James E. Hyman, Cornell's chairman, president and chief executive officer, said, "In the second quarter, we delivered yet another consecutive quarter of strong operating performance. Against the background of continuing budget turbulence among our customers, our attention to operational details and customer service positions us to maintain this growth through year end, and to leverage our spare capacity to sustain the growth into future years."

    Second-Quarter Summary (in thousands, except per share data)                              Three Months Ended     Six Months Ended                            ------------------------------------------  As Reported               6/30/2009  6/30/2008  6/30/2009  6/30/2008  Revenue from operations   $ 105,334  $  94,646  $ 205,044  $ 190,038  Income from operations       19,590     14,914     35,376     29,404  Net income                    7,628      5,345     13,360      9,979  Income available to   stockholders                 7,230      5,345     12,487      9,979  --------------------------------------------------------------------  EPS - diluted             $    0.48  $    0.36  $    0.84  $    0.67  --------------------------------------------------------------------  Diluted shares   outstanding used in per   share computation           14,970     14,854     14,952     14,840 

Higher Net Income on Increased Revenues

Revenues grew 11.3 percent to $105.3 million for the second quarter of 2009 from $94.6 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, as well as higher populations at the Regional Correctional Center (RCC). Average contract occupancy levels were 91.1 percent for our residential facilities compared with 93.0 percent in last year's second quarter. The increase in capacity from expanding Walnut Grove in the third quarter of 2008 and the second expansion of D. Ray James Prison in the second quarter of 2009, along with spare capacity at our two small male facilities in California, primarily accounted for this decrease in overall occupancy.

Income from operations of $19.6 million for the second quarter of 2009 improved from $14.9 million in the second quarter of 2008. This 31.4 percent increase was related in part to the higher revenues mentioned above. For the second quarter of 2009 the Company reported an increase in net income of 42.7 percent to $7.6 million, from net income of $5.3 million in last year's second quarter. For the second quarter of 2009 the Company reported an increase in income available to stockholders of 35.3 percent to $7.2 million, or $0.48 per diluted share, from income available to stockholders of $5.3 million, or $0.36 per diluted share, in last year's second quarter.

The Company capitalized no interest in the second quarter of 2009, compared with capitalized interest of $0.8 million (or $0.03 per diluted share, after taxes) in the second quarter of 2008.

Increased Revenues, Net Income for the Six-Months

For the six months ended June 30, 2009, revenues grew 7.9 percent to $205.0 million from $190.0 million for the first six months of 2008. The increase was principally related to the facility expansions and activations at those programs mentioned earlier. In addition, the 2008 period included approximately $1.5 million resulting from the guaranteed population contract at the RCC for the contract period ended March 2008.

Higher revenues increased income from operations to $35.4 million for the 2009 six month period compared with $29.4 million in the prior year's six month period. Net income was $13.4 million compared with net income of $10.0 million in the previous year's first six months. For the six months ended June 30, 2009, the Company reported an increase in income available to stockholders of 25.1 percent to $12.5 million, or $0.84 per diluted share, from income available to stockholders of $10.0 million, or $0.67 per diluted share, in last year's six month period. The Company capitalized interest of $0.7 million (or $0.03 per diluted share, after taxes) in the first six months of 2009. 2008 results included pre-tax capitalized interest of $1.3 million (or $0.05 or diluted share, after taxes), and revenues of approximately $1.5 million from the RCC true-up calculation mentioned earlier.

Earnings Outlook for Third and Fourth Quarters and Full Year 2009

Management expects 2009 earnings for the third quarter to range from $0.42 to $0.46 per share, and for the fourth-quarter to also be between $0.42 to $0.46 per share. For the full year, management has raised its earlier guidance by $0.06 per share to $1.68 to $1.76 per share, to account for the performance in the second quarter as well as forecasted continued operational strength across the portfolio.

All major assumptions underlying this guidance remain unchanged from those discussed by management in their previous quarterly conference call, with the exception of two items:

    * At the Company's D.Ray James facility, the Company assumes that the    700- beds of capacity added during the second quarter will not fill    this year.  As previously announced on May 20, 2009, this reduced    forecast earnings by approximately $0.06 per share.  * At the Company's 2000-bed Great Plains facility, the Arizona    Department of Corrections (ADOC) has decided due to budget    pressures to reduce the population by approximately 237 beds for    the remainder of the contract year ending June 30, 2010.  The    estimated impact of this reduction for 2009 is up to approximately    $0.07 per share. 

Stock Repurchase Program

The Company also is announcing today that its Board of Directors has authorized a stock repurchase program for 2009 and 2010. Based on the Board's authorization, the Company anticipates a repurchase program of up to $10 million.