Annual Report 2003

Company Profile
Helping Others Help Themselves
PRIDE Enterprises is an internationally recognized general manufacturing and services company. PRIDE operates 40 diverse industrial
training programs in 21 prisons throughout Florida. A private, notfor-profit corporation founded in 1981, PRIDE has experience and
expertise in working in correctional environments. PRIDE provides
for job placement and other support services for ex-offenders to help
them successfully transition back into society after a period of incarceration.

Statutory Missions
TO PROVIDE a joint effort between the Department of Corrections,
the correctional work programs, and other vocational training programs to reinforce relevant education, training, and post-release job
placement and help reduce recommitment.
TO SERVE the security goals of the state through the reduction of
idleness of inmates and the provision of an incentive for good behavior in prison.
TO REDUCE the cost of state government by operating enterprises
primarily with inmate labor, which enterprises do not seek to unreasonably compete with private enterprise.

Table of Contents
2003 Highlights

2

Board of Directors

4

Industry Locations

5

Industry Spotlight

6

TO SERVE the rehabilitative goals of the state by duplicating, as
nearly as possible, the operating activities of a free-enterprise type
of profit-making enterprise.

Corporate Mission
TO BUILD productive citizens by training inmates and developing
their work ethics in a free enterprise environment.

Former PRIDE Worker Success 7
Story
Former PRIDE Workers

8

PIE Program

8

Mission Performance

9

Recidivism Information

11

Customers

13

Financials

14

Vision
TO BECOME the most successful company in the world that assists
inmates become successful citizens.

Values
Quality Driven

Customer Focused

Respect

Easy To Do Business With

Integrity

Model the Values

2003 Highlights
Value
The President of the United States once said, “the value of
life is to improve one’s condition. Whatever is calculated to
advance the condition of the honest, struggling laboring man
. . . I am for that thing.” Those comments capture the essence of the American spirit. The idea of advancing oneself
through hard work and struggle is a hallmark of our culture.
It is not by chance that we work longer hours and take less
vacation than almost every nation in the world. You see we
have little choice. It has been part of the American tradition
since our forefathers left the shores of distant lands to meld
disparate cultures into this country. Those Presidential remarks are as true today as when they were spoken over one
hundred and forty three years ago by the 16th President of
the United States, Abraham Lincoln.

The Value to Its Customers and Competition

The Value of PRIDE
PRIDE is an independent company founded 23 years ago that
embraces the quintessence of Lincoln’s observation. While its
statutory mission is based on lengthy language established
by the Legislature, its spirit can be synthesized into a single
short phrase of “helping others help themselves.” While
PRIDE was heavily involved with change management in
2002, 2003 was a year where management challenged the
company’s relevance to its stakeholders. A rapidly changing
economy and marketplace highlighted the significance of its
corporate mission, vision and values. Embodying corporate
principles, a company's mission, vision and values represent
its purpose, goals and core ideals that the company considers intrinsically important. These guiding objectives provide a
frame of reference for organizational decision-making.
Today, our stakeholders hold us to higher standards and expect PRIDE to conduct its business in a manner consistent
with our stated principles. As consumer (both tax supported
and private) and market needs change more rapidly and
2003 Highlights
2
PRIDE becomes more decentralized, employees have been
empowered with an understanding of PRIDE’s core principles
Board of Directors
4
to enable them to make better decisions.
Companies with
strong mission, vision and values have an advantage in
Industry Locations
achieving
key business goals. In the 51995 book, Built to
Last, Collins and Porras' analysis of 18 "visionary" companies
Industry Spotlight
6 beyond profit maxiwho were driven by principles and goals
mization
Inmate found
Successthat
Storythese businesses 7show correlations between a company's mission, vision and values and its financialMission
performance,
customer loyalty and effective
risk managePerformance
8
ment.

Table of Contents

Inmate Workforce

The Value to Its Workers
Financials

and helps to reduce recidivism. In 2003, over 3.5 million
work hours were logged by inmate workers, working in 2049
jobs. Reducing the likelihood that inmates will return to
prison after release is one of PRIDE’s statutory missions. In
2003, the recidivism rate among inmates who worked for its
industries dropped to 17% and is significantly lower than the
national average recidivism rate for all inmates. PRIDE funds
placement of PRIDE inmate workers upon their release
through its affiliate company, Labor Line. In 2003, over 85%
of all released inmates who were PRIDE trained workers were
placed in jobs. In addition, other PRIDE affiliates, Global Digital, Global Remanufacturing, ITC and FCP, continue to seek
prospects to provide opportunities for PRIDE workers. Approximately 12% of PRIDE’s inmate workers were engaged in
PRIDE affiliated companies.

6

PRIDE enables inmates to gain vocational skills in one of its
40 industries to aid in their transition to the outside world
2

To meet the demands of the increasing State inmate population, PRIDE must increase its revenue. It takes approximately
$32,000 in incremental sales to create a new inmate position. In 2003, the challenge was to increase revenue as the
State budget declined and more functions privatized. The
company continued to diversify its customer base with only
approximately 52% of its business coming from the State. To
attract city, county and private sector business, PRIDE had to
competitively demonstrate that it could consistently provide
value in terms of product, delivery, quality and price. PRIDE
offers a reasonably stable and cost-effective workforce for
industries that require labor-intensive work. In addition, its
level of quality is highly competitive with private enterprise.
For example, an industry within PRIDE’s Sewn Products Strategic Business Unit (SBU) received ISO 9001 accreditation in
2003. This is the second SBU to receive International Organization for Standardization (ISO) certification, an honor very
few corporations receive and one that no other State's prison
industry program has been awarded.
PRIDE supervisors spend a significant part of their day training inmates to enhance their skill level. As a consequence,
many of our competitors have waiting orders for released
PRIDE trained workers. PRIDE is one of the rare corporations
that actively trains its workers to go to work for its competition upon release.

The Value to Citizens of the State of Florida
In the 2004 State of the Union address, President George W.
Bush stated, “ . . . tonight I ask you to consider another group
of Americans in need of help. This year, some 600,000 inmates will be released from prison back into society. We
know from long experience that if they can't find work, or a
home, or help, they are much more likely to commit crime
and return to prison. So tonight, I propose a four-year, $300

million prisoner re-entry initiative to expand job training and
placement services, to provide transitional housing, and to
help newly released prisoners get mentoring, including from
faith-based groups. America is the land of second chance,
and when the gates of the prison open, the path ahead
should lead to a better life.” While the President’s initiative
is to be applauded, PRIDE has been training inmates, providing housing and placing PRIDE trained inmates in meaningful jobs (85% of those released in 2003) for over 10 years.
All of this good work was done without a single dollar of direct government funding.

relationship with Industries Training Corporation and the money
it has loaned to this company. PRIDE is taking steps to formalize the debt agreement to address this and other audit concerns.
The Value of Cooperation
PRIDE employees take great satisfaction knowing that they embody the spirit of President Lincoln’s remarks that “the value of
life is to improve one’s condition”. All of PRIDE’s stakeholders,
its customers, its workers, its employees, its Board of Directors,
and the State of Florida, all share in adding value to PRIDE’s
successful mission of helping others help themselves.

As a prudent corporate citizen, PRIDE has independent certified public auditors audit its financial records annually to
insure compliance with State and Federal laws and generally
accepted accounting practices.
As a stakeholder, the State periodically reviews PRIDE's performance through the State Office of Program Policy Analysis
and Government Accountability (OPPAGA). In December
2003, OPPAGA confirmed that PRIDE benefits the state by
providing vocational training for prison inmates and enhances security in correctional institutions. OPPAGA acknowledged PRIDE's benefit to the state correctional system
in several ways: reducing inmate idleness, providing incentives for good behavior, facilitating payment of restitution,
and providing useful vocational skills to inmates that may
help to reduce recidivism.

Maria Camila Leiva, Chairman
PRIDE Board of Directors

John F. Bruels
President

While much of the report was favorable, OPPAGA was critical of PRIDE's corporate restructuring with regard to its

3

Board of Directors
Members of the PRIDE Board of Directors are appointed by the Governor and
confirmed by the Senate. The Board of
Directors submit candidates for consideration based on business expertise,
geographic location, gender and cultural
diversity. Members serve on the Board
without compensation for their time and
service. The following is a list of members with their business affiliation and
geographic location:

*Maria Camila Leiva,
Chairman of the Board
MFZ Management Corporation, Coral
Gables

*Kenneth L. Mellem

Carol S. Spalding

IT Executive, Largo

Florida Community College, Jacksonville

*Lawrence W. Hamilton

Gwendolyn W. Stephenson

Tech Data Corporation, Clearwater

Hillsborough Community College, Tampa

*Marcelo A. Alvarez

Derrick D. Wallace

EFG Capital International, Miami

Construct Two Group, Orlando

William G. Dresser

The CEO and President of PRIDE in addition to the Secretary of the Florida Department of Corrections automatically
serve on the Board. The Board determines the compensation of the President of PRIDE and approves compensation plans submitted by the President for
other employees. Board members submit annual statements of independence
and conflicts of interest are disclosed
within the financial statements.

Former Telecommunications and Public
Television Executive, Jacksonville Beach

Richard L. Hanas
A. Duda and Sons, Inc., Oviedo

Walter B. “Mike” Hill

John F. Bruels
President

State Farm Insurance, Pensacola

PRIDE Enterprises, St. Petersburg

Florida Department of Corrections, Tallahassee

*Pamela Jo Davis
CEO

PRIDE Enterprises, St. Petersburg

James V. Crosby, Jr.

Edward C. Peddie
Former Health Plan Executive, Gainesville

*Also serve on the Board of Trustees of Industries Training Corporation

Standing (l to r): Richard L. Hanas, Walter B. “Mike” Hill, Kenneth L. Mellem, Pamela Jo Davis, Lawrence W. Hamilton, John F. Bruels
Seated (l to r): Maria Camila Leiva, James V. Crosby, Jr., Marcelo A. Alvarez, William G. Dresser, Edward C. Peddie, Carol S. Spalding
Not pictured: Gwendolyn W. Stephenson, Derrick D. Wallace

4

Industry Locations

5

Industry Spotlight
PRIDE s Lawtey
Garment Industry
receives ISO
9001:2000
Certification

Lawtey Garment Industry
On August 25, 2003, after a six day audit conducted by Eagle
Registrations, Inc., of Dayton, Ohio, PRIDE’s Lawtey Garment
Industry accomplished what only one in five Standard &
Poors 500 companies has achieved; ISO 9001:2000 Certification.
The purpose of the International Organization for Standardization (ISO) is to promote the international exchange of goods and
services through the development of standardization. The ISO 9000 Series standards focus on systems for managing quality.
The standards are documented agreements containing technical specifications or other precise criteria that are used consistently to ensure that materials, products, processes and services meet defined standards. Product certification involves onetime testing of a product sample by a third-party test house to confirm that the product meets the standards. Registration of
the quality system confirms that the supplier has the capability of manufacturing to the product specifications. The first standard, ISO 9001, is the most comprehensive and is used to assure quality in design/development, production, installation and
servicing. This standard is typically used by manufacturing organizations that design and build their own products.
The audit process is comprehensive. The integrity of all processes are audited to insure compliance to written procedures and
methods from order receipt through delivery. A key element of an ISO audit is the assurance that written documents are linked
to work activities and those activities are being performed as defined.
The workforce in the PRIDE plant, consisting of 87 inmate workers, three supervisors, a production manager and an industry
manager, worked diligently for over a year to prepare for the strict document requirements. The initial task was defining the
sequential manufacturing steps for each garment. Then, documentation that coordinated and linked respective ISO elements
to each business or manufacturing step was created. Next, a trial audit was conducted to determine if written linkage to the
work being performed was sound. Finally, the process was implemented and workers trained in each step. Throughout the
process, many classes and seminars were conducted with the workforce to ensure
that the plant’s Quality Policy was understood. The education process was a critical
element. A dependent factor of certification is the level to which a workforce can
verbalize their understanding of the manufacturing steps and expected results.
There were two factors driving the decision to pursue ISO certification. ISO certification was a necessary step to apply for National Fire Protection Association (NFPA)
Certification in order to expand marketing of the Nomex Wild Land Garment currently being manufactured at the plant. Further, the consistency in manufacturing
the garments according to stringent standards provides our customers with reasonably priced, quality products in a timely manner.
Through this process, inmates have learned the importance of enhanced product
quality and reliability at a reasonable price. They also learn that following guidelines leads to better safety practices, increased efficiency and productivity and a
reduction in cost. This enhances the PRIDE experience of providing inmates with
invaluable skills that are extremely useful and relevant to private companies so that
upon their release they can re-enter the workplace as skilled workers that contribute to society.
6

Former PRIDE Worker Success Story
Mr. Chester Fair is living proof that the PRIDE
experience works. Chester worked in PRIDE’s
textile industries for over 9 years learning all
aspects of garment production from cutting patterns to operating single needle sewing machines and sergers. About his PRIDE experience
Mr. Fair says, “PRIDE provided good job training
and helped me change my attitude which gave
me a positive outlook on life.”
After receiving post-release support through the
PRIDE Transition Program, he was hired as a
sewing machine operator at Over the Top Inc.
which is a full-service linen rental company
based in Fort Lauderdale, Florida. The work
ethic and job skills he developed at PRIDE have
made him an asset to his employer. Alan Eingold, owner of Over the Top says, “Chester is a
valuable, trusted employee with a wonderful attitude. He is liked by everyone and when asked to
do extra work, he accepts it with a smile.” His
responsibilities have expanded to include laying
out and cutting fabric, making deliveries and
picking up products. Chester has been working
at Over the Top for 18 months using machinery
that he learned to operate at PRIDE.
Between the training he received at PRIDE and
the assistance provided through the PRIDE Transition Program, Chester states that “without the
help from PRIDE, I wouldn’t be where I am at
now”.

Chester is always
stepping up to the plate.
He is someone I would
want on my side. Alan Eingold, Owner

Chester Fair is among thousands of former
PRIDE workers who now contribute to society.
Clearly, the PRIDE experience works.

Over the Top Inc.
www.overthetopinc.com

Chester Fair shown with
employer, Nancy Eingold
7

Former PRIDE Workers
The following are excerpts from mail received from former PRIDE workers over the past year:
“I am happy to say I have started my new life with the help of
PRIDE. Without this program I know in my heart that I would have
gotten out and went back to “hang with the gang”, robbing and
using and selling drugs. But with the help of the PRIDE Transition
Program, I moved away from all that. I didn’t know anyone or how
to get around, but you made sure I was okay all the way. I’m about
to take night classes for my GED. I only went as far as the 8th
Grade, but I’m feeling so good about myself, why stop now? I’m
going all the way to the top. You’ve helped me in prison and you’ve
helped me outside of prison. Now who could ask for anything
more? I am truly happy.“ - Former New River West Textile worker.

I want you to know that I appreciate your assistance with my future. PRIDE will be the reason
I can’t fail on the streets.
- Former Calhoun Print Industry worker

“I just wanted to take a quick moment to thank all
of you for your assistance and support while I was
at Raiford. Also, I want to acknowledge the continued support I have received since I’ve been released. The PRIDE program has been really good
to me and I just wanted to say thank you. I’m employed…and all is going well. Thanks again!!”
- Former Union Tag worker

“Words cannot say Thank You enough for all
the help since I was released. My job is going
so great, they are a wonderful dental lab and I
couldn’t be working there without PRIDE’s
training and help when I was released. I won’t
let anyone down, especially myself”.
- Former Union Dental worker

I’m truly doing the
right thing and I
hope I can be a
role model for the
guys that work for
PRIDE.
- Former Calhoun
Print Industry
worker

PIE Program
The following PIE projects are operated in the State of Florida. In 2003, PRIDE operated 9 projects at 10 Correctional Institutions.
PIE PROJECT
PRIDE s Optical Lab PIE

PIE
MODEL
TYPE
Customer

LOCATION /
WORKERS

PRODUCTS

Broward CI (32)

PRIDE s Coatings PIE
PRIDE s Fabrication PIE
PRIDE s Polk Furniture PIE
PRIDE s Produce Processing PIE
PRIDE s SMS PIE

Customer
Customer
Customer
Customer

PRIDE's Imaging PIE
PRIDE s Textile PIE

Customer
Customer

Calhoun CI (8)
Madison CI (45)
Apalachee CI (8)

Placing images on a variety of substrates
Providing cut and sew manufacturing & outsourcing capabilities

PRIDE's Dental Lab

Customer

Union CI (46)

Dental lab services

PIE Employer Models
Maven Manufacturing
Private Institutions

Employer

Hardee CI (16)

Manufacture of fabric furniture

Corrections Corporation of
America & Hunter Printing

Employer

Lake City CI (9)

Printing for the entire CCA corporate facility and institutions

Corrections Corporation of
America & Bob Barker

Employer

Bay County CI (13)

Manufacture of textiles & garments

TOTAL INMATE WORKERS

Customer

Baker CI (8)
Union CI (33)
Polk CI (3)
Okeechobee CI
(35)
Avon Park CI (13)

Optical lab services, manufacturing of eyewear (frames and
lenses)
Traffic & architectural paint and coating products
Metal products & manufacturing services
Fabrication, assembly, & furniture manufacturing processes
Processing and packaging of citrus products into juice

269
8

Mixing, Processing & Packaging of cleaning supplies

Mission Performance
MISSION 1: EDUCATE, TRAIN AND PROVIDE POST-RELEASE JOB PLACEMENT TO INMATES AND HELP REDUCE RECOMMITMENT

OUTPUT: Pe rcentage of Inmate Workers
C ompleting Training P rog rams
40%
30%

31%

30%

100%

33%

31%

30%

EFFICIENCY : Pe rcentage Of Ex-Offende rs
Placed in Jobs

20%

78%

78%

FY99

FY00

88%

90%

FY01

FY02

85%

50%

10%
0%

0%
FY99

FY00

FY01

FY02

FY03

FY03

Comprehensive training programs have been developed for all PRIDE industries. Over the last five years, the percentage of
inmate workers completing training programs has been maintained in the low 30’s. The length of a program (number of
hours) and inmate turnover are factors affecting the percentage of workers who complete the training programs. Depending
on the job skill being learned, programs vary from 450 hours to over 6000 hours. The training certificates are recognized by
employers and certified by either the Department of Education or other expert authority. Job placement of ex-offenders has
been affected by the economy and unemployment rate resulting in a slight decrease in 2003.
MISSION 2: SECURITY THROUGH REDUCTION OF INMATE IDLENESS

OUTPUT: Inmate Hours Worked
5,000,000

4,305,515 4,282,660

3,576,413

4,000,000

3,493,809 3,155,241

3,000,000
2,000,000
1,000,000
0
FY99

FY00

FY01

FY02

FY03

The number of inmate hours worked varies according to product sales. As the economy and state budget cuts affected sales,
likewise, inmate hours worked has been affected. There was a significant increase in 2003 in both sales and inmate hours.
MISSION 3: REDUCE COST TO STATE GOVERNMENT BY USING INMATE LABOR TO OPERATE ENTERPRISES

OUT COME: Total Inmate C ompens ation
$4,000,000

$3,571,775

$3,000,000

$2,145,763

$1,847,827 $1,772,239 $1,916,614

$2,000,000
$1,000,000
$0
FY99

Inmate Pay

FY00

FY01

Remittances to DC

FY02

FY03

Victim Restitution

The company contributes 15% of total inmate compensation to the State Victim Restitution Fund. This contribution is over and
above the amount paid for inmate compensation. Inmate compensation includes PIE wages and traditional wages.
9

Mission Performance
MISSION 4: REHABILITATE IN A FREE-ENTERPRISE ENVIRONMENT

EFFICIENCY : Sales D ollars* Per Inmate
Workstation
$40,000
$30,000

$29,504

$31,729

$31,310

$31,859

FY01

FY02

FY03

$24,463

$20,000
$10,000
$0
FY99

FY00

The company must generate sales to create job positions for inmates. Currently, almost $32,000 in product sales is required
to be able to create one inmate job position.

INPUT: A nnual C apital Expe nditures

OUTPUT: Annual Rev enues *
$100,000,000
$75,000,000

$4,000,000
$ 78,452,030
$63,996,206

$65,278,356

$3,776,386
$ 3,579,357

$3,000,000

$62,093,958 $ 60,930,006

$50,000,000

$ 2,583,790

$2,000,000

$25,000,000

$ 1,346,583

$ 1,403,124

FY01

FY02

$1,000,000

$0

$0

FY99

FY00

FY01

FY02

FY03

FY99

FY00

FY03

Annual Revenues represent the income for the sale of products and services. The state budget cuts and economy have affected revenues. PRIDE reinvests capital in its operations to keep up with technology, make major repairs to buildings and
replace obsolete equipment. These investment costs are reflected in the Annual Capital Expenditures chart above.

OUT COME: Earning s-to-Sales Ratio*
( before Prog ram Support)
8%
6%
4%

6.60%

5.90%

4.13%

4.06%

2%
-1.77%

0%
-2%
FY99

FY00

FY01

FY02

FY03

As a standard financial measurement of performance, the earnings-to-sales ratio is an indicator of a company’s success. It
is an indicator of the management strategies with respect to administrative, general and overhead expenses.
*Financial amounts are based on continuing operations
10

Recidivism Information
Since 1996, PRIDE has used the same methodology to measure recommitment of former PRIDE workers. The measurement
criteria is identical to the criteria used by the Florida Department of Corrections. Since past studies have shown that exoffenders tend to commit new crimes within the first two years after their release, PRIDE’s study tracks former PRIDE workers
who have committed a new crime in the past 24 months. The 2003 recommitment rate reflects the percentage of those who
committed crimes since being released in 2001.

F Y01 - F Y 0 3 Recidivism Rates
20%
15%

17.3%

18.0%

FY01

FY02

17.0%

10%
5%
0%
FY03

PRIDE has compared the released PRIDE workers with the overall releases by the Florida Department of Corrections*. The
results comparing releases by race and age are found in the table below for releases between 1999 and 2001.

General Characteristics of FY1999, FY2000, FY2001 Prison Releases
FY 1999
PRIDE
FDOC*

FY 2000
PRIDE
FDOC*

FY 2001
PRIDE
FDOC*

Race
White
Black
Other
TOTAL

50.1%
47.4%
2.5%
100.0%

42.6%
55.5%
1.9%
100.0%

50.1%
47.6%
2.3%
100.0%

42.4%
55.6%
2.0%
100.0%

51.3%
46.7%
2.0%
100.0%

44.1%
53.8%
2.1%
100.0%

Age
17 & Under
18-24
25-34
35-49
50-59
60+
TOTAL

0.0%
5.5%
30.5%
50.2%
10.4%
3.4%
100.0%

0.5%
19.9%
36.3%
37.9%
4.1%
1.3%
100.0%

0.0%
5.6%
28.9%
52.2%
10.7%
2.6%
100.0%

0.4%
20.0%
34.7%
38.9%
4.7%
1.3%
100.0%

0.0%
3.8%
25.4%
55.7%
11.9%
3.2%
100.0%

0.3%
20.3%
33.4%
39.8%
4.8%
1.4%
100.0%

*Source: Florida Department of Corrections 1998-1999 Annual Report , 1999-2000
Annual Report and 2000-2001 Annual Report

11

Recidivism Information
An analysis of the PRIDE releases for the study period was performed to determine the effect on recidivism based on the date
a PRIDE worker was terminated from a PRIDE facility and the date of release by the Florida Department of Corrections. The
chart below provides a breakdown of released PRIDE workers broken down by the time period since they had worked in a
PRIDE industry and their release date from prison. A high percentage were away from a PRIDE industry for more than 24
months prior to their release.
P RIDE Re l e ase s by Ter mi nat i on Dat e vs DOC Re l e ase Da t e

% o f Inm at e R e le ase s

80%

66%

60%
40%

61%

49%
36% 36%
31%

20%

7%

11% 14% 12%

9% 10%

0%
< 6 mos.

6-12 mos.

12-24 mos.

FY99

FY00

> 24 mos

FY01

The study group for 2001 was analyzed to determine the recidivism rate based on the period of time between working in a
PRIDE industry and their release date. The chart below indicates that the longer the period of time from working in a PRIDE
industry upon release, the greater the probability of committing a new crime. The group released within 6 months of working
for PRIDE recommitted at a rate of 8%, whereas the group released more than 24 months since working for PRIDE recommitted at a rate of 23.5%.

F Y0 1 PRID E Rele as es by Termination D ate v s Recidiv ism Rate
23.5%

25%

20%
14.1%

15%

10.9%
10%

8.0%

5%

0%
< 6 mos.

6-12 mos.

12-24 mos.
Recidivism Rate

12

> 24 mos

Customers
The percentage of sales to state government has been declining over the past 5 years.

Sales by Market Sector
100.0%
11.0%

90.0%

16.0%

14.0%

80.0%

17.3%

11.0%

25.7%

18.0%

70.0%

22.0%

75.0%

60.0%

22.9%

22.4%

73.0%
64.7%

50.0%

55.1%

40.0%

51.9%

30.0%
20.0%
10.0%
0.0%
1999

2000

2001

2002

2003

State

Non-State

Private

Sales over the past five years to the four State agencies that represent PRIDE’s largest State customers are shown in the chart
below. Sales to the Department of Corrections have shown the most significant decline.

Sales by State Agency
70%

60%

5%
3%

3%
50%

5%

6%

9%
40%

2%

3%

11%

3%

8%

13%

30%

20%

2%
3%
13%

42%

37%

35%
26%

28%

2002

2003

10%

0%
1999

2000
Corrections

2001
Highway Safety

13

Transportation

Juvenile Justice

Financials

Balance Sheets
December 31, 2003 and 2002
2003

2002

Assets
Current Assets:
Cash
Accounts Receivable, Net of Allowance for Doubtful
Accounts of $299,622 and $259,471, respectively
Inventories
Due from Industries Training Corporation
Due from Florida Citrus Partners
Other Current Assets
Total Current Assets

$

Property, Agricultural Assets and Equipment, Net
Due from Industries Training Corporation - Long Term
Due from Florida Citrus Partners - Long Term
Other Assets

236,316

$

245,311

6,561,539
8,050,043
711,000
800,000
796,714
17,155,612

6,123,086
7,919,107
1,196,915
843,405
16,327,824

17,601,040
1,192,024
2,648,435
117,714

17,911,995
6,063,945
2,400,028
119,934

$

38,714,825

$

42,823,726

$

2,750,000
515,149
4,182,959
2,011,694
534,801
9,994,603

$

2,750,000
1,133,775
6,130,059
2,069,253
534,801
12,617,888

Lia bilities and N et Asse ts
Current Liabilities:
Line of Credit
Current Installments of Notes and Capital Leases Payable
Accounts Payable
Accrued Expenses
Remediation Contingencies
Total Current Liabilities
Notes and Capital Leases Payable, Less Current Installments
Total Liabilities

2,741,971
12,736,574

2,043,762
14,661,650

Net Assets

25,978,251

28,162,076

$
See notes to financial statements

14

38,714,825

$

42,823,726

Financials
Statements of Operations and Program Support and Changes in Net Assets
For the Years Ended December 31, 2003 and 2002
2003
Sales

$

Cost of Sales

2002

65,278,356

$

(56,918,433)

Gross Margin

(50,058,032)

8,359,923

Sales and General Expenses
Loss on Sale of Assets
Other Income

10,871,974

(7,760,556)

(7,375,292)

(26,492)

(530,079)

2,227,462

Interest Expense

840,279

(152,941)

Income Before Program Support

60,930,006

(213,005)

2,647,396

3,593,877

Program Support:
Inmate Services

(474,684)

(486,489)

Victim Restitution Fund

(249,991)

(231,162)

(724,675)

(717,651)

Total Program Support
Net Operating Income

1,922,721

Restructuring of Obligation Due From Industries Training Corporation

2,876,226

-

(5,279,190)

Net Income (Loss) from Continuing Operations
before pension adjustment

1,922,721

(2,402,964)

Additional Pension Liability Adjustment Attributable
to PRIDE Employees

(4,106,546)

Net Loss from Continuing Operations

(2,183,825)

(2,402,964)

Discontinued Operations
Gain on Disposal of Discontinued Operations

Change in Net Assets

-

-

815,444

-

815,444

$

(2,183,825)

$

Net Assets at Beginning of Year

$

28,162,076

$

29,749,596

Net Assets at End of Year

$

25,978,251

$

28,162,076

See notes to financial statements
15

(1,587,520)

Financials
Statements of Cash Flows
For the Years Ended December 31, 2003 and 2002
Cash Flows from Operating Activities:
Change in Net Assets
Adjustments to Reconcile Change in Net Assets to Net Cash
Provided by Operating Activities:
Depreciation and Amortization
Loss on Sale of Property, Livestock, and Equipment
Restructuring of Obligation Due From Related Parties
Provision for Doubtful Accounts
Decrease (Increase) in:
Accounts Receivable
Inventories
Due from Florida Citrus Partners
Due from Industries Training Corporation
Other Current Assets
Other Assets
Increase (Decrease) in:
Accounts Payable
Accrued Expenses
Remediation Contingencies
Net Cash Provided by Operating Activities

$

2003
(2,183,825)

$

2002
(1,587,520)

2,782,703
26,492
300,378

2,123,430
164,635
5,279,190
231,386

(738,831)
(130,936)
(1,048,407)
5,357,836
46,691
2,220

(67,315)
559,483
(629,344)
(4,949,236)
(236,343)
(78,519)

(1,947,100)
(57,559)
2,409,662

385,527
381,693
2,606
1,579,673

Cash Flows from Investing Activities:
Investment in Property, Agricultural Assets and Equipment
Proceeds from Sales of Property, Agricultural Assets and Equipment
Net Cash Used in Investing Activities

(1,345,796)
85,550
(1,260,246)

(1,212,166)
21,558
(1,190,608)

Cash Flows from Financing Activities:
Net Repayments on Line of Credit
Proceeds of Notes Payable
Principal Payments of Notes Payable
Net Cash Used In Financing Activities

(1,158,411)
(1,158,411)

(2,000,000)
1,500,000
(786,100)
(1,286,100)

$

(897,034)
1,142,345
245,311

215,041

Net Decrease in Cash
Cash at Beginning of Year
Cash at End of Year

$

(8,995)
245,311
236,316

Supplemental Cash Flow Information:
Interest Paid

$

188,249

$

Supplemental Non-Cash Information:
Equipment Financed through Capital Lease

$

1,237,994

$

Equipment financed through Notes Payable

$

See notes to financial statements
16

-

$

190,958

Notes to Financial Statements
Notes to Financial Statements
December 31, 2003 and 2002
Note 1 - Company background
Prison Rehabilitative Industries and Diversified Enterprises, Inc. (PRIDE) is a not-for-profit corporation authorized by the Florida
Legislature to lease and manage the correctional work programs of the Florida Department of Corrections (DC), independent of
state government.
PRIDE was incorporated on December 14, 1981. The final transfer of the former correctional work programs was completed
by July 1, 1984. The transfers included certain current assets and liabilities of the DC correctional work program and were
recorded by PRIDE at estimated fair market value. In addition to these transfers, various lease agreements between PRIDE
and DC provide for PRIDE to use certain land, buildings, and equipment in the operation of its industries.
PRIDE operates a variety of industries including Furniture Manufacturing, Agriculture, Digital Print Technologies, Textiles, Services, and other General Manufacturing. PRIDE receives no funding from the Legislature and is totally supported by the earnings it generates from the sale of its products. A majority of PRIDE products, except for raw agricultural products and international sales, are sold to governmental entities or their contract vendors. The majority of the sales are to state agencies.
Effective July 1, 1999, PRIDE formed Industries Training Corporation (ITC), a tax exempt organization, for the purpose of entering into relationships and managing prison work programs for PRIDE and any other tax exempt, governmental and for-profit
sectors located in the state of Florida and the United States. In addition to ITC, Labor Line, Inc, Labor Line Services, Inc., and
Global Outsourcing, Inc. and its wholly owned subsidiary, Northern Outfitters (ITC’s affiliates) were formed to assist ITC in its
mission. ITC is also a 50% owner in Florida Citrus Partners, L.L.C., (FCP). FCP utilizes inmates in the PRIDE program in various
citrus processing operations. PRIDE considers ITC and its affiliates related parties.

Note 2 - Summary of significant accounting policies
Basis of presentation
The accompanying financial statements have been prepared on an accrual basis. Preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the
amounts reported in the financial statements. Actual results could differ from those estimates.
Doubtful accounts
Accounts receivable consist of trade accounts receivable and are stated at cost less an allowance for doubtful accounts. Credit
is extended to customers after an evaluation of the customer’s financial condition, and generally collateral is not required.
Management’s determination of the allowance for doubtful accounts is based on an evaluation of the accounts receivable,
past experience, current economic conditions, and other risks inherent in the accounts receivable portfolio.
Inventories
Manufactured inventories are accounted for under the FIFO cost flow method and are stated at the lower of cost or market.
Crops in process include all direct and indirect costs of growing crops but exclude planting and harvesting costs. They are
stated at the lower of cost of market.

Property, agricultural assets and equipment
Property and equipment are stated at cost and are depreciated over their estimated useful lives ranging from 3 to 30 years on
a straight-line basis. Citrus groves are depreciated over their estimated useful lives of 30 years. Sugar cane plants are depreciated over their estimated useful lives of 5 years.
Income taxes
PRIDE is organized as a not-for-profit corporation within the meaning of Section 501(c)(3) of the Internal Revenue Code and
Chapter 617 of the Florida Statutes and, accordingly, no provision for income taxes has been recorded in the accompanying
financial statements.

17

Notes to Financial Statements
Notes to Financial Statements - continued
December 31, 2003 and 2002

Note 2 - Summary of significant accounting policies - continued
Net Assets
Under accounting principles generally accepted in the United States of America, net assets, revenues, expenses, gains and
losses are classified based on the existence or absence of donor-imposed restrictions and may be classified as unrestricted,
temporarily restricted or permanently restricted. Based on the nature of its operations, all of PRIDE’s net assets are unrestricted as they are not subject to donor-imposed stipulations.
Self insurance plan
PRIDE’s employees are provided worker’s compensation, group medical and disability insurance programs, which are selfinsured and administered by ITC. Insurance policies that provide both specific and aggregate coverage in excess of selfinsured limits are maintained by ITC. PRIDE’s obligation under these arrangements is recognized as part of its contractual arrangement with ITC.
Reclassifications
Certain reclassifications were made to the 2002 financial statements to conform to the 2003 presentation.

Note 3 - Inventories
Inventories at December 31, 2003 and 2002, consist of the following:
2003
Raw material and supplies

$

2,622,686

2002
$

2,784,180

Work in process

1,715,542

1,359,282

Finished goods

2,072,240

2,365,230

Crops in process

1,639,575

1,410,415

$

8,050,043

$

7,919,107

Note 4 - Property, agricultural assets, and equipment
Property, livestock and equipment at December 31, 2003 and 2002 consist of the following:
2003
Machinery and equipment

2002

$ 16,361,103

$ 15,814,793

Buildings

9,623,061

9,623,061

Office furniture and equipment

4,165,850

2,994,459

Leasehold improvements

4,930,310

4,817,656

Citrus groves

4,176,274

4,176,274

Vehicles

2,078,515

2,167,958

Sugar cane plantings

1,120,999

1,447,027

Land improvements

1,781,071

1,781,071

8,509

22,768

1,036,880

773,859

Livestock
Construction in process

45,282,572
Less accumulated depreciation

(27,681,532)
$ 17,601,040
18

43,618,925
(25,706,930)
$ 17,911,995

Notes to Financial Statements
Notes to Financial Statements - continued
December 31, 2003 and 2002
Note 4 - Property, agricultural assets, and equipment —continued
PRIDE leases various land, buildings, and equipment from the DC. Under terms of the lease, the annual lease payment is determined as 50% of PRIDE’s operating income after adjustments and reserves for capital expenditures, working capital requirements and provision for certain other payments. Such adjusted operating income for the years ended December 31, 2003 and
2002 was less than zero and, accordingly, no rental payments were required.

Note 5 - Line of credit
At December 31, 2003 and 2002, PRIDE had a $3,000,000 unsecured revolving line of credit with a bank. An irrevocable letter of credit amounting to $233,000 was issued to an insurer secured by the line of credit, thereby limiting its use. The line of
credit bears interest at LIBOR plus 3.5% and is payable on demand. As of December 31, 2003 and 2002, $2,750,000 was
outstanding under this agreement.

Note 6 - Notes and capital leases payable
Notes and Capital Leases payable as of December 31, 2003 and 2002, consist of the following:
2003

2002

Mortgage note payable to a bank, interest at LIBOR plus 2.35%,
matures May 2005. Monthly payments of $11,944
principal plus interest. Secured by a manufacturing facility.

$ 1,735,504

$ 1,827,500

202,560

259,091

Note payable to a bank, interest at 8.75%, matures
December 2006. Monthly payments of $6,433
principal plus interest. Secured by print equipment.
Note payable to a bank, interest at LIBOR plus 2- 3.5%
based on leverage ratio, matures September 2003.
Monthly payments of $100,000 principal plus interest.

-

900,000

Notes payable to John Deere Credit, interest at 5.0% to 5.9%,
matures June 2007. Annual payments of $44,638 principal plus
interest. Secured by Agricultural equipment.

140,405

190,946

Capital leases with a finance company, interest at 9.09% to 10.58%,
matures October 2007. Monthly payments of $28,854 including
interest. Secured by computer equipment.

1,099,426

-

79,225

-

Capital lease obligation, interest at 6.99%, matures
April 2008. Monthly payments of $1,742 including
interest. Secured by equipment.
Less current installments
Notes payable (less current installments)

19

3,257,120

3,177,537

(515,149)

(1,133,775)

$ 2,741,971

$ 2,043,762

Notes to Financial Statements
Notes to Financial Statements - continued
December 31, 2003 and 2002

Note 6 - Notes and capital leases payable – continued
Future maturities of long-term notes and payable are as follows:
2004

$

515,149

2005

1,992,895

2006

438,447

2007

303,763

2008

6,866
$ 3,257,120

Interest expense for the year ended December 31, 2003 and 2002, was $153,896 and $215,041, respectively.
At December 31, 2003 the Company was in violation of its loan covenants relating to minimum net worth. Management obtained a waiver from the bank relinquishing their right to remedies related to this violation for a period of at least one year from
the date of these financial statements.

Note 7 - Commitments and contingencies
Litigation Contingencies
PRIDE is subject to a number of lawsuits, investigations and claims arising out of the normal conduct of its business, including
those relating to commercial transactions, product liability, and safety and health matters. In the opinion of management, no
material liability exists with respect to these actions.
Remediation Contingencies
PRIDE accrues for losses associated with remediation obligations when such losses are probable and reasonably estimable.
Accruals for losses from remediation obligations generally are recognized no later than completion of the remedial feasibility
study.
PRIDE is responsible for remediation at one of its agricultural operations as a result of tests conducted by a consultant and
remediation firm. PRIDE has estimated the net remediation contingencies (net of DC reimbursement for one half of the remediation expenses) at December 31, 2003 and 2002, to be approximately $280,000. The remediation activity began prior to
June 30, 1999. Subject to the difficulty of estimating future costs, management expects that any sum PRIDE may be required
to pay in connection with matters in excess of the amounts recorded and disclosed above will not have a material adverse effect on its financial condition or results of operations. No additional expenses were incurred during the years ended December
31, 2003 and 2002.
Lease Obligations
PRIDE is obligated under several noncancelable lease agreements for office and warehouse space, and various equipment
leases, which expire at various dates over the next three years.
The balance sheets include the following assets capitalized under leases:

Property Leased Under Capital Leases
Accumulated Depreciation

2003
$ 1,250,501

2002
$
-

(1,550)

-

$ 1,248,951

Net Property Leased Under Capital Leases

20

$

-

Notes to Financial Statements
Notes to Financial Statements - continued
December 31, 2003 and 2002

Note 7 - Commitments and contingencies—continued
Future minimum lease payments under noncancelable capital and operating leases at December 31, 2003 are as follows:

Operating
Leases

Capital Leases
2004

$ 367,148

$ 575,491

2005

367,148

355,910

2006
2007

367,148
309,440

29,924
-

2008

6,966

$ 961,325

1,417,850
(239,199)

Less interest
Present Value of net

$ 1,178,651

minimum rentals

Rental expense for all operating leases during the years ended December 31, 2003 and 2002 amounted to $1,343,247 and
$1,308,516, respectively.

Note 8 - Benefit plans
PRIDE’s employees are provided employee benefits under plans administered by its affiliated organization, ITC. These plans
include a defined benefit pension plan, a 403(b) and 401 (k) savings plan. PRIDE recognizes its obligation under these plans
as part of its contractual payments to ITC under its management agreement (Note 12). During the year ended December 31,
2003, PRIDE recognized an additional obligation to ITC amounting to $4,106,546. This obligation relates to the fact that for
the years ended December 31, 2003 and 2002, the defined benefit pension plan was underfunded due to market losses and
changes in actuarial assumptions. The obligation represents PRIDE’s share of the additional pension expense incurred by ITC.
It was actuarially determined based on the participation of PRIDE employees in the plan. PRIDE employees account for approximately 93% of the total obligation. It was recognized by reducing PRIDE’s receivable from ITC (Note 12). The ITC receivable
was reduced by an additional $218,000 representing PRIDE’s share of expense under a non-qualified executive benefit plan
maintained by ITC.
Defined benefit pension plan
The defined benefit pension plan covered substantially all full-time employees. Benefits to participants are based on years of
service and the highest consecutive five-year average earnings during the last ten years of credited service prior to retirement.
The Plan is funded through employer contributions to meet ERISA minimum funding requirements. The majority of the Plan’s
assets are invested in a master trust. The trust’s investments are primarily US Treasury notes and corporate common stocks
at December 31, 2003 and 2002, respectively. At December 31, 2003 and 2002, the trust’s investments are primarily US
Treasury notes and corporate common stocks. ITC’s pension expense totaled approximately $1,706,000 and $2,193,000 for
the years ended December 2003 and 2002, respectively. The Plan’s assets were less than projected benefits by approximately
$7,567,901 and $5,904,285 at December 31, 2003 and 2002, respectively. The Plan’s status is reported in and assets are
recognized on the consolidated financial statements of ITC. Participation in this plan is frozen.
An analysis of ITC’s plan’s benefit obligations and fair value of plan asset for the year ended December 31, 2003, and a statement of the plan’s funded status as of December 31, 2003 follows:

Analysis o f Be nefit Obligatio n
Benefit obligation at end of year
Fair value of plan assets at end of year

$

18,277,855
10,709,954

Funded status at end of year

$

7,567,901

21

Notes to Financial Statements
Notes to Financial Statements - continued
December 31, 2003 and 2002

Note 8 - Benefit plans—continued
F unde d Status
Funded status at end of year
Unrecognized prior service cost
Unrecognized loss
Net amount recognized as liability in ITC

$

$

(7,567,901)
331,336
1,822,162
(5,414,403)

403(b) and 401(k) Savings Plans
In addition to the above defined benefit pension plan, PRIDE’s employees had an option at any time during full-time employment to participate in the 403 (b) Savings Plan specifically designed for non-profit organizations. Participants of this program
were able to contribute up to 20% of their annual salary (pre-tax) to a maximum of $10,000. The Company used to match the
first 4% at a rate of $0.25 for each dollar contributed. Employees can invest their tax-deferred contributions in a variety of mutual funds. This plan was frozen on December 31, 2000.
Effective January 1, 2001, PRIDE employees now have an option at any time during full-time employment to participate in the
401 (k) Savings Plan. Participants of this program can contribute up to 8% of their annual salary (pre-tax) to the maximum
allowable by law, which was $12,000 in 2003. The Company matches the first 4% at a rate of $0.25 for each dollar contributed. Employees hired prior to February 1, 2000, who opted out of the defined benefit pension plan, receive, annually, a profit
sharing contribution of 4.5%. The Company, at its discretion, may make contributions in excess of this amount. Employees
can invest their tax-deferred contributions in a variety of mutual funds.

Note 9 - Compensation plan for inmates
The legislative act, which authorized PRIDE to manage the state’s prison industries, also required that an inmate compensation
plan be established. This plan provides for payments to DC, which credits the account of an inmate performing labor, and provides for payment to DC for reimbursing the state for all or a portion of the expenses incurred for sustaining the inmate.
The compensation plan expenses totaled $1,666,623 and $1,541,077 for the years ended December 31, 2003 and 2002,
respectively, and are accounted for as a component of cost of sales.

Note 10 - Program support
PRIDE has certain programs that are unique to its legislated mission. Expenses related to program support are treated as a
period expense and include the following:
Inmate services
Expenses for inmate services represent assistance to PRIDE inmate workers to acquire job skills while in prison and find gainful employment upon release. Such expenditures include education, training and post-release job placement support.
Victim restitution fund
Payments represent PRIDE’s contribution of an additional 15 cents for every dollar of inmate compensation to provide for victim restitution.

22

Notes to Financial Statements
Notes to Financial Statements - continued
December 31, 2003 and 2002

Note 11 – Discontinued operations
Effective October 1, 2001 the Board of Directors authorized the closure of the food manufacturing and poultry business segments. This enabled the Company to return to profitability on an operating basis in 2002.
The results of operations for the aforementioned business segments for the respective periods presented are reported as a
component of discontinued operations in the statements of operations and changes in net assets.
Summarized results of operations for the food manufacturing business segment are as follows:

2003

2002

Net Sales

$

-

-

Profit from discontinued operations

$

-

-

Gain on disposal of discontinued operations

$

-

$

365,444

Summarized results of operations for the poultry business segment are as follows:

2003

2002

Net Sales

$

-

$

-

Loss from discontinued operations

$

-

$

-

Gain on disposal of discontinued operations

$

-

$

450,000

Note 12 - Related party transactions
In prior years and during the year ended December 31, 2002, PRIDE advanced funds to ITC to fund certain specific initiatives.
During 2002, PRIDE and ITC concluded that ITC would not benefit from these initiatives as PRIDE had assumed responsibility
for administering them. As a result, it was agreed that PRIDE would assume the initial and the majority of the operational costs
of these initiatives. Management identified these initiatives, isolated the costs and adjusted the amount due from ITC. Accordingly, the amount due from ITC was reduced by $5,279,190.
PRIDE has advanced funds to ITC and FCP for working capital purposes. Currently, there are no stated terms for repayment.
However, PRIDE and ITC are in the process of formalizing repayment terms. The amounts are shown as current and long term
based on management’s anticipated manner of payment. The amount due from ITC is $1,903,024 at December 31, 2003
and $7,410,860 at December 31, 2002. The 2003 balance was reduced due to PRIDE’s pension obligations to ITC (see Note
8).
The amount due from FCP is $3,448,435 at December 31, 2003 and $2,400,028 at December 31, 2002. FCP, as a business
unit, is currently winding down operations. Those operations are essentially being transferred to a business unit of ITC. ITC is
committed to assist with the retirement of amounts owed to PRIDE by FCP. ITC intends to do so from future business operations and activities. In addition, PRIDE has a security interest in equipment used by FCP which may be recovered to satisfy part
of this obligation. The amounts are shown as current and long term based on management’s anticipated manner of payment..
During the years ended December 31, 2003 and 2002, PRIDE made payments of $6,639,053 and $6,246,744, respectively,
to ITC for accounting, systems and administrative support.
During 2002, PRIDE utilized the transportation and trucking services of a company to distribute products to customers. An
officer of this company was appointed to PRIDE’s Board of Directors subsequent to the commencement of this relationship
with PRIDE. This individual’s term expired during 2002. Payments made to this company were approximately $642,000 for the
year ended December 31, 2002.

23

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors of
Prison Rehabilitative Industries
and Diversified Enterprises, Inc.
St. Petersburg, Florida
We have audited the accompanying balance sheets of Prison Rehabilitative Industries and Diversified Enterprises, Inc.
(PRIDE) as of December 31, 2003 and 2002, and the related statements of operations and program support and changes
in net assets and cash flows for the years then ended. These financial statements are the responsibility of PRIDE’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of
PRIDE as of December 31, 2003 and 2002, and the changes in its net assets and its cash flows for the years then ended
in conformity with accounting principles generally accepted in the United States of America.

.

St. Petersburg, Florida
April 2, 2004

24

PRIDE Enterprises
12425—28th Street North, Suite 103
St. Petersburg, Florida 33716
Phone: 727-582-1987
Fax: 727-570-3370
Web site: www.pridefl.com