-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BFK0Th4e2W3zeCSxIal1UHywZSJ+ooZgG+bAmsHkM/bze1snA9nSKHV0iWfMF92/ eiWdjHDvSkqKxssufMaGzQ== 0000025232-96-000005.txt : 19960402 0000025232-96-000005.hdr.sgml : 19960402 ACCESSION NUMBER: 0000025232-96-000005 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960401 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: COUSINS PROPERTIES INC CENTRAL INDEX KEY: 0000025232 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 580869052 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-03576 FILM NUMBER: 96542680 BUSINESS ADDRESS: STREET 1: 2500 WINDY RIDGE PKWY STE 1600 CITY: MARIETTA STATE: GA ZIP: 30067 BUSINESS PHONE: 4049552200 MAIL ADDRESS: STREET 1: 2500 WINDY RIDGE PARKWAY STREET 2: SUITE 1600 CITY: ATLANTA STATE: GA ZIP: 30339-5683 10-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1995 Commission file number 2-20111 COUSINS PROPERTIES INCORPORATED A GEORGIA CORPORATION I.R.S. EMPLOYER IDENTIFICATION NO. 58-086952 2500 WINDY RIDGE PARKWAY ATLANTA, GEORGIA 30339 TELEPHONE: 770-955-2200 Name of exchange on which registered: New York Stock Exchange Securities registered pursuant to Section 12(b) of the Act: Common Stock ($1 Par Value) Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. As of March 20, 1996, 28,345,020 common shares were outstanding; and the aggregate market value of the common shares of Cousins Properties Incorporated held by nonaffiliates was $397,712,906. DOCUMENTS INCORPORATED BY REFERENCE Portions of the following documents have been incorporated by reference into the designated Part of this Form 10-K: Registrant's Proxy Statement Part III, Items 10, 11, 12 and 13 dated March 29, 1996 Registrant's Annual Report to Part II, Items 5, 6, 7 and 8 Stockholders for the year ended December 31, 1995 PART I Item 1. Business - -------------------- Corporate Profile Cousins Properties Incorporated (the "Registrant" or "Cousins") is a Georgia corporation, which since 1987 has elected to be taxed as a real estate investment trust ("REIT"). Cousins Real Estate Corporation ("CREC"), a taxable entity consolidated with the Registrant, owns, develops, and manages a portion of the Company's real estate portfolio. Cousins MarketCenters, Inc. ("CMC") (formerly known as Cousins/New Market Development Company, Inc.) is a subsidiary of CREC which develops retail shopping centers. The Registrant, together with CREC, CMC and CREC's other consolidated entities, is hereafter referred to as the "Company." Cousins is an Atlanta-based, fully integrated equity real estate investment trust. The Company has extensive experience in the real estate industry, including the acquisition, financing, development, management and leasing of properties. Cousins has been a public company since 1962, and its common stock trades on the New York Stock Exchange. The Company owns a portfolio of well-located, high-quality retail and office developments and holds several tracts of strategically located undeveloped land. The Company's holdings are concentrated in the southeastern United States, primarily in the Atlanta area. The strategies employed to achieve the Company's investment goals include the development of properties which are substantially precommitted to quality tenants; maintaining high levels of occupancy within owned properties; the selective sale of assets and the acquisition of quality income-producing properties at attractive prices. The Company also seeks to be opportunistic and take advantage of normal real estate business cycles. Unless otherwise indicated, the notes referenced in the discussion below are the "Notes to Consolidated Financial Statements" included in the financial section of the Registrant's 1995 Annual Report to Stockholders. Brief Description of Company Investments Office. As of March 15, 1996, the Company owns, directly and indirectly, equity interests of at least 50% in the following fourteen high-quality commercial office buildings:
Company's Metropolitan Rentable Ownership Property Description Area Square Feet Interest -------------------- ------------ ----------- -------- First Union Tower Greensboro, NC 317,000 100% (c) 3100 Windy Hill Road Atlanta 188,000 100% (b) 100 North Point Center East Atlanta 128,000 100% (a) 200 North Point Center East Atlanta 125,000 100% (a) 3301 Windy Ridge Parkway Atlanta 106,000 100% NationsBank Plaza Atlanta 1,256,000 50% 3200 Windy Hill Road Atlanta 681,000 50% 2300 Windy Ridge Parkway Atlanta 634,000 50% 2500 Windy Ridge Parkway Atlanta 313,000 50% Ten Peachtree Place Atlanta 259,000 50% John Marshall-II Washington, D.C. 224,000 50% 4300 Wildwood Parkway Atlanta 150,000 50% (a) Summit Green Greensboro, NC 135,000 50% 4100 Wildwood Parkway Atlanta 100,000 50% (a) --------- 4,616,000 =========
(a) Under construction or in early stages of leaseup. (b) See Item 2. Properties footnote (5) where ownership is discussed. (c) See Item 2. Properties footnote (7) where ownership is discussed. The weighted average leased percentage of these office buildings (excluding 200 North Point Center East on which construction commenced in late 1995) was approximately 92% as of March 15, 1996 and the leases expire as follows:
2005 & 1996 1997 1998 1999 2000 2001 2002 2003 2004 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- OFFICE 100% Owned Properties: Square Feet Expiring (d) 0 3,306 202,672 2,705 161,755 80,365 8,125 73,896 0 84,536 617,360(b) % of Leased Space 0% 1% 33% 0% 26% 13% 1% 12% 0% 14% 100% Annual Base Rent (a) 0 43,342 2,529,721 37,762 2,381,034 1,445,262 156,406 665,064 0 1,306,665 8,565,256 Annual Base Rent/Sq. Ft. (a) 0 13.11 12.48 13.96 14.72 17.98 19.25 9.00 0 15.46 13.87 50% Owned Properties: SquareFeetExpiring(d) 122,735 128,133 342,204 54,722 203,460 704,311 237,402 66,177 65,019 1,592,269 3,516,432(c) % of Leased Space 3% 4% 9% 2% 6% 20% 7% 2% 2% 45% 100% Annual Base Rent (a)1,985,607 1,870,829 5,804,652 747,947 3,653,463 9,958,208 4,705,464 1,113,927 1,353,444 39,134,496 70,328,037 Annual Base Rent/Sq. Ft. (a) 16.18 14.60 16.96 13.67 17.96 14.14 19.82 16.83 20.82 24.58 20.00 Total (including only Company's share of 50% Owned Properties): Square Feet Expiring(d)61,368 67,372 373,774 30,066 263,485 432,520 126,826 106,985 32,510 880,670 2,375,576 % of Leased Space 3% 3% 16% 1% 11% 18% 5% 5% 1% 37% 100% Annual Base Rent (a) 992,804 978,757 5,432,047 411,736 4,207,765 6,424,366 2,509,138 1,222,027 676,722 20,873,913 43,729,275 Annual Base Rent/Sq. Ft. (a) 16.18 14.53 14.53 13.69 15.97 14.85 19.78 11.42 20.82 23.70 18.41
(a) Annual base rent excludes the operating expense reimbursement portion of the rent payable. If the lease does not provide for pass through of such operating expense reimbursements, an estimate of operating expenses is deducted from the rental rate shown. The base rental rate shown is the rate in the year of expiration. Amounts disclosed are in dollars. (b) Rentable square feet leased as of March 15, 1996 out of 739,000 total rentable square feet. (c) Rentable square feet leased as of March 15, 1996 out of 3,752,000 total rentable square feet. (d) Where tenant has the option to cancel its lease without penalty, the lease expiration date used in the table above reflects the cancellation option date rather than the lease expiration date. The weighted average remaining lease term of these thirteen office buildings was approximately 8 years as of March 31, 1996. Most of the Company's leases in these buildings provide for pass through of operating expenses, and base rents which escalate over time. Retail. As of March 15, 1996, the Company's retail portfolio includes the following eleven properties: Rentable Square Feet Company's Metropolitan (Company Ownership Property Description Area Owned) Interest -------------------- ------------ ----------- ---------- Colonial Plaza MarketCenter ....... Orlando, FL 533,000 100% (a) Lawrenceville MarketCenter ........ Atlanta 499,000 100% Greenbrier MarketCenter ........... Chesapeake, VA 474,000 100% (a) North Point MarketCenter .......... Atlanta 370,000 100% (b) Presidential MarketCenter ......... Atlanta 334,000 100% (c) Perimeter Expo .................... Atlanta 170,000 100% Los Altos MarketCenter ............ Long Beach, CA 152,000 100% (a) Mansell Crossing Phase II ......... Atlanta 100,000 100% (a)(b) Rivermont Station ................. Atlanta 92,000 100% (a) Lovejoy Station ................... Atlanta 77,000 100% Haywood Mall ...................... Greenville, SC 330,000 50% --------- 3,131,000 ========= (a) Under construction or in early stages of leaseup. (b) See Item 2. Properties footnote (14) where ownership is discussed. (c) Phase II (130,000 square feet) is under construction. The weighted average leased percentage of these eleven retail properties (excluding the properties under construction or in early stages of leaseup and excluding Haywood Mall) was approximately 99% as of March 15, 1996, and the leases of these eleven properties (excluding only Haywood Mall) expire as follows:
2005 & 1996 1997 1998 1999 2000 2001 2002 2003 2004 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- RETAIL Square Feet Expiring 0 2,195 13,810 54,904 68,988 74,776 0 0 85,267 2,028,808 2,328,748(b) % of Leased Space 0% 0% 1% 2% 3% 3% 0% 0% 4% 87% 100% Annual Base Rent (a) 0 41,486 217,051 982,861 1,032,491 711,701 0 0 941,311 22,906,420 26,833,321 Annual Base Rent/Sq. Ft. (a) 0 18.90 15.72 17.90 14.97 9.52 0 0 11.04 11.29 11.52
(a) Annual base rent excludes the operating expense reimbursement portion of the rent payable and any percentage rents due. If the lease does not provide for pass through of such operating expense reimbursements, an estimate of operating expenses is deducted from the rental rate shown. The base rental rate shown is the rate in the year of expiration. Amounts disclosed are in dollars. (b) Gross leasable area leased as of March 15, 1996 out of 2,801,000 total gross leasable area. The weighted average remaining lease term of these eleven retail properties (excluding only Haywood Mall) was approximately 16 years as of March 15, 1996. All of the major tenant leases in these retail properties have lease terms of 10 years or more and provide for pass through of operating expenses and base rents which escalate over time. Other. The Company's other real estate holdings include equity interests in approximately 484 acres of strategically located land held for investment and future development at North Point and Wildwood Office Park, and two mortgage notes for $28 million which are secured by a 250,000 square foot office building in Washington, D.C. The terms of these two notes have some of the characteristics of an equity investment, and should provide a comparable return on investment (see Note 3). The Company's joint venture partners include IBM and affiliates of The Coca-Cola Company ("Coca-Cola"), NationsBank Corporation ("NationsBank"), Corporate Property Investors, Odyssey Partners, L.P., Temple-Inland Inc., Dutch Institutional Holding Company ("DIHC"), American General Corporation, and Carr Realty Corporation. The success of the Company's operations is dependent upon such unpredictable factors as the availability of satisfactory financing; general and local economic conditions; the activity of others developing competitive projects; the cyclical nature of the real estate industry; and zoning, environmental impact, and other government regulations. Refer to Item 2 hereof for a more detailed description of the Company's real estate properties. Significant Changes in 1995 Significant changes in the Company's business and properties during the year ended December 31, 1995 were as follows: In September 1995, North Point MarketCenter Phase II, a 173,000 square foot (57,000 square feet of which are owned by the Company) retail power center expansion in north central suburban Atlanta, became fully operational for financial reporting purposes. In October 1995, Lawrenceville MarketCenter, a 499,000 square foot retail power center in northeast suburban Atlanta, became partially operational for financial reporting purposes. In December 1995, Lovejoy Station, a 77,000 square foot neighborhood retail center in south central suburban Atlanta, became partially operational for financial reporting purposes. Construction which commenced during 1995 included: Colonial Plaza MarketCenter, a 533,000 square foot retail power center in suburban north central Orlando, Florida, in February 1995; Greenbrier MarketCenter, a 474,000 square foot retail power center in Chesapeake, Virginia, in May 1995; Mansell Crossing Phase II, a 100,000 square foot retail power center expansion adjacent to the Company's other North Point properties, in May 1995; Presidential MarketCenter Phase II, a 130,000 square foot retail power center expansion in northeast suburban Atlanta, in November 1995; and Rivermont Station, a 92,000 square foot neighborhood retail center in north central suburban Atlanta, in December 1995. Also, development commenced on the Los Altos MarketCenter in February 1996. Los Altos MarketCenter is a 280,000 square foot (152,000 square feet of which the Company will own) retail power center located in Long Beach, California. In August 1995, Wildwood Associates, a 50% owned joint venture of the Company, commenced construction on two new office buildings on approximately 12.6 acres of land it owns in Wildwood Office Park. The two buildings will be a total of 250,000 rentable square feet of which 227,000 rentable square feet are pre-leased to Georgia-Pacific Corporation. Georgia-Pacific Corporation began occupying a portion of its space in February 1996. In November 1995, construction commenced on 200 North Point Center East, a 125,000 rentable square foot office building at North Point, adjacent to 100 North Point Center East (a building of similar size which opened in December 1995), North Point Mall and the Company's retail properties in north central suburban Atlanta. The Company completed three new financings and two refinancings during 1995. In July 1995, the Company completed the long term non-recourse financing of its North Point MarketCenter and Perimeter Expo retail power centers. The North Point MarketCenter financing is for $30 million, with an interest rate of 8.5% and a maturity of 10 years. The Perimeter Expo financing is for $21.5 million, with an interest rate of 8.04% and a maturity of 10 years. In November 1995, the Company completed a $28 million financing secured by the 650 Massachusetts Avenue Notes Receivable. This $28 million note payable has a maturity of 5 years with a rate of LIBOR + 1%, which rate was effectively fixed at 6.53% as of January 10, 1996 through an interest rate swap agreement. Wildwood Associates refinanced two mortgage notes in December 1995. One of those mortgage notes, which had an $81 million balance at a 9.09% rate and matured in August 1999, was refinanced with a $72 million 7.56% mortgage note due in 10 years. The second mortgage note, which had a $31 million balance at a 9.125% rate and matured in June 1996, was refinanced with a $26 million 7.45% mortgage note due in 10 years. Executive Offices The Registrant's executive offices are located at 2500 Windy Ridge Parkway, Suite 1600, Atlanta, Georgia 30339. At December 31, 1995, the Company employed 130 people. Item 2. Properties Table of Major Properties The following tables set forth certain information relating to major office and retail properties, stand alone retail lease sites, and land held for investment and future development in which the Company has a 50% or greater ownership interest. All information presented is as of December 31, 1995, except percentage leased which is as of March 15, 1996. Dollars are stated in thousands.
Adjusted Cost and Adjusted Percentage Cost Less Description, Year Rentable Leased Average Major Depreciation Location Development Joint Company's Square Feet as of 1995 Major Tenants (lease Tenants' and and Completed Venture Ownership and Acres March 15, Economic expiration/options Rentable Amortization Zip Code or Acquired Partner Interest as Noted 1996 Occupancy expiration) Sq. Feet (1) -------- ----------- ------- --------- ----------- --------- --------- -------------------- -------- ------------ Office - ------ Wildwood Office Park: Suburban Atlanta, GA 2300 Windy Ridge Parkway 30339-5671 1987 IBM 50% 634,000 95% 92% IBM (2002/2012) 240,430 $ 76,257 12 Acres Georgia-Pacific Corporation 63,006 $ 54,337 (2002/2007) (23) Electrolux (2000/2005) 62,576 Computer Associates 62,445 (2005/2010) Chevron USA (1998) 50,242 2500 Windy Ridge Parkway 30339-5683 1985 IBM 50% 313,000 87% 88% Coca-Cola Enterprises Inc. 165,180 $ 27,414 8 Acres (1998/2008) $ 18,307 3200 Windy Hill Road 30339-5609 1991 IBM 50% 681,000 95% 95% IBM (2001/2011) 440,139 $ 78,319 15 Acres Equifax (4) (1998/2003) 68,402 $ 63,326 W.H. Smith Inc. 41,858 (2002/2007) 3301 Windy Ridge Parkway 30339-5685 1984 N/A 100% 106,000 70% 70% TSW International, Inc. 73,896 $ 10,368 10 Acres (2003/2008) (3) $ 7,179 3100 Windy Hill Road 30339-5605 1983 N/A (5) 188,000 100% 100% IBM (1998/2003) 188,000 $ 17,416(5) 13 Acres $ 17,416(5) 4100/4300 Wildwood Parkway 30339-9999 (13) IBM 50% 250,000 91% (13) Georgia-Pacific 227,000 $ 10,964 13 Acres Corporation (2012/2017) (13)
Debt Maturity 1995 FFO (2) and ------------------ Company's Debt Interest 100% Share Balance Rate ---- ----- ------- ---- Office - ------ Wildwood Office Park: Suburban Atlanta, GA 2300 Windy Ridge Parkway 30339-5671 $ 9,648 $ 4,824 $72,000 12/1/05 7.56% 2500 Windy Ridge Parkway 30339-5683 $ 4,563 $ 2,282 $26,000 12/15/05 7.45% 3200 Windy Hill Road 30339-5609 $ 8,789 $ 4,395 $ 0 N/A 3301 Windy Ridge Parkway 30339-5685 $ 467 $ 467 $ 0 N/A 3100 Windy Hill Road 30339-5605 $ 1,931(5) $ 1,931(5) $ 0 N/A 4100/4300 Wildwood Parkway 30339-9999 (13) (13) $ 0 N/A
Adjusted Cost and Adjusted Percentage Cost Less Description, Year Rentable Leased Average Major Depreciation Location Development Joint Company's Square Feet as of 1995 Major Tenants (lease Tenants' and and Completed Venture Ownership and Acres March 15, Economic expiration/options Rentable Amortization Zip Code or Acquired Partner Interest as Noted 1996 Occupancy expiration) Sq. Feet (1) -------- ----------- ------- --------- ----------- --------- --------- -------------------- -------- ------------ Office (Continued) - ------------------ NationsBank Plaza Atlanta, GA 30308-2214 1992 NationsBank 50%(6) 1,256,000 92% 83% NationsBank(4) 572,742 $222,735 (4) 4 Acres (2012/2042) $196,621 Ernst & Young 188,175 (2007/2017) Troutman Sanders 178,459 (2007/2017) Paul Hastings (2012/2017) 68,980 Hunton & Williams 56,560 (2004/2009) First Union Tower Greensboro, NC 27401-2167 1990 N/A (7) 100%(7) 317,000 91% 85% Smith Helms Mullis & 70,360 $ 33,651(7) 1 Acre Moore (2000/2015) $ 25,304(7) First Union Bank (4) 62,622 (2009/2019) Halstead Industries 60,253 (2000/2005) Ten Peachtree Place Atlanta, GA 30309-3814 1991 Coca-Cola 50%(6) 259,000 100% 100% Coca-Cola (4) (2001/2006) 259,000 $ 23,474 (4) 5 Acres $ 20,897 Summit Green Greensboro, NC 27408-7023 1986 IBM 50% 135,000 99% 100% IBM (1996/2006) 75,797 $ 10,540 9 Acres(9) Fitech Systems (1999/2004) 22,688 $ 7,420 Massachusetts Mutual 11,476 Life Ins. Co. (1997/2002) John Marshall-II Suburban Washington, D.C. 22102-3802 (13) Carr Realty 50% 224,000 100% (13) Booz-Allen & Hamilton 224,000 $ 25,379 . Corporation (4) 3 Acres (2011/2016) (13) North Point Center East Suburban Atlanta, GA 30202-4885 1995(11) N/A 100% 128,000 55% (11) Schweitzer-Mauduit 30,728 $ 9,779 7 Acres International, Inc. (11) (2001/2007) Green Tree Financial 21,914 Debt Maturity 1995 FFO (2) and ------------------ Company's Debt Interest 100% Share Balance Rate ---- ----- ------- ---- Office (Continued) - ------------------ NationsBank Plaza Atlanta, GA 30308-2214 $21,237 $10,653 $ 0 N/A (6) First Union Tower Greensboro, NC 27401-2167 $ 4,172 $ 4,172 $ 0 N/A (7) Ten Peachtree Place Atlanta, GA 30309-3814 $ 2,871 $ 1,173 $20,971 11/30/01(8) (6) 8.00% Summit Green Greensboro, NC 27408-7023 $ 1,846 $ 923 $10,547 4/01/98 9.875% John Marshall-II Suburban Washington, D.C. 22102-3802 (13) (13) $15,518 6/21/98(10) . Renewable Floating 100 North Point Center East Suburban Atlanta, GA 30202-4885 (11) (11) $ 0 N/A
Adjusted Cost and Adjusted Percentage Cost Less Description, Year Rentable Leased Average Major Depreciation Location Development Joint Company's Square Feet as of 1995 Major Tenants (lease Tenants and and Completed Venture Ownership and Acres March 15, Economic expiration/options Rentable Amortization Zip Code or Acquired Partner Interest as Noted 1996 Occupancy expiration) Sq. Feet (1) -------- ----------- ------- --------- ----------- --------- --------- -------------------- -------- ------------ Office (Continued) - ------------------ 200 North Point Center East Suburban Atlanta, GA 30202-4885 (13) N/A 100% 125,000 0% (13) N/A N/A $ 768 (13) Retail Centers and Malls Haywood Mall Greenville, SC 29607-2749 1977/1995 Corporate 50% 1,256,000 95% 86% Sears (12) N/A $ 49,044 Property 86 acres overall of J.C. Penney (12) N/A $ 38,740 Investors (4) of which 83% of Venture Rich's (12) N/A 330,000 and Venture owned Belk (12) N/A 19 acres are owned Dillard's (12) N/A owned by venture (9) Perimeter Expo Atlanta, GA 30338-1519 1993 N/A 100% 290,000 95% 100% The Home Depot Expo (12) N/A $ 19,707 9 acres overall of Marshalls (2014/2029) 36,598 $ 18,837 of which 92% of Company Best Buy (2014/2029) 36,090 0,000 and Company owned Linens 'N Things(2014/2024)30,351 10 acres are owned Office Max (2013/2033) 23,500 owned by The Sport Shoe (2004/2014) 14,348 the Company North Point MarketCenter Phases I & II Suburban Atlanta, GA 30202-4889 1994/1995 N/A 100% 486,000 100% 89% Target (12) N/A $ 25,121(14) (14) (14)60 Acres (16) (15) Babies "R" Us (2012/2032) 50,275 $ 23,841(14) of which Media Play (2010/2025) 48,884 370,000 and Marshalls (2010/2025) 40,000 49 acres are Rhodes (2011/2021) 40,000 owned by Linens 'N Things 35,000 the Company (2005/2025) United Artists (2014/2034) 34,733 Circuit City (2015/2030) 33,420 PETsMART (2009/2029) 25,465 Gaps Old Navy Store 17,000
Debt Maturity 1995 FFO (2) and ------------------ Company's Debt Interest 100% Share Balance Rate ---- ----- ------- ---- Office (Continued) - ------------------ 200 North Point Center East Suburban Atlanta, GA 30202-4885 (13) (13) $ 0 N/A Retail Centers and Malls - ------------------------ Haywood Mall Greenville, SC 29607-2749 $ 7,330 $ 3,665 $ 0 N/A Perimeter Expo Atlanta, GA 30338-1519 $ 3,048 $ 3,048 $21,442 8/15/05 8.04% North Point MarketCenter Phases I & II Suburban Atlanta, GA 30202-4889 $ 3,564 $ 3,564 $29,853 7/15/05 (15) (14)(15) 8.50%
Adjusted Cost and Adjusted Percentage Cost Less Description, Year Rentable Leased Average Major Depreciation Location Development Joint Company's Square Feet as of 1995 Major Tenants (lease Tenants' and and Completed Venture Ownership and Acres March 15, Economic expiration/options Rentable Amortization Zip Code or Acquired Partner Interest as Noted 1996 Occupancy expiration) Sq. Feet (1) -------- ----------- ------- --------- ----------- --------- --------- -------------------- -------- ------------ Retail Centers and Malls (Continued) - ------------------------------------ Presidential MarketCenter Phase I Suburban Atlanta, GA 30278-2149 1994 N/A 100% 320,000 100% 98% Target (12) N/A $ 10,045 29 acres overall of Publix Super Market 56,146 $ 9,622 of which 100% ompany (2019/2044) 204,000 and of Company owned HomeGoods, Inc. (2004/2014) 35,000 19 acres owned T.J. Maxx (2004/2014) 32,000 are owned Marshalls (2010/2025) 30,000 by the Company Presidential MarketCenter Phase II Suburban Atlanta, GA 30278-2149 (13) N/A 100% 130,000(13) 54% (13) MJDesigns (4) 37,957 $ 3,822 15 Acres (2011/2026)(13) (13) Office Depot, Inc. 31,615 (2011/2026)(13) Lovejoy Station Suburban Atlanta, GA 30228-9999 1995 N/A 100% 77,000 96% 7% Publix Super Market 47,955 $ 6,132 12 Acres (17) (2016/2036) $ 6,120 Lawrenceville MarketCenter Suburban Atlanta, GA 30243-5420 1995 N/A 100% 499,000 100% 22% Target (2014/2040) 117,000 $ 16,647 56 Acres (18) Home Depot (2025/2040) 103,000 $ 16,566 AMC Theater (4)(2016/2036) 64,319 MJDesigns (4)(2011/2026) 36,966 Linens 'N Things(2010/2025) 35,000 Goody's (2008/2026) 32,400 Marshalls (2011/2026) 30,000 PETsMART (2011/2031) 25,416 Gap's Old Navy Store 14,000 (2002/2012) Colonial Plaza MarketCenter Orlando, FL 32803-5029 (13) N/A 100% 533,000 60% (13) Circuit City (2017/2037)(13) 43,432 $ 26,517 49 Acres Barnes & Noble 40,450 (13) (2011/2021)(13) Rhodes (2011/2026)(13) 40,000 BabySuperstore(2006/2021)(13)40,000 Linens 'N Things 35,000 (2011/2026)(13)
Debt Maturity 1995 FFO (2) and ------------------ Company's Debt Interest 100% Share Balance Rate ---- ----- ------- ---- Retail Centers and Malls (Continued) - ------------------------------------ Presidential MarketCenter Phase I Suburban Atlanta, GA 30278-2149 $ 1,313 $ 1,313 $ 0 N/A Presidential MarketCenter Phase II Suburban Atlanta, GA 30278-2149 (13) (13) $ 0 N/A Lovejoy Station Suburban Atlanta, GA 30228-9999 $ 26(17) $ 26(17) $ 0 N/A Lawrenceville MarketCenter Suburban Atlanta, GA 30243-5420 $ 232(18) $ 232(18) $ 0 N/A Colonial Plaza MarketCenter Orlando, FL 32803-5029 (13) (13) $ 0 N/A
Adjusted Cost and Adjusted Percentage Cost Less Description, Year Rentable Leased Average Major Depreciation Location Development Joint Company's Square Feet as of 1995 Major Tenants (lease Tenants' and and Completed Venture Ownership and Acres March 15, Economic expiration/options Rentable Amortization Zip Code or Acquired Partner Interest as Noted 1996 Occupancy expiration) Sq. Feet (1) -------- ----------- ------- --------- ----------- --------- --------- -------------------- -------- ------------ Retail Centers and Malls (Continued) - ------------------------------------ Colonial Plaza MarketCenter (Continued) Luria's (2011/2026)(13) 32,900 Marshalls (2011/2026)(13) 30,400 Ross Stores (2006/2026)(13) 28,000 Walgreen Co. (2002/2012)(13) 18,614 Gap's Old Navy Store 17,920 (2002/2012)(13) Mansell Crossing Phase II Suburban Atlanta, GA 30202-4822 (13) N/A 100% 100,000 61% (13) Bed Bath & Beyond 40,000 $ 5,367 (14) (14) 13 Acres (2010/2025)(13) (13)(14) Rooms To Go (2015/2035)(13) 21,000 Greenbrier MarketCenter Chesapeake, VA 23327-9999 (13) N/A 100% 474,000 76% (13) Target (2016/2046)(13) 117,220 $ 15,674 38 Acres Harris Teeter, Inc. 50,000 (13) (2015/2035)(13) Bed Bath & Beyond 40,484 (2011/2026)(13) Baby Superstore, Inc. 40,000 (2005/2020)(13) Kinetex, Inc.(2011/2026)(13) 33,111 Barnes & Noble Superstores, 30,545 Inc. (2010/2020)(13) PETsMART (2010/2030)(13) 26,040 Office Max (2011/2026)(13) 23,484 Rivermont Station Suburban Atlanta, Ga. 30076-9999 (13) N/A 100% 92,000 73% (13) Harris Teeter, Inc. 58,261 $ 8,468 19 Acres (2015/2035)(13) (13) CVS Drug Store (4) 8,775 (2006/2021)(13) Los Altos MarketCenter Long Beach, CA 90815-3126 (19) N/A 100% 280,000 (19) (19) Sears (12) N/A (19) 19 Acres Circuit City(4)(2016/2036)(19) 37,591 of which Borders, Inc.(2017/2037)(19 30,000 152,000 and Bristol Farms(4)(2011/2031)(19) 28,200 17 Acres CompUSA, Inc. (2011/2021)(19) 25,620 are owned by Savon Drugs (4)(2016/2026)(19) 16,914 the Company
Debt Maturity 1995 FFO (2) and ------------------ Company's Debt Interest 100% Share Balance Rate ---- ----- ------- ---- Retail Centers and Malls (Continued) - ------------------------------------ Colonial Plaza MarketCenter (Continued) Mansell Crossing Phase II Suburban Atlanta, GA 30202-4822 (13) (13) $ 0 N/A (14) Greenbrier MarketCenter Chesapeake, VA 23327-9999 (13) (13) $ 0 N/A Rivermont Station Suburban Atlanta, Ga. 30076-9999 (13) (13) $ 0 N/A Los Altos MarketCenter Long Beach, CA 90815-3126 (19) (19) $ 0 N/A
Adjusted Cost and Adjusted Percentage Cost Less Description, Year Rentable Leased Average Major Depreciation Location Development Joint Company's Square Feet as of 1995 Major Tenants (lease Tenants' and and Completed Venture Ownership and Acres March 15, Economic expiration/options Rentable Amortization Zip Code or Acquired Partner Interest as Noted 1996 Occupancy expiration) Sq. Feet (1) -------- ----------- ------- --------- ----------- --------- --------- -------------------- -------- ------------ Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects - ------------------------------------------------------------------------- Wildwood Office Park Suburban Atlanta, GA 30339-5671 1985-1993 IBM 50% 16 Acres 91% 89% N/A N/A $ 8,739 $ 7,834 GA Highway 400 Property Suburban Atlanta, GA 30202-4885 1993 N/A 100% 30 Acres 81% 56% N/A N/A $ 4,721 $ 4,694
Debt Maturity 1995 FFO (2) and ------------------ Company's Debt Interest 100% Share Balance Rate ---- ----- ------- ---- Stand Alone Retail Sites Adjacent to Company's Office and Retail Projects - ------------------------------------------------------------------------- Wildwood Office Park Suburban Atlanta, GA 30339-5671 $ 994(20) $ 497(20) $ 0 N/A $ 7,834 GA Highway 400 Property Suburban Atlanta, GA 30202-4885 $ 762(21) $ 762(21) $ 0 N/A
(1) Cost as shown in the accompanying table includes deferred leasing and financing costs and other related assets. For each of the following projects: 2300 and 2500 Windy Ridge Parkway, 3200 Windy Hill Road, 4100/4300 Wildwood Parkway and Wildwood Stand Alone Retail Lease Sites, the cost shown is what the cost would be if the venture's land cost were adjusted downward to the Company's lower basis in the land it contributed to the venture. (2) FFO represents cash flows from operating activities before interest expense excluding changes in other operating assets and liabilities. FFO should not be considered an alternative to net income or other measurements under generally accepted accounting principles as an indicator of operating performance; or to cash flows from operating, investing, or financing activities as a measure of liquidity. (3) TSW International, Inc. and Georgia-Pacific Corporation have the right to terminate their leases in 1998 and 2007, respectively, upon payment of significant cancellation penalties. (4) Actual tenant or venture partner is affiliate of entity shown. (5) For 3100 Windy Hill Road, the cost shown is the Company's carrying value of the land lease and first mortgage note from which it derives substantially all of the economic benefits of the property. The FFO in the accompanying table includes the interest and ground lease income recognized by the Company and excludes $375,000 of principal amortization of the first mortgage note. (6) See "Major Properties" - "NationsBank Plaza" and "Ten Peachtree Place" where the partnership's preferences are discussed. (7) The Company has the option to purchase its 15% minority partner's interest in the First Union Tower for $999,000 by July 31, 1996. Pursuant to this partnership amendment, the Company is entitled to 100% of the earnings and cash flow from the partnership through the option period. As a result, the accompanying table discloses all information as if the Company owned 100% of First Union Tower and includes the $999,000 buyout amount in the Adjusted Cost amounts disclosed in the accompanying table. (8) Maturity of the Ten Peachtree Place mortgage debt is extendible to December 31, 2008. Rate becomes floating after November 30, 2001. (9) Summit Green and a portion of the Haywood Mall parking lot (3 acres) are subject to long-term ground leases. (10) The rate on the construction loan on the John Marshall-II building floats at .90% over LIBOR rate. LIBOR rate averaged 5.74% for the month of December 1995. The venture has a commitment for a $24,675,000, 17 year fully amortizing non-recourse mortgage note at a 7% interest rate which should fund by April 1996. (11) 100 North Point Center East was completed in December 1995, but was not considered operational for financial reporting purposes until the first quarter of 1996. (12) This anchor tenant owns its own space. (13) Project was under construction as of December 31, 1995. Lease expiration dates are based upon estimated commencement dates, and square footage is estimated. (14) At December 31, 1995, the Company had interests in two partnerships with Coca-Cola which were exchanged effective January 1, 1996: Spring/Haynes Associates (50% interest) and North Point Market Associates, L.P. (82.3% interest). The Company and Coca-Cola entered into an exchange transaction which effectively resulted in Coca-Cola receiving 100% of the Spring/Haynes Associate' property and the Company receiving $1,092,000 in cash and 100% of North Point Market Associates, L.P.'s properties (North Point MarketCenter and Mansell Crossing Phase II). The above table discloses all information as if the exchange transaction had occurred on December 31, 1995. (15) North Point MarketCenter Phase II became operational for financial reporting purposes in mid 1995. Thus, FFO and economic occupancy reported for North Point MarketCenter Phase II does not include a full year of operations. (16) North Point MarketCenter includes approximately 6 outparcels available for ground lease to freestanding users, of which four are currently leased. The remaining 2 sites are expected to be developed for freestanding retailers in 1996. (17) Lovejoy Station became partially operational for financial reporting purposes in December 1995. Thus, FFO and economic occupancy reported for Lovejoy Station do not include a full year of operations. FFO will be approximately $700,000 on a stabilized basis. (18) Lawrenceville MarketCenter became partially operational for financial reporting purposes in late 1995. Thus, FFO and economic occupancy reported for Lawrenceville MarketCenter do not include a full year of operations. FFO will be approximately $3.2 million on a stabilized basis. (19) Land was acquired and construction commenced on Los Altos MarketCenter subsequent to December 31, 1995. Lease expiration dates are based upon estimated commencement dates, and square footage is estimated. (20) Approximately 14 acres of the Wildwood Office Park ground lease sites were generating FFO for the twelve months ended December 31, 1995. One of the remaining 2 acres is leased to a tenant whose rental commencement begins in August 1996. (21) During 1995, rentals were received from 24 acres of the GA Highway 400 Property, with rentals from 11 of the acres commencing during 1995. The remaining acres are currently being marketed to prospective tenants. (22) Tenant has the option to purchase the building on its lease expiration date for a price of $33,750,000. (23) Tenant has the right to terminate its lease in 1997. Land Held for Investment and Future Development (excluding Retail Outparcels)
Adjusted Cost Less Developable Company's Depreciation Land Area Joint Venture Ownership and Debt Description, Location and Zoned Use Year Acquired (Acres)(1) Partner Interest Amortization Balances - ----------------------------------- ------------------------ ------- -------- --------------------- Wildwood Office Park Suburban Atlanta, Georgia Office and Commercial 1971-1987 148 N/A 100% $ 7,005 $ 0 Office and Commercial 1971-1982 42 IBM 50% $ 12,676(2) $ 0 Georgia Highway 400 Land (Georgia Highway 400 & Haynes Bridge Road) (3) Suburban Atlanta, Georgia Office and Commercial - East 1970-1985 63 N/A 100% $ 1,856 $ 0 Office and Commercial - West 1970-1985 230 N/A 100% $ 4,422 $ 0 Midtown Atlanta Office and Commercial 1984 2 N/A 100% $ 1,975 $ 0 Temco Associates (Paulding County) Suburban Atlanta, Georgia 1991 -(5) Temple-Inland 50% --(5) $ 0 Inc. (4) Lawrenceville Gwinnett County Suburban Atlanta, Georgia Single-Family Residential and Commercial 1994 84 N/A 100% $ 1,484 $ 0
(1) Based upon management's estimates. (2) For the portion of the Wildwood Office Park land owned by a joint venture, the cost shown is what the cost would be if the venture's land cost were adjusted downward to the Company's lower basis in the land it contributed to the venture. The adjusted cost excludes building predevelopment costs of $1,252,000. (3) The Georgia Highway 400 property is located both east and west of Georgia Highway 400. Currently, only the land which is located east of Georgia Highway 400 is being developed, but planning has begun for additional development on the west side property. This land surrounds North Point Mall, a 1.1 million square foot regional mall (currently being expanded to 1.3 million square feet) on a 100 acre site which the Company sold in 1988 to a joint venture of Homart Development Co. and JMB/Federated Realty Associates, Ltd. (4) Joint venture partner is an affiliate of the entity shown. (5) Temco Associates has an option through March 2006, with no carrying costs, to acquire approximately 35,000 acres in Paulding County, Georgia (northwest of Atlanta, Georgia), of which approximately 13,000 acres would be a fee simple interest and approximately 22,000 acres would be a timber rights interest only. The option may be exercised in whole or in part over the option period. Temco Associates has engaged in certain sales of land as to which it simultaneously exercised its purchase option. During 1993 and 1994, approximately 1,100 and 72 acres, respectively of the option related to the fee simple interest was exercised and simultaneously sold for gross profits of $305,000 and $243,000, respectively. None of the option was exercised in 1995. Major Properties - ---------------- General - ------- This section describes the major operating properties in which the Company has an interest either directly or indirectly through joint venture arrangements. A "negative investment" in a joint venture results from distributions of capital to the Company, if any, exceeding the sum of (i) the Company's contributions of capital and (ii) reported earnings (losses) of the joint venture allocated to the Company. "Investment" in a joint venture means the book value of the Company's investment in the joint venture. Wildwood Office Park - -------------------- Wildwood Office Park is a 289 acre Class A commercial development in suburban Atlanta master planned by I.M. Pei, including 7 office buildings (of which 2 are under construction) containing 2,172,000 rentable square feet. The property is zoned for office, institutional and commercial use, with over 7 million additional gross square feet of office and commercial space planned for the park. Approximately 107 acres in the park are owned by, or committed to be contributed to, Wildwood Associates (see below), including approximately 42 acres of land held for future development. The Company owns 100% of the 148 acre balance of the land available for future development. Located in Atlanta's northwest commercial district, just north of the Interstate 285/Interstate 75 intersection, Wildwood features convenient access to all of Atlanta's major office, commercial and residential districts. The Wildwood complex overlooks the Chattahoochee River and borders 1,200 acres of national forest, thus providing an urban office facility in a forest setting. Wildwood Associates. Wildwood Associates is a joint venture formed in 1985 between the Company and IBM. The Company and IBM each have a 50% interest in Wildwood Associates. At December 31, 1995, the Company's investment in Wildwood Associates and a related partnership (see "Summit Green") was approximately $2.2 million, which included the cost of the land the Company is committed to contribute to Wildwood Associates. Wildwood Associates owns the 3200 Windy Hill Road Building (681,000 rentable square feet), the 2300 Windy Ridge Parkway Building (634,000 rentable square feet), the 2500 Windy Ridge Parkway Building (313,000 rentable square feet) and the 4100/4300 Wildwood Parkway Buildings (250,000 rentable square feet, which is under construction). At March 15, 1996, these buildings were 95%, 95%, 87%, and 91% leased, respectively. Wildwood Associates also owns 15 acres leased to two banking facilities and five restaurants. Wildwood Associates refinanced two mortgage notes in December 1995. The 2300 Windy Ridge Parkway Building which had an $81 million balance at a 9.09% rate and matured in August 1999, was refinanced with a $72 million 7.56% mortgage note due in 10 years. The 2500 Windy Ridge Parkway Building which had a $31 million balance at a 9.125% rate and matured in June 1996, was refinanced with a $26 million 7.45% mortgage note due in 10 years. The 3200 Windy Hill Road Building and the 4100/4300 Wildwood Parkway Buildings have no mortgage debt and are unencumbered assets. Wildwood Associates has a $50 million bank line of credit (the Company severally guarantees one-half) under which $26.3 million was drawn at December 31, 1995. Other Buildings in Wildwood Office Park. Wildwood Office Park also contains the 3301 Windy Ridge Parkway Building, a 106,000 rentable square foot office building located on approximately 10 acres which is wholly owned by the Company. Commencing January 1994, a single tenant, TSW International, Inc., leased the building for a term of ten years. The lease was initially for 60% of the building with options permitting the tenant to expand its occupancy to the remainder of the building over the next several years; the first such option for an additional 10% of the space was exercised in the fourth quarter of 1994. In addition, the 3100 Windy Hill Road Building, a 188,000 rentable square foot corporate training facility occupies a 13-acre parcel of land which is wholly owned by the Company. The training facility improvements were sold in 1983 to a limited partnership of private investors, at which time the Company received a leasehold mortgage note. The training facility land was simultaneously leased to the partnership for thirty years, along with certain equipment for varying periods. The training facility was 100% leased by the partnership to IBM through November 1993. In January 1993, the IBM lease was extended through November 30, 1998. Concurrently with the IBM extension, the mortgage note and related leases were also modified (see Note 3). North Point - ----------- North Point is a mixed-use commercial development located in north central suburban Atlanta, Georgia off of Georgia Highway 400, a six lane state highway that runs from downtown Atlanta to the northern Atlanta suburbs. The Company owns approximately 169 and 230 acres located on the east and west sides of Georgia Highway 400, respectively. Currently, only the land which is located east of Georgia Highway 400 is being developed, but planning has begun for additional development on the west side property. The Company previously sold 100 acres of its holdings located on the east side of Georgia Highway 400 in 1988 to a joint venture of Homart Development Co. and JMB/Federated Realty Associates, Ltd. This joint venture constructed North Point Mall, a 1.1 million square foot regional mall which opened in October 1993 and has been expanded to 1.3 million square feet with the addition of a sixth anchor store (Dillard's). The following describes the various components of North Point. North Point MarketCenter and Mansell Crossing Phase II. Through December 31, 1995, these two retail properties were owned by North Point Market Associates, L.P. ("NPMA") a limited partnership between Cousins (82.3%) and an affiliate of Coca-Cola (17.7%). At December 31, 1995, Cousins also had a 50% interest with an affiliate of Coca-Cola in another partnership, Spring/Haynes Associates, which owned approximately 11 acres of land in midtown Atlanta. Effective January 1, 1996, Cousins and Coca-Cola entered into a transaction to exchange their interests in these two partnerships, which effectively resulted in Coca-Cola receiving 100% of the Spring/Haynes Associates' property and Cousins receiving $1,092,000 in cash and 100% of North Point Market Associates, L.P.'s properties (North Point MarketCenter and Mansell Crossing Phase II). North Point MarketCenter, which is 100% leased as of March 15, 1996, is a 486,000 square foot retail power center (of which 370,000 square feet are owned by Cousins) located adjacent to North Point Mall. North Point MarketCenter-Phase I (313,000 square feet) became operational for financial reporting purposes in May 1994, with Phase II (173,000 square feet, of which 57,000 are owned by Cousins) becoming fully operational for financial reporting purposes in September 1995. Construction commenced in May 1995 on Mansell Crossing Phase II, an approximately 100,000 square foot expansion of an existing retail power center previously developed by the Company for a third party. North Point MarketCenter also includes six outparcels available for ground lease to freestanding users, of which four are currently leased. North Point Center East. In November 1995, construction commenced on 200 North Point Center East, an approximately 125,000 rentable square foot Class A office building located adjacent to 100 North Point Center East. 100 North Point Center East, an approximately 128,000 rentable square foot Class A office building opened in December 1995 and should become operational for financial reporting purposes in the first quarter of 1996. These two office buildings are located on 14 acres adjacent to North Point Mall. Other North Point Property. Approximately 30 acres of the North Point land are being ground leased in 1 to 5 acre sites to freestanding users. Approximately 24 acres were leased as of March 15, 1996. The remaining approximately 293 developable acres at North Point are 100% owned by the Company. Approximately 63 acres of this land are located on the east side of Georgia Highway 400 and are zoned for mixed-use development including retail and office space. Approximately 230 acres of the land are located on the west side of Georgia Highway 400 and are zoned for office, institutional and light industrial use. Other Office Properties - ----------------------- NationsBank Plaza. NationsBank Plaza is a Class A, 55-story, 1.3 million rentable square foot office tower designed by Kevin Roche and is located on approximately 4 acres of land between the midtown and downtown districts of Atlanta, Georgia. The building, which was completed in 1992, was approximately 92% leased at March 15, 1996. An affiliate of NationsBank leases 46% of the rentable square feet. NationsBank Plaza was developed by CSC Associates, L.P. ("CSC"), a joint venture formed by the Company and a wholly owned subsidiary of NationsBank Corporation, each as 50% partners. In October 1993, the partnership fully repaid all of its debt with equity contributions of $86.7 million made by each partner. At December 31, 1995, the Company's investment in CSC was approximately $104,776,000. CSC's net income or loss and cash distributions are allocated to the partners based on their percentage interests (50% each), subject to a preference to Cousins, which preference resulted in Cousins recognizing $874,000, $451,000, and $36,000 in income over what it would have otherwise recognized in the years ended December 31, 1993, 1994, and 1995, respectively. No additional preference is due to Cousins. First Union Tower. First Union Tower is a Class A office building containing approximately 317,000 rentable square feet. The property is located on approximately one acre of land in downtown Greensboro, North Carolina. First Union Tower opened in the first quarter of 1990 and at March 15, 1996 was approximately 91% leased. First Union Tower is owned by North Greene Associates Limited Partnership ("NGA"), which was formed in 1987 as a joint venture between Cousins and Weaver Downtown Limited Partnership. Cousins has an 85% ownership interest in NGA, and accounts for it as a consolidated entity. Pursuant to an amendment to the partnership agreement executed as of August 1, 1995, Cousins has the option to purchase its partner's interest for $999,000 by July 1996 and is entitled to 100% of the earnings and cash flow from the partnership through the option period. Cousins recognized 100% of the earnings from the partnership for the year ended December 31, 1995. One Ninety One Peachtree Tower. One Ninety One Peachtree Tower is a 50-story, Class A office tower located in downtown Atlanta, Georgia that was completed in December 1990. One Ninety One Peachtree Tower, which contains 1.2 million rentable square feet, was designed by John Burgee Architects, with Phillip Johnson as design consultant. One Ninety One Peachtree Tower was developed on approximately 2 acres of land, of which approximately 1.5 acres is owned and approximately one-half acre under the parking facility is leased for a 99-year term expiring in 2088 with a 99-year renewal option. One Ninety One Peachtree Tower was approximately 92% leased at March 15, 1996. C-H Associates, Ltd. ("C-H Associates"), a partnership formed in 1988 between CREC (49%), Hines Peachtree Associates Limited Partnership (49%) and Peachtree Palace Hotel, Ltd. (2%), owns a 20% interest in the partnership that owns One Ninety One Peachtree Tower. C-H Associates' 20% ownership of One Ninety One Peachtree Tower results in an effective 9.8% ownership interest by CREC in the One Ninety One Peachtree Tower project. The balance of the One Ninety One Peachtree Tower project is owned by DIHC Peachtree Associates, an affiliate of DIHC. Through C-H Associates, CREC received 50% of the development fees from the One Ninety One Peachtree Tower project. In addition, CREC owns a 50% interest in two general partnerships which receive fees from leasing and managing the One Ninety One Peachtree Tower project. The One Ninety One Peachtree Tower project was funded substantially by debt until March 1993, at which time DIHC Peachtree Associates contributed equity in the amount of $145,000,000. Subsequent to the equity contribution, C-H Associates is entitled to a priority distribution of $250,000 per year (of which the Company is entitled to receive $112,500) for seven years beginning in 1993. The equity contributed by DIHC Peachtree Associates is entitled to a preferred return at a rate increasing over the first 14 years from 5.5% to 11.5% (payable after the Company's priority return); at December 31, 1995, the cumulative undistributed preferred return was $9,770,495. Thereafter, the partners will share in any distributions in accordance with their percentage interests. At December 31, 1995, the Company had a negative investment of $90,000 in the One Ninety One Peachtree Tower project. Ten Peachtree Place. Ten Peachtree Place is a 20-story, 259,000 rentable square foot Class A office building located in midtown Atlanta, Georgia. Completed in 1991, this structure was designed by Michael Graves and is currently 100% leased to Coca-Cola. Approximately four acres of adjacent land, currently used for surface parking, are available for future development. Ten Peachtree Place is owned by Ten Peachtree Place Associates, a general partnership between the Company (50%) and a wholly owned subsidiary of Coca-Cola (50%). The partnership acquired the property in 1991 for a nominal cash investment, subject to a ten-year purchase money note. This 8% purchase money note had an outstanding balance of $21.0 million at December 31, 1995. If the purchase money note is paid in accordance with its terms, it will amortize to approximately $15.3 million ($59 per rentable square foot) over the ten-year term of the Coca-Cola lease, at which time Coca-Cola is entitled to receive the preferred return described below and the property may be sold, released, or returned to the lender under the purchase money note for $1.00 without penalty or any further liability to the Company for the indebtedness. At December 31, 1995, the Company had a negative investment in Ten Peachtree Place Associates of $39,000. The Company anticipates that Ten Peachtree Place Associates will generate approximately $400,000 per year of cash flows from operating activities net of note principal amortization during the ten-year lease. The partnership agreement generally provides that each of the partners is entitled to receive 50% of cash flows from operating activities net of note principal amortization (excluding any sale proceeds) for ten years, after which time the Company is entitled to 15% of cash flows (including any sale proceeds) and its partner is entitled to receive 85% of cash flows (including any sale proceeds), until the two partners have received a combined distribution of $15.3 million, after which time each partner is entitled to receive 50% of cash flows (including any sale proceeds). Summit Green. Summit Green, a 21-acre office park located in Greensboro, North Carolina, is owned by Wildwood Associates (the partnership with IBM) and a related partnership. The park contains a 135,000 rentable square foot mid-rise office building which was 99% leased at March 15, 1996. The Summit Green land is leased from an unrelated third party for a 99-year term expiring in 2084. Space exists for two additional office buildings. CC-JM II Associates. This joint venture was formed in 1994 between the Company and an affiliate of Carr Realty Corporation, each as 50% general partners, to develop and own a 224,000 square foot office building in suburban Washington, D.C. The building is 100% leased for 15 years to Booz-Allen & Hamilton, an international consulting firm, as a part of its corporate headquarters campus. Rent commenced on January 21, 1996. The building is expected to be completed in 1996 at a total cost of approximately $32 million with contributions to the venture of $4 million by each partner. The venture has a commitment for a $24,675,000, 17 year fully amortizing non-recourse mortgage note at a 7% interest rate which should fund by April 1996. Other Retail Properties - ----------------------- Haywood Mall. Haywood Mall is an enclosed regional shopping center located 5 miles southeast of downtown Greenville, South Carolina, which was developed and opened in 1980. Haywood Mall Associates, a venture formed in 1979 by the Company and Bellwether Properties of South Carolina, L.P., an affiliate of Corporate Properties Investors, owns the mall. Expansion of the mall from 956,000 gross leasable square feet ("GLA") (of which the venture's ownership is approximately 272,000 GLA) to 1,256,000 GLA (of which the venture's ownership is approximately 330,000) was substantially completed in 1995. The balance of the mall is owned by the mall's five major department stores. The portion of Haywood Mall owned by Haywood Mall Associates was developed on approximately 19 acres of land, of which approximately 16 acres is owned and approximately 3 acres (of parking area) is leased under a ground lease expiring in 2067. The portion of Haywood Mall owned by the venture was approximately 83% leased as of March 15, 1996. The Company has a 50% interest in Haywood Mall Associates. The Company originally had only a nominal cash investment, but funded an aggregate of $2.8 million in 1988 through 1990 as its 50% share of capital improvements made to the mall, including a new food court area. Additionally, the Company contributed $16.1 million and $5.8 million during 1994 and 1995 to fund its share of the expansion and the prepayment of an existing 9.37% first mortgage in May 1994. At December 31, 1995, the Company's investment was $21,961,000. Other Fully Operational Retail Properties. In addition to North Point MarketCenter which is discussed above, the Company owns two other retail power centers which were fully operational for financial reporting purposes as of December 31, 1995. Perimeter Expo is a 295,000 square foot retail power center (of which the Company owns 170,000 square feet) which is located in Atlanta, Georgia and was 92% leased (Company owned) as of March 15, 1996. Presidential MarketCenter Phase I is a 320,000 square foot retail power center (of which the Company owns 204,000 square feet) which is located in suburban Atlanta, Georgia and was 100% leased (Company owned) as of March 15, 1996. Partially Operational Retail Properties. The Company owns two retail properties which were partially operational for financial reporting purposes as of December 31, 1995. Lawrenceville MarketCenter is a 499,000 square foot retail power center which is located in suburban Atlanta and was 100% leased as of March 15, 1996. Lovejoy Station is a 77,000 square foot neighborhood retail center which is located in suburban Atlanta and was 96% leased as of March 15, 1996. Retail Projects Under Construction. In addition to Mansell Crossing Phase II which is discussed above, the Company owns three retail power centers and one neighborhood retail center which were under construction as of December 31, 1995. Presidential MarketCenter Phase II is a 130,000 square foot expansion of an existing retail power center which is located in suburban Atlanta and is expected to be completed during 1996 and 1997 at a total cost of approximately $10 million. Colonial Plaza MarketCenter is a 533,000 square foot retail power center which is located in Orlando, Florida and is expected to be completed in mid-1996 at a total cost of approximately $45 million. Greenbrier MarketCenter is a 474,000 square foot retail power center which is located in Chesapeake, Virginia and is expected to be completed in the fall of 1996 at a total cost of approximately $34 million. Rivermont Station is a 92,000 square foot neighborhood retail center which is located in suburban Atlanta and is expected to be completed in late 1996 at a total cost of approximately $10 million. Subsequent to year-end, the Company purchased the Los Altos Shopping Center, a retail center located in Long Beach, California. The Company commenced the demolition of the retail center and began construction of Los Altos MarketCenter, a 280,000 square foot (of which the Company will own 152,000 square feet) retail power center which is expected to be completed in late 1996 at a total cost of approximately $23 million. Residential Lot Developments - ---------------------------- As of December 31, 1995, CREC owned the following parcels of land which are being developed into residential communities ($ in thousands):
Estimated Total Lots Purchase Initial on Land Money Year Currently Lots Remaining Carrying Debt Description Acquired Owned (1) Sold to Date Lots Value Balances ----------- -------- --------- ------------ ---- ----- -------- Brown's Farm 1993 160 75 85 $ 2,214 $ 0 West Cobb County Suburban Atlanta, GA Apalachee River Club 1994 185 40 145 3,608 0 Gwinnett County Suburban Atlanta, GA Echo Mill 1994 219 78 141 2,261 617 West Cobb County Suburban Atlanta, GA Barrett Downs 1994 144 8 136 2,849 0 Forsyth County Suburban Atlanta, GA Bradshaw Farms 1994 118 95 23 520 0 Cherokee County Suburban Atlanta, GA --- --- --- ------- ----- Total 826 296 530 $11,452 $ 617 === === === ======= =====
(1) Includes lots sold to date. Additional lots may be developed on adjacent land on which CREC holds purchase options. Land Held for Investment and Future Development - ----------------------------------------------- In addition to the various land parcels located adjacent to operating properties or projects under construction discussed above, the Company owns the following significant land holdings either directly or indirectly through joint venture arrangements. The Company intends to convert its land holdings to income-producing usage or to sell portions of land holdings as opportunities present themselves over time. Spring/Haynes Associates. This general partnership was formed in 1985 between the Company and a wholly owned subsidiary of Coca-Cola, each as 50% general partners, to jointly own and develop real estate. See North Point above where it is discussed that effective January 1, 1996, Cousins and Coca-Cola exchanged their interests in Spring/Haynes Associates and North Point Market Associates, L.P. Temco Associates. Temco Associates was formed in March 1991 as a partnership between CREC (50%) and a subsidiary of Temple-Inland Inc. (50%). Temco Associates has an option through March 2006, with no carrying costs, to acquire approximately 35,000 acres in Paulding County, Georgia (northwest of Atlanta, Georgia), of which approximately 13,000 acres would be a fee simple interest and approximately 22,000 acres would be a timber rights interest only. The option may be exercised in whole or in part over the option period and the option price of this fee simple land was $736 per acre at January 1, 1996, escalating at 6% on January 1 of each succeeding year during the term of the option. The Temco Associates property has the potential for future residential, industrial and commercial development. Temco Associates has to date sold parcels of land as to which it simultaneously exercised its purchase option. During 1993 and 1994, approximately 1,100 and 72 acres, respectively, of the option related to the fee simple interest was exercised and simultaneously sold for gross profits of $305,000 and $243,000, respectively. None of the option was exercised in 1995. Other Real Property Investments - ------------------------------- Omni Norfolk Hotel. Norfolk Hotel Associates ("NHA") is a general partnership formed in 1978 between the Company and an affiliate of Odyssey Partners, L.P. (an investment partnership), each as 50% partners, which held a mortgage note on and owned the land under the 442-room Omni International Hotel in downtown Norfolk, Virginia. In January 1992, NHA terminated the land lease and became the owner of the hotel and a long-term parking agreement with an adjacent building owner. In April 1993, the partnership sold the hotel, but retained its interest in the parking agreement. The Company's share of the gain on this transaction was approximately $.5 million and is included in Income From Joint Ventures in the 1993 Consolidated Statement of Income. The partnership received a mortgage note for a portion of the sales proceeds. In July 1994, NHA distributed to each partner a 50% interest in the parking agreement held by NHA. The Company currently receives payments of approximately $228,000 per year for its 50% interest in the agreement, and has entered into an agreement to sell its interest for $2 million in July 1996, which would result in a profit to the Company of approximately $411,000. Additionally, in July 1994, each partner contributed $2 million to NHA to pay down $4 million in debt. At December 31, 1995, the Company had an investment of $1,815,000 in NHA. The Company has also guaranteed a $2.4 million line of credit to NHA under which $2.2 million had been drawn at December 31, 1995, and its partner has guaranteed an equal line of credit under which $2.2 million had been drawn at December 31, 1995. Dusseldorf Joint Venture. In 1992, Cousins entered into a joint venture agreement for the development of a 133,000 rentable square foot office building in Dusseldorf, Germany which is 34% leased to IBM. Cousins' venture partners are IBM and Multi Development Corporation International B.V. ("Multi"), a Dutch real estate development company. In December 1993, the building was presold to an affiliate of Deutsche Bank. CREC and Multi jointly developed the building. Due to the release of certain completion guarantees related to the building, approximately $2.6 million of development income was recognized in September 1995 ($931,000 of which had been deferred as of December 31, 1994). Kennesaw Crossings. The Company owns Kennesaw Crossings, a 116,000 square foot shopping center in suburban Atlanta, Georgia. The center was constructed in 1974 on 14 acres of land leased from an unrelated party through 2068. The Company's net carrying value in Kennesaw Crossings as of December 31, 1995 was $1.1 million. Air Rights Near the CNN Center. The Company owns a leasehold interest in the air rights over the approximately 365,000 square foot CNN Center parking facility in Atlanta, Georgia, adjoining the world headquarters of Turner Broadcasting System, Inc. and Cable News Network. The air rights are developable for additional parking or office use. The Company's net carrying value of this property is $0. Supplemental Financial and Leasing Information - ---------------------------------------------- Depreciation and amortization expense include the following components for the years ended December 31, 1994 and 1995 ($ in thousands):
1994 1995 Share of Share of Unconsolidated Unconsolidated Consolidated Joint Ventures Total Consolidated Joint Ventures Total ------------ -------------- ----- ------------ -------------- ----- Furniture, fixtures and equipment $ 444 $ 202 $ 646 $ 389 $ 122 $ 511 Deferred financing costs 119 80 199 -- 80 80 Goodwill and related business acquisition costs 441 37 478 229 28 257 Real estate related: Building (including tenant first generation) 2,598 7,724 10,322 3,754 8,082 11,836 Tenant second generation 140 509 649 144 655 799 ------ ------- ------- ------ ------- --- $ 3,742 $ 8,552 $12,294 $4,516 $ 8,967 $13,483 ======= ======= ======= ====== ======= =======
Exclusive of new developments and purchases of furniture, fixtures and equipment, the Company had the following capital expenditures for the years ended December 31, 1994 and 1995, including its share of unconsolidated joint ventures ($ in thousands):
1994 1995 Office Retail Total Office Retail Total ------ ------ ----- ------ ------ ----- Second generation related costs $ 381 $ 272 $ 653 $1,316 $ -- $1,316 Building improvements 62 -- 62 28 23 51 ----- ----- ----- ------ ----- -- Total $ 443 $ 272 $ 715 $1,344 $ 23 $1,367 ===== ===== ===== ====== ===== ======
Item 3. Legal Proceedings - -------------------------- No material legal proceedings are presently pending by or against the Company. Item 4. Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ No matter was submitted to a vote of security holders during the fourth quarter of the Registran's fiscal year ended December 31, 1995. Item X. Executive Officers of the Registrant - --------------------------------------------- The Executive Officers of the Registrant as of the date hereof are as follows:
Name Age Office Held ---- --- ----------- Thomas G. Cousins 64 Chairman of the Board of Directors and Chief Executive Officer Daniel M. DuPree 49 President and Chief Operating Officer George J. Berry 58 Senior Vice President Tom G. Charlesworth 46 Senior Vice President, Secretary, and General Counsel Craig B. Jones 45 Senior Vice President Joel T. Murphy 37 Senior Vice President and President of the Retail Division (Cousins MarketCenters, Inc.) John L. Murphy 50 Senior Vice President - Marketing W. James Overton 49 Senior Vice President - Development Peter A. Tartikoff 54 Senior Vice President and Chief Financial
Officer Relationships: - -------------- There are no family relationships among the Executive Officers or Directors. Term of Office: - --------------- The term of office for all officers expires at the annual directors' meeting, but the Board has the power to remove any officer at any time. Business Experience: - -------------------- Mr. Cousins has been the Chief Executive Officer of the Company since its inception. Mr. DuPree joined the Company in October 1992, became Senior Vice President in April 1993, Senior Executive Vice President in April 1995 and President and Chief Operating Officer in November 1995. Prior to that he was President of New Market Companies, Inc. and affiliates since 1984. Mr. Berry has been Senior Vice President since joining the Company in September 1990. Prior to that he was Commissioner of the State of Georgia's Department of Industry, Trade and Tourism from 1983 to 1990. Mr. Charlesworth joined the Company in October 1992 and became Senior Vice President, Secretary, and General Counsel in November 1992. Prior to that he worked for certain affiliates of Thomas G. Cousins as Chief Financial Officer and Legal Counsel. Mr. Jones joined the Company in October 1992 and became Senior Vice President in November 1995. From 1987 until joining the Company, he was Executive Vice President of New Market Companies, Inc. and affiliates. Mr. Joel Murphy joined the Company in October 1992 and became Senior Vice President of the Company and President of the Retail Division in November 1995. From 1988 until joining the Company, he was Senior Vice President of New Market Companies, Inc. and affiliates. Mr. John Murphy has been Senior Vice President since joining the Company in December 1987. Mr. Overton has been Senior Vice President since joining the Company in September 1989. Prior to that he was employed by Hardin Construction Group, Inc. from 1972 to 1989, where he served as President from 1985 to 1989. Mr. Tartikoff has been Senior Vice President and Chief Financial Officer of the Company since February 1986. PART II ------- Item 5. Market for Registrant's Common Stock and Related Security Holder Matters - -------------------------------------------------------------------------------- The information concerning the market prices for the Registrant's common stock and related stockholder matters appearing under the caption "Market and Dividend Information" on page 42 of the Registrant's 1995 Annual Report to Stockholders is incorporated herein by reference. Item 6. Selected Financial Data - ------------------------------- The information appearing under the caption "Five Year Summary of Selected Financial Data" on page 36 of the Registrant's 1995 Annual Report to Stockholders is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results - ------------------------------------------------------------------------------- of Operations ------------- Management's Discussion and Analysis of Financial Condition and Results of Operations which appears on pages 37 through 41 of the Registrant's 1995 Annual Report to Stockholders is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data - --------------------------------------------------- The Consolidated Financial Statements and Notes to Consolidated Financial Statements of the Registrant and Report of Independent Public Accountants which appear on pages 19 through 36 of the Registrant's 1995 Annual Report to Stockholders are incorporated herein by reference. The information appearing under the caption "Selected Quarterly Financial Information (Unaudited)" on page 43 of the Registrant's 1995 Annual Report to Stockholders is incorporated herein by reference. Other financial statements and financial statement schedules required under Regulation S-X are filed pursuant to Item 14 of Part IV of this report. Item 9. Changes in and Disagreements with Accountants on Accounting and - ------------------------------------------------------------------------- Financial Disclosure -------------------- Not applicable. PART III -------- Item 10. Directors and Executive Officers of the Registrant - ----------------------------------------------------------- The information concerning the Directors and Executive Officers of the Registrant that is required by this Item 10, except that which is presented in Item X in Part I above, is included under the caption "Directors and Executive Officers of the Company" on pages 2 through 4 of the Proxy Statement dated March 29, 1996 relating to the 1996 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. Item 11. Executive Compensation - ------------------------------- The information appearing under the caption "Executive Compensation" on pages 7 through 10 of the Proxy Statement dated March 29, 1996 relating to the 1996 Annual Meeting of the Registrant's Stockholders is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management - ----------------------------------------------------------------------- The information concerning security ownership of certain beneficial owners and management required by this Item 12 is included under the captions "Directors and Executive Officers of the Company" on pages 2 through 6 and "Principal Stockholders" on pages 27 and 28 of the Proxy Statement dated March 29, 1996 relating to the 1996 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions - ------------------------------------------------------- The information concerning certain transactions required by this Item 13 is included under the caption "Certain Transactions" on pages 14 and 15 of the Proxy Statement dated March 29, 1996 relating to the 1996 Annual Meeting of the Registrant's Stockholders, and is incorporated herein by reference. PART IV ------- Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K - -------------------------------------------------------------------------- (a) 1. Financial Statements -------------------------- A. The following Consolidated Financial Statements of the Registrant, together with the applicable Report of Independent Public Accountants, are contained on pages 19 through 36 of the Registrant's 1995 Annual Report to Stockholders and are incorporated herein by reference: Page Number in Annual Report ---------------- Consolidated Balance Sheets - December 31, 1994 and 1995 19 Consolidated Statements of Income for the Years Ended December 31, 1993, 1994 and 1995 20 Consolidated Statements of Stockholders' Investment for the Years Ended December 31, 1993, 1994 and 1995 21 Consolidated Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and 1995 22 Notes to Consolidated Financial Statements December 31, 1993, 1994 and 1995 23 Report of Independent Public Accountants 36 B. The following Combined Financial Statements, together with the applicable Report of Independent Public Accountants, of Wildwood Associates and Green Valley Associates II, joint ventures of the Registrant meeting the criteria for significant subsidiaries under the rules and regulations of the Securities and Exchange Commission, are filed as a part of this report. Page Number in Form l0-K ------------ Report of Independent Public Accountants F-1 Combined Balance Sheets - December 31, 1994 and 1995 F-2 Combined Statements of Income for the Years Ended December 31, 1993, 1994 and 1995 F-3 Combined Statements of Partners' Capital for the Years Ended December 31, 1993, 1994 and 1995 F-4 Combined Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and 1995 F-5 Notes to Combined Financial Statements December 31, 1993, 1994 and 1995 F-6 through F-12 Item 14. Continued - --------------------- C. The following Financial Statements, together with the applicable Report of Independent Auditors, of CSC Associates, L.P., a joint venture of the Registrant meeting the criteria for a significant subsidiary under the rules and regulations of the Securities and Exchange Commission, are filed as a part of this report. Page Number in Form l0-K ------------ Report of Independent Auditors G-1 Balance Sheets - December 31, 1994 and 1995 G-2 Statements of Operations for the Years Ended December 31, 1993, 1994 and 1995 G-3 Statements of Partners' Capital for the Years Ended December 31, 1993, 1994 and 1995 G-4 Statements of Cash Flows for the Years Ended December 31, 1993, 1994 and 1995 G-5 Notes to Financial Statements G-6 through December 31, 1993, 1994 and 1995 G-9 D. The following Financial Statements, together with the applicable Report of Independent Auditors, of Haywood Mall Associates, a joint venture of the Registrant meeting the criteria for a significant subsidiary under the rules and regulations of the Securities and Exchange Commission, are filed as part of this report. Page Number in Form l0-K ------------ Report of Independent Auditors H-1 Balance Sheets - December 31, 1995 and 1994 H-2 Statements of Income for the Years Ended December 31, 1995, 1994 and 1993 H-3 Statements of Cash Flows for the Years Ended December 31, 1995, 1994 and 1993 H-4 Statements of Venturers' Equity for the Three Years Ended December 31, 1995 H-5 Notes to Financial Statements H-6 through December 31, 1995, 1994 and 1993 H-7 2. Financial Statement Schedules ----------------------------------- The following financial statement schedules, together with the applicable report of independent public accountants are filed as a part of this report. Page Number in Form l0-K ------------ A. Cousins Properties Incorporated and Consolidated Entities: Report of Independent Public Accountants on Schedules S-1 Schedule III- Real Estate and Accumulated Depreciation - December 31, 1995 S-2 through S-6 B. Wildwood Associates and Green Valley Associates II Schedule III - Real Estate and Accumulated Depreciation - December 31, 1995 F-13 C. CSC Associates, L.P. Schedule III- Real Estate and Accumulated Depreciation - December 31, 1995 G-10 D. Haywood Mall Associates Schedule III- Real Estate and Accumulated Depreciation - December 31, 1995 H-8 NOTE:Other schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the financial statements or notes thereto. Item 14. Continued - --------------------- 3. Exhibits ----------- 3(a)(i) Articles of Incorporation of Registrant, as restated as of April 29, 1993, filed as Exhibit 4(a) to the Registrant's Form S-3 dated September 28, 1993, and incorporated herein by reference. 3(b) By-laws of Registrant, as amended and restated as of November 30, 1989, as further amended by Stockholders on April 30, 1990, and as further amended by the Stockholders on April 29, 1993, filed as Exhibit 4(b) to the Registrant's Form S-3 dated September 28, 1993, and incorporated herein by reference. 4(a) Dividend Reinvestment Plan as restated as of March 27, 1995, filed in the Registrant's Form S-3 dated March 27, 1995, and incorporated herein by reference. 10(a)(i) Cousins Properties Incorporated 1989 Stock Option Plan, as amended on April 26, 1994, filed as Exhibit 99.1 to the Registrant's Form S-8 dated December 8, 1994, and incorporated herein by reference. 10(a)(ii) Cousins Real Estate Corporation Stock Appreciation Right Plan, amended and restated as of March 15, 1993, filed as Exhibit 10(a)(ii) to the Registrant's Form 10-K for the year ended December 31, 1992, and incorporated herein by reference. 10(a)(iii)Cousins Properties Incorporated Stock Appreciation Right Plan, dated as of March 15, 1993, filed as Exhibit 10(a)(iii) to the Registrant's Form 10-K for the year ended December 31, 1992, and incorporated herein by reference. 10(b)(i) Cousins Properties Incorporated Profit Sharing Plan as amended and restated effective as of January 1, 1996. 10(b)(ii) Cousins Properties Incorporated Profit Sharing Trust Agreement as effective as of January 1, 1991, filed as Exhibit 10(b)(ii) to the Registrant's Form 10-K for the year ended December 31, 1991, and incorporated herein by reference. 10(c) Land lease (Kennesaw) dated December 17, 1969, and an amendment thereto dated December 15, 1977, filed as Exhibit l0(d) to the Registrant's Form 10-K for the year ended December 31, 1980, and incorporated herein by reference. 10(d) Cousins Properties Incorporated Stock Plan for Outside Directors, filed as Exhibit A to the Registrant's Proxy Statement dated March 28, 1995 relating to the 1995 Annual Meeting of Registrant's Stockholders, and incorporated herein by reference. Item 14. Continued - --------------------- 11 Schedule showing computations of weighted average number of shares of common stock outstanding as used to compute primary and fully diluted income per share for each of the five years ended December 31, 1995. 13 Annual Report to Stockholders for the year ended December 31, 1995. 21 Subsidiaries of the Registrant. 23(a) Consent of Independent Public Accountants (Arthur Andersen LLP). 23(b) Consent of Independent Auditors (Ernst & Young LLP). 27 Financial Data Schedule. (b) Reports on Form 8-K. -------------------------- No reports on Form 8-K were filed during the fourth quarter of the year ended December 31, 1995. SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Cousins Properties Incorporated (Registrant) Dated: March 27, 1996 BY: /s/ Peter A. Tartikoff ----------------------------- Peter A. Tartikoff Senior Vice President and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. Signature Capacity Date - --------- -------- ---- Principal Executive Officer: Chairman of the Board, March 27, 1996 Chief Executive Officer /s/ T. G. Cousins and Director - ---------------------------- T. G. Cousins Principal Financial and Accounting Officer: Senior Vice President and March 27, 1996 /s/ Peter A. Tartikoff Chief Financial Officer - ---------------------------- Peter A. Tartikoff Additional Directors: /s/ Richard W. Courts, II Director March 27, 1996 - ---------------------------- Richard W. Courts, II /s/ Boone A. Knox Director March 27, 1996 - ---------------------------- Boone A. Knox /s/ Richard E. Salomon Director March 27, 1996 - ---------------------------- Richard E. Salomon REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULE ---------------------------------------------------- To the Stockholders of Cousins Properties Incorporated: We have audited in accordance with generally accepted auditing standards, the financial statements included in the Cousins Properties Incorporated annual report to stockholders incorporated by reference in this Form l0-K, and have issued our report thereon dated February 20, 1996. Our audit was made for the purpose of forming an opinion on those statements taken as a whole. The schedule listed in Item 14, Part (a)2.A. is the responsibility of the Company's management and is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Atlanta, Georgia February 20, 1996
SCHEDULE III (Page 1 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 1995 ---------- -------------- ----------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b) - ----------- ------------ ---- ------------ ----- --------- ------------ ------------ ------- LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT - ---------------------------------------------- Wildwood - Cobb Co., GA $ -- $ 11,156 $ -- $ 4,737 $ (8,888) $ 7,005 $ -- $ 7,005 North Fulton Property - Fulton Co., GA -- 10,294 -- 12,213 (16,229) 6,278 -- 6,278 Midtown - Atlanta, GA 145 2,949 -- 56 (1,029) 1,976 -- 1,976 McMurray - Cobb Co., GA. -- 1,015 -- 172 (1,092) 95 -- 95 Presidential MarketCenter Outparcels - Gwinnett Co., GA -- 2,939 -- 623 (1,786) 1,776 -- 1,776 Lawrenceville - Gwinnett Co., GA -- 5,543 -- 129 (1,560) 4,112 -- 4,112 Colonial Plaza MarketCenter Orange Co., FL -- 1,649 -- -- 105 1,754 -- 1,754 Greenbrier MarketCenter Outparcels Chesapeake, VA -- 3,191 -- -- 153 3,344 -- 3,344 Lovejoy Station Clayton Co., GA -- 575 -- -- -- 575 -- 575 Miscellaneous Investments - Atlanta, GA -- 120 -- -- -- 120 -- 120 --------------------------------------------------------------------------------------------- 145 39,431 -- 17,930 (30,326) 27,035 -- 27,035 ---------------------------------------------------------------------------------------------
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 1995 lated Date of Income Deprecia- Construc- Date Statement tion (a) tion Acquired Is Computed --------- --------- -------- ----------- LAND HELD FOR INVESTMENT OR FUTURE DEVELOPMENT - ---------------------------------------------- Wildwood - Cobb Co., GA $ -- -- 1971-1982,1989 $-- North Fulton Property - Fulton Co., GA -- -- 1970-1985 -- Midtown - Atlanta, GA -- -- 1984 -- McMurray - Cobb Co., GA. -- -- 1981 -- Presidential MarketCenter Outparcels - Gwinnett Co., GA -- -- 1993 -- Lawrenceville - Gwinnett Co., GA -- -- 1994 -- Colonial Plaza MarketCenter Orange Co., FL -- -- 1995 -- Greenbrier MarketCenter Outparcels Chesapeake, VA -- -- 1995 -- Lovejoy Station Clayton Co., GA -- -- 1995 -- Miscellaneous Investments - Atlanta, GA -- -- 1972-1984 -- ------- -- -------
SCHEDULE III (Page 2 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 1995 ---------- -------------- ----------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b) - ----------- ------------ ---- ------------ ----- --------- ------------ ------------ ------- OPERATING PROPERTIES - -------------------- First Union Tower - Greensboro, N.C. $ -- $ 1,394 $ -- $ 29,287 $ 1,971 $ 1,399 $31,253 $ 32,652 Wildwood - 3301 Windy Ridge - Cobb Co., GA -- 20 -- 8,829 1,519 1,237 9,131 10,368 Kennesaw - Cobb Co., GA -- -- -- 2,337 -- -- 2,337 2,337 Perimeter Expo - Fulton Co., GA -- 8,564 -- 11,072 71 8,564 11,143 19,707 GA Highway 400 Stand Alone Retail Sites - Fulton Co., GA -- 4,559 -- 162 -- 4,721 -- 4,721 North Point MarketCenter Phase I Fulton Co., GA -- 7,932 -- 16,161 394 7,932 16,555 24,487 North Point MarketCenter Phase II Fulton Co., GA -- 568 -- 2,623 112 568 2,735 3,303 Presidential MarketCenter Phase I Gwinnett Co., GA -- 1,786 -- 8,037 222 1,786 8,259 10,045 Norfolk Parking Agreement -- 1,589 -- -- -- 1,589 -- 1,589 Miscellaneous -- 398 145 77 (475) -- 145 145 --------------------------------------------------------------------------------------------- -- 26,810 145 78,585 3,814 27,796 81,558 109,354 ---------------------------------------------------------------------------------------------
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 1995 lated Date of Income Deprecia- Construc- Date Statement tion (a) tion Acquired Is Computed --------- --------- -------- ----------- OPERATING PROPERTIES - -------------------- First Union Tower - Greensboro, N.C. $8,347 1988-1990 1987 40 Years Wildwood - 3301 Windy Ridge - Cobb Co., GA 3,189 1984 1984 30 Years Kennesaw - Cobb Co., GA 1,247 1974 1973 30 Years Perimeter Expo - Fulton Co., GA 869 1993 1993 30 Years GA Highway 400 Stand Alone Retail Sites - Fulton Co., GA 27 -- 1970-1985 -- North Point MarketCenter Phase I Fulton Co., GA 1,241 1993-1994 1970-1985 30 Years North Point MarketCenter Phase II Fulton Co., GA 39 1994 1970-1985 30 Years Presidential MarketCenter Phase I Gwinnett Co., GA 423 1993-1994 1993 30 Years Norfolk Parking Agreement -- -- 1994 -- Miscellaneous 101 -- 1977-1984 Various ------- 15,483 -------
SCHEDULE III (Page 3 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 1995 ---------- -------------- ----------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b) - ----------- ------------ ---- ------------ ----- --------- ------------ ------------ ------- PROJECTS UNDER CONSTRUCTION - --------------------------- Mansell Crossing Phase II Fulton Co., GA $ -- $ 3,272 $ -- $ 2,371 $ 266 $ 3,272 $ 2,637 $ 5,909 Lawrenceville MarketCenter Gwinnett Co., GA -- 3,510 -- 12,550 507 3,960 12,607 16,567 100 North Point Center Fulton Co., GA -- 441 -- 9,109 229 441 9,338 9,779 200 North Point Center Fulton County, GA -- 441 -- 322 5 441 327 768 Colonial Plaza MarketCenter Orange Co., FL -- 8,500 -- 17,025 992 8,500 18,017 26,517 Greenbrier MarketCenter Chesapeake, VA -- 5,500 -- 9,767 407 5,500 10,174 15,674 Presidential MarketCenter-Phase II Gwinnett Co., GA -- 2,170 -- 1,447 205 2,400 1,422 3,822 Lovejoy Station - Clayton Co., GA -- 1,387 -- 4,433 300 811 5,309 6,120 Rivermont Station Fulton Co., GA -- 2,050 -- 292 5 2,050 297 2,347 --------------------------------------------------------------------------------------------- -- 27,271 -- 57,316 2,916 27,375 60,128 87,503 ---------------------------------------------------------------------------------------------
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 1995 lated Date of Income Deprecia- Construc- Date Statement tion (a) tion Acquired Is Computed --------- --------- -------- ----------- PROJECTS UNDER CONSTRUCTION - --------------------------- Mansell Crossing Phase II Fulton Co., GA $ -- 1995 1995 -- Lawrenceville MarketCenter Gwinnett Co., GA -- 1994 1994 -- 100 North Point Center Fulton Co., GA -- 1994 1994 -- 200 North Point Center Fulton County, GA -- 1995 1995 -- Colonial Plaza MarketCenter Orange Co., FL -- 1995 1995 -- Greenbrier MarketCenter Chesapeake, VA -- 1995 1995 -- Presidential MarketCenter-Phase II Gwinnett Co., GA -- 1995 1995 -- Lovejoy Station - Clayton Co., GA -- 1994 1994 -- Rivermont Station Fulton Co., GA -- 1995 1995 -- ------- -- -------
SCHEDULE III (Page 4 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 1995 ---------- -------------- ----------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b) - ----------- ------------ ---- ------------ ----- --------- ------------ ------------ ------- RESIDENTIAL LOTS UNDER DEVELOPMENT - ---------------------------------- Brown's Farm - Cobb Co., GA $ -- $ 1,473 $ -- $ 3,649 $ (2,908) $ 2,214 $ -- $ 2,214 Apalachee River Club Gwinnett Co., GA -- 1,820 -- 3,008 (1,220) 3,608 -- 3,608 Echo Mill Cobb Co., GA 454 1,318 -- 3,456 (2,513) 2,261 -- 2,261 Barrett Downs Forsyth Co., GA -- 900 -- 2,031 (82) 2,849 -- 2,849 Bradshaw Farms Cherokee Co., GA -- 1,741 -- 3,098 (4,319) 520 -- 520 --------------------------------------------------------------------------------------------- 454 7,252 -- 15,242 (11,042) 11,452 -- 11,452 --------------------------------------------------------------------------------------------- $ 599 $ 100,764 $ 145 $169,073 $(34,638) $ 93,658 $141,686 $235,344 =============================================================================================
Column F Column G Column H Column I -------- -------- -------- -------- Life on Which De- preciation Accumu- In 1995 lated Date of Income Deprecia- Construc- Date Statement tion (a) tion Acquired Is Computed --------- --------- -------- ----------- RESIDENTIAL LOTS UNDER DEVELOPMENT - ---------------------------------- Brown's Farm - Cobb Co., GA $ -- 1993-1994 1993-1994 -- Apalachee River Club Gwinnett Co., GA -- 1994 1994 -- Echo Mill Cobb Co., GA -- 1994 1994 -- Barrett Downs Forsyth Co., GA -- 1994 1994 -- Bradshaw Farms Cherokee Co., GA -- 1994 1994 -- ------- -- ------- $15,483 =======
SCHEDULE III (Page 5 of 5) COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995 ($ in thousands) NOTES: (a) Reconciliations of total real estate carrying value and accumulated depreciation for the three years ended December 31, 1995 are as follows: Real Estate Accumulated Depreciation ---------------------------- ------------------------- 1993 1994 1995 1993 1994 1995 ---- ---- ---- ---- ---- ---- Balance at beginning of period $ 71,994 $108,252 $149,242 $7,448 $ 9,418 $12,112 Additions during the period: Improvements and other capitalized costs 37,851 53,580 101,544 -- -- -- Provision for depreciation -- -- -- 1,970 2,694 3,371 ---------------------------- ------------------------ 37,85 53,580 101,544 1,970 2,694 3,371 ---------------------------- ------------------------ Deductions during the period: Cost of real estate sold (1,593) (12,590) (15,442) -- -- -- ---------------------------- ------------------------- (1,593) (12,590) (15,442) -- -- -- ---------------------------- ------------------------- Balance at close of period $108,252 $149,242 $235,344 $9,418 $12,112 $ 15,483 ============================ =========================
(b) Initial cost for Kennesaw was previously adjusted to reflect a write-down of $1,430 to state the property at the then realizable value. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Partners of Wildwood Associates and Green Valley Associates II: We have audited the accompanying combined balance sheets of WILDWOOD ASSOCIATES (a Georgia general partnership) and GREEN VALLEY ASSOCIATES II (a North Carolina general partnership) as of December 31, 1994 and 1995, and the related combined statements of income, partners' capital and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the management of the partnerships. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Wildwood Associates and Green Valley Associates II as of December 31, 1994 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The schedule listed in Item 14 is presented for purposes of complying with the Securities and Exchange Commission's rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole. ARTHUR ANDERSEN LLP Atlanta, Georgia February 20, 1996
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II -------------------------------------------------- COMBINED BALANCE SHEETS ----------------------- DECEMBER 31, 1994 AND 1995 -------------------------- ($ in thousands) 1994 1995 ---- ---- ASSETS - ------ REAL ESTATE ASSETS: Income producing properties, including land of $37,677 in 1994 and 1995 (Note 7) ................. $217,869 $217,748 Accumulated depreciation and amortization ........... (40,009) (44,900) ------------------ 177,860 172,848 Land committed to be contributed (Note 3) ........... 20,440 13,903 Land and property predevelopment costs .............. 12,429 27,777 ------------------ Total real estate assets ..................... 210,729 214,528 ------------------ CASH AND CASH EQUIVALENTS ............................... 4 -- ------------------ OTHER ASSETS: Deferred expenses, net of accumulated amortization of $6,065 and $6,078 in 1994 and 1995, respectively .. 4,892 5,641 Receivables (Note 6) ................................ 14,506 14,920 Allowance for possible losses (Note 1) .............. (2,616) (2,550) Furniture, fixtures and equipment, net of accumulated depreciation of $1,198 and $1,276 in 1994 and 1995, respectively ...................................... 358 296 Other ............................................... 2 31 ------------------ 17,142 18,338 ------------------ $227,875 $232,866 ================== LIABILITIES AND PARTNERS' CAPITAL - --------------------------------- NOTES PAYABLE (Note 7) .................................. $132,608 $134,855 RETAINAGE, ACCOUNTS PAYABLE AND ACCRUED LIABILITIES ................................. 2,983 7,843 ------------------ Total liabilities ............................ 135,591 142,698 ------------------ PARTNERS' CAPITAL (Notes 3 and 4): International Business Machines Corporation ......... 46,142 45,084 Cousins Properties Incorporated ..................... 46,142 45,084 ------------------ Total partners' capital ...................... 92,284 90,168 ------------------ $227,875 $232,866 ==================
The accompanying notes are an integral part of these combined balance sheets. WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II --------------------------------------------------- COMBINED STATEMENTS OF INCOME ----------------------------- FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 ---------------------------------------------------- ($ in thousands)
1993 1994 1995 ---- ---- ---- REVENUES: Rental income and recovery of expenses charged directly to specific tenants ..... $36,104 $36,196 $37,589 Interest ..................................... 24 27 32 Other ........................................ 96 82 146 --------------------------- Total revenues .................... 36,224 36,305 37,767 --------------------------- OPERATING EXPENSES: Real estate taxes ............................ 2,785 2,516 3,032 Maintenance and repairs ...................... 2,142 1,991 2,207 Utilities .................................... 1,737 1,822 1,965 Management and personnel costs ............... 1,805 1,794 1,892 Contract security ............................ 761 745 820 Grounds maintenance .......................... 632 588 646 Expenses charged directly to specific tenants 852 458 395 Insurance .................................... 99 100 98 --------------------------- Total operating expenses .............. 10,813 10,014 11,055 --------------------------- OTHER EXPENSES: Interest expense ............................. 11,606 11,790 11,478 Depreciation and amortization ................ 8,336 8,648 8,353 Predevelopment, marketing and other expenses . 489 342 345 Ground lease expense (Note 8) ................ 322 322 322 Real estate taxes on undeveloped land (Note 4) 190 182 163 General and administrative expenses .......... 146 163 167 --------------------------- Total other expenses .................. 21,089 21,447 20,828 --------------------------- Total expenses ........................ 31,902 31,461 31,883 --------------------------- NET INCOME ....................................... $ 4,322 $ 4,844 $ 5,884 ===========================
The accompanying notes are an integral part of these combined statements.
WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II -------------------------------------------------- COMBINED STATEMENTS OF PARTNERS' CAPITAL ---------------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 ---------------------------------------------------- ($ in thousands) International Business Cousins Machines Properties Corporation Incorporated Total ----------- ------------ ----- BALANCE, December 31, 1992 $49,559 $49,559 $99,118 Distributions ........ (4,000) (4,000) (8,000) Net income ........... 2,161 2,161 4,322 ----------------------------------- BALANCE, December 31, 1993 47,720 47,720 95,440 Distributions ........ (4,000) (4,000) (8,000) Net income ........... 2,422 2,422 4,844 ----------------------------------- BALANCE, December 31, 1994 46,142 46,142 92,284 Distributions ........ (4,000) (4,000) (8,000) Net income ........... 2,942 2,942 5,884 ----------------------------------- BALANCE, December 31, 1995 $45,084 $45,084 $90,168 ===================================
The accompanying notes are an integral part of these combined statements. WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II -------------------------------------------------- COMBINED STATEMENTS OF CASH FLOWS (Note 9) ------------------------------------------ FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 ---------------------------------------------------- ($ in thousands)
1993 1994 1995 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income ...................................... $ 4,322 $ 4,844 $ 5,884 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ............ 8,336 8,648 8,353 Rental revenue recognized on straight-line basis in excess of rental revenue specified in the lease agreements .... (570) (349) (383) Change in tenant rental receivables ...... (106) 51 (38) Change in accounts payable and accrued liabilities related to operations .... 24 (195) (1,004) -------------------------- Net cash provided by operating activities ........... 12,006 12,999 12,812 -------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Property acquisition and development expenditures (3,581) (3,008) (4,940) Payment for deferred expenses; furniture, fixtures and equipment; and other assets ............. (1,617) (661) (2,123) -------------------------- Net cash used in investing activities ............... (5,198) (3,669) (7,063) -------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of notes payable ...................... (413) (630) (1,063) Repayment of long term financing ................ -- -- (111,998) Proceeds from long term refinancing ............. -- -- 98,000 Proceeds from line of credit .................... 11,500 12,600 31,212 Repayments under line of credit ................. 10,40 (13,300) (13,904) Partnership distributions ....................... 8,000) (8,000) (8,000) -------------------------- Net cash used in financing activities ............... (7,313) (9,330) (5,753) -------------------------- NET DECREASE IN CASH AND CASH EQUIVALENTS ................................ (505) -- (4) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR ......................................... 509 4 4 -------------------------- CASH AND CASH EQUIVALENTS AT END OF YEAR ............ $ 4 $ 4 $ -- =========================
The accompanying notes are an integral part of these combined statements. WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II -------------------------------------------------- NOTES TO COMBINED FINANCIAL STATEMENTS -------------------------------------- DECEMBER 31, 1993, 1994 AND 1995 -------------------------------- 1. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation: The Combined Financial Statements include the accounts of Wildwood Associates ("WWA") and Green Valley Associates II ("GVA II"), both of which are general partnerships. Cousins Properties Incorporated (together with its other consolidated entities hereinafter referred to as "Cousins") and International Business Machines Corporation ("IBM") each have a 50% general partnership interest in both partnerships. The financial statements of the partnerships have been combined because of the common ownership. The combined entities are hereinafter referred to as the "Partnerships." All transactions between WWA and GVA II have been eliminated in the Combined Financial Statements. Cost of Property Contributed by Cousins: The cost of property contributed or committed to be contributed by Cousins was recorded by WWA based upon the procedure described in Note 3. Such cost was, in the opinion of the partners, at or below estimated fair market value at the time of such contribution or commitment, but was in excess of Cousins' historical cost basis. Cost Capitalization: All costs related to planning, development and construction of buildings, and expenses of buildings prior to the date they become operational for financial statement purposes, are capitalized. Interest and real estate taxes are also capitalized to property under development. Depreciation and Amortization: Buildings are depreciated over 25 to 40 years. Furniture, fixtures, and equipment are depreciated over 5 years. Leasehold improvements and tenant improvements are amortized over the life of the leases or useful life of the assets, whichever is shorter. Deferred expenses - which include organizational costs, certain marketing and leasing costs, and loan acquisition costs - are amortized over the period of estimated benefit. The straight-line method is used for all depreciation and amortization. Allowance for Possible Losses: The allowance for possible losses provides for potential writeoffs of certain tenant related and other assets on WWA's books. The allowance reflects management's evaluation of the exposure to WWA based on a specific review of its properties and the impact of current economic conditions on those properties. Allocation of Operating Expenses: In accordance with certain lease agreements, certain management and maintenance costs incurred by WWA are allocated to individual buildings or tenants, including buildings not owned by WWA. Income Taxes: No provision has been made for federal or state income taxes because each partner's proportionate share of income or loss from the Partnerships is passed through to be included on each partner's separate tax return. Cash and Cash Equivalents: Cash and Cash Equivalents includes all cash and highly liquid money market instruments. Highly liquid money market instruments include securities and repurchase agreements with original maturities of three months or less, money market mutual funds, and securities on which the interest rate is adjusted to market rate at least every three months. Rental Income: In accordance with Statement of Financial Accounting Standards ("SFAS") No. 13, income on leases which include scheduled increases in rental rates over the lease term is recognized on a straight-line basis. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Impairment of Long-Lived Assets: The Partnerships have adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. SFAS No. 121 also addresses the accounting for long-lived assets that are expected to be disposed of. The adoption of SFAS No. 121 had no effect on the financial results of the Partnerships. 2. FORMATION AND PURPOSE OF THE PARTNERSHIPS WWA and GVA II were formed under the terms of partnership agreements effective May 30, 1985 and March 31, 1988, respectively. The purpose of the Partnerships is, among other things, to develop and operate the Summit Green project located in Greensboro, North Carolina, and selected property within Wildwood Office Park ("Wildwood"), located in Atlanta, Georgia. Summit Green is a project consisting of one office building and a parts distribution center totaling approximately 144,000 gross square feet ("GSF") which was completed in 1986, and land for two additional office buildings not yet constructed. The two additional buildings are planned to total approximately 240,000 GSF. The 21 acres in the project are leased from a third party by WWA (see Note 8). GVA II subleases the undeveloped portion of this land from WWA. Wildwood is an office park containing a total of approximately 289 acres, of which approximately 85 acres are owned by WWA, and an estimated 22 acres are committed to be contributed to WWA by Cousins (see Note 3). Cousins owns the balance of the developable acreage in the park. At December 31, 1995, WWA's income producing real estate assets in Wildwood consisted of: one office building of 338,000 GSF which became operational January 1, 1986, one office building of 684,000 GSF which became operational December 1, 1987 and one office building of 757,000 GSF which became operational April 1, 1991, two office buildings totaling 482,000 GSF which are under construction (including land under such buildings totaling approximately 48 acres); land parcels totaling approximately 15 acres leased to two banking facilities and five restaurants; a 2 acre site on which a child care facility is constructed, and a 1 acre retail site currently being marketed to prospective users. In addition, WWA's assets include 42 acres of land held for future development, which is composed of a 4 acre site with approximately 58,000 square feet of office space which was purchased in 1986 for future development (classified with income producing properties in the accompanying financial statements), and 38 acres of other land to be developed (including additional land committed to be contributed by Cousins) (see Note 3). 3. CONTRIBUTIONS TO THE PARTNERSHIPS IBM and Cousins have each contributed or committed to contribute $62,857,000 in cash or properties to the Partnerships. The value of property contributed was agreed to by the partners at the time of formation of WWA. The status of contributions at December 31, 1995, was as follows ($ in thousands): IBM COUSINS TOTAL --- ------- ----- Cash contributed $46,590 $ 84 $ 46,674 Property contributed 16,267 49,354 65,621 Land committed to be contributed -- 13,419 13,419 ---------------------------------- Total $62,857 $62,857 $125,714 ================================== WWA has elected not to take title to the remaining land committed to be contributed by Cousins until such land is needed for development. However, Cousins' capital account was previously credited with the amount originally required to bring it equal to IBM's, and a like amount, plus preacquisition costs paid by WWA, and condemnation proceeds net of condemnation restoration costs, were set up as an asset entitled "Land Committed To Be Contributed." This asset account subsequently has been reduced as land actually has been contributed, or as land yet to be contributed became associated with a particular building. At December 31, 1995, Cousins was committed to contribute land on which an additional 991,462 GSF are developable, provided that regardless of planned use or density, 38,333 GSF shall be the minimum GSF attributed to each developable acre contributed. Cousins has also agreed to contribute infrastructure land in Wildwood, as defined, at no cost to WWA, in order to provide the necessary land for development of roads and utilities. The ultimate acreage remaining to be contributed by Cousins will depend upon the actual density achieved, but would be approximately 22 acres if the density were similar to that achieved on land contributed to date. 4. OTHER PROVISIONS OF THE PARTNERSHIP AGREEMENTS Net income or loss and net cash flow, as defined, shall be allocated to the partners based on their percentage interests (50% each, subject to adjustment as provided in the partnership agreements). In the event of dissolution of the Partnerships, the assets will be distributed as follows: First, to repay all debts to third parties, including any secured loans with the partners. Second, to each partner until each capital account is reduced to zero. The balance to each partner in accordance with its percentage interest. WWA pays all real estate taxes on property owned by Cousins which is subject to future contribution. Such real estate taxes were $190,000, $182,000 and $163,000 in 1993, 1994 and 1995, respectively, all of which were expensed. 5. FEES TO RELATED PARTIES The Partnerships engaged Cousins to manage, develop and lease the Partnerships' property. Fees to Cousins incurred by the Partnerships during 1993, 1994 and 1995 were as follows ($ in thousands): 1993 1994 1995 ---- ---- ---- Development and tenant construction fees $ 132 $ 57 $ 250 Management fees 902 909 945 Leasing and procurement fees 523 189 235 ----------------------------- $1,557 $1,155 $1,430 ============================= 6. RENTAL REVENUES WWA leases property to the partners, as well as to unrelated third parties. The leases with partners are at rates comparable to those quoted to third parties. The leases typically contain escalation provisions and provisions requiring tenants to pay a pro rata share of operating expenses. The leases typically include renewal options and all are classified and accounted for as operating leases. At December 31, 1995, future minimum rentals to be received under existing non-cancelable leases, including tenants' current pro rata share of operating expenses are as follows ($ in thousands): Leases Leases With With Third Partners Parties Total -------- ------- ----- 1996 $15,586 $ 20,973 $ 36,559 1997 14,049 21,063 35,112 1998 14,837 18,497 33,334 1999 14,524 12,432 26,956 2000 14,409 9,979 24,388 Thereafter 6,165 41,369 47,534 --------------------------------- $79,570 $124,313 $203,883 ================================= In the years ended December 31, 1993, 1994 and 1995, income recognized on a straightline basis exceeded income which would have accrued in accordance with the lease terms by $570,000, $349,000 and $383,000, respectively. At December 31, 1994 and 1995, receivables which related to the cumulative excess of revenues recognized in accordance with SFAS No. 13 over revenues which accrued in accordance with the actual lease agreements totaled $14,371,000, and $14,754,000, respectively. Of the 1995 amount, 60% was related to leases with IBM. 7. NOTES PAYABLE At December 31, 1995, notes payable consisted of the following ($ in thousands):
Term/ Amortization Balance at Period Final December 31, Description Rate (Years) Maturity 1995 ----------- ---- ------------ -------- ------------ Line of credit ($50 million maximum) Fed Funds + .75% 2/ N/A 9/1/97 $ 26,308 2300 Windy Ridge Parkway Building mortgage note 7.56% 10/25 12/01/05 72,000 2500 Windy Ridge Parkway Building mortgage note 7.45% 10/20 12/15/05 26,000 Summit Green mortgage note 9.875% 10/30 4/1/98 10,547 -------- $134,855 ========
Wildwood Associates refinanced two mortgage notes in December 1995. The 2300 Windy Ridge Parkway Building mortgage note which had an $81 million balance at a 9.09% rate and matured in August 1999, was refinanced with a $72 million 7.56% mortgage note. The 2500 Windy Ridge Parkway Building mortgage note which had a $31 million balance at a 9.125% rate and matured in June 1996, was refinanced with a $26 million 7.45% mortgage note. The 2300 Windy Ridge Parkway Building mortgage note is secured by the building, which had a net carrying value of approximately $58,566,000 and $57,507,000 as of December 31, 1994 and 1995, respectively. The 2500 Windy Ridge Parkway Building mortgage note is secured by the building, which had a net carrying value of approximately $20,665,000 and $20,161,000 as of December 31, 1994 and 1995, respectively. The Summit Green Building mortgage note is secured by a leasehold mortgage on the building, which had a net carrying value of approximately $7,571,000 and $7,420,000 as of December 31, 1995. The line of credit matures September 1, 1997, but will automatically be renewed from year to year unless the lender provides a notice of non-renewal at least three months in advance of the annual renewal date. The line generally prohibits new borrowings other than those under the line, or the pledging of any assets not pledged as of August 1, 1990. The line bears a floating interest rate equal to the daily federal funds rate plus 3/4%, and there are no fees or compensating balance arrangements required under the line. Cousins and IBM have each severally guaranteed one-half of the line of credit. The aggregate maturities of the indebtedness at December 31, 1995 summarized above are as follows ($ in thousands): 1996 $ 1,620 1997 28,143 1998 13,107 1999 3,008 2000 3,243 Thereafter 85,734 -------- $134,855 ======== The Partnerships capitalize interest expense to property under development as required by Statement of Financial Accounting Standards No. 34. In the years ended December 31, 1993 and 1995, the Partnerships capitalized interest totaling $108,000 and $236,000, respectively. No interest was capitalized during the year ended December 31, 1994. The estimated fair value of the Partnership's $133 million and $135 million of notes payable at December 31, 1994 and 1995 respectively, is $132 million and $135 million, respectively, calculated by discounting future cash flows under the notes payable at estimated rates at which similar notes would be made currently. 8. GROUND LEASE All of the land in the Summit Green development is subject to a non-subordinated ground lease expiring October 31, 2084. Lease payments commenced December 1, 1986, and are payable in monthly installments at an annual rate of approximately $322,000 per year for the first ten years. The lease rate escalates at ten year intervals commencing December 1, 1996, based on the cumulative increase in the Consumer Price Index ("Index") over the prior ten year period (subject to a 5% annual cap on the increase in such Index in any one year); or, at lessor's option, at the end of any ten year interval the property shall be appraised, and the lessee shall elect to either purchase the land for the appraised value, or pay annually during the succeeding ten year period 10% of the appraised fair market value of the land. 9. COMBINED STATEMENTS OF CASH FLOWS-SUPPLEMENTAL INFORMATION Interest (net of amounts capitalized) was as follows ($ in thousands): 1993 1994 1995 ---- ---- ---- Interest paid $11,608 $11,780 $12,011 Significant non-cash financing and investing activities included the following: In 1993, a land parcel with a value of $926,000 was transferred from Land Committed To Be Contributed to Land and Property Predevelopment Costs. In September 1993, restaurant site parcels under construction with an aggregate value of $6,700,000 were transferred from Land and Property Predevelopment Costs to Income Producing Properties. See Notes 2 and 3. In 1994, the child care facility under construction with an aggregate value of $1,600,000 was transferred from Land and Property Predevelopment Costs to Income Producing Properties. See Notes 2 and 3. In 1995, a land parcel with a value of $6,537,000 was transferred from Land Committed To Be Contributed to Land and Property Predevelopment Cost. See Notes 2 and 3.
SCHEDULE III WILDWOOD ASSOCIATES AND GREEN VALLEY ASSOCIATES II REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 1995 ---------- -------------- ----------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b) - ----------- ------------ ---- ------------ ----- --------- ------------ ------------ ------- Wildwood Office Park - Cobb Co., GA 2500 Windy Ridge $ 26,000 $ 4,414 $ 14,814 $ 9,306 $ 141 $ 4,414 $ 24,261 $ 28,675 2300 Windy Ridge 72,000 8,927 -- 60,908 5,429 8,927 66,337 75,264 Parkside -- 4,274 2,553 (1,017) (45) 3,136 2,629 5,765 3200 Windy Hill -- 10,503 -- 66,020 5,470 10,503 71,490 81,993 4100/4300 Wildwood Parkway -- 6,537 -- 8,583 251 -- 15,371 15,371 Stand Alone Retail Sites -- 7,659 1,234 3,642 123 9,570 3,088 12,658 Land committed to be contributed -- 13,522 -- -- 381 13,903 -- 13,903 Other land and property -- 11,430 -- 3,467 (139) 11,609 3,149 14,758 -------------------------------------------------------------------------------------------- 98,000 67,266 18,601 150,909 11,611 62,062 186,325 248,387 -------------------------------------------------------------------------------------------- Summit Green, Greensboro, NC: Summit Green Phase I 10,547 -- -- 10,281 259 -- 10,540 10,540 Other property -- -- -- 501 -- -- 501 501 -------------------------------------------------------------------------------------------- 10,547 -- -- 10,782 259 -- 11,041 11,041 -------------------------------------------------------------------------------------------- $108,547 $67,266 $ 18,601 $161,691 $ 11,870 $62,062 $197,366 $259,428 ============================================================================================
Life on Which De- preciation Accumu- In 1995 lated Date of Income Deprecia- Construc- Date Statement tion (a) tion Acquired Is Computed --------- --------- -------- ----------- Wildwood Office Park - Cobb Co., GA 2500 Windy Ridge $ 8,514 1985 1985 40 Years 2300 Windy Ridge 17,757 1986 1986 40 Years Parkside 1,036 1980 1986 25 Years 3200 Windy Hill 13,162 1989 1989 40 Years 4100/4300 Wildwood Parkway -- 1995 1986 -- Stand Alone Retail Sites 877 Various 1985-1995 Various Land committed to be contributed -- -- 1985-1986 -- Other land and property 434 Various 1985-1986 Various ------- 41,780 ------- Summit Green, Greensboro, NC: Summit Green Phase I 3,120 1986 1986 40 Years Other property -- 1986 1986 -- ------- 3,120 ------- $44,900 =======
NOTE: (a) Reconciliations of total real estate carrying value and accumulated depreciation for the three years ended December 31, 1995 are as follows:
Real Estate Accumulated Depreciation -------------------------- ------------------------ 1993 1994 1995 1993 1994 1995 ---- ---- ---- ---- ---- ---- Balance at beginning of period $246,472 $249,714 $250,738 $26,039 $32,932 $40,009 Additions during the period: Improvements, and other capitalized costs 3,242 1,058 8,690 -- -- -- Provisions for depreciation -- -- -- 6,893 7,111 4,891 Deductions during the period: Retirement of fully depreciated assets and writeoffs -- (34) -- -- (34) -- ------------------------------ --------------------------- Balance at close of period $249,714 $250,738 $259,428 $32,932 $40,009 $44,900 ============================== ===========================
REPORT OF INDEPENDENT AUDITORS To the Partners of CSC Associates, L.P. (A Limited Partnership) We have audited the accompanying balance sheets of CSC Associates, L.P. (the Partnership) as of December 31, 1994 and 1995, and the related statements of operations, partners' capital, and cash flows for each of the three years in the period ended December 31, 1995. Our audits also included the financial statement schedule of CSC Associates, L.P. listed in the Index at Item 14(a). These financial statements and schedule are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of CSC Associates, L.P. as of December 31, 1994 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. ERNST & YOUNG LLP Atlanta, Georgia February 6, 1996
CSC ASSOCIATES, L.P. -------------------- BALANCE SHEETS -------------- DECEMBER 31, 1994 AND 1995 -------------------------- ($ in thousands) ASSETS ------ 1994 1995 ---- ---- REAL ESTATE ASSETS: Building and improvements, including land and land improvements of $22,818 in 1994 and 1995 ..... $203,275 $208,676 Accumulated depreciation (14,980) (21,232) --------------------- 188,295 187,444 --------------------- CASH .................................................... 1,395 97 -------------------- OTHER ASSETS: Deferred expenses, net of accumulated amortization of $2,715 and $3,664 in 1994 and 1995, respectively ......................... 8,170 8,306 Receivables (Note 3) .................................. 9,002 10,142 Furniture, fixtures and equipment, net of accumulated depreciation of $866 and $1,218 in 1994 and 1995, respectively ...................... 1,167 871 Other ................................................. 28 29 -------------------- Total other assets ........................... 18,367 19,348 -------------------- $208,057 $206,889 ==================== LIABILITIES AND PARTNERS' CAPITAL ACCOUNTS PAYABLE AND ACCRUED LIABILITIES ................$ 3,345 $ 2,951 -------------------- Total liabilities ............................ 3,345 2,951 -------------------- PARTNERS' CAPITAL (Note 1) .............................. 204,712 203,938 -------------------- $208,057 $206,889 ====================
The accompanying notes are an integral part of these balance sheets.
CSC ASSOCIATES, L.P. -------------------- STATEMENTS OF OPERATIONS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 ---------------------------------------------------- ($ in thousands) 1993 1994 1995 ---- ---- ---- REVENUES: Rental income and recovery of expenses charged directly to specific tenants $27,810 $28,931 $31,195 OPERATING EXPENSES: Real estate taxes ...................... 3,673 3,493 3,482 Utilities .............................. 1,317 1,198 1,103 Management and personnel costs ......... 1,311 1,313 1,403 Cleaning ............................... 1,042 1,041 1,086 Contract security ...................... 419 412 434 Repairs and maintenance ................ 258 352 349 Elevator ............................... 193 274 305 Parking ................................ 186 206 208 Insurance .............................. 111 111 116 Grounds maintenance .................... 90 105 116 ------------------------------ Total operating expenses ........ 8,600 8,505 8,602 ------------------------------ OTHER EXPENSES: Interest expense ....................... 12,317 -- -- Depreciation and amortization .......... 7,182 7,222 7,688 Marketing and other expenses ........... 174 154 164 General and administrative expenses .... 8 41 44 ------------------------------ Total other expenses ............ 19,681 7,417 7,896 ------------------------------ Total expenses .................. 28,281 15,922 16,498 ------------------------------ INCOME (LOSS) BEFORE EXTRAORDINARY ITEM .... (471) 13,009 14,697 EXTRAORDINARY ITEM (Note 4) ................ (723) -- -- ------------------------------ NET INCOME (LOSS) .......................... $(1,194) $13,009 $14,697 ==============================
The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P. -------------------- STATEMENTS OF PARTNERS' CAPITAL ------------------------------- FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 ---------------------------------------------------- ($ in thousands) BALANCE, December 31, 1992 $ 35,600 Net loss ............... (1,194) Capital contributions .. 173,347 Distributions .......... (1,900) -------- BALANCE, December 31, 1993 205,853 -------- Net income ............. 13,009 Distributions .......... (14,150) -------- BALANCE, December 31, 1994 204,712 Net income ............. 14,697 Distributions .......... (15,471) -------- BALANCE, December 31, 1995 $203,938 ========
The accompanying notes are an integral part of these statements.
CSC ASSOCIATES, L.P. -------------------- STATEMENTS OF CASH FLOWS ------------------------ FOR THE YEARS ENDED DECEMBER 31, 1993, 1994 AND 1995 ---------------------------------------------------- ($ in thousands) (Note 6) 1993 1994 1995 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) .............................. $ (1,194) $13,009 $14,697 Extraordinary item (Note 4) ...................... 723 -- -- Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization .................. 7,182 7,222 7,688 Rental revenue recognized on straight-line basis in excess of rental revenue specified in the lease agreements ............. (3,333) (3,156) (1,148) Change in other receivables and other assets ................................ 31 (315) 7 Change in accounts payable and accrued liabilities related to operations ... (1,016) 17 1,122 ------------------------- Net cash provided by operating activities ......... 2,393 16,777 22,366 ------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to building and improvements .......... (7,242) (1,120) (6,918) Payments for deferred expenses .................. (1,732) (1,060) (1,285) Proceeds from (payments for) furniture, fixtures and equipment ................................. (388) (17) 10 ------------------------- Net cash used in investing activities ............. (9,362) (2,197) (8,193) ------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from construction loan ................. 4,533 -- -- Repayment of construction loan .................. (168,046) -- -- Capital contributions ........................... 173,347 -- -- Partnership distributions ....................... (1,900) (14,150)(15,471) ------------------------- Net cash provided by (used in) financing activities 7,934 (14,150)(15,471) ------------------------- NET INCREASE (DECREASE) IN CASH ................... 965 4 (1,298) CASH AT BEGINNING OF YEAR ......................... -- 965 1,395 -------------------------- CASH AT END OF YEAR ............................... $ -- $ 1,395 $ 97 ==========================
The accompanying notes are an integral part of these statements. CSC ASSOCIATES, L.P. -------------------- NOTES TO FINANCIAL STATEMENTS ----------------------------- DECEMBER 31, 1993, 1994 AND 1995 -------------------------------- 1. FORMATION OF THE PARTNERSHIP AND TERMS OF THE PARTNERSHIP AGREEMENT ------------------------------------------------------------------- CSC Associates, L.P. ("CSC," or the "Partnership") was formed under the terms of a Limited Partnership Agreement dated September 29, 1989 and by the filing of its Certificate of Limited Partnership on October 27, 1989. C&S Premises, Inc. ("Premises") and Cousins Properties Incorporated ("CPI") each own a 1% general partnership and a 49% limited partnership interest in the Partnership. Premises is a wholly owned subsidiary of NB Holdings Corporation which is a wholly owned subsidiary of NationsBank Corporation. The Partnership was formed for the purpose of developing and owning a 1.4 million gross square foot office tower in downtown Atlanta, Georgia (the "Building"), which is the Atlanta headquarters of NationsBank Corporation. The Partnership Agreement and related documents (the "Agreements") contain among other provisions, the following: a. CPI is the Managing Partner. b. CPI is obligated to contribute a total of $18.2 million cash to the Partnership, all of which has been contributed. Premises is obligated to contribute land parcels to the Partnership having an aggregate agreed upon value of $18.2 million, all of which has been contributed, which property value, in the opinion of the partners, was equal to the estimated fair market value of the land at the time of formation of the Partnership. In October 1993, the partners each contributed an additional $86.7 million. c. No interest is earned on partnership capital. d. Net income or loss and cash distributions are allocated to the partners based on their percentage interests (50% each), subject to a preference to CPI. The CPI preference was $2.5 million, and accrued to CPI, with interest at 9% to the extent unpaid, over the period February 1, 1992 through January 31, 1995. During the year ended December 31, 1994, CPI received distributions of the preference and accrued interest of approximately $2.65 million. The remaining preference amount of $71,000 was distributed to CPI in January 1995. Amounts above the preference amount are allocated based on the partners' percentage interests. 2. SIGNIFICANT ACCOUNTING POLICIES ------------------------------- Capitalization Policies All costs related to planning, development and construction of the Building, and expenditures for the Building prior to the date it became operational for financial statement purposes, have been capitalized. Interest expense, amortization of financing costs, and real estate taxes were also capitalized while the Building was under development. Depreciation and Amortization Depreciation of the Building commenced the date the Building became operational for financial statement purposes and the Building is being depreciated over 40 years. Leasehold and tenant improvements are amortized over the life of the leases or useful life of the assets, whichever is shorter. Furniture, fixtures, and equipment are depreciated over 5 years. Deferred expenses which include organizational costs, certain marketing and leasing costs, and loan acquisition costs are amortized over the period of estimated benefit. The straight line method is used for all depreciation and amortization. Income Taxes No provision has been made for federal or state income taxes because each partner's proportionate share of income or loss from the Partnership will be passed through to be included on each partner's separate tax return. Rental Income In accordance with Statement of Financial Accounting Standards No. 13 ("SFAS No. 13"), income on leases which include increases in rental rates over the lease term is recognized on a straight-line basis. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. Impairment of Long-Lived Assets The Partnership has adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. SFAS No. 121 also addresses the accounting for long-lived assets that are expected to be disposed of. The adoption of SFAS No. 121 had no effect on the financial results of the Partnership. 3. LEASES ------ The Partnership has leased office space to NB Holdings Corporation, as well as to unrelated third parties. The lease with NB Holdings Corporation was at rates comparable to those quoted to third parties. The leases contain escalation provisions and provisions requiring tenants to pay a pro rata share of operating expenses. The leases typically include renewal options and all are classified and accounted for as operating leases. At December 31, 1995, future minimum rentals to be received under existing non-cancelable leases, including tenants' current pro rata share of operating expenses, are as follows ($ in thousands):
Lease Leases With With NB Holdings Third Corporation Parties Total ----------- ------- ----- 1996 $ 15,091 $ 16,268 $ 31,359 1997 15,110 16,113 31,223 1998 15,114 16,415 31,529 1999 15,114 16,338 31,452 2000 15,114 16,215 31,329 Subsequent to 2000 172,981 114,588 287,569 ---------------------------------- $248,524 $195,937 $444,461 ==================================
In the years ended December 31, 1994 and 1995, income recognized on a straight-line basis exceeded income which would have accrued in accordance with the lease terms by $3,156,000 and $1,148,000, respectively. At December 31, 1994 and 1995, receivables which related to the cumulative excess of revenues recognized in accordance with SFAS No. 13 over revenues which accrued in accordance with the actual lease agreements totaled $8,536,000 and $9,684,000, respectively. Of that amount, 23% was related to leases with NB Holdings Corporation. At December 31, 1995, two professional services firms leased approximately 15% and 12%, respectively, of the net rentable space of the Building. 4. NOTES PAYABLE ------------- At December 31, 1992, notes payable consisted solely of the amount borrowed under a Construction Loan Agreement with six banks under which a maximum of $210 million could have been drawn. On October 29, 1993, using capital contributions made by each partner, the Partnership paid off this note payable, which had an outstanding balance of $168 million. Approximately $723,000 of deferred loan costs were written off due to the early extinguishment of this note payable and is classified as an Extraordinary Item in the accompanying Statements of Operations. The Construction Loan was payable interest only monthly and had a floating interest rate equal to LIBOR plus the Applicable Spread Rate which was reduced to .65% effective January 1, 1993 and .60% effective February 1, 1993 to maturity. The Partnership entered into an interest rate swap agreement with an affiliate of Premises which effectively fixed LIBOR at 8.45% through September 1993. The face amount of the swap increased over time in amounts corresponding to the projected increases in the Construction Loan balance. The Partnership has an unsecured $3 million line of credit provided by an affiliate of Premises. Interest on the line is paid at a floating rate (6.45% weighted average rate in December 1995) and interest only is payable quarterly through July 31, 1996, at which time the entire outstanding balance is due. There were no borrowings under the line as of December 31, 1994 and 1995. 5. RELATED PARTIES --------------- The Partnership engaged CPI and an affiliate of CPI to manage, develop and lease the Building. During 1993, 1994 and 1995, fees to CPI and its affiliate incurred by the Partnership were as follows ($ in thousands): 1993 1994 1995 ---- ---- ---- Development and tenant construction fees $ 58 $ 25 $ 88 Leasing and procurement fees 684 230 229 Management fees 610 640 744 ------------------------------ $1,352 $895 $1,061 ============================== 6. STATEMENT OF CASH FLOWS - SIGNIFICANT NON-CASH TRANSACTIONS ----------------------------------------------------------- In 1993, 1994 and 1995, there were no significant non-cash transactions. Interest paid was $13,387,000 and $15,000 in 1993 and 1994, respectively. No interest was paid in 1995. 7. SUBSEQUENT EVENT ---------------- On February 6, 1996, the Partnership issued $80 million of 6.377% collateralized notes (the "Notes"). The Notes amortize in equal monthly installments of $590,680 based on a 20 year amortization schedule, and mature February 15, 2011. The Notes are non-recourse obligations of the Partnership and are secured by a Deed to Secure Debt, Assignment of Rents and Security Agreement covering the Partnership's interest in the Building. In conjunction with this financing, Premises transferred its 1% general partnership interest in the partnership to C&S Premises-SPE, Inc., a wholly owned subsidiary of Premises. The Partnership has loaned the $80 million proceeds of the Notes to CPI under a non-recourse loan (the "CPI Loan") secured by CPI's Partnership interests under the same payment terms as those of the Notes. CPI paid all costs of issuing the Notes and the CPI Loan, including a $400,000 fee to an affiliate of NationsBank Corporation. In addition, CPI will pay a monthly fee to an affiliate of NationsBank Corporation of .025% of the outstanding principal balance of the Notes.
SCHEDULE III CSC ASSOCIATES, L.P. REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 1995 ---------- -------------- ----------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b) - ----------- ------------ ---- ------------ ----- --------- ------------ ------------ ------- NationsBank Plaza Atlanta, Georgia $ -- $ 18,200 $ -- $180,027 $ 10,449 $ 22,818 $185,858 $208,676 =============================================================================================
Life on Which De- preciation Accumu- In 1995 lated Date of Income Deprecia- Construc- Date Statement tion (a) tion Acquired Is Computed --------- --------- -------- ----------- NationsBank Plaza Atlanta, Georgia $21,232 1990-1992 1990 5-40
NOTE: (a) Reconciliations of total real estate carrying value and accumulated depreciation for the three years ended December 31, 1995 are as follows:
Real Estate Accumulated Depreciation ------------------------------ -------------------------- 1993 1994 1995 1993 1994 1995 ---- ---- ---- ---- ---- ---- Balance at beginning of period $195,681 $200,781 $203,275 $3,463 $ 9,176 $14,980 Improvements and other capitalized costs 5,100 2,494 5,401 -- -- -- -- Provision for depreciation -- -- -- 5,713 5,804 6,252 ------------------------------ -------------------------- Balance at close of period $200,781 $203,275 $208,676 $9,176 $14,980 $21,232
REPORT OF INDEPENDENT AUDITORS The Partners Haywood Mall Associates (A South Carolina Joint Venture) We have audited the accompanying balance sheets of Haywood Mall Associates (A South Carolina Joint Venture) as of December 31, 1995 and 1994, and the related statements of income, cash flows and venturers' equity for each of the three years in the period ended December 31, 1995. Our audits also included the financial statement schedules of Haywood Mall Associates listed in the Index at Item 14(a). These financial statements and schedules are the responsibility of the Management of the Joint Venture. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Haywood Mall Associates (A South Carolina Joint Venture) at December 31, 1995 and December 31, 1994, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. Also, in our opinion the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. ERNST & YOUNG LLP New York, NY February 8, 1996
HAYWOOD MALL ASSOCIATES (A South Carolina Joint Venture) BALANCE SHEETS DECEMBER 31, 1995 AND 1994 1995 1994 ---- ---- ASSETS Shopping center: Land .............................. $ 3,353,335 $ 3,353,335 Building and improvements ......... 38,861,068 19,339,940 ------------------------- 42,214,403 22,693,275 Less: accumulated depreciation .... 8,550,512 7,412,999 ------------------------- 33,663,891 15,280,276 Construction-in-progress .......... -- 11,862,132 Cash ................................. 2,971,993 1,630,497 Receivables (principally rentals) less allowance of $428,094 and $249,291 2,716,834 1,988,716 Other assets ......................... 5,178,154 2,063,948 ------------------------- $44,530,872 $32,825,569 ========================= LIABILITIES AND VENTURERS' EQUITY Accounts payable and accrued liabilities ............... $ 1,237,422 $ 956,553 Venturers' equity: Cousins Properties Incorporated ... 21,268,088 15,891,995 Bellwether Properties of South Carolina, L.P. ............ 22,025,362 15,977,021 ------------------------- $44,530,872 $32,825,569 =========================
The accompanying notes are an integral part of these financial statements.
HAYWOOD MALL ASSOCIATES (A South Carolina Joint Venture) STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 1995 1994 1993 ---- ---- ---- INCOME Rental income: Minimum ............................ $ 6,667,505 $ 6,050,650 $6,064,131 Overage ............................ 261,214 568,546 435,082 Real estate taxes .................. 459,222 418,166 408,422 Utility charges and other operating expense recoveries 3,776,482 3,287,614 3,044,326 Interest income .................... 104,741 45,655 27,320 -------------------------------------- 11,269,164 10,370,631 9,979,281 -------------------------------------- EXPENSES Mortgage interest ..................... -- 598,389 1,842,232 Repairs and maintenance ............... 1,014,931 882,580 916,474 Utilities ............................. 917,881 820,798 806,911 Managing agent's costs (principally payroll) .............. 924,208 840,149 817,137 Depreciation .......................... 1,137,513 597,732 598,780 Other ................................. 742,457 486,981 477,501 Real estate taxes ..................... 539,020 450,338 444,642 Leasehold rent ........................ 66,752 64,765 61,984 -------------------------------------- 5,342,762 4,741,732 5,965,661 -------------------------------------- INCOME BEFORE EXTRAORDINARY ITEM ................. 5,926,402 5,628,899 4,013,620 Extraordinary loss from prepayment of mortgage debt ........ -- 680,277 -- -------------------------------------- NET INCOME ................... $ 5,926,402 $ 4,948,622 $4,013,620 ======================================
The accompanying notes are an integral part of these financial statements.
HAYWOOD MALL ASSOCIATES (A South Carolina Joint Venture) STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993 1995 1994 1993 ---- ---- ---- OPERATING ACTIVITIES Net income ................................. $ 5,926,402 $ 4,948,622 $ 4,013,620 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ............................... 1,137,513 597,732 598,780 Amortization of deferred charges ........... 482,746 363,230 338,069 Straight line adjustment for step lease rentals ....................... (209,567) (114,085) (255,254) Loss from prepayment of mortgage debt ............................ -- 680,277 -- Change in operating assets and liabilities: Decrease/(increase) in receivables ..... (518,551) (134,841) 53,552 Increase in other assets, principally deferred leasing costs ............... (3,596,952) (543,502) (138,880) Increase in accounts payable and accrued liabilities .................. 280,869 58,522 17,915 ----------------------------------------- Net Cash Provided by Operating Activities ....................... 3,502,460 5,855,955 4,627,802 ----------------------------------------- INVESTING ACTIVITIES Investments in shopping center ............. (7,658,996) (11,864,544) (27,247) ----------------------------------------- Cash Used in Investing Activities ............. (7,658,996) (11,864,544) (27,247) ----------------------------------------- FINANCING ACTIVITIES Principal payments on mortgages ............ -- (92,492) (260,913) Prepayment of mortgage debt ................ -- (20,116,762) -- Cash distributions ......................... (6,698,000) (,758,268) (4,105,000) Partners' capital contribution ............. 12,196,032 32,031,738 -- ----------------------------------------- Cash Provided by (Used) in Financing Activities 5,498,032 6,064,216 (4,365,913) ----------------------------------------- Increase in cash ........................... 1,341,496 55,627 234,642 Cash at beginning of year .................. 1,630,497 1,574,870 1,340,228 ----------------------------------------- Cash at end of year ........................... $ 2,971,993 $ 1,630,497 $ 1,574,870 ========================================= SUPPLEMENTAL DISCLOSURE Interest paid during the year .............. $ -- $ 750,964 $ 1,844,258 =========================================
The accompanying notes are an integral part of these financial statements.
HAYWOOD MALL ASSOCIATES (A South Carolina Joint Venture) STATEMENTS OF VENTURERS' EQUITY FOR THE THREE YEARS ENDED DECEMBER 31, 1995 Bellwether Cousins Properties of Properties South Carolina, L.P. Incorporated Total -------------------- ------------ ----- Balance at December 31, 1992 $ 369,152 $ 369,152 $ 738,304 Net income ............ 2,006,810 2,006,810 4,013,620 Cash distributions .... (2,052,500) (2,052,500) (4,105,000) ------------------------------------------- Balance at December 31, 1993 323,462 323,462 646,924 Net income ............ 2,474,311 2,474,311 4,948,622 Cash distributions .... (2,879,134) (2,879,134) (5,758,268) Capital contributions . 16,058,382 15,973,356 32,031,738 ------------------------------------------- Balance at December 31, 1994 15,977,021 15,891,995 31,869,016 Net income ............ 2,963,201 2,963,201 5,926,402 Cash distributions .... (3,349,000) (3,349,000) (6,698,000) Capital contributions . 6,434,140 5,761,892 12,196,032 ------------------------------------------- Balance at December 31, 1995 $22,025,362 $21,268,088 $43,293,450 ===========================================
The accompanying notes are an integral part of these financial statements. HAYWOOD MALL ASSOCIATES (A South Carolina Joint Venture) NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1995, 1994 AND 1993 NOTE A - JOINT VENTURE AGREEMENT Haywood Mall Associates (the "Venture") is a South Carolina Joint Venture between Bellwether Properties of South Carolina, L.P., a South Carolina Limited Partnership, and Cousins Properties Incorporated (hereinafter collectively referred to as the "Venturers") formed for the purpose of owning and operating a regional shopping center in Greenville, South Carolina. Under the terms of the joint venture agreement, the Venturers share equally in the cash flow and the profits and losses of the Venture. NOTE B - SIGNIFICANT ACCOUNTING POLICIES Shopping Center: Land and building and improvements are stated at cost. Depreciation of the building and improvements is computed on the straight-line method over an estimated useful life of 35 years. The tenants' alterations are amortized over the life of the related leases. Construction-in-progress at December 31, 1994 represents costs incurred in connection with expanding the shopping center which was completed during April 1995. Taxes: No provision has been made for income taxes, since any taxes which may be payable are the liability of the individual Venturers. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. NOTE C - MORTGAGES PAYABLE The mortgage notes which bore interest at 9% and 10-1/2% and matured in 2000 were prepaid as of April 29. 1994. A prepayment fee equal to 3-1/2% of the outstanding principal balance was paid in the amount of $680,277. NOTE D - LEASES The Venture has a land lease with a base period that extends through the year 2017. Future lease payments due under the lease, at December 31, 1995, are as follows: 1996 - $ 67,000 1997 - 67,000 1998 - 67,000 1999 - 70,000 2000 - 72,000 Thereafter - 1,274,000 There are five l0-year renewal option periods available beginning in the year 2017. Annual payments during the renewal periods are based upon fair market value as determined at each renewal date. Space in the shopping center is leased to retail tenants. Leases generally provide for minimum rentals plus overage rentals based on the tenants' sales volume, and also require tenants to pay a portion of real estate taxes and other property operating expenses. Lease periods generally range from 5 to 15 years and contain various renewal options. Future minimum rentals (excluding expenses billable to tenants) to be received under leases, all of which are classified and accounted for as operating leases at December 31, 1995 are as follows: Year Ending December 31: Amount* ------- 1996 $ 7,777,216 1997 7,823,488 1998 7,694,450 1999 6,707,140 2000 5,810,929 Thereafter 19,015,014 ----------- TOTAL $54,828,237 =========== *Does not include rentals applicable to renewal options. At December 31, 1994 and 1995, receivables which related to the cumulative excess of revenues recognized in accordance with Statement of Financial Accounting Standards No. 13 "Accounting for Leases" over revenues which accrued in accordance with the actual lease agreements aggregates $1,735,815 and $1,945,382, respectively. NOTE E - RELATED PARTY TRANSACTIONS The Venture pays Corporate Property Investors, which has an indirect ownership interest in one of the Venturers, a leasing fee of 1% of gross rentals received, as defined. During the years ended December 31, 1995, 1994 and 1993, the Venture incurred leasing fees of $61,601, $62,405 and $58,951 respectively. Such amounts are included in managing agent's costs.
SCHEDULE III HAYWOOD MALL ASSOCIATES REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 1995 ($ in thousands) Column A Column B Column C Column D Column E -------- -------- -------- -------- -------- Costs Capitalized Gross Amount at Which Initial Cost Subsequent Carried at to Company to Acquisition December 31, 1995 ---------- -------------- ----------------- Carrying Costs Buildings Less Cost Land Buildings and Improve- of Sales and Land and Total Description Encumbrances Land Improvements ments and Other Improvements Improvements (a),(b) - ----------- ------------ ---- ------------ ----- --------- ------------ ------------ ------- Haywood Mall Greenville, S.C. $ -- $ 3,598 $ 9,630 $ 10,669 $ 0 $ 3,353 $43,623 $46,976 =============================================================================================
Life on Which De- preciation Accumu- In 1995 lated Date of Income Deprecia- Construc- Date Statement tion (a) tion Acquired Is Computed --------- --------- -------- ----------- Haywood Mall Greenville, S.C. $ 9,108 1979-1980 1979 35 (1) 7 (2 =========
NOTES: (1) Estimated useful life for Buildings and Improvements. (2) Estimated useful life for Property Equipment. (3) Amounts will not tie to Property totals on Balance Sheet as some real estate assets are classified as Other Assets. (4) Reconciliations of total real estate carrying value and accumulated depreciation for the three years ended December 31, 1995 are as follows:
Real Estate Accumulated Depreciation -------------------------------- ---------------------------- 1993 1994 1995 1993 1994 1995 ---- ---- ---- ---- ---- ---- Balance at beginning of period $23,291 $23,392 $23,897 $6,321 $7,017 $7,722 Improvements and other capitalized costs 101 505 23,079 -- -- -- Provision for depreciation -- -- -- 696 705 1,386 --------------------------------- --------------------------- Balance at close of period $23,392 $23,897 $46,976 $7,017 $7,722 $9,108 ================================= ===========================
EX-11 2
EXHIBIT 11 COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK USED TO COMPUTE PRIMARY AND FULLY DILUTED INCOME PER SHARE FOR THE FIVE YEARS ENDED DECEMBER 31, 1995 1991 1992 1993 1994 1995 ---- ---- ---- ---- ---- Shares outstanding at beginning of year ....... 17,337,364 17,341,364 21,716,911 27,830,631 27,863,741 Weighted average number of shares issued during the year .................... 3,235 910,631 1,064,574 14,151 119,439 Weighted average number of shares acquired during the year .................. (195) (2,689) -- (441) -- Dilutive effect of outstanding options and warrants (as determined by the application of the Treasury Stock Method) ............. -- -- -- -- -- ------------------------------------------------------------------------- Weighted average number of shares outstanding, as adjusted .................. 17,340,404 18,249,306 22,781,485 27,844,341 27,983,180 ========================================================================= Income from operations before gain on sale of investment properties (000's) .......... $ 9,108 $ 9,069 $ 10,038 $ 20,539 $ 24,480 Gain on sale of investment properties, net of applicable income tax provision (000's) ... -- 6,644 1,927 6,356 1,862 ------------------------------------------------------------------------- Net income (000's) ............................ $ 9,108 $ 15,713 $ 11,965 $ 26,895 $ 26,342 ========================================================================= Income per share: From operations before gain on sale of investment properties .......... $ .53 $ .50 $ .44 $ .74 $ .87 From gain on sale of investment properties, net of applicable income tax provision . -- .36 .09 .23 .07 ------------------------------------------------------------------------- Net income per share ...................... $ .53 $ .86 $ .53 $ .97 $ .94 =========================================================================
EX-13 3 Cousins Properties Incorporated and Consolidated Entities CONSOLIDATED BALANCE SHEETS - ------------------------------------------------------------------------------- ($ in thousands, except per share amounts)
December 31, ------------ 1994 1995 ---- ---- ASSETS PROPERTIES (Notes 4 and 8): Operating properties, net of accumulated depreciation of $12,112 in 1994 and $15,483 in 1995 $ 92,464 $ 93,871 Land held for investment or future development 27,353 27,035 Projects under construction 8,711 87,503 Residential lots under development 8,602 11,452 --------- --------- Total properties 137,130 219,861 CASH AND CASH EQUIVALENTS, at cost, which approximates market 3,407 1,552 NOTES AND OTHER RECEIVABLES (Note 3) 52,571 53,868 INVESTMENT IN UNCONSOLIDATED JOINT VENTURES (Notes 4 and 5) 130,838 137,260 OTHER ASSETS 6,871 5,465 ---------- ---------- TOTAL ASSETS $ 330,817 $ 418,006 ========== ========== LIABILITIES AND STOCKHOLDERS' INVESTMENT NOTES PAYABLE (Note 4) $ 41,799 $ 113,434 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 11,144 22,681 MINORITY INTERESTS IN CONSOLIDATED ENTITIES 3,631 3,837 DEPOSITS AND DEFERRED INCOME 1,345 376 ---------- ---------- TOTAL LIABILITIES 57,919 140,328 ---------- ---------- COMMITMENTS AND CONTINGENT LIABILITIES (Note 4) STOCKHOLDERS' INVESTMENT (Note 6): Common stock, $1 par value, authorized 50,000,000 shares; issued 27,863,741 in 1994 and 28,222,639 in 1995 27,864 28,223 Additional paid-in capital 147,495 153,265 Cumulative undistributed net income 97,539 96,190 ---------- ---------- TOTAL STOCKHOLDERS' INVESTMENT 272,898 277,678 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $ 330,817 $ 418,006 ========== ==========
The accompanying notes are an integral part of these consolidated balance sheets. Cousins Properties Incorporated and Consolidated Entities CONSOLIDATED STATEMENTS OF INCOME - -------------------------------------------------------------------------------- ($ in thousands, except per share amounts)
Years Ended December 31, ------------------------ 1993 1994 1995 ---- ---- ---- REVENUES: Rental property revenues (Note 10) $ 6,687 $ 13,150 $ 19,348 Development and construction fees 898 1,020 3,515 Management fees 1,999 2,061 2,213 Leasing and other fees 3,006 1,942 2,156 Residential lot and outparcel sales -- 6,132 9,040 Interest and other 6,456 6,801 4,764 -------- --------- --------- 19,046 31,106 41,036 -------- --------- --------- INCOME FROM UNCONSOLIDATED JOINT VENTURES (Note 5) 5,516 12,580 14,113 - -------- --------- --------- COSTS AND EXPENSES: Rental property operating expenses 2,310 3,338 4,681 General and administrative expenses 7,336 7,538 7,648 Depreciation and amortization 3,164 3,742 4,516 Leasing and other commissions 193 82 20 Stock appreciation right expense (Note 6) 721 433 1,298 Residential lot and outparcel cost of sales -- 5,762 8,407 Interest expense (Note 4) -- 411 687 Property taxes on undeveloped land 537 1,085 977 Other 1,058 922 1,688 -------- --------- --------- 15,319 23,313 29,922 -------- --------- --------- INCOME FROM OPERATIONS BEFORE INCOME TAXES AND GAIN ON SALE OF INVESTMENT PROPERTIES 9,243 20,373 25,227 PROVISION (BENEFIT) FOR INCOME TAXES FROM OPERATIONS (Note 7) (795) (166) 747 - -------- --------- --------- INCOME BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES 10,038 20,539 24,480 -------- --------- --------- GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF APPLICABLE INCOME TAX PROVISION (Note 7) 1,927 6,356 1,862 - -------- --------- --------- NET INCOME $ 11,965 $ 26,895 $ 26,342 ======== ========= ========= INCOME PER SHARE (Note 6) From operations before gain on sale of investment properties $ .44 $ .74 $ .87 From gain on sale of investment properties, net of applicable income tax provision .09 .23 .07 -------- --------- --------- NET INCOME PER SHARE $ .53 $ .97 $ .94 ======== ========= ========= CASH DIVIDENDS DECLARED PER SHARE (Note 6) $ .73 $ .90 $ .99 ======== ========= =========
The accompanying notes are an integral part of these consolidated statements. Cousins Properties Incorporated and Consolidated Entities - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT - -------------------------------------------------------------------------------- Years Ended December 31, 1993, 1994 and 1995 ($ in thousands)
Additional Cumulative Common Paid-In Undistributed Stock Capital Net Income Total ----- ------- ---------- ----- BALANCE, December 31, 1992 $ 21,717 $ 53,427 $ 100,947 $ 176,091 --- ---- -------- ---------- ---------- ---------- Net income, 1993 -- -- 11,965 11,965 Common stock issued pursuant to: 6,100,000 share stock offering, net of expenses 6,100 93,401 -- 99,501 Exercise of options and Director stock plan 14 190 -- 204 Dividends declared -- -- (17,204) (17,204) -------- ---------- ---------- ---------- BALANCE, December 31, 1993 27,831 147,018 95,708 270,557 Net income, 1994 -- -- 26,895 26,895 Common stock issued pursuant to: Exercise of options and Director stock plan 12 169 -- 181 Compensation paid in stock in lieu of cash 21 308 -- 329 Dividends declared -- -- (25,064) (25,064) -------- ---------- ---------- ---------- BALANCE, December 31, 1994 27,864 147,495 97,539 272,898 Net income, 1995 -- -- 26,342 26,342 Common stock issued pursuant to: Exercise of options and Director stock plan 42 638 -- 680 Dividend reinvestment plan 307 4,956 -- 5,263 Compensation paid in stock in lieu of cash 10 176 -- 186 Dividends declared -- -- (27,691) (27,691) -------- ---------- ---------- ---------- BALANCE, December 31, 1995 $ 28,223 $ 153,265 $ 96,190 $ 277,678 ======== ========== ========== ==========
The accompanying notes are an integral part of these consolidated statements. - -------------------------------------------------------------------------------- Cousins Properties Incorporated and Consolidated Entities - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS (Note 9) - -------------------------------------------------------------------------------- ($ in thousands)
Years Ended December 31, ------------------------ 1993 1994 1995 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Income before gain on sale of investment properties $ 10,038 $ 20,539 $ 24,480 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization, net of minority interests' share 3,164 3,662 4,340 Stock appreciation right expense 721 433 1,298 Cash charges to expense accrual for stock appreciation rights (147) (49) (132) Other non-cash charges (credits) 310 (623) -- Rental revenue recognized on straight-line basis in excess of rental revenue specified in lease agreements (391) (209) (107) Deferred income received 297 1,131 1,673 Deferred income recognized (252) (301) (2,800) Income from unconsolidated joint ventures (5,516) (12,580) (14,113) Operating distributions from unconsolidated joint ventures 7,507 15,665 15,786 Compensation paid in stock in lieu of cash -- 329 186 Residential lot and outparcel cost of sales -- 5,667 8,065 Changes in other operating assets and liabilities: Change in other receivables 440 (606) (1,018) Change in accounts payable and accrued liabilities (1,068) 2,549 62 --------- --------- --------- Net cash provided by operating activities 15,103 35,607 37,720 --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Gain on sale of investment properties, net of applicable income tax provision 1,927 6,356 1,862 Adjustments to reconcile gain on sale of investment properties to net cash provided by sales activities: Cost of sales 1,444 6,923 2,869 Note received as sales consideration -- -- (500) Deposits and deferred income recognized (3,370) -- -- Property acquisition and development expenditures (31,358) (53,573) (87,234) Investment in unconsolidated joint ventures, including interest capitalized to equity investments (87,180) (20,844) (9,318) Non-operating distributions from unconsolidated joint ventures -- 586 1,226 Collection of notes receivable 386 45,011 841 Change in other assets, net (458) (2,601) 802 Principal payments received on government agency securities 585 636 103 Investment in notes receivable (5,524) (28,039) (18) --------- --------- --------- Net cash used in investing activities (123,548) (45,545) (89,367) --------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of lines of credit -- (50,138) (86,336) Proceeds from lines of credit 3,499 73,287 78,575 Proceeds from other notes payable 22,306 475 80,116 Repayment of other notes payable (43) (16,976) (720) Dividends paid (17,204) (25,064) (27,691) Common stock sold, net of expenses 99,564 77 5,848 Investment in joint venture by minority interest 974 -- -- --------- --------- --------- Net cash (used in) provided by financing activities 109,096 (18,339) 49,792 --------- --------- --------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS 651 (28,277) (1,855) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 31,033 31,684 3,407 --------- --------- --------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 31,684 $ 3,407 $ 1,552 ========= ========= =========
The accompanying notes are an integral part of these consolidated statements. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Cousins Properties Incorporated and Consolidated Entities NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- December 31, 1993, 1994 and 1995 1. SIGNIFICANT ACCOUNTING POLICIES Consolidation and Presentation: The Consolidated Financial Statements include the accounts of Cousins Properties Incorporated ("Cousins") and its majority owned partnerships, as well as Cousins Real Estate Corporation ("CREC") and its subsidiaries. All of the entities included in the Consolidated Financial Statements are hereinafter referred to collectively as the "Company." The Company's investments in its non-majority owned joint ventures are recorded using the equity method of accounting. However, the recognition of losses is limited to the amount of direct or implied financial support. Information regarding the non-majority owned joint ventures is included in Note 5. Certain 1993 and 1994 amounts have been reclassified to conform with the 1995 presentation. Income Taxes: Since 1987, Cousins has elected to be taxed as a real estate investment trust ("REIT"). As a REIT, Cousins is not subject to corporate federal income taxes to the extent that it distributes 100% of its taxable income (excluding CREC's and its wholly owned subsidiaries' consolidated taxable income) to stockholders, which is Cousins' current intention. The Company computes taxable income on a basis different from that used for financial reporting purposes (see Note 7). CREC and its wholly owned subsidiaries file a consolidated federal income tax return. Depreciation and Amortization: Buildings are depreciated over 30 to 40 years. Furniture, fixtures and equipment are depreciated over 5 to 15 years. Leasehold improvements and tenant improvements are amortized over the life of the applicable leases or the estimated useful life of the assets, whichever is shorter. Deferred expenses are amortized over the period of estimated benefit. The straight-line method is used for all depreciation and amortization. Fee Income and Cost Capitalization: Development, construction, management, and leasing fees received from unconsolidated joint ventures are recognized as earned. A portion of these fees may be capitalized by the joint ventures; however, the Company expenses salaries and other direct costs related to this income. The Company classifies its share of fee income earned by unconsolidated joint ventures as fee income rather than joint venture income for those ventures where the related expense is borne primarily by the Company rather than the venture. Development, construction, and leasing fees between consolidated entities are eliminated in consolidation. Costs related to planning, development, leasing and construction of properties (including related general and administrative expenses) are capitalized. The table below shows the fees eliminated, the internal costs capitalized related to these fees, and the additional internal costs capitalized by CREC to its own residential developments ($ in thousands):
1993 1994 1995 ---- ---- ---- Fees eliminated in consolidation $ 918 $ 3,019 $ 5,479 Internal costs capitalized in consolidation to projects on which fees were eliminated $ 1,107 $ 1,508 $ 2,552 Internal costs capitalized to CREC residential developments $ 39 $ 292 $ 498
Interest, real estate taxes, and rental revenues and expenses of properties prior to the date they become operational are also capitalized for financial reporting purposes. Interest is also capitalized to investments accounted for by the equity method when the investee has property under development with a carrying value in excess of the investee's borrowings. Deferred leasing and other capitalized costs associated with a particular property are classified with Properties in the Consolidated Balance Sheets. Management fees received from consolidated entities are shown as a reduction in rental property operating expenses. Cash and Cash Equivalents: Cash and cash equivalents includes cash and highly liquid money market instruments. Highly liquid money market instruments include securities and repurchase agreements with original maturities of three months or less, money market mutual funds, and securities on which the interest or dividend rate is adjusted to market rate at least every three months. At December 31, 1995, cash and cash equivalents included $550,000 from a property sale held in escrow pending reinvestment in a tax free exchange. Rental Property Revenues: In accordance with Statement of Financial Accounting Standards ("SFAS") No. 13, income on leases which include scheduled increases in rental rates over the lease term is recognized on a straight-line basis. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Stock Based Compensation: The Company will adopt SFAS No. 123, "Accounting for Stock-Based Compensation" during 1996. The Company anticipates it will continue to measure compensation costs using APB Opinion No. 25, "Accounting for Stock Issued to Employees," and therefore the adoption of this statement will not have any effect on the financial results of the Company. Impairment of Long-Lived Assets: The Company has adopted SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of" which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. SFAS No. 121 also addresses the accounting for long-lived assets that are expected to be disposed of. The adoption of SFAS No. 121 had no effect on the financial results of the Company. 2. RELATIONSHIP WITH DEVELOPMENT AND LEASING ENTITY CREC conducts certain development and leasing activities for real estate projects. A wholly owned subsidiary of CREC, Cousins MarketCenters, Inc. ("CMC") (formerly known as Cousins/New Market Development Company, Inc.), develops retail power centers for the Company. CREC also manages a joint venture property in which it has an ownership interest. At December 31, 1993, 1994 and 1995 Cousins owned 100% of CREC's $5,025,000 par value 8% cumulative preferred stock and 100% of CREC's nonvoting common stock, which common stock is entitled to 95% of any dividends of CREC after preferred dividend requirements. Thomas G. Cousins, Chairman of the Board of Cousins, owns 100% of the voting common stock of CREC, which voting common stock is entitled to 5% of any dividends of CREC after preferred dividend requirements. CREC is included in the Company's Consolidated Financial Statements, but is taxed as a regular corporation. CREC has paid no common dividends to date, and for financial reporting purposes, none of CREC's income is attributable to Mr. Cousins' minority interest because the face amount of CREC's preferred stock plus accumulated dividends thereon ($8,241,000 in aggregate) exceed CREC's $4,279,508 of equity. 3. NOTES AND OTHER RECEIVABLES At December 31, 1994 and 1995, notes and other receivables include the following ($ in thousands):
1994 1995 ---- ---- 650 Massachusetts Avenue Mortgage Notes $ 28,039 $ 27,574 Wildwood Training Facility Mortgage Note 17,791 17,416 Miscellaneous Notes 669 1,082 Cumulative rental revenue recognized on a straight- line basis in excess of revenue which accrued in accordance with lease terms (see Note 1) 3,945 4,052 Other Receivables 2,127 3,744 --------- -------- Total Notes and Other Receivables $ 52,571 $ 53,868 ========= ========
650 Massachusetts Avenue Mortgage Notes - On March 10, 1994, the Company purchased from the Resolution Trust Corporation ("RTC") two notes aggregating $37 million at a total cost of approximately $28 million. The two notes, which resulted from the RTC's restructuring in December 1993 of a $53 million note, are secured by a first deed of trust on an office building containing approximately 250,000 square feet located at 650 Massachusetts Avenue, NW, in Washington, D.C. The notes mature December 31, 2003, at which time their unamortized balance will be a maximum of approximately $32.1 million. The notes require minimum monthly payments totaling $2,818,000 annually, which through the year 2000 are supported by a U.S. government agency lease. For financial reporting purposes, the discounted notes are treated as non-amortizing notes to the extent of the minimum required payments, with the minimum required payments treated as interest income at a rate of approximately 10%. Amounts in excess of the minimum required payments ($0 in 1994 and $465,000 in 1995) are treated as a reduction of principal. Wildwood Training Facility Mortgage Note - This note, which has a face amount of $25.9 million and matures November 30, 2013, is collateralized by a building located on land owned by the Company and leased to a limited partnership through November 30, 2013, with no renewal option. The building is 100% leased to International Business Machines Corporation ("IBM") through November 30, 1998. The IBM lease generates net cash flow of approximately $2.4 million annually to the limited partnership, of which approximately $2.3 million is paid to the Company as note and lease payments. Of these amounts, ground lease payments of $304,000 per year have been treated as rental income in the accompanying financial statements and the remaining $2.0 million is treated as principal amortization over the remaining ground lease term and interest at 9.235% on the carrying value of the note. The leased land is carried at $0 in the accompanying financial statements. IBM has an option to extend its Training Facility lease from December 1, 1998 through November 30, 2003 on terms that would generate net cash flow to the limited partnership of approximately $3.1 million annually, of which approximately $3.0 million would be paid to the Company as note and ground lease payments. Fair Value - The estimated fair value of the Company's $46.5 million and $46.1 million of notes receivable at December 31, 1994 and 1995, respectively, is $49.3 million and $52.1 million, respectively, calculated by discounting future cash flows from the notes receivable at the estimated rates at which similar loans would be made currently. 4. NOTES PAYABLE, COMMITMENTS, AND CONTINGENT LIABILITIES
At December 31, 1994 and 1995, the composition of notes payable was as follows ($ in thousands): December 31, 1994 December 31, 1995 Share of Share of Unconsolidated Unconsolidated Company Joint Ventures Total Company Joint Ventures Total ------- -------------- ----- ------- -------------- ----- Floating Rate Lines of Credit $ 40,631 $ 6,905 $ 47,536 $ 32,870 $ 23,153 $ 56,023 Fixed Rate Mortgages (primarily non-recourse) 1,168 72,650 73,818 80,564 64,759 145,323 -------- -------- --------- --------- -------- --------- $ 41,799 $ 79,555 $ 121,354 $ 113,434 $ 87,912 $ 201,346 ======== ======== ========= ========= ======== =========
The following table briefly summarizes the terms of the debt outstanding at December 31, 1995 ($ in thousands): Term/ Amortization Balance at Period Final December 31, Description Rate (Years) Maturity 1995 ----------- ---- ------- -------- ---- Company Debt: Line of credit ($100 million maximum) secured by partnership interest in CSC Associates, L.P. Fed Funds + .85% 2/ N/A 9/30/96 $ 32,870 North Point MarketCenter mortgage note 8.50% 10/25 7/15/05 29,853 Perimeter Expo mortgage note 8.04% 10/30 8/15/05 21,442 Note secured by Company's interest in 650 Massachusetts Avenue mortgage notes (see Note 3) 6.53% 5/ N/A 10/01/00 28,000 Other miscellaneous notes 0% to 8.5% Various Various 1,269 --------- 113,434 --------- Share of Unconsolidated Joint Venture Debt: Wildwood: Line of credit ($25 million maximum) Fed Funds + .75% 2/ N/A 9/1/97 13,154 2300 Windy Ridge mortgage note 7.56% 10/25 12/01/05 36,000 2500 Windy Ridge mortgage note 7.45% 10/20 12/15/05 13,000 Summit Green mortgage note 9.875% 10/30 4/1/98 5,274 Ten Peachtree Place mortgage note 8.00% 10/18 11/30/01 10,485 CC-JM II Associates ($12.2 million construction loan) LIBOR + .9% 5/ N/A 6/26/00 7,759 Norfolk Hotel Associates ($2.4 million line of credit)Fed Funds + .85% 1/ N/A 10/31/96 2,240 --------- 87,912 --------- $ 201,346 =========
The Company completed three new financings and two refinancings during 1995. The North Point MarketCenter, Perimeter Expo and 650 Massachusetts Avenue financings were completed in July, August and December 1995, respectively. Wildwood Associates refinanced two mortgage notes in December 1995. One of those mortgage notes, which had an $81 million balance at a 9.09% rate and matured in August 1999, was refinanced with a $72 million 7.56% mortgage note. The second mortgage note, which had a $31 million balance at a 9.125% rate and matured in June 1996, was refinanced with a $26 million 7.45% mortgage note. The note secured by the Company's interest in the 650 Massachusetts Avenue mortgage notes actually floats at LIBOR + 1%, but as of January 10, 1996 was effectively fixed at the 6.53% rate shown above through an interest rate swap agreement with a financial institution. Concurrent with an $80 million financing completed February 6, 1996 (see Note 11), the Company's line of credit was paid down to $1,000, and the terms were modified to provide for an unsecured $10 million line maturing April 30, 1996. Prior to April 30, 1996, the Company plans to increase the line amount and extend the maturity date. The CC-JM II Associates venture has a commitment for a $24,675,000, 17 year fully amortizing loan at a 7% interest rate which should fund in the first quarter of 1996. The Company has guaranteed its share of the Wildwood Associates, CC-JM II Associates, and Norfolk Hotel Associates short term credit facilities. At December 31, 1995, the Company had outstanding letters of credit totaling $495,000, and assets with carrying values of $182,958,000 and $131,185,000 were pledged as security on the Company's and its unconsolidated joint ventures' debt, respectively. The fixed rate long-term mortgage debt of the Company and its unconsolidated joint ventures is non-recourse to the Company. As of year-end 1995, after giving effect to the $80 million financing which occurred subsequent to year-end, the weighted average maturity of the Company's debt, including its share of unconsolidated joint ventures, was 9 years. The aggregate maturities of the indebtedness at December 31, 1995 summarized above are as follows ($ in thousands):
Share of Unconsolidated Company Joint Ventures Total ------- -------------- ----- 1996 $ 34,439 $ 16,592 $ 51,031 1997 1,023 1,338 2,361 1998 1,060 7,009 8,069 1999 1,151 1,998 3,149 2000 27,295 9,913 37,208 Thereafter 48,466 51,062 99,528 ---------- -------- --------- $ 113,434 $ 87,912 $ 201,346 ========= ======== =========
For each of the years ended December 31, 1993, 1994 and 1995, interest expense was recorded as follows ($ in thousands):
Share of Unconsolidated Company Joint Ventures Total Year Expensed Capitalized Total Expensed Capitalized Total Expensed Capitalized Total - ---- -------- ----------- ----- -------- ----------- ----- -------- ----------- ----- 1993 $ $ 346 $ 346 $ 13,990 $ 108 $ 14,098 $ 13,990 $ 454 $14,444 1994 411 1,118 1,529 7,262 7,262 7,673 1,118 8,791 1995 687 5,073 5,760 6,760 302 7,062 7,447 5,375 12,822
The Company had future lease commitments under a land lease aggregating $7.4 million over its remaining term of 73 years. Current annual lease payments are approximately $63,000. The Company has entered into construction and design contracts for real estate projects, of which approximately $19.6 million remains committed at December 31, 1995. At December 31, 1994 and 1995, the carrying value of the Company's notes payable approximates fair value. 5. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES The following information summarizes financial data and principal activities of unconsolidated joint ventures in which the Company had ownership interests ($ in thousands). Audited financial statements for Wildwood Associates, CSC Associates, L.P., and Haywood Mall Associates are included in the Company's Form 10-K.
Company's Total Assets Total Debt Total Equity Investment ------------ ---------- ------------ ---------- 1994 1995 1994 1995 1994 1995 1994 1995 ---- ---- ---- ---- ---- ---- ---- ---- SUMMARY OF FINANCIAL POSITION: Wildwood Associates $ 227,875 $ 232,866 $ 132,608 $ 134,855 $ 92,284 $ 90,168 $ 3,289 $ 2,231 CSC Associates, L.P. 208,057 206,889 -- -- 204,712 203,938 105,239 104,776 Ten Peachtree Place Associates 21,814 21,173 21,692 20,971 (140) (17) (75) (39) Haywood Mall Associates 32,826 44,531 -- -- 31,869 43,293 15,985 21,961 Spring/Haynes Associates 16,344 16,527 -- -- 16,331 16,502 1,603 1,688 Norfolk Hotel Associates 8,011 8,169 4,810 4,480 3,144 3,631 1,572 1,815 CC-JM II Associates 7,498 27,253 -- 15,518 5,281 8,034 2,711 4,393 Other 2,781 1,183 -- -- 1,095 882 514 435 --------- --------- --------- ---------- --------- --------- --------- --------- $ 525,206 $ 558,591 $ 159,110 $ 175,824 $ 354,576 $ 366,431 $ 130,838 $ 137,260 ========= ========= ========= ========== ========= ========= ========= =========
Company's Share Total Revenues Net Income (Loss) of Net Income (Loss) -------------- ----------------- -------------------- 1993 1994 1995 1993 1994 1995 1993 1994 1995 ---- ---- ---- ---- ---- ---- ---- ---- ---- SUMMARY OF OPERATIONS: Wildwood Associates $36,224 $ 36,305 $ 37,767 $ 4,322 $ 4,844 $ 5,884 $ 2,161 $ 2,422 $ 2,942 CSC Associates, L.P. 27,810 28,931 31,195 (1,194) 13,009 14,697 201 6,880 7,308 Ten Peachtree Place Associates 4,263 4,228 4,276 411 461 523 240 192 236 Haywood Mall Associates 9,979 10,371 11,269 4,014 4,949 5,926 2,007 2,474 2,963 Spring/Haynes Associates 57 63 289 (214) (66) 171 (107) (33) 86 Norfolk Hotel Associates 12,680 1,029 804 1,445 664 486 723 332 243 CC-JM II Associates -- -- -- -- -- -- -- (1) -- Other 1,784 999 1,215 582 627 675 291 314 335 ------- -------- -------- ------- -------- -------- ------- -------- --- $92,797 $ 81,926 $ 86,815 $ 9,366 $ 24,488 $ 28,362 $ 5,516 $ 12,580 $ 14,113 ======= ======== ======== ======= ======== ======== ======= ======== ========
Company's Share Of Cash Flows From Cash Flows From Operating Operating Activities Operating Activities Cash Distributions -------------------- -------------------- ------------------ 1993 1994 1995 1993 1994 1995 1993 1994 1995 ---- ---- ---- ---- ---- ---- ---- ---- ---- SUMMARY OF OPERATING CASH FLOWS: Wildwood Associates $ 12,006 $ 12,999 $ 12,812 $ 6,003 $ 6,500 $ 6,406 $ 4,000 $ 4,000 $ 4,000 CSC Associates, L.P. 2,393 16,777 22,366 2,070 8,840 11,219 950 8,400 7,771 Ten Peachtree Place Associates 935 1,165 1,100 280 315 305 200 200 200 Haywood Mall Associates 4,628 5,856 3,502 2,314 2,928 1,751 2,053 2,879 3,349 Spring/Haynes Associates (98) (83) 122 (49) (42) 61 -- -- -- Norfolk Hotel Associates 33 470 338 17 235 169 -- -- -- CC-JM II Associates -- -- -- -- -- -- -- -- -- Other 843 619 721 422 310 361 304 186 466 -------- -------- -------- -------- -------- -------- ------- -------- -------- $ 20,740 $ 37,803 $ 40,961 $ 11,057 $ 19,086 $ 20,272 $ 7,507 $ 15,665 $ 15,786 ======== ======== ======== ======== ======== ======== ======= ======== ========
Wildwood Associates - Wildwood Associates was formed in 1985 between the Company and IBM, each as 50% partners. The partnership owns three office buildings totaling 1.6 million rentable square feet, two office buildings under construction totaling 250,000 rentable square feet (see Note 8), other income producing commercial properties, and additional developable land in Wildwood Office Park ("Wildwood") in Atlanta, Georgia. Wildwood is an office park containing a total of approximately 289 acres, of which approximately 85 acres are owned by Wildwood Associates and an estimated 22 acres are committed to be contributed to Wildwood Associates by the Company; the Company owns the balance of the developable acreage in the office park. Wildwood Associates and a related partnership (included in the amounts for Wildwood Associates above) also own one office building at Summit Green, an office project situated on 21 acres of leased land in Greensboro, North Carolina. The Summit Green project includes sites for two additional buildings. Through December 31, 1995, IBM had contributed $46.6 million in cash plus properties having an agreed value of $16.3 million for its one-half interest in Wildwood Associates. The Company has contributed $84,000 in cash plus properties having an agreed value of $49.3 million for its one-half interest in the partnership, and is obligated to contribute the aforesaid estimated 22 acres of additional land with an agreed value of $13.5 million. The Company and IBM each lease office space from the partnership at rates comparable to those charged to third parties. The Company's investment as recorded in the Consolidated Balance Sheets ($2.2 million at December 31, 1995) is based upon the Company's historical cost of the properties at the time they were contributed or committed to be contributed to the partnership, whereas its investment as recorded on Wildwood Associates' books ($45.1 million at December 31, 1995) is based upon the agreed values at the time the partnership was formed. CSC Associates, L.P. ("CSC") - CSC was formed in 1989 between the Company and a wholly owned subsidiary of NationsBank Corporation, each as 50% partners. CSC owns the 1.3 million rentable square foot NationsBank Plaza in Atlanta, Georgia. CSC's net income or loss and cash distributions are allocated to the partners based on their percentage interests (50% each), subject to a preference to Cousins. The Cousins preference is $2.5 million (giving Cousins an additional $1.25 million over what it would otherwise receive), and accrued to Cousins, with interest at 9% to the extent unpaid, over the period February 1, 1992 through January 31, 1995. In October 1993, the partnership fully repaid all of its debt with equity contributions of $86.7 million made by each partner. Following repayment of the partnership's debt, Cousins began recognizing its accrued preference currently in income, which resulted in Cousins recognizing $874,000, $451,000 and $36,000 in income over what it would have otherwise recognized in the years ended December 31, 1993, 1994 and 1995, respectively. During the years ended December 31, 1994 and 1995, Cousins received distributions of the preference and accrued interest of approximately $2.65 million and $71,000, respectively. Amounts above the preference amount are allocated based on the partners' percentage interests. Ten Peachtree Place Associates ("TPPA") - TPPA is a general partnership between the Company (50%) and a wholly owned subsidiary of The Coca-Cola Company ("Coca-Cola") (50%). The venture owns Ten Peachtree Place, a 259,000 rentable square foot building located in midtown Atlanta, Georgia. The building is 100% leased to Coca-Cola through November 30, 2001. The TPPA partnership agreement generally provides that each of the partners is entitled to receive 50% of cash flows from operating activities net of note principal amortization through the term of the Coca-Cola lease, after which the Company and its partner are entitled to receive 15% and 85% of the cash flows (including any sales proceeds), respectively, until the two partners have received a combined distribution of $15.3 million. Thereafter, each partner is entitled to receive 50% of cash flows. Haywood Mall Associates - Haywood Mall Associates is a venture between the Company and an affiliate of Corporate Property Investors. The venture owns Haywood Mall, a regional shopping center on 86 acres 5 miles southeast of downtown Greenville, South Carolina. Expansion of the mall from 956,000 gross leaseable square feet ("GLA") (of which the venture's ownership is approximately 272,000 GLA) to 1,256,000 GLA (of which the venture's ownership will be approximately 330,000 GLA) was substantially completed in 1995. The balance of the mall is owned by the mall's five major department stores. During the year ended December 31, 1995, the Company contributed $5.8 million to fund its share of the completion of the expansion. Spring/Haynes Associates - This general partnership was formed in 1985 between the Company and a wholly owned subsidiary of Coca-Cola, each as 50% general partners, to jointly own and develop real estate. The Company contributed 40 acres of undeveloped land at Georgia Highway 400 and Haynes Bridge Road in north central suburban Atlanta, Georgia. Coca-Cola contributed 11 acres of property in midtown Atlanta. In September 1993, the undeveloped land at Georgia Highway 400 was distributed to the partners who concurrently recontributed certain acres of the land into North Point Market Associates, L.P., a consolidated partnership formed between the partners to own North Point MarketCenter and Mansell Crossing Phase II. The Company's remaining investment in Spring/Haynes Associates as recorded in the Consolidated Balance Sheets ($1.7 million at December 31, 1995) is based upon the Company's historical cost, whereas its investment as recorded on the partnership's books ($8.3 million at December 31, 1995) is based upon the agreed values of the properties at the time they were contributed to the partnership. (See Note 11 for a description of the Company's exchange of its interest in these two partnerships subsequent to year-end.) Norfolk Hotel Associates ("NHA") - NHA is a partnership between the Company and an affiliate of Odyssey Partners, L.P., each as 50% partners, which held a mortgage note on and owned the land under the Omni International Hotel in Norfolk, Virginia. In January 1992, NHA terminated the land lease and became the owner of the hotel and a long-term parking agreement with an adjacent building owner. In April 1993, the partnership sold the hotel, but retained its interest in the parking agreement. The Company's share of the gain on this transaction was approximately $.5 million and is included in Income From Unconsolidated Joint Ventures in the accompanying Consolidated Statements of Income. The partnership received a mortgage note for a portion of the sales proceeds. In July 1994, NHA distributed to each partner a 50% interest in the parking agreement held by NHA. The Company currently receives payments of approximately $228,000 per year for its 50% interest in the agreement, and has entered into an option agreement to sell its interest for $2 million in July 1996, which would result in a profit to the Company of approximately $411,000. CC-JM II Associates - This joint venture was formed in 1994 between the Company and an affiliate of Carr Realty Corporation, each as 50% general partners, to develop and own a 224,000 rentable square foot office building in suburban Washington, D.C. The building is 100% leased for 15 years to Booz-Allen & Hamilton, an international consulting firm, as a part of its corporate headquarters campus. Rent commenced on January 21, 1996. The building is expected to be completed at a total cost of approximately $32 million with contributions to the venture of $4 million by each partner. Other - This category consists of several other joint ventures including: Cousins-Hines Partnerships - Through the Cousins-Hines partnerships, CREC effectively owns 9.8% of the One Ninety One Peachtree Tower in Atlanta, Georgia. This 1.2 million rentable square foot office building, which opened in December 1990, was developed in partnership with the Hines Interests Limited Partnership and the Dutch Institutional Holding Company. Because CREC's effective ownership of this building is less than 20%, the Company accounts for its investment using the cost method of accounting, and therefore the above tables do not include the Company's share of One Ninety One Peachtree Tower. Temco Associates - Temco Associates was formed in 1991 as a partnership between the Company (50%) and a subsidiary of Temple-Inland Inc. (50%). Temco Associates has an option through March 2006, with no carrying costs, to acquire approximately 35,000 acres in Paulding County, Georgia (northwest of Atlanta, Georgia), of which approximately 13,000 acres would be a fee simple interest and approximately 22,000 acres would be a timber rights interest only. The option may be exercised in whole or in part over the option period, and the option price of the fee simple land was $694 per acre at December 31, 1995, escalating at 6% per year during the term of the option. During 1993 and 1994, approximately 1,100 and 72 acres, respectively, of the option related to the fee simple interest was exercised and simultaneously sold for gross profits of $305,000 and $243,000, respectively. None of the option was exercised in 1995. Dusseldorf Joint Venture - In 1992, the Company entered into a joint venture agreement for the development of a 133,000 rentable square foot office building in Dusseldorf, Germany which is 34% leased to IBM. Cousins' venture partners are IBM and Multi Development Corporation International B.V. ("Multi"), a Dutch real estate development company. In December 1993, the building was presold to an affiliate of Deutsche Bank. CREC and Multi jointly developed the building. Due to the release of certain completion guarantees related to the building, approximately $2.6 million of development income was recognized in September 1995 ($931,000 of which had been deferred as of December 31, 1994). Additional Information - The Company recognized $3,106,000, $2,539,000 and $5,780,000 of development, construction, leasing, and management fees from unconsolidated joint ventures in 1993, 1994 and 1995, respectively. 6. STOCKHOLDERS' INVESTMENT, STOCK APPRECIATION RIGHT EXPENSE AND PER SHARE DATA Options and Stock Appreciation Rights: The Company has a stock incentive plan for key employees which provides for the granting of stock options. Subject to stockholder approval, the Company amended this plan effective as of September 1995 so as to allow for both stock and stock option awards under the plan (see "Stock Grants" below). At December 31, 1995, the Company had granted options to key employees to purchase 1,412,578 shares of the Company's common stock (including 258,228 shares under a predecessor plan), and subject to stockholder approval of the 1995 amendment, is authorized to award an additional 1,202,850 stock options or shares of stock. The Company may incorporate a provision in each stock option agreement to allow the option holder to surrender options and request a cash payment for the difference between the fair market value of the shares at the date of surrender and the option price. Separately from the stock incentive plan, the Company has issued stock appreciation rights ("SARs") to certain employees. In order to compensate the holders of unexercised stock options for decreases in the underlying value of shares subject to the options resulting from certain capital gain distributions to stockholders, the Company issued Deferred Payment Agreements from 1988 through 1991 to holders of unexercised stock options at the time of such distributions. These Deferred Payment Agreements provided for a fixed cash payment to stock option holders upon exercise of the options in an amount approximately equal to the amount of the capital gain distribution that would have been payable on the shares subject to the options if the options had been exercised prior to the record date for the distributions. Holders of SARs were similarly compensated by a downward adjustment in the price of SARs held by them. Financial Accounting Standards Board pronouncements require that all stock options which have a cash payment election option be accounted for as SARs. Accordingly, included in the Consolidated Statements of Income under the heading "stock appreciation right expense" are increases or reductions in accrued compensation expense to reflect the issuance of new SARs or stock options with cash payment provisions, vesting, changes in the market value of the common stock from the dates of grant, and expirations of non-vested options or SARs of terminated employees. In the first quarter of 1993, the cash payment provision associated with 374,341 stock options was given up by certain of the option holders, thereby reducing stock appreciation right expense for 1993 by approximately $502,000. The following is a summary of stock option activity under the stock option plan ($ in thousands, except per share amounts):
Number of Total Option Shares Price Option Price Per Share ------ ----- ---------------------- 1994 1995 1994 1995 1994 1995 ---- ---- ---- ---- ---- ---- Outstanding, beginning of year 911 1,184 $ 13,503 $ 17,919 $ 4.82 to $17.75 $ 8.11 to $17.75 Terminated -- (29) -- (493) $ -- $ 15.75 to $17.75 Exercised (11) (42) (57) (579) $ 4.82 $ 8.11 to $17.75 Granted 284 300 4,473 5,396 $ 15.75 $ 18.00 ----- ----- -------- -------- Outstanding, end of year 1,184 1,413 $ 17,919 $ 22,243 $ 8.11 to $17.75 $ 9.00 to $18.00 ===== ===== ======== ======== Shares exercisable at end of year 567 805 === ===
At December 31, 1994, the Company had 369,215 SARs outstanding (of which 225,360 were exercisable) at prices ranging from $10.78 per share to $16.875 per share. At December 31, 1995, the Company had 344,050 SARs outstanding (of which 271,780 were exercisable) at prices ranging from $10.78 per share to $16.875 per share. At December 31, 1994 and 1995, the total amount accrued for stock options, SARs, and Deferred Payment Agreements was $2,296,000 and $3,367,000, respectively. Stock Grants: As indicated above, the September 1995 amendment to the stock incentive plan provides for stock awards in addition to stock option awards, with the amended plan being subject to stockholder approval. The stock awards may be subject to specified performance and vesting requirements. Subject to stockholder approval of the September 1995 amendment, 110,400 shares of common stock have been awarded to date, of which 10,400 shares were awarded in lieu of 1995 cash bonuses, and 100,000 shares were awarded subject to specified performance and vesting requirements. The estimated cost of the 100,000 shares, which will not be issued until all requirements have been met, is being accrued over the five year performance and vesting period, and $44,000 was accrued as of December 31, 1995. Per Share Data: Primary income per share is computed by dividing income by the weighted average number of shares of common stock and dilutive common stock equivalents outstanding (22,781,485, 27,844,341 and 27,983,180 in 1993, 1994 and 1995, respectively). Fully diluted income per share does not differ materially from primary income per share in 1993, 1994 and 1995. Ownership Limitations: In order to maintain Cousins' qualification as a REIT, Cousins' Articles of Incorporation include certain restrictions on the ownership of more than 3.9% of the Company's common stock. Distribution of REIT Taxable Income: The following is a reconciliation between dividends declared and dividends applied in 1993 and 1994 and estimated to be applied in 1995 to meet REIT distribution requirements ($ in thousands):
1993 1994 1995 ---- ---- ---- Dividends declared $ 17,204 $ 25,064 $ 27,691 That portion of dividends declared in current year, and paid in current year, which was applied to the prior year distribution requirements (665) (161) (3,048) That portion of dividends declared in subsequent year, and paid in subsequent year, which will apply to current year 161 3,048 3,118 -------- -------- -------- Dividends applied to meet current year REIT distribution requirements $ 16,700 $ 27,951 $ 27,761 ======== ======== ========
Dividends applied to meet REIT distribution requirements were equal to Cousins' taxable income (see Note 7). Since electing to qualify as a REIT in 1987, Cousins has had no accumulated undistributed taxable income. 7. INCOME TAXES In 1993, 1994 and 1995, because Cousins qualified as a REIT and distributed all of its taxable income (see Note 6), it incurred no federal income tax liability. The differences between taxable income as reported on Cousins' tax return (actual 1993 and 1994 and estimated 1995) and Consolidated Net Income as reported herein are as follows ($ in thousands):
1993 1994 1995 ---- ---- ---- Consolidated net income $ 11,965 $ 26,895 $ 26,342 Consolidating adjustments 515 (1,875) 348 Less CREC net loss (income) 1,413 394 (1,652) -------- -------- -------- Cousins net income for financial reporting purposes 13,893 25,414 25,038 Adjustments arising from: Sales of investment properties 17,563 3,909 (2,014) Income from unconsolidated joint ventures (principally depreciation, revenue recognition, and operational timing differences) (7,529) (2,361) (1,557) Rental income recognition (403) (111) (192) Interest income recognition -- 198 123 Wildwood Training Facility differences (7,664) 342 375 Interest expense 194 297 3,520 Compensation expense under stock option and SAR plans 138 92 290 Depreciation 59 336 324 Net operating loss generated (utilized) 295 (295) -- Other 154 130 1,854 -------- -------- -------- Cousins taxable income $ 16,700 $ 27,951 $ 27,761 ======== ======== ========
The consolidated provision (benefit) for income taxes is composed of the following ($ in thousands): 1993 1994 1995 ---- ---- ---- CREC and its wholly owned subsidiaries: Currently payable (refundable): Federal $ (577) $ -- $ 574 State (157) -- 17 (734) -- 591 Adjustments arising from: Income from unconsolidated joint ventures 687 411 171 Operating loss carryforward (628) (94) 323 Stock appreciation right expense (166) (111) (324) Fee income -- (361) 354 Other 16 (33) (49) (91) (188) 475 CREC provision (benefit) for income taxes (825) (188) 1,066 Cousins provision (benefit) for state income taxes 30 22 (228) Less provision applicable to gain on sale of investment properties -- -- (91) -------- -------- -------- Consolidated provision (benefit) applicable to income from operations $ (795) $ (166) $ 747 ======== ======== ========
The Cousins provision (benefit) for state income taxes in 1995 is net of $252,000 of state income tax refunds related to a successful judicial appeal by Cousins of an assessment paid in 1992. The net income tax provision (benefit) differs from the amount computed by applying the statutory federal income tax rate to CREC's income (loss) before taxes as follows ($ in thousands):
1993 1994 1995 ---- ---- ---- Amount Rate Amount Rate Amount Rate ------ ---- ------ ---- ------ ---- Federal income tax provision (benefit) $ (761) 34% $(198) 34% $ 924 34% State income tax provision (benefit), net of federal income tax effect (90) 4 (23) 4 109 4 Other 26 (1) 33 (5) 33 1 ------ --- ----- --- ----- --- CREC provision (benefit) for income taxes (825) 37% (188) 33% 1,066 39% --- --- --- Cousins provision (benefit) for income taxes 30 22 (228) Less provision applicable to gain on sale of investment properties -- -- (91) ------ ----- ----- Consolidated provision (benefit) applicable to income from operations $ (795) $(166) $ 747 ====== ===== =====
The components of CREC's net deferred tax liability are as follows ($ in thousands): 1994 1995 ---- ---- Deferred tax assets $ 1,711 $ 1,405 Deferred tax liabilities (3,017) (3,221) -------- -------- Net deferred tax liability $ (1,306) $ (1,816) ======== ========
The tax effect of significant temporary differences representing CREC's deferred tax assets and liabilities are as follows ($ in thousands):
1994 1995 ---- ---- Operating loss carryforward $ 721 $ 310 Income from unconsolidated joint ventures (2,775) (2,946) Stock appreciation right expense 430 755 Fee income 361 7 Other (43) 58 -------- -------- $ (1,306) $ (1,816) ======== ========
8. PROPERTY TRANSACTIONS Retail Properties In September 1995, North Point MarketCenter Phase II, a 176,000 square foot (60,000 of which is owned by the Company) retail power center expansion in north central suburban Atlanta, became fully operational for financial reporting purposes. In October 1995, Lawrenceville MarketCenter, a 499,000 square foot retail power center in northeast suburban Atlanta, became partially operational for financial reporting purposes. In December 1995, Lovejoy Station, a 77,000 square foot retail strip center in south central suburban Atlanta, became partially operational for financial reporting purposes. Construction which commenced during 1995 included: Mansell Crossing Phase II, a 100,000 square foot retail power center expansion adjacent to the Company's other North Point properties, in February 1995; Colonial Plaza MarketCenter, a 533,000 square foot retail power center in suburban north central Orlando, Florida, in February 1995; Greenbrier MarketCenter, a 474,000 square foot retail power center in Chesapeake, Virginia, in May 1995; Presidential MarketCenter Phase II, a 130,000 square foot retail power center expansion in northeast suburban Atlanta, in November 1995; and Rivermont Station, a 92,000 square foot retail strip center in north central suburban Atlanta, in December 1995. Office Properties In August 1995, Wildwood Associates commenced construction on two new office buildings on approximately 12.6 acres of land it owns in Wildwood Office Park. The two buildings will be a total of 250,000 rentable square feet of which 227,000 rentable square feet are pre-leased to Georgia-Pacific Corporation. In November 1995, construction commenced on 200 North Point Center East, a 125,000 rentable square foot office building at North Point, adjacent to 100 North Point Center East (a building of similar size which opened in December 1995), North Point Mall and the Company's retail properties in north central suburban Atlanta. Residential Lots The Company is currently developing five residential communities in suburban Atlanta, including four in which development commenced in 1994 and one in 1995. These developments currently include land on which approximately 827 lots are being developed (with additional lots developable on adjacent land under option), of which 116 and 180 lots were sold in 1994 and 1995, respectively. 9. CONSOLIDATED STATEMENTS OF CASH FLOWS - SUPPLEMENTAL INFORMATION
Interest (net of amounts capitalized) (see Note 4) and income taxes paid (net of refunds) were as follows ($ in thousands): 1993 1994 1995 ---- ---- ---- Interest paid $ -- $ 336 $ 846 Income taxes paid (refunded), net of $577 and $252 refunded in 1994 and 1995, respectively $ 68 $ (549) $ 376
Significant non-cash financing and investing included the following: a. In 1994 and 1995, approximately $27,602,000 and $2,860,000, respectively, was transferred from Projects Under Construction to Operating Properties. b. In 1994 and 1995, approximately $941,000 and $2,970,000, respectively, was transferred from Land Held for Investment or Future Development to Projects Under Construction. In 1993, approximately $4,709,000 was transferred from Land Held for Investment or Future Development to Operating Properties. c. In July 1994, Norfolk Hotel Associates distributed a 50% interest (approximately $1,589,000) in a long-term parking agreement with an adjacent building owner (see Note 5). d. In September 1993, the carrying value of the Company's land and infrastructure costs for North Point MarketCenter (approximately $7,933,000) was transferred from Land Held for Investment or Future Development to Projects Under Construction. Included in the $7,933,000 of costs transferred to Projects Under Construction was the Company's carrying value (approximately $495,000) of a concurrent land distribution from Spring/Haynes Associates. Also concurrently, an affiliate of Coca-Cola contributed the land it previously held in Spring/Haynes Associates for a 17.7% minority interest in the North Point MarketCenter project, which was recorded at a value of $2,658,000 (see Note 5). 10. RENTAL PROPERTY REVENUES The Company's leases typically contain escalation provisions and provisions requiring tenants to pay a pro rata share of operating expenses. The leases typically include renewal options and all are classified and accounted for as operating leases.
At December 31, 1995, future minimum rentals to be received by consolidated entities under existing non-cancelable leases, excluding tenants' current pro rata share of operating expenses, are as follows ($ in thousands): Retail Office Total ------ ------ ----- 1996 $ 13,949 $ 6,536 $ 20,485 1997 13,964 6,601 20,565 1998 13,959 6,394 20,353 1999 13,768 6,358 20,126 2000 13,306 5,047 18,353 Subsequent to 2000 148,920 16,882 165,802 --------- -------- --------- $ 217,866 $ 47,818 $ 265,684 ========= ======== =========
For the years ended December 31, 1993, 1994 and 1995, income recognized on a straight-line basis for financial reporting purposes exceeded income which accrued in accordance with the lease terms by $391,000, $209,000 and $107,000, respectively (see Notes 1 and 3). Of the future minimum office rentals, 75% are attributable to the three major tenants of the Company's First Union Tower project in Greensboro, North Carolina. 11. SUBSEQUENT EVENTS CSC Associates, L.P. Financing On February 6, 1996, CSC Associates, L.P. ("CSC") issued $80 million of 6.377% collateralized notes (the "Notes"). The Notes amortize in equal monthly installments of $590,680 based on a 20 year amortization schedule, and mature February 15, 2011. The Notes are non-recourse obligations of CSC and are secured by a Deed to Secure Debt, an Assignment of Rents and Security Agreement covering CSC's interest in the NationsBank Plaza building and related leases and agreements. CSC has loaned the $80 million proceeds of the Notes to the Company under a non-recourse loan (the "Cousins Loan") secured by the Company's interest in CSC under the same payment terms as those of the Notes. The Company paid all costs of issuing the Notes and the Cousins Loan, including a $400,000 fee to an affiliate of NationsBank Corporation. In addition, the Company will pay a fee to an affiliate of NationsBank Corporation of .3% per annum of the outstanding principal balance of the Notes. The Company used the proceeds to temporarily pay down short term debt, and will ultimately use the funds for continuing development opportunities. Exchange of Interests in North Point Market Associates, L.P. and Spring/Haynes Associates At December 31, 1995, the Company had interests in two partnerships with Coca-Cola which were exchanged subsequent to year-end: Spring/Haynes Associates (50% interest) and North Point Market Associates, L.P. (82.3% interest) (see Note 5). Effective January 1, 1996, the Company and Coca-Cola entered into an exchange transaction which effectively resulted in Coca-Cola receiving 100% of the Spring/Haynes Associates' property and the Company receiving $1,092,000 in cash and 100% of North Point Market Associates, L.P.'s properties (North Point MarketCenter and Mansell Crossing Phase II). Los Altos MarketCenter In February 1996, the Company purchased the Los Altos Shopping Center, a retail center located in Long Beach, California. The Company commenced the demolition of the retail center and began construction of Los Altos MarketCenter, a 280,000 square foot (of which the Company will own 152,000 square feet) retail power center which is expected to be completed at a total cost of approximately $23 million. Cousins Properties Incorporated and Consolidated Entities FIVE YEAR SUMMARY OF SELECTED FINANCIAL DATA - -------------------------------------------------------------------------------- ($ in thousands, except per share amounts)
1991 1992 1993 1994 1995 ---- ---- ---- ---- ---- Rental property revenues $ 6,728 $ 6,933 $ 6,687 $ 13,150 $ 19,348 Fees 4,855 4,953 5,903 5,023 7,884 Residential lot and outparcel sales -- -- -- 6,132 9,040 Interest and other 7,127 6,989 6,456 6,801 4,764 ---------- ---------- ---------- --------- --------- Total revenues 18,710 18,875 19,046 31,106 41,036 ---------- ---------- ---------- --------- --------- Income from unconsolidated joint ventures 2,434 2,573 5,516 12,580 14,113 ---------- ---------- ---------- --------- --------- Rental property operating expenses 2,456 2,354 2,310 3,338 4,681 Depreciation and amortization 2,236 2,345 3,164 3,742 4,516 Stock appreciation right expense 378 860 721 433 1,298 Residential lot and outparcel cost of sales -- -- -- 5,762 8,407 Interest expense 1,149 820 -- 411 687 General, administrative, and other expenses 5,573 5,640 9,124 9,627 10,333 ---------- ---------- ---------- --------- --------- Total expenses 11,792 12,019 15,319 23,313 29,922 ---------- ---------- ---------- --------- --------- Provision (benefit) for income taxes from operations 244 360 (795) (166) 747 Gain on sale of investment properties, net of applicable income tax provision -- 6,644 1,927 6,356 1,862 ---------- ---------- ---------- --------- --------- Net income $ 9,108 $ 15,713 $ 11,965 $ 26,895 $ 26,342 ========== ========== ========== ========= ========= Income per share: From operations before gain on sale of investment properties $ .53 $ .50 $ .44 $ .74 $ .87 From gain on sale of investment proper- ties, net of applicable tax provision -- .36 .09 .23 .07 ---------- ---------- ---------- --------- --------- Net income per share $ .53 $ .86 $ .53 $ .97 $ .94 ========== ========= ========== ========= ========= Cash dividends declared per share $ .60 $ .62 $ .73 $ .90 $ .99 ========== ========= ========== ========= ========= Total assets $ 169,406 $ 195,791 $ 319,702 $ 330,817 $ 418,006 Notes payable 34,680 9,079 35,151 41,799 113,434 Stockholders' investment 114,100 176,091 270,557 272,898 277,678
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS - -------------------------------------------------------------------------------- To the Stockholders of Cousins Properties Incorporated: We have audited the accompanying consolidated balance sheets of Cousins Properties Incorporated (a Georgia corporation) and consolidated entities as of December 31, 1994 and 1995, and the related consolidated statements of income, stockholders' investment and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We did not audit the financial statements of CSC Associates, L.P. and Haywood Mall Associates which statements combined reflect assets of 46% and 45% of the joint ventures totals as of December 31, 1994 and 1995 and revenues of 41%, 48% and 49% of the 1993, 1994 and 1995 joint ventures totals, respectively. Those statements were audited by other auditors whose reports have been furnished to us and our opinion, insofar as it relates to the amounts included for those entities as of December 31, 1994 and 1995 and for each of the three years in the period ended December 31, 1995, is based solely on the reports of the other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the reports of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of other auditors, the financial statements referred to above present fairly, in all material respects, the financial position of Cousins Properties Incorporated and consolidated entities as of December 31, 1994 and 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995 in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Atlanta, Georgia February 20, 1996 Cousins Properties Incorporated and Consolidated Entities MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- Results of Operations For The Three Years Ended December 31, 1995 General. Historically, the Company's financial results have been significantly affected by sale transactions and the fees generated by, and start-up operations of, major real estate developments, which transactions and developments do not necessarily recur. Accordingly, the Company's historical financial statements may not be indicative of future operating results. For information as to certain factors which may affect future income and cash flow, see "Additional Prospective Information." The notes referenced in the discussion below are the "Notes to Consolidated Financial Statements" included in this annual report. Rental Property Revenues and Operating Expenses. Rental property revenues increased from $6,687,000 in 1993 to $13,150,000 and $19,348,000 in 1994 and 1995, respectively. The increases in 1994 and 1995 are primarily due to rental property revenues from the Company's retail power centers. Perimeter Expo which became operational in December 1993 increased $3,022,000 and $418,000 in 1994 and 1995, respectively. North Point MarketCenter which became operational in May 1994 (Phase I) and July 1995 (Phase II) increased $1,958,000 and $2,437,000 in 1994 and 1995, respectively. Presidential MarketCenter which became operational in December 1994 increased $117,000 and $1,762,000 in 1994 and 1995, respectively. Lawrenceville MarketCenter which became operational in December 1995 contributed to the increased results in 1995 by $312,000. Rental property revenues from 20 acres of the Georgia Highway 400 land being ground leased to freestanding users also increased in 1994 and 1995 by $400,000 and $429,000, respectively. Approximately 6 acres of leases began generating income during the fourth quarter of 1993, with 7 acres of leases beginning throughout 1994 and an additional 7 acres of leases beginning throughout 1995. Rental property revenues were also affected by changes which occurred in the 3301 Windy Ridge Parkway Building, a 107,000 square foot Company wholly owned building in Wildwood Office Park, which had rental property revenues of $0, $876,000 and $1,001,000 in 1993, 1994 and 1995, respectively. This building was unoccupied during 1993. Subsequently, commencing January 1994 a single tenant leased the building for a term of ten years. The lease was initially for 60% of the building, with options permitting the tenant to expand its occupancy to the remainder of the building over the next several years; the first such option for an additional 10% of the space was exercised in the fourth quarter of 1994. Rental property revenues were also favorably impacted over the three year period by First Union Tower, which had rental property revenues of $5,421,000, $5,522,000 and $5,961,000 in 1993, 1994 and 1995, respectively. Rental property operating expenses increased from $2,310,000 in 1993 to $3,338,000 and $4,681,000 in 1994 and 1995, respectively. The increases in 1994 and 1995 were primarily related to the occupancy of the retail power centers and the two office buildings discussed above. Development and Construction Fees. Development and construction fee income increased from $898,000 in 1993 to $1,020,000 and $3,515,000 in 1994 and 1995, respectively. The increase in 1995 is due primarily to the recognition of development income from the Dusseldorf project ($2,604,000) (see Note 5) and an increase of $244,000 in development fees recognized from Wildwood Associates. This increase was partially offset by a decrease in development fees of $313,000 recognized by CMC from third party retail developments. Development fees received from the Emory Conference Center, a third party development, also decreased in 1995 by $117,000. The increase in 1994 was primarily related to development fees received from the Emory Conference Center, ($235,000 increase). This increase was partially offset by a decrease of $112,000 in office tenant construction activity. Management Fees. Management fees increased from $1,999,000 in 1993 to $2,061,000 and $2,213,000 in 1994 and 1995, respectively. Management fees increased in 1994 and 1995 primarily due to lease-up of the projects from which management fees are received. Leasing and Other Fees and Leasing and Other Commissions Expense. Leasing and other fees decreased from $3,006,000 in 1993 to $1,942,000 in 1994, and then increased to $2,156,000 in 1995. The increase in 1995 was due primarily to a $374,000 third party incentive fee and a $276,000 cash flow and sale participation received from third party retail projects. Leasing fee income from NationsBank Plaza also increased $141,000 in 1995. Partially offsetting these increases was a decrease in leasing fees received from third party retail projects as such third party work was phased out and in-house development increased. The decrease in 1994 was also due to a decrease in leasing fees received from third party retail projects of $802,000. Office leasing fees also decreased in 1994 by $262,000. Changes in leasing commission expense were associated primarily with the changes in leasing fee income recognized from One Ninety One Peachtree Tower and retail leasing and other fees received from third parties. Residential Lot and Outparcel Sales and Cost of Sales. Residential lot and outparcel sales increased from $0 in 1993 to $6,132,000 and $9,040,000 in 1994 and 1995, respectively. Both the increases in 1994 and 1995 were due to increases in residential lot sales by CREC from none in 1993 to 116 and 180 in 1994 and 1995, respectively. CMC also recognized $1,300,000 and $525,000 in outparcel sales in 1994 and 1995, respectively. Residential lot and outparcel cost of sales increased from $0 in 1993 to $5,762,000 and $8,407,000 in 1994 and 1995, respectively. The increases in both years were due to the increases in sales discussed above. Interest and Other Income. Interest and other income increased from $6,456,000 in 1993 to $6,801,000 in 1994 and then decreased to $4,764,000 in 1995. The decrease in 1995 is due to decreases in interest income received from the 9.1% Mortgage Notes ($1,813,000 decrease) and temporary investments ($163,000 decrease). The 9.1% Mortgage Notes which had a balance of $39,927,000 at December 31, 1993 were repaid in full on June 30, 1994. The decrease in temporary investment income was primarily due to the Company's investment of its excess cash in real estate assets in 1995. Partially offsetting these decreases was an increase of $533,000 due to the recognition of a full year of interest income from the 650 Massachusetts Avenue Notes which were purchased in March 1994 (see Note 3). The increase in 1994 is primarily due to interest income of $2,285,000 being recognized from the purchase of the 650 Massachusetts Avenue Notes. Additionally, the Company recognized a gain of $623,000 on the sale of a non-real estate asset in November 1994. Offsetting these increases in 1994 were decreases in interest income received from the 9.1% Mortgage Notes ($1,820,000 decrease) and temporary investments ($511,000 decrease). Income From Unconsolidated Joint Ventures. (All amounts reflect the Company's share of joint venture income.) Income from unconsolidated joint ventures increased from $5,516,000 in 1993 to $12,580,000 and $14,113,000 in 1994 and 1995, respectively. Income from CSC Associates, L.P. increased from $201,000 in 1993 to $6,880,000 and $7,308,000 in 1994 and 1995, respectively. The increase in 1995 is due to the continued lease-up of NationsBank Plaza as the leases which were executed in 1994 began to favorably impact the operating results in 1995. The Company's share of both the 1994 and 1995 results benefited by $451,000 and $36,000 in 1994 and 1995, respectively, due to recognition by the Company of a partnership income preference after the partnership's debt was repaid in October 1993 and net income became positive (see Note 5). In addition, the total interest expense of the partnership was reduced by approximately $12.3 million in 1994 because of the partnership's debt prepayment (see Note 5). Income from Wildwood Associates increased from $2,161,000 in 1993 to $2,422,000 and $2,942,000 in 1994 and 1995, respectively. The increase in 1995 is the result of the lease-up of the 2500 Windy Ridge Parkway Building ($144,000 increase in net operating income) and the 3200 Windy Hill Road Building ($67,000 increase in net operating income). Results in 1995 were favorably impacted by lower interest expense (approximately $155,000) which was due to increased interest capitalization and refinancings of two mortgage notes payable in December 1995. Depreciation and amortization expense which was lower in 1995 (approximately $147,000) and increased rental income from certain ground lease sites (approximately $57,000) also favorably impacted 1995 results. The increase in 1994 was primarily because of leaseup of the 3200 Windy Hill Road Building ($287,000 increase in net operating income). Results in 1994 were also favorably impacted by increased rental income (approximately $139,000) from certain ground lease sites which began generating revenue during the fourth quarter of 1993 and second quarter of 1994. Income from Haywood Mall Associates increased from $2,007,000 in 1993 to $2,474,000 and $2,963,000, in 1994 and 1995, respectively. The Company's share of the 1995 results was favorably impacted by the venture's prepayment of its outstanding debt through equity contributions of $10 million from each partner on April 29, 1994. Results in 1995 reflect no interest expense as compared to four months of interest expense in 1994 (a decrease in interest expense of $299,000). Results in 1995 also reflect increases in operating income due to the completion and lease-up of the expansion of Haywood Mall (see Note 5). The Company's share of the 1994 results also benefited from the prepayment of the debt as discussed above. Results in 1994 reflect four months of interest expense as compared to twelve months of interest expense in 1993 ($613,000 decrease). Partially offsetting this favorable impact of reduced interest expense in 1994 was a $340,000 charge incurred related to the prepayment of the venture's mortgage debt. Income from Norfolk Hotel Associates decreased from $723,000 in 1993 to $332,000 and $243,000 in 1994 and 1995, respectively. The decrease in 1995 was a result of the July 1994 distribution to each partner of a 50% interest in the parking agreement (see Note 5). The 1994 results include seven months of income from the parking agreement versus none in 1995, a decrease of $121,000. Income in 1993 was favorably impacted by a $460,000 gain recognized upon the sale of the Omni International Hotel in April 1993. Subsequent to the sale, the partnership recognized more net income from the sales proceeds (including a purchase money first mortgage note) than it was receiving from hotel operations prior to the sale. General and Administrative Expenses. General and administrative expenses increased from $7,336,000 in 1993 to $7,538,000 and $7,648,000 in 1994 and 1995, respectively. The increases in 1994 and 1995 were primarily because of personnel increases related to the Company's expansion, offset by an increase in costs capitalized to projects under development ($3,049,000 in 1995 versus $1,800,000 in 1994). Depreciation and Amortization. Depreciation and amortization increased from $3,164,000 in 1993 to $3,742,000 and $4,516,000 in 1994 and 1995, respectively. Both the 1994 and 1995 increases are due primarily to the retail power centers becoming operational as discussed above (increases of $824,000 and $1,061,000 in 1994 and 1995, respectively). These increases were partially offset by decreases of $439,000 and $211,000 in 1994 and 1995, respectively, in amortization of intangible assets acquired when the Company purchased the retail development business of New Market Companies, Inc. These intangible assets were being written off as the related income was recognized. Stock Appreciation Right Expense. Stock appreciation right expense decreased from $721,000 in 1993 to $433,000 in 1994 and then increased to $1,298,000 in 1995. This non-cash item is primarily related to the price per share of the common stock, which increased over the three year period and was $16.50, $17.375 and $20.25 per share at December 31, 1993, 1994 and 1995, respectively. The cash payment provision associated with 374,341 stock options was given up by certain of the option holders in 1993, thereby reducing stock appreciation right expense by approximately $502,000 (see Note 6). Interest Expense. Interest expense increased from $0 in 1993 to $411,000 and $687,000 in 1994 and 1995, respectively. All interest was capitalized in 1993. In 1995, interest expense before capitalization increased to $5,760,000 from $1,529,000 in 1994 due to higher debt levels. This increase was partially offset by increased capitalization because of a higher level of projects under development. The amount of interest capitalized to projects under development (a reduction of interest expense) increased to $5,073,000 in 1995 from $1,118,000 in 1994. Property Taxes on Undeveloped Land. Property taxes on undeveloped land increased from $537,000 to $1,085,000 in 1994 and then decreased to $977,000 in 1995. The increase in 1994 is due primarily to an increase in property taxes of the Company's Georgia Highway 400 land ($579,000 increase of which $150,000 related to a 1993 property tax reassessment). Other Expenses. Other expenses decreased from $1,058,000 in 1993 to $922,000 in 1994 and then increased to $1,688,000 in 1995. The increase in 1995 is due primarily to an increase of $631,000 in predevelopment expenses. Other expenses were negatively impacted in 1993 because of a $310,000 charge made for the present value of an indemnification an insurance company in rehabilitation had made to the Company in 1974, but defaulted on in the third quarter of 1993. This obligation is due in monthly installments of principal and interest of $3,208 through December 2009. Partially offsetting the favorable variance of no similar expense in 1994 was an increase in predevelopment expenses of $244,000 from 1993 to 1994. Provision (Benefit) For Income Taxes From Operations. The benefit for income taxes from operations decreased from a benefit of $795,000 in 1993 to a benefit of $166,000 in 1994, which benefit decreased in 1995 to a provision of $747,000. The provision (benefit) for income taxes from operations increased from 1994 to 1995 due primarily to an increase in CREC and its subsidiaries' net income before income taxes from a net loss before income taxes of $582,000 to net income before income taxes of $2,626,000. The increase in CREC and its subsidiaries' net income before income taxes was due to the recognition of certain of the development income from the Dusseldorf project by CREC (see Note 5). Also contributing to the increase in net income before income taxes was an increase in intercompany development and leasing fees recognized from $3,019,000 in 1994 to $5,479,000 in 1995. Intercompany fee income is eliminated in consolidation (see Note 1), but the tax effect is not. The increase in the provision for income taxes from operations was partially offset by $252,000 of state income tax refunds received related to a successful judicial appeal by Cousins of an assessment paid in 1992. The benefit for income taxes from operations decreased from 1993 to 1994 due primarily to a decrease in CREC and its subsidiaries' net loss before income taxes from $2,238,000 in 1993 to $582,000 in 1994. The decrease in CREC and its subsidiaries' net loss before income taxes was due to an increase in intercompany development and leasing fees recognized, and decreased intangible amortization. Gain on Sale of Investment Properties. Gain on sale of investment properties, net of applicable income tax provision was $1,927,000, $6,356,000 and $1,862,000 in 1993, 1994 and 1995, respectively. The 1995 gain included the following: the August 1995 sale of an approximately 1 acre parcel proximate to the CNN Center in downtown Atlanta ($1.6 million gain) and the September 1995 sale of a 6.2 acre parcel in West Cobb County, Georgia ($.5 million gain). The 1994 gain included the following: the June 1994 sale of the Company's 9 acre Peachtree Road property ($3.3 million gain), the August 1994 sale of the 10.8 acre site in North Point MarketCenter Phase II ($1.8 million gain), and the November 1994 sale of a 21 acre parcel in West Cobb County, Georgia ($1.3 million gain). The 1993 gain was from profits recognized on the sale of 100 acres in 1988 at North Point; the Company recognized profits on this sale based on percentage of completion accounting as certain infrastructure work required by the sales contract was completed in 1992 and 1993. Net proceeds received from land sales were $0, $13,279,000 and $4,731,000 in 1993, 1994 and 1995, respectively. Additional Prospective Information The Company opened three retail centers during 1995: North Point MarketCenter Phase II in July 1995, Lawrenceville MarketCenter in October 1995 and Lovejoy Station in December 1995. Rental property revenues, net of rental property operating expenses from these three centers will increase in 1996 as the Company recognizes a full year of operations. Additionally, several retail power centers which were under construction as of December 31, 1995 will become operational during 1996 and will also increase rental property operating results, including Colonial Plaza MarketCenter, Greenbrier MarketCenter, Mansell Crossing Phase II and Presidential MarketCenter Phase II. The Company's increased ownership of North Point MarketCenter (see Note 11) will also increase rental property operating results. Development fees are expected to decrease in 1996 as the development income recognized in 1995 included approximately $2.6 million from the Dusseldorf project (see Note 5). The Company's share of Wildwood Associates cash flows from operating activities will be favorably impacted in 1996 as the two new buildings discussed in Note 8 become operational. Wildwood Associates' cash flows from operating activities will also be favorably impacted by lower interest expense on two mortgage notes payable which were refinanced in December 1995. These increases will be partially offset by a decrease in rental rates at the Wildwood 2500 Building. The Company's share of CSC Associates' and CC-JM II Associates' cash flows from operating activities will also increase, the former due to continued leaseup of the NationsBank Plaza, and the latter due to the building's completion and full occupancy in January 1996. The Company has entered into an option agreement to sell its interest in the Norfolk parking agreement for $2 million in July 1996, which would result in a profit to the Company of approximately $411,000 (see Note 5). Interest expense will increase in 1996 as projects that have been under construction become operational and associated interest expense is no longer capitalized. In addition to being a 50% partner in Wildwood Associates, IBM is a major tenant in Wildwood Office Park and Summit Green. In 1993 and 1994, IBM underwent a downsizing and made a portion of its leased space available to new tenants. This provided Cousins with a marketing advantage by allowing cash flow to be maintained, while making space available to prospective tenants for extended leases on very competitive lease terms.
The following is a breakdown as of February 15, 1996, of the office space leased by IBM (square feet in thousands): Square Feet Re-leased Square Feet Square Feet Primary or Sub-leased to Currently Square Feet Leased at Lease Others During Available Currently January 1, Expiration 1993, 1994 for Re-leasing Retained Building 1993 Date and 1995 or Sub-leasing by IBM - -------- ---- ---- -------- -------------- ------ Wildwood 2300 315 December 2002 305 10 -- Wildwood 2500 186 December 1995 158 28 -- Wildwood 3100 188 November 1998 -- -- 188 Wildwood 3200 446 December 2001 24 -- 422 Summit Green 104 November 1996 46 46 12 ----- --- -- --- 1,239 533 84 622 ===== === == ===
Major tenants in the re-leased space included Coca-Cola Enterprises (140,000 square feet) and Georgia Pacific (63,000 square feet). Liquidity and Capital Resources The Company's debt (including its pro rata share of unconsolidated joint venture debt) was 26% of total market capitalization at December 31, 1995, giving the Company excellent financial flexibility. As discussed in Notes 4 and 8, concurrent with an $80 million financing completed on February 6, 1996, the Company's line of credit was paid down to $1,000, and the terms were modified to provide for an unsecured $10 million line maturing April 30, 1996. Prior to April 30, 1996, the Company plans to increase the line amount and extend the maturity date. The Company temporarily used the remaining proceeds from the financing to pay down short term debt. The Company has development projects in various planning stages. The Company currently intends to finance these projects and projects currently under construction discussed in Notes 8 and 11, by using the excess proceeds from the $80 million financing discussed above, existing lines of credit (increasing those lines of credit as required), and long-term non-recourse financing on the Company's unleveraged projects as market conditions warrant. Effects of Inflation The Company attempts to minimize the effect of inflation on income from operating properties by the use of rents tied to tenants' sales, periodic fixed-rent increases and increases based on cost-of-living adjustments, and/or pass-through of operating cost increases to tenants. - -------------------------------------------------------------------------------- Cousins Properties Incorporated and Consolidated Entities - -------------------------------------------------------------------------------- MARKET AND DIVIDEND INFORMATION - --------------------------------------------------------------------------------
The high and low sales prices for the Company's common stock and cash dividends declared per share were as follows: 1994 Quarters 1995 Quarters ------------- ------------- First Second Third Fourth First Second Third Fourth ----- ------ ----- ------ ----- ------ ----- ------ High $ 17-5/8 $ 18 $ 17-3/4 $ 17-3/8 $ 17-3/4 $ 18-1/8 $ 18-3/8 $ 20-1/4 Low 15-7/8 15-1/8 15-3/4 15-1/4 16-1/2 16-1/2 17-1/8 17 Dividends Declared .22 .22 .22 .24 .24 .24 .24 .27 Payment Date 2/22/94 5/27/94 8/24/94 12/21/94 2/22/95 5/30/95 8/24/95 12/21/95
The Company's stock trades on the New York Stock Exchange (ticker symbol CUZ). At December 31, 1995, there were 1,241 stockholders of record. In 1994, the Company designated as capital gain dividends 42.1818% of the dividend paid February 22, 1994 and all of the dividends paid May 27, 1994. In 1995, the Company designated as capital gain dividends 2.4815% of the dividend paid December 21, 1995. All other dividends paid in 1994 and 1995 were taxable as ordinary dividends. In addition, in 1994 and 1995 an amount calculated as 3.73% and 3.25% of total dividends, respectively, was an "adjustment attributed to depreciation of tangible property placed in service after 1986" for alternative minimum tax purposes. This amount was passed through to stockholders and must be used as an item of adjustment in determining each stockholder's alternative minimum taxable income. ABOUT YOUR DIVIDENDS - -------------------------------------------------------------------------------- Timing of Dividends - Cousins normally pays regular dividends four times each year in February, May, August and December. Differences Between Net Income and Cash Dividends Declared - Cousins' current intention is to distribute 100% of its taxable income and thus incur no corporate income taxes. However, Consolidated Net Income for financial reporting purposes and Cash Dividends Declared will generally not be equal for the following reasons: a. There will continue to be considerable differences between Consolidated Net Income as reported to stockholders (which includes the income of a consolidated non-REIT entity that pays corporate income taxes) and Cousins' taxable income. The differences are enumerated in Note 7 of "Notes to Consolidated Financial Statements." b. For purposes of meeting REIT distribution requirements, dividends may be applied to the calendar year before or after the one in which they are declared. The differences between dividends declared in the current year and dividends applied to meet current year REIT distribution requirements are enumerated in Note 6 of "Notes to Consolidated Financial Statements." Capital Gains Dividends - In some years, as it did in 1993, 1994 and 1995, Cousins will have taxable capital gains, and Cousins currently intends to distribute 100% of such gains to stockholders. The Form 1099-DIV sent by Cousins to stockholders of record each January shows total dividends paid (including the capital gains dividends) as well as that which should be reported as a capital gain. For individuals, the capital gain portion of the dividends is subtracted from total dividends on Schedule B of IRS Form 1040 and reported separately as a capital gain in accordance with the Schedule B instructions. Tax Preference Items and "Differently Treated Items" - Internal Revenue Code Section 59(d) requires that certain corporate tax preference items and "differently treated items" be passed through to a REIT's stockholders and treated as tax preference items and items of adjustment in determining the stockholder's alternative minimum taxable income. The amount of this adjustment is included under "Market and Dividend Information" in this report. Tax preference items and adjustments are includable in a stockholder's income only for purposes of computing the alternative minimum tax. These adjustments will not affect a stockholder's tax filing unless that stockholder's alternative minimum tax is higher than that stockholder's regular tax. Stockholders should consult their tax advisors to determine if the adjustment reported by Cousins affects their tax filing. Many stockholders will find that the adjustment reported by Cousins will have no effect on their tax filing unless they have other large sources of alternative minimum tax adjustments or tax preference items. Cousins Properties Incorporated and Consolidated Entities - -------------------------------------------------------------------------------- SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED) - -------------------------------------------------------------------------------- Selected quarterly information for the two years ended December 31, 1995 ($ in thousands, except per share amounts):
Quarters First Second Third Fourth ----- ------ ----- ------ 1994: Revenues $ 5,507 $ 6,751 $ 8,147 $ 10,701 Income from unconsolidated joint ventures 3,241 2,774 3,335 3,230 Gain on sale of investment properties, net of applicable income tax provision 3,242 1,677 1,437 Net income 4,798 8,056 6,134 7,907 Net income per share .17 .29 .22 .28 1995: Revenues 8,000 8,409 15,330 9,297 Income from unconsolidated joint ventures 3,374 3,495 3,467 3,777 Gain on sale of investment properties, net of applicable income tax provision 1,746 116 Net income 5,873 5,441 9,599 5,429 Net income per share .21 .20 .34 .19
- -------------------------------------------------------------------------------- INDEPENDENT PUBLIC ACCOUNTANTS - -------------------------------------------------------------------------------- Arthur Andersen LLP COUNSEL King & Spalding Troutman Sanders Kilpatrick & Cody Arrington & Hollowell, P.C. TRANSFER AGENT AND REGISTRAR First Union National Bank Shareholder Services Group Two First Union Center, M-12 Charlotte, North Carolina 28288-1154 Telephone Number: 1-800-829-8432 FAX Number: 1-704-374-6987 DIVIDEND REINVESTMENT PLAN The Company offers its stockholders the opportunity to purchase additional shares of common stock through the Dividend Reinvestment Plan with purchases at 95% of current market value. A copy of the Plan prospectus and an enrollment card may also be obtained by calling or writing to the Company. FORM 10-K AVAILABLE The Company's annual report on Form 10-K and interim reports on Form 10-Q are filed with the Securities and Exchange Commission. Copies are available without exhibits free of charge to any person who is a record or beneficial owner of common stock upon written request to the Company at 2500 Windy Ridge Parkway, Suite 1600, Atlanta, Georgia 30339-5683. EX-21 4 EXHIBIT 21 COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES SUBSIDIARIES OF THE REGISTRANT DECEMBER 31, 1995 At December 31, 1995, the Registrant had no 100% owned subsidiaries. At December 31, 1995, the financial statements of the following entities were consolidated with those of the Registrant in the Consolidated Financial Statements incorporated herein: Cousins Real Estate Corporation and subsidiaries (100% of non-voting common stock and 100% of preferred stock owned by Registrant); subsidiaries include Cousins MarketCenters, Inc. (100% owned by Cousins Real Estate Corporation) North Greene Associates Limited Partnership (85% owned by Registrant) Rocky Creek Properties, Inc. & MT&E - Macon-Harris (75% owned by Registrant) North Point Market Associates, L.P. (82.3% owned by Registrant) Perimeter Expo Associates, L.P. (90% owned by Registrant and 10% owned by Cousins MarketCenters, Inc.) At December 31, 1995, the Registrant and its consolidated entities had the following significant unconsolidated subsidiaries which were not 100% owned: CC-JM II Associates (50% owned by Registrant) C-H Associates, Ltd. (49% owned by Cousins Real Estate Corporation) C-H Leasing Associates (50% owned by Cousins Real Estate Corporation) C-H Management Associates (50% owned by Cousins Real Estate Corporation) CSC Associates, L.P. (50% owned by Registrant) Green Valley Associates II (50% owned by Registrant) Haywood Mall Associates (50% owned by Registrant) Hickory Hollow Associates (50% owned by Cousins Real Estate Corporation) Norfolk Hotel Associates (50% owned by Registrant) MC Dusseldorf Holding B.V. (10% voting interest owned by Registrant and 40% voting interest owned by Cousins Real Estate Corporation) Spring/Haynes Associates (50% owned by Registrant) Wildwood Associates (50% owned by Registrant) Ten Peachtree Place Associates (50% owned by Registrant) Temco Associates (50% owned by Cousins Real Estate Corporation) West Georgia Commons Associates (50% owned by Cousins Real Estate Corporation) EX-23 5 EXHIBIT 23(a) CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our reports included or incorporated by reference in this Form 10-K, into Cousins Properties Incorporated's previously filed Registration Statements File No. 33-41927, 33-56787 and 33-60350. ARTHUR ANDERSEN LLP Atlanta, Georgia March 28, 1996 EX-23 6 EXHIBIT 23(b) CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in Amendment No. 1 to the Registration Statement (Form S-3 No. 33-60350) pertaining to the Dividend Reinvestment Plan of Cousins Properties Incorporated and in the related Prospectus, in the Registration Statement (Form S-8 No. 33-56787) pertaining to the 1989 Stock Option Plan of Cousins Properties Incorporated and in the related Prospectus, and in the Registration Statement (Form S-8 No. 33-41927) pertaining to the 1989 Stock Option Plan, 1987 Restricted Stock Plan for Outside Directors and Incentive Stock Option Plan of Cousins Properties Incorporated and in the related Prospectus, of our report dated February 6, 1996, with respect to the financial statements and schedule of CSC Associates, L.P. and our report dated February 8, 1996, with respect to the financial statements and schedule of Haywood Mall Associates, included in the Form 10-K of Cousins Properties Incorporated for the year ended December 31, 1995. ERNST & YOUNG LLP Atlanta, Georgia March 28, 1996 EX-27 7
5 YEAR DEC-31-1995 DEC-31-1995 1,552 0 53,868 0 0 0 219,861 15,483 418,006 0 113,434 0 0 28,223 249,455 418,006 0 41,036 0 29,922 0 0 687 25,227 747 24,480 0 0 0 26,342 0.94 0.94
EX-99 8 COUSINS PROPERTIES INCORPORATED PROFIT SHARING PLAN AS AMENDED AND RESTATED EFFECTIVE AS OF January 1, 1996 TABLE OF CONTENTS ss. 1. DEFINITIONS .......................................................... 1 1.1. Account ........................................................... 1 1.2. Actual Deferral Percentage ........................................ 1 1.3. Adjustment ........................................................ 1 1.4. Affiliate ......................................................... 2 1.5. Average Actual Deferral Percentage ................................ 2 1.6. Beneficiary ....................................................... 2 1.7. Board ............................................................. 2 1.8. Break in Service .................................................. 2 1.9. Brokerage Account ................................................. 2 1.10. Code ............................................................. 2 1.11. Company .......................................................... 3 1.12. Company Account .................................................. 3 1.13. Company Contribution ............................................. 3 1.14. Compensation...................................................... 3 1.15. Contributory Account ............................................. 3 1.16. Distributable Account ............................................ 4 1.17. Elective Deferrals ............................................... 4 1.18. Employee ......................................................... 4 1.19. ERISA ............................................................ 4 1.20. Employment Commencement Date ..................................... 4 1.21. Employment Termination Date ...................................... 4 1.22. Excess Contributions ............................................. 5 1.23. Excess Deferrals ................................................. 5 1.24. Forfeiture ....................................................... 5 1.25. 401(k) Account.................................................... 5 1.26. 401(k) Contributions.............................................. 5 1.27. Fund ............................................................. 5 1.28. Highly Compensated Employee ...................................... 5 1.29. Leave of Absence ................................................. 7 1.30. Maternity or Paternity ........................................... 8 1.31. Nonhighly Compensated Employee ................................... 8 1.32. OBRA'93 Annual Compensation Limit ................................ 8 1.33. Participant ...................................................... 8 1.34. Plan ............................................................. 8 1.35. Plan Sponsor ..................................................... 8 1.36. Plan Year ........................................................ 8 1.37. Trust Agreement................................................... 8 1.38. Trustee .......................................................... 9 1.39. Valuation Date ................................................... 9 1.40. W-2 Compensation ................................................. 9 ss. 2. PARTICIPATION ........................................................ 9 2.1. Participation Requirements........................................ 9 2.2. Reemployment ..................................................... 9 2.3. Not a Contract of Employment ..................................... 9 ss. 3. CONTRIBUTIONS ........................................................ 9 3.1. Company Contribution .............................................. 9 3.2. 401(k) Contributions ............................................. 10 3.3. Contribution Limitations ......................................... 10 3.4. No After-Tax or Rollover Contributions ........................... 11 ss. 4. ALLOCATIONS TO ACCOUNTS ............................................. 11 4.1. Administrative Action ............................................ 11 4.2. Allocation of Investment Gains or Losses ......................... 11 4.3. Allocation of 401(k) Contributions ............................... 11 4.4. Annual Allocation of Forfeitures and Company Contribution ..................................................... 11 4.5. Statutory Allocation Restrictions ................................ 12 4.6. Allocation Report ................................................ 17 4.7. Allocation Corrections ........................................... 17 ss. 5. PLAN BENEFITS ....................................................... 17 5.1. Retirement Benefit ............................................... 17 5.2. Disability Benefit ............................................... 17 5.3. Death Benefit .................................................... 18 5.4. Vested Benefit ................................................... 19 5.5. Missing Claimant ................................................. 22 ss. 6. BENEFIT DISTRIBUTION ................................................ 22 6.1. Lump Sum Distribution ............................................ 22 6.2. Distribution Deadlines and Consent Requirement ................... 23 6.3. Distributions Procedure .......................................... 24 6.4. Hardship Distributions ........................................... 26 ss. 7. ADMINISTRATION ...................................................... 28 7.1. Plan Sponsor Powers and Duties ................................... 28 7.2. Liquidity Requirements ........................................... 29 7.3. Records .......................................................... 29 7.4. Information from Others .......................................... 29 ss. 8. TRUST FUNDS AND TRUSTEE ............................................. 29 8.1. Trust Funds ...................................................... 29 8.2. Notification to Trustee .......................................... 32 8.3. Loans ............................................................ 33 ss. 9. AMENDMENT, TERMINATION AND INDEMNIFICATION .......................... 35 9.1. Amendment ........................................................ 35 9.2. Termination ...................................................... 35 9.3. Indemnification .................................................. 35 ss. 10. MISCELLANEOUS ...................................................... 36 10.1. Headings and References ......................................... 36 10.2. Construction .................................................... 36 10.3. Spendthrift Clause .............................................. 36 10.4. Legally Incompetent ............................................. 36 10.5. Benefits Supported Only by Funds ................................ 36 10.6. No Discrimination ............................................... 36 10.7. Claims .......................................................... 37 10.8. Nonreversion .................................................... 37 10.9. Merger or Consolidation ......................................... 37 10.10. Agent for Service of Process ................................... 37 10.11. Qualified Domestic Relations Order ............................. 38 COUSINS PROPERTIES INCORPORATED PROFIT SHARING PLAN ------------------- The Cousins Properties Incorporated Profit Sharing Plan, which was (1) first adopted effective as of January 1, 1966, (2) last amended and restated in its entirety effective as of January 1, 1991, and (3) thereafter amended by amendments adopted on December 22, 1992, November 4, 1994 and September 21, 1995, is hereby amended and restated in its entirety effective as of January 1, 1996 to add a cash or deferred arrangement described in Code ss. 401(k). Unless otherwise expressly set forth in this Plan, the terms of this Plan shall apply only to Employees whose employment as such terminates on or after January 1, 1996. The rights and benefits, if any, of a former Employee whose employment terminated before such date, and who is not reemployed after such date, shall be determined solely in accordance with the terms of this Plan as in effect on the date his or her employment as such terminated. This Plan has been a profit sharing plan, and this amended and restated Plan shall continue to be a profit sharing plan, up to 100% of the assets of which may be invested in common stock issued by the Plan Sponsor. ss. 1. DEFINITIONS ------------------ The following terms shall have the meanings set forth opposite such terms for purposes of this Plan. 1.1. Account - means such amount of money, if any, as is evidenced by the last balance posted to the individual bookkeeping account of each Participant and each Beneficiary in accordance with this Plan. Each Account may consist of more than one sub-Account, and the record of each such individual account shall be maintained by the Plan Sponsor. An Account shall cease to exist when the money evidenced thereby is exhausted through distributions or Forfeitures made in accordance with this Plan. 1.2. Actual Deferral Percentage -- means for each Plan Year for each Participant who is eligible to make 401(k) Contributions at any time during such Plan Year the ratio (expressed as a percentage) of (a) the 401(k) Contributions, if any, made on his or her behalf for such Plan Year to (b) his or her Compensation for such Plan Year. The Actual Deferral Percentage of a Participant who is eligible to make, but does not make, 401(k) Contributions shall be zero. 1.3. Adjustment - means for each Valuation Date the net increase or decrease in the fair market value of the Funds attributable to investments (after deducting expenses) for the period beginning immediately after the preceding Valuation Date and ending on such Valuation Date as such increase or decrease is determined by the Plan Sponsor, excluding the net increase or decrease attributable to the assets of Brokerage Accounts. 1.4. Affiliate - means for each calendar year (a) any parent, subsidiary or sister corporation which during such year is a member of a controlled group of corporations (as defined in Code ss. 1563(a), disregarding Code ss.ss. 1563(a)(4) and 1563(e)(3)(C)) of which the Plan Sponsor is a member, (b) any trade or business, whether or not incorporated, which during such year is considered to be under common control with the Plan Sponsor under Code ss. 414(c), (c) any member of an affiliated service group (under Code ss. 414(m)) which includes the Plan Sponsor, and (d) any entity required to be aggregated with the Plan Sponsor under Code ss. 414(o). 1.5. Average Actual Deferral Percentage - means for each Plan Year the average (expressed as a percentage) of the Actual Deferral Percentages computed separately (a) for the group of Participants who are Highly Compensated Employees during such Plan Year and (b) for the group of Participants who are Nonhighly Compensated Employees during such Plan Year. 1.6. Beneficiary - means the person or persons so designated as such in accordance with ss. 5.3 by a Participant or by operation of this Plan. 1.7. Board - means the Plan Sponsor's Board of Directors. 1.8. Break in Service - means any 12 consecutive month period which begins on an Employee's Employment Termination Date during which the Employee is neither paid nor entitled to payment for the performance of duties as an Employee; provided, however, if an Employee is absent from service for Maternity or Paternity reasons, the 12 consecutive month period beginning on the first anniversary of the first date of the absence shall neither constitute a Break in Service nor a period of severance or a period of service. 1.9. Brokerage Account - means an account which the Plan Sponsor directs one, or more than one, Trustee to establish pursuant to a Participant's direction at a brokerage firm (selected by the Plan Sponsor) through which such Participant can exercise investment discretion over his or her Account (other than his or her 401(k) Account) upon the transfer of the assets of such Account (in accordance with ss. 8.1(b)) to such brokerage account. 1.10. Code - means the Internal Revenue Code of 1986, as amended, and, if the Code is amended, any reference to a section of the Code in this Plan automatically shall be deemed amended to conform to the related amendment to the Code. 1.11. Company - means the Plan Sponsor, Cousins Real Estate Corporation, Cousins MarketCenters, Inc. (which formerly was known as Cousins/New Market Development Company, Inc.), and each other Affiliate which the Board designates as such for such calendar year. 1.12. Company Account - means the sub-Account which reflects a Participant's share of Forfeitures, Company Contributions and the related investment gains and losses. 1.13. Company Contribution - means any payment by a Company to the Fund with respect to a calendar year in accordance with ss. 3.1. 1.14. Compensation - means for each Employee for each calendar year the lesser of (a) the OBRA'93 Annual Compensation Limit or (b) the actual compensation which is paid to such Employee by a Company for such calendar year and which is subject to federal income tax withholding, (1) plus his or her 401(k) Contributions and any other amount which is contributed on his or her behalf for such calendar year by a Company to a plan pursuant to a salary reduction agreement and which is not includable in his or her gross income for federal income tax purposes under Code ss.ss. 125 or 401(k), and (2) minus all of the following (to the extent subject to federal income tax withholding): (A) expense reimbursements and other expense allowances, (B) fringe benefits (cash and noncash), (C) reimbursements for moving expenses, (D) deferred compensation benefits (including, without limitation, contributions to this Plan and income attributable to the exercise of any stock options or stock appreciation rights or similar arrangements) and (E) welfare benefits (including, without limitation, contributions to group insurance plans and any other employee welfare benefit plans which are not made pursuant to a salary reduction agreement and compensation paid to such Employee specifically for the purchase of life insurance and other welfare benefits). 1.15. Contributory Account - means the fully vested sub-Account which reflects the amounts contributed by a Participant as a Minimum Contribution (as defined in this Plan as in effect on December 31, 1981 and as made on or before such date) and as a Voluntary Contribution (as defined in this Plan as in effect on December 31, 1986 and as made on or before such date), and the related investment gains and losses. 1.16. Distributable Account - means the 401(k) Contribution Account and Contributory Account, if any, and the vested percentage of a Company Account which is distributable to a Participant or Beneficiary under ss. 6 as a result of an event described in ss. 5. 1.17. Elective Deferrals - means the 401(k) Contributions made on a Participant's behalf under this Plan and the employer contributions made on his or her behalf pursuant to an election to defer under any qualified cash or deferred arrangement as described in Code ss. 401(k), any simplified employee pension cash or deferred arrangement as described in Code ss. 402(h)(1)(B), any plan described under Code ss. 501(c)(18), any salary reduction agreement for the purchase of an annuity contract under Code ss. 403(b) and, to the extent required under Code ss. 402(g)(8)(A)(ii), any eligible deferred compensation plan under Code ss. 457. 1.18. Employee - means each person who is an employee of a Company or an Affiliate (which is not a Company) under such organization's uniform and nondiscriminatory personnel policy and each person who is treated as such as a result of the "leased employee" rules under Code ss. 414(n). 1.19. ERISA - means the Employee Retirement Income Security Act of 1974, as amended and, if ERISA is amended, any reference to a section of ERISA in this Plan automatically shall be deemed amended to conform to the related amendment to ERISA. 1.20. Employment Commencement Date - means the first date for which a new Employee is paid or is entitled to payment as an Employee for the performance of duties as an Employee or, in the event such person subsequently incurs a Break in Service, the first date for which such Employee thereafter is paid or is entitled to payment as an Employee for the performance of duties as a result of his or her reemployment as such; provided, further, that the Employment Commencement Date for a person who is an employee of an organization on the date such organization becomes an Affiliate shall be treated as the date such organization becomes an Affiliate. 1.21. Employment Termination Date - means for each Employee the first to occur of (a) the earlier of the date his or her employment terminates either on account of a quit, discharge, death or retirement or (b) the date on which ends a 12 consecutive month period of absence from active employment during which period such Employee is neither on a Leave of Absence nor paid nor entitled to payment for the performance of duties as an Employee; provided, further, that the Employment Termination Date for a person who is an Employee of an Affiliate on the date on which its status as an Affiliate terminates (other than by reason of a merger into a Company or another Affiliate) shall be treated as the date such organization terminates its status as an Affiliate unless such person remains an Employee after such date. 1.22. Excess Contributions - means for each Highly Compensated Employee for each Plan Year the excess of (a) the 401(k) Contributions actually taken into account in determining his or her Actual Deferral Percentage for such Plan Year over (b) the maximum amount of such contributions permitted for such Plan Year under Code ss. 401(k)(3)(A), where such maximum shall be determined by reducing such contributions made on behalf of such Highly Compensated Employees in order of their Actual Deferral Percentages, beginning with the highest of such percentages. 1.23. Excess Deferrals - means for each Participant for each taxable year the 401(k) Contributions for such taxable year that exceed $9,500 (or, after 1996, the dollar limit under Code ss. 402(g) in effect at the beginning of such taxable year) and that the Participant elects to be refunded from this Plan pursuant to the procedures set forth in ss. 4.5(b). 1.24. Forfeiture - means the balance of a Participant's Company Account which is forfeited under this Plan as a result of a termination of his or her employment as an Employee. 1.25. 401(k) Account - means the fully vested sub-Account which reflects a Participant's 401(k) Contributions and the related investment gains and losses. 1.26. 401(k) Contributions - means the contributions made by a Company on a Participant's behalf in lieu of cash compensation pursuant to his or her election under ss. 3.2. 1.27. Fund - means the trust fund which is established and maintained as part of and in accordance with this Plan under each Trust Agreement. 1.28. Highly Compensated Employee - (a) General. The term "Highly Compensated Employee" means for each Plan Year each Participant who performs service for the Plan Sponsor or an Affiliate during the determination year and who is described in any one or more of the following groups: (1) an Employee who is a 5% owner as defined in Code ss. 416(i)(1)(A)(iii) at any time during the determination year or the look back year; (2) an Employee who receives compensation in excess of $100,000 (indexed after 1996 in accordance with Code ss. 415(d)) during the look back year; (3) an Employee who receives compensation in excess of $66,000(indexed after 1996 in accordance with Code ss. 415(d)) during the look back year and is a member of the top-paid group for the look back year, where the top-paid group consists of the top 20% of Employees ranked on the basis of compensation received during the applicable year, and for purposes of determining the number of Employees in the top-paid group, the following Employees shall be excluded: (A) Employees who have not completed 6 months of service, (B) Employees who normally work less than 17 1/2 hours per week, (C) Employees who normally work during less than 6 months during any year, (D) Employees who have not attained age 21, and (E) except to the extent provided in regulations, Employees who are included in a unit of Employees covered by an agreement which the Secretary of Labor finds to be a collective bargaining agreement between employee representatives and the Plan Sponsor or an Affiliate, which agreement does not provide for participation in this Plan; (4) an Employee who is an officer, within the meaning of Code ss. 416(i), during the look back year and who receives compensation in the look back year greater than $60,000 (or, after 1996, 50% of the dollar limitation in effect under Code ss. 415(b)(1)(A) for the calendar year in which the look back year begins), where (A) the number of officers taken into account is limited to 50 (or if less, the greater of 3 Employees or 10% of Employees) excluding those Employees who may be excluded in determining the top-paid group as set forth in (3) above; and (B) when no officer has compensation in excess of 50% of the dollar limitation in effect under Code ss. 415(b)(1)(A), the highest paid officer is treated as a Highly Compensated Employee; and (5) an Employee who is described in ss. 1.28(a)(2), (3) or (4), when such sections are modified to substitute the determination year for the look-back year, and who is one of the 100 Employees who received the most compensation from the Plan Sponsor and the Affiliates during the determination year. (b) Additional Rules. For purposes of this ss. 1.28: (1) the determination of which Employees are Highly Compensated Employees shall at all times be subject to Code ss. 414(q) and any related regulations, rulings, notices or procedures; (2) the determination year is the Plan Year for which the determination of who is highly compensated is being made, and the look-back year is the 12-month period immediately preceding the determination year; (3) "compensation" means W-2 Compensation, plus elective or salary reduction contributions to a cafeteria plan under Code ss. 125, a cash or deferred arrangement under Code ss.ss. 402(e)(3) or 402(h), or a tax sheltered annuity under Code ss. 403(b); (4) employers aggregated under Code ss. 414(b), (c), (m) or (o) shall be treated as a single employer; (5) a Highly Compensated Employee who is either a 5% owner or one of the ten most highly compensated employees is subject to the family aggregation rules under Code ss. 414(q)(6) and, with respect to any such Highly Compensated Employee or former Highly Compensated Employee, "family member" means such person's spouse and lineal ascendants or descendents and the spouses of such lineal ascendants and descendents; and (6) in determining whether an Employee is a Highly Compensated Employee for any Plan Year, the Plan Sponsor shall use the calendar year calculation election described in the regulations under Code ss. 414(q) and may make any other elections authorized under the applicable regulations, rulings or revenue procedures, including the simplified method and snapshot day determination authorized under Revenue Procedure 93-42. 1.29. Leave of Absence - means an approved leave of absence granted in writing to an Employee by a Company or, where appropriate, an Affiliate (which is not a Company) in accordance with applicable federal or state law or such organization's personnel policy for a period during which such Employee is expected to cease actively performing duties for which such Employee is paid or entitled to payment as an Employee under circumstances which do not involve a quit, discharge or retirement. 1.30. Maternity or Paternity - means an Employee's absence from work by reason of the Employee's pregnancy, the birth of a child of the Employee, the placement of a child with the Employee in connection with the adoption of such child by such Employee, or for purposes of caring for such child for a period beginning immediately following such birth or placement. 1.31. Nonhighly Compensated Employee - means an individual who is neither a Highly Compensated Employee nor a family member (as described in Code ss. 414(q)(6)) of a Highly Compensated Employee. 1.32. OBRA'93 Annual Compensation Limit - means $150,000, as adjusted after 1996 for increases in the cost of living in accordance with Code ss. 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to any period, not exceeding 12 months, over which Compensation is determined (determination period) beginning in such calendar year. If a determination period consists of fewer than 12 months, the OBRA'93 Annual Compensation Limit will be multiplied by a fraction, the numerator of which is the number of months in the determination period, and the denominator of which is 12. Any reference in this Plan to the limitation under Code ss. 401(a)(17) shall mean the OBRA'93 Annual Compensation Limit set forth in this ss. 1.32. If Compensation for any prior determination period is taken into account in determining an Employee's benefits accruing in the current Plan Year, the Compensation for that prior determination period is subject to the OBRA'93 Annual Compensation Limit in effect for that prior determination period. For this purpose, for determination periods beginning before the first day of the first Plan Year beginning on or after January 1, 1994, the OBRA'93 Annual Compensation Limit is $150,000. 1.33. Participant - means for any calendar year each salaried Employee of a Company who satisfies the requirements described in ss. 2 and who is not treated as an Employee solely by reason of the "leased employee" rules under Code ss. 414(n) and each former Employee from whom an Account is maintained. 1.34. Plan - means this Cousins Properties Incorporated Profit Sharing Plan as effective as of January 1, 1996 and all amendments to such plan or, when required by the context, this Plan as in effect before January 1, 1996. 1.35. Plan Sponsor - means Cousins Properties Incorporated and any successor to such organization. 1.36. Plan Year - means the calendar year. 1.37. Trust Agreement - means each separate agreement that establishes a separate trust fund which is a part of this Plan. 1.38. Trustee - means the individual or individuals appointed by the Plan Sponsor and designated to serve as the trustee or trustees of each Fund and any successor to such individual or individuals. 1.39. Valuation Date - means (a) for each Company Account and Contributory Account that is not invested in a Brokerage Account, the last day of each calendar month, (b) for each Company Account and Contributory Account that is invested in a Brokerage Account, the last day of each Plan Year and each other date, if any, as agreed upon between the Plan Sponsor and the Trustees for valuing such accounts, and (c) for each 401(k) Account, the last day of each calendar month and each other date, if any, as agreed upon between the Plan Sponsor and the Trustees for valuing such accounts. 1.40. W-2 Compensation - means for each Participant his or her wages and other payments required to be reported as "wages, tips and other compensation" on his or her Form W-2 under Code ss.ss. 6041, 6051 and 6052 as determined in accordance with the regulations under Code ss. 415. ss. 2. PARTICIPATION -------------------- 2.1. Participation Requirements. Each salaried Employee of a Company shall satisfy the participation requirements of this Plan on his or her Employment Commencement Date if he or she is a salaried Employee of a Company on such date and is not treated as an employee solely by reason of the "leased employee" rules under Code ss. 414(n). 2.2. Reemployment. A salaried Employee who terminates employment and is reemployed as a salaried Employee of a Company shall be treated as satisfying the participation requirements under ss. 2.1 upon his or her reemployment by such Company. 2.3. Not a Contract of Employment. This Plan is not a contract of employment and participation in this Plan shall not give any person the right to be retained in the employ of a Company or any Affiliate or, upon the termination of such employment, to have any interest or right in the Funds other than as expressly set forth in this Plan. ss. 3. CONTRIBUTIONS -------------------- 3.1. Company Contribution. Subject to ss. 4.5, the Plan Sponsor contemplates that each Company for each calendar year will contribute the same overall percentage of Compensation for Participants who are employed by that Company on the last day of such calendar year as the overall percentage of Compensation which the Plan Sponsor contributes for Participants who are employed by the Plan Sponsor on the last day of such calendar year. If a Company for any calendar year elects to contribute a different overall percentage of such Compensation for Participants, the Company Contribution made by such Company and the Forfeitures attributable to Participants employed by such Company thereafter shall be allocated exclusively to Participants employed by such Company and no other Company Contributions or Forfeitures shall be allocated to such Participants. If a Participant has Compensation from more than one Company and his or her total Compensation under ss. 1.14(b) exceeds the OBRA'93 Annual Compensation Limit, each Company's contribution under this ss. 3.1 with respect to such Participant shall be based on a fraction of the OBRA'93 Annual Compensation Limit, where the numerator of such fraction shall be his or her Compensation attributable under ss. 1.14(b) to such Company and the denominator of which shall be his or her total Compensation under ss. 1.14(b). 3.2. 401(k) Contributions. (a) General Rule. Subject to the rules set forth in this ss. 3.2 and the limitations set forth in ss. 4.5, each Participant who is an Employee may elect that the Company employing such Participant make 401(k) Contributions from his or her Compensation for each payroll period for which such election is effective. All such 401(k) Contributions shall be made exclusively through payroll withholding and shall be transferred to the Trustees as soon as practicable after the end of the payroll period during which such contributions are withheld. (b) Election Procedure. The Plan Sponsor from time to time shall establish and shall communicate in writing to Participants such procedures for making the elections described in this ss. 3.2 as the Plan Sponsor deems appropriate under the circumstances for the uniform and proper administration of this Plan. A Participant's election shall be made on an election form provided for this purpose and no election shall be effective unless such election form is properly completed and timely filed in accordance with such procedures. An election shall remain in effect until revised or terminated in accordance with such procedures. The Plan Sponsor shall have the right at any time unilaterally to reduce the amount or percentage of 401(k) Contributions which a Participant has elected be made on his or her behalf if the Plan Sponsor determines that such reduction might be necessary to satisfy the limitations under ss. 4.5. 3.3. Contribution Limitations. The 401(k) Contributions and Company Contribution for each calendar year in no event shall exceed the limitations described in ss. 4.5 for such calendar year. Furthermore, in the event a suspense account under ss. 4.5(a)(3) is in existence on the first day of a calendar year, no Company Contribution for such year shall be made if the allocation in such year of the amount in such suspense account then would be precluded by Code ss. 415. 3.4. No After-Tax or Rollover Contributions. The only contributions that a Participant can elect to make are 401(k) Contributions under ss. 3.2. No other elective contributions shall be made by Participants or Employees under this Plan either directly or through a rollover from an individual retirement account or any other employee benefit plan. ss. 4. ALLOCATIONS TO ACCOUNTS ------------------------------ 4.1. Administrative Action. As soon as practicable after each Valuation Date, Participants and Beneficiaries who as of such Valuation Date are entitled to one or more of the allocations called for in this ss. 4 shall be identified and the information which the Plan Sponsor (in its judgment) needs to make such allocations shall be furnished to the Plan Sponsor by each Company as a condition to the Plan Sponsor making such allocations. 4.2. Allocation of Investment Gains or Losses. The Plan Sponsor shall allocate the Adjustment for each Valuation Date among the applicable sub- Accounts of each Participant and Beneficiary in the proportion that each such sub-Account bears to all such sub-Accounts in order that each such sub-Account will proportionately benefit from any earnings or appreciation in the value of the assets of the Funds in which such sub-Account is invested or proportionately suffer any losses or depreciation in the value of such assets. This allocation shall be made in accordance with such reasonable and equitable procedures as may be established from time to time by the Plan Sponsor, which procedures may include allocations based on units, and shall be made wholly without reference to the suspense account referred to in ss. 4.5(a)(3) or to Brokerage Accounts. Notwithstanding the foregoing, all investment gains and losses attributable to the assets of a Brokerage Account shall be allocated exclusively to such account as of each Valuation Date. 4.3. Allocation of 401(k) Contributions. Subject to the restrictions set forth in ss. 4.5, as of each Valuation Date the Plan Sponsor shall credit any 401(k) Contributions made for the period ending on such Valuation Date to the 401(k) Account of each Participant on whose behalf such contributions are made. 4.4. Annual Allocation of Forfeitures and Company Contribution. (a) Forfeitures. Subject to the restrictions set forth in ss. 4.5, the Plan Sponsor as the first allocation step in the annual allocations shall allocate the Forfeitures for each calendar year as of the last day of such calendar year among the Company Accounts of each Participant described in ss. 4.4(c) in the same proportion that his or her Compensation for such calendar year bears to the total Compensation of all such Participants for such year. (b) Company Contribution. Subject to the restrictions set forth in ss. 4.5, the Plan Sponsor as the second allocation step in the annual allocations shall allocate the Company Contribution for each calendar year as of the last day of such calendar year among the Company Accounts of each Participant described in ss. 4.4(c) in the same proportion that his or her Compensation for such calendar year bears to the total Compensation of all such Participants for such year. (c) Eligible Participants. A Participant shall be eligible to share in the allocations of the Forfeitures and Company Contribution for a Plan Year only if he or she (1) is a salaried Employee of a Company on the last day of such Plan Year and (2) was a salaried Employee of a Company on or before the first day of such Plan Year and either (A) he or she has not had 5 or more consecutive Breaks in Service since such date or (B) his or her Account was vested at least in part before he or she had 5 or more consecutive Breaks in Service. A salaried Employee who is reemployed by a Company after he or she has 5 or more consecutive Breaks in Service shall be treated under ss. 4.4(c)(2) as if he or she had never been an Employee unless his or her interest in his or her Account was vested at least in part before such Employee had such Breaks in Service. 4.5. Statutory Allocation Restrictions. (a) Code ss. 415 Limitations. (1) General Rule. The sum of the 401(k) Contributions (including any Excess Contributions distributed to the Participant under ss. 4.5(c)), Forfeitures and the Company Contribution allocated for any calendar year to the Account of any Participant shall (after taking in account the special rules under ss. 4.5(a)(2)) under no circumstances exceed the lesser of: (A) 25% of the Participant's W-2 Compensation for such calendar year; or (B) the greater of $30,000 or one-fourth of the defined benefit dollar limit set forth in Code ss. 415(b)(1) as in effect for such calendar year. (2) Special Rules. (A) A contribution made by or on behalf of an Employee under any other defined contribution plan (as defined in Code ss. 414(i)) which is maintained by a Company or an Affiliate (which is not a Company) shall be treated as made under this Plan by or on behalf of such Employee. (B) No contribution shall be made under this Plan on behalf of an Employee who has accrued a benefit under any defined benefit plan (as defined in Code ss. 414(j)) which is maintained by a Company or an Affiliate (which is not a Company) to the extent that making such contribution would result in the sum of the defined benefit plan fraction (as defined in Code ss. 415(e)(3)) and the defined contribution plan fraction (as defined in Code ss. 415(e)(3)) for such Employee exceeding 1.0. (C) The figure "1.0" shall be substituted for the figure "1.25" in Code ss.ss. 415(e)(2)(B) and 415(e)(3)(B) for any calendar year if, as of the December 31 which immediately precedes the beginning of that calendar year, the sum of (i) the Accounts of all "key employees" (as defined in Code ss. 416(i)) under this Plan and all other defined contribution plans (as defined in Code ss. 414(i)) maintained by a Company and any Affiliate, (which is not a Company) and (ii) the present value of the accumulated accrued benefits for each such "key employee" under each defined benefit plan (as defined in Code ss. 414(j)) maintained by a Company and any Affiliate (which is not a Company) exceeds in the aggregate 90% of such accounts and such present values under such plans for all Employees of a Company and such Affiliates (which are not a Company) who participate in such plans, all as determined in accordance to the rules set forth in Code ss. 416. (D) A contribution which is credited under a welfare benefit fund maintained by a Company or any Affiliate (which is not a Company) for any year to a reserve for post-retirement medical benefits for an Employee who is a "key employee" (as defined in Code ss. 416(i)) shall be treated as part of the Company Contribution made on his or her behalf under this Plan when, and to the extent, required under Code ss. 419A(d). (3) Excess Amount. In the event that ss. 4.5(a)(1) actually restricts the amount otherwise allocable in any allocation step to any Account, the total amount which was unallocable in such step ("Excess Amount") shall be disposed of as follows. First, the Participant's 401(k) Contributions, if any, shall be refunded to the extent that such refund would satisfy such limitation. If an Excess Amount still exists after such refund, the amount otherwise allocable in any allocation step shall be deemed to be a Forfeiture and shall be allocated and reallocated (subject to ss. 4.5(a)(1)) in successive allocation steps by the Plan Sponsor among the Accounts of the remaining Participants according to the allocation procedure described ss. 4.4(a) until such Excess Amount has been allocated in its entirety. If the restriction set forth in ss. 4.5(a)(1) applies to all Participants before such Excess Amount has been allocated in its entirety, the Plan Sponsor shall transfer such unallocable amount to a suspense account which (1) shall not be subject to any Adjustment, (2) shall be deemed to be a Forfeiture for purposes of the annual allocations for the succeeding calendar year and (3) shall be added to the Adjustment as an investment gain in the event that there is a termination of this Plan (within the meaning of ss. 9.2) before the date as of which such suspense account becomes allocable in its entirety as a Forfeiture. (b) Dollar Limitations on 401(k) Contributions. (1) General. No Participant shall be permitted to have Elective Deferrals made on his or her behalf under this Plan or any other qualified plan maintained by the Plan Sponsor or an Affiliate during any taxable year in excess of $9,500 (or, after 1996, the dollar limit under Code ss. 402(g) in effect at the beginning of such taxable year). If a Participant's 401(k) Contributions under this Plan exceed such dollar limit, such Participant shall be deemed to have made a request for a refund under ss. 4.5(b)(2) and such excess shall be refunded in accordance with ss. 4.5(b)(3). Although a Participant's 401(k) Contributions under this Plan cannot exceed such dollar limit, his or her aggregate Elective Deferrals nevertheless can exceed such dollar limit in a calendar year if he or she participates in at least one other plan that provides for Elective Deferrals. In that event, such Participant may request a refund in accordance with ss. 4.5(b)(2) and his or her Excess Deferrals shall be refunded in accordance with ss. 4.5(b)(3). (2) Refund Election. A Participant may request a refund from this Plan of any Excess Deferrals made during a taxable year by filing a claim with the Plan Sponsor on or before March 1 of the next taxable year. Such claim shall be in writing, shall specify the dollar amount of the Participant's Excess Deferrals assigned to this Plan for such taxable year and shall include a written statement that such amounts, if not distributed to such Participant, will exceed the limit imposed on the Participant by Code ss. 402(g) for the taxable year in which the deferral occurred. (3) Distribution of Excess Deferrals. Excess Deferrals, plus any income and minus any loss allocable to such Excess Deferrals for the taxable year in which such Excess Deferrals were made (as determined in accordance with ss. 4.2 and the regulations under Code ss. 402(g)), shall be distributed no later than April 15 of any calendar year to Participants whose Excess Deferrals for the preceding Plan Year were assigned to this Plan under ss. 4.5(b)(2). (c) Limitations on 401(k) Contributions for Highly Compensated Employees. (1) General. The Average Actual Deferral Percentage for Participants who are Highly Compensated Employees for any Plan Year shall not exceed the greater of (A) the Average Actual Deferral Percentage for Participants who are Nonhighly Compensated Employees for such Plan Year multiplied by 1.25, or (B) the Average Actual Deferral Percentage for Participants who are Nonhighly Compensated Employees for such Plan Year multiplied by 2, provided that the Average Actual Deferral Percentage for Participants who are Highly Compensated Employees does not exceed the Average Actual Deferral Percentage for Participants who are Nonhighly Compensated Employees by more than 2 percentage points. (2) Special Rules. (A) Other Plan or Arrangements. For purposes of this ss. 4.5(c), the Actual Deferral Percentage for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have "elective deferrals" as described in Code ss. 402(g)(3)(A) allocated to his or her account under two or more plans or arrangements described in Code ss. 401(k) that are maintained by the Plan Sponsor or an Affiliate shall be determined as if all such contributions were made under this Plan. (B) Code ss. 410(b) Aggregation. If this Plan satisfies the requirements of Code ss.ss. 401(k), 401(a)(4) or 410(b) only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Code sections only if aggregated with this Plan, then this ss. 4.5(c) shall be applied by determining the Actual Deferral Percentages of Participants as if all such plans were a single plan. (C) Family Members. For purposes of determining the Actual Deferral Percentage of a Participant who is a Highly Compensated Employee described in Code ss. 414(q)(6)(A), the 401(k) Contributions and Compensation of such Participant shall include the 401(k) Contributions and Compensation of his or her "family members" (as such family members are determined under Code ss. 414(q)(6)(B)), and such family members shall be disregarded as separate Participants in determining the Actual Deferral Percentage both for Participants who are Nonhighly Compensated Employees and for Participants who are Highly Compensated Employees. In the case of a Highly Compensated Employee whose Actual Deferral Percentage is determined under the family aggregation rules described in this ss. 4.5(c)(2)(C), the determination of the amount of Excess Contributions under ss. 4.5(c) shall be made by reducing the Actual Deferral Percentage in accordance with the "leveling" method described in ss. 1.401(k)-1(f)(2) of the regulations under Code ss. 401(k) and allocating the Excess Contributions among the family members in proportion to the contributions of each family member that have been combined. (D) Other Requirements. The determination and treatment of the 401(k) Contributions and Actual Deferral Percentage and Excess Contributions of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. (3) Distribution of Excess Contributions. Excess Contributions made for any Plan Year, plus any income and minus any loss allocable to such Excess Contributions for such Plan Year (as determined in accordance with ss. 4.2 and the regulations under Code ss. 401(k)), shall be distributed no later than the last day of the immediately following Plan Year to Participants on whose behalf such Excess Contributions were made. Such distributions shall be made to such Participants on the basis of the respective portions of the Excess Contributions attributable to each such Participant. (4) Order for Determining Excess Contributions. Excess Contributions shall be determined after first determining Excess Deferrals. The Excess Contributions which would otherwise be distributed to the Participant shall be reduced, in accordance with federal income tax regulations, by the Excess Deferrals distributed to the Participant under ss. 4.5(b). 4.6. Allocation Report. After the Plan Sponsor has made the allocations for any Valuation Date described in this ss. 4, the Plan Sponsor shall deliver to each Company a report which lists each Participant and states the balance credited to each Account maintained for each such person. The Plan Sponsor also shall deliver at least annually to each Company an individual statement for each Participant which states the balance credited to his or her Account and which may be forwarded to that person. 4.7. Allocation Corrections. If an error or omission is discovered in any Account, the Plan Sponsor shall make such adjustment as it, acting in its discretion, deems appropriate to correct such error or omission. ss. 5. PLAN BENEFITS -------------------- 5.1. Retirement Benefit. The Company Account of a Participant who is an Employee on the date he or she reaches age 65 shall become fully vested not later than such date, and his or her Distributable Account thereafter shall be payable to such Participant under ss. 6 upon his or her retirement. 5.2. Disability Benefit. (a) In order to compensate for a disability and to provide a measure of security to the disabled Participant and his or her family, the Company Account of a Participant whose employment with a Company or an Affiliate is terminated by reason of his or her being disabled shall become nonforfeitable on the date his or her employment is so terminated, and his or her Distributable Account shall be payable to such Participant in accordance with ss. 6 upon his or her termination of employment. (b) A person shall be treated as disabled for purposes of this ss. 5.2 if he or she is unable to engage in any substantially gainful activity at his or her customary level of compensation, competence or responsibility as an Employee due to any medically determinable physical or mental impairment or impairments which may be expected to result in death or to be permanent. (c) The Plan Sponsor shall have exclusive responsibility for determining whether a person is disabled and they may consider whether a person is disabled upon their own motion or upon the written request of such person. The Plan Sponsor's determination shall be based on a consideration of all the facts and circumstances which in its absolute discretion it deems pertinent, including reports from one or more licensed physicians or psychiatrists appointed by the Plan Sponsor and paid by the Company (which employs or had employed the Participant) to examine the Participant. Any determination by the Plan Sponsor of whether a person is disabled for purposes of this Plan shall be conclusive. 5.3. Death Benefit. (a) In order to provide a measure of security in the event of a Participant's death, the Company which employs (or which last employed) a Participant immediately before his or her death promptly shall notify the Plan Sponsor of the name of his or her Beneficiary, and his or her Account shall be changed to the name of his or her Beneficiary and shall be paid to such Beneficiary under ss. 6. Furthermore, if a Participant dies while he or she is an Employee, his or her Company Account shall become fully vested on his or her date of death. (b) If a Participant under applicable law has a spouse on his or her date of death, such spouse automatically shall (unless otherwise permissible under Code ss. 401(a)(11)) be treated as his or her Beneficiary under this Plan absent such spouse's written and notarized consent to the designation by the Participant of any other person as his or her Beneficiary or to the designation of any other person as his or her Beneficiary in accordance with the terms of this Plan. On the other hand, if a Participant has no such spouse or if his or her spouse so consents, such Participant's Beneficiary shall be a person or persons so designated in writing by a Participant on a form satisfactory to the Plan Sponsor or, in the event no such designation is made, or if no person so designated survives the Participant, or if after checking his or her last known mailing address the whereabouts of the person so designated is unknown and no death benefit claim is submitted to the Plan Sponsor by such person within one year after the date of his or her death, the personal representative of such Participant, if any has qualified within twelve (12) months from the date of his or her death or, if no personal representative has so qualified, any heirs at law of the Participant whose whereabouts are known by the Plan Sponsor. 5.4. Vested Benefit. (a) General. A Participant who (as of the date of the termination of his or her employment as an Employee) is ineligible for any other benefit payment under this Plan shall be eligible for the payment of his or her 401(k) Account and Contributory Account, if any, and the vested percentage, if any, of his or her Company Account under ss. 6. The vested percentage, if any, of his or her Company Account shall be determined under this ss. 5.4. (b) Vesting Schedule. The Plan Sponsor shall determine the vested percentage of a Participant's Company Account as of the date his or her employment as an Employee terminates in accordance with the vesting schedule set forth in this ss. 5.4(b). Such determination shall be made based on the Participant's Years of Service under ss. 5.4(c). The vested percentage of his or her Company Account shall be maintained as a separate special Account until distributed by the Plan Sponsor under ss. 6. The balance, or the nonvested percentage, of his or her Company Account shall become a Forfeiture as of the earlier of (1) the date as of which payment of the vested portion of the Participant's Company Account is made or, if such vested portion is zero, the date payment otherwise would have been made under ss. 6 if such vested portion at the Participant's termination of employment was $3,500 or less, (2) the last day of the Plan Year in which the Participant terminates employment, or (3) the date as of which the Participant has 5 consecutive Breaks in Service. Full Years Vested Percentage of of Service Company Account ---------- --------------- Less than 2 0 2 20% 3 40% 4 60% 5 80% 6 or More 100% If a Participant's employment terminates after he or she has completed at least two Years of Service plus some fractional Year of Service, the vested percentage of his or her Company Account shall equal the sum of (1) the percentage figure shown on the vesting schedule (set forth in this ss. 5.4(b)) opposite the number of full Years of Service which such Participant had then completed and (2) a fractional amount of the difference between such percentage figure and the percentage figure opposite one additional full Year of Service, where the numerator of such fraction shall be the number of full months which such Participant had completed in such fractional Year of Service and the denominator shall be 12. (c) Year of Service. (1) General. Subject to the exceptions set forth in ss. 5.4(c)(2) and (3), a Participant's Years of Service shall equal his or her full years of service as an Employee completed during the period from his or her Employment Commencement Date to his or her Employment Termination Date which coincides with the first day of his or her first Break in Service following that Employment Commencement Date. If an Employee has two or more periods of employment, the number of days in each such period in excess of the full years of employment in each such period shall be aggregated into additional full years of service on the assumption that 365 days of service equal one full year of service. (2) Former New Market Employees. With respect to an Employee of Cousins MarketCenters, Inc. (which formerly was known as Cousins/New Market Development Company, Inc.), such Employee's employment by New Market Development Company, Ltd. or one of its affiliates for periods after October 31, 1987 shall be treated as employment by a Company under this ss. 5.4(c) if such Employee became an employee of Cousins/New Market Development Company, Inc. on November 1, 1992 and he or she had been an employee of New Market Development Company, Ltd. or one of its affiliates on October 31, 1992. (3) Breaks in Service. If an Employee is reemployed after he or she has 5 or more consecutive Breaks in Service and the vested percentage of his or her Account before the first such Break in Service had been zero, Year of Service credit shall be carried forward from his or her prior period of employment only if the number of his or her full Years of Service completed before the first such Break in Service exceeds the number of consecutive Breaks in Service which such Employee had immediately before his or her reemployment. (d) Reemployment. (1) If a Participant is reemployed before he or she has 5 consecutive Breaks in Service and before the balance, or nonvested percentage, of his or her Company Account is treated as a Forfeiture under ss. 5.4(b), his or her vested interest in that part of his or her Company Account thereafter shall be determined in accordance with the formula set forth in ss. 5.4(d)(3). (2) If a Participant is reemployed before he or she has 5 consecutive Breaks in Service and while this Plan remains in effect but after the balance, or nonvested percentage, of his or her Company Account has been treated as a Forfeiture under ss. 5.4(b), the Plan Sponsor shall cause the Trustees, upon the Participant's completion of one Year of Service (after his or her reemployment) to restore such balance to a special Company Account for such Participant (subject to the Adjustment which the Plan Sponsor determines would have been allocable to that balance on the assumption that such balance were invested in the Funds as described in ss. 8.1(a) and not in a Brokerage Account as described in ss. 8.1(b) or other individually directed investments as described in ss. 8.1(c)), and his or her vested interest in such special Company Account thereafter shall be determined in accordance with the formula set forth in ss. 5.4(d)(3). Such restoration shall be made from Company Contributions or from an assessment against each Company, whichever the Plan Sponsor deems reasonable and appropriate under the circumstances. (3) For purposes of ss. 5.4(d)(1) and ss. 5.4(d)(2), X = P (AB + D) - D, where X = the dollar amount, if any, of the vested percentage of the Participant's existing or restored special Company Account; P = the vested percentage of his or her existing or restored special Company Account as determined under the vesting schedule in ss. 5.4(b); AB = the then balance of his or her existing or restored special Company Account; and D = the dollar amount, if any, distributed to the former Employee from the vested percentage of his or her Company Account as a result of his or her previous termination of employment. 5.5. Missing Claimant. If no Beneficiary of a deceased Participant is identified and located pursuant to the procedure set forth in ss. 5.3(b), or if the Account of a Participant becomes payable under ss. 5 for any reason other than his or her death and the Plan Sponsor is unable to locate such Participant after sending written notice to his or her last known mailing address and the last known mailing address of any Beneficiaries such Participant may have designated, the Plan Sponsor, in its discretion, may treat his or her Account as a Forfeiture as of the last day of the calendar year which includes the second anniversary of the date his or her Account first became payable, or as of the last day of any subsequent calendar year. However, if such missing Beneficiary or Participant in a subsequent calendar year files a written claim with the Plan Sponsor while this Plan remains in effect for the Account forfeited and proves to the satisfaction of the Plan Sponsor his or her identity as the person then entitled to such benefit under the terms of this Plan, the Plan Sponsor shall direct the payment to such Beneficiary or Participant in accordance with ss. 6 of an amount which equals dollar for dollar the amount treated as a Forfeiture. Such payment at the Plan Sponsor's discretion may come from Company Contributions or directly from one, or more than one, Company, or from an assessment against each Company, whichever the Plan Sponsor deems reasonable and appropriate under the circumstances. ss. 6. BENEFIT DISTRIBUTION --------------------------- 6.1. Lump Sum Distribution. (a) General. A Participant's Distributable Account shall be paid only as a result of an event described in ss. 5 or in ss. 6.4 and, further, shall be paid only to such Participant or, in the case of his or her death before payment has been made, only to his or her Beneficiary in a lump sum. (b) Direct Rollovers. (1) Election. Notwithstanding any provision of the Plan to the contrary that would otherwise limit a distributee's election under this ss. 6, a distributee (as described in ss. 6.1(b)(4)) may elect, at the time and in the manner prescribed by the Plan Sponsor, to have any portion of an eligible rollover distribution paid directly to an eligible retirement plan specified by the distributee in a direct rollover. (2) Eligible rollover distribution. An eligible rollover distribution is any distribution of all or any portion of the balance to the credit of the distributee, except that an eligible rollover distribution does not include: any distribution that is one of a series of substantially equal periodic payments (not less frequently than annually) made for the life (or life expectancy) of the distributee or the joint lives (or joint life expectancies) of the distributee and the distributee's designated beneficiary, or for a specified period of ten years or more; any distribution to the extent such distribution is required under Code ss. 401(a)(9); and the portion of any distribution that is not includible in gross income (determined without regard to the exclusion for net unrealized appreciation with respect to employer securities). (3) Eligible retirement plan. An eligible retirement plan is an individual retirement account described in Code ss. 408(a), an individual retirement annuity described in Code ss. 408(b), an annuity plan described in Code ss. 403(a), or a qualified trust described in Code ss. 401(a), that accepts the distributee's eligible rollover distribution. However, in the case of an eligible rollover distribution to the surviving spouse, an eligible retirement plan is an individual retirement account or individual retirement annuity. (4) Distributee. A distributee includes an employee or former employee. In addition, the employee's or former employee's surviving spouse and the employee's or former employee's spouse or former spouse who is the alternate payee under a qualified domestic relations order, as defined in Code ss. 414(p), are distributees with regard to the interest of the spouse or former spouse. (5) Direct rollover. A direct rollover is a payment by the Plan to the eligible retirement plan specified by the distributee. 6.2. Distribution Deadlines and Consent Requirement. (a) General Rule. A Participant's Distributable Account automatically shall be paid as soon as practicable after his or her employment as an Employee terminates unless his or her Distributable Account exceeds $3,500. If his or her Distributable Account exceeds $3,500, his or her Distributable Account shall be paid (1) as soon as practicable after the Plan Sponsor determines that the Code ss. 411(a)(11) consent requirements for a Distributable Account in excess of $3,500 have been satisfied with respect to such account or, if earlier, (2) when required under ss. 6.2(b). The distribution of each Distributable Account shall be made no later than the later of 60 days after the end of the calendar year in which a Participant reaches age 65 or retires unless such consent requirements prohibit such a distribution or ss. 6.2(b) requires an earlier distribution. (b) Statutory Deadlines. (1) Participant. (A) Initial Deadline. A Participant's Distributable Account shall in any event be distributed to such Participant no later than April 1 of the calendar year which follows the calendar year in which he or she reaches age 70 1/2. (B) Additional Contributions. Any contributions credited to a Participant's Distributable Account after the date payment is required to be made to such Participant under this ss. 6.2(b)(1) shall be paid to such Participant in a lump sum in cash no later than 270 days after the date as of which such contributions are credited to such account. (2) Beneficiary. If a distribution is made to a Participant's Beneficiary, such distribution shall be made by December 31 of the calendar year containing the fifth anniversary of the date of the Participant's death. 6.3. Distributions Procedure. (a) General. The amount of a Distributable Account to be distributed under this ss. 6 shall be determined by the Plan Sponsor on the basis of the Valuation Date which immediately precedes the date that such distribution is made, and no distribution shall be made to a Participant or Beneficiary on the basis of a Valuation Date which comes before the event which triggers such distribution under ss. 5. (b) Special Rule for Large Distributions or Transfers. (1) If a distribution (including a hardship distribution under ss. 6.4, but excluding a distribution from a Brokerage Account or other individually directed investments under ss. 8.1) to be made under this ss. 6 as of a Valuation Date or a transfer to a Brokerage Account or other individually directed investments to be made under ss. 8.1 as of a Valuation Date equals or exceeds $10,000.00, such distribution or transfer shall (subject to ss. 6.3(b)(2) and ss. 6.3(d)) be made in a combination of property and cash in accordance with the following rules: (A) Step One. Before any distributions or transfers are made, all of the assets of all of the Funds (excluding assets held in Brokerage Accounts or other individually directed investments) shall be divided for purposes of this ss. 6.3(b) into two accounts, one of which shall consist exclusively of common stock issued by the Plan Sponsor ("Employer Stock Account") and the other of which shall consist of all the other assets of all of the Funds ("Other Assets Account"). (B) Step Two. The portion of each class of common stock in the Employer Stock Account to be distributed to, or transferred on behalf of, each Participant whose distribution or transfer equals or exceeds $10,000 and each Participant who has elected under ss. 6.3(c) to treat his or her distribution or transfer as subject to this ss. 6.3(b), shall be determined by multiplying the value as of such Valuation Date of each class of common stock in the Employer Stock Account by a fraction, the numerator of which shall be the total value as of such Valuation Date of the distribution or transfer to be made as of such date for such Participant and the denominator of which shall be the total value of all of the assets of the Funds (excluding assets held in Brokerage Accounts or other individually directed investments) as of such date; provided, however, no fractional share of common stock shall be paid or transferred under this Step Two and, if a fractional share is distributable or transferable under this Step Two, the value of such fractional share shall be distributed from the Other Assets Account in cash in Step Three of this ss. 6.3(b). (C) Step Three. The balance of each remaining distribution or transfer shall be made in cash. (2) A Participant may elect (on the form provided for this purpose) at any time prior to a Valuation Date that any distribution or transfer which otherwise would be subject to ss. 6.3(b)(1) as of such Valuation Date be made either (A) i cash or (B) in a higher proportion of cash than provided in ss. 6.3(b)(1), and the Plan Sponsor shall, on or before such Valuation Date, direct the Trustees either (i) to make such distribution or transfer from the cash available in the Fund; (ii) to sell the applicable portion of the Participant's Account's pro rata share (in whole shares) of Employer Stock to the Plan Sponsor as of such Valuation Date; or (iii) to sell the applicable portion of the Participant's Account's pro rata share (in whole shares) of Employer Stock on the open market as soon as practicable after such Valuation Date, and deduct the cost of such sale from the Participant's Account. (c) Special Rule for Other Distributions or Transfers. If ss. 6.3(b) does not automatically apply to a distribution or transfer, a Participant nevertheless may elect that the Plan Sponsor treat any such distribution or transfer (except a distribution described in ss. 6.2(b)(1)(B)) as subject to ss. 6.3(b), and the Plan Sponsor (subject to ss. 6.3(d)) shall do so if the Participant satisfies such reasonable requirements as the Plan Sponsor may set for such an election. (d) Exception to Special Rules for Certain Distributions and Transfers. If either the Plan Sponsor or the Trustee determines that a distribution of common stock issued by the Plan Sponsor under ss. 6.3(b) or ss. 6.3(c) might result in "Excess Shares" under Article 11 of the Plan Sponsor's Articles of Incorporation or might violate any applicable law or any other provision in the Plan Sponsor's Articles of Incorporation, or might cause the Plan Sponsor to lose its status as a real estate investment trust under the Code, such distribution shall be made in cash or in cash and other property (in lieu of such stock) in accordance with this ss. 6.3(d). If such a determination is made, the Trustee shall as of the first day of the calendar month which follows such determination set aside the Participant's entire Distributable Account in a Brokerage Account. Only the Trustee shall have the right to make investment decisions regarding buying or selling of the Plan Sponsor's common stock in such Brokerage Account, and the Trustee shall begin an orderly liquidation of the Plan Sponsor's common stock allocated to such account with a view towards completing such liquidation on or before the third anniversary of the establishment of such Brokerage Account. The affected Participant shall have the right (subject to ss. 6.2(b), Statutory Deadlines) to direct the Trustee respecting the timing of distributions from such account. (e) Statutory Restrictions. The Plan Sponsor shall have the right to unilaterally direct the Trustee to make part or all of any distribution under this ss. 6.3 in the form of common stock issued by the Plan Sponsor and held by the Funds if the Plan Sponsor determines (on the advice of counsel) that any statute, rule or regulation makes it impermissible or imprudent for the Trustee to sell such common stock in order to effect a distribution or transfer. (f) No Annuities. In no event shall a Participant's Distributabl Account be distributed to such Participant in the form of a life annuity. 6.4. Hardship Distributions. (a) Hardship Distribution of Contributory Account. Upon the request of an Employee who has a Contributory Account, the Plan Sponsor may distribute all or a part of a Participant's Contributory Account to such Participant during any calendar month (based on the immediately preceding Valuation Date) to the extent that the Plan Sponsor determines that such a distribution (1) is necessary in order to avoid a hardship due to a death, serious illness or accident in his or her immediate family or (2) is for use by the Participant in acquiring a personal residence or (3) is needed to pay his or her educational expenses of educating members of his or her immediate family. (b) Hardship Distribution of 401(k) Account. A Participant shall have the right to request a withdrawal of all or any portion of his or her 401(k) Account (other than the investment gains or losses allocated to such 401(k) Account) at any time before he or she terminates employment with the Plan Sponsor and all Affiliates, and the Plan Sponsor shall grant such request if, and to the extent that, it determines (based on all the relevant facts and circumstances and in accordance with the regulations under Code ss. 401(k)) that the withdrawal is "necessary" (as described in ss. 6.4(b)(1)) to satisfy an "immediate and heavy financial need" (as described in ss. 6.4(b)(2)). Any request for a withdrawal for a financial hardship shall be made in writing and shall set forth in detail the nature of such hardship and the amount of the withdrawal needed as a result of such hardship, and the Participant shall supplement such request with such additional information as the Plan Sponsor requests consistent with this ss. 6.4(b). (1) Amount Necessary to Satisfy Need. A withdrawal shall be deemed to be "necessary" to satisfy an immediate and heavy financial need only if (A) the withdrawal is not in excess of the amount of such need, including any amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from such withdrawal, and (B) the Participant has obtained all distributions (other than hardship distributions) and all nontaxable loans currently available from this Plan and all other plans maintained by the Plan Sponsor and all Affiliates. Notwithstanding the foregoing, a Participant will not be required to obtain a loan from this Plan or any other plan maintained by the Plan Sponsor or an Affiliate if the effect of the loan would be to increase the amount of the need. A Participant who receives a withdrawal for a financial hardship under this ss. 6.4(b) shall not be eligible to make any 401(k) Contributions under this Plan or any elective contributions or employee contributions under any other qualified plan or nonqualified plan of deferred compensation maintained by the Plan Sponsor or an Affiliate for the twelve month period following the date of such withdrawal. Further, such Participant's 401(k) Contributions under this Plan and any elective contributions under any other plan maintained by the Plan Sponsor or an Affiliate for the calendar year immediately following the calendar year in which such withdrawal occurred shall not exceed the dollar limitation under Code ss. 402(g) for such following calendar year (as described in ss. 4.5(b)) reduced by the amount of his or her 401(k) Contributions under this Plan and any elective contributions under any other plan maintained by the Plan Sponsor or an Affiliate for the calendar year in which such withdrawal occurred. (2) Immediate and Heavy Financial Need. An "immediate and heavy financial need" shall mean (A) expenses for medical care described in Code ss. 213(d) previously incurred by the Participant or his or her spouse or dependents (as defined in Code ss. 152) or amounts necessary for such individuals to obtain such medical care, (B) costs directly related to the purchase (excluding mortgage payments) of a principal residence for the Participant, (C) the payment of tuition, related educational fees and room and board for the next twelve months of post-secondary education for the Participant or his or her spouse, children or dependents, (D) payments necessary to prevent the eviction of the Participant from his or her principal residence or foreclosure on the mortgage of the Participant's principal residence, or (E) such other events as the Internal Revenue Service deems to constitute an "immediate and heavy financial need" under Code ss. 401(k). ss. 7. ADMINISTRATION --------------------- 7.1. Plan Sponsor Powers and Duties. The Plan Sponsor shall have the exclusive responsibility and complete discretionary authority to control the operation, management and administration of this Plan, with all powers necessary to enable it properly to carry out its duties in that respect, including but not limited to, the power to construe the terms of this Plan and the Trust Agreements, to determine status, coverage and eligibility for benefits, and to resolve all interpretative, equitable, and other questions that shall arise in the operation and administration of this Plan. The Plan Sponsor ordinarily shall act through its Chief Financial Officer. All actions and decisions of the Plan Sponsor on all matters within the scope of its authority shall be final, conclusive and binding on all persons. 7.2. Liquidity Requirements. The Plan Sponsor shall determine anticipated liquidity requirements to meet projected benefit payments for each calendar year and, if any adjustment from previous annual liquidity requirements is appropriate, the Plan Sponsor shall appropriately coordinate the Trustees' Fund investment policies with Plan needs. 7.3. Records. All records of this Plan, together with such other documents as may be necessary for the administration of this Plan shall be maintained for at least six years in the custody of the Plan Sponsor. 7.4. Information from Others. The Plan Sponsor, the Trustee, and the officers and directors of each Company shall be entitled to rely upon all information and data contained in any certificate or report or other material prepared by any actuary, accountant, attorney or other consultant or adviser selected by the Plan Sponsor or the Trustee to perform services on behalf of this Plan or any Fund. ss. 8. TRUST FUNDS AND TRUSTEE ------------------------------ 8.1. Trust Funds. (a) General. The assets of this Plan shall be held in one or more separate Funds, as determined by the Plan Sponsor. Each of the Funds shall be held and managed by one, or more than one, individual Trustee appointed by the Plan Sponsor pursuant to a separate Trust Agreement and shall be invested up to 100% in the common stock of the Plan Sponsor, or any successor to the Plan Sponsor, except to the extent that a Participant who is an Employee exercises his or her right under ss. 8.1(b) to direct the investment of his or her Account (other than his or her 401(k) Account) through a Brokerage Account or to the extent Accounts are invested in other individually directed investments under ss. 8.1(c). No individual shall at any time serve as the Trustee for more than one Fund. The Plan Sponsor shall determine how assets of this Plan are to be allocated among the Funds and shall have the power to direct the Trustee of any Fund to transfer assets of such Fund to the Trustee of any other Fund or Funds. (b) Brokerage Account. A Participant who desires to manage the investment of his or her own Account (other than his or her 401(k) Account) may file a written election to do so with the Plan Sponsor, and the Plan Sponsor will direct one, or more than one, Trustee to establish a Brokerage Account on behalf of such Participant and to transfer the assets of his or her Account (other than his or her 401(k) Account) to such Brokerage Account as of the first day of the calendar month which follows the date the Plan Sponsor actually receives such Participant's election. The cash or other assets to be transferred to a Participant's Brokerage Account shall be determined under ss. 6.3 as if the Participant's employment had terminated on the date the Plan Sponsor receives his or her election under this ss. 8.1(b). A Participant upon the establishment of his or her Brokerage Account shall be exclusively responsible for the management of the assets of such Brokerage Account subject to the following terms and conditions: (1) All investments shall be made through the broker designated by the Plan Sponsor as the broker for all Brokerage Accounts, (2) Investments shall be made only in securities which are ordinarily and customarily available through the brokerage firm which maintains the Brokerage Account, (3) No investment shall be made under any circumstances on "margin" or in any "naked" option, (4) Investments shall be made only if such investments will be shown on the standard monthly account statements prepared by the brokerage firm which maintains the Brokerage Account, and (5) The Participant agrees to such other terms and conditions as the Trustee, the Plan Sponsor and the brokerage firm (whether individually or collectively) shall establish from time to time for Brokerage Accounts. All transaction fees, commissions and any annual maintenance fee for a Participant's Brokerage Account will be paid directly from such Brokerage Account. If a Brokerage Account is maintained for a Participant and the Participant desires that the Trustee resume the management of his or her Account (other than his or her 401(k) Account), a Participant can request the Plan Sponsor in writing that the Trustee does so, and the Plan Sponsor shall direct the Trustee to do so on the Valuation Date which first follows the date the Participant converts all of his or her investments in his or her Brokerage Account to cash; provided, however, a Participant shall not have the right to make more than one such request in any 12 consecutive month period. No part of an Adjustment shall be allocated to a Brokerage Account, but all investment gains and losses (whether realized or unrealized) from the investment of the assets of a Brokerage Account shall be allocated exclusively to such account as of each Valuation Date. Finally, if a Participant's employment terminates as an Employee (for any reason, including death) while he or she has a Brokerage Account, his or her Brokerage Account shall be payable under ss. 6 subject to the following special rules: (A) if such Participant's Account exceeds $3,500 and is fully vested, he or she shall have the right to maintain his or her Brokerage Account or to request a distribution of the assets of his or her Brokerage Account when his or her employment terminates, and (B) if such Participant's Account is less than $3,500 and is fully vested, he or she shall have the right to request a distribution of the assets of his or her Brokerage Account when his or her employment terminates but, if he or she fails to do so, the Plan Sponsor shall convert the assets in his or her Brokerage Account to cash, and (C) if his or her Account is less than fully vested, the Participant shall, within 20 days after the end of the calendar month in which his or her employment terminates, convert assets in his or her Brokerage Account to cash in an amount equal to no less than the dollar amount of the nonvested portion of his or her Company Account (as determined as of the end of such calendar month). If the Participant fails to convert sufficient assets in his or her Brokerage Account within such time period, the Plan Sponsor shall direct one, or more than one, Trustee to convert sufficient assets to cash by selling assets in such amounts and at such times as it determines in its sole discretion as necessary or appropriate to effectuate the Forfeiture of the Participant's nonvested Company Account. The Plan Sponsor thereafter shall direct one, or more than one, Trustee to transfer cash equal to the nonvested portion of the Participant's Company Account from his or her Brokerage Account to one or more of the funds described in ss. 8.1(a) as soon as practicable after such cash is available in such Brokerage Account, and such transferred amounts shall remain in the Participant's Company Account until it becomes a Forfeiture under ss. 5.4(b). A Beneficiary of a Participant described in clause (A) above shall also have the right to maintain and direct the investment of a Brokerage Account. (c) Other Individually Directed Investments. The Plan Sponsor may at any time establish procedures to allow individuals to direct the investment of their Accounts. The Plan Sponsor as part of establishing any such procedures shall direct one, or more than one, Trustee to establish the investment alternatives designated by the Plan Sponsor and to accept directions to invest all or any specified portion of the individual's Account among such alternatives. The Plan Sponsor shall establish as part of such procedures such rules for effecting the investment elections as it deems necessary or appropriate, which rules shall be applied on a uniform and nondiscriminatory basis to all similarly situated individuals. Except as required under ERISA, neither a Company nor a Trustee shall be responsible for any investment decisions made by an individual with respect to his or her Account. If an individual fails to direct the investment of his or her Account, the Trustee shall assume the investment responsibility for such Account. (d) ERISA 404(c). To the extent that the Plan Sponsor chooses to do so, the Plan Sponsor may take advantage of any relief afforded to Plan fiduciaries under ERISA ss. 404(c) and the related regulations. If Participants, Beneficiaries or alternate payees are permitted to direct the investment of their Accounts, the Plan Sponsor shall designate a fiduciary who shall implement such individuals' directions and shall determine the manner and frequency of investment instructions, any limitations on such instructions and such other procedures as may be necessary or appropriate to implement such individuals' directions or to satisfy the requirements of ERISA ss. 404(c). Any such procedures may be amended or modified from time to time by the Plan Sponsor in its discretion and all such procedures and any amendments or modifications to such procedures are incorporated into and made a part of this Plan. 8.2. Notification to Trustee. Any action of the Plan Sponsor pursuant to any of the provisions of this Plan shall be communicated to each Trustee in accordance with such procedures as the Plan Sponsor deems appropriate under the circumstances. 8.3. Loans. (a) Administration and Procedures. The Plan Sponsor shall establish objective nondiscriminatory procedures for the administration of the loan program under this Plan and such procedures and any amendments to such procedures are incorporated by this reference as a part of this Plan. Such procedures shall include, but are not limited to: (1) the class of Participants and Beneficiaries who are eligible for a loan; (2) the identity of the person or position authorized to administer the loan program; (3) the procedures for applying for a loan; (4) the basis on which loans will be approved or denied; (5) the limitations, if any, on the types and amounts of loans offered; (6) the procedures for determining a reasonable rate of interest; (7) the types of collateral that may be used as security for a loan; and (8) the events constituting default and the steps that will be taken to preserve Plan assets in the event of such default. (b) General Statutory Requirements. All loans made under this Plan shall (1) be made available to Participants and Beneficiaries who are eligible for a loan on a reasonably equivalent basis; (2) not be made available to Highly Compensated Employees in an amount greater than the amount made available to other Employees; (3) be made in accordance with specific provisions regarding loans set forth in this Plan and the procedures described above; (4) bear a reasonable rate of interest; and (5) be adequately secured. (c) Other Conditions. All loans made under this Plan shall be subject to the following additional conditions. (1) Principal and interest on the loan shall be repaid in substantially level installments with payments not less frequently than quarterly over a period of 5 years or less. However, if so provided in the loan procedures described above, the repayment period may exceed 5 years if the loan is classified as a "home loan" (as described in Code ss. 72(p)). (2) If the loan is secured by any portion of the Participant's Account, the Account balance shall not be reduced as a result of a default until a distributable event occurs under the Plan. (3) The Participant or Beneficiary must agree to any other terms and conditions required under the procedures described above. (d) Statutory Limitation on Amounts. The principal amount of any loan to a Participant (when added to the outstanding principal balance of any outstanding loans made to the Participant under this Plan and all other plans maintained by the Plan Sponsor or an Affiliate that are tax exempt under Code ss. 401) may not exceed the lesser of: (1) $50,000 reduced by the excess, if any, of (A) the highest outstanding principal balance of previous loans to the Participant from the Plan (and all other plans described above) during the one year period ending immediately before the date the current loan is made, over (B) the current outstanding principal balance of those previous loans on the date the current loan is made; or (2) 50% of the vested interest in the Participant's Account at the time the loan is made. (e) Distributions. The vested Account balance actually payable to an individual who has an outstanding loan shall be determined by reducing the vested Account balance by the amount of the security interest in the Account (if any). The Trustee may cancel the Plan's security interest in the Account and distribute the note in full satisfaction of that portion of the Participant's Account equal to the outstanding balance of the loan or the amount that would have been outstanding but for a discharge in bankruptcy or through any other legal process. Notwithstanding anything to the contrary in this Plan or the loan procedures described above, in the event of default, foreclosure on the note and execution of the Plan's security interest in the Account shall not occur until a distributable event occurs under this Plan and interest shall continue to accrue only to the extent permissible under applicable law. ss. 9. AMENDMENT, TERMINATION AND INDEMNIFICATION ------------------------------------------------- 9.1. Amendment. The Plan Sponsor reserves the right at any time and from time to time to amend this Plan in writing, provided that no amendment shall be made which would divert any of the assets of the Funds to any purpose other than the exclusive benefit of Participants and Beneficiaries unless such amendment is necessary to cause this Plan to continue to be exempt from income taxes under the Code. 9.2. Termination. The Plan Sponsor expects this Plan to be continued indefinitely but, of necessity, reserves the right to completely or partially terminate this Plan or to discontinue contributions at any time by action of the Board. If this Plan is completely or partially terminated under this ss. 9.2, or if the Plan Sponsor declares a permanent discontinuance of contributions to this Plan, the Company Account of each affected Participant who then is an Employee shall become fully vested on the date of such complete or partial termination or on the date of such declaration of discontinuance, as the case may be. In the case of such a complete termination of this Plan or such a permanent discontinuance of contributions, the Trustees shall liquidate Fund investments as necessary and distribute Accounts to Participants and Beneficiaries after the receipt of a favorable determination letter from the Internal Revenue Service respecting such termination or discontinuance. 9.3. Indemnification. Each Company (to the extent permissible under applicable law) shall indemnify each of its officers and Employees from and against any liability, assessment, loss, expense or other cost of any kind or description whatsoever, including legal fees and expenses, actually incurred by such person on account of any action or proceeding, actual or threatened, which arises as a result of his or her acting on behalf of a Company under this Plan, provided (1) such action or proceeding does not arise as a result of his or her own negligence, willful misconduct or lack of good faith and (2) such protection is not otherwise provided through insurance. Each Trustee shall (to the extent permissible under law) be indemnified and held harmless by the Plan Sponsor (subject to a right of contribution against each Company) for any expenses, including legal fees, incurred in the defense of any actual or threatened legal action which arises as a result of his or her appointment as a Trustee, provided that he or she is not ultimately determined in such action to be liable for a breach of his or her fiduciary (as distinguished from his or her co-fiduciary) duty under this Plan. ss. 10. MISCELLANEOUS --------------------- 10.1. Headings and References. The headings and subheadings in this Plan have been inserted for convenience of reference only and are to be ignored in construction of the provisions of this Plan. All references to sections and subsections shall be to sections and subsections in this Plan unless otherwise set forth in this Plan. 10.2. Construction. In the construction of this Plan, the masculine shall include the feminine and the singular the plural in all cases where such meanings would be appropriate. This Plan shall be construed in accordance with the laws of the State of Georgia to the extent that such laws are not preempted by federal law. 10.3. Spendthrift Clause. Except to the extent permitted by law or ss. 10.11, no Account, benefit, payment or distribution under this Plan shall be subject to the claim of any creditor of a Participant or Beneficiary, or to any legal process by any creditor of such person and no Participant or Beneficiary shall have any right to alienate, commute, anticipate, or assign (either at law or equity) all or any portion of his or her Account, benefit, payment or distribution under this Plan. 10.4. Legally Incompetent. The Plan Sponsor in its discretion shall direct the Trustee to make payment on such direction directly to (i) an incompetent or disabled person, whether because of minority or mental or physical disability, (ii) to the guardian of such person or to the person having custody of such person, or (iii) to any person designated or authorized under any state statute to receive such payment on behalf of such incompetent or disabled person, without further liability either on the part of the Plan Sponsor or the Trustee for the amount of such payment to the person on whose account such payment is made. 10.5. Benefits Supported Only by Funds. Any person having any claim for any benefit under this Plan shall (except to the extent required under ERISA) look solely and exclusively to the assets of the Funds for satisfaction. In no event will a Company, or any of its officers, members of its board of directors or a Trustee in his or her individual capacity be liable to any person whomsoever for the payment of benefits under this Plan. 10.6. No Discrimination. The Plan Sponsor shall administer this Plan in a uniform and consistent manner with respect to all Participants and Beneficiaries. 10.7. Claims. Any payment to a Participant or Beneficiary or to their legal representative, or heirs-at-law, made in accordance with the provisions of this Plan shall to the extent of such payment be in full satisfaction of all claims under this Plan against the Trustees and each Company, either of whom may require such person, his or her legal representative or heirs-at-law, as a condition precedent to such payment, to execute a receipt and release therefor in such form as shall be determined by the Trustees or the Plan Sponsor, as the case may be. 10.8. Nonreversion. (a) Except as provided in ss. 10.8(b), no Company shall have any present or prospective right, claim, or interest in the Fund or in any Company Contribution made to the Trustee. (b) To the extent permitted by Code and ERISA, the Company Contributions, plus any earnings and less any losses on such contributions, shall be returned by the Trustee to a Company in the event that: (1) A Company Contribution is made by such Company by a mistake of fact, provided such return is effected within one year after the payment of such contribution; or (2) A deduction for a Company Contribution is disallowed under Code ss. 404, in which event such contribution shall be returned to the Company which made such contribution within one year after such disallowance, all contributions being hereby conditioned upon being deductible under Code ss. 404. The Trustee shall have no obligation or responsibility whatsoever to determine whether the return of any such Company Contribution is permissible under the Code or ERISA and shall be indemnified and held harmless by each Company for their actions in accordance with this ss. 10.8. 10.9. Merger or Consolidation. In the case of any merger or consolidation of this Plan with, or transfer of assets or liabilities of this Plan to, any other employee benefit plan, each person for whom an Account is maintained shall be entitled to receive a benefit from such other employee benefit plan, if it is then terminated, which is equal to or greater than the benefit such person would have been entitled to receive immediately before the merger, consolidation or transfer, if this Plan had been terminated. 10.10. Agent for Service of Process. The agent for service of process for this Plan shall be the person currently listed in the records of the Secretary of State of Georgia as the agent for service of process for the Plan Sponsor. 10.11. Qualified Domestic Relations Order. In accordance with uniform and nondiscriminatory procedures established by the Plan Sponsor from time to time, the Plan Sponsor upon the receipt of a domestic relations order which seeks to require the distribution of a Participant's Account in whole or in part to an "alternate payee" (as that term is defined in Code ss. 414(p)(8)) shall (a) promptly notify the Participant and such "alternate payee" of the receipt of such order and of the procedure which the Plan Sponsor will follow to determine whether such order constitutes a "qualified domestic relations order" within the meaning of Code ss. 414(p), (b) determine whether such order constitutes a "qualified domestic relations order", notify the Participant and the "alternate payee" of the results of such determination and, if the Plan Sponsor determines that such order does constitute a "qualified domestic relations order", (c) direct the Trustee to transfer such amounts, if any, as the Plan Sponsor determines necessary or appropriate from the Participant's Account to a special Account for such "alternate payee", and (d) direct the Trustee to make such distribution to such "alternate payee" from such special Account as the Plan Sponsor deems called for under the terms of such order in accordance with Code ss. 414(p). An "alternate payee's" special Account shall be distributed in accordance with ss. 6 as if the "alternate payee" was a Beneficiary as soon as practicable after that Account has been established under this ss. 10.11, without regard to whether the date of such distribution is prior to the earliest date that a distribution could be made to a Participant under the terms of this Plan and prior to a Participant's "earliest retirement age" under Code ss. 414(p). An "alternate payee" shall have the right to designate (in the same manner as a Participant who has no spouse) a Beneficiary for the payment of his or her special Account in the event of the alternate payee's death before such special Account is paid. The determinations and the distributions made by, or at the direction of, the Plan Sponsor under this ss. 10.11 shall be final and binding on the Participant, the "alternate payee" and all other persons interested in such order. IN WITNESS WHEREOF, the Plan Sponsor has caused this Plan to be executed by its duly authorized officers and its seal to be affixed to this Plan this ______ day of ________________, 1995. COUSINS PROPERTIES INCORPORATED (CORPORATE SEAL) By:_________________________________ Title:______________________________ ATTEST: By:______________________________ Title:___________________________ ACKNOWLEDGMENT BY PARTICIPATING COMPANIES. To acknowledge its acceptance of this amended and restated Plan, each Company has caused this Plan to be executed by its duly authorized officers and its seal to be affixed to this Plan. COUSINS REAL ESTATE CORPORATION (CORPORATE SEAL) By:_________________________________ Title:______________________________ Date:_______________________________ ATTEST: By:______________________________ Title:___________________________ COUSINS MARKETCENTERS, INC. (CORPORATE SEAL) By:_________________________________ Title:______________________________ Date:_______________________________ ATTEST: By:______________________________ Title:___________________________ -----END PRIVACY-ENHANCED MESSAGE-----