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



Fiscal Year	2016			2015			2014
Revenues:
U.S. Corrections & Detention	$	1,375,277		$	1,240,440		$	1,108,397
GEO Care	394,449			340,918			329,253
International Services	157,363			154,902			197,992
Facility Construction and Design [1]	252,401			107,047			55,978
Total revenues	$	2,179,490		$	1,843,307		$	1,691,620
Capital Expenditures:
U.S. Corrections & Detention	$	40,764		$	76,070		$	74,044
GEO Care	35,001			39,523			36,747
International Services	5,800			1,988			3,433
Total capital expenditures	$	81,565		$	117,581		$	114,224
Depreciation and amortization:
U.S. Corrections & Detention	$	74,154		$	70,486		$	63,690
GEO Care	38,687			33,582			29,766
International Services	2,075			2,688			2,715
Total depreciation and amortization	$	114,916		$	106,756		$	96,171
Operating Income:
U.S. Corrections & Detention	$	296,078		$	281,945		$	263,027
GEO Care	111,780			82,806			80,152
International Services	5,809			7,666			6,130
Facility Construction & Design [1]	626			352			440
Operating income from segments	$	414,293		$	372,769		$	349,749
General and Administrative Expenses	(148,709		)	(137,040		)	(115,018		)
Total operating income	$	265,584		$	235,729		$	234,731

[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 2016 or 2015. Refer to Note 7-Contract Receivable.

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 each case, during the years ended December 31, 2016, 2015 and 2014, respectively.



Fiscal Year Ended	2016			2015			2014
	(In thousands)
Operating income from segments	$	414,293		$	372,769		$	349,749
Unallocated amounts:
General and administrative expense	(148,709		)	(137,040		)	(115,018		)
Net interest expense	(100,222		)	(94,558		)	(82,621		)
Loss on extinguishment of debt	(15,885		)	—			—
Income before income taxes and equity in earnings of affiliates	$	149,477		$	141,171		$	152,110



	2016		2015
	(In thousands)
Segment assets:
U.S. Corrections & Detention	$	2,390,705	$	2,396,076
GEO Care	711,795		722,248
International Services	64,417		43,589
Facility Construction & Design	446,434		176,638
Total segment assets	$	3,613,351	$	3,338,551

Asset Reconciliation

The following is a reconciliation of the Company’s reportable segment assets to the Company’s total assets as of December 31, 2016 and 2015, respectively.



	2016		2015
	(In thousands)
Reportable segment assets	$	3,613,351	$	3,338,551
Cash	68,038		59,638
Deferred income tax assets	30,039		35,313
Restricted cash and investments, current and non-current	37,981		28,725
Total assets	$	3,749,409	$	3,462,227

Geographic Information

During each of the years ended December 31, 2016, 2015 and 2014, 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	2016		2015		2014
	(In thousands)
Revenues:
U.S. operations	$	1,770,273	$	1,581,811	$	1,438,144
Australia operations	388,361		237,731		210,577
South African operations	13,658		14,964		16,831
United Kingdom operations	7,198		8,801		26,068
Total revenues	$	2,179,490	$	1,843,307	$	1,691,620
Property and Equipment, net:
U.S. operations	$	1,887,043	$	1,910,378	$	1,765,391
Australia operations	10,053		5,871		5,923
South African operations	145		90		127
United Kingdom operations	—		47		725
Total Property and Equipment, net	$	1,897,241	$	1,916,386	$	1,772,166

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	2016		2015		2014
	(In thousands)
Revenues:
Corrections & Detention	$	1,532,640	$	1,395,342	$	1,306,389
GEO Care	394,449		340,918		329,253
Facility Construction and Design	252,401		107,047		55,978
Total revenues	$	2,179,490	$	1,843,307	$	1,691,620

Equity in Earnings of Affiliates

Equity in earnings of affiliates for 2016, 2015 and 2014 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 $4.3 million, $4.7 million and $5.1 million in earnings, net of tax impact, for SACS operations during the years ended December 31, 2016, 2015 and 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 December 31, 2016 and 2015, the Company’s investment in SACS was $11.8 million and $9.0 million, respectively. The investment is included in other non-current assets in the accompanying Consolidated Balance Sheets. The Company received dividend distributions of $1.6 million and $3.2 million, in 2016 and 2015, respectively from this unconsolidated joint venture.

The Company has recorded $2.6 million, $0.8 million and $0.7 million in earnings, net of tax impact, for GEOAmey’s operations during the years ended December 31, 2016, 2015 and 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 December 31, 2016 and 2015, the Company’s investment in GEOAmey was $1.3 million and $(1.2) million, respectively, and represents its share of cumulative reported earnings (losses). Losses in excess of the Company's investment had been recognized as the Company has provided certain loans and guarantees to provide financial support to GEOAmey (Refer to Note 13-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	2016		2015		2014
Various agencies of the U.S Federal Government:	48	%	45	%	42	%

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.