UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED: JUNE 30, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER: 001-16109 CORECIVIC, INC. (Exact name of registrant as specified in its charter) MARYLAND 62-1763875 (State or other jurisdiction of incorpora ...

Financial Data and Key Metrics Changes - In Q1 2020, the company reported total revenue of $491 million, a 1.5% increase year-over-year, and normalized FFO per share of $0.54, exceeding the high end of guidance by $0.01 [27][35] - Adjusted EBITDA for the quarter was $100.4 million, surpassing the guidance range of $96 million to $99 million [35][36] - EPS was reported at $0.27, with adjusted EPS at $0.30, both above the guidance range [35] Business Line Data and Key Metrics Changes - The safety segment, which includes ICE and U.S. Marshals, experienced a decline in compensated populations, with a reduction of 1,300 from March 20 to March 31 due to the federal government's actions [36][40] - The community segment, which contributes about 5% of net operating income, saw a reduction in referrals due to disruptions in court hearings and transfers to non-residential statuses [43][44] - The property segment, accounting for about 12% of net operating income, is expected to remain stable as most revenue is generated from federal and state governments [45] Market Data and Key Metrics Changes - ICE's total detention population dropped to approximately 30,000 from about 43,000 at year-end 2019, significantly impacting revenue as ICE represents about 28% of total revenue [24][25] - The U.S. Marshals and Federal Bureau of Prisons also saw modest declines in utilization due to disruptions in the criminal justice system [26] Company Strategy and Development Direction - The company is focused on long-term positioning despite the pandemic, emphasizing prudent investments and maintaining a strong balance sheet [28][29] - Management is committed to supporting employees and communities during the pandemic, including providing additional health care benefits and a Hero Bonus for frontline staff [29][33] - The company is monitoring government assistance and has taken steps to reduce operating expenses while ensuring safety measures are in place [48][49] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the challenges posed by COVID-19, citing experience from past economic downturns [30][32] - The company has not seen negative budgetary impacts on contracts to date but is prepared for potential challenges [32][52] - Future financial guidance has been suspended due to uncertainties surrounding the pandemic and its impact on operations [46] Other Important Information - The company has implemented comprehensive COVID-19 response plans, including enhanced cleaning protocols and PPE supply chain management [10][12] - The average age of the company's facilities is significantly lower than that of many public correctional facilities, allowing for better compliance with social distancing guidelines [19] Q&A Session Summary Question: Can you elaborate on the decline in ICE population and any guaranteed minimum contracts? - Management confirmed that about 14 out of 21 federal contracts have monthly fixed payment provisions, providing stability despite fluctuations in populations [57][58] Question: How did the company handle state financial issues during the Great Recession? - Management noted that while states faced budget challenges, they were able to provide cost savings without materially impacting margins, and they have a playbook for similar situations today [61][62] Question: What is the status of new business prospects amid the pandemic? - Management indicated that procurement processes have been put on hold but are still actively pursuing opportunities, including in Idaho [66][67]

Supplemental Financial Information For the Quarter Ended March 31, 2020 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 expecta ...

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20%E2%80%93%20FINANCIAL%20STATEMENTS.) CoreCivic's unaudited consolidated financial statements for Q1 2020, covering balance sheets, operations, cash flows, equity, and detailed notes on key accounting areas [Consolidated Balance Sheets](index=3&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) This section provides a snapshot of CoreCivic's financial position at March 31, 2020, and December 31, 2019 Consolidated Balance Sheet Highlights (Amounts in Thousands) | Metric | March 31, 2020 | December 31, 2019 | | :---------------------- | :------------- | :---------------- | | Cash and cash equivalents | $335,491 | $92,120 | | Total current assets | $659,901 | $435,385 | | Total assets | $4,078,799 | $3,791,631 | | Total current liabilities | $353,256 | $368,811 | | Total liabilities | $2,700,123 | $2,414,882 | | Total equity | $1,378,676 | $1,376,749 | [Consolidated Statements of Operations](index=4&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section details CoreCivic's financial performance for the three months ended March 31, 2020, and 2019 Consolidated Statements of Operations Highlights (Amounts in Thousands, Except Per Share) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | REVENUES | $491,101 | $484,064 | | OPERATING INCOME | $59,019 | $73,264 | | NET INCOME | $33,238 | $49,340 | | NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS | $32,057 | $49,340 | | BASIC EARNINGS PER SHARE | $0.27 | $0.42 | | DILUTED EARNINGS PER SHARE | $0.27 | $0.41 | [Consolidated Statements of Cash Flows](index=5&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section outlines CoreCivic's cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (Amounts in Thousands) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $75,377 | $77,823 | | Net cash used in investing activities | $(42,069) | $(78,000) | | Net cash provided by (used in) financing activities | $199,940 | $(20,560) | | CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $352,341 | $53,400 | [Consolidated Statement of Stockholders' Equity (March 31, 2020)](index=6&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20STOCKHOLDERS%27%20EQUITY%20FOR%20THE%20QUARTERLY%20PERIOD%20ENDED%20MARCH%2031%2C%202020) This section details changes in CoreCivic's stockholders' equity for the quarter ended March 31, 2020 Changes in Stockholders' Equity (Q1 2020, Amounts in Thousands) | Item | Common Shares | Common Stock Par Value | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity | | :--------------------------------------- | :------------ | :--------------------- | :------------------------- | :------------------ | :------------------------- | | Balance as of December 31, 2019 | 119,096 | $1,191 | $1,821,810 | $(446,252) | $1,376,749 | | Net income | — | — | — | 32,057 | 32,057 | | Retirement of common stock | (207) | (2) | (3,558) | — | (3,560) | | Dividends declared ($0.44 per share) | — | — | — | (53,415) | (53,415) | | Restricted stock compensation, net of forfeitures | — | — | 4,610 | — | 4,610 | | Balance as of March 31, 2020 | 119,629 | $1,196 | $1,822,855 | $(468,646) | $1,355,405 | [Consolidated Statement of Stockholders' Equity (March 31, 2019)](index=7&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20STOCKHOLDERS%27%20EQUITY%20FOR%20THE%20QUARTERLY%20PERIOD%20ENDED%20MARCH%2031%2C%202019) This section details changes in CoreCivic's stockholders' equity for the quarter ended March 31, 2019 Changes in Stockholders' Equity (Q1 2019, Amounts in Thousands) | Item | Common Shares | Common Stock Par Value | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity | | :--------------------------------------- | :------------ | :--------------------- | :------------------------- | :------------------ | :------------------------- | | Balance as of December 31, 2018 | 118,674 | $1,187 | $1,807,202 | $(393,330) | $1,415,059 | | Net income | — | — | — | 49,340 | 49,340 | | Retirement of common stock | (143) | (1) | (3,069) | — | (3,070) | | Dividends declared ($0.44 per share) | — | — | — | (52,994) | (52,994) | | Restricted stock compensation, net of forfeitures | — | — | 3,812 | — | 3,812 | | Balance as of March 31, 2019 | 119,068 | $1,191 | $1,808,147 | $(426,924) | $1,382,414 | [Notes to Consolidated Financial Statements](index=8&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section provides detailed explanations and disclosures supporting the consolidated financial statements [1. Organization and Operations](index=8&type=section&id=1.%20ORGANIZATION%20AND%20OPERATIONS) CoreCivic, the largest owner of partnership correctional and reentry facilities, operates as a REIT via Safety, Community, and Properties segments - CoreCivic operates **50 correctional and detention facilities** (43 owned) with approximately **73,000 beds**, **28 residential reentry centers** (approximately **5,000 beds**), and **57 properties leased to third parties** (3.3 million sq ft) as of March 31, 2020[23](index=23&type=chunk) - The company operates as a Real Estate Investment Trust (REIT) since January 1, 2013, conducting services through Taxable REIT Subsidiaries (TRSs) to comply with REIT qualification requirements[25](index=25&type=chunk) [2. Basis of Presentation and Summary of Significant Accounting Policies](index=8&type=section&id=2.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Unaudited interim financial statements follow GAAP; Q1 2020 adoption of ASU 2016-13 resulted in a $1.0 million charge to accumulated deficit, with no material impact - CoreCivic adopted ASU 2016-13, 'Financial Instruments – Credit Losses,' in Q1 2020, resulting in a **$1.0 million charge to accumulated deficit** The impact was not material due to the high credit quality of government receivables[27](index=27&type=chunk) [Fair Value of Financial Instruments](index=9&type=section&id=Fair%20Value%20of%20Financial%20Instruments) CoreCivic estimates fair value of financial instruments; no material differences between carrying amounts and fair values were noted, except for debt Fair Value of Debt (Amounts in Thousands) | Metric | March 31, 2020 Carrying Amount | March 31, 2020 Fair Value | December 31, 2019 Carrying Amount | December 31, 2019 Fair Value | | :----- | :----------------------------- | :------------------------ | :-------------------------------- | :--------------------------- | | Debt | $(2,297,529) | $(2,183,779) | $(1,986,865) | $(1,964,366) | [3. Goodwill](index=9&type=section&id=3.%20GOODWILL) Goodwill remained at $50.5 million, primarily in Community; a COVID-19 assessment found no impairment as of March 31, 2020, but future uncertainty exists Goodwill Allocation (Amounts in Millions) | Segment | March 31, 2020 | December 31, 2019 | | :---------------- | :------------- | :---------------- | | CoreCivic Safety | $7.9 | $7.9 | | CoreCivic Community | $42.6 | $42.6 | | Total Goodwill | $50.5 | $50.5 | - A qualitative assessment for goodwill recoverability was performed due to COVID-19, concluding **no impairments as of March 31, 2020**, but future impacts are difficult to predict[33](index=33&type=chunk) [4. Real Estate Transactions](index=10&type=section&id=4.%20REAL%20ESTATE%20TRANSACTIONS) CoreCivic acquired 28 properties for $83.2 million and leased Lansing Correctional Facility in Q1 2020, incurring $2.1 million in idled facility expenses and a $0.5 million impairment - On January 2, 2020, CoreCivic acquired a portfolio of **28 government-leased properties for $83.2 million**, financed with **$7.7 million cash**, **$52.2 million assumed debt**, and **1.3 million Operating Partnership Units**[35](index=35&type=chunk) - The 20-year lease for the Lansing Correctional Facility commenced in January 2020, with a **financing receivable of $150.8 million** recognized as of March 31, 2020[36](index=36&type=chunk) Idled Correctional Facilities Carrying Values (Amounts in Thousands) | Facility Name | Design Capacity | Net Carrying Value (March 31, 2020) | | :-------------------------------- | :-------------- | :---------------------------------- | | Prairie Correctional Facility | 1,600 | $14,668 | | Huerfano County Correctional Center | 752 | $16,108 | | Diamondback Correctional Facility | 2,160 | $39,293 | | Marion Adjustment Center | 826 | $11,247 | | Kit Carson Correctional Center | 1,488 | $53,600 | | Total | 6,826 | $134,916 | - CoreCivic incurred **$2.1 million in operating expenses for idled facilities** in Q1 2020 and recorded a **$0.5 million impairment charge** for a Community segment facility sold in April 2020[39](index=39&type=chunk) [5. Debt](index=12&type=section&id=5.%20DEBT) Total debt increased to $2.3 billion due to borrowings and acquisitions; CoreCivic was in compliance with covenants, with maturities concentrated in 2023 Debt Outstanding (Amounts in Thousands) | Debt Instrument | March 31, 2020 | December 31, 2019 | | :------------------------------------------------ | :------------- | :---------------- | | Revolving Credit Facility | $631,000 | $365,000 | | Term Loan A | $250,000 | $250,000 | | 4.75% Senior Notes maturing October 2027 | $250,000 | $250,000 | | 4.5% Capital Commerce Center Non-Recourse Mortgage Note | $21,896 | $22,209 | | 4.43% Lansing Correctional Center Non-Recourse Mortgage Note | $159,522 | $159,522 | | 4.5% SSA-Baltimore Non-Recourse Mortgage Note | $148,745 | $150,134 | | Term Loan B maturing December 2024 | $246,875 | $250,000 | | 4.625% Senior Notes maturing May 2023 | $350,000 | $350,000 | | 5.0% Senior Notes maturing October 2022 | $250,000 | $250,000 | | 4.91% Government Real Estate Solutions Non-Recourse Mortgage Note | $51,991 | — | | Total debt | $2,297,529 | $1,986,865 | - As of March 31, 2020, CoreCivic had **$631.0 million outstanding** under its Revolving Credit Facility and **$155.0 million available**, with a weighted average interest rate of **2.4%**[42](index=42&type=chunk)[45](index=45&type=chunk) - The company was in compliance with all financial covenants under its Bank Credit Agreement as of March 31, 2020[46](index=46&type=chunk) Scheduled Principal Debt Payments (Amounts in Thousands) | Year | Amount | | :----------------- | :------------ | | 2020 (remainder) | $24,701 | | 2021 | $40,047 | | 2022 | $293,990 | | 2023 | $1,171,170 | | 2024 | $196,044 | | Thereafter | $571,577 | | Total debt | $2,297,529 | [6. Stockholders' Equity](index=15&type=section&id=6.%20STOCKHOLDERS%27%20EQUITY) CoreCivic declared a $0.44 per share dividend for Q1 2020, issued 1.2 million RSUs valued at $20.7 million, and expensed $4.6 million for equity compensation Quarterly Dividends Declared on Common Stock | Declaration Date | Record Date | Payable Date | Per Share | | :--------------- | :---------- | :----------- | :-------- | | Feb 21, 2019 | Apr 1, 2019 | Apr 15, 2019 | $0.44 | | May 16, 2019 | Jul 1, 2019 | Jul 16, 2019 | $0.44 | | Aug 15, 2019 | Oct 1, 2019 | Oct 15, 2019 | $0.44 | | Dec 12, 2019 | Jan 6, 2020 | Jan 15, 2020 | $0.44 | | Feb 20, 2020 | Apr 1, 2020 | Apr 15, 2020 | $0.44 | - In Q1 2020, CoreCivic issued approximately **1.2 million RSUs** with an aggregate value of **$20.7 million** and expensed **$4.6 million** (net of forfeitures) related to RSUs[62](index=62&type=chunk)[66](index=66&type=chunk) [7. Earnings Per Share](index=16&type=section&id=7.%20EARNINGS%20PER%20SHARE) Q1 2020 basic and diluted EPS decreased to $0.27 from $0.42/$0.41 in Q1 2019, reflecting restricted stock and Operating Partnership Units Earnings Per Share (Amounts in Thousands, Except Per Share Data) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income attributable to common stockholders | $32,057 | $49,340 | | Weighted average common shares outstanding (Basic) | 119,336 | 118,836 | | Weighted average shares and assumed conversions (Diluted) | 120,725 | 118,918 | | BASIC EARNINGS PER SHARE | $0.27 | $0.42 | | DILUTED EARNINGS PER SHARE | $0.27 | $0.41 | [8. Commitments and Contingencies](index=16&type=section&id=8.%20COMMITMENTS%20AND%20CONTINGENCIES) CoreCivic faces legal claims, including ICE detainee labor and securities class actions, maintaining $13.9 million in litigation reserves as of March 31, 2020 - A class action lawsuit was filed against CoreCivic alleging forced labor and minimum wage violations for ICE detainees, with a nationwide anti-trafficking class certified on April 1, 2020 No accrual has been recorded as losses are not considered probable or estimable[72](index=72&type=chunk) - A securities class action lawsuit alleges false/misleading statements regarding operational and cost efficiency factors, with the class certified on March 26, 2019 CoreCivic has established a reserve based on its estimate of a potential settlement[74](index=74&type=chunk)[75](index=75&type=chunk)[76](index=76&type=chunk) - As of March 31, 2020, CoreCivic had **$13.9 million in accrued liabilities** for legal claims and proceedings[134](index=134&type=chunk) [9. Income Taxes](index=18&type=section&id=9.%20INCOME%20TAXES) Q1 2020 income tax expense was $3.8 million (10.2% effective rate), up from $2.5 million (4.8%) in Q1 2019, partly due to a $3.1 million deferred tax expense for the Lansing facility Income Tax Expense and Effective Tax Rate | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :------------------ | :-------------------------------- | :-------------------------------- | | Income tax expense | $3,776 | $2,484 | | Effective tax rate | 10.2% | 4.8% | - Q1 2020 income tax expense included **$3.1 million deferred** during the construction of the Lansing Correctional Facility, which was revalued to zero upon its conversion to a QRS[81](index=81&type=chunk)[196](index=196&type=chunk) - The Coronavirus Aid, Relief and Economic Security Act (CARES Act) is not currently expected to have a material impact on CoreCivic's consolidated financial statements[82](index=82&type=chunk) [10. Segment Reporting](index=19&type=section&id=10.%20SEGMENT%20REPORTING) CoreCivic reports on Safety, Community, and Properties segments; Q1 2020 saw Safety generate most revenue and NOI, while Properties grew significantly from acquisitions and new leases Segment Revenue and Net Operating Income (Amounts in Thousands) | Segment | Q1 2020 Revenue | Q1 2019 Revenue | Q1 2020 Net Operating Income | Q1 2019 Net Operating Income | | :---------------- | :-------------- | :-------------- | :--------------------------- | :--------------------------- | | Safety | $437,765 | $434,318 | $107,028 | $117,723 | | Community | $30,599 | $30,566 | $6,150 | $7,070 | | Properties | $22,679 | $19,112 | $15,725 | $13,460 | | Total Segment | $491,043 | $483,996 | $128,903 | $138,253 | Segment Capital Expenditures (Amounts in Thousands) | Segment | Q1 2020 Capital Expenditures | Q1 2019 Capital Expenditures | | :---------------- | :--------------------------- | :--------------------------- | | Safety | $6,677 | $19,956 | | Community | $654 | $1,463 | | Properties | $95,949 | $15,903 | | Corporate and other | $2,058 | $3,472 | | Total | $105,338 | $40,794 | Segment Total Assets (Amounts in Thousands) | Segment | March 31, 2020 | December 31, 2019 | | :---------------- | :------------- | :---------------- | | Safety | $2,553,970 | $2,606,127 | | Community | $266,106 | $275,882 | | Properties | $789,322 | $682,249 | | Corporate and other | $469,401 | $227,373 | | Total | $4,078,799 | $3,791,631 | [11. Condensed Consolidating Financial Statements](index=21&type=section&id=11.%20CONDENSED%20CONSOLIDATING%20FINANCIAL%20STATEMENTS%20OF%20THE%20COMPANY%20AND%20SUBSIDIARIES) Condensed consolidating financial statements for CoreCivic and subsidiaries are presented per Rule 3-10 of Regulation S-X, detailing financial position and performance [ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) Management discusses CoreCivic's Q1 2020 financial condition and results, covering KPIs, revenue/expense drivers, segment performance, liquidity, capital resources, and COVID-19 impacts [Overview](index=27&type=section&id=OVERVIEW) CoreCivic is a diversified government solutions company operating as a REIT through Safety, Community, and Properties segments, managing correctional and government-leased facilities - CoreCivic is the nation's largest owner of partnership correctional, detention, and residential reentry facilities and one of the largest prison operators in the United States, also believing it is the largest private owner of real estate used by U.S. government agencies[115](index=115&type=chunk) - As of March 31, 2020, CoreCivic operated **50 correctional/detention facilities** (43 owned), **28 residential reentry centers**, and owned **57 properties for lease to third parties**[115](index=115&type=chunk) - The company operates as a REIT, with Taxable REIT Subsidiaries (TRSs) handling correctional services and other business activities, subject to corporate income tax[118](index=118&type=chunk)[119](index=119&type=chunk) [Critical Accounting Policies](index=28&type=section&id=CRITICAL%20ACCOUNTING%20POLICIES) CoreCivic's critical accounting policies involve estimates for asset impairments, insurance, and legal reserves; a COVID-19 assessment found no goodwill impairment as of March 31, 2020, but future uncertainty remains Carrying Values of Idled CoreCivic Safety Correctional Facilities (Amounts in Thousands) | Facility Name | Carrying Value (March 31, 2020) | | :-------------------------------- | :------------------------------ | | Prairie Correctional Facility | $14,668 | | Huerfano County Correctional Center | $16,108 | | Diamondback Correctional Facility | $39,293 | | Marion Adjustment Center | $11,247 | | Kit Carson Correctional Center | $53,600 | | Total | $134,916 | - A qualitative assessment for goodwill impairment was performed due to the potential impact of COVID-19, concluding **no impairments as of March 31, 2020**, but the long-term impacts are difficult to predict[132](index=132&type=chunk) - As of March 31, 2020, CoreCivic had **$42.6 million in accrued liabilities** for self-funded insurance claims (employee health, workers' compensation, automobile) and **$13.9 million for legal reserves**[133](index=133&type=chunk)[134](index=134&type=chunk) [Results of Operations](index=30&type=section&id=RESULTS%20OF%20OPERATIONS) Q1 2020 net income decreased to $32.1 million ($0.27 diluted EPS) from $49.3 million ($0.41 diluted EPS) in Q1 2019, despite a 1.4% revenue increase, due to higher operating expenses and initial COVID-19 impacts [Facility Changes](index=30&type=section&id=Facility%20Changes) This section outlines the changes in the number of facilities operated by CoreCivic across its segments Changes in Number of Facilities Operated | Item | Safety | Community | Properties | Total | | :-------------------------------------------- | :----- | :-------- | :--------- | :---- | | Facilities as of December 31, 2018 | 51 | 26 | 27 | 104 | | Acquisition of South Raleigh Reentry Center | — | 1 | — | 1 | | Acquisition of a leased property in Michigan | — | — | 1 | 1 | | Sale of a leased property in Pennsylvania | — | — | (1) | (1) | | Acquisition of Rehabilitation Services, Inc. assets | — | 2 | — | 2 | | Lease of Southeast Correctional Complex | (1) | — | 1 | — | | Facilities as of December 31, 2019 | 50 | 29 | 28 | 107 | | Acquisition of government-leased properties | — | — | 28 | 28 | | Commencement of Lansing Correctional Facility lease | — | — | 1 | 1 | | Termination of contract and lease of a Colorado reentry center | — | (1) | — | (1) | | Facilities as of March 31, 2020 | 50 | 28 | 57 | 135 | [Net Income and EPS](index=30&type=section&id=Net%20Income%20and%20EPS) This section presents CoreCivic's net income attributable to common stockholders and diluted earnings per share Net Income Attributable to Common Stockholders and Diluted EPS | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | | Net income attributable to common stockholders | $32.1 million | $49.3 million | | Diluted earnings per share | $0.27 | $0.41 | [Segment Contribution to Net Operating Income](index=31&type=section&id=Segment%20Contribution%20to%20Net%20Operating%20Income) This section analyzes the proportional contribution of each segment to CoreCivic's total facility net operating income Total Facility Net Operating Income by Segment | Segment | Q1 2020 | Q1 2019 | | :-------- | :------ | :------ | | Safety | 83.0% | 85.2% | | Community | 4.8% | 5.1% | | Properties| 12.2% | 9.7% | [Facility Operations Key Performance Indicators](index=31&type=section&id=Facility%20Operations%20Key%20Performance%20Indicators) This section presents key operational metrics for CoreCivic's facilities, including revenue, expenses, and occupancy rates Facility Operations Key Performance Indicators | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenue per compensated man-day | $81.92 | $78.37 | | Operating expenses per compensated man-day | $61.79 | $57.03 | | Operating income per compensated man-day | $20.13 | $21.34 | | Operating margin | 24.6% | 27.2% | | Average compensated occupancy | 79.0% | 82.7% | | Average available beds | 78,019 | 78,073 | | Average compensated population | 61,617 | 64,551 | [Revenue Analysis](index=32&type=section&id=Revenue%20Analysis) Q1 2020 total revenue rose 1.4% to $491.1 million, driven by higher per diem and rental revenue, despite a 4.5% drop in compensated population; federal revenue increased, state decreased, and COVID-19 impacts are emerging Revenue Components (Amounts in Millions) | Revenue Type | Q1 2020 | Q1 2019 | Change ($) | Change (%) | | :------------------- | :------ | :------ | :--------- | :--------- | | Federal | $251.3 | $242.1 | $9.2 | 3.8% | | State | $166.6 | $171.3 | $(4.7) | (2.7%) | | Local | $25.6 | $24.8 | $0.8 | 3.2% | | Other Management | $24.8 | $26.7 | $(1.9) | (7.1%) | | Total Management | $468.3 | $464.9 | $3.4 | 0.7% | | Rental Revenue | $22.7 | $19.1 | $3.6 | 18.8% | | Total Revenue | $491.1 | $484.1 | $7.0 | 1.4% | - Average daily compensated population decreased by **2,934 (4.5%) to 61,617** in Q1 2020, primarily due to the expiration of the BOP contract at Adams County Correctional Center and the transfer of California inmates[145](index=145&type=chunk) - Federal revenues increased **$9.2 million (3.8%)** in Q1 2020, but COVID-19 has amplified reductions in ICE and USMS populations due to border entry denials and criminal justice system disruptions[146](index=146&type=chunk)[147](index=147&type=chunk) - State revenues decreased **$4.7 million (2.7%)** in Q1 2020, mainly due to California inmate transfers, partially offset by new contracts with Mississippi and Kansas[149](index=149&type=chunk) [Operating Expenses Analysis](index=33&type=section&id=Operating%20Expenses%20Analysis) Q1 2020 operating expenses increased to $362.3 million, with per-man-day expenses rising to $61.79 due to higher salaries/benefits; COVID-19 is expected to add $6.5-7.5 million in Q2 'hero bonuses' Operating Expenses (Amounts in Millions) | Metric | Q1 2020 | Q1 2019 | | :--------------- | :------ | :------ | | Operating expenses | $362.3 | $345.8 | - Total expenses per compensated man-day increased to **$61.79** in Q1 2020 from **$57.03** in Q1 2019, driven by increases in salaries and benefits expenses[158](index=158&type=chunk) - CoreCivic expects to incur **$6.5 million to $7.5 million in 'hero bonuses'** for line and field staff during Q2 2020 due to the COVID-19 pandemic[159](index=159&type=chunk) [Facility Management Contracts](index=34&type=section&id=Facility%20Management%20Contracts) CoreCivic expects to renew most 3-5 year facility management contracts due to bed supply and cost-effectiveness, though government partners retain termination rights - CoreCivic expects to renew all material contracts expiring within the next twelve months, maintaining a high renewal rate due to constrained bed supply and cost-effectiveness[162](index=162&type=chunk) - Government partners generally retain the right to terminate management contracts for non-appropriation of funds or for convenience[161](index=161&type=chunk) [CoreCivic Safety Segment Performance](index=34&type=section&id=CoreCivic%20Safety%20Segment%20Performance) Q1 2020 CoreCivic Safety revenue rose slightly to $437.8 million, but NOI decreased 9.1% to $107.0 million, with margins impacted by reduced populations and higher expenses, alongside California inmate transfers and new contracts CoreCivic Safety Segment Performance Indicators | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenue per compensated man-day | $83.37 | $79.84 | | Operating expenses per compensated man-day | $62.99 | $58.20 | | Operating income per compensated man-day | $20.38 | $21.64 | | Operating margin | 24.4% | 27.1% | | Average compensated occupancy | 79.4% | 83.0% | | Average available beds | 72,689 | 72,833 | | Average compensated population | 57,699 | 60,441 | - Operating margins in CoreCivic Safety were negatively impacted by reduced populations and increased salaries and benefits expenses, with further adverse impacts expected from COVID-19[165](index=165&type=chunk) - The transfer of all California inmates from out-of-state facilities was completed by June 30, 2019, resulting in a **$9.8 million revenue decrease** for Q1 2020 compared to Q1 2019[166](index=166&type=chunk) - New contracts were secured for the previously idled Torrance County Detention Facility (ICE) and Eden Detention Center (USMS), and with the state of Mississippi for the Tallahatchie facility and Kansas for the Saguaro facility[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[173](index=173&type=chunk) [CoreCivic Community Segment Performance](index=36&type=section&id=CoreCivic%20Community%20Segment%20Performance) Q1 2020 CoreCivic Community revenue was $30.6 million, but NOI fell 13.0% to $6.2 million, with margins impacted by higher expenses and reduced population; the segment acquired two centers and faces COVID-19 impacts CoreCivic Community Segment Performance Indicators | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Revenue per compensated man-day | $60.46 | $56.71 | | Operating expenses per compensated man-day | $44.14 | $39.86 | | Operating income per compensated man-day | $16.32 | $16.85 | | Operating margin | 27.0% | 29.7% | | Average compensated occupancy | 73.5% | 78.4% | | Average available beds | 5,330 | 5,240 | | Average compensated population | 3,918 | 4,110 | - Operating margins were negatively impacted by increased salaries and benefits expenses and a decline in average compensated population, partly due to reduced utilization from Oklahoma[176](index=176&type=chunk) - CoreCivic acquired certain assets of Rehabilitation Services, Inc. in December 2019, adding **two residential reentry centers in Virginia**[177](index=177&type=chunk) - The COVID-19 pandemic has led to resident transfers to non-residential status or early releases and a modest reduction in referrals to community facilities[178](index=178&type=chunk) [CoreCivic Properties Segment Performance](index=37&type=section&id=CoreCivic%20Properties%20Segment%20Performance) Q1 2020 CoreCivic Properties revenue grew 18.7% to $22.7 million and NOI rose 16.8% to $15.7 million, driven by a 28-property acquisition and the Lansing Correctional Facility lease commencement CoreCivic Properties Segment Revenue and Net Operating Income (Amounts in Millions) | Metric | Q1 2020 | Q1 2019 | | :-------------------------- | :------ | :------ | | Total revenue | $22.7 | $19.1 | | Facility net operating income | $15.7 | $13.5 | - The segment's growth was primarily due to the acquisition of a **28-property government-leased portfolio** in January 2020, which generated **$2.7 million in rental revenue** in Q1 2020[183](index=183&type=chunk) - The lease for the Lansing Correctional Facility commenced in January 2020, generating **$0.7 million in non-lease service revenue** and **$1.6 million in interest income** in Q1 2020[184](index=184&type=chunk) [General and Administrative Expenses](index=38&type=section&id=General%20and%20Administrative%20Expenses) Q1 2020 general and administrative expenses increased to $31.3 million from $29.4 million in Q1 2019, mainly due to higher corporate salaries, benefits, and administrative costs General and Administrative Expenses (Amounts in Millions) | Metric | Q1 2020 | Q1 2019 | | :------------------------------------ | :------ | :------ | | General and administrative expenses | $31.3 | $29.4 | [Depreciation and Amortization](index=38&type=section&id=Depreciation%20and%20Amortization) Q1 2020 depreciation and amortization expense increased to $38.0 million from $35.5 million in Q1 2019, primarily due to M&A activities in 2019 and 2020 Depreciation and Amortization Expense (Amounts in Millions) | Metric | Q1 2020 | Q1 2019 | | :------------------------------------ | :------ | :------ | | Depreciation and amortization expense | $38.0 | $35.5 | [Interest Expense, Net](index=38&type=section&id=Interest%20Expense%2C%20Net) Q1 2020 gross interest expense, net of capitalized interest, rose to $24.5 million from $21.9 million, driven by increased borrowings; gross interest income also increased to $2.0 million, including $1.6 million from the Lansing facility lease Gross Interest Expense and Income (Amounts in Millions) | Metric | Q1 2020 | Q1 2019 | | :------------------------------------ | :------ | :------ | | Gross interest expense, net of capitalized interest | $24.5 | $21.9 | | Gross interest income | $2.0 | $0.5 | - The increase in gross interest expense was primarily due to increased borrowings on the revolving credit facility and interest from the new Term Loan B and the GRES Note[188](index=188&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk) - Interest income included **$1.6 million** from the 20-year finance receivable associated with the Lansing Correctional Facility lease[194](index=194&type=chunk) [Income Tax Expense](index=39&type=section&id=Income%20Tax%20Expense) Q1 2020 income tax expense was $3.8 million (10.2% effective rate), up from $2.5 million (4.8%) in Q1 2019, partly due to a $3.1 million deferred tax expense for the Lansing facility Income Tax Expense and Effective Tax Rate | Metric | Q1 2020 | Q1 2019 | | :------------------ | :------ | :------ | | Income tax expense | $3.8M | $2.5M | | Effective tax rate | 10.2% | 4.8% | - The Q1 2020 income tax expense included **$3.1 million deferred** during the construction of the Lansing Correctional Facility, which was revalued to zero upon its conversion to a QRS[196](index=196&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) CoreCivic's Q1 2020 liquidity includes $335.5 million cash and $155.0 million available credit; net operating cash flow was $75.4 million, with COVID-19 prompting precautionary measures and reevaluation of spending, while FFO and Normalized FFO decreased [Capital Requirements and REIT Distributions](index=40&type=section&id=Capital%20Requirements%20and%20REIT%20Distributions) This section outlines CoreCivic's primary capital needs and its obligations as a REIT regarding stockholder distributions - CoreCivic's principal capital requirements include working capital, stockholder distributions, capital expenditures, and debt service payments[198](index=198&type=chunk) - As a REIT, CoreCivic is generally required to distribute annually at least **90% of its REIT taxable income** to stockholders[199](index=199&type=chunk) - A quarterly dividend of **$0.44 per share**, totaling **$53.4 million**, was declared for Q1 2020[199](index=199&type=chunk) [COVID-19 Impact on Liquidity](index=40&type=section&id=COVID-19%20Impact%20on%20Liquidity) This section discusses the potential adverse effects of the COVID-19 pandemic on CoreCivic's financial position and liquidity - The COVID-19 pandemic has led to reductions in ICE and USMS populations and potential releases of inmates by state/local agencies, which could materially affect financial position, results of operations, and cash flows[200](index=200&type=chunk) - As a precautionary measure, CoreCivic partially drew its revolving credit facility and is reevaluating spending and capital projects[200](index=200&type=chunk) [Current Liquidity and Debt Maturities](index=40&type=section&id=Current%20Liquidity%20and%20Debt%20Maturities) This section details CoreCivic's immediate liquidity position and its debt maturity schedule Liquidity Position (Amounts in Millions) | Metric | March 31, 2020 | | :------------------------------------ | :------------- | | Cash on hand | $335.5 | | Available under revolving credit facility | $155.0 | Net Cash Provided by Operating Activities (Amounts in Millions) | Period | Amount | | :------------------------------------ | :----- | | Three months ended March 31, 2020 | $75.4 | | Three months ended March 31, 2019 | $77.8 | - CoreCivic has **no debt maturities until October 2022** and does not anticipate needing to access capital markets in the short-term[201](index=201&type=chunk) [Debt and Equity Overview](index=40&type=section&id=Debt%20and%20Equity%20Overview) This section provides an overview of CoreCivic's total debt, interest rates, maturity profile, and equity offering agreements - As of March 31, 2020, total debt was **$2.3 billion**, with a weighted average effective interest rate of **4.7%** and a weighted average maturity of **5.7 years**[204](index=204&type=chunk) - The company has an Amended and Restated ATM Equity Offering Sales Agreement for up to **$200.0 million in common stock sales**, but no shares were sold in 2020 or 2019[205](index=205&type=chunk) [Facility Acquisitions, Development, and Capital Expenditures](index=41&type=section&id=Facility%20Acquisitions%2C%20Development%2C%20and%20Capital%20Expenditures) This section details CoreCivic's recent acquisition and development activities, as well as future investment strategies - In January 2020, CoreCivic acquired a portfolio of **28 government-leased properties for $83.2 million**, utilizing a 'DownREIT' structure with Operating Partnership Units[206](index=206&type=chunk) - The Lansing Correctional Facility development was completed in January 2020 for approximately **$155.0 million**, fully funded by Kansas Notes[207](index=207&type=chunk) - Future investment opportunities in real estate and complementary businesses are being pursued, but temporarily suspended due to the decline in market value of public securities and an uncertain economic environment from COVID-19[208](index=208&type=chunk) [Operating Activities Cash Flow](index=42&type=section&id=Operating%20Activities%20Cash%20Flow) This section presents the net cash generated from CoreCivic's primary business operations Net Cash Provided by Operating Activities (Amounts in Millions) | Period | Amount | | :------------------------------------ | :----- | | Three months ended March 31, 2020 | $75.4 | | Three months ended March 31, 2019 | $77.8 | [Investing Activities Cash Flow](index=42&type=section&id=Investing%20Activities%20Cash%20Flow) This section details the cash flows related to CoreCivic's investments in property, plant, and equipment, and acquisitions Net Cash Used in Investing Activities (Amounts in Millions) | Period | Amount | | :------------------------------------ | :----- | | Three months ended March 31, 2020 | $42.1 | | Three months ended March 31, 2019 | $78.0 | - Q1 2020 investing activities included **$22.2 million for facility development/expansions**, **$8.6 million for capital improvements**, and **$8.8 million for the acquisition of 28 properties**[211](index=211&type=chunk) [Financing Activities Cash Flow](index=42&type=section&id=Financing%20Activities%20Cash%20Flow) This section outlines the cash flows related to CoreCivic's debt and equity transactions Net Cash Flow from Financing Activities (Amounts in Millions) | Period | Amount | | :------------------------------------ | :----- | | Three months ended March 31, 2020 | $199.9 | | Three months ended March 31, 2019 | $(20.6)| - Q1 2020 financing activities included **$266.0 million net borrowings** from the revolving credit facility, offset by **$54.5 million in dividends** and **$3.6 million for common stock repurchase**[212](index=212&type=chunk) [Funds from Operations (FFO) and Normalized FFO](index=42&type=section&id=Funds%20from%20Operations%20(FFO)%20and%20Normalized%20FFO) This section presents CoreCivic's Funds from Operations (FFO) and Normalized FFO, key metrics for REIT performance FFO and Normalized FFO (Amounts in Thousands) | Metric | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | | :-------------------------- | :-------------------------------- | :-------------------------------- | | Net income | $33,238 | $49,340 | | Depreciation and amortization of real estate assets | $28,106 | $26,599 | | Impairment of real estate assets | $405 | — | | Funds From Operations (FFO) | $61,749 | $75,939 | | Expenses associated with M&A| $338 | $436 | | Deferred tax expense on Kansas lease structure | $3,085 | — | | Goodwill and other impairments | $131 | — | | Normalized FFO | $65,303 | $76,375 | [Contractual Obligations](index=43&type=section&id=Contractual%20Obligations) This section details CoreCivic's future contractual cash obligations, including debt, interest, and lease payments Contractual Cash Obligations as of March 31, 2020 (Amounts in Thousands) | Obligation Type | 2020 (remainder) | 2021 | 2022 | 2023 | 2024 | Thereafter | Total | | :-------------------------------------- | :--------------- | :-------- | :-------- | :---------- | :-------- | :--------- | :------------ | | Long-term debt | $24,701 | $40,047 | $293,990 | $1,171,170 | $196,044 | $571,577 | $2,297,529 | | Interest on senior and mortgage notes | $53,470 | $57,314 | $56,790 | $35,594 | $26,863 | $129,648 | $359,679 | | Contractual facility developments and other commitments | $5,649 | — | — | — | — | — | $5,649 |\ | South Texas Family Residential Center | $38,742 | $37,333 | — | — | — | — | $76,075 | | Operating leases | $3,720 | $5,219 | $4,181 | $3,145 | $3,135 | $24,183 | $43,583 | | Total contractual cash obligations | $126,282 | $139,913 | $354,961 | $1,209,909 | $226,042 | $725,408 | $2,782,515 | [Inflation](index=44&type=section&id=INFLATION) Many contracts include inflationary indexing, but significant increases in personnel, workers' compensation, food, or medical expenses could adversely affect results if they outpace fixed rates - Many contracts include inflationary indexing to mitigate adverse impacts of inflation[222](index=222&type=chunk) - Substantial increases in personnel, workers' compensation, food, or medical expenses could negatively impact results if they exceed per diem or fixed rates[222](index=222&type=chunk) [Seasonality and Quarterly Results](index=44&type=section&id=SEASONALITY%20AND%20QUARTERLY%20RESULTS) CoreCivic's financial results are subject to seasonality, influenced by calendar days, Q1 unemployment tax recognition, government funding, and new facility openings - Financial results are impacted by the number of calendar days in a fiscal quarter (Q3 and Q4 typically have more days than Q1 and Q2)[223](index=223&type=chunk) - Significant portions of unemployment taxes are recognized during the first quarter[223](index=223&type=chunk) [ITEM 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) CoreCivic's primary market risk is U.S. interest rate exposure on variable-rate debt; a 100 basis point change would impact Q1 2020 interest expense by $2.1 million, while fixed-rate debt remains unaffected - A hypothetical **100 basis point increase or decrease** in market interest rates would have increased or decreased interest expense by **$2.1 million** for the three months ended March 31, 2020, due to variable-rate debt[224](index=224&type=chunk) - Fixed-rate debt, including senior notes and non-recourse mortgage notes, would not be materially impacted by a 100 basis point change in market interest rates[225](index=225&type=chunk) [ITEM 4. Controls and Procedures](index=44&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) Management concluded CoreCivic's disclosure controls and procedures were effective as of March 31, 2020, ensuring timely and accurate reporting, with no material changes in internal control - CoreCivic's disclosure controls and procedures were deemed **effective as of March 31, 2020**, ensuring timely and accurate reporting[227](index=227&type=chunk) - No material changes in internal control over financial reporting occurred during the period covered by the report[227](index=227&type=chunk) [PART II – OTHER INFORMATION](index=45&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [ITEM 1. Legal Proceedings](index=45&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) This section refers to Note 8 for details on legal proceedings, including class action lawsuits related to ICE detainee labor and securities - Information on legal proceedings is incorporated by reference from Note 8 to the financial statements[230](index=230&type=chunk) [ITEM 1A. Risk Factors](index=45&type=section&id=ITEM%201A.%20RISK%20FACTORS.) This section updates risk factors, highlighting COVID-19's material adverse effects, including reduced ICE/USMS populations, criminal justice disruptions, potential inmate releases, increased costs, and third-party service provider risks - The COVID-19 pandemic has resulted in a reduction in ICE populations due to federal government denial of entry at the southern border[233](index=233&type=chunk) - Disruptions to the criminal justice system from COVID-19 have reduced USMS and, to a lesser extent, state populations, and fewer referrals to residential reentry facilities[233](index=233&type=chunk) - CoreCivic faces increased personnel costs (e.g., 'hero bonuses'), potential inmate releases, and risks to third-party service providers due to the pandemic[233](index=233&type=chunk)[235](index=235&type=chunk) [ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) On January 2, 2020, CoreCivic issued 1.3 million Operating Partnership Units, valued at $17.34 per unit, for a property acquisition; these units are convertible and were issued under a Section 4(a)(2) exemption - CoreCivic issued **1.3 million Operating Partnership Units**, valued at **$17.34 per unit**, on January 2, 2020, as part of a property portfolio acquisition[237](index=237&type=chunk) - The Operating Partnership Units are convertible into cash or common stock after a two-year holding period and were issued without registration under Section 4(a)(2) of the Securities Act[237](index=237&type=chunk)[238](index=238&type=chunk) [ITEM 3. Defaults Upon Senior Securities](index=46&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) CoreCivic reported no defaults upon senior securities for the period - No defaults upon senior securities were reported[239](index=239&type=chunk) [ITEM 4. Mine Safety Disclosures](index=46&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) CoreCivic reported no mine safety disclosures for the period - No mine safety disclosures were reported[239](index=239&type=chunk) [ITEM 5. Other Information](index=46&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) CoreCivic reported no other information for the period - No other information was reported[239](index=239&type=chunk) [ITEM 6. Exhibits](index=47&type=section&id=ITEM%206.%20EXHIBITS.) This section lists Form 10-Q exhibits, including financial information in Inline XBRL format and various certifications - Exhibits include financial information in Inline XBRL format (Exhibit 101, 104) and certifications from the CEO and CFO (Exhibits 31.1, 31.2, 32.1, 32.2)[242](index=242&type=chunk)[243](index=243&type=chunk) [Signatures](index=48&type=section&id=SIGNATURES) The report is signed by Damon T. Hininger, President and CEO, and David M. Garfinkle, EVP, CFO, and Principal Accounting Officer, on behalf of CoreCivic, Inc

[Cautionary Statement Regarding Forward-Looking Information](index=3&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20INFORMATION) This section cautions that forward-looking statements in the report are subject to risks and uncertainties that could cause actual results to differ materially, with no obligation to update them - Forward-looking statements are identified by words like "anticipate," "believe," "expect," "intend," "may," "plan," "will," and similar expressions[7](index=7&type=chunk) - Key risks include general economic and market conditions, fluctuations in operating results (occupancy, competition, costs, interest rates), changes in industry privatization, ability to secure and maintain contracts, increased development costs, changes in government policy/legislation, ability to consummate acquisitions, REIT qualification, and availability of financing[7](index=7&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances or otherwise, except as required by law[10](index=10&type=chunk) [PART I](index=5&type=section&id=PART%20I) Part I provides a comprehensive overview of CoreCivic's business, including its operational segments, services, market position, strategic initiatives, and the regulatory environment, detailing risks, property portfolio, and legal proceedings [ITEM 1. Business](index=5&type=section&id=ITEM%201.%20BUSINESS.) CoreCivic is a diversified government solutions company operating in corrections, detention, residential reentry, and government real estate, structured as a REIT with three segments serving federal, state, and local agencies [Overview](index=5&type=section&id=Overview) CoreCivic is a diversified government solutions company structured as a REIT, providing corrections, detention, residential reentry, and government real estate solutions through three segments, with federal customers contributing significantly to revenue and a high contract renewal rate - CoreCivic is a diversified government solutions company with three segments: CoreCivic Safety, CoreCivic Community, and CoreCivic Properties[13](index=13&type=chunk) Facility Net Operating Income by Segment (2017-2019) | Segment | 2019 (%) | 2018 (%) | 2017 (%) | | :-------- | :---- | :---- | :---- | | Safety | 85.2 | 87.1 | 90.0 | | Community | 5.0 | 4.8 | 4.4 | | Properties | 9.8 | 8.1 | 5.6 | Revenue from Federal Authorities (2017-2019) | Year | Percentage of Total Revenue (%) | | :--- | :-------------------------- | | 2019 | 51 | | 2018 | 48 | | 2017 | 48 | - The contract renewal rate for properties owned and operated in CoreCivic Safety and CoreCivic Community segments was **94%** over the five years ended December 31, 2019[23](index=23&type=chunk) Average Compensated Occupancy Rates (2017-2019) | Segment | 2019 (%) | 2018 (%) | 2017 (%) | | :----------------------- | :---- | :---- | :---- | | CoreCivic Safety facilities | 82 | 81 | 80 | | CoreCivic Community facilities | 76 | 80 | 80 | | Total | 82 | 81 | 80 | CoreCivic Properties Average Occupancy (2017-2019) | Year | Leased Portfolio Occupancy (%) | | :--- | :------------------------- | | 2019 | 99 | | 2018 | 100 | | 2017 | 100 | [Operating Procedures and Offender Services for Correctional, Detention, and Residential Reentry Facilities](index=7&type=section&id=Operating%20Procedures%20and%20Offender%20Services%20for%20Correctional%2C%20Detention%2C%20and%20Residential%20Reentry%20Facilities) CoreCivic manages facility operations, including staffing and security, adhering to accreditation standards while providing evidence-based reentry programs like education, substance abuse treatment, and life skills to reduce recidivism - In 2019, **1,376 offenders passed high school equivalency exams**, **5,136 earned career and technical education certificates**, and **1,900 completed substance use disorder programming**[29](index=29&type=chunk)[30](index=30&type=chunk)[34](index=34&type=chunk) - The company offers various reentry programs, including software coding (Persevere partnership), college-level programming (Ashland University partnership), NCCER plumbing programs, and Information Support and Services computer programs[32](index=32&type=chunk)[33](index=33&type=chunk) - CoreCivic facilities are operated in accordance with ACA accreditation standards (**95% of eligible facilities accredited with an average score of 99.6% in 2019**) and PREA standards[45](index=45&type=chunk) - The Quality Assurance Division (QAD) conducts annual, unannounced on-site evaluations of CoreCivic Safety facilities using over 1,000 audit indicators, and government partners conduct over 230 compliance audits and inspections annually[49](index=49&type=chunk)[50](index=50&type=chunk)[52](index=52&type=chunk) [Business Development](index=11&type=section&id=Business%20Development) CoreCivic seeks growth by expanding customer relationships, enhancing contract terms, pursuing real estate leasing, and developing non-residential correctional alternatives, with federal customers remaining key revenue sources despite a 2019 decrease in state revenues - CoreCivic owns or controls approximately **58% of all privately owned prison beds** in the United States and manages nearly **39% of all privately managed prison beds** in the United States[53](index=53&type=chunk) - Federal customers (ICE, USMS, BOP) accounted for **51% of total revenue in 2019**, with ICE and USMS each representing **10% or more**[55](index=55&type=chunk) State Revenues (2017-2019) | Year | State Revenues (Millions USD) | Percentage of Total Revenue (%) | YoY Change (%) | | :--- | :---------------------------- | :-------------------------- | :--------- | | 2019 | $673.4 | 34 | -4.7 | | 2018 | $706.8 | 39 | - | | 2017 | - | 41 | - | - State revenue decreased by **4.7%** from 2018 to 2019, largely due to declines in populations from the state of California[58](index=58&type=chunk) - Since the beginning of 2018, new contracts have been secured with Kansas, Kentucky, Ohio, Nevada, South Carolina, and Vermont, while Wyoming began utilizing an existing contract it had not utilized in nearly a decade; in January 2020, a new management contract was signed with Mississippi[59](index=59&type=chunk) [2019 Accomplishments](index=13&type=section&id=2019%20Accomplishments) In 2019, CoreCivic achieved significant milestones, including substantial offender participation in educational and rehabilitative programs, new contracts for idled facilities, the completion of the Otay Mesa Detention Center expansion, integration of offender management systems, acquisition of reentry centers, expansion of its government-leased property portfolio, and the issuance of its first ESG report - In 2019, **1,376 offenders passed high school equivalency exams**, **5,136 earned career and technical education certificates**, **1,900 completed substance use disorder programming**, **1,247 completed Victim Impact Programs**, **721 completed the Threshold program**, and **5,355 completed cognitive/behavioral evidence-based journals in the "Go Further" program**[66](index=66&type=chunk) - Increased post-secondary educational offerings by growing a relationship with Ashland University and introduced a new computer coding program at Trousdale Turner Correctional Center[68](index=68&type=chunk) - Executed new contracts with ICE for Adams County Correctional Center (**2,348 detainees**) and Torrance County Detention Facility (**910 beds**, previously idle), and with USMS for Eden Detention Center (**1,422 beds**, previously idle)[68](index=68&type=chunk) - Completed the **$39.0 million**, **512-bed expansion** of the Otay Mesa Detention Center and extended the contract with the federal government through December 2034[68](index=68&type=chunk) - Completed the integration of Rocky Mountain Offender Management Systems, LLC, acquired the South Raleigh Reentry Center (**60 beds**), and added two residential reentry centers in Virginia (Ghent and James River) through asset acquisition[70](index=70&type=chunk) - Acquired a **37,000 square-foot office building** in Detroit, Michigan, leased to MDHHS, and entered into a lease with KYDOC for the previously idled **656-bed Southeast Correctional Complex**[71](index=71&type=chunk) - Issued its first Environmental, Social and Governance (ESG) report, detailing efforts to tackle recidivism and progress toward company-wide reentry goals[71](index=71&type=chunk) [Facility Portfolio](index=16&type=section&id=Facility%20Portfolio) CoreCivic's portfolio includes 50 CoreCivic Safety correctional and detention facilities (43 owned) and 29 CoreCivic Community residential reentry centers, totaling approximately 73,000 and 5,000 beds respectively, with the CoreCivic Properties segment comprising 28 government-leased properties totaling 2.4 million square feet - As of December 31, 2019, CoreCivic Safety operated **50 correctional and detention facilities** (**43 owned**) with a total design capacity of approximately **73,000 beds**[76](index=76&type=chunk) - As of December 31, 2019, CoreCivic Community owned and managed **29 residential reentry centers** with a total design capacity of approximately **5,000 beds**[76](index=76&type=chunk) - Facility types include Correctional (sentenced adult prisoners), Detention (ICE, USMS, pre-trial), Residential (families detained by ICE), and Community Corrections (reentry, job readiness)[74](index=74&type=chunk) - The CoreCivic Properties segment owned **28 properties** for lease to third parties and used by government agencies, totaling **2.4 million square feet**[89](index=89&type=chunk) - Several facilities are subject to purchase options by governmental agencies, some based on depreciated book value and others on fair market value[84](index=84&type=chunk) - Construction of the new Lansing Correctional Facility in Kansas, a **2,432-bed correctional facility**, was completed in January 2020 at a total cost of approximately **$155.0 million**[93](index=93&type=chunk) [Competitive Strengths](index=27&type=section&id=Competitive%20Strengths) CoreCivic's competitive strengths include its position as the largest private owner of government-used real estate, its pioneering role in the private prison industry, commitment to ESG accountability, availability of idle beds for growth, a well-established community corrections platform, flexible real estate solutions, an attractive REIT profile, and a compelling value proposition to government agencies - CoreCivic is the largest private owner of real estate used by U.S. government agencies, owning or controlling approximately **16.1 million square feet** as of December 31, 2019[95](index=95&type=chunk) - The company is the nation's largest private prison owner and one of the largest prison operators, owning or controlling approximately **58% of all privately owned prison beds** and managing nearly **39% of all privately managed prison beds** in the United States[100](index=100&type=chunk) - CoreCivic issued its first ESG report in 2019, detailing environmental impact, social responsibility (recidivism reduction, human rights), and corporate governance, making it the first company in its industry to do so[103](index=103&type=chunk)[104](index=104&type=chunk) - As of December 31, 2019, approximately **6,800 beds at five prison facilities were vacant** and immediately available for use, with recent activations of Torrance County Detention Facility and Eden Detention Center in 2019[106](index=106&type=chunk) - The company offers flexible real estate solutions, including leasing previously idled facilities to government partners (e.g., Southeast Correctional Complex to KYDOC) and developing build-to-suit facilities (e.g., Lansing Correctional Facility for KDOC)[111](index=111&type=chunk)[112](index=112&type=chunk) - CoreCivic's REIT profile is attractive due to its extensive real estate portfolio (**100 facilities, ~16.1 million sq ft**), long-term government contracts (**94% customer retention**), predictable cash flows, and low maintenance capital expenditures[115](index=115&type=chunk)[116](index=116&type=chunk) [Capital Strategy](index=32&type=section&id=Capital%20Strategy) As a REIT, CoreCivic must distribute at least 90% of its taxable income annually, influencing its capital deployment for growth, debt reduction, and dividends, primarily funded by cash and its credit facility, though opposition to private correctional facilities has tempered M&A activities by impacting capital markets - As a REIT, CoreCivic is generally required to distribute annually to its stockholders at least **90% of its REIT taxable income**[127](index=127&type=chunk) Quarterly Dividends Declared (2017-2019) | Year | Total Dividends Declared (Millions USD) | | :--- | :-------------------------------------- | | 2019 | $211.9 | | 2018 | $205.7 | | 2017 | $199.8 | - As of December 31, 2019, the company had **$92.1 million cash on hand** and **$412.7 million available** under its revolving credit facility[128](index=128&type=chunk) - Opposition to immigration policies and the association of private companies with enforcement have caused some banks to announce they will not continue providing credit or financial services to private correctional/detention facilities, affecting CoreCivic's capital markets and tempering M&A activities[129](index=129&type=chunk) - In December 2019, CoreCivic entered into a new **$250.0 million Senior Secured Term Loan B** (LIBOR + 4.50%, 5-year maturity) to partially fund the early redemption of **$325.0 million of 4.125% senior notes** due April 2020[132](index=132&type=chunk) - In January 2020, the company completed the acquisition of a portfolio of **28 government-leased properties for $83.2 million**, financed with cash, assumed debt (**$52.2 million**), and the issuance of **1.3 million limited partnership units** (DownREIT structure)[135](index=135&type=chunk)[661](index=661&type=chunk) [Government Regulation](index=34&type=section&id=Government%20Regulation) CoreCivic operates under extensive federal, state, and local regulations, including educational, healthcare, data privacy (HIPAA, HITECH, CCPA), and safety standards, with compliance failures potentially leading to penalties or contract termination, and is also subject to environmental laws - The industry is subject to extensive federal, state, and local regulations, including educational, health care, data privacy, and safety regulations[137](index=137&type=chunk) - Compliance with HIPAA, HITECH, and the California Consumer Privacy Act (CCPA) is critical, with potential for significant civil and criminal penalties for violations[140](index=140&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk) - Failure to comply with these regulations and contract requirements can result in material penalties or non-renewal or termination of facility management contracts[137](index=137&type=chunk) [Insurance](index=35&type=section&id=Insurance) CoreCivic maintains various insurance coverages for its operated facilities, including general liability, workers' compensation, vehicle liability, and property loss, and is significantly self-insured for employee health, workers' compensation, automobile liability, and general liability, making insurance expenses highly dependent on claims experience and cost control - CoreCivic maintains general liability insurance for all operated facilities, as well as property and casualty, workers' compensation, vehicle liability, and directors and officers liability insurance[144](index=144&type=chunk) - The company is significantly self-insured for employee health, workers' compensation, automobile liability, and general liability insurance, making insurance expense dependent on claims experience and the ability to control claims[145](index=145&type=chunk) [Employees](index=36&type=section&id=Employees) As of December 31, 2019, CoreCivic employed 14,075 full- and part-time employees, with approximately 9.4% represented by labor unions across six facilities, reporting good overall employee relations and no strikes or work stoppages Employee Count (as of Dec 31, 2019) | Category | Count | | :------- | :---- | | Total Employees | 14,075 | | Corporate Offices | 455 | | Facilities & Transportation/Monitoring | 13,620 | | Union-represented (at 6 facilities) | ~1,330 (9.4% of workforce) | - The company has not experienced a strike or work stoppage at any of its facilities and, in the opinion of management, overall employee relations are good[148](index=148&type=chunk) [Competition](index=36&type=section&id=Competition) CoreCivic faces competition from other private operators and government agencies in correctional, detention, and residential reentry sectors based on bed availability, cost, service quality, and experience, and also competes with other real estate investors for government-leased assets, potentially increasing acquisition prices and hindering growth - CoreCivic competes with government agencies and other private operators (e.g., The GEO Group, Inc. and Management and Training Corporation) on the basis of bed availability, cost, quality and range of services offered, experience, and reputation[149](index=149&type=chunk) - The company also competes with numerous developers, real estate companies, and other well-capitalized investors for acquisitions of government-leased assets, which could increase prices and impede growth[150](index=150&type=chunk) [ITEM 1A. Risk Factors](index=37&type=section&id=ITEM%201A.%20RISK%20FACTORS.) CoreCivic faces risks from fluctuating occupancy, government dependence, competition, privatization resistance, contract issues, operational challenges, real estate ownership, legal proceedings, technological changes, ESG scrutiny, substantial indebtedness, and REIT compliance - Fluctuations in occupancy levels can cause a decrease in revenues and profitability, as a substantial portion of the cost structure is fixed while revenue is per diem based[153](index=153&type=chunk) - Dependence on government appropriations means that governmental budgetary challenges or government shutdowns can negatively affect results of operations through contract termination, delayed payments, or reduced per diem rates[154](index=154&type=chunk) - Resistance to privatization of correctional, detention, and residential reentry facilities, and negative publicity regarding inmate disturbances or perceived poor operational performance, could result in inability to obtain new contracts or loss of existing contracts[157](index=157&type=chunk)[158](index=158&type=chunk) - **49 facility contracts**, representing **$644.1 million** or **33% of total revenue in 2019**, are scheduled to expire or have renewal options on or before December 31, 2020, posing renewal risks[159](index=159&type=chunk) - The company is subject to legal proceedings, including a purported securities class action lawsuit (Grae v. Corrections Corporation of America et al.) alleging false/misleading public statements and artificially inflated stock price, which the company is vigorously defending[196](index=196&type=chunk)[198](index=198&type=chunk) - As of December 31, 2019, total indebtedness was **$1,986.9 million**, which could adversely affect financial health, increase vulnerability to adverse economic conditions, and limit financial flexibility[210](index=210&type=chunk) - Increasing activist resistance to public-private partnerships for correctional, detention, and residential reentry facilities could impact the company's ability to obtain financing or refinance existing indebtedness[224](index=224&type=chunk) - Failure to remain qualified as a REIT would result in corporate income taxes and inability to deduct distributions to stockholders, materially impacting profitability[227](index=227&type=chunk)[228](index=228&type=chunk) [ITEM 1B. Unresolved Staff Comments](index=58&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS.) There are no unresolved staff comments - No unresolved staff comments[263](index=263&type=chunk) [ITEM 2. Properties](index=58&type=section&id=ITEM%202.%20PROPERTIES.) Information regarding the properties owned by CoreCivic as of December 31, 2019, is detailed in Item 1 ("Business") and Note 4 of the Notes to the Consolidated Financial Statements - The properties owned at December 31, 2019, are described under Item 1 and in Note 4 of the Notes to the Consolidated Financial Statements[264](index=264&type=chunk) [ITEM 3. Legal Proceedings](index=59&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS.) CoreCivic is involved in various claims and litigation inherent to its business, including those related to employee/offender conduct, medical malpractice, and contractual compliance, with management believing no pending legal proceedings will materially affect financial position, results, or cash flows, despite an ongoing securities class action lawsuit - The nature of CoreCivic's business results in claims and litigation alleging liability for damages arising from the conduct of its employees or others, including employee/offender misconduct, medical malpractice, and contractual claims[266](index=266&type=chunk) - Management believes there are no pending legal proceedings that would have a material effect on CoreCivic's financial position, results of operations or cash flows, and maintains insurance to cover many of these claims[266](index=266&type=chunk)[270](index=270&type=chunk) - A purported securities class action lawsuit (Grae v. Corrections Corporation of America et al.) is ongoing, alleging false and/or misleading public statements regarding operational, programming, and cost efficiency factors, which the company intends to vigorously defend[268](index=268&type=chunk)[270](index=270&type=chunk) [ITEM 4. Mine Safety Disclosures](index=59&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) No mine safety disclosures are applicable - No mine safety disclosures[272](index=272&type=chunk) [PART II](index=60&type=section&id=PART%20II) Part II covers CoreCivic's common equity market, selected financial data, management's discussion and analysis of financial condition and results of operations, market risk disclosures, financial statements, and internal controls, providing detailed insights into financial performance, liquidity, capital resources, and operational effectiveness [ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=60&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES.) CoreCivic's common stock trades on the NYSE under "CXW," with a closing price of **$16.85 per share** and approximately **119 million shares outstanding** as of February 14, 2020; the Board declared **$0.44 per share quarterly dividends** in 2019, totaling **$211.9 million**, consistent with REIT requirements, and no issuer purchases of equity securities were made [Market Price of and Distributions on Capital Stock](index=60&type=section&id=Market%20Price%20of%20and%20Distributions%20on%20Capital%20Stock) CoreCivic's common stock is traded on the NYSE under the symbol "CXW," with a closing price of **$16.85 per share** and **119,095,550 shares outstanding** as of February 14, 2020 - Common stock is traded on the New York Stock Exchange (NYSE) under the symbol "CXW"[275](index=275&type=chunk) Common Stock Information (as of Feb 14, 2020) | Metric | Value | | :----- | :---- | | Closing Price | $16.85 per share | | Shares Outstanding | 119,095,550 | | Registered Holders | ~3,000 | | Beneficial Holders | ~41,000 | [Dividend Policy](index=60&type=section&id=Dividend%20Policy) CoreCivic's Board of Directors declared quarterly dividends of **$0.44 per share** in 2019, totaling **$211.9 million** for the year, consistent with the REIT requirement to distribute at least **90% of its REIT taxable income** annually, with future dividends subject to Board discretion and various factors Quarterly Dividends Declared (2018-2019) | Declaration Date | Record Date | Payable Date | Per Share (USD) | | :--------------- | :---------- | :----------- | :-------- | | Feb 22, 2018 | Apr 2, 2018 | Apr 16, 2018 | $0.43 | | May 11, 2018 | Jul 2, 2018 | Jul 16, 2018 | $0.43 | | Aug 16, 2018 | Oct 1, 2018 | Oct 15, 2018 | $0.43 | | Dec 13, 2018 | Jan 2, 2019 | Jan 15, 2019 | $0.43 | | Feb 21, 2019 | Apr 1, 2019 | Apr 15, 2019 | $0.44 | | May 16, 2019 | Jul 1, 2019 | Jul 16, 2019 | $0.44 | | Aug 15, 2019 | Oct 1, 2019 | Oct 15, 2019 | $0.44 | | Dec 12, 2019 | Jan 6, 2020 | Jan 15, 2020 | $0.44 | - As a REIT, the company is generally required to distribute annually to its stockholders at least **90% of its REIT taxable income**[275](index=275&type=chunk) [Issuer Purchases of Equity Securities](index=60&type=section&id=Issuer%20Purchases%20of%20Equity%20Securities) There were no issuer purchases of equity securities during the reported period - No issuer purchases of equity securities[276](index=276&type=chunk) [ITEM 6. Selected Financial Data](index=60&type=section&id=ITEM%206.%20SELECTED%20FINANCIAL%20DATA.) This section presents selected historical financial data for the five years ended December 31, 2019, derived from the consolidated financial statements, including revenues, operating income, net income, basic and diluted EPS, total assets, total debt, total liabilities, and stockholders' equity Selected Historical Financial Information (2015-2019, in thousands USD, except per share data) | Metric | 2019 | 2018 | 2017 | 2016 | 2015 | | :------------------------------------- | :--------- | :--------- | :--------- | :--------- | :--------- | | **STATEMENT OF OPERATIONS:** | | | | | | | Revenues | $1,980,689 | $1,835,766 | $1,765,498 | $1,849,785 | $1,793,087 | | Operating expenses | 1,422,769 | 1,315,250 | 1,249,537 | 1,275,586 | 1,256,128 | | General and administrative | 127,078 | 106,865 | 107,822 | 107,027 | 103,936 | | Depreciation and amortization | 144,572 | 156,501 | 147,129 | 166,746 | 151,514 | | Asset impairments | 4,706 | 1,580 | 614 | — | 955 | | Operating income | 281,564 | 249,485 | 260,396 | 296,416 | 280,554 | | Interest expense, net | 84,401 | 80,753 | 68,535 | 67,755 | 49,696 | | Net income | $188,886 | $159,207 | $178,040 | $219,919 | $221,854 | | Basic earnings per share | $1.59 | $1.34 | $1.51 | $1.87 | $1.90 | | Diluted earnings per share | $1.59 | $1.34 | $1.50 | $1.87 | $1.88 | | **BALANCE SHEET DATA (as of Dec 31):** | | | | | | | Total assets | $3,791,631 | $3,655,660 | $3,272,398 | $3,271,604 | $3,356,018 | | Total debt | $1,959,372 | $1,801,676 | $1,447,187 | $1,445,169 | $1,452,077 | | Total liabilities | $2,414,882 | $2,240,601 | $1,820,790 | $1,812,641 | $1,893,270 | | Stockholders' equity | $1,376,749 | $1,415,059 | $1,451,608 | $1,458,963 | $1,462,748 | [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) This section provides a detailed analysis of CoreCivic's financial performance, condition, and operational results for the years ended December 31, 2019, 2018, and 2017, covering business overview, critical accounting policies, segment-wise results, liquidity, capital resources, and the impact of inflation and seasonality [Overview](index=62&type=section&id=Overview) CoreCivic, a REIT, provides diversified government solutions across three segments: Safety, Community, and Properties, aiming to increase bed utilization, develop new capacity, invest in real estate, acquire community corrections facilities, and contain operating expenses to maintain competitiveness and diversify services - CoreCivic is the nation's largest owner of partnership correctional, detention, and residential reentry facilities and one of the largest prison operators in the United States[284](index=284&type=chunk) - The company aims to increase revenues by increasing the utilization of available beds, delivering new bed capacity through new facility construction and expansion opportunities, investing in real estate-only solutions, acquiring community corrections facilities, and acquiring other businesses that expand solutions and diversify cash flows[297](index=297&type=chunk) - Approximately **60% of operating expenses consist of salaries and benefits**, and the company is making investments in systems and processes to manage its workforce more efficiently and effectively, especially with respect to overtime and costs of turnover[296](index=296&type=chunk) - The **$39.0 million**, **512-bed expansion** of the Otay Mesa Detention Center was completed during the third quarter of 2019 due to long-standing demand from the USMS and ICE[292](index=292&type=chunk) - New contracts in the second quarter of 2019 activated previously idled facilities: the **910-bed Torrance County Detention Facility** for ICE and the **1,422-bed Eden Detention Center** for the USMS[293](index=293&type=chunk) [Critical Accounting Policies](index=64&type=section&id=Critical%20Accounting%20Policies) This section outlines CoreCivic's critical accounting policies, focusing on asset impairments (long-lived assets and goodwill), self-funded insurance reserves, and legal reserves, which are evaluated based on recoverability, annual/quarterly reviews, actuarial valuations, and management's best estimates - As of December 31, 2019, CoreCivic had **$2.7 billion in property and equipment**, including **$136.3 million in long-lived assets** at five idled CoreCivic Safety correctional facilities[298](index=298&type=chunk) - Operating expenses at idled facilities were approximately **$8.0 million in 2019**, **$8.2 million in 2018**, and **$8.9 million in 2017**[299](index=299&type=chunk) - In the second quarter of 2019, an asset impairment of **$4.3 million** was recorded for a residential reentry facility in Arizona, reducing its carrying value to its estimated fair value as a commercial real estate property, after it became idle[301](index=301&type=chunk) - Goodwill amounted to **$50.5 million** as of December 31, 2019, with **$7.9 million assigned to CoreCivic Safety** and **$42.6 million assigned to CoreCivic Community**[314](index=314&type=chunk) - Accrued liabilities for self-funded insurance (employee health, workers' compensation, and automobile insurance claims) were **$41.9 million in 2019** and **$35.1 million in 2018**[315](index=315&type=chunk) - Accrued liabilities for legal reserves were **$14.1 million in 2019** and **$13.9 million in 2018**, representing the best estimate of probable costs for the resolution of claims[316](index=316&type=chunk) [Results of Operations](index=68&type=section&id=Results%20of%20Operations) CoreCivic reported net income of **$188.9 million** (**$1.59 diluted EPS**) in 2019, up from **$159.2 million** (**$1.34 diluted EPS**) in 2018, with total revenue increasing by **7.9% to $1,980.7 million** due to higher federal populations, per diem rate increases, and acquisitions, while CoreCivic Safety remained the largest segment by net operating income and CoreCivic Properties showed significant revenue growth Net Income and EPS (2018-2019) | Metric | 2019 (Millions USD) | 2018 (Millions USD) | YoY Change (%) | | :----------------- | :--------- | :--------- | :--------- | | Net Income | $188.9 | $159.2 | +18.7 | | Diluted EPS | $1.59 | $1.34 | +18.7 | Total Revenue (2018-2019) | Metric | 2019 (Millions USD) | 2018 (Millions USD) | Change (Millions USD) | % Change (%) | | :------------------- | :------------------ | :------------------ | :-------------------- | :--------- | | Total Revenue | $1,980.7 | $1,835.8 | $144.9 | 7.9 | - Total management revenue increased by **$125.4 million (7.1%)**, primarily due to a **$31.9 million increase in average daily compensated population** and a **$93.5 million increase** from higher average revenue per compensated man-day, acquisitions (RMSC), and a contractual dispute settlement[326](index=326&type=chunk) Average Daily Compensated Population (2018-2019) | Year | Average Daily Compensated Population | YoY Change | % Change (%) | | :--- | :----------------------------------- | :--------- | :--------- | | 2019 | 64,107 | +1,095 | +1.7 | | 2018 | 63,012 | - | - | - Federal revenues increased by **$122.8 million (13.8%)** in 2019, representing **51% of total revenue**, driven by per diem increases for several federal contracts and a net increase in federal populations, primarily from the USMS and ICE[328](index=328&type=chunk) - State revenues decreased by **$33.4 million (4.7%)** from 2018 to 2019, primarily due to the continued transfer of California inmates back to the state of California, partially offset by new contracts in other states[330](index=330&type=chunk) Operating Metrics per Compensated Man-Day (2018-2019) | Metric | 2019 | 2018 | | :-------------------------------- | :----- | :----- | | Revenue per compensated man-day | $79.72 | $76.50 | | Operating expenses per compensated man-day | $58.31 | $56.70 | | Operating income per compensated man-day | $21.41 | $19.80 | | Operating margin | 26.9% | 25.9% | | Average compensated occupancy | 81.9% | 80.7% | - CoreCivic Safety's facility net operating income increased **$22.3 million (4.9%)** from **$453.6 million in 2018 to $475.8 million in 2019**, representing **85.2% of total facility net operating income**[341](index=341&type=chunk) - CoreCivic Properties' total revenue increased **$19.4 million (33.5%)** from **$57.9 million in 2018 to $77.3 million in 2019**, and its facility net operating income increased **$12.0 million (28.3%) to $54.5 million**, primarily due to acquisitions[355](index=355&type=chunk) - General and administrative expenses increased to **$127.1 million in 2019** from **$106.9 million in 2018**, mainly due to higher salaries (including incentive compensation) and professional fees associated with corporate headquarters relocation[365](index=365&type=chunk) - Depreciation and amortization decreased to **$144.6 million in 2019** from **$156.5 million in 2018**, primarily due to the adoption of ASC 842, which reclassified South Texas Family Residential Center lease payments from depreciation/interest to operating expenses[367](index=367&type=chunk) - Income tax expense was **$7.8 million in 2019 (4.0% effective tax rate)** compared to **$8.4 million in 2018 (5.0% effective tax rate)**, largely based on earnings generated by Taxable REIT Subsidiaries (TRSs)[380](index=380&type=chunk) [Liquidity and Capital Resources](index=81&type=section&id=Liquidity%20and%20Capital%20Resources) CoreCivic's capital requirements include working capital, stockholder distributions, capital expenditures, and debt service, with liquidity supported by cash on hand and its revolving credit facility; in 2019, operating activities generated **$354.4 million** in cash, while investing activities used **$244.6 million** and financing activities used **$64.8 million**, with the company refinancing senior notes and acquiring government-leased properties using a "DownREIT" structure - Principal capital requirements are for working capital, stockholder distributions, capital expenditures, and debt service payments[383](index=383&type=chunk) - As of December 31, 2019, liquidity was provided by cash on hand of **$92.1 million** and **$412.7 million available** under the revolving credit facility[385](index=385&type=chunk) Cash Flow Summary (2018-2019, in millions USD) | Activity | 2019 | 2018 | | :---------------------- | :----- | :----- | | Operating Activities | $354.4 | $322.9 | | Investing Activities | $(244.6) | $(291.1) | | Financing Activities | $(64.8) | $(9.9) | - Investing activities in 2019 included **$136.1 million for facility development and expansions** and **$57.2 million for facility maintenance and information technology capital expenditures**[402](index=402&type=chunk) - Financing activities in 2019 included **$209.5 million in dividend payments** and **$325.0 million for the satisfaction and discharge of 4.125% Senior Notes**[403](index=403&type=chunk) - A new **$250.0 million Term Loan B** was entered into in December 2019, partially funding the early redemption of **$325.0 million of 4.125% Senior Notes**[390](index=390&type=chunk) - In January 2020, CoreCivic completed the acquisition of a portfolio of **28 government-leased properties for $83.2 million**, utilizing cash, assumed debt, and **1.3 million limited partnership units** (DownREIT structure)[135](index=135&type=chunk)[661](index=661&type=chunk) Funds From Operations (FFO) and Normalized FFO (2017-2019, in thousands USD) | Metric | 2019 | 2018 | 2017 | | :----------------------------- | :--------- | :--------- | :--------- | | Net income | $188,886 | $159,207 | $178,040 | | Funds From Operations (FFO) | $300,429 | $262,558 | $274,297 | | Normalized Funds From Operations | $311,921 | $273,779 | $281,634 | [Inflation](index=86&type=section&id=Inflation) Many of CoreCivic's contracts include inflationary indexing to mitigate the impact of rising costs; however, significant increases in personnel, workers' compensation, food, or medical expenses could adversely affect profitability if they outpace per diem or fixed rates - Many of CoreCivic's facility contracts include provisions for inflationary indexing, which mitigates an adverse impact of inflation on net income[413](index=413&type=chunk) - A substantial increase in personnel costs, workers' compensation or food and medical expenses could have an adverse impact on results of operations if these expenses increase faster than per diem or fixed rates[413](index=413&type=chunk) [Seasonality and Quarterly Results](index=86&type=section&id=Seasonality%20and%20Quarterly%20Results) CoreCivic's financial results are impacted by seasonal fluctuations, including the number of calendar days in a quarter and the recognition of unemployment taxes primarily in Q1, with quarterly performance also influenced by government funding, acquisitions, new facility openings, and start-up expenses, making single-quarter results not necessarily indicative of full-year performance - CoreCivic's financial results are impacted by the number of calendar days in a fiscal quarter, with daily profits for the third and fourth quarters including two more days than the first quarter (except in leap years) and one more day than the second quarter[414](index=414&type=chunk) - Significant portions of unemployment taxes are recognized during the first quarter, when base wage rates reset for unemployment tax purposes[414](index=414&type=chunk) - Quarterly results are affected by government funding initiatives, acquisitions, the timing of the opening of new facilities, or the commencement of new management contracts and related start-up expenses[414](index=414&type=chunk) [ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk](index=87&type=section&id=ITEM%207A.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) CoreCivic's primary market risk is exposure to changes in U.S. interest rates, particularly for its variable-rate debt under the revolving credit facility, Term Loan A, and Term Loan B, where a hypothetical **100 basis point** change would impact interest expense by approximately **$5.0 million** in 2019, while fixed-rate debt is not materially affected - CoreCivic's primary market risk exposure is to changes in U.S. interest rates, particularly for its variable-rate debt under the revolving credit facility, Term Loan A, and Term Loan B[416](index=416&type=chunk) Impact of 100 Basis Point Interest Rate Change on Interest Expense (2017-2019, in millions USD) | Year | Impact on Interest Expense (net of capitalized amounts) | | :--- | :------------------------------------------------------ | | 2019 | +/- $5.0 | | 2018 | +/- $3.6 | | 2017 | +/- $5.0 | - Fixed-rate debt, including senior notes and mortgage notes, is not materially impacted by hypothetical **100 basis point** increases or decreases in market interest rates[417](index=417&type=chunk) [ITEM 8. Financial Statements and Supplementary Data](index=87&type=section&id=ITEM%208.%20FINANCIAL%20STATEMENTS%20AND%20SUPPLEMENTARY%20DATA.) This section indicates that the required financial statements and supplementary data are included in the Annual Report starting on page F-1 - The financial statements and supplementary data required by Regulation S-X are included in this Annual Report on Form 10-K commencing on Page F-1[419](index=419&type=chunk) [ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=87&type=section&id=ITEM%209.%20CHANGES%20IN%20AND%20DISAGREEMENTS%20WITH%20ACCOUNTANTS%20ON%20ACCOUNTING%20AND%20FINANCIAL%20DISCLOSURE.) There are no changes in or disagreements with accountants on accounting and financial disclosure - None[420](index=420&type=chunk) [ITEM 9A. Controls and Procedures](index=87&type=section&id=ITEM%209A.%20CONTROLS%20AND%20PROCEDURES.) Management, including the CEO and CFO, evaluated the effectiveness of disclosure controls and procedures as of December 31, 2019, concluding they were effective, and the company's internal control over financial reporting was also assessed as effective based on the COSO framework, with Ernst & Young LLP issuing an unqualified opinion - Management concluded that disclosure controls and procedures were effective as of December 31, 2019[421](index=421&type=chunk) - Management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2019, using the criteria set forth by the COSO framework and believes it was effective[425](index=425&type=chunk) - Ernst & Young LLP, the independent registered public accounting firm, issued an unqualified opinion on the Company's internal control over financial reporting as of December 31, 2019[430](index=430&type=chunk)[431](index=431&type=chunk) - There have been no changes in internal control over financial reporting that occurred during the fourth fiscal quarter of 2019 that have materially affected, or are likely to materially affect, internal control over financial reporting[427](index=427&type=chunk) [ITEM 9B. Other Information](index=90&type=section&id=ITEM%209B.%20OTHER%20INFORMATION) On February 20, 2020, the Board of Directors declared a quarterly dividend of **$0.44 per common share** for the first quarter of 2020, payable on April 15, 2020 - On February 20, 2020, the Company's Board of Directors declared a dividend for the first quarter of 2020 of **$0.44 per share** to be paid on April 15, 2020 to stockholders of record as of the close of business on April 1, 2020[436](index=436&type=chunk) [PART III](index=91&type=section&id=PART%20III) Part III incorporates by reference information from CoreCivic's definitive Proxy Statement for the 2020 Annual Meeting of Stockholders, covering details on directors, executive officers, corporate governance, executive compensation, security ownership, related party transactions, and principal accounting fees and services [ITEM 10. Directors, Executive Officers and Corporate Governance](index=91&type=section&id=ITEM%2010.%20DIRECTORS%2C%20EXECUTIVE%20OFFICERS%20AND%20CORPORATE%20GOVERNANCE.) This section incorporates by reference information from the 2020 Proxy Statement regarding directors, executive officers, corporate governance, board committees, and audit committee financial literacy, with the company's Code of Ethics and Business Conduct, Corporate Governance Guidelines, and committee charters available on its website - Information required by this Item 10 is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement[439](index=439&type=chunk) - The Board of Directors has adopted a Code of Ethics and Business Conduct, Corporate Governance Guidelines, and charters for its Audit, Risk, Compensation, Nominating and Governance, and Executive Committees[440](index=440&type=chunk) [ITEM 11. Executive Compensation](index=91&type=section&id=ITEM%2011.%20EXECUTIVE%20COMPENSATION.) Information on executive compensation is incorporated by reference from the 2020 Proxy Statement - Information required by this Item 11 is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement[441](index=441&type=chunk) [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=91&type=section&id=ITEM%2012.%20SECURITY%20OWNERSHIP%20OF%20CERTAIN%20BENEFICIAL%20OWNERS%20AND%20MANAGEMENT%20AND%20RELATED%20STOCKHOLDER%20MATTERS.) This section incorporates by reference information on security ownership from the 2020 Proxy Statement and provides a table detailing securities authorized for issuance under equity compensation plans as of December 31, 2019 - Information required by this Item 12 is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement[442](index=442&type=chunk) Securities Authorized for Issuance Under Equity Compensation Plans (as of Dec 31, 2019, in thousands, except price) | Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options | Weighted-Average Exercise Price of Outstanding Options (USD) | Number of Securities Remaining Available for Future Issuance | | :------------------------------------ | :------------------------------------------------------------- | :--------------------------------------------------- | :----------------------------------------------------------- | | Equity compensation plans approved by stockholders | 644 | $20.91 | 5,253 | | Equity compensation plans not approved by stockholders | — | — | — | | Total | 644 | $20.91 | 5,253 | [ITEM 13. Certain Relationships and Related Party Transactions, and Director Independence](index=92&type=section&id=ITEM%2013.%20CERTAIN%20RELATIONSHIPS%20AND%20RELATED%20PARTY%20TRANSACTIONS%2C%20AND%20DIRECTOR%20INDEPENDENCE.) Information on certain relationships and related party transactions, as well as director independence, is incorporated by reference from the 2020 Proxy Statement - Information required by this Item 13 is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement[446](index=446&type=chunk) [ITEM 14. Principal Accounting Fees and Services](index=92&type=section&id=ITEM%2014.%20PRINCIPAL%20ACCOUNTING%20FEES%20AND%20SERVICES.) Information on principal accounting fees and services is incorporated by reference from the 2020 Proxy Statement - Information required by this Item 14 is incorporated by reference from the 2020 Annual Meeting of Stockholders Proxy Statement[447](index=447&type=chunk) [PART IV](index=93&type=section&id=PART%20IV) Part IV lists the financial statements, financial statement schedules, and exhibits filed as part of the Annual Report on Form 10-K, and states that there is no Form 10-K Summary [ITEM 15. Exhibits and Financial Statement Schedules](index=93&type=section&id=ITEM%2015.%20EXHIBITS%20AND%20FINANCIAL%20STATEMENT%20SCHEDULES.) This section lists the financial statements, Schedule III (Real Estate Assets and Accumulated Depreciation), and various exhibits filed with the Annual Report, including corporate governance documents, debt agreements, and certifications - The financial statements as set forth under Item 8 of this Annual Report on Form 10-K have been filed herewith, beginning on page F-1[450](index=450&type=chunk) - Schedule III - Real Estate Assets and Accumulated Depreciation, is included starting on page F-51[450](index=450&type=chunk) - Various exhibits, including Articles of Amendment, Bylaws, Indentures for Senior Notes, Credit Agreements, and certifications (CEO/CFO), are filed or incorporated by reference[450](index=450&type=chunk)[451](index=451&type=chunk)[452](index=452&type=chunk)[454](index=454&type=chunk)[455](index=455&type=chunk) [ITEM 16. Form 10-K Summary](index=96&type=section&id=ITEM%2016.%20FORM%2010-K%20SUMMARY.) There is no Form 10-K Summary provided - None[456](index=456&type=chunk)

CoreCivic, Inc. (NYSE:CXW) Q4 2019 Earnings Conference Call February 13, 2020 11:00 AM ET Company Participants Cameron Hopewell - MD, IR Damon Hininger - President, CEO & Director David Garfinkle - EVP & CFO Conference Call Participants Joseph Gomes - NOBLE Capital Markets Jordan Sherman - Ranger Global Operator Good morning. My name is Travis, and I will be your conference operator. As a reminder, this call is being recorded. At this time I would like to welcome you to CoreCivic's Fourth Quarter 2019 Earn ...

Okay, I will summarize the main points and logic of the report, focusing on specific figures and percentages, and adhering to the specified output format. Financial Performance Highlights - Adjusted Diluted Earnings Per Share (EPS) for the three months ended September 30, 2019, was $0.47, compared to $0.36 in 2018[4] For the nine months ended September 30, 2019, it was $1.36, compared to $1.04 in 2018[4] - Normalized Funds From Operations (FFO) per share for the three months ended September 30, 2019, was $0.70, compared to $0.58 in 2018[4] For the nine months ended September 30, 2019, it was $2.03, compared to $1.67 in 2018[4] - Adjusted Funds From Operations (AFFO) per share for the three months ended September 30, 2019, was $0.70, compared to $0.54 in 2018[4] For the nine months ended September 30, 2019, it was $2.00, compared to $1.59 in 2018[4] - Total revenue for the three months ended September 30, 2019, was $508.522 million, compared to $462.728 million in 2018[7] For the nine months ended September 30, 2019, it was $1.482880 billion, compared to $1.353573 billion in 2018[7] - Net income for the three months ended September 30, 2019, was $48.994 million, compared to $40.994 million in 2018[7] For the nine months ended September 30, 2019, it was $146.912 million, compared to $117.968 million in 2018[7] Guidance Summary (Full Year 2019) - The company projects net income to be between $191.5 million and $196 million[5] - Adjusted net income is projected to be between $207.2 million and $211.7 million[5] - Funds From Operations (FFO) is expected to be between $303.1 million and $307.6 million[5] - Normalized Funds From Operations (FFO) is projected to be between $314.4 million and $318.9 million[5] - Adjusted Funds From Operations is expected to be between $308.4 million and $313.4 million[5] Debt and Capitalization - Total debt outstanding as of September 30, 2019, was $1.875422 billion[13] - The company had $585.695 million available under its revolving credit facility as of September 30, 2019[13] - The market value of common equity at the end of the period was $2.057979 billion[13] - The annualized dividend yield was 10.2%[13] Facility Portfolio and Occupancy - The average compensated occupancy for all facilities was 82.9% for the quarter ended September 30, 2019[14] - CoreCivic Safety Facilities had an average compensated occupancy of 83.4%[16] - CoreCivic Community Facilities had an average compensated occupancy of 76.3%[16] - Total design capacity for all facilities as of September 30, 2019, was 78,619[36] Contract Retention - The company's total contract retention rate was 92.5%[26] - The retention rate for owned and controlled contracts was 93.5%[26] - The retention rate for managed-only contracts was 85.7%[26]

Financial Data and Key Metrics Changes - Total revenue for Q3 2019 was $509 million, a 10% increase from the prior year, marking a record high for quarterly revenue in the company's history [13] - Normalized FFO was $0.70 per share, representing a 21% increase year-over-year, exceeding guidance by $0.08 [16] - AFFO also stood at $0.70 per share, a 30% increase from the previous year, and 9% above the high end of guidance [16] - Adjusted EBITDA for the quarter was $115.4 million, a 16% increase from the prior year, exceeding guidance by nearly $10 million [16][61] - Full-year 2019 normalized FFO guidance was updated to a range of $2.64 to $2.68, reflecting a 15% increase over 2018 [17] Business Segment Data and Key Metrics Changes - CoreCivic Safety segment reported revenue of $458 million, an 8% increase year-over-year, driven by new state and federal contracts [15] - CoreCivic Community segment experienced a 30% year-over-year revenue growth, attributed to recent acquisitions [14] - CoreCivic Property segment saw a 23% year-over-year revenue growth, bolstered by acquisitions including the SSA Baltimore property [14][22] Market Data and Key Metrics Changes - The company has been awarded or activated 11 new contracts since the start of 2018, totaling up to 12,000 beds across 8 facilities [18] - The occupancy rate increased from 80.8% in the prior year quarter to 82.9% in Q3 2019 [64] - The company has 6 idle facilities representing a total idle capacity of 7,482 beds, indicating potential for future contract wins [34] Company Strategy and Development Direction - The company is focused on expanding its market share in the Community segment and pursuing additional acquisitions [35][21] - CoreCivic is positioned to capitalize on new market opportunities, particularly in the Safety segment, with ongoing facility activations expected to contribute to future growth [25] - The company is exploring leasing idle facilities to states to address overcrowding and infrastructure challenges [45] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the continued demand for their services, noting that no new capacity is being built in the country [94] - The company is monitoring the impact of California's AB32 legislation but believes federal contracts will remain unaffected due to the supremacy clause [49][92] - Management anticipates that the demand for their facilities will remain stable, with a projected population growth of 1% to 3% annually in most states [120] Other Important Information - The company has a strong balance sheet with total debt leverage declining to 3.5 times by Q3 2019 [52] - The quarterly dividend is well covered with an AFFO payout ratio of 66%, significantly below the average REIT payout ratio [55] - The company is actively engaged in discussions for potential new contracts and acquisitions, indicating a proactive approach to growth [77] Q&A Session Summary Question: Is there momentum in other states following California's AB32? - Management indicated no significant momentum in other states, citing the supremacy clause of the Constitution as a barrier to state laws interfering with federal functions [92][93] Question: How vulnerable is the company to sourcing populations from other states? - Management noted that there is no new capacity being built and that their facilities are critical to meeting government needs [94][95] Question: How is the company managing the tight labor market? - Management reported that they are holding their own in the labor market, with federal contracts allowing for wage increases to be reimbursed [97][99] Question: Can you clarify the implications of AB32 on federal contracts? - Management confirmed that federal contracts would continue due to the supremacy clause, allowing for ongoing operations at facilities like Otay Mesa [101][102] Question: What is the potential size of future state contracts? - Management mentioned potential contracts in Idaho and Alabama, with Alabama's opportunity estimated at around 10,000 beds [103][104] Question: Any updates on Puerto Rico? - Management stated they are in constant communication with the government of Puerto Rico, but conditions in facilities continue to worsen [106][107] Question: What could a change in administration mean for the business? - Management outlined that even in a worst-case scenario, the need for capacity remains, and alternatives to their facilities are limited, potentially leading to asset purchases or leases by the government [108][110]

[PART I – FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) Presents CoreCivic's unaudited consolidated financial statements, management's analysis, market risk, and internal controls [ITEM 1. – FINANCIAL STATEMENTS.](index=3&type=section&id=ITEM%201.%20%E2%80%93%20FINANCIAL%20STATEMENTS.) Presents CoreCivic's unaudited consolidated financial statements, including balance sheets, operations, cash flows, equity, and detailed notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This table provides a snapshot of CoreCivic's assets, liabilities, and equity as of September 30, 2019, and December 31, 2018 Consolidated Balance Sheet Highlights (Amounts in Thousands) | ASSETS/LIABILITIES & EQUITY | Sep 30, 2019 | Dec 31, 2018 | | :-------------------------- | :----------- | :----------- | | Cash and cash equivalents | $47,537 | $52,802 | | Total current assets | $380,645 | $373,525 | | Property and equipment, net | $2,836,841 | $2,830,589 | | Total assets | $3,748,845 | $3,655,660 | | Total current liabilities | $714,802 | $366,396 | | Long-term debt, net | $1,521,785 | $1,787,555 | | Total liabilities | $2,365,644 | $2,240,601 | | Total stockholders' equity | $1,383,201 | $1,415,059 | [Consolidated Statements of Operations](index=4&type=section&id=Consolidated%20Statements%20of%20Operations) This table details CoreCivic's revenues, operating income, net income, and earnings per share for the three and nine months ended September 30, 2019 and 2018 Consolidated Statements of Operations Highlights (Amounts in Thousands, Except Per Share) | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :---------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | REVENUES | $508,522 | $462,728 | $1,482,880 | $1,353,573 | | OPERATING INCOME | $71,095 | $64,419 | $215,313 | $184,836 | | NET INCOME | $48,994 | $40,994 | $146,912 | $117,968 | | BASIC EARNINGS PER SHARE| $0.41 | $0.35 | $1.23 | $1.00 | | DILUTED EARNINGS PER SHARE| $0.41 | $0.34 | $1.23 | $0.99 | [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This table summarizes CoreCivic's cash flows from operating, investing, and financing activities for the nine months ended September 30, 2019 and 2018 Consolidated Statements of Cash Flows Highlights (Amounts in Thousands) | Cash Flow Activity | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $304,072 | $284,571 | | Net cash used in investing activities | $(198,054) | $(230,636) | | Net cash used in financing activities | $(107,077) | $(1,390) | | Net increase (decrease) in cash | $(1,059) | $52,545 | | Cash, cash equivalents and restricted cash, end of period | $73,078 | $104,728 | [Consolidated Statement of Stockholders' Equity (September 30, 2019)](index=6&type=section&id=Consolidated%20Statement%20of%20Stockholders'%20Equity%20(September%2030,%202019)) This table outlines changes in CoreCivic's stockholders' equity for the nine months ended September 30, 2019 Stockholders' Equity Changes (9 Months Ended Sep 30, 2019, Amounts in Thousands) | Item | Common Shares | Stock Par Value | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity | | :-------------------------------------- | :------------ | :-------------- | :------------------------- | :------------------ | :------------------------- | | Balance as of Dec 31, 2018 | 118,674 | $1,187 | $1,807,202 | $(393,330) | $1,415,059 | | Net income | — | — | — | $49,340 | $49,340 | | Retirement of common stock | (143) | (1) | (3,069) | — | (3,070) | | Dividends declared | — | — | — | (52,994) | (52,994) | | Restricted stock compensation, net | — | — | 3,812 | — | 3,812 | | Cumulative effect of adoption of new accounting standard | — | — | — | (29,940) | (29,940) | | Balance as of Sep 30, 2019 | 119,096 | $1,191 | $1,817,258 | $(435,248) | $1,383,201 | [Consolidated Statement of Stockholders' Equity (September 30, 2018)](index=7&type=section&id=Consolidated%20Statement%20of%20Stockholders'%20Equity%20(September%2030,%202018)) This table outlines changes in CoreCivic's stockholders' equity for the nine months ended September 30, 2018 Stockholders' Equity Changes (9 Months Ended Sep 30, 2018, Amounts in Thousands) | Item | Common Shares | Stock Par Value | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity | | :-------------------------------------- | :------------ | :-------------- | :------------------------- | :------------------ | :------------------------- | | Balance as of Dec 31, 2017 | 118,204 | $1,182 | $1,794,713 | $(344,287) | $1,451,608 | | Net income | — | — | — | $37,777 | $37,777 | | Retirement of common stock | (117) | (1) | (2,524) | — | (2,525) | | Dividends declared | — | — | — | (51,533) | (51,533) | | Restricted stock compensation, net | — | — | 3,486 | — | 3,486 | | Cumulative effect of adoption of new accounting standard | — | — | — | (2,575) | (2,575) | | Balance as of Sep 30, 2018 | 118,670 | $1,187 | $1,803,903 | $(383,015) | $1,422,075 | [Notes to Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed explanations of CoreCivic's accounting policies, organization, and specific financial statement items [1. Organization and Operations](index=8&type=section&id=1.%20ORGANIZATION%20AND%20OPERATIONS) CoreCivic operates as a REIT through three segments: Safety, Community, and Properties, managing correctional and reentry facilities and government-leased real estate - CoreCivic is the nation's largest owner of partnership correctional, detention, and residential reentry facilities and one of the largest prison operators in the United States, also being the largest private owner of real estate used by U.S. government agencies[26](index=26&type=chunk) - The company operates through three segments: CoreCivic Safety (51 correctional/detention facilities, ~73,000 beds), CoreCivic Community (27 residential reentry centers, ~5,000 beds), and CoreCivic Properties (27 properties leased to third parties, 2.3 million sq ft)[26](index=26&type=chunk) - CoreCivic operates as a Real Estate Investment Trust (REIT) since January 1, 2013, conducting services through Taxable REIT Subsidiaries (TRSs) which are subject to corporate income tax and can retain income for reinvestment[28](index=28&type=chunk) [2. Basis of Presentation and Summary of Significant Accounting Policies](index=8&type=section&id=2.%20BASIS%20OF%20PRESENTATION%20AND%20SUMMARY%20

CoreCivic, Inc. (NYSE:CXW) Q2 2019 Results Conference Call August 6, 2019 11:00 AM ET Company Participants Cameron Hopewell - Managing Director, IR Damon Hininger - President and CEO David Garfinkle - CFO Conference Call Participants Operator Good morning. My name is Jonathan and I will be your conference operator. As a reminder, this call is being recorded. At this time, I’d like to welcome you to the CoreCivic’s Second Quarter 2019 Earnings Conference Call. All lines have been placed on mute to avoid any ...