GEO restates results from sales of British joint venture By Marcia Heroux Pounds August 18, 2005
Prison management company The GEO Group made less from the sale of its half-interest in a United Kingdom joint venture than the company originally recorded two years ago.
GEO corrected a miscalculation of a gain from the sale in amended filings with the SEC on Wednesday. GEO revised its financial reports for the year ended Jan. 2, and the quarter ended April 3.
In 2003, GEO reported a one-time gain of $32,700,000 from sale of the joint venture. Adjustments reduce the gain by $4.9 million.
GEO found the miscalculation through efforts to fix weaknesses in financial controls.
The latest filings offer more detail on problems with financial controls at GEO during that period. In March, GEO restated its financials for 2002 and 2003. After adjusting for the miscalculation, net income for fiscal 2003 was reduced to $40 million or $4.7 million less than previously reported.
The SEC filing, which contains new certifications by CEO George Zoley and other officers, also cited "insufficient controls" that led to the financial misstatements.
As a result, the company under-accrued its liability for vacation expense under generally accepted accounting principles in fiscal years 2002 and 2003.
GEO also noted insufficient financial controls related to its joint venture in South Africa, certain leased facilities, and its inactive prison in Jena, La.