<PAGE>   1
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
               FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1998

                                       OR

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                         SECURITIES EXCHANGE ACT OF 1934
            FOR THE TRANSACTION PERIOD FROM __________ TO __________.

                         COMMISSION FILE NUMBER: 1-13560


                       CORRECTIONS CORPORATION OF AMERICA
             (Exact name of Registrant as specified in its charter)

           TENNESSEE                                      62-1156308
-------------------------------                --------------------------------
(State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                      Identification Number)

        10 BURTON HILLS BOULEVARD
          NASHVILLE, TENNESSEE                               37215
----------------------------------------       --------------------------------
(Address of principal executive offices)                  (Zip Code)


                                 (615) 263-3000
-------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                      NONE
-------------------------------------------------------------------------------
      (Former name, address and fiscal year if changed since last report.)



Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes  X    No
                                       ---      ---

                                   84,214,275
-------------------------------------------------------------------------------

    (Outstanding shares of the issuer's common stock as of November 1, 1998.)


                                                                              1
<PAGE>   2


                       CORRECTIONS CORPORATION OF AMERICA

           FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998

                                      INDEX



<TABLE>
<CAPTION>
                                                                                    Page
PART I. FINANCIAL INFORMATION:                                                     Number
                                                                                   ------

<S>          <C>                                                                   <C>
  Item 1.    Financial Statements

             Consolidated Balance Sheets
             September 30, 1998 (Unaudited) and December 31, 1997                      3

             Consolidated Statements of Operations
             Three months ended September 30, 1998 and 1997
             (Unaudited)                                                               4

             Consolidated Statements of Operations
             Nine months ended September 30, 1998 and 1997
             (Unaudited)                                                               5

             Consolidated Statements of Cash Flows
             Nine months ended September 30, 1998 and 1997
             (Unaudited)                                                             6-7

             Notes to Consolidated Financial Statements
             (Unaudited)                                                            8-10

  Item 2.    Management's Discussion and Analysis of Financial
             Condition and Results of Operations                                   10-14

  Item 3.    Quantitative and Qualitative Disclosures About Market Risk               14


PART II.     OTHER INFORMATION

  Item 1.    Legal Proceedings                                                        15

  Item 2.    Changes in Securities and Use of Proceeds                                15

  Item 3.    Defaults Upon Senior Securities                                          15

  Item 4.    Submission of Matters to a Vote of Security Holders                      15

  Item 5.    Other Information                                                        15

  Item 6.    Exhibits and Reports on Form 8-K                                      15-16
</TABLE>


                                                                              2
<PAGE>   3


PART I.  FINANCIAL INFORMATION
Item 1.  FINANCIAL STATEMENTS

               CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
<TABLE>
<CAPTION>
                                                      September 30,   December 31,
                                                           1998           1997
                                                      -------------   ------------
ASSETS                                                 (Unaudited)

<S>                                                   <C>             <C>
Current assets:
   Cash and cash equivalents                            $ 27,627      $ 136,147
   Accounts receivable, net of allowances                140,291         89,822
   Prepaid expenses                                        8,032          4,868
   Other                                                   3,317          2,585
                                                        --------      ---------

      Total current assets                               179,267        233,422

Property and equipment, net                              613,892        266,493
Other long-term assets:
   Notes receivable                                        1,151         59,264
   Investment in direct financing leases                  75,217         90,184
   Deferred tax assets                                    14,627         10,195
   Other assets                                           60,773         38,382
                                                        --------      ---------

                                                        $944,927      $ 697,940
                                                        ========      =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                     $ 74,299      $  32,094
   Accrued salaries and wages                             12,104          9,778
   Income taxes payable                                      614         14,128
   Deferred tax liabilities                                2,799          1,229
   Other accrued expenses                                 21,553         20,361
   Current portion of long-term debt                         108          5,847
   Current portion of deferred gain on real estate        13,294         13,223
                                                        --------      ---------

       Total current liabilities                         124,771         96,660

Long-term debt, net of current portion                   292,832        127,075
Deferred gain on real estate transactions                114,051        122,529
Other noncurrent liabilities                                  --          3,600
                                                        --------      ---------

       Total liabilities                                 531,654        349,864
                                                        --------      ---------

Stockholders' equity:
   Preferred stock                                           376            380
   Common stock                                           83,109         80,230
   Additional paid-in capital                            226,494        215,833
   Retained earnings                                     103,294         92,475
   Treasury stock, at cost                                    --        (40,842)
                                                        --------      ---------

      Total stockholders' equity                         413,273        348,076
                                                        --------      ---------

                                                        $944,927      $ 697,940
                                                        ========      =========
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.


                                                                              3
<PAGE>   4


              CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                     (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                               Three months ended
                                                                  September 30
                                                           --------------------------
                                                              1998            1997
                                                           ---------       ----------

<S>                                                        <C>             <C>      
Revenues                                                   $ 179,136       $ 127,069

Expenses:
   Operating                                                 124,794          93,062
   Lease                                                      15,702           6,826
   General and administrative                                  5,720           4,267
   Depreciation and amortization                               4,386           3,011
                                                           ---------       ---------

   Total expenses                                            150,602         107,166
                                                           ---------       ---------

Operating income                                              28,534          19,903
Interest income, net                                            (112)         (1,625)
                                                           ---------       ---------


Income before income taxes                                    28,646          21,528
Provision for income taxes                                     7,544           7,863
                                                           ---------       ---------

Net income                                                 $  21,102       $  13,665
                                                           =========       =========


Net income per common share:
   Basic                                                   $    0.26       $    0.18
                                                           =========       =========

   Diluted                                                 $    0.24       $    0.15
                                                           =========       =========

Weighted average common shares outstanding:
   Basic                                                      80,970          77,721
                                                           =========       =========

   Diluted                                                    89,726          90,606
                                                           =========       =========
</TABLE>


The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.


                                                                              4
<PAGE>   5


              CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                     (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                         Nine months ended
                                                                            September 30
                                                                     -------------------------

                                                                        1998            1997
                                                                     ---------       ---------

<S>                                                                  <C>             <C>      
Revenues                                                             $ 484,505       $ 325,931

Expenses:
   Operating                                                           339,136         234,034
   Lease                                                                40,638           9,123
   General and administrative                                           16,183          11,558
   Depreciation and amortization                                        11,673          10,941
                                                                     ---------       ---------

   Total expenses                                                      407,630         265,656
                                                                     ---------       ---------

Operating income                                                        76,875          60,275
Interest income, net                                                    (5,323)           (273)
                                                                     ---------       ---------

Income before income taxes                                              82,198          60,548
Provision for income taxes                                              21,565          23,276
                                                                     ---------       ---------

Net income                                                           $  60,633       $  37,272
                                                                     =========       =========


Net income per common share:
   Basic                                                             $    0.76       $    0.49
                                                                     =========       =========

   Diluted                                                           $    0.68       $    0.42
                                                                     =========       =========

Weighted average common shares outstanding:
   Basic                                                                79,924          76,525
                                                                     =========       =========

   Diluted                                                              89,728          89,897
                                                                     =========       =========
</TABLE>




The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.


                                                                              5
<PAGE>   6


              CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                 Nine months ended
                                                                                    September 30
                                                                             -------------------------
                                                                                1998            1997
                                                                             ---------       ---------

<S>                                                                          <C>             <C>
Cash Flows from Operating Activities:
   Net income                                                                $  60,633       $  37,272
   Adjustments to reconcile net income to net cash provided
       by operating activities:
          Depreciation and amortization                                         11,673          10,941
          Deferred and other noncash income taxes                                1,186           2,153
          Other noncash items                                                      365             275
          Loss (gain) on disposal of assets                                          2          (1,244)
          Equity in earnings of unconsolidated entities                           (649)           (616)
          Recognized gain on real estate transactions                           (9,979)         (2,591)
          Changes in assets and liabilities, net of acquisitions:
               Accounts receivable                                             (50,053)         18,186
               Prepaid expenses                                                 (3,025)         (4,793)
               Other current assets                                               (732)           (651)
               Accounts payable                                                 41,810           8,411
               Income taxes payable                                            (13,514)         (3,794)
               Accrued expenses and other liabilities                           (1,494)         18,531
                                                                             ---------       ---------

                   Net cash provided by operating activities                    36,223          82,080
                                                                             ---------       ---------

Cash Flows from Investing Activities:
   Additions of property and equipment                                        (312,508)       (224,887)
   Decrease in restricted cash                                                      --           3,450
   Increase in other assets                                                    (16,340)        (13,310)
   Acquisition of USCC subsidiaries, net of cash acquired                       (9,341)             --
   Investment in affiliates, net                                                (2,891)            587
   Proceeds from disposals of assets                                            36,412         380,904
   Increase in direct financing leases                                              --         (55,850)
   Payments received on direct financing leases and notes
      receivable                                                                 3,541           2,057
                                                                             ---------       ---------

                   Net cash provided by (used in) investing activities        (301,127)         92,951
                                                                             ---------       ---------

Cash Flows from Financing Activities:
   Payments on long-term debt                                                      (45)        (57,184)
   Proceeds from line of credit, net                                           165,000          11,000
   Payment of debt issuance costs                                               (2,925)           (743)
   Payment of prepayment penalties                                                  --          (1,782)
   Proceeds from exercise of stock options and warrants                          1,954           3,043
   Purchase of treasury stock                                                   (7,600)             --
                                                                             ---------       ---------

                    Net cash provided by (used in) financing activities        156,384         (45,666)
                                                                             ---------       ---------

Net increase (decrease) in cash                                               (108,520)        129,365

CASH AND CASH EQUIVALENTS, beginning of period                                 136,147           4,832
                                                                             ---------       ---------

CASH AND CASH EQUIVALENTS, end of period                                     $  27,627       $ 134,197
                                                                             =========       =========
</TABLE>

The accompanying Notes to Consolidated Financial Statements are an integral part
of these statements.


                                                                              6
<PAGE>   7


              CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                          Nine months ended
                                                                                             September 30
                                                                                      ------------------------

                                                                                        1998           1997
                                                                                      --------       --------

<S>                                                                                   <C>            <C>
Supplemental Disclosures of Cash Flow Information:
   Cash paid during the period for:

       Interest (net of amounts capitalized)                                          $  4,708       $ 10,917
                                                                                      ========       ========

       Income taxes                                                                   $ 34,927       $  5,577
                                                                                      ========       ========

Supplemental Schedule of Noncash Investing and Financing
   Activities:

   The Company acquired treasury stock and issued common stock through the
     exercise of stock options:
           Common stock                                                               $    422       $    669
           Additional paid-in capital                                                    3,421          4,573
           Retained earnings                                                              (115)          (830)
           Treasury stock, at cost                                                      (3,728)        (4,412)
                                                                                      --------       --------
                                                                                      $     --       $     --
                                                                                      ========       ========

   Long-term debt was converted into common stock:
           Other assets                                                               $      5       $     23
           Long-term debt                                                               (5,800)        (1,700)
           Common stock                                                                  2,063          1,003
           Additional paid-in capital                                                    1,588            674
           Retained earnings                                                           (48,885)            --
           Treasury stock, at cost                                                      51,029             --
                                                                                      --------       --------
                                                                                      $     --       $     --
                                                                                      ========       ========

   The Company converted a facility from investment in direct financing lease to
     property and equipment by acquiring the equity in the facility from the
     leasing entity:
           Accounts receivable                                                        $  3,500       $     --
           Property and equipment                                                      (16,207)            --
           Investment in direct financing leases                                        12,707             --
                                                                                      --------       --------
                                                                                      $     --       $     --
                                                                                      ========       ========

The Company acquired a facility by converting a note receivable and assuming
  long-term debt:
        Property and equipment                                                        $(58,487)      $     --
        Notes receivable                                                                57,624             --
        Long-term debt                                                                     863             --
                                                                                      --------       --------
                                                                                      $     --       $     --
                                                                                      ========       ========
</TABLE>



                                                                              7
<PAGE>   8


              CORRECTIONS CORPORATION OF AMERICA AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1.       CONSOLIDATED FINANCIAL STATEMENTS

         The consolidated balance sheets as of September 30, 1998 and December
         31, 1997, the consolidated statements of operations and cash flows for
         the nine month periods ended September 30, 1998 and 1997, and the
         consolidated statements of operations for the quarters ended September
         30, 1998 and 1997 have been prepared by the Company in accordance with
         the accounting policies described in its 1997 Annual Report on Form
         10-K, as amended, and should be read in conjunction with the notes
         thereto.

         In the opinion of management, all adjustments (which include only
         normal recurring adjustments) necessary to present fairly the financial
         position, results of operations and changes in cash flows at September
         30, 1998 and for all periods presented have been made.

         Certain information and footnote disclosures normally included in
         financial statements prepared in accordance with generally accepted
         accounting principles have been condensed or omitted. The results of
         operations for the periods ended September 30, 1998, are not
         necessarily indicative of the operating results for the full year.

2.       ACQUISITIONS

         In April 1998, the Company acquired all of the issued and outstanding
         capital stock of eight subsidiaries of U.S. Corrections Corporation
         ("USCC") (the "USCC Acquisition") for approximately $10,000,000, less
         cash acquired. By virtue of the USCC Acquisition, the Company acquired
         contracts to manage four currently operating facilities in Kentucky and
         one in North Carolina, each of which is owned by CCA Prison Realty
         Trust ("Prison Realty"), as well as one each in Florida and Texas, each
         of which is owned by governmental entities of Florida and Texas,
         respectively. The Company, or one of its affiliates, currently leases
         the four Kentucky facilities from Prison Realty, or one of its
         affiliates, pursuant to the terms of a master lease. The North Carolina
         facility currently operated by the Company is owned by Prison Realty,
         which leases such facility to the State of North Carolina. The Company
         also acquired by virtue of the USCC Acquisition the right to enter into
         a contract to manage a North Carolina facility owned by Prison Realty
         for which construction was substantially completed in November 1998.
         The Company expects to operate the newly completed North Carolina
         facility pursuant to a contract with the State of North Carolina, which
         will lease the facility from Prison Realty. The Company operates or 
         will operate 5,543 beds as a result of the USCC Acquisition.

         In April 1998, the Company acquired a 376-bed correctional facility
         from a governmental entity for $18,389,000 and assumed management of
         the facility.

         In May 1998, in consideration of relinquishing its rights to purchase a
         facility, the Company agreed to pay a governmental agency $3,500,000.
         As a result, the Company converted the facility from a direct financing
         lease to property and equipment. In lieu of a cash payment, the entity
         agreed to utilize a credit for management revenue billings beginning in
         July 1998 until the credit is exhausted.

3.       MERGER

         On September 29, 1998 the Company entered into an Amended and Restated
         Agreement and Plan of Merger by and among the Company, Prison Realty,
         and Prison Realty Corporation ("Prison Realty Corporation") providing
         for the merger of the Company and Prison Realty, with Prison Realty
         Corporation as the surviving company (the "Merger"). This agreement
         amended and restated the Agreement and Plan of Merger dated April 18,
         1998 previously entered into by the Company and Prison Realty regarding
         the Merger. In the Merger, the shareholders of the Company will receive
         0.875 share of Prison Realty Corporation common stock in exchange for
         each outstanding share of Company common stock they own. The Merger is
         expected to be completed on or about January 1, 1999, subject to
         customary conditions, including approval by the shareholders of the
         Company and Prison Realty. Prison Realty Corporation intends to operate
         so as to qualify as a real estate investment trust for federal income
         tax purposes upon completion of the Merger.


                                                                              8
<PAGE>   9


4.       EARNINGS PER SHARE

         The Company adopted the provisions of SFAS 128, "Earnings Per Share"
         effective December 31, 1997. Under the standards established by SFAS
         128, earnings per share is measured at two levels: basic earnings per
         share and diluted earnings per share. Basic earnings per share is
         computed by dividing net income by the weighted average number of
         common shares outstanding during the year. Diluted earnings per share
         is computed by dividing net income by the weighted average number of
         common shares after considering the additional dilution related to
         convertible preferred stock, convertible subordinated notes, options
         and warrants. All earnings per share amounts presented herein have been
         restated to reflect the adoption of SFAS 128.

         In computing diluted earnings per common share, the Company's stock
         warrants and stock options are considered dilutive using the treasury
         stock method, and the Series B convertible preferred stock and the 8.5%
         convertible subordinated notes are considered dilutive using the
         if-converted method. The following table presents information necessary
         to calculate diluted earnings per share for the third quarter and nine
         months ended September 30:

<TABLE>
<CAPTION>
                                                                         Three months ended
                                                                            September 30
                                                                       --------------------

                                                                         1998         1997
                                                                       -------      --------
         <S>                                                           <C>          <C>    
         Net Income                                                    $21,102      $13,665
         Interest expense applicable to convertible subordinated
           notes, net of tax                                               169          171
                                                                       -------      -------
         Adjusted net income                                           $21,271      $13,836
                                                                       =======      =======

         Weighted average common shares outstanding                     80,970       77,721
         Effect of dilutive options and warrants                         4,023        7,337
         Conversion of preferred stock                                     730           --
         Conversion of convertible subordinated notes                    4,003        5,548
                                                                       -------      -------
         Adjusted diluted common shares outstanding                     89,726       90,606
                                                                       -------      -------
         Diluted earnings per share                                    $   .24      $   .15
                                                                       =======      =======


<CAPTION>
                                                                        Nine months ended
                                                                           September 30
                                                                       --------------------

                                                                         1998         1997
                                                                       -------      -------
         <S>                                                           <C>          <C>    
         Net Income                                                    $60,633      $37,272
         Interest expense applicable to convertible subordinated
           notes, net of tax                                               542          706
                                                                       -------      -------
         Adjusted net income                                           $61,175      $37,978
                                                                       =======      =======

         Weighted average common shares outstanding                     79,924       76,525
         Effect of dilutive options and warrants                         4,560        7,771
         Conversion of preferred stock                                     731           --
         Conversion of convertible subordinated notes                    4,513        5,661
                                                                       -------      -------
         Adjusted diluted common shares outstanding                     89,728       89,897
                                                                       -------      -------
         Diluted earnings per share                                    $   .68      $   .42
                                                                       =======      =======
</TABLE>


                                                                              9
<PAGE>   10


5.       NEW PRONOUNCEMENT

         In April 1998, the AICPA issued Statement of Position ("SOP") 98-5,
         "Reporting on the Costs of Start-Up Activities", effective for fiscal
         years beginning after December 15, 1998. SOP 98-5 requires the costs of
         start-up activities to be expensed as incurred. In accordance with the
         provisions of SOP 98-5, the Company will adopt the new accounting
         method on or before January 1, 1999 by recording a cumulative effect of
         a change in accounting principle. As of September 30, 1998, the
         Company's deferred start-up costs and project development costs subject
         to the provisions of SOP 98-5 totaled $32,893,000.

6.       COMPREHENSIVE INCOME

         In June 1997, the Financial Accounting Standards Board issued SFAS No.
         130, "Reporting Comprehensive Income", effective for fiscal years
         beginning after December 15, 1997. SFAS No. 130 requires that changes
         in the amounts of certain items, including gains and losses on certain
         securities, be shown in the financial statements. The Company adopted
         the provisions of SFAS No. 130 on January 1, 1998. The Company's
         comprehensive income is substantially equivalent to net income for the
         quarters ended and nine months ended September 30, 1998 and 1997.

7.       SUBSEQUENT EVENTS

         On October 2, 1998, pursuant to the terms of an Exchange Agreement by
         and among the Company, American Corrections Transport, Inc. ("ACT")
         and certain shareholders of ACT, and the charter of the Company, as
         amended, the Company converted each share of it's Series B convertible
         preferred stock into 1.94 shares of the Company's common stock,
         resulting in the issuance of an aggregate of 730,320 shares of the
         Company's common stock. In connection therewith, the Company paid a
         nominal amount of cash for fractional shares issued in the conversion.
         The Company received no cash proceeds as a result of the transaction.

         On November 4, 1998 the Company filed a Registration Statement on Form
         S-3 that will allow it, over the next two years, to sell common stock
         in one or more offerings up to a total dollar amount of $100,000,000.
         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.


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

         The following discussion should be read in conjunction with the
         financial statements and notes thereto appearing elsewhere in this
         report.

         This Quarterly Report on Form 10-Q, including Management's Discussion
         and Analysis of Financial Condition and Results of Operations, includes
         certain forward-looking statements about the Company's business,
         revenues, prospects, expenditures and operating and capital
         requirements that are provided in reliance upon the "safe harbor"
         provisions of the Private Securities Litigation Act of 1995 as set
         forth in Section 27A of the Securities Act of 1933, as amended, and
         Section 21E of the Securities Exchange Act of 1934, as amended. In
         addition, forward-looking statements may be included in various other
         Company documents to be issued in the future and in various oral
         statements by Company representatives to securities analysts and
         potential investors from time to time. Any such statements are subject
         to risks that could cause the actual results to vary materially. The
         risks and uncertainties associated with the forward-looking
         information include the strength of the markets in which the Company
         operates, competitive market conditions, 


                                                                              10
<PAGE>   11
         general economic growth, interest rates and capital market conditions.
         Reference is hereby made to the more detailed discussion of such risks
         in the Company's Annual Report on Form 10-K, as amended. Readers are
         cautioned not to place undue reliance on these forward-looking
         statements, which speak only as of the date hereof. The Company
         undertakes no obligation to publicly revise these forward-looking
         statements to reflect events or circumstances occurring after the date
         hereof or to reflect the occurrence of unanticipated events.


         RESULTS OF OPERATIONS
         REVENUES AND EXPENSES

         Revenues for the third quarter and first nine months of 1998 increased
         41% and 49%, respectively, over the comparable periods of 1997.
         Management revenues increased $52,067,000 and $156,994,000 for the
         third quarter and first nine months of 1998, respectively, as compared
         to the same periods of 1997, while transportation revenues increased
         $441,000 and $1,580,000, respectively, for the same relative time
         periods. The increase in management revenues was due to compensated
         mandays increasing by 42% and 50% for the third quarter and first nine
         months of 1998, respectively, over the comparable periods of 1997.
         During the third quarter of 1998, the Company opened three new
         facilities representing 2,264 beds and expanded two facilities
         representing 650 beds. These beds were in addition to the 10,400 beds
         brought on line in the first half of 1998 which resulted in the Company
         cumulatively adding 12,664 beds through the first nine months of 1998.
         Transportation revenues increased 13% and 17% for the third quarter and
         first nine months of 1998, respectively, over the comparable periods of
         1997, primarily as a result of an expanded customer base and increased
         compensated mileage realized through the increased utilization of three
         transportation hubs opened in 1997 and more "mass transports," which
         are generally moves of 40 or more inmates per trip.

         Operating expenses for the third quarter and first nine months of 1998
         increased 34% and 45%, respectively, over the comparable periods of
         1997. This increase was due to the increased compensated mandays and
         compensated mileage that the Company realized in the third quarter and
         first nine months of 1998 as previously mentioned. As a percentage of
         revenues, operating expenses decreased to 70% for both the third
         quarter and first nine months of 1998 as compared to 73% and 72% for
         the respective time periods of 1997.

         Lease expense increased significantly in the third quarter and first
         nine months of 1998 as a result of the lease agreements that the
         Company entered into with Prison Realty in 1997 and 1998. As of
         September 30, 1998, the Company had entered into lease agreements with
         Prison Realty for 17 facilities, including the four USCC facilities.

         General and administrative expenses for the third quarter and first
         nine months of 1998 increased 34% and 40% respectively, over the
         comparable periods of 1997. However, as a percentage of revenues,
         general and administrative expenses for the third quarter and first
         nine months of 1998 declined to 3.2% and 3.3% as compared to 3.5% and
         3.4% for the comparable periods of 1997. The Company expects that as it
         continues to grow, general and administrative expenses will increase in
         volume but continue to decrease as a percentage of revenues.

         Depreciation and amortization for the third quarter and first nine
         months of 1998 increased 46% and 7%, respectively, over the comparable
         periods of 1997. The increases are due to the increase in the number of
         owned facilities operated by the Company during the third quarter of
         1998 as compared to the comparable period of 1997.

         OTHER EXPENSES

         Interest income for the third quarter and first nine months of 1998 was
         $112,000 and $5,323,000, respectively, as compared to $1,625,000 and
         $273,000 in the comparable periods of 1997. This interest income was
         primarily the result of the sale of facilities to Prison Realty which
         allowed the Company to benefit from interest earnings on its increased
         cash balances. The decrease in the third quarter 1998 compared to 1997
         was due to the significant decline in cash resulting from the company's
         continued investment in owned facilities.


                                                                             11
<PAGE>   12


         INCOME TAXES 

         The Company's effective tax rate decreased to approximately 26% in the
         third quarter and first nine months of 1998. The decrease is due to the
         recognition of certain tax benefits realized in 1997 and 1998. The
         Company is recognizing these benefits over the next four years which
         should result in maintaining a consistent effective tax rate.

         FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

         The Company's business is capital intensive in relation to the
         development of a correctional facility. The Company's efforts to obtain
         contracts, construct additional facilities and maintain its day-to-day
         operations have required the continued acquisition of funds through
         borrowings and equity offerings. The Company has financed these
         activities through the sale of capital stock, subordinated convertible
         notes and senior secured debt, through the issuance of taxable and
         tax-exempt bonds, by bank borrowings, by assisting governmental
         agencies in the issuance of municipal bonds and most recently through
         the sale and leaseback of certain correctional facilities to Prison
         Realty.

         Cash flow from operations, calculated on an EBITDA basis, for the nine
         months of 1998 was $88,548,000 as compared to $71,216,000 in the
         comparable period of 1997. The Company has strengthened its cash flow
         through its expanded business, additional focus on larger, more
         profitable facilities, the expansion of existing facilities where
         economies of scale can be realized, and the continuing effort of cost
         containment.

         Cash flow from operations for the first nine months of 1998 was
         $36,223,000 as compared to $82,080,000 in the comparable period of
         1997. This decrease was primarily the result of an increase in accounts
         receivable and income taxes payable for the nine months of 1998 as
         compared to the comparable period of 1997. The increase in accounts
         receivable was due to the company's continued growth as indicated by
         the increase in revenues of approximately $157,000,000 during the nine
         months of 1998 as compared to nine months of 1997.

         In June 1998, the Company increased its revolving credit facility with
         a group of banks to $350,000,000. The facility matures on the earlier 
         of the date of the completion of the Merger or September 6, 1999 and is
         used for general corporate purposes and the issuance of letters of
         credit. The credit facility bears interest, at the election of the
         Company, at either the bank's prime rate or a rate which is 1.25% above
         the applicable 30, 60, or 90 day LIBOR rate. Interest is payable
         quarterly with respect to prime rate loans and at the expiration of the
         applicable LIBOR period with respect to LIBOR based loans. There are no
         prepayment penalties associated with the credit facility. The credit
         facility requires the Company, among other things, to maintain certain
         net worth, leverage and debt service coverage ratios. The Company was
         in compliance with these ratios at September 30, 1998. The facility
         also limits certain payments and distributions. As of September 30,
         1998, there was $235,000,000 borrowed under this facility. Letters of
         credit totaling $64,250,000 had been issued leaving the total unused
         commitment at $50,750,000.

         The Company also has a $2,500,000 credit facility with a bank that
         provides for the issuance of letters of credit and matures on the
         earlier of the date of the completion of the Merger or September 6,
         1999. As of September 30, 1998 there were $2,049,000 in letters of
         credit issued, leaving the unused commitment at $451,000.

         On November 4, 1998 the Company filed a Registration Statement on Form
         S-3 that will allow it, over the next two years, to sell common stock
         in one or more offerings up to a total dollar amount of $100,000,000.
         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.

         The Company anticipates making cash investments in connection with
         future acquisitions and expansions. In addition, in accordance with the
         developing trend of private prison managers toward making strategic
         financial investments in facilities, the Company plans to use a portion
         of its cash to finance start-up costs, leasehold improvements and
         equity investments in facilities, if 


                                                                             12
<PAGE>   13


         appropriate in connection with undertaking new contracts. The Company
         believes that the cash flow from operations, the availability of
         future capital from Prison Realty and amounts available under its
         credit facility and the issuance of common stock under its shelf
         registration will be sufficient to meet its capital requirements for
         the foreseeable future. Furthermore, management believes that
         additional resources may be available to the Company through a variety
         of other financing methods.


         YEAR 2000 COMPLIANCE

         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 the
         actions taken by the Company to assess and address the Year 2000 issues
         it faces.

         The Company's Year 2000 compliance program is focused on addressing
         Year 2000 readiness in the following areas: (i) the Company's
         information technology hardware and software; (ii) material
         non-information technology systems; (iii) Year 2000 compliance of third
         parties with which the Company has a material relationship; (iv)
         systems used to track and report assets not owned by the Company (e.g.
         inmate funds and personal effects); and (v) development of contingency
         plans.

         The Company has completed an initial assessment and remediation of its
         key information technology systems including its client server and
         minicomputer hardware and operating systems and critical financial and
         nonfinancial applications. Remediation efforts as of the date hereof
         include upgrades of the Company's minicomputer hardware and critical
         financial applications. Based on this initial assessment and
         remediation efforts, the Company believes that these key information
         technology systems are Year 2000 compliant. However, there can be no
         assurance that coding errors or other defects will not be discovered in
         the future. The Company is in the process of evaluating the remaining
         noncritical information technology systems for Year 2000 compliance.

         The Company manages and operates facilities it owns, facilities it
         leases from Prison Realty, and facilities owned by and leased from
         government entities. The Company is currently evaluating whether the
         material non-information technology systems such as security control
         equipment, fire suppression equipment and other physical plant
         equipment at both the facilities it owns and the facilities it leases
         from Prison Realty are Year 2000 compliant. The Company will also
         request that the owners of the government facilities it manages provide
         Year 2000 certification for material information technology and
         non-information technology systems at those facilities.

         All the Company's managed correctional facilities, 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 (e.g. 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 should the
         related electronic components fail. Therefore, Company management
         believes no additional material risks associated with the physical
         operation of its correctional facilities are created as a result of
         potential Year 2000 issues.

         The Company depends upon the proper functioning of third-party computer
         and non-information technology systems. These third parties include
         government agencies for which the Company provides 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. The Company
         has initiated communications with third parties with whom it has
         important financial or operational relationships to determine the
         extent to which they are vulnerable to the Year 2000 issue. The Company
         has not yet received sufficient information from all parties about
         their remediation plans to predict the outcome of their efforts.


                                                                             13
<PAGE>   14


         If third parties with whom the Company interacts have Year 2000
         problems that are not remedied, the following problems could result:
         (i) in the case of construction contractors and architects and
         engineers, in the delayed construction of correctional facilities; (ii)
         in the case of vendors, in disruption of important services upon which
         the Company depends, such as medical services, food services and
         supplies, telecommunications and electrical power, (iii) in the case of
         government agencies, in delayed collection of accounts receivable
         potentially resulting in liquidity stress, or (iv) in the case of banks
         and other lenders, in the disruption of capital flows potentially
         resulting in liquidity stress.

         The Company is also evaluating Year 2000 compliance of other software
         applications used to track and report assets that are not the property
         of the Company. This includes applications used to track and report
         inmate funds and the inmates' personal effects.

         The Company is 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 that could be drawn upon
         in the event of systems disruption and identifying alternative vendors
         and back-up processes that do not rely on computers, whenever possible.
         Company management expects to have the contingency plan completed
         by mid-year 1999.

         The Company has incurred and expects to continue to incur expenses
         allocable to internal staff, as well as costs for outside consultants,
         computer systems' remediation and replacement and non-information
         technology systems' remediation and replacement (including validation)
         in order to achieve Year 2000 compliance. The Company currently
         estimates 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 September 30, 1998, the Company
         has incurred $500,000 in Year 2000 program costs. These costs are
         expensed as incurred. Management of the Company believes there will be
         no material impact on the Company's financial condition or results of
         operations resulting from other information technology projects being
         delayed due to Year 2000 efforts.

         The costs of the Company's Year 2000 compliance program and the date on
         which the Company plans 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. The
         Company can give no assurance that these estimates will be achieved,
         and actual results could differ materially from the Company's 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.


Item 3.           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

         Not applicable.


                                                                             14
<PAGE>   15


PART II - OTHER INFORMATION



Item 1.  LEGAL PROCEEDINGS.

         In July 1998, a consolidated complaint regarding the Merger was filed
         with respect to a group of lawsuits originally filed in April 1998 by
         certain purported shareholders of the Company in Chancery Court for
         Davidson County in Nashville, Tennessee, pursuant to an order in which
         these lawsuits were required to be consolidated in to a single action.
         The complaint names the Company and its directors as defendants. The
         plaintiffs in the action represent a putative class of all public
         holders of the Company's common stock.

         The complaint alleges, among other things, that the directors of the
         Company breached their fiduciary duties to the Company and the
         Company's public shareholders. Among the allegations in this complaint
         are that the Company's board of directors agreed to sell the Company
         at too low a price, compared to its then current market price, without
         conducting a process, such as an auction, for a sale. The complaint
         seeks, among other things, preliminary and permanent injunctive relief
         prohibiting completion of the Merger as presently proposed and
         directing the Company or the individual defendants to adopt a
         procedure or process, such as an auction, to obtain the highest
         possible price for the Company. The complaint also seeks unspecified
         damages, attorney's fees and other relief. The Company is contesting
         the action vigorously.

         Also, on August 6, 1998, a complaint was filed by a purported
         shareholder of the Company naming the Company, Doctor R. Crants,
         Thomas W. Beasley, Charles A Blanchette and David L. Myers as
         defendants. The complaint, filed in Chancery Court for Davidson
         County, Tennessee, is a purported class action which alleges that the
         individual defendants violated certain provisions of Tennessee law by
         selling the Company's common stock during the period from April 1997
         through April 1998. Among the allegations in this complaint are that
         the Company and the individual defendants made false and misleading
         statements to maintain the price of the Company's common stock at an
         artificially high level in order to be able to sell their shares. The
         Company is contesting this action vigorously.


Item 2.  CHANGES IN SECURITIES & USE OF PROCEEDS.

         None.

Item 3.  DEFAULT UPON SENIOR SECURITIES.

         None.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None.

Item 5.  OTHER INFORMATION.

         None.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K.

         a)       Exhibits.

                  2.1      Amended and Restated Agreement and Plan of Merger,
                           dated as of September 29, 1998, by and among
                           Corrections Corporation of America,



                                                                              15
                                                                                
<PAGE>   16


                           CCA Prison Realty Trust and Prison Realty
                           Corporation (previously filed as Exhibit 2.1 to
                           Prison Realty Corporation's Registration Statement
                           on Form S-4 filed with the Securities and Exchange
                           Commission on September 30, 1998).

                  27.1     Financial Data Schedule. (For SEC use only)

                  27.2     Restated Financial Data Schedule for the Quarter 
                           Ended September 30, 1997 (For SEC use only)

         b)       Reports on Form 8-K

                           Report on Form 8-K filed September 30, 1998 relating
                           to the merger of Corrections Corporation of America
                           (the "Company") with CCA Prison Realty Trust
                           ("Prison Realty") and the filing of a Registration
                           Statement on Form S-4 with respect to the merger
                           which contains the Joint Proxy Statement of the
                           Company and Prison Realty. In the Report on Form 8-K,
                           the Company included for following historical
                           financial statements of Prison Realty:

                           (i)      unaudited condensed consolidated financial
                                    statements for the six month period ended
                                    June 30, 1998 (incorporated therein by
                                    reference to Prison Realty's Quarterly
                                    Report on Form 10-Q for the quarter ended
                                    June 30, 1998); and

                           (ii)     audited consolidated financial statements
                                    for the period from July 18, 1997 to
                                    December 31, 1997 (incorporated therein by
                                    reference to Prison Realty's Annual Report
                                    on Form 10-K, as amended, for the year ended
                                    December 31, 1997).

                         The Company also included the following pro-forma 
                         financial statements of Prison Realty Corporation 
                         ("Prison Realty Corporation") (incorporated therein by
                         reference to the Registration Statement on Form S-4 of
                         Prison Realty Corporation filed on September 30, 1998
                         with respect to the merger of the Company with Prison
                         Realty):

                           (i)      pro forma combined balance sheet as of June
                                    30, 1998;

                           (ii)     pro forma combined statement of operations
                                    for the year ended December 31, 1997; and

                           (iii)    pro forma combined statement of operations
                                    for the six months ended June 30, 1998.


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<PAGE>   17


                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                             CORRECTIONS CORPORATION OF AMERICA
                                             ----------------------------------
                                                        (Registrant)




       November 13, 1998                     /s/ Darrell K. Massengale 
-------------------------------              ------------------------------
               (Date)                                 Darrell K. Massengale
                                                    Chief Financial Officer
                                                                  Secretary
                                               Principal Accounting Officer




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