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): February 10, 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 February 10, 2009, Corrections Corporation of America, a Maryland corporation (the “Company”), issued a press release announcing its 2008 fourth quarter and year end 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 February 10, 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 February 10, 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: February 10, 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 February 10, 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
Fourth Quarter 2008 and Full-Year Financial Results
Fourth Quarter 2008 and Full-Year Financial Results
Fourth Quarter EPS of $0.32, Up 14.3%
Full-Year EPS of $1.20, Up 13.2%
NASHVILLE, Tenn. — February 10, 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 fourth quarter and year ended December 31,
2008.
Financial Review
Fourth Quarter of 2008 Compared with Fourth Quarter of 2007
| § | Net income per diluted share grew 14.3% to $0.32 from $0.28 | ||
| § | Adjusted Free Cash Flow increased 38.0% to $65.0 million from $47.1 million | ||
| § | EBITDA increased 16.7% to $107.0 million from $91.7 million | ||
| § | 1,808 expansion beds placed into service during the fourth quarter of 2008 | ||
| § | Completed construction of 2,232-bed Adams County Correctional Center |
Total revenues for the fourth quarter of 2008 increased 8.8%, primarily driven by a 5.2% increase
in per diem rates combined with a 4.1% increase in inmate populations. Management revenue from
federal customers increased 7.5% to $162.0 million generated during the fourth quarter of 2008
compared with $150.6 million generated during the prior year period. Management revenue from state
customers increased 12.5% to $218.3 million during the fourth quarter of 2008 from $194.0 million
for the same period in 2007. The growth in inmate populations was primarily attributable to
increased inmate populations from the states of California and Idaho as well as from the U.S.
Immigration and Customs Enforcement (“ICE”). The growth in inmate populations was partially offset
by declines in inmate populations from the states of Minnesota, New Mexico, Washington and Wyoming.
Total portfolio occupancy decreased to 92.9% during the fourth quarter of 2008 from 98.0% during
the fourth quarter of 2007, primarily due to a 9.9% increase in the average number of available
beds from the fourth quarter of 2007 as a result of placing approximately 10,000 new beds into
service since the end of the third quarter of 2007.
Adjusted Free Cash Flow increased to $65.0 million during the fourth quarter of 2008 from $47.1
million generated during the same period in 2007. The 38.0% increase in Adjusted Free Cash Flow
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10 Burton Hills Boulevard, Nashville, Tennessee 37215, Phone: 615-263-3000
CCA 2008 Fourth Quarter Financial Results
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primarily resulted from stronger operating results combined with a decrease in income taxes paid
and a decrease in maintenance and technology capital expenditures.
Commenting on the financial results, Chief Executive Officer, John Ferguson stated, “We are pleased
with our 2008 fourth quarter and full year financial results as our earnings benefited from
increased demand and higher per diem rates. We are also pleased that our development efforts in
2008 have provided us with an attractive inventory of beds that positions us for continued
leadership and growth in our industry.”
Full-Year 2008 Compared with Full-Year 2007
| § | Net income per diluted share increased 13.2% to $1.20 from $1.06 | ||
| § | Adjusted Free Cash Flow increased 24.2% to $256.0 million from $206.1 million | ||
| § | EBITDA increased 13.9% to $394.3 million from $346.1 million | ||
| § | 8,275 additional beds placed into service during 2008 |
Our financial results for 2008 reflected a 9.8% increase in revenues driven by a 4.5% increase in
per diem rates combined with a 5.5% increase in average daily inmate populations primarily from the
states of California and Arizona as well as from ICE. In addition, operating margins per man-day
increased 7.9% with operating margin rates increasing from 29.4% in 2007 to 30.4% in 2008.
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.
Operations Highlights
For the quarters ended December 31, 2008 and 2007, key operating statistics for the continuing
operations of the Company were as follows:
| Quarter Ended December 31, | ||||||||||||
| Metric | 2008 | 2007 | % Change | |||||||||
Average Available Beds |
82,847 | 75,354 | 9.9 | % | ||||||||
Average Compensated Occupancy |
92.9 | % | 98.0 | % | -5.2 | % | ||||||
Total Compensated Man-Days |
7,077,087 | 6,795,468 | 4.1 | % | ||||||||
Average Daily Compensated Population |
76,925 | 73,864 | 4.1 | % | ||||||||
Revenue per Compensated Man-Day |
$ | 58.21 | $ | 55.34 | 5.2 | % | ||||||
Operating Expense per Compensated
Man-Day: |
||||||||||||
Fixed |
29.82 | 28.73 | 3.8 | % | ||||||||
Variable |
10.27 | 10.28 | -0.1 | % | ||||||||
Total |
40.09 | 39.01 | 2.8 | % | ||||||||
Operating Margin per Compensated Man-Day |
$ | 18.12 | $ | 16.33 | 11.0 | % | ||||||
Operating Margin |
31.1 | % | 29.5 | % | 5.4 | % | ||||||
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CCA 2008 Fourth Quarter Financial Results
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Total revenue for the fourth quarter of 2008 increased 8.8% to $414.4 million from $380.8 million
during the same period in 2007, as total compensated man-days increased to 7.1 million from 6.8
million, and as revenue per compensated man-day increased 5.2%.
Total operating expenses per compensated man-day increased 2.8% during the fourth quarter of 2008
compared with the same period in 2007. Operating expenses per compensated man-day during the
fourth quarter of 2008 reflect an increase in salaries and wages associated with mandatory wage
increases at certain facilities holding federal prisoners combined with additional staffing levels
hired at our La Palma facility in anticipation of receiving additional inmate populations from the
state of California. These increases were partially offset by better than average claims
experience in workers’ compensation and employee medical expenses.
Facility Development Update
| Completed or | ||||||||||
| Additional | Estimated | Customer(s) or Potential | ||||||||
| Capacity | Completion | Customer(s) | ||||||||
Expansions and New Facilities Completed |
||||||||||
2008 |
||||||||||
Eden Detention Center, Texas |
129 | Q1 2008 | BOP | |||||||
Kit Carson Correctional Center, Colorado |
720 | Q1 2008 | State of Colorado | |||||||
Bent County Correctional Facility, Colorado |
720 | Q2 2008 | State of Colorado | |||||||
Leavenworth Detention Center, Kansas |
266 | Q2 2008 | USMS | |||||||
Tallahatchie County Correctional Facility,
Mississippi |
848 | Q2 and Q4 2008 |
State of California | |||||||
La Palma Correctional Center, Arizona |
2,040 | Q3 and Q4 2008 |
State of California | |||||||
| State of Oklahoma | ||||||||||
Davis Correctional Facility, Oklahoma |
660 | Q3 2008 | and/or Various States | |||||||
| State of Oklahoma, | ||||||||||
| Federal and/or Various | ||||||||||
Cimarron Correctional Facility, Oklahoma |
660 | Q4 2008 | States | |||||||
| Federal and/or Various | ||||||||||
Adams County Correctional Center, Mississippi |
2,232 | Q4 2008 | States | |||||||
Total 2008 Beds Completed |
8,275 | |||||||||
2009 |
||||||||||
La Palma Correctional Center, Arizona |
1,020 | Q1 2009 | State of California | |||||||
Facilities Under Development |
||||||||||
| Office of Federal | ||||||||||
Nevada Southern Detention Center, Nevada |
1,072 | Q2 2010 | Detention Trustee | |||||||
During 2008, we announced that we were awarded a contract with the Office of the Federal Detention
Trustee (“OFDT”) to design, build, and operate a facility expected to house approximately
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CCA 2008 Fourth Quarter Financial Results
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1,000 federal prisoners. The contract provides for a guarantee of 750 prisoners and includes an
initial term of five years with three five-year renewal options. We will commence construction of
our new Nevada Southern Detention Center upon receipt of a Notice to Proceed from the OFDT. During
2008, we also commenced development of a new 2,040-bed correctional facility in Trousdale County,
Tennessee. However, we have temporarily suspended the construction of this facility until we have
greater clarity around the timing of future bed absorption by our customers. We will continue to
monitor our customers’ needs, and could promptly resume construction of the facility at little or
no incremental cost from our original estimate.
Liquidity Update
Stock Repurchase Plan Update
In November 2008, we announced that our Board of Directors approved a stock repurchase program to
repurchase up to $150 million of our common stock. Through February 6, 2009, we have purchased 2.5
million shares at a total cost of $37.9 million. As of February 6, 2009, we had 123.2 million
shares outstanding.
Capital Resources
At December 31, 2008, our liquidity was provided by cash on hand of $34.1 million and $191.3
million available under our revolving credit facility. During the year ended December 31, 2008, we
generated $256.0 million in adjusted free cash flow, and as of December 31, 2008, we had net
working capital of $146.5 million. We believe we have the ability to fund our stock repurchase
program as well as 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 May 2011.
Guidance
We expect diluted earnings per share (“EPS”) for the first quarter of 2009 to be in the range of
$0.24 to $0.26, and full year 2009 EPS to be in the range of $1.10 to $1.20.
As a reminder, our first quarter is negatively impacted by two fewer days than the fourth quarter
and, for 2009, will have one fewer day than the first quarter of 2008 due to the leap year. The
first quarter is also negatively impacted by unemployment taxes as base wage rates reset for state
unemployment tax purposes.
Our guidance reflects higher depreciation expense as a result of placing expansion and development
projects into service during 2008 at an aggregate cost of approximately $587.0 million. Guidance
also reflects higher interest expense resulting from higher debt balances and a decline in
capitalized interest on expansion and development projects. We estimate the year over year increase
in interest expense and depreciation and amortization expense to negatively impact full-year 2009
EPS by $0.10 to $0.12. While our guidance anticipates full-year 2009 EBITDA levels to be
comparable to 2008, the increase in interest expense and depreciation and amortization expense
result in a decline in 2009 EPS compared to 2008.
During 2009, we expect to invest approximately $132.1 million in capital expenditures, consisting
of approximately $78.5 million in prison construction and expansions that have been previously
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CCA 2008 Fourth Quarter Financial Results
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announced, $40.2 million in maintenance capital expenditures and $13.4 million in information
technology. We are slowing the pace of investment in new beds planned for 2009 compared to 2008
until we have greater clarity around the timing of future bed absorption by our customers. We plan
to continue our share repurchase program announced in November 2008, while monitoring our over
arching objective of maintaining liquidity. We also expect a 2009 GAAP income tax rate of
approximately 38%, with cash taxes expected to approximate GAAP income tax expense.
We remain cautious about the economic outlook through 2009, given the uncertainty and poor
visibility around government budgets and spending associated with the economic downturn. However,
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. The investments we are
making in bed development will help ensure we capitalize on those opportunities when the
environment improves.
Supplemental Financial Information and Investor Presentations
We have made available on our website supplemental financial information and other data for the
fourth quarter of 2008. 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.
Management may meet with investors from time to time during the first quarter of 2009. Written
materials used in the investor presentations will also be available on our website beginning on or
about February 25, 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) today,
to discuss our fourth quarter 2008 and full-year 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 today at 6:00 p.m. eastern time through 11:59 p.m. eastern time on February 17,
2009, by dialing 888-203-1112, pass code 2899394.
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 64 facilities, including 44 company-owned facilities, with
a total design capacity of approximately 85,000 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
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CCA 2008 Fourth Quarter Financial Results
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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
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 2008 Fourth Quarter 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)
| December 31, | ||||||||
| 2008 | 2007 | |||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 34,077 | $ | 57,842 | ||||
Accounts receivable, net of allowance of $2,689 and $3,914, respectively |
263,073 | 236,886 | ||||||
Deferred tax assets |
16,108 | 12,250 | ||||||
Prepaid expenses and other current assets |
23,544 | 21,010 | ||||||
Current assets of discontinued operations |
1,497 | 5,094 | ||||||
Assets held for sale |
— | 7,581 | ||||||
Total current assets |
338,299 | 340,663 | ||||||
Property and equipment, net |
2,478,824 | 2,086,219 | ||||||
Restricted cash |
6,710 | 6,511 | ||||||
Investment in direct financing lease |
13,414 | 14,503 | ||||||
Goodwill |
13,672 | 13,672 | ||||||
Other assets |
20,455 | 23,401 | ||||||
Non-current assets of discontinued operations |
— | 771 | ||||||
Total assets |
$ | 2,871,374 | $ | 2,485,740 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Accounts payable and accrued expenses |
$ | 189,940 | $ | 208,949 | ||||
Income taxes payable |
450 | 964 | ||||||
Current portion of long-term debt |
290 | 290 | ||||||
Current liabilities of discontinued operations |
1,143 | 4,528 | ||||||
Total current liabilities |
191,823 | 214,731 | ||||||
Long-term debt, net of current portion |
1,192,632 | 975,677 | ||||||
Deferred tax liabilities |
68,349 | 34,271 | ||||||
Other liabilities |
38,211 | 39,086 | ||||||
Total liabilities |
1,491,015 | 1,263,765 | ||||||
Commitments and contingencies |
||||||||
Common stock — $0.01 par value; 300,000 shares authorized;124,673
and 124,472 shares issued and outstanding at December 31, 2008 and
2007, respectively |
1,247 | 1,245 | ||||||
Additional paid-in capital |
1,576,177 | 1,568,736 | ||||||
Retained deficit |
(197,065 | ) | (348,006 | ) | ||||
Total stockholders’ equity |
1,380,359 | 1,221,975 | ||||||
Total liabilities and stockholders’ equity |
$ | 2,871,374 | $ | 2,485,740 | ||||
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CCA 2008 Fourth Quarter 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 Twelve Months | |||||||||||||||
| Ended December 31, | Ended December 31, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
REVENUE: |
||||||||||||||||
Management and other |
$ | 413,153 | $ | 379,627 | $ | 1,594,068 | $ | 1,451,751 | ||||||||
Rental |
1,221 | 1,187 | 4,838 | 4,562 | ||||||||||||
| 414,374 | 380,814 | 1,598,906 | 1,456,313 | |||||||||||||
EXPENSES: |
||||||||||||||||
Operating |
286,726 | 269,252 | 1,124,002 | 1,036,087 | ||||||||||||
General and administrative |
20,086 | 19,902 | 80,308 | 74,399 | ||||||||||||
Depreciation and amortization |
24,278 | 21,361 | 90,809 | 78,539 | ||||||||||||
Goodwill impairment |
— | 554 | — | 554 | ||||||||||||
| 331,090 | 311,069 | 1,295,119 | 1,189,579 | |||||||||||||
OPERATING INCOME |
83,284 | 69,745 | 303,787 | 266,734 | ||||||||||||
OTHER EXPENSES (INCOME): |
||||||||||||||||
Interest expense, net |
16,733 | 12,938 | 59,404 | 53,776 | ||||||||||||
Other (income) expenses |
601 | (27 | ) | 292 | (308 | ) | ||||||||||
| 17,334 | 12,911 | 59,696 | 53,468 | |||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
65,950 | 56,834 | 244,091 | 213,266 | ||||||||||||
Income tax expense |
(25,000 | ) | (21,520 | ) | (92,127 | ) | (80,460 | ) | ||||||||
INCOME FROM CONTINUING OPERATIONS |
40,950 | 35,314 | 151,964 | 132,806 | ||||||||||||
Income (loss) from discontinued operations, net of taxes |
(425 | ) | (368 | ) | (1,023 | ) | 567 | |||||||||
NET INCOME |
$ | 40,525 | $ | 34,946 | $ | 150,941 | $ | 133,373 | ||||||||
BASIC EARNINGS PER SHARE: |
||||||||||||||||
Income from continuing operations |
$ | 0.32 | $ | 0.28 | $ | 1.22 | $ | 1.08 | ||||||||
Income (loss) from discontinued operations, net of taxes |
— | — | (0.01 | ) | 0.01 | |||||||||||
Net income |
$ | 0.32 | $ | 0.28 | $ | 1.21 | $ | 1.09 | ||||||||
DILUTED EARNINGS PER SHARE: |
||||||||||||||||
Income from continuing operations |
$ | 0.32 | $ | 0.28 | $ | 1.21 | $ | 1.06 | ||||||||
Income (loss) from discontinued operations, net of taxes |
— | — | (0.01 | ) | — | |||||||||||
Net income |
$ | 0.32 | $ | 0.28 | $ | 1.20 | $ | 1.06 | ||||||||
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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 FREE CASH FLOW
| For the Three Months | For the Twelve Months | |||||||||||||||
| Ended December 31, | Ended December 31, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Income from continuing operations before income taxes |
$ | 65,950 | $ | 56,834 | $ | 244,091 | $ | 213,266 | ||||||||
Income taxes paid |
(15,440 | ) | (19,924 | ) | (54,914 | ) | (51,255 | ) | ||||||||
Depreciation and amortization |
24,278 | 21,361 | 90,809 | 78,539 | ||||||||||||
Depreciation and amortization for discontinued operations |
31 | 49 | 652 | 143 | ||||||||||||
Goodwill impairment |
— | 554 | — | 554 | ||||||||||||
Goodwill impairment for discontinued operations |
— | 1,020 | — | 1,020 | ||||||||||||
Income (loss) from discontinued operations, net of taxes |
(425 | ) | (368 | ) | (1,023 | ) | 567 | |||||||||
Income tax expense (benefit) for discontinued operations |
(260 | ) | (225 | ) | (648 | ) | 372 | |||||||||
Stock-based compensation reflected in G&A expenses |
2,208 | 1,860 | 8,544 | 6,478 | ||||||||||||
Amortization of debt costs and other non-cash interest |
912 | 959 | 3,812 | 3,931 | ||||||||||||
Maintenance and technology capital expenditures |
(12,268 | ) | (15,042 | ) | (35,321 | ) | (47,500 | ) | ||||||||
Adjusted Free Cash Flow |
$ | 64,986 | $ | 47,078 | $ | 256,002 | $ | 206,115 | ||||||||
CALCULATION OF EBITDA
| For the Three Months | For the Twelve Months | |||||||||||||||
| Ended December 31, | Ended December 31, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Net income |
$ | 40,525 | $ | 34,946 | $ | 150,941 | $ | 133,373 | ||||||||
Interest expense, net |
16,733 | 12,938 | 59,404 | 53,776 | ||||||||||||
Depreciation and amortization |
24,278 | 21,361 | 90,809 | 78,539 | ||||||||||||
Income tax expense |
25,000 | 21,520 | 92,127 | 80,460 | ||||||||||||
Goodwill impairment |
— | 554 | — | 554 | ||||||||||||
Income from discontinued operations, net of taxes |
425 | 368 | 1,023 | (567 | ) | |||||||||||
EBITDA |
$ | 106,961 | $ | 91,687 | $ | 394,304 | $ | 346,135 | ||||||||
NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION
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, and Adjusted Free Cash Flow) and the operating performance of the Company’s correctional
facilities (EBITDA). EBITDA is useful as a supplemental measure of the performance of the
Company’s correctional facilities because it does not take into account depreciation and
amortization or tax provisions. 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.
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CCA 2008 Fourth Quarter Financial Results
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The Company may make adjustments to GAAP net income, EBITDA and Adjusted Free Cash Flow from time
to time for certain other income and expenses that it considers non-recurring, infrequent or
unusual, 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 EBITDA
and Adjusted Free Cash Flow differently than the Company does, or adjust for other items, and
therefore comparability may be limited. 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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