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The GEO Group Authorizes Special Dividend of $350 Million, Takes Critical Steps Toward 2013 REIT Conversion

  The GEO Group Authorizes Special Dividend of $350 Million, Takes Critical
  Steps Toward 2013 REIT Conversion

  *Internal Corporate Restructuring will Position GEO to Operate in
    Compliance with the REIT rules in FY 2013
  *GEO to Pay Special Dividend of $350 million in December 2012 in Connection
    with 2013 REIT Conversion
  *GEO Estimates 2013 REIT FFO of $215 million to $225 million, AFFO of $200
    million to $210 million and 2013 Dividend of $2.20 to $2.40 Per Share

Business Wire

BOCA RATON, Fla. -- December 06, 2012

The GEO Group, Inc. (NYSE: GEO) ("GEO") today announced that its Board of
Directors (the "Board") has unanimously authorized GEO to take all necessary
steps, including the divestiture of certain health care assets, that will
prepare GEO to position itself to operate in compliance with the real estate
investment trust ("REIT") rules of the Internal Revenue Code (the "REIT
rules") beginning January 1, 2013. This decision follows a thorough analysis
and careful consideration by GEO of ways to maximize shareholder value through
alternative financing, capital and other strategies. While GEO has not
received a private letter ruling from the Internal Revenue Service ("IRS"),
GEO is taking the necessary steps to position itself to qualify as a REIT for
2013.

George C. Zoley, GEO's Chairman, CEO and Founder, said, "Based on our
extensive work over the past few months, our Board and our management team
strongly believe that positioning GEO for a REIT conversion will maximize our
company's ability to create shareholder value given the nature of our assets,
help lower our cost of capital, draw a larger base of potential shareholders,
provide greater flexibility to pursue growth opportunities, and create a more
efficient operating structure."

“We believe these actions will enable our shareholders to begin enjoying the
benefits of REIT status as soon as possible. Similarly, our Board felt
strongly that the declaration of a special dividend this year relating to a
REIT conversion provides our shareholders with maximum value as year-end
approaches,” said Zoley.

"Fundamentally, GEO is in a real estate intensive industry. Our present
company profile has evolved over several years, during which time, we have
developed and financed many new detention and correctional facilities for
federal and state government clients. Importantly, the REIT conversion would
have no impact on our valued clients worldwide who will continue to receive
high-quality services with industry-leading practices through our diversified
business units," Zoley added.

Special Dividend

On December 6, 2012, GEO's Board declared a special dividend of $5.68 per
share of common stock, representing approximately $350 million of accumulated
earnings and profits, which will be paid on December 31, 2012 to shareholders
of record as of December 12, 2012. Each shareholder may elect to receive
payment of the special dividend either in cash or in shares of GEO common
stock, except that GEO will limit the aggregate amount of cash payable to
shareholders (other than cash payable in lieu of fractional shares) to the
amount of cash paid pursuant to the lottery described below, plus 20% of the
total dividend amount remaining after the lottery. Shareholders who elect to
receive cash will be placed in a lottery to receive all cash, with the total
cash consideration issued in the lottery capped at approximately $7.35 
million or 2.1% of the special dividend. Shareholders who do not make an
election will be deemed to have chosen the cash option, but will not
participate in the lottery. If, following the lottery, total cash elections
(including deemed elections) exceed 20% of the remaining dividend amount, each
shareholder electing to receive cash will receive stock and a pro rata portion
of the available cash. As a result, a shareholder electing to receive all cash
will receive at least 20% of the shareholder's portion of the dividend in
cash.

The total number of shares of common stock to be distributed pursuant to the
special dividend will be determined based on shareholder elections and the
average opening price per share of GEO common stock on the New York Stock
Exchange on the two trading days following December 24, 2012, the date that
election forms will be due. Promptly after December 12, 2012, election forms
and materials will be mailed to shareholders.

Financial Guidance

As a REIT, GEO would expect to generate $320 million to $330 million in 2013
Adjusted EBITDA, $215 million to $225 million in 2013 Funds from Operations,
$200 million to $210 million in 2013 Adjusted Funds from Operations and $130
million to $140 million in 2013 pre-tax income. This financial performance
would allow GEO to pay an estimated annual REIT dividend in 2013 of
approximately $2.20 to $2.40 per share of common stock based on GEO's current
outstanding share count of 61.6 million. GEO will provide further financial
guidance for 2013 in its fourth quarter 2012 earnings announcement.

GEO expects to incur $15 million to $20 million in one-time REIT conversion
costs/charges, including costs associated with modifying existing bank debt
agreements. Approximately $10 million to $15 million of the one-time
REIT-related costs/charges will be incurred in the fourth quarter of 2012, and
the balance will be incurred in the first quarter of 2013. The one-time REIT
conversion related costs/charges will be offset by the elimination of certain
net deferred tax liabilities in the fourth quarter of 2012 resulting in a
positive adjustment to earnings of $90 million to $110 million. GEO expects to
incur an additional $3 million to $5 million in annual compliance expenses
going forward.

Internal Corporate Restructuring

In order to position itself for REIT eligibility, GEO will reorganize its
operations into separate legal wholly-owned operating business units through a
taxable REIT subsidiary (“TRS”). Through the TRS structure, a small portion of
GEO’s businesses, which are non-real estate related, such as GEO’s
managed-only contracts, international operations, electronic monitoring
services, and other non-residential facilities, will be part of wholly-owned
taxable subsidiaries of the REIT, while most of GEO’s business segments, which
are real estate related and involve company-owned and company-leased
facilities, will be part of the REIT. The TRS structure will allow GEO to
maintain the strategic alignment of almost all of its diversified business
segments under one entity.

Private Letter Ruling

GEO has completed an extensive analysis of the REIT requirements and believes
that it could meet the REIT operational and technical thresholds following the
divestiture of its health care facility operations by year-end 2012. GEO
expects to take the necessary steps as approved by the Board to be able to
operate in compliance with the REIT rules as of January 1, 2013 and does not
need to receive a final private letter ruling from the IRS before January 1,
2013 in order to do so. GEO intends to continue to pursue a private letter
ruling from the IRS affirming its ability to operate as a REIT.

Asset Divestiture

Applicable REIT rules substantially restrict the ability of REITs to directly
or indirectly operate or manage health care facilities. As a result, in order
to achieve and preserve REIT status effective January 1, 2013, GEO is required
to divest all health care facility management contracts prior to December 31,
2012. Under its wholly-owned subsidiary, GEO Care, Inc., GEO currently holds
six managed-only health care facility contracts, totaling 1,970 beds, and
provides correctional mental health services for the Palm Beach County,
Florida jail system through its Residential Treatment Services division and
delivers correctional health care services in publicly-operated prisons in the
State of Victoria, Australia through its Pacific Shores Healthcare subsidiary.
These contracts and services (collectively, the "GEO Care Business") generate
approximately $165 million in annualized revenues.

To enable GEO to achieve REIT status as of January 1, 2013, a special
committee of the Board was formed consisting of all the independent directors
of GEO (the “Independent Committee”), and the Independent Committee approved
the entry by GEO into a definitive agreement for the sale of the GEO Care
Business to members of GEO and GEO Care’s management teams (the "MBO Group")
for a purchase price of $36 million, inclusive of normalized working capital
in the GEO Care Business as of the closing date (the "GEO Care Divestiture").
The MBO Group will also be obligated to pay up to an additional $5 million in
purchase price on a contingent earn-out basis if certain potential future
contract awards are received by GEO Care.

In connection with the GEO Care Divestiture, the MBO Group will enter into
various arrangements with GEO which will result in approximately $2.6 million
in annual payments and cost savings for GEO through a five-year support
services agreement, a five-year licensing agreement, and annual general and
administrative cost savings. Additionally, GEO expects to incur a non-cash
charge of approximately $13 million to $17 million, net of tax, related to the
write-off of goodwill, other intangible assets and intercompany debt during
the fourth quarter of 2012 in connection with the GEO Care Divestiture. The
parties expect to close the transaction by year-end 2012.

The Independent Committee engaged Davis Polk & Wardwell LLP and Delancey
Street Partners, LLC as its legal and financial advisors, respectively, in its
evaluation of the GEO Care Divestiture. Delancey Street Partners, LLC and Duff
& Phelps LLC have each rendered fairness opinions to the Independent Committee
and the Board of Directors stating that the consideration to be received by
GEO in the GEO Care Divestiture is fair, from a financial point of view, to
GEO.

Shareholder Vote

In order to ensure operation in accordance with the REIT rules, GEO plans on
undertaking certain corporate reorganization actions including the inclusion
of certain ownership limitations in GEO's charter documents, which will
require the approval of GEO's shareholders. GEO expects to hold a special
meeting of shareholders in the first half of 2013 for this purpose.

Principal Advisors

GEO has retained Skadden, Arps, Slate, Meagher & Flom LLP and Akerman
Senterfitt as legal advisors, Bank of America Merrill Lynch and Barclays
Capital as financial co-advisors, and Deloitte, LLP as accounting advisors to
assist the Company in its REIT conversion.

Investor Conference Call Information

An investor conference call and simultaneous webcast has been scheduled for
11:00 AM (Eastern Time) on Friday, December 7, 2012 to discuss the steps GEO
is taking to position itself for a 2013 REIT conversion. Hosting the call will
be George C. Zoley, GEO's Chairman, Chief Executive Officer and Founder and
Brian R. Evans, GEO's Chief Financial Officer. The call-in number for the U.S.
is 1-866-788-0540 and the international call-in number is 1-857-350-1678. The
participant pass-code for the conference call is 93556623. In addition, a live
audio webcast of the conference call may be accessed on the Conference
Calls/Webcasts section of GEO's investor relations home page at
www.geogroup.com. A replay of the audio webcast will be available on the
website for one year. A telephonic replay of the conference call will be
available until January 7, 2013 at 1-888-286-8010 (U.S.) and 1-617-801-6888
(International). The pass-code for the telephonic replay is 32758887.

Investor Presentation

GEO has made available an investor presentation which can be obtained from
GEO's investor relations home page at www.geogroup.com.

About The GEO Group, Inc.

The GEO Group, Inc. is the world's leading diversified provider of
correctional, detention, and community reentry services to federal, state, and
local government agencies around the globe. GEO offers a turnkey approach that
includes design, construction, financing, and operations. GEO represents
government clients in the United States, Australia, South Africa, and the
United Kingdom. GEO's worldwide operations include 18,000 employees, 101
correctional, detention and community reentry facilities, including projects
under development, and 73,000 owned and/or managed beds.

Important Information on GEO’s Non-GAAP Financial Measures

Adjusted EBITDA, Funds From Operations, and Adjusted Funds From Operations are
non-GAAP financial measures.

Adjusted EBITDA is defined as income from continuing operations before net
interest expense, income tax provision, depreciation and amortization, and tax
provision on equity in earnings of affiliates, adjusted for net income/loss
attributable to non-controlling interests, stock-based compensation expenses,
and certain other non-recurring adjustments. GEO believes that Adjusted EBITDA
is useful to investors as it provides information about the performance of
GEO's overall business because such measure eliminates the effects of certain
unusual or non-recurring charges that are not directly attributable to GEO's
underlying operating performance, it provides disclosure on the same basis as
that used by GEO's management and it provides consistency in GEO's financial
reporting and therefore continuity to investors for comparability purposes.
GEO uses Adjusted EBITDA to monitor and evaluate its operating performance and
to facilitate internal and external comparisons of the historical operating
performance of GEO and its business units. In future press releases reporting
financial results for a completed quarterly or annual period where GEO is
reporting Adjusted EBITDA for the completed period, GEO will provide a
quantitative reconciliation for Adjusted EBITDA to the most directly
comparable financial measure calculated and presented in accordance with GAAP.

Funds From Operations, or FFO, is defined in accordance with standards
established by the National Association of Real Estate Investment Trusts, or
NAREIT, which defines FFO as net income (loss) attributable to common
shareholders (computed in accordance with Generally Accepted Accounting
Principles), excluding real estate related depreciation and amortization,
excluding gains and losses from the cumulative effects of accounting changes,
extraordinary items and sales of properties, and including adjustments for
unconsolidated partnerships and joint ventures. Adjusted Funds From
Operations, or AFFO, is defined as FFO adjusted for maintenance capital
expenditures, stock-based compensation expenses, and certain other
non-recurring adjustments. GEO believes that FFO and AFFO are useful to
investors because these measures help investors evaluate GEO's operating
performance without regard to specified non-cash items, such as real estate
depreciation and amortization and gain or loss on the sale of assets, as well
as certain adjustments, and they are widely recognized measures of the
performance of REITs. GEO uses FFO and AFFO to monitor and evaluate its
operating performance and to facilitate internal and external comparisons of
the historical operating performance of GEO and its business units. In future
press releases reporting financial results for a completed quarterly or annual
period where GEO is reporting FFO and AFFO for the completed period, GEO will
provide a quantitative reconciliation for FFO and AFFO to the most directly
comparable financial measures calculated and presented in accordance with
GAAP.

Safe-Harbor Statement

This press release contains forward-looking statements regarding future events
and future performance of GEO that involve risks and uncertainties that could
materially affect actual results, including statements regarding the steps GEO
is taking to position itself to operate in compliance with the REIT rules
effective January 1, 2013, the payment of a special dividend by December 31,
2012, the completion of an internal corporate restructuring, the consummation
of the GEO Care Divestiture, and GEO’s financial guidance for 2013. Factors
that could cause actual results to vary from current expectations and
forward-looking statements contained in this press release include, but are
not limited to: (1) GEO's ability to successfully complete its conversion to a
real estate investment trust effective January 1, 2013; (2) GEO’s ability to
obtain a favorable private letter ruling from the IRS; (3) GEO’s ability to
consummate the GEO Care Divestiture by December 31, 2012; (4) GEO’s ability to
pay the special dividend by December 31, 2012; (5) GEO's ability to meet its
financial guidance given the various risks to which its business is exposed;
(6) GEO's ability to declare future cash dividends; (7) GEO's ability to
successfully pursue further growth and continue to create shareholder value;
(8) risks associated with GEO's ability to control operating costs associated
with contract start-ups; (9) GEO's ability to timely open facilities as
planned, profitably manage such facilities and successfully integrate such
facilities into GEO's operations without substantial costs; (10) GEO's ability
to win management contracts for which it has submitted proposals and to retain
existing management contracts; (11) GEO's ability to obtain future financing
on acceptable terms; (12) GEO's ability to sustain company-wide occupancy
rates at its facilities; (13) GEO's ability to access the capital markets in
the future on satisfactory terms or at all; and (14) other factors contained
in GEO's Securities and Exchange Commission filings, including the Form 10-K,
10-Q and 8-K reports.

Contact:

The GEO Group, Inc.
Pablo E. Paez, 866-301-4436
Vice President, Corporate Relations
 
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