Segment Reporting

6 Months Ended

Jun. 30, 2013

Segment Reporting

11. SEGMENT REPORTING

As of June 30, 2013, CCA owned and managed 49 correctional and detention facilities, and managed 18 correctional and detention facilities it did not own. Management views CCA’s operating results in two reportable segments: (1) owned and managed correctional and detention facilities and (2) managed-only correctional and detention facilities. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in the notes to consolidated financial statements included in CCA’s 2012 Form 10-K. Owned and managed facilities include the operating results of those facilities placed into service that were owned or controlled via a lease and managed by CCA. Following the Company’s reorganization to begin operating as a REIT effective January 1, 2013, the Company chose to reclassify the financial information provided for segment reporting purposes at two facilities where the property is effectively controlled by the Company under operating lease arrangements. Previously, the Company classified these two facilities controlled under operating leases within the managed-only segment. The Company now reports the financial information associated with these facilities as owned and managed and has reclassified its segment reporting for all periods presented. Managed-only facilities include the operating results of those facilities owned by a third party and managed by CCA. CCA measures the operating performance of each facility within the above two reportable segments, without differentiation, based on facility net operating income. CCA defines facility net operating income as a facility’s operating income or loss from operations before interest, taxes, asset impairments, depreciation, and amortization. Since each of CCA’s facilities within the two reportable segments exhibit similar economic characteristics, provide similar services to governmental agencies, and operate under a similar set of operating procedures and regulatory guidelines, the facilities within the identified segments have been aggregated and reported as one reportable segment.

The revenue and facility net operating income for the reportable segments and a reconciliation to CCA’s operating income is as follows for the three and six months ended June 30, 2013 and 2012 (in thousands):

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2013			2012			2013			2012
Revenue:
Owned and managed	$	348,608		$	357,938		$	690,101		$	709,701
Managed-only		84,286			83,476			167,599			165,884
Total management revenue		432,894			441,414			857,700			875,585
Operating expenses:
Owned and managed		234,648			238,228			463,903			473,866
Managed-only		75,088			73,848			149,138			148,905
Total operating expenses		309,736			312,076			613,041			622,771
Facility net operating income:
Owned and managed		113,960			119,710			226,198			235,835
Managed-only		9,198			9,628			18,461			16,979
Total facility net operating income		123,158			129,338			244,659			252,814
Other revenue (expense):
Rental and other revenue		1,087			1,452			2,005			2,586
Other operating expense		(4,541	)		(4,508	)		(8,766	)		(9,347	)
General and administrative		(25,360	)		(23,095	)		(56,592	)		(44,935	)
Depreciation and amortization		(28,097	)		(28,302	)		(55,727	)		(56,689	)
Asset impairments		(2,637	)		—			(2,637	)		—
Operating income	$	63,610		$	74,885		$	122,942		$	144,429

The following table summarizes capital expenditures including accrued amounts for the reportable segments for the three and six months ended June 30, 2013 and 2012 (amounts in thousands):

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2013		2012		2013		2012
Capital expenditures:
Owned and managed	$	15,023	$	15,834	$	23,342	$	29,436
Managed-only		523		1,765		1,477		2,686
Corporate and other		1,361		2,308		2,891		9,255
Total capital expenditures	$	16,907	$	19,907	$	27,710	$	41,377

The assets for the reportable segments are as follows (amounts in thousands):

	June 30, 2013		December 31, 2012
Assets:
Owned and managed	$	2,631,937	$	2,654,791
Managed-only		97,254		119,191
Corporate and other		187,969		200,760
Total assets	$	2,917,160	$	2,974,742