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): August 5, 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 August 5, 2009, Corrections Corporation of America, a Maryland corporation (the “Company”), issued a press release announcing its 2009 second 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 August 5, 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 August 5, 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: August 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 August 5, 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
Second Quarter 2009 Financial Results
Second Quarter 2009 Financial Results
Second Quarter EPS of $0.28, or $0.30 Excluding Refinancing Charge
Raises Full-Year 2009 EPS Guidance To a Range of $1.21 to $1.26
Raises Full-Year 2009 EPS Guidance To a Range of $1.21 to $1.26
NASHVILLE, Tenn. — August 5, 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 second quarter ended June 30, 2009.
Financial Review — Second Quarter 2009
| • | Revenues increased 5.7% with increases in inmate populations of 3.4% and average per diem rates of 2.3% | ||
| • | Earnings per diluted share (EPS) of $0.28 | ||
| • | EPS excluding expenses associated with debt refinancing transactions, net of taxes, (Adjusted EPS) of $0.30 | ||
| • | State of California populations increased from 6,647 to 7,884 during the second quarter of 2009 | ||
| • | Awarded an amendment to an existing contract to expand two of our facilities in Georgia to house up to 1,500 additional inmates | ||
| • | Completed offering of $465.0 million aggregate principal amount of new 7.75% senior notes, maturing in June 2017 | ||
| • | Purchased or redeemed our outstanding $450.0 million 7.5% senior notes due in May 2011 |
For the second quarter of 2009, CCA generated net income of $32.6 million, or $0.28 per diluted
share, compared with net income of $37.5 million, or $0.30 per diluted share, for the second
quarter of 2008. Results for the second quarter of 2009 included a charge of $3.8 million, or $0.02
per diluted share after taxes, associated with the debt refinancing transactions further described
below. Excluding the expenses associated with debt refinancing transactions, we generated net
income of $35.0 million, or $0.30 per diluted share, for the second quarter of 2009.
Total revenues for the second quarter of 2009 increased 5.7%, primarily driven by a 2.3% increase
in revenue per compensated man-day combined with a 3.4% increase in average daily inmate
populations. Management revenue from state customers increased 8.2% to $216.8
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10 Burton Hills Boulevard, Nashville, Tennessee 37215, Phone: 615-263-3000
CCA Second Quarter 2009 Financial Results
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million during the
second quarter of 2009 from $200.3 million for the same period in 2008. The growth in state
revenue from the second quarter of 2008 was primarily attributable to a combination of increased
inmate populations and increases in average per diems. Our results reflect increases in inmate
populations from California and Arizona that were partially offset by a reduction in inmate
populations from the states of Minnesota, Washington and New Mexico. Management revenue from
federal customers increased 3.6% to $162.2 million generated during the second quarter of 2009,
compared with $156.5 million generated during the second quarter of 2008, driven by a combination
of higher per diem rates and inmate populations.
Operating income during the second quarter of 2009 increased to $74.9 million compared with $74.0
million for the prior year period. Adjusted EBITDA for the second quarter of 2009 increased to
$100.2 million from $95.9 million during the same period in the prior year. Adjusted free cash
flow decreased for the second quarter of 2009 to $34.6 million compared with $56.4 million during
the prior year period, primarily due to an $18.2 million increase in income taxes paid. Income
taxes paid in 2008 were much lower than 2009 reflecting accelerated tax depreciation provisions
available in 2008 but not in 2009.
Operating results for the second quarter of 2009 also reflect an increase of $3.7 million in
general and administrative expense primarily resulting from $4.1 million of consulting fees
associated with a company-wide initiative to improve operational efficiency.
Our total average daily compensated population increased 3.4% to 77,408 in the second quarter of
2009 from 74,831 in the second quarter of 2008. However, since the end of the first quarter 2008,
approximately 8,600 new beds were placed into service. As a result of the additional capacity,
total portfolio occupancy decreased to 90.5% during the second quarter of 2009 from 97.0% during
the second quarter of 2008. The average number of available beds increased 11.0% to 85,575 during
the second quarter of 2009 from 77,107 during the second quarter of 2008.
As of August 1, 2009, we had approximately 9,400 unoccupied beds available for use at facilities
that had availability of 100 or more beds, including 502 beds at the North Georgia Detention
Center, where renovations to prepare the facility for detainees from the Immigration and Customs
Enforcement (“ICE”) were completed during July 2009. However, this inventory of beds available is
reduced to approximately 6,600 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 and ICE at the North Georgia facility.
Commenting on the financial results, Chief Executive Officer, John Ferguson stated, “We are pleased
with our second quarter financial results. Despite a challenging environment, we were able to
generate earnings ahead of our forecast. Inmate populations at several facilities came in ahead of
expectations as California ramped more quickly and U.S. Marshals populations grew.
During the third quarter we look forward to the commencement of our new contracts with the Bureau
of Prisons at our Adams County Correctional Center and the Immigration and Customs Enforcement at
our North Georgia Detention Center.”
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CCA Second Quarter 2009 Financial Results
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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.
First Six Months of 2009 Compared with First Six Months of 2008
| • | Total revenues increased 6.1% to $816.8 million from $769.8 million | ||
| • | EPS of $0.57 for each period | ||
| • | Adjusted EPS increased 3.5% to $0.59 from $0.57 | ||
| • | Adjusted EBITDA increased 6.9% to $199.7 million from $186.8 million |
For the six months ended June 30 2009, the Company generated net income of $67.2 million, or $0.57
per diluted share, compared with net income of $72.5 million, or $0.57 per diluted share, for the
six months ended June 30, 2008. Excluding the expenses associated with debt refinancing
transactions, net of taxes, during the first six months of 2009, the Company generated net income
of $69.6 million, or $0.59 per diluted share.
Operating income increased $6.2 million to $149.9 million during the first six months of 2009 from
$143.7 million during the same period in the prior year. The improvement in our financial results
for the six months ended June 30, 2009 resulted from a 3.8% increase in our average daily inmate
populations, to 76,951 for the six months ended June 30, 2009 from 74,131 during the six months
ended June 30, 2008. Our financial results were net of an increase in depreciation and amortization
expense of $6.5 million as a result of placing into service approximately 9,300 beds over the past
eighteen months, as well as the aforementioned consulting fees of $4.1 million incurred during the
second quarter of 2009. Also contributing to the improvement in earnings per share for the first
six months of 2009 was a share repurchase program, approved by our Board of Directors in November
of 2008. Through the end of the second quarter of 2009 we purchased 10.7 million shares at a total
cost of $125.0 million.
Refinancing Transactions
On June 3, 2009, we completed the sale and issuance of $465.0 million aggregate principal amount of
7.75% senior notes due 2017. The 7.75% senior notes were issued at a price of 97.116%, resulting
in a yield to maturity of 8.25%. We used the net proceeds from the sale of the 7.75% senior notes
to purchase (through a cash tender offer), redeem, or otherwise acquire our outstanding $450.0
million 7.5% senior notes due 2011, to pay fees and expenses, and for general corporate purposes.
In connection with the refinancing, we incurred a pre-tax charge of $3.8 million, consisting of the
tender premium paid, fees and expenses associated with the tender offer, and the write-off of loan
costs and debt premium associated with the 7.5% senior notes.
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CCA Second Quarter 2009 Financial Results
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Operations Highlights
For the quarters ended June 30, 2009 and 2008, key operating statistics for the continuing
operations of the Company were as follows:
| Quarter Ended June 30, | ||||||||||||
| Metric | 2009 | 2008 | % Change | |||||||||
Average Available Beds |
85,575 | 77,107 | 11.0 | % | ||||||||
Average Compensated Occupancy |
90.5 | % | 97.0 | % | -6.7 | % | ||||||
Total Compensated Man-Days |
7,044,159 | 6,809,624 | 3.4 | % | ||||||||
Average Daily Compensated Population |
77,408 | 74,831 | 3.4 | % | ||||||||
Revenue per Compensated Man-Day |
$ | 58.31 | $ | 57.01 | 2.3 | % | ||||||
Operating Expense per Compensated
Man-Day: |
||||||||||||
Fixed |
30.37 | 29.07 | 4.5 | % | ||||||||
Variable |
10.05 | 10.26 | -2.0 | % | ||||||||
Total |
40.42 | 39.33 | 2.8 | % | ||||||||
Operating Margin per Compensated Man-Day |
$ | 17.89 | $ | 17.68 | 1.2 | % | ||||||
Operating Margin |
30.7 | % | 31.0 | % | -1.0 | % | ||||||
Total operating expenses per compensated man-day increased 2.8% during the second 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 staffing expenses incurred in anticipation of receiving inmates at our Adams
County facility from the BOP and at our La Palma and Tallahatchie facilities from the state of
California. From March 31, 2009 to June 30, 2009 our state of California inmate populations
increased from 6,647 to 7,884. Also impacting the increase in operating expenses were operational
inefficiencies associated with our inventory of available beds.
We expect fixed costs per compensated man-day to continue to be negatively impacted by ramp-up
expenses at our Adams County Correctional Center and the North Georgia Detention Center as we
continue to prepare for the commencement of operations at these facilities.
Business Development Update
In July 2009, CCA was selected for the continued management of the 893-bed Lake City Correctional
Facility in Lake City, Florida. The Department of Management Services for the state of Florida
solicited competitive bids to manage the Lake City facility. The new contract was effective July
31, 2009 and expires June 30, 2012, with an indefinite number of two-year renewal options.
Also in July 2009, we announced that we were awarded an amendment to our existing contracts with
the Georgia Department of Corrections to expand two of our existing facilities by 1,500 beds. The
award satisfied a competitive Request for Proposal of 1,500 beds from the state of Georgia that was
issued in October of 2008. We currently house approximately 3,400 inmates from the state of
Georgia. As a result of the award, we will expand our 1,524-bed Coffee
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CCA Second Quarter 2009 Financial Results
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Correctional Facility by
788 beds and our 1,524-bed Wheeler Correctional Facility by 712 beds. The expansions are estimated
to cost $65.0 million and are currently anticipated to be completed during the third quarter of
2010, at which point we expect to begin receiving the incremental inmates. The amended contract
expires June 30, 2010 and includes twenty-four one-year remaining renewal options. In addition to
the occupancy guarantee on the existing beds at both facilities, the amended contract contains a
90% guarantee on the expansion beds.
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% guarantee of occupancy during the activation period and a 90% guarantee thereafter. In July
2009, we received a Notice to Proceed, the final procedure in the federal contract award process,
from the BOP to begin performance of services at the Adams County facility. As anticipated, we
began receiving inmates on August 3, 2009.
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 ramp through the first quarter of 2010.
Update on California
On Tuesday, August 4, 2009, a panel of three federal judges issued an order requiring the state of
California to develop a plan of action within 45 days for reducing its inmate population to within
137.5% of capacity in the next two years. This targeted occupancy is within the range previously
discussed by the three-judge panel and, if implemented would require that California’s total
current population be reduced by approximately 40,000 inmates. In commenting on the order, the
Secretary of the California Department of Corrections and Rehabilitation stated that the
administration will appeal any cap on inmate populations imposed by the three-judge panel. He also
stated that the use of out-of-state beds is a good partial solution to the overcrowding situation
and that the state may need to expand its use of out of state beds beyond the 8,000 beds currently
under contract.
Liquidity Update
Capital Resources
At June 30, 2009, our liquidity was provided by cash on hand of $73.4 million and $188.0 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. We believe we
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CCA Second Quarter 2009 Financial Results
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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 third quarter of 2009 to be in the range of $0.30 to $0.32 and fourth quarter
of 2009 EPS to be in the range of $0.32 to $0.35, resulting in full year 2009 EPS to be in the
range of $1.21 to $1.26, excluding expenses associated with debt refinancing transactions.
Nearly all of our state customers have finalized their fiscal year 2010 budgets. However,
uncertainty remains around the economic downturn and the potential impacts on state budgets going
forward. 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 $145.1 million in capital expenditures, consisting
of approximately $92.1 million in prison construction and expansions that have been previously
announced, $39.3 million in maintenance capital expenditures and $13.7 million in information
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
second 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 third quarter of 2009. Written
materials used in the investor presentations will also be available on our website beginning on or
about August 21, 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, August 6, 2009, to discuss our second 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
August 6, 2009 through 11:59
p.m. eastern time on August 13, 2009, by dialing 888-203-1112, pass code 3280584.
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CCA Second Quarter 2009 Financial Results
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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 86,500 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
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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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)
| June 30, | December 31, | |||||||
| ASSETS | 2009 | 2008 | ||||||
Cash and cash equivalents |
$ | 73,388 | $ | 34,077 | ||||
Accounts receivable, net of allowance of $2,470 and $2,689, respectively |
249,358 | 261,101 | ||||||
Deferred tax assets |
11,999 | 16,108 | ||||||
Prepaid expenses and other current assets |
35,992 | 23,472 | ||||||
Current assets of discontinued operations |
71 | 3,541 | ||||||
Total current assets |
370,808 | 338,299 | ||||||
Property and equipment, net |
2,476,507 | 2,478,670 | ||||||
Restricted cash |
6,741 | 6,710 | ||||||
Investment in direct financing lease |
12,818 | 13,414 | ||||||
Goodwill |
13,672 | 13,672 | ||||||
Other assets |
28,295 | 20,455 | ||||||
Non-current assets of discontinued operations |
— | 154 | ||||||
Total assets |
$ | 2,908,841 | $ | 2,871,374 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Accounts payable and accrued expenses |
$ | 175,738 | $ | 189,049 | ||||
Income taxes payable |
455 | 450 | ||||||
Current portion of long-term debt |
— | 290 | ||||||
Current liabilities of discontinued operations |
810 | 2,034 | ||||||
Total current liabilities |
177,003 | 191,823 | ||||||
Long-term debt, net of current portion |
1,276,357 | 1,192,632 | ||||||
Deferred tax liabilities |
73,343 | 68,349 | ||||||
Other liabilities |
39,245 | 38,211 | ||||||
Total liabilities |
1,565,948 | 1,491,015 | ||||||
Commitments and contingencies |
||||||||
Common stock - $0.01 par value; 300,000 shares authorized;
115,181 and 124,673 shares issued and outstanding at June 30, 2009 and
December 31, 2008, respectively |
1,152 | 1,247 | ||||||
Additional paid-in capital |
1,471,595 | 1,576,177 | ||||||
Retained deficit |
(129,854 | ) | (197,065 | ) | ||||
Total stockholders’ equity |
1,342,893 | 1,380,359 | ||||||
Total liabilities and stockholders’ equity |
$ | 2,908,841 | $ | 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 | For the Six Months | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
REVENUE: |
||||||||||||||||
Management and other |
$ | 412,246 | $ | 389,710 | $ | 815,818 | $ | 768,483 | ||||||||
Rental |
447 | 638 | 1,029 | 1,276 | ||||||||||||
| 412,693 | 390,348 | 816,847 | 769,759 | |||||||||||||
EXPENSES: |
||||||||||||||||
Operating |
289,283 | 274,704 | 574,080 | 543,596 | ||||||||||||
General and administrative |
23,540 | 19,803 | 43,311 | 39,356 | ||||||||||||
Depreciation and amortization |
24,948 | 21,806 | 49,592 | 43,122 | ||||||||||||
| 337,771 | 316,313 | 666,983 | 626,074 | |||||||||||||
OPERATING INCOME |
74,922 | 74,035 | 149,864 | 143,685 | ||||||||||||
OTHER EXPENSES (INCOME): |
||||||||||||||||
Interest expense, net |
18,661 | 13,934 | 36,596 | 27,584 | ||||||||||||
Expenses associated with debt refinancing transactions |
3,838 | — | 3,838 | — | ||||||||||||
Other (income) expenses |
(317 | ) | (89 | ) | (291 | ) | 5 | |||||||||
| 22,182 | 13,845 | 40,143 | 27,589 | |||||||||||||
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
52,740 | 60,190 | 109,721 | 116,096 | ||||||||||||
Income tax expense |
(20,126 | ) | (22,922 | ) | (41,721 | ) | (44,352 | ) | ||||||||
INCOME FROM CONTINUING OPERATIONS |
32,614 | 37,268 | 68,000 | 71,744 | ||||||||||||
Income (loss) from discontinued operations, net of
taxes |
— | 259 | (789 | ) | 781 | |||||||||||
NET INCOME |
$ | 32,614 | $ | 37,527 | $ | 67,211 | $ | 72,525 | ||||||||
BASIC EARNINGS PER SHARE: |
||||||||||||||||
Income from continuing operations |
$ | 0.28 | $ | 0.30 | $ | 0.58 | $ | 0.58 | ||||||||
Income (loss) from discontinued operations, net of
taxes |
— | — | (0.01 | ) | — | |||||||||||
Net income |
$ | 0.28 | $ | 0.30 | $ | 0.57 | $ | 0.58 | ||||||||
DILUTED EARNINGS PER SHARE: |
||||||||||||||||
Income from continuing operations |
$ | 0.28 | $ | 0.30 | $ | 0.58 | $ | 0.57 | ||||||||
Income (loss) from discontinued operations, net of
taxes |
— | — | (0.01 | ) | — | |||||||||||
Net income |
$ | 0.28 | $ | 0.30 | $ | 0.57 | $ | 0.57 | ||||||||
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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 Six Months | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Income from continuing operations before income taxes |
$ | 52,740 | $ | 60,190 | $ | 109,721 | $ | 116,096 | ||||||||
Expenses associated with debt refinancing transactions |
3,838 | — | 3,838 | — | ||||||||||||
Income tax benefit for debt refinancing transactions |
(1,465 | ) | — | (1,465 | ) | — | ||||||||||
Income taxes paid |
(40,594 | ) | (22,396 | ) | (40,839 | ) | (22,772 | ) | ||||||||
Depreciation and amortization |
24,948 | 21,806 | 49,592 | 43,122 | ||||||||||||
Depreciation and amortization for discontinued operations |
— | 370 | 4 | 466 | ||||||||||||
Income (loss) from discontinued operations, net of taxes |
— | 259 | (789 | ) | 781 | |||||||||||
Income tax expense (benefit) for discontinued operations |
— | 144 | (481 | ) | 464 | |||||||||||
Stock-based compensation reflected in G&A expenses |
2,034 | 2,118 | 4,359 | 4,138 | ||||||||||||
Amortization of debt costs and other non-cash interest |
953 | 967 | 1,847 | 1,960 | ||||||||||||
Maintenance and technology capital expenditures |
(7,877 | ) | (7,054 | ) | (18,189 | ) | (15,192 | ) | ||||||||
Adjusted Free Cash Flow |
$ | 34,577 | $ | 56,404 | $ | 107,598 | $ | 129,063 | ||||||||
CALCULATION OF ADJUSTED EBITDA
| For the Three Months | For the Six Months | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Net income |
$ | 32,614 | $ | 37,527 | $ | 67,211 | $ | 72,525 | ||||||||
Interest expense, net |
18,661 | 13,934 | 36,596 | 27,584 | ||||||||||||
Depreciation and amortization |
24,948 | 21,806 | 49,592 | 43,122 | ||||||||||||
Income tax expense |
20,126 | 22,922 | 41,721 | 44,352 | ||||||||||||
(Income) loss from discontinued operations, net of taxes |
— | (259 | ) | 789 | (781 | ) | ||||||||||
EBITDA |
96,349 | 95,930 | 195,909 | 186,802 | ||||||||||||
Expenses associated with debt refinancing transactions |
3,838 | — | 3,838 | — | ||||||||||||
ADJUSTED EBITDA |
$ | 100,187 | $ | 95,930 | $ | 199,747 | $ | 186,802 | ||||||||
-more-
CCA Second Quarter 2009 Financial Results
Page 11
Page 11
CALCULATION OF ADJUSTED DILUTED EARNINGS PER SHARE
| For the Three Months | For the Six Months | |||||||||||||||
| Ended June 30, | Ended June 30, | |||||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
Net income |
$ | 32,614 | $ | 37,527 | $ | 67,211 | $ | 72,525 | ||||||||
Special Items: |
||||||||||||||||
Expenses associated with debt refinancing transactions |
3,838 | — | 3,838 | — | ||||||||||||
Income tax benefit for special items |
(1,465 | ) | — | (1,465 | ) | — | ||||||||||
Diluted adjusted net income |
$ | 34,987 | $ | 37,527 | $ | 69,584 | $ | 72,525 | ||||||||
Weighted average common shares outstanding — basic |
114,661 | 124,376 | 117,215 | 124,200 | ||||||||||||
Effect of dilutive securities: |
||||||||||||||||
Stock options and warrants |
847 | 1,713 | 729 | 1,785 | ||||||||||||
Restricted
stock-based compensation |
179 | 169 | 164 | 194 | ||||||||||||
Weighted average shares and assumed conversions — diluted |
115,687 | 126,258 | 118,108 | 126,179 | ||||||||||||
Adjusted Diluted Earnings Per Share |
$ | 0.30 | $ | 0.30 | $ | 0.59 | $ | 0.57 | ||||||||
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 charges 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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