-----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, O0/kv/BE0AEx9R7Rc0Ace53cQUfx8oP6/rTnAcbZWcziPPWkgBsFgFVwjI5o+trt U6i1iz7C7fXsPXEaBY3tBA== 0000950144-96-008179.txt : 19961118 0000950144-96-008179.hdr.sgml : 19961118 ACCESSION NUMBER: 0000950144-96-008179 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 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: 96663562 BUSINESS ADDRESS: STREET 1: 102 WOODMONT BLVD STE 800 CITY: NASHVILLE STATE: TN ZIP: 37205 BUSINESS PHONE: 6152923100 10-Q 1 CORRECTIONS CORPORATION FORM 10-Q 09/30/96 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: SEPTEMBER 30, 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 ____ 74,928,848 - -------------------------------------------------------------------------------- (Outstanding shares of the issuer's common stock as of November 1, 1996.) EXHIBIT INDEX ON PAGE 11 Total number of sequentially numbered pages is 12. 2 CORRECTIONS CORPORATION OF AMERICA INDEX Page PART I. FINANCIAL INFORMATION: Number ------ Item 1. Financial Statements Consolidated Balance Sheets September 30, 1996 (Unaudited) and December 31, 1995 3 Consolidated Statements of Operations Nine months ended September 30, 1996 and 1995 (Unaudited) 4 Consolidated Statements of Operations Three months ended September 30, 1996 and 1995 (Unaudited) 5 Consolidated Statements of Cash Flows Nine months ended September 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 9-10 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)
September 30, December 31, 1996 1995 ------------- ------------ (Unaudited) ASSETS Current assets: Cash, cash equivalents and restricted cash $ 84,234 $ 2,714 Accounts receivable 58,991 39,661 Prepaid expenses 3,388 1,569 Deferred taxes 1,218 1,646 Other 1,420 1,020 --------- --------- Total current assets 149,251 46,610 --------- --------- Restricted investments 587 443 Other assets 27,875 19,642 Property and equipment, net 231,567 137,019 Investment in direct financing lease 13,021 9,764 --------- --------- $ 422,301 $ 213,478 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 30,895 $ 10,757 Accrued salaries and wages 5,006 3,480 Accrued property taxes 1,630 1,623 Other accrued expenses 8,988 8,637 Current portion of long-term debt 10,674 11,020 --------- --------- Total current liabilities 57,193 35,517 --------- --------- Long-term debt, net of current portion 90,765 74,865 Deferred taxes 4,334 4,164 Other long-term liabilities 1,485 2,228 --------- --------- Total liabilities 153,777 116,774 --------- --------- Stockholders' equity: Common stock - $1 par value 74,775 64,540 Additional paid-in capital 161,572 16,560 Retained earnings 32,426 15,641 Treasury stock, at cost (249) (37) --------- --------- Total stockholders' equity 268,524 96,704 --------- --------- $ 422,301 $ 213,478 ========= =========
3 4 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data)
Nine months ended September 30 ------------------------ 1996 1995 -------- -------- Revenues $205,933 $144,911 Expenses: Operating 151,440 111,897 General and administrative 9,811 10,793 Depreciation and amortization 7,030 4,453 -------- -------- 168,281 127,143 -------- -------- Contribution from operations 37,652 17,768 Interest expense, net 3,293 2,707 -------- -------- Income before income taxes 34,359 15,061 Provision for income taxes 13,186 5,897 -------- -------- Net income $ 21,173 $ 9,164 ======== ======== Net income per common share: Primary $ 0.26 $ 0.13 ======== ======== Fully diluted $ 0.25 $ 0.12 ======== ======== Weighted average common shares outstanding: 82,270 74,559 ======== ========
4 5 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data)
Three months ended September 30 ----------------------- 1996 1995 ------- ------- Revenues $75,203 $49,515 Expenses: Operating 54,931 36,290 General and administrative 3,517 4,284 Depreciation and amortization 2,489 1,537 ------- ------- 60,937 42,111 ------- ------- Contribution from operations 14,266 7,404 Interest expense, net 763 1,046 ------- ------- Income before income taxes 13,503 6,358 Provision for income taxes 5,043 2,341 ------- ------- Net income $ 8,460 $ 4,017 ======= ======= Net income per common share: Primary $ 0.10 $ 0.06 ======= ======= Fully diluted $ 0.10 $ 0.05 ======= ======= Weighted average common shares outstanding: 84,603 77,196 ======= =======
5 6 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine months ended September 30 ---------------------- 1996 1995 --------- -------- Cash Flows from Operating Activities: Net income $ 21,173 $ 9,164 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,029 4,456 Deferred income taxes 9,742 3,549 Loss on disposal of property and equipment 19 7 Equity in earnings of unconsolidated entities (650) (526) Changes in assets and liabilities: Accounts receivable (19,222) (11,389) Prepaid expenses (1,819) (388) Other current assets (400) (250) Accounts payable 20,138 8,303 Accrued expenses 1,988 2,520 --------- -------- Net cash provided by operating activities 37,998 15,446 --------- -------- Cash Flows from Investing Activities: Increase in restricted and escrow cash (2,496) (36) Increase in restricted investments (144) (518) Increase in other assets (9,547) (26,568) Acquisition of property and equipment (106,179) (21,847) Proceeds from disposals of property and equipment 6,533 45 Increase in direct financing lease (3,693) -0- Payments received on direct financing lease and notes receivable 342 235 --------- -------- Net cash used in investing activities (115,184) (48,689) --------- -------- Cash Flows from Financing Activities: Proceeds from issuance of long-term debt 50,000 7,604 Payments on long-term debt (19,300) (5,549) Proceeds from payments on line of credit, net (15,146) 2,416 Payments of short-term obligations refinanced by long-term debt -0- 17,480 Payment of debt issuance costs (743) (495) Issuance of common stock 138,750 8,683 Payments of stock issuance costs (6,939) -0- Proceeds from exercise of stock options and warrants 9,588 350 Repurchase of stock warrants -0- (630) --------- -------- Net cash provided by financing activities 156,210 29,859 --------- --------
6 7 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine months ended September 30 --------------------- 1996 1995 -------- -------- Net increase (decrease) in cash 79,024 (3,384) -------- -------- CASH AND CASH EQUIVALENTS, beginning of period 2,145 4,285 -------- -------- CASH AND CASH EQUIVALENTS, end of period $ 81,169 $ 901 ======== ======== Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest $ 4,984 $ 2,843 ======== ======== Income taxes $ 2,978 $ 2,516 ======== ======== Supplemental Schedule of Noncash Investing and Financing Activities: The Company acquired property and equipment by assuming long-term debt: Property and equipment $ 0 $ 27,392 Long-term debt 0 (27,392) -------- -------- $ 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 ======== ======== The Company acquired treasury stock and issued common stock through the exercise of stock options: Common stock $ (1,026) $ (234) Additional paid-in capital (2,400) (681) Retained earnings 3,129 540 Treasury stock, at cost 297 375 -------- -------- $ 0 $ 0 ======== ========
7 8 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheets as of September 30, 1996 and December 1995, the consolidated statements of operations and cash flows for the nine month periods ended September 30, 1996 and 1995, and the consolidated statements of operations for the quarters ended September 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 September 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 September 30, 1996, are not necessarily indicative of the operating results for the full year. Certain reclassifications of 1995 amounts have been made to conform with the 1996 presentation. 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, are reflective of the dividend. 8 9 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 third quarter and first nine months of 1996 increased 52% and 42%, respectively, over the comparable periods of 1995. Management revenues increased $25,544,000 and $60,133,000 for the third quarter and first nine months of 1996, respectively, as compared to the same periods of 1995, while transportation revenues increased $144,000 and $889,000 for the same relative time periods. The increase in management revenues was due to compensated mandays increasing by 57% and 52% for third quarter and first nine months of 1996, respectively, over the comparable periods of 1995. Through a series of new facility openings and existing facility expansions during 1995 and 1996, the Company added approximately 6,600 beds to the domestic operations. These additional beds are reflected in 1996 revenues as compared to 1995. The 6% and 13% increase in transportation revenues for the third quarter and nine months 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, while increasing in dollar amount 49% and 35% for the third quarter and first nine months of 1996, respectively, as compared to the same periods of 1995, actually decreased as a percentage of revenue for both periods. As more beds have been brought on line, the Company has been able to realize more economies of scale and in effect bring operating expenses down as a percentage of revenues. During 1996, the Company has been able to further integrate the facilities acquired in 1995 into the Company's operational systems. General and administrative expenses for the third quarter and first nine months of 1996 decreased 18% and 9% respectively, over the comparable periods of 1995. This decrease is due to the pooling expenses associated with acquisitions in the 1995 periods as well as the Company's ability to reduce duplication in the general and administrative areas by integrating the acquired facilities into its systems. 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 third quarter and first nine months of 1996 increased 62% and 58% respectively, over the comparable periods of 1995. This increase was a result of the Company expanding five of its owned facilities by a total of 1,350 beds. OTHER EXPENSES Interest expense, net, decreased 27% for the third quarter and increased 22% for the first nine months of 1996, respectively, as compared to the same periods in 1995. The increase for the nine month period is the result of an additional $50,000,000 in convertible, subordinated debt funded in February and April, 1996. The decrease in the third quarter is due to a significant increase in interest income as the Company had approximately $104,000,000 in cash on average for the quarter from the secondary offering. 9 10 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 nine months of 1996 was $37,998,000 as compared to $15,446,000 for 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. In September, 1996, the Company entered into a new credit facility with a group of banks which expanded its capacity from $25,000,000 to $170,000,000. The credit facility provides for general corporate borrowings and the issuance of a maximum of $136,000,000 in 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 .5% above the applicable 30, 60 or 90 day LIBOR rate. Interest is payable quarterly with respect to prime rate loans and at the expiration of the applicable LIBOR period with respect to LIBOR rate based loans. 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 September 30, 1996, there were no borrowings under the facility. Letters of Credit totaling $28,250,000 have been issued leaving the unused commitment at $141,750,000. In September, 1996, the Company also closed a $2,500,000 credit facility with a bank which provides for the issuance of letters of credit. As of September 30, 1996 there were $1,377,000 in letters of credit issued leaving the unused commitment at $1,123,000. 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%, are 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, S.A., an affiliate of the Company, acquired $20,000,000 of convertible subordinated notes under the same terms and conditions. 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, proceeds from the secondary offering 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 None 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) November 12, 1996 /s/ Darrell K. Massengale - ----------------------------------- ------------------------------------------- (Date) Darrell K. Massengale Treasurer (Principal Accounting Officer) 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 0000739404 CORRECTIONS CORPORATION OF AMERICA 1,000 U.S. DOLLAR 3-MOS DEC-31-1995 JAN-01-1996 SEP-30-1996 1 84,234 0 58,991 0 0 149,251 231,567 0 422,301 57,193 90,765 0 0 74,775 193,749 422,301 0 205,933 0 168,281 0 0 3,293 34,359 13,186 21,173 0 0 0 21,173 .26 .25
-----END PRIVACY-ENHANCED MESSAGE-----