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Boca prison company signs $26 million contract with California




By Marcia Heroux Pounds
South Florida Sun-Sentinel

October 24, 2006



A Boca Raton-based prison management company, The GEO Group, is benefiting from California's overcrowded prisons and federal policy on detention of illegal immigrants.

GEO revised upward its fourth quarter and 2007 guidance on Friday after receiving a contract from California's Department of Corrections to house 1,260 California inmates at an Indiana prison. The 2,416-bed New Castle prison in New Castle, Ind., currently houses more than 1,000 inmates for the state of Indiana.

The contract is a "win-win" for both Indiana and California, said George Zoley, chief executive officer of GEO. The contract will generate about $26 million in annual revenues for GEO and result in about 200 new jobs in New Castle, Ind., the company said.

Following its 3-for-2 stock split on Oct. 2, GEO has also revised its 2007 earnings guidance to $1.75 to $1.90 a share. Previous guidance was $1.60 to $1.75 per share. The increase was based on the company's financial outlook and the California contract, said Pablo Paez, spokesman for GEO.

About 32 percent of GEO's revenues are related to its federal clients, including the U.S. Bureau of Immigration and Customs Enforcement.

"The stars are really aligning for them this year," said Anton Hie, an analyst with Jefferies & Co., in Nashville, Tenn. Hie, who said he doesn't own GEO stock, said the company is benefiting from tight prison bed supply and a strong demand, much of it illegal immigrant detention.

GEO operates 63 prisons, detention centers and mental health facilities. In Florida, GEO's illegal immigration detention center is in Deerfield Beach.

In August, GEO announced it had a revised contract with the Bureau of Immigration for expansion of its South Texas Detention Complex, in anticipation of future needs along the United States southern border. GEO also operates a detention center in Guantanamo Bay, Cuba, for the Bureau of Immigration.

California also signed a contract with GEO's competitor Correctional Corp. of America, headquartered in Nashville, Tenn. The CCA will house up to 1,000 medium-custody level inmates at their facilities in Arizona, Oklahoma; and Tennessee.

The GEO Group has donated more than $90,000 to Gov. Arnold Schwarzenegger and his causes since 2003, according to reports by California newspapers including the Sacramento Bee and the Contra Costa Times.

GEO's stock closed at $39.15 on Monday, 30 cents lower than its 52-week high.

Marcia Heroux Pounds can be reached at mpounds@sun-sentinel.com or 561-243-6650.


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