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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For
the quarterly period ended June 30, 2005
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from            to
 Commission
file numbers 1-12080 and 0-28226
 
 POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
  Georgia
Georgia
(State or other jurisdiction
of incorporation or organization)
    
    58-1550675
58-2053632
(I.R.S. Employer
Identification No.)
 4401 Northside Parkway, Suite 800, Atlanta, Georgia 30327
 (404) 846-5000
  Post Properties, Inc.
    
    Yes
    
    þ
    
    No
    
    oPost Apartment Homes, L.P.
    
    Yes
    
    þ
    
    No
    
    o
  Post Properties, Inc.
    
    Yes
    
    þ
    
    No
    
    oPost Apartment Homes, L.P.
    
    Yes
    
    þ
    
    No
    
    o




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##### Table of Contents



POST PROPERTIES, INC.
POST APARTMENT HOMES, L.P.
 INDEX
 PagePart I FINANCIAL INFORMATIONItem 1 Financial StatementsPOST PROPERTIES, INC.Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004
    
    
    1Consolidated Statements of Operations for the three and six months ended
June 30, 2005 and 2004
    
    
    2Consolidated Statement of Shareholders Equity and Accumulated Earnings
for the six months ended June 30, 2005
    
    
    3Consolidated Statements of Cash Flows for the six months ended June 30,
2005 and 2004
    
    
    4Notes to Consolidated Financial Statements
    
    
    5POST APARTMENT HOMES, L.P.Consolidated Balance Sheets as of June 30, 2005 and December 31, 2004
    
    
    17Consolidated Statements of Operations for the three and six months ended
June 30, 2005 and 2004
    
    
    18Consolidated Statement of Partners Equity for the six months ended June
30, 2005
    
    
    19Consolidated Statements of Cash Flows for the six months ended June 30,
2005 and 2004
    
    
    20Notes to Consolidated Financial Statements
    
    
    21Item 2 Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    33Item 3 Quantitative and Qualitative Disclosures about Market Risk
    
    
    48Item 4 Controls and Procedures
    
    
    48Part II OTHER INFORMATION
    
    
    49Item 1 Legal Proceedings
    
    
    49Item 2 Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    50Item 3 Defaults Upon Senior Securities
    
    
    50Item 4 Submission of Matters to a Vote of Security Holders
    
    
    50Item 5 Other Information
    
    
    50Item 6 Exhibits
    
    
    51Signatures
    
    
    52Exhibit Index
    
    
    54EX-10.1 PURCHASE AND SALE AGREEMENTEX-31.1 SECTION 302, CERTIFICATION OF THE CEOEX-31.2 SECTION 302, CERTIFICATION OF THE CFOEX-32.1 SECTION 906, CERTIFICATION OF THE CEOEX-32.2 SECTION 906, CERTIFICATION OF THE CFO




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POST PROPERTIES, INC.
 
 CONSOLIDATED BALANCE SHEETS  (In thousands, except per share data)
 June 30,
    
    December 31,2005
    
    2004(Unaudited)AssetsReal estate assetsLand
    
    $
    270,167
    
    
    $
    266,520Building and improvements
    
    
    1,824,414
    
    
    
    1,887,514Furniture, fixtures and equipment
    
    
    208,348
    
    
    
    214,954Construction in progress
    
    
    34,291
    
    
    
    19,527Land held for future development
    
    
    51,972
    
    
    
    18,9102,389,192
    
    
    
    2,407,425Less: accumulated depreciation
    
    
    (489,812
    )
    
    
    (498,367
    )Assets held for sale, net of accumulated depreciation of $46,506 and
$26,332 at June 30, 2005 and December 31, 2004, respectively
    
    
    72,073
    
    
    
    68,661Total real estate assets
    
    
    1,971,453
    
    
    
    1,977,719Investments in and advances to unconsolidated real estate entities
    
    
    34,441
    
    
    
    21,320Cash and cash equivalents
    
    
    4,169
    
    
    
    123Restricted cash
    
    
    4,321
    
    
    
    1,844Deferred charges, net
    
    
    13,462
    
    
    
    15,574Other assets
    
    
    41,855
    
    
    
    37,262Total assets
    
    $
    2,069,701
    
    
    $
    2,053,842Liabilities and shareholders equityIndebtedness, including $47,500 and $34,060 of debt secured by assets
held for sale at June 30, 2005 and December 31, 2004, respectively
    
    $
    1,111,936
    
    
    $
    1,129,478Accounts payable and accrued expenses
    
    
    74,407
    
    
    
    58,837Dividend and distribution payable
    
    
    19,065
    
    
    
    19,203Security deposits and prepaid rents
    
    
    9,905
    
    
    
    7,236Accrued interest payable
    
    
    6,008
    
    
    
    7,677Total liabilities
    
    
    1,221,321
    
    
    
    1,222,431Minority interest of common unitholders in Operating Partnership
    
    
    41,687
    
    
    
    43,341Commitments and contingenciesShareholders equityPreferred stock, $.01 par value, 20,000 authorized:8 1/2 % Series A Cumulative Redeemable Shares, liquidation
preference $50 per share, 900 shares issued and outstanding
    
    
    9
    
    
    
    97 5/8 % Series B Cumulative Redeemable Shares, liquidation
preference $25 per share, 2,000 shares issued and outstanding
    
    
    20
    
    
    
    20Common stock, $.01 par value, 100,000 authorized:40,372 and 40,164 shares issued, 40,035 and 40,164 shares
outstanding at June 30, 2005 and December 31, 2004, respectively
    
    
    403
    
    
    
    401Additional paid-in capital
    
    
    779,907
    
    
    
    775,221Accumulated earnings
    
    
    48,330
    
    
    
    25,075Accumulated other comprehensive income (loss)
    
    
    (6,840
    )
    
    
    (8,668
    )Deferred compensation
    
    
    (4,055
    )
    
    
    (3,988
    )817,774
    
    
    
    788,070Less common stock in treasury, at cost, 337 and 0 shares
at June 30, 2005 and December 31, 2004, respectively
    
    
    (11,081
    )
    
    
    Total shareholders equity
    
    
    806,693
    
    
    
    788,070Total liabilities and shareholders equity
    
    $
    2,069,701
    
    
    $
    2,053,842
 The accompanying notes are an integral part of these consolidated financial statements.
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POST PROPERTIES, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands, except per share data)
 Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004RevenuesRental
    
    $
    68,744
    
    
    $
    65,827
    
    
    $
    136,471
    
    
    $
    130,779Other property revenues
    
    
    4,316
    
    
    
    3,986
    
    
    
    8,098
    
    
    
    7,646Other
    
    
    61
    
    
    
    47
    
    
    
    132
    
    
    
    122Total revenues
    
    
    73,121
    
    
    
    69,860
    
    
    
    144,701
    
    
    
    138,547ExpensesProperty operating and maintenance (exclusive of items
shown separately below)
    
    
    32,973
    
    
    
    30,621
    
    
    
    65,766
    
    
    
    61,093Depreciation
    
    
    19,414
    
    
    
    19,689
    
    
    
    38,946
    
    
    
    39,312General and administrative
    
    
    5,433
    
    
    
    5,476
    
    
    
    10,728
    
    
    
    10,119Development costs and other
    
    
    740
    
    
    

    381
    
    
    
    1,837
    
    
    
    916Total expenses
    
    
    58,560
    
    
    
    56,167
    
    
    
    117,277
    
    
    
    111,440Operating Income
    
    
    14,561
    
    
    
    13,693
    
    
    
    27,424
    
    
    
    27,107Interest income
    
    
    189
    
    
    
    213
    
    
    
    354
    
    
    
    393Interest expense
    
    
    (15,206
    )
    
    
    (15,942
    )
    
    
    (30,885
    )
    
    
    (31,362
    )Amortization of deferred financing costs
    
    
    (1,029
    )
    
    
    (1,092
    )
    
    
    (2,717
    )
    
    
    (2,208
    )Equity in income of unconsolidated real estate entities
    
    
    553
    
    
    
    207
    
    
    
    701
    
    
    
    422Gain on sale of technology investment
    
    
    
    
    
    
    
    
    
    
    5,267
    
    
    
    Minority interest in consolidated property partnerships
    
    
    64
    
    
    
    248
    
    
    
    178
    
    
    
    432Minority interest of preferred unitholders
    
    
    
    
    
    
    (1,400
    )
    
    
    
    
    
    
    (2,800
    )Minority interest of common unitholders
    
    
    159
    
    
    
    365
    
    
    
    200
    
    
    
    964Income (loss) from continuing operations
    
    
    (709
    )
    
    
    (3,708
    )
    
    
    522
    
    
    
    (7,052
    )Discontinued operationsIncome from discontinued operations,
net of minority interest
    
    
    1,529
    
    
    
    4,137
    
    
    
    4,637
    
    
    
    9,381Gains on sales of real estate assets, net of minority
interest and provision for income taxes
    
    
    58,919
    
    
    
    104,530
    
    
    
    59,258
    
    
    
    106,039Loss in early extinguishment of indebtedness associated
with property sales, net of minority interest
    
    
    (1,296
    )
    
    
    (3,849
    )
    
    
    (1,296
    )
    
    
    (3,849
    )Income from discontinued operations
    
    
    59,152
    
    
    
    104,818
    
    
    
    62,599
    
    
    
    111,571Net income
    
    
    58,443
    
    
    
    101,110
    
    
    
    63,121
    
    
    
    104,519Dividends to preferred shareholders
    
    
    (1,909
    )
    
    
    (1,909
    )
    
    
    (3,819
    )
    
    
    (4,507
    )Redemption costs on preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,716
    )Net income available to common shareholders
    
    $
    56,534
    
    
    $
    99,201
    
    
    $
    59,302
    
    
    $
    98,296Per common share data  BasicLoss from continuing operations (net of preferred dividends
and redemption costs)
    
    $
    (0.07
    )
    
    $
    (0.14
    )
    
    $
    (0.08
    )
    
    $
    (0.34
    )Income from discontinued operations
    
    
    1.48
    
    
    
    2.63
    
    
    
    1.56
    
    
    
    2.82Net income available to common shareholders
    
    $
    1.42
    
    
    $
    2.49
    
    
    $
    1.48
    
    
    $
    2.48Weighted
average common shares outstanding  basic
    
    
    39,930
    
    
    
    39,807
    
    
    
    40,048
    
    
    
    39,595Per common share data  DilutedLoss from continuing operations (net of preferred dividends
and redemption costs)
    
    $
    (0.07
    )
    
    $
    (0.14
    )
    
    $
    (0.08
    )
    
    $
    (0.34
    )Income from discontinued operations
    
    
    1.48
    
    
    
    2.63
    
    
    
    1.56
    
    
    
    2.82Net income available to common shareholders
    
    $
    1.42
    
    
    $
    2.49
    
    
    $
    1.48
    
    
    $
    2.48Weighted
average common shares outstanding  diluted
    
    
    39,930
    
    
    
    39,807
    
    
    
    40,048
    
    
    
    39,595Dividends declared
    
    $
    0.45
    
    
    $
    0.45
    
    
    $
    0.90
    
    
    $
    0.90
 The accompanying notes are an integral part of these consolidated financial statements.
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POST PROPERTIES, INC.
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND
ACCUMULATED EARNINGS  (In thousands, except per share data)
 AccumulatedAdditional
    
    
    
    
    
    OtherPreferred
    
    Common
    
    Paid-in
    
    Accumulated
    
    Comprehensive
    
    Deferred
    
    TreasuryStock
    
    Stock
    
    Capital
    
    Earnings
    
    Income (Loss)
    
    Compensation
    
    Stock
    
    TotalShareholders Equity and Accumulated Earnings,
December 31, 2004
    
    $
    29
    
    
    $
    401
    
    
    $
    775,221
    
    
    $
    25,075
    
    
    $
    (8,668
    )
    
    $
    (3,988
    )
    
    $
    
    
    
    $
    788,070Comprehensive incomeNet income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,121
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,121Net change in derivative value, net of
minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,828
    
    
    
    
    
    
    
    
    
    
    
    1,828Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,949Proceeds from employee stock purchase and
stock option plans
    
    
    
    
    
    
    2
    
    
    
    2,962
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,653
    
    
    
    10,617Adjustment for minority interest of
unitholders in Operating Partnership upon
conversion of units into common shares and at
dates of capital transactions
    
    
    
    
    
    
    
    
    
    
    285
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,945
    
    
    
    3,230Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    341
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    341Restricted stock issuances, net of forfeitures
    
    
    
    
    
    
    
    
    
    
    1,098
    
    
    
    
    
    
    
    
    
    
    
    (702
    )
    
    
    (396
    )
    
    
    Amortization of deferred compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    635
    
    
    
    
    
    
    
    635Treasury stock acquisitions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,283
    )
    
    
    (21,283
    )Dividends to preferred shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,819
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,819
    )Dividends to common shareholders
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,047
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,047
    )Shareholders Equity and Accumulated Earnings,
June 30, 2005
    
    $
    29
    
    
    $
    403
    
    
    $
    779,907
    
    
    $
    48,330
    
    
    $
    (6,840
    )
    
    $
    (4,055
    )
    
    $
    (11,081
    )
    
    $
    806,693
 The accompanying notes are an integral part of these consolidated financial statements.
 -3-




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POST PROPERTIES, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS  (In thousands, except per share data)
 Six months endedJune 30,2005
    
    2004Cash Flows From Operating ActivitiesNet income
    
    $
    63,121
    
    
    $
    104,519Adjustments to reconcile net income to net cash provided by operating activities:Depreciation
    
    
    38,946
    
    
    
    42,365Amortization of deferred financing costs
    
    
    2,717
    
    
    
    2,208Minority interest of preferred unitholders in Operating Partnership
    
    
    
    
    
    
    2,800Minority interest of common unitholders in Operating Partnership
    
    
    (200
    )
    
    
    (964
    )Minority interest in discontinued operations
    
    
    3,784
    
    
    
    8,102Gains on sales of real estate assets  discontinued operations
    
    
    (62,839
    )
    
    
    (113,739
    )Gain on sale of technology investment
    
    
    (5,267
    )
    
    
    Asset impairment charge
    
    
    
    
    
    
    626Equity in income of unconsolidated entities, net of distributions
    
    
    339
    
    
    
    238Stock-based compensation
    
    
    1,022
    
    
    
    865Loss on early extinguishment of debt
    
    
    1,374
    
    
    
    4,128Changes in assets, (increase) decrease in:Restricted cash
    
    
    (2,477
    )
    
    
    (20
    )Other assets
    
    
    (436
    )
    
    
    (1,835
    )Deferred charges
    
    
    (327
    )
    
    
    1,361Changes in liabilities, increase (decrease) in:Accrued interest payable
    
    
    (1,669
    )
    
    
    (34
    )Accounts payable and accrued expenses
    
    
    9,891
    
    
    
    8,446Security deposits and prepaid rents
    
    
    2,669
    
    
    
    (566
    )Net cash provided by operating activities
    
    
    50,648
    
    
    
    58,500Cash Flows From Investing ActivitiesConstruction and acquisition of real estate assets, net of payables
    
    
    (86,911
    )
    
    
    (37,663
    )Net proceeds from sales of real estate assets
    
    
    93,398
    
    
    
    138,637Proceeds from sale of technology investment
    
    
    5,267
    
    
    
    Recurring capital expenditures
    
    
    (4,822
    )
    
    
    (5,193
    )Non-recurring capital expenditures
    
    
    (2,029
    )
    
    
    (2,546
    )Revenue generating capital expenditures
    
    
    
    
    
    
    (26
    )Corporate additions and improvements
    
    
    (978
    )
    
    
    (287
    )Distributions from (investments in and advances to) unconsolidated entities
    
    
    (13,541
    )
    
    
    52,287Net cash provided by (used in) investing activities
    
    
    (9,616
    )
    
    
    145,209Cash Flows From Financing ActivitiesPayments on indebtedness
    
    
    (189,267
    )
    
    
    (14,354
    )Proceeds from indebtedness
    
    
    100,000
    
    
    
    35,000Payments of financing costs
    
    
    (976
    )
    
    
    (4,262
    )Lines of credit proceeds (repayments), net
    
    
    105,785
    
    
    
    (72,010
    )Treasury stock acquisitions
    
    
    (21,283
    )
    
    
    Redemption of preferred stock
    
    
    
    
    
    
    (50,000
    )Proceeds from employee stock purchase and stock option plans
    
    
    10,617
    
    
    
    2,845Capital
contributions (distributions) of minority interests
    
    
    283
    
    
    
    (1,506
    )Distributions to preferred unitholders
    
    
    
    
    
    
    (2,800
    )Distributions to common unitholders
    
    
    (2,216
    )
    
    
    (2,942
    )Dividends paid to preferred shareholders
    
    
    (3,819
    )
    
    
    (4,507
    )Dividends paid to common shareholders
    
    
    (36,110
    )
    
    
    (35,216
    )Net cash used in financing activities
    
    
    (36,986
    )
    
    
    (149,752
    )Net increase in cash and cash equivalents
    
    
    4,046
    
    
    
    53,957Cash and cash equivalents, beginning of period
    
    
    123
    
    
    
    1,334Cash and cash equivalents, end of period
    
    $
    4,169
    
    
    $
    55,291
 The accompanying notes are an integral part of these consolidated financial statements.
 -4-




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##### Table of Contents



POST PROPERTIES, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 1.
    
    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIESOrganizationPost Properties, Inc. and its subsidiaries develop, own and manage upscale multifamily apartment
communities in selected markets in the United States. As used herein, the term Company
includes Post Properties, Inc. and its subsidiaries, including Post Apartment Homes, L.P. (the
Operating Partnership), unless the context indicates otherwise. The Company, through its
wholly-owned subsidiaries, is the general partner and owns a majority interest in the Operating
Partnership which, through its subsidiaries, conducts substantially all of the on-going
operations of the Company. At June 30, 2005, the Company owned 23,533 apartment units in 59
apartment communities, including 545 apartment units in two apartment communities held in
unconsolidated entities and including 205 apartment units currently under development in one
community. The Company is also developing 145 for-sale condominium units and is converting 382
apartment units in three communities (including one in an unconsolidated entity) into for-sale
condominium units through a taxable REIT subsidiary. At June 30, 2005, approximately 50.1%,
16.9%, 9.0% and 8.5% (on a unit basis) of the Companys operating communities were located in
Atlanta, Dallas, Tampa and the greater Washington, D.C. metropolitan areas, respectively.The Company has elected to qualify and operate as a self-administrated and self-managed real
estate investment trust (REIT) for federal income tax purposes. A REIT is a legal entity which
holds real estate interests and through payments of dividends to shareholders, in practical
effect, is not subject to federal income taxes at the corporate level, except to the extent that
taxable income is earned through its taxable REIT subsidiaries (see note 11).As of June 30, 2005, the Company had outstanding 40,035 shares of common stock and owned the
same number of units of common limited partnership interests (Common Units) in the Operating
Partnership, representing a 94.5% ownership interest in the Operating Partnership. Common Units
held by persons other than the Company totaled 2,333 as of June 30, 2005 and represented a 5.5%
common minority interest in the Operating Partnership. Each Common Unit may be redeemed by the
holder thereof for either one share of Company common stock or cash equal to the fair market
value thereof at the time of redemption, at the option of the Company. The Companys weighted
average common ownership interest in the Operating Partnership was 94.3% and 93.7% for the three
months and 94.3% and 93.2% for the six months ended June 30, 2005 and 2004, respectively.Basis of PresentationThe accompanying unaudited financial statements have been prepared by the Companys management
in accordance with generally accepted accounting principles for interim financial information
and applicable rules and regulations of the Securities and Exchange Commission. Accordingly,
they do not include all of the information and disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion of management, all
adjustments (consisting only of normally recurring adjustments) considered necessary for a fair
presentation have been included. The results of operations for the three and six months ended
June 30, 2005 are not necessarily indicative of the results that may be expected for the full
year. These financial statements should be read in conjunction with the Companys audited
financial statements and notes thereto included in its Annual Report on Form 10-K for the year
ended December 31, 2004. Certain 2004 amounts have been reclassified to conform to the current
years financial statement presentation.Revenue RecognitionSales and the associated gains or losses of real estate assets and for-sale condominiums are
recognized in accordance with the provisions of SFAS No. 66, Accounting for Sales of Real
Estate. For condominium conversion projects, sales and the associated gains for individual
condominium units are recognized upon the closing of the sale transactions, as all conditions
for full profit recognition have been met. In accordance with SFAS No. 144, Accounting for the
Impairment and Disposal of Long-Lived Assets, gains on sales of condominium units at
condominium conversion projects are included in discontinued operations.
 -5-




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##### Table of Contents



POST
PROPERTIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Stock-based Compensation
   Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net income available to common shareholdersAs reported
    
    $
    56,534
    
    
    $
    99,201
    
    
    $
    59,302
    
    
    $
    98,296Stock-based compensation included in
net income as reported, net of
minority interest
    
    
    525
    
    
    
    420
    
    
    
    963
    
    
    
    805Stock-based compensation determined
under the fair value method for all
awards, net of minority interest
    
    
    (532
    )
    
    
    (434
    )
    
    
    (968
    )
    
    
    (839
    )Pro forma
    
    $
    56,527
    
    
    $
    99,187
    
    
    $
    59,297
    
    
    $
    98,262Net income per common share  basicAs reported
    
    $
    1.42
    
    
    $
    2.49
    
    
    $
    1.48
    
    
    $
    2.48Pro forma
    
    $
    1.42
    
    
    $
    2.49
    
    
    $
    1.48
    
    
    $
    2.48Net income per common share  dilutedAs reported
    
    $
    1.42
    
    
    $
    2.49
    
    
    $
    1.48
    
    
    $
    2.48Pro forma
    
    $
    1.42
    
    
    $
    2.49
    
    
    $
    1.48
    
    
    $
    2.48
  Long-term Ground Leases
  -6-




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##### Table of Contents



POST PROPERTIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 2.
    
    INDEBTEDNESSAt June 30, 2005 and December 31, 2004, the Companys indebtedness consisted of the following:
 Payment
    
    
    
    
    
    Maturity
    
    June 30,
    
    December 31,Description
    
    Terms
    
    Interest Rate
    
    Date
    
    2005
    
    2004Unsecured NotesSenior Notes
    
    Int.
    
    
    5.125% - 7.70
    %
    
    2006-2012
    
    $
    485,000
    
    
    $
    385,000Medium Term Notes
    
    Int.
    
    
    6.78
    %
    
    2005
    
    
    25,000
    
    
    
    212,043510,000
    
    
    
    597,043Unsecured Lines of Credit & OtherSyndicated Line of Credit
    
    N/A
    
    LIBOR + 0.75%(1)
    
    2007
    
    
    147,000
    
    
    
    40,000Cash Management Line
    
    N/A
    
    LIBOR + 0.75%
    
    2007
    
    
    9,533
    
    
    
    10,748156,533
    
    
    
    50,748Conventional Fixed Rate (Secured)FNMA
    
    Prin. and Int.
    
    
    6.975
    %(2)
    
    2029
    
    
    98,500
    
    
    
    98,500Other
    
    Prin. and Int.
    
    
    4.27% - 7.69
    %
    
    2007-2013
    
    
    270,908
    
    
    
    273,132369,408
    
    
    
    371,632Tax-Exempt Floating Rate
Bonds (Secured)
    
    Int.
    
    
    2.29
    %(3)
    
    2025
    
    
    75,995
    
    
    
    110,055Total
    
    
    
    
    
    
    
    
    
    $
    1,111,936
    
    
    $
    1,129,478
 
 (1)
    
    Represents stated rate. At June 30, 2005, the weighted average interest rate was
3.82%.(2)
    
    Interest rate is fixed at 6.975%, inclusive of credit enhancement and other fees, to
2009 through an interest rate swap arrangement.(3)
    
    FNMA credit enhanced bond indebtedness. Interest based on FNMA AAA tax-exempt rate
plus credit enhancement and other fees of 0.639%. Interest rate represents the rate at
June 30, 2005 before credit enhancements. The Company has outstanding interest rate cap
arrangements that limit the Companys exposure to increases in the base interest rate to
5%. At June 30, 2005 and December 31, 2004, approximately $47,500 and $34,060,
respectively, of this debt was secured by assets held for sale. In June 2005, the
Company executed an amendment to its master reimbursement agreement with FNMA, which
agreement, among other things, sets forth the Companys payment obligations under its
variable-rate, tax-exempt bond indebtedness. The amendment defers the commencement of
principal repayments under the bonds by five years from the originally scheduled
commencement date. The original maturity date for the bonds remains unchanged and the
amortization schedule of the bonds was changed commensurate with the five-year deferral
of the start of principal amortization. Debt maturities
  Remainder of 2005
    
    $
    28,6522006
    
    
    81,2692007
    
    
    314,726
    (1)2008
    
    
    4,5572009
    
    
    75,901Thereafter
    
    
    606,831$
    1,111,936
 
 (1)
    
    Includes outstanding balances on lines of credit
totaling $156,533. Debt issuances and retirements
    -7-




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##### Table of Contents



POST PROPERTIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 Unsecured Lines of Credit
   3.
    
    INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIESAt June 30, 2005, the Company held investments in three individual limited liability companies
(the Property LLCs) with an institutional investor. Each Property LLC owns a single apartment
community. In March 2005, one of the Property LLCs elected to convert its apartment community
into for-sale condominiums. The Company holds a 35% equity interest in the Property LLCs.The Company accounts for its investments in these Property LLCs using the equity method of
accounting. The excess of the Companys investment over its equity in the underlying net assets
of the Property LLCs was approximately $6,404 at June 30, 2005. This excess investment related
to the two Property LLCs holding apartment communities is being amortized as a reduction to
earnings on a straight-line basis over the lives of the related assets. The excess investment
of $844 at June 30, 2005 related to the Property LLC holding the condominium conversion
community will be recognized as additional cost of sales as the underlying condominiums are
sold. The Company provides real estate services (development, construction and property
management) to the Property LLCs for which it earns fees.The operating results of the Company include its share of net income from the investments in the
Property LLCs. A summary of financial information for the Property LLCs in the aggregate is as
follows:
 June 30,
    
    December 31,Balance Sheet Data
    
    2005
    
    2004Real estate assets, net of accumulated depreciation of
$7,067 and $9,712, respectively
    
    $
    97,225
    
    
    $
    124,072Assets held for sale, net (1)
    
    
    23,889
    
    
    
    Cash and other
    
    
    2,182
    
    
    
    2,797Total assets
    
    $
    123,296
    
    
    $
    126,869Mortgage notes payable
    
    $
    66,999
    
    
    $
    83,468Mortgage notes payable to Company
    
    
    13,661
    
    
    
    Other liabilities
    
    
    1,606
    
    
    
    1,296Total liabilities
    
    
    82,266
    
    
    
    84,764Members equity
    
    
    41,030
    
    
    
    42,105Total liabilities and members equity
    
    $
    123,296
    
    
    $
    126,869Companys equity investment
    
    $
    20,780
    
    
    $
    21,320
 
 (1)
    
    Includes one community, originally containing 121
units, being converted into condominiums through a taxable
REIT subsidiary. -8-




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##### Table of Contents



POST
PROPERTIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Three months ended
    
    Six months endedJune 30,
    
    June 30,Income Statement Data
    
    2005
    
    2004
    
    2005
    
    2004RevenueRental
    
    $
    2,721
    
    
    $
    2,614
    
    
    $
    5,361
    
    
    $
    5,178Other property revenues
    
    
    230
    
    
    
    211
    
    
    
    415
    
    
    
    387Total revenues
    
    
    2,951
    
    
    
    2,825
    
    
    
    5,776
    
    
    
    5,565ExpensesProperty operating and maintenance
    
    
    889
    
    
    
    933
    
    
    
    1,799
    
    
    
    1,836Depreciation and amortization
    
    
    655
    
    
    
    648
    
    
    
    1,308
    
    
    
    1,278Interest
    
    
    688
    
    
    
    688
    
    
    
    1,376
    
    
    
    1,282Total expenses
    
    
    2,232
    
    
    
    2,269
    
    
    
    4,483
    
    
    
    4,396Income from continuing operations
    
    
    719
    
    
    
    556
    
    
    
    1,293
    
    
    
    1,169Discontinued OperationsIncome (loss) from discontinued operations
    
    
    16
    
    
    
    (67
    )
    
    
    (96
    )
    
    
    (164
    )Gains on sales of real estate assets
    
    
    860
    
    
    
    
    
    
    
    855
    
    
    
    Loss on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (273
    )
    
    
    Income from discontinued operations
    
    
    876
    
    
    
    (67
    )
    
    
    486
    
    
    
    (164
    )Net income
    
    $
    1,595
    
    
    $
    489
    
    
    $
    1,779
    
    
    $
    1,005Companys share of net income
    
    $
    553
    
    
    $
    207
    
    
    $
    701
    
    
    $
    422
  Three months
    
    Six monthsended
    
    endedJune 30, 2005
    
    June 30, 2005Condominium revenues, net
    
    $
    4,183
    
    
    $
    4,183Condominium costs and expenses
    
    
    (3,323
    )
    
    
    (3,328
    )Gains on condominium sales
    
    $
    860
    
    
    $
    855
 At June 30, 2005, mortgage notes payable include a $50,000 mortgage note that bears
interest at 4.13%, requires monthly interest payments and annual principal payment of $1 through
2009. Thereafter, the note requires monthly principal and interest payments based on a 25-year
amortization schedule and matures in April 2034. The note is callable by the lender in May 2009
and on each successive fifth year anniversary of the note thereafter. The note is prepayable
without penalty in May 2008. The additional mortgage note payable totaling $17,000 bears
interest at a rate of 4.04% and matures in 2008.In March 2005, one of the Property LLCs elected to convert its apartment community into for-sale
condominiums. As a result of its decision to sell the community through the condominium
conversion process, the Property LLC prepaid its third party mortgage note payable of $16,392
through secured borrowings from the Company. The Property LLC incurred debt prepayment costs
and expenses associated with the write-off of unamortized deferred financing costs totaling $273
in March 2005. The mortgage note payable to the Company has a fixed rate component ($16,392)
bearing interest at 4.28% and a variable rate component bearing interest at LIBOR plus 1.90%.
This note is repayable from the proceeds of condominium sales and matures in February 2008.4.
    
    REAL ESTATE ACQUISITION AND DISPOSITION ACTIVITYAcquisition ActivityIn June 2005, the Company acquired a 319-unit apartment community located in suburban Charlotte,
NC for approximately $38,240, including closing costs and the reimbursement of a fee to
terminate a loan commitment paid for by the seller. Additionally, the Company plans to spend up
to approximately $1,100 to improve the community. The purchase price of this community was
preliminarily allocated to the assets acquired based on their estimated fair values.Disposition ActivityThe Company classifies real estate assets as held for sale after the approval of its investment
committee and after the Company has commenced an active program to sell the assets. At June 30,
2005, the Company had one apartment community, containing 1,738 units, and certain tracts of
land classified as held for sale. In addition, the Company had two communities, originally
containing 261 units, held for sale at June 30, 2005 that are being converted into condominiums
and sold. These real estate assets
 -9-




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##### Table of Contents



POST
PROPERTIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004RevenuesRental
    
    $
    4,855
    
    
    $
    13,199
    
    
    $
    11,839
    
    
    $
    27,504Other property revenues
    
    
    426
    
    
    
    1,186
    
    
    
    1,057
    
    
    
    2,402Total revenues
    
    
    5,281
    
    
    
    14,335
    
    
    
    12,896
    
    
    
    29,906ExpensesProperty operating and maintenance
(exclusive of items shown separately below)
    
    
    2,828
    
    
    
    6,365
    
    
    
    6,088
    
    
    
    12,972Depreciation
    
    
    
    
    
    
    1,488
    
    
    
    
    
    
    
    3,053Interest
    
    
    832
    
    
    
    1,553
    
    
    
    1,876
    
    
    
    3,337Minority interest in consolidated property partnerships
    
    
    
    
    
    
    (55
    )
    
    
    14
    
    
    
    (144
    )Asset impairment charge
    
    
    
    
    
    
    626
    
    
    
    
    
    
    
    626Total expenses
    
    
    3,660
    
    
    
    9,977
    
    
    
    7,978
    
    
    
    19,844Income from discontinued operations
before minority interest
    
    
    1,621
    
    
    
    4,408
    
    
    
    4,918
    
    
    
    10,062Minority interest
    
    
    (92
    )
    
    
    (271
    )
    
    
    (281
    )
    
    
    (681
    )Income from discontinued operations
    
    $
    1,529
    
    
    $
    4,137
    
    
    $
    4,637
    
    
    $
    9,381
   Three months
    
    Six monthsended
    
    endedJune 30, 2005
    
    June 30, 2005Condominium revenues, net
    
    $
    32,074
    
    
    $
    35,370Condominium costs and expenses
    
    
    (18,921
    )
    
    
    (21,858
    )Gains on condominium sales,
before minority interest and
provision for income taxes
    
    
    13,153
    
    
    
    13,512Minority interest
    
    
    (728
    )
    
    
    (748
    )Provision for income taxes
    
    
    (383
    )
    
    
    (383
    )Gains on condominium sales,
net of minority interest and
provision for income taxes
    
    $
    12,042
    
    
    $
    12,381
  -10-




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##### Table of Contents



POST
PROPERTIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 six months ended June 30, 2004, the Company recognized net gains from discontinued
operations of $113,739 ($106,039 net of minority interest) from the sale of eight communities
containing 3,880 units and certain land parcels. Theses sales generated net proceeds of
approximately $242,962, including debt assumed by the purchasers of $104,325.5.
    
    SHAREHOLDERS EQUITYCommon Stock PurchasesIn the three and six months ended June 30, 2005, the Company repurchased approximately 375 and
661 shares, respectively, of its common stock at an aggregate cost of $12,237 and $21,283,
respectively, under 10b5-1 stock repurchase plans, the latest of which will expire on August 31,
2005. These shares were purchased under a board of directors approved plan which provides for
aggregate common or preferred stock repurchases of up to $200,000 through December 31, 2006.Computation of Earnings Per Common ShareFor the three and six months ended June 30, 2005 and 2004, a reconciliation of the numerator and
denominator used in the computation of basic and diluted income from continuing operations per
common share is as follows:
 Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Income (loss) from continuing operations available
to common shareholders (numerator):Income (loss) from continuing operations
    
    $
    (709
    )
    
    $
    (3,708
    )
    
    $
    522
    
    
    $
    (7,052
    )Less: Preferred stock dividends
    
    
    (1,909
    )
    
    
    (1,909
    )
    
    
    (3,819
    )
    
    
    (4,507
    )Less: Preferred stock redemption costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,716
    )Loss from continuing operations available to
common shareholders
    
    $
    (2,618
    )
    
    $
    (5,617
    )
    
    $
    (3,297
    )
    
    $
    (13,275
    )Common shares (denominator):Weighted average shares outstanding  basic
    
    
    39,930
    
    
    
    39,807
    
    
    
    40,048
    
    
    
    39,595Incremental shares from assumed conversion of
stock options (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average shares outstanding  diluted (1)
    
    
    39,930
    
    
    
    39,807
    
    
    
    40,048
    
    
    
    39,595
 
 (1)
    
    The potential dilution from the Companys outstanding stock options of 250 and 46
shares, respectively, for the three months ended June 30, 2005 and 2004, and 236 and
51 shares, respectively, for the six months ended June 30, 2005 and 2004, were
antidilutive to the loss from continuing operations per share calculation. As such,
the amounts were excluded from weighted average shares for the period. At June 30, 2005 and 2004, stock options to purchase 4,309 and 4,800 shares of common
stock, respectively, were excluded from the computation of diluted earnings per common share as
these stock options were antidilutive.6.
    
    DERIVATIVE FINANCIAL INSTRUMENTSAt June 30, 2005, the Company had an outstanding interest rate swap agreement with a notional
value of approximately $98,500 with a maturity date in 2009. The interest rate swap agreement
is included on the accompanying consolidated balance sheet at fair value. The Company records
the changes in the fair value of this cash flow hedge as a change in accumulated other
comprehensive income (loss), a shareholders equity account, in the accompanying consolidated
balance sheet.At June 30, 2005, the Company had an outstanding interest rate cap agreement with a financial
institution with a notional value of $75,995. The interest rate cap agreement is a cash flow
hedge that provides a fixed interest ceiling at 5% for the Companys variable rate, tax-exempt
borrowings aggregating $75,995 at June 30, 2005. The Company is required to maintain the
interest rate exposure protection under the terms of the financing arrangements. The interest
rate cap arrangement is included on the accompanying balance sheet at fair value. At June 30,
2005, the difference between the amortized costs of the interest rate cap arrangements and their
fair value of $27 is included in accumulated other comprehensive income (loss), a shareholders
equity account. The original cost of $967 of the arrangements is being amortized as additional
expense over their five-year term.In May 2005, in connection with the sale of two communities discussed in note 4 above, the
Company sold its interest in interest rate cap agreements with a notional value of $34,060 for
aggregate proceeds of $10 and realized a loss of $408 ($385 net of minority interest) that was
included in the loss on early extinguishment of indebtedness on the accompanying statement of
 -11-




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##### Table of Contents



POST
PROPERTIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net income
    
    $
    58,443
    
    
    $
    101,110
    
    
    $
    63,121
    
    
    $
    104,519Change in derivative values, net of minority interest
    
    
    (838
    )
    
    
    5,770
    
    
    
    1,828
    
    
    
    3,683Comprehensive income
    
    $
    57,605
    
    
    $
    106,880
    
    
    $
    64,949
    
    
    $
    108,202
 7.
    
    SEGMENT INFORMATIONSegment DescriptionIn accordance with SFAS No. 131, Disclosure About the Segments of an Enterprise and Related
Information, the Company presents segment information based on the way that management
organizes the segments within the enterprise for making operating decisions and assessing
performance. The segment information is prepared on substantially the same basis as the
internally reported information used by the Companys chief operating decision makers to manage
the business.The Companys chief operating decision makers focus on the Companys primary sources of income
from apartment community rental operations. Apartment community rental operations are broken
down into four segments based on the various stages in the apartment community ownership
lifecycle. These segments are described below. All commercial properties and other ancillary
service and support operations are aggregated in the line item other in the accompanying
segment information. The segment information presented below reflects the segment categories
based on the lifecycle status of each community as of January 1, 2004. The segment information
for the three and six months ended June 30, 2004 has been adjusted due to the restatement impact
of reclassifying the operating results of the assets designated as held for sale in 2004 and
2005 to discontinued operations under SFAS No. 144 (see note 4).
 
    
    Fully stabilized communities    those apartment communities which have been stabilized
(the earlier of the point at which a property reaches 95% occupancy or one year after
completion of construction) for both the current and prior year.
    
    Communities stabilized during 2004    communities which reached stabilized occupancy in
the prior year.
    
    Development and lease-up communities    those communities that are in lease-up but were
not stabilized by the beginning of the current year, including communities that stabilized
during the current year. The Company has no communities in the development or lease-up
stage for the periods presented.
    
    Acquired communities    those communities acquired in the current or prior year.
 Segment Performance Measure
  -12-




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##### Table of Contents



POST
PROPERTIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Segment Information
  Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004RevenuesFully stabilized communities
    
    $
    63,515
    
    
    $
    62,319
    
    
    $
    125,928
    
    
    $
    124,182Communities stabilized during 2004
    
    
    1,761
    
    
    
    1,872
    
    
    
    3,521
    
    
    
    3,588Acquired communities
    
    
    2,415
    
    
    
    206
    
    
    
    4,499
    
    
    
    206Other property segments
    
    
    5,369
    
    
    
    5,416
    
    
    
    10,621
    
    
    
    10,449Other
    
    
    61
    
    
    
    47
    
    
    
    132
    
    
    
    122Consolidated revenues
    
    $
    73,121
    
    
    $
    69,860
    
    
    $
    144,701
    
    
    $
    138,547Contribution to NOIFully stabilized communities
    
    $
    38,788
    
    
    $
    38,101
    
    
    $
    76,358
    
    
    $
    76,004Communities stabilized during 2004
    
    
    1,197
    
    
    
    1,367
    
    
    
    2,408
    
    
    
    2,608Acquired communities
    
    
    1,696
    
    
    
    149
    
    
    
    3,031
    
    
    
    149Other
    
    
    (1,594
    )
    
    
    (425
    )
    
    
    (2,994
    )
    
    
    (1,429
    )Consolidated property net operating income
    
    
    40,087
    
    
    
    39,192
    
    
    
    78,803
    
    
    
    77,332Interest income
    
    
    189
    
    
    
    213
    
    
    
    354
    
    
    
    393Other revenue
    
    
    61
    
    
    
    47
    
    
    
    132
    
    
    
    122Minority interest in consolidated property partnerships
    
    
    64
    
    
    
    248
    
    
    
    178
    
    
    
    432Depreciation
    
    
    (19,414
    )
    
    
    (19,689
    )
    
    
    (38,946
    )
    
    
    (39,312
    )Interest expense
    
    
    (15,206
    )
    
    
    (15,942
    )
    
    
    (30,885
    )
    
    
    (31,362
    )Amortization of deferred financing costs
    
    
    (1,029
    )
    
    
    (1,092
    )
    
    
    (2,717
    )
    
    
    (2,208
    )General and administrative
    
    
    (5,433
    )
    
    
    (5,476
    )
    
    
    (10,728
    )
    
    
    (10,119
    )Development costs and other
    
    
    (740
    )
    
    
    (381
    )
    
    
    (1,837
    )
    
    
    (916
    )Equity in income of unconsolidated real estate entities
    
    
    553
    
    
    
    207
    
    
    
    701
    
    
    
    422Gain on sale of technology investment
    
    
    
    
    
    
    
    
    
    
    5,267
    
    
    
    Minority interest of preferred unitholders
    
    
    
    
    
    
    (1,400
    )
    
    
    
    
    
    
    (2,800
    )Minority interest of common unitholders
    
    
    159
    
    
    
    365
    
    
    
    200
    
    
    
    964Income (loss) from continuing operations
    
    
    (709
    )
    
    
    (3,708
    )
    
    
    522
    
    
    
    (7,052
    )Income from discontinued operations
    
    
    59,152
    
    
    
    104,818
    
    
    
    62,599
    
    
    
    111,571Net income
    
    $
    58,443
    
    
    $
    101,110
    
    
    $
    63,121
    
    
    $
    104,519
 -13-




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POST
PROPERTIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 8.
    
    SEVERANCE COSTSIn prior years, the Company recorded severance charges associated with the departure of certain
executive officers of the Company. Under certain of these arrangements, the Company is required
to make certain payments and provide specified benefits through 2013 and 2016, respectively.
The following table summarizes the activity relating to aggregate severance charges for the six
months ended June 30, 2005 and 2004:
 Six months endedJune 30,2005
    
    2004Accrued severance charges, beginning of period
    
    $
    15,317
    
    
    $
    19,717Payments for period
    
    
    (1,494
    )
    
    
    (1,665
    )Interest accretion
    
    
    453
    
    
    
    502Accrued severance charges, end of period
    
    $
    14,276
    
    
    $
    18,008
 9.
    
    SUPPLEMENTAL CASH FLOW INFORMATIONInterest paid (including capitalized amounts of $783 and $500 for the six months ended June 30,
2005 and 2004, respectively), aggregated $35,405 and $35,106 for the six months ended June 30,
2005 and 2004, respectively.Non-cash investing and financing activities for the six months ended June 30, 2005 and 2004 were
as follows:In May 2005, the Company sold two apartment communities subject to $34,060 of mortgage
indebtedness assumed by the purchaser. This mortgage debt assumed by the purchaser was excluded
from the cash flow statement as a non-cash transaction (see note 4).During the six months ended June 30, 2005, the Companys derivative financial instruments (see
note 6) increased in value causing a decrease in accounts payable and accrued expenses and a
corresponding increase in shareholders equity of $1,828, net of minority interest. During the
six months ended June 30, 2004, the Companys derivative financial instruments increased in
value causing a decrease in accounts payable and accrued expenses and a corresponding increase
in shareholders equity of $3,683, net of minority interest.During the six months ended June 30, 2005 and 2004, holders of 166 and 1,107 units,
respectively, in the Operating Partnership exercised their option to convert their units to
 shares of common stock of the Company on a one-for-one basis. These conversions and adjustments
for the impact of the common stock issued under the Companys employee stock purchase and stock
option plans and other capital transactions result in adjustments to minority interest. The net
effect of the conversions and adjustments was a reclassification decreasing minority interest
and increasing shareholders equity in the amounts of $3,230 and $19,404 for the six months
ended June 30, 2005 and 2004, respectively.The Operating Partnership committed to distribute $19,065 and $19,115 for the quarters ended
June 30, 2005 and 2004, respectively. As a result, the Company declared dividends of $18,015 and
$17,963 for the quarters ended June 30, 2005 and 2004, respectively. The remaining distributions
from the Operating Partnership in the amount of $1,050 and $1,152 for the quarters ended June
30, 2005 and 2004, respectively, were distributed to minority interest unitholders in the
Operating Partnership.In the three months ended June 30, 2005, a portion of the net proceeds from an apartment
community sale totaling $2,951 were held by a third party intermediary under a qualified tax
deferred exchange program. The $2,951 was included in other assets on the consolidated balance
sheet. This transaction was excluded from the statement of cash flows as a non-cash
transaction.In June 2004, the Company acquired an apartment community for cash and the assumption of
mortgage indebtedness with an estimated fair value of $49,694. Also, in June 2004, the Company
sold certain apartment communities subject to $104,325 of mortgage indebtedness assumed by the
purchasers. These transactions involving mortgage indebtedness were excluded from the statement
of cash flows as non-cash transactions (see note 4).
 -14-




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POST
PROPERTIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10.
    
    STOCK-BASED COMPENSATION PLANDuring the six months ended June 30, 2005, the Company granted approximately 31 shares of
restricted stock to Company officers and directors, of which approximately 6 shares were granted
to the Companys non-executive Chairman of the Board. No shares of restricted stock were
granted in the three months ended June 30, 2005. The restricted shares vest ratably over three
years. The total value of the restricted share grants of $1,098 for the six months ended June
30, 2005 was initially reflected in shareholders equity as additional paid in capital and as
deferred compensation, a contra shareholders equity account. Such deferred compensation is
amortized ratably into compensation expense over the three year vesting period.Additionally, in the six months ended June 30, 2005, the Company granted stock options to
purchase approximately 254 shares of Company common stock to Company officers and directors, of
which 50 stock options were granted to the Companys non-executive Chairman of the Board. No
stock options were granted in the three months ended June 30, 2005. As discussed in note 1, the
Company expenses the estimated fair value of stock options over their three year vesting
periods.11.
    
    INCOME TAXESThe Company has elected to be taxed as a REIT under the Internal Revenue Code of 1986, as
amended (the Code). To qualify as a REIT, the Company must distribute annually at least 90%
of its adjusted taxable income, as defined in the Code, to its shareholders and satisfy certain
other organizational and operating requirements. It is managements current intention to adhere
to these requirements and maintain the Companys REIT status. As a REIT, the Company generally
will not be subject to federal income tax at the corporate level on the taxable income it
distributes to its shareholders. If the Company fails to qualify as a REIT in any taxable year,
it will be subject to federal income taxes at regular corporate rates (including any applicable
alternative minimum tax) and may not be able to qualify as a REIT for four subsequent taxable
years. The Company may be subject to certain state and local taxes on its income and property,
and to federal income taxes and excise taxes on its undistributed taxable income.The Company utilizes taxable REIT subsidiaries to perform such non-REIT activities as asset and
property management, for-sale housing (condominiums) conversions and sales, leasing and
landscaping services for third parties. These taxable REIT subsidiaries are subject to federal,
state and local income taxes. For the six months ended June 30, 2005, the Company estimated it
will utilize approximately $5,000 of income tax net operating loss carry-forwards to offset its
federal taxable income generated by its taxable REIT subsidiaries (primarily as a result of
condominium sale gains). Through June 30, 2005, the Company estimated that its taxable REIT
subsidiaries will be subject to federal alternative minimum taxes and applicable state income
taxes and has recorded an income tax provision of approximately $383. At June 30, 2005, the
Companys taxable REIT subsidiaries had consolidated federal income tax net operating loss
carry-forwards totaling approximately $4,000. These tax loss carry-forwards begin to expire in
2019. At June 30, 2005, management had established a valuation allowance against the deferred
tax asset associated with these net operating loss carry-forwards due to the historical
operating losses of these subsidiaries. The tax benefits associated with such net operating
loss carry-forwards may be recognized in future periods, if the taxable REIT subsidiaries
generate sufficient taxable income to utilize such amounts or if the Company determines that it
is more likely than not that the related deferred tax assets are realizable.12.
    
    LEGAL PROCEEDINGSOn May 13, 2004, an alleged Company shareholder filed a purported pro se derivative and direct
action in the Superior Court of Fulton County, Georgia, against the Company, certain members of
the Companys board of directors, and certain of its executive officers. The case was removed to
the United States District Court for the Northern District of Georgia on May 21, 2004. The
complaint alleged, among other things, breaches of fiduciary duties, fraud, corporate waste,
withholding certain documents from shareholder inspection and certain securities laws claims.
The complaint requested various types of relief, such as injunctive relief and damages and
demanded production of certain Company records. Because the Company believed the allegations
were wholly without merit, the Company moved to dismiss the litigation. On April 20, 2005, the
court entered an order dismissing all claims without prejudice, save a claim seeking production
of certain Company records, upon which the Court declined to rule, concluding it lacked
jurisdiction to do so, and ordered the claim remanded to the Superior Court of Fulton County.
Since that time, the Company has moved for their attorney fees in the United States District
Court, arguing that the plaintiff frivolously pursued the litigation, and the plaintiff has
moved for entry of judgment in Superior Court, which the Company has vigorously contested.
 -15-




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##### Table of Contents



POST
PROPERTIES, INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 On May 5, 2003, the Company received notice that a shareholder derivative and purported class
action lawsuit was filed against members of the board of directors of the Company and the
Company as a nominal defendant. This complaint was filed in the Superior Court of Fulton County,
Atlanta, Georgia on May 2, 2003 and alleged various breaches of fiduciary duties by the board of
directors of the Company and sought, among other relief, the disclosure of certain information
by the defendants. This complaint also sought to compel the defendants to undertake various
actions to facilitate a sale of the Company. On May 7, 2003, the plaintiff made a request for
voluntary expedited discovery. On May 13, 2003, the Company received notice that a similar
shareholder derivative and purported class action lawsuit was filed against certain members of
the board of directors of the Company and against the Company as a nominal defendant. The
complaint was filed in the Superior Court of Fulton County, Atlanta, Georgia on May 12, 2003 and
alleged breaches of fiduciary duties, abuse of control and corporate waste by the defendants.
The plaintiff sought monetary damages and, as appropriate, injunctive relief. These lawsuits
were settled, and in October 2004, the Superior Court of Fulton County entered an order
approving the settlement and related orders dismissing the litigation. The estimated legal and
settlement costs, not covered by insurance, associated with the expected resolution of the
lawsuits were recorded in the second quarter of 2003 as a component of a proxy contest and
related costs charge. An alleged Company shareholder, who had filed a separate purported
derivative and direct action against the Company and certain of its officers and directors
(which is described in the paragraph above), has appealed from the Superior Courts orders
approving the settlement, overruling the shareholders objection to the settlement denying the
shareholders motion to intervene, and dismissing the litigation with prejudice. The Company is
contesting the alleged shareholders appeal vigorously.The Company is involved in various other legal proceedings incidental to its business from time
to time, most of which are expected to be covered by liability or other insurance. Management of
the Company believes that any resolution of pending proceedings or liability to the Company
which may arise as a result of these proceedings will not have a material adverse effect on the
Companys results of operations or financial position.13.
    
    SALE OF TECHNOLOGY INVESTMENTIn February 2005, the Company sold its investment in Rent.com, a privately-held internet leasing
company, and recognized a gain of $5,267.
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POST APARTMENT HOMES, L.P.
 
 CONSOLIDATED BALANCE SHEETS
 (In thousands)
 June 30,
    
    December 31,2005
    
    2004(Unaudited)AssetsReal estate assets
Land
    
    $
    270,167
    
    
    $
    266,520Building and improvements
    
    
    1,824,414
    
    
    
    1,887,514Furniture, fixtures and equipment
    
    
    208,348
    
    
    
    214,954Construction in progress
    
    
    34,291
    
    
    
    19,527Land held for future development
    
    
    51,972
    
    
    
    18,9102,389,192
    
    
    
    2,407,425Less: accumulated depreciation
    
    
    (489,812
    )
    
    
    (498,367
    )Assets held for sale, net of accumulated depreciation of $46,506 and
$26,332 at June 30, 2005 and December 31, 2004, respectively
    
    
    72,073
    
    
    
    68,661Total real estate assets
    
    
    1,971,453
    
    
    
    1,977,719Investments in and advances to unconsolidated entities
    
    
    34,441
    
    
    
    21,320Cash and cash equivalents
    
    
    4,169
    
    
    
    123Restricted cash
    
    
    4,321
    
    
    
    1,844Deferred charges, net
    
    
    13,462
    
    
    
    15,574Other assets
    
    
    41,855
    
    
    
    37,262Total assets
    
    $
    2,069,701
    
    
    $
    2,053,842Liabilities and partners equityIndebtedness, including $47,500 and $34,060 of debt secured by assets
held for sale at June 30, 2005 and December 31, 2004, respectively
    
    $
    1,111,936
    
    
    $
    1,129,478Accounts payable and accrued expenses
    
    
    74,407
    
    
    
    58,837Distribution payable
    
    
    19,065
    
    
    
    19,203Security deposits and prepaid rents
    
    
    9,905
    
    
    
    7,236Accrued interest payable
    
    
    6,008
    
    
    
    7,677Total liabilities
    
    
    1,221,321
    
    
    
    1,222,431Commitments and contingenciesPartners equityPreferred units
    
    
    95,000
    
    
    
    95,000Common unitsGeneral partner
    
    
    9,055
    
    
    
    8,673Limited partners
    
    
    752,587
    
    
    
    737,940Accumulated other comprehensive loss
    
    
    (8,262
    )
    
    
    (10,202
    )Total partners equity
    
    
    848,380
    
    
    
    831,411Total liabilities and partners equity
    
    $
    2,069,701
    
    
    $
    2,053,842
 The accompanying notes are an integral part of these consolidated financial statements.
 -17-




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per unit data)
  Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004RevenuesRental
    
    $
    68,744
    
    
    $
    65,827
    
    
    $
    136,471
    
    
    $
    130,779Other property revenues
    
    
    4,316
    
    
    
    3,986
    
    
    
    8,098
    
    
    
    7,646Other
    
    
    61
    
    
    
    47
    
    
    
    132
    
    
    
    122Total revenues
    
    
    73,121
    
    
    
    69,860
    
    
    
    144,701
    
    
    
    138,547ExpensesProperty operating and maintenance (exclusive of items
shown separately below)
    
    
    32,973
    
    
    
    30,621
    
    
    
    65,766
    
    
    
    61,093Depreciation
    
    
    19,414
    
    
    
    19,689
    
    
    
    38,946
    
    
    
    39,312General and administrative
    
    
    5,433
    
    
    
    5,476
    
    
    
    10,728
    
    
    
    10,119Development costs and other
    
    
    740
    
    
    
    381
    
    
    
    1,837
    
    
    
    916Total expenses
    
    
    58,560
    
    
    
    56,167
    
    
    
    117,277
    
    
    
    111,440Operating Income
    
    
    14,561
    
    
    
    13,693
    
    
    
    27,424
    
    
    
    27,107Interest income
    
    
    189
    
    
    
    213
    
    
    
    354
    
    
    
    393Interest expense
    
    
    (15,206
    )
    
    
    (15,942
    )
    
    
    (30,885
    )
    
    
    (31,362
    )Amortization of deferred financing costs
    
    
    (1,029
    )
    
    
    (1,092
    )
    
    
    (2,717
    )
    
    
    (2,208
    )Equity in income of unconsolidated real estate entities
    
    
    553
    
    
    
    207
    
    
    
    701
    
    
    
    422Gain on sale of technology investment
    
    
    
    
    
    
    
    
    
    
    5,267
    
    
    
    Minority interest in consolidated property partnerships
    
    
    64
    
    
    
    248
    
    
    
    178
    
    
    
    432Income (loss) from continuing operations
    
    
    (868
    )
    
    
    (2,673
    )
    
    
    322
    
    
    
    (5,216
    )Discontinued operationsIncome from discontinued operations
    
    
    1,621
    
    
    
    4,408
    
    
    
    4,918
    
    
    
    10,062Gains on sales of real estate assets, net of provision
for income taxes
    
    
    62,480
    
    
    
    112,112
    
    
    
    62,839
    
    
    
    113,739Loss on early extinguishment of indebtedness associated
with property sales
    
    
    (1,374
    )
    
    
    (4,128
    )
    
    
    (1,374
    )
    
    
    (4,128
    )Income from discontinued operations
    
    
    62,727
    
    
    
    112,392
    
    
    
    66,383
    
    
    
    119,673Net income
    
    
    61,859
    
    
    
    109,719
    
    
    
    66,705
    
    
    
    114,457Distributions to preferred unitholders
    
    
    (1,909
    )
    
    
    (3,309
    )
    
    
    (3,819
    )
    
    
    (7,307
    )Redemption costs on preferred units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,716
    )Net income available to common unitholders
    
    $
    59,950
    
    
    $
    106,410
    
    
    $
    62,886
    
    
    $
    105,434Per common unit data  BasicLoss from continuing operations (net of preferred
distributions and redemption costs)
    
    $
    (0.07
    )
    
    $
    (0.14
    )
    
    $
    (0.08
    )
    
    $
    (0.34
    )Income from discontinued operations
    
    
    1.48
    
    
    
    2.64
    
    
    
    1.56
    
    
    
    2.82Net income available to common unitholders
    
    $
    1.42
    
    
    $
    2.50
    
    
    $
    1.48
    
    
    $
    2.48Weighted
average common units outstanding  basic
    
    
    42,325
    
    
    
    42,478
    
    
    
    42,469
    
    
    
    42,469Per common unit data  DilutedLoss from continuing operations (net of preferred
distributions and redemption costs)
    
    $
    (0.07
    )
    
    $
    (0.14
    )
    
    $
    (0.08
    )
    
    $
    (0.34
    )Income from discontinued operations
    
    
    1.48
    
    
    
    2.64
    
    
    
    1.56
    
    
    
    2.82Net income available to common unitholders
    
    $
    1.42
    
    
    $
    2.50
    
    
    $
    1.48
    
    
    $
    2.48Weighted
average common units outstanding  diluted
    
    
    42,325
    
    
    
    42,478
    
    
    
    42,469
    
    
    
    42,469Distributions declared
    
    $
    0.45
    
    
    $
    0.45
    
    
    $
    0.90
    
    
    $
    0.90
 The accompanying notes are an integral part of these consolidated financial statements.
 -18-




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POST APARTMENT HOMES, L.P.
 
 CONSOLIDATED STATEMENTS OF PARTNERS EQUITY
 (In thousands)
  AccumulatedCommon Units
    
    OtherPreferred
    
    General
    
    Limited
    
    ComprehensiveUnits
    
    Partner
    
    Partners
    
    Income (Loss)
    
    TotalPartners Equity, December 31, 2004
    
    $
    95,000
    
    
    $
    8,673
    
    
    $
    737,940
    
    
    $
    (10,202
    )
    
    $
    831,411Comprehensive incomeNet income
    
    
    1,909
    
    
    
    648
    
    
    
    64,148
    
    
    
    
    
    
    
    66,705Net change in derivative value
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,940
    
    
    
    1,940Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68,645Contributions from the Company related
to employee stock purchase and stock
option plans
    
    
    
    
    
    
    106
    
    
    
    10,511
    
    
    
    
    
    
    
    10,617Purchase of common units
    
    
    
    
    
    
    
    
    
    
    (21,283
    )
    
    
    
    
    
    
    (21,283
    )Stock-based compensation
    
    
    
    
    
    
    4
    
    
    
    358
    
    
    
    
    
    
    
    362Distributions to preferred Unitholders
    
    
    (1,909
    )
    
    
    
    
    
    
    (1,910
    )
    
    
    
    
    
    
    (3,819
    )Distributions to common Unitholders
    
    
    
    
    
    
    (382
    )
    
    
    (37,806
    )
    
    
    
    
    
    
    (38,188
    )Contributions from the Company related
to shares issued for restricted stock,
net of deferred compensation
    
    
    
    
    
    
    6
    
    
    
    629
    
    
    
    
    
    
    
    635Partners Equity, June 30, 2005
    
    $
    95,000
    
    
    $
    9,055
    
    
    $
    752,587
    
    
    $
    (8,262
    )
    
    $
    848,380
 The accompanying notes are an integral part of these consolidated financial statements.
 -19-




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands, except per unit data)
  Six months endedJune 30,2005
    
    2004Cash Flows From Operating ActivitiesNet income
    
    $
    66,705
    
    
    $
    114,457Adjustments to reconcile net income to net cash provided by operating activities:Depreciation
    
    
    38,946
    
    
    
    42,365Amortization of deferred financing costs
    
    
    2,717
    
    
    
    2,208Gains sales of real estate assets  discontinued operations
    
    
    (62,839
    )
    
    
    (113,739
    )Asset impairment charge
    
    
    
    
    
    
    626Gain on sale of technology investment
    
    
    (5,267
    )
    
    
    Equity in income of unconsolidated entities, net of distributions of
accumulated earnings
    
    
    339
    
    
    
    238Equity-based compensation
    
    
    1,022
    
    
    
    865Loss on early extinguishment of debt
    
    
    1,374
    
    
    
    4,128Changes in assets, (increase) decrease in:Restricted cash
    
    
    (2,477
    )
    
    
    (20
    )Other assets
    
    
    (436
    )
    
    
    (1,835
    )Deferred charges
    
    
    (327
    )
    
    
    1,361Changes in liabilities, increase (decrease) in:Accrued interest payable
    
    
    (1,669
    )
    
    
    (34
    )Accounts payable and accrued expenses
    
    
    9,891
    
    
    
    8,446Security deposits and prepaid rents
    
    
    2,669
    
    
    
    (566
    )Net cash provided by operating activities
    
    
    50,648
    
    
    
    58,500Cash Flows From Investing ActivitiesConstruction and acquisition of real estate assets, net of payables
    
    
    (86,911
    )
    
    
    (37,663
    )Net proceeds from sales of real estate assets
    
    
    93,398
    
    
    
    138,637Proceeds from sale of technology investment
    
    
    5,267
    
    
    
    Recurring capital expenditures
    
    
    (4,822
    )
    
    
    (5,193
    )Non-recurring capital expenditures
    
    
    (2,029
    )
    
    
    (2,546
    )Revenue generating capital expenditures
    
    
    
    
    
    
    (26
    )Corporate additions and improvements
    
    
    (978
    )
    
    
    (287
    )Distribution from (investments in and advances to) unconsolidated entities
    
    
    (13,541
    )
    
    
    52,287Net cash provided by (used in) investing activities
    
    
    (9,616
    )
    
    
    (145,209
    )Cash Flows From Financing ActivitiesPayments on notes payable
    
    
    (189,267
    )
    
    
    (14,354
    )Proceeds from notes payable
    
    
    100,000
    
    
    
    35,000Payments of financing costs
    
    
    (976
    )
    
    
    (4,262
    )Lines of credit proceeds (repayments), net
    
    
    105,785
    
    
    
    (72,010
    )Redemption of preferred units
    
    
    
    
    
    
    (50,000
    )Redemption of common units
    
    
    (21,283
    )
    
    
    Contributions from the Company related to employee stock purchase
and stock option plans
    
    
    10,617
    
    
    
    2,845Capital
contributions (distributions) of minority interests
    
    
    283
    
    
    
    (1,506
    )Distributions to preferred unitholders
    
    
    (3,819
    )
    
    
    (7,307
    )Distributions to common unitholders
    
    
    (38,326
    )
    
    
    (38,158
    )Net cash used in financing activities
    
    
    (36,986
    )
    
    
    (149,752
    )Net increase in cash and cash equivalents
    
    
    4,046
    
    
    
    53,957Cash and cash equivalents, beginning of period
    
    
    123
    
    
    
    1,334Cash and cash equivalents, end of period
    
    $
    4,169
    
    
    $
    55,291
 The accompanying notes are an integral part of these consolidated financial statements.
 -20-




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 1.
    
    ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
 Organization
     Basis of Presentation
  Revenue Recognition
  -21-




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 Equity-based Compensation
   Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net income available to common unitholdersAs reported
    
    $
    59,950
    
    
    $
    106,410
    
    
    $
    62,886
    
    
    $
    105,434Stock-based compensation included in net income as reported
    
    
    558
    
    
    
    449
    
    
    
    1,022
    
    
    
    865Stock-based compensation determined under the fair value
method for all awards
    
    
    (564
    )
    
    
    (463
    )
    
    
    (1,027
    )
    
    
    (901
    )Pro forma
    
    $
    59,944
    
    
    $
    106,396
    
    
    $
    62,881
    
    
    $
    105,398Net income per common unit  basicAs reported
    
    $
    1.42
    
    
    $
    2.50
    
    
    $
    1.48
    
    
    $
    2.48Pro forma
    
    $
    1.42
    
    
    $
    2.50
    
    
    $
    1.48
    
    
    $
    2.48Net income per common unit  dilutedAs reported
    
    $
    1.42
    
    
    $
    2.50
    
    
    $
    1.48
    
    
    $
    2.48Pro forma
    
    $
    1.42
    
    
    $
    2.50
    
    
    $
    1.48
    
    
    $
    2.48
  Long-term Ground Leases
  -22-




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 2.
    
    INDEBTEDNESS
  Payment
    
    
    
    
    
    
    
    
    
    Maturity
    
    June 30,
    
    December 31,Description
    
    Terms
    
    Interest Rate
    
    
    
    
    
    Date
    
    2005
    
    2004Unsecured NotesSenior Notes
    
    Int.
    
    
    5.125% - 7.70
    %
    
    
    
    
    
    
    2006-2012
    
    
    $
    485,000
    
    
    $
    385,000Medium Term Notes
    
    Int.
    
    
    6.78
    %
    
    
    
    
    
    
    2005
    
    
    
    25,000
    
    
    
    212,043510,000
    
    
    
    597,043Unsecured Lines of Credit & OtherSyndicated Line of Credit
    
    
    N/A
    
    
    LIBOR + 0.75
    %
    (1)
    
    
    
    
    
    2007
    
    
    
    147,000
    
    
    
    40,000Cash Management Line
    
    
    N/A
    
    
    LIBOR + 0.75
    %
    
    
    
    
    
    
    2007
    
    
    
    9,533
    
    
    
    10,748156,533
    
    
    
    50,748Conventional Fixed Rate (Secured)FNMA
    
    Prin. and Int.
    
    
    6.975
    %
    (2)
    
    
    
    
    
    2029
    
    
    
    98,500
    
    
    
    98,500Other
    
    Prin. and Int.
    
    
    4.27% - 7.69
    %
    
    
    
    
    
    
    2007-2013
    
    
    
    270,908
    
    
    
    273,132369,408
    
    
    
    371,632Tax-Exempt Floating Rate
Bonds (Secured)
    
    Int.
    
    
    2.29
    %
    (3)
    
    
    
    
    
    2025
    
    
    
    75,995
    
    
    
    110,055Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,111,936
    
    
    $
    1,129,478
 
 (1)
    
    Represents stated rate. At June 30, 2005, the weighted average interest rate was
3.82%.(2)
    
    Interest rate is fixed at 6.975%, inclusive of credit enhancement and other fees, to
2009 through an interest rate swap arrangement.(3)
    
    FNMA credit enhanced bond indebtedness. Interest based on FNMA AAA tax-exempt rate
plus credit enhancement and other fees of 0.639%. Interest rate represents the rate at
June 30, 2005 before credit enhancements. The Operating Partnership has outstanding
interest rate cap arrangements that limit the Operating Partnerships exposure to
increases in the base interest rate to 5%. At June 30, 2005 and December 31, 2004,
approximately $47,500 and $34,060, respectively, of this debt was secured by assets held
for sale. In June 2005, the Operating Partnership executed an amendment to its master
reimbursement agreement with FNMA, which agreement, among other things, sets forth the
Operating Partnerships payment obligations under its variable-rate, tax-exempt bond
indebtedness. The amendment defers the commencement of principal repayments under the
bonds by five years from the originally scheduled commencement date. The original
maturity date for the bonds remains unchanged and the amortization schedule of the bonds
was changed commensurate with the five-year deferral of the start of principal
amortization. Debt maturities
  Remainder of 2005
    
    $
    28,6522006
    
    
    81,2692007
    
    
    314,726
    (1)2008
    
    
    4,5572009
    
    
    75,901Thereafter
    
    
    606,831$
    1,111,936
 
 (1)
    
    Includes outstanding balances on lines of credit
totaling $156,533. Debt issuances and retirements
    -23-




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 Unsecured Lines of Credit
   3.
    
    INVESTMENTS IN UNCONSOLIDATED REAL ESTATE ENTITIES
    June 30,
    
    December 31,Balance Sheet Data
    
    2005
    
    2004Real estate assets, net of accumulated depreciation of
$7,067 and $9,712, respectively
    
    $
    97,225
    
    
    $
    124,072Assets held for sale, net (1)
    
    
    23,889
    
    
    
    Cash and other
    
    
    2,182
    
    
    
    2,797Total assets
    
    $
    123,296
    
    
    $
    126,869Mortgage notes payable
    
    $
    66,999
    
    
    $
    83,468Mortgage notes payable to Operating Partnership
    
    
    13,661
    
    
    
    Other liabilities
    
    
    1,606
    
    
    
    1,296Total liabilities
    
    
    82,266
    
    
    
    84,764Members equity
    
    
    41,030
    
    
    
    42,105Total liabilities and members equity
    
    $
    123,296
    
    
    $
    126,869Operating Partnerships equity investment
    
    $
    20,780
    
    
    $
    21,320
 
 (1)
    
    Includes one community, originally containing 121
units, being converted into condominiums through a taxable
REIT subsidiary. -24-




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 Three months ended
    
    Six months endedJune 30,
    
    June 30,Income Statement Data
    
    2005
    
    2004
    
    2005
    
    2004RevenueRental
    
    $
    2,721
    
    
    $
    2,614
    
    
    $
    5,361
    
    
    $
    5,178Other property revenues
    
    
    230
    
    
    
    211
    
    
    
    415
    
    
    
    387Total revenues
    
    
    2,951
    
    
    
    2,825
    
    
    
    5,776
    
    
    
    5,565ExpensesProperty operating and maintenance
    
    
    889
    
    
    
    933
    
    
    
    1,799
    
    
    
    1,836Depreciation and amortization
    
    
    655
    
    
    
    648
    
    
    
    1,308
    
    
    
    1,278Interest
    
    
    688
    
    
    
    688
    
    
    
    1,376
    
    
    
    1,282Total expenses
    
    
    2,232
    
    
    
    2,269
    
    
    
    4,483
    
    
    
    4,396Income from continuing operations
    
    
    719
    
    
    
    556
    
    
    
    1,293
    
    
    
    1,169Discontinued OperationsIncome (loss) from discontinued operations
    
    
    16
    
    
    
    (67
    )
    
    
    (96
    )
    
    
    (164
    )Gains on sales of real estate assets
    
    
    860
    
    
    
    
    
    
    
    855
    
    
    
    Loss on early extinguishment of debt
    
    
    
    
    
    
    
    
    
    
    (273
    )
    
    
    Income from discontinued operations
    
    
    876
    
    
    
    (67
    )
    
    
    486
    
    
    
    (164
    )Net income
    
    $
    1,595
    
    
    $
    489
    
    
    $
    1,779
    
    
    $
    1,005Operating Partnerships share of net income
    
    $
    553
    
    
    $
    207
    
    
    $
    701
    
    
    $
    422
  Three months
    
    Six monthsended
    
    endedJune 30, 2005
    
    June 30, 2005Condominium revenues, net
    
    $
    4,183
    
    
    $
    4,183Condominium costs and expenses
    
    
    (3,323
    )
    
    
    (3,328
    )Gains on condominium sales
    
    $
    860
    
    
    $
    855
   4.
    
    REAL ESTATE ACQUISITION AND DISPOSITION ACTIVITY
 Acquisition Activity
  Disposition Activity
  -25-




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
    Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004RevenuesRental
    

    $
    4,855
    
    
    $
    13,199
    
    
    $
    11,839
    
    
    $
    27,504Other property revenues
    
    
    426
    
    
    
    1,186
    
    
    
    1,057
    
    
    
    2,402Total revenues
    
    
    5,281
    
    
    
    14,335
    
    
    
    12,896
    
    
    
    29,906ExpensesProperty operating and maintenance
(exclusive of items shown separately below)
    
    
    2,828
    
    
    
    6,365
    
    
    
    6,088
    
    
    
    12,972Depreciation
    
    
    
    
    
    
    1,488
    
    
    
    
    
    
    
    3,053Interest
    
    
    832
    
    
    
    1,553
    
    
    
    1,876
    
    
    
    3,337Minority interest in consolidated property partnerships
    
    
    
    
    
    
    (55
    )
    
    
    14
    
    
    
    (144
    )Asset impairment charge
    
    
    
    
    
    
    626
    
    
    
    
    
    
    
    626Total expenses
    
    
    3,660
    
    
    
    9,977
    
    
    
    7,978
    
    
    
    19,844Income from discontinued operations
    
    $
    1,621
    
    
    $
    4,408
    
    
    $
    4,918
    
    
    $
    10,062
   Three months
    
    Six monthsended
    
    endedJune 30, 2005
    
    June 30, 2005Condominium revenues, net
    
    $
    32,074
    
    
    $
    35,370Condominium costs and expenses
    
    
    (18,921
    )
    
    
    (21,858
    )Gains on condominium sales, before provision
for income taxes
    
    
    13,153
    
    
    
    13,512Provision for income taxes
    
    
    (383
    )
    
    
    (383
    )Gains on condominium sales, net of provision
for income taxes
    
    $
    12,770
    
    
    $
    13,129
  -26-




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
 5.
    
    PARTNERS EQUITY
 Common Unit Purchases
  Computations of Earnings Per Common Unit
  Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Income (loss) from continuing operations available
to common unitholders (numerator):Income (loss) from continuing operations
    
    $
    (868
    )
    
    $
    (2,673
    )
    
    $
    322
    
    
    $
    (5,216
    )Less: Preferred unit distributions
    
    
    (1,909
    )
    
    
    (3,309
    )
    
    

    (3,819
    )
    
    
    (7,307
    )Less: Preferred unit redemption costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,716
    )Loss from continuing operations available to
common unitholders
    
    $
    (1,041
    )
    
    $
    (5,982
    )
    
    $
    (3,497
    )
    
    
    (14,239
    )Common units (denominator):Weighted average units outstanding  basic
    
    
    42,325
    
    
    
    42,478
    
    
    
    42,469
    
    
    
    42,469Incremental units from assumed conversion of
stock options (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted average units outstanding  diluted (1)
    
    
    42,325
    
    
    
    42,478
    
    
    
    42,469
    
    
    
    42,469
 
 (1)
    
    The potential dilution from the Companys outstanding stock options of 250 and 46
shares, respectively, for the three months ended June 30, 2005 and 2004, and 236 and 51
shares, respectively, for the six months ended June 30, 2005 and 2004, were antidilutive
to the loss from continuing operations per share calculation. As such, the amounts were
excluded from weighted average shares for the period. 6.
    
    DERIVATIVE FINANCIAL INSTRUMENTS
    -27-




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  
  Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net income
    
    $
    61,859
    
    
    $
    109,719
    
    
    $
    66,705
    
    
    $
    114,457Change in derivative values
    
    
    (888
    )
    
    
    6,202
    
    
    
    1,940
    
    
    
    3,950Comprehensive income
    
    $
    60,971
    
    
    $
    115,921
    
    
    $
    68,645
    
    
    $
    118,407
 7.
    
    SEGMENT INFORMATION
 Segment Description
   
    
    Fully stabilized communities  those apartment communities which have been stabilized
(the earlier of the point at which a property reaches 95% occupancy or one year after
completion of construction) for both the current and prior year.
    
    Communities stabilized during 2004  communities which reached stabilized occupancy in
the prior year.
    
    Development and lease-up communities  those communities that are in lease-up but were
not stabilized by the beginning of the current year, including communities that stabilized
during the current year. The Operating Partnership has no communities in the development
or lease-up stage for the periods presented.
    
    Acquired communities  those communities acquired in the current or prior year.
 Segment Performance Measure
  -28-




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Segment Information
  Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004RevenuesFully stabilized communities
    
    $
    63,515
    
    
    $
    62,319
    
    
    $
    125,928
    
    
    $
    124,182Communities stabilized during 2004
    
    
    1,761
    
    
    
    1,822
    
    
    
    3,521
    
    
    
    3,588Acquired communities
    
    
    2,415
    
    
    
    206
    
    
    
    4,499
    
    
    
    206Other property segments
    
    
    5,369
    
    
    
    5,416
    
    
    
    10,621
    
    
    
    10,449Other
    
    
    61
    
    
    
    47
    
    
    
    132
    
    
    
    122Consolidated revenues
    
    $
    73,121
    
    
    $
    69,860
    
    
    $
    144,701
    
    
    $
    138,547Contribution to NOIFully stabilized communities
    
    $
    38,788
    
    
    $
    38,101
    
    
    $
    76,358
    
    
    $
    76,004Communities stabilized during 2004
    
    
    1,197
    
    
    
    1,367
    
    
    
    2,408
    
    
    
    2,608Acquired communities
    
    
    1,696
    
    
    
    149
    
    
    
    3,031
    
    
    
    149Other
    
    
    (1,594
    )
    
    
    (425
    )
    
    
    (2,994
    )
    
    
    (1,429
    )Consolidated property net operating income
    
    
    40,087
    
    
    
    39,192
    
    
    
    78,803
    
    
    
    77,332Interest income
    
    
    189
    
    
    
    213
    
    
    
    354
    
    
    
    393Other revenue
    
    
    61
    
    
    
    47
    
    
    
    132
    
    
    
    122Minority interest in consolidated property partnerships
    
    
    64
    
    
    
    248
    
    
    
    178
    
    
    
    432Depreciation
    
    
    (19,414
    )
    
    
    (19,689
    )
    
    
    (38,946
    )
    
    
    (39,312
    )Interest expense
    
    
    (15,206
    )
    
    
    (15,942
    )
    
    
    (30,885
    )
    
    
    (31,362
    )Amortization of deferred financing costs
    
    
    (1,029
    )
    
    
    (1,092
    )
    
    
    (2,717
    )
    
    
    (2,208
    )General and administrative
    
    
    (5,433
    )
    
    
    (5,476
    )
    
    
    (10,728
    )
    
    
    (10,119
    )Development costs and other
    
    
    (740
    )
    
    
    (381
    )
    
    
    (1,837
    )
    
    
    (916
    )Equity in income of unconsolidated real estate entities
    
    
    553
    
    
    
    207
    
    
    
    701
    
    
    
    422Gain on sale of technology investment
    
    
    
    
    
    
    
    
    
    
    5,267
    
    
    
    Income (loss) from continuing operations
    
    
    (868
    )
    
    
    (2,673
    )
    
    
    322
    
    
    
    (5,216
    )Income from discontinued operations
    
    
    62,727
    
    
    
    112,392
    
    
    
    66,383
    
    
    
    119,673Net income
    
    $
    61,859
    
    
    $
    109,719
    
    
    $
    66,705
    
    
    $
    114,457
 - 29 -




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 8. SEVERANCE COSTS
  Six months endedJune 30,2005
    
    2004Accrued severance charges, beginning of period
    
    $
    15,317
    
    
    $
    19,717Payments for period
    
    
    (1,494
    )
    
    
    (1,665
    )Interest accretion
    
    
    453
    
    
    
    502Accrued severance charges, end of period
    
    $
    14,276
    
    
    $
    18,008
 9. SUPPLEMENTAL CASH FLOW INFORMATION
        - 30 -




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 10. STOCK-BASED COMPENSATION PLAN
   11. INCOME TAXES
   12. LEGAL PROCEEDINGS
   - 31 -




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##### Table of Contents



POST APARTMENT HOMES, L.P.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   13. SALE OF TECHNOLOGY INVESTMENT
  - 32 -




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 Company Overview
        - 33 -




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 TM
   Disclosure Regarding Forward-Looking Statements
  
    
    The success of the Companys business strategies described on pages 2-3 of the
Companys Annual Report on Form 10-K for the year ended December 31, 2004;
    
    Future local and national economic conditions, including changes in job growth,
interest rates, the availability of financing and other factors;
    
    Demand for apartments in the Companys markets and the effect on occupancy and rental rates;
    
    The impact of competition on the Companys business, including competition for residents and development locations;
    
    The Companys ability to obtain financing or self-fund the development of
additional multifamily rental and for-sale housing and for its apartment communities and
competing for-sale housing in markets where the Company is completing condominium
conversions or developing new condominiums;
 - 34 -




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
    
    The uncertainties associated with the Companys real estate development,
including actual costs exceeding the Companys budgets or development periods exceeding
expectations;
    
    Uncertainties associated with the timing and amount of apartment community
sales and the resulting gains/losses associated with such sales;
    
    Uncertainties associated with the Companys expansion into the condominium
conversion and for-sale housing business;
    
    Conditions affecting ownership of residential real estate and general
conditions in the multi-family residential real estate market;
    
    The effects of changes in accounting policies and other regulatory matters
detailed in the Companys filings with the Securities and Exchange Commission and
uncertainties of litigation;
    
    The Companys ability to continue to qualify as a REIT under the Internal
Revenue Code; and
    
    Other factors, including the risk factors discussed on pages 7 through 14 of
the Companys Annual Report on Form 10-K for the year ended December 31, 2004.
  Critical Accounting Policies
    Results of Operations
    - 35 -




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   All Operating Communities
  Three months ended
    
    
    
    
    
    Six months endedJune 30,
    
    
    
    
    
    June 30,2005
    
    2004
    
    % Change
    
    2005
    
    2004
    
    % ChangeRental and other property revenuesFully stabilized communities (1)
    
    $
    63,515
    
    
    $
    62,319
    
    
    
    1.9
    %
    
    $
    125,928
    
    
    $
    124,182
    
    
    
    1.4
    %Communities stabilized in 2004
    
    
    1,761
    
    
    
    1,872
    
    
    
    (5.9
    )%
    
    
    3,521
    
    
    
    3,588
    
    
    
    (1.9
    )%Acquired communities (2)
    
    
    2,415
    
    
    
    206
    
    
    
    1,072.3
    %
    
    
    4,499
    
    
    
    206
    
    
    
    2,084.0
    %Other property segments (3)
    
    
    5,369
    
    
    
    5,416
    
    
    
    (0.9
    )%
    
    
    10,621
    
    
    
    10,449
    
    
    
    1.6
    %73,060
    
    
    
    69,813
    
    
    
    4.7
    %
    
    
    144,569
    
    
    
    138,425
    
    
    
    4.4
    %Property operating and maintenance
expenses (exclusive of
depreciation and amortization)Fully stabilized communities (1)
    
    
    24,727
    
    
    
    24,218
    
    
    
    2.1
    %
    
    
    49,570
    
    
    
    48,178
    
    
    
    2.9
    %Communities stabilized in 2004
    
    
    564
    
    
    
    505
    
    
    
    11.7
    %
    
    
    1,113
    
    
    
    980
    
    
    
    13.6
    %Acquired communities (2)
    
    
    719
    
    
    
    57
    
    
    
    1,161.4
    %
    
    
    1,468
    
    
    
    57
    
    
    
    2,475.4
    %Other expense (4)
    
    
    6,963
    
    
    
    5,841
    
    
    
    19.2
    %
    
    
    13,615
    
    
    
    11,878
    
    
    
    14.6
    %32,973
    
    
    
    30,621
    
    
    
    7.7
    %
    
    
    65,766
    
    
    
    61,093
    
    
    
    7.6
    %Property net operating income(5)
    
    $
    40,087
    
    
    $
    39,192
    
    
    
    2.3
    %
    
    $
    78,803
    
    
    $
    77,332
    
    
    
    1.9
    %Capital Expenditures(6)(7)Recurring capital expenditures:Carpet
    
    
    804
    
    
    
    552
    
    
    
    45.7
    %
    
    
    1,446
    
    
    
    1,164
    
    
    
    24.2
    %Other
    
    
    1,707
    
    
    
    1,647
    
    
    
    3.6
    %
    
    
    2,735
    
    
    
    2,817
    
    
    
    (2.9
    )%Total
    
    $
    2,511
    
    
    $
    2,199
    
    
    
    14.2
    %
    
    $
    4,181
    
    
    $
    3,981
    
    
    
    5.0
    %Non-recurring capital expenditures
    
    $
    1,112
    
    
    $
    901
    
    
    
    23.4
    %
    
    $
    1,986
    
    
    $
    2,117
    
    
    
    (6.2
    )%Average apartment units in service
    
    
    20,832
    
    
    
    20,227
    
    
    
    3.0
    %
    
    
    20,779
    
    
    
    20,227
    
    
    
    2.7
    %
 
 (1)
    
    Communities which reached stabilization prior to January 1, 2004.(2)
    
    Communities acquired subsequent to January 1, 2004.(3)
    
    Other property segment revenues include revenue from commercial properties,
from furnished apartment rentals above the unfurnished rental rates and any
property revenue not directly related to property operations. Other property
segment revenues exclude other corporate revenues of $61 and $47 for the three
months ended and $132 and $122 for the six months ended June 30, 2005 and 2004,
respectively.(4)
    
    Other expenses includes certain indirect central office operating expenses
related to management, grounds maintenance, and costs associated with commercial
properties and furnished apartment rentals.(5)
    
    A reconciliation of property net operating income to GAAP net income is
detailed below. - 36 -




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Three months ended
    
    Six months endedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Total same store NOI
    
    $
    38,788
    
    
    $
    38,101
    
    
    $
    76,358
    
    
    $
    76,004Property NOI from other operating segments
    
    
    1,299
    
    
    
    1,091
    
    
    
    2,445
    
    
    
    1,328Consolidated property NOI
    
    
    40,087
    
    
    
    39,192
    
    
    
    78,803
    
    
    
    77,332Add (subtract):Other revenues
    
    
    61
    
    
    
    47
    
    
    
    132
    
    
    
    122Interest income
    
    
    189
    
    
    
    213
    
    
    
    354
    
    
    
    393Minority interest in consolidated property
partnerships
    
    
    64
    
    
    
    248
    
    
    
    178
    
    
    
    432Depreciation
    
    
    (19,414
    )
    
    
    (19,689
    )
    
    
    (38,946
    )
    
    
    (39,312
    )Interest expense
    
    
    (15,206
    )
    
    
    (15,942
    )
    
    
    (30,885
    )
    
    
    (31,362
    )Amortization of deferred financing costs
    
    
    (1,029
    )
    
    
    (1,092
    )
    
    
    (2,717
    )
    
    
    (2,208
    )General and administrative
    
    
    (5,433
    )
    
    
    (5,476
    )
    
    
    (10,728
    )
    
    
    (10,119
    )Development costs and other expenses
    
    
    (740
    )
    
    
    (381
    )
    
    
    (1,837
    )
    
    
    (916
    )Equity in income of unconsolidated entities
    
    
    553
    
    
    
    207
    
    
    
    701
    
    
    
    422Gain on sale of technology investment
    
    
    
    
    
    
    
    
    
    
    5,267
    
    
    
    Minority interest of preferred unitholders
    
    
    
    
    
    
    (1,400
    )
    
    
    
    
    
    
    (2,800
    )Minority interest of common unitholders
    
    
    159
    
    
    
    365
    
    
    
    200
    
    
    
    964Income (loss) from continuing operations
    
    
    (709
    )
    
    
    (3,708
    )
    
    
    522
    
    
    
    (7,052
    )Income from discontinued operations
    
    
    59,152
    
    
    
    104,818
    
    
    
    62,599
    
    
    
    111,571Net income
    
    $
    58,443
    
    
    $
    101,110
    
    
    $
    63,121
    
    
    $
    104,519
 
 (6)
    
    In addition to those expenses which relate to property operations, the
Company incurs recurring and non-recurring expenditures relating to acquiring and

developing new assets, materially enhancing the value of an existing asset, or
substantially extending the useful life of an existing asset, all of which are
capitalized. Recurring capital expenditures are those that are generally expected
to be incurred on an annual basis. Non-recurring capital expenditures are those
that generally occur less frequently than on an annual basis.(7)
    
    A reconciliation of property capital expenditures from continuing operations
to total recurring and non-recurring capital expenditures as presented in the
consolidated statements of cash flows under GAAP is detailed below. Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Recurring capital expendituresContinuing operations
    
    $
    2,511
    
    
    $
    2,199
    
    
    $
    4,181
    
    
    $
    3,981Discontinued operations
    
    
    353
    
    
    
    572
    
    
    
    641
    
    
    
    1,212Total recurring capital
expenditures per statements of
cash flows
    
    $
    2,864
    
    
    $
    2,771
    
    
    $
    4,822
    
    
    $
    5,193Non-recurring capital expendituresContinuing operations
    
    $
    1,112
    
    
    $
    901
    
    
    $
    1,986
    
    
    $
    2,117Discontinued operations
    
    
    15
    
    
    
    401
    
    
    
    43
    
    
    
    429Total non-recurring capital
expenditures per statements of
cash flows
    
    $
    1,127
    
    
    $
    1,302
    
    
    $
    2,029
    
    
    $
    2,546
 - 37 -




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Stabilized Communities
  Three months ended
    
    
    
    
    
    Six months endedJune 30,
    
    
    
    
    
    June 30,2005
    
    2004
    
    % Change
    
    2005
    
    2004
    
    % ChangeRental and other revenues
    
    $
    63,515
    
    
    $
    62,319
    
    
    
    1.9
    %
    
    $
    125,928
    
    
    $
    124,182
    
    
    
    1.4
    %Property operating and maintenance
expenses (excluding depreciation and
amortization)
    
    
    24,727
    
    
    
    24,218
    
    
    
    2.1
    %
    
    
    49,570
    
    
    
    48,178
    
    
    
    2.9
    %Same store net operating income (1)
    
    $
    38,788
    
    
    $
    38,101
    
    
    
    1.8
    %
    
    $
    76,358
    
    
    $
    76,004
    
    
    
    0.5
    %Capital expenditures (2)
RecurringCarpet
    
    $
    705
    
    
    $
    568
    
    
    
    24.1
    %
    
    $
    1,260
    
    
    $
    1,164
    
    
    
    8.2
    %Other
    
    
    1,618
    
    
    
    1,613
    
    
    
    0.3
    %
    
    
    2,638
    
    
    
    2,786
    
    
    
    (5.3
    )%Total recurring
    
    
    2,323
    
    
    
    2,181
    
    
    
    6.5
    %
    
    
    3,898
    
    
    
    3,950
    
    
    
    (1.3
    )%Non-recurring
    
    
    715
    
    
    
    817
    
    
    
    (12.5
    )%
    
    
    1,333
    
    
    
    1,961
    
    
    
    (32.0
    )%Total capital expenditures (A)
    
    $
    3,038
    
    
    $
    2,998
    
    
    
    1.3
    %
    
    $
    5,231
    
    
    $
    5,911
    
    
    
    (11.5
    )%Total capital expenditures per unit
(A÷20,028 units)
    
    $
    152
    
    
    $
    150
    
    
    
    1.3
    %
    
    $
    261
    
    
    $
    295
    
    
    
    (11.5
    )%Average economic occupancy (3)
    
    
    93.7
    %
    
    
    93.6
    %
    
    
    0.1
    %
    
    
    93.6
    %
    
    
    93.3
    %
    
    
    0.3
    %Average monthly rental rate per unit (4)
    
    $
    1,051
    
    
    $
    1,033
    
    
    
    1.7
    %
    
    $
    1,047
    
    
    $
    1,034
    
    
    
    1.3
    %
 
 (1)
    
    Net operating income of stabilized communities is a supplemental non-GAAP financial
measure. See note 7 to the consolidated financial statements for a reconciliation of net
operating income for stabilized communities to GAAP net income.(2)
    
    A reconciliation of these segment components of property capital expenditures to total
recurring and non-recurring capital expenditures as presented in the consolidated
statements of cash flows prepared under GAAP is detailed below. Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Recurring capital expenditures by operating segment
Same store
    
    $
    2,323
    
    
    $
    2,181
    
    
    $
    3,898
    
    
    $
    3,950Partially stabilized
    
    
    3
    
    
    
    5
    
    
    
    7
    
    
    
    12Construction and lease-up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other segments
    
    
    538
    
    
    
    585
    
    
    
    917
    
    
    
    1,231Total recurring capital expenditures per statements of cash flows
    
    $
    2,864
    
    
    $
    2,771
    
    
    $
    4,822
    
    
    $
    5,193Non-recurring capital expenditures by operating segment
Same store
    
    $
    715
    
    
    $
    817
    
    
    $
    1,333
    
    
    $
    1,961Partially stabilized
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Construction and lease-up
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other segments
    
    
    412
    
    
    
    485
    
    
    
    696
    
    
    
    585Total non-recurring capital expenditures per statements of cash flows
    
    $
    1,127
    
    
    $
    1,302
    
    
    $
    2,029
    
    
    $
    2,546
 
 The Company uses same store recurring and non-recurring capital expenditures as cash
flow measures. Same store recurring and non-recurring capital expenditures are supplemental
non-GAAP financial measures. The Company believes that same store recurring and
non-recurring capital expenditures are important indicators of the costs incurred by the
Company in maintaining same store communities. The corresponding GAAP measures include
information with respect to the Companys other operating segments consisting of communities
stabilized in the prior year, lease-up communities, and sold communities in addition to same
store information. Therefore, the Company believes that the Companys presentation of same
store recurring and non-recurring capital expenditures is necessary to demonstrate same
store replacement costs over time. The Company believes that the most directly comparable
GAAP measure to same store recurring and non-recurring capital expenditures are the lines on
the Companys consolidated statements of cash flows entitled recurring capital
expenditures and non-recurring capital expenditures.(3)
    
    Average economic occupancy is defined as gross potential rent less vacancy losses, model
expenses and bad debt expenses divided by gross potential rent for the period, expressed
as a percentage. Gross potential rent is defined as the sum of the gross actual rental
rates for leased units and the anticipated rental rates for unoccupied units. The
calculation of average economic occupancy does not include a deduction for net concessions
and employee discounts. Average economic occupancy including these amounts would have
been 93.0% and 93.2% for the three months ended and 93.0% and 93.0% for the six months
ended June 30, 2005 and 2004, respectively. For the three months ended June 30, 2005 and
2004, net concessions were $341 and $142, respectively, and employee discounts were $107
and $115, respectively. For the six months ended June 30, 2005 and 2004, net concessions
were $612 and $199, respectively, and employee discounts were $216 and $230, respectively.(4)
    
    Average monthly rental rate is defined as the average of the gross actual rental rates
for leased units and the average of the anticipated rental rates for unoccupied units,
divided by total units. - 38 -




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Comparison of Three Months Ended June 30, 2005 to Three Months Ended June 30, 2004
         -39-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Stabilized Communities
   Comparison of Six Months Ended June 30, 2005 to Six Months Ended June 30, 2004
    -40-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
       Stabilized Communities
   -41-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Discontinued Operations
   Outlook
      -42-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   Liquidity and Capital Resources
         -43-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     Long-term Debt Issuances and Retirements
     -44-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Stock Repurchase Program
   Capitalization of Fixed Assets and Community Improvements
    -45-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004New community development and acquisition activity(1)
    
    $
    78,410
    
    
    $
    37,249
    
    
    $
    93,397
    
    
    $
    37,542Non-recurring capital expendituresRevenue generating additions and improvements (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26Other community additions and improvements (3)
    
    
    1,127
    
    
    
    1,302
    
    
    
    2,029
    
    
    
    2,546Recurring capital expendituresCarpet replacements and other community additions
and improvements (4)
    
    
    2,864
    
    
    
    2,771
    
    
    
    4,822
    
    
    
    5,193Corporate additions and improvements
    
    
    278
    
    
    
    153
    
    
    
    978
    
    
    
    287$
    82,679
    
    
    $
    41,475
    
    
    $
    101,226
    
    
    $
    45,594Other DataCapitalized interest
    
    $
    416
    
    
    $
    261
    
    
    $
    783
    
    
    $
    500Capitalized development costs and fees (5)
    
    $
    316
    
    
    $
    250
    
    
    $
    566
    
    
    $
    499
 
 (1)
    
    Reflects aggregate community development costs, exclusive of the
change in construction payables between years.(2)
    
    Represents expenditures for major renovations of communities,
water sub-metering equipment and other upgrade costs that enhance the
rental value of such units.(3)
    
    Represents property improvement expenditures that generally occur
less frequently than on an annual basis.(4)
    
    Represents property improvement expenditures of a type that are
expected to be incurred on an annual basis.(5)
    
    Reflects internal personnel and associated costs capitalized to
construction and development activities. Current Development Activity
  Estimated
    
    Amount
    
    
    
    
    
    
    
    
    
    EstimatedConstruction
    
    Spent
    
    Quarter of
    
    Quarter of
    
    Quarter ofCost
    
    as of
    
    Construction
    
    First Units
    
    StabilizedMetropolitan Area
    
    Number of Units
    
    ($ in millions)
    
    06/30/2005
    
    Start
    
    Available
    
    Occupancy (1)Construction/Lease-up
CommunitiesWashington D.C.Post
CarlyleTM  Apartment and Condominiums (2)
    
    
    350
    
    
    $
    97
    
    
    $
    34
    
    
    
    4Q 2004
    
    
    
    2Q 2006
    
    
    
    2Q 2007Construction/Lease-Up Communities
    
    
    350
    
    
    $
    97
    
    
    $
    34
 
 (1)
    
    The Company defines stabilized occupancy as the earlier to occur of (i) the
attainment of 95% physical occupancy on the first day of any month or (ii) one year
after completion of construction.(2)
    
    The condominium component of the project, consisting of 145 units, is being developed
in a majority owned joint venture with a Washington D.C. based developer. As of July
29, 2005, the Company has 64 units under contract for sale upon completion and delivery
of the units. The first condominium units at this project are expected to be delivered
in late 2006. There can be no assurance that condominium units under contract will
close. Inflation
  -46-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Funds from Operations
     Three months ended
    
    Six months endedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004Net income available to common shareholders
    
    $
    56,534
    
    
    $
    99,201
    
    
    $
    59,302
    
    
    $
    98,296Minority interest of common unitholders  continuing operations
    
    
    (159
    )
    
    
    (365
    )
    
    
    (200
    )
    
    
    (964
    )Minority interest in discontinued operations (1)
    
    
    3,575
    
    
    
    7,574
    
    
    
    3,783
    
    
    
    8,102Depreciation on wholly-owned real estate assets, net (2)
    
    
    18,636
    
    
    
    20,107
    
    
    
    37,385
    
    
    
    40,145Depreciation on real estate assets held in unconsolidated entities
    
    
    224
    
    
    
    331
    
    
    
    521
    
    
    
    662Gains on sales of real estate assets, net of provision for income
taxes  discontinued operations
    
    
    (62,480
    )
    
    
    (112,112
    )
    
    
    (62,839
    )
    
    
    (113,739
    )Incremental gains on condominium sales, net of provision for income
taxes (3)
    
    
    5,971
    
    
    
    
    
    
    
    6,330
    
    
    
    Gains on sales of real estate assets  unconsolidated entities
    
    
    (201
    )
    
    
    
    
    
    
    (201
    )
    
    
    Incremental gains on condominium sales  unconsolidated entities (3)
    
    
    35
    
    
    
    
    
    
    
    35
    
    
    
    Funds from operations available to common shareholders
and unitholders(4)
    
    $
    22,135
    
    
    $
    14,736
    
    
    $
    44,116
    
    
    $
    32,502Cash flow provided by (used in):Operating activities
    
    $
    27,025
    
    
    $
    29,608
    
    
    $
    50,648
    
    
    $
    58,500Investing activities
    
    $
    15,587
    
    
    $
    96,412
    
    
    $
    (9,616
    )
    
    $
    145,209Financing activities
    
    $
    (41,378
    )
    
    $
    (87,676
    )
    
    $
    (36,986
    )
    
    $
    (149,752
    )Weighted average shares outstanding  basic
    
    
    39,930
    
    
    
    39,807
    
    
    
    40,048
    
    
    
    39,595Weighted average shares and units outstanding  basic
    
    
    42,325
    
    
    
    42,478
    
    
    
    42,469
    
    
    
    42,469Weighted average shares outstanding  diluted (5)
    
    
    40,180
    
    
    
    39,853
    
    
    
    40,284
    
    
    
    39,645Weighted average shares and units outstanding  diluted (5)
    
    
    42,575
    
    
    
    42,524
    
    
    
    42,705
    
    
    
    42,520
 
 (1)
    
    Represents the minority interest in earnings and gains (losses) on properties held for sale
and sold reported as discontinued operations for the periods presented.(2)
    
    Depreciation on wholly-owned real estate assets is net of the minority interest portion of
depreciation in consolidated entities.(3)
    
    The Company recognizes incremental gains on condominium sales in FFO, net of provision for
income taxes to the extent that net sales proceeds from the sale of condominium units exceeds
the greater of their fair value or net book value as of the date the property is acquired by
its taxable REIT subsidiary.(4)
    
    Funds from operations for the three and six months ended June 30, 2005 include a loss of
$1,374 from the early extinguishment of debt associated with asset sales and for the six
months ended June 30, 2005 FFO includes a gain of $5,267 on the sale of a technology
investment. Funds from operation for the three months ended June 30, 2004,
include a loss of $4,128 from the early extinguishment of debt associated with asset sales and
a $626 asset impairment charge. Funds from operations for the six months ended June 30, 2004
also include a reduction for preferred stock redemption costs of $1,716.(5)
    
    Diluted weighted average shares and units for the three months ended June 30, 2005 and 2004
include 250 and 46 shares and units, respectively, that were antidilutive to all income (loss)
per share computations under generally accepted accounting principles. Diluted weighted
average shares and units for the six months ended June 30, 2005 and 2004 include 236 and 51
shares and units, respectively, that were antidilutive to all income (loss) per share
computations under generally accepted accounting principles. -47-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
    
    maintain a conservative ratio of fixed rate, long-term debt to total debt such that
variable rate exposure is kept at an acceptable level;
    
    fix certain long-term variable rate debt through the use of interest rate swaps or
interest rate caps with appropriately matching maturities;
    
    use treasury locks where appropriate to fix rates on anticipated debt transactions; and
    
    take advantage of favorable market conditions for long-term debt and/or equity.
   ExpectedAverage
    
    Average
    
    SettlementInterest Rate Derivatives
    
    Notional Amount
    
    Pay Rate/Cap Rate
    
    Receive Rate
    
    Date
    
    Fair ValueAsset (Liab.)Interest Rate Swap
Variable to fixed
    
    $104,000 amortizing
    
    
    6.04
    %
    
    1 month LIBOR
    
    
    7/31/09
    
    
    $
    (7,358
    )to $90,270Interest Rate Cap
    
    $
    75,995
    
    
    
    5.00
    %
    
    
    
    
    
    
    2/01/08
    
    
    
    27$
    (7,331
    )
   
 ITEM 4. CONTROLS AND PROCEDURES
   -48-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
    -49-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 (a)
    
    through (b)  None(c)
    
    The following table summarizes the Companys purchases of its equity securities
in the three months ended June 30, 2005 (in thousands, except per share amounts).
 ApproximateTotal Number of
    
    Dollar Value ofShares Purchased
    
    Shares that Mayas Part of Publicly
    
    Yet Be PurchasedTotal Number of
    
    Average Price Paid
    
    Announced Plans
    
    Under the PlansPeriod
    
    Shares Purchased
    
    Per Share
    
    or Programs
    
    or Programs(1)April 1, 2005 to
April 30, 2005
    
    
    206
    

    
    $
    30.75
    
    
    
    206
    
    
    $
    184,607May 1, 2005 to
May 31, 2005
    
    
    62
    
    
    $
    32.34
    
    
    
    62
    
    
    $
    182,608June 1, 2005 to
June 30, 2005
    
    
    107
    
    
    $
    36.43
    
    
    
    107
    
    
    $
    178,717Total
    
    
    375
    
    
    $
    32.63
    
    
    
    375
    
    
    $
    178,717
 
 (1)
    
    In the fourth quarter of 2004, the Companys board of directors
approved a stock repurchase program under which the Company may
repurchase up to $200,000 of common or preferred stock through
December 31, 2006. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  Election of Directors
 Nominees for Board of Directors
 For
    
    WithheldRobert C. Goddard, III
    
    36,796,389
    
    715,973David P. Stockert
    
    36,714,502
    
    797,860Herschel M. Bloom
    
    36,333,903
    
    1,178,459Douglas Crocker III
    
    36,716,009
    
    796,353Walter M. Deriso, Jr.
    
    36,318,049
    
    1,194,313Russell R. French
    
    35,956,528
    
    1,555,834Nicholas B. Paumgarten
    
    36,285,362
    
    1,227,000Charles E. Rice
    
    36,790,750
    
    721,612Ronald de Waal
    
    36,799,121
    
    713,241
 A Proposal To Adopt The 2005 Non-Qualified Employee Stock Purchase Plan
 For
    
    Against
    
    Abstain
    
    Broker Non-Votes28,471,436
    
    2,596,103
    
    582,266
    
    5,862,556
 
 ITEM 5. OTHER INFORMATION
  -50-




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##### Table of Contents



MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
 ITEM 6. EXHIBITS
  (a)
    
    Exhibits3.1(a)
    
    Articles of Incorporation of the Company.3.2(b)
    
    Articles of Amendment to the Articles of Incorporation of the Company.3.3(b)
    
    Articles of Amendment to the Articles of Incorporation of the Company.3.4(b)
    
    Articles of Amendment to the Articles of Incorporation of the Company.3.5(c)
    
    Articles of Amendment to the Articles of Incorporation of the Company.3.6(d)
    
    Bylaws of the Company, as Amended and Restated as of November 5, 2003, as further amended
effective May 27, 2004.4.1(e)
    
    Indenture between the Company and SunTrust Bank, as Trustee.4.2(e)
    
    First Supplemental Indenture to the Indenture between the Company and SunTrust Bank, as Trustee.10.1
    
    Purchase and Sale Agreement, dated June 10, 2005, by and among Post Apartment Homes, L.P. and
RREEF America, L.L.C.10.2(f)
    
    2005 Post Properties, Inc. Non-Qualified Employee Stock Purchase Plan.11.1(g)
    
    Statement Regarding Computation of Per Share Earnings.31.1
    
    Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of
the Securities Exchange Act of 1934, as amended, as adopted under Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of
the Securities Exchange Act of 1934, as amended, as adopted under Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted under
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted under
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (a)
    
    Filed as an exhibit to the Registration Statement on Form S-11 (SEC File No. 33-61936), as
amended, of the Company and incorporated herein by reference.(b)
    
    Filed as an exhibit to the Annual Report on Form 10-K of the Registrants for the year ended
December 31, 2002 and incorporated herein by reference.(c)
    
    Filed as an exhibit of the Quarterly Report on Form 10-Q of the Registrants for the quarter
ended September 30, 1999 and incorporated herein by reference.(d)
    
    Filed as Appendix A to the 2004 proxy statement and incorporated herein by reference.(e)
    
    Filed as an exhibit to the Registration Statement on Form S-3 (SEC File No. 333-42884), as
amended, of the Company and incorporated herein by reference.(f)
    
    Filed as Appendix A to the 2005 proxy statement and incorporated herein by reference.(g)
    
    The information required by this exhibit is included in note 5 to the consolidated financial
statements and incorporated herein by reference. -51-




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##### Table of Contents



SIGNATURES
  POST PROPERTIES, INC.August 9, 2005
    By
    /s/ David P. StockertDavid P. StockertPresident and Chief Executive Officer August 9, 2005
    By
    /s/ Christopher J. PapaChristopher J. PapaExecutive Vice President and Chief Financial Officer August 9, 2005
    By
    /s/ Arthur J. QuirkArthur J. QuirkSenior Vice President and Chief Accounting Officer -52-




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##### Table of Contents



SIGNATURES
  POST APARTMENT HOMES, L.P.By:
    Post GP Holdings, Inc., its sole general partnerAugust 9, 2005
    By
    /s/ David P. StockertDavid P. Stockert

President and Chief Executive Officer August 9, 2005
    By
    /s/ Christopher J. PapaChristopher J. PapaExecutive Vice President and Chief Financial Officer August 9, 2005
    By
    /s/ Arthur J. QuirkArthur J. QuirkSenior Vice President and Chief Accounting Officer -53-




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##### Table of Contents



EXHIBIT INDEX
 (a)
    
    Exhibits3.1(a)
    
    Articles of Incorporation of the Company.3.2(b)
    
    Articles of Amendment to the Articles of Incorporation of the Company.3.3(b)
    
    Articles of Amendment to the Articles of Incorporation of the Company.3.4(b)
    
    Articles of Amendment to the Articles of Incorporation of the Company.3.5(c)
    
    Articles of Amendment to the Articles of Incorporation of the Company.3.6(d)
    
    Bylaws of the Company, as Amended and Restated as of November 5, 2003, as further amended
effective May 27, 2004.4.1(e)
    
    Indenture between the Company and SunTrust Bank, as Trustee.4.2(e)
    
    First Supplemental Indenture to the Indenture between the Company and SunTrust Bank, as Trustee.10.1
    
    Purchase and Sale Agreement, dated June 10, 2005, by and among Post Apartment Homes, L.P. and
RREEF America, L.L.C.10.2(f)
    
    2005 Post Properties, Inc. Non-Qualified Employee Stock Purchase Plan.11.1(g)
    
    Statement Regarding Computation of Per Share Earnings.31.1
    
    Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of
the Securities Exchange Act of 1934, as amended, as adopted under Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of
the Securities Exchange Act of 1934, as amended, as adopted under Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted under
Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted under
Section 906 of the Sarbanes-Oxley Act of 2002.
 
 (a)
    
    Filed as an exhibit to the Registration Statement on Form S-11 (SEC File No. 33-61936), as
amended, of the Company and incorporated herein by reference.(b)
    
    Filed as an exhibit to the Annual Report on Form 10-K of the Registrants for the year ended
December 31, 2002 and incorporated herein by reference.(c)
    
    Filed as an exhibit of the Quarterly Report on Form 10-Q of the Registrants for the quarter
ended September 30, 1999 and incorporated herein by reference.(d)
    
    Filed as Appendix A to the 2004 proxy statement and incorporated herein by reference.(e)
    
    Filed as an exhibit to the Registration Statement on Form S-3 (SEC File No. 333-42884), as
amended, of the Company and incorporated herein by reference.(f)
    
    Filed as Appendix A to the 2005 proxy statement and incorporated herein by reference.(g)
    
    The information required by this exhibit is included in note 5 to the consolidated financial
statements and incorporated herein by reference. -54-