-----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, I9DNauVhIyZWsLB1yT+yL0sBLKjwF3gnBg4mqfeYae09nWoo7CL2QTXa2ejfdP5f sdsruERxqKrFeTU9S00I9Q== 0000025232-02-000013.txt : 20020812 0000025232-02-000013.hdr.sgml : 20020812 20020812135455 ACCESSION NUMBER: 0000025232-02-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020812 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-03576 FILM NUMBER: 02726437 BUSINESS ADDRESS: STREET 1: 2500 WINDY RIDGE PKWY STE 1600 CITY: ATLANTA STATE: GA ZIP: 30339-5683 BUSINESS PHONE: 7709552200 MAIL ADDRESS: STREET 1: 2500 WINDY RIDGE PARKWAY STREET 2: SUITE 1600 CITY: ATLANTA STATE: GA ZIP: 30339-5683 10-Q 1 fo10q602.txt 6/30/02 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from..............to.............. Commission file number 0-3576 COUSINS PROPERTIES INCORPORATED (Exact name of registrant as specified in its charter) Georgia 58-0869052 (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 2500 Windy Ridge Parkway Atlanta, Georgia 30339-5683 (Address of principal executive offices) (Zip Code) (770) 995-2200 (Registrant's telephone number, including area code) 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 (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------ ---- As of July 31, 2002, there were 50,033,282 shares of the registrant's common stock, par value $1 per share, outstanding. PART I. FINANCIAL INFORMATION - ------- --------------------- Item 1. Financial Statements COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES CONSOLIDATED BALANCE SHEETS ($ in thousands, except share amounts) June 30, December 31, 2002 2001 ----------- ------------ (Unaudited) ASSETS - ------ PROPERTIES: Operating properties, net of accumulated depreciation of $129,494 as of June 30, 2002 and $106,039 as of December 31, 2001 $ 780,906 $ 771,119 Land held for investment or future development 17,069 15,294 Projects under construction 136,685 140,833 Residential lots under development 15,272 12,520 ---------- ---------- Total properties 949,932 939,766 CASH AND CASH EQUIVALENTS, at cost which approximates market 8,867 10,556 NOTES AND OTHER RECEIVABLES 41,478 39,920 INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 180,358 185,397 OTHER ASSETS, including goodwill of $15,612 in 2002 and 2001 37,334 36,377 ---------- ---------- TOTAL ASSETS $1,217,969 $1,212,016 ========== ========== LIABILITIES AND STOCKHOLDERS' INVESTMENT - ---------------------------------------- NOTES PAYABLE $ 600,476 $ 585,275 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 25,467 27,149 DEPOSITS AND DEFERRED INCOME 2,710 2,422 ---------- ---------- TOTAL LIABILITIES 628,653 614,846 ---------- ---------- DEFERRED GAIN 105,574 107,676 ---------- ---------- MINORITY INTERESTS 27,225 26,821 ---------- ---------- COMMITMENTS AND CONTINGENT LIABILITIES STOCKHOLDERS' INVESTMENT: Common stock, $1 par value, authorized 150,000,000 shares; issued 50,615,987 shares at June 30, 2002 and 50,106,100 shares at December 31, 2001 50,616 50,106 Additional paid-in capital 283,903 276,268 Treasury stock at cost, 681,000 shares in 2002 and 2001 (17,465) (17,465) Unearned compensation (3,076) (3,580) Cumulative undistributed net income 142,539 157,344 ---------- ---------- TOTAL STOCKHOLDERS' INVESTMENT 456,517 462,673 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $1,217,969 $1,212,016 ========== ========== The accompanying notes are an integral part of these consolidated balance sheets.
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (UNAUDITED) (In thousands, except per share amounts) Three Months Six Months Ended June 30, Ended June 30, ----------------- ----------------- 2002 2001 2002 2001 ------- ------- ------- ------- REVENUES: Rental property revenues $43,412 $35,979 $82,813 $71,635 Development income 972 1,636 2,158 3,262 Management fees 2,288 1,974 4,642 3,445 Leasing and other fees 696 1,669 1,853 2,290 Residential lot and outparcel sales 521 1,519 4,556 3,907 Interest and other 1,114 1,498 2,249 3,093 ------- ------- ------- ------- 49,003 44,275 98,271 87,632 ------- ------- ------- ------- INCOME FROM UNCONSOLIDATED JOINT VENTURES 6,601 5,640 13,630 11,145 ------- ------- ------- ------- COSTS AND EXPENSES: Rental property operating expenses 12,018 10,480 23,527 21,094 General and administrative expenses 6,972 6,841 14,267 12,942 Depreciation and amortization 13,347 11,039 25,366 21,622 Stock appreciation right expense (credit) (7) 122 34 (136) Residential lot and outparcel cost of sales 444 1,354 3,414 3,353 Interest expense 9,557 6,550 18,089 13,721 Property taxes on undeveloped land 174 173 350 341 Other 1,277 1,648 2,264 2,050 ------- ------- ------- ------- 43,782 38,207 87,311 74,987 ------- ------- ------- ------- INCOME FROM OPERATIONS BEFORE INCOME TAXES AND GAIN ON SALE OF INVESTMENT PROPERTIES AND EXTRAORDINARY LOSS 11,822 11,708 24,590 23,790 PROVISION (BENEFIT) FOR INCOME TAXES FROM OPERATIONS 152 227 1,174 (713) ------- ------- ------- ------- INCOME BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES AND EXTRAORDINARY LOSS 11,670 11,481 23,416 24,503 GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF APPLICABLE INCOME TAX PROVISION 1,042 1,077 2,072 19,422 ------- ------- ------- ------- INCOME BEFORE EXTRAORDINARY LOSS 12,712 12,558 25,488 43,925 EXTRAORDINARY LOSS - - 3,501 - ------- ------- ------- ------- NET INCOME $12,712 $12,558 $21,987 $43,925 ======= ======= ======= ======= WEIGHTED AVERAGE SHARES 49,617 49,256 49,493 49,178 ======= ======= ======= ======= BASIC NET INCOME PER SHARE: Income before extraordinary loss $ .26 $ .25 $ .51 $ .89 Extraordinary loss - - .07 - ------- ------- ------- ------- Basic net income per share $ .26 $ .25 $ .44 $ .89 ======= ======= ======= ======= DILUTED WEIGHTED AVERAGE SHARES 50,621 50,395 50,447 50,301 ======= ======= ======= ======= DILUTED NET INCOME PER SHARE: Income before extraordinary loss $ .25 $ .25 $ .51 $ .87 Extraordinary loss - - .07 - ------- ------- ------- ------- Diluted net income per share $ .25 $ .25 $ .44 $ .87 ======= ======= ======= ======= CASH DIVIDENDS DECLARED PER SHARE $ .37 $ .34 $ .74 $ .68 ======= ======= ======= ======= The accompanying notes are an integral part of these consolidated statements.
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001 (UNAUDITED) ($ in thousands) 2002 2001 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Income before gain on sale of investment properties and extraordinary loss $ 23,416 $ 24,503 Adjustments to reconcile income before gain on sale of investment properties and extraordinary loss to net cash provided by operating activities: Depreciation and amortization, net of minority interest's share 25,366 21,526 Amortization of unearned compensation 299 556 Stock appreciation right expense (credit) 34 (136) Cash charges to expense accrual for stock appreciation rights (288) (373) Effect of recognizing rental revenues on a straight-line basis (1,092) (1,597) Income from unconsolidated joint ventures (13,630) (11,145) Operating distributions from unconsolidated joint ventures 21,744 14,777 Residential lot and outparcel cost of sales 2,741 2,684 Changes in other operating assets and liabilities: Change in other receivables 185 402 Change in accounts payable and accrued liabilities (1,829) (2,608) -------- -------- Net cash provided by operating activities 56,946 48,589 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Gain on sale of investment properties, net of applicable income tax provision 2,072 19,422 Adjustments to reconcile gain on sale of investment properties to net cash provided by sales activities: Cost of sales - 35,674 Deferred income recognized (2,062) (2,023) Non-cash gain on disposition of leasehold interests - (236) Property acquisition and development expenditures (36,193) (82,443) Investment in unconsolidated joint ventures, including interest capitalized to equity investments (3,075) (18,723) (Investment in) collection of notes receivable, net (652) 869 Net cash paid in acquisition of business - (2,126) Change in other assets, net (1,983) (3,999) -------- -------- Net cash used in investing activities (41,893) (53,585) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from credit facility 119,426 137,324 Repayment of credit facility (184,497) (131,781) Proceeds from other notes payable 150,000 31,000 Repayment of other notes payable (69,728) (2,746) Dividends paid (36,792) (33,513) Common stock sold, net of expenses 8,350 7,745 Extraordinary loss (3,501) - -------- -------- Net cash (used in) provided by financing activities (16,742) 8,029 -------- -------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,689) 3,033 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10,556 1,696 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 8,867 $ 4,729 ======== ======== The accompanying notes are an integral part of these consolidated statements.
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2002 (UNAUDITED) 1. BASIS OF PRESENTATION - -------------------------- The Consolidated Financial Statements include the accounts of Cousins Properties Incorporated ("Cousins"), its majority owned partnerships and wholly owned subsidiaries, Cousins Real Estate Corporation ("CREC") and its subsidiaries and CREC II Inc. ("CREC II") and its subsidiaries. All of the entities included in the Consolidated Financial Statements are hereinafter referred to collectively as the "Company." Cousins has elected to be taxed as a real estate investment trust ("REIT"), and intends to distribute 100% of its federal taxable income to stockholders, thereby eliminating any liability for future corporate federal income taxes. Therefore, the results included herein do not include a federal income tax provision for Cousins. However, CREC and its subsidiaries and CREC II and its subsidiaries are taxed separately from Cousins as regular corporations. Accordingly, the Consolidated Statements of Income include a provision (benefit) for CREC and CREC II's income taxes. The Consolidated Financial Statements were prepared by the Company without audit, but in the opinion of management reflect all adjustments necessary (which adjustments are of a normal and recurring nature) for the fair presentation of the Company's financial position as of June 30, 2002 and results of operations for the three and six month periods ended June 30, 2002 and 2001. Results of operations for the interim 2002 period are not necessarily indicative of results expected for the full year. While certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, the Company believes that the disclosures herein are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. The accounting policies employed are the same as those shown in Note 1 to the Consolidated Financial Statements included in such Form 10-K. 2. SUPPLEMENTAL INFORMATION CONCERNING CASH FLOWS - --------------------------------------------------- Interest paid (net of $3,130,000 and $4,730,000 capitalized in 2002 and 2001, respectively) and income taxes (refunded) paid were as follows for the six months ended June 30, 2002 and 2001 ($ in thousands): 2002 2001 ------- ------- Interest paid $16,954 $14,242 Income taxes (refunded) paid $(1,168) $ 200 During the six months ended June 30, 2002, approximately $26,836,000 was transferred from Projects Under Construction to Operating Properties. 3. NOTES PAYABLE AND INTEREST EXPENSE - ---------------------------------------
At June 30, 2002 and December 31, 2001, notes payable included the following ($ in thousands): June 30, 2002 December 31, 2001 ------------------------------------ ------------------------------------- Share of Share of Unconsolidated Unconsolidated Company Joint Ventures Total Company Joint Ventures Total -------- -------------- -------- -------- --------------- --------- Floating Rate Credit Facility and Floating Rate Debt $ 88,745 $ 7,114 $ 95,859 $153,816 $ 7,614 $161,430 Other Debt (primarily non-recourse fixed rate mortgages) 511,731 263,838 775,569 431,459 268,299 699,758 -------- -------- -------- -------- -------- -------- $600,476 $270,952 $871,428 $585,275 $275,913 $861,188 ======== ======== ======== ======== ======== ========
For the three and six months ended June 30, 2002, interest expense was recorded as follows ($ in thousands): Three Months Ended Six Months Ended June 30, 2002 June 30, 2002 ------------------------------------ ----------------------------------- Share of Share of Unconsolidated Unconsolidated Company Joint Ventures Total Company Joint Ventures Total ------- -------------- ------- ------- -------------- ------- Interest Expensed $ 9,557 $4,808 $14,365 $18,089 $9,678 $27,767 Interest Capitalized 1,233 - 1,233 3,130 - 3,130 ------- ------ ------- ------- ------ ------- $10,790 $4,808 $15,598 $21,219 $9,678 $30,897 ======= ====== ======= ======= ====== =======
During the first six months of 2002, interest was capitalized related to the Company's and the Company's share of unconsolidated joint venture projects under construction which had an average balance of approximately $97 million.
4. EARNINGS PER SHARE DATA - --------------------------- Weighted average shares and diluted weighted average shares are as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, -------------------- ------------------- 2002 2001 2002 2001 ------ ------ ------ ------ Weighted average shares 49,617 49,256 49,493 49,178 Dilutive potential common shares 1,004 1,139 954 1,123 ------ ------ ------ ------ Diluted weighted average shares 50,621 50,395 50,447 50,301 ====== ====== ====== ====== Anti-dilutive options not included 892 901 935 901 ====== ====== ====== ======
5. NEW ACCOUNTING PRONOUNCEMENTS - --------------------------------- In June 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). Under the provisions of SFAS 142, there will be no amortization of goodwill and other intangible assets that have indefinite useful lives. Instead, these assets must be tested for impairment upon the adoption of SFAS 142 and annually thereafter. The Company has goodwill totaling approximately $15.6 million which is subject to SFAS 142. The Company adopted SFAS 142 effective January 1, 2002 and completed its initial impairment test of this goodwill in the first quarter of 2002, which resulted in no impairment. Amortization expense recorded related to this goodwill was approximately $180,000 and $291,000 for the three and six months ended June 30, 2001, respectively. Had amortization expense not been recorded in 2001, diluted earnings per share would have been $.25 and $.88 for the three and six month 2001 periods, respectively. In August 2001, SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," was issued, which the Company adopted effective January 1, 2002. SFAS No. 144 addresses financial accounting and reporting for the impairment of long-lived assets and long-lived assets to be disposed of. This statement supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," and establishes criteria beyond that previously specified in SFAS No. 121 to determine when a long-lived asset is to be considered as held for sale. The Company believes that the impairment provisions of SFAS No. 144 are similar to SFAS No. 121 and the adoption had no impact on the Company's financial statements. SFAS No. 144 also requires that the gains and losses from the disposition of certain real estate assets and the related historical operating results be included in discontinued operations in the statements of income for all periods presented. In the normal course of business, the Company recycles invested capital by disposing of existing assets and redeploying the proceeds in order to enhance total returns to stockholders. Although net income will not be affected, the Company will reclassify results previously included in continuing operations to discontinued operations for any qualifying dispositions it may have in the future in accordance with SFAS No. 144. 6. REFINANCING OF BANK OF AMERICA PLAZA - ----------------------------------------- On February 22, 2002, CSC Associates, L.P. ("CSC"), a 50% owned joint venture, completed a $150 million non-recourse mortgage note payable with an interest rate of 6.9575% and a maturity of March 1, 2012. This non-recourse mortgage note payable is secured by CSC's interest in the Bank of America Plaza building and related leases and agreements. CSC loaned the $150 million proceeds of the non-recourse mortgage note payable 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 non-recourse mortgage note payable. The Company paid all costs of issuing the non-recourse mortgage note payable and the Cousins Loan, including a $750,000 fee to an affiliate of Bank of America Corporation. On March 15, 2002, $65,873,925 of the proceeds from this financing was used to pay off in full the existing collateralized non-recourse mortgage notes ("existing mortgage notes"). The $65,873,925 included $65,525,710 for the payoff of the principal balance as of February 15, 2002 (the last payment date of the existing mortgage notes) and $348,215 for accrued interest from February 15, 2002 through March 14, 2002. The existing non-recourse loan to CSC, which is secured by the Company's interest in CSC under the same payment terms as those of the existing mortgage notes, was also repaid in full. In connection with the prepayment in full of the existing mortgage notes, the Company paid a prepayment premium in the amount of $2,871,925. This prepayment premium of $2,871,295, along with the unamortized balance of closing costs paid by the Company related to the existing mortgage notes in the amount of $629,278, were expensed as an Extraordinary Item in the accompanying Consolidated Statements of Income. 7. REPORTABLE SEGMENTS - ----------------------- The Company has three reportable segments: Office Division, Retail Division and Land Division. The Office Division and Retail Division develop, lease and manage office buildings and retail centers, respectively. The Land Division owns various tracts of strategically located land which are being held for sale or future development. The Land Division also develops single-family residential communities which are parceled into lots and sold to various home builders. The management of the Company evaluates the performance of its reportable segments based on Funds From Operations ("FFO"). The Company calculates its FFO using the National Association of Real Estate Investment Trusts ("NAREIT") definition of FFO adjusted to (i) eliminate the recognition of rental revenues on a straight-line basis and (ii) reflect stock appreciation right expense on a cash basis. The Company believes its FFO presentation more properly reflects its operating results. The Company's reportable segments are broken down based on what type of product the division provides. The divisions are managed separately because each product they provide has separate and distinct development issues, leasing and/or sales strategies and management issues. The notations (100%) and (JV) used in the following tables indicate wholly owned and unconsolidated joint ventures, respectively, and all amounts are in thousands.
Three Months Ended Office Retail Land Unallocated June 30, 2002 Division Division Division and Other Total - ------------------ -------- -------- -------- ----------- ------- Rental property revenues (100%) $33,298 $ 9,906 $ - $ 25 $43,229 Rental property revenues (JV) 19,377 632 - - 20,009 Development income, management fees and leasing and other fees (100%) 3,467 414 75 - 3,956 Development income, management fees and leasing and other fees (JV) - - - - - Other income (100%) - - 521 1,114 1,635 Other income (JV) - - 408 - 408 -------------------------------------------------------- Total revenues 56,142 10,952 1,004 1,139 69,237 -------------------------------------------------------- Rental property operating expenses (100%) 10,243 2,293 - 1 12,537 Rental property operating expenses (JV) 5,715 150 - - 5,865 Other expenses (100%) 4,719 1,539 978 11,583 18,819 Other expenses (JV) - - 11 3,293 3,304 -------------------------------------------------------- Total expenses 20,677 3,982 989 14,877 40,525 -------------------------------------------------------- Consolidated funds from operations 35,465 6,970 15 (13,738) 28,712 -------------------------------------------------------- Depreciation and amortization (100%) (9,555) (3,260) - (2) (12,817) Depreciation and amortization (JV) (4,340) (234) - - (4,574) Effect of the recognition of rental revenues on a straight-line basis (100%) 183 - - - 183 Effect of the recognition of rental revenues on a straight-line basis (JV) (73) - - - (73) Adjustment to reflect stock appreciation right expense on an accrual basis - - - 239 239 Gain on sale of investment properties, net of applicable income tax provision 473 569 - - 1,042 -------------------------------------------------------- Net income 22,153 4,045 15 (13,501) 12,712 -------------------------------------------------------- Provision for income taxes from operations - - - 152 152 -------------------------------------------------------- Income from operations before taxes $22,153 $ 4,045 $ 15 $(13,349) $12,864 ========================================================
Six Months Ended Office Retail Land Unallocated June 30, 2002 Division Division Division and Other Total - ---------------- -------- -------- -------- ----------- ---------- Rental property revenues (100%) $ 63,225 $ 18,443 $ - $ 53 $ 81,721 Rental property revenues (JV) 38,273 1,261 - - 39,534 Development income, management fees and leasing and other fees (100%) 7,613 793 247 - 8,653 Development income, management fees and leasing and other fees (JV) - - - - - Other income (100%) - - 4,556 2,249 6,805 Other income (JV) - - 1,452 - 1,452 ----------------------------------------------------------- Total revenues 109,111 20,497 6,255 2,302 138,165 ----------------------------------------------------------- Rental property operating expenses (100%) 19,853 4,388 - 5 24,246 Rental property operating expenses (JV) 11,462 321 - - 11,783 Other expenses (100%) 9,438 3,110 4,454 23,177 40,179 Other expenses (JV) - - 25 6,642 6,667 ----------------------------------------------------------- Total expenses 40,753 7,819 4,479 29,824 82,875 ----------------------------------------------------------- Consolidated funds from operations 68,358 12,678 1,776 (27,522) 55,290 ----------------------------------------------------------- Depreciation and amortization (100%) (18,186) (6,126) - (3) (24,315) Depreciation and amortization (JV) (8,372) (477) - - (8,849) Effect of the recognition of rental revenues on a straight-line basis (100%) 1,092 - - - 1,092 Effect of the recognition of rental revenues on a straight-line basis (JV) (56) - - - (56) Adjustment to reflect stock appreciation right expense on an accrual basis - - - 254 254 Gain on sale of investment properties, net of applicable income tax provision 947 1,125 - - 2,072 Extraordinary loss - - - (3,501) (3,501) ----------------------------------------------------------- Net income 43,783 7,200 1,776 (30,772) 21,987 ----------------------------------------------------------- Provision for income taxes from operations - - - 1,174 1,174 ----------------------------------------------------------- Income from operations before taxes $ 43,783 $ 7,200 $ 1,776 $(29,598) $ 23,161 =========================================================== Total assets $850,205 $262,914 $28,004 $76,846 $1,217,969 =========================================================== Investment in unconsolidated joint ventures $151,837 $ 16,556 $11,965 $ - $ 180,358 ===========================================================
Reconciliation to Consolidated Revenues - --------------------------------------- Three Months Ended Six Months Ended June 30, June 30, --------------------- --------------------- 2002 2001 2002 2001 ------- ------- ------- ------- Rental property revenues (100%) $43,229 $35,644 $81,721 $70,054 Effect of the recognition of rental revenues on a straight-line basis (100%) 183 335 1,092 1,581 Development income, management fees and leasing and other fees (100%) 3,956 5,279 8,653 8,997 Residential lot and outparcel sales 521 1,519 4,556 3,907 Interest and other 1,114 1,498 2,249 3,093 --------------------- --------------------- Total consolidated revenues $49,003 $44,275 $98,271 $87,632 ===================== =====================
Three Months Ended Office Retail Land Unallocated June 30, 2001 Division Division Division and Other Total - ------------------ -------- -------- -------- ----------- ------- Rental property revenues (100%) $27,578 $7,976 $ -- $ 90 $35,644 Rental property revenues (JV) 16,899 604 -- -- 17,503 Development income, management fees and leasing and other fees (100%) 4,896 275 108 -- 5,279 Development income, management fees and leasing and other fees (JV) -- -- -- -- - Other income (100%) -- -- 1,519 1,498 3,017 Other income (JV) -- -- 624 - 624 ---------------------------------------------------------- Total revenues 49,373 8,855 2,251 1,588 62,067 ---------------------------------------------------------- Rental property operating expenses (100%) 8,603 2,396 -- 49 11,048 Rental property operating expenses (JV) 4,992 173 -- -- 5,165 Other expenses (100%) 3,954 1,696 1,697 9,569 16,916 Other expenses (JV) -- -- 1 3,464 3,465 ---------------------------------------------------------- Total expenses 17,549 4,265 1,698 13,082 36,594 ---------------------------------------------------------- Consolidated funds from operations 31,824 4,590 553 (11,494) 25,473 ---------------------------------------------------------- Depreciation and amortization (100%) (8,367) (2,349) -- (2) (10,718) Depreciation and amortization (JV) (3,793) (216) -- -- (4,009) Effect of the recognition of rental revenues on a straight-line basis (100%) 335 -- -- -- 335 Effect of the recognition of rental revenues on a straight-line basis (JV) 152 -- -- -- 152 Adjustment to reflect stock appreciation right expense on an accrual basis -- -- -- 248 248 Gain on sale of investment properties, net of applicable income tax provision 475 593 9 -- 1,077 ---------------------------------------------------------- Net income 20,626 2,618 562 (11,248) 12,558 ---------------------------------------------------------- Provision for income taxes from operations -- -- -- 227 227 ---------------------------------------------------------- Income from operations before taxes $20,626 $2,618 $ 562 $(11,021) $12,785 ==========================================================
Six Months Ended Office Retail Land Unallocated June 30, 2001 Division Division Division and Other Total - ---------------- -------- -------- -------- ----------- --------- Rental property revenues (100%) $ 53,124 $ 16,765 $ -- $ 165 $ 70,054 Rental property revenues (JV) 35,783 1,202 -- -- 36,985 Development income, management fees and leasing and other fees (100%) 8,092 731 174 -- 8,997 Development income, management fees and leasing and other fees (JV) 1,050 -- -- -- 1,050 Other income (100%) -- -- 3,907 3,093 7,000 Other income (JV) -- -- 892 25 917 ---------------------------------------------------------- Total revenues 98,049 18,698 4,973 3,283 125,003 ---------------------------------------------------------- Rental property operating expenses (100%) 16,924 4,690 -- 50 21,664 Rental property operating expenses (JV) 10,601 329 -- -- 10,930 Other expenses (100%) 5,405 3,235 4,096 19,528 32,264 Other expenses (JV) -- -- 24 9,182 9,206 ---------------------------------------------------------- Total expenses 32,930 8,254 4,120 28,760 74,064 ---------------------------------------------------------- Consolidated funds from operations 65,119 10,444 853 (25,477) 50,939 Depreciation and amortization (100%) (16,073) (4,779) -- (3) (20,855) Depreciation and amortization (JV) (7,677) (426) -- -- (8,103) Effect of the recognition of rental revenues on a straight-line basis (100%) 1,581 -- -- -- 1,581 Effect of the recognition of rental revenues on a straight-line basis (JV) 432 -- -- -- 432 Adjustment to reflect stock appreciation right expense on an accrual basis -- -- -- 509 509 Gain on sale of investment properties, net of applicable income tax provision 1,185 18,228 9 -- 19,422 ---------------------------------------------------------- Net income 44,567 23,467 862 (24,971) 43,925 ---------------------------------------------------------- Benefit for income taxes from operations -- -- -- (713) (713) ---------------------------------------------------------- Income from operations before taxes $ 44,567 $ 23,467 $ 862 $(25,684) $ 43,212 ========================================================== Total assets $815,197 $260,934 $16,640 $70,323 $1,163,094 ========================================================== Investment in unconsolidated joint ventures $152,502 $ 16,988 $ 9,285 $ - $ 178,775 ==========================================================
PART I. FINANCIAL INFORMATION - ------------------------------ Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations for the Three and Six Months Ended June 30, 2002 and 2001 Critical Accounting Policies: - ----------------------------- A critical accounting policy is one which is both important to the portrayal of a company's financial condition and results and requires significant judgment or complex estimation processes. As the Company is in the business of developing, owning and managing office and retail real estate properties and developing single-family residential communities which are parceled into lots and sold to various home builders, its critical accounting policies relate to cost capitalization, depreciation and amortization, impairment of long-lived assets and residential lot sales profit recognition. The Company expenses predeveloment costs incurred on a potential project until it becomes probable that the project will go forward. After a project becomes probable, all subsequently incurred predevelopment costs, as well as interest, real estate taxes, and certain internal personnel and associated costs directly related to the project under development are capitalized. If the decision is made to not commence development of a project that had been deemed probable, all previously capitalized costs are expensed. From the date a project receives its certificate of occupancy and for one year thereafter, the Company continues capitalizing interest, real estate taxes and certain internal personnel and associated costs directly related to the project under development based on the portion of the project which remains under construction. When a project is completed and placed in service, it is depreciated on a straight-line basis over its estimated useful life. Projects which the Company developed are depreciated over 30 to 40 years and projects the Company acquired are depreciated over 15 to 30 years. Leasehold improvements are amortized over the lesser of the life of the applicable lease or the estimated useful life of the asset. As required by accounting principles generally accepted in the United States, the Company periodically evaluates its real estate assets to determine if there has been any impairment in their carrying values and records impairment losses if the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts or there are other indicators of impairment. At June 30, 2002, the Company did not own any real estate assets that were impaired. In its determination of the gross profit percentages to be applied to its residential lot sales in order to calculate the profits to be recognized on these sales, the Company utilizes several estimates. Gross profit percentages are calculated based on the estimated lot sales prices divided by the estimated costs of the development. The Company must estimate the prices of the lots to be sold, the costs to complete the development of the residential community and the time period over which the lots, once completed, will be ultimately sold. Results of Operations: - ---------------------- Rental Property Revenues and Operating Expenses. Rental property revenues increased approximately $7,433,000 and $11,178,000 in the three and six month 2002 periods, respectively. Rental property revenues from the Company's office portfolio increased approximately $5,568,000 and $9,612,000 in the three and six month 2002 periods, respectively. Two office buildings, Cerritos Corporate Center-Phase II and 55 Second Street, which became partially operational for financial reporting purposes in June 2001 and February 2002, respectively, contributed approximately $763,000 and $1,672,000 in the three and six month 2002 periods, respectively, and $4,297,000 and $6,901,000 in the three and six month 2002 periods, respectively, to the increase. Additionally, rental property revenues from 101 Second Street increased approximately $731,000 and $867,000 in the three and six month 2002 periods, respectively, primarily due to the recognition of a termination fee paid to effect the early termination of a tenant's lease of approximately $778,000 in the three month 2002 period. Rental property revenues at the 3301 Windy Ridge Parkway Building increased approximately $285,000 in the six month 2002 period due to the renewal of the single tenant's lease at a higher rental rate beginning May 2001. Furthermore, rental property revenues from 1900 Duke Street, which became partially operational for financial reporting purposes in October 2000, increased approximately $314,000 in the six month 2002 period, and rental property revenues from Meridian Mark Plaza increased approximately $290,000 in the six month 2002 period, as its average economic occupancy increased from 94% in 2001 to 97% in 2002. The increases in rental property revenues were partially offset by decreases of approximately $557,000 and $1,148,000 in the three and sixth month 2002 periods, respectively, from The Points at Waterview, as its average economic occupancy for the six month period decreased from 96% in 2001 to 49% in 2002. Rental property revenues from the Company's retail portfolio increased approximately $1,930,000 and $1,678,000 in the three and six month 2002 periods, respectively. Rental property revenues increased approximately $1,135,000 and $1,905,000 in the three and six month 2002 periods, respectively, from The Avenue Peachtree City due both to the property becoming partially operational for financial reporting purposes in March 2001 and to the recognition of a termination fee of approximately $719,000 in the three month 2002 period. Rental property revenues increased approximately $619,000 and $713,000 in the three and six month 2002 periods, respectively, from The Avenue of the Peninsula, as its average economic occupancy for the six month period increased from 72% in 2001 to 79% in 2002. Rental property revenues from Presidential MarketCenter increased approximately $222,000 in the six month 2002 period, as its average economic occupancy increased from 91% in 2001 to 98% in 2002. Rental property revenues decreased approximately $1,064,000 in the six month 2002 period from the February 2001 sale of Colonial Plaza MarketCenter, which partially offset the increase in rental property revenues in the six month 2002 period. The Company expects additional termination fees will be recognized as rental property revenues during the second half of 2002 as a result of its ongoing negotiations to terminate leases with other tenants in certain of its properties. In August 2002, the Company did enter into a termination agreement with Arthur Andersen which terminated its 148,000 square foot lease at 101 Second Street. The result of the termination agreement with Arthur Andersen will not have a material impact on rental property revenues in 2002. However, there will be no economic benefit to the Company or its rental property revenues from the Arthur Andersen lease in 2003 and beyond. The Company is in active negotiations with prospective tenants to lease approximately one-half of the Arthur Andersen and Reflect.com space located in 101 Second Street. While the Company is hopeful, there is no guarantee that these negotiations will result in executed leases. In addition, the San Francisco market continues to be a difficult leasing market. Due to the uncertainties surrounding both the ongoing negotiations and the market, the Company cannot currently estimate the result of its efforts to re-lease the 101 Second Street building and the resulting impact on rental property revenues in 2003 and beyond. Rental property operating expenses increased approximately $1,538,000 and $2,433,000 in the three and six month 2002 periods, respectively, due to the aforementioned office buildings and retail center becoming partially operational for financial reporting purposes. The increase in rental property operating expenses in the six month 2002 period was partially offset by a decrease in rental property operating expenses of approximately $316,000 from the aforementioned sale of Colonial Plaza MarketCenter. Development Income. Development income decreased approximately $664,000 and $1,104,000 in the three and six month 2002 periods, respectively. Development income decreased approximately $570,000 and $642,000 in the three and six month 2002 periods, respectively, from CPI/FSP I, L.P., as construction of Austin Research Park Buildings III and IV was completed. Additionally, development income decreased approximately $209,000 in the six month 2002 period from 285 Venture, LLC, as construction of 1155 Perimeter Center West was completed, and approximately $409,000 in the six month 2002 period from the third party development of the Turner Tower. The decrease in development income was partially offset by an increase in development income of approximately $234,000 in the six month 2002 period from the third party retail redevelopment of a center in Albuquerque. Management Fees. Management fees increased approximately $314,000 and $1,197,000 in the three and six month 2002 periods, respectively. Management fees increased approximately $233,000 and $1,005,000 in the three and six month 2002 periods, respectively, from Cousins Properties Services LP ("CPS"). Effective March 1, 2001, CREC II purchased the remaining 25% interest in CPS at which point the operations of CPS were consolidated, whereas the operations had been previously accounted for using the equity method of accounting and therefore recognized as joint venture income. Approximately $301,000 and $612,000 of the CPS increase in the three and six month 2002 periods, respectively, was from the Concourse Corporate Center in Atlanta, Georgia, of which CPS commenced management in October 2001. Additionally, management fees increased by approximately $107,000 in the six month 2002 period from CPI/FSP I, L.P., as Austin Research Park Buildings III and IV became partially operational for financial reporting purposes in June 2001 and September 2001, respectively. Leasing and Other Fees. Leasing and other fees decreased approximately $973,000 and $437,000 in the three and six month 2002 periods, respectively. Leasing and other fees decreased approximately $544,000 in both the three and six month 2002 periods from CPI/FSP I, L.P., as leasing fees were recognized for Austin Research Park Buildings III and IV in 2001. A decrease in leasing and other fees from CPS also contributed to the decrease by approximately $365,000 in the three month 2002 period due to a significant third party leasing fee recognized in the three month 2001 period. Leasing and other fees also decreased approximately $100,000 in the three month 2002 period from 285 Venture, LLC from leasing fees recognized in the three month 2001 period related to the lease-up of 1155 Perimeter Center West. Furthermore, leasing and other fees decreased approximately $143,000 in the six month 2002 period from CSC Associates, L.P., which owns Bank of America Plaza, and approximately $151,000 in the six month 2002 period from CP Venture Two, LLC. Leasing and other fees from CPS increased approximately $256,000 in the six month 2002 period, which partially offset the six month 2002 decrease in leasing and other fees, primarily related to leasing at the aforementioned Concourse Corporate Center. Also partially offsetting the decrease in both the three and six month 2002 periods was an increase in leasing and other fees of approximately $267,000 from Ten Peachtree Place Associates. Residential Lot and Outparcel Sales and Cost of Sales. Residential lot and outparcel sales decreased approximately $998,000 in the three month 2002 period and increased $649,000 in the six month 2002 period. Residential lots sold decreased from 30 lots in the three month 2001 period to 5 lots in the three month 2002 period and increased from 75 lots in the six month 2001 period to 96 lots in the six month 2002 period. Residential lot and outparcel cost of sales decreased approximately $910,000 in the three month 2002 period and increased approximately $61,000 in the six month 2002 period due to the aforementioned fluctuation in the number of lots sold. The decrease in cost of sales in the three month 2002 period and the increase in cost of sales in the six month 2002 period was less than the corresponding decrease and increase in the three and six month sales, respectively, due to an increase in 2002 of the gross profit percentages used to calculate the cost of sales of lot sales in certain of the residential developments. Interest and Other Income. Interest and other income decreased approximately $384,000 and $844,000 in the three and six month 2002 periods, respectively, primarily due to interest income recognized in the 2001 periods from the $18.6 million note receivable from Charlotte Gateway Village, LLC ("Gateway") that was repaid in full in November 2001. Income from Unconsolidated Joint Ventures. (All amounts reflect the Company's share of joint venture income.) Income from unconsolidated joint ventures increased approximately $961,000 and $2,485,000 in the three and six month 2002 periods, respectively. Income from Wildwood Associates increased approximately $385,000 in the six month 2002 period primarily due to an increase in income before depreciation, amortization and interest expense of approximately $258,000 in the six month 2002 period from the 3200 Windy Hill Road Building, as its average economic occupancy increased from 99% in 2001 to 100% in 2002. Income from Temco Associates decreased approximately $227,000 in the three month 2002 period and increased approximately $559,000 in the six month 2002 period. Lot sales in its Bentwater residential development decreased from 89 lots in the three month 2001 period to 79 lots in the three month 2002 period, which contributed to the three month 2002 decrease, and increased from 138 lots in the six month 2001 period to 180 lots in the six month 2002 period, which contributed to the six month 2002 increase. Additionally, approximately 213 acres of the option related to the fee simple interest was exercised and simultaneously sold in the three month 2001 period. CREC's share of the gain was approximately $360,000. No tract sales occurred in the three month 2002 period. Approximately 559 acres of the option related to the fee simple interest was exercised and simultaneously sold in the six month 2002 period. CREC's share of the gain was approximately $371,000. Income from CPI/FSP I, L.P. increased approximately $550,000 and $976,000 in the three and six month 2002 periods, respectively, as Austin Research Park Buildings III and IV became partially operational for financial reporting purposes in June 2001 and September 2001, respectively. Income from Gateway increased approximately $197,000 and $408,000 in the three and six month 2002 periods, respectively. The Company recognizes an 11.46% current preferred return on its equity in Gateway, which increased from $3,200,000 to $10,556,000 in November 2001. Income from Crawford Long - CPI, LLC increased approximately $199,000 and $306,000 in the three and six month 2002 periods, respectively, as the Emory Crawford Long Medical Office Tower became partially operational for financial reporting purposes in February 2002. Income from Ten Peachtree Place Associates decreased approximately $260,000 and $561,000 in the three and six month 2002 periods, respectively, as its average economic occupancy for the six month period decreased from 100% in 2001 to 16% in 2002. Income from CSC Associates, L.P. increased approximately $199,000 and $299,000 in the three and six month 2002 periods, respectively, due to an increase in rental revenues from a tenant whose increase in rental rate did not require straight-lining under Statement of Financial Accounting Standards No. 13. Income from 285 Venture, LLC increased approximately $177,000 and $191,000 in the three and six month 2002 periods, respectively, as the average economic occupancy for the six month period of 1155 Perimeter Center West increased from 87% in 2001 to 100% in 2002. General and Administrative Expenses. General and administrative expenses increased approximately $131,000 and $1,325,000 in the three and six month 2002 periods, respectively. The increase in the three month 2002 period was partially due to an increase in moving expenses and salaries and employee benefits. The increase in the six month 2002 period was primarily attributable to the aforementioned consolidation of CPS and partially to an increase in moving expenses. The increases in the three and six month 2002 periods were partially offset by a decrease in general and administrative expenses resulting from the capitalization of additional general and administrative expenses to offset the partial elimination of certain development and leasing fees from joint ventures. Depreciation and Amortization. Depreciation and amortization increased approximately $2,308,000 and $3,744,000 in the three and six month 2002 periods, respectively, due to the aforementioned office buildings and retail center becoming partially operational for financial reporting purposes, which increase was partially offset by the February 2001 sale of Colonial Plaza MarketCenter. Interest Expense. Interest expense increased approximately $3,007,000 and $4,368,000 in the three and six month 2002 periods, respectively. Interest expense before capitalization increased to approximately $10,790,000 and $21,219,000 in the three and six month 2002 periods, respectively, from approximately $8,966,000 and $18,451,000 in the three and six month 2001 periods, respectively, due to higher average debt levels. The Company completed four non-recourse mortgages in 2001: Presidential MarketCenter in May 2001, 600 University Park Place in July 2001 and 333 John Carlyle/1900 Duke Street and 333/555 North Point Center East in November 2001. Also contributing to the increase in interest expense was a decrease of approximately $1,183,000 and $1,600,000 in the three and six month 2002 periods, respectively, in interest capitalized to projects under development (a reduction of interest expense) to approximately $1,233,000 and $3,130,000 in the three and six month 2002 periods, respectively, from approximately $2,416,000 and $4,730,000 in the three and six month 2001 periods, respectively, due to a lower level of projects under development in 2002. Other Expenses. Other expenses decreased approximately $371,000 in the three month 2002 period and increased approximately $214,000 in the six month 2002 period. Predevelopment expense decreased approximately $281,000 in the three month 2002 period. Minority interest expense increased approximately $194,000 in the six month 2002 period primarily due to an increase in minority interest expense from 55 Second Street, which became partially operational for financial reporting purposes in February 2002. Provision(Benefit) for Income Taxes from Operations. The benefit for income taxes from operations decreased approximately $1,887,000 to a provision for income taxes from operations in the six month 2002 period. The decrease in the benefit for income taxes from operations was primarily due to an increase in income before income taxes and gain on sale of investment properties from CREC and its subsidiaries in the six month 2002 period. This increase is primarily due to increases in income from residential lot sales, net of cost of sales, income from Temco Associates, leasing fees and a decrease in general and administrative expenses. The increase in income before income taxes and gain on sale of investment properties from CREC and its subsidiaries was partially offset by a decrease in development income and an increase in interest expense in the six month 2002 period. The decrease in the benefit for income taxes from operations was partially offset by an increase in the loss before income taxes and gain on sale of investment properties from CREC II and its subsidiaries in the six month 2002 period. The decrease is mainly due to a decrease in income from CPS. Gain on Sale of Investment Properties. Gain on sale of investment properties decreased approximately $17,350,000 in the six month 2002 period. The 2002 gain included the amortization of deferred gain from CP Venture LLC ($2.1 million) (see Note 5 of "Notes to Consolidated Financial Statements" in the Company's Annual Report on Form 10-K for the year ended December 31, 2001). The 2001 gain included the following: the February 2001 sale of Colonial Plaza MarketCenter ($17.1 million), the February 2001 disposition of leasehold interests in Summit Green ($.2 million) and the amortization of deferred gain from CP Venture LLC ($2.1 million) (see Note 5 of "Notes to Consolidated Financial Statements" in the Company's Annual Report on Form 10-K for the year ended December 31, 2001). Extraordinary Loss. The Company recognized an extraordinary loss of approximately $3,501,000 in the six month 2002 period due to the refinancing of the CSC Associates, L.P. non-recourse mortgage note payable (see Note 6 to the Company's consolidated financial statements included in this report). Liquidity and Capital Resources: - -------------------------------- Financial Condition. The Company's adjusted debt (including its pro rata share of unconsolidated joint venture debt) was 39% of total market capitalization at June 30, 2002. Adjusted debt is defined as the Company's debt and the Company's pro rata share of unconsolidated joint venture debt as disclosed in Note 4 of "Notes to Consolidated Financial Statements" in the Company's Annual Report on Form 10-K for the year ended December 31, 2001, excluding the Gateway debt as it is fully exculpated debt which is supported by a long-term lease to Bank of America Corporation. The Company had $89 million drawn on its $275 million revolving credit facility as of June 30, 2002. The Company has development and acquisition projects in various planning stages. The Company currently intends to finance these projects, as well as the completion of projects currently under construction, using its existing credit facility (increasing the credit facility as required), long-term non-recourse financing on the Company's unleveraged projects, joint ventures, project sales and other financings as market conditions warrant. In September 1996, the Company filed a shelf registration statement with the Securities and Exchange Commission ("SEC") for the offering from time to time of up to $200 million of common stock, warrants to purchase common stock and debt securities, of which approximately $132 million remains available at June 30, 2002. The Company from time to time evaluates opportunities and strategic alternatives, including but not limited to joint ventures, mergers and acquisitions and new private or publicly-owned entities created to hold existing assets and acquire new assets. These alternatives may also include sales of single or multiple assets when the Company perceives opportunities to capture value and redeploy proceeds or distribute proceeds to stockholders. The Company's consideration of these alternatives is part of its ongoing strategic planning process. There can be no assurance that any such alternative, if undertaken and consummated, would not materially adversely affect the Company or the market price of the Company's common stock. Cash Flows. Net cash provided by operating activities increased approximately $8.4 million in the six month 2002 period. Operating distributions from unconsolidated joint ventures increased approximately $7.0 million in 2002, which contributed to the increase in net cash provided by operating activities. The increase in operating distributions from unconsolidated joint ventures is mainly due to increases in operating distributions of approximately $5.0 million from Wildwood Associates and approximately $1.8 million from CPI/FSP I, L.P. Depreciation and amortization increased approximately $3.8 million due to the aforementioned office buildings and retail center becoming partially operational for financial reporting purposes, which contributed to the increase in net cash provided by operating activities. Income before gain on sale of investment properties and extraordinary loss decreased approximately $1.1 million and income from unconsolidated joint ventures increased approximately $2.5 million, both of which partially offset the increase in net cash provided by operating activities. Net cash used in investing activities decreased approximately $11.7 million in the six month 2002 period. The decrease in net cash used in investing activities was primarily due to a decrease of approximately $46.3 million in property acquisition and development expenditures, as a result of the Company having a lower level of projects under development in the six month 2002 period. Investment in unconsolidated joint ventures decreased approximately $15.6 million, which also contributed to the decrease in net cash used in investing activities. This decrease was primarily due to a decrease in contributions of approximately $9.3 million to CPI/FSP I, L.P., as construction of Austin Research Park Buildings III and IV was completed in 2001, a decrease of approximately $4.7 million to Crawford Long - CPI, LLC in 2002, as construction of the Emory Crawford Long Medical Office Tower was substantially completed in February 2002, and a decrease of approximately $1.0 million to 285 Venture, LLC, as construction of 1155 Perimeter Center West was completed in 2001. The decrease in net cash paid in acquisition of business of approximately $2.1 million, which resulted from the acquisition of the remaining 25% interest in CPS in the first quarter of 2001, and a decrease in change in other assets, net, of approximately $2.0 million, both further contributed to the decrease in net cash used in investing activities. Net cash provided by sales activities decreased approximately $52.8 million due primarily to the sale of Colonial Plaza MarketCenter in February 2001, which partially offset the decrease in net cash used in investing activities. Investment in, net of collection of notes receivable, decreased approximately $1.5 million, which also partially offset the decrease in net cash used in investing activities. Net cash provided by financing activities decreased approximately $24.8 million in the six month 2002 period to net cash used in financing activities. The decrease in net cash provided by financing activities was primarily attributable to a decrease in net amounts drawn on the credit facility of approximately $70.6 million. Also contributing to the decrease in net cash provided by financing activities was an increase of approximately $67.0 million in repayment of other notes payable and an increase in extraordinary loss of approximately $3.5 million, both due to the refinancing of Bank of America Plaza (see Note 6 to the Company's consolidated financial statements included in this report). An increase in the dividends paid per share to $.74 in 2002 from $.68 in 2001 and an increase in the number of shares outstanding also contributed to the decrease in net cash provided by financing activities as dividends paid increased approximately $3.3 million. The increase in proceeds from other notes payable of approximately $119.0 million due to the aforementioned refinancing of Bank of America Plaza (see Note 6 to the Company's consolidated financial statements included in this report) partially offset the decrease in net cash provided by financing activities. CSC Non-Recourse Mortgage Note Payable. As discussed in Note 6 to the Company's consolidated financial statements included in this report, CSC completed a $150 million non-recourse mortgage note payable on the Bank of America Plaza building. Pursuant to the loan agreement, CSC must maintain all of the insurance required under the loan agreement with insurance companies having certain claims paying ability ratings. In July 2002, the claims paying ability rating of CSC's insurance carrier was downgraded to a level immediately below that required by the loan agreement. The Company notified the lender of such downgrading. The lender is not requiring that CSC obtain replacement insurance at this time, but has reserved the right to require CSC to do so at a later time. On the advice of its insurance consultants, the Company believes that the insurance coverage currently required under the loan agreement is available from insurance companies that meet the minimum claims paying ability rating requirements under the loan agreement. If required to provide insurance from a carrier with the required rating, there can be no assurance, however, that such insurance can be obtained, or if obtainable, that such insurance can be obtained without significant additional cost to CSC. Pursuant to the loan agreement, the lender permits insurance to be issued by insurance companies with a lower claims paying ability rating under certain circumstances, including obtaining written confirmation from the rating agencies that the ratings of any securities issued or to be issued as the result of a securitization of this mortgage note payable will not be qualified, downgraded or withdrawn as a result of such lower claims paying ability rating. There can be no assurance that if requested, the rating agencies would approve a reduction in the claims paying ability rating of insurance companies. In the event that CSC is required to obtain insurance from an insurance company with the required rating and cannot obtain such insurance, and, in the further event that the rating agencies will not confirm that the rating of the related securities will not be qualified, downgraded or withdrawn due to the use of an insurance company with a lower rating, CSC could ultimately be in default under the loan agreement and related documents. Quantitative and Qualitative Disclosure About Market Risk: - ---------------------------------------------------------- There has been no material change in the Company's market risk related to its notes payable and notes receivable from that disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. Square Feet Expiring: - --------------------- As of July 31, 2002, the Company's office portfolio included thirty-eight commercial office buildings. The weighted average remaining lease term of these office buildings, excluding all properties currently under construction and/or in lease-up and One Ninety One Peachtree Tower, as it is less than 10% owned by the Company, was approximately 8 years as of July 31, 2002. Most of the Company's leases in these buildings provide for pass through of operating expenses and base rents which escalate over time. The leases expire as follows:
2011 & 2002 2003 2004 2005 2006 2007 2008 2009 2010 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- OFFICE - ------ Consolidated: - ------------- Square Feet Expiring (a) 47,616 127,437 157,592 353,399 349,048 156,725 307,060 667,361 276,062 1,478,573 3,920,873(b) % of Leased Space 1% 3% 4% 9% 9% 4% 8% 17% 7% 38% 100% Annual Base Rent (c) 716,488 2,241,529 3,044,949 6,719,441 5,527,422 3,369,649 6,544,415 13,559,815 7,037,926 42,306,807 91,068,441 Annual Base Rent/Sq. Ft. (c) 15.05 17.59 19.32 19.01 15.84 21.50 21.31 20.32 25.49 28.61 23.23 Joint Venture: - -------------- Square Feet Expiring (a) 225,941 477,988 471,912 468,951 603,257 708,786 168,103 360,595 155,996 3,542,370 7,183,899(d) % of Leased Space 3% 7% 7% 7% 8% 10% 2% 5% 2% 49% 100% Annual Base Rent (c) 4,091,971 8,353,331 8,813,615 8,235,128 10,942,692 17,232,315 2,995,182 8,440,713 3,696,238 78,852,275 151,653,460 Annual Base Rent/Sq. Ft. (c) 18.11 17.48 18.68 17.56 18.14 24.31 17.82 23.41 23.69 22.26 21.11 Total (including only Company's % share of Joint Venture Properties): - ---------------------------------------------------------------------- Square Feet Expiring (a) 156,213 357,129 454,642 551,773 628,201 488,488 379,074 818,271 326,971 3,253,206 7,413,968 % of Leased Space 2% 5% 6% 7% 9% 7% 5% 11% 4% 44% 100% Annual Base Rent (c) 2,582,055 6,238,863 8,487,266 10,234,634 10,595,617 11,601,444 7,838,451 17,266,034 8,342,742 81,735,260 164,922,366 Annual Base Rent/Sq. Ft. (c) 16.53 17.47 18.67 18.55 16.87 23.75 20.68 21.10 25.52 25.12 22.24 (a) Where a 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. (b) Rentable square feet leased as of July 31, 2002 out of approximately 4,097,000 total rentable square feet. (c) 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 estimated rate in the year of expiration. Amounts disclosed are in dollars. (d) Rentable square feet leased as of July 31, 2002 out of approximately 7,473,000 total rentable square feet.
As of July 31, 2002, the Company's medical office portfolio included six medical office properties. The weighted average remaining lease term of these medical office buildings, excluding the property currently under construction and in lease-up, was approximately 8 years as of July 31, 2002. Most of the Company's leases in the buildings provide for pass through of operating expenses and base rents which escalate over time. The leases expire as follows:
2011 & 2002 2003 2004 2005 2006 2007 2008 2009 2010 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- MEDICAL OFFICE - -------------- Consolidated: - ------------- Square Feet Expiring 0 35,388 42,246 23,723 9,210 33,337 35,571 130,041 10,535 144,986 465,037(a) % of Leased Space 0% 8% 9% 5% 2% 7% 8% 28% 2% 31% 100% Annual Base Rent (b) 0 676,258 791,772 409,956 124,046 686,226 812,145 2,639,662 202,799 3,619,463 9,962,327 Annual Base Rent/Sq. Ft. (b) 0 19.11 18.74 17.28 13.47 20.58 22.83 20.30 19.25 24.96 21.42 Joint Venture: - -------------- Square Feet Expiring 0 0 0 3,445 0 24,756 0 0 0 40,503 68,704(c) % of Leased Space 0% 0% 0% 5% 0% 36% 0% 0% 0% 59% 100% Annual Base Rent (b) 0 0 0 56,498 0 422,558 0 0 0 772,392 1,251,448 Annual Base Rent/Sq. Ft. (b) 0 0 0 16.40 0 17.07 0 0 0 19.07 18.22 Total (including only Company's % share of Joint Venture Properties): - ---------------------------------------------------------------------- Square Feet Expiring 0 35,388 42,246 24,119 9,210 36,184 35,571 130,041 10,535 149,644 472,938 % of Leased Space 0% 7% 9% 5% 2% 8% 8% 27% 2% 32% 100% Annual Base Rent (b) 0 676,258 791,772 416,453 124,046 734,821 812,145 2,639,662 202,799 3,708,288 10,106,244 Annual Base Rent/Sq. Ft. (b) 0 19.11 18.74 17.27 13.47 20.31 22.83 20.30 19.25 24.78 21.37 (a) Rentable square feet leased as of July 31, 2002 out of approximately 512,000 total rentable square feet. (b) 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 estimated rate in the year of expiration. Amounts disclosed are in dollars. (c) Rentable square feet leased as of July 31, 2002 out of approximately 69,000 total rentable square feet.
As of July 31, 2002, the Company's retail portfolio included twelve retail properties. The weighted average remaining lease term of these retail properties was approximately 11 years as of July 31, 2002. Most of the major tenant leases in these retail properties provide for pass through of operating expenses and base rents which escalate over time. The leases expire as follows:
2011 & 2002 2003 2004 2005 2006 2007 2008 2009 2010 Thereafter Total ---- ---- ---- ---- ---- ---- ---- ---- ---- ---------- ----- RETAIL - ------ Consolidated: - ------------- Square Feet Expiring 13,228 11,444 76,953 130,897 90,280 39,672 35,127 21,530 142,457 589,123 1,150,711(a) % of Leased Space 1% 1% 7% 11% 8% 4% 3% 2% 12% 51% 100% Annual Base Rent (b) 112,500 240,595 1,412,303 3,111,965 2,087,754 872,878 309,118 733,820 2,972,158 10,300,811 22,153,902 Annual Base Rent/Sq. Ft. (b) 8.50 21.02 18.35 23.77 23.13 22.00 8.80 34.08 20.86 17.48 19.25 Joint Venture: - -------------- Square Feet Expiring 0 20,011 34,343 86,802 173,539 85,968 40,358 62,256 140,895 1,200,037 1,844,209(c) % of Leased Space 0% 1% 2% 5% 9% 5% 2% 3% 8% 65% 100% Annual Base Rent (b) 0 313,945 717,124 1,558,926 2,527,672 1,887,378 751,247 722,712 2,104,236 16,772,187 27,355,427 Annual Base Rent/Sq. Ft. (b) 0.00 15.69 20.88 17.96 14.57 21.95 18.61 11.61 14.93 13.98 14.83 Total (including only Company's % share of Joint Venture Properties): - ---------------------------------------------------------------------- Square Feet Expiring 13,228 13,745 83,525 171,454 134,892 76,832 67,210 31,719 193,455 1,085,636 1,871,696 % of Leased Space 1% 1% 4% 9% 7% 4% 4% 2% 10% 58% 100% Annual Base Rent (b) 112,400 276,698 1,555,547 3,990,369 3,066,329 1,752,466 915,834 894,391 4,065,300 17,767,268 34,396,602 Annual Base Rent /Sq. Ft. (b) 8.50 20.13 18.62 23.27 22.73 22.81 13.63 28.20 21.01 16.37 18.38 (a) Gross leasable area leased as of July 31, 2002 out of approximately 1,217,000 total gross leasable area. (b) 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 estimated rate in the year of expiration. Amounts disclosed are in dollars. (c) Gross leasable area leased as of July 31, 2002 out of approximately 1,883,000 total gross leasable area.
Supplemental Financial Information: - ----------------------------------- Depreciation and amortization expense included the following components for the three and six months ended June 30, 2002 ($ in thousands): Three Months Ended Six Months Ended June 30, 2002 June 30, 2002 ----------------------------------- ----------------------------------- Share of Share of Unconsolidated Unconsolidated Company Joint Ventures Total Company Joint Ventures Total ------- -------------- ------- ------- -------------- ------- Furniture, fixtures and equipment $ 526 $ 2 $ 528 $ 1,048 $ 5 $ 1,053 Deferred financing costs - - - - - - Specifically identifiable intangible assets 7 - 7 13 - 13 Real estate related: Building (including tenant first generation) 12,562 4,284 16,846 23,382 8,282 31,664 Tenant second generation 351 187 538 1,111 376 1,487 ------- ------ ------- ------- ------ ------- $13,446 $4,473 $17,919 $25,554 $8,663 $34,217 ======= ====== ======= ======= ====== =======
Exclusive of new developments and purchases of furniture, fixtures and equipment, the Company had the following capital expenditures during the three and six months ended June 30, 2002, including its share of unconsolidated joint ventures ($ in thousands): Three Months Ended Six Months Ended June 30, 2002 June 30, 2002 --------------------------- --------------------------- Office Retail Total Office Retail Total ------ ------ ----- ------ ------ ----- Second generation related costs $750 $38 $788 $1,040 $ 51 $1,091 Building improvements 103 36 139 389 83 472 ---- --- ---- ------ ---- ------ $853 $74 $927 $1,429 $134 $1,563 ==== === ==== ====== ==== ======
PART II. OTHER INFORMATION - --------------------------- Item 6. Reports on Form 8-K ------------------- (a) Exhibits -------- Exhibit 3.1 Restated and Amended Articles of Incorporation of the Registrant, as amended August 9, 1999. Exhibit 3.2 Bylaws of the Registrant, as amended April 29, 1993. Exhibit 11 Computation of Per Share Earnings.* Exhibit 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Exhibit 99.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K ------------------- On July 13, 2002, the Company filed a Form 8-K detailing a change in certifying accountant. * Data required by SFAS No. 128, "Earnings Per Share," is provided in Note 4 to the consolidated financial statements in this report. SIGNATURES Pursuant to the requirements 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 /s/ Kelly H. Barrett ------------------------------------------------- Kelly H. Barrett Senior Vice President and Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer) August 12, 2002 EX-3.(I) 3 exh3-1.txt FOR FORM 10Q - 6/30/02 Exhibit 3.1 ----------- ARTICLES OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION OF COUSINS PROPERTIES INCORPORATED Cousins Properties Incorporated, a corporation organized and existing under the laws of the State of Georgia, hereby certifies as follows: 1. The name of the corporation is Cousins Properties Incorporated (the "Corporation"). 2. Pursuant to Section 14-2-1003 of the Georgia Business Corporation Code, these Articles of Incorporation amend the Restated Articles of Incorporation of the Corporation, as amended (the "Articles of Amendment"). These Articles of Amendment were duly adopted by the shareholders of the Corporation in accordance with the provisions of Section 14-2-1003 of the Georgia Business Corporation Code on May 4, 1999. 3. The Restated Articles of Incorporation of the Corporation as heretofore amended or supplemented are hereby further amended by amending paragraph A. to Article 4 to increase the number of shares of Common Stock, $1 par value per share, authorized for issuance from 50 million to 150 million shares. Paragraph A. to Article 4 shall hereafter read in its entirety as follows: "A. The Corporation shall have the authority to issue 150 million shares of Common Stock, $1 par value per share. Each share of Common Stock shall have one vote on each matter submitted to a vote of the shareholders of the Corporation. The holders of shares of Common Stock shall be entitled to receive, in proportion to the number of shares of Common Stock held, the net assets of the Corporation upon dissolution after any preferential amounts required to be paid or distributed to holders of outstanding shares of Preferred Stock, if any, are so paid or distributed." IN WITNESS WHEREOF, Cousins Properties Incorporated has caused this Articles of Amendment to be executed, its corporate seal to be affixed, and its seal and execution thereof to be attested, all by its duly authorized officers this 9th day of August, 1999. COUSINS PROPERTIES INCORPORATED [CORPORATE SEAL] By: /s/ Tom G. Charlesworth ----------------------------- Attest: Name: Tom G. Charlesworth Title: Senior Vice Pres By: /s/ Jack A. Lahue --------------------------- Name: Jack A. Lahue Title: Asst. Secretary ARTICLES OF AMENDMENT TO RESTATED ARTICLES OF INCORPORATION OF COUSINS PROPERTIES INCORPORATED Cousins Properties Incorporated, a corporation organized and existing under the laws of the State of Georgia, hereby certifies as follows: 1. The name of the corporation is Cousins Properties Incorporated (the "Corporation"). 2. Pursuant to Section 14-2-1007 of the Georgia Business Corporation Code, these Articles of Incorporation amend the Restated Articles of Incorporation of the Corporation (the "Articles of Amendment"). These Articles of Amendment were duly adopted by the shareholders of the Corporation in accordance with the provisions of Section 14-2-1003 of the Georgia Business Corporation Code on April 21, 1998. 3. The Restated Articles of Incorporation of the Corporation as heretofore amended or supplemented are hereby further amended by adding the following paragraph F. to Article 11: "F. Nothing in these Articles of Incorporation shall preclude settlement of any transaction entered into through the facilities of the New York Stock Exchange." IN WITNESS WHEREOF, Cousins Properties Incorporated has caused this Articles of Amendment to be executed, its corporate seal to be affixed, and its seal and execution thereof to be attested, all by its duly authorized officers this 12 day of May, 1998. COUSINS PROPERTIES INCORPORATED [CORPORATE SEAL] By: /s/ Daniel M. DuPree ------------------------------------- Attest: President and Chief Operating Officer By: /s/ Tom G. Charlesworth ----------------------- Secretary ARTICLES OF RESTATEMENT AND AMENDMENT TO RESTATED ARTICLES OF INCORPORATION OF COUSINS PROPERTIES INCORPORATED Cousins Properties Incorporated, a corporation organized and existing under the laws of the State of Georgia, hereby certifies as follows: 1. The name of the corporation is Cousins Properties Incorporated (the "Corporation"). 2. Pursuant to Section 14-2-1007 of the Georgia Business Corporation Code, these Articles of Incorporation restate and amend the Restated Articles of Incorporation of the Corporation (the "Articles of Restatement and Amendment"). These Articles of Restatement and Amendment were duly adopted by the shareholders of the Corporation in accordance with the provisions of Section 14-2-1003 of the Georgia Business Corporation Code on April 29, 1997. 3. The Restated Articles of Incorporation of the Corporation as heretofore amended or supplemented are hereby restated and further amended to read in their entirety as follows: RESTATED AND AMENDED ARTICLES OF INCORPORATION OF COUSINS PROPERTIES INCORPORATED 1. The name of the Corporation is: COUSINS PROPERTIES INCORPORATED 2. The Corporation shall have perpetual duration. 3. The purposes of the Corporation shall be to engage in and carry on the businesses of buying, leasing and otherwise acquiring lands and interests in lands of every kind and description and wheresoever situated; buying, leasing and otherwise acquiring and constructing and erecting, or contracting for the construction and erection of buildings and structures in and on said lands for any uses or purposes; holding, owning, improving, developing, maintaining, operating, letting, leasing, mortgaging, selling or otherwise disposing of such property or any part thereof; equipping, furnishing and operating apartments, apartment houses, hotels, apartment hotels, restaurants, office buildings, shopping centers, warehouses or any other buildings or structures of whatsoever kind; to loan its funds to any person, firm or corporation, either with or without security; and to conduct any other businesses and engage in any other activities not specifically prohibited to corporations for profit under the laws of the State of Georgia, and the Corporation shall have all powers necessary to conduct such businesses and engage in such activities, including, but not limited to, the powers enumerated in the Georgia Business Corporation Code or any amendment thereto. 4. (A) The Corporation shall have the authority to issue 50 million shares of Common Stock, $1 par value per share. Each share of Common Stock shall have one vote on each matter submitted to a vote of the shareholders of the Corporation. The holders of shares of Common Stock shall be entitled to receive, in proportion to the number of shares of Common Stock held, the net assets of the Corporation upon dissolution after any preferential amounts required to be paid or distributed to holders of outstanding shares of Preferred Stock, if any, are so paid or distributed. (B) The Corporation shall have the authority to issue 20 million shares of Preferred Stock, $1.00 par value per share. The Preferred Stock may be issued from time to time by the Board of Directors as shares of one or more series. The description of shares of each series of Preferred Stock, including any designations, preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications, and terms and conditions of redemption shall be as set forth in resolutions adopted by the Board of Directors, and articles of amendment shall be filed with the Georgia Secretary of State as required by law to be filed with respect to issuance of such Preferred Stock, prior to the issuance of any shares of such series. The Board of Directors is expressly authorized, at any time, by adopting resolutions providing for the issuance of, or providing for a change in the number of, shares of any particular series of Preferred Stock and, if and to the extent from time to time required by law, by filing articles of amendment that are effective without shareholder action, to increase or decrease the number of shares included in each series of Preferred Stock, but not below the number of shares then issued, and to set in any one or more respects the designations, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms and conditions of redemption relating to the shares of each such series (provided, however, that no such issuance or designation shall result in any holder of shares of Common Stock being in violation of the Limit provided for in Article 11.A.(1) or any Prior Owner being in violation of Article 11.A.(3), as applicable, or otherwise resulting in the Corporation failing to qualify as a REIT). Notwithstanding the foregoing, the Board of Directors shall not be authorized to change the right of holders of Common Stock of the Corporation to vote one vote per share on all matters submitted for shareholder action. The authority of the Board of Directors with respect to each series of Preferred Stock shall include, but not be limited to, setting or changing the following: (1) the dividend rate, if any, on shares of such series, the times of payment and the date from which dividends shall be accumulated, if dividends are to be cumulative; (2) whether the shares of such series shall be redeemable and, if so, the redemption price and the terms and conditions of such redemption; (3) the obligation, if any, of the Corporation to redeem shares of such series pursuant to a sinking fund or otherwise; (4) whether shares of such series shall be convertible into, or exchangeable for, shares of stock of any other class, classes or series, or any other security, and, if so, the terms and conditions of such conversion or exchange, including the price or prices or the rate or rates of conversion or exchange and the terms of adjustment, if any; (5) whether the shares of such series shall have voting rights, in addition to the voting rights provided by law, and, if so, the extent of such voting rights; (6) the rights of the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding-up of the Corporation; (7) restrictions on transfer to preserve the status of the C orporation as a REIT; and (8) any other relative rights, powers, preferences, qualifications, limitations or restrictions thereof relating to such series. 5. Shares of stock of the Corporation may be issued by the Corporation for such consideration as shall be fixed from time to time by the Board of Directors. 6. No shareholder shall have any preemptive right to subscribe for or to purchase any shares of stock or other securities issued by the Corporation. 7. Subject to the provisions of applicable law and the rights of the holders of the outstanding shares of Preferred Stock, if any, the holders of shares of Common Stock shall be entitled to receive, when and as declared by the Board of Directors of the Corporation, out of the assets of the Corporation legally available therefor, dividends or other distributions, whether payable in cash, property or securities of the Corporation. 8. The Corporation shall have the full power to purchase and otherwise acquire, and dispose of its own shares and securities granted by the laws of the State of Georgia. Shares of the Corporation's Common Stock acquired by the Corporation shall be treasury shares and may be resold or otherwise disposed of by the Corporation for such consideration as shall be determined by the Board of Directors, unless or until the Board of Directors shall by resolution provide that any or all treasury shares so acquired shall constitute authorized, but unissued shares. 9. (A) In addition to any affirmative vote required by law, by any other provision of these Restated and Amended Articles of Incorporation or by the Bylaws of the Corporation, (1) any merger or consolidation of the Corporation with or into any other corporation; (2) any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets of the Corporation; (3) the adoption of any plan or proposal for the liquidation or dissolution of the Corporation; or (4) any reclassification of securities of the Corporation or recapitalization or reorganization of the Corporation; shall require the affirmative vote of the holders of at least two-thirds of the then outstanding shares of Common Stock of the Corporation. (B) Any amendment of or addition to these Restated and Amended Articles of Incorporation or the Bylaws of the Corporation which would have the effect of amending, altering, changing or repealing this Article shall require the affirmative vote of the holders of at least two-thirds of the then outstanding shares of Common Stock of the Corporation. 10. No Director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of duty of care or other duty as a Director, except for liability (i) for any appropriation, in violation of his duties, of any business opportunity of the Corporation, (ii) for acts or omissions which involve intentional misconduct or a knowing violation of law, (iii) for the types of liabilities set forth in Section 14-2-832 of the Georgia Business Corporation Code, or (iv) for any transaction from which the Director derived an improper personal benefit. If the Georgia Business Corporation Code is amended to authorize corporate action further eliminating or limiting the personal liability of Directors, then the liability of a Director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Georgia Business Corporation Code, as amended. Neither the amendment nor repeal of this Article 10 nor the adoption of any provision of these Restated and Amended Articles of Incorporation inconsistent with this Article shall eliminate or adversely affect any right or protection of a Director of the Corporation existing immediately prior to such amendment, repeal or adoption. 11. (C) So long as the Corporation desires to qualify as a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), and subject to the terms and provisions of this Article, (1) After December 31, 1986, shares of stock of the Corporation shall not be transferable to any Person (as defined in C., below) if such transfer would cause such person to be the Owner (as defined in C., below) of more than 3.9% in value of the outstanding shares, which shall include both Common Stock and Preferred Stock, of the Corporation (the "Limit"). After December 31, 1986, any transfer of shares either (a) on the books of the Corporation or (b) between stockholders or (c) among accounts of a record stockholder (each of (a) (b) and (c) is referred to as a "Record Transfer") which would cause an accumulation of shares by any Person in excess of the Limit and therefore violate the prohibition of this A.(1), shall be void, and the intended beneficial transferee (the "Record Transferee") of such shares shall acquire no rights in such shares. (2) Except for Persons who were Owners of shares in excess of the Limit as of the close of business on December 31, 1986 ("Prior Owners"), no Person shall at any time be the Owner of shares in excess of the Limit. The Board of Directors, in the exercise of its sole and absolute discretion, may exempt from the operation of A.(1) and A.(2) certain specified shares of stock of the Corporation proposed to be transferred to a Person who has provided the Board of Directors with such evidence, undertakings and assurances as the Board of Directors may require that such transfer to such Person of the specified shares of stock will not prevent the continued qualification of the Corporation as a REIT under the Code and the regulations thereunder. The Board of Directors may, but shall not be required to, condition the grant of any such exemption upon the obtaining of an opinion of counsel, a ruling from the Internal Revenue Service, assurances from one or more third parties as to future acquisitions of shares, or such other assurances as the Board of Directors may deem to be satisfactory. (3) After the close of business on December 31, 1986, no Prior Owner shall at any time become the Owner of any shares not Owned as of the close of business on December 31, 1986, except for shares received pursuant to pro rata stock splits, stock dividends or similar transactions, shares acquired pursuant to stock plans approved by the shareholders of the Corporation and shares acquired from a Person whose shares are attributed to such Prior Owner for purposes of determining whether the Corporation satisfies the requirement imposed on REITs under Section 856(a)(6) of the Code; provided, however, that a Prior Owner may become the Owner of shares not Owned as of the close of business on December 31, 1986 and not acquired in accordance with the first clause of this sentence (collectively, "Additional Shares") if immediately after the transaction in which such Prior Owner becomes the Owner of such Additional Shares, such Prior Owner will not Own a percentage of the value of the outstanding shares, which shall include both Common Stock and Preferred Stock, of the Corporation greater than the percentage of the value of the outstanding shares of the Corporation Owned by such Prior Owner as of the close of business on December 31, 1986, excluding, for the purpose of calculating such Prior Owner's Ownership percentage after such transaction, shares acquired by such Prior Owner since December 31, 1986 in transactions permitted under the first clause of this sentence. Any Record Transfer which would result in a transfer of shares to a Prior Owner after December 31, 1986, in violation of this A.(3), shall be void, and the Record Transferee shall acquire no rights in such shares. (4) If, notwithstanding the provisions hereof at any time after December 31, 1986, there is a Record Transfer in violation of the provisions hereof to a Person which, absent the prohibitions in A.(1), would have become an Owner of shares of the Corporation in excess of the Limit, or there is a Record Transfer in violation of the provisions hereof to a Prior Owner after December 31, 1986, which, absent the prohibitions of A.(3), would have resulted in a Prior Owner becoming the Owner of shares not Owned as of the close of business on December 31, 1986, those shares of the Corporation which are a part of the most recent Record Transfer and which are in excess of the Limit or are to or for the benefit of a Prior Owner after December 31, 1986, as the case may be, including for this purpose shares deemed Owned through attribution, shall constitute "Excess Shares." (5) Excess Shares shall have the following characteristics: (a) Excess Shares shall be deemed to have been transferred to the Corporation as trustee (the "Trustee") of a trust (the "Trust") for the exclusive benefit of such Person or Persons to whom the Excess Shares shall later be transferred pursuant to (b) or (e) below; (b) Subject to the Corporation's rights described in (e) below, an interest in the Trust (representing the number of Excess Shares held by the Trust attributable to the Record Transferee as a result of the Record Transfer that is void under A.(1) or A.(3) shall be freely transferable by the Record Transferee (i) at a price which does not exceed the price paid by the Record Transferee for the Excess Shares in connection with the Record Transfer, or (ii) if the shares become Excess Shares in a transaction otherwise than for value (e.g. by gift, devise or descent) at a price which does not exceed the Market Price on the date of the Record Transfer (in either case, the "Record Transfer Price"), provided, however, that the Excess Shares held in the Trust attributable to the Record Transferee would not constitute Excess Shares in the hands of the transferee of the interest in the Trust. Upon such transfer, the Excess Shares attributable to the Record Transferee shall be removed from the Trust and transferred to the transferee of the interest in the Trust and shall no longer be Excess Shares, and the Record Transferee's interest in the Trust shall be extinguished; (c) Excess Shares shall not have any voting rights, and shall not be considered for the purpose of any stockholder vote or determining a quorum at the annual meeting or any special meeting of stockholders, but shall continue to be reflected as issued and outstanding stock of the Corporation; (d) No dividends or other distributions shall be paid with respect to Excess Shares; any dividends paid in error to a Record Transferee prior to the discovery by the Corporation that the Record Transfer is void under A.(1) or A.(3) will be payable back to the Corporation upon demand; and (e) Excess Shares shall be deemed to have been ffered for sale to the Corporation or its designee at the lesser of the Record Transfer Price or the Market Price on the date of acceptance of the offer. The Corporation shall have the right to accept such offer for a period of ninety (90) days from (i) the date of the Record Transfer which, absent the provisions of A.(1) or A.(3), would have made the Record Transferee the holder of Excess Shares, if the Corporation has been given notice pursuant to B.(2) that such Record Transfer creates Excess Shares as of the date of such Record Transfer or (ii) the date the Board of Directors determines in good faith that a Record Transfer which, absent the provisions of A.(1) or A.(3 ), would have made the Record Transferee the holder of Excess Shares has taken place, if the Corporation does not receive such notice pursuant to B.(2). Prior to any transfer of an interest in the Trust pursuant to A.(5)(b), notice of the transfer must be given to the Corporation by the Record Transferee, and the Corporation must (i) waive in writing its right to accept the offer described in this A.(5)(e) and (ii) make a good faith determination that the Excess Shares held in the Trust attributable to the Record Transferee would not constitute Excess Shares in the hands of the transferee of the interest in the Trust. (6) If, notwithstanding the provisions of A.(1) and A.(3), (i) any Person acquires shares in excess of the Limit or (ii) any Prior Owner acquires additional shares after December 31, 1986, in violation of the provisions hereof, and the Corporation would have qualified as a REIT but for the fact that more than 50% in value of its shares are held by five or fewer individuals in the last half of the taxable year in violation of the requirements of the Code, then that Person, and any legal entities which constitute that Person, shall be jointly and severally liable for and shall pay to the Corporation, on an after-tax basis, an amount equal to all taxes, penalties and interest imposed, and all costs (plus interest of 15% per annum from the date such costs are incurred) incurred by the Corporation, as a result of the Corporation losing its REIT qualification (the "Indemnity"). For purposes of the preceding sentence, the amount of taxes shall include the taxes that would be payable if the Corporation, immediately after losing its REIT qualification, sold all of its properties for cash at their fair market value ("Built-In Gain Tax"), regardless of whether the Corporation actually engages in any such sales. Should the loss of REIT qualification occur as described above, then the Corporation may seek to have its qualification restored for the next taxable year, but shall not be required to do so. If the Corporation is unable to requalify for the succeeding year as a result of the prohibited share acquisitions, the Indemnity shall be applicable until the Corporation is again able to elect to be taxed as a REIT. Even if the Corporation is again able to elect to be taxed as a REIT, however, the Indemnity shall nevertheless include the full amount of the Built-In Gain Tax, even if the Corporation is allowed to pay any such taxes at the time any properties are sold during the ten-year period following the Corporation's requalification as a REIT. If more than one Person has acquired shares in excess of the Limit or is a Prior Owner who has improperly acquired additional shares after December 31,1986, prior to or at the time of the loss of REIT qualification, then all such Persons and Prior Owners, together with all legal entities which constitute any of them, shall be jointly and severally liable, with right of contribution, for the Indemnity. However, the foregoing sentence shall not require that the Corporation proceed against any one or several of such Persons or Prior Owners or the legal entities which constitute them. (7) All certificates evidencing ownership of shares of the Corporation shall bear a conspicuous legend describing the restrictions set forth in this Article. Stickers bearing such legend will be distributed to record holders of shares of the Corporation's Common Stock within 30 days after the effective date of this Article 11. Such stickers shall be affixed by the holders to the certificates evidencing ownership of their shares. B. (1) If the Board of Directors or its designees shall at any time determine in good faith that a Record Transfer has taken place in violation of A.(1) or A.(3) or that a Person intends to acquire or has attempted to acquire Ownership of any shares of the Corporation in violation of A.(1) or A.(3), the Board of Directors or its designees shall take such action as it deems advisable to refuse to give effect or to prevent such transfer or acquisition, including but not limited to refusing to give effect to such transfer or acquisition on the books f the Corporation or instituting proceedings to enjoin such transfer or acquisition. (2) Any Person who acquires or attempts to acquire shares in violation of A.(1) or A.(3), or who becomes the Record Transferee of shares which, under A.(4), become Excess Shares in the hands of that Person, is obliged immediately to give written notice thereof to the Corporation and to give to the Corporation such other information as the Corporation may reasonably require of such Person (a) with respect to the Ownership of outstanding shares held directly or by attribution by such Person, and (b) such other information as may be necessary to determine the Corporation's status under the Code. (3) The Corporation has the right to request information similar to that described in (2) immediately above if it determines, in good faith, that a Person is attempting to acquire shares in violation of A.(1) and A.(3) or that a Record Transfer has been made which has resulted in Excess Shares. C. For the purpose of the determination to be made under this Article, (1) A Person shall be considered to "Own", be the "Owner" or have "Ownership" of shares if he is treated as owner of such shares for purposes of determining whether the Corporation satisfies the requirements imposed on REITs under Section 856(a)(6) of the Code. (2) "Person" includes an individual, corporation, partnership, estate, trust (including a trust qualified under Section 401(a) or 501 (c)(17) of the Code), association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, but does not include an underwriter which participates in a public offering of the Corporation's common stock for a period of seven days following the purchase by such underwriter of the Corporation's common stock. "Person" does not include an organization that qualifies under Section 501(c)(3) of the Code that is not a private foundation within the meaning of Section 509(a) of the Code. (3) "Market Price" for Excess Shares shall be the average of the high and low prices as reported on the New York Stock Exchange composite tape if the shares are listed or admitted for trading on the New York Stock Exchange, or as reported by The Nasdaq Stock Market if the shares are designated as national market system securities and are not listed or admitted for trading on the New York Stock Exchange, for the trading day immediately preceding the relevant date. (4) In the case of an ambiguity in the application of any of the provisions of (1) and (2) above, the Board of Directors or a committee thereof shall have the power to determine for purposes of this Article on the basis of information known to it (i) whether any Person Owns shares, (ii) whether any two or more individuals, corporations, partnerships, estates, trusts, associations or joint stock companies or other entities constitute a Person, and (iii) whether any of the entities of (ii) above constitute a group. D. If any provision of this Article or any application of any such provision is determined to be invalid by any Federal or state court having jurisdiction over the issues, the validity of the remaining provisions shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. E. Nothing contained in this Article shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its stockholders by preservation of the Corporation's status as a REIT under the Code. IN WITNESS WHEREOF, Cousins Properties Incorporated has caused these Restated and Amended Articles of Incorporation to be executed, its corporate seal to be affixed, and its seal and execution thereof to be attested, all by its duly authorized officers this 5th day of May, 1997. COUSINS PROPERTIES INCORPORATED [CORPORATE SEAL] By: /s/ Daniel M. DuPree ----------------------- Attest President By: /s/ Tom G. Charlesworth ----------------------- Secretary EX-3.(II) 4 exh3-2.txt ATTACHMENT FOR FORM 10-Q 6/30/02 Exhibit 3.2 ----------- BYLAWS OF COUSINS PROPERTIES INCORPORATED [Amended and Restated as of November 30, 1989, as Further Amended by the Shareholders on April 30, 1990, and as Further Amended by the Shareholders on April 29, 1993] Article I. SHAREHOLDERS ------------ Section 1. Annual Meeting. The annual meeting of the shareholders for -------------- the election of Directors and for the transaction of Such other business as may properly come before the meeting shall be held at such place, either within or without the State of Georgia, on such date and at such time as the Board of Directors may by resolution provide, or if the Board of Directors fails to provide, then such meeting shall be held at the principal office of the Corporation at 2:00 P.M. on the last day in April of each year, or, if such date is a legal holiday, on the next succeeding business day. The Board of Directors may specify by resolution prior to any special meeting of shareholders held within the year that such meeting shall be in lieu of the annual meeting. Section 2. Special Meeting; Call and Notice of Meetings. Special -------------------------------------------- meetings of the shareholders may be called at any time by the Board of Directors, the Chairman of the Board of Directors, the President or upon written request of the holders of at least twenty-five per cent (25%) of the outstanding common stock. Such meetings shall be held at such place, either within or without the State of Georgia, as is stated in the call and notice thereof. Written notice of each meeting of shareholders, stating the time and place of the meeting, and the purpose of any special meeting, shall be mailed to each shareholder entitled to vote at or to notice of such meeting at his address shown on the books of the Corporation not less than ten (10) nor more than sixty (60) days prior to such meeting unless such shareholder waives notice of the meeting. Any shareholder may execute a waiver of notice, in person or by proxy, either before or after any meeting, and shall be deemed to have waived notice if he is present at such meeting in person or by proxy. Neither the business transacted at, nor the purpose of, any meeting need be stated in the waiver of notice of such meeting, except that, with respect to a waiver of notice of a meeting at which (i) an amendment to the Articles of Incorporation; (ii) a share exchange; (iii) a sale of all or substantially all of the Corporation's assets; or (iv) any other action which would entitle shareholders of the Corporation to dissent is considered, information as required by the Georgia Business Corporation Code must be delivered to the shareholder prior to his execution of the waiver of notice or the waiver itself must conspicuously and specifically waive the right to such information. Notice of any meeting may be given by the President, the Secretary, Assistant Secretary or by the person or persons calling such meeting. No notice need be given of the time and place of reconvening of any adjourned meeting, if the time and place to which the meeting is adjourned are announced at the adjourned meeting. Section 3. Quorum; Required Shareholder Vote. A quorum for the --------------------------------- transaction of business at any annual or special meeting of shareholders shall exist when the holders of a majority of the outstanding shares entitled to vote are represented either in person or by proxy at such meeting. If a quorum is not present, a meeting of shareholders may be adjourned from time to time by the vote of shares having a majority of the votes of shares represented at such meeting, until a quorum is present. If a quorum is present, action on a matter is approved if the votes cast favoring the action exceed the votes cast opposing the action, except in the election of directors, which shall be by a plurality of votes cast, unless a greater vote is required by law, by the Articles of Incorporation or by these Bylaws. When a quorum is once present to organize a meeting, the shareholders present may continue to do business at the meeting or at any adjournment thereof (unless a new record date is or must be set for the adjourned meeting) notwithstanding the withdrawal of enough shareholders to leave less than a quorum. The holders of a majority of the voting shares represented at a meeting, whether or not a quorum is present, may adjourn such meeting from time to time. Section 4. Proxies. A shareholder may vote either in person or by a ------- proxy which he has duly executed in writing. No proxy shall be valid after eleven (11) months from the date of its execution unless a longer period is expressly provided in the proxy. Section 5. Action of Shareholders Without Meeting. Any action required -------------------------------------- to be, or which may be, taken at a meeting of the shareholders, may be taken without a meeting if written consent, setting forth the actions so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof, except that information as required by the Georgia Business Corporation Code must be delivered to the shareholders prior to their execution of the consent or the consent must conspicuously and specifically waive the right to such information. Such consent shall have the same force and effect as a unanimous affirmative vote of the shareholders and shall be filed with the minutes of the proceedings of the shareholders. Article II. DIRECTORS --------- Section 1. Power of Directors. The Board of Directors shall manage the ------------------ business of the Corporation and may exercise all the powers of the Corporation, subject to any restrictions imposed by law, by the Articles of Incorporation or by these Bylaws. Section 2. Composition of the Board. The Board of Directors of the ------------------------ Corporation shall consist of not less than three (3) nor more than twelve (12) natural persons of the age of eighteen years or over but, if at least a majority of the outstanding shares of capital stock of the Corporation having the power to vote for the election of directors is owned of record by one shareholder, the Board of Directors may consist of only one director. The exact number of Directors within the specified minimum and maximum shall be fixed by resolution of the Directors from time to time or by resolution of the shareholders from time to time. Directors need not be residents of the State of Georgia or shareholders of the Corporation. At each annual meeting the shareholders shall fix the number of directors and elect the directors, who shall serve until their successors are elected and qualified; provided that the shareholders may, if the votes cast favoring the action exceed the votes cast opposing the action, increase or reduce the number of directors by amendment to the Bylaws, but no decrease shall have the effect of shortening the term of any incumbent Director. At any shareholders' meeting with respect to which notice of such purpose has been given, the entire Board of Directors or any individual Director may be removed, with or without cause, by the affirmative vote of the holders of a majority of the shares entitled to vote at an election of directors. Section 3. Meetings of the Board; Notice of Meetings; Waiver of Notice. ----------------------------------------------------------- The annual meeting of the Board of Directors for the purpose of electing officers and transacting such other business as may be brought before the meeting shall be held each year immediately following the annual meeting of shareholders. The Board of Directors may by resolution provide for the time and place of other regular meetings and no notice of such regular meetings need be given. Special meetings of the Board of Directors may be called by the Chairman of the Board of Directors, by the President or by any two Directors, and notice of the date, time and place of such meetings shall be given to each Director at least two (2) days before the meeting. Any Director may execute a waiver of notice, either before or after any meeting, and shall be deemed to have waived notice if he is present at such meeting. Neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be stated in the notice or waiver of notice of such meeting. Any meeting may be held at any place within or without the State of Georgia. Section 4. Quorum; Vote Requirement. A majority of the number of ------------------------ directors last fixed by the shareholders shall constitute a quorum for the transaction of business at any meeting. In no case shall less than two directors constitute a quorum, except that when aboard consists of only one director as authorized in Article II, Section 2 hereof, then one director shall constitute a quorum. When a quorum is present, the vote of a majority of the directors present and voting shall be the act of the Board of Directors, unless a greater vote is required by law, by the Articles of Incorporation or by these Bylaws. Section 5. Action of Board Without Meeting. Any action required or ------------------------------- permitted to be taken at a meeting of the Board of Directors or any committee thereof may be taken without a meeting if written consent, setting forth the action so taken, is signed by all the Directors or committee members and filed with the minutes of the proceedings of the Board of Directors or committee. Such consent shall have the same force and effect as a unanimous affirmative vote of the Board of Directors or committee, as the case may be. Section 6. Committees. The Board of Directors, by resolution adopted by ---------- a majority of all of the Directors, may designate from among its members an Executive Committee, and/or other committees (which may include, by way of example and not as a limitation, a Compensation Committee, an Audit Committee, and a Nominating and Board Structure Committee), each composed of at least one (1) Director who shall elect from among themselves a committee chairman, unless such chairman has been appointed by the full Board of Directors, which may exercise such authority as is delegated by the Board of Directors, provided that no committee shall have the authority of the Board of Directors to (1) approve or propose to shareholders action which requires the approval of the shareholders of the Corporation, (2) fill vacancies on the Board of Directors or on any of its committees, (3) amend the Articles of Incorporation pursuant to Section 14-2-1002 of the Georgia Business Corporation Code, (4) adopt, amend or repeal the Bylaws of the Corporation, or (5) approve a plan of merger not requiring shareholder approval. Section 7. Vacancies. A vacancy occurring in the Board of Directors may --------- be filled by the shareholders or by the Board of Directors or, if the Directors remaining in office constitute fewer than a quorum of the Board of Directors, by the affirmative vote or a majority of the remaining Directors, or by the sole remaining Director, as the case may be. A Director elected to fill a vacancy shall serve for the unexpired term of his predecessor in office, or if such vacancy occurs by reason of an amendment to these Bylaws increasing the number of directors, until the next election of directors by the shareholders and the election and qualification of the successor. Section 8. Telephone Conference Meetings. Unless the Articles of ----------------------------- Incorporation otherwise provide, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board or committee by means of telephone conference or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 8 shall constitute presence in person at such meeting. Section 9. Fees and Expenses. A fee and reimbursement for expenses for ----------------- attendance at meetings of the Board of Directors or any committee thereof may be fixed by resolution of the Board of Directors. Article III. OFFICERS -------- Section 1. Executive Structure of the Corporation. The officers of the -------------------------------------- Corporation shall consist of a Chairman of the Board of Directors, a President, an Executive Vice President, one or more Vice Presidents, a Secretary, one or more Assistant Secretaries, a Treasurer and such other officers or assistant officers, including Vice Presidents, as may be elected by the Board of Directors. Each officer shall hold office for the term for which he has been elected or appointed and until his successor has been elected or appointed and has qualified, or until his earlier resignation, removal from office or death. Any two or more offices may be held by the same person. The Board of Directors may designate one or more Executive or Senior Vice Presidents and may designate the order in which they and other Vice Presidents may act. Section 2. Chairman of the Board of Directors. The Chairman of the ---------------------------------- Board of Directors shall give general supervision and direction to the affairs of the Corporation, subject to the direction of the Board of Directors. He shall preside at all meetings of the shareholders. Section 3. President. The President shall be in charge of the --------- day-to-day affairs of the Corporation, subject to the direction of the Board of Directors and the Chairman of the Board of Directors. He shall preside at all meetings of the shareholders in the absence of the Chairman of the Board of Directors and shall act in the case of absence or disability of the Chairman of the Board of Directors. Section 4. Executive Vice President. The Executive Vice President ------------------------ shall act in the case of absence or disability of the President. Section 5. Secretary. The Secretary and one or more Assistant --------- Secretaries shall keep the minutes of the proceedings of the shareholders and of the Board of Directors, and shall have custody of the seal of the Corporation. Section 6. Treasurer. The Treasurer shall be responsible for the --------- maintenance of proper financial books and records of the Corporation. The Treasurer shall have the custody of all moneys and securities of the Corporation and shall keep regular records of accounts and balance the same each month. He shall sign such instruments as require his signature. Section 7. Other Duties and Authority. Each officer, employee and agent -------------------------- of the Corporation shall have such other duties and authority as may be conferred upon him by the Board of Directors or delegated to him by the Chairman of the Board of Directors. Section 8. Removal of Officers. Any officer may be removed at any time ------------------- by the Board of Directors and such vacancy may be filled by the Board of Directors. This provision shall not prevent the making of a contract of employment for a definite term with any officer and shall have no effect upon any cause of action which any officer may have as a result of removal in breach of a contract of employment. Section 9. Compensation. The salaries of the officers shall be fixed ------------ from time to time by the Compensation Committee of the Board of Directors. No officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the Corporation. Article IV. STOCK ----- Section 1. Stock Certificates. The shares of stock of the Corporation ------------------ shall be represented by certificates in such form as may be approved by the Board of Directors, which certificates shall be issued to the shareholders of the Corporation, and each of which shall bear the name of the shareholder, the number of shares represented, and the date of issue; and which shall be signed by the Chairman of the Board of Directors, the President, the Secretary or an Assistant Secretary of the Corporation; and which shall be sealed with the seal of the Corporation. No share certificate shall be issued until the consideration for the shares represented thereby has been fully paid. A facsimile of the seal of the Corporation may be used in connection with the share certificates of the Corporation. Facsimile signatures of the officers named in this Section may be used in connection with said certificates if the certificate is countersigned, either manually or by facsimile, by a transfer agent or registered by a registrar other than the Corporation itself or an employee of the Corporation. In the event any officer whose facsimile signature has been placed upon a certificate shall cease to be such officer before the certificate is issued, the certificate may be issued with the same effect as if such person was an officer at the date of issue. Section 2. Transfer of Stock. Shares of stock of the Corporation shall ----------------- be transferred only on the books of the Corporation upon surrender to the Corporation of the certificate or certificates representing the shares to be transferred accompanied by an assignment in writing of such shares properly executed by the shareholder of record or his duly authorized attorney-in-fact and with all taxes on the transfer having been paid. The Corporation may refuse any requested transfer until furnished evidence satisfactory to it that such transfer is proper. Upon the surrender of a certificate for transfer of stock, such certificate shall at once be conspicuously marked on its face "Cancelled" and filed with the permanent stock records of the Corporation. The Board of Directors may make such additional rules concerning the issuance, transfer and registration of stock and requirements regarding the establishment of lost, destroyed or wrongfully taken stock certificates (including any requirement of an indemnity bond prior to issuance of any replacement certificate) as it deems appropriate or as may be required by any transfer agent or registrar designated by the Board of Directors. Section 3. Transfer Agents and Registrars. The Board of Directors may, ------------------------------ in its discretion, appoint responsible banks or trust companies in such city or cities as the Board of Directors may deem advisable, from time to time, to act as transfer agents and registrars of stock of the Corporation; and, upon such appointments being made, no stock certificate shall be valid until countersigned by one of such transfer agents and registered by one of such registrars. Section 4. Registered Shareholders. The Corporation may deem and treat ----------------------- the holder of record of any stock as the absolute owner for all purposes and shall not be required to take any notice of any right or claim of right of any other person. Section 5. Record Date. For the purpose of determining shareholders ----------- entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other purpose, the Board of Directors of the Corporation may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy (70) days and, in the case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. Article V. DEPOSITORIES, SIGNATURES AND SEAL Section 1. Depositories. All funds of the Corporation shall be ------------ deposited in the name of the Corporation in such bank, banks, other financial institutions or depositories as the Board of Directors may from time to time designate and shall be drawn out on checks, drafts or other orders upon appropriate direction on behalf of the Corporation by such person or persons as the Board of Directors may from time to time designate. Section 2. Contracts and Deeds. All contracts, deeds and other ------------------- instruments shall be signed on behalf of the Corporation by the Chairman of the Board of Directors or by such other officer, officers, agent or agents as the Board of Directors may from time to time by resolution provide. Section 3. Seal. The seal of the Corporation shall be as follows: ---- The seal may be lithographed or otherwise printed on any document and shall have, to the extent permitted by law, the same force and effect as if it had been affixed and attested manually. Article VI. INDEMNITY --------- (a) Any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal (including any action by or in the (right of the Corporation), by reason of the fact that he is or was a Director of the Corporation or who while a Director of the Corporation was serving at the Corporation's request as a director, officer, partner, agent or employee of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, shall be indemnified by the Corporation against expenses (including reasonable attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit, or proceeding; provided, that a Director of the Corporation shall not be so indemnified for such judgments, fines, amounts paid in settlement or expenses incurred in any such proceeding in which the Director is adjudged liable to the Corporation: (i) for any appropriation, in violation of his duties, of any business opportunity of the Corporation; (ii) for acts or omissions which involve intentional misconduct or a knowing violation of law; (iii) for the types of liability for unlawful distributions and dividends as set forth in Section 14-2-832 of the Georgia Business Corporation Code; or (iv) for any transaction from which the Director derives an improper personal benefit. Expenses incurred by any Director indemnified hereunder in defending any such action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding, upon receipt of the written affirmation of such Director's good faith belief that he has met the standards of conduct required hereunder. (b) Any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether formal or informal (including any action by or in the right of the corporation), by reason of the fact that he is or was an officer, agent or employee of the Corporation, or is or was serving at the request of the Corporation as a director, officer, partner, agent or employee of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, shall be indemnified by the Corporation against expenses (including reasonable attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding to the maximum extent permitted from time to time by, and in the manner provided from time to time by, the Georgia Business Corporation Code. Expenses incurred by any person who may be indemnified hereunder in defending any action, suit or proceeding shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding, upon receipt of an undertaking by or on behalf of such person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation. (c) Upon receipt of a claim for indemnification hereunder, the Corporation shall cause a determination to be made in accordance with applicable law and this Bylaw as to whether the claimant has met the applicable standard of conduct, and the Corporation shall pay the claim to the extent that the determination is favorable to the person making the claim. Each person who shall act as a director, officer, employee or agent of the Corporation or, at the request of the Corporation, as a director, officer, partner, employee or agent of another corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, shall be deemed to be doing so in reliance upon the right of indemnification provided for in this Article VI, and this Article VI constitutes a contract between the Corporation and each of the persons from time to time entitled to indemnification hereunder that may not be modified without the consent of such persons as to occurrences prior to notice to such persons of such modification. Article VII. AMENDMENT OF BYLAWS ------------------- The Board of Directors shall have the power to alter, amend or repeal the Bylaws or adopt new bylaws, but any bylaws adopted by the Board of Directors may be altered, amended or repealed and new bylaws adopted by the shareholders. The shareholders may prescribe that any bylaw or bylaws adopted by them shall not be altered, amended or repealed by the Board of Directors. Action by the Directors with respect to the Bylaws shall be taken by an affirmative vote of a majority of all of the Directors then in office. Action by the shareholders with respect to the Bylaws shall be taken if the votes cast in favor of the action exceed the votes cast opposing the action. EX-99 5 exh99-1.txt FORM FORM 10-Q 6/30/02 Exhibit 99.1 ------------ CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of Cousins Properties Incorporated (the "Corporation") for the period ended June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, the Vice Chairman of the Board, President and Chief Executive Officer of the Corporation, certifies that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. Thomas D. Bell, Jr. - ------------------------------------ Vice Chairman of the Board, President and Chief Executive Officer August 12, 2002 EX-99 6 exh99-2.txt FOR FORM 10Q - 6/30/02 Exhibit 99.2 ------------ CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with the Quarterly Report on Form 10-Q of Cousins Properties Incorporated (the "Corporation") for the period ended June 30, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, the Senior Vice President and Chief Financial Officer of the Corporation, certifies that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. Kelly H. Barrett - ------------------------------------------------- Senior Vice President and Chief Financial Officer August 12, 2002 -----END PRIVACY-ENHANCED MESSAGE-----