1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from Not Applicable to
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Commission file number 0-25890
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International Alliance Services, Inc.
- - -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 22-2769024
- - --------------------------------- -------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
10055 Sweet Valley Drive, Valley View, Ohio 44125
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(Address of Principal Executive Offices) (Zip Code)
(Registrant's Telephone Number, Including Area Code) 216-447-9000
---------------------------
NOT APPLICABLE
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Former Name, Former Address and Former Fiscal Year, if Changed since Last Report
Indicate by 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 proceeding 12 months, and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock:
Outstanding At
Class of Common Stock November 6, 1997
--------------------- ------------------
Par value $.01 per share 40,058,481
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Exhibit Index is on page 15 of this report.
Page 1 of 121 Pages
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INTERNATIONAL ALLIANCE SERVICE, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION: Page
Item 1 - Financial Statements
Consolidated Condensed Balance Sheets -
September 30, 1997 and December 31, 1996 3
Consolidated Condensed Statements of Income -
Three and Nine Months Ended September 30, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flow -
Nine Months Ended September 30, 1997 and 1996 5
Notes to the Consolidated Condensed Financial Statements 6-7
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-11
PART II. OTHER INFORMATION
Item 2 - Changes in Securities 12
Item 6 - Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit Index 15
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PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1 - FINANCIAL STATEMENTS
-----------------------------
INTERNATIONAL ALLIANCE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
SEPTEMBER 30, DECEMBER 31,
1997 1996
----------- ------------
(unaudited) (audited)
ASSETS
Investments:
Fixed maturities held to maturity,
at amortized cost $ 15,091 $ 15,481
Securities available for sale, at fair value:
Fixed maturities 46,520 35,471
Equity securities 8,158 9,213
Mortgage loans 3,684 3,685
Short-term investments 4,444 4,799
-------- --------
Total investments 77,897 68,649
Cash and cash equivalents 21,170 39,874
Accounts receivable, less allowance
for doubtful accounts of $1,113 and
$284, respectively 29,299 7,610
Excess of cost over net assets of business
acquired, net of accumulated amortization
of $706 and $33, respectively 55,397 6,048
Net assets held for disposal -- 22,999
Notes Receivable 16,151 --
Other assets 40,654 22,150
-------- --------
TOTAL ASSETS $240,568 $167,330
======== ========
LIABILITIES
Losses and loss expenses payable $ 49,272 $ 41,099
Unearned premiums 26,772 18,637
Notes payable and capitalized leases 5,196 3,211
Income taxes 7,242 1,994
Accrued expenses 9,818 5,355
Other liabilities 16,630 5,712
-------- --------
TOTAL LIABILITIES 114,930 76,008
-------- --------
SHAREHOLDERS' EQUITY
Common stock 394 338
Additional paid-in capital 109,544 80,446
Retained earnings 13,927 6,842
Net unrealized appreciation of investments
(net of tax) 1,773 3,696
-------- --------
TOTAL SHAREHOLDERS' EQUITY 125,638 91,322
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $240,568 $167,330
======== ========
See the accompanying notes to the Consolidated Condensed Financial Statements.
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INTERNATIONAL ALLIANCE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(In thousands, except per share data)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------------------------
1997 1996 1997 1996
--------- --------- --------- ---------
Revenues:
Business Services Fees and Commissions $ 15,550 $ 807 $ 33,482 $ 1,426
Specialty Insurance Services:
Premiums earned 10,371 7,110 26,791 19,607
Net investment income 507 894 3,135 2,523
Net realized gain on investments 992 499 3,026 1,098
Other income 54 79 157 1,401
-------- -------- -------- --------
Total revenues 27,474 9,389 66,591 26,055
Expenses:
Operating expenses 11,259 78 26,561 1,281
Loss and loss adjustment expenses 6,193 4,421 15,616 12,892
Policy acquisition expenses 2,741 2,016 7,082 5,423
General and Administrative expenses 1,227 -- 2,852 --
Depreciation and amortization expenses 416 172 1,372 255
Other expenses (income), net (97) 1,308 1,820 2,508
-------- ------- ------ -------
Total expenses 21,739 7,995 55,303 22,359
-------- ------- ------ -------
Income from continuing operations before
interest income and income tax expense 5,735 1,394 11,288 3,696
Interest income (expense), net of Specialty
Insurance Services 331 -- 870 --
-------- ------- ------ -------
Income from continuing operations before
income tax expense 6,066 1,394 12,158 3,696
Income tax expense 2,651 555 4,401 1,431
-------- ------- ------ -------
Income from continuing operations 3,415 839 7,757 2,265
Income (loss) from discontinued operations 50 -- (663)
-------- ------- ------ -------
Net income $ 3,465 $ 839 $ 7,094 $ 2,265
======== ======== ======== ========
Earnings per common and common share equivalents:
Primary and fully diluted:
Income from continuing operations $ .08 $ .04 $ .18 $ .12
Loss from discontinued operations -- -- (.01) --
-------- -------- -------- --------
Net income per share $ .08 $ .04 $ .17 $ .12
======== ======== ======== ========
Weighted average common and common share
equivalents, primary and fully diluted: 54,944 16,956 52,931 16,956
======== ======== ======== ========
See the accompanying notes to the Consolidated Condensed Financial Statements.
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INTERNATIONAL ALLIANCE SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1997 1996
-------- --------
(unaudited)
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 4,795 $ 9,231
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of fixed maturities, held to maturity (209) --
Purchases of fixed maturities, available for sale (13,572) (10,582)
Purchase of equity securities (2,714) (2,227)
Redemption of fixed maturities, held to maturity 600 --
Sale of fixed maturities, available for sale 2,644 7,909
Sale of equity securities 1,033 461
Principal receipts on mortgage loans 1 782
Change in short-term investments 355 (3,473)
Change in long-term investments -- 90
Business acquisitions, net of cash acquired (20,030) --
Sale of environmental services business 5,380 --
Acquisition of property and equipment (1,054) (129)
-------- --------
Net cash used in investing activities (27,566) (7,169)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from debt 1,931 --
Repayment of debt (4,278) (33)
Proceeds from stock issuances 6,414 --
Pre-merger dividends paid to parent -- (1,750)
Pre-merger capital contribution -- 446
-------- --------
Net cash provided by (used in) financing activities 4,067 (1,337)
-------- --------
Net (decrease) increase in cash and cash equivalents (18,704) 725
Cash and cash equivalents at beginning of period 39,874 2,694
-------- --------
Total cash and cash equivalents at end of period $ 21,170 $ 3,419
======== ========
SUPPLEMENTAL CASH FLOW DATA
Non cash amounts included in cash provided by operating activities:
Excess of cost over net assets acquired $ 23,645 $ --
Depreciation and amortization 8,454 1,985
See the accompanying notes to the Consolidated Condensed Financial Statements.
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INTERNATIONAL ALLIANCE SERVICES, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. GENERAL
In the opinion of management of International Alliance Services, Inc.
(the "Company"), the accompanying unaudited consolidated condensed
interim financial statements reflect all adjustments necessary to
present fairly the financial position of the Company as of September
30, 1997 and December 31, 1996 and the results of its operations and
cash flows for the periods ended September 30, 1997 and 1996. The
results of operations for such interim periods are not necessarily
indicative of the results for the full year. The 1996 consolidated
balance sheet was derived from the Company's audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31,
1996. Certain reclassifications have been made to the 1996 financial
statements to conform to the 1997 presentation.
2. CALCULATION OF EARNINGS PER COMMON AND COMMON SHARE EQUIVALENTS
Income from continuing operations for the three and nine months ended
September 30, 1997 was adjusted to reflect the effect of all interest
savings and benefits and the related tax effects under the modified
treasury stock method. The computation of fully diluted earnings per
share under the modified treasury stock method resulted in no
reportable dilution for the periods ended September 30, 1997.
Modifications to income were not required for the periods ended
September 30, 1996.
Three Months Ended Nine Months Ended
September 30, 1997 September 30, 1997
--------------------------- ---------------------------
Primary and Fully Diluted Primary and Fully Diluted
--------------------------- ---------------------------
(in thousands) (in thousands)
Income from continuing operations $ 3,415 $ 7,757
Interest expense reduction net of tax 79 196
Interest income net of tax 690 1,734
------- -------
Adjusted income from continuing operations 4,184 9,687
Income (loss) from discontinued operations 50 (663)
------- -------
Adjusted net income $ 4,234 $ 9,024
======= =======
The Company computed earnings per common and common share equivalents
under the modified treasury stock method as follows (in thousands):
Three Months Nine Months
Ended September 30, Ended September 30,
------------------ --------------------
1997 1996 1997 1996
---- ---- ---- ----
Primary and Fully Diluted:
Weighted average common shares 38,281 16,956 36,268 16,956
Additional stock equivalents less 20% limitation
on assumed repurchase 16,663 -- 16,663 --
------ ------ ------ -----
54,944 16,956 52,931 16,956
====== ====== ====== ======
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INTERNATIONAL ALLIANCE SERVICES, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
3. DISCONTINUED OPERATIONS
The Company sold the majority of its environmental services business
for cash of $8,000,000 and interest bearing notes of $16 million.
The remaining environmental operations of the Company were sold in
September 1997. Taken together, these transactions for cash and notes
approximated the net book value of the assets sold. The Company's
contingent liability is limited to $1.5 million in connection with
such divestitures. Management does not believe the Company will
experience a loss in connection with such contingencies.
The related results of operations reflected as discontinued operations
include the following (in thousands):
Three Months Ended Nine Months Ended
September 30, 1997 September 30, 1997
------------------ -------------------
Revenues $ 2,697 $ 18,785
======== ========
Loss before taxes $ 63 $ 979
Income tax (benefit) (113) (316)
-------- --------
Net income (loss) $ 50 $ (663)
======== ========
4. ACQUISITIONS
During the third quarter 1997, the Company acquired 100% of the stock
of St. James General Agency, Inc., Business Management Services, Inc.,
BMS Employee Benefits, Inc. ( collectively "BMS"), Valuation Counselors
Group, Inc., and certain of the business and assets in relation to the
Managed Care Workers' Compensation business of Anthem Insurance
Companies, Inc. for an aggregate of 1,601,553 shares of its common
stock and cash of $8,361,000. These acquisitions have been accounted
for by the purchase method of accounting except for BMS which has been
accounted for under the pooling-of-interests method and is considered
an immaterial pooling transaction.
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INTERNATIONAL ALLIANCE SERVICES, INC.
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ITEM 2-MANAGEMENT'S DISCUSSION AND ANALYSIS OF
----------------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
International Alliance Services, Inc. ("the Company") is a leading
provider of outsourced business services, including specialty insurance
services, to small and medium sized companies throughout the United
States. The Company provides integrated services in the following
areas: accounting systems, advisory and tax, employee benefits design
and administration, human resources, information technology systems,
payroll, specialty insurance, valuation, and workers' compensation.
RESULTS OF OPERATIONS
---------------------
For the three months ended September 30, 1997 and 1996, the Company
reported income from continuing operations of $3.4 million ($.08 per
common share) and $0.8 million ($.04 per common share), respectively.
Revenues increased $18.1 million for the three month period. The
increase comes as a result of the dramatic growth that the Company has
experienced since last year in outsourced Business Services and
Specialty Insurance Services. The larger components of the increase
are due to the commissions earned, fees earned by business acquisitions
made in 1997, increases in earned premiums, and lower loss and loss
adjustment expense development spread over higher premium production.
For the nine months ended September 30, 1997 and 1996, the Company
reported income from continuing operations of $7.8 million ($.18 per
common share) and $2.3 million ($.12 per common share), respectively.
The increase in revenues of $40.5 million for the nine months ended
September 30, 1997 over the same period 1996 is also attributable to
the above factors.
The aforementioned income from continuing operations excludes revenues
and earnings from the Company's discontinued environmental services
business which was sold in the third quarter 1997.
REVENUES
--------
Business services fees and commissions increased to $ 15.5 million and
$ 33.5 million for the three and nine months ended September 30, 1997,
respectively from $0.8 million and $ 1.4 million for the comparable
periods in 1996, respectively. The increases were primarily
attributable to the acquisitions completed after the periods ended
September 30, 1996. Due to the majority of the acquisitions having
been accounted for under the purchase method, the Company's
consolidated financial statements give effect to such acquisitions
only after their respective acquisition dates.
Business Services revenues consist primarily of fees and commissions
received in exchange for providing outsourced business services. There
is an element of seasonality, which effects the workers' compensation
administration, and accounting systems, advisory and tax services. In
addition, the Company reclassified certain revenues and expenses from
insurance agencies to Business Services revenue and expenses. Specialty
Insurance revenues and expenses include the results of all regulated
insurance operations owned by the Company.
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Premiums earned increased to $10.4 million for the three months ended September
30, 1997 from 7.1 million for the comparable 1996 period representing an
increase of $3.3 million, or 46%. Gross written premiums increased to $22.6
million for the three months ended September 30, 1997 from $11.7 million for
the comparable 1996 period representing an increase of $10.9 million, or 93%.
Net written premiums increased to $13.2 million for the three months ended
September 30, 1997 from $8.3 million for the comparable 1996 period,
representing an increase of $4.9 million, or 59%. These increases are
attributable to the growth in general liability premiums.
Premiums earned increased to $26.8 million for the nine month period ended
September 30, 1997 from $19.6 million for the comparable period in 1996,
representing an increase of $7.2 million, or 37%. Gross written premiums
increased to $46.5 million for the nine month period ended September 30, 1997
from $31.9 million for the comparable period in 1996, representing an increase
of $14.6 million, or 46%. Net written premiums increased to $30.2 million for
the nine month period ended September 30, 1997 compared to $23.1 million for the
comparable period in 1996, representing an increase of $7.1 million, or 31%.
These increases were primarily attributable to the growth in general liability
premiums.
Net investment income decreased to $0.5 million from $0.9 million for the three
months ended September 30, 1997 and 1996, representing a decrease of $0.4
million. Net investment income increased $3.1 million from $2.6 million for
the nine months ended September 30, 1997 and 1996, representing an increase of
$0.5 million. This increase is attributable to an increase in the annualized
return on investments to approximately 5.7% for the nine month period ended
September 30, 1997 from 5.3% for the comparable period in 1996 and to an
increase in the average investments outstanding to $77 million for the nine
month period ended September 30, 1997 from $64 million for the comparable
period in 1996.
Net realized gain on investments increased to $1.0 million and $3.1 million for
the three and nine month periods ended September 30, 1997 from $0.5 million and
$1.1 million for the comparable periods in 1996, representing increases of $0.5
million and $2.0 million respectively, or 100% and 182% respectively. This
increase was primarily due to increased sales of equity securities.
Other income decreased to $ 54,000 and $.1 million for the three and nine
months ended September 30, 1997 from $79,000 and $1.4 million, respectively
over comparable 1996 periods, representing a decrease of $25,000 and $1.3
million, respectively. For the nine months ended September 30, 1997 the
decrease is due in large part to non-recurring income realized in the three
month period ended March 31, 1996.
EXPENSES
- - --------
Total expenses were $21.7 million and $55.3 million for the three and nine
months ended September 30, 1997, respectively, compared to $8.0 million and
$22.4 million for the comparable periods in 1996, representing increases of
$13.7 million and $32.9 million, respectively. These increases reflect the
Company's acquisitions made in 1997. As a percentage of revenues, total
expenses represent 79% and 83% for the three and nine months ended September
30, 1997, respectively, and 83% and 86% for the comparable 1996 periods. The
decrease in percentage is due mainly to the spread of total expenses over
higher revenues.
Operating expenses for the three and nine month periods ended September 30, 1997
increased $11.3 million and $26.6 million, respectively over prior year periods.
As a percentage of total revenues, operating expenses represent 41% and 40% for
the three and nine months ended September 30, 1997, respectively, and 1% and 5%
for the comparable 1996 periods. Such expenses consist primarily of personnel
and occupancy costs and the related increases in these expenses are due to the
acquisitions made in 1997.
Loss and loss adjustment expense increased to $6.2 million and $15.6 million for
the three and nine months ended September 30, 1997 from $4.4 million and $12.9
million for the comparable 1996 periods, representing increases of $1.8 million
(41%) and $2.7 million (21%), respectively. Such increases are attributable to
the increased premium volume for liability coverage over last year. Loss and
loss adjustment expense decreased as a percentage of premiums earned for the
three months ended September 30, 1997 and 1996 and represents 60% and 62%,
respectively. For the comparable nine month period ended September 30, 1997 and
1996, such expenses represent 58% and 66%, respectively. Such decrease was the
result of claims from prior years that were settled and paid in 1996 for higher
than expected amounts that are not present in 1997.
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Policy acquisition expenses increased to $2.7 million from $2.0 million for the
three months ended September 30,1997 over the comparable 1996, representing an
increase of $.7 million. For the nine months ended September 30, 1997, policy
acquisition expenses increased to $7.1 million from $5.4 million over the
comparable 1996 period, representing an increase of $1.7 million. These
increases correspond directly to the increase in premium volume. For the three
months ended September 30, 1997 and 1996, policy acquisition expenses represent
approximately 20% and 24% of net premiums written. For the nine months ended
September 30, 1997 and 1996, policy acquisition costs represent 23% of net
premiums written. The decrease in percentage for the three months ended
September 30, 1997 and 1996 is due to the spread of policy acquisition expenses
over higher premiums earned and the one-time impact of recording the
acquisition of the workers' compensation line exclusive of policy acquisition
expenses.
General and administrative expenses increased to $1.2 million and $2.8 million
for the three and nine month periods ended September 30, 1997 from zero for the
comparable periods in 1996, respectively. Such increases were attributable to
the creation of a corporate function in the fourth quarter of 1996 that did not
exist prior to the reverse merger. General and administrative expenses
represented 4% of total revenues for the three and nine month periods ended
September 30, 1997, respectively.
Depreciation and amortization expense increased to $0.4 million and $1.4
million for the three and nine month periods ended September 30, 1997 from $0.2
million and 0.3 million for the comparable periods in 1996, respectively,
representing an increase of $0.2 million and $1.1 million. The increases are
the result of the increase of goodwill amortization resulting from the 23
acquisitions completed by the Company since September 30, 1996. As a percentage
of total revenues, depreciation and amortization expense increased to 1% and
2% for the three and nine month periods ended September 30, 1997 from 2% and
1% for the comparable periods in 1996.
Other expenses decreased to $(0.1) million and $1.8 million for the three and
nine month periods ended September 30, 1997 from $1.3 million and $2.5 million
for the comparable periods in 1996, respectively, representing a decrease of
$1.4 million and $0.7 million, respectively. Such decreases were primarily
attributable to the return of certain ceding commissions, which are calculated
based on historical experience in relation to certain reinsurance contracts.
The inclusion of the return of ceding commissions as an other expense item
conforms to insurance industry standards. As a percentage of net written
premiums, other expenses decreased to (1)% and 6% for the three and nine month
periods ended September 30, 1997 from 16% and 11% for the comparable periods in
1996. Such decreases reflect the positive impact of the ceding commission.
NET INTEREST INCOME (EXPENSE)
- - -----------------------------
Net interest income increased to $0.3 million and $0.9 million for the three
and nine months ended September 30, 1997 from zero over the comparable 1996
periods. Such increase was attributable to interest earned on cash and cash
equivalent balances relating to the Company's non-insurance entities acquired or
established after September 30, 1996.
INCOME TAXES
- - ------------
Income tax expense increased to $2.7 million and $4.4 million for the three and
nine months ended September 30, 1997 from $0.6 million and $1.4 million over the
comparable 1996 periods, respectively. The estimated effective tax rate for the
three and nine months ended September 30, 1997 was approximately 44% and 36%.
The effective tax rate for the nine months ended September 30, 1996 was
approximately 38%. The changes in the effective tax rates relate to quarterly
timing differences within Specialty Insurance Services.
DISCONTINUED OPERATIONS
- - -----------------------
The Company sold its environmental services operations in the third quarter
1997. The Company reported income from operations related to its discontinued
environmental services business of $50,000 net of a tax benefit of $113,000 on
revenues of $2,697,000 for the three months ended September 30, 1997. The loss
from discontinued operations for the nine months ended September 30, 1997 was
$663,000, net of a tax benefit of $316,000 on revenues of $18.8 million.
OTHER
- - -----
The Company's 1997 consolidated condensed balance sheet includes an increase in
excess of cost over net assets of businesses acquired of $49.4 million from $6.0
million to $55.4 million, which relates directly to the acquisitions made during
the nine months ended September 30, 1997.
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LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
The Company generated $4.8 million and $9.2 million in cash through operating
activities for the nine months ended September 30, 1997 and 1996, respectively.
The decrease in cash flows is due to the change in assets and liabilities of new
subsidiaries on a post-acquisition basis.
Cash used in investing activities was $27.6 million for the nine months ended
September 30, 1997 and was attributable to acquisitions of fixed maturity
investments and cash of $20.1 million used for business acquisitions, net of
cash acquired. Cash used in investing activities for the nine months ended
September 30, 1996 was $7.2 million and was mainly due to purchase of fixed
maturity investments. Capital expenditures amounted to $1.1 million and $0.1
million for the nine months ended September 30, 1997 and 1996 and related
primarily to the purchase of office equipment including computer hardware and
software.
Cash provided by financing activities was $4.1 million for the nine months ended
September 30, 1997 and cash used by financing activities was $1.3 million for
the nine months ended September 30, 1996. Cash used for the nine months ended
September 30, 1996 was attributable to dividends paid to a former parent company
net of capital contributions. Cash provided by financing activities for the nine
months ended September 30, 1997 was primarily attributable to $5.3 million from
the issuance of 616,611 shares of stock in a private placement and $1.1 million
from the exercise of 367,092 options and warrants to purchase of the Company's
stock and $2 million in proceeds from certain debt, offset in part by $4.3
million of repayment for debt obligation.
In October 1997 the Company obtained a $50 million credit facility. With the
availability of unused credit under the new credit facility and cash and
investments, (not including certain Specialty Insurance Service mortgage loans)
of $95.4 million at September 30, 1997, the Company believes that sufficient
liquidity is available to fund current operations, expansion and acquisitions.
------------------------------
Statements included in the Form 10-Q, which are not historical in nature, are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The amount of the charges to
discontinued operation with respect to the Company's environmental services
business will depend on a number of factors, including the outcome of any
related negotiations and final determination of the net realizable values of
assets to be sold or transferred. In addition, the Company's Annual Report on
Form 10-K contains certain other detailed factors that could cause the Company's
actual results to differ materially from forward-looking statements made by the
Company.
12
PART II - OTHER INFORMATION
---------------------------
ITEM 2 -CHANGES IN SECURITIES
-----------------------------
(c) Issuances of unregistered shares during the three months ended
September 30, 1997:
All transactions listed below involve the issuance of shares of Common Stock by
the Company in reliance upon Section 4(2) of the Securities Act of 1933, as
amended.
On July 1, 1997, in connection with the acquisition of St. James General Agency,
Inc., the Company paid $815,850 in cash and issued 98,510 shares of Common Stock
in exchange for all the outstanding shares of St. James General Agency, Inc.
On August 1, 1997, in connection with the acquisition of Business Management
Services, Inc. and BMS Employee Benefits, Inc., the Company issued 548,846
shares of Common Stock in exchange for all the outstanding shares of capital
stock of Business Management Services, Inc. and BMS Employee Benefits, Inc.
On August 1, 1997, in connection with the acquisition of the managed care
workers' compensation business of Anthem Insurance Companies, Inc., the Company
will be paid $795,000 in cash, of which $312,000 was paid at closing and
$483,000 that will be paid in four quarterly installments to former
shareholders, and issued 90,000 shares of Common Stock in exchange for certain
of the business assets related to the managed care workers' compensation
business.
On September 30, 1997, in connection with the acquisition of Valuation
Counselors Group, Inc., the Company paid $6,750,000 in cash and issued 864,197
shares of Common Stock in exchange for all the outstanding capital stock of
Valuation Counselors Group, Inc.
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ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
(a) Exhibits
10.1 Credit Agreement, dated as of October 3, 1997, by and among
International Alliance Services, Inc., Bank of America Trust &
Savings Association, as agent, and other financial
institutions party thereto.
27.1 FINANCIAL DATA SCHEDULE
(1) The Company's Current Report on Form 8-K/A, filed on October
3, 1997, amending the Form 8-K, dated July 23, 1997, reporting
the sale of substantially all of the Company's assets of the
liquid and solid hazardous and non-hazardous waste treatment,
storage, disposal and transportation business.
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
International Alliance Services, Inc.
-------------------------------------
(Registrant)
Date: November 14, 1997 By: /s/ GREGORY J. SKODA
------------------- ---------------------------------
Gregory J. Skoda
Executive Vice President and
Chief Financial Officer
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INTERNATIONAL ALLIANCE SERVICES, INC.
-------------------------------------
EXHIBIT INDEX
-------------
Exhibit Number: Page No.
- - ---------------
10.1 Credit Agreement, dated as of October 3, 1997, by and among
International Alliance Services, Inc., Bank of America Trust & Savings
Association, as agent, and other financial institutions . . . . . . . . . . . . . . . . . 16-120
(27) Financial Data Schedule (SEC only) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121
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