CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)



	For the Three Months Ended June 30, 2013
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	118,859		$	314,120		$	55,585		$	(106,911	)	$	381,653
Operating expenses	102,108			239,194			44,855			(106,911		)	279,246
Depreciation and amortization	5,875			16,556			1,226			—			23,657
General and administrative expenses	8,156			15,420			3,787			—			27,363
Operating income (loss)	2,720			42,950			5,717			—			51,387
Interest income	4,029			359			1,123			(4,346		)	1,165
Interest expense	(10,373		)	(12,708		)	(2,368		)	4,346			(21,103		)
Loss on extinguishment of debt	(2,600		)	(2,927		)	—			—			(5,527		)
Income (loss) before income taxes and equity in earnings of affiliates	(6,224		)	27,674			4,472			—			25,922
Income tax (benefit) provision	(8,339		)	226			845			—			(7,268		)
Equity in earnings of affiliates, net of income tax provision	—			—			1,029			—			1,029
Income (loss) before equity in income of consolidated subsidiaries	2,115			27,448			4,656			—			34,219
Income from consolidated subsidiaries, net of income tax provision	32,104			—			—			(32,104		)	—
Income from continuing operations	34,219			27,448			4,656			(32,104		)	34,219
Net income (loss) from discontinued operations	—			—			—			—			—
Net income	34,219			27,448			4,656			(32,104		)	34,219
Net income attributable to noncontrolling interests	—			—			(12		)	—			(12		)
Net income attributable to The GEO Group, Inc.	$	34,219		$	27,448		$	4,644		$	(32,104	)	$	34,207

Net income	$	34,219		$	27,448		$	4,656		$	(32,104	)	$	34,219
Other comprehensive income (loss), net of tax	—			40			(5,300		)	—			(5,260		)
Total comprehensive income	$	34,219		$	27,488		$	(644	)	$	(32,104	)	$	28,959
Comprehensive loss attributable to noncontrolling interests	—			—			19			—			19
Comprehensive income attributable to The GEO Group, Inc.	$	34,219		$	27,488		$	(625	)	$	(32,104	)	$	28,978

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)



	For the Three Months Ended July 1, 2012
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	153,753		$	177,301		$	57,780		$	(17,661	)	$	371,173
Operating expenses	130,454			110,339			46,009			(17,661		)	269,141
Depreciation and amortization	7,389			13,433			2,140			—			22,962
General and administrative expenses	9,384			12,783			3,962			—			26,129
Operating income	6,526			40,746			5,669			—			52,941
Interest income	7,847			394			1,661			(8,141		)	1,761
Interest expense	(16,837		)	(7,926		)	(3,996		)	8,141			(20,618		)
Income (loss) before income taxes and equity in earnings of affiliates	(2,464		)	33,214			3,334			—			34,084
Income tax (benefit) provision	(667		)	12,860			1,467			—			13,660
Equity in earnings of affiliates, net of income tax provision	—			—			430			—			430
Income (loss) from continuing operations before equity in income of consolidated subsidiaries	(1,797		)	20,354			2,297			—			20,854
Income from consolidated subsidiaries, net of income tax provision	22,651			—			—			(22,651		)	—
Income from continuing operations	20,854			20,354			2,297			(22,651		)	20,854
Net income from discontinued operations	1,622			2,046			233			(2,279		)	1,622
Net income	22,476			22,400			2,530			(24,930		)	22,476
Net income attributable to noncontrolling interests	—			—			25			—			25
Net income attributable to The GEO Group, Inc.	$	22,476		$	22,400		$	2,555		$	(24,930	)	$	22,501

Net income	$	22,476		$	22,400		$	2,530		$	(24,930	)	$	22,476
Other comprehensive income (loss), net of tax	29			—			(2,498		)	—			(2,469		)
Total comprehensive income	$	22,505		$	22,400		$	32		$	(24,930	)	$	20,007
Comprehensive income attributable to noncontrolling interests	—			—			58			—			58
Comprehensive income attributable to The GEO Group, Inc.	$	22,505		$	22,400		$	90		$	(24,930	)	$	20,065

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)



	For the Six Months Ended June 30, 2013
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	232,348		$	626,649		$	112,970		$	(213,283	)	$	758,684
Operating expenses	201,518			479,671			92,137			(213,283		)	560,043
Depreciation and amortization	11,697			32,438			2,457			—			46,592
General and administrative expenses	17,354			33,612			8,437			—			59,403
Operating income (loss)	1,779			80,928			9,939			—			92,646
Interest income	7,989			909			2,219			(8,768		)	2,349
Interest expense	(20,292		)	(24,139		)	(4,781		)	8,768			(40,444		)
Loss on extinguishment of debt	(2,600		)	(2,927		)	—			—			(5,527		)
Income (loss) before income taxes and equity in earnings of affiliates	(13,124		)	54,771			7,377			—			49,024
Income tax (benefit) provision	(9,006		)	632			1,987			—			(6,387		)
Equity in earnings of affiliates, net of income tax provision	—			—			2,246			—			2,246
Income (loss) from continuing operations before equity in income of consolidated subsidiaries	(4,118		)	54,139			7,636			—			57,657
Income from consolidated subsidiaries, net of income tax provision	61,775			—			—			(61,775		)	—
Income from continuing operations	57,657			54,139			7,636			(61,775		)	57,657
Net income loss from discontinued operations	—			—			—			—			—
Net income	57,657			54,139			7,636			(61,775		)	57,657
Net income attributable to noncontrolling interests	—			—			(30		)	—			(30		)
Net income attributable to The GEO Group, Inc.	$	57,657		$	54,139		$	7,606		$	(61,775	)	$	57,627

Net income	$	57,657		$	54,139		$	7,636		$	(61,775	)	$	57,657
Other comprehensive income (loss), net of tax	—			80			(6,520		)	—			(6,440		)
Total comprehensive income	57,657			54,219			1,116			(61,775		)	51,217
Comprehensive loss attributable to noncontrolling interests	—			—			42			—			42
Comprehensive income attributable to The GEO Group, Inc.	$	57,657		$	54,219		$	1,158		$	(61,775	)	$	51,259

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)



	For the Six Months Ended July 1, 2012
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	294,370		$	361,488		$	115,772		$	(40,415	)	$	731,215
Operating expenses	261,460			228,005			90,811			(40,415		)	539,861
Depreciation and amortization	14,244			26,685			4,272			—			45,201
General and administrative expenses	18,780			26,077			7,858			—			52,715
Operating income (loss)	(114		)	80,721			12,831			—			93,438
Interest income	15,655			886			3,262			(16,235		)	3,568
Interest expense	(33,754		)	(15,837		)	(8,068		)	16,235			(41,424		)
Income (loss) before income taxes and equity in earnings of affiliates	(18,213		)	65,770			8,025			—			55,582
Income tax (benefit) provision	(6,323		)	25,172			3,301			—			22,150
Equity in earnings of affiliates, net of income tax provision	—			—			1,178			—			1,178
Income (loss) from continuing operations before equity in income of consolidated subsidiaries	(11,890		)	40,598			5,902			—			34,610
Income from consolidated subsidiaries, net of income tax provision	46,500			—			—			(46,500		)	—
Income from continuing operations	34,610			40,598			5,902			(46,500		)	34,610
Net income from discontinued operations	2,925			3,118			553			(3,671		)	2,925
Net income	37,535			43,716			6,455			(50,171		)	37,535
Net income attributable to noncontrolling interests	—			—			(9		)	—			(9		)
Net income attributable to The GEO Group, Inc.	$	37,535		$	43,716		$	6,446		$	(50,171	)	$	37,526

Net income	$	37,535		$	43,716		$	6,455		$	(50,171	)	$	37,535
Other comprehensive income (loss), net of tax	59			—			(541		)	—			(482		)
Total comprehensive income	$	37,594		$	43,716		$	5,914		$	(50,171	)	$	37,053
Comprehensive income attributable to noncontrolling interests	—			—			(4		)	—			(4		)
Comprehensive income attributable to The GEO Group, Inc.	$	37,594		$	43,716		$	5,910		$	(50,171	)	$	37,049

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

(unaudited)



	As of June 30, 2013
	The GEO Group, Inc.		Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated

ASSETS
Cash and cash equivalents	$	5,736	$	1,084	$	31,691		$	—		$	38,511
Restricted cash and investments	—		—		15,646			—			15,646
Accounts receivable, less allowance for doubtful accounts	82,406		137,948		18,647			—			239,001
Deferred income tax assets, net	—		14,604		3,686			—			18,290
Prepaid expenses and other current assets	1,168		13,253		11,875			(1,154		)	25,142
Total current assets	89,310		166,889		81,545			(1,154		)	336,590
Restricted Cash and Investments	134		9,410		28,204			—			37,748
Property and Equipment, Net	654,956		973,246		111,784			—			1,739,986
Assets Held for Sale	—		1,200		—			—			1,200
Direct Finance Lease Receivable	—		—		20,445			—			20,445
Intercompany Receivable	937,073		128,058		(1,300		)	(1,063,831		)	—
Deferred Income Tax Assets, Net	16,230		—		2,532			(16,230		)	2,532
Goodwill	34		489,502		680			—			490,216
Intangible Assets, Net	—		169,375		1,368			—			170,743
Investment in Subsidiaries	954,156		442,679		—			(1,396,835		)	—
Other Non-Current Assets	26,815		107,330		34,018			(79,421		)	88,742
Total Assets	$	2,678,708	$	2,487,689	$	279,276		$	(2,557,471	)	$	2,888,202

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	5,290	$	38,898	$	3,203		$	—		$	47,391
Accrued payroll and related taxes	1,827		15,868		16,619			—			34,314
Accrued expenses	61,014		30,678		18,641			(1,154		)	109,179
Current portion of capital lease obligations, long-term debt and non-recourse debt	3,000		1,212		18,129			—			22,341
Total current liabilities	71,131		86,656		56,592			(1,154		)	213,225
Deferred Income Tax Liabilities	—		31,933		—			(16,230		)	15,703
Intercompany Payable	113,567		930,800		19,457			(1,063,824		)	—
Other Non-Current Liabilities	14,101		136,207		3,257			(79,428		)	74,137
Capital Lease Obligations	—		11,426		—			—			11,426
Long-Term Debt	1,444,475		—		—			—			1,444,475
Non-Recourse Debt	—		—		93,352			—			93,352
Commitments & Contingencies
Shareholders' Equity:
The GEO Group, Inc. Shareholders' Equity	1,035,434		1,290,667		106,168			(1,396,835		)	1,035,434
Noncontrolling Interests	—		—		450			—			450
Total Shareholders’ Equity	1,035,434		1,290,667		106,618			(1,396,835		)	1,035,884
Total Liabilities and Shareholders' Equity	$	2,678,708	$	2,487,689	$	279,276		$	(2,557,471	)	$	2,888,202

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)



	As of December 31, 2012
	The GEO Group, Inc.		Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries		Eliminations			Consolidated

ASSETS
Cash and cash equivalents	$	4,764	$	1,917	$	25,074	$	—		$	31,755
Restricted cash and investments	—		—		15,654		—			15,654
Accounts receivable, less allowance for doubtful accounts	124,670		102,704		19,261		—			246,635
Deferred income tax assets, net	13,106		1,498		3,686		—			18,290
Prepaid expenses and other current assets	8,657		5,890		11,456		(1,154		)	24,849
Total current assets	151,197		112,009		75,131		(1,154		)	337,183
Restricted Cash and Investments	7,953		—		24,803		—			32,756
Property and Equipment, Net	633,458		939,995		113,706		—			1,687,159
Assets Held for Sale	—		3,243		—		—			3,243
Direct Finance Lease Receivable	—		—		26,757		—			26,757
Intercompany Receivable	591,273		14,305		—		(605,578		)	—
Deferred Income Tax Assets, Net	16,230		—		2,532		(16,230		)	2,532
Goodwill	34		489,502		772		—			490,308
Intangible Assets, Net	—		176,666		1,652		—			178,318
Investment in Subsidiaries	1,151,998		41,356		—		(1,193,354		)	—
Other Non-Current Assets	38,574		84,931		36,584		(79,151		)	80,938
Total Assets	$	2,590,717	$	1,862,007	$	281,937	$	(1,895,467	)	$	2,839,194

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	29,889	$	17,407	$	2,814	$	—		$	50,110
Accrued payroll and related taxes	4,774		16,264		18,284		—			39,322
Accrued expenses	94,350		5,515		17,846		(1,154		)	116,557
Current portion of capital lease obligations, long-term debt and non-recourse debt	33,925		1,311		18,646		—			53,882
Total current liabilities	162,938		40,497		57,590		(1,154		)	259,871
Deferred Income Tax Liabilities	—		31,933		—		(16,230		)	15,703
Intercompany Payable	—		586,428		19,150		(605,578		)	—
Other Non-Current Liabilities	63,657		96,822		697		(79,151		)	82,025
Capital Lease Obligations	—		11,926		—		—			11,926
Long-Term Debt	1,317,310		219		—		—			1,317,529
Non-Recourse Debt	—		—		104,836		—			104,836
Commitments & Contingencies
Shareholders' Equity:
The GEO Group, Inc. Shareholders' Equity	1,046,812		1,094,182		99,172		(1,193,354		)	1,046,812
Noncontrolling Interests	—		—		492		—			492
Total Shareholders’ Equity	1,046,812		1,094,182		99,664		(1,193,354		)	1,047,304
Total Liabilities and Shareholders' Equity	$	2,590,717	$	1,862,007	$	281,937	$	(1,895,467	)	$	2,839,194

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)



	For the Six Months Ended June 30, 2013
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Consolidated
Cash Flow from Operating Activities:
Net cash provided by operating activities	$	58,343		$	18,932		$	24,039		$	101,314
Cash Flow from Investing Activities:
Proceeds from sale of property and equipment	—			51			—			51
Proceeds from sale of assets held for sale	—			1,968			—			1,968
Net working capital adjustment from RTS divestiture	(996		)	—			—			(996		)
Change in restricted cash and investments	(134		)	(1,457		)	(4,319		)	(5,910		)
Capital expenditures	(69,567		)	(19,666		)	(688		)	(89,921		)
Net cash used in investing activities	(70,697		)	(19,104		)	(5,007		)	(94,808		)
Cash Flow from Financing Activities:
Proceeds from long-term debt	785,000			—			—			785,000
Income tax benefit of equity compensation	1,308			—			—			1,308
Debt issuance costs	(17,017		)	—			—			(17,017		)
Payments on long-term debt	(688,675		)	(661		)	(8,412		)	(697,748		)
Proceeds from the exercise of stock options	4,082			—			—			4,082
Cash dividends paid	(71,527		)	—			—			(71,527		)
Proceeds from reissuance of treasury stock in connection with ESPP	155			—			—			155
Net cash provided by (used in) financing activities	13,326			(661		)	(8,412		)	4,253
Effect of Exchange Rate Changes on Cash and Cash Equivalents	—			—			(4,003		)	(4,003		)
Net Increase (Decrease) in Cash and Cash Equivalents	972			(833		)	6,617			6,756
Cash and Cash Equivalents, beginning of period	4,764			1,917			25,074			31,755
Cash and Cash Equivalents, end of period	$	5,736		$	1,084		$	31,691		$	38,511

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)



	For the Six Months Ended July 1, 2012
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Consolidated
Cash Flow from Operating Activities:
Cash provided by operating activities - continuing operations	$	98,442		$	11,721		$	6,769		$	116,932
Cash provided by operating activities - discontinued operations	752			6,827			2,455			10,034
Net cash provided by operating activities	99,194			18,548			9,224			126,966
Cash Flow from Investing Activities:
Proceeds from sale of assets held for sale	—			297			—			297
Proceeds from sale of property and equipment	—			162			69			231
Change in restricted cash and investments	(484		)	(1,350		)	2,387			553
Capital expenditures	(53,933		)	(13,363		)	(2,240		)	(69,536		)
Cash (used in) provided by investing activities - continuing operations	(54,417		)	(14,254		)	216			(68,455		)
Cash used in investing activities - discontinued operations	(311		)	(2,226		)	—			(2,537		)
Net cash (used in) provided by investing activities	(54,728		)	(16,480		)	216			(70,992		)
Cash Flow from Financing Activities:
Proceeds from long-term debt	145,000			—			—			145,000
Payments on long-term debt	(160,556		)	(693		)	(8,033		)	(169,282		)
Income tax provision of equity compensation	(270		)	—			—			(270		)
Debt issuance costs	(6		)	—			(38		)	(44		)
Distribution to noncontrolling interests	—			—			(5,758		)	(5,758		)
Proceeds from the exercise of stock options	396			—			—			396
Payments for retirement of common stock	(1,035		)	—			—			(1,035		)
Net cash used in financing activities	(16,471		)	(693		)	(13,829		)	(30,993		)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	—			—			(43		)	(43		)
Net Increase (Decrease) in Cash and Cash Equivalents	27,995			1,375			(4,432		)	24,938
Cash and Cash Equivalents, beginning of period	15,086			3,092			25,200			43,378
Cash and Cash Equivalents, end of period	$	43,081		$	4,467		$	20,768		$	68,316