Business Segment and Geographic Information

9 Months Ended

Oct. 02, 2011

Business Segment and Geographic Information [Abstract]

BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

13. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

Operating and Reporting Segments

The Company conducts its business through four reportable business segments: the U.S. Detention & Corrections segment; the International Services segment; the GEO Care segment; and the Facility Construction & Design segment. The Company has identified these four reportable segments to reflect the current view that the Company operates four distinct business lines, each of which constitutes a material part of its overall business. The U.S. Detention & Corrections segment primarily encompasses U.S.-based privatized corrections and detention business. The International Services segment primarily consists of privatized corrections and detention operations in South Africa, Australia and the United Kingdom. The GEO Care segment, which conducts its services in the U.S., represents services provided for mental health, residential and non-residential treatment, educational and community based programs, pre-release and halfway house programs, compliance technologies, monitoring services, and evidence-based supervision and treatment programs for community-based parolees, probationers and pretrial defendants. The Facility Construction & Design segment consists of contracts with various state, local and federal agencies for the design and construction of facilities for which the Company has management contracts. As a result of the acquisition of Cornell, management’s review of certain segment financial data was revised with regards to the Bronx Community Re-entry Center and the Brooklyn Community Re-entry Center. These facilities now report within the GEO Care segment and are no longer included with U.S. Detention & Corrections. Disclosures for business segments reflect these reclassifications for all periods presented and are as follows (in thousands):

	Thirteen Weeks Ended						Thirty-nine Weeks Ended
	October 2, 2011			October 3, 2010			October 2, 2011			October 3, 2010
Revenues:
U.S. Detention & Corrections	$	243,952		$	217,808		$	727,256		$	599,598
GEO Care		109,729			60,934			317,475			135,409
International Services		53,166			47,553			161,580			138,142
Facility Construction & Design		—			1,638			119			22,421
Total revenues	$	406,847		$	327,933		$	1,206,430		$	895,570
Depreciation and amortization:
U.S. Detention & Corrections	$	14,017		$	11,048		$	40,272		$	27,131
GEO Care		7,429			1,905			19,956			3,679
International Services		528			431			1,604			1,286
Facility Construction & Design		—			—			—			—
Total depreciation and amortization	$	21,974		$	13,384		$	61,832		$	32,096
Operating income:
U.S. Detention & Corrections	$	54,206		$	52,074		$	164,353		$	142,545
GEO Care		18,326			8,272			53,618			17,085
International Services		4,663			2,599			10,939			7,848
Facility Construction & Design		(43	)		504			37			1,648
Operating income from segments		77,152			63,449			228,947			169,126
General and administrative expenses		(25,922	)		(33,925	)		(86,420	)		(72,028	)
Total operating income	$	51,230		$	29,524		$	142,527		$	97,098
							October 2, 2011			January 2, 2011
Segment assets:
U.S. Detention & Corrections							$	1,947,785		$	1,849,423
GEO Care								759,078			299,563
International Services								99,399			103,004
Facility Construction & Design								157			26
Total segment assets							$	2,806,419		$	2,252,016

Pre-Tax Income Reconciliation of Segments

The following is a reconciliation of the Company’s total operating income from its reportable segments to the Company’s income before income taxes, equity in earnings of affiliates, in each case, during the thirteen and thirty-nine weeks ended October 2, 2011 and October 3, 2010, respectively (in thousands):

	Thirteen Weeks Ended						Thirty-nine Weeks Ended
	October 2, 2011			October 3, 2010			October 2, 2011			October 3, 2010
Total operating income from segments	$	77,152		$	63,449		$	228,947		$	169,126
Unallocated amounts:
General and Administrative Expenses		(25,922	)		(33,925	)		(86,420	)		(72,028	)
Net interest expense		(17,560	)		(10,183	)		(50,735	)		(23,730	)
Loss on extinguishment of debt		—			(7,933	)		—			(7,933	)
Income before income taxes and equity in earnings of affiliates	$	33,670		$	11,408		$	91,792		$	65,435

Asset Reconciliation of Segments

The following is a reconciliation of the Company’s reportable segment assets to the Company’s total assets as of October 2, 2011 and January 2, 2011, respectively (in thousands).

	October 2, 2011		January 2, 2011
Reportable segment assets	$	2,806,419	$	2,252,016
Cash		43,956		39,664
Deferred income tax		45,908		30,051
Restricted cash and investments		94,307		90,642
Total assets	$	2,990,590	$	2,412,373

Sources of Revenue

The Company derives most of its Detention & Corrections revenue from the management of privatized correctional and detention facilities and also receives revenue from related transportation services. GEO Care derives revenue from the management of residential treatment facilities and community based re-entry facilities and also from its electronic monitoring and evidence-based supervision and treatment services. Facility Construction & Design generates its revenue from the construction and expansion of new and existing correctional, detention and residential treatment facilities. All of the Company’s revenue is generated from external customers (in thousands).

	Thirteen Weeks Ended				Thirty-nine Weeks Ended
	October 2, 2011		October 3, 2010		October 2, 2011		October 3, 2010
Revenues:
Detention & Corrections	$	297,118	$	265,361	$	888,836	$	737,740
GEO Care		109,729		60,934		317,475		135,409
Facility Construction & Design		—		1,638		119		22,421
Total revenues	$	406,847	$	327,933	$	1,206,430	$	895,570

Equity in Earnings of Affiliates

Equity in earnings of affiliates includes the Company’s 50% owned joint ventures in SACS, located in South Africa, and GEOAmey, located in the United Kingdom. These entities are accounted for under the equity method of accounting. The Company’s investments in these entities are presented as a component of other non-current assets in the accompanying consolidated balance sheets.

A summary of financial data for SACS is as follows (in thousands):

	Thirteen Weeks Ended				Thirty-nine Weeks Ended
	October 2, 2011		October 3, 2010		October 2, 2011		October 3, 2010
Statement of Operations Data
Revenues	$	12,580	$	11,692	$	37,581	$	33,447
Operating income		4,994		4,571		15,123		13,171
Net income		2,688		2,298		6,848		5,735
					October 2, 2011		January 2, 2011
Balance Sheet Data
Current assets					$	29,085	$	40,624
Non-current assets						39,517		50,613
Current liabilities						3,188		3,552
Non-current liabilities						46,540		60,129
Shareholders’ equity						18,874		27,556

During the thirty-nine weeks ended October 2, 2011, the Company’s consolidated South African subsidiary, South African Custodial Holdings Pty. Ltd. (“SACH”) received a dividend of $5.4 million from SACS which reduced the Company’s investment in its joint venture. As of October 2, 2011 and January 2, 2011, the Company’s investment in SACS was $9.4 million and $13.8 million, respectively.

In February 2011, GEOAmey was formed by GEO UK and its 50% joint venture partner for the purpose of providing prisoner escort and custody services in the United Kingdom and Wales under contracts with the UK Ministry of Justice. GEOAmey commenced operations on August 29, 2011. The Company has recorded $1.1 million and $1.1 million in losses, net of tax impact, for GEOAmey’s operations during the thirteen and thirty-nine weeks ended October 2, 2011, respectively, which is included in Equity in earnings of affiliates in the accompanying consolidated statement of income and comprehensive income. As of October 2, 2011, the Company’s investment in GEOAmey was equal to its share of reported losses of $1.1 million.