-----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, EGOqTkV6qFClouewacGuNqV4+DIM8x8FkGJAShzUuO4IA7dWCz0lWRgzBId8QJSS vdelRjypy9MZ/J3ECcaX/g== 0000950124-97-002912.txt : 19970515 0000950124-97-002912.hdr.sgml : 19970515 ACCESSION NUMBER: 0000950124-97-002912 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970514 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: 97605296 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 QUARTERLY REPORT 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 March 31, 1997 [ ] 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 April 30, 1997: 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) - March 31, 1997 and December 31, 1996................... 3 Condensed Consolidated Statements of Operations (Unaudited) - Three months ended March 31, 1997 and 1996................................................... 5 Condensed Consolidated Statements of Cash Flows (Unaudited) - Three months ended March 31, 1997 and 1996................................................... 6 Notes to Condensed Consolidated Financial Statements... 8 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations.................... 11 PART II Other Information............................................ 14 SIGNATURES........................................................ 15 STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE............. 16 FINANCIAL DATA SCHEDULE........................................... 17
2 3 THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, December 31, ASSETS 1997 1996 ------ ------------ ------------- CURRENT ASSETS: Cash and cash equivalents $ 669,322 $ 476,694 Accounts receivable, less allowances of $47,000 and $62,000 for possible losses 2,373,135 2,971,425 Notes and accounts receivable - Affiliate 1,315,935 - Prepaid expenses and other 48,897 100,868 Future income tax benefits 85,000 85,000 ----------- ----------- TOTAL CURRENT ASSETS 4,492,289 3,633,987 ----------- ----------- NET PROPERTY AND EQUIPMENT 2,534,162 2,582,495 ----------- ----------- OTHER ASSETS: Notes and accounts receivable - Affiliate - 1,315,935 Goodwill, less accumulated amortization of $112,437 and $109,368 132,080 135,149 Miscellaneous 3,681 5,140 ----------- ----------- TOTAL OTHER ASSETS 135,761 1,456,224 ----------- ----------- $ 7,162,212 $ 7,672,706 =========== ===========
See accompanying notes to condensed consolidated financial statements. 3 4 THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) (Unaudited)
March 31, December 31, 1997 1996 ---------- ------------ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES: Note payable - bank $ 897,000 $ 301,000 Accounts payable 407,565 1,299,068 Billings in excess of costs and estimated earnings on contracts in progress 16,000 89,000 Accrued compensation 303,225 222,070 Accrued income taxes 13,183 78,533 Other accrued expenses 44,269 191,626 Current maturities of long-term debt 96,672 96,672 ---------- ---------- TOTAL CURRENT LIABILITIES 1,777,914 2,277,969 LONG-TERM DEBT, less current maturities 945,472 969,638 ---------- ---------- TOTAL LIABILITIES 2,723,386 3,247,607 ---------- ---------- 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 2,900,975 2,887,248 ---------- ---------- TOTAL STOCKHOLDERS' EQUITY 4,438,826 4,425,099 ---------- ---------- $7,162,212 $7,672,706 ========== ==========
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 March 31, ---------------------------- 1997 1996 ------------ -------------- REVENUES: Service/consulting $ 1,944,990 $ 2,606,712 Construction 305,165 216,373 Rental 77,572 82,666 ------------ ------------ Total Revenues 2,327,727 2,905,751 ------------ ------------ COSTS AND EXPENSES: Costs of services/consulting 1,518,312 1,716,778 Construction costs 267,827 177,864 Rental costs 62,138 54,209 Selling, administrative and general expenses 433,442 448,880 ------------ ------------ Total Costs and Expenses 2,281,719 2,397,731 ------------ ------------ Operating income 46,008 508,020 ------------ ------------ OTHER INCOME (EXPENSES): Interest expense (29,878) (49,771) Interest income 5,097 26,531 ------------ ------------ Other Income (Expense) - Net (24,781) (23,240) ------------ ------------ Income before taxes on income 21,227 484,780 INCOME TAXES 7,500 173,000 ------------ ------------ NET INCOME $ 13,727 $ 311,780 ============ ============ NET INCOME PER SHARE $ .00 $ .02 ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING 14,115,682 14,115,682 ============ ============
See accompanying notes to condensed consolidated financial statements. 5 6 THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, --------------------------------- 1997 1996 -------- -------- CASH FLOWS FROM (FOR) OPERATIONS: Cash received from customers $ 2,941,017 $ 2,763,436 Cash paid to suppliers and employees (3,205,428) (2,527,776) Interest received 5,097 4,659 Interest paid (29,878) (49,771) Income taxes paid (72,850) (26,500) ----------- ----------- Net Cash From (For) Operations (362,042) 164,048 ----------- ----------- CASH FLOWS FROM (FOR) INVESTING ACTIVITIES: Capital expenditures (17,164) (112,043) Advance to affiliate - (10,000) ----------- ----------- Net Cash From (For) Investing Activities (17,164) (122,043) ----------- ----------- CASH FLOWS FROM (FOR) FINANCING ACTIVITIES: Net borrowings (payments) on line of credit 596,000 (10,000) Principal payments on loans (24,166) (37,771) Payments received on note from affiliate - 12,200 ----------- ----------- Net Cash From (For) Financing Activities 571,834 (35,571) ----------- ----------- NET INCREASE (DECREASE) IN CASH 192,628 6,434 Cash and cash equivalents, at beginning of period 476,694 409,087 ----------- ----------- Cash and cash equivalents, at end of period $ 669,322 $ 415,521 =========== ===========
See accompanying notes to condensed consolidated financial statements. 6 7 THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Unaudited)
Three Months Ended March 31, --------------------------------- 1997 1996 -------- -------- RECONCILIATION OF NET INCOME TO NET CASH FROM (FOR) OPERATIONS: Net income $ 13,727 $ 311,780 Provision for (reduction in) allowance on accounts receivable (15,000) 10,000 Depreciation 65,497 59,778 Amortization 3,069 3,069 Changes in operating assets and liabilities: Accounts and notes receivable 613,290 (132,315) Prepaid expenses and other 53,430 (36,599) Accounts payable and billings in excess of costs and estimated earnings on contracts in progress (964,503) (363,542) Accrued expenses (131,552) 311,877 --------- ---------- NET CASH FROM (FOR) OPERATIONS $(362,042) $ 164,048 ========= ==========
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 its Subsidiaries (the Company) provide design, engineering, 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, 1996. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses reported during the period. Actual results could differ from those estimates. 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 three months ended March 31, 1997 are not necessarily indicative of the results to be expected for the full year. 8 9 THE RANDERS GROUP INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 2 - PROPERTY AND EQUIPMENT Property and equipment used in the construction and service/ consulting operations consist of the following:
March 31, December 31, 1997 1996 ------------ ------------- Cost $ 2,287,997 $ 2,270,833 Less accumulated amortization 1,187,163 1,135,437 ------------ ------------ Net $ 1,100,834 $ 1,135,396 ============ ============ Property and equipment used in rental operations consist of the following: Cost $ 1,758,966 $ 1,758,966 Less accumulated amortization 325,638 311,867 ------------ ------------ Net $ 1,433,328 $ 1,447,099 ============ ============ Net Property and Equipment - total $ 2,534,162 $ 2,582,495 ============ ============
NOTE 3 - NOTES AND ACCOUNTS RECEIVABLE - AFFILIATE The Company's balance sheets include various amounts receivable from First Venture Associates Limited Partnership (FVALP), an entity owned by four of the Company's officers/directors. The amounts receivable from FVALP consist of the following:
March 31, December 31, 1997(A) 1996 ------------ ------------ Notes receivable $ 393,111 $ 393,111 Accrued interest receivable 93,730 93,730 Accounts receivable 829,094 829,094 ------------ ------------ $ 1,315,935 $ 1,315,935 ============ ============
(A) The notes and accounts receivable are shown as a current asset in the accompanying balance sheet as of March 31, 1997, as such amounts were collected in May, 1997. 9 10 THE RANDERS GROUP INCORPORATED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 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 8.25% at December 31, 1996 and at March 31, 1997. The loan agreement, which expired May 1, 1997, has been verbally extended by the bank. The Company is currently renegotiating the loan and expects that it will be renewed under similar terms and conditions. The line of credit is collateralized by all the assets of the Company and its subsidiaries. The loan agreement further provides that the Company is to maintain consolidated net worth of at least $1,500,000. Unrestricted equity was $2,925,099 at December 31, 1996 and $2,938,826 at March 31, 1997. NOTE 5 - CONTINGENCIES Due to the limited availability and high cost of professional liability insurance covering services related to the chemical industry, Randers Engineering, a subsidiary of the Company, 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. NOTE 6 - NET INCOME PER SHARE Net income per share is computed on the basis of the weighted average number of common and dilutive common equivalent shares outstanding during the period. 10 11 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 business 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 March 31, 1997 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 notes and accrued interest receivable from FVALP of $393,111 and $93,730, respectively, and accounts receivable from FVALP of $829,094. These amounts were collected in May, 1997, and accordingly these amounts have been classified as a current asset in March 31, 1997 balance sheet. The following table sets forth information related to the Company's liquidity as of the dates indicated.
March 31, ------------------------ 1997 1996 --------- -------- Cash and cash equivalents $ 669,000 $ 416,000 Working capital $ 2,714,000 $ 821,000 Ratio of current assets to current liabilities 2.53 to 1 1.35 to 1 Available funds under line of credit $ 603,000 $ 171,000
The Company's cash position of $669,000 at March 31, 1997, reflects an increase of approximately $193,000 since December 31, 1996. Operations for the first quarter of 1997 consumed $362,000 of cash. Net income of $14,000 for the period combined with non-cash expenses of $54,000 and a $667,000 decrease in accounts receivable and prepaid expenses were not sufficient enough to offset a $965,000 decrease in accounts payable and billings in excess of cost and estimated earnings on contracts in progress and a $132,000 decrease in accrued expenses. The decrease in accounts receivable and accounts payable was due primarily to changes in business activity rather than from a change in the timing of cash collections or disbursements. 11 12 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) In addition to the $362,000 of cash consumed by operations during the first three months of 1997, the Company expended $17,000 for property and equipment and used $24,000 to reduce its long-term debt. During this same period the Company borrowed $596,000 on its line of credit thus resulting in a $192,000 net increase in cash. * * * * * * * * * Management is not aware of any known trends, demands, commitments, events or uncertainties, other than the following, that will result in the Company's liquidity increasing or decreasing in any material way. The Company has a line of credit with a bank which provides for advances up to $1,500,000. At March 31, 1997, the Company had outstanding borrowings of $897,000 on the line. Management expects that the line of credit, which expired May 1, 1997, will be renewed under similar terms and conditions. As previously discussed, the Company collected the $1,315,935 due from an affiliate during May, 1997. The funds were used to repay the Company's borrowings on its line of credit with the remaining portion invested in cash equivalents. 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 that 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. 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 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: 12 13 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Three Months Ended March 31, ---------------------------- 1997 1996 ------- -------- Revenues 100.0% 100.0% Direct Expenses 79.4% 67.1% Selling Administrative and General Expenses 18.6% 15.4% Operating Income 2.0% 17.5% Other Income (Expenses)- Net (1.1%) (.8%) Income Taxes (Reduction) .3% 6.0% Net Income (Loss) .6% 10.7%
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996 Revenues for the first months of 1997 were $2,328,000 compared to $2,906,000 for the same period in 1996, a decrease of 19.9% Service/consulting fees decreased $662,000 (25.4%) while construction revenues increased $89,000 (41.0%). The decrease in service/ consulting revenues results primarily from the completion in 1996 of two large design/construction management projects which were active during the first quarter of 1996. Construction revenues continued to reflect a slow down in construction spending among the Company's traditional client base. However, the design and manufacturer of specialized equipment system accounted for the additional revenues recognized in 1997. The Company reported an operating profit of $46,000 during the first three months of 1997 compared to an operating profit of $508,000 during the same period of 1996. Gross profit from service/consulting fees were $427,000 (21.9%) for the first quarter of 1997 compared to a gross profit of $890,000 (34.1%) in 1996. The decrease in the gross profit percentage results primarily from a decrease in staff utilization related to the decreased volume of work. Construction operations reported a gross profit of $37,000 (12.2%) compared to a gross profit of $39,000 (17.8%) for 1996. Selling, administrative, and general expenses were $434,000 during the first quarter of 1997 compared to $449,000 for the same period in 1996, a decrease of $15,000 or 3.4%. Such costs, however, represented 18.6% of revenue in 1997 compared to 15.4% in 1996. Net interest expense was $25,000 for the first three months of 1997 compared to net interest expense of $23,000 in 1996. 13 14 PART II - OTHER INFORMATION Items 1-5 Not applicable. Item 6 6(a) Exhibits: #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. 14 15 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: May 14, 1997 |s| Thomas R. Eurich --------------------------- Thomas R. Eurich, President Date: May 14, 1997 |s| Michael J. Krivitzky --------------------------- Michael J. Krivitzky Senior Vice President and Treasurer Date: May 14, 1997 |s| David A. Wiegerink --------------------------- David A. Wiegerink, Vice President Finance and Administration Principal Accounting Officer 15 16 EXHIBIT INDEX
Exhibit No. Description - -------- ----------- 11 Computation of Earnings Per shares 27 Financial Data Schedule
EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE Primary Earnings Per Share Net income 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 per share for each of the periods included herein are as follows:
Weighted Average Three Months Weighted Average Number of Dilutive Ended Number of Common Common Equivalent March 31, Shares Outstanding Shares Outstanding Total -------------- ------------------ ------------------ ------ 1997 14,115,682 --- 14,115,682 1996 14,115,682 --- 14,115,682
Fully Diluted Earnings Per Share The Company's outstanding stock options are exercisable at prices which are at or in excess of the market price. Under the treasury stock method of computing fully diluted earnings per share, the calculation of earnings per share based upon the exercise of the stock options would be antidilutive (would result in increased earnings per share). EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENT OF THE RANDERS GROUP INCORPORATED FOR THE THREE MONTHS ENDED MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-1997 JAN-01-1997 MAR-31-1997 669,322 0 2,420,135 47,000 0 4,492,289 4,046,963 1,512,801 7,162,212 1,777,914 0 0 0 1,412 4,437,414 7,162,212 305,165 2,327,727 267,827 1,848,277 433,442 0 29,878 21,227 7,500 13,727 0 0 0 13,727 0.00 0.00
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