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Prison Realty Announces 1999 Year-End Results
Prison Realty Announces 1999 Year-End Results
March 31, 2000
NASHVILLE, Tenn., March 31 /PRNewswire/ -- Prison Realty Trust, Inc.
(NYSE: PZN) today announced 1999 operating results. For the year ended
December 31, 1999, PZN posted revenues of $285.7 million and a net loss of
$62.0 million or ($0.54) per common share.
The loss for 1999 includes one-time write-offs and charges totaling
$247.0 million, comprised of:
-- $65.7 million in unrealizable deferred tenant incentive fees;
-- $76.4 million in impairment losses on three facilities in Kentucky;
-- $83.2 million in write-offs of initial deferred assets;
-- $14.6 million in write-offs of loan costs; and,
-- $7.1 million in excise taxes (included in general & administrative
expenses) due to the deferred declaration of dividends from 1999 to
2000.
On January 1, 1999, PZN and Corrections Corporation of America (Old CCA)
were combined into a single company. The company operated so as to preserve
its ability to qualify as a REIT for its 1999 taxable year. Reporting periods
prior to 1999 reflect the operating results of Old CCA, but because Old CCA
did not operate as a REIT, comparisons between 1999 and prior periods are not
believed to be meaningful.
Post-Merger CCA
As a result of the 1999 merger, Old CCA was split into three private
companies: the new Corrections Corporation of America (New CCA, which is PZN's
primary tenant), Prison Management Services, Inc. and Juvenile and Jail
Facility Management Services, Inc. All three companies do business under the
name "CCA." During 1999, the three companies collectively experienced a
12 percent increase in compensated mandays to 16.9 million, up from
15.1 million in 1998, leading to combined revenues of $787.6 million.
For 1999, New CCA's revenues derived from its prison management and
prisoner transportation services were $499.3 million. The company reported a
net loss of $202.9 million, owing largely to the lease structure between New
CCA and PZN. New CCA incurred approximately $263.5 million in gross lease
expenses to PZN during 1999, of which it has paid approximately $251.5 million
to date.
Weakened Financial Condition Leads to Investment Proposals
PZN paid certain necessary dividends during 1999 but has deferred the
payment of the remainder. Under IRS rules, if PZN elects to be taxed as a REIT
for its 1999 taxable year, it has the option of delaying the declaration of
the remaining 1999 dividends until September 2000, and delaying payment of the
remaining dividends until December 2000.
New CCA currently is in violation of certain provisions of its bank credit
facility and has not made the required lease and note payments to PZN. PZN is
in default under its secured bank credit facility and certain of its
convertible subordinated notes.
In addition, the independent auditors of both PZN and CCA have indicated
in their opinion on the respective 1999 consolidated financial statements that
there is substantial doubt about the ability of either company to continue as
a going concern.
In response to the weakened financial conditions of PZN and New CCA, PZN
has entered into an agreement with respect to an equity investment, and the
board of directors is considering a proposal from another potential strategic
investor. In addition to an equity investment, the proposals contemplate
corporate and debt restructuring and management reorganization.
Speaking to the year-end announcement and proposed restructuring, Thomas
W. Beasley, PZN's interim chairman, said, "The company faces challenging
issues regarding its financial structure and performance. These results
certainly bear witness to the challenge. The PZN board of directors, along
with our financial and legal advisors, is steadfastly addressing these issues,
and the year-end numbers also reflect some of the costs necessary to bring
about a suitable resolution. Our goal is to reach a simplified structure that
is easily understood, historically successful and financially sound.
"Encouraging our comprehensive restructuring efforts is society's
continued need for quality prison and jail facilities and management
services," Beasley said. "We believe the benefits our company brings to the
industry through its current operations will renew our growth once our
resources can again be properly channeled."
Business Description
Prison Realty's business is the development and ownership of correctional
and detention facilities. Headquartered in Nashville, Tenn., the company
provides financing, design, construction and renovation of new and existing
jails and prisons that it leases to both private and governmental managers.
Prison Realty currently owns or is in the process of developing 50
correctional and detention facilities in 17 states, the District of Columbia
and the United Kingdom.
The companies doing business as Corrections Corporation of America provide
detention and corrections services to governmental agencies. The company is
the industry leader in private sector corrections with more than 73,000 beds
in 80 facilities under contract or under development in the United States,
Puerto Rico, Australia and the United Kingdom. CCA's full range of services
includes design, construction, renovation and management of new or existing
jails and prisons, as well as long-distance inmate transportation services.
This news release contains statements that are forward looking, including
statements relating to the amount and timing of the proposed restructuring
transactions. These statements are not projections or assured results.
Actual results may differ materially from the results anticipated in the
forward looking statements due to a variety of factors, including but not
limited to, changing market conditions. Additional factors will be described
in the company's filings with the SEC. The company does not undertake an
obligation to update its forward-looking statements to reflect future events
or circumstances. Accordingly, individuals should not place undue reliance on
such statements.
PRISON REALTY TRUST, INC. AND SUBSIDIARIES
Consolidated Statement Of Operations
For The Year Ended December 31, 1999
(In Thousands, Except Per Share Amounts)
1999
REVENUES:
Rental revenues $270,134
Interest income 6,885
Licensing fees 8,699
285,718
EXPENSES:
Depreciation and amortization 44,062
General and administrative 24,125
Write-off of amounts under lease
arrangements 65,677
Impairment loss 76,433
210,297
OPERATING INCOME 75,421
OTHER INCOME (EXPENSE):
Equity in earnings of
unconsolidated entities
and amortization of deferred
gain 22,886
Interest expense (51,921)
Write-offs of loan costs (14,567)
Loss on disposals of assets (1,995)
(45,597)
INCOME BEFORE INCOME TAXES 29,824
PROVISION FOR CHANGE IN TAX STATUS 83,200
NET LOSS (53,376)
DIVIDENDS TO PREFERRED SHAREHOLDERS (8,600)
NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS $ (61,976)
BASIC NET LOSS AVAILABLE TO
COMMON SHAREHOLDERS
PER COMMON SHARE: $ (.54)
DILUTED NET LOSS AVAILABLE TO
COMMON SHAREHOLDERS
PER COMMON SHARE: $ (.54)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING, BASIC 115,097
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING, DILUTED 115,097
PRISON REALTY TRUST, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 1999
(In Thousands)
ASSETS 1999
Real estate properties:
Correctional and detention
facilities $2,258,281
Less accumulated depreciation (49,785)
Net real estate properties 2,208,496
Cash and cash equivalents 84,493
Restricted cash 24,409
Note receivable from New CCA 137,000
Investments in affiliates 118,232
Investments in direct financing leases 74,059
Receivable from New CCA 28,608
Other assets 60,625
Total assets $2,735,922
LIABILITIES AND STOCKHOLDERS' EQUITY 1999
LIABILITIES:
Distributions payable $2,150
Bank credit facility 928,234
Senior notes payable 100,000
Convertible subordinated
notes and other debt 70,757
Accounts payable and accrued
expenses 70,911
Income taxes payable 5,476
Deferred gains on sales
of contracts 106,045
Other liabilities 32,000
Total liabilities 1,315,573
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock - Series A -
$.01 (one cent) par value;
20,000 shares authorized;
4,300 shares issued and
outstanding at December 31,
1999; stated at liquidation
preference of $25 (twenty
five dollars) per share 107,500
Common stock - $.01 (one cent)
par value; 300,000 shares
authorized; 118,406 and
79,956 shares issued and
118,394 and 79,956 shares
outstanding at December 31,
1999 and 1998, respectively 1,184
Treasury stock, 12 shares, at cost (242)
Additional paid-in capital 1,347,227
Cumulative net income 29,824
Accumulated distributions (65,144)
Total stockholders' equity 1,420,349
Total liabilities and
stockholders' equity $2,735,922
CORRECTIONS CORPORATION OF AMERICA
Selected Financial Information
For The Year Ended December 31, 1999
(in thousands, except per share amounts)
1999
Revenues $499,292
Net loss (202,918)
Current assets $88,647
Total assets 184,701
Current liabilities 258,421
Deferred lease incentives
and service fees received
from Prison Realty 107,070
Total liabilities 365,491
Stockholders' equity (180,790)
Cash flows used in operating
activities $ (16,332)
Cash flows used in investing activities (2,091)
Cash flows provided by financing
activities 10,089
Net decrease in cash flow for the year
ended December 31, 1999 (8,334)
CASH AND CASH EQUIVALENTS,
beginning of the period 19,059
CASH AND CASH EQUIVALENTS,
end of the period $ 10,725