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Corrections Corporation Of America's CEO Discusses Q2 2011 Results - Earnings Call Transcript

I would now like to turn the call over to Mr. Hininger. Please go ahead, sir.

Damon Hininger

Thank you, Jessica and good morning and thank you for joining our call today. With me today is our Chairman, John Ferguson, and also board member Bill Andrews along with our CFO, Todd Mullenger. Also joining us is our VP of Finance, David Garfinkle. In a few minutes, Todd will take you through the numbers for the quarter, then I’ll discuss market opportunities, after which we look forward to taking your questions.

First, though, I would like to make some comments on the past quarter. Let me start by saying that I am very pleased with the second quarter results both operationally and financially. Our core business which is providing adult secure correctional and detention management services to our federal state and local partners remains very strong.

As for the business going forward we think this is the most favorable new development environment the industry has even seen. The macro environment has never been more favorable. For the second consecutive year not one of the 50 states is appropriating money for new prisons which is going to further exacerbate the supply demand imbalance. Additionally, we’re actively pursuing nearly 40,000 new beds and new incremental opportunity that could be decided in the next 6 to 12 months. We estimate these new opportunities to be nearly 700 million in revenues.

Let me now say a few words about our focus on managing costs. As you know we implemented a company-wide initiative in 2009 aimed at driving greater efficiency and we continue to make significant progress. We believe we had another good quarter on managing our costs. However, we did give merit increases this last month, and this is the first merit increase we’ve given our employees since 2008 and we know this cost will obviously naively impact our margin rate for the third quarter.

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