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. 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. Segment disclosures below (in thousands) reflect the results of continuing operations. All transactions between segments are eliminated.



Fiscal Year	2015			2014			2013
Revenues:
U.S. Corrections & Detention	$	1,240,440		$	1,108,397		$	1,011,818
GEO Care	340,918			329,253			302,094
International Services	154,902			197,992			208,162
Facility Construction and Design [1]	107,047			55,978			—
Total revenues	$	1,843,307		$	1,691,620		$	1,522,074
Capital Expenditures:
U.S. Corrections & Detention	$	76,070		$	74,044		$	76,418
GEO Care	39,523			36,747			39,645
International Services	1,988			3,433			1,503
Total capital expenditures	$	117,581		$	114,224		$	117,566
Depreciation and amortization:
U.S. Corrections & Detention	$	70,486		$	63,690		$	62,112
GEO Care	33,582			29,766			29,989
International Services	2,688			2,715			2,563
Total depreciation and amortization	$	106,756		$	96,171		$	94,664
Operating Income:
U.S. Corrections & Detention	$	281,945		$	263,027		$	217,918
GEO Care	82,806			80,152			71,279
International Services [2]	7,666			6,130			13,348
Facility Construction & Design [1]	352			440			—
Operating income from segments	$	372,769		$	349,749		$	302,545
General and Administrative Expenses	(137,040		)	(115,018		)	(117,061		)
Total operating income	$	235,729		$	234,731		$	185,484

[1] The Company began the design and construction of a new prison located in Ravenhall, a locality near Melbourne, Australia in 2014. There were no capital expenditures or depreciation or amortization associated with this segment in 2015 or 2014. Refer to Note 8-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, 2015, 2014 and 2013, respectively.



Fiscal Year Ended	2015			2014			2013
	(In thousands)
Operating income from segments	$	372,769		$	349,749		$	302,545
Unallocated amounts:
General and administrative expense	(137,040		)	(115,018		)	(117,061		)
Net interest expense	(94,558		)	(82,621		)	(79,680		)
Loss on early extinguishment of debt	—			—			(20,657		)
Income before income taxes, equity in earnings of affiliates and discontinued operations	$	141,171		$	152,110		$	85,147



	2015		2014
	(In thousands)
Segment assets:
U.S. Corrections & Detention	$	2,417,651	$	2,075,216
GEO Care	722,248		675,166
International Services	43,589		71,788
Facility Construction & Design	196,178		83,024
Total segment assets	$	3,379,666	$	2,905,194

Asset Reconciliation

The following is a reconciliation of the Company’s reportable segment assets to the Company’s total assets as of December 31, 2015 and 2014, respectively.



	2015		2014
	(In thousands)
Reportable segment assets	$	3,379,666	$	2,905,194
Cash	59,638		41,337
Deferred income tax assets	35,313		31,758
Restricted cash and investments, current and non-current	28,725		23,919
Total assets	$	3,503,342	$	3,002,208

Geographic Information

During each of the years ended December 31, 2015, 2014 and 2013, 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	2015		2014		2013
	(In thousands)
Revenues:
U.S. operations	$	1,581,811	$	1,438,144	$	1,314,425
Australia operations	237,731		210,577		158,028
South African operations	14,964		16,831		17,992
United Kingdom operations	8,801		26,068		31,629
Total revenues	$	1,843,307	$	1,691,620	$	1,522,074
Property and Equipment, net:
U.S. operations	$	1,910,378	$	1,765,391	$	1,721,761
Australia operations	5,871		5,923		4,828
South African operations	90		127		158
United Kingdom operations	47		725		1,051
Total Property and Equipment, net	$	1,916,386	$	1,772,166	$	1,727,798

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	2015		2014		2013
	(In thousands)
Revenues:
Corrections & Detention	$	1,395,342	$	1,306,389	$	1,219,980
GEO Care	340,918		329,253		302,094
Facility Construction and Design	107,047		55,978		—
Total revenues	$	1,843,307	$	1,691,620	$	1,522,074

Equity in Earnings of Affiliates

Equity in earnings of affiliates for 2015, 2014 and 2013 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 $4.7 million, $5.1 million and $5.1 million in earnings, net of tax impact, for SACS operations during the years ended December 31, 2015, 2014 and 2013, 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, 2015 and 2014, the Company’s investment in SACS was $9.0 million and $8.0 million, respectively. The investment is included in other non-current assets in the accompanying Consolidated Balance Sheets. The Company received dividend distributions of $3.2 million and $4.3 million, in 2015 and 2014, respectively from this unconsolidated joint venture.

The Company has recorded $0.8 million, $0.7 million and $1.1 million in earnings, net of tax impact, for GEOAmey’s operations during the years ended December 31, 2015, 2014 and 2013, 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, 2015 and 2014, the Company’s investment in GEOAmey was $(1.2) 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 15-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	2015		2014		2013
Various agencies of the U.S Federal Government:	45	%	42	%	45	%

The concentrations above relate entirely to the Company's U.S. Corrections & Detention segment.

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