SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13, 2003
Stratus Properties Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-19989 72-1211572
(State or other
(Commission
(IRS Employer
jurisdiction of
File Number)
Identification
incorporation or
Number)
organization)
98 San Jacinto Blvd., Suite 220
Austin, Texas 78701
(address of principal executive offices)
Registrant's telephone number, including area code: (512) 478-5788
Item 9. Regulation FD Disclosure
The following information is being furnished under Item 12.
Stratus Properties Inc. issued a press release dated May 13, 2003 regarding its first-quarter 2003 results (Exhibit 99.1).
SIGNATURE
------------------
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Stratus Properties Inc.
By: /s/ C. Donald Whitmire, Jr.
-------------------------------------
C. Donald Whitmire, Jr.
Vice President - Controller
(authorized signatory and
Principal Accounting Officer)
Date: May 14, 2003
Stratus Properties Inc.
Exhibit Index
Exhibit
Number
99.1
Press Release dated May 13, 2003 “Stratus Properties Inc. Reports First-Quarter 2003 Results”.
STRATUS PROPERTIES INC. REPORTS
F IRST - -QUARTER 200 3 RESULTS
HIGHLIGHTS
•
Sold two Barton Creek estate lots for $0.6 million and six acres of undeveloped property in southwest Austin for $0.7 million.
•
Extended the maturity of the two project loan credit facilities covering its three office buildings to January 31, 2004, with an option to extend both facilities by two additional one-year periods, subject to certain conditions.
F irst Quarter | ||||||
|
200 3
|
2002 | |||||
(In thousands, except per share amounts) | ||||||
Revenues | $ | 2,696 | $ | 1,744 | ||
Operating loss | (151 | ) | (540 | ) | ||
Equity in unconsolidated affiliates’ income | - |
| 418 | |||
Net income (loss) | (340 | ) | 366 | |||
|
Discount on purchase of mandatorily redeemable preferred stock |
- |
2,367 | ||||
Net income (loss) attributable to common shareholders |
(340 |
) |
2,733 | |||
Diluted net income per share | $ | ( 0. 05 | ) | $ | 0.38 | |
Diluted average shares outstanding | 7,122 | 7,804 | ||||
AUSTIN, TX, May 13 , 200 3 – Stratus Properties Inc. (NASDAQ:STRS) reported a net loss of $0.3 million, $0.05 per share, for the first quarter of 2003 compared to net income of $2.7 million, $0. 38 per share, for the f irst quarter of 200 2. Net income attributable to common shareholders for 2002 included the $2.4 million discount on the repurchase of Stratus’ $10.0 million of mandatorily redeemable preferred stock in February 2002. The discount, which was recorded as capital-in-excess of par value within the equity portion of Stratus’ balance sheet, is required to be considered in the determination of earnings per share under current accounting standards.
Revenues. Stratus’ revenues for the first quarter of 2003 totaled $2.7 million, which included $0.7 million for the sale of six acres of undeveloped property in southwest Austin, Texas and $0.6 million from the sale of two residential estate lots, one at the Escala Drive subdivision and one at the Mirador subdivision within the Barton Creek Community in Austin. Revenues during 2003 also include rental income associated with Stratus’ three office buildings totaling $0.9 million. During the first quarter of 2003, Stratus sold to third parties $0.4 million of its development incentives, which were granted to Stratus by the City of Austin in accordance with the Circle C Development Agreement in August 2002. Stratus had $0.1 million of revenues during the first quarter of 2003 from management fees and sales commissions. Stratus’ revenues for the first quarter of 2002 totaled $1.7 million, which included $1.0 million associated with the sale of two resident ial estate lots at the Escala Drive subdivision together with management fees and sales commissions totaling $0.4 million. Stratus’ revenues during the first quarter of 2002 also included $0.3 million from rental income from the two office buildings purchased on February 27, 2002.
Project Loan Amendments. As previously reported, in January 2003, Stratus amended its project loan facilities associated with the 140,000-square foot office complex at 7000 West and the 75,000 square-foot office building at 7500 Rialto Drive, both of which are located in Lantana in southwest Austin. Under the terms of the project loan amendments, each project loan’s maturity was extended until January 31, 2004 from the original maturities of August 2003 (7000 West) and June 2003 (Rialto Drive). In addition, the project loan facilities provide Stratus an option to extend the maturity of each facility by two additional one-year periods, subject to certain conditions. Stratus repaid $0.5 million and $1.4 million of its borrowings outstanding in connection with these amendments under its 7000 West and 7500 Rialto Drive project loan facilities, respectively. Stratus has borrowed all amounts available under the 7000 West project loan facility and currently has $3.7 million of remaining a vailability under the 7500 Rialto Drive project loan facility.
Development Activities. During the first quarter of 2003, Stratus completed street and utility infrastructure construction for the “Calera Drive” subdivision within the Barton Creek Community. Development of the initial phase, which includes 17 courtyard homes on 19 acres, will commence during the second quarter of 2003. The second phase of Calera Drive, consisting of 53 single-family lots, has received final plat and construction permit approval. The development of these lots, many of which adjoin the Fazio Canyons Golf Course, is expected to begin in 2004.
During the first quarter of 2003, Stratus also completed certain tenant improvements to the 75,000 square-foot Rialto Drive office building that allowed the first two tenants to occupy their leased space. The building is now approximately one-third occupied. Stratus is continuing its efforts to lease the remaining available office space at this building. The two office buildings comprising Stratus’ 140,000-square foot Lantana Corporate Center, known as 7000 West, are fully leased and occupied.
Stratus has commenced development activities based on the entitlements set forth in its 2002 Circle C Development Agreement with the City of Austin. The preliminary plan has now been filed for Meridian, an 800 lot residential development at Circle C. In addition, several retail site plans at Circle C are currently proceeding through the approval process. The 2002 Agreement permits development of approximately one million square feet of commercial space, 900 multi-family units, and 830 single-family residential lots.
Stratus is a diversified real estate company engaged in the development, marketing and management of real estate in the Austin, Texas area.
____________________________
CAUTIONARY STATEMENT : This press release contains certain forward-looking statements regarding sales and development. Important factors that might cause future results to differ from those projections include refinancing agreements, regulatory approvals and environmental regulations are described in more detail in Stratus ’ 2002 Annual Report on Form 10-K filed with the Securities and Exchange Commission.
A copy of this release is available or on our web site at http://www.stratusp roperties ..com.
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STRATUS PROPERTIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended March 31, |
||||||
2003 |
2002 | |||||
(In Thousands, Except Per Share Amounts) | ||||||
Revenues: | ||||||
Real estate | $ | 1,280 | $ | 1,025 | ||
Rental income a |
908 |
262 | ||||
Other |
508 |
457 |
||||
Total revenues |
2,696 |
1,744 |
||||
Cost of sales: |
||||||
Real estate, net | 897 | 891 | ||||
Rental a |
571 |
114 | ||||
Depreciation |
317 |
96 |
a | |||
Total cost of sales |
1,785 |
1,101 | ||||
General and administrative expenses |
1,062 |
1,183 |
||||
Total costs and expenses |
2,847 |
2,284 |
||||
Operating loss |
(151 |
) |
(540 | ) | ||
Interest expense, net | (287 | ) | (48 | ) | ||
Interest income | 98 | 250 | ||||
Equity in unconsolidated affiliates’ income |
- | 418 | b | |||
Other income |
- |
286 | c | |||
Net income (loss) |
$ |
(340 |
) |
$ |
366 |
|
Reconciliation of net income (loss) to net income (loss) attributable to common shareholders: | ||||||
Net income (loss) | $ | (340 | ) | $ | 366 | |
Discount on purchase of mandatorily redeemable preferred stock |
- | 2,367 | d | |||
Net income (loss) attributable to common shareholders |
$ |
(340 |
) |
$ |
2,733 |
|
Net income (loss) per share of common stock: | ||||||
Basic |
$(0.05 |
) |
$0.38 |
|||
Diluted |
$(0.05 |
) |
$0.35 |
|||
Average shares outstanding: |
||||||
Basic |
7,122 |
7,113 |
||||
Diluted |
7,122 |
7,804 |
||||
a.
Results during 2003 include the income and expenses for three months of activity for the two office buildings acquired from Olympus Real Estate Corporation in February 2002, as well as the results of the 7500 Rialto Drive office building, where construction was substantially completed during the third quarter of 2002.
b.
Includes $0.3 million of income associated with the third installment of the sale of the Schramm Ranch tract.
c.
Represents the gain on the sale of Stratus’ 49.9 percent interest in the Walden Partnership to Olympus in February 2002.
d.
In connection with the transactions that concluded its business relationship with Olympus, Stratus purchased its $10.0 million of mandatorily redeemable preferred stock held by Olympus for $7.6 million. Accounting standards require that this amount be included in net income attributable to common shareholders.
STRATUS PROPERTIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, | December 31, | |||||||
2003 | 2002 | |||||||
(In Thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents (including restricted cash of $0.8 million at March 31, 2003 and $0.4 million at December 31, 2002) |
| $ | 1,476 | $ | 1,361 | |||
Accounts receivable | 380 | 654 | ||||||
Current portion of notes receivable from property sales | 60 | 60 | ||||||
Prepaid expenses | 90 |
| 146 | |||||
Total current assets | 2,006 | 2,221 | ||||||
Real estate and facilities, net | 112,907 | 110,761 | ||||||
Rental properties, net | 22,746 | 22,422 | ||||||
Investments in and advances to unconsolidated affiliates | 191 | 191 | ||||||
Notes receivable from property sales, net of current portion | 1,769 | 2,103 | ||||||
Other assets | 1,877 | 1,742 | ||||||
Total assets |
$ |
141,496 |
$ |
139,440 |
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Accounts payable and accrued liabilities | $ | 1,872 | $ | 1,663 | ||||
Accrued interest, property taxes and other | 1,090 | 3,067 | ||||||
Current portion of borrowings outstanding | 434 | 2,316 | ||||||
Total current liabilities | 3,396 | 7,046 | ||||||
Long-term debt | 48,512 | 42,483 | ||||||
Other liabilities | 3,283 | 3,292 | ||||||
Stockholders' equity |
| 86,305 |
| 86,619 | ||||
Total liabilities and stockholders' equity |
$ |
141,496 |
$ |
139,440 |
||||
STRATUS PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
2003 | 2002 | |||||||
(In Thousands) | ||||||||
Cash flow from operating activities: | ||||||||
Net income (loss) | $ | (340 | ) | $ | 366 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 317 | 96 | ||||||
Cost of real estate sold | 319 | 302 | ||||||
Equity in unconsolidated affiliates’ income | - | (418 | ) | |||||
Gain on sale of Stratus’ 50 percent interest in Walden Partnership | - | (286 | ) | |||||
Amortization of deferred compensation | 30 | - | ||||||
(Increase) decrease in working capital: | ||||||||
Accounts receivable and prepaid expenses | 330 | 105 | ||||||
Accounts payable and accrued liabilities | (1,776 | ) | (1,609 | ) | ||||
Long-term receivable and other | 190 | 869 | ||||||
Net cash used in operating activities |
| (930 | ) |
| (575 | ) | ||
Cash flow from investing activities: | ||||||||
Real estate and facilities, net of cost of real estate sold and municipal utility district reimbursements | (3,106 | ) | (2,125 | ) | ||||
Net cash acquired from Barton Creek and 7000 West Joint Ventures | - | 1,067 | ||||||
Proceeds from the sale of Stratus’ 50 percent interest in the Walden Partnership | - | 3,141 | ||||||
Acquisition of Olympus’ interest in the Barton Creek and 7000 West Joint Ventures | - | (3,858 | ) | |||||
Net cash used in investing activities |
| (3,106 | ) |
| (1,775 | ) | ||
Cash flow from financing activities: | ||||||||
Borrowings under revolving credit facility, net | 6,123 | 6,259 | ||||||
Proceeds from 7500 Rialto Dr. project loan | - | 1,104 | ||||||
Payments on 7500 Rialto Dr. project loan | (1,389 | ) | - | |||||
Payments on 7000 West project loan | (587 | ) | (16 | ) | ||||
Repurchase of mandatorily redeemable preferred stock | - | (7,633 | ) | |||||
Exercise of stock options and other | 4 | 41 | ||||||
Net cash provided by (used in) financing activities |
| 4,151 |
| (245 | ) | |||
Net increase (decrease) in cash and cash equivalents | 115 | (2,595 | ) | |||||
Cash and cash equivalents at beginning of year |
| 1,361 |
| 3,705 | ||||
Cash and cash equivalents at end of period | 1,476 | 1,110 | ||||||
Less cash restricted as to use | (760 | ) | (241 | ) | ||||
Unrestricted cash and cash equivalents at end of period |
$ |
716 |
$ |
869 |
||||