UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
_____________________
Date of Report (February 14, 1996): February 14, 1996
Alexander & Alexander Services Inc.
(Exact name of registrant as specified in its charter)
Maryland 1-8282 52-0969822
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
organization)
1185 Avenue of the Americas 10036
New York, New York (Zip Code)
(Address of principal executive offices)
(212) 840-8500
(Registrant's telephone number,
including area code:)
Not Applicable
(Former name or former address,
if changed since last report.)
Item 5. Other Events.
On February 14, 1996, Alexander & Alexander Services Inc. (the
"Company") issued the following press release:
A&A REPORTS NET INCOME OF $89.4 MILLION IN 1995,
INCLUDING $17.6 MILLION 4TH QUARTER PRE-TAX CHARGE
FOR ACQUISITION-RELATED CONSOLIDATION
NEW YORK, Feb. 14 -- For the year ending December
31, 1995, Alexander & Alexander Services Inc. (A&A) today reported
net income of $89.4 million, or $1.44 per share, on consolidated
operating revenues of $1,282.4 million. Fully diluted earnings were
$1.42 per share.
The 1995 results include a fourth quarter pre-tax charge of
$17.6 million, or $0.25 per share, related primarily to A&A's October
acquisition of certain U.S. operations from Jardine Insurance Brokers
Inc. Results for the year also reflect a $28.7 million pre-tax gain, or
$0.42 per share, from the first quarter sale of a subsidiary.
In 1994, A&A reported a net loss of $138.7 million, or $3.51
per share, including charges of $167.6 million for restructuring,
contingency settlements and reserves for discontinued operations.
Frank G. Zarb, Chairman & CEO, noted, "As a result of our
successful restructuring, all operations contributed to A&A's
significant increase in operating income. I am pleased that during this
period we also were able to grow revenues as a result of new
business gains and the Jardine transaction."
FOURTH QUARTER 1995
During the quarter ending December 31, A&A reported net
income of $7.5 million, or $0.02 per share, compared with a net loss
of $111.3 million, or $2.66 per share, in 1994. Excluding the special
charges, net income in the 1995 quarter was $18.7 million, or $0.27
per share.
Consolidated operating revenues were $330.4 million for the
quarter compared to $333.2 million in the same 1994 period.
Consolidated revenues rose $14.3 million, or 4.7 percent, over the
1994 quarter when adjusted for acquisitions and the sale of
businesses.
Consolidated operating expenses were $316.2 million, a
decrease of $123.9 million from the same quarter in 1994. On a
comparable basis, operating expenses decreased by $14.9 million, or
4.9 percent.
Consolidated operating income for the quarter was $14.2
million as compared with a $106.9 million loss for the year-ago
period. On a comparable basis, operating income was $31.4 million,
an increase of approximately $29.2 million over the 1994 quarter.
1995 OPERATING RESULTS
For the full year, 1995 operating revenues were $1,282.4
million compared to $1,323.9 million in 1994. Excluding sold
operations and revenue gained from acquisitions, consolidated
revenues rose $52.9 million, or 4.4 percent.
Consolidated operating expenses were $1,159.7 million
compared to $1,406.8 million in 1994. On a comparable basis,
operating expenses decreased by $61.9 million, or 5.2 percent.
Consolidated operating income was $122.7 million, compared
with a $82.9 million loss in 1994. On a comparable basis,
consolidated operating income was $135.4 million, or an increase of
$114.8 million.
Mr. Zarb said, "In 1996, highly competitive business conditions
will continue to constrain revenue growth. To meet our long-term
business objectives, we are making significant additional investments
in information technology, product development and employee
training. These initiatives will put added short-term pressure on
earnings, but the financial benefits should become increasingly
evident in 1997 and beyond. Meanwhile, we continue to review
various acquisition opportunities that can enhance our market position
and franchise."
Alexander & Alexander Services Inc. [NYSE: AAL] provides
professional risk management consulting, insurance brokerage and
human resources consulting services from offices in more than 80
countries
AUDITED CONSOLIDATED STATEMENT OF OPERATIONS
Alexander & Alexander Services Inc.
(in millions except per share amounts)
Quarter Ended Twelve Months Ended
December 31, December 31,
----------------- -------------------
1995 1994 1995 1994
---- ---- ---- ----
OPERATING REVENUES:
Commissions and fees $ 316.1 $ 319.0 $1,219.5 $1,272.3
Fiduciary investment income 14.3 14.2 62.9 51.6
------- ------- -------- --------
Total 330.4 333.2 1,282.4 1,323.9
------- ------- -------- --------
OPERATING EXPENSES:
Salaries and benefits 191.2 212.8 735.1 814.3
Other 107.4 158.3 407.0 523.5
Restructuring and special charges 17.6 69.0 17.6 69.0
------- ------- -------- --------
Total 316.2 440.1 1,159.7 1,406.8
------- ------- -------- --------
OPERATING INCOME (LOSS) 14.2 (106.9) 122.7 (82.9)
OTHER INCOME (EXPENSES):
Investment income 5.3 4.4 19.2 10.9
Interest expense (4.5) (4.1) (18.6) (16.0)
Other (1.3) 19.4 32.7 10.9
Special charges 0.0 (69.7) 0.0 (69.7)
------- ------- -------- --------
Total (0.5) (50.0) 33.3 (63.9)
------- ------- -------- --------
Income (Loss) before Income Taxes and Minority
Interest 13.7 (156.9) 156.0 (146.8)
Income (Taxes) Benefit (6.2) 46.6 (60.9) 42.6
------- ------- -------- --------
Income (Loss) before Minority Interest 7.5 (110.3) 95.1 (104.2)
Minority Interest 0.0 1.0 (5.7) (3.0)
------- ------- -------- --------
Income (Loss) from Continuing
Operations 7.5 (109.3) 89.4 (107.2)
Loss from Discontinued Operations 0.0 (2.0) 0.0 (28.9)
------- ------- -------- --------
Income (Loss) before Cumulative Effect of
Change in Accounting 7.5 (111.3) 89.4 (136.1)
Cumulative Effect of Change in
Accounting 0.0 0.0 0.0 (2.6)
------- ------- -------- --------
Net Income (Loss) 7.5 (111.3) 89.4 (138.7)
Preferred Stock Dividends (6.5) (6.1) (25.4) (15.1)
------- ------- -------- --------
Earnings (Loss) Attributable to Common
Shareholders $ 1.0 $(117.4) $ 64.0 $ (153.8)
======= ======= ======== ========
PER SHARE INFORMATION:
Primary earnings per share:
Income (loss) from continuing
operations $ 0.02 $ (2.61) $ 1.44 $ (2.79)
Loss from discontinued operations 0.00 (0.05) 0.00 (0.66)
Cumulative effect of change in
accounting 0.00 0.00 0.00 (0.06)
------ ------- ------- -------
Net income (loss) $ 0.02 $ (2.66) $ 1.44 $ (3.51)
======= ======= ======= =======
Average common & common equivalent shares
outstanding 44.7 44.2 44.6 43.8
======= ======= ======= =======
Fully diluted earnings per share:
Income (loss) from continuing
operations $ 0.02 $ (2.61) $ 1.42 $ (2.79)
Loss from discontinued operations 0.00 (0.05) 0.00 (0.66)
Cumulative effect of change in
accounting 0.00 0.00 0.00 (0.06)
------- ------- ------- -------
Net income (loss) $ 0.02 $ (2.66) $ 1.42 $ (3.51)
======= ======= ======= =======
Average common shares outstanding, assuming
full dilution 44.7 44.2 57.1 43.8
======= ======= ======= =======
Cash dividends per common share $ 0.025 $ 0.025 $ 0.10 $ 0.325
======= ======= ======= ========
Alexander & Alexander Services Inc.
Audited Analysis of Operating Revenues
Quarter and Twelve Months Ended December 31, 1995 and 1994
(in millions)
Quarter Ended Twelve Months Ended
December 31, December 31,
----------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
CONSOLIDATED:
Commissions and fees $ 316.1 $ 319.0 $1,219.5 $1,272.3
Fiduciary investment income 14.3 14.2 62.9 51.6
------- ------- -------- --------
Total $ 330.4 $ 333.2 $1,282.4 $1,323.9
======= ======= ======== ========
RISK MGMT & INSURANCE SERVICES BROKING:
Commissions and fees $ 197.7 $ 214.0 $ 739.8 $ 816.4
Fiduciary investment income 7.1 7.6 31.0 28.6
------- ------- -------- --------
Total $ 204.8 $ 221.6 $ 770.8 $ 845.0
======= ======= ======== ========
SPECIALIST & REINSURANCE BROKING:
Commissions & fees $ 63.7 $ 55.2 $ 269.4 $ 245.4
Fiduciary investment income 7.2 6.6 31.6 22.8
------- ------- -------- --------
Total $ 70.9 $ 61.8 $ 301.0 $ 268.2
======= ======= ======== ========
HUMAN RESOURCE MGT CONSULTING:
Commissions & fees $ 54.7 $ 49.8 $ 210.3 $ 210.5
Fiduciary investment income 0.0 0.0 0.3 0.2
------- ------- -------- --------
Total $ 54.7 $ 49.8 $ 210.6 $ 210.7
======= ======= ======== ========
MEMORANDUM ONLY - EXCLUDING SOLD OPERATIONS:
CONSOLIDATED:
Commissions and fees $ 316.1 $ 290.5 $1,208.0 $1,154.3
Fiduciary investment income 14.3 13.4 62.6 48.8
------- ------- -------- --------
Total $ 330.4 $ 303.9 $1,270.6 $1,203.1
======= ======= ======== ========
RISK MGT & INSURANCE SERVICES BROKING:
Commissions and fees $ 197.7 $ 185.5 $ 728.3 $ 698.4
Fiduciary investment income 7.1 6.8 30.7 25.8
------- ------- -------- --------
Total $ 204.8 $ 192.3 $ 759.0 $ 724.2
======= ======= ======== ========
Alexander & Alexander Services Inc.
Computation of per Common Share Earnings
Quarter and Twelve Months Ended December 31, 1995 and 1994
(in millions except per share amounts)
Quarter Ended Twelve Months Ended
December 31, December 31,
----------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
PRIMARY
Earnings (Loss) Attributable
to Common Shareholders:
Income (loss) before cumulative
effect of change in accounting $ 7.5 $(111.3) $ 89.4 $(136.1)
Cumulative effect of change
in accounting - - - (2.6)
------- ------- -------- -------
Net income (loss) 7.5 (111.3) 89.4 (138.7)
Less: Preferred stock dividends (6.5) (6.1) (25.4) (15.1)
------- ------- -------- -------
Earnings (loss) attributable to common
shareholders $ 1.0 $(117.4) $ 64.0 $(153.8)
======= ======= ======== =======
Average Common and Common Equivalent Shares
Outstanding:
Average common shares
outstanding 44.5 44.2 44.3 43.8
Add shares of common stock
assumed issued on:
Exercise of stock options 0.2 - 0.3 -
------- ------- -------- -------
Average common and common
equivalent shares outstanding 44.7 44.2 44.6 43.8
======= ======= ======== =======
FULLY DILUTED
Fully Diluted Earnings Per Share:
Income (loss) before cumulative
effect of change in accounting $ 7.5 $(111.3) $ 89.4 $(136.1)
Cumulative effect of change
in accounting - - - (2.6)
------- ------- -------- -------
Net income (loss) 7.5 (111.3) 89.4 (138.7)
Less: Preferred stock dividends (6.5) (6.1) (25.4) (15.1)
------- ------- -------- -------
Earnings (loss) attributable to common
shareholders 1.0 (117.4) 64.0 (153.8)
Add: Series B preferred stock
dividends - - 17.0 -
------- ------- -------- -------
Net income available to common
shareholders $ 1.0 $(117.4) $ 81.0 $(153.8)
======= ======= ======== =======
Average Common Shares Outstanding, Assuming
Full Dilution:
Average common shares outstanding 44.5 44.2 44.3 43.8
Add shares of common stock assumed
issued on:
Exercise of stock options 0.2 - 0.2 -
Conversion of Series B preferred
stock - - 12.6 -
------- ------- -------- -------
Average common shares outstanding,
assuming full dilution 44.7 44.2 57.1 43.8
======= ======= ======== ========
SIGNATURE
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 hereunto duly authorized.
ALEXANDER & ALEXANDER SERVICES INC.
By: /s/Albert A. Skwiertz, Jr.
Albert A. Skwiertz, Jr.
Vice President & General Counsel
Date: February 14, 1996
Alexander & Alexander Services Inc.
1185 Avenue of the Americas
New York, NY 10036
Telephone 212 444-4500
FAX 212 444-4696
VIA EDGAR
February 14, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Current Report on Form 8-K
Gentlemen:
Enclosed for filing please find one conformed copy of the Current Report
on Form 8-K for Alexander & Alexander Services Inc. (the "Company").
This filing notices the February 14, 1996 press release by the Company.
Sincerely,
/s/ Andrea L. Schuman
Andrea L. Schuman
Attorney
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