Cousins Properties Reports Results for Fourth Quarter 2002.Business Editors ATLANTA--(BUSINESS WIRE)--Feb. 11, 2003 Cousins Cousins may refer to:
See: New York Stock Exchange :CUZ CUZ Because cuz Cousin CUZ Cuzco, Peru - Tte Velazco Astete (Airport Code) ) -- Increased Land Division contribution: -- Sold a record 455 lots, including lots sold by joint ventures -- Sold land tracts which contributed $3.0 million to FFO including Cousins' share of FFO from joint ventures -- Commenced CL Realty joint venture with Temple Inland to develop residential subdivisions throughout the southeast and Texas -- Asset Sales: -- Sold Salem Road Station, a 67,000 s.f. neighborhood retail center, for $7.4 million, recognizing a book gain of $1.2 million -- New Financing: -- Completed $150 million of long-term, non-recourse financing on Bank of America Plaza Cousins Properties Incorporated (NYSE:CUZ) today reported improved operating results for the fourth quarter and year ended December December: see month. 31, 2002. All per share amounts are reported on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis; basic per share data is included in the financial tables accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. this release. FFO FFO See: Funds from operations per share increased 9% to $0.59 per share for the fourth quarter of 2002 from $0.54 per share for the fourth quarter of 2001. FFO increased 7% to $28.7 million for the fourth quarter of 2002 from $26.8 million a year ago. For the year ended December 31, 2002, FFO per share increased 10% to $2.29 per share from $2.08 for the year ended December 31, 2001. FFO increased 10% to $114.4 million for the year ended December 31, 2002, from $104.4 million for the year ended December 31, 2001. Increases in rental RENTAL. A roll or list of the rents of an estate containing the description of the lands let, the names of the tenants, and other particulars connected with such estate. This is the same as rent roll, from which it is said to be corrupted. property revenues from properties that had been under development but became partially or fully operational contributed to the positive results in FFO for the fourth quarter and year ended December 31, 2002. The fourth quarter and the year ended December 31, 2002, were also positively impacted by an increase in profits from residential lot sales. The fourth quarter and the year ended December 31, 2002, were negatively impacted by a drop in fee income, increased interest expense, decreased interest capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. , increased general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. and increased predevelopment expense. Approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.01 per share of the results for the fourth quarter ended December 31, 2002, represent termination fees termination fee The one-time charge for terminating or transferring an individual retirement account. If a financial institution charges a termination fee, the fee must be spelled out in the original agreement that is signed when the account is opened. paid by seven tenants and $0.08 per share of the results for the year ended December 31, 2002, represent termination fees paid by eighteen tenants in order to effect an early termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of their lease obligations. More detailed information on the quarterly and annual FFO results is included in the Funds From Operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. Supplemental Detail schedule which can be viewed along with other supplemental information on the Company's web site at www.cousinsproperties.com. Income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before gain on sale of investment properties for the fourth quarter of 2002 was $9.5 million compared with $10.4 million for the same period last year. Income from continuing operations before gain on sale of investment properties was $0.19 per share for the fourth quarter of 2002 compared with $0.21 per share for the same period last year. Income from continuing operations before gain on sale of investment properties for the year ended December 31, 2002, decreased to $43.7 million, or $0.88 per share, from $47.1 million, or $0.94 per share, for the same period last year. Cousins recognized gains Recognized Gain The amount of gain reported for income tax purposes. Notes: You can defer recognizing some gains until the following year(s). See also: Capital Gain, Capital Loss, Deferred Income Tax, Drought Sale, Exempt Income, Exemption, Gain, Recognized Loss on sale of investment properties aggregating $7.4 million, or $0.15 per share, for the year ended December 31, 2002, and $23.5 million, or $0.47 per share, for the year ended December 31, 2001. 2002 Highlights -- Opened $147.8 million of new office developments (including Cousins' share of joint ventures): - 55 Second Street San Francisco, CA 379,000 s.f. - Emory Crawford Long Medical Office Tower Atlanta, GA 358,000 s.f. -- Commenced development of $46.9 million of new retail projects: - The Avenue West Cobb Atlanta, GA 206,000 s.f. - The Shops of Lake Tuscaloosa Tuscaloosa, AL 70,000 s.f. -- Completed significant new leases and lease renewals despite difficult market conditions: - Coca-Cola Enterprises Atlanta, GA 236,000 s.f. - AGL Resources Atlanta, GA 227,000 s.f. - Hunton & Williams Atlanta, GA 114,000 s.f. - Bombardier Dallas, TX 98,000 s.f. - Released Arthur Andersen space (three tenants) San Francisco, CA 88,000 s.f. - Graves Dougherty Austin, TX 48,000 s.f. - Dewey Ballantine Austin, TX 35,000 s.f. -- Increased Land Division contribution: -- Sold a record 455 lots, including lots sold by joint ventures -- Sold land tracts which contributed $3.0 million to FFO including Cousins' share of FFO from joint ventures -- Commenced CL Realty joint venture with Temple Inland to develop residential subdivisions throughout the southeast and Texas -- Asset Sales: -- Sold Salem Road Station, a 67,000 s.f. neighborhood retail center, for $7.4 million, recognizing a book gain of $1.2 million -- New Financing: -- Completed $150 million of long-term, non-recourse financing on Bank of America Plaza Tom Bell, Cousins' president and chief executive officer, said, "Despite some difficult market conditions, we had a number of notable leasing successes in a number of markets in 2002. Our operating office portfolio ended the year 94% leased and our operating retail portfolio closed the year at 96% leased. This was in spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the negative absorption absorption [Lat.,=sucking from], taking of molecules of one substance directly into another substance. It is contrasted with adsorption, in which the molecules adhere only to the surface of the second substance. that occurred in some of our major markets like Atlanta Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. , Dallas Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. and San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden . Although the office markets continue to be extremely soft, we have thus far demonstrated an ability to deal with leasing issues and to maintain our portfolios at respectable leased levels." Mr. Bell continued, "Looking ahead, 2003 will certainly be a very challenging year. Office demand is weak and office vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. rates continue to rise in most of our major markets. Tenant credit issues also continue to be of concern. We have just announced the termination of the Cable & Wireless lease at 55 Second Street in San Francisco. Although we are recovering significant termination fees, which will be included in earnings and FFO in 2003, ongoing rental income Noun 1. rental income - income received from rental properties income - the financial gain (earned or unearned) accruing over a given period of time at 55 Second Street will be reduced from last year's levels. Other tenant credit issues may arise during the course of the year and, if they do, we will aggressively and proactively deal with these credit issues as we have in the past." The Company announced during the fourth quarter of 2001 that its Board of Directors adopted a new plan authorizing the repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. of up to 5 million shares of the Company's common stock. During the fourth quarter of 2002, the Company repurchased 302,700 shares under this plan at an average price of $23.66 per share. For the year ended December 31, 2002, the Company repurchased 1,776,482 shares under this plan at an average price of $23.58 per share. Cousins Properties Incorporated, headquartered in Atlanta, has extensive experience in the real estate industry including the development, acquisition, financing, management and leasing of properties. The property types that Cousins actively invests in include office, retail, medical office and land development projects. The Company's portfolio consists of interests in 13.3 million square feet of office space, 3.3 million square feet of retail space and .9 million square feet of medical office space, and more than 300 acres of strategically located land for future commercial development. Cousins is a fully integrated equity real estate investment trust (REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). ) that has been public since 1962 and trades on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the symbol "CUZ." For more information on the Company, please visit Cousins' web site at www.cousinsproperties.com. Included with this press release are Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statements of Income and Funds From Operations. Supplemental financial and property information, including Funds From Operations Supplemental Detail, a Portfolio Listing, Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. , a Development Pipeline schedule and various other schedules are available on the Company's web site, www.cousinsproperties.com, or via fax by calling the Company's Investor Relations Investor relations The process by which the corporation communicates with its investors. Department, (770) 857-2449. The Company will conduct a conference call at 11:00 a.m. (Eastern time) on February February: see month. 12, 2003, to discuss the results of the fourth quarter 2002 and the year ended December 31, 2002. The number to call for this interactive teleconference is (913) 981-5523. A replay of the conference call will be available until February 26, 2003, by dialing (719) 457-0820 and entering the passcode, 643568. The Company will provide an online Web simulcast Simulcast is a portmanteau of "simultaneous broadcast", and refers to programs or events broadcast across more than one medium, or more than one service on the same medium, at the same time. and rebroadcast of its fourth quarter 2002 earnings release conference call. The live broadcast of Cousins' quarterly conference call will be available online at www.cousinsproperties.com, www.streetevents.com and www.companyboardroom.com on February 12, 2003, beginning at 11:00 a.m. (Eastern time). The online replay will be available at these sites for 14 days. Certain matters discussed in this news release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the federal securities laws and are subject to uncertainties and risks, including, but not limited to, general economic conditions, local real estate conditions, interest rates, the Company's ability to obtain favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. financing, and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. filed on March 9, 2001. The words "believes," "expects," "estimates" and similar expressions are intended to identify forward-looking statements. Such forward-looking statements are based on current expectations and speak as of the date of such statements. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information or otherwise.
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
FUNDS FROM OPERATIONS
FOR THE QUARTERS AND YEARS ENDED DECEMBER 31, 2002 AND 2001
(UNAUDITED)
(In thousands, except per share amounts)
Quarter Ended Year Ended
December 31, December 31,
------------------- -------------------
2002 2001 2002 2001
-------- -------- -------- --------
Income from continuing
operations before gain on
sale of investment
properties $9,516 $10,419 $43,718 $47,098
Income from discontinued
operations 31 41 227 221
Depreciation and
amortization (1) 18,562 16,025 72,936 61,010
Amortization of deferred
financing costs and
depreciation of furniture,
fixtures and equipment (1) (537) (514) (2,131) (1,537)
Elimination of the
recognition of rental
revenues on a straight-line
basis (1) (920) (546) (2,145) (3,164)
Adjustment to reflect stock
appreciation right expense
on a cash basis (57) (597) (318) (1,251)
Gain on sale of
undepreciated investment
properties 2,143 2,011 2,143 2,011
======== ======== ======== ========
Consolidated Funds From
Operations $28,738 $26,839 $114,430 $104,388
======== ======== ======== ========
Weighted Average Shares 48,443 49,078 49,252 49,205
======== ======== ======== ========
Consolidated Funds From
Operations Per Share -
Basic $.59 $.55 $2.32 $2.12
======== ======== ======== ========
Diluted Weighted Average
Shares 48,971 50,000 49,937 50,280
======== ======== ======== ========
Consolidated Funds From
Operations Per Share -
Diluted $.59 $.54 $2.29 $2.08
======== ======== ======== ========
(1) Includes share of joint ventures
The table above shows Funds From Operations ("FFO") for Cousins Properties Incorporated and Consolidated Entities and its unconsolidated joint ventures. On a consolidated basis, FFO includes the Company's FFO and the Company's share of FFO of its unconsolidated joint ventures, but excludes the Company's share of distributions from such ventures. The Company calculates its FFO using the National Association of Real Estate Investment Trusts ("NAREIT NAREIT National Association of Real Estate Investment Trusts ") definition of FFO adjusted to (i) eliminate the recognition of rental revenues on a straight-line straight-line adj. 1. Lying in a straight line. 2. Relating to a device whose linkage produces or copies motion in straight lines. 3. basis and (ii) reflect stock appreciation right expense on a cash basis. The Company believes its FFO presentation more properly reflects its operating results. Management believes the Company's FFO is not directly comparable to other REITs which own a portfolio of mature income-producing properties because the Company develops projects through a development and lease-up phase before they reach their targeted cash flow returns. Furthermore, the Company eliminates in consolidation fee income for developing and leasing projects owned by consolidated entities, while capitalizing related internal costs. In addition, unlike many REITs, the Company has considerable land holdings which provide a strong base for future FFO growth as land is developed or sold in future years. Property taxes on the land, which are expensed currently, reduce current FFO. As indicated above, the Company does not include straight-lined Straight´-lined` a. 1. Having straight lines. rents in its FFO, as it could under the NAREIT definition of FFO. Furthermore, most of the Company's leases are also escalated periodically based on the Consumer Price Index, which unlike fixed escalations, do not require rent to be straight-lined; under NAREIT's definition straight-lining of rents produces higher FFO in the early years of a lease and lower FFO in the later years of a lease. FFO is used by industry analysts as a supplemental measure of an equity REIT's performance. FFO should not be considered an alternative to net income or other measurements under generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting as an indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of operating performance, or to cash flows from operating, investing, or financing activities as a measure of liquidity. FFO Supplemental Detail is available from the Company upon request or at the Company's web site at www.cousinsproperties.com.
COUSINS PROPERTIES INCORPORATED AND CONSOLIDATED ENTITIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTERS AND YEARS ENDED DECEMBER 31, 2002 AND 2001
(In thousands, except per share amounts)
Quarter Ended Year Ended
December 31, December 31,
------------------- -------------------
2002 2001 2002 2001
-------- -------- -------- --------
(Unaudited)
REVENUES:
Rental property revenues $41,835 $36,603 $168,046 $144,754
Development income 1,549 1,202 4,625 6,179
Management fees 2,363 2,417 9,313 7,966
Leasing and other fees 642 1,641 4,297 5,344
Residential lot and
outparcel sales 2,089 1,122 9,126 6,682
Interest and other 1,074 1,560 4,393 6,061
-------- -------- -------- --------
49,552 44,545 199,800 176,986
-------- -------- -------- --------
INCOME FROM UNCONSOLIDATED
JOINT VENTURES 6,159 5,948 26,670 22,897
-------- -------- -------- --------
COSTS AND EXPENSES:
Rental property operating
expenses 12,791 11,571 49,015 43,826
General and administrative
expenses 7,081 6,802 27,670 27,010
Depreciation and
amortization 13,346 11,731 54,248 44,453
Stock appreciation right
expense (credit) 2 (12) 29 (276)
Residential lot and
outparcel cost of sales 1,481 1,093 7,309 5,910
Interest expense 9,823 7,044 37,423 27,610
Property taxes on
undeveloped land 127 138 675 619
Other 1,268 1,263 4,857 4,324
-------- -------- -------- --------
45,919 39,630 181,226 153,476
-------- -------- -------- --------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 9,792 10,863 45,244 46,407
PROVISION (BENEFIT) FOR
INCOME TAXES FROM
CONTINUING OPERATIONS 276 444 1,526 (691)
-------- -------- -------- --------
INCOME FROM CONTINUING
OPERATIONS BEFORE GAIN ON
SALE OF INVESTMENT
PROPERTIES 9,516 10,419 43,718 47,098
GAIN ON SALE OF INVESTMENT
PROPERTIES, NET OF
APPLICABLE INCOME TAX
PROVISION 3,155 3,043 6,254 23,496
-------- -------- -------- --------
INCOME FROM CONTINUING
OPERATIONS 12,671 13,462 49,972 70,594
-------- -------- -------- --------
DISCONTINUED OPERATIONS,
NET OF APPLICABLE
INCOME TAX PROVISION:
Income from discontinued
operations 31 41 227 221
Gain on sale of investment
property 1,174 -- 1,174 --
-------- -------- -------- --------
1,205 41 1,401 221
-------- -------- -------- --------
EXTRAORDINARY LOSS -- -- (3,501) --
-------- -------- -------- --------
NET INCOME $13,876 $13,503 $47,872 $70,815
======== ======== ======== ========
WEIGHTED AVERAGE SHARES 48,443 49,078 49,252 49,205
======== ======== ======== ========
BASIC NET INCOME PER SHARE:
Income from continuing
operations $.26 $.27 $1.01 $1.43
Discontinued operations .03 .01 .03 .01
Extraordinary loss -- -- (.07) --
-------- -------- -------- --------
Basic net income per share $.29 $.28 $.97 $1.44
======== ======== ======== ========
DILUTED WEIGHTED AVERAGE
SHARES 48,971 50,000 49,937 50,280
======== ======== ======== ========
DILUTED NET INCOME PER
SHARE:
Income from continuing
operations $.26 $.27 $1.00 $1.40
Discontinued operations .02 -- .03 .01
Extraordinary loss -- -- (.07) --
-------- -------- -------- --------
Diluted net income per
share $.28 $.27 $.96 $1.41
======== ======== ======== ========
CASH DIVIDENDS DECLARED PER
SHARE $.37 $.37 $1.48 $1.39
======== ======== ======== ========
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