DEPARTMENT OF CORRECTIONS

ARIZONA CORRECTIONAL INDUSTRIES

Fiscal Year2002

Annual R

eport

AR

IZO

NA

CO

RR

EC

TIO

NA

LIN

DU

STR

IES

MISSIO

NTo m

ake available within the state correctional institutions opportunities for em

ployment of inm

ates in jobs which

combat idleness and develop good w

orking habits.

To provide training and work experience that w

ill assist inmates in eventually securing and holding gainful

employm

ent outside the correctional institution.

To reduce the cost to society of maintaining an inm

ate through the sale of inmate-produced goods and services

and by requiring and enabling inmates to pay som

e portion of their room and board costs.

To require and enable inmates to m

ake restitution to the victims of their offenses, so as to assist the inm

ates inaccepting responsibility for the consequences of their acts.

To require and enable inmates to provide assistance to their dependents, thus tending to strengthen fam

ily ties.

To require and enable inmates to accum

ulate savings for their eventual return to the comm

unity.

VISIO

NA

CI’s com

pelling vision is to maintain its m

omentum

of successfully accomplishing legislative and departm

entalobjectives w

hile integrating and balancing strategic plans with the necessity to be a purely “custom

er-driven”organization that serves all of its custom

ers as a quantifiable value-added partner.

TAB

LE

OF

CO

NT

EN

TS

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Organizational O

verview . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

Functional Organizational Structure

. . . . . . . . . . . . . . . . . . .7

Map of A

CI O

perations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

Major A

ccomplishm

ents: Fiscal Year 2002

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

Focus: AC

I Ow

ned-and-Operated P

risonIndustry E

nterprises . . . . . . . . . . . . . . . . . . . . . . . . .12

AC

I Public and P

rivate Sector P

artnerships . . . . . . . . . . . .16

Statistical Profile:

Fiscal Year 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17

ALetter of A

ppreciation to AC

I . . . . . . . . . . . . . . . . . . . . . .22

Fiscal Year 2002 Financial Statement . . . . . . . . . . . . . . . . .23

1

AR

IZON

A CO

RREC

TION

AL IND

USTR

IES

Terry L. Stewart, D

irectorA

rizona Departm

ent of Corrections

1601 West Jefferson

Phoenix, A

rizona 85007

Dear D

irector Stewart:

On behalf of the staff of A

rizona Correctional Industries (A

CI), I am

pleasedto present the A

nnual Report for A

rizona Correctional Industries for Fiscal

Year 2002.

Nothing in our country w

as untouched by the events of Septem

ber 11, 2001.This tragedy has sparked introspection and contem

plation on a nationallevel, leading us to rediscover w

ho we are as A

mericans and to clarify w

how

e are as individuals, as well as businesses. It is this reflective, back-to-

basics tenor that inspired AC

I to devote this year’s FOC

US

section to AC

IO

wned-and-O

perated Prison Industry E

nterprises. At the heart of A

CI

operations, these work assignm

ents offer inmates a range of opportunities

we consider a First Step, a Stepping Stone, and a C

ornerstone of successduring incarceration and upon release, through the progressive acquisitionof m

arketable job skills, desirable work habits, and self-esteem

.

AC

I confirmed its resiliency this year by successfully confronting a variety of

financial challenges. Arizona’s econom

y was not im

mune to national trends,

negatively affecting both the number and size of transactions w

ith AC

I’scustom

ers. The moratorium

placed on State spending by mid-year im

pactedbusiness

with A

CI’s

largest custom

er -

the Arizona

Departm

ent of

Corrections.

Within the D

epartment of C

orrections, AC

I assumed responsibility for the

cost of all Correctional O

fficers assigned to AC

I operations and suffered asignificant loss in the garm

ent factory due to changes in the clothingallow

ance for inmates. D

espite these challenges, AC

I sustained debt-freeoperations, contributed $1 m

illion to the State General Fund and $1 m

illionto the C

orrections Fund, and realized a profit for the fiscal year.

AD

IVIS

ION

OF A

RIZO

NA

DE

PAR

TME

NT

OF C

OR

RE

CTIO

NS

Terry L. Stewart, D

irectorP

age 2

In the annual economic im

pact assessment of A

CI, the A

rizona StateU

niversity Center for B

usiness Research reports that A

CI operations

contributed directly and indirectly to the economic prosperity of the State of

Arizona through expenditures for m

aterials, supplies, and outside servicestotaling nearly $12.8 m

illion. Staff salaries alone amounted to $3.7 m

illionfor the year, creating m

ore than $2.9 million in dem

and for goods andservices. A

CI expenditures also resulted in further indirect econom

icim

pact, including the creation of 336 new jobs and a corresponding $14.7

million for additional goods and services. In addition, as previously noted,

AC

I contributed $1 million of its earnings to the State G

eneral Fund for thefourth year in a row

. This year AC

I also contributed $1 million to the

Corrections Fund.

In the year to come, A

CI plans to continue to strengthen O

wned-and-

Operated P

rison Industry Enterprises, w

hile also exploiting opportunities fornew

partnerships with public and private sector businesses. In particular,

AC

I will focus on bringing jobs to the U

nited States by forming partnerships

with private com

panies that have previously looked off-shore to meet their

labor resource requirements.

Sincerely,

John J. Spearman

Assistant D

irector

Arizona C

orrectional Industries' (AC

I's) enablingstatute serves as the core of A

CI's m

ission andthe foundation for its activities. In pursuit of its

goals, AC

I has also adopted four philosophical andoperational

ideals that

serve as

benchmarks

forprogress:

1) S

tatewide w

ork opportunities reflectingindustry diversity;

2) S

upportive, collaborative partnerships with

prisons that directly contribute to achieving them

ission of the Arizona Departm

ent of Corrections;

3) C

ustomer-driven attention to quality, tim

eliness,and responsiveness; and

4) C

onscientious and responsible governmental

entity within the State of A

rizona, contributingto the econom

ic prosperity of the State andsupporting A

rizona businesses.

Clearly

focused on

its role

within

the A

rizonaD

epartment of C

orrections and the larger social andeconom

ic contexts in which it operates —

AC

I GETS R

ESULTS!

INT

RO

DU

CT

ION

2

3

AC

I GETS R

ESULTS FO

R:

INSTITU

TION

SFacilitates inm

ate managem

ent

Com

bats inmate idleness

Reduces disruptive behavior

Contributes to a safe and secure environm

ent

Leads to increased compliance w

ith institutional requirem

ents

Provides rewards for successful attitudes and

behaviors.TH

E STATE OF A

RIZO

NA

No financial support from

taxpayers

Deductions/contributions from

inmate w

ages fortaxes, cost of incarceration, victim

’s compensation,

restitution, and other financial obligations, includingfam

ily support

Significant contributions to the economic

development and prosperity of the State

Returning law

-abiding, productive citizens to the com

munity.

CU

STOM

ERS

Efficient use of taxpayer dollars for tax-supported entities

Quality products and services

Professional installation and customer

service/support

Contracts to provide consistent, reliable, and

qualified inmate labor.

INM

ATESM

arketable job skills

Sound work ethic and w

ork habits

Self-confidence and pride

Savings

Family support

Improved chance of success upon

release.

CO

UN

TING

INM

ATE WO

RK

ERS

Throughout this report, “Inmates E

mployed” reflects the actual

number

of inm

ates that

worked

for AC

I during

the year,

regardless of the number of hours per day or the duration of the

assignment. B

y capturing information about all positions, as w

ellas turnover, this m

ethod of calculation enables AC

I to report theexact num

ber of inmates w

ho have had the opportunity to benefitfrom

AC

I work program

s.

In addition,

this year A

CI

began calculating

the Full-Tim

eE

quivalent (FTE) for inm

ate workers based on a 40-hour w

orkw

eek. This figure allows the D

epartment of C

orrections tom

aintain w

ork program

inform

ation using

a standardized

measurem

ent.

Fiscal Year

HISTO

RIC

AL

PRO

FILE

Fiscal Year

4

Fiscal Year

Contributions/deductions

from

inmate

wages

include taxes,

cost of

incarceration, victim’s com

pensation, restitution, and other financial obligations,including fam

ily support.

Direct

contributions represent

expenditures for

goods and

services, and

staffcom

pensation. Indirect contributions represent demand for goods and services created

by AC

I operations and enterprises.

Fiscal Year

5

Arizona C

orrectional Industries reports to the Director of the D

epartment of C

orrections through the Deputy D

irector of Prison

Operations. This structure ensures that A

CI activities com

plement those of P

rison Operations and allow

s for maxim

umcoordination betw

een AC

I and the prisons. In addition, AC

I’s strategic plans are developed in alignment w

ith Prison

Operations’goals, to contribute to their achievem

ent.AC

I BO

AR

D O

F DIR

ECTO

RS

AC

I’s business and financial operations are reviewed periodically by the A

CI B

oard of Directors. The B

oard is composed of the

following m

embers:

Board C

hairman:

Terry L. Stewart,D

irector, Arizona D

epartment of C

orrections

Board M

embers:

Charles L. R

yan,Deputy D

irector, AD

C P

rison Operations

Richard G. C

arlson,Deputy D

irector, AD

C A

dministration

Michael J. Sm

arik,Assistant D

irector, AD

C A

dministrative S

ervices Division

Frank Nageotte,R

etired President, G

reyhound/Dial C

orporation

AC

I FUN

CTIO

NA

LO

RG

AN

IZATION

AL

STRU

CTU

RE

• Adm

inistrative Services:

Provides

support for

all adm

inistrative functions, such as planning, personnel, legal affairs, and public inform

ation. • Business

Development:

Responsible

for developm

ent of

Public and P

rivate Sector P

artnerships and compliance w

ith the resulting inm

ate labor contracts. • G

raphic Design and Engineering: Provides state-of-the-art

conceptual drawings and detailed m

anufacturing illustrations.

Structured along the lines of a traditional private enterprise, AC

I industries and related activities are directed through three administrative

units and three operational bureaus:

• Finance and Accounting: R

esponsible for all financial and accounting functions.

• Marketing and Sales: R

esponsible for all business activities associated

with

marketing

and sales

of A

CI

products and

services. • O

perations: Responsible for all ow

ned -and -operated m

anufacturing, production, and service facilities and activities.

OR

GA

NIZ

ATIO

NA

LO

VE

RV

IEW

6

FUN

CT

ION

AL

OR

GA

NIZ

ATIO

NA

LST

RU

CT

UR

E

7

AR

IZON

AD

EPA

RTM

EN

TO

F CO

RR

EC

TION

SD

IRE

CTO

R

PR

ISO

N O

PE

RATIO

NS

DE

PU

TYD

IRE

CTO

R

ARIZONACORRECTIONALINDUSTRIES

ASSISTANT DIRECTOR

ACI BOARD OF DIRECTORS

GRAPHIC DESIGN

AND ENGINEERING

MARKETING

AND SALES

OPERATIONS

NORTHERN

REGION

DATA

FULFILLM

ENT

CEN

TERAGRIBUSINESS

FLORENCE

FURNITURE FACTORY

EYMAN

FURNITURE FACTORY

PRISON RETAIL

OUTLET

BAKERY

GRAPHIC ARTS

DIVISION

INSTA

LLATION/

SUPPORT SERVICE

TEAMS (3)

KIT MANUFACTURING

AND UPHOLSTERY

PERRYVILLE

GARMENT FACTORY

INDUSTRIAL

MAINTENANCE

DOUGLAS GAR-

MENT

SIGN

FACTORY

WOOD/META

LREFURBISHING

BEDDING

FACTORY

LICENSE PLAT

EFACTORY

META

LFABRICATION

FACTORY

SOUTHERN

REGION

CENTRALREGION

WAREHOUSE

TRANSPORTATION

COST AND

INVENTORYCONTROL

FINANCE AND ACCOUNTING

ACCOUNTING

COST

INVENTORY

INDUSTRIAL

SALES

MARKETING

CUSTOMER

SERVICES

INFORMATION

TECNOLOGY

PURCHASING

MATERIALS

MANAGEMENT

ADMINISTRATIVE

SERVICES UNIT

BUSINESS DEVELOPMENT

UNIT

PRIVATE SECTOR

LABOR CONTRACTS

PUBLIC SECTOR

LABOR CONTRACT

8

MA

PO

FA

CI O

PER

AT

ION

S

9

Central A

dministrative O

fficeInstallation/S

upport Services (2 Team

s)C

entral Office O

perations

Arizona State Prison - Phoenix W

estG

reater Auto A

uction *

Arizona State Prison C

omplex - Perryville

Garm

ent FactoryD

ata Fulfillment C

enterG

raphic Arts D

ivision/Copy S

ervice(C

opy Service co-located

with A

DC

Central O

ffice)A

Z Departm

ent of Transportation-M

otor Vehicle Division (2 O

perations) *Televerde (2 O

perations)*S

odexho *

Arizona State Prison C

omplex - Lew

isH

ickman’s E

gg Ranch (2 O

perations) *O

ban, Inc. *A

dobe Doors *

BoM

ax Vehicle Servicing G

roup *S

olar Industries *D

esert Thunder Welding *

Green A

cres *P

hoenix Bankcard S

ervices *

Arizona State Prison C

omplex - Yum

aS

olar Industries *

Arizona State Prison C

omplex - Tucson

Sign Factory

AZ D

epartment of Transportation - M

otor Vehicle Division *

Farmer’s Investm

ent Com

pany *S

olar Industries *

Arizona State Prison C

omplex - Florence

FarmB

edding FactoryC

entral Warehousing

Transportation Services

Operations A

dministration/

Industrial Maintenance

License Plate Factory

Metal Fabrication Factory

Wood/M

etal Refurbishing

Retail Store

Furniture FactoryD

ixon Farms *

Eagle M

illing Co., Inc. *

Arizona State Prison C

omplex - W

inslowK

it Manufacturing and U

pholstery Plant

White M

ountain Farms *

Arizona State Prison C

omplex - Eym

anB

akery Division

Furniture FactoryS

olar Industries *

Arizona State Prison C

omplex - Safford/Fort G

rantE

urofresh*

Arizona State Prison C

omplex - D

ouglasG

arment Factory

Southeast A

rizona Medical C

enter *

* Public/P

rivate Sector P

artnerships

Phoenix

Tucson

Arizona State Prison - M

aranaE

SB

Modular M

anufacturing*

AC

I is proud to report the following m

ajor accomplishm

ents for Fiscal Year 2002:

(1) Alcohol A

buse and Treatment Fund

(2) Includes such deductions as disciplinary and compassionate restitution and filing fees

FINA

NC

IAL

AN

D O

PERATIO

NA

LA

CC

OM

PLISHM

ENTS

Generated total revenues of $17,419,754 from

goods and services.

Realized a net incom

e of $414,836.

Maintained debt-free operations.

Provided daily w

ork opportunities for an average of 1,523 inm

ates in AC

I work program

s.

Paid m

ore than $4.9 million in inm

ate wages.

Provided for the follow

ing deductions from inm

ate w

ages:

Returned to the State G

eneral Fund a total of $1,019,836 in room

and board.

Contributed $133,783 to the Victim

’s Com

pensationFund.

Distributed $97,066 to the A

lcohol Abuse and

Treatment Fund.

Supervised distribution of federal, state, and

FICA

taxes of $190,458.

Contributed $1 m

illion to the State General Fund

for the fourth year in a row and contributed $1

million to the C

orrections Fund.

MA

JOR

AC

CO

MPL

ISHM

EN

TS - FISC

AL

YE

AR

2002

10

MA

JOR

AC

CO

MPLIS

HM

ENTS

—C

ontinued

NEW

PUB

LIC A

ND

PRIVATE SEC

TOR

PAR

TNER

SHIPS

AS

PC

- Lewis

Phoenix B

ankcard Services

Desert Thunder W

elding H

TH, Inc.*

Sw

ift Transportation Com

pany*S

afety Services C

o.*A

lleco Stone*

AS

PC

- Perryville

Televerde (opened second operation)S

wift Transportation C

ompany*

AS

PC

- Winslow

Eurofresh*

AS

P- M

aranaE

SB

Modular M

anufacturing

AS

P- P

hoenix West

Sw

ift Transportation Com

pany*P

ratte Developm

ent Com

pany*

*Under developm

ent

ECO

NO

MIC

IMPA

CT*

In addition to the financial accomplishm

ents noted, AC

I createdthe follow

ing economic im

pact for Fiscal Year 2002, without any

appropriated funding:

AC

I operations

contributed directly

and indirectly

to the

economy of the State of A

rizona through expenditures form

aterials, supplies, and outside services totaling nearly $12.8m

illion.

Staff salaries amounted to nearly $3.7 m

illion for the year,creating m

ore than $2.9 million in dem

and for goods andservices.

AC

I expenditures resulted in further indirect economic im

pact,including the creation of 336 new

jobs and a correspondingdem

and for approximately $14.7 m

illion for additional goodsand services.

* Source - Arizona State University C

enter for Business Research

Inmate H

ours Worked

Fiscal Year 2002

AC

I Ow

ned-and-Operated

1,248,528P

artnerships1,097,889

Total:2,346,417

11

AC

I Ow

ned-and-Operated P

rison Industry Enterprises and

related business

activities lie

at the

heart of A

CI

operations. With 21 industries and business activities

located in six prison complexes statew

ide, AC

I work program

sprovided m

eaningful employm

ent to over 700 inmates during

Fiscal Year 2002, representing slightly more than half of the total

1,523 inmates em

ployed by AC

I for the fiscal year. AC

I owned-

and-operated prison industry enterprises offer inmates a range of

opportunities that serve as a First Step, a Stepping Stone, and aC

ornerstone of success upon release, through the progressiveacquisition of m

arketable job skills, desirable work habits, and

self-esteem.

FOC

US:

AC

I Ow

ned-and-Operated Prison Industry E

nterprises

AC

I employm

ent opportunties include AC

I Ow

ned-and-Operated P

rison Industry Enterprises

and AC

I Public and P

rivate Sector P

artnerships. An additional 744 inm

ates were assigned

to Partnership positions during Fiscal Year 2002.

12

FIRST STEP

AC

I entry-level trainee and semi-skilled positions provide inm

ates with

an introduction to the basics of marketable em

ployment skills. W

hileengaged in these positions, inm

ates are also exposed to behaviorsthat teach and strengthen proper w

ork ethic and good work habits. In

addition, these

initial w

ork opportunities

familiarize

inmates

with

appropriate workplace interactions and team

work. F

or some inm

ates,this is a new

experience. For many others, it is also their first opportunity

to develop self-esteem through w

ork-related activities and to take pride in theiraccom

plishments.

This vital ”First Step” provides inm

ates with the experience necessary to

acquire basic work skills and good w

ork habits and to develop theconfidence essential to achieving future success in the w

ork place.

Cabinet M

aker’s Helper

Painter

Gardener I

Electrician’s H

elperH

and Packager

Welder’s H

elperP

unch Press O

peratorM

echanic’s Helper

Sander

Prep A

ssembler I

Carpenter’s H

elperH

and Trimm

er/Presser

Hem

mer

Grinder

“I’ve been employed at A

CI for

11 years . . . . I started at the AC

IPrint Shop . . . w

here I learnedthe printing business . . . . Ilearned

to estim

ate the

paperand ink needed to com

plete theorder, the operating of the w

ebprinting press, the operating ofthe sheet feed printing press, theoperating of the cutter, and thecollater.

Inmate W

orker

13

“While

at the

AC

I upholstery

shop. .

. I’ve

learned the

upholstery business from the

planning of an upholstery job tothe finish of the order, w

hichincludes the estim

ating of them

aterials needed to complete the

order, the

making

of the

patterns, and the sewing.”

Inmate W

orker

STEPPING

STON

EC

abinet Maker

Carpenter

Engraver

Silk S

creenerD

arkroom O

peratorFabric C

utterH

eating/AC

Mechanic

Web P

ress Operator

Drafter

Finish Painter

Electrician

Vehicle Mechanic

Plum

berS

aw O

perator

There is significant room

within A

CI operations for inm

ates to advanceonce they have achieved the necessary fundam

ental skills anddem

onstrated desirable

work

habits.

Inmates

are eligible

toprom

ote to skilled positions within the sam

e industry or, in some cases, to

apply for a job in a different AC

I industry. Because A

CI has enterprises

throughout the Departm

ent of Corrections, inm

ates transferred to anotherprison typically have access to A

CI operations at that location, creating

continuity in

the level

of the

inmate’s

work

experience. The

most

accomplished inm

ates may be selected to w

ork in one of the many A

CI public

and private sector partnership work program

s. Because these program

s most

closely reflect the work environm

ent in the free world and also offer the

highest w

ages available

to inm

ates, they

represent the

premier

jobassignm

ents offered within the D

epartment of C

orrections.

These

“Stepping Stones”

of success

within A

CI

industries lead

toincreasingly

marketable

and rew

arding w

ork experience

duringincarceration, w

hile simultaneously encouraging im

proved work habits

and fostering self-esteem.

14

“Since I’ve been incarcerated, I decided to turn my life around and get som

e skills I can take with

me back to society to help m

e take care of my fam

ily and become a productive m

ember of

society. . . . With the w

ork knowledge I have. . . I can’t w

ait to start my ow

n business and regainm

y place in society.”Inm

ate Worker

CO

RN

ERSTO

NE

The A

rizona Departm

ent of Corrections depicts the m

odel for promoting

change in criminal behavior as a four-legged stool, w

ith the legsrepresenting education, substance abuse services, spirituality, and

work. A

s a key element in this m

odel, AC

I work program

s offer inmates

quality work experience, exposure to good w

ork habits, and familiarity w

ithw

ork environments sim

ilar to those found in the free world. A

CI strives to give

inmates the tools to create opportunities for em

ployment and avenues for

success that may not have been available to them

prior to theirincarceration.

With

this foundation, A

CI

work

programs

provide inm

ates w

ith a

“Cornerstone” upon w

hich they can build a successful future upon release.

15

PUB

LIC

AN

D PR

IVAT

E SE

CT

OR

PAR

TN

ER

SHIPS

In addition to providing jobs for inm

ates through owned-

and-operated prison industry enterprises, AC

I creates jobsby entering into P

artnerships to supply inmate labor.

There are two types of P

artnerships:

Public Sector—These Partnerships provide inm

ate laborfor other State agencies, allow

ing them to offer greater

services without significant increases in taxpayer support.

Private S

ector—These P

artnerships provide inmate

labor for private sector companies w

ith hard-to-fill labor requirem

ents. Prison Industry E

nhancement (P

IE)

Certification P

rograms are a subcategory of P

rivateS

ector Partnerships that require adherence to

additional guidelines.

These mutually beneficial P

artnerships result in some of the

most prom

ising and sought-after inmate w

ork opportunitiesw

ithin the Arizona D

epartment of C

orrections.

Inmates learn skills that are currently in dem

and, while

also learning responsibility by contributing a portion of their w

ages to their cost of incarceration, victim’s

compensation, fam

ily support, and other financial obligations.

Institutional administrators benefit from

the motivation

these jobs create for inmates to consistently adhere to

the highest standards of behavior and attitude in order to be considered for and m

aintain these positions.

Contract P

artners gain a dependable, reliable work

force, allowing them

to focus on other aspects of their business.

The S

tate of Arizona realizes ongoing econom

ic benefit from

these Partnerships, though direct economic

contributions, as well as through increased efficiency

and effectiveness of State agencies that use inmate

labor.

16

STAT

ISTIC

AL

PRO

FILE

- FISCA

LY

EA

R 2002

* Includes nonprofit and charitable organizations

17

AC

I OW

NED

-AN

D-O

PERATED

PRISO

NIN

DU

STRY

ENTER

PRISES

18

MA

NU

FAC

TUR

ING

ENTER

PRISES

19

SERVIC

E ENTER

PRISES

* Includes clerical and administrative jobs for areas that do not generate revenue in A

CI’s C

entral O

ffice, regional operations centers, and maintenance

Transportation/Warehouse and O

ther Labor Services have been om

itted because they are supportfunctions not involving sales.

20

PUB

LIC A

ND

PRIVATE SEC

TOR

PAR

TNER

SHIPS

21

During FY

2002, there were 26 P

artnership work program

s located in 11 prisons throughout the state.

To:A

rizona Correctional Industries

From:

Inmate Talbot

Date:

23 August 2002

Subject:

Appreciation Letter

I would like to extend m

y appreciation and gratitude to thestaff and adm

inistration for employm

ent and training duringm

y incarceration at the Departm

ent of Corrections. A

rizonaC

orrectional Industries keeps focused on their mission to

provide inmates w

ith training and experience as a positiveaspect

to an

unfortunate circum

stance.

Despite

ourbackgrounds or education A

CI provides valuable experience

which w

ill help us greatly to re-enter society when our

sentence is completed.

I would like to extend m

y appreciation to Vicki Fitzpatrick,P

urchasing M

anager for

the tim

e and

patience she

displayed during my training in the purchasing departm

ent.I feel very confident that I can proceed w

ith employm

ent anddo w

ell as a result of her dedication. The purchasingdepartm

ent in any company is key to their success and I feel

I learned from the best. The experience Ireceived could not

have been achieved anywhere else in the system

and I will

always be grateful.

During m

y incarceration, I was em

ployed at Televerde andS

odexho, outside AC

I contracts which has been a very

valuable experience. In addition to the experience achievedby participating in the outside contracted jobs, I w

as able toearn alm

ost $13,000 that will be released to m

e upon my

release. The experience and financial stability would not

have been possible if it were not for A

CI and a dedicated

managem

ent team.

Again, a big Thank You

to everyone who participated in

providing these opportunities for me and continues to do so

for the inmates behind m

e.

Sincerely,

Connie Talbot

AL

ET

TE

R O

FA

PPRE

CIAT

ION

TO A

CI

Throughout this report, w

e have described the professional, social, and financial impact of A

CI w

ork programs. W

e have alsoem

phasized the long and short-term benefits realized from

AC

I employm

ent, not only for inmate w

orkers, but for theD

epartment of C

orrections and the State of Arizona, as w

ell. The following letter, w

hich was sent to A

CI by an inm

ate aboutto be released, validates our com

ments and convictions about the positive influence that A

CI w

ork programs have on inm

ates’lives in the present and in the future.

22

FISCA

LY

EA

R 2002

FINA

NC

IAL

STATE

ME

NT

AR

IZO

NA

CO

RR

EC

TIO

NA

LIN

DU

STR

IES

UN

AU

DIT

ED

FINA

NC

IAL

STATE

ME

NT

JUN

E 30, 2002 A

ND

2001

23

2001$20,650

6,986,4762,676,310

44,6052,205,250

50,322

11,983,613

3,380,641

$15,364,254

$1,075,17369,468

209,861425,706

1,780,208

1,780,208

13,584,046

13,584,046

$15,364,254

STATE OF A

RIZO

NA

DEPA

RTM

ENT O

F CO

RR

ECTIO

NS

AR

IZON

AC

OR

REC

TION

AL

IND

USTR

IESB

alance Sheet - Enterprise FundJune 30, 2002 and 2001

Assets

Current A

ssets:C

ash in bank and on handC

ash on deposit with State Treasurer

Accounts R

eceivableInterest R

eceivableInventoriesP

repaid expenses

Total current assets

Property, plant and equipm

ent, net

Total assets

Liabilities and Fund Equity

Current liabilities:

Accounts payable

Accrued payroll and em

ployee benefitsA

ccrued compensated absences

Other accrued liabilities

Total current liabilities

Total liabilities

Net A

ssetsInvested in capital assets, net of related debt

Total net assets

Total liabilities and net assets

2002$49,576

4,741,3272,260,051

28,6612,631,839

51,735

9,763,189

3,039,807

$12,802,996

$170,193126,305231,663267,498

795,659

795,659

12,007,337

12,007,337

$12,802,996

24

2001

$761,063

735,716

1,651,688

26,463

410,257

410,257

390,1736,616,953

$7,007,126

20,6506,986,476

$7,007,126

STATE OF A

RIZO

NA

DEPA

RTM

ENT O

F CO

RR

ECTIO

NS

AR

IZON

AC

OR

REC

TION

AL

IND

USTR

IESStatem

ent of Cash Flow

s - Enterprise FundYear Ended June 30, 2002 and 2001

Cash flow

s from operating activities:

Operating incom

eA

djustments to reconcile operating incom

e to net cashprovided by (used for) operating activities:

Depreciation

Changes in assets and liabilities:

Accounts receivable

InventoriesP

repaid expensesA

ccounts payableA

ccrued payroll and employee benefits

Accrued com

pensated balancesO

ther accrued liabilities

Net cash provided by (used for) operating activities

Cash flow

s from noncapital financing activities:

Cash paid to other funds

Proceeds from

sale of scrap and other miscellaneous item

s

Net cash provided by (used for) noncapital financing activities

Cash flow

s from capital and related financing activities:

Acquisition and construction of property, plant and equipm

entLoss on disposal of fixed assets

Net cash used for capital and related financing activities

Cash flow

s from investing activities:

Interest receipts on investments

Net cash provided by investing activities

Net increase (decrease) in cash

Cash, July 1

Cash, June 30

Cash, June 30, consists of :

Cash in bank and on hand

Cash on deposit w

ith State Treasurer

Total

2002

$192,528

720,012

425,456

1,951

240,709

240,709

7,007,126

$4,790,903

522,5594,268,344

$4,790,903

(426,589)(1,413)

(158,208)

(74,561)

(2,000,000)

(1,998,049)

(379,178)

(384,322)

(2,216,223)

(904,980)56,83121,802

(97,955)

363,898

(1,000,000)

(973,537)

(698,235)

(698,235)

(32,547)(457,621)

8,37527,746

343,013

26

(5,144)0