<PAGE> 1
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 June 30, 1996
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 1-5450
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.)
4200 Wackenhut Drive #100,
Palm Beach Gardens, FL 33410-4243
- ------------------------------------------ ------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (561) 622-5656
- --------------------------------------------------------------------------------
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 August 2, 1996, 3,858,885 shares of Series A and 10,862,512 shares of Series
B of the registrant's Common Stock were issued and outstanding.
Page 1 of 22
<PAGE> 2
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 twenty-six weeks ended June 30, 1996 are not necessarily
indicative of the results for the entire fiscal year ending December 29, 1996.
Page 2 of 22
<PAGE> 3
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THIRTEEN WEEKS ENDED
JUNE 30, 1996 and JULY 2, 1995
(In thousands except per share data)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
-------------------------------
<S> <C>
REVENUES $ 222,904 $ 193,371
-------------------------------
OPERATING EXPENSES:
Payroll and related taxes 163,281 140,664
Other operating expenses 55,902 48,740
-------------------------------
219,183 189,404
-------------------------------
OPERATING INCOME 3,721 3,967
-------------------------------
OTHER INCOME (EXPENSE):
Interest expense (979) (758)
Interest and investment income 1,110 330
-------------------------------
131 (428)
-------------------------------
INCOME BEFORE INCOME TAXES 3,852 3,539
Provision for income taxes 1,422 1,300
Minority interest, net of income taxes 923 667
Equity income of foreign affiliates, net of income taxes (400) (154)
-------------------------------
NET INCOME $ 1,907 $ 1,726
===============================
EARNINGS PER SHARE $ 0.15 $ 0.15
===============================
</TABLE>
See notes to Consolidated Financial Statements.
Page 3 of 22
<PAGE> 4
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE TWENTY-SIX WEEKS ENDED
JUNE 30,1996 AND JULY 2, 1995
(In thousands except share data)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
-----------------------------------
<S> <C> <C>
REVENUES $ 435,378 $ 383,163
-----------------------------------
OPERATING EXPENSES:
Payroll and related taxes 316,684 282,272
Other operating expenses 112,160 93,869
Provision for relocation costs 750 -
-----------------------------------
429,594 376,141
-----------------------------------
OPERATING INCOME 5,784 7,022
-----------------------------------
OTHER INCOME (EXPENSE):
Interest expense (1,863) (1,495)
Interest and investment income 2,165 655
-----------------------------------
302 (840)
-----------------------------------
INCOME BEFORE INCOME TAXES 6,086 6,182
Provision for income taxes 2,191 2,198
Minority interest, net of income taxes 1,750 1,038
Equity income of foreign affiliates, net of income taxes (707) (379)
-----------------------------------
NET INCOME $ 2,852 $ 3,325
===================================
EARNINGS PER SHARE $ 0.23 $ 0.28
===================================
</TABLE>
See notes to Consolidated Financial Statements.
Page 4 of 22
<PAGE> 5
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(In thousands except share data)
<TABLE>
<CAPTION>
(Unaudited)
1996 1995
-----------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 64,237 $ 20,185
Accounts receivable, less allowance for doubtful accounts
of $1,796 in 1996 and $1,268 in 1995 120,417 77,121
Inventories 6,277 6,798
Other 21,301 18,058
-----------------------------------
212,232 122,162
-----------------------------------
NOTES RECEIVABLE 10,613 10,540
-----------------------------------
MARKETABLE SECURITIES AND CERTIFICATES OF DEPOSIT
of casualty reinsurance subsidiary 13,641 5,774
-----------------------------------
PROPERTY AND EQUIPMENT, at cost 32,818 29,132
Accumulated depreciation (10,578) (9,851)
-----------------------------------
22,240 19,281
-----------------------------------
DEFERRED TAX ASSET, net 1,203 6,170
-----------------------------------
OTHER ASSETS:
Investment in and advances to foreign affiliates, at cost, including equity
in undistributed earnings of $4,823 in 1996 and $4,098 in 1995 11,648 10,984
Other 36,265 23,016
-----------------------------------
47,913 34,000
-----------------------------------
$ 307,842 $ 197,927
===================================
</TABLE>
See notes to Consolidated Financial Statements.
Page 5 of 22
<PAGE> 6
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(In thousands except share data)
<TABLE>
<CAPTION>
1996 1995
-----------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 11 $ 11
Notes payable - 1,115
Accounts payable 15,322 16,032
Accrued payroll and related taxes 34,416 33,793
Accrued expenses 19,509 21,456
Deferred tax liability, net - 117
-----------------------------------
69,258 72,524
-----------------------------------
RESERVES FOR LOSSES of casualty reinsurance subsidiary 41,543 40,118
-----------------------------------
LONG-TERM DEBT 8,012 5,376
-----------------------------------
OTHER 7,582 8,027
-----------------------------------
MINORITY INTEREST 37,401 8,978
-----------------------------------
SHAREHOLDERS' EQUITY:
Preferred stock, 10,000,000 shares authorized - -
Common stock, $.10 par value, 50,000,000 shares authorized:
Series A common stock, 3,858,885 issued and outstanding in 1996
and 1995 386 386
Series B common stock, 10,862,512 issued and outstanding in 1996
and 8,272,887 in 1995 1,086 827
Additional paid-in capital 119,411 39,644
Retained earnings 27,052 25,790
Cumulative translation adjustment (3,768) (3,702)
Unrealized loss on marketable securities (121) (41)
-----------------------------------
144,046 62,904
-----------------------------------
$ 307,842 $ 197,927
===================================
</TABLE>
See notes to Consolidated Financial Statements.
Page 6 of 22
<PAGE> 7
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 30, 1996 AND JULY 2, 1995
(In thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
-----------------------------------
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net Income $ 2,852 $ 3,325
Adjustments -
Depreciation expense 1,870 2,254
Amortization expense 6,553 3,780
Provision for bad debts 766 584
Equity income, net of dividends (963) (473)
Minority interests in net income 2,662 1,573
Other (109) (205)
Changes in assets and liabilities, net of acquisitions and divestitures -
(Increase) decrease in assets:
Accounts receivable (11,062) (8,031)
Inventories (1,767) (2,887)
Other current assets (3,243) (2,021)
Marketable securities and certificates of deposit (12) (240)
Other assets (1,543) (3,179)
Deferred tax asset, net 4,967 2,497
Increase (decrease) in liabilities:
Accounts payable and accrued expenses (3,739) (3,714)
Accrued payroll and related taxes 623 916
Deferred tax liability, net (117) (388)
Reserve for losses of casualty reinsurance subsidiary 1,425 1,880
Other (444) 800
-----------------------------------
NET CASH USED IN OPERATING ACTIVITIES (1,281) (3,529)
-----------------------------------
</TABLE>
(Continued)
Page 7 of 22
<PAGE> 8
THE WACKENHUT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWENTY-SIX WEEKS ENDED JUNE 30, 1996 AND JULY 2, 1995
(In thousands)
(UNAUDITED)
(Continued)
<TABLE>
<CAPTION>
1996 1995
-----------------------------------
<S> <C> <C>
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Net proceeds from public offering of subsidiary's common stock 51,606 -
Proceeds from exercise of stock options of subsidiary 320 897
Payments on notes receivable 153
Payments for acquisitions (13,703) -
Investment in and advances to foreign affiliates 349 (1,286)
Capital expenditures (4,615) (1,718)
Proceeds from sales (payments for purchases) of marketable securities of
casualty reinsurance subsidiary, net (7,980) 1,206
Deferred charge expenditures (2,482) (1,492)
-----------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 23,495 (2,240)
-----------------------------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
Net proceeds from public offering of the company's common stock 54,166 -
Proceeds from exercise of stock options 779 -
Proceeds from issuance of debt 9,871 64,657
Payments on debt (8,388) (95,242)
Proceeds from sales (payments for repurchases) of accounts
receivable (33,000) 34,928
Dividends paid (1,590) (1,454)
-----------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 21,838 2,889
-----------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 44,052 (2,880)
Cash and Cash Equivalents, at beginning of period 20,185 13,808
-----------------------------------
CASH AND CASH EQUIVALENTS, AT END OF PERIOD $ 64,237 $ 10,928
===================================
SUPPLEMENTAL DISCLOSURES
CASH PAID DURING THE PERIOD FOR:
Interest $ 1,939 $ 1,451
Income taxes $ 131 $ 2,143
</TABLE>
See notes to Consolidated Financial Statements.
Page 8 of 22
<PAGE> 9
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 December 31, 1995. Certain prior year amounts have been
reclassified to conform with current year financial statement presentation.
2. ACCOUNTS RECEIVABLE
In January 1995, the Corporation entered into a three year agreement to sell on
an on-going basis, an undivided interest in a defined pool of eligible
receivables up to a maximum of $40,000,000. In December 1995, the accounts
receivable securitization facility was increased to $50,000,000. The costs
associated with this program are based upon the purchasers' level of investment
and cost of issuing commercial paper plus predetermined fees. Such costs are
included in "Interest Expense," in the Consolidated Statements of Income. At
June 30, 1996, $2,000,000 of accounts receivable had been sold under this
agreement. The defined pool of accounts receivable sold at June 30, 1996
approximates fair value. The Corporation retains substantially the same risk
of credit loss as if the receivables had not been sold.
3. LONG-TERM DEBT
<TABLE>
<CAPTION>
JUNE 30, December 31,
1996 1995
-----------------------------------
<S> <C> <C>
Revolving loans - 6.1% in 1996 and 6.2% in 1995 $ 1,850 $ 1,400
Other debt principally related to WCC and international subsidiaries 6,173 3,987
-----------------------------------
8,023 5,387
Less - Current portion of long-term debt (11) (11)
-----------------------------------
$ 8,012 $ 5,376
===================================
</TABLE>
4. THE WACKENHUT CORPORATION'S STOCK OFFERING
During the second quarter of 1996, the Corporation sold 2,500,000 shares of
Series B common stock in connection with a public offering at a price of $23.50
per share. Net proceeds of approximately $54,166,000 from the offering will be
used to repay the outstanding balance on the revolving loan, to repurchase a
portion of the receivables sold under the accounts receivable securitization
facility, for possible future acquisitions, for systems and technology upgrades
and for general corporate purposes.
Page 9 of 22
<PAGE> 10
5. BUSINESS SEGMENTS
SECURITY-RELATED AND OTHER SUPPORT SERVICES AND CORRECTIONAL SERVICES
The Corporation's principal business consists of security-related and other
support services to commercial and governmental clients. WCC provides facility
management and construction services to detention and correctional facilities.
Provided below is various financial information for each segment:
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
------------------------------------
(THOUSANDS OF DOLLARS) JUNE 30, 1996 JULY 2, 1995
------------- ------------
<S> <C> <C>
REVENUES:
Security-related and other support services $372,528 $337,119
Correctional services 62,850 46,044
-------- --------
Total revenues $435,378 $383,163
-------- --------
OPERATING INCOME:
Security-related and other support services $ 2,902 $ 3,614
Correctional services 3,632 3,408
Provision for relocation costs (750) -
-------- --------
Total operating income $ 5,784 $ 7,022
-------- --------
EQUITY INCOME (LOSS) OF AFFILIATES, NET OF TAXES:
Security-related and other support services $ 525 $ 477
Correctional services 182 (98)
-------- --------
Total equity income $ 707 $ 379
-------- --------
CAPITAL EXPENDITURES:
Security-related and other support services $ 3,508 $ 1,085
Correctional services 1,107 633
-------- --------
Total capital expenditures $ 4,615 $ 1,718
-------- --------
DEPRECIATION AND AMORTIZATION EXPENSE:
Security-related and other support services $ 6,817 $ 5,023
Correctional services 1,606 1,011
-------- --------
Total expenses $ 8,423 $ 6,034
-------- --------
IDENTIFIABLE ASSETS AT JUNE 30, 1996 AND
DECEMBER 31, 1995:
Security-related and other support services $212,218 $159,087
Correctional services 95,624 38,840
-------- --------
Total identifiable assets $307,842 $197,927
-------- --------
</TABLE>
Page 10 of 22
<PAGE> 11
DOMESTIC AND INTERNATIONAL OPERATIONS
Non-U.S. Operations of the Corporation and its subsidiaries are conducted
primarily in South American and Australia. The Corporation carries its
investments in affiliates (20% to 50% owned) under the equity method. U.S.
income taxes which would be payable upon remittance of affiliates' earnings to
the Corporation are provided currently. Minority interest in consolidated
foreign subsidiaries have been reflected net of applicable income taxes on the
accompanying financial statements. A summary of domestic and international
operations is shown below.
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED
-------------------------------
(THOUSANDS OF DOLLARS) JUNE 30, 1996 JULY 2, 1995
------------- ------------
<S> <C> <C>
REVENUES:
Domestic operations $ 365,765 $ 320,984
International operations 69,613 62,179
--------- ----------
Total revenues $ 435,378 $ 383,163
--------- ----------
OPERATING INCOME:
Domestic operations $ 6,140 $ 4,899
International operations 394 2,123
Provision for relocation costs (750) -
--------- ----------
Total operating income $ 5,784 $ 7,022
--------- ----------
EQUITY INCOME OF AFFILIATES, NET OF TAXES:
Domestic operations $ - $ -
International operations 707 379
--------- ----------
Total equity income $ 707 $ 379
--------- ----------
CAPITAL EXPENDITURES:
Domestic operations $ 3,644 $ 1,277
International operations 971 441
--------- ----------
Total capital expenditures $ 4,615 $ 1,718
--------- ----------
DEPRECIATION AND AMORTIZATION EXPENSE:
Domestic operations $ 4,782 $ 4,788
International operations 3,641 1,246
--------- ----------
Total expenses $ 8,423 $ 6,034
--------- ----------
IDENTIFIABLE ASSETS AT JUNE 30, 1996 AND
DECEMBER 31, 1995:
Domestic operations $ 248,863 $ 141,431
International operations 58,979 56,496
--------- ----------
Total identifiable assets $ 307,842 $ 197,927
--------- ----------
</TABLE>
Page 11 of 22
<PAGE> 12
THE WACKENHUT CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
The Corporation provides security-related and other support services through
the Services Business and correctional services through the Correctional
Business. Through the Services Business, the Corporation provides physical
security services, food services and other related services to commercial and
governmental customers. Through the Correctional Business, the Corporation
provides correctional and detention facility design, development and management
services to government agencies. The Services Business is managed through two
operating groups: the North American Operations Group and the International
Operations Group. The Correctional Business is operated through the
Corporation's 55%-owned Wackenhut Corrections Corporation subsidiary ("WCC").
The Correctional Business includes the Australian subsidiary and United Kingdom
affiliate of WCC.
FINANCIAL CONDITION
During the second quarter of 1996, the Corporation sold 2,500,000 shares of its
Series B common stock in connection with a public offering at a price of $23.50
per share, before deducting underwriting discounts and commissions and
estimated offering expenses. Net proceeds of approximately $54,166,000 from
the offering will be used to repay the outstanding balance on the revolving
loan, to repurchase a portion of the receivables sold under the accounts
receivable securitization facility, for possible future acquisitions, for
systems and technology upgrades and for general corporate purposes.
In January 1996, WCC sold 2,300,000 shares of its common stock in connection
with a public offering at a price of $24.00 per share, before deducting
underwriting discounts and commissions and estimated offering expenses. Net
proceeds of approximately $51,606,000 from WCC's offering will be used for
possible future acquisitions, capital investments in new facilities, working
capital requirements and general corporate purposes.
Reference is made to Item 7, Part II of the Corporation's Annual Report on Form
10-K for the fiscal year ended December 31, 1995 for further 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.
Page 12 of 22
<PAGE> 13
COMPARISON OF THIRTEEN WEEKS ENDED JUNE 30, 1996 AND THIRTEEN WEEKS ENDED JULY
2, 1995
REVENUES
Consolidated revenues increased 15.3% to $222.9 million in the thirteen weeks
ended June 30, 1996 (the "Second Quarter of 1996") from $193.4 million in the
thirteen weeks ended July 2, 1995 (the "Second Quarter of 1995").
SERVICES BUSINESS
Services Business revenues increased 10.9% to $189.5 million in the Second
Quarter of 1996 from $170.8 million in the Second Quarter of 1995.
North American Operations Group. North American Operations Group revenues
increased 12.8% to $163.8 million in the Second Quarter of 1996 from $145.2
million in the Second Quarter of 1995. The North American Operations Group
continued to increase its revenue base, primarily as a result of obtaining and
maintaining contracts with major national accounts and continuing success in
the Custom Protection Officer ("CPO") business. The CPO business revenues
increased 9.8% during the Second Quarter of 1996 compared to the Second Quarter
of 1995. Revenues of the Food Division almost doubled during the Second
Quarter of 1996 to $17.6 million, compared to revenues of $9.4 million for the
Second Quarter of 1995, reflecting the acquisition of the contracts and certain
assets of the Correctional Food Services Division of Service America
Corporation and new business development.
International Operations Group. International Operations Group revenues
increased 4.2% to $24.7 million in the Second Quarter of 1996 from $23.7
million in the Second Quarter of 1995. During the fourth quarter of 1995 the
former subsidiary in Chile was deconsolidated and is now a minority-owned
affiliate. Revenues of the Chilean operation for the Second Quarter of 1995
amounted to $4.7 million. Excluding the effect of the Chilean operation,
revenues of the International Operations Group increased approximately $5.7
million. Revenues of Wackenhut of Australia Pty., Ltd., which was acquired in
July of last year, amounted to $2.3 million in the Second Quarter of 1996.
CORRECTIONAL BUSINESS
Correctional Business revenues increased 48.1% to $33.4 million in the Second
Quarter of 1996 from $22.6 million in the Second Quarter of 1995. The increase
in revenues in the Second Quarter of 1996 was primarily attributable to
increased compensated resident days resulting from the opening of two
facilities in the second half of 1995 (Moore Haven Correctional Facility in
Florida, and John R. Lindsey Unit in Texas), one facility that opened in the
first half of 1996 (Willacy County Unit in Texas), one facility for which WCC
assumed correctional services in 1996 (Delaware County Prison in Pennsylvania)
and the expansion of two facilities in the second half of 1995 (Arthur Gorrie
Correctional Centre in Australia, and Allen Correctional Center in
Louisiana).
Page 13 of 22
<PAGE> 14
OPERATING INCOME
Consolidated operating income decreased 6.2% to $3.7 million in the Second
Quarter of 1996.
SERVICES BUSINESS
Operating income from the Services Business decreased 15.9% to $1.8 million in
the Second Quarter of 1996 from $2.1 million for the same period last year.
North American Operations Group. North American Operations Group operating
income remained relatively unchanged at $4.6 million from the Second Quarter
of 1995. Increases in the profit contribution of the core security-related and
foodservice businesses were offset by higher group overhead costs and greater
absorption of direct corporate general and administrative expenses which
increased as a result of higher payroll related costs.
International Operations Group. International Operations Group incurred an
operating loss of $765,000 in the Second Quarter of 1996 compared to operating
income of $580,000 for the same period in 1995. The operating loss in the
Second Quarter of 1996 was primarily due to the operating losses from the new
security services subsidiary in Australia, Wackenhut of Australia Pty., Ltd.,
which recorded an operating loss of approximately $852,000 in the Second
Quarter of 1996. Currently, the Corporation is in the process of aligning its
organizational structure in Australia to that of its other security operations
in order to enhance operational efficiency and to increase its revenue base in
that country. Increases in operating losses in Venezuela, decreases in
operating income in Ecuador and the deconsolidation of operations in Chile
offset increases in operating income in other countries.
CORPORATE EXPENSES AND UNDERWRITING LOSSES
Corporate expenses and underwriting losses decreased 33.9% to $2.0 million in
the Second Quarter of 1996 from $3.0 million in the Second Quarter of 1995.
CORRECTIONAL BUSINESS
WCC's operating income increased by 5.2% to $1.9 million in the Second Quarter
of 1996 from $1.8 million in the Second Quarter of 1995 due to additional
income from the opening of three new facilities, assumption of correctional
services at one facility, and two expansions, partially offset by higher
general and administrative expenses.
OTHER INCOME/EXPENSE
Other income was $131,000 in the Second Quarter of 1996 compared to other
expense of $428,000 for the comparable period in 1995. Interest and investment
income increased $780,000 including interest income of approximately $553,000
from the investment of the net proceeds of WCC's public offering in January
1996. This increase was partially offset by an increase in interest expense of
$221,000 due principally to the increase in the level of corporate bank
borrowings and fees incurred under the accounts receivable securitization
facility. Proceeds from the additional bank borrowings and sales of
receivables under the accounts receivable securitization facility were used by
the Corporation
Page 14 of 22
<PAGE> 15
principally to effect the foodservice acquisition, for the improvement of its
information systems, and to penetrate the Australian security-services market.
INCOME BEFORE INCOME TAXES
Income before income taxes increased 8.8% to $3.9 million in the Second
Quarter of 1996 from $3.5 million in the Second Quarter of 1995.
The combined federal and state effective income tax rate was 36.0% for the
Second Quarter of 1996 and 35.7% for the same period in 1995. The higher
effective rate in the Second Quarter of 1996 was due to: (i) the statutory
elimination of targeted job tax credits; and (ii) a decrease in tax exempt
income of the captive reinsurance subsidiary.
MINORITY INTEREST EXPENSE
Minority interest expense (net of income taxes) increased to $923,000 in the
Second Quarter of 1996 from $667,000 in the Second Quarter of 1995, reflecting
principally the increase in earnings of and the public ownership in WCC.
EQUITY INCOME OF FOREIGN AFFILIATES
Equity income of foreign affiliates (net of income taxes) increased 159.7% to
$400,000 in the Second Quarter of 1996 from $154,000 in the Second Quarter of
1995, primarily resulting from increased earnings of security services
affiliates in South America and Europe, the joint venture of WCC in the United
Kingdom, and the inclusion of the Corporation's equity income of the Chilean
operations.
NET INCOME
Net income increased to $1,907,000 in the Second Quarter of 1996, or $0.15 per
share compared to $1,726,000 or $0.15 per share for the Second Quarter of 1995.
COMPARISON OF TWENTY-SIX WEEKS ENDED JUNE 30, 1996 AND TWENTY-SIX WEEKS ENDED
JULY 2, 1995
REVENUES
Consolidated revenues increased 13.6% to $435.4 million in the twenty-six weeks
ended June 30, 1996 (the "First Half of 1996") from $383.2 million in the
twenty-six weeks ended July 2, 1995 (the "First Half of 1995").
SERVICES BUSINESS
Services Business revenues increased 10.5% to $372.5 million in the First Half
of 1996 from $337.1 million in the First Half of 1995.
Page 15 of 22
<PAGE> 16
North American Operations Group. North American Operations Group revenues
increased 12.3% to $320.0 million in the First Half of 1996 from $284.9 million
in the First Half of 1995. The North American Operations Group continued to
increase its revenue base, primarily as a result of obtaining and maintaining
contracts with major national accounts and continuing success in the CPO
business. The CPO business revenues increased 11.8% during the First Half of
1996 compared to the First Half of 1995. Revenues of the Food Division almost
doubled during the First Half of 1996 to $33.4 million, compared to revenues of
$17.7 million for the First Half of 1995, reflecting the acquisition of the
contracts and certain assets of the Correctional Food Services Division of
Service America Corporation and new business development.
International Operations Group. International Operations Group revenues
increased 9.1% to $50.4 million in the First Half of 1996 from $46.2 million in
the First Half of 1995. During the fourth quarter of 1995 the former
subsidiary in Chile was deconsolidated and is now a minority-owned affiliate.
Revenues of the Chilean operation for the First Half of 1995 amounted to $8.9
million. Excluding the effect of the Chilean operation, revenues of the
International Operations Group increased approximately $13.1 million. Revenues
of Wackenhut of Australia Pty., Ltd., which was acquired in July of last year,
amounted to $6.1 million in the First Half of 1996.
CORRECTIONAL BUSINESS
Correctional Business revenues increased 36.5% to $62.9 million in the First
Half of 1996 from $46.0 million in the First Half of 1995. The increase in
revenues in the First Half of 1996 was primarily attributable to increased
compensated resident days resulting from the opening of two facilities in the
second half of 1995 (Moore Haven Correctional Facility in Florida, and John R.
Lindsey Unit in Texas), one facility that opened in the first half of 1996
(Willacy County Unit in Texas), one facility for which WCC assumed correctional
services in 1996 (Delaware County Prison in Pennsylvania) and the expansion of
two facilities in the second half of 1995 (Arthur Gorrie Correctional Centre in
Australia, and Allen Correctional Center in Louisiana).
OPERATING INCOME
Consolidated operating income, which included a $750,000 provision for
relocation costs in the First Half of 1996, decreased 17.6% to $5.8 million.
Excluding relocation costs, consolidated operating income decreased 7.0%.
SERVICES BUSINESS
Operating income from the Services Business decreased 19.7% to $2.9 million in
the First Half of 1996 from $3.6 million for the same period last year.
North American Operations Group. North American Operations Group operating
income increased 11.0% to $9.2 million in the First Half of 1996 from $8.3
million in the First Half of 1995. Increases in the profit contribution of the
core security-related and foodservice businesses were partially offset by
higher group overhead costs and greater absorption of direct corporate general
and administrative expenses which increased as a result of higher payroll
related costs.
Page 16 of 22
<PAGE> 17
International Operations Group. International Operations Group incurred an
operating loss of $1.0 million in the First Half of 1996 compared to operating
income of $1.1 million for the same period in 1995. The operating loss in the
First Half of 1996 was primarily due to the operating losses from the new
security services subsidiary in Australia, Wackenhut of Australia Pty., Ltd.,
which recorded an operating loss of approximately $1.2 million in the First
Half of 1996. Currently, the Corporation is in the process of aligning its
organizational structure in Australia to that of its other security operations
in order to enhance operational efficiency and to increase its revenue base in
that country. Increases in operating losses in Venezuela, decreases in
operating income in Ecuador and the deconsolidation of operations in Chile
offset increases in operating income in other countries.
CORPORATE EXPENSES AND UNDERWRITING LOSSES
Corporate expenses and underwriting losses decreased 6.8% to $5.4 million in
the First Half of 1966 from $5.8 million in the First Half of 1995.
CORRECTIONAL BUSINESS
WCC's operating income increased by 6.6% to $3.6 million in the First Half of
1996 from $3.4 million in the First Half of 1995 due to additional income from
the opening of three new facilities, assumption of correctional services at one
facility, and two expansions, partially offset by higher general and
administrative expenses.
OTHER INCOME/EXPENSE
Other income was $302,000 in the First Half of 1996 compared to other expense
of $840,000 for the comparable period in 1995 due to two principal factors.
First, interest and investment income increased $1,510,000 including interest
income of approximately $1,194,000 from the investment of the net proceeds of
WCC's public offering in January 1996. Second, interest expense increased
$368,000 due principally to the increase in the level of corporate bank
borrowings and fees incurred under the accounts receivable securitization
facility. Proceeds from the additional bank borrowings and sales of
receivables under the accounts receivable securitization facility were used by
the Corporation principally to effect the foodservice acquisition, for the
improvement of its information systems, and to penetrate the Australian
security-services market.
INCOME BEFORE INCOME TAXES
Income before income taxes, which included a $750,000 provision for relocation
costs in the First Half of 1996, decreased 1.6% to $6.1 million from $6.2
million in the First Half of 1995.
The combined federal and state effective income tax rate was 36.0% for the
First Half of 1996 and 35.7% for the same period in 1995. The higher effective
rate in the First Half was due to: (i) the statutory elimination of targeted
job tax credits; and (ii) a decrease in tax exempt income of the captive
reinsurance subsidiary.
Page 17 of 22
<PAGE> 18
MINORITY INTEREST EXPENSE
Minority interest expense (net of income taxes) increased to $1.8 million in
the First Half of 1996 from $1.0 million in the First Half of 1995, reflecting
principally the increase in earnings of and the public ownership in WCC.
EQUITY INCOME OF FOREIGN AFFILIATES
Equity income of foreign affiliates (net of income taxes) increased 86.5% to
$707,000 in the First Half of 1996 from $379,000 in the First Half of 1995,
primarily resulting from increased earnings of security services affiliates in
South America and Europe, the joint venture of WCC in the United Kingdom, and
the inclusion of the Corporation's equity income of the Chilean operations.
NET INCOME
Net income decreased to $2,852,000 in the First Half of 1996, or $0.23 per
share, after the $750,000 provision for relocation costs ($461,000 net of
income taxes), compared to $3,325,000 or $0.28 per share for the First Half of
1995.
Page 18 of 22
<PAGE> 19
THE WACKENHUT CORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Corporation is presently, and is from time to time, subject to claims
arising in the ordinary course of its business. In certain of such actions
plaintiffs request punitive or other damages that may not be covered by
insurance. In the opinion of management, the various asserted claims and
litigation in which the Corporation is currently involved will not materially
affect its financial position or future operating results, although no
assurance can be given with respect to the ultimate outcome from any such
claims or litigation.
ITEM 2. CHANGES IN SECURITIES
The Corporation increased the number of authorized shares of the Corporation's
Common Stock from 20,000,000 shares, par value $.10 per share, to 50,000,000
shares, par value of $.10 per share, with 3,858,885 shares designated as Series
A Common Stock and 46,141,115 shares designated as Series B Common Stock.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of the Corporation was held on April 30,
1996 in Palm Beach Gardens, 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>
Julius W. Becton 3,293,145 8,837
Richard G. Capen, Jr. 3,293,545 8,437
Anne Newman Foreman 3,293,618 8,364
Edward L. Hennessy, Jr. 3,293,145 8,837
Paul X. Kelley 3,294,830 7,152
Nancy Clark Reynolds 3,294,800 7,182
Thomas P. Stafford 3,293,145 8,837
George R. Wackenhut 3,294,660 7,322
Richard R. Wackenhut 3,295,403 6,579
</TABLE>
Page 19 of 22
<PAGE> 20
Tabulations of the results of other matters voted upon at the Annual Meeting is
as follows:
Proposal No. 2
Appointment of Independent Certified Public Accountants -
FOR.....3,296,552 AGAINST.....3,593 ABSTAIN.....1,836
Proposal No. 3
Approval of Non-Employee Director Stock Option Plan -
FOR.....2,619,502 AGAINST.....371,004 ABSTAIN.....16,569
Proposal No. 4
Proposal to set aside a total of 900,000 shares of series B Common Stock of the
corporation to be utilized for future issuance under the Key Employee Long Term
Incentive Stock Plan -
FOR.....2,555,079 AGAINST.....422,980 ABSTAIN.....18,245
A Special Meeting of the holders of the Series A Common Stock and the Series B
Common Stock of The Wackenhut Corporation was held on May 23, 1996 in Palm
Beach Gardens, Florida. A tabulation of the results of matters voted upon at
the Special Meeting is as follows:
Proposal No. 1
Proposal to amend Article III of the Corporation's Articles of Incorporation to
increase the number of authorized shares of the Corporation's Common Stock from
20,000,000 shares, par value $.10 per share, to 50,000,000 shares, par value
$.10 per share, with 3,858,885 shares designated as Series A Common Stock and
46,141,115 shares designated as Series B Common Stock -
<TABLE>
<CAPTION>
SERIES A SERIES B
--------- ---------
<S> <C> <C>
FOR 2,048,358 4,202,587
AGAINST 191,949 370,569
ABSTAIN 2,218 3,160
</TABLE>
Proposal No. 2
Proposal to amend Article III of the Corporation's Articles of Incorporation to
confirm that one class or series of the Corporation's capital stock may be
issued (by action of the Board of Directors without the necessity of further
shareholder action) through a share dividend or a stock split on shares of
another class or series of the Corporation's capital stock -
<TABLE>
<CAPTION>
SERIES A SERIES B
--------- ---------
<S> <C> <C>
FOR 2,100,940 4,213,706
AGAINST 139,612 360,199
ABSTAIN 1,973 2,411
</TABLE>
Page 20 of 22
<PAGE> 21
Proposal No 3
Proposal to ratify, confirm and approve prior issuances by the Corporation of
shares of one series of the Corporation's Common Stock to holders of another
series of the Corporation's Common Stock, through a share dividend, a stock
split, or otherwise -
<TABLE>
<CAPTION>
SERIES A SERIES B
--------- ---------
<S> <C> <C>
FOR 2,098,385 4,207,045
AGAINST 141,543 364,715
ABSTAIN 2,597 4,556
</TABLE>
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a). Exhibits -
Exhibit 3.1 - Articles of Incorporation as amended
Exhibit 27 - Financial Data Schedule (for SEC use only)
(b). Reports on Form 8-K
The Corporation did not file a Form 8-K during the second quarter
of 1996
Page 21 of 22
<PAGE> 22
THE WACKENHUT CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Quarterly Report on Form 10-Q for the
twenty-six weeks ended June 30, 1996 to be signed on its behalf by the
undersigned hereunto duly authorized.
THE WACKENHUT CORPORATION
DATE: August 12, 1996 /s/ JUAN D. MIYAR
--------------------------------------
Juan D. Miyar, Duly Authorized Officer
and Chief Accounting Officer
Page 22 of 22
<PAGE> 1
EXHIBIT 3.1
STATE OF FLORIDA
[SEAL]
DEPARTMENT OF STATE
I certify from the records of this office that THE WACKENHUT CORPORATION, is a
corporation organized under the laws of the State of Florida, filed on December
4, 1958.
The document number of this corporation is 217838.
I further certify that said corporation has paid all fees and penalties due
this office through December 31, 1996, that its most recent annual report was
filed on May 1, 1996, and its status is active.
I further certify that said corporation has not filed Articles of Dissolution.
GIVEN UNDER MY HAND AND THE
GREAT SEAL OF THE STATE OF FLORIDA
AT TALLAHASSEE, THE CAPITAL, THIS THE
FIFTH DAY OF JULY, 1996
[SEAL]
/s/ Sandra B. Mortham
-----------------------
Sandra B. Mortham
Secretary of State
<PAGE> 2
STATE OF FLORIDA
[SEAL]
DEPARTMENT OF STATE
I certify the attached is a true and correct copy of the Amended and Restated
Articles of Incorporation, as amended to date, for THE WACKENHUT CORPORATION,
a corporation organized under the laws of the State of Florida, as shown by the
records of this office.
The document number of this corporation is 217838.
GIVEN UNDER MY HAND AND THE
GREAT SEAL OF THE STATE OF FLORIDA
AT TALLAHASSEE, THE CAPITAL, THIS THE
FIFTH DAY OF JULY, 1996
/s/ Sandra B. Mortham
-----------------------
[SEAL] Sandra B. Mortham
Secretary of State
<PAGE> 3
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
THE WACKENHUT CORPORATION
------------------------
The articles of incorporation of The Wackenhut Corporation, originally
filed with the Secretary of State of Florida on December 4, 1958, under the
corporate name of Security Services Corp., are hereby restated as follows:
ARTICLE I
The name of this Corporation shall be:
THE WACKENHUT CORPORATION
ARTICLE II
The purpose for which the corporation is formed and the principal objects
of business to be carried on by it are as follows:
(a) To contract for and provide any of the functions of Services of a
private investigative agency, uniformed or ununiformed personnel, management
consultation, advice, plans, surveys and systems for the safety, security
control, protection and efficiency of persons, business, industrial and
governmental firms and agencies.
(b) To engage in and carry on the business of manufacturing and producing,
buying, selling or otherwise dealing in or with goods, wares and merchandise of
every kind and description and to acquire, own, use, sell and convey, mortgage
or otherwise encumber any real estate or personal property in whole or in part
and in any manner whatever to acquire, own, dispose of franchises, licenses,
options or rights in any real estate or personal property or other property
interests.
(c) To engage in and carry on a general brokerage commission, forwarding
and exporting and importing business and to act as factors, agents, commission
merchants and dealers in the buying, selling or dealing in of goods, wares and
merchandise of all kinds and descriptions.
(d) To conduct and engage in any business, occupation or enterprise and to
exercise any power or authority which may be done by a private corporation
organized and existing under and by virtue of Chapter 608, Florida Statute, it
being the intention that this corporation may conduct and transact any business
lawfully authorized and not prohibited by said Chapter 608, Florida Statutes.
<PAGE> 4
ARTICLE III
The maximum amount of shares of stock that this corporation shall be
authorized to issue shall be 30,000,000 shares which are to be divided into two
classes as follows:
20,000,000 shares of Common Stock, par value $.10 per share, and
10,000,000 shares of Preferred Stock.
The Common Stock may be created and issued from time to time in one or
more series with voting rights for each series as determined by the Board of
Directors of the Corporation and set forth in the resolution or resolutions
providing for the creation and issuance of the stock in such series. The
Preferred Stock may be created and issued from time to time in one or more
series with such designations, preferences, limitations, conversion rights,
cumulative, relative, participating, optional or other rights, including voting
rights, qualifications, limitations or restrictions thereof and determined by
the Board of Directors of the Corporation and set forth in the resolution or
resolutions providing for the creation and issuance of the stock in such
series.
ARTICLE IV
The principal place of business of this corporation shall be at 3280 Ponce
de Leon Blvd., Coral Gables, Florida, or at such other place as may be
designated by the Board of Directors from time to time. This corporation shall
have full power and authority to transact business and to establish offices or
agencies at such places as may be in the best interests of this corporation.
ARTICLE V
This corporation is to exist perpetually.
ARTICLE VI
The amount of capital with which this corporation will begin business is
Five Hundred Dollars.
ARTICLE VII
The business of this corporation shall be conducted by a Board of Directors
consisting of not less than three (3) nor more than nineteen (19) members, the
exact number to be determined from time to time in the by-laws of this
Corporation.
The Board of Directors shall have sole authority to adopt or amend by-laws
for the government of this corporation.
ARTICLE VIII
The names and post office addresses of the members of the first Board of
Directors, the President, and the Secretary and the Treasurer are:
2
<PAGE> 5
<TABLE>
<S> <C> <C>
G. DAVID PARRISH................................. 220 Security Trust President and Director
Bldg., Miami, Florida
JOHN T. WOITESEK................................. 220 Security Trust Secretary and Director
Bldg., Miami, Florida
GENE ESSNER...................................... 220 Security Trust Treasurer and Director
Bldg., Miami, Florida
</TABLE>
ARTICLE IX
The name and post office address of each subscriber of these Articles of
Incorporation, the number of shares of stock each agrees to take and the value
of the consideration therefor (the sum of which values is not less than the
amount of capital specified in Article VI) are:
<TABLE>
<S> <C> <C> <C>
G. DAVID PARRISH.................................. 220 Security Trust 167 shares $167.00
Bldg., Miami, Florida
JOHN T. WOITESEK.................................. 220 Security Trust 167 shares $167.00
Bldg., Miami, Florida
GENE ESSNER....................................... 220 Security Trust 167 shares $167.00
Bldg., Miami, Florida
--------
$500.00
=======
</TABLE>
ARTICLE X
The corporation shall have the following powers:
(a) To acquire all or any part of the good will, rights, property and
business of any person, firm, association or corporation heretofore or hereafter
engaged in any business similar to any business which the corporation has the
power to conduct and to hold, utilize, enjoy and in any and all manner dispose
of the whole or any part of the rights, property and business so acquired, and
to assume in connection therewith any liabilities of any person, firm,
association or corporation.
(b) To apply for, obtain, purchase, or otherwise acquire, any patents,
copyrights, licenses, trademarks, trade names, rights, processes, formulas and
the like, which may seem capable of being used for any of the purposes of the
corporation; and to use, exercise, develop, grant licenses in respect of, sell
and otherwise turn to account the same.
(c) To carry out all or any part of the aforesaid objects and purposes, and
to conduct its business in all or any part of its branches, in any or all
states, territories, districts and possessions of the United States of America
and in foreign countries.
3
<PAGE> 6
(d) The corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to or conferred upon corporations
organized under the laws of the State of Florida now or hereafter in force, and
the enumeration of any powers shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE XI
The Board of Directors, by the affirmative vote of a majority of the
Directors then in office, and irrespective of any personal interest of any of
its members, shall have authority to establish reasonable compensation of all
Directors for services to the corporation as directors, officers or otherwise.
The authority vested in the Board of Directors by this Article XI shall
include, in addition to the authority to establish salaries, the authority to
establish the payment of bonuses, stock options and pension and profit-sharing
plans.
ARTICLE XII
No holder of any of the shares of the capital stock of the corporation
shall be entitled as of right to purchase or to subscribe for any unissued stock
of any class, or any additional shares of any class, whether presently or
hereinafter authorized, and also including without limitation, bonds,
certificates of indebtedness, debentures, or other securities convertible into
stock of the corporation or carrying any right to purchase stock of any class.
Such unissued stock, or additional authorized issue of any stock, or other
securities convertible into stock or carrying any right to purchase stock, may
be issued and disposed of, pursuant to resolutions of the Board of Directors, to
such persons, firms, corporations or associations and upon such terms as may be
deemed advisable by the Board of Directors in the exercise of its discretion.
The Corporation shall indemnify every person who was or is a party or is or
was threatened to be made a party to any action, suit or proceeding whether
civil, criminal, administrative or investigative by reason of the fact he is or
was a director, officer, employee, or agent, or is or was serving at the request
of the Corporation as a director, officer, employee, agent or trustee of another
corporation, partnership, joint venture, trust employee benefit plan or other
enterprise, against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement, actually and reasonably incurred by him in
connection with such action, suit or proceeding, (except in such cases involving
gross negligence or willful misconduct) in the performance of their duties, to
the full extent permitted by applicable law. Such indemnification may, in the
discretion of the Board of Directors, including advances of his expenses in
advance of final disposition subject to the provisions of applicable law. Such
right of indemnification shall not be exclusive of any right to which any
director, officer, employee, agent or controlling stockholder of the Corporation
may be entitled as a matter of law.
4
<PAGE> 7
The foregoing restated articles of incorporation which integrate the
original articles of incorporation of The Wackenhut Corporation and the
amendments thereto, without further modification, were duly adopted at a
Quarterly Meeting of the Board of Directors of the Corporation held on January
25, 1992 and duly adopted by the shareholders of the Corporation on April 24,
1992.
IN WITNESS WHEREOF, the undersigned President and Chief Operating Officer
and the Assistant Secretary of the Corporation have executed these Restated
Articles of Incorporation this 5th day of May, 1992.
/s/ RICHARD R. WACKENHUT
--------------------------------------
Richard R. Wackenhut
President and Chief
Operation Officer
/s/ JAMES P. ROWAN
--------------------------------------
James P. Rowan
Assistant Secretary
5
<PAGE> 8
CERTIFICATE
I, the undersigned Vice President and Assistant Secretary of The
Wackenhut Corporation, a Florida corporation (the "Corporation"), pursuant to
the provisions of Section 607.1007(4) of the Florida Business Corporation
Act, does certify as follows:
(a) The name of the Corporation is THE WACKENHUT CORPORATION.
(b) Article III of the Corporation's Articles of Incorporation is
amended to read as follows:
ARTICLE III
The maximum number of shares of stock that the Corporation
shall be authorized to issue shall be 30,000,000 shares which are to be
divided into two classes as follows:
20,000,000 shares of Common Stock, par value
$.10 per share; and
10,000,000 shares of Preferred Stock.
The Common Stock may be created and issued from time to time in
one or more series with voting rights for each series as determined by
the Board of Directors of the Corporation and set forth in the
resolution or resolutions providing for the creation and issuance of
the stock in such series. The Preferred Stock may be created and
issued from time to time in one or more series with such designations,
preferences, limitations, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as determined by the
Board of Directors of the Corporation and set forth in the resolution
or resolutions providing for the creation and issuance of the stock in
such series.
(c) The foregoing amendment to the Articles of Incorporation of the
Corporation was duly proposed by the Corporation's Board of Directors on
January 25, 1992 and approved by the Corporation's shareholders on April 24,
1992, pursuant to Section 607.1003 of the Florida Business Corporation Act.
The number of votes cast in favor of the amendment by the shareholders of the
Corporation was sufficient for approval of the amendment.
IN WITNESS WHEREOF, the undersigned has hereunto executed the
Certificate this 2nd day of November, 1992.
/s/ James P. Rowan
----------------------------------
James P. Rowan, Vice President and
Assistant Secretary
<PAGE> 9
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
THE WACKENHUT CORPORATION,
A FLORIDA CORPORATION
Pursuant to provisions of Section 607.1006 of the Florida Business
Corporation Act, The Wackenhut Corporation, a Florida corporation (the
"Corporation"), hereby adopts the following Articles of Amendment for the
purpose of amending the numbers, designations and classes of capital stock
which the Corporation is authorized to issue.
(a) The name of this corporation is The WACKENHUT CORPORATION.
(b) The following amendment was duly adopted by the Corporation's Board
of Directors pursuant to Section 607.1002 of the Florida Business Corporation
Act without shareholder action and shareholder action on this amendment was not
required. Article III of the Corporation's Articles of Incorporation is
amended to read as follows:
ARTICLE III
The maximum number of shares of stock that the Corporation shall be
authorized to issue shall be 30,000,000 shares which are to be divided
into two classes as follows:
20,000,000 shares of Common Stock, par value $0.10 per share,
of which 4,108,885 shares are authorized to be issuable as
Series A Common Stock and 4,108,885 shares are authorized to
be issuable as Series B Common Stock; and
10,000,000 shares of Preferred Stock.
The Common Stock may be created and issued from time to time in
one or more series with voting rights for each series as determined by
the Board of Directors of the Corporation and set forth in the
resolution or resolutions providing for the creation and issuance of
the stock in such series. The Preferred Stock may be created and
issued from time to time in one or more series with such designations,
preferences, limitations, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as determined by
the Board of Directors of the Corporation and set forth in the
resolution or resolutions providing for the creation and issuance of
the stock in such series.
<PAGE> 10
The Corporation has authorized the issuance of a series of
Common Stock consisting of 4,108,885 shares of voting Common Stock,
par value $.10 per share which shall be designated as the Series A
Common Stock. The Corporation has authorized the issuance of a series
of Common Stock consisting of 4,108,885 shares of non-voting Common
Stock, par value $.10 per share which shall be designated as the
Series B Common Stock. The Series A Common Stock and the Series B
Common Stock shall be identical in all respects except that the Series
B Common Stock shall have no right to vote.
(c) The foregoing amendment to the Articles of Incorporation of the
Corporation was duly adopted by the Corporation's Board of Directors on
October 31, 1992, pursuant to Section 607.1002 of the Florida Business
Corporation Act.
(d) In accordance with Section 607.0123 (1)(a) of the Florida Business
Corporation Act, this amendment shall be effective upon filing of these
Articles of Amendment by the Department of State of the State of Florida.
The undersigned President of the Corporation has executed these Articles of
Amendment this 31st day of October, 1992.
THE WACKENHUT CORPORATION,
a Florida corporation
By: /s/ R. R. Wackenhut
---------------------------------
Richard R. Wackenhut, President
and Director
2
<PAGE> 11
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
THE WACKENHUT CORPORATION,
a Florida Corporation
Pursuant to provisions of Section 607.1006 of the Florida Business
Corporation Act, The Wackenhut Corporation, a Florida corporation (the
"Corporation"), hereby adopts the following Articles of Amendment for the
purpose of amending the numbers, designations and classes of capital stock
which the Corporation is authorized to issue.
(a) The name of this corporation is THE WACKENHUT CORPORATION.
(b) The following amendment was duly adopted by the Corporation's Board of
Directors pursuant to Section 607.1002 of the Florida Business Corporation Act
without shareholder action and shareholder action on this amendment was not
required. Article III of the Corporation's Articles of Incorporation is amended
to read as follows:
ARTICLE III
The maximum number of shares of stock that the Corporation
shall be authorized to issue shall be 30,000,000 shares which are to
be divided into two classes as follows:
20,000,000 shares of Common Stock, par value $0.10 per
share, of which 4,108,885 shares are authorized to be issued as
Series A Common Stock and 4,133,885 shares are authorized to be
issued as Series B Common Stock; and
10,000,000 shares of Preferred Stock.
The Common Stock may be created and issued from time to time in
one or more series with voting rights for each series as determined by
the Board of Directors of the Corporation and set forth in the
resolution or resolutions providing for the creation and issuance of
the stock in such series. The Preferred Stock may be created and
issued from time to time in one or more series with such designations,
preferences, limitations, conversion rights, cumulative, relative,
participating, optional or other rights, including voting rights,
qualifications, limitations or restrictions thereof as determined by
the Board of Directors of the Corporation and set forth in the
resolution or resolutions providing for the creation and issuance of
the stock in such series.
<PAGE> 12
The Corporation has authorized the issuance of a series of
Common Stock consisting of 4,108,885 shares of voting Common Stock,
par value $.10 per share which shall be designated as the Series A
Common Stock. The Corporation has authorized the issuance of a series
of Common Stock consisting of 4,132,885 shares of non-voting Common
Stock, par value $.10 per share which shall be designated as the
Series B Common Stock. The Series A Common Stock and the Series B
Common Stock shall be identical in all respects except that the Series
B Common Stock shall have no right to vote.
(c) The foregoing amendment to the Articles of Incorporation of the
Corporation was duly authorized by the Corporation's Board of Directors on
April 24, 1993, pursuant to Section 607.1002 of the Florida Business
Corporation Act.
(d) In accordance with Section 607.0123(1)(a) of the Florida Business
Corporation Act, this amendment shall be effective upon filing of these
Articles of Amendment by the Department of State of the State of Florida.
The undersigned Chairman of the Board and Chief Executive Officer of the
Corporation has executed these Articles of Amendment this 17th day of June,
1993.
THE WACKENHUT CORPORATION,
a Florida corporation
By: /s/ G. R. WACKENHUT
---------------------------------
George R. Wackenhut, Chairman of
the Board and Chief Executive
Officer
2
<PAGE> 13
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
THE WACKENHUT CORPORATION,
a Florida Corporation
Pursuant to provisions of Section 607.1006 of the Florida Business
Corporation Act, The Wackenhut Corporation, a Florida corporation (the
"Corporation"), hereby adopts the following Articles of Amendment:
(a) The name of this corporation is THE WACKENHUT CORPORATION.
(b) The following amendment was duly adopted by the Corporation's Board of
Directors pursuant to Section 607.1002 of the Florida Business Corporation Act
without shareholder action and shareholder action on this amendment was not
required. Article III of the Corporation's Articles of Incorporation is amended
to read as follows:
ARTICLE III
The maximum number of shares of stock that the Corporation
shall be authorized to issue shall be 30,000,000 shares which are to
be divided into two classes as follows:
20,000,000 shares of Common Stock, par value $0.10 per share,
of which 4,108,885 shares are authorized to be issued as Series
A Common Stock and 6,420,000 shares are authorized to be issued
as Series B Common Stock; and
10,000,000 shares of Preferred Stock.
The Common Stock may be created and issued from time to time in one or more
series with voting rights for each series as determined by the Board of
Directors of the Corporation and set forth in the resolution or resolutions
providing for the creation and issuance of the stock in such series. The
Preferred Stock may be created and issued from time to time in one or more
series with such designations, preferences, limitations, conversion rights,
cumulative, relative, participating, optional or other rights, including voting
rights, qualifications, limitations or restrictions thereof as determined by the
Board of Directors of the Corporation and set forth in the resolution or
resolutions providing for the creation and issuance of the stock in such series.
<PAGE> 14
The Corporation has authorized the issuance of a series of Common
Stock consisting of 4,108,885 shares of voting Common Stock, par
value $.10 per share which shall be designated as the Series A Common
Stock. The Corporation has authorized the issuance of a series of
Common Stock consisting of 6,420,000 shares of non-voting Common
Stock, par value $.10 per share which shall be designated as the
Series B Common Stock. The Series A Common Stock and the Series B
Common Stock shall be identical in all respects except that the Series
B Common Stock shall have no right to vote.
(c) The foregoing amendment to the Articles of Incorporation of the
Corporation was duly authorized by the Corporation's Board of Directors on
April 29, 1995, pursuant to Section 607.1002 of the Florida Business
Corporation Act.
(d) In accordance with Section 607.0123 (1)(a) of the Florida Business
Corporation Act, this amendment shall be effective upon filing of these
Articles of Amendment with the Department of State of the State of Florida.
The undersigned officer of the Corporation has executed these Articles of
Amendment this 5th day of May, 1995.
THE WACKENHUT CORPORATION,
a Florida corporation
By: /s/ James P. Rowan
---------------------------------
Name: James P. Rowan
--------------------------------------
Title: Vice President
5
<PAGE> 15
ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
OF
THE WACKENHUT CORPORATION,
a Florida Corporation
Pursuant to provisions of Section 607.1006 of the Florida Business
Corporation Act, The Wackenhut Corporation, a Florida corporation (the
"Corporation"), hereby adopts the following Articles of Amendment:
(a) The name of this corporation is The Wackenhut Corporation.
(b) Article III of the Corporation's Articles of Incorporation is amended
to read as follows:
ARTICLE III
The maximum number of shares of stock that the Corporation shall be
authorized to issue shall be 60,000,000 shares which are to be divided into two
classes as follows:
50,000,000 shares of Common Stock, par value $0.10 per share, of which
3,858,885 shares are designated as Series A Common Stock and 46,141,115
shares are designated as Series B Common Stock; and
10,000,000 shares of Preferred Stock.
The Series A Common Stock and the Series B Common Stock may be issued
from time to time as determined by the Board of Directors of the Corporation.
The Series A Common Stock and the Series B Common Stock shall be identical in
all respects except that the Series B Common Stock shall have no right to vote.
The Preferred Stock may be created and issued from time to time in one or more
series with such designations, preferences, limitations, conversion rights,
cumulative, relative, participating, optional or other rights, including voting
rights, qualifications, limitations or restrictions thereof as determined by
the Board of Directors of the Corporation and set forth in the resolution or
resolutions providing for the creation and issuance of the stock in such
series. Shares of one class or series of the Company's capital stock may be
issued through a stock dividend or stock split on shares of another class or
series of the Company's capital stock.
(c) The foregoing amendment to the Articles of Incorporation of the
Corporation was duly authorized by the Corporation's Board of Directors on
April 30, 1996, and pursuant to Section of 607.1003 of the Florida Business
Corporation Act was recommended to the holders of the Corporation's Series A
Common Stock and Series B Common Stock in a Proxy Statement
<PAGE> 16
dated May 13, 1996. At a Special Meeting of Shareholders held on May 23, 1996,
the foregoing amendment was approved by the holders of the Series A Common
Stock and the Series B Common Stock, with each series voting separately, The
number of votes cast for the foregoing amendment by the holders of the Series A
Common Stock and the Series B Common Stock, with each series voting separately,
were sufficient for approval by each such series.
(d) In accordance with Section 607.0123 of the Florida Business Corporation
Act, this amendment shall be effective immediately upon filing with the Florida
Department of State.
The undersigned Vice President, General Counsel and Assistant Secretary
of the Corporation has executed these Articles of Amendment this 23rd day of
May, 1996.
THE WACKENHUT CORPORATION,
a Florida corporation
By: /s/ J. P. Rowan
---------------------------------
James P. Rowan
Vice President, General Counsel
and Assistant Secretary
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND STATEMENT OF INCOME AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 64,237
<SECURITIES> 13,641
<RECEIVABLES> 120,417<F1>
<ALLOWANCES> 1,796
<INVENTORY> 6,277
<CURRENT-ASSETS> 212,232<F2>
<PP&E> 32,818
<DEPRECIATION> 10,578
<TOTAL-ASSETS> 307,842
<CURRENT-LIABILITIES> 69,268
<BONDS> 8,012
0
0
<COMMON> 1,472
<OTHER-SE> 142,574
<TOTAL-LIABILITY-AND-EQUITY> 307,842<F3>
<SALES> 0
<TOTAL-REVENUES> 435,378
<CGS> 0
<TOTAL-COSTS> 429,594
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 766
<INTEREST-EXPENSE> 1,863
<INCOME-PRETAX> 6,086
<INCOME-TAX> 2,191
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,852<F4>
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.00
<FN>
<F1>IN JANUARY 1995, THE CORPORATION ENTERED INTO A THREE YEAR AGREEMENT TO SELL
UNDIVIDED FRACTIONAL INTEREST IN A POOL OF ELIGIBLE RECEIVABLES UP TO A MAXIMUM
OF $40,000 WHICH WAS INCREASED TO $50,000. AT JUNE 30, 1996, $2,000 HAD BEEN
SOLD AND IS INCLUDED AS A REDUCTION IN ACCOUNTS RECEIVABLE ON THIS SCHEDULE.
<F2>INCLUDES $21,301 OF OTHER CURRENT ASSETS.
<F3>INCLUDES $41,543 RESERVES FOR LOSSES OF CASUALTY REINSURANCE SUBSIDIARY,
$37,401 MINORITY INTEREST AND $7,582 OTHER LIABILITIES.
<F4>INCLUDES MINORITY INTEREST AND EQUITY INCOME OF FOREIGN AFFILIATES - NET OF
INCOME TAXES OF $1,750 AND $(707) RESPECTIVELY.
</FN>
</TABLE>
