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Corrections Corporation of America Message Board

  • frank101_99 frank101_99 Apr 14, 1999 9:30 PM Flag

    Can somebody please explain?

    Please tell me if I got this right. CCA merged
    with PZN and said their intention was to become a
    REIT. In order to qualify as a REIT, you must, among
    other things, derive most of your earnings from real
    estate, and pass on at least 95% of your earnings to your
    shareholders. Standard and Poor's says that later this year PZN
    will have to spinoff the management part of the
    business to a company closely held by CCA and PZN
    executives before it can become qualify as a REIT; S&P also
    says that this is the profitable segment of the

    My question is this: When I read that First Call
    estimates earnings of $2.67 a share this year and $3.11
    next year, is this based on the company as it
    presently is, before becoming a REIT? If I am reading this
    correctly, once the management side of PZN gets spun-off,
    PZN will loose any revenue derived from it. And most
    of the revenue will have to come from leasing the
    real estate. I called the company 3 times to find out
    the answer and I'm still waiting for the I.R. lady to
    call me back. Any insight into this question will be

    BTW, this coming weekends edition of Wall Street Week
    is going to feature real estate. If I remember
    correctly, there will be 3 analysts discussing various
    aspects of real estate, which will have to include REITs.
    It would be nice if one of the analyst recommended
    PZN. It sure would give a nice boost to the stock.

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    • I have also called the IR lady twice in the last
      two days to try and get a better understanding of
      this special dividend. No reply yet either. Is this
      typical of this company? If it is they need to make some
      changes at headquarters.

      • 1 Reply to therealwarrenbuffett
      • Jake 1349 summed up the dividend situation as
        succinctly as possible in #800.

        The reason there is a
        special dividend is that the new PZN is treated for tax
        and accounting purposes as if it were the old CCA,
        having acquired the old PZN.

        To be a REIT, new
        PZN can't have any of CCA's "earnings and profits".
        That's a tax term, but it is essentially retained
        earnings. Thus new PZN has to pay out old CCA's retained
        earnings by the end of this year in order to be a

        You have to be a shareholder of record when the
        special dividend is formally declared (as Jake said, .05
        per quarter through September, then about 1.85 in

    • Those First Call estimates are for the company as
      it presently is, but it is now a REIT. The
      "spin-off" has already happenned. Organizationally and
      Operationally, as of 1/1/99 the deal was done. I think the
      earnings projections you mentioned are actually FFO (funds
      from operations)figures, not earnigs per

      The "Management" side of the business has already
      been seperated from the Property Ownership side but a
      substantial part of the profitability from the "management"
      side is essentially being sent back to the REIT.
      Therein lies the basis for the argument of whether or not
      the IRS will allow the present

      Confused? You are not alone and this is in large part why
      the stock is at $16 instead of $26.

      There is
      certainly a better way to explain what I've just said but
      those that can say it better have said it so many times
      they've just given up.

    • Minus the $4+ dollars in payout in the next year
      alone, this dividend adjusted price $15-$4=$11....will
      represent the PRIVATE construction cost(not even inflated
      Public construction cost)of all of PZN beds.

      traded at that level last Oct ($10+), of course
      pre-merger. It represented one of the finest buying points
      you can have in buying a stock on a fundamental

    • Mr. Dill

    • In the latter half of April, 26,500 shares were
      added to the 115,924,218 S/O, a/o 4/15/99, bringing the
      total S/O, a/o 4/30/99, to 115,950,718.

      yesterday, 5/03/99, HSBC purchased an additional 1,122,074
      shares, bringing the current S/O to

      At today's closing price of 20.0625 for PZN, its MC
      calcs to $2.349 billion, which is about 3.57% higher
      than the $2.268 billion that Yahoo is currently
      displaying, widening further the disparity between Market
      Guide's data (as furnished to Yahoo) and the extant
      reality due to MG falling further behind the times
      insofar as PZN's S/O is concerned.

    • Nice that you worried about me. I survived the
      slippery slopes of the Continetal Divide on the Alberta/BC
      border, and will soon be travelling near Serbia. And to
      top it off, I bought some more PZN!

      RE the
      10K/proxy: sure the Board is incestuous -aren't they all? I
      don't know many of the board members, so I don't know
      if they are worth the big bucks or not (by the way,
      Beth Moore's (corporate counsel) husband is not
      returning to the board.

      Some of the financial deals
      disclosed are too sophisticated for me to figure out. I
      gloss over them thinking that even if they are
      sweetheart deals, not enough money is involved to get
      excited about. Sorry, I still don't think Doc is
      dishonest, and I just don't worry about it. Doesn't mean I'm
      happy with the REIT.

      I also noticed that Baron
      wasn't listed as a 16% S/H of OPCO. I didn't bother
      going back to see if he and Sodexho were both 16% S/Hs
      or both 8% S/Hs. I think both 16. Seemed like he was
      in for the long haul. Again, whether he stays or
      goes, I just don't care.

      I did tell you not long
      ago that I was generally better off because of PZN
      (well, old CCA). I will now confess: I am pissed off
      about the current market value. It sucks, without
      question. You (and others) are justifiably angry. BUT -
      what can we do about it? You can sell. You can sue.
      You can hang in there. So far, I still choose to
      believe that Doc and Co. can make the value go up, even
      in this stupid REIT format.

    • I failed to get the posting giving your creditials to evaluate correctional training. Do you have first hand knowledge or are you just seeing us as a threat to you?

    • Do you think you know me?

    • Haven't forgotten or been ignoring

      When you posted #885 three days ago, I called The
      Oracle at Delphi to see what he had to say and found
      that he wasn't as encouraged about PZN's behavior as I
      was inclined to be. This is not to preclude the fact
      that he'd been "nibbling." (Note to Nic, I said
      "nibbling", not "nipping".)

      He was aware (as I pointed
      out) that PZN had, at that time, penetrated above its
      50 DMA and, the day before (Monday, 4/19/99), had
      violated its most recent (revised) long-term downtrend
      line which originated a year earlier at 4/20/98's
      intra-day high of 41.9375. That, of course, was the day the
      proposed merger annoumcement was released in the wee hours
      of the morning.

      Despite PZN's continued
      positive movement thus far this week, The Oracle is yet to
      be convinced by its "technicals" that it couldn't
      retest its lows.

      As he sees it, PZN is reacting
      to the strength the REIT sector has been exhibiting
      recently and has been, as pascoe has pointed out in #906,
      a laggard in that regard. This may also answer
      mikehickey's question in #938.

      The Oracle feels that
      PZN has yet to "technically" distinguish itself and
      while the positives of the current market (such as
      broader participation by the small and mid caps as well
      as a shifting towards "value" from "growth") have
      been working to PZN's benefit, if a change in market
      sentiment should occur, he believes PZN could be back down
      in the basement, possibly at the 15.000 to 15.500

      Now I realize, having said this, that some lurkers
      out there who may have been encouraged by PZN's
      recent "rays of hope" might not be too thrilled with The
      Oracle's opinion but it must be remembered that (a) the
      Oracle had been a recent accumulator of PZN (I did not
      ask him @ what prices) and (b) the Oracle is not
      saying that it WILL happen, he's only saying that the
      technicals, to date, merely indicate that it COULD

      So I asked him, "Well what kind of scenario would
      change your mind?", and this is what he told

      The Oracle would like to see PZN get above 21 3/16.
      He'd like to see it open some morning with a gap up
      and trade at least a multiple (I interpret that to
      mean at least a double) of its ADV that session.
      needs to see strong volume.

      If this scenario
      should occur, The Oracle would wait for a pullback to
      the 18.500 level which, he says, "is a good buying
      range." The Oracle says that he'd rather be a buyer on a
      pullback to that (18.500) level than he would being a
      buyer should PZN fall back down to the 15.500 level
      because the technicals (of the scenario) would have
      indicated a reversal of trend.

      I hope that's
      responding to your question, flipper.

    • receive a dividend check through the mail

      1. You were an owner of record of PZN shares on
      March 19, 1999 (see PZN's News page for its 3/05/99
      announcement of its 1Q99 dividend declaration). Due to normal
      3-day settlement, I believe you would have had to have
      purchased those shares at least 3 business days prior to
      3/19/99 for your transaction to have "settled" on
      3/19/99, according you the shareholder's entitlement to
      the dividend (If I'm in error about this--it's been
      awhile--, I'm certain that there will be many learned souls
      lurking out there to set the General straight.),

      2. You held the share certificates in YOUR NAME and
      the physical certificates had been issued to YOU, and
      were in the possession of YOU or some entity (i.e.
      safe deposit box) other than in your account at the
      brokerage firm (referred to as being held in "Street

      If your shares are held in Street Name, the dividend
      should've been credited to your brokerage account on the
      day the dividend was paid, which was 3/31/99. If that
      was the case, you need to requwst your brokerage firm
      to issue a check to you for the amount of the
      dividend that was credited.

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