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

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 x☒ No ¨☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x☒ No ¨☐

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

As of November 4, ~~2015,~~2016, the registrant had ~~74,655,580~~75,013,069 shares of common stock outstanding.


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014			September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Revenues	$	469,866		$	457,900		$	1,343,181		$	1,263,880		$	554,376		$	469,866		$	1,612,911		$	1,343,181
Operating expenses		345,966			342,216			997,812			934,197			415,659			345,966			1,221,002			997,812
Depreciation and amortization		27,127			24,079			78,628			71,969			28,783			27,127			85,886			78,628
General and administrative expenses		33,742			28,287			97,764			84,937			37,483			33,742			108,448			97,764

Operating income		63,031			63,318			168,977			172,777			72,451			63,031			197,575			168,977
Interest income		2,992			1,048			7,933			2,604			7,928			2,992			18,387			7,933
Interest expense		(27,314	)		(21,408	)		(78,610	)		(62,662	)		(33,428	)		(27,314	)		(93,864	)		(78,610	)
Loss on extinguishment of debt														—			—			(15,885	)		—

Income before income taxes and equity in earnings of affiliates		38,709			42,958			98,300			112,719			46,951			38,709			106,213			98,300
Provision for income taxes		1,758			5,537			6,954			11,062			4,970			1,758			12,000			6,954
Equity in earnings of affiliates, net of income tax provision of $583, $711, $1,712 and $1,914, respectively		1,340			1,544			3,949			4,202
Equity in earnings of affiliates, net of income tax provision of $650, $583, $1,850 and $1,712, respectively														1,693			1,340			4,943			3,949

Net income		38,291			38,965			95,295			105,859			43,674			38,291			99,156			95,295
Net loss attributable to noncontrolling interests		21			26			79			20			46			21			123			79

Net income attributable to The GEO Group, Inc.	$	38,312		$	38,991		$	95,374		$	105,879		$	43,720		$	38,312		$	99,279		$	95,374


Weighted-average common shares outstanding:
Basic		73,757			72,380			73,658			71,862			74,108			73,757			74,010			73,658
Diluted		73,919			72,637			73,906			72,130			74,336			73,919			74,283			73,906
Net income per common share attributable to The GEO Group, Inc.:
Basic:
Net income per common share attributable to The GEO Group, Inc. - basic	$	0.52		$	0.54		$	1.29		$	1.47
Net income per common share attributable to The GEO Group, Inc. – basic													$	0.59		$	0.52		$	1.34		$	1.29

Diluted:
Net income per common share attributable to The GEO Group, Inc. - diluted	$	0.52		$	0.54		$	1.29		$	1.47

Net income per common share attributable to The GEO Group, Inc. – diluted													$	0.59		$	0.52		$	1.34		$	1.29

Dividends declared per share	$	0.62		$	0.57		$	1.86		$	1.71		$	0.65		$	0.62		$	1.95		$	1.86

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


	September 30, 2015			December 31, 2014			September 30, 2016			December 31, 2015
	(Unaudited)						(Unaudited)
ASSETS
*Current Assets*
Cash and cash equivalents	$	47,131		$	41,337		$	30,123		$	59,638
Restricted cash and investments		8,389			4,341			102,652			8,489
Accounts receivable, less allowance for doubtful accounts of $3,155 and $3,315, respectively		289,044			269,038
Accounts receivable, less allowance for doubtful accounts of $3,134 and $3,088, respectively								341,454			314,097
Current deferred income tax assets		25,921			25,884			—			27,914
Prepaid expenses and other current assets		33,256			36,806			33,443			28,208

Total current assets		403,741			377,406			507,672			438,346

*Restricted Cash and Investments*		26,058			19,578			24,463			20,236
*Property and Equipment, Net*		1,921,461			1,772,166			1,908,053			1,916,386
*Contract Receivable*		124,679			66,229			388,729			174,141
*Direct Finance Lease Receivable*		3,303			9,256			—			1,826
*Non-Current Deferred Income Tax Assets*		5,873			5,873			24,154			7,399
*Goodwill*		615,937			493,890			615,457			615,438
*Intangible Assets, Net*		229,327			155,275			208,970			224,148
*Other Non-Current Assets*		104,237			102,535			64,897			64,307

Total Assets	$	3,434,616		$	3,002,208		$	3,742,395		$	3,462,227

LIABILITIES AND SHAREHOLDERS’ EQUITY
*Current Liabilities*
Accounts payable	$	72,567		$	58,155		$	81,906		$	77,523
Accrued payroll and related taxes		39,674			38,556			46,947			48,477
Accrued expenses and other current liabilities		127,549			140,612			144,384			135,483
Current portion of capital lease obligations, long-term debt and non-recourse debt		16,428			16,752			15,638			17,141

Total current liabilities		256,218			254,075			288,875			278,624

*Non-Current Deferred Income Tax Liabilities*		15,769			10,068			—			11,471
*Other Non-Current Liabilities*		88,406			87,429			92,081			87,694
*Capital Lease Obligations*		8,992			9,856			7,757			8,693
*Long-Term Debt*		1,881,034			1,462,819			1,893,980			1,855,810
*Non-Recourse Debt*		178,738			131,968			493,303			213,098
*Commitments, Contingencies and Other* (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, 125,000,000 shares authorized, 74,634,299 and 74,190,688 issued and outstanding, respectively		746			742

Common stock, $0.01 par value, 125,000,000 shares authorized, 74,985,483 and 74,642,859 issued and outstanding, respectively								750			747

Additional paid-in capital		875,992			866,056			888,975			879,599
Earnings in excess of distributions		163,262			206,342			112,085			158,796
Accumulated other comprehensive loss		(34,710	)		(27,461	)		(35,406	)		(32,404	)

Total shareholders’ equity attributable to The GEO Group, Inc.		1,005,290			1,045,679			966,404			1,006,738
Noncontrolling interests		169			314			(5	)		99

Total shareholders’ equity		1,005,459			1,045,993			966,399			1,006,837

Total Liabilities and Shareholders’ Equity	$	3,434,616		$	3,002,208		$	3,742,395		$	3,462,227

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


	Nine Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2016			September 30, 2015
Cash Flow from Operating Activities:
Net income	$	95,295		$	105,859		$	99,156		$	95,295
Net loss attributable to noncontrolling interests		79			20			123			79

Net income attributable to The GEO Group, Inc.		95,374			105,879			99,279			95,374
Adjustments to reconcile net income attributable to The GEO Group, Inc. to net cash provided by operating activities:
Depreciation and amortization expense		78,628			71,969			85,886			78,628
Stock-based compensation		8,602			6,263			9,675			8,602
Loss on extinguishment of debt								15,885			—
Amortization of debt issuance costs, discount and/or premium and other non-cash interest		4,986			3,921			8,330			4,986
Dividends received from unconsolidated joint venture		—			2,455			1,611			—
Provision for doubtful accounts		323			—			1,783			323
Equity in earnings of affiliates, net of tax		(3,949	)		(4,202	)		(4,943	)		(3,949	)
Income tax benefit related to equity compensation		(1,252	)		(1,498	)
(Gain) loss on sale/disposal of property and equipment		(935	)		453
Income tax deficiency (benefit) related to equity compensation								844			(1,252	)
Loss on sale/disposal of property and equipment								764			(935	)
Deferred tax benefit								—			—
Changes in assets and liabilities, net of effects of acquisitions:
Changes in accounts receivable, prepaid expenses and other assets		(3,068	)		22,235			(33,953	)		(3,068	)
Changes in contract receivable		(74,483	)		(54,731	)		(205,135	)		(74,483	)
Changes in accounts payable, accrued expenses and other liabilities		6,938			11,881			8,216			6,938

Net cash provided by operating activities		111,164			164,625
Net cash (used in) provided by operating activities								(11,758	)		111,164

Cash Flow from Investing Activities:
Acquisition of LCS, cash consideration								—			(307,403	)
Acquisition of SoberLink, cash consideration		(24,402	)		—			—			(24,402	)
Acquisition of LCS, net of cash acquired		(307,403	)		—
Acquisition of Protocol, cash consideration		—			(13,025	)
Insurance proceeds - damaged property		1,270			—
Insurance proceeds – damaged property								4,733			1,270
Proceeds from sale of property and equipment		49			515			68			49
Change in restricted cash and investments		(11,136	)		(6,052	)		(97,716	)		(11,136	)
Capital expenditures		(100,844	)		(77,713	)		(68,015	)		(100,844	)

Net cash used in investing activities		(442,466	)		(96,275	)		(160,930	)		(442,466	)

Cash Flow from Financing Activities:
Proceeds from long-term debt		642,000			459,384			813,077			642,000
Payments on long-term debt		(222,675	)		(509,132	)		(775,256	)		(222,675	)
Payments on non-recourse debt		(6,366	)		(4,511	)		(1,878	)		(6,366	)
Proceeds from non-recourse debt		70,117			74,191			273,087			70,117
Taxes paid related to net share settlements of equity awards		(2,748	)		(1,844	)		(2,336	)		(2,748	)
Proceeds from issuance of common stock in connection with ESPP		321			277			338			321
Issuance of common stock under prospectus supplement		—			54,724
Debt issuance costs		(5,217	)		(23,508	)		(20,490	)		(5,217	)
Income tax benefit related to equity compensation		1,252			1,498
Income tax (deficiency) benefit related to equity compensation								(844	)		1,252
Proceeds from the exercise of stock options		2,513			6,384			2,367			2,513
Cash dividends paid		(138,454	)		(124,084	)		(145,991	)		(138,454	)

Net cash provided by (used in) financing activities		340,743			(66,621	)
Net cash provided by financing activities								142,074			340,743
Effect of Exchange Rate Changes on Cash and Cash Equivalents		(3,647	)		(1,174	)		1,099			(3,647	)

Net increase in Cash and Cash Equivalents		5,794			555
Net (Decrease) Increase in Cash and Cash Equivalents								(29,515	)		5,794
Cash and Cash Equivalents, beginning of period		41,337			52,125			59,638			41,337

Cash and Cash Equivalents, end of period	$	47,131		$	52,680		$	30,123		$	47,131

Supplemental Disclosures:
Non-cash Investing and Financing activities:
Capital expenditures in accounts payable and accrued expenses	$	7,266		$	11,895		$	2,410		$	7,266

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

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 correctional, detention and reentry facilities and the provision of community-based services and youth services in the United States, Australia, South Africa and the United Kingdom. The Company owns, leases and operates a broad range of correctional and detention facilities including maximum, medium and minimum security prisons, immigration detention centers, minimum security detention centers, as well as community based reentry ~~facilities.~~facilities and offers an expanded delivery of offender rehabilitation services under its ‘GEO Continuum of Care’ platform. The ‘GEO Continuum of Care’ program integrates enhanced in-prison programs, which are evidence-based and include cognitive behavioral treatment and post-release services, provides academic and vocational classes to 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 offender and detainee populations as contracted domestically and in the United Kingdom through its joint venture GEO Amey PECS Ltd. (“GEOAmey”). The Company’s worldwide operations include the management and/or ownership of approximately 87,000 beds at 104 correctional and detention facilities, including idle facilities, projects under development and recently awarded contracts, and also include the provision of community supervision services for more than 127,000 offenders and pre-trial defendants, including approximately 83,000 individuals 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, ~~2015~~2016 for the year ended December 31, ~~2014.~~2015. The accompanying December 31, ~~2014~~2015 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, ~~2014.~~2015. 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, ~~2015~~2016 are not necessarily indicative of the results for the entire year ending December 31, ~~2015,~~2016, or for any other future interim or annual periods.

~~On May 18, 2015,~~In August 2016, the ~~Company’s wholly-owned subsidiary, B.I. Incorporated~~Department of Justice (“~~BI”~~DOJ”) ~~acquired 100%~~issued a memorandum regarding the use of public-private partnerships for federal correctional facilities. In this memorandum, the DOJ stated that the Bureau of Prisons (“BOP”) should either decline to renew or substantially reduce the scope of contract renewals in a manner consistent with the law and the overall decline of the ~~outstanding common stock~~BOP’s inmate population. The exact timing of ~~Soberlink, Inc. (“Soberlink”) for cash consideration~~this plan is unknown, and uncertainties exist about the capacity of ~~$24.4 million. Soberlink is a leading developer and distributor of mobile alcohol monitoring devices and services. The Company financed~~other BOP facilities to absorb the acquisition of Soberlink with borrowings under its revolving credit facility. The allocation of the purchase price for this transaction has not yet been finalized. The primary areas of the preliminary purchase price allocations thatpopulations which are ~~not yet finalized primarily relate to certain tangible assets and liabilities included~~currently housed in working capital. The Company expects to continue to obtain information to assist it in determining the fair value of the net assets acquired at the acquisition date during the measurement period. Measurement period adjustments that the Company determines to be material will be applied retrospectively to the period of acquisition. During the measurement period, the Company has made $0.2 million in aggregate retrospective adjustments to provisional amounts recognized at the acquisition date, that if known, would have affected the measurement of the amounts recognized at that date. These adjustments primarily related to working capital adjustments. Transaction costs incurred in connection with the acquisition were not significant andpublic-private partnerships.

Although no contracts have been ~~recorded in general and administrative expenses.~~

As shown below, the Company recorded $14.7 million of goodwill which is not deductible for tax purposes. The Company believes the acquisition of Soberlink provides strategic benefits and synergies with BI’s existing electronic monitoring services. These factors contributed to the goodwill that was recorded upon consummation of the transaction. The goodwill and net assets are included in the GEO Care business segment. Revenues and earnings from Soberlink from the date of acquisition through September 30, 2015 were not significant. Intangible assets consist of technology with an estimated useful life of 8 years and a customer relationship with an estimated useful life of 20 years.

The purchase price of approximately $24.4 million has been preliminarily allocated to the estimated fair values of the assets acquired and liabilities assumed as of May 18, 2015 as follows (in ‘000’s):

Additionally, the Company has provided a loan in the amount of $2.2 million to an entity (“Soberlink Healthcare, LLC”) owned by the former shareholders of Soberlink. The loan matures on May 19, 2019 and bears interestterminated at 10.00%. Proceeds from the loan were used by the seller to fund certain research and development activities of another entity owned by the former shareholders (“DevCo, LLC”). The Company has also entered into a license and development agreement with DevCo, LLC whereby the Company will pay an annual fee of $1.3 million in exchange for a lifetime, royalty free right to use any improvements to the existing technology resident in the product that Soberlink sells. The Company has determined that it has an implicit variable interest in DevCo, LLC and that DevCo, LLC is a variable interest entity. However,this time, the Company has determined that itthe issuance of this statement by the DOJ is ~~not the primary beneficiary~~considered to be a “triggering event” that requires certain testing of ~~DevCo, LLC since it does not have the power to direct the activities~~potential impairment of DevCo, LLC that most significantly impact DevCo, LLC’s economic performance. Nor does the Company have the obligation to absorb the losses of DevCo, LLC. Therefore, the Company does not consolidate this entity. The Company also has determined that Soberlink Healthcare, LLC. is a variable interest entity but the Company is not the primary beneficiarygoodwill for its U.S. Corrections & Detention reporting unit as it does not have the power to direct the activities of Soberlink Healthcare, LLC that most significantly impact its performance. Nor does the Company have the obligation to absorb the losses of Soberlink Healthcare, LLC. Therefore, the Company also does not consolidate this entity.

~~On February 17, 2015, the Company acquired eight correctional~~well as impairment testing for certain long-lived assets and detention facilities (the “LCS Facilities”) totaling more than 6,500 beds from LCS Corrections Services, Inc., a privately-held owner and operator of correctional and detention facilities in the United States, and its affiliates (collectively, “LCS”). Pursuant to the terms of the definitive asset purchase agreement signed on January 26, 2015, the Company acquired the LCS Facilities for approximately $307.4 million at closing in an all cash transaction, excluding transaction related ~~expenses of approximately $2.1 million that were recorded as general and~~facility management contract intangible assets.

~~administrative expense~~The result of this quantitative testing performed during the ~~nine months~~quarter ended September 30, ~~2015.~~2016 showed no impairment in the goodwill of its U.S. Corrections & Detention reporting unit. The Company also acquired certain tangible and intangible assets and assumed certain accounts payable and accrued expenses pursuant to the asset purchase agreement. Additionally, LCS has the opportunity to receive an additional payment if the LCS Facilities exceed certain performance targets over an 18-month period ending August 31, 2016 (the “Earnout Payment”). The aggregate amount of the purchase price paid at closing and the Earnout Payment, if achieved, will not exceed $350 million. This contingent payment had zero fair value ascribed at the date of acquisition since management believes that it is a remote possibility that such payment will be made. Approximately $298 million of outstanding debt related to the facilities was repaid at closing using the cash consideration paid by the Company. The Company did not assume any debt as a result of the transaction. The Company financed the acquisition of the LCS Facilities with borrowings under its revolving credit facility.

The allocation of the purchase price for this transaction has not yet been finalized. The primary areas of the preliminary purchase price allocations that are not yet finalized primarily relate to the fair value of certain tangible assets and liabilities that were assumed. The Company expects to continue to obtain information to assist it in determining thecalculated fair value of the ~~net assets acquired at the acquisition date during the measurement period. Measurement period adjustments that the~~reporting unit substantially exceeded its carrying value. The Company ~~determines~~used a third party valuation firm to be material will be applied retrospectively to the period of acquisition. During the measurement period, the Company has made $0.1 million in aggregate retrospective adjustments to provisional amounts recognized at the acquisition date, that if known, would have affected the measurement of the amounts recognized at that date. These adjustments primarily related to working capital adjustments.

~~The purchase price of $307.4 million has been preliminarily allocated to~~determine the estimated fair ~~values~~value of the reporting unit using a discounted cash flow and other valuation models. Growth rates for sales and profits were determined using inputs from the Company’s long term planning process. The Company also makes estimates for discount rates and other factors based on market conditions, historical experience and other economic factors.

The result of the long-lived asset impairment, including facility management contracts, testing performed during the quarter ended September 30, 2016 showed no impairment based on the undiscounted cash flows projected to occur over the remaining asset life. Certain assumptions about contract renewals, related rates, residual values and alternative facility uses, including leases and sales, were made in connection with these calculations.

It is reasonably possible that other future events could trigger further impairment testing in future periods. It is also reasonably possible that these events, including potential changes in assumptions, could result in the write down of goodwill or other long-lived assets ~~acquired~~ and ~~liabilities assumed~~that the amounts could be material. The Company will conduct its annual goodwill testing of all reporting units as of ~~February 17, 2015 as follows (in ‘000’s):~~

~~As shown above, the Company recorded $107.4 million of goodwill~~October 1, 2016 which is ~~fully deductible~~its annual testing date.

On September 30, 2016, we announced that the BOP had extended our contract for ~~tax purposes. The Company believes its acquisition of the LCS Facilities provides synergies and strategic benefits which further position the Company to meet the demand~~our company-owned D. Ray James Correctional Facility for correctional and detention bed space in the United States. These factors contributed to the goodwill that was recorded upon consummation of the transaction. The goodwill and net assets acquired are included in the U.S. Corrections & Detention business segment. Revenues and earnings for LCS from the date of acquisitiona two-year renewal term through September 30, ~~2015 were not significant in relation~~2018 for the housing of up to ~~the Company’s total consolidated revenues and earnings.~~

~~Identifiable intangible assets purchased consist of facility management contracts and have an estimated useful life of 20 years.~~1,900 beds with a fixed payment for 1,800 beds compared to our previous contract which contained a fixed payment for 1,962 beds.

The Company has recorded goodwill as a result of its 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 December 31, ~~2014~~2015 to September 30, ~~2015~~2016 are as follows (in thousands):


		December 31, 2014		Acquisitions		Foreign Currency Translation			September 30, 2015
											December 31, 2015		Foreign Currency Translation		September 30, 2016
U.S. Corrections & Detention		$	170,376	$	107,398	$	—		$	277,774	$	277,774	$	—	$	277,774
GEO Care			323,047		14,716		—			337,763		337,257		—		337,257
International Services			467		—		(67	)		400		407		19		426

Total Goodwill		$	493,890		122,114	$	(67	)	$	615,937	$	615,438	$	19	$	615,457
	��

The Company has also recorded other finite and indefinite-lived intangible assets as a result of its various business combinations. ~~Acquisitions completed in the first nine months of 2015 as discussed above in Note 2 - Business Combinations also led to additions to intangible assets.~~ The Company’s intangible assets include customer relationships, facility management contracts, trade names and technology, as follows (in thousands):


	September 30, 2015									December 31, 2014							September 30, 2016									December 31, 2015
	Weighted Average Useful Life (years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Weighted Average Useful Life (years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Facility management contracts and customer relationships		15.6	$	233,162	$	(67,640	)	$	165,522	$	154,591	$	(56,396	)	$	98,195		15.6	$	233,126	$	(83,320	)	$	149,806	$	233,041	$	(71,538	)	$	161,503
Technology		7.3		33,700		(15,095	)		18,605		24,000		(12,120	)		11,880		7.3		33,700		(19,736	)		13,964		33,700		(16,255	)		17,445
Trade name (Indefinite lived)		Indefinite		45,200		—			45,200		45,200		—			45,200		Indefinite		45,200		—			45,200		45,200		—			45,200

Total acquired intangible assets			$	312,062	$	(82,735	)	$	229,327	$	223,791	$	(68,516	)	$	155,275			$	312,026	$	(103,056	)	$	208,970	$	311,941	$	(87,793	)	$	224,148

Amortization expense was $5.1 million and $15.3 million for the three and nine months ended September 30, 2016, respectively. Amortization expense was $5.1 million and $14.2 million for the three and nine months ended September 30, 2015, ~~respectively. Amortization expense was $3.9 million and $11.3 million for the three and nine months ended September 30, 2014,~~ respectively. Amortization expense was primarily related to the U.S. Corrections & Detention and GEO Care segments’ amortization of acquired facility management contracts. As of September 30, ~~2015,~~2016, the weighted average period before the next contract renewal or extension for the acquired facility management contracts was approximately 1.9 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. ~~The acquired contracts in the acquisition of the LCS Facilities do not have contract expiration dates and are perpetual in nature.~~

Estimated amortization expense related to the Company’s finite-lived intangible assets for the remainder of ~~2015~~2016 through ~~2019~~2020 and thereafter is as follows (in thousands):


Fiscal Year	Total Amortization Expense
Remainder of 2016	$	5,089
2017		20,328
2018		17,468
2019		17,140
2020		17,140
Thereafter		86,605

	$	163,770

The following tables provide a summary of the Company’s significant financial assets and liabilities carried at fair value and measured on a recurring basis as of September 30, ~~2015~~2016 and December 31, ~~2014~~2015 (in thousands):


			Fair Value Measurements at September 30, 2015								Fair Value Measurements at September 30, 2016
	Carrying Value at September 30, 2015		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Carrying Value at September 30, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Restricted investment:
Rabbi Trust	$	12,459	$	—	$	12,459	$	—	$	15,521	$	—	$	15,521	$	—
Fixed income securities		1,778		—		1,778		—		1,848		—		1,848		—
Interest rate cap derivatives		210		—	$	210		—
Liabilities:
Interest rate swap derivatives	$	22,113	$	—	$	22,113	$	—	$	26,896	$	—	$	26,896	$	—

			Fair Value Measurements at December 31, 2014
	Carrying Value at December 31, 2014		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Restricted investments:
Rabbi Trust	$	11,281	$	—	$	11,281	$	—
Fixed income securities		1,966		—		1,966		—
Interest rate cap derivatives		570		—		570		—
Liabilities:
Interest rate swap derivatives	$	19,248	$	—	$	19,248	$	—


			Fair Value Measurements at December 31, 2015
	Carrying Value at December 31, 2015		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Restricted investments:
Rabbi Trust	$	13,071	$	—	$	13,071	$	—
Fixed income securities		1,717		—		1,717		—
Interest rate cap derivatives		93		—		93		—
Liabilities:
Interest rate swap derivatives	$	20,835	$	—	$	20,835	$	—

The Company’s Level 2 financial instruments included in the tables above as of September 30, ~~2015~~2016 and December 31, ~~2014~~2015 consist of interest rate swap derivative liabilities and interest rate cap derivative assets held by the Company’s Australian subsidiary, the Company’s rabbi trust established for GEO employee and employer contributions to ~~the~~The GEO Group, Inc. Non-qualified Deferred Compensation Plan and an investment in Canadian dollar denominated fixed income securities.

The Australian subsidiary’s interest rate swap derivative liabilities and interest rate cap derivative assets are valued using a discounted cash flow model based on projected Australian borrowing rates. The Australian subsidiary’s interest rate cap derivative asset was not significant at September 30, 2016. The Company’s restricted investment in the rabbi trust is invested in Company owned life insurance policies which are recorded at their cash surrender values. These investments are valued based on the underlying investments held in the policies’ separate account. The underlying assets are equity and fixed income pooled funds that are comprised of Level 1 and Level 2 securities. The Canadian dollar denominated securities, not actively traded, are valued using quoted rates for these and similar securities.

The Company’s consolidated balance sheets reflect certain financial assets and liabilities at carrying value. The carrying value of certain debt instruments, if applicable, is net of unamortized discount. The following tables present the carrying values of those financial instruments and the estimated corresponding fair values at September 30, ~~2015~~2016 and December 31, ~~2014~~2015 (in thousands):


			Estimated Fair Value Measurements at September 30, 2015										Estimated Fair Value Measurements at September 30, 2016
	Carrying Value as of September 30, 2015		Total Fair Value		Level 1		Level 2		Level 3		Carrying Value as of September 30, 2016		Total Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	47,131	$	47,131	$	47,131	$	—	$	—	$	30,123	$	30,123	$	30,123	$	—	$	—
Restricted cash		21,988		21,988		8,086		13,902		—
Restricted cash and investments												111,594		111,594		108,541		3,053		—
Liabilities:
Borrowings under senior credit facility	$	783,250	$	784,716	$	—	$	784,716	$	—	$	765,250	$	751,793	$	—	$	751,793	$	—
5.875% Senior Notes due 2024		250,000		253,438		—		253,438		—		250,000		215,938		—		215,938		—
5.125% Senior Notes		300,000		298,875		—		298,875		—		300,000		255,375		—		255,375		—
5.875% Senior Notes due 2022		250,000		257,813		—		257,813		—		250,000		225,625		—		225,625		—
6.625% Senior Notes		300,000		309,562		—		309,562		—
6.00% Senior Notes												350,000		301,438		—		301,438		—
Non-recourse debt, Australian subsidiary		141,984		142,379		—		142,379		—		482,789		482,738		—		482,738		—
Other non-recourse debt, including current portion		48,815		51,436		—		51,436		—		42,707		44,221		—		44,221		—


			Estimated Fair Value Measurements at December 31, 2014										Estimated Fair Value Measurements at December 31, 2015
	Carrying Value as of December 31, 2014		Total Fair Value		Level 1		Level 2		Level 3		Carrying Value as of December 31, 2015		Total Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	41,337	$	41,337	$	41,337	$	—	$	—	$	59,638	$	59,638	$	59,638	$	—	$	—
Restricted cash		12,638		12,638		3,889		8,749		—
Restricted cash and investments												15,654		15,654		11,536		4,118		—
Liabilities:
Borrowings under senior credit facility	$	365,500	$	364,411	$	—	$	364,411	$	—	$	777,500	$	777,500	$	—	$	777,500	$	—
5.875% Senior Notes due 2024		250,000		256,720		—		256,720		—		250,000		245,783		—		245,783		—
5.125% Senior Notes		300,000		296,814		—		296,814		—		300,000		285,189		—		285,189		—
5.875% Senior Notes due 2022		250,000		256,720		—		256,720		—		250,000		248,125		—		248,125		—
6.625% Senior Notes		300,000		315,750		—		315,750		—		300,000		308,625		—		308,625		—
Non-recourse debt, Australian subsidiary		95,714		95,871		—		95,871		—		204,539		204,531		—		204,531		—
Other non-recourse debt, including current portion		48,836		52,016		—		52,016		—		42,592		43,353		—		43,353		—

The fair values of the Company’s cash and cash equivalents, and restricted cash approximates the carrying values of these assets at September 30, ~~2015~~2016 and December 31, ~~2014.~~2015. Restricted cash consists of money market funds, bank deposits, commercial paper and time deposits used for payments on the Company’s non-recourse debt, ~~and~~ asset replacement funds contractually required to be maintained at the Company’s Australian ~~subsidiary.~~subsidiary and contractual commitments related to the design and construction of a new facility in Ravenhall Australia. The fair value of the money market funds and bank deposits is based on quoted market prices (Level 1) and the fair value of commercial paper and time deposits is based on market prices for similar instruments (Level 2).

The fair values of the Company’s 5.875% senior unsecured notes due 2022 (“5.875% Senior Notes due 2022”), 5.875% senior unsecured notes due 2024 (“5.875% Senior Notes due 2024”), 6.625% senior unsecured notes due 2021 (“~~6.625%~~6.625 Senior Notes”), 6.00% senior unsecured notes due 2026 (“6.00% Senior Notes”), and the 5.125% senior unsecured notes due 2023 (“5.125% Senior Notes”), although not actively traded, are based on published financial data for these instruments. On April 18, 2016, the Company completed an offering of $350 million aggregate principal amount of the 6.00% Senior Notes. The Company used part of the net proceeds to fund the tender offer or the repurchase, redemption or other discharge of any and all of its 6.625% Senior Notes. Refer to Note 10 – Debt. The fair values of the Company’s non-recourse debt related to the Washington Economic Development Finance Authority (“WEDFA”) is based on market prices for similar instruments. The fair value of the non-recourse debt related to the Company’s Australian subsidiary is estimated using a discounted cash flow model based on current Australian borrowing rates for similar instruments. The fair value of borrowings under the senior credit facility is based on an estimate of trading value considering the Company’s borrowing rate, the undrawn spread and similar instruments.

The following table presents the changes in shareholders’ equity that are attributable to the Company’s shareholders and to noncontrolling interests (in thousands):


	Common shares					Additional Paid-In			Earnings in Excess of			Accumulated Other Comprehensive			Noncontrolling			Total Shareholders’				Common shares					Additional Paid-In Capital			Earnings in Excess of Distributions				Accumulated Other Comprehensive Loss				Noncontrolling Interests				Total Shareholders’ Equity
	Shares			Amount		Capital			Distributions			Loss			Interests			Equity				Shares			Amount		Additional Paid-In Capital							Accumulated Other Comprehensive Loss				Noncontrolling Interests				Total Shareholders’ Equity

*Balance, December 31, 2014*		74,191		$	742	$	866,056		$	206,342		$	(27,461	)	$	314		$	1,045,993
*Balance, December 31, 2015*																							74,643		$	747	$	879,599		Earnings in Excess of Distributions			$	158,796			$	(32,404	)		$	99			$	1,006,837
Proceeds from exercise of stock options		109			—		2,513			—			—			—			2,513				108			—		2,367			—				—				—				2,367
Tax benefit related to equity compensation		—			—		1,252			—			—			—			1,252
Tax deficiency related to equity compensation																							—			—		(844	)		—				—				—				(844	)
Stock-based compensation expense		—			—		8,602			—			—			—			8,602				—			—		9,675			—				—				—				9,675

Restricted stock granted		423			4		(4	)		—			—			—			—				349			3		(3	)		—				—				—				—

Restricted stock canceled		(27	)		—		—			—			—			—			—		��		(51	)		—		—			—				—				—				—

Dividends paid		—			—		—			(138,454	)		—			—			(138,454	)			—			—		—			(145,990	)			—				—				(145,990	)
Shares withheld for net settlements of share-based awards		(71	)		—		(2,748	)		—			—			—			(2,748	)			(75	)		—		(2,336	)		—				—				—				(2,336	)
Issuance of common stock - ESPP		9			—		321			—			—			—��			321
Other adjustments to additional paid-in-capital																							—			—		179			—				—				—				179
Issuance of common stock – ESPP																							12			—		338			—				—				—				338
Net income (loss)																							—			—		—			99,279				—				(123	)			99,156
Other comprehensive (loss) income																							—			—		—			—				(3,002	)			19				(2,983	)

Net income (loss)		—			—		—			95,374			—			(79	)		95,295
*Balance, September 30, 2016*																							74,986		$	750	$	888,975		$	112,085			$	(35,406	)		$	(5	)		$	966,399

Other comprehensive loss		—			—		—			—			(7,249	)		(66	)		(7,315	)


*Balance, September 30, 2015*		74,634		$	746	$	875,992		$	163,262		$	(34,710	)	$	169		$	1,005,459

During the nine months ended September 30, ~~2015,~~2016, the Company withheld shares through net share settlements to satisfy minimum statutory tax withholding requirements upon vesting of shares of restricted stock held by employees.

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, ~~and reduce any income taxes that GEO otherwise would be required to pay,~~ 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, ~~2015~~2016 and the year ended December 31, ~~2014,~~2015, respectively, GEO declared and paid the following regular cash distributions to its shareholders as follows:


Declaration Date	Record Date	Payment Due	Distribution Per Share		Aggregate Payment Amount (in millions)		Record Date	Payment Due	Distribution Per Share		Aggregate Payment Amount (in millions)
February 18, 2014	March 3, 2014	March 14, 2014	$	0.57	$	41.1
April 28, 2014	May 15, 2014	May 27, 2014	$	0.57	$	41.5
August 5, 2014	August 18, 2014	August 29, 2014	$	0.57	$	41.4
November 5, 2014	November 17, 2014	November 26, 2014	$	0.62	$	46.0
February 6, 2015	February 17, 2015	February 27, 2015	$	0.62	$	46.0	February 17, 2015	February 27, 2015	$	0.62	$	46.0
April 29, 2015	May 11, 2015	May 21, 2015	$	0.62	$	46.3	May 11, 2015	May 21, 2015	$	0.62	$	46.3
July 31, 2015	August 14, 2015	August 24, 2015	$	0.62	$	46.3	August 14, 2015	August 24, 2015	$	0.62	$	46.3
November 3, 2015							November 16, 2015	November 25, 2015	$	0.65	$	48.5
February 3, 2016							February 16, 2016	February 26, 2016	$	0.65	$	48.5
April 20, 2016							May 2, 2016	May 12, 2016	$	0.65	$	48.7
July 20, 2016							August 1, 2016	August 12, 2016	$	0.65	$	48.7

On May 8, 2013, the Company filed with the Securities and Exchange Commission 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 $100.0 million through sales agents. Sales of shares of the Company’s common stock under the prospectus supplement and equity distribution agreements entered into with the sales agents, if any, were to be made in negotiated transactions or transactions that were deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933. On July 18, 2014, the Company filed with the Securities and Exchange Commission a post-effective amendment to its shelf registration statement on Form S-3 (pursuant to which the prospectus supplement had been filed) as a result of the merger of the Company into GEO REIT effective June 27, 2014. During the year ended December 31, 2014, there were approximately 1.5 million shares of common stock sold under the prospectus supplement for net proceeds of $54.7 million. There were no shares of the Company’s common stock sold under the prospectus supplement during the nine months ended September 30, 2015.

In September 2014, the Company filed with the Securities and Exchange Commission ~~a new~~an automatic shelf registration statement on Form S-3. On November 10, 2014, in connection with the ~~new~~ shelf registration, the Company filed with the Securities and Exchange Commission a ~~new~~ 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 $150.0 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 the Company’s stock issued under this prospectus supplement during the year ended December 31, ~~2014~~2015 nor the nine months ended September 30, ~~2015.~~2016.

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:

The Board has adopted The GEO Group, Inc. 2014 Stock Incentive Plan (the “2014 Plan”), which was approved by the Company’s shareholders on May 2, 2014. The 2014 Plan replaced the 2006 Stock Incentive Plan (the “2006 Plan”). As of the date the 2014 Plan was adopted, it provided for a reserve of 3,083,353 shares, which consisted of 2,000,000 new shares of common stock available for issuance and 1,083,353 shares of common stock that were available for issuance under the 2006 Plan prior to the 2014 Plan replacing it. The Company filed a Form S-8 registration statement related to the 2014 Plan on June 4, 2014, which was amended on July 18, 2014.

The Company uses a Black-Scholes option valuation model to estimate the fair value of each option awarded. For options granted during the nine months ended September 30, ~~2015,~~2016, the fair value was estimated using the following assumptions: (i) volatility of ~~24%~~25%; (ii) expected term of 5.00 years; (iii) risk free interest rate of 1%1.45%; and (iv) expected dividend yield of ~~5.75%~~8.85%. A summary of the activity of stock option awards issued and outstanding under Company plans is as follows for the nine months ended September 30, ~~2015:~~2016:

During the nine months ended September 30, ~~2015,~~2016, the Company granted approximately ~~256,000~~295,000 options to certain employees which had a weighted-average grant-date fair value of ~~$4.26~~$2.08 per share. For the nine months ended September 30, ~~2015~~2016 and September 30, ~~2014,~~2015, the amount of stock-based compensation expense related to stock options was ~~$0.6~~$0.4 million and ~~$0.9~~$0.6 million, respectively. As of September 30, ~~2015,~~2016, the Company had ~~$1.1~~$1.0 million of unrecognized compensation costs related to non-vested stock option awards that are expected to be recognized over a weighted average period of ~~1.5~~2.8 years.

Compensation expense for nonvested stock awards is recorded over the vesting period based on the fair value at the date of grant. Generally, the restricted stock awards vest in equal increments over either a three or four-year period. The fair value of restricted stock awards, which do not contain a market-based vesting condition, is determined using the closing price of the Company’s common stock on the date of grant. The Company has issued share-based awards with service-based, performance-based and market-based vesting criteria.

A summary of the activity of restricted stock outstanding is as follows for the nine months ended September 30, ~~2015:~~2016:


	Shares			Wtd. Avg. Grant Date Fair Value		Shares			Wtd. Avg. Grant Date Fair Value
	(in thousands)					(in thousands)
Restricted stock outstanding at December 31, 2014		724		$	30.97
Restricted stock outstanding at December 31, 2015							863		$	39.74
Granted		423			45.83		349			30.43
Vested		(243	)		24.52		(258	)		35.75
Forfeited/canceled		(27	)		38.13		(51	)		38.58

Restricted stock outstanding at September 30, 2015		877		$	39.69
Restricted stock outstanding at September 30, 2016							903		$	36.52

During the nine months ended September 30, ~~2015,~~2016, the Company granted approximately ~~423,000~~349,000 shares of restricted stock to certain employees and executive officers. Of these awards, ~~148,500~~115,000 are market and performance-based awards which will be forfeited if the Company does not achieve certain annual metrics during ~~2015,~~ 2016, 2017 and ~~2017.~~2018.

The vesting of these performance-based restricted stock grants are subject to the achievement by GEO of two annual performance metrics as follows: (i) up to ~~75%~~50% of the shares of restricted stock (“TSR Target Award”) can vest at the end of a ~~three-year~~three year performance period if GEO meets certain total shareholder return (“TSR”) performance targets, as compared to the total shareholder return of a peer group of companies, ~~during 2015,~~over a three year period from January 1, 2016 ~~and 2017~~to December 31, 2018 and (ii) up to ~~25%~~50% of the shares of restricted stock (“ROCE Target Award”) can vest at the end of a ~~three-year~~three year period if GEO meets certain return on capital employed (“ROCE”) performance targets ~~in 2015,~~over a three year period from January 1, 2016 ~~and 2017.~~to December 31, 2018. These market and performance awards can vest at between 0% and 200% of the target awards for both metrics. The number of shares shown for the performance-based awards is based on the target awards for both metrics.

The metric related to ROCE is considered to be a performance condition. For share-based awards that contain a performance condition, the achievement of the targets must be probable before any share-based compensation expense is recorded. The Company reviews the likelihood of which the target in the range will be achieved and if deemed probable, compensation expense is recorded at that time. If subsequent to initial measurement there is a change in the estimate of the probability of meeting the performance condition, the effect of the change in the estimated quantity of awards expected to vest is recognized by cumulatively adjusting compensation expense. If ultimately the performance targets are not met, for any awards where vesting was previously deemed probable, previously recognized compensation expense will be reversed in the period in which vesting is no longer deemed probable. The fair value of these awards was determined based on the closing price of the Company’s common stock on the date of grant.

The metric related to TSR is considered to be a market condition. For share-based awards that contain a market condition, the probability of satisfying the market condition must be considered in the estimate of grant-date fair value and previously recorded compensation expense is not reversed if the market condition is never met. The fair value of these awards was determined based on a Monte Carlo simulation, which calculates a range of possible outcomes and the probabilities that they will occur, using the following key assumptions: (i) volatility of ~~21.3% to 21.4%~~23.5%; (ii) beta of ~~0.81 to 0.74;~~1.04; and (iii) risk free rates of ~~0.85% to 1.00%~~1.08%.

For the nine months ended September 30, ~~2015~~2016 and September 30, ~~2014,~~2015, the Company recognized ~~$8.0~~$9.2 million and ~~$5.4~~$8.0 million, respectively, of compensation expense related to its restricted stock awards. As of September 30, ~~2015,~~2016, the Company

had ~~$25.3~~$22.8 million of unrecognized compensation costs related to non-vested restricted stock awards, including non-vested restricted stock awards with performance-based and market-based vesting, that are expected to be recognized over a weighted average period of ~~1.3~~2.4 years.

The Company previously adopted The GEO Group Inc. 2011 Employee Stock Purchase Plan (the “Plan”) which was approved by the Company’s shareholders. The purpose of the Plan, which is qualified under Section 423 of the Internal Revenue Service Code of 1986, as amended, is to encourage stock ownership through payroll deductions by the employees of GEO and designated subsidiaries of GEO in order to increase their identification with the Company’s goals and secure a proprietary interest in the Company’s success. These deductions are used to purchase shares of the Company’s common stock at a 5% discount from the then current market price. The Company has made available up to 500,000 shares of its common stock, which were registered with the Securities and Exchange Commission on May 4, 2012, as amended on July 18, 2014, for sale to eligible employees under the Plan.

The Plan is considered to be non-compensatory. As such, there is no compensation expense required to be recognized. Share purchases under the Plan are made on the last day of each month. During the nine months ended September 30, ~~2015, 9,076~~2016, 11,976 shares of the Company’s common stock were issued in connection with the Plan.

Basic earnings per common share is computed by dividing the net income from continuing operations attributable to The GEO Group, Inc. ~~shareholders~~ by the weighted average number of outstanding shares of common stock. The calculation of diluted earnings per share is similar to that of basic earnings per ~~common~~ share except that the denominator includes dilutive common stock equivalents such as stock options and shares of restricted stock. Basic and diluted earnings per share were calculated for the ~~three and~~ nine months ended September 30, ~~2015~~2016 and ~~September 30, 2014~~2015 as follows (in thousands, except per share data):


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014		September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Net income	$	38,291	$	38,965	$	95,295	$	105,859	$	43,674	$	38,291	$	99,156	$	95,295
Net income loss attributable to noncontrolling interests		21		26		79		20
Net loss attributable to noncontrolling interests										46		21		123		79

Net income attributable to The GEO Group, Inc.		38,312		38,991		95,374		105,879		43,720		38,312		99,279		95,374
Basic earnings per share attributable to The GEO Group, Inc.:
Weighted average shares outstanding		73,757		72,380		73,658		71,862		74,108		73,757		74,010		73,658

Per share amount	$	0.52	$	0.54	$	1.29	$	1.47	$	0.59	$	0.52	$	1.34	$	1.29

Diluted earnings per share attributable to The GEO Group, Inc.:
Weighted average shares outstanding		73,757		72,380		73,658		71,862		74,108		73,757		74,010		73,658
Dilutive effect of equity incentive plans		162		257		248		268		228		162		273		248

Weighted average shares assuming dilution		73,919		72,637		73,906		72,130		74,336		73,919		74,283		73,906

Per share amount	$	0.52	$	0.54	$	1.29	$	1.47	$	0.59	$	0.52	$	1.34	$	1.29

For the three months ended September 30, ~~2015, 403,695~~2016, 614,128 weighted average shares of common stock underlying options were excluded from the computation of diluted earnings per share (“EPS”) because the effect would be anti-dilutive. There were ~~258,688~~238,561 common stock equivalents from restricted shares that were anti-dilutive.

For the three months ended September 30, ~~2014, no~~2015, 403,695 weighted average shares of common stock ~~underling~~underlying options orwere excluded from the computation of diluted EPS because the effect would be anti-dilutive. There were 258,688 common stock equivalents from restricted ~~stock~~shares that were anti-dilutive.

For the nine months ended September 30, 2016, 566,610 weighted average shares of common stock underlying options were excluded from the computation of diluted earnings per share because the effect would be anti-dilutive. There were 222,521 common stock equivalents from restricted shares that were anti-dilutive.

For the nine months ended September 30, 2015, 192,079 weighted average shares of common stock underlying options were excluded from the computation of diluted EPS because the effect would be anti-dilutive. There were 201,102 ~~common stock equivalents from restricted shares that were anti-dilutive.~~

For the nine months ended September 30, 2014, 165,965 weighted average shares of common stock underlying options were excluded from the computation of diluted EPS because the effect would be anti-dilutive. There were 288 common stock equivalents from restricted shares that were anti-dilutive.

The Company’s primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in interest rates. The Company measures its derivative financial instruments at fair value.

The Company’s Australian subsidiary is a party to an interest rate swap agreement to fix the interest rate on its variable rate non-recourse debt (related to its Fulham facility) to 9.7%. The Company has determined the swap, which has a notional amount of AUD 50.9 million, or $38.9 million, based on exchange rates in effect as of September 30, 2016, payment and expiration dates, and call provisions that coincide with the terms of the non-recourse debt,

to be an effective cash flow hedge. Accordingly, the Company records the change in the fair value of the interest rate swap in accumulated other comprehensive income, net of applicable income taxes. Total unrealized gains recorded in other comprehensive income, net of tax, related to this cash flow hedge were not significant for the nine months ended September 30, ~~2015~~2016 and ~~2014.~~2015. The total fair value of the swap liability was not significant as of September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively, and is recorded as a component of other non-current liabilities within the accompanying consolidated balance sheets. There was no material ineffectiveness of this interest rate swap for the periods presented. The Company does not expect to enter into any transactions during the next twelve months which would result in the reclassification into earnings or losses associated with this swap currently reported in accumulated other comprehensive income (loss).

~~In September 2014, the~~The Company’s Australian subsidiary has entered into interest rate swap agreements to fix the interest rate on its variable rate non-recourse debt related to a prison project in Ravenhall, a locality near Melbourne, Australia to 3.3% during the design and construction phase and 4.2% during the project’s operating phase. The swaps’ notional amounts coincide with construction draw fixed commitments throughout the project. At September 30, ~~2015,~~2016, the swaps had a notional ~~value~~amount of approximately AUD ~~188.9~~626 million, or ~~$131.8~~$478 million, based on exchange rates at September 30, ~~2015,~~2016, related to the outstanding draws for the design and construction phase and approximately AUD ~~466.3~~466 million, or ~~$325.4~~$356 million, based on exchange rates at September 30, ~~2015~~2016 related to future construction draws. The Company has determined that the swaps have payment, expiration dates, and provisions that coincide with the terms of the non-recourse debt and are therefore considered to be effective cash flow hedges. Accordingly, the Company records the change in the fair value of the interest rate swaps in accumulated other comprehensive income, net of applicable income taxes. Total unrealized loss recorded in other comprehensive income, net of tax, related to this cash flow hedge was ~~approximately $2.5~~$5.2 million during the nine months ended September 30, ~~2015.~~2016. The total fair value of the swap liability as of September 30, ~~2015~~2016 was ~~$22.0~~$26.9 million and is recorded as a component of Other Non-Current liabilities within the accompanying consolidated balance sheet. There was no material ineffectiveness for the periods presented. The Company does not expect to enter into any transactions during the next twelve months which would result in the reclassification into earnings or losses associated with these swaps currently reported in accumulated other comprehensive income (loss).

Additionally, upon completion and commercial acceptance of the prison project, the Department of Justice in the State of Victoria (the “State”) in accordance with the prison contract, will make a lump sum payment of AUD 310 million, or ~~$216.3~~approximately $237 million, based on exchange rates at September 30, ~~2015,~~2016, towards a portion of the outstanding principal of the non-recourse debt. The Company’s Australian subsidiary also entered into interest rate cap agreements in September 2014 giving the Company the option to cap the interest rate on its variable non-recourse debt related to the project in the event that the completion of the prison project is delayed which could delay the State’s payment. The Company paid $1.7 million for the interest rate cap agreements. These instruments do not meet the requirements for hedge accounting, and therefore, changes in fair value of the interest rate caps are recorded in earnings. ~~During the nine months ended September 30, 2015, the Company recorded a loss of approximately $0.3 million~~Total losses related to a decrease in the fair value of the interest rate cap ~~assets. As of~~assets were not significant during the nine months ended September 30, ~~2015,~~2016. The total fair value of the interest rate cap assets ~~had~~was not significant as of September 30, 2016 and December 31, 2015, respectively, and is recorded as a ~~fair value~~component of ~~$0.2 million which is included in Other Non-Current Assets in~~other non-current assets within the accompanying consolidated balance ~~sheet.~~sheets.

Debt outstanding as of September 30, ~~2015~~2016 and December 31, ~~2014~~2015 consisted of the following (in thousands):


	September 30, 2015			December 31, 2014			September 30, 2016			December 31, 2015
Senior Credit Facility:
Term loan	$	293,250		$	295,500		$	290,250		$	292,500
Unamortized debt issuance costs on term loan								(403	)		(486	)
Revolver		490,000			70,000			475,000			485,000

Total Senior Credit Facility	$	783,250		$	365,500		$	764,847		$	777,014
5.875% Senior Notes
6.00% Senior Notes:
Notes Due in 2026								350,000			—
Unamortized debt issuance costs								(5,895	)		—

Total 6.00% Senior Notes Due in 2026								344,105			—
5.875% Senior Notes:
Notes Due in 2024		250,000			250,000			250,000			250,000
Unamortized debt issuance costs								(3,868	)		(4,140	)

Total 5.875% Senior Notes Due in 2024								246,132			245,860
5.125% Senior Notes:
Notes due in 2023		300,000			300,000
Notes Due in 2023								300,000			300,000
Unamortized debt issuance costs								(4,933	)		(5,358	)

Total 5.125% Senior Notes Due in 2023								295,067			294,642
5.875% Senior Notes
Notes Due in 2022		250,000			250,000			250,000			250,000
Unamortized debt issuance costs								(4,088	)		(4,564	)

Total 5.875% Senior Notes Due in 2022								245,912			245,436
6.625% Senior Notes:
Notes due in 2021		300,000			300,000
Non-Recourse Debt:
Notes Due in 2021								—			300,000
Unamortized debt issuance costs								—			(5,198	)

Total 6.625% Senior Notes Due in 2021								—			294,802
Non-Recourse Debt		191,384			145,262			525,929			247,679
Unamortized debt issuance costs on non-recourse debt								(21,135	)		(21,369	)
Unamortized discount on non-recourse debt		(585	)		(712	)		(433	)		(548	)

Total Non-Recourse Debt		190,799			144,550			504,361			225,762
Capital Lease Obligations		10,132			10,924			8,992			9,856
Other debt		1,011			421			1,262			1,370

Total debt		2,085,192			1,621,395			2,410,678			2,094,742
Current portion of capital lease obligations, long-term debt and non-recourse debt		(16,428	)		(16,752	)		(15,638	)		(17,141	)
Capital Lease Obligations, long-term portion		(8,992	)		(9,856	)		(7,757	)		(8,693	)
Non-Recourse Debt, long-term portion		(178,738	)		(131,968	)		(493,303	)		(213,098	)

Long-Term Debt	$	1,881,034		$	1,462,819		$	1,893,980		$	1,855,810

In April 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-03,“Interest-Imputation of Interest,” which is intended to simplify the presentation of debt issuance costs. The amendments require that debt issuance costs related to a recognized debt liability be presented as a direct reduction from the carrying amount of that debt liability, consistent with debt discounts. In accordance with ASU No. 2015-03, the Company adopted the new standard during the nine months ended September 30, 2016 and has applied the new guidance on a retrospective basis. Refer to Note 14 – Recent Accounting Pronouncements.

On May 19, 2016 (the “Amendment Effective Date”), GEO executed Amendment No. 1, among GEO and GEO Corrections Holdings, Inc. (together with GEO, the “Borrowers”), GEO Australasia Holdings Pty Ltd (“GEO Australasia Holdings”), GEO Australasia Finance Holdings Pty Ltd as trustee for the GEO Australasia Finance Holding Trust (the “Australian Trust”) (the “Australian Trustee”, and together with GEO Australasia Holdings, collectively, the “Australian Borrowers”), the guarantors party thereto, the issuing lenders party thereto, the lenders party thereto and BNP Paribas, as administrative agent (the “Amendment”), to the Second Amended and Restated Credit Agreement, dated as of August 27, 2014, ~~the Company executed a second amended and restated credit agreement~~ by and among the ~~Company and GEO Corrections Holdings, Inc., as borrowers,~~Borrowers, BNP Paribas, as ~~Administrative Agent,~~administrative agent, and the lenders who are, or may from time to time become, a party thereto (the ~~“Credit~~“Existing Credit Agreement”).

The Amendment amends certain terms of the Existing Credit Agreement to effect a revolving credit increase in the amount of $200.0 million, increases to the total leverage thresholds used in the determination of the applicable interest rates, and certain other modifications (the Existing Credit Agreement as so modified, the “Amended Credit Agreement”).

The Amendment further provides that each Revolving Credit Lender (including each applicable Increasing Lender and each Assuming Lender) that executed a lender addendum as a multicurrency subfacility lender agrees to provide a multicurrency subfacility commitment to the Borrowers and the Australian Borrowers at the Amendment Effective Time in an aggregate principal amount equal to $100.0 million (the “Multicurrency Subfacility Commitment”) on the terms set forth in the Amended Credit Agreement. The aggregate amount of loans and letters of credit that may be issued under the Revolving Credit Commitment and the Multicurrency Subfacility Commitment may not exceed $900.0 million.

Giving effect to the Amendment, the Amended Credit Agreement currently evidences a ~~credit facility~~Credit Facility (the “Credit Facility”) consisting of a ~~$296.3~~$291.0 million ~~term loan~~Term Loan (the “Term Loan”) bearing interest at LIBOR plus 2.50% (with a LIBOR floor of .75%), and a ~~$700.0~~$900.0 million revolving credit facility (the “Revolver”) initially bearing interest at LIBOR plus 2.25% (with noa LIBOR ~~floor)~~floor of 0.00%) together with ~~AUD 225.0~~AUD225.0 million available solely for the issuance of financial letters of credit and performance letters of credit, in each case denominated in Australian Dollars (the “Australian LC Facility”). ~~At September 30, 2015,~~The Amended Credit Agreement also includes a $100.0 million Multicurrency Subfacility Commitment that is part of the ~~Company had approximately AUD 215~~Revolver and a $300.0 million ~~in letters~~letter of credit ~~outstanding~~subfacility that is part of the Revolver. The Amended Credit Agreement also has an accordion feature of $450.0 million, subject to lender demand and prevailing market conditions and satisfying the relevant borrowing conditions. The Term Loan Maturity Date under the Amended Credit Agreement did not change from the Existing Credit Agreement and is April 3, 2020. The Amendment amended the termination date for the Revolving Credit Commitment component to May 19, 2021; provided, that if on October 3, 2019 both the maturity dates of all Term Loans and Incremental Term Loans have not been extended to November 19, 2021 or a later date, and the senior secured leverage ratio exceeds 2.50 to 1.00, then the termination date of the Revolving Credit Commitments will be October 3, 2019. The Amendment amended the maturity date for the performance letter of credit component of the Australian LC Facility ~~in connection with certain~~to October 1, 2016, and the maturity date for the financial letter of credit component of the Australian LC Facility to February 15, 2017. On September 9, 2016, the performance ~~and financing guarantees related to~~letter of credit component of the ~~Ravenhall prison project in Australia. Amounts to be borrowed~~Australian LC Facility was reduced by AUD110 million after the Company ~~under the Credit Agreement are subject to the satisfaction~~executed a Letter of ~~customary conditions to borrowing.~~ Offer by and among GEO and HSBC Bank Australia Limited (the “Letter of Offer”) providing for a bank guarantee line and bank guarantee/standby sub-facility in an aggregate amount of AUD100 million as further discussed below.

The ~~Revolver component is scheduled to mature on August 27, 2019 and the Term Loan component is scheduled to mature on April 3, 2020.~~

~~The~~Amended Credit Agreement contains certain customary representations and warranties, and certain customary covenants that restrict ~~the Company’s~~GEO’s ability to, among other things (i) create, incur or assume any indebtedness, (ii) create, incur, assume or permit liens, (iii) make loans and investments, (iv) engage in mergers, acquisitions and asset sales, (v) make certain restricted payments, (vi) issue, sell or otherwise dispose of capital stock, (vii) engage in transactions with affiliates, (viii) allow the total leverage ratio to exceed ~~5.75~~6.25 to 1.00, allow the senior secured leverage ratio to exceed 3.50 to 1.00, or allow the interest coverage ratio to be less than 3.00 to 1.00, (ix) cancel, forgive, make any voluntary or optional payment or prepayment on, or redeem or acquire for value any senior notes, except as permitted, (x) allow the Australian Trustee to resign or retire as trustee of the Australian Trust or cause or permit any other person to become an additional trustee of the Australian Trust or take, or omit to take any action, which might or would result in the retirement, removal or replacement of the Australian Trustee as trustee of the Australian Trust, except as permitted, (xi) alter the business ~~the Company~~GEO conducts, and ~~(xi)~~(xii) materially impair ~~the Company’s~~GEO’s lenders’ security interests in the collateral for its loans. The restricted payments covenant remains consistent with the Company’s election to be treated as a real estate investment trust under the Internal Revenue Code of 1986, effective as of January 1, 2013.

Events of default under the Amended Credit Agreement include, but are not limited to, (i) ~~the Company’s~~GEO’s or any Australian Borrower’s failure to pay principal or interest when due, (ii) ~~the Company’s~~GEO’s material breach of any representation or warranty, (iii) covenant defaults, (iv) liquidation, reorganization or other relief relating to bankruptcy or insolvency, (v) cross default under certain other material indebtedness, (vi) unsatisfied final judgments over a specified threshold, (vii) certain material environmental liability claims which have been asserted against GEO, (viii) unless the ~~Company,~~Australian Borrower Resignation Date (as defined in the Amended Credit Agreement) has occurred, certain events involving the Australian Trustee or the Australian Trust occur including the Australian Trustee ceases to be the trustee of the Australian Trust or the Australian Trust is terminated, and ~~(viii)~~(ix) a change in control. ~~The Company was in compliance with all of the covenants of the Credit Agreement as of September 30, 2015.~~

All of the obligations under the Amended Credit Agreement are unconditionally guaranteed by certain domestic subsidiaries of ~~the Company~~GEO and the Amended Credit Agreement and the related guarantees are secured by a perfected first-priority pledge of substantially all of ~~the Company’s~~GEO’s present and future tangible and intangible domestic assets and all present and future tangible and intangible domestic assets of each guarantor, including but not limited to a first-priority pledge of all of the outstanding capital stock owned by ~~the Company~~GEO and each guarantor in their domestic subsidiaries.

The Australian Borrowers are wholly owned foreign subsidiaries of GEO, and became party to the Amended Credit Agreement by executing the Amendment. Pursuant to the Amendment, GEO designated each of the Australian Borrowers as restricted subsidiaries under the Amended Credit Agreement. However, the Australian Borrowers are not obligated to pay or perform any obligations under the Amended Credit Agreement other than their own obligations as Australian Borrowers under the Amended Credit Agreement. The Australian Borrowers do not pledge any of their assets to secure any obligations under the Amended Credit Agreement.

On August 18, 2016, the Company executed a Letter of Offer by and among GEO and HSBC Bank Australia Limited (the “Letter of Offer”) providing for a bank guarantee line and bank guarantee/standby sub-facility in an aggregate amount of AUD100 million, or $76.3 million, based on exchange rates in effect as of September 30, 2016 (collectively, the “Bank Guarantee Facility”). The Bank Guarantee Facility allows GEO to provide letters of credit to assure performance of certain obligations of its wholly owned subsidiary relating to its prison project in Ravenhall, located near Melbourne, Australia and replaced the performance letter of credit discussed above which was previously included in the Amended Credit Agreement. The Bank Guarantee Facility is unsecured. The issuance of letters of credit under the Bank Guarantee Facility is subject to the satisfaction of the conditions precedent specified in the Letter of Offer. Letters of credit issued under the bank guarantee lines are due on demand and letters of credit issued under the bank guarantee/standby sub-facility cannot have a duration exceeding twelve months. The Bank Guarantee Facility may be terminated by HSBC on 90 days written notice. As of September 30, ~~2015,~~2016, there was AUD100 million in letters of credit issued under the Bank Guarantee Facility.

As of September 30, 2016, the Company had ~~$293.3~~$290.3 million in aggregate borrowings outstanding under the Term Loan, ~~$490.0~~$475.0 million in borrowings under the Revolver, and approximately ~~$58.1~~$53.6 million in letters of credit which left ~~$151.9~~$371.4 million in additional borrowing capacity under the Revolver. The weighted average interest rate on outstanding borrowings under the Amended Credit Agreement as of September 30, ~~2015~~2016 was ~~2.8%~~3.0%.

On April 18, 2016, the Company completed an offering of $350 million aggregate principal amount of 6.00% senior notes due 2026. The 6.00% Senior Notes were offered and sold in a registered offering pursuant to an underwriting agreement, dated as of April 11, 2016 (the “Underwriting Agreement”) among the Company, certain of the Company’s domestic subsidiaries, as guarantors and Wells Fargo Securities, LLC, as representative for the underwriters named therein. The 6.00% Senior Notes were issued by the Company pursuant to the Indenture, dated as of September 25, 2014 (the “Base Indenture”), by and between the Company and Wells Fargo Bank, National Association, as trustee, as supplemented by a Second Supplemental Indenture, dated as of April 18, 2016 (the “Second Supplemental Indenture” and together with the Base Indenture, the “Indenture”), by and among the Company, the guarantors and the trustee which governs the terms of the 6.00% Senior Notes. The sale of the 6.00% Senior Notes was registered under GEO’s existing shelf registration statement on Form S-3 filed on September 12, 2014, as amended (File No. 333-198729). The 6.00% Senior Notes were issued at a coupon rate and yield to maturity of 6.00%. Interest on the 6.00% Senior Notes is payable semi-annually on April 15 and October 15 of each year, commencing on October 15, 2016. The 6.00% Senior Notes mature on April 15, 2026. The Company used the net proceeds to fund the tender offer and the redemption of all of its 6.625% Senior Notes (see discussion below), to pay all related fees, costs and expenses and for general corporate purposes including repaying borrowings under the Company’s Revolver. Loan costs of approximately $6 million were incurred and capitalized in connection with the offering.

On February 10, 2011, the Company completed a private offering of $300.0 million in aggregate principal amount of its 6.625% Senior Notes. Interest on the 6.625% Senior Notes accrued at the stated rate. The Company paid interest semi-annually in arrears on February 15 and August 15 of each year.

On April 11, 2016, the Company announced that it had commenced a cash tender offer for any and all of its $300.0 million aggregate principal amount of its 6.625% Senior Notes due 2021. On April 18, 2016, the Company completed the purchase of $231.0 million in aggregate principal amount of its 6.625% Senior Notes validly tendered in connection with the Company’s tender offer on or prior to the expiration time. On May 20, 2016, the Company completed the redemption of the remaining 6.625% Senior Notes in connection with the terms of the notice of redemption delivered to the note holders on April 20, 2016 pursuant to the terms of the indenture governing the 6.625% Senior Notes. The Company financed the purchase of the 6.625% Senior Notes under the tender offer with part of the net cash proceeds from the 6.00% Senior Notes (see discussion above). As a result of the tender offer and redemption, the Company incurred a $15.9 million loss on extinguishment of debt related to the tender premium and deferred costs associated with the 6.625% Senior Notes.

Interest on the 5.875% Senior Notes due 2024 accrues at the stated rate. The Company pays interest semi-annually in arrears on April 15 and October 15 of each year. On or after October 15, 2019, the Company may, at its option, redeem all or part of the 5.875% Senior Notes due 2024 at the redemption prices set forth in the indenture governing the 5.875% Senior Notes due 2024. The indenture contains certain covenants, including limitations and restrictions on the Company and its subsidiary ~~guarantors (Refer~~guarantors. Refer to Note 15-Condensed Consolidating Financial ~~Information). The Company was in compliance with all of the covenants of the indenture governing the 5.875% Senior Notes due 2024 as of September 30, 2015.~~Information.

Interest on the 5.125% Senior Notes accrues at the stated rate. The Company pays interest semi-annually in arrears on April 1 and October 1 of each year. On or after April 1, 2018, the Company may, at its option, redeem all or part of the 5.125% Senior Notes at the redemption prices set forth in the indenture governing the 5.125% Senior Notes. The indenture contains certain covenants, including limitations and restrictions on the Company and its subsidiary ~~guarantors (Refer~~guarantors. Refer to Note 15-Condensed Consolidating Financial ~~Information). The Company was in compliance with all of the covenants of the indenture governing the 5.125% Senior Notes as of September 30, 2015.~~Information.

Interest on the 5.875% Senior Notes due 2022 accrues at the stated rate. The Company pays interest semi-annually in arrears on January 15 and July 15 of each year. On or after January 15, 2017, the Company may, at its option, redeem all or part of the 5.875% Senior Notes due 2022 at the redemption prices set forth in the indenture governing the 5.875% Senior Notes due 2022. The indenture contains certain covenants, including limitations and restrictions on the Company and its subsidiary ~~guarantors (Refer~~guarantors. Refer to Note 15-Condensed Consolidating Financial ~~Information). The Company was in compliance with all of the covenants of the indenture governing the 5.875% Senior Notes due 2022 as of September 30, 2015.~~

Interest on the 6.625% Senior Notes accrues at the stated rate. The Company pays interest semi-annually in arrears on February 15 and August 15 of each year. On or after February 15, 2016, the Company may, at its option, redeem all or part of the 6.625% Senior Notes at the redemption prices set forth in the indenture governing the 6.625% Senior Notes. The indenture contains certain covenants, including limitations and restrictions on the Company and its subsidiary guarantors (Refer to Note 15-Condensed Consolidating Financial Information). The Company was in compliance with all of the covenants of the indenture governing the 6.625% Senior Notes as of September 30, 2015.Information.

The remaining balance of the original debt service requirement under the $54.4 million note payable (“2011 Revenue Bonds”) to WEDFA will mature in October 2021 with fixed coupon rates of 5.25%, is ~~$49.4~~$43.1 million, of which ~~$6.3~~$6.5 million is classified as current in the accompanying consolidated balance sheet as of September 30, ~~2015.~~2016. The payment of principal and interest on the 2011 Revenue Bonds issued by WEDFA is non-recourse to GEO.

As of September 30, ~~2015,~~2016, included in current restricted cash and investments and non-current restricted cash and investments is $8.4 million of funds held in trust for debt service and other reserves with respect to the above mentioned note payable to WEDFA.

The non-recourse obligation of the Company totaled ~~$10.0~~$4.6 million (AUD ~~14.3~~6.0 million) and ~~$16.4~~$9.0 million (AUD ~~20.1~~12.4 million), based on the exchange rates in effect at September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. The term of the non-recourse debt is through 2017 and it bears interest at a variable rate quoted by certain Australian banks plus 140 basis points. Any obligations or liabilities of the subsidiary are matched by a similar or corresponding commitment from the government of the State of Victoria. As a condition of the loan, the Company is required to maintain a restricted cash balance of AUD 5.0 million, which, based on exchange rates as of September 30, ~~2015,~~2016, was ~~$3.5~~$3.8 million. This amount is included in non-current restricted cash and investments and the annual maturities of the future debt obligation are included in Non-Recourse Debt in the accompanying consolidated balance sheets.

In connection with a new design and build prison project agreement with the State, the Company entered into a syndicated facility agreement (the “Construction Facility”) with National Australia Bank Limited to provide debt financing for construction of the project. The Construction Facility provides for non-recourse funding up to AUD 791.0 million, or ~~$552.0~~approximately $603.9 million, based on exchange rates as of September 30, ~~2015.~~2016. Construction draws will be funded throughout the project according to a fixed utilization schedule as defined in the syndicated facility agreement. The term of the Construction Facility is through October 2019 and bears interest at a variable rate quoted by certain Australian banks plus 200 basis points. Upon completion of the prison, the Construction Facility will be converted to a term loan with payments due quarterly beginning in 2018 through 2041. In accordance with the terms of the Construction Facility, upon completion and commercial acceptance of the prison, in accordance with the prison contract, the State will make a lump sum payment of AUD 310 million, or ~~$216.3~~approximately $237 million, based on exchange rates as of September 30, ~~2015,~~2016, towards a portion of the outstanding principal. The remaining outstanding principal balance will be repaid over the term of the operating agreement. As of September 30, ~~2015, $132.0~~2016, approximately $478 million was outstanding under the Construction Facility. The Company also entered into interest rate swap and interest rate cap agreements related to its non-recourse debt in connection with the project. Refer to Note 9 -– Derivative Financial Instruments.

The Company has entered into certain guarantees in connection with the financing and construction performance of a facility in Australia. The obligations amounted to approximately AUD 215.0 million, or ~~$150.0~~$164.1 million, based on exchange rates as of September 30, ~~2015.~~2016. These guarantees are secured by outstanding letters of credit under the Company’s Revolver as of September 30, ~~2015.~~2016.

At September 30, ~~2015,~~2016, the Company also had ~~ten~~thirteen other letters of credit outstanding under separate international facilities relating to performance guarantees of its Australian subsidiary totaling ~~$12.8~~$20.1 million.

In connection with the creation of South African Custodial Services Pty. Limited (“SACS”), the Company entered into certain guarantees related to the financing, construction and operation of the prison. As of September 30, ~~2015,~~2016, the Company guaranteed obligations amounting to ~~16.7~~15.0 million South African Rand, or ~~$1.2~~$1.1 million based on exchange rates as of September 30, ~~2015.~~2016. In the event SACS is unable to maintain the required funding in a rectification account maintained for the payment of certain costs in the event of contract termination, a previously existing guarantee by the Company for the shortfall will need to be re-instated. The remaining guarantee of ~~16.7~~7.4 million South African Rand is secured by outstanding letters of credit under the Company’s Revolver as of September 30, ~~2015.~~2016.

In addition to the above, the Company has also agreed to provide a loan, if required, of up to 20 million South African Rand, or $1.4 million based on exchange rates as of September 30, ~~2015,~~2016, referred to as the Shareholder’s Loan, to SACS for the purpose of financing SACS’ obligations under its contract with the South African government. No amounts have been funded under the standby facility, and the Company does not currently anticipate that such funding will be required by SACS in the future. The Company’s obligations under the Shareholder’s Loan expire upon the earlier of full funding or SACS’s release from its obligations under its debt agreements. SACS’ ability to draw on the Shareholder’s Loan is limited to certain circumstances, including termination of the contract.

The Company has also guaranteed certain obligations of SACS to the security trustee for SACS’ lenders. The Company secured its guarantee to the security trustee by ceding its rights to claims against SACS in respect of any loans or other finance agreements, and by pledging the Company’s shares in SACS. The Company’s liability under the guarantee is limited to the cession and pledge of shares. The guarantee expires upon expiration of the cession and pledge agreements.

In connection with a design, build, finance and maintenance contract for a facility in Canada, the Company guaranteed certain potential tax obligations of a trust. The potential estimated exposure of these obligations is Canadian Dollar 1.5 million, or $1.1 million, based on exchange rates as of September 30, ~~2015,~~2016, commencing in 2017. The liability related to this exposure is included in Other Non-Current Liabilities as of September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, respectively. To secure this

guarantee, the Company purchased Canadian Dollar denominated securities with maturities matched to the estimated tax obligations in 2017 to 2021. The Company has recorded an asset equal to the current fair value of those securities included in Other Non-Current Assets as of September 30, ~~2015~~2016 and December 31, ~~2014~~2015 on its consolidated balance sheets. The Company does not currently operate or manage this facility.

In connection with the creation of GEOAmey, the Company and its joint venture partner guarantee the availability of working capital in equal proportion to ensure that GEOAmey can comply with current and future contractual commitments related to the performance of its operations. The Company and the 50% joint venture partner have each extended a £12 million line of credit, ~~of which £9.5 million,~~ or ~~$14.4~~$15.6 million, based on exchange rates as of September 30, ~~2015,~~2016, of which £4.5 million, or $5.8 million, based on exchange rates as of September 30, 2016, was outstanding as of September 30, ~~2015.~~2016. During the nine months ended September 30, 2016, GEOAmey made principal payments in the amount of £4 million. The Company’s maximum exposure relative to the joint venture is its note receivable of ~~$14.4~~approximately $5.8 million, which is included in Other Non-Current Assets in the accompanying consolidated balance sheets, and future financial support necessary to guarantee performance under the contract.

Except as discussed above, the Company does not have any off balance sheet arrangements.

On August 25, 2016, a purported shareholder class action lawsuit was filed against the Company, its Chief Executive Officer, George C. Zoley (“Mr. Zoley”), and its Chief Financial Officer, Brian R. Evans (“Mr. Evans”), in the United States District Court for the Southern District of Florida. The complaint alleges that the Company and Messrs. Zoley and Evans made false and misleading statements regarding the Company’s business, operational and compliance policies. The lawsuit alleges that it is brought by John J. Mulvaney individually and on behalf of a class consisting of all persons other than the defendants who purchased or otherwise acquired the Company’s securities during the alleged class period between March 1, 2012 through and including August 17, 2016. The complaint alleges that the Company and Messrs. Zoley and Evans violated Section 10(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, and alleges that Messrs. Zoley and Evans violated Section 20(a) of the Exchange Act. The complaint seeks damages, interest, attorneys’ fees, expert fees, other costs, and such other relief as the court may deem proper. The Company intends to take all necessary steps to vigorously defend itself and Messrs. Zoley and Evans. The Company has not recorded an accrual relating to this matter at this time, as a loss is not considered probable or reasonably estimable at this preliminary stage of the lawsuit.

The nature of the Company’s business exposes it to various types of third-party legal claims or litigation against the Company, including, but not limited to, civil rights claims relating to conditions of confinement and/or mistreatment, sexual misconduct claims brought by prisoners or detainees, medical malpractice claims, product liability claims, intellectual property infringement claims, claims relating to employment matters (including, but not limited to, employment discrimination claims, union grievances and wage and hour claims), property loss claims, environmental claims, automobile liability claims, indemnification claims by its customers and other third parties, contractual claims and claims for personal injury or other damages resulting from contact with the Company’s facilities, programs, electronic monitoring products, personnel or prisoners, including damages arising from a prisoner’s escape or from a disturbance or riot at a facility. The Company does not expect the outcome of any pending claims or legal proceedings to have a material adverse effect on its financial condition, results of operations or cash flows.

On June 1, 2015, GEO and Mr. George C. Zoley, the Company’s Chief Executive Officer, entered into a Third Amendment to the Third Amended and Restated Executive Employment Agreement, effective as of June 1, 2015 (the “Amendment”). The Amendment modifies Mr. Zoley’s employment agreement by decreasing his annual base salary from $1.215 million to $1.0 million and increasing the maximum target annual performance award he may receive from 100% of his annual base salary to 150% of his annual base salary. Additionally, on May 14, 2015, a grant of 25,000 shares of performance-based restricted stock was made to Mr. Zoley with the same performance metrics and vesting schedule as the shares of performance-based restricted stock granted to him on February 5, 2015.

The Company currently has contractual commitments for a number of projects using Company financing. The Company’s management estimates that the cost of these existing capital projects will be approximately ~~$159~~$108.7 million of which ~~$51~~$14 million was spent through the first nine months of ~~2015.~~2016. The Company estimates the remaining capital requirements related to these capital projects will be ~~$108~~$94.7 million which will be spent through 2017. Included in these commitments is a contractual commitment to provide a capital contribution towards the design and construction of a prison project in Ravenhall, a locality near Melbourne, Australia, which is estimated to be ~~$80.2~~approximately $84 million as of September 30, ~~2015.~~2016. This capital contribution is expected to be made in January 2017.

Additionally, in connection with the Ravenhall Prison Project, the Company has a contractual commitment for construction of the facility and has entered into a syndicated facility agreement with National Australia Bank Limited to provide funding for the project up to AUD 791 million, or ~~$552.0~~$604 million, based on exchange rates as of September 30, ~~2015.~~2016. Refer to Note 10 -– Debt.

~~On July 6, 2015, GEO announced the activation of three company-owned facilities totaling 4,320 beds in Oklahoma, Michigan, and California~~

On October 1, 2015, GEO announced the signing of a new contract with U.S. Immigration and Customs Enforcement (“ICE”) for the continued management of the company-owned, 1,575-bed Northwest Detention Center (the “Center”) in Tacoma, Washington. The contract for the continued management of the Center will have a term of nine years and six months inclusive of renewal options.

On October 28, 2015, GEO announced that it will assume management of the 3,400-bed Arizona State Prison-Kingman in Kingman, Arizona on December 1, 2015 under a managed-only contract with the Arizona Department of Corrections effective through February 2023. The facility currently houses approximately 1,700 inmates and is expected to ramp up through end of the first quarter of 2016.

~~The Company also recently signed new contracts with ICE for the continued management of it’s company-owned, 700-bed Broward Transition Center in Pompano Beach, Florida.~~

The Company’s GEO Care division was also recently awarded a five-year contract for the provision of community-based case management services under a new pilot program by the Department of Homeland Security for families going through the immigration review process.

The Company is currently marketing approximately ~~3,422~~3,300 vacant beds at four of its idle facilities to potential customers. The carrying values of these idle facilities, which are included in Property and Equipment, Net in the accompanying consolidated balance sheets, totaled ~~$34.5~~$34.2 million as of September 30, ~~2015,~~2016, excluding equipment and other assets that can be easily transferred for use at other facilities.

A recently completed state non-income tax audit included tax periods for which a state tax authority had a number of years ago processed a substantial tax refund. At the completion of the audit fieldwork, the Company received a notice of audit findings disallowing deductions that were previously claimed by the Company, approved by the state tax authority and served as the basis for the approved refund claim. If the state tax authority disallows the deductions, which were previously granted by the same state tax authority, a non-income tax assessment of $14.8 million plus interest could occur. The Company disagrees with the audit findings and if assessed intends to take all necessary steps to vigorously defend its position. The Company has not deemed it necessary to record an accrual relating to this matter, as a loss is not considered probable at this time.

The Company conducts its business through four reportable business segments: the U.S. Corrections & Detention segment; the GEO Care segment; the International Services segment; and the Facility Construction & Design segment. The Company’s segment revenues from external customers and a measure of segment profit are as follows (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014		September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Revenues:
U.S. Corrections & Detention	$	320,526	$	281,550	$	910,465	$	824,448	$	344,452	$	320,526	$	1,024,395	$	910,465
GEO Care		86,517		86,610		248,531		245,723		99,779		86,517		289,722		248,531
International Services		38,031		50,874		117,228		154,843		40,416		38,031		116,468		117,228
Facility Construction & Design (1)		24,792		38,866		66,957		38,866		69,729		24,792		182,326		66,957

Total revenues	$	469,866	$	457,900	$	1,343,181	$	1,263,880	$	554,376	$	469,866	$	1,612,911	$	1,343,181

Operating income:
Operating income from segments:
U.S. Corrections & Detention	$	74,017	$	67,450	$	200,224	$	190,983	$	77,865	$	74,017	$	220,292	$	200,224
GEO Care		20,702		23,504		58,426		61,164		30,007		20,702		80,558		58,426
International Services		1,647		62		6,732		4,978		1,866		1,647		4,702		6,732
Facility Construction & Design (1)		407		589		1,359		589		196		407		471		1,359

Operating income from segments	$	96,773	$	91,605	$	266,741	$	257,714	$	109,934	$	96,773	$	306,023	$	266,741

(1) In September 2014, the Company began the design and construction of a new prison contract located in Ravenhall, a locality near Melbourne, Australia. During the design and construction phase, the Company recognizes revenue as earned on a percentage of completion basis measured by the percentage of costs incurred to date as compared to estimated total costs for the design and construction of the facility. Costs incurred and estimated earnings in excess of billings is classified as Contract Receivable in the accompanying consolidated balance sheets and is recorded at the net present value based on the timing of expected future settlement. A portion of the Contract Receivable will be paid by the State upon commercial acceptance of the prison and the remainder will be paid quarterly over the life of the contract. Refer to Note 9 – Derivative Financial Instruments and Note 10 – Debt for additional information.

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 thousands):


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014			September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Total operating income from segments	$	96,773		$	91,605		$	266,741		$	257,714		$	109,934		$	96,773		$	306,023		$	266,741
Unallocated amounts:
General and Administrative Expenses		(33,742	)		(28,287	)		(97,764	)		(84,937	)		(37,483	)		(33,742	)		(108,448	)		(97,764	)
Net Interest Expense		(24,322	)		(20,360	)		(70,677	)		(60,058	)		(25,500	)		(24,322	)		(75,477	)		(70,677	)
Loss on Extinguishment of Debt														—			—			(15,885	)		—

Income before income taxes and equity in earnings of affiliates	$	38,709		$	42,958		$	98,300		$	112,719		$	46,951		$	38,709		$	106,213		$	98,300

Equity in earnings of affiliates includes the Company’s 50% owned joint ventures in SACS, located in South Africa, and GEOAmey, located in the United Kingdom. The Company’s investments in these entities are accounted for under the equity method of accounting. The Company’s investments in these entities are presented as a component of Other Non-Current Assets in the accompanying consolidated balance sheets.

The Company has recorded $1.1 million and $2.9 million in earnings, net of tax, for SACS operations during the three and nine months ended September 30, 2016, and $1.2 million and $3.4 million in earnings, net of tax, for SACS operations during the three and nine months ended September 30, 2015, ~~respectively, and $1.3 million and $3.6 million in earnings, net of tax, for SACS operations during the three and nine months ended September 30, 2014,~~ respectively, which are included in equity in earnings of affiliates, net of income tax provision in the accompanying consolidated statements of operations. As of September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, the Company’s investment in SACS was $10.3 million and $9.9 million, ~~and $8.0 million,~~ respectively.

The Company has recorded $0.7 million and $2.1 million in earnings, net of tax, for GEO Amey’s operation during the three and nine months ended September 30, 2016 and $0.2 million and ~~$0.5~~$0.6 million in earnings, net of tax, for GEOAmey’s operations during the three and nine months ended September 30, 2015, respectively, and $0.3 million and $0.6 million in earnings, net of tax, for GEOAmey’s operations during the three and nine months September 30, 2014, respectively, which are included in equity in earnings of affiliates, net of income tax provision, in the accompanying consolidated statements of operations. As of September 30, ~~2015~~2016 and December 31, ~~2014,~~2015, the Company’s investment in GEOAmey was ~~$(1.5)~~$0.2 million and ~~$(2.2)~~$(1.5) million, respectively, and represents its share of cumulative reported losses. Losses in excess of the Company’s investment have been recognized as the Company has provided certain loans and guarantees to provide financial support to GEOAmey. Refer to Note 10 -– Debt.

The following table summarizes key information related to the Company’s pension plans and retirement agreements (in thousands):


	Nine Months Ended September 30, 2015			Year Ended December 2014			Nine Months Ended September 30, 2016			Year Ended December 2015
Change in Projected Benefit Obligation
Projected benefit obligation, beginning of period	$	25,826		$	20,032		$	25,935		$	25,826
Service cost		860			821			746			1,173
Interest cost		812			935			866			1,082
Actuarial loss		—			4,324
Actuarial gain								—			(1,818	)
Benefits paid		(356	)		(286	)		(339	)		(328	)

Projected benefit obligation, end of period	$	27,142		$	25,826		$	27,208		$	25,935

Change in Plan Assets
Plan assets at fair value, beginning of period	$	—		$	—		$	—		$	—
Company contributions		356			286			339			328
Benefits paid		(356	)		(286	)		(339	)		(328	)

Plan assets at fair value, end of period	$	—		$	—		$	—		$	—

Unfunded Status of the Plan	$	(27,142	)	$	(25,826	)	$	(27,208	)	$	(25,935	)


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
	September 30, 2015		September 30, 2014		September 30, 2015		September 30, 2014		September 30, 2016		September 30, 2015		September 30, 2016		September 30, 2015
Components of Net Periodic Benefit Cost
Service cost	$	293	$	307	$	860	$	613	$	249	$	293	$	746	$	860
Interest cost		271		351		812		701		289		271		866		812
Net loss		107		31		320		95		53		107		160		320

Net periodic pension cost	$	671	$	689	$	1,992	$	1,409	$	591	$	671	$	1,772	$	1,992

The long-term portion of the pension liability as of September 30, ~~2015~~2016 and December 31, ~~2014~~2015 was ~~$26.8~~$26.9 million and ~~$24.9~~$25.1 million, respectively, and is included in Other Non-Current Liabilities in the accompanying consolidated balance sheets.

The Company implemented the following accounting standards during the nine months ended September 30, 2016:

In ~~September~~April 2015, the Financial Accounting Standards Board (“FASB”) ~~issued ASU No. 2015-16, “~~~~Business Combinations,~~” which eliminates the requirement to restate prior period financial statements for measurement period adjustments following a business combination. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The prior period impact of the adjustment should be either presented separately on the face of the income statement or disclosed in the notes. The amendments resulting from ASU No. 2015-16 are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. The amendments in this update should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this update with earlier application permitted for financial statements that have not been issued. The implementation of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

~~In August 2015, FASB issued ASU No. 2015-14 to delay the effective date of ASU No. 2014-09, “~~~~Revenue from Contracts with Customers,~~” for public companies from annual periods beginning after December 15, 2016 to annual periods beginning after December 15, 2017. ASU No. 2014-09 clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”). The Company is in the process of evaluating whether this standard would have a material impact on the Company’s financial position, results of operations or cash flows.

~~In April 2015, FASB~~ issued ASU No. 2015-03,“Interest-Imputation of Interest,” which is intended to simplify the presentation of debt issuance costs. The amendments require that debt issuance costs related to a recognized debt liability be presented ~~in the balance sheet~~ as a direct ~~deduction~~reduction from the carrying amount of that debt liability, consistent with debt discounts. The amendments resulting from ASU No. 2015-03 are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015 with early adoption permitted for financial statements that have not previously been issued. The guidance in this update does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. ~~In August 2015, FASB issued ASU No. 2015-15 “~~Interest-Imputation of Interest (Subtopic 835-30) Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting,~~” which states that given~~Given the absence of authoritative guidance ~~within ASU No. 2015-03~~ for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the ~~deferred~~ debt issuance costs ~~ratably~~ratable over the term of the line-of-credit ~~arrangement,~~agreement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. In accordance with ASU No. 2015-03, the Company has applied the new guidance on a retrospective basis. As a result, the Company has reclassified debt issuance costs of $40.8 million and $41.1 million from Other Non-Current Assets to a direct reduction of Long-Term Debt and Non-Recourse Debt in the accompanying consolidated balance sheets at September 30, 2016 and December 31, 2015, respectively. In accordance with the SEC guidance discussed above, the Company continues to present debt issuance costs related to its Revolver as an asset which is included in Other Non-Current Assets. The implementation of ~~these~~this standard during the nine months ended September 30, 2016 did not have a material impact on the Company’s financial position, results of operations or cash flows. Refer to Note 10 – Debt.

In November 2015, the FASB issued ASU No. 2015-17,“Income Taxes,” which simplifies the presentation of deferred income taxes by requiring that all deferred income tax assets and liabilities be classified as non-current in a classified statement of financial position. ASU No. 2015-17 is effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods with earlier application permitted. The Company early adopted this standard during the nine months ended September 30, 2016 on a prospective basis. Adoption of this ASU resulted in a reclassification of the Company’s net current deferred tax asset and net non-current deferred tax liability to the net non-current deferred tax asset in the accompanying consolidated balance sheet as of September 30, 2016. The prior reporting period was not retroactively adjusted. The implementation of this standard during the nine months ended September 30, 2016 did not have a material impact on the Company’s financial position, results of operations or cash flows.

In October 2016, the FASB issued ASU No. 2016-17, “Consolidation – Interest Held through Related Parties that are Under Common Control,” which amends the current consolidation guidance on how a reporting entity that is the single decision maker of a VIE should treat indirect interests in the entity held through related parties that are under common control with the

reporting entity when determining whether it is the primary beneficiary of that VIE. The primary beneficiary of a VIE is the reporting entity that has a controlling financial interest in a VIE, and therefore consolidates the VIE. A reporting entity has an indirect interest in a VIE if it has a direct interest in a related party that, in turn, has a direct interest in the VIE. The amendments in this update are effective for public companies for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The implementation of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In ~~February 2015,~~October 2016, the FASB issued ASU No. ~~2015-02~~2016-16, “~~“Consolidation,~~Income Taxes – Intra-Entity Transfers of Assets Other Than Inventory,”which ~~modifies~~requires that an entity recognize the ~~evaluation~~income tax consequences of ~~whether limited partnerships and similar legal entities are variable interest entities (“VIEs”) or voting interest entities, eliminates~~an intra-entity transfer of an asset other than inventory when the ~~presumption that a general partner should consolidate a limited partnership, affects~~transfer occurs. Prior to this ASU, an entity was prohibited from recognizing the ~~consolidation analysis~~income tax consequences of reporting entities that are involved with VIEs, particularly those that have fee arrangements and related party relationships and provides a scope exception from consolidation guidance for reporting entities with interests in legal entities that are requiredan intra-entity asset transfer until the asset had been sold to ~~comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds.~~an outside party. The amendments ~~resulting from~~in ASU No. ~~2015-02~~2016-16 are effective for public companies for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The implementation of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows,” which clarified the presentation and classification in the statement of cash flows for eight specific cash flow issues with the objective of reducing diversity in practice. These cash flow issues include debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies (including bank-owned life insurance policies), distributions received from equity method investees, beneficial interests in securitization transactions and also addresses separately identified cash flows and the application of the predominance principle. The amendments in ASU No. 2016-15 are effective for public companies for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The implementation of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments – Credit Losses,” which changes the methodology for recognizing credit losses for entities holding financial assets that are not accounted for at fair value through net income. The amendments in this update affect loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The main objective of this update is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. To achieve this objective, the amendments in this update replace the current incurred loss methodology with a methodology that reflects expected credit losses and requires consideration in a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in ASU No. 2016-13 are effective for public companies for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The implementation of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In April 2016, the FASB amended ASU No. 2016-10, “Revenue from Contracts with Customers,” which clarifies the implementation guidance on identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. This amendment clarifies that before an entity can identify its performance obligations in a contract with a customer, the entity first identifies the promised goods or services in the contract. An entity is not required to assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract with the customer. Also, an entity is permitted, as an accounting policy election, to account for shipping and handling activities that occur after the customer has obtained control of a good as an activity to fulfill the promise to transfer the good rather than as an additional promised service. The amendment also includes implementation guidance on determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a

point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments in ASU No. 2016-10 are effective for public companies for annual periods beginning after December 15, 2017. The Company is in the process of evaluating whether this standard would have a material impact on the Company’s financial position, results of operations or cash flows.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718),” as a part of its Simplification Initiative. Key areas of the amendments in this standard are (i) all excess tax benefits from stock plan transactions should be recognized in the income statement as opposed to being recognized in additional paid-in capital; (ii) the tax withholding threshold for triggering liability accounting on a net settlement transaction has been increased from the minimum statutory rate to the maximum statutory rate; and (iii) an entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur. The amendments in ASU No. 2016-09 are effective for public companies for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted. The implementation of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers – Principal versus Agent Considerations (Reporting Revenue Gross versus Net),” which clarifies the implementation guidance on principal versus agent considerations. This amendment clarifies that when another party is involved in providing goods or services to a customer, an entity is required to determine whether the nature of its promise is to provide the specified good or service itself (entity is a principal) or to arrange for that good or service to be provided by the other party (entity is an agent). When (or as) an entity that is a principal satisfies a performance obligation, the entity recognizes revenue in the gross amount of consideration it expects to be entitled in exchange for the specified good or service transferred to the customer. When (or as) an entity that is an agent satisfies a performance obligation, the entity recognizes revenue in the amount of any fee or commission to which it expects to be entitled in exchange for arranging the specified good or service to be provided by the other party. An entity is a principal if it controls the specified good or service before that good or service is transferred to the customer. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customer. The amendments in ASU No. 2016-08 are effective for public companies for annual periods beginning after December 15, 2017. The Company is in the process of evaluating whether this standard would have a material impact on the Company’s financial position, results of operations or cash flows.

In March 2016, the FASB issued ASU 2016-07, “Investments-Equity Method and Joint Ventures,” as a part of its Simplification Initiative. The amendments in this standard eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by step basis as if the equity method had been in effect during all previous periods that the investment had been held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investor’s previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. Therefore, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments in ASU 2016-07 also require that an entity that has an available-for-sale equity security that becomes qualified for the equity method of accounting recognize through earnings the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendments in this standard are effective for all entities for fiscal years, and ~~for~~ interim periods within those fiscal years, beginning after December 15, ~~2015~~2016. The amendments should be applied prospectively upon their effective date to increases in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application is permitted. The implementation of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In March 2016, the FASB issued ASU 2016-05, “Derivatives and Hedging,” which clarifies that a change in the counter party to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The amendments in ASU 2016-05 are effective for public companies for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. An entity has an option to apply the amendments in this standard on either a prospective basis or a modified retrospective basis, with early adoption permitted. The implementation of this standard is not expected to have a material impact on the Company’s financial position, results of operations or cash flows.

In February 2016, FASB issued ASU 2016-02, “Leases,” which requires entities to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about leasing arrangements. For finance leases and operating leases, a lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term with each initially measured at the present value of the lease payments. The amendments in ASU 2016-02 are effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company is in the process of evaluating whether this standard would have a material impact on the Company’s financial position, results of operations or cash flows.

As of September 30, ~~2015,~~2016, the Company’s ~~6.625%~~6.00% Senior Notes, 5.125% Senior Notes, ~~and each of~~ 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:


	For the Three Months Ended September 30, 2015															For the Three Months Ended September 30, 2016
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated			The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	175,353		$	369,004		$	65,388		$	(139,879	)	$	469,866		$	173,920		$	410,329		$	112,708		$	(142,581	)	$	554,376
Operating expenses		142,002			288,303			55,540			(139,879	)		345,966			144,748			314,009			99,483			(142,581	)		415,659
Depreciation and amortization		6,007			20,002			1,118			—			27,127			6,339			21,502			942			—			28,783
General and administrative expenses		12,285			16,876			4,581			—			33,742			11,727			18,180			7,576			—			37,483

Operating income		15,059			43,823			4,149			—			63,031			11,106			56,638			4,707			—			72,451
Interest income		5,820			431			2,870			(6,129	)		2,992			4,765			422			8,029			(5,288	)		7,928
Interest expense		(15,419	)		(14,320	)		(3,704	)		6,129			(27,314	)		(16,324	)		(13,525	)		(8,867	)		5,288			(33,428	)
Loss on extinguishment of debt																	—			—			—			—			—

Income before income taxes and equity in earnings of affiliates		5,460			29,934			3,315			—			38,709
Income tax provision (benefit)		—			869			889			—			1,758
Income (loss) before income taxes and equity in earnings of affiliates																	(453	)		43,535			3,869			—			46,951
Income tax provision																	(9	)		4,032			947			—			4,970
Equity in earnings of affiliates, net of income tax provision		—			—			1,340			—			1,340			—			—			1,693			—			1,693

Income (loss) before equity in income of consolidated subsidiaries		5,460			29,065			3,766			—			38,291
Income before equity in income of consolidated subsidiaries																	(444	)		39,503			4,615			—			43,674
Income from consolidated subsidiaries, net of income tax provision		32,831			—			—			(32,831	)		—			44,118			—			—			(44,118	)		—

Net income		38,291			29,065			3,766			(32,831	)		38,291			43,674			39,503			4,615			(44,118	)		43,674
Net loss attributable to noncontrolling interests		—			—			21						21			—			—			46			—			46

Net income attributable to The GEO Group, Inc.	$	38,291		$	29,065		$	3,787		$	(32,831	)	$	38,312		$	43,674		$	39,503		$	4,661		$	(44,118	)	$	43,720


Net income	$	38,291		$	29,065		$	3,766		$	(32,831	)	$	38,291		$	43,674		$	39,503		$	4,615		$	(44,118	)	$	43,674
Other comprehensive income (loss), net of tax		—			43			(6,484	)		—			(6,441	)
Other comprehensive income, net of tax																	—			33			450			—			483

Total comprehensive income	$	38,291		$	29,108		$	(2,718	)	$	(32,831	)	$	31,850		$	43,674		$	39,536		$	5,065		$	(44,118	)	$	44,157
Comprehensive income attributable to noncontrolling interests		—			—			64			—			64
Comprehensive loss attributable to noncontrolling interests																	—			—			36			—			36

Comprehensive income (loss) attributable to The GEO Group, Inc.	$	38,291		$	29,108		$	(2,654	)	$	(32,831	)	$	31,914
Comprehensive income attributable to The GEO Group, Inc.																$	43,674		$	39,536		$	5,101		$	(44,118	)	$	44,193


	For the Three Months Ended September 30, 2014															For the Three Months Ended September 30, 2015
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated			The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	141,631		$	337,769		$	92,300		$	(113,800	)	$	457,900		$	175,353		$	369,004		$	65,388		$	(139,879	)	$	469,866
Operating expenses		115,580			257,645			82,791			(113,800	)		342,216			142,002			288,303			55,540			(139,879	)		345,966
Depreciation and amortization		6,395			16,554			1,130			—			24,079			6,007			20,002			1,118			—			27,127
General and administrative expenses		8,352			14,295			5,640			—			28,287			12,285			16,876			4,581			—			33,742

Operating income		11,304			49,275			2,739			—			63,318			15,059			43,823			4,149			—			63,031
Interest income		5,593			966			953			(6,464	)		1,048			5,820			431			2,870			(6,129	)		2,992
Interest expense		(11,716	)		(14,258	)		(1,898	)		6,464			(21,408	)		(15,419	)		(14,320	)		(3,704	)		6,129			(27,314	)

Income before income taxes and equity in earnings of affiliates		5,181			35,983			1,794			—			42,958			5,460			29,934			3,315			—			38,709
Income tax provision		—			4,528			1,009			—			5,537			—			869			889			—			1,758
Equity in earnings of affiliates, net of income tax provision		—			—			1,544			—			1,544			—			—			1,340			—			1,340

Income before equity in income of consolidated subsidiaries		5,181			31,455			2,329			—			38,965			5,460			29,065			3,766			—			38,291
Income from consolidated subsidiaries, net of income tax provision		33,784			—			—			(33,784	)		—			32,831			—			—			(32,831	)		—

Net income		38,965			31,455			2,329			(33,784	)		38,965			38,291			29,065			3,766			(32,831	)		38,291
Net income attributable to noncontrolling interests		—			—			26			—			26
Net loss attributable to noncontrolling interests																	—			—			21			—			21

Net income attributable to The GEO Group, Inc.	$	38,965		$	31,455		$	2,355		$	(33,784	)	$	38,991		$	38,291		$	29,065		$	3,787		$	(32,831	)	$	38,312

Net income																$	38,291		$	29,065		$	3,766		$	(32,831	)	$	38,291
Other comprehensive income, net of tax																	—			43			(6,484	)		—			(6,441	)

Net income	$	38,965		$	31,455		$	2,329		$	(33,784	)	$	38,965
Other comprehensive income (loss), net of tax		—			19			(8,002	)		—			(7,983	)

Total comprehensive income (loss)	$	38,965		$	31,474		$	(5,673	)	$	(33,784	)	$	30,982
Total comprehensive income																$	38,291		$	29,108		$	(2,718	)	$	(32,831	)	$	31,850
Comprehensive loss attributable to noncontrolling interests		—			—			49			—			49			—			—			64			—			64

Comprehensive income (loss) attributable to The GEO Group, Inc.	$	38,965		$	31,474		$	(5,624	)	$	(33,784	)	$	31,031
Comprehensive income attributable to The GEO Group, Inc.																$	38,291		$	29,108		$	(2,654	)	$	(32,831	)	$	31,914


	For the Nine Months Ended September 30, 2015															For the Nine Months Ended September 30, 2016
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated			The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	481,102		$	1,076,373		$	191,876		$	(406,170	)	$	1,343,181		$	515,971		$	1,215,469		$	306,484		$	(425,013	)	$	1,612,911
Operating expenses		399,557			843,498			160,927			(406,170	)		997,812			418,261			957,704			270,050			(425,013	)		1,221,002
Depreciation and amortization		18,592			56,881			3,155			—			78,628			18,866			64,159			2,861			—			85,886
General and administrative expenses		33,657			50,684			13,423			—			97,764			34,548			53,396			20,504			—			108,448

Operating income		29,296			125,310			14,371			—			168,977			44,296			140,210			13,069			—			197,575
Interest income		17,733			2,510			8,189			(20,499	)		7,933			15,646			1,440			18,699			(17,398	)		18,387
Interest expense		(45,264	)		(43,700	)		(10,145	)		20,499			(78,610	)		(49,031	)		(41,401	)		(20,830	)		17,398			(93,864	)
Loss on extinguishment of debt																	(15,885	)		—			—			—			(15,885	)

Income before income taxes and equity in earnings of affiliates		1,765			84,120			12,415			—			98,300
Income tax provision (benefit)		(62	)		4,199			2,817			—			6,954
Income (loss) before income taxes and equity in earnings of affiliates																	(4,974	)		100,249			10,938			—			106,213
Income tax (benefit) provision																	(101	)		9,323			2,778			—			12,000
Equity in earnings of affiliates, net of income tax provision		—			—			3,949			—			3,949			—			—			4,943			—			4,943

Income before equity in income of consolidated subsidiaries		1,827			79,921			13,547			—			95,295
Income (loss) before equity in income of consolidated subsidiaries																	(4,873	)		90,926			13,103			—			99,156
Income from consolidated subsidiaries, net of income tax provision		93,468			—			—			(93,468	)		—			104,029									(104,029	)		—

Income from continuing operations		95,295			79,921			13,547			(93,468	)		95,295

Net income		95,295			79,921			13,547			(93,468	)		95,295			99,156			90,926			13,103			(104,029	)		99,156
Net loss attributable to noncontrolling interests		—			—			79			—			79			—			—			123			—			123

Net income attributable to The GEO Group, Inc.	$	95,295		$	79,921		$	13,626		$	(93,468	)	$	95,374		$	99,156		$	90,926		$	13,226		$	(104,029	)	$	99,279


Net income	$	95,295		$	79,921		$	13,547		$	(93,468	)	$	95,295		$	99,156		$	90,926		$	13,103		$	(104,029	)	$	99,156
Other comprehensive income (loss), net of tax		—			120			(7,435	)		—			(7,315	)		—			98			(3,081	)		—			(2,983	)

Total comprehensive income	$	95,295		$	80,041		$	6,112		$	(93,468	)	$	87,980		$	99,156		$	91,024		$	10,022		$	(104,029	)	$	96,173
Comprehensive income attributable to noncontrolling interests		—			—			145			—			145
Comprehensive loss attributable to noncontrolling interests																	—			—			104			—			104

Comprehensive income attributable to The GEO Group, Inc.	$	95,295		$	80,041		$	6,257		$	(93,468	)	$	88,125		$	99,156		$	91,024		$	10,126		$	(104,029	)	$	96,277


	For the Nine Months Ended September 30, 2014															For the Nine Months Ended September 30, 2015
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated			The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues	$	415,468		$	980,181		$	201,391		$	(333,160	)	$	1,263,880		$	481,102		$	1,076,373		$	191,876		$	(406,170	)	$	1,343,181
Operating expenses		333,992			760,159			173,206			(333,160	)		934,197			399,557			843,498			160,927			(406,170	)		997,812
Depreciation and amortization		19,242			49,357			3,370			—			71,969			18,592			56,881			3,155			—			78,628
General and administrative expenses		26,773			45,186			12,978			—			84,937			33,657			50,684			13,423			—			97,764

Operating income		35,461			125,479			11,837			—			172,777
Operating income (loss)																	29,296			125,310			14,371			—			168,977
Interest income		16,208			2,017			2,382			(18,003	)		2,604			17,733			2,510			8,189			(20,499	)		7,933
Interest expense		(33,913	)		(41,379	)		(5,373	)		18,003			(62,662	)		(45,264	)		(43,700	)		(10,145	)		20,499			(78,610	)

Income before income taxes and equity in earnings of affiliates		17,756			86,117			8,846			—			112,719
Income tax provision		—			8,493			2,569			—			11,062
Income (loss) before income taxes and equity in earnings of affiliates																	1,765			84,120			12,415			—			98,300
Income tax (benefit) provision																	(62	)		4,199			2,817			—			6,954
Equity in earnings of affiliates, net of income tax provision		—			—			4,202			—			4,202			—			—			3,949			—			3,949

Income before equity in income of consolidated subsidiaries		17,756			77,624			10,479			—			105,859
Income (loss) from continuing operations before equity in income of consolidated subsidiaries																	1,827			79,921			13,547			—			95,295
Income from consolidated subsidiaries, net of income tax provision		88,103			—			—			(88,103	)		—			93,468			—			—			(93,468	)		—

Net income		105,859			77,624			10,479			(88,103	)		105,859		$	95,295		$	79,921		$	13,547		$	(93,468	)	$	95,295
Net income attributable to noncontrolling interests		—			—			20			—			20
Net loss attributable to noncontrolling interests																	—			—			79			—			79

Net income attributable to The GEO Group, Inc.	$	105,859		$	77,624		$	10,499		$	(88,103	)	$	105,879		$	95,295		$	79,921		$	13,626		$	(93,468	)	$	95,374


Net income	$	105,859		$	77,624		$	10,479		$	(88,103	)	$	105,859		$	95,295		$	79,921		$	13,547		$	(93,468	)	$	95,295
Other comprehensive income (loss), net of tax		—			58			(6,359	)		—			(6,301	)		—			120			(7,435	)		—			(7,315	)

Total comprehensive income	$	105,859		$	77,682		$	4,120		$	(88,103	)	$	99,558		$	95,295		$	80,041		$	6,112		$	(93,468	)	$	87,980
Comprehensive loss attributable to noncontrolling interests		—			—			51			—			51			—			—			145			—			145

Comprehensive income attributable to The GEO Group, Inc.	$	105,859		$	77,682		$	4,171		$	(88,103	)	$	99,609		$	95,295		$	80,041		$	6,257		$	(93,468	)	$	88,125


	As of September 30, 2015
	The GEO Group, Inc.			Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries		Eliminations			Consolidated			As of September 30, 2016
														The GEO Group, Inc.		Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS													ASSETS
Cash and cash equivalents	$	14,378		$	2,373	$	30,380	$	—		$	47,131		$	5,136	$	—	$	24,987		$	—		$	30,123
Restricted cash and investments		—			—		8,389		—			8,389			—		—		102,652			—			102,652
Accounts receivable, less allowance for doubtful accounts		114,215			160,899		13,930		—			289,044			133,559		190,585		17,310			—			341,454
Current deferred income tax assets		—			21,694		4,227		—			25,921			—		—		—			—			—
Prepaid expenses and other current assets		4,087			19,275		11,048		(1,154	)		33,256			3,534		21,920		9,352			(1,363	)		33,443

Total current assets		132,680			204,241		67,974		(1,154	)		403,741			142,229		212,505		154,301			(1,363	)		507,672

Restricted Cash and Investments		127			15,236		10,695		—			26,058			162		19,021		5,280			—			24,463
Property and Equipment, Net		751,490			1,087,819		82,152		—			1,921,461			737,221		1,087,820		83,012			—			1,908,053
Contract Receivable		—			—		124,679		—			124,679			—		—		388,729			—			388,729
Direct Finance Lease Receivable		—			—		3,303		—			3,303
Intercompany Receivable		905,295			147,801		—		(1,053,096	)		—			1,025,018		119,322		17,924			(1,162,264	)		—
Non-Current Deferred Income Tax Assets		—			—		5,873		—			5,873			713		11,898		11,543			—			24,154
Goodwill		90			615,448		399		—			615,937			79		614,941		437			—			615,457
Intangible Assets, Net		—			228,498		829		—			229,327			—		208,209		761			—			208,970
Investment in Subsidiaries		1,218,023			213,919		—		(1,431,942	)		—			1,111,728		453,635		2,190			(1,567,553	)		—
Other Non-Current Assets		23,176			111,209		50,006		(80,154	)		104,237			18,153		105,703		20,984			(79,943	)		64,897

Total Assets	$	3,030,881		$	2,624,171	$	345,910	$	(2,566,346	)	$	3,434,616		$	3,035,303	$	2,833,054	$	685,161		$	(2,811,123	)	$	3,742,395

LIABILITIES AND SHAREHOLDERS’ EQUITY													LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	9,582		$	47,923	$	15,062	$	—		$	72,567		$	6,935	$	47,247	$	27,724		$	—		$	81,906
Accrued payroll and related taxes		—			25,788		13,886		—			39,674			—		31,464		15,483			—			46,947
Accrued expenses and other		39,077			74,655		14,971		(1,154	)		127,549
Accrued expenses and other current liabilities															50,615		81,013		14,290			(1,534	)		144,384
Current portion of capital lease obligations, long-term debt and non-recourse debt		3,000			1,323		12,105		—			16,428			3,000		1,581		11,057			—			15,638

Total current liabilities		51,659			149,689		56,024		(1,154	)		256,218			60,550		161,305		68,554			(1,534	)		288,875

Non-Current Deferred Income Tax Liabilities		(1,310	)		17,074		5		—			15,769			—		—		—			—			—
Intercompany Payable		91,350			961,000		746		(1,053,096	)		—			110,122		1,025,366		26,776			(1,162,264	)		—
Other Non-Current Liabilities		2,858			142,544		23,158		(80,154	)		88,406			4,247		142,555		25,051			(79,772	)		92,081
Capital Lease Obligations		—			8,992		—		—			8,992			—		7,757		—			—			7,757
Long-Term Debt		1,881,034			—		—		—			1,881,034			1,893,980		—		—			—			1,893,980
Non-Recourse Debt		—			—		178,738		—			178,738			—		—		493,303			—			493,303
Commitments & Contingencies and Other
Shareholders’ Equity:
Commitments & Contingencies and Other Shareholders’ Equity:
The GEO Group, Inc. Shareholders’ Equity		1,005,290			1,344,872		87,070		(1,431,942	)		1,005,290			966,404		1,496,071		71,482			(1,567,553	)		966,404
Noncontrolling Interests		—			—		169		—			169			—		—		(5	)		—			(5	)

Total Shareholders’ Equity		1,005,290			1,344,872		87,239		(1,431,942	)		1,005,459			966,404		1,496,071		71,477			(1,567,553	)		966,399

Total Liabilities and Shareholders’ Equity	$	3,030,881		$	2,624,171	$	345,910	$	(2,566,346	)	$	3,434,616		$	3,035,303	$	2,833,054	$	685,161		$	(2,811,123	)	$	3,742,395


	As of December 31, 2014
	The GEO Group, Inc.			Combined Subsidiary Guarantors		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated			As of December 31, 2015
															The GEO Group, Inc.		Combined Subsidiary Guarantors			Combined Non- Guarantor Subsidiaries		Eliminations			Consolidated
ASSETS														ASSETS
Cash and cash equivalents	$	18,492		$	782	$	22,063		$	—		$	41,337		$	37,077	$	—		$	22,561	$	—		$	59,638
Restricted cash and investments		—			—		4,341			—			4,341			—		—			8,489		—			8,489
Accounts receivable, less allowance for doubtful accounts		92,456			159,505		17,077			—			269,038			131,747		162,538			19,812		—			314,097
Current deferred income tax assets		—			21,657		4,227			—			25,884			—		23,120			4,794		—			27,914
Prepaid expenses and other current assets		7,022			19,593		11,345			(1,154	)		36,806			1,190		17,917			10,310		(1,209	)		28,208

Total current assets		117,970			201,537		59,053			(1,154	)		377,406			170,014		203,575			65,966		(1,209	)		438,346

Restricted Cash and Investments		228			13,729		5,621			—			19,578			138		16,386			3,712		—			20,236
Property and Equipment, Net		726,238			961,896		84,032			—			1,772,166			746,478		1,088,417			81,491		—			1,916,386
Direct Finance Lease Receivable		—			—		9,256			—			9,256			—		—			1,826		—			1,826
Contract Receivable		—			—		66,229						66,229			—		—			174,141					174,141
Intercompany Receivable		962,314			119,414		—			(1,081,728	)		—			971,291		86,519			—		(1,057,810	)		—
Non-Current Deferred Income Tax Assets		—			—		5,873			—			5,873			710		(102	)		6,791		—			7,399
Goodwill		34			493,389		467			—			493,890			79		614,941			418		—			615,438
Intangible Assets, Net		—			154,237		1,038			—			155,275			—		223,426			722		—			224,148
Investment in Subsidiaries		855,870			438,243		—			(1,294,113	)		—			1,106,546		453,636			—		(1,560,182	)		—
Other Non-Current Assets		25,635			110,105		46,838			(80,043	)		102,535			2,387		116,561			25,486		(80,127	)		64,307

Total Assets	$	2,688,289		$	2,492,550	$	278,407		$	(2,457,038	)	$	3,002,208		$	2,997,643	$	2,803,359		$	360,553	$	(2,699,328	)	$	3,462,227

LIABILITIES AND SHAREHOLDERS’ EQUITY														LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	7,549		$	47,130	$	3,476		$	—		$	58,155		$	9,731	$	54,675		$	13,117	$	—		$	77,523
Accrued payroll and related taxes		—			24,184		14,372			—			38,556			—		35,516			12,961		—			48,477
Accrued expenses and other		47,637			75,574		18,555			(1,154	)		140,612
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		3,001			1,170		12,581			—			16,752			3,000		1,477			12,664		—			17,141

Total current liabilities		58,187			148,058		48,984			(1,154	)		254,075			55,774		170,178			53,881		(1,209	)		278,624

Non-Current Deferred Income Tax Liabilities		(4,095	)		14,170		(7	)		—			10,068					11,120			351		—			11,471
Intercompany Payable		121,327			942,071		18,330			(1,081,728	)		—			76,427		967,048			14,335		(1,057,810	)		—
Other Non-Current Liabilities		4,372			143,584		19,507			(80,034	)		87,429			2,894		143,887			21,040		(80,127	)		87,694
Capital Lease Obligations		—			9,856		—			—			9,856			—		8,693			—		—			8,693
Long-Term Debt		1,462,819			—		—			—			1,462,819			1,855,810		—			—		—			1,855,810
Non-Recourse Debt		—			—		131,968			—			131,968			—		—			213,098		—			213,098
Commitments & Contingencies and Other
Shareholders’ Equity:
The GEO Group, Inc. Shareholders’ Equity		1,045,679			1,234,811		59,311			(1,294,122	)		1,045,679			1,006,738		1,502,433			57,749		(1,560,182	)		1,006,738
Noncontrolling Interests		—			—		314			—			314			—		—			99		—			99

Total Shareholders’ Equity		1,045,679			1,234,811		59,625			(1,294,122	)		1,045,993			1,006,738		1,502,433			57,848		(1,560,182	)		1,006,837

Total Liabilities and Shareholders’ Equity	$	2,688,289		$	2,492,550	$	278,407		$	(2,457,038	)	$	3,002,208		$	2,997,643	$	2,803,359		$	360,553	$	(2,699,328	)	$	3,462,227


	For the Nine Months Ended September 30, 2015												For the Nine Months Ended September 30, 2016
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Consolidated			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	$	72,063		$	74,464		$	(35,363	)	$	111,164
Net cash (used in) provided by operating activities													$	99,124		$	57,187		$	(168,069	)	$	(11,758	)

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		—			49			—			49			68			—			—			68
Insurance proceeds - damaged property		—			1,270			—			1,270
Insurance proceeds – damaged property														4,733			—			—			4,733
Change in restricted cash and investments		101			(1,957	)		(9,280	)		(11,136	)		(24	)		(2,635	)		(95,057	)		(97,716	)
Capital expenditures		(51,084	)		(47,833	)		(1,927	)		(100,844	)		(9,879	)		(54,552	)		(3,584	)		(68,015	)

Net cash used in investing activities		(358,386	)		(72,873	)		(11,207	)		(442,466	)		(5,102	)		(57,187	)		(98,641	)		(160,930	)

Cash Flow from Financing Activities:
Proceeds from long-term debt		642,000			—			—			642,000			813,077			—			—			813,077
Payments on long-term debt		(222,675	)		—			—			(222,675	)		(775,256	)		—			—			(775,256	)
Payments on non-recourse debt		—			—			(6,366	)		(6,366	)		—			—			(1,878	)		(1,878	)
Proceeds from non-recourse debt		—			—			70,117			70,117			—			—			273,087			273,087
Taxes paid related to net share settlements of equity awards		(2,748	)		—			—			(2,748	)		(2,336	)		—			—			(2,336	)
Proceeds from reissuance of treasury stock in connection with ESPP		321			—			—			321
Proceeds from issuance of common stock in connection with ESPP														—						338			338
Debt issuance costs		—			—			(5,217	)		(5,217	)		(16,980	)		—			(3,510	)		(20,490	)
Tax benefit related to equity compensation		1,252			—			—			1,252
Tax deficiency related to equity compensation														(844	)		—			—			(844	)
Proceeds from stock options exercised		2,513			—			—			2,513			2,367			—			—			2,367
Cash dividends paid		(138,454	)		—			—			(138,454	)		(145,991	)					—			(145,991	)

Net cash provided by financing activities		282,209			—			58,534			340,743
Net cash (used in) provided by financing activities														(125,963	)		—			268,037			142,074

Effect of Exchange Rate Changes on Cash and Cash Equivalents		—			—			(3,647	)		(3,647	)		—			—			1,099			1,099

Net Increase (Decrease) in Cash and Cash Equivalents		(4,114	)		1,591			8,317			5,794
Net (Decrease) Increase in Cash and Cash Equivalents														(31,941	)		—			2,426			(29,515	)
Cash and Cash Equivalents, beginning of period		18,492			782			22,063			41,337			37,077			—			22,561			59,638

Cash and Cash Equivalents, end of period	$	14,378		$	2,373		$	30,380		$	47,131		$	5,136		$	—		$	24,987		$	30,123


	For the Nine Months Ended September 30, 2014												For the Nine Months Ended September 30, 2015
	The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Consolidated			The GEO Group, Inc.			Combined Subsidiary Guarantors			Combined Non-Guarantor Subsidiaries			Consolidated
Cash Flow from Operating Activities:

Net cash provided by operating activities	$	149,460		$	53,506		$	(38,341	)	$	164,625
Net cash provided by (used in) operating activities													$	72,063		$	74,464		$	(35,363	)	$	111,164

Cash Flow from Investing Activities:
Acquisition of SoberLink, cash consideration																	(24,402	)					(24,402	)
Proceeds from sale of property and equipment		—			515			—			515			—			49			—			49
Acquisition of Protocol, cash consideration		—			(13,025	)		—			(13,025	)
Insurance proceeds – damaged property														—			1,270			—			1,270
Acquisition of LCS, net of cash acquired														(307,403	)					—			(307,403	)
Change in restricted cash and investments		(212	)		(2,073	)		(3,767	)		(6,052	)		101			(1,957	)		(9,280	)		(11,136	)
Capital expenditures		(41,020	)		(34,432	)		(2,261	)		(77,713	)		(51,084	)		(47,833	)		(1,927	)		(100,844	)

Net cash used in investing activities		(41,232	)		(49,015	)		(6,028	)		(96,275	)		(358,386	)		(72,873	)		(11,207	)		(442,466	)

Cash Flow from Financing Activities:
Taxes paid related to net share settlements of equity awards														(2,748	)		—			—			(2,748	)
Proceeds from long-term debt		459,384			—			—			459,384			642,000			—			—			642,000
Payments on long-term debt		(508,400	)		(732	)		—			(509,132	)		(222,675	)					—			(222,675	)
Indirect repurchases of treasury shares		(1,844	)		—			—			(1,844	)
Payments on non-recourse debt		—			—			(4,511	)		(4,511	)		—			—			(6,366	)		(6,366	)
Proceeds from non-recourse debt		—			—			74,191			74,191			—			—			70,117			70,117
Proceeds from reissuance of treasury stock in connection with ESPP		277			—			—			277
Debt issuance costs - deferred		(7,802	)		—			(15,706	)		(23,508	)
Proceeds from issuance of common stock in connection with ESPP														321			—			—			321
Debt issuance costs																	—			(5,217	)		(5,217	)
Tax benefit related to equity compensation		1,498			—			—			1,498			1,252			—			—			1,252
Issuance of common stock under prospectus supplement		54,724			—			—			54,724
Proceeds from stock options exercised		6,384			—			—			6,384			2,513			—			—			2,513
Cash dividends paid		(124,084	)		—			—			(124,084	)		(138,454	)		—			—			(138,454	)

Net cash used in financing activities		(119,863	)		(732	)		53,974			(66,621	)
Net cash provided by financing activities														282,209			—			58,534			340,743

Effect of Exchange Rate Changes on Cash and Cash Equivalents		—			—			(1,174	)		(1,174	)		—			—			(3,647	)		(3,647	)

Net Increase (Decrease) in Cash and Cash Equivalents		(11,635	)		3,759			8,431			555			(4,114	)		1,591			8,317			5,794
Cash and Cash Equivalents, beginning of period		30,730			985			20,410			52,125			18,492			782			22,063			41,337

Cash and Cash Equivalents, end of period	$	19,095		$	4,744		$	28,841		$	52,680		$	14,378		$	2,373		$	30,380		$	47,131

On ~~November 3, 2015,~~October 18, 2016, the Board of Directors declared a quarterly cash dividend of $0.65 per share of common stock, which is to be paid on November ~~25, 2015~~10, 2016 to shareholders of record as of the close of business on ~~November 16, 2015.~~October 31, 2016.

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

This Quarterly Report on Form 10-Q and the documents incorporated by reference herein contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. “Forward-looking” statements are any statements that are not based on historical information. Statements other than statements of historical facts included in this report, including, without limitation, statements regarding our future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are “forward-looking” statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate” or “continue” or the negative of such words or variations of such words and similar expressions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements and we can give no assurance that such forward-looking statements will prove to be correct. Important factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, or “cautionary statements,” include, but are not limited to:

We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. All subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q.

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of numerous factors including, but not limited to, those described above under “Forward-Looking Information”, those described below under “Part II -– Item 1A. Risk Factors” and under “Part I -– Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2014.~~2015. The discussion should be read in conjunction with our unaudited consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.

We are a real estate investment trust (“REIT”) specializing in the ownership, leasing and management of correctional, detention and reentry facilities and the provision of community-based services and youth services in the United States, Australia, South Africa, and the United Kingdom. We own, lease and operate a broad range of correctional and detention facilities including maximum, medium and minimum security prisons, immigration detention centers, minimum security detention centers, and community based reentry ~~facilities.~~facilities and offer an expanded delivery of offender rehabilitation services under our ‘GEO Continuum of Care’ platform. We offer counseling, education and/or treatment to inmates with alcohol and drug abuse problems at most of the domestic facilities we manage. We are also a provider of innovative compliance technologies, industry-leading monitoring services, and evidence-based supervision and treatment programs for community-based parolees, probationers and pretrial defendants.

Our worldwide operations include the management and/or ownership of approximately 87,000 beds at 104 correctional, detention and reentry facilities, including idle facilities, projects under development and recently awarded contracts, and also include the provision of community supervision services for more than ~~127,000~~139,000 offenders and pre-trial defendants, including approximately 83,000 individuals through an array of technology products including radio frequency, GPS, and alcohol monitoring devices.

For the nine months ended September 30, ~~2015~~2016 and September 30, ~~2014,~~2015, we had consolidated revenues of ~~$1,343.2~~$1,612.9 million and ~~$1,263.9~~$1,343.2 million, respectively, and we maintained an average company wide facility occupancy rate of 93.2% including 82,531 active beds and excluding 3,538 idle beds (including those being marketed to potential customers) for the nine months ended September 30, 2016, and 94.0% including 80,264 active beds and excluding 3,422 idle beds (including those being marketed to potential ~~customers~~customers) for the nine months ended September 30, ~~2015, and 96.1% including 72,682 active beds and excluding 5,756 idle beds marketed to potential customers for the nine months ended September 30, 2014.~~2015.

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

During the nine months ended September 30, ~~2015~~2016 and the year ended December 31, ~~2014,~~2015, respectively, we declared and paid the following regular cash distributions to our shareholders as follows:


Declaration Date	Record Date	Payment Due	Distribution Per Share		Aggregate Payment Amount (in millions)		Record Date	Payment Due	Distribution Per Share		Aggregate Payment Amount (in millions)
February 18, 2014	March 3, 2014	March 14, 2014	$	0.57	$	41.1
April 28, 2014	May 15, 2014	May 27, 2014	$	0.57	$	41.5
August 5, 2014	August 18, 2014	August 29, 2014	$	0.57	$	41.4
November 5, 2014	November 17, 2014	November 26, 2014	$	0.62	$	46.0
February 6, 2015	February 17, 2015	February 27, 2015	$	0.62	$	46.0	February 17, 2015	February 27, 2015	$	0.62	$	46.0
April 29, 2015	May 11, 2015	May 21, 2015	$	0.62	$	46.3	May 11, 2015	May 21, 2015	$	0.62	$	46.3
July 31, 2015	August 14, 2015	August 24, 2015	$	0.62	$	46.3	August 14, 2015	August 24, 2015	$	0.62	$	46.3
November 3, 2015							November 16, 2015	November 25, 2015	$	0.65	$	48.5
February 3, 2016							February 16, 2016	February 26, 2016	$	0.65	$	48.5
April 20, 2016							May 2, 2016	May 12, 2016	$	0.65	$	48.7
July 20, 2016							August 1, 2016	August 12, 2016	$	0.65	$	48.7

On ~~November 3, 2015,~~October 18, 2016, our Board of Directors declared a quarterly cash dividend of $0.65 per share of common stock, which is to be paid on November ~~25, 2015~~10, 2016 to shareholders of record as of the close of business on ~~November 16, 2015.~~October 31, 2016.

Reference is made to Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on February 26, ~~2015,~~2016, for further discussion and analysis of information pertaining to our financial condition and results of operations as of and for the fiscal year ended December 31, ~~2014.~~2015.

On August 18, 2016, the U.S. Deputy Attorney General of the DOJ issued a memorandum directed to the BOP which stated that the BOP should either decline to renew or substantially reduce the scope of contract renewals in a manner consistent with law and the overall decline of the BOP’s inmate population. The DOJ in its memo to the BOP argued that private facilities do not provide the same level of correctional services, programs and resources, do not substantially save costs, or have the same level of safety and security compared to BOP facilities. These arguments were purportedly based on a report that was published by the DOJ’s Office of Inspector General (“OIG”) just a few days before the DOJ memorandum was issued.

We believe that the report issued by the OIG does not support such arguments for a variety of reasons. First, we believe the methodology used by the OIG in its comparative analysis was flawed since the analysis was of privately operated facilities and BOP facilities that were dissimilar in number and demographics (14 private facilities with approximately 28,000 beds and an inmate population made up of 96% non-U.S. citizens compared to 14 BOP facilities with approximately 22,600 inmates of which only 12% were non-U.S. citizens).

In its report, the OIG acknowledged that “inmates from different countries or who are incarcerated in various geographical regions may have different cultures, behaviors, and communication methods” and that “incidents in any prison are usually a result of conflict of cultures, misinterpreting behaviors, or failing to communicate well.” The OIG report went on to say that “without the BOP conducting an in-depth study into the influence of such demographic factors on prison incidents, it would not be possible to determine their impact.” In its response to the OIG report, the BOP itself stated, “we continue to caution against drawing comparisons of contract prisons to BOP operated facilities as the different nature of the inmate populations and programs offered in each facility limit such comparisons.”

Second, the OIG failed to use nationally recognized performance ratings for its comparative analysis such as the BOP’s Contractor Performance Assessment Reporting (“CPAR”) System ratings which are generally used in an annual assessment conducted by on-site monitors; the standards used by the American Correctional Association (“ACA”) for accrediting prisons, jails and community reentry facilities; or the standards used by The Joint Commission (“TJC”) for accrediting the healthcare operations at correctional facilities. A review of these nationally recognized performance ratings would have revealed that GEO’s BOP facilities have received exemplary CPAR ratings, have achieved current ACA accreditation scores ranging from 99.28% to 100.0%, and are accredited by TJC. Instead, the OIG developed its own categories of security indicators without indicating why these standards were more relevant or significant than the standards referenced above that we believe are more established.

Despite these shortcomings, we believe that the OIG report actually shows that privately managed facilities are comparably as safe and secure as BOP facilities and in many important respects were safer. Specifically, privately operated facilities had one-third the rate of deaths as the BOP prisons as well as fewer suicides. Private facilities also had significantly lower rates of inmate-on-inmate and staff-on-inmate incidents of sexual misconduct. Additionally, private facilities had significantly lower rates of positive inmate drug tests and fewer drug confiscations. Similarly, private facilities had fewer inmate fights, fewer disruptive behavior incidents, fewer uses of force, and fewer overall inmate grievances.

Despite these findings, the OIG report chose to deemphasize them and instead focused on other safety indicators such as only selected grievance categories where BOP prisons performed better than private facilities. In other areas, we believe the OIG arguably misinterpreted the data. For instance, the OIG concluded that higher rates of contraband confiscations in private facilities should be viewed negatively even though higher confiscation rates we believe are the result of more proactive and effective contraband detection processes in private facilities compared to BOP facilities. Similarly, the OIG report found that private facilities experienced higher rates of guilty findings related to inmate disciplinary proceedings, which was portrayed negatively even though a higher rate of guilty findings we believe is the result of better documentation of the evidence pertaining to inmate disciplinary cases. In another finding, the OIG report concluded that private facilities monitored a lower rate of inmate telephone calls; however as the OIG report itself pointed out, private facilities were not contractually required to monitor inmate telephone calls. With respect to the rate of facility lockdowns and incident rates in several other categories, which are also mentioned in the report, we believe that the aforementioned population demographic differences, which were acknowledged by the OIG and the BOP, significantly limit the ability to accurately compare the data between private facilities and BOP prisons.

For all these reasons and contrary to the DOJ memorandum, we believe that private facilities are comparably as safe and secure as BOP prisons, and in fact are safer in many of the security indicators used by the OIG report including inmate death rates, suicides, drug use, sexual misconduct, disruptive behavior, uses of force, and overall grievances. Additionally, contrary to the statements in the DOJ memorandum, we believe private facilities achieve significant annual savings for taxpayers. The OIG report itself provided cost data which showed that the fiscal year 2014 annual per capita costs calculated by the BOP were $22,159 for private facilities and $25,251 for BOP institutions, demonstrating that private facilities achieve a 12% cost savings.

We are fully committed to operating our facilities and programs at the highest level, providing safe, secure and humane surroundings for those in our custody and care, our staff and the communities in which we operate. We believe we provide our government partners, including the BOP and ICE, with facilities that maximize security and efficiency while offering our suite of Continuum of Care services and resources. On September 30, 2016, as discussed below, we announced that the BOP extended our contract for our company-owned D. Ray James Correctional Facility. We believe this decision validates our belief that we operate facilities that maximize security and efficiency while offering our suite of Continuum of Care services and resources. Notwithstanding the above, the BOP or other federal, state or local governmental partners may choose to cancel, decline to renew or modify the scope of our existing contracts with them, which may have a material adverse impact on our operations and financial results.

On September 30, 2016, we announced that the BOP has extended our contract for our company-owned D. Ray James Correctional Facility for a two-year renewal term through September 30, 2018 for the housing of up to 1,900 beds with a fixed payment for 1,800 beds compared to our previous contract which contained a fixed payment for 1,962 beds.

On August 18, 2016, we executed a Letter of Offer by and among GEO and HSBC Bank Australia Limited (the “Letter of Offer”) providing for a bank guarantee line and bank guarantee/standby sub-facility in an aggregate amount of AUD100 million, or $76.3 million, based on exchange rates in effect as of September 30, 2016 (collectively, the “Bank Guarantee Facility”). The Bank Guarantee Facility allows us to provide letters of credit to assure performance of certain obligations of our wholly owned subsidiary relating to our prison project in Ravenhall, located near Melbourne, Australia and replaced the performance letter of credit which was previously included in our Amended Credit Agreement. The Bank Guarantee Facility is unsecured. The issuance of letters of credit under the Bank Guarantee Facility is subject to the satisfaction of the conditions precedent specified in the Letter of Offer. Letters of credit issued under the bank guarantee lines are due on demand and letters of credit issued under the bank guarantee/standby sub-facility cannot have a duration exceeding twelve months. The Bank Guarantee Facility may be terminated by HSBC on 90 days written notice. As of September 30, 2016, there were AUD100 million in letters of credit issued under the Bank Guarantee Facility.

party thereto, the issuing lenders party thereto, the lenders party thereto and BNP Paribas, as administrative agent (the “Amendment”), to the Second Amended and Restated Credit Agreement, dated as of August 27, 2014, by and among the Borrowers, BNP Paribas, as administrative agent, and the lenders who are, or may from time to time become, a party thereto (the “Existing Credit Agreement”).

On April 18, 2016, we completed an offering of $350 million aggregate principal amount of 6.00% senior notes due 2026 (the “6.00% Senior Notes”). The 6.00% Senior Notes were offered and sold in a registered offering pursuant to an underwriting agreement, dated as of April 11, 2016 (the “Underwriting Agreement”) among GEO, certain of the Company’s domestic subsidiaries, as guarantors and Wells Fargo Securities, LLC, as representative for the underwriters named therein. The 6.00% Senior Notes were issued by us pursuant to the Indenture, dated as of September 25, 2014 (the “Base Indenture”), by and between GEO and Wells Fargo Bank, National Association, as trustee, as supplemented by a Second Supplemental Indenture, dated as of April 18, 2016 (the “Second Supplemental Indenture” and together with the Base Indenture, the “Indenture”), by and among GEO, the guarantors and the trustee which governs the terms of the 6.00% Senior Notes. The sale of the 6.00% Senior Notes was registered under our existing shelf registration statement on Form S-3 filed on September 12, 2014, as amended (File No. 333-198729). The 6.00% Senior Notes were issued at a coupon rate and yield to maturity of 6.00%. Interest on the 6.00% Senior Notes is payable semi-annually on April 15 and October 15 of each year, commencing on October 15, 2016. The 6.00% Senior Notes mature on April 15, 2026. We used the net proceeds to fund the tender offer and the redemption of all of our 6.625% Senior Notes (see discussion below), to pay all related fees, costs and expenses and for general corporate purposes including repaying borrowings under our Revolver. Loan costs of $6 million were incurred and capitalized in connection with the offering. Refer to Note 10 – Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

On April 11, 2016, we announced that we had commenced a cash tender offer for any and all of our $300.0 million aggregate principal amount of our 6.625% senior unsecured notes due 2021 (“6.625% Senior Notes”). On April 18, 2016, we completed the purchase of $231.0 million in aggregate principal amount of our 6.625% Senior Notes validly tendered in connection with our tender offer on or prior to the expiration time. On May 20, 2016, we completed the redemption of the remaining 6.625% Senior Notes in connection with the terms of the notice of redemption delivered to the note holders on April 20, 2016 pursuant to the terms of the indenture governing the 6.625% Senior Notes. We financed the purchase of the 6.625% Senior Notes under the tender offer with part of the net cash proceeds from the 6.00% Senior Notes (see discussion above). As a result of the tender offer and redemption, we incurred a $15.9 million loss on extinguishment of debt related to the tender premium and deferred costs associated with the 6.625% Senior Notes. Refer to Note 10 – Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

We are currently marketing approximately ~~3,422~~3,300 vacant beds at four of our idle facilities to potential customers. The carrying values of these idle facilities totaled approximately ~~$34.5~~$34.2 million as of September 30, ~~2015,~~2016, excluding equipment and other assets that can be easily transferred for use at other facilities.

On January 28, 2015, we announced that we signed a contract for the reactivation of our Company-owned, 400-bed Mesa Verde Detentional Facility (the “Mesa Verde Facility”) in California. The Mesa Verde Facility will house immigration detainees under an intergovernmental service agreement between the City of McFarland and U.S. Immigration Customs and Enforcement (“ICE”).

On February 18, 2015, we announced the closing of our previously announced acquisition of eight correctional and detention facilities (the “LCS Facilities”) totaling more than 6,500 beds from LCS Corrections Services, Inc. and its affiliates (collectively, “LCS”). Refer to Note 2 - Business Combinations included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

On April 27, 2015, we announced that our wholly-owned subsidiary, The GEO Group Australia Pty. Ltd (“GEO Australia”) signed a contract with the Department of Justice & Regulation in the State of Victoria, Australia for the continued management and operation of the Fulham Correctional Centre and the Fulham Nalu Challenge Community Unit (the “Centre”). The Centre has a contract capacity of 947 beds with a further increase in planned capacity under construction.

On April 28, 2015, we announced that we had begun to mobilize our company-owned 1,748-bed North Lake Correctional Facility (the “North Lake Facility”) located in Baldwin, Michigan. The decision to mobilize the North Lake Facility was made as a result of the current demand for out-of-state correctional bed space. The mobilization effort entails hiring staff and purchasing supplies in order to prepare the previously idle North Lake Facility to receive inmates.

On May 20, 2015, we announced that we signed a contract with the Vermont Department of Corrections for the out-of-state housing of up to 675 inmates at the company-owned North Lake Correctional Facility in Baldwin, Michigan.

On May 21, 2015, we announced that we signed a contract with the Washington Department of Corrections for the out-of-state housing of up to 1,000 inmates at the company-owned North Lake Correctional Facility in Baldwin, Michigan.

On July 6, 2015, we announced the activation of three Company-owned facilities totaling 4,320 beds in Oklahoma, Michigan and California. In early June 2015, we began the intake of offenders at the 1,940-bed Great Plains Correctional Facility in Hinton, Oklahoma under a 10-year contract with the Federal Bureau of Prisons. In late June 2015, we also began the intake of inmates from the State of Vermont at the 1,748-bed North Lake Correctional Facility in Baldwin, Michigan under a five-year agreement with the Vermont Department of Corrections. Under the contracts, we will provide comprehensive correctional management services, including the provision of industry-leading, evidence-based offender rehabilitation programs under our ‘GEO Continuum of Care.’ On July 1, 2015, we activated a 640-bed expansion and began the intake process at the Adelanto Detention Facility in Adelanto, California under our existing contractual structure with the City of Adelanto and ICE.

On October 1, 2015, we announced the signing of a new contract with ICE for the continued management of our Company-owned, 1,575-bed Northwest Detention Center (the “Center”) in Tacoma, Washington. The contract for the continued management of the Center will have a term of nine years and six months inclusive of renewal options.

On October 28, 2015, we announced that we will assume management of the 3,400-bed Arizona State Prison-Kingman in Kingman, Arizona on December 1, 2015 under a managed-only contract with the Arizona Department of Corrections effective through February 2023. The facility currently houses approximately 1,700 inmates and is expected to ramp up through the end of the first quarter of 2016.

~~We also recently signed new contracts with ICE for the continued management of our company-owned, 700-bed Broward Transition Center in Pompano Beach, Florida.~~

Our GEO Care division was also recently awarded a five-year contract for the provision of community-based case management services under a new pilot program by the Department of Homeland Security for families going through the immigration review process.

The accompanying unaudited consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States. As such, we are required to make certain estimates, judgments and assumptions that we believe are reasonable based upon the information available. These estimates and assumptions affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We routinely evaluate our estimates based on historical experience and on various other assumptions that management believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. During the nine months ended September 30, ~~2015,~~2016, we did not experience any significant changes in estimates or judgments inherent in the preparation of our consolidated financial statements. A summary of our significant accounting policies is contained in Note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2014.~~2015.

The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and the notes to our unaudited consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q.


	2015		% of Revenue			2014		% of Revenue			$ Change			% Change			2016		% of Revenue			2015		% of Revenue			$ Change		% Change
	(Dollars in thousands)																(Dollars in thousands)
U.S. Corrections & Detention	$	320,526		68.2	%	$	281,550		61.5	%	$	38,976			13.8	%	$	344,452		62.1	%	$	320,526		68.2	%	$	23,926		7.5	%
GEO Care		86,517		18.4	%		86,610		18.9	%		(93	)		(0.1	)%		99,779		18.0	%		86,517		18.4	%		13,262		15.3	%
International Services		38,031		8.1	%		50,874		11.1	%		(12,843	)		(25.2	)%		40,416		7.3	%		38,031		8.1	%		2,385		6.3	%
Facility Construction & Design		24,792		5.3	%		38,866		8.5	%		(14,074	)		(36.2	)%		69,729		12.6	%		24,792		5.3	%		44,937		181.3	%

Total	$	469,866		100.0	%	$	457,900		100.0	%	$	11,966			2.6	%	$	554,376		100.0	%	$	469,866		100.0	%	$	84,510		18.0	%

Revenues increased in Third Quarter ~~2015~~2016 compared to Third Quarter ~~2014~~2015 primarily due to aggregate increases of ~~$32.3~~$14.4 million resulting from: (i) the activation and intake of detainees ~~at our Alexandria Staging facility in November 2014; (ii) the activation~~ and ~~intake of inmates at our McFarland Female Community Reentry facility; (iii) the activation and intake of inmates~~subsequent ramp up at our company-owned ~~Mesa Verde facility;~~Great Plains correctional facility in June 2015; and ~~(iv) the acquisition~~(ii) our assumption of the ~~LCS Facilities~~management of the 3,400-bed Arizona State Prison facility in ~~February~~Kingman, Arizona in December 2015. We also experienced aggregate increases in revenues of ~~$6.7~~$16.6 million at certain of our facilities primarily due to net increases in population, transportation services and/or rates. These increases were partially offset by a decrease of $7.1 million primarily due to contract terminations.

The number of compensated mandays in U.S. Corrections & Detention facilities was approximately 5.6 million in Third Quarter 2016 and 5.3 million in Third Quarter ~~2015 and 4.8 million in Third Quarter 2014.~~2015. We experienced an aggregate net increase of approximately ~~544,000~~272,000 mandays as a result of the ramp up of our new contracts and business acquisition discussed above. These increases were partially offset by decreases resulting from lower populations at certain facilities. We look at the average occupancy in our facilities to determine how we are managing our available beds. The average occupancy is calculated by taking compensated mandays as a percentage of capacity. The average occupancy in our U.S. Corrections & Detention facilities was ~~92.8%~~94.0% and ~~97.0%~~92.8% of capacity in the Third Quarter ~~2015~~2016 and ~~the~~ Third Quarter ~~2014~~2015, respectively, excluding idle facilities.

Average occupancy declined to 92.8% from 97.0% and was driven primarily by our acquisition and integration of eight correctional and detention LCS Facilities totaling more than 6,500 beds in February 2015. As we have previously disclosed, the LCS Facilities have been historically underutilized.

Revenues ~~remained relatively consistent~~increased by $13.3 million for GEO Care in Third Quarter ~~2015~~2016 compared to Third Quarter ~~2014~~2015 primarily due to increases in average client and participant counts under our ISAP services. We also experienced increases from new ~~programs~~contracts and program growth at our community based and reentry centers, ~~offset~~including our new contract for community-based case management services under a new pilot program launched in September 2015 by ~~a decrease related to changes in services provided under our electronic monitoring contracts and ISAP services.~~the Department of Homeland Security.

Revenues for International Services in Third Quarter ~~2015~~2016 compared to Third Quarter ~~2014 decreased by $12.8 million. Contributing~~2015 in total remained fairly consistent. We experienced a net increase of $1.6 million primarily attributable to ~~the decrease was the result of: (i)~~net population increases at our Australian subsidiary. Additionally, we had an increase due to foreign exchange rate fluctuations of ~~$(7.1)~~$0.8 million resulting from the ~~strengthening~~weakening of the U.S. dollar against certain international currencies; (ii) a decrease of $4.1 million in our United Kingdom subsidiary primarily due to the winding down of our Harmondworth management contract; and (iii) a decrease of $1.6 million primarily attributable to our Australian subsidiary related to population decreases.currencies.

Revenues for our Facility Construction & Design services relate to the commencement of design and construction activity for our new Ravenhall Prison Contract executed in September 2014 with the Department of Justice in the State of Victoria, Australia. The ~~decrease~~increase is ~~related~~due to ~~higher~~increased construction ~~draws, mainly consisting of architectural design services, in Third Quarter 2014 compared to Third Quarter 2015 upon commencement of the project.~~activity during 2016.


	2015		% of Segment Revenues			2014		% of Segment Revenues			$ Change			% Change			2016		% of Segment Revenues			2015		% of Segment Revenues			$ Change		% Change
	(Dollars in thousands)																(Dollars in thousands)
U.S. Corrections & Detention	$	228,648		71.3	%	$	198,148		70.4	%	$	30,500			15.4	%	$	248,024		72.0	%	$	228,648		71.3	%	$	19,376		8.5	%
GEO Care		57,223		66.1	%		55,664		64.3	%		1,559			2.8	%		60,051		60.2	%		57,223		66.1	%		2,828		4.9	%
International Services		35,710		93.9	%		50,127		98.5	%		(14,417	)		(28.8	)%		38,051		94.1	%		35,710		93.9	%		2,341		6.6	%
Facility Construction & Design		24,385		98.4	%		38,277		98.5	%		(13,892	)		(36.3	)%		69,533		99.7	%		24,385		98.4	%		45,148		185.1	%

Total	$	345,966		73.6	%	$	342,216		74.7	%	$	3,750			1.1	%	$	415,659		75.0	%	$	345,966		73.6	%	$	69,693		20.1	%

Operating expenses consist of those expenses incurred in the operation and management of our correctional, detention and community based facilities.

The increase in operating expenses for U.S. Corrections & Detention reflects an increase of ~~$18.7~~$12.2 million due to (i) the activation and intake of detainees ~~at our Alexandria Staging facility in November 2014; (ii) the activation~~ and ~~intake of inmates at our McFarland Female Community Reentry facility; (iii) the activation and intake of inmates~~subsequent ramp up at our company-owned ~~Mesa Verde facility; (iv) the reactivation of our North Lake~~Great Plains correctional facility in ~~Michigan;~~June 2015; and ~~(v) the acquisition~~(ii) our assumption of the ~~LCS Facilities~~management of the 3,400-bed Arizona State Prison facility in ~~February 2015. The timing of these activations and the corresponding start-up expenses resulted~~Kingman, Arizona in ~~an increase in our operating expenses as a percentage of segment revenue in Third Quarter~~December 2015. We also experienced increases of ~~$11.8~~$12.5 million at certain of our facilities primarily attributable to expenditures related to the expansion of the delivery of offender rehabilitation services under our GEO Continuum of Care platform, net population increases, increased transportation services and the variable costs associated with those increases. These increases were partially offset by a decrease of $5.4 million primarily related to contract terminations.

Operating expenses for GEO Care increased by ~~$1.6~~$2.8 million during Third Quarter ~~2015~~2016 from Third Quarter ~~2014~~2015 primarily due to increases in average client and participant counts under our ISAP services. We also experienced increases from new contracts and program growth at our community based and reentry ~~centers.~~centers, including our new contract for community-based case management services under a new pilot program launched in September 2015 by the Department of Homeland Security. Certain of our new contract and program growth did not experience a corresponding increase in variable costs which led to a decrease in operating expenses as a percentage of revenues.

Operating expenses for International Services in Third Quarter ~~2015~~2016 compared to Third Quarter ~~2014 decreased~~2015 increased by ~~$14.4~~$2.3 million. ~~Contributing~~The increase was primarily due to ~~the decrease was (i) the result~~variable costs due to net population increases at our Australian subsidiary of $1.7 million. Additionally, we had an increase due to foreign exchange rate fluctuations of ~~$(5.0)~~$0.6 million resulting from the ~~strengthening~~weakening of the U.S. dollar against certain international currencies; (ii) a decrease of $7.2 million in our United Kingdom subsidiary due to the winding down of our Harmondworth management contract; and (iii) a decrease of $2.2 million primarily attributable to our Australian subsidiary related to population decreases and the associated variable costs.currencies.

Operating expenses for our Facility Construction & Design services relate to the commencement of design and construction activity for our new Ravenhall Prison Contract executed in September 2014 with the Department of Justice in the State of Victoria, Australia. The ~~decrease~~increase is ~~related~~due to ~~higher~~increased construction ~~draws, mainly consisting of architectural design services, in Third Quarter 2014 compared to Third Quarter 2015 upon commencement of the project.~~activity during 2016.


	2015		% of Segment Revenue			2014		% of Segment Revenue			$ Change			% Change			2016		% of Segment Revenue			2015		% of Segment Revenue			$ Change			% Change
	(Dollars in thousands)																(Dollars in thousands)
U.S. Corrections & Detention	$	17,861		5.6	%	$	15,952		5.7	%	$	1,909			12.0	%	$	18,563		5.4	%	$	17,861		5.6	%	$	702			3.9	%
GEO Care		8,592		9.9	%		7,441		8.6	%		1,151			15.5	%		9,721		9.7	%		8,592		9.9	%		1,129			13.1	%
International Services		674		1.8	%		686		1.3	%		(12	)		(1.7	)%		499		1.2	%		674		1.8	%		(175	)		(26.0	)%
Facility Construction & Design		—		—	%		—		—			—			—	%

Total	$	27,127		5.8	%	$	24,079		5.3	%	$	3,048			12.7	%	$	28,783		5.2	%	$	27,127		5.8	%	$	1,656			6.1	%

U.S. Corrections & Detention depreciation and amortization expense increased slightly in Third Quarter ~~2015~~2016 compared to Third Quarter ~~2014~~2015 primarily due to renovations made at several of our facilities and additional depreciation and amortization related to the acquisition of the LCS Facilities in February 2015. Refer to Note 2 - Business Combinations of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.facilities.

GEO Care depreciation and amortization expense increased in Third Quarter ~~2015~~2016 compared to Third Quarter ~~2014~~2015 primarily due to renovations made at several of our locations.

Depreciation and amortization expense decreased ~~slightly~~ in Third Quarter ~~2015~~2016 compared to Third Quarter ~~2014~~2015 as a result of certain assets becoming fully depreciated and there were no significant additions or renovations during ~~2014~~2015 or ~~2015~~2016 at our international subsidiaries.

General and administrative expenses comprise substantially all of our other unallocated operating expenses which primarily includes corporate management salaries and benefits, professional fees and other administrative expenses. The increase in general and administrative expenses in Third Quarter ~~2015~~2016 compared to Third Quarter ~~2014~~2015 was primarily attributable to (i) ~~business development expenses of $1.9 million related to new contract opportunities both domestically and internationally; (ii)~~ expenditures related to the expansion of the delivery of offender rehabilitation services under our GEO Continuum of Care platform of ~~$0.6~~$0.5 million; ~~and (iii)~~(ii) non-cash stock-based compensation expense of ~~$1.3 million. We also experienced~~$0.2 million; (iii) increases related to normal personnel and compensation adjustments of $1.9 million; and ~~professional fees.~~(iv) various other administrative expenses of $1.1 million in the aggregate.


	2015		% of Revenue			2014		% of Revenue			$ Change		% Change			2016		% of Revenue			2015		% of Revenue			$ Change		% Change
	(Dollars in thousands)															(Dollars in thousands)
Interest Income	$	2,992		0.6	%	$	1,048		0.2	%	$	1,944		185.5	%	$	7,928		1.4	%	$	2,992		0.6	%	$	4,936		165.0	%
Interest Expense	$	27,314		5.8	%	$	21,408		4.7	%	$	5,906		27.6	%	$	33,428		6.0	%	$	27,314		5.8	%	$	6,114		22.4	%

Interest income increased in the Third Quarter ~~2015~~2016 compared to Third Quarter ~~2014~~2015 primarily due to interest income earned on our contract receivable related to our prison project in Ravenhall, Australia. Refer to Note 12 -– Business Segments and Geographic Information of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Interest expense increased in Third Quarter ~~2015~~2016 compared to Third Quarter ~~2014~~2015 primarily due to the construction loan interest related to our prison project in Ravenhall, ~~Australia as well as additional Revolver interest incurred in connection with our acquisition of the LCS Facilities.~~Australia. Refer to Note 10 -– Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The provision for income taxes during Third Quarter ~~2015 decreased by $3.8 million~~2016 increased compared to Third Quarter ~~2014 and~~2015 along with the effective tax ~~rate decreased to 4.5%.~~rate. The ~~decrease~~increase is primarily attributable to certain favorable non-recurring items in Third Quarter 2015. As a REIT, we are required to distribute at least 90% of our taxable income to shareholders and in turn are allowed a deduction for the distribution at the REIT level. Our wholly-owned taxable REIT subsidiaries continue to be fully subject to federal, state and foreign income taxes, as applicable. We estimate our annual effective tax rate to be in the range of approximately 8%11% to 9%12% exclusive of any ~~non-recurring~~discrete items.

Equity in earnings of affiliates, presented net of income taxes, represents the earnings of SACS and GEOAmey in the aggregate. ~~Overall, equity~~Equity in earnings of affiliates during Third Quarter ~~2015~~2016 compared to Third Quarter ~~2014 was relatively consistent~~2015 increased primarily as a result of ~~consistent~~favorable performance by ~~SACS and~~ GEOAmey during the periods.


	2015		% of Revenue			2014		% of Revenue			$ Change			% Change			2016		% of Revenue			2015		% of Revenue			$ Change			% Change
	(Dollars in thousands)																(Dollars in thousands)
U.S. Corrections & Detention	$	910,465		67.8	%	$	824,448		65.2	%	$	86,017			10.4	%	$	1,024,395		63.5	%	$	910,465		67.8	%	$	113,930			12.5	%
GEO Care		248,531		18.5	%		245,723		19.4	%		2,808			1.1	%		289,722		18.0	%		248,531		18.5	%		41,191			16.6	%
International Services		117,228		8.7	%		154,843		12.3	%		(37,615	)		(24.3	)%		116,468		7.2	%		117,228		8.7	%		(760	)		(0.6	)%
Facility Construction & Design		66,957		5.0	%		38,866		3.1	%		28,091			72.3	%		182,326		11.3	%		66,957		5.0	%		115,369			172.3	%

Total	$	1,343,181		100.0	%	$	1,263,880		100.0	%	$	79,301			6.3	%	$	1,612,911		100.0	%	$	1,343,181		100.0	%	$	269,730			20.1	%

Revenues increased in Nine Months ~~2015~~2016 compared to Nine Months ~~2014~~2015 primarily due to aggregate increases of ~~$68.0~~$81.1 million resulting from: (i) the activation and intake of detainees and subsequent ramp up at our ~~Alexandria Staging~~company-owned Great Plains correctional facility in ~~November 2014;~~June 2015; (ii) the activation and intake of inmates at our ~~McFarland Female Community Reentry facility;~~company-owned North Lake correctional facility in May 2015; (iii) the activation and intake of inmates at our company-owned Mesa Verde facility; ~~and~~ (iv) the acquisition of the LCS Facilities in February 2015; and (v) our assumption of the management of the 3,400-bed Arizona State Prison facility in Kingman, Arizona in December 2015. We also experienced aggregate increases in revenues of ~~$18.0~~$53.6 million at certain of our facilities primarily due to net increases in population, transportation services and/or rates. These increases were partially offset by a decrease of $20.7 million primarily due to contract terminations.

The number of compensated mandays in U.S. Corrections & Detention facilities was approximately 16.5 million in Nine Months 2016 and 15.2 million in Nine Months ~~2015 and 14.0 million in Nine Months 2014.~~2015. We experienced an aggregate net increase of approximately ~~1,173,000~~1,298,000 mandays as a result of the ramp up of our new contracts and business acquisition discussed above. These increases were partially offset by decreases resulting from lower populations at certain facilities. We look at the average occupancy in our facilities to determine how we are managing our available beds. The average occupancy is calculated by taking compensated mandays as a percentage of capacity. The average occupancy in our U.S. Corrections & Detention facilities was ~~94.4%~~93.2% and ~~96.8%~~94.4% of capacity in the Nine Months ~~2015~~2016 and Nine Months ~~2014,~~2015, respectively, excluding idle facilities.

Average occupancy declined to 94.4% from 96.8% and was driven primarily by our acquisition and integration of eight correctional and detention LCS Facilities totaling more than 6,500 beds in February 2015. As we have previously disclosed, the LCS Facilities have been historically underutilized.

~~The increase in revenues~~Revenues increased for GEO Care by $41.2 million in Nine Months ~~2015~~2016 compared to Nine Months ~~2014 is~~2015 primarily ~~attributable~~due to increases in average client and participant counts under our ISAP services. We also experienced increases from new ~~programs~~contracts and program growth at our community based and reentry ~~centers.~~centers, including our new contract for community-based case management services under a new pilot program launched in September 2015 by the Department of Homeland Security.

Revenues for International Services in Nine Months ~~2015~~2016 compared to Nine Months ~~2014~~2015 decreased by ~~$37.6~~$0.8 million. ~~Contributing to the~~The decrease was ~~the result of (i)~~primarily due to foreign exchange rate fluctuations of ~~$(15.5)~~$5.6 million resulting from the ~~strengthening~~weakening of the U.S. dollar against certain international ~~currencies; (ii)~~currencies. This decrease was partially offset by a ~~decrease~~net increase of ~~$19.0~~$4.8 million ~~in our United Kingdom subsidiary primarily~~ due to ~~the winding down of~~net population increases at our ~~Harmondworth management contract; and (iii) an aggregate net decrease of $3.1 million primarily attributable to our South Africa subsidiary related to population decreases.~~Australian subsidiary.

~~The increase in revenues~~Revenues for our Facility Construction & Design services ~~is due~~relate to the commencement of design and construction activity for our new Ravenhall Prison Contract executed in September 2014 with the Department of Justice in the State of Victoria, Australia. The increase is due to increased construction activity during 2016.


	2015		% of Segment Revenues			2014		% of Segment Revenues			$ Change			% Change			2016		% of Segment Revenues			2015		% of Segment Revenues			$ Change		% Change
	(Dollars in thousands)																(Dollars in thousands)
U.S. Corrections & Detention	$	657,883		72.3	%	$	585,454		71.0	%	$	72,429			12.4	%	$	748,383		73.1	%	$	657,883		72.3	%	$	90,500		13.8	%
GEO Care		165,659		66.7	%		162,640		66.2	%		3,019			1.9	%		180,529		62.3	%		165,659		66.7	%		14,870		9.0	%
International Services		108,672		92.7	%		147,826		95.5	%		(39,154	)		(26.5	)%		110,235		94.6	%		108,672		92.7	%		1,563		1.4	%
Facility Construction & Design		65,598		98.0	%		38,277		98.5	%		27,321			71.4	%		181,855		99.7	%		65,598		98.0	%		116,257		177.2	%

Total	$	997,812		74.3	%	$	934,197		73.9	%	$	63,615			6.8	%	$	1,221,002		75.7	%	$	997,812		74.3	%	$	223,190		22.4	%

Operating expenses consist of those expenses incurred in the operation and management of our correctional, detention and community based facilities.

The increase in operating expenses for U.S. Corrections & Detention reflects an increase of ~~$54.5~~$66.6 million due to (i) the activation and intake of detainees and subsequent ramp up at our ~~Alexandria Staging~~company-owned Great Plains correctional facility in ~~November 2014;~~June 2015; (ii) the activation and intake of inmates at our ~~McFarland Female Community Reentry facility;~~company-owned North Lake correctional facility in May 2015; (iii) the activation and intake of inmates at our company-owned Mesa Verde facility; ~~and~~ (iv) the acquisition of the LCS Facilities in February 2015; and (v) our assumption of the management of the 3,400-bed Arizona State Prison facility in Kingman, Arizona in December 2015. The timing of these activations and the corresponding start-up expenses resulted in an increase in our operating expenses as a percentage of segment revenue in Nine Months 2016. We also experienced increases of ~~$17.9~~$40.1 million at certain of our facilities primarily attributable to expenditures related to the expansion of the delivery of offender rehabilitation services under our GEO Continuum of Care platform, net population increases, increased transportation services and the variable costs associated with those increases. These increases were partially offset by a decrease of $16.2 million primarily related to contract terminations.

Operating expenses for GEO Care increased by ~~$3.0~~$14.9 million during Nine Months ~~2015~~2016 from Nine Months ~~2014~~2015 primarily due to increases in average client and participant counts under our ISAP services. We also experienced increases from new contracts and program growth at our community based and reentry centers, including our new contract for community-based case management services under a new pilot program launched in September 2015 by the Department of ~~$3.3 million. This~~Homeland Security. Certain of our new contract and program growth did not experience a corresponding increase ~~was partially offset by~~in variable costs which led to a decrease in ~~variable costs associated with our electronic monitoring contracts and ISAP program at BI~~operating expenses as a percentage of ~~$0.3 million.~~revenues.

Operating expenses for International Services in Nine Months ~~2015~~2016 compared to Nine Months ~~2014 decreased~~2015 increased by ~~$39.2~~$1.6 million. ~~Contributing~~The increase was primarily due to ~~the decrease~~a net increase of $7.3 million due to net population increases at our Australian subsidiary. This increase was ~~(i) the result of~~partially offset by foreign exchange rate fluctuations of ~~$(12.6)~~$5.6 million resulting from the ~~strengthening~~weakening of the U.S. dollar against certain international currencies; (ii) a decrease of $20.4 million in our United Kingdom subsidiary due to the winding down of our Harmondworth management contract; and (iii) a decrease of $6.1 million primarily attributable to our Australian and South African subsidiaries related to population decreases and the associated variable costs.currencies.

~~The increase in~~Operating expenses for our Facility Construction & Design services ~~is due~~relate to the commencement of design and construction activity for our new Ravenhall Prison Contract executed in September 2014 with the Department of Justice in the State of Victoria, Australia. The increase is due to increased construction activity during 2016.


	2015		% of Segment Revenue			2014		% of Segment Revenue			$ Change			% Change			2016		% of Segment Revenue			2015		% of Segment Revenue			$ Change			% Change
	(Dollars in thousands)																(Dollars in thousands)
U.S. Corrections & Detention	$	52,357		5.8	%	$	48,011		5.8	%	$	4,346			9.1	%	$	55,720		5.4	%	$	52,357		5.8	%	$	3,363			6.4	%
GEO Care		24,446		9.8	%		21,919		8.9	%		2,527			11.5	%		28,635		9.9	%		24,446		9.8	%		4,189			17.1	%
International Services		1,825		1.6	%		2,039		1.3	%		(214	)		(10.5	)%		1,531		1.3	%		1,825		1.6	%		(294	)		(16.1	)%
Facility Construction & Design		—		—	%		—		—			—			—	%

Total	$	78,628		5.9	%	$	71,969		5.7	%	$	6,659			9.3	%	$	85,886		5.3	%	$	78,628		5.9	%	$	7,258			9.2	%

U.S. Corrections & Detention depreciation and amortization expense increased in Nine Months ~~2015~~2016 compared to Nine Months ~~2014~~2015 primarily due to renovations made at several of our facilities and additional depreciation and amortization related to the acquisition of the LCS Facilities in February 2015. Refer to Note 2 - Business Combinations of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.facilities.

GEO Care depreciation and amortization expense increased in Nine Months ~~2015~~2016 compared to Nine Months ~~2014~~2015 primarily due to renovations made at several of our locations.

Depreciation and amortization expense ~~was fairly consistent~~decreased slightly in Nine Months ~~2015~~2016 compared to Nine Months ~~2014~~2015 as a result of certain assets becoming fully depreciated and there were no significant additions or renovations during ~~2014~~2015 or ~~2015~~2016 at our international subsidiaries.

General and administrative expenses comprise substantially all of our other unallocated operating expenses which primarily includes corporate management salaries and benefits, professional fees and other administrative expenses. The increase in general and administrative expenses in Nine Months ~~2015~~2016 compared to Nine Months ~~2014~~2015 was primarily attributable to (i) ~~business development expenses of $6.0 million related to new contract opportunities both domestically and internationally; (ii)~~ expenditures related to the expansion of the delivery of offender rehabilitation services under our GEO Continuum of Care platform of ~~$1.3~~$1.2 million; (ii) non-cash stock-based compensation expense of $1.1 million; (iii) ~~non-cash stock based~~increases related to normal personnel and compensation adjustments of ~~$2.3 million and~~$6.0 million; (iv) ~~nonrecurring professional~~consulting fees of ~~$3.0~~$0.9 million; and (v) various other administrative expenses of $1.5 million ~~incurred~~ in ~~connection with our acquisitions of Soberlink and~~ the ~~LCS Facilities in 2015.~~aggregate.


	2015		% of Revenue			2014		% of Revenue			$ Change		% Change			2016		% of Revenue			2015		% of Revenue			$ Change		% Change
	(Dollars in thousands)															(Dollars in thousands)
Interest Income	$	7,933		0.6	%	$	2,604		0.2	%	$	5,329		204.6	%	$	18,387		1.1	%	$	7,933		0.6	%	$	10,454		131.8	%
Interest Expense	$	78,610		5.9	%	$	62,662		5.0	%	$	15,948		25.5	%	$	93,864		5.8	%	$	78,610		5.9	%	$	15,254		19.4	%

Interest income increased in the Nine Months ~~2015~~2016 compared to Nine Months ~~2014~~2015 primarily due to interest income earned on our contract receivable related to our prison project in Ravenhall, Australia. Refer to Note 12 -– Business Segments and Geographic Information of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Interest expense increased in Nine Months ~~2015~~2016 compared to Nine Months ~~2014~~2015 primarily due to the construction loan interest related to our prison project in Ravenhall, Australia as well as additional Revolver interest incurred in connection with our acquisition of the LCS Facilities. Refer to Note 10 -– Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

During Nine Months 2016, we completed a tender offer and redemption of our 6.625% Senior Notes which resulted in a loss of $15.9 million related to the tender premium and deferred costs associated with the 6.625% Senior Notes. Refer to Note 10 – Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

The provision for income taxes during Nine Months ~~2015 decreased~~2016 increased compared to Nine Months ~~2014 and~~2015 along with the effective tax ~~rate decreased from 9.8%~~rate. The increase is due to ~~7.1%. The decrease is primarily attributable to~~debt extinguishment costs incurred by us in Nine Months 2016 which carry no tax benefit as well as certain favorable non-recurring items in Third Quarter 2015. As a REIT, we are required to distribute at least 90% of our taxable income to shareholders and in turn are allowed a deduction for the distribution at the REIT level. Our wholly-owned taxable REIT subsidiaries continue to be fully subject to federal, state and foreign income taxes, as applicable. We estimate our annual effective tax rate to be in the range of approximately 8%11% to 9%12% exclusive of any ~~non-recurring~~discrete items.


	2016		% of Revenue			2015		% of Revenue			$ Change		% Change
	(Dollars in thousands)
Equity in Earnings of Affiliates	$	4,943		0.3	%	$	3,949		0.3	%	$	994		25.2	%

Equity in earnings of affiliates, presented net of income taxes, represents the earnings of SACS and GEOAmey in the aggregate. ~~Overall, equity~~Equity in earnings of affiliates during Nine Months ~~2015~~2016 compared to Nine Months ~~2014 was relatively consistent~~2015 increased primarily as a result of ~~consistent~~favorable performance by ~~SACS and~~ GEOAmey during the periods.

Our current cash requirements consist of amounts needed for working capital, distributions of our REIT taxable income in order to maintain our REIT qualification, debt service, supply purchases, investments in joint ventures, and capital expenditures related to either the development of new correctional, detention and reentry facilities, or the maintenance of existing facilities. In addition, some of our management contracts require us to make substantial initial expenditures of cash in connection with opening or renovating a facility. Generally, these initial expenditures are subsequently fully or partially recoverable as pass-through costs or are billable as a component of the per diem rates or monthly fixed fees to the contracting agency over the original term of the contract. In connection with GEOAmey, our joint venture in the United Kingdom, we and our joint venture partner have each provided a line of credit of £12 million, or ~~$18.2~~$15.6 million, based on exchange rates as of September 30, ~~2015,~~2016, for GEOAmey’s operations. As of September 30, ~~2015, $14.4~~2016, $5.8 million was outstanding.

We currently have contractual commitments for a number of projects using Company financing. We estimate that the cost of these existing capital projects will be approximately ~~$159~~$108.7 million of which ~~$51~~$14 million was spent through September 30, ~~2015.~~2016. We estimate that the remaining capital requirements related to these capital projects will be ~~$108~~$94.7 million which will be spent through 2017. Included in these commitments is a contractual commitment to provide a capital contribution towards the design and construction of a prison project in Ravenhall, a locality near Melbourne, Australia, which is estimated to be ~~$80.2~~approximately $84 million as of September 30, ~~2015.~~2016. This capital contribution is expected to be made in January 2017. Additionally, in connection with the Ravenhall Prison Project, we have a contractual commitment for construction of the facility and have entered into a syndicated facility agreement with National Australia Bank Limited to provide funding for the project up to AUD 791.0 million, or ~~$552.0~~$603.9 million, based on exchange rates as of September 30, ~~2015.~~2016.

On August ~~27, 2014,~~18, 2016, we executed a ~~second amended and restated credit agreement~~Letter of Offer by and among GEO and HSBC Bank Australia Limited (the “Letter of Offer”) providing for a bank guarantee line and bank guarantee/standby sub-facility in an aggregate amount of AUD100 million, or $76.3 million, based on exchange rates in effect as of September 30, 2016 (collectively, the “Bank Guarantee Facility”). The Bank Guarantee Facility allows us to provide letters of credit to assure performance of certain obligations of our wholly owned subsidiary relating to our prison project in Ravenhall, located near Melbourne, Australia and replaced the performance letter of credit which was previously included in our Amended Credit Agreement. The Bank Guarantee Facility is unsecured. The issuance of letters of credit under the Bank Guarantee Facility is subject to the satisfaction of the conditions precedent specified in the Letter of Offer. Letters of credit issued under the bank guarantee lines are due on demand and letters of credit issued under the bank guarantee/standby sub-facility cannot have a duration exceeding twelve months. The Bank Guarantee Facility may be terminated by HSBC on 90 days written notice. As of September 30, 2016, there was AUD100 million in letters of credit issued under the Bank Guarantee Facility.

On May 19, 2016 (the “Amendment Effective Date”), we executed Amendment No. 1, among GEO and GEO Corrections Holdings, Inc. (together with GEO, the “Borrowers”), GEO Australasia Holdings Pty Ltd (“GEO Australasia Holdings”), GEO Australasia Finance Holdings Pty Ltd as ~~borrowers,~~trustee for the GEO Australasia Finance Holding Trust (the “Australian Trust”) (the “Australian Trustee”, and together with GEO Australasia Holdings, collectively, the “Australian Borrowers”), the guarantors party thereto, the issuing lenders party thereto, the lenders party thereto and BNP Paribas, as ~~Administrative Agent,~~administrative agent (the “Amendment”), to the Second Amended and Restated Credit Agreement, dated as of August 27, 2014, by and among the Borrowers, BNP Paribas, as administrative agent, and the lenders who are, or may from time to time become, a party thereto (the ~~“Credit~~“Existing Credit Agreement”).

The Amendment amends certain terms of the Existing Credit Agreement ~~evidences~~to effect a ~~credit facility (the “Credit Facility”) consisting of a $296.3 million term loan (the “Term Loan”) bearing interest at LIBOR plus 2.50% (with a LIBOR floor of .75%), and a $700.0 million~~ revolving credit ~~facility~~increase in the amount of $200.0 million, increases to the total leverage thresholds used in the determination of the applicable interest rates, and certain other modifications (the ~~“Revolver”) initially bearing interest at LIBOR plus 2.25% (with no LIBOR floor) together with AUD 225 million available solely for~~Existing Credit Agreement as so modified, the ~~issuance~~“Amended Credit Agreement”).

The Amendment provides that each lender (including each Increasing Lender and each Assuming Lender as defined in the Amended Credit Agreement) that executed a lender addendum as a revolving credit lender agrees to provide a revolving credit commitment, inclusive of ~~financial~~ letters of credit ~~and performance~~issued thereunder, to the Borrowers at the Amendment Effective Time in an aggregate principal amount equal to $900.0 million (the“Revolving Credit Commitment”) on the terms set forth in the Amended Credit Agreement. In addition, the Amendment increases the principal amount of letters of credit ~~in each case denominated in Australian Dollars (the “Australian LC Facility”). At September 30, 2015, we had approximately AUD 215 million in letters of credit outstanding~~that may be issued under the ~~Australian LC Facility in connection with certain performance guarantees related~~Revolving Credit Commitment from $175.0 million to a prison project in Ravenhall, Australia. Amounts to be borrowed by us under the Credit Agreement are subject to the satisfaction of customary conditions to borrowing. The Revolver component is scheduled to mature on August 27, 2019 and the Term Loan component is scheduled to mature on April 3, 2020.

The Credit Agreement contains certain customary representations and warranties, and certain customary covenants that restrict our ability to, among other things (i) create, incur or assume any indebtedness, (ii) create, incur, assume or permit liens, (iii) make loans and investments, (iv) engage in mergers, acquisitions and asset sales, (v) make certain restricted payments, (vi) issue, sell or otherwise dispose of capital stock, (vii) engage in transactions with affiliates, (viii) allow the total leverage ratio to exceed 5.75 to 1.00, allow the senior secured leverage ratio to exceed 3.50 to 1.00 or allow the interest coverage ratio to be less than 3.00 to 1.00, (ix) cancel, forgive, make any voluntary or optional payment or prepayment on, or redeem or acquire

for value any senior notes, except as permitted, (x) alter the business we conduct, and (xi) materially impair our lenders’ security interests in the collateral for its loans. The restricted payments covenant remains consistent with our election to be treated as a real estate investment trust under the Internal Revenue Code of 1986, effective as of January 1, 2013.

Events of default under the Credit Agreement include, but are not limited to, (i) our failure to pay principal or interest when due, (ii) our material breach of any representation or warranty, (iii) covenant defaults, (iv) liquidation, reorganization or other relief relating to bankruptcy or insolvency, (v) cross default under certain other material indebtedness, (vi) unsatisfied final judgments over a specified threshold, (vii) certain material environmental liability claims which have been asserted against us, and (viii) a change in control. We were in compliance with all of the covenants of the Credit Agreement as of September 30, 2015.$300.0 million.

As of September 30, ~~2015,~~2016, we had ~~$293.3~~$290.3 million in aggregate borrowings outstanding, net of discount, under the Term Loan and ~~$490.0~~$475.0 million in borrowings under the Revolver, and approximately ~~$58.1~~$53.6 million in letters of credit which left ~~$151.9~~$371.4 million in additional borrowing capacity under the Revolver. Refer to Note 10 -– Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

On April 18, 2016, we completed an offering of $350 million aggregate principal amount of 6.00% Senior Notes. The 6.00% Senior Notes were offered and sold in a registered offering pursuant to an underwriting agreement, dated as of April 11, 2016 (the “Underwriting Agreement”) among GEO, certain of the Company’s domestic subsidiaries, as guarantors and Wells Fargo Securities, LLC, as representative for the underwriters named therein. The 6.00% Senior Notes were issued by us pursuant to the Indenture, dated as of September 25, 2014 (the “Base Indenture”), by and between GEO and Wells Fargo Bank, National Association, as trustee, as supplemented by a Second Supplemental Indenture, dated as of April 18, 2016 (the “Second Supplemental Indenture” and together with the Base Indenture, the “Indenture”), by and among GEO, the guarantors and the trustee which governs the terms of the 6.00% Senior Notes. The sale of the 6.00% Senior Notes was registered under our existing shelf registration statement on Form S-3 filed on September 12, 2014, as amended (File No. 333-198729). The 6.00% Senior Notes were issued at a coupon rate and yield to maturity of 6.00%. Interest on the 6.00% Senior Notes is payable semi-annually on April 15 and October 15 of each year, commencing on October 15, 2016. The 6.00% Senior Notes mature on April 15, 2026. We used the net proceeds to fund the tender offer and the redemption of all of our 6.625% Senior Notes (see discussion below), to pay all related fees, costs and expenses and for general corporate purposes including repaying borrowings under our Revolver. Loan costs of approximately $6 million were incurred and capitalized in connection with the offering. Refer to Note 10 – Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

On April 11, 2016, we announced that we had commenced a cash tender offer for any and all of our $300.0 million aggregate principal amount of its 6.625% Senior Notes. On April 18, 2016, we completed the purchase of $231.0 million in aggregate principal amount of its 6.625% Senior Notes validly tendered in connection with our tender offer on or prior to the expiration time. On May 20, 2016, we completed the redemption of the remaining 6.625% Senior Notes in connection with the terms of the notice of redemption delivered to the note holders on April 20, 2016 pursuant to the terms of the indenture governing the 6.625% Senior Notes. We financed the purchase of the 6.625% Senior Notes under the tender offer with part of the net cash proceeds from the 6.00% Senior Notes (see discussion above). As a result of the tender offer and redemption, we incurred a $15.9 million loss on extinguishment related to the tender premium and deferred costs associated with the 6.625% Senior Notes. Refer to Note 10 – Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

On September 25, 2014, we completed an offering of $250.0 million aggregate principal amount of ~~senior unsecured notes.~~5.875% Senior Notes due 2024. The notes will mature on October 15, 2024 and have a coupon rate and yield to maturity of 5.875%. Interest is payable semi-annually in cash in arrears on April 15 and October 15, which commenced on April 15, 2015. The proceeds received from teh 5.875% Senior Notes due 2024 are guaranteed on a senior unsecured basis by all our restricted subsidiaries that guarantee obligations. The 5.875% Senior Notes due 2024 rank equally in right of payment with any unsecured, unsubordinated indebtedness of the Company and the guarantors, including our 6.625% senior notes due 2021, the 5.875% senior notes due 2022, the 5.125% senior notes due 2023, and the guarantors’ guarantees thereof, senior in right of paymentwere used to any future indebtedness of ours and the guarantors that is expressly subordinated to the 5.875% Senior Notes due 2024 and the guarantees, effectively junior to any secured indebtedness of ours and the guarantors, including indebtednesspay down outstanding borrowings under our ~~Credit Facility, to the extent of the value of the assets securing such indebtedness,~~Revolver and structurally junior to all obligations of our subsidiaries that are not guarantors. The sale of the 5.875% Senior Notes due 2024 was registered under our automatic shelf registration statement on Form S-3 filed on September 12, 2014.pay related fees, costs and expenses. Refer to Note 10 -– Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

In connection with a new design and build prison project agreement in Ravenhall, Australia with the State of Victoria, in September 2014, we entered into a syndicated facility agreement (the “Construction Facility”) with National Australia Bank Limited to provide debt financing for construction of the project. The Construction Facility provides for non-recourse funding up to AUD ~~791.0~~791 million, or ~~$552.0~~approximately $604 million, based on exchange rates as of September 30, ~~2015.~~2016. Construction draws

will be funded throughout the project according to a fixed utilization schedule as defined in the syndicated facility agreement. The term of the Construction Facility is through October 2019 and bears interest at a variable rate quoted by certain Australian banks plus 200 basis points. After October 2019, the Construction Facility will be converted to a term loan with payments due quarterly beginning in 2019 through 2041. In accordance with the terms of the Construction Facility, upon completion and commercial acceptance of the prison, in accordance with the prison contract, the State will make a lump sum payment of AUD 310 million, or ~~$216.3~~approximately $237 million, based on exchange rates as of September 30, ~~2015,~~2016, towards a portion of the outstanding principal. The remaining outstanding principal balance will be repaid over the term of the operating agreement. As of September 30, ~~2015, $132.0~~2016, approximately $478 million was outstanding under the Construction Facility. We also entered into interest rate swap and interest rate cap agreements related to our non-recourse debt in connection with the project. Refer to Note 9 -– Derivative Financial Instruments of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

On October 3, 2013, we completed an offering of $250.0 million aggregate principal amount of 5.875% Senior Notes due 2022. The 5.875% Senior Notes due 2022 will mature on January 15, 2022 and have a coupon rate and yield to maturity of 5.875%. Interest is payable semi-annually on January 15 and July 15 each year, which commenced on January 15, 2014. The proceeds received from the 5.875% Senior Notes due 2022 were used, together with cash on hand, to fund the repurchase, redemption or other discharge of our 7.75% ~~Senior Notes~~senior notes due 2017 and to pay related transaction fees and expenses. Refer to Note 10 -– Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

On March 19, 2013, we completed an offering of $300.0 million aggregate principal amount of 5.125% Senior Notes. The 5.125% Senior Notes will mature on April 1, 2023 and have a coupon rate and yield to maturity of 5.125%. Interest is payable semi-annually on April 1 and October 1 each year, which commenced on October 1, 2013. A portion of the proceeds received from the 5.125% Senior Notes were used on the date of the financing to repay the prior revolver credit draws outstanding under the prior senior credit facility. Refer to Note 10 -– Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

In February 2011, we completed an offering of $300.0 million in aggregate principal amount of our 6.625% Senior Notes. The 6.625% Senior Notes will mature on February 15, 2021 and have a coupon rate and yield to maturity of 6.625%. Interest is payable semi-annually in arrears on February 15 and August 15, which commenced on August 15, 2011. The proceeds received from the 6.625% Senior Notes were used together with $150.0 million of borrowing under our senior credit facility at the time to fund the acquisition of BI and pay related costs.

In addition to the debt outstanding under the Credit Facility, the ~~6.625%~~6.00% Senior Notes, the 5.125% Senior Notes, the 5.875^.% Senior Notes due 2022 and the 5.875% Senior Notes due 2024 discussed above, we also have significant debt obligations which, although these obligations are non-recourse to us, require cash expenditures for debt service. Our significant debt obligations could have material consequences. See “Risk Factors-Risks Related to Our High Level of Indebtedness” in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2014.~~2015. We are exposed to various commitments and contingencies which may have a material adverse effect on our liquidity. We also have guaranteed certain obligations for certain of our international subsidiaries. These non-recourse obligations, commitments and contingencies and guarantees are further discussed in our Annual Report on Form 10-K for the year ended December 31, ~~2014.~~2015.

We consider opportunities for future business and/or asset acquisitions as we deem appropriate when market conditions present opportunities. If we are successful in our pursuit of any new projects, our cash on hand, cash flows from operations and borrowings under the existing Credit Facility may not provide sufficient liquidity to meet our capital needs and we could be forced to seek additional financing or refinance our existing indebtedness. There can be no assurance that any such financing or refinancing would be available to us on terms equal to or more favorable than our current financing terms, or at all. In the future, our access to capital and ability to compete for future capital intensive projects will also be dependent upon, among other things, our ability to meet certain financial covenants in the indenture governing the ~~6.625% Senior Notes, the indenture governing the~~ 5.125% Senior Notes, the indenture governing the 5.875% Senior Notes due 2022, the indenture governing the 5.875% Senior Notes due 2024, the indenture governing the 6.00% Senior Notes due 2026 and our Credit Agreement. A substantial decline in our financial performance could limit our access to capital pursuant to these covenants and have a material adverse affect on our liquidity and capital resources and, as a result, on our financial condition and results of operations. In addition to these foregoing potential constraints on our capital, a number of state government agencies have been suffering from budget deficits and liquidity issues. While we expect to be in compliance with our debt covenants, if these constraints were to intensify, our liquidity could be materially adversely impacted as could our ability to remain in compliance with these debt covenants.

As a REIT, we are subject to a number of organizational and operational requirements, including a requirement that we annually distribute to our shareholders an amount equal to at least 90% of our REIT taxable income (determined before the deduction for dividends paid and by excluding any net capital gain). Generally, we expect to distribute all or substantially all of our REIT taxable income so as not to be subject to the income or excise tax on undistributed REIT taxable income. The amount, timing and frequency of distributions will be at the sole discretion of our Board of Directors and will be based upon various factors.

We plan to fund all of our capital needs, including distributions of our REIT taxable income in order to maintain our REIT qualification, and capital expenditures, from cash on hand, cash from operations, borrowings under our Credit Facility and any other financings which our management and Board of Directors, in their discretion, may consummate. Currently, our primary source of liquidity to meet these requirements is cash flow from operations and borrowings under the ~~$700.0~~$900.0 million Revolver. Our management believes that cash on hand, cash flows from operations and availability under our Credit Facility will be adequate to support our capital requirements for ~~2015~~2016 through 2017 as disclosed under “Capital Requirements” above.

We have a non-qualified deferred compensation agreement with our Chief Executive Officer (“CEO”). The current agreement, as amended, provides for a lump sum payment upon retirement, no sooner than age 55. As of January 1, 2013, our CEO had reached age 55 and was eligible to receive the payment upon retirement. If our CEO had retired as of September 30, ~~2015,~~2016, we would have had to pay him ~~$7.4~~$7.7 million. Based on our current capitalization, we do not believe that making this payment would materially adversely impact our liquidity.

Except as discussed above, and in the notes to our Unaudited Consolidated Financial Statements included in Part I, Item 1 of this quarterly report on Form 10-Q, we do not have any off-balance sheet arrangements.

Cash and cash equivalents as of September 30, ~~2015~~2016 was ~~$47.1~~$30.1 million, compared to ~~$41.3~~$59.6 million as of December 31, ~~2014.~~2015.

Cash used in operating activities amounted to $11.8 million for the nine months ended September 30, 2016 versus cash provided by operating activities ~~amounted to~~of $111.2 million for the nine months ended September 30, ~~2015 versus~~2015. Cash provided by operating activities during the nine months ended September 30, 2016 was positively impacted by net income attributable to GEO, non-cash expenses such as depreciation and amortization, loss on extinguishment of debt, amortization of debt issuance costs, and stock-based compensation expense. Equity in earnings of affiliates negatively impacted cash. Changes in accounts receivable, prepaid expenses and other assets increased in total by $34.0 million, representing a negative impact on cash. The decrease was primarily driven by new facility activations as well as the timing of billings and collections. Changes in accounts payable, accrued expenses and other liabilities increased by $8.2 million which positively impacted cash. The increase was primarily driven by new facility activations as well as the timing of payments.

Additionally, cash provided by operating activities ~~of $164.6 million~~ for the nine months ended September 30, ~~2014.~~ 2016 was negatively impacted by an increase in changes in contract receivable of $205.1 million. This increase relates to costs incurred and estimated earnings in excess of billings related to the prison project in Ravenhall, Australia. The contract receivable is expected to grow as construction services are performed and will continue to have a negative impact on cash from operating activities until the balance is ultimately settled with the State. In accordance with the contract, the project will not be billed out until completion and commercial acceptance of the facility by the State.

Cash provided by operating activities during the nine months ended September 30, 2015 was positively impacted by net income attributable to GEO, non-cash expenses such as depreciation and amortization, amortization of debt issuance costs, and stock-based compensation expense. Equity in earnings of affiliates negatively impacted cash. Changes in accounts receivable, prepaid expenses and other assets increased in total by $3.1 million, representing a negative impact on cash. The increase was primarily driven by new facility activations as well as the timing of billings and collections. Changes in accounts payable, accrued expenses and other liabilities increased by $6.9 million which positively impacted cash. The increase was primarily driven by new facility activations as well as the timing of payments.

Additionally, cash provided by operating activities for the nine months ended September 30, 2015 was negatively impacted by an increase in changes in contract receivable of $74.5 million. This increase relates to costs incurred and estimated earnings in excess of billings related to the prison project in Ravenhall, Australia. The contract receivable is expected to grow as construction services are performed and will continue to have a negative impact on cash from operating activities until the balance is ultimately settled with the State. In accordance with the contract, the project will not be billed out until completion and commercial acceptance of the facility by the State.

Cash ~~provided by operating~~used in investing activities of $160.9 million during the nine months ended September 30, 2014 was positively impacted by increases in net income attributable to GEO, non-cash expenses such as depreciation and amortization, amortization of debt issuance costs, and stock-based compensation expense. Increases in equity in earnings of affiliates negatively impacted cash. Changes in accounts receivable, prepaid expenses and other assets decreased in total by a net of $22.2 million, representing a positive impact on cash. The decrease2016 was primarily ~~driven by a decrease~~the result of ~~approximately $17.0~~capital expenditures of $68.0 million ~~related to federal~~ and state tax over payments that were included in other current assets at December 31, 2013 which were applied in 2014. The remaining change is due to the timing of billings and collections. Changes in accounts payable, accrued expenses and other liabilities increased by $11.9 million which positively impacted cash. The increase was primarily due to a prepayment from the Residential Treatment Services divestiture of $6.5 million in connection with the termination of the services and license agreement as well as the timing of payments.

~~Cash provided by operating activities in the nine months ended September 30, 2014 was negatively impacted by an increase in~~ changes in ~~contract receivable~~restricted cash of ~~$54.7~~$97.7 million. This increase relates to costs incurred and estimated earnings in excess of billings related to the Ravenhall Project. Refer to Note 11 - Commitments, Contingencies and Other in the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this quarterly report on Form 10-Q. The Contract Receivable is expected to grow as construction services are performed and will continue to have a negative impact on cash from operating activities until the balance is ultimately settled with the State. In accordance with the contract, the project will not be billed out until completion and commercial acceptance of the facility.

Cash used in investing activities of $442.5 million during the nine months ended September 30, 2015 was primarily the result of our business acquisitions of the LCS Facilities and Soberlink in the amount of $307.4 million and $24.4 million, respectively, and capital expenditures of $100.8 million. Cash used in investing activities of $96.3 million during the nine months ended September 30, 2014 was primarily the result of capital expenditures of $77.7 million and cash paid for a business acquisition in the amount of $13.0 million.

Cash provided by financing activities during the nine months ended September 30, ~~2015~~2016 amounted to ~~$340.7~~$142.1 million compared to cash ~~used in~~provided by financing activities of ~~$66.6~~$340.7 million during the nine months ended September 30, ~~2014.~~2015. Cash provided by financing activities during the nine months ended September 30, 2016 was primarily the result of proceeds from long-term debt of $813.1 million which included the issuance of our 6.00% Senior Notes. Additionally, we had proceeds from non-recourse debt of $273.1 million related to construction draws for our prison project in Ravenhall, Australia. These increases were partially offset by a decrease for dividends paid of $146.0 million and payments on long-term debt of $775.3 million which

included the redemption of our 6.625% Senior Notes. Cash provided by financing activities during the nine months ended September 30, 2015 was primarily the result of proceeds from long-term debt of ~~$642~~$642.0 million under our Revolver which was primarily used to fund the acquisition of the LCS Facilities. Additionally, we had proceeds from non-recourse debt of $70.1 million related to construction draws for our prison project in Ravenhall, Australia. These increases were partially offset by a decrease for dividends paid of $138.5 million and payments on long-term debt of $222.7 million. Cash used in financing activities during the nine months ended September 30, 2014 was primarily the result of dividend payments of $124.1 million and debt issuance costs of $23.5 million. This decrease was primarily offset by an increase of $54.7 million for issuance of common stock under our prospectus supplement.

Funds from Operations (“FFO”) is a widely accepted supplemental non-GAAP measure utilized to evaluate the operating performance of real estate investment trusts. It is defined in accordance with the standards established by the National Association of Real Estate Investment Trusts, or NAREIT, which defines FFO as net income (loss) attributable to common shareholders (computed in accordance with Generally Accepted Accounting Principles), excluding real estate related depreciation and amortization, excluding gains and losses from the cumulative effects of accounting changes, extraordinary items and sales of properties, and including adjustments for unconsolidated partnerships and joint ventures.

We also present Normalized Funds From Operations, or Normalized FFO, and Adjusted Funds from Operations, or AFFO, supplemental non-GAAP financial measures of real estate investment trusts’ operating performances.

Normalized FFO is defined as FFO adjusted for certain items which by their nature are not comparable from period to period or that tend to obscure the Company’s actual operating performance, including for the periods presented start-up expenses, ~~and~~net of tax, mergers and acquisitions (“M&A”) related expenses, net of tax and loss on extinguishment of debt, net of tax.

AFFO is defined as Normalized FFO adjusted by adding non-cash expenses such as non-real estate related depreciation and amortization, stock based compensation expense, the amortization of debt issuance costs, discount and/or premium and other non-cash interest, and by subtracting recurring consolidated maintenance capital expenditures.

Because of the unique design, structure and use of our correctional facilities, we believe that assessing the performance of our correctional facilities without the impact of depreciation or amortization is useful and meaningful to investors. Although NAREIT has published its definition of FFO, companies often modify this definition as they seek to provide financial measures that meaningfully reflect their distinctive operations. We have modified FFO to derive Normalized FFO and AFFO that meaningfully reflect our operations. Our assessment of our operations is focused on long-term sustainability. The adjustments we make to derive the non-GAAP measures of Normalized FFO and AFFO exclude items which may cause short-term fluctuations in income from continuing operations but have no impact on our cash flows, or we do not consider them to be fundamental attributes or the primary drivers of our business plan and they do not affect our overall long-term operating performance.

We may make adjustments to FFO from time to time for certain other income and expenses that do not reflect a necessary component of our operational performance on the basis discussed above, even though such items may require cash settlement. Because FFO, Normalized FFO and AFFO exclude depreciation and amortization unique to real estate as well as non-operational items and certain other charges that are highly variable from year to year, they provide our investors with performance measures that reflect the impact to operations from trends in occupancy rates, per diem rates, operating costs and interest costs, providing a perspective not immediately apparent from income from continuing operations. We believe the presentation of FFO, Normalized FFO and AFFO provide useful information to investors as they provide an indication of our ability to fund capital expenditures and expand our business. FFO, Normalized FFO and AFFO provide disclosure on the same basis as that used by our management and provide consistency in our financial reporting, facilitate internal and external comparisons of our historical operating performance and our business units and provide continuity to investors for comparability purposes. Additionally, FFO, Normalized FFO and AFFO are widely recognized measures in our industry as a real estate investment trust.

Our reconciliation of net income attributable to The GEO Group, Inc. to FFO, Normalized FFO and AFFO for the three and nine months ended September 30, ~~2015~~2016 and ~~2014~~2015 is as follows (in thousands):


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
	September 30, 2015			September 30, 2014			September 30, 2015			September 30, 2014			September 30, 2016			September 30, 2015			September 30, 2016			September 30, 2015
Funds From Operations
Net income attributable to The GEO Group, Inc.	$	38,312		$	38,991		$	95,374		$	105,879		$	43,720		$	38,312		$	99,279		$	95,374
Real estate related depreciation and amortization		14,449			13,172			42,826			39,538			15,334			14,449			45,697			42,826

NAREIT Defined FFO		52,761			52,163			138,200			145,417			59,054			52,761			144,976			138,200

Loss on extinguishment of debt, net of tax														—			—			15,885			—
Start-up expenses, net of tax		1,919			—			4,831			—			—			1,919			1,190			4,831

M&A related expenses, net of tax		—			—			2,232			—			—			—			—			2,232

Normalized Funds from Operations	$	54,680		$	52,163		$	145,263		$	145,417		$	59,054		$	54,680		$	162,051		$	145,263

Non-real estate related depreciation and amortization		12,678			10,907			35,802			32,431			13,449			12,678			40,189			35,802
Consolidated maintenance capital expenditures		(5,843	)		(6,025	)		(17,929	)		(15,406	)		(7,526	)		(5,843	)		(18,720	)		(17,929	)
Stock-based compensation expense		3,025			1,730			8,602			6,263			3,186			3,025			9,675			8,602
Amortization of debt issuance costs, discount and/or premium and other non-cash interest		1,770			2,054			4,986			4,453			3,303			1,770			8,330			4,986

Adjusted Funds from Operations	$	66,310		$	60,829		$	176,724		$	173,158		$	71,466		$	66,310		$	201,525		$	176,724

The following discussion contains statements that are not historical statements and, therefore, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those stated or implied in the forward-looking statements. Please refer to “Part I -– Item 1A. Risk Factors” and the “Forward Looking Statements -– Safe Harbor” sections in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2014,~~2015, as well as the “Forward-Looking Statements -– Safe Harbor” section and other disclosures contained in this Form 10-Q for further discussion on forward-looking statements and the risks and other factors that could prevent us from achieving our goals and cause the assumptions underlying the forward-looking statements and the actual results to differ materially from those expressed in or implied by those forward-looking statements.

Domestically, we continue to pursue a number of opportunities for corrections and detention facilities. Continued need for corrections facilities in various states and the need for bed space at the federal level are two of the factors that have contributed to these opportunities.

During the first nine months of 2015, we activated three existing company-owned facilities. In March of 2015, we began the intake process at the company-owned, 400-bed Mesa Verde Detention Facility located in Bakersfield, California under an intergovernmental agreement between the City of McFarland, California and ICE. In early June of 2015, we started the intake process at the company-owned, 1,940-bed Great Plains Correctional Facility in Hinton, Oklahoma under a new 10-year contract with the Federal Bureau of Prisons, which we announced in late December 2014. In late June, we also began the intake

of inmates from the State of Vermont at our company-owned, 1,748-bed North Lake Correctional Facility in Baldwin, Michigan under a five-year agreement with the Vermont Department of Corrections for the out-of-state housing of up to 675 inmates. Under the contract, we will provide comprehensive correctional management services, including the provision of industry-leading, evidence-based offender rehabilitation programs under the ‘GEO Continuum of Care.’ We have also entered into a five-year agreement with the Washington Department of Corrections for the out-of-state housing of up to 1,000 inmates at the North Lake Correctional Facility. In addition to the reactivation of these three existing company-owned facilities, on July 1, 2015, we activated a company-owned, 640-bed expansion at the Adelanto Detention Facility in Adelanto, California under the existing contractual structure with the City of Adelanto and ICE. Furthermore, we expect to complete the development of a 626-bed expansion to the company-owned, 532-bed Karnes County Residential Center in Texas by the end of 2015 under an amendment to our existing contract with Karnes County, Texas and the existing intergovernmental service agreement between Karnes County and ICE. We will finance, develop, and manage the $36 million expansion, which will increase the facility’s total capacity to 1,158 beds. Additionally, we recently signed new contracts with ICE for the continued management of our company-owned, 700-bed Broward Transition Center in Pompano Beach, Florida and our company-owned, 1,575-bed Northwest Detention Center in Tacoma, Washington.

We continue to be encouraged by ~~opportunities as discussed above;~~the current landscape of growth opportunities; however any positive trends may, to some extent, be adversely impacted by government budgetary constraints or any changes to the government’s willingness to maintain or grow public-private partnerships in the future. While state finances overall are stable, and revenue collections are meeting expectations in a majority of states, at least 12 states expect a budget shortfall in fiscal year 2015, according to a survey conducted in the fall of 2014 by the National Conference of State Legislatures. As a result offuture budgetary pressures may cause state correctional agencies ~~may~~to pursue a number of cost savings initiatives which may include reductions in per diem rates and/or the scope of services provided by private operators. These potential cost savings initiatives could have a material adverse impact on our current operations and/or our ability to pursue new business opportunities. Additionally, if state budgetary

constraints, as discussed above, persist or intensify, our state customers’ ability to pay us may be impaired and/or we may be forced to renegotiate our management contracts on less favorable terms and our financial condition, results of operations or cash flows could be materially adversely impacted. We plan to actively bid on any new projects that fit our target profile for profitability and operational risk. Although we are pleased with the overall industry outlook, positive trends in the industry may be offset by several factors, including budgetary constraints, ~~unanticipated~~contract modifications, contract terminations, contract non-renewals, and/or contract ~~re-bids.~~re-bids, including those contract actions that may occur in the future as a result of the August 2016 announcement by the DOJ which stated that the BOP should either decline to renew or substantially reduce the scope of contract renewals in a manner consistent with law and the overall decline of the BOP’s inmate population, the announcement by the Department of Homeland Security instructing the Homeland Security Advisory Council, or HSAC, to review ICE’s current policy and practices relating to its use of private immigration detention operations and evaluate whether ICE should move in the same direction as the BOP and the impact of any other potential changes to the willingness to maintain or grow public-private partnerships on the part of other government agencies. We believe we have a strong relationship with our government partners and we believe that we operate facilities that maximize security and efficiency while offering our suite of GEO Continuum of Care services and resources. Although we have historically had a relatively high contract renewal rate, there can be no assurance that we will be able to renew our expiring management contracts on favorable terms, or at all. Also, while we are pleased with our track record in re-bid situations, we cannot assure that we will prevail in any such future situations.

Internationally, we are exploring a number of opportunities in our current markets and will continue to actively bid on any opportunities that fit our target profile for profitability and operational risk. In September 2014, we announced that a consortium led by us and comprised of The GEO Group Australia Pty. Ltd., John Holland Construction and Honeywell signed a contract with the Department of Justice in the State of Victoria for the development and operation of a 1,300-bed capacity prison in Ravenhall, Australia. The Ravenhall facility will be developed under a public-private partnership financing structure with a capital contribution from us of approximately AUD 115 million, or $87.8 million, based on exchange rates as of September 30, 2016, and we anticipate returns on investment consistent with our company-owned facilities.

With respect to our reentry services, electronic monitoring services, and youth services business conducted through our GEO Care business segment, we are currently pursuing a number of business development opportunities. Relative to opportunities for community-based reentry services, we are working with our existing federal, state, and local correctional clients to leverage new opportunities for both residential reentry facilities as well as non-residential day reporting centers. We continue to expend resources on informing federal, state and local governments about the benefits of public-private partnerships, and we anticipate that there will be new opportunities in the future as those efforts ~~begin~~continue to yield results. We believe we are well positioned to capitalize on any suitable opportunities that become available in this area.

Operating expenses consist of those expenses incurred in the operation and management of our contracts to provide services to our governmental clients. Labor and related ~~cost~~costs represented ~~55.7%~~50.1% of our operating expenses during the nine months ended

September 30, ~~2015.~~2016. Additional significant operating expenses include food, utilities and inmate medical costs. During the nine months ended September 30, ~~2015,~~2016, operating expenses totaled ~~74.3%~~76.0% of our consolidated revenues. Our operating expenses as a percentage of revenues in ~~2015~~2016 will be impacted by the opening of any new or existing idle facilities as a result of the cost of transitioning and/or start-up operations related to a facility opening. During ~~2015,~~2016, we will incur carrying costs for facilities that are currently vacant. As of September 30, ~~2015,~~2016, our worldwide operations include the management and/or ownership of approximately 87,000 beds at 104 correctional and detention facilities, including idle facilities, projects under development and recently awarded contracts, and also include the provision of community supervision services for more than 127,000 offenders and ~~pre-trial~~pretrial defendants, including approximately 83,000 individuals through an array of technology products including radio frequency, GPS, and alcohol monitoring devices.

General and administrative expenses consist primarily of corporate management salaries and benefits, professional fees and other administrative expenses. During the nine months ended September 30, ~~2015,~~2016, general and administrative expenses totaled ~~7.3%~~

6.7% of our consolidated revenues. We expect general and administrative expenses as a percentage of revenues in ~~2015~~2016 to remain consistent or decrease as a result of cost savings ~~initiatives and decreases in nonrecurring costs related to our REIT conversion.~~initiatives. We expect business development costs to remain consistent or increase slightly as we pursue additional business development opportunities in all of our business lines. We also plan to continue expending resources from time to time on the evaluation of potential acquisition targets.

We are currently marketing approximately ~~3,422~~3,300 vacant beds at four of our idle facilities to potential customers. The annual carrying cost of our idle facilities in ~~2015~~2016 is estimated to be ~~$13.7~~$12.8 million, including depreciation expense of ~~$0.9~~$1.5 million. As of September 30, ~~2015,~~2016, these facilities had a net book value of ~~$34.5~~$34.2 million. We currently do not have any firm commitment or agreement in place to activate these facilities. Historically, some facilities have been idle for multiple years before they received a new contract award. These idle facilities are included in the U.S. Corrections & Detention segment. The per diem rates that we charge our clients often vary by contract across our portfolio. However, if all of these idle facilities were to be activated using our U.S. Corrections & Detention average per diem rate ~~through September 30,~~in 2015 (calculated as the U.S. Corrections & Detention revenue divided by the number of U.S. Corrections & Detention mandays) and based on the average occupancy rate in our U.S. Corrections & Detention facilities ~~for 2015,~~through September 30, 2016, we would expect to receive incremental annualized revenue of approximately ~~$76~~$70 million and an annualized increase in earnings per share of approximately $0.20 to $0.25 per share based on our average U.S. Corrections and Detention operating margin.

We are exposed to market risks related to changes in interest rates with respect to our Credit Facility. Payments under the Credit Facility are indexed to a variable interest rate. Based on borrowings outstanding under the Credit Facility of ~~$783.3~~$764.8 million and ~~$58.1~~$53.6 million in outstanding letters of credit, as of September 30, ~~2015,~~2016, for every one percent increase in the average interest rate applicable to the Credit Facility, our total annual interest expense would increase by ~~$7.8~~$7.6 million.

We have entered into certain interest rate swap arrangements for hedging purposes, fixing the interest rate on our Australian non-recourse debt related to the Fulham facility to 9.7%. We have also entered into certain interest rate swap arrangements for hedging purposes, fixing the interest rates on our Australian non-recourse debt related to our Ravenhall Project to 3.3% during the design and construction phase and 4.2% during the operating phase. The difference between the floating rate and the swap rate on these instruments is recognized in interest expense within the respective entity. Because the interest rates with respect to these instruments are fixed, a hypothetical one percent change in the current interest rate would not have a material impact on our financial condition or results of operations.

Additionally, we invest our cash in a variety of short-term financial instruments to provide a return. ~~The majority of our cash is invested internationally.~~ These instruments generally consist of highly liquid investments with original maturities at the date of purchase of three months or less. While these instruments are subject to interest rate risk, a hypothetical 100 basis point increase or decrease in market interest rates would not have a material impact on our financial condition or results of operations.

We are also exposed to market risks related to fluctuations in foreign currency exchange rates between the U.S. dollar, and the Australian dollar, the ~~Canadian dollar, the~~ South African Rand and the British Pound currency exchange rates. Based upon our foreign currency exchange rate exposure at September 30, ~~2015,~~2016, every 10 percent change in historical currency rates would have approximately a ~~$3.4~~$1.4 million effect on our financial position and approximately a ~~$0.7~~$0.9 million impact on our results of operations during the ~~nine~~three months ended September 30, ~~2015.~~2016.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, referred to as the Exchange Act), as of the end of the period covered by this report. On the basis of this review, our management, including our Chief Executive Officer and our Chief Financial Officer, has concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to give reasonable assurance that the information required to be disclosed in our reports filed with the SEC, under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and to ensure that the information required to be disclosed in the reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

It should be noted that the effectiveness of our system of disclosure controls and procedures is subject to certain limitations inherent in any system of disclosure controls and procedures, including the exercise of judgment in designing, implementing and evaluating the controls and procedures, the assumptions used in identifying the likelihood of future events, and the inability to eliminate misconduct completely. Accordingly, there can be no assurance that our disclosure controls and procedures will detect all errors or fraud. As a result, by its nature, our system of disclosure controls and procedures can provide only reasonable assurance regarding management’s control objectives.

Our management is responsible to report any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management believes that there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the period to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The information required herein is incorporated by reference from Note 11 -– Commitments, Contingencies and Other in the Notes to the Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2014~~2015 filed on February 26, 2016 (the “2015 Form 10-K”) includes a detailed discussion of the risk factors that could materially affect our business, financial condition or future prospects. Set forth below is a discussion of the material changes in our risk factors previously disclosed in the 2015Form 10-K. The information below updates, and should be read in conjunction with, the risk factors in our 2015 Form 10-K. We encourage you to read these risk factors in their entirety.

Legislative or other actions affecting REITs could have a negative effect on us.

The rules dealing with U.S. federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the U.S. Department of the Treasury (the “Treasury”). Changes to the tax laws or interpretations thereof, with or without retroactive application, could materially and adversely affect our investors or us. We cannot predict how changes in the tax laws might affect our investors or us. Additionally, legislative bills or proposals have been introduced from time to time with the aim of limiting or restricting the types of industries or companies that can qualify as a REIT. New legislation, Treasury regulations, administrative interpretations or court decisions implemented or adopted in the future could significantly and negatively affect our ability to qualify as a REIT or the U.S. federal income tax consequences to our investors and us of such qualification.

We partner with a limited number of governmental customers who account for a significant portion of our revenues. The loss of, or a significant decrease in revenues from, these customers could seriously harm our financial condition and results of operations.

We currently derive, and expect to continue to derive, a significant portion of our revenues from a limited number of governmental agencies. Of our governmental partners, four customers, through multiple individual contracts, accounted for 45.5% and 47.5% of our consolidated revenues for the year ended December 31, 2015 and the nine months ended September 30, 2016, respectively. In addition, three federal governmental agencies with correctional and detention responsibilities, the Bureau of Prisons, ICE, and the U.S. Marshals Service, accounted for 44.9% and 47.0% of our total consolidated revenues for the year ended December 31, 2015 and the nine months ended September 30, 2016, respectively, through multiple individual contracts, with the Bureau of Prisons accounting for 15.6% and 14.2% of our total consolidated revenues for such periods, ICE accounting for 17.7% and 22.7% of our total consolidated revenues for such periods, and the U.S. Marshals Service accounting for 11.6% and 10.2% of our total consolidated revenues for such periods. However, no individual contract with these clients accounted for more than 5.0% of our total consolidated revenues for such periods. Government agencies from the State of Florida accounted for 6.1% and 5.3% of our total consolidated revenues for the year ended December 31, 2015 and the nine months ended September 30, 2016, respectively, through multiple individual contracts.

Our revenues depend on our governmental customers receiving sufficient funding and providing us with timely payment under the terms of our contracts. If the applicable governmental customers do not receive sufficient appropriations to cover their contractual obligations, they may delay or reduce payment to us or terminate their contracts with us. With respect to our federal government customers, any future impasse or struggle impacting the federal government’s ability to reach agreement on the federal budget, debt ceiling or any future federal government shut downs could result in material payment delays, payment reductions or contract terminations. Additionally, our governmental customers may request in the future that we reduce our per diem contract rates or forego increases to those rates as a way for those governmental customers to control their spending and address their budgetary shortfalls.

Our governmental customers may also from time to time adopt, implement or modify certain policies or directives that may adversely affect our business. For example, in August 2016, the DOJ issued a memorandum directed to the BOP which stated that the BOP should either decline to renew or substantially reduce the scope of contract renewals in a manner consistent with law and the overall decline of the BOP’s inmate population. Although we believe we have a strong relationship with our government partner, the BOP, and we believe we operate facilities that maximize security and efficiency while offering our suite of GEO Continuum of Care services and resources, the BOP may decide to terminate, not renew, or reduce the scope of our existing contracts with them as a result of the announcement by the DOJ. Additionally, and in light of the DOJ announcement, in August, the Department of Homeland Security instructed the Homeland Security Advisory Council, or HSAC, to review ICE’s current policy and practices relating to its use of private immigration detention operations and evaluate whether ICE should move in the same direction as the BOP. Other federal, state or local governmental partners may choose to undertake a review of their utilization of privately operated facilities, or may cancel or decide not to renew our existing contracts with them. The loss of, or a significant decrease in, our current contracts with the BOP, ICE, the U.S. Marshals Service, the State of Florida or any other significant customers could seriously harm our financial condition and results of operations. We expect these federal and state agencies and a relatively small group of other governmental customers to continue to account for a significant percentage of our revenues.

Public resistance to the use of public-private partnerships for correctional, detention and community based facilities could result in our inability to obtain new contracts or the loss of existing contracts, which could have a material adverse effect on our business, financial condition and results of operations.

The management and operation of correctional, detention and community based facilities under public-private partnerships has not achieved complete acceptance by either government agencies or the public. Some governmental agencies have limitations on their ability to delegate their traditional management responsibilities for such facilities to private companies or they may be instructed by a governmental agency or authority overseeing them to reduce their utilization or scope of public-private partnerships or undertake additional reviews of their public-private partnerships. Additional legislative or policy changes or prohibitions could occur that further increase these limitations or instructions. In addition, the movement toward using public-private partnerships for such facilities has encountered resistance from groups which believe that correctional, detention and community based facilities should only be operated by governmental agencies. In addition, negative publicity about conditions, an escape, riot or other disturbance at a facility operated under a public-private partnership may result in adverse publicity to us and public-private partnerships in general. Any of these occurrences or continued trends may make it more difficult for us to renew or maintain existing contracts or to obtain new contracts. Increased public resistance to the use of public-private partnerships for correctional, detention and community based facilities in any of the markets in which we operate, as a result of these or other factors, could have a material adverse effect on our business, financial condition and results of operations.

The trading prices of equity securities issued by REITs have historically been affected by changes in market interest rates. One of the factors that may influence the market price of our common stock is the annual yield from distributions on our common stock as compared to yields on other financial instruments. An increase in market interest rates, or a decrease in our distributions to shareholders, may lead prospective purchasers of our shares to demand a higher annual yield, which could reduce the market price of our common stock.

Other factors that could affect the market price of our common stock include the following:

In August 2016, the DOJ issued a memorandum directed to the BOP which stated that the BOP should either decline to renew or substantially reduce the scope of contract renewals in a manner consistent with law and the overall decline of the BOP’s inmate populations. After that announcement, the market price of our common stock declined. We were subsequently named as a defendant in a punitive securities class action lawsuit as described in Note 11, Commitments, Contingencies and Other in the Notes to the Unaudited Consolidated Financial Statements. This litigation could result in substantial costs and a diversion of management’s attention and resources, which could adversely affect our business and the market price of our stock.

(1) The Company withheld these shares through net share settlements to satisfy minimum statutory tax withholding requirements upon vesting of shares of restricted stock held by employees. These purchases were not made as part of a publicly announced plan or program.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


PART I -– FINANCIAL INFORMATION		3

ITEM 1.	FINANCIAL STATEMENTS		3

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2015~~2016 AND ~~2014~~2015			3

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, ~~2015~~2016 AND ~~2014~~2015			4

CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, ~~2015~~2016 (UNAUDITED) AND DECEMBER 31, ~~2014~~2015			5

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, ~~2015~~2016 AND ~~2014~~2015			6

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS			7

ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		3839

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		60

~~ITEM 4.~~	~~CONTROLS AND PROCEDURES~~		60

~~PART II - OTHER INFORMATION~~			61

~~ITEM 1.~~	~~LEGAL PROCEEDINGS~~		61

~~ITEM 1A.~~	~~RISK FACTORS~~		61

~~ITEM 2.~~	~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~		61

~~ITEM 3.~~	~~DEFAULTS UPON SENIOR SECURITIES~~		61

~~ITEM 4.~~	~~MINE SAFETY DISCLOSURES~~		61

~~ITEM 5.~~	~~OTHER INFORMATION~~		61

~~ITEM 6.~~	~~EXHIBITS~~		62
ITEM 4. CONTROLS AND PROCEDURES		62
~~SIGNATURES~~PART II – OTHER INFORMATION		63
ITEM 1. LEGAL PROCEEDINGS		63
ITEM 1A. RISK FACTORS		63
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		65
ITEM 3. DEFAULTS UPON SENIOR SECURITIES		66
ITEM 4. MINE SAFETY DISCLOSURES		66
ITEM 5. OTHER INFORMATION		66
ITEM 6. EXHIBITS		66
SIGNATURES		67


Accounts receivable	$	9,338
Prepaid expenses and other current assets		183
Property and equipment		119,726
Intangible assets		73,200

Total assets acquired		202,447
Accounts payable and accrued expenses		2,442

Total identifiable net assets		200,005
Goodwill		107,398

Total consideration paid	$	307,403


	Nine Months Ended September 30, 2015
	(In thousands)
	Foreign currency translation adjustments, net of tax attributable to The GEO Group, Inc. (1)			Unrealized (loss)/gain on derivatives, net of tax			Pension adjustments, net of tax			Total
Balance, December 31, 2014	$	(6,903	)	$	(16,322	)	$	(4,236	)	$	(27,461	)
Current-period other comprehensive (loss) income		(4,916	)		(2,453	)		120			(7,249	)

Balance, September 30, 2015	$	(11,819	)	$	(18,775	)	$	(4,116	)	$	(34,710	)


	Nine Months Ended September 30, 2016
	(In thousands)
	Foreign currency translation adjustments, net of tax attributable to The GEO Group, Inc. (1)			Unrealized (loss)/gain on derivatives, net of tax			Pension adjustments, net of tax			Total
Balance, December 31, 2015	$	(11,747	)	$	(17,697	)	$	(2,960	)	$	(32,404	)
Current-period other comprehensive (loss) income		2,062			(5,162	)		98			(3,002	)

Balance, September 30, 2016	$	(9,685	)	$	(22,859	)	$	(2,862	)	$	(35,406	)


Accounts receivable and other current assets	$	295
Inventory		385
Intangible assets		15,200

Total assets acquired		15,880
Accounts payable		18
Deferred tax and other tax liabilities		6,176

Total identifiable net assets		9,686
Goodwill		14,716

Total consideration paid	$	24,402


Fiscal Year	Total Amortization Expense
Remainder of 2015	$	4,904
2016		20,359
2017		20,327
2018		17,468
2019		17,140
Thereafter		103,929

	$	184,127


	Shares			Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Term (years)		Aggregate Intrinsic Value
	(in thousands)							(in thousands)
Options outstanding at December 31, 2014		664		$	23.89		6.77	$	10,935
Options granted		256			43.15
Options exercised		(109	)		22.63
Options forfeited/canceled/expired		(35	)		37.76

Options outstanding at September 30, 2015		776		$	29.90		7.04	$	3,506

Options vested and expected to vest at September 30, 2015		737		$	29.41		6.94	$	3,498

Options exercisable at September 30, 2015		454		$	23.98		5.70	$	3,390


	Shares			Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Term (years)		Aggregate Intrinsic Value
	(in thousands)							(in thousands)
Options outstanding at December 31, 2015		749		$	29.98		6.85	$	3,057
Options granted		295			29.39
Options exercised		(108	)		21.25
Options forfeited/canceled/expired		(62	)		34.84

Options outstanding at September 30, 2016		874		$	30.50		7.21	$	876

Options vested and expected to vest at September 30, 2016		827		$	30.33		7.11	$	876

Options exercisable at September 30, 2016		469		$	27.37		5.84	$	876


	2015		Effective Rate			2014		Effective Rate			$ Change			% Change
	(Dollars in thousands)
Income Taxes	$	1,758		4.5	%	$	5,537		12.9	%	$	(3,779	)		(68.2	)%


Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2015 - July 31, 2015		—	$	—		—	$	—
August 1, 2015 - August 31, 2015		29,035	$	32.97		—	$	—
September 1, 2015 - September 30, 2015		277	$	29.33		—	$	—

Total		29,312	$	—		—	$	—


Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
July 1, 2016 – July 31, 2016		—	$	—		—	$	—
August 1, 2016 – August 31, 2016		2,199	$	31.11		—	$	—
September 1, 2016 – September 30, 2016		—	$	—		—	$	—

Total		2,199				—	$	—



10.1		Letter of Offer, dated August 18, 2016, between The GEO Group, Inc. and HSBC Bank Australia Limited (incorporated by reference from Exhibit 10.1 to the Form 8-K filed on August 24, 2016.

31.1		SECTION 302 CEO Certification.

31.2		SECTION 302 CFO Certification.

32.1		SECTION 906 CEO Certification.

32.2		SECTION 906 CFO Certification.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase

101.DEF		XBRL Taxonomy Extension Definition Linkbase

101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase


				THE GEO GROUP, INC.

Date: November ~~6, 2015~~8, 2016				/s/ Brian R. Evans
				Brian R. Evans
				Senior Vice President & Chief Financial Officer
				(duly authorized officer and principal financial officer)

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