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Prison Realty Announces First Quarter Results
Prison Realty Announces First Quarter Results
May 15, 2000
NASHVILLE, Tenn., May 15 /PRNewswire/ -- Prison Realty Trust, Inc.
(NYSE: PZN) today announced first quarter operating results. For the quarter
ended March 31, 2000, PZN posted revenues of $17.3 million and a net loss of
$30.0 million, or ($0.25) per common share, compared to revenues of
$72.0 million and a net loss of $24.8 million, or ($.23) per common share, in
the first quarter of 1999.
Revenues for the 2000 first quarter have been reduced to reflect a reserve
of $71.2 million to offset lease payments from Prison Realty's primary tenant,
CCA, that would not be collectible in the event of a corporate restructuring.
Prison Realty has proposed a restructuring that would include its
combination with the three entities currently operating as CCA, as well as the
assumption of C corporation status rather than REIT status. Under that
format, pro forma EBITDA (earnings before interest, taxes, depreciation and
amortization) for the combined companies is approximately $39 million for the
2000 first quarter.
"EBITDA is an indicator of cash flow and a barometer on the underlying
strength of the company's business," said Interim Chairman Thomas W. Beasley.
"The reported first quarter results validate the wisdom of restructuring the
companies and eliminating the lease burden on CCA. The pro forma EBITDA
number encourages us to do so as quickly as possible so that the companies can
realize once again the true value that exists in providing detention and
correctional facilities to government."
System wide, the three companies doing business as CCA had 60,514 prison
and jail beds in operation at the end of the first quarter of 2000, versus
50,005 beds at March 31, 1999. Occupancy was 85.6% this year compared to
89.3% last year, and compensated mandays for the quarter rose 16% to
4.5 million from 3.9 million in the first quarter of 1999.
Current Corporate Structure Defined
As a result of the 1999 merger transaction between Prison Realty and
Corrections Corporation of America, the operations of facilities 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." Prison Realty's economic interest in the two
service companies is reported as equity in earnings of subsidiaries.
New CCA had first quarter 2000 revenues of $138.0 million, an operating
loss of $57.8 million and a net loss of $62.6 million. The loss includes
lease payment charges of $79.3 million, of which $71.2 million was reserved by
PZN, as noted above. For the first quarter of 1999, New CCA had revenues of
$112.4 million, an operating loss of $60.5 (including lease payments of
$80.7 million) and a net loss after benefit of income taxes of $39.8 million.
Proposed Corporate Restructuring
In response to the liquidity issues facing both PZN and New CCA, PZN has
entered into an agreement with Pacific Life Insurance Company with respect to
an equity investment, corporate and debt restructuring and management
reorganization. The proposal would preserve the company's REIT status for
1999, but convert it to a C corporation beginning in 2000. The equity
investment would take the form of a $200 million shareholder rights offering,
backstopped by Pacific Life. A preliminary proxy on the proposal seeking
shareholder approval will be filed.
Business Description
Prison Realty's business primarily 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.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited and amounts in thousands, except per share amounts)
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
REVENUES:
Rental revenues $11,460 $63,640
Interest income 3,312 6,214
Licensing fees 2,576 2,132
17,348 71,986
EXPENSES:
Depreciation and amortization 12,924 9,917
General and administrative 2,543 882
Write off of amounts under lease
arrangements 4,000 --
19,467 10,799
OPERATING INCOME (LOSS) (2,119) 61,187
Equity in earnings of subsidiaries
and amortization of deferred gains 6,113 7,681
Interest expense (31,794) (8,273)
INCOME (LOSS) BEFORE INCOME TAXES (27,800) 60,595
Provision for change in tax status -- 83,200
NET LOSS (27,800) (22,605)
DIVIDENDS TO PREFERRED SHAREHOLDERS (2,150) (2,150)
NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS $(29,950) $(24,755)
NET LOSS AVAILABLE TO COMMON
SHAREHOLDERS PER COMMON SHARE:
Basic $ (0.25) $ (0.23)
Diluted $ (0.25) $ (0.23)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING, BASIC 118,395 107,282
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING, DILUTED 118,395 107,282
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND DECEMBER 31, 1999
(Amounts in thousands, except per share amounts)
March 31, December 31,
2000 1999
(unaudited)
ASSETS
Real estate properties:
Correctional and detention
facilities $ 2,216,662 $ 2,258,281
Less accumulated depreciation (62,709) (49,785)
Net real estate properties 2,153,953 2,208,496
Cash and cash equivalents 12,753 84,493
Restricted cash 24,722 24,409
Note receivable from CCA 137,000 137,000
Investments in affiliates 120,974 118,232
Investments in direct financing leases 162,254 74,059
Receivable from CCA 25,839 28,608
Other assets 61,116 60,625
Total assets $ 2,698,611 $ 2,735,922
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Distributions payable $ 2,150 $ 2,150
Bank credit facility 926,734 928,234
Senior notes payable 100,000 100,000
Convertible subordinated notes and other
debt 70,737 70,757
Accounts payable and accrued expenses 67,207 70,911
Income taxes payable 5,917 5,476
Deferred gains on sales of contracts 103,376 106,045
Other liabilities 32,000 32,000
Total liabilities 1,308,121 1,315,573
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock , $.01 (one cent) par value;
20,000 shares authorized; 4,300 issued
and outstanding; stated at liquidation
preference of $25 (twenty-five dollars)
per share 107,500 107,500
Common stock, $.01 (one cent) par value;
300,000 shares authorized; 118,406 shares
issued; 118,394 shares outstanding,
respectively 1,184 1,184
Treasury stock, 12 shares, at cost (242) (242)
Additional paid-in capital 1,347,318 1,347,227
Cumulative net income 2,024 29,824
Accumulated distributions (67,294) (65,144)
Total stockholders' equity 1,390,490 1,420,349
Total liabilities and stockholders'
equity $2,698,611 $2,735,922
CORRECTIONS CORPORATION OF AMERICA
SELECTED FINANCIAL INFORMATION
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Amounts in thousands)
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
(unaudited) (unaudited)
Revenues $ 137,952 $ 112,363
Net loss (62,640) (39,766)
Cash flows provided by (used in) operating
activities $ 2,228 $ (5,611)
Cash flows used in investing activities (415) (1,011)
Cash flows used in financing activities (10,034) (1,517)
Net decrease in cash $ (8,221) $ (8,139)
CASH AND CASH EQUIVALENTS, beginning
of the period 10,725 19,057
CASH AND CASH EQUIVALENTS, end of
the period $ 2,504 $ 10,918
March 31, 2000 December 31, 1999
(unaudited)
Current assets $ 82,208 $ 88,647
Total assets 175,918 184,701
Current liabilities 313,951 258,421
Deferred credits 105,202 107,070
Total liabilities 419,153 365,491
Stockholders' equity $ (243,235) $ (180,790)