Corrections Corporation of America Announces 2005 First Quarter Financial Results.NASHVILLE Nashville, city (1990 pop. 487,969), state capital, coextensive with Davidson co., central Tenn., on the Cumberland River, in a fertile farm area; inc. as a city 1806, merged with Davidson co. 1963. , Tenn. -- Corrections Corporation of America Corrections Corporation of America (NYSE: CXW) (CCA) is a company that manages public prisons and other facilities[1], and has concessions for many others. The company had annual revenues in 2004 of $1.15 billion USD. (NYSE NYSE See: New York Stock Exchange :CXW) (the "Company") today announced its financial results for the three month period ended March 31, 2005. Financial Review First Quarter of 2005 Compared with First Quarter of 2004 For the first quarter of 2005, the Company reported a net loss available to common stockholders of $8.9 million, or $0.24 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared with net income available to common stockholders of $14.4 million, or $0.37 per diluted share, for the first quarter of 2004. Financial results for the three months ended March 31, 2005 included a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charge of $35.0 million for refinancing Refinancing An extension and/or increase in amount of existing debt. transactions completed during the first quarter of 2005 as further described below. Earnings per diluted share excluding this special charge, amounted to $0.35 per diluted share. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the first quarter of 2005 was $38.6 million compared with $42.6 million for the first quarter of 2004. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become adjusted for special items ("Adjusted EBITDA") for the three months ended March 31, 2005, was $52.9 million, compared with $55.5 million for the same period in 2004. As further described below, financial results for the three months ended March 31, 2005, were negatively impacted by reduced inmate INMATE. One who dwells in a part of another's house, the latter dwelling, at the same time, in the said house. Kitch. 45, b; Com. Dig. Justices of the Peace, B 85; 1 B. & Cr. 578; 8 E. C. L. R. 153; 2 Dowl. & Ry. 743; 8 B. & Cr. 71; 15 E. C. L. R. 154; 2 Man. & Ry. 227; 9 B. & Cr. populations at a number of the Company's facilities, primarily the Prairie prairie Level or rolling grassland, especially that found in central North America. Decreasing amounts of rainfall, from 40 in. (100 cm) at the forested eastern edge to less than 12 in. Correctional Facility in Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces as a result of the state of Wisconsin's decision to return inmates to its state prison system throughout 2004. In addition, the first quarter of 2004 contained one additional operating day. During the first quarter of 2005, the Company incurred approximately $875,000 as a result of increased staffing levels in anticipation of additional inmate populations at several facilities where expansions had recently been completed, compared with $1.7 million in start-up Start-up The earliest stage of a new business venture. expenses during the first quarter of 2004. Adjusted Free Cash Flow decreased $11.4 million to $15.7 million during the three months ended March 31, 2005, compared with $27.1 million generated during the same period in 2004. The decrease in adjusted free cash flow was primarily the result of the repayment of $13.5 million in taxes associated with excess refunds received by the Company in 2002 and 2003, as described in the Company's fourth quarter 2004 earnings release. Excluding the tax payment, Adjusted Free Cash Flow increased $2.1 million, or 7.8%. Earnings Per Diluted Share Excluding Special Charges, Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures. Please refer to the Supplemental Financial Information and related note following the financial statements herein. Debt Refinancing Transactions As previously announced, during March 2005, the Company completed the sale and issuance of $375.0 million aggregate principal amount of 6.25% senior notes due 2013 in an institutional private placement. The net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of the offering, along with cash on hand, were used to purchase all of the Company's $250.0 million 9.875% senior notes due 2009, to prepay pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. $110.0 million in aggregate principal amount of the
Company's existing term loans under the Company's senior
secured credit facility, and to pay fees and expenses associated with
these transactions. These refinancing transactions resulted in a pre-tax
charge of $35.0 million, consisting of a tender premium paid to the
holders of the 9.875% senior notes at a price of approximately 111% of
par, the write-off Write-OffA reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of existing deferred loan costs, as well as fees and expenses associated with the tender offer. Primarily as a result of these refinancing transactions, Standard & Poor's Ratings Services Ratings Service A company, such as Moody's or Standard & Poor's, that rates various debt and preferred stock issues for safety of payment of principal, interest, or dividends. raised the Company's corporate credit rating to 'BB-' from 'B+'. At the same time, Standard & Poor's raised the Company's senior secured debt rating to 'BB' from 'BB-' and its senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. rating to 'BB-' from 'B'. Additionally, Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. reaffirmed the 'B1' rating on the Company's senior unsecured debt and reaffirmed its positive outlook. During April 2005, the Company completed an additional amendment to its senior secured credit facility that resulted in a reduction to the interest rates applicable to the term portion of the facility from 2.25% over the London Interbank Offered Rate London Interbank Offered Rate A short-term interest rate often quoted as a 1,3,6-month rate for U.S.dollars. ("LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). ") to 1.75% over LIBOR and a reduction to the interest rates applicable to the revolving portion of the facility from 3.50% over LIBOR to 1.50% over LIBOR, while the fees associated with the unused portion of the revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility were reduced from 50 basis points to 37.5 basis points. In connection with this amendment, the Company prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay ment n. $20.0 million of the
term portion of the senior secured credit facility by drawing a like
amount on the revolving portion of the facility. The Company expects to
report a pre-tax charge of approximately $0.3 million during the second
quarter of 2005 for the pro-rata Pro-rataUsed to describe a proportionate allocation. Notes: For example, a pro-rata dividend means that every shareholder gets an equal proportion for each share they own. See also: Dividend write-off of existing deferred loan costs and third-party fees and expenses associated with the amendment. Operations Highlights For the three months ended March 31, 2005 and 2004, key operating statistics for the continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of the Company were as follows:
Three Months Ended March 31,
Metric 2005 2004
--------------------------------------- ------------------------------
Average Available Beds 70,065 63,711
Average Compensated Occupancy 89.4% 95.6%
Total Compensated Man-Days 5,636,819 5,545,369
Revenue per Compensated Man-Day $49.88 $48.83
Operating Expense per Compensated Man-
Day:
Fixed 29.08 27.61
Variable 9.11 9.10
-------------- --------------
Total 38.19 36.71
-------------- --------------
Operating Margin per Compensated Man-
Day $11.69 $12.12
============== ==============
Operating Margin 23.4% 24.8%
Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: decreased from 24.8% in 2004 to 23.4% in 2005. The decrease in margins from the prior-year period was substantially the result of a reduction in inmate populations at a number of the Company's facilities including its Prairie Correctional Facility and Central Arizona Arizona (âr'əzō`nə), state in the southwestern United States. It is bordered by Utah (N), New Mexico (E), Mexico (S), and, across the Colorado R., Nevada and California (W). Detention Center A detention center or a detention centre is any location used for detention. Specifically, it can mean:
Detention occurs whenever a police officer accosts an individual and restrains his or her freedom to walk away, or approaches and questions an individual, or stops an Facility. The reductions in inmate populations were not sufficient to justify a decrease in staffing levels at most of these facilities, resulting in an increase in fixed expenses per compensated compensated /com·pen·sat·ed/ (kom´pen-sa?tid) counterbalanced; offset. man-day man-day n. An industrial unit of production equal to the work one person can produce in a day. . Variable expenses remained essentially flat during the first quarter of 2005 compared with the same period in the prior year. An increase in inmate medical expenses caused by an inflationary in·fla·tion·ar·y adj. Of, associated with, or tending to cause inflation: inflationary prices; inflationary policies. Adj. 1. environment for health care costs and medical care was offset by a reduction in legal expenses resulting from the successful negotiation of a number of outstanding legal matters. Total revenue for the first quarter of 2005 increased to $285.9 million from $276.8 million during the first quarter of 2004, as total compensated man-days increased slightly from 5.5 million to 5.6 million compensated man-days. The increase in compensated man-days was primarily the result of a full quarter of management of the six facilities in Texas awarded to the Company effective January January: see month. 15, 2004, as well as the commencement of operations at the Delta Correctional Facility located in Greenwood, Mississippi Greenwood is situated in Leflore County, Mississippi at the eastern edge of the Mississippi Delta, approximately 96 miles north of Jackson, Mississippi, and 130 miles south of Memphis, Tennessee. The population was 18,425 at the 2000 census. effective April 1, 2004. Despite the increase in compensated man-days, average compensated occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy for the first quarter of 2005 decreased to 89.4% from 95.6% in the first quarter of 2004. A significant factor affecting the decline in occupancy was an increase in the previously reported design capacities of a number of facilities based on the nature of the customer utilizing the facilities. These reconfigurations are typically completed with minimal capital outlays capital outlay See capital expenditure. . Excluding these changes in design capacity, average compensated occupancy for the quarter ended March 31, 2005, would have been 92.5%. Also affecting compensated occupancy for the quarter was the expansion by approximately 2,500 beds at seven of the Company's facilities, substantially all of which were completed subsequent to October October: see month. 1, 2004. Finally, the Company did experience population declines from the first quarter 2004 levels at several facilities, as discussed above. Business Development Update On February February: see month. 28, 2005, the Company announced that it received notification from the Indiana Indiana, state, United States Indiana, midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W). Department of Corrections of its intent to return to Indiana approximately 620 male Indiana inmates housed at the Company's Otter Creek Otter Creek may refer to:
Wheelwright is located at 37°19'53" North, 82°43'9" West (37.331465, -82.719064)GR1. . The Company is working with Indiana corrections officials on plans to return the inmates to the Indiana corrections system by the end of May 2005. The Indiana population at Otter Creek was 383 as of March 31, 2005. The Company is pursuing opportunities with a number of potential customers to fill the vacancy VACANCY. A place which is empty. The term is principally applied to cases where an office is not filled. 2. By the constitution of the United States, the president has the power to fill up vacancies that may happen during the recess of the senate. ; however, if the Company is unable to obtain a new agreement it intends to implement a phased closure of the Otter Creek facility that will coincide with the return of Indiana inmates. On March 21, 2005, the Company announced that it received notification from the Tulsa Tulsa (tŭl`sə), city (1990 pop. 367,302), seat of Tulsa co., NE Okla., on the Arkansas River east of its junction with the Cimarron; inc. 1898. County Commission in Oklahoma Oklahoma (ōkləhō`mə), state in SW United States. It is bordered by Missouri and Arkansas (E); Texas, partially across the Red R. (S, W); New Mexico, across the narrow edge of the Oklahoma Panhandle (W); and Colorado and Kansas (N). that the County elected to have the Tulsa County Sheriff's Office manage the 1,440-bed David L. Moss Criminal Justice Center, located in Tulsa. The Company's current contract expires on June June: see month. 30, 2005. Commenting on the Company's financial results, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , John Ferguson John Ferguson may refer to one of the following:
Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee inmates at our Prairie Correctional Facility in Minnesota. We continue to work with the state of Minnesota in filling the Prairie facility, and believe that the softness in inmate populations will be short-lived." Ferguson Ferguson, city (1990 pop. 22,286), St. Louis co., E Mo., a suburb of St. Louis; inc. 1894. It is primarily residential. continued: "On a positive note, we completed a number of very positive financing transactions that will strengthen our balance sheet and add to earnings over the long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. . Looking out over the remainder of the year, we are excited about the prospects of the BOP substantially occupying our Northeast Ohio facility as well as the anticipated occupancy of a number of our expansion projects including Lake City, Houston Houston, city (1990 pop. 1,630,553), seat of Harris co., SE Tex., a deepwater port on the Houston Ship Channel; inc. 1837. Economy The fourth largest city in the nation and the largest in the entire South and Southwest, Houston is a port of entry; and Leavenworth Leavenworth (lĕv`ənwûrth'), city (1990 pop. 38,495), seat of Leavenworth co., NE Kans., on the Missouri River; inc. 1855. It is the commercial center of a farm and livestock region, with flour mills and plants making automobile . We continue to be positive about the long-term prospects for our business, as the supply of prison beds nationally continues to be constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. in the face of growing inmate populations." Guidance The Company expects diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the second quarter of 2005 to be in the range of $0.37 to $0.39, and full year diluted earnings per share to be in the range of $1.74 to $1.82, excluding expenses associated with debt refinancing transactions. Although the accounting for share-based payments for the implementation of the Statement of Financial Accounting Standards No. 123R has been delayed until 2006, the Company's full year guidance for 2005 includes expenses totaling approximately $0.03 per diluted share, net of taxes, for the amortization of restricted stock issued to employees who have historically been granted stock options. During 2005, the Company expects to invest approximately $127.0 million in capital expenditures, consisting of approximately $82.4 million in prison construction and expansion, $23.6 million in maintenance capital expenditures and approximately $21.0 million in information technology. The increase in capital expenditures is primarily attributed to construction costs at the new Red Rock Correctional Center that were previously expected to be incurred during 2006. Supplemental Financial Information and Investor Presentations The Company has made available on its website supplemental financial information and other data for the three months ended March 31, 2005. The Company does not undertake any obligation, and disclaims any duty, to update any of the information disclosed in this report. Interested parties may access this information through the Company's website at www.correctionscorp.com under "Financial Information" of the Investor section. The Company's management will be meeting with investors from time to time during the second quarter of 2005. The investor presentation will also be available on the Company's website beginning Monday Monday: see week. , May 16, 2005. Interested parties may access this information through the Company's website at www.correctionscorp.com under "Webcasts" of the Investor section. Webcast and Replay Information The Company will host a webcast conference call at 2:00 p.m. Central Time (3:00 p.m. Eastern Time) today to discuss its first quarter financial results. To listen to this discussion, please access "Webcasts" on the Investor page at www.correctionscorp.com. The conference call will be archived on the Company's website following the completion of the call. In addition, a telephonic replay will begin today at 4:00 p.m. Central Time through 11:59 p.m. Central Time on May 12, 2005, by dialing 1-800-405-2236, pass code 11028011. In addition, the Company will host a webcast of its 2005 Annual Meeting of Stockholders beginning at 10:00 a.m. Central Time on Tuesday Tuesday: see week. , May 10, 2005. To listen to the live broadcast, please access "Webcasts" on the Investor page at www.correctionscorp.com. About the Company The Company is the nation's largest owner and operator of privatized correctional and detention facilities and one of the largest prison operators in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , behind only the federal government and three states. The Company currently operates 64 facilities, including 39 company-owned facilities, with a total design capacity of approximately 70,000 beds in 19 states and the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). . The Company specializes in owning, operating and managing prisons and other correctional facilities and providing inmate residential and prisoner Prisoner may refer to one of the following:
relating to relate prep → bezüglich +gen, mit Bezug auf +acc inmates, the Company's facilities offer a variety of rehabilitation rehabilitation: see physical therapy. and educational programs, including basic education, religious services, life skills and employment training and substance abuse treatment. These services are intended to reduce recidivism recidivism: see criminology. and to prepare inmates for their successful re-entry RE-ENTRY, estates. The resuming or retaking possession of land which the party lately had. 2. Ground rent deeds and leases frequently contain a clause authorizing the landlord to reenter on the non-payment of rent, or the breach of some covenant, when the into society upon their release. The Company also provides health care (including medical, dental and psychiatric psy·chi·at·ric adj. Of or relating to psychiatry. psychiatric adjective Pertaining to psychiatry, mental disorders services), food services food services Hospital services A 24/7 department in a hospital that provides for the nutritional needs of inpatients–eg, those needing special diets, preparing meals and transporting them to the floor and, through the cafeteria, the hospital staff and and work and recreational programs. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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) fluctuations in the Company's 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; (ii) changes in the privatization privatization: see nationalization. privatization Transfer of government services or assets to the private sector. State-owned assets may be sold to private owners, or statutory restrictions on competition between privately and publicly owned of the corrections and detention industry, the public acceptance of the Company's services and the timing of the opening of and demand for new prison facilities; (iii) the Company's ability to obtain and maintain correctional facility management contracts, including as the result of sufficient governmental appropriations and as the result of inmate disturbances; (iv) 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 the Company's control, such as weather, labor conditions and material shortages, resulting in increased construction costs; and (v) general economic and market conditions. Other factors that could cause operating and financial results to differ are described in the filings made from time to time by the Company with the Securities and Exchange Commission. The Company takes no responsibility for updating the information contained in this press release following the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or 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)
March 31, December 31,
ASSETS 2005 2004
--------------------------------------- -------------- --------------
Cash and cash equivalents $48,407 $50,938
Restricted cash 11,021 12,965
Investments 8,744 8,686
Accounts receivable, net of allowance
of $1,422 and $1,380, respectively 150,253 155,926
Deferred tax assets 56,756 56,410
Prepaid expenses and other current
assets 18,830 16,636
Current assets of discontinued
operations - 727
-------------- --------------
Total current assets 294,011 302,288
Property and equipment, net 1,665,162 1,660,010
Investment in direct financing lease 16,899 17,073
Goodwill 15,425 15,563
Other assets 26,875 28,144
-------------- --------------
Total assets $2,018,372 $2,023,078
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
---------------------------------------
Accounts payable and accrued expenses $152,104 $146,751
Income taxes payable 6,404 22,207
Current portion of long-term debt 2,014 3,182
Current liabilities of discontinued
operations 35 125
-------------- --------------
Total current liabilities 160,557 172,265
Long-term debt, net of current portion 985,166 999,113
Deferred tax liabilities 9,701 14,132
Other liabilities 21,408 21,574
-------------- --------------
Total liabilities 1,176,832 1,207,084
-------------- --------------
Commitments and contingencies
Common stock - $0.01 par value; 80,000
shares authorized; 39,129 and 35,415
shares issued and outstanding at March
31, 2005 and December 31, 2004,
respectively 391 354
Additional paid-in capital 1,492,238 1,451,885
Deferred compensation (7,641) (1,736)
Retained deficit (643,448) (634,509)
-------------- --------------
Total stockholders' equity 841,540 815,994
-------------- --------------
Total liabilities and stockholders'
equity $2,018,372 $2,023,078
============== ==============
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,
------------------------------
2005 2004
-------------- --------------
REVENUE:
Management and other $284,958 $275,863
Rental 972 948
-------------- --------------
285,930 276,811
-------------- --------------
EXPENSES:
Operating 220,582 210,341
General and administrative 12,538 10,969
Depreciation and amortization 14,200 12,852
-------------- --------------
247,320 234,162
-------------- --------------
OPERATING INCOME 38,610 42,649
-------------- --------------
OTHER (INCOME) EXPENSE:
Interest expense, net 17,428 17,641
Expenses associated with debt
refinancing and recapitalization
transactions 35,032 25
Other (income) expenses (124) 46
-------------- --------------
52,336 17,712
-------------- --------------
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (13,726) 24,937
Income tax (expense) benefit 4,787 (9,975)
-------------- --------------
INCOME (LOSS) FROM CONTINUING OPERATIONS (8,939) 14,962
Income from discontinued operations,
net of taxes - 222
-------------- --------------
NET INCOME (LOSS) (8,939) 15,184
Distributions to preferred
stockholders - (814)
-------------- --------------
NET INCOME (LOSS) AVAILABLE TO COMMON
STOCKHOLDERS $(8,939) $14,370
============== ==============
BASIC EARNINGS (LOSS) PER SHARE:
Income (loss) from continuing
operations $(0.24) $0.40
Income from discontinued operations,
net of taxes - 0.01
-------------- --------------
Net income (loss) available to
common stockholders $(0.24) $0.41
============== ==============
DILUTED EARNINGS (LOSS) PER SHARE:
Income (loss) from continuing
operations $(0.24) $0.36
Income from discontinued operations,
net of taxes - 0.01
-------------- --------------
Net income (loss) available to
common stockholders $(0.24) $0.37
============== ==============
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS)
CALCULATION OF ADJUSTED FREE CASH FLOW
For the Three Months Ended
March 31,
------------------------------
2005 2004
-------------- --------------
Pre-tax income (loss) available to
common stockholders $(13,726) $24,345
Expenses associated with debt
refinancing and recapitalization
transactions 35,032 25
Income taxes paid (13,761) (385)
Depreciation and amortization 14,200 12,852
Depreciation and amortization for
discontinued operations - 18
Income tax expense for discontinued
operations - 148
Amortization of stock-based
compensation reflected in G&A expenses 206 -
Amortization of debt costs and other
non-cash interest 1,378 1,876
Maintenance and technology capital
expenditures (7,632) (11,821)
-------------- --------------
Adjusted Free Cash Flow $15,697 $27,058
============== ==============
CALCULATION OF ADJUSTED EBITDA
For the Three Months Ended
March 31,
------------------------------
2005 2004
-------------- --------------
Net income $(8,939) $15,184
Interest expense, net 17,428 17,641
Depreciation and amortization 14,200 12,852
Income tax (benefit) expense (4,787) 9,975
Income from discontinued operations,
net of taxes - (222)
-------------- --------------
EBITDA $17,902 $55,430
Expenses associated with debt
refinancing and recapitalization
transactions 35,032 25
-------------- --------------
Adjusted EBITDA $52,934 $55,455
============== ==============
CALCULATION OF ADJUSTED DILUTED EARNINGS PER SHARE
For the Three Months
Ended March 31, 2005
----------------------
Net income available to common stockholders $(8,939)
Expenses associated with debt refinancing and
recapitalization transactions 35,032
Income tax benefit for expenses associated with
debt refinancing transactions (12,218)
----------------------
Adjusted net income available to common
stockholders 13,875
Interest expense applicable to convertible
notes, net of taxes 121
----------------------
======================
Diluted adjusted net income available to common
stockholders $13,996
======================
Weighted average common shares outstanding -
basic 36,536
Effect of dilutive securities:
Stock options and warrants 1,277
Convertible notes 2,204
Restricted stock-based compensation 75
----------------------
======================
Weighted average shares and assumed conversions
- diluted 40,092
======================
Adjusted Diluted Earnings Per Share $0.35
======================
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION
Net income excluding special charges, Adjusted EBITDA and Adjusted
free cash flow are non-GAAP financial measures. The Company believes
that these measures are important operating measures that supplement
discussion and analysis of the Company's results of operations and are
used to review and assess operating performance of the Company and its
correctional facilities and their management teams. The Company
believes that it is useful to provide investors, lenders and security
analysts' disclosures of its results of operations on the same basis
as that used by management.
Management and investors review both the Company's overall performance
(including GAAP EPS, net income, and Adjusted free cash flow) and the
operating performance of the Company's correctional facilities
(Adjusted EBITDA). Adjusted EBITDA is useful as a supplemental measure
of the performance of the Company's correctional facilities because it
does not take into account depreciation and amortization or the impact
of the Company's financing strategies or tax provisions. Because the
historical cost accounting convention used for real estate assets
requires depreciation (except on land), this accounting presentation
assumes that the value of real estate assets diminishes at a level
rate over time. Because of the unique structure, design and use of the
Company's correctional facilities, management believes that assessing
performance of the Company's correctional facilities without the
impact of depreciation or amortization is useful. The calculation of
Adjusted free cash flow substitutes capital expenditures incurred to
maintain the functionality and condition of the Company's correctional
facilities in lieu of a provision for depreciation; Adjusted free cash
flow also excludes certain other non-cash expenses that do not affect
the Company's ability to service debt.
The Company may make adjustments to GAAP net income, Adjusted EBITDA
and Adjusted free cash flow from time to time for certain other income
and expenses that it considers non-recurring, infrequent or unusual,
such as the special charge in the preceding calculation of earnings
per diluted share excluding special charges, even though such items
may require cash settlement, because such items do not reflect a
necessary component of the ongoing operations of the Company. Other
companies may calculate Adjusted EBITDA and Adjusted free cash flow
differently than the Company does, or adjust for other items, and
therefore comparability may be limited. EPS excluding special charges,
Adjusted EBITDA and Adjusted free cash flow are not measures of
performance under GAAP, and should not be considered as an alternative
to cash flows from operating activities or as 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.
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