923796--3/17/2006--GEO_GROUP

related topics

{debt, indebtedness, cash}

{regulation, government, change}

{capital, credit, financial}

{cost, contract, operation}

{loan, real, estate}

{loss, insurance, financial}

{condition, economic, financial}

{competitive, industry, competition}

{operation, international, foreign}

{investment, property, distribution}

{personnel, key, retain}

{customer, product, revenue}

{cost, operation, labor}

{regulation, change, law}

Risks Related to Our High Level of Indebtedness Our significant level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our debt service obligations. Despite current indebtedness levels, we may still incur more indebtedness, which could further exacerbate the risks described above. Future indebtedness issued pursuant to our universal shelf registration statement could have rights superior to those of our existing or future indebtedness. The covenants in the indenture governing the Notes and 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. Because portions of our indebtedness have floating interest rates, a general increase in interest rates will adversely affect cash flows. We depend on distributions from our subsidiaries to make payments on our indebtedness. These distributions may not be made. Risks Related to Our Business and Industry We are subject to the termination or non-renewal of our government contracts, which could adversely affect our results of operations and liquidity, including our ability to secure new facility management contracts from other government customers. We will continue to be responsible for certain real property payments even if our underlying facility management contracts terminate, which could adversely affect our profitability. Our growth depends on our ability to secure contracts to develop and manage new correctional and detention facilities, the demand for which is outside our control. We may not be able to secure financing for new facilities, which could adversely affect our results of operations and future growth. We depend on a limited number of governmental customers for a significant portion of our revenues. The loss of, or a significant decrease in business from, these customers could seriously harm our financial condition and results of operations. A decrease in occupancy levels could cause a decrease in revenues and profitability. Competition for inmates 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. Public resistance to privatization of correctional and detention facilities could result in our inability to obtain new contracts or the loss of existing contracts, which could have a material adverse effect on our business, financial condition and results of operations. Adverse publicity may negatively impact our ability to retain existing contracts and obtain new contracts. Our business is subject to public scrutiny. 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 location, 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. We may not be able to obtain or maintain the insurance levels required by our government contracts. Our international operations expose us to risks which could materially adversely affect our financial condition and results of operations. We conduct certain of our operations through joint ventures, which may lead to disagreements with our joint venture partners and adversely affect our interest in the joint ventures. 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.

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923796--3/17/2006--GEO_GROUP_INC