-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P1L6LDSdraCi3bmJnZejaT4FBJ+5jySk7GejckUz/JaQZvWDOgKuI2GbX8x1lpG6 bOHK+q4A4nAzjteFNOydEg== 0000950144-96-002522.txt : 19960517 0000950144-96-002522.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950144-96-002522 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORRECTIONS CORPORATION OF AMERICA CENTRAL INDEX KEY: 0000739404 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-FACILITIES SUPPORT MANAGEMENT SERVICES [8744] IRS NUMBER: 621156308 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13560 FILM NUMBER: 96566299 BUSINESS ADDRESS: STREET 1: 102 WOODMONT BLVD STE 800 CITY: NASHVILLE STATE: TN ZIP: 37205 BUSINESS PHONE: 6152923100 10-Q 1 CORRECTIONS CORPORATION OF AMERICA 10-Q 3-31-96 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSACTION PERIOD FROM__________TO __________. COMMISSION FILE NUMBER: 1-13560 ------- CORRECTIONS CORPORATION OF AMERICA (Exact name of Registrant as specified in its charter) DELAWARE 62-1156308 - --------------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 102 WOODMONT BLVD., SUITE 800 NASHVILLE, TENNESSEE 37205 - ---------------------------------------- --------------------- (Address of principal executive offices) (Zip Code) (615) 292-3100 ---------------------------------------------------- (Registrant's telephone number, including area code) NONE ------------------------------------------------------------------- (Former name, address and fiscal year if changed since last report.) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- 35,060,932 ------------------------------------------------------------------- (Outstanding shares of the issuer's common stock as of May 1, 1996.) THERE IS NO EXHIBIT INDEX Total number of sequentially numbered pages is 10. 2 CORRECTIONS CORPORATION OF AMERICA INDEX
Page PART I. FINANCIAL INFORMATION: Number ------ Item 1. Financial Statements Consolidated Balance Sheets March 31, 1996 (Unaudited) and December 31, 1995 3 Consolidated Statements of Operations Three months ended March 31, 1996 and 1995 (Unaudited) 4 Consolidated Statements of Cash Flows Three months ended March 31, 1996 and 1995 (Unaudited) 5-6 Notes to Consolidated Financial Statements (Unaudited) 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-8-9 PART II. OTHER INFORMATION Item 1. Legal Proceedings 10 Item 2. Changes in Securities 10 Item 3. Default Upon Senior Securities 10 Item 4. Submission of Matters to a Vote of Security Holders 10 Item 5. Other Information 10 Item 6. Exhibits and Reports on Form 8-K 10
2 3 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands)
March 31, December 31, 1996 1995 ------------- ---------------- ASSETS (Unaudited) ------ Current assets: Cash, cash equivalents and restricted cash $ 1,742 $ 2,714 Accounts receivable, net of allowances 47,705 39,661 Prepaid expenses 1,507 1,569 Deferred tax assets 1,714 1,646 Other 1,329 1,020 ----------- ------------ Total current assets 53,997 46,610 Restricted investments 587 443 Other assets 21,732 19,642 Property and equipment, net 145,152 137,019 Investment in direct financing lease 9,669 9,764 ----------- ------------ $ 231,137 $ 213,478 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accounts payable $ 13,007 $ 10,757 Accrued salaries and wages 3,762 3,480 Accrued property taxes 811 1,623 Other accrued expenses 5,240 8,637 Current portion of long-term debt 8,870 11,020 ----------- ------------ Total current liabilities 31,690 35,517 Long-term debt, net of current portion 81,848 74,865 Deferred tax liabilities 4,220 4,164 Other noncurrent liabilities 1,732 2,228 ----------- ------------ Total liabilities 119,490 116,774 ----------- ------------ Stockholders' equity: Common stock 33,921 32,270 Additional paid-in capital 60,068 48,830 Retained earnings 18,227 15,641 Treasury stock, at cost (569) (37) ------------ ------------- Total stockholders' equity 111,647 96,704 ----------- ------------ $ 231,137 $ 213,478
3 4 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data)
Three months ended March 31 ------------------ 1996 1995 -------------- ---------------- Revenues $ 63,277 $ 44,145 Expenses: Operating 47,184 35,151 General and administrative 2,925 2,581 Depreciation and amortization 2,277 1,435 ----------- ------------ 52,386 39,167 ----------- ------------ Contribution from operations 10,891 4,978 Interest expense, net 1,350 892 ---------- ----------- Income before income taxes 9,541 4,086 Provision for income taxes 3,835 1,695 ---------- ----------- Net income $ 5,706 $ 2,391 =========== =========== Net income per common share: Primary $ .14 $ .07 =========== =========== Fully diluted $ .14 $ .06 =========== =========== Weighted average common shares outstanding 40,251 35,334 =========== ===========
4 5 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three months ended March 31 ---------------------------------- 1996 1995 ----------- ----------- Cash Flows from Operating Activities: Net income $ 5,706 $ 2,391 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,277 1,435 Deferred and other noncash income taxes 6,077 654 Loss (gain) on disposal of assets 11 (16) Equity in earnings of unconsolidated entities (150) (267) Changes in assets and liabilities, net of acquisitions: Accounts receivable (8,034) (2,264) Prepaid expenses 62 220 Other current assets (309) (296) Accounts payable 2,250 (670) Accrued expenses (3,823) 57 ----------- ----------- Net cash provided by operating activities 4,067 1,244 ----------- ----------- Cash Flows from Investing Activities: Increase in restricted and escrow cash (402) (118) Increase in other assets (2,771) (919) Additions of property and equipment (9,602) (2,011) Proceeds from disposals of assets 6 21 Payments received on direct financing lease and notes receivable 91 77 ----------- ----------- Net cash used in investing activities (12,678) (2,950) ----------- ----------- Cash Flows from Financing Activities: Proceeds from issuance of long-term debt 30,000 7,780 Payments on long-term debt (15,444) (1,639) Payments on line of credit, net (9,723) (2) Payments of short-term obligations refinanced by long-term debt - (700) Payment of debt issuance cost (496) (248) Proceeds from exercise of stock options and warrants 3,044 24 Repurchase of stock warrants - (630) ----------- ----------- Net cash provided by financing activities 7,381 4,585 ----------- ----------- Net increase (decrease) in cash (1,230) 2,879 CASH AND CASH EQUIVALENTS, beginning of period ----------- ----------- CASH AND CASH EQUIVALENTS, end of period $ 915 $ 7,142 =========== ===========
5 6 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three months ended March 31 ---------------------------------------- 1996 1995 -------------- ---------------- C> Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $ 1,986 $ 620 ============== =============== Income taxes $ 1,565 $ 657 =============== =============== Supplemental Schedule of Noncash Investing and Financing Activities: The Company acquired treasury stock and issued common stock through the exercise of stock options: Common stock $ 911 $ (49) Additional paid-in capital 2,885 (310) Retained earnings (2,847) - Treasury stock, at cost (949) 359 -------------- --------------- $ - $ - =============== =============== Long term debt was converted into common stock: Other assets $ - $ (86) Long-term debt - 6,700 Common Stock (444) Additional paid-in capital - (6,170) --------------- --------------- $ - $ - ================ ===============
6 7 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet as of March 31, 1996, and the consolidated statements of operations and cash flows for the three month periods ended March 31, 1996 and 1995, have been prepared by the Company in accordance with the accounting policies described in its 1995 Annual Report and should be read in conjunction with the notes thereto. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial positions, results of operations and changes in cash flows at March 31, 1996 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The results of operations for the period ended March 31, 1996, are not necessarily indicative of the operating results for the full year. 2. LONG-TERM DEBT In February 1996, the Company sold $30,000,000 of convertible, subordinated notes. The notes bear interest at 7.5%, payable quarterly and mature in 2002. The Company used the proceeds to repay the principal outstanding under the company's bank loan and line of credit, $12,353,000 and $17,000,000, respectively. Subsequent to the end of the quarter the Company sold $20,000,000 of convertible, subordinated notes to Sodexho, S.A. with terms identical to the aforementioned notes. The proceeds will be used to fund construction of facility expansions. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS REVENUES AND OPERATING EXPENSES Revenues for the first quarter of 1996 increased 43% over the comparable period of 1995. Management revenues increased $18,645,000 and transportation revenues increased $487,000 in the first three months of 1996 as compared to the same period in 1995. The 44% increase in management revenues was due to a 44% increase in compensated mandays. Through a series of new facility openings and existing facility expansions during 1995, the Company was able to add approximately 6,000 beds to the domestic operations which are reflected in 1996 revenues as compared to 1995. Transportation revenues increased 23% due to an expanded customer base and compensated mileage. Operating expenses for the first quarter of 1996 increased 34% over the comparable quarter in 1995. This increase was due to the increased compensated mandays and compensated mileage that the Company realized in 1996 as previously mentioned. General and administrative expenses increased 13% for the first quarter of 1996 as compared to the comparable quarter of 1995. The increase is due to the expanded activity and staffing necessary to administer the increased beds under management. Even though increasing in 7 8 amount, general and administrative expenses decreased as a percentage of revenues from 5.8% in 1995 to 4.6% in 1996. Depreciation and amortization for the first quarter of 1996 increased 59% as compared to the comparable quarter of 1995. The 1996 increase is due to the growth in total beds in facilities owned by the company. Interest expense, net, increased 51% for the first quarter of 1996 over the first quarter of 1995 primarily due to the assumption of debt related to the Eloy Detention Center in Eloy, Arizona. In July, 1995 the company acquired the remaining 50% of the investment in a partnership and assumed the assets and debts. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES The company's business is capital intensive in relation to the development of a correctional facility. The company's efforts to obtain contracts, construct additional facilities and maintain its day-to-day operations have required the continued acquisition of funds through borrowings and equity offerings. The Company has financed these activities through the sale of capital stock, subordinated convertible notes and senior secured debt, through the issuance of taxable and tax-exempt bonds, by bank borrowings, and by assisting governmental agencies in the issuance of municipal bonds. Cash flow from operations for the first quarter of 1996 was $4,067,000 as compared to $1,244,000 in the comparable period in 1995. The company has strengthened its cash flow through its expanded business, additional focus on larger, more profitable facilities, the expansion of existing facilities where economies of scale can be realized, and the continuing effort of cost containment. Cash flow from operations has allowed the company to fund growth and to continue to retire debt on an accelerated basis. The company's working capital revolving credit facility with a U.S. bank matures May 31, 1997. The credit facility provides for borrowings of up to $25,000,000 for working capital and certain letters of credit. The credit facility bears interest, at the election of the company,at either the bank's prime rate or a rate which is 2% above the applicable 30, 60, or 90 day LIBOR rate. Interest is payable monthly with respect to prime rate loans and at the expiration of the applicable LIBOR period with respect to LIBOR-rate based loans. The credit facility is secured by certain accounts receivable and real and personal property at certain of the company's facilities. There are no prepayment penalties associated with the credit facility. The credit facility requires the company, among other things, to maintain maximum leverage ratios and a minimum debt service coverage ratio. The facility also limits certain payments and distributions. As of March 31, 1996, there was $5,000,000 borrowed against the facility. Letters of credit totaling $3,707,000 have been issued leaving the unused commitment at $16,293,000. In February 1996, the company issued $30,000,000 of its convertible subordinated notes to an investor. The proceeds were used to repay the outstanding principal, at the date of funding, under the company's working capital credit facility and construction loan. The notes bear interest at 7.5%, payable quarterly and require the company to maintain specific ratio requirements relating to net worth, cash flow and debt coverage. In April, 1996, as a result of its preemptive right triggered in connection with the issuance of convertible subordinated notes, Sodexho acquired $20,000,000 of convertible subordinated notes under the same terms and conditions. In connection with the construction and development of certain facilities, the company caused a U.S. bank to issue two letters of credit totaling $59,500,000. The letters of credit support certain industrial development bonds, the proceeds of which were used to construct such facilities. The company guaranteed to the bank the repayment in full of any amounts drawn 8 9 on such letters of credit as a result of a default under the related bonds. In the event the company is required to fund amounts pursuant to these guarantees then the company will obtain ownership rights to these facilities. The company's reimbursement obligations are secured by all of the collateral that secures the company's credit facility with the U.S. bank described above and are cross-defaulted with such credit facility. The company anticipates making cash investments in connection with future acquisitions and expansions. In addition, in accordance with the developing trend of private prison manages toward making strategic financial investments in facilities, the company plans to use a portion of its cash to finance start-up costs, leasehold improvements and equity investments in facilities, if appropriate in connection with undertaking new contracts. The company believes that the cash flow from operations and amounts available under its credit facility will be sufficient to meet its capital requirements for the foreseeable future. Furthermore, management believes that additional resources may be available to the company through a variety of other financing methods. 9 10 PART II - OTHER INFORMATION --------------------------- Item 1. Legal Proceedings ----------------- None Item 2. Changes in Securities --------------------- None Item 3. Default Upon Senior Securities ------------------------------ None Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- None Item 5. Other Information ----------------- None Item 6. Exhibits and Reports on Form 8-K -------------------------------- a) 27 Financial Data Schedule (for SEC use only) 10 11 SIGNATURES 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 thereunto duly authorized. CORRECTIONS CORPORATION OF AMERICA ---------------------------------- Registrant May 13 , 1996 /s/ Darrell K. Massengale ----------------------------------- ----------------------------------- Date Darrell K. Massengale Chief Financial Officer Secretary, Treasurer Principal Accounting Officer 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLAR 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1 1,742 0 47,705 0 0 53,997 145,152 0 231,137 31,690 81,848 33,921 0 0 77,726 231,137 0 63,277 0 52,386 0 0 1,350 9,541 3,830 5,706 0 0 0 5,706 .14 .14
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