UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 5, 2009 (November 4, 2009)
Corrections Corporation of America
(Exact name of registrant as specified in its charter)
| Maryland | 001-16109 | 62-1763875 | ||
|
|
||||
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer | ||
| Identification No.) |
10 Burton Hills Boulevard, Nashville, Tennessee 37215
(Address of principal executive offices) (Zip Code)
(615) 263-3000
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition
On November 4, 2009, Corrections Corporation of America, a Maryland corporation (the “Company”), issued a press release announcing its 2009 third quarter financial results. A copy of the release is furnished as a part of this Current Report as Exhibit 99.1 and is incorporated herein in its entirety by this reference. The release contains certain financial information calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles, or GAAP, which the Company believes is useful to investors and other interested parties. The Company has included information concerning this non-GAAP information in the release, including a reconciliation of such information to the most comparable GAAP measures, the reasons why the Company believes such information is useful, and the Company’s use of such information for additional purposes.
The information furnished pursuant to this Item 2.02 of Form 8-K shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and Section 11 of the Securities Act of 1933, as amended, or otherwise subject to the liabilities of those sections. This Current Report will not be deemed an admission by the Company as to the materiality of any information in this report that is required to be disclosed solely by Item 2.02. The Company does not undertake a duty to update the information in this Current Report and cautions that the information included in this Current Report is current only as of November 4, 2009 and may change thereafter.
Item 9.01. Financial Statements and Exhibits
(d) The following exhibit is furnished as part of this Current Report pursuant to Item 2.02:
| Exhibit 99.1 - Press Release dated November 4, 2009 |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| Date: November 5, 2009 | CORRECTIONS CORPORATION OF AMERICA | |
|
By: /s/ Todd J Mullenger Todd J Mullenger Executive Vice President and Chief Financial Officer |
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release dated November 4, 2009 |
Exhibit 99.1
News Release
|
 |
| Contact: | Investors and Analysts: Karin Demler, CCA at (615) 263-3005 Financial Media: David Gutierrez, Dresner Corporate Services at (312) 780-7204 |
Corrections
Corporation of America Announces
Third Quarter 2009 Financial Results
Third Quarter 2009 Financial Results
Third Quarter EPS of $0.39, or $0.33 Excluding Special items
NASHVILLE, Tenn. — November 4, 2009 — Corrections Corporation of America (NYSE: CXW) (the
“Company” or “CCA”), the nation’s largest provider of corrections management services to government
agencies, announced today its financial results for the third quarter and nine-month period ended
September 30, 2009.
Financial Review — Third Quarter 2009 Compared with Third Quarter 2008
| • | Total revenue increased 5.5% to $426.0 million with increases in average daily inmate populations of 4.5% | ||
| • | Earnings per diluted share (EPS) of $0.39 | ||
| • | EPS excluding unusual tax benefits (Adjusted Diluted EPS) of $0.33 |
For the third quarter of 2009, CCA generated net income of $45.3 million, or $0.39 per diluted
share, compared with net income of $37.9 million, or $0.30 per diluted share, for the third quarter
of 2008. Results for the third quarter of 2009 include unusual income tax benefits aggregating $7.0
million, as further described hereafter. Excluding these income tax benefits, net income was $38.3
million, or $0.33 per diluted share.
Total revenue for the third quarter of 2009 increased 5.5% to $426.0 million from $403.8 million
generated during the prior year period, primarily driven by a 4.5% increase in average daily inmate
populations combined with a 1.3% increase in revenue per compensated man-day. Management revenue
from state customers increased 6.6% to $224.9 million during the third quarter of 2009 from $211.0
million for the same period in 2008. The growth in state revenue from the third quarter of 2008
was primarily attributable to increases in inmate populations from California and Arizona that were
partially offset by a reduction in inmate populations primarily from the states of Minnesota and
Washington. Management revenue from federal customers increased 4.9% to $166.4 million generated
during the third quarter of 2009, compared with $158.7 million generated during the third quarter
of 2008. The increase in federal revenue was primarily driven by the commencement of our new
management contract with the Federal Bureau of Prisons (“BOP”) at our newly constructed Adams
County Correctional Center during the third quarter of 2009.
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10 Burton Hills Boulevard, Nashville, Tennessee 37215, Phone: 615-263-3000
CCA Third Quarter 2009 Financial Results
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Operating income during the third quarter of 2009 increased 6.6% to $79.3 million compared with
$74.4 million for the prior year period. Operating income for the third quarter of 2009 was net of
an increase in depreciation and amortization of $2.3 million for placing into service numerous
expansion and development projects, as well as an increase in general and administrative expenses
of $0.8 million. General and administrative expenses for the third quarter of 2009 include a $1.5
million accrual for the contractual severance benefit for our former chief executive officer who
announced his decision to step down in August 2009, and $0.5 million of additional consulting fees
associated with a company-wide initiative to improve operating efficiency. EBITDA for the third
quarter of 2009 increased 7.0% to $104.8 million from $98.0 million during the same period in the
prior year. Adjusted free cash flow increased 9.9% for the third quarter of 2009 to $68.1 million
compared with $62.0 million during the prior year period. The increase in adjusted free cash flow
was primarily attributable to the $4.9 million increase in operating income and a reduction in the
amount of cash taxes paid resulting from the implementation of tax planning strategies, partially
offset by an increase in maintenance and technology capital expenditures.
Net income for the third quarter of 2009 includes income tax benefits totaling $7.0 million for the
reversal of a liability for uncertain tax positions that were effectively settled upon the
completion of an audit by the Internal Revenue Service during the third quarter of 2009, along with
the successful pursuit of additional income tax credits.
Our total average daily compensated population increased 4.5% to 79,081 in the third quarter of
2009 from 75,691 in the third quarter of 2008. However, since the end of the second quarter of
2008, we placed approximately 8,000 new beds into service. As a result of the additional capacity,
total portfolio occupancy decreased to 91.3% during the third quarter of 2009 from 95.4% during the
third quarter of 2008. The average number of available beds increased 9.2% to 86,632 during the
third quarter of 2009 from 79,337 during the prior year quarter.
As of
November 1, 2009, we had more than 8,800 unoccupied beds at facilities that had availability
of 100 or more beds. However, this inventory of beds available is reduced to approximately 5,900
beds after taking into consideration the beds committed pursuant to new management contracts
including the beds not yet occupied at the Adams County and North Georgia facilities, and pursuant
to an amended agreement with the state of California.
Commenting on the financial results, Chief Executive Officer, Damon Hininger stated, “We are
pleased with our third quarter financial results. Once again, we were able to generate earnings
ahead of expectations, despite a challenging environment. Inmate populations at several facilities
came in ahead of expectations and we were able to control our operating expenses. Although the
environment surrounding state budgets continues to be challenging, we remain optimistic about our
long-term outlook.”
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CCA Third Quarter 2009 Financial Results
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First Nine Months of 2009 Compared with First Nine Months of 2008
| • | Total revenue increased 5.9% to $1,242.9 million from $1,173.5 million | ||
| • | EPS of $0.96 for the nine month period | ||
| • | EPS excluding special items (Adjusted Diluted EPS) increased 5.7% to $0.92 from $0.87 | ||
| • | EBITDA excluding special items increased 7.0% to $304.6 million from $284.8 million |
For the nine months ended September 30, 2009, the Company generated net income of $112.5 million,
or $0.96 per diluted share, compared with net income of $110.4 million, or $0.87 per diluted share,
for the nine months ended September 30, 2008. The Company generated net income of $107.9 million,
or $0.92 per diluted share excluding the aforementioned tax benefits reflected during the third
quarter of 2009 and the expenses associated with debt refinancing transactions, net of taxes,
incurred during the second quarter of 2009. Also contributing to the improvement in earnings per
share for the first nine months of 2009 was a share repurchase program, approved by our Board of
Directors in November of 2008. Through the end of the third quarter of 2009 we purchased 10.7
million shares at a total cost of $125.0 million.
Operating income increased $11.1 million to $229.2 million during the first nine months of 2009
from $218.1 million during the same period in the prior year. The improvement in our operating
income for the nine months ended September 30, 2009 resulted primarily from a 4.0% increase in our
average daily inmate populations to 77,669 for the nine months ended September 30, 2009 from 74,655
during the nine months ended September 30, 2008.
Our financial results reflect an increase in depreciation and amortization expense of $8.8 million,
or 13.2%, an increase in interest expense of $12.3 million, or 28.7%, and an increase in general
and administrative expense of $4.8 million, or 8.0%. The increase in depreciation and amortization
was attributable to placing into service approximately 10,500 beds during 2008 and 2009. Interest
expense increased primarily due to the combination of higher debt balances used to fund the
development and expansion projects, and lower capitalized interest on such projects during 2009
compared with 2008. General and administrative expenses during the nine-month period in 2009
increased as a result of consulting fees of $4.6 million associated with a company-wide initiative
to improve operating efficiency as well as a $1.5 million accrual for the contractual severance
benefit for our former chief executive officer who announced his decision to step down in August
2009.
Adjusted EPS, EBITDA, Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures.
Please refer to the Supplemental Financial Information and related note following the financial
statements herein for further discussion and reconciliations of these measures to GAAP financial
measures.
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CCA Third Quarter 2009 Financial Results
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Operations Highlights
For the quarters ended September 30, 2009 and 2008, key operating statistics for the continuing
operations of the Company were as follows:
| Quarter Ended September 30, | ||||||||||||
| Metric | 2009 | 2008 | % Change | |||||||||
Average Available Beds |
86,632 | 79,337 | 9.2 | % | ||||||||
Average Compensated Occupancy |
91.3 | % | 95.4 | % | -4.3 | % | ||||||
Total Compensated Man-Days |
7,275,451 | 6,963,538 | 4.5 | % | ||||||||
Average Daily Compensated Population |
79,081 | 75,691 | 4.5 | % | ||||||||
Revenue per Compensated Man-Day |
$ | 58.39 | $ | 57.66 | 1.3 | % | ||||||
Operating Expense per Compensated
Man-Day: |
||||||||||||
Fixed |
30.71 | 30.51 | 0.7 | % | ||||||||
Variable |
9.98 | 9.84 | 1.4 | % | ||||||||
Total |
40.69 | 40.35 | 0.8 | % | ||||||||
Operating Margin per Compensated Man-Day |
$ | 17.70 | $ | 17.31 | 2.3 | % | ||||||
Operating Margin |
30.3 | % | 30.0 | % | 1.0 | % | ||||||
Total operating expenses per compensated man-day increased 0.8% during the third quarter of 2009
compared with the same period in 2008. A significant component of the increase in operating costs
per man-day was due to continued ramp-up expenses incurred at our Adams County facility as well as
staffing expenses incurred in anticipation of receiving detainees at our North Georgia facility.
Also impacting the increase in operating expenses were operational inefficiencies associated with
our inventory of available beds. However, we have experienced favorable reductions in certain
operating expenses resulting from pricing concessions related to market conditions and impacts from
a company-wide initiative of improving operating efficiencies.
Business Development Update
On November 2, 2009, we announced that we entered into an amendment of our agreement with the State
of California Department of Corrections and Rehabilitation (the “CDCR”), providing the CDCR the
ability to house up to 10,468 offenders in five facilities we own, an increase from 8,132 offenders
under our previous agreement. We currently house approximately 7,900 offenders from the state of
California. We currently expect to begin receiving additional inmates pursuant to the amendment
during the first quarter of 2010, with a gradual ramp-up estimated to be completed during the first
quarter of 2011.
During the third quarter we completed renovations of the 502-bed North Georgia Detention Center and
began receiving detainees from the U.S. Immigration and Customs Enforcement during October 2009.
We currently house approximately 100 detainees at this facility.
In August 2009, we announced that we were notified by the Alaska Department of Corrections that we
were not selected in Alaska’s competitive solicitation to house up to 1,000 inmates from
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CCA Third Quarter 2009 Financial Results
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the state
of Alaska. We currently house approximately 750 Alaskan inmates at our 1,596-bed Red Rock
Correctional Center in Arizona and expect that Alaska will begin transferring its inmate population
out of the Red Rock facility beginning in November of 2009. In addition to the Alaskan inmates, we
house approximately 650 inmates from other customers at the Red Rock facility. We expect the state
of California to utilize the beds that will be vacated by Alaska pursuant to the amended agreement
with the CDCR.
Liquidity Update
At September 30, 2009, our liquidity was provided by cash on hand of $53.6 million and $188.5
million available under our revolving credit facility. On July 3, 2009, we redeemed the remaining
$77.9 million of the 7.5% senior notes outstanding at June 30, 2009, after repurchasing $372.1
million of such notes pursuant to a tender offer in June 2009. We believe we have the ability to
fund our capital expenditure requirements, working capital and debt service requirements with cash
on hand, net cash provided by operations, and borrowings available under our revolving credit
facility. None of our outstanding debt requires scheduled principal repayments, and we have no
debt maturities until December 2012.
Guidance
We expect EPS for the fourth quarter of 2009 to be in the range of $0.33 to $0.35 and full year
2009 EPS to be in the range of $1.24 to $1.26, excluding the aforementioned special items reported
through the third quarter of 2009.
Uncertainty remains around general economic conditions and the potential impacts on state budgets
as state government agencies experience revenue shortfalls in their fiscal year 2010 budgets. Our
earnings guidance incorporates our best estimate of the range of potential outcomes related to
state budget uncertainties and other variables, including the risk of population declines from
certain customers and the potential for additional pricing pressure. We believe the long-term
growth opportunities of our business remain very attractive as insufficient bed development by our
customers should result in a continuation of the supply and demand imbalance that has been
benefiting the private corrections industry.
During 2009, we expect to invest approximately $148.3 million in capital expenditures, consisting
of approximately $98.2 million in prison construction and expansions that have been previously
announced, $36.3 million in maintenance capital expenditures and $13.8 million in information
technology. We also expect an effective income tax rate of approximately 38% for the fourth
quarter of 2009, with payments for income taxes expected to approximate $65.0 million for the full
year.
Supplemental Financial Information and Investor Presentations
We have made available on our website supplemental financial information and other data for the
third quarter of 2009. We do not undertake any obligation, and disclaim any duty to update any of
the information disclosed in this report. Interested parties may access this information
through our website at www.correctionscorp.com under “Financial Information” of the Investor
section.
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CCA Third Quarter 2009 Financial Results
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Management may meet with investors from time to time during the fourth quarter of 2009. Written
materials used in the investor presentations will also be available on our website beginning on or
about November 11, 2009. Interested parties may access this information through our website at
www.correctionscorp.com under “Webcasts” of the Investor section.
Webcast and Replay Information
We will host a webcast conference call at 10:00 a.m. central time (11:00 a.m. eastern time)
tomorrow, November 5, 2009, to discuss our third quarter 2009 financial results. To listen to this
discussion, please access “Webcasts” on the Investor page at www.correctionscorp.com. The
conference call will be archived on our website following the completion of the call. In addition,
a telephonic replay will be available at 6:00 p.m. eastern time on November 5, 2009 through 11:59
p.m. eastern time on November 12, 2009, by dialing (888) 203-1112 or (719) 457-0820, pass code
4862991.
About CCA
CCA is the nation’s largest owner and operator of privatized correctional and detention facilities
and one of the largest prison operators in the United States, behind only the federal government
and three states. We currently operate 65 facilities, including 44 company-owned facilities, with
a total design capacity of approximately 87,000 beds in 19 states and the District of Columbia. We
specialize in owning, operating and managing prisons and other correctional facilities and
providing inmate residential and prisoner transportation services for governmental agencies. In
addition to providing the fundamental residential services relating to inmates, our facilities
offer a variety of rehabilitation and educational programs, including basic education, religious
services, life skills and employment training and substance abuse treatment. These services are
intended to reduce recidivism and to prepare inmates for their successful re-entry into society
upon their release. We also provide health care (including medical, dental and psychiatric
services), food services and work and recreational programs.
Forward-Looking Statements
This press release contains statements as to our beliefs and expectations of the outcome of future
events that are forward-looking statements as defined within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from the statements made. These
include, but are not limited to, the risks and uncertainties associated with: (i) general economic
and market conditions, including the impact governmental budgets can have on our per diem rates and
occupancy; (ii) fluctuations in our operating results because of, among other things, changes in
occupancy levels, competition, increases in cost of operations, fluctuations in interest rates and
risks of operations; (iii) our ability to obtain and maintain correctional facility management
contracts, including as a result of sufficient governmental appropriations and as a result of
inmate disturbances; (iv) changes in the privatization of the corrections and detention
industry, the public acceptance of our services, the timing of the opening of and demand for new
prison
facilities and the commencement of new management contracts; (v) risks associated with judicial
challenges regarding the transfer of California inmates to out of state private correctional
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CCA Third Quarter 2009 Financial Results
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facilities; and (vi) increases in costs to construct or expand correctional facilities that exceed
original estimates, or the inability to complete such projects on schedule as a result of various
factors, many of which are beyond our control, such as weather, labor conditions and material
shortages, resulting in increased construction costs. Other factors that could cause operating and
financial results to differ are described in the filings made from time to time by us with the
Securities and Exchange Commission.
CCA takes no responsibility for updating the information contained in this press release following
the date hereof to reflect events or circumstances occurring after the date hereof or the
occurrence of unanticipated events or for any changes or modifications made to this press release.
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CCA Third Quarter 2009 Financial Results
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CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
| Sepember 30, | December 31, | |||||||
| 2009 | 2008 | |||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 53,626 | $ | 34,077 | ||||
Accounts receivable, net of allowance of $1,746 and $2,689, respectively |
278,453 | 261,101 | ||||||
Deferred tax assets |
15,167 | 16,108 | ||||||
Prepaid expenses and other current assets |
26,624 | 23,472 | ||||||
Current assets of discontinued operations |
66 | 3,541 | ||||||
Total current assets |
373,936 | 338,299 | ||||||
Property and equipment, net |
2,486,080 | 2,478,670 | ||||||
Restricted cash |
6,745 | 6,710 | ||||||
Investment in direct financing lease |
12,506 | 13,414 | ||||||
Goodwill |
13,672 | 13,672 | ||||||
Other assets |
27,709 | 20,455 | ||||||
Non-current assets of discontinued operations |
— | 154 | ||||||
Total assets |
$ | 2,920,648 | $ | 2,871,374 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Accounts payable and accrued expenses |
$ | 213,316 | $ | 189,049 | ||||
Income taxes payable |
482 | 450 | ||||||
Current portion of long-term debt |
— | 290 | ||||||
Current liabilities of discontinued operations |
708 | 2,034 | ||||||
Total current liabilities |
214,506 | 191,823 | ||||||
Long-term debt, net of current portion |
1,198,792 | 1,192,632 | ||||||
Deferred tax liabilities |
81,949 | 68,349 | ||||||
Other liabilities |
32,050 | 38,211 | ||||||
Total liabilities |
1,527,297 | 1,491,015 | ||||||
Commitments and contingencies |
||||||||
Common stock - $0.01 par value; 300,000 shares authorized;
115,482 and 124,673 shares issued and outstanding at September 30, 2009
and December 31, 2008, respectively |
1,155 | 1,247 | ||||||
Additional paid-in capital |
1,476,798 | 1,576,177 | ||||||
Retained deficit |
(84,602 | ) | (197,065 | ) | ||||
Total stockholders’ equity |
1,393,351 | 1,380,359 | ||||||
Total liabilities and stockholders’ equity |
$ | 2,920,648 | $ | 2,871,374 | ||||
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CCA Third Quarter 2009 Financial Results
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CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
REVENUE: |
||||||||||||||||
Management and other |
$ | 425,563 | $ | 403,107 | $ | 1,241,381 | $ | 1,171,590 | ||||||||
Rental |
455 | 650 | 1,484 | 1,926 | ||||||||||||
| 426,018 | 403,757 | 1,242,865 | 1,173,516 | |||||||||||||
EXPENSES: |
||||||||||||||||
Operating |
299,441 | 285,243 | 873,521 | 828,839 | ||||||||||||
General and administrative |
21,704 | 20,866 | 65,015 | 60,222 | ||||||||||||
Depreciation and amortization |
25,532 | 23,251 | 75,124 | 66,373 | ||||||||||||
| 346,677 | 329,360 | 1,013,660 | 955,434 | |||||||||||||
OPERATING INCOME |
79,341 | 74,397 | 229,205 | 218,082 | ||||||||||||
OTHER EXPENSES (INCOME): |
||||||||||||||||
Interest expense, net |
18,339 | 15,087 | 54,935 | 42,671 | ||||||||||||
Expenses associated with debt refinancing transactions |
— | — | 3,838 | — | ||||||||||||
Other (income) expenses |
49 | (314 | ) | (242 | ) | (309 | ) | |||||||||
| 18,388 | 14,773 | 58,531 | 42,362 | |||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
60,953 | 59,624 | 170,674 | 175,720 | ||||||||||||
Income tax expense |
(15,701 | ) | (21,862 | ) | (57,422 | ) | (66,214 | ) | ||||||||
INCOME FROM CONTINUING OPERATIONS |
45,252 | 37,762 | 113,252 | 109,506 | ||||||||||||
Income (loss) from discontinued operations, net of
taxes |
— | 129 | (789 | ) | 910 | |||||||||||
NET INCOME |
$ | 45,252 | $ | 37,891 | $ | 112,463 | $ | 110,416 | ||||||||
BASIC EARNINGS PER SHARE: |
||||||||||||||||
Income from continuing operations |
$ | 0.39 | $ | 0.30 | $ | 0.98 | $ | 0.88 | ||||||||
Income (loss) from discontinued operations, net of
taxes |
— | — | (0.01 | ) | 0.01 | |||||||||||
Net income |
$ | 0.39 | $ | 0.30 | $ | 0.97 | $ | 0.89 | ||||||||
DILUTED EARNINGS PER SHARE: |
||||||||||||||||
Income from continuing operations |
$ | 0.39 | $ | 0.30 | $ | 0.97 | $ | 0.86 | ||||||||
Income (loss) from discontinued operations, net of
taxes |
— | — | (0.01 | ) | 0.01 | |||||||||||
Net income |
$ | 0.39 | $ | 0.30 | $ | 0.96 | $ | 0.87 | ||||||||
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CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS)
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS)
CALCULATION OF ADJUSTED DILUTED EARNINGS PER SHARE
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Net income |
$ | 45,252 | $ | 37,891 | $ | 112,463 | $ | 110,416 | ||||||||
Special Items: |
||||||||||||||||
Reversal of reserve for uncertain tax positions and other
additional income tax credits |
(6,974 | ) | — | (6,974 | ) | — | ||||||||||
Expenses associated with debt refinancing transactions |
— | — | 3,838 | — | ||||||||||||
Income tax benefit for special items |
— | — | (1,465 | ) | — | |||||||||||
Diluted adjusted net income |
$ | 38,278 | $ | 37,891 | $ | 107,862 | $ | 110,416 | ||||||||
Weighted average common shares outstanding — basic |
114,771 | 124,696 | 116,391 | 124,366 | ||||||||||||
Effect of dilutive securities: |
||||||||||||||||
Stock options and warrants |
1,154 | 1,596 | 870 | 1,722 | ||||||||||||
Restricted stock—based compensation |
244 | 255 | 191 | 214 | ||||||||||||
Weighted average shares and assumed conversions — diluted |
116,169 | 126,547 | 117,452 | 126,302 | ||||||||||||
Adjusted Diluted Earnings Per Share |
$ | 0.33 | $ | 0.30 | $ | 0.92 | $ | 0.87 | ||||||||
CALCULATION OF ADJUSTED FREE CASH FLOW
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Income from continuing operations before income taxes |
$ | 60,953 | $ | 59,624 | $ | 170,674 | $ | 175,720 | ||||||||
Expenses associated with debt refinancing transactions |
— | — | 3,838 | — | ||||||||||||
Income tax benefit for debt refinancing transactions |
— | — | (1,465 | ) | — | |||||||||||
Income taxes paid |
(8,852 | ) | (16,702 | ) | (49,691 | ) | (39,474 | ) | ||||||||
Depreciation and amortization |
25,532 | 23,251 | 75,124 | 66,373 | ||||||||||||
Depreciation and amortization for discontinued operations |
— | 313 | 4 | 779 | ||||||||||||
Income (loss) from discontinued operations, net of taxes |
— | 129 | (789 | ) | 910 | |||||||||||
Income tax expense (benefit) for discontinued operations |
— | 61 | (481 | ) | 525 | |||||||||||
Stock-based compensation reflected in G&A expenses |
2,063 | 2,198 | 6,422 | 6,336 | ||||||||||||
Amortization of debt costs and other non-cash interest |
1,088 | 940 | 2,935 | 2,900 | ||||||||||||
Maintenance and technology capital expenditures |
(12,667 | ) | (7,861 | ) | (30,856 | ) | (23,053 | ) | ||||||||
Adjusted Free Cash Flow |
$ | 68,117 | $ | 61,953 | $ | 175,715 | $ | 191,016 | ||||||||
-more-
CCA Third Quarter 2009 Financial Results
Page 11
Page 11
CALCULATION OF EBITDA AND ADJUSTED EBITDA
| For the Three Months | For the Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Net income |
$ | 45,252 | $ | 37,891 | $ | 112,463 | $ | 110,416 | ||||||||
Interest expense, net |
18,339 | 15,087 | 54,935 | 42,671 | ||||||||||||
Depreciation and amortization |
25,532 | 23,251 | 75,124 | 66,373 | ||||||||||||
Income tax expense |
15,701 | 21,862 | 57,422 | 66,214 | ||||||||||||
(Income) loss from discontinued operations, net of taxes |
— | (129 | ) | 789 | (910 | ) | ||||||||||
EBITDA |
104,824 | 97,962 | 300,733 | 284,764 | ||||||||||||
Expenses associated with debt refinancing transactions |
— | — | 3,838 | — | ||||||||||||
ADJUSTED EBITDA |
$ | 104,824 | $ | 97,962 | $ | 304,571 | $ | 284,764 | ||||||||
NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION
Adjusted Diluted Earnings Per Share (Adjusted EPS), EBITDA, Adjusted EBITDA and Adjusted Free Cash
Flow are non-GAAP financial measures. The Company believes that these measures are important
operating measures that supplement discussion and analysis of the Company’s results of operations
and are used to review and assess operating performance of the Company and its correctional
facilities and their management teams. The Company believes that it is useful to provide
investors, lenders and security analysts disclosures of its results of operations on the same basis
as that used by management.
Management and investors review both the Company’s overall performance (including GAAP EPS, net
income, Adjusted EPS and Adjusted Free Cash Flow) and the operating performance of the Company’s
correctional facilities (EBITDA and Adjusted EBITDA). EBITDA and Adjusted EBITDA are useful as
supplemental measures of the performance of the Company’s correctional facilities because they do
not take into account depreciation and amortization, tax provisions, or with respect to Adjusted
EBITDA, the impact of the Company’s financing strategies. Because the historical cost accounting
convention used for real estate assets requires depreciation (except on land), this accounting
presentation assumes that the value of real estate assets diminishes at a level rate over time.
Because of the unique structure, design and use of the Company’s correctional facilities,
management believes that assessing performance of the Company’s correctional facilities without the
impact of depreciation or amortization is useful. The calculation of Adjusted Free Cash Flow
substitutes capital expenditures incurred to maintain the functionality and condition of the
Company’s correctional facilities in lieu of a provision for depreciation; Adjusted Free Cash Flow
also excludes certain other non-cash expenses that do not affect the Company’s ability to service
debt.
The Company may make adjustments to GAAP net income, Adjusted EBITDA and Adjusted Free Cash Flow
from time to time for certain other income and expenses that it considers non-recurring, infrequent
or unusual, such as the special items in the preceding calculation of Adjusted Diluted Earnings Per
Share, even though such items may require cash settlement, because such items do not reflect a
necessary component of the ongoing operations of the Company. Other companies may calculate
Adjusted EPS, EBITDA, Adjusted EBITDA and Adjusted Free Cash Flow differently than the Company
does, or adjust for other items, and therefore comparability may be limited. Adjusted EPS, EBITDA,
Adjusted EBITDA and Adjusted Free Cash Flow are not measures of performance under GAAP, and should
not be considered as an alternative to cash flows from operating activities, a measure of liquidity
or an alternative to net income as indicators of the Company’s operating performance or any other
measure of performance derived in accordance with GAAP. This data should be read in conjunction
with the Company’s consolidated financial statements and related notes included in its filings with
the Securities and Exchange Commission.
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