-----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, SFENbQaGJ9jF7ZQgAxxEu2efsAHrFUTTDwUGlUmyNrtzEDubaFmUV08aHFMMo+j3 LTMRBZ3IZthMSuBCjOko7Q== 0000950144-98-011044.txt : 19980930 0000950144-98-011044.hdr.sgml : 19980930 ACCESSION NUMBER: 0000950144-98-011044 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980929 SROS: NYSE 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: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: SEC FILE NUMBER: 001-13560 FILM NUMBER: 98716810 BUSINESS ADDRESS: STREET 1: 10 BURTON HILLS BOULEVARD CITY: NASHVILLE STATE: TN ZIP: 37215 BUSINESS PHONE: 6152633000 MAIL ADDRESS: STREET 1: 10 BURTON HILLS BOULEVARD CITY: NASHVILLE STATE: TN ZIP: 37215 10-Q/A 1 CCA FORM 10-Q/A 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSACTION PERIOD FROM __________ TO __________. AMENDMENT NO. 1 COMMISSION FILE NUMBER: 1-13560 --------- CORRECTIONS CORPORATION OF AMERICA - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) TENNESSEE 62-1156308 - ---------------------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 10 BURTON HILLS BOULEVARD NASHVILLE, TENNESSEE 37215 - ---------------------------------------- ----------------------------------- (Address of principal executive offices) (Zip Code) (615) 263-3000 - -------------------------------------------------------------------------------- (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 ------ ------ 80,523,735 - -------------------------------------------------------------------------------- (Outstanding shares of the issuer's common stock as of August 1, 1998) This Amendment No. 1 amends the Quarterly Report on Form 10-Q filed by the Registrant on August 14, 1998, by amending the following item as set forth in the pages attached hereto. 2 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands)
June 30, December 31, 1998 1997 --------- --------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 133,455 $ 136,147 Accounts receivable, net of allowances 115,712 89,822 Prepaid expenses 7,374 4,868 Other 3,207 2,585 --------- --------- Total current assets 259,748 233,422 Property and equipment, net 432,785 266,493 Other long-term assets: Notes receivable 57,661 59,264 Investment in direct financing leases 76,024 90,184 Deferred tax assets 12,946 10,195 Other assets 56,437 38,382 --------- --------- $ 895,601 $ 697,940 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 63,737 $ 32,094 Accrued salaries and wages 11,699 9,778 Income taxes payable 3,875 14,128 Deferred tax liabilities 1,799 1,229 Other accrued expenses 25,157 20,361 Current portion of long-term debt 5,841 5,847 Current portion of deferred gain on real estate 13,223 13,223 --------- --------- Total current liabilities 125,331 96,660 Long-term debt, net of current portion 265,659 127,075 Deferred gain on real estate transactions 117,459 122,529 Other noncurrent liabilities -- 3,600 --------- --------- Total liabilities 508,449 349,864 --------- --------- Stockholders' equity: Preferred stock 376 380 Common stock 80,927 80,230 Additional paid-in capital 224,402 215,833 Retained earnings 99,670 92,475 Treasury stock, at cost (18,223) (40,842) --------- --------- Total stockholders' equity 387,152 348,076 --------- --------- $ 895,601 $ 697,940 ========= =========
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 3 3 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data)
Three months ended June 30 --------------------------- 1998 1997 --------- -------- Revenues $ 164,071 $107,024 Expenses: Operating 114,623 77,978 Lease 13,841 1,194 General and administrative 5,510 3,874 Depreciation and amortization 3,899 4,007 --------- -------- Total expenses 137,873 87,053 --------- -------- Operating income 26,198 19,971 Interest (income) expense, net (2,420) 854 --------- -------- Income before income taxes 28,618 19,117 Provision for income taxes 7,530 7,505 --------- -------- Net income $ 21,088 $ 11,612 ========= ======== Net income per common share: Basic $ .26 $ .15 ========= ======== Diluted $ .24 $ .13 ========= ======== Weighted average common shares outstanding: Basic 80,356 76,230 ========= ======== Diluted 90,064 90,211 ========= ========
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 4 4 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per share data)
Six months ended June 30 --------------------------- 1998 1997 --------- -------- Revenues $ 305,369 $198,862 Expenses: Operating 214,342 140,992 Lease 24,936 2,296 General and administrative 10,463 7,272 Depreciation and amortization 7,287 7,930 --------- -------- Total expenses 257,028 158,490 --------- -------- Operating income 48,341 40,372 Interest (income) expense, net (5,211) 1,352 --------- -------- Income before income taxes 53,552 39,020 Provision for income taxes 14,021 15,413 --------- -------- Net income $ 39,531 $ 23,607 ========= ======== Net income per common share: Basic $ .49 $ .31 ========= ======== Diluted $ .44 $ .27 ========= ======== Weighted average common shares outstanding: Basic 79,924 75,917 ========= ======== Diluted 90,252 89,937 ========= ========
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 5 5 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six months ended June 30 ---------------------------- 1998 1997 --------- --------- Cash Flows from Operating Activities: Net income $ 39,531 $ 23,607 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 7,287 7,930 Deferred and other noncash income taxes 1,818 2,029 Other noncash items 243 183 Loss on disposal of assets 2 86 Equity in earnings of unconsolidated entities (544) (313) Recognized gain on real estate transactions (5,070) -- Changes in assets and liabilities, net of acquisition: Accounts receivable (24,253) 16,605 Prepaid expenses (2,367) (3,973) Other current assets (622) (1,334) Accounts payable 31,248 34,386 Income taxes payable (10,253) 11,220 Accrued expenses and other liabilities 1,705 8,789 --------- --------- Net cash provided by operating activities 38,725 99,215 --------- --------- Cash Flows from Investing Activities: Additions of property and equipment (189,225) (148,188) Decrease in restricted cash -- 2,851 Increase in other assets (12,414) (10,864) Acquisition of USCC subsidiaries, net of cash acquired (9,341) -- Investment in affiliates, net (157) -- Proceeds from disposals of assets 36,132 14 Increase in direct financing leases -- (55,850) Payments received on direct financing leases and notes receivable 2,627 1,133 --------- --------- Net cash used in investing activities (172,378) (210,904) --------- --------- Cash Flows from Financing Activities: Payments on long-term debt (22) (4,655) Proceeds from line of credit, net 140,000 119,500 Payment of debt issuance costs (2,925) (495) Proceeds from exercise of stock options and warrants 1,508 1,843 Purchase of treasury stock (7,600) -- --------- --------- Net cash provided by financing activities 130,961 116,193 --------- --------- Net increase (decrease) in cash (2,692) 4,504 CASH AND CASH EQUIVALENTS, beginning of period 136,147 4,832 --------- --------- CASH AND CASH EQUIVALENTS, end of period $ 133,455 $ 9,336 ========= =========
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. 6 6 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six months ended June 30 ------------------------- 1998 1997 -------- ------- Supplemental Disclosures of Cash Flow Information: Cash paid during the period for: Interest (net of amounts capitalized) $ 2,921 $ 3,102 ======== ======= Income taxes $ 22,231 $ 1,492 ======== ======= 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 $ 398 $ 494 Additional paid-in capital 3,331 2,736 Retained earnings (114) (829) Treasury stock, at cost (3,615) (2,401) -------- ------- $ -- $ -- ======== ======= Long term debt was converted into common stock: Other assets $ 5 $ 15 Long-term debt (1,400) (900) Common stock 51 531 Additional paid-in capital 32 354 Retained earnings (31,500) -- Treasury stock 32,812 -- -------- ------- $ -- $ -- ======== ======= The Company converted a facility from investment in direct financing lease to property and equipment by acquiring the equity in the facility from the leasing entity: Accounts receivable $ 3,500 Property and equipment (16,207) $ -- Investment in direct financing leases 12,707 -- -------- ------- $ -- $ -- ======== =======
7 7 CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. CONSOLIDATED FINANCIAL STATEMENTS The consolidated balance sheets as of June 30, 1998 and December 31, 1997, the consolidated statements of operations for the quarters ended June 30, 1998 and 1997, and the consolidated statements of operations and cash flows for the six month periods ended June 30, 1998 and 1997, have been prepared by the Company in accordance with the accounting policies described in its 1997 Annual Report on Form 10-K 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 position, results of operations and changes in cash flows at June 30, 1998 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 periods ended June 30, 1998, are not necessarily indicative of the operating results for the full year. 2. ACQUISITIONS In April 1998, the Company acquired all of the outstanding capital stock of eight subsidiaries of U.S. Corrections Corporation ("USCC") (the "USCC Acquisition") for approximately $10,000,000, less cash acquired. By virtue of the USCC Acquisition, the Company acquired contracts to manage four currently operating facilities in Kentucky, each of which is owned by CCA Prison Realty Trust ("Prison Realty"), as well as one each in Florida and Texas, each of which is owned by governmental entities of Florida and Texas, respectively. The Company, or one of its affiliates, currently leases the four Kentucky facilities from Prison Realty, or one of its affiliates, pursuant to the terms of that certain Master Agreement to Lease dated July 1997, between the Company and Prison Realty (the "Master Lease"). The Company also acquired by virtue of the USCC Acquisition the right to enter into contracts to manage two facilities currently under construction that are located in North Carolina and owned by Prison Realty. The Company expects to lease these two facilities from Prison Realty pursuant to the terms and conditions of the Master Lease. The total number of beds currently operating or under construction under all of the aforementioned management contracts equals 5,743. In April 1998, the Company acquired a 376-bed correctional facility from a governmental entity for $18,389,000 and assumed management of the facility. In May 1998, in consideration for relinquishing its right to purchase a facility, the Company agreed to pay a governmental agency $3,500,000. As a result, the Company converted the facility from a direct financing lease to property and equipment. In lieu of a cash payment, the entity agreed to utilize a credit for management revenue billings beginning in July 1998 until the credit is exhausted. 8 8 3. LONG-TERM DEBT The Company increased its revolving credit facility to $350,000,000 in June 1998. The facility matures in September 1999 and bears interest, at the election of the Company, at either the bank's prime rate or a rate which is 1.25% above the applicable 30, 60, or 90 day LIBOR rate. As of June 30, 1998, there was $210,000,000 borrowed under this facility. Letters of credit totaling $3,400,000 had been issued leaving the total unused commitment at $136,600,000. 4. MERGER In April 1998, the Company signed a definitive agreement to merge with Prison Realty in a transaction that will give the shareholders of the Company the right to receive 0.875 Prison Realty common shares for every share of Company common stock. Prison Realty will operate as a real estate investment trust and the merger is expected to be consummated on or about January 1, 1999, subject to customary conditions, including approvals by certain regulatory agencies and the shareholders of both companies. 5. EARNINGS PER SHARE The Company adopted the provisions of SFAS 128, "Earnings Per Share" effective December 31, 1997. Under the standards established by SFAS 128, earnings per share is measured at two levels: basic earnings per share and diluted earnings per share. Basic earnings per share is computed by dividing net income by the weighted average number of common shares outstanding during the year. Diluted earnings per share is computed by dividing net income by the weighted average number of common shares after considering the additional dilution related to convertible preferred stock, convertible subordinated notes, options and warrants. All earnings per share amounts presented herein have been restated to reflect the adoption of SFAS No. 128. In computing diluted earnings per common share, the Company's stock warrants and stock options are considered dilutive using the treasury stock method, and the Series B convertible preferred stock and the 8.5% convertible subordinated notes are considered dilutive using the if-converted method. The following table presents information necessary to calculate diluted earnings per share for the second quarter and six months ended June 30:
Three months ended June 30 ----------------------- 1998 1997 ------- ------- Net Income $21,088 $11,612 Interest expense applicable to convertible subordinated notes, net of tax 147 173 ------- ------- Adjusted net income $21,235 $11,785 ======= ======= Weighted average common shares outstanding 80,356 76,230 Effect of dilutive options and warrants 4,543 8,264 Conversion of preferred stock 730 -- Conversion of convertible subordinated notes 4,435 5,717 ------- ------- Adjusted diluted common shares outstanding 90,064 90,211 ------- ------- Diluted earnings per share $ .24 $ .13 ======= =======
9 9
Six months ended June 30 ----------------------- 1998 1997 ------- ------- Net Income $39,531 $23,607 Interest expense applicable to convertible subordinated notes, net of tax 307 351 ------- ------- Adjusted net income $39,838 $23,958 ======= ======= Weighted average common shares outstanding 79,924 75,917 Effect of dilutive options and warrants 4,828 8,303 Conversion of preferred stock 732 -- Conversion of convertible subordinated notes 4,768 5,717 ------- ------- Adjusted diluted common shares outstanding 90,252 89,937 ------- ------- Diluted earnings per share $ .44 $ .27 ======= =======
6. NEW PRONOUNCEMENT In April 1998, the AICPA issued Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up Activities", effective for fiscal years beginning after December 15, 1998. SOP 98-5 requires the costs of start-up activities to be expensed as incurred. In accordance with the provisions of SOP 98-5, the Company will adopt the new accounting method as of January 1, 1999 by recording a cumulative effect of a change in accounting principle. As of June 30, 1998, the Company's deferred start-up costs and project development costs subject to the provisions of SOP 98-5 totaled $27,732,000. 7. COMPREHENSIVE INCOME In June 1997, the Financial Accounting Standards Board issued SFAS No. 130, "Reporting Comprehensive Income", effective for fiscal years beginning after December 15, 1997. SFAS No.130 requires that changes in the amounts of certain items, including gains and losses on certain securities, be shown in the financial statements. The Company adopted the provisions of SFAS No. 130 on January 1, 1998. The Company's comprehensive income is substantially equivalent to net income for the quarters ended and six months ended June 30, 1998 and 1997. 10 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amended report to be signed on its behalf by the undersigned thereunto duly authorized. CORRECTIONS CORPORATION OF AMERICA ----------------------------------- (Registrant) September 28, 1998 /s/ Darrell K. Massengale - ----------------------- ----------------------------------------- (Date) Darrell K. Massengale Chief Financial Officer Secretary, Principal Accounting Officer 16 -----END PRIVACY-ENHANCED MESSAGE-----