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Corrections Corporation of America Message Board

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  • newMK newMK Sep 8, 1999 10:28 PM Flag

    badly broken

    TI, you're almost right. It's 95% of TAXABLE
    INCOME that must be paid out to qualify as a REIT.

    The special dividend represents a fixed number (I
    forget exactly what, but I think it's about $265MM),
    which is CCA's accumulated "earnings and profits (E&P)"
    at the time of the merger. E&P is a tax term, but it
    is not the same as taxable income, nor is it the
    same as financial statement income.

    distributions by PZN during 1999 in excess of PZN's 1999 E&P
    will be treated as coming out of the E&P inherited
    from CCA, and will reduce the amount of remaining
    special dividend to be paid in December. Again, that
    excess has nothing to do with FFO, taxable income or net

    PZN has little flexibility with accounting for it's
    E&P. Most of the unforseen costs will be capitalized
    and amortized, having minimal impact on 1999 E&P (or
    taxable income, or FFO, or quarterly dividends). Higher
    interest costs, legal fees and slower growth will cut it
    back somewhat, but not a huge amount. Thus the special
    dividend won't change much...except for the impact of
    dilution. Since the CCA E&P is a fixed number, the more
    shares there are outstanding in December, the smaller
    will be the special dividend on a per share

    BTW, it seems that the last claculation I saw was for
    a special dividend of $1.54 or $1.53 - before
    reductions for dilution, etc.
    I doubt if it will end up
    as more than $1.25 per share in December, if paid in

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