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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 3, 2004
Corrections Corporation of America
| Maryland | 001-16109 | 62-1763875 | ||
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| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer | ||
| Identification No.) |
10 Burton Hills Boulevard, Nashville, Tennessee 37215
(615) 263-3000
Not Applicable
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 | ||||||||
| Item 9.01. Financial Statements and Exhibits | ||||||||
| SIGNATURE | ||||||||
| EXHIBIT INDEX | ||||||||
| Ex-99.1 Press Release | ||||||||
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Item 2.02. Results of Operations and Financial Condition
On November 3, 2004, Corrections Corporation of America, a Maryland corporation (the “Company”), issued a press release announcing its 2004 third quarter 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 in this Current Report is being furnished pursuant to Item 2.02 of Form 8-K and 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 3, 2004 and may change thereafter.
Item 9.01. Financial Statements and Exhibits
(c) The following exhibit is furnished as part of this Current Report pursuant to Item 2.02:
| Exhibit 99.1 - Press Release dated November 3, 2004 |
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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 3, 2004 | CORRECTIONS CORPORATION OF AMERICA | |
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By: /s/ Irving E. Lingo, Jr. Irving E. Lingo, Jr. Executive Vice President and Chief Financial Officer |
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EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release dated November 3, 2004 |
EXHIBIT 99.1 News Release (CORRECTIONS CORPORATION OF AMERICA LOGO) Contact: Karin Demler: (615) 263-3005 CORRECTIONS CORPORATION OF AMERICA ANNOUNCES 2004 THIRD QUARTER RESULTS REVENUES FOR THIRD QUARTER INCREASE 11% TO $292.5 MILLION NASHVILLE, TENN. - NOVEMBER 3, 2004 - CORRECTIONS CORPORATION OF AMERICA (NYSE: CXW) (the "Company") today announced its financial results for the three- and nine-month periods ended September 30, 2004. FINANCIAL HIGHLIGHTS THIRD QUARTER OF 2004 COMPARED WITH THIRD QUARTER OF 2003 For the three-month period ended September 30, 2004, the Company reported net income available to common stockholders of $17.0 million, or $0.43 per diluted share, compared with $18.2 million, or $0.47 per diluted share, for the same period in 2003. Financial results for the third quarter of 2004 include a provision for income tax expense of $9.0 million, or $0.23 per diluted share, compared with only $0.3 million, or $0.01 per diluted share, for the same period in the prior year. Further, although the Company has utilized an effective statutory tax rate of 39.8% for 2004, the actual effective tax rate during the third quarter of 2004 was 34.5%, a difference of $1.4 million, or $0.03 per diluted share, primarily resulting from a change in estimated income taxes associated with certain financing transactions completed during 2003. In accordance with generally accepted accounting principles ("GAAP"), results for 2003 do not include a provision for income taxes, other than for certain state taxes, due to the application of a valuation allowance applied to net deferred tax assets, which was substantially reversed at December 31, 2003. Results for the third quarter of 2003 also included a charge of approximately $2.6 million associated with the Company's debt refinancing transactions completed during August 2003. The Company estimates that net income available to common stockholders for the third quarter of 2003, excluding the refinancing charge and adjusted for an income tax provision using an estimated combined federal and state effective tax rate of 40% (the approximate rate for all of 2004) would have been $12.3 million, or $0.32 per diluted share. The third quarter earnings per diluted share for 2004, excluding the beneficial impact of $0.03 per diluted share on income taxes, represents a 25.0% increase over estimated third quarter 2003 earnings per diluted share on an adjusted and as-taxed basis. Please refer to the Illustration of Net Income Adjusted for Special Items and Assuming a Tax Provision and related information for the three and nine months ended September 30, 2003, following the financial statements herein. -more- 10 Burton Hills Boulevard, Nashville, Tennessee 37215, Phone: 615-263-3000
CCA 2004 Third- Quarter Results Page 2 Operating income for the three months ended September 30, 2004, was $43.0 million compared with $40.8 million for the same period in the prior year. EBITDA adjusted for special items ("Adjusted EBITDA") for the third quarter of 2004 was $56.8 million, compared with $54.1 million for the same period in 2003. The financial results for the third quarter of 2004 reflect an 11% increase in revenues generated from higher occupancy levels and new management contracts. The financial results also reflect interest savings resulting from the refinancing transactions completed during the third quarter of 2003 and an amendment to the Company's senior bank credit facility during the second quarter of 2004 lowering the interest rate spread on outstanding borrowings on the facility. Adjusted free cash flow increased nearly 9% to $29.7 million during the three-month period ended September 30, 2004, compared with $27.3 million generated during the same period in 2003. The increase in adjusted free cash flow is primarily the result of higher revenues from increased occupancy levels and an increase in cash generated from new management contracts, partially offset by an increase in cash used for investments in technology and facility improvements compared with the same period in the prior year. Please refer to the Calculation of Adjusted Free Cash Flow and Adjusted EBITDA and related information following the financial statements herein. NINE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED WITH THE NINE MONTHS ENDED SEPTEMBER 30, 2003 For the nine months ended September 30, 2004, the Company generated net income available to common stockholders of $46.2 million, or $1.18 per diluted share, compared with $47.8 million, or $1.36 per diluted share, for the nine months ended September 30, 2003. Results for the nine months ended September 30, 2003, included the following special items: o A charge of approximately $6.7 million associated with the Company's recapitalization transactions completed during 2003; o A non-cash gain of $2.9 million associated with the extinguishment of a promissory note issued in connection with the final payment of the state court portion of the Company's 2001 stockholder litigation settlement; and o A charge of approximately $4.5 million for a premium paid associated with the Company's tender offer for its series B cumulative preferred stock completed during the second quarter of 2003. Excluding these special items, and adjusting for an income tax provision, the Company estimates that net income available to common stockholders for the first nine months of 2003 would have been $29.7 million, or $0.85 per diluted share. Earnings per diluted share for the first nine months of 2004, excluding the aforementioned beneficial impact of $0.03 per diluted share on income taxes reflected during the third quarter, represents a 35.3% increase over diluted earnings per share for the first nine months of 2003 on an adjusted and as-taxed basis. Please refer to the Illustration of Net Income Adjusted for Special Items and Assuming a Tax Provision and related information for the three and nine months ended September 30, 2003, following the financial statements herein. Operating income for the first nine months of 2004 increased to $129.3 million compared with $124.0 million for the first nine months of 2003. Adjusted EBITDA for the nine months ended September 30, 2004, increased to $168.8 million compared with $163.3 million during the same period in the prior year. The improved financial performance for the first nine months resulted from many of the same items driving the Company's third quarter results: higher revenues resulting from increased occupancy levels and new management contracts, savings in interest and preferred stock distributions resulting from the refinancing -more-
CCA 2004 Third- Quarter Results Page 3 and recapitalization transactions completed during the second and third quarters of 2003, and the amendment to the Company's senior bank credit facility obtained in June 2004. Comparable results for the first nine months of 2004 were negatively impacted by an increase in operating losses incurred in connection with the start-up activities and staffing expenses primarily during the second quarter of 2004 at the Company's Northeast Ohio, Tallahatchie and Delta facilities. The combined operating losses at these facilities for the nine months ended September 30, 2004 and 2003, were $6.9 million and $1.7 million, respectively. Adjusted Free Cash Flow decreased during the first nine months of 2004 to $82.5 million compared with $83.9 million during the same period in 2003. Adjusted Free Cash Flow for the nine months ended September 30, 2004, was negatively impacted by an increase of $13.3 million in cash used for investments in technology and facility improvements compared with the first nine months of 2003. Please refer to the Calculation of Adjusted Free Cash Flow and Adjusted EBITDA and related information following the financial statements herein. OPERATIONS HIGHLIGHTS For the three months ended September 30, 2004 and 2003, key operating statistics for the continuing operations of the Company were as follows:
CCA 2004 Third- Quarter Results Page 4 compared with the same period in the prior year. Variable operating expenses per compensated man-day decreased primarily as a result of a reduction in expenses related to legal proceedings in which the Company is involved, and lower inmate medical expenses. Under the terms of the new Texas management contracts, the TDCJ retained responsibility for all inmate medical requirements. BUSINESS DEVELOPMENT UPDATE In February 2004 the Company provided notice to the Nevada Department of Corrections that it did not intend to renew its contract to manage the state-owned 500-bed Southern Nevada Women's Correctional Center located in Las Vegas, Nevada, upon expiration of the contract in October 2004, due to operating losses incurred by the Company at this facility. On October 1, 2004, the Company turned over operations of the facility to the Nevada Department of Corrections. The operating losses at this facility for the three and nine months ended September 30, 2004, amounted to $0.2 million and $0.6 million, respectively. On August 9, 2004, the Company elected to terminate its contract to manage the Tall Trees juvenile facility located in Shelby County, Tennessee. The operating losses at this facility for the three and nine months ended September 30, 2004, amounted to $0.1 million and $0.3 million, respectively. On October 25, 2004, the Company announced it entered into a contract with the Mississippi Department of Corrections to manage an initial inmate population of 128 of the State's maximum security inmates at the Company's owned-and-operated Tallahatchie County Correctional Facility in Tutwiler, Mississippi. The population may fluctuate based on the State's needs and the space available at the Tallahatchie facility. Commenting on the Company's third- quarter results, John Ferguson, president and CEO stated, "The Company's third quarter results were very much in line with our expectations, reflecting the positive operating environment we have experienced over the past several quarters. Occupancy remained high at roughly 95%, while operating margins remained relatively stable. Our business development pipeline is active and we continue to pursue a number of opportunities at the federal, state and local levels. With approximately 7,500 empty beds currently in our inventory, numerous expansion opportunities in our 38 owned facilities and a strong balance sheet enabling us to build new facilities to support customer needs, CCA is uniquely positioned to capitalize on a continuing environment of restricted prison bed supply." GUIDANCE The Company expects diluted earnings per share ("EPS") for the fourth quarter of 2004 to be in the range of $0.39 to $0.41, resulting in guidance for full-year EPS in the range of $1.54 to $1.56, excluding the aforementioned income tax benefit of $0.03 per diluted share recognized during the third quarter. During 2004, the Company expects to invest approximately $134.6 million in capital expenditures, consisting of approximately $84.2 million in prison construction and expansions, $29.8 million in maintenance capital expenditures and approximately $20.6 million in information technology. SUPPLEMENTAL FINANCIAL INFORMATION The Company has made available on its website supplemental financial information and other data for the three and nine months ended September 30, 2004. The Company does not undertake any obligation, and disclaims any duty, to update any of the information disclosed in this report. Interested parties may access -more-
CCA 2004 Third- Quarter Results Page 5 this information through the Company's website at www.correctionscorp.com under the Financial Information of the Investor section. WEBCAST AND REPLAY INFORMATION The Company will host a webcast conference call at 2:00 p.m. Central Time (3:00 p.m. Eastern Time) today to discuss its third quarter 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 the Company's website following the completion of the call. In addition, a telephonic replay will begin today at 4:00 p.m. Central Time through 11:59 p.m. Central Time on November 10, 2004, by dialing 1-800-405-2236, pass code 11011667. ABOUT THE COMPANY The Company 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. The Company currently operates 63 facilities, including 38 company-owned facilities, with a total design capacity of approximately 67,000 beds in 19 states and the District of Columbia. The Company specializes 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, the Company's 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. The Company also provides 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 the Company's 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) fluctuations in the Company's 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; (ii) changes in the privatization of the corrections and detention industry, the public acceptance of the Company's services and the timing of the opening of and demand for new prison facilities; (iii) the Company's ability to obtain and maintain correctional facility management contracts, including as the result of sufficient governmental appropriations, and the timing of the opening of new facilities; (iv) the Company's ability to obtain and maintain correctional facility management contracts, including as the result of inmate disturbances; (v) 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 the Company's control, such as weather, labor conditions and material shortages, resulting in increased construction costs; and (vi) general economic and market conditions. Other factors that could cause operating and financial results to differ are described in the filings made from time to time by the Company with the Securities and Exchange Commission. The Company 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 or the information contained herein by any third-parties, including, but not limited to, any wire or internet services. -more-
CCA 2004 Third- Quarter Results Page 6 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CCA 2004 Third- Quarter Results Page 7 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CCA 2004 Third- Quarter Results Page 8 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL INFORMATION CALCULATION OF ADJUSTED FREE CASH FLOW AND ADJUSTED EBITDA (UNAUDITED AND AMOUNTS IN THOUSANDS)
CCA 2004 Third- Quarter Results Page 9 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES ILLUSTRATION OF NET INCOME ADJUSTED FOR SPECIAL ITEMS AND ASSUMING A TAX PROVISION (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)