The GEO Group Completes Company Restructuring and Health Care Divestiture; Began Operating in Compliance with REIT Rules

  The GEO Group Completes Company Restructuring and Health Care Divestiture;
  Began Operating in Compliance with REIT Rules Effective January 1, 2013

Business Wire

BOCA RATON, Fla. -- January 2, 2013

The GEO Group, Inc. (NYSE: GEO) ("GEO") today announced that on December 31,
2012, it completed all the necessary restructuring steps, including the
previously announced divestiture of its health care assets, enabling GEO to
operate in compliance with the real estate investment trust ("REIT") rules of
the Internal Revenue Code (the "REIT rules") beginning January 1, 2013.

George C. Zoley, GEO's Chairman, CEO and Founder, said, “We are very pleased
with the completion of all the necessary restructuring steps for GEO to
operate as a REIT effective January 1, 2013. We were able to complete our
corporate restructuring and the divestiture of our health care facility
management contracts within our previously guided timelines, so that our
shareholders can begin enjoying the benefits of REIT status as soon as
possible. Our Board and our management team strongly believe that these
important steps 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.”

GEO reorganized 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, are 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, are part of the REIT. The TRS structure allows GEO
to maintain the strategic alignment of almost all of its diversified business
segments under one entity.

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 completed
the divestiture of all of its health care facility management contracts. Under
its previously wholly-owned subsidiary, GEO Care, Inc., GEO held six
managed-only health care facility contracts, totaling 1,970 beds, and provided
correctional mental health services for the Palm Beach County, Florida jail
system as well as correctional health care services in publicly-operated
prisons in the State of Victoria, Australia. These contracts and services
(collectively, the "GEO Care Business") generated approximately $165 million
in annualized revenues.

As previously announced by GEO, 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 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 (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 also entered 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
GEO Care Divestiture closed on December 31, 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 each rendered fairness opinions to the Independent Committee and
the Board of Directors stating that the consideration received by GEO in the
GEO Care Divestiture is fair, from a financial point of view, to GEO.

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.

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 benefits
of REIT status, the estimate of annual payments and cost savings to GEO and
the estimate of a non-cash charge, net of tax, during the fourth quarter of
2012 in connection with the GEO Care Divestiture. 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 meet its financial guidance given the various risks to
which its business is exposed; (2) GEO's ability to declare future cash
dividends; (3) GEO's ability to successfully pursue further growth and
continue to create shareholder value; (4) risks associated with GEO's ability
to control operating costs associated with contract start-ups; (5) 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; (6) GEO's ability to win management contracts for
which it has submitted proposals and to retain existing management contracts;
(7) GEO's ability to obtain future financing on acceptable terms; (8) GEO's
ability to sustain company-wide occupancy rates at its facilities; (9) GEO's
ability to access the capital markets in the future on satisfactory terms or
at all; and (10) 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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