Prison Realty Announces Third Quarter Results
Prison Realty Announces Third Quarter Results
November 10, 1999
NASHVILLE, Tenn., Nov. 10 /PRNewswire/ -- Prison Realty Trust, Inc., a Maryland corporation ("Prison Realty" or the "Company") (NYSE: PZN), announced today its financial results for the third quarter of 1999. Funds from operations, or FFO, of $66.2 million, or $0.56 per diluted share, were earned on revenues of $75.0 million for the quarter. In addition, the Company also announced selected occupancy related to the Company's primary tenant, Corrections Corporation of America ("CCA"), and the two service companies affiliated with the Company who, together with CCA, operate under the name of Corrections Corporation of America. During the third quarter, system wide CCA brought on line 4,056 new beds, increasing its beds in operation from 49,069 at the beginning of the quarter to 53,125 at September 30, 1999. Corrections Corporation of America's average system wide occupancy for the third quarter was 93.2% compared to 92.7% for the second quarter. The average occupancy level for the third quarter for Prison Realty owned facilities that are managed by CCA was 88.8% compared to 87.3% for the second quarter. In addition, CCA announced that it has been advised by the Department of Corrections of the State of Wisconsin that CCA has been selected as the preferred vendor in the recently completed Wisconsin procurement. Wisconsin has indicated that they intend to contract for all of CCA's vacant beds at its Prairie facility, all of CCA's vacant beds at its West Tennessee facility and all of CCA's beds at its Tallahatchie County, Mississippi facility when it is completed, for a total of 1,896 beds. The Company and CCA also announced that they have engaged Merrill Lynch & Co. ("Merrill Lynch") as their respective financial advisors. Merrill Lynch was engaged in connection with the requirement in the Company's credit facility that the companies complete a sale of equity and/or debt securities in order for the Company to make its special dividend payment in cash. As part of this process, both companies and Merrill Lynch have evaluated the Company's and CCA's financial conditions and results of operations and are considering a broad range of financing and strategic alternatives to address the liquidity needs of both companies. The companies and Merrill Lynch are in the process of evaluating proposals received with respect to these financing and strategic alternatives. No assurance can be given that any transaction will ultimately be consummated. In addition, no assurance can be given as to the exact timing of the payment of the special dividend, whether paid in cash and/or in securities. The Company will not update its review and negotiation of financing and strategic alternative proposals until this process has been completed. Additional information regarding the Company's and CCA's financial results and liquidity needs, the payment of dividends by the Company, and the Company's and CCA's engagement of Merrill Lynch can be found in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1999, filed today with the United States Securities and Exchange Commission. Prison Realty's business is the ownership of correctional and detention facilities. Prison Realty 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 51 correctional and detention facilities in 18 states, the District of Columbia and the United Kingdom having a total design capacity of 50,000 beds, of which 40 facilities are operating, eight are under construction or expansion and three are in the planning stage. Prison Realty is based in Nashville, Tennessee and operates so as to qualify as a real estate investment trust under the Internal Revenue Code. The entities operating under the Corrections Corporation of America name provide correctional and detention facility management services to governments under contracts for 83 facilities with an approximate design capacity of 75,000 beds, of which 70 facilities with an approximate design capacity of 55,000 beds are in operation. This press release contains forward-looking statements that involve various risks and uncertainties. Actual results could differ materially from those contained in these forward-looking statements due to certain factors. These and other risks and uncertainties are detailed in the Company's reports filed with the Commission. PRISON REALTY TRUST, INC. Consolidated Statements of Income For the Three and Nine Months Ended September 30, 1999 (Unaudited and amounts in thousands, except per share amounts) Three Months Nine Months Ended Ended Sept. 30, 1999 Sept. 30, 1999 REVENUES: Rental revenues $67,075 $196,543 Interest income 5,708 17,749 Licensing fees 2,192 6,510 74,975 220,802 EXPENSES: Depreciation and amortization 11,224 31,643 General and administrative 1,979 4,586 Interest expense 11,610 26,919 Write off of loan cost 8,967 8,967 Loss on disposition of property -- 1,631 33,780 73,746 OPERATING INCOME 41,195 147,056 Equity in earnings of subsidiaries and amortization of deferred gains 6,950 22,107 Interest income -- -- INCOME BEFORE INCOME TAXES 48,145 169,163 Provision for change in tax status -- 83,200 Provision for income taxes -- -- NET INCOME 48,145 85,963 Dividends to preferred shareholders (2,150) (6,450) NET INCOME AVAILABLE FOR COMMON SHARES $45,995 $79,513 NET INCOME AVAILABLE PER COMMON SHARE: Basic $0.39 $0.70 Diluted $0.39 $0.69 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, BASIC 118,196 114,003 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, DILUTED 118,315 114,547 FUNDS FROM OPERATIONS: Net Income Available for Common Shares $45,995 $79,513 Plus real estate depreciation 11,224 31,643 Add back non-recurring items: Write off of deferred tax asset -- 83,200(a) Loss on disposition of property -- 1,631(b) Write off of loan costs 8,967 8,967(c) $66,186 $204,954 FUNDS FROM OPERATIONS PER COMMON SHARE: Basic $0.56 $1.80 Diluted $0.56 $1.79 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, BASIC 118,196 114,003 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING, DILUTED 119,533 115,915 (a) - One-time charge related to change of Company tax status from C-corporation to REIT. (b) - Non-cash loss resulting from resolution of CCA pre-merger facility issue (1997). (c) - Write off of loan costs related to amendment and restatement of Credit Facility. PRISON REALTY TRUST, INC. Consolidated Balance Sheet September 30, 1999 (Unaudited and amounts in thousands) September 30, 1999 ASSETS Real estate properties, at cost: Correctional and detention facilities $2,306,074 Less accumulated depreciation (39,015) Net real estate properties 2,267,059 Cash and cash equivalents 19,743 Restricted cash 24,205 Notes Receivable 138,549 Investments in affiliates and others 126,875 Investments in direct financing leases 74,042 Amounts under lease arrangements, net 49,499 Receivable from New CCA 26,221 Other assets 57,340 Total assets $2,783,533 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES: Distributions payable $209,729 Bank credit facility 845,250 Notes payable 100,000 Convertible subordinated notes and other debt 70,778 Accounts payable and accrued expenses 59,135 Income taxes payable 6,029 Deferred gains on sales of contracts 108,079 Deferred tax liability 32,000 Total liabilities 1,431,000 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, $.01 par value; 20,000 shares authorized; 4,300 outstanding 43 Common stock, $.01 par value; 300,000 shares authorized, 118,284 shares issued and outstanding 1,183 Treasury stock (242) Additional paid-in-capital 1,380,469 Cumulative net income 169,163 Accumulated distributions (198,083) Total stockholders' equity 1,352,533 Total liabilities and stockholders' equity $2,783,533 The following table includes selected financial information from Prison Realty's primary tenant, CCA, for the nine months ended September 30, 1999: CORRECTIONS CORPORATION OF AMERICA Selected Financial Information For the Nine Months Ended September 30, 1999 (Unaudited and amounts in thousands, except per share amounts) Nine Months Ended September 30, 1999 Revenues $365,222 Net loss (84,488) Current assets 87,970 Total assets 237,740 Current liabilities 76,026 Deferred credits 87,268 Total liabilities 300,294 (a) Stockholders' equity (62,554) Cash flows used in operating activities $(6,999) Cash flows used in investing activities (3,383) Cash flows used in financing activities (6,125) Net decrease in cash for the nine months ended September 30, 1999 (16,507) CASH AND CASH EQUIVALENTS, beginning of the period 19,057 CASH AND CASH EQUIVALENTS, end of the period $2,550 (a) - At September 30, 1999 there were no borrowings under CCA's revolving credit facility. Currently, there are borrowings of approximately $20 million outstanding under CCA's revolving credit facility.