Earnings Per Share Increased 15.4%; California Resumes Ramp-Up at Tallahatchie County Correctional Facility; Provides Updated EPS Guidance; Now Expects Earnings per Diluted Share of $1.18 to $1.20 Compared With Previous Range of $1.21 to $1.24
Quarter Ended September 30, Metric 2008 2007 % Change --------- --------- --------- Average Available Beds 81,505 75,328 8.2% Average Compensated Occupancy 95.3% 97.9% -2.7% Total Compensated Man-Days 7,147,895 6,784,057 5.4% Average Daily Compensated Population 77,695 73,740 5.4% Revenue per Compensated Man-Day $ 57.23 $ 54.94 4.2% Operating Expense per Compensated Man-Day: Fixed 30.50 29.25 4.3% Variable 9.83 9.98 -1.5% --------- --------- Total 40.33 39.23 2.8% --------- --------- Operating Margin per Compensated Man-Day $ 16.90 $ 15.71 7.6% ========= ========= Operating Margin 29.5% 28.6% 3.1%
Facilities Total Bed Estimated Under Capacity Remaining Expansion or Additional Following Estimated Spend (1) Potential Development Beds Expansion Completion (in millions) Customer(s) ---------- --------- ----------- ---------- ------------- Owned Facilities: Adams County Correctional Federal or Center, Various Mississippi 2,232 2,232 Q4 2008 $ 21.8 States La Palma Correctional Center, Arizona (2) 1,020 3,060 Q1 2009 20.8 California (3) Trousdale Correctional Federal or Center, Various Tennessee 2,040 2,040 Q1 2010 122.0 States Nevada Southern Detention Center, Nevada 1,072 1,072 Q2 2010 71.0 OFDT(3) Managed Only Facilities: Silverdale Facilities, Hamilton Tennessee 128 1,046 Q4 2008 -(4) County ---------- ---------- Total 6,492 $ 235.6 ========== ========== (1) The total estimated remaining spend on all the expansion and development beds outlined above is $235.6 million. However, we estimate the total cost to construct all of the beds represented in the table above to be $561.5 million. (2) At September 30, 2008, the La Palma Correctional Center currently had 1,020 beds completed and in service. However an additional 1,020 beds were placed into service on October 1, 2008, and the final 1,020 beds are expected to be completed during the first quarter of 2009. Upon completion of construction of the entire project, the La Palma facility will have a total design capacity of 3,060 beds. (3) The management contract in place with the stated customer at this facility provides for a limited guaranteed inmate population. The expansion costs of Silverdale Facilities and Idaho Correctional Center, facilities managed by CCA but owned by the customer, will be funded by the customer. (4) The expansion costs of Silverdale Facilities, managed by CCA but owned by the customer, will be funded by the customer.
Expansions or New Facilities Additional Completed Beds Completed Customer(s) --------- --------- ---------------- 2007 Citrus County Detention Facility, Florida 360 Q1 2007 Citrus County Crossroads Correctional Center, State of Montana Montana 96 Q1 2007 and USMS Saguaro Correctional Facility, Arizona 1,896 Q2 2007 State of Hawaii Gadsden Correctional Institution, Florida 384 Q3 2007 State of Florida Bay Correctional Facility, Florida 235 Q3 2007 State of Florida Tallahatchie County Correctional State of Facility, Mississippi 720 Q4 2007 California North Fork Correctional Facility, Various Existing Oklahoma 960 Q4 2007 State Customers --------- Total 2007 Additional Beds Completed 4,651 --------- 2008 Eden Detention Center, Texas 129 Q1 2008 BOP Kit Carson Correctional Center, State of Colorado 720 Q1 2008 Colorado Bent County Correctional Facility, State of Colorado 720 Q2 2008 Colorado Leavenworth Detention Center, Kansas 266 Q2 2008 USMS Tallahatchie County Correctional State of Facility, Mississippi 720 Q2 2008 California La Palma Correctional Center, State of Arizona 1,020 Q3 2008 California State of Davis Correctional Facility, Oklahoma and/or Oklahoma 660 Q3 2008 Various States State of Oklahoma Federal Cimarron Correctional Facility, and/or Various Oklahoma 660 Q4 2008 States La Palma Correctional Center, State of Arizona 1,020 Q4 2008 California Tallahatchie County Correctional State of Facility, Mississippi 128 Q4 2008 California --------- Total 2008 Additional Beds Completed 6,043 --------- Total 10,694 =========Liquidity Update We believe we have the ability to fund our capital expenditure requirements, including all construction projects under development as well as our maintenance and information technology expenditures, working capital, and debt service requirements, with cash on hand, net cash provided by operations, and borrowings available under our $450 million revolving credit facility. None of our outstanding debt requires scheduled principal repayments, and we have no debt maturities until May 2011. We have a strong and flexible balance sheet that we believe will enable us to continue to grow while maintaining a conservative capital structure. At September 30, 2008, our liquidity was provided by cash on hand of $28.7 million and approximately $237.2 million available under our $450.0 million revolving credit facility. During the nine months ended September 30, 2008, we generated $222.9 million in cash through operating activities, and as of September 30, 2008, we had net working capital of $78.2 million. Guidance We expect diluted earnings per share ("EPS") for the fourth quarter of 2008 to be in the range of $0.30 to $0.32, resulting in full year 2008 EPS to be in the range of $1.18 to $1.20. During 2008, we expect to invest approximately $508.8 million in capital expenditures, consisting of approximately $465.4 million in prison construction and expansions that have been previously announced, $29.9 million in maintenance capital expenditures and $13.5 million in information technology. We also currently expect to pay approximately $55.0 million in federal and state income taxes during 2008. We have revised fourth quarter guidance primarily as a result of the following: 1) longer than anticipated delays in state of California inmate transfers to our Tallahatchie County facility, 2) a slower than anticipated ramp-up of state of California inmate populations at other facilities, 3) delays in negotiating the new USMS contract at our D.C. Correctional Treatment Facility and 4) recent and projected reductions in inmate populations from the states of Washington and Minnesota resulting from earlier than anticipated utilization of new, state-owned bed capacity. Looking forward to the balance of 2008 and into 2009, we are monitoring the challenges faced by our customers as a result of the down-turn in the economy and the unusual financial environment. As most state legislatures are out of session, it is unclear what steps our customers may take to address current and future budget shortfalls. Although this environment increases uncertainty in the short-term, we believe the long-term implications are very positive as states may defer or cancel plans for constructing new state-owned prison bed capacity, which should ensure a continuation of the supply and demand imbalance that has been benefiting the private prison industry. Supplemental Financial Information and Investor Presentations We have made available on our website supplemental financial information and other data for the third quarter of 2008. 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.correctionscorp.com under "Financial Information" of the Investor section. Management may meet with investors from time to time during the fourth quarter of 2008. Written materials used in the investor presentations will also be available on our website beginning on or about November 18, 2008. Interested parties may access this information through our website at www.correctionscorp.com under "Webcasts" of the Investor 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) today, to discuss our third quarter 2008 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 our website following the completion of the call. In addition, a telephonic replay will be available today at 2:00 p.m. eastern time through 11:59 p.m. eastern time on November 13, 2008, by dialing 888-203-1112, pass code 4294978. About CCA CCA 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 three states. We currently operate 64 facilities, including 42 company-owned facilities, with a total design capacity of approximately 82,000 beds in 19 states and the District of Columbia. We specialize 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, our 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. We also provide 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 our 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 our services, the timing of the opening of and demand for new prison facilities and the commencement of new management contracts; (iii) our ability to obtain and maintain correctional facility management contracts, including as the result of sufficient governmental appropriations, inmate disturbances, and the timing of the opening of new facilities and the commencement of new management contracts as well as our ability to utilize current available beds and new capacity as development and expansion projects are completed; (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 our control, such as weather, labor conditions and material shortages, resulting in increased construction costs; (v) changes in governmental policy and in legislation and regulation of the corrections and detention industry including, but not limited to, judicial challenges regarding the transfer of California inmates to out-of-state private correctional facilities; (vi) the availability of debt and equity financing on terms that are favorable to us; and (vii) 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 us with the Securities and Exchange Commission. 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) September 30, December 31, ASSETS 2008 2007 ------------ ------------ Cash and cash equivalents $ 28,736 $ 57,968 Accounts receivable, net of allowance of $3,059 and $3,914, respectively 242,574 241,116 Deferred tax assets 14,789 12,250 Prepaid expenses and other current assets 20,700 21,133 Assets held for sale - 7,581 Current assets of discontinued operations 175 615 ------------ ------------ Total current assets 306,974 340,663 Property and equipment, net 2,456,949 2,086,980 Restricted cash 6,669 6,511 Investment in direct financing lease 13,698 14,503 Goodwill 13,672 13,672 Other assets 21,907 23,411 ------------ ------------ Total assets $ 2,819,869 $ 2,485,740 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $ 219,021 $ 212,749 Income taxes payable 8,905 964 Current portion of long-term debt 290 290 Current liabilities of discontinued operations 566 728 ------------ ------------ Total current liabilities 228,782 214,731 Long-term debt, net of current portion 1,155,460 975,677 Deferred tax liabilities 42,884 34,271 Other liabilities 39,505 39,086 ------------ ------------ Total liabilities 1,466,631 1,263,765 ------------ ------------ Commitments and contingencies Common stock - $0.01 par value; 300,000 shares authorized; 125,597 and 124,472 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively 1,256 1,245 Additional paid-in capital 1,589,572 1,568,736 Retained deficit (237,590) (348,006) ------------ ------------ Total stockholders' equity 1,353,238 1,221,975 ------------ ------------ Total liabilities and stockholders' equity $ 2,819,869 $ 2,485,740 ============ ============ 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 Nine Months Ended September 30, Ended September 30, ------------------------ ------------------------ 2008 2007 2008 2007 ----------- ----------- ----------- ----------- REVENUE: Management and other $ 410,664 $ 377,069 $ 1,193,530 $ 1,085,158 Rental 1,221 1,187 3,617 3,375 ----------- ----------- ----------- ----------- 411,885 378,256 1,197,147 1,088,533 ----------- ----------- ----------- ----------- EXPENSES: Operating 292,599 273,450 850,220 778,937 General and administrative 20,866 18,362 60,222 54,497 Depreciation and amortization 23,564 20,074 67,152 57,272 ----------- ----------- ----------- ----------- 337,029 311,886 977,594 890,706 ----------- ----------- ----------- ----------- OPERATING INCOME 74,856 66,370 219,553 197,827 ----------- ----------- ----------- ----------- OTHER EXPENSES (INCOME): Interest expense, net 15,087 13,249 42,671 40,838 Other income (360) (200) (356) (281) ----------- ----------- ----------- ----------- 14,727 13,049 42,315 40,557 ----------- ----------- ----------- ----------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 60,129 53,321 177,238 157,270 Income tax expense (22,038) (20,170) (66,765) (59,275) ----------- ----------- ----------- ----------- INCOME FROM CONTINUING OPERATIONS 38,091 33,151 110,473 97,995 Income (loss) from discontinued operations, net of taxes (200) 104 (57) 432 ----------- ----------- ----------- ----------- NET INCOME $ 37,891 $ 33,255 $ 110,416 $ 98,427 =========== =========== =========== =========== EARNINGS PER SHARE: Basic $ 0.30 $ 0.27 $ 0.89 $ 0.81 =========== =========== =========== =========== Diluted $ 0.30 $ 0.26 $ 0.87 $ 0.79 =========== =========== =========== =========== CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED AND AMOUNTS IN THOUSANDS) CALCULATION OF ADJUSTED FREE CASH FLOW For the Three Months For the Nine Months Ended September 30, Ended September 30, -------------------- -------------------- 2008 2007 2008 2007 --------- --------- --------- --------- Income from continuing operations before income taxes $ 60,129 $ 53,321 $ 177,238 $ 157,270 Income taxes paid (16,702) (9,655) (39,474) (31,331) Depreciation and amortization 23,564 20,074 67,152 57,272 Income (loss) from discontinued operations, net of taxes (200) 104 (57) 432 Income tax expense (benefit) for discontinued operations (115) 64 (26) 262 Stock-based compensation reflected in G&A expenses 2,198 1,579 6,336 4,618 Amortization of debt costs and other non-cash interest 940 969 2,900 2,972 Maintenance and technology capital expenditures (7,861) (11,353) (23,053) (32,458) --------- --------- --------- --------- Adjusted Free Cash Flow $ 61,953 $ 55,103 $ 191,016 $ 159,037 ========= ========= ========= ========= CALCULATION OF EBITDA For the Three Months For the Nine Months Ended September 30, Ended September 30, -------------------- -------------------- 2008 2007 2008 2007 --------- --------- --------- --------- Net income $ 37,891 $ 33,255 $ 110,416 $ 98,427 Interest expense, net 15,087 13,249 42,671 40,838 Depreciation and amortization 23,564 20,074 67,152 57,272 Income tax expense 22,038 20,170 66,765 59,275 (Income) loss from discontinued operations, net of taxes 200 (104) 57 (432) ---------- --------- ---------- --------- EBITDA $ 98,780 $ 86,644 $ 287,061 $ 255,380 ========== ========= ========== =========
Contact Information: Contact: Investors and Analysts: Karin Demler CCA (615) 263-3005 Financial Media: David Gutierrez Dresner Corporate Services (312) 780-7204