Business Segments and Geographic Information

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Business Segments and Geographic Information

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 GEO Care segment; the International Services segment; and the Facility Construction & Design segment. The Company's segment revenues from external customers and a measure of segment profit are as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014
Revenues:
U.S. Corrections & Detention	$	320,526	$	281,550	$	910,465	$	824,448
GEO Care	86,517		86,610		248,531		245,723
International Services	38,031		50,874		117,228		154,843
Facility Construction & Design (1)	24,792		38,866		66,957		38,866
Total revenues	$	469,866	$	457,900	$	1,343,181	$	1,263,880
Operating income:
U.S. Corrections & Detention	$	74,017	$	67,450	$	200,224	$	190,983
GEO Care	20,702		23,504		58,426		61,164
International Services	1,647		62		6,732		4,978
Facility Construction & Design (1)	407		589		1,359		589
Operating income from segments	$	96,773	$	91,605	$	266,741	$	257,714

(1) In September 2014, the Company began the design and construction of a new prison contract located in Ravenhall, a locality near Melbourne, Australia. During the design and construction phase, the Company recognizes revenue as earned on a percentage of completion basis measured by the percentage of costs incurred to date as compared to estimated total costs for the design and construction of the facility. Costs incurred and estimated earnings in excess of billings is classified as Contract Receivable in the accompanying consolidated balance sheets and is recorded at the net present value based on the timing of expected future settlement. A portion of the Contract Receivable will be paid by the State upon commercial acceptance of the prison and the remainder will be paid quarterly over the life of the contract. Refer to Note 9 - Derivative Financial Instruments and Note 10 - Debt for additional information.

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 and equity in earnings of affiliates (in thousands):

	Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014
Total operating income from segments	$	96,773		$	91,605		$	266,741		$	257,714
Unallocated amounts:
General and Administrative Expenses	(33,742		)	(28,287		)	(97,764		)	(84,937		)
Net Interest Expense	(24,322		)	(20,360		)	(70,677		)	(60,058		)
Income before income taxes and equity in earnings of affiliates	$	38,709		$	42,958		$	98,300		$	112,719

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. The Company's investments in 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.

The Company has recorded $1.2 million and $3.4 million in earnings, net of tax, for SACS operations during the three and nine months ended September 30, 2015, respectively, and $1.3 million and $3.6 million in earnings, net of tax, for SACS operations during the three and nine months ended September 30, 2014, respectively, which are included in equity in earnings of affiliates, net of income tax provision in the accompanying consolidated statements of operations. As of September 30, 2015 and December 31, 2014, the Company’s investment in SACS was $9.9 million and $8.0 million, respectively.

The Company has recorded $0.2 million and $0.5 million in earnings, net of tax, for GEOAmey's operations during the three and nine months ended September 30, 2015, respectively, and $0.3 million and $0.6 million in earnings, net of tax, for GEOAmey’s operations during the three and nine monthsSeptember 30, 2014, respectively, which are included in equity in earnings of affiliates, net of income tax provision, in the accompanying consolidated statements of operations. As of September 30, 2015 and December 31, 2014, the Company’s investment in GEOAmey was $(1.5) million and $(2.2) 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 10 - Debt.