James E. Hyman, Cornell's chairman, president and chief executive officer, said, "We are pleased by our first quarter results that demonstrate strong attention by our facilities to the daily blocking and tackling required to serve customers and perform financially. We believe this positions us well to deliver solid growth this year."

    First-Quarter Summary (in thousands, except per share data)   ---------------------------------------------------------------------                                                    Three Months Ended  ---------------------------------------------------------------------  As Reported                                      3/31/2009  3/31/2008  ---------------------------------------------------------------------  Revenue from operations                          $ 99,710   $ 95,392  ---------------------------------------------------------------------  Income from operations                             15,788     14,490  ---------------------------------------------------------------------  Net income                                          5,734      4,634  ---------------------------------------------------------------------  Income available to shareholders                    5,257      4,634  ---------------------------------------------------------------------  EPS - diluted                                    $   0.36   $   0.32  ---------------------------------------------------------------------  Diluted shares outstanding used in per share   computation                                       14,629     14,558  --------------------------------------------------------------------- 

Higher Net Income on Increased Revenues

Revenues grew 4.5 percent to $99.7 million for the first quarter of 2009 from $95.4 million in the 2008 period. Much of the increase came from the expansions of the Great Plains Correctional Facility (Great Plains) and the Walnut Grove Youth Correctional Facility (Walnut Grove) in the third quarter of 2008. In addition, the expansion activation and subsequent ramp during the 2008 first quarter at D. Ray James Prison further contributed to the revenue increase. 2008 first quarter revenues included $1.5 million in revenues associated with the contract-based true-up calculation at the Regional Correctional Center (RCC) for the contract period ended March 2008. Average contract occupancy levels were 93.2 percent for our residential facilities compared with 95.5 percent in the first quarter of 2008. The increase in capacity from expanding Great Plains and Walnut Grove in the third quarter of 2008, along with spare capacity at the Cornell Abraxas 1 juvenile facility, primarily accounted for this decrease in overall occupancy.

Income from operations of $15.8 million for the first quarter of 2009 improved from income of $14.5 million in the fourth quarter of 2008. This 9.0 percent increase related in part to the higher revenues mentioned above. For the first quarter of 2009 the Company reported an increase in net income of 23.7 percent to $5.7 million, from net income of $4.6 million, in last year's first quarter.

For the first quarter of 2009 the Company reported an increase in income available to shareholders of 13.4 percent to $5.3 million, or $0.36 per diluted share, from net income available to shareholders of $4.6 million, or $0.32 per diluted share, in last year's first quarter.

The Company capitalized interest of $0.7 million (or $0.03 per diluted share, after taxes) in the first quarter of 2009. 2008 first quarter results included pre-tax capitalized interest of $0.5 million (or $0.02 per diluted share, after taxes), and revenues of approximately $1.5 million from the true-up calculation resulting from the guaranteed population contract at RCC for the contract period ended March 2008.

Earnings Outlook for Second Quarter, Full Year

For the second quarter of 2009, management expects earnings to range from $0.42 to $0.46 per share. For the full year, management has raised its earlier guidance range by $0.06 per share to $1.70 to $1.78 earnings per share to account for the performance in the first quarter and a change in the activation assumption at the Company's new Hudson, Colorado facility. The Company now expects operations to commence in the middle of the first quarter of 2010 due to construction delays with off-site infrastructure. As a result, pre-opening expense at the facility of approximately $0.04 per share previously included in the fourth quarter of 2009 will shift to 2010.

Other changes to assumptions relevant for 2009 guidance are:

    * At the Company's D. Ray James Prison, the approximate 700 bed    expansion will begin to ramp at the beginning of the third quarter    of 2009.