<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K/A

                                 AMENDMENT NO. 2

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 2001

                         Commission File Number 1-14472

                             CORNELL COMPANIES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                Delaware                               76-0433642
    (State or other jurisdiction of         (IRS Employer Identification No.)
     Incorporation or organization)

   1700 West Loop South, Suite 1500,
             Houston, Texas                               77027
(Address of principal executive offices)               (Zip Code)


Registrant's telephone number, including area code     (713) 623 - 0790

Securities registered pursuant to Section 12(b) of the Act:


          TITLE OF EACH CLASS                    NAME OF STOCK EXCHANGE
         ---------------------                  ------------------------

Common Stock, $.001 par value per share          New York Stock Exchange
    Preferred Stock Purchase Rights              New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:  NONE

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. YES [X]  NO [ ]

Indicate by check mark if disclosure of delinquent files pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of the Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

At March 28, 2002, Registrant had outstanding 13,056,903 shares of its common
stock. The aggregate market value of the Registrant's voting stock held by
non-affiliates at this date was approximately $134,805,000 based on the closing
price of $10.80 per share as reported on the New York Stock Exchange. For
purposes of the foregoing calculation, all directors and officers of the
Registrant have been deemed to be affiliates, but the Registrant disclaims that
any of such directors or officers is an affiliate.


                    Documents Incorporated by Reference: None


<PAGE>

                                EXPLANATORY NOTE

      On April 16, 2002, Cornell Companies, Inc. (the "Company") filed with the
Securities and Exchange Commission (the "SEC") its Annual Report on Form 10-K
for the year ended December 31, 2001 (the "Initial Form 10-K"). On April 30,
2002, the Company filed with the SEC Amendment No. 1 on Form 10-K/A ("Amendment
No. 1") to amend Part III of the Initial Form 10-K in order to include those
disclosures required by Part III of Form 10-K and to amend Part IV to include an
exhibit that was not available when the Company filed its Initial Form 10-K.
This Amendment No. 2 on Form 10-K/A amends and restates in its entirety Part III
contained in Amendment No. 1.

                                    PART III

ITEM 10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS

      The following table lists the names, ages and positions of the Company's
directors as of May 10, 2002. There are no family relationships between any of
the directors or officers.

<TABLE>
<CAPTION>
      NAME                                               AGE    POSITION
      ----                                               ---    --------
<S>                                                      <C>
      Anthony R. Chase..............................     47     Director
      James H. S. Cooper............................     47     Director
      David M. Cornell..............................     66     Director
      Peter A. Leidel...............................     45     Director
      Arlene R. Lissner.............................     71     Director; Director of Special Projects
      Steven W. Logan...............................     40     Director; President
      Harry J. Phillips, Jr.........................     52     Director; Chairman of the Board; Executive
                                                                Chairman
      Tucker Taylor.................................     63     Director
      Marcus A. Watts...............................     44     Director

</TABLE>

      ANTHONY R. CHASE has been a director of the Company since October 1999.
Mr. Chase has served as Chairman and Chief Executive Officer of ChaseCom Limited
Partnership since December 1998 and as President and Chief Executive Officer of
Faith Broadcasting, L.P. since November 1993. Mr. Chase is also Chairman of the
Board of the Telecom Opportunity Institute, a national, non-profit organization
founded by ChaseCom Limited Partnership to increase career, education and job
training opportunities in the telecommunications industry for people in
historically underserved communities. Mr. Chase is a Professor of Law at the
University of Houston Law Center. Mr. Chase is a director of Leap Wireless
International, Inc., a nationwide provider of wireless phone service, a director
of Northern Trust Bank of Texas, and a Member of the Council on Foreign
Relations.

      JAMES H. S. COOPER has been a director of the Company since October 1999.
Mr. Cooper is the founder and Chairman of Brentwood Capital Advisors LLC of
Brentwood, Tennessee, where he has been since May 1999. Mr. Cooper was a
Managing Director of SunTrust Equitable Securities Corporation of Nashville,
Tennessee (and its predecessor, Equitable Securities Corp.) from April 1995 to
April 1999, and served as Congressman, 4th District of Tennessee in the United
States House of Representatives from 1983 to 1995. Mr. Cooper has also been an
Adjunct Professor at the Owen School of Management at Vanderbilt University
since 1995. Mr. Cooper serves as a director of several private companies.

      DAVID M. CORNELL has been a director since our founding and was Chairman
of the Board from our founding until September 2000. Mr. Cornell also served as
President and Chief Executive Officer of the Company from our founding until
August 1999. Mr. Cornell is Chairman, President and Chief Executive Officer of
eGovNet, Inc.

      PETER A. LEIDEL has been a director since May 1991 and has been Chairman
of the Board from September 2000 to July 2001. Mr. Leidel is co-founder and
partner of Yorktown Partners LLC, which manages private investment funds. In
September 1997, Mr. Leidel resigned as Senior Vice President of Dillon Read &
Co, Inc. (a


                                       2
<PAGE>

predecessor of UBS PaineWebber Inc.) where he worked since 1983 managing private
investment funds. Mr. Leidel is a director of Willbros Group, Inc., an oil and
gas industry contractor, Carbon Energy Corporation, an oil and gas exploration
company, and several private companies.

      ARLENE R. LISSNER has been a director since September 1997 when we
acquired Abraxas, and is Director of Special Projects. Ms. Lissner founded
Abraxas in 1973, where she served as President and Chief Executive Officer until
1977, at which time she left that position to become Chairperson of the Board of
Directors of Abraxas. Ms. Lissner resumed her role as President and Chief
Executive Officer of Abraxas from April 1996 through September 1997.

      STEVEN W. LOGAN has been a director and the President since August 1999.
Mr. Logan served as Chief Executive Officer from August 1999 to April 2002 and
as Chairman of the Board from July 2001 to February 2002. Prior to August 1999,
Mr. Logan served as Executive Vice President from April 1998 and was Chief
Operating Officer from April 1998 through December 1998. Previously, Mr. Logan
served as Senior Vice President from November 1997 to April 1998, and Chief
Financial Officer, Treasurer and Secretary from 1993 to April 1998. From 1984 to
1993, Mr. Logan served in various positions with Arthur Andersen LLP, Houston.

      HARRY J. PHILLIPS, JR. has been a director since January 2001. Mr.
Phillips was named Chairman of the Board of Directors of the Company on February
6, 2002 and Executive Chairman of the Company on April 16, 2002. Mr. Phillips is
President of Timberlake Interests, Inc. and Phillips Investments, Inc. Mr.
Phillips previously served as Chairman and Chief Executive Officer of American
Ecology Corporation from 1992 to 1995. Mr. Phillips is a director of Conservatek
Industries, Inc. and Aeriform, Inc.

      TUCKER TAYLOR has been a director since October 1996. Mr. Taylor has been
President of CBCA, Inc., a company that administers health benefits for
self-insured employers, since July 2000. From 1992 to 1999, Mr. Taylor was
Executive Vice President of Medical Care International and, after an
acquisition, a Senior Vice President at Columbia/HCA. Mr. Taylor is also a
director of SuperShuttle, a privately held ground transportation company, and
Severn Healthcare, a healthcare provider.

      MARCUS A. WATTS has been a director since January 2001. Mr. Watts is a
partner of the law firm of Locke Liddell & Sapp LLP where he has practiced
corporate and securities law since 1984. Mr. Watts is a director of Aeriform,
Inc. and serves on the board of various civic and charitable organizations.

DIRECTOR COMPENSATION

      Ms. Lissner does not receive compensation for serving as a director. In
2001, Messrs. Chase, Cooper, Cornell, Leidel, Phillips, Taylor and Watts
received an annual fee of $15,000, a fee of $1,500 for attendance at each Board
of Directors meeting and a fee of $1,000 for attendance at each committee
meeting (unless held on the same day as a Board of Directors meeting). In
February 2000, the Board approved the payment of fees in cash or common stock of
the Company, at the election of the director, subject to the provisions of the
Cornell Companies, Inc. 2000 Directors Stock Plan, which was adopted by
stockholders at the Company's 2001 Annual Meeting. In January 2001, the Company
granted to Mr. Phillips and Mr. Watts nonqualified options to purchase 15,000
shares of Common Stock under the 1996 Plan in connection with their appointment
to the Board. The options to Messrs. Phillips and Watts vested 25% on the date
of the grant and the remainder vest ratably over three years with a term of 10
years and have a per share exercise price equal to the market value of a share
of Common Stock on the date of the grant. Additionally, Messrs. Chase, Cooper,
Cornell, Leidel and Taylor were each granted nonqualified options to purchase
2,000 shares of Common Stock under the 1996 Plan in January 2001. These options
vested 100% on the date of the grant with a term of 10 years and have a per
share exercise price equal to the market value of a share of Common Stock on
December 31, 2000. All directors are reimbursed for out-of-pocket expenses
incurred in attending meetings of the Board of Directors or committees thereof
and for other expenses incurred in their capacity as directors.

EXECUTIVE OFFICERS AND OTHER KEY EMPLOYEES

      The following table sets forth the names, ages and positions of the
persons who are not directors and who are executive officers and other key
employees of the Company as of May 10, 2002:



                                       3
<PAGE>

<TABLE>
<CAPTION>

       NAME                                 AGE                    POSITION
       ----                                 ---                    --------
<S>                                         <C>      <C>
       Leslie A. Balonick.............      50       Vice President, Mid-West Region
       Luis A. Collazo................      35       Corporate Controller and Chief Accounting Officer
       John C. Godlesky...............      55       Vice President, Eastern Region
       John L. Hendrix................      53       Senior Vice President and Chief Financial Officer
       Gary L. Henman.................      62       Vice President, Adult Secure Institutions
       Thomas R. Jenkins..............      54       Senior Vice President and Chief Operating Officer
       Kevin B. Kelly.................      39       Treasurer and Corporate Secretary
       Patrick N. Perrin..............      41       Vice President and Chief Administrative Officer
       Laura J. Shol..................      47       Vice President, Western Region
       Kevin T. Smyley................      51       Managing Director, Business Development
       Marvin H. Wiebe, Jr............      54       Senior Vice President

</TABLE>

      LESLIE A. BALONICK has been Vice President, Mid-West Region since we
acquired Interventions in November 1999. She previously served as Acting
Clinical Director for BHS Consulting Corp. from September 1998 to November 1999
and as Director of Planning and Business Development from 1996 to August 1998.
From 1991 to 1996, she served as Regional Manager for Interventions. Ms.
Balonick serves as a member of the Women's Committee of the Illinois Department
of Human Services, Office of Alcoholism and Substance Abuse Advisory Board and
is a Clinically Certified Substance Abuse Counselor.

      LUIS A. COLLAZO has been Corporate Controller and Chief Accounting Officer
since November 1999. Prior to November 1999, Mr. Collazo served as Corporate
Controller and Vice President of Accounting and Business Processes for IKON
Document Services, a division of IKON Office Solutions from September 1993 to
November 1999. Mr. Collazo is a Certified Public Accountant.

      JOHN C. GODLESKY has been Vice President, Eastern Region, since November
1999 and Vice President, Juvenile since January 1999. He previously served as
Director, Division of Residential Programs of Abraxas from June 1993 to December
1998, and was responsible for the overall development, direction and management
of Abraxas' juvenile residential programs.

      JOHN L. HENDRIX has been Senior Vice President and Chief Financial Officer
since September 1999. Mr. Hendrix previously served as Senior Vice President and
Chief Financial Officer of GC Services from 1998 to August 1999. From 1996 to
1998, Mr. Hendrix served as Senior Vice President and Chief Financial Officer of
APS Holding Corporation. Mr. Hendrix served as Senior Vice President and Chief
Financial Officer at Kay-Bee Toy Stores in 1996 and held various senior
financial positions at Kay-Bee Toy Stores since 1991. Mr. Hendrix is a Certified
Public Accountant.

      GARY L. HENMAN has been Vice President, Adult Secure Institutions since
October 1998 and National Director of Quality Assurance since June 1998. He was
previously an associate professor at Louisiana State University from 1997 to
September 1998. From 1973 to 1997, Mr. Henman was with the Federal Bureau of
Prisons ("FBOP"), progressing to Deputy Regional Director and Warden of five
facilities, including the United States Penitentiaries at Leavenworth, Kansas
and Marion, Illinois. Mr. Henman was Chairman of both the FBOP High Security
Facility Task Force and the FBOP Task Force on Vocational Training.

      THOMAS R. JENKINS has been Senior Vice President since May 1999 and Chief
Operating Officer of the Company since January 1999. Mr. Jenkins previously
served as Vice President, Juvenile since September 1997. From November 1995
through September 1997 he served as Vice President---Operations of Abraxas. From
1973 through November 1995, Mr. Jenkins served with the Department of Public
Welfare, Commonwealth of Pennsylvania in various capacities ranging from
Director of various juvenile facilities to Director of the Pennsylvania Child
Welfare Services.

      KEVIN B. KELLY has served as Treasurer and Corporate Secretary since
November 1999 and was Corporate Controller and Chief Accounting Officer from
January 1996 to November 1999. Prior to January 1996, Mr. Kelly


                                       4
<PAGE>

was Assistant Controller and Corporate Financial Reporting Manager for American
Ecology Corporation from 1993 to 1995. Mr. Kelly is a Certified Public
Accountant.

      PATRICK N. PERRIN has been Vice President since June 2001 and Chief
Administrative Officer since November 1998. Prior to November 1998, Mr. Perrin
served as Corporate Director of Risk Management, Employee Benefits and
Retirement Plans for Tracor, Inc. from November 1991 to October 1998.

      LAURA J. SHOL has been Vice President, Western Region since November 1999
and as Vice President, Pre-Release since November 1997, and was Managing
Director of Pre-Release Centers since May 1997. She previously served as
Director of Community Corrections of the Company from June 1996 through May
1997, and was Senior Regional Administrator of Eclectic from 1986 to June 1996.

      KEVIN T. SMYLEY has been Vice President, Business Development since
January 2002 and was Managing Director, Business Development from January 2001
through December 2001. Mr. Smyley was Director of Public Policy since September
1999 and a Vice President of Cornell Interventions, Inc., one of our
subsidiaries, since July 1999. From 1997 to 1999, Mr. Smyley served as
Co-Executive Director and Project Manager for the Kid's Stuff Foundation. From
1991 to 1997, Mr. Smyley worked for Lockheed Martin IMS serving as Vice
President of Criminal Justice Services from 1995 to 1997. Mr. Smyley is a member
of the National Organization of Black Law Enforcement Executives, the ACA and
the American Probation and Parole Association.

      MARVIN H. WIEBE, JR. has been Senior Vice President since November 1997
and Vice President since we acquired Eclectic Communications, Inc. in 1994. He
was previously Vice President---Administration and Finance, Vice
President---Secure Detention and Chief Financial Officer of Eclectic, where he
was employed for 11 years. Mr. Wiebe has served as President of the
International Community Corrections Association and as an auditor for the ACA
Commission on Accreditation for Corrections and is a member of the International
Community Corrections Association, the California Probation Parole &
Correctional Association and the ACA.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers to file
with the Securities and Exchange Commission and the New York Stock Exchange
initial reports of ownership and reports of changes in ownership of Common
Stock. Based solely on a review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that all its directors and executive officers during 2001
complied on a timely basis with all applicable filing requirements under Section
16(a) of the Exchange Act, except that Tucker Taylor, director of the Company,
did not timely file a Form 4.


ITEM 11. EXECUTIVE COMPENSATION

      The following table sets forth compensation information for the chief
executive officer and the four other most highly compensated executive officers
(the "named executive officers") of the Company during the Company's fiscal
years 2001, 2000 and 1999.


                                       5

<PAGE>

<TABLE>
<CAPTION>
                                                          SUMMARY COMPENSATION TABLE

                                                                                                 LONG-TERM
                                                             ANNUAL COMPENSATION               COMPENSATION
                                                         ----------------------------         ---------------
                                                                                                SECURITIES              ALL
                                           FISCAL                                               UNDERLYING             OTHER
NAME AND PRINCIPAL POSITION                 YEAR           SALARY           BONUS                 OPTIONS          COMPENSATION(1)
---------------------------               --------       -----------    -------------         ---------------     -----------------
                                                            ($)              ($)                    (#)                  ($)
<S>                                         <C>            <C>            <C>                      <C>                  <C>
Steven W. Logan (2).................        2001           425,000           205,000(3)            75,000               6,128
    President and Chief                     2000           300,000               ---               36,667               5,441
    Executive Officer                       1999           252,404               ---              100,000               5,380


John L. Hendrix (4).................        2001           250,000            65,000                  ---               4,802
    Senior Vice President and Chief         2000           225,000               ---               70,000               1,744
    Financial Officer                       1999            64,904               ---              100,000(5)            1,869

Thomas R. Jenkins...................        2001           250,000            80,000                  ---               5,952
    Senior Vice President and Chief         2000           180,000               ---               33,333               5,062
    Operating Officer                       1999           158,557               ---                  ---              17,805

Patrick N. Perrin...................        2001           150,000            30,000                  ---               1,920
    Vice President and Chief                2000           135,000               ---                7,500               2,794
    Administrative Officer                  1999           120,000               ---                  ---                 ---

Kevin T. Smyley (6) ................        2001           140,000            25,000                  ---               1,056
    Vice President, Business                2000           140,000               ---                  ---                 239
    Development                             1999            66,912               ---               20,000                 ---

</TABLE>
---------------

(1)   Amounts in 2001 for Messrs. Logan, Hendrix, Jenkins, Perrin and Smyley
      include (i) the Company's 401(k) matching contributions of $5,678, $4,250,
      $5,400, $1,800 and $808, respectively, and (ii) group term life insurance
      premiums of $450, $552, $552, $120 and $248, respectively.
(2)   Mr. Logan served as Chief Executive Officer from August 1999 to April
      2002.
(3)   Includes $80,000 cash bonus awarded in April 2001 and $125,000, which
      amount represents that portion of Mr. Logan's bonus pursuant to the
      Deferred Bonus Plan that vested during the fiscal year ended December 31,
      2001.
(4)   Mr. Hendrix has served as Senior Vice President and Chief Financial
      Officer since September 1999.
(5)   These options are no longer outstanding.
(6)   Mr. Smyley has been employed by the Company since July 1999.

      The following table presents information regarding options granted to each
of the named executive officers in 2001.

<TABLE>
<CAPTION>
                                                        OPTION GRANTS IN 2001

                                              PERCENTAGE OF                                       POTENTIAL REALIZABLE VALUE AT
                              NUMBER OF           TOTAL                                              ASSUMED RATES OF STOCK
                              SECURITIES         OPTIONS                                                PRICE APPRECIATION
                              UNDERLYING        GRANTED TO        EXERCISE                              FOR OPTION TERM(1)
                               OPTIONS          EMPLOYEES          PRICE         EXPIRATION      ------------------------------
       NAME                    GRANTED           IN 2001         PER SHARE          DATE              5%                10%
      ------                 ------------    ---------------    -----------     ------------     ------------       -----------
<S>                            <C>                <C>             <C>             <C>  <C>         <C>               <C>
Steven W. Logan...........     75,000             51.7%           $16.25          12/4/11          $766,465          $1,942,374
John L. Hendrix...........       ---               ---              ---             ---               ---                ---
Thomas R. Jenkins.........       ---               ---              ---             ---               ---                ---
Patrick N. Perrin.........       ---               ---              ---             ---               ---                ---
Kevin T. Smyley...........       ---               ---              ---             ---               ---                ---

</TABLE>
----------------

                                       6
<PAGE>

(1)   The values shown are based on the indicated assumed annual rates of
      appreciation compounded annually. Actual gains realized, if any, on stock
      option exercises and Common Stock holdings are dependent on the future
      performance of the Common Stock and overall stock market conditions. There
      can be no assurance that the values shown in this table will be achieved.

      The following table presents information regarding options exercised in
2001 and the value of options outstanding at December 31, 2001 for each of the
named executive officers.


               AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
                          FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>

                                                                     NUMBER OF SECURITIES                 VALUE OF UNEXERCISED
                                NUMBER OF                           UNDERLYING UNEXERCISED              IN-THE-MONEY OPTIONS AT
                             SHARES ACQUIRED     VALUE            OPTIONS AT FISCAL YEAR END               FISCAL YEAR END(1)
NAME                          ON EXERCISE       REALIZED       EXERCISABLE      UNEXERCISABLE(2)      EXERCISABLE   UNEXERCISABLE(2)
----                         ---------------   ----------     --------------    ----------------     ------------   ----------------
<S>                                                               <C>               <C>                <C>               <C>
Steven W. Logan..........         ---              ---            197,374           151,667            $2,277,276        $823,838
John L. Hendrix..........         ---              ---             24,000            46,000              $307,600        $597,900
Thomas R. Jenkins........         ---              ---             22,999            25,335              $180,987        $294,477
Patrick N. Perrin........         ---              ---             10,500            12,000               $37,035         $92,940
Kevin T. Smyley .........         ---              ---              8,000            12,000               $20,200         $30,300

</TABLE>

---------------

(1)   The excess, if any, of the market value of Common Stock at December 31,
      2001 ($17.65) over the option exercise price(s).
(2)   All of these options become immediately exercisable upon a change in
      control of the Company.

SEVERANCE AGREEMENTS

      In December 1999, the Company entered into severance agreements with John
L. Hendrix, Thomas R. Jenkins, Arlene R. Lissner and Steven W. Logan. If a
listed officer's employment with the Company is terminated for any reason within
a year after a change in control (as defined in the severance agreements), the
Company has agreed that all stock options, restricted stock awards and similar
awards granted to the terminated officer by the Company prior to the termination
date will vest immediately on the termination date. In addition, the Company has
agreed to make the following severance payments upon such a termination:

      (i)   with respect to Mr. Logan, a payment equal to four times the sum of
            (a) his highest annual base salary as of the termination date and
            the change in control date and (b) the average annual bonus paid to
            him by the Company or its affiliates in respect of the two most
            recent full fiscal years (or one year if not employed for two years)
            ending on or prior to the termination date;

      (ii)  with respect to each of Mr. Hendrix and Mr. Jenkins, a payment equal
            to two times the sum of (a) his highest annual base salary as of the
            termination date and the change in control date and (b) the average
            bonus paid to him by the Company or its affiliates in respect of the
            two most recent full fiscal years (or one year if not employed for
            two years) ending on or prior to the termination date; and

      (iii) with respect to Ms. Lissner, a payment equal to the sum of (a) her
            highest annual base salary as of the termination date and the change
            in control date and (b) the average bonus paid to her by the Company
            or its affiliates in respect of the two most recent full fiscal
            years (or one year if not employed for two years) ending on or prior
            to the termination date.

      The Company has agreed to pay the severance amounts in a lump sum in cash
(i) on the termination date if the Company terminates the officer and (ii)
within 30 days after the termination date if the officer's employment is
terminated by the officer or upon the officer's death or retirement.



                                       7
<PAGE>

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

      The members of the Compensation Committee of the Board are Messrs. Taylor
and Chase. None of these directors has at any time been an officer or employee
of the Company and none of these directors serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Company's Board or Compensation Committee.

ITEM 12. SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

      The following table sets forth information with respect to the shares of
Common Stock (the only outstanding class of voting securities of the Company)
owned of record and beneficially as of April 23, 2002, unless otherwise
specified, by (i) all persons known to possess voting or dispositive power over
more than 5% of the Common Stock, (ii) each director and named executive
officer, and (iii) all directors and executive officers of the Company as a
group:

<TABLE>
<CAPTION>
                                                                         AMOUNT AND NATURE OF          PERCENTAGE
                                                                        BENEFICIAL OWNERSHIP (1)        OF CLASS
                                                                       -------------------------      ------------
<S>                                                                           <C>                         <C>
 FMR Corp.(2)......................................................           1,793,220                   13.7%
     82 Devonshire Street
     Boston, Massachusetts 02109
 Royce & Associates, Inc. (3)......................................           1,092,200                    8.3%
     1414 Avenue of the Americas
     New York, New York 10019
 Wellington Management Company, LLP (4)............................             889,200                    6.8%
     75 State Street
     Boston, Massachusetts 02109
 Caxton Associates, L.L.C.(5)......................................             798,000                    6.1%
     Princeton Plaza, Building 2
     731 Alexander Road
     Princeton, New Jersey 08540
 Dimensional Fund Advisors Inc.(2).................................             725,800                    5.5%
     1299 Ocean Avenue, 11th Floor
     Santa Monica, California 90401
 Anthony R. Chase..................................................              20,091                     *
 James H. S. Cooper................................................              31,271                     *
 David M. Cornell (6)..............................................             382,893                   2.9%
 John L. Hendrix...................................................              48,862                     *
 Thomas R. Jenkins.................................................              39,521                     *
 Peter A. Leidel...................................................              81,842                     *
 Arlene R. Lissner.................................................              17,375                     *
 Steven W. Logan...................................................             336,457                   2.5%
 Patrick N. Perrin.................................................              65,988                     *
 Harry J. Phillips, Jr.............................................              57,500                     *
 Kevin T. Smyley...................................................              16,588                     *
 Tucker Taylor.....................................................              38,621                     *
 Marcus A. Watts...................................................              12,569                     *
 All directors and executive officers as a group (13 persons)......           1,149,578                   8.5%

</TABLE>


                                       8
<PAGE>

-----------------

 * Less than 1.0%.

(1)   Shares of Common Stock listed include shares subject to stock options
      exercisable within 60 days (15,250 for Mr. Chase, 15,250 for Mr. Cooper,
      141,334 for Mr. Cornell, 24,000 for Mr. Hendrix, 23,999 for Mr. Jenkins,
      12,833 for Mr. Leidel, 14,000 for Ms. Lissner, 204,874 for Mr. Logan,
      10,500 for Mr. Perrin, 7,500 for Mr. Phillips, 8,000 for Mr. Smyley,
      20,333 for Mr. Taylor, 7,500 for Mr. Watts, and 505,373 for all the above
      as a group).

(2)   Based on a filing made with the SEC reflecting ownership of Common Stock
      as of December 31, 2001. The filing indicates sole voting power with
      respect to 39,500 shares of Common Stock and sole dispositive power with
      respect to 1,793,220 shares of Common Stock.

(3)   Based on a filing made with the SEC reflecting ownership of Common Stock
      as of December 31, 2001. The filing indicates sole voting and dispositive
      power with respect to the referenced shares of Common Stock.

(4)   Based on a filing made with the SEC reflecting ownership of Common Stock
      as of December 31, 2001. The filing indicates shared voting power for
      550,100 shares of Common Stock and shared dispositive power for 889,200
      shares of Common Stock.

(5)   Based on a filing made with the SEC reflecting ownership of Common Stock
      as of January 31, 2002. The filing indicates shared voting power and
      shared dispositive power for 798,000 shares of Common Stock.

(6)   Mr. Cornell has sole voting power for 382,393 shares of Common Stock and
      sole dispositive power for 362,428 shares of Common Stock, of which
      141,334 shares are subject to stock options exercisable within 60 days.
      The total includes 19,965 shares over which Jane B. Cornell, the former
      wife of David M. Cornell, has sole dispositive power and, pursuant to a
      voting agreement, over which Mr. Cornell has sole voting power.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      At December 31, 2001, the Company had notes and accrued interest
receivable from Mr. Cornell, a Director, and Mr. Logan, Company President, in
the amounts of $746,386 and $364,165, respectively. These amounts were the
largest amount of indebtedness outstanding at any time during 2001. Interest on
the notes, which were incurred upon the exercise of stock options and in
connection with other personal matters, is charged annually at a rate of 6.63%
and the notes mature in June 2004.

      In September 1997, in connection with the acquisition of Abraxas, the
Company entered into a covenant not to compete agreement with Ms. Lissner
pursuant to which she agreed for a period of 20 years not to: (i) engage in any
business in competition with any business operation of the Company or its
affiliates; (ii) request that any customer or supplier of the Company or any of
its affiliates curtail or cancel its business with the Company or any such
affiliate; or (iii) induce or attempt to influence any employee of the Company
or any of its affiliates to terminate his or her employment with the Company or
any such affiliate, or hire or retain the services of any such employee. In
consideration of Ms. Lissner's agreements, the Company agreed to pay Ms. Lissner
10 annual installments of $60,000 each beginning on January 2, 1998. Such
payments may be accelerated upon the mutual agreement of Ms. Lissner and the
Company.

      Effective as of September 1, 1999, the Company entered into a consultant
agreement with David M. Cornell. As compensation for his services, the Company
agreed to pay Mr. Cornell an annual salary of at least $255,000 for each of the
first four years of the seven-year initial term of the consultant agreement and
an annual salary of at least $180,000 for each of the last three years of the
seven-year initial term. If the Company and Mr. Cornell agree to renew the
consultant agreement for an additional three-year renewal term, the Company has
agreed to pay Mr. Cornell an annual salary of at least $300,000 for each of the
three years of the renewal term.


                                       9
<PAGE>

      As additional compensation for his services, the Company has agreed to pay
Mr. Cornell an annual bonus, subject to certain limitations, equal to $75,000
during the first four years of the initial term and an annual bonus of $60,000
during the last three years of the initial term and during any renewal term. The
Company has also agreed to grant Mr. Cornell options to purchase an aggregate of
120,000 shares of the Common Stock in four equal annual installments beginning
on September 1, 2000. The options have an exercise price equal to the fair
market value of the Common Stock on the date of grant and vest at the time such
options are granted.

      Effective as of September 1, 1999, as part of the consultant agreement
that the Company entered into with Mr. Cornell, Mr. Cornell agreed for a period
of 10 years not to: (i) within the United States, transact or take part in any
competitive business (as defined in the consultant agreement) or render any
service to any person or entity engaged in a competitive business; (ii) share in
the earnings of, beneficially own any security issued by, or otherwise own any
interest in any person or entity engaged in a competitive business within the
United States; or (iii) hire or solicit the services of any person or entity
employed or engaged to perform services for the Company or any of its
affiliates, or cause any such person or entity to leave the employment or
services of the Company or any of its affiliates. In consideration of Mr.
Cornell's agreements, the Company agreed to pay Mr. Cornell $10,000 per month
during the seven-year initial term of the consultant agreement.

      Mr. Watts, a director of the Company, is a partner in the law firm of
Locke Liddell & Sapp LLP ("LLS"). The Company paid legal fees to LLS and LLS
performed legal services for the Company in 2001.




                                       10
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Registrant has duly caused this annual report to be signed
on its behalf by the undersigned, thereunto duly authorized.


                                          CORNELL COMPANIES, INC.


                                          By:  /s/ HARRY J. PHILLIPS, JR.
                                               -------------------------------
                                               Harry J. Phillips, Jr.
                                               Executive Chairman, Chairman
                                               of the Board and Director


Pursuant to the requirements of the Securities Act of 1934, this report on Form
10-K/A has been signed below by the following persons on behalf of Cornell
Companies, Inc. and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
         SIGNATURE                                       TITLE                                   DATE
        -----------                                     -------                                 ------
<S>                                     <C>                                                  <C>
/s/ HARRY J. PHILLIPS, JR.              Executive Chairman, Chairman of the Board and        May 13, 2002
--------------------------------        Director (Principal Executive Officer)
    Harry J. Phillips, Jr.


/s/  JOHN L. HENDRIX                    Senior Vice President and Chief Financial            May 13, 2002
--------------------------------        Officer (Principal Financial Officer and
     John L. Hendrix                    Principal Accounting Officer)

/s/  ANTHONY R. CHASE                   Director                                             May 13, 2002
--------------------------------
     Anthony R. Chase

/s/  JAMES H.S. COOPER                  Director                                             May 13, 2002
--------------------------------
     James H.S. Cooper

/s/  DAVID M. CORNELL                   Director                                             May 13, 2002
--------------------------------
     David M. Cornell

/s/  PETER A. LEIDEL                    Director                                             May 13, 2002
--------------------------------
     Peter A. Leidel

/s/  ARLENE R. LISSNER                  Director                                             May 13, 2002
--------------------------------
     Arlene R. Lissner

/s/  STEVEN W. LOGAN                    Director                                             May 13, 2002
--------------------------------
     Steven W. Logan

/s/  TUCKER TAYLOR                      Director                                             May 13, 2002
--------------------------------
     Tucker Taylor

/s/  MARCUS A. WATTS                    Director                                             May 13, 2002
--------------------------------
     Marcus A. Watts

</TABLE>

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