In addition to its PLR request, GEO has been working on a number of administrative steps, including the internal reorganization of the Company into separate legal operating business units. GEO has also conducted the TRS transfer pricing and the earnings and profits distribution analysis which must be completed in connection with a potential REIT conversion.
Following a decision to convert into a REIT by GEO’s Board, certain ownership limitations to ensure compliance with the REIT provisions in the tax code would require the approval of GEO's shareholders. This shareholder vote would take place after the decision to convert had been made by GEO’s Board.
While additional work remains to be completed, based on its current review, GEO believes that a conversion to a REIT using a TRS structure could potentially provide numerous benefits to GEO and its shareholders. These benefits include enhancing its ability to return value to shareholders, lowering its cost of capital, drawing a larger base of potential shareholders, providing greater flexibility to pursue growth opportunities, and creating a more efficient operating structure.
GEO’s Board recently met and received detailed presentations from GEO’s legal and financial advisors on a possible conversion of the Company into a REIT. If GEO’s Board decides to move forward with the REIT conversion, GEO will strive to complete the conversion by the earliest conversion date which is January 2013. However, as GEO has previously disclosed, given the short timeframe, the conversion could be delayed until the next available conversion date which is January 2014.
Business Segments Revenue
U.S. Corrections & Detention
For the third quarter 2012, U.S. Corrections & Detention revenue increased to $244.1 million from $232.8 million in the third quarter 2011. Third quarter 2012 revenues for U.S. Corrections & Detention reflect the activation of an expansion of the Adelanto Detention Facility in California in August 2012, the opening of the Riverbend Correctional Facility in Georgia in December 2011, and the activation of the Karnes Civil Detention Center in Texas and an expansion to the New Castle Correctional Facility in Indiana in the first quarter 2012. These facility activations were offset by the deactivation of the Leo Chesney Community Correctional Facility in California in the third quarter 2011 and the Desert View and Central Valley Community Correctional Facilities in California in the fourth quarter 2011.