HEADLINE: Wackenhut Corrections Declines Extension of Arkansas Contracts
DATELINE: PALM BEACH GARDENS, Fla., Feb. 15
BODY: Wackenhut Corrections Corporation (NYSE: WHC) today reported that it has informed the Arkansas Board of Correction and Community Punishment and the Arkansas Department of Correction that the Company would not consider a third extension of its management service contract for the Grimes and McPherson Correctional Facilities under the contracts' current terms and conditions. The existing WCC contracts are set to expire on June 30, 2001. Dr. George C. Zoley, Vice Chairman and Chief Executive Officer of Wackenhut Corrections, said, "We value our four-year relationship with the Arkansas Board of Correction and Community Punishment and the Arkansas Department of Correction. We continue however, to incur substantial financial losses due to the unexpectedly high cost of women's medical care, and the current contracts do not allow sufficient flexibility to adequately address these increased costs. Compounding the medical cost issue is the fact that staffing costs have also significantly increased due to a tight labor market and wage increases initiated by the State for its own correctional officers." Dr. Zoley went on to say that the Company does not expect the expiration of the current management contracts to have any impact on the Company's financial guidance for the fiscal year 2001. Both Arkansas prisons are owned by the State. "We are proud of our accomplishments, and we believe that the Grimes and McPherson Correctional Facilities are operating in accordance with our contract requirements and in line with the State's standards applicable to State-run facilities," Dr. Zoley said. "Over the last four months, we have made substantial operating improvements in facility sanitation, staffing levels, employee morale, maintenance and inmate programs/work details. Both facilities have attained re-accreditation status with the American Correctional Association and the National Commission on Correctional Health Care." Dr. Zoley noted, "Naturally, we hope that all of the employees who wish to continue their professional careers at the Grimes and McPherson Correctional Facilities will be able to do so. We will ensure a smooth transition of the facilities' operations to whichever organization is next selected to manage the facilities." In 1996, WCC was selected as the preferred contractor to design, construct and operate the Scott Grimes Correctional Facility, a 600-bed young adult male offender facility, and the adjacent 685-bed women's prison, Ronald McPherson Correctional Facility.