1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT TO FORM 10-Q
Filed Pursuant to
THE SECURITIES EXCHANGE ACT OF 1934
EASTGROUP PROPERTIES, INC.
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(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its Quarterly Report on Form
10-Q for the quarter ended March 31, 1999 as set forth in the pages attached
hereto:
PART I. FINANCIAL INFORMATION - Item 1. Consolidated Financial Statements
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: May 18, 1999
EASTGROUP PROPERTIES, INC.
By /s/ DIANE W. HAYMAN
----------------------------------
Diane W. Hayman, CPA
Vice President and Controller
2
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
(UNAUDITED)
ASSETS
Real estate properties:
Industrial $ 527,456 507,187
Industrial development 27,665 25,682
Other 15,779 15,762
--------- ---------
570,900 548,631
Less accumulated depreciation (38,456) (34,042)
--------- ---------
532,444 514,589
--------- ---------
Real estate held for sale 25,326 25,620
Less accumulated depreciation (8,816) (8,794)
--------- ---------
16,510 16,826
--------- ---------
Mortgage loans 6,055 8,814
Investment in real estate investment trusts 15,375 5,737
Cash 4,388 2,784
Other assets 16,650 18,798
--------- ---------
TOTAL ASSETS $ 591,422 567,548
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Mortgage notes payable $ 165,957 122,494
Notes payable to banks 95,213 114,322
Accounts payable & accrued expenses 9,289 9,138
Other liabilities 3,488 2,867
--------- ---------
273,947 248,821
--------- ---------
Minority interest in joint ventures 2,059 2,053
Minority interest in operating partnership 650 650
--------- ---------
2,709 2,703
--------- ---------
STOCKHOLDERS' EQUITY
Series A 9.00% Cumulative Redeemable Preferred
Shares and additional paid-in capital; $.0001 par value;
1,725,000 authorized and issued; stated liquidation
preference of $43,125 41,357 41,357
Series B 8.75% Cumulative Convertible Preferred
Shares and additional paid-in capital; $.0001 par value;
2,800,000 shares authorized; 400,000 shares issued;
stated liquidation preference of $10,000 9,640 9,642
Series C Preferred Shares; $.0001 par value -- --
Common shares; $.0001 par value; 65,475,000
shares authorized; 16,299,942 shares issued at
March 31, 1999 and 16,307,681 at
December 31, 1998 2 2
Excess shares; $.0001 par value; 30,000,000 shares
authorized; no shares issued -- --
Additional paid-in capital on common shares 246,120 246,340
Undistributed earnings 17,573 18,076
Accumulated other comprehensive income 74 607
--------- ---------
314,766 316,024
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 591,422 567,548
========= =========
See accompanying notes to consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS
ENDED
MARCH 31,
1999 1998
-------- --------
REVENUES
Income from real estate operations $ 20,199 15,335
Interest:
Mortgage loans 288 458
Other interest 34 24
Other 364 224
-------- --------
20,885 16,041
-------- --------
EXPENSES
Operating expenses from real
estate operations 4,994 3,996
Interest 4,351 2,939
Depreciation and amortization 4,800 3,206
General and administrative 1,136 869
-------- --------
15,281 11,010
-------- --------
INCOME BEFORE MINORITY INTEREST
AND GAIN ON INVESTMENTS 5,604 5,031
Minority interest in joint ventures and
operating partnership 92 106
-------- --------
INCOME BEFORE GAIN ON INVESTMENTS 5,512 4,925
Gain on real estate investments 1,451 73
-------- --------
INCOME BEFORE CUMULATIVE EFFECT 6,963 4,998
OF CHANGE IN ACCOUNTING PRINCIPLE
Preferred dividends-Series A 970 --
Preferred dividends-Series B 219 --
-------- --------
INCOME AVAILABLE TO
COMMON SHAREHOLDERS 5,774 4,998
Cumulative effect of change in accounting principle 418 --
-------- --------
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS $ 5,356 4,998
======== ========
BASIC PER SHARE DATA
Net income available to
common shareholders $ 0.33 0.31
======== ========
Weighted average shares outstanding 16,303 16,223
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DILUTED PER SHARE DATA (A)
Net income available to
common shareholders $ 0.33 0.30
======== ========
Weighted average shares outstanding 16,429 16,391
======== ========
(A) Assumes conversion of all limited partnership units.
See accompanying notes to consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
THREE MONTHS ENDED
March 31, March 31,
1999 1998
------------------- -------------------
OPERATING ACTIVITIES:
Net income $ 6,545 4,998
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of deferred
leasing costs 4,800 3,206
Gains on investments, net (1,451) (73)
Other (92) (75)
Changes in operating assets and liabilities:
Accrued income and other assets 1,830 (966)
Accounts payable, accrued expenses and
prepaid rent 507 112
--------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 12,139 7,202
--------------- -------------
INVESTING ACTIVITIES:
Payments on mortgage loans receivable, net of
amortization of loan discounts 5,862 (16)
Advances on mortgage loans receivable (1,588) -
Sale of real estate investments 436 -
Real estate improvements (1,500) (1,208)
Real estate development (11,758) (4,846)
Purchases of real estate (9,217) (7,406)
Purchases of real estate investment
trusts shares (10,171) (182)
Merger expenses - (20)
Changes in other assets and other liabilities 150 (163)
------------------ ----------------
NET CASH USED IN INVESTING ACTIVITIES (27,786) (13,841)
------------------ ----------------
FINANCING ACTIVITIES:
Proceeds from bank borrowings 179,020 21,189
Proceeds from mortgage notes payable 47,000 -
Principal payments on bank borrowings (198,129) (8,917)
Principal payments on mortgage notes payable (3,537) (635)
Distributions paid to shareholders (6,829) (5,533)
Purchases of shares of beneficial interest
and common stock (346) -
Proceeds from exercise of stock options - 130
Preferred stock issuance costs (2) -
Proceeds from dividend reinvestment plan 74 72
------------------ ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 17,251 6,306
------------------ ----------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,604 (333)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,784 1,298
------------------ ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,388 965
================== ================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of amount capitalized $ 4,648 2,872
Debt assumed by the Company in purchase of real estate - 2,610
See accompanying notes to consolidated financial statements
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CONSOLIDATED STATEMENTS OF CHANGES
IN STOCKHOLDERS' EQUITY (UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
Shares Shares Shares Accumulated
of of of Additional Other
Preferred Common Beneficial Paid-In Undistributed Comprehensive
Stock Stock Interest Capital Earnings Income Total
-------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998 $ 50,999 2 -- 246,340 18,076 607 316,024
Comprehensive income
Net income -- -- -- -- 6,545 -- 6,545
Net unrealized change in
investment securities -- -- -- -- -- (533) (533)
--------
Total comprehensive income 6,012
--------
Cash dividends declared-common,
$.36 per share -- -- -- -- (5,859) -- (5,859)
Preferred stock dividends declared -- -- -- -- (1,189) -- (1,189)
Preferred stock issuance costs (2) -- -- -- -- -- (2)
Issuance of 8,009 shares of common
stock, incentive compensation -- -- -- 52 -- -- 52
Issuance of 4,552 shares of common
stock, dividend reinvestment plan -- -- -- 74 -- -- 74
Repurchase of 20,300 common shares,
stock repurchase plan -- -- -- (346) -- -- (346)
-------------------------------------------------------------------------------------
BALANCE, MARCH 31, 1999 $ 50,997 2 -- 246,120 17,573 74 314,766
=====================================================================================
See accompanying notes to consolidated financial statements
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In management's opinion, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. The financial statements should be read in conjunction with the 1998
annual report and the notes thereto.
(2) RECLASSIFICATIONS
Certain reclassifications have been made in the 1998 financial
statements to conform to the 1999 presentation.
(3) SUBSEQUENT EVENTS
As of May 14, 1999, the Company had entered into contracts to purchase
the following properties:
APPROXIMATE
PROPERTY LOCATION SIZE PURCHASE PRICE
- -------------------------------------------------------------------------------------------
(In thousands)
Wilson Distribution Center Tempe, Arizona 56,000 sq. ft. $2,500
Rojas Commerce Park El Paso, Texas 172,000 sq. ft. 4,650
Land for Development Tampa, Florida 4.4 acres 684
Land for Development Orlando, Florida 4.7 acres 494
------
$8,328
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Also, as of May 14, 1999, the Company had entered into a contract to
sell the 198,000 square foot 8150 Leesburg Pike Office Building located in
Tyson's Corner, Virginia for an approximate net sales price of $28,000,000. We
anticipate the sale of this property to close in early July; however, there can
be no assurance that the sale will actually be completed.
(4) NEW ACCOUNTING PRONOUNCEMENTS
In April 1998, Statement of Position (SOP) No. 98-5, "Reporting on the
Costs of Start-Up Activities," was issued. This SOP provides guidance on the
financial reporting of start-up costs and organization costs, and requires that
these costs be expensed as incurred effective for fiscal years beginning after
December 15, 1998. As of January 1, 1999, the unamortized organization costs
were written off and accounted for as a cumulative effect of a change in
accounting principle. This change did not have a material effect on prior
periods.
THREE MOTNTHS ENDED
MARCH 31,
--------------------
CONSOLIDATED STATEMENTS OF INCOME 1999 1998
- ------------------------------------------------------------------------------------------
(in thousands)
Income before cumulative effect of change in accounting principle $6,963 4,998
Preferred dividends (1,189) -
----------------------
Income available to common shareholders 5,774 4,998
Cumulative effect of change in accounting principle (418) -
----------------------
Net income available to common shareholders $5,356 4,998
======================
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THREE MONTHS ENDED
MARCH 31,
---------
CONSOLIDATED STATEMENTS OF INCOME 1999 1998
- ----------------------------------------------------------------------------------------------------------
(In thousands)
Basic earnings per common share:
Before cumulative effect of change in accounting principle $.36 $.31
Accounting change (.03) --
----------------------------
Basic earnings per common share $.33 $.31
----------------------------
Diluted earnings per common share:
Before cumulative effect of change in accounting principle $.36 $.30
Accounting change (.03) --
----------------------------
Diluted earnings per common share $.33 $.30
----------------------------
(5) BUSINESS SEGMENTS
The Company's reportable segments consist of industrial properties,
office buildings, and an other category that includes apartments and other real
estate. The Company's chief decision makers use two primary measures of
operating results in making decisions, such as allocating resources: property
net operating income and funds from operations (FFO), defined as net income
(loss) (computed in accordance with generally accepted accounting principles
(GAAP)), excluding gains or losses from debt restructuring and sales of
property, plus real estate related depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. The Company uses
FFO as a measure of the performance of our industry as an equity real estate
investment trust because, along with cash flows from operating activities,
financing and investing activities, it provides a measure of our ability to
incur and service debt and to make capital expenditures. FFO is not considered
as an alternative to net income (determined in accordance with GAAP) as an
indication of the Company's financial performance or to cash flows from
operating activities (determined in accordance with GAAP) as a measure of the
Company's liquidity, nor is it indicative of funds available to fund the
Company's cash needs, including our ability to make distributions. The table
below presents on a comparative basis for the three months ended March 31, 1999
and 1998 reported PNOI by operating segment, followed by reconciliations of PNOI
to FFO and FFO to net income before cumulative effect of change in accounting
principle:
THREE MONTHS ENDED
MARCH 31,
1999 1998
(In thousands)
-----------------------
PROPERTY REVENUES:
Industrial $18,371 11,732
Office 1,284 1,721
Other 544 1,882
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20,199 15,335
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PROPERTY EXPENSES:
Industrial (4,245) (2,642)
Office (447) (491)
Other (302) (863)
------- ------
(4,994) (3,996)
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PROPERTY NET OPERATING INCOME:
Industrial 14,126 9,090
Office 837 1,230
Other 242 1,019
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TOTAL PROPERTY NET OPERATING INCOME 15,205 11,339
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Other income 686 706
Interest expenses (4,351) (2,939)
General and administrative expenses (1,136) (869)
Minority interest in earnings (184) (181)
Dividends on Series A preferred shares (970) --
------- ------
FUNDS FROM OPERATIONS 9,250 8,056
Depreciation and amortization (4,800) (3,206)
Share of joint venture depreciation and amortization 92 75
Gains from property sales/investment in REITs 1,451 73
Dividends on Series B convertible preferred shares (219) --
Cumulative effect of change in accounting principle (418) --
------- ------
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS 5,356 4,998
Dividends on preferred shares 1,189 --
Cumulative effect of change in accounting principle 418 --
------- ------
NET INCOME BEFORE CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE $6,963 4,998
====== =====