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The GEO Group Reports Fourth Quarter 2012 Results

  The GEO Group Reports Fourth Quarter 2012 Results

  *2012 Income from Continuing Operations Per Diluted Share Up 117%
  *4Q12 Normalized FFO up 18.0%; 4Q12 AFFO up 19.7%
  *Confirms 2013 Guidance – AFFO of $200-210 million, $2.78 to $2.92 per
    Diluted Share

Business Wire

BOCA RATON, Fla. -- February 21, 2013

The GEO Group (NYSE: GEO) (“GEO”), the world’s leading provider of diversified
correctional, detention, and community reentry services, reported today its
financial results for the fourth quarter and full year 2012. GEO’s financial
results are presented throughout as retrospectively revised for discontinued
operations resulting from GEO’s previously announced discontinuation of three
managed-only contracts with the State of Mississippi during the third quarter
of 2012 and the divestiture of the healthcare facility contracts previously
held by its former wholly-owned subsidiary, GEO Care, Inc., which was
completed on December 31, 2012 (the “GEO Care Divestiture”) in connection with
GEO’s conversion to a real estate investment trust (“REIT”) as of January 1,
2013. Please see the section of this press release below entitled “Note on GEO
Care Divestiture.”

Fourth Quarter 2012 Highlights

  *Income from Continuing Operations of $1.55 Per Diluted Share
  *Pro Forma Income from Continuing Operations of $0.44 Per Diluted Share
  *Net Operating Income of $97.5 million
  *Normalized FFO of $0.79 Per Diluted Share
  *AFFO of $0.84 Per Diluted Share

For the fourth quarter 2012, GEO reported Normalized FFO of $49.0 million, or
$0.79 per diluted share, an increase of 18.0% from $41.5 million, or $0.67 per
Diluted Share, for the fourth quarter 2011. GEO reported fourth quarter 2012
AFFO of $51.8 million, or $0.84 per diluted share, an increase of 19.7% from
$43.3 million, or $0.70 per diluted share, for the fourth quarter 2011.

Net operating income for the fourth quarter 2012 increased to $97.5 million
from $96.1 million for the fourth quarter of 2011. Net operating income, or
gross profit, is defined as revenues less operating expenses, excluding
depreciation and amortization expense and general and administrative expenses.

George C. Zoley, Chairman and Chief Executive Officer of GEO, said: “We are
pleased with our fourth quarter results and confirmed outlook for 2013, which
continue to reflect strong operational and financial performance from our
diversified business units. During 2012, we achieved a historic milestone by
completing the steps required for our conversion to a real estate investment
trust on January 1, 2013, which has allowed us to increase our annual
dividends from $0.80 to $2.00 per share. The decisive actions taken by our
Board and our management team positioned GEO to become the first fully
integrated equity REIT in our industry, and we remain committed to maximizing
value for our shareholders.”

GEO reported total revenues for the fourth quarter 2012 of $378.7 million
compared to total revenues of $354.5 million for the fourth quarter 2011. GEO
reported fourth quarter 2012 income from continuing operations of $1.55 per
diluted share, compared to $0.28 per diluted share for the fourth quarter
2011.

GEO’s fourth quarter 2012 earnings reflect a positive adjustment of $79.0
million related to the elimination of certain net deferred tax liabilities
associated with GEO’s REIT conversion; $0.8 million, after-tax, in
start-up/transition expenses; $0.9 million, after-tax, in international bid
related costs; and $9.0 million, after-tax, in REIT conversion related
expenses. Excluding these items, GEO reported Pro Forma income from continuing
operations of $0.44 per diluted share, for the fourth quarter 2012 compared to
$0.36 per diluted share for the fourth quarter 2011.

Full Year 2012 Highlights

  *Income from Continuing Operations of $2.36 Per Diluted Share
  *Pro Forma Income from Continuing Operations of $1.49 Per Diluted Share
  *Net Operating Income of $389.8 million
  *Normalized FFO of $3.19 Per Diluted Share
  *AFFO of $3.52 Per Diluted Share

For the full year 2012, GEO reported Normalized FFO of $195.6 million, or
$3.19 per diluted share, an increase of 13.4% from $172.5 million, or $2.71
per Diluted Share, for the full year 2011. GEO reported full year 2012 AFFO of
$215.7 million, or $3.52 per diluted share, an increase of 16.9% from $184.6
million, or $2.90 per diluted share, for the full year 2011.

Net operating income for the full year 2012 increased to $389.8 million from
$371.2 million for the full year 2011.

GEO reported total revenues for the full year 2012 of $1.48 billion compared
to total revenues of $1.41 billion for the full year 2011. GEO reported full
year 2012 income from continuing operations of $2.36 per diluted share,
compared to $1.09 per diluted share for the full year 2011.

GEO’s full year 2012 earnings reflect a positive adjustment of $79.0 million
related to the elimination of certain net deferred tax liabilities associated
with GEO’s REIT conversion; a $0.9 million after-tax loss attributable to
non-controlling interests; $6.2 million, after-tax, in start-up/transition
expenses; $3.2 million, after-tax, in international bid related costs; $9.6
million, after-tax, in REIT conversion related expenses; $0.9 million in M&A
related expenses; and a $5.0 million after-tax loss related to the early
extinguishment of debt. Excluding these items, GEO reported Pro Forma income
from continuing operations of $1.49 per diluted share, for the full year 2012
compared to $1.42 per diluted share for the full year 2011.

Net Operating Income, Funds from Operations (“FFO”), Normalized Funds from
Operations (“Normalized FFO”), and Adjusted Funds From Operations (“AFFO”) are
widely used non-GAAP supplemental financial measures of REIT performance. GEO
also uses Pro Forma Income from Continuing Operations and Adjusted EBITDA as
Non-GAAP supplemental financial measures. Please see the section of this press
release below entitled “Note to Reconciliation Tables and Supplemental
Disclosure - Important Information on GEO’s Non-GAAP Financial Measures” for
information on how GEO defines these supplemental financial measures.

2013 Financial Guidance

GEO confirmed its previously issued financial guidance for 2013 and issues
additional financial guidance for the full year and first quarter 2013. GEO
expects full year 2013 AFFO to be in a range of $2.78 to $2.92 per diluted
share, or $200 million to $210 million. On a GAAP basis, GEO expects its
income from continuing operations for the full year 2013 to be in a range of
$1.70 to $1.80 per diluted share.

GEO expects full year 2013 revenues to be in a range of $1.51 billion to $1.55
billion. GEO’s full year 2013 Net Operating Income is expected to be in a
range of $410 million to $420 million, and full year 2013 Adjusted EBITDA is
expected to be in a range of $320 million to $330 million.

GEO’s 2013 guidance already reflects the expected discontinuation of GEO’s
contract with the State of Alaska for the housing of approximately 1,000
Alaskan inmates at GEO’s Hudson Correctional Facility in Colorado effective
July 2013. In 2012, the contract generated approximately $23.0 million in
revenues.

Additionally, GEO’s 2013 guidance reflects the December 31, 2012 GEO Care
Divestiture, representing approximately $165 million in annualized revenues.
Further, GEO’s 2013 guidance does not assume the potential reactivation of
approximately 6,000 current beds in inventory which GEO is actively marketing
to local, state, and federal customers.

With respect to the first quarter 2013, GEO expects AFFO to be in a range of
$0.63 to $0.70 per share, or $45.0 million to $50.0 million. On a GAAP basis,
GEO expects its first quarter 2013 income from continuing operations to be in
a range of $0.38 to $0.40 per diluted share. GEO expects first quarter 2013
revenues to be in a range of $377.0 million to $382.0 million. GEO’s first
quarter 2013 guidance reflects approximately $0.03 to $0.04 per share in
additional employment tax expense as a result of the seasonality in
unemployment taxes, which are front-loaded in the first quarter of the year.

Note on GEO Care Divestiture

GEO divested 100% of its interest in the GEO Care, Inc. legal entity on
December 31, 2012 and entered into a five-year licensing agreement to allow
the new owners to use the GEO Care service mark and domain name. The
divestiture of GEO Care, Inc. was not equivalent to the divestiture of GEO’s
entire GEO Care reporting segment. The divested business was comprised of
Residential Treatment Services and a correctional health care services
business operating in publicly operated prisons in the State of Victoria,
Australia. Residential Treatment Services 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. The
correctional health services business operating in publicly operated prisons
in the State of Victoria, Australia was part of the International Services
reporting segment. The GEO Care reporting segment has been renamed GEO
Community Services and now consists of the following three operating segments:
Community Based Services, Youth Services, and BI Electronic and Location
Monitoring.

Reconciliation Tables and Supplemental Disclosure

GEO has made available a Supplemental Disclosure which contains reconciliation
tables of operating income to net operating income, income from continuing
operations to pro forma income from continuing operations, income from
continuing operations to EBITDA and Adjusted EBITDA, and income from
continuing operations to Funds From Operations, Normalized Funds From
Operations and Adjusted Funds from Operations along with supplemental
financial and operational information on GEO’s business segments and other
important operating metrics. Please see the section of this press release
below entitled “Note to Reconciliation Tables and Supplemental Disclosure -
Important Information on GEO’s Non-GAAP Financial Measures” for information on
how GEO defines these supplemental financial measures and reconciles them to
the most directly comparable GAAP measures. GEO’s Reconciliation Tables can be
found herein and in GEO’s Supplemental Disclosure which is available on GEO’s
Investor Relations webpage at www.geogroup.com.

Conference Call Information

GEO has scheduled a conference call and simultaneous webcast for today at
11:00 AM (Eastern Time) to discuss GEO’s fourth quarter 2012 financial results
as well as its progress and outlook. The call-in number for the U.S. is
1-888-679-8038 and the international call-in number is 1-617-213-4850. The
conference call participant passcode is 65357966. 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 March 21, 2013 at 1-888-286-8010 (U.S.) and 1-617-801-6888
(International). The conference call ID number for the telephonic replay is
88327693.

About The GEO Group

The GEO Group (NYSE:GEO) is the first fully integrated equity real estate
investment trust specializing in the design, financing, development, and
operation of correctional, detention, and community reentry facilities around
the globe. GEO is the world's leading provider of diversified correctional,
detention, and community reentry services to government agencies worldwide
with operations in the United States, Australia, South Africa, and the United
Kingdom. GEO's worldwide operations include the ownership and/or management of
100 facilities totaling approximately 73,000 beds with a growing workforce of
approximately 18,000 professionals.

Note to Reconciliation Tables and Supplemental Disclosure –
Important Information on GEO’s Non-GAAP Financial Measures

Net Operating Income, Pro Forma Income from Continuing Operations, EBITDA,
Adjusted EBITDA, Funds from Operations, Normalized Funds from Operations and
Adjusted Funds From Operations are non-GAAP financial measures that are
presented as supplemental disclosures. Net operating income, or gross profit,
is defined as revenues less operating expenses, excluding depreciation and
amortization expense and general and administrative expenses.

GEO has presented herein certain forward-looking statements about GEO's future
financial performance that include non-GAAP financial measures, including, Net
Operating Income, Adjusted EBITDA and Adjusted Funds From Operations. The
determination of the amounts that are excluded from these non-GAAP financial
measures is a matter of management judgment and depends upon, among other
factors, the nature of the underlying expense or income amounts recognized in
a given period. While we have provided a high level reconciliation for the
guidance ranges for full year 2013, we are unable to present a more detailed
quantitative reconciliation of the forward-looking non-GAAP financial measures
to their most directly comparable forward-looking GAAP financial measures
because management cannot reliably predict all of the necessary components of
such GAAP measures. The quantitative reconciliation of the forward-looking
GAAP financial measures will be provided for completed annual and quarterly
periods, as applicable, calculated in a consistent manner with the
quantitative reconciliation of non-GAAP financial measures previously reported
for completed annual and quarterly periods.

Pro Forma Income from Continuing Operations is defined as income from
continuing operations adjusted for net income/loss attributable to
non-controlling interests, start-up/transition expenses, net of tax,
international bid related costs, net of tax, and certain other adjustments as
defined from time to time. GEO believes that Pro Forma Income from Continuing
Operations is useful to investors as it provides information about the
performance of GEO’s overall business because such measure eliminates the
effects of certain 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’s management uses Pro Forma Income from Continuing Operations 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.

EBITDA is defined as income from continuing operations before net interest
expense, income tax provision (benefit), depreciation and amortization, and
tax provision on equity in earnings of affiliates. Adjusted EBITDA is defined
as EBITDA adjusted for net income/loss attributable to non-controlling
interests, non-cash stock-based compensation expenses, non-cash interest
expense, and certain other adjustments as defined from time to time. 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 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.

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 United States 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. Normalized
Funds From Operations, or Normalized FFO, is defined as FFO adjusted for
certain items which by their nature are not comparable from period to period
or that tend to obscure the Company’s actual operating performance. Adjusted
Funds From Operations, or AFFO, is defined as Normalized Funds From Operations
adjusted for maintenance capital expenditures, non-cash stock-based
compensation expenses, non-cash interest expense, and certain other
adjustments as defined from time to time. GEO believes that Funds From
Operations, Normalized Funds From Operations, and Adjusted Funds From
Operations are useful measures to investors as they provide information
regarding cash that GEO’s operating business generates before taking into
account certain cash and non-cash items that are non-operational in nature,
provide disclosure on the same basis as that used by GEO’s management and
provide consistency in GEO’s financial reporting and therefore continuity to
investors for comparability purposes. GEO’s management uses these measures 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.

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 financial
guidance for first quarter 2013 and full year 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 meet its financial guidance for 2013 given the various
risks to which its business is exposed; (2) GEO’s ability to declare future
quarterly 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; (10) GEO’s ability to remain qualified as a REIT; (11) the incurrence
of REIT related expenses; and (12) other factors contained in GEO’s Securities
and Exchange Commission periodic filings, including the Form 10-K, 10-Q and
8-K reports.

Fourth quarter and full year 2013 financial tables to follow:


Condensed Consolidated Statements of Income
                                                                      
(In thousands
except per
share data)
(Unaudited)                   13 Weeks        13 Weeks        52 Weeks          52 Weeks
                              Ended           Ended           Ended             Ended
                              31-Dec-12       1-Jan-12        31-Dec-12         1-Jan-12
Revenues                      $ 378,731       $ 354,473       $ 1,479,062       $ 1,407,172
Operating                       281,229         258,372         1,089,232         1,036,010
expenses
Depreciation
and                             23,540          22,486          91,685            81,548
amortization
General and
administrative                 34,649        26,317        113,792         110,015   
expenses
Operating                     $ 39,313        $ 47,298        $ 184,353         $ 179,599
income
Interest income                 1,497           2,073           6,716             7,032
Interest                        (20,160 )       (19,681 )       (82,189   )       (75,378   )
expense
Loss on early
extinguishment                 -             -             (8,462    )      -         
of debt
Income before income
taxes, equity in
earnings (loss) of            $ 20,650        $ 29,690        $ 100,418         $ 111,253
affiliates and
discontinued operations
(Benefit)
provision for                   (72,837 )       11,725          (40,562   )       43,172
income taxes
                                                                                            
Equity in earnings
(loss) of affiliates,          1,926         (789    )      3,578           1,563     
net of Income tax
Income from
continuing                    $ 95,413        $ 17,176        $ 144,558         $ 69,644
operations
Income (loss) from
discontinued                   (13,777 )      1,450         (10,660   )      7,819     
operations, net of
income tax
Net income                    $ 81,636        $ 18,626        $ 133,898         $ 77,463
Net (income)
loss
attributable to                (28     )      112           852             1,162     
non-controlling
interests
Net income
attributable to               $ 81,608       $ 18,738       $ 134,750        $ 78,625    
The GEO Group,
Inc.
                                                                                
Weighted
average shares
outstanding
                Basic           61,218          61,615          60,934            63,425
                Diluted         61,663          61,780          61,265            63,740
                                                                                
Income per
share from
continuing
operations
                Basic         $ 1.56          $ 0.28          $ 2.37            $ 1.10
                Diluted       $ 1.55          $ 0.28          $ 2.36            $ 1.09
                                                                                
                                                                                
Income per
share
attributable to
The GEO Group,
Inc.
                Basic         $ 1.33          $ 0.30          $ 2.21            $ 1.24
                Diluted       $ 1.32          $ 0.30          $ 2.20            $ 1.23

                                                              
Condensed Consolidated Balance Sheets                         
                                                                   
(In thousands)
(Unaudited)
                                                                   
ASSETS                                             31-Dec-12       1-Jan-12
Current Assets
Cash and cash equivalents                          $ 31,755        $ 43,377
Restricted cash and investments                      15,654          42,535
Accounts receivable, less allowance for              246,635         265,250
doubtful accounts
Current deferred income tax assets                   18,290          28,580
Prepaid expenses and other current assets            24,849          49,025
Current assets of discontinued operations           -              30,562
Total current assets                                337,183        459,329
Restricted Cash and Investments                      32,756          56,925
Property and Equipment, Net                          1,687,159       1,688,356
Assets Held for Sale                                 3,243           4,363
Direct Finance Lease Receivable                      26,757          32,146
Non-Current Deferred Income Tax Assets               2,532           1,437
Goodwill                                             490,308         490,296
Intangible Assets, Net                               178,318         195,716
Other Non-Current Assets                             80,938          79,577
Non-Current Assets of Discontinued Operations       -              41,778
                                                   $ 2,839,194     $ 3,049,923
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable                                     50,110          68,033
Accrued payroll and related taxes                    39,322          34,806
Accrued expenses                                     116,557         125,836
Current portion of capital lease obligation,         53,882          53,653
long-term debt, and non-recourse debt
Current liabilities of discontinued operations      -              6,490
Total current liabilities                           259,871        288,818
                                                                   
Non-Current Deferred Income Tax Liabilities          15,703          125,516
Other Non-Current Liabilities                        82,025          54,106
Capital Lease Obligations                            11,926          13,064
Long-Term Debt                                       1,317,529       1,319,068
Non-Recourse Debt                                    104,836         208,532
Non-Current Liabilities of Discontinued              -               2,298
Operations
Total Shareholders' Equity                          1,047,304      1,038,521
Total Liabilities and Shareholders' Equity         $ 2,839,194     $ 3,049,923


Reconciliation of Income from Continuing Operations to Pro Forma Income from
Continuing Operations
                                                             
(In thousands
except per share
data)
(Unaudited)             13 Weeks          13 Weeks     52 Weeks        52 Weeks
                        Ended             Ended        Ended           Ended
                        31-Dec-12         1-Jan-12     31-Dec-12       1-Jan-12
Income from
continuing              $ 95,413          $ 17,176     $ 144,558       $ 69,644
operations
Net (Income) loss
attributable to           (28     )         112          852             1,162
non-controlling
interests
Start-up/transition
expenses, net of          800               5,207        6,189           14,625
tax
International bid
related costs, net        904               -            3,215           703
of tax
REIT conversion
related expenses          9,001             -            9,606           -
and other expenses,
net of tax
M&A related
expenses, net of          -                 -            874             4,129
tax
Tax impact of REIT        (79,033 )         -            (79,033 )       -
conversion
Early
extinguishment of        -               -           4,977         -
debt, net of tax
Pro forma income
from continuing         $ 27,057         $ 22,495     $ 91,238       $ 90,263
operations
                                                                       
Income from
continuing              $ 1.55            $ 0.28       $ 2.36          $ 1.09
operations per
diluted share (1)
Net (Income) loss
attributable to           -                 -            0.01            0.02
non-controlling
interests
Start-up/transition
expenses, net of          0.01              0.08         0.10            0.23
tax
International bid
related costs, net        0.01              -            0.05            0.01
of tax
REIT conversion
related expenses          0.15              -            0.16            -
and other expenses,
net of tax
M&A related
expenses, net of          -                 -            0.01            0.06
tax
Tax impact of REIT        (1.28   )         -            (1.29   )       -
conversion
Early
extinguishment of        -               -           0.08          -
debt, net of tax
Diluted Pro forma
income from
continuing              $ 0.44           $ 0.36       $ 1.49         $ 1.42
operations per
diluted share
                                                                       
Weighted average
common shares             61,663            61,780       61,265          63,740
outstanding-diluted
                                                                       
                                                                       
(1) Note that earnings per share tables may contain slight summation
differences due to rounding

                                                            
Reconciliation of Income from Continuing Operations to Adjusted EBITDA
                                                                     
(In thousands)
(Unaudited)             13 Weeks        13 Weeks     52 Weeks        52 Weeks
                        Ended           Ended        Ended           Ended
                        31-Dec-12       1-Jan-12     31-Dec-12       1-Jan-12
Income from
continuing              $ 95,413        $ 17,176     $ 144,558       $ 69,644
operations
Interest expense,         18,663          17,608       75,473          68,346
net
Income tax                (72,837 )       11,725       (40,562 )       43,172
provision (benefit)
Depreciation and          23,540          22,486       91,685          81,548
amortization
Tax provision on
equity in earnings       802           701         1,660         2,406
of affiliates
EBITDA                  $ 65,581        $ 69,696     $ 272,814       $ 265,116
                                                                     
Adjustments
Net (Income) loss
attributable to           (28     )       112          852             1,162
non-controlling
interests
Stock based
compensation              1,531           1,270        6,543           6,113
expenses, pre-tax
Start-up/transition       800             7,063        9,027           21,625
expenses, pre-tax
International bid
related costs,            904             -            4,057           1,091
pre-tax
REIT conversion
related expenses          14,670          -            15,670          -
and other expenses,
pre-tax
M&A related               -               -            1,471           6,308
expenses, pre-tax
Early
extinguishment of        -             -           8,462         -
debt, pre-tax
Adjusted EBITDA         $ 83,458       $ 78,141     $ 318,896      $ 301,415

                                                                     
Reconciliation of Income from Continuing Operations to Funds from Operations,
Normalized FFO, and Adjusted Funds from Operations
                                                 
(In thousands)
(Unaudited)             13 Weeks        13 Weeks        52 Weeks        52 Weeks
                        Ended           Ended           Ended           Ended
                        31-Dec-12       1-Jan-12        31-Dec-12       1-Jan-12
Income from
Continuing              $ 95,413        $ 17,176        $ 144,558       $ 69,644
Operations
Net (Income) Loss
Attributable to           (28     )       112             852             1,162
Non-controlling
Interests
Real Estate Related
Depreciation and         13,267        12,063        51,182        43,507  
Amortization
Funds from              $ 108,652      $ 29,351       $ 196,592      $ 114,313 
Operations
                                                                        
Funds from              $ 108,652       $ 29,351        $ 196,592       $ 114,313
Operations
Income Tax                (72,837 )       11,725          (40,562 )       43,172
Provision
Income Taxes (Paid)       (5,108  )       (5,820  )       (2,764  )       (15,621 )
Refunded
Equity in Earnings
(Loss) of                 1,926           (789    )       3,578           1,563
Affiliates, Net of
Income Tax
Start-up/transition       800             7,063           9,027           21,625
Expenses
International Bid         904             -               4,057           1,091
Related Costs
REIT Conversion           14,670          -               15,670          -
Related Expenses
M&A Related               -               -               1,471           6,308
Expenses
Early
Extinguishment of        -             -             8,462         -       
Debt
Normalized Funds        $ 49,007       $ 41,530       $ 195,531      $ 172,451 
from Operations
                                                                        
Normalized Funds        $ 49,007        $ 41,530        $ 195,531       $ 172,451
from Operations
Non-Real Estate
Related                   10,274          10,423          40,503          38,041
Depreciation &
Amortization
Consolidated
Maintenance Capital
Expenditures - Real       (10,551 )       (10,565 )       (30,739 )       (33,796 )
Estate and Non-Real
Estate Related
Stock Based
Compensation              1,531           1,270           6,543           6,113
Expenses
Amortization of
Debt Costs and           1,523         597           3,869         1,745   
Other Non-Cash
Interest
Adjusted Funds from     $ 51,784       $ 43,255       $ 215,707      $ 184,554 
Operations (AFFO)
                                                                     
Normalized FFO Per      $ 0.79         $ 0.67         $ 3.19         $ 2.71    
Diluted Share
                                                                     
AFFO Per Diluted        $ 0.84         $ 0.70         $ 3.52         $ 2.90    
Share
                                                                        
Weighted Average
Common Shares             61,663          61,780          61,265          63,740
Outstanding-Diluted

                                                            
Reconciliation of Operating Income to Net Operating Income
                                                                     
(In thousands)
(Unaudited)                 13 Weeks      13 Weeks     52 Weeks      52 Weeks
                            Ended         Ended        Ended         Ended
                            31-Dec-12     1-Jan-12     31-Dec-12     1-Jan-12
Operating Income            $  39,313     $ 47,298     $ 184,353     $ 179,599
Depreciation and               23,540       22,486       91,685        81,548
amortization
General and                   34,649      26,317      113,792      110,015
administrative expenses
Net Operating Income        $  97,502     $ 96,101     $ 389,830     $ 371,162

                                                              
2013 Outlook/Reconciliation
                                                                   
(Unaudited)
(In thousands except per share data)
                                                                   
                                                Full Year 2013
                                                                   
Net Income                                      $ 120,000     to   $ 130,000
Real Estate Related Depreciation and             45,000           45,000  
Amortization
Funds from Operations (FFO)                     $ 165,000    to   $ 175,000 
                                                                   
Non-Real Estate Related Depreciation and          50,000             50,000
Amortization
Consolidated Maintenance Capex - Real             (30,000 )          (30,000 )
Estate and Non-Real Estate
Non-Cash Stock Based Compensation and            15,000           15,000  
Non-Cash Interest Expense
Adjusted Funds From Operations (AFFO)           $ 200,000         $ 210,000 
                                                                   
Net Interest Expense                              75,000             75,000
Consolidated Maintenance Capex - Real             30,000             30,000
Estate and Non-Real Estate
Income Taxes                                     15,000           15,000  
Adjusted EBITDA                                 $ 320,000         $ 330,000 
                                                                   
G&A Expenses                                      100,000            100,000
Non-Cash Stock Based Compensation                (10,000 )         (10,000 )
Net Operating Income                            $ 410,000         $ 420,000 
                                                                   
FFO Per Share                                   $ 2.29             $ 2.43
AFFO Per Share                                  $ 2.78             $ 2.92
Dividend Per Share                              $ 2.00             $ 2.00
Weighted Average Common Shares                    72,000             72,000
Outstanding-Diluted
                                                                   
FFO Payout Ratio                                  87      %          82      %
AFFO Payout Ratio                                 72      %          69      %

Contact:

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