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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 11-K

[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001

OR

[   ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to _______

Commission file number: 0-4466

Wackenhut Corrections Corporation
401(k) Retirement Plan

(Full title of the Plan)

Wackenhut Corrections Corporation

(Name of issuer of securities held pursuant to the Plan)

4200 Wackenhut Drive #100
Palm Beach Gardens, Florida 33410-4200

(Address of principal executive offices)

 

WACKENHUT CORRECTIONS CORPORATION
401(k) RETIREMENT PLAN

DECEMBER 31, 2001 AND 2000

 

WACKENHUT CORRECTIONS CORPORATION
401(k) RETIREMENT PLAN

DECEMBER 31, 2001 AND 2000

CONTENTS

         
    Page
   
Independent auditors’ report
     1  
 
Financial statements:
        
 
Statements of net assets available for plan benefits
     2  
 
Statement of changes in net assets available for plan benefits
     3  
 
Notes to financial statements
     4-8  
 
Supplemental information:
        
 
Schedule of assets held for investment purposes
     9  

 

INDEPENDENT AUDITORS’ REPORT

To the Trustees and the Savings Plan Committee
of Wackenhut Corrections Corporation
401(k) Retirement Plan:

We have audited the accompanying statement of net assets available for plan benefits of Wackenhut Corrections Corporation 401(k) Retirement Plan (the “Plan”) as of December 31, 2001 and the related statement of changes in net assets available for plan benefits for the year then ended. These financial statements and the schedule referred to below are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audit. The statement of net assets available for plan benefits as of December 31, 2000 was audited by other auditors whose report dated June 18, 2001 expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 2001 financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2001, and the changes in its net assets available for benefits for the year then ended in conformity with accounting principles generally accepted in the United States of America.

Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule of Assets Held for Investment Purposes is presented for purposes of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule has been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

Jaffe, Kaufman & Sarbey, LLC

Fort Lauderdale, Florida
June 20, 2002

 

WACKENHUT CORRECTIONS CORPORATION

401(k) RETIREMENT PLAN

Statements of Net Assets Available for Plan Benefits

December 31, 2001 and 2000

                   
      2001   2000
     
 
Investments
   $ 11,029,213     $ 7,724,131  
Employee contributions receivable
     248,186       297,513  
Employer contributions receivable
     82,330       103,533  
 
    
     
 
 
Net assets available for plan benefits
   $ 11,359,729     $ 8,125,177  
 
    
     
 

See notes to financial statements.

2

 

WACKENHUT CORRECTIONS CORPORATION
401(k) RETIREMENT PLAN
Statement of Changes in Net Assets Available for Plan Benefits

For the Year Ended December 31, 2001

         
Additions to net assets attributed to:
        
Investment income
   $ 203,371  
Contributions:
        
Employee contributions
     3,071,029  
Employer contributions
     1,073,033  
 
    
 
Total additions
     4,347,433  
 
    
 
Deductions from net assets attributed to:
        
Benefits paid to participants
     589,801  
Net depreciation in fair value of investments
     235,670  
Rollovers
     287,410  
 
    
 
Total deductions
     1,112,881  
 
    
 
Net increase
     3,234,552  
Net assets available for plan benefits:
        
Beginning of year
     8,125,177  
 
    
 
End of year
   $ 11,359,729  
 
    
 

See notes to financial statements.

3

 

WACKENHUT CORRECTIONS CORPORATION
401(k) RETIREMENT PLAN

Notes to Financial Statements

December 31, 2001 and 2000

1. DESCRIPTION OF PLAN

The following description of the Wackenhut Corrections Corporation 401(k) Retirement Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.

General:

The Plan provides benefits to all eligible employees of Wackenhut Corrections Corporation and its subsidiaries (the “Company”). The Plan, as amended, is a defined contribution plan commonly known as an Internal Revenue Code (“IRC”) section 401(k) profit sharing plan and is subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Company is the designated administrator of the Plan.

Although it has expressed no intention to do so, the Company retains the right to terminate the Plan. In the event of Plan termination, all amounts credited to participants’ accounts become fully vested subject to the requirements of ERISA. The Company also retains the right to amend the Plan.

Eligibility:

An employee age 18 or older is eligible to participate in the Plan on the first day of the calendar month following the date of employment. The Plan excludes highly compensated employees as defined by the IRC.

Contributions and Allocations:

The Plan permits tax-deferred contributions of 1% to 20% of a participant’s annual compensation, subject to certain Internal Revenue Service (“IRS”) limitations. Amounts contributed by participants are fully vested when made. The Plan allows for rollovers of vested contributions from previous employers’ qualified plans.

The Company may contribute to the Plan either annual or monthly matching contributions on behalf of participants who made elective deferrals during such period in an amount which shall be determined each plan year by the Company. The Company may at is discretion, designate a different matching contribution formula for participants at each separate work site, and/or participants with different job classifications. In order to be entitled to an allocation of the Company’s annual matching contribution, participants, as defined under the Plan, must be employed on the last day of the Plan year. Also, the Company, at its option, may make a basic contribution to the Plan each year.

Each participant’s account is credited with the participant’s contribution and allocations of the Company’s contributions and Plan earnings. Allocations are based on participant earnings or account balances as of the date of the allocation.

(continued)

4

 

WACKENHUT CORRECTIONS CORPORATION
401(k) RETIREMENT PLAN

Notes to Financial Statements (continued)

December 31, 2001 and 2000

1. DESCRIPTION OF PLAN (continued)

Vesting:

Participants who are employed at the Company’s Taft Correctional Institution and South Florida State Hospital facilities vest 100% immediately in the Company’s contributions. All other Plan participants vest in the Company’s contributions in accordance with the following schedule:

         
Years of Service   Vesting Percentage
 
Less than 1
     0 %
1
     20 %
2
     40 %
3
     60 %
4
     80 %
5 or more
     100 %

Additionally, Company contributions become fully vested upon normal retirement age, as defined by the Plan, death or termination of employment as a result of a total or permanent disability.

Payment of benefits:

Participants may elect to receive benefits in a lump-sum payment, a series of payments within one calendar year, a series of annual installments of approximately equal amount to be paid over a period of five to ten years, or may be used by the employee to purchase an immediate or deferred annuity. The amount of benefits paid will be determined by the balance in the employee’s Plan account at the date of retirement, termination, death or disability. Benefits are recorded when paid.

2. SUMMARY OF ACCOUNTING POLICIES

The following are significant accounting policies followed by the Plan:

Basis of accounting:

The Plan’s financial statements are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. Shares of registered investment companies are valued at quoted market prices which represent the net asset value of shares held by the Plan at year end. The Company stock is valued at its quoted market price on the last trading day of the year. Purchases and sales of investments are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts of assets and changes therein, and disclosures of contingent assets and liabilities. Accordingly, actual results may differ from those estimates.

5

 

WACKENHUT CORRECTIONS CORPORATION
401(k) RETIREMENT PLAN

Notes to Financial Statements (continued)

December 31, 2001 and 2000

3. INVESTMENTS

The Company has entered into an agreement whereby Mellon HR Solutions, formerly Dreyfus Trust Company, (the “Trustee”) has been appointed the trustee of the Plan’s assets. Under the terms of the agreement, the Trustee holds and invests the funds of the Plan subject to the direction of a designated investment committee. The Company is the Plan administrator and fiduciary.

All investments are carried at contract value or fair market value except for the Capital Preservation Fund, which is carried at cost and approximates fair market value.

The following presents individual investments that represent five percent or more of net assets available for plan benefits:

                 
    December 31,
   
Investments   2001   2000
 
 
Capital Preservation Fund, 2,864,269 and 1,963,991 shares, respectively
   $ 2,864,269     $ 1,963,991  
Dreyfus Appreciation Fund, 36,124 and 27,520 shares, respectively
     1,373,432       1,181,692  
Dreyfus Basic S&P 500 Stock Index Fund, 88,912 and 65,258 shares, respectively
     2,125,004       1,795,248  
Dreyfus Emerging Leaders Fund, 38,757 and 28,064 shares, respectively
     1,347,574       1,111,043  
Wackenhut Corrections Corporation Common Stock, 87,690 and 63,152 shares, respectively
     1,215,525       466,170  
Other (less than five percent)
     2,103,409       1,205,987  
 
    
     
 
 
   $ 11,029,213     $ 7,724,131  
 
    
     
 

During 2001, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) depreciated in value by a net amount of $235,670 as follows:

         
Decrease in mutual funds
   $ (702,295 )
Increase in common stock
     466,625  
 
    
 
Net decrease
   $ (235,670 )
 
    
 

4. COLLECTIVE TRUST

The Capital Preservation Fund is a collective investment trust that invests mainly in Guaranteed Investment Contracts (“GIC”). A GIC is a general obligation of an insurance company, which agrees to pay a guaranteed rate for the term of the contract and to return principal at maturity. This fund may also invest in repurchase agreements, private placements, certificates of deposit, commercial paper, shares of registered investment companies, bank investment contracts and corporate investment contracts.

(continued)

6

 

WACKENHUT CORRECTIONS CORPORATION
401(k) RETIREMENT PLAN

Notes to Financial Statements (continued)

December 31, 2001 and 2000

4. COLLECTIVE TRUST (continued)

The Capital Preservation Fund is fully benefit-responsive and in accordance with Statement of Position No. 94-4, “Reporting of Investment Contracts Held by Health and Welfare Benefit Plans and Defined Contribution Pension Plans” is recorded at contract value, which approximates fair value. Contract value represents contributions under the contract plus accrued interest. There are no reserves against contract value for credit risk of the issuers of the contracts or otherwise. The crediting interest rate and average effective yield on this account were 5.5% for 2001.

5. DERIVATIVES

Derivative financial instruments may be used by the Plan’s Capital Preservation Fund to rebalance the fixed income/equity allocation of the Plan’s portfolio and to hedge the currency risk component of the Plan’s foreign investments. Certain of the fixed income investment managers are permitted to use certain specified types of derivative instruments as part of their respective strategies. These strategies include the use of futures and options as substitutes for certain types of fixed income securities. Leveraging of the Plan’s assets and speculation are prohibited. Currency hedge positions are not permitted to exceed the level of exposure in the related Plan’s assets.

6. TAX STATUS

The Plan is based on a prototype plan established by the Trustee. The prototype plan received a favorable determination letter dated September 1, 1994 from the IRS. As of July 1, 1997, the Plan was amended and restated. Application for determination of its tax-exempt status from the IRS is pending. The Trustee and the Company’s management believe the Plan was designed and is operating in compliance with the applicable requirements of the IRC and, consequently, will qualify for favorable determination as a tax-exempt plan.

7. ADMINISTRATIVE EXPENSES

The Company performs certain services for the Plan for which no fee is charged. Additionally, audit and certain other administrative fees were paid by the Company on behalf of the Plan. Total fees and expenses paid by the Company totaled $37,542 during 2001.

7

 

WACKENHUT CORRECTIONS CORPORATION
401(k) RETIREMENT PLAN

Notes to Financial Statements (continued)

December 31, 2001 and 2000

8. FORFEITURES

Non-vested contributions which have been forfeited by employees due to retirement or termination of employment prior to achieving vested status are used to reduce future contributions by the Company. Forfeitures used to reduce employer contributions for the year ended December 31, 2001 totaled $28,752.

9. RELATED PARTY TRANSACTIONS

The Plan regularly invests in common trust funds and mutual funds managed by the Trustee. Therefore, these investments represent a party-in-interest to the Plan. These transactions are not considered prohibited transactions by statutory exemptions under ERISA regulations.

8

 

WACKENHUT CORRECTIONS CORPORATION
401(k) RETIREMENT PLAN

EIN #65-0043078

Schedule H, Part IV, Line 4i of Form 5500-

Schedule of Assets Held for Investment Purposes at End of Year

December 31, 2001

             
Identity of Issuer, Borrower, Lessor or       Current
Similar Party   Description of Investment   Value
 
 
*The Dreyfus Trust Company   Capital Preservation Fund   $ 2,864,269  
*The Dreyfus Trust Company   Dreyfus Appreciation Fund     1,373,432  
*The Dreyfus Trust Company   Dreyfus Basic S&P 500 Stock Index Fund     2,125,004  
*The Dreyfus Trust Company   Dreyfus Premier Balanced Fund     512,948  
*The Dreyfus Trust Company   Dreyfus Emerging Leaders Fund     1,347,574  
Franklin Templeton   Templeton Foreign Fund     468,294  
MAS Funds   MAS Midcap Value Fund     151,082  
PIMCO Funds Distributors, LLC   PIMCO Total Return Fund     484,291  
Janus Distributors, Inc.   Janus Olympus Fund     486,794  
*Wackenhut Corrections Corporation   Wackenhut Corrections Corporation Common Stock     1,215,525  
         
 
        $ 11,029,213  
         
 

*   Denotes a Party-in-Interest

9

 

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrators have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

     
    Wackenhut Correction Corporation
    Employees’ 401(k) and Retirement Plan
 
 
 
Date: June 28, 2002   /s/ John G. O’Rourke
   
    JOHN G. O’ROURKE
    Plan Administrator

10 





                                                                    EXHIBIT 23.1

                         Consent of Independent Auditors


As independent certified public accountants, we hereby consent to the
incorporation by reference of our report dated June 20, 2002 included in this
Form 11-K, into the Company's previously filed Registration Statements on Form
S-8 (Nos. 333-79817, 333-17265, 333-09981 and 333-09977).



Jaffe, Kaufman & Sarbey, LLC

Fort Lauderdale, Florida
June 27, 2002