SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 2000 Commission file number 0-3576 COUSINS PROPERTIES INCORPORATED A GEORGIA CORPORATION I.R.S. EMPLOYER IDENTIFICATION NO. 58-0869052 2500 WINDY RIDGE PARKWAY ATLANTA, GEORGIA 30339-5683 TELEPHONE: 770-955-2200 Registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and has been subject to such filing requirements for the past 90 days. At July 31, 2000, 32,566,298 shares of common stock of the Registrant were outstanding.
<TABLE> <CAPTION> COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES CONSOLIDATED BALANCE SHEETS ($ in thousands, except share amounts) June 30, December 31, 2000 1999 ---------- ------------ (Unaudited) ASSETS - ------ PROPERTIES: <S> <C> <C> Operating properties, net of accumulated depreciation of $50,926 as of June 30, 2000 and $35,929 as of December 31, 1999 $543,317 $365,976 Land held for investment or future development 15,032 14,126 Projects under construction 218,421 348,065 Residential lots under development 4,207 4,687 -------- -------- Total properties 780,977 732,854 CASH AND CASH EQUIVALENTS, at cost which approximates market 2,317 1,473 NOTES AND OTHER RECEIVABLES 40,097 37,303 INVESTMENT IN UNCONSOLIDATED JOINT VENTURES 152,000 151,737 OTHER ASSETS 11,345 9,558 -------- -------- TOTAL ASSETS $986,736 $932,925 ======== ======== LIABILITIES AND STOCKHOLDERS' INVESTMENT - ---------------------------------------- NOTES PAYABLE $359,680 $312,257 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES 31,244 34,820 DEPOSITS AND DEFERRED INCOME 1,662 861 -------- -------- TOTAL LIABILITIES 392,586 347,938 -------- -------- DEFERRED GAIN 113,503 115,576 -------- -------- MINORITY INTERESTS 31,158 31,689 -------- -------- COMMITMENTS AND CONTINGENT LIABILITIES STOCKHOLDERS' INVESTMENT: Common stock, $1 par value, authorized 50,000,000 shares; issued 32,566,298 shares at June 30, 2000 and 32,328,135 shares at December 31, 1999 32,566 32,328 Additional paid-in capital 263,469 256,988 Treasury stock at cost, 153,600 shares in 2000 and 1999 (4,990) (4,990) Cumulative undistributed net income 158,444 153,396 -------- -------- TOTAL STOCKHOLDERS' INVESTMENT 449,489 437,722 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $986,736 $932,925 ======== ======== The accompanying notes are an integral part of these consolidated balance sheets. </TABLE>
<TABLE> <CAPTION> COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED) (In thousands, except per share amounts) Three Months Six Months Ended June 30, Ended June 30, ---------------- ---------------- 2000 1999 2000 1999 ------- ------- ------- ------- REVENUES: <S> <C> <C> <C> <C> Rental property revenues $27,531 $12,967 $50,249 $24,632 Development income 1,009 1,374 2,173 3,134 Management fees 1,237 1,255 2,451 2,361 Leasing and other fees 794 1,688 1,115 2,299 Residential lot and outparcel sales 3,932 4,974 5,910 7,651 Interest and other 1,339 829 2,597 1,694 ------- ------- ------- ------- 35,842 23,087 64,495 41,771 ------- ------- ------- ------- INCOME FROM UNCONSOLIDATED JOINT VENTURES 4,407 5,392 8,284 9,499 ------- ------- ------- ------- COSTS AND EXPENSES: Rental property operating expenses 7,962 3,827 14,608 7,028 General and administrative expenses 4,916 3,447 9,460 7,033 Depreciation and amortization 8,009 3,019 14,441 5,826 Stock appreciation right expense 129 460 366 136 Residential lot and outparcel cost of sales 3,613 3,859 5,167 6,148 Interest expense 2,998 65 3,495 430 Property taxes on undeveloped land 191 224 (77) 442 Other 984 820 1,230 1,110 ------- ------- ------- ------- 28,802 15,721 48,690 28,153 ------- ------- ------- ------- INCOME FROM OPERATIONS BEFORE INCOME TAXES 11,447 12,758 24,089 23,117 (BENEFIT) PROVISION FOR INCOME TAXES FROM OPERATIONS (117) 390 (124) 1,255 INCOME BEFORE GAIN ON SALE OF INVESTMENT PROPERTIES 11,564 12,368 24,213 21,862 GAIN ON SALE OF INVESTMENT PROPERTIES, NET OF APPLICABLE INCOME TAX PROVISION 1,575 51,198 9,867 56,706 ------- ------- ------- ------- NET INCOME $13,139 $63,566 $34,080 $78,568 ======= ======= ======= ======= WEIGHTED AVERAGE SHARES 32,359 32,079 32,299 32,015 ======= ======= ======= ======= BASIC NET INCOME PER SHARE $ .41 $ 1.98 $ 1.06 $ 2.45 ======= ======= ======= ======= ADJUSTED WEIGHTED AVERAGE SHARES 33,215 32,749 33,076 32,578 ======= ======= ======= ======= DILUTED NET INCOME PER SHARE $ .40 $ 1.94 $ 1.03 $ 2.41 ======= ======= ======= ======= CASH DIVIDENDS DECLARED PER SHARE $ .45 $ .41 $ .90 $ .82 ======= ======= ======= ======= The accompanying notes are an integral part of these consolidated statements. </TABLE>
<TABLE> <CAPTION> COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (UNAUDITED) ($ in thousands) 2000 1999 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: <S> <C> <C> Income before gain on sale of investment properties $ 24,213 $ 21,862 Adjustments to reconcile income before gain on sale of investment properties to net cash provided by operating activities: Depreciation and amortization, net of minority interest's share 13,846 5,826 Stock appreciation right expense 366 136 Cash charges to expense accrual for stock appreciation rights (299) (122) Effect of recognizing rental revenues on a straight-line basis (1,432) (202) Income from unconsolidated joint ventures (8,284) (9,499) Operating distributions from unconsolidated joint ventures 18,369 24,192 Residential lot and outparcel cost of sales 4,803 6,019 Changes in other operating assets and liabilities: Change in other receivables (3,152) (1,447) Change in accounts payable and accrued liabilities 413 2,189 -------- -------- Net cash provided by operating activities 48,843 48,954 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Gain on sale of investment properties, net of applicable income tax provision 9,867 56,706 Adjustments to reconcile gain on sale of investment properties to net cash provided by sales activities: Cost of sales 17,510 28,178 Deferred income recognized (2,056) (2,066) Property acquisition and development expenditures (87,564) (195,572) Investment in unconsolidated joint ventures, including interest capitalized to equity investments (10,348) (23,189) Non-operating distributions from unconsolidated joint ventures - 2,000 Collection of notes receivable 1,778 5,521 Net cash received in formation of venture - 100,000 Investment in notes receivable - (4) Change in other assets, net (2,299) (1,399) -------- -------- Net cash used in investing activities (73,112) (29,825) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from line of credit 126,488 170,672 Repayment of line of credit (164,893) (163,969) Proceeds from other notes payable 89,944 - Dividends paid (29,029) (26,219) Common stock sold, net of expenses 6,719 6,998 Repayment of other notes payable (4,116) (2,582) -------- -------- Net cash provided by (used in) financing activities 25,113 (15,100) -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 844 4,029 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,473 1,349 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,317 $ 5,378 ======== ======== The accompanying notes are an integral part of these consolidated statements. </TABLE>
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2000 (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 (benefit) provision 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 for the fair presentation of the Company's financial position as of June 30, 2000 and results of operations for the three and six month periods ended June 30, 2000 and 1999. Results of operations for the interim 2000 periods 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 generally accepted accounting principles 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, 1999. The accounting policies employed are the same as those shown in Note 1 to the Consolidated Financial Statements included in such Form 10-K. Certain 1999 amounts have been reclassified to conform with the 2000 presentation. 2. SUPPLEMENTAL INFORMATION CONCERNING CASH FLOWS - --------------------------------------------------- Interest (net of $9,657,000 and $7,209,000 capitalized in 2000 and 1999, respectively) and income taxes paid (net of refunds of $27,000 in 2000) were as follows for the six months ended June 30, 2000 and 1999 ($ in thousands): 2000 1999 ------ ------ Interest paid $2,075 $1,137 Income taxes paid $2,841 $1,336 During the six months ended June 30, 2000, approximately $197,827,000 was transferred from Projects Under Construction to Operating Properties and approximately $1,066,000 was transferred from Land Held for Investment or Future Development to Residential Lots Under Development. At June 30, 2000, cash and cash equivalents included approximately $630,000 from a property sale held in escrow pending reinvestment in a tax-deferred exchange and approximately $389,000 which is restricted under a municipal bond indenture.
3. NOTES PAYABLE AND INTEREST EXPENSE - --------------------------------------- <TABLE> <CAPTION> At June 30, 2000 and December 31, 1999, notes payable included the following ($ in thousands): June 30, 2000 December 31, 1999 ------------------------------------ -------------------------------------- Share of Share of Unconsolidated Unconsolidated Company Joint Ventures Total Company Joint Ventures Total -------- -------------- -------- -------- -------------- -------- <S> <C> <C> <C> <C> <C> <C> Floating Rate Lines of Credit and Construction Loans $ 92,247 $ 53,615 $145,862 $130,651 $ 28,504 $159,155 Other Debt (primarily non-recourse fixed rate mortgages) 267,433 188,174 455,607 181,606 190,235 371,841 -------- -------- -------- -------- -------- -------- $359,680 $241,789 $601,469 $312,257 $218,739 $530,996 ======== ======== ======== ======== ======== ======== </TABLE> <TABLE> <CAPTION> For the three and six months ended June 30, 2000, interest expense was recorded as follows ($ in thousands): Three Months Ended Six Months Ended June 30, 2000 June 30, 2000 ------------------------------------ ----------------------------------- Share of Share of Unconsolidated Unconsolidated Company Joint Ventures Total Company Joint Ventures Total ------- -------------- ------- ------- -------------- ------- <S> <C> <C> <C> <C> <C> <C> Interest Expensed $2,998 $3,584 $ 6,582 $ 3,495 $7,187 $10,682 Interest Capitalized 3,774 837 4,611 9,657 1,402 11,059 ------ ------ ------- ------- ------ ------- $6,772 $4,421 $11,193 $13,152 $8,589 $21,741 ====== ====== ======= ======= ====== ======= </TABLE> In April 2000, the Company completed the $90 million financing of 101 Second Street. This non-recourse mortgage note payable has an interest rate of 8.33% and a maturity of April 27, 2010. In June 2000, the Company received a commitment for the financing of Meridian Mark Plaza which is expected to be completed in August 2000. This $25.5 million non-recourse mortgage note payable has an interest rate of 8.27% and term of 10 years. Subsequent to June 30, 2000, the Company completed the $39 million financing of The Avenue East Cobb. This non-recourse mortgage note payable has an interest rate of 8.39% and a maturity of August 1, 2010. During the first half of 2000, 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 $424 million. 4. EARNINGS PER SHARE DATA - --------------------------- <TABLE> <CAPTION> Weighted average shares and adjusted weighted average shares are as follows (in thousands): Three Months Ended Six Months Ended June 30, June 30, ------------------- ------------------- 2000 1999 2000 1999 ------ ------ ------ ------ <S> <C> <C> <C> <C> Weighted average shares 32,359 32,079 32,299 32,015 Dilutive potential common shares 856 670 777 563 ------ ------ ------ ------ Adjusted weighted average shares 33,215 32,749 33,076 32,578 ====== ====== ====== ====== Anti-dilutive options not included 3 - 3 - ====== ====== ====== ====== </TABLE> 5. REPORTABLE SEGMENTS - ----------------------- The Company has four reportable segments: Office Division, Retail Division, Medical Office Division and Land Division. The Office Division, Retail Division and Medical Office Division develop, lease and manage office buildings, retail centers and medical office buildings, respectively. The Land Division owns various tracts of strategically located land which are being held for 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 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, (ii) reflect stock appreciation right expense on a cash basis and (iii) recognize certain fee income as cash is received rather than when recognized in the financial statements. 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.
<TABLE> <CAPTION> Three Months Ended Office Retail Medical Land Unallocated June 30, 2000 Division Division Office Division Division and Other Total - ------------------ --------- -------- --------------- -------- ----------- ------- <S> <C> <C> <C> <C> <C> <C> Rental property revenues (100%) $ 17,693 $ 6,693 $2,766 $ - $ 16 $ 27,168 Rental property revenues (JV) 16,057 582 40 - - 16,679 Development income, management fees and leasing and other fees (100%) 1,855 125 989 71 - 3,040 Development income, management fees and leasing and other fees (JV) 1,240 - - - - 1,240 Other income (100%) - 425 - 3,507 1,339 5,271 Other income (JV) - - - 23 5 28 ------------------------------------------------------------------------ Total revenues 36,845 7,825 3,795 3,601 1,360 53,426 ------------------------------------------------------------------------ Rental property operating expenses (100%) 5,869 1,758 755 - 6 8,388 Rental property operating expenses (JV) 4,547 154 14 - - 4,715 Other expenses (100%) 2,168 2,127 1,156 3,642 3,716 12,809 Other expenses (JV) 770 - - 20 4,035 4,825 ------------------------------------------------------------------------ Total expenses 13,354 4,039 1,925 3,662 7,757 30,737 ------------------------------------------------------------------------ Gain on sale of undepreciated investment properties - - - 542 - 542 ------------------------------------------------------------------------ Consolidated funds from operations 23,491 3,786 1,870 481 (6,397) 23,231 ------------------------------------------------------------------------ Depreciation and amortization (100%) (4,987) (1,714) (755) - - (7,456) Depreciation and amortization (JV) (3,659) (201) (12) - - (3,872) Effect of the recognition of rental revenues on a straight-line basis (100%) 363 - - - - 363 Effect of the recognition of rental revenues on a straight-line basis (JV) (128) - - - - (128) Adjustment to reflect stock appreciation right expense on an accrual basis - - - - (32) (32) Gain on sale of investment properties, net of applicable income tax provision - - - - 1,033 1,033 ------------------------------------------------------------------------ Net income 15,080 1,871 1,103 481 (5,396) 13,139 ------------------------------------------------------------------------ Benefit for income taxes from operations - - - - (117) (117) ------------------------------------------------------------------------ Income from operations before taxes $ 15,080 $ 1,871 $1,103 $ 481 $(5,513) $ 13,022 ======================================================================== </TABLE>
<TABLE> <CAPTION> Six Months Ended Office Retail Medical Land Unallocated June 30, 2000 Division Division Office Division Division and Other Total - ----------------- --------- -------- --------------- -------- ----------- ------- <S> <C> <C> <C> <C> <C> <C> Rental property revenues (100%) $ 30,886 $ 12,568 $5,324 $ - $ 40 $ 48,818 Rental property revenues (JV) 31,821 1,141 79 - - 33,041 Development income, management fees and leasing and other fees (100%) 3,856 224 1,553 106 - 5,739 Development income, management fees and leasing and other fees (JV) 1,651 - - - - 1,651 Other income (100%) - 1,075 - 4,835 2,597 8,507 Other income (JV) - - - 66 32 98 ------------------------------------------------------------------------ Total revenues 68,214 15,008 6,956 5,007 2,669 97,854 ------------------------------------------------------------------------ Rental property operating expenses (100%) 10,731 3,096 1,441 - (1) 15,267 Rental property operating expenses (JV) 8,822 287 27 - - 9,136 Other expenses (100%) 4,303 4,318 2,272 4,727 4,277 19,897 Other expenses (JV) 1,064 - - 31 8,082 9,177 ------------------------------------------------------------------------ Total expenses 24,920 7,701 3,740 4,758 12,358 53,477 ------------------------------------------------------------------------ Gain on sale of undepreciated investment properties - - - 564 - 564 ------------------------------------------------------------------------ Consolidated funds from operations 43,294 7,307 3,216 813 (9,689) 44,941 ------------------------------------------------------------------------ Depreciation and amortization (100%) (8,847) (3,076) (1,411) - - (13,334) Depreciation and amortization (JV) (7,399) (392) (24) - - (7,815) Effect of the recognition of rental revenues on a straight-line basis (100%) 1,431 - - - - 1,431 Effect of the recognition of rental revenues on a straight-line basis (JV) (378) - - - - (378) Adjustment to reflect stock appreciation right expense on an accrual basis - - - - (68) (68) Gain on sale of investment properties, net of applicable income tax provision - 7,247 - - 2,056 9,303 ------------------------------------------------------------------------ Net income 28,101 11,086 1,781 813 (7,701) 34,080 ------------------------------------------------------------------------ Benefit for income taxes from operations - - - - (124) (124) ------------------------------------------------------------------------ Income from operations before taxes $ 28,101 $ 11,086 $ 1,781 $ 813 $(7,825) $ 33,956 ======================================================================== Total assets $591,981 $271,750 $65,262 $9,371 $48,372 $986,736 ======================================================================== Investment in unconsolidated joint ventures $128,369 $ 16,885 $ 1,664 $5,082 $ - $152,000 ======================================================================== </TABLE> <TABLE> <CAPTION> Reconciliation to Consolidated Revenues - --------------------------------------- Three Months Ended Six Months Ended June 30, June 30, --------------------- --------------------- 2000 1999 2000 1999 ------- ------- ------ ------ <S> <C> <C> <C> <C> Rental property revenues (100%) $27,168 $12,869 $48,818 $24,430 Effect of the recognition of rental revenues on a straight-line basis (100%) 363 98 1,431 202 Development income, management fees and leasing and other fees 3,040 4,317 5,739 7,794 Residential lot and outparcel sales 3,932 4,974 5,910 7,651 Interest and other 1,339 829 2,597 1,694 --------------------- --------------------- Total consolidated revenues $35,842 $23,087 $64,495 $41,771 ===================== ===================== </TABLE> <TABLE> <CAPTION> Three Months Ended Office Retail Medical Land Unallocated June 30, 1999 Division Division Office Division Division and Other Total - ----------------- --------- -------- --------------- -------- ----------- ------- <S> <C> <C> <C> <C> <C> <C> Rental property revenues (100%) $ 6,544 $ 4,687 $1,545 $ - $ 93 $ 12,869 Rental property revenues (JV) 15,719 4,049 135 - - 19,903 Development income, management fees and leasing and other fees (100%) 3,409 333 515 60 - 4,317 Development income, management fees and leasing and other fees (JV) 451 - - - - 451 Other income (100%) - 815 - 4,159 829 5,803 Other income (JV) - - - 243 47 290 ------------------------------------------------------------------------ Total revenues 26,123 9,884 2,195 4,462 969 43,633 ------------------------------------------------------------------------ Rental property operating expenses (100%) 2,183 1,135 509 - - 3,827 Rental property operating expenses (JV) 4,210 987 47 - - 5,244 Other expenses (100%) - 358 - 3,725 4,939 9,022 Other expenses (JV) 167 242 - 61 3,915 4,385 ------------------------------------------------------------------------ Total expenses 6,560 2,722 556 3,786 8,854 22,478 ------------------------------------------------------------------------ Gain on sale of undepreciated investment properties - - - 104 - 104 ------------------------------------------------------------------------ Consolidated funds from operations 19,563 7,162 1,639 780 (7,885) 21,259 ------------------------------------------------------------------------ Depreciation and amortization (100%) (1,582) (877) (331) - (74) (2,864) Depreciation and amortization (JV) (4,451) (985) (41) - - (5,477) Effect of the recognition of rental revenues on a straight-line basis (100%) 98 - - - - 98 Effect of the recognition of rental revenues on a straight-line basis (JV) (67) (76) - - - (143) Adjustment to reflect stock appreciation right expense on an accrual basis - - - - (401) (401) Gain on sale of investment properties, net of applicable income tax provision - 50,063 - - 1,031 51,094 ------------------------------------------------------------------------ Net income 13,561 55,287 1,267 780 (7,329) 63,566 ------------------------------------------------------------------------ Provision for income taxes from operations - - - - 390 390 ------------------------------------------------------------------------ Income from operations before income taxes $ 13,561 $ 55,287 $1,267 $ 780 $(6,939) $ 63,956 ======================================================================== </TABLE>
<TABLE> <CAPTION> Six Months Ended Office Retail Medical Land Unallocated June 30, 1999 Division Division Office Division Division and Other Total - ----------------- --------- -------- --------------- -------- ----------- ------- <S> <C> <C> <C> <C> <C> <C> Rental property revenues (100%) $ 12,557 $ 9,431 $2,263 $ - $ 179 $ 24,430 Rental property revenues (JV) 31,063 8,503 334 - - 39,900 Development income, management fees and leasing and other fees (100%) 6,019 869 786 120 - 7,794 Development income, management fees And leasing and other fees (JV) 451 - - - - 451 Other income (100%) - 815 - 6,836 1,694 9,345 Other income (JV) - - - 249 75 324 ------------------------------------------------------------------------ Total revenues 50,090 19,618 3,383 7,205 1,948 82,244 ------------------------------------------------------------------------ Rental property operating expenses (100%) 4,144 2,134 719 - 31 7,028 Rental property operating expenses (JV) 8,777 2,061 111 - - 10,949 Other expenses (100%) - 358 - 6,232 10,254 16,844 Other expenses (JV) 167 242 - 72 7,478 7,959 ------------------------------------------------------------------------ Total expenses 13,088 4,795 830 6,304 17,763 42,780 ------------------------------------------------------------------------ Gain on sale of undepreciated investment properties - - - 222 - 222 ------------------------------------------------------------------------ Consolidated funds from operations 37,002 14,823 2,553 1,123 (15,815) 39,686 ------------------------------------------------------------------------ Depreciation and amortization (100%) (3,045) (1,678) (649) - (156) (5,528) Depreciation and amortization (JV) (9,467) (2,455) (103) - - (12,025) Effect of the recognition of rental revenues on a straight-line basis (100%) 202 - - - - 202 Effect of the recognition of rental revenues on a straight-line basis (JV) (176) (61) - - - (237) Adjustment to reflect stock appreciation right expense on an accrual basis - - - - (14) (14) Gain on sale of investment properties, net of applicable income tax provision - 54,418 - - 2,066 56,484 ------------------------------------------------------------------------ Net income 24,516 65,047 1,801 1,123 (13,919) 78,568 ------------------------------------------------------------------------ Provision for income taxes from operations - - - - 1,255 1,255 ------------------------------------------------------------------------ Income from operations before income taxes $ 24,516 $ 65,047 $ 1,801 $ 1,123 $(12,664) $ 79,823 ======================================================================== Total assets $484,350 $220,351 $56,212 $10,456 $ 53,250 $824,619 ======================================================================== Investment in unconsolidated joint ventures $124,217 $ 29,786 $ 1,699 $ 3,408 $ 5,517 $164,627 ======================================================================== </TABLE> 6. WARRANTS TO PURCHASE COMMON STOCK OF CYPRESS COMMUNICATIONS, INC. - --------------------------------------------------------------------- In December 1999, the Company executed an Amended and Restated Master Communications License Transaction Agreement (the "Master Agreement") with Cypress Communications, Inc. ("Cypress") that provides for Cypress and the owner of each building subject to the Master Agreement to enter into a Communications License Agreement (an "Agreement") pursuant to which Cypress will have the non-exclusive right to access the risers and certain areas of certain of the Company's and its joint ventures' office and medical office buildings. Each Agreement allows Cypress to install equipment and wiring, at Cypress' sole cost and expense, and to offer a variety of telecommunication services to tenants of each of the applicable buildings. Each Agreement has a term of 5 years with an automatic renewal for another 5 years unless Cypress elects not to renew or Cypress fails to equip the applicable building with a server within 18 months of the execution of the Agreement. Pursuant to each Agreement, the Company will receive a percentage of the revenue earned by Cypress from tenants and third parties who use the telecommunication services. In addition, the Company has entered into a Stock Warrant Agreement with Cypress which provides that Cypress issue to the Company 54,000 warrants per one million gross leasable square feet in the buildings subject to the Master Agreement or approximately 345,329 warrants (of which 150,996 warrants relate to wholly owned buildings and 194,333 warrants relate to joint venture owned buildings), each warrant entitling the owner to purchase one share of Cypress' common stock at an exercise price of $4.22 per share. On February 10, 2000, Cypress completed its initial public offering of 10 million shares of common stock. The warrants have not been exercised, and the underlying common stock has not been registered under the Securities Act of 1933, as amended and is not required to be registered until 18 months after completion of the initial public offering. The value of the warrants are included in both Other Assets and Deferred Income in the accompanying Consolidated Balance Sheet and were recorded on the date Cypress completed its initial public offering. The value of the warrants of $344,000 was determined based on the difference between management's estimate of the fair market value of the warrants less the exercise price times the number of warrants granted related to properties wholly owned by the Company. The Deferred Income is being amortized into Rental Property Revenues over the life of each Agreement. Pursuant to Statement of Financial Accounting Standards No. 115 "Accounting for Certain Investments in Debt and Equity Securities," the asset will be adjusted to fair market value based on the current trading value of the Cypress common stock beginning within one year of the date at which the warrants are required to be registered, with such adjustment resulting in unrealized gains or losses which will be recognized as a separate component of Stockholders' Investment in the Consolidated Balance Sheet.
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, 2000 and 1999 Results of Operations: - ---------------------- Rental Property Revenues and Operating Expenses. Rental property revenues increased approximately $14,564,000 and $25,617,000 in the three and six month 2000 periods, respectively. Rental property revenues from the Company's office portfolio increased approximately $11,414,000 and $19,558,000 in the three and six month 2000 periods, respectively. The June 1999 acquisition of Inforum increased rental property revenues approximately $4,222,000 and $8,705,000 in the three and six month 2000 periods, respectively. Rental property revenues increased approximately $3,958,000 for both the three and six month 2000 periods from 101 Second Street which became partially operational for financial reporting purposes in April 2000. Three office buildings, AT&T Wireless Services Headquarters, 333 John Carlyle and 555 North Point Center East, which became partially operational for financial reporting purposes in September 1999, May 1999 and February 2000, respectively, contributed to the increase by approximately $1,710,000, $577,000 and $625,000, respectively, in the three month 2000 period and approximately $3,669,000, $1,514,000 and $902,000, respectively, in the six month 2000 period to the increase. Additionally, rental property revenues from 615 Peachtree Street increased approximately $168,000 and $301,000 in the three and six month 2000 periods, respectively, as the six month average economic occupancy increased to 81% in 2000 from 68% in 1999. Rental property revenues from the Company's retail portfolio increased approximately $2,006,000 and $3,137,000 in the three and six month 2000 periods, respectively. Rental property revenues increased approximately $1,475,000 and $2,835,000 in the three and six month 2000 periods, respectively, from The Avenue East Cobb, which became partially operational for financial reporting purposes in September 1999. Two retail centers, The Avenue of the Peninsula and Mira Mesa MarketCenter, became partially operational in May 2000, which contributed approximately $429,000 and $692,000, respectively, to the increase in both the three and six month 2000 periods. The increase was partially offset by a decrease of approximately $644,000 in both the three and six month 2000 periods from the sale of Laguna Niguel Promenade in March 2000 and by approximately $157,000 in the six month 2000 period from the sale of Abbotts Bridge Station in February 1999. Rental property revenues from the Company's medical office portfolio increased approximately $1,221,000 and $3,061,000 in the three and six month 2000 periods, respectively. Meridian Mark Plaza became partially operational for financial reporting purposes in April 1999 which contributed approximately $478,000 and $1,491,000 to the increase in the three and six month 2000 periods, respectively. Northside/Alpharetta II became partially operational for financial reporting purposes in September 1999 which contributed approximately $697,000 and $1,309,000 to the increase in the three and six month 2000 periods, respectively. AtheroGenics became partially operational in March 1999 which contributed approximately $270,000 to the increase for the six month 2000 period. Rental property operating expenses increased approximately $4,135,000 and $7,580,000 in the three and six month 2000 periods, respectively, due to the aforementioned office buildings, retail centers and medical office buildings becoming partially operational, as well as the acquisition of Inforum in June 1999. Development Income. Development income decreased approximately $365,000 and $961,000 in the three and six month 2000 periods, respectively. Development income decreased approximately $225,000 and $675,000 in the three and six month 2000 periods, respectively, due to development income recognized in 1999 from the build-to-suit for Walgreens on an outparcel at Colonial Plaza MarketCenter. Development income also decreased approximately $194,000 and $515,000 in the three and six month 2000 periods, respectively, from Cousins LORET Venture, L.L.C. ("Cousins LORET") related to the development of The Pinnacle and approximately $173,000 and $458,000 in the three and six month 2000 periods, respectively, from the third party development of Total System Services, Inc.'s corporate headquarters. This decrease was partially offset by an increase of approximately $120,000 and $462,000 in the three and six month 2000 periods, respectively, in development income from the Crawford Long Hospital campus redevelopment and the joint venture medical office building. The decrease in development income was also partially offset by approximately $122,000 and $244,000 in the three and six month 2000 periods, respectively, from the third party development of Cox Enterprises' corporate headquarters and by approximately $155,000 in the six month 2000 period from the development of 1155 Perimeter Center West, owned by 285 Venture, LLC. Leasing and Other Fees. Leasing and other fees decreased approximately $894,000 and $1,184,000 in the three and six month 2000 periods, respectively. Leasing fees decreased approximately $987,000 in both the three and six month 2000 periods due to a lease signed by CREC at The Inforum office building executed prior to the Company's acquisition of the building in 1999. Leasing fees also decreased $243,000 in both the three and six month 2000 periods from 285 Venture, LLC as a higher amount of leasing fees from the lease-up of 1155 Perimeter Center West were recognized in 1999. Leasing fees from Cousins LORET decreased approximately $126,000 and $541,000 in the three and six month 2000 periods, respectively, primarily related to the lease-up of The Pinnacle. The decrease in leasing and other fees was partially offset by an increase of $330,000 in both the three and six month 2000 periods, due to a fee recognized by the medical office division for representing the owners of a third-party managed property in the sale of that property. The decrease was also partially offset by an increase of leasing fees of approximately $127,000 in the six month 2000 period from Wildwood Associates, mainly due to lease-up of the 2300 Windy Ridge Parkway Building in 2000. Residential Lot and Outparcel Sales and Cost of Sales. Residential lot and outparcel sales decreased approximately $1,042,000 and $1,741,000 in the three and six month 2000 periods, respectively. The decrease in the three month 2000 period was partially due to a decrease in residential lot sales of approximately $652,000, although the number of residential lot sales increased from 77 lots in the three month 1999 period to 85 lots in the three month 2000 period. The decrease in the sales amount was due to a difference in sales price points of the various residential developments. Also contributing to the decrease was one outparcel sale recognized by CREC for $425,000 in the three month 2000 period compared to one outparcel sale for $815,000 in the three month 1999 period. The decrease in the six month 2000 period was partially due to a decrease in residential lot sales from 138 lots in 1999 to 114 lots in 2000, which decreased residential lot sales by approximately $2,001,000. Partially offsetting the decrease were two outparcel sales recognized by CREC or a subsidiary of CREC totaling approximately $1,075,000 in the six month 2000 period, as compared to one outparcel sale for $815,000 in the six month 1999 period. Residential lot and outparcel cost of sales decreased approximately $246,000 and $981,000 in the three and six month 2000 periods, respectively. Residential lot cost of sales decreased approximately $213,000 and $1,350,000 in the three and six month 2000 periods, respectively, due to the aforementioned explanation of the decrease in residential lots and outparcel sales. The decrease in cost of sales was less than the corresponding decrease in sales due to a decrease during 2000 in the gross profit percentages used to calculate the cost of sales on residential lot sales in certain of the residential developments. The decrease was partially offset by an increase in outparcel cost of sales in the six month 2000 period of approximately $369,000 due to the aforementioned two outparcel sales in 2000, as compared to one sale in 1999. Interest and Other Income. Interest and other income increased approximately $510,000 and $903,000 in the three and six month 2000 periods, respectively, mainly due to interest income recognized in 2000 from the $18.6 million note receivable from Charlotte Gateway Village, LLC. Income from Unconsolidated Joint Ventures. (All amounts reflect the Company's share of joint venture income.) Income from unconsolidated joint ventures decreased approximately $985,000 and $1,215,000 in the three and six month 2000 periods, respectively. Income from Wildwood Associates increased approximately $324,000 and $851,000 in the three and six month 2000 periods, respectively. The increase was partially due to an increase in income before depreciation, amortization and interest expense from the 3200 Windy Hill Road Building of approximately $224,000 and $430,000 in the three and six month 2000 periods, respectively, due to an increase in the six month average economic occupancy to 100% in 2000 from 88% in 1999. The increase was also partially due to an increase in income before depreciation, amortization and interest expense from the 4200 Wildwood Parkway Building of approximately $233,000 in the six month 2000 period due to an increase in average economic occupancy to 100% in 2000 from 81% in 1999. Income from Haywood Mall Associates decreased approximately $1,296,000 and $2,433,000 in the three and six month 2000 periods, respectively, due to the June 1999 sale of the Company's 50% interest in Haywood Mall. Income from CP Venture LLC increased approximately $302,000 in the six month 2000 period due mainly to a decrease in amortization expense. Income from Cousins LORET decreased approximately $205,000 and $387,000 in the three and six month 2000 periods, respectively. Depreciation and amortization expense increased approximately $249,000 and $666,000 in the three and six month 2000 periods, respectively, due to The Pinnacle becoming partially operational, which contributed to the decrease in income from Cousins LORET. Additionally, capitalized interest decreased approximately $268,000 and $763,000 in the three and six month 2000 periods, respectively, due to The Pinnacle becoming fully operational for financial reporting purposes in December 1999. Income before depreciation, amortization and interest expense from The Pinnacle increased approximately $282,000 and $1,012,000 in the three and six month 2000 periods, respectively, due to an increase in the average economic occupancy to 89% in 2000 from 76% in 1999, which partially offset the decrease. Income from 285 Venture, LLC increased approximately $138,000 and $281,000 in the three and six month 2000 periods, respectively, as 1155 Perimeter Center West became partially operational in January 2000. Income from Cousins Stone LP increased approximately $187,000 and $303,000 in the three and six month 2000 periods, respectively. This venture was formed in June 1999 when the Company purchased Faison's 50% interest in Faison-Stone. Income from Temco Associates decreased $179,000 and $141,000 in the three and six month 2000 periods, respectively, due to land sales in 1999. There were no land sales in 2000. General and Administrative Expenses. General and administrative expenses increased approximately $1,469,000 and $2,427,000 in the three and six month 2000 periods, respectively. The increase in both periods was primarily due to the Company's continued expansion. Depreciation and Amortization. Depreciation and amortization increased approximately $4,990,000 and $8,615,000 in the three and six month 2000 periods, respectively, due to the aforementioned acquisition of Inforum in June 1999 and the aforementioned office buildings, retail centers and medical office buildings becoming partially operational. Stock Appreciation Right Expense. The stock appreciation right expense decreased approximately $331,000 in the three month 2000 period and increased $230,000 in the six month 2000 period. This non-cash item is primarily related to the Company's stock price, which was $33.9375, $36.8125 and $38.50 at December 31, 1999, March 31, 2000 and June 30, 2000, respectively; and $32.25, $28.9375 and $33.8125 at December 31, 1998 and March 31, 1999 and June 30, 1999, respectively. Interest Expense. Interest expense increased approximately $2,933,000 and $3,065,000 in the three and six month 2000 periods, respectively. Interest expense before capitalization increased to approximately $6,772,000 and $13,152,000 in the three and six month 2000 periods, respectively, from $3,849,000 and $7,639,000 in the three and six month 1999 periods, respectively, due to higher debt levels. Partially offsetting the increase in the six month 2000 period was an increase of approximately $2,448,000 in interest capitalized to projects under development (a reduction of interest expense) to $9,657,000 in 2000 from $7,209,000 in 1999. Property Taxes on Undeveloped Land. Property taxes on undeveloped land decreased approximately $519,000 in the six month 2000 period due to the reversal in the three months ended March 31, 2000 of estimated amounts accrued for anticipated reassessments of the Company's North Point and Wildwood land holdings. The final reassessments, after appeal, were lower than the anticipated reassessments and the accrual was reduced. (Benefit) Provision for Income Taxes from Operations. (Benefit) provision for income taxes from operations decreased $507,000 in the three month 2000 period from a provision of $390,000 in 1999 to a benefit of $117,000 in 2000. (Benefit) provision for income taxes from operations decreased $1,379,000 in the six month 2000 period from a provision of $1,255,000 in 1999 to a benefit of $124,000 in 2000. The decrease in both periods was due to a decrease in CREC and its subsidiaries' income from operations before income taxes from $707,000 and $6,554,000 in the three and six month 1999 periods, respectively, to a loss from operations before income taxes of $773,000 and $1,069,000 in the three and six month 2000 periods, respectively. The decrease in both periods was mainly due to the aforementioned decrease in net profit from residential lot sales and a decrease in third-party leasing and other fees earned by CREC. The decrease in CREC's income from operations before income taxes was partially offset by an increase in third-party development fees recognized in 2000. Gain on Sale of Investment Properties. Gain on sale of investment properties decreased approximately $49,623,000 and $46,839,000 in the three and six month 2000 periods, respectively. The 2000 gain included the following: the March 2000 sale of Laguna Niguel Promenade ($7.2 million gain), the April 2000 sale of 2 acres of North Point land ($.6 million gain) and the amortization of deferred gain from CP Venture LLC ($2.1 million gain). The 1999 gain included the following: the January 1999 sale of 3 acres of McMurray land ($.1 million gain), the February 1999 sale of Abbotts Bridge Station, a neighborhood retail center ($3.5 million gain), the March 1999 sale of Kennesaw Crossings neighborhood retail center ($.9 million gain), the May 1999 sale of 2 acres of Hidden Hills land ($.1 million gain), the June 1999 sale of the Company's 50% interest in Haywood Mall ($50.1 million gain) and the amortization of deferred gain from CP Venture LLC ($2.0 million gain). Liquidity and Capital Resources: - -------------------------------- Financial Condition. The Company's adjusted debt (including its pro rata share of unconsolidated joint venture debt) was 31% of total market capitalization at June 30, 2000. 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, 1999, excluding the Charlotte Gateway Village, LLC debt as it is fully exculpated debt which is supported by a long-term lease to Bank of America Corporation. 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 lines of credit (increasing those lines of credit 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, 2000. 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 Cousins' Common Stock. Cash Flows. Net cash provided by operating activities decreased approximately $.1 million in 2000. Changes in other operating assets and liabilities decreased approximately $3.5 million which contributed to the decrease in net cash provided by operating activities. Residential lot and outparcel cost of sales also decreased approximately $1.2 million. Operating distributions from unconsolidated joint ventures decreased approximately $5.8 million, partially due to approximately $4.0 million of operating distributions from Cousins LORET in 1999, as compared to approximately $1.0 million of distributions in 2000. Additionally, distributions from CP Venture LLC decreased approximately $5.7 million in 2000. The final distribution of $4.1 million was made in 1999 from Haywood Mall Associates due to the sale of the Company's 50% interest in Haywood Mall in June 1999, further contributing to the decrease in operating distributions from unconsolidated joint ventures. Partially offsetting the decrease in operating distributions from unconsolidated joint ventures was an increase of $3.4 million of operating distributions from Wildwood Associates, an increase of $1.8 million of operating distributions from Temco Associates and an increase of $1.5 million of operating distributions from Cousins Stone LP, which was formed in June 1999. Additionally, the effect of recognizing rental revenues on a straight-line basis decreased net cash provided by operating activities by approximately $1.2 million. Partially offsetting the increase in net cash provided by operating activities was an increase in income before gain on sale of investment properties of approximately $2.4 million. Also, depreciation and amortization increased $8.0 million. Income from unconsolidated joint ventures decreased approximately $1.2 million which also partially offset the decrease in net cash provided by operating activities. Net cash used in investing activities increased approximately $43.3 million in 2000. Net cash received in formation of venture (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, 1999) decreased approximately $100.0 million in 2000 which primarily caused the increase in net cash used in investing activities. The collection of notes receivable decreased approximately $3.7 million due to the repayment of the Cousins LORET note receivable in 1999, which also contributed to the increase in net cash used in investing activities. Change in other assets, net, also increased approximately $.9 million, which further contributed to the increase in net cash used in investing activities. Non-operating distributions from unconsolidated joint ventures also decreased approximately $2.0 million, which contributed to the increase in net cash used in investing activities. In 1999, Cousins LORET distributed approximately $2.0 million, which represented a portion of the proceeds from the $70 million financing of The Pinnacle in December 1998. Net cash provided by sales activities decreased approximately $57.5 million also partially contributing to the increase in net cash used in investing activities due to a higher gain recognized from the sale of the Company's 50% interest in Haywood Mall in 1999, as compared to the sale of Laguna Niguel Promenade in 2000, which further offset the increase in net cash used in investing activities. Property acquisition and development expenditures decreased $108.0 million in 2000 as a result of the Company having a higher level of projects under development in 1999. Investment in unconsolidated joint ventures also decreased approximately $12.8 million, which partially offset the increase in net cash used in investing activities, partially due to contributions of approximately $10.1 million in 1999 to Charlotte Gateway Village, LLC. Additionally, contributions of approximately $5.2 million were made in 1999 to Cousins Stone LP, as compared to approximately $1.0 million of contributions in 2000. Partially offsetting the decrease in contributions was an increase in contributions to 285 Venture, LLC of approximately $1.8 million in 2000. Net cash provided by financing activities increased approximately $40.2 million in 2000 from net cash used in financing activities in 1999. The increase in 2000 was mainly attributable to proceeds from other notes payable of $89.9 million from the completion of the $90 million non-recourse mortgage of 101 Second Street in April 2000. The increase was partially offset by a decrease of approximately $45.1 million in the net amount drawn on the Company's line of credit in 2000. An increase in the dividends paid per share to $.45 in 2000 from $.41 in 1999 and an increase in the number of shares outstanding also partially offset the increase as dividends paid increased approximately $2.8 million. Repayment of other notes payable increased approximately $1.5 million in 2000 and common stock sold decreased approximately $.3 million in 2000, both of which partially offset the increase in net cash provided by financing activities. Quantitative and Qualitative Disclosure About Market Risk: - ---------------------------------------------------------- There have been no significant changes 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, 1999. Year 2000: - ---------- The "Year 2000 issue" is the result of certain computer systems, software, electronic equipment or embedded chips (collectively known as "computer systems") being written using two digits rather than four to define the applicable year. Therefore, certain computer systems may not distinguish between a year that begins with a "20" rather than a "19." This could have resulted in system failures which could have disrupted operations. No significant delays in processing or interruption of business have occurred to date due to the start of the Year 2000. The Company assessed the impact of the Year 2000 issue on its business and operations and attempted to identify the areas which rely on computer systems that could have been potentially impacted, which mainly included the systems utilized in the operations of its real estate properties and in the processing of its accounting data. The Company completed an inventory of the material computer systems being utilized in its existing operating real estate properties which could have been adversely affected by the Year 2000 issue. Such systems included, but are not limited to, building control systems, heating and air conditioning controls, elevator controls, fire alarms and security devices. Certain of these systems were replaced, upgraded or modified as deemed necessary, the cost of which was not material. The Company upgraded its accounting software to a version that its software vendor has represented to be Year 2000 compliant, as they define it. The hardware and operating system used to run the accounting software has been represented to be Year 2000 compliant. The Company has also assessed its non-financial computer systems, and replaced, upgraded or modified such systems as needed. The cost of the upgrades to the accounting software and non-financial computer systems was not material. The Company completed its survey of all material third party vendors to determine their Year 2000 compliance status and has received certificates, where possible, as to their compliancy. To date, there have been no significant issues or interruptions of business and, based upon an assessment of the current compliance by third parties, there appears to be no material business risk posed by any such non-compliance as a result of a vendor not being Year 2000 compliant. To date, the cost to analyze and prepare for the Year 2000 issue has not been material. The Company does not expect to incur any additional costs to address the Year 2000 issue. There can be no assurance that the Company will be able to identify and correct all aspects of the effect of the Year 2000 issue on the Company. However, the Company does not currently expect the Year 2000 issue will have a material impact on the Company's business, operations or financial condition. Supplemental Financial Information: - ----------------------------------- <TABLE> <CAPTION> Depreciation and amortization expense included the following components for the three and six months ended June 30, 2000 ($ in thousands): Three Months Ended Six Months Ended June 30, 2000 June 30, 2000 ------------------------------------ ------------------------------------ Share of Share of Unconsolidated Unconsolidated Company Joint Ventures Total Company Joint Ventures Total ------- --------------- ------- ------- --------------- ------- <S> <C> <C> <C> <C> <C> <C> Furniture, fixtures and equipment $ 197 $ 47 $ 244 $ 391 $ 92 $ 483 Deferred financing costs -- 4 4 -- 8 8 Goodwill and related business acquisition costs 75 -- 75 150 -- 150 Real estate related: Building (including tenant first generation) 7,143 3,644 10,787 12,719 7,337 20,056 Tenant second generation 292 174 466 586 357 943 ------ ------ ------- ------- ------ ------- $7,707 $3,869 $11,576 $13,846 $7,794 $21,640 ====== ====== ======= ======= ====== ======= </TABLE> <TABLE> <CAPTION> Exclusive of new developments and purchases of furniture, fixtures and equipment, the Company had the following capital expenditures during the three and six months ended June 30, 2000, including its share of unconsolidated joint ventures ($ in thousands): Three Months Ended Six Months Ended June 30, 2000 June 30, 2000 --------------------------------- --------------------------------- Office Retail Medical Total Office Retail Medical Total ------ ------ ------- ------ ------ ------ ------- ------ <S> <C> <C> <C> <C> <C> <C> <C> <C> Second generation related costs $1,019 $166 $ - $1,185 $1,502 $244 $43 $1,789 Building improvements 139 - - 139 186 23 30 239 ------ ---- ---- ------ -- --- ---- --- ------ $1,158 $166 $ - $1,324 $1,688 $267 $73 $2,028 ====== ==== ==== ====== ====== ==== === ====== </TABLE>
PART II. OTHER INFORMATION - --------------------------- Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a) Exhibits 27 Financial Data Schedule (b) Reports on Form 8-K ------------------- There have been no reports on Form 8-K filed by the Registrant during the quarter ended June 30, 2000.
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 Registrant /s/ Kelly H. Barrett________________________ --------------------------------------------- Kelly H. Barrett Senior Vice President - Finance (Authorized Officer) (Principal Accounting Officer) August 14, 2000