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Corrections Corporation of America Message Board

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    • The point that jumped out was the pro-froma
      consolidated income statement shows a 1Q loss, but if you add
      back depreciation the company was break-even. These
      numbers were prepared on a different basis than the
      actual results and excluded some costs such as the
      default premium paid on the loan facility. But they still
      make the point that even in a difficult period the
      company was bruised, but not bleeding.

      Lawsuits
      not settled yet. The litigants may have been using
      the PL deal as leverage to force a settlement. Now
      the company has no incentive to do
      anything.

      No clear info on the failure to pay the break-up fee
      to BS.

      A competitor proposed a merger in late
      March.

      Rights offering still planned for this year.

    • The proxy statement said that the company will
      get around to paying the REIT dividend in the 4th
      quarter. IMO, that means December 31. So you get $2.50 per
      share equivalent, but you have to hold the stock till
      December to find out. If there isn't another deal before
      that time. Kind of reminds me of a girl I met back in
      the service. Promised to leave with me if I bought
      her one more drink. I decided it wasn't worth it.

    • Your response on book value is meaningless in
      relation to my statements, because you include non-REITs.
      All I am saying is that book value should not be
      ignored when looking at REITs. You are saying that the
      book value of a REIT should be completely ignored. You
      are wrong.

      Regarding "Sources and Uses of
      Cash", if you work on Wall Street, you should know that
      a statements of cash flow can be finagled. All
      financial statements are can be finagled. The reason that
      Income Statements are produced is that Cash Flow
      statements can be misleading, in that expenses can be
      deferred and revenues can be accelerated. So you need to
      look at cash flow, income, and the balance
      sheet.

      You are saying we should ignore the balance sheet.
      That is always foolish to some degree, but it is
      especially foolish with respect to a REIT.

    • But aren't we going to de-reit?
      Maybe we
      should take a look at debt coverage and cash flow
      numbers to get an idea of where we're going. Also, won't
      the merger make the
      current book value numbers
      meaningless?

    • Yes we are going to de-REIT (but we haven't yet).
      Even so, this will be a company with a lot of real
      estate assets. I do not see how the re-merger makes book
      value meaningless. I think it makes book value all the
      more interesting. Remember, we are remerging (at a
      cost of $20mm) with a bankrupt company. CCA owes far
      more than it owns. You and brendy may think that is
      meaningless, but I do not. (Please do not ask me for a loan!)
      I would consider it very meaningful if the
      re-merged company, with real estate at cost less
      depreciation, owns more than it owes. Whether we can get an
      honest statement of that is another matter. Still, it is
      something to want to know.

      Regarding debt coverage
      and cash flow numbers, of course they are of
      interest. We should be looking at everything.

    • is based on the post merger balance
      sheet
      constructed by the accountants
      on a pro-forma basis. In
      other words
      what the first quarters balance
      sheet
      and income statement would have
      looked like if
      the merger had taken
      place at the end of 1999.
      There is
      also a pro forma Balance Sheet
      and
      Income statement in the proxy for
      the entire year of
      1999

    • that it made a strategic error in
      becoming a
      REIT in the first place.
      It forced all Reit
      earnings (whichI
      assiume to include depreciation

      generated cash flow?) to be paid
      out as dividends.
      Therefor it had
      to incur high interest expense
      when
      building new prisons instead of
      using internally
      generated and retained cash. It states for this
      reason
      it lost credibility on Wall
      street and could not
      get new equity
      financing. With Pac Life out of
      the
      way. They only need under this
      agreement to raise
      50,000,000 thru
      the proposed new rights
      offering.
      After the merger and 3d and 4th
      quarter positive
      earnings are posted
      PZN will once again be a growth
      stock.

    • But I guess like many, you prefer
      other
      people's posts to say what
      you pretend them to say. I

      said the merger would make the "current" BV numbers
      meaningless.
      But, again, it is far less
      relevant to a c-corp
      than to a
      REIT. If you doubt this, why don't you
      spend some of your abundant
      and clearly misused
      time looking at REITS that have de-REITED. Cash

      flow and EPS are what drives
      their shares, not BV.

    • Absolutely right. This is exactly what the
      Yieldseeker mentalities don't grasp. PZN tried to use the
      REIT structure as a growth structure. They and
      everyone else who have tried this have failed
      (take a
      look at the paired share craze, for
      example).

      REITS are primarily income instruments and are not
      really, growth vehicles, though some achieve marginal,
      single digit growth over
      the longer term.

      The
      reason REITS aren't suited for growth is because their
      tax structure allows for little or no retained
      earnings because it all has to be paid out in dividends.
      In other words, anyone trying to use a REIT as a
      growth structure is highly reliant on outside capital.
      This is
      evident when PZN loaded up on debt to pay
      for its building binge.

      Once the C-corp
      structure is
      brought back, PZN will be able to use its
      cash flow to pay down debt and maintain a sane,
      planned growth strategy, provided we get good management.
      This is why so many of the REIT measures (BV, FFO,
      NAV) aren't so relevant to the future valuation of
      PZN. Look to EPS and
      debt coverage. That will
      ultimately tell the tale.

    • I believe that REITs need only pay out earnings.
      That means they can use depreciation for new
      investments, to the extent not required for improvements,
      etc.

      We have been told for a long time on this board that
      the REIT creation was an error. I doubt that. Many
      REITs are well-run, able to reinvest some FOF, and
      grow. I believe that PZN (and CCA) have failed because
      they were not well run. As a REIT you can not expand
      rapidly unless the market for REIT-issued securities is
      strong. PZN became a REIT just as the REIT market went
      into a sharp decline, AND PZN EXPANDED ANYWAY.
      Well-run REITs change plans as needed. PZN did
      not.

      We are getting new management, so we are told. The
      question is, will they be smarter than the old management?

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