UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported):		February 1, 2011

THE GEO GROUP, INC.

(Exact Name of Registrant as Specified in Charter)

Florida

(State or Other Jurisdiction of Incorporation)

1-14260		65-0043078
(Commission File Number)		(IRS Employer Identification No.)

621 NW 53rd Street, Suite 700, Boca Raton, Florida		33487
(Address of Principal Executive Offices)		(Zip Code)

(561) 893-0101

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Section 7 — Regulation FD

Item 7.01 Regulation FD Disclosure.

     Certain Information on Financial Guidance

     On November 4, 2010, The GEO Group, Inc. (“GEO”) reported results for the thirteen weeks ended October 3, 2010, including total revenues of $327.9 million, Adjusted EBITDA of $61.7 million, GAAP earnings per share of $0.09, and pro forma earnings per share of $0.39. GEO also provided guidance for the thirteen weeks ended January 2, 2011, projecting total revenues of $370.0 million to $375.0 million and pro forma earnings per share of $0.38 to $0.40. Subsequently, on December 21, 2010, GEO reaffirmed its previously issued guidance for the thirteen weeks ended January 2, 2011. A reconciliation from Adjusted EBITDA to GAAP income from continuing operations and from pro forma earnings per share to GAAP earnings per share is included in GEO’s November 4, 2010 press release which is available on GEO’s investor relations website at www.geogroup.com.

     Although GEO has not completed its financial close for the thirteen weeks ended January 2, 2011, based upon a preliminary review of results of operations, to the extent available, GEO expects its revenues and earnings per share to be consistent with its previously issued guidance for the thirteen weeks ended January 2, 2011. The foregoing estimates are preliminary, are based on a number of assumptions (including, but not limited to, the continued operation of GEO’s facilities under current contracts at expected occupancy levels through the month of December), and are subject to a number of risks and uncertainties and, as a result, could change.

     The foregoing information is being furnished pursuant to Regulation FD under the Securities Exchange Act of 1934, as amended. GEO undertakes no duty or obligation to publicly update or revise the foregoing information, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the Securities and Exchange Commission, through press releases or through other public disclosure. By furnishing the information in this Item 7.01, GEO makes no admission as to the materiality thereof.

     Certain Supplemental Financial Information

     As previously announced, on December 21, 2010, GEO entered into a definitive agreement to acquire BII Holding Corporation (“BI”), a Delaware corporation (the “BI Acquisition”). GEO is disclosing under Item 7.01 of this Current Report on Form 8-K the information included as Exhibit 99.1. This information, some of which has not previously been reported, may be used by GEO in connection with certain financing activities relating to the closing of the BI Acquisition. This information, which is being provided for informational purposes, includes certain unaudited pro forma financial information of GEO for the fiscal year ended January 3, 2010, the nine months ended September 27, 2009, and as of and for the nine months ended October 3, 2010, in each case, after giving effect to the acquisition of Cornell Companies, Inc., acquired on August 12, 2010, and the BI Acquisition, which is expected to be completed in February 2011 (collectively, the “Supplemental Financial Information”). The Supplemental Financial Information set forth in Exhibit 99.1 is attached hereto and incorporated herein by reference.

     The information furnished under this Item 7.01 and in Exhibit 99.1 shall not be considered “filed” under the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, unless GEO expressly sets forth in such future filings that such information is to be considered “filed” or incorporated by reference therein.

Forward Looking Statements

     The information set forth in this Form 8-K and in Exhibit 99.1 includes forward-looking statements that are based on information currently available to management, management’s beliefs, as well as on a number of assumptions concerning future events. Forward-looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, which could cause the actual results to differ materially from those currently expected. For a more detailed description of the factors that could cause such a difference, please see GEO’s filings with the SEC. In providing forward-looking statements, GEO does not intend, and is not undertaking any obligation or duty, to update these statements as a result of new information, future events or otherwise.

Section 9 — Financial Statements and Exhibits

		Item 9.01 Financial Statements and Exhibits.
(d)		Exhibits

Exhibit No.		Description
99.1		Supplemental Financial Information, dated February 1, 2011.

     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 hereunto duly authorized.

EXHIBIT INDEX

Exhibit No.		Description
99.1		Supplemental Financial Information, dated February 1, 2011.

Exhibit 99.1

 

The Unaudited Pro Forma Condensed Combined Financial Information takes into consideration adjustments that are directly attributable to the Cornell Acquisition and the BI Acquisition, including certain financing activities, and are expected to have a continuing impact and are factually supportable. All pro forma adjustments have been explained in the related notes set forth below. The following Unaudited Pro Forma Condensed Combined Financial Information is based on the historical financial statements of GEO and Cornell, and the historical financial statements and accounting records of BII Holding after giving effect to the assumptions, reclassifications and adjustments described in the accompanying notes to the Unaudited Pro Forma Condensed Combined Financial Information. The pro forma adjustments included in the Unaudited Pro Forma Condensed Combined Balance Sheet as of October 3, 2010 present the pro forma effect of the acquisition of BII Holding as if it had occurred on that date. The Unaudited Pro Forma Condensed Combined Statements of Income (loss) for the thirty-nine weeks ended October 3, 2010, the thirty-nine weeks ended September 27, 2009 and for the year ended January 3, 2010 give effect to the acquisitions of Cornell and BII Holding as if they had occurred on December 29, 2008.

 

The Unaudited Pro Forma Condensed Combined Financial Information should be read in conjunction with (i) GEO’s historical consolidated financial statements; (ii) Cornell’s historical consolidated financial statements; and (iii) BII Holding’s historical consolidated financial statements.

 

GEO will account for the BI Acquisition as a business combination in accordance with GAAP. Upon completion of the acquisition, GEO will own 100% of the equity interests in BII Holding. In order to determine the acquirer for accounting purposes, GEO considered relative voting rights, the composition of the governing body of the combined entity and the composition of senior management of the combined entity after the acquisition. Based on the weighting of these factors, GEO has concluded that it is the accounting acquirer. Under the business combination method of accounting, as of the effective time of the acquisition, the assets acquired, including the identifiable intangible assets, and liabilities assumed from BII Holding will be recorded at their respective fair values and added to those of GEO. Any excess of the purchase price for the acquisition over the net fair value of BII Holding’s identified assets acquired and liabilities assumed will be recorded as goodwill and any transaction costs and restructuring expenses associated with the acquisition will be expensed as incurred. The results of operations of BII Holding will be combined with the results of operations of GEO beginning at the effective time of the acquisition.

 

The unaudited pro forma financial data is based on the historical financial statements of GEO, Cornell, BII Holding, and on publicly available information and certain assumptions that GEO believes are reasonable, which are described in the notes to the Unaudited Pro Forma Condensed Combined Financial Information. GEO has not yet performed a detailed valuation analysis necessary to determine the fair market values of BII Holding’s assets to be acquired and liabilities to be assumed. The preliminary purchase price allocation for Cornell, which has been disclosed in GEO’s Quarterly Report on Form 10-Q as of and for the thirty-nine weeks ended October 3, 2010, is presented in Note 3 to the Unaudited Pro Forma Condensed Combined Financial Information. This preliminary allocation of the purchase price to identifiable net assets acquired and of the excess purchase price to goodwill represents GEO’s most current estimate of the allocation.

 

The Unaudited Pro Forma Condensed Combined Financial Information is provided for informational purposes only. The pro forma information provided is not necessarily indicative of what the combined company’s financial position and results of operations would have actually been had the acquisitions and certain financing activities been completed on the dates used to prepare the pro forma financial information. The adjustments to fair value and the other estimates reflected in the accompanying Unaudited Pro Forma Condensed Combined Financial Information may be materially different from those reflected in the combined company’s consolidated financial statements subsequent

to the acquisitions and certain financing activities. In addition, the Unaudited Pro Forma Condensed Combined Financial Information does not purport to project the future financial position or results of operations of GEO, after giving effect to the Cornell Acquisition, the BI Acquisition and certain financing activities. Reclassifications and adjustments may be required if changes to GEO’s consolidated financial presentation are needed to conform Cornell’s and BII Holding’s accounting policies to those of GEO.

 

The Unaudited Pro Forma Condensed Combined Financial Information has been prepared in a manner consistent with the accounting policies adopted by GEO. The accounting policies followed for financial reporting on a pro forma basis are the same as those disclosed in the notes to Consolidated Financial Information included in GEO’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2010 for the fiscal year ended January 3, 2010. The Unaudited Pro Forma Condensed Combined Financial Information does not assume any differences in accounting policies between GEO, Cornell and BII Holding. Upon consummation of the BI Acquisition, GEO will review the accounting policies of BII Holding to ensure conformity of such accounting policies to those of GEO and, as a result of that review, GEO may identify differences between the accounting policies of the two companies, that when conformed, could have a material impact on GEO’s combined financial information. At this time, GEO is not aware of any differences in accounting policies that would have a material impact on the Unaudited Pro Forma Condensed Combined Financial Information.

 

The Unaudited Pro Forma Condensed Combined Financial Information does not give effect to any anticipated synergies, operating efficiencies or costs savings that may be associated with these transactions. This information also does not include any integration costs the companies may incur related to the acquisitions as part of combining the operations of the companies. The Unaudited Pro Forma Condensed Combined Financial Information includes an estimate for aggregate transaction costs. Additional costs, not included in the Unaudited Pro Forma Condensed Combined Financial Information, will likely be incurred for items such as systems integration and conversion, change in control and other employee benefits, lease termination and/or modification costs, and training costs. A substantial portion of these costs will be incurred over the year following the acquisitions. In general, these costs will be recorded as expenses when incurred and are non-recurring, and, therefore, are not reflected in the Unaudited Pro Forma Condensed Combined Financial Information.

THE GEO GROUP INC.

 

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

 

THE GEO GROUP INC.

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (LOSS)

Thirty-Nine Weeks Ended October 3, 2010

 

 

 

(a) In order to present Cornell’s financial results for the full thirty-nine weeks ended October 3, 2010, the stub period July 1, 2010 through August 11, 2010 has been included.

THE GEO GROUP INC.

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (LOSS)

Thirty-Nine Weeks Ended September 27, 2009

 

THE GEO GROUP INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME (LOSS)

Fiscal Year Ended January 3, 2010

 

NOTES TO THE UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL INFORMATION

 

 

The Unaudited Pro Forma Condensed Combined Financial Information has been prepared by GEO based on the historical financial statements of GEO and Cornell, and the historical financial statements and accounting records of BII Holding to reflect the effects of the Cornell Acquisition, the BI Acquisition and certain financing activities. The Unaudited Pro Forma Condensed Combined Financial Information takes into consideration adjustments that are directly attributable to the Cornell Acquisition and the BI Acquisition, including certain financing activities, and are expected to have a continuing impact and are factually supportable. The Unaudited Pro Forma Condensed Combined Financial Information should be read in conjunction with the historical consolidated financial statements of GEO, Cornell and BI, including the related notes, with GEO’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and with the “Unaudited Pro Forma Condensed Combined Financial Information”. The effective date of the Cornell Acquisition, the BI Acquisition and certain financing activities is assumed to be October 3, 2010 for purposes of preparing the Unaudited Pro Forma Condensed Combined Balance Sheet, and December 29, 2008 for purposes of preparing the Unaudited Pro Forma Condensed Combined Statements of Income (Loss). The unaudited pro forma financial data included in this Form 8-K is based on the historical financial statements of GEO and Cornell, and the historical financial statements and accounting records of BII Holding, on publicly available information where available and certain assumptions that GEO believes are reasonable, which are described in the notes to the Unaudited Pro Forma Condensed Combined Financial Information.

 

 

On December 21, 2010, GEO entered into an Agreement and Plan of Merger (the “Merger Agreement”) with BII Holding, GEO Acquisition IV, Inc., a Delaware corporation and wholly-owned subsidiary of GEO (“Merger Sub”), BII Investors IF LP, in its capacity as the stockholders’ representative, and AEA Investors 2006 Fund L.P. (“AEA”). The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into BII Holding (the “Merger”), with BII Holding continuing as the surviving corporation and a wholly-owned subsidiary of GEO. Pursuant to the Merger Agreement, GEO will pay merger consideration of $415.0 million in cash, subject to certain adjustments, including an adjustment for working capital. All indebtedness of BI under its senior term loan and senior subordinated note purchase agreement will be repaid by BII Holding with a portion of the $415.0 million of merger consideration. As of September 30, 2010, approximately $78.4 million was outstanding under the senior term loan and $105.4 million was outstanding under the senior subordinated note purchase agreement, excluding the unamortized debt discount.

 

 

On August 12, 2010, GEO completed its acquisition of Cornell pursuant to a definitive merger agreement entered into on April 18, 2010, and amended on July 22, 2010, between GEO, GEO Acquisition III, Inc., and Cornell. Under the terms of the merger agreement, GEO acquired 100% of the outstanding common stock of Cornell for aggregate consideration of $618.3 million, excluding cash acquired of $12.9 million and including: (i) cash payments for Cornell’s outstanding common stock of $84.9 million, (ii) payments made on behalf of Cornell related to Cornell’s transaction costs accrued prior to the acquisition of $6.4 million, (iii) cash payments for the settlement of certain of Cornell’s debt plus accrued interest of $181.9 million using proceeds from GEO’s senior credit facility, (iv) common stock consideration of $357.8 million, and (v) the fair value of stock option replacement awards of $0.2 million. The value of the equity consideration was based on the closing price of GEO common stock on August 12, 2010 of $22.70. For purposes of the accompanying Unaudited Pro Forma Condensed Combined Statements of Income (Loss), certain adjustments have been made to present the combined

 

companies’ operations as if the acquisitions had occurred on December 29, 2008. The historical GEO financial statement data presented in the accompanying Unaudited Pro Forma Condensed Combined Balance Sheet includes Cornell and as such, there are no adjustments in the Unaudited Pro Forma Condensed Combined Balance Sheet relating to the Cornell Acquisition.

 

GEO is identified as the acquiring company for US GAAP accounting purposes. Under the purchase method of accounting, the aggregate purchase price was allocated to Cornell’s net tangible and intangible assets based on their estimated fair values as of August 12, 2010, the date of closing and the date that GEO obtained control over Cornell. In order to determine the fair values of a significant portion of the assets acquired and liabilities assumed, the Company engaged third party independent valuation specialists. For any assets acquired and liabilities assumed for which the Company did not consider the work of third party independent valuation specialists, the fair value determined represents the estimated price to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The preliminary purchase price allocation for Cornell, which was disclosed in GEO’s Quarterly Report on Form 10-Q as of and for the thirty-nine weeks ended October 3, 2010 is presented below. This preliminary allocation of the purchase price to identifiable net assets acquired and of the excess purchase price to goodwill represents GEO’s most current estimate of the allocation.

 

 

 

(A) For the purposes of the accompanying unaudited pro forma condensed combined financial statements, the following reclassifications have been made to BII Holding’s historical consolidated balance sheet to be consistent with GEO’s historical financial presentation:

 

 

 

 

(B) The pro forma cash balance reflects the following sources and uses of cash in connection with the completion of the BI Acquisition (in ’000’s):

 

 

 

 

(C) To the extent these adjustments relate to tax deductible items, the adjustment to deferred income tax assets, net, reflects an estimated tax impact at the statutory rate of 40%.

 

The adjustments to current deferred income tax asset are as follows:

 

 

(D) The purchase price was allocated to the net assets acquired as indicated in the table below. GEO has not determined the fair market values of BII Holding’s Rental and Monitoring Equipment, Capitalized Software or its Property and Equipment and therefore has not reflected a fair value adjustment to these assets. In addition, GEO has assumed that Current Assets, Sales-type Leases Receivable, Current Liabilities and Deferred Revenue and Other Liabilities approximate their fair value for the purposes of the preliminary purchase price allocation. Management has obtained an estimate of identifiable intangible assets based on preliminary data obtained during the due diligence process. The preliminary purchase price allocation and the pro forma adjustments to goodwill based on the assumptions disclosed herein are as follows (in ‘000’s):

 

 

 

 

(E) This adjustment reflects the elimination of the net carrying value of BII Holding’s intangible assets and the addition of estimated fair value of the identifiable intangible assets acquired in the transaction. In order to estimate a fair value of the acquired intangible assets, GEO considered the work performed by a third party valuation specialist based on preliminary information acquired during the due diligence process. The estimated fair values of the identifiable intangible assets will be finalized subsequent to the close of the transaction and any such valuation established by a complete analysis may be materially different from the amounts used in the accompanying pro forma financial statements. The adjustments to intangible assets are as follows (in ‘000’s):

 

 

(F) GEO’s Other Non-Current Assets and BII Holding Deferred Financing Fees reflect an adjustment to write-off $4.1 million of BII Holding’s existing deferred financing fees and an adjustment to record GEO’s estimated deferred financing fees of $9.8 million associated with certain financing activities.

 

 

(G) The net increase in the current portion of long term debt reflects the following adjustments (in ‘000’s):