James E. Hyman, Cornell's chairman, president and chief executive officer, said, "In the third quarter, we performed to plan despite customer budget problems. As we previously announced, we received an award from the Alaska Department of Corrections to house up to 1,000 of their inmates at our new facility in Hudson, Colorado that we expect to ramp by the end of the year. Combined with our confidence to execute to plan across the rest of our operations through year end, we believe the Company will finish the year well positioned to continue our growth in 2010 despite another challenging budget year for customers."

 Third-Quarter Summary (in thousands, except per share data)
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                             Three Months Ended     Nine Months Ended
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 As Reported                9/30/2009  9/30/2008  9/30/2009  9/30/2008
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 Revenue from operations     $103,279   $ 95,187   $308,323   $285,225
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 Income from operations        18,594     14,037     53,972     43,442
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 Net income                     7,206      4,915     20,568     14,896
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 Income available to
  stockholders                  6,693      4,828     19,182     14,809
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 EPS - diluted               $   0.45   $   0.32   $   1.28   $   1.00
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 Diluted shares outstanding
  used in per share
  computation                  14,995     14,915     14,968     14,867
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Higher Net Income on Increased Revenues

Revenues grew 8.5 percent to $103.3 million for the third quarter of 2009 from $95.2 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 90.6 percent for our residential facilities compared with 90.0 percent in last year's third quarter.

Income from operations of $18.6 million for the third quarter of 2009 improved from $14.0 million in the third quarter of 2008. This 32.5 percent increase was related in part to the higher revenues mentioned above. For the third quarter of 2009, the Company reported an increase in net income of 46.6 percent to $7.2 million, from net income of $4.9 million in last year's third quarter. In the third quarter of 2009 the Company also reported an increase in income available to stockholders of 38.6 percent to $6.7 million, or $0.45 per diluted share, from income available to stockholders of $4.8 million, or $0.32 per diluted share, in last year's third quarter.

The Company capitalized no interest in the third quarter of 2009, compared with capitalized interest of $1.0 million (or $0.04 per diluted share, after taxes) in the third quarter of 2008.

Increased Revenues, Net Income for the Nine-Months

For the nine months ended September 30, 2009, revenues grew 8.1 percent to $308.3 million from $285.2 million for the first nine months of 2008. The increase was principally related to the facility expansions and occupancy growth 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 $54.0 million for the 2009 nine month period compared with $43.4 million in the prior year's nine month period. Net income was $20.6 million compared with net income of $14.9 million in the previous year's first nine months. For the nine months ended September 30, 2009, the Company reported an increase in income available to stockholders of 29.5 percent to $19.2 million, or $1.28 per diluted share, from income available to stockholders of $14.8 million, or $1.00 per diluted share, in last year's nine month period. The Company capitalized interest of $0.7 million (or $0.03 per diluted share, after taxes) in the first nine months of 2009. 2008 results included pre-tax capitalized interest of $2.3 million (or $0.09 per diluted share, after taxes), and revenues of approximately $1.5 million from the RCC true-up calculation mentioned earlier.

Earnings Outlook for Fourth Quarter and Full Year 2009

As previously announced on September 30, 2009, we are activating our Hudson Correctional Facility for our contract with the State of Alaska Department of Corrections sooner than previously forecast. Though we did not incur material expenses for the activation in the third quarter, we expect to incur additional net start-up costs of approximately $0.11 to $0.12 per share in the fourth quarter. Aside from these start-up costs, there are no material changes to our guidance assumptions for the fourth quarter and full year 2009. As a result, management expects 2009 earnings for the fourth-quarter to range from $0.32 to $0.35 per share. For the full year, management anticipates earnings of $1.60 to $1.63 per share.

Quarterly Webcast

Cornell's management will host a conference call and simultaneous webcast at 2:00 p.m. Eastern time today. The webcast may be accessed through Cornell's home page, www.cornellcompanies.com. An audio replay and podcast will be available on the above Website, or can otherwise be heard by dialing (800) 406-7325 or (303) 590-3030 and providing confirmation code 4175248. The replay will be available through Thursday, November 12, 2009 by phone and through Friday, November 5, 2010 on the Web site.