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Corrections Corporation of America Message Board

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  • RetiredPaperman RetiredPaperman Nov 2, 1999 2:42 PM Flag

    Another PZN Insider Purchase

    Cash Flow is most important but it can be
    difficult to calculate the real number. That's why PZN's
    stock price looks low relative to traditional
    measurements (FFO, Book Value). What really matters is that
    PZN is not generating sufficient cash to pay the
    dividend. They are borrowing.

    The nice thing about
    cash flow analysis is that it tends to cut through all
    the accounting nonsense and games that company's
    play.

    Still think Book Value is important? Look at Dell's.
    It's just over a dollar but their earnings, cash flow
    and growth are great. JMHO.

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    • According to Realty Stock Review, the PZN dividends represent 88.4% of adjusted funds from operations. Where are you getting your information that PZN has to borrow to pay its
      dividends?

      • 1 Reply to dsrooker
      • PZN derives most of its income from OPCO, its
        major tenant. Somebody (actually, a lot of bodies)
        miscalculated OPCO's ability to pay rents to PZN that were set
        very high. PZN amended its leases with OPCO to pay
        OPCO significant additional fees (about 60MM so far,
        as I recall, but don't hold me to it). These fees
        are capitalized by PZN and amortized and have had
        very little effect on FFO this year.

        The whole
        structure is designed to move the management income of the
        old CCA into the new PZN, primarily as rent. If you
        look at the two companies together, I think you would
        find that dvidends exceed combined earnings, as well
        as combined FFO.

        Thus, the business is paying
        more in dividends than its cash flow.

 
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