Subsequent Events

6 Months Ended

Jul. 03, 2011

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

16. SUBSEQUENT EVENTS

In connection with the creation of SACS, the Company entered into certain guarantees related to the financing, construction and operation of the prison. The Company guaranteed certain obligations of SACS under its debt agreements up to a maximum amount of 60.0 million South African Rand, or $9.0 million, to SACS’ senior lenders through the issuance of letters of credit. On July 27, 2011, the Company was notified by SACS’ lenders that, as of August 3, 2011, these guarantees would be reduced to 34.8 million South African Rand, or $5.2 million.

On July 9, 2011, the Company adopted The GEO Group Inc., 2011 Employee Stock Purchase Plan (the “Plan”). The Plan was approved by the Company’s Compensation Committee and its Board of Directors on May 4, 2011. The purpose of the Plan, which is qualified under Section 423 of the Internal Revenue Service Code of 1986, as amended, is to encourage stock ownership through payroll deductions by the employees and designated subsidiaries of GEO in order to increase their identification with the Company’s goals and secure a proprietary interest in the Company’s success. These deductions will be used to purchase shares of the Company’s Common Stock at a 5% discount from the then current market price. Upon approval of the Plan by the Company’s shareholders, the Company will offer up to 500,000 shares of its common stock for sale to eligible employees. The Plan is subject to approval by the Company’s shareholders on or before June 29, 2012 and, as such, no shares will be issued until such time as the Plan is approved.

On July 11, 2011, the Company announced that the State of California decided to implement its Criminal Justice Realignment Plan, which is expected to delegate tens of thousands of low level state offenders to local county jurisdictions in California effective October 1, 2011. As a result of the implementation of the Realignment Plan, the State of California has decided to discontinue contracts with Community Correctional Facilities which currently house low level state offenders across the state. This decision will impact three of the Company’s facilities: the company-leased 305-bed Leo Chesney Community Correctional Facility, the company-owned 643-bed Desert View Modified Community Correctional Facility, and the company-owned 625-bed Central Valley Modified Community Correctional Facility. The Company has received written notice from the California Department of Corrections and Rehabilitation regarding the cancellation of GEO’s agreements for the housing of low level state offenders at these three facilities effective as of September 30, 2011, November 30, 2011 and November 30, 2011, respectively. The Company is in the process of actively marketing these facilities to local county agencies in California. Given that most local county jurisdictions in California are presently operating at or above their correctional capacity, the Company is hopeful that it will be able to market these facilities to local county agencies for the housing of low level offenders who will be the responsibility of local county jurisdictions. Included in revenue for the twenty-six weeks ended July 3, 2011 is $16.3 million of revenue related to these terminated contracts.

On July 14, 2011, the Company announced that its Board of Directors approved a stock repurchase program of up to $100.0 million of the Company’s common stock effective through December 31, 2012. The stock repurchase program will be funded primarily with cash on hand, free cash flow, and borrowings under the Company’s revolving credit facility. The Company believes it has the ability to fund the stock repurchase program, its working capital, its debt service requirements, and its maintenance and growth capital expenditure requirements, while maintaining sufficient liquidity for other corporate purposes. The stock repurchase is intended to be implemented through purchases made from time to time in the open market or in privately negotiated transactions, in accordance with applicable Securities and Exchange requirements. The program may also include repurchases from time to time from executive officers or directors of vested restricted stock and/or vested stock options. The stock repurchase program does not obligate the Company to purchase any specific amount of its common stock and may be suspended or extended at any time at the Company’s discretion. As of August 4, 2011, the Company had 65.1 million shares of common stock outstanding.

On July 25, 2011, the Company filed an exchange offer prospectus on Form 424B3 with the Securities and Exchange Commission relating to an Offer to Exchange up to $300,000,000 aggregate principal amount of its 6.625% Senior Notes Due 2021 (the “New Notes”) and the guarantees thereof which were registered under the Securities Act of 1933, as amended, for a like amount of its outstanding 6.625% Senior Notes Due 2021 (the “Old Notes”) and the guarantees thereof. The terms of the New Notes are identical to the Old Notes, except that the transfer restrictions, registration rights and additional interest provisions relating to the Old Notes will not apply to the New Notes. The exchange offer will expire at 5:00 p.m., New York City time, on August 22, 2011, unless extended. Tenders of Old Notes may be withdrawn at any time before the expiration of the exchange offer. The Company will not receive any proceeds from the exchange offer.