Cousins Properties Incorporated 2006 Annual Report - SNL Financial

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COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company recognizes compensation expense arising from share-based payment arrangements (stock options, restricted stock and restricted stock units) granted to employees in general and administrative expense in the 2006 Consolidated Statements of Income over the related awards’ vesting period. A portion of share-based payment expense is capitalized to projects under development in accordance with SFAS No. 67. Compensation expense related to the adoption of SFAS 123R is shown in the “Stock Options Only” column below. Information for the Company’s share-based payment arrangements for the year ended December 31, 2006 are as follows ($ in thousands, except per share amounts): All Share-Based Stock Options Only Compensation 2006 2006 Expensed ......................................... $3,550 $ 9,983 Amounts capitalized ................................. (997) (2,945) Effect on provision for income taxes ..................... (140) (349) Effect on income from continuing operations and net income . . . $2,413 $ 6,689 Effect on basic earnings per share ....................... $ 0.05 $ 0.13 Effect on diluted earnings per share ...................... $ 0.05 $ 0.13 If the Company had applied fair value recognition provisions to options granted under the Company’s stock option plans prior to January 1, 2006, pro forma results would have been as follows for 2005 and 2004 ($ in thousands, except per share amounts): 2005 2004 Net income available to common stockholders, as reported ............... Add: Stock-based employee compensation expense included in reported net $34,491 $399,742 income, net of related tax effect ................................. Deduct: Total stock-based employee compensation expense determined under 2,496 1,609 fair-value-based method for all awards, net of related tax effect ......... (4,907) (4,006) Pro forma net income available to common stockholders ................ $32,080 $397,345 Net income per common share: Basic — as reported. ......................................... $ 0.69 $ 8.16 Basic — pro forma .......................................... $ 0.64 $ 8.11 Diluted — as reported ........................................ $ 0.67 $ 7.84 Diluted — pro forma ......................................... $ 0.62 $ 7.82 Earnings per Share (“EPS”) Basic EPS represents net income available to common stockholders divided by the weighted average number of common shares outstanding during the period. Diluted EPS represents net income available to common stockholders divided by the diluted weighted average number of common shares outstanding during the period. Diluted weighted average number of common shares is calculated to reflect the potential dilution that would occur if stock options or other contracts to issue common stock were exercised and resulted in additional common stock F-12
outstanding. The income amounts used in the Company’s EPS calculations are reduced for the effect of preferred dividends and are the same for both basic and diluted EPS. Share data is as follows (in thousands): 2006 2005 2004 Weighted-average shares-basic. .............................. Dilutive potential common shares: 50,655 49,989 49,005 Stock options ......................................... 1,676 1,630 1,911 Restricted stock ........................................ 182 128 100 Weighted-average shares-diluted ............................. 52,513 51,747 51,016 Anti-dilutive options at period end not included .................. 952 871 918 Cash and Cash Equivalents and Restricted Cash Cash and cash equivalents include cash and highly liquid money market instruments. Highly liquid money market instruments include securities and repurchase agreements with original maturities of three months or less, money market mutual funds and United States Treasury Bills with maturities of 30 days or less. Restricted cash primarily represents amounts restricted under debt agreements for future capital expenditures or amounts restricted under purchase agreements to be expended only for prescribed use. New Accounting Pronouncements In addition to the new FASB pronouncement, FIN 48, previously discussed in the Income Tax section, the Securities and Exchange Commission issued SAB No. 108, “Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements,” in September 2006. This statement requires that registrants analyze the effect of financial statement misstatements on both their balance sheet and their income statement and contains guidance on correcting errors under this approach. The Company adopted SAB 108 on December 31, 2006 and, in accordance with the initial application provisions of SAB 108, adjusted retained earnings as of January 1, 2006. All of these adjustments were considered to be immaterial individually and in the aggregate in prior years based on the Company’s historical method of determining materiality. See Note 15 for further discussion. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the accompanying financial statements and notes. Actual results could differ from those estimates. Reclassifications COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) In periods prior to 2006, the Company recorded reimbursements of salary and benefits of on-site employees pursuant to management agreements with third parties and unconsolidated joint ventures as reductions of general and administrative expenses. In 2006, the Company determined that these amounts should have been recorded as revenues in accordance with EITF No. 99-19 and, accordingly, began recording these reimbursements in Fee Income on the Consolidated Statements of Income. Prior period amounts have been revised to conform to the 2006 presentation. As a result, Fee Income and General and Administrative Expenses have increased by $15.1 million in 2005 and $13.2 million in 2004 when compared to amounts previously reported. F-13
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Outstanding Performance Cousins Pro
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FORWARD-LOOKING STATEMENTS Certain
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Had significant leasing activity, n
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Certain environmental laws impose l
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Environmental issues. Environmental
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Financing Risks If interest rates o
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eceive less cash than the amount of
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income, Cousins is subject to tax o
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16 Description and Location Year De
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18 Lease Expirations — Office As
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20 Description and Location Year De
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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 and 48: esidential lot development and land
Page 49 and 50: Stock-Based Compensation. The Compa
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: Income Taxes COUSINS PROPERTIES INC
Page 89 and 90: Company and 28% to GDL, after each
Page 99 and 100: The following supplemental pro form
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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