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Mail Stop 7010
September 15, 2005
Mr. John G. O`Rourke
Senior Vice President - Finance and Chief Financial Officer
The GEO Group, Inc.
621 NW 53rd Street, Suite 700
Boca Raton, Florida 33487
RE: Form 10-K for the Fiscal Year ended January 2, 2005
Forms 10-Q for the Fiscal Quarters ended
April 3, 2005 and July 3,
2005
File No. 1-14260
Dear Mr. O`Rourke:
We have reviewed your response letter dated August 4,
2005
and have the following additional comments. If you disagree with
a
comment, we will consider your explanation as to why our comment
is
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your explanation.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the year ended January 2, 2005
General
1. Where a comment below requests additional disclosures or other
revisions to be made, please show us in your supplemental response
what the revisions will look like. These revisions should be
included in your future filings, including your interim filings
where
applicable.
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 15
2. We have reviewed your response to comment 2. Please discuss
and
analyze the underlying business reasons for the changes in
revenues
and operating income between periods for each of your segments.
Please also discuss the impact of significant non-cash credits and
charges on operating income in total and for each segment. For
example, some of the increase in operating income in the U.S.
operations appears to be due to non-cash credits of $1,150,000 in
2004 compared to non-cash charges of $8,600,000 in 2003. Please
refer to SEC Release 33-8350 for guidance.
Financial Statements and Supplementary Data, page 46
3. We have reviewed your response to comment 5. Please revise
your
proposed future disclosure to state that the audit was conducted
in
accordance with standards of the Public Accounting Oversight
Board,
rather than just auditing standards of the Public Accounting
Oversight Board.
Financial Statements
Note 10 - Commitments and Contingencies
Litigation, Claims and Assessments, page 76
4. We have reviewed your response to comment 18. Please disclose
if
you have accrued a minimum amount for the claim of property damage
to
the Australian facilities and your basis for accruing this minimum
amount. Please also disclose if the unfavorable settlement of
this
litigation would be material to cash flows from operations.
Note 15 - Business Segment and Geographic Information, page 82
5. We have reviewed your response to comment 19. Please provide
us
with your computation of the 10% materiality test for reportable
segments based on assets of your three business lines. Please
also
tell us why you aggregated the management of mental health
facilities
and the construction services lines of business with the
management
of correction and detention facilities line of business. The
management of correction and detention facilities constitutes a
reportable segment and your other lines of business may not be
aggregated with this reportable segment unless they have (a)
similar
economic characteristics and (b) meet all of the five aggregation
criteria in paragraph 17 of SFAS 131. See Question 7 of the FASB
Staff Implementation Guide for SFAS 131. Based on the information
you provided, these other two lines of business may even have
dissimilar economic characteristics from each other based on their
different revenue growth rates and gross margins, and might not
meet
the majority of the five aggregation criteria specified in
paragraph
17 of SFAS 131 to be combined with each other. Please provide us
with additional information that supports your position that you
do
not have three separate reportable segments. Please refer to SFAS
131 and EITF 04-10.
6. We have reviewed your response to comment 20. Your reference
to
the response to comment 2 did not address our question. Please
disclose significant non-cash items, other than depreciation and
amortization expense, included in operating income for each
segment
in accordance with paragraph 27 of SFAS 131. The disclosure of
costs
associated with exit activities for each segment is also required
by
paragraph 20 of SFAS 146.
7. Please disclose your revenues from external customers for each
product and service or each group of similar products and services
as
required by paragraph 37 of SFAS 131.
Note 16 - Income Taxes, page 84
8. We have reviewed your response to comment 21. Your decision to
re-label income from continuing operation in the income taxes note
should add some clarity to your tax disclosure. However, this
proposed revision does not fully address our initial comment.
Please
tell us why income before income taxes, equity in earnings of
affiliates, discontinued operations and minority interest in the
United States of $9,395,000 is less than operating income in the
United States in your segment note of $28,641,000. Please also
tell
us why income before income taxes, equity in earnings of
affiliates,
discontinued operations and minority interest from the Australian
and
South Africa operations of $17,058,000 is more than the total
operating income in the Australian and South Africa operations in
your segment note of $10,669,000. In doing so, reconciliations
between each of these income statement amounts would be helpful,
along with an explanation of how each allocation to your U.S. and
Foreign operations was performed.
Form 10-Q for the period ended July 3, 2005
General
9. Please address the comments above in your interim filings as
well.
Note 2 - Restatements, page 7
Section 4 - Matters Related to Accountants and Financial
Statements,
page 33
10. Given the restatements of your annual financial statements for
the year ended January 2, 2005 and your first quarter financial
statements dated April 3, 2005 and the pending second restatement
of
these financial statements, please file an Item 4.02 Form 8-K
report
regarding non-reliance on previously issued financial statements.
* * * *
Please respond to these comments within 10 business
days, or tell us when you will provide us with a response. Please
provide us with a response letter that keys your responses to our
comments and provides any requested information. Detailed letters
greatly facilitate our review. Please file your response on EDGAR
as
a correspondence file. Please understand that we may have
additional
comments after reviewing your responses to our comments.
If you have any questions regarding these comments,
please
direct them to Gus Rodriguez, Staff Accountant, at (202) 551-3752
or,
in his absence, Rufus Decker, the undersigned, at (202) 551-3769.
Sincerely,
Rufus Decker
Branch Chief
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John G. O'Rourke
The GEO Group, Inc.
September 15, 2005
Page 1 of 4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-7010
DIVISION OF
CORPORATION FINANCE