<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 28, 1998
---------------
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period ___________________to____________________
Commission File Number 0-28192
-------
RENAISSANCE WORLDWIDE, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2920563
- ------------------------ -------------------------------
(State of Incorporation) (IRS Employer Identification No.)
189 WELLS AVENUE
NEWTON, MA 02159
(617)527-6886
(Address, including zip code, and telephone number, including area code
of registrant's principal executive offices)
Indicate by check mark whether the registrant (1) has 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 registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
--- ---
As of May 11, 1998, there were 55,819,959 shares of Common Stock, no par value,
outstanding.
1
<PAGE>
RENAISSANCE WORLDWIDE, INC.
INDEX TO FORM 10-Q
Page
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet at December 27,
1997 and March 28, 1998 3
Condensed Consolidated Statement of Income for the
three months ended March 29, 1997 and March 28, 1998 4
Condensed Consolidated Statement of Cash Flows for the
three months ended March 29, 1997 and March 28, 1998 5
Notes to Unaudited Condensed Consolidated
Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION 12
SIGNATURES 13
EXHIBIT INDEX 14
This Quarterly Report on Form 10-Q contains forward-looking statements.
For this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans," "expects,"
and similar expressions are intended to identify forward-looking statements.
The important factors discussed below under the caption "Certain Factors That
May Affect Future Operating Results," among others, could cause actual results
to differ materially from those indicated by forward-looking statements made
herein and presented elsewhere by management from time to time.
2
<PAGE>
RENAISSANCE WORLDWIDE, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 27, MARCH 28,
1997 1998
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 17,835 $ 7,558
Marketable securities 5,867 -
Accounts receivable, net 141,007 160,609
Notes receivable 1,689 1,664
Deferred income taxes 2,167 2,167
Other current assets 7,266 14,861
--------- ---------
Total current assets 175,831 186,859
Fixed assets, net 24,422 27,444
Notes receivable from officers 102 109
Other assets 97,181 105,177
Deferred income taxes 855 855
--------- ---------
Total assets $ 298,391 $ 320,444
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Line of credit $ 37,600 $ 49,491
Current portion of long-term debt 2,958 4,060
Accounts payable 12,414 8,197
Accrued salaries and wages 11,226 16,140
Other accrued expenses 40,588 27,848
Deferred income taxes 142 142
--------- ---------
Total current liabilities 104,928 105,878
Deferred income taxes 2,484 2,484
Long-term debt 3,639 3,720
Other liabilities 226 219
--------- ---------
Total liabilities 111,277 112,301
--------- ---------
Commitments and contingencies
Stockholders' equity
Common stock 4,704 4,704
Additional paid-in capital 160,701 173,911
Notes receivable from stockholders (476) (476)
Retained earnings 21,986 29,872
Unrealized gain on investments 22 -
Cumulative translation adjustment 177 132
--------- ---------
Total stockholders' equity 187,114 208,143
--------- ---------
$ 298,391 $ 320,444
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
RENAISSANCE WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED
MARCH 29, MARCH 28,
1997 1998
<S> <C> <C>
Revenue
$115,629 $156,821
Cost of revenue 78,852 103,130
----------- -----------
36,777 53,691
Selling, general and administrative expenses 24,650 39,860
----------- -----------
Income from operations 12,127 13,831
Interest and other income (expense), net 354 (731)
----------- -----------
Income before taxes 12,481 13,100
Income tax provision 5,227 5,214
----------- -----------
Net income $7,254 $7,886
=========== ===========
Basic earnings per share $0.15 $0.16
Weighted average common shares - basic 47,357 50,535
Diluted earnings per share $0.14 $0.15
Weighted average common and potential common
shares outstanding-diluted 50,696 54,212
Comprehensive income $ 7,024 $ 7,819
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
RENAISSANCE WORLDWIDE, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 29, MARCH 28,
1997 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,254 $ 7,886
Adjustments to reconcile net income to net cash
used for operating activities
Depreciation and amortization 1,318 2,267
Deferred income taxes 1,385 -
Non-cash loss on debt forgiveness 48 -
Compensation expense in connection with stock options
granted 50 -
Changes in operating assets and liabilities:
Accounts receivable (16,917) (17,846)
Other current assets (378) (786)
Other assets (368) 293
Accounts payable 581 (4,416)
Accrued expenses (772) (13,202)
Accrued salaries and wages 2,006 4,111
Income taxes payable 289 -
Other liabilities 14 -
--------- --------
Net cash used for operating activities (5,490) (21,693)
--------- --------
Cash flows from investing activities
Cash disbursed for acquisitions, net of cash acquired (32,536) (5,553)
Increase in notes receivable from officers (510) (7)
(Increase) decrease in notes receivable from related parties (92) 25
Purchase of marketable securities (16,904) -
Sales and maturities of marketable securities - 5,845
Purchases of fixed assets (1,402) (4,353)
--------- --------
Net cash used for investing activities (51,444) (4,043)
--------- --------
Cash flows from financing activities
Cash proceeds from issuance of common stock 47,393 -
Proceeds from reissuance of treasury stock 1,921 -
Cash proceeds from exercise of stock options 424 4,238
Cash proceeds from stock purchase plan 406 1,445
Net borrowings (repayments) on line of credit (10,759) 11,891
Principal payments on long-term debt (984) (2,048)
--------- --------
Net cash provided by financing activities 38,401 15,526
--------- --------
Effect of exchange rate changes on cash and cash equivalents (208) (67)
--------- --------
Net decrease in cash and cash equivalents (18,741) (10,277)
Cash and cash equivalents, beginning of period 56,482 17,835
--------- --------
Cash and cash equivalents, end of period $ 37,741 $ 7,558
========= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
RENAISSANCE WORLDWIDE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Renaissance Worldwide, Inc. ("Renaissance" or "the Company") is a provider
of integrated business and information technology ("IT") consulting
services to organizations worldwide with complex IT operations in a broad
range of industries.
Basis of Consolidation
The accompanying condensed consolidated financial statements include the
accounts of Renaissance Worldwide, Inc. and its wholly-owned subsidiaries.
On July 31, 1997 and November 26, 1997, the Company completed the mergers
with Renaissance Solutions, Inc. ("RSI") and The Hunter Group ("Hunter"),
respectively. These transactions have been accounted for as poolings-of-
interests and, therefore, the accompanying financial statements have been
retroactively restated to reflect the financial position and results of
operations and cash flows of the Company, RSI and Hunter for all periods
presented. On March 12, 1998 and March 25, 1998, the Company completed the
acquisition of the capital stock of Exad Galons and Hackenberg & Partner,
respectively, in transactions accounted for as purchases. Results of
operations for these entities have been included in the results of
operations for the quarter from the date of acquisition. All intercompany
balances and transactions have been eliminated.
Interim Financial Statements
Effective as of December 27, 1997, the Company changed its fiscal year
from the last Saturday in June to the last Saturday in December. The
condensed consolidated balance sheet at March 28, 1998 and condensed
consolidated statements of operations and of cash flows for the three month
periods ended March 29, 1997 and March 28, 1998 are unaudited and, in the
opinion of management, include all adjustments (consisting of normal and
recurring adjustments) necessary for a fair presentation of results for
these interim periods. Certain information and footnote disclosures
normally included in the Company's annual consolidated financial statements
have been condensed or omitted. The results of operations for the interim
period ended March 28, 1998 are not necessarily indicative of the results
to be expected for future quarters or the entire year. The balance sheet at
December 27, 1997 contained herein has been derived from the audited
consolidated financial statements at that date but does not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. These interim condensed
consolidated financial statements should be read in conjunction with the
audited consolidated financial statements for the transition period ended
December 27, 1997, which are contained in the Company's 1997 Transition
Report on Form 10-K.
Reclassifications
Certain amounts in the prior year financial statements have been
reclassified to conform to the current period presentation.
Earnings per share
Basic earnings per share has been computed by dividing net income by the
weighted average number of common shares outstanding. Diluted earnings per
share has been computed by dividing net income by the weighted average
number of common shares and dilutive potential common stock outstanding.
Potential common stock includes stock options and warrants, calculated
using the treasury stock method.
A reconciliation of the weighted average number of common shares
outstanding is as follows:
THREE MONTHS ENDED
MARCH 29, 1997 MARCH 28, 1998
-------------- --------------
Weighted average number of
common shares outstanding-basic 47,357 50,535
Assumed exercise of stock options,
using the treasury stock method 3,339 3,677
------ ------
Weighted average number of common
and potential common shares
outstanding-dilutive 50,696 54,212
====== ======
Translation of foreign currencies
The functional currency for the Company's subsidiaries is the local
currency. Assets and liabilities are translated into U.S. dollars at
exchange rates in effect at the balance sheet date. Income and expense
items and cash flows are translated at average exchange rates for the
period. Cumulative net translation adjustments are included in
stockholders' equity. Gains and losses resulting from foreign currency
transactions, not significant in amount, are included in the results of
operations as other income (expense).
6
<PAGE>
RENAISSANCE WORLDWIDE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Recently enacted accounting standards
In the first quarter of 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting of Comprehensive Income." This
Statement requires disclosure of comprehensive income and its components in
interim and annual reports. Total comprehensive income components included
in stockholder's equity include any changes in equity during a period that
are not the result of transactions with owners, including cumulative
translation adjustments, unrealized gains and losses on available-for-sale
securities and minimum pension liabilities. For the quarters ended March
29, 1997 and March 28, 1998, comprehensive income (expense) items included
in stockholders'equity consisted of translation adjustments of $(111) and
$(45), respectively, and gains (losses) on available-for-sale securities of
$(119) and $(22), respectively.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 131 is effective
for fiscal years beginning after December 15, 1997 and requires restatement
of disclosures for all periods presented.
SFAS 131 requires that companies disclose information about operating
segments in annual and interim financial statements. SFAS 131 utilizes the
"management approach" in determining what constitutes an operating segment.
An operating segment is defined in SFAS 131 as a business component:
. which engages in business activities from which it may earn revenues and
incur expenses
. whose operating results are regularly reviewed by a chief operating
decision maker to make decisions about resources to be allocated to the
segment and assess its performance; and
. for which discrete financial information is available.
The adoption of SFAS 131 will not impact the Company's financial position,
results of operations or cash flows. Management has determined that the
adoption of SFAS 131 will not materially differ from the Company's current
presentation of operating segments.
2. ACQUISITION OF SUBSIDIARIES - PURCHASES
Exad Galons On March 12, 1998, the Company, through a wholly-owned
subsidiary, completed the acquisition of all of the outstanding stock of
Exad Galons, a French corporation ("Exad"), for $5.0 million in cash. Exad
is a business process and information technology consulting firm
headquartered in Paris, France.
Hackenberg & Partner On March 25, 1998, the Company, through a wholly-
owned subsidiary, completed the acquisition of all of the outstanding
common stock of Hackenberg & Partner, a German corporation ("Hackenberg"),
for $3.2 million in cash which was paid in the first week of April 1998.
Based in Starnberg, Germany, Hackenberg provides
7
<PAGE>
RENAISSANCE WORLDWIDE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
business application, networking and database services and specializes in
custom-developed solutions and PeopleSoft implementations.
Both Exad and Hackenberg are operating as subsidiaries to Hunter augmenting
the enterprise resource planning solutions business unit of the Solutions
Group.
These acquisitions have been accounted for as purchases and accordingly,
the purchase prices have been allocated to the assets acquired and
liabilities assumed based upon their estimated fair values as of the date
of their respective acquisitions. The excess of the consideration paid over
the estimated fair value of net assets acquired of approximately $7.5
million has been recorded as goodwill and is being amortized on a straight-
line basis over 30 years.
The pro forma results of operations, assuming that the acquisitions
occurred at the beginning of the periods ended March 29, 1997 and March 28,
1998, would not materially differ from Renaissance's reported results of
operations.
3. SUBSEQUENT EVENTS
On March 31, 1998 the Company, through a wholly-owned subsidiary, acquired
all of the outstanding stock of Neoglyphics Media Corporation
("Neoglyphics"). Neoglyphics is an Internet development and applications
company based in Chicago, Illinois and augments the e-commerce business
unit of the Solutions Group. Pursuant to the agreement, each share of
Neoglyphics was converted into the right to receive .12495 shares of
Renaissance common stock. Renaissance also assumed outstanding options
for the purchase of Neoglyphics common stock at the same conversion ratio.
On April 2, 1998, the Company, through a wholly-owned subsidiary, acquired
all of the outstanding stock of Triad Data, Inc. ("Triad"). Triad is an
information technology consulting firm based in New York City performing
services similar to those of the Services group of the Company. Pursuant to
the agreement, each share of Triad common stock was converted into the
right to receive 24,409.2 shares of Renaissance common stock.
In total, 4,554,759 shares of the Company's Common Stock were exchanged for
all of the outstanding common stock of Neoglyphics and Triad. In addition,
outstanding stock options to purchase Neoglyphics common stock were
converted into options to purchase 119,940 shares of the Company's Common
Stock. These transactions have been accounted for as poolings-of-interests
and, therefore, commencing in the second quarter of 1998, the financial
statements of the Company will be restated to include the financial
condition, results of operations and cash flows of these two companies for
all periods presented.
8
<PAGE>
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The following table summarizes the Company's significant operating
results as a percentage of revenue for each of the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH MARCH
29, 1997 28, 1998
<S> <C> <C>
Revenue 100.0% 100.0%
Cost of revenue 68.2 65.8
------ ------
Gross profit 31.8 34.2
Selling, general and administrative expenses 21.3 25.4
------ ------
Income from operations 10.5 8.8
Interest and other income (expense), net 0.3 (0.5)
------ ------
Income before taxes 10.8 8.3
Income tax provision 4.5 3.3
------ ------
Net income 6.3% 5.0%
====== ======
</TABLE>
THREE MONTHS ENDED MARCH 29, 1997 AND MARCH 28, 1998
Revenue. Revenue increased 36% to $156.8 million for the first quarter of
fiscal 1998 from $115.6 million in the first quarter of 1997. This increase
was attributable primarily to a 14% increase in the revenue of the
Company's Services business unit in the quarter as a result of a greater
number of IT consultants being placed with the Company's clients during the
period. In addition, revenues of the Company's Strategy business unit
increased 39% as compared with the comparable prior period due to both
organic growth and the inclusion of the results of C.M. Management Systems,
Ltd., Inc. and COBA Consulting Limited, which were acquired during the
first quarter of calendar 1997. The Company's Solutions business unit
increased 116% as compared with the prior period due primarily to organic
growth as well as the addition of the results of Eligibility Management
Systems, Inc. which was acquired in August 1997.
Gross Profit. Gross profit increased 46% to $53.7 million for the first
quarter of 1998 from $36.8 million in the comparable prior period.
As a percentage of revenue, gross profit increased to 34.2% for the period
compared to 31.8% for the comparable prior period. The increase in gross
margin percentage was attributable to increases in the number of higher
margin strategic, management and solutions consulting engagements resulting
from both acquisitions in the strategic consulting services area as well as
internal growth and the increased utilization of staff IT consultants
compared with the prior period.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased by 62% to $39.9 million for the first
quarter of 1998 from $24.7 million in the comparable prior period. As a
percentage of revenue, selling, general and administrative expenses
increased to 25.4% from 21.3% for the comparable prior period. This
increase was attributable primarily to the costs of the integration and
redundant processes resulting from the Company's recent acquisitions, as
well as the investments in the Company's information technology,
telecommunciations and facilities infrastructure to accommodate the growth
of the past year.
Interest and Other Income, Net. Interest and other income, net, decreased
to $731,000 in expense for the first quarter of fiscal 1998 from $354,000
in income for the comparable prior period. This change was a result of
increased balances under the Company's line of credit due to payments for
acquisitions made in the quarter, other contingent payments made for 1997
acquisitions as well as increased working capital needs.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Renaissance has a revolving advance facility with BNY Financial Corporation
(the "Line of Credit") under which it can borrow the lesser of $50.0
million or 85% of eligible receivables. The Line of Credit is secured by
all of the Company's assets and contains certain restrictive covenants,
including limitations on amounts of loans the Company may extend to
officers and employees, the incurrance of additional debt and the payment
of dividends on the Company's Common and Preferred Stock. Additionally,
the agreement requires the maintenance of certain financial ratios,
including minimum tangible net worth and a limit on the ratio of total
liabilities to total tangible net worth. As of March 28, 1998 and the date
of this report, the Company was in compliance with these covenants.
As of March 28, 1998, there was $47.6 million outstanding with
availability under the Line of Credit of $2.4 million. Subsequent to the
end of the period, the availability under the Line of Credit was increased
to $75 million or 85% of eligible receivables. The Line of Credit bears an
interest rate of LIBOR plus 2.5% (8.19% at March 28, 1998) or the Bank of
New York alternative base rate plus 0.5% at the Company's option.
The Company had negative cash flows from operations of $21.7 million for
the three months ended March 28, 1998. The negative operating cash flows
were due primarily to a $17.8 million increase in accounts receivable the
period. This increase was attributable primarily to increased revenues as
well as an increase in the amount of unbilled receivables in the period due
to the timing of milestone invoicing. In addition, operating cash flows
were impacted by a $13.2 million decrease in accrued expenses in the
period attributable primarily to the payment of certain contingent payments
related to 1997 acquisitions as well as year end bonuses during the period.
Other changes in accounts payable and accrued salaries and wages relate
primarily to the timing of payments made at the end of each reporting
period.
The Company experienced negative cash flows from investing activities of
$4.0 million for the three months ended March 28, 1998. The negative
investing cash flows were attributable to $5.6 in net payments made for
acquisitions and $4.4 million in fixed asset purchases during the period.
These decreases were offset by the sale of $5.8 million in marketable
securities held during the period.
The Company experienced positive cash flows from financing activities of
$15.5 million for the three months ended March 28, 1998. The positive
financing cash flows were attributable primarily to $11.9 million in net
borrowings on the Company's line of credit as well as $5.7 million in cash
received from employees for the exercise of stock options and purchases
under the employee stock purchase plan. Certain of the options exercised
were non-qualified options which resulted in an additional tax benefit to
the Company of $7.5 million which is included in additional paid-in
capital.
The Company anticipates that its primary uses of working capital in
future periods will be for funding growth, either through acquisitions, the
internal development of existing branch offices or the development of new
branch offices and new service offerings. The Company also anticipates
making approximately $10.0 million in capital expenditures in the next
twelve months principally to upgrade its computer systems. In connection
with certain of its acquisitions, the Company may be obligated to make
certain contingent payments during the next several years, including $4.65
million which the Company is currently required to pay over the next 12
months. The Company does not believe that such payments will have a
material impact on the Company's liquidity, results of operations or
capital requirements. The Company's principal capital requirement is
working capital to support the accounts receivable associated with its
revenue growth. The Company believes that the cash flow from operations and
borrowings under the increased Line of Credit will be sufficient to meet
the Company's presently anticipated working capital needs for at least the
next 12 months.
RECENT ACQUISITIONS
Exad Galons On March 12, 1998, the Company, through a
10
<PAGE>
wholly-owned subsidiary, completed the acquisition of the outstanding stock
of Exad Galons, a French corporation ("Exad"), for $5.0 million in cash.
Exad is a business process and information technology consulting firm
headquartered in Paris, France.
Hackenberg & Partner On March 25, 1998, the Company, through a wholly-owned
subsidiary, acquired all of the outstanding common stock of Hackenberg &
Partner, a German corporation ("Hackenberg"), for $3.2 million in cash
which was paid in the first week of April 1998. Based in Starnberg,
Germany, Hackenberg provides business application, networking and database
services and specializes in custom-developed solutions and PeopleSoft
implementations.
Both Exad and Hackenberg are operating as subsidiaries to Hunter augmenting
the enterprise resource planning solutions business unit of the Solutions
Group.
These acquisitions have been accounted for as purchases and accordingly,
the purchase prices have been allocated to the assets acquired and
liabilities assumed based upon their estimated fair values as of the date
of their respective acquisitions. The excess of the consideration paid over
the estimated fair value of net assets acquired of approximately $7.5
million has been recorded as goodwill and is being amortized on a straight-
line basis over 30 years.
The pro forma results of operations, assuming that the acquisitions
occurred at the beginning of the periods ended March 29, 1997 and March 28,
1998 would not materially differ from Renaissance's reported results of
operations.
RECENTLY ENACTED ACCOUNTING STANDARDS
In the first quarter of 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting of Comprehensive Income." This
Statement requires disclosure of comprehensive income and its components in
interim and annual reports. Total comprehensive income components included
in stockholder's equity include any changes in equity during a period that
are not the result of transactions with owners, including cumulative
translation adjustments, unrealized gains and losses on available-for-sale
securities and minimum pension liabilities. For the quarters ended March
29, 1997 and March 28, 1998, comprehensive income (expense) items included
in stockholders'equity consisted of translation adjustments of $(111) and
$(45), respectively and gains (losses) on available-for-sale securities
of $(119) and $(22), respectively.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131 "Disclosures about Segments of an Enterprise and Related
Information", ("SFAS 131"). SFAS 131 is effective for fiscal years
beginning after December 15, 1997 and requires restatement of disclosures
for all periods presented.
SFAS 131 requires that companies disclose information about operating
segments in annual and interim financial statements. SFAS 131 utilizes the
"management approach" in determining what constitutes an operating segment.
An operating segment is defined in SFAS 131 as a business component:
. which engages in business activities from which it may earn revenues and
incur expenses
. whose operating results are regularly reviewed by a chief operating
decision maker to make decisions about resources to be allocated to the
segment and assess its performance; and
. for which discrete financial information is available.
11
<PAGE>
The adoption of SFAS 131 will not impact the Company's financial position,
results of operations or cash flows. Management has determined that the
adoption of SFAS 131 will not materially differ from the Company's current
presentation of operating segments.
CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
The foregoing forward-looking statements involve risks and uncertainties.
The Company's actual performance and results may differ materially due to
many important factors, including, but not limited to, the Company's
dependence on the availability of qualified IT consultants, its ability to
sustain and manage growth, the risks associated with acquisitions, its
dependence on key clients, risks associated with international operations,
its dependence on key personnel, the relatively short history of
profitability, the impact of the government regulation of immigration,
fluctuations in operating results due in part to the opening of new branch
offices, general economic conditions, employment liability risks, and the
like. For additional and more comprehensive discussion of the risks
associated with ownership of Common Stock of the Company, please see the
Risk Factors section of the Company's Transition Report on Form 10-K. As a
result of these and other factors, there can be no assurance that the
Company will not experience material fluctuations in future operating
results on a quarterly or annual basis.
PART II. OTHER INFORMATION
Item 1 - Legal Proceedings
Not applicable
Item 2 - Change in Securities
Not applicable.
Item 3 - Defaults Upon Senior Securities
Not applicable
Item 4 - Submission of Matters to a Vote of Security Holders
A special meeting of stockholders was held on December 30, 1997 to amend
the Company's Restated Articles of Organization to change the corporate
name to "Renaissance Worldwide, Inc." The vote was 22,010,142 votes for and
1,830 against, with 8,365 abstentions and 0 broker nonvotes on a pre-split
basis.
Item 5 - Other Information
On February 12, 1998, the Company announced a 2-for-1 stock split, effected
as a dividend, on the Common Stock of Renaissance. Shareholders of record
on March 2, 1998 participated in the stock split, which took place on
March 24, 1998.
Item 6 - Exhibits and Reports on Form 8-K
a. See Exhibit Index, Page 15
b. Reports on Form 8-K
A report on Form 8-K/A related to the Company's acquisition of The
Hunter Group was filed on February 9, 1998. The Form 8-K/A included three
years of audited financial statements for The Hunter Group and the required
pro forma financial information.
12
<PAGE>
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.
RENAISSANCE WORLDWIDE, INC.
(Registrant)
Date: May 12, 1998 By: /s/ G. Drew Conway
--------------------------
G. Drew Conway, President and
Chief Executive Officer
(Principal Executive Officer)
Date: May 12, 1998 By: /s/ Robert E. Foley
---------------------------
Robert E. Foley, Chief Financial
Officer
(Principal Financial and
Accounting Officer)
13
<PAGE>
RENAISSANCE WORLDWIDE, INC.
EXHIBIT INDEX
Exhibit Page
27 Financial Data Schedule
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1998
<PERIOD-START> DEC-29-1997
<PERIOD-END> MAR-28-1998
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0
0
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</TABLE>
