<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 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
<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) -
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
</TABLE>
-2-
<PAGE> 3
THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
------ ----------- ------------
<S> <C> <C>
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
========== ==========
</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>
June 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
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
========== ==========
</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 Six Months Ended
June 30, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
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-
=========== =========== =========== ===========
</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>
Six Months Ended
June 30,
--------------------------
1996 1995
---------- ----------
<S> <C> <C>
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
======== =========
</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>
Six Months Ended
June 30,
-------------------------
1996 1995
---------- ----------
<S> <C> <C>
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)
========== ===========
</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 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-
<PAGE> 9
THE RANDERS GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Cost $ 2,206,864 $ 2,069,408
Less accumulated amortization 1,020,642 928,076
------------ ------------
Net $ 1,186,222 $ 1,141,332
============ ============
</TABLE>
Property and equipment used in rental operations consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
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
============ ============
</TABLE>
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-
<PAGE> 10
THE RANDERS GROUP INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Notes and accounts receivable from FVALP consist of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
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
============ ============
</TABLE>
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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---------- -----------
<S> <C> <C>
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
</TABLE>
The Company's cash position of $442,184 at June 30, 1996 reflects an
increase of $33,097 from December 31, 1995.
-14-
<PAGE> 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-
<PAGE> 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:
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
---------------- ---------------
1996 1995 1996 1995
------- ------- ------ ------
<S> <C> <C> <C> <C>
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%)
</TABLE>
-16-
<PAGE> 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-
<PAGE> 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:
<TABLE>
<CAPTION>
Shares Shares Shares
Voted Voted Shares Not
"For" "Against" "Abstaining" Voted
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
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
</TABLE>
The appointment of BDO Seidman as independent auditor was approved by the
following vote:
<TABLE>
<CAPTION>
Shares Shares Shares
Voted Voted Shares Not
"For" "Against" "Abstaining" Voted
--------- --------- ------------ ---------
<S> <C> <C> <C>
5,236,750 12,000 2,907,745 5,959,187
</TABLE>
Item 5
Not Applicable.
-18-
<PAGE> 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-
<PAGE> 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-
<PAGE> 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:
<TABLE>
<CAPTION>
Weighted Average
Weighted Average Number of Dilutive
Number of Common Common Equivalent
Shares Outstanding Shares Outstanding Total
------------------ ------------------ --------------
<S> <C> <C> <C>
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
</TABLE>
-21-
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- -------------
<S> <C> <C>
27 Financial Data Schedule
</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 June 30, 1996, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-1-1996
<PERIOD-END> JUN-30-1996
<CASH> 442,184
<SECURITIES> 0
<RECEIVABLES> 2,534,879
<ALLOWANCES> 75,000
<INVENTORY> 0
<CURRENT-ASSETS> 3,044,224
<PP&E> 3,946,913
<DEPRECIATION> 1,306,607
<TOTAL-ASSETS> 7,094,122
<CURRENT-LIABILITIES> 1,939,717
<BONDS> 0
0
0
<COMMON> 1,412
<OTHER-SE> 4,131,501
<TOTAL-LIABILITY-AND-EQUITY> 7,094,122
<SALES> 370,123
<TOTAL-REVENUES> 5,286,279
<CGS> 374,937
<TOTAL-COSTS> 3,866,522
<OTHER-EXPENSES> 909,726
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98,287
<INCOME-PRETAX> 838,089
<INCOME-TAX> 310,000
<INCOME-CONTINUING> 528,089
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 528,089
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
