FOOL CONFERENCE CALL SYNOPSIS*
By Dale Wettlaufer (MF Raleigh)

Wackenhut Corrections Corp. <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: WHC)") else Response.Write("(NYSE: WHC)") end if %>
4200 Wackenhut Dr., Ste. 100
Palm Beach Gardens, FL 33410-4243
305-666-5656

ALEXANDRIA, Va., October 28, 1996 /FOOLWIRE/ -- Wackenhut Corrections Corporation reported on October 24 third quarter 1996 net income increased 102 percent to $2.4 million, from $1.2 million in the third quarter 1995. Earnings per share increased to 11 cents from 7.0 cents a year ago. Third quarter revenue increased 43 percent to $36.8 million from $25.8 million in the 1995 quarter.

Net income for the first nine months of the year was $5.7 million or 26 cents a share compared with $3.2 million or 18 cents a share during the first nine months of the previous year, an increase of 78 percent. Revenue for the nine months of the year was $99.6 million compared to $71.8 million during the first three quarters of last year, an increase of 39 percent. All per share data reflect the company's two-for-one stock split effected on June 4, 1996.

Dr. George C. Zoley, president and chief executive officer of Wackenhut Corrections, said, "I am extremely proud of our corporation's achievements in this third quarter as our financial results once again validate the sustained growth previously projected for our company. Total revenue-producing beds approached 12,000 beds at the close of the quarter compared to approximately 8,000 beds on January 1, 1996. This was achieved as the company brought the newly-constructed 1,000-bed state correctional facility in Holly Springs, Mississippi up to full capacity and the 1,000-bed correctional facility in Willacy County, Texas to full operation. These highly successfully startups have enabled us to continue to leverage our overhead and improve company margins."

"Also in the third quarter," Dr. Zoley continued, "we were selected by the state of California for the design, construction and management of three 500-bed state correctional facilities, and our joint venture company in the United Kingdom was selected by the Home Office for the design, construction, financing and management of a 500-bed correctional facility."

Revenues rose due to an increase in revenue-producing beds, which rose from under 8,000 to just under 12,000 beds this quarter. That increase has resulted from the opening of two 1,000-bed facilities in Texas, a 1,000 bed facility in Mississippi, and a 1,000 bed facility in Pennsylvania. Average occupancy was 97% in the quarter.

The company is making a $13 million investment in its New York Immigration and Naturalization Service (INS) facility. The composite per-diem for the facility is $125 per person. This is a 200 bed facility which will replace one that is half as large. The larger per-diem is attributable to higher labor costs and the small size of the facility, which skews the per-diem number.

In the balance of the year, the company will hover just under the 12,000 bed number achieved in the third quarter. The fourth quarter's financials, then, are projected to resemble the third quarter's.

In Q1 1997, several opening are expected to take place, including the New York City INS facility; a 500 bed Puerto Rico facility; a 1,300 facility in Palm Beach County, Florida; a 100 bed Australian facility; and hopefully late in the quarter, the 1,000 bed Travis County, Texas facility.

The company is on-target for opening all of these facilities in the coming fiscal year. Teams are in-place to open these facilities with what is hoped to be on-budget expenditures.

Wackenhut is pursuing 26 contracts covering several tens-of-thousands of beds. The company intends to maintain market share and will pursue aggressively these opportunities. These facilities will continue to be publicly-owned subcontracts. Some of the contracts will require corporate-assisted financing -- the company is prepared to compete on this basis, providing financing where needed by the client. The majority of contracts are state-owned, but the company sees higher profit potential in facilities where it can take an ownership interest. In addition, ownership offers the company greater latitude in deciding upon expansion of facilities.

COMMENTS ON FINANCIALS

Operating profit of $5 million was 13.6% of sales, which is the company's prototypical operating margin. As a result of filling previously-empty beds, the company has returned to this level of profit.

General and administrative (G&A) expense has remained relatively stable at 5.6% of revenues, vs. just under 7% last year. Headcount at corporate offices has been held down, giving leverage to the profit and loss statement.

Interest income was $455,000, representing $43 million in cash.

Equity income has increased due to a higher level of profitability with the company's English joint-venture partner.

QUESTION AND ANSWER SESSION

The composite average per-diem was $37.69, but that number is almost exclusively a management per-diem. Excluding interest expense and facility use cost, the pure per-diem is $35.20.

The company sees higher per-diem rates in owned facilities such as New York. When the company acquires facilities and applies facility use costs, the per-diem increases from the $30 range to the mid- to high-$40 range.

The Governor of New Mexico is behind the efforts at privatization in that state. The company is working toward successful completion of the project through the planning, financing, and legislative phases of that effort.

A little less than half of the $13 million intended for the New York facility has already been spent, which is reflected by the company's $43 million cash balance. So, more than $6.5 million to be spent on that facility will come out of that cash balance.

On facilities in which the company takes an ownership position, a prototypical financing arrangement would be comprised of 1/3 equity and 2/3 debt.

The management per-diem of the New Mexico facility is around $30. Aside from the management per-diem, there would be a state bond issue which would take care of debt service and add another $10 to the per-diem amount.

The company anticipates opening just under 4,000 beds in Q1 1997.

There are approximately 1.6 million people incarcerated in the United States at all government levels. 100,000 people are incarcerated the federal level and 1 million at the state level. The states will continue to be the largest customers of Wackenhut because the need is greatest at that level. Less than 4% of all prisons, measured per bed, have been privatized. Moving forward, the company believes that the level will increase significantly. Growth in prison beds has been running at 8% a year and 100,000 beds need to be added to capacity in the foreseeable future. The company further believes that 20% of that capacity addition will come from privatized corrections. Charles Thomas of the University of Florida has projected that 3.5 million people imprisoned by the year 2004 and that 10% of those prisoners would be incarcerated at privately managed facilities.

The company maintains a long-term goal of owning 25% of the facilities in which it participates.

Food service revenue in the quarter was 7%.

The company believes that the General Accounting Office report cited in Barron's during that quarter was erroneous. In addition, the federal government is proceeding with its first large-scale privatization.

The major component of operating expense is labor, which represents about 65-70% of operating costs.

The company was listed in a recent Forbes magazine survey of the 200 best-managed small companies (revenues less than $300 million). The company is the only member of its industry to be included on the list. Return on equity is the basis for the rankings.

There were no significant fees booked in the quarter.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.