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Condensed Consolidating Financial Information
9 Months Ended
Sep. 30, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Condensed Consolidating Financial Information
CONDENSED CONSOLIDATING FINANCIAL INFORMATION
As of September 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 September 30, 2018
 
The GEO Group, Inc.
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
208,607

 
$
479,175

 
$
65,028

 
$
(169,280
)
 
$
583,530

Operating expenses
171,038

 
379,892

 
53,156

 
(169,280
)
 
434,806

Depreciation and amortization
6,742

 
23,621

 
934

 

 
31,297

General and administrative expenses
16,878

 
25,568

 
5,201

 

 
47,647

Operating income
13,949

 
50,094

 
5,737

 

 
69,780

Interest income
3,415

 
1,159

 
8,660

 
(4,806
)
 
8,428

Interest expense
(20,765
)
 
(13,714
)
 
(8,318
)
 
4,806

 
(37,991
)
Income (loss) before income taxes and equity in earnings of affiliates
(3,401
)
 
37,539

 
6,079

 

 
40,217

Income tax provision
162

 
2,446

 
1,115

 

 
3,723

Equity in earnings of affiliates, net of income tax provision

 

 
2,735

 

 
2,735

Income (loss) before equity in income of consolidated subsidiaries
(3,563
)
 
35,093

 
7,699

 

 
39,229

Income from consolidated subsidiaries, net of income tax provision
42,792

 

 

 
(42,792
)
 

Net income
39,229

 
35,093

 
7,699

 
(42,792
)
 
39,229

Net loss attributable to noncontrolling interests

 

 
60

 

 
60

Net income attributable to The GEO Group, Inc.
$
39,229

 
$
35,093

 
$
7,759

 
$
(42,792
)
 
$
39,289

 
 
 
 
 
 
 
 
 
 
Net income
$
39,229

 
$
35,093

 
$
7,699

 
$
(42,792
)
 
$
39,229

Other comprehensive income (loss), net of tax

 
(761
)
 
205

 

 
(556
)
Total comprehensive income
$
39,229

 
$
34,332

 
$
7,904

 
$
(42,792
)
 
$
38,673

Comprehensive loss attributable to noncontrolling interests

 

 
72

 

 
72

Comprehensive income attributable to The GEO Group, Inc.
$
39,229

 
$
34,332

 
$
7,976

 
$
(42,792
)
 
$
38,745










CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(dollars in thousands)
(unaudited)
 
 
For the Three Months Ended September 30, 2017
 
The GEO Group, Inc.
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
171,553

 
$
464,140

 
$
69,698

 
$
(138,632
)
 
$
566,759

Operating expenses
139,165

 
364,834

 
57,767

 
(138,632
)
 
423,134

Depreciation and amortization
6,104

 
24,623

 
922

 

 
31,649

General and administrative expenses
14,699

 
28,066

 
6,309

 

 
49,074

Operating income
11,585

 
46,617

 
4,700

 

 
62,902

Interest income
2,688

 
1,629

 
14,871

 
(4,540
)
 
14,648

Interest expense
(18,148
)
 
(13,093
)
 
(12,018
)
 
4,540

 
(38,719
)
Income before income taxes and equity in earnings of affiliates
(3,875
)
 
35,153

 
7,553

 

 
38,831

Income tax provision
147

 
811

 
762

 

 
1,720

Equity in earnings of affiliates, net of income tax provision

 

 
1,342

 

 
1,342

Income (loss) before equity in income of consolidated subsidiaries
(4,022
)
 
34,342

 
8,133

 

 
38,453

Income from consolidated subsidiaries, net of income tax provision
42,475

 

 

 
(42,475
)
 

Net income
38,453

 
34,342

 
8,133

 
(42,475
)
 
38,453

Net loss attributable to noncontrolling interests

 

 
36

 

 
36

Net income attributable to The GEO Group, Inc.
$
38,453

 
$
34,342

 
$
8,169

 
$
(42,475
)
 
$
38,489

 
 
 
 
 
 
 
 
 
 
Net income
$
38,453

 
$
34,342

 
$
8,133

 
$
(42,475
)
 
$
38,453

Other comprehensive income, net of tax

 
64

 
1,561

 

 
1,625

Total comprehensive income
$
38,453

 
$
34,406

 
$
9,694

 
$
(42,475
)
 
$
40,078

Comprehensive loss attributable to noncontrolling interests

 

 
34

 

 
34

Comprehensive income attributable to The GEO Group, Inc.
$
38,453

 
$
34,406

 
$
9,728

 
$
(42,475
)
 
$
40,112























CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(dollars in thousands)
(unaudited)
 
 
For the Nine Months Ended September 30, 2018
 
The GEO Group, Inc.
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
606,424

 
$
1,412,868

 
$
201,090

 
$
(488,426
)
 
$
1,731,956

Operating expenses
483,982

 
1,138,897

 
164,859

 
(488,426
)
 
1,299,312

Depreciation and amortization
19,766

 
71,759

 
3,011

 

 
94,536

General and administrative expenses
47,499

 
73,753

 
15,675

 

 
136,927

Operating income
55,177

 
128,459

 
17,545

 

 
201,181

Interest income
10,998

 
4,023

 
26,951

 
(15,778
)
 
26,194

Interest expense
(59,034
)
 
(42,133
)
 
(25,390
)
 
15,778

 
(110,779
)
Income before income taxes and equity in earnings of affiliates
7,141

 
90,349

 
19,106

 

 
116,596

Income tax provision
1,055

 
6,188

 
4,950

 

 
12,193

Equity in earnings of affiliates, net of income tax provision

 

 
7,071

 

 
7,071

Income before equity in income of consolidated subsidiaries
6,086

 
84,161

 
21,227

 

 
111,474

Income from consolidated subsidiaries, net of income tax provision
105,388

 

 

 
(105,388
)
 

Net income
111,474

 
84,161

 
21,227

 
(105,388
)
 
111,474

Net loss attributable to noncontrolling interests

 

 
223

 

 
223

Net income attributable to The GEO Group, Inc.
$
111,474

 
$
84,161

 
$
21,450

 
$
(105,388
)
 
$
111,697

 
 
 
 
 
 
 
 
 
 
Net income
$
111,474

 
$
84,161

 
$
21,227

 
$
(105,388
)
 
$
111,474

Other comprehensive income (loss), net of tax

 
(31
)
 
(1,332
)
 

 
(1,363
)
Total comprehensive income
$
111,474

 
$
84,130

 
$
19,895

 
$
(105,388
)
 
$
110,111

Comprehensive loss attributable to noncontrolling interests

 

 
247

 

 
247

Comprehensive income attributable to The GEO Group, Inc.
$
111,474

 
$
84,130

 
$
20,142

 
$
(105,388
)
 
$
110,358





















CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(dollars in thousands)
(unaudited)

 
For the Nine Months Ended September 30, 2017
 
The GEO Group, Inc.
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
Revenues
$
520,986

 
$
1,342,620

 
$
250,618

 
$
(419,781
)
 
$
1,694,443

Operating expenses
406,576

 
1,076,232

 
213,259

 
(419,781
)
 
1,276,286

Depreciation and amortization
18,319

 
71,404

 
2,741

 

 
92,464

General and administrative expenses
43,939

 
78,479

 
21,448

 

 
143,866

Operating income
52,152

 
116,505

 
13,170

 

 
181,827

Interest income
12,793

 
2,858

 
39,175

 
(15,855
)
 
38,971

Interest expense
(51,391
)
 
(41,353
)
 
(32,813
)
 
15,855

 
(109,702
)
Income before income taxes and equity in earnings of affiliates
13,554

 
78,010

 
19,532

 

 
111,096

Income tax provision
441

 
3,058

 
2,091

 

 
5,590

Equity in earnings of affiliates, net of income tax provision

 

 
4,255

 

 
4,255

Income before equity in income of consolidated subsidiaries
13,113

 
74,952

 
21,696

 

 
109,761

Income from consolidated subsidiaries, net of income tax provision
96,648

 

 

 
(96,648
)
 

Net income
$
109,761

 
$
74,952

 
$
21,696

 
$
(96,648
)
 
$
109,761

Net loss attributable to noncontrolling interests

 

 
123

 

 
123

Net income attributable to The GEO Group, Inc.
$
109,761

 
$
74,952

 
$
21,819

 
$
(96,648
)
 
$
109,884

 
 
 
 
 
 
 
 
 
 
Net income
$
109,761

 
$
74,952

 
$
21,696

 
$
(96,648
)
 
$
109,761

Other comprehensive income, net of tax

 
175

 
4,586

 

 
4,761

Total comprehensive income
$
109,761

 
$
75,127

 
$
26,282

 
$
(96,648
)
 
$
114,522

Comprehensive loss attributable to noncontrolling interests

 

 
119

 

 
119

Comprehensive income attributable to The GEO Group, Inc.
$
109,761

 
$
75,127

 
$
26,401

 
$
(96,648
)
 
$
114,641






















CONDENSED CONSOLIDATING BALANCE SHEET
(dollars in thousands)
(unaudited)
 
As of September 30, 2018
 
The GEO Group, Inc.
 
Combined
Subsidiary
Guarantors
 
Combined
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
ASSETS
Cash and cash equivalents
$
9,193

 
$
18,059

 
$
38,755

 
$

 
$
66,007

Restricted cash and cash equivalents
5,652

 

 
49,279

 

 
54,931

Accounts receivable, less allowance for doubtful accounts
178,579

 
187,231

 
33,695

 
4,105

 
403,610

Contract receivable, current portion

 

 
9,420

 

 
9,420

Prepaid expenses and other current assets
2,153

 
26,183

 
11,037

 
(1,786
)
 
37,587

Total current assets
195,577

 
231,473

 
142,186

 
2,319

 
571,555

Restricted Cash and Investments

 
23,476

 
5,463

 

 
28,939

Property and Equipment, Net
843,558

 
1,217,597

 
86,850

 

 
2,148,005

Non-Current Contract Receivable

 

 
384,794

 

 
384,794

Assets Held for Sale
705

 
1,929

 

 

 
2,634

Intercompany Receivable
980,555

 
126,525

 
24,460

 
(1,131,540
)
 

Non-Current Deferred Income Tax Assets
863

 
23,913

 
1,501

 

 
26,277

Goodwill

 
775,955

 
413

 

 
776,368

Intangible Assets, Net

 
237,345

 
602

 

 
237,947

Investment in Subsidiaries
1,516,564

 
458,229

 
2,190

 
(1,976,983
)
 

Other Non-Current Assets
8,711

 
115,759

 
20,245

 
(78,895
)
 
65,820

Total Assets
$
3,546,533

 
$
3,212,201

 
$
668,704

 
$
(3,185,099
)
 
$
4,242,339

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable
$
11,967

 
$
64,568

 
$
5,749

 
$

 
$
82,284

Accrued payroll and related taxes

 
33,424

 
20,173

 

 
53,597

Accrued expenses and other current liabilities
43,371

 
121,258

 
30,511

 
2,319

 
197,459

Current portion of capital lease obligations, long-term debt and non-recourse debt
8,000

 
1,998

 
330,145

 

 
340,143

Total current liabilities
63,338

 
221,248

 
386,578

 
2,319

 
673,483

Non-Current Deferred Income Tax Liabilities

 

 
8,757

 

 
8,757

Intercompany Payable
118,478

 
979,528

 
33,534

 
(1,131,540
)
 

Other Non-Current Liabilities
1,337

 
157,333

 
9,439

 
(78,895
)
 
89,214

Capital Lease Obligations

 
4,954

 

 

 
4,954

Long-Term Debt
2,282,399

 

 
80,919

 

 
2,363,318

Non-Recourse Debt

 

 
22,201

 

 
22,201

Commitments & Contingencies and Other


 


 


 


 


Shareholders' Equity:
 
 
 
 
 
 
 
 
 
The GEO Group, Inc. Shareholders' Equity
1,080,981

 
1,849,138

 
127,845

 
(1,976,983
)
 
1,080,981

Noncontrolling Interests

 

 
(569
)
 

 
(569
)
Total Shareholders’ Equity
1,080,981

 
1,849,138

 
127,276

 
(1,976,983
)
 
1,080,412

Total Liabilities and Shareholders' Equity
$
3,546,533

 
$
3,212,201

 
$
668,704

 
$
(3,185,099
)
 
$
4,242,339

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 Nine Months Ended September 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
$
112,599

 
$
70,040

 
$
37,584

 
$
220,223

Cash Flow from Investing Activities:
 
 
 
 
 
 
 
Insurance proceeds - damaged property

 
5,998

 

 
5,998

Proceeds from sale of property and equipment

 

 
2,061

 
2,061

Proceeds from sale of assets held for sale

 
3,797

 

 
3,797

Change in restricted investments

 
(2,413
)
 

 
(2,413
)
Capital expenditures
(95,461
)
 
(64,015
)
 
(2,014
)
 
(161,490
)
Net cash (used in) provided by investing activities
(95,461
)
 
(56,633
)
 
47

 
(152,047
)
Cash Flow from Financing Activities:
 
 
 
 
 
 
 
Proceeds from long-term debt
372,000

 

 

 
372,000

Payments on long-term debt
(183,000
)
 

 
(3,033
)
 
(186,033
)
Payments on non-recourse debt

 

 
(9,636
)
 
(9,636
)
Taxes paid related to net share settlements of equity awards
(4,452
)
 

 

 
(4,452
)
Proceeds from issuance of common stock in connection with ESPP
404

 

 

 
404

Payment for repurchases of common stock
(70,446
)
 

 

 
(70,446
)
Debt issuance costs
(990
)
 

 

 
(990
)
Proceeds from stock options exercised
1,781

 

 

 
1,781

Dividends paid
(172,256
)
 

 

 
(172,256
)
Net cash used in financing activities
(56,959
)
 

 
(12,669
)
 
(69,628
)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash and Cash Equivalents

 

 
(5,392
)
 
(5,392
)
Net (Decrease) Increase in Cash. Cash Equivalents and Restricted Cash and Cash Equivalents
(39,821
)
 
13,407

 
19,570

 
(6,844
)
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
$
14,845

 
$
18,359

 
$
93,497

 
$
126,701

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
(dollars in thousands)
(unaudited)
 
 
For the Nine Months Ended September 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
$
15,303

 
$
79,088

 
$
(36,486
)
 
$
57,905

Cash Flow from Investing Activities:
 
 
 
 
 
 
 
Acquisition of CEC, net of cash acquired
(353,555
)
 

 

 
(353,555
)
Proceeds from sale of property and equipment
845

 

 
11

 
856

Insurance proceeds - damaged property
86

 

 

 
86

Change in restricted investments

 
(3,810
)
 

 
(3,810
)
Capital expenditures
(34,679
)
 
(61,432
)
 
(8,019
)
 
(104,130
)
Cash used in by investing activities
(387,303
)
 
(65,242
)
 
(8,008
)
 
(460,553
)
Net cash used in investing activities
 
 
 
 
 
 
 
Cash Flow from Financing Activities:

 

 

 

Proceeds from long-term debt
1,324,865

 

 

 
1,324,865

Payments on long-term debt
(1,093,088
)
 

 

 
(1,093,088
)
Payments on non-recourse debt

 

 
(68,887
)
 
(68,887
)
Proceeds from non-recourse debt

 

 
123,785

 
123,785

Taxes paid related to net share settlements of equity awards
(4,122
)
 

 

 
(4,122
)
Issuance of common stock under prospectus supplement
275,867

 

 

 
275,867

Proceeds from issuance of common stock in connection with ESPP

 

 
382

 
382

Debt issuance costs
(8,701
)
 

 
(769
)
 
(9,470
)
Proceeds from stock options exercised
6,786

 

 

 
6,786

Dividends paid
(169,152
)
 

 

 
(169,152
)
Net cash provided by financing activities
332,455

 

 
54,511

 
386,966

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash and Cash Equivalents

 

 
863

 
863

Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash and Cash Equivalents
(39,545
)
 
13,846

 
10,880

 
(14,819
)
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
$
6,191

 
$
18,768

 
$
50,579

 
$
75,538