<PAGE> 1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 10-Q
----------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: June 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From ________ to __________
Commission File Number: 1-13049
CCA PRISON REALTY TRUST
(Exact name of Registrant as specified in its declaration of trust)
Maryland 62-1689525
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10 Burton Hills Blvd., Suite 100, Nashville, Tennessee 37215
(Address and zip code of principal executive offices)
(615) 263-0200
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former
fiscal year if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
21,576,000
(Outstanding shares of the issuer's common shares,
$0.01 par value per share as of July 31, 1998)
- --------------------------------------------------------------------------------
<PAGE> 2
CCA PRISON REALTY TRUST
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30,1998
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
a) Consolidated Balance Sheets 3
as of June 30, 1998 and December 31, 1997
b) Consolidated Statements of Income 4
for the three months and six months ended
June 30, 1998
c) Consolidated Statement of Cash Flows for the six months ended June 30, 5
1998
d) Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 9
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About 13
Market Risk
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURE
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements.
CCA PRISON REALTY TRUST
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and December 31, 1997
(Amounts in thousands, except share amounts)
<TABLE>
<CAPTION>
June 30, 1998 December 31,
(Unaudited) 1997
--------- ---------
<S> <C> <C>
ASSETS
Real Estate Properties, at Cost:
Correctional and Detention Facilities $ 756,698 $ 458,360
Less - Accumulated Depreciation (13,682) (5,088)
--------- ---------
Net Real Estate Properties 743,016 453,272
Cash and Cash Equivalents 5,029 756
Other Assets 2,148 410
--------- ---------
TOTAL ASSETS $ 750,193 $ 454,438
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Distributions Payable $ 11,320 $ 9,170
Line of Credit 215,000 32,000
Accounts Payable and Accrued Expenses 11,820 519
--------- ---------
TOTAL LIABILITIES 238,140 41,689
--------- ---------
Commitments and Contingencies -- --
SHAREHOLDERS' EQUITY
Preferred Shares, $.01 par value; 10,000,000 shares
authorized; 4,300,000 and none outstanding, respectively 43 --
Common Shares, $.01 par value; 90,000,000 shares
authorized; 21,576,000 shares issued and outstanding 216 216
Capital in Excess of Par Value 518,226 414,841
Accumulated Distributions in Excess of Net Income (6,432) (2,308)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 512,053 412,749
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 750,193 $ 454,438
========= =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
<PAGE> 4
CCA PRISON REALTY TRUST
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 1998 June 30, 1998
-------- --------
<S> <C> <C>
REVENUES
Rental $ 16,609 $ 30,073
Interest 180 617
-------- --------
16,789 30,690
-------- --------
EXPENSES
Depreciation 4,463 8,593
Interest 2,307 2,928
General and Administrative 587 1,010
-------- --------
7,357 12,531
-------- --------
Net Income 9,432 18,159
Dividends to Preferred Shareholders (2,150) (3,569)
-------- --------
Net Income Available for Common Shares $ 7,282 $ 14,590
======== ========
Net Income Available Per Common Share:
Basic $ 0.34 $ 0.68
======== ========
Diluted $ 0.33 $ 0.66
======== ========
Weighted Average Number of Shares Outstanding, Basic 21,576 21,576
======== ========
Weighted Average Number of Shares Outstanding, Diluted 21,984 22,053
======== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.
<PAGE> 5
CCA PRISON REALTY TRUST
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED AND AMOUNTS IN THOUSANDS)
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 18,159
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation of Real Estate Properties 8,593
Changes in Assets and Liabilities:
Increase in Other Assets (1,738)
Increase in Accounts Payable and Accrued Expenses 11,301
---------
Net Cash Provided by Operating Activities 36,315
---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Real Estate Properties (298,338)
---------
Net Cash Used In Investing Activities (298,338)
---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Preferred Share Offering, net of Offering Costs 103,428
Borrowings under Line of Credit 255,700
Repayments under Line of Credit (72,700)
Dividends paid on Preferred Shares (1,793)
Distributions paid on Common Shares (18,340)
---------
Net Cash Provided by Financing Activities 266,296
---------
Net Increase in Cash and Cash Equivalents 4,273
Cash and Cash Equivalents, Beginning of Period 756
---------
Cash and Cash Equivalents, End of Period $ 5,029
=========
Supplemental Disclosure of Noncash Transactions:
Increase in Distributions Payable $ 11,320
Reduction in Shareholders' Equity through Distributions to Shareholders (11,320)
---------
--
=========
Supplemental Disclosure of Cash Flow Information:
Cash paid for Interest $ 1,191
=========
</TABLE>
The accompanying Notes to Consolidated Financial Statements are an integral part
of this statement.
<PAGE> 6
CCA PRISON REALTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
1. ORGANIZATION AND OPERATIONS
BACKGROUND AND FORMATION TRANSACTIONS
CCA Prison Realty Trust, a Maryland real estate investment trust (the
"Company"), was formed on April 23, 1997 to acquire, develop, and lease private
and public correctional and detention facilities. The Company has elected to
qualify as a real estate investment trust (a "REIT") under the Internal Revenue
Code of 1986, as amended (the "Code").
On July 18, 1997, the Company commenced operations after completing an initial
public offering (the "Initial Offering") of 21,275,000 of its common shares,
$.01 par value per share (the "Common Shares") (including 2,775,000 shares
issued as a result of the exercise of an over-allotment option by the
underwriters). The Common Shares were issued at an Initial Offering price of
$21.00 per share, generating gross proceeds to the Company of $446.8 million.
The aggregate proceeds to the Company, net of the underwriters' discount and
offering costs, were approximately $412.1 million.
The Company immediately used the Initial Offering proceeds to acquire nine
correctional and detention facilities (the "Initial Facilities") from
Corrections Corporation of America, a Tennessee corporation, and certain of its
subsidiaries (collectively, "CCA") for an aggregate purchase price of $308.1
million, payable in cash. The Company entered into agreements with CCA to lease
the Initial Facilities back to CCA pursuant to long-term, non-cancellable
"triple net" leases (the "Leases") which require CCA to pay all operating
expenses, taxes, insurance and other costs. All of the Leases have primary terms
ranging from 10-12 years which may be extended at the fair market rental rates
for three additional five-year periods upon the mutual agreement of the Company
and CCA.
Simultaneously, the Company entered into option agreements with CCA (the "Option
Agreements") pursuant to which the Company was granted the option to acquire and
leaseback to CCA any or all of five correctional and/or detention facilities
from CCA at any time during the three-year period following the acquisition of
the Initial Facilities for a purchase price generally equal to CCA's costs of
developing, constructing and equipping such facilities, plus 5% of such costs.
As of June 30, 1998, the Company has acquired two facilities pursuant to the
Option Agreements. In addition, the Company entered into an agreement (the
"Right to Purchase Agreement") with CCA whereby CCA granted the Company an
option to acquire, at fair market value, and leaseback to CCA at fair market
rental rates, any correctional or detention facility acquired or developed and
owned by CCA for a period of three years following the date CCA first receives
inmates at such facility. As of June 30, 1998, the Company has purchased two
facilities pursuant to the Right to Purchase Agreement. Facilities available for
purchase by the Company through the Option Agreements and the Right to Purchase
Agreements are collectively referred to herein as the "Option Facilities."
<PAGE> 7
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of the Company include all the accounts of
the Company and its subsidiaries, including Prison Realty Management, Inc., a
Tennessee corporation and wholly-owned management subsidiary. All significant
intercompany balances and transactions have been eliminated.
The accompanying interim consolidated financial statements are unaudited. The
financial statements, however, have been prepared in accordance with generally
accepted accounting principles for interim financial information and in
conjunction with the rules and regulations of the Securities and Exchange
Commission (the "Commission"). Accordingly, they do not include all of the
disclosures required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
solely of normal recurring matters) necessary for a fair presentation of the
financial statements for this interim period have been included. The results of
operations for the interim period are not necessarily indicative of the results
to be obtained for the full fiscal year. Reference is made to the audited
financial statements of the Company filed with the Company's Annual Report on
Form 10-K for the period from July 18, 1997 to December 31, 1997 with respect to
significant accounting and financial reporting policies as well as other
pertinent information of the Company.
3. COMPREHENSIVE INCOME
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income", effective for fiscal years beginning after
December 15, 1998. SFAS No. 130 requires that changes in the amounts of certain
items, including gains and losses on certain securities, be shown in the
Financial Statements. The Company adopted the provisions of SFAS No. 130 on
January 1, 1998. The Company's comprehensive income is equivalent to net income
for the six months ended June 30, 1998.
4. REAL ESTATE PROPERTIES
On January 5, 1998, the Company acquired from CCA the 960 bed Davis County
Correctional Center located in Holdenville, Oklahoma for a purchase price of
$36.1 million.
On April 17, 1998, the Company and its newly-formed, wholly-owned subsidiary
USCA Corporation ("USCA") and U.S. Corrections Corporation, a privately-held
owner and former operator of correctional and detention facilities ("USCC"),
entered into and consummated an Agreement of Merger, (the "USCC Merger
Agreement"), whereby USCA merged with and into USCC and the Company acquired all
of the outstanding capital stock and derivative securities of USCC (the "USCC
Merger"), in exchange for a cash payment to the shareholders of USCC of
approximately $157.0 million. As a result of the USCC Merger, the Company also
assumed certain liabilities of USCC consisting of a bank credit facility, two
subordinated loans, and obligations outstanding for convertible, redeemable
preferred stock totaling approximately $79.4 million. Immediately prior to the
USCC Merger, CCA purchased USCC's facility management contracts and the
corresponding enterprise value of operations from USCC for $10.0 million in
cash. Accordingly, as a result of the USCC Merger, the Company acquired only
real estate properties in substance.
By virtue of the USCC Merger, the Company acquired four correctional and
detention facilities in Kentucky, one in Ohio and two, which are currently under
construction, in North Carolina. Such facilities currently have an aggregate
design capacity of approximately 5,200 beds. The Company will not operate the
acquired facilities but has entered into leases for the Kentucky facilities
with, and expects to lease the North Carolina facilities to, CCA, who will
operate the facilities, pursuant to long-term "triple-net" operating leases
under the terms of that certain Master Agreement to Lease, dated July 18, 1997,
between the Company and CCA. The Company will continue to lease the Ohio
facility to Hamilton County pursuant to the terms of an existing lease.
<PAGE> 8
On May 4, 1998, the Company acquired the Leo Chesney Center in Live Oak,
California for approximately $5.1 million. The 240 bed minimum security facility
is operated and leased by a private operator other than CCA.
On June 30, 1998, the Company signed a Master Lease and two Lease Agreements
with Community Education Partners ("CEP") under which the Company will provide
short term real estate development financing for two initial alternative schools
for juveniles which will be leased to CEP upon completion. Amounts expended for
CEP projects prior to June 30, 1998 total $2.2 million and total costs at
completion of the developments are expected to be $13.0 million. Completion of
the schools is expected on or about October 1998.
As of June 30, 1998, the Company had investments in 19 leased real estate
properties and four development properties, which are currently under
construction, with a total aggregate cost of $756.7 million. Thirteen of these
correctional and detention facilities have been purchased from CCA and leased
back to CCA. CCA currently leases 17 real estate properties from the Company.
5. BANK CREDIT FACILITY
On April 17,1998, the Company's $150.0 million revolving acquisition credit
facility (the "Bank Credit Facility") was increased by $75.0 million to
facilitate the acquisition of real estate properties through the USCC Merger.
Outstanding borrowings under the Bank Credit Facility were $215.0 million at
June 30, 1998.
The Company has subsequently entered into an amendment and restatement of the
Bank Credit Facility, maturing July 2000, to increase the total available
borrowings to $300.0 million, effective July 31, 1998.
6. DISTRIBUTIONS TO SHAREHOLDERS
On March 2, 1998, the Board of Trustees declared a distribution of $0.425 per
common share for the quarter ended March 31, 1998, to common shareholders of
record on March 31, 1998. In addition, the Board of Trustees declared an initial
prorated quarterly dividend for the 8.0% Series A Cumulative Preferred Shares of
$0.417 per share to preferred shareholders of record on March 31, 1998, for the
period from January 30, 1998 through the dividend payment date of April 15,
1998. The aforementioned distributions were paid on April 15, 1998.
On June 26, 1998, the Board of Trustees declared a distribution of $0.425 per
common share for the quarter ended June 30, 1998 to common shareholders of
record on July 1, 1998. In addition, the Board of Trustees declared a quarterly
dividend for the 8.0% Series A Cumulative Preferred Shares of $0.50 per share to
preferred shareholders of record on July 1, 1998, through the dividend payment
date of July 15, 1998. The aforementioned distributions were paid on July 15,
1998.
7. NET INCOME PER SHARE
SFAS 128, "Earnings per Share," has been issued by the Financial Accounting
Standards Board effective for fiscal periods ending after December 15, 1997.
SFAS 128 establishes standards for computing and presenting earnings per share.
The Company has adopted the provisions of SFAS 128 in the fourth quarter of
1997. Under the standards established by SFAS 128, earnings per share is
measured at two levels: basic earnings per share and diluted earnings per share.
Basic earnings per share for the Company was computed by dividing net income by
the weighted average number of common shares outstanding during the period, or
21,576,000 shares. Diluted earnings per share was computed by dividing net
income by the weighted average number of common shares outstanding during the
period after considering
<PAGE> 9
the additional dilution related to the Company's outstanding share options,
after assuming a buyback of shares under the treasury method.
8. PROPOSED MERGER WITH CORRECTIONS CORPORATION OF AMERICA
The Company has entered into an Agreement and Plan of Merger, dated as of April
18, 1998 (the "Merger Agreement"), with CCA. Pursuant to and subject to the
terms and conditions of the Merger Agreement, CCA will be merged with and into
the Company with each share of CCA common stock being converted into the right
to receive 0.875 Company common shares, $0.01 par value per share. The Merger is
subject to certain conditions, including approvals by regulatory governmental
agencies, approval by Company shareholders, approval by CCA shareholders and
certain other conditions. The Company expects that the transaction will be
consummated on or about January 1, 1999.
<PAGE> 10
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report.
This quarterly report on Form 10-Q, including Management's Discussion and
Analysis of Financial Condition and Results of Operations, contains certain
forward-looking statements provided in reliance upon the "safe harbor"
provisions of the Private Securities Litigation Reform Act, as set forth in
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. In addition, forward-looking
statements may be included in various other Company documents to be issued in
the future and in various oral statements by Company representatives to
securities analysts and potential investors from time to time. These
forward-looking statements reflect the Company's current views with respect to
future events and financial performance, and these statements can be identified,
without limitations, by the use of the words "anticipates," "believes",
"estimates", "expects", "intends", "plans", "projects" and similar expressions.
Such forward-looking statements include statements concerning the Company's
business, revenues, expenditures, operating and capital requirements, as well as
future events, prospects, objectives, goals, strategies, underlying assumptions,
and other statements which are other than statements of historical fact.
Forward-looking statements are subject to risks, uncertainties, and other
factors which may cause actual results or outcomes to differ materially from
future outcomes expressed or implied by the forward-looking statement. Such
factors include, but are not limited to, the following: (i) risks associated
with the corrections and detention industry; (ii) competitive market conditions;
(iii) the strength of the real estate markets in which the company operates;
(iv) general economic growth rates; and (v) interest rates and capital market
conditions. The company discloses such risks in detail in its Annual Report on
Form 10-K/A for the year ended December 31, 1997. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date hereof. The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances occurring after
the date hereof or to reflect the occurrence of unanticipated events.
OVERVIEW.
The Company was formed on April 23, 1997, as a Maryland real estate investment
trust to capitalize on the opportunities created by the increased demand for
private correctional and detention facilities. The Company has elected to
qualify as a REIT for federal income tax purposes commencing with its taxable
year ending December 31, 1997.
On July 18, 1997, the Company commenced operations after completing an initial
public offering of 21,275,000 common shares (including 2,775,000 shares issued
as a result of the exercise of an over-allotment option by the underwriters)
(the "Initial Offering"). The 21,275,000 common shares were issued at the
Initial Offering price of $21.00, generating gross proceeds of $446.8 million.
The aggregate proceeds to the Company, net of the underwriters' discount and
offering costs, were approximately $412.1 million. Proceeds of the offering were
used to purchase correctional and detention facilities, as well as for initial
working capital.
The principal business strategy of the Company is to acquire correctional and
detention facilities that meet the Company's investment criteria, from both
private prison managers and government entities, to expand its existing
facilities, and to lease all such facilities under long-term leases to qualified
third-party operators, including affiliates of the sellers. The Company's
initial investments were privately-managed facilities that were owned and
operated by CCA. However, the Company is pursuing other opportunities, including
acquisitions and leasebacks of, or financings for, correctional facilities owned
and operated by various government entities and private operators other than
CCA. Substantially all of the Company's revenues are
<PAGE> 11
derived from: (i) rents received under triple net leases of correctional and
detention facilities; and (ii) interest earned from the temporary investment of
funds in short-term investments.
The Company, together with its wholly-owned management subsidiary, Prison Realty
Management, Inc., a Tennessee corporation, incurs operating and administrative
expenses including, principally, compensation expenses for its executive
officers and other employees, office rental and related occupancy costs and
various expenses incurred in the process of acquiring additional properties. The
Company is self-administered and managed by its executive officers and staff,
and does not engage a separate advisor or pay an advisory fee for administrative
or investment services, although the Company does engage legal, accounting, tax
and financial advisors. The primary non-cash expense of the Company is
depreciation of its correctional and detention facilities.
The Company expects to leverage its portfolio of real estate equity investments
and will incur long and short-term indebtedness, and related interest expense,
from time to time.
The Company has made distributions to its shareholders in amounts not less than
the amounts required to maintain REIT status under the Code and, in general, in
amounts exceeding taxable income.
RESULTS OF OPERATIONS.
RENTAL REVENUES - For the three months and six months ended June 30, 1998,
rental revenues of $16.6 million and $30.1 million, respectively, were generated
from the leasing of correctional and detention facilities. Lease rates for all
correctional and detention facilities were 11.0% based upon original acquisition
costs.
INTEREST INCOME - For the three months and six months ended June 30, 1998,
interest income was $0.2 million and $0.6 million, respectively. Interest income
was earned through the investment of cash prior to the purchase of the real
estate properties.
DEPRECIATION EXPENSE - For the three months and six months ended June 30, 1998,
depreciation expense was $4.5 million and $8.6 million, respectively.
INTEREST EXPENSE - For the three months and six months ended June 30, 1998,
interest expense was $2.3 million and $2.9 million, respectively. Interest
expense is based on borrowings under the Company's Bank Credit Facility and
includes amortization of loan costs, net of capitalized interest on construction
in progress.
GENERAL AND ADMINISTRATIVE EXPENSES - For the three months and six months ended
June 30, 1998, general and administrative expenses were $0.6 million and $1.0
million, respectively. General and administrative expenses were 3.5% and 3.3% of
rental revenues for the three months and six months ended June 30, 1998,
respectively. General and administrative expenses consist primarily of
management salaries and benefits, legal and other administrative costs.
LIQUIDITY AND CAPITAL RESOURCES.
Upon completion of the Initial Offering, the Company received approximately
$412.1 million in net proceeds. The Company used these funds, borrowings under
the Bank Credit Facility (as herein defined), and cash provided from operations
to purchase 13 correctional and detention facilities at an aggregate cost of
$491.5 million. Initially, cash on hand was invested by the Company in
interest-bearing accounts and other short-term, interest-bearing securities that
are consistent with the Company's election to seek qualification for taxation as
a REIT. After the Company began utilizing the Bank Credit Facility, cash
available was utilized to reduce outstanding borrowings.
The Company expects to meet its short-term liquidity requirements generally
through cash provided by operations and borrowings under the Bank Credit
Facility. The Company believes that its net cash provided
<PAGE> 12
by operations will be sufficient to allow the Company to make distributions
necessary to enable the Company to maintain qualification as a REIT. All
facilities owned by the Company will be leased to third parties under triple net
leases, which require the lessee to pay substantially all expenses associated
with the operation of such facilities. As a result of these arrangements, the
Company does not believe it will be responsible for any significant expenses in
connection with the facilities during the terms of the Leases. The Company
anticipates entering into similar leases with respect to all properties acquired
in the future.
On March 2, 1998, the Board of Trustees declared a distribution of $0.425 per
common share for the quarter ended March 31, 1998, to common shareholders of
record on March 31, 1998. In addition, the Board of Trustees declared an initial
prorated quarterly dividend for the 8.0% Series A Cumulative Preferred Shares of
$0.417 per share to preferred shareholders of record on March 31, 1998, for the
period from January 30, 1998 through the dividend payment date of April 15,
1998. The aforementioned distributions were paid on April 15, 1998. The
distributions to the Company's common shareholders are in accordance with the
Code's requirements for qualification as a REIT.
On June 26, 1998, the Board of Trustees declared a distribution of $0.425 per
common share for the quarter ended June 30, 1998 to common shareholders of
record on July 1, 1998. In addition, the Board of Trustees declared a quarterly
dividend for the 8.0% Series A Cumulative Preferred Shares of $0.50 per share to
preferred shareholders of record on July 1, 1998, through the dividend payment
date of July 15, 1998. The aforementioned distributions were paid on July 15,
1998. The distributions to the Company's common shareholders are in accordance
with the Code's requirements for qualification as a REIT.
The Company closed on the $150.0 million Bank Credit Facility, maturing July
2000, contemporaneously with the closing of the Initial Offering. On April 17,
1998, the Company increased the Bank Credit Facility from $150.0 million to
$225.0 million in connection with the USCC merger. The Company has subsequently
entered into an amendment and restatement of the Bank Credit Facility to
increase the total available borrowings to $300.0 million, effective July 31,
1998. General provisions of the Bank Credit Facility remained unchanged by the
amendment and restatement and are as follows: the effective interest rate is
determined by adding 1.50% to the LIBOR rate for the interest period selected by
the Company. The Company may specify LIBOR rate loans of one, two, or three
month maturities. The Company may also borrow up to $5.0 million at the prime
rate for working capital purposes and repay such loans at any time. The Bank
Credit Facility is secured by all assets of the Company. The Company is subject
to ongoing compliance with a number of financial and other covenants under the
Bank Credit Facility, with which the Company is and has been in compliance. At
June 30, 1998, $215.0 million was outstanding under the Bank Credit Facility.
On January 30, 1998, the Company received net proceeds of approximately $103.4
million through its offering of 4,300,000 8.0% Series A Cumulative Preferred
Shares, 0.01 par value per share (including 300,000 Series A Cumulative
Preferred Shares issued as a result of the exercise of an over-allotment option
by the underwriters), at a price of $25 per share. The Company used
approximately $72.7 million of the preferred share offering proceeds to repay
outstanding indebtedness under the Bank Credit Facility.
As a result of the Company's acquisition of USCC, the Company expects to incur
additional construction costs of approximately $10.0 million related to two
facilities under construction in North Carolina. On June 30, 1998, the Company
signed a Master Lease and two Lease Agreements with Community Education Partners
("CEP") under which the Company will provide short term real estate development
financing for two initial alternative schools for juveniles which will be leased
to CEP at completion. Amounts expended for CEP projects prior to June 30, 1998
total $2.2 million and total costs at completion are expected to be $13.0
million. In addition, the Company has options with varying terms to purchase any
or all of ten Option Facilities from CCA for CCA's costs of developing,
constructing and equipping the facilities, plus 5% of such costs, aggregating
approximately $461.4 million. The Company also has an option to acquire, at fair
market value, and lease back to CCA, any correctional or detention facility
acquired or developed and owned by CCA in the future for a period of three years
following the date CCA first receives inmates at such facility.
<PAGE> 13
CCA has formed a wholly-owned subsidiary, Agecroft Properties, Inc., a Tennessee
corporation ("API"), which will design, develop, construct, finance, and
sublease a new 800 bed, medium security prison facility to be located in the
United Kingdom on Agecroft Road in Salford, England (the "Agecroft Prison"). In
July 1998, the Company entered into a Refinancing Agreement with CCA, API, and
Agecroft Prison Management Limited, a company incorporated in England and Wales,
pursuant to which the Company will, upon the opening of the Agecroft Prison,
purchase all of the issued and outstanding stock of API. Estimated construction
cost for the facility is $80.0 million and the facility is expected to open in
January 2000.
The Company expects to meet its long-term liquidity requirements for the funding
of real estate property development and acquisitions by borrowing under the Bank
Credit Facility and by issuing in public or private transactions, equity or debt
securities. The Company anticipates that as a result of its initially low debt
to total capitalization ratio and its intention to maintain a debt to total
capitalization ratio of 50% or less, it will be able to obtain financing for its
long-term capital needs. However, there can be no assurance that such additional
financing or capital will be available on terms acceptable to the Company. The
Company may, under certain circumstances, borrow additional amounts in
connection with the renovation or expansion of facilities, the acquisition of
additional properties, or as necessary, to meet certain distribution
requirements imposed on REITs under the Code.
YEAR 2000 COMPLIANCE.
While the Company has completed an assessment of its computer systems and
software applications and believes that both are "Year 2000" compliant, there
can be no assurance that coding errors or other defects will not be discovered
in the future. In addition, the Company has not initiated formal communications
with its lessee or with any of the entities which contract with its lessee to
determine the extent to which the Company is vulnerable to those third parties'
failure to remediate their own Year 2000 issues. The Company expects to address
this issue with these parties during 1998, which is prior to any anticipated
impact from the issue. Any Year 2000 compliance problem of the Company, its
lessee or other third parties could result in a material adverse effect on the
Company's business, prospects, results of operations and financial condition.
FUNDS FROM OPERATIONS.
Management believes Funds from Operations is helpful to investors as a measure
of the performance of an equity REIT because, along with cash flows from
operating activities, financing activities and investing activities, it provides
investors with an understanding of the ability of the Company to incur and
service debt and make capital expenditures. The Company computes Funds from
Operations in accordance with standards established by the White Paper on Funds
from Operations approved by the Board of Governors of the National Association
of Real Estate Investment Trusts ("NAREIT") in 1995, which may differ from the
methodology for calculating Funds from Operations utilized by other equity
REITs, and accordingly, may not be comparable to such other REITs. The White
Paper defines Funds from Operations as net income (loss), computed in accordance
with generally accepted accounting principles ("GAAP"), excluding gains (or
losses) from debt restructuring and sales of property, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. Further, Funds from Operations does not
represent amounts available for management's discretionary use because of needed
capital replacement or expansion, debt service obligations, or other commitments
and uncertainties. Funds from Operations should not be considered as an
alternative to net income (determined in accordance with GAAP) as an indication
of the Company's financial performance or to cash flows from operating
activities (determined in accordance with GAAP) as a measure of the Company's
liquidity, nor is it indicative of funds available to fund the Company's cash
needs, including its ability to make distributions. The Company believes that in
order to facilitate a clear understanding of the consolidated operating results
of the Company, Funds from Operations should be examined in conjunction with net
income as presented in the consolidated financial statements.
<PAGE> 14
The following table presents the Company's Funds from Operations for the three
months and six months ended June 30, 1998:
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, 1998 Ended June 30, 1998
------------------- -------------------
<S> <C> <C>
Funds from Operations:
Net Income Available to Common $ 7,282 $14,590
Shareholders
Add back real estate depreciation 4,463 8,593
------- -------
$11,745 $23,183
======= =======
</TABLE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a). The Company held its Annual Meeting of Shareholders on May 6, 1998.
(1) To consider and elect four (4) Class I Trustees to serve until
the 2001 annual meeting of the Company's shareholders and
until their respective successors are duly elected and
qualified;
(2) To consider and approve the Non-Employee Trustees'
Compensation Plan (the "Plan"), whereby Non-Employee Trustees
of the Company may elect to receive the cash compensation they
are entitled to for serving as trustees of the company in the
form of Common Shares of the Company;
(3) To consider and ratify the action of the Board of Trustees in
selecting the firm of Arthur Andersen LLP to be the
independent auditors of the Company for the fiscal year ending
December 31, 1998, and to perform such other services as may
be requested.
(b). The matters voted upon and approved at the meeting thereto were as
follows:
Election of Trustees Michael W. Devlin, C. Ray Bell, Monroe J. Carrell,
Jr., and Charles W. Thomas:
For all Nominees Instructed Withheld from all Nominees
---------------- ---------- --------------------------
19,092,679 2,040 67,909
Approval of the Non-Employee Trustees' Compensation Plan:
For Against Abstain
--- ------- -------
18,725,282 251,985 135,337
Ratification of the action of the board of trustees in selecting the
firm of Arthur Andersen LLP to be the independent auditors of the
company for the fiscal year ending December 31, 1998
For Against Abstain
--- ------- -------
19,092,679 7,710 12,216
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a). Exhibits
2.1 Agreement of Merger dated April 17, 1998, By and Among Prison Realty
Trust ("the Company") and USCA Corporation, a wholly-owned Kentucky
subsidiary of Prison Realty Trust, and U.S. Corrections Corporation, a
Kentucky corporation (previously filed as Exhibit 2.2 to the Company's
Current Report on Form 8-K filed with the Commission on April 22, 1998
and incorporated herein by reference).
2.2 Agreement and Plan of Merger, dated April 18, 1998, between Corrections
Corporation of America, a Tennessee corporation and CCA Prison Realty
Trust, a Maryland real estate investment trust ("the Company")
(previously filed as Exhibit 2.1 to Corrections Corporation of
America's Current Report on Form 8-K filed with the Commission on April
22, 1998 and incorporated herein by reference).
10.1 Waiver, Amendment and Joinder Agreement, dated April 17, 1998, between
the Company and U.S. Corrections Corporation, Subsidiaries of U.S.
Corrections Corporation, certain financial institutions, and First
Union National Bank.
10.2 CCA Prison Realty Trust Non-Employee Trustees' Compensation Plan
(previously filed as Exhibit 4.3 to the Company's Registration
Statement on Form S-8 filed with the Commission on July 1, 1998 and
incorporated herein by reference).
27 Financial Data Schedule (SEC use only).
(b). Reports on Form 8-K
A report on Form 8-K, dated April 22, 1998, was filed with the Commission
regarding the Agreement and Plan of Merger entered into on April 18,
1998 by and between the Company and Corrections Corporation of America
pursuant to which Corrections Corporation of America will be merged with
and into the company.
A report on Form 8-K, dated May 4, 1998, was filed with the Commission
regarding the merger of USCA Corporation, a wholly-owned subsidiary of
the Company, and U.S. Corrections Corporation, pursuant to an Agreement
and Plan of Merger effective April 17, 1998.
<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
CCA PRISON REALTY TRUST
/s/ Vida H. Carroll
- ---------------------------------
Vida H. Carroll
Chief Financial Officer
Date: August 14, 1998
<PAGE> 1
EXHIBIT 10.1
WAIVER, AMENDMENT AND JOINDER AGREEMENT
THIS WAIVER, AMENDMENT AND JOINDER AGREEMENT (this "Agreement") is made
and entered into as of this 17th day of April, 1998 by and among CCA Prison
Realty Trust ("CCA REIT"), Prison Realty Management, Inc. ("Management"), U.S.
Corrections Corporation ("USCC"), the Subsidiaries of USCC identified on the
signature pages hereto (such subsidiaries of USCC, collectively with Management
and USCC, the "New Borrowers"), the financial institutions who are or may become
party to the Credit Agreement referenced below (the "Lenders"), and FIRST UNION
NATIONAL BANK (f/k/a First Union National Bank of Tennessee), a national banking
association ("First Union"), as Administrative Agent for the Lenders (the
"Administrative Agent").
Statement of Purpose
The Lenders agreed to extend certain credit facilities to CCA REIT
pursuant to the Credit Agreement dated as of July 18, 1997 by and among CCA
REIT, the Lenders and the Administrative Agent (as amended restated, modified or
otherwise supplemented from time to time, the "Credit Agreement").
CCA REIT desires to purchase 100% of the outstanding capital stock of
USCC for an aggregate purchase price of approximately $255 Million, through a
merger of a Wholly- Owned Subsidiary of CCA REIT with and into USCC, resulting
in USSC becoming a Wholly-Owned Subsidiary of CCA REIT (the "Acquisition and
Merger"). USCC has several Subsidiaries, which Subsidiaries own certain real
property located in Kentucky, North Carolina and Ohio. USCC, Inc., a direct
subsidiary of USCC, has an existing credit facility in the aggregate principal
amount of up to $70 Million with certain lenders party thereto and Credit Suisse
First Boston, as agent for the lenders thereunder (the "Credit Suisse Credit
Facility"). The Credit Suisse Credit Facility is secured by substantially all of
the assets of USCC and its Subsidiaries (the "USSC Collateral").
The transactions described above require certain waivers under the
terms and conditions of the Credit Agreement. The Borrowers hereby request and
the Agents and the Lenders hereby agree to the following:
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. Capitalized Terms. All capitalized terms used in this Agreement and
not defined herein shall have the meanings assigned thereto in the Credit
Agreement.
2. Effect of Amendments and Waivers. Except as expressly amended
hereby, the Credit Agreement and Loan Documents shall be and remain in full
force and effect. The waivers granted herein are specific and limited and shall
not constitute an amendment of the Credit Agreement or the Loan Documents or a
modification, acceptance or waiver of any
<PAGE> 2
other provision of or default under the Credit Agreement, the Loan Documents or
any other document or instrument entered into in connection therewith or a
future modification, acceptance or waiver of the provisions set forth therein
(except to the extent necessary to give effect to the specific waivers and
agreements set forth herein).
3. Amendments to Credit Agreement.
(a) Section 1.1 of the Credit Agreement shall hereby be
amended by deleting the defined term "Aggregate Commitment" in its
entirety and substituting the following in lieu thereof:
"'Aggregate Commitment' shall mean the aggregate amount of the
Lenders' Commitments hereunder, as such amount may be reduced or
modified at any time or from time to time pursuant to the terms hereof.
The Aggregate Commitment as of April 17, 1998 shall be Two Hundred and
Twenty Five Million Dollars ($225,000,000)."
(b) Schedule 1.1(b) of the Credit Agreement is hereby replaced
with the updated copy of Schedule 1.1(b) attached hereto.
(c) Schedule 6.1(a) and Schedule 6.1(b) of the Credit
Agreement are hereby replaced with the updated copies of such Schedules
attached hereto.
4. Waivers of Credit Agreement. The Administrative Agent and the
Lenders hereby consent to the following waivers under the Credit Agreement:
(a) The Administrative Agent and the Lenders hereby waive the
provisions of Section 8.16 for the period commencing on the date hereof
and continuing through and including May 15, 1998 (the "Collateral
Waiver Period"), solely to permit the consummation of the Acquisition
and Merger without the execution of the joinder agreements and other
documents required pursuant to Section 8.16; provided, that (i) CCA
REIT and its new direct and indirect Subsidiaries shall use their
reasonable best efforts to deliver to the Administrative Agent the
documents required pursuant to the terms and conditions of Section 8.16
on the date hereof and (ii) on or before the last day of the Collateral
Waiver Period, CCA REIT and its new direct and indirect Subsidiaries
shall have executed and delivered to the Administrative Agent each and
every document required pursuant to the terms and conditions of Section
8.16.
(b) The Administrative Agent and the Lenders hereby waive the
provisions of Sections 10.1 and 10.3 for the period commencing on the
date hereof and continuing through and including April 28, 1998 (the
"Credit Suisse Waiver Period"), solely to permit the Credit Suisse
Credit Facility and the Liens on the USCC Collateral which secure such
Debt; provided, that on or before the last day of such period, the
Credit Suisse Credit Facility shall have been repaid in full and
2
<PAGE> 3
terminated and the Liens on the USCC Collateral shall have been
released.
(c) The Administrative Agent and the Lenders hereby waive the
provisions of Sections 10.4 and 10.5 solely to permit the Acquisition
and Merger.
(d) The Administrative Agent and the Lenders hereby waive the
provisions of Section 10.4 solely to permit CCA REIT and its new direct
and indirect Subsidiaries to deliver the security documents and other
documents and instruments required pursuant to Section 10.4(b) which
shall evidence the first priority Lien on the USCC Collateral on or
prior to the last day of the Collateral Waiver Period; provided that
CCA REIT and its new direct and indirect Subsidiaries shall use their
reasonable best efforts to deliver the security documents and other
documents and instruments required pursuant to Section 10.4(b) which
shall evidence the first priority Lien on the USSC Collateral on the
date hereof.
5. The Administrative Agent and the Lenders hereby waive any Default or
Event of Default which shall have or may occur under (a) arising from the
Borrowers' failure to comply with Section 8.16 solely with regard to Management
prior to the date hereof and (b) Section 11.1(g), solely as a result of an
"default or event of "default" under the Credit Suisse Credit Facility resulting
from the consummation of the Acquisition and Merger and the execution and
delivery of this Agreement or any other document required pursuant to this
Agreement; provided, that this waiver shall only be effective during the Credit
Suisse Waiver Period.
6. Each of the New Borrowers hereby agrees that by executing this
Agreement it shall become a Borrower party to the Credit Agreement and each
other applicable Loan Document as if a signatory thereto on the Closing Date of
the Credit Agreement, and each New Borrower shall comply with all of the terms,
covenants, conditions and agreements set forth in the Credit Agreement and each
applicable Loan Document and hereby makes each representation and warranty to be
made by the Borrowers under the Credit Agreement and each applicable Loan
Document, in each case set forth therein. Further, each New Borrower agrees that
it shall be jointly and severally liable with each Borrower for all Obligations
of any Borrower under the Credit Agreement or any other Loan Document regardless
of the date of such Obligation.
7. Conditions. The effectiveness of this Agreement shall be conditioned
upon delivery to the Administrative Agent of the following items:
(a) Notes. CCA REIT and the New Borrowers shall issue and
deliver to the Administrative Agent, in exchange for the Notes
outstanding, separate new Notes, payable to each Lender in the amount
of such Lender's Commitment Percentage or the Aggregate Commitment.
(b) Officer's Certificate. The Administrative Agent shall have
received a certificate from the chief executive officer or chief
financial officer of CCA REIT,
3
<PAGE> 4
in form and substance reasonably satisfactory to the Administrative
Agent, to the effect that all representations and warranties of the
Borrowers contained in the Credit Agreement and the other Loan
Documents are true, correct and complete in all material respects; that
no Borrower is in violation of any of the covenants contained in the
Credit Agreement and the other Loan Documents; that, after giving
effect to the transactions contemplated by this Agreement, no Default
or Event of Default has occurred and is continuing; and that each
Borrower has satisfied each of the closing conditions hereof to be
satisfied thereby.
(c) Secretary's Certificates. The Administrative Agent shall
have received a certificate of the secretary or assistant secretary of
each of CCA REIT and the New Borrowers certifying that (A) attached
thereto is a true and complete copy of the certificate of incorporation
or declaration of trust, as applicable, of such entity and all
amendments thereto, certified as of a recent date by the appropriate
Governmental Authority in its jurisdiction of incorporation; (B)
attached thereto is a true and complete copy of the bylaws of such
entity as in effect on the date of such certification; (C) attached
thereto is a true and complete copy of resolutions duly adopted by the
Board of Directors of such entity authorizing the transactions
contemplated herein, the borrowings contemplated hereunder and the
execution, delivery and performance of this Agreement and the other
documents related thereto; and (D) as to the incumbency and genuineness
of the signature of each officer of such entity executing this
Agreement and the other documents related hereto.
(d) Certificates of Good Standing. The Administrative Agent
shall have received short-form certificates as of a recent date of the
good standing of each of CCA REIT and the New Borrowers under the laws
of its jurisdiction of organization and such other jurisdictions
requested by the Administrative Agent.
(e) Opinions of Counsel. The Administrative Agent shall have
received favorable opinions of counsel to the Borrowers (including
local counsel) addressed to the Administrative Agent and the Lenders
with respect to such Persons and the Loan Documents, as modified by
this agreement, reasonably satisfactory in form and substance to the
administrative Agent and the Lenders.
(f) Credit Suisse Credit Facility Payoff. The Administrative
Agent shall have received evidence, in form and substance satisfactory
to the Administrative Agent that (i) USCC, Inc. shall have given
irrevocable notice to Credit Suisse of its intention to pay off and
terminate the Credit Suisse Credit Facility and (ii) funds sufficient
to repay in full all outstanding obligations under the Credit Suisse
Credit Facility have been deposited with a bank satisfactory to the
Administrative Agent pursuant to an agreement, in form and substance
satisfactory to the Administrative Agent, requiring (A) that such funds
be used to pay in full and terminate the Credit Suisse Credit Facility
upon the expiration of the prepayment notice period under the Credit
Suisse Credit Facility and (B) upon such payment and termination all
Liens securing such facility shall be released.
4
<PAGE> 5
(g) Fees. In order to compensate the Administrative Agent and
the Lenders for their obligations hereunder, the Borrowers agrees to
pay to the Administrative Agent and the Lenders existing at the time
this Agreement becomes effective the fees set forth in that certain
commitment letter agreement of even date herewith between CCA REIT and
First Union National Bank.
(h) Expenses. The Borrower shall pay all reasonable
out-of-pocket expenses of the Administrative Agent in connection with
the preparation, execution and delivery of this Agreement, including
without limitation, the reasonable fees and disbursements of counsel
for the Administrative Agent.
7. Representations and Warranties; No Default. By its execution hereof,
CCA REIT hereby certifies that each of the representations and warranties set
forth in the Credit Agreement and the other Loan Documents is true and correct
as of the date hereof as if fully set forth herein (other than representations
and warranties which speak as of a specific date pursuant to the Credit
Agreement, which representations and warranties shall have been true and correct
as of such specific dates) and that as of the date hereof no Default or Event of
Default has occurred and is continuing.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina.
9. Counterparts. This Agreement may be executed in separate
counterparts, each of which when executed and delivered is an original but all
of which taken together constitute one and the same instrument.
[Signature Pages Follow]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
[SEAL] CCA PRISON REALTY TRUST
By: /s/ Vida H. Carroll
----------------------------------
Name: Vida H. Carroll
----------------------------------
Title: Secretary
----------------------------------
[CORPORATE SEAL] U.S. CORRECTIONS CORPORATION
By /s/ D. Robert Crants, III
----------------------------------
Name: D. Robert Crants, III
----------------------------------
Title: President
----------------------------------
[CORPORATE SEAL] USCC, INC.
By: /s/ D. Robert Crants, III
----------------------------------
Name: D. Robert Crants, III
----------------------------------
Title: President
----------------------------------
[CORPORATE SEAL] U.S. CORRECTIONS LEASING (NC)
AVERY/MITCHELL FACILITY, INC.
By: /s/ D. Robert Crants, III
----------------------------------
Name: D. Robert Crants, III
----------------------------------
Title: President
----------------------------------
[Signature Pages Continue]
6
<PAGE> 7
[CORPORATE SEAL] U.S. CORRECTIONS LEASING (NC)
PAMLICO FACILITY, INC.
By: /s/ D. Robert Crants, III
----------------------------------
Name: D. Robert Crants, III
----------------------------------
Title: President
----------------------------------
[CORPORATE SEAL] QUEENSGATE CORRECTIONAL
CENTER, INC.
By: /s/ D. Robert Crants, III
----------------------------------
Name: D. Robert Crants, III
----------------------------------
Title: President
[CORPORATE SEAL] PRISON REALTY MANAGEMENT, INC.
By: /s/ Vida H. Carroll
----------------------------------
Name: Vida H. Carroll
----------------------------------
Title: Secretary
----------------------------------
[Signature Pages Continue]
7
<PAGE> 8
FIRST UNION NATIONAL BANK (f/k/a
First Union National Bank of Tennessee),
as Administrative Agent and Lender
By: /s/ James Downes
----------------------------------
Name: James Downes
----------------------------------
Title: Vice President
----------------------------------
[Signature Pages Continue]
8
<PAGE> 9
SOUTHTRUST BANK, N.A., as Lender
By: /s/ James M. Sloan, Jr.
----------------------------------
Name: James M. Sloan, Jr.
----------------------------------
Title: Vice President
----------------------------------
[Signature Pages Continue]
9
<PAGE> 10
AMSOUTH BANK, as Lender
By: /s/ Dan Andrews, Jr.
----------------------------------
Name: Dan Andrews, Jr.
----------------------------------
Title: Senior Vice President
----------------------------------
[Signature Pages Continue]
10
<PAGE> 11
CIBC INC., as Lender
By: /s/ Roger Colden
----------------------------------
Name: Roger Colden
----------------------------------
Title: Executive Director
----------------------------------
[Signature Pages Continue]
11
<PAGE> 12
COMERICA BANK, as Lender
By: /s/ Kristin L. Andersen
----------------------------------
Name: Kristin L. Andersen
----------------------------------
Title: Account Officer
----------------------------------
[Signature Pages Continue]
12
<PAGE> 13
FIRST TENNESSEE BANK, as Lender
By: /s/ Laurie D. Gilreath
----------------------------------
Name: Laurie D. Gilreath
----------------------------------
Title: Vice President
----------------------------------
[Signature Pages Continue]
13
<PAGE> 14
MERCANTILE BANK NATIONAL
ASSOCIATION, as Lender
By: /s/ Donald A. Adam
----------------------------------
Name: Donald A. Adam
----------------------------------
Title: Vice President
----------------------------------
[Signature Pages Continue]
14
<PAGE> 15
UNION PLANTERS BANK, N.A.
(formerly Union Planters National Bank),
as Lender
By: /s/ Victoria E. Docauer
----------------------------------
Name: Victoria E. Docauer
----------------------------------
Title: Vice President
----------------------------------
[Signature Pages Continue]
15
<PAGE> 16
BANK HAPOALIM, B. M., as Lender
By: /s/ Frank McEntee
----------------------------------
Name: Frank McEntee
----------------------------------
Title: Vice President/Controller
----------------------------------
By: /s/ Carl Kopfinger
----------------------------------
Name: Carl Kopfinger
----------------------------------
Title: Vice President
----------------------------------
[Signature Pages Continue]
16
<PAGE> 17
BANK OF SCOTLAND, as Lender
By: /s/ Annie Chin Tat
----------------------------------
Name: Annie Chin Tat
----------------------------------
Title: Vice President
----------------------------------
17
<PAGE> 18
SCHEDULE 1.1(B)
<TABLE>
<CAPTION>
Revolving
Credit Commitment
Lender Commitment Percentage
- ------ ---------- ----------
<S> <C> <C>
First Union National Bank of Tennessee $105,000,000 46.6666666667%
One First Union Center, TW-10
301 South College Street
Charlotte, North Carolina 28288-0608
Attn.: Syndication Agency Services
Telephone: (704) 383-0281
Telecopy: (704) 383-0288
and
First Union National Bank of Tennessee
150 Fourth Avenue North
Nashville, Tennessee 37219
Attn.: Tim Fouts
Telephone: (615) 251-9243
Telecopy: (615) 251-9461
SouthTrust Bank, National Association $ 20,000,000 8.8888888889%
420 North 20th Street
Birmingham, Alabama 35203
Attn.: Jim Sloan
Telephone: (205) 254-5870
Telecopy: (205) 254-8270
AmSouth Bank $ 20,000,000 8.8888888889%
333 Union Street, #200
Nashville, Tennessee 37201
Attn.: Dan Andrews
Telephone: (615) 291-5259
Telecopy: (615) 291-5257
</TABLE>
1
<PAGE> 19
<TABLE>
<CAPTION>
Revolving
Credit Commitment
Lender Commitment Percentage
- ------ ---------- ----------
<S> <C> <C>
CIBC Inc. $15,000,000 6.66666666667%
Two Paces West
2727 Paces Ferry Road, Ste. 1200
Atlanta, Georgia 30339
Attn.: Roger Colden
Telephone: (770) 319-4902
Telecopy: (770) 319-4954
Comerica Bank $20,000,000 8.88888888889%
9th Floor MC 3280
500 Woodward Avenue
Detroit, Michigan 48226
Attn.: Kristine L. Andersen
Telephone: (313) 222-3648
Telecopy: (313) 222-3330
First Tennessee Bank $10,000,000 4.4444444444%
511 Union Street, 2nd Floor
Nashville, Tennessee 37219
Attn.: Laurie D. Gilreath
Telephone: (615) 734-6216
Telecopy: (615) 734-6148
Mercantile Bank, National Association $10,000,000 4.4444444444%
721 Locust Street, TRAM 12-3
St. Louis, Missouri 63101
Attn.: Donald A. Adam
Telephone: (314) 425-2420
Telecopy: (314) 425-3859
Union Planters Bank, N.A. $10,000,000 4.4444444444%
(formerly Union Planters National Bank)
6200 Poplar Avenue, 4th Floor
Memphis, Tennessee 38119
Attn.: Victoria E. Docauer
Telephone: (901) 580-5507
Telecopy: (901) 580-5451
</TABLE>
2
<PAGE> 20
<TABLE>
<CAPTION>
Revolving
Credit Commitment
Lender Commitment Percentage
- ------ ---------- ----------
<S> <C> <C>
Bank Hapoalim, B.M. $10,000,000 4.4444444444%
1515 Market Street
Philadelphia, Pennsylvania 19102
Attn.: Ellen Frank
Telephone: (215) 665-2200
Telecopy: (215) 665-2217
</TABLE>
3
<PAGE> 21
<TABLE>
<CAPTION>
Revolving
Credit Commitment
Lender Commitment Percentage
- ------ ---------- ----------
<S> <C> <C>
Bank of Scotland $5,000,000 2.2222222222%
111 Riverside Avenue, Suite 230
Jacksonville, Florida 32202
Attn.: Hugh Van Seaton
Telephone: (904) 353-7766
Telecopy: (904) 353-7833 __________ _____________
Total $225,000,000 100%
============
</TABLE>
4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CCA PRISON REALTY TRUST AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,029
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,177
<PP&E> 756,698
<DEPRECIATION> 13,682
<TOTAL-ASSETS> 750,193
<CURRENT-LIABILITIES> 238,140
<BONDS> 0
0
43
<COMMON> 216
<OTHER-SE> 511,794
<TOTAL-LIABILITY-AND-EQUITY> 750,193
<SALES> 16,609
<TOTAL-REVENUES> 16,789
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,050
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,307
<INCOME-PRETAX> 9,432
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,432
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,432
<EPS-PRIMARY> .34
<EPS-DILUTED> .33
</TABLE>
