Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Z Best Place to Talk Stocks -- Ignore unavailable to you. Want to Upgrade?

To: Ron McKinnon who wrote (38250)	2/6/2002 12:28:12 PM
From: Larry S.	Respond to of 53068

CD - in pers again 15.06. eom

To: Ron McKinnon who wrote (38250)	2/6/2002 12:41:41 PM
From: pz	Read Replies (1) \| Respond to of 53068

Ron, It looks like this accounting issue is specific to CRN, BUT I think these private prisons do similar things....so..... So basically I have no idea. :o) Paul Cornell sets accounting review, shares plunge (UPDATE: adds details throughout) HOUSTON, Feb 6 (Reuters) - Prison builder and operator Cornell Cos. Inc. (NYSE:CRN - news) on Wednesday said it was reviewing the accounting of an off-balance-sheet transaction and said the review could have material financial consequences. The company also said its president and chief executive will no longer be chairman. The news sent Cornell shares plunging on the New York Stock Exchange, where they lost more than half their value. Investors are extremely nervous about accounting practices following the collapse of Enron Corp. (NYSE:ENE - news). Cornell said the board of directors had formed a special committee to review an August transaction in which Cornell sold 11 facilities and then leased them back. It said the facilities were sold to an entity owned by affiliates of an unnamed investment bank for net proceeds of $173 million. Cornell is focusing on a $3.65 million nonrefundable fee it paid to the investment bank and whether that fee affected the previously reported accounting treatment for the transaction, Cornell said. It also is looking at whether its financial statements appropriately reflected the amount paid to the investment bank. The fee was for financial advisory services concerning future financing vehicles and strategic development. Depending on the results of the accounting review, the company could be forced to put the facilities back on its balance sheet as assets and take on the debt of Municipal Corrections Finance L.P., the entity formed to buy the facilities, as a liability, Cornell said. Municipal Corrections Finance is a completely independent entity from Cornell and involves no Cornell employees, the spokesman said. The review is the latest sign that auditors and companies are questioning off-balance-sheet transactions in the wake of the collapse of Enron. Cornell shares were down $10.47, or 60 percent, at $7.01 near midday on the NYSE. Cornell, which provides prison, treatment and educational services to government agencies, also said it had installed an outside director, Harry Phillips Jr., as its new chairman. Phillips succeeds Steve Logan, who remains president and chief executive of Cornell. ``Our board of directors has determined that it is advisable to have one of the company's outside directors fill the position of chairman,'' Logan said in a statement. ``Many other public companies have adopted this practice, and our board believes that this represents best corporate governance practice.''