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): May 7, 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 May 7, 2009, Corrections Corporation of America, a Maryland corporation (the “Company”), issued a press release announcing its 2009 first 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 May 7, 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 May 7, 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: May 7, 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 May 7, 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
First Quarter 2009 Financial Results
First Quarter 2009 Financial Results
First Quarter Earnings Per Share of $0.29
Raises Full-Year 2009 EPS Guidance To a Range of $1.17 to $1.25
Raises Full-Year 2009 EPS Guidance To a Range of $1.17 to $1.25
NASHVILLE, Tenn. — May 7, 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 first quarter ended March 31, 2009.
Financial Review — First Quarter 2009
| § | Net income per diluted share of $0.29 | ||
| § | Total revenues increased 6.5% to $404.2 million | ||
| § | EBITDA increased 9.6% to $99.6 million | ||
| § | Repurchased 9.6 million shares at an aggregate purchase price of $108.4 million during the first quarter of 2009 | ||
| § | 1,020 beds placed into service during the first quarter of 2009, completing the final phase of construction at our La Palma Correctional Center | ||
| § | Awarded three new management contracts for up to 3,819 inmates |
Total revenues for the first quarter of 2009 increased 6.5%, primarily driven by a 3.9% increase in
revenue per compensated man-day combined with a 4.2% increase in average inmate populations.
Management revenue from federal customers increased 5.5% to $160.1 million generated during the
first quarter of 2009, compared with $151.8 million generated during the prior year period,
primarily driven by per diem increases achieved during 2008. Management revenue from state
customers increased 9.5% to $211.8 million during the first quarter of 2009, from $193.5 million
for the same period in 2008. The growth in state revenues from the first quarter 2008 was
primarily attributable to increased inmate populations from the states of California, Colorado and
Idaho combined with per diem increases achieved during 2008, partially offset by a reduction in
inmate populations from the states of Minnesota, Washington, New Mexico, and Kentucky.
Adjusted Free Cash Flow increased to $73.0 million during the first quarter of 2009 from $72.7
million generated during the same period in 2008. Adjusted free cash flow was negatively impacted
by a $2.2 million increase in maintenance and technology capital expenditures.
10 Burton Hills Boulevard, Nashville, Tennessee 37215, Phone: 615-263-3000
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CCA First Quarter 2009 Financial Results
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As a result of placing approximately 9,300 new beds into service since the end of the fourth
quarter of 2007, total portfolio occupancy decreased to 89.4% during the first quarter of 2009 from
97.0% during the first quarter of 2008. The average number of available beds increased 12.9% during
the first quarter of 2009 from the first quarter of 2008. Our total average daily compensated
population increased 4.2% to 76,489 in the first quarter of 2009 from 73,431 in the first quarter
of 2008.
As of May 1, 2009, we had approximately 10,900 unoccupied beds at facilities that had
availability of 100 or more beds, including 502 beds at the North Georgia Detention Center, where
we currently expect renovations to be completed during the third quarter of 2009. However, this
capacity is reduced to approximately 6,700 beds after taking into consideration the beds committed
pursuant to new management contracts with the Federal Bureau of Prisons (“BOP”) at our newly
constructed Adams County Correctional Center, Immigration and Customs Enforcement (“ICE”) at the
North Georgia facility, and the state of Arizona at our Huerfano County Correctional Center, as
well as the state of California at our La Palma Correctional Center and our Tallahatchie County
Correctional Facility.
Commenting on the financial results, Chief Executive Officer, John Ferguson stated, “With first
quarter revenues very much in line with our forecast, we were able to deliver better than expected
financial results primarily as a result of favorable operating expense performance combined with a
slight acceleration of our planned share repurchases. We are pleased that we were able to
capitalize on our bed developments in 2008 through the award of three new contracts during the
first quarter of 2009 for nearly 4,000 additional inmates. The remaining 6,700 beds in inventory
positions us for additional growth in the future.”
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 March 31, 2009 and 2008, key operating statistics for the continuing
operations of the Company were as follows:
| Quarter Ended March 31, | ||||||||||||
| Metric | 2009 | 2008 | % Change | |||||||||
Average Available Beds |
85,528 | 75,731 | 12.9 | % | ||||||||
Average Compensated Occupancy |
89.4 | % | 97.0 | % | -7.8 | % | ||||||
Total Compensated Man-Days |
6,884,021 | 6,682,227 | 3.0 | % | ||||||||
Average Daily Compensated Population |
76,489 | 73,431 | 4.2 | % | ||||||||
Revenue per Compensated Man-Day |
$ | 58.45 | $ | 56.27 | 3.9 | % | ||||||
Operating Expense per Compensated
Man-Day: |
||||||||||||
Fixed |
30.96 | 29.54 | 4.8 | % | ||||||||
Variable |
9.94 | 9.92 | 0.2 | % | ||||||||
Total |
40.90 | 39.46 | 3.6 | % | ||||||||
Operating Margin per Compensated Man-Day |
$ | 17.55 | $ | 16.81 | 4.4 | % | ||||||
Operating Margin |
30.0 | % | 29.9 | % | 0.3 | % | ||||||
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CCA First Quarter 2009 Financial Results
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Total revenue for the first quarter of 2009 increased 6.5% to $404.2 million from $379.4 million
during the same period in 2008, as total compensated man-days increased 3.0%, and as revenue per
compensated man-day increased 3.9%.
Total operating expenses per compensated man-day increased 3.6% during the first quarter of 2009
compared with the same period in 2008. Operating costs per man-day reflect normal wage and other
general inflationary increases, as well as operating inefficiencies associated with our inventory
of vacant beds and the ramp-up of new bed activations primarily at the La Palma and Tallahatchie
facilities.
We expect fixed costs per compensated man-day to continue to be negatively impacted by start-up
expenses at our Adams County Correctional Center, Huerfano County Correctional Center and the North
Georgia Detention Center as we prepare for the commencement of our new management contracts.
Business Development Update
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 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. In April 2009, we received authorization
from the OFDT to commence construction of our new 1,072-bed Nevada Southern Detention Center. As a
result we expect to complete construction during the third quarter of 2010 and expect to begin
receiving detainees during the fourth quarter of 2010.
In March 2009, we announced a new contract to manage detainee populations for ICE at the North
Georgia Detention Center in Hall County, Georgia with a total design capacity of 502 beds upon
completion of renovations. Under a five-year Inter-Governmental Service Agreement between Hall
County, Georgia and ICE, we will house up to 500 ICE detainees at the facility. We are leasing the
former Hall County Jail from Hall County, Georgia. The lease has an initial term of 20 years with
two five-year renewal options and provides us the ability to cancel the lease if we do not have a
management contract. We currently anticipate opening the facility during the third quarter of 2009
and expect the facility to be substantially occupied by the end of 2009.
In March 2009, we also announced a new agreement with the state of Arizona to manage up to 752
Arizona inmates at our 752-bed Huerfano County Correctional Center in Colorado. The new contract
includes an initial term ending March 9, 2010, which may be renewed by mutual agreement for four
consecutive terms of one year each. The new contract includes a guaranteed 90% occupancy level
effective upon initially reaching 90% occupancy. We recently completed the relocation of the
Colorado inmates housed at the Huerfano facility to our three other facilities located in Colorado.
In April we began to receive inmates from the state of Arizona and expect the facility will be
substantially occupied during the second quarter of 2009.
In April 2009, we announced that we were awarded a contract with the BOP to house up to 2,567
federal inmates at our recently completed 2,232-bed Adams County Correctional Center in
Mississippi. The four-year contract, awarded as part of the Criminal Alien Requirement 8
Solicitation (“CAR 8”), also provides for up to three two-year renewal options and includes
contract provisions that are materially comparable to our other contracts with the BOP, including a
50%
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CCA First Quarter 2009 Financial Results
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guarantee of occupancy during the activation period and a 90% guarantee thereafter. We expect
to receive a Notice to Proceed within 120 days of the contract award and expect to commence
receiving inmates during the third quarter of 2009.
In April 2009, we were awarded a contract for the continued management of ICE detainees at our
905-bed Houston Processing Center. The new agreement which commenced on April 1, 2009, has a base
period of one-year with four one-year renewal options and contains a 750 bed guarantee.
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 $150.0 million of our common stock. Through May 1, 2009, we have purchased 10.7
million shares at a total cost of $125.0 million. As of May 1, 2009, we had 115.2 million shares
outstanding.
Capital Resources
At March 31, 2009, our liquidity was provided by cash on hand of $44.0 million and $119.0 million
available under our revolving credit facility. During the quarter ended March 31, 2009, we
generated $73.0 million in adjusted free cash flow, and as of March 31, 2009, we had net working
capital of $150.6 million. We believe we have the ability to fund the remaining balance of 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 second quarter of 2009 to be in the range of
$0.26 to $0.28 and full year 2009 EPS to be in the range of $1.17 to $1.25, inclusive of start-up
costs. Second quarter EPS is expected to be negatively impacted by approximately $0.02 of start-up
costs associated with the new contract awards at our Adams County, Huerfano County and North
Georgia facilities.
Many states are nearing completion of their fiscal year 2010 budgets, which begin July 1, 2009.
The federal fiscal stimulus bill passed during the first quarter of 2009 provides significant funds
to states over several years, which will assist them in balancing their budgets. However,
uncertainty remains regarding the magnitude of the recession and the potential impacts on state
budgets going forward. The earnings guidance incorporates our best estimate of the range of
potential outcomes related to state budget uncertainties and ramp-up of populations from the state
of California and our recent contract awards. 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 $111.9 million in capital expenditures, consisting
of approximately $58.7 million in prison construction and expansions that have been previously
announced, $40.5 million in maintenance capital expenditures and $12.7 million in information
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CCA First Quarter 2009 Financial Results
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technology. We also expect a 2009 GAAP income tax rate of approximately 38%, with cash taxes
expected to approximate $80.0 million to $85.0 million.
Supplemental Financial Information and Investor Presentations
We have made available on our website supplemental financial information and other data for the
first 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.
Management may meet with investors from time to time during the second quarter of 2009. Written
materials used in the investor presentations will also be available on our website beginning on or
about May 26, 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 first 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 today at 6:00 p.m. eastern time through 11:59 p.m. eastern time on May 14, 2009, by
dialing 888-203-1112, pass code 6903084.
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 86,000 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,
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CCA First Quarter 2009 Financial Results
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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 First 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)
| March 31, | December 31, | |||||||
| 2009 | 2008 | |||||||
ASSETS |
||||||||
Cash and cash equivalents |
$ | 44,048 | $ | 34,077 | ||||
Accounts receivable, net of allowance of $3,642 and $2,689, respectively |
260,419 | 261,101 | ||||||
Deferred tax assets |
14,359 | 16,108 | ||||||
Prepaid expenses and other current assets |
15,834 | 23,472 | ||||||
Current assets of discontinued operations |
864 | 3,541 | ||||||
Total current assets |
335,524 | 338,299 | ||||||
Property and equipment, net |
2,478,612 | 2,478,670 | ||||||
Restricted cash |
6,732 | 6,710 | ||||||
Investment in direct financing lease |
13,120 | 13,414 | ||||||
Goodwill |
13,672 | 13,672 | ||||||
Other assets |
19,621 | 20,455 | ||||||
Non-current assets of discontinued operations |
— | 154 | ||||||
Total assets |
$ | 2,867,281 | $ | 2,871,374 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Accounts payable and accrued expenses |
$ | 170,920 | $ | 189,049 | ||||
Income taxes payable |
11,574 | 450 | ||||||
Current portion of long-term debt |
290 | 290 | ||||||
Current liabilities of discontinued operations |
2,122 | 2,034 | ||||||
Total current liabilities |
184,906 | 191,823 | ||||||
Long-term debt, net of current portion |
1,264,781 | 1,192,632 | ||||||
Deferred tax liabilities |
71,109 | 68,349 | ||||||
Other liabilities |
39,016 | 38,211 | ||||||
Total liabilities |
1,559,812 | 1,491,015 | ||||||
Commitments and contingencies |
||||||||
Common stock - $0.01 par value; 300,000 shares authorized;115,149
and 124,673 shares issued and outstanding at March 31, 2009 and
December 31, 2008, respectively |
1,151 | 1,247 | ||||||
Additional paid-in capital |
1,468,786 | 1,576,177 | ||||||
Retained deficit |
(162,468 | ) | (197,065 | ) | ||||
Total stockholders’ equity |
1,307,469 | 1,380,359 | ||||||
Total liabilities and stockholders’ equity |
$ | 2,867,281 | $ | 2,871,374 | ||||
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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 | ||||||||
| Ended March 31, | ||||||||
| 2009 | 2008 | |||||||
REVENUE: |
||||||||
Management and other |
$ | 403,572 | $ | 378,773 | ||||
Rental |
582 | 638 | ||||||
| 404,154 | 379,411 | |||||||
EXPENSES: |
||||||||
Operating |
284,797 | 268,892 | ||||||
General and administrative |
19,771 | 19,553 | ||||||
Depreciation and amortization |
24,644 | 21,316 | ||||||
| 329,212 | 309,761 | |||||||
OPERATING INCOME |
74,942 | 69,650 | ||||||
OTHER EXPENSES: |
||||||||
Interest expense, net |
17,935 | 13,650 | ||||||
Other expenses |
26 | 94 | ||||||
| 17,961 | 13,744 | |||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
56,981 | 55,906 | ||||||
Income tax expense |
(21,595 | ) | (21,430 | ) | ||||
INCOME FROM CONTINUING OPERATIONS |
35,386 | 34,476 | ||||||
Income (loss) from discontinued operations, net of taxes |
(789 | ) | 522 | |||||
NET INCOME |
$ | 34,597 | $ | 34,998 | ||||
BASIC EARNINGS PER SHARE: |
||||||||
Income from continuing operations |
$ | 0.30 | $ | 0.28 | ||||
Income (loss) from discontinued operations, net of taxes |
(0.01 | ) | — | |||||
Net income |
$ | 0.29 | $ | 0.28 | ||||
DILUTED EARNINGS PER SHARE: |
||||||||
Income from continuing operations |
$ | 0.29 | $ | 0.28 | ||||
Income (loss) from discontinued operations, net of taxes |
— | — | ||||||
Net income |
$ | 0.29 | $ | 0.28 | ||||
RECONCILIATION OF DILUTED SHARES OUTSTANDING |
||||||||
Weighted
average common shares outstanding — basic |
119,797 | 124,024 | ||||||
Effect of dilutive securities: |
||||||||
Stock options and warrants |
611 | 1,857 | ||||||
Restricted stock—based compensation |
149 | 219 | ||||||
Weighted average shares and assumed conversions — diluted |
120,557 | 126,100 | ||||||
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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 Ended | ||||||||
| March 31, | ||||||||
| 2009 | 2008 | |||||||
Income from continuing operations before income taxes |
$ | 56,981 | $ | 55,906 | ||||
Income taxes paid |
(245 | ) | (376 | ) | ||||
Depreciation and amortization |
24,644 | 21,316 | ||||||
Depreciation and amortization for discontinued operations |
4 | 96 | ||||||
Income (loss) from discontinued operations, net of taxes |
(789 | ) | 522 | |||||
Income tax expense (benefit) for discontinued operations |
(481 | ) | 320 | |||||
Stock-based compensation reflected in G&A expenses |
2,325 | 2,020 | ||||||
Amortization of debt costs and other non-cash interest |
894 | 993 | ||||||
Maintenance and technology capital expenditures |
(10,312 | ) | (8,138 | ) | ||||
Adjusted Free Cash Flow |
$ | 73,021 | $ | 72,659 | ||||
CALCULATION OF EBITDA
| For the Three Months Ended | ||||||||
| March 31, | ||||||||
| 2009 | 2008 | |||||||
Net income |
$ | 34,597 | $ | 34,998 | ||||
Interest expense, net |
17,935 | 13,650 | ||||||
Depreciation and amortization |
24,644 | 21,316 | ||||||
Income tax expense |
21,595 | 21,430 | ||||||
Income (loss) from discontinued operations, net of taxes |
789 | (522 | ) | |||||
EBITDA |
$ | 99,560 | $ | 90,872 | ||||
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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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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