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As filed with the Securities and Exchange Commission on June 10, 2010
Registration No. 333-166525
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 1
To
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
The GEO Group, Inc.
(Exact name of registrant as specified in its charter)
 
         
Florida
(State or other jurisdiction of
incorporation or organization)
  1520
(Primary Standard Industrial
Classification Code Number)
  65-0043078
(I.R.S. Employer
Identification Number)
 
One Park Place, Suite 700
621 Northwest 53rd Street
Boca Raton, Florida 33487-8242
(561) 893-0101
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
 
John J. Bulfin, Esq.
Senior Vice President, General Counsel
and Secretary
The GEO Group, Inc.
One Park Place, Suite 700
621 Northwest 53rd Street
Boca Raton, Florida 33487-8242
(561) 893-0101
(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
Copies to:
 
         
Jose Gordo, Esq.
Stephen K. Roddenberry, Esq.
Esther L. Moreno, Esq.
Akerman Senterfitt
One Southeast Third Avenue, 25th
Floor
Miami, Florida 33131
(305) 374-5600
  Cathryn L. Porter, Esq.
General Counsel
Cornell Companies, Inc.
1700 West Loop South, Suite 1500
Houston, Texas 77027
(713) 623-0790
  Daniel Keating, Esq.
Hogan Lovells US LLP
555 Thirteenth Street, NW
Washington, D.C. 20004
(202) 637-5490
 
Approximate date of commencement of proposed sale to the public:  As soon as practicable after the effective time of this registration statement and the effective time of the merger of GEO Acquisition III, Inc., a Delaware corporation and a wholly owned subsidiary of The GEO Group, Inc. with and into Cornell Companies, Inc., a Delaware corporation, as described in the Agreement and Plan of Merger, dated as of April 18, 2010, as amended, attached as Annex A to the joint proxy statement/prospectus forming part of this registration statement.
 
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o
 
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer þ Accelerated filer o Non-accelerated filer o Smaller reporting company o
(Do not check if a smaller reporting company)
 
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
 
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)  o
 
Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)  o
 
CALCULATION OF REGISTRATION FEE
 
                         
            Proposed Maximum
    Proposed Maximum
    Amount of
Title of Each Class of
    Amount to be
    Offering
    Aggregate
    Registration
Securities to be Registered     Registered(1)(2)     Price per Unit     Offering Price(3)     Fee(3)
Common Stock, par value $0.01 per share
    20,800,000 shares and related preferred share purchase rights     N/A     $444,000,000     $31,657(4)
                         
(1) Represents the estimated maximum number of shares of common stock, par value $.01 per share, of The GEO Group, Inc., referred to herein as GEO, issuable in connection with the merger in exchange for shares of Cornell Companies, Inc., referred to herein as Cornell, common stock calculated as 16,000,000 shares of Cornell common stock (giving effect to all shares actually issued and outstanding, all shares issuable upon the exercise of any option, warrant, employee stock purchase right or other right to acquire Cornell common stock and all shares issuable upon the conversion or exchange of any security convertible into or exchangeable for shares of Cornell common stock) multiplied by the exchange ratio of 1.3 shares.
(2) Each share of GEO common stock issued by the registrant includes one preferred share purchase right (the “Right”), which initially attaches to and trades with the shares of the registrant’s common stock being registered hereby. The terms of the Rights are described in the Rights Agreement, dated as of October 9, 2003, included as Exhibit 4.3 to the Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 30, 2003. Prior to the occurrence of certain events, none of which has occurred as of the date of this registration statement, the Rights will not be exercisable or separable from the common stock.
(3) Pursuant to Rules 457(c) and 457(f)(1) under the Securities Act of 1933, as amended, and solely for the purpose of calculating the registration fee, the proposed maximum aggregate offering price is equal to: (i) the market value of the shares of Cornell common stock to be received by GEO in the merger, calculated as (x) the estimated maximum number of such shares that will be outstanding as of the closing date of the merger (16,000,000) multiplied by (y) $27.75, the average of the high and low sales prices per share of Cornell common stock as reported on the NYSE on April 28, 2010.
(4) A registration fee of $41,155 was previously paid in connection with the Registration Statement filed on May 5, 2010.
 
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
 


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The information in this preliminary joint proxy statement/prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary joint proxy statement/prospectus is not an offer to sell and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
 
PRELIMINARY — SUBJECT TO COMPLETION, DATED JUNE 10, 2010
 
     
(GEO LOGO)   (CORNELL LOGO)
 
MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT
 
The boards of directors of The GEO Group, Inc., or GEO, and Cornell Companies, Inc., or Cornell, have each approved a merger agreement which provides for GEO to acquire Cornell. The boards of directors of GEO and Cornell believe that the combination of the two companies will create greater long-term stockholder value than either company could individually achieve on a stand-alone basis.
 
If the merger is completed, Cornell stockholders will be entitled to receive, at their election, either (i) 1.3 shares of common stock of GEO, par value $.01 per share, for each share of Cornell common stock, which we refer to as the stock consideration; or (ii) the right to receive cash consideration equal to the greater of (x) the fair market value of one share of GEO common stock plus $6.00 or (y) the fair market value of 1.3 shares of GEO common stock, which we refer to as the cash consideration. The stock consideration and cash consideration are collectively referred to as the merger consideration. Cornell stockholders desiring to receive a combination of GEO common stock and cash may do so by making a stock election with respect to a portion of their shares and a cash election with respect to their remaining shares. If a Cornell stockholder fails to make an election, the holder will receive the stock consideration. In order to preserve the tax-deferred treatment of the transaction, no more than 20% of the outstanding shares of Cornell common stock may be exchanged for the cash consideration. If cash elections are made with respect to more than 20% of Cornell’s shares, the excess over 20% shall be treated as a stock election and will be exchanged for shares of GEO common stock. Additionally, if cash elections are made such that the aggregate cash consideration would exceed $100.0 million, then GEO may elect, in its sole discretion, to pay such excess amount in shares of GEO common stock or in cash. GEO intends to pay such excess amount in cash.
 
The combined company will be named The GEO Group, Inc. and the shares of the combined company will continue to be traded on the New York Stock Exchange, or the NYSE, under the symbol “GEO.” GEO shareholders will continue to own their existing shares after the merger. On [          ], 2010, the closing price per share of GEO common stock as reported by the NYSE was $[     ]. On [          ], 2010, the closing price per share of Cornell common stock as reported by the NYSE was $[     ]. You are urged to obtain current market quotations for the shares of GEO and Cornell.
 
YOUR VOTE IS IMPORTANT. The merger cannot be completed unless holders of GEO common stock vote to approve the issuance of GEO common stock, which we refer to as the GEO share issuance, in connection with the merger, and Cornell stockholders vote to adopt the merger agreement.
 
The GEO board of directors recommends that GEO shareholders vote “FOR” the GEO share issuance in connection with the merger, “FOR” the amendments to The GEO Group, Inc. 2006 Stock Incentive Plan and “FOR” the adjournment of the GEO special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposals. The Cornell board of directors recommends that Cornell stockholders vote “FOR” the adoption of the merger agreement and “FOR” the adjournment of the Cornell special meeting, if necessary, to solicit additional proxies in favor of the adoption of the merger agreement.
 
GEO and Cornell will each hold a special meeting of their respective shareholders and stockholders to vote on these proposals. Whether or not you plan to attend your company’s special meeting, please take the time to cause your shares to be voted by completing and mailing the enclosed proxy card or submitting your proxy by telephone or through the Internet, using the procedures in the proxy voting instructions included with your proxy card. Even if you return the proxy, you may attend the special meeting and vote your shares in person at the meeting.
 
This joint proxy statement/prospectus describes the proposed merger and related transactions in more detail. GEO and Cornell encourage you to read this entire joint proxy statement/prospectus carefully, including the merger agreement, which is included as Annex A, and the section discussing “Risk Factors” relating to the merger and the combined company beginning on page 22.
 
GEO and Cornell look forward to the successful combination of the two companies.
 
     
     
George C. Zoley
Chairman of the Board of Directors and
Chief Executive Officer,
The GEO Group, Inc. 
  James E. Hyman
Chairman of the Board of Directors,
Chief Executive Officer and President
Cornell Companies, Inc.
 
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger described in this joint proxy statement/prospectus or the GEO common stock to be issued pursuant to the merger, or determined if this joint proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.
 
This joint proxy statement/prospectus is dated [          ], 2010 and, together with the accompanying proxy card, is first being mailed or otherwise delivered to GEO shareholders and Cornell stockholders on or about [          ], 2010.


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THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES
ADDITIONAL INFORMATION
 
This joint proxy statement/prospectus incorporates by reference important business and financial information about GEO and Cornell from other documents filed with the Securities and Exchange Commission, or the SEC, that are not included in or delivered with this joint proxy statement/prospectus. These SEC filings are available to the public at the website maintained by the SEC at http://www.sec.gov and at the SEC’s public reference room located at 100 F Street, N.E., Room 1024, Washington, DC 20549. This information is available to you without charge upon your written or oral request. For a list of the documents incorporated by reference into this joint proxy statement/prospectus and more information on how you can obtain these filings, see “Where You Can Find More Information” beginning on page 126. You can obtain electronic or hardcopy versions of the documents that are incorporated by reference into this joint proxy statement/prospectus, without charge, from the Investor Relations section of the appropriate company’s website or by requesting them in writing or by telephone, in each case as set forth below:
 
             
if you are a GEO shareholder:
  if you are a Cornell stockholder:
Electronic:
  www.geogroup.com
Pablo E. Paez
Director, Corporate Relations
The GEO Group, Inc.
Phone: (866) 301-4436
E-mail: ppaez@geogroup.com
  Electronic:   www.cornellcompanies.com
Charles Seigel
Vice President
Cornell Companies, Inc.
Phone: (888) 624-0816
Email: InvestorRelations@cornellcompanies.com
By Mail:
  The GEO Group, Inc.
One Park Place, Suite 700
621 Northwest 53rd Street
Boca Raton, Florida 33487
Attention: Director, Corporate Relations
  By Mail:   Cornell Companies, Inc.
1700 West Loop South,
Suite 1500
Houston, Texas 77027
Attention: Investor
Relations
E-mail Address:
  ppaez@geogroup.com   E-mail Address:   InvestorRelations@cornellcompanies.com
By Telephone:
  (866) 301-4436   By Telephone:   (888) 624-0816
 
IF YOU ARE A CORNELL STOCKHOLDER AND YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY [          ], 2010 IN ORDER TO RECEIVE THEM NO LATER THAN FIVE DAYS BEFORE THE ELECTION DEADLINE. YOU WILL NOT BE CHARGED FOR ANY OF THE DOCUMENTS YOU REQUEST.
 
IF YOU ARE A GEO SHAREHOLDER AND YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY [          ], 2010 IN ORDER TO RECEIVE THEM NO LATER THAN FIVE DAYS BEFORE GEO’S SPECIAL MEETING. YOU WILL NOT BE CHARGED FOR ANY OF THE DOCUMENTS YOU REQUEST.
 
SUBMITTING A PROXY ELECTRONICALLY, BY TELEPHONE OR BY MAIL
 
GEO shareholders of record on [          ], 2010 may submit their proxies as follows:
 
  •  Through the Internet, by visiting the website established for that purpose at www. [          ].com and following the instructions;
 
  •  By telephone, by calling the toll-free number [          ] in the United States, Canada or Puerto Rico on a touch-tone phone and following the recorded instructions; or
 
  •  By mail, by marking, signing, and dating the enclosed proxy card and returning it in the postage-paid envelope provided or returning it pursuant to the instructions set out in the proxy card.
 
Cornell stockholders of record on [          ], 2010 may submit their proxies as follows:
 
  •  Through the Internet, by visiting the website established for that purpose at www.[          ].com and following the instructions;
 
  •  By telephone, by calling the toll-free number [          ] in the United States, Canada or Puerto Rico on a touch-tone phone and following the recorded instructions; or
 
  •  By mail, by marking, signing, and dating the enclosed proxy card and returning it in the postage-paid envelope provided or returning it pursuant to the instructions provided in the proxy card.
 
If you are a beneficial owner, please refer to your proxy card or the information forwarded by your bank, broker or other holder of record to see which options are available to you.


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(GEO LOGO)
 
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To Be Held On [          ], 2010
 
Dear GEO Shareholder:
 
The GEO Group, Inc. is pleased to invite you to attend a special meeting of the shareholders of GEO, which will be held on [          ], 2010 at [  ] a.m., Eastern time, at [          ].
 
The purpose of the GEO special meeting is to consider and to vote upon the following proposals:
 
  •  a proposal to approve the issuance of shares of GEO common stock and other securities convertible into or exercisable for shares of GEO common stock, which we refer to as the GEO share issuance, in connection with the transactions contemplated by the Agreement and Plan of Merger, dated as of April 18, 2010, among GEO, GEO Acquisition III, Inc., a wholly owned subsidiary of GEO formed for the purpose of the merger, and Cornell Companies, Inc.;
 
  •  a proposal to approve amendments to The GEO Group, Inc. 2006 Stock Incentive Plan, which we refer to as the 2006 Plan, to increase the number of shares of common stock subject to awards under the 2006 Plan; and
 
  •  a proposal to approve an adjournment of the GEO special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposals.
 
The GEO board of directors has determined that the GEO share issuance in connection with the merger and the amendments to the 2006 Plan are advisable and in the best interests of GEO and its shareholders and recommends that GEO shareholders vote “FOR” the GEO share issuance in connection with the merger, “FOR” the amendments to the 2006 Plan and “FOR” the adjournment of the GEO special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposals.
 
GEO and Cornell cannot complete the merger unless the GEO share issuance is approved by the affirmative vote of holders of shares of GEO common stock representing a majority of votes cast on the proposal, provided that the total number of votes cast on the proposal must represent a majority of the total number of shares of GEO common stock issued and outstanding on the record date for the GEO special meeting.
 
Your vote is very important. Your failure to vote will make it more difficult to approve the GEO share issuance.
 
The close of business on [          ], 2010 has been fixed as the record date, which is referred to as the GEO record date. Only holders of record of GEO common stock on the GEO record date are entitled to notice of, and to vote at, the GEO special meeting or any adjournments or postponements of the GEO special meeting. A list of the holders of GEO common stock entitled to vote at the GEO special meeting will be available for examination by any GEO shareholder, for any purpose germane to the GEO special meeting, at GEO’s principal executive offices at One Park Place, Suite 700, 621 Northwest 53rd Street, Boca Raton, Florida 33487, for ten days before the GEO special meeting, during normal business hours, and at the time and place of the GEO special meeting as required by law.
 
GEO directs your attention to the joint proxy statement/prospectus accompanying this notice for a more complete statement regarding the matters proposed to be acted upon at the GEO special meeting. You are encouraged to read the entire joint proxy statement/prospectus carefully, including the merger agreement, which is included as Annex A to the joint proxy statement/prospectus, and the section discussing “Risk Factors” beginning on page 22.


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SO THAT YOUR SHARES WILL BE REPRESENTED WHETHER OR NOT YOU ATTEND THE GEO SPECIAL MEETING, PLEASE SUBMIT A PROXY AS SOON AS POSSIBLE BY MAIL, BY TELEPHONE OR THROUGH THE INTERNET. INSTRUCTIONS ON THESE DIFFERENT WAYS TO SUBMIT YOUR PROXY ARE FOUND ON THE ENCLOSED PROXY FORM. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE GEO SPECIAL MEETING. YOUR VOTE IS IMPORTANT, SO PLEASE VOTE YOUR SHARES AS SOON AS POSSIBLE.
 
By Order of the Board of Directors,
 
    
George C. Zoley
Chairman of the Board of Directors and
Chief Executive Officer
 
[          ], 2010


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(CORNELL LOGO)
 
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On [          ], 2010
 
Dear Cornell Stockholder:
 
Cornell Companies, Inc. is pleased to invite you to attend a special meeting of the stockholders of Cornell which will be held on [          ], 2010 at [  ] a.m., Central time, at [          ].
 
The purpose of the Cornell special meeting is to consider and to vote upon the following proposals:
 
  •  a proposal to adopt the Agreement and Plan of Merger, dated as of April 18, 2010, among The GEO Group, Inc., GEO Acquisition III, Inc., a wholly owned subsidiary of GEO formed for the purpose of the merger, and Cornell Companies, Inc., a copy of which is attached as Annex A to the joint proxy statement/prospectus, pursuant to which Cornell will become a wholly owned subsidiary of GEO; and
 
  •  a proposal to approve an adjournment of the Cornell special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal.
 
The Cornell board of directors has determined that the merger agreement and the transactions contemplated by it, including the merger, are advisable and in the best interests of Cornell and its stockholders and recommends that Cornell stockholders vote “FOR” the adoption of the merger agreement and “FOR” the adjournment of the Cornell special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal.
 
GEO and Cornell cannot complete the merger unless the proposal to adopt the merger agreement is approved by holders of a majority of the total number of shares of Cornell common stock issued and outstanding on the record date for the Cornell special meeting.
 
Your vote is very important. Abstentions and broker non-votes will have the same effect as a vote against approval of the merger agreement.
 
The close of business on [          ], 2010 has been fixed as the record date, which is referred to as the Cornell record date. Only holders of record of Cornell common stock on the Cornell record date are entitled to notice of, and to vote at, the Cornell special meeting or any adjournments or postponements of the Cornell special meeting. A list of Cornell stockholders entitled to vote at the Cornell special meeting will be available for examination by any Cornell stockholder for any purpose germane to the Cornell special meeting, at Cornell’s principal executive offices at 1700 West Loop South, Suite 1500, Houston, Texas 77027, for ten days before the Cornell special meeting, during normal business hours, and at the time and place of the Cornell special meeting as required by law.
 
Cornell directs your attention to the joint proxy statement/prospectus accompanying this notice for more detailed information regarding the matters proposed to be acted upon at the Cornell special meeting. You are encouraged to read the entire joint proxy statement/prospectus carefully, including the merger agreement, which is included as Annex A to the joint proxy statement/prospectus, and the section discussing “Risk Factors” beginning on page 22.


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SO THAT YOUR SHARES WILL BE REPRESENTED WHETHER OR NOT YOU ATTEND THE CORNELL SPECIAL MEETING, PLEASE SUBMIT A PROXY AS SOON AS POSSIBLE BY MAIL, BY TELEPHONE OR THROUGH THE INTERNET. INSTRUCTIONS ON THESE DIFFERENT WAYS TO SUBMIT YOUR PROXY ARE FOUND ON THE ENCLOSED PROXY FORM. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE CORNELL SPECIAL MEETING. YOUR VOTE IS IMPORTANT, SO PLEASE VOTE YOUR SHARES AS SOON AS POSSIBLE.
 
By Order of the Board of Directors,
 
    
James E. Hyman
Chairman of the Board, Chief Executive
Officer and President
 
[          ], 2010


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QUESTIONS AND ANSWERS ABOUT THE MERGER
 
Q. Why am I receiving these materials?
 
A. GEO’s board of directors and the Cornell board of directors have approved a merger agreement pursuant to which a wholly owned subsidiary of GEO will merge with and into Cornell, with Cornell surviving the merger and becoming a wholly owned subsidiary of GEO. In order to complete the merger, GEO shareholders must vote to approve the issuance of shares of GEO common stock to Cornell stockholders in the merger, and Cornell stockholders must vote to adopt the merger agreement.
 
Additionally, GEO is seeking approval to amend the 2006 Plan to increase the number of shares of common stock subject to awards under the 2006 Plan by 2,000,000, from 2,400,000 to 4,400,000, and make other related changes to numerical thresholds in the 2006 Plan. The 2006 Plan, as amended and restated to reflect (i) the proposed amendments to the 2006 Plan and (ii) prior amendments that have been adopted and approved since the 2006 Plan’s initial adoption, is attached as Annex F to this joint proxy statement/prospectus.
 
GEO and Cornell will hold separate special meetings of their respective shareholders and stockholders to obtain these approvals. This document is the joint proxy statement for GEO and Cornell to solicit proxies for their respective special meetings. It is also the prospectus of GEO regarding the shares of GEO common stock to be issued as contemplated by the merger agreement. This document contains important information about the proposed merger and the special meetings of GEO and Cornell, and you should read it carefully.
 
Q: What will happen in the merger?
 
A: In the merger, GEO Acquisition III, Inc., a Delaware corporation and a wholly owned subsidiary of GEO, will be merged with and into Cornell, referred to as the merger, with Cornell surviving the merger and becoming a wholly owned subsidiary of GEO. Immediately following the merger, GEO will continue to be named “The GEO Group, Inc.” and will be the parent company of Cornell. As a result of the merger Cornell common stock will no longer be publicly traded.
 
Q: What will I receive in the merger?
 
A: GEO Shareholders.  Each share of GEO common stock held by GEO shareholders immediately before the merger will continue to represent one share of common stock of the combined company after the effective time of the merger. GEO shareholders will receive no consideration in the merger.
 
Cornell Stockholders.  At the effective time of the merger, each share of common stock of Cornell, par value $.001 per share, issued and outstanding immediately prior to the effective time of the merger will be cancelled and converted into, at the option of the holder, the right to receive either: (i) 1.3 shares of common stock of GEO, par value $.01 per share, or (ii) the right to receive cash consideration equal to the greater of (x) the fair market value of one share of GEO common stock plus $6.00 or (y) the fair market value of 1.3 shares of GEO common stock. Cornell stockholders desiring to receive a combination of GEO common stock and cash may do so by making a stock election with respect to a portion of their shares and a cash election with respect to their remaining shares. If a Cornell stockholder fails to make an election, the holder will receive the stock consideration. “Fair market value” of GEO common stock for the purpose of determining the cash consideration means the average of the daily closing prices per share of GEO common stock for the ten consecutive trading days on which shares of GEO common stock are actually traded (as reported on the NYSE) ending on the last trading day immediately preceding the tenth business day preceding the closing date.
 
In order to preserve the tax-deferred treatment of the transaction, no more than 20% of the outstanding shares of Cornell common stock may be exchanged for the cash consideration. If cash elections are made with respect to more than 20% of Cornell’s shares, the excess over 20% shall be treated as a stock election and will be exchanged for shares of GEO common stock. In such event, a pro rata portion (rounded up to the nearest whole share) of each holder’s shares of Cornell common stock with respect to which an election was made to elect cash consideration shall instead be converted to GEO common stock. If cash elections are made such that the aggregate cash consideration to be received by Cornell stockholders would exceed $100 million, such excess amount may be paid at the election of GEO in shares of GEO common stock or in cash.


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Q: Can Cornell stockholders elect whether to receive cash or stock consideration for their Cornell shares?
 
A: Yes, we have enclosed with this joint proxy statement/prospectus election materials which will allow Cornell stockholders to elect, with respect to each share of Cornell common stock owned, stock consideration or cash consideration. Cornell stockholders desiring to receive a combination of GEO common stock and cash may do so by making a stock election with respect to a portion of their shares and a cash election with respect to their remaining shares.
 
Q: If a Cornell stockholder elects to receive all of the merger consideration in cash, will that stockholder be assured of receiving only cash?
 
A: No. GEO will not pay cash consideration for more than 20% of the shares of Cornell common stock and any such excess of elections for cash consideration shall be paid in GEO common stock. Additionally, if the cash elections would result in an aggregate of more than $100 million of cash consideration, GEO may in its sole discretion pay such excess consideration in cash or shares of GEO common stock.
 
Q: If a Cornell stockholder elects to receive all of the merger consideration in GEO common stock, will that stockholder be assured of receiving only GEO common stock?
 
A: Yes. The Cornell stockholders electing to receive stock consideration and the Cornell stockholders failing to make an election will receive stock consideration and no portion of such election shall be pro-rated into cash consideration.
 
Q: How do Cornell stockholders elect which form of consideration they would prefer to receive in the merger?
 
A: To make an election, Cornell stockholders as of the record date must properly complete and sign the election form and letter of transmittal sent to them together with this joint proxy statement/prospectus, and send those documents and the certificates (or properly completed notice of guaranteed delivery) for their shares to [ ], the exchange agent, at the address listed in the election form and letter of transmittal by the election deadline, which is 5:00 p.m., New York time, on [          ], 2010.
 
If you own shares of Cornell common stock in “street name” through a broker or other financial institution, you will receive or should seek instructions from the institution holding your shares concerning how to make your election. Any instructions must be given to your broker or other financial institution sufficiently in advance of the election deadline for record holders in order to allow your broker or financial institution sufficient time to cause the record holder of your shares to make an election as described above. Therefore, you should carefully read any materials you receive from your broker. If you instruct a broker to submit an election for your shares, you must follow your broker’s directions for changing those instructions. Please see “The Merger Agreement — Merger Consideration — Election Procedures” beginning on page 73 for additional information.
 
All elections are subject to the proration procedures as further described herein. If you do not make a valid election your shares will be considered non-election shares, and when the merger is completed you will be entitled to receive the stock consideration.
 
Q: May Cornell stockholders change or revoke their election after they have mailed their completed election form and letter of transmittal?
 
A: If a Cornell stockholder is a holder of Cornell common stock as of the record date, the holder may change the holder’s election or change the number of shares for which the holder has made an election at any time prior to the election deadline by sending a signed written notice to the exchange agent identifying the shares of Cornell common stock for which the holder is changing the election along with a properly completed revised election form. For a change of an election to be effective, it must be received by the exchange agent prior to the election deadline. Shares of Cornell common stock as to which an election has been revoked after the election deadline will be deemed non-election shares, and no new election as to such shares may be made after the election deadline. If a Cornell stockholder holds its shares in “street name,” the holder must follow the broker’s instructions for changing or revoking an election.


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Q: When do GEO and Cornell expect to complete the merger?
 
A: GEO and Cornell are working to complete the merger as quickly as practicable. GEO and Cornell expect to complete the merger after all conditions to the merger in the merger agreement are satisfied or waived, including the receipt of GEO shareholder approval at the special meeting of shareholders of GEO and receipt of Cornell stockholder approval at the special meeting of Cornell stockholders and the receipt of all required regulatory approvals. See “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 83. GEO and Cornell currently expect to complete the merger during the third quarter of 2010. However, because fulfillment of some of the conditions to completing the merger are outside of either company’s control, we cannot predict the actual timing or if the merger will be completed at all.
 
Q: When and where are the GEO and Cornell special meetings?
 
A: GEO Special Meeting.  A special meeting of GEO shareholders, which is referred to as the GEO special meeting, will be held on [          ], 2010 at [  ] a.m., Eastern time, at [          ], to consider and vote on the proposals related to the merger and amendments to the 2006 Plan.
 
Cornell Special Meeting.  A special meeting of Cornell stockholders, which is referred to as the Cornell special meeting, will be held on [          ], 2010 at [  ]a.m., Central time, at [          ], to consider and vote on the proposals related to the merger.
 
Q: What are the quorum requirements for the GEO special meeting?
 
A: Under Florida law and GEO’s bylaws, a quorum of GEO’s shareholders at the GEO special meeting is necessary to transact business. A majority of shares of stock issued and outstanding and entitled to vote, represented in person or by proxy, will constitute a quorum for the transaction of business at the GEO special meeting.
 
Q: What are the quorum requirements for the Cornell special meeting?
 
A: Under Delaware law and Cornell’s Bylaws, a quorum of Cornell’s stockholders at the Cornell special meeting is necessary to transact business. The presence of holders representing a majority of the votes of all outstanding Cornell common stock on the record date entitled to vote at the Cornell special meeting will constitute a quorum for the transaction of business at the Cornell special meeting.
 
Q: Why is my vote important?
 
A: In order to complete the merger, GEO shareholders must approve of the GEO share issuance and Cornell stockholders must vote to adopt the merger agreement.
 
Q: What votes of GEO shareholders are required to complete the merger?
 
A: In order to complete the merger, GEO shareholders must approve the issuance of GEO common stock and other securities convertible into or exercisable for shares of GEO common stock in connection with the merger, which is referred to as the GEO share issuance.
 
The GEO share issuance requires the affirmative vote of holders of shares of GEO common stock representing a majority of votes cast on the proposal, provided that the total number of votes cast on the proposal must represent a majority of the total number of shares of GEO common stock issued and outstanding on the record date for the GEO special meeting.
 
If you are a GEO shareholder, any of your shares as to which you abstain will have the same effect as a vote “AGAINST” the GEO share issuance.
 
The approval is referred to as the GEO shareholder approval.
 
The approval of the merger agreement and the closing of the merger are not conditioned upon approval of the amendments to the 2006 Plan.
 
The GEO board of directors recommends that GEO shareholders vote “FOR” the GEO share issuance in connection with the merger.


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Q: What votes of Cornell stockholders are required to complete the merger?
 
A: Cornell stockholders are being asked to adopt the merger agreement, which requires the approval of holders of a majority of the total number of shares of Cornell common stock issued and outstanding on the record date for the Cornell special meeting, which is referred to as the Cornell stockholder approval.
 
If you are a Cornell stockholder, any of your shares as to which you abstain or which are not voted will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement.
 
The Cornell board of directors recommends that Cornell stockholders vote “FOR” the adoption of the merger agreement.
 
Q. What votes of GEO shareholders are required to amend the 2006 Plan?
 
A. The approval of the amendments to the 2006 Plan requires the affirmative vote of holders of shares of GEO common stock representing a majority of votes cast in the proposal, provided that the total number of votes cast on the proposal must represent a majority of the total number of shares of GEO common stock issued and outstanding on the record date for the GEO special meeting.
 
If you are a GEO shareholder, any of your shares as to which you abstain or which are not voted will have the same effect as a vote “AGAINST” the amendments to the 2006 Plan.
 
Q. Why are GEO shareholders being asked to approve the amendments to the 2006 Plan?
 
A. GEO is seeking approval to amend the 2006 Plan to increase the number of shares of common stock subject to the awards under the 2006 Plan by 2,000,000 from 2,400,000 to 4,400,000, and make other related changes to numerical thresholds in the 2006 Plan. GEO is seeking to increase in the number of shares of common stock subject to the plan in order to provide adequate availability to issue new awards to Cornell employees who will become GEO employees upon the closing of the merger as well as GEO employees who will be involved in the completion of the merger and the integration of Cornell’s operations. GEO’s board of directors believes that the equity awards are a key component of overall employee compensation and will help maintain GEO’s performance-oriented culture and further align the interests of GEO’s employees and shareholders.
 
Q. Is the closing of the merger between GEO and Cornell contingent upon GEO shareholders approving the amendments to the 2006 Plan?
 
A. No. Although GEO’s board of directors believe that the amendments to the 2006 Plan are important to align the interests of employees of the combined company with the interests of GEO’s shareholders, the approval of the merger agreement and the consummation of the merger between GEO and Cornell are not contingent upon GEO shareholders approving amendments to the 2006 Plan.
 
Q. Are any Cornell stockholders already committed to vote in favor of any of the special meeting proposals?
 
A. Under a voting agreement with GEO, which is attached as Annex B to this joint proxy statement/prospectus, certain significant stockholders of Cornell have agreed to vote all of their shares of Cornell common stock in favor of the Cornell merger agreement proposal and have granted to GEO a proxy to vote their shares in favor of the proposal. As of April 15, 2010, the Cornell stockholders who are parties to the voting agreement collectively beneficially owned (with sole or shared voting power) 2,747,185 shares, or 18.4%, of the Cornell common stock outstanding and entitled to vote at the special meeting. For more information, see “The Merger Agreement — Voting Agreement.”
 
Q. How may the Cornell stockholders vote their shares for the special meeting proposals presented in this joint proxy statement/prospectus?
 
A. Cornell’s stockholders have four voting options:
 
• over the internet, which we encourage if you have internet access, by accessing the web page at [  ] and following the on-screen instructions;
 
• by telephone, by calling toll-free [(          )          -          ] and following the instructions;
 
• by mail, after completing, signing, and dating the enclosed proxy card and mailing it in the enclosed, prepaid and addressed envelope; or


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• by attending the special meeting and voting your shares in person.
 
Proxies submitted through the Internet or by telephone must be received by 11:59 p.m., Central Standard Time, on [          , 2010].
 
Q. Will Cornell’s stockholders be able to vote their shares at the Cornell special meeting?
 
A. Yes. Submitting a proxy will not affect the right of any Cornell stockholder to vote in person at the special meeting. Cornell will distribute written ballots to any Cornell stockholder who requests, and is entitled, to vote at the special meeting. If a Cornell stockholder holds shares in “street name,” the stockholder must request a proxy from the stockholder’s broker or bank in order to vote those shares in person at the special meeting.
 
Q. What do Cornell’s stockholders need to do now?
 
A. After carefully reading and considering the information contained in this joint proxy statement/prospectus, Cornell’s stockholders are requested to complete and return their proxies as soon as possible. The proxy card will instruct the persons named on the proxy card to vote the stockholder’s Cornell shares at the special meeting as the stockholder directs. If a stockholder signs and sends in a proxy card and does not indicate how the stockholder wishes to vote, the proxy will be voted “FOR” both of the special meeting proposals.
 
Q. May a Cornell stockholder change the stockholder’s vote after submitting a proxy?
 
A. Yes. A Cornell stockholder may change a vote at any time before the stockholder’s proxy is voted at the Cornell special meeting. A proxy submitted through the Internet or by telephone may be revoked by executing a later-dated proxy card, by subsequently submitting a proxy through the Internet or by telephone, or by attending the special meeting and voting in person. A stockholder executing a proxy card also may revoke the proxy at any time before it is voted by giving written notice revoking the proxy to Cornell’s Corporate Secretary, by subsequently filing another proxy card bearing a later date or by attending the special meeting and voting in person. Attending the special meeting will not automatically revoke a stockholder holder’s prior submission of a proxy (by Internet, telephone or in writing). A revocation of a proxy shall also be deemed a revocation of an election with respect to the merger consideration. All written notices of revocation or other communications with respect to revocation of proxies should be addressed to:
 
Cornell Companies, Inc.
1700 West Loop South, Suite 1500
Houston, Texas 77027
Attention: Corporate Secretary
 
If your shares are held in the name of a broker or nominee, you may change your vote by submitting new voting instructions to your broker or nominee. If you need assistance in changing or revoking your proxy, please contact [          ], toll-free at [          ].
 
Q. If I am a Cornell stockholder, who can help answer my questions?
 
A. If you have any questions about the merger or the special meeting, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you should contact Cornell’s proxy solicitor, at the following address or phone number:
 
[Proxy Solicitor]
[Address]
 
Q. Are any of GEO’s shareholders already committed to vote in favor of any of the special meeting proposals?
 
A. None of GEO’s shareholders are committed to vote in favor of any of the special meeting proposals.
 
Q. How may GEO’s shareholders vote their shares for the special meeting proposals presented in this joint proxy statement/prospectus?
 
A. GEO’s shareholders have four voting options:
 
• over the internet, which we encourage if you have internet access, by accessing the web page at [  ] and following the on-screen instructions;


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• by telephone, by calling toll-free [(          )          -          ] and following the instructions;
 
• by mail, after completing, signing, and dating the enclosed proxy card and mailing it in the enclosed, prepaid and addressed envelope; or
 
• by attending the special meeting and voting your shares in person.
 
Proxies submitted through the Internet or by telephone must be received by 11:59 p.m., Eastern Standard Time, on [          , 2010].
 
Q. Will GEO’s shareholders be able to vote their shares at the GEO special meeting?
 
A. Yes. Submitting a proxy will not affect the right of any GEO shareholder to vote in person at the special meeting. GEO will distribute written ballots to any GEO shareholder who requests, and is entitled, to vote at the special meeting. If a GEO shareholder holds shares in “street name,” the shareholder must request a proxy from the shareholder’s broker or bank in order to vote those shares in person at the special meeting.
 
Q. What do GEO’s shareholders need to do now?
 
A. After carefully reading and considering the information contained in this joint proxy statement/prospectus, GEO’s shareholders are requested to complete and return their proxies as soon as possible. The proxy card will instruct the persons named on the proxy card to vote the GEO shareholder’s shares at the special meeting as the shareholder directs. If a shareholder signs and sends in a signed proxy card and does not indicate how the shareholder wishes to vote, the proxy will be voted “FOR” the proposal to approve the GEO share issuance, the proposal to amend the 2006 Plan, and the proposal to approve an adjournment to the special meeting, if necessary.
 
Q. May a GEO shareholder change his/her vote after submitting a proxy?
 
A. Yes. A GEO shareholder may change a vote at any time before the shareholder’s proxy is voted at the GEO special meeting. A proxy submitted through the Internet or by telephone may be revoked by executing a later-dated proxy card, by subsequently submitting a proxy through the Internet or by telephone, or by attending the special meeting and voting in person. A shareholder executing a proxy card also may revoke the proxy at any time before it is voted by giving written notice revoking the proxy to GEO’s secretary, by subsequently filing another proxy card bearing a later date or by attending the special meeting and voting in person. Attending the special meeting will not automatically revoke a shareholder’s prior submission of a proxy (by Internet, telephone or in writing). All written notices of revocation or other communications with respect to revocation of proxies should be addressed to:
 
The GEO Group, Inc.
One Park Place, Suite 700
621 NW 53rd Street
Boca Raton, Florida 33487
Attention: Corporate Secretary
 
If your shares are held in the name of a broker or nominee, you may change your vote by submitting new voting instructions to your broker or nominee. If you need assistance in changing or revoking your proxy, please contact [          ], toll-free at [          ].
 
Q. If I am a GEO shareholder, who can help answer my questions?
 
A. If you have any questions about the merger or the special meeting, or if you need additional copies of this joint proxy statement/prospectus or the enclosed proxy card, you should contact GEO’s proxy solicitor, at the following address or phone number:
 
[Proxy Solicitor]
[Name]
 
Q: If my shares are held in “street name” by my broker, will my broker vote my shares for me?
 
A: No. Your broker is not permitted to decide how your shares should be voted. Your broker will only vote your shares on a proposal if you provide your broker with voting instructions on that proposal. You should instruct your broker to vote your shares by following the directions that your broker provides you. Please review the


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voting information form used by your broker to see if you can submit your voting instructions by telephone or Internet.
 
A broker non-vote occurs when a beneficial owner fails to provide voting instructions to his or her broker as to how to vote the shares held by the broker in street name and the broker does not have discretionary authority to vote without instructions. See “The GEO Special Meeting” beginning on page 88 and “The Cornell Special Meeting” beginning on page 92.
 
Q: What if I fail to instruct my broker with respect to those items that are necessary to consummate the merger?
 
A: If you are a GEO shareholder, under the NYSE rules, a broker non-vote will not be considered a vote cast on the GEO share issuance. Additionally, a broker non-vote will not be considered a vote cast on the amendments to the 2006 Plan. Because the proposals at the GEO special meeting are not considered “routine” under NYSE rules, brokers are not entitled to vote on such proposals without receiving voting instructions from a beneficial owner. Broker non-votes will not be counted towards a quorum at the GEO special meeting.
 
If you are a Cornell stockholder, a broker non-vote will have the same effect as a vote “AGAINST” the proposal to adopt the merger agreement. Because the proposals at the Cornell special meeting are not considered “routine” under NYSE rules, brokers are not entitled to vote on such proposals without receiving voting instructions from a beneficial owner. As a result, broker non-votes will not be counted towards a quorum at the Cornell special meeting.
 
Q: Should Cornell stockholders send in their stock certificates now?
 
A: If a Cornell stockholder is a record holder and the holder wishes to make an election, the holder must send the stock certificates representing the shares of Cornell common stock with respect to which the holder is making an election with the holder’s completed election form and letter of transmittal. Please do not send your election form and stock certificates with your proxy card for the special meeting. Your election form and stock certificates are to be submitted separately from your proxy card. If a Cornell stockholder does not make an election with respect to all of the holder’s shares, the holder will receive a letter of transmittal from the exchange agent promptly after the completion of the merger with instructions for sending in the holder’s stock certificates. If a Cornell stockholder owns shares of Cornell common stock in “street name” through a broker or other financial institution and the holder wishes to make an election, the holder will receive or should seek instructions from the institution holding its shares concerning how to make an election.
 
Q: What if I hold Cornell employee stock options or restricted stock awards?
 
A: In the merger, all outstanding Cornell employee stock options will vest. All Cornell stock options which are outstanding and unexercised immediately following the effective time of the merger and do not, by their terms, terminate on the effective date will be assumed by GEO, and these options will entitle the holder to receive GEO common stock as adjusted to account for the stock consideration exchange ratio of 1.3 shares of GEO common stock, referred to herein as the exchange ratio. Cornell will make reasonable best efforts to ensure that, immediately prior to the effective time, the following occurs: (i) each outstanding option or right to acquire Cornell common stock under Cornell’s employee stock purchase plan will automatically be exercised or deemed exercised, and (ii) in lieu of the shares of Cornell common stock otherwise issuable upon the exercise of each such option or right, the holder of such option or right will have the right to elect to receive from GEO, following the effective time, either the stock consideration or the cash consideration, subject to the same prorations and adjustments set forth in “The Merger — Merger Consideration” beginning on page 72, except to the extent that the holder of such option or right elects not to exercise the holder’s options and to withdraw the entire balance of holder’s Cornell employee stock purchase plan account prior to the effective time. All restricted stock awards will vest and be automatically converted into shares of GEO common stock, as adjusted to account for the exchange ratio. See “The Merger Agreement — Cornell Options and Other Equity-based Awards” beginning on page 74.


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Q. Will I be able to sell the shares of GEO common stock that I receive in the merger?
 
A. You may freely trade the shares of GEO common stock issued in the merger, unless you are deemed an affiliate of GEO. GEO shares are quoted on the NYSE under the symbol “GEO.” Persons who are considered “affiliates” (generally directors, officers and 10% or greater shareholders) of GEO may resell shares of GEO common stock received in the merger only if the shares are registered for resale under the Securities Act or an exemption is available. We will notify you if we believe you are deemed an affiliate of GEO as a result of the merger.
 
Q: Do I have appraisal rights?
 
A: No. Neither Cornell stockholders nor GEO shareholders have appraisal rights in connection with the merger.
 
Q: What are the material U.S. federal income tax consequences of the merger?
 
A: GEO and Cornell intend for the merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, referred to herein as the Code, for U.S. federal income tax purposes. Accordingly, holders of Cornell common stock will generally not recognize any gain or loss for U.S. federal income tax purposes upon the exchange of their shares of Cornell common stock for GEO common stock in the merger, except that gain or loss will be recognized on the receipt of cash in lieu of fractional shares and gain (but not loss) will be recognized to the extent of other cash received. Cornell stockholders are urged to review the section of this joint proxy statement/prospectus entitled ‘‘Material Federal Income Tax Consequences of the Merger” beginning on page 64 for more information and to consult their tax advisors as to the U.S. federal income tax consequences of the merger, as well as the effect of state, local, foreign and other tax laws and of any proposed changes to applicable tax laws.
 
Q: Are there risks involved in undertaking the merger?
 
A: Yes. In evaluating the merger, GEO shareholders and Cornell stockholders should carefully consider the factors discussed in “Risk Factors” beginning on page 22 and other information about GEO and Cornell included in the documents incorporated by reference into this joint proxy statement/prospectus.
 
Q. Where can I find more information about the companies?
 
A. You can find more information about GEO and Cornell from the various sources described under the section of this document titled “Where You Can Find More Information” beginning on page 126.


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SUMMARY
 
This summary highlights information contained elsewhere in this joint proxy statement/prospectus. It does not contain all of the information that may be important to you. You are urged to read carefully this entire joint proxy statement/prospectus, including the attached annexes, and the other documents to which this joint proxy statement/prospectus refers you in order for you to understand fully the proposed merger. See “Where You Can Find More Information” beginning on page 126. Each item in this summary refers to the page of this joint proxy statement/prospectus on which that subject is discussed in more detail.
 
The Companies
 
The GEO Group Inc. (see page 70)
One Park Place, Suite 700
621 NW 53rd Street
Boca Raton, Florida 33487
(561) 893-0101
 
www.geogroup.com (The information contained on GEO’s website shall not be deemed part of this joint proxy statement/prospectus.)
 
GEO is a leading provider of government-outsourced services specializing in the management of correctional, detention and mental health and residential treatment facilities in the United States, Canada, Australia, South Africa and the United Kingdom.
 
As of April 4, 2010, GEO managed 56 facilities totaling approximately 52,700 beds worldwide. GEO has an additional 4,325 beds under development at three facilities, including an expansion and renovation of one vacant facility which GEO currently owns, the expansion of one facility GEO currently owns and operates and a new 2,000-bed facility which GEO will manage upon completion. GEO owns three idle facilities totaling 954 beds and two facilities totaling 1,560 beds that are leased to Cornell and other private operators. GEO maintained an average companywide facility occupancy rate of 94.4% for the thirteen weeks ended April 4, 2010, excluding facilities that are either idle or under development.
 
Cornell Companies, Inc. (see page 70)
1700 West Loop South, Suite 1500
Houston, Texas 77027
(713) 623-0790
 
www.cornellcompanies.com (The information contained on Cornell’s website shall not be deemed part of this joint proxy statement/prospectus.)
 
Cornell is a leading provider of correctional, detention, educational, rehabilitation and treatment services outsourced by federal, state, county and local government agencies for adults and juveniles.
 
As of March 31, 2010, Cornell operated 63 facilities among Cornell’s three operating divisions, representing a total operating service capacity of 20,531 beds. Cornell also had five facilities that were vacant, representing additional service capacity of 861 beds. Service capacity is comprised of the number of beds currently available for service in residential facilities and on either the contractual terms or an estimate of the number of clients to be served for non-residential community-based programs. Cornell’s facilities are located in 15 states and the District of Columbia.
 
The Merger
 
The Agreement and Plan of Merger, dated as of April 18, 2010, among The GEO Group, Inc., GEO Acquisition III, Inc. and Cornell Companies, Inc., which is referred to as the merger agreement, is included as Annex A to this joint proxy statement/prospectus. GEO and Cornell encourage you to carefully read the merger agreement in its entirety because it is the principal legal agreement that governs the merger.


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Structure of the Merger (see page 72)
 
Subject to the terms and conditions of the merger agreement and in accordance with Delaware law, GEO Acquisition III, Inc., a wholly owned subsidiary of GEO that was formed for the sole purpose of the merger, will be merged with and into Cornell, with Cornell surviving the merger and becoming a wholly owned subsidiary of GEO. Immediately following the merger, GEO will continue to be named “The GEO Group, Inc.” and will be the parent company of Cornell. Accordingly, after the effective time of the merger, shares of Cornell common stock will no longer be publicly traded.
 
Merger Consideration (see page 72)
 
Cornell Stockholders.  For each share of Cornell common stock, Cornell stockholders may elect to receive either (i) 1.3 shares of GEO common stock or (ii) an amount of cash equal to the greater of (x) the fair market value (as defined below) of one share of GEO common stock plus $6.00 or (y) the fair market value of 1.3 shares of GEO common stock. Cornell stockholders desiring to receive a combination of GEO common stock and cash may do so by making a stock election with respect to a portion of their shares and a cash election with respect to their remaining shares. If a Cornell stockholder fails to make an election, the holder will receive the stock consideration.
 
“Fair market value” of GEO common stock for the purpose of determining the cash consideration means the average of the daily closing prices per share of GEO common stock for the ten consecutive trading days on which shares of GEO common stock are actually traded (as reported on the New York Stock Exchange, or NYSE) ending on the last trading day immediately preceding the tenth business day preceding the closing date.
 
No more than 20% of the shares of Cornell common stock are permitted to be exchanged for the cash consideration. If cash elections are made with respect to more than 20% of the shares of Cornell common stock outstanding immediately before the effective time, the excess over 20% shall be exchanged for shares of GEO common stock, such that only 20% of the shares of Cornell common stock outstanding immediately before the effective time are exchanged for the cash consideration. In such event, a pro rata portion (rounded up to the nearest whole share) of each holder’s shares of Cornell common stock with respect to which an election was made to elect cash consideration shall instead be converted to GEO common stock.
 
If the Cornell stockholders’ election would otherwise result in more than $100.0 million of cash in the aggregate being paid to holders electing cash consideration, GEO may elect, in its sole discretion, to reduce the amount of cash paid to each holder electing cash consideration pro rata based on the number of shares held so that the total cash paid with respect to all Cornell stockholders electing cash consideration is $100.0 million. If the cash consideration otherwise payable to any holder is reduced under this mechanism, such holder shall be entitled to receive GEO common stock equal to the amount of the reduction. GEO intends to pay such excess amount in cash.
 
An election form and letter of transmittal have been enclosed with this joint proxy statement/prospectus pursuant to which Cornell stockholders may elect whether they would prefer to receive GEO common stock or cash in exchange for their Cornell shares. If you were a record holder of Cornell common stock on [               ], 2010, the record date, you should carefully review and follow the instructions included in the election form and the letter of transmittal. To make an election, record holders must properly complete and sign the election form and letter of transmittal and send those documents and the certificates for their shares (or a properly completed notice of guaranteed delivery) to the exchange agent at the address listed in the election form and letter of transmittal by the election deadline, which is 5:00 p.m. New York time, on [               ], 2010. If the merger agreement is terminated, all election forms delivered to the exchange agent on or prior to the date of such termination will be automatically revoked and all share certificates will be returned. If you own shares of Cornell common stock in “street name” through a bank, broker or other financial institution and you wish to make an election, you will receive or should seek instructions from the financial institution holding your shares concerning how to make your election.
 
Please do not send your election form and stock certificates with your proxy card for the special meeting. Your election form and stock certificates are to be submitted separately from your proxy card.
 
All elections are subject to the proration procedures described above. If you do not make a valid election, your shares will be considered non-election shares, and when the merger is completed you will be entitled to receive the stock consideration for non-election shares as described above.


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GEO Shareholders.  GEO shareholders will continue to own their existing shares of GEO common stock after the merger. Each share of GEO common stock will represent one share of common stock in the combined company.
 
Comparative Per Share Market Price and Share Information (see page 18)
 
GEO common stock is listed on the NYSE under the symbol “GEO.” Cornell common stock is listed on the NYSE under the symbol “CRN.” The following table sets forth the closing sale prices of GEO common stock as reported on the NYSE and the closing sale prices of Cornell common stock as reported on the NYSE, each on April 16, 2010, the last trading day before the day on which GEO and Cornell announced the execution of the merger agreement, and on [          ], 2010, the last practicable trading day prior to the printing of this joint proxy statement/prospectus. This table also shows the implied value of a Cornell common share, which was calculated by multiplying the closing price of GEO common stock on those dates by 1.3, which is the total GEO stock consideration in the merger per share of Cornell common stock (assuming that the merger consideration received consists exclusively of GEO common stock).
 
                         
            Implied
            Value
    GEO
  Cornell
  Cornell
    Common
  Common
  Common
    Stock   Stock   Stock
 
April 16, 2010
  $ 19.16     $ 18.47     $ 24.91  
[          ], 2010
  $ [     ]     $ [     ]     $ [     ]  
 
The market prices of both GEO common stock and Cornell common stock will fluctuate before the special meetings and before the merger is completed. Therefore, you should obtain current market quotations for GEO common stock and Cornell common stock.
 
Comparison of Stockholder Rights
 
GEO is a Florida corporation and Cornell is a Delaware corporation. The GEO Amended and Restated Articles of Incorporation, as amended, and the Amended and Restated Bylaws contain provisions that are different from the Cornell Restated Certificate of Incorporation, as amended, and the Third Amended and Restated Bylaws. Upon completion of the merger, Cornell stockholders that receive GEO common stock in the merger will become shareholders of GEO, and their rights will be governed by the Florida Business Corporation Act, GEO’s Amended and Restated Articles of Incorporation, as amended, and GEO’s Amended and Restated Bylaws. No change to GEO’s articles of incorporation or bylaws will be made as a result of the completion of the merger. For a discussion of certain differences among the rights of GEO shareholders and Cornell stockholders, see “Comparison of Stockholder Rights” beginning on page 99.
 
Recommendations to GEO Shareholders and Cornell Stockholders
 
Recommendations to GEO Shareholders.  The GEO board of directors has determined that the GEO share issuance in connection with the merger and the amendments to the 2006 Plan are advisable and in the best interests of GEO and its shareholders. The GEO board of directors recommends that GEO shareholders vote:
 
  •  “FOR” the GEO share issuance in connection with the merger;
 
  •  “FOR” the amendments to the 2006 Plan; and
 
  •  “FOR” the adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposals.
 
For additional information see “The GEO Special Meeting — Board Recommendations” beginning on page 89.


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Recommendations to Cornell Stockholders.  The Cornell board of directors has determined that the merger agreement and the merger contemplated thereby are advisable and in the best interests of Cornell and its stockholders. The Cornell board of directors recommends that Cornell stockholders vote:
 
  •  “FOR” the adoption of the merger agreement; and
 
  •  “FOR” the adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal.
 
For additional information see “The Cornell Special Meeting — Board Recommendations” beginning on page 92.
 
In making its respective recommendation, each board considered those matters set forth under the headings “The Merger — GEO Reasons for the Merger and the Recommendation of GEO’s Board of Directors Relating to the Merger” and “The Merger — Cornell Reasons for the Merger and the Recommendation of the Cornell Board of Directors” beginning on pages 36 and 50, respectively.
 
Opinions of Financial Advisors (see pages 38 and 53)
 
GEO.  In connection with the proposed merger, GEO’s board of directors received separate written opinions, dated April 18, 2010, of GEO’s financial advisors, Barclays Capital Inc., referred to as Barclays Capital, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, referred to as BofA Merrill Lynch, as to the fairness, from a financial point of view and as of the date of such opinions, to GEO of the consideration to be paid by GEO in the merger. The full texts of the written opinions are attached as Annexes C and D, respectively, to this joint proxy statement/prospectus and are incorporated herein by reference. The written opinions set forth, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken by GEO’s financial advisors in rendering their respective opinions. The opinions are addressed to GEO’s board of directors for its use in connection with its evaluation of the merger consideration and relate only to the fairness, from a financial point of view, to GEO of the consideration to be paid by GEO in the merger. The opinions do not in any manner address GEO’s underlying business decision to proceed with or effect the merger or any other matter and are not intended to and do not constitute a recommendation to any shareholder as to how such shareholder should vote or act with respect to the merger or any related matter.
 
Cornell.  In connection with the merger, the Cornell board of directors received an oral opinion, subsequently confirmed by delivery of a written opinion dated April 18, 2010, from Cornell’s financial advisor, Moelis & Company LLC, which is referred to as Moelis & Company, as to the fairness, from a financial point of view and as of the date of such opinion, to the Cornell stockholders of the per share consideration to be received by the Cornell stockholders pursuant to the merger agreement. The full text of Moelis & Company’s written opinion is attached to this joint proxy statement/prospectus as Annex E. Cornell stockholders are encouraged to read Moelis & Company’s opinion carefully in its entirety for a description of the assumptions made, procedures followed, matters considered, qualifications and limitations on the review undertaken by Moelis & Company. Moelis & Company’s opinion was provided for the benefit of the Cornell board of directors in connection with, and for the purpose of, its evaluation of the per share consideration to be received by Cornell from a financial point of view and does not address any other aspect of the merger. The opinion does not address the relative merits of the merger as compared to other business strategies or transactions that might be available with respect to Cornell or Cornell’s underlying business decision to effect the merger. The opinion does not constitute a recommendation to any stockholder as to how to vote or act with respect to the merger.
 
Cornell Options and Other Equity-Based Awards (see page 74)
 
At the effective time of the merger, each outstanding option issued by Cornell to purchase shares of Cornell common stock granted under any stock option or other equity incentive plan, which is outstanding and unexercised immediately following the effective time and which does not, by its terms, terminate on the effective time, whether vested or unvested, which is referred to as a Cornell option, will be assumed by GEO, and these options will entitle the holder to receive GEO common stock as adjusted to account for the exchange ratio, rounded down to the nearest whole number of shares of GEO common stock, on the same terms and conditions as were applicable before the merger (but taking into account any acceleration of Cornell options in connection with the merger). In addition, at the effective time of the merger, each Cornell option that has been assumed by GEO will have an exercise price per


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share equal to the quotient determined by dividing the exercise price per share of Cornell common stock at which such Cornell Option was exercisable immediately prior to the effective time by the exchange ratio rounded up to the nearest whole cent.
 
At the effective time of the merger, each outstanding share of Cornell restricted stock will vest and be automatically converted into GEO common stock as adjusted to account for the exchange ratio. For more information regarding Cornell equity-based awards, please see “The Merger Agreement — Cornell Options and Other Equity-Based Awards” beginning on page 74.
 
Cornell will use reasonable best efforts to ensure that, immediately prior to the effective time, the following occurs: (i) each outstanding option or right to acquire Cornell common stock under Cornell’s employee stock purchase plan will automatically be exercised or deemed exercised, and (ii) in lieu of the shares of Cornell common stock otherwise issuable upon the exercise of each such option or right, the holder of such option or right will have the right to elect to receive from GEO, following the effective time, either the stock consideration or the cash consideration, subject to the same prorations and adjustments set forth in “The Merger — Merger Consideration” above, except to the extent that the holder of such option or right elects not to exercise the holder’s options and to withdraw the entire balance of holder’s Cornell employee stock purchase plan account prior to the effective time.
 
Interests of GEO and Cornell Executive Officers and Directors in the Merger (see pages  50 and 59)
 
When you consider the GEO and Cornell board of directors’ respective recommendations that GEO shareholders and Cornell stockholders vote in favor of the proposals described in this joint proxy statement/prospectus, you should be aware that (1) some GEO executive officers and directors may have interests that may be different from, or in addition to, GEO shareholders’ interests, and (2) some Cornell executive officers and directors may have interests that may be different from, or in addition to, Cornell stockholders’ interests, including their receipt of change in control benefits under existing Cornell employment arrangements, accelerated vesting of Cornell equity-based awards and participation in various benefits plans. The following is a brief summary of the additional interests of executive officers and directors of GEO and Cornell.
 
GEO.  There are no change in control, compensatory, severance payments or benefits that the executive officers, directors, key employees or affiliates of GEO have received or will receive as a result of this transaction, other than potential future awards under GEO’s 2006 Stock Incentive Plan, as amended by the proposed amendments, to GEO directors, employees and consultants who will be involved in the completion of the merger, the integration of Cornell’s operations, as well as the operations of the larger combined company going forward. The awards, benefits or amounts that will be received or allocated to eligible participants under the 2006 Plan, as amended by the proposed amendment, have not been determined.


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Cornell.
 
Stock Options.  The stock options and restricted stock held by directors and executive officers of Cornell will be treated the same as all other stock options and restricted stock under the terms of the merger agreement. The following table sets forth, as of August 1, 2010, the number of unvested options and unvested shares of restricted stock held by directors and executive officers of Cornell that will become fully vested in advance of, or upon, the consummation of the merger:
 
                 
    Number of
    Number of Currently
 
    Currently Unvested
    Unvested Shares of
 
    Options to Fully
    Restricted Stock to Fully
 
    Vest Upon
    Vest Upon Completion of
 
Name
  Completion of Merger     Merger  
 
Max Batzer
    [1,250]       [—]  
Anthony R. Chase
    [1,250]       [—]  
Richard Crane
    [1,250]       [—]  
Zachary R. George
    [1,250]       [—]  
Todd Goodwin
    [1,250]       [—]  
James E. Hyman
    [—]       [124,167]  
Andrew R. Jones
    [1,250]       [—]  
Alfred J. Moran, Jr. 
    [1,250]       [—]  
John R. Nieser
    [—]       [60,167]  
Patrick N. Perrin
    [—]       [31,584]  
Cathryn L. Porter
    [—]       [37,375]  
D. Stephen Slack
    [1,250]       [—]  
Executive Officers and Directors as a Group (12 Persons)
    [10,000]       [253,293]  
 
Employee Stock Purchase Plan.  Each outstanding option or right to acquire Cornell common stock under the terms of Cornell’s Employee Stock Purchase Plan, which is referred to as the ESPP, held by executive officers of Cornell will be treated the same as other options or rights to acquire Cornell common stock under the ESPP. The following table sets forth the number of in-the-money options to acquire Cornell common stock held by executive officers under the ESPP as of August 1, 2010, and the dollar amount payable to each officer, upon the exercise of such options upon completion of the merger if such holder elects to receive cash:
 
                 
    Number of
    Net Merger
 
Name
  Options     Consideration(1)(2)  
 
James E. Hyman
    771     $ 5,190  
John R. Nieser
    95       639  
Patrick N. Perrin
    379       2,551  
Cathryn L. Porter
    356       2,396  
                 
Executive Officers as a Group (4 Persons)
    1,601     $ 10,776  
 
 
(1) Based upon each holder electing to receive the equivalent of 1.3 shares of GEO common stock in cash, which, based upon the closing price per share of GEO common stock on as reported on the NYSE on June 4, 2010, is equal to $26.351 per share.
 
(2) The net merger consideration is $6.731 per share, which is based upon the difference between the ESPP option price of $19.62 per share of Cornell common stock and $26.351.
 
Nonqualified Deferred Compensation Plan.  Cornell maintains a nonqualified deferred compensation plan, which is referred to as the NQDC Plan, into which directors and executive officers may choose to defer amounts of compensation. All amounts credited to the NQDC Plan are fully vested at all times and are fully accrued (i.e., no additional contributions will be made to the NQDC Plan because of the merger). However, amounts credited to the NQDC Plan will become payable to the plan participants earlier than when such payment would ordinarily have been made absent the merger to NQDC Plan participants and could be viewed as an interest in addition to that held


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by stockholders generally. The following table sets forth the dollar amount of compensation accrued by each participating director and executive officer under the NQDC Plan as of June 4, 2010:
 
         
    Amount Accrued
 
    Under the
 
    Nonqualified
 
    Deferred
 
Name
  Compensation Plan(1)  
 
Zachary R. George
  $ 311,189  
Todd Goodwin
    311,683  
         
Total
  $ 622,872  
 
 
(1) Based on the June 4, 2010 Cornell stock price of $26.03 per share.
 
Employment and Change in Control Agreements.  Upon consummation of the merger, GEO shall honor the existing amended and restated employment agreement between Cornell and James E. Hyman, the employment/separation agreement between Cornell and John Nieser, the executive management employment agreement between Cornell and Cathryn L. Porter and the severance agreement between Cornell and Patrick N. Perrin. The merger would constitute a change of control for purposes of these agreements.
 
Assuming that the merger occurred on August 1, 2010 and each of the above executive officers were terminated immediately following the completion of the merger in accordance with their respective agreement, the following table sets forth the dollar amount of cash and benefits such executive officer would be entitled to receive:
 
         
    Amount of Cash and Benefits
 
Name
  Payable Upon Termination  
 
James E. Hyman (1)
  $ 2,445,980  
John R. Nieser (1)
    620,979  
Patrick N. Perrin
    390,664  
Cathryn L. Porter
    428,297  
         
Total
  $ 3,885,920  
 
 
(1) Each of Messrs. Hyman and Nieser would also be entitled to receive “gross up” payments if the excise tax under Section 4999 applies.
 
Stock Ownership of GEO and Cornell Directors and Executive Officers (see page 89 and 93)
 
On [          ], 2010, the GEO record date, directors and executive officers of GEO and their respective affiliates, as a group, beneficially owned and were entitled to vote approximately [          ] shares of GEO common stock. These shares represent approximately [     ]% of the shares of GEO common stock outstanding on the GEO record date.
 
On          , 2010, the Cornell record date, directors and executive officers of Cornell and their respective affiliates, as a group, beneficially owned and were entitled to vote approximately [          ] shares of Cornell common stock. These shares represent approximately [     ]% of the shares of Cornell common stock outstanding on the Cornell record date.
 
No Appraisal Rights (see page 64)
 
Neither Cornell stockholders nor GEO shareholders have appraisal rights in connection with the merger.
 
Material Federal Income Tax Consequences of the Merger (see page 64)
 
GEO and Cornell intend for the merger to qualify as a reorganization under Section 368(a) of the Code for U.S. federal income tax purposes. It is a condition to the closing of the merger that GEO will have received a written opinion from Akerman Senterfitt and Cornell will have received a written opinion from Hogan Lovells US LLP, hereafter referred to as Hogan Lovells, both as of the closing date of the merger and to the effect that for U.S. federal income tax purposes, the merger will constitute a reorganization within the meaning of Section 368(a) of the Code. If such opinions are not delivered, and if the parties seek to proceed with the transaction notwithstanding that fact, then we will recirculate this joint merger proxy/prospectus with appropriate revisions and resolicit the vote of the GEO and Cornell stockholders.


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Receipt by a holder of Cornell common stock of GEO common stock pursuant to the merger will not cause gain or loss to be recognized for U.S. federal income tax purposes, except that (i) gain or loss will be recognized on the receipt of cash in lieu of a fractional share of GEO common stock, (ii) gain (but not loss) will be recognized to the extent of other cash received in exchange for shares of Cornell common stock in the case of a holder of Cornell common stock who receives a combination of cash and GEO common stock and (iii) gain or loss will be recognized in the case of a holder of Cornell common stock who receives solely cash in exchange for such stock.
 
The U.S. federal income tax consequences described above may not apply to some holders of Cornell common stock, including some types of holders specifically referred to on page 64. Accordingly, please consult your tax advisor for a full understanding of the particular tax consequences of the merger to you.
 
Accounting Treatment (see page 64)
 
The merger will be accounted for as an acquisition by GEO of Cornell under the acquisition method of accounting according to accounting principles generally accepted in the United States, referred to herein as GAAP.
 
Regulatory Matters (see page 69)
 
The merger is subject to review by federal and state antitrust authorities pursuant to applicable federal and state antitrust laws. Under the provisions of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, referred to herein as the HSR Act, and the rules and regulations thereunder, the merger cannot be completed until the companies have made the required notifications and the occurrence of the first of the following: (1) the early termination of the waiting period; (2) the expiration of the required waiting period; or (3) the resolution of any applicable federal or state litigation. The required notification and report forms were filed by each of GEO and Cornell on April 30, 2010 with the United States Department of Justice, Antitrust Division and the Federal Trade Commission. The waiting period under the HSR Act expired as of 11:59 pm on June 1, 2010.
 
Financing (see page 69)
 
Completion of the merger is not conditioned on receipt of any financing. However, in connection with the merger, GEO may choose to refinance Cornell’s existing senior secured credit facility, and Cornell’s existing 10.75% senior notes due 2012 and pay the cash component of the merger consideration, by utilizing a combination of existing cash and one or more draws upon GEO’s existing senior credit facility with BNP Paribas, as amended. BNP Paribas has committed $150.0 million to GEO in order to effect such an increase, which commitment will expire if the merger is not closed on or prior to April 18, 2011. In the alternative, GEO may choose to pursue alternate financing sources, including debt financing or accessing the capital markets. For more information regarding the financing in connection with the merger, see “Financing.”
 
Voting Agreement (see page 86)
 
Certain significant stockholders of Cornell have entered into a voting agreement with GEO requiring them, among other things, to vote their shares of Cornell common stock in favor of the adoption and approval of the terms of the merger agreement, the merger and the other transactions contemplated by the merger agreement and any actions required in furtherance thereof and vote against any alternative proposal, action, transaction or agreement that would result in a breach of any covenant, representation, warranty or other obligation or agreement of Cornell set forth in the merger agreement or of a Cornell stockholder set forth in the voting agreement. The Cornell stockholders party to the voting agreement beneficially owned 18.4% of Cornell’s outstanding common stock as of April 15, 2010. The voting agreement is attached as Annex B to this joint proxy statement/prospectus.
 
Listing of GEO Stock (see page 75)
 
GEO has agreed to use its reasonable best efforts to cause the shares of GEO common stock that are to be issued pursuant to the merger and the shares of GEO common stock that are required to be reserved for issuance upon exercise or settlement of Cornell options and other equity-based awards to be approved for listing on the NYSE. It is also a condition to the merger that the shares of GEO common stock issuable in connection with the merger be approved for listing on the NYSE on or prior to the effective time of the merger.


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Conditions to Completion of the Merger (see page 83)
 
Each party’s obligations to effect the merger is subject to the satisfaction or waiver of mutual conditions, including the following:
 
  •  receipt of the GEO shareholder approval in accordance with Florida law and Cornell stockholder approval in accordance with Delaware law;
 
  •  the absence of any law, injunction, judgment or ruling prohibiting consummation of the merger or making the consummation of the merger illegal;
 
  •  the effectiveness of, and the absence of any stop order with respect to, the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part;
 
  •  the approval for listing on the NYSE, subject to official notice of issuance, of the shares of GEO common stock issuable in connection with the merger;
 
  •  the representations and warranties of each party to the merger agreement being true and correct in all material respects, and true and correct (without giving effect to any qualifications) except where such failures to be true and correct would not reasonably be expected to have a material adverse effect in the case of certain representations and warranties, and each party to the merger agreement having performed in all material respects all of its obligations under the merger agreement; and
 
  •  the merger agreement will not have been terminated.
 
The obligations of GEO and GEO Acquisition III, Inc. to effect the merger are subject to the satisfaction or waiver of the following additional conditions:
 
  •  the Cornell employee stock purchase plan must have been terminated as of the effective time and each option or right to purchase Cornell common stock thereunder will have been exercised or deemed to have been exercised and converted into the right to receive the stock consideration or the cash consideration;
 
  •  no events, occurrences or developments have occurred since the Cornell Balance Sheet Date (as defined in the merger agreement) and are continuing that have had or would reasonably be expected, to have individually or in the aggregate, a material adverse effect on Cornell;
 
  •  certain specified third-party consents must have been obtained;
 
  •  each non-employee director of Cornell and, if requested in writing by GEO, of each subsidiary of Cornell, in each case must have resigned or been removed in his or her capacity as a director, effective as of, or prior to, the closing date;
 
  •  GEO must have received the opinion of its own counsel that the merger will be treated for Federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code; and
 
  •  Cornell must not permit its total issued and outstanding shares of common stock to exceed 16,000,000 shares after giving effect to all shares of Cornell common stock issued and outstanding and all shares of Cornell common stock issuable upon the exercise of any option, warrant, employee stock purchase right or other right or issuable upon the conversion or exchange of any security convertible into or exchangeable for shares of Cornell common stock.
 
Cornell’s obligation to effect the merger is subject to the satisfaction or waiver of the following additional conditions:
 
  •  no events, occurrences or developments have occurred since the GEO Balance Sheet Date (as defined in the merger agreement) and are continuing that have had or would reasonably be expected, to have individually or in the aggregate, a material adverse effect on GEO; and
 
  •  Cornell must have received the opinion of its own counsel that the merger will be treated for Federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code.


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Termination of the Merger Agreement (see page 84)
 
The merger agreement may be terminated at any time before the effective time of the merger by mutual written consent of GEO, GEO Acquisition III, Inc. and Cornell.
 
The merger agreement may also be terminated prior to the effective time of the merger by either GEO or Cornell if:
 
  •  the merger has not been consummated on or before February 15, 2011;
 
  •  any governmental authority issues an order, decree or ruling, enacts a law or takes any other action (that is final and nonappealable) having the effect of making the merger illegal or otherwise prohibiting the completion of the merger;
 
  •  the GEO shareholders or Cornell stockholders fail to give the necessary approvals at their special meetings or any adjournments or postponements thereof; or
 
  •  GEO or Cornell have breached in any material respect any of their representations or warranties or failed to perform in any material respect any of their covenants set forth in the merger agreement, and such breach or failure to perform (i) would prevent such party from satisfying the closing conditions of the merger agreement relating to the accuracy of its representations and warranties or compliance with covenants, and (ii) cannot be cured or has not been cured within 30 days from the date of notice to such party.
 
The merger agreement may also be terminated prior to the effective time of the merger by GEO if:
 
  •  the Cornell board of directors has changed its recommendation to the Cornell stockholders that they adopt the merger agreement or it has approved or entered into any acquisition agreement other than in compliance with the merger agreement;
 
  •  a burdensome condition has been imposed in connection with the grant of the antitrust approval relating to the merger which would prohibit or materially restrict the ownership or operation of any material business or assets of GEO and its subsidiaries or Cornell and its subsidiaries or cause GEO and its subsidiaries or Cornell and its subsidiaries to agree to or to dispose of or hold separate all or a material portion of the business and assets of GEO and its subsidiaries or Cornell and its subsidiaries; or
 
  •  Cornell fails to fulfill the condition regarding the maximum number of issued and outstanding shares of Cornell common stock, and such failure either cannot be cured or has not been cured within 30 days from the date of notice to Cornell.
 
The merger agreement may also be terminated prior to the effective time of the merger by Cornell if Cornell, in compliance with the terms of the merger agreement, has entered into a definitive acquisition agreement to effect a proposal that the Cornell board of directors determines in good faith to be more favorable to Cornell stockholders and it pays to GEO a $12 million termination fee and the GEO-related fees and expenses (as defined below) within the time frame provided.
 
Reimbursement of Fees and Expenses; Termination Fees (see page 85)
 
Fees and Expenses Payable by GEO.  GEO has agreed to reimburse Cornell for its reasonable and documented out-of-pocket fees and expenses up to $2 million incurred by Cornell and its affiliates in connection with the merger agreement and the transactions contemplated thereby, under any of the following circumstances:
 
  •  if the merger agreement is terminated by Cornell or GEO following the failure by GEO to obtain the GEO shareholder approval; or
 
  •  if the merger agreement is terminated by Cornell if GEO or GEO Acquisition III, Inc. have breached in any material respect any of their representations or warranties or failed to perform in any material respect any of their covenants set forth in the merger agreement, and such breach or failure to perform (i) would prevent GEO or GEO Acquisition III from satisfying the closing conditions of the merger agreement relating to the accuracy of the representations and warranties or performance of its obligations required under the merger agreement, and (ii) cannot be cured or has not been cured within 30 days from the date of notice to GEO.


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Fees and Expenses Payable by Cornell.  Cornell has agreed to reimburse GEO up to $2 million of GEO’s and GEO Acquisition III’s reasonable and documented out-of-pocket fees and expenses incurred by GEO, GEO Acquisition III, Inc. and their respective affiliates in connection with the merger agreement and the transactions contemplated thereby, referred to as the GEO-related fees and expenses, under any of the following circumstances:
 
  •  if the merger agreement is terminated by GEO or Cornell following the failure by Cornell to obtain the Cornell stockholder approval; or
 
  •  if the merger agreement is terminated by GEO because Cornell has breached in any material respect any of its representations or warranties or failed to perform in any material respect any of its covenants set forth in the merger agreement, and such breach or failure to perform (i) would prevent Cornell from satisfying the closing conditions of the merger agreement relating to the accuracy of the representations and warranties or performance of its obligations required under the merger agreement, and (ii) cannot be cured or has not been cured within 30 days from the date of notice to Cornell.
 
Termination Fee Payable by Cornell.  Cornell has agreed to pay GEO a termination fee of $12 million and reimburse GEO the GEO-related fees and expenses under any of the following circumstances:
 
  •  if the merger agreement is terminated by GEO pursuant to the Cornell board of directors having changed its recommendation to the Cornell stockholders that they adopt the merger agreement or the Cornell board of directors approving or entering into any acquisition agreement other than in compliance with the merger agreement; or
 
  •  if the merger agreement is terminated by Cornell pursuant to Cornell, in compliance with the terms of the merger agreement, having entered into a definitive acquisition agreement to effect a proposal that the Cornell board of directors determines in good faith to be more favorable to Cornell stockholders and Cornell simultaneously pays the termination fee and the GEO-related fees and expenses within the time frame provided.
 
If the merger agreement is terminated pursuant to the reasons below, and any acquisition proposal that was received by Cornell or publicly announced prior to such termination of the merger agreement is consummated no later than the 12-month anniversary of the date of the termination, then Cornell has agreed to pay GEO a termination fee of $12 million upon the consummation of the acquisition proposal:
 
  •  if the merger agreement is terminated by GEO or Cornell because the merger has not been consummated on or before February 15, 2011;
 
  •  if the merger agreement is terminated by GEO or Cornell because Cornell stockholders fail to give the necessary approvals at their special meetings; or
 
  •  if the merger agreement is terminated by GEO because Cornell has breached in any material respect any of its representations or warranties or failed to perform in any material respect any of its covenants or agreements set forth in the merger agreement, and such breach or failure to perform (i) would prevent Cornell from satisfying the closing conditions of the merger agreement relating to the accuracy of the representations and warranties or performance of its obligations under the merger agreement, and (ii) cannot be cured or has not been cured within 30 days from the date of notice to Cornell.
 
Special Meetings of GEO Shareholders and Cornell Stockholders
 
The GEO Special Meeting (see page 88)
 
Meeting.  The GEO special meeting will be held on [          ], 2010 at [  ] p.m., Eastern time, at [          ]. At the GEO special meeting, GEO shareholders will be asked to:
 
  •  approve the issuance of shares of GEO common stock in connection with the merger;
 
  •  approve the amendments to the 2006 Plan; and
 
  •  approve an adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposals.


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Record Date; Votes.  GEO has fixed the close of business on [          ], 2010 as the record date, which is referred to as the GEO record date, for determining the GEO shareholders entitled to receive notice of and to vote at the GEO special meeting. Only holders of record of GEO common stock on the GEO record date are entitled to receive notice of and vote at the GEO special meeting, and any adjournment or postponement thereof.
 
Each share of GEO common stock is entitled to one vote on each matter brought before the meeting. On the GEO record date, there were [          ] shares of GEO common stock issued and outstanding.
 
Required Vote.  The GEO proposals require different percentages of votes in order to approve them:
 
  •  The GEO share issuance requires the affirmative vote of holders of shares of GEO common stock representing a majority of votes cast on the proposal, provided that the total number of votes cast on the proposal must represent a majority of the total number of shares of GEO common stock issued and outstanding on the record date for the GEO special meeting;
 
  •  Approval of the amendments to the 2006 Plan requires the affirmative vote of holders of shares of GEO common stock representing a majority of votes cast on the proposal, provided that the total number of votes cast on the proposal must represent a majority of the total number of shares of GEO common stock issued and outstanding on the record date for the GEO special meeting; and
 
  •  Approval of an adjournment of the GEO special meeting, if necessary, to solicit additional proxies in favor of the GEO share issuance and the amendments to the 2006 Plan requires the affirmative vote of holders of shares of GEO common stock represented and entitled to vote at the special meeting to exceed the number of votes cast opposing the approval of an adjournment.
 
Approval of the GEO share issuance by GEO shareholders is a condition to completion of the merger. Approval of the amendments to the 2006 Plan by GEO shareholders is not a condition to approval of the merger agreement and the closing of the merger.
 
Failure to Vote; Abstentions.  If you are a GEO shareholder, any of your shares as to which you abstain or which are not voted will have the same effect as a vote “AGAINST” the GEO share issuance, a vote “AGAINST” the amendments to the 2006 Plan and a vote “AGAINST” approving an adjournment of the GEO special meeting. For more information regarding the effect of abstentions, a failure to vote or a broker non-vote, see “The GEO Special Meeting — Votes Required to Approve GEO Proposals” on page 89.
 
The Cornell Special Meeting (see page 92)
 
Meeting.  The Cornell special meeting will be held on [          ], 2010, at [  ] p.m., Central time, at [          ]. At the Cornell special meeting, Cornell stockholders will be asked to:
 
  •  adopt the merger agreement, pursuant to which Cornell will become a wholly owned subsidiary of GEO; and
 
  •  approve an adjournment of the Cornell special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal.
 
Record Date; Votes.  Cornell has fixed the close of business on [          ], 2010 as the record date, which is referred to as the Cornell record date, for determining the Cornell stockholders entitled to receive notice of and to vote at the Cornell special meeting. Only holders of record of Cornell common stock on the Cornell record date are entitled to receive notice of and vote at the Cornell special meeting, and any adjournment or postponement thereof.
 
Each share of Cornell common stock is entitled to one vote on each matter brought before the meeting. On the Cornell record date, there were [          ] shares of Cornell common stock issued and outstanding.
 
Required Vote.  The Cornell proposals require different percentages of votes in order to approve them:
 
  •  the adoption of the merger agreement requires the approval of holders of a majority of the total number of shares of Cornell common stock issued and outstanding on the record date for the Cornell special meeting; and


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  •  the approval of an adjournment of the Cornell special meeting, if necessary, to solicit additional proxies in favor of the adoption of the merger agreement, requires the affirmative vote of holders of shares of Cornell common stock representing a majority of the total number of shares of Cornell common stock present, in person or by proxy at the Cornell special meeting, and entitled to vote on the proposal.
 
Adoption of the merger agreement by Cornell stockholders is a condition to the completion of the merger.
 
Failure to Vote; Abstentions.  If you are a Cornell stockholder, any of your shares as to which you abstain or which are not voted will have the same effect as a vote “AGAINST” the proposal to approve the merger agreement and a vote “AGAINST” approving an adjournment of the Cornell special meeting. For more information regarding the effect of abstentions, a failure to vote or a broker non-vote, see “The Cornell Special Meeting — Votes Required to Approve Cornell Proposals” beginning on page 93.


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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF GEO
 
The following tables set forth the selected historical consolidated financial data for GEO. The selected consolidated financial data as of and for the thirteen weeks ended April 4, 2010 and March 29, 2009 and as of and for the fiscal years ended January 3, 2010, December 28, 2008, December 30, 2007, December 31, 2006 and January 1, 2006 have been derived from GEO’s consolidated financial statements. You should not take historical results as necessarily indicative of the results that may be expected for any future period.
 
You should read this selected consolidated financial data in conjunction with GEO’s Quarterly Report on Form 10-Q for the thirteen weeks ended April 4, 2010 and Annual Report on Form 10-K for the fiscal year ended January 3, 2010.
 
                                                         
    For the Thirteen Weeks Ended     Fiscal Years Ended  
    April 4, 2010     March 29, 2009     2009     2008     2007     2006(1)     2005(2)  
                (In thousands, except per share data)  
 
Statement of Operations Data:
                                                       
Revenues
  $ 287,542     $ 259,061     $ 1,141,090     $ 1,043,006     $ 976,299     $ 818,439     $ 612,900  
Operating expenses
    226,382       202,327       897,356       822,659       788,503       680,088       541,173  
Depreciation and amortization
    9,238       9,816       39,306       37,406       33,218       21,682       15,876  
General and administrative expenses
    17,448       17,236       69,240       69,151       64,492       56,268       48,958  
                                                         
Operating income
    34,474       29,682       135,188       113,790       90,086       60,401       6,893  
Interest income
    1,229       1,090       4,943       7,045       8,746       10,687       9,154  
Interest expense
    (7,814 )     (7,204 )     (28,518 )     (30,202 )     (36,051 )     (28,231 )     (23,016 )
Loss on extinguishment of debt
                (6,839 )           (4,794 )     (1,295 )     (1,360 )
                                                         
Income before income taxes, equity in earnings of affiliates, and discontinued operations
    27,889       23,568       104,774       90,633       57,987       41,562       (8,329 )
Provision for income taxes
    10,807       9,141       41,991       33,803       22,049       15,138       (12,129 )
Equity in earnings of affiliates, net of income tax provision
    590       644       3,517       4,623       2,151       1,576       2,079  
                                                         
Income from continuing operations
    17,672       15,071       66,300       61,453       38,089       28,000       5,879  
Income (loss) from discontinued operations, net of tax provision (benefit)
          (366 )     (346 )     (2,551 )     3,756       2,031       1,127  
                                                         
Net income
  $ 17,672     $ 14,705     $ 65,954     $ 58,902     $ 41,845     $ 30,031     $ 7,006  
                                                         
Weighted average common shares outstanding:
                                                       
Basic
    50,711       50,697       50,879       50,539       47,727       34,442       28,740  
                                                         
Diluted
    51,640       51,723       51,922       51,830       49,192       35,744       30,030  
                                                         
Earnings (loss) per common share:
                                                       
Basic:
                                                       
Income from continuing operations
  $ 0.35     $ 0.30     $ 1.30     $ 1.22     $ 0.80     $ 0.81     $ 0.20  
Income (loss) from discontinued operations
          (0.01 )           (0.05 )     0.08       0.06       0.04  
                                                         
Net income per share — basic
  $ 0.35     $ 0.29     $ 1.30     $ 1.17     $ 0.88     $ 0.87     $ 0.24  
                                                         
Diluted:
                                                       
Income from continuing operations
  $ 0.34     $ 0.29     $ 1.28     $ 1.19     $ 0.77     $ 0.78     $ 0.19  
Income (loss) from discontinued operations
          (0.01 )     (0.01 )     (0.05 )     0.08       0.06       0.04  
                                                         
Net income per share — diluted
  $ 0.34     $ 0.28     $ 1.27     $ 1.14     $ 0.85     $ 0.84     $ 0.23  
                                                         
Balance Sheet Data:
                                                       
Cash and cash equivalents
  $ 30,276     $ 60,009     $ 33,856     $ 31,655     $ 44,403     $ 111,520     $ 57,094  
Restricted cash
    36,606       31,707       34,068       32,697       34,107       33,651       26,366  
Accounts receivable, net
    179,848       178,273       200,756       199,665       164,773       162,867       127,612  
Property, plant and equipment, net
    1,003,917       903,921       998,560       878,616       783,363       287,374       282,236  
Total assets
    1,426,740       1,310,037       1,447,818       1,288,621       1,192,634       743,453       639,511  
Total debt
    588,536       516,443       584,694       512,133       463,930       305,957       376,046  
Total shareholders’ equity
    631,588       595,759       665,098       579,597       529,347       249,907       108,594  
 
 
(1) The Selected Historical Consolidated Balance Sheet Data for the fiscal year ended December 31, 2006 does not include the impact of certain discontinued operations which occurred in the fiscal year ended December 28, 2008. The Selected Historical Consolidated Statement of Operations Data for this fiscal year includes a


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reclassification for income related to GEO’s non-controlling interest which was reclassified to operating income for consistent presentation to later years presented.
(2) The Selected Historical Consolidated Statement of Operations Data and Balance Sheet Data for the fiscal year ended January 1, 2006 does not include the impact of certain discontinued operations which occurred in the fiscal year ended December 28, 2008. The Selected Historical Consolidated Statement of Operations Data for this fiscal year includes a reclassification for income related to GEO’s non-controlling interest which was reclassified to operating income for consistent presentation to later years presented.


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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF CORNELL
 
The following tables set forth the selected historical consolidated financial data for Cornell. The selected consolidated financial data as of and for the three months ended March 31, 2010 and March 31, 2009 and for the fiscal years ended December 31, 2009, 2008, 2007, 2006 and 2005 have been derived from Cornell’s consolidated financial statements. You should not take historical results as necessarily indicative of the results that may be expected for any future period.
 
You should read this selected consolidated financial data in conjunction with Cornell’s Quarterly Report on Form 10-Q for the three months ended March 31, 2010 and Cornell’s Annual Report on Form 10-K, as amended, for the fiscal year ended December 31, 2009.
 
                                                         
    For the Three Months Ended                                
    March 31,
    March 31,
    Years Ended December 31,  
    2010     2009     2009     2008     2007     2006     2005  
                (In thousands, except per share data)  
 
Statement of Operations Data:
                                                       
Revenues
  $ 100,006     $ 99,710     $ 412,377     $ 386,724     $ 360,604     $ 360,855     $ 310,775  
Operating expenses, excluding depreciation and amortization
    76,683       72,891       295,645       280,630       274,110       275,395       238,305  
Pre-opening and start-up expenses
                    4,086                   2,657       9,017  
Depreciation and amortization
    4,699       4,893       18,833       17,943       15,986       16,285       15,200  
General and administrative expenses
    5,759       6,138       24,112       25,954       25,499       21,720       20,387  
                                                         
Income from operations
    12,865       15,788       69,701       62,197       45,009       44,798       27,866  
Interest expense
    6,314       6,199       25,830       26,946       26,215       26,130       24,041  
Interest income
    (129 )     (246 )     (657 )     (2,988 )     (1,951 )     (3,060 )     (2,318 )
                                                         
Income from continuing operations before provision for income taxes
    6,680       9,835       44,528       38,239       20,745       21,728       6,143  
Provision for income taxes
    2,831       4,101       17,955       15,603       8,835       9,148       2,215  
                                                         
Income from continuing operations
    3,849       5,734       26,573       22,636       11,910       12,580       3,928  
Discontinued operations, net of tax benefit of $381 and $1,950 in 2006 and 2005, respectively
                                  (707 )     (3,622 )
                                                         
Net income
    3,849       5,734       26,573       22,636       11,910       11,873       306  
Non-controlling interest(1)
    569       477       1,947       445                    
                                                         
Income available to Cornell Companies, Inc. 
  $ 3,280     $ 5,257     $ 24,626     $ 22,191     $ 11,910     $ 11,873     $ 306  
                                                         
Earnings per share attributable to Cornell Companies, Inc. stockholders:
                                                       
Basic:
  $ 0.22     $ 0.36     $ 1.65     $ 1.51     $ 0.82     $ 0.85     $ 0.02  
                                                         
Diluted:
  $ 0.22     $ 0.36     $ 1.64     $ 1.49     $ 0.82     $ 0.84     $ 0.02  
                                                         
Number of shares used in per share computation:
                                                       
Basic:
    14,756       14,572       14,881       14,701       14,452       14,003       13,692  
                                                         
Diluted:
    14,882       14,629       14,986       14,847       14,611       14,072       13,787  
                                                         
Balance Sheet Data:
                                                       
Cash and cash equivalents
  $ 18,061     $ 10,271     $ 27,724     $ 14,613     $ 3,028     $ 18,529     $ 13,723  
Property and equipment, net
    457,274       450,620       455,523       450,354       383,952       319,064       323,861  
Total assets
    643,765       635,601       650,565       636,921       562,287       523,533       510,628  
Total debt
    300,697       321,525       303,254       320,482       286,709       265,981       276,360  
Stockholders’ equity
    257,665       234,593       258,738       228,167       200,449       181,564       165,461  
 
 
(1) Non-controlling interest in consolidated special purpose entities represents equity that other investors have contributed to the special purpose entity Municipal Corrections Finance, L.P., or MCF. Non-controlling interest is adjusted for income and losses allocable to the other owners of the special purpose entity.


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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL DATA
 
The following Selected Unaudited Pro Forma Condensed Combined Financial Data is based on the historical financial data of GEO and Cornell, and has been prepared to illustrate the effects of the merger. The Selected Unaudited Pro Forma Condensed Combined Financial Data does not give effect to any anticipated synergies, operating efficiencies or costs savings that may be associated with the merger. The Selected Unaudited Pro Forma Condensed Combined Financial Data also does not include any integration costs the companies may incur related to the merger as part of combining the operations of the companies. The Selected Unaudited Pro Forma Condensed Combined Statements of Income from Continuing Operations Data below is presented as if the merger were completed on December 29, 2008, the first day of GEO’s fiscal year ended January 3, 2010, and the Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data below is presented as if the merger were completed on April 4, 2010. The unaudited pro forma financial data included in this joint proxy statement/prospectus is based on the historical financial statements of GEO and Cornell, and on publicly available information and certain assumptions that we believe are reasonable, which are described the notes to the Unaudited Pro Forma Condensed Combined Financial Statements included in this joint proxy statement/prospectus. This data should be read in conjunction with GEO’s and Cornell’s historical consolidated financial statements and accompanying notes in GEO’s Quarterly Report on Form 10-Q as of and for the thirteen-weeks ended April 4, 2010 and GEO’s Annual Report on Form 10-K as of and for the year ended January 3, 2010 and Cornell’s Quarterly Report on Form 10-Q as of and for the three months ended March 31, 2010 and Cornell’s Annual Report on Form 10-K, as amended, as of and for the year ended December 31, 2009. GEO has not performed a detailed valuation analysis necessary to determine the fair market values of Cornell’s assets to be acquired and liabilities to be assumed. Accordingly, the pro forma financial statements include only a preliminary allocation of the purchase price, which will be finalized at closing using a third party financial valuation service. The preliminary purchase price allocation is primarily based on the carrying value of Cornell’s assets, liabilities and noncontrolling interest. See also the Unaudited Pro Forma Condensed Combined Financial Statements and notes thereto beginning on page 107.
 
                                 
    For the Thirteen Weeks
  For the Year Ended
   
    Ended April 4, 2010   January 3, 2010    
    (In thousands, except per share data)    
 
RESULTS OF CONTINUING OPERATIONS:
                               
Revenues
  $           387,121     $             1,551,759          
Operating income
    45,362               197,545          
Income from Continuing Operations Before Estimated Nonrecurring Charges Related to the Transaction Attributable to the Combined Company
    20,123               86,528          
Income from Continuing Operations Before Estimated Nonrecurring Charges Related to the Transaction per Common Share Attributable to the Combined Company
                               
Basic:
  $ 0.30     $             1.30          
Diluted:
    0.30               1.28          
Weighted Average Shares Outstanding:
                               
Basic:
    66,431               66,599          
Diluted:
    67,360               67,642          
 
                 
    As of
    April 4, 2010
    (In thousands)
 
BALANCE SHEET DATA:
               
Current assets
  $             377,094  
Current liabilities
            284,060  
Total assets
            2,258,117  
Total debt
            972,159  
Total liabilities
            1,313,275  
Total shareholders’ equity
            944,842  


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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA
 
The following table sets forth selected per share data for GEO and Cornell separately on a historical basis. It also includes unaudited pro forma combined per share data for GEO, which combines the data of GEO and Cornell on a pro forma basis giving effect to the merger. This data does not give effect to any anticipated synergies, operating efficiencies or costs savings that may be associated with the merger. This data also does not include any integration costs the companies may incur related to the merger as part of combining the operations of the companies. This data should be read in conjunction with GEO’s and Cornell’s historical consolidated financial statements and accompanying notes in GEO’s Annual Report on Form 10-K for the year ended January 3, 2010 and Cornell’s Annual Report on Form 10-K, as amended, for the year ended December 31, 2009. See also the Unaudited Pro Forma Condensed Combined Financial Statements and notes thereto beginning on page 107.
 
                 
    As of and
   
    for the
  As of and
    Thirteen Weeks
  for the Year
    Ended April 4,
  Ended January 3,
    2010   2010
 
GEO Historical Per Share Data:
               
Income from continuing operations per share
               
Basic
  $ 0.35     $ 1.30  
Diluted
    0.34       1.28  
Cash dividends per share
           
Book value per diluted share
    12.23       12.81  
GEO Unaudited Pro Forma Combined Per Share Data:
               
Income from Continuing Operations Before Estimated Nonrecurring Charges Related to the Transaction Attributable to the Combined Company per share
               
Basic
  $ 0.30     $ 1.30  
Diluted
    0.30       1.28  
Cash dividends per share
           
Book value per diluted share
    14.03       14.49  
 
                 
    As of and
   
    for the
  As of and
    Three Months
  for the Year
    Ended March 31,
  Ended December 31,
    2010   2009
 
Cornell Historical Per Share Data:
               
Income from continuing operations per share
               
Basic
  $ 0.22     $ 1.65  
Diluted
    0.22       1.64  
Cash dividends per share
           
Book value per diluted share
    17.31       17.27  
 


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    As of and
    As of and
 
    for the
    for the
 
    Thirteen Weeks
    Year Ended
 
    Ended April 4,
    April 4,
 
    2010     2010  
 
Cornell Unaudited Equivalent Pro Forma Combined Per Share Data:(1)
               
Income from Continuing Operations Before Estimated Nonrecurring Charges Related to the Transaction Attributable to the Combined Company per share
               
Basic
  $ 0.39     $ 1.69  
Diluted
    0.39       1.66  
Cash dividends per share
           
Book value per diluted share
    18.24       18.84  
 
 
(1) The Cornell equivalent pro forma per share amounts are calculated by multiplying GEO pro forma per share amounts by the exchange ratio for the merger of 1.3.

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COMPARATIVE PER SHARE MARKET PRICE AND SHARE INFORMATION
 
Shares of GEO common stock and Cornell common stock are each listed and principally traded on the NYSE. GEO common stock is listed for trading under the symbol “GEO” and Cornell common stock is listed for trading under the symbol “CRN.” The following table sets forth, for the periods indicated, the high and low sales prices per share of GEO common stock and Cornell common stock, in each case as reported on the consolidated tape of the NYSE. Neither GEO nor Cornell declared or paid cash dividends on their common stock for the fiscal years and interim periods shown below.
 
                                 
    GEO Common Stock
  Cornell Common Stock
    Market Price ($)   Market Price ($)
    High   Low   High   Low
 
2008
                               
First Quarter
    28.71       22.01       23.01       16.15  
Second Quarter
    29.48       22.10       24.50       20.16  
Third Quarter
    26.96       18.00       28.32       22.00  
Fourth Quarter
    21.62       12.65       26.00       16.50  
2009
                               
First Quarter
    19.54       10.98       18.45       13.73  
Second Quarter
    18.66       12.83       20.40       15.86  
Third Quarter
    20.78       16.82       22.64       15.74  
Fourth Quarter
    22.78       19.35       23.92       20.16  
2010
                               
First Quarter
    23.18       17.91       25.13       18.06  
Second Quarter (through [June 4], 2010)
    [22.27]       [18.23]       [28.55]       [17.61]  
 
The following table shows the closing sale prices of GEO common stock and Cornell common stock as reported on the NYSE on April 16, 2010, the last full trading day before the public announcement of the signing of the merger agreement, and on          , 2010, the most recent practicable date before the printing of this joint proxy statement/prospectus. The table also sets forth the value of the GEO common stock that a Cornell stockholder would have received for one share of Cornell common stock, assuming that the transaction had occurred on those dates. The numbers have been calculated by multiplying the closing sale price of GEO common stock as of the specified date by the exchange ratio and assumes that the merger consideration received consists exclusively of GEO common stock. The actual value of the GEO common stock that a stockholder will receive on the date of the transaction may be higher or lower than the prices set forth below.
 
                         
    GEO
  Cornell
  Implied Value
    Common
  Common
  of Cornell
    Stock   Stock   Common Stock
 
April 16, 2010
  $ 19.16     $ 18.47     $ 24.91  
[          ], 2010
    [     ]       [     ]       [     ]  
 
GEO shareholders should obtain current market quotations for shares of GEO and Cornell common stock in deciding whether to vote for approval of the issuance of GEO common stock in accordance with the terms of the merger agreement. Cornell stockholders should obtain current market quotations for shares of GEO common stock and Cornell common stock in deciding whether to vote for adoption of the merger agreement.


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RECENT DEVELOPMENTS
 
Stock Repurchase Program
 
On February 22, 2010, GEO announced that its Board of Directors approved a stock repurchase program of up to $80.0 million of its common stock effective through March 31, 2011. The stock repurchase program is intended to be implemented through purchases made from time to time in the open market or in privately negotiated transactions, in accordance with applicable rules and requirements of the Securities and Exchange Commission. The program also may include repurchases from time to time from executive officers or directors of vested restricted stock and/or vested stock options. The stock repurchase program does not obligate GEO to purchase any specific amount of its common stock and may be suspended or extended at any time at GEO’s discretion. GEO does not intend to enter into any privately negotiated transactions to repurchase any shares of GEO stock issued in the merger, nor does it intend to target shares of GEO stock issued in the merger for repurchase in the open market. As of [June 4, 2010], GEO has repurchased 3,878,828 shares of its common stock for $77.3 million.
 
Contract Terminations
 
On April 14, 2010, GEO announced the results of the rebids of two of its managed-only contracts in the State of Florida. The State of Florida has issued a Notice of Intent to Award contracts for the 1,884-bed Graceville Correctional Facility located in Graceville, Florida and the 985-bed Moore Haven Correctional Facility located in Moore Haven, Florida to another operator effective August 1, 2010. GEO does not expect that the termination of these contracts will have a material adverse impact, individually or in the aggregate, on its financial condition, results of operations or cash flows.
 
Litigation Relating to the Merger
 
On April 27, 2010, a putative stockholder class action was filed in the District Court for Harris County, Texas by Todd Shelby against Cornell, members of the Cornell board of directors, individually, and GEO. The plaintiff filed an amended complaint on May 28, 2010. The amended complaint alleges, among other things, that the Cornell directors, aided and abetted by Cornell and GEO, breached their fiduciary duties in connection with the merger. Among other things, the amended complaint seeks to enjoin Cornell, its directors and GEO from completing the merger and seeks a constructive trust over any benefits improperly received by the defendants as a result of their alleged wrongful conduct.
 
Asset Acquisition
 
On June 7, 2010, GEO announced the acquisition of a 650-bed Correctional Facility (the “Facility) in Adelanto, California for approximately $28.0 million. The Facility was bought from the City of Adelanto. GEO expects to retrofit the Facility and market it to local, state, and federal correctional and detention agencies. GEO financed the acquisition of the Facility with free cash flow and borrowings available under its senior revolving credit facility.


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RISK FACTORS
 
In addition to the other information included and incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements” below, you should carefully consider the following risk factors before deciding whether to vote for the GEO share issuance and the amendments to the 2006 Plan, in the case of GEO shareholders, or for adoption of the merger agreement, in the case of Cornell stockholders. In addition to the risk factors set forth below, you should read and consider other risk factors specific to each of the GEO and Cornell businesses that will also affect the combined company after the merger, which are described in Part I, Item 1A of GEO’s Annual Report on Form 10-K for the year ended January 3, 2010 and Cornell’s Annual Report on Form 10-K, as amended, for the year ended December 31, 2009, each of which has been filed by GEO or Cornell, as applicable, with the SEC and any subsequent periodic reports all of which are incorporated by reference into this joint proxy statement/prospectus. If any of the risks described below or in the periodic reports incorporated by reference into this joint proxy statement/prospectus actually occurs, the businesses, financial condition, results of operations, prospects or stock prices of GEO, Cornell or the combined company could be materially adversely affected. See “Where You Can Find More Information,” beginning on page 126.
 
Risks Related to Completion of the Merger
 
Cornell’s stockholders will receive, subject to certain conditions, either cash consideration or a fixed ratio of 1.3 shares of GEO common stock for each share of Cornell common stock regardless of any changes in the market value of Cornell common stock or GEO common stock before the completion of the merger.
 
Upon completion of the merger, subject to certain conditions, Cornell stockholders will receive either cash consideration or a fixed ratio of 1.3 shares of GEO common stock for each share of Cornell common stock they hold. There will be no adjustment to the exchange ratio (except for adjustments to reflect the effect of any stock split, reverse stock split, stock dividend, recapitalization, reclassification or other similar transaction with respect to Cornell common stock), and the parties do not have a right to terminate the merger agreement based upon changes in the market price of either GEO common stock or Cornell common stock. Accordingly, the dollar value of GEO common stock that Cornell’s stockholders will receive upon completion of the merger will depend upon the market value of GEO common stock at the time of completion of the merger, which may be different from, and lower than, the closing price of GEO common stock on the last full trading day preceding public announcement that GEO and Cornell entered into the merger agreement, the last full trading day prior to the date of this joint proxy statement/prospectus or the date of the Cornell stockholder meetings. The opinions received from GEO’s and Cornell’s respective financial advisors were based on market and other conditions as of the dates of such opinions and neither GEO nor Cornell intends to request updated opinions from such financial advisors prior to completion of the merger. Moreover, completion of the merger may occur some time after the requisite stockholder approvals have been obtained. The market values of GEO common stock and Cornell common stock have varied since GEO and Cornell entered into the merger agreement and will continue to vary in the future due to changes in the business, operations or prospects of GEO and Cornell, market assessments of the merger, regulatory considerations, market and economic considerations, and other factors both within and beyond the control of GEO and Cornell.
 
There can be no assurance that the merger will be consummated. The announcement and pendency of the merger, or the failure of the merger to be consummated, could have an adverse effect on GEO’s or Cornell’s stock price, business, financial condition, results of operations or prospects.
 
The merger is subject to a number of conditions to closing, including (i) the approval of the issuance of shares of GEO common stock in accordance with the terms of the merger agreement, (ii) the adoption of the merger agreement by the Cornell stockholders, (iii) the resolution of any litigation instituted applicable to the merger under the HSR Act or any other applicable federal or state statute or regulation, (iv) no temporary restraining order, preliminary or permanent injunction or other order shall have been issued (and remain in effect) by a court or other governmental entity having the effect of making the merger illegal or otherwise prohibiting the consummation of the merger, (v) the approval for listing on the NYSE of the shares of GEO common stock issuable in connection with


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the merger and (vi) the receipt of certain third party contractual approvals that are required as a result of the merger. See “The Merger Agreement — Conditions to Completion of the Merger,” beginning on page 83.
 
If the shareholders of GEO fail to approve the GEO share issuance or if Cornell stockholders fail to adopt the merger agreement, GEO and Cornell will not be able to complete the merger. Additionally, if the other closing conditions are not met or waived, the companies will not be able to complete the merger. As a result, there can be no assurance that the merger will be completed in a timely manner or at all.
 
Further, the announcement and pendency of the merger could disrupt GEO’s and Cornell’s businesses, in any of the following ways, among others:
 
  •  GEO and Cornell employees may experience uncertainty about their future roles with the combined company, which might adversely affect Cornell’s and GEO’s ability to retain and hire key managers and other employees;
 
  •  the attention of management of each of GEO and Cornell may be directed toward the completion of the merger and transaction-related considerations and may be diverted from the day-to-day business operations of their respective companies; and
 
  •  customers, suppliers or others may seek to modify or terminate their business relationships with GEO or Cornell.
 
GEO and Cornell may face additional challenges in competing for new business and retaining or renewing business. These disruptions could be exacerbated by a delay in the completion of the merger or termination of the merger agreement.
 
For the foregoing reasons, there can be no assurance that the announcement and pendency of the merger, or the failure of the merger to be consummated, will not have an adverse effect on GEO’s or Cornell’s stock price, business, financial condition, results of operations or prospects.
 
There can be no assurance that GEO will be able to secure the debt financing required in connection with the merger.
 
GEO’s obligation to complete the merger is not conditioned on receipt of any financing. However, GEO needs approximately $300.0 million to fund the cash component of the merger consideration, the redemption of Cornell’s 10.75% senior notes, the refinancing of Cornell’s credit facility and the payment of transaction fees and expenses. GEO intends to fund the foregoing utilizing a combination of existing cash and one or more draws upon GEO’s senior credit facility. BNP Paribas has provided a commitment to extend $150.0 million of additional financing under the accordion feature of GEO’s existing senior credit facility. GEO may choose to draw upon its existing senior credit facility and the $150.0 million of committed financing or it may choose to pursue alternate financing sources, including debt financing or accessing the capital markets. GEO is currently in compliance with its debt covenants; however, GEO cannot guarantee that it will continue to be in compliance with all necessary conditions in order to draw upon its existing senior credit facility or the $150.0 million of committed financing, or that it will be able to secure alternative financing on terms as favorable as its current debt financing arrangements, on commercially acceptable terms, or at all. If GEO is unable to access its current sources of debt financing or is unable to use its available cash and secure any alternative financing in order to fund the payments it is obligated to make in connection with the merger, GEO will be in breach of the merger agreement.
 
The merger agreement limits Cornell’s ability to pursue an alternative acquisition proposal and requires Cornell to pay a termination fee of $12 million, plus expenses, if it does.
 
The merger agreement prohibits Cornell from soliciting, initiating or encouraging alternative merger or acquisition proposals with any third party. The merger agreement also provides for the payment by Cornell to GEO of a termination fee of $12 million, plus up to $2 million in fees and expenses, if the merger agreement is terminated in certain circumstances in connection with a competing acquisition proposal for Cornell or the withdrawal by the board of directors of Cornell of its recommendation that the Cornell stockholders vote in favor of the proposals


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required to consummate the merger, as the case may be. See “The Merger Agreement — Reimbursement of Fees and Expenses; Termination Fees,” beginning on page 85.
 
There may be a long delay between GEO and Cornell each receiving the necessary shareholder and stockholder approvals for the merger and the closing of the transaction, during which time Cornell will lose the ability to consider and pursue alternative acquisition proposals, which might otherwise be superior to the merger.
 
Following the GEO shareholder and Cornell stockholder approvals, the merger agreement prohibits Cornell from taking any actions to review, consider or recommend any alternative acquisition proposals, including those that could be superior to Cornell’s stockholders, respectively, when compared to the merger. Given that there could be a delay between stockholder approval and closing, the time during which Cornell could be prevented from reviewing, considering or recommending such proposals could be significant.
 
Cornell stockholders electing cash consideration cannot be certain that they will receive cash consideration.
 
Under the terms of the merger agreement, no more than 20% of the shares of Cornell common stock are permitted to be exchanged for cash. If cash elections are made with respect to more than 20% of the shares of Cornell common stock outstanding immediately before the effective time of the merger, the excess over 20% shall be treated as a stock election. Additionally, if the Cornell stockholders electing cash consideration in the aggregate would require GEO to pay cash consideration in excess of $100.0 million, GEO, in its sole discretion, may pay such excess amount in either cash consideration or stock consideration. Accordingly, if a Cornell stockholder elects cash consideration, the holder may receive a portion of the merger consideration in stock, which could result in a different result than that anticipated by such stockholder and may result in tax consequences that differ from those that would have resulted from the merger if the Cornell stockholder had only received cash consideration.
 
Certain directors and executive officers of GEO and Cornell may have interests that may be different from, or in addition to, interests of GEO and Cornell stockholders generally.
 
Some of the directors of GEO and Cornell who recommend that GEO shareholders vote in favor of the GEO issuance and Cornell stockholders vote in favor of adopting the merger agreement, and the executive officers of GEO and Cornell who provided information to the GEO and Cornell board of directors relating to the merger, have employment, indemnification and change in control benefit arrangements, rights to acceleration of equity-based awards and other benefits on a change in control of Cornell, and rights to ongoing indemnification and insurance that may provide them with interests in the merger. The receipt of compensation or other benefits, including the rights to acceleration of equity-based awards by Cornell’s executive officers in connection with the merger, may make it more difficult for the combined company to retain their services after the merger, or require the combined company to expend additional sums to continue to retain their services. Stockholders of both companies should be aware of these interests when considering the Cornell and GEO board of directors’ recommendations that they vote in favor of the adoption of the merger agreement, or the GEO share issuance, as the case may be. See “The Merger — Interests of GEO Executive Officers and Directors in the Merger” beginning on page 50. See “The Merger — Interests of Cornell Directors and Executive Officers in the Merger That are Different Than Yours” beginning on page 59.
 
Estimates as to the future value of the combined company are inherently uncertain. You should not rely on such estimates without considering all of the information contained in this joint proxy statement/prospectus.
 
Any estimates as to the future value of the combined company, including estimates regarding the price at which the common stock of the combined company will trade following the merger, are inherently uncertain. The future value of the combined company will depend upon, among other factors, the combined company’s ability to achieve projected revenue and earnings expectations and to realize the anticipated synergies described in this joint proxy statement/prospectus, all of which are subject to the risks and uncertainties described in this joint proxy statement/prospectus, including these risk factors. Accordingly, you should not rely upon any estimates as to the future value


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of the combined company, or the price at which the common stock of the combined company will trade following the merger, whether made before or after the date of this joint proxy statement/prospectus by GEO’s or Cornell’s respective management or affiliates or others, without considering all of the information contained in this joint proxy statement/prospectus.
 
A lawsuit has been filed against Cornell, members of the Cornell board of directors and GEO challenging the merger, and an unfavorable judgment or ruling in this lawsuit could prevent or delay the consummation of the merger, result in substantial costs or both.
 
Cornell, its directors and GEO have been named in a purported stockholder class action complaint, as amended, filed in Texas state court. The complaint alleges, among other things, that Cornell’s directors breached their fiduciary duties by entering into the merger agreement without first taking steps to obtain adequate, fair and maximum consideration for Cornell’s stockholders by shopping the company or initiating an auction process, by structuring the transaction to take advantage of Cornell’s current low stock valuation, and by structuring the transaction to benefit GEO while making an alternative transaction either prohibitively expensive or otherwise impossible, and that the corporate defendants have aided and abetted such breaches by Cornell’s directors. The plaintiffs are seeking, among other things, both an injunction prohibiting the merger and a constructive trust in an unspecified amount.
 
One of the conditions to the closing of the merger is that there not be any legal prohibition preventing the consummation of the merger, which would include the injunction sought by the plaintiffs in this case if it were to be granted. As a result, if the plaintiffs are successful in obtaining the injunction they seek, the merger may be blocked or delayed, or there could be substantial costs to GEO and/or Cornell. It is possible that other similar lawsuits may be filed in the future. Cornell cannot estimate any possible loss from this or similar future litigation at this time. Cornell has obligations under certain circumstances to hold harmless and indemnify each of the defendant directors against judgments, fines, settlements and expenses related to claims against such directors and otherwise to the fullest extent permitted under Delaware law and Cornell’s certificate of incorporation, bylaws and contractual agreements with its directors.
 
The shares of GEO common stock to be received by Cornell stockholders as a result of the merger will have different rights from the shares of Cornell common stock.
 
The rights associated with Cornell common stock are different from the rights associated with GEO common stock. See the section of this joint proxy statement/prospectus entitled “Comparison of Stockholder Rights” for a discussion of the different rights associated with Cornell common stock.
 
If the merger is not consummated by February 15, 2011, either Cornell or GEO may choose not to proceed with the merger.
 
Either Cornell or GEO may terminate the merger agreement if the merger has not been completed by February 15, 2011, unless the failure of the merger to be completed has resulted from the failure of the party seeking to terminate the merger agreement to perform its obligations.
 
If you tender shares of Cornell common stock to make an election (or follow the procedures for guaranteed delivery), you will not be able to sell those shares, unless you revoke your election prior to the election deadline.
 
You will receive an election form and other materials relating to your right to elect the form of merger consideration under the merger agreement and will be requested to send to the exchange agent your Cornell stock certificates (or follow the procedures for guaranteed delivery) together with the properly completed election form. If you want to make a cash or stock election, you must deliver your stock certificates (or follow the procedures for guaranteed delivery) and a properly completed and signed form of election to the exchange agent by the election deadline, which will be specified in the form of election. If you hold Cornell stock options and you wish to make an election as to the form of merger consideration, you must have exercised your options before the election deadline.


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You will not be able to sell any shares of Cornell common stock that you have delivered, unless you revoke your election before the deadline by providing written notice to the exchange agent. If you do not revoke your election, you will not be able to liquidate your investment in Cornell common stock for any reason until you receive cash and/or GEO common stock in the merger. In the time between delivery of your shares and the completion of the merger, the trading price of Cornell or GEO common stock may decrease, and you might otherwise want to sell your shares of Cornell to gain access to cash, make other investments, or reduce the potential for a decrease in the value of your investment.
 
The date that you will receive your merger consideration depends on the completion date of the merger, which is uncertain. The completion date of the merger might be later than expected due to unforeseen events, such as delays in obtaining required third-party approvals.
 
Risks Related to the Combined Company if the Merger is Completed
 
GEO and Cornell may experience difficulties integrating their businesses.
 
Currently, each company operates as an independent public company. Achieving the anticipated benefits of the merger will depend in significant part upon whether the two companies integrate their businesses in an efficient and effective manner. Due to legal restrictions, GEO and Cornell have been able to conduct only limited planning regarding the integration of the two companies following the merger and have not yet determined the exact nature of how the businesses and operations of the two companies will be combined after the merger. The actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. The companies may not be able to accomplish the integration process smoothly, successfully or on a timely basis. The necessity of coordinating geographically separated organizations, systems of controls, and facilities and addressing possible differences in business backgrounds, corporate cultures and management philosophies may increase the difficulties of integration. The companies operate numerous systems and controls, including those involving management information, purchasing, accounting and finance, sales, billing, employee benefits, payroll and regulatory compliance. The integration of operations following the merger will require the dedication of significant management and external resources, which may temporarily distract management’s attention from the day-to-day business of the combined company and be costly. Employee uncertainty and lack of focus during the integration process may also disrupt the business of the combined company. Any inability of management to successfully and timely integrate the operations of the two companies could have a material adverse effect on the business and results of operations of the combined company.
 
The combined company may not fully realize the anticipated synergies and related benefits of the merger or within the timing anticipated.
 
GEO and Cornell entered into the merger agreement because each company believes that the merger will be beneficial to each of GEO, the GEO shareholders, Cornell and the Cornell stockholders including, among other things, as a result of the anticipated synergies resulting from the combined company’s operations. GEO’s management anticipates annual synergies of $12-15 million during the year following the completion of the merger. The companies may not be able to achieve the anticipated operating and cost synergies or long-term strategic benefits of the merger within the timing anticipated or at all. For example, elimination of duplicative costs may not be fully achieved or may take longer than anticipated. For at least the first year after the merger, and possibly longer, the benefits from the merger will be offset by the costs incurred in integrating the businesses and operations, or adverse conditions imposed by regulatory authorities on the combined business in connection with granting approval for the merger. An inability to realize the full extent of, or any of, the anticipated synergies or other benefits of the merger, as well as any delays that may be encountered in the integration process, which may delay the timing of such synergies or other benefits, could have an adverse effect on the business and results of operations of the combined company, and may affect the value of the shares of GEO common stock after the completion of the merger.


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The merger may not be accretive and may cause dilution to the combined company’s earnings per share, which may harm the market price of GEO common stock after the merger.
 
While GEO believes the merger has the potential to be accretive to future earnings, there can be no assurance with respect to the timing and scope of the accretive effect or whether it will be accretive at all. The combined company could encounter additional transaction and integration-related costs or other factors such as the failure to realize all of the benefits anticipated in the merger or a downturn in its business. All of these factors could cause dilution to the combined company’s earnings per share or decrease the expected accretive effect of the merger and cause a decrease in the price of GEO common stock after the merger.
 
The price of the common stock of the combined company may be affected by factors different from those affecting the price of GEO common stock or Cornell common stock independently.
 
After completion of the merger, as the combined company integrates the businesses of GEO and Cornell, the results of operations as well as the stock price of the combined company may be affected by factors different than those factors affecting GEO and Cornell as independent stand-alone entities. The combined company may face additional risks and uncertainties not otherwise facing each independent company prior to the merger. For a discussion of GEO’s and Cornell’s businesses and certain factors to consider in connection with their respective businesses, see the respective sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in each of GEO’s Annual Report on Form 10-K for the year ended January 3, 2010 and Cornell’s Annual Report on Form 10-K, as amended, for the year ended December 31, 2009 and other documents incorporated by reference into this joint proxy statement/prospectus.
 
Charges to earnings resulting from the application of the acquisition method of accounting may adversely affect the market value of GEO common stock following the merger.
 
In accordance with GAAP, GEO will be considered the acquiror of Cornell for accounting purposes. GEO will account for the merger using the acquisition method of accounting. There may be charges related to the acquisition that are required to be recorded to GEO’s earnings that could adversely affect the market value of GEO common stock following the completion of the merger. Under the acquisition method of accounting, GEO will allocate the total purchase price to the assets acquired, including identifiable intangible assets, and liabilities assumed from Cornell based on their fair values as of the date of the completion of the merger, and record any excess of the purchase price over those fair values as goodwill. For certain tangible and intangible assets, revaluing them to their fair values as of the completion date of the merger may result in GEO’s incurring additional depreciation and amortization expense that may exceed the combined amounts recorded by GEO and Cornell prior to the merger. This increased expense will be recorded by GEO over the useful lives of the underlying assets. In addition, to the extent the value of goodwill or intangible assets were to become impaired after the merger, GEO may be required to incur charges relating to the impairment of those assets.
 
The combined company will incur significant transaction- and integration-related costs in connection with the merger.
 
GEO and Cornell expect to incur non-recurring costs associated with combining the operations of the two companies, including charges and payments to be made to some of their employees pursuant to “change in control” contractual obligations. GEO expects that the amount of these costs will be determined as of the effective time of the merger and may be material to the financial position and results of operations of the combined company. The substantial majority of non-recurring expenses resulting from the merger will be comprised of transaction costs related to the merger, facilities and systems consolidation costs, and employee-related costs. GEO and Cornell will also incur fees and costs related to formulating integration plans and performing these activities. Additional unanticipated costs may be incurred in the integration of the two companies’ businesses. The elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may not offset incremental transaction- and other integration-related costs in the near term.


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The combined company will have substantial indebtedness following the merger, which may limit its financial flexibility.
 
Following the completion of the merger, the combined company is expected to have approximately $[     ] million in pro-forma total debt outstanding. This amount of indebtedness may limit the combined company’s flexibility as a result of its debt service requirements, and may limit the combined company’s ability to access additional capital and make capital expenditures and other investments in its business, to withstand economic downturns and interest rate increases, to plan for or react to changes in its business and its industry, and to comply with financial and other restrictive covenants in its indebtedness.
 
Further, the combined company’s ability to comply with the financial and other covenants contained in its debt instruments may be affected by changes in economic or business conditions or other events beyond its control. If the combined company does not comply with these covenants and restrictions, it may be required to take actions such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing all or part of its existing debt, or seeking additional equity capital.
 
GEO may have failed to discover undisclosed liabilities of Cornell.
 
GEO’s investigations and due diligence review of Cornell may have failed to discover undisclosed liabilities of Cornell. If Cornell has undisclosed liabilities, GEO as a successor owner may be responsible for such undisclosed liabilities. GEO has tried to minimize its exposure to undisclosed liabilities by obtaining certain protections under the merger agreement, including representations and warranties from Cornell regarding undisclosed liabilities. However, there can be no assurance that such provisions in the merger agreement will protect GEO against any undisclosed liabilities being discovered or provide an adequate remedy for any undisclosed liabilities that are discovered. Additionally, the representations and warranties from Cornell do not survive beyond the effective time of the merger. Therefore, there can be no assurance that GEO will have a remedy that is enforceable, collectible or sufficient in amount, scope or duration, or a remedy at all, to offset, fully or partially, any undisclosed liabilities arising from the merger. Such undisclosed liabilities could have an adverse effect on the business and results of operations of GEO and may adversely affect the value of the shares of GEO common stock after the consummation of the merger.
 
Cornell may have failed to discover undisclosed liabilities of GEO.
 
Cornell’s investigations and due diligence review of GEO may have failed to discover undisclosed liabilities of GEO. Cornell has tried to minimize its exposure to undisclosed liabilities by obtaining certain protections under the merger agreement, including representations and warranties from GEO regarding undisclosed liabilities. However, there can be no assurance that such provisions in the merger agreement will protect Cornell against any undisclosed liabilities being discovered or provide an adequate remedy for any undisclosed liabilities that are discovered. Additionally, the representations and warranties from GEO do not survive beyond the effective time of the merger. Therefore, there can be no assurance that the combined company will have a remedy that is enforceable, collectible or sufficient in amount, scope or duration, or any remedy at all, to offset, fully or partially, any undisclosed liabilities of GEO. Such undisclosed liabilities could have an adverse effect on the business and results of operations of the combined company, and may adversely affect the value of the shares of GEO common stock after the consummation of the merger.
 
The merger will result in GEO reentering the market of operating juvenile correctional facilities which may pose certain risks and difficulties compared to other facilities.
 
As a result of the merger, GEO will reenter the market of operating juvenile correctional facilities. GEO intentionally exited this market a number of years ago. Operating juvenile correctional facilities may pose increased operational risks and difficulties that may result in increased litigation, higher personnel costs, higher levels of turnover of personnel and reduced profitability. Additionally, juvenile services contracts related to educational services may provide for annual collection several months after a school year is completed. GEO cannot assure you that the combined company will be successful in operating juvenile correctional facilities or that it will minimize the risks and difficulties involved while yielding an attractive profit margin.


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The combined company’s goodwill or other intangible assets may become impaired, which could result in material non-cash charges to its results of operations.
 
The combined company will have a substantial amount of goodwill and other intangible assets resulting from the merger. At least annually, or whenever events or changes in circumstances indicate a potential impairment in the carrying value as defined by GAAP, the combined company will evaluate this goodwill for impairment based on the fair value of each reporting unit. Estimated fair values could change if there are changes in the combined company’s capital structure, cost of debt, interest rates, capital expenditure levels, operating cash flows, or market capitalization. Impairments of goodwill or other intangible assets could require material non-cash charges to the combined company’s results of operations.
 
Future results of the combined company may differ materially from the unaudited pro forma financial statements presented in this joint proxy statement/prospectus.
 
The combined company’s future results may be materially different from those shown in the unaudited pro forma financial statements presented in this joint proxy statement/prospectus that show only a combination of GEO’s and Cornell’s historical results. GEO expects to incur significant costs associated with completing the merger and combining the operations of the two companies, and the exact magnitude of these costs is not yet known. Furthermore, these costs may decrease capital that could be used by GEO for income-earning investments in the future.
 
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
 
This joint proxy statement/prospectus contains certain forward-looking information about GEO, Cornell and the combined company that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this joint proxy statement/prospectus or may be incorporated into this joint proxy statement/prospectus by reference to other documents and may include statements for the period following the completion of the merger. Representatives of GEO and Cornell may also make forward-looking statements. Forward-looking statements are statements that are not historical facts. Words such as “expect,” “believe,” “will,” “may,” “anticipate,” “plan,” “estimate,” “intend,” “should,” “can,” “likely,” “could” and similar expressions are intended to identify forward-looking statements. These statements include statements about the expected benefits of the merger, information about the combined company, including expected synergies, combined operating and financial data and the combined company’s objectives, plans and expectations, the likelihood of satisfaction of certain conditions to the completion of the merger and whether and when the merger will be consummated. Forward-looking statements are not guarantees of performance. These statements are based upon the current beliefs and expectations of the management of each of GEO and Cornell and are subject to risks and uncertainties, including the risks described in this joint proxy statement/prospectus under the section “Risk Factors” and those that are incorporated by reference into this joint proxy statement/prospectus that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.
 
In light of these risks, uncertainties, assumptions and factors, the results anticipated by the forward-looking statements discussed in this joint proxy statement/prospectus, in documents incorporated by reference into this joint proxy statement/prospectus or made by representatives of GEO or Cornell may not occur. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof or, in the case of statements incorporated by reference, on the date of the document incorporated by reference, or, in the case of statements made by representatives of GEO or Cornell, on the date those statements are made. All subsequent written and oral forward-looking statements concerning the merger or the combined company or other matters addressed in this joint proxy statement/prospectus and attributable to GEO or Cornell or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable law or regulation, neither GEO nor Cornell undertakes any obligation to update or publish revised forward-looking statements to reflect events or circumstances after the date hereof or the date of the forward-looking statements or to reflect the occurrence of unanticipated events.


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THE MERGER
 
The following discussion contains important information relating to the merger. You are urged to read this discussion together with the merger agreement and related documents attached as annexes to this joint proxy statement/prospectus before voting.
 
Structure of the Merger
 
Subject to the terms and conditions of the merger agreement and in accordance with Delaware law, GEO Acquisition III, Inc., a wholly owned subsidiary of GEO that was formed for the purpose of the merger, will be merged with and into Cornell, with Cornell surviving the merger and becoming a wholly owned subsidiary of GEO. Immediately following the merger, GEO will continue to be named “The GEO Group, Inc.” and will be the parent company of Cornell. Accordingly, after the effective time of the merger, shares of Cornell common stock will no longer be publicly traded.
 
Merger Consideration
 
Cornell Stockholders.  At the effective time of the merger, each outstanding share of Cornell common stock will be converted into the right to receive either (i) 1.3 shares of GEO common stock, or (ii) an amount of cash consideration equal to the greater of (x) the fair market value of one share of GEO common stock plus $6.00 or (y) the fair market value of 1.3 shares of GEO common stock. Cornell stockholders desiring to receive a combination of GEO common stock and cash may do so by making a stock election with respect to a portion of their shares and a cash election with respect to their remaining shares. If a Cornell stockholder fails to make an election, the holder will receive the stock consideration. “Fair market value” of GEO common stock for the purpose of determining the cash consideration means the average of the daily closing prices per share of GEO common stock for the ten consecutive trading days on which shares of GEO common stock are actually traded (as reported on the NYSE) ending on the trading day immediately preceding the tenth business day preceding the closing date. Cornell stockholders have the opportunity to elect whether to receive stock consideration or cash consideration as provided above. However, the merger agreement provides that notwithstanding such elections, no more than 20% of the shares of Cornell common stock are permitted to be exchanged for cash consideration. If cash elections are made with respect to more than 20% of Cornell’s shares, the excess over 20% shall be treated as if a stock election had been made with respect to such excess shares and they will be exchanged for shares of GEO common stock. In such event, a pro rata portion (rounded up to the nearest whole share) of each holder’s shares of Cornell common stock with respect to which an election was made to elect cash consideration shall instead be converted to GEO common stock. Additionally, if the application of the above procedures and limitations relating to the merger agreement would result in more than $100.0 million of cash being paid to Cornell stockholders electing cash consideration, then GEO may elect, in its sole discretion, to reduce the amount of cash paid to each Cornell stockholder electing cash consideration on a pro rata basis so that the total cash paid with respect to all cash consideration is $100.0 million. If the cash consideration otherwise payable to any holder of Cornell common stock is reduced under this clause, such holder shall be entitled to receive GEO common stock at a fair market value (as defined above) equal to the amount of the reduction. GEO intends to pay such excess amount in cash.
 
Election Procedure.  An election form and letter of transmittal have been enclosed with this joint proxy statement/prospectus pursuant to which Cornell stockholders may elect whether they would prefer to receive GEO common stock or cash in exchange for their Cornell shares. If you were a record holder of Cornell common stock on the Cornell record date, you should carefully review and follow the instructions included in the election form and the letter of transmittal. To make an election, record holders must properly complete and sign the election form and letter of transmittal and send those documents and the certificates for their shares (or a properly completed notice of guaranteed delivery) to the exchange agent at the address listed in the election form and letter of transmittal by the election deadline, which is 5:00 p.m., New York time, on [               ], 2010. If the merger agreement is terminated, all election forms delivered to the exchange agent on or prior to the date of such termination will be automatically revoked and all share certificates will be returned. Please do not send your election form and stock certificates with your proxy card for the special meeting. Your election form and stock certificates are to be submitted separately from your proxy card.
 
If you own shares of Cornell common stock in “street name” through a broker or other financial institution, you will receive or should seek instructions from the institution holding your shares concerning how to make your election. Any instructions must be given to your broker or other financial institution sufficiently in advance of the


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election deadline for record holders in order to allow your broker or financial institution sufficient time to cause the record holder of your shares to make an election as described above. Therefore, you should carefully read any materials you receive from your broker.
 
If you are a record holder of Cornell shares, you may change your election or change the number of shares for which you have made an election at any time prior to the election deadline by sending a signed written notice to the exchange agent identifying the shares of Cornell common stock for which you are changing your election along with a properly completed revised election form. For a change of an election to be effective, it must be received by the exchange agent prior to the election deadline. In addition, a record holder may revoke an election at any time prior to the election deadline by delivering to the exchange agent a written notice of revocation. A revocation of a proxy shall also be deemed a revocation of an election with respect to the merger consideration. Shares of Cornell common stock as to which an election has been revoked after the election deadline will be deemed non-election shares, and no new election as to such shares may be made after the election deadline. If you hold your shares in “street name,” you must follow your broker’s instructions for changing or revoking an election.
 
All elections are subject to the proration procedures described above. If you do not make a valid election, your shares will be considered non-election shares, and when the merger is completed you will be entitled to receive the stock consideration for non-election shares as described above.
 
GEO Shareholders.  GEO shareholders will continue to own their existing shares of GEO common stock after the merger. Each share of GEO common stock will represent one share of common stock in the combined company.
 
Fractional Shares.  GEO will not issue fractional shares of GEO common stock in the merger. All fractional shares of GEO common stock to which a holder of shares of Cornell common stock would otherwise be entitled as a result of the merger will be aggregated. For any fractional share that results from such aggregation, the exchange agent will pay the holder an amount of cash, without interest, equal to the product of such fraction of a share of GEO common stock which the Cornell stockholder would otherwise have been entitled to receive pursuant to the merger multiplied by the closing sale price of a share of GEO common stock on the NYSE on the trading day that is one trading day prior to the closing date. GEO shall deposit with the exchange agent the funds required to make such cash payments when and as needed.
 
Ownership of the Combined Company After the Merger
 
As of April 4, 2010, approximately 49.2 million shares of GEO common stock were outstanding and approximately 2.8 million shares of GEO common stock were reserved for the exercise of outstanding GEO options and settlement of other outstanding GEO equity-based awards. In accordance with terms of the merger, at the effective time of the merger, GEO (1) will issue up to approximately [     ] million shares of GEO common stock to Cornell stockholders pursuant to the merger and (2) will reserve for issuance approximately [     ] million shares of GEO common stock in connection with the exercise or settlement of Cornell equity-based awards. GEO and Cornell expect that the shares of GEO common stock issued in connection with the merger in respect of Cornell common stock will represent approximately [     ]% of the outstanding common stock of the combined company immediately after the merger on a diluted basis. Shares of GEO common stock held by GEO shareholders immediately prior to the merger will represent approximately [     ]% of the outstanding common stock of the combined company immediately after the merger on a diluted basis.
 
Background of the Merger
 
Since 2003, GEO and Cornell, through their respective management teams and representatives, have discussed a potential strategic combination on a number of occasions. In 2004 and again in 2007, the companies undertook extensive due diligence and entered into negotiations regarding definitive merger agreements. However, the companies did not consummate a transaction in either year.
 
Following the failure to consummate a transaction in 2004, representatives of the companies continued to hold informal discussions regarding a potential business combination. James E. Hyman, Cornell’s Chairman, Chief Executive Officer and President, and George C. Zoley, GEO’s Chairman and Chief Executive Officer, have known


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each other professionally since early 2005 and from time to time have had informal conversations about their respective companies and the possibility of a strategic combination. In 2006, Cornell conducted a review of strategic alternatives involving multiple industry participants and potential private equity partners. That process eventually resulted in a merger agreement with a private equity company that Cornell’s stockholders rejected in January 2007.
 
In May 2007, representatives of GEO contacted representatives of Cornell and proposed that GEO acquire Cornell in an all stock transaction. Substantive discussions between representatives of the companies and extensive due diligence continued from May through October. However, the parties were ultimately unable to agree on terms for a proposed transaction and, on October 22, 2007, discussions regarding a combination were terminated. Thereafter, Mr. Hyman, from time to time, continued to have informal discussions on strategic combinations with other industry participants.
 
Beginning in the spring of 2009, the Cornell board of directors and Cornell senior management undertook a review of Cornell’s strategic alternatives, based on the broader industry and economic climate, including (i) continuing to execute its business strategy as a stand-alone entity, (ii) acquiring or divesting business units, (iii) undertaking an internal restructuring or (iv) engaging in a transaction with a potential strategic acquirer.
 
On July 2, 2009, GEO, through its representatives, delivered to Cornell a written proposal whereby GEO proposed to acquire Cornell in an all stock transaction at an exchange ratio of 1.05 shares of GEO common stock for each outstanding share of Cornell common stock. Following the receipt of this proposal, on July 9, 2009, the Cornell board of directors met with representatives of Moelis & Company LLC, hereafter referred to as Moelis & Company, Cornell’s financial advisor, to evaluate the terms of the proposal including, among other things, the proposed price per share, the transaction structure and the relative advantages of a strategic combination with GEO at that time. Based on its evaluation, the Cornell board of directors rejected the proposal.
 
In August 2009, Messrs. Hyman and Zoley again informally discussed the possibility of re-initiating conversations regarding a potential transaction between GEO and Cornell. No formal terms were proposed at that time. During the ensuing months, Mr. Zoley periodically kept the members of GEO’s board of directors apprised that Cornell was potentially interested in engaging in discussions once again.
 
Following the rejection of the July 2009 GEO proposal and the informal discussions with GEO in August 2009, Cornell analyzed its available resources and the challenges it faced as a stand-alone entity. Throughout the remainder of 2009 and the beginning of 2010, Cornell’s management investigated potential acquisition opportunities related to Cornell’s community-corrections segment and targeted companies in both the secure and juvenile industry segments. Cornell’s management also analyzed potential business unit divestitures and alternative debt or leverage structures as a means of creating value for Cornell’s stockholders and better positioning Cornell in the marketplace. However, Cornell was unable to find sufficiently attractive external acquisition or internal restructuring opportunities.
 
On February 18, 2010, at a meeting of the corporate planning committee of the GEO board of directors, Mr. Zoley discussed at length with the GEO board members various growth opportunities that GEO was in the process of evaluating. During this meeting, Mr. Zoley once again discussed the potential acquisition of Cornell. Mr. Zoley also provided to the GEO board members selected preliminary pro forma information regarding the potential impact of an acquisition of Cornell on GEO’s business, including certain key financial and operating metrics.
 
On March 3, 2010, Messrs. Hyman and Zoley met and discussed GEO’s continued interest in a strategic business combination. During this meeting, Mr. Hyman and Mr. Zoley discussed a proposal whereby GEO would acquire Cornell in an all stock transaction at an exchange ratio of 1.25 shares of GEO common stock for each outstanding share of Cornell common stock. In the days following, Mr. Hyman, following separate telephonic communications with each member of the Cornell board of directors, continued to engage in informal conversations with a number of potential domestic and international strategic acquirers in Cornell’s industry and related industries. Such discussions continued throughout the months of March and April, however each potential acquirer informed Cornell that they were not interested in pursuing substantive discussions concerning a transaction at that time.


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At a meeting held on March 26, 2010, the Cornell board of directors met with representatives of Moelis & Company and Cornell senior management present, including Mr. Hyman. Mr. Hyman outlined Mr. Zoley’s proposal to Cornell’s board of directors. The board discussed the proposal and other strategic considerations and potential strategic alternatives available to Cornell. At this meeting, the Cornell board of directors appointed a special committee of the board comprised solely of independent directors, referred to herein as the special committee, to evaluate strategic alternatives, including GEO’s proposal and any proposals received from other parties, and to negotiate the terms of any definitive transaction documents. The special committee further determined to retain Hogan Lovells as legal counsel in connection with the evaluation of proposals.
 
On April 1, 2010, the special committee met with representatives of Moelis & Company and Cornell senior management regarding the status of discussions with various potential strategic partners. Representatives of Cornell senior management informed the special committee that a potential strategic acquirer expressed limited general interest in a transaction but it, and each of the other parties contacted, did not appear interested in specific discussions at that time. The special committee, following discussion concerning these parties, and following a review of the fiduciary duties of the Cornell board of directors with representatives of Hogan Lovells, determined, among other things, that Mr. Hyman should inform Mr. Zoley that Cornell, through the special committee, would be willing to proceed with discussions concerning a potential strategic transaction and to request that Mr. Zoley submit a written proposal for the special committee’s consideration. Additionally, the special committee determined that representatives of Cornell senior management and Moelis & Company should continue communications with other potential strategic acquirers. Immediately following the meeting, Mr. Hyman contacted Mr. Zoley as directed.
 
On April 2, 2010, GEO submitted a written, non-binding proposal to the board of directors of Cornell pursuant to which GEO proposed to acquire all of the outstanding common stock of Cornell in exchange for either stock consideration at an exchange ratio of 1.25 shares of GEO common stock for each outstanding share of Cornell common stock, or a mix of cash and stock consideration equal to one share of GEO common stock plus $4.00 in cash for each outstanding share of Cornell common stock, at the election of each Cornell stockholder. The proposal further requested that GEO and Cornell adhere to an expedited transaction timeline and due diligence process.
 
On April 5, 2010, the special committee of Cornell met with representatives of Hogan Lovells and Moelis & Company, with members of Cornell senior management present, to consider GEO’s proposal and to receive an update as to the status of discussions with various other potential strategic acquirers. A representative of Moelis & Company and members of Cornell senior management informed the special committee that the other potential strategic acquirers were not interested in substantive discussions at that time and a representative of Moelis & Company reviewed with the Cornell board of directors the likelihood of interest by, and ability to procure acquisition financing of, other potential parties. Mr. Hyman outlined the terms of GEO’s proposal and the proposed timeline. Representatives of Moelis & Company outlined for the special committee the substance of discussions concerning the proposal held with GEO’s outside counsel. A representative of Moelis & Company answered questions from the members of the special committee regarding the specific terms of the offer and representatives of Hogan Lovells reviewed the fiduciary duties of the Cornell board of directors. Following discussion among its members, the special committee determined that Moelis & Company should contact representatives of GEO to communicate that the special committee had rejected GEO’s proposal because the special committee believed that GEO’s proposal constituted an inadequate premium to the trading price of Cornell’s common stock. Immediately following the meeting, representatives of Moelis & Company contacted GEO as directed. Discussions continued throughout the week of April 5, 2010 between Moelis & Company and representatives of GEO concerning the specific financial terms of a possible revised proposal.
 
On April 9, 2010, GEO held internal discussions and conducted a detailed review of, among other things, its valuation of Cornell. Representatives of GEO subsequently contacted representatives of Moelis & Company to orally communicate that (i) GEO would revise its offer such that all of the outstanding common stock of Cornell would be exchanged for either stock consideration at an exchange ratio of 1.25 shares of GEO common stock for each outstanding share of Cornell common stock, or a mix of cash and stock consideration equal to one share of GEO common stock plus $5.00 in cash for each outstanding share of Cornell common stock, at the election of each Cornell stockholder, and (ii) no seats on the board of directors of GEO would be offered to Cornell as part of the transaction.


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On April 9, 2010, the special committee met with representatives of Hogan Lovells, Moelis & Company and members of Cornell senior management present to discuss GEO’s revised proposal. Following discussion among those present concerning the revised terms of the proposal, financial analysis conducted by Moelis & Company concerning Cornell and GEO and a review of the fiduciary duties of the Cornell board of directors with representatives of Hogan Lovells, the special committee determined to reject GEO’s revised proposal and to submit a counter proposal in writing to GEO which would result in Cornell stockholders receiving, for each outstanding share of Cornell common stock, either (i) 1.3 shares of GEO common stock, or (ii) the cash value of one share of GEO common stock plus $6.00, at such stockholders’ election.
 
On April 10, 2010, representatives of GEO and GEO senior management held extensive discussions regarding the terms of the special committee’s counterproposal. Following those discussions, on April 11, 2010, GEO submitted a revised written, non-binding proposal to acquire Cornell pursuant to which Cornell’s stockholders could elect to receive in exchange for each outstanding share of Cornell common stock either (i) 1.3 shares of GEO common stock, or (ii) the cash value of one share of GEO common stock plus $6.00, at such stockholders’ election. The proposal provided for the execution of a definitive merger agreement on April 18, 2010 and a public announcement of the transaction on April 19, 2010.
 
Hogan Lovells received the first draft of the definitive merger agreement from GEO’s counsel on April 13, 2010. Thereafter, the parties and their respective advisors continued mutual due diligence and, from April 13, 2010 through April 18, 2010, negotiated the terms of a definitive merger agreement and ancillary documents. The parties largely completed their due diligence efforts on April 16, 2010.
 
On April 15, 2010, the GEO board of directors held a telephonic meeting to discuss the proposed acquisition of Cornell. Mr. Zoley summarized the status of recent discussions and negotiations that had taken place regarding the proposed transaction. He then reviewed in detail the terms of GEO’s proposal letter, dated April 11, 2010, which is summarized above. A copy of the letter had been provided to the GEO board of directors in advance of the meeting. Mr. Zoley next reviewed the extensive history of discussions between the two companies and the substantial due diligence that GEO had conducted over the years on Cornell’s business. Discussions were then had regarding the board’s significant familiarity with Cornell’s business and operations. Several GEO board members expressed optimism that Cornell appeared to once again have an interest in pursuing a transaction but questioned whether a transaction could actually be completed on mutually satisfactory terms given the parties’ history of terminated discussions. A number of key factors relating to transaction execution were then considered, including, among other things, the extensive amount of due diligence the parties had conducted on each other’s respective businesses in the past, the information that was publicly available on both companies due to their status as SEC reporting companies, the companies’ status as competitors in the corrections industry, and the risk that a lengthy process could significantly increase the possibility that news of a potential transaction could leak and make the transaction highly improbable. After taking these and other relevant factors into account, the GEO board of directors supported GEO management’s view that an expedited timeline for negotiations and due diligence would be an advisable strategy for successfully executing a definitive merger agreement with respect to a proposed transaction. Representatives of Akerman Senterfitt then reviewed the proposed terms of the merger agreement with Cornell in detail. Extensive discussions were had regarding various key terms and provisions of the merger agreement. Following these discussions on the merger agreement, representatives of Akerman Senterfitt delivered a detailed presentation regarding the GEO board of directors’ fiduciary duties in connection with its review and approval of the proposed transaction with Cornell. After extensive discussion, the meeting was adjourned.
 
On April 16, 2010, the board of directors of Cornell, including the members of the special committee, met with representatives of Hogan Lovells, Moelis & Company and members of Cornell senior management present to discuss the status of due diligence efforts and negotiations concerning the definitive merger agreement. Representatives of Hogan Lovells, Moelis & Company and Cornell senior management reviewed for the board, among other things, the directors’ fiduciary duties, the proposed deal structure, preliminary due diligence results and certain of GEO’s corporate governance practices and policies. The parties continued negotiations following such meeting.
 
The special committee met again on April 18, 2010 with representatives of Hogan Lovells, Moelis & Company and members of Cornell senior management present to confer and agree upon a recommendation to the board of


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directors of Cornell regarding a potential transaction with GEO. During this meeting, Mr. Hyman outlined a revised proposal pursuant to which Cornell’s stockholders could elect to receive in exchange for each outstanding share of Cornell common stock either (i) 1.3 shares of GEO common stock or (ii) the greater of the cash equivalent of (a) 1.3 shares of GEO common stock or (b) one share of GEO common stock plus $6.00, at the election of each Cornell stockholder. GEO’s proposal was contingent upon certain conditions, including, among other things, that no more than 20% of the shares of Cornell common stock be exchanged for the cash consideration and that the aggregate cash consideration payable would not, except in GEO’s sole discretion, exceed $100.0 million. The proposal was discussed at length by the members of the special committee and the special committee’s legal and financial advisors. Representatives of Hogan Lovells also reviewed the status of the negotiations concerning the definitive merger agreement and thereafter the members of the special committee unanimously determined to recommend, subject to the receipt of definitive documentation from GEO consistent with the terms of the transaction as presented by Mr. Hyman, the acceptance of GEO’s proposal to the board of directors of Cornell.
 
Immediately thereafter, the board of directors of Cornell, including the members of the special committee, met with representatives of Hogan Lovells, Moelis & Company and members of Cornell senior management present to consider the proposed transaction. Mr. Hyman outlined the terms of GEO’s revised merger proposal. Representatives of Hogan Lovells advised the board of directors of its fiduciary duties and its confidentiality obligations, and also reviewed the terms of the draft merger agreement with the board of directors and answered questions from the board members about the transaction documents, including with respect to events which would trigger the payment of a termination fee by Cornell to GEO and the fiduciary duties of the Cornell board of directors in connection with the receipt of superior proposals. A representative of Moelis & Company presented its updated financial analysis of the proposed merger and explained to the members of the Cornell board of directors the mechanics of the proposed election to be made by Cornell stockholders and other details regarding the transaction structure. In connection with its deliberations, the Cornell board of directors considered written materials distributed in advance of the meeting by Moelis & Company. Representatives of Hogan Lovells also reviewed with the board the final results of the due diligence conducted on GEO. The directors then engaged in a discussion with their advisors about the transaction. Following such discussion, a representative of Moelis & Company orally expressed its opinion (subsequently confirmed in writing) that as of such date, based upon and subject to the considerations, assumptions, qualifications and limitations set forth therein, the consideration to be received in the merger by the holders of shares of Cornell common stock (viewed solely in their capacities as holders of shares of Cornell common stock), was fair from a financial point of view. Mr. Hyman disclosed to the Cornell board of directors that GEO had requested him to extend by one year, contingent upon the consummation of the merger, the term of the non-competition period contained in Mr. Hyman’s employment agreement. Such extension would be made on mutually-agreeable terms to be documented after execution of the merger agreement. Mr. Hyman reviewed the proposed terms of such understanding, which had not yet been finalized, and responded to questions from the Cornell board of directors relating thereto. As of the date hereof, the parties are working to agree on definitive documentation agreeable to both parties regarding the extension of Mr. Hyman’s non-competition period. Thereafter, the special committee expressed its unanimous recommendation of the transaction to the Cornell board of directors and then the Cornell board of directors, having taken into consideration the information presented, including the opinion of Moelis & Company, approved the merger of GEO and Cornell and the merger agreement, and voted to recommend the adoption of the merger agreement to the holders of Cornell’s common stock. Promptly following the vote of the members of the board of directors, Moelis & Company delivered its written opinion, dated April 18, 2010, a copy of which is attached hereto as Annex E.
 
On April 18, 2010, the GEO board of directors met with representatives of Akerman Senterfitt and GEO’s financial advisors to discuss the proposed transaction with Cornell. During the meeting, Mr. Zoley outlined the revised merger proposal. Barclays Capital and BofA Merrill Lynch reviewed with the GEO board of directors their financial analysis of the proposed merger consideration and each rendered to the GEO board of directors an oral opinion (confirmed by delivery of a written opinion) to the effect that, as of such date and based upon and subject to the considerations, assumptions, qualifications and limitations set forth therein, the consideration to be paid by GEO in the merger was fair, from a financial point of view, to GEO. Representatives of Akerman Senterfitt then reviewed with the GEO board of directors the results of GEO’s due diligence review and the terms of the merger agreement. An extensive discussion was had regarding various key terms and provisions of the merger agreement. Representatives of Akerman Senterfitt also discussed the fiduciary duties of the GEO board of directors with respect


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to the potential transaction. Thereafter, the GEO board of directors, having taken into consideration the information presented and the factors noted below in the section captioned “GEO Reasons for the Merger and the Recommendation of GEO’s Board of Directors Relating to the Merger,” approved the merger of GEO and Cornell, the merger agreement and the GEO share issuance. The GEO board of directors voted to recommend that the GEO shareholders approve the GEO share issuance in connection with the merger. Following the vote of the members of the GEO board of directors, Barclays Capital and BofA Merrill Lynch each delivered their individual written opinions, dated April 18, 2010, copies of which are attached hereto as Annex C and Annex D.
 
Following the approval of Cornell’s board of directors, the parties executed the merger agreement and certain related agreements on April 18, 2010 and a joint press release was issued on the morning of April 19, 2010.
 
GEO Reasons for the Merger and the Recommendation of GEO’s Board of Directors Relating to the Merger
 
The GEO board of directors believes that the merger will provide GEO shareholders with an interest in a combined company with an enhanced platform to deliver high quality, diversified government services and pursue new growth opportunities. In evaluating the GEO share issuance in connection with the merger, the GEO board of directors consulted with GEO’s senior management and legal and financial advisors. The GEO board of directors has (i) determined that the merger consideration is fair, from a financial point of view, and (ii) recommended the approval of the GEO share issuance in connection with the merger to the GEO shareholders.
 
In reaching its conclusion to recommend the GEO share issuance in connection with the merger, the GEO board of directors considered a number of factors, including those discussed below:
 
Strategic Considerations
 
  •  Strong Strategic Benefits.  The GEO board of directors considered that two key strategic benefits of the merger would be the combined company’s increased scale and the further diversification of GEO’s service offerings. The GEO board considered:
 
  •  that the combined company is expected to generate annual revenues of more than $1.5 billion, and to materially increase GEO’s net income and free cash flow on an annualized basis, giving GEO substantially more size than it has pre-merger; and
 
  •  that the addition of Cornell’s substantial presence in the community-based and behavioral health markets will further diversify GEO’s service offerings. Pre-merger, GEO operates two community-based corrections facilities totaling 287 beds, while Cornell operates 30 community-based facilities totaling 3,558 beds. Cornell operates 27 youth and family behavioral health facilities totaling 3,043 beds. GEO does not currently operate any youth and family behavioral health facilities.
 
  •  Expansion of GEO Care Business Unit into New Markets and Service Offerings.  GEO plans to place Cornell’s community-based and youth and family behavioral health operations under GEO Care’s management. These two divisions will incorporate an additional 57 facilities totaling 6,601 beds into GEO Care’s operations. As a result of the merger, GEO Care will have a presence in a total of 11 new states and the District of Columbia. The GEO board of directors believe that this expansion and further diversification of GEO Care’s business into new geographic markets and service offerings will substantially increase the profile of GEO Care’s operational expertise and enhance GEO Care’s ability to pursue business in new states and business segments.
 
  •  GEO believes that the increased scale and diversification of the combined company post-merger will enable the combined company to better capitalize on attractive business development opportunities and serve its customers, mitigate business segment risk and result in a more balanced and diverse revenue base.


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Financial Considerations
 
  •  Increased Ability to Compete More Effectively.  The GEO board of directors considered the financial strength of the combined company compared to GEO’s financial standing pre-merger, including, but not limited to, the GEO board of directors’ belief that:
 
  •  a post-merger GEO is expected to have increased cash flow which should, in turn, enhance the combined company’s access to capital markets and lower its cost of capital. GEO strongly believes that strengthening its access to capital through the merger will enable it to more effectively compete with its competitors in the private sector, as well as the public sector; and
 
  •  a post-merger GEO will be increasingly well positioned to build and finance new correctional facilities to meet customer demands for larger facilities. GEO believes that being in a better position to build and finance new correctional facilities is important due to the increased demand for private sector financing for the construction of new corrections facilities in light of budgetary pressures faced by state and federal governments.
 
  •  Consideration Consisting of GEO Common Stock or Cash.  The GEO board of directors considered that providing for the merger consideration to consist of GEO common stock or cash at the election of Cornell stockholders, subject to the limitation that no more than 20% of the shares of Cornell common stock be exchanged for the cash consideration and that the aggregate cash consideration payable not exceed $100.0 million except in GEO’s sole discretion, was favorable, including for the following reasons:
 
  •  the consideration is structured in a way that is intended to qualify as a reorganization within the meaning of Section 368(a) of the Code. This qualification means that Cornell stockholders generally would not recognize gain for federal income tax purposes, upon their exchange of shares except with respect to cash received;
 
  •  the requirement to have a significant portion of the merger consideration paid in shares of GEO common stock permits Cornell stockholders to share in the growth and opportunities of the combined company and participate in the potential future increase in value of an investment in GEO or dispose of their shares of GEO common stock received in the merger in the public market while the remaining cash portion of the merger consideration permits Cornell stockholders to receive a certain cash value for their shares and as a result monetize their investment in Cornell; and
 
  •  the significant stock portion of the merger consideration permits GEO to use its common stock as currency and minimizes the amount of cash from operations or borrowings that GEO has to use to consummate the merger.
 
Integration Considerations
 
Synergies and Cost Savings of the Combined Company.  The management of GEO anticipates annual synergies of $12-15 million during the year following the completion of the merger, and believes there may be potential to achieve additional synergies thereafter. GEO believes the merger should result in a number of important synergies. These synergies are expected to result primarily from achieving greater operating efficiencies, capturing inherent economies of scale and leveraging corporate resources. Any synergies achieved will further enhance the free cash flow and return on invested capital of the combined company.
 
In the course of its deliberations, the GEO board of directors also considered a variety of risks and other factors in addition to the factors listed above, relating to the merger, including
 
  •  the risk that Cornell could lose management contracts to operate some of their facilities;
 
  •  the risk regarding the failure of the merger to be consummated or any delay in consummating the merger;
 
  •  the risk that GEO and Cornell may experience difficulties or delays in integrating their businesses; and
 
  •  the risk that the combined company may fail to realize the full extent of, or any of, the anticipated synergies or other benefits of the merger.


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In reaching its decision to recommend approval of the GEO share issuance to GEO’s shareholders in connection with the merger, the GEO board of directors did not quantify or assign any relative weights to different factors. The GEO board of directors considered all of these factors as a whole, and overall considered them to be favorable to, and to support, its determination.
 
The GEO board of directors has determined that the GEO share issuance in connection with the merger is advisable and in the best interests of GEO and its shareholders. The GEO board of directors recommends that GEO shareholders vote “FOR” the GEO share issuance and “FOR” the adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposals.
 
Opinions of GEO’s Financial Advisors
 
GEO engaged Barclays Capital and BofA Merrill Lynch as GEO’s financial advisors in connection with the merger. At an April 18, 2010 meeting of GEO’s board of directors held to evaluate the merger, Barclays Capital and BofA Merrill Lynch rendered to GEO’s board of directors separate oral opinions, subsequently confirmed by delivery of separate written opinions dated April 18, 2010, to the effect that, as of that date and based on and subject to the qualifications, limitations and assumptions stated in such opinions, the consideration to be paid by GEO in the merger was fair, from a financial point of view, to GEO.
 
The separate written opinions, each dated April 18, 2010, are attached as Annexes C and D, respectively, to this joint proxy statement/prospectus. The written opinions set forth, among other things, the assumptions made, procedures followed, factors considered and limitations on the review undertaken by GEO’s financial advisors in rendering their respective opinions. The following summaries are qualified in their entirety by reference to the full text of each such opinion. The opinions are addressed to GEO’s board of directors for its use in connection with its evaluation of the merger consideration and relate only to the fairness, from a financial point of view, to GEO of the consideration to be paid by GEO in the merger. The opinions do not in any manner address GEO’s underlying business decision to proceed with or effect the merger or any other matter and are not intended to and do not constitute a recommendation to any shareholder as to how such shareholder should vote or act with respect to the merger or any related matter.
 
The terms of the merger (including, without limitation, the consideration payable in the merger) were determined through negotiations between GEO and Cornell, rather than by any financial advisor, and the decision to enter into the merger agreement was solely that of GEO’s board of directors. Barclays Capital and BofA Merrill Lynch did not recommend any specific form of consideration to GEO’s board of directors or that any specific form of consideration constituted the only appropriate consideration for the merger. The opinions were only one of many factors considered by GEO’s board of directors in its evaluation of the merger and should not be viewed as determinative of the views of GEO’s board of directors, management or any other party with respect to the merger or the consideration payable in the merger.
 
Summary of Barclays Capital’s Opinion
 
In arriving at its opinion, Barclays Capital, among other things:
 
  •  reviewed the merger agreement and the specific financial terms of the merger;
 
  •  reviewed and analyzed publicly available information concerning Cornell and GEO that Barclays Capital believed to be relevant to its analysis, including Cornell’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, GEO’s Annual Report on Form 10-K for the fiscal year ended January 3, 2010 and other relevant filings with the SEC;


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  •  reviewed and analyzed financial and operating information with respect to GEO’s business, operations and prospects furnished to Barclays Capital by GEO, including financial projections of GEO prepared by GEO’s management, referred to as the GEO forecasts;
 
  •  reviewed and analyzed financial and operating information with respect to Cornell’s business, operations and prospects furnished to Barclays Capital by Cornell and GEO, including financial projections of Cornell prepared by Cornell’s management, referred to as the Cornell forecasts, and certain adjustments thereto prepared by GEO’s management reflecting more conservative assumptions and estimates as to the future financial performance of Cornell, referred to as the adjusted Cornell forecasts;
 
  •  reviewed and analyzed public estimates of independent research analysts with respect to the future financial performance of GEO and Cornell;
 
  •  reviewed and analyzed trading histories of Cornell common stock and GEO common stock from April 15, 2009 to April 16, 2010 and a comparison of those trading histories with each other;
 
  •  reviewed and analyzed a comparison of certain financial data of Cornell and GEO with each other and with those of other companies that Barclays Capital deemed relevant;
 
  •  reviewed and analyzed a comparison of the financial terms of the merger with the financial terms of certain other transactions that Barclays Capital deemed relevant;
 
  •  reviewed and analyzed the relative contributions of Cornell and GEO to the future financial performance of the combined company on a pro forma basis;
 
  •  reviewed and analyzed the potential pro forma financial impact of the merger on the future financial performance of the combined company, including the amount and timing of cost savings expected by GEO’s management to result from the merger, referred to as cost savings;
 
  •  had discussions with GEO’s and Cornell’s managements concerning GEO’s and Cornell’s respective businesses, operations, assets, liabilities, financial condition and prospects; and
 
  •  undertook such other studies, analyses and investigations as Barclays Capital deemed appropriate.
 
In arriving at its opinion, Barclays Capital assumed and relied upon the accuracy and completeness of the financial and other information used by Barclays Capital without any independent verification of such information and further relied upon the assurances of GEO’s and Cornell’s managements that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the Cornell forecasts, upon Cornell’s advice, Barclays Capital assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of Cornell’s management as to the future financial performance of Cornell. With respect to the adjusted Cornell forecasts and the GEO forecasts, upon GEO’s advice, Barclays Capital assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of GEO’s management as to the future financial performance of Cornell and GEO and that Cornell and GEO would perform substantially in accordance with such projections, and Barclays Capital relied on the adjusted Cornell forecasts and the GEO forecasts in arriving at its opinion. In addition, upon GEO’s advice, Barclays Capital assumed that the amount and timing of the cost savings were reasonable and would be realized in accordance with such estimates. Barclays Capital assumed no responsibility for and expressed no view as to any projections or estimates reviewed by it or the assumptions on which they were based. In arriving at its opinion, Barclays Capital did not conduct a physical inspection of the properties and facilities of Cornell or GEO and did not make or obtain any evaluations or appraisals of the assets or liabilities, contingent or otherwise, of Cornell or GEO. Barclays Capital’s opinion necessarily was based upon market, economic and other conditions as they existed on, and could be evaluated as of, the date of its opinion. Barclays Capital assumed no responsibility for updating or revising its opinion based on events or circumstances that may occur after the date of its opinion. Barclays Capital expressed no opinion as to the prices at which shares of GEO common stock or Cornell common stock would trade at any time following the announcement of the merger or the prices at which shares of GEO common stock would trade at any time following consummation of the merger.


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Barclays Capital assumed the accuracy of the representations and warranties contained in the merger agreement and all related agreements. Barclays Capital also assumed, upon GEO’s advice, that all material governmental, regulatory and third party approvals, consents and releases for the merger would be obtained within the constraints contemplated by the merger agreement and that the merger would be consummated in accordance with the merger agreement without waiver, modification or amendment of any material term, condition or agreement. Barclays Capital’s opinion does not in any manner address the form or structure of the merger, the form or structure of the merger consideration or any election, limitations or proration procedures relating to the merger consideration. Barclays Capital also did not express any opinion as to any tax or other consequences that might result from the merger, nor did its opinion address any legal, tax, regulatory or accounting matters, as to which Barclays Capital understood that GEO had obtained such advice as it deemed necessary from qualified professionals.
 
Barclays Capital was not requested to opine as to, and its opinion did not in any manner address, GEO’s underlying business decision to proceed with or effect the merger or the likelihood of consummation of the merger. In addition, Barclays Capital expressed no opinion on, and its opinion did not in any manner address, the fairness of the amount or the nature of any compensation to any officers, directors or employees of any parties to the merger, or any class of such persons, relative to the consideration to be paid by GEO in the merger or otherwise. The issuance of Barclays Capital’s opinion was approved by Barclays Capital’s fairness opinion committee. Barclay Capital’s opinion is not intended to be and does not constitute a recommendation to any shareholder as to how such shareholder should vote or act with respect to the merger or any related matter. Except as described above, GEO imposed no other instructions or limitations on Barclays Capital with respect to the investigations made or the procedures followed by it in rendering its opinion.
 
Barclays Capital is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. In selecting Barclays Capital as GEO’s financial advisor in connection with the merger, GEO considered Barclays Capital’s qualifications, reputation and experience in the valuation of businesses and securities in connection with mergers and acquisitions generally. GEO also considered its prior relationship with Barclays Capital and its affiliates and their provision of investment banking and financial services to GEO described in more detail below.
 
As compensation for Barclays Capital’s financial advisory services to GEO in connection with the merger, GEO has agreed to pay Barclays Capital an aggregate fee of $3.75 million, a portion of which was payable upon execution of the merger agreement and $3.375 million of which is contingent upon the consummation of the merger. In addition, GEO has agreed to reimburse Barclays Capital for expenses, including fees and disbursements of Barclays Capital’s counsel, and indemnify Barclays Capital and related parties for certain liabilities that may arise out of Barclays Capital’s engagement. Barclays Capital and its affiliates have performed various investment banking and financial services for GEO in the past, and expect to perform such services in the future, and have received, and expect to receive, customary fees for such services. Specifically, in the past two years, Barclays Capital and its affiliates have acted as (i) joint book runner on certain debt offerings of GEO and (ii) financial advisor to GEO in connection with GEO’s share buy-back program. In addition, an affiliate of Barclays Capital currently is a lender under certain of GEO’s credit facilities. Barclays Capital and its affiliates engage in a wide range of businesses from investment and commercial banking, lending, asset management and other financial and non-financial services. In the ordinary course of business, Barclays Capital and its affiliates may actively trade and effect transactions in the equity, debt and/or other securities (and any derivatives thereof) and financial instruments (including loans and other obligations) of GEO, Cornell and certain of their respective affiliates for our own account and for the accounts of our customers and, accordingly, may at any time hold long or short positions and investments in such securities and financial instruments.
 
Summary of BofA Merrill Lynch’s Opinion
 
In connection with rendering its opinion, BofA Merrill Lynch, among other things:
 
  •  reviewed certain publicly available business and financial information relating to Cornell and GEO;


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  •  reviewed certain internal financial and operating information with respect to the business, operations and prospects of Cornell furnished to or discussed with BofA Merrill Lynch by Cornell’s management, including certain financial forecasts relating to Cornell prepared by Cornell’s management, referred to as the Cornell forecasts;
 
  •  reviewed an alternative version of the Cornell forecasts incorporating certain adjustments thereto made by GEO’s management, referred to as the adjusted Cornell forecasts, and discussed with GEO’s management its assessments as to the relative likelihood of achieving the future financial results reflected in the Cornell forecasts and the adjusted Cornell forecasts;
 
  •  reviewed certain internal financial and operating information with respect to the business, operations and prospects of GEO furnished to or discussed with BofA Merrill Lynch by GEO’s management, including certain financial forecasts relating to GEO prepared by GEO’s management, referred to as the GEO forecasts;
 
  •  reviewed certain estimates as to the amount and timing of cost savings anticipated by GEO’s management to result from the merger, referred to as the cost savings;
 
  •  discussed the past and current business, operations, financial condition and prospects of Cornell with members of senior managements of Cornell and GEO, and discussed the past and current business, operations, financial condition and prospects of GEO with members of GEO’s senior management;
 
  •  discussed with GEO’s management its assessments as to (a) Cornell’s existing and future relationships, agreements and arrangements with, and GEO’s ability to retain, key management contracts of Cornell and (b) the ability of GEO to integrate the businesses of GEO and Cornell;
 
  •  reviewed the potential pro forma financial impact of the merger on the future financial performance of GEO, including the potential effect on GEO’s estimated earnings per share, both before and after taking into account potential cost savings;
 
  •  reviewed the trading histories of Cornell common stock and GEO common stock and a comparison of such trading histories with each other;
 
  •  compared certain financial and stock market information of Cornell and GEO with similar information of other companies BofA Merrill Lynch deemed relevant;
 
  •  compared certain financial terms of the merger to financial terms, to the extent publicly available, of other transactions BofA Merrill Lynch deemed relevant;
 
  •  reviewed the relative financial contributions of Cornell and GEO to the future financial performance of the combined company on a pro forma basis;
 
  •  reviewed the merger agreement; and
 
  •  performed such other analyses and studies and considered such other information and factors as BofA Merrill Lynch deemed appropriate.
 
In arriving at its opinion, BofA Merrill Lynch assumed and relied upon, without independent verification, the accuracy and completeness of the financial and other information and data publicly available or provided to or otherwise reviewed by or discussed with it and relied upon the assurances of the managements of GEO and Cornell that they were not aware of any facts or circumstances that would make such information or data inaccurate or misleading in any material respect. With respect to the Cornell forecasts, BofA Merrill Lynch was advised by Cornell, and assumed, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of Cornell’s management as to the future financial performance of Cornell. With respect to the adjusted Cornell forecasts, GEO forecasts and cost savings, BofA Merrill Lynch assumed, at GEO’s direction, that they were reasonably prepared on bases reflecting the best currently available estimates and good faith judgments of GEO’s management as to the future financial performance of Cornell and GEO and the other matters covered thereby and, based on the assessments of GEO’s management as to the relative likelihood of achieving the future financial results reflected in the Cornell forecasts and the adjusted Cornell forecasts, BofA Merrill Lynch


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relied, at GEO’s direction, on the adjusted Cornell forecasts for purposes of its opinion. BofA Merrill Lynch also relied, at GEO’s direction, on the assessments of GEO’s management as to GEO’s ability to achieve the cost savings and was advised by GEO, and assumed, that the cost savings would be realized in the amounts and at the times projected. BofA Merrill Lynch further relied, at GEO’s direction, upon the assessments of GEO’s management as to Cornell’s existing and future relationships, agreements and arrangements with, and GEO’s ability to retain, key management contracts of Cornell and as to the ability of GEO to integrate the businesses of GEO and Cornell and assumed that there would be no developments with respect to any such matters that would have an adverse effect on Cornell, GEO or the contemplated benefits of the merger.
 
BofA Merrill Lynch did not make and was not provided with any independent evaluation or appraisal of the assets or liabilities, contingent or otherwise, of Cornell or GEO, nor did it make any physical inspection of the properties or assets of Cornell or GEO. BofA Merrill Lynch did not evaluate the solvency or fair value of Cornell or GEO under any state, federal or other laws relating to bankruptcy, insolvency or similar matters. BofA Merrill Lynch assumed, at GEO’s direction, that the merger would be consummated in accordance with its terms, without waiver, modification or amendment of any material term, condition or agreement and that, in the course of obtaining the necessary governmental, regulatory and other approvals, consents, releases and waivers for the merger, no delay, limitation, restriction or condition, including any divestiture requirements or amendments or modifications, would be imposed that would have an adverse effect on Cornell, GEO or the contemplated benefits of the merger. BofA Merrill Lynch also assumed, at GEO’s direction, that the merger would qualify for federal income tax purposes as a reorganization under the provisions of Section 368(a) of the Code.
 
BofA Merrill Lynch expressed no view or opinion as to any terms or other aspects of the merger, other than the merger consideration to the extent expressly specified in its opinion, including, without limitation, the form or structure of the merger, the form or structure of the merger consideration or any election, limitations or proration procedures relating to the merger consideration. BofA Merrill Lynch’s opinion was limited to the fairness, from a financial point of view, to GEO of the merger consideration to be paid in the merger and no opinion or view was expressed with respect to any consideration received in connection with the merger by the holders of any class of securities, creditors or other constituencies of any party. In addition, no opinion or view was expressed with respect to the fairness, financial or otherwise, of the amount, nature or any other aspect of any compensation to any of the officers, directors or employees of any party to the merger, or class of such persons, relative to the merger consideration. Furthermore, no opinion or view was expressed as to the relative merits of the merger in comparison to other strategies or transactions that might be available to GEO or in which GEO might engage or as to the underlying business decision of GEO to proceed with or effect the merger. BofA Merrill Lynch did not express any opinion as to what the value of GEO common stock actually would be when issued or the prices at which GEO common stock or Cornell common stock would trade at any time, including following announcement or consummation of the merger. BofA Merrill Lynch also did not express any view or opinion with respect to, and relied, with GEO’s consent, upon the assessments of GEO’s management regarding, legal, regulatory, accounting, tax or similar matters relating to Cornell, GEO or the merger as to which BofA Merrill Lynch understood that GEO had obtained such advice as it deemed necessary from qualified professionals. In addition, BofA Merrill Lynch expressed no opinion or recommendation as to how any shareholder should vote or act in connection with the merger or any related matter.
 
BofA Merrill Lynch’s opinion was necessarily based on financial, economic, monetary, market and other conditions and circumstances as in effect on, and the information made available to BofA Merrill Lynch as of, the date of its opinion. It should be understood that subsequent developments may affect its opinion, and BofA Merrill Lynch does not have any obligation to update, revise or reaffirm its opinion. The issuance of BofA Merrill Lynch’s opinion was approved by BofA Merrill Lynch’s Americas Fairness Opinion Review Committee. Except as described above, GEO imposed no other limitations on the investigations made or procedures followed by BofA Merrill Lynch in rendering its opinion.
 
GEO has agreed to pay BofA Merrill Lynch for its services as financial advisor to GEO in connection with the merger an aggregate fee of $3.75 million, a portion of which was payable upon execution of the merger agreement and $3.375 million of which is contingent upon the completion of the merger. GEO also has agreed to reimburse BofA Merrill Lynch for its expenses, including fees and disbursements of BofA Merrill Lynch’s counsel, incurred in connection with BofA Merrill Lynch’s engagement and to indemnify BofA Merrill Lynch, any controlling person of


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BofA Merrill Lynch and each of their respective directors, officers, employees, agents and affiliates against specified liabilities, including liabilities under the federal securities laws.
 
BofA Merrill Lynch and its affiliates comprise a full service securities firm and commercial bank engaged in securities, commodities and derivatives trading, foreign exchange and other brokerage activities and principal investing as well as providing investment, corporate and private banking, asset and investment management, financing and financial advisory services and other commercial services and products to a wide range of companies, governments and individuals. In the ordinary course of business, BofA Merrill Lynch and its affiliates may invest on a principal basis or on behalf of customers or manage funds that invest, make or hold long or short positions, finance positions or trade or otherwise effect transactions in equity, debt or other securities or financial instruments (including derivatives, bank loans or other obligations) of GEO, Cornell and certain of their respective affiliates.
 
BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to GEO and have received or in the future may receive compensation for the rendering of these services, including (i) having acted as joint book runner on certain debt offerings of GEO and as dealer manager for a tender offer undertaken by GEO for certain of its outstanding notes, (ii) having acted or acting as lender under various credit facilities of GEO and (iii) having provided or providing certain treasury management services to GEO. In addition, BofA Merrill Lynch and its affiliates in the past have provided, currently are providing, and in the future may provide, investment banking, commercial banking and other financial services to Cornell and have received or in the future may receive compensation for the rendering of these services, including having acted or acting as syndication agent for, and/or as lender under, various credit and leasing facilities of Cornell.
 
BofA Merrill Lynch is an internationally recognized investment banking firm which is regularly engaged in providing financial advisory services in connection with mergers and acquisitions. In selecting BofA Merrill Lynch as GEO’s financial advisor in connection with the merger, GEO considered BofA Merrill Lynch’s experience in transactions similar to the merger and reputation in the investment community. GEO also considered its prior relationship with BofA Merrill Lynch and its affiliates and their provision of investment banking, commercial banking and other financial services to GEO described in more detail above.
 
Summary of Financial Analyses
 
In connection with rendering their respective opinions, GEO’s financial advisors performed certain financial, comparative and other analyses as summarized below. This summary is not a complete description of the financial analyses performed and factors considered in connection with such opinions. In arriving at their respective opinions, GEO’s financial advisors did not ascribe a specific range of values to shares of GEO common stock or Cornell common stock but rather made their respective determinations as to the fairness, from a financial point of view, to GEO of the consideration to be paid by GEO in the merger on the basis of various financial and comparative analyses taken as a whole. The preparation of a fairness opinion is a complex process and involves various determinations as to the most appropriate and relevant methods of financial and comparative analyses and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to summary description.
 
In arriving at their respective opinions, GEO’s financial advisors did not attribute any particular weight to any single analysis or factor considered but rather made qualitative judgments as to the significance and relevance of each analysis and factor relative to all other analyses and factors performed and considered and in the context of the circumstances of the particular transaction. Accordingly, the analyses must be considered as a whole, as considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying such opinions. The fact that any specific analysis has been referred to in the summary below is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.
 
In performing their analyses, GEO’s financial advisors considered industry performance, general business and economic conditions and other matters existing as of April 18, 2010, many of which are beyond the control of GEO, Cornell or any other parties to the merger. None of GEO, Cornell or GEO’s financial advisors or any other person assumes responsibility if future results are different from those discussed, whether or not any such difference is


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material. Any estimates contained in these analyses and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or necessarily reflect the prices at which businesses or securities may actually be sold or acquired. Accordingly, the assumptions and estimates used in, and the results derived from, the following analyses are inherently subject to substantial uncertainty.
 
The following is a summary of the material financial analyses reviewed with GEO’s board of directors by GEO’s financial advisors at GEO’s board meeting on April 18, 2010. Certain financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of such financial analyses. Barclays Capital and BofA Merrill Lynch performed separate financial analyses with respect to Cornell and GEO on a standalone basis and jointly performed certain pro forma financial analyses as more fully described below. For purposes of the financial analyses summarized below, the term “implied merger consideration” refers to the implied per share value of (i) the all-stock merger consideration of $24.91 based on 1.3 shares of GEO common stock and GEO’s closing stock price of $19.16 as of April 16, 2010 (the last trading day prior to execution of the merger agreement) and (ii) the all-cash consideration of $25.16 based on 1.0 share of GEO common stock and GEO’s closing stock price of $19.16 as of April 16, 2010 plus $6.00. Also for purposes of the financial analyses summarized below, the term “merger exchange ratios” refers to the exchange ratio of 1.3 and the implied all-cash exchange ratio of 1.31 based on the implied value of the all-cash merger consideration of $25.16 divided by GEO’s closing stock price on April 16, 2010.
 
Barclays Capital Financial Analyses
 
Cornell Selected Company Analysis.  Barclays Capital reviewed and compared specific financial and operating data relating to Cornell with the following two selected correctional, detention, educational, rehabilitation and treatment services providers, which companies were selected generally because they operate in whole or in part in the same industry as Cornell:
 
  •  GEO
 
  •  Corrections Corporation of America
 
No selected company is identical to Cornell and such analysis may not necessarily utilize all companies that could be deemed comparable to Cornell. Accordingly, Barclays Capital believes that purely quantitative analyses are not, in isolation, determinative and that qualitative judgments concerning differences in the business, financial and operating characteristics and prospects of Cornell and the selected companies that could affect public trading values also are relevant.
 
Barclays Capital calculated, among other things, the ratio of each company’s enterprise value to its calendar year 2010 estimated earnings before interest, taxes, depreciation and amortization, or EBITDA. Enterprise value generally was obtained by adding short-term and long-term debt to the sum of the market value of common equity, calculated using a fully diluted share count assuming the treasury stock method, and the book value of any minority interest, and subtracting cash and cash equivalents. These calculations were performed based on publicly available financial data and closing stock prices as of April 16, 2010, the last trading date prior to execution of the merger agreement. Barclays Capital then applied a range of selected multiples of calendar year 2010 estimated EBITDA derived from the selected companies to corresponding data of Cornell based on the adjusted Cornell forecasts. This analysis indicated the following implied per share equity value reference range for Cornell, as compared to the implied merger consideration:
 
         
Implied per Share Equity Value
  Implied Merger Consideration Based on:
Reference Range for Cornell
 
All-Stock Consideration
 
All-Cash Consideration
 
$22.58 - $27.57
  $24.91   $25.16


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Barclays Capital also calculated an implied exchange ratio reference range by dividing the high and low ends of the implied per share equity value reference range for Cornell described above by GEO’s closing stock price of $19.16 as of April 16, 2010. This indicated the following implied exchange ratio reference range, as compared to the merger exchange ratios:
 
         
Implied Exchange Ratio
  Merger Exchange Ratios Based on:
Reference Range
 
All-Stock Consideration
 
All-Cash Consideration
 
1.18x - 1.44x
  1.3x   1.31x
 
Cornell Selected Transactions Analysis.  Barclays Capital reviewed and compared the purchase prices and financial multiples paid in the following nine selected transactions involving correctional, detention, educational, rehabilitation and treatment services providers, which transactions were selected generally because they involve companies that operate in whole or in part in the same industry or provide similar services as Cornell:
 
     
Acquiror   Target
 
•   Psychiatric Solutions, Inc. 
  •   Horizon Health Corporation
•   Psychiatric Solutions, Inc. 
  •   Alternative Behavioral Services, Inc.
•   GEO
  •   Correctional Services Corp.
•   Cornell
  •   Correctional Systems, Inc.
•   Electra Partners Europe Limited
  •   Global Solutions Limited
•   Psychiatric Solutions, Inc. 
  •   Ramsay Youth Services, Inc.
•   National MENTOR Holdings, Inc. 
  •   REM, Inc.
•   Psychiatric Solutions, Inc. 
  •   The Brown Schools, Inc. (six psychiatric facilities)
•   Group 4 Falck A/S
  •   The Wackenhut Corp.
 
No selected transaction or company is identical to Cornell or the merger and such analysis may not necessarily utilize all transactions or companies that could be deemed comparable to Cornell or the merger. Accordingly, Barclays Capital believes that purely quantitative analyses are not, in isolation, determinative and that qualitative judgments concerning differences in the characteristics of the selected transactions and the merger that could affect the acquisition values of the selected target companies and Cornell also are relevant.
 
Barclays Capital calculated transaction values in the selected transactions as the ratio of the target company’s enterprise value, based on the consideration payable in the selected transaction, to its latest 12 months EBITDA based on publicly available information at the time of announcement of the relevant transaction. Barclays Capital then applied a range of selected multiples of latest 12 months EBITDA derived from the selected transactions to Cornell’s calendar year 2009 EBITDA based on Cornell’s public filings and to Cornell’s calendar year 2010 estimated EBITDA based on the adjusted Cornell forecasts. This analysis indicated the following implied per share equity value reference ranges for Cornell, as compared to the implied merger consideration:
 
             
Implied per Share Equity Value
   
Reference Ranges for Cornell Based on:   Implied Merger Consideration Based on:
2009A
  2010E
  All-Stock
  All-Cash
EBITDA   EBITDA  
Consideration
 
Consideration
 
$33.06 - $38.70
  $27.57 - $32.57   $24.91   $25.16
 
Barclays Capital also calculated implied exchange ratio reference ranges by dividing the high and low ends of the implied per share equity value reference ranges for Cornell described above by GEO’s closing stock price of $19.16 as of April 16, 2010. This indicated the following implied exchange ratio reference ranges, as compared to the merger exchange ratios:
 
             
Implied Exchange Ratio
   
Reference Ranges Based on:   Merger Exchange Ratios Based on:
2009A
  2010E
  All-Stock
  All-Cash
EBITDA   EBITDA  
Consideration
 
Consideration
 
1.73x - 2.02x
  1.44x - 1.70x   1.3x   1.31x


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Cornell Discounted Cash Flow Analysis.  Barclays Capital performed a discounted cash flow analysis of Cornell to calculate the estimated present value of the standalone future cash flows of Cornell. “Present value” refers to the current value of future cash flows or amounts and is obtained by discounting those future cash flows or amounts by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors. To calculate an implied reference range for Cornell using the discounted cash flow method, Barclays Capital added (i) Cornell’s projected after-tax unlevered free cash flows for fiscal years 2010 through 2014 based on the adjusted Cornell forecasts to (ii) the residual or terminal value of Cornell at the end of the forecast period, and discounted such amounts to present value using a range of selected discount rates. The after-tax unlevered free cash flows were calculated by taking the tax-affected earnings before interest and tax expense, adding back non-cash depreciation and amortization, subtracting capital expenditures and adjusting for changes in working capital. The terminal value of Cornell was estimated by applying to Cornell’s fiscal year 2014 estimated EBITDA a range of terminal value multiples of 7.5x to 8.5x, which range was selected taking into consideration, among other things, calendar year 2010 estimated EBITDA multiples derived from Cornell and the selected companies referred to above under the “Cornell Selected Company Analysis.” The cash flows and terminal values were then discounted to present value using discount rates ranging from 9.0% to 11.0%, which range was selected taking into consideration, among other things, a weighted average cost of capital calculation. This analysis indicated the following implied per share equity value reference range for Cornell, as compared to the implied merger consideration:
 
         
    Implied Merger Consideration Based on:
Implied per Share Equity Value
  All-Stock
  All-Cash
Reference Range for Cornell  
Consideration
 
Consideration
 
$21.81 - $28.29
  $24.91   $25.16
 
Barclays Capital also calculated an implied exchange ratio reference range by dividing the high and low ends of the implied per share equity value reference range for Cornell described above by GEO’s closing stock price of $19.16 as of April 16, 2010. This indicated the following implied exchange ratio reference range, as compared to the merger exchange ratios:
 
         
    Merger Exchange Ratios Based on:
Implied Exchange Ratio
  All-Stock
  All-Cash
Reference Range
 
Consideration
 
Consideration
 
1.14x - 1.48x
  1.3x   1.31x
 
Other Factors.  Barclays Capital also considered, for informational purposes, certain other factors, including:
 
  •  premiums paid in selected precedent transactions with transaction values of between $200 million and $1 billion announced during the five-year period ended April 13, 2010;
 
  •  implied exchange ratios based on certain market and financial data for Cornell and GEO;
 
  •  target prices for Cornell common stock estimated by selected research analysts; and
 
  •  high and low closing prices of Cornell common stock during the 52-week period ended April 16, 2010.
 
BofA Merrill Lynch Financial Analyses
 
Cornell Selected Companies Analysis.  BofA Merrill Lynch reviewed publicly available financial and stock market information for Cornell and the following three selected correctional, detention, educational, rehabilitation and treatment services providers, which companies were selected generally because they operate in whole or in part in the same industry or provide similar services as Cornell:
 
  •  GEO
 
  •  Corrections Corporation of America
 
  •  The Providence Service Corporation
 
BofA Merrill Lynch reviewed, among other things, enterprise values of the selected companies, calculated as equity values based on closing stock prices on April 16, 2010, plus debt, less cash and other adjustments, as a multiple of


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calendar years 2010 and 2011 estimated EBITDA. BofA Merrill Lynch also reviewed per share equity values, based on closing stock prices on April 16, 2010 (the last trading day prior to execution of the merger agreement), of the selected companies as a multiple of calendar year 2010 estimated earnings per share, referred to as EPS. BofA Merrill Lynch then applied a range of selected multiples of calendar years 2010 and 2011 estimated EBITDA and calendar year 2010 estimated EPS derived from the selected companies to corresponding data of Cornell. Estimated financial data of the selected companies were based on publicly available research analysts’ estimates, public filings and other publicly available information. Estimated financial data of Cornell were based on the adjusted Cornell forecasts. This analysis indicated the following implied per share equity value reference ranges for Cornell, as compared to the implied merger consideration:
 
                 
Implied per Share Equity Value
   
Reference Ranges for Cornell Based on:   Implied Merger Consideration Based on:
2010E
  2011E
  2010E
  All-Stock
  All-Cash
EBITDA   EBITDA   EPS  
Consideration
 
Consideration
 
$17.60 - $25.10
  $17.50 - $25.60   $15.50 - $17.80   $24.91   $25.16
 
BofA Merrill Lynch also calculated implied exchange ratio reference ranges derived from the implied per share equity value reference ranges for Cornell described above and the implied per share equity value reference ranges for GEO described below under the caption “- GEO selected companies analysis.” This indicated the following implied exchange ratio reference ranges, as compared to the merger exchange ratios:
 
                 
Implied Exchange Ratio
   
Reference Ranges Based on:   Merger Exchange Ratios Based on:
2010E
  2011E
  2010E
  All-Stock
  All-Cash
EBITDA   EBITDA   EPS  
Consideration
 
Consideration
 
0.77x - 1.31x
  0.83x - 1.50x   0.70x - 0.93x   1.3x   1.31x
 
No company used in this analysis is identical to Cornell and such analysis may not necessarily utilize all companies that could be deemed comparable to Cornell. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which Cornell was compared.
 
Cornell Selected Precedent Transactions Analysis.  BofA Merrill Lynch reviewed, to the extent publicly available, financial information relating to the following nine selected transactions involving correctional, detention, educational, rehabilitation and treatment services providers, which transactions were selected generally because they involve companies that operate in whole or in part in the same industry or provide similar services as Cornell:
 
     
Acquiror
 
Target
 
•   G4S plc
  •   Global Solutions Limited
•   Psychiatric Solutions, Inc. 
  •   Horizon Health Corporation
•   GEO
  •   Correctional Services Corp.
•   Cornell
  •   Correctional Systems, Inc.
•   Electra Partners Europe Limited
  •   Global Solutions Limited
•   Psychiatric Solutions, Inc. 
  •   Ramsay Youth Services, Inc.
•   National MENTOR Holdings, Inc. 
  •   REM, Inc.
•   Psychiatric Solutions, Inc. 
  •   The Brown Schools, Inc. (six psychiatric facilities)
•   Group 4 Falck A/S
  •   The Wackenhut Corp.
 
BofA Merrill Lynch reviewed transaction values, calculated as the enterprise value implied for the target company, based on the consideration payable in the selected transaction, as a multiple of the target company’s latest 12 months EBITDA. BofA Merrill Lynch then applied a range of selected multiples of latest 12 months EBITDA derived from the selected transactions to Cornell’s calendar year 2010 estimated EBITDA which, given the recent decline in Cornell’s EBITDA, served as a proxy for Cornell’s latest 12 months EBITDA. Estimated financial data of the


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selected transactions were based on publicly available information. Estimated financial data of Cornell were based on the adjusted Cornell forecasts. This analysis indicated the following implied per share equity value reference range for Cornell, as compared to the implied merger consideration:
 
         
    Implied Merger Consideration Based on:
Implied per Share Equity Value
  All-Stock
  All-Cash
Reference Range for Cornell
 
Consideration
 
Consideration
 
$30.10 - $35.10
  $24.91   $25.16
 
No company, business or transaction used in this analysis is identical to Cornell or the merger and such analysis may not necessarily utilize all transactions or companies that could be deemed comparable to Cornell or the merger. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the acquisition or other values of the companies, business segments or transactions to which Cornell and the merger were compared.
 
Cornell Discounted Cash Flow Analysis.  BofA Merrill Lynch performed a discounted cash flow analysis of Cornell to calculate the estimated present value of the standalone unlevered, after-tax free cash flows that Cornell was forecasted to generate during the second through fourth quarters of calendar year 2010 through the full calendar year 2014 based on the Cornell forecasts and the adjusted Cornell forecasts. BofA Merrill Lynch calculated terminal values for Cornell by applying to Cornell’s fiscal year 2014 estimated EBITDA a range of terminal multiples of 6.5x to 8.0x, which range was selected taking into consideration, among other things, calendar year 2010 estimated EBITDA multiples derived from Cornell and the selected companies referred to above under the “Cornell Selected Companies Analysis.” The cash flows and terminal values were then discounted to present value as of December 31, 2009 using discount rates ranging from 8.0% to 10.0%, which range was selected taking into consideration, among other things, a weighted average cost of capital calculation. BofA Merrill Lynch also calculated the estimated present value of potential cost savings estimated by GEO’s management to result from the merger assuming a selected perpetuity growth rate of 0.5% and discount rate of 9.0%. This analysis indicated the following implied per share equity value reference ranges for Cornell, both before and after taking into account the estimated present value of potential cost savings, as compared to the implied merger consideration:
 
             
Implied per Share Equity Value
  Implied Merger
Reference Ranges for Cornell Based on:   Consideration Based on:
Cornell Forecasts
  Adjusted Cornell Forecasts
  All-Stock
  All-Cash
(Without Cost Savings)
 
(Without Cost Savings)
 
Consideration
 
Consideration
 
$30.70 - $42.40
  $18.90 - $27.40   $24.91   $25.16
             
Cornell Forecasts
(With Cost Savings)
  Adjusted Cornell Forecasts (With
Cost Savings)
       
             
$35.50 - $47.20
  $23.70 - $32.20        
 
GEO Selected Companies Analysis.  BofA Merrill Lynch reviewed publicly available financial and stock market information for GEO and the following three selected correctional, detention, educational, rehabilitation and treatment services providers, which companies were selected generally because they operate in whole or in part in the same industry or provide similar services as GEO:
 
  •  Cornell
 
  •  Corrections Corporation of America
 
  •  The Providence Service Corporation
 
BofA Merrill Lynch reviewed, among other things, enterprise values of the selected companies, calculated as equity values based on closing stock prices on April 16, 2010, plus debt, less cash and other adjustments, as a multiple of calendar years 2010 and 2011 estimated EBITDA. BofA Merrill Lynch also reviewed per share equity values, based on closing stock prices on April 16, 2010, of the selected companies as a multiple of calendar year 2010 estimated EPS. BofA Merrill Lynch then applied a range of selected multiples of calendar years 2010 and 2011 estimated EBITDA and calendar year 2010 estimated EPS derived from the selected companies to corresponding data of GEO. Estimated financial data of the selected companies were based on publicly available research analysts’


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estimates, public filings and other publicly available information. Estimated financial data of GEO were based on the GEO forecasts. This analysis indicated the following implied per share equity value reference ranges for GEO, as compared to the closing price of GEO common stock on April 16, 2010:
 
             
Implied per Share Equity Value
   
Reference Ranges for GEO Based on:   Closing Price of
2010E
  2011E
  2010E
  GEO Common Stock
EBITDA   EBITDA   EPS  
on April 16, 2010
 
$19.10 - $22.80
  $17.10 - $21.10   $19.10 - $22.00   $19.16
 
No company used in this analysis is identical to GEO and such analysis may not necessarily utilize all companies that could be deemed comparable to GEO. Accordingly, an evaluation of the results of this analysis is not entirely mathematical. Rather, this analysis involves complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the public trading or other values of the companies to which GEO was compared.
 
Other Factors.  BofA Merrill Lynch also considered, for informational purposes, certain other factors, including:
 
  •  high and low closing prices of Cornell common stock and GEO common stock during the 52-week period ended April 16, 2010; and
 
  •  target stock prices for Cornell common stock and GEO common stock estimated by selected research analysts.
 
Barclays Capital and BofA Merrill Lynch Joint Pro Forma Financial Analyses
 
Pro Forma Contribution Analysis.  Barclays Capital and BofA Merrill Lynch reviewed the relative financial contributions of Cornell and GEO to the estimated financial performance of the combined company on a pro forma basis. Barclays Capital and BofA Merrill Lynch reviewed the pro forma combined company’s estimated revenue, EBITDA and earnings before interest and taxes, referred to as EBIT, for fiscal years 2010 and 2011 based on the adjusted Cornell forecasts (in the case of Cornell financial data) and the GEO forecasts (in the case of GEO financial data). Barclays Capital and BofA Merrill Lynch calculated the overall aggregate equity ownership percentages of Cornell stockholders and GEO shareholders in the combined company based on such relative contributions, and then compared such percentages to the aggregate pro forma equity ownership percentages of Cornell stockholders and GEO shareholders in the combined company immediately upon consummation of the merger based on the merger consideration assuming either all-stock consideration or the maximum percentage of cash payable in the merger of 20%. This analysis indicated the following:
 
         
    Aggregate Pro Forma Equity Ownership
    of GEO Shareholders Based on:
Overall Contribution Percentage
  All-Stock
  80% Stock / 20%
Reference Range for GEO  
Consideration
  Cash Consideration
 
69.4% - 74.3%
  71%   75%
 
         
    Aggregate Pro Forma Equity Ownership
    of Cornell Stockholders Based on:
Overall Contribution Percentage
  All-Stock
  80% Stock / 20%
Reference Range for Cornell  
Consideration
 
Cash Consideration
 
25.7% - 30.6%
  29%   25%
 
Potential Pro Forma EPS Impact.  Barclays Capital and BofA Merrill Lynch reviewed the potential pro forma financial effects of the merger on GEO’s fiscal year 2011 estimated EPS, both before and after taking into account potential cost savings estimated by GEO’s management to result from the merger, based on (i) the GEO forecasts and the Cornell forecasts, (ii) the GEO forecasts and the adjusted Cornell forecasts and (iii) publicly available research analysts’ consensus estimates with respect to GEO, referred to as GEO consensus estimates, and the


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adjusted Cornell forecasts. Assuming the maximum percentage of cash payable in the merger of 20%, this analysis indicated that the merger could be:
 
  •  accretive to GEO’s fiscal year 2011 estimated EPS based on the Cornell forecasts and GEO forecasts, both before and after taking into account potential cost savings;
 
  •  dilutive to GEO’s fiscal year 2011 estimated EPS based on the adjusted Cornell forecasts and both the GEO forecasts and GEO consensus estimates, before taking into account potential cost savings; and
 
  •  accretive to GEO’s fiscal year 2011 estimated EPS based on the adjusted Cornell forecasts and both the GEO forecasts and GEO consensus estimates, after taking into account potential cost savings.
 
The actual results achieved by the combined company may vary from forecasted results and the variations may be material.
 
Interests of GEO Executive Officers and Directors in the Merger
 
In considering the recommendation of the GEO board of directors with respect to the merger, GEO shareholders should be aware that executive officers of GEO and members of the GEO board of directors may have interests in the transactions contemplated by the merger agreement that may be different from, or in addition to, the interests of the GEO shareholders generally. The GEO board of directors was aware of these interests and considered them, among other matters, in approving the merger agreement and making its recommendation. These interests are summarized below.
 
Board of Directors and Board Committees
 
At the effective time of the merger, all members of the GEO board of directors will continue as directors of the combined company. Mr. Zoley, currently the chairman of the board and chief executive officer of GEO, will continue in those roles with the combined company.
 
Executive Officers
 
At the effective time of the merger, all executive officers of the GEO management team will continue in those roles with the combined company.
 
Cornell Reasons for the Merger and the Recommendation of the Cornell Board of Directors
 
The Cornell board of directors believes the merger presents an opportunity to merge with a successful worldwide private provider of correctional services and create a combined company that will have revenues of approximately $1.5 billion, enhanced scale, diversification, and complementary service offerings. In reaching its decision to approve the Merger Agreement, the Cornell board of directors consulted with its legal advisors regarding its fiduciary duties, the terms of the merger agreement and related issues, and reviewed with its financial advisor, Moelis & Company, and the senior management of Cornell, among other things, operational matters, the financial aspects and the fairness of the transaction to the Cornell stockholders from a financial point of view. The Cornell board of directors has (i) determined that the merger is fair to, and in the best interests of, Cornell and its stockholders, (ii) approved and adopted the Merger Agreement and the merger and (iii) resolved to recommend to Cornell’s stockholders that they vote to approve the Merger Agreement and the merger.
 
In reaching its conclusion to approve the Merger Agreement and the merger, the Cornell board of directors considered a number of factors, including the companies’ failure to come to terms on a transaction in 2004, 2007 and 2009, the perceived execution risk of pursuing another transaction with GEO, the proposed purchase price per share of Cornell common stock offered by GEO, the complementary nature of the companies’ businesses and GEO’s ability to integrate Cornell’s operations into its own with minimal disruption to customers and employees. (These and other factors considered by the Cornell board of directors are discussed in greater detail below). Despite the long history between the companies, the board of directors ultimately determined that the accelerated negotiation timeline proposed by GEO significantly mitigated the execution risk of the proposed transaction


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and that the proposed purchase price represented a superior value proposition for Cornell stockholders relative to other strategic alternatives, including the company’s continued independence.
 
Financial Considerations
 
  •  Merger consideration payable to Cornell’s stockholders.  The Cornell board of directors took into account the proposed merger consideration. The Cornell board of directors assessed the merger consideration in light of, among other things, the following factors:
 
  •  the price to be paid per share of Cornell common stock in the transaction represented a premium of 35% over the closing sale price of Cornell’s common stock on April 16, 2010 (the trading day immediately prior to the public announcement of the transaction);
 
  •  the potential for GEO’s stock to appreciate in price;
 
  •  the anticipated increased trading liquidity of the combined company; and
 
  •  the belief that the transaction will be tax-deferred to Cornell stockholders (to the extent such stockholders receive shares of GEO common stock in exchange for their Cornell shares and not cash).
 
The Cornell board of directors determined that the combination of cash and shares of GEO common stock as consideration in the merger transaction was beneficial to Cornell’s stockholders. Cornell desired to provide its stockholders with the option to choose the type of consideration they preferred. The merger agreement allows all stockholders to elect to receive, at their choosing, either cash or shares of GEO, or a combination of both, in exchange for their shares of Cornell (subject to the restrictions discussed elsewhere in this Joint Proxy Statement/Prospectus). No Cornell stockholder will be required to receive cash in the merger transaction.
 
  •  Financial strength.  The Cornell board of directors considered the expected financial strength of the combined company following the merger and the ability of the combined company to realize cost savings, lower its cost of capital and improve its overall financial resources.
 
  •  Financial analyses and Opinion of Moelis & Company.  The Cornell board of directors evaluated the financial analyses and financial presentation of Cornell’s financial advisor, Moelis & Company, as well as the written opinion of Moelis & Company dated April 18, 2010, that, as of such date and based on and subject to the limitations and qualifications set forth in its opinion, the merger consideration was fair, from a financial point of view, to Cornell stockholders. See “The Merger — Opinion of Cornell’s Financial Advisor” beginning on page 53.
 
Strategic Considerations
 
  •  Comparison of prospects of the merged entity and a stand alone strategy.  The Cornell board of directors considered what it believed to be a number of strategic advantages of the merger in comparison to a stand alone strategy, including, but not limited to, its belief that:
 
  •  a merger with GEO would create a highly competitive platform by combining Cornell’s national franchise across three separate businesses with GEO’s global presence, capacity and complementary product offerings; and
 
  •  the combination of Cornell and GEO would likely reduce the impact of “headline risk” for the individual businesses.
 
Integration Considerations
 
  •  Ability to integrate.  The Cornell board of directors took note of GEO’s integration record. In this regard, the Cornell board of directors noted that customer and employee disruption from consolidations in connection with the transaction should not be significant due to the complementary nature of the markets and customers served by Cornell and GEO.


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  •  Similarity of business strategy and philosophy.  The Cornell board of directors noted that Cornell and GEO share a similar commitment to their respective stockholders and shareholders, customers and employees and are both focused on growing revenue and profitability, which the Cornell board of directors believed would facilitate the process of integration of these two organizations.
 
Other Strategic Alternatives
 
  •  Continued independence.  The Cornell board of directors considered, among other things, the high level of competition in the provision of correctional and related services and the increasing importance of scale in the industry, particularly in the cost of capital required for construction of new facilities. The Cornell board of directors also considered and analyzed, in consultation with its financial advisor, Moelis & Company, information with respect to Cornell’s financial condition, results of operations, businesses and its prospects. In this regard, the Cornell board of directors considered Cornell’s past performance and compared Cornell’s operating results to publicly available financial and other information for its competitors. Additionally, the Cornell board of directors considered Cornell’s ability to grow as an independent institution, its prospects to make future acquisitions, and its ability to further enhance stockholder value without engaging in a strategic transaction. In this regard, the Cornell board of directors considered the long- and short-term interests of Cornell and its stockholders, including whether those interests are best served by continued independence.
 
  •  Superiority of value.  The Cornell board of directors noted that based on its own experience, the results of discussions held by Cornell senior management with third parties, and the advice of Moelis & Company, the probability of receiving a higher value offer from another party in the near term was low.
 
  •  Alternative strategic transactions.  The Cornell board of directors also noted that, while the Merger Agreement prohibits Cornell from seeking alternative transactions, it permits, subject to its terms and conditions, Cornell to consider and react to alternative combination proposals made on an unsolicited basis.
 
In addition to the foregoing, the Cornell board of directors also considered, among other things, the following factors:
 
  •  the recommendation of the Special Committee that the Merger Agreement is advisable and in the best interests of Cornell and its stockholders;
 
  •  the Cornell board of director’s knowledge of GEO’s business, operations, financial condition, earnings and prospects;
 
  •  the Cornell board of director’s review of reports of Cornell management and outside advisors concerning the operations, financial condition and prospects of GEO;
 
  •  GEO’s ability to pay the merger consideration and to consummate the transaction in an efficient and timely manner;
 
  •  the Cornell board of directors’ review of the potential impact of the merger on employees and belief that the impact would generally be positive in that employees would become part of a more geographically diversified institution with greater resources and opportunities;
 
  •  the Cornell board of directors’ review with its legal advisors of the likelihood of the transaction receiving regulatory approval and the terms and conditions of the Merger Agreement, including the parties’ respective representations, warranties and covenants, the conditions to closing and:
 
  •  the stock and cash elections with respect to the merger consideration;
 
  •  the Cornell board of directors’ ability to comply with its fiduciary duties if Cornell receives a superior proposal; and
 
  •  the requirement of Cornell to pay GEO a $12 million termination fee plus expenses in certain circumstances.


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In the course of its deliberations, the Cornell board of directors also considered a variety of risks and other countervailing factors related to entering into the Merger Agreement, including:
 
  •  the risk that the merger will not be consummated even were the Company’s stockholders to adopt the Merger Agreement;
 
  •  the potential for any adverse effects of the public announcement of the merger on the Company’s business, including its significant customers, suppliers and other key relationships, its ability to attract and retain key management personnel and its overall competitive position if the merger is not consummated;
 
  •  the additional cost to another potential purchaser as a result of the termination fee and expense reimbursement to be paid by Cornell to GEO in the event Cornell accepts, in accordance with the terms and conditions of the Merger Agreement, a superior proposal;
 
  •  the possibility that, although the merger provides Cornell’s stockholders with a premium over the price at which Cornell’s common stock traded prior to the public announcement of the merger, the price of Cornell’s common stock might have increased in the future to a price higher than the per share valuation implied by the transaction;
 
  •  the possibility that merger integration would occupy more of management’s time and attention than anticipated and therefore impact other strategic and business priorities;
 
  •  the interests of certain of Cornell’s directors and executive officers with respect to the merger (see, “The Merger — Interests of Cornell Directors and Executive Officers in the Merger That are Different Than Yours”); and
 
  •  that cash paid to Cornell stockholders in connection with the merger would be taxable to such stockholders for U.S. federal income tax purposes.
 
While the Cornell board of directors realized that there can be no assurance about future results, including results expected or considered in the factors listed above, the Cornell board of directors concluded that the potential positive factors outweighed the potential risks of consummating the merger.
 
The foregoing discussion of the factors considered by the Board in evaluating the merger and the Merger Agreement is not intended to be exhaustive, but rather, includes all material factors considered by the Cornell board of directors. In reaching its decision to approve the merger and the Merger Agreement, the Cornell board of directors did not quantify or assign any relative weights to the factors considered, and the individual directors may have given different weights to different factors. The Cornell board of directors considered all these factors as a whole, and overall considered them to be favorable to, and to support, its determination. ACCORDINGLY, THE CORNELL BOARD OF DIRECTORS RECOMMENDS THAT ALL CORNELL STOCKHOLDERS VOTE “FOR” APPROVAL OF THE MERGER AND THE MERGER AGREEMENT.
 
Opinion of Cornell’s Financial Advisor
 
Pursuant to a letter agreement dated March 30, 2010, Cornell engaged Moelis & Company to act as its exclusive financial advisor in connection with the merger. Subsequently, the Cornell board of directors asked Moelis & Company to provide it with an opinion as to whether the per share consideration to be received in the transactions contemplated pursuant to the merger agreement was fair, from a financial point of view, to Cornell’s stockholders.
 
On April 18, 2010, at a meeting of the Cornell board of directors held to evaluate the merger agreement and the transactions contemplated thereby, Moelis & Company delivered to the Cornell board of directors its oral opinion, subsequently confirmed by delivery of a written opinion dated April 18, 2010, that, based upon and subject to the limitations and qualifications set forth in the opinion, as of the date of the opinion, the merger consideration to be received by the Cornell stockholders, pursuant to the terms and subject to the conditions set forth in the merger agreement, is fair, from a financial point of view, to such holders.
 
The full text of Moelis & Company’s opinion is attached as Annex E to this proxy statement/prospectus and is incorporated herein by reference. This summary is qualified in its entirety by reference to the full text of the opinion.


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The full text of the opinion describes the assumptions made, procedures followed, matters considered and limitations on the review undertaken by Moelis & Company in connection with such opinion. Stockholders are encouraged to read the opinion carefully in its entirety. Moelis & Company’s opinion is directed to the Cornell board of directors and addresses only the fairness from a financial point of view of the consideration to be received by Cornell stockholders. The Cornell board has not asked Moelis & Company to address, and its opinion does not address, the fairness to, or any other consideration of, the holders of any class of securities, creditors or other constituencies of Cornell, other than the stockholders. Moelis & Company’s opinion does not constitute a recommendation on how any stockholder of Cornell should vote at any stockholders’ meetings held in connection with the merger. In addition, Moelis & Company did not express any opinion as to the fairness of the amount or nature of any compensation to be received by any of Cornell’s officers, directors or employees, or any class of such persons, relative to the merger consideration.
 
Moelis & Company’s opinion does not address Cornell’s underlying business decision to effect the merger or the relative merits of the merger as compared to any alternative business strategies or transactions that might be available to Cornell and does not constitute a recommendation to any Cornell stockholder as to how such Cornell stockholder should vote with respect to the merger. At the direction of the Cornell board of directors, Moelis & Company was not asked to, nor did it, offer any opinion as to the material terms of the merger agreement or the form of the merger. Moelis & Company expressed no opinion as to what the value of GEO’s common stock will be when it is issued pursuant to the merger agreement or the prices at which GEO’s or Cornell’s common stock will trade at any time.
 
Moelis & Company’s opinion is necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Moelis & Company as of, the date of Moelis & Company’s opinion. Moelis & Company has also assumed, with the consent of the Cornell board of directors, that all governmental, regulatory or other consents and approvals necessary for the consummation of the merger will be obtained without the imposition of any material delay, limitation, restriction, divestiture or condition that would have an adverse effect on Cornell or GEO or on the expected benefits of the merger. Moelis & Company has also assumed, with the consent of the Cornell board of directors, that the final executed form of the merger agreement does not differ in any material respect from the draft that Moelis & Company has examined, and that GEO and Cornell will comply with all the material terms of the merger agreement. The Moelis & Company opinion was approved by Moelis & Company’s Fairness Opinion and Valuation Review Committee.
 
In arriving at the conclusions reached in its opinion, Moelis & Company has, among other things:
 
  •  reviewed certain publicly available business and financial information relating to Cornell and GEO that Moelis & Company deemed relevant;
 
  •  reviewed certain internal information relating to the past and current business of Cornell, including financial forecasts, earnings, cash flow, assets, liabilities and prospects of Cornell and information relating to anticipated cost savings, synergies and related expenses expected to result from the merger, all furnished to Moelis & Company by Cornell;
 
  •  reviewed certain internal information relating to GEO, including financial forecasts, earnings, cash flow, assets, liabilities and prospects of GEO and information relating to anticipated cost savings, synergies and related expenses expected to result from the merger, all furnished to Moelis & Company by GEO;
 
  •  conducted discussions with members of senior management and representatives of Cornell and GEO concerning the matters described above, as well as their respective businesses and prospects before and after giving effect to the merger;
 
  •  reviewed publicly available financial and stock market data, including valuation multiples, for Cornell and GEO and compared them with those of certain other companies in lines of business that Moelis & Company deemed relevant;
 
  •  compared the proposed financial terms of the merger with the financial terms of certain other transactions that Moelis & Company deemed relevant;
 
  •  considered certain potential pro forma effects of the merger;


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  •  reviewed a draft of the merger agreement, dated April 18, 2010;
 
  •  participated in certain discussions and negotiations among representatives of Cornell and GEO and their financial and legal advisors; and
 
  •  conducted such other financial studies and analyses and took into account such other information as Moelis & Company deemed appropriate.
 
In connection with its review, Moelis & Company did not assume any responsibility for independent verification of any of the information supplied to, discussed with, or reviewed by it for the purpose of its opinion and, with the consent of the Cornell board of directors, relied on such information being complete and accurate in all material respects. In addition, at the direction of the Cornell board of directors, Moelis & Company has not made any independent evaluation or appraisal of any of the assets or liabilities (contingent, derivative, off-balance-sheet, or otherwise) of Cornell or GEO, nor has Moelis & Company been furnished with any such evaluation or appraisal. With respect to the forecasted financial information referred to above, Moelis & Company has assumed, with the consent of the Cornell board of directors, that such information has been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the respective management of Cornell or GEO as to the respective future performance of Cornell or GEO. Any estimates or forecasts contained in Moelis & Company’s analyses are not necessarily indicative of future results or actual values, which may be significantly more or less favorable than those suggested by such estimates or forecasts. Moelis & Company is a financial advisor only and relied upon, without independent verification, certain internal information provided to it by Cornell and GEO. Moelis & Company is not a legal, tax or regulatory advisor and its opinion does not address any legal, tax or regulatory matters.
 
Financial Analyses
 
The following is a summary of the financial analyses presented by Moelis & Company to the Cornell board of directors at its meeting held on April 18, 2010 in connection with the delivery of the oral opinion of Moelis & Company at such meeting and its subsequent written opinion, dated April 18, 2010.
 
The summary set forth below does not purport to be a complete description of the analyses performed and factors considered by Moelis & Company in arriving at its opinion. The fact that any specific analysis has been referred to in the summary below or in this statement is not meant to indicate that such analysis was given more weight than any other analysis. The preparation of a fairness opinion is a complex process involving various determinations and subjective judgments as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances. Therefore, such an opinion is not readily susceptible to partial analysis or summary description. With respect to the comparable public companies analysis and the precedent transactions analysis summarized below, no company, business or transaction used in such analyses as a comparison is either identical or directly comparable to Cornell or the merger, nor is an evaluation of such analyses entirely mathematical. These analyses necessarily involve complex considerations and judgments concerning financial and operating characteristics and other factors. Moelis & Company did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis for purposes of its opinion, but rather arrived at its ultimate opinion based on the results of all analyses undertaken by it and assessed as a whole, and believes that the totality of the factors considered and analyses it performed in connection with its opinion operated collectively to support its determination as to the fairness from a financial point of view as of the date of its opinion of the merger consideration to be received by the Cornell stockholders.
 
Some of the summaries of the financial analyses below include information presented in tabular format. In order to fully understand Moelis & Company’s analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the analyses performed by Moelis & Company. Considering the data described below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Moelis & Company’s analyses. Moelis & Company did not in isolation draw conclusions from or with regard to any one factor or method of analysis for purposes of its opinion, but rather Moelis & Company arrived at its opinion based on the results of all analyses undertaken by it and assessed as a whole.


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The analyses performed by Moelis & Company include analyses based upon forecasts of future results, which results might be significantly more or less favorable than those upon which Moelis & Company’s analyses were based. The analyses do not purport to be appraisals or to reflect the prices at which Cornell’s or GEO’s shares of common stock might trade at any time following the announcement of the merger. Because the analyses are inherently subject to uncertainty, being based upon numerous factors and events, including, without limitation, factors relating to general economic and competitive conditions beyond the control of the parties or their respective advisors, neither Moelis & Company nor any other person assumes responsibility if future results or actual values are materially different from those contemplated below.
 
Cornell Analyses
 
In its evaluation of the proposed transaction, Moelis & Company selected three principal valuation methodologies (specifically, a comparable public companies analysis, a precedent transactions analysis and a discounted cash flow analysis), each of which is summarized on the following pages.
 
Set forth in the table immediately below are the derived per share valuation ranges resulting from the application, subject to certain assumptions, of the three valuation methodologies that Moelis & Company selected (specifically, the publicly traded comparable companies analysis, the precedent transactions analysis and the discounted cash flow analysis). The discounted cash flow analysis was conducted based upon certain materials prepared by Cornell management. The table below contains certain additional data presented to the Cornell board of directors by Moelis & Company that was not incorporated into, and does not constitute a part of, the three valuation methodologies utilized by Moelis & Company in support of its opinion. These data include (i) the 52-week trading range of a share of Cornell stock, (ii) Cornell’s volume-weighted average closing price per share of $18.88 for the thirty calendar days ended on April 16, 2010, which we refer to as the 30-Day volume-weighted average price, or VWAP, (iii) Cornell’s volume-weighted average closing price per share of $20.08 for the one-hundred twenty calendar days ended on April 16, 2010, which we refer to as the 120-Day VWAP, and (iv) analyst consensus price target of $22.67 for a share of Cornell stock compiled as of April 16, 2010. The derived per share valuation ranges are presented next to the implied per share values for Cornell based on the merger consideration to be received, calculated using GEO’s closing price per share of $19.16 as of April 16, 2010 (the last trading day prior to the delivery of the opinion).
 
                     
Valuation Methodology
      Implied per Share Value:
 
Comparable public companies analysis
  $ 14.68-$20.10     All Stock Offer(1)   $ 24.91  
Precedent transactions analysis
  $ 22.80-$28.16     All Cash Offer(2)   $ 25.16  
Discounted cash flow analysis
  $ 20.68-$27.89              
 
                     
Market Data Statistics
           
 
52 Week Low and High
  $ 15.50, $25.13              
4/16/10 Closing Price
  $ 18.47              
30-Day VWAP
  $ 18.88              
120-Day VWAP
  $ 20.08              
Analyst Consensus Price Target
  $ 22.67              
 
 
(1) Assumes 100% stock consideration at a 1.30x fixed exchange ratio. Each issued and outstanding share of Cornell common stock will be converted into the right to receive 1.30 shares of common stock of GEO.
 
(2) If cash election is selected, each issued and outstanding share of Cornell common stock will receive in cash an amount equal to the greater of either (i) the fair market value of 1.00 share of common stock of GEO plus $6.00 per share or (ii) the fair market value of 1.30 shares of common stock of GEO.
 
Comparable Public Companies Analysis
 
Moelis & Company performed a comparable public companies analysis, which is intended to provide an implied value of a company by comparing certain financial information of the company with corresponding financial information of similar public companies. Moelis & Company compared selected financial metrics of


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Cornell with similar data involving companies with business operations that generally reflected similar characteristics to Cornell’s Adult Secure business and/or Non Adult business.
 
Given the mix of Cornell’s business operations and the limited number of publicly traded companies with business operations directly comparable to those of Cornell, Moelis & Company analyzed the market values and trading multiples of Cornell and publicly traded companies with lines of business, or operating and financial characteristics, generally similar to those of Cornell’s Adult Secure business and/or Non Adult business. Using publicly available information, Moelis & Company independently selected and analyzed the market values and trading multiples of Cornell and the corresponding trading multiples of the Adult Secure Public Companies and the Non Adult Public Companies listed below:
 
Adult Secure Companies: Corrections Corporation of America and The GEO Group, Inc.
 
Non Adult Companies: Res-Care, Inc. and Providence Service Corporation
 
All multiples were based on the closing stock prices of the selected companies on April 16, 2010. Estimated financial data for the selected companies were based on publicly available research analysts’ estimates. Moelis & Company reviewed enterprise values of the selected companies as multiples of, among other things, estimated calendar year 2010 through estimated calendar year 2012 earnings before interest, taxes, depreciation and amortization and other non- cash and non- recurring expenses or gains, commonly referred to as EBITDA. Moelis & Company calculated enterprise values as equity value, plus total debt and minority interest, less cash. This analysis indicated the following:
 
             
    Enterprise Value/
    CY2010
  CY2011
  CY2012
Mean of Comparable Companies
  EBITDA   EBITDA   EBITDA
 
Adult Secure Companies
  8.4x   8.0x   7.3x
Non Adult Companies
  5.7x   5.5x   NA
All Comparable Companies
  7.1x   6.8x   7.3x
 
Based on the foregoing, Moelis & Company selected multiple ranges for the metric, applied the selected ranges to the relevant statistic for Cornell using Cornell management’s background materials and calculated an implied range of Cornell stock prices. This resulted in a valuation range for Cornell of $14.68 to $20.10 per share, which compares to the merger consideration of $24.91 (100% stock) and $25.16 (cash election offer) per Cornell share based on GEO’s closing stock price as of April 16, 2010 of $19.16.
 
Precedent Transactions Analysis
 
Moelis & Company compared selected financial and transaction metrics of Cornell and the merger with similar data involving companies with business operations that generally reflected similar characteristics to Cornell’s Adult Secure business and/or Non Adult business. Given the lack of transactions involving businesses directly comparable to Cornell, Moelis & Company considered relevant transactions dating back approximately nine years. Market conditions at the time a given transaction was announced were also considered when analyzing the precedent transactions.
 
For each of the precedent transactions, Moelis & Company calculated valuation multiples based on information that was publicly available, focusing on the ratio of enterprise value to EBITDA for the identified target company for the last reported last twelve months period as of the announcement date of the transaction.


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The precedent transactions considered were:
 
         
Date Announced
 
Acquiror
 
Target
 
01/4/2010
  Group 4 Securicor plc   Nuclear Security Services Corporation
08/31/2009
  The GEO Group   Just Care
10/09/2006
  Veritas Capital   Cornell Companies
03/22/2006
  Vestar Capital Partners   National Mentor Holdings
07/14/2005
  The GEO Group   Correctional Services Corporation
01/24/2005
  Cornell Corporation   Correctional Systems, Inc.
10/08/2005
  Bain Capital   CRC Health Corporation
03/10/2004
  Onex Corporation   Res-Care, Inc.
03/08/2002
  Group 4 Securicor plc   The Wackenhut Corporation
01/17/2001
  Madison Dearborn Partners   National Mentor Holdings
 
Precedent Transactions:
 
         
    TEV/LTM
    Revenue   EBITDA
 
Mean
  1.3x   8.3x
 
Based on the foregoing, Moelis & Company selected multiple ranges for the metric and applied them to the relevant statistic for Cornell using Cornell management’s background materials and calculated an implied range of Cornell stock prices. This resulted in a valuation range for Cornell of $22.80 to $28.16 per share, which compares to the merger consideration of $24.91 (100% stock) and $25.16 (cash election offer) per Cornell share based on GEO’s closing stock price as of April 16, 2010 of $19.16.
 
Discounted Cash Flow Analysis
 
Using background materials provided by Cornell management, Moelis & Company performed a discounted cash flow analysis utilizing the after-tax unlevered free cash flows for the fiscal years 2010 to 2015, applying the mid-year convention and discount rates ranging from 9.5% to 11.5% derived from the estimated weighted average cost of capital for Cornell and for the Adult Secure Companies and Non Adult Companies referred to above under “Comparable Public Companies Analysis.” In conducting the terminal valuation, Moelis & Company utilized Cornell’s calendar year 2015 estimated EBITDA normalized assuming depreciation and amortization equals capital expenditure, and applied a 6.0x to 7.0x multiple derived from the mean of the trading multiples in the Adult Secure and/or Non Adult Companies referred to above under “Comparable Public Companies Analysis”.
 
Based on the foregoing, Moelis & Company derived a valuation range of $20.68 to $27.89, which compares to the merger consideration of $24.91 (100% stock) and $25.16 (cash election offer) per Cornell share based on GEO’s closing stock price as of April 16, 2010 of $19.16.
 
Conclusion
 
Based on the foregoing analyses, on April 18, 2010, Moelis & Company delivered to the Cornell board of directors its oral opinion, subsequently confirmed by delivery of a written opinion dated April 18, 2010, that, based upon and subject to the limitations and qualifications set forth in the opinion, as of the date of the opinion, the merger consideration to be received by the Cornell stockholders, pursuant to the terms and subject to the conditions set forth in the merger agreement, is fair, from a financial point of view, to such holders.
 
Other Information
 
As noted above, the discussion set forth above is a summary of the material financial analyses presented by Moelis & Company to the Cornell board of directors in connection with Moelis & Company’s analysis of the fairness of the consideration to be received by holders of shares of Cornell common stock pursuant to the merger


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agreement from a financial point of view to such holders and in connection with the delivery of its opinion to the Cornell board of directors, and is not a comprehensive description of all analyses undertaken by Moelis & Company in connection with its opinion. Moelis & Company believes that its analyses must be considered as a whole and that selecting portions of its analyses or the factors it considered or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying Moelis & Company’s analyses and opinion. The fact that any specific analysis has been referred to in the summary above is not meant to indicate that such analysis was given greater weight than any other analysis referred to in the summary.
 
The consideration to be paid pursuant to the merger agreement was determined through arm’s-length negotiations between Cornell and GEO and was approved by each company’s board of directors. Moelis & Company provided advice to Cornell during these negotiations, however, Moelis & Company did not recommend any specific consideration to the Cornell board of directors or suggest that any specific consideration constituted the only appropriate consideration for a transaction.
 
The merger consideration was determined through negotiations among Cornell and its representatives, on the one hand, and GEO and its representatives, on the other hand, and the decision by the Cornell board of directors to approve, adopt and authorize the merger agreement was solely that of the Cornell board of directors. The Moelis & Company opinion and financial analyses, taken together, represented only one of many factors considered by the Cornell board of directors in its evaluation of the merger and should not be determinative of the views of the Cornell board of directors or Cornell management with respect to the merger or the merger consideration or whether the Cornell board of directors would have been willing to agree to different merger consideration.
 
Moelis & Company was engaged by Cornell primarily due to a long standing relationship between Cornell and a senior banker at Moelis & Company. This individual had previously served as Cornell’s investment banker and financial adviser and had participated in prior discussions between Cornell and GEO during his time with Moelis & Company and his prior investment banking firm. His familiarity with the history of the discussions between the parties, knowledge of the correctional, detention and mental health industry and the prior positive experiences working with this individual resulted in Cornell engaging Moelis & Company as its exclusive financial advisor. Moelis & Company is an investment banking enterprise with substantial experience in transactions similar to the merger. Moelis & Company, as part of its investment banking business, is continually engaged in the valuation of businesses and securities in connection with business combinations and acquisitions and for other purposes. Moelis & Company has consented to the inclusion in this proxy statement/prospectus of its written opinion delivered to the Cornell board of directors, dated April 18, 2010.
 
Under the terms of the engagement letter between Moelis & Company and Cornell, Moelis & Company agreed to act as Cornell’s financial advisor in connection with the merger. In accordance with the terms of such engagement letter, (i) Moelis & Company received a fee of $1,000,000 upon the delivery of its opinion, which was not contingent upon the consummation of the merger and (ii) Moelis & Company will receive a transaction fee contingent upon the consummation of the merger equal to 1.0% of the transaction value (as defined in the engagement letter) or approximately $7 million based on the closing price of Cornell common stock on April 30, 2010. The opinion fee is creditable against the fee payable upon consummation of the merger. In addition, Cornell has agreed to reimburse Moelis & Company for certain expenses and indemnify Moelis & Company for certain liabilities arising out of its engagement. Other than its engagement in connection with the merger, Moelis & Company has no agreement, arrangement or understanding for the provision of investment banking or other related services to either Cornell or GEO.
 
Interests of Cornell Directors and Executive Officers in the Merger That are Different Than Yours
 
In considering the recommendation of the Cornell board of directors to vote for the proposal to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement, you should be aware that some of Cornell’s directors and executive officers have certain interests in, and will receive benefits from, the merger that differ from, or are in addition to (and therefore may conflict with), the interests of Cornell’s stockholders generally. These additional interests are described below. The Cornell board of directors was aware of these interests during their deliberations regarding the merits of the merger agreement and considered them in


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determining to recommend to Cornell’s stockholders that they vote to approve the merger agreement, the merger and the other transactions contemplated by the merger agreement.
 
Equity-Based Awards
 
Stock Options and Restricted Stock.  The stock options and restricted stock held by the directors and executive officers of Cornell will be treated the same as all other stock options and restricted stock under the terms of the merger agreement. Any option to purchase Cornell common stock that must be exercised by its terms prior to the effective time which is not exercised will terminate as of the effective time of the merger. The merger agreement provides that upon completion of the merger, each outstanding and unexercised option to acquire shares of Cornell common stock that is not required to be exercised prior to the effective time of the merger, whether vested or unvested, will cease to represent the right to acquire shares of Cornell common stock and will become a right to acquire GEO common stock. The number of shares and the exercise price subject to the converted options will be adjusted in accordance with the exchange ratio in the transaction. However, the duration and other terms of the Cornell options which are converted into options to acquire shares of GEO will remain the same as the terms of the prior Cornell options. Unless an assumed option provides for acceleration of vesting prior to the effective time, such option shall vest upon the effective time of the merger. All shares of Cornell restricted stock will vest and be automatically converted into shares of GEO common stock, as adjusted to account for the exchange ratio. The following table sets forth, as of August 1, 2010, the number of unvested options and unvested shares of restricted stock held by the directors and executive officers of Cornell that will become fully vested in advance of, or upon, the consummation of the merger:
 
                 
    Number of
  Number of Currently
    Currently Unvested
  Unvested Shares of
    Options to Fully
  Restricted Stock to Fully
    Vest Upon
  Vest Upon Completion of
Name
  Completion of Merger   Merger
 
Max Batzer
    [1,250]       [—]  
Anthony R. Chase
    [1,250]       [—]  
Richard Crane
    [1,250]       [—]  
Zachary R. George
    [1,250]       [—]  
Todd Goodwin
    [1,250]       [—]  
James E. Hyman
    [—]       [124,167]  
Andrew R. Jones
    [1,250]       [—]  
Alfred J. Moran, Jr. 
    [1,250]       [—]  
John R. Nieser
    [—]       [60,167]  
Patrick N. Perrin
    [—]       [31,584]  
Cathryn L. Porter
    [—]       [37,375]  
D. Stephen Slack
    [1,250]       [—]  
Executive Officers and Directors as a Group (12 Persons)
    [10,000]       [253,293]  
 
Employee Stock Purchase Plan.  Each outstanding option or right to acquire Cornell common stock under the terms of Cornell’s Employee Stock Purchase Plan, which is referred to as the ESPP, held by the executive officers of Cornell will be treated the same as all other options or rights to acquire Cornell common stock under the ESPP. Non-employee directors are not eligible to participate in the ESPP. Cornell will make reasonable best efforts to ensure that, immediately prior to the effective time, the following occurs: (i) each outstanding option or right to acquire Cornell common stock under Cornell’s employee stock purchase plan will automatically be exercised or deemed exercised, and (ii) in lieu of the shares of Cornell common stock otherwise issuable upon the exercise of each such option or right, the holder of such option or right will have the right to elect to receive from GEO, following the effective time, either the stock consideration or the cash consideration, subject to the same prorations and adjustments set forth in “The Merger — Merger Consideration” above, except to the extent that the holder of such option or right elects not to exercise the holder’s options and to withdraw the entire balance of holder’s Cornell employee stock purchase plan account prior to the effective time. The following table sets forth the number of


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in-the-money options to acquire Cornell common stock held by executive officers under the ESPP as of August 1, 2010, and the dollar amount payable to each executive officer, upon the exercise of such options upon completion of the merger if such holder elects to receive cash:
 
                 
    Number of
    Net Merger
 
Name
  Options     Consideration(1)(2)  
 
James E. Hyman
    771     $ 5,190  
John R. Nieser
    95       639  
Patrick N. Perrin
    379       2,551  
Cathryn L. Porter
    356       2,396  
                 
Executive Officers as a Group (4 Persons)
    1,601     $ 10,776  
 
 
(1) Based upon each holder electing to receive the equivalent of 1.3 shares of GEO common stock in cash, which, based upon the closing price per share of GEO common stock on as reported on the NYSE on June 4, 2010, is equal to $26.351 per share.
 
(2) The net merger consideration is $6.731 per share, which is based upon the difference between the ESPP option price of $19.62 per share of Cornell common stock and $26.351.
 
Nonqualified Deferred Compensation Plan.  Cornell maintains a nonqualified deferred compensation plan, which is referred to as the NQDC Plan, into which directors and executive officers may choose to defer amounts of compensation. Cornell also makes contributions to the accounts of certain executive officers in the NQDC Plan equal to amounts that would have been credited to the executive’s account under the Cornell 401(k) plan if not for the imposition of certain IRS limits on contributions to tax-qualified plans such as the Cornell 401(k) plan. All amounts credited to the NQDC Plan are fully vested at all times and are fully accrued (i.e., no additional contributions will be made to the NQDC Plan because of the merger). However, amounts credited to the NQDC Plan will become payable to the plan participants at, or immediately prior to, the effective time of the merger. This time of payment would be earlier than when such payment would ordinarily have been made absent the merger to NQDC Plan participants and could be viewed as an interest in addition to that held by stockholders generally. This plan provides for a gross-up for any excise taxes with respect to Section 4999 excise parachute payments made under the plan.
 
The following table sets forth the dollar amount of compensation accrued by each participating director and executive officer under the NQDC Plan as of June 4, 2010:
 
         
    Amount Accrued
 
    Under the
 
    Nonqualified
 
    Deferred
 
Name
  Compensation Plan(1)  
 
Zachary R. George
  $ 311,189  
Todd Goodwin
    311,683  
         
Total
  $ 622,872  
 
 
(1) Based on the June 4, 2010 Cornell stock price of $26.03 per share.
 
Employment and Change in Control Agreements
 
Upon the consummation of the merger, GEO shall honor the existing amended and restated employment agreement between Cornell and James E. Hyman, the employment/separation agreement between Cornell and John R. Nieser, the executive management employment agreement between Cornell and Cathryn L. Porter, and the severance agreement between Cornell and Patrick N. Perrin. The merger would constitute a change of control for purposes of these agreements.
 
The following describes the material terms of such agreements:


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James E. Hyman.  Mr. Hyman’s existing amended and restated employment agreement provides that he will be entitled to receive the severance and other benefits described below if, at any time prior to the expiration of 180 days following the completion of the merger, he voluntarily terminates his employment:
 
  •  Mr. Hyman will be paid, to the extent he has not already been paid, his accrued annual base salary and any annual bonus for the fiscal year prior to termination, and his pro rata annual bonus as earned through the date of termination;
 
  •  Mr. Hyman will be entitled to receive an amount equal to (i) two times his annual base salary and (ii) 100% of the annual bonus he would have been entitled to receive for the remainder of the employment period (that is, two years) as if all performance goals had been met;
 
  •  The surviving company will reimburse Mr. Hyman for all reasonable expenses incurred by him on behalf of the surviving company, as well as any relocation expenses;
 
  •  The surviving company will pay for Mr. Hyman to continue his health care benefits under COBRA for 18 months; and
 
  •  In the event any payment or benefit received by Mr. Hyman (whether payable under his employment agreement or otherwise) gives rise to an excise tax under Section 4999 of the Code, as amended, he will be entitled to a “gross-up” payment in an amount that would place him in the same after-tax position he would have been in if no excise tax had applied.
 
In addition to the above-mentioned benefits, regardless of whether Mr. Hyman terminates his employment, upon the effective time of the merger, all of Mr. Hyman’s unvested restricted stock awards will vest.
 
Assuming that the merger occurred on August 1, 2010 and Mr. Hyman terminated his employment immediately following the completion of the merger, he would be entitled to receive approximately $2,445,980 in cash and benefits under the terms of his employment agreement, plus a “gross up” payment if the excise tax under Section 4999 applies,
 
In addition, as part of the merger discussions, GEO requested that Mr. Hyman extend his existing non-competition period by one year. GEO and Mr. Hyman agreed that subsequent to entering into the merger agreement, they would seek to come to a mutually-acceptable understanding relating to such extension. This matter was part of the Cornell board of directors’ discussions when considering the proposed transaction. GEO and Mr. Hyman are working to agree on definitive documentation agreeable to both parties in connection with the extension of Mr. Hyman’s non-competition period.
 
John R. Nieser.  Mr. Nieser’s existing amended employment/separation agreement provides that he will be entitled to receive the severance and other benefits described below if, within 180 days following the completion of the merger, the surviving corporation terminates the employment of Mr. Nieser:
 
  •  Mr. Nieser will be paid, to the extent he has not already been paid, his accrued annual base salary as earned through the date of termination;
 
  •  Mr. Nieser will be entitled to receive any incentive compensation award that has been earned but not paid;
 
  •  Mr. Nieser will be entitled to receive a payment equal to the pro rata portion of the target award under Cornell’s Incentive Compensation Plan;
 
  •  Mr. Nieser will be entitled to receive a continuation of his base salary for a period of 24 months following the date of termination;
 
  •  The surviving company will make additional payments equal to its contribution towards the cost of coverage under the surviving company’s health plan during the severance period for so long as Mr. Nieser remains covered by such health plan; and
 
  •  In the event any payment or benefit received by Mr. Nieser (whether payable under the employment/separation agreement or otherwise) gives rise to an excise tax under Section 4999 of the Code, he will be


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  entitled to a “gross-up” payment in an amount that would place him in the same after-tax position that he would have been in if no excise tax had applied.
 
Assuming that the merger occurred on August 1, 2010 and Mr. Nieser is terminated immediately following the completion of the merger, he would be entitled to receive approximately $620,979 in cash and benefits under the terms of his employment/separation agreement, plus a “gross up” payment if the excise tax under Section 4999 applies.
 
Cathryn L. Porter.  Ms. Porter’s existing executive management employment agreement provides that she will be entitled to receive the severance and other benefits described below, if at any time within 180 days following completion of the merger, her employment is terminated involuntarily by the surviving corporation:
 
  •  Ms. Porter will be paid, to the extent she has not already been paid, her accrued annual base salary as earned through the date of termination;
 
  •  Ms. Porter will be entitled to receive a continuation of her base salary for a period of 18 months following the date of termination;
 
  •  Ms. Porter will be entitled to receive in a lump sum payment the pro rata portion of any discretionary incentive compensation award that would have been made following the end of the relevant fiscal year; and
 
  •  Ms. Porter will be entitled to extended COBRA benefits at the surviving company’s expense until the earlier of twelve months from the date of termination or the date Ms. Porter commences employment with any person or entity and is thereby eligible for health insurance benefits, provided that the surviving company shall deduct from Ms. Porter’s monthly payments of her base salary an amount equal to that which was deducted for such coverage when Ms. Porter was a regular employee.
 
Assuming that the merger occurred on August 1, 2010 and Ms. Porter is terminated immediately following the completion of the merger, she would be entitled to receive approximately $428,297 in cash and benefits under the terms of her employment agreement.
 
Patrick N. Perrin.  Mr. Perrin’s existing severance agreement provides that he will be entitled to receive the severance and other benefits described below if, at any time within 180 days following completion of the merger, his employment is terminated involuntarily by the surviving corporation:
 
  •  Mr. Perrin will be paid, to the extent he has not already been paid, his accrued annual base salary as earned through the date of termination;
 
  •  Mr. Perrin will be entitled to receive any incentive compensation award that has been earned but not paid;
 
  •  Mr. Perrin will be entitled to receive a payment equal to the pro rata portion of the target award under Cornell’s Incentive Compensation Plan;
 
  •  Mr. Perrin will be entitled to receive a continuation of his base salary for a period of 18 months following the date of termination; and
 
  •  Mr. Perrin will be entitled to extended COBRA benefits at his expense, provided that the surviving company shall pay to Mr. Perrin an amount equal to the surviving company’s portion of employee health care costs under the surviving company’s group health care plan as if Mr. Perrin were an active employee.
 
Mr. Perrin’s existing severance agreement further provides that if Mr. Perrin is terminated within one year after the merger for any reason, but is not involuntarily terminated within 180 days following consummation of the merger, Mr. Perrin shall be entitled exclusively to receive the severance and other benefits described below:
 
  •  Mr. Perrin will be entitled to receive a lump sum payment equal to the sum of (i) his highest annual base salary as of the termination date and the change in control date plus (ii) the average of the annual bonus paid or payable, including by reason of any deferral, to Mr. Perrin by Cornell or its affiliates in respect of the two most recent full fiscal years ending prior to the termination date; and
 
  •  Mr. Perrin will be entitled to have all stock options, restricted stock awards and similar awards granted to him by Cornell immediately vest on the termination date.


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Assuming that the merger occurred on August 1, 2010 and Mr. Perrin is terminated immediately following the completion of the merger, he would be entitled to receive approximately $390,664 in cash and benefits under the terms of his severance agreement.
 
Protection of Directors and Officers Against Claims
 
GEO has agreed to indemnify and hold harmless the present and former officers and directors of Cornell and its subsidiaries against any claims, liabilities, losses, damages, judgments, fines, penalties, costs and expenses in connection with any claim, suit, action, proceeding or investigation, whether civil, criminal, administrative or investigative), arising out of or pertaining to matters existing or occurring at or before the consummation of the merger to the fullest extent allowed under applicable law. GEO has also agreed that it will maintain Cornell’s existing directors’ and officers’ liability insurance policy, or provide a policy providing similar coverage, for the benefit of Cornell’s directors and officers who are currently covered by such insurance, for at least six years from the effective time of the merger, with respect to acts or omissions occurring prior to the effective time of the merger, subject to a limit on the cost to maintain such coverage.
 
Accounting Treatment
 
The merger will be accounted for as an acquisition of Cornell by GEO under the acquisition method of accounting of GAAP. Under the acquisition method of accounting, the assets and liabilities of the acquired company are, as of completion of the merger, recorded at their respective fair values and added to those of the reporting public issuer, including an amount for goodwill representing the difference between the purchase price and the fair value of the identifiable net assets. The financial statements of GEO issued after the merger will reflect the operations of the combined company beginning at the effective time of the merger. The consolidated financial statements of the combined company will not be restated retroactively to reflect the historical financial position or results of operations of Cornell.
 
All unaudited pro forma condensed combined financial statements contained in this proxy statement/prospectus were prepared using the acquisition method of accounting. The final allocation of the purchase price will be determined after the merger is completed and after completion of an analysis to determine the fair value of Cornell’s assets and liabilities. Accordingly, the final purchase accounting adjustments may be materially different from the unaudited pro forma adjustments. Any decrease in the fair value of the assets or increase in the fair value of the liabilities of Cornell as compared to the unaudited pro forma information included in this proxy statement/prospectus will have the effect of increasing the amount of the purchase price allocable to goodwill.
 
Federal Securities Laws Consequences; Stock Transfer Restriction Agreements
 
All shares of GEO common stock that Cornell stockholders receive in the merger will be freely transferable, except for shares of GEO common stock received by persons who become “affiliates” of GEO under the Securities Act of 1933, as amended, and the related SEC rules and regulations.
 
No Appraisal Rights
 
Neither Cornell stockholders nor GEO shareholders have appraisal rights in connection with the merger.
 


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MATERIAL FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
 
The following discussion summarizes the material U.S. federal income tax consequences of the merger to holders of Cornell common stock and GEO common stock. Pursuant to the opinions included as Exhibit 8.1 and 8.2, respectively, and subject to the conditions set forth in such opinions, each of Akerman Senterfitt and Hogan Lovells adopts and confirms the statements in this discussion, to the extent they constitute legal conclusions and relate to the tax consequences of the merger, as its opinion of the material United States federal income tax consequences of the merger.
 
This discussion addresses only those U.S. holders (defined below) that hold their Cornell common stock as a capital asset and does not address all aspects of U.S. federal income taxation that may be relevant to a holder of Cornell common stock in light of that stockholder’s particular circumstances or to a stockholder subject to special rules, such as:
 
  •  a stockholder that is not a U.S. holder;
 
  •  a financial institution or insurance company;
 
  •  a mutual fund;
 
  •  a tax-exempt organization;
 
  •  a dealer or broker in securities or foreign currencies;
 
  •  a trader in securities that elects to apply a mark-to-market method of accounting;
 
  •  a stockholder that holds Cornell common stock as part of a hedge, appreciated financial position, straddle, conversion, or other risk reduction transaction;
 
  •  a stockholder that acquired Cornell common stock pursuant to the exercise of options or similar derivative securities or otherwise as compensation; or
 
  •  a U.S. person whose functional currency is not the U.S. dollar.
 
If a partnership or other entity taxed as a partnership for U.S. federal income tax purposes holds Cornell common stock, the tax treatment of a partner in such partnership will depend on the status of the partners and the activities of the partnership. A partner in a partnership holding Cornell common stock should consult its tax advisor about the tax consequences of the merger to them.
 
The following discussion is not binding on the Internal Revenue Service, which is referred to as the IRS. It is based on the Code, applicable Treasury regulations, administrative interpretations and court decisions, each as in effect as of the date of this joint proxy statement/prospectus, and all of which are subject to change, possibly with retroactive effect. The tax consequences under U.S. state and local and foreign laws and U.S. federal laws other than U.S. federal income tax laws are not addressed. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences set forth below.
 
Holders of Cornell common stock are strongly urged to consult their tax advisors as to the specific tax consequences to them of the merger, including the applicability and effect of U.S. federal alternative minimum tax, state and local and foreign income and other tax laws in light of their particular circumstances.
 
For purposes of this section, the term “U.S. holder” means a beneficial owner of Cornell common stock that for U.S. federal income tax purposes is:
 
  •  a citizen or resident of the United States;
 
  •  a corporation or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or any State or the District of Columbia;
 
  •  an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

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  •  a trust, the substantial decisions of which are controlled by one or more U.S. persons and which is subject to the primary supervision of a U.S. court, or a trust that validly has elected under applicable Treasury regulations to be treated as a U.S. person for U.S. federal income tax purposes.
 
General
 
GEO and Cornell have structured the merger to qualify as a reorganization for U.S. federal income tax purposes. Akerman Senterfitt has included its opinion to GEO as Exhibit 8.1 hereto, and Hogan Lovells has included its opinion to Cornell as Exhibit 8.2 hereto, each effective on the effectiveness date of this joint proxy statement/prospectus and subject to the conditions set forth in such opinions, that (a) the merger will constitute a reorganization within the meaning of Section 368(a) of Code and (b) GEO and Cornell will be parties to the reorganization within the meaning of Section 368(b) of the Code. Further, it is a condition to the closing of the merger that GEO will have received a written opinion from Akerman Senterfitt, and Cornell will have received a written opinion from Hogan Lovells US LLP, both as of the closing date of the merger and to the effect that for U.S. federal income tax purposes, the merger will constitute a reorganization within the meaning of section 368(a) of the Code. Neither GEO nor Cornell intends to waive this condition. These opinions each rely on assumptions, including assumptions regarding the absence of changes in existing facts and law and the completion of the merger in the manner contemplated by the merger agreement, and representations and covenants made by GEO and Cornell, including those contained in certificates of officers of GEO and Cornell. The accuracy of those representations, covenants or assumptions may affect the conclusions set forth in these opinions, in which case the tax consequences of the merger could differ from those discussed here. Opinions of counsel neither bind the IRS nor preclude the IRS from adopting a contrary position. No ruling has been or will be sought from the IRS on the tax consequences of the merger. Consequently, no assurance can be given that the IRS will not assert, or a court would not sustain, a position contrary to those set forth herein.
 
U.S. Federal Income Tax Consequences of the Merger to U.S. Holders of Cornell Common Stock
 
The United States federal income tax consequences of the merger to a U.S. holder will vary depending on whether the U.S. holder receives shares of GEO common stock, cash, or a combination of GEO common stock and cash, in exchange for Cornell common stock. If a U.S. holder chooses to make a cash election pursuant to the merger agreement, at the time of such election such U.S. holder will not know whether, or to what extent, the proration rules of the merger agreement will alter the mix of consideration such U.S. holder will receive. As a result, the tax consequences to such a U.S. holder will not be ascertainable with certainty until the U.S. holder knows the precise number of shares of GEO common stock and the amount of cash that such U.S. holder will receive in the merger.
 
Receipt Solely of GEO Common Stock
 
A U.S. holder who receives only shares of GEO common stock in the merger will not recognize any gain or loss except for any gain or loss recognized with respect to cash received in lieu of a fractional share of GEO common stock. U.S. holders will recognize gain or loss on any cash received in lieu of a fractional share of GEO common stock equal to the difference between the amount of cash received in lieu of the fractional share and the portion of the holder’s adjusted tax basis of the shares of Cornell common stock surrendered that is allocable to the fractional share. Such gain or loss will be long-term capital gain or loss if the holding period in Cornell common stock is more than one year as of the closing date of the merger. The deductibility of capital losses is subject to limitations. Such U.S. holder will have an adjusted tax basis in the GEO common stock received in the merger, including any fractional share for which cash is received, equal to the adjusted tax basis of the Cornell common stock surrendered by that holder in the merger. The holding period for GEO common stock received in the merger will include the holding period for the Cornell common stock surrendered therefor.
 
Receipt of GEO Common Stock and Cash
 
A U.S. holder who receives both GEO common stock and cash in the merger will not recognize any loss on the exchange, and will recognize gain (if any) equal to the lesser of: (1) the amount of cash received (other than cash received in lieu of a fractional share) and (2) the excess of the sum of the amount of cash received and the fair market


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value of the shares of GEO common stock received over the stockholder’s adjusted tax basis for the shares of Cornell common stock surrendered in exchange therefor. For purposes of this calculation, the fair market value of GEO common stock is based on the trading price as of the effective time of the merger, rather than the ten-day average price used in calculating the amount of cash consideration to be paid to Cornell stockholders making a cash election.
 
Subject to the discussion below, any gain recognized with respect to shares of Cornell common stock as a consequence of participating in the merger will be capital gain, and will be long-term capital gain if the shares have been held for more than one year on the closing date of the merger. It is possible, however, that a U.S. holder would instead be required to treat all or part of such gain as dividend income, if that U.S. holder’s percentage ownership in GEO (including shares that the U.S. holder is deemed to own under certain attribution rules) after the transaction is not meaningfully reduced from what the U.S. holder’s percentage ownership would have been if the U.S. holder had received solely shares of GEO common stock rather than a combination of cash and GEO common stock in the merger. If a U.S. holder who has a relatively minimal stock interest in GEO and Cornell suffers a reduction in its proportionate interest in GEO (as compared to the interest it would have had if it had received solely shares of GEO common stock), the U.S. holder should be regarded as having suffered a meaningful reduction in interest. A U.S. holder should consult its own tax advisor as to whether its receipt of cash in the merger will be treated as capital gain or dividend income under the Code.
 
A U.S. holder who receives GEO common stock will have an adjusted tax basis in the GEO common stock received in the merger equal to the adjusted tax basis of the shares of Cornell common stock surrendered, increased by the amount of gain, if any, recognized (including any portion of the gain that is treated as a dividend, if any, but excluding any gain recognized with respect to a fractional share), and decreased by the amount, if any, of cash received (other than cash received in lieu of a fractional share). The holding period for shares of GEO common stock received in exchange for shares of Cornell common stock in the merger will include the holding period for the shares of Cornell common stock surrendered in the merger.
 
U.S. holders will recognize gain or loss on any cash received in lieu of a fractional share of GEO common stock equal to the difference between the amount of cash received in lieu of the fractional share and the portion of the holder’s adjusted tax basis of the shares of Cornell common stock surrendered that is allocable to the fractional share. Such gain or loss will be long-term capital gain or loss if the holding period in Cornell common stock is more than one year as of the closing date of the merger.
 
Receipt Solely of Cash
 
A U.S. holder who receives only cash in the merger will recognize gain or loss equal to the difference between the amount of cash received and its adjusted tax basis in the shares of Cornell common stock surrendered in the exchange. It is anticipated that most U.S. holders will be required to treat any recognized gain (or loss) as capital gain (or loss), as described above. However, it is possible that a U.S. holder would instead be required to treat all or part of such gain as dividend income as described in the section “— Receipt of GEO Common Stock and Cash.” A U.S. holder should consult its own tax advisor as to whether its receipt of cash in the merger will be treated as capital gain or dividend income under the Code.
 
Separate Blocks of Stock
 
In the case of a holder of Cornell common stock that holds shares of Cornell common stock with differing tax bases and/or holding periods, the preceding rules must be applied to each identifiable block of Cornell common stock.
 
Reporting Requirements
 
A holder of Cornell common stock who receives GEO common stock as a result of the merger will be required to retain records pertaining to the merger. A holder of Cornell common stock who is a “significant holder” will be subject to certain reporting requirements with respect to the merger. In particular, such stockholders will be required to attach a statement to their tax returns for the year of the merger that contains the information listed in Treasury Regulation Section 1.368-3(b). Such statement must include the stockholder’s adjusted tax basis in its Cornell


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common stock and other information regarding the reorganization. A “significant holder” is a U.S. holder who receives GEO common stock in the merger and who, immediately before the merger, owned at least 5% of the outstanding stock of Cornell (by vote or value) or securities of Cornell with a tax basis of $1 million or more. U.S. holders are urged to consult with their tax advisers with respect to these and other reporting requirements applicable to the merger.
 
Information Reporting and Backup Withholding
 
A holder of Cornell common stock may be subject to information reporting and backup withholding in connection with any cash payments received instead of a fractional share of GEO common stock, unless such holder provides proof of an applicable exemption or a correct taxpayer identification number, and otherwise complies with the applicable requirements of the backup withholding rules. The amounts withheld under the backup withholding rules are not an additional tax and may be refunded, or credited against the holder’s U.S. federal income tax liability, provided the required information is furnished.
 
This discussion is intended to provide only a general summary of the material U.S. federal income tax consequences of the merger, and is not a complete analysis or description of all potential U.S. federal income tax consequences of the merger. This discussion does not address tax consequences that may vary with, or are contingent on, individual circumstances. In addition, it does not address any non-income tax or any foreign, state or local tax consequences of the merger. Accordingly, each holder of Cornell common stock is strongly urged to consult his or her tax advisor to determine the particular U.S. federal, state or local or foreign income or other tax consequences to that stockholder of the merger.
 
U.S. Federal Income Tax Consequences to GEO Shareholders
 
There will be no U.S. federal income tax consequences to a holder of GEO common stock (who does not also own Cornell common stock) as a result of the merger.


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REGULATORY MATTERS
 
Under the merger agreement, each of GEO and Cornell has agreed to use its reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to consummate the merger and the other transactions contemplated by the merger agreement, including (1) preparing and filing with any governmental authority or other third party as promptly as practicable all documentation to effect all necessary filings, notices, petitions, statements, registrations, submissions of information, applications and other documents and (2) obtaining and maintaining all approvals, actions, non-actions, consents, waivers, licenses, orders, registrations, permits, authorizations, clearances and other confirmations required to be obtained from any governmental authority or other third party that are necessary, proper or advisable to consummate the merger and the other transactions contemplated by the merger agreement.
 
A condition to GEO’s and Cornell’s respective obligations to consummate the merger is that any waiting period applicable to the merger under the HSR Act will have expired or been terminated. See “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 83.
 
U.S. Antitrust Filing
 
Under the HSR Act and the rules and regulations promulgated thereunder, certain transactions, including the merger, may not be consummated unless certain waiting period requirements have expired or been terminated. Pursuant to the requirements of the HSR Act, each of GEO and Cornell filed a Notification and Report Form with respect to the merger with the United States Department of Justice, Antitrust Division, which is referred to as the Antitrust Division, and the Federal Trade Commission, which is referred to as the FTC, on April 30, 2010. Pursuant to the requirements of the HSR Act, the merger may be closed following the expiration of a 30-calendar day waiting period (if the thirtieth day falls on a weekend or holiday, the waiting period will expire on the next business day) following the filings by GEO and Cornell with the FTC and the Antitrust Division, unless the federal government terminates the waiting period early or issues a request for additional information and documentary material.
 
The waiting period under the HSR Act expired as of 11:59 pm on June 1, 2010. Although the waiting period has expired, at any time before the effective time of the merger, the Antitrust Division, the FTC or others could take action under the antitrust laws with respect to the merger, including seeking to enjoin the merger or to require the divestiture of certain assets of GEO or Cornell. Private parties (including individual states) may also bring legal actions under the antitrust laws. GEO and Cornell do not believe that the closing of the merger will result in a violation of any applicable antitrust laws. However, there can be no assurance that a challenge to the merger on antitrust grounds will not be made, or if such a challenge is made, what the result will be. See “The Merger Agreement — Conditions to Completion of the Merger” for certain conditions, including conditions with respect to litigation and other legal restraints.
 
Other than the filings described above, neither GEO nor Cornell is aware of any material regulatory approvals required to be obtained, or waiting periods required to expire, to complete the merger. If GEO and Cornell discover that other material approvals or waiting periods are necessary, GEO and Cornell will seek to obtain or comply with them in accordance with the merger agreement.
 
FINANCING
 
Completion of the merger is not conditioned on receipt of any financing. However, in connection with the merger, GEO may choose to refinance Cornell’s existing senior secured credit facility and Cornell’s existing 10.75% senior notes due 2012, and to pay the cash component of the merger consideration, by utilizing a combination of GEO’s existing cash and one or more draws upon GEO’s senior credit facility.
 
Under GEO’s existing senior credit facility, GEO currently has the right to increase the revolving and term loan commitments thereunder. BNP Paribas has committed $150.0 million to GEO in order to effect such an increase, which commitment will expire if the merger is not closed on or prior to April 18, 2011, which we refer to as commitments increase.


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Under the BNP Paribas’ commitment, any commitments increase taking the form of a term loan will have a maturity date equal to the maturity date of the term loans in GEO’s existing senior credit facility, January 24, 2014. That portion of the commitments increase, if any, taking the form of revolving credit commitments will have a final maturity date concurrent with GEO’s existing senior revolving credit commitments, September 14, 2012.
 
At GEO’s option, the interest rate on any new term loans under the commitments increase will be equal to either a base rate plus an applicable margin or the LIBOR rate plus an applicable margin. GEO expects the applicable margin on any new term loans to be 2.25% in the case of base rate loans and 3.25% in the case of LIBOR rate loans and the rate of interest applicable to revolving credit loans drawn under the commitments increase to be the same as currently applicable to revolving loans under GEO’s existing senior credit facility.
 
The loans under the new commitments will be subject in all respects to the terms of GEO’s existing credit facility, as amended, and will be subject to the satisfaction of a number of conditions, including that the closing of the merger will have occurred on or before April 18, 2011.
 
In the alternative, GEO may choose to pursue alternate financing.
 
GEO expects that the total utilization under GEO’s senior credit facility (existing or alternative) at the effective time of the merger will be approximately $[     ] million, consisting of $[     ] in borrowings and $[     ] in letters of credit.
 
THE COMPANIES
 
The GEO Group, Inc.
 
GEO’s principal executive offices are located at: One Park Place, Suite 700, 621 Northwest 53rd Street, Boca Raton, Florida 33487-8242.
 
GEO is a leading provider of government-outsourced services specializing in the management of correctional, detention, mental health and residential treatment facilities in the United States, Canada, Australia, South Africa and the United Kingdom. GEO operates a broad range of correctional and detention facilities including maximum, medium and minimum security prisons, immigration detention centers and minimum security detention centers. GEO also provides secure transportation services for offender and detainee populations as contracted. GEO’s correctional and detention management services involve the provision of security, administrative, rehabilitation, education, health and food services primarily at adult male correctional and detention facilities. GEO’s mental health and residential treatment services involve the delivery of quality care, innovative programming and active patient treatment, primarily at privatized state mental health facilities. GEO also 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. As of April 4, 2010, GEO managed 56 facilities totaling approximately 52,700 beds worldwide. GEO has an additional 4,325 beds under development at three facilities, including an expansion and renovation of one vacant facility which GEO currently owns, the expansion of one facility GEO currently owns and operates and a new 2,000-bed facility which GEO will manage upon completion. GEO owns three idle facilities totaling 954 beds and two facilities totaling 1,560 beds that are leased to Cornell and other private operators. GEO maintained an average companywide facility occupancy rate of 94.4% for the thirteen weeks ended April 4, 2010, excluding facilities that are either idle or under development. For the thirteen weeks ended April 4, 2010 and for the fiscal year ended January 3, 2010, GEO had consolidated revenues of $0.3 billion and $1.1 billion, respectively.
 
This joint proxy statement/prospectus incorporates important business and financial information about GEO from other documents that are not included in or delivered with this joint proxy statement/prospectus. For a list of the documents incorporated by reference in this joint proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 126.
 
Cornell Companies, Inc.
 
Cornell’s principal executive offices are located at: 1700 West Loop South, Suite 1500, Houston, Texas 77027.


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Cornell is a leading provider of correctional, detention, educational, rehabilitation and treatment services outsourced by federal, state, county and local government agencies for adults and juveniles. Cornell partners with these agencies to deliver quality, cost-efficient programs that Cornell believes enable its customers to achieve their missions while saving taxpayers’ money. Cornell’s customers include the Federal Bureau of Prisons, U.S. Marshals Service, various state Departments of Corrections, and city, county and state departments of human services and similar agencies. Cornell offers a diverse portfolio of services in structured and secure environments throughout three operating divisions: (1) Adult Secure Services; (2) Abraxas Youth and Family Services; and (3) Adult Community-Based Services. As of March 31, 2010, Cornell operated 63 facilities among its three operating divisions, representing a total operating service capacity of 20,531. Cornell also had five facilities that were vacant, representing additional service capacity of 861 beds. Service capacity is comprised of the number of beds currently available for service in residential facilities and on either the contractual terms or an estimate of the number of clients to be served for non-residential community-based programs. Cornell’s facilities are located in 15 states and the District of Columbia. For the quarter ended March 31, 2010 and for the year ended December 31, 2009, Cornell had revenues of $100.0 million and $412.4 million, respectively.
 
This joint proxy statement/prospectus incorporates important business and financial information about Cornell from other documents that are not included in or delivered with this joint proxy statement/prospectus. For a list of the documents incorporated by reference in this joint proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 126.


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THE MERGER AGREEMENT
 
The following is a summary of the material terms of the Agreement and Plan of Merger, dated as of April 18, 2010, among The GEO Group, Inc., GEO Acquisition III, Inc. and Cornell Companies, Inc., which is referred to as the merger agreement. This summary does not purport to describe all the terms of the merger agreement and is qualified in its entirety by reference to the complete merger agreement which is attached as Annex A to this joint proxy statement/prospectus and incorporated by reference. The rights and obligations of the parties are governed by the express terms and conditions of the merger agreement and not this summary or any other information contained in this joint proxy statement/prospectus. All GEO shareholders and Cornell stockholders are urged to read the merger agreement carefully and in its entirety.
 
Structure of the Merger
 
Subject to the terms and conditions of the merger agreement and in accordance with Delaware law, GEO Acquisition III, Inc., a wholly owned subsidiary of GEO that was formed for the purpose of the merger, will be merged with and into Cornell, with Cornell surviving the merger and becoming a wholly owned subsidiary of GEO. Immediately following the merger, GEO will continue to be named “The GEO Group, Inc.” and will be the parent company of Cornell. Accordingly, after the effective time of the merger, shares of Cornell common stock will no longer be publicly traded.
 
Closing and Effective Time of the Merger
 
The closing will occur as soon as practicable, but in no event later than two business days after the day on which the last of the conditions set forth in the merger agreement has been satisfied or waived, unless GEO and Cornell agree to a different date. The merger will become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware or such later time as may be agreed upon by GEO and Cornell and as specified in the certificate of merger. See “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 83 for a more complete description of the conditions that must be satisfied or waived before closing.
 
Merger Consideration
 
Cornell Stockholders.  At the effective time of the merger, each outstanding share of Cornell common stock will be converted into the right to receive either (i) 1.3 shares of GEO common stock or (ii) an amount of cash equal to the greater of (x) the fair market value of one share of GEO common stock plus $6.00 or (y) the fair market value of 1.3 shares of GEO common stock. Cornell stockholders desiring to receive a combination of GEO common stock and cash may do so by making a stock election with respect to a portion of their shares and a cash election with respect to their remaining shares. If a Cornell stockholder fails to make an election, the holder will receive the stock consideration. “Fair market value” of GEO common stock means the average of the daily closing prices per share of GEO common stock for the ten consecutive trading days on which shares of GEO common stock are actually traded (as reported on the NYSE) ending on the last trading day immediately preceding the tenth business day preceding the closing date. Cornell stockholders have the opportunity to elect whether they would prefer to receive stock consideration or cash consideration as provided above. However, the merger agreement provides that notwithstanding such elections, no more than 20% of the shares of Cornell common stock are permitted to be exchanged for cash consideration. If cash elections are made with respect to more than 20% of the shares of Cornell common stock outstanding immediately before the effective time, the excess over 20% shall be treated as if a stock election had been made with respect to them and will be exchanged for shares of GEO common stock, such that only 20% of the shares of Cornell common stock outstanding immediately before the effective time are exchanged for the cash consideration. In such event, a pro rata portion (rounded up to the nearest whole share) of each holder’s shares of Cornell common stock with respect to which an election was made to elect cash consideration shall instead be treated as an election for stock consideration such that the reduction is borne pro rata by each holder of Cornell common stock with respect to which such election was made.
 
If the Cornell stockholders’ election would otherwise result in more than $100.0 million of cash in the aggregate being paid to holders electing cash consideration, GEO may elect, in its sole discretion, to reduce the


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amount of cash paid to each holder electing cash consideration pro rata based on the number of shares held so that the total cash paid with respect to all Cornell stockholders electing cash consideration is $100.0 million. If the cash consideration otherwise payable to any holder is reduced under this clause, such holder shall be entitled to receive GEO common stock at a fair market value (defined above) equal to the amount of the reduction. GEO intends to pay such excess amount in cash.
 
Election Procedures.  An election form and letter of transmittal have been enclosed with this joint proxy statement/prospectus pursuant to which Cornell stockholders may elect whether they would prefer to receive GEO common stock or cash in exchange for their Cornell shares. If you were a record holder of Cornell common stock on the Cornell record date, you should carefully review and follow the instructions included in the election form and the letter of transmittal. To make an election, record holders must properly complete and sign the election form and letter of transmittal and send those documents and the certificates for their shares (or a properly completed notice of guaranteed delivery) to the exchange agent at the address listed in the election form and letter of transmittal by the election deadline, which is 5:00 p.m. New York time, on [                         ], 2010. If the merger agreement is terminated, all election forms delivered to the exchange agent on or prior to the date of such termination will be automatically revoked and all share certificates will be returned. Please do not send your election form and stock certificates with your proxy card for the special meeting. Your election form and stock certificates are to be submitted separately from your proxy card.
 
If you own shares of Cornell common stock in “street name” through a broker or other financial institution, you will receive or should seek instructions from the institution holding your shares concerning how to make your election. Any instructions must be given to your broker or other financial institution sufficiently in advance of the election deadline for record holders in order to allow your broker or financial institution sufficient time to cause the record holder of your shares to make an election as described above. Therefore, you should carefully read any materials you receive from your broker. If you instruct a broker to submit an election for your shares, you must follow your broker’s directions for changing those instructions.
 
If you are a record holder of Cornell shares, you may change your election or change the number of shares for which you have made an election at any time prior to the election deadline by sending a signed written notice to the exchange agent identifying the shares of Cornell common stock for which you are changing your election along with a properly completed revised election form. For a change of an election to be effective, it must be received by the exchange agent prior to the election deadline. In addition, a record holder may revoke an election at any time prior to the election deadline by delivering to the exchange agent a written notice of revocation. A revocation of a proxy shall also be deemed a revocation of an election with respect to the merger consideration. Shares of Cornell common stock as to which an election has been revoked after the election deadline will be deemed non-election shares, and no new election as to such shares may be made after the election deadline. If you hold your shares in “street name,” you must follow your broker’s instructions for changing or revoking an election.
 
All elections are subject to the proration procedures described above. If you do not make a valid election your shares will be considered non-election shares, and when the merger is completed you will be entitled to receive the stock consideration for non-election shares as described above.
 
GEO Shareholders.  GEO shareholders will continue to own their existing shares of GEO common stock after the merger. Each share of GEO common stock will represent one share of common stock in the combined company.
 
Fractional Shares.  GEO will not issue fractional shares of GEO common stock in the merger. All fractional shares of GEO common stock to which a holder of shares of Cornell common stock would otherwise be entitled as a result of the merger will be aggregated. For any fractional share that results from such aggregation, the exchange agent will pay the holder an amount of cash, without interest, equal to the product of such fraction of a share of GEO common stock to which the Cornell stockholder would otherwise have been entitled to receive pursuant to the merger multiplied by the closing sale price of a share of GEO common stock on the NYSE on the trading day that is one trading day prior to the closing date. GEO shall deposit with the exchange agent the funds required to make such cash payments when and as needed.


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Exchange of Shares
 
GEO has appointed [BNY Mellon Shareowner Services] as exchange agent for the purpose of exchanging certificates and uncertificated shares of Cornell common stock. The exchange agent will also be responsible for administering the election procedures described above and determining the merger consideration to be received by each holder of Cornell common stock as described above and consistent with the merger agreement.
 
The letter of transmittal sent to Cornell stockholders by the exchange agent contains instructions for exchanging shares of Cornell common stock for the applicable merger consideration. If you are a record holder of Cornell shares and you wish to make an election with respect to any of your shares, you must submit an election form and, separately, letter of transmittal (along with the certificates representing the shares with respect to which you are making an election) to the exchange agent prior to the election deadline. Record holders of Cornell common stock should not submit their Cornell stock certificates with their proxy card. Stock certificates should only be sent to the exchange agent with a properly completed, signed election form and letter of transmittal. If you own shares of Cornell common stock in “street name” through a broker or other financial institution, you will receive or should seek instructions from the institution holding your shares concerning how to make your election.
 
Soon after the completion of the merger, but in any event within ten business days after the effective date of the merger, the exchange agent will send a letter of transmittal to each person who was a Cornell stockholder at the effective time of the merger and who did not submit his or her election form and share certificates on or before the election deadline or who holds shares for which a valid election was not made. This mailing will contain instructions on how to surrender shares of Cornell common stock in exchange for the merger consideration the holder is entitled to receive under the merger agreement.
 
After the effective time, each certificate that previously represented shares of Cornell common stock will represent only the right to receive the applicable merger consideration as described above under “— Merger Consideration,” including cash for any fractional shares of Cornell common stock. In addition, neither GEO nor Cornell will register any transfers of the shares of Cornell common stock after the effective time of the merger.
 
If a certificate for Cornell common stock has been lost, stolen or destroyed, the exchange agent will issue the consideration properly payable under the merger agreement upon receipt of an affidavit relating to such loss, theft or destruction and customary indemnification. The posting of a bond in a reasonable amount may also be required.
 
Cornell Options and Other Equity-Based Awards
 
At the effective time of the merger, each outstanding option issued by Cornell to purchase shares of Cornell common stock granted under any stock option or other equity incentive plan, which is outstanding and unexercised immediately following the effective time and which does not, by its terms, terminate on the effective time, whether vested or unvested will be assumed by GEO, and these options will entitle the holder to receive GEO common stock as adjusted to account for the exchange ratio, rounded down to the nearest whole number of shares of GEO common stock, on the same terms and conditions as were applicable before the merger (but taking into account any acceleration of Cornell options in connection with the merger). In addition, at the effective time of the merger, each Cornell option that has been assumed by GEO will have an exercise price per share equal to the quotient determined by dividing the exercise price per share of Cornell common stock at which such Cornell option was exercisable immediately prior to the effective time by the exchange ratio rounded up to the nearest whole cent.
 
At the effective time of the merger, each outstanding share of Cornell restricted stock will vest and be automatically converted into GEO common stock as adjusted to account for the exchange ratio.
 
Cornell will use reasonable best efforts to ensure that, immediately prior to the effective time, the following occurs: (i) each outstanding option or right to acquire Cornell common stock under Cornell’s employee stock purchase plan will automatically be exercised or deemed exercised, and (ii) in lieu of the shares of Cornell common stock otherwise issuable upon the exercise of each such option or right, the holder of such option or right will have the right to elect to receive from GEO, following the effective time, either the stock consideration or the cash consideration except to the extent that the holder of such option or right elects not to exercise the holder’s options and to withdraw the entire balance of holder’s Cornell employee stock purchase plan account prior to the effective


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time and subject to the same prorations and adjustments as elections made with respect to shares of Cornell common stock, discussed above in “The Merger Agreement — Merger Consideration.”
 
Listing of GEO Stock
 
GEO has agreed to use its reasonable best efforts to cause the shares of GEO common stock to be issued in connection with the merger to be approved for listing on the NYSE. The approval for listing of these shares on the NYSE is a condition to the obligations of GEO and Cornell to complete the merger, subject only to official notice of issuance. GEO will continue to use the trading symbol “GEO” for the shares of GEO common stock issuable to the Cornell stockholders in the merger.
 
Representations and Warranties
 
The merger agreement contains a number of substantially reciprocal representations and warranties made by and to GEO and GEO Acquisition III, Inc., on the one hand, and Cornell, on the other hand. The most significant representations and warranties relate to:
 
  •  due incorporation, good standing and qualification;
 
  •  ownership of subsidiaries;
 
  •  capitalization;
 
  •  corporate authority to enter into the merger agreement and complete the merger;
 
  •  approval and adoption of the merger agreement and related matters by each party’s board of directors;
 
  •  absence of any breach of organizational documents, laws, agreements and instruments as a result of the merger;
 
  •  the required stockholder vote to (1) adopt the merger agreement, in the case of Cornell, and (2) approve the issuance of shares of GEO common stock in connection with the merger, in the case of GEO;
 
  •  required consents and filings with government entities;
 
  •  accuracy and sufficiency of documents filed with the SEC;
 
  •  conformity of the financial statements with applicable accounting requirements and that the financial statements fairly present, in all material respects, the consolidated financial positions of GEO and Cornell, respectively;
 
  •  absence of undisclosed liabilities;
 
  •  since January 3, 2010, in the case of GEO, and December 31, 2009, in the case of Cornell, conduct of business in ordinary and usual course and absence of any material adverse event, change, effect or development;
 
  •  absence of material pending or threatened legal proceedings;
 
  •  compliance with laws, regulations and court orders and permits;
 
  •  tax matters;
 
  •  employee benefits plans and labor and employment matters;
 
  •  material contracts;
 
  •  intellectual property matters;
 
  •  real estate and personal property matters;
 
  •  environmental matters;
 
  •  information supplied for use in this joint proxy statement/prospectus;


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  •  receipt of opinions from financial advisors;
 
  •  absence of any obligation to pay brokers’ or other similar fees; and
 
  •  insurance matters.
 
Significant portions of the representations and warranties of Cornell and GEO are qualified as to “materiality” or “material adverse effect.” For the purpose of the merger agreement, a material adverse effect means, when used in connection with GEO or Cornell, any changes, circumstances or effects that individually or in the aggregate has a material adverse effect on the business, assets, liabilities, results of operation or condition (financial or otherwise) of that party and of its subsidiaries, taken as a whole, or that materially impairs, prevents or delays the ability of that party to consummate the merger and the other transactions to be performed or consummated by that party; provided, however, that none of the following, or any change, event, occurrence or effect resulting or arising from the following, shall constitute or shall be considered in determining whether there has occurred, a material adverse effect:
 
(i) changes in conditions in the United States economy or capital or financial markets generally;
 
(ii) changes in general legal, regulatory, political, economic or business conditions or changes in GAAP that, in each case, generally affect any industry in the United States related to the correction, detention, education, rehabilitation and treatment services for adults and juveniles in the case of Cornell and in which the party or any of its subsidiaries operates in the case of GEO (other than those changes that have a materially disproportionate adverse effect on the party and its subsidiaries, taken as a whole, relative to other participants in such industry);
 
(iii) the negotiation, execution, announcement or performance of this Agreement or the consummation of the merger, including the impact thereof on relationships, contractual or otherwise, with customers, suppliers, distributors, partners or employees in the case of Cornell (other than any such impact resulting from a material breach of the party’s covenant with respect to the conduct of such party’s business in the ordinary course of business);