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Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to_______             

Commission file number: 1-14260 

 

The GEO Group, Inc.

(Exact name of registrant as specified in its charter) 

 

 

Florida

 

65-0043078

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

 

 

4955 Technology Way

Boca Raton, Florida

 

33431

(Address of principal executive offices)

 

(Zip Code)

 

(561) 893-0101

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.01 par value per share

 

GEO

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes     No  

As of May 3, 2022, the registrant had 124,096,099 shares of common stock outstanding.

 

 

 

 


Table of Contents

 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

3

ITEM 1. FINANCIAL STATEMENTS

3

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

3

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

4

CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2022 (UNAUDITED) AND DECEMBER 31, 2021

5

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

6

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

7

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

27

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

48

ITEM 4. CONTROLS AND PROCEDURES

48

PART II - OTHER INFORMATION

49

ITEM 1. LEGAL PROCEEDINGS

49

ITEM 1A. RISK FACTORS

51

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

51

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

52

ITEM 4. MINE SAFETY DISCLOSURES

52

ITEM 5. OTHER INFORMATION

52

ITEM 6. EXHIBITS

53

SIGNATURES

54

 

2


Table of Contents

 

 

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

THE GEO GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

FOR THE THREE MONTHS ENDED

MARCH 31, 2022 AND 2021

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

 

March 31, 2022

 

 

March 31, 2021

 

 

Revenues

 

$

551,185

 

 

$

576,377

 

 

Operating expenses

 

 

385,161

 

 

 

428,151

 

 

Depreciation and amortization

 

 

35,938

 

 

 

34,117

 

 

General and administrative expenses

 

 

48,560

 

 

 

48,479

 

 

Operating income

 

 

81,526

 

 

 

65,630

 

 

Interest income

 

 

5,628

 

 

 

6,202

 

 

Interest expense

 

 

(31,621

)

 

 

(31,844

)

 

Gain on extinguishment of debt

 

 

 

 

 

3,038

 

 

Gain (loss) on dispositions of real estate

 

 

(627

)

 

 

13,329

 

 

Income before income taxes and equity in earnings of affiliates

 

 

54,906

 

 

 

56,355

 

 

Provision for income taxes

 

 

17,962

 

 

 

7,936

 

 

Equity in earnings of affiliates, net of income tax provision of

   $112 and $340 respectively

 

 

1,235

 

 

 

2,064

 

 

Net income

 

 

38,179

 

 

 

50,483

 

 

Net loss attributable to noncontrolling interests

 

 

40

 

 

 

61

 

 

Net income attributable to The GEO Group, Inc.

 

$

38,219

 

 

$

50,544

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

 

120,714

 

 

 

120,022

 

 

Diluted

 

 

121,394

 

 

 

120,417

 

 

Net income per common share attributable to The GEO Group,

   Inc.:

 

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

 

Net income per common share attributable to The GEO Group,

   Inc. - basic

 

$

0.26

 

 

$

0.41

 

 

Diluted:

 

 

 

 

 

 

 

 

 

Net income per common share attributable to The GEO Group,

   Inc. - diluted

 

$

0.26

 

 

$

0.41

 

 

Dividends declared per share

 

$

 

 

$

0.25

 

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3


Table of Contents

 

THE GEO GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

FOR THE THREE MONTHS ENDED

MARCH 31, 2022 AND 2021

(In thousands)

 

 

 

Three Months Ended

 

 

 

 

March 31, 2022

 

 

March 31, 2021

 

 

Net income

 

$

38,179

 

 

$

50,483

 

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

 

 

425

 

 

 

(627

)

 

Change in marketable securities, net of tax benefit of $107 and $0

 

 

(405

)

 

 

 

 

Pension liability adjustment, net of tax provision

   of $23 and $41, respectively

 

 

85

 

 

 

156

 

 

Change in fair value of derivative instrument

   classified as cash flow hedge, net of tax provision of

   $655 and $784, respectively

 

 

2,464

 

 

 

2,948

 

 

Total other comprehensive income, net of tax

 

 

2,569

 

 

 

2,477

 

 

Total comprehensive income

 

 

40,748

 

 

 

52,960

 

 

Comprehensive loss attributable to noncontrolling interests

 

 

55

 

 

 

63

 

 

Comprehensive income attributable to The GEO Group, Inc.

 

$

40,803

 

 

$

53,023

 

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

4


Table of Contents

 

THE GEO GROUP, INC.

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2022 AND DECEMBER 31, 2021

(In thousands, except share data)

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

 

(Unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

598,508

 

 

$

506,491

 

Restricted cash and cash equivalents

 

 

23,795

 

 

 

20,161

 

Accounts receivable, less allowance for doubtful accounts of $1,216 and $1,155,

   respectively

 

 

358,648

 

 

 

365,573

 

Contract receivable, current portion

 

 

6,866

 

 

 

6,507

 

Prepaid expenses and other current assets

 

 

34,998

 

 

 

45,176

 

Total current assets

 

 

1,022,815

 

 

 

943,908

 

Restricted Cash and Investments

 

 

84,886

 

 

 

76,158

 

Property and Equipment, Net

 

 

2,017,322

 

 

 

2,037,845

 

Assets Held for Sale

 

 

14,488

 

 

 

7,877

 

Contract Receivable

 

 

376,775

 

 

 

367,071

 

Operating Lease Right-of-Use Assets, Net

 

 

105,617

 

 

 

112,187

 

Goodwill

 

 

755,238

 

 

 

755,225

 

Intangible Assets, Net

 

 

158,695

 

 

 

166,124

 

Other Non-Current Assets

 

 

73,048

 

 

 

71,013

 

Total Assets

 

$

4,608,884

 

 

$

4,537,408

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable

 

$

80,313

 

 

$

64,073

 

Accrued payroll and related taxes

 

 

87,699

 

 

 

67,210

 

Accrued expenses and other current liabilities

 

 

193,704

 

 

 

200,712

 

Operating lease liabilities, current portion

 

 

28,038

 

 

 

28,279

 

Current portion of finance lease liabilities, long-term debt and non-recourse debt

 

 

18,617

 

 

 

18,568

 

Total current liabilities

 

 

408,371

 

 

 

378,842

 

Deferred Income Tax Liabilities

 

 

80,768

 

 

 

80,768

 

Other Non-Current Liabilities

 

 

82,500

 

 

 

87,073

 

Operating Lease Liabilities

 

 

83,408

 

 

 

89,917

 

Finance Lease Liabilities

 

 

1,805

 

 

 

1,977

 

Long-Term Debt

 

 

2,626,473

 

 

 

2,625,959

 

Non-Recourse Debt

 

 

304,724

 

 

 

297,856

 

Commitments, Contingencies and Other Matters (Note 11)

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 30,000,000 shares authorized,

   none issued or outstanding

 

 

 

 

 

 

Common stock, $0.01 par value, 187,500,000 shares authorized,

   128,863,377 and 127,323,762 issued and 124,011,005

and 122,471,390 outstanding, respectively

 

 

1,289

 

 

 

1,273

 

Additional paid-in capital

 

 

1,281,268

 

 

 

1,276,213

 

Distributions in excess of earnings

 

 

(137,741

)

 

 

(175,960

)

Accumulated other comprehensive loss

 

 

(17,632

)

 

 

(20,216

)

Treasury stock, 4,852,372 shares, at cost

 

 

(105,099

)

 

 

(105,099

)

Total shareholders’ equity attributable to The GEO Group, Inc.

 

 

1,022,085

 

 

 

976,211

 

Noncontrolling interests

 

 

(1,250

)

 

 

(1,195

)

Total shareholders’ equity

 

 

1,020,835

 

 

 

975,016

 

Total Liabilities and Shareholders’ Equity

 

$

4,608,884

 

 

$

4,537,408

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

5


Table of Contents

 

THE GEO GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

FOR THE THREE MONTHS ENDED

MARCH 31, 2022 AND 2021

(In thousands)

 

 

 

Three Months Ended

 

 

 

March 31, 2022

 

 

March 31, 2021

 

Cash Flow from Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

$

38,179

 

 

$

50,483

 

Net loss attributable to noncontrolling interests

 

 

40

 

 

 

61

 

Net income attributable to The GEO Group, Inc.

 

 

38,219

 

 

 

50,544

 

Adjustments to reconcile net income attributable to The GEO Group, Inc. to net cash

   provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

35,938

 

 

 

34,117

 

Stock-based compensation

 

 

6,313

 

 

 

7,402

 

Gain on extinguishment of debt

 

 

 

 

 

(3,038

)

Amortization of debt issuance costs, discount and/or premium and other non-cash

   interest

 

 

1,848

 

 

 

1,683

 

Provision for doubtful accounts

 

 

 

 

 

614

 

Equity in earnings of affiliates, net of tax

 

 

(1,235

)

 

 

(2,064

)

Dividends received from unconsolidated joint ventures

 

 

1,781

 

 

 

1,399

 

Loss on sale/disposal of property and equipment, net

 

 

38

 

 

 

1,664

 

(Gain) loss on disposition of real estate

 

 

627

 

 

 

(13,329

)

Changes in assets and liabilities, net of effects of acquisitions:

 

 

 

 

 

 

 

 

Changes in accounts receivable, prepaid expenses and other assets

 

 

22,448

 

 

 

26,846

 

Changes in contract receivable

 

 

1,644

 

 

 

1,611

 

Changes in accounts payable, accrued expenses and other liabilities

 

 

14,335

 

 

 

17,468

 

Net cash provided by operating activities

 

 

121,956

 

 

 

124,917

 

Cash Flow from Investing Activities:

 

 

 

 

 

 

 

 

Insurance proceeds - damaged property

 

 

 

 

 

469

 

Proceeds from sale of property and equipment

 

 

41

 

 

 

39

 

Proceeds from sales of real estate

 

 

 

 

 

15,673

 

Change in restricted investments

 

 

(4,109

)

 

 

(2,191

)

Capital expenditures

 

 

(13,773

)

 

 

(27,276

)

Net cash used in investing activities

 

 

(17,841

)

 

 

(13,286

)

Cash Flow from Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from long-term debt

 

 

 

 

 

240,000

 

Payments on long-term debt

 

 

(2,881

)

 

 

(298,522

)

Payments on non-recourse debt

 

 

(2,328

)

 

 

(1,755

)

Taxes paid related to net share settlements of equity awards

 

 

(1,285

)

 

 

(1,901

)

Proceeds from issuance of common stock in connection with ESPP

 

 

43

 

 

 

116

 

Debt issuance costs

 

 

 

 

 

(9,587

)

Cash dividends paid

 

 

 

 

 

(30,486

)

Net cash used in financing activities

 

 

(6,451

)

 

 

(102,135

)

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash

   and Cash Equivalents

 

 

2,606

 

 

 

(657

)

Net Increase in Cash, Cash Equivalents and Restricted Cash

   and Cash Equivalents

 

 

100,270

 

 

 

8,839

 

Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, beginning of period

 

 

548,322

 

 

 

311,853

 

Cash, Cash Equivalents and Restricted Cash and Cash Equivalents, end of period

 

$

648,592

 

 

$

320,692

 

Supplemental Disclosures:

 

 

 

 

 

 

 

 

Non-cash Investing and Financing activities:

 

 

 

 

 

 

 

 

Right-of-use assets obtained from operating lease liabilities

 

$

200

 

 

$

3,764

 

Equipment obtained from finance lease liabilities

 

$

 

 

$

794

 

Dividends paid in treasury shares

 

$

 

 

$

153

 

Capital expenditures in accounts payable and accrued expenses

 

$

1,260

 

 

$

4,408

 

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

6


Table of Contents

 

THE GEO GROUP, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The GEO Group, Inc., a Florida corporation, and subsidiaries (the “Company” or “GEO”) specializes in the ownership, leasing and management of secure facilities, processing centers and reentry centers in the United States, Australia and South Africa. The Company owns, leases and operates a broad range of facilities including maximum, medium and minimum security facilities, processing centers, as well as community-based reentry facilities and offers an expanded delivery of rehabilitation services under its 'GEO Continuum of Care' platform. The 'GEO Continuum of Care' program integrates enhanced rehabilitative programs, which are evidence-based and include cognitive behavioral treatment and post-release services, and provides academic and vocational classes in life skills and treatment programs while helping individuals reintegrate into their communities. The Company develops new facilities based on contract awards, using its project development expertise and experience to design, construct and finance what it believes are state-of-the-art facilities that maximize security and efficiency. The Company provides innovative compliance technologies, industry-leading monitoring services, and evidence-based supervision and treatment programs for community-based parolees, probationers and pretrial defendants. The Company also provides secure transportation services for individuals as contracted domestically and in the United Kingdom through its joint venture GEO Amey PECS Ltd. (“GEOAmey”). At March 31, 2022, the Company’s worldwide operations include the management and/or ownership of approximately 83,000 beds at 103 facilities, including idle facilities, projects under development and recently awarded contracts, and also include the provision of community supervision services for more than 300,000 individuals on average, including over 100,000 through an array of technology products including radio frequency, GPS, and alcohol monitoring devices.

 

GEO operated as a real estate investment trust ("REIT") from January 1, 2013 through December 31, 2020. As a REIT, the Company provided services and conducted other business activities through taxable REIT subsidiaries ("TRSs"). A TRS is a subsidiary of a REIT that is subject to applicable corporate income tax rates and certain qualification requirements. The Company's use of TRSs permitted GEO to engage in certain business activities in which the REIT could not engage directly, so long as those activities were conducted in entities that elected to be treated as TRSs under the Internal Revenue Code of 1986, as amended (the “Code”), and enabled GEO to, among other things, provide correctional services at facilities it owns and at facilities owned by its government partners. A TRS is not subject to the distribution requirements applicable to REITs so it may retain income generated by its operations for reinvestment.

On December 2, 2021, the Company announced that its board of directors (“Board”) unanimously approved a plan to terminate the Company's REIT status and become a taxable C Corporation, effective for the year ended December 31, 2021. As a result, the Company is no longer required to operate under REIT rules, including the requirement to distribute at least 90% of REIT taxable income to its stockholders, which provides the Company with greater flexibility to use its free cash flow.  Effective January 1, 2021, the Company was subject to federal and state income taxes on its taxable income at applicable tax rates and was no longer entitled to a tax deduction for dividends paid. The Company operated as a REIT for the 2020 tax year, and existing REIT requirements and limitations, including those established by the Company’s organizational documents, remained in place until December 31, 2020. In connection with terminating the Company’s REIT status, the Board also voted unanimously to discontinue the Company's quarterly dividend in late 2021.

 

The Company's unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the instructions to Form 10-Q and consequently do not include all disclosures required by Form 10-K. The accounting policies followed for quarterly financial reporting are the same as those disclosed in the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2022 for the year ended December 31, 2021. The accompanying December 31, 2021 consolidated balance sheet has been derived from those audited financial statements. Additional information may be obtained by referring to the Company’s Form 10-K for the year ended December 31, 2021. In the opinion of management, all adjustments (consisting only of normal recurring items) necessary for a fair presentation of the financial information for the interim periods reported in this Quarterly Report on Form 10-Q have been made. Results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results for the entire year ending December 31, 2022, or for any other future interim or annual periods.

 

Risks and uncertainties

 

Executive Order

7


Table of Contents

 

On January 26, 2021, President Biden signed an executive order directing the United States Attorney General not to renew Department of Justice (“DOJ”) contracts with privately operated criminal detention facilities, as consistent with applicable law. Two agencies of the DOJ, the Federal Bureau of Prisons (“BOP”) and the U.S. Marshals Service (“USMS”), utilize GEO’s support 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. As of March 31, 2022, GEO has one company-owned facility under direct contract with the BOP, which has a current contract option period that expires on September 30, 2022, and three company-owned/company-leased facilities under direct contracts with USMS, which have current contract option periods that expire between June 30, 2022 and September 30, 2023.

 

COVID-19

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.  

The Company has been closely monitoring the impact of the COVID-19 pandemic on all aspects of its business and geographies, including how it will impact those entrusted to its care and governmental partners. The Company has incurred disruptions from the COVID-19 pandemic but, it is unable to predict the overall future impact that the COVID-19 pandemic will have on its financial condition, results of operations and cash flows due to numerous uncertainties related to the pandemic. The COVID-19 pandemic and related government-imposed mandatory closures, the efficacy and distribution of COVID-19 vaccines and boosters, the evolution of COVID-19 variants, shelter in-place restrictions, labor shortages 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 the Company operates. Additionally, the Company has experienced the transmission of COVID-19 among detainees and staff at most of its facilities. If the Company is unable to mitigate the transmission of COVID-19 at its facilities it could experience a material adverse effect on its financial position, results of operations and cash flows. Although the Company is unable to predict the duration or scope of the COVID-19 pandemic or estimate the extent of the negative financial impact to its operating results, an extended period of depressed economic activity necessitated to combating the disease, and the severity and duration of the related global economic crisis may adversely impact its future financial performance.

2. GOODWILL AND OTHER INTANGIBLE ASSETS

The Company has recorded goodwill as a result of its various business combinations. Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the tangible assets and intangible assets acquired net of liabilities assumed, including noncontrolling interests. Changes in the Company's goodwill balances from January 1, 2022 to March 31, 2022 are as follows (in thousands):

 

 

 

January 1,

2022

 

 

Foreign Currency

Translation

 

 

March 31, 2022

 

U.S. Secure Services

 

$

316,366

 

 

$

 

 

$

316,366

 

Electronic Monitoring and Supervision Services

 

$

289,570

 

 

$

 

 

 

289,570

 

Reentry Services

 

 

148,873

 

 

 

 

 

 

148,873

 

International Services

 

 

416

 

 

 

13

 

 

 

429

 

Total Goodwill

 

$

755,225

 

 

$

13

 

 

$

755,238

 

 

 

The Company has also recorded other finite and indefinite-lived intangible assets as a result of its various business combinations. The Company's intangible assets include facility management contracts, covenants not to compete, trade names and technology, as follows (in thousands):

 

 

 

March 31, 2022

 

 

December 31, 2021

 

 

 

Weighted

Average

Useful Life

(years)

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net

Carrying

Amount

 

Facility management contracts

 

 

16.3

 

 

$

308,397

 

 

$

(196,317

)

 

$

112,080

 

 

$

308,369

 

 

$

(189,163

)

 

$

119,206

 

Technology

 

 

7.3

 

 

 

33,700

 

 

 

(32,285

)

 

 

1,415

 

 

 

33,700

 

 

 

(31,982

)

 

 

1,718

 

Trade names

 

Indefinite

 

 

 

45,200

 

 

 

 

 

 

45,200

 

 

 

45,200

 

 

 

 

 

 

45,200

 

Total acquired intangible assets

 

 

 

 

 

$

387,297

 

 

$

(228,602

)

 

$

158,695

 

 

$

387,269

 

 

$

(221,145

)

 

$

166,124

 

 

Amortization expense was $7.5 million and $5.3 million for the three months ended March 31, 2022 and 2021, respectively. Amortization expense was primarily related to the U.S. Secure Services, Electronic Monitoring and Supervision Services and Reentry Services segments' amortization of acquired facility management contracts. As of March 31, 2022, the weighted average period before the next contract renewal or extension for the acquired facility management contracts was approximately 2.8 years.

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Table of Contents

 

Estimated amortization expense related to the Company's finite-lived intangible assets for the remainder of 2022 through 2026 and thereafter is as follows (in thousands):

 

Fiscal Year

 

Total

Amortization

Expense

 

Remainder of 2022

 

$

10,977

 

2023

 

 

11,813

 

2024

 

 

9,314

 

2025

 

 

9,263

 

2026

 

 

7,170

 

Thereafter

 

 

64,958

 

 

 

$

113,495

 

 

3. FINANCIAL INSTRUMENTS

The following tables provide a summary of the Company’s significant financial assets and liabilities carried at fair value and measured on a recurring basis as of March 31, 2022 and December 31, 2021 (in thousands):

 

 

 

 

 

 

 

Fair Value Measurements at March 31, 2022

 

 

 

Carrying Value at

March 31,

2022

 

 

Quoted Prices in

Active Markets

(Level 1)

 

 

Significant Other

Observable Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs (Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rabbi Trust

 

$

40,752

 

 

$

 

 

$

40,752

 

 

$

 

      Marketable equity and fixed income securities

 

 

17,845

 

 

 

 

 

 

17,845

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swap derivatives

 

$

76

 

 

$

 

 

$

76

 

 

$

 

 

 

 

 

 

 

 

Fair Value Measurements at December 31, 2021

 

 

 

Carrying Value at

December 31,

2021

 

 

Quoted Prices in

Active Markets

(Level 1)

 

 

Significant Other

Observable Inputs

(Level 2)

 

 

Significant

Unobservable

Inputs (Level 3)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Restricted investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rabbi Trust

 

$

42,937

 

 

$

 

 

$

42,937

 

 

$

 

      Marketable equity and fixed income securities

 

 

11,551

 

 

$

 

 

 

11,551

 

 

 

 

      Fixed income securities

 

 

1,927