Supplemental Financial Information For the Quarter Ended December 31, 2008 The Company’s supplemental financial information and other data presented herein speaks only as of the date or period indicated (or as of the date posted, as the case may be), and the Company does not undertake any obligation, and disclaims any duty, to update any of this information. The Company’s future financial performance is subject to various risks and uncertainties that could cause actual results to differ materially from expectations. The factors that could affect the Company's future financial results are discussed more fully in our reports filed with the SEC. Readers are advised to refer to these reports for additional information concerning the Company. Readers are also advised that the Company’s historical performance may not be indicative of future results. In addition, the information contained herein does not constitute an offer to sell or a solicitation to buy any of the Company’s securities. CORRECTIONS CORPORATION OF AMERICA Supplemental Financial Information For the Quarter Ended December 31, 2008 TABLE OF CONTENTS Consolidated Balance Sheets 1 Consolidated Statements of Operations 2 Reconciliation of Basic to Diluted Earnings Per Share 5 Calculation of Adjusted Diluted Earnings Per Share 6 Selected Financial Information 7 Analysis of Outstanding Debt 10 Selected Operating Ratios 11 Facility Portfolio 12 Diversification of Revenue 18 Research Coverage / Credit Ratings 19 John D. Ferguson, Chief Executive Officer Todd J Mullenger, Chief Financial Officer 10 Burton Hills Boulevard Nashville, TN 37215 Tel.: (615) 263-3000 Fax: (615) 263-3010 1 of 19 CONSOLIDATED BALANCE SHEETS (Unaudited and amounts in thousands, except per share amounts) ASSETS Cash and cash equivalents Accounts receivable, net of allowance Deferred tax assets Prepaid expenses and other current assets Assets held for sale Total current assets December 31, 2008 $ Property and equipment, net $ 28,736 242,732 14,789 20,717 306,974 June 30, 2008 $ 14,287 246,618 12,843 24,423 298,171 March 31, 2008 $ 50,470 231,547 14,916 13,584 7,578 318,095 December 31, 2007 $ 57,968 241,722 12,250 21,142 7,581 340,663 2,478,824 2,456,949 2,370,892 2,231,354 2,086,980 6,710 13,414 13,672 20,455 Restricted cash Investment in direct financing lease Goodwill Other assets Total assets 34,077 264,336 16,108 23,778 338,299 September 30, 2008 6,669 13,698 13,672 21,907 6,628 13,975 13,672 22,850 6,580 14,243 13,672 22,781 6,511 14,503 13,672 23,411 $ 2,871,374 $ 2,819,869 $ 2,726,188 $ 2,606,725 $ 2,485,740 $ 191,083 450 290 191,823 $ 219,587 8,905 290 228,782 $ 244,517 6,632 290 251,439 $ 207,471 11,450 290 219,211 $ 213,477 964 290 214,731 LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses Income taxes payable Current portion of long-term debt Total current liabilities Long-term debt, net of current portion Deferred tax liabilities Other liabilities Total liabilities 1,192,632 68,349 38,211 1,491,015 1,155,460 42,884 39,505 1,466,631 1,085,532 41,703 39,018 1,417,692 1,045,605 39,338 39,392 1,343,546 975,677 34,271 39,086 1,263,765 1,247 1,576,177 (197,065) 1,380,359 1,256 1,589,572 (237,590) 1,353,238 1,253 1,582,724 (275,481) 1,308,496 1,250 1,574,937 (313,008) 1,263,179 1,245 1,568,736 (348,006) 1,221,975 Commitments and contingencies Common stock - $0.01 par value Additional paid-in capital Retained deficit Total stockholders' equity Total liabilities and stockholders' equity $ 2,871,374 $ 2,819,869 $ 2,726,188 $ 2,606,725 $ 2,485,740 CONSOLIDATED STATEMENTS OF OPERATIONS 2 of 19 (Unaudited and amounts in thousands, except per share amounts) For the Three Months Ended December 31, 2008 2007 For the Twelve Months Ended December 31, 2008 2007 REVENUE: Management: Federal State Local Other Total management revenue Transportation Rental Other $ 161,958 218,264 16,626 15,091 411,939 1,191 1,221 23 414,374 $ 150,596 193,975 16,726 14,774 376,071 3,089 1,187 467 380,814 $ 628,892 831,947 65,442 60,781 1,587,062 6,908 4,838 98 1,598,906 $ 593,601 719,577 65,566 57,541 1,436,285 14,197 4,562 1,269 1,456,313 EXPENSES: Operating: Facility fixed Facility variable Transportation Other Total operating expenses General and administrative Depreciation and amortization Goodwill impairment 211,057 72,706 2,761 202 286,726 20,086 24,278 331,090 825,482 279,114 15,463 3,943 1,124,002 80,308 90,809 1,295,119 750,656 263,035 21,693 703 1,036,087 74,399 78,539 554 1,189,579 83,284 69,745 303,787 266,734 16,733 601 17,334 12,938 (27) 12,911 59,404 292 59,696 65,950 56,834 244,091 213,266 (25,000) (21,520) (92,127) (80,460) 40,950 OPERATING INCOME 195,217 69,839 4,107 89 269,252 19,902 21,361 554 311,069 35,314 151,964 132,806 OTHER (INCOME) EXPENSE: Interest expense, net Other (income) expenses INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES Income tax expense INCOME FROM CONTINUING OPERATIONS Income (loss) from discontinued operations, net of taxes (425) (368) 53,776 (308) 53,468 (1,023) 567 NET INCOME $ 40,525 $ 34,946 $ 150,941 $ 133,373 BASIC EARNINGS PER SHARE $ 0.32 $ 0.28 $ 1.21 $ 1.09 DILUTED EARNINGS PER SHARE $ 0.32 $ 0.28 $ 1.20 $ 1.06 CONSOLIDATED STATEMENTS OF OPERATIONS 3 of 19 (Unaudited and amounts in thousands, except per share amounts) As Adjusted for Discontinued Operations For the Three Months Ended June 30, September 30, 2008 2008 March 31, 2008 December 31, 2008 REVENUE: Management: Federal State Local Other Total management revenue Transportation Rental Other $ 151,794 196,394 15,856 15,073 379,117 2,692 1,187 47 383,043 $ 156,484 203,296 16,170 15,382 391,332 1,462 1,209 22 394,025 $ 158,656 213,993 16,790 15,235 404,674 1,563 1,221 6 407,464 $ 161,958 218,264 16,626 15,091 411,939 1,191 1,221 23 414,374 EXPENSES: Operating: Facility fixed Facility variable Transportation Other Total operating expenses General and administrative Depreciation and amortization 199,548 66,835 4,591 630 271,604 19,553 21,356 312,513 214,710 69,120 4,110 197 288,137 20,866 23,325 332,328 211,057 72,706 2,761 202 286,726 20,086 24,278 331,090 70,530 74,837 75,136 83,284 13,650 94 13,744 13,934 (89) 13,845 15,087 (314) 14,773 16,733 601 17,334 56,786 60,992 60,363 65,950 (21,768) (23,227) (22,132) (25,000) 35,018 OPERATING INCOME 200,167 70,453 4,001 2,914 277,535 19,803 21,850 319,188 37,765 38,231 40,950 OTHER (INCOME) EXPENSE: Interest expense, net Other (income) expenses INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES Income tax expense INCOME FROM CONTINUING OPERATIONS Loss from discontinued operations, net of taxes (20) (238) (340) (425) NET INCOME $ 34,998 $ 37,527 $ 37,891 $ 40,525 BASIC EARNINGS PER SHARE $ 0.28 $ 0.30 $ 0.30 $ 0.32 DILUTED EARNINGS PER SHARE $ 0.28 $ 0.30 $ 0.30 $ 0.32 TOTAL COMPENSATED MAN-DAYS TOTAL AVAILABLE BED-DAYS AVERAGE COMPENSATED OCCUPANCY 6,774,671 6,984,151 97.0% 6,902,051 7,109,381 97.1% 7,057,032 7,392,624 95.5% 7,077,087 7,621,884 92.9% CONSOLIDATED STATEMENTS OF OPERATIONS 4 of 19 (Unaudited and amounts in thousands, except per share amounts) As Adjusted for Discontinued Operations For the Three Months Ended June 30, September 30, 2007 2007 March 31, 2007 December 31, 2007 REVENUE: Management: Federal State Local Other Total management revenue Transportation Rental Other $ 142,002 168,706 15,628 14,138 340,474 3,517 1,077 195 345,263 $ 149,792 171,689 16,275 14,103 351,859 3,473 1,111 365 356,808 $ 151,211 185,207 16,937 14,526 367,881 4,118 1,187 242 373,428 $ 150,596 193,975 16,726 14,774 376,071 3,089 1,187 467 380,814 EXPENSES: Operating: Facility fixed Facility variable Transportation Other Total operating expenses General and administrative Depreciation and amortization Goodwill impairment 178,695 59,612 4,880 500 243,687 17,318 18,240 279,245 195,116 66,872 7,278 48 269,314 18,362 20,040 307,716 195,217 69,839 4,107 89 269,252 19,902 21,361 554 311,069 66,018 65,259 65,712 69,745 13,934 (11) 13,923 13,655 (70) 13,585 13,249 (200) 13,049 12,938 (27) 12,911 52,095 51,674 52,663 56,834 (19,636) (19,397) (19,907) (21,520) 32,459 32,277 32,756 35,314 111 OPERATING INCOME 181,628 66,712 5,428 66 253,834 18,817 18,898 291,549 325 499 OTHER (INCOME) EXPENSE: Interest expense, net Other (income) expenses INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES Income tax expense INCOME FROM CONTINUING OPERATIONS Income (loss) from discontinued operations, net of taxes (368) NET INCOME $ 32,570 $ 32,602 $ 33,255 $ 34,946 BASIC EARNINGS PER SHARE $ 0.27 $ 0.27 $ 0.27 $ 0.28 DILUTED EARNINGS PER SHARE $ 0.26 $ 0.26 $ 0.26 $ 0.28 TOTAL COMPENSATED MAN-DAYS TOTAL AVAILABLE BED-DAYS AVERAGE COMPENSATED OCCUPANCY 6,308,681 6,434,412 98.0% 6,511,454 6,579,335 99.0% 6,682,589 6,824,349 97.9% 6,795,468 6,932,526 98.0% RECONCILIATION OF BASIC TO DILUTED EARNINGS PER SHARE 5 of 19 (Unaudited and amounts in thousands, except per share amounts) For the Three Months Ended December 31, 2008 2007 Basic: Income from continuing operations Income (loss) from discontinued operations, net of taxes Net income Diluted: Income from continuing operations Income (loss) from discontinued operations, net of taxes Diluted net income $ $ $ $ Basic: Weighted average common shares outstanding Unvested restricted common stock Weighted average common shares outstanding-basic Diluted: Weighted average common shares outstanding-basic Effect of dilutive securities: Stock options and warrants Restricted stock-based compensation Weighted average shares and assumed conversions-diluted Basic earnings per share: Income from continuing operations Income (loss) from discontinued operations, net of taxes Net income Diluted earnings per share: Income from continuing operations Income (loss) from discontinued operations, net of taxes Net income 40,950 (425) 40,525 $ 40,950 (425) 40,525 $ $ $ For the Twelve Months Ended December 31, 2008 2007 35,314 (368) 34,946 $ 35,314 (368) 34,946 $ $ $ 151,964 (1,023) 150,941 $ 151,964 (1,023) 150,941 $ $ $ 132,806 567 133,373 132,806 567 133,373 125,490 (734) 124,756 $ $ 123,447 (894) 122,553 123,396 124,464 122,553 977 358 126,091 $ 125,192 (728) 124,464 124,756 $ 124,266 (870) 123,396 2,106 405 125,907 1,536 250 126,250 2,480 348 125,381 0.32 0.32 $ 0.32 0.32 $ $ $ 0.28 0.28 $ 0.28 0.28 $ $ $ 1.22 (0.01) 1.21 $ 1.21 (0.01) 1.20 $ $ $ 1.08 0.01 1.09 1.06 1.06 CALCULATION OF ADJUSTED DILUTED EARNINGS PER SHARE 6 of 19 (Unaudited and amounts in thousands, except per share amounts) For the Three Months Ended December 31, 2008 2007 Net Income $ Special items: Goodwill impairment Goodwill impairment for discontinued operations Diluted adjusted net income 40,525 $ $ 40,525 34,946 For the Twelve Months Ended December 31, 2008 2007 $ 554 1,020 $ 36,520 150,941 $ $ 150,941 133,373 554 1,020 $ 134,947 Weighted average common shares outstanding - basic Effect of dilutive securities: Stock options and warrants Restricted stock-based compensation 124,756 123,396 124,464 122,553 977 358 2,106 405 1,536 250 2,480 348 Weighted average shares and assumed conversions - diluted 126,091 125,907 126,250 125,381 Adjusted Diluted Earnings Per Share $ 0.32 $ 0.29 $ 1.20 $ 1.08 7 of 19 SELECTED FINANCIAL INFORMATION (Unaudited and amounts in thousands, except per share amounts) December 31, 2008 September 30, 2008 June 30, 2008 March 31, 2008 December 31, 2007 BALANCE SHEET: Property and equipment Accumulated depreciation and amortization Property and equipment, net $ $ $ 3,078,214 (599,390) 2,478,824 $ $ 3,035,753 (578,804) 2,456,949 $ $ 2,925,509 (554,617) 2,370,892 $ $ 2,761,445 (530,091) 2,231,354 $ 2,595,677 (508,697) 2,086,980 Total assets $ 2,871,374 $ 2,819,869 $ 2,726,188 $ 2,606,725 $ 2,485,740 Maintenance & technology capital expenditures for the quarter ended $ 12,268 $ 7,861 $ 7,054 $ 8,138 $ 15,042 Total debt $ 1,192,922 $ 1,155,750 $ 1,085,822 $ 1,045,895 $ 975,967 Equity book value $ 1,380,359 $ 1,353,238 $ 1,308,496 $ 1,263,179 $ 1,221,975 Cash and cash equivalents $ 34,077 $ 28,736 $ 14,287 $ 50,470 $ 57,968 Availability under revolving credit facility $ 191,250 $ 237,208 $ 306,368 $ 345,117 $ 415,117 Common shares outstanding Common share price at end of period Market value of common equity at end of period $ $ 124,673 16.36 2,039,650 $ $ 125,597 24.85 3,121,085 $ $ 125,302 27.47 3,442,046 $ $ 124,965 27.52 3,439,037 $ $ 124,472 29.51 3,673,169 Total equity market capitalization $ 2,039,650 $ 3,121,085 $ 3,442,046 $ 3,439,037 $ 3,673,169 Total market capitalization (market value of equity plus debt) $ 3,232,572 $ 4,276,835 $ 4,527,868 $ 4,484,932 $ 4,649,136 EBITDA $ 106,961 $ 98,775 $ 96,776 $ 91,792 $ 91,687 ADJUSTED FREE CASH FLOW $ 64,986 $ 61,953 $ 56,404 $ 72,659 $ 47,078 $ $ 0.52 0.52 $ $ 0.50 0.49 $ $ 0.45 0.45 $ $ 0.59 0.58 $ $ 0.38 0.37 LIQUIDITY: CAPITALIZATION: ADJUSTED FREE CASH FLOW PER SHARE: Basic adjusted free cash flow per share Diluted adjusted free cash flow per share 8 of 19 SELECTED FINANCIAL INFORMATION (Unaudited and amounts in thousands, except per share amounts) For the Three Months Ended December 31, 2008 2007 92 Number of days per period ALL FACILITIES: Average available beds $ Operating margin per compensated man-day $ ADJUSTED FREE CASH FLOW PER SHARE: Basic Diluted $ 18.12 55.34 16.33 98.2% 27,810,841 $ 28.73 10.28 39.01 $ 73,344 95.5% 6,795,468 29.82 10.27 40.09 Operating margin rate ADJUSTED FREE CASH FLOW: Income from continuing operations before income taxes Income taxes paid Depreciation and amortization Depreciation and amortization for discontinued operations Goodwill impairment Goodwill impairment for discontinued operations Income (loss) from discontinued operations, net of taxes Income tax expense (benefit) for discontinued operations Stock-based compensation reflected in G&A expenses Amortization of debt costs and other non-cash interest Maintenance and technology capital expenditures Adjusted free cash flow 58.21 365 79,530 98.0% 7,077,087 Revenue per compensated man-day Operating expenses per compensated man-day: Fixed expense Variable expense Total 366 75,354 92.9% Total compensated man-days DEPRECIATION AND AMORTIZATION: Depreciation expense on real estate Other depreciation expense Amortization of intangible assets Amortization of negative contract values Depreciation and amortization 92 82,847 Average compensated occupancy For the Twelve Months Ended December 31, 2008 2007 57.07 26,298,192 $ 29.68 10.04 39.72 $ 17.35 54.62 28.54 10.00 38.54 $ 16.08 31.1% $ $ $ 29.5% 30.4% 29.4% 15,964 9,480 (1,166) 24,278 13,322 8,959 246 (1,166) 21,361 58,535 36,937 (4,663) 90,809 51,020 31,853 330 (4,664) 78,539 65,950 (15,440) 24,278 31 (425) (260) 2,208 912 (12,268) 64,986 $ $ $ 56,834 (19,924) 21,361 49 554 1,020 (368) (225) 1,860 959 (15,042) 47,078 $ $ $ 244,091 (54,914) 90,809 652 (1,023) (648) 8,544 3,812 (35,321) 256,002 $ $ $ 213,266 (51,255) 78,539 143 554 1,020 567 372 6,478 3,931 (47,500) 206,115 $ 0.52 $ 0.38 $ 2.06 $ 1.68 $ 0.52 $ 0.37 $ 2.03 $ 1.64 9 of 19 SELECTED FINANCIAL INFORMATION (Unaudited and amounts in thousands, except per share amounts) For the Three Months Ended December 31, 2008 2007 MANAGED ONLY FACILITIES: Management revenue Operating expenses: Fixed expense Variable expense Total Contribution $ 91,143 $ 56,698 19,351 76,049 15,094 Average available beds 88,713 $ 56,710 20,443 77,153 11,560 25,459 Average compensated occupancy $ Operating margin per compensated man-day Operating margin rate $ 39.43 $ 320,796 $ 154,359 53,355 207,714 113,082 Average available beds $ $ 287,358 $ 138,507 49,396 187,903 99,455 $ Operating margin per compensated man-day Operating margin rate $ 67.32 32.39 11.20 43.59 23.73 35.2% $ $ 22.13 34.6% 39.13 5.61 14.3% $ 1,229,339 $ 596,708 201,439 798,147 431,192 98.2% 8,978,891 $ $ 1,091,233 $ 531,263 186,892 718,155 373,078 48,292 98.3% 18,667,786 65.85 17,319,301 $ 31.96 10.79 42.75 $ 23.10 35.1% 5.52 14.4% $ 94.5% $ 38.43 24.43 8.48 32.91 53,990 30.81 10.99 41.80 $ 25,052 25.02 8.50 33.52 4,494,911 63.93 $ 219,393 76,143 295,536 49,516 9,143,055 97.9% $ 345,052 97.8% 49,882 4,765,565 Revenue per compensated man-day Operating expenses per compensated man-day: Fixed Variable Total 5.02 13.0% $ 90.3% Total compensated man-days 38.56 $ 25,540 24.65 8.89 33.54 57,388 Average compensated occupancy $ 228,774 77,675 306,449 51,274 2,300,557 24.53 8.37 32.90 6.53 16.6% 357,723 98.2% 2,311,522 Revenue per compensated man-day Operating expenses per compensated man-day: Fixed expense Variable expense Total $ 25,472 98.7% Total compensated man-days OWNED AND MANAGED FACILITIES: Management revenue Operating expenses: Fixed expense Variable expense Total Contribution $ For the Twelve Months Ended December 31, 2008 2007 63.01 30.67 10.79 41.46 $ 21.55 34.2% 10 of 19 ANALYSIS OF OUTSTANDING DEBT (Unaudited and amounts in thousands) Outstanding Balance 12/31/2007 Outstanding Balance 12/31/2008 Stated Interest Rate Effective Interest Rate $250.0 Million Senior Notes 250,000 250,000 7.50% $200.0 Million Senior Notes 200,967 200,677 $375.0 Million Senior Notes 375,000 $150.0 Million Senior Notes Total Fixed Rate Debt Maturity Date Callable/ Redeemable 7.87% May 2011 On or prior to May 1, 2006, 35% redeemable at 107.5% with proceeds from equity offerings; on or after May 1, 2007, 100% redeemable at various premium prices until May 1, 2009 at par 7.50% 7.65% May 2011 On or prior to May 1, 2006, 35% redeemable at 107.5% with proceeds from equity offerings; on or after May 1, 2007, 100% redeemable at various premium prices until May 1, 2009 at par 375,000 6.25% 6.50% March 2013 150,000 150,000 6.75% 6.99% January 2014 975,967 975,677 - 217,245 2.81% 3.08% 1,192,922 6.25% 6.51% 1) Fixed Rate: On or prior to March 15, 2008, 35% redeemable at 106.25% with proceeds from equity offerings; on or after March 15, 2009, 100% redeemable at various premium prices until March 15, 2011 at par On or prior to January 31, 2009, 35% redeemable at 106.75% with proceeds from equity offerings; on or after January 31, 2010, 100% redeemable at various premium prices until January 31, 2012 at par Floating Rate: Revolving Credit Facility Grand Total Debt 1) $ 975,967 $ 2) December 2012 3.56 3) Includes amortization of debt issuance costs, net of debt premiums. 2) The Company also has $32.2 million of letters of credit outstanding under a sub-facility. Further, the Company was notified that Lehman's unfunded $9.3 million commitment would no longer be funded by Lehman. Lehman's commitment has not been assumed by another party, which effectively reduces the Company's borrowing capacity under the Revolving Credit Facility to $191.3 million. The Revolving Credit facility currently bears interest at LIBOR plus a margin of 0.75%. 3) Represents the weighted average debt maturity in years. Debt Maturity Schedule: Year Total Debt Maturing 2009 2010 2011 2012 2013 Thereafter $ 290 290 450,097 217,245 375,000 150,000 1,192,922 % of Debt Maturing 0.02% 0.02% 37.73% 18.21% 31.44% 12.57% 100.00% % of Debt Maturing 0.02% 0.05% 37.78% 55.99% 87.43% 100.00% 11 of 19 SELECTED OPERATING RATIOS (Unaudited and amounts in thousands, except per share amounts) For the Three Months Ended December 31, 2008 2007 For the Twelve Months Ended December 31, 2008 2007 COVERAGE RATIOS: Interest coverage ratio (Adjusted EBITDA/Interest incurred) (x) Fixed charge coverage ratio (Adjusted EBITDA/(Interest incurred + Scheduled prin pmts)) (x) Senior debt coverage ratio (Senior debt/Annualized Adjusted EBITDA) (x) Total debt coverage ratio (Total debt/Annualized Adjusted EBITDA) (x) Accounts receivable turnover (Annualized revenues/Accounts receivable) (x) 5.7 5.7 2.8 2.8 6.3 5.4 5.4 2.7 2.7 6.3 5.4 5.4 3.0 3.0 6.0 5.1 5.1 2.8 2.8 6.0 DEBT/EQUITY RATIOS: Total debt/Total market capitalization Total debt/Equity market capitalization Total debt/Book equity capitalization Total debt/Gross book value of real estate assets 36.9% 58.5% 86.4% 38.6% 21.0% 26.6% 79.9% 37.3% 36.9% 58.5% 86.4% 38.6% 21.0% 26.6% 79.9% 37.3% 13.9% 14.4% 13.8% 14.2% 12.5% 12.4% 12.2% 12.2% 2.3% 4.8% 2.7% 5.2% 2.5% 5.0% 2.6% 5.1% RETURN ON INVESTMENT RATIOS: Annualized return on operating real estate investments (Annualized Adjusted EBITDA/Average operating real estate investments (undepreciated book value)*) Annualized return on total assets (Annualized Adjusted EBITDA/Average total assets (undepreciated book value)*) OVERHEAD RATIOS: Annualized general & administrative expenses/Average total assets (undepreciated book value)* General & administrative expenses/Total revenues INTEREST EXPENSE, NET: Interest income from continuing operations Interest incurred Amortization of debt costs and other non-cash interest Capitalized interest Interest expense, net $ $ (692) 18,757 912 (2,244) 16,733 $ $ (2,283) 17,087 959 (2,825) 12,938 $ $ (3,372) 72,490 3,812 (13,526) 59,404 $ $ (10,772) 68,230 3,931 (7,613) 53,776 EBITDA CALCULATION: Net income Interest expense, net Depreciation and amortization Income tax (benefit) expense Goodwill impairment (Income) loss from discontinued operations, net of taxes $ 40,525 16,733 24,278 25,000 425 $ 34,946 12,938 21,361 21,520 554 368 $ 150,941 59,404 90,809 92,127 1,023 $ 133,373 53,776 78,539 80,460 554 (567) EBITDA $ 106,961 $ 91,687 $ 394,304 $ 346,135 *Calculated as a simple average (beginning of period plus end of period divided by 2) 12 of 19 FACILITY PORTFOLIO Facility Name Year Constructed (A) Primary Customer Design Capacity (B) Security Level Facility Type (C) Term Remaining Renewal Options (D) Compensated Occupancy % for the Quarter ended 12/31/08 Owned and Managed Facilities: Central Arizona Detention Center Florence, Arizona 1994, 1998 USMS 2,304 Multi Detention Sep-13 (3) 5 year Eloy Detention Center Eloy, Arizona 1995, 1996 ICE 1,500 Medium Detention Indefinite - 97.49% Florence Correctional Center Florence, Arizona 1999, 2004 USMS 1,824 Multi Correctional Sep-13 (3) 5 year 92.67% La Palma Correctional Center Eloy, Arizona 2008 State of California Medium Correctional Jun-11 Indefinite 74.45% Red Rock Correctional Center Eloy, Arizona 2006 State of Alaska 1,596 Medium Correctional Jun-09 (5) 1 year 96.89% Saguaro Correctional Facility Eloy, Arizona 2007 State of Hawaii 1,896 Medium Correctional Jun-09 (1) 2 year 101.43% California City Correctional Center California City, California 1999 BOP 2,304 Medium Correctional Sep-09 (1) 1 year 113.65% San Diego Correctional Facility (E) San Diego, California 1999, 2000 ICE 1,154 Minimum/ Medium Detention Jun-11 (4) 3 year 103.99% Bent County Correctional Facility Las Animas, Colorado 1992, 1997, 2008 State of Colorado 1,420 Medium Correctional Jun-09 (1) 1 year 66.53% Crowley County Correctional Facility Olney Springs, Colorado 1998, 2004 State of Colorado 1,794 Medium Correctional Jun-09 (1) 1 year 91.24% Huerfano County Correctional Center (F) Walsenburg, Colorado 1997 State of Colorado 752 Medium Correctional Jun-09 (1) 1 year 98.03% Kit Carson Correctional Center Burlington, Colorado 1998, 2008 State of Colorado 1,488 Medium Correctional Jun-09 (1) 1 year 70.79% Coffee Correctional Facility (G) Nicholls, Georgia 1998, 1999 State of Georgia 1,524 Medium Correctional Jun-09 (20) 1 year 112.09% McRae Correctional Facility McRae, Georgia 2000, 2002 BOP 1,524 Medium Correctional Nov-09 (3) 1 year 113.23% Stewart Detention Center Lumpkin, Georgia 2004 ICE 1,752 Medium Detention Indefinite - 101.90% Wheeler Correctional Facility (G) Alamo, Georgia 1998, 1999 State of Georgia 1,524 Medium Correctional Jun-09 (20) 1 year 112.07% 2,040 137.37% 13 of 19 FACILITY PORTFOLIO Facility Name Year Constructed (A) Primary Customer Leavenworth Detention Center Leavenworth, Kansas 1992, 2000, 2004, 2008 USMS Lee Adjustment Center Beattyville, Kentucky 1990 Marion Adjustment Center St. Mary, Kentucky Design Capacity (B) Security Level Facility Type (C) Term Remaining Renewal Options (D) Compensated Occupancy % for the Quarter ended 12/31/08 1,033 Maximum Detention Dec-11 (3) 5 year 95.03% State of Vermont 816 Minimum/ Medium Correctional Jun-09 (2) 2 year 75.01% 1955, 1988 Commonwealth of Kentucky 826 Minimum Correctional Jun-09 (2) 2 year 82.29% Otter Creek Correctional Center (H) Wheelwright, Kentucky 1993 Commonwealth of Kentucky 656 Minimum/ Medium Correctional Jul-09 (3) 2 year 90.13% Prairie Correctional Facility Appleton, Minnesota 1991 State of Minnesota 1,600 Medium Correctional Jun-09 (3) 1 year 78.67% Adams County Correctional Center Adams County, Mississippi 2008 Federal and/or various states 2,232 Medium Correctional - - Tallahatchie County Correctional Facility (I) Tutwiler, Mississippi 2000, 2007, 2008 State of California 2,672 Medium Correctional Jun-11 Indefinite 63.68% Crossroads Correctional Center (J) Shelby, Montana 1999 State of Montana Multi Correctional Aug-09 (5) 2 year 95.61% Cibola County Corrections Center Milan, New Mexico 1994, 1999 BOP Medium Correctional Sep-09 (1) 1 year 100.85% New Mexico Women’s Correctional Facility Grants, New Mexico 1989, 2000 State of New Mexico 596 Multi Correctional Jun-09 - 97.60% Torrance County Detention Facility Estancia, New Mexico 1990, 1997 USMS 910 Multi Detention Indefinite - 61.72% Northeast Ohio Correctional Center Youngstown, Ohio 1997 BOP 2,016 Medium Correctional May-09 (3) 2 year 96.53% Cimarron Correctional Facility (K) Cushing, Oklahoma 1997, 2008 State of Oklahoma 1,692 Medium Correctional Jun-09 - 59.72% Davis Correctional Facility (K) Holdenville, Oklahoma 1996, 2008 State of Oklahoma 1,670 Medium Correctional Jun-09 - 67.31% Diamondback Correctional Facility Watonga, Oklahoma 1998, 2000 State of Arizona 2,160 Medium Correctional May-09 (3) 1 year 99.74% North Fork Correctional Facility Sayre, Oklahoma 1998, 2007 State of California 2,400 Medium Correctional Jun-11 Indefinite 64.14% 664 1,129 0.00% 14 of 19 FACILITY PORTFOLIO Facility Name Year Constructed (A) Primary Customer Design Capacity (B) Security Level Facility Type (C) Term Remaining Renewal Options (D) Compensated Occupancy % for the Quarter ended 12/31/08 West Tennessee Detention Facility Mason, Tennessee 1990, 1996 USMS 600 Multi Detention Feb-10 - 91.53% Shelby Training Center (L) Memphis, Tennessee 1986, 1995 Shelby County, TN 200 Secure Juvenile - - 0.00% Whiteville Correctional Facility (M) Whiteville, Tennessee 1998 State of Tennessee 1,536 Medium Correctional Sep-08 (2) 1 year 96.96% Bridgeport Pre-Parole Transfer Facility Bridgeport, Texas 1989 State of Texas 200 Medium Correctional Feb-09 (2) 1 year 99.91% Eden Detention Center Eden, Texas 1990 BOP 1,422 Medium Correctional Apr-11 (3) 2 year 108.05% Houston Processing Center Houston, Texas 1984, 2005 ICE 905 Medium Detention Mar-09 - 94.89% Laredo Processing Center Laredo, Texas 1985, 1990 ICE 258 Minimum/ Medium Detention Indefinite - 119.49% Webb County Detention Center Laredo, Texas 1998 USMS 480 Medium Detention Nov-12 (1) 5 year 112.04% Mineral Wells Pre-Parole Transfer Facility Mineral Wells, Texas 1995 State of Texas Minimum Correctional Feb-09 (2) 1 year 95.32% T. Don Hutto Residential Center Taylor, Texas 1997 ICE Non-secure Detention Indefinite - 100.00% D.C. Correctional Treatment Facility (N) Washington D.C. 1992 District of Columbia Medium Detention Mar-17 - 63.49% Total design capacity for Owned and Managed Facilities (43 Owned and Managed Facilities) 2,103 512 1,500 59,184 Managed Only Facilities: Bay Correctional Facility Panama City, Florida N/A State of Florida 985 Medium Correctional Jun-10 Indefinite 99.86% Citrus County Detention Facility Lecanto, Florida N/A Citrus County, FL 760 Multi Detention Sep-15 Indefinite 79.73% Gadsden Correctional Institution Quincy, Florida N/A State of Florida Minimum/ Medium Correctional Jun-10 Indefinite 99.54% Hernando County Jail Brooksville, Florida N/A Hernando County, FL Multi Detention Oct-10 - 93.13% 1,520 876 15 of 19 FACILITY PORTFOLIO Facility Name Year Constructed (A) Primary Customer Lake City Correctional Facility Lake City, Florida N/A State of Florida Idaho Correctional Center Boise, Idaho N/A State of Idaho Marion County Jail Indianapolis, Indiana N/A Winn Correctional Center Winnfield, Louisiana Design Capacity (B) 893 Security Level Facility Type (C) Term Remaining Renewal Options (D) Compensated Occupancy % for the Quarter ended 12/31/08 Secure Correctional Jun-09 Indefinite 100.74% 1,270 Minimum/ Medium Correctional Jun-09 - 118.80% Marion County, IN 1,030 Multi Detention Dec-17 (1) 10 year 109.58% N/A State of Louisiana 1,538 Medium/ Maximum Correctional Mar-09 - 95.03% Delta Correctional Facility Greenwood, Mississippi N/A State of Mississippi 1,172 Minimum/ Medium Correctional Jul-09 - 93.31% Wilkinson County Correctional Facility Woodville, Mississippi N/A State of Mississippi 1,000 Medium Correctional Jul-09 - 98.83% Elizabeth Detention Center Elizabeth, New Jersey N/A ICE Minimum Detention Sep-11 (4) 3 year 100.00% Silverdale Facilities Chattanooga, Tennessee N/A Hamilton County, TN Multi Detention Dec-08 Indefinite 85.96% South Central Correctional Center Clifton, Tennessee N/A State of Tennessee 1,676 Medium Correctional Jun-10 (1) 2 year 97.44% Metro-Davidson County Detention Facility Nashville, Tennessee N/A Davidson County, TN 1,092 Multi Detention Jul-09 - Hardeman County Correctional Facility Whiteville, Tennessee N/A State of Tennessee 2,016 Medium Correctional May-09 (3) 3 year 97.42% B. M. Moore Correctional Center (O) Overton, Texas N/A State of Texas 500 Minimum/ Medium Correctional Jan-09 - 99.74% Bartlett State Jail Bartlett, Texas N/A State of Texas 1,049 Minimum/ Medium Correctional Jan-10 (1) 1 year 99.78% Bradshaw State Jail Henderson, Texas N/A State of Texas 1,980 Minimum/ Medium Correctional Jan-10 (1) 1 year 99.01% Dawson State Jail Dallas, Texas N/A State of Texas 2,216 Minimum/ Medium Correctional Jan-10 (1) 1 year 98.54% Diboll Correctional Center (O) Diboll, Texas N/A State of Texas 518 Minimum/ Medium Correctional Jan-09 - 99.92% 300 1,046 100.30% 16 of 19 FACILITY PORTFOLIO Facility Name Year Constructed (A) Primary Customer Design Capacity (B) Security Level Facility Type (C) Term Remaining Renewal Options (D) Compensated Occupancy % for the Quarter ended 12/31/08 Lindsey State Jail Jacksboro, Texas N/A State of Texas 1,031 Minimum/ Medium Correctional Jan-10 (1) 1 year 99.69% Willacy State Jail Raymondville, Texas N/A State of Texas 1,069 Minimum/ Medium Correctional Jan-10 (1) 1 year 99.82% Total design capacity for Managed Only Facilities (22 Managed Only Facilities) 25,537 Total design capacity for All Facilities as of December 31, 2008 84,721 Expansion and Development Projects: Estimated Completion Facility Name Potential Customer(s) Project Description Design Capacity (B) La Palma Correctional Center Eloy, Arizona First quarter 2009 State of California 1,020 New owned facility Nevada Southern Detention Center Pahrump, Nevada Second quarter 2010 Office of the Federal Detention Trustee 1,072 New owned facility Projected design capacity for All Facilities 86,813 Leased Facilities: Leo Chesney Correctional Center Live Oak, California 1989 Queensgate Correctional Facility (P) Cincinnati, Ohio 1906 Community Education Partners (Q) Houston, Texas N/A Cornell Corrections - Community Education Partners 240 Minimum Owned/Leased Sep-10 - N/A 850 Medium Owned/Leased - - N/A Non-secure Owned/Leased Jun-09 (4) 1 year N/A - (A) The year constructed represents the initial completion of the facility's construction, as well as significant additions to the facility that occurred at a later date. (B) Design capacity measures the number of beds, and accordingly, the number of inmates each facility is designed to accommodate. Facilities housing detainees on a short term basis may exceed the original intended design capacity for sentenced inmates due to the lower level of services required by detainees in custody for a brief period. From time to time, we may evaluate the design capacity of our facilities based on the customers using the facilities, and the ability to reconfigure space with minimal capital outlays. We believe design capacity is an appropriate measure for evaluating prison operations, because the revenue generated by each facility is based on a per diem or monthly rate per inmate housed at the facility paid by the corresponding contracting governmental entity. (C) We manage numerous facilities that have more than a single function (i.e., housing both long-term sentenced adult prisoners and pre-trial detainees). The primary functional categories into which facility types are identified was determined by the relative size of prisoner populations in a particular facility on December 31, 2008. If, for example, a 1,000-bed facility housed 900 adult prisoners with sentences in excess of one year and 100 pre-trial detainees, the primary functional category to which it would be assigned would be that of correction facilities and not detention facilities. It should be understood that the primary functional category to which multi-user facilities are assigned may change from time to time. (D) Remaining renewal options represents the number of renewal options, if applicable, and the remaining term of each option renewal. (E) The facility is subject to a ground lease with the County of San Diego whereby the initial lease term is 18 years from the commencement of the contract, as defined. The County has the right to buy out all, or designated portions of, the premises at various times prior to the expiration of the term at a price generally equal to the cost of the premises, or the designated portion of the premises, less an allowance for the amortization over a 20-year period. Upon expiration of the lease, ownership of the facility automatically reverts to the County of San Diego. 17 of 19 FACILITY PORTFOLIO Facility Name Year Constructed (A) Primary Customer Design Capacity (B) Security Level Facility Type (C) Term Remaining Renewal Options (D) (F) The facility is subject to a purchase option held by Huerfano County which grants Huerfano County the right to purchase the facility upon an early termination of the contract at a price generally equal to the cost of the facility plus 80% of the percentage increase in the Consumer Price Index, cumulated annually. (G) The facility is subject to a purchase option held by the Georgia Department of Corrections, or GDOC, which grants the GDOC the right to purchase the facility for the lesser of the facility's depreciated book value or fair market value at any time during the term of the contract between us and the GDOC. (H) The facility is subject to a deed of conveyance with the city of Wheelwright, KY which includes provisions that would allow assumption of ownership by the city of Wheelwright under the following occurrences: (1) we cease to operate the facility for more than two years, (2) our failure to maintain at least one employee for a period of sixty consecutive days, or (3) a conversion to a maximum security facility based upon classification by the Kentucky Corrections Cabinet. (I) The facility is subject to a purchase option held by the Tallahatchie County Correctional Authority which grants Tallahatchie County Correctional Authority the right to purchase the facility at any time during the contract at a price generally equal to the cost of the premises less an allowance for amortization originally over a 20 year period, and which amortization period was extended through 2050 in connection with an expansion completed during the fourth quarter of 2007. (J) The State of Montana has an option to purchase the facility generally at any time during the term of the contract with us at fair market value less the sum of a pre-determined portion of per-diem payments made to us by the state of Montana. (K) The facility is subject to a purchase option held by the Oklahoma Department of Corrections, or ODC, which grants the ODC the right to purchase the facility at its fair market value at any time. (L) Under the terms of a ground lease with Shelby County, if the County terminates the lease without cause, or breaches the lease or the State fails to fund the contract, we may purchase the property for $150,000. During the second quarter of 2008, Shelby County elected to terminate the ground lease. During the fourth quarter of 2008, we completed the purchase of the land for $150,000 and we are currently evaluating stratigies to maximize the value of the Shelby Training Center. (M) The state of Tennessee has the option to purchase the facility in the event of our bankruptcy, or upon an operational breach, as defined, at a price equal to the book value, as defined. (N) The District of Columbia has the right to purchase the facility at any time during the term of the contract at a price generally equal to the present value of the remaining lease payments for the premises. Upon expiration of the lease, ownership of the facility automatically reverts to the District of Columbia. (O) Pursuant to a re-bid of the management contracts, the Texas Department of Criminal Justice (“TDCJ”) transferred the management of the 500-bed B.M. Moore Correctional Center and the 518-bed Diboll Correctional Center to another operator, upon the expiration of the management contracts on January 16, 2009. (P) During December 2008, we were notified by Hamilton County, Ohio of its intent to terminate the lease for the 850-bed Queensgate Correctional Facility. We believe the County elected to terminate the lease effective January 1, 2009, due to funding issues experienced by the County. (Q) The alternative educational facility is currently configured to accommodate 900 at-risk juveniles and may be expanded to accommodate a total of 1,400 at-risk juveniles. During November 2007, we accepted an unsolicited purchase offer from Community Education Partners to purchase this facility. During February 2008, at the request of CEP, we agreed to extend the closing date and fix the sale price through June 30, 2008. During the second quarter of 2008, CEP did not elect to purchase the facility and instead signed a new one-year lease with four one-year renewal options. Compensated Occupancy % for the Quarter ended 12/31/08 DIVERSIFICATION OF REVENUE 18 of 19 (Unaudited and amounts in thousands) Customer United States Marshals United States Immigration and Customs Enforcement Bureau of Prisons Texas California Colorado Tennessee Florida Georgia Arizona Management Revenue For the Twelve Months Ended December 31, 2008 Percent of Management Revenue For the Twelve Months Ended December 31, 2008 221,672 209,470 198,202 101,542 98,490 84,077 77,002 63,805 53,590 46,731 13.97% 13.20% 12.49% 6.40% 6.21% 5.30% 4.85% 4.02% 3.38% 2.94% $ Total Management Revenue $ 1,154,581 72.75% $ 1,587,062 100.00% 19 of 19 RESEARCH / ANALYST COVERAGE Equity Research Coverage: Avondale Partners Kevin Campbell (615) 467-3521 First Analysis Corporation Todd Van Fleet (312) 258-1400 Barclays Capital Manav Patnaik (212) 526-2983 Macquarie Research H. Cooley May (212) 231-2586 Barclays Capital Emily Shanks (212) 526-6403 SG Cowen Securities Corporation Brad E. Eilert (212) 278-5290 Moody's Investors Service Christopher Wimmer (212) 553-2947 Standard & Poor's Gerald Phelan (312) 233-7031 Debt Research Coverage: Rating Agency Coverage: Credit Ratings: Standard & Poor's Corporate Credit Rating Senior Unsecured Debt Moody's BB BB Not rated Ba2 Any opinions, estimates and/or forecasts regarding the Company’s performance made by the analysts and/or rating agencies listed above are theirs alone and do not necessarily represent the opinions, forecasts or predictions of the Company or its management. The Company does not by its reference above imply its endorsement of or concurrence with such information, conclusions or recommendations and the Company has not undertaken to verify any of the information provided by such analysts or agencies.