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CA State Officials Lease Private Prison to Lower Prison Overcrowding: Oct. 15, 2013

CA State Officials Lease Private Prison to Lower Prison Overcrowding: Oct. 15, 2013

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Published by John Myers
California's Department of Corrections and Rehabilitation signs a 3 year lease on a private prison in the Central Valley. This news release is from the owners of the prison, the Corrections Corporation of America.
California's Department of Corrections and Rehabilitation signs a 3 year lease on a private prison in the Central Valley. This news release is from the owners of the prison, the Corrections Corporation of America.

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Published by: John Myers on Oct 15, 2013
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10/16/2013

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News Release
‐more‐
 
10 Burton Hills Boulevard, Nashville, Tennessee 37215, Phone: 615-263-3000Contact:
Karin Demler – Investors, 615-263-3005Steve Owen – Media, 615-263-3107
CCA
TO
LEASE
CALIFORNIA
CITY 
CORRECTIONAL
CENTER
TO
THE
CALIFORNIA
DEPARTMENT
OF
CORRECTIONS
 AND
REHABILITATION
 
Provides
Update
on
Fourth
Quarter
Operating
Trends
 
Nashville,
Tenn.,
October
15,
2013–
CCA
(Corrections
Corporation
of 
 America)
(NYSE:
CXW)
,America'slargestownerofpartnershipcorrectionalanddetentionfacilities,announcedtodaythatithasenteredintoaleaseforits2,304‐bedCaliforniaCityCorrectionalCenterwiththeCaliforniaDepartmentofCorrectionsandRehabilitation(CDCR).TheCompanyisalsoprovidinganupdateoncertainoperatingtrendsitbelieveswillnegativelyimpactfourthquarterfinancialresults.
California
City
Lease
Theleaseagreementincludesathree‐yearbasetermwithunlimitedtwo‐yearrenewaloptionsuponmutualagreement.Annualrentduringthethree‐yearbasetermisfixedat$28.5million.Afterthethree‐yearbaseterm,therentwillbeincreasedannuallybythelesserofCPI(ConsumerPriceIndex)or2%.CCAwillberesponsibleforrepairsandmaintenance,propertytaxesandpropertyinsurance,whileallotheraspectsandcostsoffacilityoperationswillbetheresponsibilityoftheCDCR.LeasepaymentsareexpectedtocommenceonDecember1,2013.Monthlyleasepaymentsaresubjecttoreductionsuntilcertaintenantimprovementsarecompletedanduntilallinmatepopulationscurrentlyhousedatthefacilityareremoved.ThefacilitycurrentlyhousesdetaineesfortheU.S.MarshalsService(USMS)andImmigrationandCustomsEnforcement(ICE).CCAhasbeenworkingwithboththeUSMSandICEtorelocatetheirdetaineesandexpectsthatsomeofthepopulationswillberelocatedtootherCCAfacilities.WeexpectallcurrentinmatepopulationswillberemovedbeforetheendofDecember.CCAwillprovide$10millionintenantimprovementsatnoadditionalcosttotheCDCR.Additionaltenantimprovements,ifdeemednecessarybytheCDCRandagreeduponbyCCA,wouldbefundedbyCCAandrepaidbyCDCRinmonthlyinstallmentsover15years,beginningJuly1,2014.DamonHininger,PresidentandCEO,stated,"WeappreciatetheopportunitytoexpanduponourlongstandingrelationshipwiththeCDCRandthestateofCalifornia,andwe’reespeciallypleasedtohavereachedthisagreement,whichprovidesCaliforniaanimmediatesolutiontohelpreachitspopulationcapacitygoals.Ourabilitytoreactquicklytoourpartners'needswithinnovativesolutionsthatmakethebestuseoftaxpayerdollarsexemplifiestheflexibilitythatCCAisabletoprovidetheCDCRandothergovernmentagencies."
 
Page 2
F
ourth
Quarter
Operating
Trends
TheCompany'sUSMSandICEpopulationshaverecentlybeentrendingbelowexpectationswhichwebelieveislargelyduetothefurloughofgovernmentemployeesandotherconsequencesofthefederalgovernmentshutdown.TheCompanyalsomadeastrategicdecisiontoactivatevacantbedcapacityinordertocompeteforthepotentialopportunitytohousehigherpopulationsforthestateofCaliforniabeginninginthefourthquarterofthisyear.WhiletheCompanyhasbeguntoincuroperatingexpensesassociatedwiththeactivationofthebeds,Californiahasnotyetmadeadecisiononwhethertocontractforadditionalout‐of‐statebeds.TheCompanyalsoexpectstoincuroperatinglossesduringthefourthquarterfromtherampdownofUSMSandICEpopulationsatourCaliforniaCityfacilitynecessarytomakethefacilityavailableforleasetoCalifornia.Whiletheseissuesareexpectedtonegativelyimpactfourthquarteroperatingresults,wecannotmakeapreciseestimateoftheimpactatthistime.TheCompanyisreaffirmingitspreviouslyissuedearningspershareguidanceforthethirdquarterof2013asdisclosedinitspressreleaseannouncingSecondQuarterFinancialResultsissuedonAugust7,2013andexpectstoprovideupdatedearningsguidanceforthefourthquarterandyearendingDecember31,2013reflectingtheissuesdescribedaboveaspartofourregularthirdquarterearningspressreleasetobeissuedafterthecloseofbusinessonNovember6,2013.
 About 
CCA
CCA,apubliclytradedrealestateinvestmenttrust(REIT),isthenation’slargestownerofpartnershipcorrectionanddetentionfacilitiesandoneofthelargestprisonoperatorsintheUnitedStates,behindonlythefederalgovernmentandthreestates.Wecurrentlyownorcontrol53correctionalanddetentionfacilitiesandmanage16additionalfacilitiesownedbyourgovernmentpartners,withatotaldesigncapacityofapproximately90,000bedsin20statesandtheDistrictofColumbia.CCAspecializesinowning,operatingandmanagingprisonsandothercorrectionalfacilitiesandprovidinginmateresidential,communityre‐entryandprisonertransportationservicesforgovernmentalagencies.Inadditiontoprovidingthefundamentalresidentialservicesrelatingtoinmates,ourfacilitiesofferavarietyofrehabilitationandeducationalprograms,includingbasiceducation,religiousservices,lifeskillsandemploymenttrainingandsubstanceabusetreatment.
Forward
Looking
Statements
Thispressreleasecontainsstatementsastoourbeliefsandexpectationsoftheoutcomeoffutureeventsthatareforward‐lookingstatementsasdefinedwithinthemeaningofthePrivateSecuritiesLitigationReformActof1995.Theseforward‐lookingstatementsaresubjecttorisksanduncertaintiesthatcouldcauseactualresultstodiffermateriallyfromthestatementsmade.Theseinclude,butarenotlimitedto,therisksanduncertaintiesassociatedwith:(i)generaleconomicandmarketconditions,includingtheimpactgovernmentalbudgetscanhaveonourperdiemrates,occupancy,andoverallutilization;(ii)fluctuationsinouroperatingresultsbecauseof,amongotherthings,changesinoccupancylevels,competition,increasesincostofoperations,fluctuationsininterestratesandrisksofoperations;(iii)ourabilitytoobtainandmaintaincorrectionalfacilitymanagementcontracts,includingasaresultofsufficientgovernmentalappropriationsandasaresultofinmatedisturbances;(iv)changesinthe
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