CCA Announces 2012 Third Quarter Financial Results and Provides

CCA Announces 2012 Third Quarter Financial Results and Provides
Update on Potential REIT Conversion 
Diluted Earnings per Share up 13.5%; Adjusted Earnings per Diluted
Share up 16.2%; Adjusted Funds From Operations per Diluted Share up
15.3%; Updates Earnings Guidance for 2012 -- Expects Full-Year
Diluted EPS of $1.53 to $1.55 
NASHVILLE, TN -- (Marketwire) -- 11/07/12 --  CCA (NYSE: CXW) (the
"Company" or "Corrections Corporation of America"), America's leader
in partnership corrections and the nation's largest provider of
corrections management services to government agencies, announced
today its financial results for the third quarter of 2012. 
Third Quarter Highlights 


 
--  Diluted EPS up 13.5% to $0.42
--  Adjusted Diluted EPS up 16.2% to $0.43
--  Net income up 7.9% to $42.3 million
--  Funds From Operations Per Diluted Share up 9.7% to $0.79
--  Adjusted Funds From Operations Per Diluted Share up 15.3% to $0.68
--  Dividends per common share of $0.20 paid in September 2012

  
For the third quarter of 2012, CCA generated net income of $42.3
million, or $0.42 per diluted share, compared with net income of
$39.2 million, or $0.37 per diluted share, for the third quarter of
2011. Net income adjusted for expenses associated with debt
refinancing transactions and expenses associated with the pursuit of
a potential conversion into a real estate investment trust (REIT),
was $43.3 million, or $0.43 per diluted share in the third quarter of
2012, a per share increase of 16.2%, from the prior year quarter. Net
income for third quarter of 2012 benefitted from lower than
forecasted employee and inmate medical expenses as well as a lower
effective income tax rate. These favorable items were partially
offset by a decline in U.S. Marshals Service (USMS) populations
during the quarter. 
Net income for the third quarter of 2012 increased compared to the
third quarter of 2011 primarily resulting from an increase in total
compensated man-days due to the commencement of new contracts with
Ohio, Georgia and Puerto Rico and a reduction in interest expense.
These increases in net income were partially offset by a decline in
USMS populations and an increase in employee salary and benefits
costs. Our earnings per share also benefited from the reduction in
our w
eighted average diluted shares outstanding from 105.0 million
during the third quarter of 2011 to 100.8 million during the third
quarter of 2012, as a result of share repurchases made in 2011. 
CCA President and Chief Executive Officer, Damon Hininger, stated,
"We are pleased with our third quarter financial results, as Adjusted
Earnings Per Share increased by more than 16% and Adjusted Funds From
Operations per share increased more than 15%. We are also pleased to
have been awarded a new contract with the Arizona Department of
Corrections, adding Arizona once again as one of our partners." 
During the third quarter of 2012, total management revenue increased
2.9% to $443.1 million from $430.6 million during the third quarter
of 2011. Management revenue from our federal partners increased
slightly to $188.9 million during the third quarter of 2012 compared
with $188.4 million during the third quarter of 2011. The increase in
federal revenue was primarily attributable to contractual rate
increases associated with certain federal management contracts. These
increases were partially offset by a decline in our average
compensated USMS populations by approximately 500 prisoners during
the third quarter of 2012 from the third quarter of 2011,
predominately in the southwest region of the country.  
Management revenue from our state partners increased 5.2% to $224.3
million during the third quarter of 2012 compared with $213.2 million
during the prior year period. State revenue increased primarily due
to new inmate populations from the state of Ohio as we commenced
operations at our Lake Erie Correctional Institution on January 1,
2012, and from the state of Georgia at our newly constructed Jenkins
Correctional Center which we completed during the first quarter of
2012. In addition, we experienced increases in inmate populations
from our new contract with the Commonwealth of Puerto Rico as we
began ramping-up populations at our Cimarron Correctional Facility
during the first quarter of 2012, as well as increased populations
from the state of Idaho pursuant to a new management contract at our
Kit Carson facility in Colorado and from the state of Oklahoma at our
Davis facility in Oklahoma. These increases were partially offset by
lower inmate populations from the District of Columbia and the states
of Colorado, Kentucky and California.  
Revenue per compensated man-day in the third quarter of 2012
increased to $59.19 from $58.62 in the third quarter of 2011. Revenue
per man-day improved as a result of an increase in per diem rates
from certain federal and state partners. However, operating margins
declined by $0.26 per man-day from $18.11 in the third quarter of
2011 to $17.85 in the third quarter of 2012, due to an increase in
operating expenses to $41.34 per man-day in the third quarter of 2012
from $40.51 per man-day in the third quarter of 2011. The increase in
operating expenses per man-day resulted from wage increases provided
to employees in the third quarter of 2012 and an increase in benefit
costs primarily resulting from an increase in medical claims.  
Our total average daily compensated population increased to 81,384 in
the third quarter of 2012 from 79,840 in the third quarter of 2011.
However, our total portfolio occupancy decreased to 88.4% in the
third quarter of 2012 from 89.6% during the third quarter of 2011 as
the increase in populations resulting from the commencement of
operations at our Jenkins and Lake Erie facilities was offset by the
termination of a management contract from the state of Kentucky at
our Otter Creek facility and the aforementioned reductions in inmate
populations from the USMS, the District of Columbia, Colorado,
Kentucky and California. 
EBITDA for the third quarter of 2012 was $108.8 million compared to
$107.4 million during the third quarter of 2011. Adjusted EBITDA for
the third quarter of 2012, which excludes expenses associated with
debt refinancing transactions and expenses associated with the
pursuit of a potential REIT conversion, was $110.2 million. Funds
From Operations was $79.3 million during the third quarter of 2012
compared to $76.0 million in the prior year quarter. Adjusted Funds
From Operations, which includes maintenance and technology capital
expenditures, for the third quarter of 2012 was $69.1 million
compared with $61.7 million during the prior year period.  
Adjusted net income, EBITDA, Adjusted EBITDA, Funds From Operations
and Adjusted Funds From Operations 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. 
Potential Real Estate Investment Trust Conversion Update
 CCA is in a
real estate intensive business, owning 49 correctional and detention
facilities comprising approximately 67,000 beds, making it the
largest private owner of prison facilities in the United States. In
May 2012, CCA announced it was assessing the feasibility of a
conversion to a REIT and had assembled a team of outside tax, le
gal
and financial advisors to assist management and the board of
directors in determining if we could structure our operations in such
a way as to allow us to maintain the strategic alignment of our real
estate and operations under a single publicly traded umbrella,
qualify for status as a REIT and continue to provide correctional
services through a taxable REIT subsidiary. As part of this
assessment, we concluded that it would not be advisable to convert to
a REIT structure without a private letter ruling (PLR) from the
Internal Revenue Service (IRS). 
In August 2012, we disclosed we had filed a formal request for a PLR
from the IRS in late July while we continued our own internal
analysis of the feasibility and potential benefits of a REIT
conversion. We have not yet received a ruling from the IRS and there
is no specific schedule for the IRS to respond to our PLR request.
Although we believe there is a sound legal basis for the IRS to grant
the ruling we have requested, we can provide no assurances the IRS
will issue a favorable ruling.  
There are a number of issues to be addressed before the Company can
conclude it could meet the operational and technical thresholds
necessary to operate as a REIT. In addition to obtaining a favorable
PLR from the IRS, these issues include, among others, finalizing our
financial and transfer pricing analysis of the potential impact of a
REIT conversion on operating profits and corporate income taxes,
concluding the assessment of our ability to meet and maintain
compliance with REIT qualification tests, and completing certain
changes to our corporate structure that would be necessitated by a
REIT conversion.  
A REIT election cannot be made for a portion of a taxable year and
thus would need to be effective January 1st of the year the election
is made. We will continue to pursue a favorable ruling from the IRS
and endeavor to complete our analysis of the issues associated with a
REIT conversion as quickly and diligently as possible. We believe
that if the IRS responds favorably to our proposed request and
structure as submitted, electing REIT status effective January 1,
2013 remains a possibility; however, this is a complex process, and
as time continues to pass without a favorable ruling from the IRS,
the probability of electing REIT status effective January 1, 2013
diminishes. 
Although we have not completed our assessment and continue to
evaluate a number of issues associated with a REIT conversion, our
preliminary analysis completed to date indicates the following: 


 
--  In accordance with tax rules applicable to REIT conversions, CCA would
    be required to distribute accumulated earnings and profits (E&P)
    calculated through the end of the calendar year preceding the REIT
    effective date. Based on our preliminary analysis, the Company
    estimates accumulated E&P could total approximately $700 million
    to $750 million through the period ending December 31, 2012. In the
    event of a REIT conversion, the E&P distribution would be paid out
    in a combination of at least 20% in cash and up to 80% in common
    stock.
--  If the Company were to convert to a REIT, in addition to payments to
    stockholders, the Company expects it could incur approximately $20
    million to $25 million in one-time conversion expenses, excluding any
    costs associated with issuing new debt, refinancing existing debt or
    modifying existing debt agreements.
--  We believe there would be no reclassification of assets from personal
    property to real property in connection with a conversion, thereby
    preventing any tax liabilities associated with the recapture of
    depreciation expenses.
--  If a conversion is implemented, the Company expects to incur
    additional general and administrative compliance costs in future
    years, but believes those will be less than $2 million annually.
--  The Company will likely need to issue additional debt to fund the
    estimated cash component of the E&P distribution and other
    conversion costs noted above. The Company would also likely need to
    refinance its existing senior notes and potentially amend its
    revolving credit facility to accommodate a REIT conversion.
--  Stockholder approval will be required to add provisions regarding
    REIT-related ownership restrictions in the Company's charter.

  
Refinancing Activities 
As previously announced, on April 16, 2012, we redeemed the remaining
$40.0 million of aggregate principal amount outstanding of our 6.25%
Senior Notes due in March 2013. On June 14, 2012 we redeemed $60.0
million of aggregate principal amount of our 6.75% Senior Notes due
in January 2014 (the 2014 Notes) and on August 27, 2012 we redeemed
an additional $50.0 million principal amount of the 2014 Notes. We
redeemed these notes at par plus accrued interest to the redemption
date, with proceeds from our senior bank credit facility. We incurred
$0.2 million in charges during the third quarter of 2012 associated
with these refinancing transactions. 
Following these redemptions, our outstanding debt as of September 30,
2012, consisted of $40.0 million of the 2014 Notes, $465.0 million
aggregate principal amount of 7.75% Senior Notes due June 2017, and
$635.0 million drawn on our senior bank credit facility due in
December 2016. 
Partnership Development Update 
In September 2012, we announced we received a contract award from the
Arizona Department of Corrections to house up to 1,000
medium-security inmates at our Red Rock Correctional Center in
Arizona. The new management contract contains an initial term of ten
years, with two five-year renewal options upon mutual agreement and
provides an occupancy guarantee of 90% of the contracted beds, which
is expected to be implemented in two phases. We expect to begin
receiving approximately 500 inmates from Arizona beginning in January
of 2014 and an additional 500 inmates in 2015.  
Guidance  
We expect Adjusted Diluted EPS for the fourth quarter of 2012 to be
in the range of $0.39 to $0.41, resulting in full-year 2012 Adjusted
Diluted EPS to be in the range of $1.53 to $1.55. We also expect
Funds From Operations for the full year 2012 to be in the range of
$2.89 to $2.93, with full year Adjusted Funds From Operations Per
Diluted Share to be in the range of $2.37 to $2.45. Our guidance does
not include expenses associated with refinancing transactions or
expenses we will continue to incur evaluating the feasibility of a
conversion to a real estate investment trust. 
During 2012, we expect to invest approximately $78.0 million to $88.0
million in capital expenditures, consisting of approximately $30.0
million to $35.0 million in on-going prison construction and
expenditures related to potential land acquisitions, and $48.0
million to $53.0 million in maintenance and information technology.
We also expect a full-year effective income tax rate of approximately
37.5%, with payments for income taxes expected to approximate $84.0
million to $85.0 million for the full year. 
Supplemental Financial Information and Investor Presentations 
We have made available on our website supplemental financial
information and other data for the third quarter of 2012. 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
Information" 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 November 8, 2012, to discuss our third
quarter 2012 financial results and future outlook. To listen to this
discussion, please access "Webcasts" on the Investors page 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 2:00 p.m. eastern time on November 8,
2012 through 1:59 p.m. eastern time on November 15, 2012, by dialing
(888) 203-1112 or (719) 457-0820, pass code 9401810.  
About CCA  
CCA is the nation's largest owner and operator of partnership
correction and detention facilities and one of the largest prison
operators in the United States, behind only the federal government
and three states. We currently operate 67 facilities, including 47 
company-owned facilities, with a total design capacity of
approximately 92,000 beds in 20 states and the District of Columbia.
We specialize in owning, operating and managing prisons and other
correctional facilities and providing inmate residential and prisoner
transportation services for governmental agencies. In addition to
providing the fundamental residential services relating to inmates,
our facilities offer a variety of rehabilitation and educational
programs, including basic education, religious services, life skills
and employment training and substance abuse treatment. These services
are intended to reduce recidivism and to prepare inmates for their
successful re-entry into society upon their release. We also provide
inmates health care (including medical, dental and mental health
services), food services and work and recreational programs.  
Forward-Looking Statements  
This press release contains statements as to the Company's 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) general economic and market
conditions, including the impact governmental budgets can have on our
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 facility management
contracts, including as a result of sufficient governmental
appropriations 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 facilities and the commencement of new
management contracts; (v) the outcome of California's realignment
program and utilization of out of state private correctional
capacity; and (vi) 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.  
This press release states that the Company is assessing the
feasibility of converting to a REIT. The Company does not know if or
when it will elect REIT status. Further, many conditions must be met
in order to complete a conversion to a REIT, and the timing and
outcome of many of these are beyond the Company's control. For
example, the Company cannot provide assurance that the IRS will
ultimately provide it with a favorable PLR or that any favorable PLR
will be received in a timely manner for the Company to elect REIT
status as of January 1, 2013, or that our analysis, which is very
involved and complex, will conclude that converting to a REIT is in
the best interest of the Company or its shareholders. 
This press release also provides an estimated range of the Company's
total undistributed accumulated earnings and profits (E&P)
attributable to all taxable periods ending prior to January 1, 2013,
based on a preliminary analysis. The Company has not yet completed a
comprehensive study of its pre-REIT accumulated E&P as of the close
of the Company's 2012 taxable year. The calculation of undistributed
accumulated E&P is very complex and the actual result of the
comprehensive study relating to the Company's pre-REIT accumulated
E&P may differ materially from the Company's current estimates. 
These forward-looking statements should not be relied upon except as
statements of the Company's present intentions and of the Company's
present expectations, which may or may not occur. Cautionary
statements should be read as being applicable to all forward-looking
statements wherever they appear. Except as required by law, the
Company undertakes no obligation to release publicly or to reflect
the occurrence of unanticipated events. Readers are urged to
carefully review and consider the various disclosures the Company has
made in the Company's filings with the SEC, including "Risk Factors"
and "Cautionary Note Regarding Forward-Looking Statements" sections
in the Company's Annual Report on Form 10-K for the year ended
December 31, 2011. Other factors that could cause operating and
financial results to differ are described in the filings made from
time to time by us 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. 


 
                                                                            
             CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES            
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
       (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)       
                                                                            
                                                 September 30,  December 31,
                     ASSETS                           2012          2011    
                                                 ------------- -------------
                                                                            
Cash and cash equivalents                        $      59,242 $      55,802
Accounts receivable, net of allowance of $1,155                             
 and $1,218, respectively                              239,233       269,685
Deferred tax assets                                      7,947        11,768
Prepaid expenses and other current assets               23,807        18,676
Current assets of discontinued operations                   12         3,498
                                                 ------------- -------------
    Total current assets                               330,241       359,429
                                                                            
Property and equipment, net                          2,582,019     2,608,740
                                                                            
Restricted cash                                          5,020         5,013
Investment in direct financing lease                     7,928         9,233
Goodwill                                                11,988        11,988
Other assets                                            30,479        25,047
Non-current assets of discontinued operations                -           181
                                                 ------------- -------------
                                                                            
    Total assets                                 $   2,967,675 $   3,019,631
                                                 ============= =============
                                                                            
      LIABILITIES AND STOCKHOLDERS' EQUITY                                  
                                                                            
Accounts payable and accrued expenses            $     171,048 $     195,726
Income taxes payable                                        98           605
Current liabilities of discontinued operations             963         2,031
                                                 ------------- -------------
    Total current liabilities                          172,109       198,362
                                                                            
Long
-term debt                                       1,131,152     1,245,014
Deferred tax liabilities                               137,276       136,503
Other liabilities                                       35,060        31,730
                                                 ------------- -------------
                                                                            
    Total liabilities                                1,475,597     1,611,609
                                                 ------------- -------------
                                                                            
Commitments and contingencies                                               
                                                                            
Preferred stock - $0.01 par value; 50,000 shares                            
 authorized; none issued and outstanding at                                 
 September 30, 2012 and December 31, 2011,                                  
 respectively                                                -             -
Common stock - $0.01 par value; 300,000 shares                              
 authorized; 100,048 and 99,528 shares issued                               
 and outstanding at September 30, 2012 and                                  
 December 31, 2011, respectively                         1,000           995
Additional paid-in capital                           1,142,271     1,129,435
Retained earnings                                      348,807       277,592
                                                 ------------- -------------
                                                                            
    Total stockholders' equity                       1,492,078     1,408,022
                                                 ------------- -------------
                                                                            
    Total liabilities and stockholders' equity   $   2,967,675 $   3,019,631
                                                 ============= =============
                                                                            
                                                                            
                                                                            
            CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES             
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
       (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)       
                                                                            
                              For the Three Months     For the Nine Months  
                               Ended September 30,     Ended September 30,  
                             ----------------------  ---------------------- 
                                2012        2011        2012        2011    
                             ----------  ----------  ----------  ---------- 
REVENUE:                                                                    
  Management and other       $  443,572  $  431,586  $1,320,641  $1,285,608 
  Rental                          1,281         551       2,383       1,653 
                             ----------  ----------  ----------  ---------- 
                                444,853     432,137   1,323,024   1,287,261 
                             ----------  ----------  ----------  ---------- 
EXPENSES:                                                                   
  Operating                     314,338     301,689     946,456     888,866 
  General and administrative     22,015      23,007      66,950      66,236 
  Depreciation and                                                          
   amortization                  28,612      26,536      85,301      80,509 
                             ----------  ----------  ----------  ---------- 
                                364,965     351,232   1,098,707   1,035,611 
                             ----------  ----------  ----------  ---------- 
                                                                            
OPERATING INCOME                 79,888      80,905     224,317     251,650 
                             ----------  ----------  ----------  ---------- 
                                                                            
OTHER EXPENSES:                                                             
  Interest expense, net          13,722      18,058      45,341      54,820 
  Expenses associated with                                                  
   debt refinancing                                                         
   transactions                     168           -       1,996           - 
  Other (income) expense           (422)         73        (369)        262 
                             ----------  ----------  ----------  ---------- 
                                 13,468      18,131      46,968      55,082 
                             ----------  ----------  ----------  ---------- 
                                                                            
INCOME FROM CONTINUING                                                      
 OPERATIONS BEFORE INCOME                                                   
 TAXES                           66,420      62,774     177,349     196,568 
Income tax expense              (24,081)    (23,427)    (65,634)    (74,165)
                             ----------  ----------  ----------  ---------- 
                                                                            
INCOME FROM CONTINUING                                                      
 OPERATIONS                      42,339      39,347     111,715     122,403 
                                                                            
  Loss from discontinued                                                    
   operations, net of taxes           -        (107)       (362)       (415)
                             ----------  ----------  ----------  ---------- 
                                                                            
NET INCOME                   $   42,339  $   39,240  $  111,353  $  121,988 
                             ==========  ==========  ==========  ========== 
                                                                            
BASIC EARNINGS PER SHARE:                                                   
  Income from continuing                                                    
   operations                $     0.42  $     0.38  $     1.12  $     1.14 
  Loss from discontinued                                                    
   operations, net of taxes           -           -           -           - 
                             ----------  ----------  ----------  ---------- 
    Net income               $     0.42  $     0.38  $     1.12  $     1.14 
                             ==========  ==========  ==========  ========== 
                                                                            
DILUTED EARNINGS PER SHARE:                                                 
  Income from continuing                                                    
   operations                $     0.42  $     0.37  $     1.11  $     1.14 
  Loss from discontinued                                                    
   operations, net of taxes           -           -           -           - 
                             ----------  ----------  ----------  ---------- 
    Net income               $     0.42  $     0.37  $     1.11  $     1.14 
                             ==========  ==========  ==========  ========== 
                                                                            
DIVIDENDS PER SHARE          $     0.20  $        -  $    0. 40  $        - 
                             ==========  ==========  ==========  ========== 
                                                                            
                                                                            
                                                                            
             CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES            
                     SUPPLEMENTAL FINANCIAL INFORMATION                     
       (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)       
                                                                            
CALCULATION OF ADJUSTED DILUTED EPS                                         
                                                                            
                                For the Three Months   For the Nine Months  
                                 Ended September 30,    Ended September 30, 
                               ---------------------- ----------------------
                                  2012        2011       2012        2011   
                               ----------  ---------- ----------  ----------
                                                                            
Net income      
               $   42,339  $   39,240 $  111,353  $  121,988
Special items:                                                              
  Expenses associated with                                                  
   debt refinancing                                                         
   transactions                       168           -      1,996           -
  Expenses associated with                                                  
   pursuit of REIT conversion       1,310           -      1,910           -
  Income tax benefit for                                                    
   special items                     (536)          -     (1,444)          -
                               ----------  ---------- ----------  ----------
Adjusted net income            $   43,281  $   39,240 $  113,815  $  121,988
                               ==========  ========== ==========  ==========
                                                                            
Weighted average common shares                                              
 outstanding - basic               99,637     104,254     99,500     106,624
Effect of dilutive securities:                                              
  Stock options                       973         550        790         621
  Restricted stock-based                                                    
   compensation                       232         216        174         169
                               ----------  ---------- ----------  ----------
Weighted average shares and                                                 
 assumed conversions - diluted    100,842     105,020    100,464     107,414
                               ==========  ========== ==========  ==========
                                                                            
Adjusted Diluted Earnings Per                                               
 Share                         $     0.43  $     0.37 $     1.13  $     1.14
                               ==========  ========== ==========  ==========
                                                                            
                                                                            
                                                                            
CALCULATION OF FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS     
                                                                            
                              For the Three Months     For the Nine Months  
                               Ended September 30,     Ended September 30,  
                             ----------------------  ---------------------- 
                                2012        2011        2012        2011    
                             ----------  ----------  ----------  ---------- 
                                                                            
Net income                   $   42,339  $   39,240  $  111,353  $  121,988 
Income tax expense               24,081      23,427      65,634      74,165 
Expenses associated with                                                    
 debt refinancing                                                           
 transactions                       168           -       1,996           - 
Expenses associated with                                                    
 pursuit of REIT conversion       1,310           -       1,910           - 
Income tax benefit for                                                      
 special items                     (536)          -      (1,444)          - 
Income taxes paid               (20,647)    (16,631)    (59,645)    (58,092)
Depreciation and                                                            
 amortization                    28,612      26,536      85,301      80,509 
Depreciation and                                                            
 amortization for                                                           
 discontinued operations              -         101           -         374 
Income tax benefit for                                                      
 discontinued operations              -         (63)       (215)       (252)
Stock-based compensation                                                    
 reflected in G&A expense         2,890       2,294       8,265       6,922 
Amortization of debt costs                                                  
 and other non-cash interest      1,056       1,093       3,280       3,234 
                             ----------  ----------  ----------  ---------- 
                                                                            
Funds From Operations        $   79,273  $   75,997  $  216,435  $  228,848 
                                                                            
Maintenance and technology                                                  
 capital expenditures           (10,205)    (14,264)    (35,056)    (28,449)
                             ----------  ----------  ----------  ---------- 
                                                                            
Adjusted Funds From                                                         
 Operations                  $   69,068  $   61,733  $  181,379  $  200,399 
                             ==========  ==========  ==========  ========== 
                                                                            
Funds From Operations Per                                                   
 Diluted Share               $     0.79  $     0.72  $     2.15  $     2.13 
                             ==========  ==========  ==========  ========== 
Adjusted Funds From                                                         
 Operations Per Diluted                                                     
 Share                       $     0.68  $     0.59  $     1.81  $     1.87 
                             ==========  ==========  ==========  ========== 
                                                                            
                                                                            
                                                                            
CALCULATION OF EBITDA AND ADJUSTED EBITDA                                   
                                                                            
                                  For the Three Months  For the Nine Months 
                                  Ended September 30,   Ended September 30, 
                                 --------------------- ---------------------
                                    2012       2011       2012       2011   
                                 ---------- ---------- ---------- ----------
                                                                            
Net income                       $   42,339 $   39,240 $  111,353 $  121,988
Interest expense, net                13,722     18,058     45,341     54,820
Depreciation and amortization        28,612     26,536     85,301     80,509
Income tax expense                   24,081     23,427     65,634     74,165
Loss from discontinued                                                      
 operations, net of taxes                 -        107        362        415
                                 ---------- ---------- ---------- ----------
                                                                            
EBITDA                           $  108,754 $  107,368 $  307,991 $  331,897
                                                                            
Expenses associated with debt                                               
 refinancing transactions               168          -      1,996          -
Expenses associated with pursuit                                            
 of REIT conversion                   1,310          -      1,910          -
                                 ---------- ---------- ---------- ----------
                                                                            
ADJUSTED EBITDA   
               $  110,232 $  107,368 $  311,897 $  331,897
                                 ========== ========== ========== ==========
                                                                            
                                                                            
                                                                            
CALCULATION OF ADJUSTED FUNDS FROM OPERATIONS PER SHARE GUIDANCE            
                                                                            
                                                     For the Year Ending    
                                                      December 31, 2012     
                                                 -------------------------- 
                                                  Low End of    High End of 
                                                   Guidance      Guidance   
                                                 ------------  ------------ 
                                                                            
Adjusted net income                              $    154,000  $    156,000 
Income tax expense                                     92,000        94,000 
Income taxes paid                                     (84,000)      (85,000)
Depreciation and amortization                         114,000       114,000 
Other non-cash items                                   15,000        15,500 
                                                 ------------  ------------ 
                                                                            
Funds From Operations                            $    291,000  $    294,500 
Maintenance and technology capital expenditures       (53,000)      (48,000)
                                                 ------------  ------------ 
                                                                            
Adjusted Funds From Operations                   $    238,000  $    246,500 
                                                 ============  ============ 
                                                                            
Funds From Operations Per Diluted Share          $       2.89  $       2.93 
                                                 ============  ============ 
Adjusted Funds From Operations Per Diluted Share $       2.37  $       2.45 
                                                 ============  ============ 

 
NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION 
Adjusted Net Income, EBITDA, Adjusted EBITDA, Funds From Operations
and Adjusted Funds From Operations, and their corresponding per share
metrics are non-GAAP financial measures. The Company 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. The
Company believes that it is useful to provide investors, lenders and
security analysts disclosures of its results of operations on the
same basis as that used by management.  
Management and investors review both the Company's overall
performance using GAAP and non-GAAP measures including Net Income,
Adjusted Net Income, Funds From Operations and Adjusted Funds From
Operations, and their corresponding per share metrics, as well as
EBITDA and Adjusted EBITDA to assess the operating performance of the
Company's correctional facilities. EBITDA, Adjusted EBITDA, Funds
From Operations and Adjusted Funds From Operations are useful as
supplemental measures of the performance of the Company's
correctional facilities because they do not take into account
depreciation and amortization, or with respect to EBITDA and Adjusted
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 correctional facilities,
management believes that assessing performance of the Company's
correctional facilities without the impact of depreciation or
amortization is useful. The calculation of Adjusted Funds From
Operations substitutes capital expenditures incurred to maintain the
functionality and condition of the Company's correctional facilities
in lieu of a provision for depreciation. Some of these capital
expenditures contain a discretionary element with respect to when
they are incurred, while others may be more urgent. Therefore,
maintenance capital expenditures may fluctuate from quarter to
quarter, depending on the nature of the expenditures required,
seasonal factors such as weather, and budgetary conditions. The
calculation of Funds From Operations and Adjusted Funds From
Operations also reflect the amount of income taxes paid. We
continuously evaluate tax planning strategies to reduce the effective
tax rate for financial reporting purposes as well as strategies to
reduce the amount of taxes we pay. As a result, the amount of taxes
we pay may fluctuate from period to period depending on the
effectiveness of our strategies. The amount of taxes we pay may also
result from many factors beyond our control, such as changes in tax
law. Finally, income taxes paid may fluctuate significantly from
quarter to quarter based on statutory methods of computing
inter-period payment requirements and the date such taxes are due.  
The Company may make adjustments to GAAP net income, EBITDA, Adjusted
EBITDA, Funds From Operations and Adjusted Funds From Operations 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 se
ttlement, because such items do not reflect a
necessary component of the ongoing operations of the Company. Other
companies may calculate Adjusted net income, EBITDA, Adjusted EBITDA,
Funds From Operations and Adjusted Funds From Operations differently
than the Company does, or adjust for other items, and therefore
comparability may be limited. Adjusted net income, EBITDA, Adjusted
EBITDA, Funds From Operations and Adjusted Funds From Operations 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.  
Contact:
Investors and Analysts:
Karin Demler
CCA
(615) 263-3005 
Financial Media:
Dave Gutierrez
Dresner Corporate Services
(312) 780-7204 
 
 
Press spacebar to pause and continue. Press esc to stop.