CCA Announces 2012 Fourth Quarter Financial Results

CCA Announces 2012 Fourth Quarter Financial Results 
Diluted Earnings per Share up 9.8%; Adjusted Diluted Earnings per
Share up 7.3%; Normalized FFO per Diluted Share up 8.5%; AFFO per
Diluted Share up 13.0% 
NASHVILLE, TN -- (Marketwire) -- 02/13/13 --   CCA (NYSE: CXW) (the
"Company" or "Corrections Corporation of America"), America's largest
owner of partnership correctional and detention facilities, announced
today its financial results for the fourth quarter of 2012. 
Fourth Quarter 2012 Highlights 


 
--  Diluted EPS up 9.8% to $0.45
--  Adjusted Diluted EPS up 7.3% to $0.44
--  Normalized FFO Per Diluted Share up 8.5% to $0.64
--  AFFO Per Diluted Share up 13.0% to $0.61

  
For the fourth quarter of 2012, the Company reported Normalized FFO of
$0.64 per share compared to $0.59 per share in the same period of
2011. The 8.5% increase in Normalized FFO per share reflects a slight
increase in operating income, adjusted to exclude REIT conversion
costs, combined with a reduction in interest expense.  
Normalized FFO is calculated by eliminating certain items from FFO
which, by their nature, are not comparable from period to period or
that tend to obscure the Company's actual operating performance. A
reconciliation of Normalized FFO can be found later in this release. 
CCA President and Chief Executive Officer, Damon Hininger, stated,
"We are pleased to report financial results that were above
expectations. As we reported last week, we are also very excited to
have announced our decision to elect REIT status effective January 1,
2013. We believe this demonstrates our commitment to creating value
for our shareholders."  
Revenue for the fourth quarter of 2012 totaled $436.9 million
compared to $437.1 million in the same period of 2011. Revenue for
the fourth quarter of 2012 reflects: 


 
--  Stable compensated man-days: 7.38 million in the fourth quarter of
    2012 compared to 7.39 million in the fourth quarter of 2011
--  A slight increase in revenue per compensated man-day: $59.09 in the
    fourth quarter of 2012 compared to $58.97 in the fourth quarter of
    2011

  
Fourth quarter 2012 revenues and compensated man-days reflect higher
populations from our Lake Erie Correctional Institution which we
purchased from the state of Ohio and assumed operations effective
January 1, 2012. In addition, we completed construction of our
Jenkins Correctional Center during the first quarter of 2012 and
began ramping-up state of Georgia populations during the same
quarter. We also 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 contract at our Kit Carson
Correctional Center in Colorado and from the state of Oklahoma at our
Cimarron and Davis facilities in Oklahoma pursuant to a newly
expanded contract. These population increases were offset by declines
in populations from the U. S. Marshals Service, Kentucky, California,
Colorado and the District of Columbia. 
Fourth quarter 2012 operating expenses, general and administrative
expense, and depreciation expense totaled $354.0 million (adjusted to
exclude approximately $2.3 million of REIT conversion costs),
compared to $354.7 million in the same period of 2011. Total
operating expenses increased primarily due to an increase in wage and
benefits expense and depreciation expense offset by a reduction in
general and administrative expense. Interest expense declined by
approximately $5.1 million in the fourth quarter of 2012 compared to
the same period of 2011 due to a reduction in debt balances and a
lower weighted average interest rate. 
Adjusted net income, FFO, Normalized FFO and AFFO, 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). We have modified our
calculation of FFO and AFFO to conform with NAREIT guidelines. 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. 
Guidance  
We expect Adjusted Diluted EPS for the first quarter of 2013 to be in
the range of $0.47 to $0.48, and full-year 2013 to be in the range of
$2.05 to $2.15. We also expect FFO for the first quarter of 2013 to
be in the range of $0.66 to $0.68 per diluted share and full-year
2013 to be in the range of $2.80 to $2.90. AFFO Per Diluted Share for
the first quarter of 2013 is expected to be in the range of $0.64 to
$0.66 and $2.72 to $2.87 for the full-year 2013.  
Guidance excludes REIT conversion costs, debt refinancing costs, the
reversal of certain net deferred tax liabilities associated with the
REIT conversion as well as the impact of any shares to be issued as
part of the E&P dividend. For more specifics on those items related
to the REIT conversion, please refer to the press release and
investor presentation we
 issued on February 7, 2013.  
First quarter 2013 guidance compared to fourth quarter 2012, reflects
$5.0 million, or 5 cents per diluted share, for the seasonal increase
in unemployment taxes, which we experience during the first quarter
of each year. First quarter guidance also reflects two fewer
operating days in the quarter compared with the fourth quarter, which
negatively impacts the first quarter of 2013 by 2.5 cents per share.
First quarter and full-year guidance assumes general and
administrative expense equal to approximately 5.25% of total
revenues, including the increase related to ongoing REIT compliance
costs. Full-year guidance reflects an expected increase in
depreciation expense as well as an increase in interest expense
related to the incurrence of additional debt to fund the E&P dividend
and REIT conversion costs. Guidance also assumes a consolidated GAAP
income tax rate of 8.5% to 9.0%.  
With regards to inmates we house for the state of California, our
guidance assumes all of the approximately 1,500 inmates at our Red
Rock facility are returned to the custody of California between July
2013 and December 2013, in order to make space available for the
state of Arizona under our previously announced new contract
beginning in 2014. To the extent the state of California needs
replacement capacity for their inmates being displaced at our Red
Rock facility, we have other beds in our system we could make
available to California.  
During 2013, we expect to invest approximately $85 million to $100
million in capital expenditures, consisting of $40 million to $45
million in on-going prison construction and expenditures related to
potential land acquisition, $20 million to $25 million in maintenance
capital expenditures on real estate assets, and $25 million to $30
million on capital expenditures on other assets and information
technology.  
Supplemental Financial Information and Investor Presentations 
We have made available on our website supplemental financial
information and other data for the fourth 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.  
The Fourth Quarter Investor Presentation will be available on our
website beginning on or about March 11, 2013. Interested parties may
access this information through our website at www.cca.com under
"Webcasts" 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 February 14, 2013, to discuss our fourth
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 February 14,
2013 through 1:59 p.m. eastern time on February 22, 2013, by dialing
(888) 203-1112 or (719) 457-0820, pass code 8510479.  
About CCA 
CCA is the nation's largest owner 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 own or control 51 facilities and currently operate 67 facilities,
with a total design capacity of approximately 92,500 beds in 20
states and the District of Columbia. CCA specializes in owning,
operating and managing prisons and other correctional facilities and
providing inmate residential 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.  
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) our ability to meet and maintain
REIT qualification tests; (ii) general economic and market
conditions, including the impact governmental budgets can have on our
per diem rates, occupancy and overall utilization; (iii) the
availability of debt and equity financing on terms that are favorable
to us; (iv) 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; (v) 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;
(vi) 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; (vii) the outcome of California's
realignment program and utilization of out of state private
correctional capacity; and (viii) 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.  


 
                                                                            
                                                                            
             CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES            
                    CONDENSED CONSOLIDATED BALANCE SHEETS                   
       (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)       
                                                                            
                                                         December 31,       
                                                 ---------------------------
                     ASSETS                           2012          2011    
                                                 ------------- -------------
                                                                            
Cash and cash equivalents                        $      62,897 $      55,802
Accounts receivable, net of allowance of $2,578                             
 and $1,218, respectively                              252,764       269,685
Deferred tax assets                                      8,022        11,768
Prepaid expenses and other current assets               27,059        18,676
Current assets of discontinued operations                    -         3,498
                                                 ------------- -------------
    Total current assets                               350,742       359,429
                                                                            
Property and equipment, net                          2,568,791     2,608,740
                                                                            
Restricted cash                                          5,022         5,013
Investment in direct financing lease                     7,467         9,233
Goodwill                                                11,988        11,988
Other assets                                            30,732        25,047
Non-current assets of discontinued operations                -           181
                                                 ------------- -------------
                                                                            
    Total assets                                 $   2,974,742 $   3,019,631
                                                 ============= =============
                                                                            
      LIABILITIES AND STOCKHOLDERS' EQUITY                                  
                                                                            
Accounts payable and accrued expenses            $     166,000 $     195,726
Income taxes payable                                       102           605
Current liabilities of discontinued operations             356         2,031
                                                 ------------- -------------
    Total current liabilities                          166,458       198,362
                                                                            
Long-term debt                                       1,111,545     1,245,014
Deferred tax liabilities                               139,526       136,503
Other liabilities                                       35,593        31,730
                                                 ------------- -------------
                                                                            
    Total liabilities                                1,453,122     1,611,609
                                                 ------------- -------------
                                                                            
Commitments and contingencies                                               
                                                                            
Preferred stock - $0.01 par value; 50,000 shares                            
 authorized; none issued and outstanding at                                 
 December 31, 2012 and 2011, respectively                    -             -
Common stock - $0.01 par value; 300,000 shares                              
 authorized; 100,105 and 99,528 shares issued                               
 and outstanding at December 31, 2012 and 2011,                             
 respectively                                            1,001           995
Additional paid-in capital                           1,146,488     1,129,435
Retained earnings                                      374,131       277,592
                                                 ------------- -------------
                                                                            
    Total stockholders' equity                   $   1,521,620 $   1,408,022
                                                 ------------- -------------
                                                                            
    Total liabilities and stockholders' equity   $   2,974,742 $   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 Twelve Months 
                               Ended December 31,      Ended December 31,   
                             ----------------------  ---------------------- 
                                2012        2011        2012        2011    
                             ----------  ----------  ----------  ---------- 
REVENUE:                                                                    
  Management and other       $  436,580  $  436,531  $1,757,221  $1,722,139 
  Rental                            281         551       2,664       2,204 
                             ----------  ----------  ----------  ---------- 
                                436,861     437,082   1,759,885   1,724,343 
                             ----------  ----------  ----------  ---------- 
EXPENSES:                                                                   
  Operating                     305,728     302,007   1,252,184   1,190,873 
  General and administrative     21,985      24,991      88,935      91,227 
  Depreciation and                                                          
   amortization                  28,632      27,707     113,933     108,216 
                             ----------  ----------  ----------  ---------- 
                                356,345     354
,705   1,455,052   1,390,316 
                             ----------  ----------  ----------  ---------- 
                                                                            
OPERATING INCOME                 80,516      82,377     304,833     334,027 
                             ----------  ----------  ----------  ---------- 
                                                                            
OTHER (INCOME) EXPENSES:                                                    
  Interest expense, net          13,022      18,120      58,363      72,940 
  Expenses associated with                                                  
   debt refinancing                                                         
   transactions                     103           -       2,099           - 
  Other (income) expense             31          42        (338)        304 
                             ----------  ----------  ----------  ---------- 
                                 13,156      18,162      60,124      73,244 
                             ----------  ----------  ----------  ---------- 
                                                                            
INCOME FROM CONTINUING                                                      
 OPERATIONS BEFORE INCOME                                                   
 TAXES                           67,360      64,215     244,709     260,783 
                                                                            
Income tax expense              (21,952)    (22,852)    (87,586)    (97,017)
                             ----------  ----------  ----------  ---------- 
                                                                            
INCOME FROM CONTINUING                                                      
 OPERATIONS                      45,408      41,363     157,123     163,766 
                                                                            
  Loss from discontinued                                                    
   operations, net of taxes           -        (841)       (362)     (1,256)
                             ----------  ----------  ----------  ---------- 
                                                                            
NET INCOME                   $   45,408  $   40,522  $  156,761  $  162,510 
                             ==========  ==========  ==========  ========== 
                                                                            
BASIC EARNINGS PER SHARE:                                                   
  Income from continuing                                                    
   operations                $     0.46  $     0.42  $     1.58  $     1.56 
  Loss from discontinued                                                    
   operations, net of taxes           -       (0.01)          -       (0.01)
                             ----------  ----------  ----------  ---------- 
    Net income               $     0.46  $     0.41  $     1.58  $     1.55 
                             ==========  ==========  ==========  ========== 
                                                                            
DILUTED EARNINGS PER SHARE:                                                 
  Income from continuing                                                    
   operations                $     0.45  $     0.42  $     1.56  $     1.55 
  Loss from discontinued                                                    
   operations, net of taxes           -       (0.01)          -       (0.01)
                             ----------  ----------  ----------  ---------- 
    Net income               $     0.45  $     0.41  $     1.56  $     1.54 
                             ==========  ==========  ==========  ========== 
                                                                            
DIVIDENDS PER SHARE          $     0.20  $        -  $     0.60  $        - 
                             ==========  ==========  ==========  ========== 
                                                                            
                                                                            
                                                                            
             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 Twelve Months 
                                Ended December 31,      Ended December 31,  
                             ----------------------- -----------------------
                                2012         2011       2012         2011   
                             ----------  ----------- ----------  -----------
                                                                            
Net income                   $   45,408  $    40,522 $  156,761  $   162,510
Special items:                                                              
  Expenses associated with                                                  
   debt refinancing                                  
                       
   transactions                     103            -      2,099            -
  Expenses associated with                                                  
   pursuit of REIT                                                          
   conversion                     2,326            -      4,236            -
  Income tax benefit for                                                    
   reversal of deferred                                                     
   taxes due to corporate                                                   
   restructuring                 (2,891)           -     (2,891)           -
  Income tax benefit for                                                    
   special items                   (896)           -     (2,340)           -
                             ----------  ----------- ----------  -----------
                                                                            
Adjusted net income          $   44,050  $    40,522 $  157,865  $   162,510
                             ==========  =========== ==========  ===========
                                                                            
Weighted average common                                                     
 shares outstanding - basic      99,679       99,135     99,545      104,736
Effect of dilutive                                                          
 securities:                                                                
  Stock options                   1,086          547        864          603
  Restricted stock-based                                                    
   compensation                     334          276        214          196
                             ----------  ----------- ----------  -----------
Weighted average shares and                                                 
 assumed conversions -                                                      
 diluted                        101,099       99,958    100,623      105,535
                             ==========  =========== ==========  ===========
                                                                            
Adjusted Diluted Earnings                                                   
 Per Share                   $     0.44  $      0.41 $     1.57  $      1.54
                             ==========  =========== ==========  ===========
                                                                            
                                                                            
                                                                            
CALCULATION OF FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS     
                                                                            
                              For the Three Months    For the Twelve Months 
                               Ended December 31,      Ended December 31,   
                             ----------------------  ---------------------- 
                                2012        2011        2012        2011    
                             ----------  ----------  ----------  ---------- 
                                                                            
Net income                   $   45,408  $   40,522  $  156,761  $  162,510 
Depreciation of real estate                                                 
 assets                          20,148      18,885      79,145      73,705 
Depreciation of real estate                                                 
 assets of discontinued                                                     
 operations                           -           -           -         345 
                             ----------  ----------  ----------  ---------- 
Funds From Operations        $   65,556  $   59,407  $  235,906  $  236,560 
                                                                            
Expenses associated with                                                    
 debt refinancing                                                           
 transactions                       103           -       2,099           - 
Expenses associated with                                                    
 pursuit of REIT conversion       2,326           -       4,236           - 
Income tax benefit for                                                      
 special items                     (896)          -      (2,340)          - 
Income tax benefit for                                                      
 reversal of deferred taxes                                                 
 due to corporate                                                           
 restructuring                   (2,891)          -      (2,891)          - 
                             ----------  ----------  ----------  ---------- 
Normalized Funds From                                                       
 Operations                  $   64,198  $   59,407  $  237,010  $  236,560 
                                                                            
Maintenance capital                                                         
 expenditures on real estate                                                
 assets                          (6,428)     (9,269)    (18,643)    (20,056)
Stock-based compensation          3,202       2,582      12,296      10,331 
Amortization of debt costs                                                  
 and other non-cash interest      1,036       1,097       4,316       4,331 
                             ----------  ----------  ----------  ---------- 
Adjusted Funds From                                                         
 Operations                  $   62,008  $   53,817  $  234,979  $  231,166 
                             ==========  ==========  ==========  ========== 
Normalized Funds From                                                       
 Operations Per Diluted                                                     
 Share                       $     0.64  $     0.59  $     2.36  $     2.24 
                             ==========  ==========  ==========  ========== 
Adjusted Funds From                                                         
 Operations Per Diluted                                                     
 Share                       $     0.61  $     0.54  $     2.34  $     2.19 
                             ==========  ==========  ==========  ========== 
                                                                            
                                                                            
                                                                            
      CALCULATION OF ADJUSTED FUNDS FROM OPERATIONS PER SHARE GUIDANCE      
                                                                            
                             For the Quarter Ending    For the Year Ending  
                                 March 31, 2013         December 31, 2013   
                             ----------------
------  ---------------------- 
                                          High End                High End  
                             Low End of      of      Low End of      of     
                              Guidance    Guidance    Guidance    Guidance  
                             ----------  ----------  ----------  ---------- 
                                                                            
Adjusted net income          $   48,000  $   49,000  $  210,000  $  220,000 
Depreciation on real estate                                                 
 assets                          19,000      20,000      77,000      77,000 
                             ----------  ----------  ----------  ---------- 
                                                                            
Funds From Operations        $   67,000  $   69,000  $  287,000  $  297,000 
                                                                            
Other non-cash expenses           4,000       4,250      17,000      17,000 
Maintenance capital                                                         
 expenditures on real estate                                                
 assets                          (5,250)     (6,250)    (25,000)    (20,000)
                             ----------  ----------  ----------  ---------- 
                                                                            
Adjusted Funds From                                                         
 Operations                  $   65,750  $   67,000  $  279,000  $  294,000 
                             ==========  ==========  ==========  ========== 
                                                                            
Funds From Operations Per                                                   
 Diluted Share               $     0.66  $     0.68  $     2.80  $     2.90 
                             ==========  ==========  ==========  ========== 
Adjusted Funds From                                                         
 Operations Per Diluted                                                     
 Share                       $     0.64  $     0.66  $     2.72  $     2.87 
                             ==========  ==========  ==========  ========== 

 
NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION 
FFO and AFFO are widely accepted non-GAAP supplemental measures of
REIT performance following the standards established by the National
Association of Real Estate Investment Trusts (NAREIT). CCA believes
that FFO and AFFO 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. NAREIT
defines FFO as net income computed in accordance with generally
accepted accounting principles, excluding gains (or losses) from
sales of property and extraordinary items, plus depreciation and
amortization of real estate and impairment of depreciable real
estate. 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. CCA may make adjustments to FFO 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 settlement, because such items do not reflect a
necessary component of the ongoing operations of the Company.
Normalized FFO excludes the effects of such items. CCA calculates
AFFO by adding to Normalized FFO non-cash expenses such as the
amortization of deferred financing costs and stock-based
compensation, and by subtracting from Normalized FFO normalized
recurring real estate expenditures that are capitalized and then
amortized, but which are necessary to maintain a REIT's properties
and its revenue stream. Some of these capital expenditures contain a
discretionary element with respect to when they are incurred, while
others may be more urgent. Therefore, these capital expenditures may
fluctuate from quarter to quarter, depending on the nature of the
expenditures required, seasonal factors such as weather, and
budgetary conditions. Other companies may calculate FFO, Normalized
FFO, and AFFO differently than the Company does, or adjust for other
items, and therefore comparability may be limited. FFO, Normalized
FFO, and AFFO 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 
 
 
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