<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 4, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CORRECTIONS CORPORATION OF AMERICA
(Exact Name of Registrant as Specified in its Charter)
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<TABLE>
<S> <C>
TENNESSEE 62-1156308
(State or other Jurisdiction (I.R.S. Employer Identification Number)
of Incorporation)
10 BURTON HILLS BOULEVARD DOCTOR R. CRANTS
NASHVILLE, TENNESSEE 37215 CHIEF EXECUTIVE OFFICER
(615) 263-3000 10 BURTON HILLS BOULEVARD
(Address, including zip code, and telephone NASHVILLE, TENNESSEE 37215
number, including (615) 263-3000
area code, of registrant's principal executive (Name, address, including zip code, and
offices) telephone
number, including area code of agent for
service)
</TABLE>
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COPIES TO:
F. MITCHELL WALKER, JR.
BASS, BERRY & SIMS PLC
2700 FIRST AMERICAN CENTER
NASHVILLE, TN 37238
(615) 742-6200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement pursuant to Rule
415.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] ________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED PRICE FEE
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<S> <C> <C>
Common Stock $1.00 par value............................. $100,000,000 $27,800(1)
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</TABLE>
(1) Calculated pursuant to Rule 457(o) of the rules and regulations under the
Securities Act.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED NOVEMBER 4, 1998
PROSPECTUS
[LOGO]
$100,000,000
COMMON STOCK
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<TABLE>
<S> <C>
Corrections Corporation of America This is a prospectus for the offering of
10 Burton Hills Boulevard shares of common stock up to a total dollar
Nashville, TN 37215 amount of $100,000,000. We will determine
(615) 263-3000 amounts, prices and terms at the time of an
offering and may state these in a
We develop and manage private correctional supplement to this prospectus.
and detention facilities worldwide.
You should read this prospectus and any
prospectus supplement carefully before you
invest.
Our common stock is listed on the New York
Stock Exchange under the symbol "CCA."
</TABLE>
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INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE MATERIAL RISK FACTORS
BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
The date of this prospectus is , 1998
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
ABOUT THIS PROSPECTUS............... 1
WHERE YOU CAN FIND MORE
INFORMATION....................... 1
CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING INFORMATION....... 2
THE COMPANY......................... 3
General........................... 3
Recent Developments............... 3
Pending Merger................. 3
Recent Acquisition............. 3
Bank Financing................. 4
MATERIAL RISK FACTORS............... 5
Our Revenue and Profit Growth
Depend on Expansion............ 5
Risks of Leverage and Floating
Rate Debt...................... 5
Risks Associated with
Acquisitions................... 5
Ownership of Shares of the Common
Stock Involves Risks Inherent
in the Corrections and
Detention Industry............. 6
Short-Term Nature of Government
Contracts.................... 6
Dependence on Government
Funding...................... 6
Dependence on Government Agen-
cies for Inmates............. 6
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PAGE
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<S> <C>
Dependence on Ability to
Develop New Facilities and
Contracts.................... 6
Options to Purchase............ 7
Legal Proceedings.............. 7
Regulations.................... 7
Competition.................... 7
Our Success Depends on Senior
Management..................... 8
Relationship with Sodexho Alliance
S.A............................ 8
Possible Volatility of Stock
Price.......................... 8
Year 2000 Compliance Issues May
Have an Effect on our
Operations..................... 8
Risks Associated with the Proposed
Merger......................... 10
General........................ 10
Ineligibility to Vote on the
Proposed Merger.............. 11
USE OF PROCEEDS..................... 11
DESCRIPTION OF THE COMMON STOCK..... 11
PLAN OF DISTRIBUTION................ 11
LEGAL MATTERS....................... 12
EXPERTS............................. 12
</TABLE>
i
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (the "SEC") utilizing a "shelf" registration
process. Under this shelf process, we may, over the next two years, sell the
common stock described in this prospectus in one or more offerings up to a total
dollar amount of $100,000,000. This prospectus provides you with a general
description of the common stock we may offer. Each time we sell the common
stock, we will provide a prospectus supplement that will contain specific
information about the terms of that offering. The prospectus supplement may also
add, update or change information contained in this prospectus. You should read
both this prospectus and any prospectus supplements together with additional
information described under the heading WHERE YOU CAN FIND MORE INFORMATION.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. We also maintain a web
site at http://www.correctionscorp.com.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to other, previously filed documents. The information incorporated by
reference is an important part of this prospectus, and information that we file
later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934, as amended, from the date on the front of this prospectus
until we sell all of the common stock described in this prospectus.
- - Annual Report on Form 10-K/A for the year ended December 31, 1997, as amended
on September 16, 1998 and September 25, 1998;
- - Quarterly Reports on Form 10-Q/A for the period ended March 31, 1998, as
amended on June 5, 1998 and for the period ended June 30, 1998, as amended on
September 29, 1998;
- - Current Reports on Form 8-K filed April 22, 1998 and September 30, 1998; and
- - The description of the common stock contained in Form 8-B filed July 10, 1997.
You may request a copy of these filings at no cost, by writing or telephoning us
at the following address:
Corrections Corporation of America, 10 Burton Hills Boulevard, Nashville,
Tennessee 37215, (615) 263-3000, Attn: Peggy Lawrence.
You should rely only on the information incorporated by reference or provided in
this prospectus or any prospectus supplement. We have not authorized anyone else
to provide you with different information. We are not making an offer of the
common stock in any state where the offer is not permitted. You should not
assume that the information in this prospectus or a prospectus supplement is
accurate as of any date other than the date on the front of those documents.
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CAUTIONARY STATEMENT CONCERNING
FORWARD-LOOKING INFORMATION
This prospectus contains or incorporates by reference certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
which are intended to be covered by the safe harbors that these sections
created. Those statements include the discussions of management's expectations
concerning our future profitability, operating and growth strategy, including
strategic acquisitions, and assumptions regarding other matters. When used in
this prospectus, the words "believes," "expects," "anticipates," "intends,"
"estimates," "plans," and similar terms or expressions are intended to identify
forward-looking statements. In addition, we may include forward-looking
statements in various other documents issued in the future and in various oral
statements to securities analysts and potential investors. Investors are
cautioned that all forward-looking statements involve risks and uncertainties,
including the factors described in this prospectus under the heading MATERIAL
RISK FACTORS, which could cause the future results and shareholder values to
differ materially from those expressed in the forward-looking statements.
Although we believe that the assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could be inaccurate, and,
therefore, we cannot guarantee that the forward-looking statements included or
incorporated by reference in this prospectus will prove to be accurate. Because
of the significant uncertainties inherent in the forward-looking statements
included or incorporated by reference, the inclusion of such information is not
a representation by us or any other person that our objectives and plans will be
achieved. In addition, we do not intend to, and are not obligated to, update
these forward-looking statements after we distribute this prospectus, even if
new information, future events or other circumstances have made them incorrect
or misleading as of any future date.
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THE COMPANY
GENERAL
Corrections Corporation of America, a Tennessee corporation, is the largest
developer and manager of privatized correctional and detention facilities
worldwide. We manage facilities in 22 states, the District of Columbia, Puerto
Rico, Australia and the United Kingdom. As of October 27, 1998, we had contracts
to manage 78 correctional and detention facilities with a total of 64,956 beds.
We currently operate 65 facilities with a total of 47,142 beds. In addition, we
are currently developing 13 facilities and expanding nine facilities,
representing a total of 17,814 beds.
We provide services to government agencies including the integrated design,
construction and management of new correctional and detention facilities and the
redesign, renovation and management of existing facilities.
In addition, we own TransCor America, Inc., which provides inmate transportation
services to government agencies.
Our executive offices are located at 10 Burton Hills Boulevard, Nashville,
Tennessee 37215, our telephone number is (615) 263-3000, and we maintain a web
site at http://www.correctionscorp.com.
RECENT DEVELOPMENTS
Pending Merger
Under a merger agreement dated September 29, 1998, our Board of Directors and
the Board of Trustees of CCA Prison Realty Trust have agreed to merge the
companies. The combined company will be called Prison Realty Corporation. Prison
Realty Corporation will elect to be taxed, and expects to operate, so as to
qualify as a real estate investment trust, or a REIT, for federal income tax
purposes.
If the merger is completed, our shareholders will obtain the right to receive
0.875 share of Prison Realty Corporation common stock for each share of the
common stock they own. Shareholders of CCA Prison Realty Trust will receive 1.0
share of Prison Realty Corporation common stock for each CCA Prison Realty Trust
common share they own and 1.0 share of Prison Realty Corporation 8.0% Series A
Cumulative Preferred Stock for each CCA Prison Realty Trust 8.0% Series A
Cumulative Preferred Share they own.
The merger and the merger agreement are more fully described in our Current
Report on Form 8-K filed with the SEC on September 30, 1998, which is
incorporated by reference. In connection with the merger, we have prepared a
joint proxy statement-prospectus with CCA Prison Realty Trust and Prison Realty
Corporation, which is part of the registration statement on Form S-4 filed by
Prison Realty Corporation on September 30, 1998, as later amended.
Recent Acquisition
On April 17, 1998, we acquired all of the issued and outstanding capital stock
of eight subsidiaries of U.S. Corrections Corporation. As a result, we acquired
contracts to
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manage four currently operating correctional and detention facilities in
Kentucky and one in North Carolina, each of which is owned by CCA Prison Realty
Trust, as well as one each in Florida and Texas, each of which is owned by
government entities of Florida and Texas. We currently lease the four Kentucky
facilities from CCA Prison Realty Trust under the terms of a master lease. The
North Carolina facility is owned by CCA Prison Realty Trust, which leases it to
the State of North Carolina. We also acquired the right to enter into contracts
to manage a North Carolina facility owned by CCA Prison Realty Trust that is
currently under construction. We expect to manage the uncompleted North Carolina
facility for the State of North Carolina, which will lease the facility from CCA
Prison Realty Trust. The total number of beds currently operated or under
construction related to the acquisition is 5,543.
Bank Financing
On June 24, 1998, we entered into an amended and restated credit agreement with
a syndication of banks arranged by First Union National Bank, NationsBank, N.A.,
and the Canadian Imperial Bank of Commerce, which increased our existing
revolving credit facility from $170.0 million to $350.0 million. The increase to
our credit facility allows us to continue our budgeted expansion plans during
the interim period prior to the completion of the merger, as well as provide for
working capital and funds for general corporate purposes. Our credit facility
will mature on the earlier of the date of the completion of the merger or
September 6, 1999. Our credit facility bears interest generally at a floating
rate based on prevailing interest rates. As of October 27, 1998, we had a total
indebtedness of approximately $348.8 million, including $116.8 million committed
pursuant to letters of credit issued under our credit facility.
4
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MATERIAL RISK FACTORS
You should carefully consider the following factors and other information in
this prospectus before deciding to invest in the common stock.
OUR REVENUE AND PROFIT GROWTH DEPEND ON EXPANSION
Our growth depends on our ability to obtain contracts to manage new correctional
and detention facilities and to keep existing management contracts. The rate of
construction of new facilities and our potential for growth will depend on
several factors, including crime rates and sentencing patterns in the United
States and other countries in which we operate, government and public acceptance
of the concept of privatization of correctional and detention facilities, the
number of facilities available for privatization, and our ability to obtain
contracts and to make new facilities profitable. In addition, certain
jurisdictions have recently required the successful bidder for development
projects or management contracts to make a significant capital investment in
connection with the financing of a particular project. We will not be able to
secure these types of contracts unless we have significant capital resources. We
cannot guarantee that we will be able to obtain additional contracts to develop
or manage new facilities on favorable terms.
RISKS OF LEVERAGE AND FLOATING RATE DEBT
Our current total indebtedness is approximately $348.8 million under our credit
facility, which bears interest generally at a floating rate based on prevailing
interest rates. Consequently, this substantial interest expense has increased
our exposure to the risks associated with debt financing. Our substantial
leverage may have important consequences, including the following: (1) our
ability to obtain additional financing for purchases of companies, working
capital, capital expenditures or other purposes may be affected or such
financing may not be on terms favorable to us; (2) a substantial decrease in
operating cash flow or an increase in our expenses could make it difficult for
us to meet our debt service requirements and force us to modify our operations;
(3) our higher level of debt and resulting interest expense may place us at a
competitive disadvantage with respect to certain competitors with lower amounts
of indebtedness; and (4) our greater leverage may make us more vulnerable to a
downturn in our business or the economy generally. Moreover, the floating
interest rates on these debt obligations could result in higher interest rates,
thereby increasing interest expense on our floating rate debt.
RISKS ASSOCIATED WITH ACQUISITIONS
We intend to grow in two ways: through the opening of additional correctional
and detention facilities and through the purchase of other companies. We cannot
guarantee that we will be able to identify, acquire or profitably manage
companies that we purchase without substantial costs, delays or other problems.
In addition, we cannot guarantee that companies we purchase in the future will
be profitable or that they will become profitable enough to justify our
investment in them. Risks involved in the acquisition of new companies may
include adverse short-term effects on our 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
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of these risks could have a material adverse effect on our financial condition
and results of operations.
OWNERSHIP OF SHARES OF THE COMMON STOCK INVOLVES RISKS INHERENT IN THE
CORRECTIONS AND DETENTION INDUSTRY
Short-Term Nature of Government Contracts.
We typically enter into facility management contracts with government agencies
with terms of up to five years. These contracts typically permit the government
agencies to renew the contracts for one or more additional terms after the
initial terms expire. We cannot guarantee that government agencies will renew
their contracts in the future. Government agencies typically may also terminate
contracts at any time without cause by giving written notice to us.
Dependence on Government Funding.
Our cash flow is subject to the receipt of sufficient funding of and timely
payment by contracting government entities. If a government agency does not
receive sufficient funding to cover its obligations under a management contract,
the contract may be terminated, or the management fee may be deferred or
reduced. Any delays in payment by government agencies could adversely affect our
cash flow.
Dependence on Government Agencies for Inmates.
We depend on government agencies to supply our facilities with a sufficient
number of inmates to meet the capacities of the facilities. The failure of these
agencies to supply enough inmates to meet these capacities may adversely affect
our financial condition and results of operations.
Dependence on Ability to Develop New Facilities and Contracts.
Our success in obtaining new awards and contracts may depend upon our ability to
locate land that can be leased or purchased under favorable terms. Otherwise
desirable locations may be in or near populated areas, and residents of those
areas may generate legal action or other forms of opposition to the development
of a new correctional or detention facility. Moreover, the private corrections
industry is subject to public scrutiny. An escape, riot or other disturbance at
any privately managed correctional or detention facility may result in negative
publicity for us and the private corrections industry in general. In addition,
when government agencies are evaluating whether they will award contracts to us,
opposition from organized labor unions, including unions of state correctional
and detention facility employees, has increased. Any public opposition may make
it more difficult for us to keep or renew existing contracts, or to obtain new
contracts or sites on which to operate new correctional or detention facilities.
6
<PAGE> 10
Options to Purchase.
When we buy a correctional or detention facility from a government entity or
develop a facility for a government entity, the government entity may require us
to grant it an option to purchase the facility back from us at a price at or
below fair market value. We may, therefore, be required to sell a facility to a
government entity at less than fair market value if one of these options is
exercised. Additionally, if we sell a facility to CCA Prison Realty Trust or to
another purchaser while a government option to purchase the facility exists, we
may be required to adjust the sales price paid by the purchaser.
Legal Proceedings.
Our ownership and operation of correctional and detention facilities could
expose us to potential third party claims or litigation by prisoners or other
persons related to personal injury or other damages resulting from contact with
a facility, its managers, personnel, or other prisoners, including damages
arising from a prisoner's escape from, or a disturbance or riot at, one of our
facilities. In addition, as an owner of real property, we may be subject to
certain proceedings relating to personal injury of persons at our facilities. We
may be held responsible under state laws for claims based on personal injury or
property damage.
Regulations.
The corrections and detention industry 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. Our contracts with government agencies typically
include extensive reporting requirements and require supervision and on-site
monitoring by representatives of contracting government agencies. State law also
typically requires correctional officers to meet certain training standards.
States such as Florida and Texas deem prison guards to be peace officers and
require our 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 us 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 our financial condition and results of operation.
Furthermore, our current and future operations 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 additional regulations could have a material
adverse effect on our financial condition and results of operation.
Competition.
We compete primarily on the basis of the quality and range of the services we
offer, our experience in managing facilities, the reputation of our personnel
and our ability to design, finance and construct new facilities. Other entities
may easily enter the corrections and detention industry without substantial
capital investment or experience in management of
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correctional or detention facilities. Private sector competitors include, among
others, Wackenhut Corrections Corporation, Correctional Services Corporation,
Inc., Group 4 International Corrections Service and Securicor Group. Some
international competitors have greater resources than we have. We also compete
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, we compete with government agencies that are
responsible for correctional facilities.
OUR SUCCESS DEPENDS ON SENIOR MANAGEMENT
The success of our operations has been and will continue to be highly dependent
upon the continued services of senior management. The loss of one or more of the
Company's senior management could have a material adverse effect on our
business.
RELATIONSHIP WITH SODEXHO ALLIANCE S.A.
Sodexho Alliance S.A. beneficially owns 15.5% of our common stock. Accordingly,
Sodexho Alliance S.A. may have a significant influence over our affairs. Sodexho
Alliance S.A. has agreed to limit its ownership interest 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. If the merger with CCA Prison
Realty Trust is not completed and we issue additional common stock, Sodexho
Alliance S.A. has a preemptive right to purchase additional shares of common
stock or securities convertible or exchangeable for common stock so that it will
maintain a percentage ownership equal to 20% of the common stock on a fully
diluted basis.
POSSIBLE VOLATILITY OF STOCK PRICE
The prices at which the common stock will trade will be determined by the
marketplace and may be influenced by many factors, including the liquidity of
the market for the common stock, investor perception of our business and of the
corrections and detention industry generally, and general economic and market
conditions. In addition, the stock market historically has experienced
volatility which has affected the market price of securities of many companies
and which has sometimes been unrelated to their operating performance. In
addition, factors such as announcements of new facilities or acquisitions by us
or our competitors or third parties, as well as market conditions in the
industry, may have a significant impact on the market price of the common stock.
The market price may also be affected by movements in prices of stocks in
general. In addition, the exercise of options to purchase shares of common stock
may cause dilution to existing shareholders.
YEAR 2000 COMPLIANCE ISSUES MAY HAVE AN EFFECT ON OUR OPERATIONS
The Year 2000 issue generally relates to computer programs that were written
using two digits rather than four to define the applicable year. In those
programs, the year 2000 may be incorrectly identified as the year 1900, which
can result in a system failure or miscalculations causing a disruption of
operations, including a temporary inability to process transactions, prepare
financial statements or engage in other normal business activities. The
following discussion identifies actions we have taken to assess and address the
Year 2000 issues facing us.
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Our Year 2000 compliance program is focused on addressing Year 2000 readiness in
the following areas: (1) our information technology hardware and software; (2)
material non-information technology systems; (3) Year 2000 compliance of third
parties with which we have a material relationship; (4) systems used to track
and report assets not owned by us such as inmate funds and personal effects; and
(5) development of contingency plans.
We have completed an initial assessment and remediation of our key information
technology systems including our client server and minicomputer hardware and
operating systems and critical financial and nonfinancial applications.
Remediation efforts include upgrades of our minicomputer hardware and critical
financial applications. Based on this initial assessment and remediation effort,
we believe that these key information technology systems are "Year 2000
compliant." However, we cannot guarantee that coding errors or other defects
will not be discovered in the future. We are in the process of evaluating the
remaining noncritical information technology systems for Year 2000 compliance.
We manage and operate facilities we own, facilities we lease from CCA Prison
Realty Trust, and facilities owned by and leased from government entities. We
are currently evaluating whether the material non-information technology systems
such as security control equipment, fire suppression equipment and other
physical plant equipment at the facilities we own and the facilities we lease
from CCA Prison Realty Trust are Year 2000 compliant. We will also request that
the owners of the government facilities we manage provide Year 2000
certification for material information technology and non-information technology
systems at those facilities.
All correctional facilities we manage, as a part of general operating policy,
have existing contingency plans that are deployed in the event key operational
systems such as security control equipment fail such as when a power failure
occurs. In addition, the correctional facilities' key security systems are "fail
secure" systems which automatically "lock down" and are then operated manually
if the related electronic components fail. Therefore, management believes no
additional material risks associated with the physical operation of correctional
facilities are created as a result of potential Year 2000 issues.
We depend upon the proper functioning of third-party computer and
non-information technology systems. These third parties include government
agencies for which we provide services, commercial banks and other lenders,
construction contractors, architects and engineers, and vendors such as
providers of food supplies and services, inmate medical services,
telecommunications and utilities. We have initiated communications with third
parties with whom we have important financial or operational relationships to
determine the extent to which they are vulnerable to the Year 2000 issue. We
have not yet received sufficient information from all parties about their
remediation plans to predict the outcome of their efforts.
If third parties with whom we interact have Year 2000 problems that are not
remedied, the following problems could result: (1) in the case of construction
contractors and architects and engineers, in the delayed construction of
correctional facilities; (2) in the case of vendors, in disruption of important
services upon which we depend, such as medical services, food services and
supplies, telecommunications and electrical power; (3) in the case of government
agencies, in delayed collection of accounts receivable, potentially resulting in
a shortage of cash needed for operations; and (4) in the case of
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banks and other lenders, in the disruption of capital flows, potentially
resulting in a shortage of cash needed for operations.
We are also evaluating Year 2000 compliance of other software applications used
to track and report assets that are not our property. This includes applications
used to track and report inmate funds and personal effects.
We are currently developing a contingency plan that is expected to address
financial and operational problems that might arise on and around January 1,
2000. This contingency plan would include establishing additional sources of
liquidity we could draw upon in the event of systems disruption and identifying
alternative vendors and back-up processes that do not rely on computers,
whenever possible. Management expects to have the contingency plan completed by
mid-year 1999.
We have incurred and expect to continue to incur expenses allocable to internal
staff, as well as costs for outside consultants, computer system remediation and
replacement and non-information technology system remediation and replacement,
including validation, in order to achieve Year 2000 compliance. We currently
estimate that these costs will total approximately $4.0 million. Of this total,
it is estimated that $2.5 million will be for the repair of software problems
and $1.5 million will be for the replacement of problem systems and equipment.
As of August 31, 1998, we had incurred $500,000 in Year 2000 program costs.
These costs are expensed as incurred. Management believes there will be no
material impact on our financial condition or results of operations resulting
from other information technology projects being delayed due to Year 2000
efforts.
The costs of our Year 2000 compliance program and the date on which we plan to
complete it are based on current estimates, which reflect numerous assumptions
about future events, including the continued availability of certain resources,
the timing and effectiveness of third-party remediation plans and other factors.
We cannot guarantee that these estimates will be achieved, and actual results
could differ materially from our plans. Specific factors that might cause such
material differences include, but are not limited to, the availability and cost
of personnel trained in this area, the ability to locate and correct relevant
computer source codes and embedded technology, the results of internal and
external testing and the timeliness and effectiveness of remediation efforts of
third parties.
RISKS ASSOCIATED WITH THE PROPOSED MERGER
General
Our Board of Directors has agreed to merge with CCA Prison Realty Trust as
described under the heading THE COMPANY -- Recent Developments -- Pending
Merger. If the merger is completed, investors who purchase common stock will
obtain the right to receive common stock of Prison Realty Corporation.
Accordingly, if completed, the merger involves additional risks to investors who
purchase the common stock. The merger, the merger agreement, the material risk
factors and the material federal income tax consequences relating to the merger,
among other things, are more fully described in our Current Report on Form 8-K
filed with the SEC on September 30, 1998, which is incorporated by reference.
10
<PAGE> 14
Ineligibility to Vote on the Proposed Merger
Our Board of Directors has set the close of business on October 14, 1998 as the
record date for the special meeting of shareholders to be held on December 1,
1998 for the purpose of considering a proposal to approve the merger and the
merger agreement. Only shareholders who own common stock on the record date will
be entitled to notice of and to vote at the special meeting. As a result,
investors who purchase the common stock after the record date will not be able
to vote on the merger and the merger agreement at the special meeting. They
will, however, be subject to the outcome of the vote.
USE OF PROCEEDS
Unless otherwise specified in the applicable prospectus supplement, the Company
intends to use the net proceeds from the sale of the common stock for general
corporate purposes including, without limitation, repayment of indebtedness,
financing capital expenditures and working capital. Pending any such uses, we
may invest the net proceeds from the sale of the common stock in short-term
investment grade instruments, interest bearing bank accounts, certificates of
deposit, money market securities, U.S. Government securities or mortgage-backed
securities guaranteed by federal agencies or may use them to reduce short-term
indebtedness.
DESCRIPTION OF THE COMMON STOCK
As of October 27, 1998, there were 150,000,000 shares of common stock
authorized, of which 84,130,275 shares of common stock were issued and
outstanding. Our Form 8-B filed with the SEC on July 10, 1997 describes the
common stock. The common stock is listed on the New York Stock Exchange under
the symbol "CCA."
Each share of common stock is entitled to one vote on all matters submitted to a
vote of the shareholders and cumulative voting is prohibited. The shareholders
are entitled to receive ratably dividends declared by our Board of Directors,
subject to the payment of any preferential dividends to the holders of any
outstanding preferred stock. If we liquidate, dissolve or wind-up our business,
the shareholders are entitled to share ratably in all assets remaining after we
pay our liabilities, subject to prior distribution rights of the holders of any
outstanding preferred stock. Other than the contractual rights granted to
Sodexho Alliance, S.A., the shareholders have no preemptive or conversion rights
or other subscription rights, and there are no redemption or sinking fund
provisions that apply to the common stock. All currently outstanding shares of
common stock are and any additional shares of common stock we issue will be
fully paid and nonassessable.
PLAN OF DISTRIBUTION
We may offer the common stock through underwriters or dealers, directly to one
or more purchasers, through agents or through a combination of any of these
methods. The applicable prospectus supplement will name any underwriter or agent
involved in the sale of the common stock and will provide the price, fee or
commission paid or discount given, or will provide the information required to
calculate the price, fee, commission or discount. In addition, the prospectus
supplement will provide the net proceeds to the Company from a sale of the
common stock.
11
<PAGE> 15
We may distribute the common stock in one or more transactions, including block
transactions on the New York Stock Exchange or we may distribute the common
stock in the over-the-counter market or in negotiated transactions if we follow
the applicable rules of the New York Stock Exchange.
We, or the purchasers of the common stock, may pay underwriters or agents
discounts, concessions or commissions. Underwriters may sell common stock to or
through dealers, and dealers may receive discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agents. Underwriters, dealers and agents who participate in the
distribution of the common stock may be deemed to be underwriters under the
Securities Act of 1933, as amended (the "Securities Act"), and any discounts or
commissions they receive, and any profit on the sale of the common stock they
realize, may be deemed to be underwriting discounts and commissions under the
Securities Act.
Any common stock sold pursuant to this prospectus will be listed on the New York
Stock Exchange, subject to official notice of issuance.
We may enter into agreements to indemnify underwriters, dealers and agents who
participate in the distribution of the common stock against certain liabilities,
including liabilities under the Securities Act.
Underwriters, dealers and agents may engage in transactions with or perform
services for us in the ordinary course of business.
In some states, common stock will be sold only through registered or licensed
brokers or dealers in order to comply with the securities laws of those states.
In addition, in some states the common stock may not be sold unless it has been
registered or qualified for sale in that state or an exemption from the
registration or qualification requirement is available and is complied with.
LEGAL MATTERS
Certain legal matters with respect to the securities offered hereby will be
passed on for the Company by Bass, Berry & Sims PLC, Nashville, Tennessee, and,
if applicable, for the underwriters or agents by counsel to be identified in the
prospectus supplement.
EXPERTS
The consolidated financial statements of the Company and its subsidiaries as of
December 31, 1997 and 1996, and for each of the years in the three year period
ended December 31, 1997, included in its annual report on Form 10-K/A, which is
incorporated by reference herein, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included or incorporated by reference therein and incorporated
herein by reference in reliance upon the authority of said firm as experts in
giving said reports.
The consolidated financial statements of CCA Prison Realty Trust as of December
31, 1997 and for the period from July 17, 1997 through December 31, 1997,
included in CCA Prison Realty Trust's annual report on Form 10-K/A, which is
incorporated by reference
12
<PAGE> 16
in Corrections Corporation of America's current report on Form 8-K, which is
incorporated by reference herein, have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report with respect
thereto, and are included or incorporated by reference therein and incorporated
herein by reference in reliance upon the authority of said firm as experts in
giving said reports.
13
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration Fee -- Securities and Exchange Commission...... $ 27,800
Printing and Engraving Expenses............................. 15,000
Accounting Fees and Expenses................................ 50,000
Legal Fees and Expenses..................................... 50,000
--------
Total............................................. $142,800
========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Tennessee Business Corporation Act (the "TBCA") provides that a corporation
may indemnify any of its directors and officers against liability incurred in
connection with a proceeding if (i) the director or officer acted in good faith;
(ii) the director or officer reasonably believed, in the case of conduct in an
official capacity, that his or her conduct was in the corporation's best
interests, or, in all other cases, that his or her conduct was not opposed to
the best interests of the corporation; and (iii) in connection with any criminal
proceeding, the director or officer had no reasonable cause to believe his or
her conduct was unlawful. In actions brought by or in the right of the
corporation, however, the TBCA provides that no indemnification may be made if
the director or officer was adjudged liable to the corporation. The TBCA also
provides that in connection with any proceeding charging improper personal
benefit to a director or officer, no indemnification may be made if such
director or officer is adjudged liable on the basis that such personal benefit
was improperly received. In cases where the director or officer is wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which the director or officer was a party because the director or officer is or
was a director or officer of the corporation, the TBCA mandates that the
corporation indemnify the director or officer against reasonable expenses
incurred in connection with the proceeding. Notwithstanding the foregoing, the
TBCA provides that a court of competent jurisdiction, upon application, may
order that a director or officer be indemnified for reasonable expenses if, in
consideration of all relevant circumstances, the court determines that such
individual is fairly and reasonably entitled to indemnification, even if such
director or officer (i) was adjudged liable to the corporation in a proceeding
by or in the right of the corporation; (ii) was adjudged liable on the basis
that personal benefit was improperly received; or (iii) breached his or her duty
of care to the corporation. The Company's Bylaws provide that each director and
officer of the Company may be indemnified by the Company to the extent allowed
by Tennessee law.
The Company's Charter, as amended, provides that to the fullest extent permitted
by Tennessee law, no director shall be personally liable to the Company or its
shareholders for monetary damages for breach of any fiduciary duty to the
Company. Under the Company's Charter and the TBCA, the Company's directors are
relieved of personal liability to the Company or its shareholders for monetary
damages for breach of fiduciary duty as directors, except for liability arising
from a judgment or other final adjudication establishing (i) any breach of a
director's duty of loyalty, (ii) acts or omissions not in
II-1
<PAGE> 18
good faith or which involve intentional misconduct or a knowing violation of
law, or (iii) any unlawful distributions.
The Company also maintains officers' and directors' liability insurance, which
insures against liabilities that the officers and directors of the Company may
incur in such capacities.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement (to be filed by amendment or
on a Current Report on Form 8-K incorporated herein by
reference).
2.1 -- Amended and Restated Agreement and Plan of Merger dated
September 29, 1998 (incorporated by reference to Exhibit 2.1
to the Company's Current Report on Form 8-K filed with the
Commission on September 30, 1998).
4.1 -- Charter of the Company (incorporated by reference to Exhibit
3.1 to the Company's Registration Statement on Form 8-B
filed with the Commission on July 10, 1997).
4.2 -- Bylaws of the Company (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form 8-B
filed with the Commission on July 10, 1997).
4.3 -- Specimen Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form
S-1 (Registration No. 33-8052)).
5.1 -- Opinion of Bass, Berry & Sims PLC
23.1 -- Consent of Bass, Berry & Sims PLC (included in Exhibit 5.1).
23.2 -- Consent of Arthur Andersen LLP
23.3 -- Consent of Arthur Andersen LLP
24.1 -- Power of Attorney (included on the signature pages of this
registration statement)
</TABLE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities offered hereby, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
provided, however, that the undertakings in paragraph (i) and (ii) above do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or
II-2
<PAGE> 19
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered hereby which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, the Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Nashville, state of Tennessee, on November 4, 1998.
CORRECTIONS CORPORATION OF AMERICA
By: /s/ DOCTOR R. CRANTS
---------------------------------
Doctor R. Crants
Chairman of the Board,
Chief Executive Officer and
President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Doctor
R. Crants and Darrell K. Massengale, and each of them, the true and lawful
attorneys-in-fact and agents of the undersigned, with full power of substitution
and resubstitution, for and in the name, place and stead of the undersigned, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement and any registration statement
relating to the same offering as the registration statement that is to be
effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933,
as amended, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, and hereby
grants to such attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done, as fully to all intents and purposes as the undersigned might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DOCTOR R. CRANTS Chairman of the November 4, 1998
- ----------------------------------------------------- Board; President;
Doctor R. Crants Chief Executive
Officer; and
Director
(Principal
Executive
Officer)
</TABLE>
II-4
<PAGE> 21
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DARRELL K. MASSENGALE Chief Financial November 4, 1998
- ----------------------------------------------------- Officer and
Darrell K. Massengale Secretary
(Principal
Financial and
Accounting
Officer)
Chairman Emeritus November , 1998
- ----------------------------------------------------- and Director
Thomas W. Beasley
/s/ JOSEPH F. JOHNSON, JR. Director November 4, 1998
- -----------------------------------------------------
Joseph F. Johnson, Jr.
Director November , 1998
- -----------------------------------------------------
R. Clayton McWhorter
/s/ SAMUEL W. BARTHOLOMEW, JR. Director November 4, 1998
- -----------------------------------------------------
Samuel W. Bartholomew, Jr.
/s/ JEAN-PIERRE CUNY Director November 4, 1998
- -----------------------------------------------------
Jean-Pierre Cuny
/s/ LUCIUS E. BURCH, III Director November 4, 1998
- -----------------------------------------------------
Lucius E. Burch, III
</TABLE>
II-5
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<C> <C> <S>
1.1 -- Form of Underwriting Agreement (to be filed by amendment or
on a Current Report on Form 8-K incorporated herein by
reference).
2.1 -- Amended and Restated Agreement and Plan of Merger dated
September 29, 1998 (incorporated by reference to Exhibit 2.1
to the Company's Current Report on Form 8-K filed with the
Commission on September 30, 1998).
4.1 -- Charter of the Company (incorporated by reference to Exhibit
3.1 to the Company's Registration Statement on Form 8-B
filed with the Commission on July 10, 1997).
4.2 -- Bylaws of the Company (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form 8-B
filed with the Commission on July 10, 1997).
4.3 -- Specimen Stock Certificate (incorporated by reference to
Exhibit 4.1 to the Company's Registration Statement on Form
S-1 (Registration No. 33-8052)).
5.1 -- Opinion of Bass, Berry & Sims PLC
23.1 -- Consent of Bass, Berry & Sims PLC (included in Exhibit 5.1).
23.2 -- Consent of Arthur Andersen LLP
23.3 -- Consent of Arthur Andersen LLP
24.1 -- Power of Attorney (included on the signature pages of this
registration statement)
</TABLE>
<PAGE> 1
Exhibit 5.1
B A S S, B E R R Y & S I M S P L C
A PROFESSIONAL LIMITED LIABILITY COMPANY
ATTORNEYS AT LAW
<TABLE>
<S> <C>
2700 FIRST AMERICAN CENTER 1700 RIVERVIEW TOWER
NASHVILLE, TENNESSEE 37238-2700 POST OFFICE BOX 1509
TELEPHONE (615) 742-6200 KNOXVILLE, TENNESSEE 37901-1509
TELECOPIER (615) 742-6293 TELEPHONE (423) 521-6200
TELECOPIER (423) 521-6234
</TABLE>
November 4, 1998
Corrections Corporation of America
10 Burton Hills Boulevard
Nashville, TN 37215
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as your counsel in connection with your preparation of a
Registration Statement on Form S-3 (the "Registration Statement") to be filed by
you with the Securities and Exchange Commission on November 4, 1998, covering up
to $100,000,000 million of common stock, par value $1.00 per share, (the "Common
Stock"), of Corrections Corporation of America (the "Company") to be sold on the
terms set forth in the Registration Statement.
In connection with this opinion, we have examined and relied upon such
records, documents, certificates, and other instruments as in our judgment are
necessary or appropriate in order to express the opinions hereinafter set forth
and have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, and the conformity to original documents
of all documents submitted to us as certified or photostatic copies.
Based on the foregoing and such other matters as we have deemed
relevant, we are of the opinion that the shares of Common Stock to be sold by
the Company will be validly issued, fully paid, and nonassessable when payment
therefor is received upon the terms established by the Company's Board of
Directors.
Very truly yours,
/s/ Bass, Berry & Sims PLC
<PAGE> 1
Exhibit 23.2
Consent of Independent Auditors
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of Corrections Corporation
of America of our report dated February 16, 1998 relating to the financial
statements of Corrections Corporation of America included in Corrections
Corporation of America's Form 10-K, as amended, for the year ended December 31,
1997 and to all references to our Firm included in or incorporated by reference
in this registration statement.
/s/ Arthur Andersen LLP
Nashville, Tennessee
November 2, 1998
<PAGE> 1
Exhibit 23.3
Consent of Independent Auditors
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement on Form S-3 of Corrections Corporation
of America of our report dated January 9, 1998, relating to the financial
statements of CCA Prison Realty Trust included in CCA Prison Realty Trust's Form
10-K, as amended, for the year ended December 31, 1997 incorporated by reference
in Correction Corporation of America's Current Report on Form 8-K and all
references to the Firm included in or incorporated by reference in this
registration statement.
/s/ Arthur Andersen LLP
Nashville, Tennessee
November 2, 1998
