Condensed Consolidating Financial Information

3 Months Ended

Mar. 31, 2020

Condensed Consolidating Financial Information Disclosure [Abstract]

Condensed Consolidating Financial Information

15. CONDENSED CONSOLIDATING FINANCIAL INFORMATION

As of March 31, 2020, 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

(dollars in thousands)

(unaudited)

	For the Three Months Ended March 31, 2020
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	238,715		$	492,774		$	65,111		$	(191,583	)	$	605,017
Operating expenses		187,566			414,639			50,700			(191,583	)		461,322
Depreciation and amortization		7,816			24,574			937			—			33,327
General and administrative expenses		21,021			27,027			5,734			—			53,782
Operating income		22,312			26,534			7,740			—			56,586
Interest income		3,358			1,372			5,005			(4,297	)		5,438
Interest expense		(20,738	)		(13,616	)		(4,123	)		4,297			(34,180	)
Gain on extinguishment of debt		—			1,563			—			—			1,563
Income before income taxes and equity in earnings of    affiliates		4,932			15,853			8,622			—			29,407
Income tax provision		198			4,034			2,314			—			6,546
Equity in earnings of affiliates, net of income    tax provision		—			—			2,260			—			2,260
Income before equity in income of consolidated    subsidiaries		4,734			11,819			8,568			—			25,121
Income from consolidated subsidiaries, net of income    tax provision		20,387			—			—			(20,387	)		—
Net income		25,121			11,819			8,568			(20,387	)		25,121
Net loss attributable to noncontrolling interests		—			—			60			—			60
Net income attributable to The GEO Group, Inc.	$	25,121		$	11,819		$	8,628		$	(20,387	)	$	25,181
Net income	$	25,121		$	11,819		$	8,568		$	(20,387	)	$	25,121
Other comprehensive income (loss), net of tax		(4,512	)		107			(8,807	)		—			(13,212	)
Total comprehensive income	$	20,609		$	11,926		$	(239	)	$	(20,387	)	$	11,909
Comprehensive loss attributable to noncontrolling    interests		—			—			108			—			108
Comprehensive income (loss) attributable to    The GEO Group, Inc.	$	20,609		$	11,926		$	(131	)	$	(20,387	)	$	12,017

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME

(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 BALANCE SHEET

(dollars in thousands)

(unaudited)

	As of March 31, 2020
	The GEO Group, Inc.		Combined Subsidiary Guarantors		Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	8,673	$	934	$	22,807		$	—		$	32,414
Restricted cash and cash equivalents		—		—		27,865			—			27,865
Accounts receivable, less allowance for doubtful    accounts		152,001		187,539		32,794			3,119			375,453
Contract receivable, current portion		—		—		4,686			—			4,686
Prepaid expenses and other current assets		1,667		28,377		8,179			(2,115	)		36,108
Total current assets		162,341		216,850		96,331			1,004			476,526
Restricted Cash and Investments		—		25,143		2,128			—			27,271
Property and Equipment, Net		848,926		1,212,008		81,596			—			2,142,530
Assets Held for Sale		705		3,700		—			—			4,405
Contract Receivable		—		—		319,819			—			319,819
Operating Lease Right-of-Use Assets, Net		20,641		102,165		659			—			123,465
Intercompany Receivable		961,145		242,777		14,714			(1,218,636	)		—
Deferred Income Tax Assets		—		35,585		693			—			36,278
Goodwill		—		775,954		352			—			776,306
Intangible Assets, Net		—		203,995		392			—			204,387
Investment in Subsidiaries		1,454,238		573,816		2,190			(2,030,244	)		—
Other Non-Current Assets		17,698		120,610		16,080			(77,528	)		76,860
Total Assets	$	3,465,694	$	3,512,603	$	534,954		$	(3,325,404	)	$	4,187,847
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	11,690	$	78,891	$	2,306		$	—		$	92,887
Accrued payroll and related taxes		—		46,984		16,021			—			63,005
Accrued expenses and other current liabilities		38,496		115,317		25,440			(419	)		178,834
Operating lease liabilities, current portion		5,328		21,554		86			—			26,968
Current portion of finance lease liabilities, long-term    debt and non-recourse debt		8,000		2,626		12,999			—			23,625
Total current liabilities		63,514		265,372		56,852			(419	)		385,319
Deferred Income Tax Liabilities		—		—		19,254			—			19,254
Intercompany Payable		105,255		1,087,981		23,976			(1,217,212	)		—
Other Non-Current Liabilities		4,715		155,110		294			(77,528	)		82,591
Operating lease Liabilities		15,860		82,881		573			—			99,314
Finance Lease Liabilities		—		2,563		—			—			2,563
Long-Term Debt		2,318,004		—		52,886			—			2,370,890
Non-Recourse Debt		—		—		270,460			—			270,460
Commitments & Contingencies and Other												—
Shareholders' Equity:												—
The GEO Group, Inc. Shareholders' Equity		958,346		1,918,696		111,549			(2,030,245	)		958,346
Noncontrolling Interests		—		—		(890	)		—			(890	)
Total Shareholders’ Equity		958,346		1,918,696		110,659			(2,030,245	)		957,456
Total Liabilities and Shareholders' Equity	$	3,465,694	$	3,512,603	$	534,954		$	(3,325,404	)	$	4,187,847

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

(unaudited)

	As of December 31, 2019
	The GEO Group, Inc.		Combined Subsidiary Guarantors		Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	9,840	$	—	$	22,623		$	—		$	32,463
Restricted cash and cash equivalents		—		—		32,418			—			32,418
Accounts receivable, less allowance for doubtful    accounts		167,769		218,920		41,175			3,118			430,982
Contract receivable, current portion		—		—		11,199			—			11,199
Prepaid expenses and other current assets		1,273		32,187		9,315			(2,059	)		40,716
Total current assets		178,882		251,107		116,730			1,059			547,778
Restricted Cash and Investments		—		28,648		2,275			—			30,923
Property and Equipment, Net		846,297		1,214,697		83,728			—			2,144,722
Right-of-Use Assets Operating Leases		21,995		98,654		878						121,527
Assets Held for Sale		705		5,354		—			—			6,059
Contract Receivable		—		—		360,647						360,647
Intercompany Receivable		978,337		238,680		17,050			(1,234,067	)		—
Deferred Income Tax Assets		—		35,584		694			—			36,278
Goodwill		—		775,953		403			—			776,356
Intangible Assets, Net		—		209,554		516			—			210,070
Investment in Subsidiaries		1,484,930		573,816		2,189			(2,060,935	)		—
Other Non-Current Assets		18,329		123,797		18,853			(77,805	)		83,174
Total Assets	$	3,529,475	$	3,555,844	$	603,963		$	(3,371,748	)	$	4,317,534
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	16,690	$	76,631	$	5,911		$	—		$	99,232
Accrued payroll and related taxes		—		38,243		16,429			—			54,672
Accrued expenses and other current liabilities		32,175		131,031		28,765			(363	)		191,608
Operating lease liabilities, current portion		5,232		20,777		199						26,208
Current portion of finance lease liabilities, long-term    debt and non-recourse debt		8,000		2,626		13,582			—			24,208
Total current liabilities		62,097		269,308		64,886			(363	)		395,928
Deferred Income Tax Liabilities		—		—		19,254			—			19,254
Intercompany Payable		106,029		1,100,299		26,316			(1,232,644	)		—
Other Non-Current Liabilities		3,572		162,026		733			(77,805	)		88,526
Operating Lease Liabilities		17,321		79,290		680						97,291
Finance Lease Liabilities		—		2,954		—			—			2,954
Long-Term Debt		2,343,626		—		64,671			—			2,408,297
Non-Recourse Debt		—		—		309,236			—			309,236
Commitments & Contingencies and Other												—
Shareholders' Equity:												—
The GEO Group, Inc. Shareholders' Equity		996,830		1,941,967		118,969			(2,060,936	)		996,830
Noncontrolling Interests		—		—		(782	)		—			(782	)
Total Shareholders’ Equity		996,830		1,941,967		118,187			(2,060,936	)		996,048
Total Liabilities and Shareholders' Equity	$	3,529,475	$	3,555,844	$	603,963		$	(3,371,748	)	$	4,317,534

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)

	For the Three Months Ended March 31, 2020
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Consolidated
Cash Flow from Operating Activities:
Net cash provided by operating activities	$	105,094		$	14,512		$	8,653		$	128,259
Cash Flow from Investing Activities:
Proceeds from sale of property and equipment		—			264			—			264
Proceeds from sale of assets held for sale		—			1,300			—			1,300
Change in restricted investments		—			3,363			—			3,363
Capital expenditures		(11,583	)		(18,647	)		(422	)		(30,652	)
Net cash used in investing activities		(11,583	)		(13,720	)		(422	)		(25,725	)
Cash Flow from Financing Activities:
Proceeds from long-term debt		96,000			—			—			96,000
Payments on long-term debt		(121,485	)		—			(4,020	)		(125,505	)
Payments on non-recourse debt		—			—			(1,362	)		(1,362	)
Taxes paid related to net share settlements of equity awards		(2,632	)		—			—			(2,632	)
Proceeds from issuance of common stock in connection    with ESPP		150			—			—			150
Payment for repurchases of common stock		(9,009	)		—			—			(9,009	)
Dividends paid		(57,703	)		—			—			(57,703	)
Net cash used in financing activities		(94,679	)		—			(5,382	)		(100,061	)
Effect of Exchange Rate Changes on Cash, Cash Equivalents    and Restricted Cash and Cash Equivalents		—			—			(7,364	)		(7,364	)
Net (Decrease) Increase in Cash. Cash Equivalents and    Restricted Cash and Cash Equivalents		(1,168	)		792			(4,515	)		(4,891	)
Cash, Cash Equivalents and Restricted Cash and Cash    Equivalents, beginning of period		9,840			—			57,632			67,472
Cash, Cash Equivalents and Restricted Cash and Cash    Equivalents, end of period	$	8,672		$	792		$	53,117		$	62,581

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:
Proceeds from sale of property and equipment		—			274			—			274
Proceeds from sale of assets held for sale		—			—						—
Insurance proceeds - damaged property		—			2,503			—			2,503
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