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): March 30, 2004
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 March 30, 2004, announcing its fourth-quarter 2003 results and certain recent developments (see exhibit 99).
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: March 30, 2004
Stratus Properties Inc.
Exhibit Index
Exhibit
Number
99
Press release dated March 30, 2004, titled “Stratus Properties Inc. Reports Fourth-Quarter and Twelve Months 2003 Results.”
NEWS RELEASE
NASDAQ Symbol: "STRS"
Stratus Properties Inc.
Financial and Media Contact:
98 San Jacinto Blvd. Suite 220
William H. Armstrong, III
Austin, Texas 78701
(512) 478-5788
STRATUS PROPERTIES INC. REPORTS
FOURTH-QUARTER AND TWELVE MONTHS 2003 RESULTS
HIGHLIGHTS
*
In December 2003, Stratus sold a 23-acre tract within the Circle C community for $1.25 million.
*
In January 2004, Stratus acquired a 234 lot residential project in Plano, Texas, for $7.0 million.
|
Fourth Quarter |
Twelve Months | |||||||||||||
|
2003 |
2002 |
2003 |
2002 | |||||||||||
|
(In thousands, except per share amounts) | ||||||||||||||
|
Revenues |
$ |
2,605 |
$ |
1,669 |
$ |
14,422 |
$ |
11,569 | ||||||
|
Operating income (loss) |
(482 |
) |
(970 |
) |
180 |
(1,146 |
) | |||||||
|
Net income (loss) |
(699 |
) |
(1,174 |
) |
20 |
(521 |
) | |||||||
|
Discount on purchase of mandatorily redeemable preferred stock |
- |
- |
- |
2,367 | ||||||||||
|
Net income (loss) applicable to common stock |
(699 |
) |
(1,174 |
) |
20 |
1,846 | ||||||||
|
Diluted net income (loss) per share |
(0.10 |
) |
(0.16 |
) |
- |
0.25 | ||||||||
|
Diluted average shares outstanding |
7,128 |
7,116 |
7,315 |
7,392 | ||||||||||
AUSTIN, TX, March 30, 2004 – Stratus Properties Inc. (NASDAQ:STRS) reported a net loss of $0.7 million, $0.10 per share, for the fourth quarter of 2003 compared to a net loss of $1.2 million, $0.16 per share, for the fourth quarter of 2002. For the year ended December 31, 2003, Stratus reported net income of $20,000, $0.00 per share, compared with net income applicable to common stock of $1.8 million, $0.25 per share, for the year ended December 31, 2002. Net income applicable to common stock for the year ended December 31, 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 in Stratus’ balance sheet, is required to be considered in the determination of earnings per share under accounting standards.
Revenues. Stratus’ revenues for the fourth quarter of 2003 totaled $2.6 million, including the sale of a 23-acre tract within the Circle C community for $1.25 million, compared to $1.7 million for the fourth quarter of 2002. Fourth-quarter 2002 real estate revenues included the sale of a four-acre tract within the Circle C community to the City of Austin for $0.4 million and a residential lot sale at the Escala Drive subdivision within the Barton Creek community for $0.3 million. Management fees and sales commissions totaled $0.4 million for the fourth quarter of 2003, compared to $0.2 million for the fourth quarter of 2002. For the fourth quarter of 2003, Stratus also received rental income of $0.9 million from its two fully leased 7000 West office buildings in the Lantana project in southwest Austin, compared to $0.8 million for the fourth quarter of 2002. In addition, Stratus earned $0.1 million in rental income related
to its approximately 40 percent-leased 75,000-square-foot office building at 7500 Rialto Drive for the fourth quarter of 2003. During the first quarter of 2004, Stratus executed leases that brought our 7500 Rialto Drive office building to 94 percent leased.
Development Activities. During the fourth quarter of 2003, Stratus continued its construction of the first four of 17 planned condominium units at Calera Court, the initial phase of the “Calera Drive” subdivision within the Barton Creek community. The second phase of Calera Drive, consisting of 53 single-family lots, has received final plat and construction permit approval. The last phase of Calera Drive, which will include approximately 70 single-family lots has also been approved. Funding for the construction of condominium units at Calera Court will be provided by a new $3.0 million project loan, which Stratus established with Comerica Bank in September 2003. The project loan, which matures in November 2005, is secured by the condominium units at Calera Court.
Stratus also has commenced development activities at Circle C based on the entitlements set forth in its 2002 Circle C Settlement with the City of Austin. 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 permit approvals for the first phase of Meridian. In addition, several retail sites at Circle C have received final City of Austin approvals and are under development. Other retail sites, including a proposed 160,000-square-foot grocery-store-anchored project are proceeding through the City of Austin approval process. The Circle C Settlement permits development of approximately one million square feet of commercial space, 900 multi-family units, and 830 single-family residential lots.
In January 2004, Stratus acquired approximately 68 acres of land in Plano, Texas, for $7.0 million. The property (Deerfield) is zoned and subject to a preliminary subdivision plan for 234 residential lots. In February 2004, Stratus executed an Option Agreement and a Construction Agreement with a national homebuilder. Pursuant to the Option Agreement, Stratus was paid $1.44 million for an option to purchase all 234 lots over 36 monthly take-downs. The net purchase price for each of the 234 lots is $61,500. The $1.44 million option payment is non-refundable, but would be credited to the purchase price. The Construction Agreement requires the homebuilder to complete development of the entire project by March 15, 2007. In financing the development costs, Stratus is subject to a guaranteed maximum price of $5.225 million. In addition, the homebuilder must pay all property taxes and maintenance costs. In February 2004, Stratus entered into a $9.824 mi llion three-year loan agreement with Comerica Bank to finance the acquisition and development of Deerfield.
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 primarily in the Austin, Texas area.
____________________________
CAUTIONARY STATEMENT: This press release contains certain forward-looking statements regarding real estate sales and development. 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’ 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 | Years Ended | ||||||||||||
December 31, | December 31, | ||||||||||||
2003 | 2002 | 2003 | 2002 | ||||||||||
(In Thousands, Except Per Share Amounts) | |||||||||||||
Revenues: | |||||||||||||
Real estate | $ | 1,649 | $ | 913 | $ | 10,667 | $ | 9,082 | |||||
Rental incomea | 956 | 756 | 3,755 | 2,487 | |||||||||
Total revenues |
2,605 | 1,669 | 14,422 | 11,569 | |||||||||
Cost of sales: | |||||||||||||
Real estate, net | 1,079 | 975 | 6,414 | 5,918 | |||||||||
Rentala | 727 | 490 | 2,502 | 1,638 | |||||||||
Depreciation and amortizationa |
335 | 305 | 1,313 | 876 | |||||||||
Total cost of sales | 2,141 | 1,770 | 10,229 | 8,432 | |||||||||
General and administrative expenses |
946 | 869 | 4,013 | 4,283 | |||||||||
Total costs and expenses |
3,087 | 2,639 | 14,242 | 12,715 | |||||||||
Operating income (loss) | (482 | ) | (970 | ) | 180 | (1,146 | ) | ||||||
Interest expense, net | (243 | ) | (260 | ) | (917 | ) | (639 | ) | |||||
Interest income | 26 | 56 | 728 | b | 606 | b | |||||||
Equity in unconsolidated affiliates’ income | - | - | 29 | 372 | c | ||||||||
Other income |
- | - | - | 286 | d | ||||||||
Net income (loss) | (699 | ) | (1,174 | ) | 20 | (521 | ) | ||||||
Discount on purchase of mandatorily redeemable preferred stock |
- | - | - | 2,367 | e | ||||||||
Net income (loss) applicable to common stock |
$ |
(699 | ) |
$ |
(1,174 | ) |
$ |
20 | $ |
1,846 | |||
Net income (loss) per share of common stock: | |||||||||||||
Basic | $(0.10 | ) | $(0.16 | ) | $ - | $0.26 | |||||||
Diluted | $(0.10 | ) | $(0.16 | ) | $ - | $0.25 | |||||||
Average shares outstanding: | |||||||||||||
Basic | 7,128 | 7,116 | 7,124 | 7,116 | |||||||||
Diluted | 7,128 | 7,116 | 7,315 | 7,392 | |||||||||
a.
Results include the income and expenses for the two office buildings in which Stratus acquired Olympus Real Estate Corporation’s (Olympus) 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 $0.6 million for the year ended December 31, 2003, and $0.2 million for the year ended December 31, 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)
December 31, | ||||||||
2003 | 2002 | |||||||
(In Thousands) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents (including restricted cash of $0.2 million at December 31, 2003 and $0.4 million at December 31, 2002) |
| $ | 3,413 | $ | 1,361 | |||
Accounts receivable | 768 | 654 | ||||||
Current portion of notes receivable from property sales | 60 | 60 | ||||||
Prepaid expenses | 194 |
| 146 | |||||
Total current assets | 4,435 | 2,221 | ||||||
Real estate and facilities, net | 113,732 | 110,761 | ||||||
Commercial leasing assets, net | 22,160 | 22,422 | ||||||
Other assets | 1,929 | 1,742 | ||||||
Notes receivable from property sales, net of current portion | 174 | 2,103 | ||||||
Investments in and advances to unconsolidated affiliates | - | 191 | ||||||
Total assets | $ | 142,430 | $ | 139,440 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 1,773 | $ | 1,663 | ||||
Accrued interest, property taxes and other | 3,015 | 3,067 | ||||||
Current portion of borrowings outstanding | 434 | 2,316 | ||||||
Total current liabilities | 5,222 | 7,046 | ||||||
Long-term debt | 47,105 | 42,483 | ||||||
Other liabilities | 3,282 | 3,292 | ||||||
Stockholders' equity |
| 86,821 |
| 86,619 | ||||
Total liabilities and stockholders' equity | $ | 142,430 | $ | 139,440 | ||||
STRATUS PROPERTIES INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Years Ended | ||||||||
December 31, | ||||||||
2003 | 2002 | |||||||
(In Thousands) | ||||||||
Cash flow from operating activities: | ||||||||
Net income (loss) | $ | 20 | $ | (521 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 1,313 | 876 | ||||||
Cost of real estate sold | 4,973 | 3,215 | ||||||
Equity in unconsolidated affiliates’ income | (29 | ) | (372 | ) | ||||
Gain on sale of Stratus’ 50 percent interest in Walden Partnership | - | (286 | ) | |||||
Stock-based compensation | 119 | 88 | ||||||
(Increase) decrease in working capital: | ||||||||
Accounts receivable and prepaid expenses | (162 | ) | 107 | |||||
Accounts payable, accrued liabilities and other | 47 | 131 | ||||||
Long-term notes receivable and other | 1,742 | 3,739 | ||||||
Distribution of unconsolidated affiliates’ income | 29 | 278 | ||||||
Net cash provided by operating activities |
| 8,052 |
| 7,255 | ||||
Cash flow from investing activities: | ||||||||
Real estate and facilities, net of cost of real estate sold and municipal utility district reimbursements | (8,995 | ) | (9,905 | ) | ||||
Acquisition of Olympus’ interests in the Barton Creek and 7000 West Joint Ventures, net of cash acquired | - | (2,791 | ) | |||||
Proceeds from the sale of Stratus’ 50 percent interest in the Walden Partnership | - | 3,141 | ||||||
Distributions from Lakeway Project | 191 | 1,239 | ||||||
Net cash used in investing activities |
| (8,804 | ) |
| (8,316 | ) | ||
Cash flow from financing activities: | ||||||||
Borrowings from revolving credit facility, net | 5,037 | 1,385 | ||||||
Borrowings from term loan component of credit facility | - | 4,645 | ||||||
Payments on term loan component of credit facility | (777 | ) | (1,497 | ) | ||||
Borrowings from (repayments of) 7500 Rialto project loan | (735 | ) | 1,966 | |||||
Payments on 7000 West project loan | (785 | ) | (175 | ) | ||||
Repurchase of mandatorily redeemable preferred stock | - | (7,633 | ) | |||||
Proceeds from exercise of stock options, net | 64 | 26 | ||||||
Net cash provided by (used in) financing activities | 2,804 |
| (1,283 | ) | ||||
Net increase (decrease) in cash and cash equivalents | 2,052 | (2,344 | ) | |||||
Cash and cash equivalents at beginning of year |
| 1,361 |
| 3,705 | ||||
Cash and cash equivalents at end of year | 3,413 | 1,361 | ||||||
Less cash restricted as to use | (207 | ) | (388 | ) | ||||
Unrestricted cash and cash equivalents at end of year | $ | 3,206 | $ | 973 | ||||