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SECURITIES AND EXCHANGE COMMISSION

Form 10-K

Commission file number: 1-14260

Wackenhut Corrections Corporation

Registrant’s telephone number (including area code):

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

      Indicate by a 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 þ          No o

      Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     þ

      Indicate by a check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).     Yes þ          No o

      At June 30, 2002, the aggregate market value of the 9,236,620 shares of Common Stock held by non-affiliates of the registrant was $131,714,201. At March 10, 2003, there were outstanding 21,245,620 shares of Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

      Parts of the Registrant’s Proxy Statement for its 2003 Annual Meeting of Shareholders are incorporated by reference in Part III of this report.

EXHIBIT INDEX IS LOCATED ON PAGE 73

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PART I

Item 1.     Business

The Company

      Wackenhut Corrections Corporation (“the Company”), a 56% owned subsidiary of Group 4 Falck A/ S (“Group 4 Falck”), is an industry leader in the privatization of correctional facilities throughout the world. The Company was founded in 1984 as a division of The Wackenhut Corporation (“TWC”), a leading provider of professional security services. In 1986, the Company received its first contract, from the United States Immigration and Naturalization Service (the “INS”), to design, construct and manage a detention facility with a design capacity of 150 beds.

      On May 8, 2002, TWC consummated a merger (the “Merger”) with a wholly owned subsidiary of Group 4 Falck A/ S, a Danish multinational security and correctional services company. As a result of the Merger, Group 4 Falck has become the indirect beneficial owner of TWC’s 12 million shares in the Company. The Company’s common stock continues to trade on the New York Stock Exchange.

      As of December 29, 2002, the Company had 59 correctional, detention and healthcare facilities either under contract or award with an aggregate design capacity of 39,216 beds. At December 29, 2002, all 59 facilities were in operation. At December 29, 2002, the Company had outstanding written responses to Requests for Proposal (“RFPs”) for seven projects with an aggregate design capacity of 2,548 beds.

      The Company offers a comprehensive range of correctional and related institutional services to federal, state, local and overseas government agencies. Correctional services include the management of a broad spectrum of facilities, including male and female adult facilities; juvenile facilities; community corrections; work programs; prison industries; substance abuse treatment facilities; and mental health, geriatric and other special needs institutions. Other management contracts include psychiatric health care, electronic home monitoring, prisoner transportation, correctional health services, and facility maintenance. The Company has an in-house capability for the design of new facilities, and offers a full privatization package to government agencies, including financing of new projects. The Company believes that its experience in delivering governmental agencies high quality, cost-effective correctional and related services provides such agencies strong incentive to select the Company when renewing and awarding contracts.

      On November 1, 1998, the Company began management of the 325-bed South Florida State Hospital, representing a historic milestone for public sector mental health services and a significant diversification of the Company’s service offerings. In December 2000, the Company completed construction at the site of the new South Florida State Hospital and successfully moved all operations to the new facility. In January 2003, the Company’s initial five-year contract was extended for an additional five years.

      The Company has obtained and is pursuing development and management contracts for correctional and detention facilities outside the United States including facilities in Europe, Australia, New Zealand and South Africa.

      Through its wholly-owned subsidiary in Australia, Wackenhut Corrections Corporation Australia Pty Limited (“WCCA”), the Company manages four correctional centres, six immigration detention centres, two temporary detention centres and one correctional Health Care Services entity in Australia and one correctional center in New Zealand.

      In the United Kingdom, the Company formed two joint ventures to pursue construction and management contracts for privatized correctional and detention facilities. Premier Custodial Group Limited (“PCG”), a joint venture with Serco Limited, currently manages six correctional facilities, one immigration detention centre, two court escort contracts and two electronic monitoring services contracts. Under court escort contracts, a private company, on behalf of a governmental agency, transports prisoners between police stations, prisons and courts and is responsible for the custody of such prisoners during

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      In South Africa, the Company formed a joint venture to pursue construction and management contracts for privatized correctional and detention centers. South African Custodial Management (“SACM”), a joint venture with Kensani Holdings Pty Ltd and Fidelity Services Group Pty Ltd, currently manages a 3,024-bed correctional facility located in the Northern Province of South Africa.

      In the majority of contracts, the Company manages facilities owned or leased by a governmental agency. The agency may finance the construction of such facilities through various methods including, but not limited to, the following: (i) a one time general revenue appropriation by the governmental agency for the cost of the new facility; (ii) general obligation bonds that are secured by either a limited or unlimited tax levy by the issuing entity; or (iii) lease revenue bonds or certificates of participation secured by an annual lease payment that is subject to annual or bi-annual legislative appropriations. In some instances, the Company may be required to own and/or finance the facility. The construction of these facilities may be financed through various methods including, but not limited to the following: (i) funds from equity offerings of the Company’s stock; (ii) cash flows from operations; (iii) borrowings from banks or other institutions (which may or may not be subject to government guarantees in the event of contract termination); or (iv) lease arrangements with third parties.

      The Company was incorporated in Florida in April, 1988. The Company’s principal executive offices are located at 4200 Wackenhut Drive #100, Palm Beach Gardens, Florida 33410-4243, and its telephone number is (561) 622-5656.

      See the Company’s Consolidated Financial Statements and Notes to Consolidated Financial Statements included herein for financial information regarding domestic and international operations.

Certain Factors That May Affect Future Results

      Prospective investors should carefully consider the following factors that may affect future results, together with the other information contained in this Annual Report on Form 10-K, in evaluating the Company and its business before purchasing its securities. In particular, prospective investors should note that this Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and that actual results could differ materially from those contemplated by such statements. See “Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995” below. The factors listed below represent certain important factors the Company believes could cause such results to differ. These factors are not intended to represent a complete list of the general or specific risks that may affect the Company. It should be recognized that other risks may be significant, presently or in the future, and the risks set forth below may affect the Company to a greater extent than indicated.

      Revenue and Profit Growth Dependent on Expansion. The Company’s growth will depend to a significant degree upon its ability to obtain additional construction and management contracts and to retain existing management contracts. The Company’s growth is generally dependent on the construction and management of new correctional and detention facilities, since contracts to manage existing public facilities are not typically offered to private operators. The rate of construction of new facilities and, therefore, the Company’s potential for growth will depend on a number of factors, including crime rates and sentencing patterns in jurisdictions in which the Company operates, governmental and public acceptance of the concept of privatization, the number of facilities available for privatization, and the Company’s ability to

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      Contracts Subject to Renewal. Thirty-three contracts are subject to renewal in 2003. These contracts represented 54% of the Company’s 2002 revenue. Management believes the Company will be successful in the renegotiation of these contracts; however, there can be no assurance that the Company will be able to renew these contracts.

      Possible Fluctuations in Occupancy Levels. A substantial portion of the Company’s revenues are generated under facility management contracts that specify per diem payments based upon occupancy rates (some of which provide guaranteed minimum occupancy levels), while a substantial portion of the Company’s cost structure is fixed. Under a per diem rate structure, a decrease in occupancy rates could cause a decrease in revenue and profitability. Average facility occupancy rates were approximately 97% in Fiscal 2002 and Fiscal 2001; however, there can be no assurance that occupancy rates will not decrease below these percentages in the future. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included herein.

      Reliance Upon Government Appropriations for Payment Under Awarded Contracts. The Company’s facility management contracts are subject to either annual or bi-annual legislative appropriations. A failure by a governmental agency to receive such appropriations could result in termination of the contract by such agency or a reduction of the management fee payable to the Company. In addition, even if funds are appropriated, delays in payments may occur which could negatively affect the Company’s cash flow. In addition, in certain cases the development and construction of facilities to be managed by the Company are also subject to obtaining construction financing. Such financing may be obtained through a variety of means, including without limitation, sale of tax-exempt or taxable bonds or other obligations or direct governmental appropriation. The sale of tax-exempt or taxable bonds or other obligations may be adversely affected by changes in applicable tax laws or adverse changes in the market for tax-exempt or taxable bonds or other obligations. See “Business — Facility Overview.”

      Governmental Regulation. The Company’s business is highly regulated by a variety of governmental agencies with oversight authority. For example, a contracting agency may assign full-time, on-site personnel to a facility to monitor the Company’s compliance with contract terms and applicable regulations. Failure by the Company to comply with such contract terms or regulations could expose it to substantial penalties or contract termination. In addition, changes in existing regulations could require the Company to substantially modify the manner in which it conducts business and, therefore, could have a material adverse effect on the Company. See “Business — Business Regulations and Legal Considerations.”

      Limited Acceptance of Private Prison Operation. Management of correctional and detention facilities by private entities has not achieved complete acceptance by either governments or the public. Some governmental agencies have limitations on their right to delegate their traditional management responsibilities for correctional and detention facilities to private companies and further legislative changes or prohibitions could occur that further impact these limits. The operation of correctional and detention facilities by private entities is a relatively new concept and is not widely accepted by the public and has encountered resistance from certain groups, such as labor unions, local sheriffs’ departments, and groups that believe that correctional and detention facility operations should only be conducted by governmental agencies. Moreover, changes in dominant political parties in any of the markets in which the Company operates could result in significant changes to previously established views of privatization in such markets. See “Business — Marketing.”

      Community Opposition to Facility Location. The Company’s success in obtaining new awards and contracts sometimes depends, in part, upon its ability to locate land that can be leased or acquired, on

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      Potential Legal Liability. The Company’s management of correctional and detention facilities exposes it to potential third-party claims or litigation by prisoners or other persons for personal injury or other damage resulting from contact with Company-managed facilities, programs, personnel or prisoners, including damages arising from a prisoner’s escape or from a disturbance or riot at a Company-managed facility. In addition, the Company’s management contracts generally require the Company to indemnify the governmental agency against any damages to which the governmental agency may be subject in connection with such claims or litigation. The Company has an insurance program that provides coverage for certain liability risks faced by the Company, including accident and personal injury and bodily injury or property damage to a third party where the Company is found to be negligent. There can be no assurance, however, that the Company’s insurance will be adequate to cover all potential third-party claims. See “Business — Insurance.” In addition, the Company may from time to time be subjected to employment related litigation and medical malpractice claims that are not covered by insurance.

      Adverse Publicity. The Company’s business is subject to public scrutiny. An escape or disturbance at a Company-managed facility or another privately-managed facility may result in publicity adverse to the Company and the industry in which it operates, which could materially adversely affect the Company’s business.

      Reliance of Company on TWC for Certain Services. The Company has historically been reliant upon TWC for various services including payroll, tax, data processing, auditing, treasury, cash management, insurance, information technology and human resource services. During the year the Company developed the internal support structure to internally perform all functions with the exception of information technology support services. The Company and TWC have an agreement under which TWC has agreed to continue to provide information technology support services, as deemed necessary, to the Company in return for payment by the Company of a fixed annual fee.

      Inflation. The Company’s largest facility management expense is personnel costs. Most of the Company’s facility management contracts provide for payments to the Company of either fixed management fees or fees that increase by only small amounts during their terms. If, due to inflation or other causes, the Company must increase the wages and salaries of its employees at rates faster than increases, if any, in management fees, then the Company’s profitability would be adversely affected. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Inflation” included herein.

      Economic Risks Associated With Development Activities. When the Company is engaged to perform construction and design services for a facility, the Company typically acts as the primary contractor and subcontracts with other companies who act as the general contractors. As primary contractor, the Company is subject to the various risks of construction (including, without limitation, shortages of labor and materials, work stoppages, labor disputes and weather interference) which could cause construction delays, and the Company is subject to the risk that the general contractor will be unable to complete construction at the budgeted costs or be unable to fund any excess construction costs, despite the fact that the Company requires its general contractor to post construction bonds and insurance. Under such contracts, the Company is ultimately liable for all late delivery penalties and cost overruns. See

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      Facility Lease Liability. The Company currently leases fifteen of the facilities that it manages. The leases for fourteen of these facilities do not terminate upon the completion of the management contracts. If a management contract for such a facility is completed and not renewed, or is terminated, the Company would be obligated to continue to make lease payments until expiration of the facility lease, even though it no longer would receive management fees under such contract and may be unable to obtain an additional contract for the use of the facility.

      Control of Company. As a result of the Merger, Group 4 Falck is the indirect beneficial owner of 12 million shares, or approximately 56%, of the issued and outstanding voting common stock of the Company.

      Due to certain provisions of Florida law, as part of the Merger, Group 4 Falck and TWC requested that the Company’s Board of Directors approve the Merger. In response to this request, the Company’s Board of Directors formed a Special Independent Committee to investigate and evaluate the Merger. The Special Independent Committee determined that, as a prerequisite to recommending that the Company’s Board of Directors approve the Merger, it was advisable for the Company to enter into an agreement with Group 4 Falck and TWC to govern the relationship between the Company, Group 4 Falck and TWC following the consummation of the Merger (the “Agreement”). After negotiations between the Company’s Special Independent Committee and Group 4 Falck and TWC, the Agreement was entered into by the Company, Group 4 Falck and TWC on March 8, 2002.

      The Agreement provides, among other things, that (1) for a period of three years following the Merger, the Board of Directors of the Company will consist of nine members, five of which will be independent directors, two of which will be Company officers and two of which will be Group 4 Falck representatives, (2) during the one year period following the Merger, the Nominating and Compensation Committee of the Company’s Board of Directors will consist of three members, two of which will be independent directors and one of which will be a Company director nominated by Group 4 Falck, (modified in February 2003 to provide that all three members in the newly named Nominating and Governance Committee are to be independent directors) and (3) until such time as Group 4 Falck directly or indirectly owns less than 49% of the Company’s outstanding common stock, (i) neither Group 4 Falck nor TWC will engage in the business of managing or operating prison, detention facility or mental health facility management businesses anywhere in the United States, and (ii) representatives of Group 4 Falck and TWC who serve on the Company’s Board of Directors will not have access to certain proprietary, confidential information of the Company, its subsidiaries or affiliates. The Agreement also requires that any purchases of the Company’s common stock by either Group 4 Falck or TWC during the three-year period following the Merger be made only at a price approved by a majority of the independent directors of the Company.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

      This report and the documents incorporated by referenced herein contain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. “Forward-looking” statements are any statements that are not based on historical information. Words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks”, “estimates”, and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (“Future Factors”), which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Future Factors include, but are not limited to, (1) the Company’s ability to timely build and/or open facilities as planned, profitably manage such facilities and successfully integrate such facilities into the Company

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Facilities

      The following table summarizes certain information with respect to facilities currently under management contract or award for management by the Company (or a subsidiary or joint venture of the Company) at December 29, 2002.

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