SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________________
Commission File Number: 0-29292
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HAGLER BAILLY, INC.
(Exact name of registrant as specified in its charter)
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Delaware
(State or other jurisdiction of incorporation or organization)
54-1759180
I.R.S. Employer Identification Number
1530 Wilson Boulevard, Suite 400, Arlington, VA 22209 (Address of
principal executive offices) (Zip Code)
703-351-0300
(Registrant's telephone number, including area code)
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 preceding 12 months (or 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. [X]Yes [ ]No
As of July 31, 1998, the Registrant had 9,647,616 shares of its common stock
outstanding.
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS..................................................1
CONSOLIDATED BALANCE SHEETS.................................................1
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)...........................2
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)...........................3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..................................4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.............................................5
PART II
ITEM 1. LEGAL PROCEEDINGS.....................................................9
ITEM 2. CHANGES IN SECURITIES.................................................9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS...................10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K......................................10
SIGNATURES....................................................................14
PART I
Item 1. Financial Statements
Hagler Bailly, Inc.
Consolidated Balance Sheets
June 30, December 31,
---------------------------------
1998 1997
---------------------------------
(unaudited) (restated)
Assets
Current assets:
Cash & cash equivalents $5,506,845 $3,967,527
Investments 7,327,614 6,775,331
Accounts receivable, net 39,683,625 33,334,926
Note receivable 1,000,000 1,000,000
Prepaid expenses 3,765,808 731,067
Other current assets 696,240 1,867,444
--------------- ----------------
Total current assets 57,980,132 47,676,295
Property and equipment, net 3,466,431 2,916,873
Software development costs, net 2,474,319 2,463,174
Intangible assets, net 9,245,391 6,925,960
Other assets 1,143,151 1,289,349
Deferred income taxes 24,355 601,002
--------------- ----------------
Total assets $74,333,779 $61,872,653
============ ===========
Liabilities and stockholders' equity
Current liabilities:
Bank line of credit $239,790 $ -
Accounts payable and accrued expenses 6,175,979 5,543,664
Accrued compensation and benefits 4,158,829 5,096,818
Billings in excess of cost 1,061,812 1,757,208
Notes payable-financial institution - 180,000
Notes payable-related party 14,877 620,417
Current portion of long-term debt 208,488 -
Income taxes payable 83,868 1,951,897
--------------- ----------------
Total current liabilities 12,830,853 16,533,693
Long-term debt, net of current portion - 21,014
--------------- ----------------
Total liabilities $12,830,853 $16,554,707
Stockholders' equity:
Preferred stock, $0.01 par value, 5,000,000 shares authorized,
none issued and outstanding - -
Common stock, $0.01 par value, 20,000,000 shares authorized; 9,606,579
and 9,051,345 issued and outstanding in 1998 and 1997 96,066 90,513
Additional capital 54,889,128 41,436,216
Retained earnings 6,713,696 3,791,217
Foreign currency translation (195,964) -
--------------- -----------------
Total stockholders' equity 61,502,926 45,317,946
--------------- -----------------
Total liabilities and stockholders' equity $74,333,779 $61,872,653
============ ===========
See accompanying notes.
Hagler Bailly, Inc.
Consolidated Statements of Operations
(Unaudited)
Three months ended Six months ended
June 30, June 30,
1998 1997 1998 1997
--------------------------------- ---------------------------------
Revenues:
Consulting revenues $27,716,194 $24,356,488 $50,043,272 $45,459,241
Other revenues 1,139,095 785,521
--------------- ------------ ------------ ----------
542,710 2,454,237
Total revenues 28,855,289 24,899,198 52,497,509 46,244,762
Cost of services 21,402,167 18,613,188 40,156,548 35,015,935
--------------- -------------- -------------- ------------
Gross profit 7,453,122 6,286,010 12,340,961 11,228,827
Merger related costs 995,672 - 1,362,930 -
Selling, general and administrative expenses 3,822,835 2,976,792 5,758,265 5,490,660
Stock and stock option compensation - - - 64,869
-------------- -------------- -------------- ------------
Income from operations 2,634,615 5,673,298
3,309,218 5,219,766
Other income (expense) 83,059 (152,486) 117,348 (446,804)
-------------- -------------- -------------- ------------
------- --------- -------
Income before income tax expense 2,717,674 5,226,494
3,156,732 5,337,114
Income tax expense 1,059,893 2,310,560
--------------- ----- ----- --------------
1,506,524 2,081,319
Net income before extraordinary gain 1,657,781 2,915,934
1,650,208 3,255,795
Extraordinary gain, net of income tax expense
of $55,906 tax for the three months ended
June 30, 1997 737,709 737,709
------------------ ------- -------------------------------
- -
-- -
Net income $1,657,781 $2,387,917 $3,255,795 $3,653,643
= =========== = =========== = =========== = ==========
Net income per share:
Basic:
Net income before extraordinary gain $0.18 $0.25 $0.36 $0.46
Extraordinary gain, net of income tax expense $ - $0.11 $ - $0.12
Net income $0.18 $0.36 $0.36 $0.58
Diluted:
Net income before extraordinary gain $0.17 $0.23 $0.33 $0.41
Extraordinary gain, net of income tax expense $ - $0.10 $ - $0.10
Net income $0.17 $0.33 $0.33 $0.51
Weighted average shares outstanding:
Basic 9,188,013 6,342,627
=============== ===== ===== ==============
6,550,873 9,028,838
Diluted 10,029,667 7,138,113
=== =========== ===== ===== ==============
7,236,602 9,844,817
Comprehensive income:
Net Income $ 1,657,781 $ 2,387,917 $ 3,255,795 $ 3,653,643
Foreign currency translation adjustment, net
Of $20,849 and $76,426 tax, for the three
Months and six months ended June 30, 1998 (119,538)
-------- ------------------ ---------
(32,610) - -
-------- -- -
Comprehensive income $1,625,171 $2,387,917 $3,136,257 $3,653,643
= =========== = =========== = =========== = ==========
See accompanying notes.
Hagler Bailly, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended June 30,
------------------------------------------
1998 1997
------------------------------------------
Operating activities
Net income $3,255,795 $3,653,643
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 1,682,032 1,150,070
Extraordinary gain (737,709)
-
Provision for deferred income taxes 1,625,341
80,168
Provision for possible losses 164,177
82,418
Amortization of deferred stock compensation 64,869
-
Changes in operating assets and liabilities:
Accounts receivable (6,431,114) (4,460,520)
Prepaid expenses (3,034,741) (70,967)
Other current assets 1,171,204 (2,189,313)
Other assets (798,142)
146,198
Accounts payable and accrued expenses 632,315 1,087,593
Accrued compensation and benefits 1,587,497
(937,989)
Billings in excess of cost (971,364)
(695,396)
Income taxes payable (1,868,029) 207,178
------------------ ------- -------
Net cash provided by (used in) operating activities (5,917,139) 312,353
Investing activities
Acquisition of property and equipment (1,362,469) (637,491)
Purchase of investments (78,022)
(552,283)
Purchase of 100% interest in Estudio "Q" and PT Indonesia (1,099,765)
-
Investment in software development
(500,000) -
--------- -
Net cash used in investing activities (3,514,517) (715,513)
Financing activities
Issuance of common stock, net of offering costs 11,858,529 116,969
Repurchase of common stock (45,857)
Dividends paid by Izsak Grapin (233,333)
(333,315)
Net borrowings from bank line of credit 3,625,000
239,790
Principal payments on debt (849,031)
(598,066)
Net cash provided by financing activities 11,166,938 2,613,748
Net increase in cash and cash equivalents 1,735,282 2,210,588
Foreign currency gain (loss)
(195,964) -
Cash and cash equivalents, beginning of period 3,967,527 2,043,567
------------------ ---- ---------
Cash and cash equivalents, end of period $5,506,845 $4,254,155
=================== =================
See accompanying notes.
HAGLER BAILLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying unaudited interim consolidated financial statements of
Hagler Bailly, Inc. (the "Company") have been prepared pursuant to the rules of
the Securities and Exchange Commission ("SEC") for quarterly reports on Form
10-Q and do not include all of the information and note disclosures required by
generally accepted accounting principles. The information furnished herein
reflects all adjustments, of a normal recurring nature, which are, in the
opinion of management, necessary for a fair presentation of results for these
interim periods.
The interim results of operations are not necessarily indicative of the
results to be expected for the entire fiscal year ending December 31, 1998.
As a result of a business combination completed in the second quarter
which was accounted for as a pooling of interest as described in Note 3 below,
all consolidated financial statements presented for the three-month and
six-month periods ended June 30, 1998 and 1997 and as of December 31, 1997 have
been restated to include the results of operations and financial position of
Izsak, Grapin et Associes, S.A.R.L. ("Izsak Grapin"). These financial statements
should be read in conjunction with the Company's audited consolidated financial
statements and notes thereto for the year ended December 31, 1997, included in
the Form 10-K and restated in the Form 8-K filed on June 12, 1998.
Note 2. Earnings per Share
Basic earnings per share is computed based on the weighted average
number of shares of common stock outstanding during the respective periods.
Diluted earnings per share is inclusive of the dilutive effect of unexercised
stock options using the treasury stock method.
Note 3. Pooling of Interests
On June 30, 1998, the Company acquired all of the stock of Izsak Grapin
in exchange for 183,550 shares of the Company's common stock. The transaction
was accounted for as a pooling of interests. Accordingly, the Company's
financial statements have been restated to include the results of Izsak Grapin
for all periods presented.
Note 4. Cash Dividend
Retained earnings for 1998 were reduced by a cash dividend of $333,316
paid by Izsak Grapin, the pooling of interest transaction detailed in Note 3
above, prior to its acquisition by the Company. The dividends per share for the
Izsak Grapin stock were $1.82.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in
nature, are intended to be, and are hereby identified as, "forward looking
statements" for purposes of the safe harbor provided by Section 21E of the
Securities Exchange Act of 1934, as amended by Public Law 104-67.
Forward-looking statements may be identified by words including "anticipate,"
"believe," "estimate," "expect" and similar expressions. The Company cautions
readers that forward-looking statements, including without limitation, those
relating to the Company's future business prospects, revenues, working capital,
liquidity, and income, are subject to certain risks and uncertainties that would
cause actual results to differ materially from those indicated in the
forward-looking statements, due to several important factors such as
concentration of the Company's revenues from a relatively limited number of
public and private clients involved in the energy and network industries, the
Company's ability to attract, retain and manage professional and administrative
staff, fluctuations in quarterly results, risks related to acquisitions, and the
fact that historical operations and performance are not necessarily indicative
of future operations and performance, among others, and other risks and factors
identified from time to time in the Company's reports filed with the SEC,
including the risk factors identified in the Company's Registration Statement
(No. 333-22207) on Form S-1, the Company's Annual Report on Form 10-K for the
year ended December 31, 1997, and the Company's Proxy Statement for its Special
Meeting of Stockholders dated July 27, 1998.
The Company, together with its wholly owned subsidiaries Hagler Bailly
Services, Inc., Hagler Bailly Consulting, Inc., HB Capital, Inc., Apogee
Research, Inc., TB&A Group, Inc., and several of its foreign wholly owned
subsidiaries, provides professional services to corporations and governments
worldwide. The Company's focus is on energy, network industries and the
environment.
Recent Events
On June 11, 1998 the Company signed a definitive agreement to combine
with Putnam, Hayes & Bartlett, Inc. ("PHB"). The Company anticipates issuing up
to 6.6 million shares of its common stock to the shareholders of PHB in
connection with the transaction. PHB had gross revenues of approximately $63
million in 1997. For a copy of the definitive agreement, see the Company's Proxy
Statement for its Special Meeting of Stockholders dated July 27, 1998.
On June 16, 1998 the Company and Cap Gemini S.A. and its wholly owned
subsidiary Cap Gemini America, Inc. entered into an exclusive joint venture to
deliver information technology consulting services and solutions to electric,
gas and water utilities and service providers in the U.S. and Canada.
On June 30, 1998 the Company acquired all of the stock of Izsak Grapin in
exchange for 183,550 shares of its common stock. The transaction was accounted
for as a pooling of interests.
Results of Operations
Revenues. Revenues increased 15.9% to $28.9 million for the quarter ended
June 30, 1998 from $24.9 million in the quarter ended June 30, 1997. Revenues
increased 13.5% to $52.5 million for the six months ended June 30, 1998 compared
to $46.2 million in the six months ended June 30, 1997. Consulting revenues
increased 13.8% to $27.7 million for the quarter ended June 30, 1998 compared to
$24.4 million in the comparable period in 1997. Consulting revenues increased
10.1% to $50.0 million for the six months ended June 30, 1998 compared to $45.5
million for the six months ended June 30, 1997. These increases are the result
of the Company's focus on the growth of international private sector engagements
by increasing capacity through the purchase of Estudio Q, S.R.L. ("Estudio Q"),
an Argentinean company, and the acquisition of Izsak Grapin, a French company,
increased volume in selected public sector work, and the development of "other
revenues". Other revenues, the Company's revenues associated with
information-based products and services and financial advisory services,
increased 109.9% to $1.1 million for the quarter ended June 30, 1997 compared to
$0.5 million in the comparable period in 1997.
Cost of Services. Cost of services increased 15.0% to $21.4 million for the
quarter ended June 30, 1998 from $18.6 million for the quarter ended June 30,
1997. Cost of services increased 14.7% to $40.2 million in the six months ended
June 30, 1998 compared to $35.0 million for the six months ended June 30, 1997.
Cost of services increased due to the increase in revenue.
Gross Profit. Gross profit increased 18.6% to $7.5 million for the quarter
ended June 30, 1998 from $6.3 million for the quarter ended June 30, 1997. Gross
profit increased 9.9% to $12.3 million in the six months ended June 30, 1998
compared to $11.2 million for the comparable period. Gross profit as a
percentage of revenues was 25.8% and 23.5% for the second quarter and the six
months ended June 30, 1998 as compared to 25.2% and 24.3% for the second quarter
and the six months ended June 30, 1997. The increase in gross margin for the
quarter is the result of the additional high margin business from the private
sector and the increased profitability in "other revenues", the
information-based products and services and financial advisory services.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") increased to $4.8 million and $7.1 million
($3.8 million and $5.8 million, exclusive of merger related costs) for the
quarter and six months ended June 30, 1998. As a percentage of revenue, SG&A
increased to 16.7% (13.2% without merger related costs) for the quarter ended
June 30 from 12% for the comparable 1997 quarter. The increase can be
attributable to costs associated with continued integration of business
combinations and to the merger activity related to PHB of $1.0 million. In
addition, the Company significantly increased marketing efforts in the second
quarter.
Income From Operations. Income from operations was $2.6 million for the
quarter ended June 30, 1998 compared to $3.3 million for the quarter ended June
30, 1997. Income from operations decreased to $5.2 million in the six months
ended June 30, 1998 compared to $5.7 million for the six months ended June 30,
1997. These decreases can be attributed to the merger-related activities
described above.
Other Income (Expense). Other income (expense) was $0.08 million of income
for the quarter ended June 30, 1998 and $(0.2) million of expense for the
quarter ended June 30, 1997, $0.1 million of income and $(0.4) million of
expense for the six months ended June 30, 1998 and June 30, 1997, respectively.
The net change is due to the interest income earned from the investment of cash
received from the issuance of common stock in 1998 and the reduction of the
Company's debt in 1997.
Income Tax Expense. Income tax expense was $1.1 million for the quarter
ended June 30, 1998 compared to $1.5 million for the quarter ended June 30,
1997. Income tax expense was $2.1 million for the six months ended June 30, 1998
compared to $2.3 million for the six months ended June 30, 1997. For the
quarters ended June 30, 1998 and 1997 income tax expense as a percentage of
income before income tax expense was 39.0% and 47.7%, respectively, and for the
six month periods ended June 30, 1998 and 1997 income tax expense as a
percentage of income before income tax expense was 39.0% and 44.2%,
respectively. The company accrues income tax at 39% of income before tax
expense. The additional amounts expensed in 1997 for the quarter and six months
ended June 30 are related to taxes associated with the extraordinary gains from
the extinguishment of debt at more favorable terms to the Company.
Net Income. As a result of the preceding information, net income for the
quarter ended June 30, 1998 was $1.7 million compared to $2.4 million for the
quarter ended June 30, 1997. Net income as a percentage of revenue (excluding
merger related costs of $1.0 million) was 7.9% for the quarter ended June 30,
1998 as compared to 6.6%, excluding the extraordinary gain, for the comparable
1997 period. Net income for the six months ended June 30, 1998 and 1997 was $3.2
million and $3.7 million, respectively. The decrease from 1997 to 1998 is due to
the extraordinary gain recognized in 1997. Liquidity and Capital Resources
At June 30, 1998 and December 31, 1997, the Company had working capital of
$45.1 million and $31.1 million, respectively. The $14.0 million increase in
1998 is primarily due to the private placement of 470,975 shares of the
Company's common stock, for consideration of $12.5 million, to Cap Gemini
America, Inc. These shares were issued concurrently with the formation of a
joint venture with Cap Gemini America, Inc., Cap Gemini Hagler Bailly L.L.C. The
increase can also be attributed to the growth in accounts receivable.
Net cash used in operations consisted primarily of net income plus elements
of cash flows related to accounts receivable and related billings, accounts
payable and accrued compensation adjusted for non-cash items including
depreciation and provision for possible losses. The use of funds in operations
of $5.9 million for the six months ended June 30, 1998 can primarily be
attributed to the growth in accounts receivable, the payment of bonuses, and the
payment of estimated taxes for the first and second quarters of 1998.
Investment activities used $3.5 million and $0.7 million for the six months
ended June 30, 1998 and 1997, respectively. Investment expenditures have
primarily been to purchase the stock of Estudio Q and the remaining interest in
PT Hagler Bailly Indonesia, the continued capital expenditures for information
technology, software development and other resources necessary for the growth of
the Company.
Financing activities provided $11.2 million and $2.6 million for the six
months ended June 30, 1998 and 1997, respectively. The funds were provided
primarily through the issuance of common stock in connection with the private
placement mentioned above, and in 1997, primarily through the use of the
Company's credit facility. Net proceeds from equity financing are invested in
short-term, interest-bearing investment grade securities.
The Company's primary source of liquidity for the past twelve months has
been cash flows from financing, periodically supplemented by borrowings under a
bank line of credit. During the year ended December 31, 1997, the Company,
through two of its subsidiaries, established a $15 million revolving credit
facility and began borrowing under the facility. The balance under the line of
credit at June 30, 1998 was $0.2 million. Currently, the Company is evaluating
proposals to increase its bank line of credit to $50 million. The Company
believes that current projected levels of cash flows and the availability of
financing, including borrowings under the Company's current and proposed credit
facility, will be adequate to fund its anticipated cash needs, which may include
future acquisitions of complementary businesses, for at least the next 12
months. The Company, depending on market conditions, may consider other sources
of financing, including equity financing.
Prior to its acquisition by Hagler Bailly and consistent with its dividend
policy, Izsak Grapin paid cash dividends of $333,315 in 1998.
The Company currently anticipates that it will retain all of its earnings
for development of the Company's business and does not anticipate paying any
cash dividends in the foreseeable future.
Year 2000
The Year 2000 ("Y2K") issue is a result of certain information systems
and programs using a two-digit format, as opposed to four digits, to indicate
the years. Such systems and programs will be unable to correctly interpret dates
beyond the year 1999, which could lead to system failure or certain other
problems, leading to disruption in operations. The Company is currently
developing a plan for Y2K information systems compliance. The Company has
completed a preliminary evaluation of its domestic systems and does not
anticipate incurring any material costs in connection with assuring that they
are Y2K compliant.
In the Company's networked systems area, all applications have been
identified as Y2K compliant due to their recent scheduled upgrade. The Company's
core financial and reporting systems are not Y2K compliant but the Company has
already scheduled their replacement by early 1999. In addition, the Company
anticipates being provided with a Y2K compliant upgrade to its current core
financial and reporting systems software by the end of August 1998. The Company
believes it will incur a cost of approximately $2.0 million to replace the core
financial and reporting systems. This cost was budgeted for 1998 along with the
networked systems upgrade and is not considered by the Company as a cost
incurred to ensure Y2K compliance. The Company has not yet assessed the cost of
ensuring Y2K compliance of its embedded systems but does not anticipate
incurring material costs in connection with such compliance.
The Company has not yet assessed the Y2K compliance of (i) its foreign
operations or (ii) its suppliers and customers. The Company anticipates
undertaking an assessment of the costs of ensuring Y2K compliance of its foreign
operations by the end of 1998. The Company is also currently planning an
assessment of its exposure to Y2K non-compliance by its suppliers and customers.
At the present time, the Company's management believes that the costs
associated with Y2K compliance should not have a material adverse effect on the
results of operations or financial position of the Company in future periods.
Nevertheless, the Company is not certain that it has fully identified all
potential impacts or effects on it that could result from Y2K non-compliance,
either internally or with respect to the various third-party enterprises with
which it interacts.
PART II
Item 1. Legal Proceedings
Hagler Bailly's indirect subsidiary, Theodore Barry & Associates, is a
defendant in a lawsuit brought in the United States District Court for the
Northern District of Illinois, Michael A. Laros v. Theodore Barry & Associates,
No. 95-C4175, by one of its former executives seeking payment of a bonus and
salary allegedly due him and payment of principal and interest on a subordinated
note of TB&A held by Mr. Laros, prejudgment interest and costs and fees. TB&A is
defending the suit. Hagler Bailly does not believe that the resolution of this
lawsuit will have a material adverse effect on its business, financial condition
or results of operations.
Apogee Research, Inc. ("Apogee"), one of Hagler Bailly's wholly owned
subsidiaries, has received a subpoena from the Office of the Inspector General
of the Environmental Protection Agency (the "EPA") requesting records from April
1993 through October 1995 pertaining to a contract between Apogee and the EPA.
The work under this contract has been completed. The subpoena was served in
connection with an EPA investigation relating to the submission of potential
false statements and false claims under the contract. Hagler Bailly is unable to
determine at this time what effect, if any, the investigation will have on its
business, financial condition or results of operations.
Hagler Bailly and its subsidiaries are from time to time parties to
litigation arising in the ordinary course of business. Neither Hagler Bailly nor
any of its subsidiaries is a party to any pending material litigation nor are
any of them aware of any pending or threatened litigation that would have a
material adverse effect on Hagler Bailly or its business.
Item 2. Changes in Securities
On April 30, 1998 the Company acquired Estudio Q S.R.L. ("Estudio Q"),
an Argentinean company, for cash and stock. The Company issued 64,306 shares of
the Company's common stock to the shareholders of Estudio Q. The shares of
common stock issued in connection with the acquisition were exempt from
registration because they were issued in a transaction outside the jurisdiction
of the United States.
On June 16, 1998 Cap Gemini America, Inc. purchased 470,975 shares of
the Company's common stock for $12.5 million. The shares of common stock issued
in connection with this transaction were exempt from registration pursuant to
Section 4(2) of the Securities Act of 1933.
On June 30, 1998 the Company acquired all the stock of Izsak Grapin
("IGA"), a French company. The Company issued 183,550 shares of the Company's
common stock to the shareholders of IGA. The shares of common stock issued in
connection with this acquisition were exempt from registration because they were
issued in a transaction outside the jurisdiction of the United States.
The Company issued 3,457 shares of its common stock in June 1998 to one
of its officers upon exercise of options. The shares of common stock issued in
connection with this transaction were exempt from registration pursuant to
Section 4(2) of the Securities Act 1933.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's annual meeting of stockholders held on May 14, 1998,
the stockholders voted on the election of two directors to the Company's Board
of Directors. Vinod K. Dar and Fred M. Schriever were elected to serve a
three-year term ending at the 2001 annual meeting of stockholders. The voting
for each director was as follows:
Name For Withheld
Vinod K. Dar 6,635,056 59,561
Fred M. Schriever 6,682,491 12,126
At the meeting, the stockholders also voted on the ratification of the
selection, by the Audit Committee of the Board of Directors of the Company, of
Ernst & Young LLP as independent auditors of the Company for its fiscal year
ending December 31, 1998.
For Against Abstain
6,693,187 1,400 30
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
No. Description
2 Sale Agreement between RCG International, Inc., and Hagler Bailly Consulting, Inc. (1)
2.1 Agreement and Plan of Merger by and among Hagler Bailly, Inc., Hagler Bailly Acquisition
Corp. 1997-1 and Apogee Research, Inc., dated as of November 18, 1997. (3)
2.2 Agreement and Plan of Merger by and among Hagler Bailly, Inc., PHB Acquisition Corp. and
Putnam, Hayes and Bartlett, Inc., dated as of June 11, 1998. (5)
3.1 Amended and Restated Certificate of Incorporation of the Company (1)
3.2 By-Laws of the Company, as amended
4 Specimen Stock Certificates (1)
4.1 Escrow Agreement dated December 1, 1997 by and among Hagler Bailly, Inc., Hagler Bailly
Acquisition Corp. 1997-1, Richard R. Mudge as Stockholders' Representative and State Street
Bank and Trust Company, as Escrow Agent. (3)
4.2 Registration Rights Agreement dated November 18, 1997 by and between Hagler Bailly, Inc. and
Richard R. Mudge, acting as Stockholders' Representation. (3)
10.1 Hagler Bailly, Inc. Amended and Restated 1996 Employee Incentive and Non-Qualified Stock
Option and Restricted Stock Plan (including forms of option agreements). (1)
10.2 Form of Non-Compete, Confidentiality and Registration Rights Agreement between the Company
and each stockholder. (1)
10.3 Form of Amended and Restated Employment Agreement between the Company and Henri-Claude A.
Bailly. (1)
10.4 Lease by and between Wilson Boulevard Venture and RCG/Hagler Bailly, Inc. dated October 25,
1991. (1)
10.5 First Amendment to Lease by and between Wilson Boulevard Venture and RCG/Hagler Bailly,
Inc., dated February 26, 1993. (1)
10.6 Second Amendment to Lease by and between Wilson Boulevard Venture and RCG/Hagler Bailly,
Inc., dated December 12, 1994. (1)
10.7 Lease by and between Bresta Futura V.B.V. and Hagler Bailly Consulting, Inc. dated May 8,
1996. (1)
10.8 Lease by and between L.C. Fulenwider, Inc., and RCG/Hagler Bailly, Inc. dated December 14,
1994. (1)
10.9 Lease by and between University of Research Park Facilities Corp. and RCG/Hagler Bailly,
Inc., dated April 1, 1995. (1)
10.10 Credit Agreement by and between Hagler Bailly Consulting, Inc. and State Street Bank and
Trust Company, dated May 17, 1995. (1)
10.11 Amendment to Credit Agreement by and between Hagler Bailly Consulting, Inc. and State Street
Bank and Trust Company, dated as of June 20, 1996. (1)
10.12 Extension Agreement by and between Hagler Bailly Consulting, Inc. and State Street Bank and
Trust Company, dated as of August 1, 1996. (1)
10.13 Amendment to Credit Agreement by and between Hagler Bailly Consulting, Inc. and State Street
Bank and Trust Company, dated as of November 12, 1996. (1)
10.14 Term Note by and between Hagler Bailly Consulting, Inc., and State Street Bank and Trust
Company, dated May 26, 1995. (1)
10.15 Revolving Credit Note by and between Hagler Bailly Consulting, Inc. and State Street Bank
and Trust Company dated May 26, 1995. (1)
10.16 Amendment to Credit Agreement by and between Hagler Bailly Consulting, Inc., and State
Street Bank and Trust Company, dated as of June 12, 1997. (1)
10.17 Credit Agreement by and among Hagler Bailly Consulting, Inc., Hagler Bailly Services, Inc.
and State Street Bank and Trust Company, dated as of September 30, 1997. (2)
10.18 Promissory Note by Hagler Bailly Consulting, Inc. and Hagler Bailly Services, Inc. to State
Street Bank and Trust Company, dated September 30, 1997. (2)
10.19 Security Agreement by and between Hagler Bailly Consulting, Inc. and State Street Bank and
Trust Company, dated as of September 30, 1997. (2)
10.20 Security Agreement by and between Hagler Bailly Services, Inc. and State Street Bank and
Trust Company, dated as of September 30, 1997. (2)
10.21 Guaranties by Hagler Bailly, Inc. to State Street Bank and Trust Company, dated September
30, 1997. (2)
10.22 Guaranties by HB Capital, Inc. to State Street Bank and Trust Company, dated September 30,
1997. (2)
10.23 Subordination Agreement and Negative Pledge/Sale Agreement by and between Hagler Bailly,
Inc. and State Street Bank and Trust Company for Hagler Bailly Consulting, Inc., dated
September 30, 1997. (2)
10.24 Subordination Agreement and Negative Pledge/Sale Agreement by and between Hagler Bailly,
Inc. and State Street Bank and Trust Company for Hagler Bailly Services, Inc., dated
September 30, 1997. (2)
10.25 Guaranty of Monetary Obligations to Bresta Futura V.B.V. by Hagler Bailly, Inc., dated July
23, 1997. (2)
10.26 Amendment to Credit Agreement by and between Hagler Bailly Consulting, Inc. and State Street
Bank and Trust Company dated May 18, 1998.
10.27 Sublease Agreement by and between Coopers and Lybrand L.L.P. and Hagler Bailly, Inc. dated
December 5, 1997.
21 Subsidiaries (4)
24 Powers of Attorney (included on Signature Pages) (1)
27.1 Financial Data Schedule - June 30, 1998
27.2 Restated Financial Data Schedule - March 31, 1998
27.3 Restated Financial Data Schedule - December 31, 1997
27.4 Restated Financial Data Schedule - September 30, 1997
27.5 Restated Financial Data Schedule - June 30, 1997
27.6 Restated Financial Data Schedule - March 31, 1997
27.7 Restated Financial Data Schedule - December 31, 1996
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(1) Included in the Company's Registration Statement on Form S-1 (No. 333-22207)
(2) Included in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
1997.
(3) Included in the Company's Current Report on Form 8-K filed on December 16, 1998.
(4) Included in the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
(5) Included in the Company's Proxy Statement for Special Meeting of Stockholders dated July 27,
1998 on Form DEF 14A.
(b) Reports on Form 8-K
On June 12, 1998 the Company filed a current report on Form 8-K, which
restated the Hagler Bailly's 1997 audited financial statements to reflect the
merger of one of the Company's wholly owned subsidiaries with and into TB&A
Group, Inc. which took place after December 31, 1997.
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.
Date: August 14, 1998 -----------------------
Henri-Claude Bailly
President, Chief Executive Officer and
Chairman of the Board
/s/ Daniel M. Rouse
-------------------
Date: August 14, 1998 Daniel M. Rouse
Vice President, Chief Financial
Officer and Treasurer