Cornell Companies to Provide Alternative Education Services for the School District of Philadelphia

Business Wire, July 22, 2004

PITTSBURGH -- Cornell Companies Inc. (NYSE:CRN) announced today the signing of a five-year agreement to provide alternative education services to 3rd and 4th grade students in 11 schools for the School District of Philadelphia beginning in the 2004-2005 academic year. Class sizes will be limited to 15 students for a total of 165. The agreement will generate nearly $2 million in estimated annualized revenue.

Cornell has more than 30 years of experience in providing alternative education services through its juvenile residential treatment programs. "We know how to help at-risk students succeed academically and socially. These specialized services are a growing trend in Pennsylvania and throughout the United States. This line of business fits well into Cornell's strategic growth plan for juvenile services," said Thomas R. Jenkins Jr., president and chief operating officer.

Jack Godlesky, senior vice president of the Eastern Region, said, "Our three-year-old alternative education program in Harrisburg, Pa., has become a model for school districts across the state. The students there have experienced significant academic gains, as well as improved attendance rates.

"The School District of Philadelphia is making a concerted effort to help younger students experience success in school through this alternative education program. If these students, who are experiencing difficulty in a regular classroom, receive early interventions, they have a much better chance for long-term academic success," Godlesky added.

The alternative education program will be housed on the campus of the selected schools, creating a school-within-a-school environment. Students will be referred to the program through normal District disciplinary channels.

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current plans and actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. Important factors that could cause actual results to differ include, among others, (1) the outcomes of pending putative class action shareholder and derivative lawsuits, and related insurance coverage, (2) the outcome of the pending SEC investigation of Cornell, (3) Cornell's ability to win new contracts and to execute its growth strategy, (4) risks associated with acquisitions and the integration thereof (including the ability to achieve administrative and operating cost savings and anticipated synergies), (5) the timing and costs of the opening of new programs and facilities or the expansions of existing facilities, (6) Cornell's ability to negotiate contracts at those facilities for which it currently does not have an operating contract, (7) significant charges to expense of deferred costs associated with financing and other projects in development if management determines that one or more of such projects is unlikely to be successfully concluded, (8) results from alternative deployment or sale of facilities such as the New Morgan Academy or the inability to do so, (9) Cornell's ability to negotiate a contract amendment with the BOP related to the Moshannon Valley Correctional Center and Cornell's ability to resume construction of that facility, (10) changes in governmental policy and/or funding to discontinue or not renew existing arrangements, to eliminate or discourage the privatization of correctional, detention and pre-release services in the United States, or to eliminate rate increase, (11) the availability of financing on terms that are favorable to Cornell, and (12) fluctuations in operating results because of occupancy, competition (including competition from two competitors that are substantially larger than Cornell), increases in cost of operations, fluctuations in interest rates and risks of operations.

Cornell Companies Inc. is a leading private provider of corrections, treatment and educational services outsourced by federal, state and local governmental agencies. Cornell provides a diversified portfolio of services for adults and juveniles, including incarceration and detention, transition from incarceration, drug and alcohol treatment programs, behavioral rehabilitation and treatment, and grades 3-12 alternative education in an environment of dignity and respect, emphasizing community safety and rehabilitation in support of public policy. Cornell (http://www.cornellcompanies.com) has contracts to operate 70 facilities with a total service capacity of 16,457. Cornell's facilities are located in 15 states and the District of Columbia.