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  • newMK newMK Jan 15, 1999 12:22 AM Flag

    div & pzn price

    While PZN appears to be the surviving corporation
    (it actually isn't, as they both merged into a new
    corp - although I think PZN was treated as going first
    - can't remember and too lazy to look)for
    accounting purposes CCA is treated as the survivor (as if it
    bought PZN). Thus all of CCA's historical info will be
    used, and PZN's will disappear. (This is different than
    a pooling of interests where the combined histories
    are shown).

    That reminds me. Somewhere there
    was discussion of the step-up of PZN's assets to
    appraised value, which would increase the depreciation.
    Unfortunately, while that is true for financial statements and
    reported FFO (reduces FFO), it's not true for tax
    purposes. Tax-wise this IS treated as a "pooling" (tax-free
    merger), so there is no step up and taxable income will be
    higher than book income. This may account for the high
    percentage (85%) of FFO to be paid out, since dividends are
    locked in at 95% of taxable income. The more that is
    paid out, the more equity that must be issued.

    In the past, CCA went out of its way to get pooling
    treatment for its acquisitions. Now we get purchase
    accounting and the balance sheet looks stronger (forget the
    income statement). Ahhh...the topsy-turvy world of

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