<PAGE> 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, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OF 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, 1995:
14,115,682
<PAGE> 2
THE RANDERS GROUP INCORPORATED
FORM 10-QSB
QUARTERLY REPORT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Facing Sheet....................................................... 1
TABLE OF CONTENTS.................................................. 2
PART I Financial Information
ITEM 1 Financial Statements
Condensed Consolidated Balance Sheets (Unaudited) -
March 31, 1995 and December 31, 1994..................... 3
Condensed Consolidated Statements of Operations
(Unaudited) - Three months ended March 31, 1995 and
1994..................................................... 5
Condensed Consolidated Statements of Cash Flows
(Unaudited) - Three months ended March 31, 1995 and
1994..................................................... 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......................................... 13
SIGNATURES......................................................... 14
STATEMENT REGARDING COMPUTATION OF EARNINGS (LOSS) PER SHARE
FINANCIAL DATA SCHEDULE
</TABLE>
2
<PAGE> 3
THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1995 1994
------ ----------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 677,045 $ 776,430
Accounts receivable, less
allowances of $17,000
and $81,000 for possible
losses 1,819,527 1,967,584
Refundable income taxes 138,440 72,907
Prepaid expenses and other 108,363 104,863
Future income tax benefits 102,000 102,000
----------- ----------
TOTAL CURRENT ASSETS 2,845,375 3,023,784
----------- ----------
NET PROPERTY AND EQUIPMENT 2,585,912 2,609,084
----------- ----------
OTHER ASSETS:
Notes and accounts receivable -
Affiliate 1,156,241 1,096,849
Real estate held for resale 237,853 237,853
Goodwill, less accumulated
amortization of $87,885
and $84,816 156,632 159,701
Miscellaneous 28,111 31,046
----------- ----------
TOTAL OTHER ASSETS 1,578,837 1,525,449
----------- ----------
$ 7,010,124 $7,158,317
=========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
----------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Note payable - bank $ 1,363,000 $ 980,000
Accounts payable 521,471 985,144
Billings in excess of costs and
estimated earnings on contracts
in progress 158,000 66,000
Accrued compensation 177,896 181,108
Other accrued expenses 71,069 50,032
Current maturities of long-term debt 133,853 135,554
---------- ----------
TOTAL CURRENT LIABILITIES 2,425,289 2,397,838
LONG-TERM DEBT, less current
maturities 1,187,576 1,221,563
DEFERRED CREDIT, less accumulated
amortization of $18,415 and
$14,732 55,244 58,927
----------- ----------
TOTAL LIABILITIES AND DEFERRRED
CREDIT 3,668,109 3,678,328
----------- ----------
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 1,804,164 1,942,138
----------- ----------
TOTAL STOCKHOLDERS' EQUITY 3,342,015 3,479,989
----------- ----------
$ 7,010,124 $7,158,317
=========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1995 1994
------------ ------------
<S> <C> <C>
REVENUES:
Construction $1,017,559 $1,461,421
Service/consulting 1,564,051 1,796,867
Rental 75,534 73,609
--------- ---------
Total Revenues 2,657,144 3,331,897
--------- ---------
COSTS AND EXPENSES:
Construction costs 961,525 1,348,831
Costs of services/consulting 1,331,499 1,588,862
Rental costs 56,650 52,956
Selling, administrative and
general expenses 470,434 483,420
--------- ---------
Total Costs and Expenses 2,820,108 3,474,069
--------- ---------
Operating income (loss) (162,964) (142,172)
--------- ---------
OTHER INCOME (EXPENSES):
Interest expense (56,117) (35,983)
Interest income 12,107 14,289
--------- ---------
Other Income (Expense) - Net (44,010) (21,694)
--------- ---------
Income (loss) before taxes on income (206,974) (163,866)
INCOME TAXES (REDUCTION) (69,000) (53,000)
--------- ---------
NET INCOME (LOSS) $ (137,974) $ (110,866)
========== ==========
NET INCOME (LOSS) PER SHARE $ (.01) $ (.01)
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
OUTSTANDING 14,115,682 14,106,591
DIVIDENDS PER SHARE $ -0- $ -0-
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 6
THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1995 1994
---------- ----------
<S> <C> <C>
CASH FLOWS FROM (FOR) OPERATIONS:
Cash received from customers $ 2,749,160 $ 4,069,026
Cash paid to suppliers and employees (3,135,007) (4,667,899)
Interest received 7,556 9,737
Interest paid (56,117) (35,983)
Income taxes (paid) refunded 3,467 (20,520)
--------- --------
Net Cash From (For) Operations (430,941) (645,639)
--------- ---------
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Capital expenditures (16,956) (76,264)
--------- ---------
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Net borrowings (payments) on line of credit 383,000 150,000
Principal payments on loans (35,688) (34,857)
Payments received on note from affiliate 1,200 -
--------- ---------
Net Cash From (For) Financing Activities 348,512 115,143
--------- ---------
NET INCREASE (DECREASE) IN CASH (99,385) (606,760)
Cash and cash equivalents, at
beginning of period 776,430 1,696,874
--------- ---------
Cash and cash equivalents, at
end of period $ 677,045 $ 1,090,114
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE> 7
THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1995 1994
---------- ----------
<S> <C> <C>
RECONCILIATION OF NET INCOME (LOSS) TO
NET CASH FROM (FOR) OPERATIONS:
Net income (loss) $(137,974) $ (110,866)
Depreciation and amortization 39,514 68,291
Changes in operating assets and
liabilities:
Accounts and notes receivable 87,465 732,577
Prepaid expenses and other (66,098) (77,777)
Accounts payable and billings
in excess of costs and estimated
earnings on contracts in progress (371,673) (1,254,785)
Accrued expenses 17,825 (3,079)
--------- ----------
NET CASH FROM (FOR) OPERATIONS $(430,941) $ (645,639)
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE> 8
THE RANDERS GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The Company provides 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 Company and all of its subsidiaries. On consolidation all material
intercompany accounts and transactions are eliminated.
The condensed consolidated financial statements included herein are
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.
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, 1995 are not necessarily
indicative of the results to be expected for the full year.
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, 1994.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment used in the construction and service/
consulting operations consist of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Cost $ 1,946,369 $ 1,937,009
Less accumulated amortization 800,866 773,946
------------ ------------
Net $ 1,145,503 $ 1,163,063
============ ============
</TABLE>
8
<PAGE> 9
THE RANDERS GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Property and equipment used in rental operations consist of the
following:
<TABLE>
<S> <C> <C>
Cost $ 1,656,071 $ 1,648,476
Less accumulated amortization 215,662 202,455
------------ ------------
Net $ 1,440,409 $ 1,446,021
============ ============
Net Property and Equipment - total $ 2,585,912 $ 2,609,084
============ ============
</TABLE>
NOTE 3 - 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, 1994 and March 31, 1995.
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 $1,979,989 at December 31, 1994 and $1,842,015 at March 31, 1995.
NOTE 4 - CONTINGENCIES
Insurance Coverage
Due to the limited availability and high cost of professional
liability insurance covering services related to the chemical industry, two of
the Company's subsidiaries do 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 for clients in the chemical industry, there can be no
assurances that the Company will not incur such a liability in the future.
Guarantee
The Company has guaranteed the payment of a $665,000 line of credit by
a bank to First Venture Associates Limited Partnership (FVALP), an affiliated
company. There was $587,000 outstanding on the line at December 31, 1994 and
March 31, 1995. The loan relates to the joint development of a condominium
project by FVALP and the Company.
9
<PAGE> 10
THE RANDERS GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 5 - 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.
10
<PAGE> 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.
Operations for the first quarter of 1995 consumed $431,000 of cash. A
net loss of $138,000 for the period, combined with a decrease of $372,000 in
accounts payable and billings in excess of costs and estimated earnings on
contracts in progress were only partially offset by a $79,000 decrease in
accounts receivable and miscellaneous items. The decrease in accounts
receivable and accounts payable is due primarily to a decrease in activity
during the first quarter of 1995. In addition to the $431,000 of cash consumed
by operations, $34,000 was used to reduce debt and $17,000 was used for capital
expenditures. The uses of cash were partially offset by additional borrowing
of $383,000 on the Company's line of credit thus resulting in a $99,000
decrease in cash for the quarter.
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.
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.
11
<PAGE> 12
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
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 $78,000 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 $665,000. 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 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:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1995 1994
------------ ------------
<S> <C> <C>
Revenues 100.0% 100.0%
Gross Profit 11.6% 10.2%
Selling Administrative
and General Expenses 17.7% 14.5%
Other Income (Expenses) (1.7%) (.6%)
Income Taxes (Reduction) (2.6%) (1.6%)
Net Income (Loss) (5.2%) (3.3%)
</TABLE>
Three Months Ended March 31, 1995 Compared to 1994
Revenues for the first quarter of 1995 were $2,657,000 compared to
$3,332,000 for the same period in 1994, a decrease of 20.3%. Construction
revenues decreased $444,000 (30.4%) while revenues from service/consulting fees
decreased $233,000 (13.0%). Construction revenues continued to experience a
slow down in spending among the Company's traditional client base while the
decrease in service/ consulting revenues results primarily from a decrease in
activity of the Charleston, WV office. Management has continued its increased
marketing efforts and believes that such efforts will result in increased
revenues in the future.
12
<PAGE> 13
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
The Company reported an operating loss of $163,000 during the first
three months of 1995 compared to an operating loss of $142,000 during the same
period of 1994. Construction operations reported a gross profit of $56,000
(5.5%) compared to a gross profit of $113,000 (7.7%) for 1994. The gross profit
percentage on construction operations for the first quarter of 1995 was lower
than normally expected as one of the larger projects in the Chicago area had
been taken on at lower margins in an attempt to gain entry into that market
area. Gross profit from service/consulting fees were $233,000 (14.9%) for the
first quarter of 1995 compared to a gross profit of $208,000 (11.6%) in 1994.
The increase in the gross profit percentage results primarily from a reduction
in the labor component of services provided. Although the gross profit
percentage is an improvement from 1994, it is still not at the level management
expects. Accordingly, management continues to review staffing levels and
efficiency at the various offices. Selling, administrative, and general
expenses were $470,000 during the first quarter of 1995 compared to $483,000
for the same period in 1994, a decrease of $13,000 or 2.7%. Such costs,
however, represented 17.7% of revenue in 1995 compared to 14.5% in 1994.
Net interest expense was $44,000 for the first three months of 1995
compared to net interest expense of $22,000 in 1994. The increase results
primarily from an increase in net borrowing .
PART II - OTHER INFORMATION
Items 1-5
Not applicable.
Item 6
6(a) Exhibits: (1) Statement regarding Computation of Earnings
Per Share.
(2) Financial Data Schedule
6(b) Reports on Form 8-K: None.
13
<PAGE> 14
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
<TABLE>
<S> <C>
Date: |s| Thomas R. Eurich
-----------------------------------
Thomas R. Eurich, President
Date: |s| Michael J. Krivitzky
-----------------------------------
Michael J. Krivitzky
Senior Vice President and Treasurer
Date: |s| David A. Wiegerink
-----------------------------------
David A. Wiegerink, Vice President
Finance and Administration
Principal Accounting Officer
</TABLE>
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<S> <C>
11 Statement Regarding Computation of Earnings (Loss) Per Share
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 11
THE RANDERS GROUP INCORPORATED
Statement Regarding Computation of Net Income (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:
<TABLE>
<CAPTION>
Weighted Average
Weighted Average Number of Dilutive
Number of Common Common Equivalent
Shares Outstanding Shares Outstanding Total
------------------ ------------------ --------------
<S> <C> <C> <C>
Three Months Ended
March 31, 1995 14,115,682 --- 14,115,682
March 31, 1994 14,106,591 --- 14,106,591
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated financial statement of The Randers Group Incorporated for
the quarter ended March 31, 1995, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-1-1995
<PERIOD-END> MAR-31-1995
<CASH> 677,045
<SECURITIES> 0
<RECEIVABLES> 1,836,527
<ALLOWANCES> 17,000
<INVENTORY> 0
<CURRENT-ASSETS> 2,845,375
<PP&E> 3,602,441
<DEPRECIATION> 1,016,529
<TOTAL-ASSETS> 7,010,124
<CURRENT-LIABILITIES> 2,425,289
<BONDS> 1,187,576
<COMMON> 1,412
0
0
<OTHER-SE> 3,340,603
<TOTAL-LIABILITY-AND-EQUITY> 7,010,124
<SALES> 1,017,559
<TOTAL-REVENUES> 2,657,144
<CGS> 961,525
<TOTAL-COSTS> 2,349,674
<OTHER-EXPENSES> 470,434
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56,117
<INCOME-PRETAX> (206,974)
<INCOME-TAX> (69,000)
<INCOME-CONTINUING> (137,974)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (137,974)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
