Fourth Quarter Diluted EPS Increased 5.1% to $0.41; Full Year Diluted EPS up 10.8% to $1.54; Full Year Adjusted Diluted EPS Up 9.2%; 2012 Full-Year Diluted EPS Guidance of $1.60 to $1.70
NASHVILLE, TN, Feb 08, 2012 (MARKETWIRE via COMTEX) --CCA (NYSE: CXW) (the "Company" or "Corrections Corporation of
America"), America's leader in partnership corrections and the
nation's largest provider of corrections management services to
government agencies, announced today its financial results for the
fourth quarter and the year ended December 31, 2011.
Financial Review - Fourth Quarter 2011 Compared with Fourth Quarter
2010
-- Diluted EPS of $0.41
-- Operating income of $81.1 million
-- EBITDA of $109.1 million
-- Adjusted Funds From Operations Per Diluted Share of $0.63
Total management revenue for the fourth quarter of 2011 increased to
$438.3 million from $430.8 million during the fourth quarter of 2010.
For the fourth quarter of 2011, CCA generated net income of $40.5
million, or $0.41 per diluted share, compared with net income of
$43.7 million, or $0.39 per diluted share, for the fourth quarter of
2010.
Management revenue from our federal partners increased 5.9% to $192.6
million generated during the fourth quarter of 2011 compared with
$181.8 million generated during the prior year period. The increase
in federal revenue resulted from higher populations from the U.S.
Marshals Service (USMS) primarily located in the southwest region of
the United States, combined with contractual rate increases
associated with certain federal management contracts. These revenue
increases occurred mostly within the owned and managed segment of our
business.
Management revenue from our state partners decreased 1.8% to $216.8
million during the fourth quarter of 2011 compared with $220.7
million during the fourth quarter of 2010. State revenue decreased
primarily as a result of a reduction of inmate populations from the
state of California due to our strategic decision not to renew the
contract for nearly 900 beds at our Florence facility, where we were
able to replace such inmates with more inmates from the USMS,
combined with lower inmate populations from the state of Hawaii.
These decreases were partially offset by higher inmate populations
from the state of Georgia.
EBITDA for the fourth quarter of 2011 decreased 4.6% to $109.1
million from $114.3 million during the fourth quarter of 2010. Funds
From Operations increased slightly to $82.1 million during the fourth
quarter of 2011 from $81.6 million in the prior year quarter.
Adjusted Funds From Operations, which includes maintenance and
technology capital expenditures, for the fourth quarter of 2011
decreased slightly to $62.7 million compared with $62.9 million
during the prior year period. EBITDA, Funds From Operations and
Adjusted Funds From Operations were negatively impacted by wage
increases beginning in the third quarter of 2011, along with an
increase in general and administrative expenses largely attributable
to increases in incentive compensation. We also experienced
unfavorable claims for our self-insured employee medical plans during
the fourth quarter of 2011 compared with the fourth quarter of 2010.
The fourth quarter of 2011 also included nearly $1.0 million in
start-up expenses associated with the commencement of operations at
our newly acquired Lake Erie Correctional Institution and preparation
for the commencement of operations at our newly constructed Jenkins
Correctional Center, which is expected to be completed in early March
2012.
Revenue per compensated man-day in the fourth quarter of 2011
increased 1.2% to $58.66 compared to $57.97 in the fourth quarter of
2010. Operating expenses per compensated man-day during the fourth
quarter of 2011 increased 2.8% to $40.32 from $39.22 in the fourth
quarter of 2010. The increase in operating expenses resulted
primarily from wage increases that were effective in the beginning of
the third quarter of 2011 combined with higher employee benefits
expenses primarily as a result of unfavorable claims experience in
our self-insured plans during the fourth quarter of 2011.
Our earnings per share were favorably impacted by the reduction in
our weighted average shares outstanding from 109.6 million during the
fourth quarter of 2010 to 99.1 million during the fourth quarter of
2011 resulting from the purchase of 10.6 million shares of our
outstanding stock during 2011. Our earnings per share for the fourth
quarter of 2011 were also favorably impacted by a lower effective
income tax rate primarily resulting from the generation of additional
tax credits.
Our total average daily compensated population increased to 81,221 in
the fourth quarter of 2011 from 80,777 in the fourth quarter of 2010.
Our total portfolio occupancy increased slightly to 90.0% during the
fourth quarter of 2011 from 89.7% during the fourth quarter of 2010.
CCA President and Chief Executive Officer, Damon Hininger, stated,
"As we begin 2012, we are preparing to commence operations at our
Jenkins Correctional Center, which we expect will be completed and
begin ramping later this quarter. Additionally, we are very pleased
to have added the states of Ohio and the Commonwealth of Puerto Rico
to our list of government partners."
Hininger added, "We are also very pleased with the execution of our
previously announced new revolving credit facility, which reflects
our strong financial position, reduces our near-term debt maturities
and decreases our overall cost of debt."
Full-Year 2011 Compared with Full-Year 2010
-- Diluted EPS of $1.54
-- Operating Income of $332.1 million
-- EBITDA of $440.7 million
-- Adjusted Funds From Operations Per Diluted Share of $2.49
Total management revenue for the year ended December 31, 2011,
increased 3.7% to $1,729.2 million from $1,668.3 million during 2010.
For the full-year 2011, CCA generated net income of $162.5 million,
or $1.54 per diluted share, compared with net income of $157.2
million, or $1.39 per diluted share for 2010, representing an
increase in diluted earnings per share of 10.8%. Adjusted net income
during 2010 was $158.9 million, or $1.41 per diluted share,
representing an increase in diluted earnings per share of 9.2%.
Adjusted net income for 2010 excluded a non-cash charge of $1.7
million for the write-off of goodwill associated with the termination
of the management contracts for the Gadsden and Hernando facilities
located in Florida, which were previously in the managed-only segment
of our business.
Operating income increased to $332.1 million during 2011 from $323.1
million during the prior year, an increase of 2.8%. The improvement
in our financial results for 2011 resulted from a 3.4% increase in
our average daily inmate population to 81,016 for 2011 from 78,319
during 2010. Operating expenses during 2010 included $4.1 million of
bonuses paid to non-management level staff in-lieu of wage increases.
Adjusted net income, EBITDA, Funds From Operations, Adjusted Funds
From Operations, 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.
Partnership Development Update
On January 3, 2012, we announced that
we entered into a contract with the Puerto Rico Department of
Corrections and Rehabilitation to manage up to 480 male inmates at
the 1,692-bed Cimarron Correctional Facility, a facility we own in
Cushing, Oklahoma. The management contract contains an initial term
of two years and upon mutual agreement can be renewed for two
additional one-year terms. The management contract will commence upon
receipt of an initial inmate population of 240 inmates currently
expected later this month with the remainder expected to arrive by
early May 2012. We currently manage approximately 650 male inmates
from the state of Oklahoma at the Cimarron facility. Following the
ramp-up of the new inmates from Puerto Rico, the population at our
Cimarron facility is expected to be approximately 1,100 inmates.
On September 1, 2011, we announced that we had entered into a
contract with the state of Ohio to purchase and operate the 1,798-bed
Lake Erie Correctional Institution. On December 30, 2011, we
finalized the purchase of the facility for a purchase price of
approximately $73.0 million, using cash on hand and borrowing
available under our revolving bank credit facility. We commenced
operations of the facility on December 31, 2011. This represents the
first sale of a state-owned correctional facility to the private
sector and the first contract CCA has had with the state of Ohio.
In late January 2012, the governor of Kentucky submitted his proposed
budget which included the transfer of the inmates currently held at
one of our facilities to a facility owned by the Commonwealth of
Kentucky that had previously been closed as the result of damage
sustained during an inmate disturbance. Based on conversations with
the Kentucky Department of Corrections, we believe that Kentucky will
likely remove inmates currently in the 656-bed Otter Creek
Correctional Center, a facility we own in Wheelright, Kentucky, by
the end of June 2012. Assuming the budget is passed as proposed, we
plan to idle the facility if we are unable to identify a partner to
utilize the facility. At February 1, 2012 we housed approximately 625
inmates at the Otter Creek facility. This facility incurred operating
losses of $0.4 million and $1.0 million during the fourth quarter and
full year ended December 31, 2011, respectively.
During January 2012, as expected, we ceased management of the
1,172-bed Delta Correctional Facility located in Greenwood,
Mississippi, pursuant to a mutual agreement between CCA and the state
of Mississippi. This facility incurred operating losses of $1.3
million and $2.0 million during the fourth quarter and full-year
ended December 31, 2011, respectively, and was previously included in
the managed-only segment of our business.
Refinancing
On January 6,
2012, CCA announced it entered into an amendment and restatement of
its senior credit facility. The facility was expanded to a total
capacity of up to $785 million aggregate principal amount from $450
million. The maturity for the amended senior credit facility was
extended through December 2016 and the new facility will initially
bear interest at London Interbank Offered Rate (LIBOR) plus 1.5%,
subject to adjustments based on CCA's leverage ratio. Borrowings
under the amended senior credit facility will be used to repurchase
and redeem $335.0 million aggregate principal amount of CCA's
outstanding 6 1/4% $375 Million Senior Notes due 2013 and for general
corporate purposes.
Share Repurchase Program
During the fourth quarter of 2011 we
repurchased 0.1 million shares of our common stock at an aggregate
cost of $2.3 million. During the full-year 2011, we repurchased 10.6
million shares of our outstanding common stock at an aggregate cost
of $237.5 million. Since 2008, we have repurchased 28.4 million
shares at an average per share cost of $17.91, representing
approximately 22.6% of the total shares outstanding prior to the
initiation of the first program. As of December 31, 2011, we had
approximately 99.5 million shares outstanding, and $117.2 million
remaining under the share repurchase program authorized by the Board,
but only approximately $46.6 million in capacity under the restricted
payment limitations under our debt agreements, after taking into
consideration the net income generated during the fourth quarter of
2011. The restricted payment limitation increases quarterly based
generally on 50% of our net income.
Guidance
We expect Diluted EPS for the first quarter of 2012 to be
in the range of $0.32 to $0.33 and full year 2012 Diluted EPS to be
in the range of $1.60 to $1.70, with full year Adjusted Funds From
Operations Per Diluted Share to be in the range of $2.35 to $2.50.
These estimates do not include charges of $1.4 million to $1.9
million we expect to report during the first quarter of 2012 in
connection with our refinancing activities or the purchase of
additional shares under the share repurchase program.
The decline in diluted EPS from the fourth quarter of 2011 to the
first quarter of 2012 reflects the impact of higher unemployment
taxes we experience during the first quarter of each year, a higher
effective income tax rate resulting from the expiration of certain
tax credits, additional startup expenses associated with the
commencement of operations at our new Jenkins facility and the intake
of new inmates from the Commonwealth of Puerto Rico at our Cimarron
facility. In addition, we experienced a reduction in USMS populations
that began at the end of 2011 and has continued into the first
quarter of 2012. We expect these inmate populations to recover during
the second quarter of 2012. Combined, these items amount to a
reduction of approximately $0.09 per diluted share from the fourth
quarter of 2011 to the first quarter of 2012.
During 2012, we expect to invest approximately $80.0 million to $90.0
million in capital expenditures, consisting of approximately $30.0
million to $35.0 million in on-going prison construction and
expenditures related to potential land acquisitions, and $50.0
million to $55.0 million in maintenance and information technology.
We also expect a full-year effective income tax rate of approximately
38.0%, with payments for income taxes expected to approximate $99.0
million to $105.0 million for the full year.
Supplemental Financial Information and Investor Presentations
We
have made available on our website supplemental financial information
and other data for the fourth quarter of 2011. 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.
Management may meet with investors from time to time during the first
quarter of 2012. Written materials used in the investor presentations
will also be available on our website beginning on or about February
24, 2012. 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 February
9, 2012, to discuss our fourth quarter 2011 financial results. 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
February 9, 2012 through 1:59 p.m. eastern time on February 16, 2012,
by dialing (888) 203-1112 or (719) 457-0820, pass code 6431835.
About CCA
CCA is the nation's largest owner and operator 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 66
facilities, including 46 company-owned facilities, with a total
design capacity of approximately 91,000 beds in 20 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) general economic and market
conditions, including the impact governmental budgets can have on our
per diem rates, occupancy and overall utilization; (ii) 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; (iii) 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; (iv) 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; (v) the outcome of California's realignment
program and utilization of out of state private correctional
capacity; and (vi) 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. 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)
December 31,
ASSETS 2011 2010
----------- -----------
Cash and cash equivalents $ 55,832 $ 25,505
Accounts receivable, net of allowance of $1,218 and
$1,568, respectively 271,217 305,305
Deferred tax assets 11,768 14,132
Prepaid expenses and other current assets 18,764 31,196
Current assets of discontinued operations 1,848 2,155
----------- -----------
Total current assets 359,429 378,293
Property and equipment, net 2,608,918 2,549,295
Restricted cash 5,013 6,756
Investment in direct financing lease 9,233 10,798
Goodwill 11,988 11,988
Other assets 25,050 26,092
Non-current assets of discontinued operations - 6
----------- -----------
Total assets $ 3,019,631 $ 2,983,228
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 196,667 $ 203,796
Income taxes payable 605 476
Current liabilities of discontinued operations 1,090 1,583
----------- -----------
Total current liabilities 198,362 205,855
Long-term debt 1,245,014 1,156,568
Deferred tax liabilities 136,503 118,245
Other liabilities 31,730 31,689
----------- -----------
Total liabilities 1,611,609 1,512,357
----------- -----------
Commitments and contingencies
Common stock - $0.01 par value; 300,000 shares
authorized; 99,528 and 109,754 shares issued and
outstanding at December 31, 2011 and 2010,
respectively 995 1,098
Additional paid-in capital 1,129,435 1,354,691
Retained earnings 277,592 115,082
----------- -----------
Total stockholders' equity 1,408,022 1,470,871
----------- -----------
Total liabilities and stockholders' equity $ 3,019,631 $ 2,983,228
=========== ===========
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 Twelve Months
Ended December 31, Ended December 31,
---------------------- ----------------------
2011 2010 2011 2010
---------- ---------- ---------- ----------
REVENUE:
Management and other $ 439,142 $ 431,650 $1,733,409 $1,672,474
Rental 551 550 2,204 2,557
---------- ---------- ---------- ----------
439,693 432,200 1,735,613 1,675,031
---------- ---------- ---------- ----------
EXPENSES:
Operating 305,582 295,711 1,203,400 1,163,771
General and administrative 24,991 22,061 91,227 84,148
Depreciation and
amortization 28,048 27,336 108,931 104,051
---------- ---------- ---------- ----------
358,621 345,108 1,403,558 1,351,970
---------- ---------- ---------- ----------
OPERATING INCOME 81,072 87,092 332,055 323,061
---------- ---------- ---------- ----------
OTHER EXPENSES:
Interest expense, net 18,120 18,628 72,940 71,127
Other expenses 42 115 304 40
---------- ---------- ---------- ----------
18,162 18,743 73,244 71,167
---------- ---------- ---------- ----------
INCOME FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES 62,910 68,349 258,811 251,894
Income tax expense (22,388) (24,644) (96,301) (94,297)
---------- ---------- ---------- ----------
INCOME FROM CONTINUING
OPERATIONS 40,522 43,705 162,510 157,597
Loss from discontinued
operations, net of taxes - - - (404)
---------- ---------- ---------- ----------
NET INCOME $ 40,522 $ 43,705 $ 162,510 $ 157,193
========== ========== ========== ==========
BASIC EARNINGS PER SHARE:
Income from continuing
operations $ 0.41 $ 0.40 $ 1.55 $ 1.41
Loss from discontinued
operations, net of taxes - - - (0.01)
---------- ---------- ---------- ----------
Net income $ 0.41 $ 0.40 $ 1.55 $ 1.40
========== ========== ========== ==========
DILUTED EARNINGS PER SHARE:
Income from continuing
operations $ 0.41 $ 0.39 $ 1.54 $ 1.39
Loss from discontinued
operations, net of taxes - - - -
---------- ---------- ---------- ----------
Net income $ 0.41 $ 0.39 $ 1.54 1.39
========== ========== ========== ==========
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
CALCULATION OF ADJUSTED DILUTED EARNINGS PER SHARE
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
--------------------- ---------------------
2011 2010 2011 2010
---------- ---------- ---------- ----------
Net income $ 40,522 $ 43,705 $ 162,510 $ 157,193
Special Items:
Goodwill impairment for
discontinued operations - - - 1,684
---------- ---------- ---------- ----------
Adjusted net income $ 40,522 $ 43,705 $ 162,510 $ 158,877
========== ========== ========== ==========
Weighted average common shares
outstanding - basic 99,135 109,641 104,736 112,015
Effect of dilutive securities:
Stock options 547 755 603 769
Restricted stock-based
compensation 276 302 196 193
---------- ---------- ---------- ----------
Weighted average shares and
assumed conversions - diluted 99,958 110,698 105,535 112,977
========== ========== ========== ==========
Adjusted Diluted Earnings Per
Share $ 0.41 $ 0.39 $ 1.54 $ 1.41
========== ========== ========== ==========
CALCULATION OF FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
For the Twelve
For the Three Months Months
Ended December 31, Ended December 31,
-------------------- --------------------
2011 2010 2011 2010
--------- --------- --------- ---------
Net income $ 40,522 $ 43,705 $ 162,510 $ 157,193
Income tax expense 22,388 24,644 96,301 94,297
Income taxes paid (12,249) (17,183) (70,341) (61,396)
Depreciation and amortization 28,048 27,336 108,931 104,051
Depreciation and amortization
for discontinued operations - - - 2,222
Goodwill impairment for
discontinued operations - - - 1,684
Income tax benefit for
discontinued operations - - - (253)
Stock-based compensation
reflected in G&A expense 2,332 2,022 9,254 8,525
Amortization of debt costs and
other non-cash interest 1,097 1,053 4,331 4,250
--------- --------- --------- ---------
Funds From Operations $ 82,138 $ 81,577 $ 310,986 $ 310,573
Maintenance and technology
capital expenditures (19,463) (18,679) (47,912) (43,092)
--------- --------- --------- ---------
Adjusted Funds From Operations $ 62,675 $ 62,898 $ 263,074 $ 267,481
========= ========= ========= =========
Funds From Operations Per
Diluted Share $ 0.82 $ 0.74 $ 2.95 $ 2.75
========= ========= ========= =========
Adjusted Funds From Operations
Per Diluted Share $ 0.63 $ 0.57 $ 2.49 $ 2.37
========= ========= ========= =========
CALCULATION OF EBITDA
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
--------------------- ---------------------
2011 2010 2011 2010
---------- ---------- ---------- ----------
Net income $ 40,522 $ 43,705 $ 162,510 $ 157,193
Interest expense, net 18,120 18,628 72,940 71,127
Depreciation and amortization 28,048 27,336 108,931 104,051
Income tax expense 22,388 24,644 96,301 94,297
Loss from discontinued
operations, net of taxes - - - 404
---------- ---------- ---------- ----------
EBITDA $ 109,078 $ 114,313 $ 440,682 $ 427,072
========== ========== ========== ==========
CALCULATION OF ADJUSTED FUNDS FROM OPERATIONS PER SHARE GUIDANCE
For the Year Ending
December 31, 2012
--------------------------
Low End of High End of
Guidance Guidance
------------ ------------
Net income $ 161,000 $ 171,000
Income tax expense 99,000 105,000
Income taxes paid (99,000) (105,000)
Depreciation and amortization 115,000 115,000
Expenses associated with debt refinancing
transactions, net of tax 1,000 1,000
Other non-cash items 15,000 16,000
------------ ------------
Funds From Operations $ 292,000 $ 303,000
Maintenance and technology capital expenditures (55,000) (50,000)
------------ ------------
Adjusted Funds From Operations $ 237,000 $ 253,000
============ ============
Funds From Operations Per Diluted Share $ 2.89 $ 3.00
============ ============
Adjusted Funds From Operations Per Diluted Share $ 2.35 $ 2.50
============ ============
NOTE TO SUPPLEMENTAL FINANCIAL INFORMATION
Adjusted Net Income, Adjusted Diluted Earnings Per Share, EBITDA,
Funds From Operations and Adjusted Funds From Operations, and their
corresponding per share metrics 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 using GAAP and non-GAAP measures including EPS, Adjusted
Diluted EPS, net income, Funds From Operations and Adjusted Funds
From Operations, and their corresponding per share metrics, as well
as EBITDA to assess the operating performance of the Company's
correctional facilities. EBITDA, Funds From Operations and Adjusted
Funds From Operations are useful as supplemental measures of the
performance of the Company's correctional facilities because they do
not take into account depreciation and amortization, or with respect
to EBITDA, the impact of the Company's tax provisions and financing
strategies. 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 Funds From
Operations substitutes capital expenditures incurred to maintain the
functionality and condition of the Company's correctional facilities
in lieu of a provision for depreciation. Some of these capital
expenditures contain a discretionary element with respect to when
they are incurred, while others may be more urgent. Therefore,
maintenance capital expenditures may fluctuate from quarter to
quarter, depending on the nature of the expenditures required,
seasonal factors such as weather, and budgetary conditions. The
calculation of Funds From Operations and Adjusted Funds From
Operations also reflect the amount of income taxes paid. We
continuously evaluate tax planning strategies to reduce the effective
tax rate for financial reporting purposes as well as strategies to
reduce the amount of taxes we pay. As a result, the amount of taxes
we pay may fluctuate from period to period depending on the
effectiveness of our strategies. The amount of taxes we pay may also
result from many factors beyond our control, such as changes in tax
law. Finally, income taxes paid fluctuate significantly from quarter
to quarter based on statutory methods of computing inter-period
payment requirements and the date such taxes are due.
The Company may make adjustments to GAAP net income, EBITDA, Funds
From Operations and Adjusted Funds From Operations 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. Other
companies may calculate Adjusted net income, EBITDA, Funds From
Operations and Adjusted Funds From Operations differently than the
Company does, or adjust for other items, and therefore comparability
may be limited. Adjusted net income, EBITDA, Funds From Operations
and Adjusted Funds From Operations, 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
SOURCE: Corrections Corporation of America
