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): November 3, 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 12. Results of Operations and Financial Condition
Stratus Properties Inc. issued a press release dated November 3, 2003 announcing its third-quarter and nine months 2003 results and certain recent developments (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: November 3, 2003
Stratus Properties Inc.
Exhibit Index
Exhibit
Number
99.1
Press Release dated November 3, 2003 Stratus Properties Inc. Reports Third-Quarter And Nine Months 2003 Results And Recent Developments.
NEWS RELEASE
NASDAQ Symbol: "STRS"
Stratus Properties Inc.
Financial and Media Contact:
98 San Jacinto Blvd. Suite 220
William H. Armstrong
Austin, Texas 78701
(512) 478-5788
STRATUS PROPERTIES INC. REPORTS
THIRD-QUARTER AND NINE MONTHS 2003 RESULTS
AND RECENT DEVELOPMENTS
HIGHLIGHTS
*
On August 1, 2003, Stratus sold all of its 142 acres of residential real estate within the Lantana development in southwest Austin for $4.6 million.
*
In July 2003, Barton Creek Municipal Utility District No. 4 issued $5.0 million in revenue bonds, of which Stratus received approximately $3.8 million as reimbursement for a portion of Stratus' previous infrastructure work within the Barton Creek community.
*
During the third quarter, Stratus sold a 1.5-acre retail tract at its Circle C development for $1.2 million and sold two residential estate lots at the Mirador subdivision within the Barton Creek community for $0.5 million.
SUMMARY FINANCIAL RESULTS |
Third Quarter |
Nine Months |
||||||||||||
2003 |
2002 |
2003 |
2002 |
|||||||||||
(In thousands, except per share amounts) |
||||||||||||||
Revenues |
$ |
7,622 |
$ |
4,579 |
$ |
11,817 |
$ |
9,900 |
||||||
Operating income (loss) |
1,855 |
(88 |
) |
662 |
(176 |
) |
||||||||
Net income (loss) |
2,220 |
(89 |
) |
719 |
653 |
|||||||||
Discount on purchase of mandatorily redeemable preferred stock |
|
- |
- |
2,367 |
||||||||||
Net income (loss) applicable to common stock |
2,220 |
(89 |
) |
719 |
3,020 |
|||||||||
Diluted net income (loss) per share |
$ |
0.30 |
$ |
(0.01 |
) |
$ |
0.10 |
$ |
0.41 |
|||||
Diluted average shares outstanding |
7,346 |
7,116 |
7,297 |
7,442 |
||||||||||
AUSTIN, TX, November 3 , 2003 - Stratus Properties Inc. (NASDAQ:STRS) reported net income of $2.2 million, $0.30 per share, for the third quarter of 2003 compared to a net loss of $0.1 million, $0.01 per share, for the third quarter of 2002. For the nine months ended September 30, 2003, Stratus reported net income of $0.7 million, $0.10 per share, compared with net income applicable to common stock of $3.0 million, $0.41 per share, for the nine months ended September 30, 2002. Net income applicable to common stock for the nine months ended September 30, 2002, included a $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 in Stratus' balance sheet, is required to be considered in the determination of earnings per share under accounting standards.
Revenues. Stratus' revenues for the third quarter of 2003 totaled $7.6 million, which included $4.6 million for the sale of its entire 142 acres of residential real estate within the Lantana development in southwest Austin, $1.2 million for the sale of a 1.5-acre retail tract within the Circle C development, $1.0 million of rental income associated with Stratus' three office buildings and $0.5 million for the sale of two residential estate lots at the Mirador subdivision within the Barton Creek community. During the third quarter of 2003, Stratus had other revenue totaling $0.3 million, which included management fees and sales commissions totaling $0.1 million and the sale to third parties of $0.2 million of development fee credits, which were granted to Stratus by the City of Austin (the City) in August 2002 in accordance with the Circle C Development Agreement. In July 2003, Barton Creek Municipal Utility District No. 4 issued $5.0 million in bonds, of which Stratus received approximately $3.8 million during the third quarter of 2003 representing a partial reimbursement of its previous infrastructure expenditures within the Barton Creek community.
Stratus' revenues for the third quarter of 2002 totaled $4.6 million. These revenues included the sale of 11 acres of commercial real estate in Houston, Texas, for $1.4 million; the sale of a 9-acre tract within the Circle C community to the City for the construction of a fire station for $0.7 million; two residential estate lot sales at the Mirador subdivision and one residential estate lot sale at the Escala Drive subdivision within the Barton Creek community for $1.6 million and management fees and sales commissions totaling $0.1 million. Stratus also received rental income of $0.8 million associated with its two 7000 West office buildings in the Lantana project in southwest Austin.
Development Activities. During the third quarter of 2003, Stratus began construction of four condominium units at Calera Court, the initial phase of the "Calera Drive" subdivision within the Barton Creek community. The Calera Court condominium project includes 17 courtyard homes on 19 acres. The second phase of Calera Drive, consisting of 53 single-family lots, has received final plat and construction permit approval. Construction of the lots, many of which adjoin the Fazio Canyons Golf Course, is expected to begin in 2004. Development of the last phase of Calera Drive, which will include approximately 70 single-family lots, is not expected to commence until after 2004. Funding for the construction of condominium units at Calera Court will be provided by a new $2.0 million project loan, which Stratus finalized with Comerica Bank-Texas in October 2003. The project loan, which matures in November 2005, is secured by the condominium units at Calera Court.
Stratus also has commenced development activities in the Circle C development based on the entitlements set forth in its 2002 Circle C Development Agreement with the City. The preliminary plan has been filed and approved for Meridian, an 800-lot residential development at Circle C. Stratus is processing a final plat and construction plan for the first phase of homesites at Meridian. In addition, several retail site plans at Circle C are currently proceeding through the approval process, and some have already received final City approval. The 2002 Circle C Development 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 acquisition, development, management and sale of commercial, multi-family and residential real estate properties located in the Austin, Texas area.
____________________________
CAUTIONARY STATEMENT: This press release contains certain forward-looking statements regarding sales and development and expected reimbursements of infrastructure expenditures. Important factors that might cause future results to differ from those projections include refinancing agreements, regulatory approvals and environmental regulations as 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 on our web site at http://www.stratusproperties.com.
#
#
#
STRATUS PROPERTIES INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended |
Nine Months Ended | |||||||||||
September 30, |
September 30, | |||||||||||
2003 |
2002 |
2003 |
2002 | |||||||||
(In Thousands, Except Per Share Amounts) | ||||||||||||
Revenues: | ||||||||||||
Real estate |
$ |
6,305 |
$ |
3,626 |
$ |
7,640 |
$ |
7,266 | ||||
Rental income a |
951 |
817 |
2,799 |
1,731 | ||||||||
Other |
366 |
136 |
1,378 |
903 | ||||||||
Total revenues |
7,622 |
4,579 |
11,817 |
9,900 | ||||||||
Cost of sales: | ||||||||||||
Real estate, net |
3,860 |
2,759 |
5,335 |
4,932 | ||||||||
Rental a |
626 |
606 |
1,775 |
1,159 | ||||||||
Depreciation and amortization a |
329 |
244 |
978 |
571 | ||||||||
Total cost of sales |
4,815 |
3,609 |
8,088 |
6,662 | ||||||||
General and administrative expenses |
952 |
1,058 |
3,067 |
3,414 | ||||||||
Total costs and expenses |
|
5,767 |
|
4,667 |
|
11,155 |
|
10,076 | ||||
Operating income (loss) |
1,855 |
(88 |
) |
662 |
(176 |
) | ||||||
Interest expense, net |
(202 |
) |
(167 |
) |
(674 |
) |
(379 |
) | ||||
Interest income |
|
567 |
b |
|
166 |
b |
|
702 |
b |
|
550 |
b |
Equity in unconsolidated affiliates income |
- |
- |
29 |
372 |
c | |||||||
Other income |
- |
- |
- |
286 |
d | |||||||
Net income (loss) |
$ |
2,220 |
$ |
(89 |
) |
$ |
719 |
$ |
653 | |||
Reconciliation of net income (loss) to net income (loss) applicable to common stock: | ||||||||||||
Net income (loss) |
$ |
2,220 |
$ |
(89 |
) |
$ |
719 |
$ |
653 | |||
Discount on purchase of mandatorily redeemable preferred stock |
- |
- |
- |
2,367 |
e | |||||||
Net income (loss) applicable to common stock |
$ |
2,220 |
$ |
(89 |
) |
$ |
719 |
$ |
3,020 | |||
Net income (loss) per share of common stock: | ||||||||||||
Basic |
$0.31 |
$(0.01 |
) |
$0.10 |
$0.42 | |||||||
Diluted |
$0.30 |
$(0.01 |
) |
$0.10 |
$0.41 | |||||||
Weighted average shares outstanding: | ||||||||||||
Basic |
7,123 |
7,116 |
7,123 |
7,116 | ||||||||
Diluted |
7,346 |
7,116 |
7,297 |
7,442 | ||||||||
a.
Results include the income and expenses for the two office buildings in which Stratus acquired Olympus Real Estate Corporations interest in February 2002, as well as for the 7500 Rialto Drive office building, where construction was substantially completed during the third quarter of 2002 and rent was first received in the first quarter of 2003.
b.
Includes interest on Municipal Utility District reimbursements totaling $0.5 million in the third quarter of 2003, $0.1 million in the third quarter of 2002, $0.6 million during the first nine months of 2003 and $0.2 million during the first nine months of 2002.
c.
Primarily reflects income associated with the Schramm Ranch tract sales at the Lakeway Project.
d.
Represents the gain on the sale of Stratus 49.9 percent interest in the Walden Partnership to Olympus in February 2002.
e.
In connection with the transactions that concluded its 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 applicable to common stock.
STRATUS PROPERTIES INC.
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
September 30, |
December 31, | |||||||
2003 |
2002 | |||||||
(In Thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents (including restricted cash of $0.2 million at September 30, 2003 and $0.4 million at December 31, 2002) |
$ |
2,040 |
$ |
1,361 | ||||
Accounts receivable |
110 |
654 | ||||||
Current portion of notes receivable from property sales |
503 |
60 | ||||||
Prepaid expenses |
312 |
|
146 | |||||
Total current assets |
2,965 |
2,221 | ||||||
Real estate and facilities, net |
112,082 |
110,761 | ||||||
Rental properties, net |
22,308 |
22,422 | ||||||
Other assets |
1,944 |
1,742 | ||||||
Notes receivable from property sales, net of current portion |
174 |
2,103 | ||||||
Investments in and advances to unconsolidated affiliates |
- |
191 | ||||||
Total assets |
$ |
139,473 |
$ |
139,440 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
Accounts payable and accrued liabilities |
$ |
2,009 |
$ |
1,663 | ||||
Accrued interest, property taxes and other |
2,992 |
3,067 | ||||||
Current portion of borrowings outstanding |
434 |
2,316 | ||||||
Total current liabilities |
5,435 |
7,046 | ||||||
Long-term debt |
43,322 |
42,483 | ||||||
Other liabilities |
3,294 |
3,292 | ||||||
Stockholders' equity |
|
87,422 |
|
86,619 | ||||
Total liabilities and stockholders' equity |
$ |
139,473 |
$ |
139,440 | ||||
STRATUS PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended | ||||||||
September 30, | ||||||||
2003 |
2002 | |||||||
(In Thousands) | ||||||||
Cash flow from operating activities: | ||||||||
Net income |
$ |
719 |
$ |
653 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization |
978 |
571 | ||||||
Cost of real estate sold |
4,494 |
2,950 | ||||||
Equity in unconsolidated affiliates income |
(29 |
) |
(372 |
) | ||||
Gain on sale of Stratus interest in Walden Partnership |
- |
(286 |
) | |||||
Amortization of deferred compensation |
88 |
32 | ||||||
(Increase) decrease in working capital: | ||||||||
Accounts receivable and other |
383 |
2 | ||||||
Accounts payable and accrued liabilities |
266 |
(400 |
) | |||||
Long-term receivable and other |
1,280 |
3,362 | ||||||
Distribution of unconsolidated affiliates income |
29 |
278 | ||||||
Net cash provided by operating activities |
|
8,208 |
|
6,790 | ||||
Cash flow from investing activities: | ||||||||
Real estate and facilities, net of municipal utility district reimbursements |
(6,680 |
) |
(9,845 |
) | ||||
Net cash acquired from Barton Creek and 7000 West Joint Ventures |
- |
1,067 | ||||||
Proceeds from the sale of Stratus interest in the Walden Partnership |
- |
3,141 | ||||||
Acquisition of Olympus interest in the Barton Creek and 7000 West Joint Ventures |
- |
(3,858 |
) | |||||
Distributions from Lakeway Project |
191 |
1,239 | ||||||
Net cash used in investing activities |
|
(6,489 |
) |
|
(8,256 |
) | ||
Cash flow from financing activities: | ||||||||
Borrowings under revolving credit facility, net |
1,145 |
1,453 | ||||||
Borrowings on term loan component of credit facility |
- |
4,645 | ||||||
Payments on term loan portion of credit facility |
(777 |
) |
(1,497 |
) | ||||
(Payments on) proceeds from 7500 Rialto project loan |
(693 |
) |
1,966 | |||||
Payments on 7000 West project loan |
(719 |
) |
(127 |
) | ||||
Repurchase of mandatorily redeemable preferred stock |
- |
(7,633 |
) | |||||
Exercise of stock options and other |
4 |
47 | ||||||
Net cash used in financing activities |
|
(1,040 |
) |
|
(1,146 |
) | ||
Net increase (decrease) in cash and cash equivalents |
679 |
(2,612 |
) | |||||
Cash and cash equivalents at beginning of year |
|
1,361 |
|
3,705 | ||||
Cash and cash equivalents at end of period |
2,040 |
1,093 | ||||||
Less cash restricted as to use |
(224 |
) |
(234 |
) | ||||
Unrestricted cash and cash equivalents at end of period |
$ |
1,816 |
$ |
859 |