GEO : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. (form 10-Q)

Forward-Looking Information

This Quarterly Report on Form 10-Q and the documents incorporated by reference
herein contain "forward-looking" statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. "Forward-looking" statements are any
statements that are not based on historical information. Statements other than
statements of historical facts included in this report, including, without
limitation, statements regarding our future financial position, business
strategy, the impact of COVID-19 on our business, the efficacy and distribution
of COVID-19 vaccines, budgets, projected costs and plans and objectives of
management for future operations, are "forward-looking" statements.
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "anticipate,"
"intend," "plan," "believe," "seek," "estimate" or "continue" or the negative of
such words or variations of such words and similar expressions. These statements
are not guarantees of future performance and involve certain risks,
uncertainties and assumptions, which are difficult to predict. Therefore, actual
outcomes and results may differ materially from what is expressed or forecasted
in such forward-looking statements and we can give no assurance that such
forward-looking statements will prove to be correct. Important factors that
could cause actual results to differ materially from those expressed or implied
by the forward-looking statements, or "cautionary statements," include, but are
not limited to:

• our ability to mitigate the transmission of the current pandemic of the

novel coronavirus, or COVID-19, at our secure facilities, processing

centers and reentry centers and the efficacy and distribution of COVID-19

vaccines;

      •  the magnitude, severity and duration of the COVID-19 pandemic and its
         impact on our business, financial condition, results of operations and
         cash flows;


      •  our ability to timely build and/or open facilities as planned,
         successfully manage such facilities and successfully integrate such

         facilities into our operations without substantial additional costs;


      •  our ability to estimate the government's level of utilization of
         public-private partnerships for secure services and the impact of any
         modifications or reductions by our government customers of their
         utilization of public-private partnerships;

• our ability to accurately project the size and growth of public-private

partnerships for secure services in the U.S. and internationally and our

ability to capitalize on opportunities for public-private partnerships;

• our ability to successfully respond to any challenges or concerns that

our government customers may raise regarding their use of public-private

partnerships for secure services, including finding other government

customers or alternative uses for facilities where a government customer

         has discontinued or announced that a contract with us will be
         discontinued;

• the impact of adopted or proposed executive action or legislation aimed

at limiting public-private partnerships for secure facilities, processing

         centers and community reentry centers or limiting or restricting the
         business and operations of financial institutions or others who do
         business with us;


      •  our ability to successfully respond to delays encountered by states
         pursuing public-private partnerships for secure services and cost savings
         initiatives implemented by a number of states;


  • our ability to activate the inactive beds at our idle facilities;

• our ability to maintain or increase occupancy rates at our facilities;

• the impact of our suspension of quarterly dividend payments and our

ability to maximize the use of cash flows to repay debt, deleverage and

         internally fund growth;


      •  the timing and impact of our Board's evaluation of our corporate tax
         structure and capital structure alternatives;

• our ability to expand, diversify and grow our secure services, reentry,

community-based services, monitoring services, evidence-based supervision

and treatment programs and secure transportation services businesses;

• our ability to win management contracts for which we have submitted

proposals, retain existing management contracts, prevail in any challenge

         or protest involving the award of a management contract and meet any
         performance standards required by such management contracts;

• our ability to raise new project development capital given the often

short-term nature of the customers' commitment to use newly developed

         facilities;


  • our ability to develop long-term earnings visibility;

• our ability to successfully conduct our operations in the United Kingdom,

South Africa and Australia through joint ventures or a consortium;


  • the impact of the anticipated LIBOR transition in 2021;


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• the instability of foreign exchange rates, exposing us to currency risks

in Australia, the United Kingdom, and South Africa, or other countries in

         which we may choose to conduct our business;


  • an increase in unreimbursed labor rates;


  • our exposure to rising medical costs;

• our ability to manage costs and expenses relating to ongoing litigation

arising from our operations;

• our ability to accurately estimate on an annual basis, loss reserves

         related to general liability, workers' compensation and automobile
         liability claims;


      •  if we fail to remain qualified as a REIT, we will be subject to U.S.

federal income tax as a regular corporation and could face a substantial

         tax liability, which would reduce the amount of cash available for
         distribution to our shareholders;

• qualifying as a REIT involves highly technical and complex provisions of

the Internal Revenue Code of 1986, as amended (the "Code");

• complying with the REIT requirements may cause us to liquidate or forgo

otherwise attractive opportunities;

• dividends payable by REITs do not qualify for the reduced tax rates

available for some dividends;

• REIT distribution requirements could adversely affect our ability to

         execute our business plan;


  • our cash distributions are not guaranteed and may fluctuate;


      •  certain of our business activities may be subject to corporate level
         income tax and foreign taxes, which would reduce our cash flows, and may
         have potential deferred and contingent tax liabilities;

• REIT ownership limitations may restrict or prevent you from engaging in

certain transfers of our common stock;

• our use of taxable REIT subsidiaries ("TRSs") may cause us to fail to

qualify as a REIT;

• new legislation or administrative or judicial action, in each instance

         potentially with retroactive effect, could make it more difficult or
         impossible for us to maintain our qualification as a REIT;

• our ability to fulfill our debt service obligations and its impact on our

         liquidity;


  • our ability to refinance our indebtedness;

• we are incurring significant indebtedness in connection with substantial

         ongoing capital expenditures. Capital expenditures for existing and
         future projects may materially strain our liquidity;


      •  despite current indebtedness levels, we may still incur more
         indebtedness, which could further exacerbate the risks relating to our
         indebtedness;

• the covenants in the indentures governing the 6.50% Convertible Notes,

the 6.00% Senior Notes, the 5.125% Senior Notes and the 5.875% Senior

Notes and the covenants in our senior credit facility impose significant

         operating and financial restrictions which may adversely affect our
         ability to operate our business;

• servicing our indebtedness will require a significant amount of cash. Our

ability to generate cash depends on many factors beyond our control and

         we may not be able to generate the cash required to service our
         indebtedness;

• because portions of our senior indebtedness have floating interest rates,

a general increase in interest rates would adversely affect cash flows;

• we depend on distributions from our subsidiaries to make payments on our

indebtedness. These distributions may not be made;

• we may not be able to satisfy our repurchase obligations in the event of

         a change of control because the terms of our indebtedness or lack of
         funds may prevent us from doing so;

• from time to time, we may not have a management contract with a client to

operate existing beds at a facility or new beds at a facility that we are

expanding, and we cannot assure you that such a contract will be

obtained. Failure to obtain a management contract for these beds will

subject us to carrying costs with no corresponding management revenue;

• negative conditions in the capital markets could prevent us from

obtaining financing on desirable terms, which could materially harm our

business;

• we are subject to the loss of our facility management contracts, due to

executive orders, terminations, non-renewals or competitive re-bids,

which could adversely affect our results of operations and liquidity,

         including our ability to secure new facility management contracts from
         other government customers;


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      •  our growth depends on our ability to secure contracts to develop and

manage new secure facilities, processing centers and community based

facilities and to secure contracts to provide electronic monitoring

services, community-based reentry services and monitoring and supervision

services, the demand for which is outside our control;

• we may not be able to meet state requirements for capital investment or

locate land for the development of new facilities, which could adversely

affect our results of operations and future growth;

• we partner with a limited number of governmental customers who account

for a significant portion of our revenues. The loss of, or a significant

         decrease in revenues from, these customers could seriously harm our
         financial condition and results of operations;


  • State budgetary constraints may have a material adverse impact on us;

• competition for contracts may adversely affect the profitability of our

business;

• we are dependent on government appropriations, which may not be made on a

timely basis or at all and may be adversely impacted by budgetary

         constraints at the federal, state, local and foreign government levels;


      •  public resistance to the use of public-private partnerships for secure
         facilities, processing centers and community reentry centers could result
         in our inability to obtain new contracts or the loss of existing

contracts, impact our ability to obtain or refinance debt financing or

         enter into commercial arrangements, which could have a material adverse
         effect on our business, financial condition, results of operations and
         the market price of our securities;

• adverse publicity may negatively impact our ability to retain existing

contracts and obtain new contracts;

• we may incur significant start-up and operating costs on new contracts

         before receiving related revenues, which may impact our cash flows and
         not be recouped;

• failure to comply with extensive government regulation and applicable

         contractual requirements could have a material adverse effect on our
         business, financial condition or results of operations;


      •  we may face community opposition to facility locations, which may
         adversely affect our ability to obtain new contracts;

• our business operations expose us to various liabilities for which we may

         not have adequate insurance and may have a material adverse effect on our
         business, financial condition or results of operations;

• we may not be able to obtain or maintain the insurance levels required by

         our government contracts;


  • our exposure to rising general insurance costs;

• natural disasters, pandemic outbreaks, global political events and other

         serious catastrophic events could disrupt operations and otherwise
         materially adversely affect our business and financial condition;

• our international operations expose us to risks that could materially

adversely affect our financial condition and results of operations;

• we conduct certain of our operations through joint ventures or

         consortiums, which may lead to disagreements with our joint venture
         partners or business partners and adversely affect our interest in the
         joint ventures or consortiums;

• we are dependent upon our senior management and our ability to attract

         and retain sufficient qualified personnel;


  • our profitability may be materially adversely affected by inflation;

• various risks associated with the ownership of real estate may increase

costs, expose us to uninsured losses and adversely affect our financial

condition and results of operations;

• risks related to facility construction and development activities may

increase our costs related to such activities;

• the rising cost and increasing difficulty of obtaining adequate levels of

surety credit on favorable terms could adversely affect our operating

results;

      •  adverse developments in our relationship with our employees could
         adversely affect our business, financial condition or results of
         operations;

• technological changes could cause our electronic monitoring products and

technology to become obsolete or require the redesign of our electronic

         monitoring products, which could have a material adverse effect on our
         business;

• any negative changes in the level of acceptance of or resistance to the

use of electronic monitoring products and services by governmental

customers could have a material adverse effect on our business, financial

condition and results of operations;

• we depend on a limited number of third parties to manufacture and supply

quality infrastructure components for our electronic monitoring products.

If our suppliers cannot provide the components or services we require and

         with such quality as we expect, our ability to market and sell our
         electronic monitoring products and services could be harmed;


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• the interruption, delay or failure of the provision of our services or

information systems could adversely affect our business;

• an inability to acquire, protect or maintain our intellectual property

and patents in the electronic monitoring space could harm our ability to

compete or grow;

• our electronic monitoring products could infringe on the intellectual

property rights of others, which may lead to litigation that could itself

be costly, could result in the payment of substantial damages or

royalties, and/or prevent us from using technology that is essential to

our products;

• we license intellectual property rights in the electronic monitoring

         space, including patents, from third party owners. If such owners do not
         properly maintain or enforce the intellectual property underlying such
         licenses, our competitive position and business prospects could be
         harmed. Our licensors may also seek to terminate our license;

• we may be subject to costly product liability claims from the use of our

         electronic monitoring products, which could damage our reputation, impair
         the marketability of our products and services and force us to pay costs
         and damages that may not be covered by adequate insurance;

• our ability to identify suitable acquisitions, and to successfully

complete and integrate such acquisitions on satisfactory terms, to

enhance occupancy levels and the financial performance of assets acquired

         and estimate the synergies to be achieved as a result of such
         acquisitions;

• as a result of our acquisitions, we have recorded and will continue to

record a significant amount of goodwill and other intangible assets. In

the future, our goodwill or other intangible assets may become impaired,

         which could result in material non-cash charges to our results of
         operations;


  • we are subject to risks related to corporate social responsibility;


  • the market price of our common stock may vary substantially;

• future sales of shares of our common stock or securities convertible into

         common stock could adversely affect the market price of our common stock
         and may be dilutive to current shareholders;


      •  various anti-takeover protections applicable to us may make an
         acquisition of us more difficult and reduce the market value of our
         common stock;


      •  failure to maintain effective internal controls in accordance with
         Section 404 of the Sarbanes-Oxley Act of 2002 could have an adverse
         effect on our business and the trading price of our common stock;

• we may issue additional debt securities that could limit our operating

         flexibility and negatively affect the value of our common stock; and


      •  other factors contained in our filings with the Securities and Exchange

Commission, or the SEC, including, but not limited to, those detailed in

         the Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q and
         our Current Reports on Form 8-K filed with the SEC.


We undertake no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. All
subsequent written and oral forward-looking statements attributable to us, or
persons acting on our behalf, are expressly qualified in their entirety by the
cautionary statements included in this Quarterly Report on Form 10-Q.

Introduction

The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of our consolidated
results of operations and financial condition. This discussion contains
forward-looking statements that involve risks and uncertainties. Our actual
results may differ materially from those anticipated in these forward-looking
statements as a result of numerous factors including, but not limited to, those
described above under "Forward-Looking Information", those described below under
"Part II - Item 1A. Risk Factors" under "Part I - Item 1A. Risk Factors" in our
Annual Report on Form 10-K for the year ended December 31, 2020 and under "Part
II - Item 1A Risk Factors" in our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2021. The discussion should be read in conjunction with our
unaudited consolidated financial statements and notes thereto included in this
Quarterly Report on Form 10-Q.

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We are a fully-integrated real estate investment trust ("REIT") specializing in
the ownership, leasing and management of secure facilities, processing centers
and reentry facilities and the provision of community-based services and youth
services in the United States, Australia, South Africa and the United Kingdom.
We own, lease and operate a broad range of secure facilities including maximum,
medium and minimum-security facilities, processing centers, as well as
community-based reentry facilities. We develop new facilities based on contract
awards, using our project development expertise and experience to design,
construct and finance what we believe are state-of-the-art facilities. We
provide innovative technologies, industry-leading monitoring services, and
evidence-based supervision and treatment programs for community based programs.
We also provide secure transportation services domestically and in the United
Kingdom through our joint venture GEOAmey PECS Ltd. ("GEOAmey").

At June 30, 2021, our worldwide operations include the management and/or
ownership of approximately 90,000 beds at 114 secure services and community
based facilities, including idle facilities, and also include the provision of
community supervision services for more than 200,000 individuals, including over
100,000 through an array of technology products including radio frequency, GPS,
and alcohol monitoring devices.

We provide a diversified scope of services on behalf of our government agency partners:

• our secure facility management services involve the provision of security,

administrative, rehabilitation, education, and food services at secure

       services facilities;


    •  our community based services involve supervision of individuals in
       community-based programs and re-entry centers and the provision of

temporary housing, programming, employment assistance and other services

       with the intention of the successful reintegration of residents into the
       community;

• we provide comprehensive electronic monitoring and supervision services;

• we develop new facilities, using our project development experience to

       design, construct and finance what we believe are state-of-the-art
       facilities;


  • we provide secure transportation services; and

• our services are provided at facilities which we either own, lease or are

       owned by the government.




For the six months ended June 30, 2021 and 2020, we had consolidated revenues of
$1,141.8 million and $1,192.8 million, respectively. We maintained an average
company-wide facility occupancy rate of 87.0% including 79,726 active beds and
excluding 10,104 idle beds which includes those being marketed to potential
customers for the six months ended June 30, 2021, and 88.4% including 90,190
active beds and excluding 3,105 idle beds which includes those being marketed to
potential customers and beds under development for the six months ended June 30,
2020. The decrease in occupancy is primarily due to the impact of the COVID-19
pandemic as well as the impacts of the Executive Order (as defined below).

As a REIT, we are required to distribute annually at least 90% of our REIT
taxable income (determined without regard to the dividends paid deduction and by
excluding net capital gain) and we began paying regular quarterly REIT dividends
in 2013. The amount, timing and frequency of future dividends, however, will be
at the sole discretion of our Board of Directors (the "Board") and will be
declared based upon various factors, many of which are beyond our control,
including, our financial condition and operating cash flows, the amount required
to maintain REIT status, limitations on distributions in our existing and future
debt instruments, limitations on our ability to fund distributions using cash
generated through our taxable REIT subsidiaries ("TRSs") and other factors that
our Board may deem relevant.

During the six months ended June 30, 2021 and the year ended December 31, 2020,
respectively, we declared and paid the following regular cash distributions to
our shareholders as follows:



                                                                                                 Aggregate
                                                                            Distribution       Payment Amount
Declaration Date                      Record Date        Payment Date        Per Share         (in millions)
February 3, 2020                   February 14, 2020   February 21, 2020   $         0.48     $           58.2
April 6, 2020                      April 17, 2020      April 24, 2020      $         0.48     $           58.5
July 7, 2020                       July 17, 2020       July 24, 2020       $         0.48     $           58.5
October 6, 2020                    October 16, 2020    October 23, 2020    $         0.34     $           41.5
January 15, 2021                   January 25, 2021    February 1, 2021    $         0.25     $           30.5




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On April 7, 2021, we announced that our Board had immediately suspended GEO's
quarterly dividend payments with the goal of maximizing the use of cash flows to
repay debt, deleverage and internally fund growth. While we currently intend to
maintain our corporate tax structure as a REIT, the Board is evaluating GEO's
corporate tax structure as a REIT. The Board's evaluation of the current
corporate tax structure and GEO's REIT status is expected to take into
consideration, among other factors, potential changes to GEO's financial
operating performance, as well as potential changes to the Code applicable to
U.S. corporations and REITs. As a result of this evaluation, we have engaged
financial advisors and legal advisors to assist in evaluating various corporate
structure alternatives. The Board expects to conclude its evaluation in the
fourth quarter of 2021, and should the Board determine to maintain GEO's REIT
status, an additional dividend payment may be required before year-end in order
to meet the minimum REIT distribution requirements under the Code.



Reference is made to Part II, Item 7 of our Annual Report on Form 10-K filed
with the SEC on February 16, 2021, for further discussion and analysis of
information pertaining to our financial condition and results of operations as
of and for the year ended December 31, 2020.

2021 and Recent Developments

CEO Succession Plan

On June 1, 2021, we announced that our Board has determined that it is in the
best interests of GEO to implement a succession plan for the Chief Executive
Officer position given that GEO's Founder, Chairman and Chief Executive Officer,
George C. Zoley, is 71 years old and has served with GEO for approximately forty
years. The primary objectives of the Board in initiating a succession plan were
to secure Mr. Zoley's services on a long-term basis to ensure a proper senior
management transition, and to retain a new Chief Executive Officer that would
succeed Mr. Zoley in that role. This change will allow Mr. Zoley the ability to
focus on planning of GEO's future.

On May 27, 2021, the Board terminated without cause Mr. Zoley's existing employment agreement, effective as of June 30, 2021, and entered into a new five-year employment agreement with Mr. Zoley as Executive Chairman, in a modified role and at reduced compensation effective July 1, 2021. The new employment agreement with Mr. Zoley will secure Mr. Zoley's continuous employment, enabling GEO to continue to benefit from Mr. Zoley's extensive knowledge and experience, and providing for an orderly transition of senior management.

In order to transition the role of Chief Executive Officer to a successor in an
orderly manner, our Board determined it was in the best interests of GEO to
create a new officer position for the role of Executive Chairman and appoint
Mr. Zoley as Executive Chairman, effective as of July 1, 2021. As a result, the
Company and Mr. Zoley entered into on May 27, 2021 an Executive Chairman
Employment Agreement effective as of July 1, 2021 (the "Executive Chairman
Agreement"). Pursuant to the terms of the Executive Chairman Agreement,
Mr. Zoley will serve as Executive Chairman assisting the new Chief Executive
Officer in his transition, among other duties and responsibilities, and report
directly to the Board of Directors for a term of five years ending on June 30,
2026 and subject to automatic renewals for one-year periods unless either the
Company or Mr. Zoley gives written notice at least 1 year prior to the
expiration of the term. Under the terms of the Executive Chairman Agreement,
Mr. Zoley will be paid an annual base salary of $1.0 million and will be
eligible to receive target annual performance awards equal to 100% of base
salary in accordance with the terms of any plan governing senior management
performance awards. Mr. Zoley will also be entitled to receive an annual equity
incentive award with a grant date fair value equal to 100% of base salary and
subject to a time-based vesting schedule of one (1) year from the date of grant.
Additionally, the Company will credit Mr. Zoley's account balance under the
Amended and Restated Executive Retirement Agreement on an annual basis in an
amount equal to 100% of his base salary. Lastly, Mr. Zoley is entitled to
participate in all benefits and perquisites available to executive officers of
GEO.



Also on May 27, 2021, our Board determined that it was in the best interests of
GEO to appoint Jose Gordo as the successor Chief Executive Officer of the
Company, effective as of July 1, 2021, in light of Mr. Gordo's business
experience and background, his long history of working with GEO, his intimate
understanding of the Company's business and his service on the Board of
Directors. Jose Gordo, 48, has over 20 years of experience in business
management, private equity, corporate finance and business law. Since June 2017,
Mr. Gordo has served as the Managing Partner of a general partnership that
invests in and actively oversees small and medium-sized privately held
companies, with a focus on the healthcare, consumer products and technology
industries. From 2013 to early 2017, Mr. Gordo served as the Chief Financial
Officer of magicJack Vocaltec Ltd., a publicly traded company in the
telecommunications industry. Prior to that position, Mr. Gordo served as a
Managing Director at The Comvest Group, a Florida-based private equity firm.
Mr. Gordo was also previously a partner at the national law firm of Akerman LLP,
where he specialized in corporate law matters, advising public and private
companies and private equity firms on mergers and acquisitions and capital
markets transactions. He received a J.D. degree from Georgetown University Law
Center and a B.A. degree from the University of Miami.

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In connection with his appointment, Mr. Gordo and the Company entered into an
Executive Employment Agreement (the "Employment Agreement") on May 27, 2021 to
provide that Mr. Gordo will be employed by the Company for a three-year term
beginning July 1, 2021. Unless the Employment Agreement is sooner terminated, or
not renewed, it will automatically extend upon the end of its initial term for a
rolling three-year term. Pursuant to the terms of the Employment Agreement,
Mr. Gordo will serve as Chief Executive Officer and report directly to the
Executive Chairman. Either Mr. Gordo or the Company may terminate Mr. Gordo's
employment under the Employment Agreement for any reason upon not less than
thirty (30) days written notice.

Under the terms of the Employment Agreement, Mr. Gordo will be paid an annual
base salary of $900,000, subject to the review and potential increase within the
sole discretion of the Compensation Committee. Mr. Gordo will also be entitled
to receive a target annual performance award of 85% of Mr. Gordo's base salary
and will also be entitled to participate in the Company's stock incentive plan
and upon the effective date, the Company will grant Mr. Gordo an award of 50,000
performance-shares that will vest ratably over a three-year period.

Refer to Note 15 - Subsequent Events of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information.

Executive Order

On January 26, 2021, President Biden signed an executive order directing the
United States Attorney General not to renew U.S. Department of Justice ("DOJ")
contracts with privately operated criminal detention facilities, as consistent
with applicable law (the "Executive Order"). Two agencies of the DOJ, the
Federal Bureau of Prisons ("BOP") and U.S. Marshals Service ("USMS"), utilize
our services. The BOP houses inmates who have been convicted of federal crimes,
and the USMS is generally responsible for detainees who are awaiting trial or
sentencing in U.S. federal courts. Our contracts with the BOP for our
company-owned 1,940-bed Great Plains Correctional Facility, our company-owned
1,732-bed Big Spring Correctional Facility, our company-owned 1,800-bed
Flightline Correctional Facility, and our company-owned 1,800-bed North Lake
Correctional Facility have renewal option periods that expire on May 31, 2021,
November 30, 2021, November 30, 2021, and September 30, 2022, respectively.
Additionally, the contracts with the BOP for the county owned and managed
1,800-bed Reeves County Detention Center I & II and the 1,376-bed Reeves County
Detention Center III have renewal option periods that expire September 30, 2022
and June 30, 2022, respectively. We have a management agreement with Reeves
County, Texas for the management oversight of these two county-owned facilities.
The Great Plains, Big Spring, Flightline, North Lake Correctional Facilities,
Reeves County Detention Center I & II and Reeves County Detention Center III
generated approximately $145 million in revenues during the year ended December
31, 2020. The BOP has experienced a decline in federal prison populations over
the last several years, a trend that has more recently been accelerated by the
COVID-19 global pandemic. As a result of the Executive Order and the decline in
federal prison populations, our above-described contracts with the BOP may not
be renewed over the coming years. On March 5, 2021, we were notified by the BOP
that it had decided to not exercise its contract renewal option for the
company-owned, 1,940-bed Great Plains Correctional Facility in Oklahoma, when
the contract base period expired on May 31, 2021. On March 25, 2021, we were
notified that the BOP had decided to terminate its contract with the
county-owned and managed Reeves County Detention Center I & II effective May 10,
2021. For the six months ended June 30, 2021, our secure services contracts with
the BOP accounted for approximately 10% of our total revenues.





Unlike the BOP, the USMS does not own and operate its detention facilities. The
USMS contracts for the use of facilities, which are generally located in areas
near federal courthouses, primarily through intergovernmental service
agreements, and to a lesser extent, direct contracts. We are cooperating with
the USMS in assessing various alternatives on how to comply with the Executive
Order. During the first quarter of 2021, we were notified by the USMS that it
would not renew its contract for the company-owned Queens Detention Facility in
New York, when the contract base period ended on March 31, 2021. We currently
operate four additional detention facilities that are under direct contracts and
eight detention facilities that are under intergovernmental agreements with the
USMS. The four direct contracts are up for renewal at various times over the
next few years, including two in late 2021. For the six months ended June 30,
2021, the direct contracts and intergovernmental agreements with the USMS
accounted for approximately 16% of our total revenues.



The Executive Order only applies to agencies that are part of the DOJ, which
includes the BOP and USMS. U.S. Immigration and Customs Enforcement ("ICE")
facilities are not covered by the Executive Order as ICE is an agency of the
Department of Homeland Security, not the DOJ. However, it is possible that the
federal government could choose to take similar action on ICE facilities in the
future. For the six months ended June 30, 2021, contracts for ICE Processing
Centers, not including the alternatives to detention contract under ISAP
accounted for approximately 24% of our total revenues.



President Biden's administration may implement additional executive orders or
directives relating to federal criminal justice policies and immigration
policies which may impact the federal government's use of public-private
partnerships with respect to correctional and detention needs, including with
respect to our contracts, and/or may impact the budget and spending priorities
of federal agencies, including the BOP, USMS, and ICE.



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COVID-19



We have been and are currently closely monitoring the impact of the COVID-19
pandemic and the efficacy and distribution of COVID-19 vaccines on all aspects
of our business and geographies, including how it will impact those entrusted in
our care and governmental partners. We did incur disruptions during the six
months ended June 30, 2021 from the COVID-19 pandemic and are unable to predict
the overall future impact that the COVID-19 pandemic will have on our financial
condition, results of operations and cash flows due to numerous uncertainties.
Refer to further discussion regarding the economic impacts of COVID-19 to our
operations in the Outlook section below.

Contract Terminations/Expirations

On March 5, 2021, we were notified by the BOP that it has decided to not exercise the contract renewal option for the company-owned, 1,940-bed Great Plains Correctional Facility in Oklahoma, when the contract base period expired on May 31, 2021. The contract for the facility generated approximately $35 million in annualized revenues.

On March 15, 2021, we announced that the USMS has decided to not exercise the
contract renewal option for our company-owned, 222-bed Queens Detention Facility
in New York, when the contract base period ended on March 31, 2021. The contract
for the facility generated approximately $19 million in annualized revenues.



On March 25, 2021, we were notified by the BOP that it has decided to terminate
the contract for the county-owned and managed, 1,800-bed Reeves County Detention
Center I & II in Texas effective May 10, 2021, which was earlier than the
contract base period was to scheduled to expire on September 30, 2022. The
contract for the facility generated approximately $4 million in annualized
revenues.



We were also not awarded the managed-only contracts for the Bay, Graceville and
Moore Haven Correctional and Rehabilitation Facilities in Florida during the
recent re-bid solicitation process by the State of Florida. We subsequently
filed a protest challenging the award of the contracts, and as a result of the
protest, we were able to retain the management contract for the Moore Haven
Correctional and Rehabilitation Facility. Our contracts for the Bay and
Graceville Correctional and Rehabilitation Facilities have been extended through
July 31, 2021 and August 31, 2021, after which these contracts will transition
to a different operator. The contracts for these two facilities generated
approximately $15 million and $25 million in annualized revenues respectively.





Idle Facilities

We are currently marketing approximately 9,500 vacant beds at nine of our idle
facilities to potential customers. The carrying values of these idle facilities
totaled $225.5 million as of June 30, 2021, excluding equipment and other assets
that can be easily transferred for use at other facilities. Refer to Note 11 -
Commitments and Contingencies included in Part I, Item 1, of this Quarterly
Report on Form 10-Q for additional information.

Critical Accounting Policies

The accompanying unaudited consolidated financial statements are prepared in
conformity with accounting principles generally accepted in the United States.
As such, we are required to make certain estimates, judgments and assumptions
that we believe are reasonable based upon the information available. These
estimates and assumptions affect the reported amounts of assets and liabilities
as of the date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. We routinely evaluate our estimates
based on historical experience and on various other assumptions that management
believes are reasonable under the circumstances. Actual results may differ from
these estimates under different assumptions or conditions. During the six months
ended June 30, 2021, we did not experience any significant changes in estimates
or judgments inherent in the preparation of our consolidated financial
statements. A summary of our significant accounting policies is contained in
Note 1 to our consolidated financial statements included in our Annual Report on
Form 10-K for the year ended December 31, 2020.

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RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our
unaudited consolidated financial statements and the notes to our unaudited
consolidated financial statements included in Part I, Item 1, of this Quarterly
Report on Form 10-Q.

Comparison of Second Quarter 2021 and Second Quarter 2020

Revenues



                                     2021        % of Revenue        2020        % of Revenue      $ Change       % Change
                                                                    (Dollars in thousands)
U.S. Secure Services               $ 368,394              65.2 %   $ 389,718              66.3 %   $ (21,324 )         (5.5 )%
GEO Care                             141,905              25.1 %     138,240              23.5 %       3,665            2.7 %
International Services                54,921               9.7 %      53,254               9.1 %       1,667            3.1 %
Facility Construction & Design           199               0.0 %       6,617               1.1 %      (6,418 )        (97.0 )%
Total                              $ 565,419             100.0 %   $ 587,829             100.0 %   $ (22,410 )         (3.8 )%




U.S. Secure Services

Revenues decreased by $21.3 million in Second Quarter 2021 compared to Second
Quarter 2020 primarily due to aggregate decreases of $53.3 million due to the
ramp-down/deactivations of our company-owned D. Ray James, Rivers, Moshannon
Valley and Great Plains Correctional Facilities as well as our Queens Detention
Facility which expired on January 31, 2021, March 31, 2021, March 31, 2021, May
31, 2021 and March 31, 2021, respectively. These decreases were partially offset
by aggregate net increases of $22.2 million resulting from the activations in
late 2020 and early 2021 of our company-owned Golden State, Desert View and
Central Valley Annexes as well as our company-owned Eagle Pass Detention Center.
In addition, we experienced aggregate net increases in populations,
transportation services and/or rates of $9.8 million primarily due to increased
occupancies at our USMS facilities mainly due to the large increase in the
number of crossings at the Southern border during 2021.



The number of compensated mandays in U.S. Secure Services facilities was
approximately 4.9 million in Second Quarter 2021 and 5.4 million in Second
Quarter 2020. We experienced an aggregate net decrease of approximately 500,000
mandays as a result of contract terminations, partially offset by contract
activations and increases in occupancies discussed above. We look at the average
occupancy in our facilities to determine how we are managing our available beds.
The average occupancy is calculated by taking compensated mandays as a
percentage of capacity. The average occupancy in our U.S. Secure Services
facilities was 88.6% and 89.2% of capacity in the Second Quarter 2021 and Second
Quarter 2020, respectively, excluding idle facilities.

GEO Care

Revenues increased by $3.7 million in Second Quarter 2021 compared to Second
Quarter 2020 primarily due to increases of $4.4 million due to new/reactivated
contracts and programs. Additionally, we experienced an increase of $4.3 million
due to increased client and participant counts under our Intensive Supervision
and Appearance Program ("ISAP") and electronic monitoring services. These
increases were partially offset by decreases of $3.4 million due to contract
terminations/closures of underutilized facilities which have been impacted by
the COVID-19 pandemic and other factors. Additionally, we experienced net
decreases of $1.6 million due to decreases in census levels at certain of our
community-based and reentry centers due to declines in programs as a result of
lower levels of referrals by federal, state and local agencies primarily due to
the impact of the COVID-19 pandemic.

International Services

Revenues for International Services increased by $1.7 million in Second Quarter
2021 compared to Second Quarter 2020. We experienced a net decrease in revenues
of $2.9 million which was primarily due to the transition of the Arthur Gorrie
Correctional Centre to government operation in State of Queensland, Australia at
the end of June 2020. This was offset by an increase due to foreign exchange
rate fluctuations of $4.6 million.

Facility Construction & Design

In Second Quarter 2021 and Second Quarter 2020, we had Facility Construction &
Design services related to an expansion project at our Fulham Correctional
Centre in Australia which has been substantially completed. The decrease was due
to a decrease in construction activity as the project neared completion.

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Operating Expenses



                                                   % of Segment                     % of Segment
                                      2021           Revenues          2020           Revenues        $ Change       % Change
                                                                      (Dollars in thousands)
U.S. Secure Services                $ 268,963               73.0 %   $ 294,368               75.5 %   $ (25,405 )         (8.6 )%
GEO Care                               87,317               61.5 %      95,601               69.2 %      (8,284 )         (8.7 )%
International Services                 48,615               88.5 %      47,474               89.1 %       1,141            2.4 %
Facility Construction & Design            114               57.3 %       6,592               99.6 %      (6,478 )        (98.3 )%
Total                               $ 405,009               71.6 %   $ 444,035               75.5 %   $ (39,026 )         (8.8 )%




U.S. Secure Services

Operating expenses for U.S. Secure Services decreased by $25.4 million in Second
Quarter 2021 compared to Second Quarter 2020 primarily due to decreases of $35.6
million related to the ramp-down/deactivations of our company-owned D. Ray
James, Rivers, Moshannon Valley and Great Plains Correctional Facilities as well
as our Queens Detention Facility which expired on January 31, 2021, March 31,
2021, March 31, 2021, May 31, 2021 and March 31, 2021, respectively.
Additionally, we experienced aggregate net decreases of $3.8 million related to
decreases in population, transportation services and the variable costs
associated with those services primarily as a result of the impacts of the
COVID-19 pandemic as described above. These decreases were partially offset by
increases of $14.0 million resulting from the activations in late 2020 and early
2021 of our company-owned Golden State, Desert View and Central Valley Annexes
as well as our company-owned Eagle Pass Detention Center.

GEO Care

Operating expenses for GEO Care decreased by $8.3 million during Second Quarter
2021 compared to Second Quarter 2020 primarily due to aggregate decreases of
$4.5 million related to contract terminations/closures of underutilized
facilities as a result of the COVID-19 pandemic and other factors. In addition,
we experienced net decreases of $6.7 million related to net decreases in census
levels at certain of our community-based and reentry centers due to declines in
programs as a result of lower levels of referrals by federal, state and local
agencies due to the impact of the COVID-19 pandemic. These decreases were
partially offset by increases of $2.3 million due to new/reactivated contracts
and programs and day reporting center openings. We also experienced an increase
of $0.6 million due to increases in average client and participant counts under
our ISAP and electronic monitoring services. Operating expenses as a percentage
of revenue decreased in Second Quarter 2021 compared to Second Quarter 2020
primarily due to the closure of underperforming/underutilized facilities as
discussed above.

International Services

Operating expenses for International Services increased by $1.1 million in
Second Quarter 2021 compared to Second Quarter 2020. We experienced a net
decrease in operating expenses of $6.2 million which was primarily due to the
transition of the Arthur Gorrie Correctional Centre to government operation in
State of Queensland, Australia at the end of June 2020. This decrease was
partially offset by an increase due to foreign exchange rate fluctuations of
$7.3 million.

Facility Construction & Design

In Second Quarter 2021 and Second Quarter 2020, we had Facility Construction &
Design services related to an expansion project at our Fulham Correctional
Centre in Australia which has been substantially completed. The decrease was due
to a decrease in construction activity as the project neared completion.

Depreciation and Amortization

                                                % of Segment                   % of Segment
                                     2021          Revenue          2020          Revenue         $ Change       % Change
                                                                   (Dollars in thousands)
U.S. Secure Services               $ 20,529               5.6 %   $ 20,131               5.2 %   $      398            2.0 %
GEO Care                             12,190               8.6 %     12,789               9.3 %         (599 )         (4.7 )%
International Services                  587               1.1 %        514               1.0 %           73           14.2 %
Total                              $ 33,306               5.9 %   $ 33,434               5.7 %   $     (128 )         (0.4 )%




U.S. Secure Services

U.S. Secure Services depreciation and amortization expense increased in Second
Quarter 2021 compared to Second Quarter 2020 primarily due to renovations in
connection with our contract activations at certain of our company-owned
facilities.

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GEO Care

GEO Care depreciation and amortization expense decreased in Second Quarter 2021
compared to Second Quarter 2020 primarily due to certain asset dispositions at
our company-owned centers.

International Services

Depreciation and amortization expense increased slightly in Second Quarter 2021 compared to Second Quarter 2020 primarily due to foreign exchange rate fluctuations.

Other Unallocated Operating Expenses

                                        2021       % of Revenue        2020       % of Revenue       $ Change       % Change
                                                                      (Dollars in thousands)
General and Administrative Expenses   $ 54,688               9.7 %   $ 45,543               7.7 %   $    9,145           20.1 %




General and administrative expenses comprise substantially all of our other
unallocated operating expenses which primarily includes corporate management
salaries and benefits, professional fees and other administrative expenses.
General and administrative expenses increased in Second Quarter 2021 compared to
Second Quarter 2020 by $9.1 million primarily due to one-time employee
restructuring expenses of $7.5 million. The remainder of the increase was
primarily due to normal professional, consulting and other administrative
expenses as well as the impacts of the COVID-19 pandemic.

Non-Operating Expenses

Interest Income and Interest Expense

                                     2021       % of Revenue        2020       % of Revenue       $ Change       % Change
                                                                   (Dollars in thousands)
Interest Income                    $  5,985               1.1 %   $  5,248               0.9 %   $      737           14.0 %
Interest Expense                   $ 32,053               5.7 %   $ 30,610

             5.2 %   $    1,443            4.7 %

Interest income increased in Second Quarter 2021 compared to Second Quarter 2020 primarily due to the effect of foreign exchange rate fluctuations.

Interest expense increased in Second Quarter 2021 compared to Second Quarter
2020 primarily due to higher balances under the revolver component of our credit
facility. During 2021, we drew down $170 million on our revolver as a
conservative precautionary step to preserve liquidity, maintain financial
flexibility, and obtain additional funds for general corporate purposes.
Partially offsetting the increase was the effect of decreases in the LIBOR rate.

Gain on Extinguishment of Debt

                                    2021       % of Revenue        2020     

% of Revenue $ Change % Change

                                                                   (Dollars in thousands)
Gain on Extinguishment of Debt     $ 1,654               0.3 %   $      -               0.3 %   $    1,654          100.0 %


During Second Quarter 2021, we repurchased $19.5 million in aggregate principal
amount of our 5.125% Senior Notes due 2023 at a weighted average price of $90.88
for a total cost of $17.7 million. As a result of these transactions, we
recognized a gain on extinguishment of debt of $1.7 million, net of the
write-off of associated unamortized deferred loan costs.

Refer to Note 10- Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

Loss on Dispositions of Real Estate

                                       2021       % of Revenue       2020   

% of Revenue $ Change % Change

                                                                     (Dollars in thousands)
Loss on Dispositions of Real Estate   $ 2,950               0.5 %   $ 1,304               0.2 %   $    1,646          126.2 %


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The increase in Second Quarter 2021 compared to Second Quarter 2020 is primarily
due to the disposition of certain assets at our company-owned Queens Detention
Center located in New York, our company-owned Alle Kiski Pavillion located in
Pennsylvania and our company-owned DuPage Interventions center located in
Illinois during Second Quarter 2021.

Income Tax Provision

                                    2021        Effective Rate       2020        Effective Rate      $ Change       % Change
                                                                     (Dollars in thousands)
Provision for Income Taxes         $ 5,063                 11.2 %   $ 4,196                 11.0 %   $     867           20.7 %




The provision for income taxes during Second Quarter 2021 increased compared to
Second Quarter 2020 while our effective tax rate remained at about 11%. The
increase in the tax expense is primarily due to a change in the composition of
our income between our REIT and TRS subsidiaries and certain non-recurring
items. In Second Quarter 2021, there was a $0.5 million net discrete tax expense
as compared to a $0.7 million net discrete tax benefit in the second quarter of
2020. As a REIT, we are required to distribute at least 90% of our taxable
income to shareholders and in turn we are allowed a deduction for the
distribution at the REIT level. Our wholly owned taxable REIT subsidiaries
continue to be fully subject to federal, state and foreign income taxes, as
applicable. We estimate our annual effective tax rate to be in the range of
approximately 11% to 13% exclusive of any discrete items.

Equity in Earnings of Affiliates, net of Income Tax Provision

                                    2021       % of Revenue       2020       % of Revenue       $ Change       % Change
                                                                  (Dollars in thousands)
Equity in Earnings of Affiliates   $ 1,942               0.3 %   $ 2,699               0.5 %   $     (757 )        (28.0 )%




Equity in earnings of affiliates, presented net of income tax provision,
represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings
of affiliates decreased during Second Quarter 2021 compared to Second Quarter
2020 primarily due to less favorable performance by GEOAmey.

Comparison of First Half 2021 and First Half 2020

Revenues

                                       2021         % of Revenue         2020         % of Revenue      $ Change       % Change
                                                                       (Dollars in thousands)
U.S. Secure Services                $   755,405              66.2 %   $   787,827              66.0 %   $ (32,422 )         (4.1 )%
GEO Care                                277,387              24.3 %       282,703              23.7 %      (5,316 )         (1.9 )%
International Services                  108,405               9.5 %       110,104               9.2 %      (1,699 )         (1.5 )%
Facility Construction & Design              599               0.1 %        12,212               1.0 %     (11,613 )        (95.1 )%
Total                               $ 1,141,796             100.0 %   $ 1,192,846             100.0 %   $ (51,050 )         (4.3 )%




U.S. Secure Services

Revenues decreased by $32.4 million in First Half 2021 compared to First Half
2020 primarily due to aggregate decreases of $78.6 million due to the
ramp-down/deactivations of our company-owned D. Ray James, Rivers, Moshannon
Valley and Great Plains Correctional Facilities as well as our Queens Detention
Facility which expired on January 31, 2021, March 31, 2021, March 31, 2021, May
31, 2021 and March 31, 2021, respectively. These decreases were partially offset
by aggregate net increases of $47.6 million resulting from the activations in
late 2020 and early 2021 of our company-owned Golden State, Desert View and
Central Valley Annexes, our company-owned Eagle Pass Detention Center and our
managed-only contract for the El Centro Detention Center in California which was
effective in December 2020. In addition, we experienced aggregate net increases
in populations, transportation services and/or rates of $6.2 million due to
increased occupancy at our USMS facilities mainly due to the large increase in
the number of crossings at the Southern border during 2021. These increases in
occupancy were offset by decreases in population, transportation and/or rates of
$7.6 million at our BOP and State facilities primarily due to the impacts of the
COVID-19 pandemic.



The number of compensated mandays in U.S. Secure Services facilities was
approximately 10.1 million in First Half 2021 and 11.1 million in Second Quarter
2020. We experienced an aggregate net decrease of approximately 1,000,000
mandays as a result of contract terminations, partially offset by contract
activations and increases in occupancies discussed above. We look at the average
occupancy in our facilities to determine how we are managing our available beds.
The average occupancy is calculated by taking compensated mandays as a
percentage of capacity. The average occupancy in our U.S. Secure Services
facilities was 90.5% of capacity in both First Half 2021 and First Half 2020,
excluding idle facilities.

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GEO Care

Revenues decreased by $5.3 million in First Half 2021 compared to First Half
2020 primarily due to decreases of $10.1 million due to contract
terminations/closures of underutilized facilities which have been impacted by
the COVID-19 pandemic and other economic factors. Additionally, we experienced
net decreases of $7.5 million due to decreases in census levels at certain of
our community-based and reentry centers due to declines in programs as a result
of lower levels of referrals by federal, state and local agencies primarily due
to the impact of the COVID-19 pandemic. These decreases were partially offset by
increases of $8.4 million due to new/reactivated contracts and programs as well
as an increase of $3.9 million due to increased client and participant counts
under our ISAP and electronic monitoring services.

International Services

Revenues for International Services decreased by $1.7 million in First Half 2021
compared to First Half 2020. We experienced a net decrease in revenues of $9.7
million which was primarily due to the transition of the Arthur Gorrie
Correctional Centre to government operation in State of Queensland, Australia at
the end of June 2020. This decrease was partially offset by an increase due to
foreign exchange rate fluctuations of $8.0 million.

Facility Construction & Design

In First Half 2021 and First Half 2020, we had Facility Construction & Design
services related to an expansion project at our Fulham Correctional Centre in
Australia which has been substantially completed. The decrease was due to a
decrease in construction activity as the project neared completion.

Operating Expenses

                                                   % of Segment                     % of Segment
                                      2021           Revenues          2020           Revenues        $ Change       % Change
                                                                      (Dollars in thousands)
U.S. Secure Services                $ 566,741               75.0 %   $ 599,606               76.1 %   $ (32,865 )         (5.5 )%
GEO Care                              171,557               61.8 %     195,809               69.3 %     (24,252 )        (12.4 )%
International Services                 94,361               87.0 %      98,189               89.2 %      (3,828 )         (3.9 )%
Facility Construction & Design            501               83.6 %      12,177               99.7 %     (11,676 )        (95.9 )%
Total                               $ 833,160               73.0 %   $ 905,781               75.9 %   $ (72,621 )         (8.0 )%




U.S. Secure Services

Operating expenses for U.S. Secure Services decreased by $32.9 million in First
Half 2021 compared to First Half 2020 primarily due to decreases of $55.9
million related to the ramp-down/deactivations of our company-owned D. Ray
James, Rivers, Moshannon Valley and Great Plains Correctional Facilities as well
as our Queens Detention Facility which expired on January 31, 2021, March 31,
2021, March 31, 2021, May 31, 2021 and March 31, 2021, respectively.
Additionally, we experienced aggregate net decreases of $8.1 million related to
decreases in population, transportation services and the variable costs
associated with those services primarily as a result of the impacts of the
COVID-19 pandemic. These decreases were partially offset by increases of $31.1
million resulting from the activations in late 2020 and early 2021 of our
company-owned Golden State, Desert View and Central Valley Annexes, our
company-owned Eagle Pass Detention Center and our managed-only contract for the
El Centro Detention Center in California which was effective in December 2020.

GEO Care

Operating expenses for GEO Care decreased by $24.3 million during First Half
2021 compared to First Half 2020 primarily due to aggregate decreases of $12.4
million related to contract terminations/closures of underutilized facilities as
a result of the COVID-19 pandemic and economic other factors. In addition, we
experienced decreases of $13.7 million related to net decreases in census levels
at certain of our community-based and reentry centers due to declines in
programs as a result of lower levels of referrals by federal, state and local
agencies due to the impact of the COVID-19 pandemic. We also experienced a
decrease of $1.7 million due to decreases in average client and participant
counts under our ISAP and electronic monitoring services as a result of policy
changes by the former administration which reduced the number of enrollments at
the Southern border. These decreases were partially offset by increases of $3.5
million due to new/reactivated contracts and programs and day reporting center
openings. Operating expenses as a percentage of revenue decreased in Second
Quarter 2021 compared to Second Quarter 2020 primarily due to the closure of
underperforming/underutilized facilities as discussed above.



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International Services

Operating expenses for International Services decreased by $3.8 million in First
Half 2021 compared to First Half 2020. We experienced a net decrease in
operating expenses of $17.1 million which was primarily due to the transition of
the Arthur Gorrie Correctional Centre to government operation in State of
Queensland, Australia at the end of June 2020. This decrease was partially
offset by an increase due to foreign exchange rate fluctuations of $13.3
million.

Facility Construction & Design

In First Half 2021 and First Half 2020, we had Facility Construction & Design
services related to an expansion project at our Fulham Correctional Centre in
Australia which has been substantially completed. The decrease was due to a
decrease in construction activity as the project neared completion.

Depreciation and Amortization

                                                % of Segment                   % of Segment
                                     2021          Revenue          2020          Revenue         $ Change       % Change
                                                                   (Dollars in thousands)
U.S. Secure Services               $ 41,248               5.5 %   $ 40,297               5.1 %   $      951            2.4 %
GEO Care                             25,022               9.0 %     25,465               9.0 %         (443 )         (1.7 )%
International Services                1,153               1.1 %        999               0.9 %          154           15.4 %
Total                              $ 67,423               5.9 %   $ 66,761               5.6 %   $      662            1.0 %




U.S. Secure Services

U.S. Secure Services depreciation and amortization expense increased in First
Half 2021 compared to First Half 2020 primarily due to renovations in connection
with our contract activations at certain of our company-owned facilities.

GEO Care

GEO Care depreciation and amortization expense decreased in First Half 2021 compared to First Half 2020 primarily due to certain asset dispositions at our company-owned centers.

International Services

Depreciation and amortization expense increased in First Half 2021 compared to First Half 2020 primarily due to foreign exchange rate fluctuations.

Other Unallocated Operating Expenses

                                        2021        % of Revenue        

2020 % of Revenue $ Change % Change

                                                                      (Dollars in thousands)
General and Administrative Expenses   $ 103,167               9.0 %   $ 99,325               8.3 %   $    3,842           3.9 %


General and administrative expenses comprise substantially all of our other
unallocated operating expenses which primarily includes corporate management
salaries and benefits, professional fees and other administrative expenses.
General and administrative expenses increased in First Half 2021 compared to
First Half 2020 by $3.8 million primarily due to one-time employee restructuring
expenses of $7.5 million. Partially offsetting this increase was a decrease in
stock-based compensation of $3.0 million. The remainder of the decrease was
primarily due to less travel, marketing, business development and other
corporate administrative expenses primarily due to the impacts of the COVID-19
pandemic.

Non-Operating Expenses

Interest Income and Interest Expense

                                     2021       % of Revenue        2020    

% of Revenue $ Change % Change

                                                                   (Dollars in thousands)
Interest Income                    $ 12,187               1.1 %   $ 10,686               0.9 %   $    1,501           14.0 %
Interest Expense                   $ 63,897               5.6 %   $ 64,790               5.4 %   $     (893 )         (1.4 )%

Interest income increased in First Half 2021 compared to First Half 2020 primarily due to the effect of foreign exchange rate fluctuations.

Interest expense decreased in First Half 2021 compared to First Half 2020
primarily due to decreases in LIBOR rates. This decrease was partially offset by
increases from higher balances on the revolver component of our credit facility.
During 2021, we drew down

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$170 million on our revolver as a conservative precautionary step to preserve liquidity, maintain financial flexibility, and obtain additional funds for general corporate purposes.

Gain on Extinguishment of Debt

                                    2021       % of Revenue       2020      

% of Revenue $ Change % Change

                                                                  (Dollars in thousands)
Gain on Extinguishment of Debt     $ 4,693               0.4 %   $ 1,563               0.1 %   $    3,130          200.3 %




During First Half 2021, we repurchased $22.5 million in aggregate principal
amount of our 5.125% Senior Notes due 2023 at a weighted average price of $90.68
for a total cost of $20.4 million. We also repurchased $17.2 million in
aggregate principal amount of our 5.875% Senior Notes due 2024 at a weighted
average price of $79.51 for a total cost of $13.7 million. As a result of these
transactions, we recognized a gain on extinguishment of debt of $4.7 million,
net of the write-off of associated unamortized deferred loan costs.

During First Half 2020, we repurchased approximately $5.5 million in aggregate
principal amount of our 5.125% Senior Notes due 2023 at a weighted average price
of $70.68 for a total cost of $3.9 million. As a result of these transactions,
we recognized a gain on extinguishment of debt of $1.6 million, net of the
write-off of associated unamortized deferred loan costs.

(Gain) Loss on Dispositions of Real Estate

                                     2021         % of Revenue        2020  

% of Revenue $ Change % Change

                                                                    (Dollars in thousands)
(Gain) Loss on Dispositions of
Real Estate                        $ (10,379 )             (1.8 )%   $   880               0.1 %   $ (11,259 )     (1,279.4 )%


The net gain in First Half 2021 is primarily due to the sale of our interest in
Talbot Hall, located in New Jersey, and the sale of our company-owned McCabe
Center, located in Texas.

Income Tax Provision

                                     2021        Effective Rate        2020        Effective Rate       $ Change       % Change
                                                                      (Dollars in thousands)
Provision for Income Taxes         $ 12,999                 12.8 %   $ 10,742                 15.9 %   $    2,257           21.0 %




The provision for income taxes during First Half 2021 increased while our
effective tax rate decreased compared to First Half 2020. The decrease in the
effective rate is primarily due to a change in the composition of our income
between our REIT and TRS subsidiaries and certain non-recurring items. In First
Half 2021, there was a $1.9 million net discrete tax expense compared to a $2.1
million net discrete tax expense in First Half 2020. Included in the provision
for income taxes were $2.3 million and $2.7 million of discrete tax expense in
First Half 2021 and 2020, respectively, related to stock compensation that
vested during the respective periods. As a REIT, we are required to distribute
at least 90% of our taxable income to shareholders and in turn we are allowed a
deduction for the distribution at the REIT level. Our wholly owned taxable REIT
subsidiaries continue to be fully subject to federal, state and foreign income
taxes, as applicable. We estimate our annual effective tax rate to be in the
range of approximately 11% to 13% exclusive of any discrete items.

Equity in Earnings of Affiliates, net of Income Tax Provision

                                    2021       % of Revenue       2020       % of Revenue       $ Change       % Change
                                                                  (Dollars in thousands)
Equity in Earnings of Affiliates   $ 4,007               0.4 %   $ 4,959               0.4 %   $     (952 )        (19.2 )%

Equity in earnings of affiliates, presented net of income tax provision, represents the earnings of SACS and GEOAmey in the aggregate. Equity in earnings of affiliates decreased during First Half 2021 compared to First Half 2020 primarily due to less favorable performance by GEOAmey.

Financial Condition

Capital Requirements

Our current cash requirements consist of amounts needed for working capital,
distributions of our REIT taxable income in order to maintain our REIT
qualification, debt service, supply purchases, investments in joint ventures,
and capital expenditures related to either the development of new secure
services and reentry facilities, or the maintenance of existing facilities. In
addition, some of our management contracts require us to make substantial
initial expenditures of cash in connection with opening or renovating a
facility. Generally, these initial expenditures are subsequently fully or
partially recoverable as pass-through costs or are billable as a component of
the per diem rates or monthly fixed fees to the contracting agency over the
original term of the contract.

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We currently have contractual commitments for a number of projects using Company
financing. We estimate that the cost of these existing active capital projects
will be approximately $39.7 million of which $30.6 million was spent through
June 30, 2021. We estimate that the remaining capital requirements related to
these capital projects will be $9.1 million which will be spent through 2021.

Liquidity and Capital Resources

Indebtedness

6.50% Exchangeable Senior Notes due 2026

On February 24, 2021, our wholly-owned subsidiary, GEO Corrections Holdings,
Inc. ("GEOCH"), completed a private offering of $230 million aggregate principal
amount of 6.50% exchangeable senior unsecured notes due 2026 (the "Convertible
Notes"), which included the full exercise of the initial purchasers'
over-allotment option to purchase an additional $30 million aggregate principal
amount of Convertible Notes. The Convertible Notes will mature on February 23,
2026, unless earlier repurchased or exchanged. The Convertible Notes bear
interest at the rate of 6.50% per year plus an additional amount based on the
dividends paid by GEO on its common stock, $0.01 par value per share. Interest
on the notes is payable semi-annually in arrears on March 1 and September 1 of
each year, beginning on September 1, 2021.



Subject to certain restrictions on share ownership and transfer, holders may
exchange the notes at their option prior to the close of business on the
business day immediately preceding November 25, 2025, but only under the
following circumstances: (1) during the five consecutive business day period
after any five consecutive trading day period, or the measurement period, in
which the trading price per $1,000 principal amount of notes for each trading
day of such measurement period was less than 98% of the product of the last
reported sale price of our common stock and the exchange rate for the notes on
each such trading day; or (2) upon the occurrence of certain specified corporate
events. On or after November 25, 2025, until the close of business on the second
scheduled trading day immediately preceding the maturity date of the notes,
holders may exchange their notes at any time, regardless of the foregoing
circumstances. Upon exchange of a note, we will pay or deliver, as the case may
be, cash or a combination of cash and shares of our common stock. As of June 30,
2021, conditions had not been met to convert.

Upon conversion, we will pay or deliver, as the case may be, cash or a
combination of cash and shares of common stock. The initial conversion rate is
108.4011 shares of common stock per $1,000 principal amount of Convertible Notes
(equivalent to an initial conversion price of approximately $9.225 per share of
common stock). The conversion rate will be subject to adjustment in certain
events. If GEO or GEOCH undergoes a fundamental change, holders may require
GEOCH to purchase the notes in whole or in part for cash at a fundamental change
purchase price equal to 100% of the principal amount of the notes to be
purchased, plus accrued and unpaid interest, if any, to, but excluding, the
fundamental change purchase date.

We used the net proceeds from this offering, including the exercise in full of
the initial purchasers' over-allotment option to fund the redemption of the then
outstanding amount of approximately $194.0 million of our existing 5.875% senior
notes due 2022, to re-purchase additional senior notes and we used the remaining
net proceeds to pay related transaction fees and expenses, and for general
corporate purposes of the Company. As a result of the redemption, deferred loan
costs in the amount of approximately $0.7 million were written off to loss on
extinguishment of debt during the six months ended June 30, 2021.

The notes were offered in the United States only to persons reasonably believed
to be "qualified institutional buyers" pursuant to Rule 144A under the
Securities Act, and outside of the United States to non-U.S. persons in
compliance with Regulation S under the Securities Act. Neither the notes nor any
of the shares of the Company's common stock issuable upon exchange of the notes,
if any, have been, or will be, registered under the Securities Act and, unless
so registered, may not be offered or sold in the United States, except pursuant
to an applicable exemption from the registration requirements under the
Securities Act.

Credit Agreement



On June 12, 2019, we entered into Amendment No. 2 to the Third Amended and
Restated Credit Agreement (the "Credit Agreement") by and among the refinancing
lenders party thereto, the other lenders party thereto, GEO and GEOCH and the
administrative agent. Under the amendment, the maturity date of the revolver was
extended to May 17, 2024. The borrowing capacity under the amended revolver
remains at $900.0 million, and its pricing remains unchanged currently bearing
interest at LIBOR plus 2.25%. As a result of the amendment, we incurred a loss
on extinguishment of debt of $1.2 million during 2019 related to certain
unamortized deferred loan costs. Additionally, loan costs of $4.7 million were
incurred and capitalized in connection with the amendment.

A syndicate of approximately 65 lenders participate in our Credit Agreement, six
of which have indicated that they do not intend to provide new financing to GEO
but will honor their existing obligations. Refer to Item 1A - Risk Factors
included in Part I of the Annual Report on Form 10-K for the year ended December
31, 2020 for further discussion. The banks that have withdrawn participation
remain contractually committed for approximately three years. Additionally,
these six banks represent less than 25% of our overall borrowing capacity under
our Credit Agreement. We are in frequent communication with potential new
lenders as well as the credit rating agencies. In March 2021, Moody's Investors
Service downgraded GEO's issuer rating to B2 and in May 2021, Standard & Poor's
S&P Global downgraded GEO's issuer rating to CCC+.

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As of June 30, 2021, we had approximately $766.0 million in aggregate borrowings
outstanding under our term loan, approximately $789.4 million in borrowings
under our revolver, and approximately $68.3 million in letters of credit which
left approximately $42.3 million in additional borrowing capacity under the
Revolver. The weighted average interest rate on outstanding borrowings under the
Credit Agreement as of June 30, 2021 was 2.54%.

On April 30, 2021 and May 4, 2021, we elected to draw down $20 million and $150
million, respectively in borrowings under the revolver component of our credit
facility as a conservative precautionary step to preserve liquidity, maintain
financial flexibility, and obtain additional funds for general corporate
purposes.

Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further discussion.

Australia - Ravenhall

In connection with a design and build project agreement with the State of
Victoria, in September 2014, we entered into a syndicated facility agreement
(the "Construction Facility") to provide debt financing for construction of the
project. The Construction Facility provided for non-recourse funding up to AUD
791.0 million, or approximately $593.9 million, based on exchange rates as of
June 30, 2021. In accordance with the terms of the contract, upon completion and
commercial acceptance of the project in late 2017, the State of Victoria made a
lump sum payment of AUD310 million, or approximately $252.7 million, based on
exchange rates as of June 30, 2021. The term of the Construction Facility was
through September 2020 and bore interest at a variable rate quoted by certain
Australian banks plus 200 basis points. On May 22, 2019, we completed an
offering of AUD 461.6 million, or $346.6 million, based on exchange rates as of
June 30, 2021, aggregate principal amount of the Non-Recourse Notes. The
amortizing Non-Recourse Notes were issued by Ravenhall Finance Co Pty Limited in
a private placement pursuant to Section 4(a)(2) of the Securities Act of 1933,
as amended. The Non-Recourse Notes were issued with a coupon and yield to
maturity of 4.23% with a maturity date of March 31, 2042. The net proceeds from
this offering were used to refinance the outstanding Construction Facility and
to pay all related fees, costs and expenses associated with the transaction. As
a result of the transaction, we incurred a $4.5 million loss on extinguishment
of debt related to swap termination fees and unamortized deferred costs
associated with the Construction Facility. Additionally, loan costs of
approximately $7.5 million were incurred and capitalized in connection with the
offering.

Other

In August 2020, we entered into two identical promissory notes in the aggregate
amount of $44.3 million which are secured by loan agreements and mortgage and
security agreements on certain real property and improvements. The terms of the
promissory notes are through September 1, 2034 and bear interest at LIBOR plus
200 basis points and are payable in monthly installments plus interest. We have
entered into interest rate swap agreements to fix the interest rate to 4.22%.
Included in the balance at June 30, 2021 is $0.7 million of deferred loan costs
incurred in the transaction. Refer to Note 9 - Derivative Financial Instruments
and Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements
included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further
discussion.

In addition to the debt outstanding under the Credit Facility, the 6.50%
Convertible Notes, the 6.00% Senior Notes, the 5.125% Senior Notes, and the
5.875% Senior Notes due 2024, we also have significant debt obligations which,
although these obligations are non-recourse to us, require cash expenditures for
debt service. Our significant debt obligations could have material consequences.
See "Risk Factors-Risks Related to Our High Level of Indebtedness" in Item 1A of
our Annual Report on Form 10-K for the year ended December 31, 2020. We are
exposed to various commitments and contingencies which may have a material
adverse effect on our liquidity. We also have guaranteed certain obligations for
certain of our international subsidiaries. These non-recourse obligations,
commitments and contingencies and guarantees are further discussed in our Annual
Report on Form 10-K for the year ended December 31, 2020.

Debt Repurchases

On August 16, 2019, our Board authorized us to repurchase and/or retire a
portion of our 6.00% Senior Notes due 2026, the 5.875% Senior Notes due 2024,
the 5.125% Senior Notes due 2023 and the 5.875% Senior Notes due 2022
(collectively the "GEO Senior Notes") and our term loan under our Amended Credit
Agreement through cash purchases, in open market purchases, privately negotiated
transactions, or otherwise, up to an aggregate maximum of $100.0 million,
subject to certain limitations through December 31, 2020. During the Second
Quarter 2021, the 5.875% Senior Notes due 2022 were redeemed in connection with
the offering of the Convertible Notes discussed above. On February 11, 2021, our
Board authorized a new repurchase program for repurchases/retirements of part of
the above referenced GEO Senior Notes and term loan, subject to certain
limitations up to an aggregate maximum of $100.0 million through December 31,
2022.

During the six months ended June 30, 2021, we repurchased $22.5 million in
aggregate principal amount of our 5.125% Senior Notes due 2023 at a weighted
average price of 90.68% for a total cost of $20.4 million. Additionally, we
repurchased $17.2 million in aggregate principal amount of our 5.875% Senior
Notes due 2024 at a weighted average price of 79.51% for a total cost of $13.7
million. As a result of these repurchases, we recognized a net gain on
extinguishment of debt of $5.6 million.

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During the six months ended June 30, 2020, we repurchased $5.5 million in
aggregate principal amount of our 5.125% Senior Notes due 2023 at a weighted
average price of 70.68% for a total cost of $3.9 million. As a result of these
repurchases, we recognized a net gain on extinguishment of debt of $1.6 million.

Refer to Note 10 - Debt of the Notes to Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on our indebtedness.

We consider opportunities for future business and/or asset acquisitions as we
deem appropriate when market conditions present opportunities. If we are
successful in our pursuit of any new projects, our cash on hand, cash flows from
operations and borrowings under the existing Credit Facility may not provide
sufficient liquidity to meet our capital needs and we could be forced to seek
additional financing or refinance our existing indebtedness. There can be no
assurance that any such financing or refinancing would be available to us on
terms equal to or more favorable than our current financing terms, or at all.
Additionally, the magnitude, severity and duration of the COVID-19 pandemic may
negatively impact the availability of opportunities for future business and/or
asset acquisitions and market conditions generally. In the future, our access to
capital and ability to compete for future capital intensive projects will also
be dependent upon, among other things, our ability to meet certain financial
covenants in the indenture governing the 5.125% Senior Notes, the indenture
governing the 5.875% Senior Notes due 2024, the indenture governing the 6.00%
Senior Notes, the indenture governing our Convertible Notes and our Credit
Agreement. A substantial decline in our financial performance could limit our
access to capital pursuant to these covenants and have a material adverse effect
on our liquidity and capital resources and, as a result, on our financial
condition and results of operations. In addition to these foregoing potential
constraints on our capital, a number of state government agencies have been
suffering from budget deficits and liquidity issues. While we were in compliance
with our debt covenants as of June 30, 2021 and we expect to continue to be in
compliance with our debt covenants, if these constraints were to intensify, our
liquidity could be materially adversely impacted as could our ability to remain
in compliance with these debt covenants.

We may from time to time seek to purchase or retire our outstanding senior notes
through cash purchases and/or exchanges for equity securities, in open market
purchases, privately negotiated transactions or otherwise. Such repurchases or
exchanges, if any, will depend on prevailing market conditions, our liquidity
requirements, contractual restrictions and other factors.  The amounts involved
may be material.

Quarterly Dividends

On April 7, 2021, we announced that our Board had immediately suspended our
quarterly dividend payments with the goal of maximizing the use of cash flows to
repay debt, deleverage and internally fund growth. While we currently intend to
maintain our corporate tax structure as a REIT, our Board is evaluating our
corporate tax structure as a REIT. Our Board's evaluation of our current
corporate tax structure and our REIT status is expected to take into
consideration, among other factors, potential changes to our financial operating
performance, as well as, potential changes to the Code applicable to U.S.
corporations and REITs. As a part of this evaluation, we have engaged financial
advisors and legal advisors to assist in evaluating various capital structure
alternatives. Our Board expects to conclude its evaluation in the fourth quarter
of 2021, and should our Board determine to maintain our REIT status, an
additional dividend payment may be required before year-end in order to meet the
minimum REIT distribution requirements under the Code.

Guarantor Financial Information

GEO's 6.50% Convertible Notes, 6.00% Senior Notes, 5.125% Senior Notes and the
5.875% Senior Notes due 2024 are fully and unconditionally guaranteed on a joint
and several senior unsecured basis by certain of our wholly-owned domestic
subsidiaries (the "Subsidiary Guarantors").

Summarized financial information is provided for The GEO Group, Inc. ("Parent")
and the Subsidiary Guarantors on a combined basis in accordance with SEC
Regulation S-X Rules 3-10 and 13-01. The accounting policies used in the
preparation of this summarized financial information are consistent with those
elsewhere in the condensed consolidated financial statements of the Company,
except that intercompany transactions and balances of the Parent and Subsidiary
Guarantor entities with non-guarantor entities have not been eliminated.
Intercompany transactions between the Parent and Subsidiary Guarantors have been
eliminated and equity in earnings from and investments
in non-guarantor subsidiaries have not been presented.

Summarized statement of operations (in thousands):

                                                  Six Months Ended
                                                   June 30, 2021
Net operating revenues                           $        1,027,471
Income from operations                                      130,664
Net income                                                   73,392
Net income attributable to The GEO Group, Inc.               73,392




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Summarized balance sheets (in thousands):

                              June 30, 2021       December 31, 2020
Current assets               $       615,592     $           607,044
Noncurrent assets (a)              3,229,842               3,268,260
Current liabilities                  322,761                 350,041
Noncurrent liabilities (b)         2,805,383               2,737,673

(a) Includes amounts due from non-guarantor subsidiaries of $24.4 million and

$26.7 million as of June 30, 2021 and December 31, 2020, respectively.

(b) Includes amounts due to non-guarantor subsidiaries of $15.0 million and $17.4

    million as of June 30, 2021 and December 31, 2020, respectively.




Capital Requirements

As a REIT, we are subject to a number of organizational and operational
requirements, including a requirement that we annually distribute to our
shareholders an amount equal to at least 90% of our REIT taxable income
(determined before the deduction for dividends paid and by excluding any net
capital gain). Generally, we expect to distribute all or substantially all of
our REIT taxable income so as not to be subject to the income or excise tax on
undistributed REIT taxable income. The amount, timing and frequency of
distributions will be at the sole discretion of our Board and will be based upon
various factors. As discussed above, on April 7, 2021, we announced that our
Board had immediately suspended our quarterly dividend payments with the goal of
maximizing the use of cash flows to repay debt, deleverage and internally fund
growth. While we currently intend to maintain our corporate tax structure as a
REIT, our Board is evaluating our corporate tax structure as a REIT.

We plan to fund all of our capital needs, including distributions of our REIT
taxable income necessary to maintain our REIT qualification should our Board
determine to maintain our REIT status., and capital expenditures, from cash on
hand, cash from operations, borrowings under our Credit Facility and any other
financings which our management and Board, in their discretion, may consummate.
Currently, our primary source of liquidity to meet these requirements is cash
flow from operations and borrowings under our $900.0 million Revolver. Our
management believes that our financial resources and sources of liquidity will
allow us to manage the anticipated impact of COVID-19 on our business, financial
condition, results of operations and cash flows. For the full-year 2021, we have
reduced our planned capital spending by deferring capital expenditure projects
where possible and closely managing our working capital. We have completed our
annual budgeting process and have identified cost savings at the corporate and
facility level. Additionally, we have identified company-owned facilities that
can be sold to government agencies or third-party individuals. Our management
believes that cash on hand, cash flows from operations and availability under
our Credit Facility will be adequate to support our capital requirements for
2021 as disclosed under "Capital Requirements" above. The challenges posed by
COVID-19, as well as the current political environment, generally and on our
business are continuing to evolve. Consequently, we will continue to evaluate
our financial position in light of future developments, particularly those
relating to the Executive Order and COVID-19.

Automatic Shelf Registration on Form S-3

Refer to Note 6 - Shareholders' Equity of the Notes to Unaudited Consolidated
Financial Statements included in Part I, Item 1 of this Quarterly Report on Form
10-Q for further information.

Off-Balance Sheet Arrangements

Except as discussed in the notes to our Unaudited Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, we do not have any off-balance sheet arrangements.

Cash Flow

Cash, cash equivalents and restricted cash and cash equivalents as of June 30, 2021 was $517.1 million, compared to $106.7 million as of June 30, 2020.

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Operating Activities

Cash provided by operating activities amounted to $205.6 million for the six
months ended June 30, 2021 versus cash provided by operating activities of
$256.8 million for the six months ended June 30, 2020. Cash provided by
operating activities during the six months ended June 30, 2021 was positively
impacted by net income attributable to GEO, non-cash expenses such as
depreciation and amortization, amortization of debt issuance costs, discount
and/or premium and other non-cash interest and stock-based compensation expense.
Equity in earnings of affiliates, net of tax, gain on extinguishment of debt and
gain on disposition of real estate negatively impacted cash. Changes in accounts
receivable, prepaid expenses and other assets decreased in total by $53.0
million, representing a positive impact on cash. The decrease was primarily
driven by the favorable timing of billings and collections. Changes in accounts
payable, accrued expenses and other liabilities decreased by $15.1 million which
negatively impacted cash. The decrease was primarily driven by the timing of
payments. Additionally, cash provided by operating activities for the six months
ended June 30, 2021 was positively impacted by a decrease in changes in contract
receivable related to our correctional facility in Ravenhall, Australia of $3.2
million which was a result of the timing of interest accruals and payments
received towards the contract receivable.

Cash provided by operating activities during the six months ended June 30, 2020
was positively impacted by net income attributable to GEO, non-cash expenses
such as depreciation and amortization, amortization of debt issuance costs,
discount and/or premium and other non-cash interest and stock-based compensation
expense. Equity in earnings of affiliates, net of tax, negatively impacted cash.
Changes in accounts receivable, prepaid expenses and other assets decreased in
total by $68.8 million, representing a positive impact on cash. The decrease was
primarily driven by the favorable timing of billings and collections. Changes in
accounts payable, accrued expenses and other liabilities increased by $38.0
million which positively impacted cash. The increase was primarily driven by the
timing of payments. Additionally, cash provided by operating activities for the
six months ended June 30, 2020 was positively impacted by a decrease in changes
in contract receivable related to our correctional facility in Ravenhall,
Australia of $2.5 million which was a result of the timing of interest accruals
and payments received towards the contract receivable.

Investing Activities

Cash used in investing activities of $32.3 million during the six months ended
June 30, 2021 was primarily the result of capital expenditures of $44.3 million
partially offset by proceeds from dispositions of real estate of $13.2 million.
Cash used in investing activities of $49.2 million during the six months ended
June 30, 2020 was primarily the result of capital expenditures of $53.5 million.

Financing Activities

Cash used in financing activities during the six months ended June 30, 2021 was
approximately $32.5 million compared to cash used in financing activities of
$167.4 million during the six months ended June 30, 2020. Cash used in financing
activities during the six months ended June 30, 2021 was primarily the result of
dividends paid of $30.5 million, payments on long-term debt of $356.8 million,
payments on non-recourse debt of $3.8 million and payments of debt issuance
costs of $9.6 million. These decreases were partially offset by proceeds from
long-term debt of $435.0 million. Cash used in financing activities during the
six months ended June 30, 2020 was primarily the result of dividends paid of
$116.2 million, payments on long-term debt of $262.4 million, payments on
non-recourse debt of $2.9 million and repurchases of common stock of $9.0
million. These decreases were partially offset by proceeds from long-term debt
of $225.6 million.

Non-GAAP Measures

Funds from Operations ("FFO") is a widely accepted supplemental non-GAAP measure
utilized to evaluate the operating performance of real estate investment trusts.
It is defined in accordance with the 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.

We also present Normalized Funds From Operations, or Normalized FFO, and Adjusted Funds from Operations, or AFFO, as supplemental non-GAAP financial measures of real estate investment trusts' operating performance.

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, including for the periods presented
Covid-19 expenses, pre-tax, gain on extinguishment of debt, pre-tax, one-time
employee restructuring expenses, pre-tax, start-up expenses, pre-tax, close-out
expenses, pre-tax and the tax effect of adjustments to FFO.

AFFO is defined as Normalized FFO adjusted by adding non-cash expenses such as
non-real estate related depreciation and amortization, stock-based compensation
expense, the amortization of debt issuance costs, discount and/or premium and
other non-cash interest, and by subtracting recurring consolidated maintenance
capital expenditures and other non-cash revenue and expenses.

Because of the unique design, structure and use of our secure facilities,
processing centers and reentry centers, we believe that assessing the
performance of our secure facilities, processing centers and reentry centers
without the impact of depreciation or amortization is useful and meaningful to
investors. Although NAREIT has published its definition of FFO, companies often
modify this definition as they seek to provide financial measures that
meaningfully reflect their distinctive operations. We have modified FFO to
derive Normalized FFO and AFFO that meaningfully reflect our operations.

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Our assessment of our operations is focused on long-term sustainability. The
adjustments we make to derive the non-GAAP measures of Normalized FFO and AFFO
exclude items which may cause short-term fluctuations in net income attributable
to GEO but have no impact on our cash flows, or we do not consider them to be
fundamental attributes, or the primary drivers of our business plan and they do
not affect our overall long-term operating performance. We may make adjustments
to FFO from time to time for certain other income and expenses that do not
reflect a necessary component of our operational performance on the basis
discussed above, even though such items may require cash settlement. Because
FFO, Normalized FFO and AFFO exclude depreciation and amortization unique to
real estate as well as non-operational items and certain other charges that are
highly variable from year to year, they provide our investors with performance
measures that reflect the impact to operations from trends in occupancy rates,
per diem rates, operating costs and interest costs, providing a perspective not
immediately apparent from net income attributable to GEO.

We believe the presentation of FFO, Normalized FFO and AFFO provide useful
information to investors as they provide an indication of our ability to fund
capital expenditures and expand our business. FFO, Normalized FFO and AFFO
provide disclosure on the same basis as that used by our management and provide
consistency in our financial reporting, facilitate internal and external
comparisons of our historical operating performance and our business units and
provide continuity to investors for comparability purposes. Additionally, FFO,
Normalized FFO and AFFO are widely recognized measures in our industry as a real
estate investment trust.

Our reconciliation of net income attributable to The GEO Group, Inc. to FFO,
Normalized FFO and AFFO for the three and six months ended June 30, 2021 and
2020 is as follows (in thousands):



                                              Three Months Ended            Six Months Ended
                                            June 30,       June 30,      June 30,      June 30,
                                              2021           2020          2021          2020
Net income attributable to The GEO
Group, Inc.                                $   41,959     $   36,720     $  92,504     $  61,901
Add (Subtract):
Real estate related depreciation and
amortization                                   18,846         18,384        37,818        36,780
Loss (gain) on real estate assets               2,950          1,304       (10,379 )         880
NAREIT Defined FFO                         $   63,755     $   56,408     $ 119,943     $  99,561
Add (Subtract):
Gain on extinguishment of debt, pre-tax        (1,655 )            -        (4,694 )      (1,563 )
Start-up expenses, pre-tax                          -            553             -         2,506
One-time employee restructuring
expenses, pre-tax                               7,459              -         7,459             -
Covid-19 expenses, pre-tax                          -          3,877             -         4,769
Close-out expenses, pre-tax                         -          2,284             -         4,220
Tax effect of adjustments to Funds From
Operations *                                      105         (1,599 )          13          (762 )
Normalized Funds from Operations           $   69,664     $   61,523     $ 122,721     $ 108,731
Add (Subtract):
Non-real estate related depreciation and
amortization                                   14,460         15,050        29,605        29,981
Consolidated maintenance capital
expenditures                                   (4,203 )       (4,139 )      (8,142 )     (11,166 )
Stock-based compensation expense                4,023          4,706        11,426        14,474
Other non-cash revenue & expenses              (1,102 )            -        (2,204 )           -
Amortization of debt issuance costs,
discount and/or
  premium and other non-cash interest           1,903          1,708         3,586         3,378
Adjusted Funds from Operations             $   84,745     $   78,848     $ 156,992     $ 145,398

* Tax effect of adjustments relate to loss (gain) on real estate assets, gain

on extinguishment of debt, start-up expenses, Covid-19 expenses, severance

expenses and close-out expenses.

Outlook

The following discussion contains statements that are not historical statements
and, therefore, constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Our forward-looking statements
are subject to risks and uncertainties that could cause actual results to differ
materially from those stated or implied in the forward-looking statements.
Please refer to "Part I - Item 1A. Risk Factors" and the "Forward Looking
Statements - Safe Harbor" sections in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2020, as well as the "Part II - Item 1A. Risk
Factors" and the "Forward-Looking Statements - Safe Harbor" section and other
disclosures contained in the Form 10-Q for the quarter ended March 31, 2021 and
this Form 10-Q for further discussion on forward-looking statements and the
risks and other factors that could prevent us from achieving our goals and cause
the assumptions underlying the forward-looking statements and the actual results
to differ materially from those expressed in or implied by those forward-looking
statements.



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Executive Order

On January 26, 2021, President Biden signed an Executive Order directing the
United States Attorney General not to renew DOJ contracts with privately
operated criminal detention facilities, as consistent with applicable law. Two
agencies of the DOJ, the BOP and USMS, utilize our services. The BOP houses
inmates who have been convicted of federal crimes, and the USMS is generally
responsible for detainees who are awaiting trial or sentencing in U.S. federal
courts. Our contracts with the BOP for our company-owned 1,940-bed Great Plains
Correctional Facility, our company-owned 1,732-bed Big Spring Correctional
Facility, our company-owned 1,800-bed Flightline Correctional Facility, and our
company-owned 1,800-bed North Lake Correctional Facility have renewal option
periods that expire on May 31, 2021, November 30, 2021, November 30, 2021, and
September 30, 2022, respectively. Additionally, the contracts with the BOP for
the county owned and managed 1,800-bed Reeves County Detention Center I & II and
the 1,376-bed Reeves County Detention Center III have renewal option periods
that expire September 30, 2022 and June 30, 2022, respectively. We have a
management agreement with Reeves County, Texas for the management oversight of
these two county-owned facilities. The Great Plains, Big Spring, Flightline,
North Lake Correctional Facilities, Reeves County Detention Center I & II and
Reeves County Detention Center III generated approximately $145 million in
revenues for GEO during the year ended December 31, 2020. The BOP has
experienced a decline in federal prison populations over the last several years,
a trend that has more recently been accelerated by the COVID-19 global pandemic.
As a result of the Executive Order and the decline in federal prison
populations, our above-described contracts with the BOP may not be renewed over
the coming years. On March 5, 2021, we were notified by the BOP that it had
decided to not exercise its contract renewal option for the company-owned,
1,940-bed Great Plains Correctional Facility in Oklahoma, when the contract base
period expired on May 31, 2021. On March 25, 2021, we were notified that the BOP
had decided to terminate its contract with the county-owned and managed Reeves
County Detention Center I & II effective May 10, 2021. For the six months ended
June 30, 2021, our secure services contracts with the BOP accounted for
approximately 10% of our total revenues.



Unlike the BOP, the USMS does not own and operate its detention facilities. The
USMS contracts for the use of facilities, which are generally located in areas
near federal courthouses, primarily through intergovernmental service
agreements, and to a lesser extent, direct contracts. We are cooperating with
the USMS in assessing various alternatives on how to comply with the Executive
Order. During the first quarter of 2021, we were notified by the USMS that it
would not renew its contract for the company-owned Queens Detention Facility in
New York, when the contract base period ended on March 31, 2021. We currently
operate four additional detention facilities that are under direct contracts and
eight detention facilities that are under intergovernmental agreements with the
USMS. The four direct contracts are up for renewal at various times over the
next few years, including two in late 2021. For the six months ended June 30,
2021, the direct contracts and intergovernmental agreements with the USMS
accounted for approximately 16% of our total revenues.



The Executive Order only applies to agencies that are part of the DOJ, which
includes the BOP and USMS. ICE facilities are not covered by the Executive Order
as ICE is an agency of the Department of Homeland Security, not the DOJ.
However, it is possible that the federal government could choose to take similar
action on ICE facilities in the future. For the six months ended June 30, 2021,
contracts for ICE Processing Centers, not including the alternatives to
detention contract under ISAP, accounted for approximately 24% of our total
revenues.



President Biden's administration may implement additional executive orders or
directives relating to federal criminal justice policies and immigration
policies which may impact the federal government's use of public-private
partnerships with respect to correctional and detention needs, including with
respect to our contracts, and/or may impact the budget and spending priorities
of federal agencies, including the BOP, USMS, and ICE.

Coronavirus Disease (COVID-19) Pandemic

In December 2019, a novel strain of coronavirus, now known as COVID-19
("COVID-19"), was reported in Wuhan, China and has since extensively impacted
the global health and economic environment. In January 2020, the World Health
Organization ("WHO") declared it a Public Health Emergency of International
Concern. On February 28, 2020, the WHO raised its assessment of the COVID-19
threat from high to very high at a global level due to the continued increase in
the number of cases and affected countries, and on March 11, 2020, the WHO
characterized COVID-19 as a pandemic.

Health and Safety

From the beginning of the global COVID-19 pandemic, our corporate, regional, and
field staff have taken steps to mitigate the risks of the novel coronavirus and
have worked with our government partners to implement best practices consistent
with the guidance issued by the Centers for Disease Control and Prevention
("CDC"). Ensuring the health and safety of all those entrusted to our care and
of our employees has always been our number one priority. GEO's COVID-19
mitigation initiatives have included:



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Guidance

• We issued guidance to all our facilities, consistent with the guidance issued

    for correctional and detention facilities by the CDC.




Testing

• We increased testing capabilities at our secure services facilities and

entered into contracts with multiple commercial labs to provide adequate

testing supplies and services.

• We invested approximately $2 million to acquire 45 Abbott Rapid COVID-19 ID

NOW devices and testing kits capable of diagnosing not only COVID-19, but

Influenza and Strep Throat.

• By the end of June of 2021, we had administered more than 130,000 COVID-19

tests to those in our care at our secure services facilities.

Bi-Polar Ionization

• We invested $3.7 million to install Bi-Polar Ionization Air Purification

Systems at select secure services facilities to reduce the spread of airborne

bacteria and viruses.

• Bi-Polar Ionization Air Purification Systems are specially designed electronic

   devices that create bi-polar - negative and positive - ions that can
   effectively break down a wide variety of harmful bacterial and viral
   contaminations into a less complex and safe form by attacking the DNA of
   bacteria and viruses.

Facemasks and Personal Hygiene Products

• We have provided continuing access to facemasks to all inmates and detainees,

with a minimum of three facemasks per week or more often upon request.

• We increased the frequency of distribution of personal hygiene products,

including soap, shampoo and body wash, and tissue paper, and we are ensuring

the daily availability of bars of soap or soap dispensers at each sink for

   hand washing in all of our facilities.




Social Distancing

• We have implemented social distancing pursuant to directives from our

government agency partners.

• We have communicated social distancing obligations and requirements via

meetings, memos, and postings.

• We deployed floor markers throughout our facilities to inform and encourage

social distancing.

• We have modified inmate/detainee movements to accommodate social distancing.

Engineering Controls

• We temporarily suspended onsite social visitation

• We established requirements for staff to complete a medical questionnaire and

pass a daily temperature check.

• We modified intake procedures to screen new inmates/detainees.

• We established isolation and quarantine procedures for COVID-19 positive and

symptomatic cases, consistent with CDC guidelines.

Administrative/Work Practice Controls

• We posted reminders regarding coughing and sneezing etiquette, the importance

of frequent handwashing, and the use of facemasks.

• We increased cleaning and disinfection of facilities, including high-touch

areas (e.g., doorknobs/handles, light switches, handheld radios), housing unit

dayrooms, dining areas, and other areas where inmates/detainees assemble.

• We advised our employees to remain home if they exhibit flu-like symptoms, and

we have exercised flexible paid leave and Paid Time Off policies to allow for

employees to remain home if they exhibit flu-like symptoms or to care for a

family member.

• We enacted quarantine and testing policies for any employees who may have come

into contact with an individual who has tested positive for COVID-19.

Vaccination

• We are working closely with our government partners and State and Local Health

Departments to coordinate vaccination efforts for staff, inmates, detainees,

and residents at our secure facilities and reentry centers and programs across

the country and the coordination of these vaccination efforts is in alignment

with recommendations from the CDC's Advisory Committee on Immunization

Practices (ACIP), as well as criteria established through the Food and Drug

Administration approval process.

• The timing of vaccine distribution to staff, inmates, detainees, and residents

is presently being directed by the Local and State Health Departments in the

jurisdictions in which we operate through the guidance and prioritization

   recommendations offered by the CDC and ACIP.


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• As of June of 2021, GEO has worked with our government agency partners and

State and Local Health Departments to administer approximately 25,000 doses of

the vaccine to inmates, detainees, and residents in our facilities.

• Our staff are not required, nor mandated, to receive the vaccine but will be

offered the vaccine when made available to them by their respective Local

and/or State Health Departments.

• We have also advised our staff that if they have any questions regarding

vaccination, they should direct them to their health care provider and/or

their respective Local/State Health Department.

Along with implementing these measures, GEO is continuing to coordinate closely
with our government agency partners and local health agencies to ensure the
health and safety of all those in our care and our employees. We are grateful
for our frontline employees, who are making sacrifices daily to provide care for
all those in our facilities, during this unprecedented global pandemic.
Information on the steps we have taken to address and mitigate the risks of
COVID-19 can be found at www.geogroup.com/COVID19. The information on or
accessible through our website is not incorporated by reference in this
Quarterly Report on Form 10-Q.

Economic Impact

The COVID-19 pandemic and related government-imposed mandatory closures, the
efficacy and distribution of COVID-19 vaccines, shelter in-place restrictions
and social distancing protocols and increased expenditures on engineering
controls, personal protective equipment, diagnostic testing, medical expenses,
temperature scanners, protective plexiglass barriers and increased sanitation
have had, and will continue to have, a severe impact on global economic
conditions and the environment in which we operate. Starting in late March and
early April 2020, we began to observe negative impacts from the pandemic on our
performance in our secure services business, specifically with our ICE
Processing Centers and U.S. Marshals Facilities, as a result of a decrease in
court sentencing at the federal level and reduced operational capacity to
promote social distancing protocols which have continued into 2021. The federal
government has also put in place Title 42 public health restrictions at the
Southwest border, which result in the immediate removal of single adults
apprehended by Border Patrol. This reduced operational capacity and the Title 42
public health restrictions may result in reduced reliance by ICE on GEO for
detention beds and/or ICE processing centers. Additionally, our reentry services
business conducted through our GEO Care business segment has also been
negatively impacted, specifically our residential reentry centers and
non-residential day reporting programs were impacted by declines in programs due
to lower levels of referrals by federal, state and local agencies. We have also
experienced the transmission of COVID-19 at most of our facilities continuing in
Second Quarter 2021 and to date in the third quarter of 2021. If we are unable
to mitigate the transmission of COVID-19 at our facilities, we could experience
a material adverse effect on our financial position, results of operations and
cash flows. We expect the continued impact of COVID-19 in the form of reduced
operational capacity and decline in programs during the first part of 2021 with
a slow recovery to more normalized operations by the end of 2021. Although we
are unable to predict the duration or scope of the COVID-19 pandemic or estimate
the extent of the overall future negative financial impact to our operating
results, an extended period of depressed economic activity necessitated by
actions to combat the disease, and the severity and duration of the related
global economic crisis may adversely impact our future financial performance.

Revenue

Due to the uncertainty surrounding the COVID-19 pandemic, we are unable to
determine the future landscape of growth opportunities in the near term;
however, any positive trends may, to some extent, be adversely impacted by
government budgetary constraints in light of the pandemic or any changes to a
government's willingness to maintain or grow public-private partnerships in the
future. While state finances overall were stable prior to the COVID-19 pandemic,
future budgetary pressures may cause state agencies to pursue a number of cost
savings initiatives which may include reductions in per diem rates and/or the
scope of services provided by private operators or the decision to not re-bid a
contract after expiration of the contract term. These potential cost savings
initiatives could have a material adverse impact on our current operations
and/or our ability to pursue new business opportunities. Additionally, if state
budgetary constraints, as discussed above, persist or intensify, our state
customers' ability to pay us may be impaired and/or we may be forced to
renegotiate our management contracts on less favorable terms and our financial
condition, results of operations or cash flows could be materially adversely
impacted. We plan to actively bid on any new projects that fit our target
profile for profitability and operational risk. Any positive trends in the
industry may be offset by several factors, including budgetary constraints,
contract modifications, contract terminations, contract non-renewals, contract
re-bids and/or the decision to not re-bid a contract after expiration of the
contract term and the impact of any other potential changes to the willingness
or ability to maintain or grow public-private partnerships on the part of other
government agencies. We believe we have a strong relationship with our
government agency partners and we believe that we operate facilities that
maximize security, safety and efficiency while offering our suite of GEO
Continuum of Care services and resources.

Prior to the Executive Order, we have historically had a relatively high
contract renewal rate, however, there can be no assurance that we will be able
to renew our expiring management contracts on favorable terms, or at all. Also,
while we are pleased with our track record in re-bid situations, we cannot
assure that we will prevail in any such future situations.

California enacted legislation that became effective on January 1, 2020 aimed at
phasing out public-private partnership contracts for the operation of secure
correctional facilities and detention facilities within California and
facilities outside of the State of California housing State of California
inmates. Additionally, we have public-private partnership contracts in place
with ICE and the USMS relating to secure services facilities located in
California. Our contract for our Central Valley facility was discontinued by the
State of California at the end of September 2019, and our three other California
secure facility contracts for our Desert View, Golden State, and McFarland
Facilities were discontinued during 2020. During the fourth quarter of 2019, we
signed two 15-year contracts with ICE for five company-owned facilities in
California totaling 4,490 beds, including the Central Valley, Desert View, and
Golden State

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facilities and a managed-only contract with the USMS for the government-owned,
512-bed El Centro Service Processing Center in California. Additionally, we and
the U.S. Department of Justice have filed separate legal actions challenging the
constitutionality of the attempted ban on new federal contracts entered into
after the effective date of the California law. Recently the State of Washington
approved a similar measure banning the use of public-private partnership
contracts for the operation of detention facilities in the state., that GEO is
also challenging in federal court. GEO's contract for the company-owned
1,575-bed Northwest ICE Processing Center in Washington has a renewal option
period that expires in 2025. The facility generates approximately $64 million in
annualized revenues for GEO. The Delaware County Council has also been exploring
how to end the public-private partnership arrangement for GEO's managed-only
contract for the 1,883-bed George W. Hill Correctional Facility located in
Thornton, Pennsylvania and transition the operations to the county. The George
W. Hill Correctional Facility generates approximately $46 million in annualized
revenue for GEO.

Internationally, we are exploring opportunities in our current markets and will
continue to actively bid on any opportunities that fit our target profile for
profitability and operational risk. We are pleased to have been awarded a
ten-year contract renewal for the continued delivery of secure transportation
under our GEOAmey joint venture in the United Kingdom. Total revenue over the
ten-year period is expected to be approximately $760 million. In New South
Wales, Australia, we have developed a 489-bed expansion at the Junee
Correctional Centre which was substantially completed during the third quarter
of 2020. We have also constructed a 137-bed expansion at the Fulham Correctional
Centre in Victoria, Australia. With respect to our Dungavel House Immigration
Removal Centre in the United Kingdom, we were unfortunately unsuccessful in the
current competitive rebid process and will transition the management contract in
October 2021. In addition, we transitioned the Arthur Gorrie Correctional Centre
to government operation in the State of Queensland, Australia at the end of June
2020.

With respect to our reentry services, electronic monitoring services, and
community-based services business conducted through our GEO Care business
segment, we are currently pursuing a number of business development
opportunities. Related to opportunities for community-based reentry services, we
are working with our existing federal, state, and local clients to leverage new
opportunities for both residential reentry facilities as well as non-residential
day reporting centers. However, in light of the uncertainty surrounding the
COVID-19 pandemic, we may not be successful. We continue to expend resources on
informing federal, state and local governments about the benefits of
public-private partnerships, and we anticipate that there will be new
opportunities in the future as those efforts continue to yield results. We
believe we are well positioned to capitalize on any suitable opportunities that
become available in this area.

Operating Expenses

Operating expenses consist of those expenses incurred in the operation and
management of our contracts to provide services to our governmental clients.
Labor and related costs represented 60% and 58.2% of our operating expenses
during the six months ended June 30, 2021 and 2020, respectively. Additional
significant operating expenses include food, utilities and medical costs. During
the six months ended June 30, 2021 and 2020, operating expenses totaled 73.0%
and 75.9%, respectively, of our consolidated revenues. We expect our operating
expenses as a percentage of revenues in 2021 will be impacted by the opening of
any new or existing idle facilities as a result of the cost of transitioning
and/or start-up operations related to a facility opening. During 2021, we will
incur carrying costs for facilities that are currently vacant. Additionally, we
have increased our spending on engineering controls, personal protective
equipment, diagnostic testing, medical expenses, temperature scanners,
protective plexiglass barriers and increased sanitation as a result of COVID-19
and expect to incur several millions of dollars in such costs in 2021.

General and Administrative Expenses

General and administrative expenses consist primarily of corporate management
salaries and benefits, professional fees and other administrative expenses.
During the six months ended June 30, 2021 and 2020, general and administrative
expenses totaled 9.0% and 8.3%, respectively, of our consolidated revenues. We
expect general and administrative expenses as a percentage of revenues in 2021
to remain consistent or decrease as a result of cost savings initiatives as well
as less travel, marketing and other corporate administrative expenses primarily
due to the impacts of the COVID-19 pandemic.

Idle Facilities

We are currently marketing approximately 9,500 vacant beds at seven of our U.S.
Secure Services and two of our GEO Care idle facilities to potential customers.
The annual net carrying cost of our idle facilities in 2021 is estimated to be
$8.0 million, inclusive of revenues earned on certain facilities during the
first quarter of 2021 before they became idle, including depreciation expense of
$11.7 million. As of June 30, 2021, these nine facilities had a combined net
book value of $225.5 million. We currently do not have any firm commitment or
agreement in place to activate the remaining facilities. Historically, some
facilities have been idle for multiple years before they received a new contract
award. These idle facilities are included in the U.S. Secure Services and GEO
Care segments. The per diem rates that we charge our clients often vary by
contract across our portfolio. However, if the nine remaining idle facilities
were to be activated using our U.S. Secure Services and GEO Care average per
diem rates in 2021 (calculated as the U.S. Secure Services and GEO Care revenue
divided by the number of U.S. Secure Services and GEO Care mandays) and based on
the average occupancy rate in our facilities through June 30, 2021, we would
expect to receive incremental annualized revenue of approximately $220 million
and an annualized increase in earnings per share of approximately $0.20 to $0.25
per share based on our average operating margins.

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