Business Segments and Geographic Information

Operating and Reporting Segments

The Company conducts its business through four reportable business segments: the U.S. Corrections & Detention segment; the International Services segment; the GEO Care segment; and 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. Corrections & Detention 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 Company’s community-based services, youth services and BI are operating segments aggregated under the GEO Care reporting segment. The GEO Care segment, which conducts its services in the United States, represents services provided to adult offenders and juveniles for non-residential treatment, educational and community based programs, pre-release and half-way house programs, compliance technologies, monitoring services and evidence-based supervision and treatment programs for community-based parolees, probationers, and pretrial defendants. Effective January 1, 2015, the Company regained ownership of its GEO Care trade name and as a result renamed its GEO Community Services Segment "GEO Care" in connection with the termination of the license agreement related to the sale of RTS. Refer to Note 2-Discontinued Operations. The Facility Construction & Design segment primarily contracts with various state, local and federal agencies for the design and construction of facilities for which the Company has management contracts. Generally, the assets and revenues from the Facility Construction & Design segment are offset by a similar amount of liabilities and expenses. There was no activity in the Facility Construction & Design segment during 2013 or 2012. Segment disclosures below (in thousands) reflect the results of continuing operations. All transactions between segments are eliminated.



Fiscal Year	2014			2013			2012
Revenues:
U.S. Corrections & Detention	$	1,108,397		$	1,011,818		$	974,780
GEO Care	329,253			302,094			291,891
International Services	197,992			208,162			212,391
Facility Construction and Design [1]	55,978			—			—
Total revenues	$	1,691,620		$	1,522,074		$	1,479,062
Depreciation and amortization:
U.S. Corrections & Detention	$	63,690		$	62,112		$	62,578
GEO Care	29,766			29,989			26,738
International Services	2,715			2,563			2,369
Total depreciation and amortization	$	96,171		$	94,664		$	91,685
Operating Income:
U.S. Corrections & Detention	$	263,027		$	217,918		$	222,976
GEO Care	80,152			71,279			65,401
International Services [2]	6,130			13,348			9,768
Facility Construction & Design [1]	440			—			—
Operating income from segments	$	349,749		$	302,545		$	298,145
General and Administrative Expenses	(115,018		)	(117,061		)	(113,792		)
Total operating income	$	234,731		$	185,484		$	184,353

[1] The Company began the design and construction of a new prison located in Ravenhall, a locality near Melbourne, Australia in 2014. There was no depreciation or amortization associated with this segment in 2014. Refer to Note 7-Contract Receivable.

[2] Operating income in the International Services segment decreased primarily due to bid costs incurred in the third quarter of 2014 at GEO's subsidiary in the United Kingdom as well as the termination of the Harmondsworth facility contract in early 2014 at GEO's subsidiary in the United Kingdom.

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 and discontinued operations, in each case, during the years ended December 31, 2014, 2013 and 2012, respectively.



Fiscal Year Ended	2014			2013			2012
	(In thousands)
Operating income from segments	$	349,749		$	302,545		$	298,145
Unallocated amounts:
General and administrative expense	(115,018		)	(117,061		)	(113,792		)
Net interest expense	(82,621		)	(79,680		)	(75,473		)
Loss on early extinguishment of debt	—			(20,657		)	(8,462		)
Income before income taxes, equity in earnings of affiliates and discontinued operations	$	152,110		$	85,147		$	100,418



	2014		2013
	(In thousands)
Segment assets:
U.S. Corrections & Detention	$	2,075,216	$	2,048,882
GEO Care	675,166		654,352
International Services	71,788		78,381
Facility Construction & Design	83,024		—
Total segment assets	$	2,905,194	$	2,781,615

Asset Reconciliation

The following is a reconciliation of the Company’s reportable segment assets to the Company’s total assets as of December 31, 2014 and 2013, respectively.



	2014		2013
	(In thousands)
Reportable segment assets	$	2,905,194	$	2,781,615
Cash	41,337		52,125
Deferred income tax assets	31,758		25,757
Restricted cash and investments, current and non-current	23,919		29,867
Total assets	$	3,002,208	$	2,889,364

Geographic Information

During each of the fiscal years ended December 31, 2014, December 31, 2013 and December 31, 2012, the Company’s international operations were conducted through (i) the Company’s wholly owned Australian subsidiary, The GEO Group Australia Pty. Ltd., through which the Company has management contracts for four correctional facilities, (ii) the Company's wholly owned subsidiaries, GEO Ravenhall Finance Holdings Pty. Ltd. and GEO Ravenhall Holdings Pty. Ltd. which, together, have a design and construction contract for a new prison in Ravenhall, Australia, (iii) the Company’s consolidated joint venture in South Africa, SACM, through which the Company manages one correctional facility, and (iv) the Company’s wholly-owned subsidiary in the United Kingdom, The GEO Group UK Ltd., through which the Company manages the Dungavel House Immigration Removal Centre.



Fiscal Year	2014		2013		2012
	(In thousands)
Revenues:
U.S. operations	$	1,438,144	$	1,314,425	$	1,267,335
Australia operations	210,577		158,028		159,444
South African operations	16,831		17,992		20,029
United Kingdom operations	26,068		31,629		32,254
Total revenues	$	1,691,620	$	1,522,074	$	1,479,062
Long-lived assets:
U.S. operations	$	1,765,391	$	1,721,761	$	1,680,038
Australia operations	5,923		4,828		5,634
South African operations	127		158		234
United Kingdom operations	725		1,051		1,253
Total long-lived assets	$	1,772,166	$	1,727,798	$	1,687,159

Sources of Revenue

The Company derives most of its revenue from the management of privatized correction and detention facilities. The Company also derives revenue from the provision of community based and youth services, monitoring and evidence-based supervision and treatment programs in the United States, and expansion of new and existing correction, detention facilities. All of the Company’s revenue is generated from external customers.



Fiscal Year	2014		2013		2012
	(In thousands)
Revenues:
Corrections & Detention	$	1,306,389	$	1,219,980	$	1,187,171
GEO Care	329,253		302,094		291,891
Facility Construction and Design	55,978		—		—
Total revenues	$	1,691,620	$	1,522,074	$	1,479,062

Equity in Earnings of Affiliates

Equity in earnings of affiliates for 2014, 2013 and 2012 includes the operating results of the Company’s joint ventures in SACS and GEOAmey. These joint ventures are accounted for under the equity method and the Company’s investments in SACS and GEOAmey are presented as a component of other non-current assets in the accompanying Consolidated Balance Sheets.

The Company has recorded $5.1 million, $5.1 million and $5.3 million in earnings, net of tax impact, for SACS operations during the years ended December 31, 2014, 2013 and 2012, respectively, which are included in equity in earnings of affiliates, net of income tax provision in the accompanying Consolidated Statements of Operations. As of December 31, 2014 and 2013, the Company’s investment in SACS was $8.0 million and $8.1 million, respectively. The investment is included in other non-current assets in the accompanying Consolidated Balance Sheets. The Company received dividend distributions of $4.3 million and $3.2 million, in 2014 and 2013, respectively from this unconsolidated joint venture.

The Company has recorded $0.7 million, $1.1 million and $(1.7) million in earnings (losses), net of tax impact, for GEOAmey’s operations during the years ended December 31, 2014, 2013 and 2012, respectively, which are included in equity in earnings of affiliates, net of income tax provision, in the accompanying Consolidated Statements of Operations. As of December 31, 2014 and 2013, the Company’s investment in GEOAmey was $(2.2) million and $(3.0) million, respectively, and represents its share of cumulative reported losses. Losses in excess of the Company's investment have been recognized as the Company has provided certain loans and guarantees to provide financial support to GEOAmey (Refer to Note 14-Debt and Note 1 - Summary of Business Organization, Operations and Significant Account Policies - Note Receivable from Joint Venture.

Business Concentration

Except for the major customer noted in the following table, no other single customer made up greater than 10% of the Company’s consolidated revenues for the following fiscal years.



Customer	2014		2013		2012
Various agencies of the U.S Federal Government:	42	%	45	%	47	%

Credit risk related to accounts receivable is reflective of the related revenues.