Cousins Properties Incorporated 2006 Annual Report - SNL Financial

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The 2005 gain included the following: The sale of undeveloped land at The Lakes of Cedar Grove residential development — $1.2 million; The sale of undeveloped land at the North Point/Westside mixed use project — $4.4 million; The sale of Company-owned land at Wildwood — $9.8 million; and The recurring amortization of deferred gain from CPV — $0.3 million. The 2004 gain included the following: The sale of the 333 John Carlyle and 1900 Duke Street office buildings — $34.5 million; The sale of Ridenour land — $0.7 million; The sale of the 101 Independence Center office building — $35.8 million; The sale of undeveloped land at the North Point/Westside mixed use project — $9.6 million; The recognition of deferred gain from the sale of Wildwood land associated with the property sales — $29.3 million); The sale of Company-owned land at Wildwood — $3.3 million; The sale of a ground lease adjacent to North Point MarketCenter — $1.4 million; A true-up of gains from the 1996 sale of Lawrenceville MarketCenter, as certain taxes were determined not to be owed on that transaction — $0.6 million; and The recurring amortization of deferred gain from CPV, plus an additional amount recognized from the sale of Wachovia Tower, — $2.8 million. Discontinued Operations. SFAS No. 144 requires that certain office buildings and retail centers that were sold or plan to be sold be treated as discontinued operations and that the results of their operations and any gains on sales from these properties be shown as a separate component of income in the Consolidated Statements of Income for all periods presented. The properties sold which qualified as discontinued operations were as follows: 2006 Frost Bank Tower The Avenue of the Peninsula North Point Ground Leases 2005 Hanover Square South 2004 Rocky Creek Properties Northside/Alpharetta I and II 101 Second Street 55 Second Street The Shops of Lake Tuscaloosa Income from Discontinued Operations decreased from $6.0 million in 2004 to $2.3 million in 2005, and further decreased to a loss of $38,000 in 2006. The difference between the 2004, 2005 and 2006 amounts is the result of the number and type of properties included in each year. 47
Stock-Based Compensation. The Company adopted SFAS No. 123R, “Share-Based Payment,” on January 1, 2006 utilizing the modified prospective method. This standard requires that companies recognize compensation expense in the statement of income for the grant-date fair value of share-based awards that vest during the period. The Company calculates the grant-date fair value of its awards using the Black-Scholes model, which it also utilized under SFAS No. 123 in its pro forma disclosures for periods prior to 2006. Assumptions used under SFAS No. 123 are not materially different from those used under SFAS No. 123R. The adoption of SFAS No. 123R reduced 2006 net income by approximately $2.4 million after accounting for the effect of capitalizing salaries and related benefits of certain development and leasing personnel to projects under development and after the effect of income taxes. The total unrecognized compensation cost related to all non-vested share-based payment arrangements was $23.3 million, which will be recognized over a weighted average period of 3.2 years. Funds From Operations. The table below shows Funds From Operations Available to Common Stockholders (“FFO”) and the related reconciliation to net income available to common stockholders for the Company. The Company calculated FFO in accordance with the National Association of Real Estate Investment Trusts’ (“NAREIT”) definition, which is net income available to common stockholders (computed in accordance with accounting principles generally accepted in the United States of America (“GAAP”)), excluding extraordinary items, cumulative effect of change in accounting principle and gains or losses from sales of depreciable property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures to reflect FFO on the same basis. In 2005, the Company included $5.0 million in income from a real estate venture related to the sale of real estate in its NAREIT-defined calculation of FFO. The Company included this amount in FFO because, based on the nature of the investment, the Company believes this income should not be considered gain on the sale of depreciable property. The Company presented the NAREIT-defined calculation and also presented an adjusted NAREIT-defined calculation of FFO to add back the losses on extinguishment of debt recognized in 2006 in connection with the venture formation on June 29, 2006 with Prudential and the sale of Bank of America Plaza in September 2006. The Company presented this additional measure of FFO because the losses on extinguishment of debt that the Company recognized related to a sale or an exchange of real estate, and all other amounts related to a sale or an exchange of real estate are excluded from FFO. 48
Page 1 and 2: Outstanding Performance Cousins Pro
Page 3 and 4: FORWARD-LOOKING STATEMENTS Certain
Page 5 and 6: Had significant leasing activity, n
Page 7 and 8: Certain environmental laws impose l
Page 9 and 10: Environmental issues. Environmental
Page 11 and 12: Financing Risks If interest rates o
Page 13 and 14: eceive less cash than the amount of
Page 15 and 16: income, Cousins is subject to tax o
Page 17 and 18: 16 Description and Location Year De
Page 19 and 20: 18 Lease Expirations — Office As
Page 21 and 22: 20 Description and Location Year De
Page 23 and 24: Lease Expirations — Industrial As
Page 25 and 26: Additional Information Related to O
Page 27 and 28: (3) Total Project GLA includes anch
Page 29 and 30: Description Year Commenced Estimate
Page 31 and 32: Description and Location(1) Zoned U
Page 33 and 34: Mr. DuPree rejoined the Company in
Page 35 and 36: Performance Graph The following gra
Page 37 and 38: General and Administrative Expenses
Page 39 and 40: For the foreseeable future, the Com
Page 41 and 42: collectibility of unit purchase pri
Page 43 and 44: Decrease of approximately $1.2 mill
Page 45 and 46: The vesting period for stock option
Page 47: esidential lot development and land
Page 51 and 52: capitalization at December 31, 2006
Page 53 and 54: Cash Flows from Investing Activitie
Page 55 and 56: eceivable. The table presents sched
Page 57 and 58: Item 9. Changes in and Disagreement
Page 59 and 60: We have also audited, in accordance
Page 61 and 62: 10(a)(v)* Form of Restricted Stock
Page 63 and 64: SIGNATURES Pursuant to the requirem
Page 65 and 66: Cousins Properties Incorporated IND
Page 67 and 68: COUSINS PROPERTIES INCORPORATED AND
Page 73 and 74: fair values at the date of acquisit
Page 75 and 76: Income Taxes COUSINS PROPERTIES INC
Page 77 and 78: outstanding. The income amounts use
Page 89 and 90: Company and 28% to GDL, after each
Page 99 and 100:
The following supplemental pro form
Page 101 and 102:
COUSINS PROPERTIES INCORPORATED AND
Page 103 and 104:
Page 105 and 106:
Page 107 and 108:
14. PROFIT SHARING/401(K) PLAN The
Page 109 and 110:
S-2 Description Encumbrances COUSIN
Page 111 and 112:
S-4 Description Encumbrances COUSIN
Page 113 and 114:
COUSINS PROPERTIES INCORPORATED STA
Page 115 and 116:
Subsidiary State of Incorporation C
Page 117 and 118:
I, Thomas D. Bell, Jr., certify tha
Page 119 and 120:
Exhibit 32.1 CERTIFICATION PURSUANT
Page 121 and 122:
Shareholder Information INDEPENDENT
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Cousins Properties Incorporated 2006 Annual Report - SNL Financial

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