1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ---------------------- Date of Report (Date of earliest event reported) July 23, 1997 INTERNATIONAL ALLIANCE SERVICES, INC. ------------------------------------- (Exact name of registrant as specified in its charter) Delaware 22-2769024 -------- ---------- (State of other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 0-25890 ------- (Commission File Number) 10055 Sweet Valley Drive Cleveland, Ohio 44125 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (216) 447-9000. --------------- 2 ITEM 2. Acquisition or Disposition of Assets Disposition of the RESI Companies --------------------------------- (i) General ------- Pursuant to a Share Purchase Agreement dated as of June 13, 1997 (the "U.S. Agreement") among Philip Environmental (Delaware), Inc. (the "Purchaser") and Republic Environmental Systems, Inc. ("RESI"), RESI sold all issued and outstanding shares of Republic Environmental Recycling, Inc., Republic Environmental Systems (Technical Services Group), Inc., Republic Environmental Systems (Pennsylvania), Inc., Republic Environmental Systems (Transportation Group), Inc., and Chem-Freight, Inc. (collectively and in combination with the Canadian subsidiaries, the "RESI Companies"). Pursuant to an Asset Purchase Agreement dated as of July 7, 1997 (the "Canadian Agreement") among Philip Enterprises, Inc. and RESI, RESI sold certain assets of Republic Environmental Systems (Fort Erie) Ltd., Republic Environmental Systems (Brantford) Ltd., and Republic Environmental Systems (Pickering) Ltd. At closing under the U.S. Agreement, RESI received $8,000,000 in cash and two promissory notes in the amount of $8,000,000 and $1,000,000 due July 23, 1998 and July 23, 1999, respectively, as set forth in the Guaranty Agreement dated July 23, 1997. At closing under the Canadian Agreement, RESI received a promissory note in the amount of $7,000,000 subject to adjustment due July 23, 1999, as set forth in the Guaranty Agreement dated July 23, 1997. The aforementioned notes bear interest of 5% per annum. (ii) Description of the RESI Companies --------------------------------- The RESI Companies operate certain treatment, storage and disposal facilities ("TSD Facilities") and provide transportation, remediation and technical services and related engineering, consulting and analytical services pertaining to the management of hazardous and non-hazardous wastes. The assets of the RESI Companies include certain trade receivables, inventories, certain prepaid expenses and owned or leased real estate property, vehicles and machinery and equipment. Certain Canadian assets were excluded from the sale of the Canadian subsidiaries in accordance with the Asset Purchase Agreement. 3 ITEM 7. Financial Statements and Exhibits. (a) Proforma Financial Information ------------------------------ Set forth below are the following unaudited proforma financial statements: 1. Proforma Condensed Consolidated Balance Sheet as of June 30, 1997 2. Proforma Condensed Consolidated Statement of Income for Six Months Ended June 30, 1997. 3. Proforma Condensed Consolidated Statement of Income for the Year Ended December 31, 1996. 4. Notes to Proforma Condensed Consolidated Financial Statements. (b) Exhibits. -------- 2.1 Asset Purchase Agreement, dated as of July 7, 1997, by and among Republic Environmental Systems (Fort Erie) Ltd., Republic Environmental Systems (Brantford) Ltd., Republic Environmental Systems (Pickering) Ltd., Philip Enterprises Inc. and Republic Environmental Systems, inc. (filed as Exhibit 2.1 to the company's Report on Form 8-K dated July 23, 1997 and incorporated herein by reference). 2.2 Share Purchase Agreement, dated as of July 13, 1997, by and among Philip Environmental (Delaware), Inc., Republic Environmental Systems, Inc., Republic Environmental Systems (Pennsylvania), Inc., Republic Environmental Systems (Transportation Group), Inc. and Chem-Freight, Inc. (filed as Exhibit 2.2 to the Company's Report on Form 8-K dated July 23, 1997 and incorporated herein by reference). 4 PROFORMA CONDENSED FINANCIAL STATEMENTS The following unaudited Proforma Condensed Consolidated Statement of Income for the six months ended June 30, 1997 and the year ended December 31, 1996 and the unaudited Proforma Condensed Consolidated Balance Sheet at June 30, 1997 were prepared to illustrate the estimated effects on International Alliance Services, Inc. ("the Company") as of the disposition of the RESI Companies. The Proforma Condensed Consolidated Financial Statements have been presented for informational purposes only and do not purport to indicate what the Company's results of operations or financial position would have been if the transaction had in fact occurred on the dates indicated or to project the Company's results of operations for any future period or any future date. The unaudited proforma adjustments are based upon available information and upon certain assumptions stated in the notes thereto that the Company believes are reasonable. The Proforma Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements of the Company and the notes thereto included in the Company's 1996 Annual report on Form 10-K. 5 International Alliance Services, Inc. Unaudited Pro Forma Condensed Consolidated Balance Sheet (In Thousands) June 30, 1997 --------------------------------------------------------- Pro Forma Pro Forma Consolidated (a) Adjustments Consolidated ---------------- ----------- ------------ Investments Fixed maturities held to maturity, at amortized cost $ 15,013 $ 15,013 Securities available for sale, at fair value: Fixed maturities 43,540 43,540 Equity securities 8,725 8,725 Mortgage loans 3,684 3,684 Short-term investments 1,015 1,015 --------- --------- Total investments 71,977 71,977 Cash and cash equivalents 27,994 $ 8,000 (c) 29,261 (6,733) (d) Accounts receivable, net 18,238 18,238 Excess of cost over net assets of business acquired, net 41,443 41,443 Net assets held for disposal 22,286 (20,817) (b) 1,469 Other assets 30,207 16,000 (c) 46,207 --------- --------- --------- $ 212,145 $ (3,550) $ 208,595 ========= ========= ========= TOTAL ASSETS Losses and loss expenses payable $ 43,987 $ 43,987 Unearned premiums 19,796 19,796 Notes payable and capitalized leases 6,733 $ (6,733) (d) -- Income taxes 4,235 65 (f) 4,300 Accrued expenses 4,527 2,994 (e) 7,521 Other liabilities 15,272 15,272 --------- ---------- --------- $ 94,550 $ (3,674) $ 90,876 --------- ---------- --------- TOTAL LIABILITIES Common stock $ 375 $ 375 Additional paid-in capital 105,001 105,001 Retained earnings 10,460 $ 124 10,584 Net unrealized appreciation of investments, net 1,759 1,759 --------- --------- --------- TOTAL SHAREHOLDERS' EQUITY 117,595 124 117,719 --------- --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 212,145 $ (3,550) $ 208,595 ========= ========= ========= Notes to Pro Forma Condensed Consolidated Balance Sheet at June 30, 1997. (unaudited) <FN> (a) Derived from unaudited consolidated financial statements at June 30, 1997. (b) Represents the net effect of the sale transaction to Philip Environmental (Delaware), Inc. as derived from the unaudited financial statements of the RESI Companies. (c) Represents proceeds received from Philip Environmental (Delaware), Inc. in accordance with the U.S. Agreement and the Canadian Agreement. (d) Represents the utilization of sale proceeds to pay down current and long term debt including notes payable. (e) To record a reserve for severance and professional fees associated with the sale of the RESI Companies. (f) To record tax benefit related to interest on debt paid off. 6 International Alliance Services, Inc. Unaudited Pro Forma Condensed Consolidated Statement of Income For the Six Months Ended June 30, 1997 (In Thousands) Pro Forma Pro Forma Consolidated (a) Adjustments Consolidated ---------------- ----------- ------------ Revenues $ 37,384 $ 37,384 Expenses: Operating expenses 16,524 $ (189)(b) 16,335 Losses and loss adjustment expenses 9,423 9,423 Policy acquisition expenses 5,345 5,345 -------- -------- -------- Total expenses 31,292 (189) 31,103 Income from continuing operations before Income tax expense 6,092 189 6,281 Income tax expense 1,750 $ 65 (c) 1,815 -------- -------- -------- Income from Continuing Operations $ 4,342 $ 124 $ 4,466 ======== ======== ======== Earnings per share Primary and Fully Diluted $ .11 $ .13 Weighted Average Shares 51,329 51,329 Notes to Pro Forma Condensed Consolidated Statement of Operations for the Six Months ended June 30, 1997 (unaudited) <FN> (a) Derived from unaudited consolidated financial statements for the six months ended June 30, 1997. (b) Represents the reduction in interest expense resulting from the utilization of proceeds received from the sale of the RESI Companies to pay down current and long term debt including notes payable. (c) To record tax expense related to interest savings (b). 7 International Alliance Services, Inc. Unaudited Pro Forma Condensed Consolidated Statement of Income For the Year Ended December 31, 1996 (In Thousands) Pro Forma Pro Forma Consolidated (a) Adjustments Consolidated ---------------- ----------- ------------ Revenues $ 35,769 $ 35,769 Expenses: Operating expenses 4,384 $ (45)(b) 4,339 Losses and loss adjustment expenses 17,624 17,624 Policy acquisition expenses 7,699 7,699 -------- -------- -------- Total expenses 29,707 (45) 29,662 Income from continuing operations before Income tax expense 6,062 45 6,107 Income tax expense 1,640 15 (c) 1,655 -------- -------- -------- Income from Continuing Operations $ 4,422 $ 30 $ 4,452 ======== ======== ======== Earnings per share Primary $ .21 $ .21 Fully Diluted .16 .16 Weighted Average Shares 32,213 32,213 Notes to Pro Forma Condensed Consolidated Statement of Operations for the Year ended December 31, 1996 (unaudited) <FN> (a) Derived from unaudited consolidated financial statements for the twelve months ended December 31, 1996. (b) Represents the reduction in interest expense resulting from the utilization of proceeds received from the sale of the RESI Companies to pay down current and long term debt including notes payable. (c) To record tax expense related to interest savings (b). 8 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. INTERNATIONAL ALLIANCE SERVICES, INC. Date: October 3, 1997 By: /s/ Gregory J. Skoda -------------------------------- Gregory J. Skoda Executive Vice President and Chief Financial Officer 9 INDEX TO EXHIBIT EXHIBIT NUMBER EXHIBIT - ------ ------- 2.1 Asset Purchase Agreement, dated as of July 7, 1997, by and among Republic Environmental Systems (Fort Erie) Ltd., Republic Environmental Systems (Brantford) Ltd., Republic Environmental Systems (Pickering) Ltd., Philip Enterprises Inc. and Republic Environmental Systems, inc. (filed as Exhibit 2.1 to the company's Report on Form 8-K dated July 23, 1997 and incorporated herein by reference). 2.2 Share Purchase Agreement, dated as of June 13, 1997, by and among Philip Environmental (Delaware), Inc., Republic Environmental Systems, Inc., Republic Environmental Systems (Pennsylvania), Inc., Republic Environmental Systems (Transportation Group), Inc. and Chem-Freight, Inc. (filed as Exhibit 2.2 to the Company's Report on Form 8-K dated July 23, 1997 and incorporated herein by reference).