Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidating Financial Information

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

As of June 30, 2018, the Company's 6.00% Senior Notes, 5.125% Senior Notes, the 5.875% Senior Notes due 2022 and the 5.875% Senior Notes due 2024 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 June 30, 2018
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	202,186		$	474,966		$	67,256		$	(160,899	)	$	583,509
Operating expenses	161,122			381,040			56,534			(160,899		)	437,797
Depreciation and amortization	6,564			23,695			1,054			—			31,313
General and administrative expenses	16,281			25,738			5,429			—			47,448
Operating income	18,219			44,493			4,239			—			66,951
Interest income	3,406			1,447			8,908			(5,094		)	8,667
Interest expense	(19,647		)	(13,959		)	(8,407		)	5,094			(36,919		)
Income before income taxes and equity in earnings of affiliates	1,978			31,981			4,740			—			38,699
Income tax provision	716			1,442			1,557			—			3,715
Equity in earnings of affiliates, net of income tax provision	—			—			2,341			—			2,341
Income before equity in income of consolidated subsidiaries	1,262			30,539			5,524			—			37,325
Income from consolidated subsidiaries, net of income tax provision	36,063			—			—			(36,063		)	—
Net income	37,325			30,539			5,524			(36,063		)	37,325
Net loss attributable to noncontrolling interests	—			—			96			—			96
Net income attributable to The GEO Group, Inc.	$	37,325		$	30,539		$	5,620		$	(36,063	)	$	37,421
Net income	$	37,325		$	30,539		$	5,524		$	(36,063	)	$	37,325
Other comprehensive income (loss), net of tax	—			625			(2,757		)	—			(2,132		)
Total comprehensive income	$	37,325		$	31,164		$	2,767		$	(36,063	)	$	35,193
Comprehensive loss attributable to noncontrolling interests	—			—			117			—			117
Comprehensive income attributable to The GEO Group, Inc.	$	37,325		$	31,164		$	2,884		$	(36,063	)	$	35,310

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)

	For the Three Months Ended June 30, 2017
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	171,260		$	465,286		$	79,436		$	(138,912	)	$	577,070
Operating expenses	135,244			373,399			68,714			(138,912		)	438,445
Depreciation and amortization	6,065			24,906			895			—			31,866
General and administrative expenses	15,573			29,432			7,201			—			52,206
Operating income	14,378			37,549			2,626			—			54,553
Interest income	6,751			409			12,476			(7,290		)	12,346
Interest expense	(17,451		)	(15,775		)	(10,047		)	7,290			(35,983		)
Income before income taxes and equity in earnings of affiliates	3,678			22,183			5,055			—			30,916
Income tax provision	147			793			460			—			1,400
Equity in earnings of affiliates, net of income tax provision	—			—			1,426			—			1,426
Income before equity in income of consolidated subsidiaries	3,531			21,390			6,021			—			30,942
Income from consolidated subsidiaries, net of income tax provision	27,411			—			—			(27,411		)	—
Net income	30,942			21,390			6,021			(27,411		)	30,942
Net loss attributable to noncontrolling interests	—			—			50			—			50
Net income attributable to The GEO Group, Inc.	$	30,942		$	21,390		$	6,071		$	(27,411	)	$	30,992
Net income	$	30,942		$	21,390		$	6,021		$	(27,411	)	$	30,942
Other comprehensive income, net of tax	—			64			1,808			—			1,872
Total comprehensive income	$	30,942		$	21,454		$	7,829		$	(27,411	)	$	32,814
Comprehensive loss attributable to noncontrolling interests	—			—			51			—			51
Comprehensive income attributable to The GEO Group, Inc.	$	30,942		$	21,454		$	7,880		$	(27,411	)	$	32,865

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)

	For the Six Months Ended June 30, 2018
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	397,816		$	933,694		$	136,062		$	(319,146	)	$	1,148,426
Operating expenses	312,944			759,006			111,702			(319,146		)	864,506
Depreciation and amortization	13,024			48,138			2,077			—			63,239
General and administrative expenses	30,622			48,185			10,473			—			89,280
Operating income	41,226			78,365			11,810			—			131,401
Interest income	7,583			2,864			18,292			(10,973		)	17,766
Interest expense	(38,269		)	(28,419		)	(17,073		)	10,973			(72,788		)
Income before income taxes and equity in earnings of affiliates	10,540			52,810			13,029			—			76,379
Income tax provision	893			3,742			3,835			—			8,470
Equity in earnings of affiliates, net of income tax provision	—			—			4,336			—			4,336
Income before equity in income of consolidated subsidiaries	9,647			49,068			13,530			—			72,245
Income from consolidated subsidiaries, net of income tax provision	62,598			—			—			(62,598		)	—
Net income	72,245			49,068			13,530			(62,598		)	72,245
Net loss attributable to noncontrolling interests	—			—			163			—			163
Net income attributable to The GEO Group, Inc.	$	72,245		$	49,068		$	13,693		$	(62,598	)	$	72,408
Net income	$	72,245		$	49,068		$	13,530		$	(62,598	)	$	72,245
Other comprehensive income (loss), net of tax	—			730			(1,526		)	—			(796		)
Total comprehensive income	$	72,245		$	49,798		$	12,004		$	(62,598	)	$	71,449
Comprehensive loss attributable to noncontrolling interests	—			—			176			—			176
Comprehensive income attributable to The GEO Group, Inc.	$	72,245		$	49,798		$	12,180		$	(62,598	)	$	71,625

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)

	For the Six Months Ended June 30, 2017
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	349,433		$	878,480		$	180,920		$	(281,149	)	$	1,127,684
Operating expenses	267,411			711,398			155,492			(281,149		)	853,152
Depreciation and amortization	12,215			46,781			1,819			—			60,815
General and administrative expenses	29,240			50,413			15,139			—			94,792
Operating income	40,567			69,888			8,470			—			118,925
Interest income	10,105			1,229			24,304			(11,315		)	24,323
Interest expense	(33,243		)	(28,260		)	(20,795		)	11,315			(70,983		)
Income before income taxes and equity in earnings of affiliates	17,429			42,857			11,979			—			72,265
Income tax provision	294			2,247			1,329			—			3,870
Equity in earnings of affiliates, net of income tax provision	—			—			2,913			—			2,913
Income before equity in income of consolidated subsidiaries	17,135			40,610			13,563			—			71,308
Income from consolidated subsidiaries, net of income tax provision	57,749			—			—			(57,749		)	—
Net income	$	74,884		$	40,610		$	13,563		$	(57,749	)	$	71,308
Net loss attributable to noncontrolling interests	—			—			87			—			87
Net income attributable to The GEO Group, Inc.	$	74,884		$	40,610		$	13,650		$	(57,749	)	$	71,395
Net income	$	74,884		$	40,610		$	13,563		$	(57,749	)	$	71,308
Other comprehensive income, net of tax	—			111			3,022			—			3,133
Total comprehensive income	$	74,884		$	40,721		$	16,585		$	(57,749	)	$	74,441
Comprehensive loss attributable to noncontrolling interests	—			—			85			—			85
Comprehensive income attributable to The GEO Group, Inc.	$	74,884		$	40,721		$	16,670		$	(57,749	)	$	74,526

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

(unaudited)

	As of June 30, 2018
	The GEO Group, Inc.		Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	18,363	$	11,156	$	35,932		$	—		$	65,451
Restricted cash and cash equivalents	7,842		—		50,878			—			58,720
Accounts receivable, less allowance for doubtful accounts	141,487		200,426		35,855			—			377,768
Contract receivable, current portion	—		—		9,398			—			9,398
Prepaid expenses and other current assets	2,391		22,293		11,079			—			35,763
Total current assets	170,083		233,875		143,142			—			547,100
Restricted Cash and Investments	—		22,481		2,816			—			25,297
Property and Equipment, Net	826,324		1,210,293		87,936			—			2,124,553
Non-Current Contract Receivable	—		—		396,360			—			396,360
Intercompany Receivable	969,520		130,374		26,300			(1,126,194		)	—
Non-Current Deferred Income Tax Assets	863		23,913		1,501			—			26,277
Goodwill	—		775,955		424			—			776,379
Intangible Assets, Net	—		242,911		638			—			243,549
Investment in Subsidiaries	1,512,288		458,228		2,190			(1,972,706		)	—
Other Non-Current Assets	9,448		113,627		23,042			(79,062		)	67,055
Total Assets	$	3,488,526	$	3,211,657	$	684,349		$	(3,177,962	)	$	4,206,570
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	17,449	$	67,292	$	5,586		$	—		$	90,327
Accrued payroll and related taxes	—		50,169		18,893			—			69,062
Accrued expenses and other current liabilities	42,758		115,623		30,880			—			189,261
Current portion of capital lease obligations, long-term debt and non-recourse debt	8,000		1,974		15,153			—			25,127
Total current liabilities	68,207		235,058		70,512			—			373,777
Non-Current Deferred Income Tax Liabilities	—		—		8,757			—			8,757
Intercompany Payable	122,124		968,622		35,448			(1,126,194		)	—
Other Non-Current Liabilities	1,320		156,158		11,466			(79,062		)	89,882
Capital Lease Obligations	—		5,329		—			—			5,329
Long-Term Debt	2,203,441		—		85,968			—			2,289,409
Non-Recourse Debt	—		—		346,479			—			346,479
Commitments & Contingencies and Other
Shareholders' Equity:
The GEO Group, Inc. Shareholders' Equity	1,093,434		1,846,490		126,217			(1,972,706		)	1,093,435
Noncontrolling Interests	—		—		(498		)	—			(498		)
Total Shareholders’ Equity	1,093,434		1,846,490		125,719			(1,972,706		)	1,092,937
Total Liabilities and Shareholders' Equity	$	3,488,526	$	3,211,657	$	684,349		$	(3,177,962	)	$	4,206,570

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

	As of December 31, 2017
	The GEO Group, Inc.		Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	54,666	$	—	$	26,711		$	—		$	81,377
Restricted cash and cash equivalents	—		—		44,932			—			44,932
Accounts receivable, less allowance for doubtful accounts	130,354		225,029		34,533			—			389,916
Contract receivable, current portion	—		—		18,142			—			18,142
Prepaid expenses and other current assets	2,589		24,163		18,590			—			45,342
Total current assets	187,609		249,192		142,908			—			579,709
Restricted Cash and Investments	—		25,715		2,284			—			27,999
Property and Equipment, Net	777,404		1,209,816		90,903			—			2,078,123
Assets Held for Sale	—		3,915		—			—			3,915
Non-Current Contract Receivable	—		—		404,309						404,309
Intercompany Receivable	1,130,189		88,534		28,218			(1,246,941		)	—
Non-Current Deferred Income Tax Assets	863		23,913		1,501			—			26,277
Goodwill	—		778,504		447			—			778,951
Intangible Assets, Net	—		254,531		808			—			255,339
Investment in Subsidiaries	1,336,665		456,076		2,190			(1,794,931		)	—
Other Non-Current Assets	11,141		115,330		25,210			(79,395		)	72,286
Total Assets	$	3,443,871	$	3,205,526	$	698,778		$	(3,121,267	)	$	4,226,908
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	20,643	$	65,475	$	6,469		$	—		$	92,587
Accrued payroll and related taxes	—		51,780		19,952			—			71,732
Accrued expenses and other current liabilities	40,344		115,636		20,344			—			176,324
Current portion of capital lease obligations, long-term debt and non-recourse debt	8,000		1,870		19,050			—			28,920
Total current liabilities	68,987		234,761		65,815			—			369,563
Non-Current Deferred Income Tax Liabilities	—		—		8,757			—			8,757
Intercompany Payable	79,984		1,129,590		37,367			(1,246,941		)	—
Other Non-Current Liabilities	4,674		157,200		14,223			(79,395		)	96,702
Capital Lease Obligations	—		6,059		—			—			6,059
Long-Term Debt	2,090,985		—		90,559			—			2,181,544
Non-Recourse Debt	—		—		365,364			—			365,364
Commitments & Contingencies and Other
Shareholders' Equity:
The GEO Group, Inc. Shareholders' Equity	1,199,241		1,677,916		117,015			(1,794,931		)	1,199,241
Noncontrolling Interests	—		—		(322		)	—			(322		)
Total Shareholders’ Equity	1,199,241		1,677,916		116,693			(1,794,931		)	1,198,919
Total Liabilities and Shareholders' Equity	$	3,443,871	$	3,205,526	$	698,778		$	(3,121,267	)	$	4,226,908

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)

	For the Six Months Ended June 30, 2018
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Consolidated
Cash Flow from Operating Activities:
Net cash provided by operating activities	$	118,354		$	37,087		$	24,812		$	180,253
Cash Flow from Investing Activities:
Insurance proceeds - damaged property	—			4,036			—			4,036
Proceeds from sale of property and equipment	—			—			1,717			1,717
Proceeds from sale of assets held for sale	—			3,797			—			3,797
Change in restricted investments	—			(1,490		)	—			(1,490		)
Capital expenditures	(68,607		)	(36,998		)	(1,459		)	(107,064		)
Net cash (used in) provided by investing activities	(68,607		)	(30,655		)	258			(99,004		)
Cash Flow from Financing Activities:
Proceeds from long-term debt	245,000			—			—			245,000
Payments on long-term debt	(134,000		)	—			—			(134,000		)
Payments on non-recourse debt	—			—			(7,490		)	(7,490		)
Taxes paid related to net share settlements of equity awards	(4,391		)	—			—			(4,391		)
Proceeds from issuance of common stock in connection with ESPP	264			—			—			264
Payment for repurchases of common stock	(70,446		)	—			—			(70,446		)
Debt issuance costs	(990		)	—			—			(990		)
Proceeds from stock options exercised	1,372			—			—			1,372
Dividends paid	(115,017		)	—			—			(115,017		)
Net cash used in financing activities	(78,208		)	—			(7,490		)	(85,698		)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash and Cash Equivalents	—			—			(1,881		)	(1,881		)
Net (Decrease) Increase in Cash. Cash Equivalents and Restricted Cash and Cash Equivalents	(28,461		)	6,432			15,699			(6,330		)
Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, beginning of period	54,666			4,952			73,927			133,545
Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, end of period	$	26,205		$	11,384		$	89,626		$	127,215

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)

	For the Six Months Ended June 30, 2017
	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	$	2,389		$	62,559		$	(14,234	)	$	50,714
Cash Flow from Investing Activities:
Acquisition of CEC, net of cash acquired	(354,466		)	—			—			(354,466		)
Proceeds from sale of property and equipment	648			—			—			648
Change in restricted investments	—			(2,963		)	—			(2,963		)
Capital expenditures	(9,709		)	(53,629		)	(4,170		)	(67,508		)
Cash used in by investing activities	(363,527		)	(56,592		)	(4,170		)	(424,289		)
Net cash used in investing activities
Cash Flow from Financing Activities:
Proceeds from long-term debt	1,158,574			—			—			1,158,574
Payments on long-term debt	(972,500		)	—			—			(972,500		)
Payments on non-recourse debt	—			—			(67,885		)	(67,885		)
Proceeds from non-recourse debt	—			—			91,076			91,076
Taxes paid related to net share settlements of equity awards	(4,092		)	—			—			(4,092		)
Issuance of common stock under prospectus supplement	275,867			—			—			275,867
Proceeds from issuance of common stock in connection with ESPP	—			—			242			242
Debt issuance costs	(6,992		)	—			(595		)	(7,587		)
Proceeds from stock options exercised	6,150			—			—			6,150
Dividends paid	(110,859		)	—			—			(110,859		)
Net cash provided by financing activities	346,148			—			22,838			368,986
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash and Cash Equivalents	—			—			1,907			1,907
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash and Cash Equivalents	(14,990		)	5,967			6,341			(2,682		)
Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, beginning of period	45,736			4,922			39,699			90,357
Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, end of period	$	30,746		$	10,889		$	46,040		$	87,675