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CCA Announces 2013 Second Quarter Financial Results

CCA Announces 2013 Second Quarter Financial Results 
Raising Full-Year Adjusted Diluted EPS Guidance From $1.91 - $1.98 to
$1.95 - $1.99 
NASHVILLE, TN -- (Marketwired) -- 08/07/13 --  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 second quarter of 2013. 
Second Quarter 2013 Financial Highlights 


 
--  Diluted EPS $0.19, including debt refinancing and other charges
--  Adjusted Diluted EPS $0.52, up 36.8% over prior year second quarter
--  Normalized FFO Per Diluted Share $0.71, up 24.6% over prior year
    second quarter
--  AFFO Per Diluted Share $0.71, up 26.8% over prior year second quarter

  
For the second quarter of 2013, the Company generated Normalized FFO of
$0.71 per diluted share compared to $0.57 per diluted share in the
same period of 2012. Net income generated in the second quarter of
2013, after adjusting for debt refinancing costs, REIT conversion
costs and asset impairment charges (Adjusted net income) increased
50.8% to $57.1 million, or $0.52 per diluted share, compared to $37.9
million, or $0.38 per diluted share generated in the second quarter
of 2012. Second quarter 2013 financial results were impacted by a
one-time tax benefit of approximately $5.0 million, or $0.05 per
share, resulting from tax planning strategies implemented during the
second quarter of 2013. This income tax benefit was offset by the
Company's decision to provide a Special Incentive Bonus totaling
approximately $5.0 million, or $0.05 per share, to non-management
level staff in lieu of merit increases in 2013. Per share amounts
were also impacted by the issuance of 13.9 million shares of common
stock in connection with the payment of the special dividend on May
20, 2013. Our conversion to a REIT resulting in a reduction in income
tax expense, as well as a reduction in interest expense generated by
debt refinancing transactions completed during the second quarter of
2013, were the primary contributors to the increases in Adjusted EPS,
Normalized FFO, AFFO, and Adjusted Net Income. 
CCA President and Chief Executive Officer, Damon Hininger, stated,
"We are pleased with our second quarter financial results, our new
three-year contract with the California Department of Corrections and
Rehabilitation, and the increase in beds utilized by Oklahoma under
our existing contract."  
Revenue for the second quarter of 2013 totaled $434.0 million
compared to $442.9 million in the second quarter of 2012. Revenue for
the second quarter of 2013 reflects increases in revenue per
compensated man-day and declines in populations from the United
States Marshals Service, Texas, Kentucky, Puerto Rico and California,
which were partially offset by increases in populations from
Immigration and Customs Enforcement, Georgia, Idaho and Oklahoma. 
Net operating income (total revenues less total operating expenses)
totaled $119.7 million in the second quarter of 2013 compared to
$126.3 million in the second quarter of 2012. The decline in net
operating income reflects the $5.0 million Special Incentive Bonus as
well as the change in revenues. 
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 May 20, 2013, CCA
issued approximately 13.9 million new shares of its common stock in
connection with the payment of the Company's previously announced
special dividend. The shares issued represented 80% of the total
value of the $675 million special dividend. The remaining 20%, or
$135 million of the special dividend, was paid in cash.  
Guidance 
 The Company expects Adjusted Diluted EPS for the third
quarter to be in the range of $0.45 to $0.47 and Adjusted Diluted EPS
for fourth quarter to be in the range of $0.48 to $0.50, resulting in
full year 2013 Adjusted Diluted EPS in the range of $1.95 to $1.99.
The Company expects Normalized FFO for the full-year 2013 to be in
the range of $2.65 to $2.69 per diluted share, while full-year 2013
AFFO Per Diluted Share is in the range of $2.58 to $2.66. One of the
primary drivers of the decline in EPS from the second quarter to the
third quarter is the increase in the weighted average shares
outstanding resulting from the 13.9 million sh
ares issued in May 2013
for the special dividend. 
Our guidance currently assumes all of the approximately 1,500 inmates
housed at our Red Rock facility at the end of June are returned to
the custody of California by the end of the year to make space
available for the state of Arizona under our previously announced new
contract beginning in 2014. Although California is considering
alternatives that could result in CCA retaining some or all of these
inmates past December 31, 2013, we have left this assumption in place
as California has not yet finalized its plans for these inmates. If
we were to keep some or all of these inmates, costs incurred related
to the relocation of these inmates would likely result in a
relatively neutral impact on 2013 earnings guidance due to
transportation costs and start-up costs associated with activating
vacant housing units at partially occupied facilities or a completely
vacant facility which would be necessary to provide a long-term
solution for these inmates.  
Guidance excludes REIT conversion costs, debt refinancing costs,
asset impairments, transaction expenses associated with the
acquisition of CAI, as well as the reversal of certain net deferred
tax liabilities associated with the REIT conversion.  
Per share guidance also reflects the impact of the 13.9 million
shares issued in May 2013, as part of the special dividend. We expect
weighted average shares outstanding of approximately 117 million in
both the third and fourth quarters of 2013, and approximately 112
million for the full-year 2013. 
During 2013, we expect to invest approximately $90.0 million to
$105.0 million in capital expenditures, consisting of $45.0 million
to $50.0 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. Capital expenditure guidance does
not include the approximate $36 million acquisition of CAI. 
Supplemental Financial Information and Investor Presentations
 We
have made available on our website supplemental financial information
and other data for the second 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 Second Quarter Investor Presentation will be available on our
website beginning on or about August 30, 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 August
8, 2013, to discuss our second 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 August 8, 2013 through 2:00 p.m. eastern time on
August 16, 2013, by dialing (888) 203-1112 or (719) 457-0820, pass
code 9803906.  
About CCA
 CCA, a publicly traded real estate investment trust
(REIT), 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 currently operate 68 facilities, including 53 facilities that we
own or control, with a total design capacity of approximately 92,000
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 and community reentry
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.  
CCA 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)       
                                                                            
                                                                            
                                                   June 30,     December 31,
                     ASSETS                          2013           2012    
                                                -------------  -------------
                                                                            
Cash and cash equivalents                       $      37,875  $      62,897
Accounts receivable, net of allowance of $2,127                             
 and $2,578, respectively                             233,470        252,764
Current deferred tax assets                             5,416          8,022
Prepaid expenses and other current assets              28,969         27,059
              
                                  -------------  -------------
    Total current assets                              305,730        350,742
                                                                            
Property and equipment, net                         2,538,825      2,568,791
                                                                            
Restricted cash                                         5,673          5,022
Investment in direct financing lease                    6,500          7,467
Goodwill                                               11,158         11,988
Non-current deferred tax assets                         9,035              -
Other assets                                           40,239         30,732
                                                -------------  -------------
                                                                            
    Total assets                                $   2,917,160  $   2,974,742
                                                =============  =============
                                                                            
      LIABILITIES AND STOCKHOLDERS' EQUITY                                  
                                                                            
Accounts payable and accrued expenses           $     228,022  $     166,000
Income taxes payable                                      652            102
Current liabilities of discontinued operations             79            356
                                                -------------  -------------
    Total current liabilities                         228,753        166,458
                                                                            
Long-term debt                                      1,150,000      1,111,545
Deferred tax liabilities                                    -        139,526
Other liabilities                                      37,218         35,593
                                                -------------  -------------
                                                                            
    Total liabilities                               1,415,971      1,453,122
                                                -------------  -------------
                                                                            
Commitments and contingencies                                               
                                                                            
Preferred stock -- $0.01 par value; 50,000                                  
 shares au
thorized; none issued and outstanding                             
 at June 30, 2013 and December 31, 2012,                                    
 respectively                                               -              -
Common stock -- $0.01 par value; 300,000 shares                             
 authorized; 115,418 and 100,105 shares issued                              
 and outstanding at June 30, 2013 and December                              
 31, 2012, respectively                                 1,154          1,001
Additional paid-in capital                          1,711,821      1,146,488
Retained (deficit) earnings                          (211,786)       374,131
                                                -------------  -------------
                                                                            
    Total stockholders' equity                  $   1,501,189  $   1,521,620
                                                -------------  -------------
                                                                            
    Total liabilities and stockholders' equity  $   2,917,160  $   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     For the Six Months   
                                 Ended June 30,          Ended June 30,     
                             ----------------------  ---------------------- 
                                2013        2012        2013        2012    
                             ----------  ----------  ----------  ---------- 
REVENUE:                                                                    
  Owned and controlled                                                      
   properties                $  348,889  $  358,489  $  690,663  $  710,803 
  Managed only and other         85,092      84,377     169,042     167,368 
                             ----------  ----------  ----------  ---------- 
                                433,981     442,866     859,705     878,171 
                             ----------  ----------  ----------  ---------- 
EXPENSES:                                                                   
  Operating:                                                                
    Owned and controlled                                                    
     properties                 234,903     238,614     464,347     474,351 
    Managed only and other       79,374      77,970     157,460     157,767 
                             ----------  ----------  ----------  ---------- 
      Total operating                                                       
       expenses                 314,277     316,584     621,807     632,118 
  General and administrative     23,597      22,545      46,768      44,335 
  REIT conversion costs           1,763         550       9,824         600 
  Depreciation and                                                          
   amortization                  28,097      28,302      55,727      56,689 
  Asset impairments               2,637           -       2,637           - 
                             ----------  ----------  ----------  ---------- 
                                370,371     367,981     736,763     733,742 
                             ----------  ----------  ----------  ---------- 
                                                                            
OPERATING INCOME                 63,610      74,885     122,942     144,429 
                             ----------  ----------  ----------  ---------- 
                                                                            
OTHER EXPENSES:                                                             
  Interest expense, net          11,912      14,729      24,478      31,619 
  Expenses associated with                                                  
   debt refinancing                                                         
   transactions                  36,303         287      36,528       1,828 
  Other expense                     (36)         41          65          53 
                             ----------  ----------  ----------  ---------- 
                                 48,179      15,057      61,071      33,500 
                             ----------  ----------  ----------  ---------- 
                                                                            
INCOME FROM CONTINUING                                                      
 OPERATIONS BEFORE INCOME                                                   
 TAXES                           15,431      59,828      61,871     110,929 
                                                                            
Income tax benefit (expense)      4,998     (22,494)    139,650     (41,553)
                             ----------  ----------  ----------  ---------- 
                                                                            
INCOME FROM CONTINUING                                                      
 OPERATIONS                      20,429      37,334     201,521      69,376 
                                                                            
  Loss from discontinued                                                    
   operations, net of taxes           -           -           -        (362)
                             ----------  ----------  ----------  ---------- 
                                                                            
NET INCOME                   $   20,429  $   37,334  $  201,521  $   69,014 
                             ==========  ==========  ==========  ========== 
                                                                            
BASIC EARNINGS PER SHARE:                                                   
  Income from continuing                                                    
   operations                $     0.19  $     0.37  $     1.94  $     0.70 
  Loss from discontinued                                                    
   operations, net of taxes           -           -           -           - 
                             ----------  ----------  ----------  ---------- 
    Net income               $     0.19  $     0.37  $     1.94  $     0.70 
                             ==========  ==========  ==========  ========== 
                                                                            
DILUTED EARNINGS PER SHARE:                                                 
  Income from continuing                                                    
   operations                $     0.19  $     0.37  $     1.91  $     0.69 
  Loss from discontinued                                                    
   operations, net of taxes           -           -           -           - 
                             ----------  ----------  ----------  ---------- 
    Net income               $     0.19  $     0.37  $     1.91  $     0.69 
                             ==========  ==========  ==========  ========== 
                                                                            
REGULAR DIVIDENDS DECLARED                                                  
 PER SHARE                   $     0.48  $     0.20  $     1.01  $     0.20 
                             ==========  ==========  ==========  ========== 
SPECIAL DIVIDENDS DECLARED                                                  
 PER SHARE                   $     6.66  $        -  $     6.66  $        - 
            
                 ==========  ==========  ==========  ========== 
                                                                            
                                                                            
                                                                            
             CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES            
                     SUPPLEMENTAL FINANCIAL INFORMATION                     
        (UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)      
                                                                            
CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EPS                 
                                                                            
                                 For the Three Months    For the Six Months 
                                    Ended June 30,         Ended June 30,   
                               -----------------------  --------------------
                                   2013        2012        2013       2012  
                               -----------  ----------  ---------  ---------
                                                                            
Net income                                                                  
                                $   20,429  $   37,334  $ 201,521  $  69,014
Special items:                                                              
  Expenses associated with debt                                             
   refinancing transactions,                                                
   net                              33,092         179     33,299      1,144
  Expenses associated with REIT                                             
   conversion, net                   1,641         343      9,118        376
  Asset impairments, net             1,911           -      1,911          -
  Income tax benefit for                                                    
   reversal of deferred taxes                                               
   due to REIT conversion                -           -   (137,686)         -
                                 ---------  ----------  ---------  ---------
                                                                            
Adjusted net income                                                         
                                $   57,073  $   37,856  $ 108,163  $  70,534
                                ==========  ==========  =========  =========
                                                                            
                                                                            
Weighted average common shares                                              
 outstanding - basic               107,400      99,570    103,755     99,431
Effect of dilutive securities:                                              
  Stock options                      1,284         767      1,420        699
  Restricted stock-based                                                    
   compensation                        307         128        258        146
                                 ---------  ----------  ---------  ---------
Weighted average shares and                                                 
 assumed conversions - diluted     108,991     100,465    105,433    100,276
                                 =========  ==========  =========  =========
                                                                            
Adjusted Diluted Earnings Per                                               
 Share                          $     0.52  $     0.38  $    1.03  $    0.70
                                ==========  ==========  =========  =========
                                                                            
                                                                            
                                                                            
CALCULATION OF FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS     
                                                                            
                                 For the Three Months   For the Six Months  
                                    Ended June 30,        Ended June 30,    
                                ---------------------  -------------------- 
                                   2013        2012       2013       2012   
                                ----------  ---------  ---------  --------- 
                                                                            
Net income                      $   20,429  $  37,334  $ 201,521  $  69,014 
Depreciation of real estate                                                 
 assets                             20,114     19,646     39,861     38,989 
                                ----------  ---------  ---------  --------- 
                                                                            
Funds From Operations           $   40,543  $  56,980  $ 241,382  $ 108,003 
                                                                            
Expenses associated with debt                                               
 refinancing transactions, net      33,092        179     33,299      1,144 
Expenses associated with REIT                                               
 conversion, net                     1,641        343      9,118        376 
Asset impairments, net               1,911          -      1,911          - 
Income tax benefit for reversal                                             
 of deferred taxes due to REIT                                              
 conversion                              -          -   (137,686)         - 
                                ----------  ---------  ---------  --------- 
                                                                            
  Normalized Funds From                                                     
   Operations                   $   77,187  $  57,502  $ 148,024  $ 109,523 
                                                                            
Maintenance capital                                                         
 expenditures on real estate                                                
 assets                             (4,396)    (5,489)    (8,530)    (7,601)
Stock-based compensation             3,193      3,259      6,398      5,888 
Amortization of debt costs and                                              
 other non-cash interest               919      1,071      1,966      2,224 
                                ----------  ---------  ---------  --------- 
                                                                            
Adjusted Funds From Operations  $   76,903  $  56,343  $ 147,858  $ 110,034 
                                ==========  =========  =========  ========= 
                                                                            
Normalized Funds From                                                       
 Operations Per Diluted Share   $     0.71  $    0.57  $    1.40  $    1.09 
                                ==========  =========  =========  ========= 
Adjusted Funds From Operations                                              
 Per Diluted Share              $     0.71  $    0.56  $    1.40  $    1.10 
                                ==========  =========  =========  ========= 
                                                                            
                                                                            
                                                                            
CALCULATION OF ADJUSTED FUNDS FROM OPERATIONS PER SHARE GUIDANCE            
                                                                            
                           For the Quarter Ending     For the Year Ending   
                             September 30, 2013        December 31, 2013    
                          ------------------------  ----------------------- 
              
            Low End of   High End of  Low End of  High End of 
                            Guidance     Guidance    Guidance     Guidance  
                          -----------  -----------  ----------  ----------- 
                                                                            
Adjusted net income       $    52,500  $    54,500  $  217,000  $   221,500 
Depreciation on real                                                        
 estate assets                 19,000       20,000      78,500       78,500 
                          -----------  -----------  ----------  ----------- 
                                                                            
Funds From Operations     $    71,500  $    74,500  $  295,500  $   300,000 
                                                                            
Other non-cash expenses         4,100        4,200      16,500       16,500 
Maintenance capital                                                         
 expenditures on real                                                       
 estate assets                 (7,000)      (8,000)    (25,000)     (20,000)
                          -----------  -----------  ----------  ----------- 
                                                                            
Adjusted Funds From                                                         
 Operations               $    68,600  $    70,700  $  287,000  $   296,500 
                          ===========  ===========  ==========  =========== 
                                                                            
Funds From Operations Per                                                   
 Diluted Share            $      0.61  $      0.64  $     2.65  $      2.69 
                          ===========  ===========  ==========  =========== 
Adjusted Funds From                                                         
 Operations Per Diluted                                                     
 Share                         $ 0.59       $ 0.60  $     2.58  $      2.66 
                          ===========  ===========  ==========  =========== 

 
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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