CORRECTIONS CORPORATION OF AMERICA, 424B4, 1996-05-31

CORRECTIONS CORPORATION OF AMERICA
424B4, 1996-05-31
FACILITIES SUPPORT MANAGEMENT SERVICES

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<PAGE> 1
Filed Pursuant to Rule 424(b)(4)
File No. 333-03009
PROSPECTUS

2,850,000 SHARES

[CORRECTIONS CORPORATION OF AMERICA LOGO]

COMMON STOCK

Of the 2,850,000 shares of Common Stock offered hereby, 1,850,000 shares
are being sold by Corrections Corporation of America (the "Company") and
1,000,000 shares are being sold by certain stockholders of the Company (the
"Selling Stockholders"). See "Principal and Selling Stockholders." The Company
will not receive any of the proceeds from the sale of Common Stock by the
Selling Stockholders.

The Common Stock is traded on the New York Stock Exchange (the "NYSE")
under the symbol "CXC." On May 30, 1996, the last reported sale price of the
Common Stock was $76.00 per share. See "Price Range of Common Stock and Dividend
Policy."

SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK OFFERED HEREBY.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share............... $75.00 $3.45 $71.55 $71.55
- ------------------------------------------------------------------------------------------------
Total(3)................ $213,750,000 $9,832,500 $132,367,500 $71,550,000
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting expenses estimated at $550,000 payable by the Company.
(3) The Company has granted to the Underwriters a 30-day over-allotment option
to purchase up to 427,500 additional shares of Common Stock on the same
terms and conditions as set forth above. If all such shares are purchased by
the Underwriters, the total Price to Public will be $245,812,500, the total
Underwriting Discount will be $11,307,375 and the total Proceeds to Company
will be $162,955,125. See "Underwriting."
---------------------

The shares of Common Stock are offered subject to receipt and acceptance by
the several Underwriters, to prior sale, and to the several Underwriters' right
to reject any order in whole or in part and to withdraw, cancel or modify the
offer without notice. It is expected that certificates for the shares of Common
Stock will be available for delivery on or about June 5, 1996.

---------------------

J.C. BRADFORD & CO. STEPHENS, INC.

May 31, 1996
<PAGE> 2

(photo of outside view of Company's
Central Arizona Detention Center Facility)

CCA's state-of-the-art facilities and
comprehensive
training ensure the security of its
communities,
employees and inmate population (photo of Company
(caption) corrections officers and inmates)

(photo of a Company corrections (photo of interior of a
officer monitoring security systems) Company facility)

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AND
THE COMPANY'S WARRANTS TO PURCHASE COMMON STOCK AT A LEVEL ABOVE THAT WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON
THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

2
<PAGE> 3

(Map indicating location, number of beds,
first year of Company operation,
ACA accreditation and ownership of the
Company's operations under contract)

<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information appearing elsewhere or incorporated by reference in this Prospectus.
Unless the context otherwise indicates, (i) all references to the "Company"
include Corrections Corporation of America and its subsidiaries, (ii) the
information contained in this Prospectus assumes no exercise of the
Underwriters' over-allotment option and (iii) the information contained in this
Prospectus has been adjusted to reflect a two-for-one split of the Common Stock
effected in the form of a 100% stock dividend on October 31, 1995.

THE COMPANY

Corrections Corporation of America (the "Company") is the largest developer
and manager of privatized correctional and detention facilities worldwide. The
Company's facilities are located in 11 states of the United States, Puerto Rico,
Australia and the United Kingdom. As of May 30, 1996, the Company had contracts
to manage 49 correctional and detention facilities with an aggregate design
capacity of 33,153 beds of which 37 facilities representing 20,994 beds are in
operation. The Company is currently developing 12 facilities and expanding four
facilities representing an aggregate of 12,159 beds. The Company expects that
all of the beds under development and expansion will be in operation by the end
of 1997. The Company owns 12 of the 37 facilities it currently operates and
leases the remaining 25 facilities from governmental agencies and non-profit
corporations.

The services provided by the Company to governmental agencies include the
integrated design, construction and management of new correctional and detention
facilities and the redesign, renovation and management of older facilities. In
addition to providing the fundamental residential services relating to adult and
juvenile inmates, the Company's facilities offer a large variety of
rehabilitation and education programs including basic education, life skills and
employment training and substance abuse treatment. The Company also provides
health care (including medical, dental and psychiatric services), institutional
food services, transportation requirements, and work and recreational programs.
By providing a secure, clean facility, with reasonable occupancy levels and the
opportunity for inmates to participate in educational and rehabilitational
programs, the Company believes that there will be fewer disturbances among the
prison population. Management believes that this atmosphere results in less
stress for members of the work force, fewer workers' compensation claims, fewer
sick days, reduced overtime costs and lower overall operating costs. The Company
believes that its quality of personnel, efficient application of financial
resources and adherence to proven policies and procedures enable it to design,
develop and manage correctional and detention facilities at costs lower than
governmental agencies that are responsible for performing such services. See
"Business -- Business Strategy."

The Company's operating philosophy is to provide quality corrections, at
less cost to taxpayers, in partnership with government agencies. The Company's
growth strategy is to develop and operate secure institutions with an emphasis
on medium and maximum security operations. As of May 30, 1996, the Company was
pursuing 34 facility prospects for a total of approximately 22,700 beds. See
"Business -- Business Proposals."

3
<PAGE> 5

In the last two years, the Company has expanded its service capabilities
and broadened its geographic presence in the United States through a series of
strategic acquisitions that complement the Company's development activities. In
December 1994, the Company acquired TransCor America, Inc. ("TransCor"), a
nationwide provider of inmate transportation services. In April 1995, the
Company acquired Concept Incorporated ("Concept"), a prison management company
with eight facilities and 4,400 beds under contract at the time of acquisition.
In August 1995, the Company acquired Corrections Partners, Inc. ("CPI"), a
prison management company with seven facilities and 2,900 beds under contract at
the time of acquisition. The Company intends to consider additional strategic
acquisitions of prison management and related companies in the future.

In addition to its domestic operations, the Company has obtained and is
pursuing development and management contracts for correctional and detention
facilities outside the United States. The Company presently contracts to operate
one facility in the United Kingdom, two facilities in Australia, and also has
contracts to provide inmate transportation services in Australia. In June 1994,
the Company entered into an international strategic alliance with Sodexho S.A.
("Sodexho"), a French conglomerate, for the purpose of pursuing prison
management business outside the United States and the United Kingdom. In
connection with the alliance, Sodexho purchased a significant ownership interest
in the Company and entered into certain agreements with the Company relating to
future financings by the Company and corporate governance and control matters.
See "Principal and Selling Stockholders" and "Description of
Securities -- Relationship with Sodexho."

RECENTLY ANNOUNCED DEVELOPMENT PROJECTS

Taylor, Texas. In April 1996, the Company entered into an agreement with
the Taylor Correctional Development Authority pursuant to which the Company will
design, construct and manage a 512-bed, medium security prison in Taylor, Texas
to house inmates for the State of Oregon and other governmental agencies. This
facility is currently under construction and scheduled for completion by January
1997. This contract is an expansion of the Company's relationship with the State
of Oregon which includes a contract for the housing of more than 500 Oregon
inmates at the Company's Central Arizona Detention Center in Florence, Arizona.

Cushing, Oklahoma. In April 1996, the Company reached an agreement with
the Cushing Municipal Authority pursuant to which the Company will design,
construct and manage a 960-bed, medium security prison in Cushing, Oklahoma to
house inmates for the State of Oklahoma. This facility is currently under
construction and scheduled for completion by July 1997.

Washington, D.C. In April 1996, the Company entered into negotiations to
purchase an 868-bed, medium security correctional treatment facility from the
District of Columbia and to contract with the District to manage the facility
for locally convicted inmates.

Lawrenceville, Virginia. In May 1996, the Company reached an agreement
with the Commonwealth of Virginia to design, build and manage a 1,500-bed,
medium security prison in Lawrenceville, Virginia for state inmates.
Construction of the prison, which will begin in early June, is scheduled for
completion in the fourth quarter of 1997.

Columbia, South Carolina. In May 1996, the Company reached an agreement
with the State of South Carolina to manage 400 juveniles for the State
Department of Juvenile Justice. Pursuant to the agreement, the Company will
renovate an existing facility in Columbia, South Carolina to house juveniles
beginning on July 1, 1996. A wilderness camp for 32 of the juveniles is
scheduled to open August 1, 1996.

4
<PAGE> 6

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.............. 1,850,000 shares
Common Stock offered by the Selling
Stockholders................................... 1,000,000 shares
Common Stock to be outstanding after the
offering....................................... 36,910,932 shares(1)
Use of proceeds by the Company................... To finance capital investments in the
development, acquisition or expansion of
prison facilities. See "Use of Proceeds."
NYSE Common Stock symbol......................... CXC
</TABLE>

- ---------------
(1) Excludes (a) 2,230,317 shares of Common Stock reserved for issuance upon
grants of deferred shares or exercise of options granted pursuant to the
Company's existing stock incentive plans; (b) 4,227,256 shares of Common
Stock issuable upon the exercise of outstanding warrants; and (c) 4,062,391
shares of Common Stock reserved for issuance upon the conversion of
outstanding convertible notes, and assumes that Sodexho does not exercise
its preemptive right to purchase shares of Common Stock as a result of this
offering. See "Description of Securities."

5
<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)

The summary consolidated financial data set forth below for the three years
ended December 31, 1995 and the three month period ended March 31, 1996 have
been derived from the Company's financial statements and include financial data
reflecting the acquisitions of TransCor in December 1994, Concept in April 1995
and CPI in August 1995, all of which were accounted for as pooling-of-interests.

<TABLE>
<CAPTION>
THREE
YEARS ENDED DECEMBER 31, MONTHS
---------------------------------------- ENDED
1993 1994 1995 MARCH 31,
---------- ---------- ---------- 1996
----------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Revenues................................ $ 132,534 $ 152,375 $ 207,241 $ 63,277
Expenses:
Operating............................ 108,026 123,540 158,814 47,184
General and administrative........... 7,885 9,413 14,288 2,925
Depreciation and amortization........ 5,759 5,753 6,524 2,277
---------- ---------- ---------- ----------
121,670 138,706 179,626 52,386
---------- ---------- ---------- ----------
Contribution from operations............ 10,864 13,669 27,615 10,891
Interest expense, net................... 4,424 3,439 3,952 1,350
---------- ---------- ---------- ----------
Income before income taxes.............. 6,440 10,230 23,663 9,541
Provision for income taxes.............. 832 2,312 9,330 3,835
---------- ---------- ---------- ----------
Net income.............................. 5,608 7,918 14,333 5,706
Preferred stock dividends............... 425 204 -- --
---------- ---------- ---------- ----------
Net income allocable to common
stockholders......................... $ 5,183 $ 7,714 $ 14,333 $ 5,706
========== ========== ========== ==========
Net income per common share:
Primary.............................. $ 0.20 $ 0.25 $ 0.38 $ 0.14
Fully diluted........................ $ 0.20 $ 0.25 $ 0.36 $ 0.14
Weighted average common shares
outstanding.......................... 25,881 30,954 37,555 40,251

OPERATING DATA:
Beds under contract (at period end)..... 12,254 19,735 28,607 28,687
Beds in operation (at period end)....... 10,368 13,404 20,252 21,098
Average occupancy....................... 92.0% 93.9% 93.5% 90.2%
Compensated mandays..................... 3,338,411 3,768,095 4,799,562 1,555,601
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1996
------------------------------
ACTUAL AS ADJUSTED(1)(2)
-------- -----------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital................................................ $ 22,307 $ 169,125
Property and equipment, net.................................... 145,152 145,152
Total assets................................................... 231,137 377,955
Total debt..................................................... 90,718 105,718
Stockholders' equity........................................... 111,647 243,465
</TABLE>

- ---------------
(1) Gives effect to (a) the issuance in April 1996 of $20.0 million of 7.5%
convertible subordinated notes and (b) the repayment with a portion of the
proceeds therefrom of the outstanding principal balance under the Company's
line of credit ($5.0 million at March 31, 1996). See "Description of
Securities -- Convertible Notes."

(2) Adjusted to reflect the sale by the Company of the 1,850,000 shares of
Common Stock offered hereby and the proposed application of the estimated
net proceeds therefrom. See "Use of Proceeds."

6
<PAGE> 8

RISK FACTORS

In addition to the other information contained or incorporated by reference
in this Prospectus, the following risk factors should be considered carefully in
evaluating an investment in the Common Stock offered hereby.

Revenue and Profit Growth Dependent on Expansion. The Company's growth is
dependent upon its ability to obtain contracts to manage new correctional and
detention facilities and to retain existing management contracts. The rate of
construction of new facilities and the Company's potential for growth will
depend on a number of factors, including crime rates and sentencing patterns in
the United States and other countries in which the Company operates,
governmental and public acceptance of the concept of privatization, the number
of facilities available for privatization, and the Company's ability to obtain
awards for contracts and to integrate new facilities into its management
structure on a profitable basis. In addition, certain jurisdictions have
recently required the successful bidder to make a significant capital investment
in connection with the financing of a particular project. The Company's ability
to secure awards under such circumstances will therefore also depend on the
Company having significant capital resources. There can be no assurance that the
Company will be able to obtain additional contracts to develop or manage new
facilities on favorable terms.

Risks Associated with Acquisitions. The Company intends to grow internally
through the opening of additional facilities, as well as through strategic
acquisitions. There can be no assurance that the Company will be able to
identify, acquire or profitably manage acquired companies or successfully
integrate such operations into the Company without substantial costs, delays or
other problems. In addition, there can be no assurance that companies acquired
in the future will be profitable at the time of their acquisition or will
achieve levels of profitability that justify the investment therein.
Acquisitions may involve a number of special risks, including adverse short-term
effects on the Company's reported operating results, diversion of management's
attention, dependence on retaining, hiring and training key personnel, and risks
associated with unanticipated problems or legal liabilities, some or all of
which could have a material adverse effect on the Company's financial condition
and results of operation.

Acceptance of Privatized Correctional and Detention Facilities. Management
of correctional and detention facilities by private entities is a relatively new
concept and has not achieved complete acceptance by either governments or the
public. Some sectors of the federal government and some state and local
governments are legally unable to delegate their traditional management
responsibilities for correctional and detention facilities to private companies.
The operation of correctional and detention facilities by private entities is
not widely understood by the public and the industry has encountered resistance
from certain groups, such as labor unions, local sheriff's departments, and
groups that believe that correctional and detention facility operations should
only be conducted by governmental agencies. Such resistance may cause a change
in public and government acceptance of privatized correctional facilities. In
addition, changes in dominant political parties in any of the markets in which
the Company operates could result in significant changes to previously
established views of privatization in such market.

Opposition to Facility Location and Adverse Publicity. The Company's
success in obtaining new awards and contracts may depend, in part, upon its
ability to locate land that can be leased or acquired, on favorable terms, by
the Company or other entities working with the Company in conjunction with the
Company's proposal to develop and/or manage a facility. Some locations may be in
or near populous areas and, therefore, may generate legal action or other forms
of opposition from residents in areas surrounding a proposed site. The Company's
business also is subject to public scrutiny. In addition to possible negative
publicity about privatization in general, an escape, riot or other disturbance
at a Company-managed facility or another privately managed facility may result
in publicity adverse to the Company and the industry in which it operates.

7
<PAGE> 9

Dependence on Governmental Agencies. The Company's cash flow is subject to
the receipt of sufficient funding and timely payment by applicable governmental
entities. If the appropriate governmental agency does not receive sufficient
appropriations to cover its contractual obligations, a contract may be
terminated or the management fee may be deferred or reduced. Any delays in
payment could have an adverse effect on the Company's cash flow. In addition,
the Company is dependent on government agencies supplying Company facilities
with a sufficient number of inmates to meet the facilities design capacities. A
failure to do so may have a material adverse effect on the Company's financial
condition and results of operation.

Economic Risks Associated with Development Activities. When the Company is
engaged to perform construction and design services for a facility, the Company
typically acts as the primary contractor and subcontracts with other parties who
act as the general contractors. As primary contractor, the Company is subject to
the various risks of construction including, without limitation, shortages of
labor and materials, work stoppages, labor disputes and weather interference.
The Company also is subject to the risk that the general contractor will be
unable to complete construction at the budgeted costs or be unable to fund any
excess construction costs. Under such contracts, the Company is ultimately
liable for all late delivery penalties and cost overruns.

Contract Duration. The Company's facility management contracts typically
have terms ranging from one to five years, with one or more renewal options
which may be exercised only by the contracting governmental agencies. No
assurance can be given that any agency will exercise a renewal option in the
future. Additionally, the contracting governmental agency typically may
terminate a facility contract without cause by giving the Company written
notice. See "Business -- Facility Management Contracts."

Potential Legal Liability. The Company's management of correctional and
detention facilities exposes it to potential third-party claims or litigation by
prisoners or other persons for personal injury or other damages resulting from
contact with Company-managed facilities, programs, personnel or prisoners,
including damages arising from a prisoner's escape or from a disturbance or riot
at a Company-managed facility. In addition, the Company's management contracts
generally require the Company to indemnify the governmental agency against any
damages to which the governmental agency may be subject in connection with such
claims or litigation. The Company maintains an insurance program that provides
coverage for certain liability risks faced by the Company, including personal
injury, bodily injury, death or property damage to a third party where the
Company is found to be negligent. There can be no assurance, however, that the
Company's insurance will be adequate to cover potential third-party claims. See
"Business -- Insurance."

Regulations. The industry in which the Company operates is subject to
national, federal, state and local regulations which are administered by various
regulatory authorities. Prospective providers of correctional and detention
services must comply with a variety of applicable state and local regulations
including education, health care and safety regulations. The Company's contracts
typically include extensive reporting requirements and require supervision and
on-site monitoring by representatives of contracting governmental agencies.
State law also typically requires corrections officers to meet certain training
standards. Certain states such as Florida and Texas deem prison guards to be
peace officers and require Company personnel to be licensed and may make them
subject to background investigation. In addition, many state and local
governments are required to enter into a competitive bidding procedure before
awarding contracts for products or services. The laws of certain jurisdictions
may also require the Company to award subcontracts on a competitive basis or to
subcontract with businesses owned by members of minority groups. The failure to
comply with any applicable laws, rules or regulations and the loss of any
required license could have a material adverse effect on the Company's financial
condition and results of operation. Furthermore, the current and future
operations of the Company may be subject to additional regulations as a result
of, among other factors, new statutes and regulations and changes in the manner
in which existing statutes and regulations are or may be interpreted or applied.
Any such additional regulations could have a material adverse effect on the
Company's financial condition and results of operation.

8
<PAGE> 10

Competition. The Company competes primarily on the basis of the quality
and range of services offered, its experience in managing facilities, the
reputation of its personnel and its ability to design, finance and construct new
facilities. The business in which the Company engages is one that other entities
may easily enter without substantial capital investment or experience in
management of correctional or detention facilities. Some of the Company's
competitors may have greater resources than the Company. The Company also
competes in some markets with smaller local companies that may have a better
understanding of the local conditions and may be better able to gain political
and public acceptance. In addition, the Company competes with governmental
agencies that are responsible for correctional facilities.

Dependence on Senior Management. The success of the Company's operations
has been and will continue to be highly dependent upon the continued services of
its senior management. The loss of one or more of the Company's senior
management could have a material adverse effect on the Company's business. The
Company's loan agreement provides that Doctor R. Crants, the Company's Chairman
of the Board and Chief Executive Officer, must be employed by the Company
pursuant to an employment agreement reasonably satisfactory to the Company's
lenders. See "Management."

Relationship with Sodexho. Following completion of this offering, Sodexho
will beneficially own 16.6% of the Common Stock (16.5% assuming exercise of the
Underwriters' over-allotment option). See "Principal and Selling Stockholders."
Accordingly, Sodexho may have significant influence over the affairs of the
Company. Sodexho has agreed to limit its ownership interest in the Company to
25% (or 30% in certain limited circumstances) through June 23, 1999, subject to
earlier termination upon the occurrence of certain events, and has agreed to
certain restrictions on the voting of its Common Stock. Sodexho has a preemptive
right to purchase additional shares of Common Stock or securities convertible or
exchangeable for Common Stock in any issuance of securities by the Company in an
amount necessary to enable Sodexho to maintain a percentage ownership in the
Company equal to 20% of the Common Stock on a fully diluted basis. See
"Description of Securities -- Relationship with Sodexho."

Volatility of Market Price. From time to time after this offering, there
may be significant volatility in the market price of the Common Stock. The
Company believes that the current market price of the Common Stock reflects
expectations that the Company will be able to continue to operate its facilities
profitably and to develop new facilities at a significant rate and operate them
profitably. If the Company is unable to operate its facilities profitably or
develop facilities at a pace that reflects the expectations of the market,
investors could sell shares of the Common Stock at or after the time that it
becomes apparent that such expectations may not be realized, resulting in a
decrease in the market price of the Common Stock. In addition to the operating
results of the Company, changes in earnings estimated by analysts, changes in
general conditions in the economy or the financial markets or other developments
affecting the Company or the private corrections industry could cause the market
price of the Common Stock to fluctuate substantially. In recent years, the stock
market has experienced extreme price and volume fluctuations. This volatility
has had a significant effect on the market prices of securities issued by many
companies for reasons unrelated to their operating performance.

9
<PAGE> 11

USE OF PROCEEDS

The net proceeds to the Company from the sale of the Common Stock offered
hereby are estimated to be approximately $131.8 million ($162.4 million if the
Underwriters' over-allotment option is exercised in full), after deduction of
the underwriting discount and the estimated offering expenses payable by the
Company. The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders. Set forth below is a discussion of the Company's
anticipated capital needs as well as a discussion of the Company's sources of
funds (including the net proceeds of this offering) to meet those needs. Until
utilized for the purposes described herein, the Company intends to invest the
net proceeds of this offering in high quality, short-term, interest-bearing
securities.

ANTICIPATED CAPITAL NEEDS

The Company's principal anticipated capital needs arise in connection with
the development, acquisition or expansion of correctional and detention
facilities. Set forth below are currently identifiable capital needs for
specific projects the Company expects to complete by the end of 1997:

ANTICIPATED
PROJECT EXPENDITURE
- -------------------------------------------------------------------------- ----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
512-bed expansion of the Central Arizona Detention Center................. $ 15,000
500-bed expansion of the Eloy Detention Center............................ 15,000
Construction costs for the 752-bed Huerfano County Correctional
Facility................................................................ 27,000
Construction costs for the 1,504-bed Hardeman County Correctional
Center(1)............................................................... 47,000
160-bed expansion of the West Tennessee Detention Facility................ 5,500
Acquisition and/or renovation costs for other projects anticipated to be
completed by the end of 1997............................................ 70,000
--------
Total........................................................... $179,500
========
</TABLE>

- ---------------
(1) The Company will provide financing for the construction costs of the
Hardeman County Correctional Center. It is anticipated that following
completion of construction of the facility, a local governmental authority
will issue tax-exempt bonds to fund the permanent financing for the facility
and the Company's loan to finance construction of the facility will be
repaid. The local governmental authority will be the obligor on the
permanent financing.

ANTICIPATED SOURCES OF FUNDING FOR CAPITAL EXPENDITURES

In addition to the anticipated net proceeds of this offering, the Company's
principal sources of funding for its anticipated capital expenditures will
include cash flow from operations, borrowings under the Company's bank lines of
credit and proceeds from the sale of the 1996 Convertible Notes. The currently
estimated sources of funds are as follows:

SOURCES OF FUNDING ANTICIPATED AMOUNT
- --------------------------------------------------------------------------- ----------------------
(DOLLARS IN THOUSANDS)
<S> <C>
Net proceeds of this offering.............................................. $131,818
Cash flow from operations and borrowings under the Company's bank lines
of credit................................................................ 27,682
Proceeds from sale of 7.5% convertible subordinated notes.................. 20,000
--------
Total............................................................ $179,500
========
</TABLE>

The Company currently has a $25.0 million working capital revolving credit
facility (the "Credit Facility"). As of May 30, 1996, there was $21.3 million
available to be borrowed under the Credit Facility. The Company has received a
proposal from its primary bank lender for an increase in the Credit Facility up
to $150.0 million. There can be no assurance that the Company will enter into an
agreement for an increased Credit Facility.

10
<PAGE> 12

CAPITALIZATION

The following table sets forth the current indebtedness and capitalization
of the Company as of March 31, 1996 and on an as adjusted basis giving effect to
the issuance of $20.0 million in 7.5% convertible subordinated notes, the sale
by the Company of the 1,850,000 shares of Common Stock offered hereby and the
proposed application of the estimated net proceeds received by the Company
therefrom as described under "Use of Proceeds."

<TABLE>
<CAPTION>
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Current portion of long-term debt..................................... $ 8,870 $ 8,870
======== ========
Long-term debt, net of current portion:
Bank loan and credit facilities..................................... 5,322 322
Other long term debt................................................ 32,026 32,026
Convertible subordinated notes(1)................................... 44,500 64,500
-------- --------
Total long-term debt, net of current portion................ 81,848 96,848
-------- --------
Stockholders' equity:
Preferred Stock, $1.00 par value, 1,000,000 shares authorized, no
shares outstanding............................................... -- --
Common Stock, $1.00 par value, 150,000,000 shares authorized,
33,921,000 shares issued and outstanding; 35,771,000 shares
issued and outstanding, as adjusted(2)........................... 33,921 35,771
Additional paid-in capital.......................................... 60,068 190,036
Retained earnings................................................... 18,227 18,227
Treasury stock, at cost............................................. (569) (569)
-------- --------
Total stockholders' equity.................................. 111,647 243,465
-------- --------
Total capitalization................................... $193,495 $ 340,313
======== ========
</TABLE>

- ---------------
(1) The Company currently has outstanding an aggregate of $64.5 million
principal amount of convertible subordinated notes (the "Convertible Notes")
which is comprised of $7.5 million of 8.5% convertible subordinated notes
due September 30, 1998 (the "1992 Convertible Notes"), $7.0 million of 8.5%
convertible subordinated notes due November 7, 1999 (the "1994 Convertible
Notes") and $50.0 million of 7.5% convertible subordinated notes due
February 28, 2002 (the "1996 Convertible Notes"). See "Description of
Securities -- Convertible Notes."

(2) Excludes (a) 2,230,317 shares of Common Stock reserved for issuance upon
grants of deferred shares or exercise of options granted pursuant to the
Company's existing stock incentive plans; (b) 4,227,256 shares of Common
Stock reserved for issuance upon the exercise of outstanding warrants; and
(c) 4,062,391 shares of Common Stock reserved for issuance upon the
conversion of the Convertible Notes. See "Description of Securities."

11
<PAGE> 13

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Common Stock is traded on the NYSE under the symbol "CXC." Until
December 30, 1994, the Common Stock was quoted on the Nasdaq National Market
under the symbol "CCAX." The following table sets forth, for the periods
indicated, the high and low closing sales prices for each of the quarters
indicated as reported on (i) the Nasdaq National Market through December 29,
1994 and (ii) the NYSE composite tape from December 30, 1994.

<TABLE>
<CAPTION>
1994 HIGH LOW
------------------------------------------------------------------- ------ ------
<S> <C> <C>
First Quarter...................................................... $ 8.19 $ 4.63
Second Quarter..................................................... 8.38 6.25
Third Quarter...................................................... 8.75 7.69
Fourth Quarter..................................................... 8.75 6.44
1995
First Quarter...................................................... $15.31 $ 8.25
Second Quarter..................................................... 18.81 14.69
Third Quarter...................................................... 24.31 17.69
Fourth Quarter..................................................... 38.38 23.44
1996
First Quarter...................................................... $57.00 $34.75
Second Quarter (through May 30, 1996).............................. 90.00 53.63
</TABLE>

The Company also has warrants to purchase Common Stock at an exercise price of
$8.50 per share (the "Warrants"), which are listed for trading on the NYSE under
the symbol "CXCWS." See "Description of Securities -- Warrants."

On May 30, 1996, the last sale prices of the Common Stock and the Warrants
on the NYSE composite tape were $76.00 and $143.00, respectively. As of May 28,
1996, there were 959 and 346 record holders of the Common Stock and the
Warrants, respectively.

The Company has never declared or paid a cash dividend on its Common Stock.
It is the present policy of the Company's Board of Directors to retain all
earnings to support operations; therefore, the Company does not anticipate
declaring or paying cash dividends on its Common Stock for the foreseeable
future. The declaration and payment of cash dividends in the future will be
determined based on a number of factors, including the Company's earnings,
financial condition, liquidity requirements, restrictions on financing
agreements and other factors deemed relevant by the Board of Directors. Certain
of the Company's credit agreements prohibit the Company from paying any cash
dividends on its Common Stock without the lender's consent.

12
<PAGE> 14

BUSINESS

The Company is the largest developer and manager of privatized correctional
and detention facilities worldwide. The Company's facilities are located in 11
states of the United States, Puerto Rico, Australia and the United Kingdom. As
of May 30, 1996, the Company had contracts to manage 49 correctional and
detention facilities with an aggregate design capacity of 33,153 beds of which
37 facilities representing 20,994 beds are in operation. The Company is
currently developing 12 facilities and expanding four facilities representing an
aggregate of 12,159 beds. The Company expects that all of the beds under
development and expansion will be in operation by the end of 1997. The Company
owns 12 of the 37 facilities it currently operates and leases the remaining 25
facilities from governmental agencies and non-profit corporations.

THE MARKET FOR THE COMPANY'S SERVICES

Throughout the world, there is a growing trend toward privatization of
government services and functions, including corrections and detention, as
governments of all types face continuing pressure to control costs and improve
the quality of services. As a result of increased costs, some governments have
been forced to limit public services and to seek more cost-effective means of
providing the remaining services. Since correctional and detention facilities
are viewed as an essential service, fiscal pressures have caused governments to
seek to deliver these services more cost effectively. Further, as a result of
the number of crimes committed each year and the corresponding number of
arrests, incarceration costs generally grow faster than any other part of a
government's budget. In an attempt to address these pressures, governmental
agencies responsible for correctional and detention facilities are increasingly
privatizing facilities. According to the 1995 Census, the design capacity of
privately managed adult correctional and detention facilities worldwide has
increased dramatically since the first privatized facility was opened by the
Company in 1984. The majority of this growth has occurred since 1989 as the
number of privately managed adult correctional and detention facilities
worldwide increased from 26 facilities with a design capacity of 10,973 beds in
1989 to 104 facilities with a design capacity of 63,595 beds in 1995. To date,
numerous counties, 22 states, Puerto Rico and the federal government have
incorporated the private sector into their criminal justice systems and 15
states are currently considering privatization. Notwithstanding such growth,
less than four percent of all adult prison beds in the United States are
privately managed.

Management believes that the increase in the demand for privatized
correctional and detention facilities also is a result, in large part, of the
general shortage of beds available in United States correctional and detention
facilities. According to reports issued by the United States Department of
Justice, Bureau of Justice Statistics ("BJS"), the number of inmates housed in
United States federal and state prison facilities increased from 487,593 at
December 31, 1985 to 1,104,074 at December 31, 1995, an increase of more than
126%. Local jail populations in the United States increased from 254,986 inmates
at December 31, 1985 to 490,442 at December 31, 1994, an increase of 92%. At
December 31, 1994, the BJS reports that the federal prison system in the United
States was operating at approximately 125% of its rated capacity.

Industry reports also indicate that inmates convicted of violent crimes
generally serve only one-third of their sentence, with the majority of them
being repeat offenders. Accordingly, there is a perceived public demand for,
among other things, longer prison sentences, as well as prison terms for
juvenile offenders, resulting in even more overcrowding in United States
correctional and detention facilities. Finally, numerous courts and other
governmental entities in the United States have mandated that additional
services offered to inmates be expanded and living conditions be improved. Many
governments do not have the readily-available resources to make the changes
necessary to meet such mandates.

At December 31, 1995, the Company managed 38 of the 91 privatized United
States adult facilities and 27,960 of the 56,109 private United States adult
beds. These facilities include (i) Immigration and Naturalization Service
detention facilities and United States Marshals Service detention facilities
privatized by federal agencies, (ii) state prisons, community corrections
facilities, intermediate sanction facilities, pre-release centers, work program
facilities and state jail facilities privatized by state agencies and (iii) city
jail facilities and transfer facilities privatized by local agencies. There are
also numerous privatized juvenile

13
<PAGE> 15

offender facilities of which the Company currently has contracts to operate
facilities with an aggregate design capacity of 1,047 beds.

The demand for privately managed correctional and detention centers is also
increasing internationally. Management believes that many countries are faced
with the same fiscal pressures as the United States and, as a result, are
seeking more cost-effective means of providing prison management services. At
December 31, 1995, there were a total of 11 privatized facilities in the United
Kingdom and Australia, with an aggregate design capacity of 6,302 beds. The
Company, through joint ventures, had contracts to manage three of these
facilities with an aggregate design capacity of 1,479 beds.

For similar economic reasons, the demand for privatized prisoner transport
services is also increasing domestically and internationally. The Company
believes that more and more government agencies will look for more
cost-effective means of providing these and other ancillary services.

BUSINESS STRATEGY

The Company intends to enhance its position as the largest developer and
manager of privatized correctional and detention facilities worldwide through
the following business strategies.

Efficient Development and Management of Facilities. The Company will
continue to provide low cost, high quality management of its facilities. The
Company believes that its quality of personnel, efficient application of
financial resources and adherence to proven policies and procedures enables it
to design, develop and manage correctional and detention facilities at costs
lower than governmental agencies that are responsible for performing such
services. The Company believes that its reputation as an innovative and
effective manager of facilities enhances its ability to market its services and
capitalize on a larger scope of opportunities with a variety of governmental
agencies.

The Company also recognizes the importance of the facility administrator
and the facility's management team in the successful financial performance of
its facilities. Management believes that the Company's reputation as the largest
developer and manager of privatized correctional and detention facilities
enables it to attract highly-qualified facility administrators. Each facility
management team operates in accordance with a Company-wide policy and procedure
regimen, derived from industry standards, designed to ensure the delivery of
consistent, high quality services in each of its facilities. See " -- Operating
Procedures." The Company seeks to minimize operating expenses by designing its
facilities to optimize correctional officer staffing consistent with facility
security requirements. The Company further controls operating expenses through
the use of electronic surveillance systems and other technologies.

Development of Domestic Business Opportunities. As a result of the growth
in the demand for privatized correctional and detention facilities, the Company
is selective in the projects it pursues. The Company pursues projects based on
probability of success, geographic location, size, potential profitability, and
political and community acceptability. This approach allows the Company to
enhance its market share and optimize resource allocation, profitability and
financial return. The Company intends to continue its focus on institutions with
an emphasis on medium to maximum security that are 500 to 1,000 beds or larger.
Management believes that the Company's experience and reputation in managing
large secure facilities will enable it to maintain its industry position and
capitalize on the trend of governments to privatize larger facilities.

Strategic Acquisitions. The Company believes that its recent acquisitions
have significantly enhanced its position as the largest developer and manager of
privatized correctional and detention facilities, while increasing operating
efficiencies. Accordingly, the Company intends to continue to pursue strategic
acquisitions of other managers of privatized correctional and detention
facilities.

Expanded Scope of Services. The Company intends to continue to implement a
wide variety of specialized services that address the unique needs of various
segments of the inmate population. Because the facilities operated by the
Company differ with respect to security levels, ages, genders and cultures of
inmates, the Company focuses on the particular needs of an inmate population and
tailors its services based on local conditions and the Company's ability to
provide such services on a cost-effective basis. In addition to core

14
<PAGE> 16

residential services, the Company offers rehabilitative and education services
such as counseling, basic education, job skill training and life
skills/transition planning services, all aimed at reducing recidivism. Further,
because management believes alcohol and drug abuse are directly or indirectly
responsible for the majority of criminal offenses in the United States, the
Company has created and offers to its inmates its Lifeline program, a
comprehensive long-term substance abuse treatment program. The Company believes
that its success in delivering these specialized services will enable it to
address the changing needs of its customers. By offering a broad range of
specialized services, the Company seeks to provide a solution to reduce
recidivism and ultimately the cost of crime.

Expansion into International Markets. The Company believes the majority of
its new business will come from within the United States. However, the Company
and its international strategic partner, Sodexho, believe that interest in
private-sector corrections is developing in other nations. While management will
not detract from its domestic business to pursue international activities, the
Company will participate in selected international projects it finds attractive.
The Company also believes that in order to compete effectively in international
markets it must enter into alliances with strategic local partners with access
to local opportunities and familiarity with local business practices.

In June 1994, the Company entered into an international strategic alliance
with Sodexho. Among other business ventures, Sodexho provides contract services
to French prisons and has business operations in 60 countries. Pursuant to the
terms of the joint venture agreement between the Company and Sodexho, only the
Company will develop and manage prison management business in the United States
and its territories. In the rest of the world, except in the United Kingdom, the
Company and Sodexho will pursue prison management business opportunities through
local joint venture entities to be established, generally on a 50/50 basis.
Management believes that, with the formation of the Sodexho alliance, the
Company is well positioned to participate in international markets. See
"Description of Securities -- Relationship with Sodexho."

Cost Reduction Programs. An important component of the Company's strategy
is to position itself as a low cost, high quality provider of prison management
services in all of its markets. As cost containment pressures increase, the
Company will continue to focus on improving operating performance and efficiency
through the following key operating initiatives: (i) standardization of supply
and service purchasing practices and usage; (ii) improvement of inmate
management, resource consumption and reporting procedures; and (iii) improvement
in salary and wage expenses by reducing overtime, monitoring staff levels and
developing productivity standards. The Company intends to continue to apply
these operating cost initiatives throughout its existing facilities and in new
facilities.

FACILITY MANAGEMENT CONTRACTS

The Company is compensated on the basis of the number of inmates held in
each of its facilities. Contracts may vary to provide fixed per diem rates or
monthly fixed rates. Of the Company's 37 facilities in operation, 34 of the
Company's facility management contracts provide that the Company will be
compensated at an inmate per diem rate based upon actual or minimum guaranteed
occupancy levels and three of the management contracts are based on monthly
fixed rates. In either case, the compensation is invoiced in accordance with
applicable law and is paid on a monthly basis. Occupancy rates for a particular
facility will be low when first opened or when expansions are first available.
However, after a facility gets beyond the start-up period, typically ranging
from 30 to 90 days, the occupancy rate tends to stabilize. For 1995, the average
occupancy, based on rated capacity, was 93.5% for all facilities operated by the
Company.

In addition, the Company's contracts generally require the Company to
operate each facility in accordance with all applicable laws and regulations.
The Company is required by its contracts to maintain certain levels of insurance
coverage for general liability, workers' compensation, vehicle liability and
property loss or damage. The Company also is required to indemnify the
contracting agencies for claims and costs arising out of the Company's
operations and, in certain cases, to maintain performance bonds.

The Company's facility contracts are short term in nature. Terms of federal
contracts generally range from one to five years, and contain multiple renewal
options. The terms of local and state contracts may be for

15
<PAGE> 17

longer periods with additional renewal options. Most facility contracts also
generally contain clauses which allow the governmental agency to terminate a
contract without cause. The Company's facility contracts are generally subject
to annual or bi-annual legislative appropriation of funds. A failure by a
governmental agency to receive appropriations could result in termination of the
contract by such agency or a reduction in the management fee payable to the
Company. To date, none of the Company's contracts have been terminated by a
governmental agency and all renewal options under the Company's management
contracts have been exercised by the governmental agencies. No assurance can be
given that a governmental agency will not terminate or fail to renew a contract
with the Company in the future. For 1995, contracts for facilities with the
United States Marshals Service accounted for 11% of the Company's revenues and
contracts with the State of Texas accounted for 18% of the Company's revenues.

OPERATING PROCEDURES

Pursuant to the terms of its management contracts, the Company is
responsible for the overall operation of its facilities, including staff
recruitment, general administration of the facilities, security and supervision
of the offenders and facility maintenance. The Company also provides a variety
of rehabilitative and educational programs at its facilities. Inmates at most
facilities managed by the Company may receive basic education through academic
programs designed to improve inmate literary levels and the opportunity to
acquire General Education Development certificates. The Company also offers
vocational training to inmates who lack marketable job skills. In addition, the
Company offers life skills transition planning programs that provide inmates job
search training and employment skills, health education, financial
responsibility training, parenting and other skills associated with becoming
productive citizens. At several of its facilities, the Company also offers
counseling, education and/or treatment to inmates with alcohol and drug abuse
problems through its Lifeline program.

The Company operates each facility in accordance with the Company-wide
policies and procedures and the standards and guidelines established by the
American Correctional Association ("ACA") Commission on Accreditation. The ACA
is an independent organization comprised of professionals in the corrections
industry which establishes guidelines and standards by which a correctional
institution may gain accreditation. The ACA standards, which the ACA believes
safeguard the life, health and safety of offenders and personnel, are the basis
of the accreditation process and define policies and procedures for operating
programs. The ACA standards, which are the industry's most widely accepted
correctional standards, describe specific objectives to be accomplished and
cover such areas as administration, personnel and staff training, security,
medical and health care, food service, inmate supervision and physical plant
requirements. The Company has sought and received ACA accreditation for 16 of
the facilities it currently manages, and intends to apply for ACA accreditation
for all of its facilities once they are eligible. The accreditation process is
usually completed in 18 to 24 months after a facility is opened.

FACILITY DESIGN, CONSTRUCTION AND FINANCE

In addition to its facility management services, the Company also provides
consultation to various governmental agencies with respect to the design and
construction of new correctional and detention facilities, and the redesign and
renovation of older facilities. Since its inception in January 1983, the Company
has designed and constructed 21 of its 37 operating corrections facilities for
various federal, state, and local governmental agencies. The Company manages all
of the facilities it has designed and constructed or redesigned and renovated.

Pursuant to the Company's design, build and manage contracts, the Company
is responsible for overall project development and completion. Typically, the
Company develops the conceptual design for a project, then hires architects,
engineers and construction companies to complete the development. When designing
a particular facility, the Company utilizes, with appropriate modifications,
prototype designs the Company has used in developing other projects. Management
of the Company believes that the use of such prototype designs allows it to
reduce cost overruns and construction delays. The Company's facilities are
designed to maximize staffing efficiencies by increasing the area of vision
under surveillance by corrections officers and utilizing additional electronic
surveillance systems.

16
<PAGE> 18

Various methods of construction financing may be used by a contracting
governmental agency, including, but not limited to the following: (i) one-time
general revenue appropriation by the government agency for the cost of the new
facility; (ii) general obligation bonds that are secured by either a limited or
unlimited tax levied by the issuing governmental entity; or (iii) lease revenue
bonds or certificates of participation secured by an annual lease payment that
is subject to annual or bi-annual legislative appropriation of funds. When the
project is financed using direct governmental appropriations or proceeds from
the sale of bonds or other obligations issued prior to the award of the project,
or by the Company directly, the financing is in place when the construction or
renovation contract is executed. If the project is financed using
project-specific tax-exempt bonds or other obligations, the construction
contract is generally subject to the sale of such bonds or obligations.
Substantial expenditures for construction will not be made on such a project
until the tax-exempt bonds or other obligations are sold. If such bonds or
obligations are not sold, construction and management of the facility may either
be delayed until alternate financing is procured or development of the project
will be entirely suspended. When the Company is awarded a facility management
contract, appropriations for the first annual or bi-annual period of the
contract's term have generally already been approved, and the contract is
subject to governmental appropriations for subsequent annual or bi-annual
periods. Of the domestic facilities currently managed by the Company, 25 were
funded by the government using one of the above-described financing vehicles.

MARKETING

The Company engages in extensive marketing efforts. The Company believes
that it is the industry leader in promoting the benefits of privatization of
prisons and other correctional and detention facilities. Marketing efforts are
conducted and coordinated by the Company's business development department and
senior management with the aid, where appropriate, of certain independent
consultants.

The Company views governmental agencies responsible for federal, state and
local correctional facilities in the United States and governmental agencies
responsible for correctional facilities in Puerto Rico, the United Kingdom and
Australia as its primary target markets.

The Company generally receives inquiries from or on behalf of governmental
agencies that are considering privatization of certain facilities or that have
already decided to contract with private enterprise. When it receives such an
inquiry, the Company determines whether there is an existing need for the
Company's services and whether the legal and political climate in which the
inquiring party operates is conducive to serious consideration of privatization
and then conducts an initial cost analysis to further determine project
feasibility.

The Company pursues its domestic business opportunities on two primary
courses. In the first course, the Company follows the traditional competitive
route where a Request for Proposals ("RFP") or Request for Qualification ("RFQ")
is issued by a government agency and a number of companies respond. Management
believes that this competitive approach will produce the majority of new
contract awards to the Company. The second course involves the development of
new facilities in locations where there is a clearly defined, long-term need for
beds, but where a competitive bidding procedure is not required.

Generally, governmental agencies responsible for correctional and detention
services procure goods and services through RFPs or RFQs. Most of the Company's
activities in the area of securing new business are in the form of responding to
RFPs. As part of the Company's process of responding to RFPs, management meets
with appropriate personnel from the agency making the request to best determine
the agency's distinct needs. If the project fits within the Company's strategy,
the Company will then submit a written response to the RFP. A typical RFP
requires bidders to provide detailed information, including, but not limited to,
the service to be provided by the bidder, its experience and qualification, and
the price at which the bidder is willing to provide the services (which services
may include the renovation, improvement or expansion of an existing facility or
the planning, design and construction of a new facility). The Company has and
intends to in the future, engage independent consultants to assist it in
responding to RFPs. Based on the proposals received in response to an RFP, the
agency will award a contract to the successful bidder. In addition to issuing
formal RFPs, local jurisdictions may issue an RFQ. In the RFQ process, the
requesting agency selects a firm believed to be most

17
<PAGE> 19

qualified to provide the requested services and then negotiates the terms of the
contract with that firm, including the price at which its services are to be
provided.

The marketing process for facility management consists of several critical
events. These include issuance of an RFP or RFQ by a governmental agency,
submission of a response to the RFP or RFQ by the Company, the award of the
contract by a governmental agency and the commencement of construction or
management of the facility. The Company's experience has been that a substantial
period of time may elapse from the initial inquiry to receipt of a new contract.
As the concept of privatization has gained wider acceptance, however, the length
of time from inquiry to the award of a contract has shortened. The length of
time required to award a contract is also affected, in some cases, by the need
to introduce enabling legislation. Generally, if the facility for which an award
has been made must be constructed, the Company's experience has been that
management of a newly-constructed facility typically commences between 12 and 24
months after the governmental agency's award.

While the Company focuses primarily on the traditional competitive
marketing approach described above, it also pursues the development of new
facilities in those areas where a competitive bid process is not required.
Management believes this approach, which has proven successful to the Company to
date, is effective because of the Company's strong client relationships and
reputation for quality corrections.

In addition to marketing its services to federal, state and local
authorities, the Company markets its services internationally, primarily through
the international strategic alliance formed with Sodexho. The Company is
currently marketing its management services in Australia, Germany, Hungary,
Canada, Panama, and Mexico.

The marketing efforts of TransCor for inmate transportation services vary
from those of the rest of the Company. TransCor's marketing approach generally
consists of mass mailings, phone calls, and personal visits to hundreds of state
and local governmental agencies as well as attendance at local, state and
national trade shows.

BUSINESS PROPOSALS

As of May 30, 1996, the Company was pursuing eight prospects with a total
of approximately 5,700 beds for which written responses to RFPs have been
submitted. The Company is also pursuing 26 prospects with a total of
approximately 17,000 beds for which it has not submitted proposals. The domestic
projects that the Company is pursuing are located in nine states, including
eight states in which the Company is not currently operating. Additionally, the
Company is pursuing business in Australia and Great Britain through joint
ventures in those countries. The Company is also pursuing other foreign facility
prospects through its alliance with Sodexho.

When a contract requires construction of a new facility, the Company's
success depends, in part, upon its ability to acquire real property for its
facilities on desirable terms and at satisfactory locations. Management expects
that many such locations will be in or near populous areas and therefore
anticipates legal action and other forms of opposition from residents in areas
surrounding each proposal site. The Company may incur significant expenses in
responding to such opposition and there can be no assurance of success.

EMPLOYEES

At May 30, 1996, the Company employed 5,688 full-time employees and 140
part-time employees. Of the full-time employees, 89 were employed at the
Company's headquarters and 5,599 were employed at the Company's facilities and
TransCor. The Company employs personnel in the following areas: clerical and
administrative, including facility administrators/wardens, security, food
service, medical, transportation and scheduling, maintenance, teachers,
counselors and other support services.

Each of the Company's facilities is managed as a separate operational
facility by the facility administrator or warden. All facilities follow a
standardized code of policies and procedures. The Company has never experienced
a strike or work stoppage. Beginning in 1992, six facilities were approached by
one particular union to organize the work force. The union was defeated or
withdrew in five facilities. In March 1993, the

18
<PAGE> 20

Company reached an agreement with the union to represent 73 correctional
officers at the Silverdale facility and this contract was decertified in March
1994. In January 1996, the Company reached an agreement with a union to
represent 38 non-security personnel at its Shelby Training Center. In the
opinion of management, employee relations are good.

EMPLOYEE TRAINING

Under the laws applicable to the Company's operations, as well as the
Company's internal training policy, the Company's corrections officers are
required to complete a minimum amount of training prior to independent
assignment. In most cases, officers must undergo at least 160 hours of training
by the Company before being allowed to work alone in a position that will bring
them in contact with inmates or detainees. Additional training is required in
certain jurisdictions where necessary to comply with applicable law in order to
enable such officers to work in positions that will bring them into contact with
inmates. All non-security staff receive 80 hours of initial training.
Accordingly, the Company's training programs meet or exceed all applicable
requirements.

The Company's training is comprised of approximately 40 hours of
instruction concerning the Company's policies, operational procedures and
management philosophy. An additional 120 hours concerning legal issues, rights
of inmates and detainees, techniques of communication and supervision,
improvement of interpersonal skills and job training relating to the particular
position to be filled are provided. Employees of facilities acquired or taken
over by the Company who are offered continued employment undergo at least 40
hours of training by the Company before reporting to work for the Company. Each
of the Company's employees who has contact with inmates receives a minimum of 40
hours of additional training each year, and each facility management employee of
the Company receives at least 40 hours of training each year.

TransCor also has training requirements for its employees. Each new
employee must undergo 40 hours of training, prior to job performance, including
driver training and safety, correctional training and policy and procedures
guidelines. Each employee then performs four weeks of on-the-job training with
an experienced transportation agent. TransCor maintains continuing training for
all employees of 16 to 32 hours per year.

INSURANCE

The Company maintains a $30,000,000 general liability insurance policy for
all of its operations. To date, no payments have been made under the Company's
general liability insurance policies because of any action brought as a result
of the operation of any of its facilities. The Company also maintains insurance
in amounts it deems adequate to cover property and casualty risks, workers'
compensation and directors and officers liability. There can be no assurance
that the aggregate amount and kinds of the Company's insurance are adequate to
cover all risks it may incur or that insurance will be available in the future.

Each of the Company's facility management contracts and the statutes of
certain states require the maintenance of insurance by the Company. The
Company's contracts provide that in the event that the Company does not maintain
such insurance, the contracting agency may terminate its agreement with the
Company. The Company believes it is in compliance in all material respects with
respect to these requirements.

LITIGATION

The Company is currently, and from time to time, subject to claims and
suits arising in the ordinary course of business, including claims for damages
for personal injuries or for wrongful restriction of, or interference with,
inmate privileges. In the opinion of management, the outcome of the proceedings
to which it is currently a party will not have a material adverse effect upon
its operations or financial condition.

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<PAGE> 21

MANAGEMENT

The following table sets forth certain information concerning the directors
and executive officers of the Company as of the date of this Prospectus.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------- --- -----------------------------------------------------------------
<S> <C> <C>
Doctor R. Crants............. 51 Chairman of the Board; Chief Executive Officer; Director
Thomas W. Beasley............ 53 Director; Chairman Emeritus
William F. Andrews........... 64 Director
Samuel W. Bartholomew, Jr.... 51 Director
Jean-Pierre Cuny............. 41 Director
Joseph F. Johnson............ 45 Director
R. Clayton McWhorter......... 62 Director
David L. Myers............... 52 President
Darrell K. Massengale........ 35 Chief Financial Officer; Secretary and Treasurer;
Vice President, Finance
Dennis E. Bradby............. 46 Vice President, Education Services
Robert G. Britton............ 55 Vice President, Operations
Linda G. Cooper.............. 45 Vice President, Legal Affairs
Susan Hart................... 35 Vice President, Communications
Peggy W. Lawrence............ 40 Vice President, Investor Relations
John D. Rees................. 50 Vice President, Business Development
Linda A. Staley.............. 51 Vice President, Project Development
Gay E. Vick, III............. 48 Vice President and Managing Director of International Operations
</TABLE>

Doctor R. Crants, a founder of the Company, was elected Chief Executive
Officer and Chairman of the Board of the Company in June 1994. From June 1987 to
June 1994, he served as President, Chief Executive Officer and Vice Chairman of
the Board of Directors of the Company. He has served as a director of the
Company since 1983.

Thomas W. Beasley, a founder of the Company, was elected Chairman Emeritus
of the Board of Directors of the Company in June 1994. From June 1987 to June
1994, he served as Chairman of the Board. Mr. Beasley served as President of the
Company from January 1983 to June 1987. He has served as a director of the
Company since 1983.

William F. Andrews has served as a director of the Company since 1986. Mr.
Andrews currently serves as the Chairman of Schrader, Inc., a manufacturing
company, and Chairman of Scovill Fasteners. From January 1992 through December
1994 he was Chairman, President and Chief Executive Officer of Amdura
Corporation, a manufacturing company, and Chairman of Utica Corp., also a
manufacturing company. Mr. Andrews serves as a director of Navistar
International Corporation, Southern New England Telephone Company, Johnson
Control Corporation, Harley Davidson Company, Katy Industries, Northwestern
Steel and Wire Company, Black Box Corporation and Process Technology Holdings.

Samuel W. Bartholomew, Jr. has served as a director of the Company since
June 1991. Mr. Bartholomew is a founder and Chairman of the Nashville law firm
of Stokes & Bartholomew, P.A., which serves as general counsel to the Company.

Jean-Pierre Cuny has served as a director of the Company since July 1994.
Mr. Cuny serves as Senior Vice President of The Sodexho Group, a leading
supplier of catering and related services to institutions based in Paris,
France. Mr. Cuny was elected to the Board of Directors in connection with the
international strategic alliance with Sodexho. See "Description of
Securities -- Relationship with Sodexho."

20
<PAGE> 22

Joseph F. Johnson became a director of the Company in May 1996. He serves
as Chairman and CEO of The Johnson Companies, a group of closely held companies
involved in government relations and corrections. In 1994, Mr. Johnson founded
National Corrections & Rehabilitation Corporation, a correctional services
company which specializes in providing education, vocational training, substance
abuse treatment and medical care programs to inmates.

R. Clayton McWhorter became a director of the Company in May 1996. Mr.
McWhorter is the former Chairman of Columbia/HCA Healthcare Corporation. He
resigned from this position on May 9, 1996, but remains a director of
Columbia/HCA. Mr. McWhorter participated in the formation of HealthTrust, Inc.
and served as its Chairman, President and Chief Executive Officer until its
merger with Columbia/HCA in April 1995.

David L. Myers became President of the Company in June 1994. From December
1986 to June 1994, he served as Vice President, Facility Operations of the
Company.

Darrell K. Massengale joined the Company in February 1986 and in March 1991
became its Vice President, Finance, Secretary, and Treasurer. In June 1994, he
was also elected Chief Financial Officer of the Company. Mr. Massengale is a
certified public accountant.

Dennis E. Bradby has served as Vice President, Education Services for the
Company since June 1991. From April 1986 through June 1991, Mr. Bradby served as
the Company's Vice President, Operational Support Systems.

Robert G. Britton was elected Vice President, Operations for the Company in
June 1994. From January 1986 to June 1994, he served as Vice President, Business
Development for the Company.

Linda G. Cooper joined the Company in April 1987 as Senior Legal Counsel.
In May 1988, she was elected Assistant Secretary for the Company and in January
1989 became its Vice President, Legal Affairs.

Susan Hart became Vice President, Communications in May 1996. From April
1993 to May 1996, she served as Director of Communications for the Company.

Peggy W. Lawrence became Vice President, Investor Relations in January
1995. From June 1985 to January 1995, she served as Vice President,
Communications for the Company.

John D. Rees was elected Vice President, Business Development for the
Company in June 1994. From 1967 until 1986 when he joined the Company, Mr. Rees
served as warden of the Kentucky State Reformatory.

Linda A. Staley was elected Vice President, Project Development for the
Company in June 1994. She joined the Company in 1985 as Director, Project
Development.

Gay E. Vick, III was elected Vice President and Managing Director for the
Company's International Operations in June 1994. From January 1987 to June 1994,
he served as Vice President, Project Development for the Company.

21
<PAGE> 23

PRINCIPAL AND SELLING STOCKHOLDERS

The table below sets forth certain information regarding the beneficial
ownership of Common Stock, as of May 30, 1996, and as adjusted to reflect the
sale of the Common Stock offered hereby of (i) each person who is known by the
Company to be the beneficial owner of more than 5% of the Common Stock, (ii)
each director of the Company, (iii) the Company's Chief Executive Officer and
the Company's four other most highly compensated executive officers as of
December 31, 1995, (iv) all directors and executive officers as a group and (v)
the Selling Stockholders.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO THE SHARES TO OWNED AFTER THE
OFFERING(1) BE SOLD IN OFFERING(1)
------------------- THE -------------------
NUMBER PERCENT OFFERING NUMBER PERCENT
---------- ------- ---------- ---------- -------
<S> <C> <C> <C> <C> <C>
DIRECTORS, EXECUTIVE OFFICERS AND 5%
STOCKHOLDERS:
Sodexho, S.A.(2).............................. 6,992,406 17.4% -- 6,992,406 16.6%
Thomas W. Beasley(3).......................... 1,889,217 5.3% 235,584 1,653,633 4.4%
Doctor R. Crants(4)........................... 984,586 2.8% -- 984,586 2.6%
T. Don Hutto(5)............................... 251,519 * -- 251,519 *
William F. Andrews(6)......................... 124,666 * -- 124,666 *
Samuel W. Bartholomew, Jr.(7)................. 111,300 * -- 111,300 *
Jean-Pierre Cuny(8)........................... 15,000 * -- 15,000 *
Joseph F. Johnson............................. -- * -- *
R. Clayton McWhorter.......................... -- * -- *
David L. Myers(9)............................. 100,082 * -- 100,082 *
Darrell K. Massengale(10)..................... 77,569 * -- 77,569 *
All directors and executive officers as a
group (17 persons)(11)..................... 3,687,122 10.2% 235,584 3,451,538 9.1%

FORMER TRANSCOR STOCKHOLDERS:
Thomas Loventhal.............................. 515,252 1.5% 75,000 440,252 1.2%
American Corrections Transport, Inc........... 444,312 1.3% 44,430 399,882 1.1%
Ted Feldman................................... 6,924 * 1,000 5,924 *
Louis Ratchford............................... 2,886 * 1,500 1,386 *
Scott L. Moskovitz............................ 11,274 * 1,000 10,274 *
Alma Wells.................................... 2,886 * 1,500 1,386 *
Elizabeth Smith............................... 2,886 * 1,500 1,386 *
FORMER CONCEPT STOCKHOLDERS:
D. Paul and Joyce Alagia...................... 695,741 2.0% 12,000 683,741 1.9%
Harold S. Nelson.............................. 193,002 * 171,562 21,440 *
Ben F. Morgan, Jr............................. 155,853 * 30,000 125,853 *
A. W. Sandbach................................ 140,120 * 40,000 100,120 *
William H. Cull............................... 363,968 1.0% 35,000 328,968 *
Thomas F. Buetow.............................. 211,816 * 69,000 142,816 *
Dorothy Watkins............................... 106,930 * 2,500 104,430 *
David Watkins................................. 22,184 * 2,000 20,184 *
John Watkins, Jr.............................. 22,314 * 2,000 20,314 *
John L. Smith................................. 80,526 * 21,000 59,526 *
Patrick H. Molloy............................. 90,434 * 2,500 87,934 *
Charles O. Hundley............................ 17,748 * 15,974 1,774 *
Starletta Schirmer............................ 750 * 750 0 *
The Community Foundation of Louisville........ 5,000 * 5,000 0 *
FORMER CPI STOCKHOLDERS:
Michael D. Shmerling.......................... 309,200 * 38,400 270,800 *
Lisa A. Shmerling............................. 72,800 * 72,800 0 *
Alan Wernick.................................. 30,000 * 8,000 22,000 *
David Obolensky............................... 32,000 * 10,000 22,000 *
Cindie Unger.................................. 280,000 * 100,000 180,000 *
</TABLE>

22
<PAGE> 24

- ---------------
* Represents beneficial ownership of less than 1% of the Common Stock

(1) The persons named in the table, to the Company's knowledge, have sole
voting and investment power with respect to all shares of Common Stock
shown as beneficially owned by them, except as otherwise indicated. Shares
of Common Stock underlying options and warrants to purchase Common Stock
are deemed to be outstanding for the purpose of computing the outstanding
Common Stock owned by the particular person and by the group, but are not
deemed outstanding for any other purpose.

(2) Sodexho's address is 3 avenue Newton, 78180 Montigny-le-Bretonneux, France.
Includes 1,352,205 shares of Common Stock issuable upon conversion of
certain Convertible Notes; 2,200,000 shares issuable upon conversion of
certain warrants, 30,000 shares issuable upon the exercise of certain
options issued to Mr. Cuny and approximately 1,465,200 shares issuable upon
conversion of certain convertible subordinated notes which Sodexho will
purchase pursuant to a forward contract with the Company. Information
contained herein is based solely on the Schedule 13D filed with the
Securities and Exchange Commission (the "Commission") in April 1996. See
"Description of Securities -- Relationship with Sodexho."

(3) Mr. Beasley's address is Route 2, Box 305, Burns, Tennessee 37029. Includes
30,000 shares issuable upon the exercise of options, 2,000 shares owned by
Mr. Beasley's wife, 14,649 shares held in the Company's Amended and
Restated Employee Stock Ownership Plan (the "ESOP"), 358,770 shares
issuable upon the exercise of Warrants and 200 shares issuable upon the
exercise of Warrants owned by Mr. Beasley's wife. Such information is
derived in part from the Schedule 13G, dated February 12, 1996, filed by
Mr. Beasley.

(4) Includes 185,000 shares issuable upon the exercise of options, 24,175
shares held in the Company's ESOP and 99,940 shares issuable upon the
exercise of Warrants (does not include 3,200 shares held in trust for Mr.
Crants' children and 6,640 shares issuable upon the exercise of Warrants
held in trust for Mr. Crants' children beneficial ownership of which is
disclaimed).

(5) Includes 45,000 shares issuable upon the exercise of options, 8,589 shares
held in the ESOP and 64,666 shares owned by Mr. Hutto's wife. Mr. Hutto
resigned from the Board of Directors on May 14, 1996.

(6) Includes 74,000 shares issuable upon exercise of options and 4,000 shares
owned of record by minor children of Mr. Andrews.

(7) Includes 71,500 shares issuable upon the exercise of options, 6,000 shares
owned by minor children of Mr. Bartholomew, 800 shares issuable upon the
exercise of Warrants and 800 shares issuable upon the exercise of Warrants
owned by minor children of Mr. Bartholomew.

(8) Mr. Cuny serves as the Senior Vice President of The Sodexho Group, an
affiliate of Sodexho, and was elected to the Board of Directors in
connection with the international strategic alliance between the Company
and Sodexho. Mr. Cuny beneficially owns 15,000 shares issuable upon the
exercise of options. Mr. Cuny disclaims beneficial ownership of all shares
held by Sodexho.

(9) Includes 90,200 shares issuable upon the exercise of options, 400 shares
owned by children of Mr. Myers, 40 shares issuable upon the exercise of
Warrants, 80 shares issuable upon the exercise of Warrants owned by
children of Mr. Myers and 9,162 shares held in the ESOP.

(10) Includes 64,800 shares issuable upon the exercise of options, 700 shares
owned jointly by Mr. Massengale and his wife, 140 shares issuable upon the
exercise of Warrants owned jointly by Mr. Massengale and his wife and 7,129
shares held in the ESOP.

(11) Includes an aggregate of 1,224,998 shares issuable upon exercise of options
and warrants and 107,153 shares held in the ESOP.

23
<PAGE> 25

DESCRIPTION OF SECURITIES

As of May 30, 1996, the Company's authorized capital stock consists of (i)
150,000,000 shares of Common Stock, $1.00 par value per share, and (ii)
1,000,000 shares of Preferred Stock, $1.00 par value per share ("Preferred
Stock"). Upon the completion of this offering, 36,910,932 shares of Common Stock
and no shares of Preferred Stock will be outstanding. The following summary
description is qualified in its entirety by reference to the Company's
Certificate of Incorporation and By-laws and the other contracts, agreements and
documents describing the terms of the Company's securities.

COMMON STOCK

The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders. Cumulative voting of shares of
Common Stock is prohibited. The holders of Common Stock are entitled to receive
ratably such dividends, if any, as may be declared from time to time by the
Board of Directors out of funds legally available therefor, subject to the
payment of any preferential dividends with respect to any Preferred Stock that
from time to time may be outstanding. In the event of the liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled to share ratably in all assets remaining after payment of liabilities,
subject to prior distribution rights of the holders of any outstanding Preferred
Stock. Other than the contractual rights granted to Sodexho described below, the
holders of Common Stock have no preemptive or conversion rights or other
subscription rights, and there are no redemption or sinking fund provisions
applicable to the Common Stock. All of the outstanding shares of Common Stock
are fully paid and nonassessable, and all of the shares of Common Stock offered
hereby, when issued and paid for, will be fully paid and nonassessable.

PREFERRED STOCK

The Board of Directors, without further action by the stockholders, is
authorized to issue up to 1,000,000 shares of Preferred Stock in one or more
series and to fix and determine as to any such series any and all of the
relative rights and preferences of shares in such series, including, without
limitation, preferences, limitations or relative rights with respect to
redemption rights, conversion rights, voting rights, dividend rights and
preferences on liquidation. The Company has no present intention to issue any
Preferred Stock, but may determine to do so in the future.

CONVERTIBLE NOTES

The Company currently has outstanding an aggregate of $64,500,000 principal
amount of convertible subordinated notes. The Convertible Notes, which are
currently convertible into an aggregate of 4,062,391 shares of Common Stock, are
comprised of the 1992 Convertible Notes, 1994 Convertible Notes and the 1996
Convertible Notes. The 1992 Convertible Notes were issued in three tranches,
with the first tranche ($2,500,000 aggregate principal amount) having a current
conversion price of $3.388 and the remaining two tranches ($5,000,000 aggregate
principal amount) having a conversion price of $3.548. The 1994 Convertible
Notes and the 1996 Convertible Notes are convertible into Common Stock at $7.165
and $53.30, respectively. These conversion prices are subject to adjustments,
including in the event of the issuance of equity securities at a price which is
less than the current conversion price. The Company may prepay the 1992
Convertible Notes at any time on or after July 1, 1997, and may force conversion
of the 1992 Convertible Notes beginning on July 1, 1997, if the Common Stock
price remains above $5.32. The Company may prepay the 1994 Convertible Notes at
any time on or after June 23, 1997, and may force conversion of the 1994
Convertible Notes beginning on June 23, 1997, if the Common Stock price remains
above $10.75. The Company may force conversion of the 1996 Convertible Notes
beginning in the year 2000 in the event that the Common Stock has traded for at
least 45 consecutive trading days in the public market at a price above 150% of
the conversion price of such 1996 Convertible Notes. All of the 1994 Convertible
Notes and $20,000,000 of the 1996 Convertible Notes are owned by Sodexho. See
" -- Relationship with Sodexho."

24
<PAGE> 26

WARRANTS

In September 1992, the Company issued a warrant dividend to holders of
Common Stock by distributing one Warrant for every five outstanding shares of
Common Stock. The Warrants expire on September 14, 1997, and are convertible
into two shares of Common Stock at an exercise price of $8.50. An aggregate of
2,027,256 shares of Common Stock currently are issuable upon exercise of the
Warrants.

OPTIONS AND DEFERRED SHARES

As of May 30, 1996, options to purchase a total of 2,061,805 shares of
Common Stock were outstanding pursuant to the Company's various stock option
plans for employees and directors, and an additional 1,538,720 shares of Common
Stock are available for future grants under such plans. In 1995, the Company
awarded an aggregate of 168,512 shares of deferred stock to certain key
employees pursuant to the Company's Stock Bonus Plan (the "Stock Bonus Plan").
Deferred shares granted under the Stock Bonus Plan do not vest until ten years
from the date of the grant and carry no voting rights or dividend rights until
such time as the stock is actually issued. As of May 30, 1996, no other deferred
shares are outstanding and an additional 31,488 shares are available for
issuance pursuant to the Stock Bonus Plan.

RELATIONSHIP WITH SODEXHO

In connection with the 1994 formation of the strategic alliance between the
Company and Sodexho, Sodexho purchased the 1994 Convertible Notes and 1,400,000
shares of Common Stock. In consideration of Sodexho's agreement to enter into
the international strategic alliance with the Company, the Company, among other
things, (i) entered into a forward contract pursuant to which Sodexho will
purchase at any time on or before December 31, 1997, up to $20,000,000 aggregate
principal amount of the Company's floating rate convertible subordinated notes
with a conversion price, as adjusted, of $13.65 per share, and (ii) granted
Sodexho a presently exercisable warrant expiring on December 31, 1998, covering
2,200,000 shares of Common Stock with an exercise price, as adjusted, of $7.90
per share. Sodexho also agreed to limit its ownership interest in the Company to
25% (or 30% in certain limited circumstances) through June 23, 1999, subject to
earlier termination upon the occurrence of a change in control (the "Standstill
Period"). A change in control is defined as: (i) a party acquiring more than 20%
of the Common Stock; (ii) a 10% stockholder publicly announcing an intent to
commence a tender offer for the Company; (iii) the termination of Doctor R.
Crants as the Company's chief executive officer or the failure by Doctor R.
Crants to own at least 2% of the Common Stock; (iv) if the Company's Board of
Directors shall no longer consist of a majority of Continuing Directors; or (v)
an acquirer shall publicly announce an intent to commence a tender offer and the
Company's Board publicly recommending that the stockholders accept such tender
offer. "Continuing Directors" means the directors of the Company as of June 23,
1994 and each other director, if such other director's nomination for election
to the Board of Directors of the Company is recommended by a majority of the
then Continuing Directors.

During the Standstill Period, Sodexho has agreed to vote its Common Stock
in the same fashion as either the Company's public stockholders or the Company's
Board of Directors, at Sodexho's option, on the election of directors and
certain other matters. Sodexho has also agreed that during the Standstill
Period, it will not solicit proxies under any circumstances, or become a
participant in any election contest, or make an offer for the acquisition of
substantially all of the assets or capital stock of the Company or induce or
assist any other person to make such an offer. Until Sodexho's ownership in the
Company is reduced to below 400,000 shares of Common Stock, Sodexho has the
right to nominate one member to the Company's Board of Directors and, without
Sodexho's consent, the Company may not increase the number of directors on the
Company's Board of Directors to eight or more. In addition, Sodexho has a
preemptive right to purchase additional shares of Common Stock or securities
convertible into or exchangeable for Common Stock in any issuance of securities
by the Company in an amount necessary to enable Sodexho to maintain a percentage
ownership in the Company equal to 20% of the Common Stock on a fully diluted
basis.

25
<PAGE> 27

DELAWARE ANTI-TAKEOVER LAW AND CERTAIN BYLAW PROVISIONS

The Company is a Delaware corporation and consequently is subject to
certain anti-takeover provisions of the Delaware General Corporation Law. The
business combination provision contained in Section 203 of the Delaware General
Corporation Law ("Section 203") defines an interested stockholder of a
corporation as any person that (i) owns, directly or indirectly, or has the
right to acquire, 15% or more of the outstanding voting stock of the corporation
or (ii) is an affiliate or associate of the corporation and was the owner of 15%
or more of the outstanding voting stock of the corporation at any time within
the three-year period immediately prior to the date on which it is sought to be
determined whether such person is an interested stockholder; and the affiliates
and the associates of such person. Under Section 203, a Delaware corporation may
not engage in any business combination with any interested stockholder for a
period of three years following the time such stockholder became an interested
stockholder, unless (i) prior to such time the board of directors of the
corporation approved either the business combination or the transaction which
resulted in the stockholder becoming an interested stockholder, or (ii) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced (excluding, for determining the number of shares outstanding, (a)
shares owned by persons who are directors and officers and (b) employee stock
plans, in certain instances), or (iii) at or subsequent to such time the
business combination is approved by the board of directors and authorized at an
annual or special meeting of stockholders by at least 66 2/3% of the outstanding
voting stock that is not owned by the interested stockholder. The restrictions
imposed by Section 203 will not apply to a corporation if (i) the corporation's
original certificate of incorporation contains a provision expressly electing
not to be governed by this section or (ii) the corporation, by the action of its
stockholders holding a majority of outstanding stock, adopts an amendment to its
certificate of incorporation or by-laws expressly electing not to be governed by
Section 203 (such amendment will not be effective until 12 months after adoption
and shall not apply to any business combination between such corporation and any
person who became an interested stockholder of such corporation on or prior to
such adoption).

The Company has not elected out of Section 203, and the restrictions
imposed by Section 203 apply to transactions between the Company and interested
stockholders. Section 203 could, under certain circumstances, make it more
difficult for a third party to gain control of the Company.

The Company's By-Laws include several provisions which may deter an
unsolicited acquisition of control of the Company. These provisions require: (a)
special meetings of stockholders to be called by the Chairman of the Board or
the Board of Directors; and (b) approval of By-Law amendments by the Board of
Directors or a majority vote of the stockholders.

REGISTRATION RIGHTS

Beneficial holders of an aggregate of 12,145,114 shares of Common Stock
have contractual rights with respect to the registration of shares of Common
Stock ("Registrable Shares") under the Securities Act. The Company has granted
two demand registration rights which may be exercised by Sodexho with respect to
securities acquired in June 1994 and by the holders of the 1992 Convertible
Notes. Sodexho and the other holder of the 1996 Convertible Notes also have
three demand shelf registration rights which may be exercised beginning June 22,
1997. In addition, Sodexho, the other holders of Convertible Notes and certain
other holders of Registrable Shares have incidental registration rights which
provide that, in the event that the Company proposes to register any of its
securities under the Securities Act for is own account, holders of Registrable
Shares may require the Company to include all or a portion of the Registrable
Shares in the registration, provided, among other conditions, that the managing
underwriter (if any) of any such offering has the right, subject to certain
conditions, to limit the number of Registrable Shares included in the
registration. In general, all fees, costs and expenses of such registrations
(other than underwriting commissions, dealers' fees, brokers' fees and
concessions applicable to Common Stock) will be borne by the Company.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock and Warrants is First
Union National Bank of North Carolina.

26
<PAGE> 28

UNDERWRITING

Pursuant to the Underwriting Agreement and subject to the terms and
conditions thereof, the Underwriters named below, acting through J.C. Bradford &
Co. and Stephens Inc. as representatives of the several Underwriters (the
"Representatives"), have agreed, severally, to purchase from the Company and the
Selling Stockholders the number of shares of Common Stock set forth below
opposite their respective names:

<TABLE>
<CAPTION>
NUMBER OF
NAME OF UNDERWRITER SHARES
-------------------------------------------------------------------------- ---------
<S> <C>
J.C. Bradford & Co. ...................................................... 868,750
Stephens Inc. ............................................................ 868,750
Bear, Stearns & Co. Inc................................................... 32,500
CS First Boston Corporation............................................... 32,500
Alex. Brown & Sons Incorporated........................................... 32,500
Dean Witter Reynolds Inc.................................................. 32,500
Dillon, Read & Co. Inc.................................................... 32,500
A.G. Edwards & Sons, Inc.................................................. 32,500
Goldman, Sachs & Co....................................................... 32,500
Hambrecht & Quist LLC..................................................... 32,500
Lazard Freres & Co. LLC................................................... 32,500
Lehman Brothers Inc....................................................... 32,500
Merrill Lynch, Pierce, Fenner & Smith Incorporated........................ 32,500
Montgomery Securities..................................................... 32,500
Morgan Stanley & Co. Incorporated......................................... 32,500
Natwest Securities Limited................................................ 32,500
Oppenheimer & Co., Inc.................................................... 32,500
PaineWebber Incorporated.................................................. 32,500
Prudential Securities Incorporated........................................ 32,500
Robertson, Stephens & Company LLC......................................... 32,500
Schroder Wertheim & Co. Incorporated...................................... 32,500
Smith Barney Inc.......................................................... 32,500
Equitable Securities Corporation.......................................... 32,500
Janney Montgomery Scott Inc............................................... 32,500
Robert W. Baird & Co. Incorporated........................................ 22,500
William Blair & Company, L.L.C............................................ 22,500
The Chicago Corporation................................................... 22,500
Cowen & Company........................................................... 22,500
Dain Bosworth Incorporated................................................ 22,500
Furman Selz LLC........................................................... 22,500
Interstate/Johnson Lane Corporation....................................... 22,500
Legg Mason Wood Walker, Incorporated...................................... 22,500
McDonald & Company Securities, Inc........................................ 22,500
Piper Jaffray Inc......................................................... 22,500
Rauscher Pierce Refsnes, Inc.............................................. 22,500
Unterberg Harris.......................................................... 22,500
Wheat First Butcher Singer................................................ 22,500
Allen C. Ewing & Co....................................................... 15,000
Ferris, Baker Watts, Inc.................................................. 15,000
Genesis Merchant Group Securities......................................... 15,000
Heidtke & Co., Inc........................................................ 15,000
J.J.B. Hilliard, W.L. Lyons, Inc.......................................... 15,000
Hoak Securities Corp...................................................... 15,000
Edgar M. Norris & Co. Inc................................................. 15,000
---------
Total........................................................... 2,850,000
=========
</TABLE>

In the Underwriting Agreement, the Underwriters have agreed, subject to the
terms and conditions therein set forth, to purchase all shares of Common Stock
offered hereby if any of such shares are purchased.

27
<PAGE> 29

The Company and the Selling Stockholders have been advised by the
Representatives that the Underwriters propose initially to offer the shares of
Common Stock to the public at the public offering price set forth on the cover
page of this Prospectus and to certain dealers at such price less a concession
not in excess of $2.00 per share. The Underwriters may allow, and such dealers
may reallow, a concession not in excess of $0.10 per share to certain other
dealers. After the initial public offering, the public offering price and such
concessions may be changed.

The offering of the shares of Common Stock is made for delivery when, as
and if accepted by the Underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offer without notice. The Underwriters
reserve the right to reject any order for the purchase of the shares.

The Company has granted to the Underwriters an option, exercisable not
later than 30 days after the date of the effectiveness of the Offering, to
purchase up to 427,500 shares of Common Stock to cover over-allotments, if any.
To the extent the Underwriters exercise this option, each of the Underwriters
will have a firm commitment to purchase approximately the same percentage
thereof which the number of shares of Common Stock to be purchased by it shown
in the table above bears to the total number of shares in such table, and the
Company will be obligated, pursuant to the option, to sell such shares to the
Underwriters. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of the shares of Common Stock
offered hereby. If purchased, the Underwriters may sell these additional shares
on the same terms as those on which the 2,850,000 shares are being offered.

The Company, its directors and executive officers and the Selling
Stockholders have agreed not to offer, sell, or otherwise dispose of any shares
of the Common Stock owned by them prior to the expiration of 120 days from the
date of this Prospectus without the prior written consent of the
Representatives.

The Underwriting Agreement provides that the Company and the Selling
Stockholders will indemnify the Underwriters and controlling persons, if any,
against certain liabilities, including liabilities under the Securities Act, or
will contribute to payments that the Underwriters or any such controlling
persons may be required to make in respect thereof.

EXPERTS

The audited consolidated financial statements of the Company incorporated
by reference herein and elsewhere in the Registration Statement, to the extent
and for the periods indicated in their report, have been audited by Arthur
Andersen LLP, independent public accountants, and are incorporated herein, in
reliance upon the authority of such firm as experts in giving said report.

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Stokes & Bartholomew, P.A., Nashville, Tennessee. Certain legal
matters related to this offering hereby will be passed upon for the Underwriters
by Bass, Berry & Sims PLC, Nashville, Tennessee. Samuel W. Bartholomew, Jr., a
shareholder of Stokes & Bartholomew, P.A., is a director of the Company.

28
<PAGE> 30

AVAILABLE INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-3 (together, with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Common Stock offered
hereby. This Prospectus constitutes a part of the Registration Statement and
does not contain all of the information set forth in the Registration Statement
and the exhibits and schedules thereto, certain portions of which have been
omitted in accordance with the rules and regulations of the Commission.
Statements contained in the Prospectus as to any contracts, agreements or other
documents filed as an exhibit to or incorporated by reference in the
Registration Statement are qualified in all respects to the copy of such
contract, agreement or other document filed as an exhibit to the Registration
Statement. Each statement is qualified in its entirety by such reference. For
further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement, including the exhibits
and schedules thereto.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Copies of the Registration Statement (with exhibits), as well as
such reports, proxy statements and other information filed by the Company with
the Commission, may be inspected and copied at public reference facilities
maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following regional offices of the
Commission: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661; and
Seven World Trade Center, New York, New York 10048. Copies of such material may
be obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.

The Common Stock and the Warrants are listed on the NYSE and the
aforementioned material concerning the Company also may be inspected at the
offices of the NYSE, 20 Broad Street, New York, New York 10005. The Company's
principal offices are located at 102 Woodmont Blvd., Suite 800, Nashville,
Tennessee 37205, and its telephone number is (615) 292-3100.

29
<PAGE> 31

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed by the Company with the Commission
pursuant to the Exchange Act are incorporated and made a part of this Prospectus
by reference, except as superseded or modified herein:

(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1995;

(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996; and

(3) The description of the Common Stock and the Warrants contained in
the Registration Statement on Form 8-A dated December 15, 1994; and

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering contemplated hereby shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed documents
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such earlier statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

The Company undertakes to provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus has been delivered, on
the written or oral request of any such person, a copy of any or all of the
documents referred to above which have been or may be incorporated by reference
in the Prospectus, other than exhibits to such documents (unless such exhibits
are specifically incorporated by reference in such documents). Requests for such
copies should be directed to Darrell K. Massengale, Corrections Corporation of
America, 102 Woodmont Boulevard, Suite 800, Nashville, Tennessee 37205,
telephone number (615) 292-3100.

30
<PAGE> 32

[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 33
(photo of Company (photo of Company
counselor and inmate) counselor and inmate)

Education, life skills training
and substance abuse counseling
are integral components of
CCA facility programs
(caption)

Company ownership by employees
is a benefit and an incentive
(photo of several to keep quality and efficiency
Company corrections officers) in CCA's operations
(caption)

(photo of outside view
of a Company facility)

<PAGE> 34

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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDERS OR ANY UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY THE
SHARES OF COMMON STOCK OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH SOLICITATION OR OFFER. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 10
Capitalization........................ 11
Price Range of Common Stock and
Dividend Policy..................... 12
Business.............................. 13
Management............................ 20
Principal and Selling Stockholders.... 22
Description of Securities............. 24
Underwriting.......................... 27
Experts............................... 28
Legal Matters......................... 28
Available Information................. 29
Incorporation of Certain Documents by
Reference........................... 30
</TABLE>

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2,850,000 SHARES

[CORRECTIONS CORPORATION OF AMERICA LOGO]

COMMON STOCK
--------------------
PROSPECTUS
--------------------
J.C. BRADFORD & CO.

STEPHENS INC.

MAY 31, 1996

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