Cousins Properties Incorporated 2006 Annual Report - SNL Financial

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COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) reversed in the year of forfeiture. Compensation expense related to the restricted stock, before any capitalization to projects under development or income tax benefit, was approximately $2,944,000, $2,450,000 and $1,059,000 in 2006, 2005 and 2004, respectively. As of December 31, 2006, there was $4.5 million of total unrecognized compensation cost included in additional paid-in capital related to restricted stock, which will be recognized over a weighted average period of 2.0 years. The total fair value of restricted stock which vested during 2006 was $3.2 million. The following table summarizes restricted stock activity during 2006: Number of Shares Weighted- Average Grant Date Fair Value Non-vested stock at December 31, 2005 ......................... (In thousands) 413 $29.44 Vested .................................................. (233) 28.73 Forfeited ................................................ (16) 30.11 Non-vested stock at December 31, 2006 ......................... 164 $30.39 Outside directors may elect to receive any portion of their director fees in stock, based on 95% of the average market price on the date of service. Outside directors elected to receive 9,678, 9,329, and 7,342 shares of stock in lieu of cash for director fees in 2006, 2005, and 2004, respectively. Restricted Stock Unit Plan: In 2005, the Company adopted the 2005 Restricted Stock Unit (“RSU”) Plan, under which 197,506 and 87,202 RSUs were issued in 2006 and 2005, respectively. An RSU is a right to receive a payment in cash equal to the fair market value of one share of the Company’s stock upon vesting. The Company is expensing and recording a liability based on the current market value as the RSUs vest. Employees with RSUs receive payments during the vesting period equal to the common dividends per share paid by the Company times the number of RSUs held. The Company also records the effect of these additional payments in compensation expense. The RSU Plan was amended in 2006 to permit issuances to directors. During 2006 and 2005, approximately $3.0 million (including dividend payments) and $36,000, respectively, was recognized as compensation expense related to the RSUs for employees and directors, before capitalization to projects under development or income tax benefit. In 2006, the Company amended the RSU certificates to add a retirement feature. Employees who meet the requirements of the retirement feature vest immediately in their RUSs outstanding, and the vesting period was changed for employees who will become eligible under this feature before the end of their original vesting period. The 2006 compensation expense amount above included $786,000 of expense, before capitalization to projects under development or income tax benefit, related to this modification. In 2006, the Company also amended the RSU Plan to allow for grants of Performance Based RSUs and issued 220,000 of these units. The Performance Based RSUs do not receive dividends and, if certain performance measures are met, these units vest five years from the date of grant. The Company is expensing the fair value of these RSUs over the vesting period and recognized approximately $1.1 million in 2006, before capitalization to projects under development or income tax benefit. F-28
COUSINS PROPERTIES INCORPORATED AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) As of December 31, 2006, the Company had recorded approximately $13.2 million of unrecognized compensation related to RSUs, which will be recognized over a weighted average period of 3.6 years. The total fair value of RSUs and dividends paid in 2006 was $1.1 million. The following table summarizes RSU activity for 2006 (in thousands): Outstanding at December 31, 2005 ............................................. 87 Granted ................................................................. 418 Vested .................................................................. (20) Forfeited ................................................................ (8) Outstanding at December 31, 2006 ............................................. 477 Stock Repurchase Plan: In 2006, the Board of Directors of the Company authorized a stock repurchase plan, which expires May 9, 2009, which allows the Company to purchase up to five million shares of its common stock. This replaces the 2004 authorization, which expired April 15, 2006 and was also for up to five million shares of the Company’s common stock. No common stock was repurchased in 2006. Prior to 2006, the Company purchased 2,691,582 shares of its common stock for an aggregate price of approximately $64,894,000 under previous plans. Ownership Limitations: In order to maintain Cousins’ qualification as a REIT, Cousins’ Articles of Incorporation include certain restrictions on the ownership of more than 3.9% of the Company’s total common and preferred stock. Distribution of REIT Taxable Income: The following is a reconciliation between dividends paid and dividends applied in 2006, 2005 and 2004 to meet REIT distribution requirements ($ in thousands): 2006 2005 2004 Common and preferred dividends paid. ................... That portion of dividends declared in current year, and paid in current year, which was applied to the prior year distribution $266,214 $ 89,253 $437,112 requirements ..................................... That portion of dividends declared in subsequent year, and paid — (4,621) (5,577) in subsequent year, which will apply to current year ........ Dividends in excess of current year REIT distribution — — 4,621 requirements ..................................... Dividends applied to meet current year REIT distribution — (23,691) — requirements ..................................... $266,214 $ 60,941 $436,156 F-29
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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
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Additional Information Related to O
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(3) Total Project GLA includes anch
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Description Year Commenced Estimate
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Description and Location(1) Zoned U
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Mr. DuPree rejoined the Company in
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Performance Graph The following gra
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General and Administrative Expenses
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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 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 91: COUSINS PROPERTIES INCORPORATED AND
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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