-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WKwrzH5SaSA+bux9yOdp5jR2e6Ewxv2Ut6bnlgzJnogkuWhdby9xeTZ1hpUMdt6/ fhywWFXfXoD/6ULanglrww== 0000950144-96-001937.txt : 19960508 0000950144-96-001937.hdr.sgml : 19960508 ACCESSION NUMBER: 0000950144-96-001937 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960507 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WACKENHUT CORP CENTRAL INDEX KEY: 0000104030 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-DETECTIVE, GUARD & ARMORED CAR SERVICES [7381] IRS NUMBER: 590857245 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05450 FILM NUMBER: 96557189 BUSINESS ADDRESS: STREET 1: 4200 WACKENHUT DRIVE CITY: PALM BEACH GARDEN STATE: FL ZIP: 33410 BUSINESS PHONE: 4026916429 MAIL ADDRESS: STREET 1: 4200 WACKENHUT DRIVE CITY: PALM BEACH GARDEN STATE: FL ZIP: 33410 10-Q 1 WACKENHUT CORPORATION FORM 10-Q 3-31-96 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended March 31, 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 1500 San Remo Avenue, Coral Gables, FL 33146 - -------------------------------------------------------------------------------- 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 May 2, 1996, 3,858,885 shares of Series A and 8,309,762 shares of Series B of the registrant's Common Stock were issued and outstanding. Page 1 of 15 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 thirteen weeks ended March 31, 1996 are not necessarily indicative of the results for the entire fiscal year ending December 29, 1996. Page 2 of 15 3 THE WACKENHUT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THIRTEEN WEEKS ENDED MARCH 31, 1996 AND APRIL 2, 1995 (IN THOUSANDS EXCEPT PER SHARE DATA) (UNAUDITED)
1996 1995 ------------------------------- REVENUES $ 212,474 $ 189,792 ------------------------------- OPERATING EXPENSES: Payroll and related taxes 153,403 141,608 Other operating expenses 56,258 45,129 Provision for relocation costs 750 - ------------------------------- 210,411 186,737 ------------------------------- OPERATING INCOME 2,063 3,055 ------------------------------- OTHER INCOME (EXPENSE): Interest expense (884) (737) Interest and investment income 1,055 325 ------------------------------- 171 (412) ------------------------------- INCOME BEFORE INCOME TAXES 2,234 2,643 Provision for income taxes 769 898 Minority interest, net of income taxes 827 371 Equity income of foreign affiliates, net of income taxes (307) (225) ------------------------------- NET INCOME $ 945 $ 1,599 =============================== EARNINGS PER SHARE $ 0.08 $ 0.13 ===============================
See notes to Consolidated Financial Statements. Page 3 of 15 4 THE WACKENHUT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 1996 AND DECEMBER 31, 1995 (IN THOUSANDS EXCEPT SHARE DATA) (UNAUDITED)
1996 1995 ASSETS ------------------------------ CURRENT ASSETS: Cash and cash equivalents $ 67,390 $ 20,185 Accounts receivable (net of allowances for doubtful accounts of $1,588 in 1996 and $1,268 in 1995) 73,472 77,121 Inventories, net 6,047 6,798 Other 18,060 18,058 ------------------------------ 164,969 122,162 ------------------------------ NOTES RECEIVABLE 10,435 10,540 ------------------------------ MARKETABLE SECURITIES AND CERTIFICATES OF DEPOSIT of casualty reinsurance subsidiary 14,681 5,774 ------------------------------ PROPERTY AND EQUIPMENT, at cost 31,204 29,132 Accumulated depreciation (10,191) (9,851) ------------------------------ 21,013 19,281 ------------------------------ DEFERRED TAX ASSET, NET 570 6,170 ------------------------------ OTHER ASSETS: Investment in and advances to foreign affiliates, at cost, including equity in undistributed earnings of $4,371 in 1996 and $4,098 in 1995 11,711 10,984 Other 36,199 23,016 ------------------------------ 47,910 34,000 ------------------------------ $ 259,578 $ 197,927 ==============================
(continued) Page 4 of 15 5 THE WACKENHUT CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 1996 AND DECEMBER 31, 1995 (IN THOUSANDS EXCEPT SHARE DATA) (UNAUDITED) (CONTINUED)
1996 1995 --------------------- LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 11 $ 11 Notes payable - 1,115 Accounts payable 14,686 20,223 Accrued payroll and related taxes 32,369 29,602 Accrued expenses 22,150 21,456 Deferred tax liability, net - 117 --------------------- 69,216 72,524 --------------------- RESERVES FOR LOSSES of casualty reinsurance subsidiary 42,087 40,118 --------------------- LONG-TERM DEBT 15,310 5,376 --------------------- OTHER 8,205 8,027 --------------------- MINORITY INTEREST 36,504 8,978 --------------------- 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 and outstanding in 1996 and 1995 386 386 Series B common stock, 8,309,762 issued and outstanding in 1996 and 8,272,887 in 1995 831 827 Additional paid-in capital 64,934 39,644 Retained earnings 25,937 25,790 Cumulative translation adjustment (3,671) (3,702) Unrealized loss on marketable securities (161) (41) --------------------- 88,256 62,904 --------------------- $259,578 $197,927 =====================
See notes to Consolidated Financial Statements. Page 5 of 15 6 THE WACKENHUT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THIRTEEN WEEKS ENDED MARCH 31, 1996 AND APRIL 2, 1995 (In Thousands) (UNAUDITED)
1996 1995 ------------------------- CASH FLOWS PROVIDED BY (USED IN): OPERATING ACTIVITIES Net Income $ 945 $ 1,599 Adjustments - Depreciation expense 886 1,153 Amortization expense 2,554 1,244 Provision for bad debts 524 276 Equity income, net of dividends (419) (287) Minority interests in net income 1,221 562 Other 460 (102) Changes in assets and liabilities, net of acquisitions and divestitures- (Increase) Decrease in assets: Accounts receivable (6,875) 957 Inventories (381) (560) Other current assets (2) (2,213) Marketable securities and certificates of deposit (36) (199) Other assets 48 (251) Deferred tax asset, net 5,600 1,269 Increase (Decrease) in liabilities: Accounts payable and accrued expenses (5,672) (1,549) Accrued payroll and related taxes 2,767 2,570 Deferred tax liability, net (117) (302) Reserve for losses of casualty reinsurance subsidiary 1,969 914 Other 178 628 ------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 3,650 5,709 ------------------------- CASH FLOWS PROVIDED BY (USED IN): INVESTING ACTIVITIES Net proceeds from public offering of subsidiary's common stock 51,776 - Net proceeds from exercise of stock options of subsidiary 174 246 Payments on notes receivable - 76 Payments for acquisitions (13,703) - Investment in and advances to foreign affiliates (454) (177) Capital expenditures (2,383) (503) Proceeds from sales/(payments for purchases) of marketable securities of casualty reinsurance subsidiary, net (8,991) 1,087 Deferred charge expenditures (1,115) (16) ------------------------- NET CASH PROVIDED BY INVESTING ACTIVITIES 25,304 713 -------------------------
(Continued) Page 6 of 15 7 THE WACKENHUT CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THIRTEEN WEEKS ENDED MARCH 31, 1996 AND APRIL 2, 1995 (IN THOUSANDS) (UNAUDITED) (CONTINUED)
1996 1995 --------------------- CASH FLOWS PROVIDED BY (USED IN): FINANCING ACTIVITIES Proceeds from issuance of debt 8,783 - Payments on debt (2) (35,931) Proceeds from the exercise of stock options 268 - Proceeds from sales of accounts receivable 10,000 28,940 Dividends paid (798) (730) ---------------------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 18,251 (7,721) ---------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 47,205 (1,299) CASH AND CASH EQUIVALENTS, AT BEGINNING OF PERIOD 20,185 13,808 ---------------------- CASH AND CASH EQUIVALENTS, AT END OF PERIOD $67,390 $ 12,509 ====================== SUPPLEMENTAL DISCLOSURES CASH PAID DURING THE PERIOD FOR: Interest $ 987 $ 773 Income taxes $ 45 $ 34
See notes to Consolidated Financial Statements. Page 7 of 15 8 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 with two financial institutions 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 March 31, 1996, $45,000,000 of accounts receivable had been sold under this agreement. The defined pool of accounts receivable sold at March 31, 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 Long-term debt consists of the following (in thousands):
MARCH December 31, 31, 1996 1995 ----------------------------- Revolving loan - 6.06% in 1996 and 6.20% 1995 $ 9,450 $ 1,400 Other debt principally related to WCC and international subsidiaries 5,871 3,987 ----------------------------- 15,321 5,387 Less - Current portion of long-term debt (11) (11) ----------------------------- $ 15,310 $ 5,376 =============================
4. WACKENHUT CORRECTIONS CORPORATION ("WCC") STOCK OFFERING In January 1996, WCC (a subsidiary of the Corporation) sold 2,300,000 shares of common stock in connection with a public offering at a price of $24.00 per share. Net proceeds of approximately $51,776,000 from the offering will be used for possible future acquisitions, capital investments in new facilities, working capital requirements and general corporate purposes. 5. CORRECTIONAL FOODSERVICE ACQUISITION In January 1996, the Corporation acquired the contracts and certain assets, of the Correctional Food Service Division of Service America Corporation for approximately $13.7 million. Proforma financial information is not presented, as the results of operations herein are not materially affected. Page 8 of 15 9 6. 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:
THIRTEEN WEEKS ENDED ---------------------------------- (THOUSANDS OF DOLLARS) MARCH 31, 1996 APRIL 2, 1995 ---------------- ---------------- REVENUES: Security-related and other support services $183,040 $166,318 Correctional services 29,434 23,474 -------- -------- Total revenues $212,474 $189,792 ======== ======== OPERATING INCOME: Security-related and other support services $ 1,094 $ 1,465 Correctional services 1,719 1,590 Provision for relocation costs (750) - -------- -------- Total operating income $ 2,063 $ 3,055 ======== ======== EQUITY INCOME (LOSS) OF FOREIGN AFFILIATES, NET OF TAXES: Security-related and other support services $ 265 $ 303 Correctional services 42 (78) -------- -------- Total equity income $ 307 $ 225 ======== ======== CAPITAL EXPENDITURES: Security-related and other support services $ 1,725 $ 60 Correctional services 658 443 -------- -------- Total capital expenditures $ 2,383 $ 503 ======== ======== DEPRECIATION AND AMORTIZATION EXPENSE: Security-related and other support services $ 2,604 $ 1,911 Correctional services 836 486 -------- -------- Total expenses $ 3,440 $ 2,397 ======== ======== IDENTIFIABLE ASSETS AT MARCH 31, 1996 AND DECEMBER 31, 1995: Security-related and other support services $166,414 $159,087 Correctional services 93,164 38,840 -------- -------- Total identifiable assets $259,578 $197,927 ======== ========
Page 9 of 15 10 DOMESTIC AND INTERNATIONAL OPERATIONS Non-U.S. operations of the Corporation and its subsidiaries are conducted primarily in South America 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: THIRTEEN WEEKS ENDED (THOUSANDS OF DOLLARS) MARCH 31, 1996 APRIL 2, 1995 ---------------- ---------------- REVENUES: Domestic operations $177,258 $158,611 International operations 35,216 31,181 -------- -------- Total revenues $212,474 $189,792 ======== ======== OPERATING INCOME: Domestic operations $ 2,312 $ 1,670 International operations 501 1,385 Provision for relocation costs (750) - -------- -------- Total operating income $ 2,063 $ 3,055 ======== ======== EQUITY INCOME OF FOREIGN AFFILIATES, NET OF TAXES: Domestic operations - - International operations $ 307 $ 225 -------- -------- Total equity income $ 307 $ 225 ======== ======== CAPITAL EXPENDITURES: Domestic operations $ 2,200 $ 425 International operations 183 78 -------- -------- Total capital expenditures $ 2,383 $ 503 ======== ======== DEPRECIATION AND AMORTIZATION EXPENSE: Domestic operations $ 2,650 $ 1,806 International operations 790 591 -------- -------- Total expenses $ 3,440 $ 2,397 ======== ======== IDENTIFIABLE ASSETS at March 31, 1996 and December 31, 1995 : Domestic operations $202,767 $141,431 International operations 56,811 56,496 -------- -------- Total identifiable assets $259,578 $197,927 ======== ========
Page 10 of 15 11 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 December 31, 1995 for further discussion and analysis of information pertaining to the Corporation's financial condition. COMPARISON OF THIRTEEN WEEKS ENDED MARCH 31, 1996 AND THIRTEEN WEEKS ENDED APRIL 2, 1995 The following discussion and analysis should be read in conjunction with the Corporation's consolidated financial statements and the notes thereto. COMPARISON OF THIRTEEN WEEKS ENDED MARCH 31, 1996 TO THIRTEEN WEEKS ENDED APRIL 2, 1995 REVENUES Consolidated revenues increased 12.0% to $212.5 million in the thirteen weeks ended March 31, 1996 (the "First Thirteen Weeks of 1996") from $189.8 million in the thirteen weeks ended April 2, 1995 (the "First Thirteen Weeks of 1995"). SERVICES BUSINESS Services Business revenues increased 10.1% to $183.0 million in the First Thirteen Weeks of 1996 from $166.3 million in the First Thirteen Weeks of 1995. Domestic Operations Group. Domestic Operations Group revenues increased 17.4% to $119.4 million in the First Thirteen Weeks of 1996 from $101.8 million in the First Thirteen Weeks of 1995. Within the Domestic Operations Group, revenues from the Security Services Division increased 12.1% to $89.0 million in the First Thirteen Weeks of 1996 from $79.4 million in the First Thirteen Weeks of 1995. The Security Services Division 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 14.9% during the First Thirteen Weeks of 1996 compared to the First Thirteen Weeks of 1995. Revenues of the Food Division almost doubled during the First Thirteen Weeks of 1996 to $15.8 million, compared to revenues of $8.3 million for the First Thirteen Weeks 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. Revenues from the Nuclear Division remained relatively unchanged from the First Thirteen Weeks of 1995, reflecting the maturation of the nuclear power industry and limited opportunities for growth in this market. Government Services Group. Government Services Group revenues (excluding WCC) decreased 4.6% to $39.5 million in the First Thirteen Weeks of 1996 from $41.4 million for the First Thirteen Weeks of 1995. Within the Government Services Group, revenues of Wackenhut Services, Inc. decreased 3.6% to $34.4 million in the First Thirteen Weeks of 1996 from $35.7 million in the First Thirteen Weeks of 1995, principally due to reductions in government funding for security at United States Department of Energy facilities. Management believes this reduction in funding will continue to affect Government Services Group revenues and operating income. Revenues of Wackenhut Educational Services, Inc. decreased $4.4 million to $1.3 million in the First Thirteen Weeks of 1996 due to the loss of two contracts in Fiscal 1995. However, revenues of Wackenhut of Australia Pty., Ltd., which was acquired in July of last year, amounted to $3.8 million in the First Thirteen Weeks of Fiscal 1996. International Group. International Group revenues remained relatively unchanged during the First Thirteen Weeks of 1996 compared to the same period in 1995, as a result of the deconsolidation in the fourth quarter of 1995 of the former subsidiary in Chile, which is now a minority-owned affiliate. Revenues of the Chilean operation for the First Thirteen Weeks of 1995 amounted to $4.2 million. Excluding the effect of the Chilean operation, revenues of the International Group increased approximately $3.7 million. CORRECTIONAL BUSINESS Correctional Business revenues increased 25.4% to $29.4 million in the First Thirteen Weeks of 1996 from $23.5 million in the First Thirteen Weeks of 1995. The increase was attributable principally to an increase in compensated resident days resulting from the opening of three domestic facilities (Moore Haven Correctional Facility in Florida, and John R. Lindsey Unit and Willacy County Unit in Texas) in the second half of Fiscal 1995 and in the First Thirteen Weeks of 1996. In addition, revenues of Australasian Correctional Management Pty Limited ("ACM") increased 11.1% or $713,000, resulting principally from the expansion of the Arthur Gorrie Correctional Centre in Wacol, Australia. Page 11 of 15 12 OPERATING INCOME Consolidated operating income, which included a $750,000 provision for relocation costs in the First Thirteen Weeks of 1996, decreased 32.5% to $2.1 million in the First Thirteen Weeks of 1996 from $3.1 million in the First Thirteen Weeks of 1995. Excluding relocation costs, consolidated operating income decreased 7.9%. SERVICES BUSINESS Operating income from the Services Business decreased 25.3% to $1.1 million in the First Thirteen Weeks of 1996 from $1.5 million in the First Thirteen Weeks of 1995. Domestic Operations Group. Domestic Operations Group operating income remained relatively unchanged at $2.9 million in the First Thirteen Weeks of 1996 compared to the First Thirteen Weeks of 1995. Increases in the profit contributions 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. Government Services Group. Government Services Group (excluding WCC) operating income increased 22.7% to $1.1 million in the First Thirteen Weeks of 1996 compared to $895,000 in the First Thirteen Weeks of 1995. The increase was principally due to recaptured allowable general and administrative expenses from a contract with the United States Department of Energy, and anticipated award fee revenues in other contracts with the United States Department of Energy. However, this increase was partially offset by operating losses from the new security services subsidiary in Australia, Wackenhut of Australia Pty., Ltd., which recorded an operating loss of approximately $500,000 in the First Thirteen Weeks of 1996. Currently, the Company 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 Australia. International Group. International Group operating income decreased 60% to $192,000 in the First Thirteen Weeks of 1996 from $480,000 for the First Thirteen Weeks of 1995. Increases in operating losses in Canada, Ecuador, Venezuela and the deconsolidation of operations in Chile offset increases in operating income in other countries. CORPORATE EXPENSES AND UNDERWRITING LOSSES The increase in corporate expenses and underwriting losses resulted principally from increases in variable general and administrative personnel-related costs principally attributed to the Headquarters relocation and general growth. CORRECTIONAL BUSINESS Operating income from the Correctional Business increased 8.1% to $1.7 million in the First Thirteen Weeks of 1996 from $1.6 million for the First Thirteen Weeks of 1995. The increase was principally attributable to the increase in domestic facility management services as a result of the opening of two facilities in the second half of 1995 and one facility in January 1996. OTHER INCOME/EXPENSE Other income was $171,000 in the First Thirteen Weeks of 1996 compared to other expense of $412,000 for the First Thirteen Weeks of 1995 due to two principal factors. First, interest and investment income increased $730,000 and included interest income of approximately $641,000 from the investment of the net proceeds of WCC's public offering in January 1996. Second, interest expense increased $147,000 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 Company principally to effect the foodservice acquisition, to begin improvement of its information systems, and to penetrate the Australian security-services market. Page 12 of 15 13 INCOME BEFORE INCOME TAXES Income before income taxes, which included a $750,000 provision for relocation costs in the First Thirteen Weeks of 1996, decreased 15.5% to $2.2 million from $2.6 million in the First Thirteen Weeks of 1995. The combined federal and state effective income tax rate was 34.4% for the First Thirteen Weeks of 1996 and 34.0% for the First Thirteen Weeks of 1995. The higher effective rate in the First Thirteen Weeks 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 $827,000 in the First Thirteen Weeks of 1996 from $371,000 in the First Thirteen Weeks 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 36.4% to $307,000 in the First Thirteen Weeks of 1996 from $225,000 in the First Thirteen Weeks 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 Company's equity income of the Chilean operations'. NET INCOME Net income decreased to $945,000 in the First Thirteen Weeks of 1996, or $0.08 per share, after the $750,000 provision for relocation costs ($461,000 net of income taxes), compared to $1.6 million or $0.13 per share for the First Thirteen Weeks of 1995. INFLATION Management believes that inflation has not had a material effect on the Corporation's results of operations during the past three fiscal years and the First Thirteen Weeks of 1996. However, many of the Corporation's service contracts provide for either fixed management fees or for fees that increase by only small amounts during the terms of the contracts. Since personnel costs represent the Corporation's largest expense, inflation could have a substantial adverse effect on the Corporation's results of operations in the future to the extent that wages and salaries increase at a faster rate than the per diem or fixed rates received by the Corporation for its services. LIQUIDITY AND CAPITAL RESOURCES The Corporation's principal sources of funds have been, and are expected to continue to be, cash flows from operations and borrowings under lines of credit provided by banks in the United States and abroad. Cash and cash equivalents amounted to $67.4 million at March 31, 1996 compared to $20.2 million at December 31, 1995. Cash and cash equivalents at March 31, 1996 includes $54.2 million of cash and cash equivalents of WCC which were not available for use by the Corporation. In addition, $1.5 million serves as collateral for certain obligations of the Corporation's captive reinsurance subsidiary. The Corporation has additional sources of liquidity available in the form of a $50 million revolving line of credit and a $50 million accounts receivable securitization facility. Additionally, at March 31, 1996, WCC had in place a $15 million revolving line of credit, and subsidiaries of the Corporation and WCC had in place credit agreements with banks providing Australian $10.5 million (approximately $8.2 million U.S. at March 31, 1996). WCC's $15 million revolving line of credit contains certain covenants that restrict WCC's ability to pay dividends to the Corporation. At March 31, 1996, the Corporation had $9.5 million outstanding under its $50 million revolving line of credit and $37.2 million outstanding in the form of letters of credit securing reserves of the captive reinsurance subsidiary and other corporate transactions. The unused portion of the revolving line of credit was $3.4 million at March 31, 1996. In addition, at March 31, 1996, the Corporation had sold $45 million of accounts receivable under its accounts receivable securitization facility. Under the terms of the accounts receivable securitization facility, the Corporation retains substantially the same risk of credit loss as if receivables had not been sold under this facility. At March 31, 1996, WCC and the subsidiaries of the Corporation and WCC had $5.9 million outstanding under their credit agreements. At March 31, 1996 and December 31, 1995, the ratio of total debt to total capitalization was 14.8% and 9.4%, respectively. WCC anticipates making cash investments in connection with future acquisitions. In addition, in line with a developing industry trend toward requiring private operators to make capital investments in facilities and to enter into direct financing arrangements in connection with the development of such facilities, WCC plans to use part of the net proceeds of $51.8 million from the January 1996 public offering of shares of its common stock to finance start-up costs, leasehold improvements and equity investments in facilities, if appropriate, in connection with undertaking new contracts. In connection with the award of one project, WCC recently has agreed to make an approximate $4.0 million equity investment in the project and to assist in the financing of the project by guaranteeing up to approximately $20.0 million of the permanent pass-through financing. The governmental entity that has contracted for the project is the ultimate pass-through source of payments and the recourse obligations of WCC and the subsidiary through which it will hold its investment in the project are substantially limited in type and likelihood. WCC and its subsidiary have made application to restructure the pass-through financing to a non-recourse basis. WCC has structured the transaction so that the financing for the project will be repaid from funds generated by the project. In addition, to the extent that WCC elects to receive dividends from its subsidiary, it will be required to arrange for a letter of credit in favor of the subsidiary to provide security for the payment of certain possible future tax obligations of the subsidiary. The letter of credit will not be issued any earlier than the second half of 1997 and, consequently, any financing arrangements with respect to such letter of credit have not been determined. The Corporation does not believe that the issuance of the letter of credit will have a material impact on its liquidity or capital resources or the liquidity or capital resources of WCC. Net cash generated by operating activities was $3.7 million for the First Thirteen Weeks of 1996 compared to $5.7 million in the First Thirteen Weeks of 1995. Cash provided by investing activities amounted to $25.3 million in the First Thirteen Weeks of 1996. Net proceeds from the public offering of WCC of $51.8 million in 1996 were partially offset by payments of $13.7 million for the acquisition of the contracts and certain assets of the Correctional Food Services Division of Service America Corporation. Capital expenditures of $2.4 million reflect the investment in leasehold improvements in the new headquarters building, purchases of equipment related to the provision of security-related services and investments in facilities by WCC. Cash provided by financing activities was $18.3 million for the First Thirteen Weeks of 1996. Cash proceeds under the Corporation's accounts receivable securitization facility with two banks amounted to $10.0 million. The Corporation increased by $8.8 million the amounts outstanding under its revolving line of credit with two banks. Cash dividends paid in the First Thirteen Weeks of 1996 amounted to $798,000. Current cash requirements consist of amounts needed for capital expenditures, increased working capital needs resulting from corporate growth, payment of liabilities incurred in the operation of the Corporation's business, the renovation or construction of correctional facilities by WCC, possible acquisitions and the payment of dividends. The Corporation continues to expand its domestic and international businesses and to pursue major contracts, some of which may require substantial initial cash outlays, which are partially or fully recoverable over the original term of the contract. In January 1996, WCC sold 2.3 million shares of its common stock at a price of $24.00 per share. Such proceeds were only available to WCC. The offering resulted in net proceeds to WCC of approximately $51.8 million. Management believes that cash on hand, internally generated cash flows and available lines of credit will be adequate to support currently planned business expansion and various obligations incurred in the operation of the Corporation's business, both on a near term and long term basis. Page 13 of 15 14 THE WACKENHUT CORPORATION AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued) PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On March 29, 1996, the Corporation settled a lawsuit alleging tortious interference with contract and other related torts by the Corporation ("Essex Company vs. Wackenhut Services, Inc.," Case No. 94-908 JC/DJS United States District Court for the District of New Mexico). The reserves previously provided by the Corporation were adequate to cover the exposure in this matter. 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 for any such claim or litigation. ITEM 2. CHANGES IN SECURITIES Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable ITEM 5. OTHER INFORMATION Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 4.5 - Amendment dated March 28, 1996 to the Revolving Credit and Reimbursement Agreement dated January 5, 1995 by and among The Wackenhut Corporation, NationsBank of Florida, N.A. (South), as successor to NationsBank of Florida, N.A., and Bank of America Illinois, as Lenders, and NationsBank, N.A. (South), as successor to NationsBank of Florida, N.A. as Agent. Exhibit 4.6 - Letter dated April 26, 1996 amending the Revolving Credit and Reimbursement Agreement dated January 5, 1995 by and among The Wackenhut Corporation, NationsBank, N.A. (South), as successor to NationsBank of Florida, N.A., and Bank of Illinois, as Lenders, and NationsBank, N.A. (South), and NationsBank, N.A. (South), as successor to NationsBank of Florida, N.A., as Agent. Exhibit 27 - Financial Data Schedule (for SEC use only) (b) Reports on Form 8-K - No reports on Form 8-K were filed by the Corporation during the first thirteen weeks of fiscal year ending December 29, 1996. Page 14 of 15 15 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 thirteen weeks ended March 31, 1996 to be signed on its behalf by the undersigned thereunto duly authorized. THE WACKENHUT CORPORATION /s/ Juan D. Miyar DATE: May 7, 1996 ----------------------------- By: Juan D. Miyar, Duly Authorized Officer and Chief Accounting Officer Page 15 of 15 EX-4.5 2 4-26-96 AMENDMENT TO REVOLVING CREDIT 1 EXHIBIT 4.5 AMENDMENT AGREEMENT NO. 1 TO REVOLVING CREDIT AND REIMBURSEMENT AGREEMENT THIS AMENDMENT AGREEMENT made and entered into as of the 28th day of March, 1996, by and among WACKENHUT CORPORATION, a Florida corporation (herein called the "Company"), the financial institutions who are signatories hereto (herein individually called the "Lender" and collectively the "Lenders"), and NATIONSBANK, NATIONAL ASSOCIATION (SOUTH) (successor by merger of NationsBank of Florida, National Association), as Agent for the Lenders (herein called the "Agent"). W I T N E S S E T H: WHEREAS, the Company, the Agent and the Lenders have entered into a Revolving Credit and Reimbursement Agreement dated January 5, 1995 (the "Agreement") whereby the Lenders party thereto have agreed to make loans to the Company and to provide Letters of Credit; and WHEREAS, the Subsidiaries of the Company have guaranteed payment of the Obligations pursuant to Guaranty Agreements dated January 5, 1995, all as described in the Agreement and other Loan Documents; and WHEREAS, the Company has requested that the Agreement be amended as hereinafter provided; NOW, THEREFORE, the Company, the Lenders and the Agent do hereby agree as follows: 1. The term "Agreement" as used herein and in Loan Documents shall mean the Agreement as hereby amended and modified. Unless the context otherwise requires, all terms used herein without definition shall have the definition provided therefor in the Agreement. 2. Subject to the conditions hereof, the Agreement is hereby amended, effective June 30, 1995, as follows: (a) Section 1.01 is hereby amended by adding the following two new definitions immediately following the definition of "Advance": "'Adjusted Consolidated Net Worth' means at any time as of which the amount thereof is to be determined, the sum of Consolidated Net Worth plus $5,351,000 (representing the after tax loss associated with the sale of the headquarters building located at 1500 San Remo Avenue, Coral Gables, Florida); 2 'Adjusted Total Capitalization' means the sum of (i) Consolidated Funded Debt plus (ii) Adjusted Consolidated Net Worth;" (b) The definition of "Applicable Interest Addition" in Section 1.01 is hereby amended by deleting the phrase "Total Capitalization" appearing therein and inserting in lieu thereof the phrase "Adjusted Total Capitalization". (c) Section 7.09 is amended in its entirety so that as amended it shall read as follows: "7.09 Trading Asset Ratio. The Company will at all times keep and maintain a ratio of (a) the sum of (1) unencumbered cash, net accounts receivable and net inventory of the Company and its Subsidiaries (other than WCC) all as determined in accordance with GAAP, plus, through June 30, 1996 but not thereafter, (2) the unpaid principal of the note in the original principal amount of $9,000,000 payable by ACP-Atrium CG, Ltd. Partnership held by the Company, provided such note is at all times secured by the headquarters building located at 1500 San Remo Avenue, Coral Gables, Florida, to (b) the sum of (1) Consolidated Funded Debt, excluding the Funded Debt of WCC, (2) the stated amount of outstanding unsecured Letters of Credit and (3) accounts payable of the Company and its Subsidiaries (other than WCC) all determined as of the last day of each fiscal quarter, of not less than 1.15 to 1.00." 3. In order to induce the Lenders to enter into this Amendment Agreement, the Company represents and warrants to the Lenders as follows: (a) The representations and warranties made by Company in Article VI of the Agreement are true on and as of the date hereto except that the financial statements referred to in Section 6.03(a) shall be those most recently furnished to each Lender pursuant to Section 7.17; (b) There has been no material change in the condition, financial or otherwise, of the Company and its Subsidiaries since the date of the most recent financial reports of the Company received by each Lender under Section 7.17 thereof, other than changes in the ordinary course of business, none of which has been a material adverse change; (c) The business and properties of the Company and its Subsidiaries are not, and since the date of the most recent financial report of the Company and its Subsidiaries received by each Lender under Section 7.17 thereof have not been adversely affected in any substantial way as the result of any fire, explosion, earthquake, accident, strike, lockout, 2 3 combination of workers, flood, embargo, riot, activities of armed forces, war or acts of God or the public enemy, or cancellation or loss of any major contracts; and (d) No event has occurred and no condition exists which, upon the consummation of the transaction contemplated hereby, constitutes a Default or an Event of Default on the part of the Company under the Agreement or the Notes either immediately or with the lapse of time or the giving of notice, or both. 4. Each of the Subsidiaries of the Company have joined in the execution of this Agreement for the purpose of consenting hereto and hereby reaffirm their respective guaranty of payment of the Obligations. 5. All instruments and documents incident to the consummation of the transactions contemplated hereby shall be satisfactory in form and substance to the Agent, the Lenders and their counsel; the Agent shall have received copies of all additional agreements, instruments and documents which they may reasonably request in connection therewith, including copies of resolutions of the Company authorizing the transactions contemplated by this Amendment Agreement, such documents, when appropriate, to be certified by appropriate corporate or governmental authorities; and all proceedings of the Company relating to the matters provided for herein shall be satisfactory to the Agent, the Lenders and their counsel. 6. This Amendment Agreement sets forth the entire understanding and agreement of the parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the parties relative to such subject matter. No promise, conditions, representation or warranty, express or implied, not herein set forth shall bind any party hereto, and no one of them has relied on any such promise, condition, representation or warranty. Each of the parties hereto acknowledges that, except as in this Amendment Agreement otherwise expressly stated, no representations, warranties or commitments, express or implied, have been made by any other party to the other. None of the terms or conditions of this Amendment Agreement may be changed, modified, waived or canceled orally or otherwise, except by writing, signed by all the parties hereto, specifying such change, modification, waiver or cancellation of such terms or conditions, or of any preceding or succeeding breach thereof. Except as hereby specifically amended, modified or supplemented, the Agreement and all of the other Loan Documents are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms. 3 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment Agreement to be duly executed by their duly authorized officers, all as of the day and year first above written. COMPANY: WITNESS: WACKENHUT CORPORATION /s/ Luis Barreto By: /s/ Terry P. Mayotte - ---------------------------- ----------------------------- Name: Terry P. Mayotte Luis Barreto - Treasury Mgr. Title: Assistant Treasurer - ---------------------------- GUARANTORS: WITNESS: WACKENHUT SERVICES, INCORPORATED /s/ Luis Barreto By: /s/ Terry P. Mayotte - ---------------------------- ----------------------------- Name: Terry P. Mayotte Luis Barreto - Treasury Mgr. Title: Assistant Treasurer - ---------------------------- WITNESS: WACKENHUT INTERNATIONAL, INCORPORATED /s/ Luis Barreto By: /s/ Terry P. Mayotte - ---------------------------- ----------------------------- Name: Terry P. Mayotte Luis Barreto - Treasury Mgr. Title: Assistant Treasurer - ---------------------------- WITNESS: AMERICAN GUARD AND ALERT, INCORPORATED /s/ Luis Barreto By: /s/ Terry P. Mayotte - ----------------------------- ---------------------------- Name: Terry P. Mayotte Luis Barreto - Treasury Mgr. Title: Assistant Treasurer - ---------------------------- WITNESS: WACKENHUT AIRLINE SERVICES, INC. /s/ Luis Barreto By: /s/ Terry P. Mayotte - ---------------------------- ---------------------------- Name: Terry P. Mayotte Luis Barreto - Treasury Mgr. Title: Assistant Treasurer - ---------------------------- 4 5 WITNESS: WACKENHUT EDUCATION SERVICES, INC. /s/ Luis Barreto By: /s/ Terry P. Mayotte - ---------------------------- ---------------------------- Name: Terry P. Mayotte Luis Barreto - Treasury Mgr. Title: Assistant Treasurer - ---------------------------- WITNESS: TITANIA INSURANCE COMPANY OF AMERICA /s/ Luis Barreto By: /s/ Terry P. Mayotte - ---------------------------- ---------------------------- Name: Terry P. Mayotte Luis Barreto - Treasury Mgr. Title: Assistant Treasurer - ---------------------------- WITNESS: TUHNEKCAW, INC. /s/ Luis Barreto By: /s/ Terry P. Mayotte - ---------------------------- ---------------------------- Name: Terry P. Mayotte Luis Barreto - Treasury Mgr. Title: Assistant Treasurer - ---------------------------- 5 6 NATIONSBANK, NATIONAL ASSOCIATION (SOUTH) in its capacity as Agent By: /s/ David E. Spalding ----------------------------- Name: David E. Spalding Title: AVP NATIONSBANK, NATIONAL ASSOCIATION (SOUTH) as Lender By: /s/ David E. Spalding ----------------------------- Name: David E. Spalding Title: AVP 6 7 BANK OF AMERICA ILLINOIS By: /s/ Laurence Schaad, Jr. ----------------------------- Name: Laurence Schaad, Jr. ----------------------------- Title: Vice President ----------------------------- 7 EX-4.6 3 3-28-96 AMENDMENT TO REVOLVING CREDIT 1 EXHIBIT 4.6 April 26, 1996 The Wackenhut Corporation 4200 Wackenhut Drive #100 Palm Beach Gardens, FL 33410-4243 Re: Revolving Credit and Reimbursement Agreement (the "Credit Agreement") dated as January 5, 1995 among the Wackenhut Corporation (the "Company"), NationsBank, National Association (South) as successor to NationsBank of Florida, National Association ("NationsBank"), as agent for the Lenders (in such capacity, the "Agent"), and NationsBank and Bank of America Illinois as lenders (collectively, the "Lenders"). Ladies and Gentlemen: Section 7.13(b) and Section 7.13(c) of the Credit Agreement each currently prohibits the sale, transfer or other disposition of the shares of stock of WCC (as defined in the Credit Agreement). You have requested that such provisions be amended, and the Agent and the Lenders agree effective as of January 2, 1996 (subject to the terms and conditions hereof) to amend such provision, as herein provided. 1. Subject to the terms and conditions hereof, (a) Section 7.13(b) is hereby amended to permit the sale of stock of WCC to the extent provided in Section 7.13(c) and (b) Section 7.13(c) of the Credit Agreement is hereby amended by deleting "69%" in line 6 thereof and substituting in lieu thereof "50.1%". 2. The company hereby represents and warrants that the Credit Agreement has been re-examined by the Company and that as of the date hereof: A. The representations and warranties made by the company in the Credit Agreement are true on and as of the date hereof; B. There has been no material adverse change in the condition, financial or otherwise, of the Company and its Subsidiaries since the date of the most recent consolidated financial statements of the Company and its Subsidiaries delivered to the Lender under Section 7.17 thereof; 2 C. The business and properties of the Company and its Subsidiaries are not, and since the date of the most recent consolidated financial statements of the Company and its Subsidiaries delivered to the Lender under Section 7.17 thereof; have not been, adversely affected in any substantial way as the result of any fire, explosion, earthquake, accident, strike, lockout, combination of workers, flood, embargo, riot, activities of armed forces, war or acts of God or the public enemy, or cancellation or loss of any major contracts; D. After giving effect to the amendment effected hereby, no condition exists which, upon the effectiveness of the amendment contemplated hereby, would constitute a Default or an Event of Default. 3. The amendment to the Credit Agreement effected hereby shall not be effective until the Agent shall have received four (4) original counterparts of this letter (each of which shall be deemed an original and which together shall constitute a single document) executed by the Agent, and consented to in writing by each of the Lenders, the Company and each of the Guarantors. 4. By their execution hereof, each of the Guarantors (i) consent to the amendment effected hereby and (ii) ratify and confirm that their respective obligations under the Guaranty Agreements remain in full force and effect. 5. The signatories hereto agree that from the effective date hereof, all references in any of the Loan Documents to the Credit Agreement shall mean and include the Credit Agreement as amended hereby. NATIONSBANK, NATIONAL ASSOCIATION (SOUTH) as agent By: /s/ Stephen Hanas ---------------------------- Name: Stephen Hanas ---------------------------- Title: Vice President ---------------------------- 3 WE CONSENT: LENDERS NATIONSBANK, NATIONAL ASSOCIATION (SOUTH) By: /s/ Stephen Hanas ---------------------------------- Name: Stephen Hanas ---------------------------------- Title: Vice President ---------------------------------- BANK OF AMERICA ILLIONIS By: /s/ Laurence Schaad, Jr. ---------------------------------- Name: Laurence Schaad, Jr. ---------------------------------- Title: Vice President ---------------------------------- WE CONSENT: COMPANY THE WACKENHUT CORPORATION By: /s/ Terry Mayotte ---------------------------------- Name: Terry Mayotte ---------------------------------- Title: Assistant Treasurer ---------------------------------- GUARANTORS WACKENHUT SERVICES, INCORPORATED WACKENHUT INTERNATIONAL, INCORPORATED AMERICAN GUARD AND ALERT, INCORPORATED WACKENHUT AIRLINE SERVICES, INC. WACKENHUT EDUCATION SERVICES, INC. TITANIA INSURANCE COMPANY OF AMERICA TUHNEKCAW, INC. By: /s/ Juan D. Miyar ------------------------------------- Name: Juan D. Miyar ------------------------------------- Title: Vice President, Corporate Controller ------------------------------------- EX-27 4 FINANCIAL DATA SCHEDULE
5 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 MARCH 31, 1996. 1,000 U.S. DOLLARS 3-MOS DEC-29-1996 JAN-01-1996 MAR-31-1996 1 67,390 14,681 73,472 1,588 6,047 164,969 31,204 10,191 259,578 69,216 15,310 0 0 1,217 87,039 259,578 0 212,474 0 210,411 0 444 884 2,234 769 0 0 0 0 945 0.08 0.00 IN JANUARY 1995, THE CORPORATION ENTERED INTO A $50,000,000 (AS AMENDED), THREE YEAR ACCOUNTS RECEIVABLE SECURITIZATION FACILITY AGREEMENT TO SELL UNDIVIDED FRACTONAL INTERESTS IN A POOL OF ELIGIBLE RECEIVABLES. AT MARCH 31, 1996, $45,000,000 HAD BEEN SOLD AND ARE INCLUDED AS A REDUCTION IN ACCOUNTS RECEIVABLE IN THIS SCHEDULE. INCLUDES $18,060 OF OTHER CURRENT ASSETS INCLUDES $42,087 RESERVE FOR LOSSES OF CASUALTY REINSURANCE SUBSIDIARY, $36,504 MINORITY INTEREST AND $8,205 OTHER LIABILITIES. INCLUDES MINORITY INTEREST AND EQUITY INCOME OF FOREIGN AFFILIATES - NET OF INCOME TAXES OF $827 AND (307) RESPECTIVELY
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