CCA Announces 2013 First Quarter Financial Results

CCA Announces 2013 First Quarter Financial Results 
Adjusted Diluted EPS of $0.50, up 51.5%; Normalized FFO per Diluted
Share up 34.6%; Raising Full-Year 2013 Adjusted Diluted EPS Guidance
From $2.05 - $2.15 to $2.08 - $2.16 
NASHVILLE, TN -- (Marketwired) -- 05/08/13 --   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 first quarter of 2013. 
First Quarter 2013 Financial Highlights 


 
--  Diluted EPS $1.78
--  Adjusted Diluted EPS $0.50, up 51.5% over prior year first quarter
--  Normalized FFO Per Diluted Share $0.70, up 34.6% over prior year first
    quarter
--  AFFO Per Diluted Share $0.70, up 29.6% over prior year first quarter

  
For the first quarter of 2013, the Company reported Normalized FFO of
$0.70 per diluted share compared to $0.52 per diluted share in the
same period of 2012. Net income generated in the first quarter of
2013, after adjusting for debt refinancing costs, REIT conversion
costs and income tax benefits primarily resulting from the REIT
conversion increased 56.3% to $51.1 million, or $0.50 per diluted
share, compared to $32.7 million, or $0.33 per diluted share
generated in the first quarter of 2012. Our conversion to a REIT,
resulting in a reduction in income tax expense, as well as a
reduction in interest expense, were the primary contributors to the
increases in EPS, FFO and AFFO. 
CCA President and Chief Executive Officer, Damon Hininger, stated,
"Revenues were in line with our expectations while operating expenses
were lower than forecasted, which resulted in earnings above our
guidance range." Hininger continued, "On May 20, 2013, we will
distribute the special dividend completing our requirement to
distribute our pre-REIT accumulated earnings and profits, which is
the final step necessary to complete our conversion into a REIT
effective January 1, 2013."  
Revenue for the first quarter of 2013 totaled $425.7 million compared
to $435.3 million in the first quarter of 2012. Revenue for the first
quarter of 2013 reflects: 


 
--  A reduction in compensated man-days driven primarily by the previously
    disclosed decline in United States Marshals Service (USMS) populations
    we experienced during 2012
--  An increase in revenue per compensated man-day to $59.43 in the first
    quarter of 2013 compared to $59.06 in the first quarter of 2012

  
While USMS populations declined in 2012, we have begun to experience
increases in these populations in 2013. We also experienced a slight
decline in state populations primarily due to declines in inmate
populations from the states of Kentucky, California and Texas,
partially offset by increases from Georgia. We also experienced
increases in inmate populations pursuant to our recently expanded
contract from the state of Oklahoma at our Cimarron Correctional
Facility and our Davis Correctional Facility. 
First quarter 2013 operating expenses totaled $307.5 million compared
to $315.5 million in the same period of 2012. Total operating
expenses decreased primarily due to the change in populations
discussed above.  Net operating income, or our total revenue less
total operating expenses, totaled $118.2 million, or 27.8% of
revenues, in the first quarter of 2013 compared to $119.8 million, or
27.5% of revenues, in the first quarter of 2012. 
Adjusted net income, net operating 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).
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. 
Special Dividend to Satisfy E&P Distribution
 On April 8, 2013, CCA's
Board of Directors declared a special dividend to shareholders of
$675 million, or approximately $6.63 per share of common stock, based
on the number of shares outstanding at that time, in connection with
the Company's plan to qualify as a REIT effective as of January 1,
2013. The special dividend will be paid in satisfaction of a
requirement that the Company distribute its previously undistributed
accumulated earnings and profits attributable to tax periods ending
prior to January 1, 2013. The Company expects to pay the special
dividend on May 20, 2013 to shareholders of record as of April 19,
2013.  
The Company will pay the special dividend with a combination of cash
and shares of CCA common stock, with the total amount of cash payable
to shareholders limited to a maximum of 20% of the total value of the
special dividend, or $135 million. If the total amount of cash
elected by shareholders exceeds 20% of the total value of the special
dividend, the available cash will be prorated among those
shareholders who elect to receive cash, and the remaining portion of
the special dividend will be paid in shares of CCA common stock.
Shareholders who do not make an election by May 9, 2013 will be
deemed to have made an election to receive payment of the special
dividend in shares of CCA common stock. 
The total number of shares of CCA common stock to be distributed
pursuant to the special dividend will be determined based on
shareholder elections and the average closing price per share of CCA
common stock on the New York Stock Exchange for the three trading
days after May 9, 2013, the date that election forms are due.  
Guidance 
 The Company is raising full-year 2013 financial guidance
ranges as follows: 


 
--  Full-year Adjusted Diluted EPS: $2.08 to $2.16
--  Full-year Normalized Funds From Operations per diluted share: $2.83 to
    $2.91
--  Full-year Adjusted Funds From Operations per diluted share: $2.75 to
    $2.88

  
We expect Adjusted Diluted EPS for the second quarter of 2013 to be in
the range of $0.52 to $0.53. We expect Normalized FFO for the second
quarter of 2013 to be in the range of $0.70 to $0.72 per diluted
share. AFFO per diluted share for the second quarter of 2013 is
expected to be in the range of $0.69 to $0.71. We are assuming a
consolidated GAAP income tax rate of 8.5% to 9.0% for the remainder
of 2013. 
The increase in 2013 full-year guidance reflects lower interest
expense compared to our February guidance as a result of our recent
debt refinancing. The favorable earnings impact from lower interest
expense was partially offset by a reduction in earnings associated
with reduced inmate populations at our Mineral Wells facility.  
The State of California has submitted a court-ordered plan that lists
slowing the rate of return of its inmates housed in CCA facilities as
one of the potential measures that could be implemented to meet the
court-ordered reduction of populations housed within the State's own
correctional facilities. If this measure were implemented by the
State, it could increase the average daily California populations
above those currently assumed in our earnings guidance. A number of
actions must be taken before this measure could be implemented,
including approval of the plan by the court. As such, our guidance
continues to assume 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. We have beds in our 
system we could make available
to California to replace the capacity they are losing at the Red Rock
facility or to otherwise assist them with their needs.  
On April 4, 2013, the Company closed on two new issuances of senior
notes totaling $675 million (the New Notes). On April 17, 2013 the
Company completed the purchase of $315.4 of its $465 million 7 3/4%
Senior Notes due 2017 (the 2017 Notes) under a tender offer. The
$149.6 million balance of the 2017 Notes will remain outstanding
until June 1, 2013 when they will be redeemed at a price of 103.875%
of par plus accrued interest. We expect to incur additional
refinancing charges of approximately $36.5 million during the second
quarter of 2013 associated with the tender offer and redemption of
the 2017 Notes.  
This 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 all shares to be issued
as part of the special dividend. The number of shares to be issued in
connection with the special dividend will be based on the average
closing price of the Company's common stock for the three trading
days following May 9, 2013. The shares to be issued in connection
with the special dividend will be included in the calculation of
basic and diluted per share data prospectively and not retroactively
for all periods presented. The issuance of these additional shares
will result in a reduction to the aforementioned per share guidance
amounts, as well as the per share amount of our quarterly cash
dividends.  
During 2013, we expect to invest approximately $85.0 million to
$100.0 million in capital expenditures, consisting of $40.0 million
to $45.0 million in on-going prison construction and expenditures
related to potential land acquisitions, $20.0 million to $25.0
million in maintenance capital expenditures on real estate assets,
and $25.0 million to $30.0 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 first quarter of 2013. 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 First Quarter Investor Presentation will be available on our
website beginning on or about May 20, 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 May 9,
2013, to discuss our first quarter 2013 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 May 9, 2013 through 2:00 p.m. eastern time on May 17, 2013,
by dialing (888) 203-1112 or (719) 457-0820, pass code 7931621.  
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 operate 67 facilities, including 51 facilities
that we own or control, 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)       
                                                                            
                                                                            
                                                   March 31,    December 31,
                      ASSETS                          2013          2012    
                                                 ------------- -------------
                                                                            
Cash and cash equivalents                        $      60,330 $      62,897
Accounts receivable, net of allowance of $2,138                             
 and $2,578, respectively                              232,863       252,764
Current deferred tax assets                              5,360         8,022
Prepaid expenses and other current assets               20,048        27,059
                                                 ------------- -------------
    Total current assets                               318,601       350,742
                                                                      
      
Property and equipment, net                          2,551,961     2,568,791
                                                                            
Restricted cash                                          5,023         5,022
Investment in direct financing lease                     6,991         7,467
Goodwill                                                11,988        11,988
Other assets                                            35,813        30,732
Non-current deferred tax assets                          5,998             -
                                                 ------------- -------------
                                                                            
    Total assets                                 $   2,936,375 $   2,974,742
                                                 ============= =============
                                                                            
       LIABILITIES AND STOCKHOLDERS' EQUITY                                 
                                                                            
Accounts payable and accrued expenses            $     216,279 $     166,000
Income taxes payable                                     2,352           102
Current liabilities of discontinued operations              79           356
                                                 ------------- -------------
    Total current liabilities                          218,710       166,458
                                                                            
Long-term debt                                       1,016,948     1,111,545
Deferred tax liabilities                                     -       139,526
Other liabilities                                       38,815        35,593
                                                 ------------- -------------
                                                                            
    Total liabilities                                1,274,473     1,453,122
                                                 ------------- -------------
                                                                            
Commitments and contingencies                                               
                                                                            
Preferred stock - $0.01 par value; 50,000 shares                            
 authorized; none issued and outstanding at March                           
 31, 2013 and December 31, 2012, respectively                -             -
Common stock - $0.01 par value; 300,000 shares                              
 authorized; 101,102 and 100,105 shares issued                              
 and outstanding at March 31, 2013 and December                             
 31, 2012, respectively                                  1,011         1,001
Additional paid-in capital                           1,159,512     1,146,488
Retained earnings                                      501,379       374,131
                                                 ------------- -------------
                                                                            
    Total stockholders' equity                   $   1,661,902 $   1,521,620
                                                 ------------- -------------
                                                                            
    Total liabilities and stockholders' equity   $   2,936,375 $   2,974,742
                                                 ============= =============
                                                                            

 
                                                                            
                                                                            
             CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES            
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS              
       (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)       
                                                                            
                                                   For the Three Months     
                                                      Ended March 31,       
                                                --------------------------- 
                                                     2013          2012     
                                                ------------- ------------- 
REVENUE:                                                                    
  Owned and controlled properties               $     341,774 $     352,314 
  Managed only and other                               83,950        82,991 
                                                ------------- ------------- 
                                                      425,724       435,305 
                                                ------------- ------------- 
EXPENSES:                                                                   
  Operating:                                                                
    Owned and controlled properties                   229,444       235,737 
    Managed only and other                             78,086        79,797 
                                                ------------- ------------- 
      Total operating expenses                        307,530       315,534 
  General and administrative                           23,171        21,790 
  REIT conversion costs                                 8,061            50 
  Depreciation and amortization                        27,630        28,387 
                                                ------------- ------------- 
                                                      366,392       365,761 
                                                ------------- ------------- 
                                                                            
OPERATING INCOME                                       59,332        69,544 
                                                ------------- ------------- 
                                                                            
OTHER EXPENSES:                                                             
  Interest expense, net                                12,566        16,890 
  Expenses associated with debt refinancing                                 
   transactions                                           225         1,541 
  Other expense                                           101            12 
                                                ------------- ------------- 
                                                       12,892        18,443 
                                                ------------- ------------- 
                                                                            
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME                             
 TAXES                                                 46,440        51,101 
                                                  
                          
Income tax (expense) benefit                          134,652       (19,059)
                                                ------------- ------------- 
                                                                            
INCOME FROM CONTINUING OPERATIONS                     181,092        32,042 
                                                                            
  Loss from discontinued operations, net of                                 
   taxes                                                    -          (362)
                                                ------------- ------------- 
                                                                            
NET INCOME                                      $     181,092 $      31,680 
                                                ============= ============= 
                                                                            
BASIC EARNINGS PER SHARE:                                                   
  Income from continuing operations             $        1.81 $        0.32 
  Loss from discontinued operations, net of                                 
   taxes                                                    -             - 
                                                ------------- ------------- 
    Net income                                  $        1.81 $        0.32 
                                                ============= ============= 
                                                                            
DILUTED EARNINGS PER SHARE:                                                 
  Income from continuing operations             $        1.78 $        0.32 
  Loss from discontinued operations, net of                                 
   taxes                                                    -             - 
                                                ------------- ------------- 
    Net income                                  $        1.78 $        0.32 
                                                ============= ============= 
                                                                            
DIVIDENDS DECLARED PER SHARE                    $        0.53 $           - 
                                                ============= ============= 
                                                                            
                                                                            
                                                                            
             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   
                                                        Ended March 31,     
                                                   ------------------------ 
                                                       2013         2012    
                                                   -----------  ----------- 
                                                                            
Net income                                         $   181,092  $    31,680 
Special items:                                                              
  Expenses associated with debt refinancing                                 
   transactions                                            225        1,541 
  Expenses associated with REIT conversion               8,061           50 
  Income tax benefit for reversal of deferred taxes                         
   due to REIT conversion                             (137,686)           - 
  Income tax benefit for special items                    (602)        (593)
                                                   -----------  ----------- 
                                                                            
Adjusted net income                                $    51,090  $    32,678 
                                                   ===========  =========== 
                                                                            
                                                                            
Weighted average common shares outstanding - basic     100,070       99,292 
Effect of dilutive securities:                                              
  Stock options                                          1,556          631 
  Restricted stock-based compensation                      209          163 
                                                   -----------  ----------- 
Weighted average shares and assumed conversions -                           
 diluted                                               101,835      100,086 
                                                   ===========  =========== 
                                                                            
Adjusted Diluted Earnings Per Share                $      0.50  $      0.33 
                                                   ===========  =========== 
                                                                            
                                                                            
                                                                            
CALCULATION OF FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS     
                                                                            
                                                     For the Three Months   
                                                        Ended March 31,     
                                                   ------------------------ 
                                                       2013         2012    
                                                   -----------  ----------- 
                                                                            
Net income                                         $   181,092  $    31,680 
Depreciation of real estate assets                      19,747       19,343 
                                                   -----------  ----------- 
                                                                            
Funds From Operations                              $   200,839  $    51,023 
                                                                            
Expenses associated with debt refinancing                                   
 transactions                                              225        1,541 
Expenses associated with REIT conversion                 8,061           50 
Income tax benefit for special items                      (602)        (593)
Income tax benefit for reversal of deferred taxes                           
 due to REIT conversion                               (137,686)           - 
                                                   -----------  ----------- 
  Normalized Funds From Operations                 $    70,837  $    52,021 
Maintenance capital expenditures on real estate                             
 assets                                                 (4,134)      (2,112)
Stock-based compensation                                 3,205        2,629 
Amortization of debt costs and other non-cash                               
 interest                                                1,047        1,153 
                                                   -----------  ----------- 
Adjusted Funds From Operations                     $    70,955  $    53,691 
                                                   ===========  =========== 
Normalized Funds From Operations Per Diluted Share $      0.70  $      0.52 
                                                   ===========  =========== 
Adjusted Funds From Operations Per Diluted Share   $      0.70  $      0.54 
                                                   ===========  =========== 
                                                                            
                                                                            
                                                                            
CALCULATION OF ADJUSTED FUNDS FROM OPERATIONS PER SHARE GUIDANCE            
(excluding the impact on per share amounts of any shares to be issued as    
part of the special dividend)                                               
                                                                            
                          For the Quarter Ending      For the Year Ending   
                               June 30, 2013           December 31, 2013    
                         ------------------------  -----------
------------- 
                          Low End of  High End of   Low End of  High End of 
                           Guidance     Guidance     Guidance     Guidance  
                         -----------  -----------  -----------  ----------- 
                                                                            
Adjusted net income      $    53,000  $    54,000  $   213,000  $   221,000 
Depreciation on real                                                        
 estate assets                19,000       20,000       77,000       77,000 
                         -----------  -----------  -----------  ----------- 
                                                                            
Funds From Operations    $    72,000  $    74,000  $   290,000  $   298,000 
                                                                            
Other non-cash expenses        4,300        4,400       17,000       17,000 
Maintenance capital                                                         
 expenditures on real                                                       
 estate assets                (5,250)      (6,250)     (25,000)     (20,000)
                         -----------  -----------  -----------  ----------- 
                                                                            
Adjusted Funds From                                                         
 Operations              $    71,050  $    72,150  $   282,000  $   295,000 
                         ===========  ===========  ===========  =========== 
                                                                            
Funds From Operations Per                                                   
 Diluted Share           $      0.70  $      0.72  $      2.83  $      2.91 
                         ===========  ===========  ===========  =========== 
Adjusted Funds From                                                         
 Operations Per Diluted                                                     
 Share                   $      0.69  $      0.71  $      2.75  $      2.88 
                         ===========  ===========  ===========  =========== 

 
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 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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