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 privatized corrections and detention business. The International Services segment primarily consists of privatized 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	2017			2016			2015
Revenues:
U.S. Corrections & Detention	$	1,438,044		$	1,375,277		$	1,240,440
GEO Care	514,166			394,449			340,918
International Services	195,806			157,363			154,902
Facility Construction and Design [1]	115,404			252,401			107,047
Total revenues	$	2,263,420		$	2,179,490		$	1,843,307
Capital Expenditures:
U.S. Corrections & Detention	$	117,186		$	40,764		$	76,070
GEO Care	24,263			35,001			39,523
International Services	6,957			5,800			1,988
Total capital expenditures	$	148,406		$	81,565		$	117,581
Depreciation and amortization:
U.S. Corrections & Detention	$	75,276		$	74,154		$	70,486
GEO Care	47,103			38,687			33,582
International Services	1,918			2,075			2,688
Total depreciation and amortization	$	124,297		$	114,916		$	106,756
Operating Income:
U.S. Corrections & Detention	$	302,488		$	296,078		$	281,945
GEO Care	123,525			111,780			82,806
International Services	14,235			5,809			7,666
Facility Construction & Design [1]	(1,620		)	626			352
Operating income from segments	$	438,628		$	414,293		$	372,769
General and Administrative Expenses	(190,343		)	(148,709		)	(137,040		)
Total operating income	$	248,285		$	265,584		$	235,729

[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 2017, 2016 or 2015. Refer to Note 7 - Contract Receivable.

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, 2017, 2016 and 2015, respectively.



Fiscal Year Ended	2017			2016			2015
	(In thousands)
Operating income from segments	$	438,628		$	414,293		$	372,769
Unallocated amounts:
General and administrative expense	(190,343		)	(148,709		)	(137,040		)
Net interest expense	(96,348		)	(100,222		)	(94,558		)
Loss on extinguishment of debt	—			(15,885		)	—
Income before income taxes and equity in earnings of affiliates	$	151,937		$	149,477		$	141,171



	2017		2016		2015
	(In thousands)
Segment assets:
U.S. Corrections & Detention	$	2,385,069	$	2,390,705	$	2,396,076
GEO Care	1,121,792		711,795		722,248
International Services	40,056		64,417		43,589
Facility Construction & Design	499,406		446,434		176,638
Total segment assets	$	4,046,323	$	3,613,351	$	3,338,551

Asset Reconciliation

The following is a reconciliation of the Company’s reportable segment assets to the Company’s total assets as of December 31, 2017 and 2016, respectively.



	2017		2016
	(In thousands)
Reportable segment assets	$	4,046,323	$	3,613,351
Cash	81,377		68,038
Deferred income tax assets	26,277		30,039
Restricted cash and investments, current and non-current	72,931		37,981
Total assets	$	4,226,908	$	3,749,409

Geographic Information

During each of the years ended December 31, 2017, 2016 and 2015, 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	2017		2016		2015
	(In thousands)
Revenues:
U.S. operations	$	1,952,210	$	1,770,273	$	1,581,811
Australia operations	285,702		388,361		237,731
South African operations	18,251		13,658		14,964
United Kingdom operations	7,257		7,198		8,801
Total revenues	$	2,263,420	$	2,179,490	$	1,843,307
Property and Equipment, net:
U.S. operations	$	2,061,711	$	1,887,043	$	1,910,378
Australia operations	16,281		10,053		5,871
South African operations	131		145		90
United Kingdom operations	—		—		47
Total Property and Equipment, net	$	2,078,123	$	1,897,241	$	1,916,386

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	2017		2016		2015
	(In thousands)
Revenues:
Corrections & Detention	$	1,633,850	$	1,532,640	$	1,395,342
GEO Care	514,166		394,449		340,918
Facility Construction and Design	115,404		252,401		107,047
Total revenues	$	2,263,420	$	2,179,490	$	1,843,307

Equity in Earnings of Affiliates

Equity in earnings of affiliates for 2017, 2016 and 2015 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 $10.8 million, $4.3 million and $4.7 million in earnings, net of tax impact, for SACS operations during the years ended December 31, 2017, 2016 and 2015, 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, 2017 and 2016, the Company’s investment in SACS was $18.1 million and $11.8 million, respectively. The investment is included in other non-current assets in the accompanying Consolidated Balance Sheets. The Company received dividend distributions of $6.1 million and $1.6 million, in 2017 and 2016, respectively from this unconsolidated joint venture.

The Company has recorded $1.2 million, $2.6 million and $0.8 million in earnings, net of tax impact, for GEOAmey’s operations during the years ended December 31, 2017, 2016 and 2015, 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, 2017 and 2016, the Company’s investment in GEOAmey was $2.7 million and $1.3 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	2017		2016		2015
Various agencies of the U.S Federal Government:	48	%	48	%	45	%

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.