Condensed Consolidating Financial Information

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidating Financial Information

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

As of September 30, 2015, the Company's 6.625% Senior Notes, 5.125% Senior Notes and each of the 5.875% Senior Notes were fully and unconditionally guaranteed on a joint and several senior unsecured basis by the Company and certain of its wholly-owned domestic subsidiaries (the “Subsidiary Guarantors”). The following condensed consolidating financial information, which has been prepared in accordance with the requirements for presentation of Rule 3-10(d) of Regulation S-X promulgated under the Securities Act, presents the condensed consolidating financial information separately for:

(i) The GEO Group, Inc., as the issuer of the notes;

(ii) The Subsidiary Guarantors, on a combined basis, which are 100% owned by The GEO Group, Inc., and which are guarantors of the notes;

(iii) The Company’s other subsidiaries, on a combined basis, which are not guarantors of the notes (the “Non-Guarantor Subsidiaries”);

(iv) Consolidating entries and eliminations representing adjustments to (a) eliminate intercompany transactions between or among the Company, the Subsidiary Guarantors and the Subsidiary Non-Guarantors and (b) eliminate the investments in the Company’s subsidiaries; and

(v) The Company and its subsidiaries on a consolidated basis.

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)

	For the Three Months Ended September 30, 2015
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	175,353		$	369,004		$	65,388		$	(139,879	)	$	469,866
Operating expenses	142,002			288,303			55,540			(139,879		)	345,966
Depreciation and amortization	6,007			20,002			1,118			—			27,127
General and administrative expenses	12,285			16,876			4,581			—			33,742
Operating income	15,059			43,823			4,149			—			63,031
Interest income	5,820			431			2,870			(6,129		)	2,992
Interest expense	(15,419		)	(14,320		)	(3,704		)	6,129			(27,314		)
Income before income taxes and equity in earnings of affiliates	5,460			29,934			3,315			—			38,709
Income tax provision (benefit)	—			869			889			—			1,758
Equity in earnings of affiliates, net of income tax provision	—			—			1,340			—			1,340
Income (loss) before equity in income of consolidated subsidiaries	5,460			29,065			3,766			—			38,291
Income from consolidated subsidiaries, net of income tax provision	32,831			—			—			(32,831		)	—
Net income	38,291			29,065			3,766			(32,831		)	38,291
Net loss attributable to noncontrolling interests	—			—			21						21
Net income attributable to The GEO Group, Inc.	$	38,291		$	29,065		$	3,787		$	(32,831	)	$	38,312
Net income	$	38,291		$	29,065		$	3,766		$	(32,831	)	$	38,291
Other comprehensive income (loss), net of tax	—			43			(6,484		)	—			(6,441		)
Total comprehensive income	$	38,291		$	29,108		$	(2,718	)	$	(32,831	)	$	31,850
Comprehensive income attributable to noncontrolling interests	—			—			64			—			64
Comprehensive income (loss) attributable to The GEO Group, Inc.	$	38,291		$	29,108		$	(2,654	)	$	(32,831	)	$	31,914

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)

	For the Three Months Ended September 30, 2014
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	141,631		$	337,769		$	92,300		$	(113,800	)	$	457,900
Operating expenses	115,580			257,645			82,791			(113,800		)	342,216
Depreciation and amortization	6,395			16,554			1,130			—			24,079
General and administrative expenses	8,352			14,295			5,640			—			28,287
Operating income	11,304			49,275			2,739			—			63,318
Interest income	5,593			966			953			(6,464		)	1,048
Interest expense	(11,716		)	(14,258		)	(1,898		)	6,464			(21,408		)
Income before income taxes and equity in earnings of affiliates	5,181			35,983			1,794			—			42,958
Income tax provision	—			4,528			1,009			—			5,537
Equity in earnings of affiliates, net of income tax provision	—			—			1,544			—			1,544
Income before equity in income of consolidated subsidiaries	5,181			31,455			2,329			—			38,965
Income from consolidated subsidiaries, net of income tax provision	33,784			—			—			(33,784		)	—
Net income	38,965			31,455			2,329			(33,784		)	38,965
Net income attributable to noncontrolling interests	—			—			26			—			26
Net income attributable to The GEO Group, Inc.	$	38,965		$	31,455		$	2,355		$	(33,784	)	$	38,991
Net income	$	38,965		$	31,455		$	2,329		$	(33,784	)	$	38,965
Other comprehensive income (loss), net of tax	—			19			(8,002		)	—			(7,983		)
Total comprehensive income (loss)	$	38,965		$	31,474		$	(5,673	)	$	(33,784	)	$	30,982
Comprehensive loss attributable to noncontrolling interests	—			—			49			—			49
Comprehensive income (loss) attributable to The GEO Group, Inc.	$	38,965		$	31,474		$	(5,624	)	$	(33,784	)	$	31,031

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)

	For the Nine Months Ended September 30, 2015
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations				Consolidated
Revenues	$	481,102		$	1,076,373		$	191,876		$	(406,170	)		$	1,343,181
Operating expenses	399,557			843,498			160,927			(406,170		)		997,812
Depreciation and amortization	18,592			56,881			3,155			—				78,628
General and administrative expenses	33,657			50,684			13,423			—				97,764
Operating income	29,296			125,310			14,371			—				168,977
Interest income	17,733			2,510			8,189			(20,499		)		7,933
Interest expense	(45,264		)	(43,700		)	(10,145		)	20,499				(78,610		)
Income before income taxes and equity in earnings of affiliates	1,765			84,120			12,415			—				98,300
Income tax provision (benefit)	(62		)	4,199			2,817			—				6,954
Equity in earnings of affiliates, net of income tax provision	—			—			3,949			—			2,246	3,949
Income before equity in income of consolidated subsidiaries	1,827			79,921			13,547			—				95,295
Income from consolidated subsidiaries, net of income tax provision	93,468			—			—			(93,468		)		—
Income from continuing operations	95,295			79,921			13,547			(93,468		)		95,295
Net income	95,295			79,921			13,547			(93,468		)		95,295
Net loss attributable to noncontrolling interests	—			—			79			—				79
Net income attributable to The GEO Group, Inc.	$	95,295		$	79,921		$	13,626		$	(93,468	)		$	95,374
Net income	$	95,295		$	79,921		$	13,547		$	(93,468	)		$	95,295
Other comprehensive income (loss), net of tax	—			120			(7,435		)	—				(7,315		)
Total comprehensive income	$	95,295		$	80,041		$	6,112		$	(93,468	)		$	87,980
Comprehensive income attributable to noncontrolling interests	—			—			145			—				145
Comprehensive income attributable to The GEO Group, Inc.	$	95,295		$	80,041		$	6,257		$	(93,468	)		$	88,125

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)

	For the Nine Months Ended September 30, 2014
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	415,468		$	980,181		$	201,391		$	(333,160	)	$	1,263,880
Operating expenses	333,992			760,159			173,206			(333,160		)	934,197
Depreciation and amortization	19,242			49,357			3,370			—			71,969
General and administrative expenses	26,773			45,186			12,978			—			84,937
Operating income	35,461			125,479			11,837			—			172,777
Interest income	16,208			2,017			2,382			(18,003		)	2,604
Interest expense	(33,913		)	(41,379		)	(5,373		)	18,003			(62,662		)
Income before income taxes and equity in earnings of affiliates	17,756			86,117			8,846			—			112,719
Income tax provision	—			8,493			2,569			—			11,062
Equity in earnings of affiliates, net of income tax provision	—			—			4,202			—			4,202
Income before equity in income of consolidated subsidiaries	17,756			77,624			10,479			—			105,859
Income from consolidated subsidiaries, net of income tax provision	88,103			—			—			(88,103		)	—
Net income	105,859			77,624			10,479			(88,103		)	105,859
Net income attributable to noncontrolling interests	—			—			20			—			20
Net income attributable to The GEO Group, Inc.	$	105,859		$	77,624		$	10,499		$	(88,103	)	$	105,879
Net income	$	105,859		$	77,624		$	10,479		$	(88,103	)	$	105,859
Other comprehensive income (loss), net of tax	—			58			(6,359		)	—			(6,301		)
Total comprehensive income	$	105,859		$	77,682		$	4,120		$	(88,103	)	$	99,558
Comprehensive loss attributable to noncontrolling interests	—			—			51			—			51
Comprehensive income attributable to The GEO Group, Inc.	$	105,859		$	77,682		$	4,171		$	(88,103	)	$	99,609

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

(unaudited)

	As of September 30, 2015
	The GEO Group, Inc.			Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	14,378		$	2,373	$	30,380	$	—		$	47,131
Restricted cash and investments	—			—		8,389		—			8,389
Accounts receivable, less allowance for doubtful accounts	114,215			160,899		13,930		—			289,044
Current deferred income tax assets	—			21,694		4,227		—			25,921
Prepaid expenses and other current assets	4,087			19,275		11,048		(1,154		)	33,256
Total current assets	132,680			204,241		67,974		(1,154		)	403,741
Restricted Cash and Investments	127			15,236		10,695		—			26,058
Property and Equipment, Net	751,490			1,087,819		82,152		—			1,921,461
Contract Receivable	—			—		124,679		—			124,679
Direct Finance Lease Receivable	—			—		3,303		—			3,303
Intercompany Receivable	905,295			147,801		—		(1,053,096		)	—
Non-Current Deferred Income Tax Assets	—			—		5,873		—			5,873
Goodwill	90			615,448		399		—			615,937
Intangible Assets, Net	—			228,498		829		—			229,327
Investment in Subsidiaries	1,218,023			213,919		—		(1,431,942		)	—
Other Non-Current Assets	23,176			111,209		50,006		(80,154		)	104,237
Total Assets	$	3,030,881		$	2,624,171	$	345,910	$	(2,566,346	)	$	3,434,616
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	9,582		$	47,923	$	15,062	$	—		$	72,567
Accrued payroll and related taxes	—			25,788		13,886		—			39,674
Accrued expenses and other	39,077			74,655		14,971		(1,154		)	127,549
Current portion of capital lease obligations, long-term debt and non-recourse debt	3,000			1,323		12,105		—			16,428
Total current liabilities	51,659			149,689		56,024		(1,154		)	256,218
Non-Current Deferred Income Tax Liabilities	(1,310		)	17,074		5		—			15,769
Intercompany Payable	91,350			961,000		746		(1,053,096		)	—
Other Non-Current Liabilities	2,858			142,544		23,158		(80,154		)	88,406
Capital Lease Obligations	—			8,992		—		—			8,992
Long-Term Debt	1,881,034			—		—		—			1,881,034
Non-Recourse Debt	—			—		178,738		—			178,738
Commitments & Contingencies and Other
Shareholders' Equity:
The GEO Group, Inc. Shareholders' Equity	1,005,290			1,344,872		87,070		(1,431,942		)	1,005,290
Noncontrolling Interests	—			—		169		—			169
Total Shareholders’ Equity	1,005,290			1,344,872		87,239		(1,431,942		)	1,005,459
Total Liabilities and Shareholders' Equity	$	3,030,881		$	2,624,171	$	345,910	$	(2,566,346	)	$	3,434,616

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

	As of December 31, 2014
	The GEO Group, Inc.			Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	18,492		$	782	$	22,063		$	—		$	41,337
Restricted cash and investments	—			—		4,341			—			4,341
Accounts receivable, less allowance for doubtful accounts	92,456			159,505		17,077			—			269,038
Current deferred income tax assets	—			21,657		4,227			—			25,884
Prepaid expenses and other current assets	7,022			19,593		11,345			(1,154		)	36,806
Total current assets	117,970			201,537		59,053			(1,154		)	377,406
Restricted Cash and Investments	228			13,729		5,621			—			19,578
Property and Equipment, Net	726,238			961,896		84,032			—			1,772,166
Direct Finance Lease Receivable	—			—		9,256			—			9,256
Contract Receivable	—			—		66,229						66,229
Intercompany Receivable	962,314			119,414		—			(1,081,728		)	—
Non-Current Deferred Income Tax Assets	—			—		5,873			—			5,873
Goodwill	34			493,389		467			—			493,890
Intangible Assets, Net	—			154,237		1,038			—			155,275
Investment in Subsidiaries	855,870			438,243		—			(1,294,113		)	—
Other Non-Current Assets	25,635			110,105		46,838			(80,043		)	102,535
Total Assets	$	2,688,289		$	2,492,550	$	278,407		$	(2,457,038	)	$	3,002,208
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	7,549		$	47,130	$	3,476		$	—		$	58,155
Accrued payroll and related taxes	—			24,184		14,372			—			38,556
Accrued expenses and other	47,637			75,574		18,555			(1,154		)	140,612
Current portion of capital lease obligations, long-term debt and non-recourse debt	3,001			1,170		12,581			—			16,752
Total current liabilities	58,187			148,058		48,984			(1,154		)	254,075
Non-Current Deferred Income Tax Liabilities	(4,095		)	14,170		(7		)	—			10,068
Intercompany Payable	121,327			942,071		18,330			(1,081,728		)	—
Other Non-Current Liabilities	4,372			143,584		19,507			(80,034		)	87,429
Capital Lease Obligations	—			9,856		—			—			9,856
Long-Term Debt	1,462,819			—		—			—			1,462,819
Non-Recourse Debt	—			—		131,968			—			131,968
Commitments & Contingencies and Other
Shareholders' Equity:
The GEO Group, Inc. Shareholders' Equity	1,045,679			1,234,811		59,311			(1,294,122		)	1,045,679
Noncontrolling Interests	—			—		314			—			314
Total Shareholders’ Equity	1,045,679			1,234,811		59,625			(1,294,122		)	1,045,993
Total Liabilities and Shareholders' Equity	$	2,688,289		$	2,492,550	$	278,407		$	(2,457,038	)	$	3,002,208

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)

	For the Nine Months Ended September 30, 2015
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Consolidated
Cash Flow from Operating Activities:
Net cash provided by (used in) operating activities	$	72,063		$	74,464		$	(35,363	)	$	111,164
Cash Flow from Investing Activities:
Acquisition of SoberLink, cash consideration				(24,402		)				(24,402		)
Acquisition of LCS, net of cash acquired	(307,403		)	—			—			(307,403		)
Proceeds from sale of property and equipment	—			49			—			49
Insurance proceeds - damaged property	—			1,270			—			1,270
Change in restricted cash and investments	101			(1,957		)	(9,280		)	(11,136		)
Capital expenditures	(51,084		)	(47,833		)	(1,927		)	(100,844		)
Net cash used in investing activities	(358,386		)	(72,873		)	(11,207		)	(442,466		)
Cash Flow from Financing Activities:
Proceeds from long-term debt	642,000			—			—			642,000
Payments on long-term debt	(222,675		)	—			—			(222,675		)
Payments on non-recourse debt	—			—			(6,366		)	(6,366		)
Proceeds from non-recourse debt	—			—			70,117			70,117
Taxes paid related to net share settlements of equity awards	(2,748		)	—			—			(2,748		)
Proceeds from reissuance of treasury stock in connection with ESPP	321			—			—			321
Debt issuance costs	—			—			(5,217		)	(5,217		)
Tax benefit related to equity compensation	1,252			—			—			1,252
Proceeds from stock options exercised	2,513			—			—			2,513
Cash dividends paid	(138,454		)	—			—			(138,454		)
Net cash provided by financing activities	282,209			—			58,534			340,743
Effect of Exchange Rate Changes on Cash and Cash Equivalents	—			—			(3,647		)	(3,647		)
Net Increase (Decrease) in Cash and Cash Equivalents	(4,114		)	1,591			8,317			5,794
Cash and Cash Equivalents, beginning of period	18,492			782			22,063			41,337
Cash and Cash Equivalents, end of period	$	14,378		$	2,373		$	30,380		$	47,131

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)

	For the Nine Months Ended September 30, 2014
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Consolidated
Cash Flow from Operating Activities:
Net cash provided by operating activities	$	149,460		$	53,506		$	(38,341	)	$	164,625
Cash Flow from Investing Activities:
Proceeds from sale of property and equipment	—			515			—			515
Acquisition of Protocol, cash consideration	—			(13,025		)	—			(13,025		)
Change in restricted cash and investments	(212		)	(2,073		)	(3,767		)	(6,052		)
Capital expenditures	(41,020		)	(34,432		)	(2,261		)	(77,713		)
Net cash used in investing activities	(41,232		)	(49,015		)	(6,028		)	(96,275		)
Cash Flow from Financing Activities:
Proceeds from long-term debt	459,384			—			—			459,384
Payments on long-term debt	(508,400		)	(732		)	—			(509,132		)
Indirect repurchases of treasury shares	(1,844		)	—			—			(1,844		)
Payments on non-recourse debt	—			—			(4,511		)	(4,511		)
Proceeds from non-recourse debt	—			—			74,191			74,191
Proceeds from reissuance of treasury stock in connection with ESPP	277			—			—			277
Debt issuance costs - deferred	(7,802		)	—			(15,706		)	(23,508		)
Tax benefit related to equity compensation	1,498			—			—			1,498
Issuance of common stock under prospectus supplement	54,724			—			—			54,724
Proceeds from stock options exercised	6,384			—			—			6,384
Cash dividends paid	(124,084		)	—			—			(124,084		)
Net cash used in financing activities	(119,863		)	(732		)	53,974			(66,621		)
Effect of Exchange Rate Changes on Cash and Cash Equivalents	—			—			(1,174		)	(1,174		)
Net Increase (Decrease) in Cash and Cash Equivalents	(11,635		)	3,759			8,431			555
Cash and Cash Equivalents, beginning of period	30,730			985			20,410			52,125
Cash and Cash Equivalents, end of period	$	19,095		$	4,744		$	28,841		$	52,680