Condensed Consolidating Financial Information

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed Consolidating Financial Information

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

As of June 30, 2016, the Company's 6.00% Senior Notes, 5.125% Senior Notes and each of the 5.875% Senior Notes 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 June 30, 2016
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	174,414		$	404,798		$	112,811		$	(143,673	)	$	548,350
Operating expenses	135,603			323,791			101,116			(143,673		)	416,837
Depreciation and amortization	6,265			21,424			963			—			28,652
General and administrative expenses	14,846			15,250			6,808			—			36,904
Operating income	17,700			44,333			3,924			—			65,957
Interest income	5,440			409			6,013			(5,960		)	5,902
Interest expense	(16,369		)	(13,932		)	(6,748		)	5,960			(31,089		)
Loss on extinguishment of debt	(15,866		)	—			—			—			(15,866		)
Income before income taxes and equity in earnings of affiliates	(9,095		)	30,810			3,189			—			24,904
Income tax provision	(101		)	3,099			881			—			3,879
Equity in earnings of affiliates, net of income tax provision	—			—			2,131			—			2,131
Income before equity in income of consolidated subsidiaries	(8,994		)	27,711			4,439			—			23,156
Income from consolidated subsidiaries, net of income tax provision	32,150			—			—			(32,150		)	—
Net income	23,156			27,711			4,439			(32,150		)	23,156
Net loss attributable to noncontrolling interests	—			—			53			—			53
Net income attributable to The GEO Group, Inc.	$	23,156		$	27,711		$	4,492		$	(32,150	)	$	23,209
Net income	$	23,156		$	27,711		$	4,439		$	(32,150	)	$	23,156
Other comprehensive income (loss), net of tax	—			33			(2,611		)	—			(2,578		)
Total comprehensive income	$	23,156		$	27,744		$	1,828		$	(32,150	)	$	20,578
Comprehensive loss attributable to noncontrolling interests	—			—			52			—			52
Comprehensive income attributable to The GEO Group, Inc.	$	23,156		$	27,744		$	1,880		$	(32,150	)	$	20,630

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)

	For the Three Months Ended June 30, 2015
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	161,365		$	367,482		$	61,521		$	(144,423	)	$	445,945
Operating expenses	141,323			286,414			50,616			(144,423		)	333,930
Depreciation and amortization	6,381			19,182			997			—			26,560
General and administrative expenses	11,049			16,928			4,197			—			32,174
Operating income	2,612			44,958			5,711			—			53,281
Interest income	5,735			847			3,183			(6,897		)	2,868
Interest expense	(15,537		)	(14,743		)	(3,268		)	6,897			(26,651		)
Income before income taxes and equity in earnings of affiliates	(7,190		)	31,062			5,626			—			29,498
Income tax provision	(61		)	1,588			842			—			2,369
Equity in earnings of affiliates, net of income tax provision	—			—			1,124			—			1,124
Income before equity in income of consolidated subsidiaries	(7,129		)	29,474			5,908			—			28,253
Income from consolidated subsidiaries, net of income tax provision	35,382			—			—			(35,382		)	—
Net income	28,253			29,474			5,908			(35,382		)	28,253
Net loss attributable to noncontrolling interests	—			—			38			—			38
Net income attributable to The GEO Group, Inc.	$	28,253		$	29,474		$	5,946		$	(35,382	)	$	28,291
Net income	$	28,253		$	29,474		$	5,908		$	(35,382	)	$	28,253
Other comprehensive income, net of tax	—			40			4,810			—			4,850
Total comprehensive income	$	28,253		$	29,514		$	10,718		$	(35,382	)	$	33,103
Comprehensive loss attributable to noncontrolling interests	—			—			43			—			43
Comprehensive income attributable to The GEO Group, Inc.	$	28,253		$	29,514		$	10,761		$	(35,382	)	$	33,146

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)

	For the Six Months Ended June 30, 2016
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	342,051		$	805,140		$	193,776		$	(282,432	)	$	1,058,535
Operating expenses	273,513			643,695			170,567			(282,432		)	805,343
Depreciation and amortization	12,527			42,657			1,919			—			57,103
General and administrative expenses	22,821			35,216			12,928			—			70,965
Operating income (loss)	33,190			83,572			8,362			—			125,124
Interest income	10,881			1,018			10,670			(12,110		)	10,459
Interest expense	(32,726		)	(27,876		)	(11,963		)	12,110			(60,455		)
Loss on extinguishment of debt	(15,866		)	—			—			—			(15,866		)
Income (loss) before income taxes and equity in earnings of affiliates	(4,521		)	56,714			7,069			—			59,262
Income tax (benefit) provision	(91		)	5,290			1,831			—			7,030
Equity in earnings of affiliates, net of income tax provision	—			—			3,250			—			3,250
Income (loss) before equity in income of consolidated subsidiaries	(4,430		)	51,424			8,488			—			55,482
Income from consolidated subsidiaries, net of income tax provision	59,912									(59,912		)	—
Net income	55,482			51,424			8,488			(59,912		)	55,482
Net loss attributable to noncontrolling interests	—			—			77			—			77
Net income attributable to The GEO Group, Inc.	$	55,482		$	51,424		$	8,565		$	(59,912	)	$	55,559
Net income	$	55,482		$	51,424		$	8,488		$	(59,912	)	$	55,482
Other comprehensive income (loss), net of tax	—			65			(3,541		)	—			(3,476		)
Total comprehensive income	$	55,482		$	51,489		$	4,947		$	(59,912	)	$	52,006
Comprehensive loss attributable to noncontrolling interests	—			—			68			—			68
Comprehensive income attributable to The GEO Group, Inc.	$	55,482		$	51,489		$	5,015		$	(59,912	)	$	52,074

CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)

(unaudited)

	For the Six Months Ended June 30, 2015
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	305,748		$	707,369		$	126,488		$	(266,291	)	$	873,314
Operating expenses	257,548			555,195			105,387			(266,291		)	651,839
Depreciation and amortization	12,585			36,879			2,037			—			51,501
General and administrative expenses	21,372			33,808			8,842			—			64,022
Operating income (loss)	14,243			81,487			10,222			—			105,952
Interest income	11,914			2,078			5,319			(14,370		)	4,941
Interest expense	(29,847		)	(29,379		)	(6,441		)	14,370			(51,297		)
Income (loss) before income taxes and equity in earnings of affiliates	(3,690		)	54,186			9,100			—			59,596
Income tax (benefit) provision	(61		)	3,328			1,929			—			5,196
Equity in earnings of affiliates, net of income tax provision	—			—			2,610			—			2,610
Income (loss) from continuing operations before equity in income of consolidated subsidiaries	(3,629		)	50,858			9,781			—			57,010
Income from consolidated subsidiaries, net of income tax provision	60,639			—			—			(60,639		)	—
Net income	$	57,010		$	50,858		$	9,781		$	(60,639	)	$	57,010
Net loss attributable to noncontrolling interests	—			—			58			—			58
Net income attributable to The GEO Group, Inc.	$	57,010		$	50,858		$	9,839		$	(60,639	)	$	57,068
Net income	$	57,010		$	50,858		$	9,781		$	(60,639	)	$	57,010
Other comprehensive income (loss), net of tax	—			77			(951		)	—			(874		)
Total comprehensive income	$	57,010		$	50,935		$	8,830		$	(60,639	)	$	56,136
Comprehensive loss attributable to noncontrolling interests	—			—			81			—			81
Comprehensive income attributable to The GEO Group, Inc.	$	57,010		$	50,935		$	8,911		$	(60,639	)	$	56,217

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

(unaudited)

	As of June 30, 2016
	The GEO Group, Inc.		Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	14,727	$	—	$	24,138	$	—		$	38,865
Restricted cash and investments	—		—		72,453		—			72,453
Accounts receivable, less allowance for doubtful accounts	110,299		172,229		14,725		—			297,253
Current deferred income tax assets	—		—		—		—			—
Prepaid expenses and other current assets	3,982		18,983		7,419		(1,312		)	29,072
Total current assets	129,008		191,212		118,735		(1,312		)	437,643
Restricted Cash and Investments	150		17,951		4,435		—			22,536
Property and Equipment, Net	738,819		1,093,039		81,812		—			1,913,670
Contract Receivable	—		—		302,575		—			302,575
Intercompany Receivable	1,000,004		101,871		3,087		(1,104,962		)	—
Non-Current Deferred Income Tax Assets	713		11,898		11,543		—			24,154
Goodwill	79		614,941		426		—			615,446
Intangible Assets, Net	—		213,281		742		—			214,023
Investment in Subsidiaries	1,098,855		453,636		2,190		(1,554,681		)	—
Other Non-Current Assets	16,298		110,789		23,317		(80,005		)	70,399
Total Assets	$	2,983,926	$	2,808,618	$	548,862	$	(2,740,960	)	$	3,600,446
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	8,368	$	53,802	$	30,466	$	—		$	92,636
Accrued payroll and related taxes	—		36,849		13,684		—			50,533
Accrued expenses and other current liabilities	39,067		77,585		13,209		(1,312		)	128,549
Current portion of capital lease obligations, long-term debt and non-recourse debt	3,000		1,532		12,618		—			17,150
Total current liabilities	50,435		169,768		69,977		(1,312		)	288,868
Non-Current Deferred Income Tax Liabilities	—		—		—		—			—
Intercompany Payable	92,498		1,000,527		11,937		(1,104,962		)	—
Other Non-Current Liabilities	4,246		142,534		25,516		(80,005		)	92,291
Capital Lease Obligations	—		8,075		—		—			8,075
Long-Term Debt	1,869,281		—		—		—			1,869,281
Non-Recourse Debt	—		—		374,434		—			374,434
Commitments & Contingencies and Other
Shareholders' Equity:
The GEO Group, Inc. Shareholders' Equity	967,466		1,487,714		66,967		(1,554,681		)	967,466
Noncontrolling Interests	—		—		31		—			31
Total Shareholders’ Equity	967,466		1,487,714		66,998		(1,554,681		)	967,497
Total Liabilities and Shareholders' Equity	$	2,983,926	$	2,808,618	$	548,862	$	(2,740,960	)	$	3,600,446

CONDENSED CONSOLIDATING BALANCE SHEET

(dollars in thousands)

	As of December 31, 2015
	The GEO Group, Inc.		Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	37,077	$	—		$	22,561	$	—		$	59,638
Restricted cash and investments	—		—			8,489		—			8,489
Accounts receivable, less allowance for doubtful accounts	131,747		162,538			19,812		—			314,097
Current deferred income tax assets	—		23,120			4,794		—			27,914
Prepaid expenses and other current assets	1,190		17,917			10,310		(1,209		)	28,208
Total current assets	170,014		203,575			65,966		(1,209		)	438,346
Restricted Cash and Investments	138		16,386			3,712		—			20,236
Property and Equipment, Net	746,478		1,088,417			81,491		—			1,916,386
Direct Finance Lease Receivable	—		—			1,826		—			1,826
Contract Receivable	—		—			174,141					174,141
Intercompany Receivable	971,291		86,519			—		(1,057,810		)	—
Non-Current Deferred Income Tax Assets	710		(102		)	6,791		—			7,399
Goodwill	79		614,941			418		—			615,438
Intangible Assets, Net	—		223,426			722		—			224,148
Investment in Subsidiaries	1,106,546		453,636			—		(1,560,182		)	—
Other Non-Current Assets	2,387		116,561			25,486		(80,127		)	64,307
Total Assets	$	2,997,643	$	2,803,359		$	360,553	$	(2,699,328	)	$	3,462,227
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	9,731	$	54,675		$	13,117	$	—		$	77,523
Accrued payroll and related taxes	—		35,516			12,961		—			48,477
Accrued expenses and other current liabilities	43,043		78,510			15,139		(1,209		)	135,483
Current portion of capital lease obligations, long-term debt and non-recourse debt	3,000		1,477			12,664		—			17,141
Total current liabilities	55,774		170,178			53,881		(1,209		)	278,624
Non-Current Deferred Income Tax Liabilities			11,120			351		—			11,471
Intercompany Payable	76,427		967,048			14,335		(1,057,810		)	—
Other Non-Current Liabilities	2,894		143,887			21,040		(80,127		)	87,694
Capital Lease Obligations	—		8,693			—		—			8,693
Long-Term Debt	1,855,810		—			—		—			1,855,810
Non-Recourse Debt	—		—			213,098		—			213,098
Commitments & Contingencies and Other
Shareholders' Equity:
The GEO Group, Inc. Shareholders' Equity	1,006,738		1,502,433			57,749		(1,560,182		)	1,006,738
Noncontrolling Interests	—		—			99		—			99
Total Shareholders’ Equity	1,006,738		1,502,433			57,848		(1,560,182		)	1,006,837
Total Liabilities and Shareholders' Equity	$	2,997,643	$	2,803,359		$	360,553	$	(2,699,328	)	$	3,462,227

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)

	For the Six Months Ended June 30, 2016
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Consolidated
Cash Flow from Operating Activities:
Net cash (used in) provided by operating activities	$	84,523		$	40,602		$	(86,873	)	$	38,252
Cash Flow from Investing Activities:
Proceeds from sale of property and equipment	—			41			2			43
Insurance proceeds - damaged property	—			—			548			548
Change in restricted cash and investments	(12		)	(1,565		)	(64,276		)	(65,853		)
Capital expenditures	(5,137		)	(39,078		)	(1,799		)	(46,014		)
Net cash used in investing activities	(5,149		)	(40,602		)	(65,525		)	(111,276		)
Cash Flow from Financing Activities:
Proceeds from long-term debt	641,000			—			—			641,000
Payments on long-term debt	(627,506		)	—			—			(627,506		)
Payments on non-recourse debt	—			—			(3,044		)	(3,044		)
Proceeds from non-recourse debt	—			—			159,068			159,068
Taxes paid related to net share settlements of equity awards	(2,257		)	—			—			(2,257		)
Proceeds from issuance of common stock in connection with ESPP	—						224			224
Debt issuance costs	(16,980		)	—			(2,517		)	(19,497		)
Tax deficiency related to equity compensation	(791		)	—			—			(791		)
Proceeds from stock options exercised	2,057			—			—			2,057
Cash dividends paid	(97,247		)				—			(97,247		)
Net cash (used in) provided by financing activities	(101,724		)	—			153,731			52,007
Effect of Exchange Rate Changes on Cash and Cash Equivalents	—			—			244			244
Net Decrease in Cash and Cash Equivalents	(22,350		)	—			1,577			(20,773		)
Cash and Cash Equivalents, beginning of period	37,077			—			22,561			59,638
Cash and Cash Equivalents, end of period	$	14,727		$	—		$	24,138		$	38,865

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

(dollars in thousands)

(unaudited)

	For the Six Months Ended June 30, 2015
	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	$	39,103		$	62,486		$	(21,791	)	$	79,798
Cash Flow from Investing Activities:
Acquisition of SoberLink, cash consideration				(24,402		)				(24,402		)
Acquisition of LCS, net of cash acquired	(307,403		)				—			(307,403		)
Proceeds from sale of property and equipment	—			123			—			123
Insurance proceeds - damaged property	—			901			—			901
Acquisition of LCS, net of cash acquired	(307,403		)				—			(307,403		)
Change in restricted cash and investments	(97		)	2,396			(7,716		)	(5,417		)
Capital expenditures	(36,367		)	(34,273		)	(1,054		)	(71,694		)
Net cash used in investing activities	(343,867		)	(55,255		)	(8,770		)	(407,892		)
Cash Flow from Financing Activities:
Taxes paid related to net share settlements of equity awards	(1,784		)	—			—			(1,784		)
Proceeds from long-term debt	518,000			—			—			518,000
Payments on long-term debt	(134,744		)				—			(134,744		)
Payments on non-recourse debt	—			—			(4,513		)	(4,513		)
Proceeds from non-recourse debt	—			—			49,731			49,731
Proceeds from issuance of common stock in connection with ESPP	218			—			—			218
Debt issuance costs				—			(2,438		)	(2,438		)
Tax benefit related to equity compensation	651			—			—			651
Proceeds from stock options exercised	2,037			—			—			2,037
Cash dividends paid	(92,254		)	—			—			(92,254		)
Net cash provided by financing activities	292,124			—			42,780			334,904
Effect of Exchange Rate Changes on Cash and Cash Equivalents	—			—			(1,103		)	(1,103		)
Net Increase (Decrease) in Cash and Cash Equivalents	(12,640		)	7,231			11,116			5,707
Cash and Cash Equivalents, beginning of period	18,492			782			22,063			41,337
Cash and Cash Equivalents, end of period	$	5,852		$	8,013		$	33,179		$	47,044