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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to_______             

Commission file number: 1-14260 

 

The GEO Group, Inc.

(Exact name of registrant as specified in its charter) 

 

 

Florida

 

65-0043078

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

 

 

4955 Technology Way

Boca Raton, Florida

 

33431

(Address of principal executive offices)

 

(Zip Code)

 

(561) 893-0101

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.01 par value per share

 

GEO

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  

As of November 3, 2020, the registrant had 121,315,423 shares of common stock outstanding.

 

 

 

 


Table of Contents

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

3

ITEM 1. FINANCIAL STATEMENTS

3

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

3

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

4

CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2020 (UNAUDITED) AND DECEMBER 31, 2019

5

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

6

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

7

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

27

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

47

ITEM 4. CONTROLS AND PROCEDURES

47

PART II - OTHER INFORMATION

48

ITEM 1. LEGAL PROCEEDINGS

48

ITEM 1A. RISK FACTORS

48

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

50

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

50

ITEM 4. MINE SAFETY DISCLOSURES

50

ITEM 5. OTHER INFORMATION

51

ITEM 6. EXHIBITS

52

SIGNATURES

53

 

2


Table of Contents

 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE GEO GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2020 AND 2019

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

September 30, 2020

 

 

September 30, 2019

 

Revenues

 

$

579,136

 

 

$

631,579

 

 

$

1,771,982

 

 

$

1,856,212

 

Operating expenses

 

 

434,402

 

 

 

472,513

 

 

 

1,341,063

 

 

 

1,382,678

 

Depreciation and amortization

 

 

33,628

 

 

 

32,419

 

 

 

100,389

 

 

 

97,240

 

General and administrative expenses

 

 

46,644

 

 

 

48,488

 

 

 

145,969

 

 

 

142,183

 

Operating income

 

 

64,462

 

 

 

78,159

 

 

 

184,561

 

 

 

234,111

 

Interest income

 

 

6,360

 

 

 

6,686

 

 

 

17,046

 

 

 

23,127

 

Interest expense

 

 

(30,749

)

 

 

(36,645

)

 

 

(95,539

)

 

 

(115,857

)

Gain (loss) on extinguishment of debt

 

 

1,472

 

 

 

594

 

 

 

3,035

 

 

 

(5,147

)

Income before income taxes and equity in earnings of affiliates

 

 

41,545

 

 

 

48,794

 

 

 

109,103

 

 

 

136,234

 

Provision for income taxes

 

 

4,616

 

 

 

5,137

 

 

 

15,358

 

 

 

14,509

 

Equity in earnings of affiliates, net of income tax provision of

   $506, $456, 1,434 and $1,176 respectively

 

 

2,243

 

 

 

2,228

 

 

 

7,202

 

 

 

6,645

 

Net income

 

 

39,172

 

 

 

45,885

 

 

 

100,947

 

 

 

128,370

 

Net loss attributable to noncontrolling interests

 

 

48

 

 

 

47

 

 

 

174

 

 

 

181

 

Net income attributable to The GEO Group, Inc.

 

$

39,220

 

 

$

45,932

 

 

$

101,121

 

 

$

128,551

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

119,826

 

 

 

119,209

 

 

 

119,677

 

 

 

119,052

 

Diluted

 

 

120,032

 

 

 

119,282

 

 

 

119,964

 

 

 

119,314

 

Net income per common share attributable to The GEO Group,

   Inc.:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share attributable to The GEO Group,

   Inc. - basic

 

$

0.33

 

 

$

0.39

 

 

$

0.84

 

 

$

1.08

 

Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per common share attributable to The GEO Group,

   Inc. - diluted

 

$

0.33

 

 

$

0.39

 

 

$

0.84

 

 

$

1.08

 

Dividends declared per share

 

$

0.48

 

 

$

0.48

 

 

$

1.44

 

 

$

1.44

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3


Table of Contents

 

THE GEO GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2020 AND 2019

(In thousands)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

September 30, 2020

 

 

September 30, 2019

 

Net income

 

$

39,172

 

 

$

45,885

 

 

$

100,947

 

 

$

128,370

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

2,002

 

 

 

(4,553

)

 

 

(2,802

)

 

 

(2,787

)

Pension liability adjustment, net of tax provision

   of $28, $11, $85 and $33, respectively

 

 

107

 

 

 

42

 

 

 

320

 

 

 

(563

)

Change in fair value of derivative instrument

   classified as cash flow hedge, net of tax (benefit) provision of

   $114, $(738), $(1,143) and $1,752, respectively

 

 

376

 

 

 

(2,777

)

 

 

(4,299

)

 

 

2,969

 

Total other comprehensive income (loss), net of tax

 

 

2,485

 

 

 

(7,288

)

 

 

(6,781

)

 

 

(381

)

Total comprehensive income

 

 

41,657

 

 

 

38,597

 

 

 

94,166

 

 

 

127,989

 

Comprehensive loss attributable to noncontrolling interests

 

 

44

 

 

 

62

 

 

 

217

 

 

 

191

 

Comprehensive income attributable to The GEO Group, Inc.

 

$

41,701

 

 

$

38,659

 

 

$

94,383

 

 

$

128,180

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4


Table of Contents

 

THE GEO GROUP, INC.

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2020 AND DECEMBER 31, 2019

(In thousands, except share data)

 

 

 

September 30,

2020

 

 

December 31,

2019

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

53,676

 

 

$

32,463

 

Restricted cash and cash equivalents

 

 

27,229

 

 

 

32,418

 

Accounts receivable, less allowance for doubtful accounts of $2,885 and $4,183,

   respectively

 

 

380,072

 

 

 

430,982

 

Contract receivable, current portion

 

 

5,703

 

 

 

11,199

 

Prepaid expenses and other current assets

 

 

33,393

 

 

 

40,716

 

Total current assets

 

 

500,073

 

 

 

547,778

 

Restricted Cash and Investments

 

 

40,970

 

 

 

30,923

 

Property and Equipment, Net

 

 

2,126,438

 

 

 

2,144,722

 

Assets Held for Sale

 

 

9,521

 

 

 

6,059

 

Contract Receivable

 

 

368,887

 

 

 

360,647

 

Operating Lease Right-of-Use Assets, Net

 

 

121,805

 

 

 

121,527

 

Deferred Income Tax Assets

 

 

36,278

 

 

 

36,278

 

Goodwill

 

 

776,364

 

 

 

776,356

 

Intangible Assets, Net

 

 

193,265

 

 

 

210,070

 

Other Non-Current Assets

 

 

74,234

 

 

 

83,174

 

Total Assets

 

$

4,247,835

 

 

$

4,317,534

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

91,955

 

 

$

99,232

 

Accrued payroll and related taxes

 

 

64,812

 

 

 

54,672

 

Accrued expenses and other current liabilities

 

 

212,127

 

 

 

191,608

 

Operating lease liabilities, current portion

 

 

27,910

 

 

 

26,208

 

Current portion of finance lease liabilities, long-term debt and non-recourse debt

 

 

25,073

 

 

 

24,208

 

Total current liabilities

 

 

421,877

 

 

 

395,928

 

Deferred Income Tax Liabilities

 

 

19,254

 

 

 

19,254

 

Other Non-Current Liabilities

 

 

121,525

 

 

 

88,526

 

Operating Lease Liabilities

 

 

96,675

 

 

 

97,291

 

Finance Lease Liabilities

 

 

2,979

 

 

 

2,954

 

Long-Term Debt

 

 

2,343,342

 

 

 

2,408,297

 

Non-Recourse Debt

 

 

309,899

 

 

 

309,236

 

Commitments and Contingencies (Note 11)

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 30,000,000 shares authorized,

   none issued or outstanding

 

 

 

 

 

 

Common stock, $0.01 par value, 187,500,000 shares authorized,

   126,151,365 and 125,435,573 issued and 121,339,110

   121,225,319 outstanding, respectively

 

 

1,262

 

 

 

1,254

 

Additional paid-in capital

 

 

1,257,176

 

 

 

1,230,865

 

Distributions in excess of earnings

 

 

(193,345

)

 

 

(119,779

)

Accumulated other comprehensive loss

 

 

(27,073

)

 

 

(20,335

)

Treasury stock, 4,812,255 and 4,210,254 shares, at cost, respectively

 

 

(104,737

)

 

 

(95,175

)

Total shareholders’ equity attributable to The GEO Group, Inc.

 

 

933,283

 

 

 

996,830

 

Noncontrolling interests

 

 

(999

)

 

 

(782

)

Total shareholders’ equity

 

 

932,284

 

 

 

996,048

 

Total Liabilities and Shareholders’ Equity

 

$

4,247,835

 

 

$

4,317,534

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5


Table of Contents

 

THE GEO GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 2020 AND 2019

(In thousands)

 

 

 

Nine Months Ended

 

 

 

September 30,

2020

 

 

September 30,

2019

 

Cash Flow from Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

100,947

 

 

$

128,370

 

Net loss attributable to noncontrolling interests

 

 

174

 

 

 

181

 

Net income attributable to The GEO Group, Inc.

 

 

101,121

 

 

 

128,551

 

Adjustments to reconcile net income attributable to The GEO Group, Inc. to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

100,389

 

 

 

97,240

 

Stock-based compensation

 

 

19,163

 

 

 

16,919

 

(Gain) loss on extinguishment of debt

 

 

(3,035

)

 

 

5,147

 

Amortization of debt issuance costs, discount and/or premium and other non-cash

   interest

 

 

5,153

 

 

 

6,861

 

Provision for doubtful accounts

 

 

288

 

 

 

126

 

Equity in earnings of affiliates, net of tax

 

 

(7,202

)

 

 

(6,645

)

Dividends received from unconsolidated joint venture

 

 

5,296

 

 

 

5,694

 

Loss on sale/disposal of property and equipment, net

 

 

4,744

 

 

 

3,736

 

Loss on assets held for sale

 

 

774

 

 

 

1,083

 

Changes in assets and liabilities, net of effects of acquisitions:

 

 

 

 

 

 

 

 

Changes in accounts receivable, prepaid expenses and other assets

 

 

58,498

 

 

 

46,114

 

Changes in contract receivable

 

 

3,787

 

 

 

6,338

 

Changes in accounts payable, accrued expenses and other liabilities

 

 

69,151

 

 

 

11,794

 

Net cash provided by operating activities

 

 

358,127

 

 

 

322,958

 

Cash Flow from Investing Activities:

 

 

 

 

 

 

 

 

Insurance proceeds - damaged property

 

 

9,497

 

 

 

17,389

 

Proceeds from sale of property and equipment

 

 

83

 

 

 

402

 

Proceeds from sale of assets held for sale

 

 

1,516

 

 

 

823

 

Change in restricted investments

 

 

(4,455

)

 

 

(5,449

)

Capital expenditures

 

 

(83,817

)

 

 

(90,787

)

Net cash used in investing activities

 

 

(77,176

)

 

 

(77,622

)

Cash Flow from Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from long-term debt

 

 

311,579

 

 

 

274,370

 

Payments on long-term debt

 

 

(380,055

)

 

 

(310,616

)

Payments on non-recourse debt

 

 

(4,530

)

 

 

(332,717

)

Proceeds from non-recourse debt

 

 

 

 

 

322,906

 

Taxes paid related to net share settlements of equity awards

 

 

(2,789

)

 

 

(4,177

)

Proceeds from issuance of common stock in connection with ESPP

 

 

465

 

 

 

400

 

Payment for repurchases of common stock

 

 

(9,562

)

 

 

 

Debt issuance costs

 

 

 

 

 

(9,885

)

Proceeds from the exercise of stock options

 

 

 

 

 

1,259

 

Cash dividends paid

 

 

(174,134

)

 

 

(174,332

)

Net cash used in financing activities

 

 

(259,026

)

 

 

(232,792

)

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash

   and Cash Equivalents

 

 

(309

)

 

 

(2,063

)

Net Increase in Cash, Cash Equivalents and Restricted Cash

   and Cash Equivalents

 

 

21,616

 

 

 

10,481

 

Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, beginning of period

 

 

67,472

 

 

 

84,472

 

Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, end of period

 

$

89,088

 

 

$

94,953

 

Supplemental Disclosures:

 

 

 

 

 

 

 

 

Non-cash Investing and Financing activities:

 

 

 

 

 

 

 

 

Right-of-use assets obtained from operating lease liabilities upon adoption of new

   lease standard

 

$

 

 

$

147,000

 

Right-of-use assets obtained from operating lease liabilities

 

$

10,398

 

 

$

 

Equipment obtained from finance lease liabilities

 

$

1,616

 

 

$

 

Dividends paid in treasury shares

 

$

553

 

 

$

 

Conversion of pension liability to shares of common stock

 

$

8,925

 

 

$

 

Capital expenditures in accounts payable and accrued expenses

 

$

7,983

 

 

$

5,231

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

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THE GEO GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The GEO Group, Inc., a Florida corporation, and subsidiaries (the “Company” or “GEO”) is a fully-integrated real estate investment trust (“REIT”) specializing in the ownership, leasing and management of secure facilities, processing centers and community reentry centers in the United States, Australia, South Africa and the United Kingdom. The Company owns, leases and operates a broad range of facilities including maximum, medium and minimum security facilities, processing centers, as well as community-based reentry facilities and offers an expanded delivery of rehabilitation services under its 'GEO Continuum of Care' platform. The 'GEO Continuum of Care' program integrates enhanced rehabilitative programs, which are evidence-based and include cognitive behavioral treatment and post-release services, and provides academic and vocational classes in life skills and treatment programs while helping individuals reintegrate into their communities. The Company develops new facilities based on contract awards, using its project development expertise and experience to design, construct and finance what it believes are state-of-the-art facilities that maximize security and efficiency. The Company provides innovative compliance technologies, industry-leading monitoring services, and evidence-based supervision and treatment programs for community-based parolees, probationers and pretrial defendants. The Company also provides secure transportation services for individuals as contracted domestically and in the United Kingdom through its joint venture GEO Amey PECS Ltd. (“GEOAmey”). At September 30, 2020, the Company’s worldwide operations include the management and/or ownership of approximately 93,000 beds at 123 facilities, including idle facilities, projects under development and recently awarded contracts, and also include the provision of community supervision services for more than 210,000 individuals, including approximately 100,000 through an array of technology products including radio frequency, GPS, and alcohol monitoring devices.

 

The Company's unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States and the instructions to Form 10-Q and consequently do not include all disclosures required by Form 10-K. The accounting policies followed for quarterly financial reporting are the same as those disclosed in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2020 for the year ended December 31, 2019. The accompanying December 31, 2019 consolidated balance sheet has been derived from those audited financial statements. Additional information may be obtained by referring to the Company’s Form 10-K for the year ended December 31, 2019. In the opinion of management, all adjustments (consisting only of normal recurring items) necessary for a fair presentation of the financial information for the interim periods reported in this Quarterly Report on Form 10-Q have been made. Results of operations for the nine months ended September 30, 2020 are not necessarily indicative of the results for the entire year ending December 31, 2020, or for any other future interim or annual periods.

 

Risks and uncertainties

In December 2019, a novel strain of coronavirus, now known as COVID-19 (“COVID-19”), was reported in Wuhan, China and has since extensively impacted the global health and economic environment. In January 2020, the World Health Organization (“WHO”) declared it a Public Health Emergency of International Concern. On February 28, 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on March 11, 2020, the WHO characterized COVID-19 as a pandemic.  

The Company has been closely monitoring the impact of the COVID-19 pandemic on all aspects of its business and geographies, including how it will impact those entrusted to its care and governmental partners. The Company did incur significant disruptions during the nine months ended September 30, 2020 from the COVID-19 pandemic and, it is unable to predict the overall future impact that the COVID-19 pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties.

The COVID-19 pandemic and related government-imposed mandatory closures, shelter in-place restrictions and social distancing protocols and increased expenditures on engineering controls, personal protective equipment, diagnostic testing, medical expenses, temperature scanners, protective plexiglass barriers and increased sanitation have had, and will continue to have, a severe impact on global economic conditions and the environment in which the Company operates. Starting in late March and early April, the Company began to observe negative impacts from the pandemic on its performance in its secure services business, specifically with its U.S. Immigration and Customs Enforcement (“ICE”) Processing Centers and U.S. Marshals Facilities, as a result of declines in crossings and apprehensions along the Southwest border and a decrease in court sentencing at the federal level. Various governmental agencies have also taken steps to decrease the number of those in custody to adhere to social distancing protocols. Additionally, its reentry services business conducted through its GEO Care business segment has also been negatively impacted, specifically its residential reentry centers and non-residential day reporting programs were impacted by declines in programs due to lower levels of referrals by federal, state and local agencies. Additionally, the Company has experienced the transmission of COVID-19 among detainees and staff at most of its facilities during the first three quarters of 2020 and continuing into the fourth quarter of 2020. If the Company is unable to mitigate the transmission of COVID-19 at its facilities it could experience a material adverse effect on its financial position, results of operations and cash flows. Although the Company is unable to predict the duration or scope of the COVID-19 pandemic or estimate the extent of the negative financial impact to its operating results, an extended period of depressed economic activity necessitated to combating the disease, and the severity and duration of the related global economic crisis may adversely impact its future financial performance.

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Table of Contents

 

2. GOODWILL AND OTHER INTANGIBLE ASSETS

The Company has recorded goodwill as a result of its various business combinations. Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the tangible assets and intangible assets acquired net of liabilities assumed, including noncontrolling interests. Changes in the Company's goodwill balances from January 1, 2020 to September 30, 2020 are as follows (in thousands):

 

 

 

January 1,

2020

 

 

Foreign Currency

Translation

 

 

September 30,

2020

 

GEO Secure Services

 

$

316,366

 

 

$

 

 

$

316,366

 

GEO Care

 

 

459,589

 

 

 

 

 

 

459,589

 

International Services

 

 

401

 

 

 

8

 

 

 

409

 

Total Goodwill

 

$

776,356

 

 

$

8

 

 

$

776,364

 

 

The Company has also recorded other finite and indefinite-lived intangible assets as a result of its various business combinations. The Company's intangible assets include facility management contracts, covenants not to compete, trade names and technology, as follows (in thousands):

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

Weighted

Average

Useful Life

(years)

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

Facility management contracts

 

 

16.3

 

 

$

308,336

 

 

$

(163,671

)

 

$

144,665

 

 

$

308,432

 

 

$

(148,171

)

 

$

160,261

 

Technology

 

 

7.3

 

 

 

33,700

 

 

 

(30,300

)

 

 

3,400

 

 

 

33,700

 

 

 

(29,091

)

 

 

4,609

 

Trade names

 

Indefinite

 

 

 

45,200

 

 

 

 

 

 

45,200

 

 

 

45,200

 

 

 

 

 

 

45,200

 

Total acquired intangible assets

 

 

 

 

 

$

387,236

 

 

$

(193,971

)

 

$

193,265

 

 

$

387,332

 

 

$

(177,262

)

 

$

210,070

 

 

Amortization expense was $16.7 million for each of the nine months ended September 30, 2020 and 2019, respectively. Amortization expense was primarily related to the GEO Secure Services and GEO Care segments' amortization of acquired facility management contracts. As of September 30, 2020, the weighted average period before the next contract renewal or extension for the acquired facility management contracts was approximately 2.1 years. Although the facility management contracts acquired have renewal and extension terms in the near term, the Company has historically maintained these relationships beyond the current contractual periods.

Estimated amortization expense related to the Company's finite-lived intangible assets for the remainder of 2020 through 2024 and thereafter is as follows (in thousands):

 

Fiscal Year

 

Total