2020
A N N U A L R E P O R T
Form 10-K
BR21871N-0321-10KW UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 001-16109
CORECIVIC, INC.
(Exact name of registrant as specified in its charter)
MARYLAND
(State or other jurisdiction of
incorporation or organization)
5501 VIRGINIA WAY
BRENTWOOD, TENNESSEE
(Address of principal executive offices)
62-1763875
(I.R.S. Employer
Identification No.)
37027
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (615) 263-3000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of each class
Common Stock, par value $.01 per share
Trading Symbol(s)
CXW
Name of each exchange
on which registered
New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting
company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.
Accelerated filer
Smaller reporting company
☐
☒
☐
☐
☐
☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
The aggregate market value of the shares of the registrant's Common Stock held by non-affiliates was approximately $1,109,062,984 as
of June 30, 2020 based on the closing price of such shares on the New York Stock Exchange on that day. The number of shares of the
registrant's Common Stock outstanding on February 16, 2021 was 119,637,734.
☒
Yes ☐ No ☒
Portions of the registrant's definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, currently scheduled to be held on
May 13, 2021, are incorporated by reference into Part III of this Annual Report on Form 10-K.
DOCUMENTS INCORPORATED BY REFERENCE:
BR21871N-0321-10KW
CORECIVIC, INC.
FORM 10-K
For the fiscal year ended December 31, 2020
TABLE OF CONTENTS
Item No.
Page
PART I
1.
1A.
1B.
2.
3.
4.
Business ....................................................................................................................................................
Overview .............................................................................................................................................
Operating Procedures and Offender Services for Correctional, Detention, and Residential Reentry
7
7
9
Facilities .......................................................................................................................................
Business Development ........................................................................................................................ 14
2020 Accomplishments ....................................................................................................................... 17
Facility Portfolio .................................................................................................................................. 19
Competitive Strengths ......................................................................................................................... 29
Human Capital ..................................................................................................................................... 34
Government Regulation ....................................................................................................................... 36
Insurance ............................................................................................................................................. 38
Competition ......................................................................................................................................... 38
Risk Factors .............................................................................................................................................. 39
Unresolved Staff Comments .................................................................................................................... 58
Properties .................................................................................................................................................. 58
Legal Proceedings .................................................................................................................................... 58
Mine Safety Disclosures ........................................................................................................................... 58
PART II
5.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities ........................................................................................................................................... 59
Market Price of and Distributions on Capital Stock ............................................................................ 59
Dividend Policy ................................................................................................................................... 59
Issuer Purchases of Equity Securities .................................................................................................. 59
Reserved ................................................................................................................................................... 59
Management's Discussion and Analysis of Financial Condition and Results of Operations .................... 60
Overview ............................................................................................................................................. 60
Critical Accounting Policies ................................................................................................................ 64
Results of Operations .......................................................................................................................... 67
Liquidity and Capital Resources .......................................................................................................... 80
Inflation ............................................................................................................................................... 87
Seasonality and Quarterly Results ....................................................................................................... 87
Quantitative and Qualitative Disclosures about Market Risk ................................................................... 87
Financial Statements and Supplementary Data ........................................................................................ 88
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ................... 88
Controls and Procedures ........................................................................................................................... 88
Other Information ..................................................................................................................................... 91
PART III
Directors, Executive Officers and Corporate Governance ....................................................................... 92
Executive Compensation .......................................................................................................................... 92
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters . 92
Certain Relationships and Related Party Transactions and Director Independence ................................. 93
Principal Accounting Fees and Services .................................................................................................. 93
Exhibits and Financial Statement Schedules ............................................................................................ 94
Form 10-K Summary ............................................................................................................................... 98
99
SIGNATURES
PART IV
6.
7.
7A.
8.
9.
9A.
9B.
10.
11.
12.
13.
14.
15.
16.
2
BR21871N-0321-10KW
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K, or Annual Report, contains statements as to our beliefs and expectations of the
outcome of future events that are forward-looking statements as defined within the meaning of the Private Securities
Litigation Reform Act of 1995, as amended. All statements other than statements of current or historical fact
contained in this Annual Report, including statements regarding our future financial position, business strategy,
budgets, projected costs and plans, and objectives of management for future operations, are forward-looking
statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan,"
"projects," "will," and similar expressions, as they relate to us, are intended to identify forward-looking statements.
These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ
materially from the statements made in this Annual Report. These include, but are not limited to, the risks and
uncertainties associated with:
•
•
•
•
•
•
•
•
•
•
•
changes in government policy (including the United States Department of Justice, or DOJ, not renewing
contracts as a result of President Biden’s Executive Order on Reforming Our Incarceration System to
Eliminate the Use of Privately Operated Criminal Detention Facilities, or the Private Prison EO),
legislation and regulations that affect utilization of the private sector for corrections, detention, and
residential reentry services, in general, or our business, in particular, including, but not limited to, the
continued utilization of our correctional and detention facilities by the federal government, and the
impact of any changes to immigration reform and sentencing laws (we do not, under longstanding
policy, lobby for or against policies or legislation that would determine the basis for, or duration of, an
individual's incarceration or detention);
our ability to obtain and maintain correctional, detention, and residential reentry facility management
contracts because of reasons including, but not limited to, sufficient governmental appropriations,
contract compliance, negative publicity and effects of inmate disturbances;
changes in the privatization of the corrections and detention industry, the acceptance of our services, the
timing of the opening of new facilities and the commencement of new management contracts (including
the extent and pace at which new contracts are utilized), as well as our ability to utilize available beds;
general economic and market conditions, including, but not limited to, the impact governmental budgets
can have on our contract renewals and renegotiations, per diem rates, and occupancy;
fluctuations in our operating results because of, among other things, changes in occupancy levels,
competition, contract renegotiations or terminations, increases in costs of operations, fluctuations in
interest rates and risks of operations;
the duration of the federal government's denial of entry at the United States southern border to asylum-
seekers and anyone crossing the southern border without proper documentation or authority in an effort
to contain the spread of the novel coronavirus, or COVID-19;
government and staff responses to staff or residents testing positive for COVID-19 within public and
private correctional, detention and reentry facilities, including the facilities we operate;
the location and duration of shelter in place orders and other restrictions associated with COVID-19 that
disrupt the criminal justice system, along with government policies on prosecutions and newly ordered
legal restrictions that affect the number of people placed in correctional, detention, and reentry facilities;
whether revoking our real estate investment trust, or REIT, election, effective January 1, 2021, and our
revised capital allocation strategy can be implemented in a cost effective manner that provides the
expected benefits, including facilitating our planned debt reduction initiative and planned return of
capital to shareholders;
our ability to identify and consummate the sale of additional non-core assets at attractive prices;
our ability to successfully identify and consummate future development and acquisition opportunities
and our ability to successfully integrate the operations of our completed acquisitions and realize
projected returns resulting therefrom;
3
BR21871N-0321-10KW •
•
•
•
increases in costs to develop or expand real estate properties that exceed original estimates, or the
inability to complete such projects on schedule as a result of various factors, many of which are beyond
our control, such as the effects of, and delays caused by, COVID-19, weather, the availability of labor
and materials, labor conditions, delays in obtaining legal approvals, unforeseen engineering,
archeological or environmental problems, and cost inflation, resulting in increased construction costs;
our ability, following our revocation of our REIT election, to identify and initiate service opportunities
that were unavailable under the REIT structure;
our ability to have met and maintained qualification for taxation as a REIT for the years we elected
REIT status; and
the availability of debt and equity financing on terms that are favorable to us, or at all.
Any or all of our forward-looking statements in this Annual Report may turn out to be inaccurate. We have based
these forward-looking statements largely on our current expectations and projections about future events and
financial trends that we believe may affect our financial condition, results of operations, business strategy, and
financial needs. Our statements can be affected by inaccurate assumptions we might make or by known or unknown
risks, uncertainties and assumptions, including the risks, uncertainties, and assumptions described in "Risk Factors"
included elsewhere in this Annual Report and in other reports, documents, and other information we file with the
Securities and Exchange Commission, or the SEC, from time to time.
In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this
Annual Report may not occur and actual results could differ materially from those anticipated or implied in the
forward-looking statements. When you consider these forward-looking statements, you should keep in mind the risk
factors and other cautionary statements in this Annual Report, including in "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Business" and "Risk Factors."
Our forward-looking statements speak only as of the date made. We undertake 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. All subsequent written and oral forward-looking statements attributable to us
or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained in this
Annual Report.
4
BR21871N-0321-10KW
RISK FACTORS SUMMARY
Our business faces significant risks and uncertainties. If any of the following risks are realized, our business,
financial condition and results of operations could be materially and adversely affected. You should carefully review
and consider the full discussion of our risk factors in Part I, Item 1A, "Risk Factors" of this Annual Report. Set forth
below is a summary list of the principal risk factors as of the date of the filing of this Annual Report.
• Resistance to privatization of correctional, detention, and residential reentry facilities, and negative
publicity regarding inmate disturbances or perceived poor operational performance, could result in our
inability to obtain new contracts, the loss of existing contracts, or other unforeseen consequences.
• We are subject to fluctuations in occupancy levels, and a decrease in occupancy levels could cause a
decrease in revenues and profitability.
• We are dependent on government appropriations, and our results of operations may be negatively affected
by governmental budgetary challenges or government shutdowns.
• The COVID-19 pandemic has had, and we expect will continue to have, certain negative effects on our
business, and such effects may have a material adverse effect on our results of operations, financial
condition and cash flows.
• Competition may adversely affect the profitability of our business.
• We are subject to terminations, non-renewals, or competitive re-bids of our government contracts.
• Our ability to secure new contracts to develop and manage correctional, detention, and residential reentry
facilities depends on many factors outside our control.
• We may face community opposition to facility location, which may adversely affect our ability to obtain
new contracts.
• Providing family residential services increases certain unique risks and difficulties compared to operating
our other facilities.
• We may incur significant start-up and operating costs on new contracts before receiving related revenues,
which may impact our cash flows and not be recouped.
• Government agencies may investigate and audit our contracts and operational performance, and if any
deficiencies or improprieties are found, we may be required to cure those deficiencies or improprieties,
refund revenues we have received, or forego anticipated revenues, and we may be subject to penalties and
sanctions, including contract termination and prohibitions on our bidding in response to Requests for
Proposals.
• Failure to comply with facility contracts or with unique and increased governmental regulation could result
in material penalties or non-renewal or termination of noncompliant contracts or our other contracts to
provide or manage correctional, detention, and residential reentry facilities.
• We depend on a limited number of governmental customers for a significant portion of our revenues.
• We may not be able to successfully identify, consummate or integrate acquisitions.
• As a result of our acquisitions, we have recorded and will continue to record goodwill and other intangible
assets. In the future, our goodwill or other intangible assets may become impaired, which could result in
material non-cash charges to our results of operations.
• We are dependent upon our senior management and our ability to attract and retain sufficient qualified
personnel.
• We are subject to various types of litigation.
• We are subject to necessary insurance costs.
• We may be adversely affected by inflation.
• Technological changes or negative changes in the level of acceptance of, or resistance to, the use of
electronic monitoring products could cause our electronic monitoring products and other technology to
become obsolete or require the redesign of our electronic monitoring products, which could have an
adverse effect on our business.
• We depend on a limited number of third parties to manufacture and supply our electronic monitoring
products. If our suppliers cannot provide the products or services we require in a timely manner and with
such quality as we expect, our ability to market and sell our electronic monitoring products and services
could be harmed.
5
BR21871N-0321-10KW • We may be subject to costly product liability claims from the use of our electronic monitoring products,
which could damage our reputation, impair the marketability of our products and services and force us to
pay costs and damages that may not be covered by adequate insurance.
• We are subject to risks associated with ownership of real estate.
• We may be adversely affected by an increase in costs or difficulty of obtaining adequate levels of surety
•
credit on favorable terms.
Interruption, delay or failure of the provision of our technology services or information systems, or the
compromise of the security thereof, could adversely affect our business, financial condition or results of
operations.
• We are subject to risks related to corporate social responsibility.
• As an owner and operator of correctional, detention, and residential reentry facilities, we are subject to risks
relating to acts of God, outbreaks of epidemic or pandemic disease, terrorist activity and war.
• Our indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations
under our debt securities.
• Our Credit Agreements, indentures related to our senior notes, and other debt instruments have restrictive
covenants that could limit our financial flexibility.
• Our indebtedness is secured by a substantial portion of our assets.
• Servicing our indebtedness will require a significant amount of cash or may require us to refinance our
indebtedness before it matures. Our ability to generate cash depends on many factors beyond our control
and there is no assurance that we will be able to refinance our debt on acceptable terms, or at all.
• We are required to repurchase all or a portion of our senior notes upon a change of control, and our Credit
Agreements are subject to acceleration upon a change of control.
• Despite current indebtedness levels, we may still incur more debt.
• Our ability to incur more secured debt has been further limited by the Term Loan B.
• Our access to capital may be affected by general macroeconomic conditions.
•
Increasing activist resistance to the use of public-private partnerships for correctional, detention, and
residential reentry facilities could impact our ability to obtain financing to grow our business or to
refinance existing indebtedness, which could have a material adverse effect on our business, financial
condition and results of operations.
• Rising interest rates would increase the cost of our variable rate debt.
• Our obligations to pay income taxes will increase beginning in 2021, which will result in a reduction to our
earnings, and could have negative consequences to us.
• We may fail to realize the anticipated benefits of revoking our REIT election and becoming a taxable C
Corporation effective January 1, 2021, or those benefits may take longer to realize than expected, if at all,
or may not offset the costs of revoking our REIT election and becoming a taxable C Corporation.
If we failed to remain qualified as a REIT for those years we elected REIT status, we would be subject to
corporate income taxes and would not be able to deduct distributions to stockholders when computing our
taxable income for those years.
•
• Even if we remained qualified as a REIT for those years we elected REIT status, we may owe taxes under
certain circumstances.
• The market price of our equity securities may vary substantially, which may limit our stockholders' ability
to liquidate their investment.
• The number of shares of our common stock available for future sale could adversely affect the market price
of our common stock.
• Future offerings of debt or equity securities ranking senior to our common stock or incurrence of debt
(including under our Bank Credit Facility) may adversely affect the market price of our common stock.
• Our issuance of preferred stock could adversely affect holders of our common stock and discourage a
takeover.
• Our charter and bylaws and Maryland law could make it difficult for a third party to acquire our company.
6
BR21871N-0321-10KW ITEM 1. BUSINESS.
Overview
PART I.
We are a diversified government solutions company with the scale and experience needed to solve tough
government challenges in flexible, cost-effective ways. Through three segments, CoreCivic Safety, CoreCivic
Community, and CoreCivic Properties, we provide a broad range of solutions to government partners that serve the
public good through corrections and detention management, a network of residential reentry centers to help address
America's recidivism crisis, and government real estate solutions. We have been a flexible and dependable partner
for government for more than 35 years. Our employees are driven by a deep sense of service, high standards of
professionalism and a responsibility to help government better the public good.
We are the nation's largest owner of partnership correctional, detention, and residential reentry facilities and one of
the largest prison operators in the United States. We also believe we are the largest private owner of real estate used
by U.S. government agencies. As of December 31, 2020, through our CoreCivic Safety segment, we operated 47
correctional and detention facilities, 42 of which we owned, with a total design capacity of approximately 70,000
beds. Through our CoreCivic Community segment, we owned and operated 27 residential reentry centers with a
total design capacity of approximately 5,000 beds. In addition, through our CoreCivic Properties segment, we
owned 15 properties for lease to third parties and used by government agencies, totaling 2.7 million square feet.
In addition to providing fundamental residential services, our correctional, detention, and residential reentry
facilities offer a variety of rehabilitation and educational programs, including basic education, faith-based services,
life skills and employment training, and substance abuse treatment. These services are intended to help reduce
recidivism and to prepare offenders for their successful reentry into society upon their release. We also provide or
make available to offenders certain health care (including medical, dental, and mental health services), food
services, and work and recreational programs.
We are a Maryland corporation formed in 1983. Our principal executive offices are located at 5501 Virginia Way,
Brentwood, Tennessee, 37027, and our telephone number at that location is (615) 263-3000. Our website address is
www.corecivic.com. We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, definitive proxy statements, and amendments to those reports under the Securities Exchange
Act of 1934, as amended, or the Exchange Act, available on our website, free of charge, as soon as reasonably
practicable after these reports are filed with or furnished to the SEC. Information contained on our website is not
part of this Annual Report.
We have operated as a REIT from January 1, 2013 through December 31, 2020. As a REIT, we have provided
services and conducted other business activities through taxable REIT subsidiaries, or TRSs. A TRS is a subsidiary
of a REIT that is subject to applicable corporate income tax and certain qualification requirements. Our use of TRSs
has enabled us to comply with REIT qualification requirements while providing correctional services at facilities we
own and at facilities owned by our government partners and to engage in certain other business operations. A TRS
is not subject to the distribution requirements applicable to REITs so it may retain income generated by its
operations for reinvestment.
As a REIT, we generally have not been subject to federal income taxes on our REIT taxable income and gains that
we distribute to our stockholders, including the income derived from our real estate and dividends we have earned
from our TRSs. However, our TRSs have been required to pay income taxes on their earnings at regular corporate
income tax rates.
As a REIT, we generally have been required to distribute annually to our stockholders at least 90% of our REIT
taxable income (determined without regard to the dividends paid deduction and excluding net capital gains). Our
REIT taxable income does not typically include income earned by our TRSs except to the extent our TRSs paid
dividends to the REIT.
7
BR21871N-0321-10KW On June 17, 2020, we announced that our Board of Directors, or BOD, was evaluating corporate structure and
capital allocation alternatives. Concurrently, the BOD suspended our quarterly dividend while we assessed how best
to use our free cash flow to build shareholder value, maintain service excellence, and offer and implement unique
solutions for our government partners and the communities in which we serve. On August 5, 2020, we announced
that the BOD concluded its analysis and unanimously approved a plan to revoke our REIT election and become a
taxable C Corporation, effective January 1, 2021. The BOD also voted unanimously to discontinue our quarterly
dividend and prioritize allocating our free cash flow to reduce debt levels. As a result, we will no longer be required
to operate under REIT rules, including the requirement to distribute at least 90% of our taxable income to our
stockholders, which will provide us with greater flexibility to use our free cash flow. Beginning January 1, 2021, we
will be subject to federal and state income taxes on our taxable income at applicable tax rates, and will no longer be
entitled to a tax deduction for dividends paid. However, we believe this conversion will improve our overall credit
profile and lower our overall cost of capital. Following our first priority of reducing debt, we expect to allocate a
substantial portion of our free cash flow to returning capital to our shareholders and pursue alternative growth
opportunities. This conversion will also provide us with significantly more liquidity, which will enable us to reduce
our reliance on the capital markets and reduce the size of our Second Amended and Restated Credit Agreement, or
Bank Credit Facility, in the future. We continued to operate as a REIT for the 2020 tax year, and existing REIT
requirements and limitations, including those established by our organizational documents, remained in place until
January 1, 2021.
Our ongoing operations are organized into three principal business segments:
• CoreCivic Safety segment, consisting of the 47 correctional and detention facilities that are owned, or
controlled via a long-term lease, and managed by CoreCivic, as well as those correctional and detention
facilities owned by third parties but managed by CoreCivic. CoreCivic Safety also includes the operating
results of our subsidiary that provides transportation services to governmental agencies, TransCor
America, LLC, or TransCor.
• CoreCivic Community segment, consisting of the 27 residential reentry centers that are owned, or
controlled via a long-term lease, and managed by CoreCivic. CoreCivic Community also includes the
operating results of our electronic monitoring and case management services.
• CoreCivic Properties segment, consisting of the 15 real estate properties owned by CoreCivic for lease to
third parties and used by government agencies.
For the years ended December 31, 2020, 2019, and 2018, our total segment net operating income, which we define
as a facility's revenues (including interest income associated with finance leases) less operating expenses, was
divided among our three business segments as follows:
Segment:
Safety
Community
Properties
For the Years Ended December 31,
2019
2018
2020
82.2 %
3.4 %
14.4 %
85.2 %
5.0 %
9.8 %
87.1 %
4.8 %
8.1 %
Our customers primarily consist of federal, state, and local government agencies. Federal correctional and detention
authorities primarily consist of U.S. Immigration and Customs Enforcement, or ICE, the United States Marshals
Service, or the USMS, and the Federal Bureau of Prisons, or the BOP. Payments by federal correctional and
detention authorities represented 52%, 51%, and 48% of our total revenue for the years ended December 31, 2020,
2019, and 2018, respectively.
8
BR21871N-0321-10KW
Our customer contracts for providing bed capacity and correctional, detention, and residential reentry services in our
CoreCivic Safety and CoreCivic Community segments typically have terms of three to five years and contain
multiple renewal options. Most of our facility contracts also contain clauses that allow the government agency to
terminate the contract at any time without cause, and our facility contracts are generally subject to annual or bi-
annual legislative appropriations of funds. Notwithstanding these termination clauses, the contract renewal rate for
properties we owned and operated in these segments was 94% over the five years ended December 31, 2020. The
government lease agreements in our CoreCivic Properties segment typically have terms of five to twenty years
including renewal options, and generally have more restrictive termination clauses. At December 31, 2020, the lease
agreements in our CoreCivic Properties segment had a weighted average lease term of 8.6 years remaining.
In our CoreCivic Safety and CoreCivic Community segments, we are compensated for providing bed capacity and
correctional, detention, and residential reentry services at a per diem rate based upon actual or minimum guaranteed
occupancy levels. Occupancy rates for a particular facility are typically low when first opened or immediately
following an expansion. However, beyond the start-up period, which typically ranges from 90 to 180 days, the
occupancy rate tends to stabilize. Our occupancy rates have declined due to the effects of COVID-19, as further
described hereafter. The average compensated occupancy of our correctional, detention, and residential reentry
facilities, based on rated capacity was as follows for the years 2020, 2019, and 2018:
CoreCivic Safety facilities
CoreCivic Community facilities
Total
2020
2019
2018
75 %
62 %
74 %
82 %
76 %
82 %
81 %
80 %
81 %
The average compensated occupancy of our CoreCivic Safety and CoreCivic Community facilities, excluding idled
facilities, was 82%, 93%, and 93% for the years 2020, 2019, and 2018, respectively.
In our CoreCivic Properties segment, we own properties for lease to third parties and used by government agencies
where our occupancy percentage is based on leased square feet rather than bed capacity. The average occupancy of
the 15 properties comprising our CoreCivic Properties segment portfolio as of December 31, 2020 was 99%, 99%
and 100% for the years 2020, 2019, and 2018, respectively.
Operating Procedures and Offender Services for Correctional, Detention, and Residential Reentry Facilities
Pursuant to the terms of our customer contracts, we are responsible for the overall operations of our facilities,
including staff recruitment, general administration of the facilities, facility maintenance, security, and supervision of
the offenders. We are required by our customer contracts to maintain certain levels of insurance coverage for
general liability, workers' compensation, vehicle liability, and property loss or damage. We also are required to
indemnify our customers for claims and costs arising out of our operations and, in certain cases, to maintain
performance bonds and other collateral requirements.
Reentry programs.
We believe a focus on inmate reentry provides great benefits for our communities – more people living healthy and
productive lives and contributing to strong families and local economies. We have committed to evolving our
model with an increased focus on reentry services, and we are working hard to equip the men and women in our care
with the services, support, and resources they need to be successful upon reentry.
While we remain focused on our commitment, due to COVID-19, we experienced a reduction in the number of
individuals who benefited from our reentry and educational programs in 2020 when compared to prior years. As a
result of our efforts to mitigate the spread of COVID-19 by inhibiting the movement and interactions of individuals
in and around our facilities, our reentry programs were significantly disrupted. We intend to work with our
government partners and follow national health standards in reinstating these reentry programs to their full capacity.
9
BR21871N-0321-10KW
We provide a wide range of evidence-based reentry programs and activities in our facilities. At most of the facilities
we manage, offenders have the opportunity to enhance their basic education from literacy through earning a high
school equivalency certificate endorsed by their respective state. In some cases, we also provide opportunities for
postsecondary educational achievements and chances to participate in college degree programs. A number of our
facilities that care for non-U.S. citizens offer adult education curricula recognized by several nations to which these
offenders may return, including a curriculum offered in conjunction with the Mexican government. We also provide
an Adult Education in Spanish program for offenders with that specific language need.
For the offenders who are close to taking their high school equivalency exam (either the GED or the HiSET), we
have invested in the equipment needed to use the GED/HiSET Academy software program, which is an offline
software program providing over 200 hours of individualized lessons up to a 12th grade level. The GED/HiSET
Academy incorporates teaching best practices and provides an atmosphere to engage and motivate students to learn
everything they need to know to pass the GED/HiSET exam. According to a 2018 study published in the Journal of
Experimental Criminology, inmates participating in correctional education programs were 28% less likely to
recidivate when compared with inmates who did not participate in correctional education programs.
In addition, we offer a broad spectrum of career/technical education opportunities to help individuals learn
marketable job skills. Our trade programs are certified by the National Center for Construction Education and
Research, or NCCER. NCCER establishes the curriculum and certification for over 4,000 construction and trade
organizations. Graduates of these programs enter the job market with certified skills that significantly enhance
employability. According to research conducted by the RAND Corporation published in 2013, inmates who
complete vocational training are 28% more likely to find a job after release.
We are proud of the educational programs we offer and intend to maintain and continue to develop such programs.
Examples of programs we've recently offered include:
•
•
•
In 2020, our Lee Adjustment Center in Kentucky implemented "Interview School," a web-based artificial
intelligence software for practicing job interviews. Interview School conducts job-specific interviews and
provides feedback on tone, confidence, and answer content. We plan to implement Interview School at
additional facilities in 2021.
facility
in Tennessee an opportunity
In 2019, we partnered with Persevere, a national non-profit organization, to offer offenders at our
Trousdale Turner
job
readiness/employability skills specific to the technology field. In 2020, the partnership with Persevere was
expanded to include our Red Rock Correctional Center in Arizona. The instructor-led, self-paced program
utilizes both a coding instructor and a Technology Employability Specialist to ensure students are learning
the craft and how to obtain and maintain a job in the field, post-incarceration. Additionally, the program is
split into two phases that allows students to become certified Front-end Developers (phase 1) and Full
Stack Developers (phase 2) upon completion.
learn software coding and
to
In 2019, we increased our post-secondary educational offerings by growing our relationship with Ashland
University, based in Ohio, to deliver college-level programming to offenders at our Jenkins, Wheeler, and
Coffee correctional facilities in Georgia. In 2020, we also began offering the college-level programming
at our Northeast Ohio facility in Ohio. This relationship with Ashland University allows enrollees to
obtain an Associate's Degree in General Studies or a Bachelor's Degree in Communication Studies or
Interdisciplinary Studies at no cost to them through Pell Grant funding. Students access coursework, tests,
and interact with their instructors through a secure Learning Management System via a tablet computer.
10
BR21871N-0321-10KW •
•
In 2018, through a relationship with Fuel Education, a company that specializes in digital learning
opportunities, we began offering an online Information Support and Services computer program at our Lee
Adjustment Center in Kentucky. This program allows students to enhance their computer knowledge and
was developed in coordination with the Commonwealth of Kentucky Department of Corrections, or
KYDOC, our government partner at the Lee facility. Students who successfully complete the approximate
10-month program will be awarded a base National Occupational Competency Testing Institute, or
NOCTI, credential with the opportunity to earn an advanced NOCTI credential in the future.
In 2016, our Coffee and Wheeler facilities in Georgia implemented state-of-the-art Diesel Maintenance
and Welding programs in coordination with the Georgia Department of Corrections, or GDOC, enabling
students to earn trade certificates from nearby community colleges.
For those with assessed substance abuse disorders, we offer cognitive behavioral evidence-based treatment programs
with proven clinical outcomes, such as the Residential Drug Abuse Program. We offer both therapeutic community
models and intensive outpatient programs. We also offer drug and alcohol use education/DWI programs at some of
our locations. Our goal in providing substance abuse treatment is to stimulate internal motivation for change and
progress through the stages of change so that lasting behavioral change can occur. Our drug and alcohol education
programs help participants understand their relationships with drugs and alcohol and the links between drug and
alcohol use and crime, as well as assisting them in making better choices that can lead to healthier relationships in
their lives. According to a study by the Florida State University College of Criminology and Criminal Justice, "An
Assessment of Substance Abuse Treatment Programs in Florida's Prisons Using a Random Assignment
Experimental Design" submitted to the National Institute of Justice, Office of Justice Programs, U.S. Department of
Justice in 2016, inmates who completed addiction treatment in prison have significantly lower recidivism levels
regardless of the treatment model used.
Additional program offerings include our Victim Impact Programs, available at a number of our Safety and
Community facilities, which seek to educate offenders about the negative effects their criminal conduct can have on
others. All of our facility chaplains facilitate diverse and inclusive opportunities for those in our care to engage in
the practice of spirituality and to exercise individual religious freedom. In several facilities, we offer faith-based
programs with an emphasis on character development, spiritual growth, and successful reentry. Presently, we utilize
Threshold, as an innovative, evidence-based inter-faith component of comprehensive reentry services.
Our Reentry and Life Skills programs prepare individuals for life after incarceration by teaching them how to
successfully conduct a job search, how to manage their budget and financial matters, parenting skills, and
relationship and family skills. Equally significant, we offer cognitive behavioral programs aimed at changing anti-
social attitudes and behaviors in offenders, with a focus on altering the level of criminal thinking. In 2017, we
introduced a comprehensive reentry strategy we call "Go Further," a forward thinking, process approach to reentry.
"Go Further" encompasses all facility reentry programs, adds a proprietary cognitive/behavioral curriculum, and
encourages staff and offenders to take a collaborative approach to assist in reentry preparation. In 2020, we
expanded our offering by completing the first implementation of "Go Further" in one of our community corrections
facilities.
In 2020, we developed and launched our first "Go Further Release" program in Albuquerque, New Mexico. Go
Further Release is a program that provides stabilization services and reentry coaching to individuals being released
from our facilities. The program provides "Reach-in" services during the returning citizen's last 90 days of
incarceration which are designed to prepare individuals for release and make a connection with a reentry coach that
will provide support to them after release. "Stabilization and Reentry Coaching" services are provided during an
individual's first 90 days of release and an ongoing community support group is available as long as needed. All
services are free of charge.
Across the country, our dedicated staff, along with the assistance of thousands of volunteers, work to provide
guidance, direction, and post-incarceration services to the men and women in our care. We believe these critical
reentry programs help fight the serious challenge of recidivism facing the United States.
11
BR21871N-0321-10KW Through our community corrections facilities, we provide an array of services to defendants and offenders who are
serving their full sentence, the last portion of their sentence, waiting to be sentenced, or awaiting trial while
supervised in a community environment. We offer housing and programs with a key focus on employment, job
readiness, life skills and various substance abuse treatment programs, in order to help offenders successfully reenter
their communities and reduce the risk of recidivism. In some of our community corrections facilities, we offer
housing and program services to parolees who have completed their sentence but lack a viable reentry plan.
Through a focus on employment and skill development, we provide a means for these parolees to successfully
reintegrate into their communities.
In addition, we provide day-reporting and substance abuse treatment programs at some of our community
corrections facilities. These programs, depending on the needs of the offender, can provide cognitive behavioral-
based programs to assist in the offender's successful reentry while holding the individual accountable while living in
the community.
Lastly, we also provide a number of non-residential correctional alternative services, including electronic monitoring
and case management services, under our CoreCivic Community segment. Governmental customers use electronic
monitoring products and services to monitor low risk offenders as a way to help reduce overcrowding in correctional
facilities, as a monitoring and sanctioning tool, and to promote public safety by imposing restrictions on movement
and serving as a deterrent for alcohol usage. Providing these non-residential services is a natural complement to our
broad network of residential reentry facilities and can help keep individuals from going back to prison or being
incarcerated in the first place.
Ultimately, the work we do is intended to give people the tools to reintegrate with their communities permanently.
We are proud of the teachers, counselors, case managers, chaplains, and other offender support service professionals
who provide these services to the men and women entrusted in our care.
To further underscore our long-term commitment to reducing recidivism, since October 2017, we have maintained a
nationwide initiative to advocate for a range of government policies that will help former offenders successfully
reenter society and stay out of prison. As part of this continued initiative, we apply government relations resources
and expertise to advocate for the following policies:
•
•
•
•
"Ban-the-Box" proposals to help improve former inmates' chances at getting a job;
Reduced legal barriers to make it easier and less risky for companies to hire former inmates;
Increased funding for reentry programs in areas such as education, addiction treatment, faith-based
offerings, victim impact and post-release employment; and
Social impact bond pilot programs that tie contractor payments to positive outcomes.
In 2020, we announced that we will publicly advocate at the federal and state levels for a slate of new policies that
will help people succeed in their communities after being released from prison. Specifically, we pledged our
support for Pell Grant Restoration, Voting Rights Restoration and Licensure Reform Policies. Also in 2020, we
partnered and made an investment in Prison Fellowship, a leading advocate for criminal justice reform serving
approximately 550,000 current and formerly incarcerated individuals and their family members each year. Through
a network of programming and advocacy efforts, the organization seeks to effect positive change at every level of
the criminal justice system. We have committed to a multi-year partnership in Prison Fellowship's Warden
Exchange program, a residency and online professional development program that enables wardens to share reentry
best practices and problem solve amongst a peer group. We believe that as successful as we may be with our work
inside our facilities, offenders still face embedded societal barriers when they return to their communities.
Supporting recidivism-reducing policies is one way we can bridge the gap and give the men and women entrusted in
our care a better opportunity at never returning to prison.
12
BR21871N-0321-10KW
Operating guidelines.
The American Correctional Association, or ACA, is an independent organization comprised of corrections
professionals that establishes accreditation standards for correctional and detention facilities around the world.
Outside agency standards, such as those established by the ACA, provide us with the industry's most widely
accepted operational guidelines. ACA accredited facilities must be audited and re-accredited at least every three
years. We have sought and received ACA accreditation for 36, or approximately 90%, of the eligible facilities we
operated as of December 31, 2020, excluding our residential reentry facilities. During 2020, five of the facilities we
manage were newly accredited or re-accredited by the ACA with an average score of 99.5%, making our portfolio
average also 99.5%.
Beyond the standards provided by the ACA, our facilities are operated in accordance with a variety of company and
facility-specific policies and procedures, as well as various contractual requirements. Many of these policies and
procedures reflect the high standards generated by a number of sources, including the ACA, the National
Commission on Correctional Healthcare, the Occupational Safety and Health Administration, as well as federal,
state, and local government codes and regulations and longstanding correctional procedures.
In addition, our facilities are operated in compliance with the Prison Rape Elimination Act, or PREA, standards. All
confinement facilities covered under the PREA standards must be audited at least every three years to maintain
compliance with the PREA standards. We utilize DOJ certified PREA auditors to help ensure that all facilities
operate in compliance with applicable PREA regulations.
Our facilities operate under these established standards, policies, and procedures, and also are subject to annual
audits by our Quality Assurance Division, or QAD, which operates under, and reports directly to, our Office of
General Counsel and acts independently from our Operations Division. Through the QAD, we have devoted
significant resources to ensuring that our facilities meet outside agency and accrediting organization standards and
guidelines.
The QAD employs a team of full-time auditors, who are subject matter experts from all major disciplines
within institutional operations. Annually, QAD auditors generally conduct unannounced on-site evaluations of each
CoreCivic Safety facility we operate using specialized audit tools, typically containing more than 1,000 audit
indicators across all major operational areas. In most instances, these audit tools are tailored to facility and partner
specific requirements. In 2020, due to the impact of COVID-19, many of the QAD's annual facility audits were
announced and conducted remotely, or conducted through a combination of remote and limited onsite reviews. We
expect these remote and hybrid audit practices to continue for at least the first half of 2021. In addition, audit teams
provide guidance to facility staff on operational best practices and assist staff with addressing specific areas of need,
such as meeting requirements of new partner contracts and providing detailed training on compliance requirements
for new departmental managers.
The QAD management team coordinates overall operational auditing and compliance efforts across all correctional,
detention, and residential reentry facilities we manage. In conjunction with subject matter experts and other
stakeholders having risk management responsibilities, the QAD management team develops performance
measurement tools used in facility audits. The QAD management team provides governance of the corrective action
plan process for any items of nonconformance identified through internal and external facility reviews. Our QAD
also contracts with teams of ACA certified correctional auditors to evaluate compliance with ACA standards at
accredited facilities. Similarly, the QAD routinely incorporates a review of facility compliance with key ACA
standards and PREA regulations during annual audits of company facilities.
13
BR21871N-0321-10KW In addition to our own internal audit and contract compliance efforts, we are also subject to oversight by our
government partners. As part of their standard monitoring and compliance programs, approximately 71% of our
federal and state government partners typically conduct formal contract-compliance audits and inspections at least
annually at CoreCivic Safety facilities. In addition to these annual audits of our facilities, many partners conduct
additional area-specific operational audits and inspections on a more frequent basis, including monthly, quarterly,
and semi-annually. Some of these audits and facility inspections by our partners are conducted on an unannounced
basis. In 2020, our government partners conducted over 165 annual, semi-annual, quarterly, and monthly
compliance audits and inspections at our CoreCivic Safety facilities. In addition, the majority of our federal and state
government partners employ on-site contract monitors who monitor performance and contract compliance at our
facilities on a full- or part-time basis. In 2020, approximately 93% of the CoreCivic Safety facilities we manage
have an onsite contract monitor.
Business Development
We believe we own, or control via a long-term lease, approximately 58% of all privately owned prison beds in the
United States, manage nearly 39% of all privately managed prison beds in the United States, and are currently the
second largest private owner and provider of community corrections services in the nation. We also believe that we
are the largest private owner of real estate used by U.S. government agencies. Under the direction of our partnership
development department, we market our facilities and services to government agencies responsible for federal, state,
and local correctional, detention, and residential reentry facilities in the United States. Under the direction of our
real estate department, we intend to continue to pursue opportunities to help our government partners meet their
infrastructure needs, primarily through the development and redevelopment of criminal justice sector assets that we
believe have favorable investment returns, diversify our cash flows, and increase value to our stockholders. We will
also respond to customer demand and may develop or expand correctional and detention facilities when we believe
potential long-term returns justify the capital deployment.
We execute cross-departmental efforts to market CoreCivic Safety solutions to government partners that seek
corrections and detention management services, CoreCivic Community solutions to government partners seeking
residential reentry services, and CoreCivic Properties solutions to customers that need real estate and maintenance
services.
As indicated by the following chart, business from our federal customers, including primarily ICE, the USMS, and
the BOP, continues to be a significant component of our business, although the source of revenue is derived from
many contracts at various types of properties, i.e. correctional, detention, reentry, and leased. ICE and the USMS
each accounted for 10% or more of our total revenue during the last three years.
60%
50%
40%
30%
20%
10%
0%
Percent of Total Revenue
52%
51%
48%
28%
21%
3%
29%
17%
5%
25%
17%
6%
2020
2019
2018
Total Federal
ICE
USMS
BOP
14
BR21871N-0321-10KW
Certain of our contracts with federal partners contain clauses that guarantee the federal partner access to a minimum
bed capacity in exchange for a fixed monthly payment. However, these contracts also generally provide the
government the ability to cancel the contract for non-appropriation of funds or for convenience. The solutions we
provide to our federal customers continue to be a significant component of our business. We believe our ability to
provide flexible solutions and fulfill emergent needs of our federal customers would be very difficult and costly to
replicate in the public sector.
Additionally, on January 26, 2021, President Biden issued the Private Prison EO. The Private Prison EO directs the
Attorney General to not renew DOJ contracts with privately operated criminal detention facilities. Two agencies of
the DOJ, the BOP and the USMS, utilize our services. The BOP houses inmates who have been convicted, and the
USMS is generally responsible for detainees who are awaiting trial. The BOP has experienced a steady decline in
inmate populations over the last seven years, a trend that has been accelerated by the COVID-19 pandemic. We
currently have one prison contract with the BOP, accounting for 2% ($39.2 million) of our total revenue for the year
ended December 31, 2020, which was recently renewed through November 2022.
Unlike the BOP, the USMS does not own detention capacity and relies on the private sector, along with county jails,
for its detainee population. We do not believe the USMS currently has sufficient capacity that satisfies their current
needs without the private sector, and we are not currently aware of an alternative solution for the USMS. We
currently have eight detention facilities that have separate contracts where the USMS is the primary customer that all
expire at various times over the next several years, with the exception of two contracts that have indefinite terms.
Non-renewal of these contracts would have a material adverse effect on our business, financial condition, and results
of operations. For the year ended December 31, 2020, USMS accounted for 21% ($396.3 million) of our total
revenue.
In February 2021, President Biden announced plans to allow certain migrants to pursue asylum in the United States
while awaiting their proceedings in immigration courts, reversing a policy of the prior administration, which
required these asylum seekers to wait in Mexico during the pendency of their immigration court proceedings.
Federal revenues from contracts at correctional, detention, and residential reentry facilities that we operate decreased
1.4% from $1,013.8 million during 2019 to $999.2 million during 2020. Partially offset by several mitigating
factors, as further described in Management's Discussion and Analysis of Financial Condition and Results of
Operations, or MD&A, the decrease in federal revenues from 2019 to 2020 was primarily a result of COVID-19. At
the beginning of 2020, we expected a reduction in ICE populations throughout 2020 compared with 2019 because of
a dramatic rise in such populations during 2019, when southern border apprehensions reached the highest levels in
over a decade, as we did not believe these high levels would be sustained. However, the decision near the end of the
first quarter of 2020, which continued throughout the duration of 2020, by the federal government to deny entry at
the United States southern border to asylum-seekers and anyone crossing the southern border without proper
documentation or authority in an effort to contain the spread of COVID-19 amplified the reduction in people being
apprehended and detained by ICE during 2020.
State revenues from contracts at correctional, detention, and residential reentry facilities that we operate constituted
33%, 34%, and 39% of our total revenue during 2020, 2019, and 2018, respectively, and decreased 5.5% from
$673.4 million during 2019 to $636.3 million during 2020. In addition to the effect of an overall decline in state
inmate populations resulting from COVID-19 during 2020, the decrease in state revenues from 2019 to 2020 was
also a result of the completion of the transfer of California inmates held in our out-of-state facilities back to the state
of California during the second quarter of 2019, as further described in MD&A. No state partner accounted for 10%
or more of our total revenue during these years.
Prior to the COVID-19 pandemic, several of our state partners had been experiencing improvements in their
budgets, which helped us secure recent per diem increases at certain facilities. Further, several of our existing state
partners, as well as prospective state partners, have been experiencing growth in offender populations and
overcrowded conditions, are considering alternative correctional capacity for their aged and inefficient
infrastructure, or are seeking cost savings by utilizing the private sector. Since the beginning of 2018, we have
completed the intake of new inmate populations as a result of new contracts with Idaho, Kansas, Kentucky,
Mississippi, Ohio, Nevada, South Carolina, and Vermont.
15
BR21871N-0321-10KW The COVID-19 pandemic has had, and we currently expect that the COVID-19 pandemic will continue to have, a
negative impact on many of our state partners' budgets, though we cannot predict the ultimate impact COVID-19
will have on our revenue and per diem rates from our state partners. We have implemented enhanced hygiene
practices, suspended visitation in consultation with our government partners, separated vulnerable inmate
populations for their additional protection, followed guidelines provided by the United States Centers for Disease
Control and Prevention, or CDC, for Correctional and Detention Facilities, and have taken many other actions
intended to limit the spread of COVID-19 among our staff and residents within our correctional, detention, and
reentry facilities. However, we cannot predict government responses to an increase in staff or residents testing
positive for COVID-19 within public and private correctional, detention and reentry facilities, nor can we predict
COVID-19 related restrictions on individuals, businesses, and services that disrupt the criminal justice system.
Certain government agencies have released, may be considering releasing, or may be experiencing pressure to
release, certain inmates and detainees as a result of COVID-19, including those inmates and detainees considered
vulnerable to serious illness or death in the event of COVID-19 infection, those with sentences ending in the next
year, or those being held on a minor supervision violation. Further, we cannot predict government policies on
prosecutions and newly ordered legal restrictions as a result of COVID-19 that affect the number of people placed in
correctional, detention, and reentry facilities. We currently expect the federal government’s policy of denying entry
at the United States southern border to asylum-seekers and anyone crossing the southern border without proper
documentation or authority, as well as the disruptions to the criminal justice system, to persist at least until a widely
accepted treatment and/or vaccine for COVID-19 is widely disseminated, which could result in a further reduction in
the number of offenders placed in our facilities. Such actions could, either alone or in combination, have a material
effect on our financial position, results of operations and cash flows.
COVID-19 notwithstanding, we believe the long-term growth opportunities of our business remain attractive as
government agencies consider their emergent needs (including capacity to help mitigate the spread of infectious
disease), as well as the efficiency and offender programming opportunities we provide, as flexible solutions to
satisfy our partners' needs. Further, we expect our partners, and prospective partners, to continue to face challenges
in maintaining old facilities, developing new facilities, and expanding current facilities for additional capacity,
which could result in increased future demand for the solutions we provide.
Following our first priorities of debt reduction, which may include the purchase of our outstanding debt in open
market transactions, privately negotiated transactions or otherwise, and managing through the COVID-19 pandemic,
we believe the revocation of our REIT election and conversion to a taxable C Corporation, effective January 1,
2021, will allow us to allocate a substantial portion of our free cash flow to returning capital to our shareholders and
to pursuing attractive growth opportunities. We believe that we can further develop our business by, among other
things:
• Maintaining and expanding our existing customer relationships and filling existing capacity within our
facilities, while maintaining an adequate inventory of available capacity that we believe provides us
with flexibility and a competitive advantage when bidding for new management contracts;
•
•
•
•
Enhancing the terms of our existing contracts and expanding the services we provide under those
contracts;
Pursuing additional opportunities to lease our facilities to government and other third-party operators in
need of correctional, detention, and residential reentry capacity;
Pursuing mission-critical real estate solutions for government agencies focused on, but not limited to,
corrections and detention real estate assets;
Pursuing other asset acquisitions and business combinations through transactions with non-government
third parties;
• Maintaining and expanding our focus on community corrections and reentry programming that align
with the needs of our government partners;
16
BR21871N-0321-10KW •
•
Pursuing additional opportunities that expand the scope of non-residential correctional alternative
solutions we provide to government agencies, including those that were not available to us under the
REIT structure; and
Establishing relationships with new customers that have either previously not outsourced their
correctional facility management needs or have utilized other private enterprises.
We generally receive inquiries from or on behalf of government agencies that are considering outsourcing the
ownership and/or management of certain facilities or that have already decided to contract with a private enterprise.
When we receive such an inquiry, we determine whether there is an existing need for our correctional, detention,
and residential reentry facilities and/or services and whether the legal and political climate in which the inquiring
party operates is conducive to serious consideration of outsourcing. Based on these findings, an initial cost analysis
is conducted to further determine project feasibility.
Frequently, government agencies responsible for correctional, detention, and residential reentry facilities and
services procure space and services through solicitations or competitive procurements. As part of our process of
responding to such requests, members of our management team meet with the appropriate personnel from the
agency making the request to best determine the agency's needs. If the project fits within our strategy, we submit a
written response. A typical solicitation or competitive procurement requires bidders to provide detailed information,
including, but not limited to, the space and services to be provided by the bidder, its experience and qualifications,
and the price at which the bidder is willing to provide the facility and services (which services may include the
purchase, renovation, improvement or expansion of an existing facility or the planning, design and construction of a
new facility). The requesting agency selects a provider believed to be able to provide the requested bed capacity, if
needed, and most qualified to provide the requested services, and then negotiates the price and terms of the contract
with that provider.
2020 Accomplishments
In spite of, and in some instances, as a result of, the challenges presented by COVID-19 on our business in 2020, we
entered into a number of new contracts, renewed several other significant contracts, and completed numerous other
transactions and milestones, including the following:
CoreCivic Safety:
•
•
•
•
Developed and launched our first "Go Further Release" program in Albuquerque, New Mexico. Go
Further Release is a program that provides stabilization services and reentry coaching to individuals
being released from our facilities. The program provides "Reach-in" services during the returning
citizen's last 90 days of incarceration which are designed to prepare individuals for release and make a
connection with a reentry coach that will provide support to them after release. "Stabilization and
Reentry Coaching" services are provided during an individual's first 90 days of release and an ongoing
community support group is available as long as needed. All services are free of charge.
Implemented "Interview School," a web-based artificial intelligence software for practicing job
interviews, at our Lee Adjustment Center in Kentucky. Interview School conducts job-specific
interviews and provides feedback on tone, confidence, and answer content.
Executed an emergency contract with the state of Mississippi to care for up to 375 of Mississippi's
inmates at our 2,672-bed Tallahatchie County Correctional Facility in Mississippi. The contract was
subsequently expanded to up to 1,000 inmates.
Executed a new contract with the state of Idaho to care for up to 1,200 adult male offenders at our
1,896-bed Saguaro Correctional facility in Arizona, and other facilities by mutual agreement. The new
management contract has an initial term of five years, with unlimited extension options thereafter upon
mutual agreement.
17
BR21871N-0321-10KW •
The USMS executed a new contract for our 1,600-bed Cimarron Correctional Facility in Oklahoma.
We had previously announced our intention to idle the Cimarron facility, predominantly due to a lower
number of inmate populations from the state of Oklahoma resulting from COVID-19, combined with
the consequential impact of COVID-19 on the State's budget. The new management contract has an
initial term of three years, with unlimited 24-month extension options thereafter upon mutual
agreement.
CoreCivic Community:
• Executed a new contract with the BOP for residential reentry and home confinement services at our
previously idled 289-bed Turley Residential Center and at our 494-bed Oklahoma Reentry Opportunity
Center, both in Oklahoma. The new management contract has an effective date of February 1, 2021
and an initial term of one year, with four one-year renewal options.
CoreCivic Properties:
•
•
•
Completed the construction and commenced the 20-year lease of the new 2,432-bed Lansing
Correctional Facility in Kansas. The new Lansing facility replaced Kansas' largest correctional complex
for adult male inmates, which was originally constructed in 1863.
Commenced the lease with the KYDOC, for our previously idled 656-bed Southeast Correctional
Complex in Wheelwright, Kentucky, formerly known as the Southeast Kentucky Correctional Facility.
The lease has an initial term of ten years and includes five two-year renewal options.
Completed the sale of 42 non-core government-leased properties in a single transaction to a third party
for an aggregate price of $106.5 million, generating net proceeds of $27.8 million after the repayment of
non-recourse mortgage notes associated with some of the properties and other transaction-related costs.
Response to COVID-19:
•
•
Created a "COVID-19 Response Committee," including a robust group of various subject-matter-
experts and chaired by one of our officers with an extensive background in emergency crisis
management, including managing inmates with infectious diseases.
Helped to promote the safety and welfare of those within our care through actions including, but not
limited to:
o Coordinating a multitude of COVID-19 testing events, in conjunction with our business partners
and local health departments;
o Providing personal protection equipment, or PPE, including masks and personal hygiene items;
o Educating those in our care on the mitigation of COVID-19 transmission and encouraging the
basics of good hygiene;
o Providing free phone calls;
o Waiving nominal medical co-pays; and
o Expanding the use of computer tablets to assist with the ability to maintain contact with family and
friends.
•
Demonstrated support for the communities in which we operate through actions including, but not
limited to:
o Offering one of our idled facilities in Minnesota at no cost to serve as a regional health center;
o Producing more than 61,000 masks and 1,000 protective gowns; and
o Donating to United Way and the Second Harvest Food Bank's specific needs related to COVID-19
for the greater Nashville, Tennessee community.
18
BR21871N-0321-10KW
•
Helped to promote the safety and welfare of our employees through actions including, but not limited
to:
o
Implementing entry screening measures for all of our facilities that are consistent with the CDC
guidelines for correctional, detention, and residential living environments;
o Providing PPE and other supplies;
o Educating our staff on mitigation of COVID-19 transmission and encouraging the basics of good
hygiene;
o Expanding our Personal Time Off, or PTO, policies for sick employees or those caring for a family
member, and providing an additional day of PTO;
o Waiving in-network member-cost-share for telehealth visits with employees' own providers who
deliver certain services;
o Paying $6.3 million in Hero Bonuses to recognize the hard work and dedication of our facility staff;
and
o Providing quarantine pay of approximately $8.4 million to encourage employees to remain home
should they experience COVID-19 symptoms or be required to be absent from work due to
COVID-19 exposure.
Corporate and Other:
•
•
•
•
Approved and began implementation of a plan to revoke our REIT election and become a taxable C
Corporation, effective January 1, 2021, providing us with greater financial flexibility.
Repaid approximately $200.0 million of indebtedness, net of the change in cash.
Publicly advocated at the federal and state levels for a slate of new policies that will help people succeed
in their communities after being released from prison. Specifically, we pledged our support for Pell
Grant Restoration, Voting Rights Restoration and Licensure Reform Policies.
Issued our second Environmental, Social and Governance, or ESG, report which summarizes our
impacts and aspirational goals across environmental, social, and governance topics. The report details
our commitment to reducing the national recidivism crisis, and provides quantified evidence of progress
being made toward company-wide reentry goals.
Facility Portfolio
CoreCivic Safety and Community Facilities and Facility Management Contracts
Our correctional, detention, and residential reentry facilities can generally be classified according to the level(s) of
security at such facility. Minimum security facilities have open housing within an appropriately designed and
patrolled institutional perimeter. Medium security facilities have either cells, rooms or dormitories, a secure
perimeter, and some form of external patrol. Maximum security facilities have cells, a secure perimeter, and
external patrol. Multi-security facilities have various areas encompassing minimum, medium or maximum security.
Our CoreCivic Safety and Community facilities can also be classified according to their primary function. The
primary functional categories are:
•
•
Correctional Facilities. Correctional facilities care for and provide contractually agreed upon programs
and services to sentenced adult prisoners, typically prisoners on whom a sentence in excess of one year
has been imposed.
Detention Facilities. Detention facilities care for and provide contractually agreed upon programs and
services to (i) individuals being detained by ICE, (ii) individuals who are awaiting trial who have been
charged with violations of federal criminal law (and are therefore in the custody of the USMS) or state
criminal law, and (iii) prisoners who have been convicted of crimes and on whom a sentence of one year
or less has been imposed.
19
BR21871N-0321-10KW
•
•
Residential Facilities. Residential facilities provide space and residential services in an open and safe
environment to adults with children who have been detained by ICE and are awaiting the outcome of
immigration hearings. As contractually agreed upon, residential facilities offer services including, but
not limited to, educational programs, medical care, recreational activities, counseling, and access to
religious and legal services.
Community Corrections. Community corrections/residential reentry facilities offer housing and
programs to offenders who are serving the last portion of their sentence or who have been assigned to
the facility in lieu of a jail or prison sentence, with a key focus on employment, job readiness, and life
skills.
As of December 31, 2020, through our CoreCivic Safety segment, we operated 47 correctional and detention
facilities, 42 of which we owned and managed and five of which we managed, and were owned by our government
partners. Through our CoreCivic Community segment, we also owned and managed 27 residential reentry centers.
Owned and managed facilities include facilities placed into service that we own or control via a long-term lease and
manage. The following table includes certain information regarding each facility, including the term of the primary
customer contract related to such facility.
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BR21871N-0321-10KW
Facility Name
Primary Customer
Design
Capacity
(A)
Security
Level
Facility
Type
(B)
Term
Remaining
Renewal
Options
(C)
CoreCivic Safety Facilities:
Safety - Owned and Managed:
Central Arizona Florence
Correctional Complex
Florence, Arizona
Eloy Detention Center
Eloy, Arizona
La Palma Correctional Center
Eloy, Arizona
Red Rock Correctional Center (D)
Eloy, Arizona
Saguaro Correctional Facility
Eloy, Arizona
Leo Chesney Correctional Center
Live Oak, California
Otay Mesa Detention Center
San Diego, California
Bent County Correctional Facility
Las Animas, Colorado
Crowley County Correctional
Facility
Olney Springs, Colorado
USMS
4,128 Multi
Detention Sep-23 (1) 5 year
ICE
1,500 Medium Detention Indefinite —
ICE
3,060 Multi
Detention Indefinite —
State of Arizona
2,024 Medium Correctional Jul-26
(2) 5 year
State of Hawaii
1,896 Multi
Correctional Jul-21
—
Idled 2015
240
—
—
—
—
ICE
1,994 Minimum/ Detention Dec-24 (2) 5 year
Medium
State of Colorado
1,420 Medium Correctional Jun-21 —
State of Colorado
1,794 Medium Correctional Jun-21 —
Huerfano County Correctional Center
Walsenburg, Colorado
Idled 2010
752
Medium Correctional —
—
Kit Carson Correctional Center
Burlington, Colorado
Coffee Correctional Facility (E)
Nicholls, Georgia
Jenkins Correctional Center (E)
Millen, Georgia
McRae Correctional Facility
McRae, Georgia
Stewart Detention Center
Lumpkin, Georgia
Idled 2016
1,488 Medium Correctional —
—
State of Georgia
2,312 Medium Correctional Jun-21 (13) 1 year
State of Georgia
1,124 Medium Correctional Jun-21 (14) 1 year
BOP
1,978 Medium Correctional Nov-22 —
ICE
1,752 Medium Detention Indefinite —
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BR21871N-0321-10KW
Facility Name
Primary Customer
Design
Capacity
(A)
Security
Level
Facility
Type
(B)
Term
Remaining
Renewal
Options
(C)
Wheeler Correctional Facility (E)
Alamo, Georgia
Leavenworth Detention Center
Leavenworth, Kansas
Lee Adjustment Center
Beattyville, Kentucky
State of Georgia
2,312 Medium Correctional Jun-21 (13) 1 year
USMS
1,033 Maximum Detention Dec-21 (1) 5 year
Commonwealth of
816
Multi
Correctional Jun-21 —
Kentucky
Marion Adjustment Center
St. Mary, Kentucky
Idled 2013
826
Minimum/ Correctional —
Medium
—
Prairie Correctional Facility
Appleton, Minnesota
Adams County Correctional Center
Adams County, Mississippi
Tallahatchie County Correctional
Facility (F)
Tutwiler, Mississippi
Crossroads Correctional Center (G)
Shelby, Montana
Nevada Southern Detention Center
Pahrump, Nevada
Elizabeth Detention Center
Elizabeth, New Jersey
Cibola County Corrections Center
Milan, New Mexico
Northwest New Mexico Correctional
Center
Grants, New Mexico
Torrance County Detention Facility
Estancia, New Mexico
Lake Erie Correctional
Institution (H)
Conneaut, Ohio
Northeast Ohio Correctional Center
Youngstown, Ohio
Cimarron Correctional Facility
Cushing, Oklahoma
Davis Correctional Facility (I)
Holdenville, Oklahoma
Idled 2010
1,600 Medium Correctional —
—
ICE
2,232 Medium Detention Aug-24 Indefinite
USMS
2,672 Multi
Correctional Jun-22 Indefinite
State of Montana
664
Multi
Correctional Jun-21 (1) 2 year
USMS
1,072 Medium Detention Sep-25 (1) 5 year
ICE
300
Minimum Detention Aug-21 —
USMS
1,129 Medium Detention Indefinite —
State of New Mexico
596
Multi
Correctional Jun-24 —
ICE
910
Multi
Detention May-24 Indefinite
State of Ohio
1,798 Medium Correctional Jun-32 Indefinite
State of Ohio
2,016 Medium Correctional Jun-32 Indefinite
USMS
1,600 Multi
Correctional Sep-23 Indefinite
State of Oklahoma
1,670 Multi
Correctional Jun-21 —
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Facility Name
Primary Customer
Design
Capacity
(A)
Security
Level
Facility
Type
(B)
Term
Remaining
Renewal
Options
(C)
Diamondback Correctional Facility
Watonga, Oklahoma
Idled 2010
2,160 Multi
Correctional —
—
Trousdale Turner Correctional Center State of Tennessee
Hartsville, Tennessee
2,552 Multi
Correctional Jun-21 —
West Tennessee Detention Facility
Mason, Tennessee
Whiteville Correctional Facility (J)
Whiteville, Tennessee
Eden Detention Center
Eden, Texas
Houston Processing Center
Houston, Texas
Laredo Processing Center
Laredo, Texas
South Texas Family Residential
Center
Dilley, Texas
T. Don Hutto Residential Center
Taylor, Texas
Webb County Detention Center
Laredo, Texas
Safety - Managed Only:
Citrus County Detention Facility
Lecanto, Florida
Lake City Correctional Facility
Lake City, Florida
Marion County Jail
Indianapolis, Indiana
Hardeman County Correctional
Facility
Whiteville, Tennessee
South Central Correctional Center
Clifton, Tennessee
USMS
600
Multi
Detention Sep-21 (4) 2 year
State of Tennessee
1,536 Medium Correctional Jun-21 —
USMS
1,422 Medium Correctional Indefinite —
ICE
1,000 Medium Detention Aug-21 (9) 1 year
ICE
258
Minimum/ Detention Jul-23
Medium
Indefinite
ICE
2,400 —
Residential Sep-26 —
ICE
ICE
512
Medium Detention Jul-21
(9) 1 year
480
Medium Detention Feb-23 Indefinite
Citrus County, FL
760
Multi
Detention Sep-30 (2) 5 year
State of Florida
893
Medium Correctional Jun-22 Indefinite
Marion County, IN
1,030 Multi
Detention Dec-27 —
State of Tennessee
2,016 Medium Correctional Jun-24 —
State of Tennessee
1,676 Medium Correctional Jun-23 (1) 2 year
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Facility Name
Primary Customer
CoreCivic Community Facilities:
Design
Capacity
(A)
Security
Level
Facility
Type
(B)
Term
Remaining
Renewal
Options
(C)
CAI Boston Avenue
San Diego, California
CAI Ocean View
San Diego, California
State of California
120
—
Community Jun-24 —
Corrections
BOP
483
—
Community May-21 —
Corrections
Adams Transitional Center
Denver, Colorado
Adams County
102
—
Community Jun-21 —
Corrections
Arapahoe Community Treatment
Center
Englewood, Colorado
Centennial Community Transition
Center
Englewood, Colorado
Arapahoe County
135
—
Community
Corrections Jun-21 —
Arapahoe County
107
—
Community
Corrections Jun-21 —
Columbine Facility
Denver, Colorado
Idled 2020
60
—
Community —
Corrections
—
Commerce Transitional Center
Commerce City, Colorado
Dahlia Facility
Denver, Colorado
Fox Facility and Training Center
Denver, Colorado
Henderson Transitional Center (K)
Henderson, Colorado
Longmont Community Treatment
Center
Longmont, Colorado
Adams County
136
—
Denver County
120
—
Denver County
90
—
Adams County
184
—
Community Jun-21 —
Corrections
Community Jun-21 —
Corrections
Community Jun-21 —
Corrections
Community Jan-21
Corrections
—
Boulder County
69
—
Community
Corrections Jun-21 (3) 1 year
Ulster Facility
Denver, Colorado
Denver County
90
—
Community Jun-21 —
Corrections
South Raleigh Reentry Center
Raleigh, North Carolina
BOP
60
—
Community Mar-21 —
Corrections
Oklahoma City Transitional Center
Oklahoma City, Oklahoma
Idled 2020
200
—
Community —
Corrections
—
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BR21871N-0321-10KW
Facility Name
Primary Customer
Design
Capacity
(A)
Security
Level
Facility
Type
(B)
Term
Remaining
Renewal
Options
(C)
Oklahoma Reentry Opportunity
Center
Oklahoma City, Oklahoma
Tulsa Transitional Center
Tulsa, Oklahoma
Turley Residential Center
Tulsa, Oklahoma
State of Oklahoma
494
—
Community Jun-21 (1) 1 year
Corrections
Idled 2020
390
—
Community —
Corrections
—
BOP
289
—
Community Jan-22
Corrections
(4) 1 year
Austin Residential Reentry Center
Del Valle, Texas
BOP
116
—
Community Aug-21 (3) 1 year
Corrections
Austin Transitional Center
Del Valle, Texas
State of Texas
460
—
Community Aug-21 (3) 2 year
Corrections
Corpus Christi Transitional Center
Corpus Christi, Texas
State of Texas
160
—
Community Aug-21 (3) 2 year
Corrections
Dallas Transitional Center
Hutchins, Texas
El Paso Multi-Use Facility
El Paso, Texas
El Paso Transitional Center
El Paso, Texas
State of Texas
300
—
State of Texas
360
—
State of Texas
224
—
Fort Worth Transitional Center
Fort Worth, Texas
State of Texas
248
—
Community Aug-22 —
Corrections
Community Aug-22 —
Corrections
Community Aug-22 —
Corrections
Community Aug-22 —
Corrections
Ghent Residential Reentry Center
Norfolk, Virginia
BOP
36
—
Community Feb-21 (1) 1 year
Corrections
James River Residential Reentry
Center
Newport News, Virginia
Cheyenne Transitional Center
Cheyenne, Wyoming
BOP
84
—
Community
Corrections Feb-21 (1) 1 year
State of Wyoming
116
—
Community Jun-22 (1) 3 year
Corrections
25
BR21871N-0321-10KW
(A) Design capacity measures the number of beds, and accordingly, the number of offenders each facility is
designed to accommodate. Facilities housing detainees on a short-term basis may exceed the original
intended design capacity due to the lower level of services required by detainees in custody for a brief
period. From time to time, we may evaluate the design capacity of our facilities based on the customers
using the facilities, and the ability to reconfigure space with minimal capital outlays. We believe design
capacity is an appropriate measure for evaluating the operations in our CoreCivic Safety and CoreCivic
Community segments, because the revenue generated by each facility is based on a per diem or monthly
rate per offender cared for at the facility paid by the corresponding contracting governmental entity.
(B) We manage numerous facilities that have more than a single function (i.e., housing both long-term
sentenced adult prisoners and pre-trial detainees). The primary functional categories into which facility
types are identified were determined by the relative size of offender populations in a particular facility
on December 31, 2020. If, for example, a 1,000-bed facility cared for 900 adult offenders with
sentences in excess of one year and 100 pre-trial detainees, the primary functional category to which it
would be assigned would be that of correctional facilities and not detention facilities. It should be
understood that the primary functional category to which multi-user facilities are assigned may change
from time to time.
(C) Remaining renewal options represents the number of renewal options, if applicable, and the term of
each option renewal.
(D) Pursuant to the terms of a contract awarded by the state of Arizona in September 2012, the state of
Arizona has an option to purchase the Red Rock facility at any time during the term of the contract,
including extension options, based on an amortization schedule starting with the fair market value and
decreasing evenly to zero over the 20-year term of the contract.
(E) These facilities are subject to purchase options held by the GDOC, which grants the GDOC the right to
purchase the facility for the lesser of the facility's depreciated book value, as defined, or fair market
value at any time during the term of the contract between the GDOC and us.
(F) The facility is subject to a purchase option held by the Tallahatchie County Correctional Authority
which grants Tallahatchie County Correctional Authority the right to purchase the facility at any time
during the contract at a price generally equal to the cost of the premises less an allowance for
amortization that originally occurred over a 20-year period. The amortization period was extended
through 2050 in connection with an expansion completed during the fourth quarter of 2007.
(G) The state of Montana has an option to purchase the facility generally at any time during the term of the
contract with us at fair market value less the sum of a pre-determined portion of per-diem payments
made to us by the state of Montana.
(H) The state of Ohio has the irrevocable right to repurchase the facility before we may resell the facility to
a third party, or if we become insolvent or are unable to meet our obligations under the management
contract with the state of Ohio, at a price generally equal to the fair market value.
(I) This facility is subject to a purchase option held by the Oklahoma Department of Corrections, or
ODOC, which grants the ODOC the right to purchase the facility at its fair market value at any time
during the term of the contract with the ODOC.
(J) The state of Tennessee has the option to purchase the facility in the event of our bankruptcy, or upon an
operational or financial breach under the management agreement, at a price equal to the book value, as
determined under such agreement.
(K) The contract at this facility expired on January 10, 2021, and was not renewed. The facility was leased
from a third-party and the lease also terminated in January 2021.
26
BR21871N-0321-10KW
CoreCivic Properties
Through our CoreCivic Properties segment, we owned 15 properties for lease to third parties and used by
government agencies. We calculate annualized lease income as annualized contractual base rent for the last month
in a specified period, plus the annualized straight line rent adjustments for the last month in such period and the
annualized net expense reimbursements earned by us for the last month in such period. The following table includes
certain information regarding each property.
Property Name
Primary Customer
Tenant
Lease
Expiration
Year
(B)
Property
Type
(A)
Annualized
Lease
Income
(in
thousands)
Percentage
of Total
Annualized
Lease
Income
Leasable
Square
Feet
Annualized
Lease
Income per
Leased
Square
Foot
California City Correctional
Center
California City, California
Long Beach Community
Corrections Center
Long Beach, California
Stockton Female Community
Corrections Facility
Stockton, California
Capital Commerce Center *
Tallahassee, Florida
State of California
C
2024 (C) 522,000 $ 33,196
40.5 % $
64
The GEO Group, Inc.
CC
2025
16,000 $
977
1.2 % $
62
WestCare California, Inc. CC
2025 (D) 15,000 $
206
0.3 % $
13
State of Florida -
Florida Dept. of
Business & Professional
Regulation
GL
2028 (E) 259,000 $
5,907
7.2 % $
23
Augusta Transitional Center
Augusta, Georgia
State of
Georgia
CC
2021 (F) 29,000 $
498
0.6 % $
17
Lansing Correctional Facility
Lansing, Kansas
Southeast Correctional
Complex (G)
Wheelwright, Kentucky
State of Kansas
C
2040
401,000 $
2,468
3.0 % $
6
Commonwealth of
C
2030 (H) 127,000 $
4,144
5.1 % $
33
Kentucky
SSA-Baltimore *
Baltimore, Maryland
GSA - Social Security
Administration
GL
2034
541,000 $ 24,050
29.4 % $
44
MDHHS-Detroit
Detroit, Michigan
Michigan Department
of Technology,
Management and
Budget
GL
2021 (I) 37,000 $
905
1.1 % $
25
SSA-Florissant
St Louis, Missouri
GSA - Social Security
Administration
GL
2021
12,000 $
274
0.3 % $
22
27
BR21871N-0321-10KW
Property Name
Primary Customer
NARA-Dayton *
Dayton, Ohio
GSA - National
Archives &
Records
Administration
Tenant
Lease
Expiration
Year
(B)
Property
Type
(A)
Annualized
Lease
Income
(in
thousands)
Percentage
of Total
Annualized
Lease
Income
Leasable
Square
Feet
Annualized
Lease
Income per
Leased
Square
Foot
GL
2033 (J) 214,000 $
1,623
2.0 % $
8
North Fork Correctional Facility State of Oklahoma
Sayre, Oklahoma
C
2021 (C) 466,000 $
7,258
8.9 % $
16
Broad Street Residential Reentry
Center
Philadelphia, Pennsylvania
Roth Hall Residential Reentry
Center
Philadelphia, Pennsylvania
Walker Hall Residential Reentry
Center
Philadelphia, Pennsylvania
Total / Weighted Average
*Held for Sale.
Idled 2019
CC
—
18,000 $
—
— $
—
City of Philadelphia,
CC
2021
18,000 $
197
0.2 % $
11
Pennsylvania
City of Philadelphia,
CC
2021
18,000 $
169
0.2 % $
9
Pennsylvania
2,693,000 $ 81,872
100.0 % $
31
(A) GL=Government-Leased; C=Correctional; CC=Community Corrections.
(B) The year of lease expiration does not include renewal options, but does include the soft term, where
applicable. All leases with renewal options are noted in the following footnotes to this table.
(C) Lease contains indefinite renewal options.
(D) Lease contains one five-year renewal option.
(E) Lease contains two five-year renewal options.
(F) Lease contains two one-year renewal options.
(G) The KYDOC has an option to purchase the facility at any time during the term of the lease with us at a
price equal to the fair market value of the property.
(H) Lease contains five two-year renewal options.
(I) The Department of Technology, Management & Budget provided notice of lease cancellation effective
February 5, 2021.
(J) Lease contains one ten-year renewal option.
28
BR21871N-0321-10KW
Competitive Strengths
Through our three segments, CoreCivic Safety, CoreCivic Community, and CoreCivic Properties, we offer multiple
solutions to unique challenges, allowing government organizations to address their various needs while customizing
the solution based on their unique circumstances. Accordingly, we believe that we benefit from the following
competitive strengths:
Largest Private Owner of Real Estate used by Government Agencies in the United States. As of December 31, 2020,
we owned, or controlled via a long-term lease, approximately 16.3 million square feet of real estate, all used directly
or indirectly by government agencies, which we believe makes us the largest private owner of real estate used by
U.S. government agencies. Our complementary set of business assets provide critical infrastructure and services
under contracts with federal, state, and local government agencies that generally have credit ratings of single-A or
better, which also contributes to our steady, predictable cash flows.
In our CoreCivic Safety segment, we own, or control via a long-term lease, 12.9 million square feet of real estate
used to provide innovative, comprehensive, flexible, turn-key correctional and detention services to federal, state
and local government agencies. As of December 31, 2020, our CoreCivic Safety segment operated 47 facilities, 42
of which we owned, with a total design capacity of 70,003 beds, making us the nation's largest private prison owner
and one of the largest prison operators in the United States. Six facilities in our Safety segment were idle as of
December 31, 2020, containing 7,066 beds, and are available for growth opportunities. Our CoreCivic Safety
segment generated 82.2% of our total segment net operating income during 2020.
In our CoreCivic Community segment, we own, or control via a long-term lease, 0.7 million square feet of real
estate representing, as of December 31, 2020, 27 residential reentry centers with a design capacity of 5,233 beds,
making us the second largest community corrections owner and operator in the United States. Three of our
residential reentry centers, containing 650 beds, were idle as of December 31, 2020, excluding our Turley
Residential Center in Oklahoma. In the fourth quarter of 2020, we were awarded a new contract with the BOP for
home confinement services to be provided in the state of Oklahoma. As a result of this award, we reactivated the
Turley facility, which was idled in 2019, in the first quarter of 2021. Our CoreCivic Community segment generated
3.4% of our total segment net operating income during 2019.
In our CoreCivic Properties segment, as of December 31, 2020, we owned 2.7 million square feet of real estate
representing 15 properties that are for lease to third parties and used by government agencies. Our CoreCivic
Properties segment generated 14.4% of our total segment net operating income during 2020.
We believe our synergistic set of business segments, combined with our operating strategies, corrections-industry
commitment to rehabilitation, extensive government relationships, and deep real estate expertise, provide us with a
diversified platform for stable cash flows and sustainable growth, with multiple paths for organic expansions and
acquisitions.
First and Largest Private Prison Owner. Through our CoreCivic Safety segment, we are the nation's largest private
prison owner and one of the largest prison operators in the United States, which provides us significant credibility
with our current and prospective clients. We believe we own, or control via a long-term lease, approximately 58%
of all privately owned prison beds in the United States and manage nearly 39% of all privately managed prison beds
in the United States. We pioneered modern-day private prisons with a list of notable accomplishments, such as:
•
•
•
•
•
the first company to design, build, and operate a private prison;
the first company to manage a private maximum-security facility under a direct contract with the federal
government;
the first company to purchase a government-owned correctional facility from a government agency in the
United States and to manage the facility for the government agency;
the first company to lease a private prison to a state government; and
the first company to develop a privately-owned, build-to-suit correctional facility to be operated by a
government agency through a long-term lease agreement.
29
BR21871N-0321-10KW In addition to providing us with extensive experience and institutional knowledge, our size also helps us deliver
value to our customers by providing purchasing power and allowing us to achieve certain economies of scale.
Available Beds within Our Existing Facilities. As of December 31, 2020, we had 6,826 beds at five prison facilities
that are vacant and immediately available to use. We are actively engaged in marketing this available capacity as
solutions to meet the needs of potential customers. Historically, we have been successful in substantially filling our
inventory of available beds. For example, in the second quarter of 2019, we announced that we entered into new
contracts under inter-governmental service agreements, or IGSAs, with ICE at our previously idled 910-bed
Torrance County Detention Facility in New Mexico and with the USMS at our previously idled 1,422-bed Eden
Detention Center in Texas. The activations of these two facilities were both completed in the third quarter of 2019.
More recently, in the third quarter of 2020, we entered into a new contract under an IGSA between the city of
Cushing, Oklahoma and the USMS, to utilize our 1,600-bed Cimarron Correctional Facility in Oklahoma. We had
previously announced our intention to idle the Cimarron facility during the third quarter of 2020, predominantly due
to a lower number of inmate populations from the state of Oklahoma resulting from COVID-19, combined with the
consequential impact of COVID-19 on the State's budget. The new management contract commenced on September
15, 2020.
Available bed capacity can also be used for emergent needs. For example, during January 2020, we entered into an
emergency ninety-day contract with the state of Mississippi to care for up to 375 inmates at our Tallahatchie County
Correctional Facility, as the state of Mississippi was experiencing significant challenges in its correctional system.
This emergency contract exemplifies how critically important it is for state and federal partners to have access to our
real estate assets and associated service offerings to meet their unexpected needs. Our Tallahatchie facility provided
immediate capacity for the state of Mississippi to move a portion of its close-custody inmate population, which we
believe quickly improved the safety and security of their correctional system.
Well-Established Community Corrections Platform. Through our CoreCivic Community segment, as of December
31, 2020, we had a network of 27 residential reentry centers containing a total of 5,233 beds. We offer housing and
programs, with a key focus on employment, job readiness and life skills in order to help offenders successfully re-
enter the community and reduce the risk of recidivism. We also provide non-residential correctional alternatives,
including electronic monitoring and case management services, to municipal, county and state governments in
multiple states. We expect to continue to pursue opportunities that expand the scope of non-residential correctional
alternative solutions available to government agencies.
We are the second largest community corrections owner and operator in the United States. We believe this
recognition, along with our track record of successful acquisitions and the relationships we have established with
owners and potential sellers of reentry facilities, provides us with a platform for further growth and allows us to
continue to be an industry consolidator in a fragmented market. COVID-19 notwithstanding, we believe the demand
for the housing and programs that community corrections facilities offer will grow as offenders are released from
prison and due to an increased awareness of the important role these programs play in an offender's successful
transition from prison to society, especially following the COVID-19 pandemic when the judicial system resumes
normal operations. We expect to continue to pursue opportunities to provide these services to parolees, defendants,
and offenders who are serving their full sentence, the last portion of their sentence, waiting to be sentenced, awaiting
trial while supervised in a community environment, or as an alternative to incarceration. We believe we have the
opportunity to maximize utilization of available beds within our community corrections portfolio that would further
increase the number of individuals benefiting from the services we provide in such facilities. For example, in the
fourth quarter of 2020, we executed a new contract with the BOP for residential reentry and home confinement
services at our previously idled 289-bed Turley Residential Center and at our 494-bed Oklahoma Reentry
Opportunity Center, both in Oklahoma. The new contract commenced in the first quarter of 2021 and supplements
the existing utilization by the state of Oklahoma at the Oklahoma Reentry Opportunity Center.
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Flexible Real Estate Solutions. Through our CoreCivic Properties segment, as of December 31, 2020, we owned 15
properties for lease to third parties and used by government agencies, totaling 2.7 million square feet. We have an
extensive network of government relationships and the capability to manage and maintain complex properties, built
over our 35-year history. In addition, we offer our customers an attractive portfolio of correctional, detention, and
reentry facilities that can be leased for various needs as an alternative to providing "turn-key" correctional,
detention, and residential reentry bed space and services to our government partners. In December 2019, we entered
into a lease with the KYDOC for our previously idled 656-bed Southeast Correctional Complex in Wheelwright,
Kentucky. The lease commenced July 1, 2020 and has an initial term of ten years and includes five two-year renewal
options. The lease of this facility, along with the lease of our 2,400-bed North Fork Correctional Facility to the
ODOC originating in 2016 and the lease of our California City Correctional Center to the California Department of
Corrections and Rehabilitation originating in 2013, exemplify our ability to react quickly to our partners' needs with
innovative and flexible solutions that make the best use of taxpayer dollars. We previously operated these three
correctional facilities for various state and federal partners. We intend to pursue additional opportunities to lease
prison facilities to government and other third-party operators in need of correctional capacity.
On January 24, 2018, we entered into a 20-year lease agreement with the KDOC for a 2,432-bed correctional facility
to be constructed in Lansing, Kansas. We commenced construction of the facility in the first quarter of 2018. In
December 2019, the Lansing facility began accepting offenders into the 512-bed minimum security complex ahead
of schedule, with the remaining 1,920-bed medium/maximum security complex completed in January 2020. The
new facility replaces the Lansing Correctional Facility, Kansas' largest correctional complex for adult male inmates,
originally constructed in 1863. This transaction represents the first development of a privately owned, build-to-suit
correctional facility to be operated by a government agency through a long-term lease agreement. We are
responsible for facility maintenance throughout the 20-year term of the lease, at which time ownership will revert to
the state of Kansas.
Attractive Real Estate Portfolio. For the year ended December 31, 2020, the properties we owned or controlled
generated 97% of our facility net operating income. The weighted average age of our portfolio of facilities in our
CoreCivic Safety, CoreCivic Community, and CoreCivic Properties segments is 21, 28, and 18 years, respectively.
These valuable assets are located in areas with high barriers to entry, particularly due to the unique permitting and
zoning requirements for these facilities. Further, the majority of our assets are constructed primarily of concrete and
steel, generally requiring lower maintenance capital expenditures than other types of commercial properties.
We believe we are the largest developer of mission-critical, criminal justice center real estate projects over the past
15 years. We also believe we are the largest private owner of real estate used by government agencies. We provide
space and services under contracts with federal, state, and local government agencies that generally have credit
ratings of single-A or better. In addition, a majority of our contracts have terms between one and five years, and we
have experienced customer retention of approximately 94% at facilities we owned and operated during the previous
five years, which contributes to our relatively predictable and stable revenue base. This stream of revenue combined
with our low maintenance capital expenditure requirement translates into steady, predictable cash flow.
We intend to pursue the sale of non-core assets in the Properties segment. These properties have performed well
through the COVID-19 pandemic and are leased to federal and state government agencies with strong credit profiles,
creating an opportune time to redeploy this capital into projects generating higher returns, like those we plan to
develop in Alabama, or to pay-down debt. In December 2020, we completed the sale of 42 non-core government
leased properties in a single transaction to a third party for an aggregate price of $106.5 million, generating
approximate net proceeds of $27.8 million, following repayment of non-recourse mortgage notes associated with
some of the properties and other transaction-related costs.
As of December 31, 2020, we had three additional non-core real estate assets held for sale with a net book value of
$279.4 million. Although we can provide no assurance, based on interest expressed to-date, we are hopeful to
consummate the sale of these assets during the first half of 2021. If we are successful in consummating the sale of
these assets, combined with the sale completed in the fourth quarter of 2020, we expect the net proceeds from our
sale of non-core assets will be consistent with our original estimate of up to $150 million.
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BR21871N-0321-10KW Acquisitions, Development and Expansion Opportunities. Although disrupted by the COVID-19 pandemic, several
of our existing federal and state partners, as well as prospective state partners, had been experiencing growth in
offender populations and overcrowded conditions. Governments are now assessing their need for correctional space
in light of COVID-19, and several are considering alternative correctional capacity for their aged or inefficient
infrastructure, or are seeking cost savings by utilizing the private sector. Competing budget priorities, which will
likely become more challenging because of COVID-19, often impede our customers' ability to construct new prison
beds of their own or update older facilities, which we believe could result in further need for private sector prison
capacity solutions in the long-term. Over the long-term, we would like to see meaningful utilization of our available
capacity and better visibility from our customers into their potential future needs before we develop new prison
capacity on a speculative basis. We will, however, respond to customer demand and may develop or expand
correctional and detention facilities when we believe potential long-term returns justify the capital deployment, such
as the 2019 expansion of our Otay Mesa Detention Center. We expanded the Otay Mesa facility by 512 beds as a
result of long-standing demand from the USMS and ICE and limited detention capacity in the Southwest region of
the United States. Both the USMS and ICE currently utilize the Otay Mesa Detention Center under an existing
contract that enables both agencies to utilize the additional capacity.
In February 2021, we entered into two 30-year lease agreements with the Alabama Department of Corrections, or
ADOC, for the development of two correctional facilities in Alabama. Final lease costs for both properties will
become available when project financing is completed. Construction of both facilities, which will contain an
aggregate of approximately 7,000 beds, is expected to commence later in 2021 or the beginning of 2022. The two
facilities are expected to be ready for occupancy once construction is completed in approximately three years. Both
facilities will be leased, operated, and staffed by the ADOC. We will retain ownership and be responsible for
facility maintenance throughout the term of the leases. With the extensively aged criminal justice infrastructure in
the U.S. today, and contract awards from the KDOC and the ADOC demonstrating our ability to bring important
flexible solutions to government agencies, we believe we can bring solutions like these to other government
agencies.
Over the previous three years, through multiple acquisitions, we acquired approximately 1.6 million square feet of
real estate assets leased to third parties and used by government agencies, including the acquisition in January 2020
of a portfolio of 28 properties, all of which were built-to-suit and leased to the federal government through the
General Services Administration, or GSA. The 445,000 square foot portfolio acquired in 2020 serves numerous
federal agencies, including primarily the Social Security Administration, the Department of Homeland Security, or
DHS, and the Office of Hearings Operations. As previously described, we sold this 445,000 square foot portfolio in
December 2020, along with fourteen other properties, in a single transaction.
Increasing Financial Flexibility. On August 5, 2020, we announced that our BOD unanimously approved a plan to
revoke our REIT election and become a taxable C Corporation, effective January 1, 2021. As a result, we will no
longer be required to operate under REIT rules, including the requirement to distribute at least 90% of our taxable
income to our stockholders, which will provide us with greater flexibility to use our free cash flow. Beginning
January 1, 2021, we will be subject to federal and state income taxes on our taxable income at applicable tax rates,
and will no longer be entitled to a tax deduction for dividends paid. However, we believe this conversion will
improve our overall credit profile and lower our overall cost of capital, as we will be able to allocate our free cash
flow toward the repayment of debt, which may include the purchase of our outstanding debt in open market
transactions, privately negotiated transactions or otherwise. Any such debt repurchases will depend upon prevailing
market conditions, our liquidity requirements, contractual requirements, applicable securities laws requirements, and
other factors. Following our first priority of reducing debt, we expect to utilize a substantial portion of our free cash
flow to returning capital to our shareholders, which could include share repurchases and future dividends. We have
not been able to implement a meaningful share repurchase program under the REIT structure without increasing our
debt because a substantial portion of our free cash flow was required to satisfy the distribution requirements under
the REIT structure. We will also pursue attractive growth opportunities, including new development opportunities in
our Properties segment to meet the need to modernize outdated correctional infrastructure across the country, and
evaluate additional opportunities to provide services in our Community segment that have not been available under
the REIT structure. As a REIT, we depended on the capital markets to provide resources we could deploy toward
acquisition and development opportunities. This capital was not always available to us and came at an increasing
cost. The revocation of our REIT election provides us with significantly more liquidity and financial flexibility,
which will enable us to reduce our reliance on the capital markets and reduce the size of our Bank Credit Facility in
the future.
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As of December 31, 2020, we had cash on hand of $113.2 million and $566.2 million available under our revolving
credit facility, which has borrowing capacity under our Bank Credit Facility of up to $800.0 million, or our
Revolving Credit Facility. Our total weighted average effective interest rate on all outstanding debt was 4.5%, while
our total weighted average maturity on all outstanding debt was 5.6 years. For the year ended December 31, 2020,
our fixed charge coverage ratio was 3.9x and our debt leverage was 3.7x. During the year ended December 31, 2020,
we generated $355.5 million in cash through operating activities.
Offer Compelling Value to Correctional Agencies. We believe our government partners seek a compelling value
and service offering when selecting an outsourced correctional services provider. We believe we offer a cost-
effective alternative to our government partners by reducing their correctional services costs, including the
avoidance of long-term pension obligations and large capital investments in new prison beds. We endeavor to
improve operating performance and efficiency through the following key operating initiatives: (1) standardizing
supply and service purchasing practices and usage; (2) implementing a standard approach to staffing and business
practices; (3) improving offender management, resource consumption, and reporting procedures through the
utilization of numerous technological initiatives; (4) reconfiguring facility bed space to optimize capacity utilization;
and (5) improving productivity. Through ongoing company-wide initiatives, we continue to focus on efforts to
contain costs and improve operating efficiencies.
Since 2017, we have maintained a nationwide initiative to advocate for a range of government policies that will help
former offenders successfully reenter society and stay out of prison. In 2020, we announced that we will publicly
advocate at the federal and state levels for a slate of new policies that will help people succeed in their communities
after being released from prison. Specifically, we pledged our support for Pell Grant Restoration, Voting Rights
Restoration and Licensure Reform Policies. Also in 2020, we partnered with, and made an investment in, Prison
Fellowship, a leading advocate for criminal justice reform serving approximately 550,000 current and formerly
incarcerated individuals and their family members each year. Through a network of programming and advocacy
efforts, the organization seeks to effect positive change at every level of the criminal justice system. We have
committed to a multi-year partnership in Prison Fellowship's Warden Exchange program, a residency and online
professional development program that enables wardens to share reentry best practices and problem solve amongst a
peer group. We believe that as successful as we may be with our work inside our facilities, offenders still face
embedded societal barriers when they return to their communities. Through our strong commitment to community
corrections and reentry programs, we offer our government partners additional long-term value. Our evidence-based
reentry programs, including academic education, vocational training, substance abuse treatment, life skills training,
and faith-based programming, are customizable based on partner needs and are applied utilizing best practices
and/or industry standards. Our proprietary reentry process and cognitive/behavioral curriculum, "Go Further,"
promotes a comprehensive approach to addressing the barriers to a successful return to society. Through our efforts
in community corrections and reentry programs, we can provide consistency and common standards across facilities.
We can also serve multiple levels of government on an as-needed basis, all toward reaching the goal we share with
our government partners of providing offenders with the opportunity to succeed when they are released, making our
communities safer, and, ultimately, reducing recidivism.
We also offer a wide variety of specialized services that address the unique needs of various segments of the
offender population. Because the offenders in the facilities we operate differ with respect to security levels, ages,
genders, and cultures, we focus on the particular needs of an offender population and tailor our services based on
local conditions and our ability to provide services on a cost-effective basis.
We believe our government partners and other agencies in the criminal justice sector also seek a compelling value
and service offering when pursuing solutions to their unique real estate needs. We believe our track record of
constructing quality assets on time and within budget, our design and construction methods, unique financing
alternatives, and our expertise and experience enable us to provide a compelling value proposition for the
construction of mission-critical government real estate assets. We also offer utility management services using
environmentally-friendly, state-of-the-art technology and believe our robust preventive maintenance program
included in our service offering significantly reduces the risk of real estate neglect.
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BR21871N-0321-10KW Proven Senior Management Team. Our senior management team has applied their prior experience and diverse
industry expertise to improve our operations, related financial results, and capital structure. Under our senior
management team's leadership, we have successfully executed strategies to diversify our business and offer a
broader range of solutions to government partners over the past several years resulting in the Company being
renamed and rebranded as CoreCivic, created new business opportunities with customers that have not previously
utilized the private corrections sector, completed several business combination transactions and corporate structure
changes adapting to dynamic environments, and successfully completed numerous financing transactions.
ESG Accountability. In May 2020, we issued our second ESG report, which summarizes our impacts and
aspirational goals across environmental, social, and governance topics. The report covers the year ended December
31, 2019, and details our commitment to reducing the national recidivism crisis, and provides quantified evidence of
progress being made toward company-wide reentry goals. The report showcases our performance against long-term
and annual goals in five key reentry programming areas: Educational Services, Treatment and Behavioral Programs,
Reentry Services, Chaplaincy and Religious Services, and Victim Impact Programs. In addition, the report covers
the human rights risk assessment conducted by the company in collaboration with an external consultant with
expertise in international human rights matters. The report also updates our stakeholders on the implementation of a
strategic energy management program, and highlights "green" design elements in new and existing facilities.
Additionally, the report summarizes our management approach and activities in topics like political activity and
contributions; supplier diversity; charitable giving; veterans hiring programs; PREA compliance; ethics; workforce
rights, compensation, benefits, training and diversity.
The ESG report was prepared with reference to selected Global Reporting Initiative, or GRI, standards issued by the
Global Sustainability Standards Board. GRI is an international independent standards organization created to help
business, government and other organizations understand and communicate how their operations affect issues of
global importance, such as human rights, corruption and climate change. In conducting the ESG materiality
assessment contained in the report, we also considered the relevance and impact of our actions toward the United
Nations Sustainable Development Goals, or UN SDGs, which were established in 2015 as a blueprint for addressing
global societal challenges with measures that promote good health and well-being, clean and affordable energy,
decent work and economic growth, climate action, and peace and justice
The ESG report may be accessed on our website under "Social Responsibility." The information included in the
ESG report is not incorporated by reference into this Annual Report.
Human Capital
In order to fulfill our mission of providing high quality, compassionate treatment to all those in our care, we strive to
attract, develop and retain a diverse workforce of individuals who are driven by a deep sense of service, high
standards of professionalism and a responsibility to help government better the public good. The following
information outlines the strategies and initiatives designed to address the twin challenge of turnover and retention.
Demographics
Employees
Total Employees
% Female
% People of Color or Under-
represented Minorities (URM)
% Veterans
% Facility-level employees
Hiring
2020
12,415 Total Hires
51.5%
% Female
% People of Color or Under-
represented Minorities (URM)
% Veterans
% Facility-level employees
56.0%
10.1%
95.6%
2020
4,530
50.3%
54.9%
11.6%
98.8%
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BR21871N-0321-10KW
Leadership & Learning
CoreCivic facilitates annual performance and career development discussions with all employees. These discussions
consist of a continuous cycle of goal alignment, individual development planning and performance and career
reviews. In 2020, 100% of management and 99% of all other employees completed annual performance and career
development reviews.
Every year, CoreCivic facilitates talent review discussions to help identify development opportunities within our
leadership pipeline. In 2020, we expanded the talent review process to better assess and develop our people for
leadership positions. Through these discussions, we continue to see opportunities for advancement within our
existing workforce, with 55% of our employees in leadership positions assessed "ready now" for advanced
leadership responsibilities. For the 45% who are not "ready now," programs like the CoreCivic Leadership
Experiences and Rotations program, or CLEAR, are designed to assist us in their development. CLEAR is a two-
year rotational development program designed to provide the individuals identified during our talent management
discussions an accelerated development opportunity to advance their careers through multiple short-term
experiences. The breadth of roles can vary across different career paths and are intended to develop the rising
leader's readiness for targeted, more complex roles following the program's successful completion.
We recognize the importance of investing in our people. CoreCivic’s management approach to training and
development is overseen by our Chief Human Resources Officer and Managing Director, Enterprise Learning and
Development, and is implemented by leaders at our headquarters as well as a network of learning and development
managers across our facilities. Our training activity and records are managed according to our learning and
development policy, and our BOD receives periodic updates on the delivery of strategic training programs.
All CoreCivic employees are eligible to participate in various leadership and operational offerings. For example,
through CoreCivic University, our employees can refine their current skills and learn new valuable skills, as well.
To date, over 4,000 employees have completed programs within CoreCivic University. For new and existing
employees alike, we provide training that meets or exceeds ACA and government partner standards, including 200
hours of pre-service and on-the-job training for new employees as well as a minimum of 40 hours of annual in-
service and specialty training for employees in our Safety and Community segments.
Diversity, Equity, and Inclusion (DEI)
We are proud of our diverse workforce, and we recognize that employees come from many different backgrounds
and that these differences are integral in how we view and experience the world. We believe that diversity, equity
and inclusion, or DEI, improves safety and security, drives quality, increases employee engagement and provides
greater accountability, which allows us to better serve our government partners' needs.
Our Vice President of Talent and Organizational Development leads our strategic approach to DEI. Our DEI
policies prohibit harassment and promote proactive efforts on DEI. In accordance with federal contract
requirements, we maintain affirmative action plans designed to recruit and advance underrepresented groups,
including but not limited to, qualified minorities, women, persons with disabilities and covered veterans.
We believe there are opportunities to further advance underrepresented groups at CoreCivic. We have recently
established a Diversity, Equity and Inclusion Advisory Council, or DEI Advisory Council, to drive future
advancement of underrepresented groups, and to help better understand how our DEI practices can be improved in
the future. This DEI Advisory Council includes a select team of CoreCivic employees representing our
organization's diversity by gender, race, ethnicity, tenure and geography. We equipped our DEI Advisory Council,
executive leadership team, and senior leaders with training and strategic planning on unconscious bias.
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BR21871N-0321-10KW
Hiring and Sustaining our Workforce
CoreCivic is the largest employer in many of the areas where our facilities are located, and as such, we commit to
support and grow the local communities through our hiring and outreach efforts. Our long-term tenure in many of
the communities we serve has provided stable careers and career growth opportunities to workforces in many
communities. The Company provides equal opportunity employment to all candidates and follows the United States
Department of Labor Office of Federal Contract Compliance Programs equal employment opportunity guidelines for
hiring.
In 2020, CoreCivic invested $6.6 million in advertising and outreach to prospective candidates.
•
• Our average annual number of applications received is 78,000.
• CoreCivic has also been named a GI Jobs Military Friendly employer for ten (10) consecutive years.
CoreCivic offers multiple medical and wellness benefit plans, dental, vision, and disability income insurance,
flexible spending accounts, and life and accidental death and dismemberment insurance. In addition, CoreCivic
provides its employees with paid time off and paid holidays. CoreCivic also provides retirement benefits to its
employees through a 401(k) retirement plan. To be eligible for most benefit plans, employees must be in a full-time
position. Certain exceptions apply, such as eligibility for the 401(k) retirement plan if the 401(k) retirement plan's
service and hour requirements are met, and at locations where the Service Contract Act applies.
Government Regulation
Business Regulations
The industry in which we operate is subject to extensive federal, state, and local regulations, including educational,
health care, data privacy, transportation, telecommunications, and safety regulations, which are administered by
many governmental and regulatory authorities. Some of the regulations are unique to the corrections industry, and
some target private, for-profit entities by imposing location requirements, compliance requirements, elevated
litigation risk and financial penalties only on private, for-profit correction and detention providers. Facility
management contracts typically include specific staffing requirements, reporting requirements, supervision, and on-
site monitoring by representatives of the contracting governmental agencies. Corrections and reentry personnel are
customarily required to meet certain training standards and, in some instances, facility personnel are required to be
licensed and subject to background investigation. Certain jurisdictions also require us to award subcontracts on a
competitive basis or to subcontract with certain types of businesses, such as small businesses and businesses owned
by members of minority groups. Our facilities are also subject to operational and financial audits by the
governmental agencies with which we have contracts. Failure to comply with these regulations and contract
requirements can result in material penalties or non-renewal or termination of facility management contracts which
could have a material effect on our financial position, results of operations and cash flows, or on our competitive
position as a dependable government partner.
Environmental Matters
Under various federal, state, and local environmental laws, ordinances and regulations, a current or previous owner
or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances
on, under, or in such property. Such laws often impose liability whether or not the owner or operator knew of, or
was responsible for, the presence of such hazardous or toxic substances. As an owner of real estate assets and as the
result of our operation and management of correctional, detention, and residential reentry facilities, we have been,
and continue to be, subject to these laws, ordinances, and regulations. Phase I environmental assessments have been
obtained on substantially all of the properties we currently own or are under an option to purchase. We are not
aware of any environmental matters that are expected to materially affect our financial condition or results of
operations; however, if such matters are detected in the future, the costs of complying with environmental laws
could have a material effect on our financial position, results of operations and cash flows, or on our competitive
position as a dependable government partner.
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BR21871N-0321-10KW Privacy and Security Requirements
The Health Insurance Portability and Accountability Act of 1996, as amended, or HIPAA, and implementing
regulations, require covered entities, which include health plans, most health care providers, and health
clearinghouses, to protect the privacy and security of individually identifiable health information, known as
“protected health information.” The regulations also provide for individual rights related to understanding and
controlling how health information is used or disclosed. Certain provisions of the privacy and security regulations
apply directly to entities that handle protected health information on behalf of covered entities, known as business
associates. Covered entities may be subject to penalties as a result of a business associate violating HIPAA, if the
business associate is found to be an agent of a covered entity.
Covered entities must notify affected individuals of breaches of unsecured protected health information without
unreasonable delay, and such delay is not to exceed 60 days from discovery of the breach by the covered entity or its
agents. They must also notify the U.S. Department of Health and Human Services, or DHHS, and, in certain
situations involving large breaches, the media. All non-permitted uses or disclosures of unsecured protected health
information are presumed to be breaches unless the covered entity or business associate establishes that there is a
low probability the information has been compromised.
The DHHS may impose significant civil and criminal penalties for violations of the HIPAA regulations. The civil
penalties are adjusted annually based on updates to the consumer price index. In addition, state attorneys general are
authorized to bring civil actions for injunctions or damages in response to violations that threaten the privacy of state
residents. The costs associated with compliance and defending against privacy and security related claims or
enforcement actions may be substantial.
Additionally, we are subject to complex and evolving U.S. federal and state privacy laws and regulations, including
those pertaining to the processing of personal data that may not be preempted by the HIPAA privacy and security
standards, such as the California Consumer Privacy Act, or CCPA, which was recently significantly modified by the
California Privacy Rights Act, or CPRA. Many of these privacy laws and regulations and related interpretations are
subject to uncertain application, interpretation or enforcement standards that could result in claims against us,
extensive changes to our business practices, systems and operational processes, including our data processing and
security systems, penalties, increased operating costs or other impacts on our businesses. Many of the recently
enacted laws often provide for civil penalties for violations, as well as a private right of action for data breaches and
non-compliance with such laws that may increase data breach litigation and/or our susceptibility to fines or penalties
from a regulator. Further, while we are using internal and external resources to monitor compliance with and to
continue to modify our data processing practices and policies in order to comply with evolving privacy laws,
relevant regulatory authorities could disagree with our interpretation of these laws and determine that our data
processing practices fail to address all the requirements of certain new laws, which could subject us to penalties
and/or litigation. In addition, there is no assurance that our security controls over personal data, the training of
employees and vendors on data privacy and data security, and the policies, procedures and practices we
implemented or may implement in the future will prevent the improper disclosure of personal data. Improper use or
disclosure of personal data in violation of HIPAA, the CCPA, CPRA and/or of other personal data protection laws
could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions
(including fines), or result in private litigation against us, which could result in loss of revenue, increased costs,
liability for monetary damages, fines and/or criminal prosecution, all of which could have a material effect on our
financial position, results of operations and cash flows, or on our competitive position as a dependable government
partner.
Healthcare providers and certain other industry participants are also subject to a growing number of requirements
intended to promote the interoperability and exchange of patient health information. For example, beginning April 5,
2021, health care providers and certain other entities will be subject to information blocking restrictions pursuant to
the 21st Century Cures Act that prohibit practices that are likely to interfere with the access, exchange or use of
electronic health information, except as required by law or specified by DHHS as a reasonable and necessary
activity. Violations may result in penalties or other disincentives.
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BR21871N-0321-10KW Insurance
We maintain general liability insurance for all the facilities we operate, as well as insurance in amounts we deem
adequate to cover property and casualty risks, workers' compensation, and directors and officers liability. In
addition, each of our leases with third parties provides that the lessee will maintain insurance on each leased
property under the lessee's insurance policies providing for the following coverages: (i) fire, vandalism, and
malicious mischief, extended coverage perils, and all physical loss perils; (ii) comprehensive general public liability
(including personal injury and property damage); and (iii) workers' compensation. Under each of these leases, we
have the right to periodically review our lessees' insurance coverage and provide input with respect thereto.
Each of our management contracts and the statutes of certain states require the maintenance of insurance. We
maintain various insurance policies including employee health, workers' compensation, automobile liability, and
general liability insurance. Because we are significantly self-insured for employee health, workers' compensation,
automobile liability, and general liability insurance, the amount of our insurance expense is dependent on claims
experience, and our ability to control our claims experience. Our insurance policies contain various deductibles and
stop-loss amounts intended to limit our exposure for individually significant occurrences. However, the nature of
our self-insurance policies provides little protection for deterioration in overall claims experience or an increase in
medical costs. We are continually developing strategies to improve the management of our future loss claims but
can provide no assurance that these strategies will be successful. However, unanticipated additional insurance
expenses resulting from adverse claims experience or an increasing cost environment for general liability and other
types of insurance could adversely impact our results of operations and cash flows.
Competition
The correctional, detention, and residential reentry facilities we own, operate, or manage, as well as those facilities
we own but are managed by other operators, are subject to competition for offenders and residents from other
private operators. We compete primarily on the basis of bed availability, cost, the quality and range of services
offered, our experience in the design, construction, and management of correctional and detention facilities, and our
reputation. We compete with government agencies that are responsible for correctional, detention, and residential
reentry facilities and a number of companies, including, but not limited to, The GEO Group, Inc. and Management
and Training Corporation. We also compete in some markets with small local companies that may have a better
knowledge of the local conditions and may be better able to gain political and public acceptance. Other potential
competitors may in the future enter into businesses competitive with us without a substantial capital investment or
prior experience. We may also compete in the future for acquisitions and new development projects with companies
that have more financial resources than we have or those willing to accept lower returns than we are willing to
accept. Competition by other companies may adversely affect occupancy at our facilities, which could have an
adverse impact on the operating revenue of our facilities. In addition, revenue derived from our facilities will be
affected by a number of factors, including the demand for beds, general economic conditions, and the age of the
general population.
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BR21871N-0321-10KW
ITEM 1A. RISK FACTORS.
As the owner and operator of correctional, detention, and residential reentry facilities, we are subject to certain risks
and uncertainties associated with, among other things, the corrections and detention industry and pending or
threatened litigation in which we are involved. In addition, we are also currently subject to risks associated with real
estate ownership, our indebtedness, as well as our qualification as a REIT for federal income tax purposes for those
years we elected REIT status. The risks and uncertainties set forth below could cause our actual results to differ
materially from those indicated in the forward-looking statements contained herein and elsewhere. The risks
described below are not the only risks we face. Additional risks and uncertainties not currently known to us or those
we currently deem to be immaterial may also materially and adversely affect our business operations. Any of the
following risks could materially adversely affect our business, financial condition, or results of operations.
Risks Related to Our Business and Industry
Resistance to privatization of correctional, detention, and residential reentry facilities, and negative publicity
regarding inmate disturbances or perceived poor operational performance, could result in our inability to obtain
new contracts, the loss of existing contracts, or other unforeseen consequences.
Privatization of correctional, detention, and residential reentry facilities has not achieved complete acceptance by
either government agencies or the public at large. The operation of correctional, detention, and residential reentry
facilities by private entities has encountered resistance from certain groups, such as labor unions, prison reform
organizations, activists and others that believe that correctional, detention, and residential reentry facilities should
only be operated by governmental agencies. Any political platform or promise, governmental agency report,
investigation or inquiry, public statement by any governmental agency, policy or legislative change, or other similar
occurrence or action, that seeks to, or purports to, prohibit, eliminate, or otherwise restrict or limit in any way, the
federal government's (or any state or local government's) ability to contract with private operators of correctional,
detention, and residential reentry facilities, could negatively impact our growth and our ability to renew or maintain
existing contracts or to obtain new contracts and could have a material adverse effect on our business, financial
condition, results of operations or the market price of our common stock.
On January 26, 2021, President Biden issued the Private Prison EO. The Private Prison EO directs the Attorney
General to not renew DOJ contracts with privately operated criminal detention facilities. Two agencies of the DOJ,
the BOP and the USMS, utilize our services. The BOP houses inmates who have been convicted, and the USMS is
generally responsible for detainees who are awaiting trial. The BOP has experienced a steady decline in inmate
populations over the last seven years, a trend that has been accelerated by the COVID-19 pandemic. We currently
have one prison contract with the BOP, accounting for 2% ($39.2 million) of our total revenue for the year ended
December 31, 2020, which was recently renewed through November 2022.
Unlike the BOP, the USMS does not own detention capacity and relies on the private sector, along with county jails,
for their detainee population. We do not believe the USMS currently has sufficient detention capacity that satisfies
their needs without the private sector, and we are not currently aware of an alternative solution for the USMS. We
currently have eight detention facilities that have separate contracts where the USMS is the primary customer that all
expire at various times over the next several years, with the exception of two contracts that have indefinite
terms. Non-renewal of these contracts, or the expansion of such a similar order to ICE, an agency of the DHS,
would have a material adverse effect on our business, financial condition, and results of operations. For the year
ended December 31, 2020, USMS and ICE accounted for 21% ($396.3 million) and 28% ($541.9 million),
respectively, of our total revenue.
In addition, negative publicity regarding offenders escaping, rioting or any other disturbances at our facilities or any
public perception of poor operational performance at our facilities, contract non-compliance, or other conditions
(including COVID-19 infections at the facilities we own and manage) at a privately managed facility may result in
adverse publicity to us and the private corrections industry in general and could negatively impact our growth and
our ability to renew or maintain existing contracts or to obtain new contracts, which could have an adverse impact
on our business, financial condition, results of operations or the market price of our common stock.
39
BR21871N-0321-10KW We are subject to fluctuations in occupancy levels, and a decrease in occupancy levels could cause a decrease in
revenues and profitability.
While a substantial portion of our cost structure is fixed, a substantial portion of our revenue is generated under
facility ownership and management contracts that specify per diem payments based upon daily or minimum
guaranteed occupancy levels. We are dependent upon the governmental agencies with which we have contracts to
provide offenders for facilities we operate. We cannot control occupancy levels at the facilities we operate. We do
not lobby or advocate for any policies that determine the basis for or duration of an individual's incarceration or
detention. Under a per diem rate structure, a decrease in our occupancy rates could cause a decrease in revenue and
profitability. For the years 2020, 2019, and 2018, the average compensated occupancy of our facilities, based on
rated capacity, was 74%, 82%, and 81%, respectively, for all of the facilities we operated, exclusive of facilities that
are leased to third-party operators where our revenue is generally not based on daily occupancy. Occupancy rates
may, however, decrease below these levels in the future, including as a result of COVID-19. When combined with
relatively fixed costs for operating each facility, a decrease in occupancy levels could have an adverse impact on our
profitability.
We are dependent on government appropriations, and our results of operations may be negatively affected by
governmental budgetary challenges or government shutdowns.
Our cash flow is subject to the receipt of sufficient funding of, and timely payment by, contracting governmental
entities. If the appropriate governmental agency does not receive sufficient appropriations to cover its contractual
obligations, it may terminate our contract or delay or reduce payment to us. While we have historically been
required to continue to perform under our government contracts during government shutdowns, we are generally not
paid until the government reopens. Any delays in payment, or the termination of a contract, could have an adverse
effect on our cash flow and financial condition. In addition, federal, state and local governments are constantly
under pressure to control additional spending or reduce current levels of spending. In prior years, these pressures
have been compounded by economic downturns. Beginning in 2020, these pressures were further exacerbated by
the economic impact of COVID-19, and the extent to which COVID-19 will impact our government partners’ future
appropriations and budgetary constraints is unknown. Accordingly, we have been requested and may be requested
in the future to reduce our existing per diem contract rates or forego prospective increases to those rates. Further, our
government partners could reduce offender population levels in facilities we own or manage to contain their
correctional costs. In addition, it may become more difficult to renew our existing contracts on favorable terms or
otherwise.
The COVID-19 pandemic has had, and we expect will continue to have, certain negative effects on our business,
and such effects may have a material adverse effect on our results of operations, financial condition and cash
flows.
The public health crisis caused by the COVID-19 pandemic and the unprecedented measures taken by United States
federal, state and local government authorities in an effort to contain and mitigate the spread of COVID-19, have
had, and we expect will continue to have, certain negative effects on our business, including, without limitation, the
following:
• The decision imposed by the federal government to deny entry at the United States southern border to
asylum-seekers and anyone crossing the United States southern border without proper documentation or
authority in an effort to contain the spread of COVID-19 has resulted in a reduction in ICE populations,
including in our facilities. The duration of the closure of the United States southern border to asylum-
seekers and anyone crossing the southern boarder without proper documentation or authority is unknown,
and such closure will continue to effect the utilization of our facilities by ICE. In February 2021, President
Biden announced plans to allow certain migrants to pursue asylum in the United States while awaiting their
proceedings in immigration courts, reversing a policy of the prior administration, which required these
asylum seekers to wait in Mexico during the pendency of their immigration court proceedings. We are
compensated under several of our contracts with ICE based on minimum guaranteed occupancy levels,
which provides the agency with the certainty of available beds. ICE may be more likely to renegotiate per
diem rates or terminate contracts where occupancy has declined below the minimum guaranteed occupancy
levels.
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BR21871N-0321-10KW
• Disruptions to the criminal justice system as a result of COVID-19 have contributed to a reduction in the
number of USMS populations and state populations in our correctional and detention facilities, as the
number of courts in session, arrests, and prosecutions have declined. Disruptions to the criminal justice
system have also resulted in fewer referrals to both our residential reentry facilities and programs in our
non-residential criminal justice services business. As long as COVID-19 related restrictions on individuals,
businesses, and services, along with government policies on prosecutions, and newly ordered legal
restrictions associated with COVID-19 that affect the number of people placed in correctional, detention,
and reentry facilities, remain in effect, we expect the disruption in the criminal justice system to continue.
• We have had positive COVID-19 cases at our facilities. While we are taking measures to protect our
employees and those entrusted to our care, which include, but are not limited to, enhanced hygiene
practices, the suspension of visitation (after consultation with our government partners), following
guidance provided by the CDC for Correctional and Detention Facilities, and the separation of vulnerable
inmate populations from the rest of the inmate population for their protection, these measures may not be
sufficient to prevent or mitigate the spread of COVID-19 among our employees and those entrusted to our
care and, as a result, we may face disruptions at our facilities. For example, an inability to fully staff our
correctional, detention, and reentry facilities could result in negative consequences, including fines, other
penalties, or contract cancellations.
• Certain government agencies have released, may be considering releasing, or may be experiencing pressure
to release, certain inmates and detainees as a result of COVID-19. It is possible that government agencies,
which may include our government partners, could release certain inmates and detainees from correctional,
detention, and residential reentry facilities, which could reduce the utilization of our facilities and our
services, and could occur as a result of legal decisions. In addition, our government partners could require
us to transfer inmates or detainees to other facilities in the event of a COVID-19 outbreak at one of our
facilities.
• Longer-term budget challenges our government partners face as a result of a reduction in revenues resulting
from COVID-19 could negatively impact per diem rates and the utilization of our facilities and our
services.
• Our personnel costs and expenses at our facilities have increased as a result of COVID-19. In response to
the COVID-19 pandemic, we have, among other things, increased compensation and provided additional
benefits to staff at our correctional, detention, and residential reentry facilities, and implemented enhanced
hygiene practices at our facilities.
• Government agencies and referring boards have decided, and may continue to decide, to refer residents to
home confinement or otherwise reduce the utilization of community facilities, such as our residential
reentry facilities.
• We rely on third-party service providers and business partners, such as suppliers, distributors, contractors
and other external businesses, for certain functions or for services in support of our operations. These third-
party service providers are subject to risks and uncertainties related to COVID-19, which may interfere
with their ability to fulfill their respective commitments and responsibilities to us in a timely manner and in
accordance with the agreed-upon terms.
• Actions we have taken or may take, or decisions we have made or may make, as a consequence of COVID-
19, may result in legal claims or litigation against us.
The full extent to which the COVID-19 pandemic will negatively affect our results of operations, financial condition
and cash flows will depend on future developments that are highly uncertain and cannot be predicted, including the
scope and duration of the pandemic and actions taken by federal, state and local government authorities and other
third parties in response to COVID-19. Any of the negative impacts of the COVID-19 pandemic, including those
described above, alone or in combination with others, may have a material adverse effect on our results of
operations, financial condition and cash flows.
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BR21871N-0321-10KW
Competition may adversely affect the profitability of our business.
We compete with government entities and other private operators on the basis of bed availability, cost, quality and
range of services offered, experience in designing, constructing, and managing facilities, and reputation of
management and personnel. While there are barriers to entering the market for the ownership and management of
correctional, detention, and residential reentry facilities, these barriers may not be sufficient to limit additional
competition. In addition, our government customers may assume the management of a facility that they own and we
currently manage for them upon the termination of the corresponding management contract or, if such customers
have capacity at their facilities, may take offenders and residents currently cared for in our facilities and transfer
them to government-run facilities. Since we are paid on a per diem basis with no minimum guaranteed occupancy
under most of our contracts, the loss of such offenders and residents, and the resulting decrease in occupancy, would
cause a decrease in our revenues and profitability.
We are subject to terminations, non-renewals, or competitive re-bids of our government contracts.
We typically enter into facility contracts with governmental entities for terms of up to five years, with additional
renewal periods at the option of the contracting governmental agency. Notwithstanding any contractual renewal
option of a contracting governmental agency, 39 of our facility contracts with the customers listed under "Business –
Facility Portfolio" are currently scheduled to expire on or before December 31, 2021 but have renewal options (22),
or are currently scheduled to expire on or before December 31, 2021 and have no renewal options (17). Although
we generally expect these customers to exercise renewal options or negotiate new contracts with us, one or more of
these contracts may not be renewed and we may not be able to negotiate a new contract on favorable terms or at all
with the corresponding governmental agency. In addition, these and any other contracting agencies may determine
not to exercise renewal options with respect to any of our contracts in the future. Our government partners can also
re-bid contracts in a competitive procurement process upon termination or non-renewal of our contract. Competitive
re-bids may result from the expiration of the term of a contract, including the initial term and any renewal periods,
or the early termination of a contract. Competitive re-bids are often required by applicable federal or state
procurement laws periodically in order to further competitive pricing and other terms for the government agency.
The aggregate revenue earned during the year ended December 31, 2020 for the 39 contracts with scheduled
maturity dates, notwithstanding contractual renewal options, on or before December 31, 2021 was $541.1 million, or
28% of total revenue.
Additionally, the Private Prison EO issued by President Biden on January 26, 2021, directs the Attorney General to
not renew DOJ contracts with privately operated criminal detention facilities. Two agencies of the DOJ, the BOP
and the USMS, utilize our services. The BOP houses inmates who have been convicted, and the USMS is generally
responsible for detainees who are awaiting trial. The BOP has experienced a steady decline in inmate populations
over the last seven years, a trend that has been accelerated by the COVID-19 pandemic. We currently have one
prison contract with the BOP, accounting for 2% ($39.2 million) of our total revenue for the year ended December
31, 2020, which was recently renewed through November 2022.
Unlike the BOP, the USMS does not own detention capacity and relies on the private sector, along with county jails,
for its detainee population. We do not believe the USMS currently has sufficient capacity that satisfies their current
needs without the private sector, and we are not currently aware of an alternative solution for the USMS. We
currently have eight detention facilities that have separate contracts where the USMS is the primary customer that all
expire at various times over the next several years, with the exception of two contracts that have indefinite terms.
Non-renewal of these contracts, or the expansion of such a similar order to ICE, an agency of the DHS, would have
a material adverse effect on our business, financial condition, and results of operations. For the year ended
December 31, 2020, USMS and ICE accounted for 21% ($396.3 million) and 28% ($541.9 million), respectively, of
our total revenue.
Governmental agencies typically may terminate a facility contract at any time without cause or use the possibility of
termination to negotiate a lower per diem rate. In the event any of our contracts are terminated or are not renewed on
favorable terms or otherwise, we may not be able to obtain additional replacement contracts. The non-
renewal, termination, renegotiation or competitive re-bid of any of our contracts with governmental agencies could
materially adversely affect our financial condition, results of operations and liquidity, including our ability to secure
new facility contracts from others.
42
BR21871N-0321-10KW Based on information available as of the date of this Annual Report, we believe we will renew all contracts with our
government partners that have expired or are scheduled to expire within the next twelve months that could have a
material adverse impact on our financial statements. We believe our renewal rate on existing contracts remains high
due to a variety of reasons including, but not limited to, the constrained supply of available beds within the U.S.
correctional system, our ownership of the majority of the beds we operate, and the cost effectiveness of the services
we provide. However, we cannot assure we will continue to achieve such renewal rates in the future.
Our ability to secure new contracts to develop and manage correctional, detention, and residential reentry
facilities depends on many factors outside our control.
Our growth is generally dependent upon our ability to obtain new contracts to develop and manage correctional,
detention, and residential reentry facilities. This possible growth depends on a number of factors we cannot control,
including crime rates and sentencing patterns in various jurisdictions, governmental budgetary constraints,
governmental responses to COVID-19, and governmental and public acceptance of privatization. The demand for
our facilities and services could be adversely affected by the relaxation of enforcement efforts, the expansion of
alternatives to incarceration and detention, leniency in conviction or parole standards and sentencing practices
through the decriminalization of certain activities that are currently proscribed by criminal laws, disruptions to the
criminal justice system, including as a result of COVID-19, or as a result of COVID-19 related responses by
governmental entities intended to address and/or mitigate the spread of COVID-19, including the decision to release
persons entrusted to our care. For instance, any changes with respect to drugs and controlled substances or illegal
immigration could affect the number of persons arrested, convicted, and sentenced, thereby potentially reducing
demand for correctional or detention facilities to house them. Immigration reform laws are currently a focus for
legislators and politicians at the federal, state, and local level. Legislation has also been proposed in numerous
jurisdictions that could lower minimum sentences for some non-violent crimes and make more inmates eligible for
early release based on good behavior. On December 21, 2018, President Trump signed legislation, known as The
First Step Act, that reduces sentences for first-time offenders in possession of a gun when committing a crime,
eliminates mandating life-time sentences for three-time offenders, provides judges more discretion in crafting
sentences for some drug-related offenses, and allows offenders to seek a retroactive reduction in sentences affected
by the disparity in the sentences for crack and powder cocaine cases narrowed by the Fair Sentencing Act of
2010. (Although, under long-standing policy, CoreCivic does not draft, lobby for, promote, or in any way take a
position on policies that determine the basis or duration of an individual's incarceration or detention, CoreCivic
supported adoption of The First Step Act because the legislation aligns with our publicly stated commitment to
advocate for a range of recidivism-reducing policies by providing additional resources to help ensure that
incarcerated individuals are given the best possible chance to successfully return to their communities and stay out
of prison.) Also, the expansion of alternatives to incarceration and detention, the utilization of which may increase in
response to COVID-19, such as electronic monitoring, may reduce the number of offenders who would otherwise be
incarcerated or detained. Similarly, reductions in crime rates, increases in resources dedicated to prevent crime,
reduced funding for law enforcement, or strained law enforcement resources could lead to a reduction in arrests,
which could lead to a decrease in convictions and sentences requiring incarceration at correctional facilities.
Moreover, certain jurisdictions recently have required successful bidders to make a significant capital investment in
connection with the financing of a particular project, a trend that could significantly burden our capital resources to
remain competitive. We may compete for such projects with companies that have more financial resources than we
have. Further, we may not be able to obtain the capital resources when needed. A prolonged downturn in the
financial capital markets or in our stock price could make it more difficult to obtain capital resources at favorable
rates of return or obtain capital resources at all.
43
BR21871N-0321-10KW We may face community opposition to facility location, which may adversely affect our ability to obtain new
contracts.
Our success in obtaining new awards and contracts sometimes depends, in part, upon our ability to locate land that
can be leased or acquired, on economically favorable terms, by us or other entities working with us in conjunction
with our proposal to construct and/or manage a facility. Some locations may be in or near populous areas and,
therefore, may generate legal action or other forms of opposition from residents in areas surrounding a proposed site.
When selecting project sites, we attempt to conduct business in communities where local leaders and residents
generally support the establishment of a privatized correctional, detention, or residential reentry facility. Future
efforts to find suitable host communities may not be successful. We may incur substantial costs in evaluating the
feasibility of the development of a correctional or detention facility. As a result, we may report significant charges if
we decide to abandon efforts to develop a correctional or detention facility on a particular site. Further, in many
cases, the site selection is made by the contracting governmental entity. In such cases, site selection may be made
for reasons related to political and/or economic development interests and may lead to the selection of sites that have
less favorable environments.
Providing family residential services increases certain unique risks and difficulties compared to operating our
other facilities.
In September 2014, we signed an amended agreement to provide at the South Texas Family Residential Center safe
and humane residential housing, as well as educational opportunities, to women and children (but no unaccompanied
children) under the custody of ICE, who are awaiting their due process before immigration courts. In October 2016,
we entered into an amended agreement that extended the term of the 2014 agreement through September 2021. The
term of the amended agreement was further extended in September 2020, from September 2021 to September 2026.
This is an important service to our federal government partner. At the same time, providing this type of residential
service subjects us to unique risks such as unanticipated increased costs and litigation that could materially
adversely affect our business, financial condition, or results of operations. For example, the contract mandates
resident-to-staff ratios that are higher than our typical contract, requires services unique to this contract (e.g. child
care and primary education services), and limits the use of security protocols and techniques typically utilized in
correctional and detention settings. These operational risks and others, including risks relating to COVID-19,
associated with privately managing this type of residential facility could result in higher costs associated with
staffing and lead to increased litigation.
Numerous lawsuits, to which we are not a party, have challenged the government's policy of detaining migrant
families, and government policies with respect to family immigration may impact the demand for the South Texas
Family Residential Center. Any court decision or government action that impacts our existing contract for the South
Texas Family Residential Center could materially affect our cash flows, financial condition, and results of
operations.
We may incur significant start-up and operating costs on new contracts before receiving related revenues, which
may impact our cash flows and not be recouped.
When we are awarded a contract to provide or manage a facility, we may incur significant start-up and operating
expenses, including the cost of constructing the facility, purchasing equipment and staffing the facility, before we
receive any payments under the contract. These expenditures could result in a significant reduction in our cash
reserves and may make it more difficult for us to meet other cash obligations. In addition, a contract may be
terminated prior to its scheduled expiration, and as a result, we may not recover these expenditures or realize any
return on our investment.
44
BR21871N-0321-10KW Government agencies may investigate and audit our contracts and operational performance, and if any
deficiencies or improprieties are found, we may be required to cure those deficiencies or improprieties, refund
revenues we have received, or forego anticipated revenues, and we may be subject to penalties and sanctions,
including contract termination and prohibitions on our bidding in response to Requests for Proposals.
Governmental agencies with which we contract have the authority to audit and investigate our contracts with them.
As part of that process, government agencies may review our performance of the contract, our pricing practices, our
cost structure and our compliance with applicable performance requirements, laws, regulations and standards,
including those related to COVID-19. The regulatory and contractual environment in which we operate is complex
and many aspects of our operations remain subject to manual processes and oversight that make compliance
monitoring difficult and resource intensive. A governmental agency audit, review or investigation could result in a
request to cure a performance or compliance issue, and if we are unable to, or otherwise fail to do so, the failure
could lead to the imposition of monetary penalties or revenue deductions, or the termination of the contract in
question and/or other contracts that we have with that governmental agency. Similarly, for contracts that actually or
effectively provide for certain reimbursement of expenses, if an agency determines that we have improperly
allocated costs to a specific contract, we may not be reimbursed for those expenses, and we could be required to
refund the amount of any such expenses that have been reimbursed. If a government audit asserts improper or illegal
activities by us, we may be subject to civil and criminal penalties and administrative sanctions, including
termination of contracts, forfeitures of profits, suspension of payments, fines and suspension or disqualification from
doing business with certain government entities. In addition to the potential civil and criminal penalties and
administrative sanctions, any adverse determination with respect to contractual or regulatory violations could
negatively impact our ability to bid in response to Requests for Proposals, or RFPs, in one or more jurisdictions.
Failure to comply with facility contracts or with unique and increased governmental regulation could result in
material penalties or non-renewal or termination of noncompliant contracts or our other contracts to provide or
manage correctional, detention, and residential reentry facilities.
The industry in which we operate is subject to extensive federal, state, and local regulations, including educational,
environmental, health care, data privacy, transportation, telecommunications, and safety regulations, which are
administered by many regulatory authorities. Some of the regulations are unique to the corrections industry, some
target private, for-profit entities by imposing location requirements, compliance requirements, elevated litigation
risk and financial penalties only on private, for-profit correction and detention providers, some are unique to
government contractors, and the combination of regulations we face is unique and complex. Facility management
contracts typically include reporting requirements, supervision, and on-site monitoring by representatives of the
contracting governmental agencies. Corrections and reentry personnel are customarily required to meet certain
training standards and, in some instances, facility personnel are required to be licensed and subject to background
investigation. Certain jurisdictions also require us to award subcontracts on a competitive basis or to subcontract
with certain types of businesses, such as small businesses and businesses owned by members of minority groups.
Our facilities are also subject to operational and financial audits by the governmental agencies with which we have
contracts. Federal regulations also require federal government contractors like us to self-report evidence of certain
forms of misconduct. We may not always successfully comply with these regulations and contract requirements,
and failure to comply can result in material penalties, including financial penalties, non-renewal or termination of
noncompliant contracts and/or our other facility contracts, exclusion from new contract procurement or RFP
bidding, and suspension or debarment from contracting with certain government entities.
In addition, private prison managers are subject to government legislation and regulation attempting to restrict the
ability of private prison managers to house certain types of inmates, such as inmates from other jurisdictions or
inmates at medium or higher security levels. Legislation has been enacted in several states, and has previously been
proposed in the United States Congress, containing such restrictions. Such legislation, if enacted, could have an
adverse effect on us.
Our inmate transportation subsidiary, TransCor, is subject to regulations promulgated by the Departments of
Transportation and Justice. TransCor must also comply with the Interstate Transportation of Dangerous Criminals
Act of 2000, which covers operational aspects of transporting prisoners, including, but not limited to, background
checks and drug testing of employees; employee training; employee hours; staff-to-inmate ratios; prisoner restraints;
communication with local law enforcement; and standards to help ensure the safety of prisoners during transport.
Any changes in such regulations could result in an increase in the cost of our transportation operations.
45
BR21871N-0321-10KW From time to time, we enter into agreements with telecommunications providers to provide telephone services to
residents in our facilities. Although we are not a telecommunications provider, these services are subject to
regulations which may change from time to time. We are subject to the direct and indirect effects of these
regulations. Non-compliance with these regulations, either by us or by our telecommunications providers, subjects
us to risks which could result in increases to our costs or decreases in our revenue. The impact to our revenue is
limited because a significant amount of commissions paid by our telecommunications providers is passed along to
our customers or is reserved and must be used for the benefit of offenders in our care.
We depend on a limited number of governmental customers for a significant portion of our revenues.
We currently derive, and expect to continue to derive, a significant portion of our revenues from a limited number of
governmental agencies. The three primary federal governmental agencies with correctional and detention
responsibilities, ICE, the USMS, and the BOP accounted for 52% of our total revenues for the year ended December
31, 2020 ($998.9 million). For the year ended December 31, 2020, ICE, USMS, and the BOP accounted for 28%
($541.9 million), 21% ($396.3 million), and 3% ($60.7 million), respectively, of our total revenue. Although the
revenue generated from each of these agencies is derived from numerous management contracts and various types of
properties, i.e. correctional, detention, reentry, and leased, the loss or substantial reduction in value of one or more
of such contracts could have a material adverse impact on our financial condition, results of operations, and cash
flows. We expect to continue to depend upon these federal agencies and a relatively small group of other
governmental customers for a significant percentage of our revenues.
Additionally, the Private Prison EO issued by President Biden on January 26, 2021, directs the Attorney General to
not renew DOJ contracts with privately operated criminal detention facilities. Two agencies of the DOJ, the BOP
and the USMS, utilize our services. The BOP houses inmates who have been convicted, and the USMS is generally
responsible for detainees who are awaiting trial. The BOP has experienced a steady decline in inmate populations
over the last seven years, a trend that has been accelerated by the COVID-19 pandemic. We currently have one
prison contract with the BOP, accounting for 2% ($39.2 million) of our total revenue for the year ended December
31, 2020, which was recently renewed through November 2022.
Unlike the BOP, the USMS does not own detention capacity and relies on the private sector, along with county jails,
for its detainee population. We do not believe the USMS currently has sufficient capacity that satisfies their current
needs without the private sector, and we are not currently aware of an alternative solution for the USMS. We
currently have eight detention facilities that have separate contracts where the USMS is the primary customer that all
expire at various times over the next several years, with the exception of two contracts that have indefinite terms.
Non-renewal of these contracts, or the expansion of such a similar order to ICE, an agency of the DHS, would have
a material adverse effect on our business, financial condition, and results of operations. For the year ended
December 31, 2020, USMS and ICE accounted for 21% ($396.3 million) and 28% ($541.9 million), respectively, of
our total revenue.
Revenue from our South Texas Family Residential Center was $168.0 million in 2020, $171.1 million in 2019, and
$171.3 million in 2018. The loss or reduction in value of this contract would have an adverse impact on our
financial condition, results of operations, and cash flows.
We may not be able to successfully identify, consummate or integrate acquisitions.
Although the primary focus of our capital strategy is on debt reduction, we continue to evaluate suitable acquisition
targets intended to enhance our growth and diversify our cash flows. The pursuit of acquisitions may pose certain
risks to us. We may not be able to identify acquisition candidates that fit our criteria for growth, profitability and
capital allocation strategy. Even if we are able to identify such candidates, we may not be able to acquire them on
terms satisfactory to us. We may incur expenses and dedicate attention and resources associated with the review and
pursuit of acquisition opportunities, whether or not we consummate such acquisitions.
46
BR21871N-0321-10KW Additionally, even if we are able to identify and acquire suitable targets on agreeable terms, we may not be able to
successfully integrate their operations with ours. Achieving the anticipated benefits of any acquisition will depend in
significant part upon whether we integrate such acquired businesses in an efficient and effective manner. We may
not be able to achieve the anticipated operating and cost synergies or long-term strategic benefits of our acquisitions
within our anticipated timing, or at all. We may also assume liabilities in connection with acquisitions to which we
would otherwise not be exposed. An inability to realize the full extent of, or any of, the anticipated synergies or
other benefits of an acquisition, as well as any delays that may be encountered in the integration process, which may
delay the timing of such synergies or other benefits, could have an adverse effect on our business and results of
operations.
As a result of our acquisitions, we have recorded and will continue to record goodwill and other intangible assets.
In the future, our goodwill or other intangible assets may become impaired, which could result in material non-
cash charges to our results of operations.
We have goodwill and other intangible assets resulting from business acquisitions. We evaluate the carrying value of
goodwill annually, and whenever circumstances indicate the carrying value of goodwill may be impaired, as defined
by U.S. generally accepted accounting principles. In conjunction with our annual assessment in the fourth quarter of
2020, we recognized an impairment charge of $42.6 million, representing the full balance of goodwill allocated to
our Community reporting unit, primarily because of the significant decline in the equity market valuation of the
Company, as well as the reduction in cash flows from the COVID-19 pandemic and the anticipated change in tax
structure effective January 1, 2021. We will continue to evaluate the remaining goodwill in our Safety reporting unit
for impairment by performing a qualitative assessment to determine whether the existence of events or
circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than
its carrying amount. Estimated fair values could change if there are changes in assumptions related to our capital
structure and cost of debt and equity and operating cash flows, as well as considerations related to our equity
valuation. Impairments of goodwill or other intangible assets could require material non-cash charges to our results
of operations.
We are dependent upon our senior management and our ability to attract and retain sufficient qualified
personnel.
The success of our business depends in large part on the ability and experience of our senior management. The
unexpected loss of any of these persons could materially adversely affect our business and operations.
In addition, the services we provide are labor-intensive. The success of our business, and our ability to satisfy the
staffing and operational performance requirements of our contracts, require that we attract, hire, develop and retain
sufficient qualified personnel. When we are awarded a facility management contract or open a new facility, we
must hire operating management, correctional officers, and other personnel. Our inability to hire sufficient qualified
personnel on a timely basis, or experiencing excessive turnover or the loss of significant personnel at existing
facilities, could adversely affect our business and operations. Many of our contracts include specific staffing
requirements, and our failure to satisfy such requirements may result in the imposition of financial penalties or loss
of contract.
We are subject to various types of litigation.
We are subject to certain stockholder litigation. In a memorandum to the BOP dated August 18, 2016, the DOJ
directed that, as each contract with privately operated prisons reaches the end of its term, the BOP should either
decline to renew that contract or substantially reduce its scope in a manner consistent with law and the overall
decline of the BOP's inmate population. In addition to the decline in the BOP's inmate population, the DOJ
memorandum cites purported operational, programming, and cost efficiency factors as reasons for the DOJ directive.
On February 21, 2017, the newly appointed U.S. Attorney General issued a memorandum rescinding the DOJ's prior
directive stating the memorandum changed long-standing policy and practice and impaired the BOP's ability to meet
the future needs of the federal correctional system.
Following the release of the August 18, 2016 DOJ memorandum, a purported securities class action lawsuit was
filed on August 23, 2016 against us and certain of our current and former officers in the United States District Court
47
BR21871N-0321-10KW for the Middle District of Tennessee, or the District Court, captioned Grae v. Corrections Corporation of America et
al., Case No. 3:16-cv-02267. The lawsuit is brought on behalf of a putative class of shareholders who purchased or
acquired our securities between February 27, 2012 and August 17, 2016. The Plaintiffs seek compensatory damages
and costs incurred in connection with the lawsuit. In general, the lawsuit alleges that, during this timeframe, our
public statements were false and/or misleading regarding the purported operational, programming, and cost
efficiency factors cited in the DOJ memorandum and, as a result, our stock price was artificially inflated. The
lawsuit alleges that the publication of the DOJ memorandum on August 18, 2016 revealed the alleged fraud, causing
the per share price of our stock to decline, thereby causing harm to the putative class of shareholders.
On December 18, 2017, the District Court denied our motion to dismiss. On March 26, 2019, the District Court
certified the class proposed by the plaintiff. The United States Court of Appeals for the Sixth Circuit denied our
appeal of the class certification order on August 23, 2019. A trial before United States District Judge Aleta Trauger
is scheduled for May 2021 in the Middle District of Tennessee. We believe the lawsuit is entirely without merit and
intend to vigorously defend against it.
Legal proceedings related to, and adverse developments in our relationship with, our employees could adversely
affect our business, financial condition or results of operations. We and our subsidiaries are party to a variety of
claims and legal proceedings in the ordinary course of business, including but not limited to claims and legal
proceedings related to employment matters. Because the resolution of claims and legal proceedings is inherently
uncertain, there can be no assurance we will be successful in defending against such claims or legal proceedings, or
that management's assessment of the materiality of these matters, including the reserves taken in connection
therewith, will be consistent with the ultimate outcome of such claims or legal proceedings. In the event
management's assessment of materiality of current claims and legal proceedings proves inaccurate or litigation that
is material arises in the future, the resolution of such matters may have an adverse impact on our business, financial
condition or results of operations.
As of December 31, 2020, we employed 12,415 full- and part-time employees. Approximately 1,260 of our
employees at six of our facilities, or approximately 10.1% of our workforce, are represented by labor unions. We
have not experienced a strike or work stoppage at any of our facilities and, in the opinion of management, overall
employee relations are good. New executive orders, administrative rules and changes in National Labor Relations
could increase organizing activity at locations where employees are currently not represented by a labor
organization. Increases in organizational activity or any future work stoppages could have an adverse impact on our
business, financial condition, or results of operations.
We are subject to legal proceedings associated with owning and managing correctional, detention, and residential
reentry facilities. Our ownership and management of correctional, detention, and residential reentry facilities, and
the provision of inmate transportation services by a subsidiary, expose us to potential third-party claims or litigation
by prisoners or other persons relating to personal injury, illness, or other damages resulting from contact with a
facility, its managers, personnel or other prisoners, including damages arising from a prisoner's escape from, or a
disturbance or riot at, a facility we own or manage, or from the misconduct of our employees. To the extent the
events serving as a basis for any potential claims are alleged or determined to constitute illegal or criminal activity,
we could also be subject to criminal liability. Such liability could result in significant monetary fines and could
affect our ability to bid on future contracts and retain our existing contracts. In addition, as an owner of real
property, we may be subject to a variety of proceedings relating to personal injuries of persons at such facilities. The
claims against our facilities may be significant and may not be covered by insurance. Even in cases covered by
insurance, our deductible (or self-insured retention) may be significant.
We are subject to necessary insurance costs.
Workers' compensation, auto liability, employee health, and general liability insurance represent significant costs to
us. Because we are significantly self-insured for workers' compensation, auto liability, employee health, and general
liability risks, the amount of our insurance expense is dependent on claims experience, our ability to control our
claims experience, and in the case of workers' compensation and employee health, rising health care costs in general.
Unanticipated additional insurance costs could adversely impact our results of operations and cash flows, and the
failure to obtain or maintain any necessary insurance coverage could have an adverse impact on us.
48
BR21871N-0321-10KW We may be adversely affected by inflation.
Many of our facility contracts provide for fixed fees or fees that increase by only small amounts during their terms.
If, due to inflation or other causes, our operating expenses, such as wages and salaries of our employees, insurance,
medical, and food costs, increase at rates faster than increases, if any, in our revenues, then our profitability would
be adversely affected. See "Management's Discussion and Analysis of Financial Condition and Results of
Operations – Inflation."
Technological changes or negative changes in the level of acceptance of, or resistance to, the use of electronic
monitoring products could cause our electronic monitoring products and other technology to become obsolete or
require the redesign of our electronic monitoring products, which could have an adverse effect on our business.
Technological changes within our electronic monitoring business may require us to expend resources in an effort to
acquire, maintain and/or utilize new electronic monitoring products and technology. We may not be able to
anticipate or respond to technological changes in a timely manner, and our response may not result in successful
electronic monitoring product offerings. If we are unable to anticipate or timely respond to technological changes,
our business could be adversely affected. Further, our business could be adversely affected if the level of acceptance
of or resistance to the use of electronic monitoring products and services by governmental customers were to change
over time in a negative manner so that governmental customers decide to decrease their usage levels and contracting
for electronic monitoring products and services.
We depend on a limited number of third parties to manufacture and supply our electronic monitoring products. If
our suppliers cannot provide the products or services we require in a timely manner and with such quality as we
expect, our ability to market and sell our electronic monitoring products and services could be harmed.
If our suppliers fail to supply, in a timely manner, electronic monitoring products that meet our quantity, quality,
cost requirements, or technical specifications, we may not be able to access alternative sources of these products
within a reasonable period of time or at commercially reasonable rates. A reduction or interruption in the supply of
such products, or a significant increase in the price of such products, could have an adverse impact on our marketing
and sales initiatives, which could adversely affect our financial condition and results of operations. In addition,
contracts with such suppliers may not continue to be available on acceptable terms or at all.
We may be subject to costly product liability claims from the use of our electronic monitoring products, which
could damage our reputation, impair the marketability of our products and services and force us to pay costs and
damages that may not be covered by adequate insurance.
The operation of our electronic monitoring products and services entails a risk of product liability. We could be
subject to product liability claims to the extent these electronic monitoring products fail to perform as intended.
Even unsuccessful claims against us could result in the expenditure of funds in litigation, the diversion of
management time and resources, damage to our reputation and impairment of the marketability of our electronic
monitoring products and services. While we maintain liability insurance, it is possible that a successful claim could
be made against us, that the amount of our insurance coverage would not be adequate to cover the costs of defending
against or paying such a claim, and that damages payable by us would harm our business.
We are subject to risks associated with ownership of real estate.
Our ownership of correctional, detention, and residential reentry facilities and other government-leased assets
subjects us to risks typically associated with investments in real estate. Investments in real estate and, in particular,
correctional and detention facilities have limited or no alternative use and thus are relatively illiquid. Therefore, our
ability to divest ourselves of one or more of our facilities promptly in response to changing conditions is limited.
Investments in real estate properties subject us to risks involving potential exposure to environmental liability and
uninsured loss. Our operating costs may be affected by the obligation to pay for the cost of complying with existing
environmental laws, ordinances and regulations, as well as the cost of complying with future legislation. In addition,
although we maintain insurance for many types of losses, there are certain types of losses, such as losses from
earthquakes and acts of terrorism, which may be either uninsurable or for which it may not be economically feasible
to obtain insurance coverage in light of the substantial costs associated with such insurance. As a result, we could
49
BR21871N-0321-10KW lose both our capital invested in, and anticipated profits from, one or more of the properties we own. Further, it is
possible to experience losses that may exceed the limits of insurance coverage.
The primary risk we face for asset impairment charges, excluding goodwill, is associated with real estate that we
own. As of December 31, 2020, we had $2.6 billion in property and equipment, including $132.7 million in long-
lived assets, excluding equipment, at five idled CoreCivic Safety correctional facilities. We can provide no
assurance that we will be able to secure agreements to utilize our idle properties, or that we will not incur
impairment charges in the future.
In addition, facility development and expansion projects pose additional risks, including cost overruns caused by
various factors, many of which are beyond our control, such as the effects of, and delays caused by, COVID-19,
weather, the availability of labor and materials, labor conditions, delays in obtaining legal approvals, unforeseen
engineering, archeological or environmental problems, and cost inflation, resulting in increased construction costs.
Further, if we are unable to utilize the new bed capacity, our financial results could deteriorate.
Certain of our facilities are subject to options to purchase and reversions. Ten of our facilities are subject to an
option to purchase by certain governmental agencies. Such options are exercisable by the corresponding contracting
governmental entity generally at any time during the term of the respective facility contract. Certain of these
purchase options are based on the depreciated book value of the facility, which essentially could result in the transfer
of ownership of the facility to the governmental agency at the end of the life used for accounting purposes, while
other options to purchase are exercisable at prices below fair market value. See "Business – Facility Portfolio." If
any of these options are exercised, there exists the risk that we will be unable to invest the proceeds from the sale of
the facility in one or more properties that yield as much cash flow as the property acquired by the government entity.
In addition, in the event any of these options is exercised, there exists the risk that the contracting governmental
agency will terminate the management contract associated with such facility. For the year ended December 31,
2020, the ten facilities currently subject to these options generated $323.8 million in revenue (17.2% of total
revenue) and incurred $259.8 million in operating expenses.
Risks related to facility construction and development activities may increase our costs related to such activities.
When we are engaged to perform construction and design services for a facility, we typically act as the primary
contractor and subcontract with other companies that act as the general contractors. As primary contractor, we are
subject to the various risks associated with construction (including, without limitation, shortages of labor and
materials, work stoppages, labor disputes, and weather interference which could cause construction delays). In
addition, we are subject to the risk that the general contractor will be unable to complete construction at the
budgeted costs or be unable to fund any excess construction costs, even though we require general contractors to
post construction bonds and insurance. Under such contracts, we are ultimately liable for all late delivery penalties
and cost overruns.
We may be adversely affected by an increase in costs or difficulty of obtaining adequate levels of surety credit on
favorable terms.
We are often required to post bid or performance bonds issued by a surety company as a condition to bidding on or
being awarded a contract. Availability and pricing of these surety commitments are subject to general market and
industry conditions, among other factors. Increases in surety costs could adversely affect our operating results if we
are unable to effectively pass along such increases to our customers. We cannot assure you that we will have
continued access to surety credit or that we will be able to secure bonds economically, without additional collateral,
or at the levels required for any potential facility development or contract bids. If we are unable to obtain adequate
levels of surety credit on favorable terms, we would have to rely upon letters of credit under our Revolving Credit
Facility which could entail higher costs if such borrowing capacity was even available when desired, and our ability
to bid for or obtain new contracts could be impaired.
50
BR21871N-0321-10KW Interruption, delay or failure of the provision of our technology services or information systems, or the
compromise of the security thereof, could adversely affect our business, financial condition or results of
operations.
Components of our business depend significantly on effective information systems and technologies, some of which
are provided and/or maintained by third parties. As with all companies that utilize information systems, we are
vulnerable to negative impacts to our business if the operation of those systems malfunctions or experiences errors,
interruptions or delays, or certain information contained therein is compromised. As a matter of course, we may
store or process the personal information of offenders, employees and other persons as required to provide our
services and such personal information or other data may be hosted or exchanged with our government partners and
other third-party providers. While we employ commercially reasonable, industry standard administrative, technical
and physical safeguards designed to protect the integrity and security of any personal data we collect or process,
despite the security measures we have in place, and any additional measures we may implement in the future, our
facilities and systems, and those of our third-party service providers, could be vulnerable to security breaches,
computer viruses, lost or misplaced data, programming errors, human errors, acts of vandalism, or other events. For
example, several well-known companies have recently disclosed high-profile security breaches involving
sophisticated and highly targeted attacks on their company's infrastructure or their customers' data, which were not
recognized or detected until after such companies had been affected notwithstanding the preventive measures they
had in place. Any security breach or event resulting in the interruption, delay or failure of our services or
information systems, or the misappropriation, loss, or other unauthorized disclosure of personal data or confidential
information, including confidential information about our employees, whether by us directly or our third-party
service providers, could damage our reputation, expose us to the risks of litigation and liability, result in significant
monetary penalties and/or regulatory actions for violation of applicable laws or regulations, disrupt our business and
result in significant costs for remedial measures to prevent future occurrences and mitigate past violations, result in
lost business, or otherwise adversely affect our results of operations. Although we maintain insurance covering
certain security and privacy damages and claim expenses, we may not carry insurance or maintain coverage
sufficient to compensate for all liability and in any event, insurance coverage would not address the reputational
damage that could result from a security incident. We did not log any such incidents in 2020, nor were we informed
by law enforcement of any such incidents.
We are subject to risks related to corporate social responsibility.
The growing integration of ESG factors in making investment decisions is relatively new, and frameworks and
methods used by investors for assessing ESG policies are not fully developed and vary considerably among the
investment community. During 2020, we issued our second ESG report to detail how we attempt to deliver on our
service commitment to our government partners and manage our operations responsibly and ethically. These
policies and practices, whether it be the standards we set for ourselves or ESG criteria established by third parties,
and whether or not we meet such standards, may influence our reputation. For example, the perception held by the
general public, our governmental partners, vendors, suppliers, other stakeholders, or the communities in which we
do business may depend, in part, on the standards we have chosen to aspire to meet, whether or not we meet these
standards on a timely basis or at all, and whether or not we meet external ESG factors they deem relevant.
Nonetheless, the subjective nature and wide variety of methods and processes used by various stakeholders,
including investors, to assess a company with respect to ESG criteria can result in the perception of negative ESG
factors or a misrepresentation of our ESG policies and practices. Our failure to achieve progress on our ESG policies
and practices on a timely basis, or at all, or to meet ESG criteria set by third parties, could adversely affect our
business, financial performance, or growth.
By electing to set and publicly share these ESG standards, our business may also face increased scrutiny related to
ESG activities. As a result, our reputation could be harmed if we fail to act responsibly in the areas in which we
report, such as safety and security, human rights, diversity, quality assurance and facility oversight, community
development, and environmental sustainability. Any harm to our reputation resulting from setting these standards or
our failure or perceived failure to meet such standards could impact: employee retention; the willingness of our
governmental partners, vendors and suppliers to do business with us; investors willingness or ability to purchase or
hold our securities; or our ability to access capital, any of which could adversely affect our business, financial
performance, and growth. Our ESG report is not a part of this Annual Report.
51
BR21871N-0321-10KW As an owner and operator of correctional, detention, and residential reentry facilities, we are subject to risks
relating to acts of God, outbreaks of epidemic or pandemic disease, terrorist activity and war.
We may encounter staffing constraints as well as costs and expenses associated with owning and/or operating our
correctional, detention, and residential reentry facilities as a result of acts of God, outbreaks of epidemic or
pandemic disease (such as the COVID-19 pandemic), war (including the potential for war), terrorist activity
(including threats of terrorist activity), political unrest, geopolitical uncertainty and other forms of civil strife, in or
around locations where we own and/or operate significant properties. These events could have an adverse impact on
our business, financial condition, results of operations or the market price of our common stock.
Risks Related to Our Indebtedness
Our indebtedness could adversely affect our financial health and prevent us from fulfilling our obligations under
our debt securities.
We have a significant amount of indebtedness. As of December 31, 2020, we had total indebtedness of $1,809.5
million. Our indebtedness could have important consequences. For example, it could:
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make it more difficult for us to satisfy our obligations with respect to our indebtedness;
increase our vulnerability to general adverse economic and industry conditions;
require us to dedicate a substantial portion of our cash flow from operations to payments on our
indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital
expenditures, dividends, and other general corporate purposes;
limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we
operate;
restrict us from pursuing strategic acquisitions or certain other business opportunities;
place us at a competitive disadvantage compared to our competitors that have less debt; and
limit our ability to borrow additional funds or refinance existing indebtedness on favorable terms, or at
all.
If we are unable to meet our debt service obligations, we may need to reduce capital expenditures, restructure or
refinance our indebtedness, obtain additional equity financing or sell assets. We may be unable to restructure or
refinance our indebtedness, obtain additional equity financing or sell assets on satisfactory terms or at all.
Our Credit Agreements, indentures related to our senior notes, and other debt instruments have restrictive
covenants that could limit our financial flexibility.
The indentures related to our aggregate original principal amount of $350.0 million 4.625% senior notes due 2023,
$250.0 million 5.0% senior notes due 2022, and $250.0 million 4.75% senior notes due 2027, collectively referred to
herein as our senior notes, the $200.0 million term loan under our Bank Credit Facility, or Term Loan A, the
Revolving Credit Facility, and the credit agreement governing our outstanding $250.0 million Senior Secured Term
Loan B, or our Term Loan B, and, together with the Bank Credit Facility, our Credit Agreements, contain restrictive
covenants that limit our ability to engage in activities that may be in our long-term best interests. Our Bank Credit
Facility requires us to comply with certain financial covenants, including leverage and fixed charge coverage ratios.
Our Term Loan B requires us to comply with certain financial covenants, including a secured leverage ratio and,
under specified circumstances, a loan-to-value requirement. Our Credit Agreements include other restrictions that,
among other things, limit our ability to incur indebtedness; grant liens; engage in mergers, consolidations and
liquidations; make asset dispositions, make restricted payments and investments; issue disqualified stock; enter into
transactions with affiliates; and amend, modify or prepay certain indebtedness. The indentures related to our senior
notes contain limitations on our ability to effect mergers and change of control events, as well as other limitations on
our ability to create liens on our assets.
52
BR21871N-0321-10KW Our failure to comply with these covenants could result in an event of default that, if not cured or waived, could
result in the acceleration of all or a substantial portion of our debt. We do not have sufficient working capital to
satisfy our debt obligations in the event of an acceleration of all or a significant portion of our outstanding
indebtedness.
Our indebtedness is secured by a substantial portion of our assets.
Subject to applicable laws and certain agreed-upon exceptions, our Revolving Credit Facility and Term Loan A are
secured by a pledge of all of the capital stock of CoreCivic's domestic subsidiaries, 65% of the capital stock of
CoreCivic’s foreign subsidiaries, all of CoreCivic’s accounts receivable and all of CoreCivic's deposit accounts. Our
Term Loan B is secured by a first lien on certain specified real property assets, representing a loan-to-value of no
greater than 80%. Subject to compliance with the restrictive covenants under our existing indebtedness, we may
incur additional indebtedness secured by existing or future assets of CoreCivic or our subsidiaries. In the event of a
default under our Credit Agreements or any other secured indebtedness, or if we experience insolvency, liquidation,
dissolution or reorganization, the holders of our secured debt instruments would first be entitled to payment from
their collateral security, and only after that would holders of our unsecured debt be entitled to payment from our
remaining assets. In such an event, there can be no assurance that we would have sufficient assets to pay amounts
due to holders of our unsecured debt, and such holders may receive less than the full amount to which they are
entitled.
Servicing our indebtedness will require a significant amount of cash or may require us to refinance our
indebtedness before it matures. Our ability to generate cash depends on many factors beyond our control and
there is no assurance that we will be able to refinance our debt on acceptable terms, or at all.
Currently, our Term Loan A and Revolving Credit Facility both mature in April 2023. Our Term Loan B matures in
December 2024. We also have outstanding $350.0 million in aggregate principal amount of our 4.625% senior notes
due 2023, $250.0 million in aggregate principal amount of our 5.0% senior notes due 2022, and $250.0 million in
aggregate principal amount of our 4.75% senior notes due 2027. In addition, we have $323.0 million outstanding
under three non-recourse mortgage notes with interest rates ranging from 4.43% to 4.5% maturing in 2033, 2034,
and 2040. Our ability to make payments on our indebtedness, to refinance our indebtedness, and to fund planned
capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory, and other factors that are beyond our control.
The risk exists that our business will be unable to generate sufficient cash flow from operations or that future
borrowings will not be available to us in an amount sufficient to enable us to pay our indebtedness, including our
existing senior notes, or to fund our other liquidity needs. We may need to refinance all or a portion of our
indebtedness, including our senior notes, on or before maturity. Our ability to refinance all or a portion of our
indebtedness on acceptable terms, or at all, will be dependent upon a number of factors, including our degree of
leverage, the amount of our cash flows, the value of our assets, borrowing and other financial restrictions imposed
by lenders and conditions in the credit markets at the time we refinance. If we are unable to refinance our
indebtedness on acceptable terms, we may be forced to agree to otherwise unfavorable financing terms or to sell one
or more properties at unattractive prices or on disadvantageous terms. Any one of these options could have a
material adverse effect on our business, financial condition, results of operations and our cash flows.
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BR21871N-0321-10KW We are required to repurchase all or a portion of our senior notes upon a change of control, and our Credit
Agreements are subject to acceleration upon a change of control.
Upon certain change of control events, as that term is defined in the indentures for our senior notes, including a
change of control caused by an unsolicited third party, we are required to make an offer in cash to repurchase all or
any part of each holder's notes at a repurchase price equal to 101% of the principal thereof, plus accrued interest.
The source of funds for any such repurchase would be our available cash or cash generated from operations or other
sources, including borrowings, sales of equity or funds provided by a new controlling person or entity. Sufficient
funds may not be available to us, however, at the time of any change of control event to repurchase all or a portion
of the tendered notes pursuant to this requirement. Our failure to offer to repurchase notes, or to repurchase notes
tendered, following a change of control will result in a default under the respective indentures, which could lead to a
cross-default under our Credit Agreements and under the terms of our other indebtedness. In addition, terms of our
Credit Agreements, which are subject to acceleration upon the occurrence of a change in control (as described
therein), may prohibit us from making any such required repurchases. Prior to repurchasing the notes upon a change
of control event, we must either repay outstanding indebtedness under our Credit Agreements or obtain the consent
of the lenders under our Credit Agreements. If we do not obtain the required consents or repay our outstanding
indebtedness under our Credit Agreements, we would remain effectively prohibited from offering to repurchase the
notes, which would cause a default under the indentures governing the notes.
Despite current indebtedness levels, we may still incur more debt.
The terms of the indentures for our senior notes and our Credit Agreements restrict our ability to incur indebtedness;
however, we may nevertheless incur additional indebtedness in the future, and in the future, we may refinance all or
a portion of our indebtedness, including our Credit Agreements, and may incur additional indebtedness as a result so
long as we comply with the limitations in our senior notes and Credit Agreements while they are in effect. As of
December 31, 2020, we had $566.2 million of additional borrowing capacity available under our Revolving Credit
Facility. The Bank Credit Facility also contains an "accordion" feature that provides for uncommitted incremental
extensions of credit in the form of increases in the revolving commitments or incremental term loans of up to $350.0
million. In addition, so long as we comply with the limitations in our senior notes and Credit Agreements while
they are in effect, we may issue an indeterminate amount of debt securities from time to time when we determine
that market conditions and the opportunity to utilize the proceeds from the issuance of such debt securities are
favorable. If new debt is added to our and our subsidiaries' current debt levels, the related risks that we and they now
face could intensify.
Our ability to incur more secured debt has been further limited by the Term Loan B.
The Term Loan B required us to place liens on mortgaged properties representing a loan-to-value of no greater than
80%. Our Credit Agreements limit the amount of liens we can place on existing assets, further restricting the
amount of additional secured debt we are able to obtain. This limitation restricts our ability to obtain financing for
future needs and opportunities.
Our access to capital may be affected by general macroeconomic conditions.
Credit markets may tighten significantly for various reasons that may or may not result from company-specific
activities such that our ability to obtain new capital could be more challenging and more expensive. Further, we can
provide no assurance that the banks that have made commitments under our Bank Credit Facility will continue to
operate as going concerns in the future or will agree to extend commitments beyond the maturity date. If any of the
banks in the lending group were to fail, or fail to renew their commitments, it is possible that the capacity under our
Bank Credit Facility would be reduced. In the event that the availability under our Bank Credit Facility was reduced
significantly, we could be required to obtain capital from alternate sources in order to continue with our business and
capital strategies. Our options for addressing such capital constraints would include, but not be limited to (i)
delaying certain capital expenditure projects, (ii) obtaining commitments from the remaining banks in the lending
group or from new banks to fund increased or new amounts under the terms of our Bank Credit Facility, (iii)
accessing the public capital markets, or (iv) retaining more of our cash flow. Such alternatives could be on terms
less favorable than under existing terms, which could have a material effect on our consolidated financial position,
results of operations, or cash flows.
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BR21871N-0321-10KW Increasing activist resistance to the use of public-private partnerships for correctional, detention, and residential
reentry facilities could impact our ability to obtain financing to grow our business or to refinance existing
indebtedness, which could have a material adverse effect on our business, financial condition and results of
operations.
Our company does not, under longstanding policy, lobby for or against policies or legislation that would determine
the basis for, or duration of, an individual's incarceration or detention. This strict policy also applies to external
government relations professionals working on our behalf at all levels of government. Nonetheless, contracting for
correctional, detention, and residential reentry facilities and related services has not achieved complete acceptance
by certain governments or the public at large. The operation of correctional, detention, and residential reentry
facilities by private entities has encountered resistance from certain groups, such as immigration advocates, labor
unions, prison reform organizations and other special interest groups that believe correctional, detention, and
residential reentry facilities should only be operated by governmental agencies, or that alternatives to immigrant
detention should be utilized to enforce the nation's border policies. Further, opposition to immigration policies and
the association of private companies with the enforcement of such policies have caused some banks, including
several that are currently parties to the Bank Credit Facility, to announce that they do not expect to continue
providing credit or financial services to private entities that operate correctional, and detention facilities, including
CoreCivic. The banks that are currently parties to the Bank Credit Facility are obligated to honor their commitments
under the Bank Credit Facility, which expire in April 2023. These decisions have currently affected the capital
markets for our securities, and we can provide no assurance that additional banks that are party to our Bank Credit
Facility will not make similar decisions, or that new banks will be willing to become party to our Bank Credit
Facility, or that the capital markets for our securities will improve. While we believe we will continue to have
access to capital, restrictions on our access to capital, or increases in the cost of capital, could have a material
adverse effect on our business, financial condition and results of operations.
Rising interest rates would increase the cost of our variable rate debt.
We have incurred and expect in the future to incur indebtedness that bears interest at variable rates, including
indebtedness under our Credit Agreements. Accordingly, increases in interest rates would increase our interest costs,
which could have an adverse impact on us and our ability to pay-down our debt, return capital to our stockholders
and pay maturing debt or cause us to be in default under certain debt instruments.
Risks Related to our Corporate Tax Structure
Our obligations to pay income taxes will increase beginning in 2021, which will result in a reduction to our
earnings, and could have negative consequences to us.
We expect to revoke our REIT election and become a taxable C Corporation effective January 1, 2021, which will
result in a higher provision for federal and state income taxes, which could impair our ability to satisfy our financial
obligations and negatively impact the price of our securities. Further, federal and state income tax rates could
increase in the future, exacerbating these risks. President Biden has advocated for an increase in the federal
corporate income tax rate from 21% to 28%. We can provide no assurance that federal or state income tax rates will
not increase in the future.
We may fail to realize the anticipated benefits of revoking our REIT election and becoming a taxable C
Corporation effective January 1, 2021, or those benefits may take longer to realize than expected, if at all, or may
not offset the costs of revoking our REIT election and becoming a taxable C Corporation.
including
the requirement
We believe that revoking our REIT election and becoming a taxable C Corporation will, among other things,
provide us with greater flexibility to use our free cash flows as we will no longer be required to operate under the
REIT rules,
to our
stockholders. However, the amount of our free cash flows may not meet our expectations, which may reduce, or
eliminate, the anticipated benefits of the transition from a REIT to a taxable C Corporation. For example, if our cash
flows do not meet our expectations, our ability to implement our new capital allocation strategy may be delayed, and
we may not be able to reduce our debt as quickly as we desire. Moreover, there can be no assurance that the
anticipated benefits of the transition from a REIT to a taxable C Corporation will offset its costs, which could be
greater than we expect. Our failure to achieve the anticipated benefits of the transition from a REIT to a taxable C
least 90% of our
to distribute at
income
taxable
55
BR21871N-0321-10KW Corporation at all, or in a timely manner, or a failure of any benefits realized to offset its costs, could negatively
affect our business, financial condition, results of operations or the market price of our common stock.
If we failed to remain qualified as a REIT for those years we elected REIT status, we would be subject to
corporate income taxes and would not be able to deduct distributions to stockholders when computing our taxable
income for those years.
We operated in a manner that was intended to allow us to qualify as a REIT for federal income tax purposes during
those years we elected REIT status, 2013 through 2020. However, we cannot assure you that we qualified as a REIT
during those years. Qualification as a REIT required us to satisfy numerous requirements established under highly
technical and complex sections of the Internal Revenue Code of 1986, as amended, or the Code, which may change
from time to time and for which there are only limited judicial and administrative interpretations, and involves the
determination of various factual matters and circumstances not entirely within our control. For example, in order to
qualify as a REIT, the REIT must derive at least 95% of its gross income in any year from qualifying sources. In
addition, a REIT is required to distribute annually to its stockholders at least 90% of its REIT taxable income
(determined without regard to the dividends paid deduction and by excluding capital gains) and must satisfy
specified asset tests on a quarterly basis.
If we failed to qualify as a REIT in any taxable year we elected REIT status, we would be subject to federal income
tax (including any applicable alternative minimum tax for years before 2018) on our taxable income computed in the
usual manner for corporate taxpayers without deduction for distributions to our stockholders, and we may need to
borrow additional funds or issue securities to pay such additional tax liability. Any such corporate income tax
liability could be substantial and would reduce the amount of cash available for other purposes, because, unless we
are entitled to relief under certain statutory provisions, we would be taxable as a C Corporation, beginning in the
year in which the failure occurred, and we would not be allowed to re-elect to be taxed as a REIT for the following
four years.
Even if we remained qualified as a REIT for those years we elected REIT status, we may owe taxes under certain
circumstances.
Even if we qualify as a REIT for those years we elected REIT status, we will be subject to certain U.S. federal, state
and local taxes on our income and property, including on taxable income that we did not distribute to our
stockholders, and on net income from certain "prohibited transactions". In addition, the REIT provisions of the Code
are complex and are not always subject to clear interpretation. For example, a REIT must derive at least 95% of its
gross income in any year from qualifying sources, including rents from real property. Rents from real property
include amounts received for the use of limited amounts of personal property and for certain services. Whether
amounts constitute rents from real property or other qualifying income may not be entirely clear in all cases. We
may fail to qualify as a REIT for those years we elected REIT status if we exceed the permissible amounts of non-
qualifying income unless such failures qualify for relief under certain statutory relief provisions. Even if we qualify
for statutory relief, we may be required to pay an excise or penalty tax (which could be significant in amount) in
order to utilize one or more such relief provisions under the Code to maintain our qualification as a REIT for those
years we elected REIT status. Furthermore, we conducted substantial activities through TRSs, and the income of
those subsidiaries is subject to U.S. federal income tax at regular corporate rates.
Performing services through our TRSs during those years we elected REIT status may increase our overall tax
liability or subject us to certain excise taxes. A TRS may hold assets and earn income, including income earned
from the performance of correctional services, that would not be qualifying assets or income if held or earned
directly by a REIT. During those years we elected REIT status, we conducted a significant portion of our business
activities through our TRSs. Our TRSs are subject to federal, foreign, state and local income tax on their taxable
income, and their after-tax net income generally is available for distribution to us but is not required to be distributed
to us. The TRS rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that
are not conducted on an arm's-length basis. We believe our arrangements with our TRSs were on arm's-length terms.
If it is determined that our arrangements with our TRSs were not on an arm's-length terms, we would be subject to
the 100% excise tax.
56
BR21871N-0321-10KW The value of the securities we owned in our TRSs during those years we elected REIT status was limited under the
REIT asset tests. Under the Code, no more than 20% of the value of the gross assets of a REIT may be represented
by securities of one or more TRSs. This limitation affected our ability to increase the size of our TRSs' operations
and assets during those years that we elected REIT status, and there can be no assurance that we were able to
comply with this limitation. If it is determined that we were unable to comply with this limitation, we would fail to
qualify as a REIT for those years we elected REIT status.
The tax imposed on REITs engaging in "prohibited transactions" limited our ability to engage in transactions during
those years we elected REIT status which would be treated as sales for federal income tax purposes. A REIT's net
income from prohibited transactions is subject to a 100% penalty tax. In general, prohibited transactions are sales or
other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary
course of business. Although we do not believe that we held any properties that would be characterized as held for
sale to customers in the ordinary course of our business during those years we elected REIT status, unless the sale or
disposition qualified under certain statutory safe harbors, such characterization is a factual determination and no
guarantee can be given that the Internal Revenue Service, or IRS, would agree with our characterization of our
properties or that we will always be able to make use of the available safe harbors.
General Risk Factors
The market price of our equity securities may vary substantially, which may limit our stockholders' ability to
liquidate their investment.
Factors that could affect the market price of our equity securities include, but are not limited to, the following:
•
•
•
•
•
•
actual or anticipated variations in our quarterly results of operations;
changes in market valuations of companies in the corrections, detention, or residential reentry
industries;
changes in expectations of future financial performance or changes in estimates of securities analysts;
fluctuations in stock market prices and volumes;
issuances of common shares or other securities in the future; and
announcements by us or our competitors of acquisitions, investments or strategic actions.
The number of shares of our common stock available for future sale could adversely affect the market price of
our common stock.
We cannot predict the effect, if any, of future sales of common stock, or the availability of common stock for future
sale, on the market price of our common stock. Sales of substantial amounts of common stock (including stock
issued under equity compensation plans or stock issued pursuant to our Amended and Restated ATM Equity
Offering Sales Agreement), or the perception that these sales could occur, may adversely affect prevailing market
prices for our common stock.
Future offerings of debt or equity securities ranking senior to our common stock or incurrence of debt (including
under our Bank Credit Facility) may adversely affect the market price of our common stock.
If we decide to issue debt or equity securities in the future ranking senior to our common stock or otherwise incur
indebtedness (including under our Bank Credit Facility), it is possible that these securities or indebtedness will be
governed by an indenture or other instrument containing covenants restricting our operating flexibility and limiting
our ability to make distributions to our stockholders. Additionally, any convertible or exchangeable securities that
we issue in the future may have rights, preferences and privileges, including with respect to distributions, more
favorable than those of our common stock and may result in dilution to owners of our common stock. Because our
decision to issue debt or equity securities in any future offering or otherwise incur indebtedness will depend on
market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature
of our future offerings or financings, any of which could reduce the market price of our common stock and dilute the
value of our common stock.
57
BR21871N-0321-10KW Our issuance of preferred stock could adversely affect holders of our common stock and discourage a takeover.
Our Board of Directors has the authority to issue up to 50.0 million shares of preferred stock without any action on
the part of our stockholders. Our Board of Directors also has the authority, without stockholder approval, to set the
terms of any new series of preferred stock that may be issued, including voting rights, dividend rights, liquidation
rights and other preferences superior to our common stock. In the event that we issue shares of preferred stock in
the future that have preferences superior to our common stock, the rights of the holders of our common stock or the
market price of our common stock could be adversely affected. In addition, the ability of our Board of Directors to
issue shares of preferred stock without any action on the part of our stockholders may impede a takeover of us and
discourage or prevent a transaction that may be favorable to our stockholders.
Our charter and bylaws and Maryland law could make it difficult for a third party to acquire our company.
The Maryland General Corporation Law and our charter and bylaws contain provisions that could delay, deter, or
prevent a change in control of our company or our management. These provisions could also discourage proxy
contests and make it more difficult for our stockholders to elect directors and take other corporate actions. These
provisions:
•
•
•
authorize us to issue "blank check" preferred stock, which is preferred stock that can be created and
issued by our Board of Directors, without stockholder approval, with rights senior to those of common
stock;
provide that directors may be removed with or without cause only by the affirmative vote of at least a
majority of the votes of shares entitled to vote thereon; and
establish advance notice requirements for submitting nominations for election to the Board of Directors
and for proposing matters that can be acted upon by stockholders at a meeting.
We are also subject to anti-takeover provisions under Maryland law, which could delay or prevent a change of
control. Together, these provisions of our charter and bylaws and Maryland law may discourage transactions that
otherwise could provide for the payment of a premium over prevailing market prices for our common stock, and also
could limit the price that investors are willing to pay in the future for shares of our common stock.
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
The properties we owned at December 31, 2020 are described under Item 1 and in Note 4 of the Notes to the
Consolidated Financial Statements contained in this Annual Report, as well as in Schedule III in Part IV of this
Annual Report.
ITEM 3.
LEGAL PROCEEDINGS.
The information required under this item can be found in Note 16 of the Notes to the Consolidated Financial
Statements contained in this Annual Report and is incorporated by reference in this Part I, Item 3.
ITEM 4. MINE SAFETY DISCLOSURES
None.
58
BR21871N-0321-10KW
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Price of and Distributions on Capital Stock
Our common stock is traded on the New York Stock Exchange, or NYSE, under the symbol "CXW." On February
16, 2021, the last reported sale price of our common stock was $7.62 per share and there were approximately 2,500
registered holders and approximately 33,000 beneficial holders, respectively, of our common stock.
Dividend Policy
During 2019 and 2020, CoreCivic's Board of Directors declared the following quarterly dividends on its common
stock:
Declaration Date
February 21, 2019
May 16, 2019
August 15, 2019
December 12, 2019
February 20, 2020
Record Date
April 1, 2019
July 1, 2019
October 1, 2019
January 6, 2020
April 1, 2020
Payable Date
April 15, 2019
July 16, 2019
October 15, 2019
January 15, 2020
April 15, 2020
Per Share
$
$
$
$
$
0.44
0.44
0.44
0.44
0.44
In order to qualify as a REIT for the years we elected REIT status, we were generally required to distribute to our
stockholders at least 90% of our REIT taxable income (determined without regard to the dividends paid deduction
and excluding net capital gains), and we were subject to tax to the extent our net taxable income (including net
capital gains) was not fully distributed. We announced on June 17, 2020 that our BOD suspended our quarterly
dividend while it evaluated corporate structure and capital allocation alternatives. On August 5, 2020, our BOD
voted unanimously to approve a plan to revoke our REIT election and become a taxable C Corporation, effective
January 1, 2021; our BOD also voted unanimously to discontinue the quarterly dividend and prioritize allocating our
free cash flow to reduce debt levels.
Issuer Purchases of Equity Securities
None.
ITEM 6.
[Reserved]
59
BR21871N-0321-10KW
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto
appearing elsewhere in this Annual Report on Form 10-K, or this Annual Report. In this Annual Report, we use the
term, the "Company," "CoreCivic," "we," "us," and "our" to refer to CoreCivic, Inc. and its subsidiaries unless
context indicates otherwise. This discussion contains forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements
as a result of certain factors, including, but not limited to, those described under Item 1A, "Risk Factors" and
included in other portions of this report.
OVERVIEW
We are a diversified government solutions company with the scale and experience needed to solve tough
government challenges in flexible, cost-effective ways. Through three segments, CoreCivic Safety, CoreCivic
Community, and CoreCivic Properties, we provide a broad range of solutions to government partners that serve the
public good through corrections and detention management, a network of residential reentry centers to help address
America's recidivism crisis, and government real estate solutions. We have been a flexible and dependable partner
for government for more than 35 years. Our employees are driven by a deep sense of service, high standards of
professionalism and a responsibility to help government better the public good.
As of December 31, 2020, through our CoreCivic Safety segment, we operated 47 correctional and detention
facilities, 42 of which we owned, with a total design capacity of approximately 70,000 beds. Through our CoreCivic
Community segment, we owned and operated 27 residential reentry centers with a total design capacity of
approximately 5,000 beds. In addition, through our CoreCivic Properties segment, we owned 15 properties for lease
to third parties and used by government agencies, totaling 2.7 million square feet. We are the nation's largest owner
of partnership correctional, detention, and residential reentry facilities and one of the largest prison operators in the
United States. We also believe we are the largest private owner of real estate used by U.S. government agencies.
Our size and experience provide us with significant credibility with our current and prospective customers, and
enable us to generate economies of scale in purchasing power for food services, health care and other supplies and
services we offer to our government partners.
See Item 1, "Business – Overview" for a description of how we were organized as a real estate investment trust, or
REIT, as of December 31, 2020, and our plans to revoke our REIT election and convert to a taxable C Corporation
effective January 1, 2021.
Our Business
Through our CoreCivic Safety and CoreCivic Community segments, we are compensated for providing bed capacity
and correctional, detention, and residential reentry services at a per diem rate based upon actual or minimum
guaranteed occupancy levels. Federal, state, and local governments are constantly under budgetary constraints
putting pressure on governments to control correctional budgets, including per diem rates our customers pay to us as
well as pressure on appropriations for building new prison capacity.
The solutions we provide to our federal customers continue to be a significant component of our business. We
believe our ability to provide flexible solutions and fulfill emergent needs of our federal customers would be very
difficult and costly to replicate in the public sector.
In February 2021, President Biden announced plans to allow certain migrants to pursue asylum in the United States
while awaiting their proceedings in immigration courts, reversing a policy of the prior administration, which
required these asylum seekers to wait in Mexico during the pendency of their immigration court proceedings.
60
BR21871N-0321-10KW On January 26, 2021, President Biden issued the Executive Order on Reforming Our Incarceration System to
Eliminate the Use of Privately Operated Criminal Detention Facilities, or the Private Prison EO. The Private Prison
EO directs the Attorney General to not renew United States Department of Justice, or DOJ, contracts with privately
operated criminal detention facilities. Two agencies of the DOJ, the Federal Bureau of Prisons, or the BOP, and the
United States Marshals Service, or the USMS, utilize our services. The BOP houses inmates who have been
convicted, and the USMS is generally responsible for detainees who are awaiting trial. The BOP has experienced a
steady decline in inmate populations over the last seven years, a trend that has been accelerated by the novel
coronavirus, or COVID-19, pandemic. We currently have one prison contract with the BOP, accounting for 2%
($39.2 million) of our total revenue for the year ended December 31, 2020, which was recently renewed through
November 2022.
Unlike the BOP, the USMS does not own detention capacity and relies on the private sector, along with county jails,
for its detainee population. We do not believe the USMS currently has sufficient capacity that satisfies their current
needs without the private sector, and we are not currently aware of an alternative solution for the USMS. We
currently have eight detention facilities that have separate contracts where the USMS is the primary customer that all
expire at various times over the next several years, with the exception of two contracts that have indefinite terms.
Non-renewal of these contracts would have a material adverse effect on our business, financial condition, and results
of operations. For the year ended December 31, 2020, USMS accounted for 21% ($396.3 million) of our total
revenue.
Additionally, at the beginning of 2020, we expected a reduction in Immigration and Customs Enforcement, or ICE,
populations throughout 2020 compared with 2019 because of a dramatic rise in such populations during 2019, when
southern border apprehensions reached the highest levels in over a decade, as we did not believe these high levels
would be sustained. However, the decision near the end of the first quarter of 2020, which continued throughout the
duration of 2020, by the federal government to deny entry at the United States southern border to asylum-seekers
and anyone crossing the southern border without proper documentation or authority in an effort to contain the spread
of COVID-19, amplified the reduction in people being apprehended and detained by ICE during 2020. A protracted
denial in United States southern border entries of asylum-seekers and undocumented immigrants, or continued
disruptions in the criminal justice system could have a material effect on our financial position, results of operations
and cash flows.
Prior to the COVID-19 pandemic, several of our state partners had been experiencing improvements in their
budgets, which helped us secure recent per diem increases at certain facilities. Further, several of our existing state
partners, as well as prospective state partners, have been experiencing growth in offender populations and
overcrowded conditions, are considering alternative correctional capacity for their aged and inefficient
infrastructure, or are seeking cost savings by utilizing the private sector. Since the beginning of 2018, we have
completed the intake of new inmate populations as a result of new contracts with Kansas, Kentucky, Mississippi,
Ohio, Nevada, South Carolina, and Vermont, and during the third quarter of 2020, we entered into a new contract
with Idaho.
The COVID-19 pandemic has had, and we currently expect that the COVID-19 pandemic will continue to have, a
negative impact on many of our state partners' budgets, though we cannot predict the ultimate impact COVID-19
will have on our revenue and per diem rates from our state partners.
We have implemented enhanced hygiene practices, suspended visitation in consultation with our government
partners, separated vulnerable inmate populations for their additional protection, followed guidelines provided by
the United States Centers for Disease Control and Prevention, or CDC, for Correctional and Detention Facilities, and
have taken many other actions intended to limit the spread of COVID-19 among our staff and residents within our
correctional, detention, and reentry facilities. However, we cannot predict government responses to an increase in
staff or residents testing positive for COVID-19 within public and private correctional, detention and reentry
facilities, nor can we predict COVID-19 related restrictions on individuals, businesses, and services that disrupt the
criminal justice system. Certain government agencies have released, may be considering releasing, or may be
experiencing pressure to release, certain inmates and detainees as a result of COVID-19, including those inmates
and detainees considered vulnerable to serious illness or death in the event of COVID-19 infection, those with
sentences ending in the next year, or those being held on a minor supervision violation. Further, we cannot predict
government policies on prosecutions and newly ordered legal restrictions as a result of COVID-19 that affect the
61
BR21871N-0321-10KW number of people placed in correctional, detention, and reentry facilities. We currently expect the federal
government’s policy of denying entry at the United States southern border to asylum-seekers and anyone crossing
the southern border without proper documentation or authority, as well as the disruptions to the criminal justice
system, to persist at least until a widely accepted treatment and/or vaccine for COVID-19 is widely disseminated,
which could result in a further reduction in the number of offenders placed in our facilities. Such actions could,
either alone or in combination, have a material effect on our financial position, results of operations and cash flows.
COVID-19 notwithstanding, we believe the long-term growth opportunities of our business remain attractive as
government agencies consider their emergent needs (including capacity to help mitigate the spread of infectious
disease), as well as the efficiency and offender programming opportunities we provide, as flexible solutions to
satisfy our partners' needs. Further, we expect our partners, and prospective partners, to continue to face challenges
in maintaining old facilities, developing new facilities, and expanding current facilities for additional capacity,
which could result in increased future demand for the solutions we provide.
Governments continue to experience many significant spending demands which have constrained correctional
budgets limiting their ability to expand existing facilities or construct new facilities. We believe the outsourcing of
corrections and detention management services to private operators allows governments to manage increasing
inmate populations while simultaneously controlling costs. We believe our customers discover that partnering with
private operators to provide residential services to their offenders introduces competition to their correctional
system, resulting in improvements to the quality and cost of services throughout their correctional system. Further,
the use of facilities owned and managed by private operators allows governments to expand correctional capacity
without incurring large capital commitments and allows them to avoid long-term pension obligations for their
employees.
We also believe that having beds immediately available to our partners provides us with a distinct competitive
advantage when bidding on new contracts. We believe the most significant opportunities for growth are in
providing our government partners with available beds within facilities we currently own or that we will develop.
Over the long-term, we would like to see meaningful utilization of our available capacity and better visibility from
our customers into their potential future needs before we develop new correctional or detention capacity on a
speculative basis. We will, however, respond to customer demand and may develop or expand correctional and
detention facilities when we believe potential long-term returns justify the capital deployment, like the 2019
expansion of our Otay Mesa Detention Center in San Diego, California. We expanded the Otay Mesa facility by
512 beds as a result of long-standing demand from the USMS and ICE and limited detention capacity in the
Southwest region of the United States. Both the USMS and ICE currently utilize the Otay Mesa Detention Center
under an existing contract that enables both agencies to utilize the additional capacity. We also believe that owning
the facilities in which we provide management services enables us to more rapidly replace business lost compared
with managed-only facilities, since we can offer the same beds to new and existing customers and, with customer
consent, may have more flexibility in moving our existing populations to facilities with available capacity. Our
management contracts generally provide our customers with the right to terminate our management contracts at any
time without cause.
We are actively engaged in marketing our available capacity as solutions to meet the needs of potential customers.
Historically, we have been successful in substantially filling our inventory of available beds and the beds that we
have constructed. For example, in the second quarter of 2019, we announced that we entered into new contracts
under inter-governmental service agreements, or IGSAs, with ICE at our previously idled 910-bed Torrance County
Detention Facility in New Mexico and with the USMS at our previously idled 1,422-bed Eden Detention Center in
Texas. More recently, in the third quarter of 2020, we entered into a new contract under an IGSA between the city
of Cushing, Oklahoma and the USMS, to utilize our 1,600-bed Cimarron Correctional Facility in Oklahoma. We
had previously announced our intention to idle the Cimarron facility during the third quarter of 2020, predominantly
due to a lower number of inmate populations from the state of Oklahoma resulting from COVID-19, combined with
the consequential impact of COVID-19 on the State's budget. The new management contract commenced on
September 15, 2020. Filling these available beds could provide substantial growth in revenues, cash flow, and
earnings per share. However, we can provide no assurance that we will be able to fill our available beds.
62
BR21871N-0321-10KW We also offer our customers an attractive portfolio of correctional, detention, and reentry facilities that can be leased
for various needs as an alternative to providing "turn-key" correctional, detention, and residential reentry bed space
and services to our government partners. In December 2019, we entered into a lease with the Kentucky Department
of Corrections, or KYDOC, for our previously idled 656-bed Southeast Correctional Complex in Wheelwright,
Kentucky. The lease commenced in mid-2020 and has an initial term of ten years and includes five two-year renewal
options. The lease of this facility, along with the lease of our 2,400-bed North Fork Correctional Facility to the
Oklahoma Department of Corrections, or ODOC, originating in 2016 and the lease of our 2,560-bed California City
Correctional Center to the California Department of Corrections and Rehabilitation originating in 2013, exemplify our
ability to react quickly to our partners' needs with innovative and flexible solutions that make the best use of
taxpayer dollars. We previously operated these three correctional facilities for various state and federal partners. We
intend to pursue additional opportunities to lease prison facilities to government and other third-party operators in
need of correctional capacity.
On January 24, 2018, we entered into a 20-year lease agreement with the Kansas Department of Corrections, or
KDOC, for a 2,432-bed correctional facility to be constructed in Lansing, Kansas. We commenced construction of
the facility in the first quarter of 2018. In December 2019, the Lansing facility began accepting offenders into the
512-bed minimum security complex ahead of schedule, with the remaining 1,920-bed medium/maximum security
complex completed in January 2020. The new facility replaces the Lansing Correctional Facility, Kansas' largest
correctional complex for adult male inmates, originally constructed in 1863. This transaction represents the first
development of a privately owned, build-to-suit correctional facility to be operated by a government agency through
a long-term lease agreement. We are responsible for facility maintenance throughout the 20-year term of the lease,
at which time ownership will revert to the state of Kansas.
In February 2021, we entered into two 30-year lease agreements with the Alabama Department of Corrections, or
ADOC, for the development of two correctional facilities in Alabama. Final lease costs for both properties will
become available when project financing is completed. Construction of both facilities, which will contain an
aggregate of approximately 7,000 beds, is expected to commence later in 2021 or the beginning of 2022. The two
facilities are expected to be ready for occupancy once construction is completed in approximately three years. Both
facilities will be leased, operated, and staffed by the ADOC. We will retain ownership and be responsible for
facility maintenance throughout the term of the leases. With the extensively aged criminal justice infrastructure in
the U.S. today, and contract awards from the KDOC and the ADOC demonstrating our ability to bring important
flexible solutions to government agencies, we believe we can bring solutions like these to other government
agencies.
We also remain steadfast in our efforts to contain costs. Approximately 61% of our operating expenses consist of
salaries and benefits. The turnover rate for correctional officers for our company, and for the corrections industry in
general, remains high. We are making investments in systems and processes intended to help manage our workforce
more efficiently and effectively, especially with respect to overtime and costs of turnover. We are also focused on
workers' compensation and medical benefits costs for our employees due to continued rising healthcare costs
throughout the country. Effectively managing these staffing costs requires a long-term strategy to control such
costs, and we continue to dedicate resources to enhance our benefits, provide specialized training and career
development opportunities to our staff in order to attract and retain quality personnel. Finally, we are evaluating cost
savings opportunities in areas such as inmate medical, utilities, and maintenance, among others. Through ongoing
company-wide initiatives, we continue to focus on efforts to manage costs and improve operating efficiencies.
Through the combination of our initiatives to (i) increase our revenues by increasing the utilization of our available
beds, (ii) deliver new bed capacity through new facility construction and expansion opportunities, (iii) invest in real
estate-only solutions, (iv) grow the utilization of our community corrections facilities, (v) acquire other businesses
that expand the range of solutions we provide to government partners and diversify our cash flows, and (vi) contain
our operating expenses, we believe we will be able to maintain our competitive advantage and continue to diversify
the range of services we provide to our customers at an attractive price, thereby producing value for our
stockholders.
63
BR21871N-0321-10KW CRITICAL ACCOUNTING POLICIES
The consolidated financial statements in this report are prepared in conformity with U.S. generally accepted
accounting principles, or GAAP. As such, we are required to make certain estimates, judgments, and assumptions
that we believe are reasonable based upon the information available. These estimates and assumptions affect the
reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenue and expenses during the reporting period. A summary of our significant accounting policies is
described in Note 2 of the Notes to the Consolidated Financial Statements contained in this Annual Report. The
significant accounting policies and estimates which we believe are the most critical to aid in fully understanding and
evaluating our reported financial results include the following:
Asset impairments. The primary risk we face for asset impairment charges, excluding goodwill, is associated with
facilities we own. As of December 31, 2020, we had $2.6 billion in property and equipment, including $132.7
million in long-lived assets, excluding equipment, at five idled CoreCivic Safety correctional facilities. The
carrying values of the five idled facilities as of December 31, 2020 were as follows (in thousands):
Prairie Correctional Facility
Huerfano County Correctional Center
Diamondback Correctional Facility
Marion Adjustment Center
Kit Carson Correctional Center
$
14,646
15,895
38,346
11,047
52,757
$ 132,691
As of December 31, 2020, we also had one idled non-core facility in our Safety segment containing 240 beds with a
total net book value of $3.1 million; three facilities in our Community segment, all of which became idle during
2020, containing an aggregate of 650 beds with an aggregate net book value of $9.2 million; and two previously
leased properties in our Properties segment containing 55,000 square feet with an aggregate net book value of $9.5
million. We incurred operating expenses at these idled facilities of approximately $7.6 million, $7.1 million, and
$7.7 million during the period they were idle for the years ended December 31, 2020, 2019, and 2018, respectively.
Two of the three idled facilities in our Community segment are located in Oklahoma. As a result of the lower
resident populations from the state of Oklahoma and the impact of COVID-19, we also transferred the remaining
resident populations at our 390-bed Tulsa Transitional Center to Oklahoma's system, idling the Tulsa facility during
the third quarter of 2020. Closure of the Tulsa facility followed the closure of the 200-bed Oklahoma City
Transitional Center during the second quarter of 2020, and the 289-bed Turley Residential Center in Oklahoma in
2019. During the fourth quarter of 2020, the BOP awarded a new contract to us for residential reentry and home
confinement services pursuant to a solicitation for capacity and services to be provided in the state of Oklahoma. As
a result, we reactivated the Turley Residential Center during the first quarter of 2021, and provide the BOP
additional reentry services at our owned and operated Oklahoma Reentry Opportunity Center (formerly known as
the Carver Transitional Center), which supplements the existing utilization by the state of Oklahoma.
During the third quarter of 2020, Adams County, Colorado, notified us that, pursuant to a re-bid of the managed-
only contract at the 184-bed Henderson Transitional Center, a facility in the Community segment we leased from
Adams County, it awarded the contract to another operator. We transitioned operations to the other operator upon
expiration of the contract in January 2021.
On April 15, 2020, we sold an idled facility in our Community segment, containing 92 beds, for a gross sales price
of $1.6 million. In anticipation of the sale, we reported an impairment charge of $0.5 million in the first quarter of
2020 based on the realizable value resulting from the sale. On May 26, 2020, we sold an idled non-core facility in
our Safety segment, containing 200 beds with a net book value of $0.5 million at the time of the sale, for net
proceeds of $3.3 million. The gain on the sale of $2.8 million was recognized in the second quarter of 2020.
On September 15, 2020, we announced that we entered into a new contract under an IGSA between the city of
Cushing, Oklahoma and the USMS to utilize our 1,600-bed Cimarron Correctional Facility in our CoreCivic Safety
segment. We had previously announced our intention to idle the Cimarron facility during the third quarter of 2020,
predominantly due to a lower number of inmate populations from the state of Oklahoma resulting from COVID-19,
64
BR21871N-0321-10KW
combined with the consequential impact of COVID-19 on the State's budget. The new management contract
commenced on September 15, 2020, and has an initial term of three years, with unlimited 24-month extension
options thereafter upon mutual agreement. As of December 31, 2020, the net book value of the Cimarron facility
was $72.7 million.
We evaluate the recoverability of the carrying values of our long-lived assets, other than goodwill, when events
suggest that an impairment may have occurred. Such events primarily include, but are not limited to, the
termination of a management contract, a significant decrease in populations within a facility we own in our Safety
and Community segments that we believe will be longer than short-term, and the expiration and non-renewal of
lease agreements in our Properties segment.
We perform the impairment analyses for each of the idle facilities as well as any other properties with indicators of
impairment. Our estimates of recoverability are initially based on projected undiscounted cash flows that are
comparable to historical cash flows from management contracts or lease agreements at facilities similar to the idled
facilities, including historical operations for the idled facilities when such facilities were operating. Our impairment
evaluations also take into consideration our historical experience in securing new management contracts to utilize
correctional facilities that had been previously idled for substantial periods of time. Such previously idled
correctional facilities are currently being operated under contracts that continue to generate cash flows resulting in
the recoverability of the net book value of the previously idled facilities by material amounts. We also perform
sensitivity analyses that consider reductions to such cash flows. Our sensitivity analyses include reductions in
projected cash flows by as much as half of the historical cash flows generated by the respective facility as well as
prolonged periods of vacancies. As a result of our analyses, we reported an impairment charge of $9.8 million on
one of the residential reentry facilities in the Community segment in Oklahoma, based on its anticipated use as a
commercial real estate property rather than a reentry facility. The fair value measurement for these assets was
estimated using unobservable Level 3 inputs, as defined in Accounting Standards Codification, or ASC, 820, "Fair
Value Measurement," using market comparable data for similar properties in the local markets.
We also evaluate on a quarterly basis market developments for the potential utilization of each of these facilities in
order to identify events that may cause us to reconsider our most recent assumptions. Such events could include
negotiations with a prospective customer for the utilization of an idle facility at terms significantly less favorable
than those used in our most recent impairment analysis, or changes in legislation surrounding a particular facility
that could impact our ability to care for certain types of populations at such facility, or a demolition or substantial
renovation of a facility. Further, a substantial increase in the number of available beds at other facilities we own
could lead to a deterioration in market conditions and cash flows that we might be able to obtain under a new
contract at our idle facilities. Although they are not frequently received, an unsolicited offer to purchase any of our
idle facilities at amounts that are less than the carrying value could also cause us to reconsider the assumptions used
in our most recent impairment analysis.
We can provide no assurance that we will be able to secure agreements to utilize our idle properties, or that we will
not incur impairment charges in the future. By their nature, these estimates contain uncertainties with respect to the
extent and timing of the respective cash flows due to potential delays or material changes to historical terms and
conditions in contracts with prospective customers that could impact the estimate of cash flows. With respect to idle
correctional facilities, we believe the long-term trends favor an increase in the utilization of our correctional
facilities and management services. This belief is based on our experience in working with governmental agencies
faced with significant budgetary challenges, which is a primary contributing factor to the lack of appropriated
funding over the past decade to build new bed capacity by the federal and state governments with which we partner.
Due to a variety of factors, the lead time to negotiate contracts with our federal and state partners to utilize idle bed
capacity at correctional facilities is generally lengthy.
65
BR21871N-0321-10KW Goodwill impairments. As of December 31, 2020 and 2019, we had $5.9 million and $50.5 million, respectively, of
goodwill, established in connection with multiple business combination transactions. Under the provisions of
Accounting Standards Update, or ASU, 2017-04, "Intangibles–Goodwill and Other (Topic 350): Simplifying the
Test of Goodwill Impairment," we perform a qualitative assessment to determine whether the existence of events or
circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than
its carrying amount. If, after assessing the totality of events or circumstances, we determine it is more likely than
not that the fair value of a reporting unit is less than its carrying amount, then we perform a quantitative impairment
test. If a quantitative test is required, we perform an assessment to identify the existence of impairment and to
measure the excess of a reporting unit's carrying amount over its fair value by using a combination of various
common valuation techniques, including market multiples and discounted cash flows under valuation methodologies
that include an income approach and a market approach. Goodwill impairment tests are required to be performed at
least annually. We perform our impairment tests during the fourth quarter, in connection with our budgeting
process, and whenever circumstances indicate the carrying value of goodwill may not be recoverable. By their
nature, valuation techniques are subject to considerable judgment and require estimates of future cash flows as well
as other factors, which are often difficult to predict. Estimated fair values could change if there are changes in
assumptions related to our capital structure and cost of debt and equity and operating cash flows, as well as
considerations related to our equity valuation.
In connection with our annual impairment test for the goodwill associated with the Community reporting unit,
during the fourth quarter of 2020, we performed a quantitative goodwill impairment test and concluded to record an
impairment charge of $42.6 million, representing the full value of goodwill allocated to this reporting unit. Our
analysis considered numerous factors, with the impairment predominantly driven by our consideration of the broad-
based declines in the market capitalization of publicly-traded companies in our industry, primarily during the second
half of 2020, as well as the reduction in cash flows from the COVID-19 pandemic and the anticipated change in tax
structure effective January 1, 2021. We believe the cash flows in this segment will improve once effects of the
pandemic subside, and intend to continue to pursue investments in this segment, which focuses on helping those
entrusted to our care successfully transition to local communities and become productive citizens. This segment
serves a critical need to parolees, defendants, and offenders who are serving their full sentence, the last portion of
their sentence, waiting to be sentenced, awaiting trial while supervised in a community environment, or as an
alternative to incarceration. We could generate additional goodwill from business combinations transacted in this
segment in the future, which could result in additional charges if the goodwill becomes impaired under the
requirements of ASU 2017-04.
We also performed qualitative assessments of goodwill recorded in our Safety reporting units in the fourth quarter of
2020, concluding there was no impairment for such goodwill. We recorded certain interim event-driven impairment
charges in 2020. During the third quarter of 2020, we provided notice to the local county customers at two
managed-only facilities in our CoreCivic Safety segment of our intent to terminate the contracts. We transitioned
operations of the 1,046-bed Silverdale Detention Center in December of 2020 and transitioned operations at the
1,348-bed Metro-Davidson County Detention Facility in October 2020. As a result of these expected contract
terminations, during the second quarter of 2020, we recognized goodwill impairment charges of $2.0 million
associated with these two managed-only facilities' reporting units.
Self-funded insurance reserves. As of December 31, 2020 and 2019, we had $46.3 million and $41.9 million,
respectively, in accrued liabilities for employee health, workers' compensation, and automobile insurance claims.
We are significantly self-insured for employee health, workers' compensation, and automobile liability insurance
claims. As such, our insurance expense is largely dependent on claims experience and our ability to control our
claims. We have consistently accrued the estimated liability for employee health insurance claims based on our
history of claims experience and the estimated time lag between the incident date and the date we pay the claims.
We have accrued the estimated liability for workers' compensation claims based on an actuarial valuation of the
outstanding liabilities, discounted to the net present value of the outstanding liabilities, using a combination of
actuarial methods used to project ultimate losses, and our automobile insurance claims based on estimated
development factors on claims incurred. The liability for employee health, workers' compensation, and automobile
insurance includes estimates for both claims incurred and for claims incurred but not reported. These estimates
could change in the future. It is possible that future cash flows and results of operations could be materially affected
by changes in our assumptions, new developments, or by the effectiveness of our strategies.
66
BR21871N-0321-10KW Legal reserves. As of December 31, 2020 and 2019, we had $5.9 million and $14.1 million, respectively, in accrued
liabilities under the provisions of ASC Subtopic 450-20, "Loss Contingencies," related to certain claims and legal
proceedings in which we are involved. We have accrued our best estimate of the probable costs for the resolution of
these claims, if estimable. In addition, we are subject to current and potential future claims and legal proceedings
for which little or no accrual has been reflected because our current assessment of the potential exposure is nominal.
These estimates have been developed in consultation with our General Counsel's office and, as appropriate, outside
counsel handling these matters, and are based upon an analysis of potential results, assuming a combination of
litigation and settlement strategies. It is possible that future cash flows and results of operations could be materially
affected by changes in our assumptions, new developments, or by the effectiveness of our litigation and settlement
strategies.
RESULTS OF OPERATIONS
Our results of operations are impacted by the number of correctional and detention facilities we operated, including
42 we owned and five owned by our government partners (CoreCivic Safety), the number of residential reentry
centers we owned and operated (CoreCivic Community), the number of facilities we leased to other operators
(CoreCivic Properties), and the facilities we owned that were not in operation. The following table sets forth the
changes in the number of facilities operated for the years ended December 31, 2020 and 2019.
Facilities as of December 31, 2018
Acquisition of the South Raleigh Reentry
Center in North Carolina
Acquisition of a leased property in
Michigan
Sale of a leased property in Pennsylvania
Acquisition of certain assets of
Rehabilitation Services, Inc.
Lease of the Southeast Correctional
Complex
Facilities as of December 31, 2019
Acquisition of a portfolio of government-
leased properties
Commencement of the Lansing
Correctional Facility lease
Termination of contract and lease of a
Colorado reentry center
Sale of an idled residential reentry center
in Arizona
Sale of an idled non-core facility in
Tennessee
Expiration of a managed-only contract in
Tennessee
Expiration of a managed-only contract in
Tennessee
Sale of a portfolio of government-
leased properties
Facilities as of December 31, 2020
Effective
Date
February 2019
May 2019
June 2019
December 2019
December 2019
January 2020
January 2020
January 2020
April 2020
May 2020
October 2020
December 2020
December 2020
CoreCivic
Safety
Community Properties Total
51
26
27
104
—
—
—
—
(1 )
50
—
—
—
—
(1 )
(1 )
(1 )
—
47
1
—
—
—
1
(1 )
2
—
1
1
(1 )
2
—
29
1
28
—
107
—
28
28
—
1
(1 )
—
(1 )
—
—
—
—
—
—
—
1
(1 )
(1 )
(1 )
(1 )
(1 )
—
27
(42 )
15
(42 )
89
67
BR21871N-0321-10KW
Year Ended December 31, 2020 Compared to the Year Ended December 31, 2019
During the year ended December 31, 2020, net income attributable to common stockholders was $54.2 million, or
$0.45 per diluted share, compared with net income attributable to common stockholders of $188.9 million, or $1.59
per diluted share, for the previous year. Financial results in 2020 included $13.8 million of incremental expenses
directly associated with COVID-19 (reflected in operating expenses), and $5.2 million of expenses associated with
changes in our corporate tax structure (reflected in general and administrative expenses). In addition, financial
results in 2020 reflected several special items, including $60.6 million of asset impairments, a net loss of $13.0
million on sale of real estate assets, $7.1 million of expenses associated with debt repayments, and a charge of $0.6
million for contingent consideration associated with an acquisition of a business, each as more fully discussed
herein. Financial results in 2020 also reflected non-recurring deferred tax expense of $3.1 million reported during
the first quarter of 2020. Financial results in 2019 were impacted by several non-routine transactions, including a
$4.1 million gain, net of taxes, for the settlement of a contractual dispute with respect to revenues that would have
been recognized during the previous several years, $4.7 million of asset impairments, and $0.6 million of expenses
associated with debt refinancing transactions. Financial results in 2019 also included $9.5 million of start-up
expenses associated with the activation of two previously idled facilities, as further described hereafter.
Our Current Operations
Our ongoing operations are organized into three principal business segments:
• CoreCivic Safety segment, consisting of the 47 correctional and detention facilities that are owned, or
controlled via a long-term lease, and managed by CoreCivic, as well as those correctional and detention
facilities owned by third parties but managed by CoreCivic. CoreCivic Safety also includes the operating
results of our subsidiary that provides transportation services to governmental agencies, TransCor
America, LLC, or TransCor.
• CoreCivic Community segment, consisting of the 27 residential reentry centers that are owned, or
controlled via a long-term lease, and managed by CoreCivic. CoreCivic Community also includes the
operating results of our electronic monitoring and case management service.
• CoreCivic Properties segment, consisting of the 15 real estate properties owned by CoreCivic for lease to
third parties and used by government agencies.
For the years ended December 31, 2020 and 2019, our total segment net operating income, which we define as
facility revenue (including interest income associated with finance leases) less operating expenses, was divided
among our three business segments as follows:
Segment:
Safety
Community
Properties
For the Years Ended December 31,
2019
2020
82.2 %
3.4 %
14.4 %
85.2 %
5.0 %
9.8 %
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BR21871N-0321-10KW
Facility Operations
A key performance indicator we use to measure the revenue and expenses associated with the operation of the
correctional, detention, and residential reentry facilities we own or manage is expressed in terms of a compensated
man-day, which represents the revenue we generate and expenses we incur for one offender for one calendar day.
Revenue and expenses per compensated man-day are computed by dividing facility revenue and expenses by the
total number of compensated man-days during the period. A compensated man-day represents a calendar day for
which we are paid for the occupancy of an offender. We believe the measurement is useful because we are
compensated for operating and managing facilities at an offender per diem rate based upon actual or minimum
guaranteed occupancy levels. We also measure our costs on a per compensated man-day basis, which is largely
dependent upon the number of offenders we accommodate. Further, per compensated man-day measurements are
also used to estimate our potential profitability based on certain occupancy levels relative to design capacity.
Revenue and expenses per compensated man-day for all of the correctional, detention, and residential reentry
facilities placed into service that we owned or managed, exclusive of those held for lease, and for TransCor were as
follows for the years ended December 31, 2020 and 2019:
Revenue per compensated man-day
Operating expenses per compensated man-day:
Fixed expense
Variable expense
Total
Operating income per compensated man-day
Operating margin
Average compensated occupancy
Average available beds
Average compensated population
For the Years Ended
December 31,
2020
2019
$
84.71
$
79.72
$
47.20
16.86
64.06
$
20.65
24.4 %
74.1 %
42.20
16.11
58.31
21.41
26.9 %
81.9 %
77,462
57,392
78,236
64,107
Revenue
Total revenue consists of management revenue we generate through CoreCivic Safety and CoreCivic Community in
the operation of correctional, detention, and residential reentry facilities, as well as the revenue we generate from
TransCor and our electronic monitoring and case management services. Total revenue also consists of lease revenue
we generate through CoreCivic Properties from facilities we lease to third-party operators. The following table
reflects the components of revenue for the years ended December 31, 2020 and 2019 (in millions):
For the Years Ended
December 31,
2020
2019
$ Change
% Change
Management revenue:
Federal
State
Local
Other
Total management revenue
Lease revenue
Other revenue
Total revenue
$
999.2 $ 1,013.8 $
673.4
636.3
102.9
81.7
113.1
95.0
1,812.2 1,903.2
77.3
0.2
$ 1,905.5 $ 1,980.7 $
93.1
0.2
(14.6 )
(37.1 )
(21.2 )
(18.1 )
(91.0 )
15.8
—
(75.2 )
(1.4 %)
(5.5 %)
(20.6 %)
(16.0 %)
(4.8 %)
20.4 %
—
(3.8 %)
69
BR21871N-0321-10KW
The $91.0 million, or 4.8%, decrease in total management revenue was primarily a result of a decrease in revenue of
approximately $190.8 million caused primarily by a decrease in the average daily compensated population from
2019 to 2020, net of the revenue generated by one additional day of operations due to a leap year in 2020. In
addition, revenue generated from our electronic monitoring and case management services decreased $5.0 million in
2020 when compared to 2019, primarily as a result of fewer court hearings and referrals due to COVID-19. The
decrease in total management revenue was partially offset by an increase in revenue of approximately $104.8
million driven primarily by an increase of 6.3% in average revenue per compensated man-day. The increase in
average revenue per compensated man-day was primarily the result of the effect of per diem increases at several of
our facilities as well as a higher mix of federal populations at higher per diem rates.
Average daily compensated population decreased 6,715, or 10.5%, to 57,392 in 2020 compared to 64,107 in 2019.
Average daily compensated population decreased primarily as a result of COVID-19, as further described hereafter,
and the expiration of the contract with the BOP at our Adams County Correctional Center in the third quarter of
2019, which had an average daily compensated population of 1,997 inmates during the first three quarters of 2019
compared with 1,101 detainees during the first three quarters of 2020 under a new contract with ICE, as further
described hereafter. Further, the completion of the transfer of California inmates held in our out-of-state facilities
back to the state of California during the second quarter of 2019, also contributed to the decline in average daily
compensated population during 2020. The decrease in average daily compensated population was also a result of a
reduction in ICE populations, as previously described herein, net of additional populations resulting from the new
IGSAs with ICE at the Adams County Correctional Center, which promptly transitioned from the BOP contract to
the new IGSA with ICE during the third quarter of 2019, and at our previously idled Torrance facility during the
second quarter of 2019. The decrease in average daily compensated population was partially offset by population
increases from the USMS, including at our previously idled Eden facility due to a new contract executed in the
second quarter of 2019, and from the state of Mississippi due to a new contract executed in the first quarter of 2020.
Average daily compensated populations also decreased at our 1,600-bed Cimarron Correctional Facility due to an
agreement with the state of Oklahoma to idle the facility as a result of lower inmate populations in the State,
combined with the impact of COVID-19 on the State's budget. The Oklahoma populations were removed from this
facility during the third quarter of 2020. However, on September 15, 2020, we announced that we entered into a
new contract under an IGSA between the city of Cushing, Oklahoma and the USMS to utilize the facility. As of
December 31, 2020, the USMS occupied approximately 1,000 beds at the Cimarron facility.
The solutions we provide to our federal customers, including primarily ICE, the USMS, and the BOP, continue to be
a significant component of our business. The federal customers in our Safety and Community segments generated
approximately 52% and 51% of our total revenue in 2020 and 2019, respectively, decreasing $14.6 million, or 1.4%.
As previously described herein, the reduction in federal revenue in 2020 was primarily a result of a reduction in ICE
populations throughout 2020 compared with 2019 due to a dramatic rise in such populations during 2019, when
southern border apprehensions reached the highest levels in over a decade. The reduction of people being
apprehended and detained by ICE during 2020 was amplified by the decision near the end of the first quarter of
2020 by the federal government to deny entry at the United States southern border to asylum-seekers and anyone
crossing the southern border without proper documentation or authority in an effort to contain the spread of COVID-
19.
State revenues from contracts at correctional, detention, and residential reentry facilities that we operate decreased
$37.1 million, or 5.5%, from 2019 to 2020. In addition to the effect of an overall decline in state inmate populations
resulting from COVID-19 during 2020, as previously described herein, the decrease in state revenues was also a
result of the completion of the transfer back to the state of California of all of the California inmates held in our out-
of-state facilities during the second quarter of 2019. This decline in population from California inmates resulted in a
decrease in revenue of $13.3 million from 2019 to 2020. The decrease in state revenues was partially offset by the
revenue generated by new contracts with the state of Mississippi at our Tallahatchie County Correctional Facility,
and the states of Kansas and Idaho at our Saguaro Correctional Facility in Arizona, each as further described
hereafter, as well as per diem increases under numerous other state contracts. State revenues in 2020 also benefited
from one additional day of operations due to a leap year in 2020.
During the third quarter of 2020, largely due to a lower number of inmate populations in the state of Oklahoma
resulting from COVID-19, combined with the consequential impact of COVID-19 on the State's budget, we agreed
70
BR21871N-0321-10KW with the State to idle our 1,600-bed Cimarron Correctional Facility during the third quarter of 2020. We also
transferred the remaining resident populations at our 390-bed Tulsa Transitional Center to Oklahoma's system,
idling the Tulsa facility during the third quarter of 2020. As previously described herein, we did not idle the
Cimarron facility because we subsequently entered into a new contract under an IGSA between the city of Cushing,
Oklahoma and the USMS to quickly repurpose the facility to serve a federal need. From the end of the first quarter
of 2020 to December 31, 2020, excluding the closure of our Cimarron facility to Oklahoma inmate populations, our
state populations declined by approximately 4,700 inmates, or 14.5%, predominantly due to government actions to
help prevent the spread of COVID-19.
The $18.1 million, or 16.0%, decrease in other management revenue from 2019 to 2020 included the gain for the
settlement of a contractual dispute recognized in the third quarter of 2019, as previously discussed herein. The
decrease in other management revenue was also a result of the reduction in revenue generated from our electronic
monitoring and case management services, also as previously discussed herein.
The $15.8 million, or 20.4%, increase in lease revenue from 2019 to 2020 was primarily a result of acquisitions in
2019 and 2020 of multiple properties leased to third parties and the commencement of the leases of the 656-bed
Southeast Correctional Complex in Wheelwright, Kentucky, and the 2,432-bed correctional facility we constructed
in Lansing, Kansas, all as further described hereafter.
Operating Expenses
Operating expenses totaled $1,406.4 million and $1,422.8 million in 2020 and 2019, respectively. Operating
expenses consist of those expenses incurred in the operation and management of correctional, detention, and
residential reentry facilities, as well as those expenses incurred in the operations of TransCor and our electronic
monitoring and case management services. Operating expenses also consist of those expenses incurred in the
operation of facilities we lease to third-party operators.
Expenses incurred by CoreCivic Safety and CoreCivic Community in connection with the operation and
management of our correctional, detention, and residential reentry facilities, as well as those incurred in the
operations of TransCor and our electronic monitoring and case management services, decreased $21.4 million, or
1.5%, during 2020 compared with 2019. Similar to our management revenue, there were several factors that
contributed to the decrease in operating expenses incurred in these segments. Operating expenses decreased
primarily as a result of lower staffing and service levels that were consistent with the lower occupancy levels during
the COVID-19 pandemic. In addition, consistent with the reduction in revenue from our electronic monitoring and
case management services, operating expenses from these services also decreased due to fewer court hearings and
referrals due to COVID-19. The decrease in operating expenses during 2020 when compared to 2019 was partially
offset by expenses associated with COVID-19, by the aforementioned activations of our previously idled Torrance
and Eden facilities in the second quarter of 2019, and as a result of the additional day of operations due to a leap
year in 2020.
Total expenses per compensated man-day increased to $64.06 during 2020 from $58.31 during 2019. Fixed
expenses per compensated man-day increased to $47.20 during 2020 from $42.20 during 2019. Recent increases in
the unemployment rate caused by COVID-19 notwithstanding, as the economy improved and the nation's
unemployment rate declined, we experienced wage pressures in certain markets across the country, and provided
wage increases to remain competitive. Further, the COVID-19 pandemic presents unique employment
circumstances, as the unemployment rate has recently increased dramatically as many businesses curtailed or even
ceased operations. While a higher unemployment rate in the longer-term could provide a more robust talent
acquisition pipeline than we have recently experienced, we have incurred, and expect to continue to incur,
incremental expenses in the short-term to help ensure sufficient staffing levels under unique and challenging
working conditions. Further, recruiting has been particularly challenging during the pandemic due to the front-line
nature of the services we provide. Incremental expenses include, but may not be limited to, incentive payments to
our line and field staff, additional paid time off, as well as expenses to procure personal protective equipment and
other supplies. During April 2020, we announced that we would provide incentive payments to our line and field
staff, known as "hero bonuses", through the end of the second quarter of 2020. During 2020, we incurred $13.8
million of incremental expenses associated with COVID-19, including $6.3 million of hero bonuses paid in the
second quarter of 2020. These incremental expenses contributed to the increase in fixed expenses per compensated
71
BR21871N-0321-10KW man-day during 2020 compared to 2019. We also provided wage increases to most of our facility staff during the
third quarter of 2020. We continually monitor compensation levels very closely along with overall economic
conditions and will set wage levels necessary to help ensure the long-term success of our business. Further, we
continually evaluate the structure of our employee benefits package and training programs to ensure we are better
able to attract and retain our employees. Salaries and benefits represent the most significant component of our
operating expenses, representing approximately 61% and 60% of our total operating expenses during 2020 and
2019, respectively.
Operating expenses incurred by CoreCivic Properties in connection with facilities we lease to third-party operators
increased $5.3 million, or 23.4%, during 2020 when compared to 2019. The increase in expenses in this segment
during 2020 was primarily the result of acquisitions in 2019 and 2020 of multiple properties leased to third parties
and the commencement of the leases of the 656-bed Southeast Correctional Complex in Wheelwright, Kentucky,
and the 2,432-bed correctional facility we constructed in Lansing, Kansas.
Facility Management Contracts
We enter into facility management contracts to provide bed capacity and management services to governmental
entities in our CoreCivic Safety and CoreCivic Community segments for terms typically ranging from three to five
years, with additional renewal periods at the option of the contracting governmental agency. Accordingly, a
substantial portion of our facility contracts are scheduled to expire each year, notwithstanding contractual renewal
options that a government agency may exercise. Although we generally expect these customers to exercise renewal
options or negotiate new contracts with us, one or more of these contracts may not be renewed by the corresponding
governmental agency. Further, our government partners can generally terminate our management contracts for non-
appropriation of funds or for convenience.
Additionally, the Private Prison EO issued by President Biden on January 26, 2021, directs the Attorney General to
not renew DOJ contracts with privately operated criminal detention facilities. Two agencies of the DOJ, the BOP
and the USMS, utilize our services. The BOP houses inmates who have been convicted, and the USMS is generally
responsible for detainees who are awaiting trial. The BOP has experienced a steady decline in inmate populations
over the last seven years, a trend that has been accelerated by the COVID-19 pandemic. We currently have one
prison contract with the BOP, accounting for 2% ($39.2 million) of our total revenue for the year ended December
31, 2020, which was recently renewed through November 2022.
Unlike the BOP, the USMS does not own detention capacity and relies on the private sector, along with county jails,
for its detainee population. We do not believe the USMS currently has sufficient capacity that satisfies their current
needs without the private sector, and we are not currently aware of an alternative solution for the USMS. We
currently have eight detention facilities that have separate contracts where the USMS is the primary customer that all
expire at various times over the next several years, with the exception of two contracts that have indefinite terms.
Non-renewal of these contracts, or the expansion of such a similar order to ICE, an agency of the DHS, would have
a material adverse effect on our business, financial condition, and results of operations. For the year ended
December 31, 2020, USMS and ICE accounted for 21% ($396.3 million) and 28% ($541.9 million), respectively, of
our total revenue
Based on information available as of the date of this Annual Report, we believe we will renew all contracts with our
government partners that have expired or are scheduled to expire within the next twelve months that could have a
material adverse impact on our financial statements. We believe our renewal rate on existing contracts remains high
due to a variety of reasons including, but not limited to, the constrained supply of available beds within the U.S.
correctional system, our ownership of the majority of the beds we operate, and the cost effectiveness of the services
we provide. However, we cannot assure we will continue to achieve such renewal rates in the future.
72
BR21871N-0321-10KW CoreCivic Safety
CoreCivic Safety includes the operating results of the correctional and detention facilities that we operated during
each period. Total revenue generated by CoreCivic Safety decreased $73.7 million, or 4.1%, from $1,780.0 million
during 2019 to $1,706.2 million during 2020. CoreCivic Safety's facility net operating income, or facility revenues
less operating expenses, decreased $58.5 million, or 12.3%, from $475.8 million during 2019 to $417.3 million
during 2020. During 2020 and 2019, CoreCivic Safety generated 82.2% and 85.2%, respectively, of our total
segment net operating income.
The following table displays the revenue and expenses per compensated man-day for CoreCivic Safety's correctional
and detention facilities placed into service that we own and manage and for the facilities we manage but do not own,
inclusive of the transportation services provided by TransCor:
CoreCivic Safety Facilities:
Revenue per compensated man-day
Operating expenses per compensated man-day:
Fixed expense
Variable expense
Total
Operating income per compensated man-day
Operating margin
Average compensated occupancy
Average available beds
Average compensated population
For the Years Ended December 31,
2020
2019
$
86.09
$
81.16
$
47.68
17.35
65.03
$
21.06
24.5 %
75.0 %
72,201
54,153
42.84
16.63
59.47
21.69
26.7 %
82.4 %
72,962
60,085
Operating margins within the CoreCivic Safety facilities during 2020 were negatively impacted primarily by
reduced populations and increased operating expenses, which was driven by increases in salaries and benefits
expenses, as previously described herein. Also as previously mentioned, COVID-19 has had an adverse impact on
operating margins, and was the primary factor in the reduction of average compensated populations and operating
margins of the CoreCivic Safety segment. The expected return of all remaining inmate populations from the state of
California from our La Palma Correctional Center during the first half of 2019 also contributed to the reduction in
compensated populations during 2020.
California Assembly Bill 32, or AB32, became effective January 1, 2020. AB32 generally prohibits new contracts
and renewals of existing contracts between private, for-profit entities and government agencies for the operation of
detention facilities within the state of California, and prohibits the utilization of detention centers operated by
private, for-profit entities by the state of California effective January 1, 2028. AB32 does not apply to facilities
leased from private, for-profit entities, such as our California City Correctional Center. The U.S. Government and
The GEO Group, Inc. both filed lawsuits against the state of California challenging the enforceability of AB32 under
applicable law. On October 8, 2020, US District Judge Janis Sammartino allowed AB32 to block future BOP and
ICE contracts and renewals, while determining that AB32 could not block future USMS contracts and renewals.
Judge Sammartino also acknowledged that the State has agreed it will not use AB32 to block federal, state, or local
residential reentry center contracts. Both the U.S. Government and The GEO Group, Inc. have appealed Judge
Sammartino's ruling to the Ninth Circuit Court of Appeals.
In the event AB32 is implemented so as to prohibit ICE-contracted private detention facilities, the federal
government could be prohibited from renewing its contract for us to operate our Otay Mesa Detention Center, which
is currently scheduled to expire in December 2024. A potential non-renewal of our contract to operate the Otay
Mesa Detention Center, which we recently expanded from 1,482 beds to 1,994 beds, could have a significant impact
on our results of operations and cash flows at the time of non-renewal.
73
BR21871N-0321-10KW
On May 16, 2019, we announced that we entered into a new contract under an IGSA between Torrance County,
New Mexico and ICE to activate our 910-bed Torrance County Detention Facility in Estancia, New Mexico. The
new agreement also permits the USMS to utilize capacity at the facility, which had previously been idle since 2017.
The new management contract commenced on May 15, 2019, and has an initial term of 60 months, with unlimited
extension options thereafter upon mutual agreement. Either party may terminate the contract with 120 days' written
notice. We began accepting ICE detainee populations into the Torrance facility in the third quarter of 2019.
Activation of the Torrance facility contributed to an increase in total revenue of $18.6 million during 2020 when
compared to 2019.
On May 23, 2019, we announced that we entered into a new contract under an IGSA between the City of Eden,
Texas and the USMS, to activate our 1,422-bed Eden Detention Center in Eden, Texas. The new agreement also
permits ICE to utilize capacity at the facility, which had previously been idle since 2017. The new management
contract commenced on June 1, 2019, and has an indefinite term. Either party may terminate the contract with 30
days' written notice. We began accepting populations into the Eden facility in the third quarter of 2019. Activation
of the Eden facility contributed to an increase in total revenue of $17.6 million during 2020 when compared to 2019.
On January 9, 2020, we announced that we entered into a new emergency contract with the state of Mississippi to
care for up to 375 of Mississippi's inmates at the Tallahatchie facility, to assist the State with significant challenges
in its correctional system. The contract had a term of ninety days, which the State could extend for up to two
additional ninety-day terms. The State subsequently expanded the contract to 1,000 inmates during the second
quarter of 2020, and extended the contract through April 2021, but no longer needed the capacity and transferred the
inmates back to the State during the first quarter of 2021. During 2020, management revenue from this new contract
was $12.8 million.
On May 1, 2019, the BOP announced that it elected not to renew the contract at our Adams County Correctional
Center in Adams County, Mississippi. On June 28, 2019, the BOP executed an amendment to the existing contract
to allow ICE to use up to 660 beds to care for adult male detainees. On July 18, 2019, the BOP contract, which was
originally scheduled to expire on July 31, 2019, was extended to August 30, 2019. On September 3, 2019, we
announced that we had entered into a new contract under an IGSA between Adams County, Mississippi and ICE for
up to 2,348 adult detainees at the Adams facility. The new management agreement commenced on August 31,
2019, and has an initial term of 60 months, with unlimited extension options thereafter upon mutual agreement.
Either party may terminate the contract with 120 days' written notice. The average compensated occupancy of the
Adams County facility was 80% during 2019 compared with 49% during 2020, when occupancy was also impacted
by COVID-19. Facility net operating income declined by $1.6 million from the prior year, which included $2.0
million for a performance bonus earned under the contract with the BOP. More favorable contract terms under the
new IGSA mitigated the impact of lower occupancy at this facility.
Effective August 1, 2019, we were awarded a new contract with the Kansas Department of Corrections, or KDOC,
to care for offenders at our 1,896-bed Saguaro Correctional Facility in Arizona, where we also care for inmates from
Hawaii and Nevada. We accepted 120 offenders from the KDOC in October 2019. During the second quarter of
2020, this contract was extended through July 2021. However, due to available capacity in the state of Kansas,
partially as a result of the completion of construction of our Lansing Correctional Facility, these inmates were
returned to the State in December 2020. During the third quarter of 2020, we were also awarded a new contract with
the Idaho Department of Correction, or IDOC, to care for up to 1,200 adult male offenders at the Saguaro facility.
Subject to available capacity, we may also care for IDOC offenders at our 4,128-bed Central Arizona Florence
Correctional Complex under terms of the contract. The new management contract with the IDOC commenced on
August 18, 2020, and has an initial term of five years, with unlimited extension options thereafter upon mutual
agreement. As of December 31, 2020, we cared for 436 IDOC offenders at our Saguaro facility.
On September 15, 2020, we announced that we entered into a new contract under an IGSA between the city of
Cushing, Oklahoma and the USMS to utilize our 1,600-bed Cimarron Correctional Facility. We had previously
announced our intention to idle the Cimarron facility during the third quarter of 2020, predominantly due to a lower
number of inmate populations from the state of Oklahoma resulting from COVID-19, combined with the
consequential impact of COVID-19 on the State's budget. The new management contract commenced on September
15, 2020, and has an initial term of three years, with unlimited 24-month extension options thereafter upon mutual
agreement. As of December 31, 2020, we cared for 1,036 USMS detainees at the Cimarron facility. During 2019
74
BR21871N-0321-10KW and 2020, this facility generated facility net operating income of $2.4 million and incurred an operating loss of $1.4
million, respectively. We expect an improvement in facility net operating income at this facility as a result of the
new contract with annual revenues increasing to approximately $30.0 million at current utilization levels and an
operating margin that approximates the average CoreCivic Safety operating margin percentage.
In September 2020, the term of the amended IGSA between the city of Dilley, Texas and ICE to care for up to 2,400
individuals at our South Texas Family Residential Center, a facility we lease in Dilley, Texas, was extended from
September 2021 to September 2026. ICE's termination rights, which permit ICE to terminate the agreement for
convenience or non-appropriation of funds, without penalty, by providing us with at least a 60-day notice, were
unchanged under the extension. As a result of extending the amortization period for the deferred revenue associated
with the amended IGSA over the extended term of the agreement, the non-cash revenue associated with the
amended IGSA decreased by approximately $2.7 million per quarter, from $3.4 million to $0.7 million, effective
beginning in the fourth quarter of 2020. Concurrent with the extension of the amended IGSA, the lease with the
third-party lessor for the site was also extended through September 2026. Other terms of the extended lease
agreement were unchanged and provide us with the ability to terminate the lease if ICE terminates the amended
IGSA associated with the facility.
As previously described, during the third quarter of 2020, we provided notice to the local counties utilizing the
Silverdale Detention Center and the Metro-Davidson County Detention Facility, both in Tennessee, of our intent to
terminate the contracts at these managed-only facilities. We transitioned operations of the Metro facility in October
2020, and transitioned operations of the Silverdale facility in December 2020. During 2019, and during the time we
operated these two facilities in 2020, they generated total facility net operating income of $0.8 million and incurred
an operating loss of $4.7 million, respectively. As a result of these expected contract terminations, during the
second quarter of 2020, we also recognized goodwill impairments of $2.0 million associated with these two
managed-only facilities' reporting units.
CoreCivic Community
CoreCivic Community includes the operating results of the residential reentry centers that we operated during each
period, along with the operating results of our electronic monitoring and case management services from the
acquisition dates of the subsidiaries providing those services. Total revenue generated by CoreCivic Community
decreased $17.3 million, or 14.0%, from $123.3 million during 2019 to $106.0 million during 2020. CoreCivic
Community's facility net operating income decreased $11.0 million, or 39.2%, from $28.1 million during 2019 to
$17.1 million during 2020. During 2020 and 2019, CoreCivic Community generated 3.4% and 5.0%, respectively,
of our total segment net operating income.
The following table displays the revenue and expenses per compensated man-day for CoreCivic Community's
residential reentry facilities placed into service that we own and manage, but exclusive of the electronic monitoring
and case management services given that revenue is not generated on a per compensated man-day basis for these
services:
CoreCivic Community Facilities:
Revenue per compensated man-day
Operating expenses per compensated man-day:
Fixed expense
Variable expense
Total
Operating income per compensated man-day
Operating margin
Average compensated occupancy
Average available beds
Average compensated population
75
For the Years Ended December 31,
2020
2019
$
61.67
$
58.14
$
39.11
8.64
47.75
$
13.92
22.6 %
61.6 %
5,261
3,239
32.66
8.37
41.03
17.11
29.4 %
76.3 %
5,274
4,022
BR21871N-0321-10KW
Operating margins in the CoreCivic Community segment during 2020 were negatively impacted by the reduction in
average compensated population. The average compensated population reduction was primarily driven by COVID-
19, and a decline in utilization from the states of Oklahoma and Colorado, which led to the consolidation of
residents located in the respective states, and the closure of several of our residential reentry facilities. The 289-bed
Turley Residential Center in Oklahoma closed in the second quarter of 2019, the 200-bed Oklahoma City
Transitional Center in Oklahoma and the 60-bed Columbine Facility in Colorado closed in the second quarter of
2020, and the 390-bed Tulsa Transitional Center in Oklahoma closed in the third quarter of 2020. Operating
margins were also negatively impacted during 2020 by an increase in operating expenses, which was driven
primarily by increases in salaries and benefits expenses across the portfolio, as previously described herein.
During the fourth quarter of 2020, the BOP awarded a new contract to us for residential reentry and home
confinement services pursuant to a solicitation for capacity and services to be provided in the state of Oklahoma. As
a result, we reactivated the Turley Residential Center during the first quarter of 2021 and provide the BOP additional
reentry services at our owned and operated Oklahoma Reentry Opportunity Center (formerly known as the Carver
Transitional Center), which supplements the existing utilization by the state of Oklahoma.
During the third quarter of 2020, Adams County, Colorado, notified us that, pursuant to a re-bid of the contract at
the 184-bed Henderson Transitional Center, a facility we lease from the County, it awarded the contract to another
operator. We transitioned operations to the other operator upon expiration of the contract in January 2021. During
2020, this facility generated net operating income of $0.7 million.
On December 7, 2019, we completed the acquisition of certain assets of Rehabilitation Services, Inc., or RSI. The
acquisition resulted in the addition of two residential reentry centers in Virginia. The Ghent Residential Reentry
Center, a 36-bed residential reentry center in Norfolk, Virginia and the James River Residential Reentry Center, an
84-bed residential reentry center in Newport News, Virginia provide reentry services for residents under custody of
the BOP. The residential reentry facilities can also serve an additional 34 home confinement clients on behalf of the
BOP. During 2020, these facilities generated net operating income of $1.2 million.
Like the CoreCivic Safety segment, our CoreCivic Community segment has been impacted by the COVID-19
pandemic. Some of our government partners have transferred certain residents assigned to our reentry facilities to
non-residential status, home confinement or early releases, to create additional space for enhanced social distancing
within our reentry facilities. Additionally, similar to our CoreCivic Safety segment, the CoreCivic Community
segment has been adversely impacted by the disruption in court hearings, resulting in a reduction in the number of
referrals to our community facilities. The impact of COVID-19 on our cash flows, in part, contributed to a goodwill
impairment charge of $42.6 million, as further described herein. Additionally, at some locations, residents are
responsible for a portion of the subsistence payments, which could be impacted by a curtailment in work programs
available to them, negatively impacting our revenue to the extent that the government agency does not supplement
such payments. However, it is possible that in the future, government agencies will increase the utilization of our
community facilities or home confinement services, as an alternative to incarceration.
CoreCivic Properties
CoreCivic Properties includes the operating results of the properties we leased to third parties and that were used by
government agencies during each period. Total revenue generated by CoreCivic Properties increased $15.8 million,
or 20.4%, from $77.3 million during 2019 to $93.1 million during 2020. CoreCivic Properties' facility net operating
income increased $10.5 million, or 19.2%, from $54.5 million during 2019 to $65.0 million during 2020. During
2020 and 2019, CoreCivic Properties generated 14.4% and 9.8%, respectively, of our total segment net operating
income.
On January 24, 2018, we entered into a 20-year lease agreement with the KDOC for a 2,432-bed correctional facility
to be constructed by the Company in Lansing, Kansas. The new facility replaces the Lansing Correctional Facility,
Kansas' largest correctional complex for adult male inmates, originally constructed in 1863. CoreCivic is
responsible for facility maintenance throughout the 20-year term of the lease, at which time ownership will revert to
the state of Kansas. Construction of the facility commenced in the first quarter of 2018, and construction was
completed in January 2020, at which time the lease commenced. During 2020, the Lansing Correctional Facility
generated $2.6 million of revenue associated with the non-lease services components of the arrangement, and $8.4
million of interest income, as further described hereafter.
76
BR21871N-0321-10KW On December 9, 2019, we entered into a lease with the Commonwealth of Kentucky Department of Corrections, or
KYDOC, for our previously idled 656-bed Southeast Correctional Complex in Wheelwright, Kentucky, formerly
known as the Southeast Kentucky Correctional Facility. The lease commenced July 1, 2020, has an initial term of
ten years and includes five two-year renewal options. The KYDOC has the option to purchase the facility at its fair
market value at any time during the term of the lease. During 2020, this facility generated $2.1 million of lease
revenue. The Southeast Correctional facility had previously been idle since 2012.
On May 6, 2019, we completed the acquisition of a 37,000 square-foot office building in Detroit, Michigan, for $7.2
million, excluding transaction related expenses, that was built-to-suit for the state of Michigan's Department of
Health and Human Services, or MDHHS, in 2002. This property was acquired through our wholly-owned
subsidiary, Government Real Estate Solutions, LLC, or GRES. The property was 100% leased to the Michigan
Department of Technology, Management and Budget, or MDTMB, on behalf of MDHHS through June 2028 and
included one six-year renewal option at the sole discretion of the MDTMB. During the fourth quarter of 2020, the
MDTMB provided notice of its intent to exercise its executive cancellation provision to terminate the lease effective
December 31, 2020, which was subsequently extended through February 5, 2021.
On January 2, 2020, we completed the acquisition of a portfolio of 28 properties, all of which were built-to-suit and
leased to the federal government through the General Services Administration, or GSA, 24 of which the counter-
party contributed to GRES. The 445,000 square foot portfolio serves numerous federal agencies, including
primarily the Social Security Administration, or SSA, the Department of Homeland Security, and the Office of
Hearings Operations. During 2020, the portfolio of 28 properties generated $10.6 million of lease revenue. On
December 23, 2020, we completed the sale of 42 non-core government-leased properties, including this portfolio of
28 properties, in a single transaction to a third party for an aggregate price of $106.5 million, generating net
proceeds of $27.8 million after the repayment of non-recourse mortgage notes associated with some of the properties
and other transaction-related costs. After considering tax protection payments required to be paid to the contributing
partners of GRES in connection with the sale, we reported a net loss on this sale of $17.9 million. We intend to
dissolve GRES in 2021, and extinguish the operating partnership units for no consideration, which will result in a
gain upon dissolution of the partnership of $15.0 million to $20.0 million, assuming we take no further actions that
impact the partnership, that would be reflected as an increase to stockholders' equity.
We intend to pursue the sale of additional non-core assets in the Properties segment, reinvesting the net proceeds
into new opportunities in the Properties segment and to repay debt. As of December 31, 2020, we had three
additional non-core real estate assets held for sale with a net book value of $279.4 million. Although we can
provide no assurance, based on interest expressed to-date, we are hopeful to consummate the sale of these assets
during the first half of 2021. If we are successful in consummating the sale of these assets, combined with the sale
completed in the fourth quarter of 2020, we expect the net proceeds from our sale of non-core assets will be
consistent with our original estimate of up to $150 million. These three properties performed well through the
COVID-19 pandemic and are leased to federal and state government agencies with strong credit profiles, creating an
opportune time to redeploy this capital into projects generating higher returns like those we plan to develop in
Alabama, as previously described herein, or to pay-down debt.
During the third quarter of 2019, leases at three residential reentry centers located in Pennsylvania leased to the
same tenant expired and were not renewed. The three properties, which total approximately 54,000 square feet and
contain an aggregate of 430 beds, were subsequently idled. We executed new leases at two of these facilities to the
city of Philadelphia effective July 1, 2020, which are scheduled to expire in June 2021.
General and administrative expense
For the years ended December 31, 2020 and 2019, general and administrative expenses totaled $124.3 million and
$127.1 million, respectively. General and administrative expenses consist primarily of corporate management
salaries and benefits, professional fees, including those associated with mergers and acquisitions, or M&A, and
expenses associated with changes in our corporate tax structure, as well as other administrative expenses. General
and administrative expenses decreased from the prior year primarily as a result of a decrease in incentive
compensation by $8.9 million, partially offset by professional fees associated with changes in our corporate tax
structure amounting to $5.2 million during 2020.
77
BR21871N-0321-10KW Depreciation and Amortization
For the years ended December 31, 2020 and 2019, depreciation and amortization expense totaled $150.9 million and
$144.6 million, respectively. The increase in depreciation and amortization expense from the prior year is primarily
due to the additional depreciation and amortization resulting from our M&A activities during 2019 and 2020.
Contingent consideration for acquisition of businesses
As a result of better than estimated financial performance of two residential reentry centers acquired in 2019, during
the third quarter of 2020, we recognized a charge of $0.6 million for the maximum contingent consideration
estimated as owed to the seller associated with the acquisition. The contingent consideration is expected to be paid
during the first quarter of 2021.
Asset impairments
As further described under "critical accounting policies", asset impairment charges in 2020 include the impairment
of $44.6 million of goodwill related to our Community segment and two managed-only facilities in our Safety
segment, $11.1 million for the impairment of real estate and other intangible assets for three facilities in our
Community segment, $4.2 million of impairment charges for the abandonment of certain development costs and
$0.7 million of other intangible assets associated with the cancellation of a lease in our Properties segment. During
the second quarter of 2019, we incurred real estate asset impairment charges of $4.7 million primarily related to a
residential reentry center in Arizona that became idle in the third quarter of 2019 and was ultimately sold in 2020.
Expenses associated with debt repayments and refinancing transactions
As previously described herein, on December 23, 2020, we completed the sale of 42 non-core government-leased
properties in a single transaction to a third party for an aggregate price of $106.5 million, generating net proceeds of
$27.8 million after the repayment of non-recourse mortgage notes associated with some of the properties and other
transaction-related costs. In connection with the sale, we incurred a debt defeasance cost of $10.5 million associated
with the prepayment of the non-recourse mortgage notes. This defeasance charge was partially offset by the reversal
of a corresponding intangible debt liability, which was recorded upon acquiring the debt in January 2020, and was
derecognized upon the repayment of the debt in December 2020 upon sale of the properties.
Expenses associated with debt repayments and refinancing transactions during 2019 included $0.6 million
associated with the early redemption in December 2019 of our $325.0 million in aggregate principal amount of
4.125% senior notes originally due in April 2020.
Interest expense, net
Interest expense was reported net of interest income and capitalized interest for the years ended December 31, 2020
and 2019. Gross interest expense, net of capitalized interest, was $93.5 million and $86.7 million in 2020 and 2019,
respectively. Gross interest expense is based on outstanding borrowings under our revolving credit facility, our
outstanding Incremental Term Loan A, or Term Loan A, our outstanding $250.00 million Senior Secured Term
Loan B, or Term Loan B, as further described hereafter, our outstanding senior notes, and our outstanding non-
recourse mortgage notes, as well as the amortization of loan costs and unused facility fees. The increase in gross
interest expense primarily resulted from an increase in the average outstanding balance on our revolving credit
facility, and the interest expense associated with the Term Loan B and the new non-recourse mortgage note assumed
during 2020, as further described hereafter, net of lower capitalized interest in 2020.
We have benefited from relatively low interest rates on our revolving credit facility, which is largely based on the
London Interbank Offered Rate, or LIBOR. Based on our total leverage ratio, borrowings under our revolving credit
facility during 2019 and 2020 were at the base rate plus a margin of 0.50% or at LIBOR plus a margin of 1.50%, and
a commitment fee equal to 0.35% of the unfunded balance. Interest rates under the Term Loan A are the same as the
interest rates under our revolving credit facility.
78
BR21871N-0321-10KW On April 20, 2018, CoreCivic of Kansas, LLC, a wholly-owned unrestricted subsidiary of ours, priced $159.5
million in aggregate principal amount of non-recourse senior secured notes, or the Kansas Notes, in a private
placement pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, or the Securities Act. The private
placement closed on June 1, 2018. We used the proceeds of the private placement, which were drawn on quarterly
funding dates beginning in the second quarter of 2018, to fund construction of the Lansing Correctional Facility,
along with costs and expenses of the project. The Kansas Notes have a yield to maturity of 4.43% and are scheduled
to mature in January 2040, 20 years following completion of the project, which occurred in January 2020. We
capitalized $5.1 million of interest during 2019 and $0.5 million in 2020 through the date construction was complete
in January 2020, associated with this construction project. During 2020, we incurred $6.5 million of interest expense
on the Kansas Notes, net of capitalized interest.
On December 18, 2019, we entered into a new Term Loan B which bears interest at a rate of LIBOR plus 4.50%,
with a 1.00% LIBOR floor (or, at our option, a base rate plus 3.50%), and has a five-year maturity with scheduled
quarterly principal payments through December 2024. The Term Loan B is secured by a first lien on certain
specified real property assets, representing a loan-to-value of no greater than 80%. We can prepay the Term Loan B
at any time and from time to time, without premium or penalty. Proceeds from the issuance of the Term Loan B
were used to partially fund the early redemption of our $325.0 million in aggregate principal amount of 4.125%
senior notes originally due in April 2020.
On January 2, 2020, we completed the acquisition of a portfolio of 28 properties, 24 of which the counter-party
contributed to GRES, for total consideration of $83.2 million. In connection with the acquisition, a wholly-owned
subsidiary of GRES, an unrestricted subsidiary we control, assumed $52.2 million of in-place financing. The
assumed non-recourse mortgage notes, or collectively, the GRES Note, carried a fixed interest rate of 4.91% and
required monthly principal and interest payments, with a balloon payment of $46.2 million due at maturity in
November 2025. The GRES Note was fully-secured by the same 24 properties originally pledged as collateral at the
time the debt was issued. The GRES Note was fully repaid as part of the sale of 42 non-core government-leased
properties, including this portfolio of 28 properties, in December 2020, as previously described herein.
Gross interest income was $10.2 million and $2.3 million in 2020 and 2019, respectively. Gross interest income is
earned on notes receivable, investments, cash and cash equivalents, and restricted cash. Interest income also includes
interest income associated with the 20-year finance receivable associated with the Lansing Correctional Facility
lease to the KDOC, which commenced in January 2020, and amounted to $8.4 million in 2020. Total capitalized
interest was $0.5 million and $6.0 million during 2020 and 2019, respectively, and was primarily associated with the
construction of the Lansing Correctional Facility.
Income tax expense
During the years we elected REIT status, we were entitled to a deduction for dividends paid, resulting in a substantial
reduction in the amount of federal income tax expense we recognize. Substantially all of our income tax expense
during the years we elected REIT status was incurred based on the earnings generated by our TRSs. Our overall
effective tax rate was based on the taxable income primarily generated by our TRSs.
During the years ended December 31, 2020 and 2019, our financial statements reflected an income tax expense of
$4.4 million and $7.8 million, respectively. Our effective tax rate was 7.3% and 4.0% during 2020 and 2019,
respectively. Income tax expense during 2020 included $3.1 million, recorded in the first quarter of 2020, that had
been deferred during the construction period of our Lansing Correctional Facility, which was owned by a TRS of
ours until it converted to a qualified REIT subsidiary, or QRS, upon completion of construction in the first quarter of
2020. Because ownership of this facility reverts to the state of Kansas upon expiration of the twenty-year lease, the
construction and subsequent lease of the facility to the State was a deemed sale for federal and state income tax
purposes. The gain on sale was reported as a deferred tax asset based on the percentage of completion method over
the construction period. This deferred tax asset was revalued to zero upon conversion of the TRS to a QRS. Aside
from this charge, income tax expense during 2020 decreased due to lower occupancy levels at several facilities
resulting from COVID-19, and as a result of certain tax benefits that became available under provisions of the
Coronavirus Aid, Relief and Economic Security Act.
79
BR21871N-0321-10KW On August 5, 2020, we announced that our Board of Directors, or BOD, unanimously approved a plan to revoke our
REIT election and become a taxable C Corporation, effective January 1, 2021. As a result, we will no longer be
required to operate under REIT rules, including the requirement to distribute at least 90% of our taxable income to
our stockholders, which will provide us with greater flexibility to use our free cash flow. Beginning January 1,
2021, we will be subject to federal and state income taxes on our taxable income at applicable tax rates, and will no
longer be entitled to a tax deduction for dividends paid. The revocation of our REIT election will also result in a
revaluation of our net deferred tax liabilities, resulting in a material income tax charge in the period we complete all
significant actions necessary to revoke our REIT election, currently anticipated to occur in the first quarter of 2021.
We currently estimate such charge to be $100.0 million to $135.0 million. We continued to operate as a REIT for
the remainder of the 2020 tax year, and existing REIT requirements and limitations, including those established by
our organizational documents, remained in place until January 1, 2021.
Our consolidated effective tax rate could fluctuate in the future based on changes in estimates of taxable income, the
implementation of additional tax planning strategies, changes in federal or state tax rates or laws affecting tax credits
available to us, changes in other tax laws, changes in estimates related to uncertain tax positions, or changes in state
apportionment factors, as well as changes in the valuation allowance applied to our deferred tax assets that are based
primarily on the amount of state net operating losses and tax credits that could expire unused.
Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018
Pursuant to Regulation S-K item 303, a detailed review of our performance for the year ended December 31, 2019
compared to our performance for the year ended December 31, 2018 is set forth in "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for
the year ended December 31, 2019, filed with the Securities and Exchange Commission, or SEC, on February 20,
2020.
LIQUIDITY AND CAPITAL RESOURCES
Our principal capital requirements are for working capital, capital expenditures, and debt service payments, as well
as outstanding commitments and contingencies, as further discussed in the notes to our financial statements.
On June 17, 2020, we announced that our BOD was evaluating corporate structure and capital allocation
alternatives. Concurrently, our BOD suspended our quarterly dividend while we assessed how best to use our free
cash flow to build shareholder value, maintain service excellence, and offer and implement unique solutions for our
government partners and the communities in which we serve. On August 5, 2020, we announced that our BOD
concluded its analysis and unanimously approved a plan to revoke our REIT election and become a taxable C
Corporation, effective January 1, 2021. Additionally, our BOD voted unanimously to discontinue the quarterly
dividend and prioritize allocating our free cash flow to reduce debt levels. As a result, we will no longer be required
to operate under REIT rules, including the requirement to distribute at least 90% of our taxable income to our
stockholders, which will provide us with greater flexibility to use our free cash flow.
Beginning January 1, 2021, we will be subject to federal and state income taxes on our taxable income at applicable
tax rates, and will no longer be entitled to a tax deduction for dividends paid. However, we believe this conversion
will improve our overall credit profile and lower our overall cost of capital, as we will be able to allocate our free
cash flow toward the repayment of debt, which may include the purchase of our outstanding debt in open market
transactions, privately negotiated transactions or otherwise. Any such debt repurchases will depend upon prevailing
market conditions, our liquidity requirements, contractual requirements, applicable securities laws requirements, and
other factors. Following our first priority of reducing debt, we expect to allocate a substantial portion of our free
cash flow to returning capital to our shareholders, which could include share repurchases and future dividends. We
have not been able to implement a meaningful share repurchase program under the REIT structure without
increasing our debt because a substantial portion of our free cash flow was required to satisfy the distribution
requirements under the REIT structure. We will also pursue attractive growth opportunities, including new
development opportunities in our Properties segment to meet the need to modernize outdated correctional
infrastructure across the country, and evaluate additional opportunities to provide services in our Community
segment that have not been available under the REIT structure. As a REIT we depended on the capital markets to
80
BR21871N-0321-10KW provide resources we could deploy toward acquisition and development opportunities. This capital was not always
available to us and came at an increasing cost. The revocation of our REIT election provides us with significantly
more liquidity and financial flexibility, which will enable us to reduce our reliance on the capital markets and reduce
the size of our Bank Credit Facility in the future.
Beyond the operating cash flow we generate from our business, we intend to pursue the sale of additional non-core
assets in the Properties segment, reinvesting the net proceeds into new opportunities in the Properties segment and to
repay debt. As of December 31, 2020, we had three additional non-core real estate assets held for sale with a net
book value of $279.4 million. Although we can provide no assurance, based on interest expressed to-date, we are
hopeful to consummate the sale of these assets during the first half of 2021. If we are successful in consummating
the sale of these assets, combined with the sale of the portfolio of 42 properties completed in the fourth quarter of
2020, we expect the net proceeds from our sale of non-core assets will be consistent with our original estimate of up
to $150 million. These three properties performed well through the COVID-19 pandemic and are leased to federal
and state government agencies with strong credit profiles, creating an opportune time to redeploy this capital into
projects generating higher returns like those we plan to develop in Alabama, as previously described herein, or to
pay-down debt.
In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to
spread throughout the United States. As a result, in the first quarter of 2020, the federal government decided to deny
entry at the United States southern border to asylum-seekers and anyone crossing the southern border without proper
documentation or authority in an effort to contain the spread of COVID-19. This action has resulted in the reduction
in the number of people being apprehended and detained by ICE. Further, disruptions to the criminal justice system
have also contributed to a reduction in the number of USMS detainee populations, as the number of courts in session
and prosecutions have declined. We currently expect the federal government’s policy of denying entry at the United
States southern border to asylum-seekers and anyone crossing the southern border without proper documentation or
authority, as well as the disruptions in the criminal justice system, to persist until a widely accepted treatment and/or
vaccine for COVID-19 is widely disseminated. In addition, many state and local government agencies have
released, may be considering releasing, or may be experiencing pressure to release, certain inmates and detainees to
help ensure social distancing within their facilities and prevent excessive interactions among inmate populations. A
protracted denial in southern border entries of asylum-seekers and undocumented immigrants, or continued
disruptions in the criminal justice system could have a material effect on our financial position, results of operations
and cash flows. As a result of uncertainties in the near-term outlook for the business caused by COVID-19, we are
monitoring and reducing discretionary spending (except to help ensure the safety of our employees and residents
entrusted to our care), reviewing capital projects to ensure we are only spending on projects that are deemed
essential in the current environment, and limiting travel and other operating expenses.
As of December 31, 2020, our liquidity was provided by cash on hand of $113.2 million, and $566.2 million
available under our revolving credit facility. During the years ended December 31, 2020 and 2019, we generated
$355.5 million and $354.4 million, respectively, in cash through operating activities. We currently expect to be able
to meet our cash expenditure requirements for the next year utilizing cash on hand and availability under our revolving
credit facility. Some banks that are party to our Bank Credit Facility have announced that they do not expect to
continue to provide credit or financial services to private entities that operate correctional and detention facilities,
including CoreCivic. The banks that are currently parties to the Bank Credit Facility are obligated to honor their
commitments under our Bank Credit Facility, which expires in April 2023. These decisions have currently affected
the capital markets for our securities, and we can provide no assurance that additional banks that are party to our
Bank Credit Facility will not make similar decisions, or that new banks will be willing to become party to our Bank
Credit Facility, or that the capital markets for our securities will improve. As previously mentioned, upon our
planned revocation of our REIT election, we believe we will not be as reliant on the revolving credit facility under
the Bank Credit Facility, as we will be able to retain our cash flows to use at our general discretion and, therefore,
believe we can operate with a smaller revolving credit facility. We have no debt maturities until October 2022, and
do not currently anticipate a need to access the capital markets in the short-term.
81
BR21871N-0321-10KW Our cash flow is subject to the receipt of sufficient funding of and timely payment by contracting governmental
entities. If the appropriate governmental agency does not receive sufficient appropriations to cover its contractual
obligations, it may terminate our contract or delay or reduce payment to us. Delays in payment from our major
customers or the termination of contracts from our major customers could have an adverse effect on our cash flow
and financial condition. Although our revenue has been negatively impacted by COVID-19, we have not
experienced any unusual delays in payments from our major customers.
Debt and equity
As of December 31, 2020, we had $350.0 million principal amount of unsecured notes outstanding with a fixed stated
interest rate of 4.625%, $250.0 million principal amount of unsecured notes outstanding with a fixed stated interest rate
of 5.0%, and $250.0 million principal amount of unsecured notes outstanding with a fixed stated interest rate of 4.75%.
In addition, we had $20.9 million outstanding under the Capital Commerce Note with a fixed stated interest rate of
4.5%, $157.6 million outstanding under the Kansas Notes with a fixed stated interest rate of 4.43%, and $144.5 million
outstanding under the SSA-Baltimore Note with a fixed stated interest rate of 4.5%. We also had $180.0 million
outstanding under our Term Loan A with a variable interest rate of 1.6%, $237.5 million outstanding under our new
Term Loan B with a variable interest rate of 5.5%, and $219.0 million outstanding under our revolving credit facility
with a variable weighted average interest rate of 1.7%. As of December 31, 2020, our total weighted average effective
interest rate was 4.5%, while our total weighted average maturity was 5.6 years. We may also seek to issue debt or
equity securities from time to time when we determine that market conditions and the opportunity to utilize the
proceeds from the issuance of such securities are favorable.
On August 28, 2018, we entered into an Amended and Restated ATM Equity Offering Sales Agreement, or ATM
Agreement, with multiple sales agents, pursuant to which we may offer and sell to or through the agents, from time
to time, shares of our common stock, par value $0.01 per share, having an aggregate gross sales price of up to
$200.0 million. Sales, if any, of our shares of common stock will be made primarily in "at-the-market" offerings, as
defined in Rule 415 under the Securities Act. The shares of common stock will be offered and sold pursuant to our
registration statement on Form S-3 and a related prospectus supplement, both filed with the SEC on August 28,
2018. We intend to use substantially all of the net proceeds from any sale of shares of our common stock to repay
outstanding borrowings or for working capital and other general corporate purposes, which may include
investments. There were no shares of our common stock sold under the ATM Agreement during 2019 and 2020.
Facility transactions, development, and capital expenditures
On January 2, 2020, we completed the acquisition of a portfolio of 28 properties, 24 of which the counter-party
contributed to GRES, for total consideration of $83.2 million, excluding transaction-related expenses. All of the
properties are leased to the federal government through the GSA. We financed the acquisition with $7.7 million of
cash, assumed debt of $52.2 million and the balance with the issuance of 1.3 million shares of Class A Common
Interests in GRES that are convertible into cash or, at our option, shares of our common stock following a two-year
holding period on a one-for-one basis, or Operating Partnership Units, using a partnership structure. The assumed
debt carried a fixed interest rate of 4.91%, with fixed monthly payments extending through November 2025, and a
balloon payment of $46.2 million due at maturity.
On December 23, 2020, we completed the sale of 42 non-core government-leased properties, including the portfolio
of 28 properties discussed above, in a single transaction to a third party for an aggregate price of $106.5 million,
generating net proceeds of $27.8 million after the repayment of the GRES Note, which was associated with some of
the properties, and other transaction-related costs. Net cash proceeds were used to pay-down our revolving credit
facility and are available to recycle into projects generating higher returns, such as the Alabama transaction
previously described herein.
On January 24, 2018, we entered into a 20-year lease agreement with the KDOC for a 2,432-bed correctional facility
to be constructed in Lansing, Kansas. We commenced construction of the facility in the first quarter of 2018 and, as
of December 31, 2019, we had capitalized $137.7 million associated with the construction project. In December
2019, the Lansing facility began accepting offenders into the 512-bed minimum security complex ahead of schedule,
with the remaining 1,920-bed medium/maximum security complex completed in January 2020, for a total project
cost of approximately $155.0 million. Construction of the facility was 100% funded with proceeds from the private
82
BR21871N-0321-10KW placement of the Kansas Notes, as previously described herein. This transaction represents the first development of a
privately owned, build-to-suit correctional facility operated by a government agency through a long-term lease
agreement. We are responsible for facility maintenance throughout the 20-year term of the lease, at which time
ownership will revert to the state of Kansas. With the extensively aged criminal justice infrastructure in the United
States today, we believe we can bring our flexible solutions like this to other government agencies.
Although disrupted by the COVID-19 pandemic, several of our existing federal and state partners, as well as
prospective state partners, had been experiencing growth in offender populations and overcrowded conditions.
Governments are now assessing their need for correctional space in light of COVID-19, and several are considering
alternative correctional capacity for their aged or inefficient infrastructure, or are seeking cost savings by utilizing
the private sector. Competing budget priorities, which will likely become more challenging because of COVID-19,
often impede our customers' ability to construct new prison beds of their own or update older facilities, which we
believe could result in further need for private sector prison capacity solutions in the long-term. Over the long-term,
we would like to see meaningful utilization of our available capacity and better visibility from our customers into
their potential future needs before we develop new prison capacity on a speculative basis. We will, however,
respond to customer demand and may develop or expand correctional and detention facilities when we believe
potential long-term returns justify the capital deployment.
Operating Activities
Our net cash provided by operating activities for the year ended December 31, 2020 was $355.5 million compared
with $354.4 million in 2019. Our net cash provided by operating activities was $74.0 million during the fourth quarter
of 2020 compared with $75.4 million during the first quarter of 2020, before our operations were impacted by COVID-
19, and compared with $50.3 million during the fourth quarter of 2019. Cash provided by operating activities
represents our net income plus depreciation and amortization, changes in various components of working capital,
and various non-cash charges.
Investing Activities
Our cash flow provided by investing activities was $13.0 million for the year ended December 31, 2020 and was
primarily attributable to $113.6 million in net proceeds from the sale of assets, partially offset by capital
expenditures for facility development and expansions of $27.6 million and $56.2 million for facility maintenance
and information technology capital expenditures. Our cash flow provided by investing activities was also net of $8.8
million primarily attributable to the acquisition of the aforementioned portfolio of 28 properties in January 2020.
Our cash flow used in investing activities was $244.6 million for the year ended December 31, 2019 and was
attributable to payments totaling $48.4 million, including payments of $34.1 million to the state of Montana in
connection with an agreement with the state of Montana to extend our ownership of the Crossroads Correctional
Center for the estimated duration of its useful life, and acquisitions completed in 2019, net of cash acquired. Our
cash flow used in investing activities for the year ended December 31, 2019 also included capital expenditures of
$193.3 million, including expenditures for facility development and expansions of $136.1 million and $57.2 million
for facility maintenance and information technology capital expenditures.
Financing Activities
Cash flow used in financing activities was $350.8 million for the year ended December 31, 2020 and was primarily
attributable to net repayments under our revolving credit facility of $146.0 million, dividend payments of $106.0
million and $3.6 million for the purchase and retirement of common stock that was issued in connection with equity-
based compensation. In addition, cash flow used in financing activities included $32.3 million of scheduled principal
repayments under our Term Loan A, Term Loan B, and non-recourse mortgage notes, as well as $51.3 million for
the defeasance of non-recourse mortgage notes in connection with the aforementioned sale of assets and other
refinancing related costs.
83
BR21871N-0321-10KW Cash flow used in financing activities was $64.8 million for the year ended December 31, 2019 and was primarily
attributable to dividend payments of $209.5 million and $3.5 million for the purchase and retirement of common
stock that was issued in connection with equity-based compensation. In addition, cash flow used in financing
activities included $325.0 million related to the aforementioned satisfaction and discharge of our 4.125% Senior
Notes. Cash flow used in financing activities also included $7.4 million of contingent consideration associated with
the acquisition of a business and $14.1 million of scheduled principal repayments under our Term Loan A and non-
recourse mortgage notes. These payments were partially offset by $164.0 million of net borrowings under our
revolving credit facility, $237.5 million of net proceeds from the issuance of the Term Loan B, and $97.2 million of
proceeds from the quarterly borrowings under the Kansas Notes during the construction period of the Lansing
Correctional Facility.
Supplemental Guarantor Information
On March 2, 2020, the SEC adopted final rules that amend and simplify the financial disclosure requirements for
subsidiary issuers and guarantors of registered debt securities under Rules 3-10 and 3-16 of SEC Regulation S-X.
The new rules permit registrants to provide certain alternative financial disclosures and non-financial disclosures in
lieu of separate consolidating financial statements for subsidiary issuers and guarantors of registered debt securities
(which we previously included within the notes to our financial statements included in our Annual Reports on Form
10-K and Quarterly Reports on Form 10-Q) if certain conditions are met. Although the disclosures required by the
amendments do not become mandatory until January 4, 2021, voluntary early compliance is permitted. We elected
to voluntarily comply beginning with the quarterly period ended June 30, 2020.
All of the domestic subsidiaries of CoreCivic (as the parent corporation) that guarantee the Credit Agreements have
provided full and unconditional guarantees of the Senior Notes. All of CoreCivic's subsidiaries guaranteeing the
Senior Notes are 100% owned direct or indirect subsidiaries of CoreCivic; and the subsidiary guarantees are full and
unconditional and are joint and several obligations of the guarantors.
As of December 31, 2020, neither CoreCivic nor any of its subsidiary guarantors had any material or significant
restrictions on CoreCivic's ability to obtain funds from its subsidiaries by dividend or loan or to transfer assets from
such subsidiaries.
The indentures governing our Senior Notes contain certain customary covenants that, subject to certain exceptions
and qualifications, restrict CoreCivic's ability to, among other things, create or permit to exist certain liens and
consolidate, merge or transfer all or substantially all of CoreCivic's assets. In addition, if CoreCivic experiences
specific kinds of changes in control, CoreCivic must offer to repurchase all or a portion of the Senior Notes. The
offer price for the Senior Notes in connection with a change in control would be 101% of the aggregate principal
amount of the notes repurchased plus accrued and unpaid interest and liquidated damages, if any, on the notes
repurchased to the date of purchase.
The following tables present summarized information for CoreCivic and the subsidiary guarantors, on a combined
basis after elimination of (i) intercompany transactions and balances among CoreCivic and the subsidiary guarantors
and (ii) equity in earnings from, and any investments in, any subsidiary that is a non-guarantor (in thousands).
Current assets
Real estate and related assets
Other assets
Total non-current assets
Current liabilities
Long-term debt, net
Other liabilities
Total long-term liabilities
$
December 31,
$
2020
469,331
2,572,112
266,126
2,838,238
188,023
1,457,913
234,806
1,692,719
2019
402,983
2,738,347
241,823
2,980,170
258,834
1,629,427
118,048
1,747,475
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BR21871N-0321-10KW
Revenues
Operating expenses
Other expenses
Total expenses
Operating income
Net income
Net income attributable to common stockholders
For the Years Ended December 31,
2020
$ 1,869,689
1,393,795
323,788
1,717,583
152,106
118,425
118,425
2019
$ 1,957,143
1,413,627
268,590
1,682,217
274,926
189,357
189,357
Funds from Operations
Funds From Operations, or FFO, is a widely accepted supplemental non-GAAP measure utilized to evaluate the
operating performance of real estate companies. The National Association of Real Estate Investment Trusts, or
NAREIT, defines FFO as net income computed in accordance with GAAP, excluding gains or losses from sales of
property and extraordinary items, plus depreciation and amortization of real estate and impairment of depreciable
real estate and after adjustments for unconsolidated partnerships and joint ventures calculated to reflect funds from
operations on the same basis. We believe FFO is an important supplemental measure of our operating performance
and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of
REITs and other real estate companies, many of which present FFO when reporting results.
We also present Normalized FFO as an additional supplemental measure as we believe it is more reflective of our core
operating performance. We may make adjustments to FFO from time to time for certain other income and expenses
that we consider non-recurring, infrequent or unusual, even though such items may require cash settlement, because
such items do not reflect a necessary or ordinary component of our ongoing operations. Even though expenses
associated with M&A may be recurring, the magnitude and timing fluctuate based on the timing and scope of M&A
activity, and therefore, such expenses, which are not a necessary component of our ongoing operations, may not be
comparable from period to period. Start-up expenses represent the incremental operating losses incurred during the
period we were activating idle correctional facilities. Normalized FFO excludes the effects of such items.
FFO and Normalized FFO are supplemental non-GAAP financial measures of real estate companies' operating
performance, which do not represent cash generated from operating activities in accordance with GAAP and
therefore should not be considered an alternative for net income or as a measure of liquidity. Our method of
calculating FFO and Normalized FFO may be different from methods used by other REITs and, accordingly, may
not be comparable to such other REITs.
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BR21871N-0321-10KW
Our reconciliation of net income to FFO and Normalized FFO for the years ended December 31, 2020, 2019, and
2018 is as follows (in thousands):
For the Years Ended December 31,
2019
2018
2020
FUNDS FROM OPERATIONS:
Net income
Depreciation and amortization of real estate assets
Impairment of real estate assets
Loss (gain) on sale of real estate assets, net of taxes
Funds From Operations
Expenses associated with debt repayments
and refinancing transactions
Charges associated with adoption of tax reform
Expenses associated with mergers and acquisitions
Contingent consideration for acquisition of businesses
Expenses associated with COVID-19
Expenses associated with changes in corporate
tax structure
Deferred tax expense on Kansas lease structure
Start-up expenses
Goodwill and other impairments
Normalized Funds From Operations
$
55,338 $ 188,886 $
107,402
112,046
4,428
14,380
(287 )
13,555
300,429
195,319
159,207
101,771
1,580
—
262,558
7,141
—
338
620
13,777
602
—
1,132
—
—
1,016
1,024
3,096
6,085
—
5,240
3,085
—
46,248
—
—
9,480
278
$ 271,768 $ 311,921 $
—
—
—
—
273,779
Contractual Obligations
The following schedule summarizes our contractual obligations by the indicated period as of December 31, 2020 (in
thousands):
Long-term debt
Interest on senior and mortgage notes
Contractual facility developments and
other commitments
South Texas Family Residential Center
Leases
Total contractual cash obligations
2021
Payments Due By Year Ending December 31,
2024
$ 39,087 $ 292,981 $ 758,110 $ 194,937 $ 14,556 $ 509,846 $ 1,809,517
54,784 54,308 33,164 24,479 23,851 103,666 294,252
Thereafter
2025
Total
2022
2023
—
750
750
51,421 51,421 51,421 51,562 51,421 38,460 295,706
39,795
$ 151,164 $ 402,766 $ 845,881 $ 274,162 $ 92,995 $ 673,052 $ 2,440,020
3,184 3,167 21,080
— —
3,186
4,056
5,122
—
—
The cash obligations in the table above do not include future cash obligations for variable interest expense
associated with our Term Loan A, Term Loan B or the balance on our outstanding revolving credit facility as
projections would be based on future outstanding balances as well as future variable interest rates, and we are unable
to make reliable estimates of either. The contractual facility developments included in the table above represent
development projects for which we have already entered into a contract with a customer that obligates us to
complete the development project. The table excludes two renovation projects, totaling approximately $23.0
million, with $21.8 million remaining to be incurred as of December 31, 2020, that the federal government has
agreed to reimburse over a twelve-month period. Certain of our other ongoing construction projects are not currently
under contract and thus are not included as a contractual obligation above as we may generally suspend or terminate
such projects without substantial penalty. With respect to the South Texas Family Residential Center, the cash
obligations included in the table above reflect the full contractual obligations of the lease of the site, excluding
contingent payments, even though the lease agreement provides us with the ability to terminate if ICE terminates the
amended IGSA associated with the facility.
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BR21871N-0321-10KW
We had $14.8 million of letters of credit outstanding at December 31, 2020 primarily to support our requirement to
repay fees and claims under our self-insured workers' compensation plan in the event we do not repay the fees and
claims due in accordance with the terms of the plan. The letters of credit are renewable annually. We did not have
any draws under any outstanding letters of credit during 2020, 2019, or 2018.
INFLATION
Many of our contracts include provisions for inflationary indexing, which mitigates an adverse impact of inflation
on net income. However, a substantial increase in personnel costs, workers' compensation or food and medical
expenses could have an adverse impact on our results of operations in the future to the extent that these expenses
increase at a faster pace than the per diem or fixed rates we receive for our management services. We outsource our
food service operations to a third party. The contract with our outsourced food service vendor contains certain
protections against increases in food costs.
SEASONALITY AND QUARTERLY RESULTS
Certain aspects of our business are subject to seasonal fluctuations. Because we are generally compensated for
operating and managing correctional, detention, and reentry facilities at a per diem rate, our financial results are
impacted by the number of calendar days in a fiscal quarter. Our fiscal year follows the calendar year and therefore,
our daily profits for the third and fourth quarters include two more days than the first quarter (except in leap years)
and one more day than the second quarter. Further, salaries and benefits represent the most significant component
of operating expenses. Significant portions of our unemployment taxes are recognized during the first quarter, when
base wage rates reset for unemployment tax purposes. Quarterly results are also 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 which may mitigate or exacerbate the impact of other seasonal influences.
Because of seasonality factors, and other factors described herein, results for any quarter are not necessarily
indicative of the results that may be achieved for the full fiscal year.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Our primary market risk exposure is to changes in U.S. interest rates. We are exposed to market risk related to our
revolving credit facility, Term Loan A and Term Loan B because the interest rates on these loans are subject to
fluctuations in the market. If the interest rate for our outstanding indebtedness under the revolving credit facility,
the Term Loan A, and the Term Loan B was 100 basis points higher or lower during the years ended December 31,
2020, 2019, and 2018, our interest expense, net of amounts capitalized, would have been increased by $8.0 million,
$5.0 million, and $3.6 million, respectively, and would have been decreased by $3.4 million, $5.0 million, and $3.6
million, respectively.
As of December 31, 2020, we had outstanding $350.0 million of senior notes due 2023 with a fixed interest rate of
4.625%, $250.0 million of senior notes due 2022 with a fixed interest rate of 5.0%, and $250.0 million of senior
notes due 2027 with a fixed interest rate of 4.75%. We also had $20.9 million outstanding under the Capital
Commerce Note with a fixed interest rate of 4.5%, $157.6 million outstanding under the Kansas Notes with a fixed
interest rate of 4.43%, and $144.5 million outstanding under the SSA-Baltimore Note with a fixed interest rate of
4.5%. Because the interest rates with respect to these instruments are fixed, a hypothetical 100 basis point increase
or decrease in market interest rates would not have a material impact on our financial statements.
We may, from time to time, invest our cash in a variety of short-term financial instruments. These instruments
generally consist of highly liquid investments with original maturities at the date of purchase of three months or less.
While these investments are subject to interest rate risk and will decline in value if market interest rates increase, a
hypothetical 100 basis point increase or decrease in market interest rates would not materially affect the value of
these instruments. See the risk factor discussion captioned "Rising interest rates would increase the cost of our
variable rate debt" under Item 1A of this Annual Report on Form 10-K for more discussion on interest rate risks that
may affect our financial condition.
87
BR21871N-0321-10KW ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
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.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROLS AND PROCEDURES.
Management's Evaluation of Disclosure Controls and Procedures
An evaluation was performed under the supervision and with the participation of our senior management, including
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of the end of the period covered by
this Annual Report. Based on that evaluation, our officers, including our Chief Executive Officer and Chief
Financial Officer, concluded that as of the end of the period covered by this Annual Report our disclosure controls
and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit
under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the
SEC's rules and forms and information required to be disclosed in the reports we file or submit under the Exchange
Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.
Management's Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial
reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control
over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. The Company's internal control over financial reporting includes those policies and procedures that:
(i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the Company;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the Company are being made only in accordance with authorizations of management
and directors of the Company; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the Company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Management assessed the effectiveness of the Company's internal control over financial reporting as of
December 31, 2020. In making this assessment, management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework released
in 2013. Based on this assessment, management believes that, as of December 31, 2020, the Company's internal
control over financial reporting was effective.
The Company's independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report
on the Company's internal control over financial reporting. That report begins on page 90.
88
BR21871N-0321-10KW Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the fourth fiscal
quarter of 2020 that have materially affected, or are likely to materially affect, our internal control over financial
reporting.
89
BR21871N-0321-10KW REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of CoreCivic, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited CoreCivic, Inc. and subsidiaries’ internal control over financial reporting as of December 31, 2020,
based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, CoreCivic, Inc.
and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2020, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the 2020 consolidated financial statements of the Company and our report dated February 22,
2021 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting included in the accompanying
Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on
the Company’s internal control over financial reporting based on our audit. We are a public accounting firm
registered with the PCAOB and are required to be independent with respect to the Company in accordance with the
U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and
the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We
believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ Ernst & Young LLP
Nashville, Tennessee
February 22, 2021
90
BR21871N-0321-10KW
ITEM 9B. OTHER INFORMATION
None.
91
BR21871N-0321-10KW PART III.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
The information required by this Item 10 will appear in, and is hereby incorporated by reference from, the
information under the headings "Proposal 1 – Election of Directors-Nominees Standing for Election," "Executive
Officers" "Corporate Governance – Board Meetings and Committees," "Corporate Governance – Director
Independence,” "Corporate Governance – Certain Relationships and Related Party Transactions," and "Security
Ownership of Certain Beneficial Owners and Management – Section 16(a) Beneficial Ownership Reporting
Compliance" in our definitive proxy statement for the 2021 Annual Meeting of Stockholders.
Our Board of Directors has adopted a Code of Ethics and Business Conduct applicable to the members of our Board
of Directors and our officers, including our Chief Executive Officer and Chief Financial Officer. In addition, the
Board of Directors has adopted Corporate Governance Guidelines and charters for our Audit Committee, Risk
Committee, Compensation Committee, Nominating and Governance Committee and Executive Committee. You
can access our Code of Ethics and Business Conduct, Corporate Governance Guidelines and current committee
charters under the "Investor Relations" tab on our website at www.corecivic.com.
ITEM 11. EXECUTIVE COMPENSATION.
The information required by this Item 11 will appear in, and is hereby incorporated by reference from, the
information under the headings "Executive and Director Compensation" in our definitive proxy statement for the
2021 Annual Meeting of Stockholders.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS.
The information required by this Item 12 will appear in, and is hereby incorporated by reference from, the
information under the heading "Security Ownership of Certain Beneficial Owners and Management – Ownership of
Common Stock – Directors and Executive Officers," and "Security Ownership of Certain Beneficial Owners and
Management – Ownership of Common Stock – Principal Stockholders" in our definitive proxy statement for the
2021 Annual Meeting of Stockholders.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth certain information as of December 31, 2020 regarding compensation plans under
which our equity securities are authorized for issuance.
(c)
Number of
Securities
Remaining
Available
for Future
Issuance
Under Equity
Compensation
Plans (Excluding
Securities
Reflected in
Column
(a))
(a)
Number of
Securities
to be Issued
Upon Exercise
of Outstanding
Options
(b)
Weighted –
Average
Exercise Price
of Outstanding
Options
471,828 $
22.13
4,734,016 (1)
—
471,828 $
—
22.13
—
4,734,016
Plan Category
Equity compensation plans approved by
stockholders
Equity compensation plans not approved by
stockholders
Total
(1) Reflects shares of common stock available for issuance under our 2020 Stock Incentive Plan, the only equity
compensation plan approved by our stockholders under which we continue to grant awards.
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BR21871N-0321-10KW
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
The information required by this Item 13 will appear in, and is hereby incorporated by reference from, the
information under the heading "Corporate Governance – Certain Relationships and Related Party Transactions" and
"Corporate Governance – Director Independence" in our definitive proxy statement for the 2021 Annual Meeting of
Stockholders.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
The information required by this Item 14 will appear in, and is hereby incorporated by reference from, the
information under the heading "Proposal 2 – Non-Binding Ratification of Appointment of Independent Registered
Public Accounting Firm" in our definitive proxy statement for the 2021 Annual Meeting of Stockholders.
93
BR21871N-0321-10KW PART IV.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
The following documents are filed as part of this Annual Report:
(1)
Financial Statements:
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 of this Annual Report.
(2)
Financial Statement Schedules:
Schedule III-Real Estate Assets and Accumulated Depreciation.
Information with respect to this item begins on page F-45 of this Annual Report on Form 10-K. Other
schedules are omitted because of the absence of conditions under which they are required or because the
required information is given in the financial statements or notes thereto.
(3)
Exhibits:
3.1
3.2
3.3
4.1
4.2
4.3
4.4
4.5
4.6
4.7
The following exhibits marked with an * are filed herewith. Exhibits marked with ** are furnished
herewith. Other exhibits have previously been filed with the Securities and Exchange Commission (the
"Commission") and are incorporated herein by reference:
Articles of Amendment and Restatement of the Company (previously filed as Exhibit 3.1 to the
Company's Current Report on Form 8-K (Commission File no. 001-16109), filed with the Commission
on May 20, 2013 and incorporated herein by this reference).
Articles of Amendment of the Company (previously filed as Exhibit 3.1 to the Company's Current
Report on Form 8-K (Commission File no. 001-16109), filed with the Commission on November 10,
2016 and incorporated herein by this reference).
Ninth Amended and Restated Bylaws of the Company (previously filed as Exhibit 3.3 to the Company's
Annual Report on Form 10-K (Commission File no. 001-16109), filed with the Commission on
February 22, 2018 and incorporated herein by this reference).
Specimen of certificate representing shares of the Company's Common Stock (previously filed as
Exhibit 4.1 to the Company's Current Report on Form 8-K (Commission File no. 001-16109), filed with
the Commission on November 10, 2016 and incorporated herein by this reference).
Indenture (2023 Notes), dated as of April 4, 2013, by and among the Company, certain of its
subsidiaries, and U.S. Bank National Association, as Trustee (previously filed as Exhibit 4.3 to the
Company's Current Report on Form 8-K (Commission File no. 001-16109), filed with the Commission
on April 8, 2013 and incorporated herein by this reference).
Indenture (2022 Notes and 2027 Notes), dated as of September 25, 2015, by and between the Company
and U.S. Bank National Association, as Trustee (previously filed as Exhibit 4.1 to the Company's
Current Report on Form 8-K (Commission File no. 001-16109), filed with the Commission on
September 25, 2015 and incorporated herein by this reference).
Form of 4.625% Senior Note due 2023 (incorporated by reference to Exhibit A to Exhibit 4.2 hereof).
Form of 5.00% Senior Note due 2022 (incorporated by reference to Exhibit A to Exhibit 4.8 hereof).
Form of 4.75% Senior Note due 2027 (incorporated by reference to Exhibit A to Exhibit 4.9 hereof).
Supplemental Indenture (2023 Notes), dated as of September 4, 2013, by and among the Company,
certain of its subsidiaries, and U.S. Bank National Association, as Trustee (previously filed as Exhibit
4.2 to the Company's Quarterly Report on Form 10-Q (Commission File no. 001-16109), filed with the
Commission on November 7, 2013 and incorporated herein by this reference).
94
BR21871N-0321-10KW
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
4.18
First Supplemental Indenture (2022 Notes), dated as of September 25, 2015, by and among the
Company, certain of its subsidiaries, and U.S. Bank National Association, as Trustee (previously filed
as Exhibit 4.2 to the Company's Current Report on Form 8-K (Commission File no. 001-16109), filed
with the Commission on September 25, 2015 and incorporated herein by this reference).
Second Supplemental Indenture (2027 Notes), dated as of October 13, 2017, by and among the
Company, the Guarantors, and U.S. Bank National Association, as Trustee (previously filed as Exhibit
4.2 to the Company's Current Report on Form 8-K (Commission File no. 001-16109), filed with the
Commission on October 13, 2017 and incorporated herein by this reference).
Schedule of additional Supplemental Indentures (2023 Notes), relating to the Supplemental Indenture in
Exhibit 4.7 hereof (previously filed as Exhibit 4.12 to the Company's Annual Report on Form 10-K
(Commission File no. 001-16109), filed with the Commission on February 25, 2016 and incorporated
herein by this reference).
Schedule of additional Supplemental Indentures (2022 Notes), relating to the Supplemental Indenture in
Exhibit 4.8 hereof (previously filed as Exhibit 4.13 to the Company's Annual Report on Form 10-K
(Commission File no. 001-16109), filed with the Commission on February 25, 2016 and incorporated
herein by this reference).
Supplemental Indenture (2023 Notes), dated as of January 7, 2019, by and among the Company, certain
of its subsidiaries, and Regions Bank, successor-in-interest to U.S. Bank National Association, as
Trustee (previously filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q (Commission
File No. 001-16109), filed with the Commission on May 9, 2019 and incorporated herein by this
reference).
Supplemental Indenture (2022 Notes), dated as of January 7, 2019, by and among the Company, certain
of its subsidiaries, and Regions Bank, successor-in-interest to U.S. Bank National Association, as
Trustee (previously filed as Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q (Commission
File No. 001-16109), filed with the Commission on May 9, 2019 and incorporated herein by this
reference).
Supplemental Indenture (2027 Notes), dated as of January 7, 2019, by and among the Company, certain
of its subsidiaries, and Regions Bank, successor-in-interest to U.S. Bank National Association, as
Trustee (previously filed as Exhibit 4.4 to the Company's Quarterly Report on Form 10-Q (Commission
File No. 001-16109), filed with the Commission on May 9, 2019 and incorporated herein by this
reference).
Supplemental Indenture (2023 Notes), dated as of February 3, 2020, by and among the Company,
certain of its subsidiaries, and Regions Bank, successor-in-interest to U.S. Bank National Association,
as Trustee (previously filed as Exhibit 4.1 to the Company's Quarterly Report on Form 10-Q
(Commission File No. 001-16109), filed with the Commission on May 7, 2020 and incorporated herein
by this reference).
Supplemental Indenture (2022 Notes), dated as of February 3, 2020, by and among the Company,
certain of its subsidiaries, and Regions Bank, successor-in-interest to U.S. Bank National Association,
as Trustee (previously filed as Exhibit 4.2 to the Company's Quarterly Report on Form 10-Q
(Commission File No. 001-16109), filed with the Commission on May 7, 2020 and incorporated herein
by this reference).
Supplemental Indenture (2027 Notes), dated as of February 3, 2020, by and among the Company,
certain of its subsidiaries, and Regions Bank, successor-in-interest to U.S. Bank National Association,
as Trustee (previously filed as Exhibit 4.3 to the Company's Quarterly Report on Form 10-Q
(Commission File No. 001-16109), filed with the Commission on May 7, 2020 and incorporated herein
by this reference).
Description of Securities of CoreCivic, Inc. (previously filed as Exhibit 4.15 to the Company's Annual
Report on Form 10-K (Commission File no. 001-16109), filed with the Commission on February 20,
2020 and incorporated herein by this reference).
95
BR21871N-0321-10KW
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
Second Amended and Restated Credit Agreement, dated as of April 17, 2018 (previously filed as
Exhibit 10.1 to the Company's Current Report on Form 8-K (Commission File no. 001-16109), filed
with the Commission on April 18, 2018 and incorporated herein by this reference).
First Amendment to Second Amended and Restated Credit Agreement, dated August 4, 2020, to the
Second Amended and Restated Credit Agreement, dated as of April 17, 2018 (previously filed as
Exhibit 10.2 to the Company's Current Report on Form 8-K (Commission File no. 001-16109), filed
with the Commission on August 5, 2020 and incorporated herein by this reference).
The Company's Non-Employee Directors' Compensation Plan (previously filed as Appendix C to the
Company's definitive Proxy Statement relating to its Annual Meeting of Stockholders (Commission File
no. 001-16109), filed with the Commission on April 11, 2003 and incorporated herein by this
reference).
Form of Executive Non-qualified Stock Option Agreement for the Company's 2008 Stock Incentive
Plan (previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K (Commission File
no. 001-16109), filed with the Commission on February 21, 2008 and incorporated herein by this
reference).
Amended Form of Executive Non-qualified Stock Option Agreement for the Company's 2008 Stock
Incentive Plan (previously filed as Exhibit 10.2 to the Company's Current Report on Form 8-K
(Commission File no. 001-16109), filed with the Commission on February 23, 2009 and incorporated
herein by this reference).
Form of Director Non-qualified Stock Option Agreement for the Company's 2008 Stock Incentive Plan
(previously filed as Exhibit 10.3 to the Company's Current Report on Form 8-K (Commission File no.
001-16109), filed with the Commission on February 21, 2008 and incorporated herein by this
reference).
The Company's Amended and Restated 2008 Stock Incentive Plan (previously filed as Exhibit 10.1 of
the Company's Current Report on Form 8-K (Commission File no. 001-16109), filed with the
Commission on May 17, 2011 and incorporated herein by this reference).
Form of Executive Restricted Stock Unit Award Agreement for the Company's Amended and Restated
2008 Stock Incentive Plan (previously filed as Exhibit 10.1 to the Company's Current Report on Form
8-K (Commission File no. 001-16109), filed with the Commission on March 21, 2012 and incorporated
herein by this reference).
Form of Non-Employee Directors Restricted Stock Unit Award Agreement with deferral provisions for
the Company's Amended and Restated 2008 Stock Incentive Plan (previously filed as Exhibit 10.2 to
the Company's Current Report on Form 8-K (Commission File no. 001-16109), filed with the
Commission on March 21, 2012 and incorporated herein by this reference).
Form of Non-Employee Directors Restricted Stock Unit Award Agreement for the Company's Amended
and Restated 2008 Stock Incentive Plan (previously filed as Exhibit 10.3 to the Company's Current
Report on Form 8-K (Commission File no. 001-16109), filed with the Commission on March 21, 2012
and incorporated herein by this reference).
Form of Restricted Stock Unit Award Agreement for the Company's Amended and Restated 2008 Stock
Incentive Plan (Time-Vesting Form for Executive Officers) (previously filed as Exhibit 10.23 to the
Company's Annual Report on Form 10-K (Commission File no. 001-16109), filed with the Commission
on February 27, 2013 and incorporated herein by this reference).
Amended and Restated Non-Employee Director Deferred Compensation Plan (previously filed as
Exhibit 10.1 to the Company's Current Report on Form 8-K (Commission File no. 001-16109), filed
with the Commission on August 16, 2007 and incorporated herein by this reference).
Amendment to the Amended and Restated Non-Employee Director Deferred Compensation Plan
(previously filed as Exhibit 10.35 to the Company's Annual Report on Form 10-K (Commission File no.
001-16109), filed with the Commission on February 24, 2010 and incorporated herein by this
reference).
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BR21871N-0321-10KW
10.14
10.15
10.16
Amended and Restated Executive Deferred Compensation Plan (previously filed as Exhibit 10.2 to the
Company's Current Report on Form 8-K (Commission File no. 001-16109), filed with the Commission
on August 16, 2007 and incorporated herein by this reference).
Form of Indemnification Agreement (previously filed as Exhibit 10.1 to the Company's Current Report
on Form 8-K (Commission File no. 001-16109), filed with the Commission on August 18, 2009 and
incorporated herein by this reference).
Restricted Stock Unit Award Cancellation Agreement, dated as of September 27, 2016, with Damon T.
Hininger (previously filed as Exhibit 10.1 to the Company's Current Report on Form 8-K (Commission
File no. 001-16109), filed with the Commission on September 27, 2016 and incorporated herein by this
reference).
10.17*
Form of Executive Employment Agreement, effective as of January 1, 2021.
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
10.26
Letter Agreement, dated as of December 31, 2017, with Harley G. Lappin (previously filed as Exhibit
10.29 to the Company's Annual Report on Form 10-K (Commission File no. 001-16109), filed with the
Commission on February 22, 2018 and incorporated herein by this reference).
Amended and Restated ATM Equity OfferingSM Sales Agreement, dated August 28, 2018 (previously
filed as Exhibit 1.1 to the Company's Current Report on Form 8-K (Commission File no. 001-16109),
filed with the Commission on August 28, 2018 and incorporated herein by this reference).
Term Loan Credit Agreement, dated as of December 18, 2019, by and among the Company, Nomura
Corporate Funding Americas, LLC, as Administrative Agent and Nomura Securities International, Inc.,
as a Lead Arranger and Bookrunner (previously filed as Exhibit 10.19 to the Company's Annual Report
on Form 10-K (Commission File no. 001-16109), filed with the Commission on February 20, 2020 and
incorporated herein by this reference).
First Amendment to Term Loan Credit Agreement, dated August 4, 2020, to the Term Loan Credit
Agreement, dated as of December 18, 2019 (previously filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K (Commission File no. 001-16109), filed with the Commission on August 5, 2020
and incorporated herein by this reference).
The Company's Second Amended and Restated 2008 Stock Incentive Plan (previously filed as Exhibit
10.1 to the Company's Current Report on Form 8-K (Commission File no. 001-16109), filed with the
Commission on May 12, 2017 and incorporated herein by this reference).
The Company's 2020 Stock Incentive Plan (previously filed as Exhibit 10.1 to the Company's Current
Report on Form 8-K (Commission File no. 001-16109), filed with the Commission on May 18, 2020
and incorporated herein by this reference).
Form of Executive Time-Based Restricted Share Unit Award Agreement for the Company's 2020 Stock
Incentive Plan (previously filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q
(Commission File no. 001-16109), filed with the Commission on August 6, 2020 and incorporated
herein by this reference).
Form of Executive Performance-Based Restricted Share Unit Award Agreement for the Company's
2020 Stock Incentive Plan (previously filed as Exhibit 10.2 to the Company's Quarterly Report on Form
10-Q (Commission File no. 001-16109), filed with the Commission on August 6, 2020 and incorporated
herein by this reference).
Form of Non-Employee Director Restricted Share Unit Agreement for the Company's 2020 Stock
Incentive Plan (previously filed as Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q
(Commission File no. 001-16109), filed with the Commission on August 6, 2020 and incorporated
herein by this reference).
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BR21871N-0321-10KW
10.27
Form of Non-Employee Director Restricted Share Unit Agreement with deferral provisions for the
Company's 2020 Stock Incentive Plan (previously filed as Exhibit 10.4 to the Company's Quarterly
Report on Form 10-Q (Commission File no. 001-16109), filed with the Commission on August 6, 2020
and incorporated herein by this reference).
21.1*
Subsidiaries of the Company.
22.1*
List of Guarantor Subsidiaries.
23.1*
Consent of Independent Registered Public Accounting Firm.
31.1*
Certification of the Company's Chief Executive Officer pursuant to Securities and Exchange Act
Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of the Company's Chief Financial Officer pursuant to Securities and Exchange Act Rules
13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certification of the Company's Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**
Certification of the Company's Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*
The following financial information from the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 2020, formatted in Inline XBRL (Extensible Business Reporting Language)
includes: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the
Consolidated Statements of Cash Flows, (iv) the Consolidated Statements of Stockholders' Equity, and
(v) the Notes to Consolidated Financial Statements. The instance document does not appear in the
interactive data file because its XBRL tags are embedded within the Inline XBRL document.
104*
The cover page from the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2020, formatted in Inline XBRL (included in Exhibit 101).
ITEM 16. FORM 10-K SUMMARY
None.
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BR21871N-0321-10KW
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Annual
Report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 22, 2021
CORECIVIC, INC.
By: /s/ Damon T. Hininger
Damon T. Hininger, President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
/s/ Damon T. Hininger
Damon T. Hininger, President and Chief Executive Officer
(Principal Executive Officer and Director)
February 22, 2021
/s/ David M. Garfinkle
David M. Garfinkle, Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
February 22, 2021
/s/ Mark A. Emkes
Mark A. Emkes, Chairman of the Board of Directors
/s/ Donna M. Alvarado
Donna M. Alvarado, Director
/s/ Robert J. Dennis
Robert J. Dennis, Director
/s/ Stacia A. Hylton
Stacia A. Hylton, Director
/s/ Harley G. Lappin
Harley G. Lappin, Director
/s/ Anne L. Mariucci
Anne L. Mariucci, Director
/s/ Thurgood Marshall, Jr.
Thurgood Marshall, Jr., Director
/s/ Devin I. Murphy
Devin I. Murphy, Director
/s/ Charles L. Overby
Charles L. Overby, Director
/s/ John R. Prann, Jr.
John R. Prann, Jr., Director
February 22, 2021
February 22, 2021
February 22, 2021
February 22, 2021
February 22, 2021
February 22, 2021
February 22, 2021
February 22, 2021
February 22, 2021
February 22, 2021
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BR21871N-0321-10KW INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
Consolidated Financial Statements of CoreCivic, Inc. and Subsidiaries
Report of Independent Registered Public Accounting Firm ................................................................................. F-2
Consolidated Balance Sheets as of December 31, 2020 and 2019 ....................................................................... F-4
Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018 ....................... F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018 ...................... F-6
Consolidated Statements of Stockholders' Equity for the years ended December 31, 2020, 2019 and 2018 ....... F-7
Notes to Consolidated Financial Statements......................................................................................................... F-8
Schedule III .......................................................................................................................................................... F-45
F-1
BR21871N-0321-10KW
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of CoreCivic, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of CoreCivic, Inc. and subsidiaries (the Company)
as of December 31, 2020 and 2019, the related consolidated statements of operations, stockholders’ equity, and cash
flows for each of the three years in the period ended December 31, 2020, and the related notes and financial
statement schedule listed in the Index at Item 15(2) (collectively referred to as the “consolidated financial
statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the
financial position of the Company at December 31, 2020 and 2019, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2020, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2020, based on
criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 framework) and our report dated February 22, 2021 expressed an unqualified
opinion thereon.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is
to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1)
relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective or complex judgments. The communication of this critical audit matter does not
alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
F-2
BR21871N-0321-10KW
Impairment of Long-Lived Assets
Description of the Matter At December 31, 2020, the Company’s property and equipment, net of accumulated
depreciation, was $2.6 billion, which includes $132.7 million related to five idled
facilities and $21.8 million related to other idle facilities. As discussed in Note 2 and
Note 6 to the consolidated financial statements, long-lived assets other than goodwill are
reviewed for impairment when circumstances indicate the carrying value of an asset
may not be recoverable. When the estimated undiscounted cash flows associated with
the asset or group of assets are less than their carrying value, an impairment is
recognized as the difference between the carrying value of the asset and its fair value.
How We Addressed the
Matter in Our Audit
Auditing management’s evaluation of long-lived assets for impairment was subjective
due to the estimation uncertainty in determining the future undiscounted cash flows of
facilities where indicators of impairment are determined to be present. These estimates
are particularly sensitive to the assumption as to whether the Company will obtain
contracts to utilize idle facilities in the future, which can be affected by expectations
about market developments and public policy as well as management’s intent to hold
and operate each facility over the term and in the manner assumed in the analysis.
We obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over the Company’s long-lived asset impairment review
process, including controls over management’s review of evidence supporting the
projected utilization of idle facilities and the recoverability of net book values based on
estimated cash flows.
To test the Company’s long-lived asset impairment analysis, we performed audit
procedures that included, among others, evaluating evidence to support the projected
utilization of facilities and to support recoverability of net book values based on
anticipated cash flows. We also performed sensitivity analyses to evaluate the impact of
changes in future undiscounted cash flows.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2002.
Nashville, Tennessee
February 22, 2021
F-3
BR21871N-0321-10KW
CORECIVIC, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
ASSETS
Cash and cash equivalents
Restricted cash
Accounts receivable, net of credit loss reserve of $6,103 and $3,217,
respectively
Prepaid expenses and other current assets
Assets held for sale
Total current assets
Real estate and related assets:
Property and equipment, net of accumulated depreciation of $1,559,388
and $1,510,117, respectively
Other real estate assets
Goodwill
Non-current deferred tax assets
Other assets
Total assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses
Current portion of long-term debt
Total current liabilities
Long-term debt, net
Deferred revenue
Other liabilities
Total liabilities
December 31,
2020
2019
$
113,219 $
23,549
267,705
33,243
279,406
717,122
2,350,272
228,243
5,902
11,113
396,663
3,709,315 $
274,318 $
39,087
313,405
1,747,664
18,336
216,468
2,295,873
$
$
92,120
26,973
280,785
35,507
—
435,385
2,700,107
238,637
50,537
16,058
350,907
3,791,631
337,462
31,349
368,811
1,928,023
12,469
105,579
2,414,882
Commitments and contingencies
Preferred stock – $0.01 par value; 50,000 shares authorized; none issued
and outstanding at December 31, 2020 and 2019, respectively
Common stock – $0.01 par value; 300,000 shares authorized;
119,638 and 119,096 shares issued and outstanding
at December 31, 2020 and 2019, respectively
Additional paid-in capital
Accumulated deficit
Total stockholders' equity
Non-controlling interest - operating partnership
Total equity
Total liabilities and stockholders' equity
—
—
1,196
1,835,494
(446,519 )
1,390,171
23,271
1,413,442
3,709,315 $
1,191
1,821,810
(446,252 )
1,376,749
—
1,376,749
3,791,631
$
The accompanying notes are an integral part of these consolidated financial statements.
F-4
BR21871N-0321-10KW
CORECIVIC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
REVENUES
EXPENSES:
Operating
General and administrative
Depreciation and amortization
Contingent consideration for acquisition of businesses
Asset impairments
OPERATING INCOME
OTHER (INCOME) EXPENSE:
Interest expense, net
Expenses associated with debt repayments
and refinancing transactions
Loss (gain) on sale of real estate assets
Other (income) expense
INCOME BEFORE INCOME TAXES
Income tax expense
NET INCOME
Net income attributable to non-controlling interest
NET INCOME ATTRIBUTABLE TO COMMON
STOCKHOLDERS
BASIC EARNINGS PER SHARE
DILUTED EARNINGS PER SHARE
DIVIDENDS DECLARED PER SHARE
For the Years Ended December 31,
2019
$ 1,905,485 $ 1,980,689 $ 1,835,766
2020
2018
1,406,376
124,338
150,861
620
60,628
1,742,823
162,662
1,422,769
127,078
144,572
—
4,706
1,699,125
281,564
1,315,250
106,865
156,501
6,085
1,580
1,586,281
249,485
83,299
84,401
80,753
7,141
13,023
(525 )
102,938
59,724
(4,386 )
55,338
(1,181 )
602
(287 )
123
84,839
196,725
(7,839 )
188,886
—
$
$
$
$
54,157 $
0.45 $
0.45 $
0.44 $
188,886 $
1.59 $
1.59 $
1.76 $
1,016
—
156
81,925
167,560
(8,353 )
159,207
—
159,207
1.34
1.34
1.72
The accompanying notes are an integral part of these consolidated financial statements.
F-5
BR21871N-0321-10KW
CORECIVIC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
For the Years Ended December 31,
2019
2018
2020
$
55,338 $
188,886
$
159,207
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization
Asset impairments
Amortization of debt issuance costs and other non-cash interest
Expenses associated with debt repayments and refinancing
transactions
Deferred income taxes
Loss (gain) on sale of real estate
Other expenses and non-cash items
Non-cash revenue and other income
Non-cash equity compensation
Changes in assets and liabilities, net:
Accounts receivable, prepaid expenses and other assets
Accounts payable, accrued expenses and other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for facility development and expansions
Expenditures for other capital improvements
Acquisitions, net of cash acquired
Net proceeds from sale of assets
Increase in other assets
Net cash provided by (used in) investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of debt and borrowings from credit facility
Scheduled principal repayments
Principal repayments of credit facility
Defeasance of non-recourse mortgage notes
Satisfaction and discharge of senior notes
Payment of debt defeasance, issuance and other refinancing and
related costs
Payment of lease obligations for financing leases
Contingent consideration for acquisition of businesses
Proceeds from exercise of stock options
Proceeds from sale/leaseback
Purchase and retirement of common stock
Dividends paid
Net cash used in financing activities
NET INCREASE IN CASH, CASH EQUIVALENTS
AND RESTRICTED CASH
CASH, CASH EQUIVALENTS AND RESTRICTED CASH,
beginning of period
CASH, CASH EQUIVALENTS AND RESTRICTED CASH,
end of period
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Debt assumed on acquisition of property
$
Establishment of right of use assets and lease liabilities
$
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
$
Cash paid during the period for:
Interest (net of amounts capitalized of $0.5 million, $6.0 million, and
$1.0 million in 2020, 2019, and 2018, respectively)
Income taxes paid
$
$
F-6
150,861
60,628
5,519
7,141
4,945
13,023
13,616
(7,301 )
17,264
16,769
17,727
355,530
(27,591 )
(56,196 )
(8,849 )
113,602
(7,998 )
12,968
374,000
(32,254 )
(520,000 )
(51,311 )
—
(11,162 )
(543 )
—
—
—
(3,575 )
(105,978 )
(350,823 )
144,572
4,706
3,351
602
(1,162 )
(287 )
13,320
(11,292 )
17,267
(16,938 )
11,359
354,384
(136,128 )
(57,192 )
(48,396 )
4,295
(7,168 )
(244,589 )
1,146,691
(14,121 )
(648,000 )
—
(325,000 )
(4,296 )
(538 )
(7,398 )
876
—
(3,531 )
(209,522 )
(64,839 )
17,675
44,956
119,093
74,137
156,501
1,580
3,419
1,016
(4,436 )
—
7,909
(14,509 )
13,132
(19,470 )
18,531
322,880
(58,239 )
(63,438 )
(175,588 )
12,911
(6,703 )
(291,057 )
809,831
(7,816 )
(603,500 )
—
—
(6,087 )
(3,744 )
(1,500 )
2,367
7,783
(3,005 )
(204,198 )
(9,869 )
21,954
52,183
136,768 $
119,093
$
74,137
52,217 $
116,263 $
—
137,946
$
$
157,280
—
$
The accompanying notes are an integral part of these consolidated financial statements.
16,437
88,132 $
1,322 $
85,698
$
71,787
13,303
BR21871N-0321-10KW
CORECIVIC, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018
(in thousands)
Stockholders' Equity
Non-
controlling
Interest -
Common Stock
Par
Additional
Paid-in
Shares Value Capital
Total
Accumulated Stockholders' Operating
Deficit
Total
Partnership Equity
Equity
—
(139 )
(164 )
(3,004 )
(3,529 )
(2,575 )
462
147
— (205,675 )
—
—
—
—
—
—
— —
— —
— —
13,132
—
2,367
— (205,675 ) (205,675 )
13,132
—
2,367
13,132
(5 )
2,366
— —
(1 )
— —
(2 )
— $ 1,451,608
— 159,207
(3,005 )
—
— —
5
1
—
(2,575 )
— $ 1,415,059
— 188,886
(3,531 )
—
Balance as of December 31, 2017 118,204 $ 1,182 $ 1,794,713 $ (344,287 ) $ 1,451,608 $
— 159,207 159,207
Net income
Retirement of common stock
(3,005 )
—
Dividends declared on common
stock ($1.72 per share)
Restricted stock compensation, net
of forfeitures
Restricted stock grants
Stock options exercised
Cumulative effect of adoption of
new accounting standard
(2,575 )
Balance as of December 31, 2018 118,674 $ 1,187 $ 1,807,202 $ (393,330 ) $ 1,415,059 $
— 188,886 188,886
Net income
Retirement of common stock
(3,531 )
—
Dividends declared on common
stock ($1.76 per share)
Restricted stock compensation, net
of forfeitures
Restricted stock grants
Stock options exercised
Cumulative effect of adoption of
new accounting standard
(29,940 )
Balance as of December 31, 2019 119,096 $ 1,191 $ 1,821,810 $ (446,252 ) $ 1,376,749 $
54,157
Net income
Retirement of common stock
(3,575 )
Dividends declared on common
stock ($0.44 per share)
— —
Reductions in dividends on RSUs — —
Restricted stock compensation, net
of forfeitures
Restricted stock grants
Cumulative effect of adoption of
new accounting standard
Contributions to operating
partnership
Distributions to non-controlling
interest
(1,181 )
Balance as of December 31, 2020 119,638 $ 1,196 $ 1,835,494 $ (446,519 ) $ 1,390,171 $ 23,271 $ 1,413,442
—
(29,940 )
— $ 1,376,749
55,338
(3,575 )
— —
5
1
— —
7
— —
(2 )
17,267
(5 )
875
17,267
—
876
— (211,868 ) (211,868 )
17,267
—
876
(53,415 )
27
(53,415 )
27
17,264
(7 )
(53,415 )
27
17,264
—
—
(3,573 )
— —
— —
— —
— —
1,181
—
17,264
—
—
—
—
—
—
—
— (211,868 )
— 23,271
524
62
—
—
—
—
—
—
(29,940 )
54,157
(1,181 )
(1,036 )
(1,036 )
23,271
(1,036 )
(209 )
751
—
—
—
—
—
—
—
—
—
The accompanying notes are an integral part of these consolidated financial statements.
F-7
BR21871N-0321-10KW
CORECIVIC, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020, 2019 AND 2018
1. ORGANIZATION AND OPERATIONS
CoreCivic, Inc. (together with its subsidiaries, the "Company" or "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. The Company also believes it is the largest private owner of real estate used by U.S.
government agencies. Through three segments, CoreCivic Safety, CoreCivic Community, and CoreCivic
Properties, the Company provides a broad range of solutions to government partners that serve the public
good through corrections and detention management, a network of residential reentry centers to help address
America's recidivism crisis, and government real estate solutions. As of December 31, 2020, through its
CoreCivic Safety segment, the Company operated 47 correctional and detention facilities, 42 of which the
Company owned, with a total design capacity of approximately 70,000 beds. Through its CoreCivic
Community segment, the Company owned and operated 27 residential reentry centers with a total design
capacity of approximately 5,000 beds. In addition, through its CoreCivic Properties segment, the Company
owned 15 properties for lease to third parties and used by government agencies, totaling 2.7 million square
feet.
In addition to providing fundamental residential services, CoreCivic's correctional, detention, and reentry
facilities offer a variety of rehabilitation and educational programs, including basic education, faith-based
services, life skills and employment training, and substance abuse treatment. These services are intended to
help reduce recidivism and to prepare offenders for their successful reentry into society upon their release.
CoreCivic also provides or makes available to offenders certain health care (including medical, dental, and
mental health services), food services, and work and recreational programs.
CoreCivic has operated as a real estate investment trust ("REIT") from January 1, 2013 through December 31,
2020. As a REIT, the Company has provided services and conducted other business activities through taxable
REIT subsidiaries ("TRSs"). A TRS is a subsidiary of a REIT that is subject to applicable corporate income
tax and certain qualification requirements. The Company's use of TRSs has permitted CoreCivic to engage in
certain business activities in which the REIT may not engage directly, so long as these activities are conducted
in entities that elect to be treated as TRSs under the Internal Revenue Code of 1986, as amended, and has
enabled CoreCivic to, among other things, provide correctional services at facilities it owns and at facilities
owned by its government partners. A TRS is not subject to the distribution requirements applicable to REITs
so it may retain income generated by its operations for reinvestment.
On June 17, 2020, the Company announced that its Board of Directors ("BOD") was evaluating corporate
structure and capital allocation alternatives. Concurrently, the BOD suspended the Company's quarterly
dividend while it assessed how best to use its free cash flow to build shareholder value, maintain service
excellence, and offer and implement unique solutions for its government partners and the communities in
which it serves. On August 5, 2020, the Company announced that the BOD concluded its analysis and
unanimously approved a plan to revoke the Company's REIT election and become a taxable C Corporation,
effective January 1, 2021. As a result, the Company will no longer be required to operate under REIT rules,
including the requirement to distribute at least 90% of its taxable income to its stockholders, which will
provide the Company with greater flexibility to use its free cash flow. Beginning January 1, 2021, the
Company will be subject to federal and state income taxes on its taxable income at applicable tax rates, and
will no longer be entitled to a tax deduction for dividends paid. The Company continued to operate as a REIT
for the 2020 tax year, and existing REIT requirements and limitations, including those established by the
Company’s organizational documents, remained in place until January 1, 2021. The BOD also voted
unanimously to discontinue the Company's quarterly dividend and prioritize allocating the Company’s free
cash flow to reduce debt.
F-8
BR21871N-0321-10KW
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting
principles and include the accounts of CoreCivic on a consolidated basis with its wholly-owned subsidiaries.
All intercompany balances and transactions have been eliminated.
Certain reclassifications have been made to the consolidated statement of operations and the consolidated
statement of cash flows in 2019 to conform to the current year presentation.
Cash and Cash Equivalents
CoreCivic considers all liquid deposits and investments with a maturity of three months or less at the time of
purchase to be cash equivalents.
Restricted Cash
Restricted cash at December 31, 2020 and 2019 included deposit accounts totaling $10.3 million and $27.0
million, respectively, to ensure the timely payment of certain operating expenses, capital expenditures and
debt service associated with the SSA-Baltimore property and the Lansing Correctional Facility, as further
discussed in Notes 6 and 11. The restricted cash accounts are required under the terms of the indebtedness
securing such properties. Restricted cash at December 31, 2020 also included $13.2 million for deposits
primarily associated with Government Real Estate Solutions, LLC ("GRES") as further discussed in Note 6.
Accounts Receivable and Credit Loss Reserve
At December 31, 2020 and 2019, accounts receivable of $267.7 million and $280.8 million, respectively, were
net of credit loss reserve totaling $6.1 million and $3.2 million, respectively. Accounts receivable consist
primarily of amounts due from federal, state, and local government agencies for the utilization of CoreCivic's
properties. Accounts receivable also consist of amounts due for operating and managing the Company's
correctional, detention, and residential reentry facilities, as well as its electronic monitoring and case
management services operations.
Accounts receivable are stated at estimated net realizable value. CoreCivic recognizes allowances for
doubtful accounts to ensure receivables are not overstated due to uncollectibility. Bad debt reserves are
maintained for customers using an expected loss model based on a variety of factors, including the nature of
the accounts receivable, risks of loss, length of time receivables are past due, and historical experience. If
circumstances related to customers change, estimates of the recoverability of receivables would be further
adjusted.
Property and Equipment
Property and equipment are carried at cost. Assets acquired by CoreCivic in conjunction with acquisitions are
recorded at estimated fair market value at the time of purchase. Betterments, renewals and significant repairs
that extend the life of an asset are capitalized; other repair and maintenance costs are expensed. Interest is
capitalized to the asset to which it relates in connection with the construction or expansion of real estate
properties. Construction costs directly associated with the development of a property are capitalized as part of
the cost of the development project. Such costs are written-off to expense whenever a project is abandoned.
The cost and accumulated depreciation applicable to assets retired are removed from the accounts and the gain
or loss on disposition is recognized in income. Depreciation is computed over the estimated useful lives of
depreciable assets using the straight-line method. Useful lives for property and equipment are as follows:
Land improvements
Buildings and improvements
Equipment and software
Office furniture and fixtures
5 – 20 years
5 – 50 years
3 – 10 years
5 years
F-9
BR21871N-0321-10KW
Other Real Estate Assets
Other real estate assets are accounted for in accordance with Accounting Standards Codification ("ASC") 853,
"Service Concession Arrangements". ASC 853 stipulates that the facilities subject to the standard may not be
accounted for as a lease, nor should the infrastructure used in the service concession arrangement be
recognized as property and equipment by the operating entity. Instead, the contracts should be accounted for
under the applicable revenue standards. The Company owns four facilities that are accounted for as service
concession arrangements. The facilities accounted for under ASC 853 were constructed in periods prior to
2013.
On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") 2014-09, "Revenue from
Contracts with Customers" and its subsequent corresponding update, ASC 606. For facilities which CoreCivic
constructed for the public entity, two separate and distinct performance obligations exist. Service revenue is
recognized as provided. All revenues and costs related to the construction of the facilities were recognized
upon adoption of ASC 606. Revenue recognized related to the construction of the facilities for which cash has
not yet been received is recorded as a contract asset and is amortized and evaluated for impairment on an on-
going basis. For facilities contributed to a service contract, the cost of the facility is accounted for as costs to
fulfill the service contract and the cost is recognized over the term of the service contract. The costs related to
contract assets and costs to fulfill the service contracts are recoverable if the contract is terminated or not
renewed due to the existence of residual interest options.
Prior to the adoption of ASC 606, other real estate assets were stated at cost, net of accumulated amortization.
These assets represent the cost of all infrastructure to be transferred to the public entity grantors should the
grantors exercise their residual interest. The costs related to the facilities constructed for a governmental entity
were deferred as an other real estate asset, and the deferred costs were amortized in proportion to revenue
recognized over the term of the related services arrangement. The costs related to the facilities that were
constructed before entering into the service concession arrangement were amortized in proportion to revenue
recognized over the term of the related service contract as an investment in the service contract.
Accounting for the Impairment of Long-Lived Assets Other Than Goodwill
Long-lived assets other than goodwill are reviewed for impairment when circumstances indicate the carrying
value of an asset may not be recoverable. When circumstances indicate an asset may not be recoverable,
impairment is recognized when the estimated undiscounted cash flows associated with the asset or group of
assets is less than their carrying value. If impairment exists, an adjustment is made to write the asset down to
its fair value, and a loss is recorded as the difference between the carrying value and fair value. Fair values
are determined based on quoted market values, comparable sales data, discounted cash flows or internal and
external appraisals, as applicable.
Goodwill
Goodwill represents the cost in excess of the net assets of businesses acquired. As further discussed in Note 3,
goodwill is tested for impairment at least annually using a fair-value based approach.
Investment in Affiliates
Investments in affiliates that are equal to or less than 50%-owned over which CoreCivic can exercise
significant influence are accounted for using the equity method of accounting. Investments under the equity
method are recorded at cost and subsequently adjusted for contributions, distributions, and net income
attributable to the Company's ownership based on the governing agreement.
F-10
BR21871N-0321-10KW Debt Issuance Costs
Debt issuance costs, excluding those costs incurred related to CoreCivic's revolving credit facility, are
presented as a direct deduction from the face amount of the related liability on the consolidated balance sheets.
Debt issuance costs related to the Company's revolving credit facility are included in other assets on the
consolidated balance sheets. Generally, debt issuance costs are capitalized and amortized into interest expense
using the interest method, or on a straight-line basis over the term of the related debt, if not materially
different than the interest method. However, certain debt issuance costs incurred in connection with debt
refinancings are charged to expense in accordance with ASC 470-50, "Modifications and Extinguishments".
Revenue Recognition
CoreCivic maintains contracts with certain governmental entities to manage their facilities for fixed per diem
rates. CoreCivic also maintains contracts with various federal, state, and local governmental entities for the
housing of offenders in company-owned facilities at fixed per diem rates or monthly fixed rates. These
contracts usually contain expiration dates with renewal options ranging from annual to multi-year renewals.
Most of these contracts have current terms that require renewal every two to five years. Additionally, most
facility management contracts contain clauses that allow the government agency to terminate a contract
without cause, and are generally subject to legislative appropriations. CoreCivic generally expects to renew
these contracts for periods consistent with the remaining renewal options allowed by the contracts or other
reasonable extensions; however, no assurance can be given that such renewals will be obtained. Fixed
monthly rate revenue is recorded in the month earned and fixed per diem revenue, including revenue under
those contracts that include guaranteed minimum populations, is recorded based on the per diem rate
multiplied by the number of offenders housed or guaranteed during the respective period.
CoreCivic recognizes any additional management service revenues upon completion of services provided to
the customer. Certain of the government agencies also have the authority to audit and investigate CoreCivic's
contracts with them. If the agency determines that CoreCivic has improperly allocated costs to a specific
contract or otherwise was unable to perform certain contractual services, CoreCivic may not be reimbursed for
those costs and could be required to refund the amount of any such costs that have been reimbursed, or to pay
liquidated damages. In these instances, the amounts required to be returned to the customer are classified as
reductions to revenue.
Lease revenue is recognized in accordance with ASC 842, "Leases". In accordance with ASC 842, minimum
lease revenue is recognized on a straight-line basis over the term of the related lease. Leasehold incentives are
recognized as a reduction to lease revenue on a straight-line basis over the term of the related lease. Lease
revenue associated with expense reimbursements from tenants is recognized in the period that the related
expenses are incurred based upon the tenant lease provision.
Other revenue consists primarily of ancillary revenues associated with operating correctional, detention and
residential reentry facilities, such as commissary, phone, and vending sales, and is recorded in the period the
goods and services are provided. Revenues generated from prisoner transportation services for governmental
agencies are recorded in the period the inmates have been transported to their destination.
F-11
BR21871N-0321-10KW Self-Funded Insurance and Litigation Reserves
CoreCivic is significantly self-insured for employee health, workers' compensation, automobile liability
claims, and general liability claims. As such, CoreCivic's insurance expense is largely dependent on claims
experience and CoreCivic's ability to control its claims experience. CoreCivic has consistently accrued the
estimated liability for employee health insurance based on its history of claims experience and time lag
between the incident date and the date the cost is paid by CoreCivic. CoreCivic has accrued the estimated
liability for workers' compensation claims based on an actuarially determined liability, discounted to the net
present value of the outstanding liabilities, using a combination of actuarial methods used to project ultimate
losses, and the Company's automobile insurance claims based on estimated development factors on claims
incurred. The liability for employee health, workers' compensation, and automobile insurance includes
estimates for both claims incurred and for claims incurred but not reported. CoreCivic records its best
estimate of the probable costs for the resolution of certain claims and legal proceedings in which it is involved,
if estimable. In addition, the Company is subject to current and potential future claims and legal proceedings
for which little or no accrual has been reflected because the Company's current assessment of the potential
exposure is nominal. These estimates have been developed in consultation with CoreCivic's General
Counsel's office and, as appropriate, outside counsel handling these matters, and are based upon an analysis of
potential results, assuming a combination of litigation and settlement strategies. These estimates could change
in the future.
Income Taxes
CoreCivic operated in compliance with REIT requirements for federal income tax purposes from January 1,
2013 through December 31, 2020. As a REIT, the Company generally has not been subject to corporate level
federal income tax on taxable income it distributes to its stockholders as long as it meets the organizational
and operational requirements under the REIT rules. However, certain subsidiaries have made an election to be
treated as TRSs in conjunction with the Company's REIT election. The TRS elections have permitted
CoreCivic to engage in certain business activities in which the REIT may not engage directly, so long as these
activities are conducted in entities that elect to be treated as TRSs under the Internal Revenue Code of 1986,
as amended. A TRS is subject to federal and state income taxes on the income from these activities and
therefore, CoreCivic includes a provision for taxes in its consolidated financial statements.
Income taxes are accounted for under the provisions of ASC 740, "Income Taxes". ASC 740 generally
requires CoreCivic to record deferred income taxes for the tax effect of differences between book and tax
bases of its assets and liabilities. Deferred income taxes reflect the available net operating losses and the net
tax effect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes using enacted tax rates in effect for the year
in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and
liabilities is recognized in the statement of operations in the period that includes the enactment date.
Realization of the future tax benefits related to deferred tax assets is dependent on many factors, including
CoreCivic's past earnings history, expected future earnings, the character and jurisdiction of such earnings,
unsettled circumstances that, if unfavorably resolved, would adversely affect utilization of its deferred tax
assets, carryback and carryforward periods, and tax strategies that could potentially enhance the likelihood of
realization of a deferred tax asset.
CoreCivic's deferred tax assets and liabilities are classified as non-current on the consolidated balance sheets.
See Note 13 for further discussion of the significant components of CoreCivic's deferred tax assets and
liabilities and the impact on deferred tax assets and liabilities that resulted from the lower corporate tax rates
enacted under the Tax Cuts and Jobs Act ("the TCJA") in December 2017.
Income tax contingencies are accounted for under the provisions of ASC 740. ASC 740 prescribes a
recognition threshold and measurement attribute for the financial statement recognition and measurement of a
tax position taken or expected to be taken in a tax return. The guidance prescribed in ASC 740 establishes a
recognition threshold of more likely than not that a tax position will be sustained upon examination. The
measurement attribute requires that a tax position be measured at the largest amount of benefit that is greater
than 50% likely of being realized upon ultimate settlement.
F-12
BR21871N-0321-10KW Foreign Currency Transactions
CoreCivic has extended a working capital loan to Agecroft Prison Management, Ltd. ("APM"), the operator of
a correctional facility in Salford, England previously owned by a subsidiary of CoreCivic. The working
capital loan is denominated in British pounds; consequently, CoreCivic adjusts this receivable to the current
exchange rate at each balance sheet date and recognizes the unrealized currency gain or loss in current period
earnings. See Note 8 for further discussion of CoreCivic's relationship with APM.
Fair Value of Financial Instruments
To meet the reporting requirements of ASC 825, "Financial Instruments", regarding fair value of financial
instruments, CoreCivic calculates the estimated fair value of financial instruments using market interest rates,
quoted market prices of similar instruments, or discounted cash flow techniques with observable Level 1
inputs for publicly traded debt and Level 2 inputs for all other financial instruments, as defined in ASC 820,
"Fair Value Measurement". At December 31, 2020 and 2019, there were no material differences between the
carrying amounts and the estimated fair values of CoreCivic's financial instruments, other than as follows (in
thousands):
December 31,
2020
2019
Carrying
Amount
Fair Value
Carrying
Amount
Fair Value
Note receivable from APM
Debt
3,094 $
$
3,949
$ (1,809,517 ) $ (1,774,016 ) $ (1,986,865 ) $ (1,964,366 )
3,896 $
2,989 $
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with U.S. generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual results could differ from those
estimates and those differences could be material.
Concentration of Credit Risks
CoreCivic's credit risks relate primarily to cash and cash equivalents, restricted cash, and accounts receivable.
Cash and cash equivalents and restricted cash are primarily held in bank accounts and overnight investments.
CoreCivic maintains deposits of cash in excess of federally insured limits with certain financial institutions.
CoreCivic's accounts receivable represents amounts due primarily from governmental agencies. CoreCivic's
financial instruments are subject to the possibility of loss in carrying value as a result of either the failure of
other parties to perform according to their contractual obligations or changes in market prices that make the
instruments less valuable.
F-13
BR21871N-0321-10KW
CoreCivic derives its revenues primarily from amounts earned under federal, state, and local government
contracts. For each of the years ended December 31, 2020, 2019, and 2018, federal correctional and detention
authorities represented 52%, 51%, and 48%, respectively, of CoreCivic's total revenue. Federal correctional
and detention authorities consist primarily of U.S. Immigration and Customs Enforcement ("ICE"), the United
States Marshals Service ("USMS"), and the Federal Bureau of Prisons ("BOP"). ICE accounted for 28%,
29%, and 25% of total revenue for 2020, 2019, and 2018, respectively. The USMS accounted for 21%, 17%,
and 17% of total revenue for 2020, 2019, and 2018, respectively. The BOP accounted for 3%, 5%, and 6% of
total revenue for 2020, 2019, and 2018, respectively. These federal customers have management contracts at
facilities CoreCivic owns and at facilities CoreCivic manages but does not own. State revenues from contracts
at correctional, detention, and residential reentry facilities that CoreCivic operates represented 33%, 34%, and
39% of total revenue during the years ended December 31, 2020, 2019, and 2018, respectively. ICE and the
USMS each generated 10% or more of total revenue during 2020, 2019, and 2018. Although the revenue
generated from each of these agencies is derived from numerous management contracts and various types of
properties, i.e. correctional, detention, reentry, and leased, the loss of one or more of such contracts could have
a material impact on CoreCivic's financial condition and results of operations.
Accounting for Stock-Based Compensation
CoreCivic accounts for restricted stock-based compensation under the recognition and measurement principles
of ASC 718, "Compensation-Stock Compensation". CoreCivic amortizes the fair market value as of the grant
date of restricted stock unit ("RSU") awards over the vesting period using the straight-line method. The fair
market value of performance-based restricted stock units is amortized over the vesting period as long as
CoreCivic expects to meet the performance criteria. To the extent performance-based RSUs are expected to
increase or decrease based on revised estimates of performance, the related expense is adjusted accordingly.
If achievement of the performance criteria becomes improbable, an adjustment is made to reverse the expense
previously recognized. The Company estimates the number of awards expected to be forfeited and adjusts the
estimate when it is likely to change.
Leases
In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, "Leases (Topic
842)", which requires lessees to put most leases on their balance sheets but recognize expenses on their
income statements in a manner similar to previous accounting requirements. ASU 2016-02 also eliminated
previous real estate-specific provisions for all entities. For lessors, the ASU modifies the classification criteria
and the accounting for sales-type and direct financing leases. For finance leases and operating leases, a lessee
should recognize on the balance sheet a liability to make lease payments and a right-of-use ("ROU") asset
representing its right to use the underlying asset for the lease term, with each initially measured at the present
value of the lease payments. In July 2018, the FASB issued ASU 2018-11, "Targeted Improvements – Leases
(Topic 842)", which permits entities to adopt a new transition method whereby the modified retrospective
transition method would allow companies to recognize the cumulative-effect adjustment in the period of
adoption rather than the earliest period presented and continue to apply the legacy guidance in ASC 840,
"Leases", in the comparative periods presented. Further, ASU 2018-11 also allows entities to elect, by class of
underlying asset, to not separate non-lease components from the associated lease components when certain
criteria are met. Adoption results in an increase in long-term assets and liabilities for leases where the
Company is the lessee.
F-14
BR21871N-0321-10KW CoreCivic adopted ASU 2016-02 and ASU 2018-11, cumulatively ("ASC 842"), on January 1, 2019. The
Company elected the modified retrospective transition method and recognized the cumulative-effect
adjustment resulting from adoption of ASC 842 in the first quarter of 2019. CoreCivic also elected to adopt
the package of available practical expedients that permits lessees and lessors to not reassess certain items,
including whether any expired or existing contracts are or contain leases, lease classification of any expired or
existing leases, and initial direct costs for any expired or existing leases. In addition, the Company made an
accounting policy election to apply the "short-term lease exception" permitted by ASC 842 for all classes of
underlying assets. With the exception of the South Texas Family Residential Center lease, as further
described in Note 5, the Company also elected the practical expedient that permits lessees to make an
accounting policy election to account for each separate lease component of a contract and its associated non-
lease components as a single lease component. Prior to the adoption of ASC 842, a portion of the rental
payments for the South Texas Family Residential Center was classified as depreciation and interest expense in
accordance with ASC 840-40-55, formerly Emerging Issues Task Force No. 97-10, "The Effect of Lessee
Involvement in Asset Construction." Upon adoption of ASC 842, all rental payments associated with this
lease are classified as operating expenses.
Upon adoption of ASC 842, CoreCivic recognized a ROU asset of $115.6 million and a lease liability of $82.9
million for all operating leases identified by the Company as applicable under the guidance of ASC 842,
including the lease for the South Texas Family Residential Center. For those operating leases that contain
renewal options, the Company included the renewal period in the lease terms, and the related payments are
reflected in the ROU asset and lease liability, when it is reasonably certain that a renewal option will be
exercised. The ROU asset is included in other assets on the consolidated balance sheets, while the current
portion of the lease liability is included in accounts payable and accrued expenses, and the long-term portion
of the liability is included in other liabilities on the consolidated balance sheets. The Company also recognized
a net charge of approximately $29.9 million to accumulated deficit upon adoption of ASC 842. Because
CoreCivic does not generally have access to the interest rates implicit in its leases, the Company utilized its
incremental borrowing rate, based upon the terms and tenure of each base lease, as the discount rate when
calculating the present value of future minimum lease payments for each lease arrangement. The weighted
average discount rate associated with the operating leases at adoption of ASC 842 was 5.3%.
For leases where the Company is the lessor, upon adoption of ASC 842, the Company elected to also apply
the practical expedient to not separate non-lease components from the associated lease component if certain
criteria are met for each class of underlying assets. Lease components are elements of an arrangement that
provide the customer with the right to use an identified asset. Non-lease components are distinct elements of a
contract that are not related to securing the use of the leased asset and revenue is recognized in accordance
with ASC 606. The Company considers common area maintenance ("CAM") and service income associated
with tenant work orders to be non-lease components because they represent delivery of a separate service but
are not considered a cost of securing the identified asset. In the case of the Company’s business, the identified
asset would be the leased real estate. The Company assessed and concluded that the timing and pattern of
transfer for non-lease components and the associated lease component are the same. The Company determined
that the predominant component was the lease component and as such its leases continue to qualify as
operating leases. The Company made a policy election to account for and present the lease component and the
non-lease component as a single component in revenue.
F-15
BR21871N-0321-10KW
Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments – Credit Losses – Measurement of
Credit Losses on Financial Instruments," which changes how entities measure credit losses for most financial
assets and certain other instruments that are not measured at fair value through net income. The ASU replaces
the "incurred loss" approach with an "expected loss" model for instruments measured at amortized cost. For
trade and other receivables, held-to-maturity debt securities, contract assets, loans and other instruments,
entities are now required to use a new forward-looking "expected loss" model that generally will result in the
earlier recognition of allowances for losses. Upon its effective date, CoreCivic adopted the ASU in the first
quarter of 2020. The Company recognized a charge of $1.0 million to accumulated deficit upon adoption of
ASU 2016-13. Based principally on the fact that the largest portion of the Company's accounts receivable is
with governmental agencies with high credit ratings, the adoption of ASU 2016-13 did not have a material
impact on its financial statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the
American Institute of Certified Public Accountants and the Securities and Exchange Commission ("SEC") did
not, or are not expected to, have a material effect on the Company's results of operations or financial position.
3. GOODWILL
ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test of Goodwill Impairment",
establishes accounting and reporting requirements for goodwill and other intangible assets. Goodwill was $5.9
million and $50.5 million as of December 31, 2020 and 2019, respectively. Of these amounts, goodwill was
$5.9 million and $7.9 million as of December 31, 2020 and 2019, respectively, for the Company's CoreCivic
Safety segment, and was $42.6 million as of December 31, 2019, for its CoreCivic Community segment. This
goodwill was established in connection with multiple business combination transactions.
Under the provisions of ASU 2017-04, CoreCivic performs a qualitative assessment to determine whether the
existence of events or circumstances leads to a determination that it is more likely than not that the fair value
of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances,
the Company determines it is more likely than not that the fair value of a reporting unit is less than its carrying
amount, then the Company performs a quantitative impairment test. If a quantitative test is required,
CoreCivic performs an assessment to identify the existence of impairment and to measure the excess of a
reporting unit's carrying amount over its fair value by using a combination of various common valuation
techniques, including market multiples and discounted cash flows under valuation methodologies that include
an income approach and a market approach. The income valuation approach includes certain significant
assumptions impacting projected future cash flows, such as projected revenue, projected operating costs, and
the weighted average cost of capital, which are affected by expectations about future market or economic
conditions. These impairment tests are required to be performed at least annually. CoreCivic performs its
impairment tests during the fourth quarter, in connection with its annual budgeting process, and whenever
circumstances indicate the carrying value of goodwill may not be recoverable.
In connection with the Company's annual impairment test for the goodwill associated with the Community
reporting unit, during the fourth quarter of 2020, the Company performed a quantitative goodwill impairment
test and concluded to record an impairment charge of $42.6 million, representing the full value of goodwill
allocated to this reporting unit. The Company's analysis considered numerous factors, with the impairment
predominantly driven by the Company's consideration of the broad-based declines in the market capitalization
of publicly-traded companies in the Company's industry, primarily during the second half of 2020, as well as
the reduction in cash flows from the COVID-19 pandemic and the anticipated change in tax structure effective
January 1, 2021. The Company intends to continue to pursue investments in this segment, which could
generate additional goodwill from business combinations transacted in this segment in the future, which could
result in additional charges if the goodwill becomes impaired under the requirements of ASU 2017-04.
F-16
BR21871N-0321-10KW The Company also performed qualitative assessments of goodwill recorded in its Safety reporting units in the
fourth quarter of 2020, concluding there was no impairment for such goodwill. The Company recorded
certain interim event-driven impairment charges in 2020. During the third quarter of 2020, the Company
provided notice to the local county customers at two managed-only facilities of its intent to terminate the
contracts. The Company transitioned operations of the 1,046-bed Silverdale Detention Center in December
2020 and transitioned operations at the 1,348-bed Metro-Davidson County Detention Facility in October
2020. As a result of these expected contract terminations, during the second quarter of 2020, the Company
recognized goodwill impairments of $2.0 million associated with these two managed-only facilities' reporting
units.
4. REAL ESTATE AND RELATED ASSETS
At December 31, 2020, CoreCivic owned 69 correctional, detention, and residential reentry real estate
properties, and 15 properties for lease to third parties. At December 31, 2020, CoreCivic also managed five
correctional and detention facilities owned by governmental agencies.
Property and equipment, at cost, consists of the following (in thousands):
Land and improvements
Buildings and improvements
Equipment and software
Office furniture and fixtures
Construction in progress
Less: Accumulated depreciation
December 31,
2020
2019
420,894
37,704
26,466
$ 253,289 $ 295,214
3,171,307 3,411,583
435,628
38,278
29,521
3,909,660 4,210,224
(1,559,388 ) (1,510,117 )
$ 2,350,272 $ 2,700,107
Construction in progress primarily consists of property improvements in process. Interest is capitalized on
construction in progress and amounted to $0.5 million, $6.0 million, and $1.0 million in 2020, 2019, and
2018, respectively.
Depreciation expense was $141.7 million, $137.7 million, and $152.0 million for the years ended December
31, 2020, 2019, and 2018, respectively.
Ten of the facilities owned by CoreCivic are subject to options that allow various governmental agencies to
purchase those facilities. Certain of these options to purchase are based on a depreciated book value while
others are based on a fair market value calculation. Four of the facilities that are subject to options are
accounted for in accordance with ASC 853 and are recorded in other real estate assets on the consolidated
balance sheets, as further described in Note 2. As of December 31, 2020, CoreCivic had $228.2 million in
other real estate assets, including $143.6 million accounted for as a contract cost and $84.6 million accounted
for as costs of fulfilling the related service contract. As of December 31, 2019, CoreCivic had $238.6 million
in other real estate assets, including $147.8 million accounted for as a contract cost and $90.8 million
accounted for as costs of fulfilling the related service contract.
F-17
BR21871N-0321-10KW
In June 2013, CoreCivic entered into an Economic Development Agreement ("EDA") with the Development
Authority of Telfair County ("Telfair County") in Telfair County, Georgia to implement a tax abatement plan
related to CoreCivic's bed expansion project at its McRae Correctional Facility. The tax abatement plan
provides for 90% abatement of real property taxes in the first year, decreasing by 10% over the subsequent
nine years. In June 2013, Telfair County issued bonds in a maximum principal amount of $15.0 million.
According to the EDA, legal title of CoreCivic's real property was transferred to Telfair County. Pursuant to
the EDA, the bonds were issued to CoreCivic, so no cash exchanged hands. Telfair County then leased the
real property back to CoreCivic. The lease payments are equal to the amount of the payments on the bonds.
At any time, CoreCivic has the option to purchase the real property by paying off the bonds, plus $100. Due
to the form of the transactions, CoreCivic has not recorded the bonds or the capital lease associated with the
sale lease-back transaction. The original cost of CoreCivic's property and equipment is recorded on the
balance sheet and is being depreciated over its estimated useful life.
5.
LEASES
As further described in Note 2, CoreCivic accounts for leases in accordance with ASC 842. CoreCivic leases
land and buildings from third-party lessors for multiple properties under operating leases that expire over
varying dates through 2032. The ROU asset related to these leases amounted to $194.1 million and $108.1
million at December 31, 2020 and 2019, respectively, while the current portion of the lease liability amounted
to $21.6 million and $26.9 million and the long-term portion of the liability amounted to $144.8 million and
$51.2 million at December 31, 2020 and 2019, respectively. As of December 31, 2020, the weighted-average
lease term of the operating leases was 6.3 years and the weighted average discount rate associated with the
operating leases was 6.2%.
CoreCivic leases the South Texas Family Residential Center and the site upon which it was constructed from a
third-party lessor. CoreCivic's lease agreement with the lessor is over a base period concurrent with an inter-
governmental service agreement ("IGSA") with ICE, which was amended in September 2020 to extend the
term of the agreement through September 2026. ICE's termination rights, which permit ICE to terminate the
agreement for convenience or non-appropriation of funds, without penalty, by providing CoreCivic with at
least a 60-day notice, were unchanged under the extension. Concurrent with the extension of the amended
IGSA, the lease with the third-party lessor for the site was also extended through September 2026. Other
terms of the extended lease agreement were unchanged and provide us with the ability to terminate the lease if
ICE terminates the amended IGSA associated with the facility. As a result of the lease modification, the
Company re-measured the lease liability at the effective date of the modification, and recognized a
corresponding adjustment to increase the ROU asset amounting to $116.0 million. Under provisions of ASC
842, CoreCivic determined that the South Texas Family Residential Center lease with the third-party lessor
includes a non-lease component for food services representing approximately 44% of the consideration paid
under the lease.
F-18
BR21871N-0321-10KW The expense incurred for all operating leases, inclusive of short-term and variable leases, but exclusive of the
non-lease food services component of the South Texas Family Residential Center lease, was $34.9 million,
$34.8 million, and $30.7 million for the years ended December 31, 2020, 2019, and 2018, respectively. The
cash payments for operating leases are reflected as cash flows from operating activities on the accompanying
consolidated statements of cash flows and cash payments for financing leases are reflected as cash flows from
financing activities. Future minimum lease payments as of December 31, 2020 for the Company's operating
lease liabilities, inclusive of $165.3 million of payments expected to be made under the cancelable lease at the
South Texas facility (excluding the non-lease food services component), are as follows (in thousands):
2021
2022
2023
2024
2025
Thereafter
Total future minimum lease payments
Less amount representing interest
Total present value of minimum lease payments
$
33,220
32,476
32,068
31,994
31,967
39,290
201,015
(34,600 )
$ 166,415
In addition, through its CoreCivic Properties segment, as of December 31, 2020, the Company owned $449.6
million in property and equipment at 15 properties for lease to third parties and used by government agencies
under operating and finance leases that expire over varying dates through 2040, some of which contain
renewal options. In accordance with ASC 842, minimum lease revenue is recognized on a straight-line basis
over the term of the related lease. Leasehold incentives are recognized as a reduction to lease revenue on a
straight-line basis over the term of the related lease. Lease revenue associated with expense reimbursements
from tenants is recognized in the period that the related expenses are incurred based upon the tenant lease
provision. See Note 6 for further discussion regarding a 20-year lease agreement with the Kansas Department
of Corrections ("KDOC"). Future undiscounted cash flows to be received from third-party lessees as of
December 31, 2020 for the Company's operating and finance leases, including those associated with the three
properties held for sale at December 31, 2020, as further described in Note 6, are as follows (in thousands):
2021
2022
2023
2024
2025
Thereafter
$
85,783
80,306
80,734
81,235
81,262
588,364
6.
REAL ESTATE TRANSACTIONS
Acquisitions, Dispositions, and Assets Held for Sale
2018 Acquisitions and Dispositions. On January 19, 2018, CoreCivic acquired the 261,000 square-foot Capital
Commerce Center, located in Tallahassee, Florida for a purchase price of $44.7 million, excluding transaction-
related costs and certain closing credits. Capital Commerce Center is 98% leased, including 87% leased to the
state of Florida on behalf of the Florida Department of Business and Professional Regulation. In allocating
the purchase price of this transaction, CoreCivic recorded $40.6 million of net tangible assets and $3.2 million
of identifiable intangible assets.
F-19
BR21871N-0321-10KW
On July 17, 2018, CoreCivic acquired a portfolio of twelve properties for $12.0 million, excluding
transaction-related costs, 100% leased to the U.S. Federal Government through the General Services
Administration ("GSA"), an independent agency of the United States government, on behalf of the Social
Security Administration ("SSA"), the Department of Homeland Security, and ICE. In allocating the purchase
price of this transaction, CoreCivic recorded $11.1 million of net tangible assets and $1.9 million of
identifiable intangible assets.
On August 23, 2018, CoreCivic acquired a 541,000 square-foot SSA office building in Baltimore, Maryland
("SSA-Baltimore") for a purchase price of $242.0 million, excluding transaction-related costs and certain
closing credits. The office building was purpose built to SSA specifications in 2014 under a 20-year firm term
lease expiring in January 2034, and is backed by the full faith and credit of the U.S. Federal Government
through the GSA. In connection with the acquisition and as further described in Note 11, CoreCivic assumed
$157.3 million of in-place financing that was used to fund the initial construction of the property in 2014. In
allocating the purchase price of this transaction, CoreCivic recorded $207.4 million of net tangible assets and
$38.9 million of identifiable intangible assets.
On September 21, 2018, CoreCivic acquired a 217,000 square-foot, steel frame property in Dayton, Ohio for
$6.9 million, excluding transaction-related costs and certain closing credits, that was built-to-suit for the
National Archives and Records Administration ("NARA") in 2002. The building is 100% leased to the GSA
on behalf of NARA through January 2023 and includes two additional 10-year renewal options. The building
provides 1.2 million cubic feet of storage space, approximately 90% of which is dedicated to archives of the
IRS. In allocating the purchase price of this transaction, CoreCivic recorded $6.9 million of net tangible assets
and $0.7 million of identifiable intangible assets.
CoreCivic acquired the 15 properties in 2018 as strategic investments that further diversify the Company's
cash flows through government-leased properties and broaden the solutions it provides to its government
partners.
In the second quarter of 2018, CoreCivic entered into an agreement to sell its former corporate headquarters
for $12.6 million. In connection with the agreement, the Company wrote-down the value of the property to its
net realizable value, recognizing an asset impairment charge of $1.6 million in the second quarter of 2018.
CoreCivic closed on the sale during the third quarter of 2018 and used the net proceeds from the sale to pay-
down a portion of the amounts outstanding under the Company's revolving credit facility.
2019 Acquisitions and Dispositions. On February 20, 2019, CoreCivic acquired the South Raleigh Reentry
Center, a 60-bed residential reentry center in Raleigh, North Carolina, for $0.9 million, excluding transaction-
related expenses. In connection with the acquisition, CoreCivic provides reentry services for both male and
female residents under custody of the BOP.
On May 6, 2019, CoreCivic acquired a 36,520-square foot office building in Detroit, Michigan, for $7.2
million, excluding transaction-related expenses, that was built-to-suit for the state of Michigan's Department
of Health and Human Services ("MDHHS") in 2002. This property was acquired through GRES. The
property was 100% leased to the Michigan Department of Technology, Management and Budget ("MDTMB")
on behalf of MDHHS through June 2028 and included one six-year renewal option at the sole discretion of the
MDTMB. During the fourth quarter of 2020, the MDTMB provided notice of its intent to exercise its
executive cancellation provision to terminate the lease effective December 31, 2020.
In allocating the purchase price of the acquisitions in 2019, CoreCivic recorded $7.4 million of net tangible
assets and $0.8 million of identifiable intangible assets. CoreCivic acquired the properties as strategic
investments that further expand the Company's network of residential reentry centers and enable the continued
delivery of critical services that help people reintegrate into the community, and also further diversify the
Company's cash flows through the acquisition of a government-leased property.
F-20
BR21871N-0321-10KW On June 24, 2019, CoreCivic sold a property which was leased to a third-party and located in Chester,
Pennsylvania for $3.4 million. The property had a net carrying value of $3.1 million at the time of the sale,
with the gain on the sale of $0.3 million recognized in the second quarter of 2019 and reflected in loss (gain)
on sale of real estate assets on the consolidated statement of operations.
2020 Acquisitions and Dispositions. On January 2, 2020, CoreCivic completed the acquisition of a portfolio
of 28 properties, 24 of which the counter-party contributed to GRES, for total consideration of $83.2 million,
excluding transaction-related expenses. All of the properties are leased to the federal government through the
GSA. CoreCivic financed the acquisition with $7.7 million of cash, assumed debt of $52.2 million, as further
described in Note 11, and the balance with the issuance of 1.3 million shares of Class A Common Interests in
GRES, an unrestricted subsidiary controlled by the Company, that are convertible into cash or, at the
Company's option, shares of the Company's common stock following a two-year holding period on a one-for-
one basis (the "Operating Partnership Units"), using a partnership structure. In allocating the purchase price of
the acquisition, CoreCivic recorded $77.4 million of net tangible assets, $7.5 million of identifiable intangible
assets, and $4.9 million of tenant improvements.
On December 23, 2020, CoreCivic completed the sale of 42 government-leased properties, including the
portfolio of 28 properties acquired in 2020 and 11 of the 12 properties acquired July 17, 2018 described
above, in a single transaction to a third party for an aggregate price of $106.5 million, generating net proceeds
of $27.8 million after the repayment of the debt related to GRES, and other transaction-related costs. Net cash
proceeds were used to pay-down the Company's revolving credit facility and are available to recycle into
projects generating higher returns. In accordance with a Tax Protection Agreement, the Company agreed to
provide certain tax protection payments to the contributing partners of GRES, limited to the cash and certain
other resources held by GRES. After considering the tax protection payments in connection with this sale, the
Company reported a net loss on sale of $17.9 million.
Assets Held for Sale. The Company intends to pursue the sale of additional assets in the Properties segment,
utilizing any net proceeds, after the repayment of non-recourse mortgage notes associated with such
properties, in furtherance of the Company’s revised capital allocation strategy. As of December 31, 2020,
CoreCivic had three real estate assets held for sale. The aggregate net book value of the property and
equipment of these three properties, amounting to $241.8 million, and the other assets associated with the
properties, consisting of deferred leasing costs and other assets amounting to $37.6 million, are reflected as
assets held for sale on the Company's consolidated balance sheet as of December 31, 2020. Although the
Company can provide no assurance, based on interest expressed to-date, CoreCivic expects to close on the
sale of these assets during 2021.
Financing Leasing Transactions
On January 24, 2018, CoreCivic entered into a 20-year lease agreement with the KDOC for a 2,432-bed
correctional facility to be constructed by the Company in Lansing, Kansas. The new facility replaces the
Lansing Correctional Facility, Kansas' largest correctional complex for adult male inmates, originally
constructed in 1863. CoreCivic will be responsible for facility maintenance throughout the 20-year term of
the lease, at which time ownership will revert to the state of Kansas. Construction of the facility commenced
in the first quarter of 2018, and construction was completed in January 2020, at which time the lease
commenced. CoreCivic accounts for the lease with the KDOC partially as a financing receivable under ASU
2016-02, "Leases (Topic 842)", with the remaining portion of the lease payments attributable to maintenance
services and capital expenditures as revenue streams under ASC 606, "Revenue from Contracts with
Customers". As of December 31, 2020, the financing receivable was $147.5 million recognized in Other
Assets on the consolidated balance sheet. Prior to commencement of the lease, the costs incurred to construct
the facility were reflected as a construction receivable and, as of December 31, 2019, $137.7 million was
recognized in Other Assets on the consolidated balance sheet. The cash payments associated with the
construction of the project were reported as expenditures for facility development and expansions on the
consolidated statements of cash flows. During 2020, the Lansing Correctional Facility generated $2.6 million
of revenue associated with the non-lease services components of the arrangement, and $8.4 million of interest
income.
F-21
BR21871N-0321-10KW Idle Facilities
As of December 31, 2020, CoreCivic had five idled CoreCivic Safety correctional facilities that are currently
available and being actively marketed as solutions to meet the needs of potential customers. The following
table summarizes each of the idled facilities and their respective carrying values, excluding equipment and
other assets that could generally be transferred and used at other facilities CoreCivic owns without significant
cost (dollars in thousands):
Facility
Prairie Correctional Facility
Huerfano County Correctional Center
Diamondback Correctional Facility
Marion Adjustment Center
Kit Carson Correctional Center
Net Carrying Values at
December 31,
2020
2019
$
$
14,646 $
15,895
38,346
11,047
52,757
132,691 $
14,863
16,266
39,729
11,351
54,041
136,250
As of December 31, 2020, CoreCivic also had one idled non-core facility in its Safety segment containing 240
beds with an aggregate net book value of $3.1 million; three facilities in its Community segment, all of which
became idle during 2020, containing an aggregate of 650 beds with an aggregate net book value of $9.2
million; and two previously leased properties in its Properties segment containing 55,000 square feet with an
aggregate net book value of $9.5 million. CoreCivic incurred operating expenses at these idled facilities of
approximately $7.6 million, $7.1 million, and $7.7 million during the period they were idle for the years ended
December 31, 2020, 2019, and 2018, respectively.
Two of the three idled facilities in the CoreCivic Community segment are located in Oklahoma. As a result of
the lower resident populations from the state of Oklahoma and the impact of COVID-19, CoreCivic
Community transferred the remaining resident populations at its 390-bed Tulsa Transitional Center to
Oklahoma's system, idling the Tulsa facility during the third quarter of 2020. Closure of the Tulsa facility
followed the closure of the 200-bed Oklahoma City Transitional Center during the second quarter of 2020, and
the 289-bed Turley Residential Center in Oklahoma in 2019. During the fourth quarter of 2020, the BOP
awarded a new contract to CoreCivic for residential reentry and home confinement services pursuant to a
solicitation for capacity and services to be provided in the state of Oklahoma. As a result, CoreCivic
reactivated the Turley Residential Center during the first quarter of 2021, and provides the BOP additional
reentry services at its owned and operated Oklahoma Reentry Opportunity Center (formerly known as the
Carver Transitional Center), which supplements the existing utilization by the state of Oklahoma.
During the third quarter of 2020, Adams County, Colorado, notified the Company that, pursuant to a re-bid of
the managed-only contract at the 184-bed Henderson Transitional Center, a facility in the Community segment
the Company leased from Adams County, it awarded the contract to another operator. CoreCivic transitioned
operations to the other operator upon expiration of the contract in January 2021.
On April 15, 2020, CoreCivic sold an idled facility in its Community segment, containing 92 beds, for a gross
sales price of $1.6 million. In anticipation of the sale, CoreCivic reported an impairment charge of $0.5
million in the first quarter of 2020 based on the realizable value resulting from the sale. On May 26, 2020,
CoreCivic sold an idled non-core facility in its Safety segment, containing 200 beds with a net book value of
$0.5 million at the time of the sale, for net proceeds of $3.3 million. The gain on the sale of $2.8 million was
recognized in the second quarter of 2020.
F-22
BR21871N-0321-10KW
On September 15, 2020, CoreCivic announced that it had entered into a new contract under an IGSA between
the city of Cushing, Oklahoma and the USMS to utilize the Company's 1,600-bed Cimarron Correctional
Facility in the CoreCivic Safety segment. The Company had previously announced its intention to idle the
Cimarron facility during the third quarter of 2020, predominantly due to a lower number of inmate
populations from the state of Oklahoma resulting from COVID-19, combined with the consequential impact
of COVID-19 on the State's budget. The new management contract commenced on September 15, 2020, and
has an initial term of three years, with unlimited 24-month extension options thereafter upon mutual
agreement.
CoreCivic considers the cancellation of a contract or an expiration and non-renewal of a lease agreement in its
CoreCivic Properties segment as an indicator of impairment, and tested each of the idled properties for
impairment when it was notified by the respective customers or tenants that they would no longer be utilizing
such property. CoreCivic evaluates on a quarterly basis market developments for the potential utilization of
each of these properties in order to identify events that may cause CoreCivic to reconsider its most recent
assumptions, such as the agreement to sell a property at less than its carrying value. As a result of CoreCivic's
analyses, in the second quarter of 2020, CoreCivic reported an impairment charge of $9.8 million on one of
the residential reentry facilities in the Community segment in Oklahoma, based on its anticipated use as a
commercial real estate property rather than a residential reentry facility. The fair value measurement for the
Oklahoma residential reentry facility was estimated using unobservable Level 3 inputs, as defined in ASC
820, using market comparable data for similar properties in the local markets.
7.
BUSINESS COMBINATIONS
Effective January 1, 2018, CoreCivic closed on the acquisition of Rocky Mountain Offender Management
Systems, LLC ("RMOMS"), which provides non-residential correctional alternatives, including electronic
monitoring and case management services, to municipal, county, and state governments in seven states. The
aggregate purchase price was $7.0 million, excluding transaction-related expenses.
Effective December 1, 2018, CoreCivic closed on the acquisition of Recovery Monitoring Solutions
Corporation ("RMSC"), which provides non-residential correctional alternatives, including electronic
monitoring and case management services, to municipal, county, and state governments in four states. The
aggregate purchase price was $15.9 million, excluding transaction-related expenses.
In allocating the purchase price for the two transactions in 2018, CoreCivic recorded the following (in
millions):
Property and equipment
Intangible assets
Tangible assets and liabilities, net
Total identifiable assets, net
Goodwill
Total consideration
$
$
6.1
12.4
(2.8 )
15.7
7.2
22.9
On December 7, 2019, CoreCivic completed the acquisition of certain assets of Rehabilitation Services, Inc.
("RSI") for $4.4 million, excluding transaction related expenses. As a result of better than estimated financial
performance of the acquisition, during the third quarter of 2020, the Company recognized a loss of $0.6
million for additional contingent consideration associated with the acquisition. The acquisition resulted in the
addition of two residential reentry centers in Virginia. The Ghent Residential Reentry Center, a 36-bed
residential reentry center in Norfolk, Virginia and the James River Residential Reentry Center, an 84-bed
residential reentry center in Newport News, Virginia provide reentry services for residents under custody of
the BOP. The residential reentry facilities can also serve an additional 34 home confinement clients on behalf
of the BOP.
F-23
BR21871N-0321-10KW
In allocating the purchase price for the acquisition of certain assets of RSI in 2019, CoreCivic recorded the
following (in millions):
Property and equipment
Intangible assets
Total identifiable assets
Goodwill
Total consideration
$
$
1.3
0.7
2.0
2.4
4.4
The results of operations for these business combinations have been included in the Company's consolidated
financial statements from the dates of the acquisitions.
8.
INVESTMENT IN AFFILIATE
CoreCivic has a 50% ownership interest in APM, an entity holding the management contract for a correctional
facility, HM Prison Forest Bank, under a 25-year prison management contract with an agency of the United
Kingdom government. CoreCivic has determined that its joint venture investment in APM represents a
variable interest entity ("VIE") in accordance with ASC 810, "Consolidation" of which CoreCivic is not the
primary beneficiary. The Forest Bank facility, located in Salford, England, was previously constructed and
owned by a wholly-owned subsidiary of CoreCivic, which was sold in April 2001. All gains and losses under
the joint venture are accounted for using the equity method of accounting. During 2000, CoreCivic extended a
working capital loan to APM, which has an outstanding balance of $3.1 million as of December 31, 2020.
For the years ended December 31, 2020, 2019, and 2018, equity in losses of the joint venture was $192,000,
$128,000, and $100,000, respectively. The equity in losses of the joint venture is included in other (income)
expense in the consolidated statements of operations. As of December 31, 2020, the equity in the net deficit
of APM was $0.2 million and is applied as a reduction in the carrying value of the outstanding working capital
loan of $3.1 million, which is reported in other assets on the accompanying consolidated balance sheets. The
outstanding working capital loan of $3.1 million, net of the $0.2 million equity in the net deficit of APM,
represents CoreCivic's maximum exposure to loss in connection with APM.
CoreCivic has determined that its joint venture investment in GRES also represents a VIE. CoreCivic has
100% voting control in GRES. Accordingly, CoreCivic concluded that it is the primary beneficiary of GRES
and consolidates the VIE. The primary beneficiary is the entity that has (i) the power to direct the activities
that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the
VIE or the right to receive benefits from the VIE that could be significant to the VIE.
F-24
BR21871N-0321-10KW
9. OTHER ASSETS
Other assets consist of the following (in thousands):
Intangible assets:
Deferred leasing assets, less accumulated
amortization of $1,132 and $5,647, respectively
Other intangible assets, less accumulated
amortization of $9,219 and $8,182, respectively
Construction receivable - Kansas lease
Financing receivable - Kansas lease
ROU lease assets
Lease incentive assets
Debt issuance costs, less accumulated amortization of
$2,332 and $1,475, respectively
Cash equivalents and cash surrender value of life
insurance held in Rabbi trust
Straight-line rent receivable
Insurance receivable
Other
December 31,
2020
2019
$
146 $
41,129
10,720
—
147,481
194,080
4,813
14,517
137,665
—
108,118
5,454
1,855
2,628
14,940
2,196
14,353
6,079
396,663 $
14,448
7,836
13,179
5,933
350,907
$
The gross carrying amount of intangible assets amounted to $21.2 million and $69.5 million at December 31,
2020 and 2019, respectively. Amortization expense related to intangible assets, including those associated
with the three properties held for sale at December 31, 2020, as previously described in Note 6, was $9.1
million, $6.8 million, and $6.5 million for 2020, 2019, and 2018, respectively, and depending upon the nature
of the asset, was either reported as operating expense or depreciation and amortization in the accompanying
statement of operations for the respective periods.
As of December 31, 2020, the estimated amortization expense related to intangible assets, including the
expense associated with the three properties held for sale at December 31, 2020, for each of the next five years
is as follows (in thousands):
2021
2022
2023
2024
2025
$
4,853
4,253
3,308
3,272
3,268
F-25
BR21871N-0321-10KW
10. ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LONG-TERM LIABILITIES
Accounts payable and accrued expenses consist of the following (in thousands):
December 31,
Trade accounts payable
Accrued salaries and wages
Accrued dividends
Accrued workers' compensation and auto liability
Accrued litigation
Accrued employee medical insurance
Accrued property taxes
Accrued interest
ROU lease liability
Deferred revenue
Construction payable
Lease obligation
Deferred employer payroll taxes
Other
$
2020
85,359 $
43,564
3,148
7,379
5,861
7,035
27,780
9,516
21,646
8,693
1,821
4,400
14,795
33,321
2019
75,152
51,845
54,843
7,062
14,134
6,110
27,900
10,142
26,914
15,387
7,504
8,603
—
31,866
$ 274,318 $ 337,462
Other long-term liabilities consist of the following (in thousands):
December 31,
2020
2019
7,508
5,030 $
$
5,417
31,868 28,769
11,802 10,919
7,634
144,769 51,247
14,795
—
696
1,593
$ 216,468 $ 105,579
Intangible contract liability
Accrued workers' compensation
Accrued deferred compensation
Lease financing obligation
ROU lease liability
Deferred employer payroll taxes
Other
F-26
BR21871N-0321-10KW
11. DEBT
Debt outstanding consists of the following (in thousands):
Revolving Credit Facility maturing April 2023. Interest payable
periodically at variable interest rates. The weighted average rate
at December 31, 2020 and 2019 was 1.7% and 3.3%, respectively.
Term Loan A maturing April 2023. Interest payable periodically at
variable interest rates. The rate at December 31, 2020 and 2019
was 1.6% and 3.3%, respectively. Unamortized debt issuance
costs amounted to $0.1 million at both December 31, 2020 and
2019.
Term Loan B maturing December 2024. Interest payable periodically
at variable interest rates. The rate at December 31, 2020 and 2019
was 5.5% and 6.3%, respectively. Unamortized debt issuance costs
amounted to $4.1 million and $4.6 million at December 31, 2020
and 2019, respectively.
4.625% Senior Notes maturing May 2023. Unamortized debt
issuance costs amounted to $1.5 million and $2.1 million
at December 31, 2020 and 2019, respectively.
5.0% Senior Notes maturing October 2022. Unamortized debt
issuance costs amounted to $0.8 million and $1.3 million at
December 31, 2020 and 2019, respectively.
4.75% Senior Notes maturing October 2027. Unamortized debt
issuance costs amounted to $2.7 million and $3.1 million at
December 31, 2020 and 2019, respectively.
4.5% Capital Commerce Center Non-Recourse Mortgage Note
maturing January 2033. Unamortized debt issuance costs
amounted to $0.3 million at both December 31, 2020 and 2019.
4.43% Lansing Correctional Center Non-Recourse Mortgage Note
maturing January 2040. Unamortized debt issuance costs amounted
to $3.1 million and $3.3 million at December 31, 2020
and 2019, respectively.
4.5% SSA- Baltimore Non-Recourse Mortgage Note maturing
February 2034. Unamortized debt issuance costs amounted to
$0.2 million at both December 31, 2020 and 2019.
Total debt
Unamortized debt issuance costs
Unamortized original issue discount
Current portion of long-term debt
Long-term debt, net
December 31,
2020
2019
$
219,000 $
365,000
180,000
190,000
237,500
250,000
350,000
350,000
250,000
250,000
250,000
250,000
20,934
22,209
157,607
159,522
144,476
1,809,517
(12,766 )
(10,000 )
(39,087 )
1,747,664 $
150,134
1,986,865
(14,993 )
(12,500 )
(31,349 )
1,928,023
$
F-27
BR21871N-0321-10KW
Revolving Credit Facility. On April 17, 2018, CoreCivic entered into the Second Amended and Restated
Credit Agreement (referred to herein as the "Bank Credit Facility") in an aggregate principal amount of up to
$1.0 billion. The Bank Credit Facility provides for a term loan of $200.0 million (the "Term Loan A") and a
revolving credit facility in an aggregate principal amount of up to $800.0 million (the "Revolving Credit
Facility"). The Bank Credit Facility has a maturity of April 2023. The Bank Credit Facility also contains an
"accordion" feature that provides for uncommitted incremental extensions of credit in the form of increases in
the revolving commitments or incremental term loans of up to $350.0 million. At CoreCivic's option, interest
on outstanding borrowings under the Revolving Credit Facility is based on either a base rate plus a margin
ranging from 0.00% to 1.00% or at the London Interbank Offered Rate ("LIBOR") plus a margin ranging from
1.00% to 2.00% based on CoreCivic's then-current leverage ratio. The Revolving Credit Facility includes a
$30.0 million sublimit for swing line loans that enables CoreCivic to borrow at the base rate from the
Administrative Agent on same-day notice.
Based on CoreCivic's total leverage ratio, loans under the Revolving Credit Facility currently bear interest at
the base rate plus a margin of 0.50% or at LIBOR plus a margin of 1.50%, and a commitment fee equal to
0.35% of the unfunded balance. The Revolving Credit Facility also has a $50.0 million sublimit for the
issuance of standby letters of credit. As of December 31, 2020, CoreCivic had $219.0 million in borrowings
outstanding under the Revolving Credit Facility as well as $14.8 million in letters of credit outstanding
resulting in $566.2 million available under the Revolving Credit Facility.
The Bank Credit Facility is secured by a pledge of all of the capital stock of CoreCivic's domestic restricted
subsidiaries, 65% of the capital stock of CoreCivic's foreign subsidiaries, all of CoreCivic's accounts
receivable, and all of CoreCivic's deposit accounts. The Bank Credit Facility requires CoreCivic to meet
certain financial covenants, including, without limitation, a maximum total leverage ratio, a maximum secured
leverage ratio, and a minimum fixed charge coverage ratio. As of December 31, 2020, CoreCivic was in
compliance with all such covenants. In addition, the Bank Credit Facility contains certain covenants that,
among other things, limit the incurrence of additional indebtedness, payment of dividends and other
customary restricted payments, permitted investments, transactions with affiliates, asset sales, mergers and
consolidations, liquidations, prepayments and modifications of other indebtedness, liens and other
encumbrances and other matters customarily restricted in such agreements. In addition, the Bank Credit
Facility is subject to certain cross-default provisions with terms of CoreCivic's other unsecured indebtedness,
and is subject to acceleration upon the occurrence of a change of control.
As a result of opposition to immigration policies and the association of private companies with the
enforcement of such policies, some banks, including several that are currently parties to the Bank Credit
Facility, have announced that they do not expect to continue providing credit or financial services to private
entities that operate correctional and detention facilities, including CoreCivic. The banks that are currently
parties to the Bank Credit Facility are obligated to honor their commitments under the Bank Credit Facility,
which expire in April 2023.
Incremental Term Loan A. Interest rate margins under the Term Loan A are the same as the interest rate
margins under the Revolving Credit Facility. The Term Loan A also has the same collateral requirements,
financial and certain other covenants, and cross-default provisions as the Revolving Credit Facility. The Term
Loan A, which is pre-payable without penalty, also has a maturity concurrent with the Revolving Credit
Facility due April 2023, with scheduled quarterly principal payments through April 2023. As of
December 31, 2020, the outstanding balance of the Term Loan A was $180.0 million.
F-28
BR21871N-0321-10KW Senior Secured Term Loan B. On December 18, 2019, CoreCivic entered into a new $250.0 million Senior
Secured Term Loan B ("Term Loan B" and, together with the Bank Credit Facility, the "Credit Agreements").
The Term Loan B bears interest at a rate of LIBOR plus 4.50%, with a 1.00% LIBOR floor (or, at CoreCivic's
option, a base rate plus 3.50%), and has a five-year maturity with scheduled quarterly principal payments
through December 2024. The Term Loan B is secured by a first lien on certain specified real property assets,
representing a loan-to-value of no greater than 80%. CoreCivic can prepay the Term Loan B at any time and
from time to time, without premium or penalty. The Term Loan B was issued at a price of 95% of the
principal amount of the Term Loan B, resulting in a discount of $12.5 million, which is amortized into interest
expense over the term of the Term Loan B. Proceeds from the issuance of the Term Loan B were used to
partially fund the early redemption of $325.0 million in aggregate principal amount of 4.125% senior notes
originally due 2020, transaction fees and expenses, and to provide for general corporate purposes. CoreCivic
capitalized approximately $5.1 million of costs associated with the issuance of the Term Loan B. As of
December 31, 2020, the outstanding balance of the Term Loan B was $237.5 million.
Senior Notes. Interest on the $350.0 million aggregate principal amount of CoreCivic's 4.625% senior notes
issued in April 2013 (the "4.625% Senior Notes") accrues at the stated rate and is payable in May and
November of each year. The 4.625% Senior Notes are scheduled to mature on May 1, 2023. Interest on the
$250.0 million aggregate principal amount of CoreCivic's 5.0% senior notes issued in September 2015 (the
"5.0% Senior Notes") accrues at the stated rate and is payable in April and October of each year. The 5.0%
Senior Notes are scheduled to mature on October 15, 2022. Interest on the $250.0 million aggregate principal
amount of CoreCivic's 4.75% senior notes issued in October 2017 (the "4.75% Senior Notes") accrues at the
stated rate and is payable in April and October of each year. The 4.75% Senior Notes are scheduled to mature
on October 15, 2027.
The 4.625% Senior Notes, the 5.0% Senior Notes, and the 4.75% Senior Notes, collectively referred to herein
as the "Senior Notes", are senior unsecured obligations of the Company and are guaranteed by all of the
Company's subsidiaries that guarantee the Bank Credit Facility. CoreCivic may redeem all or part of the
Senior Notes at any time prior to three months before their respective maturity date at a "make-whole"
redemption price, plus accrued and unpaid interest thereon to, but not including, the redemption date.
Thereafter, the Senior Notes are redeemable at CoreCivic's option, in whole or in part, at a redemption price
equal to 100% of the aggregate principal amount of the notes to be redeemed plus accrued and unpaid interest
thereon to, but not including, the redemption date.
Non-Recourse Mortgage Notes:
Capital Commerce Center. As previously discussed in Note 6, on January 19, 2018, CoreCivic acquired the
261,000 square-foot Capital Commerce Center, located in Tallahassee, Florida, for a purchase price of $44.7
million. The acquisition was partially financed with a $24.5 million non-recourse mortgage note (the "Capital
Commerce Note"), which is fully-secured by the Capital Commerce Center property, with an interest rate of
4.5%, maturing in January 2033. Principal and interest on the Capital Commerce Note are payable in equal
monthly payments over the 15-year term of the note. The Capital Commerce Note is pre-payable at any time
with a prepayment charge, if any, equal to an amount so as to maintain the same yield on the Capital
Commerce Note as if it had been carried through to its full term using Treasury instruments having a term
equal to the remaining term of the Capital Commerce Note as of the prepayment date. CoreCivic capitalized
approximately $0.4 million of costs associated with the Capital Commerce Note. As of December 31, 2020,
the outstanding balance of the mortgage note was $20.9 million.
F-29
BR21871N-0321-10KW Lansing Correctional Facility. On April 20, 2018, CoreCivic of Kansas, LLC (the "Issuer"), a wholly-owned
unrestricted subsidiary of the Company, priced $159.5 million in aggregate principal amount of non-recourse
senior secured notes of the Issuer (the "Kansas Notes"), in a private placement pursuant to Section 4(a)(2) of
the Securities Act of 1933, as amended. The private placement closed on June 1, 2018. The Company used
the proceeds of the private placement, which were drawn on quarterly funding dates beginning in the second
quarter of 2018, to fund construction of the Lansing Correctional Facility, along with costs and expenses of
the project. The Kansas Notes have a yield to maturity of 4.43% and are scheduled to mature in January 2040,
20 years following completion of the project, which occurred in January 2020. Principal and interest on the
Kansas Notes will be payable in quarterly payments beginning in July 2020 until maturity. CoreCivic may
redeem all or part of the Kansas Notes at any time upon written notice of not less than 30 days and not more
than 60 days prior to the date fixed for such prepayment, with a "make-whole" amount, together with interest
on the Kansas Notes accrued to, but not including, the redemption date. CoreCivic capitalized approximately
$3.4 million of costs associated with the private placement. Because the Issuer has been designated as an
unrestricted subsidiary of the Company under terms of the Company's Credit Agreements, the issuance and
service of the Kansas Notes, and the revenues and expenses associated with the facility lease, do not impact
the financial covenants associated with the Company's Credit Agreements. As of December 31, 2020, the
outstanding balance of the Kansas Notes was $157.6 million.
SSA-Baltimore. As previously discussed in Note 6, on August 23, 2018, CoreCivic acquired the 541,000
square-foot SSA-Baltimore office building for a purchase price of $242.0 million. In connection with the
acquisition, a wholly-owned unrestricted subsidiary of the Company assumed $157.3 million of in-place
financing that was used to fund the initial construction of the property in 2014. The assumed non-recourse
mortgage note (the "SSA-Baltimore Note") carries a fixed interest rate of 4.5% and requires monthly principal
and interest payments, with a balloon payment of $40.0 million due at maturity in February 2034. The SSA-
Baltimore Note is fully-secured by the SSA-Baltimore property. CoreCivic may pre-pay the SSA-Baltimore
Note in whole or in part upon not less than 30 days' and not more than 60 days' prior written notice and such
pre-payment shall include a "make-whole" amount. During the last 90 days of the permanent loan term and
upon 30 days' prior written notice, CoreCivic may prepay the note in full, including any accrued and
outstanding interest on any permanent loan payment date, without the payment of the "make-whole" amount.
CoreCivic capitalized approximately $0.2 million of costs associated with the assumption of the SSA-
Baltimore Note. As of December 31, 2020, the outstanding balance of the SSA-Baltimore Note was $144.5
million.
Government Real Estate Solutions. As previously described in Note 6, on January 2, 2020, CoreCivic acquired
a portfolio of 28 properties, 24 of which the counter-party contributed to GRES, for total consideration of
$83.2 million. In connection with the acquisition, a wholly-owned subsidiary of GRES assumed $52.2 million
of in-place financing. The assumed non-recourse mortgage notes (collectively the "GRES Note") carried a
fixed interest rate of 4.91% and required monthly principal and interest payments, with a balloon payment of
$46.2 million due at maturity in November 2025. The GRES Note continued to be fully-secured by the same
24 properties originally pledged as collateral at the time the debt was issued. On December 23, 2020, we
completed the sale of 42 non-core government-leased properties, including the 24 properties originally
pledged as collateral at the time the GRES Note was issued, in a single transaction to a third party for an
aggregate price of $106.5 million, generating net proceeds of $27.8 million after the repayment of the GRES
Note and other transaction-related costs. In connection with the sale, we incurred a debt defeasance cost of
$10.5 million associated with the prepayment of the GRES Note.
CoreCivic may also seek to issue additional debt or equity securities from time to time when the Company
determines that market conditions and the opportunity to utilize the proceeds from the issuance of such
securities are favorable.
Guarantees and Covenants. All of the restricted domestic subsidiaries of CoreCivic (as the parent
corporation) have provided full and unconditional guarantees of the Senior Notes. All of CoreCivic's
subsidiaries guaranteeing the Senior Notes are 100% owned subsidiaries of CoreCivic; and the subsidiary
guarantees are full and unconditional and are joint and several obligations of the guarantors.
F-30
BR21871N-0321-10KW As of December 31, 2020, neither CoreCivic nor any of its subsidiary guarantors had any material or
significant restrictions on CoreCivic's ability to obtain funds from its subsidiaries by dividend or loan or to
transfer assets from such subsidiaries.
The indentures governing the Senior Notes contain certain customary covenants that, subject to certain
exceptions and qualifications, restrict CoreCivic's ability to, among other things, make restricted payments;
incur additional debt or issue certain types of preferred stock; create or permit to exist certain liens;
consolidate, merge or transfer all or substantially all of CoreCivic's assets; and enter into transactions with
affiliates. In addition, if CoreCivic sells certain assets (and generally does not use the proceeds of such sales
for certain specified purposes) or experiences specific kinds of changes in control, CoreCivic must offer to
repurchase all or a portion of the Senior Notes. The offer price for the Senior Notes in connection with an
asset sale would be equal to 100% of the aggregate principal amount of the notes repurchased plus accrued
and unpaid interest and liquidated damages, if any, on the notes repurchased to the date of purchase. The offer
price for the Senior Notes in connection with a change in control would be 101% of the aggregate principal
amount of the notes repurchased plus accrued and unpaid interest and liquidated damages, if any, on the notes
repurchased to the date of purchase. The Senior Notes are also subject to certain cross-default provisions with
the terms of CoreCivic's Bank Credit Facility, as well as the credit agreement governing the Term Loan B.
Other Debt Transactions
Letters of Credit. At December 31, 2020 and 2019, CoreCivic had $14.8 million and $22.3 million,
respectively, in outstanding letters of credit. The letters of credit were issued to secure CoreCivic's workers'
compensation and general liability insurance policies, performance bonds, and utility deposits.
Debt Maturities
Scheduled principal payments as of December 31, 2020 for the next five years and thereafter were as follows
(in thousands):
2021
2022
2023
2024
2025
Thereafter
Total debt
$
39,087
292,981
758,110
194,937
14,556
509,846
$ 1,809,517
Cross-Default Provisions
The provisions of CoreCivic's debt agreements relating to the Credit Agreements and the Senior Notes contain
certain cross-default provisions. Any events of default under the Credit Agreements that result in the lenders'
actual acceleration of amounts outstanding thereunder also result in an event of default under the Senior
Notes. Additionally, any events of default under the Senior Notes that give rise to the ability of the holders of
such indebtedness to exercise their acceleration rights also result in an event of default under the Credit
Agreements.
If CoreCivic were to be in default under the Credit Agreements, and if the lenders under the Credit
Agreements elected to exercise their rights to accelerate CoreCivic's obligations under the Credit Agreements,
such events could result in the acceleration of all or a portion of CoreCivic's Senior Notes, which would have
a material impact on CoreCivic's liquidity and financial position. CoreCivic does not have sufficient working
capital to satisfy its debt obligations in the event of an acceleration of all or a substantial portion of
CoreCivic's outstanding indebtedness.
F-31
BR21871N-0321-10KW
12. DEFERRED REVENUE
In September 2014, CoreCivic announced that it had agreed under an expansion of an existing IGSA between
the city of Eloy, Arizona and ICE to care for up to 2,400 individuals at the South Texas Family Residential
Center, a facility leased by CoreCivic in Dilley, Texas. In September 2018, the city of Dilley, Texas assumed
the amended IGSA with ICE. Services provided under the original amended IGSA commenced in the fourth
quarter of 2014 and had an original term of up to four years. The agreement provided for a fixed monthly
payment in accordance with a graduated schedule. In October 2016, CoreCivic entered into an amended
IGSA that provided for a new, lower fixed monthly payment commencing in November 2016, and extended
the term of the contract through September 2021. In September 2020, the term of the amended IGSA was
extended from September 2021 to September 2026. The agreement can be further extended by bi-lateral
modification. ICE's termination rights, which permit ICE to terminate the agreement for convenience or non-
appropriation of funds, without penalty, by providing CoreCivic with at least a 60-day notice, were unchanged
under the extension. ICE began housing the first residents at the facility in December 2014, and the site was
completed during the second quarter of 2015.
Under the fixed monthly payment schedule of the original amended IGSA, ICE agreed to pay CoreCivic $70.0
million in two $35.0 million installments during the fourth quarter of 2014 and graduated fixed monthly
payments over the remaining months of the contract. As a result of extending the amortization period for the
deferred revenue associated with the 2020 amended IGSA over the extended term of the agreement,
CoreCivic's non-cash revenue associated with the amended IGSA decreased by approximately $2.7 million
per quarter, from $3.4 million to $0.7 million, effective beginning in the fourth quarter of 2020. During the
years ended December 31, 2020, 2019, and 2018, CoreCivic recognized $167.7 million, $170.6 million, and
$170.6 million, respectively, in revenue associated with the amended IGSA with the unrecognized balance of
the fixed monthly payments reported in deferred revenue. The current portion of deferred revenue is reflected
within accounts payable and accrued expenses while the long-term portion is reflected in deferred revenue on
the accompanying consolidated balance sheets. As of December 31, 2020 and 2019, total deferred revenue
associated with this agreement amounted to $15.2 million and $26.1 million, respectively.
13.
INCOME TAXES
As discussed in Note 1, the Company has operated in compliance with REIT requirements for federal income
tax purposes from January 1, 2013 through December 31, 2020. During the years the Company elected REIT
status, the Company was required to distribute at least 90 percent of its taxable income (including dividends
paid to it by its TRSs) and did not pay federal income taxes on the amount distributed to its stockholders. In
addition, the Company was required to meet a number of other organizational and operational requirements,
which the Company continued to meet through the year ending December 31, 2020. Most states where
CoreCivic holds investments in real estate conform to the federal rules recognizing REITs. Certain
subsidiaries have made an election with the Company to be treated as TRSs in conjunction with the
Company's REIT election; the TRS elections permit CoreCivic to engage in certain business activities in
which the REIT may not engage directly. A TRS is subject to federal and state income taxes on the income
from these activities and therefore, CoreCivic has included a provision for taxes in its consolidated financial
statements.
The TCJA was enacted on December 22, 2017. The TCJA reduced the U.S. federal corporate tax rate from
35% to 21%, required companies to pay a one-time transition tax on earnings of certain foreign subsidiaries
that were previously tax deferred, and created new taxes on certain foreign-sourced earnings. However, the
TCJA did not change the dividends paid deduction applicable to REITs and, therefore, CoreCivic generally
was not subject to federal income taxes on the Company's REIT taxable income and gains that it distributed to
its stockholders. In the fourth quarter of 2017, the Company recorded, in accordance with ASC 740, the tax
effects of enactment of the TCJA on existing deferred tax balances and there was no one-time transition tax on
foreign earnings. The Company re-measured certain deferred tax assets and liabilities based on the rates at
which they are expected to reverse in the future, which is generally 21%. In the fourth quarter of 2017, the
Company recognized a charge of $4.5 million, which was included as a component of income tax expense, for
the revaluation of deferred tax assets and liabilities and other taxes associated with the TCJA. CoreCivic
applied the guidance in the SEC Staff Accounting Bulletin 118, "Income Tax Accounting Implications of the
Tax Cuts and Jobs Act" when accounting for the enactment-date effects of the TCJA in 2017 and throughout
2018. During the third quarter of 2018, the Company completed its accounting for the TCJA and revised its
estimates of the revaluation of deferred tax assets and liabilities resulting in the recognition of an additional
charge of $1.0 million, which was also included as a component of income tax expense.
F-32
BR21871N-0321-10KW Income tax expense (benefit) is comprised of the following components (in thousands):
Current income tax expense (benefit)
Federal
State
Deferred income tax expense (benefit)
Federal
State
Income tax expense
For the Years Ended December 31,
2018
2019
2020
$
(1,928 ) $
1,369
(559 )
5,324 $ 10,481
2,308
3,677
12,789
9,001
3,878
1,067
4,945
4,386 $
(489 )
(673 )
(1,162 )
7,839 $
(3,422 )
(1,014 )
(4,436 )
8,353
$
Income tax expense during 2020 included $3.1 million, recorded in the first quarter of 2020, that had been
deferred during the construction period of the Lansing Correctional Facility, which was owned by a TRS of
the Company until it converted to a qualified REIT subsidiary ("QRS") upon completion of construction in the
first quarter of 2020. Because ownership of this facility reverts to the state of Kansas upon expiration of the
twenty-year lease, the construction and subsequent lease of the facility to the State was a deemed sale for
federal and state income tax purposes. The gain on sale was reported as a deferred tax asset based on the
percentage of completion method over the construction period. This deferred tax asset was revalued to zero
upon conversion of the TRS to a QRS.
Significant components of CoreCivic's deferred tax assets and liabilities as of December 31, 2020 and 2019,
are as follows (in thousands):
Noncurrent deferred tax assets:
Asset reserves and liabilities not yet deductible for tax
Tax over book basis of certain assets
Net operating loss and tax credit carryforwards
Intangible contract value
Other
$
Total noncurrent deferred tax assets
Less valuation allowance
Total noncurrent deferred tax assets
Noncurrent deferred tax liabilities:
Book over tax basis of certain assets
Intangible value
Other
Total noncurrent deferred tax liabilities
Net total noncurrent deferred tax assets
$
December 31,
2020
2019
21,482 $
1,001
3,782
699
68
27,032
(848 )
26,184
28,247
1,451
5,130
262
103
35,193
(3,865 )
31,328
(11,305 )
(2,149 )
(1,617 )
(15,071 )
11,113 $
(11,478 )
(2,264 )
(1,528 )
(15,270 )
16,058
F-33
BR21871N-0321-10KW
A reconciliation of the income tax provision at the statutory income tax rate and the effective tax rate as a
percentage of income from continuing operations before income taxes for the years ended December 31, 2020,
2019, and 2018 is as follows:
Statutory federal rate
Dividends paid deduction
State taxes, net of federal tax benefit
Permanent differences
Charges associated with adoption of tax reform
Deferred tax expense on Kansas lease structure
Tax benefit of equity-based compensation
Other items, net
2020
2019
2018
21.0 %
(24.9 )
1.9
2.2
—
5.2
1.1
0.8
7.3 %
21.0 %
(18.9 )
1.2
1.2
—
—
0.1
(0.6 )
4.0 %
21.0 %
(18.6 )
1.0
1.0
0.6
—
0.5
(0.5 )
5.0 %
CoreCivic's effective tax rate was 7.3%, 4.0%, and 5.0% during 2020, 2019, and 2018, respectively. During
the years the Company elected REIT status, CoreCivic was entitled to a deduction for dividends paid,
resulting in a substantial reduction in the amount of federal income tax expense it recognizes. Substantially all
of CoreCivic's income tax expense during the years the Company elected REIT status was incurred based on
the earnings generated by its TRSs.
On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief and Economic Security Act
(the “CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll
tax credits, deferral of employer side social security payments, net operating loss carryback periods,
alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical
corrections to tax depreciation methods for qualified improvement property. The accelerated depreciation
methods for qualified improvement property significantly reduced the Company's taxable income and,
therefore, its distribution requirement as a REIT for 2020. Additionally, as of December 31, 2020, the
Company has deferred payment of $29.6 million of employer-side social security payments. Half of these
deferrals will be due December 31, 2021, with the other half due December 31, 2022.
On August 5, 2020, the Company announced that the BOD unanimously approved a plan to revoke its REIT
election and become a taxable C Corporation, effective January 1, 2021. As a result, the Company will no
longer be required to operate under REIT rules, including the requirement to distribute at least 90% of its
taxable income to its stockholders, which will provide the Company with greater flexibility to use its free cash
flow. Beginning January 1, 2021, the Company will be subject to federal and state income taxes on its taxable
income at applicable tax rates, and will no longer be entitled to a tax deduction for dividends paid. The
revocation of the Company's REIT election will also result in a revaluation of its net deferred tax liabilities,
resulting in a material income tax charge in the period the Company has completed all significant actions
necessary to revoke its REIT election, currently expected to occur in the first quarter of 2021. The Company
currently estimates the charge to be $100.0 million to $135.0 million. The Company continued to operate as a
REIT for the 2020 tax year, and existing REIT requirements and limitations, including those established by
the Company’s organizational documents, remained in place until January 1, 2021.
The Company's consolidated effective tax rate could fluctuate in the future based on changes in estimates of
taxable income, the implementation of additional tax planning strategies, changes in federal or state tax rates
or laws affecting tax credits available to the Company, changes in other tax laws, changes in estimates related
to uncertain tax positions, or changes in state apportionment factors, as well as changes in the valuation
allowance applied to the Company's deferred tax assets that are based primarily on the amount of state net
operating losses and tax credits that could expire unused.
F-34
BR21871N-0321-10KW
CoreCivic had no liabilities for uncertain tax positions as of December 31, 2020 and 2019. CoreCivic
recognizes interest and penalties related to unrecognized tax positions in income tax expense. CoreCivic does
not currently anticipate that the total amount of unrecognized tax positions will significantly change in the
next twelve months.
CoreCivic's U.S. federal income tax returns for tax years 2017 through 2019 remain subject to examination by
the IRS. All states in which CoreCivic files income tax returns follow the same statute of limitations as the
federal government, with the exception of the following states whose open tax years include 2016 through
2019: Arizona, California, Colorado, Kentucky, Minnesota, New Jersey, Texas, and Wisconsin.
In October 2019, the Company received notification that the Internal Revenue Service ("IRS") intended to
commence an audit of the federal income tax return of the Company's REIT for the year ended December 31,
2017. The IRS also conducted audit procedures related to the Company's TRSs for the same year. The
Company received notice in January 2021 that the audit was complete with no material findings.
14. STOCKHOLDERS' EQUITY
Dividends on Common Stock
The tax characterization of dividends per share on common shares as reported to stockholders was as follows
for the years ended December 31, 2020, 2019, and 2018:
Declaration Date
February 22, 2018
May 11, 2018
August 16, 2018
December 13, 2018
February 21, 2019
May 16, 2019
August 15, 2019
December 12, 2019
February 20, 2020
Record Date
April 2, 2018
July 2, 2018
October 1, 2018
January 2, 2019
April 1, 2019
July 1, 2019
October 1, 2019
January 6, 2020
April 1, 2020
Payable Date
April 16, 2018
July 16, 2018
October 15, 2018
January 15, 2019
April 15, 2019
July 16, 2019
October 15, 2019
January 15, 2020
April 15, 2020
Total
Ordinary
Income
Return of
Capital
Per Share
0.396671 (1) 0.033329
$
0.396671 (1) 0.033329
$
0.396671 (1) 0.033329
$
0.374927 (2) 0.055073 $
0.383646 (3) 0.056354
$
0.383646 (3) 0.056354
$
0.383646 (3) 0.056354
$
0.440000 (4)
—
$
— $
0.440000 (4)
0.43
0.43
0.43
0.43
0.44
0.44
0.44
0.44
0.44
(1) $0.053074 of this amount constitutes a "Qualified Dividend", as defined by the IRS.
(2) $0.041413 of this amount constitutes a "Qualified Dividend", as defined by the IRS.
(3) $0.042774 of this amount constitutes a "Qualified Dividend", as defined by the IRS.
(4) $0.040745 of this amount constitutes a "Qualified Dividend", as defined by the IRS.
As further discussed in Note 1, the Company announced on June 17, 2020 that the BOD suspended the
Company's quarterly dividend while it evaluated corporate structure and capital allocation alternatives. On
August 5, 2020, the BOD voted unanimously to approve a plan to revoke the Company’s REIT election and
become a taxable C Corporation, effective January 1, 2021; the BOD also voted unanimously to discontinue
the quarterly dividend and prioritize allocating the Company's free cash flow to reduce debt levels. Future
dividends will depend on CoreCivic's future cash flows and earnings, capital requirements, financial
condition, limitations under debt covenants, opportunities for alternative uses of capital, and on such other
factors as the BOD of CoreCivic may consider relevant.
F-35
BR21871N-0321-10KW
Common Stock
Restricted shares. During 2020, CoreCivic issued approximately 1.2 million RSUs to certain of its employees
and non-employee directors, with an aggregate value of $20.9 million, including 1.1 million RSUs to
employees and non-employee directors whose compensation is charged to general and administrative expense
and 0.1 million RSUs to employees whose compensation is charged to operating expense. During 2019,
CoreCivic issued approximately 0.9 million RSUs to certain of its employees and non-employee directors,
with an aggregate value of $20.1 million, including 0.8 million RSUs to employees and non-employee
directors whose compensation is charged to general and administrative expense and 0.1 million RSUs to
employees whose compensation is charged to operating expense.
Since 2015, CoreCivic has established performance-based vesting conditions on the RSUs awarded to its
officers and executive officers that, unless earlier vested under the terms of the agreements, were subject to
vesting over a three-year period based upon the satisfaction of certain annual performance criteria, and no
more than one-third of the RSUs could vest in any one performance period. The RSUs awarded to officers
and executive officers in 2019 and 2020 consist of a combination of awards with performance-based
conditions and time-based conditions. Unless earlier vested under the terms of the RSU agreements, the RSUs
with time-based vesting conditions vest evenly generally on the first, second, and third anniversary of the
award. The RSUs with performance-based vesting conditions are divided into one-third increments, each of
which is subject to vesting based upon satisfaction of certain annual performance criteria established at the
beginning of the fiscal years ending December 31, 2019, 2020, and 2021 for the 2019 awards, and December
31, 2020, 2021, and 2022 for the 2020 awards, and which can be increased by up to 150% or decreased to 0%
based on performance relative to the annual performance criteria, and further increased or decreased using a
modifier of 80% to 120% based on CoreCivic's total shareholder return relative to a peer group. Based on
performance achieved for 2020, the RSUs subject to performance-based vesting criteria were decreased by
47.9%, and were further reduced to the 80% modifier based on CoreCivic's total shareholder return relative to
the peer group. Because the performance criteria for the fiscal years ending December 31, 2021 and 2022 have
not yet been established, the values of the third RSU increment of the 2019 awards and of the second and third
increments of the 2020 awards for financial reporting purposes will not be determined until such criteria are
established. Time-based RSUs issued to other employees, unless earlier vested under the terms of the
agreements, generally vest equally on the first, second, and third anniversary of the award. RSUs issued to
non-employee directors vest one year from the date of award.
Nonvested RSU transactions as of December 31, 2020 and for the year then ended are summarized below (in
thousands, except per share amounts).
Nonvested at December 31, 2019
Granted
Cancelled
Vested
Nonvested at December 31, 2020
Shares of
RSUs
Weighted
average
grant date
fair value
1,562 $
1,245 $
(47 ) $
(739 ) $
2,021 $
22.52
16.80
19.42
23.55
18.40
F-36
BR21871N-0321-10KW
During 2020, 2019, and 2018, CoreCivic expensed $17.3 million ($1.7 million of which was recorded in
operating expenses and $15.6 million of which was recorded in general and administrative expenses), $17.3
million ($1.8 million of which was recorded in operating expenses and $15.5 million of which was recorded in
general and administrative expenses), and $13.1 million ($1.8 million of which was recorded in operating
expenses and $11.3 million of which was recorded in general and administrative expenses), net of forfeitures,
relating to RSUs, respectively. As of December 31, 2020, CoreCivic had $15.0 million of total unrecognized
compensation cost related to RSUs that is expected to be recognized over a remaining weighted-average
period of 1.7 years. The total fair value of RSUs that vested during 2020, 2019, and 2018 was $17.4 million,
$13.4 million, and $15.3 million, respectively.
On August 28, 2018, CoreCivic entered into an Amended and Restated ATM Equity Offering Sales
Agreement, or ATM Agreement, with multiple sales agents, pursuant to which the Company may offer and
sell to or through the agents, from time to time, shares of the Company's common stock, par value $0.01 per
share, having an aggregate gross sales price of up to $200.0 million. Sales, if any, of the Company's shares of
common stock will be made primarily in “at-the-market” offerings, as defined in Rule 415 under the Securities
Act of 1933, as amended. The shares of common stock will be offered and sold pursuant to CoreCivic's
registration statement on Form S-3 and a related prospectus supplement, both filed with the SEC on August
28, 2018. CoreCivic intends to use substantially all of the net proceeds from any sale of shares of the
Company's common stock to repay outstanding borrowings or for working capital and other general corporate
purposes, which may include investments. There were no shares of the Company's common stock sold under
the ATM Agreement during 2018, 2019 and 2020.
Preferred Stock
CoreCivic has the authority to issue 50.0 million shares of $0.01 par value per share preferred stock (the
"Preferred Stock"). The Preferred Stock may be issued from time to time upon authorization by the Board of
Directors, in such series and with such preferences, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications or other provisions as may be fixed by CoreCivic's Board of
Directors.
Stock Option Plans
CoreCivic has equity incentive plans under which, among other things, incentive and non-qualified stock
options are granted to certain employees and non-employee directors of CoreCivic by the compensation
committee of CoreCivic's BOD. The options are granted with exercise prices equal to the fair market value on
the date of grant. Vesting periods for options granted to employees generally range from three to four years.
Options granted to non-employee directors vest on a date approximately following the first anniversary of the
grant date. The term of such options is ten years from the date of grant.
Since 2012, CoreCivic has elected not to issue stock options to its non-employee directors, officers, and
executive officers as it had in prior years, and instead elected to issue all of its equity compensation in the
form of RSUs as previously described herein. All outstanding stock options were fully vested as of December
31, 2016.
F-37
BR21871N-0321-10KW Stock option transactions relating to CoreCivic's non-qualified stock option plans are summarized below (in
thousands, except exercise prices):
Outstanding at December 31, 2019
Granted
Exercised
Cancelled
Outstanding at December 31, 2020
Exercisable at December 31, 2020
Weighted-
Average
Exercise
Price of
options
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
No. of
options
644 $
—
—
(172 )
472 $
472 $
20.91
—
—
17.58
22.13
22.13
0.9
0.9
$ —
$ —
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference
between CoreCivic's stock price as of December 31, 2020 and the exercise price, multiplied by the number of
in-the-money options) that would have been received by the option holders had all option holders exercised
their options on December 31, 2020. This amount changes based on the fair market value of CoreCivic's stock.
The total intrinsic value of options exercised during the years ended December 31, 2019 and 2018 was $0.5
million and $1.3 million, respectively. There were no options exercised during 2020.
At CoreCivic's 2020 annual meeting of stockholders held in May 2020, CoreCivic's stockholders approved the
CoreCivic, Inc. 2020 Stock incentive Plan that authorized the issuance of new awards to an aggregate of up to
4.7 million shares. As of December 31, 2020, CoreCivic had 4.7 million shares available for issuance under
the 2020 Stock Incentive Plan.
15. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income by the weighted average number of common
shares outstanding during the year. Diluted earnings per share reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted into common stock or resulted
in the issuance of common stock that then shared in the earnings of the entity. For CoreCivic, diluted earnings
per share is computed by dividing net income by the weighted average number of common shares after
considering the additional dilution related to restricted stock-based awards, stock options, and Operating
Partnership Units.
F-38
BR21871N-0321-10KW
A reconciliation of the numerator and denominator of the basic earnings per share computation to the
numerator and denominator of the diluted earnings per share computation is as follows (in thousands, except
per share data):
For the Years Ended December 31,
2019
2018
2020
NUMERATOR
Basic:
Net income attributable to common stockholders $ 54,157 $ 188,886 $ 159,207
Diluted:
Net income attributable to common stockholders $ 54,157 $ 188,886 $ 159,207
Net income attributable to non-controlling
interest
Diluted net income attributable to common
stockholders
DENOMINATOR
Basic:
$ 55,338 $ 188,886 $ 159,207
1,181
—
—
Weighted average common shares outstanding
119,559 119,028 118,544
Diluted:
Weighted average common shares outstanding
Effect of dilutive securities:
119,559 119,028 118,544
Stock options
Restricted stock-based awards
Non-controlling interest - Operating
Partnership Units
Weighted average shares and assumed
conversions
BASIC EARNINGS PER SHARE
DILUTED EARNINGS PER SHARE
—
28
22
114
111
61
1,342
—
—
120,929 119,164 118,716
1.34
$
1.34
$
0.45 $
0.45 $
1.59 $
1.59 $
Approximately 502,000, 486,000, and 317,000 stock options were excluded from the computations of diluted
earnings per share for the years ended December 31, 2020, 2019, and 2018, respectively, because they were
anti-dilutive.
16. COMMITMENTS AND CONTINGENCIES
Legal Proceedings
The nature of CoreCivic's business results in claims and litigation alleging that it is liable for damages arising
from the conduct of its employees, offenders or others. The nature of such claims includes, but is not limited
to, claims arising from employee or offender misconduct, medical malpractice, employment matters, property
loss, contractual claims, including claims regarding compliance with contract performance requirements, and
personal injury or other damages resulting from contact with CoreCivic's facilities, personnel or offenders,
including damages arising from an offender's escape or from a disturbance at a facility. CoreCivic maintains
insurance to cover many of these claims, which may mitigate the risk that any single claim would have a
material effect on CoreCivic's consolidated financial position, results of operations, or cash flows, provided
the claim is one for which coverage is available. The combination of self-insured retentions and deductible
amounts means that, in the aggregate, CoreCivic is subject to substantial self-insurance risk.
F-39
BR21871N-0321-10KW
Based upon management's review of the potential claims and outstanding litigation, and based upon
management's experience and history of estimating losses, and taking into consideration CoreCivic's self-
insured retention amounts, management believes a loss in excess of amounts already recognized would not be
material to CoreCivic's financial statements. Adversarial proceedings and litigation are, however, subject to
inherent uncertainties, and unfavorable decisions and rulings resulting from legal proceedings could occur
which could have a material impact on CoreCivic's consolidated financial position, results of operations, or
cash flows for the period in which such decisions or rulings occur, or future periods. Expenses associated
with legal proceedings may also fluctuate from quarter to quarter based on changes in CoreCivic's
assumptions, new developments, or by the effectiveness of CoreCivic's litigation and settlement strategies.
CoreCivic records a liability in the consolidated financial statements for loss contingencies when a loss is
known or considered probable, and the amount can be reasonably estimated. If the reasonable estimate of a
known or probable loss is a range, and no amount within the range is a better estimate than any other, the
minimum amount of the range is accrued. If a loss is reasonably possible but not known or probable, and can
be reasonably estimated, the estimated loss or range of loss is disclosed. When determining the estimated loss
or range of loss, significant judgment is required to estimate the amount and timing of a loss to be recorded.
Any receivable for insurance recoveries is recorded separately from the corresponding litigation reserve, and
only if recovery is determined to be probable and the amount of payment can be determined. CoreCivic does
not accrue for anticipated legal fees and costs but expenses those items as incurred.
CoreCivic was named as a defendant in the lawsuits detailed below. Due to the stage of these proceedings, the
Company cannot reasonably predict the outcome, nor can it estimate the amount of loss or range of loss, if
any, that may result. As a result, the Company has not recorded an accrual relating to these matters at this
time, as losses are not considered probable or reasonably estimable at this stage of these lawsuits.
ICE Detainee Labor and Related Matters.
On May 31, 2017, two former ICE detainees, who were detained at the Company's Otay Mesa Detention
Center (“OMDC”) in San Diego, California, filed a class action lawsuit against the Company in the United
States District Court for the Southern District of California. The complaint alleged that the Company forces
detainees to perform labor under threat of punishment in violation of state and federal anti-trafficking laws
and that OMDC’s Voluntary Work Program (“VWP”) violates state labor laws including state minimum wage
law. ICE requires that CoreCivic offer and operate the VWP in conformance with ICE standards and ICE
prescribes the minimum rate of pay for VWP participants. The Plaintiffs seek compensatory damages,
exemplary damages, restitution, penalties, and interest as well as declaratory and injunctive relief on behalf of
former and current detainees. On April 1, 2020, the district court certified a nationwide anti-trafficking claims
class of former and current detainees at all CoreCivic ICE detention facilities. It also certified a state law class
of former and current detainees at the Company’s ICE detention facilities in California. The court did not
certify any claims for injunctive or declaratory relief. Since this case was initially filed, four similar lawsuits
have been filed in other courts in California, Texas, Maryland and Georgia. The Company disputes these
allegations and intends to take all necessary steps to vigorously defend itself against all claims.
Shareholder Litigation.
In a memorandum to the BOP dated August 18, 2016, the Department of Justice ("DOJ") directed that, as each
contract with privately operated prisons reaches the end of its term, the BOP should either decline to renew
that contract or substantially reduce its scope in a manner consistent with law and the overall decline of the
BOP's inmate population. In addition to the decline in the BOP's inmate population, the DOJ memorandum
cites purported operational, programming, and cost efficiency factors as reasons for the DOJ directive. On
February 21, 2017, the newly appointed U.S. Attorney General issued a memorandum rescinding the DOJ's
prior directive stating the memorandum changed long-standing policy and practice and impaired the BOP's
ability to meet the future needs of the federal correctional system.
F-40
BR21871N-0321-10KW Following the release of the August 18, 2016 DOJ memorandum, a purported securities class action lawsuit
was filed on August 23, 2016 against the Company and certain of its current and former officers in the United
States District Court for the Middle District of Tennessee (the "District Court"), captioned Grae v. Corrections
Corporation of America et al., Case No. 3:16-cv-02267. The lawsuit is brought on behalf of a putative class
of shareholders who purchased or acquired the Company's securities between February 27, 2012 and August
17, 2016. The Plaintiffs seek compensatory damages and costs incurred in connection with the lawsuit. In
general, the lawsuit alleges that, during this timeframe, the Company's public statements were false and/or
misleading regarding the purported operational, programming, and cost efficiency factors cited in the DOJ
memorandum and, as a result, the Company's stock price was artificially inflated. The lawsuit alleges that the
publication of the DOJ memorandum on August 18, 2016 revealed the alleged fraud, causing the per share
price of the Company's stock to decline, thereby causing harm to the putative class of shareholders.
On December 18, 2017, the District Court denied the Company's motion to dismiss. On March 26, 2019, the
District Court certified the class proposed by the plaintiff. The United States Court of Appeals for the Sixth
Circuit denied the Company's appeal of the class certification order on August 23, 2019. A trial before United
States District Judge Aleta Trauger is scheduled for May 2021 in the Middle District of Tennessee. CoreCivic
believes the lawsuit is entirely without merit and intends to vigorously defend against it.
Insurance Contingencies
Each of CoreCivic's management contracts and the statutes of certain states require the maintenance of
insurance. CoreCivic maintains various insurance policies including employee health, workers' compensation,
automobile liability, and general liability insurance. These policies are fixed premium policies with various
deductible amounts that are self-funded by CoreCivic. Reserves are provided for estimated incurred claims
for which it is probable that a loss has been incurred and the range of such loss can be estimated.
Retirement Plan
All employees of CoreCivic are eligible to participate in the CoreCivic 401(k) Savings and Retirement Plan
(the "Plan") upon reaching age 18 and completing six months of qualified service. Eligible employees may
contribute up to 90% of their eligible compensation, subject to IRS limitations. For the years ended December
31, 2020, 2019, and 2018, CoreCivic provided a discretionary matching contribution equal to 100% of the
employee's contributions up to 5% of the employee's eligible compensation to employees with at least 500
hours of employment in the plan year. Employer matching contributions paid into the Plan each pay period
vest immediately pursuant to safe harbor provisions adopted by the Plan. During 2020, 2019, and 2018,
CoreCivic's discretionary contributions to the Plan were $15.0 million, $14.2 million, and $13.2 million,
respectively.
Deferred Compensation Plans
CoreCivic provides two non-qualified deferred compensation plans (the "Deferred Compensation Plans") for
non-employee directors and for certain senior executives. The Deferred Compensation Plans are unfunded
plans maintained for the purpose of providing CoreCivic's directors and certain of its senior executives the
opportunity to defer a portion of their compensation. Under the terms of the Deferred Compensation Plans,
certain senior executives may elect to contribute on a pre-tax basis up to 50% of their base salary and up to
100% of their cash bonus, and non-employee directors may elect to contribute on a pre-tax basis up to 100%
of their director retainer and meeting fees. During the years ended December 31, 2020, 2019, and 2018,
CoreCivic matched 100% of employee contributions up to 5% of total cash compensation. CoreCivic also
contributes a fixed rate of return on balances in the Deferred Compensation Plans, determined at the beginning
of each plan year. Matching contributions and investment earnings thereon become vested 20% after two
years of service, 40% after three years of service, 80% after four years of service, and 100% after five or more
years of service. Distributions are generally payable no earlier than five years subsequent to the date an
individual becomes a participant in the Plan, or upon termination of employment (or the date a director ceases
to serve as a director of CoreCivic), at the election of the participant. Distributions to senior executives must
commence on or before the later of 60 days after the participant's separation from service or the fifteenth day
of the month following the month the individual attains age 65.
F-41
BR21871N-0321-10KW During 2020, 2019, and 2018, CoreCivic provided a fixed return of 5.0% in each year to participants in the
Deferred Compensation Plans. CoreCivic has purchased life insurance policies on the lives of certain
employees of CoreCivic, which are intended to fund distributions from the Deferred Compensation Plans.
CoreCivic is the sole beneficiary of such policies. At the inception of the Deferred Compensation Plans,
CoreCivic established an irrevocable Rabbi Trust to secure the plans' obligations. However, assets in the
Deferred Compensation Plans are subject to creditor claims in the event of bankruptcy. During 2020, 2019,
and 2018, CoreCivic recorded $0.3 million, $0.2 million, and $0.3 million, respectively, of matching
contributions as general and administrative expense associated with the Deferred Compensation Plans. Assets
in the Rabbi Trust were $14.9 million and $14.4 million as of December 31, 2020 and 2019, respectively, and
were reflected in other assets on the accompanying consolidated balance sheets. As of December 31, 2020 and
2019, CoreCivic's liability related to the Deferred Compensation Plans was $12.5 million and $12.9 million,
respectively, which was reflected in accounts payable and accrued expenses and other liabilities on the
accompanying consolidated balance sheets.
Employment and Severance Agreements
CoreCivic currently has employment agreements with several of its executive officers, which provide for the
payment of certain severance amounts upon termination of employment under certain circumstances or a
change of control, as defined in the agreements.
17. SEGMENT REPORTING
As of December 31, 2020, CoreCivic operated 47 correctional and detention facilities, 42 of which the
Company owned. In addition, CoreCivic owned and operated 27 residential reentry centers and owned 15
properties for lease to third parties. Management views CoreCivic's operating results in three operating
segments, CoreCivic Safety, CoreCivic Community, and CoreCivic Properties. CoreCivic Safety includes the
operating results of those correctional and detention facilities placed into service that were owned, or
controlled via a long-term lease, and managed by CoreCivic, as well as those correctional and detention
facilities owned by a third party and managed by CoreCivic. CoreCivic Safety also includes the operating
results of TransCor America, LLC, a subsidiary of the Company that provides transportation services to
governmental agencies. CoreCivic Community includes the operating results of those residential reentry
centers placed into service that were owned, or controlled via a long-term lease, and managed by CoreCivic.
CoreCivic Community also includes the operating results of the Company's electronic monitoring and case
management services. CoreCivic Properties includes the operating results of those properties leased to third
parties. The operating performance of the three segments can be measured based on their net operating
income. CoreCivic defines facility net operating income as a facility's revenues less operating expenses.
F-42
BR21871N-0321-10KW
The revenue and net operating income for each of the three segments and a reconciliation to CoreCivic's
operating income is as follows for the three years ended December 31, 2020, 2019, and 2018 (in thousands):
For the Years Ended December 31,
2019
2018
2020
Revenue:
Safety
Community
Properties
Total segment revenue
Operating expenses:
Safety
Community
Properties
Total segment operating expenses
Facility net operating income:
Safety
Community
Properties
Total facility net operating income
Other revenue (expense):
Other revenue
Other operating expense
General and administrative
Depreciation and amortization
Contingent consideration for acquisition
of businesses
Asset impairments
Operating income
$ 1,706,232 $ 1,779,958 $ 1,675,998
105,990 123,265 101,841
57,899
1,905,320 1,980,530 1,835,738
93,098
77,307
1,288,938 1,304,121 1,222,418
76,898
15,420
1,405,969 1,422,083 1,314,736
88,903
28,128
95,159
22,803
417,294 475,837 453,580
24,943
42,479
499,351 558,447 521,002
17,087
64,970
28,106
54,504
165
(407 )
28
(514 )
(124,338 ) (127,078 ) (106,865 )
(150,861 ) (144,572 ) (156,501 )
159
(686 )
(620 )
(60,628 )
(6,085 )
(1,580 )
$ 162,662 $ 281,564 $ 249,485
—
(4,706 )
The following table summarizes capital expenditures including accrued amounts for the years ended
December 31, 2020, 2019, and 2018 (in thousands):
For the Years Ended December 31,
2019
2018
2020
Capital expenditures:
Safety
Community
Properties
Corporate and other
Total capital expenditures
The total assets are as follows (in thousands):
Assets:
Safety
Community
Properties
Corporate and other
Total assets
2,548
107,487
6,877
$ 42,577 $ 77,662 $ 94,559
15,689
5,859
95,109 365,628
11,260
12,111
$ 159,489 $ 190,741 $ 487,136
December 31,
2020
2019
$ 2,589,622 $ 2,606,127
234,475 275,882
676,374 682,249
208,844 227,373
$ 3,709,315 $ 3,791,631
F-43
BR21871N-0321-10KW
18.
SUBSEQUENT EVENTS
During February 2021, CoreCivic issued approximately 2.0 million RSUs to certain of CoreCivic's employees
and non-employee directors, with an aggregate value of $15.4 million. Unless earlier vested under the terms
of the RSU agreement, approximately 1.0 million RSUs were issued to officers and executive officers which
vest evenly on the first, second, and third anniversary of the award. CoreCivic expects to issue additional
RSUs before the end of the second quarter of 2021, which will be subject to vesting over a three-year period
based upon satisfaction of certain annual performance criteria for the fiscal years ending December 31, 2021,
2022, and 2023, and which can be increased or decreased based on performance relative to the annual
performance criteria, and further increased or decreased based on total shareholder return relative to a peer
group. Approximately 0.8 million RSUs issued to other employees vest evenly on the first, second, and third
anniversary of the award. Approximately 0.2 million RSUs issued to non-employee directors vest on the first
anniversary of the award. Any RSUs that become vested will be settled in shares of CoreCivic's common
stock.
F-44
BR21871N-0321-10KW 8
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BR21871N-0321-10KW
CORECIVIC, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
FOR THE YEARS ENDED DECEMBER 31, 2020, 2019, AND 2018
(in thousands)
For the Years Ended December 31,
2018
2019
2020
$ 3,605,137 $ 3,697,160 $ 3,367,358
26,547
269,271
—
33,984
$ 3,595,278 $ 3,605,137 $ 3,697,160
29,142
82,324
(10,154 )
(111,171 )
64,423
8,809
(4,040 )
(161,215 )
$ (1,053,670 ) $ (1,075,389 ) $ (976,121 )
(99,361 )
93
$ (1,128,563 ) $ (1,053,670 ) $ (1,075,389 )
(87,492 )
109,211
(89,008 )
14,115
Investment in Real Estate:
Balance at beginning of period
Additions through capital expenditures
Acquisitions
Asset impairments
Reclassifications and other
Balance at end of period
Accumulated Depreciation:
Balance at beginning of period
Depreciation
Disposals/Other
Balance at end of period
F-51
BR21871N-0321-10KW Exhibit 21.1
LIST OF SUBSIDIARIES OF CORECIVIC, INC.
ACS Corrections of Texas, L.L.C., a Texas limited liability company
Avalon Corpus Christi Transitional Center, LLC, a Texas limited liability company
Avalon Correctional Services, Inc., a Nevada corporation
Avalon Transitional Center Dallas, LLC, a Texas limited liability company
Avalon Tulsa, L.L.C., an Oklahoma limited liability company
Carver Transitional Center, L.L.C., an Oklahoma limited liability company
CCA Health Services, LLC, a Tennessee limited liability company
CCA International, LLC, a Delaware limited liability company
CCA South Texas, LLC, a Maryland limited liability company
CCA (UK) Ltd., a United Kingdom limited company
CoreCivic, LLC, a Delaware limited liability company
CoreCivic Government Solutions, LLC, a Maryland limited liability company
CoreCivic of Kansas Holdings LLC, a Maryland limited liability company
CoreCivic of Kansas LLC, a Maryland limited liability company
CoreCivic of Tallahassee, LLC, a Maryland limited liability company
CoreCivic of Tennessee, LLC, a Tennessee limited liability company
CoreCivic TRS, LLC, a Maryland limited liability company
Correctional Alternatives, LLC, a California limited liability company
Correctional Management, Inc., a Colorado corporation
EP Horizon Management, LLC, a Texas limited liability company
Fort Worth Transitional Center, L.L.C., an Oklahoma limited liability company
Government Real Estate Solutions LLC, a Delaware limited liability company
Green Level Realty, LLC, a Colorado limited liability company
National Offender Management Systems, LLC, a Colorado limited liability company
Prison Realty Management, LLC, a Tennessee limited liability company
Recovery Monitoring Solutions Corporation, a Texas corporation.
Rocky Mountain Offender Management Systems, LLC, a Colorado limited liability company
SSA Baltimore Holdings LLC, a Delaware limited liability company
SSA Baltimore LLC, a Delaware limited liability company
Southern Corrections System of Wyoming, L.L.C., an Oklahoma limited liability company
Technical and Business Institute of America, LLC, a Tennessee limited liability company
Time To Change, Inc., a Colorado corporation
TransCor America, LLC, a Tennessee limited liability company
TransCor Puerto Rico, Inc., a Puerto Rico corporation
Turley Residential Center, L.L.C., an Oklahoma limited liability company
BR21871N-0321-10KW
CERTIFICATION OF THE CEO PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, Damon T. Hininger, certify that:
1.
I have reviewed this Annual Report on Form 10-K of CoreCivic, Inc.;
Exhibit 31.1
2. Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statement made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this Annual Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Annual
Report, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this Annual Report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this Annual Report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in
this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this Annual Report based on such evaluation;
d) Disclosed in this Annual Report any change in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: February 22, 2021
/s/ Damon T. Hininger
Damon T. Hininger
President and Chief Executive Officer
BR21871N-0321-10KW
CERTIFICATION OF THE CFO PURSUANT TO
SECURITIES EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002
I, David M. Garfinkle, certify that:
Exhibit 31.2
1.
I have reviewed this Annual Report on Form 10-K of CoreCivic, Inc.;
2. Based on my knowledge, this Annual Report does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statement made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this Annual Report;
3. Based on my knowledge, the financial statements, and other financial information included in this Annual
Report, fairly present in all material respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this Annual Report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this Annual Report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in
this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures,
as of the end of the period covered by this Annual Report based on such evaluation;
d) Disclosed in this Annual Report any change in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date: February 22, 2021
/s/ David M. Garfinkle
David M. Garfinkle
Executive Vice President, Chief
Financial Officer, and Principal
Accounting Officer
BR21871N-0321-10KW
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.1
In connection with the Annual Report of CoreCivic, Inc. (the "Company") on Form 10-K for the period ending
December 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I,
Damon T. Hininger, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as
adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
/s/ Damon T. Hininger
Damon T. Hininger
President and Chief Executive Officer
February 22, 2021
BR21871N-0321-10KW
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 32.2
In connection with the Annual Report of CoreCivic, Inc. (the "Company") on Form 10-K for the period ending
December 31, 2020, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, David
M. Garfinkle, Executive Vice President, Chief Financial Officer, and Principal Accounting Officer of the Company,
certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
A signed original of this written statement required by Section 906 has been provided to the Company and will be
retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
/s/ David M. Garfinkle
David M. Garfinkle
Executive Vice President, Chief
Financial Officer, and Principal
Accounting Officer
February 22, 2021
BR21871N-0321-10KW
APPENDIX TO 2020 ANNUAL LETTER
Reconciliation of Non-GAAP Disclosures
($ in thousands, except per share amounts)
Net income attributable to common stockholders
Non-controlling interest
Diluted net income attributable to common stockholders
Special items:
Expenses associated with debt repayments and refinancing transactions
Expenses associated with mergers and acquisitions
Expenses associated with COVID-19
Expenses associated with changes in corporate tax structure
Deferred tax expense on Kansas lease structure
Charges associated with adoption of tax reform
Start-up expenses
Contingent consideration for acquisition of businesses
Loss on sale of real estate assets, net of taxes
Asset impairments
Adjusted net income (A)
2020
$
For the Years Ended December 31,
2019
$
2018
$
54,157
1,181
55,338
188,886
-
188,886
159,207
-
159,207
$
$
$
7,141
338
13,777
5,240
3,085
-
-
620
13,555
60,628
159,722
$
602
1,132
-
-
-
-
9,480
-
-
4,706
204,806
$
1,016
3,096
-
-
-
1,024
-
6,085
-
1,580
172,008
$
Weighted average common shares outstanding - basic
119,559
119,028
118,544
Effect of dilutive securities:
Stock options
Restricted stock-based awards
Non-controlling interest - operating partnership units
Weighted average shares and assumed conversions - diluted
-
28
1,342
120,929
22
114
-
119,164
111
61
-
118,716
Adjusted Earnings Per Diluted Share
$
1.32
$
1.72
$
1.45
Net income
Depreciation and amortization of real estate assets
Impairment of real estate assets
Loss (gain) on sale of real estate assets, net of taxes
Funds From Operations (A)
2020
$
For the Years Ended December 31,
2019
$
2018
$
55,338
112,046
14,380
13,555
195,319
188,886
107,402
4,428
(287)
300,429
159,207
101,771
1,580
-
262,558
$
$
$
Expenses associated with debt repayments and refinancing transactions
Expenses associated with mergers and acquisitions
Contingent consideration for acquisition of businesses
Expenses associated with COVID-19
Expenses associated with changes in corporate tax structure
Deferred tax expense on Kansas lease structure
Charges associated with adoption of tax reform
Start-up expenses
Goodwill and other impairments
Normalized Funds From Operations (A)
7,141
338
620
13,777
5,240
3,085
-
-
46,248
271,768
$
602
1,132
-
-
-
-
-
9,480
278
311,921
$
1,016
3,096
6,085
-
-
-
1,024
-
-
273,779
$
Normalized Funds From Operations Per Diluted Share
$
2.25
$
2.62
$
2.31
A-1
APPENDIX TO 2020 ANNUAL LETTER
Reconciliation of Non-GAAP Disclosures
($ in thousands, except per share amounts)
Net Income
Interest expense
Depreciation and amortization
Income tax expense
EBITDA (A)
2020
$
For the Years Ended December 31,
2019
$
2018
$
55,338
93,453
150,861
4,386
304,038
188,886
86,661
144,572
7,839
427,958
159,207
82,129
156,501
8,353
406,190
$
$
$
Expenses associated with debt repayments and refinancing transactions
Expenses associated with mergers and acquisitions
Expenses associated with COVID-19
Expenses associated with changes in corporate tax structure
Contingent consideration for acquisition of businesses
Depreciation expense associated with STFRC lease (A)
Interest expense associated with STFRC lease (A)
Start-up expenses
Loss on sale of real estate assets
Asset impairments
Adjusted EBITDA (A)
7,141
338
13,777
5,240
620
-
-
-
13,023
60,628
404,805
$
602
1,132
-
-
-
-
-
9,480
-
4,706
443,878
$
1,016
3,096
-
-
6,085
(16,453)
(5,562)
-
-
1,580
395,952
$
(A)
Adjusted Net Income, EBITDA, Adjusted EBITDA, Funds From Operations (FFO), and Normalized FFO, and, where appropriate, their
corresponding per share metrics are non-GAAP financial measures. CoreCivic believes that these measures are important operating measures that
supplement discussion and analysis of the Company's results of operations and are used to review and assess operating performance of the
Company and its correctional facilities and their management teams. CoreCivic believes that it is useful to provide investors, lenders and security
analysts disclosures of its results of operations on the same basis that is used by management. FFO, in particular, is a widely accepted non-GAAP
supplemental measure of REIT performance, grounded in the standards for FFO established by the National Association of Real Estate Investment
Trusts (NAREIT). NAREIT defines FFO as net income computed in accordance with generally accepted accounting principles, excluding gains (or
losses) from sales of property and extraordinary items, plus depreciation and amortization of real estate and impairment of depreciable real estate.
EBITDA, Adjusted EBITDA, and Normalized FFO are useful as supplemental measures of performance of the Company's corrections facilities
because they don't take into account depreciation and amortization, or with respect to EBITDA, the impact of the Company's tax provisions and
financing strategies. Because the historical cost accounting convention used for real estate assets requires depreciation (except on land), this
accounting presentation assumes that the value of real estate assets diminishes at a level rate over time. Because of the unique structure, design and
use of the Company's properties, management believes that assessing performance of the Company's properties without the impact of depreciation
or amortization is useful. Adjusted EBITDA for 2018 includes the portion of rental payments for the South Texas Family Residential Center
(STFRC) that was classified as depreciation and interest expense for financial reporting purposes, to more properly reflect the cash flows
associated with the lease. The Company adopted Accounting Standards Codification 842, "Leases", (ASC 842) on January 1, 2019. Upon
adoption of ASC 842, all rental payments associated with this lease are classified as operating expenses. CoreCivic may make adjustments to FFO
from time to time for certain other income and expenses that it considers non-recurring, infrequent or unusual, even though such items may require
cash settlement, because such items do not reflect a necessary component of the ongoing operations of the Company. Start-up expenses represent
the incremental operating losses incurred during the period we activate idle correctional facilities. Normalized FFO excludes the effects of such
items. CoreCivic calculates Adjusted Net Income by adding to GAAP Net Income expenses associated with the Company’s debt refinancing
transactions, mergers and acquisitions (M&A) activity, certain impairments and other items that the Company believes are unusual or nonrecurring
to provide an alternative measure of comparing operating performance for the periods presented. Even though expenses associated with mergers
and acquisitions may be recurring, the magnitude and timing fluctuate based on the timing and scope of M&A activity, and therefore, such
expenses, which are not a necessary component of the ongoing operations of the Company, may not be comparable from period to period. Other
companies may calculate Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized FFO differently than the Company does, or
adjust for other items, and therefore comparability may be limited. Adjusted Net Income, EBITDA, Adjusted EBITDA, FFO, and Normalized
FFO and their corresponding per share measures are not measures of performance under GAAP, and should not be considered as an alternative to
cash flows from operating activities, a measure of liquidity or an alternative to net income as indicators of the Company's operating performance or
any other measure of performance derived in accordance with GAAP. This data should be read in conjunction with the Company's consolidated
financial statements and related notes included in its filings with the Securities and Exchange Commission
A-2
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BR21871N-0321-10KW BR21871N-0321-10KW BR21871N-0321-10KW 5501 Virginia Way, Suite 110
Brentwood, TN 37027
(615) 263-3000
Website: ir.corecivic.com
NYSE: CXW
BR21871N-0321-10KW