-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VXJ6LsU87uWte5GbH8PWtJIiUaU0/ljZZXujLfzCyA8pT0kiCs6sYI1x1JfVoMw9 DU7GZ0rtRN/d8itLnaSfiw== 0000950124-96-003454.txt : 19960812 0000950124-96-003454.hdr.sgml : 19960812 ACCESSION NUMBER: 0000950124-96-003454 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960809 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: RANDERS GROUP INC CENTRAL INDEX KEY: 0000830104 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 382788025 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-11039 FILM NUMBER: 96607280 BUSINESS ADDRESS: STREET 1: 570 SEMINOLE RD CITY: MUSKEGON STATE: MI ZIP: 49444 BUSINESS PHONE: 616-733-00 MAIL ADDRESS: STREET 1: 388 GREENWICH ST. 22ND FL CITY: NEW YORK STATE: NY ZIP: 10013 10QSB 1 FORM 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 1996 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------ ----- Commission file number 0-18095. THE RANDERS GROUP INCORPORATED --------------------------------------------------------- (Exact Name of Small Business Issuer as Specified in its Charter) DELAWARE 38-2788025 - --------------------------------- ------------------------------------ (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 570 Seminole Road, Norton Shores, Michigan 49444 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) (616) 733-0036 ----------------------------------- (Issuer's Telephone Number) - ------------------------------------------------------------------------------- Check whether the issuer (1) 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 for 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. Yes X No ----- ----- Number of Common shares, par value $.0001, outstanding at July 31, 1996: 14,115,682 2 THE RANDERS GROUP INCORPORATED FORM 10-QSB QUARTERLY REPORT TABLE OF CONTENTS
Page ---- Facing Sheet....................................................... 1 TABLE OF CONTENTS.................................................. 2 PART I Financial Information ITEM 1 Financial Statements Condensed Consolidated Balance Sheets (Unaudited) - June 30, 1996 and December 31, 1995.................. 3 Condensed Consolidated Statements of Operations (Unaudited) - Three months and six months ended June 30, 1996 and 1995............................... 5 Condensed Consolidated Statements of Cash Flows (Unaudited) - Six months ended June 30, 1996 and 1995................................................. 6 Notes to Condensed Consolidated Financial Statements. 8 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 13 PART II Other Information........................................ 18 SIGNATURES......................................................... 20 STATEMENT REGARDING COMPUTATION OF EARNINGS (LOSS) PER SHARE....... 21 FINANCIAL DATA SCHEDULE............................................ 22
-2- 3 THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
June 30, December 31, ASSETS 1996 1995 ------ ----------- ------------ CURRENT ASSETS: Cash and cash equivalents $ 442,184 $ 409,087 Accounts receivable, less allowances of $75,000 and $30,500 for possible losses 2,459,879 2,499,199 Prepaid expenses and other 80,161 59,847 Future income tax benefits 62,000 62,000 ---------- ---------- TOTAL CURRENT ASSETS 3,044,224 3,030,133 ---------- ---------- NET PROPERTY AND EQUIPMENT 2,640,306 2,617,919 ---------- ---------- OTHER ASSETS: Notes and accounts receivable - affiliate 1,164,147 1,061,033 Real estate held for resale 89,400 237,853 Goodwill, less accumulated amortization of $103,230 and $97,092 141,287 147,425 Miscellaneous 14,758 20,623 ---------- --------- TOTAL OTHER ASSETS 1,409,592 1,466,934 ---------- ---------- $7,094,122 $7,114,986 ========== ==========
See accompanying notes to condensed consolidated financial statements. -3- 4 THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) (Unaudited)
June 30, December 31, 1996 1995 ------------ ------------ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Note payable - bank $1,020,000 $1,339,000 Accounts payable 265,159 680,332 Billings in excess of costs and estimated earnings on contracts in progress 176,200 54,000 Accrued compensation 225,485 162,113 Accrued income taxes 17,175 28,975 Other accrued expenses 132,529 37,409 Current maturities of long-term debt 103,169 124,113 --------- ---------- TOTAL CURRENT LIABILITIES 1,939,717 2,425,942 LONG-TERM DEBT, less current maturities 1,021,492 1,084,220 ---------- ---------- TOTAL LIABILITIES 2,961,209 3,510,162 ---------- ---------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Common stock, $.0001 par - shares authorized 30,000,000; issued 14,115,682 1,412 1,412 Additional paid-in capital 1,536,439 1,536,439 Retained earnings 2,595,062 2,066,973 ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 4,132,913 3,604,824 ---------- ---------- $7,094,122 $7,114,986 ========== ==========
See accompanying notes to condensed consolidated financial statements. -4- 5 THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 ---------- ---------- ---------- ---------- REVENUES: Construction $ 153,750 $ 749,644 $ 370,123 $1,767,203 Service/consulting 2,517,990 1,725,201 5,124,702 3,289,252 Rental 78,911 79,290 161,577 154,824 ----------- ----------- ----------- ----------- Total Revenues 2,750,651 2,554,135 5,656,402 5,211,279 ----------- ----------- ----------- ----------- COSTS AND EXPENSES: Construction costs 197,073 697,994 374,937 1,659,519 Costs of services/consulting 1,664,668 1,234,066 3,381,446 2,565,565 Rental costs 55,930 53,632 110,139 110,282 Selling, general and administrative expenses 460,846 417,950 909,726 888,384 ----------- ----------- ----------- ----------- Total Costs and Expenses 2,378,517 2,403,642 4,776,248 5,223,750 ----------- ----------- ----------- ----------- Operating Income (Loss) 372,134 150,493 880,154 (12,471) ----------- ----------- ----------- ----------- OTHER INCOME (EXPENSES): Interest expense (48,516) (59,446) (98,287) (115,563) Interest income 29,691 11,371 56,222 23,478 ----------- ----------- ----------- ----------- Other Income (Expenses) - Net (18,825) (48,075) (42,065) (92,085) ----------- ----------- ----------- ----------- Income (Loss) Before Taxes on Income 353,309 102,418 838,089 (104,556) INCOME TAXES (REDUCTION) 137,000 36,000 310,000 (33,000) ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ 216,309 $ 66,418 $ 528,089 $ (71,556) =========== =========== =========== =========== NET INCOME (LOSS) PER SHARE $ .02 $ .00 $ .04 $ (.01) =========== =========== =========== =========== AVERAGE NUMBER OF COMMON AND DILUTIVE COMMON EQUIVALENT SHARES OUTSTANDING 14,115,682 14,115,682 14,115,682 14,115,682 =========== =========== =========== =========== DIVIDENDS PER SHARE $ -0- $ -0- $ -0- $ -0- =========== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements. -5- 6 THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended June 30, -------------------------- 1996 1995 ---------- ---------- CASH FLOWS FROM (FOR) OPERATIONS: Cash received from customers $5,652,267 $5,350,252 Cash paid to suppliers and employees (4,768,007) (5,812,889) Interest received 12,477 14,421 Interest paid (98,287) (115,563) Income taxes (paid) refunded (321,800) - --------- --------- Net Cash From (For) Operations 476,650 (563,779) --------- --------- CASH FLOWS FROM (FOR) INVESTING ACTIVITIES: Capital expenditures (143,420) (152,334) Advances to affiliate (65,314) - Sale of real estate 148,453 - --------- --------- Net Cash From (For) Investing Activities (60,281) (152,334) --------- --------- CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: Net borrowings (payments) on line of credit (319,000) 405,000 Principal payments on loans (83,672) (70,145) Payment received on note from affiliate 19,400 7,200 -------- -------- Net Cash From (For) Financing Activities (383,272) 342,055 -------- -------- NET INCREASE (DECREASE) IN CASH 33,097 (374,058) Cash and cash equivalents, at beginning of period 409,087 776,430 -------- --------- Cash and cash equivalents, at end of period $ 442,184 $ 402,372 ======== =========
See accompanying notes to condensed consolidated financial statements. -6- 7 THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited)
Six Months Ended June 30, ------------------------- 1996 1995 ---------- ---------- RECONCILIATION OF NET INCOME (LOSS) TO NET CASH FROM (FOR) OPERATIONS: Net income (loss) $ 528,089 $ (71,556) Depreciation 121,033 95,304 Amortization 6,138 (52,609) Provision for (reduction in) allowance on accounts receivable 30,000 (50,500) Changes in operating assets and liabilities: Accounts and notes receivable (47,881) 202,973 Prepaid expenses and other (14,449) (34,830) Accounts payable and billings in excess of costs and estimated earnings on contracts in progress (292,973) (639,563) Accrued expenses 146,693 (12,998) ---------- ----------- NET CASH FROM (FOR) OPERATIONS $ 476,650 $ (563,779) ========== ===========
See accompanying notes to condensed consolidated financial statements. -7- 8 THE RANDERS GROUP INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF PRESENTATION The Randers Group Incorporated and Subsidiaries ("the Company") provide design, project management, general contracting and development services to industrial and commercial clients throughout the United States. The Company considers such operations to constitute one business segment. The condensed consolidated financial statements include the accounts of The Randers Group Incorporated and all of its subsidiaries. On consolidation all material intercompany accounts and transactions are eliminated. The financial information included herein as of any date other than December 31, is unaudited; however, such information reflects all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods. Financial information as of December 31, has been taken from the audited financial statements of the Company, however, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Accordingly, these condensed consolidated financial statements and notes should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 1995. A portion of the Company's business is derived from long-term contracts, the income from which is recognized on the percentage-of-completion method. Results of operations for any quarter may include revisions to estimated earnings for such contracts that were recorded in prior periods and these revisions may again be adjusted in subsequent quarters as further information becomes available or the contracts are completed. The results of operations for the six months ended June 30, 1996 are not necessarily indicative of the results to be expected for the full year. NOTE 2 - PROPERTY AND EQUIPMENT Property and equipment used in the construction and service/ consulting operations consist of the following: -8- 9 THE RANDERS GROUP INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, December 31, 1996 1995 ------------ ------------ Cost $ 2,206,864 $ 2,069,408 Less accumulated amortization 1,020,642 928,076 ------------ ------------ Net $ 1,186,222 $ 1,141,332 ============ ============
Property and equipment used in rental operations consist of the following:
June 30, December 31, 1996 1995 ------------ ------------ Cost $ 1,740,049 $ 1,734,085 Less accumulated amortization 285,965 257,498 ------------ ------------ Net $ 1,454,084 $ 1,476,587 ============ ============ Net Property and Equipment - total $ 2,640,306 $ 2,617,919 ============ ============
NOTE 3 - REAL ESTATE HELD FOR RESALE AND NOTES AND ACCOUNTS RECEIVABLE - AFFILIATE The $89,400 of real estate held for resale at June 30, 1996 represents one of two condominium units that were turned over to the Company as settlement for advances made to partners of FVALP. The carrying value of the asset held for sale approximates the estimated fair market value, less cost to sell, based on comparable properties. The estimate of the fair market value of the assets held for sale is dependent on current market conditions which could change in the near term. The amounts the Company could ultimately realize on the sale of the condominium could differ from the amount estimated. It is management's belief that the sale of the condominium unit will not result in any material adverse impact to the Company's financial statements. The Company sold one of the condominium units during the second quarter of 1996 at its book value. -9- 10 THE RANDERS GROUP INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Notes and accounts receivable from FVALP consist of the following:
June 30, December 31, 1996 1995 ------------ ------------ Notes receivable $ 416,512 $ 435,911 Accrued interest receivable 46,942 3,196 Accounts receivable 700,693 621,926 ------------ ------------ $ 1,164,147 $ 1,061,033 ============ ============
The notes receivable bear interest at the prime rate (8.25% at June 30, 1996), are comprised of $239,086 representing the remaining balance on a note receivable the Company accepted when it sold certain assets to FVALP prior to 1993 and a note receivable of $177,426 representing prior accrued interest receivable on a note due from FVALP. The $700,693 accounts receivable due from FVALP resulted from services provided and advances made to FVALP for the joint development of a condominium project. Based on cash projections, the condominium project is expected to provide sufficient cash flows to repay its borrowings from a bank which the Company has guaranteed, but not the entire amounts due to the Company. No impairment has been recognized for the projected shortfall on the amounts receivables, as the partners of FVALP have collateralized the receivables with 1,422,000 shares of the Company's common stock that are collectively owned by the partners of FVALP and FVALP. These shares are estimated to have sufficient market value to cover any remaining balances due from FVALP after the sale of the condominium project. Management has not reclassified any portion of the amounts due from FVALP as a contra to stockholders' equity as it believes that the Company can receive cash or other assets in full satisfaction of the amounts owed to it by FVALP. The Company's accounting for and classification of these amounts is based on sensitive estimates used to derive FVALP's projected construction costs on the condominium project, the time the condominiums will be held prior to sale, interest rates during these periods, the ultimate net sale price that will be received on the sale of the condominium project, the market value of the Company's common stock that was provided as collateral and the steps that will be taken to satisfy the receivables. -10- 11 THE RANDERS GROUP INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) The amounts FVALP ultimately realizes on the sale of the condominium project and the value of the collateral could differ from the amounts assumed in arriving at the carrying value and classification of the related receivables. It is management's belief that the sale of the condominium project and the ultimate settlement of the receivables from FVALP will not result in any material adverse impact to the Company's financial statements. Other than interest earned on the notes receivable from FVALP, the Company has deferred recognizing revenues, costs, and profits associated with transactions with FVALP until the Company has been reimbursed for all costs incurred. Amounts collected from FVALP are treated as a reduction of the accounts and notes receivable from FVALP. NOTE 4 - NOTE PAYABLE - BANK The Randers Group Incorporated has a line of credit which provides for advances up to $1,500,000. The line bears interest at the prime rate. The prime rate was 8.5% at December 31, 1995 and 8.25% at June 30, 1996. The line of credit is collateralized by all the assets of the Company. The loan agreement further provides that the Company is to maintain net worth of at least $1,500,000. Unrestricted equity was $2,104,824 at December 31, 1995 and $2,632,913 at June 30, 1996. NOTE 5 - CONTINGENCIES Insurance Coverage Due to the limited availability and high cost of professional liability insurance covering services related to the chemical industry, one of the Company's subsidiaries does not maintain such insurance. Management is not aware of any uninsured claims or potential claims which may be asserted against the Company. Although the Company has never incurred a significant liability because of work performed, there can be no assurances that the Company will not incur such a liability in the future. -11- 12 THE RANDERS GROUP INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Guarantee The Company has guaranteed the payment of a $475,000 line of credit by a bank to First Venture Associates Limited Partnership (FVALP), an affiliated company. There was $456,625 outstanding on the line at December 31, 1995 and June 30, 1996. The loan relates to the joint development of a condominium project by FVALP and the Company. NOTE 6 - NET INCOME (LOSS) PER SHARE Net income (loss) per share is computed on the basis of the weighted average number of common and dilutive common equivalent shares outstanding during the period. -12- 13 ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Company's construction and service/consulting operations normally do not require a significant investment in property and equipment or other long-term assets. Short-term needs for cash may develop as the service/consulting operations expands and cash is consumed by operations prior to the collection of the related revenue. Construction operations may provide temporary cash resources as amounts payable to subcontractors and suppliers are normally not due until after the related receivable from the client is collected. The Company's rental operations have required a significant investment in real estate. These operations have been primarily financed by long-term debt. The Company's June 30, 1996 balance sheet includes various amounts related to the Company's activities with First Venture Associates Limited Partnership (FVALP), an entity owned by four of the Company's officers/directors. Such amounts include $89,400 of real estate held for sale, notes receivable and accrued interest receivable from FVALP of $416,512 and $46,942, respectively, and accounts receivable from FVALP of $700,693. In addition, the Company has guaranteed FVALP's borrowings under its line of credit. Such borrowings amounted to $456,625 at June 30, 1996. The $89,400 of real estate held for sale represents one of two condominium units that were turned over to the Company as settlement for advances made to partners of FVALP. The carrying value of the asset held for sale approximates the estimated fair market value less costs to sell based on comparable properties. The estimate of the fair market value of the asset held for sale is dependent on current market conditions which could change in the near term. The amounts the Company could ultimately realize on the sale of the condominiums could differ from the amounts estimated. It is management's belief that the sale of the condominium unit will not result in any material adverse impact to the Company's financial statements. The Company sold one of the condominium units during the second quarter of 1996 at its book value. The $416,512 notes receivable balance is comprised of $239,086 representing the remaining balance on a note receivable the Company accepted when it sold certain assets to FVALP prior to 1993 and a note receivable of $177,426 representing prior accrued interest receivable on a note due from FVALP. The $700,693 accounts receivable due from FVALP resulted from services provided and advances made to FVALP for the joint development of a condominium project. Based on cash projections, the condominium project is expected to provide sufficient cash flows to repay its borrowings from a bank which the Company has -13- 14 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) guaranteed, but not the entire amounts due to the Company. No impairment has been recognized for the projected shortfall on the amounts receivables, as the partners of FVALP have collateralized the receivables with 1,422,000 shares of the Company's common stock that are collectively owned by the partners of FVALP and FVALP. These shares are estimated to have sufficient market value to cover any remaining balances due from FVALP after the sale of the condominium project. Management has not reclassified any portion of the amounts due from FVALP as a contra to stockholders' equity as it believes that the Company will receive cash or other assets in full satisfaction of the amounts owed to it by FVALP. The Company's accounting for and classification of these amounts is based on sensitive estimates used to derive FVALP's projected construction costs on the condominium project, the time the condominiums will be held prior to sale, interest rates during these periods, the ultimate net sale price that will be received on the sale of the condominium project, the market value of the Company's common stock that was provided as collateral and the steps that will be taken to satisfy the receivables. The amounts FVALP ultimately realizes on the sale of the condominium project and the value of the collateral could differ from the amounts assumed in arriving at the carrying value and classification of the related receivables. It is management's belief that the sale of the condominium project and the ultimate settlement of the receivables from FVALP will not result in any material adverse impact to the Company's financial statements. * * * * * * * * * * * * * * * * The following table sets forth information related to the Company's liquidity as of the dates indicated:
June 30, December 31, 1996 1995 ---------- ----------- Cash and cash equivalent $ 442,184 $ 409,087 Working capital $1,104,507 $ 604,191 Ratio of current assets to current liabilities 1.57 to 1 1.25 to 1 Funds available under the line of credit $ 480,000 $ 161,000
The Company's cash position of $442,184 at June 30, 1996 reflects an increase of $33,097 from December 31, 1995. -14- 15 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Operations for the first six months of 1996 resulted in a $477,000 increase in cash. A net profit of $528,000 combined with non-cash expenses of $157,000 and a $147,000 increase in accrued expenses was more than sufficient to offset a $62,000 increase in accounts and notes receivable and prepaid expenses, and a $293,000 decrease in accounts payable and billings in excess of costs and estimated earnings on contracts in progress. An additional $148,000 of cash came from the sale of one of the condominium units owned by the Company and $19,000 cash was collected on a note receivable from an affiliate. During the period the $143,000 of cash was invested in new equipment, $403,000 was used to reduce debt, and $65,000 was advanced to an affiliate. The forgoing resulted in a $33,000 increase in cash during the first six months of 1996. In June 1995, the Company opened an office in Springfield, Massachusetts. The Company has not incurred any major commitments for capital expenditures related to the new office, however, cash may be consumed during the initial operations as funds are converted into accounts receivable. As of June 30, 1996, there were five people employed in the Springfield office while a significant portion of the work generated from that location was still being done in other offices. Also during June, 1995, the Company announced that it had formed a new subsidiary, Viridian Technology, Inc., to design and manufacture modular process equipment systems for the chemical and process related industries. The new business is not expected to require a significant cash investment as the Company plans to sell the systems on a basis requiring progress payments which approximate out of pocket costs and that, at least initially, the manufacturing of the systems will be sub-contracted to others. Management does not expect that Viridian will have a material impact on revenues or profits in the near future. * * * * * * * * * Management is not aware of any known trends, demands, commitments, events, or uncertainties, other than the following, which will result in the Company's liquidity increasing or decreasing in any material way. -15- 16 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) The Company has a line of credit with a bank which provides for advance up to $1,500,000. At June 30, 1996, the Company had outstanding borrowings of $1,020,000 on the line. Management expects that the line of credit, which expires March 31, 1997, will be renewed under similar terms and conditions. In January 1998, the Company will be required to pay the remaining balance on a mortgage note. It is estimated that the balance will be $970,000 at that time. To satisfy the debt requirement, the Company anticipates that a new source of long-term financing will be secured or the current agreement will be extended. The Company does not have any material commitment for capital expenditures which are outside the ordinary course of business. However, an affiliated company is expected to borrow an additional $18,000 from a bank for further development of a condominium project. The additional borrowings by the affiliate will increase the Company's guarantee of its debt to $475,000. If the affiliate receives sales commitments for the planned units, the Company may provide additional short-term financing to the affiliate in order to complete construction of those units. Management does not contemplate or expect any change in capital resources of the Company, including any material changes in the mix or relative cost of such capital resources or any changes between debt and equity except as discussed. Accordingly, management expects that other future cash flow needs will be provided primarily from operations. Results of Operations The following table sets forth, for the periods indicated, the percentage of which certain items in the Company's Condensed Consolidated Statements of Operations bear to revenues:
Three Months Six Months Ended June 30, Ended June 30, ---------------- --------------- 1996 1995 1996 1995 ------- ------- ------ ------ Revenues 100.0% 100.0% 100.0% 100.0% Gross Profit 30.3% 22.3% 31.6% 16.8% Selling , Administrative and General Expenses 16.7% 16.4% 16.1% 17.0% Other Income (Expenses) (.7%) (1.9%) (.7%) (1.8%) Income Taxes (Reduction) 5.0% 1.4% 5.5% (.6%) Net Income (Loss) 7.9% 2.6% 9.3% (1.4%)
-16- 17 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995 Revenues for the first six months of 1996 were $5,656,000 compared to $5,211,000 for the same period in 1995. Construction revenues decreased $1,397,000 (79.1%) while revenues from service/consulting fees increased $1,835,000 (55.8%). Construction revenues continued to experience a decline as construction revenues from the Company's traditional client base remains low. Management believes however, that the Company's expanded client base for service/consulting services will help return construction revenues to their prior levels. The increase in service/consulting revenues results from expansion of the Company's client base and from additional work from its existing clients. The Company reported an operating profit of $880,000 during the first six months of 1996 compared to an operating loss of $12,000 during the same period of 1995. Construction operations reported a gross loss of $5,000 (1.3%) compared to a gross profit of $108,000 (6.1%) for 1995. The loss from construction operations for the first six months of 1996 resulted from a $35,000 adjustment on a project completed in the first quarter of 1996. Gross profit from service/consulting fees was $1,743,000 (34.0%) for the first six months of 1996 compared to $724,000 (22.0%) in 1995. The increase in the gross profit percentage resulted primarily from increased staff utilization related to the increased volume of work. Selling, general and administrative expenses were $910,000 for the first six months of 1996, compared to $888,000 for the first six months of 1995, an increase of $21,000 (2.4%). The increase in selling, general and administrative cost results primarily to the fact that such costs for 1995 were reduced by a $59,000 write off of a deferred credit related to the closing of the Chicago office. Such costs were 16.1% of revenue in 1996 compared to 17.0% of revenue of 1995. Net interest expense was $42,000 for the first six months of 1996 compared to net interest expense of $92,000 in 1995. Approximately 50% of the decrease in interest expense results from an decrease in net borrowing, while the other 50% relates to a decrease in interest rates. -17- 18 PART II - OTHER INFORMATION Items 1-3 Not applicable. Item 4 - Submission of Matters to a Vote of Security Holders. The Annual Meeting of Stockholders of The Randers Group Incorporated was held on April 30, 1996, for the purpose of electing a board of directors and approving the appointment of auditors. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934 and there was no solicitation in opposition to management's solicitations. All of management's nominees for directors as listed in the proxy statement were elected with the following vote:
Shares Shares Shares Voted Voted Shares Not "For" "Against" "Abstaining" Voted ---------- --------- ---------- --------- T.R. Eurich 8,126,750 29,745 - 5,959,187 M.J. Krivitzky 8,126,750 10,000 19,745 5,959,187 T.J. McEnhill 8,126,750 29,745 - 5,959,187 B.M. Bourdon 8,114,750 22,000 19,745 5,959,187
The appointment of BDO Seidman as independent auditor was approved by the following vote:
Shares Shares Shares Voted Voted Shares Not "For" "Against" "Abstaining" Voted --------- --------- ------------ --------- 5,236,750 12,000 2,907,745 5,959,187
Item 5 Not Applicable. -18- 19 PART II - OTHER INFORMATION (Continued) Item 6 6(a) Exhibit: #11 Statement regarding Computation of Earnings Per Share (Part I Exhibit) #27 Financial Data Schedule (Part I Exhibit). 6(b) Reports on Form 8-K: None. -19- 20 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. THE RANDERS GROUP INCORPORATED Date: August 9, 1996 /s/ Thomas R. Eurich ------------------------------------------- Thomas R. Eurich, President Date: August 9, 1996 /s/ Michael J. Krivitzky ------------------------------------------- Michael J. Krivitzky Senior Vice President and Treasurer Date: August 9, 1996 /s/ David A. Wiegerink ------------------------------------------- David A. Wiegerink, Vice President Finance and Administration Principal Accounting Officer -20- 21 The Randers Group Incorporated Exhibit 6(a)-11 Statement Regarding Computation of Earnings (Loss) Per Share Primary Earnings Per Share Net income (loss) per share is computed on the basis of the weighted average number of common and dilutive common equivalent shares outstanding during each period. The number of shares used in computing net income (loss) per share for each of the periods included herein are as follows:
Weighted Average Weighted Average Number of Dilutive Number of Common Common Equivalent Shares Outstanding Shares Outstanding Total ------------------ ------------------ -------------- Six Months Ended June 30, 1996 14,115,682 --- 14,115,682 June 30, 1995 14,115,682 --- 14,115,682 Three Months Ended June 30, 1996 14,115,682 --- 14,115,682 June 30, 1995 14,115,682 --- 14,115,682
-21- 22 EXHIBIT INDEX
SEQUENTIALLY EXHIBIT NUMBERED NUMBER DESCRIPTION PAGE - ------- ----------- ------------- 27 Financial Data Schedule
EX-27 2 EXHIBIT 27
5 This schedule contains summary financial information extracted from the condensed consolidated financial statement of The Randers Group Incorporated for the quarter ended June 30, 1996, and is qualified in its entirety by reference to such financial statements. 6-MOS DEC-31-1996 JAN-1-1996 JUN-30-1996 442,184 0 2,534,879 75,000 0 3,044,224 3,946,913 1,306,607 7,094,122 1,939,717 0 0 0 1,412 4,131,501 7,094,122 370,123 5,286,279 374,937 3,866,522 909,726 0 98,287 838,089 310,000 528,089 0 0 0 528,089 .04 .04
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