Shareholders' Equity

9 Months Ended

Sep. 30, 2019

SHAREHOLDERS’ EQUITY

The following table presents the changes in shareholders’ equity that are attributable to the Company’s shareholders and to noncontrolling interests for the three and nine months ended September 30, 2019 and 2018 (in thousands):



	Common shares					Additional Paid-In			Distributions in Excess of			Accumulated Other Comprehensive			Treasury shares				Noncontrolling			Total Shareholders'
	Shares		Amount			Capital			Earnings			Loss			Shares	Amount			Interests			Equity
For the Three Months Ended September 30, 2019
Balance, July 1, 2019	121,213		$	1,254		$	1,220,242		$	(87,339	)	$	(16,716	)	4,210	$	(95,175	)	$	(728	)	$	1,021,538
Proceeds from exercise of stock options	15		1			181			—			—			—	—			—			182
Stock-based compensation expense	—		—			4,739			—			—			—	—			—			4,739
Restricted stock canceled	(14	)	(1		)	1			—			—			—	—			—			—
Dividends paid	—		—			—			(58,200		)	—			—	—			—			(58,200		)
Shares withheld for net settlements of share-based awards [1]	(1	)	—			(2		)	—			—			—	—			—			(2		)
Issuance of common stock - ESPP	9		1			149			—			—			—	—			—			150
Net income (loss)	—		—			—			45,932			—			—	—			(47		)	45,885
Other comprehensive income (loss)	—		—			—			—			(7,273		)	—	—			(15		)	(7,288		)
Balance, September 30, 2019	121,222		$	1,255		$	1,225,310		$	(99,607	)	$	(23,989	)	4,210	$	(95,175	)	$	(790	)	$	1,007,004



	Common shares						Additional Paid-In			Distributions in Excess of			Accumulated Other Comprehensive			Treasury shares					Noncontrolling			Total Shareholders'
	Shares			Amount			Capital			Earnings			Loss			Shares		Amount			Interests			Equity
For the Three Months Ended September 30, 2018
Balance, July 1, 2018	$	121,677		$	1,248		$	1,198,930		$	(11,068	)	$	(25,229	)	3,117		$	(70,446	)	$	(498	)	$	1,092,937
Proceeds from exercise of stock options	20			—			409			—			—			—		—			—			409
Stock-based compensation expense	—			—			5,564			—			—			—		—			—			5,564
Restricted stock granted	9			—			—			—			—			—		—			—			—
Restricted stock canceled	(24		)	—			—			—			—			—		—			—			—
Dividends paid	—			—			—			(57,239		)	—			—		—			—			(57,239		)
Shares withheld for net settlements of share-based awards [1]	(2		)	—			(61		)	—			—			—		—			—			(61		)
Issuance of common stock - ESPP	6			—			140			—			—			—		—			—			140
Net income (loss)	—			—			—			39,289			—			—		—			(60		)	39,229
Other comprehensive income (loss)	—			—			—			—			(556		)	—		—			(11		)	(567		)
Balance, September 30, 2018	121,686			$	1,248		$	1,204,982		$	(29,018	)	$	(25,785	)	3,117		$	(70,446	)	$	(569	)	$	1,080,412

	Common shares						Additional Paid-In			Distributions in Excess of			Accumulated Other Comprehensive			Treasury shares					Noncontrolling			Total Shareholders'
	Shares			Amount			Capital			Earnings			Loss			Shares		Amount			Interests			Equity
For the Nine Months Ended September 30, 2019
Balance January 1, 2019	$	120,585		$	1,248		$	1,210,916		$	(52,868	)	$	(23,618	)	$	4,210	$	(95,175	)	$	(599	)	$	1,039,904
Proceeds from exercise of stock options	78			1			1,258			—			—			—		—			—			1,259
Stock-based compensation expense	—			—			16,919			—			—			—		—			—			16,919
Restricted stock granted	788			8			(8		)	—			—			—		—			—			—
Restricted stock canceled	(52		)	—			—			—			—			—		—			—			—
Dividends paid	—			—			—			(174,322		)	—			—		—			—			(174,322		)
Shares withheld for net settlements of share-based awards [1]	(198		)	(2		)	(4,175		)	—			—			—		—			—			(4,177		)
Issuance of common stock - ESPP	21			—			400			—			—			—		—			—			400
Transition adjustment for accounting standard adoption [2]	—			—			—			(968		)	968			—		—			—			—
Net income (loss)	—			—			—			128,551			—			—		—			(181		)	128,370
Other comprehensive income (loss)	—			—			—			—			(1,339		)	—		—			(10		)	(1,349		)
Balance, September 30, 2019	121,222			$	1,255		$	1,225,310		$	(99,607	)	$	(23,989	)	4,210		$	(95,175	)	$	(790	)	$	1,007,004



	Common shares					Additional Paid-In				Earnings in Excess of			Accumulated Other Comprehensive			Treasury shares				Noncontrolling			Total Shareholders'
	Shares		Amount			Capital				Distributions			Loss			Shares	Amount			Interests			Equity
For the Nine Months Ended September 30, 2018
Balance, January 1, 2018	124,008		$	1,240		$	1,190,906			$	31,541		$	(24,446	)	—	—			$	(322	)	$	1,198,919
Proceeds from exercise of stock options	97		1			1,780			—	—			—			—	—			—			1,781
Stock-based compensation expense	—		—			16,351			—	—			—			—	—			—			16,351
Restricted stock granted	905		9			(9		)	—	—			—			—	—			—			—
Restricted stock canceled	(52	)	—			—			—	—			—			—	—			—			—
Dividends paid	—		—			—				(172,256		)	—			—	—			—			(172,256		)
Shares withheld for net settlements of share-based awards [1]	(173	)	(2		)	(4,450		)	—	—			—			—	—			—			(4,452		)
Issuance of common stock - ESPP	18		—			404			—	—			—			—	—			—			404
Repurchases of common stock	(3,117	)	—			—			—	—			—			3,117	(70,446		)	—			(70,446		)
Net income (loss)	—		—			—				111,697			—			—	—			(223		)	111,474
Other comprehensive income (loss)	—		—			—				—			(1,339		)	—	—			(24		)	(1,363		)
Balance, September 30, 2018	121,686		$	1,248		$	1,204,982			$	(29,018	)	$	(25,785	)	3,117	$	(70,446	)	$	(569	)	$	1,080,412

[1] During the nine months ended September 30, 2019 and 2018, the Company withheld shares through net share settlements to satisfy statutory tax withholding requirements upon vesting of shares of restricted stock held by employees.

[2] On January 1, 2019, the Company adopted Accounting Standard Update ("ASU") No. 2018-02 "Income Statement-Reporting Comprehensive Income-Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income". Refer to Note 15 - Recent Accounting Pronouncements for further information.

REIT Distributions

As a REIT, GEO is required to distribute annually at least 90% of its REIT taxable income (determined without regard to the dividends paid deduction and by excluding net capital gain) and began paying regular quarterly REIT dividends in 2013. The amount, timing and frequency of future dividends, however, will be at the sole discretion of GEO's Board of Directors (the "Board”) and will be declared based upon various factors, many of which are beyond GEO's control, including, GEO's financial condition and operating cash flows, the amount required to maintain REIT status, limitations on distributions in GEO's existing and future debt instruments, limitations on GEO's ability to fund distributions using cash generated through GEO's taxable REIT subsidiaries ("TRSs") and other factors that GEO's Board may deem relevant.

During the nine months ended September 30, 2019 and the year ended December 31, 2018 GEO declared and paid the following regular cash distributions to its shareholders as follows:



Declaration Date	Record Date	Payment Date	Distribution Per Share	Aggregate Payment Amount (in millions)
February 5, 2018	February 16, 2018	February 27, 2018	$0.47	$58.3
April 11, 2018	April 23, 2018	May 3, 2018	$0.47	$57.4
July 10, 2018	July 20, 2018	July 27, 2018	$0.47	$57.2
October 15, 2018	October 26, 2018	November 2, 2018	$0.47	$57.2
February 4, 2019	February 15, 2019	February 22, 2019	$0.48	$57.9
April 3, 2019	April 15, 2019	April 22, 2019	$0.48	$58.2
July 9, 2019	July 19, 2019	July 26, 2019	$0.48	$58.2

Stock Buyback Program

On February 14, 2018, the Company announced that its Board authorized a stock buyback program authorizing the Company to repurchase up to a maximum of $200 million of its shares of common stock. The stock buyback program will be funded primarily with cash on hand, free cash flow and borrowings under the Company's $900 million revolving credit facility (the "Revolver"). The program is effective through October 20, 2020. The stock buyback program is intended to be implemented through purchases made from time to time in the open market or in privately negotiated transactions, in accordance with applicable Securities and Exchange Commission ("SEC") requirements. The stock buyback program does not obligate the Company to purchase any specific amount of the Company's common stock and may be suspended or extended at any time at the discretion of the Company's Board. There were no repurchases of shares of the Company's common stock during the nine months ended September 30, 2019. The Company believes it has the ability to continue to fund the stock buyback program, its debt service requirements and its maintenance and growth capital expenditure requirements, while maintaining sufficient liquidity for other corporate purposes.

Prospectus Supplement

On October 20, 2017, the Company filed with the SEC an automatic shelf registration on Form S-3. Under this shelf registration, the Company may, from time to time, sell any combination of securities described in the prospectus in one or more offerings. Each time that the Company may sell securities, the Company will provide a prospectus supplement that will contain specific information about the terms of that offering and the securities being offered. On November 9, 2017, in connection with the shelf registration, the Company filed with the SEC a prospectus supplement related to the offer and sale from time to time of the Company’s common stock at an aggregate offering price of up to $150 million through sales agents. Sales of shares of the Company’s common stock under the prospectus supplement and the equity distribution agreements entered into with the sales agents, if any, may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933. There were no shares of common stock sold under this prospectus supplement during the nine months ended September 30, 2019.

Comprehensive Income (Loss)

Comprehensive income (loss) represents the change in shareholders' equity from transactions and other events and circumstances arising from non-shareholder sources. The Company's total comprehensive income (loss) is comprised of net income attributable to GEO, net income attributable to noncontrolling interests, foreign currency translation adjustments that arise from consolidating foreign operations that do not impact cash flows, net unrealized gains and/or losses on derivative instruments, and pension liability adjustments within shareholders' equity and comprehensive income (loss).

The components of accumulated other comprehensive income (loss) attributable to GEO within shareholders' equity are as follows:



	Nine Months Ended September 30, 2019
	(In thousands)
	Foreign currency translation adjustments, net of tax attributable to The GEO Group, Inc. (1)			Change in fair value of derivatives, net of tax (2)			Pension adjustments, net of tax			Total
Balance, January 1, 2019	$	(14,573	)	$	(5,746	)	$	(3,299	)	$	(23,618	)
Current-period other comprehensive loss before reclassifications	(2,777		)	(882		)	(563		)	(4,222		)
Amounts reclassified from other comprehensive income into earnings	—			3,851			—			3,851
Net current-period other comprehensive income (loss)	(2,777		)	2,969			(563		)	(371		)
Balance, September 30, 2019	$	(17,350	)	$	(2,777	)	$	(3,862	)	$	(23,989	)

(1) The foreign currency translation related to noncontrolling interests was not significant at September 30, 2019 or December 31, 2018.

(2) On May 22, 2019, the Company refinanced the debt associated with its Ravenhall project and terminated the associated interest rate swap derivatives which resulted in the reclassification of $3.9 million into losses that were previously reported in accumulated other comprehensive income (loss). In August 2019, the Company entered into two identical Notes in the aggregate amount of $44.3 million which are secured by loan agreements and mortgage and security agreements on certain real property and improvements. The Company has entered into interest rate swap agreements to fix the interest rate to 4.22%. Refer to Note 10 - Derivative Financial Instruments and Note 11 - Debt for additional information.



	Nine Months Ended September 30, 2018
	(In thousands)
	Foreign currency translation adjustments, net of tax attributable to The GEO Group, Inc. (1)		Change in fair value of derivatives, net of tax		Pension adjustments, net of tax		Total
Balance, January 1, 2018	(7,470	)	(11,892	)	(5,084	)	(24,446	)
Current-period other comprehensive (loss) income	(5,858	)	4,550		(31	)	(1,339	)
Balance, September 30, 2018	(13,328	)	(7,342	)	(5,115	)	(25,785	)

(1) The foreign currency translation related to noncontrolling interests was not significant at September 30, 2018 or December 31, 2017.