Cousins Properties Incorporated 2006 Annual Report - SNL Financial

14. PROFIT SHARING/401(K) PLAN
The Company has a 401(k) plan which covers active regular employees. Employees are eligible under this plan
immediately upon hire, and pre-tax contributions are allowed up to the limits set by the Internal Revenue Service.
The Company has a profit sharing plan which covers active regular employees who work a minimum of 1,000 hours
per year. The Compensation, Nominating and Governance Committee of the Board of Directors makes an annual,
discretionary determination of the percentage contribution of an eligible employees’ compensation that will be
made by the Company into the profit sharing plan. In order to be an eligible employee, the employee must, among
other factors, be an active employee on both January 1 and December 31 of that plan year. The Company
contributed or plans to contribute approximately $3.2 million, $2.7 million and $2.6 million to the profit sharing
plan for the 2006, 2005 and 2004 plan years, respectively.
15. SAB NO. 108
As discussed in Note 2, the Company adopted SAB 108 effective December 31, 2006. As permitted by
SAB 108, the Company adjusted retained earnings as of January 1, 2006 for the cumulative effect of the following
misstatements from prior years:
Deferred Tax Liability
In prior years, the Company did not reduce its taxable income at CREC for goodwill written off in connection
with the sale of certain office properties. These errors resulted in an overstatement of the Company’s deferred tax
liability.
Investment in Unconsolidated Joint Ventures
In 2004, the Company maintained its investment in Verde under the cost method and, accordingly, did not
record the Company’s share of losses incurred by Verde. The Company later determined that it should account for
Verde under the equity method, and began recognizing equity in earnings from this entity in 2005 but did not adjust
for the Company’s share of Verde’s losses in 2004. As a result, the Company’s investment in Verde was overstated.
Compensated Absences
In prior years, the Company had no established accrual for earned but unpaid compensated absences. As a
result, the Company’s accrued liabilities were understated.
Impact of Adjustments
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The impact of each of the items noted above on retained earnings as of January 1, 2006 is presented below (in
thousands):
Deferred
Tax
Liability
Investment in
Unconsolidated
Joint Ventures
Vacation
Accrual Total
Investment in unconsolidated joint ventures, net of
tax ................................... $ — $(260) $ — $ (260)
Accounts payable and accrued liabilities ......... (2,827) — 213 (2,614)
Cumulative undistributed net income ............ $2,827 $(260) $(213) $ 2,354
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