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Goodwill and Other Intangible Assets | 9 Months Ended
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Sep. 30, 2021
Goodwill And Intangible Assets Disclosure [Abstract] |
Goodwill and Other Intangible Assets | 2. GOODWILL AND OTHER INTANGIBLE ASSETS The Company has recorded goodwill as a result of its various business combinations. Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the tangible assets and intangible assets acquired net of liabilities assumed, including noncontrolling interests. Changes in the Company's goodwill balances from January 1, 2021 to September 30, 2021 are as follows (in thousands):
|  | January 1, 2021 |  |  | Foreign Currency Translation |  |  | September 30, 2021 |
U.S. Secure Services |  | $ | 316,366 |  |  | $ | — |  |  | $ | 316,366 |
GEO Care [1] |  |  | 438,443 |  |  |  | — |  |  |  | 438,443 |
International Services |  |  | 441 |  |  |  | (28 | ) |  |  | 413 |
Total Goodwill |  | $ | 755,250 |  |  | $ | (28 | ) |  | $ | 755,222 |
[1] Net of accumulated loss on impairment of $21.1 million related to the Community Based reporting unit for an impairment charge incurred during the fourth quarter of 2020. As previously discussed in Note 1 – Basis of Presentation, on January 26, 2021, President Biden signed an Executive Order directing the United States Attorney General not to renew DOJ contracts with privately operated criminal detention facilities, as consistent with applicable law. The Company considered the issuance of the Executive Order to be a “triggering event” that requires certain quantitative testing for potential impairment of goodwill for its U.S. Secure Services reporting unit. The quantitative testing performed during first quarter 2021 resulted in no impairment in the goodwill of the U.S. Secure Services reporting unit. The carrying value of the U.S. Secure Services reporting unit is all of the goodwill in the U.S. Secure Services segment in the table above. The calculated fair value of the U.S. Secure Services reporting unit exceeded its carrying value. The percentage that the fair value exceeded the carrying value was approximately 6%. The Company used a third-party valuation firm to determine the estimated fair value of the reporting unit using a discounted cash flow model which is dependent on several significant estimates and assumptions related to forecasts of future cash flows and the weighted average cost of capital, among other factors. A discount rate of 10% was utilized to adjust the cash flow forecasts based on the Company’s estimate of a market participant’s weighted-average cost of capital. Growth rates for sales, profits and other assumptions were determined using inputs from the Company’s long-term planning process. The Company also makes estimates for discount rates and other factors based on market conditions, historical experience and other economic factors. Additionally, management made certain assumptions relating to future re-activations and sales of certain idle facilities, including those where the BOP and USMS have recently notified the Company of its intention not to exercise upcoming renewal options and/or not to rebid contracts with upcoming contract expirations. A change in one or a combination of these assumptions could significantly impact the fair value of the reporting unit. For example, a 1% increase in the discount rate would cause the carrying value to exceed the fair value and trigger an impairment of approximately $76 million or 24% of the goodwill balance in the U.S. Secure Services reporting unit. Conversely, a 1% decrease in the discount rate would increase the percentage that the fair value exceeded the carrying value to 22%. Future impairment charges may be required on the Company’s goodwill, as the discounted cash flow model is subject to change based upon the Company’s performance, overall market conditions, the state of the credit markets and political environment. The Company will continue to monitor these relevant factors to determine if an additional interim impairment assessment is warranted. If there were to be a deterioration in management’s forecasted financial performance, an increase in discount rates or a reduction in long-term growth rates, these factors could all be potential indicators of an impairment charge to our remaining goodwill, which could be material, in future periods. The Company has also recorded other finite and indefinite-lived intangible assets as a result of its various business combinations. The Company's intangible assets include facility management contracts, covenants not to compete, trade names and technology, as follows (in thousands):
|  | September 30, 2021 |  |  | December 31, 2020 |
|  | Weighted Average Useful Life (years) |  |  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |  |  | Gross Carrying Amount |  |  | Accumulated Amortization |  |  | Net Carrying Amount |
Facility management contracts |  |  | 16.3 |  |  | $ | 308,424 |  |  | $ | (182,851 | ) |  | $ | 125,573 |  |  | $ | 308,398 |  |  | $ | (168,848 | ) |  | $ | 139,550 |
Technology |  |  | 7.3 |  |  |  | 33,700 |  |  |  | (31,679 | ) |  |  | 2,021 |  |  |  | 33,700 |  |  |  | (30,703 | ) |  |  | 2,997 |
Trade names |  | Indefinite |  |  |  | 45,200 |  |  |  | — |  |  |  | 45,200 |  |  |  | 45,200 |  |  |  | — |  |  |  | 45,200 |
Total acquired intangible assets |  |  |  |  |  | $ | 387,324 |  |  | $ | (214,530 | ) |  | $ | 172,794 |  |  | $ | 387,298 |  |  | $ | (199,551 | ) |  | $ | 187,747 |
Amortization expense was $15.0 million and $16.7 million for the nine months ended September 30, 2021 and 2020, respectively. Amortization expense was primarily related to the U.S Secure Services and GEO Care segments' amortization of acquired facility management contracts. As of September 30, 2021, the weighted average period before the next contract renewal or extension for the acquired facility management contracts was approximately 2.3 years. Estimated amortization expense related to the Company's finite-lived intangible assets for the remainder of 2021 through 2025 and thereafter is as follows (in thousands):
Fiscal Year |  | Total Amortization Expense |
Remainder of 2021 |  | $ | 7,178 |
2022 |  |  | 18,131 |
2023 |  |  | 13,487 |
2024 |  |  | 9,754 |
2025 |  |  | 9,703 |
Thereafter |  |  | 69,341 |
|  | $ | 127,594 |

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- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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