Property And Equipment

12 Months Ended

Dec. 31, 2011

4.	PROPERTY AND EQUIPMENT

At December 31, 2011, CCA owned 50 real estate properties, including 48 correctional and detention facilities, two of which CCA leased to other operators, and two corporate office buildings. At December 31, 2011, CCA also managed 21 correctional and detention facilities owned by governmental agencies.

Property and equipment, at cost, consists of the following (in thousands):


	December 31,
	2011			2010
Land and improvements	$	119,721		$	112,137
Buildings and improvements		2,958,578			2,874,388
Equipment and software		303,286			279,155
Office furniture and fixtures		30,309			29,937
Construction in progress		99,408			52,240

		3,511,302			3,347,857
Less: Accumulated depreciation		(902,384	)		(798,562	)

	$	2,608,918		$	2,549,295

Construction in progress primarily consists of correctional facilities under construction or expansion. Interest is capitalized on construction in progress and amounted to $1.6 million, $3.9 million, and $1.6 million in 2011, 2010, and 2009, respectively.

Depreciation expense was $109.1 million, $106.4 million, and $103.0 million for the years ended December 31, 2011, 2010, and 2009, respectively.

Ten of the facilities owned by CCA, including the facility under construction in Millen, Georgia, 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. In addition, two facilities, one of which is also subject to a purchase option, are constructed on land that CCA leases from governmental agencies under ground leases. Under the terms of those ground leases, the facilities become the property of the governmental agencies upon expiration of the ground leases. CCA depreciates these properties over the shorter of the term of the applicable ground lease or the estimated useful life of the property.

CCA leases portions of the land and building of the San Diego Correctional Facility under an operating lease that expires December 2015 pursuant to amended lease terms executed between CCA and the County of San Diego in January 2010. CCA also leases land and building at the Elizabeth Detention Center under operating leases that expire June 2015. During January 2009, CCA commenced a new lease for land and building at the North Georgia Detention Center under an operating lease that expires in 2029. The rental expense incurred for these leases was $6.2 million, $6.2 million, and $5.6 million for the years ended December 31, 2011, 2010, and 2009, respectively. Future minimum lease payments as of December 31, 2011 under these operating leases are as follows:


2012	$	6,122
2013		6,142
2014		6,162
2015		4,794
2016		2,112
Thereafter		26,188

In December 2009, CCA entered into an Economic Development Agreement with the Wheeler County Development Authority ("Wheeler County") in Wheeler County, Georgia to implement a tax abatement plan related to CCA's bed expansion project at its Wheeler Correctional Facility. The tax abatement plan provides for 50% abatement of real property taxes for six years. Under the plan, legal title of CCA's real property was transferred to Wheeler County. In December 2009, Wheeler County issued bonds in a maximum principal amount of $30.0 million. The bonds were issued to CCA, so no cash exchanged hands. Wheeler County then leased the real property back to CCA. The lease payments are equal to the amount of the payments on the bonds. At any time, CCA has the option to purchase the real property by paying off the bonds, plus $100. Due to the form of the transaction, CCA has not recorded the bond or the capital lease associated with sale lease-back transaction. The original cost of CCA's property and equipment is recorded on the balance sheet and is being depreciated over its estimated useful life.

In December 2009, CCA also entered into an Economic Development Agreement with the Douglas-Coffee County Industrial Authority ("Coffee County") in Coffee County, Georgia to implement a tax abatement plan related to CCA's bed expansion project at its Coffee Correctional Facility. The tax abatement plan provides for 100% abatement of real property taxes for five years. Under the plan, legal title of CCA's real property was transferred to Coffee County. In December 2009, Coffee County issued bonds in a maximum principal amount of $33.0 million. The bonds were issued to CCA, so no cash exchanged hands. Coffee County then leased the real property back to CCA. The lease payments are equal to the amount of the payments on the bonds. At any time, CCA has the option to purchase the real property by paying off the bonds, plus $100. Due to the form of the transaction, CCA has not recorded the bond or the capital lease associated with sale lease-back transaction. The original cost of CCA's property and equipment is recorded on the balance sheet and is being depreciated over its estimated useful life.

- Definition

The entire disclosure for long-lived, physical assets that are used in the normal conduct of business to produce goods and services and not intended for resale. Examples include land, buildings, machinery and equipment, and other types of furniture and equipment including, but not limited to, office equipment, furniture and fixtures, and computer equipment and software. This disclosure may include property plant and equipment accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives, income statement disclosures, assets held for sale and public utility disclosures.

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