Question-and-Answer Session
Operator
Thank you, sir. We will now begin the question-and-answer session. (Operator Instructions) Our first question is from the line of Kevin Campbell with Avondale Partners; please go ahead.
Kevin Campbell – Avondale Partners
Good morning. Great quarter and thanks for taking my question. I just wanted to try and get a little bit more clarity on the guidance. If you could give us an idea as to what the earnings impact is on from your ramp-up scenario where you’re going from zero to 180 to 600, I mean what would be the impact to your earnings number for 2008? Is that a $0.05 a number, a $0.15 number? Can you give us some clarity there?
John Hyman
When you say the ramp, which ramp you talking about?
Kevin Campbell – Avondale Partners
I’m sorry, at the Regional Correctional Center in your base case scenario.
James Hyman
Base case is that we’re at about, we’re fluctuating now with the Marshals between 180 and 200, depending on their daily lease, 170 and 200. So the base case assumes that that population continues to move forward, so we’re not ramping down. The base case then is flat through the end of the second quarter, and then it starts to gradually ramp with, and we haven’t said whether that will be whichever customer it is, through November.
Kevin Campbell – Avondale Partners
Is that though, what is the earnings impact of that ramp? I guess what I’m trying to get at is what might be the risk be to your current guidance if that ramp doesn’t occur? That’s the number I’m trying to get a better handle on.
James Hyman
I mean it’s an interesting question and this is why? What it will relate to is as much what happens with the final true-up calculation for the obligations at the facility. The contract we have in place today is 182,500 and that is March 2007 through March 2000, sorry March 2008 through March 2009. If the population differs materially and does not achieve the total level of those mandates, then at some point under the current contract you would have a true-up payment. We’re not predicting that. But if there was material shortfall, then that would have to be taken into account. That would obviously be an accounting question of whether that would be recognized in 2008 versus 2009. The other piece is: Could there be a material change to the contract? The answer is: Of course there could be, but that would have to be negotiated by both parties, both parties would have to agree. From a notice period perspective, the contract as it exists today has 180-day notice period within it, so there’s basically six months. But as we look at sort of the cases, for example, if we modeled the case that we were just 180 population through the end of the year flat, because of the terms of the contract, you would actually have a better EPS number.
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