CORECIVIC : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)

The following discussion should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this quarterly report on
Form 10-Q. In this quarterly report on Form 10-Q, or Quarterly Report, we use
the terms, the "Company," "CoreCivic," "we," "us," and "our" to refer to
CoreCivic, Inc. and its subsidiaries unless context indicates otherwise.

This Quarterly 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 herein, 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. These include, but are
not limited to, the risks and uncertainties associated with:

• 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;

• 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;


    •   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;

• changes in government policy, 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 the South

Texas Family Residential Center by U.S. Immigration and Customs

Enforcement, or ICE, under terms of the current contract, and the impact

of any changes to immigration reform and sentencing laws. (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);

• 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;


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    •   our ability to meet and maintain qualification for taxation as a real
        estate investment trust, or REIT, for years the Company elected REIT
        status;

• whether revoking our REIT election 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 certain non-core assets

at attractive prices;

• our ability, following the revocation of our REIT election, to identify

        and initiate service opportunities that were unavailable under the REIT
        structure; 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 quarterly 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 "Item 1A Risk Factors" disclosed in Part II of this
Quarterly Report, as well as in our Annual Report on Form 10-K as of and for the
year ended December 31, 2019 filed with the Securities and Exchange Commission,
or the SEC, on February 20, 2020, or the 2019 Form 10-K, and in other reports,
documents, and other information we file with the SEC from time to time. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. New risks and uncertainties arise from
time to time, and it is impossible for us to predict these events or how they
may affect us. We undertake no obligation to publicly update or revise any
forward-looking statements made in this Quarterly Report, except as may be
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.

OVERVIEW

The Company

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 June 30, 2020, through our CoreCivic
Safety segment, we operated 49 correctional and detention facilities, 42 of
which we owned, with a total design capacity of approximately 72,000 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 57 properties for
lease to third parties and used by government agencies, totaling 3.3 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 [phone]. 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 Quarterly Report.

We began operating as a REIT effective January 1, 2013. We provide services and
conduct 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 enables us to comply
with REIT qualification requirements while providing correctional

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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 are not 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 earn from our TRSs. However, our TRSs will be required to pay income taxes on their earnings at regular corporate income tax rates.

As a REIT, we generally are 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 will not typically include income earned by our TRSs except to the extent
our TRSs pay dividends to the REIT.

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. 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. We will continue 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,
will remain in place until January 1, 2021. The BOD also announced that we are
discontinuing our quarterly dividend and prioritizing the allocation of our free
cash flow to debt reduction.

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 our 2019 Form 10-K. 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 June 30, 2020,
we had $2.7 billion in property and equipment, including $133.6 million in
long-lived assets, excluding equipment, at five idled CoreCivic Safety
correctional facilities. The impairment analyses we performed for each of these
facilities excluded the net book value of equipment, as a substantial portion of
the equipment is easily transferrable to other company-owned facilities without
significant cost. The carrying values of the five idled correctional facilities
as of June 30, 2020 were as follows (in thousands):



Prairie Correctional Facility         $  14,473
Huerfano County Correctional Center      15,949
Diamondback Correctional Facility        38,860
Marion Adjustment Center                 11,142
Kit Carson Correctional Center           53,158
                                      $ 133,582




As of June 30, 2020, we also had one idled non-core facility in our Safety
segment containing 240 beds with a total net book value of $3.2 million; three
facilities in our Community segment, including two that became idle during 2020,
containing an aggregate of 549 beds with a total net book value of $11.3
million; and three previously leased residential reentry centers in our
Properties segment containing an aggregate of 430 beds with a total net book
value of $9.2 million.

We incurred operating expenses at these idled facilities of approximately $2.0
million and $1.7 million for the period they were idle during the three months
ended June 30, 2020 and 2019, respectively. We incurred operating expenses at
these idled facilities of approximately $4.0 million and $3.6 million for the
period they were idle during the six months ended June 30, 2020 and 2019,
respectively.

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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 approximately $2.8 million was
recognized in the second quarter of 2020.

During the third quarter of 2020, predominately 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 with the State
to idle our 1,692-bed Cimarron Correctional Facility in our CoreCivic Safety
segment during the third quarter of 2020. As of June 30, 2020, the net book
value of the Cimarron facility was $73.3 million. CoreCivic Community 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 of June 30, 2020, the net book value of the Tulsa facility was $2.4
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, and the expiration and non-renewal of lease agreements in our
CoreCivic Properties segment. Accordingly, we tested each of the idled
properties for impairment when we were notified by the respective customers or
tenants that they would no longer be utilizing such facility or property.

We re-perform the impairment analyses on an annual basis for each of the idle
facilities as well as any other properties with indicators of impairment. In
performing our annual impairment analyses, the 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 included 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 Oklahoma, based on its anticipated use as a commercial real estate property
rather than a reentry facility. The fair value measurement for the Oklahoma
residential reentry facility 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
market.

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, or an agreement to
sell, 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 since 2009 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.

Goodwill Impairments - As of June 30, 2020, we had $48.6 million of goodwill,
established in connection with multiple business combination transactions. We
evaluate the carrying value of goodwill annually and whenever circumstances
indicate the carrying value of goodwill may be impaired. 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

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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 the income approach and 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. 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 our capital
structure, cost of debt, interest rates, capital expenditure levels, operating
cash flows, or market capitalization. Accordingly, we may incur goodwill
impairment charges in the future.

During the third quarter of 2020, we provided notice to our customers at two
managed-only facilities of our intent to terminate the contracts. We expect to
transition operations of both the 1,046-bed Silverdale Detention Center and the
1,348-bed Metro-Davidson County Detention Facility in the fourth quarter of
2020. As a result of these expected contract terminations, during the second
quarter of 2020, we recognized goodwill impairments of $2.0 million associated
with these two managed-only facilities' reporting units.

We have continued to monitor the impact of COVID-19 with respect to the
projections and assumptions used for our annual assessment performed in the
fourth quarter of 2019. As of June 30, 2020, we concluded that it is more likely
than not that the fair value of the reporting units exceeded their carrying
values (with the exception of the impact of the contract terminations discussed
above on two managed-only reporting units). However, the long-term impacts of
COVID-19, if any, on future cash flows are difficult to predict. We can provide
no assurance that goodwill impairments will not occur in the future as a result
of the impact of COVID-19 or otherwise. We will conduct additional impairment
tests if, and when, warranted by the impact of COVID-19 on our reporting units.

Self-funded insurance reserves. As of June 30, 2020, we had $47.0 million 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.

Legal reserves. As of June 30, 2020, we had $15.5 million 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. 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.

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RESULTS OF OPERATIONS

Our results of operations are impacted by the number of correctional and
detention facilities we operated, including 42 we owned and seven 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 periods presented:



                                       Effective                     CoreCivic
                                         Date         Safety       Community       Properties        Total
Facilities as of December 31, 2018                          51             26               27           104
Acquisition of the South Raleigh
Reentry
  Center in North Carolina           February 2019           -              1                -             1
Acquisition of a leased property
in
  Michigan                             May 2019              -              -                1             1
Sale of a leased property in
Pennsylvania                           June 2019             -              -               (1 )          (1 )

Acquisition of certain assets of

  Rehabilitation Services, Inc.      December 2019           -              2                -             2
Lease of the Southeast
Correctional
  Complex                            December 2019          (1 )            -                1             -
Facilities as of December 31, 2019                          50             29               28           107
Acquisition of a portfolio of
government-
  leased properties                  January 2020            -              -               28            28
Commencement of the Lansing
Correctional
  Facility lease                     January 2020            -              -                1             1
Termination of contract and lease
of a
  Colorado reentry center            January 2020            -             (1 )              -            (1 )
Sale of an idled residential
reentry center in Arizona             April 2020             -             (1 )              -            (1 )
Sale of an idled non-core facility
in Tennessee                           May 2020             (1 )            -                -            (1 )
Facilities as of June 30, 2020                              49             27               57           133

Three and Six Months Ended June 30, 2020 Compared to the Three and Six Months Ended June 30, 2019

Net income attributable to common stockholders was $22.2 million, or $0.18 per
diluted share, for the three months ended June 30, 2020, compared with net
income attributable to common stockholders of $48.6 million, or $0.41 per
diluted share, for the three months ended June 30, 2019. Net income attributable
to common stockholders was $54.2 million, or $0.45 per diluted share, for the
six months ended June 30, 2020, compared with net income attributable to common
stockholders of $97.9 million, or $0.82 per diluted share, for the six months
ended June 30, 2019. Financial results for the three months ended June 30, 2020
reflected several special items, including $8.2 million of expenses associated
with COVID-19, $11.7 million of asset impairments, $0.3 million for the
evaluation of corporate structure alternatives, and a gain on sale of assets of
$2.8 million. In addition to the special items reflected in the financial
results for the three months ended June 30, 2020, financial results for the six
months ended June 30, 2020 also included a non-recurring deferred tax expense of
$3.1 million reported during the first quarter of 2020. Financial results for
the three and six months ended June 30, 2019 included $4.7 million of asset
impairments and $2.7 million of start-up expenses associated with the activation
of two previously idled facilities, as further described hereafter.

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Our Current Operations

Our ongoing operations are organized into three principal business segments:

• CoreCivic Safety segment, consisting of the 49 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 57 real estate properties

       owned by CoreCivic for lease to third parties and used by government
       agencies.

For the three and six months ended June 30, 2020 and 2019, our total facility net operating income was divided among these business segments as follows:

                 For the Three Months Ended            For the Six Months Ended
                          June 30,                             June 30,
                 2020                  2019             2020              2019
Segment:
Safety                83.8 %                85.3 %          83.4 %            85.2 %
Community              3.2 %                 5.3 %           4.0 %             5.2 %
Properties            13.0 %                 9.4 %          12.6 %             9.6 %


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 three and six months ended June 30, 2020 and 2019:



                                                 For the Three Months Ended            For the Six Months Ended
                                                          June 30,                             June 30,
                                                  2020                2019              2020               2019
Revenue per compensated man-day               $       83.40       $       78.38     $      82.64       $      78.37
Operating expenses per compensated man-day:
Fixed expense                                         47.25               40.12            46.32              40.76
Variable expense                                      16.57               16.20            16.46              15.92
Total                                                 63.82               56.32            62.78              56.68

Operating income per compensated man-day $ 19.58 $ 22.06 $ 19.86 $ 21.69 Operating margin

                                       23.5 %              28.1 %           24.0 %             27.7 %
Average compensated occupancy                          74.9 %              82.8 %           76.9 %             82.7 %
Average available beds                               77,803              78,107           77,911             78,090
Average compensated population                       58,280              64,680           59,949             64,616




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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 rental revenue we generate through CoreCivic Properties from
facilities we lease to third-party operators. The following table reflects the
components of revenue for the three and six months ended June 30, 2020 and 2019
(in millions):



                              For the Three Months Ended
                                       June 30,
                               2020                2019           $ Change       % Change
Management revenue:
Federal                    $       246.2       $       252.2     $     (6.0 )         (2.4 %)
State                              161.9               167.6           (5.7 )         (3.4 %)
Local                               19.9                24.9           (5.0 )        (20.1 %)
Other                               22.1                26.4           (4.3 )        (16.3 %)
Total management revenue           450.1               471.1          (21.0 )         (4.5 %)
Rental revenue                      22.5                19.2            3.3           17.2 %
Total revenue              $       472.6       $       490.3     $    (17.7 )         (3.6 %)










                              For the Six Months Ended
                                      June 30,
                               2020               2019          $ Change       % Change
Management revenue:
Federal                    $      497.5       $      494.3     $      3.2            0.6 %
State                             328.5              338.9          (10.4 )         (3.1 %)
Local                              45.5               49.7           (4.2 )         (8.5 %)
Other                              46.9               53.1           (6.2 )        (11.7 %)
Total management revenue          918.4              936.0          (17.6 )         (1.9 %)
Rental revenue                     45.2               38.3            6.9           18.0 %
Other revenue                       0.1                0.1              -              -
Total revenue              $      963.7       $      974.4     $    (10.7 )         (1.1 %)






The $21.0 million, or 4.5%, decrease in total management revenue for the three
months ended June 30, 2020 as compared with the same period in 2019 was
primarily a result of a decrease in revenue of approximately $45.6 million
caused primarily by a decrease in the average daily compensated population from
2019 to 2020. In addition, revenue generated from our electronic monitoring and
case management services decreased $2.0 million in the second quarter of 2020
when compared to the same period in 2019, primarily as a result of fewer court
hearings and referrals due to COVID-19. The $17.6 million, or 1.9%, decrease in
total management revenue for the six months ended June 30, 2020 as compared with
the same period in 2019 was primarily a result of a decrease in revenue of
approximately $61.6 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
$2.5 million during the six months ended June 30, 2020 when compared to the same
period in the prior year, primarily as a result of fewer court hearings and
referrals due to COVID-19. The decrease in management revenue in both the three-
and six-month periods was partially offset by an increase in revenue of
approximately $26.6 million and $46.5 million, respectively, driven primarily by
an increase of 6.4% and 5.4%, respectively, 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 6,400, or 9.9%, to 58,280 during
the three months ended June 30, 2020 compared to 64,680 during the three months
ended June 30, 2019. Average daily compensated population decreased 4,667, or
7.2%, to 59,949 during the six months ended June 30, 2020 compared to 64,616
during the six months ended June 30, 2019. Average daily compensated population
decreased in both the three- and six-month periods primarily as a result of
COVID-19, as further described hereafter, and the expiration of the contract
with the Federal Bureau of Prisons, or BOP, at our Adams County Correctional
Center in the third quarter of 2019, which had an average daily compensated
population of 2,150 inmates during the first six months of 2019 compared with
1,100 detainees during the first six months of 2020 under a new contract with
ICE, as further described hereafter.

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Further, the continued and anticipated transfer of California inmates held in
our out-of-state facilities back to the state of California, which was completed
during the second quarter of 2019, also contributed to the decline in average
daily compensated population. Average daily compensated populations from the
state of California were approximately 600 during the second quarter of
2019. The decrease in average daily compensated population was also a result of
a reduction in ICE populations, as further described hereafter, net of
additional populations resulting from the new inter-governmental service
agreements, or 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 U.S. Marshals Service, or
USMS, including at our previously idled Eden facility due to a new contract
executed in the second quarter of 2019.

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. Our
federal customers generated approximately 52% and 51% of our total revenue for
the three months ended June 30, 2020 and 2019, respectively, decreasing $6.0
million, or 2.4%, during the three months ended June 30, 2020 as compared with
the same period in 2019. Our federal customers generated approximately 52% and
51% of our total revenue for the six months ended June 30, 2020 and 2019,
respectively, increasing $3.2 million, or 0.6%, during the six months ended June
30, 2020 as compared with the same period in 2019. The increase in federal
revenues in the first six months of 2020 primarily resulted from the combined
effect of the aforementioned new contracts, per diem increases for several of
our federal contracts and as a result of one additional day of operations due to
a leap year in 2020.

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 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 has amplified the reduction in 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
offender populations from sequential quarters, as the number of courts in
session and prosecutions have declined. 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.

State revenues from contracts at correctional, detention, and residential
reentry facilities that we operate decreased $5.7 million, or 3.4%, from the
second quarter of 2019 to the second quarter of 2020. State revenues decreased
$10.4 million, or 3.1%, from the six months ended June 30, 2019 to the
comparable period in 2020. In addition to the effect of an overall decline in
state populations resulting from COVID-19, as further described hereafter, the
decrease in state revenues in both the three- and six-month periods was also a
result of a continued, and anticipated, transfer back to the state of California
of all of the California inmates held in our out-of-state facilities, which was
completed during the second quarter of 2019. This decline in population from
California inmates resulted in a decrease in revenue of $3.4 million and $13.3
million, respectively, from the three and six months ended June 30, 2019 to the
comparable periods in 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 with the state of Kansas at our
Saguaro Correctional Facility in Arizona, both as further described hereafter,
as well as per diem increases under numerous other state contracts. Revenue also
benefited from one additional day of operations due to a leap year in 2020.

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.

We currently expect that the COVID-19 pandemic will 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 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

                                       27

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violation. Further, we cannot predict government policies on prosecutions and
newly ordered legal restrictions as a result of COVID-19 that affect the number
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 until a widely accepted treatment and/or
vaccine for COVID-19 is available, 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.

From the end of the first quarter of 2020 to the end of the second quarter of
2020, our state populations declined by approximately 3,100 inmates, or 9.2%,
predominately due to government actions to help prevent the spread of
COVID-19. 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 with
the State to idle our 1,692-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. We can provide no assurance that
additional states will not take similar actions in response to declines in
resident populations resulting from COVID-19.

The $3.3 million, or 17.2%, increase and the $6.9 million, or 18.0%, increase in
rental revenue from the three and six months ended June 30, 2019 to the
comparable periods in 2020 were both primarily a result of acquisitions in 2019
and 2020 of multiple properties leased to third parties and the commencement of
the lease of the 2,432-bed correctional facility we constructed in Lansing,
Kansas, all as further described hereafter.

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.

Operating Expenses

Operating expenses totaled $352.9 million and $345.7 million for the three
months ended June 30, 2020 and 2019, respectively, while operating expenses for
the six months ended June 30, 2020 and 2019 totaled $715.2 million and $691.5
million, 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, increased $5.9 million,
or 1.7%, during the second quarter of 2020 when compared with the same period in
2019. Expenses incurred by these segments increased $21.0 million, or 3.1%,
during the six months ended June 30, 2020, when compared to the same period in
2019. Similar to our management revenue, there were several factors that
contributed to the increase in operating expenses incurred in these
segments. Operating expenses increased primarily due to the aforementioned
activations of our previously idled Torrance and Eden facilities in the second
quarter of 2019, expenses associated with COVID-19, and as a result of the
additional day of operations due to a leap year in 2020. The increase in
operating expenses was partially offset by lower staffing and service levels
that were consistent with the lower occupancy levels during the COVID-19
pandemic. Additionally, 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.

Total expenses per compensated man-day increased to $63.82 during the three
months ended June 30, 2020 from $56.32 during the three months ended June 30,
2019, and increased to $62.78 during the six months ended June 30, 2020 from
$56.68 during the same period in the prior year. Fixed expenses per compensated
man-day increased to $47.25 during the three months ended June 30, 2020 from
$40.12 during the same period in the prior year, and increased to $46.32 during
the six months ended June 30, 2020 from $40.76 during the same period in the
prior year.

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

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working conditions. 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 the second quarter of 2020, we incurred
$8.2 million of incremental expenses associated with COVID-19, including $6.3
million of hero bonuses. These incremental expenses contributed to the increase
in fixed expenses per compensated man-day during the three- and six-month
periods ending June 30, 2020 compared to the same periods in 2019. 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%
of our total operating expenses for the first six months of 2020 and 60% of our
total operating expenses during 2019.

Operating expenses incurred by CoreCivic Properties in connection with
facilities we lease to third-party operators increased $1.4 million, or 25.7%,
during the second quarter of 2020 when compared with the same period in 2019,
and increased $2.7 million, or 24.3%, during the six months ended June 30, 2020
when compared with the same period in 2019. The increase in expenses in this
segment during both the three and six months ended June 30, 2020 was primarily
the result of acquisitions in 2019 and 2020 of multiple properties leased to
third parties.

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.

Based on information available as of the date of this Quarterly 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 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.

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 $16.3 million, or 3.7%, from $440.4
million in the second quarter of 2019 to $424.1 million in the second quarter of
2020, and decreased $12.8 million, or 1.5%, from $874.7 million during the six
months ended June 30, 2019 to $861.9 million during the six months ended June
30, 2020. CoreCivic Safety's facility net operating income, or facility revenues
less operating expenses, decreased $23.0 million, or 18.7%, from $123.4 million
during the three months ended June 30, 2019 to $100.4 million during the three
months ended June 30, 2020, and decreased $33.7 million, or 14.0%, from $241.1
million during the six months ended June 30, 2019 to $207.4 million during the
six months ended June 30, 2020. During the three and six months ended June 30,
2020, CoreCivic Safety generated 83.8% and 83.4%, respectively, of our total
facility net operating income, compared with 85.3% and 85.2%, respectively,
during the three and six months ended June 30, 2019.

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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:



                                                 For the Three Months Ended            For the Six Months Ended
                                                          June 30,                             June 30,
                                                  2020                2019              2020               2019
CoreCivic Safety Facilities:
Revenue per compensated man-day               $       84.72       $       79.77     $      84.03       $      79.81
Operating expenses per compensated man-day:
Fixed expense                                         47.62               40.68            46.87              41.35
Variable expense                                      17.05               16.74            16.94              16.45
Total                                                 64.67               57.42            63.81              57.80

Operating income per compensated man-day $ 20.05 $ 22.35 $ 20.22 $ 22.01 Operating margin

                                       23.7 %              28.0 %           24.1 %             27.6 %
Average compensated occupancy                          75.8 %              83.3 %           77.6 %             83.1 %
Average available beds                               72,555              72,833           72,622             72,833
Average compensated population                       55,010              60,670           56,355             60,556




Operating margins within the CoreCivic Safety facilities during both the three
and six months ended June 30, 2020 were negatively impacted primarily by reduced
populations and increased operating expenses, which was driven primarily 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 the fourth quarter of 2019, the Governor of California signed Assembly
Bill 32, or AB32, which, subject to certain exceptions, as of January 1, 2020,
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, with a January 1, 2028
sunset for the use of private, for-profit entities by the state of
California. While AB32 excludes facilities leased from private, for-profit
entities, such as our California City Correctional Center, the impact of AB32 on
our California based detention and reentry facility contracts is currently
unclear given the potential conflict between federal and state law, and court
challenges to the enforceability of AB32. On January 24, 2020, the U.S.
Government filed a lawsuit against the state of California challenging the
enforceability of AB32 under applicable law. In a hearing on July 16, 2020, U.S.
District Judge Janis L. Sammartino noted that the USMS's federal statutory
authority appears to render AB32 unenforceable as to USMS private detention
contracts, but expressed skepticism regarding ICE's authority to contract for
privately operated detention services in California in light of AB32.  Judge
Sammartino has requested additional briefing from the parties before issuing any
ruling. We cannot predict the timing of any ruling or the outcome of this
lawsuit. However, we believe the restrictions to force a phase-out of federal
detention and residential reentry facilities under private management goes
against federal law. In the event AB32 is implemented so as to prohibit
ICE­contracted private detention facilities or privately­operated residential
reentry centers, the federal government could be prohibited from renewing (i)
its contract to operate our Otay Mesa Detention Center, which is currently
scheduled to expire in December 2024, and (ii) our residential reentry contracts
within the state of California, which are scheduled to expire at dates ranging
from 2021 to 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.

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 Torrance facility 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. This new contract contributed to
an increase in total revenue of $6.7 million and $13.2 million during the three
and six months ended June 30, 2020, respectively, from the comparable periods in
the prior year.

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. The Eden facility had previously been idle since
2017. The new management contract commenced on June 1, 2019, and has

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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. This new contract contributed to an increase in total
revenue of $8.4 million and $17.0 million during the three and six months ended
June 30, 2020, respectively, from the comparable periods in the prior year.

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 and exercised the extension options
through October 4, 2020. During the three and six months ended June 30, 2020,
management revenue from this new contract was $4.2 million and $7.2 million,
respectively.

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 49.3% during the second
quarter of 2020 compared with 95.1% during the second quarter of 2019, although
facility net operating income increased by $0.5 million from the second quarter
of 2019 to the second quarter of 2020.

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.

As previously described, during the third quarter of 2020, we provided notice to
our customers at 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 expect to transition operations of both
facilities in the fourth quarter of 2020. During 2019, and for the six months
ended June 30, 2020, these facilities generated total facility net operating
income of $0.8 million and incurred an operating loss of $2.3 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.

Also as previously described, during the third quarter of 2020, predominately
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 with the State to idle our 1,692-bed Cimarron Correctional
Facility during the third quarter of 2020. During 2019, and for the six months
ended June 30, 2020, this facility generated facility net operating income of
$2.4 million and incurred an operating loss of $0.6 million, respectively.

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. Total revenue generated
by CoreCivic Community decreased $4.7 million, or 15.3%, from $30.7 million
during the second quarter of 2019 to $26.0 million during the second quarter of
2020, and decreased $4.7 million, or 7.6%, from $61.3 million during the six
months ended June 30, 2019 to $56.6 million during the six months ended June 30,
2020. CoreCivic Community's facility net operating income decreased $3.8
million, or 50.1%, from $7.6 million during the three months ended June 30, 2019
to $3.8 million during the three months ended June 30, 2020, and decreased $4.7
million, or 32.2%, from $14.7 million during the six months ended June 30, 2019
to $10.0 million during the six months ended June 30, 2020. During the three and
six months ended June 30, 2020, CoreCivic Community generated 3.2% and 4.0%,
respectively, of our total facility net operating income, compared with 5.3% and
5.2%, respectively, during the three and six months ended June 30, 2019.

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:



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                                                 For the Three Months Ended            For the Six Months Ended
                                                          June 30,                             June 30,
                                                  2020                2019              2020               2019
CoreCivic Community Facilities:
Revenue per compensated man-day               $       61.08       $       57.31     $      60.74       $      57.01
Operating expenses per compensated man-day:
Fixed expense                                         41.12               31.61            37.69              31.86
Variable expense                                       8.42                8.12             8.91               7.93
Total                                                 49.54               39.73            46.60              39.79

Operating income per compensated man-day $ 11.54 $ 17.58 $ 14.14 $ 17.22 Operating margin

                                       18.9 %              30.7 %           23.3 %             30.2 %
Average compensated occupancy                          62.3 %              76.0 %           67.9 %             77.2 %
Average available beds                                5,248               5,274            5,289              5,257
Average compensated population                        3,270               4,010            3,594              4,060


Operating margins in the CoreCivic Community segment during both the three and
six months ended June 30, 2020 were negatively impacted by an increase in
operating expenses, which was driven primarily by increases in salaries and
benefits expenses across the portfolio, as previously described
herein. Operating margins were also negatively impacted during the first six
months of 2020 by the reduction in average compensated population, which was
primarily driven by COVID-19, as further described hereafter, 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, and the 200-bed
Oklahoma City Transitional Center and the 60-bed Columbine Facility in Colorado
closed in the second quarter of 2020. We also idled a 92-bed residential reentry
center in Arizona in the third quarter of 2019 upon the expiration of a BOP
contract on August 31, 2019, and sold this facility during the second quarter of
2020.

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.

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. 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.

During the third quarter of 2020, predominately due to a lower number of
resident populations in the state of Oklahoma resulting from COVID-19, combined
with the consequential impact of COVID-19 on the State's budget, we transferred
the remaining resident populations at our Tulsa Transitional Center to
Oklahoma's system, idling the Tulsa facility during the third quarter of 2020.
During 2019, and for the six months ended June 30, 2020, the Tulsa facility
generated facility net operating income of $0.1 million and incurred an
operating loss of $0.4 million, respectively. As previously described, during
the second quarter of 2020, we also reported a real estate impairment of $9.8
million associated with the consolidation of residential reentry populations in
Oklahoma.

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 $3.3 million,
or 17.4%, from $19.1 million in the second quarter of 2019 to $22.5 million in
the second quarter of 2020, and increased $6.9 million, or 18.1%, from $38.3
million during the six months ended June 30, 2019 to $45.2 million during the
six months ended June 30, 2020. CoreCivic Properties' facility net operating
income increased $1.9 million, or 14.1%, from $13.6 million in the second
quarter of 2019 to $15.6 million in the second quarter of 2020, and
increased $4.2 million, or 15.5%, from $27.1 million during the six months ended
June 30, 2019 to $31.3 million during the six months ended June 30, 2020. The
increases in total revenue and net operating income in both the three- and
six-month periods were primarily the result of the properties we acquired in
2019 and 2020, and due to the commencement of the lease at our

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Lansing Correctional Facility in January 2020. During the three and six months
ended June 30, 2020, CoreCivic Properties generated 13.0% and 12.6%,
respectively, of our total facility net operating income, compared with 9.4% and
9.6%, respectively, during the three and six months ended June 30, 2019.

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. The property is 100% leased to the
Michigan Department of Technology, Management and Budget, or MDTMB, on behalf of
MDHHS through June 2028 and includes one six-year renewal option at the sole
discretion of the MDTMB.

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. We expect to report annual rental revenue of $4.1 million
associated with this lease. The Southeast Correctional facility had previously
been idle since 2012.

On January 2, 2020, we completed the acquisition of a portfolio of 28
properties, all of which are leased to the federal government through the
General Services Administration, or GSA. The 445,000 square foot portfolio
serves numerous federal agencies, including primarily the Social Security
Administration, the Department of Homeland Security, and the Office of Hearings
Operations. The 28-property portfolio is strategically located throughout the
mid-south, complementing our existing real estate footprint, and each property
was built-to-suit for its federal tenant. During the three and six months ended
June 30, 2020, the portfolio of 28 properties generated $2.4 million and $4.9
million, respectively, of rental revenue.

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 the six months ended June 30, 2020, the Lansing Correction Facility
generated $1.3 million of revenue associated with the non-lease services
components of the arrangement, and $3.9 million of interest income, as further
described hereafter.

General and administrative expenses

For the three months ended June 30, 2020 and 2019, general and administrative
expenses totaled $30.1 million and $33.4 million, respectively, while general
and administrative expenses totaled $61.4 million and $62.8 million,
respectively, during the six months ended June 30, 2020 and 2019. 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 our evaluation of corporate structure alternatives, as
well as other administrative expenses. General and administrative expenses
decreased from the prior year period primarily as a result of a decrease in
incentive compensation and a curtailment of certain other expenses, such as
travel, due to restrictions imposed because of COVID-19. We expect our general
and administrative expenses to increase during the second half of 2020 from the
first half of 2020 as we incur expenses associated with our evaluation and
implementation of corporate structure alternatives, which we currently estimate
to be $5.0 million to $6.0 million for the full year.

Depreciation and amortization

For the three months ended June 30, 2020 and 2019, depreciation and amortization
expense totaled $38.6 million and $35.6 million, respectively, while
depreciation and amortization expense totaled $76.6 million and $71.1 million,
respectively, during the six months ended June 30, 2020 and 2019. The increase
in depreciation and amortization expense is primarily due to the additional
depreciation and amortization resulting from our M&A activities during 2019 and
2020.

Interest expense, net

Interest expense is reported net of interest income and capitalized interest for
the three and six months ended June 30, 2020 and 2019. Gross interest expense,
net of capitalized interest, was $23.9 million and $21.4 million for the three
months ended June 30, 2020 and 2019, respectively, and was $48.4 million and
$43.2 million for the six months ended June 30, 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

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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.

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 the first six months of 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.

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 $1.1 million and $2.0 million of interest during the three
and six months ended June 30, 2019, respectively, and $0.5 million in 2020
through the date construction was complete in January 2020, associated with this
construction project. During the three and six months ended June 30, 2020, we
incurred $1.8 million and $3.5 million, respectively, of interest expense on the
Kansas Notes.

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, except that a premium of 1.0% of the amount
prepaid must accompany any prepayment made prior to December 18, 2020, with the
proceeds of any new or replacement tranche of term loans that are in the nature
of what are commonly referred to as "B" term loans and that bear interest with
an all-in yield less than the all-in yield applicable to the Term Loan B. The
1.0% prepayment premium is also payable in respect of certain repricing events
occurring prior to December 18, 2020. 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 a newly formed
partnership of ours, for total consideration of $83.2 million.  In connection
with the acquisition, a wholly-owned subsidiary of Government Real Estate
Solutions, LLC, or GRES, an unrestricted subsidiary we control, assumed $52.2
million of in-place financing. The assumed non-recourse mortgage note, or the
GRES Note, carries a fixed interest rate of 4.91% and requires monthly principal
and interest payments, with a balloon payment of $46.2 million due at maturity
in November 2025. The GRES Note continues to be fully-secured by the same 24
properties originally pledged as collateral at the time the debt was issued.

Gross interest income was $2.9 million and $0.7 million for the three months
ended June 30, 2020 and 2019, respectively, and was $4.9 million and $1.1
million for the six months ended June 30, 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 $2.2 million and $3.9 million for the three and six months ended
June 30, 2020, respectively. Total capitalized interest was $1.8 million during
the three months ended June 30, 2019, and was $0.5 million and $2.7 million
during the six months ended June 30, 2020 and 2019, respectively. There was no
interest capitalized during the second quarter of 2020. Capitalized interest was
primarily associated with the construction of the Lansing Correctional
Facility.

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Income tax benefit (expense)

As a REIT, we are 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 is currently incurred
based on the earnings generated by our TRSs. Our overall effective tax rate is
based on the taxable income primarily generated by our TRSs. Our consolidated
effective tax rate could fluctuate in the future based on changes in estimates
of taxable income, the relative amounts of taxable income generated by the TRSs
and the REIT, 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.

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. 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 have not yet completed our estimate of
such charge. We will continue 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, will remain in place until January
1, 2021. Our BOD also announced that we are discontinuing our quarterly dividend
and prioritizing the allocation of our free cash flow to debt reduction.

During the three months ended June 30, 2020 and 2019, our financial statements
reflected an income tax benefit of $1.0 million and an income tax expense of
$2.0 million, respectively. During the six months ended June 30, 2020 and 2019,
our financial statements reflected an income tax expense of $2.8 million and
$4.5 million, respectively. Our effective tax rate was 4.8% and 4.4% during the
six months ended June 30, 2020 and 2019, respectively. The income tax benefit in
the second quarter of 2020 reflected an operating loss in one of our TRSs caused
primarily by lower occupancy levels at several facilities resulting from
COVID-19. Income tax expense during the six months ended June 30, 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.

LIQUIDITY AND CAPITAL RESOURCES

Our principal capital requirements are for working capital, stockholder
distributions, capital expenditures, and debt service payments. Capital
requirements may also include cash expenditures associated with our outstanding
commitments and contingencies, as further discussed in the notes to our
financial statements. Additionally, our capital expenditures may include M&A
activities that will enable us to further expand our network of residential
reentry centers and acquire other businesses that provide complementary
services. We will 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.

To maintain our qualification as a REIT, we generally are 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 will not typically include income earned by our TRSs
except to the extent our TRSs pay dividends to the REIT. Our BOD declared a
quarterly dividend of $0.44 for the first quarter of 2020 totaling $53.4
million. On August 5, 2020, our BOD announced that we are discontinuing our
quarterly dividend and prioritizing the allocation of our free cash flow to debt
reduction. The amount, timing and frequency of future distributions will be at
the sole discretion of our BOD and will be declared based upon various factors,
many of which are beyond our control, including our financial condition and
operating cash flows, the amount required to maintain qualification and taxation
as a REIT for years we elected to be taxed as a REIT and to reduce any income
and excise taxes that we otherwise would be required to pay, limitations on
distributions in our existing and future debt instruments, limitations on our
ability to fund distributions using cash generated through our TRSs, alternative
growth opportunities that require capital deployment, and other factors that our
BOD may deem relevant.

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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 cost of capital. Following our first priority of debt
reduction, we expect to allocate a substantial portion of our free cash flow to
returning capital to shareholders and pursue attractive 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 Agreement,
in the future.

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 offender 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 available. 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 precautionary
measure to ensure that we have sufficient liquidity for the pandemic with
uncertain consequences and duration, we partially drew our revolving credit
facility in the first quarter of 2020. 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 June 30, 2020, we had cash on hand of $363.8 million, and $154.2 million
available under our revolving credit facility. During the six months ended
June 30, 2020 and 2019, we generated $174.3 million and $166.6 million,
respectively, in cash through operating activities. Despite COVID-19, our cash
generated by operating activities remains strong, amounting to $98.9 million
during the second quarter of 2020 compared with $75.4 million during the first
quarter of 2020, and compared with $88.8 million during the second quarter of
2019. 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 Agreement 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. These banks are legally obligated to honor their
commitments under our Bank Credit Agreement, which expires in April 2023. We can
provide no assurance that additional banks that are party to our Bank Credit
Agreement will not make similar decisions, or that new banks will be willing to
become party to our Bank Credit Agreement. 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 Agreement, 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. With the revocation of our REIT election,
we also intend to evaluate the sales of non-core real estate assets in our
Properties segment, which would provide us with additional liquidity, and we
believe could accelerate the benefits of our new capital allocation strategy.

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.

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Debt and equity

As of June 30, 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%, or collectively, the Senior
Notes. In addition, we had $21.6 million outstanding under the Capital Commerce
Note with a fixed stated interest rate of 4.5%, $159.5 million outstanding under
the Kansas Notes with a fixed stated interest rate of 4.43%, $147.3 million
outstanding under the SSA-Baltimore Note with a fixed stated interest rate of
4.5%, and $51.8 million outstanding under the GRES Note with a fixed stated
interest rate of 4.91%. We also had $185.0 million outstanding under our Term
Loan A with a variable interest rate of 1.7%, $243.8 million outstanding under
our Term Loan B with a variable interest rate of 5.5%, and $631.0 million
outstanding under our revolving credit facility with a variable weighted average
interest rate of 1.7%. As of June 30, 2020, our total weighted average effective
interest rate was 4.0%, while our total weighted average maturity was 5.5
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 2020 or 2019.

Facility acquisitions, 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 a newly formed
partnership of the Company's, 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 carries 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. For this acquisition, we were able to
complete an accretive transaction despite what we believe is a depressed market
value of our public securities, by fixing the number of Operating Partnership
Units to be issued based on a negotiated share price collar between $21.00 and
$25.00, or a 17% premium to the price of our common stock as of the date of the
acquisition. Creating a partnership structure provides us with another form of
capital outside our traditional debt and equity securities, and is attractive to
potential sellers because they may be able to defer a substantial portion of
income taxes they otherwise may incur by selling their properties to another
buyer.

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 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

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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 six months ended June 30,
2020 was $174.3 million, compared with $166.6 million for the same period in the
prior year. Our net cash provided by operating activities was $98.9 million
during the second quarter of 2020 compared with $75.4 million during the first
quarter of 2020, and compared with $88.8 million during the second quarter of
2019. Cash provided by operating activities represents the year to date net
income plus depreciation and amortization, changes in various components of
working capital, and various non-cash charges.

Investing Activities

Our net cash flow used in investing activities was $50.8 million for the six
months ended June 30, 2020 and was attributable to capital expenditures for
facility development and expansions of $23.5 million and $18.5 million for
facility maintenance and information technology capital expenditures. Our cash
flow used in investing activities also included $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 $146.1 million
for the six months ended June 30, 2019 and was attributable to payments totaling
$38.6 million, including payments of $30.0 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 the first six months of 2019, net of cash
acquired. Our net cash flow used in investing activities also included capital
expenditures for facility development and expansions of $84.8 million and $23.5
million for facility maintenance and information technology capital
expenditures.

Financing Activities

Our net cash flow provided by financing activities was $140.2 million for the
six months ended June 30, 2020 and was primarily attributable to net borrowings
under our revolving credit facility of $266.0 million, partially offset by
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 $15.1
million of scheduled principal repayments under our Term Loan A, Term Loan B,
and non-recourse mortgage notes.

Our net cash flow used in financing activities was $7.8 million for the six
months ended June 30, 2019 and was primarily attributable to dividend payments
of $104.7 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 $7.4 million of contingent
consideration associated with the acquisition of a business and $5.8 million of
scheduled principal repayments under our Term Loan A and non-recourse mortgage
notes. These payments were partially offset by $51.0 million of net borrowings
under our revolving credit facility, and $62.1 million of proceeds from the
quarterly borrowings of 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 have 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 June 30, 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

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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).



                                    June 30, 2020       December 31, 2019
Current assets                     $       656,863     $           402,983
  Real estate and related assets         2,678,663               2,738,347
  Other assets                             222,312                 241,823
Total non-current assets                 2,900,975               2,980,170
Current liabilities                        180,719                 258,834
  Long-term debt, net                    1,882,441               1,629,427
  Other liabilities                        109,872                 118,048
Total long-term liabilities              1,992,313               1,747,475




                                                                             For the
                                                                             Twelve
                                                        For the Six       Months Ended
                                                       Months Ended       December 31,
                                                       June 30, 2020          2019
Revenues                                              $       945,793     $   1,957,143
  Operating expenses                                          709,180         1,413,627
  Other expenses                                              143,875           268,590
Total expenses                                                853,055         1,682,217
Operating income                                               92,738           274,926
Net income                                                     56,578           189,357
Net income attributable to common stockholders                 56,578           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, 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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Our reconciliation of net income to FFO and Normalized FFO for the three and six months ended June 30, 2020 and 2019 is as follows (in thousands):

                                                           For the Three Months Ended
                                                                    June 30,
FUNDS FROM OPERATIONS:                                      2020                2019
Net income                                              $      22,186       $      48,578
Depreciation and amortization of real estate assets            28,244       

26,503

Impairment of real estate assets                                9,750       

4,428

Gain on sale of real estate assets                             (2,818 )              (287 )
Funds From Operations                                          57,362       

79,222

Expenses associated with mergers and acquisitions                   -       

438

Expenses associated with COVID-19                               8,165                   -

Expenses associated with evaluation of corporate

  structure alternatives                                          347                   -
Start-up expenses                                                   -       

2,687

Goodwill and other impairments                                  1,967       

278

Normalized Funds From Operations                        $      67,841       $      82,625




                                                        For the Six Months Ended
                                                                June 30,
FUNDS FROM OPERATIONS:                                    2020              2019
Net income                                            $      55,424       $  97,918

Depreciation and amortization of real estate assets 56,350

53,102

Impairment of real estate assets                             10,155         

4,428

Gain on sale of real estate assets                           (2,818 )          (287 )
Funds From Operations                                       119,111         

155,161

Expenses associated with mergers and acquisitions               338         

874

Expenses associated with COVID-19                             8,165         

-

Expenses associated with evaluation of corporate

  structure alternatives                                        347         

-

Deferred tax expense on Kansas lease structure                3,085         

-

Start-up expenses                                                 -         

2,687

Goodwill and other impairments                                2,098         

278

Normalized Funds From Operations                      $     133,144       $ 159,000




Contractual Obligations

The following schedule summarizes our contractual cash obligations by the indicated period as of June 30, 2020 (in thousands):

Payments Due By Year Ended December 31,

                                            2020
                                         (remainder)        2021          2022           2023           2024         Thereafter         Total
Long-term debt                          $      17,130     $  40,047     $

293,990 $ 1,171,170 $ 196,044 $ 571,577 $ 2,289,958 Interest on senior and mortgage notes 28,858 57,314 56,790 35,594 26,863 129,648 335,067 Contractual facility developments and

  other commitments                             2,368             -             -               -             -                -           2,368

South Texas Family Residential Center 25,922 37,333

     -               -             -                -          63,255
Operating leases                                2,722         5,214         4,197           3,145         3,135           24,184          42,597

Total contractual cash obligations $ 77,000 $ 139,908 $ 354,977 $ 1,209,909 $ 226,042 $ 725,409 $ 2,733,245

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. Certain of our other ongoing construction
projects are not currently

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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.

We had $14.8 million of letters of credit outstanding at June 30, 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 these outstanding letters of credit
during the six months ended June 30, 2020 or 2019.

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

Our business is 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. Finally, quarterly results are 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 these seasonality factors, results for any quarter are
not necessarily indicative of the results that may be achieved for the full
fiscal year.

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