Good morning. My name is Lauren and I will be your conference operator. As a reminder, this call is being recorded. At this time, I'd like to welcome you to Corrections Corporation of America's Fourth Quarter and Full Year 2015 Financial Results Conference Call. All lines have been placed on mute to avoid any background noise. After the speaker's remarks, there will be a question and answer session. [Operator Instructions] Thank you. I would now like to turn the call over to Cameron Hopewell, CCA's Managing Director of Investor Relations. Mr. Hopewell, you may begin your conference.

Thanks Lauren. Good morning ladies and gentlemen and thank you for joining us. Participating on today's call are Damon Hininger, President and Chief Executive Officer, and David Garfinkle, Chief Financial Officer. During today's call, our remarks will include forward-looking statements pursuant to the Safe Harbor provisions of the Private Securities and Litigation Reform Act. Our actual results or trends may differ materially as a result of a variety of factors, including those identified in our fourth quarter 2015 earnings release and in our Securities and Exchange Commission filings, including the forms 10-K, 10-Q and 8-K reports. You are also cautioned that any forward-looking statements reflect management's current views only and that the Company undertakes no obligation to revise or update such statements in the future. This call will include a discussion of non-GAAP measures. A reconciliation of the most comparable GAAP measurements is provided in our corresponding earnings release and included in the supplemental financial data on the Investors page of our website at www.cca.com. With that, it's my pleasure to turn the call over to Damon Hininger.

Thank you, Cameron and good morning, to everyone and thank you for joining our call today. In addition to Dave and Cameron joining us we also have Brian Hammonds, who is our VP of Finance and John Ferguson, who is our Chairman of the Board. I will touch on some key highlights which drove our fourth quarter 2015 financial performance and provide an update on development in our business since our last call in November. Following my remarks, Dave will provide an in-depth review of our financial performance in the quarter and will lay out the details of our financial guidance for 2016 which was disclosed in our earnings release last evening. In the fourth quarter we generated revenue of $448 million representing a 5.8% increase from the prior year period and normalized funds from operations of $0.63 per share, $0.03 above the high end of the fourth quarter guidance we provided in November. Dave will provide a full overview of these metrics and the primary drivers of our financial performance at the conclusion of my remarks. Next, I'll provide an update on our recent facility construction projects before moving on to new contracts and updates on our acquisition of Avalon Correctional Services in October 2015. We discussed on our third quarter call that the full transition of operations from the San Diego Correctional Facility to the newly constructed 1500 bed Otay Mesa Detention Center was temporary delayed in the third quarter resulting in a modest increase in transition related expenses to be recognized in the fourth quarter. As an update prior to the end of the fourth quarter we successfully completed the full transition to the Otay Mesa facility and have transitioned the San Diego Correctional Facility back to the county and we are completing some final minor repairs.…

Thank you, Damon and good morning everyone. In the fourth quarter, we generated $0.43 of adjusted EPS compared to our November guidance range of $0.39 to $0.41 and $0.04 ahead of the First Call Consensus estimates. Normalized FFO totaled $0.63 per share, exceeding our November guidance range of $0.58 to $0.60 and AFFO totaled $0.58 per share ahead of our November guidance range of $0.54 to $0.56. The adjusted or normalized 2015 results exclude $2 million of M&A expenses primarily incurred for the acquisition of Avalon Correctional Services which closed October 28, 2015, while the 2014 quarterly results exclude $27.7 million of asset impairment charges on two non-core assets. The most significant factors affecting fourth quarter results compared with the prior year quarter include the decline and inmate populations from the State of California, refinancing short term debt with long term debt in the third quarter of 2015 and the previously announced termination of the contract with the Federal Bureau of Prisons at our Northeast Ohio Correctional center effective May 31. The decline in California populations which were consistent with our projections contributed to a reduction in per share results by about $0.08 from the prior year quarter. The negative financial impact of these events was mitigated by a full quarter of operations at our South Texas Family Residential Center with the contract commenced late in the fourth quarter of 2014. And an increase from the prior quarter and average daily populations from the State of Arizona by about a thousand inmates at our Red Rock facility. The increase in populations at the Red Rock facility resulted from a new contract that commenced in 2014 as well as a short term contract that begin in July, 2015 and ended in December 2015. Q4, 2015 includes approximately $0.03 in start up…

Thank you, Dave. So before we open it up for questions, I just wanted to make a comment about our Chairman of the Board, John Ferguson. As you all know as shareholders, John has announced his retirement this spring and I wanted to just to say that he is an individual that came to us almost 16 years ago, we had the company, really that challenging situation really where company was in a ditch and we had our employees, myself included had lost confidence in what we do and what we provided a solution that would be attractive going forward with all the turmoil going on with the company. So he came up into the organization and quickly restored the confidence of the employees, but also went about the business restoring trust with our investors and with our partners and I clearly can just tell you that over the last 16 years we wouldn’t be the company we are today without John’s leadership. To John, he is a mentor, he is an advisor, but he is really someone I’m honored to call as a friend. So John I appreciate all your leadership over the last 16 years and really wish you very best wishes in the next chapter of your life.

Thank you, Damon.

So with that, we will now open the lines for questions from our investors and analysts. Thank you.

Thank you, sir. [Operator Instructions] Our first question comes from Kevin McVeigh with Macquarie.

Great, thank you and congratulations John as well. Hey Damon, is there any way to size what the potential opportunity could be on the residential reentry coupled with just the County opportunities relative to the core business as we think about the over the next kind of three to five years if you would?

Good morning Kevin, so a couple ways to answer that. Let me first on the residential reentry side, so as we’ve tried to explain to investors there is a lot of great operations going on today that are locally owned kind of mom and pop operations maybe with one or two facilities and so it’s very fragmented. And so our strategy on growing into this market really is going to be an acquisition strategy, it’s not going to be a development strategy. So the outlook during the course of this year, I wouldn’t be surprised if we have one, two, maybe three companies that we buy again in that range of beds, I mentioned earlier, kind of 200 to 600 beds during the course of 2016. I feel like that is probably pretty good cadence for this year, and maybe for the next couple of years as we think about acquisitions in that part of the market. For the local market, I think you’re referring little bit to the opportunities of providing the real estate solutions so local jurisdictions, that market continues to be very interesting to us, we are seeing more and more local jurisdictions kind of grapple with age infrastructure, being over crowded, maybe their system is not right-sized, they have got a main jail and annex that the can excess they can consolidate and get some efficiency. So we’ve got, I'd would say about a handful of jurisdictions that have expressed interest to us for us to come in and provide a solution and be kind of a real estate partner as they think about continuing the operations themselves.

Got it. And then just in terms of is, we kind of transitioned through presidential cycle, any maybe not necessarily procurements, but how does that impact ongoing operations, would it be where you get a series of just extension to existing budget to keep facilities going or how does that work?

Yes if I was going to look into the crystal ball, I think what we’re going to probably see for the coming fiscal year at the federal level, so that starts on October 4 as you know that likely they will do continued resolution, Congress and Federal continued resolution which basically funds the government at levels of the previous fiscal year, so no increases, no decreases basically on par with the previous fiscal year. And as I said earlier, my guess is that that continued resolution goes past at least the elections, but I think there is a pretty good chance also since we are also going to have a change in the administration [ph] ratio so that it goes into January and February until the new President is inaugurated. So my thinking is from kind of October 1 continued to January and February, it’s kind of straight funding from the previous year and no road changes relative to contracts and new contracts also.

Got it, thank you.

You bet, Kevin. Thank you.

Our next question comes from Michael Curtis with Canaccord Genuity.

Hey good morning guys. And thanks for taking my questions here, just first off on the public private partnerships, I was wondering if you could just give a little bit more color on what that opportunity would look like more from a size perspective? And then also just kind of what jurisdictions maybe you’re looking at that type of arrangement? Thanks.

Regards and good morning, this is Damon. We’ve got a couple of jurisdictions that are not public and it’s hard also to put a number to it. The first part of your question, again I go back to California, so you got a State that has got over half of their systems that are operated facilities that are 30 years old or older and so the opportunity is that they think about how they deal with that aging infrastructure probably inefficiency from a staffing and operations perspective and a lot of dollars being appropriated for CapEx, is it an opportunity to work with the private sector to be a real solution, so only a couple of states are looking at that. As I mentioned earlier have a lot of interest on the local level, so as I think about kind of the total opportunity providing real estate solution, I would say it is probably more predominant in local level than it is at the state level over next couple of years.

All right, that is helpful. And moving on to sensing reform, are there any jurisdictions which you guys operate in where you’re seeing more threat than others or maybe even looking to get into just kind of what are you guys seeing in there?

California has been most notable and you know the history there. There has been a lot of changes over the last couple of years and as I look at the rest of the United States, a little I would say tweaks and changes over some states versus others. Texas probably is another good example about four, five years they did make some meaningful reforms within their State and affected their population. But as I think about 2016 we’re not really seeing or hearing a lot of activity and I think that’s kind of goes back to being a year of National Election. So I think both at the State level and at the Federal level I don’t think you’re going to see any rules kind of sweeping efforts on policy not just in criminal justice. I think anything that is controversial or going to require a lot of discussion and the debate, I just don’t see a lot of that activity in 2016 until the election is finalized and we've got a new President in the White House in 2017.

Yes fair enough, that makes sense too. And then just on the election, have you guys met with any of the campaigns to kind of discuss their views on sentencing reform or general criminal justice platforms and maybe what that would look like for either you guys or just the private industry in general?

No we have not and wouldn’t really be appropriate of course we’re in the middle of primary season, so you got two candidates on the democratic side, many candidates on the Republican side, so as the primary process kind of work through the course and you get a nominee on both Democrats and Republicans if appropriate we may educate a little bit their campaigns on what we do but it wouldn’t be appropriate right now since you’re in kind of full swing with the primary season. And I would also say, lot of these candidates John Casey of Ohio who is Governor, a lot of these candidates know the value proposition and the work we do already and aware of our track record and quality of our operations. So part of these candidates are up the learning curve in a fairly meaningful way about CCA and what we do with the respective jurisdictions.

Any thoughts on Bloomberg’s track record financials?

I do not, I am aware obviously if will see it is tenure as Mayor in New York and nothing I could share as an opinion or thought or a view Robert [indiscernible] candidate.

Fair enough, fair enough and then just one more for me here, so on the Dallas transitional center we are just trying to get an idea of when that would be completed exactly how many beds that would be and then just kind of the timing of that $5.5 million earnings payout?

Yes, I will take that one Michael. The facility was actually completed in December with the exception of some punchlist items, so we actually transitioned populations over from the least facility in Dallas to the newly constructed facility. That is about 300 beds, so all the inmates have transitioned over and really I think all we have now are some punchlist items and a finalization of the cost before we ultimately make that better earn out payment, but I would expect to make that earn out payment later in the first quarter certainly by early second quarter.

All right, I appreciate all the color guys. Thanks.

Thanks Michael.

Our next question comes from Tobey Sommer with SunTrust.

Thank you. Do you consider local business as attractive as State and Federal businesses in terms of contract length, durability of demand and the population outlook in pricing? A - Damon Hininger Tobey, good morning, it is Damon.

Good morning.

And the short answer is yes, depends on the jurisdiction and exactly what kind of solution they were providing. But if we've got a jurisdiction that is looking for real based solution clearly the solution we potentially bring is the only solution and they’re interested in say a long-term lease where they’re the operator and we’re just the landlord. And yeah, I think that could be very attractive to us and again I think that the agreement we worked out at the State level, State of California and talked about with some up-states like Ohio, again I think that type of agreement and that type of relationship and to your question durability of the agreement, portability of the opportunity or durability of the opportunity could be very attractive.

Okay. Could you refresh us on the dividend payout ratio target and where you stand with that relative to the 2016 guidance for backend loaded, I’m just trying to get a sense for what how the board may look at things soon? Thanks.

Sure, I will take that one, yes when we convert it to a REIT and throughout 2014 and 2015 we have announced kind of a targeted AFFO payout ratio of around 80%. The 2016 guidance is around 86%, but as I mentioned in my comments our 2016 results are somewhat backend loaded, we’re a little bit north of 80% for 2015, I think it was on 83%. So as we exit 2016, I would expect us to be back below that 83% AFFO payout ratio, if you are looking on a quarterly basis. So it has ticked up a little bit really because of the decline in California populations, but certainly comfortable at that AFFO payout ratio and the current dividend levels. So I think really the discussion with the Board will be, what is the optimal timing for a dividend increase given the trajectory of our cash cash flows and alternative uses of capital.

Thanks. To follow up on another question, previous question on your revenue mix shift as you grow in I guess acquire non-correctional businesses are you targeting size or a percentage of sales over time?

Not sure if I'm following completely your question Tobey but the acquisition opportunities primarily we think it's on the residential reentry and you've got to have the kind of parameters and also kind of the size that we think that we typically could have during the course of this year and in the coming years. And so that's really kind of been our focus, there could be additional acquisition opportunities outside that business most notably that [indiscernible] talked about coming in Ohio where we could acquire a state owned asset. So it could be some opportunities like that, that I'd say really kind of fits in those kinds of two buckets.

Yes I'd say we certainly see more rapid growth in the residential reentry center business from a macro perspective now there are pockets of exceptions like our contract in December with the State of Arizona so that could create some fluctuations. But I think if you look at the country as a whole the residential reentry center business the populations are growing and the bipartisan support is more toward the residential reentry center business and hence that's our reason for pivoting in that direction.

Yes, one more thing to that Tobey is that the Avalon that we acquired is 11 facilities in three states. A majority of those operations are in Texas and so Texas is one of those states that I mentioned earlier, they have done some meaningful reforms in their system on sentence reductions and early releases, so it is effective there total prison population pretty meaningful in the last couple of years, but on a parallel path if you go back to 2005 there amount of hedge used in reentry facilities has grown by 50%. And so that was a state that clearly sees the value of reentry facilities, wants to do more, has done more and so that was one part of our strategy going after Avalon since they have a big part of their footprint operationally in Texas taking advantage of those opportunities in Texas provides additional solutions.

Okay, thank you. I guess what I was getting at is are you targeting a percentage of sales maybe to expand that business or you mean could it be 10% or 15% or 20% of sales at some point down the road or it is a small opportunity?

We really haven’t set a number to it. It is really more opportunistic on the acquisition side. We've put a lot of feelers out. We've had a lot of inbound interest. So I think it really is just going to be a case of we find the right time to make sense for us and the shareholders to make those acquisitions. So it's hard I think to put an exact number during a course of say a 12-month period or a couple of year period.

We're taking a look we're just looking at the percentage of sales, we're obviously focused on the bottom line. So we're certainly not going to grow the business just to grow the top line, but we'll be judicious and prudent in trying to capture the bottom line opportunities.

Okay, strategically is there an advantage to having these lines of business kind of side by side in one organization?

Yes, there is a lot to that, again go back to Avalon, I mentioned part of the strategy was because of the opportunity and in the State of Texas. Another part is the benefit and the attractiveness to us is that we already had relationships in Oklahoma and Texas, so they know us. They had confidence in us. So I think that is providing some consistency in operations between the other facilities and our facilities I think is attractive to our partners. And it is also great benefit to the employees. So you got Avalon who had 400 employees and now they are part of a family with 15,000 employees so they are excited about the prospect of being part of the company in 20 states and clear opportunities and so we think that also can create a little bit of kind of retention and turnover in a positive way at those facilities because they are part of our big organization with more clear advancements. So, yes lot of benefits we saw for customers and for the operations and for our employees.

And my last question is just kind of a broad one on competition, is there a different set of competitors or a changing competitive landscape as you are looking at different opportunities including sort of the real estate solution at the local level? Thanks.

No, I would say not the GEO of course had competed with us on Arizona and so I think kind of in the core business I think the landscape has not changed that much. MTC is still obviously a very important competitor within the industry. But on the real estate side now GEO has done some work recently, most notably the Montgomery County in the State of Texas which is a solution like that. So no, I wouldn’t say that the landscape or the competition changes dramatically for those type of solutions.

Thank you, very much.

Oh sorry Tobey, thank you.

[Operator Instructions] Our next question comes from Andrew Berg with Post Advisory Group.

He guys, I just want to go back to startup costs related to both San Diego and Trousdale you just confirm how much was the impact in 4Q and how much is the expected impact in the guidance numbers for 2016 on an actual dollar basis?

Yes, I'll take that one, this is David. There were three sets in Q4 and we have about a penny in Q1 of cash flow drag. I mean, at some point I'm not sure when startup becomes ongoing operations, but at Trousdale facility we've begun taking in inmates from the State of Tennessee, but it will be a cash flow drag of about a penny in Q1. Likewise at Red Rock we've already got staff there and an inmate population at our Red Rock facility, but it will, because we'll have to hire staff in advance of the inmates coming in late Q3 or early Q4 that will generate about a penny drag in cash flows in Q3.

Okay and then the $0.03 is Trousdale or $0.03 was San Diego?

In Q4 it was probably $0.02 Trousdale, $0.01 for Otay Mesa, so a total of three.

Got it, okay, perfect thank you.

Welcome.

It appears there are no further questions at this time. Mr. Hininger, I'd like to turn the conference back to you for any additional or closing remarks sir.

All right, thank you very much and to all of our investors, thanks for calling in today, but more importantly, thank you for your investment in CXW and we are looking forward to reporting our progress during the course of 2016, so thanks again. Enjoy your day.

This concludes today's conference. You may now disconnect.