-----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, RyYAt0CVYyL1U91MfQ0ogAjKSQ5y0dhoP2QBWncsbAfQ7PKjeczwESQ58crhXW/U oK4vUbyz4JuFNiPP4JNd8w== 0000950144-96-005464.txt : 19960816 0000950144-96-005464.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950144-96-005464 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 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: 96612201 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 FORM 10-Q 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: JUNE 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) SECURITIES EXCHANGE ACT OT 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 --- --- 74,552,589 (Outstanding shares of the issuer's common stock as of August 1, 1996.) 1 2 CORRECTIONS CORPORATION OF AMERICA INDEX
PART I. FINANCIAL INFORMATION: Number ------ Item 1. Financial Statements Consolidated Balance Sheets June 30, 1996 (Unaudited) and December 31, 1995 3 Consolidated Statements of Operations Six months ended June 30, 1996 and 1995 (Unaudited) 4 Consolidated Statements of Operations Three months ended June 30, 1996 and 1995 (Unaudited) 5 Consolidated Statements of Cash Flows Six months ended June 30, 1996 and 1995 (Unaudited) 6-7 Notes to Consolidated Financial Statements (Unaudited) 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 PART II. OTHER INFORMATION Item 1. Legal Proceedings 11 Item 2. Changes in Securities 11 Item 3. Default Upon Senior Securities 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11
2 3 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands)
June 30, December 31, 1996 1995 ---------- ------------ (Unaudited) ASSETS - ------ Current assets: Cash, cash equivalents and restricted cash $124,477 $ 2,714 Accounts receivable, less allowance 57,286 39,661 Prepaid expenses 3,328 1,569 Deferred taxes 1,286 1,646 Other 1,455 1,020 -------- -------- Total current assets 187,832 46,610 -------- -------- Restricted investments 587 443 Other assets 23,809 19,642 Property and equipment, net 178,223 137,019 Investment in direct financing lease 12,982 9,764 -------- -------- $403,433 $213,478 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Accounts payable $ 23,038 $ 10,757 Accrued salaries and wages 4,174 3,480 Accrued property taxes 1,115 1,623 Other accrued expenses 8,746 8,637 Current portion of long-term debt 9,344 11,020 -------- -------- Total current liabilities 46,417 35,517 -------- -------- Long-term debt, net of current portion 94,246 74,865 Deferred taxes 4,332 4,164 Other long-term liabilities 1,732 2,228 -------- -------- Total liabilities 146,727 116,774 -------- -------- Commitments and contingencies Stockholders' equity: Common stock - $1 par value 74,278 32,270 Additional paid-in capital 157,950 48,830 Retained earnings 24,869 15,641 Treasury stock, at cost (391) (37) -------- -------- Total stockholders' equity 256,706 96,704 -------- -------- $403,433 $213,478 ======== ========
3 4 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data)
Three months ended June 30 ------------------ 1996 1995 ------- ------- Revenues $67,453 $51,251 Expenses: Operating 49,325 40,457 General and Administrative 3,369 3,928 Depreciation and amortization 2,264 1,482 ------- ------- Contribution from operations 12,495 5,384 Interest expense, net 1,180 768 ------- ------- Income before income tax 11,315 4,616 Income taxes 4,308 1,860 ------- ------- Net income $ 7,007 $ 2,756 ======= ======= Net income per share: Primary $ .09 $ .04 ======= ======= Fully diluted $ .08 $ .04 ======= ======= Weighted average shares outstanding: 82,001 74,884 ======= =======
4 5 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data)
Six months ended June 30 ---------------- 1996 1995 -------- ------- Revenues $130,730 $95,396 Expenses: Operating 96,509 75,607 General and administrative 6,294 6,509 Depreciation and amortization 4,541 2,917 -------- ------- Contribution from operations 23,386 10,363 Interest expense, net 2,530 1,661 -------- ------- Income before income tax 20,856 8,702 Income taxes 8,143 3,556 -------- ------- Net income $ 12,713 $ 5,146 ======== ======= Net income per share: Primary $ .16 $ .07 ======== ======= Fully diluted $ .15 $ .07 ======== ======= Weighted average shares outstanding: 81,065 73,028 ======== =======
5 6 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Six months ended June 30 -------------------- 1996 1995 -------- ------- Cash Flows from Operating Activities: Net income $ 12,713 $ 5,146 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 4,541 2,917 Deferred and other noncash income taxes 7,041 2,490 Loss on disposal of assets 29 19 Equity in earnings of unconsolidated entities (530) (227) Changes in assets and liabilities, net of acquisitions: Accounts receivable (17,473) (12,032) Prepaid expenses (1,759) (820) Other current assets (435) (379) Accounts payable 12,281 3,640 Accrued expenses 399 252 --------- --------- Net cash provided by operating activities 16,807 1,006 --------- --------- Cash Flows from Investing Activities: (Increase) decrease in restricted and escrow cash (407) 164 Increase in other assets (5,145) (4,379) Additions of property and equipment (44,302) (6,768) Proceeds from disposals of assets 22 21 Increase in Direct Financing Lease (3,590) 0 Payments received on direct financing lease and notes receivable 234 163 --------- --------- Net cash used in investing activities (53,188) (10,809) --------- --------- Cash Flows from Financing Activities: Proceeds from issuance of long-term debt 50,000 7,604 Payments on long-term debt (17,831) (3,439) Payments on line of credit, net (14,464) 1,214 Payments of short-term obligations refinanced by long-term debt 0 (700) Payment of debt issuance cost (496) (495) Issuance of common stock 132,750 8,341 Payments of stock issuance costs (6,939) 0 Proceeds from exercise of stock options and warrants 8,861 315 Repurchase of stock warrants 0 (630) --------- --------- Net cash provided by financing activities 157,881 12,210 --------- ---------
6 7 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Six months ended June 30 ---------------- 1996 1995 -------- ------- Net increase in cash 121,500 2,407 CASH AND CASH EQUIVALENTS, beginning of period 2,145 4,265 -------- ------- CASH AND CASH EQUIVALENTS, end of period $123,645 $ 6,672 ======== ======= Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $ 2,431 $ 2,048 ======== ======= Income taxes $ 1,877 $ 1,690 ======== ======= 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 $ 717 $ 205 Additional paid-in capital 1,673 1,183 Retained earnings (3,042) 0 Treasury stock, at cost 652 (1,387) -------- ------- $ 0 $ 0 ======== ======= Long-term debt was converted into common stock: Other assets $ 0 $ (53) Long-term debt 0 6,700 Common stock 0 (444) Additional paid-in capital 0 (6,203) -------- ------- $ 0 $ 0 ======== =======
7 8 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheet as of June 30, 1996, the consolidated statements of operations and cash flows for the six month periods ended June 30, 1996 and 1995, and the consolidated statement of operations for the quarters ended June 30, 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 June 30, 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 June 30, 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. In April, 1996, as a result of its preemptive right triggered in connection with the issuance of convertible subordinated notes, the company sold $20,000,000 of convertible subordinated notes to Sodexho, S.A. with terms identical to the aforementioned notes. The proceeds were used to fund construction of facility expansions. 3. STOCKHOLDERS' EQUITY In June, 1996, the Company completed a public offering of 1,850,000 shares of common stock at a price to the public of $75.00 per share. The proceeds of the offering, after deducting all associated costs, were $131,948,000. Also in June, 1996, the Company announced a two-for-one stock split to be effected in the form of a stock dividend. The dividend was distributed on July 2, 1996, to all shareholders of record on June 19, 1996. The consolidated balance sheet and consolidated statements of operations and cash flows, as well as all earnings per share data, reflect the dividend as of June 30, 1996. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS REVENUES AND EXPENSES FROM OPERATIONS Revenues for the second quarter and first half of 1996 increased 32% and 37%, respectively, over the comparable periods of 1995. Management revenues increased $15,945,000 and $34,589,000 for the second quarter and first half of 1996, respectively, as compared to the 8 9 same periods of 1995, while transportation revenues increased $257,000 and $745,000 for the same relative time periods. The increase in management revenues was due to compensated mandays increasing by 52% and 48% for the second quarter and first half of 1996, respectively, over the comparable periods of 1995. Through a series of new facility openings in 1995 and 1996 and existing facility expansions during 1995, the Company was able to add approximately 6,900 beds to the domestic operations which are reflected in 1996 revenues as compared to 1995. The 11% and 17% increase in transportation revenues for the second quarter and first half of 1996, respectively, over the comparable periods of 1995 was due to a marketing effort resulting in an expanded customer base and therefore increased compensated mileage. Operating expenses for the second quarter and first half of 1996 increased 22% and 28%, respectively, over the comparable periods of 1995. This was due to the increase in compensated mandays based on the growth in beds on line and the increase in compensated mileage as previously mentioned. General and administrative expenses for the second quarter and first half of 1996 decreased 14% and 3% respectively, over the comparable periods of 1995. In 1995 the Company acquired two companies that were accounted for as pooling of interests which resulted in a duplication of services for General and Administrative expenses. Also included in the second quarter of 1995 were expenses of approximately $700,000 of non-recurring pooling expenses. As the Company continues to grow General and Administrative expenses should grow in volume but continue to decrease as a percentage of revenues. Depreciation and amortization for the second quarter and first half of 1996, increased 53% and 56%, respectively, over the comparable periods of 1995. The increases are due to the growth in total beds in facilities owned by the company. OTHER EXPENSES Interest expense, net, increased 54% and 52% for the second quarter and first half of 1996, respectively, as compared to the same periods in 1995. The increases are due to the Company assuming debt related to the Eloy Detention Center in July, 1995, when the Company acquired the remaining 50% of the investment in a partnership, which owns that facility, and due to the Company issuing $20,000,000 of Convertible Subordinated Notes in April, 1996. 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 six months of 1996 was $16,807,000 as compared to $1,006,000 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. 9 10 The company's working capital revolving credit facility with a U.S. bank matures May 31, 1998. 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 June 30, 1996, there were no borrowings against the facility. Letters of Credit totaling $4,404,000 have been issued leaving the unused commitment at $20,596,000. 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 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. 10 11 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 At the Annual Meeting of Stockholders of the company held on May 14, 1996, the nominees for election as Directors of the company were elected without opposition. The amendment of the company's certificate of incorporation increasing the amount of authorized common stock from 50,000,000 shares to 150,000,000 shares was ratified. On this motion 22,182,504 shares, voted in favor of the motion, 2,803,070 shares votes against and 49,770 shares abstained. Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K a) 27 Financial Data Schedule (for SEC use only) b) None 11 12 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) August 12, 1996 /s/ DarrellK.Massengale - --------------- ------------------------- (Date) Darrell K. Massengale Treasurer Principal Accounting Officer) 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF CORRECTIONS CORPORATION OF AMERICA FOR THE SIX MONTHS ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS DEC-31-1995 JAN-01-1996 JUN-30-1996 124,477 0 57,286 0 0 187,832 178,223 0 403,433 46,417 94,246 0 0 74,278 182,428 403,433 0 130,730 0 107,344 0 0 2,530 20,856 8,143 12,713 0 0 0 12,713 .16 .15
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