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Previous: CHEYENNE SOFTWARE INC, 10-Q, 1996-05-15 |
Next: CLEAR CHANNEL COMMUNICATIONS INC, 10-Q, 1996-05-15 |
<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSACTION PERIOD FROM__________TO __________.
COMMISSION FILE NUMBER: 1-13560
-------
CORRECTIONS CORPORATION OF AMERICA
(Exact name of Registrant as specified in its charter)
DELAWARE 62-1156308
- --------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
102 WOODMONT BLVD., SUITE 800
NASHVILLE, TENNESSEE 37205
- ---------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
(615) 292-3100
----------------------------------------------------
(Registrant's telephone number, including area code)
NONE
-------------------------------------------------------------------
(Former name, address and fiscal year if changed since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
35,060,932
-------------------------------------------------------------------
(Outstanding shares of the issuer's common stock as of May 1, 1996.)
THERE IS NO EXHIBIT INDEX
Total number of sequentially numbered pages is 10.
<PAGE> 2
CORRECTIONS CORPORATION OF AMERICA
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
PART I. FINANCIAL INFORMATION: Number
------
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 1996 (Unaudited) and December 31, 1995 3
Consolidated Statements of Operations
Three months ended March 31, 1996 and 1995
(Unaudited) 4
Consolidated Statements of Cash Flows
Three months ended March 31, 1996 and 1995
(Unaudited) 5-6
Notes to Consolidated Financial Statements
(Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-8-9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Default Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
2
<PAGE> 3
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------- ----------------
ASSETS (Unaudited)
------
<S> <C> <C>
Current assets:
Cash, cash equivalents and restricted cash $ 1,742 $ 2,714
Accounts receivable, net of allowances 47,705 39,661
Prepaid expenses 1,507 1,569
Deferred tax assets 1,714 1,646
Other 1,329 1,020
----------- ------------
Total current assets 53,997 46,610
Restricted investments 587 443
Other assets 21,732 19,642
Property and equipment, net 145,152 137,019
Investment in direct financing lease 9,669 9,764
----------- ------------
$ 231,137 $ 213,478
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 13,007 $ 10,757
Accrued salaries and wages 3,762 3,480
Accrued property taxes 811 1,623
Other accrued expenses 5,240 8,637
Current portion of long-term debt 8,870 11,020
----------- ------------
Total current liabilities 31,690 35,517
Long-term debt, net of current portion 81,848 74,865
Deferred tax liabilities 4,220 4,164
Other noncurrent liabilities 1,732 2,228
----------- ------------
Total liabilities 119,490 116,774
----------- ------------
Stockholders' equity:
Common stock 33,921 32,270
Additional paid-in capital 60,068 48,830
Retained earnings 18,227 15,641
Treasury stock, at cost (569) (37)
------------ -------------
Total stockholders' equity 111,647 96,704
----------- ------------
$ 231,137 $ 213,478
</TABLE>
3
<PAGE> 4
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three months ended
March 31
------------------
1996 1995
-------------- ----------------
<S> <C> <C>
Revenues $ 63,277 $ 44,145
Expenses:
Operating 47,184 35,151
General and administrative 2,925 2,581
Depreciation and amortization 2,277 1,435
----------- ------------
52,386 39,167
----------- ------------
Contribution from operations 10,891 4,978
Interest expense, net 1,350 892
---------- -----------
Income before income taxes 9,541 4,086
Provision for income taxes 3,835 1,695
---------- -----------
Net income $ 5,706 $ 2,391
=========== ===========
Net income per common share:
Primary $ .14 $ .07
=========== ===========
Fully diluted $ .14 $ .06
=========== ===========
Weighted average common shares outstanding 40,251 35,334
=========== ===========
</TABLE>
4
<PAGE> 5
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three months ended
March 31
----------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 5,706 $ 2,391
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 2,277 1,435
Deferred and other noncash income taxes 6,077 654
Loss (gain) on disposal of assets 11 (16)
Equity in earnings of unconsolidated entities (150) (267)
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (8,034) (2,264)
Prepaid expenses 62 220
Other current assets (309) (296)
Accounts payable 2,250 (670)
Accrued expenses (3,823) 57
----------- -----------
Net cash provided by operating activities 4,067 1,244
----------- -----------
Cash Flows from Investing Activities:
Increase in restricted and escrow cash (402) (118)
Increase in other assets (2,771) (919)
Additions of property and equipment (9,602) (2,011)
Proceeds from disposals of assets 6 21
Payments received on direct financing lease and notes
receivable
91 77
----------- -----------
Net cash used in investing activities (12,678) (2,950)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from issuance of long-term debt 30,000 7,780
Payments on long-term debt (15,444) (1,639)
Payments on line of credit, net (9,723) (2)
Payments of short-term obligations refinanced by long-term
debt - (700)
Payment of debt issuance cost (496) (248)
Proceeds from exercise of stock options and warrants 3,044 24
Repurchase of stock warrants - (630)
----------- -----------
Net cash provided by financing activities 7,381 4,585
----------- -----------
Net increase (decrease) in cash (1,230) 2,879
CASH AND CASH EQUIVALENTS, beginning of period ----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 915 $ 7,142
=========== ===========
</TABLE>
5
<PAGE> 6
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION> Three months ended
March 31
----------------------------------------
1996 1995
-------------- ----------------
<S> <C> C>
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 1,986 $ 620
============== ===============
Income taxes $ 1,565 $ 657
=============== ===============
Supplemental Schedule of Noncash Investing and Financing
Activities:
The Company acquired treasury stock and issued common
stock through the exercise of stock options:
Common stock $ 911 $ (49)
Additional paid-in capital 2,885 (310)
Retained earnings (2,847) -
Treasury stock, at cost (949) 359
-------------- ---------------
$ - $ -
=============== ===============
Long term debt was converted into common stock:
Other assets $ - $ (86)
Long-term debt - 6,700
Common Stock (444)
Additional paid-in capital - (6,170)
--------------- ---------------
$ - $ -
================ ===============
</TABLE>
6
<PAGE> 7
CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated balance sheet as of March 31, 1996, and the
consolidated statements of operations and cash flows for the three
month periods ended March 31, 1996 and 1995, have been prepared by the
Company in accordance with the accounting policies described in its
1995 Annual Report and should be read in conjunction with the notes
thereto.
In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the
financial positions, results of operations and changes in cash flows
at March 31, 1996 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The results of
operations for the period ended March 31, 1996, are not necessarily
indicative of the operating results for the full year.
2. LONG-TERM DEBT
In February 1996, the Company sold $30,000,000 of convertible,
subordinated notes. The notes bear interest at 7.5%, payable
quarterly and mature in 2002. The Company used the proceeds to repay
the principal outstanding under the company's bank loan and line of
credit, $12,353,000 and $17,000,000, respectively.
Subsequent to the end of the quarter the Company sold $20,000,000 of
convertible, subordinated notes to Sodexho, S.A. with terms identical
to the aforementioned notes. The proceeds will be used to fund
construction of facility expansions.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES AND OPERATING EXPENSES
Revenues for the first quarter of 1996 increased 43% over the
comparable period of 1995. Management revenues increased $18,645,000
and transportation revenues increased $487,000 in the first three
months of 1996 as compared to the same period in 1995. The 44%
increase in management revenues was due to a 44% increase in
compensated mandays. Through a series of new facility openings and
existing facility expansions during 1995, the Company was able to add
approximately 6,000 beds to the domestic operations which are
reflected in 1996 revenues as compared to 1995. Transportation
revenues increased 23% due to an expanded customer base and
compensated mileage.
Operating expenses for the first quarter of 1996 increased 34% over
the comparable quarter in 1995. This increase was due to the
increased compensated mandays and compensated mileage that the Company
realized in 1996 as previously mentioned.
General and administrative expenses increased 13% for the
first quarter of 1996 as compared to the comparable quarter of 1995.
The increase is due to the expanded activity and staffing necessary to
administer the increased beds under management. Even though
increasing in
7
<PAGE> 8
amount, general and administrative expenses decreased as a percentage
of revenues from 5.8% in 1995 to 4.6% in 1996.
Depreciation and amortization for the first quarter of 1996 increased
59% as compared to the comparable quarter of 1995. The 1996 increase
is due to the growth in total beds in facilities owned by the company.
Interest expense, net, increased 51% for the first quarter of 1996
over the first quarter of 1995 primarily due to the assumption of debt
related to the Eloy Detention Center in Eloy, Arizona. In July, 1995
the company acquired the remaining 50% of the investment in a
partnership and assumed the assets and debts.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
The company's business is capital intensive in relation to the
development of a correctional facility. The company's efforts to
obtain contracts, construct additional facilities and maintain its
day-to-day operations have required the continued acquisition of funds
through borrowings and equity offerings. The Company has financed
these activities through the sale of capital stock, subordinated
convertible notes and senior secured debt, through the issuance of
taxable and tax-exempt bonds, by bank borrowings, and by assisting
governmental agencies in the issuance of municipal bonds.
Cash flow from operations for the first quarter of 1996 was $4,067,000
as compared to $1,244,000 in the comparable period in 1995. The
company has strengthened its cash flow through its expanded business,
additional focus on larger, more profitable facilities, the expansion
of existing facilities where economies of scale can be realized, and
the continuing effort of cost containment. Cash flow from operations
has allowed the company to fund growth and to continue to retire debt
on an accelerated basis.
The company's working capital revolving credit facility with a U.S.
bank matures May 31, 1997. The credit facility provides for
borrowings of up to $25,000,000 for working capital and certain
letters of credit. The credit facility bears interest, at the
election of the company,at either the bank's prime rate or a rate
which is 2% above the applicable 30, 60, or 90 day LIBOR rate.
Interest is payable monthly with respect to prime rate loans and at
the expiration of the applicable LIBOR period with respect to
LIBOR-rate based loans. The credit facility is secured by certain
accounts receivable and real and personal property at certain of the
company's facilities. There are no prepayment penalties associated
with the credit facility. The credit facility requires the company,
among other things, to maintain maximum leverage ratios and a minimum
debt service coverage ratio. The facility also limits certain
payments and distributions. As of March 31, 1996, there was $5,000,000
borrowed against the facility. Letters of credit totaling $3,707,000
have been issued leaving the unused commitment at $16,293,000.
In February 1996, the company issued $30,000,000 of its convertible
subordinated notes to an investor. The proceeds were used to
repay the outstanding principal, at the date of funding, under the
company's working capital credit facility and construction loan. The
notes bear interest at 7.5%, payable quarterly and require the company
to maintain specific ratio requirements relating to net worth, cash
flow and debt coverage. In April, 1996, as a result of its preemptive
right triggered in connection with the issuance of convertible
subordinated notes, Sodexho acquired $20,000,000 of convertible
subordinated notes under the same terms and conditions.
In connection with the construction and development of certain
facilities, the company caused a U.S. bank to issue two letters of
credit totaling $59,500,000. The letters of credit support certain
industrial development bonds, the proceeds of which were used to
construct such facilities. The company guaranteed to the bank the
repayment in full of any amounts drawn
8
<PAGE> 9
on such letters of credit as a result of a default under the related
bonds. In the event the company is required to fund amounts pursuant
to these guarantees then the company will obtain ownership rights to
these facilities. The company's reimbursement obligations are secured
by all of the collateral that secures the company's credit facility
with the U.S. bank described above and are cross-defaulted with such
credit facility.
The company anticipates making cash investments in connection with
future acquisitions and expansions. In addition, in accordance with
the developing trend of private prison manages toward making strategic
financial investments in facilities, the company plans to use a
portion of its cash to finance start-up costs, leasehold improvements
and equity investments in facilities, if appropriate in connection
with undertaking new contracts. The company believes that the cash
flow from operations and amounts available under its credit facility
will be sufficient to meet its capital requirements for the
foreseeable future. Furthermore, management believes that additional
resources may be available to the company through a variety of other
financing methods.
9
<PAGE> 10
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
None
Item 3. Default Upon Senior Securities
------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) 27 Financial Data Schedule (for SEC use only)
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORRECTIONS CORPORATION OF AMERICA
----------------------------------
Registrant
May 13 , 1996 /s/ Darrell K. Massengale
----------------------------------- -----------------------------------
Date Darrell K. Massengale
Chief Financial Officer
Secretary, Treasurer
Principal Accounting Officer
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 1,742
<SECURITIES> 0
<RECEIVABLES> 47,705
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 53,997
<PP&E> 145,152
<DEPRECIATION> 0
<TOTAL-ASSETS> 231,137
<CURRENT-LIABILITIES> 31,690
<BONDS> 81,848
33,921
0
<COMMON> 0
<OTHER-SE> 77,726
<TOTAL-LIABILITY-AND-EQUITY> 231,137
<SALES> 0
<TOTAL-REVENUES> 63,277
<CGS> 0
<TOTAL-COSTS> 52,386
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,350
<INCOME-PRETAX> 9,541
<INCOME-TAX> 3,830
<INCOME-CONTINUING> 5,706
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,706
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
|
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