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 corrections and detention business. The International Services segment primarily consists of 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	2018			2017			2016
Revenues:
U.S. Corrections & Detention	$	1,492,973		$	1,438,044		$	1,375,277
GEO Care	580,313			514,166			394,449
International Services	253,874			195,806			157,363
Facility Construction and Design [1] [2]	4,226			115,404			252,401
Total revenues	$	2,331,386		$	2,263,420		$	2,179,490
Capital Expenditures:
U.S. Corrections & Detention	$	163,208		$	117,186		$	40,764
GEO Care	30,136			24,263			35,001
International Services	2,322			6,957			5,800
Total capital expenditures	$	195,666		$	148,406		$	81,565
Depreciation and amortization:
U.S. Corrections & Detention	$	76,801		$	75,276		$	74,154
GEO Care	47,546			47,103			38,687
International Services	2,087			1,918			2,075
Total depreciation and amortization	$	126,434		$	124,297		$	114,916
Operating Income:
U.S. Corrections & Detention	$	297,453		$	302,488		$	296,078
GEO Care	138,911			123,525			111,780
International Services	12,816			14,235			5,809
Facility Construction & Design [1] [2]	—			(1,620		)	626
Operating income from segments	$	449,180		$	438,628		$	414,293
General and Administrative Expenses	(184,515		)	(190,343		)	(148,709		)
Total operating income	$	264,665		$	248,285		$	265,584

[1] The Company began the design and construction of a new prison located in Ravenhall, a locality near Melbourne, Australia in 2014. The facility was completed in November 2017. There were no capital expenditures or depreciation or amortization associated with this segment in 2018, 2017 or 2016. Refer to Note 7 - Contract Receivable.

[2] During 2018, the Company had facility construction & design revenues related to an expansion project at its Fulham Correctional Centre in Australia which is expected to be completed in the third quarter of 2020. There is no margin associated with the expansion.

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, 2018, 2017 and 2016, respectively.



Fiscal Year Ended	2018			2017			2016
	(In thousands)
Operating income from segments	$	449,180		$	438,628		$	414,293
Unallocated amounts:
General and administrative expense	(184,515		)	(190,343		)	(148,709		)
Net interest expense	(115,348		)	(96,348		)	(100,222		)
Loss on extinguishment of debt	—			—			(15,885		)
Income before income taxes and equity in earnings of affiliates	$	149,317		$	151,937		$	149,477



	2018		2017		2016
	(In thousands)
Segment assets:
U.S. Corrections & Detention	$	2,580,067	$	2,385,069	$	2,390,705
GEO Care	1,063,484		1,121,792		711,795
International Services	84,911		40,056		64,417
Facility Construction & Design	383,713		499,406		446,434
Total segment assets	$	4,112,175	$	4,046,323	$	3,613,351

Asset Reconciliation

The following is a reconciliation of the Company’s reportable segment assets to the Company’s total assets as of December 31, 2018 and 2017, respectively.



	2018		2017
	(In thousands)
Reportable segment assets	$	4,112,175	$	4,046,323
Cash	31,255		81,377
Deferred income tax assets	29,924		26,277
Restricted cash and investments, current and non-current	74,109		72,931
Total assets	$	4,247,463	$	4,226,908

Geographic Information

During each of the years ended December 31, 2018, 2017 and 2016, 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, had a design and construction contract for a new prison in Ravenhall, Australia which was completed in November 2017, (iii) the Company’s wholly-owned subsidiary 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	2018		2017		2016
	(In thousands)
Revenues:
U.S. operations	$	2,073,286	$	1,952,210	$	1,770,273
Australia operations	231,164		285,702		388,361
South African operations	19,806		18,251		13,658
United Kingdom operations	7,130		7,257		7,198
Total revenues	$	2,331,386	$	2,263,420	$	2,179,490
Property and Equipment, net:
U.S. operations	$	2,145,197	$	2,061,711	$	1,887,043
Australia operations	13,006		16,281		10,053
South African operations	88		131		145
United Kingdom operations	319		—		—
Total Property and Equipment, net	$	2,158,610	$	2,078,123	$	1,897,241

Sources of Revenue

The Company derives most of its revenue from the management of correction and detention facilities through public-private partnerships. 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	2018		2017		2016
	(In thousands)
Revenues:
Corrections & Detention	$	1,746,847	$	1,633,850	$	1,532,640
GEO Care	580,313		514,166		394,449
Facility Construction and Design	4,226		115,404		252,401
Total revenues	$	2,331,386	$	2,263,420	$	2,179,490

Equity in Earnings of Affiliates

Equity in earnings of affiliates for 2018, 2017 and 2016 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 $7.4 million, $10.8 million and $4.3 million in earnings, net of tax impact, for SACS operations during the years ended December 31, 2018, 2017 and 2016, respectively, which are included in equity in earnings of affiliates, net of income tax provision in the accompanying Consolidated Statements of Operations. During 2017, SACS was successful in obtaining a favorable tax judgment which resulted in an increase in earnings net of taxes of $5.5 million As of December 31, 2018 and 2017, the Company’s investment in SACS was $13.4 million and $18.1 million, respectively. The investment is included in other non-current assets in the accompanying Consolidated Balance Sheets. The Company received dividend distributions of $11.8 million and $6.1 million, in 2018 and 2017, respectively from this unconsolidated joint venture.

The Company has recorded $2.2 million, $1.2 million and $2.6 million in earnings, net of tax impact, for GEOAmey’s operations during the years ended December 31, 2018, 2017 and 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 December 31, 2018 and 2017, the Company’s investment in GEOAmey was $4.8 million and $2.7 million, respectively, and represents its share of cumulative reported earnings (losses).

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	2018		2017		2016
Various agencies of the U.S Federal Government:	50	%	48	%	48	%

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.