Business Segments and Geographic Information

9 Months Ended

Sep. 30, 2016

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, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Revenues:
U.S. Corrections & Detention	$	344,452	$	320,526	$	1,024,395	$	910,465
GEO Care	99,779		86,517		289,722		248,531
International Services	40,416		38,031		116,468		117,228
Facility Construction & Design (1)	69,729		24,792		182,326		66,957
Total revenues	$	554,376	$	469,866	$	1,612,911	$	1,343,181
Operating income from segments:
U.S. Corrections & Detention	$	77,865	$	74,017	$	220,292	$	200,224
GEO Care	30,007		20,702		80,558		58,426
International Services	1,866		1,647		4,702		6,732
Facility Construction & Design (1)	196		407		471		1,359
Operating income from segments	$	109,934	$	96,773	$	306,023	$	266,741

(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, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Total operating income from segments	$	109,934		$	96,773		$	306,023		$	266,741
Unallocated amounts:
General and Administrative Expenses	(37,483		)	(33,742		)	(108,448		)	(97,764		)
Net Interest Expense	(25,500		)	(24,322		)	(75,477		)	(70,677		)
Loss on Extinguishment of Debt	—			—			(15,885		)	—
Income before income taxes and equity in earnings of affiliates	$	46,951		$	38,709		$	106,213		$	98,300

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 $1.1 million and $2.9 million in earnings, net of tax, for SACS operations during the three and ninemonths ended September 30, 2016, and $1.2 million and $3.4 million in earnings, net of tax, for SACS operations during the three and ninemonths ended September 30, 2015, 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, 2016 and December 31, 2015, the Company’s investment in SACS was $10.3 million and $9.9 million, respectively.

The Company has recorded $0.7 million and $2.1 million in earnings, net of tax, for GEO Amey's operation during the three and nine months ended September 30, 2016 and $0.2 million and $0.6 million in earnings, net of tax, for GEOAmey's operations during the threeand nine months ended September 30, 2015, respectively, net of income tax provision, in the accompanying consolidated statements of operations. As of September 30, 2016 and December 31, 2015, the Company’s investment in GEOAmey was $0.2 million and $(1.5) 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.