Segment Reporting

9 Months Ended

Sep. 30, 2013

Segment Reporting

11. SEGMENT REPORTING

As of September 30, 2013, CCA owned and managed 50 correctional and detention facilities, and managed 16 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 nine months ended September 30, 2013 and 2012 (in thousands):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2013			2012			2013			2012
Revenue:
Owned and managed	$	344,150		$	358,730		$	1,034,251		$	1,068,431
Managed-only		76,132			75,292			225,754			223,258
Total management revenue		420,282			434,022			1,260,005			1,291,689
Operating expenses:
Owned and managed		232,778			235,065			696,681			708,931
Managed-only		65,177			65,745			194,730			197,006
Total operating expenses		297,955			300,810			891,411			905,937
Facility net operating income:
Owned and managed		111,372			123,665			337,570			359,500
Managed-only		10,955			9,547			31,024			26,252
Total facility net operating income		122,327			133,212			368,594			385,752
Other revenue (expense):
Rental and other revenue		1,184			1,705			3,189			4,291
Other operating expense		(3,534	)		(4,781	)		(12,301	)		(14,128	)
General and administrative		(23,570	)		(22,015	)		(80,162	)		(66,950	)
Depreciation and amortization		(28,151	)		(28,388	)		(83,203	)		(84,656	)
Asset impairments		(985	)		—			(985	)		—
Operating income	$	67,271		$	79,733		$	195,132		$	224,309

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

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2013		2012		2013		2012
Capital expenditures:
Owned and managed	$	33,439	$	14,983	$	56,781	$	44,419
Managed-only		756		516		2,161		2,874
Discontinued operations		—		74		72		402
Corporate and other		2,606		2,864		5,497		12,119
Total capital expenditures	$	36,801	$	18,437	$	64,511	$	59,814

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

	September 30, 2013		December 31, 2012
Assets:
Owned and managed	$	2,670,007	$	2,654,791
Managed-only		84,381		109,572
Corporate and other		213,228		200,760
Discontinued operations		566		9,619
Total assets	$	2,968,182	$	2,974,742