EXHIBIT 99.1
News Release (CCA LOGO)
Contact: Karin Demler, Investor Relations, 615-263-3005
CORRECTIONS CORPORATION OF AMERICA
ANNOUNCES 2003 SECOND QUARTER RESULTS
NET INCOME INCREASES TO $12.1 MILLION
- - REVENUE INCREASES 9.6% - ADJUSTED FREE CASH FLOW UP 41.7%
- - OPERATING INCOME IMPROVES 26.0% - ADJUSTED EBITDA IMPROVES 20.0%
NASHVILLE, Tenn. - August 6, 2003 - Corrections Corporation of America (NYSE:
CXW) (the "Company") today announced its operating results for the three and six
month periods ended June 30, 2003.
For the second quarter of 2003, the Company generated net income available to
common stockholders of $12.1 million, or $0.34 per diluted share, compared with
a net loss available to common stockholders of $31.4 million, or $1.14 per
diluted share, for the second quarter of 2002. Results for the second quarter of
2003 included the following special items:
- A charge of approximately $4.1 million, or $0.11 per diluted
share, associated with the Company's recapitalization
transactions completed during May 2003, as further described
below;
- A non-cash gain of $2.9 million, or $0.08 per diluted share,
associated with the extinguishment of a promissory note issued
during the second quarter of 2003 in connection with the final
payment of the state court portion of the Company's 2001
stockholder litigation settlement. The gain was reflected as a
change in fair value of derivative instruments because the
determination of the note's value was based on changes in the
trading price of the Company's common stock; and
- A charge of approximately $4.5 million, or $0.12 per diluted
share, for additional distributions paid to series B preferred
stockholders in connection with the Company's tender offer for
such shares, as further described below. The additional
distributions represented a tender premium over and above the
regular dividend accruing on approximately 3.7 million shares
that were tendered on May 13, 2003.
Results for the second quarter of 2002 included a charge of approximately $36.7
million, or $1.33 per diluted share, associated with the refinancing of the
Company's senior indebtedness in May 2002.
Excluding the above mentioned special items the Company generated net income
available to common stockholders of $17.8 million, or $0.50 per diluted share,
for the second quarter of 2003, compared with net income available to common
stockholders of $5.2 million, or $0.18 per diluted share, in the same prior year
period. The effects of these special items are further illustrated in the
following table:
=============================================================================================================
THREE MONTHS ENDED JUNE 30,
2003 2002
-------- --------
Net income (loss) available to common stockholders $ 12,140 $(31,395)
Expenses associated with debt refinancing and recapitalization transactions 4,135 36,670
Change in fair value of derivative instruments (2,900) (51)
Excess distributions to series B preferred stockholders 4,472 --
-------- --------
$ 17,847 $ 5,224
======== ========
Per diluted share $ 0.50 $ 0.18
======== ========
============================================================================================================
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10 Burton Hills Boulevard, Nashville, Tennessee 37215, Phone: 615-263-3000
CCA 2003 Second Quarter Results
August 6, 2003
Page 2
Operating income for the second quarter of 2003 increased to $40.8 million
compared with $32.4 million for the second quarter of 2002. EBITDA adjusted for
special items for the second quarter of 2003 increased to $54.2 million compared
with $45.1 million, representing an increase of 20%, from the second quarter of
2002. The increases in Adjusted EBITDA and operating income were primarily the
result of higher occupancy levels and operating margins, including contributions
resulting from the opening of the McRae Correctional Facility in December 2002
and the acquisition of the Crowley County Correctional Facility in January 2003.
"Same-store" facility EBITDA for the second quarter of 2003 increased
approximately 10% over the same period in the prior year.
Adjusted free cash flow for the second quarter of 2003 amounted to $26.2 million
compared with $18.5 million for the year earlier period. In addition to higher
occupancy levels and operating margins, the increase in adjusted free cash flow
was due to lower interest expense resulting from the Company's May 2002
refinancing, combined with a lower overall interest rate environment. Readers
should refer to the Calculation of Adjusted Free Cash Flow and Adjusted EBITDA
following the financial statements herein.
For the six months ended June 30 2003, the Company generated net income
available to common stockholders of $29.6 million, or $0.89 per diluted share,
compared with a net loss available to common stockholders of $77.7 million, or
$2.69 per diluted share, for the six months ended June 30, 2002.
In addition to the special item during the three month period ended June 30,
2002, results for the six months ended June 30, 2002, also included the
following special items:
- A tax benefit of approximately $32.2 million resulting from the
enactment in March 2002 of the "Job Creation and Worker
Assistance Act," enabling the Company to carryback net operating
losses from 2001 to offset taxable income generated in 1997 and
1996;
- A favorable change in the fair value of derivative instruments
of $3.5 million in accordance with Statement of Financial
Accounting Standards No. 133; and
- A non-cash charge of $80.3 million for the cumulative effect of
accounting change for goodwill in accordance with Statement of
Financial Accounting Standards No. 142.
Excluding all special items, during the first six months of 2003 and 2002, the
Company generated net income available to common stockholders of $35.3 million,
or $1.05 per diluted share, compared with $3.5 million, or $0.12 per diluted
share, for the same period in the prior year. The effects of these special items
are further illustrated in the following table:
=============================================================================================================
SIX MONTHS ENDED JUNE 30,
2003 2002
-------- --------
Net income (loss) available to common stockholders $ 29,562 $(77,724)
Expenses associated with debt refinancing and recapitalization transactions 4,135 36,670
Income tax benefit -- (32,224)
Change in fair value of derivative instruments (2,900) (3,462)
Cumulative effect of accounting change -- 80,276
Excess distributions to series B preferred stockholders 4,472 --
-------- --------
$ 35,269 $ 3,536
======== ========
Per diluted share $ 1.05 $ 0.12
======== ========
=============================================================================================================
Operating income for the first half of 2003 increased to $83.1 million compared
with $62.1 million for the first half of 2002. Excluding the special items,
Adjusted EBITDA for the six months ended June 30, 2003 increased to $109.2
million compared with $87.1 million for the same period in the prior year.
Adjusted free
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CCA 2003 Second Quarter Results
August 6, 2003
Page 3
cash flow also increased for the second half of 2003 to $56.6 million, or $1.65
per diluted share, compared with $34.9 million, or $1.12 per diluted share for
the year earlier period.
OPERATIONS UPDATE
For the quarters ended June 30, 2003 and 2002, key operating statistics for
continuing operations were as follows:
======================================================================================
THREE MONTHS ENDED JUNE 30,
Metric 2003 2002
- ------------------------------------------ ---------- ----------
Average Available Beds 58,732 56,924
Average Compensated Occupancy 91.1% 88.6%
Total Compensated Man-Days 4,867,064 4,587,082
Revenue per Compensated Man-Day $ 51.08 $ 49.45
---------- ----------
Operating Expense per Compensated Man-Day:
Fixed 28.40 27.84
Variable 9.69 10.18
---------- ----------
Total 38.09 38.02
---------- ----------
Operating Margin per Compensated Man-Day $ 12.99 $ 11.43
========== ==========
Operating Margin 25.4% 23.1%
======================================================================================
Total revenue for the three months ended June 30, 2003 increased 9.6% to $254.1
million from $231.9 million in the prior year. Total compensated man-days
increased to 4.9 million from 4.6 million, while average compensated occupancy
for the quarter increased to 91.1% from 88.6% in the prior year second quarter.
Revenue per compensated man-day for the second quarter of 2003 increased to
$51.08 compared with $49.45 in the prior year second quarter, representing the
ninth consecutive quarterly increase in revenue per compensated man-day.
Operating margins increased to $12.99 per compensated man-day in the second
quarter of 2003 from $11.43 per compensated man-day in the prior year second
quarter while operating margins improved to 25.4% compared with 23.1% for the
same period in the prior year. The higher margins were driven by increasing
occupancy levels, increases in per-diem rates at a number of facilities and
strong expense control. Total operating expenses per man-day increased just
$0.07 over the prior year comparable quarter while variable expenses actually
declined $0.49 per-man day from the prior year due to stronger expense controls
in a number of areas including food, medical and legal.
Commenting on the Company's second quarter, President and CEO John Ferguson
stated, "Our second quarter results reflect considerably higher occupancy
levels, revenues and operating margins than the previous year, and provide
additional evidence supporting our contention that industry fundamentals are
particularly compelling. This belief is also confirmed by the recent report from
the Bureau of Justice Statistics showing that in 2002 the U.S. prison population
grew at its highest rate since 1999, while 25 states and the Federal prison
system operated at or above highest capacity. Given state budget deficits and
the lack of new bed construction, we believe these trends will continue. Ongoing
prison overcrowding and the lack of new prison construction should provide
numerous opportunities to fill our remaining empty beds and, in appropriate
situations, to deliver new beds to meet our customers' needs."
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CCA 2003 Second Quarter Results
August 6, 2003
Page 4
SECOND QUARTER 2003 RECAPITALIZATION TRANSACTIONS
The Company previously announced the completion of a series of transactions
during the second quarter that were intended to enhance its capital structure
and to provide additional financing flexibility. These transactions included the
sale and issuance of 6.4 million shares of the Company's common stock at a price
of $19.50 per share, resulting in net proceeds of approximately $117.0 million,
after the estimated payment of costs associated with the issuance. Concurrently
with the common stock offering, the Company also completed the sale and issuance
of $250.0 million aggregate principal amount of its 7.5% senior notes due 2011.
The Company used the proceeds from these transactions to redeem approximately
3.7 million shares of its series B preferred stock for approximately $97.4
million, to redeem 4.0 million shares of its series A preferred stock for $100.0
million, and to repurchase approximately 3.4 million shares of its common stock
issued upon the conversion of $40.0 million of the Company's convertible
subordinated notes for $81.1 million, including accrued interest. The remaining
net proceeds, along with cash on hand were used to pay-down approximately $132.0
million of outstanding indebtedness under the Company's senior secured credit
facility and to pay fees and expenses associated with the recapitalization.
CONTRACT UPDATE
On June 26, 2003, the Company announced its first-ever inmate management
contract with the State of Alabama to aid the state's corrections agency in
relieving its overcrowded system that is under court order. Through an emergency
contract, authorized by the Governor of Alabama, the Company will manage
approximately 1,440 medium-security, male inmates at its Tallahatchie County
Correctional Facility, located in Tutwiler, Mississippi. The contract is
intended to be short-term in nature while Alabama prepares a longer term Request
for Proposal for this inmate population. The expected short-term nature of the
contract should not result in a material impact on the Company's financial
statements in 2003. At August 1, 2003, the Company had received approximately
800 inmates from the State of Alabama under the contract.
Also in June 2003, the Company announced that during the third quarter of 2003,
it will transfer all of the Wisconsin inmates currently housed at its North Fork
Correctional Facility located in Sayre, Oklahoma to its 2,160-bed
medium-security Diamondback Correctional Facility located in Watonga, Oklahoma
in order to satisfy a contractual provision mandated by the State of Wisconsin.
The inmate transfers will bring the Diamondback Correctional Facility close to
full capacity.
Upon completion of the inmate transfers, North Fork Correctional Facility will
close for an indefinite period of time. The consolidation of inmates at
Diamondback and the resulting closure of North Fork are not expected to have a
material impact on the Company's 2003 financial results. However, long-term, the
consolidation will result in certain operational efficiencies. In addition, the
Company is currently pursuing new management contracts and other opportunities
to take advantage of the 1,440 beds that will become available at this facility,
but can provide no assurance that it will be successful.
FUTURE FINANCIAL GUIDANCE
On June 13, 2003 the Securities and Exchange Commission issued interpretive
guidance on its rules regarding non-GAAP disclosures. Specifically, the guidance
recommends that EBITDA, as a measure of performance, be reconciled to net income
as opposed to operating income or other GAAP measures. The Company had
previously reconciled its EBITDA guidance to operating income. Accordingly, in
order to better comply with the revised guidance, in the future, the Company
will provide guidance as to operating income rather than EBITDA. The Company
expects operating income for the third quarter 2003 to be in the range of $40.0
to $42.0 million, with estimates for the full year in the range of $161.0 to
$166.0 million.
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CCA 2003 Second Quarter Results
August 6, 2003
Page 5
SUPPLEMENTAL FINANCIAL INFORMATION
The Company has made available on its website supplemental financial information
and other data for the second quarter of 2003. The Company does not undertake
any obligation, and disclaims any duty, to update any of the information
disclosed in this report. You may access this information under the investor
section of the Company's website at www.correctionscorp.com.
WEBCAST TODAY
The Company will host a webcast conference call today at 2:00 p.m., Central
Time, to discuss its second quarter results. This discussion will be webcasted
live and archived on our website, www.correctionscorp.com, under the Investor
Section. A telephonic replay will be available beginning today at 4:00 p.m.,
Central Time, and ending at 11:59 p.m., Central Time, on August 13, 2003 by
dialing 1-800-405-2236, pass code 547571.
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, behind only the federal government and four states. The
Company currently operates 59 facilities, including 38 company-owned facilities,
with a total design capacity of approximately 59,000 beds in 20 states and the
District of Columbia. The Company specializes in owning, operating and managing
prisons and other correctional facilities and providing inmate residential and
prisoner transportation services for governmental agencies. In addition to
providing the fundamental residential services relating to inmates, the
Company's facilities offer a variety of rehabilitation and educational programs,
including basic education, religious services, life skills and employment
training and substance abuse treatment. These services are intended to reduce
recidivism and to prepare inmates for their successful re-entry into society
upon their release. The Company also provides health care (including medical,
dental and psychiatric services), food services and work and recreational
programs.
FORWARD-LOOKING STATEMENTS
This press release contains statements as to the Company's beliefs and
expectations of the outcome of future events that are forward-looking statements
as defined within the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from the statements made.
These include, but are not limited to, the risks and uncertainties associated
with: (i) 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; (ii) changes in the
privatization of the corrections and detention industry, the public acceptance
of the Company's services and the timing of the opening of new prison facilities
and the renewal of existing contracts; and (iii) 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 SEC.
The Company takes no responsibility for updating the information contained in
this press release following the date hereof to reflect events or circumstances
occurring after the date hereof or the occurrence of unanticipated events or for
any changes or modifications made to this press release or the information
contained herein by any third-parties, including, but not limited to, any wire
or internet services.
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CCA 2003 Second Quarter Results
August 6, 2003
Page 6
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
JUNE 30, December 31,
ASSETS 2003 2002
- ------------------------------------------------------------------- ----------- -----------
Cash and cash equivalents $ 70,464 $ 65,406
Restricted cash 13,186 7,363
Accounts receivable, net of allowance 132,753 119,197
Income tax receivable 60 32,499
Prepaid expenses and other current assets 9,206 12,299
Current assets of discontinued operations 1,158 17,583
----------- -----------
Total current assets 226,827 254,347
Property and equipment, net 1,584,825 1,551,781
Investment in direct financing lease 18,057 18,346
Goodwill 20,294 20,902
Other assets 32,636 28,211
Non-current assets of discontinued operations -- 484
----------- -----------
Total assets $ 1,882,639 $ 1,874,071
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------
Accounts payable and accrued expenses $ 131,730 $ 151,516
Income tax payable 3,547 3,685
Distributions payable 150 5,330
Current portion of long-term debt 5,377 23,054
Current liabilities of discontinued operations 1,670 2,381
----------- -----------
Total current liabilities 142,474 185,966
Long-term debt, net of current portion 1,043,780 932,905
Other liabilities 22,075 21,202
----------- -----------
Total liabilities 1,208,329 1,140,073
----------- -----------
Commitments and contingencies
Preferred stock - $0.01 par value:
Series A - stated at liquidation preference of $25.00 per share 7,500 107,500
Series B - stated at liquidation preference of $24.46 per share 22,933 107,831
Common stock - $0.01 par value 350 280
Additional paid-in capital 1,439,347 1,343,066
Deferred compensation (2,323) (1,604)
Retained deficit (792,549) (822,111)
Accumulated other comprehensive loss (948) (964)
----------- -----------
Total stockholders' equity 674,310 733,998
----------- -----------
Total liabilities and stockholders' equity $ 1,882,639 $ 1,874,071
=========== ===========
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CCA 2003 Second Quarter Results
August 6, 2003
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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,
------------------------- -------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
REVENUE:
Management and other $ 253,213 $ 230,907 $ 502,594 $ 454,387
Rental 929 950 1,852 1,897
--------- --------- --------- ---------
254,142 231,857 504,446 456,284
--------- --------- --------- ---------
EXPENSES:
Operating 190,294 178,646 375,801 353,990
General and administrative 10,010 8,344 19,547 15,535
Depreciation and amortization 13,036 12,479 25,949 24,625
--------- --------- --------- ---------
213,340 199,469 421,297 394,150
--------- --------- --------- ---------
OPERATING INCOME 40,802 32,388 83,149 62,134
--------- --------- --------- ---------
OTHER (INCOME) EXPENSE:
Equity in (earnings) loss of joint venture (46) 90 44 (27)
Interest expense, net 19,659 22,532 37,381 51,418
Expenses associated with debt refinancing and
recapitalization transactions 4,135 36,670 4,135 36,670
Change in fair value of derivative instruments (2,900) (51) (2,900) (3,462)
(Gain) loss on disposal of assets 1 54 (15) 51
Unrealized foreign currency transaction gain (277) (422) (150) (327)
--------- --------- --------- ---------
20,572 58,873 38,495 84,323
--------- --------- --------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF ACCOUNTING CHANGE 20,230 (26,485) 44,654 (22,189)
Income tax benefit -- 119 170 32,888
--------- --------- --------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 20,230 (26,366) 44,824 10,699
Income (loss) from discontinued operations, net of taxes -- 176 (1,692) 2,135
Cumulative effect of accounting change -- -- -- (80,276)
--------- --------- --------- ---------
NET INCOME (LOSS) 20,230 (26,190) 43,132 (67,442)
Distributions to preferred stockholders (8,090) (5,205) (13,570) (10,282)
--------- --------- --------- ---------
NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS $ 12,140 $ (31,395) $ 29,562 $ (77,724)
========= ========= ========= =========
BASIC EARNINGS (LOSS) PER SHARE:
Income (loss) from continuing operations before cumulative
effect of accounting change $ 0.38 $ (1.15) $ 1.05 $ 0.01
Income (loss) from discontinued operations, net of taxes -- 0.01 (0.06) 0.08
Cumulative effect of accounting change -- -- -- (2.90)
--------- --------- --------- ---------
Net income (loss) available to common stockholders $ 0.38 $ (1.14) $ 0.99 $ (2.81)
========= ========= ========= =========
DILUTED EARNINGS (LOSS) PER SHARE:
Income (loss) from continuing operations before cumulative
effect of accounting change $ 0.34 $ (1.15) $ 0.94 $ 0.01
Income (loss) from discontinued operations, net of taxes -- 0.01 (0.05) 0.08
Cumulative effect of accounting change -- -- -- (2.78)
--------- --------- --------- ---------
Net income (loss) available to common stockholders $ 0.34 $ (1.14) $ 0.89 $ (2.69)
========= ========= ========= =========
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CCA 2003 Second Quarter Results
August 6, 2003
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CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
CALCULATION OF ADJUSTED FREE CASH FLOW AND EBITDA
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------- ------------------------
2003 2002 2003 2002
-------- -------- -------- ---------
Pre-tax income (loss) available to common stockholders $ 12,140 $(31,514) $ 29,392 $(110,612)
Expenses associated with debt refinancing and recapitalization
transactions 4,135 36,670 4,135 36,670
Cumulative effect of accounting change -- -- -- 80,276
Income taxes paid (1,495) (4,080) (1,501) (4,110)
Depreciation and amortization 13,036 12,479 25,949 24,625
Depreciation and amortization for discontinued operations -- 2,320 1,074 2,632
Income tax (benefit) expense for discontinued operations -- (561) -- 475
Amortization of debt costs and other non-cash interest 2,231 2,937 3,618 9,123
Change in fair value of derivative instruments (2,900) (51) (2,900) (3,462)
Series B preferred stock dividends satisfied with series B preferred
stock and non-recurring tender premium 6,460 3,055 9,790 5,982
Maintenance capital expenditures (7,438) (2,792) (12,920) (6,694)
-------- -------- -------- ---------
ADJUSTED FREE CASH FLOW $ 26,169 $ 18,463 $ 56,637 $ 34,905
======== ======== ======== =========
ADJUSTED FREE CASH FLOW PER SHARE:
BASIC $ 0.82 $ 0.67 $ 1.90 $ 1.26
======== ======== ======== =========
DILUTED $ 0.72 $ 0.59 $ 1.65 $ 1.12
======== ======== ======== =========
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
----------------------- ------------------------
2003 2002 2003 2002
-------- -------- --------- --------
Net income (loss) $ 20,230 $(26,190) $ 43,132 $(67,442)
Interest expense, net 19,659 22,532 37,381 51,418
Depreciation and amortization 13,036 12,479 25,949 24,625
Income tax benefit -- (119) (170) (32,888)
Cumulative effect of accounting change -- -- -- 80,276
(Income) loss from discontinued operations, net of taxes -- (176) 1,692 (2,135)
-------- -------- --------- --------
EBITDA $ 52,925 $ 8,526 $ 107,984 $ 53,854
Expenses associated with debt refinancing and recapitalization
transactions 4,135 36,670 4,135 36,670
Change in fair value of derivative instruments (2,900) (51) (2,900) (3,462)
-------- -------- --------- --------
ADJUSTED EBITDA $ 54,160 $ 45,145 $ 109,219 $ 87,062
======== ======== ========= ========
Adjusted EBITDA and adjusted free cash flow are presented because the Company
believes they are frequently used by the Company's lenders, security analysts,
investors and other interested parties to evaluate the Company's operating
results and its ability to service debt. However, other companies may calculate
Adjusted EBITDA and adjusted free cash flow differently than the Company does,
and therefore comparability may be limited. 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
combined and consolidated financial statements and related notes included in its
filings with the Securities and Exchange Commission.
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