<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, 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 April 30, 1996:
14,115,682
<PAGE> 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, 1996 and December 31, 1995.................. 3
Condensed Consolidated Statements of Operations
(Unaudited) - Three months ended March 31, 1996 and
1995.................................................. 5
Condensed Consolidated Statements of Cash Flows
(Unaudited) - Three months ended March 31, 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...................................................... 19
MATERIAL CONTRACTS.............................................. 20
STATEMENT REGARDING COMPUTATION OF EARNINGS (LOSS) PER SHARE.... 22
FINANCIAL DATA SCHEDULE......................................... 23
2
<PAGE> 3
THE RANDERS GROUP INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
===============================================
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1996 1995
------ ----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 415,521 $ 409,087
Accounts receivable, less
allowances of $55,000
and $45,000 for possible
losses 2,621,514 2,499,199
Prepaid expenses and other 78,679 59,847
Future income tax benefits 62,000 62,000
----------- -----------
TOTAL CURRENT ASSETS 3,177,714 3,030,133
----------- -----------
NET PROPERTY AND EQUIPMENT 2,670,184 2,617,919
----------- -----------
OTHER ASSETS:
Notes and accounts receivable -
Affiliate 1,080,705 1,061,033
Real estate held for resale 237,853 237,853
Goodwill, less accumulated
amortization of $100,161
and $97,092 144,356 147,425
Miscellaneous 16,518 20,623
----------- -----------
TOTAL OTHER ASSETS 1,479,432 1,466,934
----------- -----------
$ 7,327,330 $ 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>
March 31, December 31,
1996 1995
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Note payable - bank $1,329,000 $1,339,000
Accounts payable 343,590 680,332
Billings in excess of costs and
estimated earnings on contracts
in progress 27,200 54,000
Accrued compensation 216,055 162,113
Accrued income taxes 175,475 28,975
Other accrued expenses 148,844 37,409
Current maturities of long-term debt 116,210 124,113
---------- ----------
TOTAL CURRENT LIABILITIES 2,356,374 2,425,942
LONG-TERM DEBT, less current
maturities 1,054,352 1,084,220
---------- ----------
TOTAL LIABILITIES 3,410,726 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 2,378,753 2,066,973
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 3,916,604 3,604,824
---------- ----------
$7,327,330 $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 March 31,
----------------------------
1996 1995
---------- ----------
<S> <C> <C>
REVENUES:
Construction $ 216,373 $1,017,559
Service/consulting 2,606,712 1,564,051
Rental 82,666 75,534
---------- ----------
Total Revenues 2,905,751 2,657,144
---------- ----------
COSTS AND EXPENSES:
Construction costs 177,864 961,525
Costs of services/consulting 1,716,778 1,331,499
Rental costs 54,209 56,650
Selling, administrative and
general expenses 448,880 470,434
---------- ----------
Total Costs and Expenses 2,397,731 2,820,108
---------- ----------
Operating income (loss) 508,020 (162,964)
---------- ----------
OTHER INCOME (EXPENSES):
Interest expense (49,771) (56,117)
Interest income 26,531 12,107
---------- ----------
Other Income (Expense) - Net (23,240) (44,010)
---------- ----------
Income (loss) before taxes on income 484,780 (206,974)
INCOME TAXES (REDUCTION) 173,000 (69,000)
---------- ----------
NET INCOME (LOSS) $ 311,780 $ (137,974)
========== ==========
NET INCOME (LOSS) PER SHARE $ .02 $ (.01)
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT SHARES
OUTSTANDING 14,115,682 14,115,682
========== ==========
</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,
--------------------------
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM (FOR) OPERATIONS:
Cash received from customers $2,763,436 $2,749,160
Cash paid to suppliers and employees (2,527,776) (3,135,007)
Interest received 4,659 7,556
Interest paid (49,771) (56,117)
Income taxes (paid) refunded (26,500) 3,467
---------- ----------
Net Cash From (For) Operations 164,048 (430,941)
---------- ----------
CASH FLOWS FROM (FOR) INVESTING ACTIVITIES:
Capital expenditures (112,043) (16,956)
Advance to affiliate (10,000) -
---------- ----------
Net Cash From (For) Investing
Activities (122,043) (16,956)
---------- ----------
CASH FLOWS FROM (FOR) FINANCING ACTIVITIES:
Net borrowings (payments) on line of credit (10,000) 383,000
Principal payments on loans (37,771) (35,688)
Payments received on note from affiliate 12,200 1,200
---------- ----------
Net Cash From (For) Financing Activities (35,571) 348,512
---------- ----------
NET INCREASE (DECREASE) IN CASH 6,434 (99,385)
Cash and cash equivalents, at
beginning of period 409,087 776,430
---------- ----------
Cash and cash equivalents, at
end of period $ 415,521 $ 677,045
========== ==========
</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,
------------------------
1996 1995
--------- ----------
<S> <C> <C>
RECONCILIATION OF NET INCOME (LOSS) TO
NET CASH FROM (FOR) OPERATIONS:
Net income (loss) $ 311,780 $ (137,974)
Provision for (reduction in) allowance
on accounts receivable 10,000 (64,000)
Depreciation 59,778 36,445
Amortization 3,069 3,069
Changes in operating assets and
liabilities:
Accounts and notes receivable (132,315) 151,465
Prepaid expenses and other (36,599) (66,098)
Accounts payable and billings
in excess of costs and estimated
earnings on contracts in progress (363,542) (371,673)
Accrued expenses 311,877 17,825
--------- ----------
NET CASH FROM (FOR) OPERATIONS $ 164,048 $(430,941)
========= ==========
</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 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 three months ended March 31, 1996 are
not necessarily indicative of the results to be expected for the full year.
8
<PAGE> 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:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Cost $ 2,176,796 $ 2,069,408
Less accumulated amortization 973,283 928,076
------------ ------------
Net $ 1,203,513 $ 1,141,332
============ ============
</TABLE>
Property and equipment used in rental operations consist of the following:
<TABLE>
<S> <C> <C>
Cost $ 1,738,741 $ 1,734,085
Less accumulated amortization 272,070 257,498
------------ ------------
Net $ 1,466,671 $ 1,476,587
============ ============
Net Property and Equipment - total $ 2,670,184 $ 2,617,919
============ ============
</TABLE>
NOTE 3 - REAL ESTATE HELD FOR RESALE AND NOTES AND ACCOUNTS RECEIVABLE -
AFFILIATE
The $237,853 of real estate held for resale at March 31, 1996 and December
31, 1995, represents two condominiums that were turned over to the Company as
settlement for advances made to partners of FVALP. The carrying value of the
assets 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 condominiums could differ from the amounts estimated. It is
management's belief that the sale of these condominiums will not result in any
material adverse impact to the Company's financial statements.
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>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Notes receivable $ 423,711 $ 435,911
Accrued interest receivable 25,068 3,196
Accounts receivable 631,926 621,926
------------ ------------
$ 1,080,075 $ 1,061,033
============ ============
</TABLE>
The notes receivable bear interest at the prime rate (8.25% at March 31,
1996) and at March 31, 1996, are comprised of $246,285 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
$631,926 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 1,434,000 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.
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 March 31, 1996.
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 $2,104,824 at December 31, 1995 and $2,416,604 at March 31, 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 for clients in the chemical industry, 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
March 31, 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 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, 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 $237,853 of real estate held for
sale, notes receivable and accrued interest receivable from FVALP of $423,711
and $25,068, respectively, and accounts receivable from FVALP of $631,926. In
addition, the Company has guaranteed FVALP's borrowings under its line of
credit. Such borrowings amounted to $456,625 at March 31, 1996.
The $237,853 of real estate held for sale represents two condominiums that
were turned over to the Company as settlement for advances made to partners of
FVALP. The carrying value of the assets 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 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 condominiums could
differ from the amounts estimated. It is management's belief that the sale of
these condominiums will not result in any material adverse impact to the
Company's financial statements.
The $423,711 notes receivable balance is comprised of $246,285
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 $631,926 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
13
<PAGE> 14
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
===============================================
impairment has been recognized for the projected shortfall on the amounts
receivables, as the partners of FVALP have collateralized the receivables with
1,434,000 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>
March 31,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash and cash equivalents $ 416,000 $ 677,000
Working capital 821,000 $ 420,000
Ratio of current assets to current
liabilities 1.35 to 1 1.17 to 1
Available funds under line of credit $ 171,000 $ 137,000
</TABLE>
The Company's cash position of $416,000 at March 31, 1996, reflects an
increase of approximately $6,000 from December 31, 1995.
14
<PAGE> 15
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
===============================================
Operations for the first quarter of 1996 provided $164,000 of cash. Net
income of $312,000 for the period combined with non-cash expenses of $73,000
and a $312,000 increase in accrued expenses were more than sufficient to offset
the $169,000 increase in accounts receivable and prepaid expenses and the
$364,000 decrease in accounts payable and billings in excess of cost and
estimated earnings on contracts in progress. The increase in accounts
receivable and the decrease in accounts payable was due primarily to changes in
business activity rather than from a change in the timing of cash collections
or disbursements.
In addition to the $164,000 of cash provided by operations during the
first three months of 1996, the Company collected $12,000 on a note receivable
from an affiliate. During this same period the Company expended $112,000 for
property and equipment and used $48,000 to reduce its line of credit and its
long-term debt thus resulting in a $6,000 net increase in cash.
In June 1995, the Company opened an office in Springfield, Massachusetts.
The Company is not expected to incur 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
March 31, 1996, there were four 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 manufacturer 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, that 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 advances
up to $1,500,000. At March 31, 1996, the Company had outstanding borrowings of
$1,329,000 on the line. Management expects that the line of credit, which
expired April 1, 1996, 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 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. 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 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,
----------------------------
1996 1995
------------ -------------
<S> <C> <C>
Revenues 100.0% 100.0%
Gross Profit 32.9% 11.6%
Selling Administrative
and General Expenses 15.4% 17.7%
Other Income (Expenses) (.8%) (1.7%)
Income Taxes (Reduction) 6.0% (2.6%)
Net Income (Loss) 10.7% (5.2%)
</TABLE>
16
<PAGE> 17
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
===============================================
Three Months Ended March 31, 1996 Compared to Three Months Ended March 31, 1995
Revenues for the first quarter of 1996 were $2,906,000 compared to
$2,657,000 for the same period in 1995, an increase of 9.4%. Construction
revenues decreased $801,000 (78.7%) while revenues from service/consulting fees
increased $1,043,000 (66.7%). Construction revenues continued to reflect a
slow down in construction spending among the Company's traditional client base
and a return by certain clients to performing the general contracting function
with their internal staff. 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 increased volume at all offices resulting from
expansion of the Company's client base and from additional work from its
existing client base.
The Company reported an operating profit of $508,000 during the first
three months of 1996 compared to an operating loss of $163,000 during the same
period of 1995. Construction operations reported a gross profit of $39,000
(17.8%) compared to a gross profit of $56,000 (5.5%) for 1995. The gross
profit percentage on construction operations for the first quarter of 1996 was
higher than normally expected as final adjustments were made for projects
closing out during the period. The gross profit margin in 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 $890,000 (34.1%) for the first
quarter of 1996 compared to a gross profit of $233,000 (14.9%) in 1995. The
increase in the gross profit percentage results primarily from increased staff
utilization related to the increased volume of work. Selling, administrative,
and general expenses were $449,000 during the first quarter of 1996 compared to
$470,000 for the same period in 1995, a decrease of $21,000 or 4.6%. The
decrease in selling, administrative, and general costs relates to the closing
of the Chicago office in May, 1995. Such costs, however, represented 15.4% of
revenue in 1996 compared to 17.7% in 1995.
Net interest expense was $23,000 for the first three months of 1996
compared to net interest expense of $44,000 in 1995. Approximately 25% of the
decrease in net interest expense relates to a decrease in borrowings while the
remainder relates primarily to an increase in the balance of accounts and notes
receivable on which interest was being charged.
17
<PAGE> 18
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
===============================================
PART II - OTHER INFORMATION
===========================
Items 1-5
Not applicable.
Item 6
6(a) Exhibits:
#10 - Material Contracts (Part II Exhibit)
10(a) Sublease of office space, dated March 26, 1996, between
Randers Engineering, Inc. (Subleasee) and Environmental
Consulting and Technology, Inc. (Sublessor) regarding 650 square
feet of space located at 41280 Six Mile Road, Northville Township,
Michigan.
#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.
18
<PAGE> 19
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, 1996 /s/ Thomas R. Eurich
------------------------------------------
Thomas R. Eurich, President
Date: May 14, 1996 /s/ Michael J. Krivitzky
------------------------------------------
Michael J. Krivitzky
Senior Vice President and Treasurer
Date: May 14, 1996 /s/ David A. Wiegerink
------------------------------------------
David A. Wiegerink, Vice President
Finance and Administration
Principal Accounting Officer
19
<PAGE> 20
THE RANDERS GROUP INCORPORATED
EXHIBIT 6(a) - 10
SUBLEASE TO NORTHWOOD
CORPORATE PARK LEASE
This sublease attaches to and is integral to a certain lease dated August 2,
1990 between Environmental Consulting and Technology, Inc. (ECT) the "Tenant",
and Northwood Corporate Park Limited Partnership, the "Landlord", for the
rental of office space of 3687 SF in Suite 100 of the Northwood Corporate Park,
at 41820 Six Mile Road, Northville Township, Wayne County, Michigan 48167.
Sublease, Randers Engineering, Inc. (Randers), a Michigan Corporation, doing
business in the Landlord's building, Suite 102, desires and hereby rents from
Tenant, office space of 650 SF, and further described in attached Exhibit "A",
on a month-to-month basis.
Subleasee agrees to be bound by all the use provisions of Tenant's lease with
Landlord except as they relate to the areas not under sublease by Subleasee.
This sublease shall commence on March 27, 1996 and terminate on June 30, 1996.
Subleasee agrees to pay a rental of $19.00/SF/year, amounting to
$1,029.17/month, based on a 650 SF leasable area.
Landlord, agrees to provide the following suite modifications to properly
separate the Tenant and Subleasee's business operations from one another.
Subleasee agrees to reimburse Landlord for the modifications. The
modifications are:
1) Install a code approved hallway entrance passage door in the
Subleasee's space as shown in Exhibit "A" at location A.
2) Remove Door B and relocate to the end of the suite hallway.
3) Provide openings only at locations C and D in Rooms 3 and 4.
APPROVALS:
LANDLORD TENANT SUBLEASE
\s\Peter Ventura \s\Katherine H. Pierce \s\ Thomas R. Eurich
- ---------------- ---------------------- --------------------
Vice President
Date: 4/8/96 Date: 4/2/96 Date: 3/26/96
----------- ----------------- ---------------
20
<PAGE> 21
THE RANDERS GROUP INCORPORATED
EXHIBIT 6(a) - 10 (Continued)
EXHIBIT "A"
SUBLEASE TO NORTHWOOD
CORPORATE PARK LEASE
Exhibit "A" to the Sublease to Northwood Corporate Park Lease contains a detail
floor plan of the space sublet to Randers Engineering, Inc.
21
<PAGE> 22
THE RANDERS GROUP INCORPORATED
EXHIBIT 6(a)-11
Statement Regarding Computation of Earnings (Loss) 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:
<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, 1996 14,115,682 --- 14,115,682
March 31, 1995 14,115,682 --- 14,115,682
</TABLE>
Common equivalent shares, calculated using the treasury stock method,
including shares issuable under the Company's stock option plan.
Common equivalent shares are not used in computing net income (loss) per
share as they would be antidilutive when a loss exists or because they are not
considered dilutive as the effect on earnings per share data would be less than
three percent.
22
<PAGE> 23
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <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 three months ended March 31, 1996, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 415,521
<SECURITIES> 0
<RECEIVABLES> 2,676,514
<ALLOWANCES> 55,000
<INVENTORY> 0
<CURRENT-ASSETS> 3,177,714
<PP&E> 3,915,537
<DEPRECIATION> 1,245,353
<TOTAL-ASSETS> 7,327,330
<CURRENT-LIABILITIES> 2,356,374
<BONDS> 0
0
0
<COMMON> 1,412
<OTHER-SE> 3,915,192
<TOTAL-LIABILITY-AND-EQUITY> 7,327,330
<SALES> 216,373
<TOTAL-REVENUES> 2,905,751
<CGS> 177,864
<TOTAL-COSTS> 1,948,851
<OTHER-EXPENSES> 448,880
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49,771
<INCOME-PRETAX> 484,780
<INCOME-TAX> 173,000
<INCOME-CONTINUING> 311,780
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 311,780
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
