Cornell Companies Moves Forward With Construction of Moshannon Valley Correctional Center.

Business Editors

HOUSTON--(BUSINESS WIRE)--March 25, 2003

Cornell Companies Inc. (NYSE:CRN) announced that it has reached an agreement with the Commonwealth of Pennsylvania that resolves all outstanding administrative issues relative to the operation of a federally contracted privately operated prison in Pennsylvania. This agreement will allow the company to move forward with construction and operation of a new correctional complex in Pennsylvania's Clearfield County. The facility should open in 2004.

The initial contract term is three years and provides for seven, one-year renewal options. The estimated contract value for the base period is $99 million.

"We are elated to have worked through the issues that delayed this project," said Tom Jenkins, president and chief operating officer.

"This announcement today is a direct result of the active involvement of Senator Rick Santorum, members of Pennsylvania's congressional delegation, including John Peterson, state and county political leadership, including Attorney General Mike Fisher, the Bureau of Prisons and the people of the Moshannon Valley," Jenkins added.

The Federal Bureau of Prisons originally awarded the contract to Cornell in April 1999. But, litigation concerning the environmental impact of the facility as well as issues regarding the right of a private firm to incarcerate adults within the Commonwealth delayed the project.

"Cornell executives will be meeting with the Bureau of Prisons to update the contract and the facility's design and expect to begin construction soon," Jenkins continued. "Thanks to the hard work, persistence, patience and perseverance of the entire team, and especially Senator Santorum, the people of the Moshannon Valley will enjoy the benefits of more than 500 construction jobs, over 346 permanent jobs and an economic impact which will exceed $50 million per year."

Dr. Gary Henman, vice president of Adult Secure Institutions said, "The approval to move forward on the project illustrates confidence that Cornell can provide a quality service in a reasonable and cost-effective manner. Also, it allows the company to continue its long-lasting relationship in serving the people of Pennsylvania and proves the state's commitment to supporting public-private partnerships."

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 69 facilities with a total service capacity of 15,444. Cornell's facilities are located in 13 states and the District of Columbia.

This press release may contain 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, (i) risks associated with acquisitions and the integration thereof (including the ability to achieve administrative and operating cost savings and anticipated synergies), (ii) the timing and costs of expansions of existing facilities, (iii) changes in governmental policy to eliminate or discourage the privatization of correctional, detention and pre-release services in the United States, (iv) availability of debt and equity financing on terms that are favorable to the Company, (v) fluctuations in operating results because of occupancy, competition (including competition from two competitors that are substantially larger than the Company), increases in cost of operations, fluctuations in interest rates and risks of operations and (vi) 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.