UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 11-K
(X) ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO _______________
COMMISSION FILE NUMBER 1-14472
CORNELL CORRECTIONS, INC. 401(K) PROFIT SHARING PLAN
CORNELL CORRECTIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 76-0433642
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1700 WEST LOOP SOUTH, SUITE 1500, HOUSTON, TEXAS 77027
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 623-0790
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Retirement Plan Committee of
the Cornell Corrections, Inc. 401(k) Profit Sharing Plan:
We have audited the accompanying statements of net assets available for benefits
of the Cornell Corrections, Inc. 401(k) Profit Sharing Plan (the Plan) at
December 31, 1998 and 1997, and the related statement of changes in net assets
available for benefits for the year ended December 31, 1998. These financial
statements and supplemental schedules referred to below are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements and supplemental schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 1998 and 1997, and the changes in net assets available for benefits
for the year ended December 31, 1998, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes at December 31, 1998, loans or fixed income obligations
at December 31, 1998, reportable transactions for the year ended December 31,
1998 and non-exempt transactions for the year ended December 31, 1998 are
presented for the purpose of additional analysis and are not a required part of
the basic financial statements but are supplementary information required by the
Department of Labor Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974. The Fund Information in the
statements of net assets available for benefits and the statement of changes in
net assets available for benefits is presented for purposes of additional
analysis rather than to present the net assets available for benefits and
changes in net assets available for benefits of each fund. The supplemental
schedules and Fund Information have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
ARTHUR ANDERSEN LLP
Houston, Texas
June 4, 1999
<PAGE>
CORNELL CORRECTIONS, INC.
401(K) PROFIT SHARING PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1997
<TABLE>
<CAPTION>
AETNA AETNA AETNA FIDELITY
SERIES AETNA SERIES SERIES ADVISORS CORNELL
AETNA MONEY SERIES BALANCED GROWTH AND EQUITY CORRECTIONS, INC.
FIXED MARKET THE BOND GROWTH INCOME GROWTH COMMON LOAN
ACCOUNT FUND FUND FUND FUND FUND STOCK ACCOUNT TOTAL
-------- -------- -------- -------- ---------- -------- ----------------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments (at fair value):
Pooled Separate Accounts ....... $620,094 $304,188 $386,835 $292,484 $1,203,876 $396,602 $ -- $ -- $3,204,079
Cornell Corrections, Inc.
Common Stock.................. -- -- -- -- -- -- 290,353 -- 290,353
Cash ........................... -- -- -- -- -- -- 24,561 -- 24,561
Participant Loans .............. -- -- -- -- -- -- -- 230,715 230,715
-------- -------- -------- -------- ---------- -------- ----------------- -------- ----------
Total Investments ........... 620,094 304,188 386,835 292,484 1,203,876 396,602 314,914 230,715 3,749,708
Receivables:
Employer Contributions ......... 4,713 1,760 2,009 4,589 11,369 11,283 5,263 -- 40,986
Employee Contributions ......... 11,193 4,295 4,721 10,666 27,437 27,385 12,850 -- 98,547
-------- -------- -------- -------- ---------- -------- ----------------- -------- ----------
Total Receivables ........... 15,906 6,055 6,730 15,255 38,806 38,668 18,113 -- 139,533
NET ASSETS AVAILABLE FOR BENEFITS.. $636,000 $310,243 $393,565 $307,739 $1,242,682 $435,270 $ 333,027 $230,715 $3,889,241
======== ======== ======== ======== ========== ======== ================= ======== ==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
CORNELL CORRECTIONS, INC.
401(K) PROFIT SHARING PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS, WITH FUND INFORMATION
DECEMBER 31, 1998
<TABLE>
<CAPTION>
FRANKLIN
BALANCE SHEET JANUS PUTNAM MUNDER AIM
INVESTMENT WORLDWIDE INVESTORS INDEX BALANCED
FUND FUND FUND A 500 FUND K FUND A
ASSETS: --------------- -------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Investments (at fair value):
Mutual Funds ......................... $ 519,947 $ 571,111 $1,392,057 $ 851,627 $ 578,109
Cornell Corrections, Inc. ............
Common Stock ...................... -- -- -- -- --
Participant Loans .................... -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total Investments ................. 519,947 571,111 1,392,057 851,627 578,109
Receivables:
Employer Contributions ............... 8,058 7,263 13,782 10,638 7,066
Employee Contributions ............... 19,599 17,569 35,125 25,755 17,373
Accrued Income ....................... 4,863 -- -- 7,253 4,217
---------- ---------- ---------- ---------- ----------
Total Receivables ................. 32,520 24,832 48,907 43,646 28,656
LIABILITIES:
Other ................................ -- -- -- -- --
NET ASSETS AVAILABLE FOR
BENEFITS ............................. $ 552,467 $ 595,943 $1,440,964 $ 895,273 $ 606,765
========== ========== ========== ========== ==========
<CAPTION>
MUNDER U.S. CORNELL
TREASURY CORRECTIONS,
MUNDER U.S. MONEY INC.
GOVERNMENT MARKET COMMON LOAN
INCOME FUND K FUND K STOCK ACCOUNT TOTAL
------------- ----------- ------------ -------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments (at fair value):
Mutual Funds ............................... $ 173,836 $ 606,714 $ -- $ -- $ 4,693,401
Cornell Corrections, Inc. ..................
Common Stock ............................ -- -- 976,923 -- 976,923
Participant Loans .......................... -- -- -- 272,196 272,196
------------- ----------- ------------ -------- -----------
Total Investments ....................... 173,836 606,714 976,923 272,196 5,942,520
Receivables:
Employer Contributions ..................... 1,902 3,846 9,525 -- 62,080
Employee Contributions ..................... 4,373 8,821 24,609 -- 153,224
Accrued Income ............................. 1,426 2,084 -- -- 19,843
------------- ----------- ------------ -------- -----------
Total Receivables ....................... 7,701 14,751 34,134 -- 235,147
LIABILITIES:
Other ...................................... -- (33,182) -- -- (33,182)
NET ASSETS AVAILABLE FOR
BENEFITS.................................... $ 181,537 $ 588,283 $ 1,011,057 $272,196 $ 6,144,485
============= =========== ============ ======== ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
CORNELL CORRECTIONS, INC.
401(K) PROFIT SHARING PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS,
WITH FUND INFORMATION
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
AETNA
AETNA AETNA SERIES FIDELITY
SERIES AETNA SERIES GROWTH ADVISORS FRANKLIN
AETNA MONEY SERIES BALANCED AND EQUITY BALANCE SHEET
FIXED MARKET THE BOND GROWTH INCOME GROWTH INVESTMENT
ACCOUNT FUND FUND FUND FUND FUND FUND
--------- --------- --------- --------- ----------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Net Investment Income (Loss) from
Pooled Separate Accounts/Mutual Funds $ -- $ 5,038 $ 9,836 $ 23,768 $ 111,130 $ 45,079 $ (65,751)
Net Appreciation of Common Stock ....... -- -- -- -- -- -- --
Interest ............................... 1,842 621 216 300 3,951 595 1,663
Dividends .............................. 14,252 -- -- -- -- -- 29,260
Employee Contributions ................. 53,155 15,756 20,049 43,099 133,082 102,018 139,281
Employer Contributions ................. 49,355 14,484 15,542 33,118 104,245 70,216 56,177
Employee Rollover Contributions ........ 434 -- -- 1,039 2,077 -- 9,240
--------- --------- --------- --------- ----------- --------- -------------
Total Additions ..................... 119,038 35,899 45,643 101,324 354,485 217,908 169,870
DEDUCTIONS:
Employee benefit payments,
withdrawals and other ............... (62,842) (73,615) (214,540) (13,781) (69,535) (18,626) (12,395)
Plan expenses .......................... (339) (18,308) (94) (275) (731) (343) --
--------- --------- --------- --------- ----------- --------- -------------
Total Deductions .................... (63,181) (91,923) (214,634) (14,056) (70,266) (18,969) (12,395)
INTERFUND TRANSFERS, NET .................. (691,857) (254,219) (224,574) (395,007) (1,526,901) (634,209) 394,992
--------- --------- --------- --------- ----------- --------- -------------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS .......... (636,000) (310,243) (393,565) (307,739) (1,242,682) (435,270) 552,467
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR ............ 636,000 310,243 393,565 307,739 1,242,682 435,270 --
--------- --------- --------- --------- ----------- --------- -------------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR .................. $ -- $ -- $ -- $ -- $ -- $ -- $ 552,467
========= ========= ========= ========= =========== ========= =============
<CAPTION>
MUNDER U.S.
MUNDER U.S. TREASURY
JANUS PUTNAM MUNDER AIM GOVERNMENT MONEY
WORLDWIDE INVESTORS INDEX BALANCED INCOME MARKET
FUND FUND A 500 FUND K FUND A FUND K FUND K
--------- ----------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ADDITIONS:
Net Investment Income (Loss) from
Pooled Separate Accounts/Mutual Funds $ 20,834 $ 150,596 $ 79,674 $ 24,869 $ 245 $ --
Net Appreciation of Common Stock ....... -- -- -- -- -- --
Interest ............................... 1,206 3,641 1,971 1,647 416 1,316
Dividends .............................. 2,928 36,440 20,642 14,452 6,595 16,206
Employee Contributions ................. 128,253 252,590 182,729 128,918 32,953 78,674
Employer Contributions ................. 51,136 96,512 73,544 50,369 13,734 33,732
Employee Rollover Contributions ........ 11,517 29,562 24,765 19,860 837 12,831
--------- ----------- ---------- --------- ----------- -----------
Total Additions ..................... 215,874 569,341 383,325 240,115 54,780 142,759
DEDUCTIONS:
Employee benefit payments,
withdrawals and other ............... (10,825) (21,139) (45,050) (7,738) (3,241) (46,241)
Plan expenses .......................... -- -- -- -- -- (47,327)
--------- ----------- ---------- --------- ----------- -----------
Total Deductions .................... (10,825) (21,139) (45,050) (7,738) (3,241) (93,568)
INTERFUND TRANSFERS, NET .................. 390,894 892,762 556,998 374,388 129,998 539,092
--------- ----------- ---------- --------- ----------- -----------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS .......... 595,943 1,440,964 895,273 606,765 181,537 588,283
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR ............ -- -- -- -- -- --
--------- ----------- ---------- --------- ----------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR .................. $ 595,943 $ 1,440,964 $ 895,273 $ 606,765 $ 181,537 $ 588,283
========= =========== ========== ========= =========== ===========
<CAPTION>
CORNELL
CORRECTIONS,
INC.
COMMON LOAN
STOCK ACCOUNT TOTAL
------------ --------- -----------
<S> <C> <C> <C>
ADDITIONS:
Net Investment Income (Loss) from
Pooled Separate Accounts/Mutual Funds $ -- $ -- $ 405,318
Net Appreciation of Common Stock ....... 11,442 -- 11,442
Interest ............................... 2,786 -- 22,171
Dividends .............................. 1,319 -- 142,094
Employee Contributions ................. 230,586 -- 1,541,143
Employer Contributions ................. 107,332 -- 769,496
Employee Rollover Contributions ........ 5,004 -- 117,166
------------ --------- -----------
Total Additions ..................... 358,469 -- 3,008,830
DEDUCTIONS:
Employee benefit payments,
withdrawals and other ............... (51,290) (35,188) (686,046)
Plan expenses .......................... (123) -- (67,540)
------------ --------- -----------
Total Deductions .................... (51,413) (35,188) (753,586)
INTERFUND TRANSFERS, NET .................. 370,974 76,669 --
------------ --------- -----------
INCREASE (DECREASE) IN NET
ASSETS AVAILABLE FOR BENEFITS .......... 678,030 41,481 2,255,244
NET ASSETS AVAILABLE FOR
BENEFITS, BEGINNING OF YEAR ............ 333,027 230,715 3,889,241
------------ --------- -----------
NET ASSETS AVAILABLE FOR
BENEFITS, END OF YEAR .................. $ 1,011,057 $ 272,196 $ 6,144,485
============ ========= ===========
</TABLE>
The accompanying notes are an integral part of this financial statement.
<PAGE>
CORNELL CORRECTIONS, INC.
401(K) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. DESCRIPTION OF THE PLAN
GENERAL
The Cornell Corrections, Inc. 401(k) Profit Sharing Plan (the Plan) was
established on January 1, 1993, and is a trusteed defined contribution plan in
which generally all employees of Cornell Corrections, Inc. and its subsidiaries
(the Company), are eligible to participate. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
(ERISA). The following description of the Plan provides only general
information. Participants should refer to the Plan agreement for a more complete
description of the Plan's provisions.
PLAN ADMINISTRATION AND TRUSTEE
The Plan is administered by a retirement plan committee appointed by the board
of directors of the Company. The retirement plan committee gives the general
directions as to investment options available to participants. Effective June 1,
1998, the retirement committee appointed Comerica Bank to replace Aetna Life
Insurance and Annuity Company (Aetna) as the Plan's asset custodian and
recordkeeper to hold and control the assets of the Plan in accordance with the
terms of the Plan. The retirement plan committee is the trustee of the Plan.
ELIGIBILITY AND CONTRIBUTIONS
All employees except leased employees who have completed one year of service are
eligible to participate in the Plan. Following the completion of one year of
service, participants can enroll in the Plan quarterly.
Employees may elect to contribute from 1 percent to 15 percent of their
compensation, as defined, up to the maximum allowed under Internal Revenue
Service (IRS) guidelines. The Company makes matching contributions equal to 50
percent of the participants' elective deferrals for the Plan year, not to exceed
6 percent of the participants' compensation.
PARTICIPANT ACCOUNTS AND INVESTMENT OPTIONS
Each participating employee's share of the net assets of the Plan is segregated
in an individual account. Participants exercise control over the types of
investments made on their behalf, provided that such investments shall be
invested only in investment funds designated by the retirement plan committee.
Each participant may elect to invest his/her contribution and the Company's
contributions made on the participant's behalf in any one or more of the
investment funds.
Prior to June 1, 1998, participants could direct their accounts into the
following investment options: Aetna Fixed Account, Aetna Series Money Market
Fund, Aetna Series The Bond Fund, Aetna Series Balanced Growth Fund, Aetna
Series Growth, Income Fund and Fidelity Advisors Equity Growth Fund and Cornell
Corrections, Inc. Common Stock.
<PAGE>
In anticipation of the change in service providers, options previously offered
were liquidated and invested in the new options described below at the
participant's direction. The Cornell Corrections, Inc. common stock was
transferred in-kind. Effective June 1, 1998, the retirement plan committee, in
conjunction with the transfer of assets to Comerica Bank, replaced existing
investment options with the following investment options: Franklin Balance Sheet
Investment Fund, Janus Worldwide Fund, Putnam Investors Fund A, Munder Index 500
Fund K, AIM Balanced Fund A, Munder U.S. Government Income Fund K and Munder
U.S. Treasury Money Market Fund K. Cornell Corrections, Inc. Common Stock
remained an investment option under Comerica Bank.
Investment income or loss is allocated monthly to a participant's account in the
same ratio as the participant's investment in each fund bears to the total of
all participants' investments in each fund.
VESTING
All participant contributions are 100 percent vested and nonforfeitable at all
times. Participants become vested in the Company's contributions to the Plan as
follows:
YEARS OF SERVICE PERCENT VESTED
---------------- --------------
1 0%
2 20%
3 40%
4 60%
5 100%
FORFEITURES
Forfeitures of any employer contributions are to be used either to reduce the
Company's contributions to the Plan or to pay the expenses of the Plan. As of
December 31, 1998 and 1997, $8,539 and $41,428 of forfeitures are included in
net assets available for Plan benefits, respectively. During the year ended
December 31, 1998, $67,540 of forfeitures was utilized by the Company to pay the
expenses of the Plan.
PLAN TERMINATION
The Company currently intends to continue the Plan for the benefit of its
employees but reserves the right to discontinue contributions and/or terminate
the Plan, subject to the provisions of ERISA. In the event of a complete
termination of the Plan, the affected participants shall be fully vested in all
amounts allocated to their accounts, and such amounts shall be nonforfeitable.
LOANS
A participant may borrow from the Plan up to the lesser of $50,000 or 50 percent
of the participant's vested account balance with a minimum loan requirement of
$1,000. The loans are secured by the participant's vested account balance.
Interest is charged at the current commercial lending rate and is credited to
the participant's account. The participant is entitled to no more than one loan
concurrently.
PAYMENT OF BENEFITS
Benefits are payable to a participant upon separation from service, total and
permanent disability, retirement or death in accordance with the aforementioned
vesting schedule.
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared on the accrual basis of
accounting. The preparation of the financial statements in conformity with
generally accepted accounting principles requires the Plan's management to use
estimates and assumptions that affect the accompanying financial statements and
disclosures. Actual results could differ from those estimates.
RISKS AND UNCERTAINTIES
The Plan provides for investment in pooled separate accounts, mutual funds, and
Company stock. Investment securities, in general, are exposed to various risks,
such as interest rate, credit and overall market volatility risk. Due to the
level of risk associated with certain investment securities, it is reasonably
possible that changes in the values of investment securities will occur in the
near term and that such changes could materially affect the amounts reported in
the statements of net assets available for benefits and participant account
balances.
VALUATION OF INVESTMENTS
Investments in the pooled separate accounts are stated at current value as
determined by Aetna by reference to published market data. Investments in mutual
funds are stated at fair value based on published market prices. The Company
stock is valued at its quoted market price. Participant loans are valued at cost
which approximates fair value. The net appreciation and depreciation of Plan
assets is based on the value of the assets at the beginning of the Plan year or
at the time of purchase during the year.
EXPENSES
Administrative and other expenses of the Plan are to be paid by the Company or
with forfeitures of the Plan.
3. FEDERAL INCOME TAXES
The Plan originally obtained a favorable determination letter from the IRS on
March 8, 1994. The Plan operated under the Aetna Comprehensive Nonstandardized
Safe Harbor 401(k) Profit Sharing Plan prototype document until May 31, 1998 and
did not file for a new determination letter. Effective June 1, 1998 to December
31, 1998, the Plan began operating under the Comerica Prototype Cash or Deferred
Profit-Sharing Plan and Trust/Custodial Account document which received a
favorable determination letter on January 27, 1993. The retirement plan
committee believes that the Plan is being operated in compliance with the
applicable requirements of the Internal Revenue Code of 1986, as amended.
Therefore, the retirement plan committee believes that the Plan was qualified
and the related trust was tax-exempt as of December 31, 1998 and 1997.
4. NONEXEMPT TRANSACTIONS
As reported on Schedule IV, certain plan contributions were not remitted to the
trust within the time frame specified by the Department of Labor's Regulation 29
CFR 2510.3-102, thus constituting a nonexempt transactions between the Plan and
the Company.
<PAGE>
SCHEDULE I
CORNELL CORRECTIONS, INC.
401(K) PROFIT SHARING PLAN
ITEM 27(A) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF CURRENT
IDENTITY OF ISSUE/DESCRIPTION OF ASSET SHARES/UNITS COST VALUE
-------------------------------------- ------------ ------------- -------------
<S> <C> <C> <C>
Franklin Balance Sheet Investment Fund..................................... 16,454 $ 575,505 $ 519,947
Janus Worldwide Fund....................................................... 12,059 546,624 571,111
Putnam Investors Fund A.................................................... 93,931 1,238,611 1,392,057
Munder Index 500 Fund K.................................................... 32,455 772,697 851,627
AIM Balanced Fund A........................................................ 20,479 552,041 578,109
Munder U.S. Government Income Fund K....................................... 16,699 173,676 173,836
Munder U.S. Treasury Money Market Fund K................................... 606,714 606,714 606,714
Cornell Corrections, Inc. Common Stock *................................... 51,417 832,511 976,923
Participant Loans* (interest rates ranging from 7.50% to 9.25%)............ 272,196
-------------
$ 5,942,520
=============
</TABLE>
* Indicates party in interest.
<PAGE>
SCHEDULE II
CORNELL CORRECTIONS, INC.
401(K) PROFIT SHARING PLAN
ITEM 27(B) - SCHEDULE OF LOANS OR FIXED INCOME OBLIGATIONS
DECEMBER 31, 1998
<TABLE>
<CAPTION>
AMOUNT RECEIVED
ORIGINAL DURING REPORTING YEAR UNPAID AMOUNT OVERDUE
IDENTITY OF AMOUNT OF --------------------- BALANCE AT ----------------------
OBLIGOR LOAN PRINCIPAL INTEREST YEAR END DESCRIPTION OF LOAN PRINCIPAL INTEREST
----------- --------- --------- -------- ---------- ------------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Employee #1* Loan originated February 2,
###-##-#### $8,000 $ -- $ -- $8,000 1998 at 8.5%, payable in 36
monthly payments of $253
each, and maturing on
February 28, 2001 $2,027 $ 503
Employee #2*
###-##-#### $5,000 $ 443 $ 163 $4,381 Loan originated on
September 23, 1997, at
8.5%, payable in 48 monthly
payments of $123 each,
and maturing on
October 31, 2001 $ 660 $ 210
</TABLE>
* Indicates party in interest
<PAGE>
SCHEDULE III
CORNELL CORRECTIONS, INC.
401(K) PROFIT SHARING PLAN
ITEM 27(D) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PURCHASE SELLING COST OF NET
IDENTITY OF PARTY INVOLVED/DESCRIPTION PRICE (A)(B) PRICE (A)(B) ASSET GAIN/(LOSS)
- ---------------------------------------- ------------- ----------- --------- -----------
<S> <C> <C> <C> <C>
I. SINGLE TRANSACTIONS
Aetna Fixed Account
Sale......................................................... $ -- $ 659,310 640,052 19,258
Aetna Series Money Market Fund
Sale......................................................... -- 238,640 229,700 8,940
Aetna Series The Bond Fund
Sale......................................................... -- 224,287 212,380 11,907
Aetna Series Balanced Growth Fund
Sale......................................................... -- 389,419 334,586 54,833
Aetna Series Growth and Income Fund
Sale......................................................... -- 1,497,127 1,216,432 280,695
Fidelity Advisors Equity Growth Fund
Sale......................................................... -- 639,119 556,674 82,445
Franklin Balance Sheet Investment Fund
Purchase..................................................... 316,851 -- 316,851 --
Janus Worldwide Fund
Purchase..................................................... 281,276 -- 281,276 --
Putnam Investors Fund A
Purchase..................................................... 680,880 -- 680,880 --
Purchase..................................................... 250,333 -- 250,333 --
Munder Index 500 Fund K
Purchase..................................................... 412,543 -- 412,543 --
AIM Balanced Fund A
Purchase..................................................... 290,159 -- 290,159 --
Munder U.S. Treasury Money Market Fund
Purchase..................................................... 3,648,555 -- 3,648,555 --
Purchase..................................................... 1,665,748 -- 1,665,748 --
Purchase..................................................... 199,926 -- 199,926 --
Purchase..................................................... 403,475 -- 403,475 --
Purchase..................................................... 254,201 -- 254,201 --
Purchase..................................................... 245,109 -- 245,109 --
Purchase..................................................... 195,059 -- 195,059 --
Sale........................................................ -- 3,648,555 3,648,555 --
Sale........................................................ -- 1,130,756 1,130,756 --
Sale........................................................ -- 446,169 446,169 --
Sale........................................................ -- 205,151 205,151 --
Sale........................................................ -- 197,529 197,529 --
Cornell Corrections, Inc. Common Stock
Purchase..................................................... 223,425 -- 223,425 --
</TABLE>
(a) Purchase and selling price include or are net of transactional expenses.
(b) Current value of asset on transaction date is equal to the purchase/selling
price.
The above transactions represent those defined as reportable transactions by
Section 2520.103-6 of the Department of Labor Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. Five percent of the fair market value of the Plan's assets at January 1,
1998 was used to determine those transactions requiring disclosure.
<PAGE>
SCHEDULE III
(Continued)
CORNELL CORRECTIONS, INC.
401(K) PROFIT SHARING PLAN
ITEM 27(D) - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
PURCHASE SELLING COST OF NET
IDENTITY OF PARTY INVOLVED/DESCRIPTION PRICE (A)(B) PRICE (A)(B) ASSET GAIN/(LOSS)
- ---------------------------------------- ------------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
II. SERIES OF TRANSACTIONS IN THE SAME SECURITY
Aetna Fixed Account
Purchases.................................................. $ 142,848 $ -- $ 142,848 $ --
Sales...................................................... -- 762,942 740,657 22,285
Aetna Series Money Market Fund
Purchases.................................................. 46,539 -- 46,539 --
Sales...................................................... -- 355,765 342,437 13,328
Aetna Series The Bond Fund
Purchases.................................................. 45,119 -- 45,119 --
Sales...................................................... -- 441,790 418,336 23,454
Aetna Series Balanced Growth Fund
Purchases.................................................. 100,352 -- 100,352 --
Sales...................................................... -- 416,604 357,943 58,661
Aetna Series Growth and Income Fund
Purchases.................................................. 301,348 -- 301,348 --
Sales...................................................... -- 1,616,354 1,313,305 303,049
Fidelity Advisors Equity Growth Fund
Purchases.................................................. 243,412 -- 243,412 --
Sales...................................................... -- 685,093 596,717 88,376
Franklin Balance Sheet Investment Fund
Purchases.................................................. 657,519 -- 657,519 --
Sales...................................................... -- 71,821 82,014 (10,193)
Janus Worldwide Fund
Purchases.................................................. 588,779 -- 588,779 --
Sales...................................................... -- 38,502 42,155 (3,653)
Putnam Investors Fund A
Purchases.................................................. 1,365,394 -- 1,365,394 --
Sales...................................................... -- 123,933 126,783 (2,850)
Munder Index 500 Fund K
Purchases.................................................. 839,054 -- 839,054 --
Sales...................................................... -- 67,101 66,357 744
AIM Balanced Fund A
Purchases.................................................. 582,652 -- 582,652 --
Sales...................................................... -- 29,412 30,611 (1,199)
Munder U.S. Government Income Fund K
Purchases.................................................. 179,580 -- 179,580 --
Sales...................................................... -- 5,989 5,904 85
Munder U.S. Treasury Money Market Fund
Purchases.................................................. 7,403,538 -- 7,403,538 --
Sales...................................................... -- 6,796,824 6,796,824 --
Cornell Corrections, Inc. Common Stock
Purchases.................................................. 754,018 -- 754,018 --
Sales...................................................... -- 78,890 110,748 (31,858)
</TABLE>
(a) Purchase and selling price include or are net of transactional expenses.
(b) Current value of asset on transaction date is equal to the purchase/selling
price.
The above transactions represent those defined as reportable transactions by
Section 2520.103-6 of the Department of Labor Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. Five percent of the fair market value of the Plan's assets at January 1,
1998 was used to determine those transactions requiring disclosure.
<PAGE>
SCHEDULE IV
CORNELL CORRECTIONS, INC.
401(K) PROFIT SHARING PLAN
ITEM 27(E) - SCHEDULE OF NON-EXEMPT TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
RELATIONSHIP TO PLAN, DESCRIPTION OF TRANSACTIONS INCLUDING INTEREST
IDENTITY OF EMPLOYER OR OTHER MATURITY DATE, RATE OF INTEREST, AMOUNT INCURRED
PARTY INVOLVED PARTY IN INTEREST COLLATERAL AND MATURITY VALUE LOANED ON LOAN
- ----------------- --------------------- --------------------------------------- ---------- ------------
<S> <C> <C> <C> <C>
Cornell Employer Lending of monies from the Plan to
Corrections, Inc. the Employer (contributions not timely
remitted to the Plan) as follows:
Deemed loan dated February 23, 1998,
maturity of February 24, 1998, with
interest at 27% per annum $ 126,380 $ 93
Deemed loan dated April 21, 1998,
maturity of April 22, 1998, with
interest at 27% per annum $ 105,328 $ 78
Deemed loan dated April 21, 1998,
maturity of December 17, 1998, with
interest at 27% per annum $ 2,034 $ 362
Deemed loan dated March 20, 1998,
maturity of December 17, 1998, with
interest at 27% per annum $ 3,009 $ 605
Deemed loan dated May 21, 1998,
maturity of May 22, 1998, with
interest at 27% per annum $ 103,607 $ 77
Deemed loan dated June 19, 1998,
maturity of October 8, 1998, with
interest at 27% per annum $ 21,281 $ 1,747
Deemed loan dated July 22, 1998,
maturity of December 9, 1998, with
interest at 27% per annum $ 3,417 $ 354
</TABLE>
(a) Interest amount of $3,316 was remitted to the Plan by the Employer on
June 29, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrator has duly caused this annual report to be signed on its behalf by
the undersigned hereunto duly authorized.
CORNELL CORRECTIONS, INC.
Date: June 29, 1999 By: /S/ PAT PERRIN
Pat Perrin
Chief Administrative Officer
and Plan Administrator
<PAGE>
INDEX TO EXHIBITS
23.1 Written Consent of Arthur Andersen LLP Dated June 29, 1999.
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated June 4, 1999, included in this Annual Report and
Form 11-K for the year ended December 31, 1998, into the previously filed Form
S-8 Registration Statement of Cornell Corrections, Inc. (File No.
333-19127).
ARTHUR ANDERSEN LLP
Houston, Texas
June 29, 1999