<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended April 3, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934.
For the transition period from________ to _______
Commission file number 0-2514
------
The Wackenhut Corporation
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-0857245
- - --------------------------------------------------------------------------------
(State of incorporation or organization) (I.R.S. Employer Identification No.)
1500 San Remo Avenue, Coral Gables, FL 33146
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (305) 666-5656
--------------
- - --------------------------------------------------------------------------------
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
At April 3, 1994, 3,858,885 shares of Series A and 3,864,287 shares of Series B
of the registrant's Common Stock were issued and outstanding.
Page 1 of 18
<PAGE>
THE WACKENHUT CORPORATION AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following consolidated financial statements of the Corporation have been
prepared in accordance with the instructions to Form 10-Q and therefore, omit or
condense certain footnotes and other information normally included in financial
statements prepared in accordance with generally accepted accounting principles.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the financial
information for the interim periods reported have been made. Results of
operations for the thirteen weeks ended April 3, 1994 are not necessarily
indicative of the results for the entire fiscal year ending January 1, 1995.
Page 2 of 18
<PAGE>
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THIRTEEN WEEKS ENDED
APRIL 3, 1994 AND APRIL 4, 1993
(In thousands except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
------------------------
<S> <C> <C>
REVENUES $ 174,537 $162,112
------------------------
OPERATING EXPENSES:
Payroll and related taxes 128,298 119,681
Other operating expenses 43,036 39,350
------------------------
171,334 159,031
------------------------
OPERATING INCOME 3,203 3,081
------------------------
OTHER INCOME (EXPENSE):
Interest expense (895) (1,033)
Interest and investment income 426 711
Equity income of foreign affiliates 246 219
------------------------
(223) (103)
------------------------
INCOME BEFORE INCOME TAXES 2,980 2,978
Provision for income taxes 1,043 1,056
Minority interest, net of income taxes 117 63
------------------------
NET INCOME $ 1,820 $ 1,859
------------------------
------------------------
EARNINGS PER SHARE: $ 0.24 $ 0.24
------------------------
------------------------
</TABLE>
See notes to Consolidated Financial Statements.
Page 3 of 18
<PAGE>
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 3, 1994 AND JANUARY 2, 1994
(In thousands except share data)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
-----------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 11,598 $ 7,821
Accounts receivable, less allowance for
doubtful accounts of $976 in 1994 and $687 in 1993 88,902 94,937
Inventories, net 6,658 6,243
Other 15,339 14,760
-----------------------
122,497 123,761
-----------------------
NOTES RECEIVABLE 2,013 2,085
-----------------------
MARKETABLE SECURITIES AND -- CERTIFICATES OF DEPOSIT
of casualty reinsurance subsidiary 23,500 24,843
-----------------------
PROPERTY AND EQUIPMENT, at cost 51,372 51,497
Accumulated depreciation (13,383) (13,374)
-----------------------
37,989 38,123
-----------------------
DEFERRED TAX ASSET, NET 6,782 6,374
-----------------------
OTHER ASSETS:
Investment in and advances to foreign affiliates,
at cost, including equity in undistributed earnings
of $2,044 in 1994 and $2,370 in 1993 5,457 5,742
-----------------------
Other 13,009 10,369
-----------------------
18,466 16,111
-----------------------
$211,247 $211,297
-----------------------
-----------------------
</TABLE>
See notes to Consolidated Financial Statements.
Page 4 of 18
<PAGE>
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 3, 1994 AND JANUARY 2, 1994
(In thousands except share data)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
----------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 5,683 $ 10,456
Accounts payable 14,566 16,711
Accrued payroll and related taxes 25,612 22,444
Accrued expenses 22,083 22,124
Deferred tax liability, net 521 -
----------------------
68,465 71,735
----------------------
RESERVES FOR LOSSES of casualty reinsurance
subsidiary 34,394 33,500
----------------------
LONG-TERM DEBT 59,283 57,484
----------------------
MINORITY INTEREST 1,333 1,216
----------------------
SHAREHOLDERS' EQUITY:
Preferred stock, 10,000,000 shares authorized - -
Common stock, $.10 par value, 20,000,000
shares authorized;
Series A common stock, 3,858,885 issued 386 386
Series B common stock, 3,864,287 issued 386 386
Additional paid-in capital 26,234 26,234
Retained earnings 24,393 23,268
Cumulative translation adjustment (3,301) (3,058)
Unrealized gain (loss) on marketable securities (326) 146
----------------------
47,772 47,362
----------------------
$211,247 $211,297
----------------------
----------------------
</TABLE>
See notes to Consolidated Financial Statements.
Page 5 of 18
<PAGE>
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED APRIL 3, 1994 AND APRIL 4, 1993
(In thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
-------------------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Net Income $ 1,820 $ 1,859
Adjustments -
Depreciation expense 1,076 1,110
Amortization of uniforms 1,053 775
Amortization of deferred charges 221 320
Provision for bad debts 232 (193)
Equity income, net of dividends (242) (207)
Minority interests in net earnings 117 63
Other (243) (302)
Changes in assets and liabilities, net of effects of
purchase of controlling interest in foreign
subsidiaries and divestitures:
Decrease (increase) in assets:
Accounts receivable 5,884 2,885
Inventories (1,424) (1,516)
Other current assets (288) 633
Marketable securities and certificates of deposit 871 814
Other assets (350) (785)
Deferred tax asset (408) (412)
(Decrease) increase in liabilities:
Accounts payable and accrued expenses (4,522) (3,350)
Accrued payroll and related taxes 3,168 3,543
Deferred tax liability - current 521 55
Reserve for losses of casualty - reinsurance subsidiary 894 152
-------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 8,380 5,444
-------------------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Payments on notes receivable 72 -
Payment for acquisitions, net of working capital acquired (931) -
Investment in and advances to foreign affiliates 507 (300)
Capital expenditures (518) (1,072)
Deferred charge expenditures (65) -
-------------------
NET CASH USED IN INVESTING ACTIVITIES (935) (1,372)
-------------------
</TABLE>
(Continued)
Page 6 of 18
<PAGE>
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTEEN WEEKS ENDED APRIL 3, 1994 AND APRIL 4, 1993
(In thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
------------------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from issuance of debt 30,659 31,552
Payments on debt (33,633) (32,583)
Dividends paid (694) (694)
------------------
NET CASH USED IN FINANCING ACTIVITIES (3,668) (1,725)
------------------
NET INCREASE - IN CASH AND CASH EQUIVALENTS 3,777 2,347
Cash and Equivalents, at beginning of year 7,821 4,899
------------------
CASH AND EQUIVALENTS, AT END OF YEAR $ 11,598 $ 7,246
------------------
------------------
SUPPLEMENTAL DISCLOSURES
CASH PAID DURING THE YEAR FOR:
Interest $ 927 $ 1,008
Income taxes $ 70 $ 59
</TABLE>
See notes to Consolidated Financial Statements.
Page 7 of 18
<PAGE>
THE WACKENHUT CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies followed for the quarterly financial reporting are the
same as those disclosed in Note 1 of the Notes to Consolidated Financial
Statements included in the Corporation's Annual Report on Form 10-K for the
fiscal year ended January 2, 1994. Certain prior year amounts have been
reclassified to conform with current year financial statement presentation.
2. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
APRIL 3, January 2,
1994 1994
--------------------
<S> <C> <C>
Senior note payable - 10.2% $ 12,500 $ 25,000
Revolving loan - 4.5% in April 1994 and 4.2% in January 1994 33,850 26,150
First mortgage note on headquarters building -
4.6% in April 1994 and 4.3% in January 1994 16,607 16,790
Revolving line of credit - Wackenhut Corrections Corporation
Australia, Pty., Ltd. 2,009 -
------------------
64,966 67,940
Less - Current portion of long-term debt (5,683) (10,456)
------------------
$ 59,283 $ 57,484
------------------
------------------
</TABLE>
Page 8 of 18
<PAGE>
THE WACKENHUT CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION
Reference is made to Item 7, Part II of the Corporation's Annual Report on
Form 10-K for the fiscal year ended January 2, 1994 for discussion and analysis
of information pertaining to the Corporation's financial condition.
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Corporation's consolidated financial statements and the notes thereto.
Consolidated revenues - increased $12,425,000 (7.7%) in the first quarter of
1994 compared to the same quarter in 1993. This increase is principally
attributed to the Security Services Division which reported an increase in
revenues of $11,048,000. The addition of various major national and state
contracts acquired during the later part of 1993 contributed to the increase
in revenues of the Security Services Division.
During the first quarter of 1994, Wackenhut Corrections Corporation increased
its equity in Australasian Correctional Management, Pty., Ltd. (ACM) to 100%.
ACM, previously a 50% joint venture, manages and operates two correctional
facilities in Australia. During the first quarter of 1994, ACM contributed
approximately $5,000,000 to the increase in revenues. The increase in revenues
of Wackenhut Corrections more than offset the reduction in revenues within
other areas of the Government Services Group, primarily from the reduction in
Department of Energy (DOE) business since the second half of 1993. This
decrease in DOE revenues has not affected award fees.
Payroll and related taxes increased $8,617,000 (7.2%) compared to 1993 as a
result of the growth in business from the new security contracts and the
consolidation of ACM. Other operating expenses
increased $3,686,000 (9.4%) compared to the same period last year.
Operating income increased $122,000 (4.0%) during the first quarter of 1994
compared to the same period last year. A significant portion of the increase
in operating income can be attributed to new national and state contracts of
the Security Services Division and to the consolidation of ACM, the Australian
subsidiary of Wackenhut Corrections Corporation. In addition, the sale of the
monitoring business late in 1993, discontinuance of the operations of Wackenhut
Applied Technology Center, Inc. and scaling down the Investigative Division
contributed $588,000 to the improvement in operating income for the first
quarter quarter of 1994 compared to the first quarter of 1993. These increases
were partially offset by a decrease in profit margins in the traditional guard
business and the loss of a major contract in South America. Although profit
margins in the traditional guard business were lower in the first quarter of
1994 than in the same period in 1993, they have continued their modest but
stable increase since the second half of 1993.
Page 9 of 18
<PAGE>
THE WACKENHUT CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
Interest and investment income decreased $285,000 during the first quarter of
1994 compared to the same period in 1993 principally due to a decrease in
realized marketable security gains. Minority interest increased $54,000, net
of applicable taxes, during the same period in 1994 compared to 1993 due to a
general - increase in profits from existing subsidiaries and the initial
consolidation of new subsidiaries, principally in Russia.
Net income was $1,820,000 in the first quarter of 1994, compared to $1,859,000
in the same period in 1993. The combined Federal and state effective income
tax rates of 35.0% and 35.5% for the first quarters of 1994 and 1993
respectively, included reductions in the statutory corporate tax rate
attributable to targeted job credits, tax exempt interest and capital loss
carryforwards.
Page 10 of 18
<PAGE>
THE WACKENHUT CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The nature of the Corporation's business results in claims or litigation
alleging that the Corporation is liable for damages arising from the conduct of
its employees or others.
During the first quarter of 1994, the company settled the PALLAZOLA case
referred to in the Corporation's Annual Report on Form 10-K for the fiscal year
ended January 2, 1994 and dropped its appeal. The Corporation's insurance
carriers contributed on a loan basis to provide funds for that
settlement. These carriers dispute their obligation to bear the cost of such
settlement, but it is the opinion of management, after consultation with outside
counsel, that it is more likely than not that the cost will eventually be
found to be the responsibility of the liability insurers of the Corporation.
While there can be no absolute assurance that the reserves provided by the
Corporation would be sufficient to cover any shortfall, management believes it
has provided adequate reserves for its potential exposure in this matter.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Page 11 of 18
<PAGE>
THE WACKENHUT CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION (continued)
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Corporation was held on April 29, 1994
in Coral Gables, Florida. All directors nominated for election were elected in
an uncontested election. A tabulation of the results is as follows:
<TABLE>
<CAPTION>
Name Votes for Votes Withheld
- - ---- --------- --------------
<S> <C> <C>
Richard G. Capen, Jr. 3,344,081 136,032
Norman A. Carlson 3,344,576 135,537
Anne Newman Foreman 3,344,244 135,869
Edward L. Hennessy, Jr. 3,344,579 135,534
Paul X. Kelley 3,344,544 135,569
Robert Q. Marston 3,344,556 135,557
Jorge L. Mas Canosa 3,344,591 135,522
Nancy Clark Reynolds 3,344,591 135,522
Thomas P. Stafford 3,344,544 135,569
George R. Wackenhut 3,343,880 136,233
Richard R. Wackenhut 3,344,349 135,764
</TABLE>
The other matter voted upon at the Annual Meeting was the ratification of the
action of the Board of Directors in appointing the firm of Arthur Andersen & Co.
to be the independent certified public accountants of the Corporation for the
fiscal year 1994, and to perform such other services as may be requested.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT 1- Amendment to Note Agreement between The Wackenhut Corporation and
The Principal Mutual Life Insurance Company ("Principal Mutual") dated March 4,
1994.
EXHIBIT 2- Amendment to Note Agreement between The Wackenhut Corporation and
NationsBank of Florida dated March 1, 1994.
The Corporation did not file a Form 8-K during the first quarter of 1994.
Page 12 of 18
<PAGE>
THE WACKENHUT CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE WACKENHUT CORPORATION
DATE: May 13, 1994 /s/ Richard C. DeCook
_________________________________________
Richard C. DeCook, Senior Vice President-
Finance and Chief Financial Officer
DATE: May 13, 1994 /s/ Juan D. Miyar
_________________________________________
Juan D. Miyar, Vice President-Accounting
Services and Corporate Controller
Page 13 of 18
<PAGE>
EXHIBIT 1
March 4, 1994
Via Telecopier and Federal Express
The Wackenhut Corporation
1500 San Remo Avenue
Coral Gables, FL 33146-3036
Attn: Richard DeCook
Chief Financial Officer
Dear Mr. DeCook:
Reference is made to the Note Agreement, dated as of September 30, 1990 (as
amended from time to time, referred to herein as the "Note Agreement"), by and
between The Wackenhut Corporation (the "Company"), Massachusetts Mutual Life
Insurance Company ("Massachusetts Mutual") and Principal Mutual Life Insurance
Company ("Principal Mutual" and, together with Massachusetts Mutual, the
"Noteholders"). Pursuant to the Note Agreement, the Company issued, and
Noteholders purchased senior promissory notes of the Company (collectively, the
"Notes") in the aggregate principal amount of $25,000,000.00 due September 30,
2000. With the Company having prepaid all of such Notes as were previously
held by Massachusetts Mutual, Principal Mutual is now the only holder of any of
the Notes. Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Note Agreement.
By their execution hereof as provided below, the Company and Principal Mutual
agree and consent to the following amendments and waiver, but only as to the
extent expressly provided herein, and subject to the terms and conditions set
forth below.
1. FIXED CHARGE COVERAGE RATIO. Section 5.10 shall be amended in its
entirety to read as follows:
5.10 FIXED CHARGE COVERAGE RATIOS. (a) The Company will at all times keep
and maintain the ratio of Net Income Available for fixed Charges,
determined as of the last day of each fiscal quarter for the immediately
preceding Four-Quarter Period, to Fixed Charges for such Four-Quarter
Period, at not less than 1.75:1.00.
(b) During each of the first, second and third quarters of the fiscal
year immediately following the fiscal year ended January 2, 1994, the Company
will at all times keep and maintain the ratio of Net Income Available for Fixed
Charges, determined as of the last day of each such fiscal quarter for such
quarter, to Fixed Charges for such quarter, at not less than 2.00:1.00.
Page 14 of 18
<PAGE>
Page 2
2. DEFINITION OF "NET INCOME AVAILABLE FOR FIXED CHARGES". The
definition of "NET INCOME AVAILABLE FOR FIXED CHARGES" in Section 8.1 of the
Note Agreement shall be amended in its entirety to read as follows:
"NET INCOME AVAILABLE FOR FIXED CHARGES" for any period shall mean the sum
of (i) Consolidated Net Income during such period plus (to the extent
deducted in determining Consolidated Net Income), (ii) all provisions for
any Federal, state or other income taxes made by the Company and its
Restricted Subsidiaries during such period and (iii) Fixed Charges of the
Company and its Restricted Subsidiaries during such period; provided,
however, that solely for the purposes of computing Net Income Available for
Fixed Charges for any Four-Quarter Period which includes the fourth quarter
of the fiscal year ended January 2, 1994, the amount of $4,074,000 shall be
added to said sum in determining whether the Company is in compliance with
Section 5.10(a).
3. LIMITED WAIVER. Principal Mutual hereby waives compliance by the
Company with the requirements of Section 5.10 of the Note Agreement for the
fiscal quarter ended January 2, 1994 to the extent, and only to the extent,
that such requirements existed prior to the effectiveness of the amendments
made by this letter agreement.
4. CONDITIONS PRECEDENT. The waiver and amendments made and granted by
Principal Mutual herein are expressly subject to and shall be effective only
upon the satisfaction of the following conditions:
4.1 The Company and Principal Mutual shall have executed this letter
agreement.
4.2 As of the date of execution hereof by the Company, no Default or
Event of Default under the Note Agreement (except for any Default or Event of
Default which has been either waived by Principal Mutual or the subject of a
previous amendment to the Note Agreement) shall exist or be continuing, after
giving effect to the amendments set forth herein.
4.3 The representation and warranties of the Company referred to in
Section 3.1 of the Note Agreement, shall be true and complete in all material
respects, as if made on and as of the date hereof (except as to those
representations and warranties which are made as of a specific date, which shall
be true and complete in all material respects as of such specific date).
4.4 The representations of the Company referred to in Section 4
hereof shall be true and complete in all material respects.
5. REPRESENTATIONS OF THE COMPANY. The Company, by its execution and
delivery of this letter agreement, hereby represents and warrants to Principal
Mutual as follows:
Page 15 of 18
<PAGE>
Page 3
5.1 As of the date of this letter agreement, no Default or Event of
Default under the Note Agreement, or under any other agreement to which the
Company is subject, exists or is continuing, after giving effect to the
amendments set forth herein.
5.2 The representations and warranties of the Company referred to in
Section 3.1 of the Note Agreement (as modified by letter agreement dated July
21, 1993) are true and correct and complete in all material respects as if made
on the date hereof, except as to those representations and warranties made as of
a specific date, which are true and correct and materially complete as of such
date.
5.3 No dissolution proceedings with respect to the Company have been
commenced or are contemplated, and there had been no material adverse change in
the business, conditions or operations (financial or otherwise) of the Company
and its Restricted Subsidiaries, taken as a whole since September 30, 1990,
except as previously disclosed to Principal Mutual.
5.4 This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a legal, valid and binding obligation of the
Company.
6. MISCELLANEOUS
6.1 It is expressly understood and agreed that the amendments
contained herein shall not constitute either (a) a modification, alteration or
amendment of the terms, conditions, and covenants of the Note Agreement or the
Notes, both of which shall remain unchanged and in full force and effect, except
as otherwise specifically set forth herein, or (b) a waiver, release or
limitation upon the exercise by Principal Mutual of any of the rights, legal or
equitable, hereunder except as to matters as to which Principal Mutual herein
expressly consents or waives compliance and only for the relevant time period
set forth herein. Nothing herein is intended or shall be construed to release
or relieve the Company in any way or to any extent from any of the obligations,
covenants or agreements imposed upon the Company by the Note Agreement or the
Notes or otherwise, or from the consequences of any default thereunder, except
as to matters as to which the undersigned expressly agree herein.
6.2 The Note Agreement, as amended hereby, and the Notes are in all
respects ratified and confirmed, and all the terms, conditions and provisions
thereof shall be and remain in full force and effect.
6.3 The execution of this letter agreement by Principal Mutual shall
not in any way constitute, or be construed as, a waiver of any provision of, or
of any Default or Event of Default under, the Note Agreement except as expressly
provided herein, nor shall it constitute
Page 16 of 18
<PAGE>
Page 4
an agreement or obligation of Principal Mutual to give its consent to any future
waiver, consent or amendment of the Note Agreement or to any future transaction
which would, absent consent of Principal Mutual, constitute a Default or Event
of Default under the Note Agreement.
6.4 This letter agreement may be executed in as many counterparts as
may be deemed necessary or convenient and by the different parties hereto on
separate counterparts (provided that the Company will execute each counterpart),
and each of which, when so executed, shall be deemed to be an original, but all
such counterparts shall constitute but one and the same agreement.
6.5 This letter agreement shall be deemed effective as of the date
hereof, provided that the provisions and the conditions precedent set forth in
Section 4 hereof have been completely satisfied.
6.6 From and after the effective date hereof, each reference in the
Note Agreement to "this Agreement", "hereof", or "hereunder" or words of like
import, and all references to the Note Agreement in any and all agreements,
instruments, documents, notes, certificates and other writings of every kind and
nature shall be deemed to mean the Note Agreement, as modified and amended by
this letter agreement.
6.7 This letter agreement (a) shall be binding on the parties hereto
and their respective successors and assigns and shall insure to the benefit of
the parties hereto and their respective successors and assigns, (b) constitutes
the entire agreement among the parties hereto with respect to the matters
addressed herein, and (c) shall be governed by and construed and enforced in
accordance with the laws of the State of Florida.
The Wackenhut Corporation
By Richard C. DeCook
-----------------
Its Senior Vice President - C.F.O.
------------------------------
Principal Mutual Life Insurance Company
By John D. Cleavenger
------------------
Its Counsel
-------
By Joseph P. McLaughlin
--------------------
Its Counsel
-------
Page 17 of 18
<PAGE>
EXHIBIT 2
March 1, 1994
Mr. Juan D. Miyar
Vice President & Controller
The Wackenhut Corporation
1500 San Remo Avenue
Coral Gables, FL 33146-3009
RE: TEMPORARY AMENDMENT TO SECTION 7.10 (THE "FIXED CHARGE COVERAGE RATIO") OF
THE AMENDED AND RESTATED REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT BY
AND AMONG THE WACKENHUT CORPORATION AND NATIONSBANK OF FLORIDA DATED
JULY 1, 1993 (THE "CREDIT AGREEMENT")
Dear Juan:
Pursuant to Wackenhut's request, NationsBank has agreed to amend the calculation
of the Fixed Charge Coverage Ratio contained in the above referenced Credit
Agreement for the four quarter period ending January 2, 1994 and for the four
quarter periods ending on Wackenhut's following three quarter ends. For
purposes of calculating the Fixed Charge Coverage Ratio, Wackenhut may add back
to Net Income the non-recurring charges of $1,726,000 and the extraordinary
charge related to early extinguishment of debt reported in its financial
statements date January 2, 1994.
The amendment to the calculation of the Fixed Charge Coverage Ratio described
herein is effective only for the four quarter period ending January 2, 1994 and
the four quarter periods ending on Wackenhut's following three quarter ends.
After that time, the calculation of the Fixed Charge Coverage Ratio will be made
as set forth in the Credit Agreement.
Juan, please let me know if you have any questions regarding this temporary
amendment.
Sincerely,
/s/ John A. Miller
John A. Miller
Vice President
(305) 577-5422
Page 18 of 18
