Condensed Consolidating Financial Information

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidating Financial Information

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

As of March 31, 2019, 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 March 31, 2019
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	228,382		$	494,890		$	68,968		$	(181,573	)	$	610,667
Operating expenses	171,516			412,453			54,601			(181,573		)	456,997
Depreciation and amortization	7,419			24,185			865			—			32,469
General and administrative expenses	17,200			24,030			5,194			—			46,424
Operating income	32,247			34,222			8,308			—			74,777
Interest income	3,478			1,335			8,198			(4,615		)	8,396
Interest expense	(23,296		)	(13,847		)	(7,752		)	4,615			(40,280		)
Income before income taxes and equity in earnings of affiliates	12,429			21,710			8,754			—			42,893
Income tax provision	289			2,379			2,172			—			4,840
Equity in earnings of affiliates, net of income tax provision	—			—			2,596			—			2,596
Income before equity in income of consolidated subsidiaries	12,140			19,331			9,178			—			40,649
Income from consolidated subsidiaries, net of income tax provision	28,509			—			—			(28,509		)	—
Net income	40,649			19,331			9,178			(28,509		)	40,649
Net loss attributable to noncontrolling interests	—			—			56			—			56
Net income attributable to The GEO Group, Inc.	$	40,649		$	19,331		$	9,234		$	(28,509	)	$	40,705
Net income	$	40,649		$	19,331		$	9,178		$	(28,509	)	$	40,649
Other comprehensive income (loss), net of tax	—			(648		)	2,900			—			2,252
Total comprehensive income	$	40,649		$	18,683		$	12,078		$	(28,509	)	$	42,901
Comprehensive loss attributable to noncontrolling interests	—			—			56			—			56
Comprehensive income attributable to The GEO Group, Inc.	$	40,649		$	18,683		$	12,134		$	(28,509	)	$	42,957

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)

	For the Three Months Ended March 31, 2018
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	195,630		$	458,728		$	68,806		$	(158,247	)	$	564,917
Operating expenses	151,822			377,966			55,168			(158,247		)	426,709
Depreciation and amortization	6,460			24,443			1,023			—			31,926
General and administrative expenses	14,341			22,447			5,044			—			41,832
Operating income	23,007			33,872			7,571			—			64,450
Interest income	4,177			1,417			9,384			(5,879		)	9,099
Interest expense	(18,622		)	(14,460		)	(8,666		)	5,879			(35,869		)
Income before income taxes and equity in earnings of affiliates	8,562			20,829			8,289			—			37,680
Income tax provision	177			2,300			2,278			—			4,755
Equity in earnings of affiliates, net of income tax provision	—			—			1,995			—			1,995
Income (loss) before equity in income of consolidated subsidiaries	8,385			18,529			8,006			—			34,920
Income from consolidated subsidiaries, net of income tax provision	26,535			—			—			(26,535		)	—
Net income	34,920			18,529			8,006			(26,535		)	34,920
Net loss attributable to noncontrolling interests	—			—			67			—			67
Net income attributable to The GEO Group, Inc.	$	34,920		$	18,529		$	8,073		$	(26,535	)	$	34,987
Net income	$	34,920		$	18,529		$	8,006		$	(26,535	)	$	34,920
Other comprehensive income, net of tax	—			105			1,257			—			1,362
Total comprehensive income	$	34,920		$	18,634		$	9,263		$	(26,535	)	$	36,282
Comprehensive loss attributable to noncontrolling interests	—			—			59			—			59
Comprehensive income attributable to The GEO Group, Inc.	$	34,920		$	18,634		$	9,322		$	(26,535	)	$	36,341

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

(unaudited)

	As of March 31, 2019
	The GEO Group, Inc.		Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	32,701	$	2,965	$	32,062		$	—		$	67,728
Restricted cash and cash equivalents	1,125		—		52,624			—			53,749
Accounts receivable, less allowance for doubtful accounts	177,929		199,420		43,128			3,119			423,596
Contract receivable, current portion	—		—		16,005			—			16,005
Prepaid expenses and other current assets	586		40,108		4,736			(1,895		)	43,535
Total current assets	212,341		242,493		148,555			1,224			604,613
Restricted Cash and Investments	—		24,954		2,328			—			27,282
Property and Equipment, Net	842,309		1,223,123		85,195			—			2,150,627
Assets Held for Sale	705		3,902		—			—			4,607
Contract Receivable	—		—		368,698			—			368,698
Operating Lease Right-of-Use Assets, Net	25,097		107,432		836			—			133,365
Intercompany Receivable	989,843		219,936		25,462			(1,235,241		)	—
Deferred Income Tax Assets	798		27,928		1,198			—			29,924
Goodwill	—		775,954		407			—			776,361
Intangible Assets, Net	—		226,229		553			—			226,782
Investment in Subsidiaries	1,483,260		458,229		2,189			(1,943,678		)	—
Other Non-Current Assets	7,931		113,075		19,289			(78,488		)	61,807
Total Assets	$	3,562,284	$	3,423,255	$	654,710		$	(3,256,183	)	$	4,384,066
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	13,657	$	70,420	$	9,381		$	—		$	93,458
Accrued payroll and related taxes	—		37,351		20,728			—			58,079
Accrued expenses and other current liabilities	35,765		126,669		26,938			(198		)	189,174
Operating lease liabilities, current portion	5,042		29,786		382			—			35,210
Current portion of finance lease liabilities, long-term debt and non-recourse debt	8,000		1,521		323,343			—			332,864
Total current liabilities	62,464		265,747		380,772			(198		)	708,785
Deferred Income Tax Liabilities	—		—		13,681			—			13,681
Intercompany Payable	92,733		1,106,285		34,800			(1,233,818		)	—
Other Non-Current Liabilities	387		151,804		6,031			(78,488		)	79,734
Operating lease Liabilities	20,612		81,171		455			—			102,238
Finance Lease Liabilities	—		4,179		—			—			4,179
Long-Term Debt	2,358,529		—		74,904			—			2,433,433
Non-Recourse Debt	—		—		15,112			—			15,112
Commitments & Contingencies and Other
Shareholders' Equity:
The GEO Group, Inc. Shareholders' Equity	1,027,559		1,814,069		129,610			(1,943,679		)	1,027,559
Noncontrolling Interests	—		—		(655		)	—			(655		)
Total Shareholders’ Equity	1,027,559		1,814,069		128,955			(1,943,679		)	1,026,904
Total Liabilities and Shareholders' Equity	$	3,562,284	$	3,423,255	$	654,710		$	(3,256,183	)	$	4,384,066

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

	As of December 31, 2018
	The GEO Group, Inc.		Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	4,468	$	7,873	$	18,914		$	—		$	31,255
Restricted cash and cash equivalents	2,854		—		48,824			—			51,678
Accounts receivable, less allowance for doubtful accounts	190,594		221,957		44,377			(11,402		)	445,526
Contract receivable, current portion	—		—		15,535			—			15,535
Prepaid expenses and other current assets	2,011		50,482		7,114			(1,839		)	57,768
Total current assets	199,927		280,312		134,764			(13,241		)	601,762
Restricted Cash and Investments	—		21,009		1,422			—			22,431
Property and Equipment, Net	845,291		1,227,223		86,096			—			2,158,610
Assets Held for Sale	705		1,929		—			—			2,634
Contract Receivable	—		—		368,178						368,178
Intercompany Receivable	990,365		150,710		22,407			(1,163,482		)	—
Deferred Income Tax Assets	798		27,928		1,198			—			29,924
Goodwill	—		775,955		404			—			776,359
Intangible Assets, Net	—		231,787		573			—			232,360
Investment in Subsidiaries	1,503,841		458,229		2,190			(1,964,260		)	—
Other Non-Current Assets	9,541		115,695		19,334			(78,710		)	65,860
Total Assets	$	3,550,468	$	3,290,777	$	636,566		$	(3,219,693	)	$	4,258,118
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	13,566	$	72,128	$	7,338		$	—		$	93,032
Accrued payroll and related taxes	—		56,543		19,466			—			76,009
Accrued expenses and other current liabilities	23,565		168,231		25,615			(13,241		)	204,170
Current portion of finance lease liabilities, long-term debt and non-recourse debt	8,000		2,017		322,010			—			332,027
Total current liabilities	45,131		298,919		374,429			(13,241		)	705,238
Deferred Income Tax Liabilities	—		—		13,681			—			13,681
Intercompany Payable	142,055		989,856		31,571			(1,163,482		)	—
Other Non-Current Liabilities	1,395		152,815		6,981			(78,710		)	82,481
Finance Lease Liabilities	—		4,570		—			—			4,570
Long-Term Debt	2,321,384		—		75,843			—			2,397,227
Non-Recourse Debt	—		—		15,017			—			15,017
Commitments & Contingencies and Other
Shareholders' Equity:
The GEO Group, Inc. Shareholders' Equity	1,040,503		1,844,617		119,643			(1,964,260		)	1,040,503
Noncontrolling Interests	—		—		(599		)	—			(599		)
Total Shareholders’ Equity	1,040,503		1,844,617		119,044			(1,964,260		)	1,039,904
Total Liabilities and Shareholders' Equity	$	3,550,468	$	3,290,777	$	636,566		$	(3,219,693	)	$	4,258,118

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)

	For the Three Months Ended March 31, 2019
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Consolidated
Cash Flow from Operating Activities:
Net cash provided by operating activities	$	14,354		$	20,879		$	63,778		$	99,011
Cash Flow from Investing Activities:
Insurance proceeds - damaged property	—			2,503			—			2,503
Proceeds from sale of property and equipment	—			274			—			274
Change in restricted investments	—			(4,062		)	—			(4,062		)
Capital expenditures	(6,608		)	(21,452		)	(24		)	(28,084		)
Net cash used in investing activities	(6,608		)	(22,737		)	(24		)	(29,369		)
Cash Flow from Financing Activities:
Proceeds from long-term debt	130,000			—			—			130,000
Payments on long-term debt	(96,926		)	—			—			(96,926		)
Payments on non-recourse debt	—			—			(2,089		)	(2,089		)
Taxes paid related to net share settlements of equity awards	(4,172		)	—			—			(4,172		)
Proceeds from issuance of common stock in connection with ESPP	124			—			—			124
Proceeds from stock options exercised	333			—			—			333
Dividends paid	(57,945		)	—			—			(57,945		)
Net cash used in financing activities	(28,586		)	—			(2,089		)	(30,675		)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash and Cash Equivalents	—			—			366			366
Net (Decrease) Increase in Cash. Cash Equivalents and Restricted Cash and Cash Equivalents	(20,840		)	(1,858		)	62,031			39,333
Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, beginning of period	54,666			4,823			24,983			84,472
Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, end of period	$	33,826		$	2,965		$	87,014		$	123,805

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)

	For the Three Months Ended March 31, 2018
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Consolidated
Cash Flow from Operating Activities:
Net cash provided by operating activities	$	39,888		$	17,614		$	12,184		$	69,686
Cash Flow from Investing Activities:
Proceeds from sale of assets held for sale	—			3,797						3,797
Insurance proceeds - damaged property	—			4,504			—			4,504
Change in restricted investments	—			(505		)	—			(505		)
Capital expenditures	(34,360		)	(16,654		)	(1,133		)	(52,147		)
Net cash used in investing activities	(34,360		)	(8,858		)	(1,133		)	(44,351		)
Cash Flow from Financing Activities:
Proceeds from long-term debt	102,000			—			—			102,000
Payments on long-term debt	(43,000		)	—			—			(43,000		)
Payments on non-recourse debt	—			—			(5,600		)	(5,600		)
Taxes paid related to net share settlements of equity awards	(4,356		)	—			—			(4,356		)
Proceeds from issuance of common stock in connection with ESPP	140			—			—			140
Proceeds from stock options exercised	260			—			—			260
Payments for repurchases of common stock	(40,182		)	—			—			(40,182		)
Dividends paid	(58,238		)	—			—			(58,238		)
Net cash used in financing activities	(43,376		)	—			(5,600		)	(48,976		)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash and Cash Equivalents	—			—			(655		)	(655		)
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash and Cash Equivalents	(37,848		)	8,756			4,796			(24,296		)
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	$	16,818		$	13,708		$	78,723		$	109,249