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1 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: December 15, 1999 Commission File No. 001-13783 INTEGRATED ELECTRICAL SERVICES, INC. (Exact name of registrant as specified in its charter) DELAWARE 76-0542208 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 515 Post Oak Boulevard Suite 450 Houston, Texas 77027-9408 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (713) 860-1500

2 ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On October 18, 1999, Integrated Electrical Services, Inc. (the "Company") consummated the acquisition of all of the issued and outstanding capital stock of Britt Rice Electric, Inc. and Britt Rice Company and certain assets held by Britt Rice individually, (collectively, "BRE"). BRE performs electrical contracting services primarily in Bryan, College Station and Dallas, Texas. The consideration paid by the Company for BRE was determined through negotiations between representatives of the Company and BRE and consisted of an aggregate of 577,386 shares of common stock of the Company and approximately $9.0 million in cash. The cash portion of the consideration paid for BRE was funded through borrowings under the Company's existing $175.0 million line of credit facility. The Company intends to continue using the assets of BRE in the electrical contracting business.

3 ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (A) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED

4 INDEPENDENT AUDITORS' REPORT Britt Rice Electric, Inc. and Britt Rice Company College Station, Texas We have audited the accompanying balance sheet of Britt Rice Electric, Inc. (a corporation) and Britt Rice Company (a proprietorship) as of December 31, 1998, and the related statements of income and retained earnings and capital and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Britt Rice Electric, Inc. and Britt Rice Company as of December 31, 1998, and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. Our audit was made for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplementary information on pages 13-29 is presented for the purposes of additional analysis and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion is fairly stated in all material respects in relation to the basic financial statements taken as a whole. DULOCK & COMPANY, P.C. February 26, 1999

5 BRITT RICE ELECTRIC, INC. AND BRITT RICE COMPANY BALANCE SHEET DECEMBER 31, 1998 BRITT RICE BRITT RICE ELECTRIC, INC. COMPANY ELIMINATIONS COMBINED -------------- ---------- ------------ ----------- ASSETS Current Assets Cash $ 559,914 $ 151,158 $ -- $ 711,072 Certificates of deposit - money market 2,363,212 270,074 -- 2,633,286 Contracts receivable Completed contracts 1,122,187 314,651 -- 1,436,838 Earned estimates 2,022,989 65,838 -- 2,088,827 Retainage 817,892 12,314 -- 830,206 Accounts receivable Britt Rice Electric, Inc. -- 710,379 (710,379) -- Other 57,599 -- 57,599 Inventory - materials & supplies 456,666 -- -- 456,666 Costs and estimated earnings in excess of billings on uncompleted contracts 106,962 -- -- 106,962 Prepaid expense 42,775 -- -- 42,775 -------------- ---------- ------------ ----------- Total Current Assets 7,550,196 1,524,414 (710,379) 8,364,231 Property and Equipment - at Cost Machinery and equipment 244,729 83,696 -- 328,425 Trucks and vehicles 989,576 239,274 -- 1,228,850 Office equipment 322,807 96,625 -- 419,432 -------------- ---------- ------------ ----------- 1,557,112 419,595 -- 1,976,707 Less - accumulated depreciation 1,026,409 414,171 -- 1,440,580 -------------- ---------- ------------ ----------- 530,703 5,424 -- 536,127 -------------- ---------- ------------ ----------- Other Assets Organization cost - net of amortization -- -- -- -- -------------- ---------- ------------ ----------- -- -- -- -- -------------- ---------- ------------ ----------- Total Assets $ 8,080,899 $ 1,529,838 $ (710,379) $ 8,900,358 ============== ========== ============ =========== The accompanying notes are a part of the financial statements.

6 BRITT RICE ELECTRIC, INC. AND BRITT RICE COMPANY BALANCE SHEET (CONTINUED) DECEMBER 31, 1998 BRITT RICE BRITT RICE ELECTRIC, INC. COMPANY ELIMINATIONS COMBINED -------------- ---------- ------------ ----------- LIABILITIES Current Liabilities Notes payable - amount due in one year $ 23,352 $ -- $ -- $ 23,352 Accounts payable Trade 1,121,159 181,950 -- 1,303,109 Britt Rice Company 710,379 -- (710,379) -- Unbilled amounts due subcontractors and overbilling on contracts 781,925 799 -- 782,724 Accrued liabilities Payroll tax 2,742 51 -- 2,793 Sales tax 10,594 4,091 -- 14,685 Vacation 78,925 7,513 -- 86,438 Federal income tax payable (1,637) -- -- (1,637) -------------- ---------- ------------ ----------- Total Current Liabilities 2,727,439 194,404 (710,379) 2,211,464 Long-Term Debt Notes payable -- -- -- -- Deferred federal income tax -- -- -- -- -------------- ---------- ------------ ----------- Total Liabilities 2,727,439 194,404 (710,379) 2,211,464 STOCKHOLDER'S EQUITY AND CAPITAL Common stock - no par - 1,000,000 shares authorized - 10,000 shares issued and outstanding 1,000 -- -- 1,000 Retained earnings 5,352,460 -- -- 5,352,460 Capital - Britt Rice -- 1,335,434 -- 1,335,434 -------------- ---------- ------------ ----------- 5,353,460 1,335,434 -- 6,688,894 -------------- ---------- ------------ ----------- Total Liabilities and Stockholders' Equity and Capital $ 8,080,899 $1,529,838 $ (710,379) $ 8,900,358 ============== ========== ============ =========== The accompanying notes are a part of the financial statements.

7 BRITT RICE ELECTRIC, INC. AND BRITT RICE COMPANY STATEMENT OF RETAINED EARNINGS AND CAPITAL FOR THE YEAR ENDED DECEMBER 31, 1998 BRITT RICE BRITT RICE ELECTRIC, INC. COMPANY COMBINED -------------- ----------- ----------- Balance - January 1 $ 3,510,268 $ 1,384,913 $ 4,895,181 Net income 2,732,837 208,486 2,941,323 Distributions - Withdrawals (890,645) (257,965) (1,148,610) -------------- ----------- ----------- Balance - December 31 $ 5,352,460 $ 1,335,434 $ 6,687,894 ============== =========== =========== The accompanying notes are a part of the financial statements.

8 BRITT RICE ELECTRIC, INC. AND BRITT RICE COMPANY STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1998 BRITT RICE BRITT RICE ELECTRIC, INC. COMPANY COMBINED -------------- ------------ ------------ Earned Revenues $ 23,182,240 $ 2,704,766 $ 25,887,006 Cost of Earned Revenues 19,716,429 2,423,251 22,139,680 -------------- ------------ ------------ Gross Profit on Contracts 3,465,811 281,515 3,747,326 Operating Expenses 902,384 90,715 993,099 -------------- ------------ ------------ Income from Operations 2,563,427 190,800 2,754,227 Other Income Interest 74,228 14,300 88,528 Other 95,182 3,386 98,568 -------------- ------------ ------------ 169,410 17,686 187,096 -------------- ------------ ------------ Net Income Before Federal Income Tax 2,732,837 208,486 2,941,323 Federal Income Tax Current -- -- -- -------------- ------------ ------------ Net Income $ 2,732,837 $ 208,486 $ 2,941,323 ============== ============ ============ The accompanying notes are a part of the financial statements.

9 BRITT RICE ELECTRIC, INC. AND BRITT RICE COMPANY SCHEDULE OF COST OF EARNED REVENUES FOR THE YEAR ENDED DECEMBER 31, 1998 BRITT RICE BRITT RICE ELECTRIC, INC. COMPANY COMBINED -------------- ------------ ------------ Cost of Earned Revenues Materials $ 8,980,336 $ 548,016 $ 9,528,352 Salaries 6,270,213 549,058 6,819,271 Sub-contracts 2,343,421 1,130,291 3,473,712 Insurance - bonds - liability - workmen's compensation - general - group 323,358 58,449 381,807 Tax - payroll 506,691 43,299 549,990 Truck and equipment expense 171,426 19,924 191,350 Rent 106,852 6,240 113,092 Supplies 183,596 26,151 209,747 Depreciation 148,428 7,455 155,883 Equipment rental 452,702 15,620 468,322 Contract labor 158,578 -- 158,578 Permits and fees 4,599 16,023 20,622 Employee benefits 853 1,128 1,981 Travel 56,669 -- 56,669 Other 8,707 1,597 10,304 -------------- ------------ ------------ Total $ 19,716,429 $ 2,423,251 $ 22,139,680 ============== ============ ============ The accompanying notes are a part of the financial statements.

10 BRITT RICE ELECTRIC, INC. AND BRITT RICE COMPANY SCHEDULE OF OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1998 BRITT RICE BRITT RICE ELECTRIC, INC. COMPANY COMBINED -------------- ------------ ------------ Operating Expenses Salaries - office - general $ 269,894 $ 43,890 $ 313,784 Insurance - group - general 19,200 4,800 24,000 Legal and accounting 23,000 6,570 29,570 Office supplies - printing - postage 41,299 2,420 43,719 Advertising 52,998 585 53,583 Dues and subscriptions 7,063 -- 7,063 Business promotion & entertainment 19,636 3,048 22,684 Tax Payroll 22,094 3,509 25,603 Franchise 82,775 -- 82,775 Ad valorem and other 22,054 822 22,876 Contributions 1,600 -- 1,600 Interest 3,328 -- 3,328 Depreciation 31,444 10,695 42,139 Rent 26,713 1,560 28,273 Repairs - maintenance - general 8,280 2,020 10,300 Maintenance agreements 4,414 -- 4,414 Telephone 57,348 4,897 62,245 Utilities 27,712 -- 27,712 Freight 3,589 72 3,661 Bad debts 57,378 4,110 61,488 Travel expense -- -- -- Radio & communications 27,849 176 28,025 Employee benefits 396 -- 396 Profit sharing - 401 K 22,038 1,422 23,460 Apprenticeship school -- -- -- Computer support & data processing 67,986 -- 67,986 Other 2,296 119 2,415 -------------- ------------ ------------ Total $ 902,384 $ 90,715 $ 993,099 ============== ============ ============ The accompanying notes are a part of the financial statements.

11 BRITT RICE ELECTRIC, INC. AND BRITT RICE COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1998 BRITT RICE BRITT RICE ELECTRIC, INC. COMPANY ELIMINATIONS COMBINED -------------- ---------- ------------ ------------ Cash Flows From Operating Activities Net income $ 2,732,837 $ 208,486 $ -- $ 2,941,323 Adjustments to reconcile net income to net cash provided by operations: Depreciation 179,872 18,150 -- 198,022 Contracts receivable - (increase) decrease (1,528,175) (55,523) -- (1,583,698) Accounts receivable - payable Intercompany (increase) decrease 100,000 (100,000) -- -- Other - (increase) decrease (57,599) -- -- (57,599) Inventory - (increase) decrease (456,666) -- -- (456,666) Costs and estimated earnings in excess of billings on uncompleted contracts - (increase) decrease (99,479) -- -- (99,479) Prepaid expense - (increase) decrease (42,275) -- -- (42,275) Accounts payable - trade - increase (decrease) 269,678 87,276 -- 356,954 Unbilled amounts due subcontractors and overbilling on contracts - increase (decrease) 129,125 799 -- 129,924 Accrued liabilities - increase (decrease) 75,867 8,146 -- 84,013 Federal income tax payable - (decrease) (1,637) -- -- (1,637) -------------- ---------- ------------ ------------ Net Cash Provided by Operating Activities 1,301,548 167,334 -- 1,468,882 -------------- ---------- ------------ ------------ Cash Flows From Investing Activities Purchase of machinery and equipment (18,583) (1,086) -- (19,669) Purchase of trucks and vehicles (177,308) (1,939) -- (179,247) Purchase of office equipment (7,854) (10,695) -- (18,549) Book value of trucks & machinery & equipment sold or traded -- -- -- -- Britt Rice - distributions - withdrawals (890,645) (257,965) -- (1,148,610) -------------- ---------- ------------ ------------ Net Cash Used By Investing Activities (1,094,390) (271,685) -- (1,366,075) -------------- ---------- ------------ ------------ Cash Flows From Financing Activities New borrowings Short-term 50,688 -- -- 50,688 Long-term 12,664 -- -- 12,664 Debt reduction Short-term (75,330) -- -- (75,330) Long-term (12,664) -- -- (12,664) -------------- ---------- ------------ ------------ Net Cash Used by Financing Activities (24,642) -- -- (24,642) -------------- ---------- ------------ ------------ Net Increase (decrease) in cash - Certificates of Deposit - Money Market 182,516 (104,351) -- 78,165 Cash - January 1 2,740,610 525,583 -- 3,266,193 -------------- ---------- ------------ ------------ Cash - December 31 $ 2,923,126 $ 421,232 $ -- $ 3,344,358 ============== ========== ============ ============ Supplemental Disclosures Interest paid $ 3,328 $ -- $ -- $ 3,328 ============== ========== ============ ============ Federal income tax paid $ -- $ -- $ -- $ -- ============== ========== ============ ============ The accompanying notes are a part of the financial statements.

12 BRITT RICE ELECTRIC, INC. AND BRITT RICE COMPANY NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1998 1. Summary of Significant Accounting Policies The following is a summary of certain significant accounting policies followed in the preparation of these financial statements. The policies conform to generally accepted accounting principles and have been consistently applied. Basis for Recording Income Profits on long term contracts are recorded on the basis of the company's estimates of the percentage of completion of individual contracts, commencing when progress reaches a point where experience is sufficient to estimate final results with reasonable accuracy. That portion of the total contract price is accrued which is allocable, on the basis of the company's estimates of the percentage of completion, to contract expenditures incurred and work performed. As these long term contracts extend over one or more years revisions in cost and profit estimates during the course of the work are reflected in the accounting period in which the facts which require the revision become known. Profits on short term contracts are recorded on the substantial completion of each contract. At the time a loss on a contract becomes known, the entire amount of the estimated ultimate loss on both short term and long term contract is recorded. Property and Equipment Property and equipment is recorded at cost and depreciated over their estimated useful lives using the accelerated methods of depreciation for both financial reporting purposes and for federal income tax purposes. Upon sale or retirement, the cost and related accumulated depreciation are eliminated from the respective accounts and the resulting gain or loss is included in current income. Repairs and maintenance charges which do not increase the useful lives of the assets are charged to income as incurred. 2. Notes Payable The following is a summary of note payable at December 31, 1998:

13 BRITT RICE ELECTRIC, INC. AND BRITT RICE COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1998 PRINCIPAL AMOUNT DUE ------------------------- IN ONE IN MORE THAN YEAR ONE YEAR TOTAL -------- ------------ -------- Norwest Bank - Texas, N.A. - Bryan, Texas - original amount $165,000 line of credit - dated March 27, 1998 - fifteen - month note - due July 9, 1999 - interest rate 7.0 percent - unsecured $ 23,352 $ -- $ 23,352 -------- ------------ -------- Total $ 23,352 $ -- $ 23,352 ======== ============ ======== 3. Federal Income Tax The stockholders of Britt Rice Electric, Inc. have elected under Section 1372 (a) of the Internal Revenue Code to be taxed as a small business corporation. This election permits the undistributed taxable income of a "small business corporation" to be taxed to the stockholders rather than the corporation. Therefore, Britt Rice Electric Inc. does not owe any federal income tax at December 31, 1998. Britt Rice Company is a proprietorship and Britt Rice includes the income of the company with his other income and expense on his federal income tax return form 1040. The federal income tax for the company has been paid and all additional federal income tax is recorded on Britt Rice's personal financial statement. The following is a reconciliation of income for financial statement and taxable income for the year ended December 31, 1998. FINANCIAL TAX ---------- ---------- Income before federal income tax $2,941,323 $2,941,323 Depreciation -- -- Meals and entertainment - 50% non-deductible 11,342 11,342 ---------- ---------- Taxable Income $2,952,665 $2,952,665 ========== ==========

14 BRITT RICE ELECTRIC, INC. AND BRITT RICE COMPANY NOTES TO FINANCIAL STATEMENTS (CONTINUED) DECEMBER 31, 1998 4. Depreciation Depreciation is deducted in the statement of income as follows: METHOD LIFE AMOUNT ------ --------- -------- Machinery and equipment MACRS 7 years $ 32,673 Trucks and vehicles MACRS 5 years 123,210 Office equipment MACRS 5-7 years 42,139 -------- Total $198,022 ======== 5. Contingent Liabilities The company is contingently liable on the following lease agreements at December 31, 1998: DATE OF NUMBER OF ANNUAL LEASE MONTHS AMOUNT ------- --------- -------- Office and warehouse College Station 3-1-98 36 $ 90,795 College Station 3-1-98 36 7,800 Dallas 9-1-92 120 42,770 -------- Total $141,365 ========

15 ITEM 7. (B) PRO FORMA FINANCIAL INFORMATION INTEGRATED ELECTRICAL SERVICES, INC. UNAUDITED PRO FORMA FINANCIAL STATEMENTS BASIS OF PRESENTATION The unaudited pro forma balance sheet reflects the acquisition by Integrated Electrical Services, Inc. ("IES"), of BRE as if it had occurred on September 30, 1999. The unaudited pro forma statements of operations for the year ended September 30, 1998, presents the statement of operations data to give effect to the 78 electrical and cabling contracting and maintenance companies and related entities (including the 16 companies acquired concurrent with IES' initial public offering) acquired through September 30, 1999 (the "Previously Closed Acquisitions"), BRE and the related pro forma adjustments as if they had occurred on October 1, 1997. The unaudited pro forma statement of operations for the year ended September 30, 1999, presents the statement of operations data to give effect to the Previously Closed Acquisitions, BRE and the related pro forma adjustments as if they had occurred on October 1, 1998. IES has analyzed the savings that it expects to realize from reductions in salaries, bonuses and certain benefits to the owners. To the extent the owners of the Acquisitions have contractually agreed to changes in salary, bonuses, benefits and lease payments, these changes have been reflected in the unaudited pro forma combined statement of operations. Certain pro forma adjustments are based on preliminary estimates, available information and certain assumptions that Company management deems appropriate and may be revised as additional information becomes available. The pro forma financial data do not purport to represent what IES's combined financial position or results of operations would actually have been if such transactions in fact had occurred on these dates and are not necessarily representative of IES's combined financial position or results of operations for any future period. Since the acquired entities were not under common control or management prior to their acquisitions by IES, historical combined results may not be comparable to, or indicative of, future performance. The unaudited pro forma combined financial statements should be read in conjunction with the historical consolidated financial statements and notes thereto included in the company's Annual Report for the year ended September 30, 1998 filed on Form 10-K. See also "Risk Factors" included elsewhere therein.

16 INTEGRATED ELECTRICAL SERVICES, INC. UNAUDITED PRO FORMA BALANCE SHEET SEPTEMBER 30, 1999 (IN THOUSANDS) IES AND PRO FORMA PRO FORMA SUBSIDIARIES BRE ADJUSTMENTS TOTAL ------------- -------------- ----------- --------- ASSETS CURRENT ASSETS: Cash............................................. $ 2,931 $ 1,400 $ -- $ 4,331 Receivables, net................................. 270,726 6,162 -- 276,888 Inventories, net................................. 12,793 378 -- 13,171 Cost and estimated earnings in excess of billings on uncompleted contracts............ 40,592 -- -- 40,592 Prepaid expenses and other current assets....... 7,640 46 -- 7,686 ------------- --------- ------- ------------ Total current assets.......................... 334,682 7,986 -- 342,668 RECEIVABLES FROM RELATED PARTIES.................... -- -- -- -- GOODWILL, NET....................................... 467,385 -- 10,270 477,655 PROPERTY AND EQUIPMENT, NET......................... 47,368 477 -- 47,845 OTHER NONCURRENT ASSETS............................. 9,057 -- -- 9,057 ------------- --------- ------- ------------ Total assets.................................. $ 858,492 $ 8,463 $10,270 $ 877,225 ============= ========= ======= ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Short-term debt and current maturities of long-term debt................. $ 1,444 $ -- $ -- $ 1,444 Accounts payable and accrued expense............. 116,121 2,369 -- 118,490 Billings in excess of costs and estimated earnings on uncompleted contracts............ 37,507 755 -- 38,262 Income taxes payable............................. 3,971 -- -- 3,971 Other current liabilities........................ 67 (2) -- 65 ------------- --------- ------- ------------ Total current liabilities..................... 159,110 3,122 -- 162,232 ------------- --------- ------- ------------ LONG-TERM BANK DEBT................................. 76,980 -- -- 76,980 OTHER LONG-TERM DEBT, net of current maturities 1,120 -- 9,100 10,220 SENIOR SUBORDINATED NOTES, net of $1,170 discount.......................... 148,849 -- -- 148,849 OTHER NON-CURRENT LIABILITIES....................... 5,267 -- -- 5,267 ------------- --------- ------- ------------ Total liabilities............................. 391,326 3,122 9,100 403,548 STOCKHOLDERS' EQUITY: Preferred stock.................................. -- -- -- -- Common stock..................................... 360 1 5 366 Restricted common stock.......................... 27 -- -- 27 Treasury stock................................... -- -- -- -- Additional paid-in capital....................... 407,926 -- 6,505 414,431 Retained earnings................................ 58,853 5,340 (5,340) 58,853 ------------- --------- ------- ------------ Total stockholders' equity.................... 467,166 5,341 1,170 473,677 ------------- --------- ------- ------------ Total liabilities and stockholders' equity..... $ 858,492 $ 8,463 $10,270 $ 877,225 ============= ========= ======= ============

17 INTEGRATED ELECTRICAL SERVICES, INC. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1998 (IN THOUSANDS, EXCEPT SHARE INFORMATION) PREVIOUSLY IES AND CLOSED PRO FORMA PRO FORMA SUBSIDIARIES ACQUISITIONS BRE ADJUSTMENTS TOTAL ------------- --------------- --------------- -------------- --------- REVENUES.................................. $ 386,721 $ 771,373 $ 24,510 $ -- $1,182,604 COST OF SERVICES.......................... 306,052 617,831 19,741 -- 943,624 ------------ ------------- --------------- -------------- ---------- GROSS PROFIT........................... 80,669 153,542 4,769 -- 238,980 SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES............... 47,390 119,657 1,059 (41,762)a 126,344 NON-CASH, NON-RECURRING COMPENSATION CHARGE.................. 17,036 -- -- (17,036)b -- GOODWILL AMORTIZATION..................... 3,212 -- -- 9,040 c 12,252 ------------ ------------- --------------- -------------- ---------- INCOME FROM OPERATIONS................. 13,031 33,885 3,710 49,758 100,384 OTHER INCOME (EXPENSE): Interest expense....................... (1,161) (1,602) -- (2,166)d (4,929) Interest income........................ 433 1,517 67 (2,326)d (309) Other, net............................. 335 939 49 (462)c 861 ------------ ------------- --------------- -------------- ---------- OTHER INCOME (EXPENSE), NET............... (393) 854 116 (4,954) (4,377) INCOME BEFORE INCOME TAXES................ 12,638 34,739 3,826 44,804 96,007 PROVISION FOR INCOME TAXES................ 12,690 14,080 -- 14,546 e 41,316 ------------ ------------- --------------- -------------- ---------- NET INCOME (LOSS)......................... $ (52) $ 20,659 $ 3,826 $ 30,258 $ 54,691 ============ ============= =============== ============== ========== EARNING (LOSS) PER SHARE - BASIC - $ 0.00 $ 1.39 ============ ========== DILUTED - $ 0.00 $ 1.38 ============ ========== SHARES USED IN THE COMPUTATION OF EARNINGS (LOSS) PER SHARE BASIC - 19,753,060 39,218,933 ============ ========== DILUTED - 19,753,060 39,618,766 ============ ==========

18 INTEGRATED ELECTRICAL SERVICES, INC. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 1999 (IN THOUSANDS, EXCEPT SHARE INFORMATION) PREVIOUSLY IES AND CLOSED BRITT RICE PRO FORMA PRO FORMA SUBSIDIARIES ACQUISITIONS ELECTRIC, INC. ADJUSTMENTS TOTAL ------------- --------------- --------------- -------------- ---------- REVENUES.................................. $ 1,035,888 $ 233,195 $ 28,551 $ -- $1,297,634 COST OF SERVICES.......................... 816,715 186,846 22,883 (402)a 1,026,042 ------------ --------------- --------------- -------------- ---------- GROSS PROFIT........................... 219,173 46,349 5,668 402 271,592 SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES............... 113,871 38,823 2,040 (8,231)a 146,503 GOODWILL AMORTIZATION..................... 9,305 -- -- 2,947 c 12,252 ------------ --------------- --------------- -------------- ---------- INCOME FROM OPERATIONS................. 95,997 7,526 3,628 5,686 112,837 OTHER INCOME (EXPENSE): Interest expense....................... (14,089) (999) -- 362 d (14,726) Interest income........................ 944 388 104 (492)d 944 Other, net............................. 603 648 (51) -- 1,200 ------------ --------------- --------------- -------------- ---------- OTHER INCOME (EXPENSE), NET............... (12,542) 37 53 (130) (12,582) INCOME BEFORE INCOME TAXES................ 83,455 7,563 3,681 5,556 100,255 PROVISION FOR INCOME TAXES................ 35,348 2,976 -- 4,627 e 42,951 ------------ --------------- --------------- -------------- ---------- NET INCOME (LOSS)......................... $ 48,107 $ 4,587 $ 3,681 $ 929 $ 57,304 ============ =============== =============== ============== ========== EARNING (LOSS) PER SHARE - BASIC - $ 1.41 $ 1.46 ============ ========== DILUTED - $ 1.39 $ 1.45 ============ ========== SHARES USED IN THE COMPUTATION OF EARNINGS (LOSS) PER SHARE BASIC - 34,200,532 39,218,933 ============ ========== DILUTED - 34,632,506 39,650,907 ============ ==========

19 INTEGRATED ELECTRICAL SERVICES, INC. NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS 1. UNAUDITED PRO FORMA BALANCE SHEET: The Unaudited Pro Forma Balance Sheet gives effect to the acquisition of BRE which was acquired for total consideration of $15.5 million, including $9.0 million in cash and 0.6 million shares of common stock. 2. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS: The Unaudited Pro Forma Statement of Operations for the year ended September 30, 1998 for IES and Subsidiaries reflects the historical results of Houston-Stafford Electric, Inc. ("Houston-Stafford") as the accounting acquirer (restated for the effect of an acquisition accounted for as a pooling-of-interest combined) the other Founding Companies beginning February 1, 1998, and the Acquired Companies beginning on their respective dates of acquisition. Pro Forma Adjustments consist of the following: (a) Reflects the reduction in salaries, bonuses and benefits and lease payments to the owners of the Acquisitions. These reductions in salaries, bonuses and benefits and lease payments have been agreed to in accordance with the terms of employment agreements executed as part of the acquisitions. Such employment agreements are for five years, contain restrictions related to competition and provide severance for termination of employment in certain circumstances. (b) Includes the reversal of the $17.0 million non-cash, non-recurring compensation charge in connection with the acquisition of the Founding Companies. (c) Reflects the amortization of goodwill recorded as a result of these acquisitions over a 40-year estimated life, as well as a reduction in historical minority interest expense attributable to minority interests that were acquired as part of the related acquisitions. (d) Reflects the reduction of additional interest expense and income on borrowings which will be repaid and collected, respectively, subsequent to the acquisition and the reduction of certain non-recurring other income. (e) Reflects the incremental provision for federal and state income taxes at a 38.5% overall tax rate, before non-deductible goodwill and other permanent items, related to the other statements of operations adjustments and for income taxes on the pretax income of acquired companies that have historically elected S Corporation tax status.

20 ITEM 7. (C) EXHIBITS 23.1 Consent of Dulock and Company, P.C.

21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned, thereunto duly authorized. INTEGRATED ELECTRICAL SERVICES, INC. By: /s/ STANLEY H. FLORANCE ------------------------------ STANLEY H. FLORANCE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER Dated: December 15, 1999

22 Exhibit Index Exhibit No. Description - -------- ----------- 23.1 Consent of Dulock and Company, P.C.

   1
                                                                    EXHIBIT 23.1


                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the incorporation of our
report, dated February 26, 1999, on the financial statements of Britt Rice
Electric, Inc. included in this Form 8-K, into Integrated Electrical Services,
Inc.'s previously filed Registration Statements on Form S-8 (File Nos.
333-67113, 333-45447, 333-45449 and 333-91041) and previously filed Post
Effective Amendment No. 5 to Form S-1 on Form S-4 (File No. 333-50031).


DULOCK AND COMPANY, P.C.
WACO, Texas
December 14, 1999