ThZeal - The Zeal

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2023

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

For the transition period from ______ to_______

Commission file number: 1-14260

The GEO Group, Inc.

(Exact name of registrant as specified in its charter)


Florida		65-0043078
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

4955 Technology Way Boca Raton, Florida		33431
(Address of principal executive offices)		(Zip Code)

(561) 893-0101

(Registrant’s telephone number, including area code)

N/A

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

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	GEO	New York Stock Exchange

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

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

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


Large accelerated filer	☑	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

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

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

As of November 6, 2023, the registrant had 126,104,359 shares of common stock outstanding.

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION	3
ITEM 1. FINANCIAL STATEMENTS	3
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022	3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022	4
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 2023 (UNAUDITED) AND DECEMBER 31, 2022	5
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022	6
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS	7
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	52
ITEM 4. CONTROLS AND PROCEDURES	52
PART II - OTHER INFORMATION	53
ITEM 1. LEGAL PROCEEDINGS	53
ITEM 1A. RISK FACTORS	55
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	55
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	55
ITEM 4. MINE SAFETY DISCLOSURES	56
ITEM 5. OTHER INFORMATION	56
ITEM 6. EXHIBITS	57
SIGNATURES	58

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE GEO GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2023 AND 2022

(In thousands, except per share data)


	Three Months						Nine Months
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Revenues	$	602,785		$	616,683		$	1,804,885		$	1,756,045
Operating expenses		440,667			436,210			1,302,287			1,233,162
Depreciation and amortization		31,173			32,330			94,787			100,284
General and administrative expenses		47,356			50,022			139,182			147,878
Operating income		83,589			98,121			268,629			274,721
Interest income		1,320			5,111			3,785			16,301
Interest expense		(55,777	)		(46,537	)		(165,081	)		(111,383	)
Loss on extinguishment of debt		(91	)		(37,487	)		(1,845	)		(37,487	)
Gain on asset divestitures		1,274			29,279			3,449			32,332
Income before income taxes and equity in earnings of affiliates		30,315			48,487			108,937			174,484
Provision for income taxes		6,521			11,246			30,036			48,106
Equity in earnings of affiliates, net of income tax provision of $67, $189, $581 and $464, respectively		709			1,071			3,121			3,786
Net income		24,503			38,312			82,022			130,164
Net loss attributable to noncontrolling interests		16			25			71			119
Net income attributable to The GEO Group, Inc.	$	24,519		$	38,337		$	82,093		$	130,283

Weighted-average common shares outstanding:
Basic		122,066			121,154			121,850			120,998
Diluted		123,433			122,426			123,479			121,907
Net income per common share attributable to The GEO Group, Inc.:
Basic:
Net income per common share attributable to The GEO Group, Inc.-basic	$	0.17		$	0.26		$	0.56		$	0.89
Diluted:
Net income per common share attributable to The GEO Group, Inc.-diluted	$	0.16		$	0.26		$	0.55		$	0.89

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

THE GEO GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2023 AND 2022

(In thousands)


	Three Months						Nine Months
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Net income	$	24,503		$	38,312		$	82,022		$	130,164
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments		(2,852	)		(2,247	)		(5,242	)		(11,648	)
Change in marketable securities, net of tax provision (benefit) of $0, $(129), $253 and $(331), respectively		—			(487	)		953			(1,245	)
Pension liability adjustment, net of tax provision of $0, $23, $0 and $68, respectively		—			86			—			256
Change in fair value of derivative instrument classified as cash flow hedge, net of tax provision of $364, $498, $311 and $1,660, respectively		1,370			1,873			1,170			6,247
Total other comprehensive loss, net of tax		(1,482	)		(775	)		(3,119	)		(6,390	)
Total comprehensive income		23,021			37,537			78,903			123,774
Comprehensive loss attributable to noncontrolling interests		15			2			44			88
Comprehensive income attributable to The GEO Group, Inc.	$	23,036		$	37,539		$	78,947		$	123,862

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

THE GEO GROUP, INC.

CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, 2023 AND DECEMBER 31, 2022

(In thousands, except share data)


	September 30, 2023			December 31, 2022
	(Unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	141,020		$	95,073
Accounts receivable, less allowance for doubtful accounts of $1,066 and $809, respectively		356,501			416,399
Prepaid expenses and other current assets		41,138			43,536
Total current assets		538,659			555,008
Restricted Cash and Investments		130,729			111,691
Property and Equipment, Net		1,951,524			2,002,021
Assets Held for Sale		5,130			480
Operating Lease Right-of-Use Assets, Net		106,552			90,950
Deferred Income Tax Assets		8,005			8,005
Goodwill		755,178			755,199
Intangible Assets, Net		138,271			147,688
Other Non-Current Assets		90,335			89,341
Total Assets	$	3,724,383		$	3,760,383
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	66,758		$	79,312
Accrued payroll and related taxes		78,568			53,225
Accrued expenses and other current liabilities		200,187			237,369
Operating lease liabilities, current portion		24,506			22,584
Current portion of finance lease liabilities and long-term debt		63,307			44,722
Total current liabilities		433,326			437,212
Deferred Income Tax Liabilities		75,849			75,849
Other Non-Current Liabilities		79,797			74,008
Operating Lease Liabilities		86,849			73,801
Finance Lease Liabilities		740			1,280
Long-Term Debt, Net		1,789,273			1,933,145
Commitments, Contingencies and Other Matters (Note 11)
Shareholders’ Equity
Preferred stock, $0.01 par value, 30,000,000 shares authorized, none issued or outstanding		—			—
Common stock, $0.01 par value, 187,500,000 shares authorized, 130,281,035 and 128,912,410 issued and 126,071,188 and 124,060,038 outstanding, respectively		1,303			1,289
Additional paid-in capital		1,295,983			1,291,363
Retained earnings (accumulated deficit)		77,857			(4,236	)
Accumulated other comprehensive loss		(20,065	)		(16,919	)
Treasury stock, 4,209,847 shares, at cost, respectively		(95,175	)		(105,099	)
Total shareholders’ equity attributable to The GEO Group, Inc.		1,259,903			1,166,398
Noncontrolling interests		(1,354	)		(1,310	)
Total shareholders’ equity		1,258,549			1,165,088
Total Liabilities and Shareholders’ Equity	$	3,724,383		$	3,760,383

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

THE GEO GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 2023 AND 2022

(In thousands)


	Nine Months
	September 30, 2023			September 30, 2022
Cash Flow from Operating Activities:
Net income	$	82,022		$	130,164
Net loss attributable to noncontrolling interests		71			119
Net income attributable to The GEO Group, Inc.		82,093			130,283
Adjustments to reconcile net income attributable to The GEO Group, Inc. to net cash provided by operating activities:
Depreciation and amortization expense		94,787			100,284
Stock-based compensation		12,052			13,010
Loss on extinguishment of debt		1,845			37,487
Amortization of debt issuance costs, discount and/or premium and other non-cash interest		8,963			6,211
Provision for doubtful accounts		412			133
Equity in earnings of affiliates, net of tax		(3,121	)		(3,786	)
Dividends received from unconsolidated joint ventures		2,283			2,706
Gain on sale/disposal of property and equipment, net		(724	)		(1,101	)
Gain on assets held for sale		(1,274	)		—
Gain on asset divestitures, net		—			(32,332	)
Changes in assets and liabilities, net of effects of acquisitions:
Changes in accounts receivable, prepaid expenses and other assets		45,059			(34,407	)
Changes in accounts payable, accrued expenses and other liabilities		(9,655	)		9,064
Net cash provided by operating activities		232,720			227,552
Cash Flow from Investing Activities:
Proceeds from sale of property and equipment		2,690			1,647
Proceeds from sale of real estate and other assets		15,109			99,812
Change in restricted investments		(2,644	)		(5,544	)
Capital expenditures		(53,569	)		(72,233	)
Net cash (used in) provided by investing activities		(38,414	)		23,682
Cash Flow from Financing Activities:
Proceeds from long-term debt		—			50,000
Payments on long-term debt		(131,359	)		(676,114	)
Payments on non-recourse debt		—			(1,302	)
Proceeds from sale of treasury shares		5,750			—
Taxes paid related to net share settlements of equity awards		(3,442	)		(1,301	)
Proceeds from issuance of common stock in connection with ESPP		117			150
Debt issuance costs		—			(41,536	)
Proceeds from the exercise of stock options		85			—
Net cash used in financing activities		(128,849	)		(670,103	)
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash and Cash Equivalents		(3,116	)		(8,080	)
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash and Cash Equivalents		62,341			(426,949	)
Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, beginning of period		143,843			548,322
Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, end of period	$	206,184		$	121,373
Supplemental Disclosures:
Non-cash Investing and Financing activities:
Right-of-use assets obtained from operating lease liabilities	$	32,768		$	8,924
Principal Exchanges of Debt	$	—		$	1,620,318
Debt issuance costs in accrued expenses	$	3,850		$	11,245
Capital expenditures in accounts payable and accrued expenses	$	2,409		$	4,842

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

THE GEO GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The GEO Group, Inc., a Florida corporation, and subsidiaries (the “Company” or “GEO”) specialize in the ownership, leasing and management of secure facilities, processing centers and community reentry centers in the United States, Australia and South Africa. The Company owns, leases and operates a broad range of facilities including maximum, medium and minimum security facilities, processing centers, as well as community-based reentry facilities and offers an expanded delivery of rehabilitation services under its 'GEO Continuum of Care' platform. The 'GEO Continuum of Care' platform integrates enhanced rehabilitative programs, which are evidence-based and include cognitive behavioral treatment and post-release services, and provides academic and vocational classes in life skills and treatment programs while helping individuals reintegrate into their communities. The Company develops new facilities based on contract awards, using its project development expertise and experience to design, construct and finance what it believes are state-of-the-art facilities that maximize security and efficiency. The Company provides innovative compliance technologies, industry-leading monitoring services, and evidence-based supervision and treatment programs for community-based parolees, probationers and pretrial defendants. The Company also provides secure transportation services for individuals as contracted domestically and in the United Kingdom through its joint venture GEOAmey Ltd. (“GEOAmey”). At September 30, 2023, the Company’s worldwide operations include the management and/or ownership of approximately 81,000 beds at 100 facilities, including idle facilities, and also include the provision of community supervision services for more than 400,000 individuals on average, including nearly 180,000 individuals through an array of technology products including radio frequency, GPS, and alcohol monitoring devices.

GEO operated as a real estate investment trust ("REIT") from January 1, 2013 through December 31, 2020. As a REIT, the Company provided services and conducted other business activities through taxable REIT subsidiaries ("TRSs"). A TRS is a subsidiary of a REIT that is subject to applicable corporate income tax rates and certain qualification requirements. The Company's use of TRSs permitted GEO to engage in certain business activities in which the REIT could not engage directly, so long as those activities were conducted in entities that elected to be treated as TRSs under the Internal Revenue Code of 1986, as amended (the “Code”), and enabled GEO to, among other things, provide correctional services at facilities it owns and at facilities owned by its government partners. A TRS is not subject to the distribution requirements applicable to REITs so it may retain income generated by its operations for reinvestment.

On December 2, 2021, the Company announced that its board of directors (the “Board”) unanimously approved a plan to terminate the Company's REIT status and become a taxable C Corporation, effective for the year ended December 31, 2021. As a result, the Company is no longer required to operate under REIT rules, including the requirement to distribute at least 90% of REIT taxable income to its shareholders, which provides the Company with greater flexibility to use its free cash flow. Effective January 1, 2021, the Company was subject to federal and state income taxes on its taxable income at applicable tax rates and was no longer entitled to a tax deduction for dividends paid. The Company operated as a REIT for the 2020 tax year, and existing REIT requirements and limitations remained in place until December 31, 2020. In connection with terminating the Company’s REIT status, the Board also voted unanimously to discontinue the Company's quarterly dividend in late 2021.

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 (“GAAP”) 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 27, 2023 for the year ended December 31, 2022. The accompanying December 31, 2022 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, 2022. 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, 2023 are not necessarily indicative of the results for the entire year ending December 31, 2023, or for any other future interim or annual periods.

2. GOODWILL AND OTHER INTANGIBLE ASSETS

The Company has recorded goodwill as a result of its various business combinations. Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the tangible assets and intangible assets acquired net of liabilities assumed, including noncontrolling interests. Changes in the Company's goodwill balances from January 1, 2023 to September 30, 2023 are as follows (in thousands):


	January 1, 2023		Foreign Currency Translation			September 30, 2023
U.S. Secure Services	$	316,366	$	—		$	316,366
Electronic Monitoring and Supervision Services		289,570		—			289,570
Reentry Services		148,873		—			148,873
International Services		390		(21	)		369
Total Goodwill	$	755,199	$	(21	)	$	755,178

The Company has also recorded other finite and indefinite-lived intangible assets as a result of its various business combinations. The Company's intangible assets include facility management contracts and trade names and technology, as follows (in thousands):


	September 30, 2023									December 31, 2022
	Weighted Average Useful Life (years)		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Facility management contracts		16.3	$	308,326	$	(215,255	)	$	93,071	$	308,350	$	(206,367	)	$	101,983
Technology		7.3		33,700		(33,700	)		—		33,700		(33,195	)		505
Trade names	Indefinite			45,200		—			45,200		45,200		—			45,200
Total acquired intangible assets			$	387,226	$	(248,955	)	$	138,271	$	387,250	$	(239,562	)	$	147,688

Amortization expense was $9.4 million and $14.8 million for the nine months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, the weighted average period before the next contract renewal or extension for the acquired facility management contracts was approximately 3.1 years.

Estimated amortization expense related to the Company's finite-lived intangible assets for the remainder of 2023 through 2027 and thereafter is as follows (in thousands):


Fiscal Year	Total Amortization Expense
Remainder of 2023	$	2,383
2024		9,305
2025		9,263
2026		7,170
2027		6,860
Thereafter		58,090
	$	93,071

3. FINANCIAL INSTRUMENTS

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, 2023 and December 31, 2022 (in thousands):


			Fair Value Measurements at September 30, 2023
	Carrying Value at September 30, 2023		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Restricted investment:
Rabbi Trusts	$	45,910	$	7,014	$	38,896	$	—
Marketable equity and fixed income securities		49,360		22,691		26,669		—
Interest rate swap derivatives		6,094		—		6,094		—


			Fair Value Measurements at December 31, 2022
	Carrying Value at December 31, 2022		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Restricted investments:
Rabbi Trust	$	36,982	$	—	$	36,982	$	—
Marketable equity and fixed income securities		25,939		—		25,939		—
Interest rate swap derivatives		4,613		—		4,613		—

The Company’s Level 2 financial instruments included in the tables above as of September 30, 2023 and December 31, 2022 consist of interest rate swap derivative assets/liabilities held by GEO, investments in equity and fixed income mutual funds held in the Company’s captive insurance subsidiary, Florina and the Company's rabbi trust established for employer contributions to The GEO Group, Inc. Non-qualified Deferred Compensation Plan. The Company's Level 1 financial instruments included in the table above as of September 30, 2023 consist of money market funds held in Florina and money market funds held in the Company's rabbi trust established for its Executive Chairman's retirement account.

The interest rate swap derivative assets are valued using a discounted cash flow model based on projected borrowing rates. The Company's restricted investment in the rabbi trust for The GEO Group, Inc. Non-qualified Deferred Compensation Plan 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 accounts. The underlying assets are equity and fixed income pooled funds. The marketable equity and fixed income securities are valued using quoted rates.

4. FAIR VALUE OF ASSETS AND LIABILITIES

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, 2023 and December 31, 2022 (in thousands):


			Estimated Fair Value Measurements at September 30, 2023
	Carrying Value as of September 30, 2023		Total Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	141,020	$	141,020	$	141,020	$	—	$	—
Restricted cash and investments		35,459		35,459		35,459		—		—
Liabilities:
Borrowings under exchange credit facility	$	982,749	$	999,504	$	—	$	999,504	$	—
10.500% Public Second Lien Notes due 2028		286,521		288,011		—		288,011		—
9.500% Private Second Lien Notes due 2028		239,142		233,972		—		233,972		—
5.875% Senior Notes due 2024		23,253		22,591		—		22,591		—
6.00% Senior Notes due 2026		110,858		131,943		—		131,943		—
6.50% Exchangeable Senior Notes due 2026		230,000		209,662		—		209,662		—


			Estimated Fair Value Measurements at December 31, 2022
	Carrying Value as of December 31, 2022		Total Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	95,073	$	95,073	$	95,073	$	—	$	—
Restricted cash and investments		48,770		48,770		48,770		—		—
Liabilities:
Borrowings under exchange credit facility	$	1,113,239	$	1,112,183	$	—	$	1,112,183	$	—
10.500% Public Second Lien Notes due 2028		286,521		291,610		—		291,610		—
9.500% Private Second Lien Notes due 2028		239,142		232,627		—		232,627		—
5.875% Senior Notes due 2024		23,253		22,997		—		22,997		—
6.00% Senior Notes due 2026		110,858		99,132				99,132
6.50% Exchangeable Senior Notes due 2026		230,000		327,872		—		327,872		—

The fair values of the Company’s cash and cash equivalents, and restricted cash and investments approximates the carrying values of these assets at September 30, 2023 and December 31, 2022. Restricted cash consists of money market funds, bank deposits, commercial paper and time deposits used for asset replacement funds and other funds contractually required to be maintained at the Company's Australian subsidiary. The fair value of the money market funds and bank deposits is based on quoted market prices (Level 1).

As of September 30, 2023, the recurring fair values of the Company's 10.500% Public Second Lien Notes due 2028 and the 9.500% Private Second Lien Notes due 2028 are based on Level 2 inputs using quotations by major market news services, such as Bloomberg. The fair value of the Company's exchange credit facility was also based on quotations by major market new services and also estimates of trading value considering the Company's borrowing rate, the undrawn spread and similar instruments.

As of September 30, 2023 and December 31, 2022, the fair values of the Company's 5.875% senior unsecured notes due 2024 ("5.875% Senior Notes due 2024"), 6.00% senior unsecured notes due 2026 (“6.00% Senior Notes”), and the 6.50% exchangeable senior unsecured notes due 2026 (“Convertible Notes” or “6.50% Exchangeable Notes due 2026”) are based on Level 2 inputs by major market news services.

5. RESTRICTED CASH AND CASH EQUIVALENTS

The following table provides a reconciliation of cash, cash equivalents and restricted cash and cash equivalents reported on the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:


	September 30, 2023			September 30, 2022
Cash and cash equivalents	$	141,020		$	91,645
Restricted cash and cash equivalents - current		—			—
Restricted cash and investments - non-current		130,729			89,760
Less Restricted investments - non-current		(65,565	)		(60,032	)
Total cash, cash equivalents and restricted cash and cash equivalents shown in the statement of cash flows	$	206,184		$	121,373

Amounts included in restricted cash and cash equivalents are attributable to certain contractual cash restriction requirements at the Company's wholly owned Australian subsidiary related to non-recourse debt (which were included in Restricted Cash and cash equivalents current) and asset replacement funds contractually required to be maintained and other guarantees. The Company sold shares/units in certain of its wholly owned Australian subsidiaries related to its Ravenhall facility in September 2022. Upon the sale, the restricted cash related to these subsidiaries was transferred to the buyer. As such, the Company has no current restricted cash and cash equivalents at September 30, 2023. Refer to Note 11 - Commitments, Contingencies and Other Matters for further information. Restricted investments - non-current (included in Restricted Cash and Investments in the accompanying consolidated balance sheets) consists of the Company's rabbi trust established for an employee and employer contributions to The GEO Group, Inc. Non-qualified Deferred Compensation Plan, its rabbi trust established for its Executive Chairman's retirement account held in a money market fund, investments in equity and fixed income mutual funds and money market funds held in the Company’s captive insurance subsidiary, Florina, and certain contractual cash requirements at the Company’s wholly owned Australian subsidiary related to certain performance guarantees at its Ravenhall facility. The investments held in the rabbi trust related to The GEO Group, Inc. Non-Qualified Deferred Compensation Plan and the investments in equity and fixed income mutual funds held in Florina are restricted investments that are not considered to be restricted cash and cash equivalents in the accompanying consolidated statements of cash flows. Refer to Note 3 - Financial Instruments.

6. SHAREHOLDERS’ EQUITY

The following tables present the changes in shareholders’ equity that are attributable to the Company’s shareholders and to noncontrolling interests for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Common shares					Additional Paid-In				Accumulated Other Comprehensive			Treasury shares					Noncontrolling			Total Shareholders'
	Shares			Amount		Capital		Retained Earnings		Loss			Shares		Amount			Interests			Equity
For the Three Months Ended September 30, 2023
Balance, June 30, 2023		126,075		$	1,303	$	1,292,826	$	53,338	$	(18,582	)		4,210	$	(95,175	)	$	(1,339	)	$	1,232,371
Proceeds from exercise of stock options		1			—		4		—		—			—		—			—			4
Stock-based compensation expense		—			—		3,116		—		—			—		—			—			3,116
Restricted stock canceled		(10	)		—		—		—		—			—		—			—			—
Issuance of common stock - ESPP		5			—		37				—			—		—			—			37
Net income (loss)		—			—		—		24,519		—			—		—			(16	)		24,503
Other comprehensive loss		—			—		—		—		(1,483	)		—		—			1			(1,482	)
Balance, September 30, 2023		126,071		$	1,303	$	1,295,983	$	77,857	$	(20,065	)		4,210	$	(95,175	)	$	(1,354	)	$	1,258,549


	Common shares					Additional Paid-In			Accumulated			Accumulated Other Comprehensive			Treasury shares					Noncontrolling			Total Shareholders'
	Shares			Amount		Capital			Deficit			Loss			Shares		Amount			Interests			Equity
For the Three Months Ended September 30, 2022
Balance, June 30, 2022		124,003		$	1,289	$	1,284,867		$	(84,105	)	$	(25,839	)		4,852	$	(105,099	)	$	(1,281	)	$	1,069,832
Proceeds from exercise of stock options		3			—		20			—			—			—		—			—			20
Stock-based compensation expense		—			—		3,141			—			—			—		—			—			3,141
Restricted stock granted		50			1		(1	)		—			—			—		—			—			-
Restricted stock canceled		(6	)		—		—			—			—			—		—			—			-
Other adjustment		—			—		—			2			—			—		—			—			2
Issuance of common stock - ESPP		7			—		48			—			—			—		—			—			48
Net income (loss)		—			—		—			38,337			—			—		—			(25	)		38,312
Other comprehensive income (loss)		—			—		—			—			(798	)		—		—			23			(775	)
Balance, September 30, 2022		124,057		$	1,290	$	1,288,075		$	(45,766	)	$	(26,637	)		4,852	$	(105,099	)	$	(1,283	)	$	1,110,580


	Common shares						Additional Paid-In			Accumulated Deficit			Accumulated Other Comprehensive			Treasury shares						Noncontrolling			Total Shareholders'
	Shares			Amount			Capital			/Retained Earnings			Loss			Shares			Amount			Interests			Equity
For the Nine Months Ended September 30, 2023
Balance January 1, 2023		124,061		$	1,289		$	1,291,363		$	(4,236	)	$	(16,919	)		4,852		$	(105,099	)	$	(1,310	)	$	1,165,088
Proceeds from exercise of stock options		13			—			85			—			—			—			—			—			85
Stock-based compensation expense		—			—			12,052			—			—			—			—			—			12,052
Restricted stock granted		1,758			17			(17	)		—			—			—			—			—			—
Restricted stock canceled		(36	)		—			—			—			—			—			—			—			—
Sale of treasury shares [1]		642			—			(4,174	)		—			—			(642	)		9,924			—			5,750
Shares withheld for net settlements of share- based awards [2]		(383	)		(4	)		(3,442	)		—			—			—			—			—			(3,446	)
Issuance of common stock - ESPP		16			1			116			—			—			—			—			—			117
Net income (loss)		—			—			—			82,093			—			—			—			(71	)		82,022
Other comprehensive income (loss)		—			—			—			—			(3,146	)		—			—			27			(3,119	)
Balance, September 30, 2023		126,071		$	1,303		$	1,295,983		$	77,857		$	(20,065	)		4,210		$	(95,175	)	$	(1,354	)	$	1,258,549


	Common shares						Additional Paid-In			Accumulated			Accumulated Other Comprehensive			Treasury shares					Noncontrolling			Total Shareholders'
	Shares			Amount			Capital			Deficit			Loss			Shares		Amount			Interests			Equity
For the Nine Months Ended September 30, 2022
Balance, January 1, 2022		122,472		$	1,273		$	1,276,213		$	(175,960	)	$	(20,216	)		4,852	$	(105,099	)	$	(1,195	)	$	975,016
Proceeds from exercise of stock options		3			—			20			—			—			—		—			—			20
Stock-based compensation expense		—			—			13,010			—			—			—		—			—			13,010
Restricted stock granted		1,836			18			(18	)		—			—			—		—			—			-
Restricted stock canceled		(46	)		—			—			—			—			—		—			—			-
Shares withheld for net settlements of share- based awards [2]		(229	)		(1	)		(1,300	)		—			—			—		—			—			(1,301	)
Issuance of common stock - ESPP		21			—			150			—			—			—		—			—			150
Other adjustment		—			—			—			(89	)		—			—		—			—			(89	)
Net income (loss)		—			—			—			130,283			—			—		—			(119	)		130,164
Other comprehensive income (loss)		—			—			—			—			(6,421	)		—		—			31			(6,390	)
Balance, September 30, 2022		124,057		$	1,290		$	1,288,075		$	(45,766	)	$	(26,637	)		4,852	$	(105,099	)	$	(1,283	)	$	1,110,580

[1] The Company sold treasury shares to partially fund its obligation under its Amended and Restated Executive Retirement

Agreement with its Executive Chairman. Refer to Note 13 - Benefit Plans for further information.

[2] The Company withheld shares through net settlements to satisfy statutory tax withholding requirements upon the vesting of shares

of restricted stock held by employees.

Automatic Shelf Registration on Form S-3

On October 30, 2023, the Company filed an automatic shelf registration statement on Form S-3 with the Securities and Exchange Commission (the “SEC”) that enables the Company to offer for sale, from time to time and as the capital markets permit, an unspecified amount of common stock, preferred stock, debt securities, guarantees of debt securities, warrants and units. The shelf registration statement became automatically effective upon filing and is valid for three years.

Comprehensive Income (Loss)

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, marketable securities and pension liability adjustments within shareholders' equity and comprehensive income (loss).

The components of accumulated other comprehensive loss attributable to GEO within shareholders' equity are as follows:


	Nine Months Ended September 30, 2023
	(In thousands)
	Foreign currency translation adjustments, net of tax (1)			Change in fair value of derivatives, net of tax		Change in marketable securities, net of tax			Pension adjustments, net of tax		Total
Balance, January 1, 2023	$	(20,015	)	$	3,645	$	(953	)	$	404	$	(16,919	)
Current-period other comprehensive income (loss)		(5,269	)		1,170		953			-		(3,146	)
Balance, September 30, 2023	$	(25,284	)	$	4,815	$	—		$	404	$	(20,065	)


	Nine Months Ended September 30, 2022
	(In thousands)
	Foreign currency translation adjustments, net of tax (1)			Change in fair value of derivatives, net of tax			Change in marketable securities, net of tax			Pension adjustments, net of tax			Total
Balance, January 1, 2022	$	(12,461	)	$	(2,524	)	$	7		$	(5,238	)	$	(20,216	)
Current-period other comprehensive income (loss)		(11,679	)		6,247			(1,245	)		256			(6,421	)
Balance, September 30, 2022	$	(24,140	)	$	3,723		$	(1,238	)	$	(4,982	)	$	(26,637	)

(1)

The foreign currency translation related to noncontrolling interests was not significant at September 30, 2023 or 2022.

7. EQUITY INCENTIVE PLANS

The Board adopted The GEO Group, Inc. Amended and Restated 2018 Stock Incentive Plan (the "2018 Amended and Restated Plan"), which was approved by the Company's shareholders on April 28, 2021. The 2018 Amended and Restated Plan supersedes the previous 2018 Stock Incentive Plan. As of the date the 2018 Amended and Restated Plan was approved by the Company’s shareholders, it provided for a reserve of an additional 16,800,000 shares of common stock that may be issued pursuant to awards granted under the 2018 Amended and Restated Plan. The Company filed a Form S-8 registration statement related to the 2018 Amended and Restated Plan on June 15, 2021.

Stock Options

The Company uses a Black-Scholes option valuation model to estimate the fair value of each time-based or performance-based option awarded. For options granted during the nine months ended September 30, 2023, the fair value was estimated using the following assumptions: (i) volatility of 52.34%; (ii) expected term of 5 years and (iii) risk free interest rate of 4.27%. A summary of the activity of stock option awards issued and outstanding under Company plans was as follows for the nine months ended September 30, 2023:


	Shares			Wtd. Avg. Exercise Price		Wtd. Avg. Remaining Contractual Term (years)		Aggregate Intrinsic Value
	(in thousands)							(in thousands)
Options outstanding at January 1, 2023		1,885		$	18.03		6.23	$	73
Options granted		362			9.07
Options exercised		(13	)		6.59
Options forfeited/canceled/expired		(130	)		13.47
Options outstanding at September 30, 2023		2,104		$	16.85		5.77	$	802
Options vested and expected to vest at September 30, 2023		2,031		$	17.17		5.66	$	746
Options exercisable at September 30, 2023		1,403		$	21.08		4.42	$	229

On March 1, 2023, the Company granted approximately 362,000 options to certain employees which had a per share grant date fair value of $4.53. For the nine months ended September 30, 2023 and 2022, the amount of stock-based compensation expense related to stock options was $0.5 million and $0.4 million, respectively. As of September 30, 2023, the Company had $1.7 million of unrecognized compensation costs related to non-vested stock option awards that are expected to be recognized over a weighted average period of 3.1 years.

Restricted Stock

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 generally 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 historically 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, 2023:


	Shares			Wtd. Avg. Grant Date Fair Value
	(in thousands)
Restricted stock outstanding at January 1, 2023		3,595		$	8.29
Granted		1,758			9.16
Vested		(1,252	)		11.57
Forfeited/canceled		(35	)		8.68
Restricted stock outstanding at September 30, 2023		4,066		$	7.78

During the nine months ended September 30, 2023, the Company granted 1,758,455 shares of restricted stock to certain employees and executive officers. Of these awards, 422,121 are market and performance-based awards which will be forfeited if the Company does not achieve certain annual metrics during 2023, 2024 and 2025.

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 50% of the shares of restricted stock ("TSR Target Award") can vest at the end of a 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, over a three year period from January 1, 2023 to December 31, 2025 and (ii) up to 50% of the shares of restricted stock ("ROCE Target Award") can vest at the end of a three year period if GEO meets certain return on capital employed ("ROCE") performance targets over a three year period from January 1, 2023 to December 31, 2025. 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 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 weighted average key assumptions: (i) volatility of 62.9%; (ii) beta of 0.92; and (iii) risk free rate of 4.60%.

For the nine months ended September 30, 2023 and 2022, the Company recognized $11.6 million and $12.6 million, respectively, of compensation expense related to its restricted stock awards. As of September 30, 2023, the Company had $19.5 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 2.5 years.

Employee Stock Purchase Plan

The Company previously adopted The GEO Group Inc. 2011 Employee Stock Purchase Plan (the “Plan" or "ESPP”) effective July 9, 2011. The Company has since amended and restated the Plan (the “Amended ESPP”) which was approved by the Company’s shareholders on April 28, 2021 and became effective on July 9, 2021. The purpose of the Amended ESPP, which is qualified under Section 423 of the Code, 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 maximum number of shares of common stock reserved for issuance over the term of the Amended ESPP on the amended effective date shall not exceed 506,023 shares.

The Amended ESPP is considered to be non-compensatory. As such, there is no compensation expense required to be recognized. Share purchases under the Amended ESPP are made on the last day of each month. During the nine months ended September 30, 2023 and 2022, 16,208 and 20,769 shares, respectively, of the Company's common stock were issued in connection with the Amended ESPP.

8. EARNINGS PER SHARE

Basic earnings per share of common stock is computed by dividing the net income attributable to The GEO Group, Inc. available to common stockholders by the weighted-average number of common shares outstanding for the period. Net income attributable to The GEO Group, Inc. available to common stockholders represents net income attributable to The GEO Group reduced by an allocation of earnings to participating securities. The 6.50% Exchangeable Notes due 2026, which contain non-forfeitable rights to dividends declared and paid on the shares of common stock, are participating securities and are included in the computation of earnings per share pursuant to the two-class method. Diluted EPS (as defined below) is calculated under the if-converted method and the two-class method for each class of shareholders using the weighted average number of shares attributable to each class. The calculation that results in the lowest diluted earnings per share amount for common stock is reported in the Company’s financial statements. The if-converted method includes the dilutive effect of potential common shares related to the 6.50% Exchangeable Notes due 2026, if any. Basic and diluted earnings per share were calculated for the three and nine months ended September 30, 2023 and 2022 as follows (in thousands, except per share data):


	Three Months Ended						Nine Months Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Net income	$	24,503		$	38,312		$	82,022		$	130,164
Net loss attributable to noncontrolling interests		16			25			71			119
Less: Undistributed income allocable to participating securities		(4,159	)		(6,543	)		(13,944	)		(22,259	)
Net income attributable to The GEO Group, Inc. available to common stockholders		20,360			31,794			68,149			108,024
Basic earnings per share attributable to The GEO Group, Inc. available to common stockholders:
Weighted average shares outstanding		122,066			121,154			121,850			120,998
Per share amount	$	0.17		$	0.26		$	0.56		$	0.89
Diluted earnings per share attributable to The GEO Group, Inc. available to common stockholders:
Weighted average shares outstanding		122,066			121,154			121,850			120,998
Dilutive effect of equity incentive plans		1,367			1,272			1,629			909
Weighted average shares assuming dilution		123,433			122,426			123,479			121,907
Per share amount	$	0.16		$	0.26		$	0.55		$	0.89

For the three months ended September 30, 2023, 2,111,272 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 1,388,495 common stock equivalents from restricted shares that were anti-dilutive for the period.

For the three months ended September 30, 2022, 1,961,377 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 305,897 common stock equivalents from restricted shares that were anti-dilutive for the period.

For the nine months ended September 30, 2023, 1,558,085 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 950,770 common stock equivalents from restricted shares that were anti-dilutive for the period.

For the nine months ended September 30, 2022, 1,974,921 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 314,097 common stock equivalents from restricted shares that were anti-dilutive for the period.

On February 24, 2021, the Company’s wholly owned subsidiary, GEO Corrections Holdings, Inc. (“GEOCH”), completed a private offering of $230 million aggregate principal amount of 6.50% Exchangeable Notes due 2026. Refer to Note 10 – Debt for additional information. As of September 30, 2023, conditions had not been met to exchange the 6.50% Exchangeable Notes due 2026 into shares of the Company’s common stock. Approximately 24.9 million shares of potential common shares associated with the conversion option embedded in the convertible notes were excluded from the computation for the three and nine months ended September 30, 2023 and 2022 as the average stock price was lower than the exchange price.

9. DERIVATIVE FINANCIAL INSTRUMENTS

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.

In August of 2019, the Company entered into two interest rate swap agreements in the aggregate notional amount of $44.3 million to fix the interest rate on certain of its variable rate debt to 4.22%. The Company has designated these interest rate swaps as hedges against changes in the cash flows of two identical promissory notes (the "Notes") which are secured by loan agreements and mortgage and security agreements on certain real property and improvements. The Company has determined that the swaps have payment, expiration dates, and provisions that coincide with the terms of the Notes and are therefore considered to be effective cash flow hedges. Accordingly, the Company records the change in fair value of the interest rate swaps as accumulated other comprehensive loss, net of applicable taxes. Total unrealized losses recorded in other comprehensive income, net of tax, related to these cash flow hedges was $1.2 million during the nine months ended September 30, 2023. The total fair value of the swap assets as of September 30, 2023 was $6.1 million and is recorded as a component of Other Non-Current assets within the accompanying consolidated balance sheet. There was no material ineffectiveness for the period presented. The Company does not expect to enter into any transactions during the next twelve months which would result in reclassification into earnings or losses associated with these swaps currently reported in accumulated other comprehensive income (loss). Refer to Note 10 - Debt for additional information.

10. DEBT

Debt outstanding as of September 30, 2023 and December 31, 2022 consisted of the following (in thousands):


	September 30, 2023			December 31, 2022
Exchange Credit Agreement
Tranche 1 Loans	$	795,337		$	846,445
Unamortized premium on tranche 1 loans		19,817			25,345
Unamortized debt issuance costs on tranche 1 loans		(19,114	)		(22,575	)
Tranche 2 Loans		187,412			236,794
Unamortized discount on tranche 2 loans		(1,983	)		(2,922	)
Unamortized debt issuance costs on tranche 2 loans		(4,641	)		(6,310	)
Revolver		—			30,000
Total Exchange Credit Agreement [*]		976,828			1,106,777
10.500% Public Second Lien Notes due 2028
Notes Due in 2028		286,521			286,521
Unamortized discount		(13,932	)		(15,457	)
Unamortized debt issuance costs		(7,533	)		(7,811	)
Total 10.500% Public Second Lien Notes due 2028		265,056			263,253
9.500% Private Second Lien Notes due 2028
Notes Due in 2028		239,142			239,142
Unamortized discount		(20,551	)		(22,524	)
Unamortized debt issuance costs		(6,458	)		(6,551	)
Total 9.500% Private Second Lien Notes due 2028		212,133			210,067
6.50% Exchangeable Senior Notes:
Notes Due in 2026		230,000			230,000
Unamortized debt issuance costs		(5,086	)		(6,489	)
Total 6.50% Exchangeable Senior Notes Due in 2026		224,914			223,511
6.00% Senior Notes:
Notes Due in 2026		110,858			110,858
Unamortized debt issuance costs		(614	)		(776	)
Total 6.00% Senior Notes Due in 2026		110,244			110,082
5.875% Senior Notes:
Notes Due in 2024		23,253			23,253
Unamortized debt issuance costs		(57	)		(96	)
Total 5.875% Senior Notes Due in 2024		23,196			23,157
Finance Lease Liabilities		1,457			1,977
Other debt, net of unamortized debt issuance costs		39,492			40,323
Total debt		1,853,320			1,979,147
Current portion of finance lease liabilities and long-term debt		(63,307	)		(44,722	)
Finance Lease Liabilities, long-term portion		(740	)		(1,280	)
Long-Term Debt	$	1,789,273		$	1,933,145

[*] As further discussed below, the exchange agreement included Tranche 3 Loans which were redeemed prior to December 31, 2022.

Exchange Offer

On August 19, 2022, the Company completed an exchange offer to exchange certain of its outstanding 5.125% Senior Notes due 2023, 5.875% Senior Notes due 2024, 6.00% Senior Notes due 2026 and certain revolving credit loans and term loans under its senior secured credit facility into newly issued senior second lien secured notes and a new Exchange Credit Agreement (as defined below) as follows:

Amendment No. 4 and Amendment No. 5 to Existing Credit Agreement

In connection with the exchange offer, (i) the Company and GEO Corrections Holdings, Inc. (“Corrections”), as borrowers (the “Borrowers”), certain lenders (the “Consenting Lenders”) and BNP Paribas, as the then existing administrative agent (the “Existing Administrative Agent”) under the Company’s then existing senior secured credit agreement (the “Existing Credit Agreement”), entered into Amendment No. 4 to Third Amended and Restated Credit Agreement, dated as of August 19, 2022 (“Amendment No. 4”), and (ii) the Borrowers, certain subsidiaries of the Borrowers (the “Credit Facility Guarantors”), the Consenting Lenders, the

Existing Administrative Agent, Alter Domus Products Corp., as the new administrative agent for the lenders under the amended existing credit agreement (in such capacity, the “Amended Credit Agreement Administrative Agent”), and Alter Domus Products Corp., as the administrative agent for the lenders under the Exchange Credit Agreement (in such capacity, the “Exchange Credit Agreement Administrative Agent”), entered into Amendment No. 5 to Third Amended and Restated Credit Agreement, dated as of August 19, 2022 (“Amendment No. 5,” and the Existing Credit Agreement as amended by Amendment No. 4 and Amendment No. 5, the “Amended Credit Agreement”).

Pursuant to Amendment No. 4, the Borrowers and the Consenting Lenders amended the Existing Credit Agreement to permit the consummation of the exchange offers and consent solicitations described below. Pursuant to Amendment No. 5, (i) the Existing Administrative Agent was replaced as administrative agent under the Amended Credit Agreement with the Amended Credit Agreement Administrative Agent, (ii) the Borrowers and the Consenting Lenders agreed to amend the Existing Credit Agreement as set forth therein, (iii) the Company agreed to purchase the revolving credit commitments of certain Consenting Lenders under the Existing Credit Agreement and exchange such revolving credit commitments with revolving credit commitments under the Exchange Credit Agreement, (iv) certain Consenting Lenders holding such revolving credit commitments agreed to exchange their revolving credit loans and related obligations for cash, tranche 2 term loans under the Exchange Credit Agreement (“Tranche 2 Loans”) and tranche 3 term loans under the Exchange Credit Agreement (“Tranche 3 Loans”), (v) certain Consenting Lenders holding such revolving credit commitments agreed to assign their revolving credit loans and related obligations to certain other Consenting Lenders (who then agreed to exchange such assigned revolving credit loans and related obligations for tranche 1 term loans under the Exchange Credit Agreement (“Tranche 1 Loans”)) and exchange the remainder of such revolving credit loans and related obligations for cash, Tranche 2 Loans and/or Tranche 3 Loans, (vi) the Company agreed to purchase the term loans of certain Consenting Lenders under the Existing Credit Agreement and exchange such term loans with Tranche 1 Loans or a combination of Tranche 1 Loans and cash, and (vii) all letters of credit outstanding under the Existing Credit Agreement were deemed issued and outstanding under the Exchange Credit Agreement and no longer outstanding under the Existing Credit Agreement.

After giving effect to Amendment No. 4 and Amendment No. 5 and the transactions described therein, approximately $87 million in aggregate principal amount of revolving credit commitments and approximately $102 million in aggregate principal amount of term loans remained outstanding under the Amended Credit Agreement. The Credit Facility Guarantors continue to guarantee the obligations in respect of the commitments and loans under the Amended Credit Agreement, and the collateral securing the Borrowers’ and the Credit Facility Guarantors’ obligations in respect of the commitments and loans under the Existing Credit Agreement prior to the effectiveness of the transactions (the “Common Collateral”) continues to secure the Borrower’s and the Credit Facility Guarantors’ obligations in respect of the commitments and loans under the Amended Credit Agreement after giving effect to the transactions. Revolving credit loans under the Amended Credit Agreement will continue to bear interest at a per annum rate equal to LIBOR (with no LIBOR floor) plus 1.50% to 2.50%, and the Borrowers will continue to pay a fee in respect of unused revolving commitments under the Amended Credit Agreement at a per annum rate of 0.25% to 0.30%, in each case depending on the Company’s total leverage ratio as of the most recent determination date. Term loans under the Amended Credit Agreement will continue to bear interest at a per annum rate equal to LIBOR (subject to a floor of 0.75%) plus 2.00%. The revolving credit commitments under the Amended Credit Agreement terminate on May 17, 2024, and the term loans under the Amended Credit Agreement mature on March 23, 2024. The representations and warranties and affirmative and negative covenants in the Amended Credit Agreement were amended so that the representations and warranties and affirmative and negative covenants in the Exchange Credit Agreement are incorporated by reference into the Amended Credit Agreement. Subsequent to the transactions, the term loans were repaid in full.

New Exchange Credit Agreement

In connection with the exchange offer, the Borrowers, the Consenting Lenders and the Exchange Credit Agreement Administrative Agent entered into a Credit Agreement, dated as of August 19, 2022 (the “Exchange Credit Agreement”), to, among other things, evidence and govern the exchanged revolving credit commitments (the “Exchange Revolving Credit Facility”), Tranche 1 Loans, Tranche 2 Loans and Tranche 3 Loans described above. On the transaction date, after giving effect to the transactions, the aggregate principal amount of revolving credit commitments under the Exchange Revolving Credit Facility was approximately $187 million (including a $175 million letter of credit subfacility), the aggregate principal amount of the Tranche 1 Loans was approximately $857 million, the aggregate principal amount of the Tranche 2 Loans was approximately $237 million and the aggregate principal amount of the Tranche 3 Loans was approximately $45 million.

Revolving credit loans under the Exchange Revolving Credit Facility bear interest at a per annum rate equal to Term Secured Overnight Financing Rate (“SOFR”) (subject to a 0.75% floor) plus between 2.25% and 3.25%, and the Borrowers will pay a fee in respect of unused revolving commitments under the Exchange Revolving Credit Facility at a per annum rate of 0.25% to 0.30%, in each case depending on the Company’s total leverage ratio as of the most recent determination date. Tranche 1 Loans bear interest at a per annum rate equal to Term SOFR (subject to a 0.75% floor) plus 7.125%, Tranche 2 Loans bear interest at a per annum rate equal to Term SOFR (subject to a 0.75% floor) plus 6.125% and Tranche 3 Loans bear interest at a per annum rate equal to Term SOFR (subject to a 0.75% floor) plus 2.00%. At any time after the earlier of (x) February 19, 2024, solely in the event that no 2023 Notes (defined below) or 2024 Notes (defined below) remain outstanding at such time, and (y) November 1, 2024, (i) if the Company’s first

lien leverage ratio is less than 1.50:1.00 at such time, then the interest rate margin on Tranche 1 Loans and Tranche 2 Loans will be reduced by 0.25%, and (ii) if the Company has achieved a public corporate credit rating of at least B3 or B-, as applicable (in any case with a stable or better outlook), from any two of S&P, Moody’s and Fitch, then the interest rate margin on Tranche 1 Loans and Tranche 2 Loans will be reduced by 0.25%, resulting in a total reduction in the interest rate margin on Tranche 1 Loans and Tranche 2 Loans of 0.50% if both conditions set forth in clauses (i) and (ii) are satisfied. If, following any reduction in the interest rate margin in accordance with the previous sentence, the condition giving rise to such reduction is no longer satisfied as of the last day of the Company’s most recently ended fiscal quarter, such interest rate margin reduction will no longer apply unless and until such condition is satisfied again.

Loans under the Exchange Revolving Credit Facility may not be borrowed if, at the time of and immediately after giving pro forma effect to such extension of credit and any planned future expenditures entered into or expected to be made or payments on indebtedness required to be made, in each case within 60 days of such extension of credit, domestic unrestricted cash for the Company and its restricted subsidiaries exceeds $234 million. Tranche 1 Loans amortize at a rate of 1.25% per quarter, and Tranche 3 Loans amortize at a rate of 0.25% per quarter. Tranche 2 Loans are not subject to amortization. Mandatory prepayments of loans under the Exchange Credit Agreement are required in respect of certain casualty and asset sale proceeds, excess cash flow and domestic unrestricted cash in excess of $234 million as of the last day of any fiscal quarter, subject to certain thresholds and exceptions. Voluntary prepayments of Tranche 2 Loans, Tranche 3 Loans and loans under the Exchange Revolving Credit Facility may be made by the Borrowers at any time without premium or penalty (subject to reimbursement for customary breakage expenses). Voluntary prepayments of Tranche 1 Loans and any prepayments of Tranche 1 Loans required in connection with any acceleration of the maturity thereof require payment of a premium equal to (i) a customary “make whole” amount if made prior to the first anniversary of the Transaction Date, (ii) 3.00% of the principal amount prepaid or required to be prepaid if made on or after the first anniversary but prior to the second anniversary of the transaction date, and (iii) 2.00% of the principal amount prepaid or required to be prepaid if made on or after the second anniversary but prior to the third anniversary of the transaction date.

The revolving credit commitments under the Exchange Revolving Credit Facility terminate, and the Tranche 1 Loans and Tranche 2 Loans mature, in each case on the earliest of (i) March 23, 2027, and (ii) in the event that an aggregate principal amount equal to or greater than $100,000,000 of any Specified Senior Note (defined below) remains outstanding on the Springing Maturity Date (defined below) applicable thereto, such Springing Maturity Date, it being understood that Specified Senior Notes are not outstanding to the extent the Company or GEO Corrections Holdings, Inc., as applicable, shall have deposited or caused to be deposited funds into a customary irrevocable escrow in an amount sufficient to pay or redeem such Specified Senior Notes in full on the maturity date thereof, where “Specified Senior Notes” refers to each of the 2026 Notes and the Company’s 6.500% Exchangeable Senior Notes due 2026 (the “2026 Exchangeable Senior Notes”), and “Springing Maturity Date” means the date that is 91 days prior to the stated maturity date of the 2026 Notes or the 2026 Exchangeable Senior Notes, as applicable. The Tranche 3 Loans were scheduled to mature on March 23, 2024. The Tranche 3 Loans were redeemed in full during the third quarter of 2022.

The Exchange Credit Agreement contains certain customary representations and warranties, affirmative covenants and negative covenants, including restrictions on the ability of the Company and its restricted subsidiaries 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) cancel, forgive, make any voluntary or optional payment or prepayment on, or redeem or acquire for value any senior notes, except as permitted, (ix) engage in other businesses, except as permitted, and (x) materially impair the security interests securing the obligations under the Exchange Credit Agreement. The Exchange Credit Agreement also contains certain financial covenants, including a maximum total leverage ratio covenant of 6.25:1.00, a maximum first lien leverage ratio covenant of 3.50:1.00, a minimum interest coverage ratio covenant of 1.50:1.00 and a cap of $55 million on the amount of unrestricted cash that the Company’s foreign subsidiaries may hold as of the last day of any fiscal quarter. In addition, the Exchange Credit Agreement restricts the Company from electing to be taxed as a real estate investment trust under the Internal Revenue Code. The Exchange Credit Agreement also contains certain customary events of default.

The Credit Facility Guarantors guarantee the obligations in respect of the commitments and loans under the Exchange Credit Agreement. The obligations of the Borrowers and the Credit Facility Guarantors in respect of the Exchange Credit Agreement are secured by first-priority liens on the Common Collateral securing the obligations under the Amended Credit Agreement and, other than with respect to the Tranche 3 Loans, first-priority liens on certain additional assets of the Borrower and the Credit Facility Guarantors (the “Exclusive Collateral”), including real property interests with respect to which the Exchange Credit Agreement requires the execution and delivery of a mortgage but with respect to which the Amended Credit Agreement does not. The rights of the secured parties under the Amended Credit Agreement and the Exchange Credit Agreement in respect of the Common Collateral are governed by a First Lien Pari Passu Intercreditor Agreement (the “First Lien Pari Passu Intercreditor Agreement”), dated as of August 19, 2022, among the Amended Credit Agreement Administrative Agent, the Exchange Credit Agreement Administrative Agent and each additional senior representative party thereto from time to time, and acknowledged by the Borrower and the Credit Facility Guarantors.

As of September 30, 2023, the Company had no borrowings under its revolver, and approximately $75.8 million in letters of credit which left approximately $198.2 million in additional borrowing capacity under the revolver. Subsequent to the transaction, the Tranche 3 Loans were repaid in full. The weighted average interest rate on outstanding borrowings under the Credit Agreement as of September 30, 2023 was 12.27%.

During the nine months ended September 30, 2023, the Company made mandatory quarterly prepayments on its Tranche 1 and Tranche 2 loans under its exchange credit agreement. In connection with the prepayments, the Company wrote off a proportionate amount of related deferred loan costs and discount/premium of approximately $1.8 million as a loss on extinguishment of debt.

5.125% Senior Notes due 2023 and 5.875% Senior Notes due 2024

The Company exchanged $100.6 million and $178.3 million principal amounts of its 5.125% Senior Notes due 2023 and 5.875% Senior Notes due 2024, respectively, for newly issued $286.5 million 10.500% Senior Second Lien Secured Notes maturing on June 30, 2028 ("New Registered Notes") and, if elected, cash upon the terms and subject to the conditions set forth in the prospectus. Holders of the 5.125% Senior Notes due 2023 could elect cash and new notes at 100% par or new notes only at 105% par. Holders of the 5.785% Senior Notes due 2024 could elect cash and new notes at 100% par or new notes only at 103% par. After the transactions, there was approximately $125.7 million and $23.3 million remaining in outstanding principal on the 5.125% Senior Notes due 2023 and the 5.875% Senior Notes due 2024, respectively. Subsequent to the transaction, the remaining balance of the 5.125% Senior Notes due 2023 was deposited on account with the trustee and the indenture was discharged. On October 6, 2022, the 5.125% Senior Notes due 2023 were redeemed in full.

6.00% Senior Notes due 2026

The Company exchanged $239.1 million principal amount of its 6.000% Senior Notes due 2026 for newly issued $239.1 million 9.500% Senior Second Lien Secured Notes maturing on December 31, 2028 ("New Private Notes"). After the transaction there was approximately $110.9 million remaining in outstanding principal on the 6.00% Senior Notes due 2026.

A description of the New Registered Notes and the New Private Notes is as follows:

Issuance of 10.500% Senior Second Lien Secured Notes due 2028

The Company issued $286.5 million aggregate principal amount of New Registered Notes pursuant to an Indenture, dated as of August 19, 2022 (the “Registered Notes Indenture”), among the Company, the guarantors named therein (the “Guarantors”) and Ankura Trust Company, LLC, as trustee and second lien collateral trustee (in such capacities, the “Trustee” and “Second Lien Collateral Trustee,” as applicable).

The New Registered Notes will initially be fully and unconditionally guaranteed (collectively, the “Registered Notes Guarantees”) by each of the Company’s Restricted Subsidiaries (as defined in the Registered Notes Indenture) that has guaranteed its obligations under the Exchange Credit Agreement and may be guaranteed by additional subsidiaries as described in the Registered Notes Indenture.

The New Registered Notes and the Registered Notes Guarantees are secured on a second-priority basis by the same collateral (the “Collateral”) that secures the obligations under the Exchange Credit Agreement in accordance with the terms of the Registered Notes Indenture and the Second Lien Collateral Trust Agreement, dated as of August 19, 2022 (as amended, supplemented or otherwise modified, the “Second Lien Collateral Trust Agreement”), among the Company, the Guarantors, the Second Lien Collateral Trustee and the Trustee. The Second Lien Collateral Trust Agreement sets forth therein the relative rights of the second-lien secured parties with respect to the Collateral and covering certain other matters relating to the administration of security interests. The Second Lien Collateral Trust Agreement generally controls substantially all matters related to the interest of the second-lien secured parties in the Collateral, including with respect to directing the Second Lien Collateral Trustee, distribution of proceeds and enforcement.

The New Registered Notes are also subject to the terms of the First Lien/Second Lien Intercreditor Agreement (the “First Lien/Second Lien Intercreditor Agreement”), dated August 19, 2022, among the Amended Credit Agreement Administrative Agent, the Exchange Credit Agreement Administrative Agent, each additional senior representative party thereto from time to time and the Second Lien Collateral Trustee and acknowledged by the Company and the Guarantors, and, in connection with the exchange offers and consent solicitations, the Second Lien Collateral Trustee entered into the First Lien/Second Lien Intercreditor Agreement with respect to the New Registered Notes and the New Private Notes. The First Lien/Second Lien Intercreditor Agreement restricts the actions permitted to be taken by the Second Lien Collateral Trustee with respect to the Collateral on behalf of the holders of the New Registered Notes and the New Private Notes, and the Second Lien Collateral Trustee, on behalf of itself and the holders of the New Registered Notes and the New Private Notes, agreed to limit certain other rights with respect to the Collateral during any insolvency proceeding.

The New Registered Notes bear interest at a rate of 10.500% per year, accruing from August 19, 2022. Interest on the New Registered Notes is payable semiannually in arrears on June 30 and December 31 of each year, beginning on December 31, 2022. The New Registered Notes will mature on June 30, 2028, subject to earlier repurchase or redemption in accordance with the terms of the Registered Notes Indenture.

The Company may redeem some or all of the New Registered Notes at any time upon not less than 10 nor more than 60 days’ notice, at a price equal to (a) 103% of the principal amount of the New Registered Notes redeemed, if redeemed prior to August 19, 2023, (b) 102% of the principal amount of the New Registered Notes redeemed, if redeemed on or after August 19, 2023, but prior to August 19, 2024, (c) 101% of the principal amount of the New Registered Notes redeemed, if redeemed on or after August 19, 2024, but prior to August 19, 2025 or (d) 100% of the principal amount of the New Registered Notes redeemed, if redeemed on or after August 19, 2025, in each case plus accrued and unpaid interest, if any, to, but not including, the redemption date and a make-whole premium set forth in the Registered Notes Indenture. If the Company experiences certain change of control events, the Company must offer to repurchase the New Registered Notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to, but not including, the repurchase date.

The Registered Notes Indenture contains covenants that, among other things, restrict the Company’ ability and the ability of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make certain dividend payments, distributions, investments and other restricted payments, sell certain assets, agree to any restrictions on the ability of its restricted subsidiaries to make payments to the Company, create certain liens, merge, consolidate or sell all or substantially all of their assets and enter into certain transactions with affiliates. These covenants are subject to a number of important exceptions and qualifications as described in the Registered Notes Indenture.

Issuance of 9.500% Senior Second Lien Secured Notes due 2028

The Company issued $239.1 million aggregate principal amount of New Private Notes pursuant to an Indenture, dated as of August 19, 2022 (the “Private Notes Indenture”), among the Company, the Guarantors, the Trustee and the Second Lien Collateral Trustee.

The New Private Notes will initially be fully and unconditionally guaranteed (collectively, the “Private Notes Guarantees”) by each of the Company’s Restricted Subsidiaries (as defined in the Registered Notes Indenture) that has guaranteed its obligations under the Exchange Credit Agreement and may be guaranteed by additional subsidiaries as described in the Registered Notes Indenture.

The New Private Notes and Private Notes Guarantees are subject to the terms of the Second Lien Collateral Trust Agreement and the First Lien/Second Lien Intercreditor Agreement described above on the same terms as the New Registered Notes.

The New Private Notes bear interest at a rate of 9.500% per year, accruing from August 19, 2022. Interest on the New Private Notes is payable semiannually in arrears on June 30 and December 31 of each year, beginning on December 31, 2022. The New Private Notes will mature on December 31, 2028, subject to earlier repurchase or redemption in accordance with the terms of the Private Notes Indenture.

The Company may redeem some or all of the New Private Notes at any time upon not less than 10 nor more than 60 days’ notice, at a price equal to (a) 103% of the principal amount of the New Private Notes redeemed, if redeemed prior to August 19, 2023, (b) 102% of the principal amount of the New Private Notes redeemed, if redeemed on or after August 19, 2023, but prior to August 19, 2024, (c) 101% of the principal amount of the New Private Notes redeemed, if redeemed on or after August 19, 2024, but prior to August 19, 2025 or (d) 100% of the principal amount of the New Private Notes redeemed, if redeemed on or after August 19, 2025, in each case plus accrued and unpaid interest, if any, to, but not including, the redemption date and a make-whole premium set forth in the Private Notes Indenture. If the Company experiences certain change of control events, the Company must offer to repurchase the New Private Notes at 101% of their principal amount, plus accrued and unpaid interest, if any, to, but not including, the repurchase date.

The Private Notes Indenture contains covenants that, among other things, restrict the Company’s ability and the ability of its restricted subsidiaries to incur certain additional indebtedness and issue preferred stock, make certain dividend payments, distributions, investments and other restricted payments, sell certain assets, agree to any restrictions on the ability of its restricted subsidiaries to make payments to the Company, create certain liens, merge, consolidate or sell all or substantially all of their assets and enter into certain transactions with affiliates. These covenants are subject to a number of important exceptions and qualifications as described in the Private Notes Indenture.

Debt Issuance Fees

As a result of the transactions discussed above, the Company incurred a total of approximately $52.8 million of debt issuance fees which were allocated to the new revolving credit commitments, new Tranche 1, 2 and 3 Loans, New Registered Notes and New Private Notes based on their fair values at date of issuance. The debt issuance fees are being amortized over the terms of the respective agreements using the effective interest method.

6.50% Exchangeable Senior Notes due 2026

On February 24, 2021, the Company’s wholly owned subsidiary, GEOCH, completed a private offering of $230 million aggregate principal amount of Convertible Notes which included the full exercise of the initial purchasers’ over-allotment option to purchase an additional $30 million aggregate principal amount of Convertible Notes. The Convertible Notes will mature on February 23, 2026, unless earlier repurchased or exchanged. The Convertible Notes bear interest at the rate of 6.50% per year plus an additional amount based on the dividends paid by the Company on its common stock, $0.01 par value per share. Interest on the notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2021.

Subject to certain restrictions on share ownership and transfer, holders may exchange the notes at their option prior to the close of business on the business day immediately preceding November 25, 2025, but only under the following circumstances: (1) during the five consecutive business day period after any five consecutive trading day period, or the measurement period, in which the trading price per $1,000 principal amount of notes for each trading day of such measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the exchange rate for the notes on each such trading day; or (2) upon the occurrence of certain specified corporate events. On or after November 25, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date of the notes, holders may exchange their notes at any time, regardless of the foregoing circumstances. Upon exchange of a note, GEO will pay or deliver, as the case may be, cash or a combination of cash and shares of the Company’s common stock. As of September 30, 2023, conditions had not been met to exchange the notes.

Upon conversion, the Company will pay or deliver, as the case may be, cash or a combination of cash and shares of common stock. The initial conversion rate is 108.4011 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $9.225 per share of common stock). The conversion rate will be subject to adjustment in certain events. If the Company or GEOCH undergoes a fundamental change, holders may require GEOCH to purchase the notes in whole or in part for cash at a fundamental change purchase price equal to 100% of the principal amount of the notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date.

The Company used the net proceeds from this offering, including the exercise in full of the initial purchasers' over-allotment option to fund the redemption of the then outstanding amount of approximately $194.0 million of the Company’s 5.875% Senior Notes due 2022, to re-purchase additional senior notes and used remaining net proceeds to pay related transaction fees and expenses, and for general corporate purposes of the Company.

The notes were offered in the United States only to persons reasonably believed to be “qualified institutional buyers” pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and outside of the United States to non-U.S. persons in compliance with Regulation S under the Securities Act. Neither the notes nor any of the shares of the Company’s common stock issuable upon exchange of the notes, if any, have been, or will be, registered under the Securities Act and, unless so registered, may not be offered or sold in the United States, except pursuant to an applicable exemption from the registration requirements under the Securities Act.

The Company elected to early adopt Accounting Standards Update ("ASU") 2020-06, Debt – Debt with Conversion and Other Options and Derivatives and Hedging – Contracts in Entity’s Own Equity, on January 1, 2021. The new standard simplifies the accounting for convertible debt by removing the requirements to separately present certain conversion features in equity. In addition, the new standard also simplifies the guidance in ASC 815-40, Derivatives and Hedging – Contract in Entity’s Own Equity, by removing certain criteria that must be satisfied to classify a contract as equity. Finally, the new standard revised the guidance on calculating earnings per share. The Company determined under the guidance of the new standard that the embedded conversion option does not require bifurcation and all proceeds were allocated to the Convertible Notes as a single instrument and is included in Long-Term Debt in the accompanying consolidated balance sheets. The costs incurred in the issuance, including the initial purchasers discount, totaling approximately $9.6 million, were classified as a cash outflow within the financing activities section in the consolidated statement of cash flows, and are also being amortized to expense over the term of the Convertible Notes.

Because the Company currently intends to settle conversions by paying cash up to the principal amount of the Convertible Notes, with any excess conversion value settled in shares of common stock, the Convertible Notes are being accounted for using the net settlement method (or treasury stock-type method) for the purposes of calculating diluted earnings per share. Using this method, the denominator will be affected when the average share price of the Company's common stock for a given period is greater than the conversion price of approximately $9.225 per share. There was no dilutive impact for the three and nine months ended September 30, 2023 and 2022.

Other

In August of 2019, the Company entered into two identical Notes in the aggregate amount of $39.5 million which are secured by loan agreements and mortgage and security agreements on certain real property and improvements. The terms of the Notes are through September 1, 2034 and bear interest at LIBOR plus 200 basis points and are payable in monthly installments plus interest. The Company has entered into interest rate swap agreements to fix the interest rate to 4.22%. Included in the balance at September 30, 2023 is $0.5 million of deferred loan costs incurred in the transaction. Refer to Note 9 - Derivative Financial Instruments for further information.

The Company was in compliance with its debt covenants at September 30, 2023.

Guarantees

Australia

The Company has entered into a guarantee in connection with the operating performance of a facility in Australia. The obligation amounted to approximately AUD53 million, or $34.1 million, based on exchange rates as of September 30, 2023.

As of September 30, 2023, the Company also had five other letters of credit outstanding under separate international facilities relating to performance guarantees of its Australian subsidiary totaling $8.6 million, based on exchange rates as of September 30, 2023.

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

11. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS

Litigation, Claims and Assessments

Shareholder and Derivative Litigation

On July 7, 2020, a putative shareholder class action lawsuit was filed against the Company and its officers George C. Zoley and Brian R. Evans in the U.S. District Court for the Southern District of Florida. On November 18, 2020, the lead plaintiffs, James Michael DeLoach and Edward Oketola, filed a consolidated class action amended complaint against Messrs. Zoley and Evans––as well as then current and former Company officers J. David Donahue and Ann M. Schlarb. On September 23, 2021, the court dismissed all claims against Messrs. Evans and Donahue, and Ms. Schlarb, and dismissed all claims against GEO and Mr. Zoley other than claims related to GEO's disclosures about pending litigation. On October 4, 2021, plaintiffs filed a consolidated class action second amended complaint. The second amended complaint alleges that GEO and Mr. Zoley violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”), and Rule 10b-5 promulgated thereunder, and alleges that Mr. Zoley violated Section 20(a) of the Exchange Act, by making materially false and misleading statements and/or omissions related to pending litigation, and seeks relief individually and on behalf of a putative class consisting of all persons and entities––other than the defendants, the officers and directors of the Company, members of their immediate families and their legal representatives, heirs, successors or assigns and any entity in which the defendants have or had a controlling interest––who purchased or otherwise acquired the Company’s securities during the alleged class period from November 9, 2018 to August 5, 2020, inclusive. The second amended complaint seeks damages, interest, attorneys’ fees, expert fees, other costs, and such other relief as the court may deem proper. On June 21, 2022, the court dismissed all claims in the second amended complaint other than those related to the Company’s statements about pending lawsuits made prior to July 17, 2019. The parties resolved this matter following mediation, and a hearing to consider final approval of the settlement is set for November 14, 2023.

After the putative shareholder class action lawsuit was filed, three related putative shareholder derivative actions have also been filed. These cases generally allege breaches of fiduciary duties related to the same underlying matters alleged in the class action above. First, on July 1, 2021, a putative shareholder derivative complaint was filed in Palm Beach County, Florida Circuit Court against the Company, as well as current and former Company directors and officers George C. Zoley, Jose Gordo, Brian R. Evans, Ann M. Schlarb, Richard H. Glanton, Anne N. Foreman, Christopher C. Wheeler, Julie M. Wood, Guido van Hauwermeiren, Scott M. Kernan, and Duane Helkowski (collectively, the “State Court Defendants”). Second, on November 12, 2021, a putative shareholder derivative complaint was filed in the U.S. District Court for the Southern District of Florida against the Company, the State Court Defendants, as well as then current and former Company officers David Venturella and J. David Donahue (collectively, the “Derivative Defendants”). Third, on August 24, 2022, a putative stockholder derivative complaint was filed in the U.S. District Court for the Southern District of Florida against the Company and the Derivative Defendants. The state-court complaint alleges breach of fiduciary duty and unjust enrichment claims against the State Court Defendants relating to purported healthcare and quality of care deficiencies, an allegedly inadequate response to the COVID-19 pandemic, alleged forced labor by detainees, and alleged exposure to pending litigation, which purportedly led to damage to GEO. The federal-court complaints make similar allegations of breach of fiduciary duty as to the Derivative Defendants, and also allege that the Derivative Defendants violated Section 10(b) of the Exchange Act, and Rule 10b-5

promulgated thereunder and that Mr. Zoley contributed to alleged violations of Sections 10(b) and 21D of the Exchange Act. These cases are currently stayed pending the resolution of the federal putative shareholder class action lawsuit described above.

GEO strongly disputes the claims made in these four lawsuits, and intends to take all necessary steps to vigorously defend itself from these lawsuits.

Immigration Detainee Litigation

Civil immigration detainees at the Aurora ICE Processing Center filed a class action lawsuit on October 22, 2014, against the Company in the U.S. District Court for the District of Colorado. The complaint alleges that the Company was in violation of the Colorado Minimum Wages of Workers Act and the Federal Trafficking Victims Protection Act (“TVPA”). The complaint also claims that the Company was unjustly enriched based on the level of payment the detainees received for work performed in a Voluntary Work Program ("VWP") the Company is required to implement at the facility under the terms of its contract with the federal government. On July 6, 2015, the court found that detainees were not employees under the Colorado Minimum Wage Order and dismissed this claim. On February 27, 2017, the court granted the plaintiffs' motion for class certification on the TVPA and unjust enrichment claims. The plaintiffs' class seeks actual damages, compensatory damages, exemplary damages, punitive damages, restitution, attorneys’ fees and costs, and such other relief as the court may deem proper. On October 18, 2022, the court issued an order granting plaintiffs’ motion for summary judgment on the Company’s affirmative defenses, denying the Company’s motion for summary judgment, motion to dismiss, and motion for decertification of the class, narrowing the class period for plaintiffs’ TVPA claims, and otherwise ruling against the Company’s motions for relief. All trial dates are currently stayed by court order pending appeal of certain of GEO's defenses to the 10th Circuit Court of Appeal. Oral argument before the 10th Circuit was held on September 18, 2023.

Since the Colorado suit was initially filed, four similar lawsuits have been filed - two in the state of Washington and two in California.

The first of the two state of Washington lawsuits was filed on September 26, 2017, by immigration detainees against the Company in the U.S. District Court for the Western District of Washington. The second lawsuit was filed on September 20, 2017, by the State Attorney General against the Company in the Superior Court of the State of Washington for Pierce County, which the Company removed to the U.S. District Court for the Western District of Washington on October 9, 2017. The plaintiffs claimed that Washington State minimum wage laws should be enforced with respect to detainees who volunteer to participate in a VWP administered by GEO at the Northwest ICE Processing Center (the "Center") as required by the U.S. Department of Homeland Security under the terms of GEO’s contract. The Center houses persons in the custody of federal immigration authorities while the federal government is determining their immigration status. In October 2021, an unfavorable jury verdict and court judgment resulting in a combined $23.2 million judgment entered against the Company in the retrial of the two cases, which judgment amounts were subsequently increased by a further award against the Company of attorney’s fees, costs, and pre-judgment interest in the amount of $12.7 million. Post judgment interest is accruing on these judgments in accordance with Washington law. The trial court has waived the necessity to post a supersedeas bond for the combined judgments and has stayed enforcement of the verdict and judgments while GEO’s appeal to the U.S. Court of Appeals for the Ninth Circuit is pending. Oral argument before the Ninth Circuit was held on October 6, 2022. On March 7, 2023, the Ninth Circuit certified certain state law questions to the Washington Supreme Court. Oral argument before the Washington Supreme Court was held on October 17, 2023.

In California, a class-action lawsuit was filed on December 19, 2017, by immigration detainees against the Company in the U.S. District Court Eastern Division of the Central District of California. The California lawsuit alleges violations of the state’s minimum wage laws, violations of the TVPA and California's equivalent state statute, unjust enrichment, unfair competition and retaliation. The California court has certified a class of individuals who have been civilly detained at the Company's Adelanto Facility from December 19, 2014, until the date of final judgment. On March 31, 2022, the court entered a stay until the Ninth Circuit rules on the Washington cases.

Current and former detainees of the Mesa Verde ICE Processing Center and the Golden State Annex ICE Processing Center filed a class action lawsuit on July 13, 2022, against the Company in the U.S. District Court for the Eastern District of California, Fresno Division. This lawsuit is similar to the cases in Colorado, Washington and California discussed above. The complaint alleges that federal detainees who volunteer to participate in the VWP at GEO’s Mesa Verde and Golden State Annex ICE facilities are employees of GEO and entitled to the state’s minimum wage. Plaintiffs also make claims for unfair competition, unjust enrichment, human trafficking, forced labor, California's Private Attorneys General Act and retaliation. GEO filed both a motion to stay the action pending the Ninth Circuit's decision in the Washington lawsuits and a motion to dismiss the action in its entirety. On July 10, 2023, the court entered a stay until the Ninth Circuit rules on the Washington cases.

GEO believes it operates the VWP in full compliance with its contract with ICE and all applicable laws, regulations, and standards. GEO strongly disputes the claims made in these lawsuits, and intends to take all necessary steps to vigorously defend itself from these lawsuits. GEO has not recorded any accruals relating to these lawsuits at this time as losses are not considered probable.

Challenges to State Legislation that Conflict with Federal Contracts

On December 30, 2019, the Company filed a lawsuit in the U.S. District Court for the Southern District of California against the State of California for declaratory and injunctive relief challenging California’s newly enacted law - Assembly Bill 32 ("AB-32") - which prohibits the operation of "private detention facilities" in California, including facilities in which the Company provides secure immigration detention contract services to the federal government. The Company’s lawsuit asserts that AB-32 violates the Constitution’s Supremacy Clause, which protects the federal government from regulation by any state. By prohibiting federal detention facilities in California, the suit argues AB-32 substantially interferes with the ability of USMS and ICE to carry out detention responsibilities for the federal government. Secondly, because AB-32 creates an exemption for the application of AB-32 for the State of California for the use of "private detention facilities" (to alleviate overcrowding), California’s statute unlawfully discriminates against the federal government. On January 24, 2020, the United States filed a lawsuit challenging AB-32. On October 8, 2020, the court issued an order granting, in part, and denying, in part, the Company’s and the United States’ motions for preliminary injunction and California’s motion to dismiss. Among other findings, the court (1) dismissed the Company’s intergovernmental immunity claims as well as the United States’ preemption claims as applied to ICE facilities; (2) found that the Company and the United States were likely to succeed on the preemption claims as applied to U.S. Marshals’ facilities and enjoined enforcing AB-32 against those facilities; and (3) refused to enjoin California from enforcing AB-32 against ICE contracts with the Company and the United States. The Company and the United States appealed to the Ninth Circuit. Oral argument was held on June 7, 2021. On October 5, 2021, a three-Judge panel of the Ninth Circuit reversed the lower court’s decision, holding that AB-32 conflicted with federal law. California petitioned the Ninth Circuit for the matter to be heard by the court sitting en banc, which petition was accepted. On September 26, 2022, in an 8-3 en banc decision, the Ninth Circuit held that AB-32 violates the Constitution's Supremacy Clause and that AB-32 is preempted, vacated the lower court’s denial of the Company’s and the United States’ motions for preliminary injunction, and remanded the case to the District Court to consider the remaining preliminary injunction factors. On May 23, 2023, the District Court entered a Final Judgment and Permanent Injunction in favor of GEO and the United States.

On April 29, 2021, the Company filed a lawsuit in the U.S. District Court for the Western District of Washington against the State of Washington for declaratory and injunctive relief challenging the State of Washington’s newly enacted law – House Bill 1090 – that purports to prohibit the operation of "private detention facilities" in the state, which would prevent the United States from using privately contracted detention facilities to house detainees in the custody of ICE. The court entered a stay of this action pending the final resolution of the AB-32 appeal. On June 22, 2023, the State of Washington filed a stipulation indicating, among other things, that it will not enforce House Bill 1090 against GEO for its operation of the Northwest ICE Processing Center.

On July 13, 2023, the Company filed a lawsuit in the U.S. District Court for the Western District of Washington against the State of Washington for declaratory and injunctive relief challenging the State of Washington’s newly enacted law – House Bill 1470. House Bill 1470 purports to empower state agencies with new rule making, inspection, investigation, and testing powers over the Northwest ICE Processing Center. House Bill 1470 also creates a statutory regime of civil penalties applicable to private detention facilities for violations of House Bill 1470 detention standards, and purports to create a private right of action for detainees aggrieved by violations of the statute. The Company is currently awaiting a ruling on its complaint from the U.S. District Court for the Western District of Washington.

Other Litigation

The nature of the Company's business also exposes it to various other legal claims or litigation, including, but not limited to, civil rights claims relating to conditions of confinement and/or mistreatment, sexual misconduct claims brought by individuals in its care, medical malpractice claims, claims related to deaths in custody, 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 detainees, including damages arising from the escape of an individual in its care or from a disturbance or riot at a facility. Legal proceedings with respect to our facilities are unpredictable and, where material, can cause adverse effects, such as prompting modification or even termination of the underlying facility management contracts.

Accruals for Legal Proceedings

The Company establishes accruals for specific legal proceedings when it is considered probable that a loss has been incurred and the amount of the loss can be reasonably estimated. However, the results of these claims or proceedings cannot be predicted with certainty, and an unfavorable resolution of one or more of these claims or proceedings could have a material adverse effect on the Company's financial condition, results of operations or cash flows, including the modification or loss of one ore more facility management contracts, or could result in a material impairment of the Company’s assets. The Company's accruals for loss contingencies are reviewed quarterly and adjusted as additional information becomes available. The Company does not accrue for anticipated legal fees and costs but expenses those items as incurred.

Other Assessment

A state non-income tax audit completed in 2016 included tax periods for which the state tax authority had previously 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. In early January 2017, the Company received a formal Notice of Assessment of Taxes and Demand for Payment from the taxing authority disallowing the deductions. The total tax, penalty and interest related to the assessment is approximately $20.8 million. The Company is appealing an administrative ruling and disagrees with the assessment and intends to take all necessary steps to vigorously defend its position. The Company has established a reserve based on its estimate of the most probable loss based on the facts and circumstances known to date and the advice of outside counsel in connection with this matter.

Ravenhall

Effective September 20, 2022, the Company executed a Share and Unit Sale and Purchase Agreement ("SPA") for the sale of its equity investment interest in the government-owned Ravenhall Correctional Centre ("Centre") project in Australia for approximately $84 million in gross proceeds, pre-tax to an unrelated third party. In accordance with the SPA, the Company sold its shares/units in GEO Australasia Holdings Pty Ltd, GEO Australasia Finance Holdings Pty Ltd and GEO Australasia Finance Holding Trust, the Company's former wholly owned subsidiaries. These subsidiaries held the contract receivable and related non-recourse debt which were transferred to the buyer and are no longer an asset or outstanding obligation of the Company. These subsidiaries also held restricted cash that was also transferred to the buyer. The Company continues to manage the operations of the Centre on behalf of the State of Victoria. As a result of the sale, the Company recorded a gain of approximately $29.3 million, pre-tax, during the third quarter of 2022. The proceeds, along with available cash on hand, were used to repay debt.

Commitments

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 active capital projects will be approximately $57.8 million of which $43.0 million was spent through the first nine months of 2023. The Company estimates the remaining capital requirements related to these capital projects will be $14.8 million which will be spent through the remainder of 2023.

Assets Held for Sale

As of September 30, 2023, the Company had two properties classified as held for sale, one in its Reentry Services segment and the other in its U.S. Secure Services segment, in the accompanying consolidated balance sheet. At December 31, 2022, the Company had one property classified as held for sale included in its U.S. Secure Services Segment in the accompanying consolidated balance sheet. The Company does not record depreciation for assets held for sale. Any gain or loss on the sale of operating assets is included in the operating income of the reportable segment to which it relates. The properties that are classified as held for sale at September 30, 2023 are the Company's company-owned 139-bed Hector Garza Center located in Texas and a parcel of vacant land located in Colorado. At September 30, 2023, the aggregate carrying value of the properties was approximately $5.1 million. The property that was classified as held for sale at December 31, 2022 was a parcel of undeveloped land located in Texas which had a carrying value of approximately $0.5 million as of December 31, 2022.

Facility Disturbance

During the third quarter of 2023, the Company's 50% owned joint venture, South African Custodial Services, PTY Ltd, (“SACS”), experienced a disturbance at its managed-only facility in South Africa. As a result, SACS recognized gross business interruption recoveries of approximately $3 million, of which 50%, or approximately $1.5 million, is included in equity in earnings from affiliates in the accompanying statements of operations.

Idle Facilities

As of September 30, 2023, the Company was marketing seven of its idle facilities to potential customers. One of the facilities, Cheyenne Mountain Recovery Center, is under a contract which has yet to be activated. The carrying values of these idle facilities are included in Property and Equipment in the accompanying consolidated balance sheets. The following table summarizes each of the idled facilities and their respective carrying values, excluding equipment and other assets that can be easily transferred for use at other facilities. There was no indication of impairment related to the Company's idle facilities as of September 30, 2023.


						Secure Services		Reentry Services		Total
		Secure Services		Reentry Services		Net Carrying Value		Net Carrying Value		Net Carrying Value
Facility	Year Idled	Design Capacity (beds)		Design Capacity (beds)		September 30, 2023		September 30, 2023		September 30, 2023
D. Ray James Correctional Facility	2021		1,900		—		49,508		—		49,508
Northlake Correctional Facility	2022		1,800		—		67,028		—		67,028
Rivers Correctional Facility	2021		1,450		—		36,656		—		36,656
Big Spring Correctional Facility	2021		1,732		—		30,883		—		30,883
Flightline Correctional Facility	2021		1,800		—		33,672		—		33,672
McFarland Female Community Reentry Facility	2020		300		—		10,494		—		10,494
Cheyenne Mountain Recovery Center	2020		750		-		17,710				17,710
Coleman Hall	2017		—		350		—		7,465		7,465
Total			9,732		350	$	245,951	$	7,465	$	253,416

Executive Order

On January 26, 2021, President Biden signed an executive order directing the United States Attorney General not to renew Department of Justice (“DOJ”) contracts with privately operated criminal detention facilities, as consistent with applicable law. Two agencies of the DOJ, the Federal Bureau of Prisons (“BOP”) and the U.S. Marshals Service (“USMS”), utilized GEO’s support services at the time the executive order was signed. The BOP houses inmates who have been convicted of federal crimes, and the USMS is generally responsible for detainees who are awaiting trial or sentencing in U.S. federal courts. As of September 30, 2023, GEO has three company-owned/company-leased facilities under direct contracts with USMS, which have current contract option periods that expire between September 2025 and September 2028. The Company no longer has any contracts with the BOP for secure correctional facilities.

12. BUSINESS SEGMENTS AND GEOGRAPHIC INFORMATION

Operating and Reporting Segments

The Company conducts its business through four reportable business segments: the U.S. Secure Services segment; the Electronic Monitoring and Supervision Services segment; the Reentry Services segment; and the International Services segment. The Company has identified these four reportable segments to reflect the current view that the Company operates four distinct business lines, each of which constitutes a material part of its overall business.

The U.S. Secure Services segment primarily encompasses U.S.-based secure services business. The Electronic Monitoring and Supervision Services segment, which conducts its services in the United States, represents technology and services provided to adults for monitoring services for community-based parolees, probationers, and pretrial defendants. The Reentry Services segment, which conducts its services in the United States represents evidence-based supervision and treatment programs provided to adults for residential and non-residential treatment, educational and community-based programs, pre-release and half-way house programs. The International Services segment primarily consists of secure services operations in South Africa and Australia. Segment disclosures below (in thousands) reflect the results of continuing operations. All transactions between segments are eliminated.

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
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Revenues:
U.S. Secure Services	$	385,007		$	368,493		$	1,123,507		$	1,073,140
Electronic Monitoring and Supervision Services		94,489			137,039			335,158			346,444
Reentry Services		71,375			65,406			203,192			192,557
International Services		51,914			45,745			143,028			143,904
Total revenues	$	602,785		$	616,683		$	1,804,885		$	1,756,045
Operating income from segments:
U.S. Secure Services	$	64,187		$	67,462		$	195,589		$	214,994
Electronic Monitoring and Supervision Services		46,651			67,673			166,460			160,838
Reentry Services		16,826			9,816			37,198			34,027
International Services		3,281			3,192			8,564			12,740
Operating income from segments	$	130,945		$	148,143		$	407,811		$	422,599
General and Administrative Expenses		(47,356	)		(50,022	)	$	(139,182	)		(147,878	)
Total Operating Income	$	83,589		$	98,121		$	268,629		$	274,721

Pre-Tax Income Reconciliation of Segments

The following is a reconciliation of the Company’s total operating income from its reportable segments to the Company’s income before income taxes and equity in earnings of affiliates (in thousands):


	Three Months Ended						Nine Months Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Operating income from segments	$	130,945		$	148,143		$	407,811		$	422,599
Unallocated amounts:
General and administrative expenses		(47,356	)		(50,022	)		(139,182	)		(147,878	)
Net interest expense		(54,457	)		(41,426	)		(161,296	)		(95,082	)
Loss on extinguishment of debt		(91	)		(37,487	)		(1,845	)		(37,487	)
Gain on disposition on asset divestitures		1,274			29,279			3,449			32,332
Income before income taxes and equity in earnings of affiliates	$	30,315		$	48,487		$	108,937		$	174,484

Equity in Earnings of Affiliates

Equity in earnings of affiliates includes the Company’s 50% owned joint ventures in South African Custodial Services Pty. Limited (“SACS”), located in South Africa, and GEOAmey PECS Limited (“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 $1.5 million in earnings, net of tax, for SACS operations during the nine months ended September 30, 2023, and $1.5 million in earnings, net of tax, for SACS operations during the nine months ended September 30, 2022, 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, 2023, and December 31, 2022, the Company’s investment in SACS was $9.3 million and $11.1 million, respectively, and represents its share of cumulative reported earnings.

The Company has recorded $1.6 million in earnings, net of tax, for GEOAmey's operations during the nine months ended September 30, 2023, and $1.2 million in earnings, net of tax, for GEOAmey's operations during the nine months ended September 30, 2022, 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, 2023, and December 31, 2022, the Company’s investment in GEOAmey was $9.5 million and represents its share of cumulative reported earnings.

13. BENEFIT PLANS

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


	Nine Months Ended September 30, 2023			Year Ended December 31, 2022
Change in Projected Benefit Obligation
Projected benefit obligation, beginning of period	$	26,207		$	31,830
Service cost		559			1,118
Interest cost		1,009			962
Actuarial gain		—			(6,710	)
Benefits paid		(591	)		(993	)
Projected benefit obligation, end of period	$	27,184		$	26,207
Change in Plan Assets
Plan assets at fair value, beginning of period	$	—		$	—
Company contributions		591			993
Benefits paid		(591	)		(993	)
Plan assets at fair value, end of period	$	—		$	—
Unfunded Status of the Plan	$	27,184		$	26,207


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Components of Net Periodic Benefit Cost
Service cost	$	186	$	280	$	559	$	839
Interest cost		336		240		1,009		721
Net loss		-		108		-		324
Net periodic pension cost	$	522	$	628	$	1,568	$	1,884

The service cost and other components of net periodic benefit cost are included in General and Administrative Expenses in the accompanying consolidated statements of operations.

The long-term portion of the pension liability as of September 30, 2023 and December 31, 2022 was $26.4 million and $25.4 million, respectively, and is included in Other Non-Current Liabilities in the accompanying consolidated balance sheets.

Amended and Restated Executive Retirement Agreement

The Company also has a non-qualified deferred compensation agreement with its former CEO. The agreement provides for a lump sum cash payment upon retirement, no sooner than age 55. As of September 30, 2023, the former CEO had reached age 55 and was eligible to receive the payment upon retirement.

On May 27, 2021, the Company and its former CEO entered into an Amended and Restated Executive Retirement Agreement which replaced the former CEO’s previous agreement, effective July 1, 2021. Pursuant to the terms of the Amended and Restated Executive Retirement Agreement, upon the date that the former CEO ceases to provide services to the Company, the Company will pay to the former CEO an amount equal to $3.6 million which shall be paid in cash. The payment shall be credited with interest at a rate of 5% compounded quarterly. Additionally, at the end of each calendar year provided that the former CEO is still providing services to GEO pursuant to the Executive Chairman Agreement, GEO will credit an amount equal to $1.0 million at the end of each calendar year (the “Employment Contributions Account”). The Employment Contributions Account will be credited with interest at the rate of 5% compounded quarterly. The balance of the Amended and Restated Executive Retirement Agreement was approximately $8.1 million at September 30, 2023 and is included in Other Non-Current Liabilities in the accompanying consolidated balance sheets.

The Company has established several trusts for the purpose of paying the retirement benefit pursuant to the Amended and Restated Executive Retirement Agreement. The trusts are revocable “rabbi trusts” and the assets of the trusts are subject to the claims of the Company’s creditors in the event of the Company’s insolvency.

14. RECENT ACCOUNTING PRONOUNCEMENTS

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants and the SEC did not, or are not expected to, have a material effect on the Company's results of operations or financial position.

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

Forward-Looking Information

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, legal proceedings, our corporate structure and potential steps to address our future debt maturities 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:

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our ability to timely build and/or open facilities as planned, successfully manage such facilities and successfully integrate such facilities into our operations without substantial additional costs;

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our ability to estimate the government’s level of utilization of public-private partnerships for secure services and the impact of any modifications or reductions by our government customers of their utilization of public-private partnerships;

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our ability to accurately project the size and growth of public-private partnerships for secure services in the U.S. and internationally and our ability to capitalize on opportunities for public-private partnerships;

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our ability to successfully respond to any challenges or concerns that our government customers may raise regarding their use of public-private partnerships for secure services, including finding other government customers or alternative uses for facilities where a government customer has discontinued or announced that a contract with us will be discontinued;

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the impact of adopted or proposed executive action or legislation aimed at limiting public-private partnerships for secure facilities, processing centers and community reentry centers or limiting or restricting the business and operations of financial institutions or others who do business with us;

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our ability to successfully respond to delays encountered by states pursuing public-private partnerships for secure services and cost savings initiatives implemented by a number of states;

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our ability to activate the inactive beds at our idle facilities;

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our ability to maintain or increase occupancy rates at our facilities and the impact of fluctuations in occupancy levels on our revenues and profitability;

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the impact of our termination of our REIT election and the discontinuation of quarterly dividend payments and our ability to maximize the use of cash flows to repay debt, deleverage and internally fund growth;

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we may fail to realize the anticipated benefits of terminating our REIT election or those benefits may take longer to realize than expected, if at all, or may not offset the costs of terminating our REIT election and becoming a taxable C Corporation;

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if we failed to remain qualified as a REIT for those years we elected REIT status, we would be subject to additional corporate income taxes and would not be able to deduct distributions to shareholders when computing our taxable income for those years;

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our ability to expand, diversify and grow our secure services, reentry, community-based services, monitoring services, evidence-based supervision and treatment programs and secure transportation services businesses;

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our ability to win management contracts for which we have submitted proposals, retain existing management contracts, prevail in any challenge or protest involving the award of a management contract and meet any performance standards required by such management contracts;

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our ability to raise new project development capital given the often short-term nature of the customers’ commitment to use newly developed facilities;

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our ability to develop long-term earnings visibility;

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our ability to successfully conduct our operations in the United Kingdom and South Africa through joint ventures;

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the impact of the LIBOR transition;

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the instability of foreign exchange rates, exposing us to currency risks in Australia, the United Kingdom, and South Africa, or other countries in which we may choose to conduct our business;

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an increase in unreimbursed labor rates;

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our exposure to rising medical costs;

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our ability to manage costs and expenses relating to ongoing litigation arising from our operations;

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our ability to successfully pursue an appeal to reverse the recent unfavorable verdict and judgments in the retrial of the lawsuits in the State of Washington, our company being required to record an accrual for the judgments in the future, and our ability to defend similar other pending litigation and the effect such litigation may have on our company;

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our ability to accurately estimate on an annual basis, loss reserves related to general liability, workers’ compensation and automobile liability claims;

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our ability to fulfill our debt service obligations and its impact on our liquidity;

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our ability to deleverage and repay, refinance or otherwise address our debt maturities in an amount or on the timeline we expect, or at all;

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despite current indebtedness levels, we may still incur more indebtedness, which could further exacerbate the risks relating to our indebtedness;

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the covenants in the indentures governing the Convertible Notes, the 6.00% Senior Notes due 2026, the 5.875% Senior Notes due 2024 and the covenants in the indentures governing the 2028 Registered Notes, the 2028 Private Exchange Notes and the Exchange Credit Agreement impose significant operating and financial restrictions which may adversely affect our ability to operate our business;

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servicing our indebtedness will require a significant amount of cash and our ability to generate cash depends on many factors beyond our control and we may not be able to generate the cash required to service our indebtedness;

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because portions of our senior indebtedness have floating interest rates, an increase in interest rates would adversely affect cash flows;

•

we depend on distributions from our subsidiaries to make payments on our indebtedness and these distributions may not be made;

•

we may not be able to satisfy our repurchase obligations in the event of a change of control because the terms of our indebtedness or lack of funds may prevent us from doing so;

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the conditional exchange feature of the 6.5% Exchangeable Senior Notes, if triggered, may adversely affect our financial condition;

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the second lien notes and the related guarantees are effectively subordinated to our and our subsidiary guarantors' current senior secured indebtedness and structurally subordinated to the indebtedness of our subsidiaries that do not guarantee the second lien notes;

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it may be difficult to realize the value of the collateral securing the second lien notes and related guarantees;

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our ability to identify and successfully complete any potential sales of additional Company-owned assets and businesses on commercially advantageous terms on a timely basis, or at all;

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from time to time, we may not have a management contract with a client to operate existing beds at a facility or new beds at a facility that we are expanding, and we cannot assure you that such a contract will be obtained. Failure to obtain a management contract for these beds will subject us to carrying costs with no corresponding management revenue;

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negative conditions in the capital markets could prevent us from obtaining future financing on desirable terms, which could materially harm our business;

•

we are subject to the loss of our facility management contracts, due to executive orders, terminations, non-renewals or competitive re-bids, which could adversely affect our results of operations and liquidity, including our ability to secure new facility management contracts from other government customers;

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our growth depends on our ability to secure contracts to develop and manage new secure facilities, processing centers and community-based facilities and to secure contracts to provide electronic monitoring services, community-based reentry services and monitoring and supervision services, the demand for which is outside our control;

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we may not be able to meet state requirements for capital investment or locate land for the development of new facilities, which could adversely affect our results of operations and future growth;

•

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;

•

State budgetary constraints may have a material adverse impact on us;

•

competition for contracts may adversely affect the profitability of our business;

•

we are dependent on government appropriations, which may not be made on a timely basis or at all and may be adversely impacted by budgetary constraints at the federal, state, local and foreign government levels;

•

public and political resistance to the use of public-private partnerships for secure facilities, electronic monitoring and supervision as alternatives to detention, processing centers and community reentry centers could result in our inability to obtain new contracts or the loss of existing contracts, impact our ability to obtain or refinance debt financing or enter into commercial arrangements, which could have a material adverse effect on our business, financial condition, results of operations and the market price of our securities;

•

adverse publicity may negatively impact our ability to retain existing contracts and obtain new contracts;

•

we may incur significant start-up and operating costs on new contracts before receiving related revenues, which may impact our cash flows and may not be recouped;

•

failure to comply with extensive government regulation and applicable contractual requirements could have a material adverse effect on our business, financial condition or results of operations;

•

we may face community opposition to facility locations, which may adversely affect our ability to obtain new contracts;

•

our business operations expose us to various liabilities for which we may not have adequate insurance and may have a material adverse effect on our business, financial condition or results of operations;

•

we may not be able to obtain or maintain the insurance levels required by our government contracts;

•

our exposure to rising general insurance costs;

•

natural disasters, pandemic outbreaks, global political events and other serious catastrophic events could disrupt operations and otherwise materially adversely affect our business and financial condition;

•

our international operations expose us to risks that could materially adversely affect our financial condition and results of operations;

•

we conduct certain of our operations through joint ventures or consortiums, which may lead to disagreements with our joint venture partners or business partners and adversely affect our interest in the joint ventures or consortiums;

•

we are dependent upon our senior management and our ability to attract and retain sufficient qualified personnel;

•

our profitability may be materially adversely affected by inflation;

•

various risks associated with the ownership of real estate may increase costs, expose us to uninsured losses and adversely affect our financial condition and results of operations;

•

risks related to facility construction and development activities may increase our costs related to such activities;

•

the rising cost and increasing difficulty of obtaining adequate levels of surety credit on favorable terms could adversely affect our operating results;

•

adverse developments in our relationship with our employees could adversely affect our business, financial condition or results of operations;

•

technological changes could cause our electronic monitoring products and technology, including our recently launched BI VeriWatch™ wrist-worn device, to become obsolete or require the redesign of our electronic monitoring products, which could have a material adverse effect on our business;

•

any negative changes in the level of acceptance of or resistance to the use of electronic monitoring products, including our recently launched BI VeriWatch™ wrist-worn device, and services by governmental customers could have a material adverse effect on our business, financial condition and results of operations;

•

we depend on a limited number of third parties to manufacture and supply quality infrastructure components for our electronic monitoring products. If our suppliers cannot provide the components or services we require in a timely manner and/or with such quality as we expect, our ability to market and sell our electronic monitoring products and services could be harmed;

•

the interruption, delay or failure of the provision of our services or information systems could adversely affect our business;

•

an inability to acquire, protect or maintain our intellectual property and patents in the electronic monitoring space could harm our ability to compete or grow;

•

our electronic monitoring products could infringe on the intellectual property rights of others, which may lead to litigation that could itself be costly, could result in the payment of substantial damages or royalties, and/or prevent us from using technology that is essential to our products;

•

we license intellectual property rights in the electronic monitoring space, including patents, from third party owners. If such owners do not properly maintain or enforce the intellectual property underlying such licenses, our competitive position and business prospects could be harmed. Our licensors may also seek to terminate our license;

•

we may be subject to costly product liability claims from the use of our electronic monitoring products, which could damage our reputation, impair the marketability of our products and services and force us to pay costs and damages that may not be covered by adequate insurance;

•

our ability to identify suitable acquisitions or dispositions, and to successfully complete such acquisitions or dispositions;

•

as a result of our acquisitions, we have recorded and will continue to record a significant amount of goodwill and other intangible assets. In the future, our goodwill or other intangible assets may become impaired, which could result in material non-cash charges to our results of operations;

•

we are subject to risks related to corporate social responsibility;

•

the market price of our common stock may vary substantially. If the market price of our common stock were to decline further in the future at a specific measurement time period that impacts our public float calculation, we could potentially lose our status as a well-known seasoned issuer and/or large accelerated filer;

•

future sales of shares of our common stock or securities convertible into common stock could adversely affect the market price of our common stock and may be dilutive to current shareholders;

•

various anti-takeover protections applicable to us may make an acquisition of us more difficult and reduce the market value of our common stock;

•

failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have an adverse effect on our business and the trading price of our common stock;

•

we may issue additional debt securities that could limit our operating flexibility and negatively affect the value of our common stock;

•

failure to comply with anti-bribery and anti-corruption laws could subject us to penalties and other adverse consequences; and

•

other factors contained in our filings with the SEC, including, but not limited to, those detailed in the Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K filed with the SEC.

We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 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.

Introduction

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”, and under “Part I - Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022. This 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 specialize in the ownership, leasing and management of secure facilities, processing centers and reentry facilities and the provision of community-based services in the United States, Australia and South Africa. We own, lease and operate a broad range of secure facilities including maximum, medium and minimum-security facilities, processing centers, as well as community-based reentry facilities. We develop new facilities based on contract awards, using our project development expertise and experience to design, construct and finance what we believe are state-of-the-art facilities. We provide innovative technologies, industry-leading monitoring services, and evidence-based supervision and treatment programs for community based programs. We also provide secure transportation services domestically and in the United Kingdom through our joint venture GEOAmey.

At September 30, 2023, our worldwide operations include the management and/or ownership of approximately 81,000 beds at 100 secure services and community based facilities, including idle facilities, and also include the provision of community supervision services for an average of more than 400,000 individuals, including nearly 180,000 through an array of technology products including radio frequency, GPS, and alcohol monitoring devices.

We provide a diversified scope of services on behalf of our government agency partners:

•

our secure facility management services involve the provision of security, administrative, rehabilitation, education, and food services at secure services facilities;

•

our reentry services involve supervision of individuals in community-based programs and re-entry centers and the provision of temporary housing, programming, employment assistance and other services with the intention of the successful reintegration of residents into the community;

•

we provide comprehensive electronic monitoring and supervision services;

•

we develop new facilities, using our project development experience to design, construct and finance what we believe are state-of-the-art facilities;

•

we provide secure transportation services; and

•

our services are provided at facilities which we either own, lease or are owned by the government.

For the nine months ended September 30, 2023 and 2022, we had consolidated revenues of $1,804.9 million and $1,756.0 million, respectively. We maintained an average company-wide facility occupancy rate of approximately 86% including 71,034 active beds and excluding 10,221 idle beds which includes those being marketed to potential customers and those classified as held for sale for the nine months ended September 30, 2023, and approximately 85% including 68,920 active beds and excluding 13,061 idle beds which includes those being marketed to potential customers for the nine months ended September 30, 2022.

Reference is made to Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on February 27, 2023, for further discussion and analysis of information pertaining to our financial condition and results of operations as of and for the year ended December 31, 2022.

Business Segments

We conduct our business through four reportable business segments: our U.S. Secure Services segment; our Electronic Monitoring and Supervision Services segment; our Reentry Services segment and our International Services segment. We have identified these four reportable segments to reflect our current view that we operate four distinct business lines, each of which constitutes a material part of our overall business.

Our U.S. Secure Services segment primarily encompasses our U.S.-based public-private partnership secure services business. Our Electronic Monitoring and Supervision Services segment, which conducts its services in the U.S., consists of our electronic monitoring and supervision services. Our Reentry Services segment consists of various community-based and reentry services. Our

International Services segment primarily consists of our public-private partnership secure services operations in Australia and South Africa.

Recent Developments

Contract Developments

During the third quarter of 2023, we renewed two direct contracts with the U.S. Marshals Service. One was at our company-owned 1,900-bed Rio Grande Processing Center in Texas for a five-year term, and the second at our company-leased 770-bed Western Region Detention Facility in San Diego for a two-year term.

We also renewed three contracts with ICE for respective one-year terms that include our company-owned 700-bed Broward Transitional Center in Florida, our company-owned 1,904-bed South Texas ICE Processing Center, and our company-owned 1,314-bed Montgomery Processing Center in Texas and entered into a new emergency nine month contract to provide air operations support for ICE.

Idle Facilities

We are currently marketing 9,332 vacant beds at seven of our idle facilities to potential customers which do not include assets classified as held for sale or idle facilities that are under a contract that has not yet been activated. The carrying values of these idle facilities totaled $235.7 million as of September 30, 2023, excluding equipment and other assets that can be easily transferred for use at other facilities. Refer to Note 11 - Commitments, Contingencies and Other Matters 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.

Critical Accounting Policies

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, 2023, 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, 2022.

RESULTS OF OPERATIONS

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.

Comparison of Third Quarter 2023 and Third Quarter 2022

Revenues


	2023		% of Revenue			2022		% of Revenue			$ Change			% Change
	(Dollars in thousands)
U.S. Secure Services	$	385,007		63.9	%	$	368,493		59.8	%	$	16,514			4.5	%
Electronic Monitoring and Supervision Services		94,489		15.7	%		137,039		22.2	%		(42,550	)		(31.0	)%
Reentry Services		71,375		11.8	%		65,406		10.6	%		5,969			9.1	%
International Services		51,914		8.6	%		45,745		7.4	%		6,169			13.5	%
Total	$	602,785		100.0	%	$	616,683		100.0	%	$	(13,898	)		(2.3	)%

U.S. Secure Services

Revenues for U.S. Secure Services increased by $16.5 million in Third Quarter 2023 compared to Third Quarter 2022 primarily due to aggregate increases of $8.8 million due to the activation of new transportation contracts. In addition, we experienced aggregate net increases in rates and/or per diem amounts in connection with contract modifications, transportation services and increased occupancies of $16.6 million. These increases were partially offset by aggregate decreases of $8.8 million primarily due to the ramp-down/deactivation of our company-owned North Lake Correctional Facility.

The number of compensated mandays in U.S. Secure Services facilities was approximately 4.3 million in Third Quarter 2023 and 4.5 million in Third Quarter 2022. We experienced an aggregate net decrease of approximately 200,000 mandays as a result of contract terminations, partially offset by contract activations and increases in occupancies discussed above. 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. Secure Services facilities was 86.6% and 88.8% of capacity in the Third Quarter 2023 and Third Quarter 2022, respectively, excluding idle facilities.

Electronic Monitoring and Supervision Services

Revenues for Electronic Monitoring and Supervision Services decreased by $42.6 million in Third Quarter 2023 compared to Third Quarter 2022 primarily due to decreases in average participant counts under the Intensive Supervision and Appearance Program ("ISAP").

Reentry Services

Revenues for Reentry Services increased by $6.0 million in Third Quarter 2023 compared to Third Quarter 2022 primarily due to increases of $1.7 million due to new day reporting center contracts. We also experienced a net aggregate increase of $4.2 million primarily related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals.

International Services

Revenues for International Services increased by $6.2 million in Third Quarter 2023 compared to Third Quarter 2022 primarily due to a net increase of $8.7 million due to increased populations at our Australian subsidiary and our new health care contract in Australia. Partially offsetting this increase was a decrease due to foreign exchange rate fluctuations of $2.5 million.

Operating Expenses


	2023		% of Segment Revenues			2022		% of Segment Revenues			$ Change			% Change
	(Dollars in thousands)
U.S. Secure Services	$	301,201		78.2	%	$	281,694		76.4	%	$	19,507			6.9	%
Electronic Monitoring and Supervision Services		41,145		43.5	%		61,351		44.8	%		(20,206	)		(32.9	)%
Reentry Services		50,256		70.4	%		51,121		78.2	%		(865	)		(1.7	)%
International Services		48,065		92.6	%		42,044		91.9	%		6,021			14.3	%
Total	$	440,667		73.1	%	$	436,210		70.7	%	$	4,457			1.0	%

U.S. Secure Services

Operating expenses for U.S. Secure Services increased by $19.5 million in Third Quarter 2023 compared to Third Quarter 2022 primarily due to aggregate net increases in connection with labor and medical costs, transportation services, increased occupancies and the variable costs associated with those services of $19.2 million. We also experienced an increase of $5.7 million related to new transportation contracts. Partially offsetting these increases were decreases of $5.4 million primarily related to the ramp-down/deactivation of our company-owned North Lake Correctional Facility. Operating expenses as a percentage of revenue have increased due to increased labor and medical costs and increased variable costs associated with population increases for several of our minimum guarantee contracts.

Electronic Monitoring and Supervision Services

Operating expenses for Electronic Monitoring and Supervision Services decreased by $20.2 million in Third Quarter 2023 compared to Third Quarter 2022 primarily due to decreases in variable costs related to decreases in average participant counts under ISAP.

Reentry Services

Operating expenses for Reentry Services decreased by $0.9 million during Third Quarter 2023 compared to Third Quarter 2022 primarily due to a decrease of $2.0 million due to contract terminations. Partially offsetting this decrease was an aggregate net increase of $2.2 million related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals and the associated variable costs. We also experienced an increase of $1.9 million due to new day reporting center contracts. We also experienced net favorable adjustments of $3.0 million primarily related to worker's compensation actuarial adjustments and employee retention credits from the IRS in Third Quarter 2023.

International Services

Operating expenses for International Services increased by $6.0 million in Third Quarter 2023 compared to Third Quarter 2022 primarily due to a net increase of approximately $8.4 million primarily due to expenses associated with our new health care contract in Australia. Partially offsetting this increase was a decrease related to foreign exchange rate fluctuations of $2.4 million.

Depreciation and Amortization


	2023		% of Segment Revenue			2022		% of Segment Revenue			$ Change			% Change
	(Dollars in thousands)
U.S. Secure Services	$	19,619		5.1	%	$	19,337		5.2	%	$	282			1.5	%
Electronic Monitoring and Supervision Services		6,693		7.1	%		8,015		5.8	%		(1,322	)		(16.5	)%
Reentry Services		4,293		6.0	%		4,469		6.8	%		(176	)		(3.9	)%
International Services		568		1.1	%		509		1.1	%		59			11.6	%
Total	$	31,173		5.2	%	$	32,330		5.2	%	$	(1,157	)		(3.6	)%

U.S. Secure Services

U.S. Secure Services depreciation and amortization expense increased in Third Quarter 2023 compared to Third Quarter 2022 primarily due to renovations at certain of our company-owned and leased facilities.

Electronic Monitoring and Supervision Services

Electronic Monitoring and Supervision Services depreciation and amortization expense decreased in Third Quarter 2023 compared to Third Quarter 2022 primarily due to certain assets becoming fully depreciated and/or amortized as well as the closing of certain ISAP locations.

Reentry Services

Reentry Services depreciation and amortization expense decreased in Third Quarter 2023 compared to Third Quarter 2022 primarily due to certain assets becoming fully depreciated and/or amortized as well as certain asset dispositions at our company-owned centers.

International Services

International Services depreciation and amortization expense was relatively consistent in Third Quarter 2023 compared to Third Quarter 2022.


	2023		% of Revenue			2022		% of Revenue			$ Change			% Change
	(Dollars in thousands)
General and Administrative Expenses	$	47,356		7.9	%	$	50,022		8.1	%	$	(2,666	)		(5.3	)%

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. General and administrative expenses decreased by $2.7 million in Third Quarter 2023 compared to Third Quarter 2022 primarily due to decreases in professional fees, insurance and other administrative expenses.

Non-Operating Expenses

Interest Income and Interest Expense


	2023		% of Revenue			2022		% of Revenue			$ Change			% Change
	(Dollars in thousands)
Interest Income	$	1,320		0.2	%	$	5,111		0.8	%	$	(3,791	)		(74.2	)%
Interest Expense	$	55,777		9.3	%	$	46,537		7.5	%	$	9,240			19.9	%

Interest income decreased in Third Quarter 2023 compared to Third Quarter 2022 primarily due to the sale of our equity interest in the Ravenhall project in Australia in August 2022 and the corresponding decrease in interest income on the contract receivable. Also contributing to the decrease was the effect of foreign exchange rate fluctuations. Refer to Note 11 - Commitments, Contingencies and Other Matters 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 August 19, 2022, we completed an exchange offer to exchange certain of our outstanding 5.125% Senior Notes due 2023, 5.875% Senior Notes due 2024, 6.00% Senior Notes due 2026 and certain revolving credit loans and term loans under our senior secured credit facility into newly issued senior second lien secured notes and a new exchange credit agreement. Interest expense increased in Third Quarter 2023 compared to Third Quarter 2022 primarily due to higher interest rates on the new debt instruments as well as the net amortization of deferred issuance costs and discounts/premiums related to the transaction. Additionally, SOFR/LIBOR rates have increased in Third Quarter 2023 compared to Third Quarter 2022. 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.

Loss on Extinguishment of Debt


	2023		% of Revenue			2022		% of Revenue			$ Change			% Change
	(Dollars in thousands)
Loss on Extinguishment of Debt	$	91		0.0	%	$	37,487		6.1	%	$	(37,396	)		(99.8	)%

During Third Quarter 2023, the Company made a mandatory quarterly prepayment on its Tranche 1 and Tranche 2 loans under its exchange credit agreement. In connection with the prepayment, the Company wrote off a proportionate amount of related deferred loan costs and discount/premium. 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.

During Third Quarter 2022, the Company completed an exchange offer to exchange certain of its outstanding 5.125% Senior Notes due 2023, 5.875% Senior Notes due 2024, 6.000% Senior Notes due 2026 and certain revolving credit loans and term loans under its senior secured credit facility into newly issued senior second lien secured notes and a new credit facility. As a result of the transactions, we recorded a net loss on extinguishment of debt of $37.5 million.

Gain on Asset Divestitures


	2023		% of Revenue			2022		% of Revenue			$ Change			% Change
	(Dollars in thousands)
Gain on Asset Divestitures	$	1,274		0.2	%	$	29,279		4.7	%	$	(28,005	)		(95.6	)%

We experienced a gain on asset divestiture in Third Quarter 2023 primarily due to the sale of our company-owned 900-bed Albert Bo Robinson Assessment and Treatment Center.

During Third Quarter 2022, we sold our equity investment interest in the government-owned Ravenhall Correctional Centre project in Australia for approximately $84 million in gross proceeds, pre-tax to an unrelated third party. As a result of the transaction, we recorded a gain of approximately $29.3 million. Refer to Note 11 - Commitments, Contingencies and Other Matters 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.

Income Tax Provision


	2023		Effective Rate			2022		Effective Rate			$ Change			% Change
	(Dollars in thousands)
Provision for Income Taxes	$	6,521		21.5	%	$	11,246		23.2	%	$	(4,725	)		(42.0	)%

The provision for income taxes decreased during Third Quarter 2023 principally due to lower pre-tax income for the quarter. The effective tax rate decreased compared to Third Quarter 2022. In Third Quarter 2023, there was a $2.1 million net discrete tax benefit as compared to a $4.3 million net discrete tax benefit in Third Quarter 2022. Due to the lower pre-tax income during Third Quarter 2023, the net discrete benefit in the quarter had a larger impact on the effective tax rate. We estimate our 2023 annual effective tax rate to be in the range of approximately 27% to 30%, exclusive of any discrete items.

Equity in Earnings of Affiliates, net of Income Tax Provision


	2023		% of Revenue			2022		% of Revenue			$ Change			% Change
	(Dollars in thousands)
Equity in Earnings of Affiliates, net of Income Tax Provision	$	709		0.1	%	$	1,071		0.2	%	$	(362	)		(33.8	)%

Equity in earnings of affiliates, presented net of income tax provision, represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings of affiliates decreased during Third Quarter 2023 compared to Third Quarter 2022 due to unfavorable performance at SACS.

Comparison of Nine Months 2023 and Nine Months 2022

Revenues


	2023		% of Revenue			2022		% of Revenue			$ Change			% Change
	(Dollars in thousands)
U.S. Secure Services	$	1,123,507		62.2	%	$	1,073,140		61.1	%	$	50,367			4.7	%
Electronic Monitoring and Supervision Services		335,158		18.6	%		346,444		19.7	%		(11,286	)		(3.3	)%
Reentry Services		203,192		11.3	%		192,557		11.0	%		10,635			5.5	%
International Services		143,028		7.9	%		143,904		8.2	%		(876	)		(0.6	)%
Total	$	1,804,885		100	%	$	1,756,045		100.0	%	$	48,840			2.8	%

U.S. Secure Services

Revenues for U.S. Secure Services increased by $50.4 million in Nine Months 2023 compared to Nine Months 2022 primarily due to aggregate increases of $14.3 million due to the activation of new transportation contracts. In addition, we experienced aggregate net increases in rates and/or per diem amounts in connection with contract modifications, transportation services and increased occupancies of $75.5 million. These increases were partially offset by aggregate decreases of $39.4 million due to the ramp-down/deactivations of our company-owned North Lake Correctional Facility and our managed-only George W. Hill Correctional Facility.

The number of compensated mandays in U.S. Secure Services facilities was approximately 12.5 million in Nine Months 2023 and 13.3 million in Nine Months 2022. We experienced an aggregate net decrease of approximately 800,000 mandays as a result of contract terminations, partially offset by contract activations and increases in occupancies discussed above. 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. Secure Services facilities was 86.2% and 88.2% of capacity in Nine Months 2023 and Nine Months 2022, respectively, excluding idle facilities.

Electronic Monitoring and Supervision Services

Revenues for Electronic Monitoring and Supervision Services decreased by $11.3 million in Nine Months 2023 compared to Nine Months 2022 primarily due to decreases in average participant counts under ISAP.

Reentry Services

Revenues for Reentry Services increased by $10.6 million in Nine Months 2023 compared to Nine Months 2022 primarily due to increases of $4.6 million due to new day reporting center contracts. We also experienced a net aggregate increase of $12.3 million primarily related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals. These increases were partially offset by decreases of $6.3 million due to contract terminations.

International Services

Revenues for International Services decreased by $0.9 million in Nine Months 2023 compared to Nine Months 2022 primarily due to foreign exchange rate fluctuations of $9.5 million. This decrease was partially offset by a net increase of $8.6 million due to increased populations at our Australian subsidiary and our new health care contract in Australia.

Operating Expenses


	2023		% of Segment Revenues			2022		% of Segment Revenues			$ Change			% Change
	(Dollars in thousands)
U.S. Secure Services	$	869,233		77.4	%	$	796,913		74.3	%	$	72,320			9.1	%
Electronic Monitoring and Supervision Services		147,144		43.9	%		162,072		46.8	%		(14,928	)		(9.2	)%
Reentry Services		153,078		75.3	%		144,563		75.1	%		8,515			5.9	%
International Services		132,832		92.9	%		129,614		90.1	%		3,218			2.5	%
Total	$	1,302,287		72.2	%	$	1,233,162		70.2	%	$	69,125			5.6	%

U.S. Secure Services

Operating expenses for U.S. Secure Services increased by $72.3 million in Nine Months 2023 compared to Nine Months 2022 primarily due to aggregate net increases in connection with labor and medical costs, transportation services, increased occupancies and the variable costs associated with those services of $88.2 million. We also experienced an increase of $9.7 million related to new transportation contracts. Partially offsetting these increases were decreases of $25.6 million related to the ramp-down/deactivations of our company-owned North Lake Correctional Facility and our managed-only George W. Hill Correctional Facility. Operating expenses as a percentage of revenue have increased due to increased labor and medical costs and increased variable costs associated with population increases for several of our minimum guarantee contracts.

Electronic Monitoring and Supervision Services

Operating expenses for Electronic Monitoring and Supervision Services decreased by $14.9 million in Nine Months 2023 compared to Nine Months 2022 primarily due to decreases in variable costs related to decreases in average participant counts under ISAP. Operating expenses as a percentage of revenues decreased due to favorable cost trends.

Reentry Services

Operating expenses for Reentry Services increased by $8.5 million during Nine Months 2023 compared to Nine Months 2022 primarily due to an aggregate net increase of $9.2 million related to increased census levels at certain of our community-based and reentry centers due to increased programming needs and referrals and the associated variable costs. We also experienced an increase of $5.6 million due to the new day reporting center contracts. Partially offsetting these increases was a decrease of $6.3 million due to contract terminations.

International Services

Operating expenses for International Services increased by $3.2 million in Nine Months 2023 compared to Nine Months 2022 primarily due to a net increase of approximately $12.1 million primarily due to increases in populations at our Australian subsidiary and transitional expenses associated with our new health care contract in Australia. Partially offsetting this increase was a decrease related to foreign exchange rate fluctuations of $8.9 million.

Depreciation and Amortization


	2023		% of Segment Revenue			2022		% of Segment Revenue			$ Change			% Change
	(Dollars in thousands)
U.S. Secure Services	$	58,685		5.2	%	$	61,233		5.7	%	$	(2,548	)		(4.2	)%
Electronic Monitoring and Supervision Services		21,554		6.4	%		23,534		6.8	%		(1,980	)		(8.4	)%
Reentry Services		12,916		6.4	%		13,967		7.3	%		(1,051	)		(7.5	)%
International Services		1,632		1.1	%		1,550		1.1	%		82			5.3	%
Total	$	94,787		5.3	%	$	100,284		5.7	%	$	(5,497	)		(5.5	)%

U.S. Secure Services

U.S. Secure Services depreciation and amortization expense decreased in Nine Months 2023 compared to Nine Months 2022 primarily due to certain assets becoming fully depreciated and/or amortized.

Electronic Monitoring and Supervision Services

Electronic Monitoring and Supervision Services depreciation and amortization expense decreased in Nine Months 2023 compared to Nine Months 2022 primarily due to certain assets becoming fully depreciated and/or amortized as well as the closing of certain ISAP locations.

Reentry Services

Reentry Services depreciation and amortization expense decreased in Nine Months 2023 compared to Nine Months 2022 primarily due to certain assets becoming fully depreciated and/or amortized as well as certain asset dispositions at our company-owned centers.

International Services

International Services depreciation and amortization expense was relatively consistent in Nine Months 2023 compared to Nine Months 2022.

Other Unallocated Operating Expenses


	2023		% of Revenue			2022		% of Revenue			$ Change			% Change
	(Dollars in thousands)
General and Administrative Expenses	$	139,182		7.7	%	$	147,878		8.4	%	$	(8,696	)		(5.9	)%

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. General and administrative expenses decreased by $8.7 million in Nine Months 2023 compared to Nine Months 2022 primarily due to decreases in professional fees, insurance and other administrative expenses.

Non-Operating Expenses

Interest Income and Interest Expense


	2023		% of Revenue			2022		% of Revenue			$ Change			% Change
	(Dollars in thousands)
Interest Income	$	3,785		0.2	%	$	16,301		0.9	%	$	(12,516	)		(76.8	)%
Interest Expense	$	165,081		9.1	%	$	111,383		6.3	%	$	53,698			48.2	%

Interest income decreased in Nine Months 2023 compared to Nine Months 2022 primarily due to the sale of our equity interest in the Ravenhall project in Australia in August 2022 and the corresponding decrease in interest income on the contract receivable. Also contributing to the decrease was the effect of foreign exchange rate fluctuations. Refer to Note 11 - Commitments, Contingencies and Other Matters 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 August 19, 2022, we completed an exchange offer to exchange certain of our outstanding 5.125% Senior Notes due 2023, 5.875% Senior Notes due 2024, 6.00% Senior Notes due 2026 and certain revolving credit loans and term loans under our senior secured credit facility into newly issued senior second lien secured notes and a new exchange credit agreement. Interest expense increased in Nine Months 2023 compared to Nine Months 2022 primarily due to higher interest rates on the new debt instruments as well as the net amortization of deferred issuance costs and discounts/premiums related to the transaction. Additionally, SOFR/LIBOR rates have increased in Nine Months 2023 compared to Nine Months 2022. 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.

Loss on Extinguishment of Debt


	2023		% of Revenue			2022		% of Revenue			$ Change			% Change
	(Dollars in thousands)
Loss on Extinguishment of Debt	$	1,845		0.1	%	$	37,487		2.1	%	$	(35,642	)		(95.1	)%

During Nine Months 2023, the Company made a mandatory quarterly prepayment on its Tranche 1 and Tranche 2 loans under its exchange credit agreement. In connection with the prepayment, the Company wrote off a proportionate amount of related deferred loan costs and discount/premium. 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.

During Nine Months 2022, we completed an exchange offer to exchange certain of our outstanding 5.125% Senior Notes due 2023, 5.875% Senior Notes due 2024, 6.00% Senior Notes due 2026 and certain revolving credit loans and term loans under our senior secured credit facility into newly issued senior second lien secured notes and a new credit facility. As a result of the transactions, we recorded a net loss on extinguishment of debt of $37.5 million, net of the write-off of associated unamortized deferred loan costs.

Gain on Asset Divestitures


	2023		% of Revenue			2022		% of Revenue			$ Change			% Change
	(Dollars in thousands)
Gain on Asset Divestitures	$	3,449		0.2	%	$	32,332		1.8	%	$	(28,883	)		(89.3	)%

We experienced a gain on asset divestitures in Nine Months 2023 primarily due to the sale of vacant land located in South Dallas County, Texas and the sale of our company-owned 900-bed Albert Bo Robinson Assessment and Treatment Center.

During Nine Months 2022, we sold our equity investment interest in the government-owned Ravenhall Correctional Centre project in Australia for approximately $84 million in gross proceeds, pre-tax to an unrelated third party. As a result of the transaction, we recorded a gain of approximately $29.3 million. Refer to Note 11 - Commitments, Contingencies and Other Matters 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. The net gain in Nine Months 2022 also includes the sale of our Perry County Correctional Facility located in Alabama.

Income Tax Provision


	2023		Effective Rate			2022		Effective Rate			$ Change			% Change
	(Dollars in thousands)
Provision for Income Taxes	$	30,036		27.6	%	$	48,106		27.6	%	$	(18,070	)		(37.6	)%

The provision for income taxes decreased during Nine Months 2023 due to lower pre-tax income for Nine Months 2023. In turn, our effective tax rate during Nine Months 2023 and Nine Months 2022 is the same. In Nine Months 2023 and Nine Months 2022, there was a $2.0 million and $2.3 million net discrete tax benefit, respectively. Included in the provision for income taxes in Nine Months 2023 and Nine Months 2022 were a $0.9 million and $2.0 million discrete tax expense related to stock compensation that vested during the respective periods. We estimate our 2023 annual effective tax rate to be in the range of approximately 27% to 30%, exclusive of any discrete items.

Equity in Earnings of Affiliates, net of Income Tax Provision


	2023		% of Revenue			2022		% of Revenue			$ Change			% Change
	(Dollars in thousands)
Equity in Earnings of Affiliates, net of Income Tax Provision	$	3,121		0.2	%	$	3,786		0.2	%	$	(665	)		(17.6	)%

Equity in earnings of affiliates, presented net of income tax provision, represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings of affiliates decreased during Nine Months 2023 compared to Nine Months 2022 primarily due to less favorable performance by GEOAmey and SACS.

Financial Condition

Capital Requirements

Our current cash requirements consist of amounts needed for working capital, debt service, supply purchases, research and development costs related to new electronic monitoring products, investments in joint ventures, and capital expenditures related to either the development of new secure, processing 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. Additional capital needs may also arise in the future with respect to possible acquisitions, other corporate transactions or other corporate purposes.

We currently have contractual commitments for a number of projects using Company financing. We estimate that the cost of these existing active capital projects will be approximately $57.8 million of which $43.0 million was spent through September 30, 2023. We estimate that the remaining capital requirements related to these capital projects will be $14.8 million which will be spent through the remainder of 2023.

We plan to fund all of our capital needs, including capital expenditures, from cash on hand, cash from operations, borrowings under our Exchange Credit Agreement and any other financings which our management and Board, in their discretion, may consummate. Currently, our primary source of liquidity to meet these requirements is cash flow from operations and borrowings under our Exchange Credit Agreement. Our management believes that our financial resources and sources of liquidity will allow us to manage our business, financial condition, results of operations and cash flows. We completed our annual budgeting process, and for 2023, we will continue to strategically manage our capital expenditures to maintain both short and long term financial objectives. Additionally, we may from time to time pursue transactions for the potential sale of additional assets and businesses and/or other strategic transactions. Our management believes that cash on hand, cash flows from operations and availability under our Exchange Credit Agreement will be adequate to support our capital requirements for 2023 as disclosed under “Capital Requirements” above and the next twelve months.

Liquidity and Capital Resources

Indebtedness

Exchange Offering

Following the completed exchange offer in August 2022, S&P Global Ratings upgraded our issuer rating to B with a stable outlook. In September 2022, Moody’s Investors Service upgraded our corporate family rating to B3 with a stable outlook.

6.50% Exchangeable Senior Notes due 2026

On February 24, 2021, our wholly owned subsidiary, GEOCH, completed a private offering of $230 million aggregate principal amount of 6.50% Exchangeable Notes due 2026, which included the full exercise of the initial purchasers’ over-allotment option to purchase an additional $30 million aggregate principal amount of Convertible Notes. The Convertible Notes will mature on February 23, 2026, unless earlier repurchased or exchanged. The Convertible Notes bear interest at the rate of 6.50% per year plus an additional amount based on the dividends paid by GEO on its common stock. Interest on the notes is payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2021.

Upon conversion, we will pay or deliver, as the case may be, cash or a combination of cash and shares of common stock. The initial conversion rate is 108.4011 shares of common stock per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $9.225 per share of common stock). The conversion rate will be subject to adjustment in certain events. If GEO or GEOCH undergoes a fundamental change, holders may require GEOCH to purchase the notes in whole or in part for cash at a fundamental change purchase price equal to 100% of the principal amount of the notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change purchase date.

Our debt outstanding under the new Exchange Credit Agreement, the New Registered Notes, the New Private Notes, the 6.50% Exchangeable Notes due 2026, the 6.00% Senior Notes due 2026 and the 5.875% Senior Notes due 2024 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, 2022. 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 commitments, contingencies and guarantees are further discussed in our Annual Report on Form 10-K for the year ended December 31, 2022.

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 information on our indebtedness.

We consider opportunities for future business and/or asset acquisitions or dispositions 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 new Exchange Credit Agreement 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 New Registered Notes, the indenture governing the New Private Notes, the indenture governing the 5.875% Senior Notes due 2024, the indenture governing the 6.00% Senior Notes due 2026, the indenture governing our Convertible Notes and our Exchange Credit Agreement. A substantial decline in our financial performance could limit our access to capital pursuant to these covenants and have a material adverse effect 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 were in compliance with our debt covenants as of September 30, 2023 and we expect to continue 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.

Guarantor Financial Information

GEO’s New Registered Notes, New Private Notes, Convertible Notes, 6.00% Senior Notes due 2026, and the 5.875% Senior Notes due 2024 are fully and unconditionally guaranteed on a joint and several senior unsecured basis by certain of our wholly owned domestic subsidiaries (the “Subsidiary Guarantors”).

Summarized financial information is provided for The GEO Group, Inc. (“Parent”) and the Subsidiary Guarantors on a combined basis in accordance with SEC Regulation S-X Rules 3-10 and 13-01. The accounting policies used in the preparation of this summarized financial information are consistent with those elsewhere in the consolidated financial statements of the Company, except that intercompany transactions and balances of the Parent and Subsidiary Guarantor entities with non-guarantor entities have not been

eliminated. Intercompany transactions between the Parent and Subsidiary Guarantors have been eliminated and equity in earnings from and investments in non-guarantor subsidiaries have not been presented.

Summarized statement of operations (in thousands):


	Nine Months Ended September 30, 2023		Nine Months Ended September 30, 2022
Net operating revenues	$	1,652,780	$	1,602,182
Income from operations		254,779		280,776
Net income		65,343		105,331
Net income attributable to The GEO Group, Inc.		65,343		105,331

Summarized balance sheets (in thousands):


	September 30, 2023		December 31, 2022
Current assets	$	462,402	$	492,080
Noncurrent assets (a)		3,031,037		3,059,195
Current liabilities		329,064		370,177
Noncurrent liabilities (b)		2,059,542		2,163,004

(a) Includes amounts due from non-guarantor subsidiaries of $32.4 million and $32.6 million as of September 30, 2023 and December 31, 2022, respectively.

(b) Includes amounts due to non-guarantor subsidiaries of $8.2 million and $8.9 million as of September 30, 2023 and December 31, 2022, respectively.

Off-Balance Sheet Arrangements

Except as discussed 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 Flow

Cash, cash equivalents and restricted cash and cash equivalents as of September 30, 2023 was $206.2 million compared to $121.4 million as of September 30, 2022.

Operating Activities

Net cash provided by operating activities amounted to $232.7 million for the nine months ended September 30, 2023 versus net cash provided by operating activities of $227.6 million for the nine months ended September 30, 2022. Cash provided by operating activities during the nine months ended September 30, 2023 was positively impacted by net income attributable to GEO, non-cash expenses such as depreciation and amortization, loss on sale/disposal of property and equipment, loss on extinguishment of debt, amortization of debt issuance costs, discount and/or premium and other non-cash interest, dividends received from unconsolidated joint ventures and stock-based compensation expense. Equity in earnings of affiliates, net of tax and gain on asset divestitures negatively impacted cash. Accounts receivable, prepaid expenses and other assets decreased in total by $45.1 million, representing a positive impact on cash. The decrease was primarily driven by the favorable timing of billings and collections. Accounts payable, accrued expenses and other liabilities decreased by $9.7 million which negatively impacted cash. The decrease was primarily driven by the timing of payments.

Net cash provided by operating activities for the nine months ended September 30, 2022 was positively impacted by net income attributable to GEO, non-cash expenses such as depreciation and amortization, amortization of debt issuance costs, discount and/or premium and other non-cash interest, dividends received from unconsolidated joint ventures and stock-based compensation expense. Equity in earnings of affiliates, net of tax, gain on sale/disposal of property and equipment and gain on asset divestitures negatively impacted cash. Changes in accounts receivable, prepaid expenses and other assets increased in total by $34.4 million, representing a negative impact on cash. The increase was primarily driven by the timing of billings and collections. Changes in accounts payable, accrued expenses and other liabilities increased by $9.0 million which positively impacted cash. The increase was primarily driven by the timing of payments.

Investing Activities

Net cash used in investing activities of $38.4 million during the nine months ended September 30, 2023 was primarily the result of capital expenditures of $53.6 million and changes in restricted investments of $2.6 million, partially offset by proceeds from sale of real estate and other assets of $15.1 million and proceeds from sale of property and equipment of $2.7 million. Net cash provided by investing activities of $23.7 million during the nine months ended September 30, 2022 was primarily the result of capital expenditures of $72.2 million, changes in restricted investments of $5.5 million, partially offset by proceeds from sale of real estate and other assets of $99.8 million.

Financing Activities

Net cash used in financing activities during the nine months ended September 30, 2023 was approximately $128.8 million compared to net cash used in financing activities of $670.1 million during the nine months ended September 30, 2022. Net cash used in financing activities during the nine months ended September 30, 2023 was primarily the result of payments on long-term debt of $131.4 million and taxes paid related to net share settlement of equity awards of $3.4 million partially offset by proceeds from sale of treasury shares of $5.8 million. Net cash provided by financing activities during the nine months ended September 30, 2022 was primarily the result of payments on long-term debt of $676.1 million, proceeds from long-term debt of $50.0 million, debt issuance costs of $41.5 million and payments on non-recourse debt of $1.3 million.

Non-GAAP Measures

EBITDA is defined as net income adjusted by adding provisions for income tax, interest expense, net of interest income, loss on extinguishment of debt and depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted for gain on asset divestitures, pre-tax, net loss attributable to non-controlling interests, stock-based compensation expenses, pre-tax, transaction related expenses, pre-tax, other non-cash revenue and expenses, pre-tax, and certain other adjustments as defined from time to time.

Given the nature of our business as a real estate owner and operator, we believe that EBITDA and Adjusted EBITDA are helpful to investors as measures of our operational performance because they provide an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures, and to fund other cash needs or reinvest cash into our business.

We believe that by removing the impact of our asset base (primarily depreciation and amortization) and excluding certain non-cash charges, amounts spent on interest and taxes, and certain other charges that are highly variable from year to year, EBITDA and Adjusted EBITDA provide our investors with performance measures that reflect the impact to operations from trends in occupancy rates, per diem rates and operating costs, providing a perspective not immediately apparent from net income.

The adjustments we make to derive the non-GAAP measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in income from continuing operations and which we do not consider to be the fundamental attributes or primary drivers of our business plan and they do not affect our overall long-term operating performance.

EBITDA and Adjusted EBITDA 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.

Our reconciliation of net income to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2023 and 2022 is as follows (in thousands):


	Three Months Ended						Nine Months Ended
	September 30, 2023			September 30, 2022			September 30, 2023			September 30, 2022
Net income	$	24,503		$	38,312		$	82,022		$	130,164
Add:
Income tax provision *		6,588			11,435			30,617			48,570
Interest expense, net of interest income		54,457			41,426			161,296			95,082
Loss on extinguishment of debt		91			37,487			1,845			37,487
Depreciation and amortization		31,173			32,330			94,787			100,284
EBITDA	$	116,812		$	160,990		$	370,567		$	411,587
Add (Subtract):
Gain on asset divestitures, pre-tax		(1,274	)		(29,279	)		(3,449	)		(32,332	)
Net loss attributable to noncontrolling interests		16			25			71			119
Stock-based compensation expenses, pre-tax		3,116			3,141			12,052			13,010
Transaction related expenses, pre-tax		—			1,322			—			1,322
Other non-cash revenue & expenses, pre-tax		—			—			(687	)		—
Adjusted EBITDA	$	118,670		$	136,199		$	378,554		$	393,706
* including income tax provision on equity in earnings of affiliate

Outlook

The following discussion contains statements that are not limited to 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, 2022 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.

As of the date of this filing, the public health emergency declaration related to the COVID-19 pandemic has ended. Despite this fact, there continues to be lingering impacts of the COVID-19 pandemic in the regions in which we operate. At this time, it is not possible for us to predict the duration or magnitude of the adverse results stemming from the outbreak and its lingering effects on our business or results of operations, financial condition, or liquidity. We will continue to coordinate closely with our government agency partners and local health agencies to ensure the health and safety of all those in our care and our employees.

We continue to be encouraged by 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 a government's willingness to maintain or grow public-private partnerships in the future. While state finances overall are stable, future budgetary pressures may cause state agencies 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 or the decision to not re-bid a contract after expiration of the contract term. 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, develop, 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. Any positive trends in the industry may be offset by several factors, including budgetary constraints, contract modifications, contract terminations, contract non-renewals, contract re-bids and/or the decision to not re-bid a contract after expiration of the contract term and the impact of any other potential changes to the willingness or ability to maintain or grow public-private partnerships on the part of other government agencies. We believe we have a strong relationship with our government agency partners and we believe that we operate facilities that maximize security, safety and efficiency while offering our suite of GEO Continuum of Care programs, services and resources.

On January 26, 2021, President Biden signed an executive order directing the United States Attorney General not to renew DOJ contracts with privately operated criminal detention facilities, as consistent with applicable law. Two agencies of the DOJ, the BOP and the USMS, utilized GEO’s support services at the time the executive order was signed. The BOP houses inmates who have been convicted of federal crimes, and the USMS is generally responsible for detainees who are awaiting trial or sentencing in U.S. federal courts. As of September 30, 2023, GEO has three company-owned/company-leased facilities under direct contracts with USMS, which have current contract option periods that expire between September 2025 and September 2028. These facilities combined represented approximately 6% of our revenues for the nine months ended September 30, 2023. As of September 30, 2023, we no longer have any contracts with the BOP for secure correctional facilities.

President Biden’s administration may implement additional executive orders or directives relating to federal criminal justice policies and/or immigration policies, which may impact the federal government’s use of public-private partnerships with respect to secure correctional and detention facilities and immigration processing centers, including with respect to our contracts, and/or may impact the budget and spending priorities of federal agencies, including the BOP, USMS, and ICE, which is an agency of the U.S. Department of Homeland Security.

Prior to the executive order, we have historically had a relatively high contract renewal rate, however, 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.

California enacted legislation that became effective on January 1, 2020 aimed at phasing out public-private partnership contracts for the operation of secure correctional facilities and detention facilities within California and facilities outside of the State of California housing State of California inmates. Currently, we have four public-private partnership contracts in place with ICE relating to secure services facilities located in California. The contracts for these facilities/annexes do not expire until December of 2034. GEO and the DOJ filed separate legal actions challenging the constitutionality of the attempted ban on new federal contracts entered into after the effective date of the California law. On October 5, 2021, the Ninth Circuit Court of Appeals reversed a prior U.S. District Court decision dismissing the requests by GEO and the United States for declaratory and injunctive relief and ruled that AB32

conflicts with federal law in violation of the Supremacy Clause of the U.S. Constitution and discriminates against the federal government in violation of the intergovernmental immunity doctrine. On April 26, 2022, the Ninth Circuit granted California’s petition for an en banc hearing and vacated the previous panel’s opinion. En banc arguments took place the week of June 21, 2022, in Pasadena, California. On September 26, 2022, in an 8-3 decision, the En Banc court vacated the prior decision denying the requests by GEO and the United States for declaratory and injunctive relief barring application of the California law to federal immigration processing centers. The Ninth Circuit Court of Appeals, En Banc, ruled that AB-32 would give California a virtual power of review over detention decisions made by ICE in violation of the Supremacy Clause. The court held that whether analyzed under intergovernmental immunity or preemption, California cannot exert such control over the federal government’s detention operations. The case was remanded to the U.S. District Court for further proceedings, consistent with the court’s ruling. On May 23, 2023, the District Court entered a Final Judgment and Permanent Injunction in favor of GEO and the United States. Refer to Note 11- Commitments, Contingencies and Other Matters of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on our indebtedness.

Recently the State of Washington approved a similar measure, EHB 1090, banning the use of public-private partnership contracts for the operation of detention facilities in the state, that GEO also challenged in federal court. GEO's contract for the company-owned 1575-bed Northwest ICE Processing Center in Washington has a renewal option period that expires in 2025. On June 22, 2023, the State of Washington filed a stipulation indicating, among other things, that it will not enforce House Bill 1090 against GEO for its operation of the Northwest ICE Processing Center. The facility generated approximately $66 million in annualized revenues for GEO during the year ended December 31, 2022.

Internationally, we are exploring opportunities in our current markets and will continue to actively bid on any opportunities that fit our target profile for profitability and operational risk. We are pleased to have been awarded a ten-year contract renewal for the continued delivery of secure transportation under our GEOAmey joint venture in the United Kingdom. In January 2023, our Australian subsidiary, GEO Australia, entered into a contract with the Department of Justice and Community Safety in the State of Victoria for the delivery of primary health services across thirteen public prisons. The contract commenced on July 1, 2023 and is expected to generate approximately AUD47.5 million, or $31.8 million based on average exchange rates for the nine months ended September 30, 2023, in incremental annualized revenue for GEO.

With respect to our reentry services, electronic monitoring services, and community-based services business, we are currently pursuing a number of business development opportunities. Related to opportunities for community-based reentry services, we are working with our existing federal, state, and local clients to leverage new opportunities for both residential reentry facilities as well as non-residential day reporting centers. With respect to the Department of Homeland Security's ISAP, the number of participants steadily increased throughout 2022, however, since the beginning of 2023, there has been a decline in ISAP participants as a result of recent changes in immigration and budgetary pressures. There are no assurances that there will not be a further decline in ISAP participants in 2023 and beyond. Title 42, which provided for restrictions at the Southwest border under the COVID public health emergency declaration, ended on May 11, 2023. We are focused on delivering high quality services and developing new and innovative technology solutions. To this end, we recently launched VeriWatch, a new wrist-worn GPS tracking device that allows for real-time and discrete monitoring of individuals under community supervision. 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 continue to yield results. We believe we are well positioned to capitalize on any suitable opportunities that become available in this area.

Operating Expenses

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 costs represented approximately 66% and 63% of our operating expenses during the nine months ended September 30, 2023 and 2022, respectively. Additional significant operating expenses include food, utilities and medical costs. During the nine months ended September 30, 2023 and 2022, operating expenses totaled approximately 72% and 70%, respectively, of our consolidated revenues. We expect our operating expenses as a percentage of revenues in 2023 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. We also expect that our operating expenses will be impacted by the effect of inflation on costs related to personnel, utilities, insurance, and medical and food, among other operational costs. During 2023, we will incur carrying costs for facilities that are currently vacant.

General and Administrative Expenses

General and administrative expenses consist primarily of corporate management salaries and benefits, professional fees and other administrative expenses. During each of the nine months ended September 30, 2023 and 2022, general and administrative expenses totaled approximately 8% of our consolidated revenues. We expect general and administrative expenses as a percentage of revenues in 2023 to remain consistent or decrease as a result of cost savings initiatives.

Idle Facilities

We are currently marketing 9,332 vacant beds at six of our U.S. Secure Services and at one of our Reentry Services idle facilities to potential customers. One of our U.S Secure Services idle facilities, the 750-bed Cheyenne Mountain Recovery Center, is currently under a contract that has not yet been activated. The annual net carrying cost of our idle facilities in 2023 is estimated to be $25.6 million, including depreciation expense of $12.5 million. As of September 30, 2023, these eight facilities had a combined net book value of $253.4 million. We currently do not have any firm commitment or agreement in place to activate the idle 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. Secure Services and Reentry Services segments. The per diem rates that we charge our clients often vary by contract across our portfolio. However, if the eight remaining idle facilities were to be activated using our U.S. Secure Services and Reentry Services average per diem rates in 2023 (calculated as the U.S. Secure Services and Reentry Services revenue divided by the number of U.S. Secure Services and Reentry Services mandays) and based on the average occupancy rate in our facilities through September 30, 2023, we would expect to receive incremental annualized revenue of approximately $290 million and an annualized increase in earnings per share of approximately $0.28 to $0.33 per share based on our average operating margins.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Interest Rate Risk

We are exposed to market risks related to changes in interest rates with respect to our Exchange Credit Agreement. Payments under the Exchange Credit Agreement are indexed to a variable interest rate. Based on borrowings outstanding under the Exchange Credit Agreement of approximately $982.7 million and approximately $76 million in outstanding letters of credit, as of September 30, 2023, for every one percent increase in the average interest rate applicable to the Exchange Credit Facility, our total annual interest expense would increase by approximately $10 million.

Additionally, we invest our cash in a variety of short-term financial instruments to provide a return. 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.

Foreign Currency Exchange Rate Risk

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 South African Rand and the British Pound currency exchange rates. Based upon our foreign currency exchange rate exposure as of September 30, 2023, every 10 percent change in historical currency rates would have approximately a $7.6 million effect on our financial position and approximately a $0.9 million impact on our results of operations during the nine months ended September 30, 2023.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

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.

Changes in Internal Control Over Financial Reporting.

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. There were no significant changes to our internal control over financial reporting during the quarter ended September 30, 2023.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Litigation, Claims and Assessments

Shareholder and Derivative Litigation

GEO strongly disputes the claims made in these four lawsuits, and intends to take all necessary steps to vigorously defend itself from these lawsuits.

Immigration Detainee Litigation

summary judgment, motion to dismiss, and motion for decertification of the class, narrowing the class period for plaintiffs’ TVPA claims, and otherwise ruling against the Company’s motions for relief. All trial dates are currently stayed by court order pending appeal of certain of GEO's defenses to the 10th Circuit Court of Appeal. Oral argument before the 10th Circuit was held on September 18, 2023.

Since the Colorado suit was initially filed, four similar lawsuits have been filed - two in the state of Washington and two in California.

Challenges to State Legislation that Conflict with Federal Contracts

United States. The Company and the United States appealed to the Ninth Circuit. Oral argument was held on June 7, 2021. On October 5, 2021, a three-Judge panel of the Ninth Circuit reversed the lower court’s decision, holding that AB-32 conflicted with federal law. California petitioned the Ninth Circuit for the matter to be heard by the court sitting en banc, which petition was accepted. On September 26, 2022, in an 8-3 en banc decision, the Ninth Circuit held that AB-32 violates the Constitution's Supremacy Clause and that AB-32 is preempted, vacated the lower court’s denial of the Company’s and the United States’ motions for preliminary injunction, and remanded the case to the District Court to consider the remaining preliminary injunction factors. On May 23, 2023, the District Court entered a Final Judgment and Permanent Injunction in favor of GEO and the United States.

Other Litigation

Accruals for Legal Proceedings

ITEM 1A. RISK FACTORS.

Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) includes a detailed discussion of the risk factors that could materially affect our business, financial condition or future prospects. We encourage you to read these risk factors in their entirety.

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

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION.

Securities Trading Plans of Directors and Executive Officers

Shayn P. March, Executive Vice President, Finance and Treasurer, entered into a 10b5-1 trading plan on September 14, 2023 (the “Trading Plan”). The Trading Plan provides for the potential sale of up to 64,000 shares of GEO common stock and will be in effect until the earlier of (i) September 13, 2024 and (ii) the date on which all of the shares have been sold. The Trading Plan was entered into during an open insider trading window and is intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934, as amended, and GEO’s policies regarding transactions in GEO securities.

ITEM 6. EXHIBITS.

(A)

Exhibits




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		Inline XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase

104		The cover page from the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2023, has been formatted in Inline XBRL (included with the Exhibit 101 attachments).

SIGNATURES

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.


		THE GEO GROUP, INC.

Date:	November 8, 2023	/s/ Brian R. Evans
		Brian R. Evans
		Senior Vice President & Chief Financial Officer
		(duly authorized officer and principal financial officer)