Business Segments and Geographic Information

6 Months Ended

Jun. 30, 2017

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					Six Months Ended
	June 30, 2017			June 30, 2016		June 30, 2017			June 30, 2016
Revenues:
U.S. Corrections & Detention	$	360,838		$	341,573	$	708,769		$	679,943
GEO Care	139,364			96,529		243,130			189,943
International Services	42,928			38,497		84,620			76,052
Facility Construction & Design (1)	33,940			71,751		91,165			112,597
Total revenues	$	577,070		$	548,350	$	1,127,684		$	1,058,535
Operating income from segments:
U.S. Corrections & Detention	$	69,801		$	74,989	$	144,697		$	142,427
GEO Care	36,533			26,580		65,359			50,551
International Services	2,117			1,074		5,003			2,836
Facility Construction & Design (1)	(1,692		)	218		(1,342		)	275
Operating income from segments	$	106,759		$	102,861	$	213,717		$	196,089

(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. During the three months ending June 30, 2017, the Company became aware of certain claims by its construction subcontractor for unanticipated additional costs which are in excess of the agreed contract price. The Company has agreed in principle with the subcontractor to pay approximately $1.9 million related to these overruns and has recorded a provision for loss related to these claims during the three months ended June 30, 2017.

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						Six Months Ended
	June 30, 2017			June 30, 2016			June 30, 2017			June 30, 2016
Total operating income from segments	$	106,759		$	102,861		$	213,717		$	196,089
Unallocated amounts:
General and Administrative Expenses	(52,206		)	(36,904		)	(94,792		)	(70,965		)
Net Interest Expense	(23,637		)	(25,187		)	(46,660		)	(49,996		)
Loss on Extinguishment of Debt	—			(15,866		)	—			(15,866		)
Income before income taxes and equity in earnings of affiliates	$	30,916		$	24,904		$	72,265		$	59,262

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 $2.3 million in earnings, net of tax, for SACS operations during the three and six months ended June 30, 2017, and $0.9 million and $1.8 million in earnings, net of tax, for SACS operations during the three and six months ended June 30, 2016, respectively, which are included in equity in earnings of affiliates, net of income tax provision in the accompanying consolidated statements of operations. As of June 30, 2017 and December 31, 2016, the Company’s investment in SACS was $12.3 million and $11.8 million, respectively.

The Company has recorded $0.3 million and $0.6 million in earnings, net of tax, for GEO Amey's operation during the the three and six months ended June 30, 2017, and $1.1 million and $1.4 million in earnings, net of tax, during the three and six months ended June 30, 2016, respectively, in the accompanying consolidated statements of operations. As of June 30, 2017 and December 31, 2016, the Company’s investment in GEOAmey was $2.0 million and $1.3 million, respectively, and represents its share of cumulative reported earnings.