Business Combinations

12 Months Ended

Dec. 31, 2012

Business Combinations [Abstract]

Business Combinations

Business Combinations

Acquisition of BII Holding

On February 10, 2011, the Company completed its acquisition of B.I. Incorporated (“BI”), pursuant to an Agreement and Plan of Merger, dated as of December 21, 2010 (the “Merger Agreement”), among GEO, BII Holding (“BII Holding”), a Delaware corporation, which owns BI, GEO Acquisition IV, Inc., a Delaware corporation and wholly-owned subsidiary of GEO (“Merger Sub”), BII Investors IF LP, in its capacity as the stockholders’ representative, and AEA Investors 2006 Fund L.P (the “BI Acquisition”). Under the terms of the Merger Agreement, Merger Sub merged with and into BII Holding, with BII Holding emerging as the surviving corporation of the merger. As a result of the BI Acquisition, the Company paid merger consideration of $409.6 million in cash, net of cash acquired of $9.7 million, excluding transaction related expenses and any potential adjustments, for 100% of BI’s outstanding common stock. In connection with the BI Acquisition and included in general and administrative expenses, the Company incurred $4.3 million in nonrecurring acquisition related costs for the fiscal year ended January 1, 2012. The Company does not believe that any of the goodwill recorded as a result of the BI Acquisition will be deductible for federal income tax purposes.

The Company believes its acquisition of BI provides it with the ability to offer turn-key solutions to its customers in managing the full lifecycle of an offender from arraignment to reintegration into the community, which the Company refers to as the corrections lifecycle. Under the acquisition method of accounting, the purchase price for BI was allocated to BI’s net tangible and intangible assets based on their estimated fair values as of February 10, 2011, the date of closing and the date that the Company obtained control over BI. In order to determine the fair values of certain tangible and intangible assets acquired, the Company engaged a third party independent valuation specialist. For all other assets acquired and liabilities assumed, the recorded fair value was determined by the Company’s management and represents an estimate of the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

During the period ended January 1, 2012, the Company retroactively adjusted provisional amounts with respect to the BI Acquisition that were recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. The purchase price allocation as of February 10, 2011 and as of January 1, 2012 and adjustments made to the estimated acquisition date fair values during the measurement period are as follows (in thousands):

	Acquisition  Date Estimated Fair Value as of February 10, 2011			Measurement  Period Adjustments			Final Acquisition Date Fair Value as of January 1, 2012
Accounts receivable	$	18,321		$	1,298		$	19,619
Prepaid expenses and other current assets	3,896			—			3,896
Deferred income tax assets	15,857			(7,923		)	7,934
Property and equipment	22,359			901			23,260
Intangible assets	126,900			4,900			131,800
Other non-current assets	8,884			—			8,884
Total assets acquired	$	196,217		$	(824	)	$	195,393
Accounts payable	(3,977		)	—			(3,977		)
Accrued expenses	(8,461		)	—			(8,461		)
Deferred income tax liabilities	(43,824		)	7,037			(36,787		)
Other non-current liabilities	(11,431		)	5,411			(6,020		)
Long-term debt	(2,014		)	—			(2,014		)
Total liabilities assumed	(69,707		)	12,448			(57,259		)
Total identifiable net assets	126,510			11,624			138,134
Goodwill	283,097			(11,624		)	271,473
Total cash consideration	$	409,607		$	—		$	409,607

Acquisition of Cornell Companies, Inc.

On August 12, 2010, the Company completed its acquisition of Cornell pursuant to a definitive merger agreement entered into on April 18, 2010, and amended on July 22, 2010, among the Company, GEO Acquisition III, Inc., and Cornell (the “Cornell Acquisition”). Under the terms of the merger agreement, the Company acquired 100% of the outstanding common stock of Cornell for aggregate consideration of $618.3 million. In connection with the acquisition, the Company acquired assets of $873.7 million (including goodwill recorded amounting to $196.4 million), liabilities of $234.7 million, and noncontrolling interest of $20.7 million. Of the goodwill recorded in relation to this acquisition, only $1.5 million of goodwill which resulted from a previous acquisition by Cornell, is deductible for federal income tax purposes; the remainder of goodwill is not deductible.