UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A-2
Amendment No. 2 to Current Report on Form 8-K/A
Dated October 27, 1998 Reporting The Required Financial Statements and
Exhibits for an Event of August 13, 1998
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
August 13, 1998
CORNELL CORRECTIONS, INC.
(Exact name of registrant as specified in its charter)
1-14472
(Commission File Number)
DELAWARE 76-0433642
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
1700 WEST LOOP SOUTH, SUITE 1500
HOUSTON, TEXAS 77027
(Address of principal executive offices and zip code)
(713) 623-0790
(Registrants telephone number, including area code)
The undersigned registrant hereby amends its
Current Report on Form 8-K/A dated October 27, 1998, reporting
the required financial statements and exhibits for an event
on August 13, 1998, for additional pro-forma adjustments.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this document to be signed on its behalf by the
undersigned, thereunto duly authorized.
CORNELL CORRECTIONS, INC.
By: __________________________
Brian E. Bergeron
Date: November 13, 1998 Chief Financial Officer
and Treasurer
<PAGE>
CORNELL CORRECTIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated balance sheet as of
June 30, 1998 and the unaudited pro forma condensed consolidated statements of
operations for the year ended December 31, 1997 and for the six months ended
June 30, 1998 reflect the consolidated financial position and results of
operations, respectively, of Cornell Corrections, Inc. and its subsidiaries
("the Company") as if the acquisition of Allvest Corporation's Alaska
Corrections Division ("Allvest") by the Company had occurred, in the case of the
balance sheet, on June 30, 1998, and in the case of the statements of
operations, on January 1, 1997. In addition, the unaudited pro forma condensed
consolidated statement of operations for the year ended December 31, 1997
reflects the results of operations as if the Company's acquisition of the Great
Plains Correctional Facility in January 1998 and the acquisition of The Abraxas
Group, Inc. in September 1997 had occurred on January 1, 1997. These statements
do not purport to be indicative of the consolidated results of operations of the
Company that might have been obtained had these events actually then occurred or
of the Company's future results.
The unaudited pro forma condensed consolidated financial statements are based
on certain assumptions and estimates which are subject to change.
2
<PAGE>
CORNELL CORRECTIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL
------------------- PRO FORMA
THE PRO FORMA FOR THE
COMPANY ALLVEST ADJUSTMENTS ACQUISITION
---------- --------- ----------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents .................. $ 1,141 $ 1,088 $ (1,088)(1) $ 1,141
Receivables, net ........................... 22,462 1,041 (1,041)(1) 22,462
Other current assets ....................... 4,897 65 (27)(1) 4,935
-------- -------- -------- --------
Total current assets ..................... 28,500 2,194 (2,156) 28,538
Property and equipment, net .................... 126,454 2,322 14,692 (2) 143,468
Intangibles .................................... 5,904 -- 4,015 (3) 9,919
Other assets ................................... 3,941 -- 3,941
-------- -------- -------- --------
Total assets ............................. $164,799 $ 4,516 $ 16,551 $185,866
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable and accrued liabilities ... $ 22,537 $ 932 $ (919)(4) $ 23,153
603 (5)
Current portion of long-term debt .......... 239 169 (169)(4) 239
-------- -------- -------- --------
Total current liabilities ................ 22,776 1,101 (485) 23,392
Other long-term liabilities .................... 810 588 (588)(4) 810
Long-term debt, excluding current portion ...... 51,769 1,830 (1,830)(4) 72,220
20,451 (6)
Stockholders' equity ........................... 89,444 997 (997)(7) 89,444
-------- -------- -------- --------
Total liabilities and stockholders' equity $164,799 $ 4,516 $ 16,551 $185,866
======== ======== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma
condensed consolidated balance sheet.
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<PAGE>
CORNELL CORRECTIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------------------------- TOTAL PRO FORMA
THE GREAT PRO FORMA FOR THE
COMPANY ABRAXAS PLAINS ALLVEST ADJUSTMENTS ACQUISITIONS
---------- --------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Revenues .......................... $ 70,302 $ 22,832 $ 14,766 $ 7,898 $ -- $ 115,798
Operating expenses ................ 57,047 17,413 7,766 5,700 (368) (1) 91,172
300 (2)
367 (3)
3,145 (4)
333 (5)
(531) (6)
Depreciation and amortization ..... 2,231 801 984 204 (4) (7) 4,186
201 (8)
230 (9)
(501)(10)
40 (11)
General and administrative expenses 5,394 3,145 -- -- (3,145) (4) 5,394
--------- --------- --------- --------- --------- ---------
Income from operations ............ 5,630 1,473 6,016 1,994 (67) 15,046
Interest expense .................. 491 808 3,318 112 2,631 (12) 7,360
Interest income ................... (414) -- (692) -- 692 (13) (414)
--------- --------- --------- --------- --------- ---------
Income before provision
for income taxes ................ 5,553 665 3,390 1,882 (3,390) 8,100
Provision for income taxes ........ 1,999 -- -- -- 1,241 (14) 3,240
--------- --------- --------- --------- --------- ---------
Net income ........................ $ 3,554 $ 665 $ 3,390 $ 1,882 $ (4,631) $ 4,860
========= ========= ========= ========= ========= =========
Earnings per share:
Basic ........................ $ 0.48 $ 0.66
Diluted ...................... $ 0.46 $ 0.63
Number of shares used in per share
computation (thousands):
Basic ...................... 7,350 7,350
Diluted .................... 7,740 7,740
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated
statements of operations.
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<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
HISTORICAL
--------------------- PRO FORMA
THE PRO FORMA FOR THE
COMPANY ALLVEST ADJUSTMENTS ACQUISITION
---------- --------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues .......................... $ 56,140 $ 5,005 $ -- $ 61,145
Operating expenses ................ 45,734 3,480 (266)(6) 48,948
Depreciation and amortization ..... 1,900 155 (55)(7) 2,100
100 (8)
General and administrative expenses 3,631 -- 3,631
-------- -------- -------- --------
Income from operations ............ 4,875 1,370 221 6,466
Interest expense .................. 716 60 815 (12) 1,591
Interest income ................... (72) -- -- (72)
-------- -------- -------- --------
Income before provision
for income taxes ................ 4,231 1,310 (594) 4,947
Provision for income taxes ........ 1,692 -- 287 (14) 1,979
-------- -------- -------- --------
Net income ........................ $ 2,539 $ 1,310 $ (881) $ 2,968
======== ======== ======== ========
Earnings per share:
Basic ..................... $ 0.27 $ 0.32
Diluted ................... $ 0.26 $ 0.30
Number of shares used in per share
computation (thousands):
Basic ..................... 9,407 9,407
Diluted ................... 9,854 9,854
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated
statement of operations.
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<PAGE>
CORNELL CORRECTIONS, INC.
NOTES TO UNAUDITED PRO FORMA CONSDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. ACQUISITION OF ALLVEST CORPORATION ALASKA CORRECTIONS DIVISION
On August 13, 1998, Cornell Corrections, Inc., a Delaware corporation (the
"Company"), through its wholly owned subsidiary, Cornell Corrections of
Alaska, Inc., acquired substantially all of the Alaskan assets of Allvest,
Inc. (the "Acquisition"). The Acquisition was completed pursuant to an Asset
Purchase Agreement dated as of June 20, 1998 by and between the Company and
Allvest, Inc., St. John Investments, Inc. and William C. Weimar. The Company
paid an aggregate purchase price of $20.0 million and financed the purchase
with borrowings from its revolving credit facility. The Acquisition is being
treated as a purchase for accounting purposes.
The Acquisition included the operations of five pre-release facilities
located in Anchorage, Fairbanks and Bethel, Alaska with a total offender
capacity of 540 beds and the real properties of three of the five facilities.
2. PRO FORMA ADJUSTMENTS AND MANAGEMENT ASSUMPTIONS
The pro forma balance sheet assumes the Acquisition had occurred on June
30, 1998 and the pro forma statements of operations assume the Acquisition
had occurred on January 1, 1997. These pro forma financial statements should
be read in conjunction with the historical financial statements and notes
thereto of the Company as filed with the Securities and Exchange Commission.
The following pro forma adjustments and management assumptions are
reflected in the pro forma financial statements:
BALANCE SHEET
(1) Records the elimination of assets not acquired in the Acquisition.
(2) Records an increase in the carrying value of property and equipment to
estimated fair value.
(3) Records the excess of purchase price over fair value of identifiable net
assets to goodwill.
(4) Records the elimination of liabilities not assumed in the Acquisition.
(5) Records accrued transaction costs.
(6) Records the increase in long-term debt related to financing the
Acquisition.
(7) Records the elimination of the net assets of Allvest prior to the
acquisition.
STATEMENTS OF OPERATIONS
(1) Records the elimination of one half of the annual management fee paid to a
third party operator included in Great Plains' operating expenses as the
operations of the facility were assumed by the Company after a six month
contract termination period with the third party operator.
(2) Records an adjustment to operating expenses to record estimated property
taxes on property and equipment purchased in the Great Plains acquisition
which were tax exempt prior to the purchase.
(3) Records an estimated per diem payable to the Hinton Economic Development
Authority for the twelve months ended December 31, 1997 at the Great
Plains Correctional Facility.
(4) Records a reclassification of Abraxas' general and administrative expenses
to operating expenses to conform to Company Policy.
(5) Records an adjustment to operating expenses to record eight months of
estimated property taxes for property acquired from Abraxas which were tax
exempt prior to the acquisition.
(6) Records an adjustment to eliminate facility rent of $531,000 for the year
ended December 31, 1997 and $266,000 for the six months ended June 30,
1998 paid to an Allvest affiliated company which is non-recurring.
(7) Records an adjustment to depreciation expense for the revised basis in
depreciable assets acquired from Allvest.
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<PAGE>
(8) Records goodwill amortization expense of $201,000 for the year ended
December 31, 1997 and $100,000 for the six months ended June 30, 1998 for
the Allvest acquisition.
(9) Records an adjustment to depreciation expense for the revised basis in
depreciable assets purchased in the Great Plains acquisition.
(10) Records an adjustment to depreciation expense for the revised basis in
depreciable assets acquired in the Abraxas acquisition.
(11) Records an adjustment to amortization expense to recognize eight months of
amortization related to a non-compete agreement with the president of
Abraxas.
(12) Records additional interest expense of $2.6 million for the year ended
December 31, 1997 on assumed bank borrowings of $82.8 million incurred to
consummate the Allvest, Great Plains and Abraxas acquisitions and
additional interest expense of $815,000 for the six months ended June 30,
1998 on assumed bank borrowings of $20.0 million incurred to consummate
the Allvest acquisition based at an interest rate of 8.75%.
(13) Records the elimination of investment income recognized by Great
Plains for the year ended December 31, 1997.
(14) Records an adjustment to income tax expense for the foregoing adjustments.
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