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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported) July 23, 1997
INTERNATIONAL ALLIANCE SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 22-2769024
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
0-25890
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(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.
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ITEM 2. Acquisition or Disposition of Assets
Disposition of the RESI Companies
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(i) General
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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
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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.
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ITEM 7. Financial Statements and Exhibits.
(a) Proforma Financial Information
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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.
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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).
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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.
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International Alliance Services, Inc.
Unaudited Pro Forma Condensed Consolidated Balance Sheet
<TABLE>
<CAPTION>
(In Thousands) June 30, 1997
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Pro Forma Pro Forma
Consolidated (a) Adjustments Consolidated
---------------- ----------- ------------
<S> <C> <C> <C>
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
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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
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$ 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
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$ 94,550 $ (3,674) $ 90,876
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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
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TOTAL SHAREHOLDERS' EQUITY 117,595 124 117,719
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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.
</TABLE>
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International Alliance Services, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Six Months Ended June 30, 1997
<TABLE>
<CAPTION>
(In Thousands)
Pro Forma Pro Forma
Consolidated (a) Adjustments Consolidated
---------------- ----------- ------------
<S> <C> <C> <C>
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
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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
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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).
</TABLE>
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International Alliance Services, Inc.
Unaudited Pro Forma Condensed Consolidated Statement of Income
For the Year Ended December 31, 1996
<TABLE>
<CAPTION>
(In Thousands)
Pro Forma Pro Forma
Consolidated (a) Adjustments Consolidated
---------------- ----------- ------------
<S> <C> <C> <C>
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
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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
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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).
</TABLE>
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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
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Gregory J. Skoda
Executive Vice President and
Chief Financial Officer
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INDEX TO EXHIBIT
EXHIBIT
NUMBER EXHIBIT
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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).
