UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 2, 2016 (October 28, 2016)
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):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
On November 2, 2016, Corrections Corporation of America, a Maryland corporation (the “Company”), issued a press release announcing its 2016 third quarter financial results. A copy of the release is furnished as a part of this Current Report as Exhibit 99.1 and is incorporated herein in its entirety by 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.
Item 7.01. Regulation FD Disclosure.
On October 28, 2016, the Company issued a press release announcing its intent to change the name of the Company from “Corrections Corporation of America” to “CoreCivic, Inc.”. A copy of the release is furnished as a part of this Current Report as Exhibit 99.2 and is incorporated herein in its entirety by reference.
The information furnished pursuant to Items 2.02 and 7.01 of this 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 Items 2.02 and 7.01. 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 the date made and may change thereafter.
Item 9.01. Financial Statements and Exhibits.
(d) The following exhibits are furnished as part of this Current Report:
Exhibit 99.1 – Press Release dated November 2, 2016
Exhibit 99.2 – Press Release dated October 28, 2016
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| Date: November 2, 2016 | CORRECTIONS CORPORATION OF AMERICA | |||||
| By: | /s/ David M. Garfinkle | |||||
| David M. Garfinkle Executive Vice President and Chief Financial Officer | ||||||
EXHIBIT INDEX
| Exhibit |
Description | |
| 99.1 | Press Release dated November 2, 2016 | |
| 99.2 | Press Release dated October 28, 2016 | |
Exhibit 99.1
News Release
|
|
| Contact: |
Investors and Analysts: Cameron Hopewell, CCA at (615)263-3024 | |
| Financial Media: David Gutierrez, Dresner Corporate Services at (312)780-7204 |
CCA REPORTS THIRD QUARTER 2016 FINANCIAL RESULTS
INCREASES FULL YEAR 2016 & 2017 FINANCIAL GUIDANCE
NASHVILLE, Tenn. – November 2, 2016 – Corrections Corporation of America (NYSE: CXW) (the “Company” or “CCA”), which will be renamed “CoreCivic” for financial and public reporting purposes later in 2016 consistent with its announcement on October 28, 2016 to rebrand and rename the corporate enterprise, today published its financial results for the third quarter of 2016.
Third Quarter 2016 Highlights
| • | Revenue of $474.9 million increased 3.3% |
| • | Diluted EPS of $0.47 increased 9.3% |
| • | Adjusted Diluted EPS of $0.49 increased 8.9% |
| • | Normalized Funds From Operations per diluted share of $0.69 increased 7.8% |
“I am very proud of the focus our team has maintained in delivering solid third quarter results while securing an important contract extension with Immigration and Customs Enforcement (“ICE”) at our South Texas Family Residential Center, and in executing a new contract to address an emergent need of ICE. We have worked diligently to provide dependable, professional service to our government partners,” said Damon Hininger, chief executive officer.
Hininger continued, “Solving the tough challenges facing government is at the core of our business, and the recently announced contract award with ICE at our 1,129-bed Cibola County Corrections Center is another great example of how we provide flexible, cost-effective solutions when our partners face an emergent need. The CoreCivic brand, announced in October, more appropriately reflects the range of solutions we can provide and the deep sense of service we feel in delivering for our government partners, providing us with a platform to continue to grow over the long-term where our partners want and need solutions.”
10 Burton Hills Boulevard, Nashville, Tennessee 37215, Phone: 615-263-3000
Third Quarter 2016 Financial Results
Page 2
Third Quarter 2016 Results
Total revenue for the third quarter of 2016 was $474.9 million compared to $460.0 million in the third quarter of 2015. The increase in revenue was primarily attributable to the acquisition of 23 residential reentry facilities from the beginning of the third quarter of 2015 through the third quarter of 2016, and the activation of the newly constructed Trousdale Turner Correctional Center in the first quarter of 2016. Total revenue also increased due to higher average daily populations from ICE across multiple facilities in our owned and managed portfolio, primarily in Arizona and at our new Otay Mesa Detention Center in California. These increases in revenue were partially offset by a decline in California inmates held in our out-of-state facilities and the expiration of our managed-only contract with the state of Louisiana at the state-owned Winn Correctional Facility effective September 30, 2015.
Net income generated in the third quarter of 2016 totaled $55.3 million, or $0.47 per diluted share, compared with $50.7 million, or $0.43 per diluted share, in the third quarter of 2015. Adjusted for special items, net income in the third quarter of 2016 was $57.2 million, or $0.49 per diluted share (Adjusted Diluted EPS), compared with $53.0 million, or $0.45 per diluted share, in the third quarter of 2015. Special items in the third quarter of 2016 included corporate restructuring charges of $4.0 million, expenses associated with mergers and acquisitions of $0.1 million, and a $2.0 million gain on settlement of contingent consideration. The gain on settlement of contingent consideration, which was included in consolidated revenue, but reflected as a non-recurring special item excluded from our Adjusted and Normalized results, occurred upon the expiration of the period by which certain utilization milestones were to be achieved in connection with the acquisition of Avalon Correctional Services. Special items in the third quarter of 2015 included debt refinancing expenses and expenses associated with mergers and acquisitions, primarily related to the acquisition of Avalon.
Funds From Operations, or FFO, was $79.0 million, or $0.67 per diluted share, during the third quarter of 2016, compared with $73.3 million, or $0.62 per diluted share, during the third quarter of 2015. Normalized FFO was $80.9 million, or $0.69 per diluted share, during the third quarter of 2016, compared with $75.6 million, or $0.64 per diluted share, during the third quarter of 2015.
EBITDA was $116.8 million during the third quarter of 2016, compared with $106.3 million during the third quarter of 2015. Adjusted EBITDA was $105.7 million in the third quarter of 2016, compared with $94.8 million during the third quarter of 2015.
Adjusted net income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO and their corresponding per share amounts, are measures calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles (GAAP). 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 measures.
Third Quarter 2016 Financial Results
Page 3
Business Development Update
Contract Award from ICE at the Cibola County Corrections Center. On October 31, 2016, we announced a new contract award to house up to 1,116 ICE detainees at our Cibola County Corrections Center in Milan, New Mexico. The contract contains an initial term of five years, with renewal options upon mutual agreement. CCA had previously housed inmates from the BOP at the Cibola County Corrections Center under a separate contract that expired on October 30, 2016.
South Texas Family Residential Center Contract Amendment and Extension. On October 17, 2016, we announced that ICE amended and extended its Intergovernmental Service Agreement (“IGSA”) with the City of Eloy, Arizona, for CCA’s leased and operated 2,400-bed South Texas Family Residential Center. The updated agreement provides for a new, lower fixed monthly payment commencing in November 2016, with a new term extending through September 2021. Concurrently, CCA and the third-party lessor of the South Texas Family Residential Center modified the lease agreement to reflect a reduced monthly lease expense effective in November 2016, with a new term concurrent with the IGSA.
Trousdale Turner Correctional Center Opening Update. Pursuant to an agreement with Trousdale County, Tennessee, CCA agreed to finance, design, construct, and operate a 2,552-bed facility to meet the responsibilities of a separate IGSA between Trousdale County and the state of Tennessee regarding correctional services. Construction of the 2,552-bed Trousdale Turner Correctional Center was completed during the fourth quarter of 2015 at a total cost of approximately $144.0 million. In January 2016, CCA began receiving inmates from the state of Tennessee. As of September 30, 2016, the ramp was completed and CCA housed approximately 2,500 inmates at the Trousdale Turner Correctional Center.
Red Rock Correctional Center Expansion Update. During the fourth quarter of 2015, CCA entered into a new contract with the state of Arizona to house up to an additional 1,000 state inmates at our 1,596-bed Red Rock Correctional Center. We previously provided housing for approximately 1,000 inmates at the Red Rock facility under a multi-year contract that commenced in 2014. Construction to expand the facility to 2,024 beds and to add additional space for inmate reentry programming is ongoing. The cost of the expansion is estimated to range from $37.0 million to $38.0 million, including $30.5 million invested through September 30, 2016. Construction is expected to be completed late in the fourth quarter of 2016, although we began receiving inmates under the new contract during July 2016. As of September 30, 2016, CCA housed approximately 1,400 inmates at the Red Rock Correctional Center.
2016 and 2017 Guidance
Based on our financial performance through the first nine months of the fiscal year and current business conditions, we have provided the following updated financial guidance for the fourth quarter 2016 and for the full year 2016 and 2017:
Third Quarter 2016 Financial Results
Page 4
| Fourth Quarter 2016 |
Full Year 2016 |
Full Year 2017 | ||||
| • Diluted EPS |
$0.42 to $0.42 | $1.76 to $1.77 | $1.38 to $1.49 | |||
| • Adjusted Diluted EPS |
$0.42 to $0.43 | $1.80 to $1.81 | $1.40 to $1.50 | |||
| • FFO per diluted share |
$0.61 to $0.62 | $2.56 to $2.57 | $2.15 to $2.25 | |||
| • Normalized FFO per diluted share |
$0.61 to $0.62 | $2.59 to $2.60 | $2.16 to $2.27 |
During 2016, we expect to invest approximately $104.0 million to $114.0 million in capital expenditures, consisting of approximately $48.0 million to $53.0 million in on-going prison construction and expenditures related to potential land acquisitions; approximately $27.0 million in maintenance capital expenditures on real estate assets; and approximately $29.0 million to $34.0 million for capital expenditures on other assets and information technology.
Supplemental Financial Information and Investor Presentations
We have made available on our website supplemental financial information and other data for the third quarter 2016. 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.cca.com under “Financial Reports” of the Investors section.
Management may meet with investors from time to time during the fourth quarter of 2016. Written materials used in the investor presentations will also be available on our website beginning on or about November 10, 2016. Interested parties may access this information through our website at www.cca.com under “Webcasts” of the Investors 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) on Thursday, November 3, 2016, to discuss our third quarter 2016 financial results and future outlook. To listen to this discussion, please access “Presentations, Webcasts and Events” of the Investors section at www.cca.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 1:00 p.m. Central Time (2:00 p.m. Eastern Time) on November 3, 2016, through 1:00 p.m. Central Time (2:00 p.m. Eastern Time) on November 11, 2016. To access the telephonic replay, dial 888-203-1112 in the U.S. and Canada. International callers may dial +1 719-457-0820 and enter passcode 3587698.
About the Company
The Company is a diversified government solutions company with the scale and experience needed to solve tough government challenges in cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through high-quality corrections and detention management, innovative and cost-saving government real estate
Third Quarter 2016 Financial Results
Page 5
solutions, and a growing network of residential reentry centers to help address America’s recidivism crisis. We are a publicly traded real estate investment trust (REIT) and the nation’s largest owner of partnership correctional, detention and residential reentry facilities. The Company has been a flexible and dependable partner for government for more than 30 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good. Learn more at http://www.corecivic.com/.
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 within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and 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 contract renewals and renegotiations, per diem rates, occupancy, and overall utilization; (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, detention, and residential reentry facility management contracts, including, but not limited to, sufficient governmental appropriations, contract compliance 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, detention, and residential reentry facilities and the commencement of new management contracts, as well as our ability to utilize current available beds and new capacity as new development and expansion projects are completed; (v) changes in government policy regarding the utilization of the private sector for corrections and detention capacity and our services by the U.S. Department of Justice and the Department of Homeland Security; (vi) changes in government policy and in legislation and regulation of corrections and detention contractors that affect our business, including but not limited to, California’s utilization of out-of-state contracted correctional capacity and the continued utilization of the South Texas Family Residential Center by U.S. Immigration and Customs Enforcement under terms of the current contract, and the impact of any changes to immigration reform and sentencing laws (Our company does not, under longstanding policy, lobby for or against policies or legislation that would determine the basis for, or duration of, an individual’s incarceration or detention.); (vii) our ability to successfully integrate operations of our acquisitions and realize projected returns resulting therefrom; (viii) the ability to attract and retain key personnel; (ix) escalation in salaries, wages, incentives and the costs of providing employee health care; (x) our ability to meet and maintain qualification for taxation as a REIT; (xi) the availability of debt and equity financing on terms that are favorable to us; and (xii) increases in costs to construct or expand correctional and other 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
Third Quarter 2016 Financial Results
Page 6
delays and increased costs. Other factors that could cause operating and financial results to differ are described in the filings we make from time to time 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 or the information contained herein by any third-parties, including, but not limited to, any wire or internet services.
###
Third Quarter 2016 Financial Results
Page 7
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| September 30, 2016 |
December 31, 2015 |
|||||||
| ASSETS | ||||||||
| Cash and cash equivalents |
$ | 42,731 | $ | 65,291 | ||||
| Restricted cash |
— | 877 | ||||||
| Accounts receivable, net of allowance of $414 and $459, respectively |
222,420 | 234,456 | ||||||
| Prepaid expenses and other current assets |
32,742 | 41,434 | ||||||
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|
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|
|||||
| Total current assets |
297,893 | 342,058 | ||||||
| Property and equipment, net of accumulated depreciation of $1,319,452 and $1,193,723, respectively |
2,850,219 | 2,883,060 | ||||||
| Restricted cash |
218 | 131 | ||||||
| Investment in direct financing lease |
— | 684 | ||||||
| Goodwill |
38,386 | 35,557 | ||||||
| Non-current deferred tax assets |
11,973 | 9,824 | ||||||
| Other assets |
86,823 | 84,704 | ||||||
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|
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| Total assets |
$ | 3,285,512 | $ | 3,356,018 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| Accounts payable and accrued expenses |
$ | 329,446 | $ | 317,675 | ||||
| Income taxes payable |
1,627 | 1,920 | ||||||
| Current portion of long-term debt |
8,750 | 5,000 | ||||||
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| Total current liabilities |
339,823 | 324,595 | ||||||
| Long-term debt, net |
1,420,155 | 1,447,077 | ||||||
| Deferred revenue |
36,257 | 63,289 | ||||||
| Other liabilities |
45,084 | 58,309 | ||||||
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| Total liabilities |
1,841,319 | 1,893,270 | ||||||
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| Commitments and contingencies |
||||||||
| Preferred stock — $0.01 par value; 50,000 shares authorized; none issued and outstanding at September 30, 2016 and December 31, 2015, respectively |
— | — | ||||||
| Common stock — $0.01 par value; 300,000 shares authorized; 117,551 and 117,232 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively |
1,176 | 1,172 | ||||||
| Additional paid-in capital |
1,776,504 | 1,762,394 | ||||||
| Accumulated deficit |
(333,487 | ) | (300,818 | ) | ||||
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| Total stockholders’ equity |
1,444,193 | 1,462,748 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 3,285,512 | $ | 3,356,018 | ||||
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Third Quarter 2016 Financial Results
Page 8
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| REVENUES |
$ | 474,935 | $ | 459,957 | $ | 1,385,651 | $ | 1,345,252 | ||||||||
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| EXPENSES: |
||||||||||||||||
| Operating |
326,349 | 326,500 | 956,713 | 945,197 | ||||||||||||
| General and administrative |
27,699 | 26,791 | 81,543 | 76,770 | ||||||||||||
| Depreciation and amortization |
42,924 | 41,230 | 127,328 | 108,315 | ||||||||||||
| Restructuring charges |
4,010 | — | 4,010 | — | ||||||||||||
| Asset impairments |
— | — | — | 955 | ||||||||||||
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| 400,982 | 394,521 | 1,169,594 | 1,131,237 | |||||||||||||
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| OPERATING INCOME |
73,953 | 65,436 | 216,057 | 214,015 | ||||||||||||
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| OTHER (INCOME) EXPENSE: |
||||||||||||||||
| Interest expense, net |
16,937 | 11,764 | 51,277 | 33,715 | ||||||||||||
| Expenses associated with debt refinancing transactions |
— | 701 | — | 701 | ||||||||||||
| Other (income) expense |
54 | (363 | ) | 103 | (353 | ) | ||||||||||
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| 16,991 | 12,102 | 51,380 | 34,063 | |||||||||||||
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| INCOME BEFORE INCOME TAXES |
56,962 | 53,334 | 164,677 | 179,952 | ||||||||||||
| Income tax expense |
(1,622 | ) | (2,658 | ) | (5,447 | ) | (6,696 | ) | ||||||||
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| NET INCOME |
$ | 55,340 | $ | 50,676 | $ | 159,230 | $ | 173,256 | ||||||||
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| BASIC EARNINGS PER SHARE |
$ | 0.47 | $ | 0.43 | $ | 1.36 | $ | 1.48 | ||||||||
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| DILUTED EARNINGS PER SHARE |
$ | 0.47 | $ | 0.43 | $ | 1.35 | $ | 1.47 | ||||||||
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| DIVIDENDS DECLARED PER SHARE |
$ | 0.54 | $ | 0.54 | $ | 1.62 | $ | 1.62 | ||||||||
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Third Quarter 2016 Financial Results
Page 9
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EPS
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income |
$ | 55,340 | $ | 50,676 | $ | 159,230 | $ | 173,256 | ||||||||
| Special items: |
||||||||||||||||
| Expenses associated with debt refinancing transactions |
— | 701 | — | 701 | ||||||||||||
| Expenses associated with mergers and acquisitions |
110 | 1,674 | 1,570 | 1,674 | ||||||||||||
| Gain on settlement of contingent consideration |
(2,000 | ) | — | (2,000 | ) | — | ||||||||||
| Restructuring charges |
4,010 | — | 4,010 | — | ||||||||||||
| Asset impairments |
— | — | — | 955 | ||||||||||||
| Income tax benefit for special items |
(215 | ) | (24 | ) | (215 | ) | (24 | ) | ||||||||
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| Adjusted net income |
$ | 57,245 | $ | 53,027 | $ | 162,595 | $ | 176,562 | ||||||||
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| Weighted average common shares outstanding – basic |
117,443 | 117,066 | 117,360 | 116,889 | ||||||||||||
| Effect of dilutive securities: |
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| Stock options |
207 | 559 | 384 | 716 | ||||||||||||
| Restricted stock-based compensation |
44 | 149 | 80 | 181 | ||||||||||||
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| Weighted average shares and assumed conversions—diluted |
117,694 | 117,774 | 117,824 | 117,786 | ||||||||||||
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| Adjusted Diluted Earnings Per Share |
$ | 0.49 | $ | 0.45 | $ | 1.38 | $ | 1.50 | ||||||||
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Third Quarter 2016 Financial Results
Page 10
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CALCULATION OF FUNDS FROM OPERATIONS AND NORMALIZED FUNDS FROM OPERATIONS
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income |
$ | 55,340 | $ | 50,676 | $ | 159,230 | $ | 173,256 | ||||||||
| Depreciation of real estate assets |
23,684 | 22,577 | 70,409 | 66,024 | ||||||||||||
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| Funds From Operations |
$ | 79,024 | $ | 73,253 | $ | 229,639 | $ | 239,280 | ||||||||
| Expenses associated with debt refinancing transactions |
— | 701 | — | 701 | ||||||||||||
| Expenses associated with mergers and acquisitions |
110 | 1,674 | 1,570 | 1,674 | ||||||||||||
| Gain on settlement of contingent consideration |
(2,000 | ) | — | (2,000 | ) | — | ||||||||||
| Restructuring charges |
4,010 | — | 4,010 | — | ||||||||||||
| Goodwill and other impairments |
— | — | — | 955 | ||||||||||||
| Income tax benefit for special items |
(215 | ) | (24 | ) | (215 | ) | (24 | ) | ||||||||
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| Normalized Funds From Operations |
$ | 80,929 | $ | 75,604 | $ | 233,004 | $ | 242,586 | ||||||||
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| Funds From Operations Per Diluted Share |
$ | 0.67 | $ | 0.62 | $ | 1.95 | $ | 2.03 | ||||||||
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| Normalized Funds From Operations Per Diluted Share |
$ | 0.69 | $ | 0.64 | $ | 1.98 | $ | 2.06 | ||||||||
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CALCULATION OF EBITDA AND ADJUSTED EBITDA
| For the Three Months Ended September 30, |
For the Nine Months Ended September 30, |
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| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income |
$ | 55,340 | $ | 50,676 | $ | 159,230 | $ | 173,256 | ||||||||
| Interest expense, net |
16,937 | 11,764 | 51,277 | 33,715 | ||||||||||||
| Depreciation and amortization |
42,924 | 41,230 | 127,328 | 108,315 | ||||||||||||
| Income tax expense |
1,622 | 2,658 | 5,447 | 6,696 | ||||||||||||
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| EBITDA |
$ | 116,823 | $ | 106,328 | $ | 343,282 | $ | 321,982 | ||||||||
| Expenses associated with debt refinancing transactions |
— | 701 | — | 701 | ||||||||||||
| Expenses associated with mergers and acquisitions |
110 | 1,674 | 1,570 | 1,674 | ||||||||||||
| Gain on settlement of contingent consideration |
(2,000 | ) | — | (2,000 | ) | — | ||||||||||
| Restructuring charges |
4,010 | — | 4,010 | — | ||||||||||||
| Depreciation expense associated with STFRC lease |
(10,706 | ) | (10,706 | ) | (31,886 | ) | (19,181 | ) | ||||||||
| Interest expense associated with STFRC lease |
(2,500 | ) | (3,203 | ) | (8,076 | ) | (5,420 | ) | ||||||||
| Asset impairments |
— | — | — | 955 | ||||||||||||
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| Adjusted EBITDA |
$ | 105,737 | $ | 94,794 | $ | 306,900 | $ | 300,711 | ||||||||
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Third Quarter 2016 Financial Results
Page 11
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CALCULATION OF ADJUSTED NET INCOME, NORMALIZED FUNDS FROM OPERATIONS & ADJUSTED EBITDA GUIDANCE
| For the Quarter Ending December 31, 2016 |
For the Year Ending December 31, 2016 |
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| Low End of Guidance |
High End of Guidance |
Low End of Guidance |
High End of Guidance |
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| Net income |
$ | 49,000 | $ | 50,000 | $ | 208,205 | $ | 209,205 | ||||||||
| Restructuring charges |
— | — | 4,010 | 4,010 | ||||||||||||
| Gain on settlement of contingent consideration |
— | — | (2,000 | ) | (2,000 | ) | ||||||||||
| Expense associated with mergers and acquisitions |
400 | 400 | 2,000 | 2,000 | ||||||||||||
| Income tax benefit for special items |
— | — | (215 | ) | (215 | ) | ||||||||||
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| Adjusted net income |
$ | 49,400 | $ | 50,400 | $ | 212,000 | $ | 213,000 | ||||||||
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| Net income |
$ | 49,000 | $ | 50,000 | $ | 208,205 | $ | 209,205 | ||||||||
| Depreciation of real estate assets |
23,000 | 23,000 | 93,500 | 93,500 | ||||||||||||
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| Funds From Operations |
$ | 72,000 | $ | 73,000 | $ | 301,705 | $ | 302,705 | ||||||||
| Restructuring charges |
— | — | 4,010 | 4,010 | ||||||||||||
| Gain on settlement of contingent consideration |
— | — | (2,000 | ) | (2,000 | ) | ||||||||||
| Expenses associated with mergers and acquisitions |
400 | 400 | 2,000 | 2,000 | ||||||||||||
| Income tax benefit for special items |
— | — | (215 | ) | (215 | ) | ||||||||||
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| Normalized Funds From Operations |
$ | 72,400 | $ | 73,400 | $ | 305,500 | $ | 306,500 | ||||||||
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| Diluted EPS |
$ | 0.42 | $ | 0.42 | $ | 1.76 | $ | 1.77 | ||||||||
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| Adjusted EPS per diluted share |
$ | 0.42 | $ | 0.43 | $ | 1.80 | $ | 1.81 | ||||||||
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| FFO per diluted share |
$ | 0.61 | $ | 0.62 | $ | 2.56 | $ | 2.57 | ||||||||
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| Normalized FFO per diluted share |
$ | 0.61 | $ | 0.62 | $ | 2.59 | $ | 2.60 | ||||||||
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| Net income |
$ | 49,000 | $ | 50,000 | $ | 208,205 | $ | 209,205 | ||||||||
| Interest expense |
16,000 | 16,500 | 67,000 | 67,500 | ||||||||||||
| Depreciation and amortization |
40,000 | 40,000 | 167,500 | 167,500 | ||||||||||||
| Income tax expense |
3,500 | 3,500 | 8,785 | 9,285 | ||||||||||||
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| EBITDA |
$ | 108,500 | $ | 110,000 | $ | 451,490 | $ | 453,490 | ||||||||
| Restructuring charges |
— | — | 4,010 | 4,010 | ||||||||||||
| Gain on settlement of contingent considerations |
— | — | (2,000 | ) | (2,000 | ) | ||||||||||
| Expenses associated with mergers and acquisitions |
400 | 400 | 2,000 | 2,000 | ||||||||||||
| Depreciation associated with STFRC lease |
(6,700 | ) | (6,700 | ) | (38,600 | ) | (38,600 | ) | ||||||||
| Interest expense associated with STFRC lease |
(1,800 | ) | (1,800 | ) | (9,900 | ) | (9,900 | ) | ||||||||
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| Adjusted EBITDA |
$ | 100,400 | $ | 101,900 | $ | 407,000 | $ | 409,000 | ||||||||
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Third Quarter 2016 Financial Results
Page 12
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CALCULATION OF ADJUSTED NET INCOME, NORMALIZED FUNDS FROM OPERATIONS & ADJUSTED EBITDA GUIDANCE
| For the Year Ending December 31, 2017 |
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| Low End of Guidance |
High End of Guidance |
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| Net income |
$ | 164,000 | $ | 176,000 | ||||
| Expenses associated with mergers and acquisitions |
2,000 | 2,000 | ||||||
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| Adjusted net income |
$ | 166,000 | $ | 178,000 | ||||
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| Net income |
$ | 164,000 | $ | 176,000 | ||||
| Depreciation of real estate assets |
90,500 | 90,500 | ||||||
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| Funds From Operations |
$ | 254,500 | $ | 266,500 | ||||
| Expenses associated with mergers and acquisitions |
2,000 | 2,000 | ||||||
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| Normalized Funds From Operations |
$ | 256,500 | $ | 268,500 | ||||
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| Diluted EPS |
$ | 1.38 | $ | 1.49 | ||||
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| Adjusted EPS per diluted share |
$ | 1.40 | $ | 1.50 | ||||
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| FFO per diluted share |
$ | 2.15 | $ | 2.25 | ||||
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| Normalized FFO per diluted share |
$ | 2.16 | $ | 2.27 | ||||
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| Net income |
$ | 164,000 | $ | 176,000 | ||||
| Interest expense |
64,000 | 67,000 | ||||||
| Depreciation and amortization |
148,000 | 148,000 | ||||||
| Income tax expense |
13,500 | 14,500 | ||||||
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| EBITDA |
$ | 389,500 | $ | 405,500 | ||||
| Expenses associated with mergers and acquisitions |
2,000 | 2,000 | ||||||
| Depreciation associated with STFRC lease |
(16,600 | ) | (16,600 | ) | ||||
| Interest expense associated with STFRC lease |
(6,400 | ) | (6,400 | ) | ||||
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| Adjusted EBITDA |
$ | 368,500 | $ | 384,500 | ||||
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NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION
Adjusted Net Income, EBITDA, Adjusted EBITDA, Funds From Operations (FFO), and Normalized FFO, and, where appropriate, their corresponding per share metrics are non-GAAP financial measures. CCA 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. CCA believes that it is useful to provide investors, lenders and security analysts disclosures of its results of operations on the same basis that is used by management. FFO, in particular, is a widely accepted non-GAAP supplemental measure of REIT performance, grounded in the standards for FFO established by the National Association of Real Estate Investment Trusts (NAREIT).
Third Quarter 2016 Financial Results
Page 13
NAREIT defines FFO as net income computed in accordance with generally accepted accounting principles, excluding gains (or losses) from sales of property and extraordinary items, plus depreciation and amortization of real estate and impairment of depreciable real estate. EBITDA, Adjusted EBITDA, and Normalized FFO are useful as supplemental measures of performance of the Company’s corrections facilities because they don’t take into account depreciation and amortization, or with respect to EBITDA, the impact of the Company’s tax provisions and 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 properties, management believes that assessing performance of the Company’s properties without the impact of depreciation or amortization is useful. However, a portion of the rental payments for the South Texas Family Residential Center is classified as depreciation and interest expense for financial reporting purposes. Adjusted EBITDA includes such depreciation and interest expense in order to more properly reflect the cash flows associated with this lease. CCA may make adjustments to FFO 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. Normalized FFO excludes the effects of such items. CCA calculates Adjusted Net Income by adding to GAAP Net Income expenses associated with the Company’s debt refinancing, mergers and acquisitions (M&A) activity, restructuring charges, and certain impairments that the Company believes are unusual or nonrecurring to provide an alternative measure of comparing operating performance for the periods presented. Even though expenses associated with mergers and acquisitions may be recurring, the magnitude and timing fluctuate based on the timing and scope of M&A activity, and therefore, such expenses, which are not a necessary component of the ongoing operations of the Company, may not be comparable from period to period.
Other companies may calculate Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO differently than the Company does, or adjust for other items, and therefore comparability may be limited. Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO and their corresponding per share measures 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.
###
Exhibit 99.2
Corrections Corporation of America Rebrands as CoreCivic
Marks Culmination of Multi-Year Strategy to Transform
into Diversified Government Solutions Company
NASHVILLE, Tenn., Oct. 28, 2016 — Corrections Corporation of America (NYSE:CXW) (the “Company”) today announced that it is rebranding its corporate enterprise as CoreCivic. Under the CoreCivic brand, the Company will provide three distinct business offerings: CoreCivic Safety, a national leader in high quality corrections and detention management; CoreCivic Properties, a wide range of innovative, cost-saving government real estate solutions; and, CoreCivic Community, a growing network of residential reentry centers to help tackle America’s recidivism crisis.
“Rebranding as CoreCivic is the culmination of a multi-year strategy to transform our business from largely corrections and detention services to a wider range of government solutions,” said Damon T. Hininger, the Company’s President and Chief Executive Officer. “The CoreCivic name speaks to our ability to solve the tough challenges facing government at all levels and to the deep sense of service that we feel every day to help people.”
The CoreCivic Name: Solving Tough Government Problems; a Strong Sense of Service
Over the past several years, Hininger and his executive management team have spearheaded an aggressive strategy to diversify the Company’s business. This has included converting to a Real Estate Investment Trust (REIT), making unprecedented public commitments to expand reentry programs at correctional facilities, launching a comprehensive real estate solutions business, and investing nearly $250 million to acquire and build an expanding network of residential reentry and community corrections facilities.
“We’ve listened closely to our employees, partners and investors, and there’s a strong recognition and appreciation for what we’ve built over more than 30 years,” said Hininger. “At the same time, we know we can do even more to serve the needs of our government partners and the greater public good. CoreCivic reflects the company we are today and provides us with a platform to continue to grow where our partners want and need solutions.”
The Company’s specific rebranding effort began when it decided to launch a new, dedicated real estate solutions business in mid-2015. As the Company
continued to acquire residential reentry businesses, the effort rapidly evolved into considering an enterprise-wide name change. After an intense research, brand strategy and creative process, the Board of Directors authorized changing the Company’s charter to reflect the CoreCivic name on August 11, 2016, which the Company intends to be legally effected by year-end. The name change will not affect the rights of the Company’s stockholders and the Company’s common stock ticker symbol on the New York Stock Exchange will remain unchanged.
“The management team has successfully executed a well-planned strategy to diversify the business, and rebranding became a natural evolution of that process,” said Mark A. Emkes, Non-Executive Chairman of the Company’s Board of Directors. “We’re excited about the potential for the CoreCivic brand to accelerate the Company’s growth and value-creation in new areas. We also believe the new brand will help galvanize our efforts to play an even bigger role in making a positive difference in our communities and individual lives.”
CoreCivic’s Visual Identity: Innovation, Public Service and Professionalism
As part of the rebranding, the Company has also adopted a new visual identity. This includes a bolder, sleeker and more modern typeface, as well as a color palette intended to evoke attributes such as safety, strength, passion, stability, integrity and seriousness. The brand’s symbol, a 13-stripe American flag stylized to also represent a building, speaks to the Company’s commitment to public service, the professionalism of its employees and its expanding government real estate focus. There’s also a nod to the Company’s heritage with the right side of the symbol angled at 19.83°, representing the year that the Company was founded, and the left side of the symbol angled at 20.16° to mark the year the Company rebranded as CoreCivic.
“Our government partners value the dependability and professionalism of our people, and our people share a deep sense of service with our government partners,” said Executive Vice President and Chief Development Officer Tony Grande. “Our new name and identity speak emotionally to our strengths while expanding the scope of solutions that we can offer our partners. We’re excited about the work ahead to build and realize our new brand’s full potential.”
In the coming months, the Company will begin converting its facilities and other assets to the new visual identity, which will amount to a modest expense spread out over several quarters. The Company does not anticipate any impact of the rebranding on its contractual relationships with government partners.
“Government has core responsibilities that are vital for safe, healthy and thriving communities. But in our increasingly complex and budget-constrained world, performing these basic functions is becoming harder to do,” added Hininger. “For more than three decades, our company has been an innovative, dependable partner for government. As CoreCivic, we will continue to bring the scale, experience and professionalism needed to solve problems for our partners and serve the greater public good.”
About the Company
The Company is a diversified government solutions company with the scale and experience needed to solve tough government challenges in cost-effective ways. We provide a broad range of solutions to government partners that serve the public good through high-quality corrections and detention management, innovative and cost-saving government real estate solutions, and a growing network of residential reentry centers to help address America’s recidivism crisis. We are a publicly traded real estate investment trust (REIT) and the nation’s largest owner of partnership correctional, detention and residential reentry facilities. The Company has been a flexible and dependable partner for government for more than 30 years. Our employees are driven by a deep sense of service, high standards of professionalism and a responsibility to help government better the public good. Learn more at http://www.corecivic.com/.
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) the Company’s ability to meet the expectations regarding timing and success of its rebranding; (ii) general economic and market conditions, including the impact governmental budgets can have on our per diem rates, occupancy, and overall utilization; (iii) 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; (iv) our ability to obtain and maintain correctional, detention, and reentry facility management contracts, including, but not limited to, sufficient governmental appropriations, contract compliance and as a result of inmate disturbances; (v) 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 facilities and the commencement of new management contracts; (vi) changes in government policy regarding the utilization of the private sector for corrections and detention capacity and our services by the U.S. Department of Justice and the Department of Homeland Security; (vii) changes in governmental policy and in legislation and regulation of corrections and detention contractors, including but not limited to, California’s continued utilization of out-of-state contracted correctional capacity and the continued utilization of the South Texas Family Residential Center by U.S. Immigration & Customs Enforcement; (viii) our ability to meet and maintain REIT qualification status; and (ix) 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 the Company with the Securities and Exchange Commission.
The Company takes no responsibility for updating the information contained in this press release following the date hereof to reflect events or circumstances occurring after the date hereof or the occurrence of unanticipated events or for any changes or modifications made to this press release.
###
| Contact: | Investors: Cameron Hopewell – Managing Director, Investor Relations – (615) 263-3024 Media: Steve Owen – Managing Director, Communications – (615) 263-3107 |