SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------------------------
FORM 10-K
(mark one)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended April 4, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission file number 0-18095
THE RANDERS GROUP INCORPORATED
(Exact name of Registrant as specified in its charter)
Delaware 38-2788025
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
570 Seminole Road
Norton Shores, Michigan 49444
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $.0001 par value American Stock Exchange
Emerging Company Marketplace
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to the filing requirements for
at least the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference into Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of May 29, 1998, was approximately $3,158,000.
As of May 29, 1998, the Registrant had 14,115,682 actual shares and 127,146,733
pro forma shares of Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Annual Report to Shareholders for the year ended
April 4, 1998, are incorporated by reference into Parts I and II.
Portions of the Registrant's definitive Proxy Statement for the Annual Meeting
of Shareholders to be held on September 15, 1998, are incorporated by reference
into Part III.
<PAGE>
PART I
Item 1. Business
(a) General Development of Business
The Randers Group Incorporated (Randers) provides comprehensive engineering
and outsourcing services in such areas as water and wastewater treatment,
highway and bridge projects, process engineering, construction management, and
operational services.
In May 1997, Thermo TerraTech Inc. purchased a controlling interest in
Randers. Subsequently, Thermo TerraTech entered into a definitive agreement to
transfer The Killam Group Inc. to Randers in exchange for additional shares of
Randers' common stock. As a result of these transactions, The Killam Group is
deemed to be the "accounting acquiror," and historical results for Randers have
been restated to solely reflect the financial information of The Killam Group
for periods prior to May 12, 1997, and to reflect the combined results of The
Killam Group and Randers (collectively, the Company or the Registrant) from May
12, 1997, the date on which Thermo TerraTech became the majority owner of
Randers. See Note 2 of Notes to Consolidated Financial Statements.
The Company's Killam Associates, Inc. subsidiary provides environmental
consulting and engineering services and specializes in wastewater treatment and
water resources management. The Company's BACKillam subsidiary provides both
private- and public-sector clients with a range of consulting services that
address transportation planning and design. The Company's Randers subsidiary
provides design engineering, project management, and construction services for
industrial clients in the manufacturing, pharmaceutical, and chemical-processing
industries. In November 1996, Thermo TerraTech acquired Carlan Consulting Group,
Inc. a provider of transportation and environmental consulting and professional
engineering and architectural services, and subsequently transferred it to the
Company.
The Company was originally organized as a partnership in January 1974, and
was incorporated in January 1976. Following the completion of the transactions
described above, Thermo TerraTech will own 120,551,051 shares of the common
stock of the Company, representing 95% of such stock outstanding. A publicly
traded subsidiary of Thermo Electron Corporation, Thermo TerraTech provides
industrial outsourcing services and manufacturing support encompassing a broad
range of specializations, including infrastructure engineering, design and
construction, environmental compliance, laboratory-testing and metal treating.
As of April 4, 1998, Thermo Electron owned 1,255,000 shares of the
Company's common stock, representing 1.0% of the Company's stock outstanding
following the completion of the transactions described above. Thermo Electron is
a world leader in environmental-monitoring and analysis instruments, papermaking
and recycling equipment, biomedical products such as heart-assist devices and
mammography systems, biomass electric power generation, and other specialized
products and technologies. Thermo Electron also provides a range of services
related to environmental quality and personal care.
2
<PAGE>
Forward-looking Statements
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Annual Report on Form
10-K. For this purpose, any statements contained herein that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans," "expects,"
"seeks," "estimates," and similar expressions are intended to identify
forward-looking statements. There are a number of important factors that could
cause the results of the Company to differ materially from those indicated by
such forward-looking statements, including those detailed under the heading
"Forward-looking Statements" in the Registrant's Fiscal 1998 Annual Report to
Shareholders, which statements are incorporated herein by reference.
(b) Financial Information About Industry Segments
The Company conducts business in one segment: environmental services. The
Company provides comprehensive engineering and outsourcing services in such
areas as water and wastewater treatment, highway and bridge projects, process
engineering, construction management, inspection, and operational services.
(c) Description of Business
(i) Principal Services and Products
The Company provides comprehensive environmental consulting and
professional engineering services to private- and public-sector clients. These
services include the design and resident observation of water supply and
wastewater treatment facilities; investigations of different methods to clean up
hazardous-waste sites; assistance in obtaining government permits;
transportation-related and similar types of infrastructure engineering, survey,
and land-use planning; and support services including mechanical, electrical,
and structural engineering. In addition, the Company provides natural resource
management services including environmental-impact studies.
Through its Killam Associates subsidiary, the Company specializes in the
design, planning, and construction observation of municipal and privately owned
water-treatment plants, waste treatment plants, and hazardous-wastewater
facilities. The Company provides full-service contract operations to plant
owners in the public and private sectors. These services facilitate regulatory
compliance; optimize day-to-day plant operations; reduce costs; provide
competent, experienced personnel; and promote good community relations.
Through its BACKillam subsidiary, the Company provides a broad range of
bridge and highway engineering services. Projects include bridge inspection,
rating and rehabilitation; new bridge design; highway corridor planning studies
for new route alignment of major state highways; design of the reconstruction
and widening of existing major roads; and construction inspection on both
highway and bridge projects.
3
<PAGE>
Results from May 1997, include the results of Randers, a provider of design
engineering, project management, and construction services for industrial
clients in the manufacturing, pharmaceutical, and chemical-processing
industries, principally in Michigan, Ohio, Illinois, Massachusetts, and West
Virginia.
Through its Carlan subsidiary, the Company provides transportation and
environmental consulting and professional engineering and architectural
services.
A substantial portion of the Company's sales are made to existing customers
on a repeat basis. The Company's services are often performed as multi-year
studies. In addition to federal, state, and local governments, customers include
public utilities, waste management companies, oil refineries, mining companies,
chemical manufacturers, architectural and engineering firms, and a variety of
service companies involved with real estate transactions.
(ii) New Products
The Company has made no commitments to new products that would require the
investment of a material amount of the Company's assets.
(iii) Raw Materials
Since the Company's business is service oriented, it does not involve the
processing of raw materials and is not dependent on fluctuations in the supply
or price of raw materials. To date, the Company has not experienced any
difficulty in obtaining any of the materials or components used in its
operations and does not foresee any such difficulty in the future. The Company
has multiple sources for all of its significant raw material needs.
(iv) Patents, Licenses and Trademarks
The Company does not own or license any patents, trademarks, licenses,
franchises or concessions which are material to the Company's business. The
Company believes that its business depends primarily upon the technical and
marketing expertise of its personnel.
(v) Seasonal Influences
A majority of the Company's businesses experience seasonal fluctuations.
Site investigation work and certain environmental testing services may decline
in winter months as a result of severe weather conditions.
(vi) Working Capital Requirements
In general, there are no special inventory requirements or credit terms
extended to customers that would have a material adverse effect on the Company's
working capital.
4
<PAGE>
(vii) Dependency on a Single Customer
No single customer accounted for more than 10% of the Company's total
revenues in any of the past three years.
(viii) Backlog
The Company's backlog of firm orders was $53,669,000 and $49,397,000 as of
April 4, 1998, and March 29, 1997, respectively. Included in the Company's
backlog at fiscal year-end 1998 and 1997 is the incomplete portion of contracts
that are accounted for using the percentage-of-completion method. Certain of
these contracts are subject to cancellation by the customer upon payment of a
cancellation charge. Of the fiscal 1998 backlog amount, substantially all orders
are expected to be filled within fiscal 1999.
(ix) Government Contracts
Not applicable.
(x) Competition
The Company's businesses are engaged in highly competitive markets in all
of its service areas. These markets tend to be regional. In its geographic
service area, competition consists of small, one- to three-person firms offering
a limited scope of services, as well as much larger firms that may be regional,
national, or international in the scope of services they offer. The principal
competitive factors for the Company are: reputation; experience; price; breadth
and quality of services offered; and technical, managerial, and business
proficiency.
(xi) Environmental Protection Regulations
The Company believes that compliance by the Company with federal, state,
and local environmental protection regulations will not have a material adverse
effect on its capital expenditures, earnings, or competitive position.
(xii) Number of Employees
As of April 4, 1998, the Company employed 711 people. None of the Company's
employees is represented by a union. The Company believes that relations with
its employees are good.
(d) Financial Information About Exports by Domestic Operations and About
Foreign Operations
The Company's does not engage in export operations and has no foreign
operations.
5
<PAGE>
(e) Executive Officers of the Registrant
Present Title (Fiscal Year First Became
Name Age Executive Officer)
-------------------------------------------------------------------------
Emil C. Herkert 60 President and Chief Executive Officer
(1997)
Nicholas M. DeNichilo 46 Vice President (1997)
Thomas R. Eurich 52 Vice President (1976)
John N. Hatsopoulos 63 Chief Financial Officer and Senior Vice
President (1997)
Paul F. Kelleher 55 Chief Accounting Officer (1997)
Each executive officer serves until his successor is chosen or appointed
by the Board of Directors and qualified or until earlier resignation, death,
or removal. Mr. Herkert was appointed Chief Executive Officer of the Company
in May 1997 and President in November 1997. Prior thereto, Mr. Herkert had
served as President of Killam Associates since 1977. Mr. Herkert has also
served as a Vice President of Thermo TerraTech since 1996. Mr. DeNichilo was
appointed Vice President in 1997. Prior to that time he served as a Vice
President of Killam Associates since 1985. Mr. Eurich served as President of
Randers from 1976 until the date of its agreement to acquire The Killam
Group in 1997, at which time Mr. Eurich was appointed Vice President of the
Company. Messrs. Hatsopoulos and Kelleher have held comparable positions for
at least five years with Thermo TerraTech and Thermo Electron. Messrs.
Hatsopoulos and Kelleher are full-time employees of Thermo Electron, but
devote such time to the affairs of the Company as the Company's needs
reasonably require.
Item 2. Properties
The location and general character of the Company's principal properties as
of April 4, 1998, are as follows:
The Company owns approximately 86,000 square feet of office and engineering
space, principally in New Jersey and Michigan, of which 16,000 square feet is
used as rental property. As of April 4, 1998, the Company had an aggregate $2.1
million under two mortgage loans that are secured by 53,000 square feet of
property in Michigan and New Jersey with a total net book value of $3.1 million.
In addition, the Company leases approximately 120,000 square feet of office and
engineering space pursuant to leases expiring in fiscal 1999 through 2004,
principally in Pennsylvania, New Jersey, and Florida.
The Company believes that these facilities are in good condition and are
adequate for its present operations and that other suitable space is readily
available if any of such leases are not extended.
Item 3. Legal Proceedings
Not applicable.
Item 4. Submission of Matters to a Vote of the Security Holders
Not applicable.
6
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
Information concerning the market and market price for the Registrant's
common stock, $.0001 par value, and dividend policy is included under the
sections labeled "Common Stock Market Information" and "Dividend Policy" in the
Registrant's 1998 Annual Report to Shareholders and is incorporated herein by
reference.
Item 6. Selected Financial Data
The information required under this item is included under the sections
"Selected Financial Information" and "Dividend Policy" in the Registrant's 1998
Annual Report to Shareholders and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The information required under this item is included under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the Registrant's 1998 Annual Report to Shareholders and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The Registrant's Consolidated Financial Statements as of April 4, 1998, and
Supplementary Data are included in the Registrant's 1998 Annual Report to
Shareholders and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
7
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant
The information concerning directors required under this item is
incorporated herein by reference from the material contained under the caption
"Election of Directors" in the Registrant's definitive proxy statement to be
filed with the Securities and Exchange Commission pursuant to Regulation 14A,
not later than 120 days after the close of the fiscal year. The information
concerning delinquent filers pursuant to Item 405 of Regulation S-K is
incorporated herein by reference from the material contained under the heading
"Section 16(a) Beneficial Ownership Reporting Compliance" under the caption
"Stock Ownership" in the Registrant's definitive proxy statement to be filed
with the Securities and Exchange Commission pursuant to Regulation 14A, not
later than 120 days after the close of the fiscal year.
Item 11. Executive Compensation
The information required under this item is incorporated herein by
reference from the material contained under the caption "Executive Compensation"
in the Registrant's definitive proxy statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A, not later than 120 days
after the close of the fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required under this item is incorporated herein by
reference from the material contained under the caption "Stock Ownership" in the
Registrant's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A, not later than 120 days after
the close of the fiscal year.
Item 13. Certain Relationships and Related Transactions
The information required under this item is incorporated herein by
reference from the material contained under the caption "Relationship with
Affiliates" in the Registrant's definitive proxy statement to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, not later than
120 days after the close of the fiscal year.
8
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a,d) Financial Statements and Schedules
(1) The consolidated financial statements set forth in the list below
are filed as part of this Report.
(2) The consolidated financial statement schedule set forth in the
list below is filed as part of this Report.
(3) Exhibits filed herewith or incorporated herein by reference are
set forth in Item 14(c) below.
List of Financial Statements and Schedules Referenced in this Item
14
Information incorporated by reference from Exhibit 13 filed herewith:
Consolidated Statement of Income
Consolidated Balance Sheet
Consolidated Statement of Cash Flows
Consolidated Statement of Shareholders' Investment
Notes to Consolidated Financial Statements
Report of Independent Public Accountants
Certain Financial Statement Schedule filed herewith:
Schedule II: Valuation and Qualifying Accounts
All other schedules are omitted because they are not applicable or not
required, or because the required information is shown either in the
financial statements or in the notes thereto.
(b) Reports on Form 8-K
None.
(c) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
9
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed by
the undersigned, thereunto duly authorized.
Date: June 12, 1998 THE RANDERS GROUP INC.
By: Emil C. Herkert
------------------
Emil C. Herkert
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated, as of June 12, 1998.
Signature Title
By: Emil C. Herkert President, Chief Executive Officer,
--------------------- and Director
Emil C. Herkert
By: John N. Hatsopoulos Chief Financial Officer, and Senior
--------------------- Vice President
John N. Hatsopoulos
By: Paul F. Kelleher Chief Accounting Officer
---------------------
Paul F. Kelleher
By: John P. Appleton Chairman of the Board and Director
---------------------
John P. Appleton
By: Thomas R. Eurich Director
---------------------
Thomas R. Eurich
By Susan F. Tierney Director
---------------------
Susan F. Tierney
By Polyvios C. Vintiadis Director
---------------------
Polyvios C. Vintiadis
10
<PAGE>
Report of Independent Public Accountants
To the Shareholders and Board of Directors of The Randers Group Incorporated:
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements included in The Randers Group's Annual
Report to Shareholders incorporated by reference in this Form 10-K, and have
issued our report thereon dated May 12, 1998. Our audits were made for the
purpose of forming an opinion on those statements taken as a whole. The schedule
listed in Item 14 on page 9 is the responsibility of the Company's management
and is presented for purposes of complying with the Securities and Exchange
Commission's rules and is not part of the basic consolidated financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic consolidated financial statements and, in our
opinion, fairly states in all material respects the consolidated financial data
required to be set forth therein in relation to the basic consolidated financial
statements taken as a whole.
Arthur Andersen LLP
Boston, Massachusetts
May 12, 1998
11
<PAGE>
SCHEDULE II
THE RANDERS GROUP INCORPORATED
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Balance
at Provision Accounts Balance
Beginning Charged to Accounts Written at End
of Year Expense Recovered off Other(a) of Year
- --------------------------------------------------------------------------------
Allowance for
Doubtful
Accounts
Year Ended
Apr. 4, 1998 $706 $293 $ 4 $(352) $109 $760
Year Ended
Mar. 29, 1997 $576 $149 $ 30 $ (84) $ 35 $706
Year Ended
Mar. 30, 1996 $765 $208 $ 52 $(440) $ (9) $576
(a) Includes allowances of businesses transferred from parent company as
described in Note 2 to Consolidated Financial Statements in the
Registrant's Fiscal 1998 Annual Report to Shareholders.
12
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- --------------------------------------------------------------------------------
2.1 Stock Purchase Agreement between the Thermo Electron Corporation
and the Registrant dated March 13, 1991 (filed as an Exhibit to
Schedule 13D filed by Thermo Electron Corporation on March 22,
1991, and incorporated herein by reference).
2.2 Option granted by Richard A. McEnhill to the Registrant dated
March 8, 1991 (filed as an Exhibit to Amendment No. 1 to Schedule
13D filed by Thermo Electron Corporation on January 27, 1994, and
incorporated herein by reference).
2.3 Option Assignment Agreement between the Registrant and Thermo
Power Corporation dated as of January 19, 1994 (filed as an
Exhibit to Amendment No. 1 to Schedule 13D filed by Thermo
Electron Corporation on January 27, 1994, and incorporated herein
by reference).
2.4 Stock Purchase and Sale Agreement dated May 12, 1997, by and
between Thermo TerraTech Inc. and Thomas R. Eurich, Michael J.
Krivitzky, Thomas J. McEnhill, and Bruce M. Bourdon (filed as
Exhibit (iv) to Amendment No. 3 to Schedule 13D filed by Thermo
Electron Corporation and Thermo TerraTech Inc. on May 13, 1997,
and incorporated herein by reference).
2.5 Amendment No. 1 dated September 19, 1997, to Stock Purchase and
Sale Agreement dated May 12, 1997, by and between Thermo
TerraTech Inc. and Thomas R. Eurich, Michael J. Krivitzky,
Thomas J. McEnhill, and Bruce M. Bourdon.
2.6 Letter of Intent dated May 12, 1997, by and between Thermo
TerraTech Inc. and the Registrant (filed as Exhibit (v) to
Amendment No. 3 to Schedule 13D filed by Thermo Electron
Corporation and Thermo TerraTech Inc. on May 13, 1997, and
incorporated herein by reference).
2.7 Stock Purchase Agreement entered on September 19, 1997, by and
between Thermo TerraTech Inc. and the Registrant (filed as Exhibit
(vii) to Amendment No. 4 to Schedule 13D filed by Thermo Electron
Corporation and Thermo TerraTech Inc. on October 1, 1997, and
incorporated herein by reference).
2.8 Amendment No. 1 dated as of April 4, 1998, to Stock Purchase
Agreement entered on September 19, 1997, by and between Thermo
TerraTech Inc. and the Registrant.
2.9 Agreement by and among Thermo TerraTech Inc., the Registrant,
Thomas R. Eurich, Michael J. Krivitzky, Thomas J. McEnhill, Bruce
M. Bourdon, and David A. Wiegerink (filed as Exhibit 10 to the
Registrant's Current Report on Form 8-K dated September 19, 1997,
and filed with the Commission on October 3, 1997, and incorporated
herein by reference).
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<PAGE>
Exhibit
Number Description of Exhibit
- --------------------------------------------------------------------------------
3.1 Certificate of Incorporation (filed as Exhibit 3(a) to the
Registrant's Registration Statement on Form 10 and incorporated
herein by reference).
3.2 Certificate of Amendment to Certificate of Incorporation, dated
November 2, 1987 (filed as Exhibit 3(b) to the Registrant's
Registration Statement on Form 10 and incorporated herein by
reference).
3.3 Amended and Restated By-Laws (filed as Exhibit 3(a) to the
Registrant's Registration Statement on Form 10 and incorporated
herein by reference).
3.4 Amendment to Amended and Restated By-Laws, effective October 28,
1997.
10.1 Development Agreement dated December 1, 1988, between First
Venture Associates Limited Partnership and Redeco Incorporated
(filed as Exhibit 10(a) to the Registrant's Registration Statement
on Form 10 and incorporated herein by reference).
10.2 Addendum to Development Agreement between First Venture Associates
Limited Partnership and Redeco Incorporated (filed as Exhibit
10(b) to the Registrant's Annual Report on Form 10-KSB for the
year ended December 31, 1993, and incorporated herein by
reference).
10.3 The Randers Group Incorporated 1988 Stock Option Plan (filed as
Exhibit 10(m) to the Registrant's Registration Statement on Form
10 and incorporated herein by reference).
10.4 Indemnification Agreement, dated November 2, 1987, between The
Registrant and Thomas R. Eurich (filed as Exhibit 10(n) to the
Registrant's Registration Statement on Form 10 and incorporated
herein by reference).
10.5 The Randers Group Incorporated Flexible Compensation Plan (filed
as Exhibit 10(a) to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 1991, and incorporated herein by
reference).
10.6 Thermo Electron Corporate Charter as amended and restated
effective January 3, 1993 (filed as Exhibit 10.1 to Thermo
Electron Corporation's Annual Report on Form 10-K for the fiscal
year ended January 2, 1993 [File No. 1-8002] and incorporated
herein by reference).
14
<PAGE>
Exhibit
Number Description of Exhibit
- --------------------------------------------------------------------------------
10.7 Corporate Services Agreement dated November 19, 1997, between
Thermo Electron Corporation and the Registrant (filed as Exhibit
10.4 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended January 3, 1998, and incorporated herein by
reference).
10.8 Tax Allocation Agreement dated as of November 19, 1997, between
the Registrant and Thermo TerraTech Inc. (filed as Exhibit 10.3 to
the Registrant's Quarterly Report on Form 10-Q for the quarter
ended January 3, 1998, and incorporated herein by reference).
10.9 Master Repurchase Agreement dated as of November 19, 1997, between
the Registrant and Thermo Electron Corporation (filed as Exhibit
10.6 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended January 3, 1998, and incorporated herein by
reference).
10.10 Master Guarantee Reimbursement and Loan Agreement dated as of
February 26, 1998, between the Registrant and Thermo TerraTech
Inc.
10.11 Master Guarantee Reimbursement and Loan Agreement dated as of
February 26, 1998, between the Registrant and Thermo Electron
Corporation.
10.12 Equity Incentive Plan (filed as Exhibit 10.7 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended January 3,
1998, and incorporated herein by reference).
10.13 Deferred Compensation Plan for Directors (filed as Exhibit 10.8
to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended January 3, 1998, and incorporated herein by
reference).
10.14 Form of Indemnification Agreement for Directors and Officers Form
of Indemnification Agreement with Directors and Officers (filed as
Exhibit 10.9 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended January 3, 1998, and incorporated herein by
reference).
10.15 Stock Holding Assistance Plan and Form of Loan thereunder.
15
<PAGE>
Exhibit
Number Description of Exhibit
- --------------------------------------------------------------------------------
13 Annual Report to Shareholders for the year ended April 4, 1998
(only those portions incorporated herein by reference).
21 Subsidiaries of the Registrant.
27.1 Financial Data Schedule for the fiscal year ended April 4, 1998.
27.2 Financial Data Schedule for the fiscal year ended March 30, 1996.
27.3 Financial Data Schedule for the quarter ended June 29, 1996.
27.4 Financial Data Schedule for the quarter ended September 28, 1996.
27.5 Financial Data Schedule for the quarter ended December 28, 1996.
27.6 Financial Data Schedule for the fiscal year ended March 29, 1997.
27.7 Financial Data Schedule for the quarter ended June 28, 1997.
27.8 Financial Data Schedule for the quarter ended September 27, 1997.
27.9 Financial Data Schedule for the quarter ended January 3, 1998.
16
Exhibit 2.5
AMENDMENT NO. 1 TO
STOCK PURCHASE AND SALE AGREEMENT
WHEREAS, Thermo TerraTech Inc., a Delaware corporation ("TTT"), and Thomas
R. Eurich, Michael J. Krivitzky, Thomas J. McEnhill and Bruce M. Bourdon (each
such person, individually, a "Seller" and all such persons collectively, the
"Sellers"), are parties to that certain Stock Purchase and Sale Agreement made
and entered into on May 12, 1997, pursuant to which TTT acquired a majority of
the issued and outstanding shares of the capital stock of The Randers Group
Incorporated ("RGI") from the Sellers (the "Agreement");
WHEREAS, pursuant to a Stock Purchase Agreement of even date herewith (the
"Killam Agreement"), TTT has agreed to transfer to RGI all of the issued and
outstanding capital stock of The Killam Group Inc. ("Killam") in consideration
of the issuance by RGI of additional shares of its common stock to TTT;
WHEREAS, in connection with execution and delivery of the Killam
Agreement, RGI, TTT, the Sellers and one other party have entered into a certain
agreement of even date herewith, providing for certain Severance Payments (as
such term is defined therein) to the Sellers and such other party under certain
circumstances; and
WHEREAS, the parties wish to amend certain provisions of the Agreement to
better reflect their intentions in consideration of the execution and delivery
of the Killam Agreement and the Related Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements and provisions herein contained, the parties hereto, intending to be
legally bound, agree as follows:
1. Section 5.4(a) of the Agreement is hereby amended and restated in its
entirety as follows:
"(a) Each Seller agrees that, while he is employed by the Company,
and for a period of two years after (i) the termination of the Seller's
employment by the Company with Cause (as defined in the first sentence of
Section 5.4(d) below), or (ii) the termination of the Seller's employment
without Cause (as defined in the second sentence of Section 5.4(d) below),
the Seller will not, directly or indirectly:
(i) engage in any business that provides any services or
products competitive with those offered by the Company as of the date of
such resignation or termination in any jurisdiction within the United
States of America in which the Company then offer such services or
products, or
(ii) without the prior written consent of the Company, (i)
solicit any person employed by the Company (or any of its affiliates) to
terminate his employment with the Company (or any of such affiliates) or
to become an employee of the Seller or any person or entity with which the
Seller may be affiliated, or (ii) hire any such employee except employees
involuntarily terminated by the Company (or any of its affiliates)."
2. Section 5.4(d) of the Agreement is hereby amended and restated in its
entirety as follows:
"(d) For purposes of this Agreement only, "Cause" for termination of
the Seller's employment by the Company shall be deemed to exist upon (i) a
good faith finding by the Company of the failure of the Seller to perform
his assigned duties for the Company, a material violation of any policy
established by the Company (or its affiliates) and made known to the
Seller, gross insubordination, dishonesty, gross negligence or gross
misconduct, or (ii) the conviction of the Seller of, or the entry of a
pleading of guilty or nolo contendere by the Seller to, any crime
involving moral turpitude or any felony. "Cause" for termination of the
Seller's employment by the Seller shall be deemed to exist upon (i) the
Company's assignment to the Seller of duties fundamentally incompatible
with the duties of the Seller as of the date of this Agreement (although
the Seller's actual title or officer and/or director status may be changed
or eliminated and that alone will not be considered "Cause") or (ii) a
reduction in the Seller's current base salary prior to September 1, 1998."
3. Section 5.4 of the Agreement is hereby further amended by adding the
following subsection (h) immediately after subsection (g) thereof:
"(h) Notwithstanding any provision of this Section 5.4 to the
contrary, in no event shall any Seller engage in any of the activities
prohibited by clauses (i) or (ii) of Subsection 5.4(a) hereof during any
period in, or with respect to, which such Seller is receiving or has
received a Severance Payment (as such term is defined in that certain
agreement of even date herewith providing, among other things, for such
Severance Payments under certain circumstances to the Sellers and to one
other party)."
4. Except as set forth herein, the Agreement shall remain in full force
and effect in accordance with its terms.
5. This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the 19th day of September, 1997.
THERMO TERRATECH INC.
By: /s/ John P. Appleton
John P. Appleton
President and CEO
/s/ Thomas R. Eurich
/s/ Michael J. Krivitzky
Thomas R. Eurich
Michael J. Krivitzky
/s/ Thomas J. McEnhill
/s/ Bruce M. Bourdon
Thomas J. McEnhill
Bruce M. Bourdon
Exhibit 2.8
AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
WHEREAS, THERMO TERRATECH INC., a Delaware corporation (the "Seller"), and
THE RANDERS GROUP INCORPORATED, a Delaware corporation (the "Buyer"), have
entered into that certain Stock Purchase Agreement (the "Agreement") on
September 19, 1997 providing for the sale of the capital stock of The Killam
Group Inc. ("Killam") by the Seller to the Buyer;
WHEREAS, the Agreement contemplated that in consideration of such sale,
the Buyer would issue to the Seller 103,569,600 fully paid and non-assessable
shares of the Buyer's common stock, subject to a post-closing adjustment as
described in Section 2.2 of the Agreement;
WHEREAS, as of April 4, 1998 (the end of the Buyer's and the Seller's most
recently completed fiscal year), the post-closing adjustment mechanism set forth
in Section 2.2 of the Agreement would have resulted in the issuance of
113,031,051 shares of the Buyer's common stock to the Seller in consideration of
the sale of Killam to the Buyer;
WHEREAS, the Buyer and the Seller wish to stabilize the number of shares
of the Buyer's common stock to be issued in consideration of the sale of Killam
to the Buyer as of April 4, 1998;
WHEREAS, the Buyer's Board of Directors has recommended, subject to the
approval of the Buyer's shareholders, that Buyer effect a one-for-five reverse
split of its common stock (the "Reverse Stock Split"); and
WHEREAS, the Buyer and the Seller wish to give effect to the Reverse Stock
Split prior to the issuance of the shares of Buyer's common stock to Seller as
contemplated by the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements and provisions herein contained, the parties hereto, intending to be
legally bound, agree as follows:
1. Section 1 of the Agreement is hereby amended by deleting the definition
of "Base Purchase Price" and by adding the following definition in alphabetical
order within such Section:
"'Purchase Price' has the meaning set forth in ss.2.2 below."
2. Section 1 of the Agreement is hereby further amended by deleting the
definition of "Closing Balance Sheet."
3. Section 1 of the Agreement is hereby further amended by adding the
following definition in alphabetical order within such Section:
"'Reverse Stock Split' has the meaning set forth in ss.7.2(i)
below."
4. Section 2.2 of the Agreement is hereby amended and restated in its
entirety as follows:
"2.2 Purchase Consideration. The Buyer shall deliver to the Seller at the
Closing 22,606,210 fully paid and non-assessable shares (after giving
effect to the Reverse Stock Split) of RGI Stock (the "Purchase Price").
The parties acknowledge and agree that the number of shares of RGI Stock
to be delivered at the Closing in payment of the Purchase Price represents
the audited book value of Killam Group as of April 4, 1998, divided by
$3.125 (or $0.625 multiplied by 5, to take into account the Reverse Stock
Split) per share of RGI Stock so issued."
5. Section 7.2 of the Agreement is amended by inserting the following new
clause (i) therein and by renumbering all subsequent clauses accordingly:
"(i) the Seller shall have effected a reverse stock split of one
share of RGI Stock for every five shares outstanding of such RGI Stock
(the "Reverse Stock Split") in accordance with the laws of the State of
Delaware;"
6. Section 8.4 of the Agreement is hereby amended and restated in its
entirety as follows:
"8.4 Indemnification Ceiling Amount. In no event will the
total amount payable by either Seller or Buyer pursuant to
ss.8.2 or ss.8.3 exceed an amount equal to the Purchase Price
for the Killam Shares."
7. Except as set forth herein, the Agreement shall remain in full force
and effect in accordance with its terms.
8. This Amendment may be executed in counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the 4th day of April, 1998.
THE RANDERS GROUP INCORPORATED THERMO TERRATECH INC.
By: /s/ Thomas R. Eurich By: /s/ John P. Appleton
Thomas R. Eurich John P. Appleton
Vice President President and CEO
Exhibit 3.4
THE RANDERS GROUP INCORPORATED
October 28, 1997
The undersigned, being all of the Directors of The Randers Group
Incorporated, a Delaware corporation (the "Corporation"), hereby consent
pursuant to Section 141(f) of the Delaware General Corporation Law, to the
adoption of the following resolution, effective as of the date set forth above:
RESOLVED: That Section 1 of Article III of the Amended and
Restated Bylaws of the Corporation be, and it
hereby is, amended by deleting such section in its
entirety and replacing it with the following:
"Section 1. Number of Directors. Except as otherwise provided by
law, the certificate of incorporation or these by-laws, the
property and business of the corporation shall be managed by or
under the direction of a board of not less than three nor more
than thirteen directors. Within the limits specified, the number
of directors shall be determined by resolution of the Board of
Directors or by the stockholders at the annual meeting.
Directors need not be stockholders. The directors shall be
elected by ballot at the annual meeting of the stockholders and
each director shall be elected to serve until his successor
shall be elected and shall qualify or until his earlier
resignation or removal; provided that in the event of failure to
hold such meeting or to hold such election at such meeting, such
election may be held at any special meeting of the stockholders
called for that purpose. If the office of any director becomes
vacant by reason of death, resignation, disqualification,
removal, failure to elect, or otherwise, the remaining
directors, although less than a quorum, by a majority vote of
such remaining directors may elect a successor or successors who
shall hold office for the unexpired term or until their earlier
resignation or removal. Vacancies and newly created
directorships resulting from any increase in the authorized
number of directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold
office until the next annual election and until their successors
are elected and qualified or until their earlier resignation or
removal."
/s/ Thomas R. Eurich /s/ Michael J. Krivitzky
Thomas R. Eurich Michael J. Krivitzky
/s/ Thomas J. McEnhill /s/ Bruce M. Bourdon
Thomas J. McEnhill Bruce M. Bourdon
Exhibit 10.10
1MASTER GUARANTEE REIMBURSEMENT AND LOAN AGREEMENT
This AGREEMENT is entered into as of the 26th day of February, 1998, by
and among Thermo TerraTech Inc. (the "Parent") and those of its subsidiaries
that join in this Agreement by executing the signature page hereto (the
"Majority Owned Subsidiaries").
WITNESSETH:
WHEREAS, the majority owned subsidiaries and their wholly-owned
subsidiaries wish to enter into various financial transactions, such as
convertible or nonconvertible debt, loans, and equity offerings, and other
contractual arrangements with third parties (the "Underlying Obligations") and
may provide credit support to, on behalf of or for the benefit of, other
subsidiaries of the Parent ("Credit Support Obligations");
WHEREAS, the Majority Owned Subsidiaries and the Parent acknowledge that
the Majority Owned Subsidiaries and their wholly-owned subsidiaries may be
unable to enter into many kinds of Underlying Obligations without a guarantee of
their performance thereunder from the Parent (a "Parent Guarantee") or without
obtaining Credit Support Obligations from other Majority Owned Subsidiaries;
WHEREAS, the Majority Owned Subsidiaries and their wholly-owned
subsidiaries may borrow funds from the Parent, and the Parent may loan funds or
provide credit to the Majority Owned Subsidiaries and their wholly-owned
subsidiaries, on a short-term and unsecured basis; and
WHEREAS, the Parent is willing to consider continuing to issue Parent
Guarantees and providing credit, and the Majority Owned Subsidiaries are willing
to consider continuing to provide Credit Support Obligations and to borrow
funds, on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party hereto, the parties agree as follows:
1. If the Parent provides a Parent Guarantee of an Underlying
Obligation, and the beneficiary(ies) of the Parent Guarantee
enforce the Parent Guarantee, or the Parent performs under
the Parent Guarantee for any other reason, then the Majority
Owned Subsidiary that is obligated, either directly or
indirectly through a wholly-owned subsidiary, under such
Underlying Obligation shall indemnify and save harmless the
Parent from any liability, cost, expense or damage
(including reasonable attorneys' fees) suffered by the
Parent as a result of the Parent Guarantee. If a Majority
Owned Subsidiary or a wholly-owned subsidiary thereof
provides a Credit Support Obligation for any subsidiary of
the Parent, other than a subsidiary of such Majority Owned
Subsidiary, and the beneficiary(ies) of the Credit Support
Obligation enforce the Credit Support Obligation, or the
Majority Owned Subsidiary or its wholly-owned subsidiary
performs under the Credit Support Obligation for any other
reason, then the Parent shall indemnify and save harmless
the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, from any liability, cost, expense
or damage (including reasonable attorneys' fees) suffered by
the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, as a result of the Credit Support
Obligation. Without limiting the foregoing, Credit Support
Obligations include the deposit of funds by a Majority Owned
Subsidiary or a wholly-owned subsidiary thereof in a credit
arrangement with a banking facility whereby such funds are
available to the banking facility as collateral for
overdraft obligations of other Majority Owned Subsidiaries
or their subsidiaries also participating in the credit
arrangement with such banking facility.
2. For purposes of this Agreement, the term "guarantee" shall
include not only a formal guarantee of an obligation, but
also any other arrangement where the Parent is liable for
the obligations of a Majority Owned Subsidiary or its
wholly-owned subsidiaries. Such other arrangements include
(a) representations, warranties and/or covenants or other
obligations joined in by the Parent, whether on a joint or
joint and several basis, for the benefit of the Majority
Owned Subsidiary or its wholly-owned subsidiaries and (b)
responsibility of the Parent by operation of law for the
acts and omissions of the Majority Owned Subsidiary or its
wholly-owned subsidiaries, including controlling person
liability under securities and other laws.
3. Promptly after the Parent receives notice that a beneficiary
of a Parent Guarantee is seeking to enforce such Parent
Guarantee, the Parent shall notify the Majority Owned
Subsidiary(s) obligated, either directly or indirectly
through a wholly-owned subsidiary, under the relevant
Underlying Obligation. Such Majority Owned Subsidiary(s) or
wholly-owned subsidiary thereof, as applicable, shall have
the right, at its own expense, to contest the claim of such
beneficiary. If a Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is contesting the claim
of such beneficiary, the Parent will not perform under the
relevant Parent Guarantee unless and until, in the Parent's
reasonable judgment, the Parent is obligated under the terms
of such Parent Guarantee to perform. Subject to the
foregoing, any dispute between a Majority Owned Subsidiary
or wholly-owned subsidiary thereof, as applicable, and a
beneficiary of a Parent Guarantee shall not affect such
Majority Owned Subsidiary's obligation to promptly indemnify
the Parent hereunder. Promptly after a Majority Owned
Subsidiary or wholly-owned subsidiary thereof, as
applicable, receives notice that a beneficiary of a Credit
Support Obligation is seeking to enforce such Credit Support
Obligation, the Majority Owned Subsidiary shall notify the
Parent. The Parent shall have the right, at its own
expense, to contest the claim of such beneficiary. If the
Parent or the subsidiary of the Parent on whose behalf the
Credit Support Obligation is given is contesting the claim
of such beneficiary, the Majority Owned Subsidiary or
wholly-owned subsidiary thereof, as applicable, will not
perform under the relevant Credit Support Obligation unless
and until, in the Majority Owned Subsidiary's reasonable
judgment, the Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is obligated under the
terms of such Credit Support Obligation to perform. Subject
to the foregoing, any dispute between the Parent or the
subsidiary of the Parent on whose behalf the Credit Support
Obligation was given, on the one hand, and a beneficiary of
a Credit Support Obligation, on the other, shall not affect
the Parent's obligation to promptly indemnify the Majority
Owned Subsidiary or its wholly-owned subsidiary, as
applicable, hereunder.
4. Upon the request of a Majority Owned Subsidiary, the Parent
may make loans and advances to the Majority Owned Subsidiary
or its wholly-owned subsidiaries on a short-term, revolving
credit basis, from time to time in such amounts as mutually
determined by the Parent and the Majority Owned Subsidiary.
The aggregate principal amount of such loans and advances
shall be reflected on the books and records of the Majority
Owned Subsidiary (or wholly-owned subsidiary, as applicable)
and the Parent. All such loans and advances shall be on an
unsecured basis unless specifically provided otherwise in
loan documents executed at that time. The Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable,
shall pay interest on the aggregate unpaid principal amount
of such loans from time to time outstanding at a rate
("Interest Rate") equal to the rate of the Commercial Paper
Composite Rate for 90-day maturities as reported by Merrill
Lynch Capital Markets, as an average of the last five
business days of such Majority Owned Subsidiary's latest
fiscal quarter then ended, plus twenty-five (25) basis
points. The Interest Rate shall be adjusted on the first
business day of each fiscal quarter of such Majority Owned
Subsidiary pursuant to the Interest Rate formula contained
in the preceding sentence and shall be in effect for the
entirety of such fiscal quarter. Interest shall be computed
on a 360-day basis. The aggregate principal amount
outstanding and accrued interest thereon shall be payable on
demand. The principal and accrued interest may be paid by
the Majority Owned Subsidiaries or their wholly-owned
subsidiaries, as applicable, at any time or from time to
time, in whole or in part, without premium or penalty. All
payments shall be applied first to accrued interest and then
to principal. Principal and interest shall be payable in
lawful money of the United States of America, in immediately
available funds, at the principal office of the Parent or at
such other place as the Parent may designate from time to
time in writing to the Majority Owned Subsidiary. The
unpaid principal amount of any such borrowings, and accrued
interest thereon, shall become immediately due and payable,
without demand, upon the failure of the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, to
pay its debts as they become due, the insolvency of the
Majority Owned Subsidiary or its wholly-owned subsidiary, as
applicable, the filing by or against the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
any petition under the U.S. Bankruptcy Code (or the filing
of any similar petition under the insolvency law of any
jurisdiction), or the making by the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
an assignment or trust mortgage for the benefit of creditors
or the appointment of a receiver, custodian or similar agent
with respect to, or the taking by any such person of
possession of, any property of the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable. In case any
payments of principal and interest shall not be paid when
due, the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, further promises to pay all cost
of collection, including reasonable attorneys' fees.
5. All payments required to be made by a Majority Owned Subsidiary or its
wholly-owned subsidiaries, as applicable, shall be made within two days
after receipt of notice from the Parent. All payments required to be made
by the Parent shall be made within two days after receipt of notice from
the Majority Owned Subsidiary.
6. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts applicable to contracts made and
performed therein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
THERMO TERRATECH INC.
By: /s/ John P. Appleton
John P. Appleton
Title: President
THE RANDERS GROUP INCORPORATED
By: /s/ Emil C. Herkert
Emil C. Herkert
Title: President
Exhibit 10.11
MASTER GUARANTEE REIMBURSEMENT AND LOAN AGREEMENT
This AGREEMENT is entered into as of the 26th day of February, 1998 by and
among Thermo Electron Corporation (the "Parent") and those of its subsidiaries
that join in this Agreement by executing the signature page hereto (the
"Majority Owned Subsidiaries").
WITNESSETH:
WHEREAS, the majority owned subsidiaries and their wholly-owned
subsidiaries wish to enter into various financial transactions, such as
convertible or nonconvertible debt, loans, and equity offerings, and other
contractual arrangements with third parties (the "Underlying Obligations") and
may provide credit support to, on behalf of or for the benefit of, other
subsidiaries of the Parent ("Credit Support Obligations");
WHEREAS, the Majority Owned Subsidiaries and the Parent acknowledge that
the Majority Owned Subsidiaries and their wholly-owned subsidiaries may be
unable to enter into many kinds of Underlying Obligations without a guarantee of
their performance thereunder from the Parent (a "Parent Guarantee") or without
obtaining Credit Support Obligations from other Majority Owned Subsidiaries;
WHEREAS, the Majority Owned Subsidiaries and their wholly-owned
subsidiaries may borrow funds from the Parent, and the Parent may loan funds or
provide credit to the Majority Owned Subsidiaries and their wholly-owned
subsidiaries, on a short-term and unsecured basis;
WHEREAS, certain Majority Owned Subsidiaries ("Second Tier
Majority Owned Subsidiaries ") may themselves be majority owned
subsidiaries of other Majority Owned Subsidiaries ("First Tier
Majority Owned Subsidiaries");
WHEREAS, for various reasons, Parent Guarantees of a Second Tier Majority
Owned Subsidiary's Underlying Obligations may be demanded and given without the
respective First Tier Majority Owned Subsidiary also issuing a guarantee of such
Underlying
Obligation;
WHEREAS, the Parent may itself make a loan or provide other credit to a
Second Tier Majority Owned Subsidiary or its wholly-owned subsidiaries under
circumstances where the applicable First Tier Majority Owned Subsidiary does not
provide such credit; and
WHEREAS, the Parent is willing to consider continuing to issue Parent
Guarantees and providing credit, and the Majority Owned Subsidiaries are willing
to consider continuing to provide Credit Support Obligations and to borrow
funds, on the terms and conditions set forth below;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party hereto, the parties agree as follows:
1. If the Parent provides a Parent Guarantee of an Underlying
Obligation, and the beneficiary(ies) of the Parent Guarantee
enforce the Parent Guarantee, or the Parent performs under
the Parent Guarantee for any other reason, then the Majority
Owned Subsidiary that is obligated, either directly or
indirectly through a wholly-owned subsidiary, under such
Underlying Obligation shall indemnify and save harmless the
Parent from any liability, cost, expense or damage
(including reasonable attorneys' fees) suffered by the
Parent as a result of the Parent Guarantee. If the
Underlying Obligation is issued by a Second Tier Majority
Owned Subsidiary or a wholly-owned subsidiary thereof, and
such Second Tier Majority Owned Subsidiary is unable to
fully indemnify the Parent (because of the poor financial
condition of such Second Tier Majority Owned Subsidiary, or
for any other reason), then the First Tier Majority Owned
Subsidiary that owns the majority of the stock of such
Second Tier Majority Owned Subsidiary shall indemnify and
save harmless the Parent from any remaining liability, cost,
expense or damage (including reasonable attorneys' fees)
suffered by the Parent as a result of the Parent Guarantee.
If a Majority Owned Subsidiary or a wholly-owned subsidiary
thereof provides a Credit Support Obligation for any
subsidiary of the Parent, other than a subsidiary of such
Majority Owned Subsidiary, and the beneficiary(ies) of the
Credit Support Obligation enforce the Credit Support
Obligation, or the Majority Owned Subsidiary or its
wholly-owned subsidiary performs under the Credit Support
Obligation for any other reason, then the Parent shall
indemnify and save harmless the Majority Owned Subsidiary or
its wholly-owned subsidiary, as applicable, from any
liability, cost, expense or damage (including reasonable
attorneys' fees) suffered by the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable, as a result
of the Credit Support Obligation. Without limiting the
foregoing, Credit Support Obligations include the deposit of
funds by a Majority Owned Subsidiary or a wholly-owned
subsidiary thereof in a credit arrangement with a banking
facility whereby such funds are available to the banking
facility as collateral for overdraft obligations of other
Majority Owned Subsidiaries or their subsidiaries also
participating in the credit arrangement with such banking
facility.
2. For purposes of this Agreement, the term "guarantee" shall
include not only a formal guarantee of an obligation, but
also any other arrangement where the Parent is liable for
the obligations of a Majority Owned Subsidiary or its
wholly-owned subsidiaries. Such other arrangements include
(a) representations, warranties and/or covenants or other
obligations joined in by the Parent, whether on a joint or
joint and several basis, for the benefit of the Majority
Owned Subsidiary or its wholly-owned subsidiaries and (b)
responsibility of the Parent by operation of law for the
acts and omissions of the Majority Owned Subsidiary or its
wholly-owned subsidiaries, including controlling person
liability under securities and other laws.
3. Promptly after the Parent receives notice that a beneficiary
of a Parent Guarantee is seeking to enforce such Parent
Guarantee, the Parent shall notify the Majority Owned
Subsidiary(s) obligated, either directly or indirectly
through a wholly-owned subsidiary, under the relevant
Underlying Obligation. Such Majority Owned Subsidiary(s) or
wholly-owned subsidiary thereof, as applicable, shall have
the right, at its own expense, to contest the claim of such
beneficiary. If a Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is contesting the claim
of such beneficiary, the Parent will not perform under the
relevant Parent Guarantee unless and until, in the Parent's
reasonable judgment, the Parent is obligated under the terms
of such Parent Guarantee to perform. Subject to the
foregoing, any dispute between a Majority Owned Subsidiary
or wholly-owned subsidiary thereof, as applicable, and a
beneficiary of a Parent Guarantee shall not affect such
Majority Owned Subsidiary's obligation to promptly indemnify
the Parent hereunder. Promptly after a Majority Owned
Subsidiary or wholly-owned subsidiary thereof, as
applicable, receives notice that a beneficiary of a Credit
Support Obligation is seeking to enforce such Credit Support
Obligation, the Majority Owned Subsidiary shall notify the
Parent. The Parent shall have the right, at its own
expense, to contest the claim of such beneficiary. If the
Parent or the subsidiary of the Parent on whose behalf the
Credit Support Obligation is given is contesting the claim
of such beneficiary, the Majority Owned Subsidiary or
wholly-owned subsidiary thereof, as applicable, will not
perform under the relevant Credit Support Obligation unless
and until, in the Majority Owned Subsidiary's reasonable
judgment, the Majority Owned Subsidiary or wholly-owned
subsidiary thereof, as applicable, is obligated under the
terms of such Credit Support Obligation to perform. Subject
to the foregoing, any dispute between the Parent or the
subsidiary of the Parent on whose behalf the Credit Support
Obligation was given, on the one hand, and a beneficiary of
a Credit Support Obligation, on the other, shall not affect
the Parent's obligation to promptly indemnify the Majority
Owned Subsidiary or its wholly-owned subsidiary, as
applicable, hereunder.
4. Upon the request of a Majority Owned Subsidiary, the Parent
may make loans and advances to the Majority Owned Subsidiary
or its wholly-owned subsidiaries on a short-term, revolving
credit basis, from time to time in such amounts as mutually
determined by the Parent and the Majority Owned Subsidiary.
The aggregate principal amount of such loans and advances
shall be reflected on the books and records of the Majority
Owned Subsidiary (or wholly-owned subsidiary, as applicable)
and the Parent. All such loans and advances shall be on an
unsecured basis unless specifically provided otherwise in
loan documents executed at that time. The Majority Owned
Subsidiary or its wholly-owned subsidiaries, as applicable,
shall pay interest on the aggregate unpaid principal amount
of such loans from time to time outstanding at a rate
("Interest Rate") equal to the rate of the Commercial Paper
Composite Rate for 90-day maturities as reported by Merrill
Lynch Capital Markets, as an average of the last five
business days of such Majority Owned Subsidiary's latest
fiscal quarter then ended, plus twenty-five (25) basis
points. The Interest Rate shall be adjusted on the first
business day of each fiscal quarter of such Majority Owned
Subsidiary pursuant to the Interest Rate formula contained
in the preceding sentence and shall be in effect for the
entirety of such fiscal quarter. Interest shall be computed
on a 360-day basis. The aggregate principal amount
outstanding and accrued interest thereon shall be payable on
demand. The principal and accrued interest may be paid by
the Majority Owned Subsidiaries or their wholly-owned
subsidiaries, as applicable, at any time or from time to
time, in whole or in part, without premium or penalty. All
payments shall be applied first to accrued interest and then
to principal. Principal and interest shall be payable in
lawful money of the United States of America, in immediately
available funds, at the principal office of the Parent or at
such other place as the Parent may designate from time to
time in writing to the Majority Owned Subsidiary. The
unpaid principal amount of any such borrowings, and accrued
interest thereon, shall become immediately due and payable,
without demand, upon the failure of the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, to
pay its debts as they become due, the insolvency of the
Majority Owned Subsidiary or its wholly-owned subsidiary, as
applicable, the filing by or against the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
any petition under the U.S. Bankruptcy Code (or the filing
of any similar petition under the insolvency law of any
jurisdiction), or the making by the Majority Owned
Subsidiary or its wholly-owned subsidiary, as applicable, of
an assignment or trust mortgage for the benefit of creditors
or the appointment of a receiver, custodian or similar agent
with respect to, or the taking by any such person of
possession of, any property of the Majority Owned Subsidiary
or its wholly-owned subsidiary, as applicable. In case any
payments of principal and interest shall not be paid when
due, the Majority Owned Subsidiary or its wholly-owned
subsidiary, as applicable, further promises to pay all cost
of collection, including reasonable attorneys' fees.
5. If the Parent makes a loan or provides other credit ("Credit
Extension") to a Second Tier Majority Owned Subsidiary, the
First Tier Majority Owned Subsidiary that owns the majority
of the stock of such Second Tier Majority Owned Subsidiary
hereby guarantees the Second Tier Majority Owned
Subsidiary's obligations to the Parent thereunder. Such
guaranty shall be enforced only after the Parent, in its
reasonable judgment, determines that the Second Tier
Majority Owned Subsidiary is unable to fully perform its
obligations under the Credit Extension. If the Parent
provides Credit Extension to a wholly-owned subsidiary of a
Second Tier Majority Owned Subsidiary, the Second Tier
Majority Owned Subsidiary hereby guarantees it wholly-owned
subsidiary's obligations to the Parent thereunder and the
First Tier Majority Owned Subsidiary that owns the majority
of the stock of such Second Tier Majority Owned Subsidiary
hereby guarantees the Second Tier Majority Owned
Subsidiary's obligations to the Parent hereunder. Such
guaranty by the First Tier Majority Owned Subsidiary shall
be enforced only after the Parent, in its reasonable
judgment, determines that the Second Tier Majority Owned
Subsidiary is unable to fully perform its guaranty
obligation hereunder.
6. All payments required to be made by a Majority Owned Subsidiary or its
wholly-owned subsidiaries, as applicable, shall be made within two days
after receipt of notice from the Parent. All payments required to be made
by the Parent shall be made within two days after receipt of notice from
the Majority Owned Subsidiary.
7. This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts applicable to contracts made and
performed therein.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the date first above written.
THERMO ELECTRON CORPORATION
By: /s/ Melissa F. Riordan
Melissa F. Riordan
Title: Treasurer
THE RANDERS GROUP INCORPORATED
By: /s/ Emil C. Herkert
Emil C. Herkert
Title: President
Exhibit 10.15
THE RANDERS GROUP INCORPORATED
RESTATED STOCK HOLDING ASSISTANCE PLAN
SECTION 1. Purpose.
The purpose of this Plan is to benefit The Randers Group Incorporated (the
"Company") and its stockholders by encouraging Key Employees to acquire and
maintain share ownership in the Company, by increasing such employees'
proprietary interest in promoting the growth and performance of the Company and
its subsidiaries and by providing for the implementation of the Stock Holding
Policy.
SECTION 2. Definitions.
The following terms, when used in the Plan, shall have the meanings set
forth below:
Committee: The Human Resources Committee of the Board of
Directors of the Company as appointed from time to time.
Common Stock: The common stock of the Company and any
successor thereto.
Company: The Randers Group Incorporated, a Delaware
corporation.
Stock Holding Policy: The Stock Holding Policy of the
Company, as adopted by the Committee and as in effect from time
to time.
Key Employee: Any employee of the Company or any of its subsidiaries,
including any officer or member of the Board of Directors who is also an
employee, as designated by the Committee, and who, in the judgment of the
Committee, will be in a position to contribute significantly to the attainment
of the Company's strategic goals and long-term growth and prosperity.
Loans: Loans extended to Key Employees by the Company
pursuant to this Plan.
Plan: The Randers Group Incorporated Stock Holding
Assistance Plan, as amended from time to time.
SECTION 3. Administration.
The Plan and the Stock Holding Policy shall be administered by the
Committee, which shall have authority to interpret the Plan and the Stock
Holding Policy and, subject to their provisions, to prescribe, amend and rescind
any rules and regulations and to make all other determinations necessary or
desirable for the administration thereof. The Committee's interpretations and
decisions with regard to the Plan and the Stock Holding Policy and such rules
and regulations as may be established thereunder shall be final and conclusive.
The Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or the Stock Holding Policy, or in any Loan in the
manner and to the extent the Committee deems desirable to carry it into effect.
No member of the Committee shall be liable for any action or omission in
connection with the Plan or the Stock Holding Policy that is made in good faith.
SECTION 4. Loans and Loan Limits.
The Committee has determined that the provision of Loans from time to time
to Key Employees in such amounts as to cause such Key Employees to comply with
the Stock Holding Policy is, in the judgment of the Committee, reasonably
expected to benefit the Company and authorizes the Company to extend Loans from
time to time to Key Employees in such amounts as may be requested by such Key
Employees in order to comply with the Stock Holding Policy. Such Loans may be
used solely for the purpose of acquiring Common Stock (other than upon the
exercise of stock options or under employee stock purchase plans) in open market
transactions or from the Company.
Each Loan shall be full recourse and evidenced by a non-interest bearing
promissory note substantially in the form attached hereto as Exhibit A (the
"Note") and maturing in accordance with the provisions of Section 6 hereof, and
containing such other terms and conditions, which are not inconsistent with the
provisions of the Plan and the Stock Holding Policy, as the Committee shall
determine in its sole and absolute discretion.
SECTION 5. Federal Income Tax Treatment of Loans.
For federal income tax purposes, interest on Loans shall be imputed on any
interest free Loan extended under the Plan. A Key Employee shall be deemed to
have paid the imputed interest to the Company and the Company shall be deemed to
have paid said imputed interest back to the Key Employee as additional
compensation. The deemed interest payment shall be taxable to the Company as
income, and may be deductible to the Key Employee to the extent allowable under
the rules relating to investment interest. The deemed compensation payment to
the Key Employee shall be taxable to the employee and deductible to the Company,
but shall also be subject to employment taxes such as FICA and FUTA.
SECTION 6. Maturity of Loans.
Each Loan to a Key Employee hereunder shall be due and payable on demand
by the Company. If no such demand is made, then each Loan shall mature and the
principal thereof shall become due and payable on the fifth anniversary of the
date of the Loan, provided that the Committee may, in its sole and absolute
discretion, authorize such other maturity and repayment schedule as the
Committee may determine. Each Loan shall also become immediately due and payable
in full, without demand, upon the occurrence of any of the events set forth in
the Note; provided that the Committee may, in its sole and absolute discretion,
authorize an extension of the time for repayment of a Loan upon such terms and
conditions as the Committee may determine.
SECTION 7. Amendment and Termination of the Plan.
The Committee may from time to time alter or amend the Plan or the Stock
Holding Policy in any respect, or terminate the Plan or the Stock Holding Policy
at any time. No such amendment or termination, however, shall alter or otherwise
affect the terms and conditions of any Loan then outstanding to Key Employee
without such Key Employee's written consent, except as otherwise provided herein
or in the promissory note evidencing such Loan.
SECTION 8. Miscellaneous Provisions.
(a) No employee or other person shall have any claim or right to receive a
Loan under the Plan, and no employee shall have any right to be retained in the
employ of the Company due to his or her participation in the Plan.
(b) No Loan shall be made hereunder unless counsel for the Company shall
be satisfied that such Loan will be in compliance with applicable federal, state
and local laws.
(c) The expenses of the Plan shall be borne by the Company.
(d) The Plan shall be unfunded, and the Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the making of any Loan under the Plan.
(e) Except as otherwise provided in Section 7 hereof, by accepting any
Loan under the Plan, each Key Employee shall be conclusively deemed to have
indicated his acceptance and ratification of, and consent to, any action taken
under the Plan or the Stock Holding Policy by the Company, the Board of
Directors of the Company or the Committee.
(f) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding Loans hereunder, as may be
required by any applicable statute, rule or regulation.
SECTION 9. Effective Date.
The Plan and the Stock Holding Policy shall become effective upon approval
and adoption by the Committee.
DOC # 1087
RGI STOCK HOLDING ASSISTANCE PLAN 5/98
<PAGE>
EXHIBIT A TO STOCK HOLDING ASSISTANCE PLAN
THE RANDERS GROUP INCORPORATED
Promissory Note
$---------
Dated:____________
For value received, ________________, an individual whose residence is
located at _______________________ (the "Employee"), hereby promises to pay to
Thermo Ecotek Corporation (the "Company"), or assigns, ON DEMAND, but in any
case on or before [insert date which is the fifth anniversary of date of
issuance] (the "Maturity Date"), the principal sum of [loan amount in words]
($_______), or such part thereof as then remains unpaid, without interest.
Principal shall be payable in lawful money of the United States of America, in
immediately available funds, at the principal office of the Company or at such
other place as the Company may designate from time to time in writing to the
Employee.
Unless the Company has already made a demand for payment in full of this
Note, the Employee agrees to repay to the Company from the Employee's annual
cash incentive compensation (referred to as bonus), beginning with the first
such bonus payment to occur after the date of this Note and on each of the next
four bonus payment dates occurring prior to the Maturity Date, such amount as
may be designated by the Company. Any amount remaining unpaid under this Note,
if no demand has been made by the Company, shall be due and payable on the
Maturity Date.
This Note may be prepaid at any time or from time to time, in whole or in
part, without any premium or penalty. The Employee acknowledges and agrees that
the Company has advanced to the Employee the principal amount of this Note
pursuant to the Company's Stock Holding Assistance Plan, and that all terms and
conditions of such Plan are incorporated herein by reference.
The unpaid principal amount of this Note shall be and become immediately
due and payable without notice or demand, at the option of the Company, upon the
occurrence of any of the following events:
(a) the termination of the Employee's employment with the Company,
with or without cause, for any reason or for no reason;
(b) the death or disability of the Employee;
(c) the failure of the Employee to pay his or her debts as they
become due, the insolvency of the Employee, the filing by or against the
Employee of any petition under the United States Bankruptcy Code (or the
filing of any similar petition under the insolvency law of any
jurisdiction), or the making by the Employee of an assignment or trust
mortgage for the benefit of creditors or the appointment of a receiver,
custodian or similar agent with respect to, or the taking by any such
person of possession of, any property of the Employee; or
(d) the issuance of any writ of attachment, by trustee process or
otherwise, or any restraining order or injunction not removed, repealed or
dismissed within thirty (30) days of issuance, against or affecting the
person or property of the Employee or any liability or obligation of the
Employee to the Company.
In case any payment herein provided for shall not be paid when due, the
Employee further promises to pay all costs of collection, including all
reasonable attorneys' fees.
No delay or omission on the part of the Company in exercising any right
hereunder shall operate as a waiver of such right or of any other right of the
Company, nor shall any delay, omission or waiver on any one occasion be deemed a
bar to or waiver of the same or any other right on any future occasion. The
Employee hereby waives presentment, demand, notice of prepayment, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note. The undersigned hereby assents
to any indulgence and any extension of time for payment of any indebtedness
evidenced hereby granted or permitted by the Company.
This Note has been made pursuant to the Company's Stock Holding Assistance
Plan and shall be governed by and construed in accordance with, such Plan and
the laws of the State of Delaware and shall have the effect of a sealed
instrument.
-------------------------------
Employee Name: _________________
- ------------------------
Witness
Exhibit 13
THE RANDERS GROUP INCORPORATED
Consolidated Financial Statements
Fiscal 1998
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Consolidated Statement of Income
Year Ended
------------------------------
April 4, March 29, March 30,
(In thousands except per share amounts) 1998 1997 1996
------------------------------------------------------------------------
Revenues $ 71,583 $ 64,374 $ 58,515
-------- -------- --------
Costs and Operating Expenses:
Cost of revenues 52,838 48,048 45,012
Selling, general, and administrative
expenses (Note 7) 12,788 9,555 8,131
-------- -------- --------
65,626 57,603 53,143
-------- -------- --------
Operating Income 5,957 6,771 5,372
Interest Income 195 110 173
Interest Expense (196) (184) (257)
Loss on Sale of Assets (Note 9) - - (569)
-------- -------- --------
Income Before Provision for Income Taxes 5,956 6,697 4,719
Provision for Income Taxes (Note 4) 2,803 3,117 2,340
-------- -------- --------
Net Income $ 3,153 $ 3,580 $ 2,379
======== ======== ========
Basic and Diluted Earnings per Share
(Note 10) $ .03 $ .03 $ .02
======== ======== ========
Weighted Average Shares (Note 10):
Basic 125,557 113,031 113,031
======== ======== ========
Diluted 126,009 113,031 113,031
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Consolidated Balance Sheet
April 4, March 29,
(In thousands except share amounts) 1998 1997
-----------------------------------------------------------------------
Assets
Current Assets:
Cash and cash equivalents (includes $8,713 under
repurchase agreement with related party
in 1998) $ 9,763 $ 1,737
Accounts receivable, less allowances of $760
and $706 14,304 11,613
Unbilled contract costs and fees 9,333 8,113
Prepaid income taxes (Note 4) 1,359 1,431
Prepaid expenses 373 478
------- -------
35,132 23,372
------- -------
Property, Plant, and Equipment, at Cost, Net 11,664 9,035
------- -------
Other Assets (Note 3) 1,177 1,373
------- -------
Cost in Excess of Net Assets of Acquired
Companies (Note 2) 45,220 41,654
------- -------
$93,193 $75,434
======= =======
Liabilities and Shareholders' Investment
Current Liabilities:
Notes payable and current maturities of
long-term obligations (Note 5) $ 187 $ 648
Accounts payable 3,809 2,023
Accrued payroll and employee benefits 3,254 3,124
Accrued income taxes 1,016 78
Other accrued expenses 725 1,425
Due to parent company 319 36
------- -------
9,310 7,334
------- -------
Deferred Income Taxes (Note 4) 888 1,096
------- -------
Other Deferred Items 1,049 1,013
------- -------
Long-term Obligations (Note 5) 1,948 1,260
------- -------
Commitments and Contingencies (Note 6)
Shareholders' Investment (Notes 2, 3, and 8):
Common stock, $.0001 par value, 30,000,000 shares
authorized; 127,146,733 pro forma shares issued
and outstanding 13 -
Capital in excess of par value 79,321 -
Retained earnings 664 -
Parent company investment - 64,731
------- -------
79,998 64,731
------- -------
$93,193 $75,434
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Consolidated Statement of Cash Flows
Year Ended
--------------------------------
April 4, March 29, March 30,
(In thousands) 1998 1997 1996
------------------------------------------------------------------------
Operating Activities:
Net income $ 3,153 $ 3,580 $ 2,379
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,675 2,137 2,010
Loss on sale of assets (Note 9) - - 569
Provision for losses on
accounts receivable 293 149 208
Other noncash items (200) (193) (155)
Increase (decrease) in deferred
income taxes (208) (109) 52
Changes in current accounts,
excluding the effects of
transfers of businesses from
parent company:
Accounts receivable (874) 590 (1,125)
Unbilled contract costs and
fees (1,338) (764) (1,110)
Other current assets 369 523 296
Accounts payable 1,246 (896) 774
Other current liabilities (636) (1,487) 1,797
------- ------- -------
Net cash provided by operating
activities 4,480 3,530 5,695
------- ------- -------
Investing Activities:
Purchases of property, plant, and
equipment (1,531) (1,003) (1,303)
Proceeds from sale of property,
plant, and equipment 18 106 134
Other (27) - -
------- ------- -------
Net cash used in investing activities $(1,540) $ (897) $(1,169)
------- ------- -------
4
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Consolidated Statement of Cash Flows (continued)
Year Ended
------------------------------
April 4, March 29, March 30,
(In thousands) 1998 1997 1996
-----------------------------------------------------------------------
Financing Activities:
Repayment of note payable $ (170) $ (671) $ (628)
Net transfer (to) from parent company 3,424 (1,304) (3,932)
Cash acquired from transfer of
businesses from parent company 1,442 285 -
Repayment (issuance) of note receivable 390 - (390)
------- ------- -------
Net cash provided by (used in)
financing activities 5,086 (1,690) (4,950)
------- ------- -------
Increase (Decrease) in Cash and Cash
Equivalents 8,026 943 (424)
Cash and Cash Equivalents at Beginning
of Year 1,737 794 1,218
------- ------- -------
Cash and Cash Equivalents at End of
Year $ 9,763 $ 1,737 $ 794
======= ======= =======
Cash Paid For:
Interest $ 224 $ 205 $ 259
Income taxes $ 642 $ - $ -
Noncash Activities:
Transfer of acquired businesses from
parent company (Note 2) $ 4,700 $ 3,460 $ -
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Consolidated Statement of Shareholders' Investment
Year Ended
--------------------------------
April 4, March 29, March 30,
(In thousands) 1998 1997 1996
------------------------------------------------------------------------
Common Stock, $.0001 Par Value
Balance at beginning of period $ - $ - $ -
Pro forma shares issuable to parent
company (Note 2) 12 -
Transfer of Randers from parent
company (Note 2) 1 - -
-------- -------- --------
Balance at end of period 13 - -
-------- -------- --------
Capital in Excess of Par Value
Balance at beginning of period - - -
Pro forma shares issuable to parent
company (Note 2) 70,632 - -
Transfer of Randers from parent
company (Note 2) 8,597 - -
Tax benefit related to employees'
and directors' stock plans 92 - -
-------- -------- --------
Balance at end of period 79,321 - -
-------- -------- --------
Retained Earnings
Balance at beginning of period - - -
Net income after May 12, 1997 2,752 - -
Additional pro forma shares issuable
to parent company (Note 2) (2,088) - -
-------- -------- --------
Balance at end of period 664 - -
-------- -------- --------
Parent Company Investment
Balance at beginning of period 64,731 58,725 60,278
Net income prior to May 12, 1997 401 3,580 2,379
Transfer of Carlan from parent
company (Note 2) - 3,730 -
Net transfer (to) from parent company 3,424 (1,304) (3,932)
Pro forma shares issuable to parent
company (Note 2) (68,556) - -
-------- -------- --------
Balance at end of period - 64,731 58,725
-------- -------- --------
Total Shareholders' Investment $ 79,998 $ 64,731 $ 58,725
======== ======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
The Randers Group Incorporated (the Company) provides comprehensive
engineering and outsourcing services in such areas as water and wastewater
treatment, highway and bridge projects, process engineering, construction
management, and inspection and operational services.
Relationship with Thermo TerraTech Inc. and Principles of Consolidation
As of April 4, 1998, Thermo TerraTech Inc. owned 120,551,051 pro
forma shares of the Company's common stock, representing 95% of such pro
forma shares outstanding. Thermo TerraTech is an 82%-owned subsidiary of
Thermo Electron Corporation. As of April 4, 1998, Thermo Electron owned
1,255,000 shares of the Company's common stock, representing 1% of such pro
forma shares outstanding. (Note 2)
The accompanying financial statements include the accounts of the
Company and its subsidiaries. All material intercompany accounts and
transactions have been eliminated.
Fiscal Year
The Company has adopted a fiscal year ending the Saturday nearest March
31. References to fiscal 1998, 1997, and 1996 are for the fiscal years ended
April 4, 1998, March 29, 1997, and March 30, 1996, respectively. Fiscal year
1998 included 53 weeks; fiscal 1997 and 1996 each included 52 weeks.
Revenue Recognition
Substantially all revenues are earned under contracts. Revenues and
profits on contracts are recognized using the percentage-of-completion
method. The percentage of completion is determined by relating the actual
costs incurred to date to management's estimate of total costs to be
incurred on each contract. If a loss is indicated on any contract in
process, a provision is made currently for the entire loss. Revenues earned
on contracts in process in excess of billings are classified as unbilled
contract costs and fees in the accompanying balance sheet. There are no
significant amounts included in the accompanying balance sheet that are not
expected to be recovered from existing contracts at current contract values,
or that are not expected to be collected within one year, including amounts
that are billed but not paid under retainage provisions.
Stock-based Compensation Plans
The Company applies Accounting Principles Board Opinion (APB) No. 25,
"Accounting for Stock Issued to Employees," and related interpretations in
accounting for its stock-based compensation plans (Note 3). Accordingly, no
accounting recognition is given to stock options granted at fair market
value until they are exercised. Upon exercise, net proceeds, including tax
benefits realized, are credited to equity.
7
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Income Taxes
The Company and Thermo TerraTech have a tax allocation agreement under
which the Company will be included in Thermo TerraTech's consolidated
federal and certain state income tax returns upon Thermo TerraTech's
ownership of the Company exceeding 80% as a result of the transactions
contemplated in Note 2. The agreement provides that in years in which the
Company has taxable income, it will pay to Thermo TerraTech amounts
comparable to the taxes the Company would have paid had it filed separate
tax returns. If Thermo TerraTech's equity ownership of the Company were to
subsequently drop below 80%, the Company would be required to file its own
income tax returns.
In accordance with Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," the Company recognizes deferred
income taxes based on the expected future tax consequences of differences
between the financial statement basis and the tax basis of assets and
liabilities, calculated using enacted tax rates in effect for the year in
which the differences are expected to be reflected in the tax return.
Earnings per Share
During the quarter ended January 3, 1998, the Company adopted SFAS No.
128, "Earnings per Share" (Note 10). As a result, all previously reported
earnings per share have been restated. Basic earnings per share have been
computed by dividing net income by the weighted average number of pro forma
shares outstanding during the year (Note 2). Diluted earnings per share have
been computed assuming the exercise of stock options, as well as their
related income tax effects. Shares issuable in connection with the
transactions contemplated in Note 2 have been shown as outstanding for all
periods presented for purposes of computing earnings per share.
Cash and Cash Equivalents
At April 4, 1998, $8,713,000 of the Company's cash equivalents were
invested in a repurchase agreement with Thermo Electron. Under this
agreement, the Company in effect lends excess cash to Thermo Electron, which
Thermo Electron collateralizes with investments principally consisting of
corporate notes, commercial paper, U.S. government-agency securities, money
market funds, and other marketable securities, in the amount of at least
103% of such obligation. The Company's funds subject to the repurchase
agreement are readily convertible into cash by the Company and have an
original maturity of three months or less. The Company's repurchase
agreement earns a rate based on the 90-day Commercial Paper Composite Rate
plus 25 basis points, set at the beginning of each quarter. At fiscal
year-end 1998, the Company's cash equivalents also included investments in
commercial paper which have an original maturity of three months or less.
Cash equivalents are carried at cost, which approximates market value.
8
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
1. Nature of Operations and Summary of Significant Accounting Policies
(continued)
Property, Plant, and Equipment
The costs of additions and improvements are capitalized, while
maintenance and repairs are charged to expense as incurred. The Company
provides for depreciation and amortization using the straight-line method
over the estimated useful lives of the property as follows: buildings and
improvements, 30 to 40 years; machinery and equipment, 3 to 10 years; and
leasehold improvements, the shorter of the term of the lease or the life of
the asset. Property, plant, and equipment consists of the following:
(In thousands) 1998 1997
-----------------------------------------------------------------------
Land $ 1,044 $ 674
Buildings 7,157 5,334
Machinery, Equipment, and Leasehold Improvements 7,515 5,855
------- -------
15,716 11,863
Less: Accumulated Depreciation and Amortization 4,052 2,828
------- -------
$11,664 $ 9,035
======= =======
Costin Excess of Net Assets of Acquired Companies The excess of cost over
the fair value of net assets of acquired
businesses is amortized using the straight-line method over 40 years.
Accumulated amortization was $6,574,000 and $5,405,000 at fiscal year-end
1998 and 1997, respectively. The Company assesses the future useful life of
this asset whenever events or changes in circumstances indicate that the
current useful life has diminished. The Company considers the future
undiscounted cash flows of the acquired businesses in assessing the
recoverability of this asset. If impairment has occurred, any excess of
carrying value over fair value is recorded as a loss.
Fair Value of Financial Instruments
The Company's financial instruments consist primarily of cash and cash
equivalents, accounts receivable, notes payable, accounts payable, and
long-term obligations. Their respective carrying amounts in the accompanying
balance sheet, excluding long-term obligations, approximated fair value due
to their short-term nature. The fair value of the Company's long-term
obligations at fiscal year-end 1998 and 1997 approximated carrying value
based on borrowing rates available to the Company at the respective year
ends.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
9
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
2. Acquisitions and Basis of Accounting
On May 12, 1997, Thermo TerraTech purchased a controlling interest in
Randers. Thermo TerraTech purchased 7,100,000 shares of Randers common stock
from certain members of Randers' management, and 420,000 shares from Thermo
Power Corporation, an affiliate of Thermo TerraTech, at a price of $0.625
per share, for an aggregate cost of $4,700,000. Following these transactions
and currently, Thermo TerraTech owns 53.3% of Randers' actual outstanding
common stock. In addition, Thermo Electron owns 8.9% of Randers' actual
outstanding common stock.
Subsequently, in September 1997, Thermo TerraTech and Randers entered
into a definitive agreement to transfer Thermo TerraTech's wholly owned
engineering and consulting businesses (known as The Killam Group) to
Randers, in exchange for newly issued shares of Randers' common stock.
Effective April 4, 1998, the agreement was amended to provide that the price
for these businesses would be equal to $70,644,407, the book value of the
transferred businesses as of April 4, 1998. The number of new shares of
Randers' common stock to be issued to Thermo TerraTech would equal such book
value on April 4, 1998, divided by $0.625, or 113,031,051 shares. The shares
to be issued to Thermo TerraTech include 3,341,800 shares related to the
increase in value resulting from the earnings of The Killam Group from May
12, 1997, through April 4, 1998, which totaled approximately $2,088,000.
Upon such issuance, Thermo TerraTech and Thermo Electron would own
approximately 94.8% and 1.0% of Randers' outstanding common stock,
respectively. The transfer is subject to approval of the transaction by
Randers' shareholders and continued listing of Randers' common stock on the
American Stock Exchange following the transaction. However, because Thermo
TerraTech currently owns 53.3% of Randers' actual outstanding common stock,
approval by Randers' shareholders is assured. For purposes of computing
weighted average shares, the 113,031,051 shares of Randers' common stock to
be issued in connection with the acquisition of The Killam Group are
considered to be outstanding for all periods presented, and the 14,115,682
shares of Randers' common stock that were outstanding as of May 12, 1997,
the date on which Thermo TerraTech acquired a majority interest in Randers,
are considered outstanding as of that date.
This transaction has been accounted for in accordance with Staff
Accounting Bulletin Topic 2-A2, pursuant to which The Killam Group has been
treated as the "accounting acquiror" because Thermo TerraTech owns the
larger portion of the voting rights of Randers as a result of the above
mentioned transactions. Accordingly, the historical financial information of
Randers has been restated to solely reflect the financial information of The
Killam Group for periods prior to May 12, 1997, the date on which Thermo
TerraTech acquired a majority interest in Randers. Results from May 12,
1997, reflect the combined results of The Killam Group and Randers.
Consequently, references to the Company prior to May 12, 1997, refer solely
to The Killam Group.
10
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
2. Acquisitions and Basis of Accounting (continued)
Based on unaudited data, the following table presents selected financial
information for The Killam Group and Randers on a pro forma basis, assuming
the companies had been combined since the beginning of fiscal 1997.
(In thousands except per share amounts) 1998 1997
-----------------------------------------------------------------------
Revenues $72,720 $76,775
Net Income 3,150 4,213
Earnings per Share:
Basic .03 .03
Diluted .02 .03
The pro forma results are not necessarily indicative of future
operations or the actual results that would have occurred had the businesses
been combined from the beginning of fiscal 1997.
In November 1996, Thermo TerraTech acquired Carlan Consulting Group,
Inc., a provider of transportation and environmental consulting and
professional engineering and architectural services for $3,460,000.
Immediately subsequent to Thermo TerraTech's acquisition of Carlan, Thermo
TerraTech contributed this business to the Company. Pro forma results have
not been presented as the results of Carlan were not material to the
Company's results of operations.
These transactions have been accounted for using the purchase method of
accounting, and their results of operations have been included in the
accompanying financial statements from the respective dates of acquisition
by Thermo TerraTech. The aggregate cost of Randers and Carlan exceeded the
estimated fair value of the acquired net assets by $7,760,000, which is
being amortized over 40 years. Allocation of the purchase price was based on
estimates of the fair value of the net assets acquired and, for the Randers
transaction, is subject to adjustment, although the Company has no
information which indicates that the final allocation of purchase price will
be different than the preliminary estimate.
3. Employee Benefit Plans
Stock-based Compensation Plans
Stock Option Plans
------------------
In November 1997, the Company adopted a stock-based compensation plan
for its key employees, directors and others, which permits the grant of
stock and stock-based awards as determined by the human resources committee
of the Company's Board of Directors (the Board Committee), including
restricted stock, stock options, stock bonus shares or performance-based
shares. The option recipients and the terms of options granted under this
plan are determined by the Board Committee. Generally, options granted to
date are exercisable immediately, but are subject to certain transfer
restrictions and the right of the Company to repurchase shares issued upon
exercise of the options at the exercise price, upon certain events. The
restrictions and repurchase rights generally lapse
11
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
3. Employee Benefit Plans (continued)
ratably over a five- to ten-year period, depending on the term of the
option, which generally ranges from seven to twelve years. Nonqualified
stock options may be granted at any price determined by the Board Committee,
although incentive stock options must be granted at not less than the fair
market value of the Company's stock on the date of grant. To date, all
options have been granted at fair market value.
In connection with the transfer of Randers in fiscal 1998, the Company
assumed certain outstanding options granted under Randers' incentive stock
option plan. The Randers' options become exercisable over the vesting
period. Options vest 50% in the first year after the date of grant and 25%
in each of the second and third years after the date of grant. These options
expire 10 years from the date of grant.
In addition to the Company's stock-based compensation plans, certain
officers and key employees may also participate in the stock-based
compensation plans of Thermo Electron and Thermo TerraTech.
A summary of the Company's stock option information is as follows:
1998
-----------------
Weighted
Number Average
of Exercise
(Shares in thousands) Shares Price
------------------------------------------------------------------------
Options Outstanding, Beginning of Year - $ -
Granted 6,860 .65
Forfeited (120) .65
Randers' options outstanding at time of transfer 694 .72
----- ----
Options Outstanding, End of Year 7,434 $ .66
===== =====
Options Exercisable 7,283 $ .65
===== =====
Options Available for Grant 3,260
=====
As of April 4, 1998, the options outstanding were exercisable at prices
ranging from $0.63 to $0.88 and had a weighted average remaining contractual
life of 6.5 years. The information for options outstanding as of April 4,
1998, does not differ materially for options exercisable.
12
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
3. Employee Benefit Plans (continued)
Employee Stock Purchase Program
Substantially all of the Company's full-time employees are eligible to
participate in an employee stock purchase program sponsored by Thermo
TerraTech and Thermo Electron. Under this program, shares of Thermo
TerraTech's and Thermo Electron's common stock can be purchased at the end
of a 12-month period at 95% of the fair market value at the beginning of the
period, and the shares purchased are subject to a six-month resale
restriction. Shares are purchased through payroll deductions of up to 10% of
each participating employee's gross wages.
Pro Forma Stock-based Compensation Plans Expense
In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-Based Compensation," which sets forth a
fair-value based method of recognizing stock-based compensation expense. As
permitted by SFAS No. 123, the Company has elected to continue to apply APB
25 in accounting for its stock-based compensation plans. Had compensation
cost for awards in fiscal 1998 under the Company's stock-based compensation
plans been determined based on the fair value at the grant dates consistent
with the method set forth under SFAS No. 123, the effect on the Company's
net income and earnings per share would have been as follows:
(In thousands except per share amounts) 1998
----------------------------------------------------------------------
Net Income:
As reported $3,153
Pro forma 2,786
Basic and Diluted Earnings per Share:
As reported .03
Pro forma .02
Pro forma compensation expense for options granted is reflected over the
vesting period; therefore future pro forma compensation expense may be
greater as additional options are granted.
The weighted average fair value per share of options granted was $0.65
in fiscal 1998. The fair value of each option grant is estimated on the
grant date using the Black-Scholes option-pricing model with the following
weighted-average assumptions:
1998
----------------------------------------------------------------------
Volatility 27%
Risk-free Interest Rate 5.7%
Expected Life of Options 5.0 years
The Black-Scholes option-pricing model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option-pricing models
require the input of highly subjective assumptions. Because the Company's
employee stock options have characteristics significantly
13
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
3. Employee Benefit Plans (continued)
different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate,
in management's opinion, the existing models do not necessarily provide a
reliable single measure of the fair value of its employee stock options.
401(k) Savings Plans
The majority of the Company's full-time employees are eligible to
participate in 401(k) savings plans. Contributions to the 401(k) savings
plans are made by both the employee and the Company. Company contributions
are based upon the level of employee contributions. For these plans, the
Company contributed and charged to expense $1,272,000, $1,130,000, and
$1,100,000 in fiscal 1998, 1997, and 1996, respectively.
Pension Plan
One of the Company's divisions has a noncontributory defined benefit
retirement plan for salaried employees. This plan has been frozen and all
participants who had not been credited with the maximum years of service
continue to receive such credit up to the allowable maximum based on
continued service. Benefits under the plan are based on years of service and
employees' compensation during the last years of employment. Funds are
contributed to a trustee as necessary to provide for current service and for
any unfunded projected benefit obligation over a reasonable period.
Net periodic pension income includes the following components:
(In thousands) 1998 1997 1996
------------------------------------------------------------------------
Interest Cost on Projected Benefit
Obligation $ (711) $ (677) $ (613)
Return on Plan Assets 928 964 1,689
Amortization of Unrecognized Obligation - (97) (955)
------ ------ ------
$ 217 $ 190 $ 121
====== ====== ======
14
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
3. Employee Benefit Plans (continued)
The funded status of the Company's defined benefit pension plan is as
follows:
(In thousands) 1998 1997
------------------------------------------------------------------------
Actuarial Present Value of Benefit Obligations:
Vested benefits $ 10,025 $ 9,543
Nonvested benefits 3 20
-------- --------
Projected Benefit Obligation 10,028 9,563
Plan Assets at Fair Value (12,756) (10,456)
-------- --------
Plan Assets Greater Than Projected Benefit
Obligation (2,728) (893)
Unrecognized Net Gain 1,639 21
-------- --------
Prepaid pension costs $ (1,089) $ (872)
======== ========
Actuarial assumptions used to determine the net periodic pension costs
are:
1998 1997 1996
------------------------------------------------------------------------
Discount Rate 7.5% 7.5% 8%
Rate of Increase in Salary Levels 0% 0% 5%
Expected Long-term Rate of Return on Assets 9% 9% 9%
Other Postretirement Benefits
In addition to providing pension benefits, one of the Company's
divisions provided other postretirement benefits for employees who met
certain age and length-of-service requirements. Under SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions," the
expected cost of these postretirement benefits must be charged to expense
during the years that the employees render service. This postretirement
benefit plan has been frozen and the Company recorded the accumulated
postretirement obligation calculated as of that date.
15
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
3. Employee Benefit Plans (continued)
Net postretirement healthcare cost includes the following components:
(In thousands) 1998 1997 1996
-----------------------------------------------------------------------
Interest Cost on Accumulated
Postretirement Benefit Obligation $ 66 $ 91 $ 69
Amortization of Transition Obligation
Over 20 Years (16) (11) (29)
------ ------ ------
Net postretirement health care cost $ 50 $ 80 $ 40
====== ====== ======
For measurement purposes, the following table illustrates the annual
rate of increase in the per capita cost of covered healthcare claims:
Annual Rate
-----------------
Pre-65 Post-65
------ -------
1998 8% 6%
1997 8% 6%
1996 9% 7%
The pre-65 rate decreases gradually to 6% for 2000 and remains at that
level thereafter. The healthcare cost trend rate assumption has a
significant effect on the amounts reported. To illustrate, increasing the
assumed healthcare cost trend rates by one percentage point in each year
would increase the accumulated postretirement benefit obligation as of April
4, 1998, by $71,000 and the aggregate of the service and interest cost
components of net postretirement health care cost for the year then ended by
$5,000. The discount rates used in determining the accumulated
postretirement benefit obligations were 7.5% and 8% in fiscal 1998 and 1997,
respectively.
The following table reconciles the plan's funded status to the accrued
postretirement healthcare cost liability as reflected on the balance sheet:
(In thousands) 1998 1997
------------------------------------------------------------
Accumulated Postretirement Benefit
Obligation:
Retirees $ 495 $ 350
Other fully eligible participants 191 575
------ ------
686 925
Unrecognized Net Gain 324 70
------ ------
Accrued postretirement healthcare
cost liability $1,010 $ 995
====== ======
16
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
4. Income Taxes
The components of the provision for income taxes are as follows:
(In thousands) 1998 1997 1996
------------------------------------------------------------------------
Currently Payable:
Federal $2,398 $2,306 $1,360
State 617 654 386
------ ------ ------
3,015 2,960 1,746
------ ------ ------
Net Deferred:
Federal (180) 121 460
State (32) 36 134
------ ------ ------
(212) 157 594
------ ------ ------
$2,803 $3,117 $2,340
====== ====== ======
The Company receives a tax deduction upon exercise of nonqualified stock
options by employees for the difference between the exercise price and the
market price of the Company's stock on the date of exercise. The provision
for income taxes that is currently payable does not reflect $92,000 of such
benefits the Company allocated to capital in excess of par value in fiscal
1998.
Provision for income taxes in the accompanying statement of income
differs from the provision calculated by applying the statutory federal
income tax rate of 34% to income before provision for income taxes due to
the following:
(In thousands) 1998 1997 1996
------------------------------------------------------------------------
Provision for Income Taxes at Statutory
Rate $2,025 $2,277 $1,604
Increases/(Decreases) Resulting From:
State income taxes, net of federal tax 386 455 343
Amortization of cost in excess of net
assets of acquired companies 412 363 366
Other, net (20) 22 27
------ ------ ------
$2,803 $3,117 $2,340
====== ====== ======
17
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
4. Income Taxes (continued)
Prepaid income taxes and deferred income taxes in the accompanying
balance sheet consist of the following:
(In thousands) 1998 1997
-----------------------------------------------------------------------
Prepaid Income Taxes:
Reserves and other accruals $ 706 $ 924
Accrued compensation 759 507
Other (106) -
------ ------
$1,359 $1,431
====== ======
Deferred Income Taxes:
Depreciation $1,078 $1,096
Intangible assets (82) -
State net operating loss carryforward (108) -
------ ------
$ 888 $1,096
====== ======
5. Short- and Long-term Obligations
Short-term Obligations
The Company had a $500,000 installment note payable outstanding at
fiscal year-end 1997, which bore interest at 6.7% and was repaid in
September 1997.
Long-term Obligations
Long-term obligations of the Company are as follows:
(In thousands) 1998 1997
-----------------------------------------------------------------------
6.75% Mortgage loan, payable in monthly
installments of $9, with final payment in 2008 $1,173 $1,293
Mortgage loan, payable in monthly installments
of $12, with final payment in 2003(a) 949 -
Other 13 115
------ ------
2,135 1,408
Less: Current maturities of long-term obligations 187 148
------ ------
$1,948 $1,260
====== ======
(a) Bears interest at Prime Rate, which was 8.5% at April 4, 1998.
The annual requirements for long-term obligations as of April 4, 1998,
are $187,000 in fiscal 1999; $181,000 in fiscal 2000; $188,000 in fiscal
2001; $195,000 in fiscal 2002; $760,000 in fiscal 2003; and $624,000 in
fiscal 2004 and thereafter. Total requirements of long-term obligations are
$2,135,000.
18
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
6. Commitments and Contingencies
Operating Leases
The Company leases portions of its office and operating facilities under
various operating lease arrangements. The accompanying statement of income
includes expenses from operating leases of $2,498,000, $2,068,000, and
$1,593,000 in fiscal 1998, 1997, and 1996, respectively. Future minimum
payments due under noncancelable operating leases at April 4, 1998, are
$2,142,000 in fiscal 1999; $1,677,000 in fiscal 2000; $1,180,000 in fiscal
2001, $851,000 in fiscal 2002; $570,000 in fiscal 2003; and $16,000 in
fiscal 2004 and thereafter. Total future minimum lease payments are
$6,436,000.
Contingencies
The Company is contingently liable with respect to lawsuits and other
matters that arose in the ordinary course of business. In the opinion of
management, these contingencies will not have a material adverse effect upon
the financial position of the Company or its results of operations.
7. Related-party Transactions
Corporate Services Agreement
The Company and Thermo Electron have a corporate services agreement
under which Thermo Electron's corporate staff provides certain
administrative services, including certain legal advice and services, risk
management, certain employee benefit administration, tax advice and
preparation of tax returns, centralized cash management, and certain
financial and other services, for which the Company pays Thermo Electron
annually an amount equal to 0.8% of the Company's revenues in calendar 1998.
In calendar 1997 and 1996 the Company paid an amount equal to 1.0% of the
Company's revenues. Prior to January 1, 1996, the Company paid an annual fee
equal to 1.20% of the Company's revenues. The annual fee is reviewed and
adjusted annually by mutual agreement of the parties. For these services,
the Company was charged $679,000, $644,000, and $589,000 in fiscal 1998,
1997, and 1996, respectively. Management believes that the service fee
charged by Thermo Electron is reasonable and that such fees are
representative of the expenses the Company would have incurred on a
stand-alone basis. The corporate services agreement is renewed annually but
can be terminated upon 30 days' prior notice by the Company or upon the
Company's withdrawal from the Thermo Electron Corporate Charter (the Thermo
Electron Corporate Charter defines the relationship among Thermo Electron
and its majority-owned subsidiaries). For additional items such as employee
benefit plans, insurance coverage and other identifiable costs, Thermo
Electron charges the Company based upon costs attributable to the Company.
Repurchase Agreement
The Company invests cash in a repurchase agreement with Thermo Electron
as discussed in Note 1.
19
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
8. Common Stock
In January 1998, the Company's Board of Directors voted to effect a
one-for-five reverse stock split. The proposal is subject to approval by the
Company's shareholders. A special shareholders' meeting is expected to be
held at which a vote will occur. Pro forma common shares outstanding as of
April 4, 1998, on a restated basis to reflect the reverse stock split, would
have been 25,429,347 shares. The following table presents other selected
financial data on a restated basis to reflect the reverse stock split.
(In thousands except
per share amounts) 1998 1997 1996
-----------------------------------------------------------------------
Basic and Diluted Earnings
per Share $ .13 $ .16 $ .11
Weighted Average Shares:
Basic 25,111 22,606 22,606
Diluted 25,202 22,606 22,606
At April 4, 1998, the Company had reserved 10,818,500 unissued shares of
its common stock for possible issuance under stock-based compensation plans.
9. Loss on Sale of Assets
In fiscal 1996, the Company sold to a management group the assets of a
small civil engineering design office in Williston, Vermont, that was no
longer included in the geographic expansion plans of the Company. An
intangible asset of $569,000 associated with this office was not recovered
in the sale price and, accordingly, was written off. This noncash expense is
nondeductible for tax purposes. Sales and earnings of this office were not
material to the Company.
20
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
10. Earnings per Share
Basic and diluted earnings per share were calculated as follows:
(In thousands except
per share amounts) 1998 1997 1996
------------------------------------------------------------------------
Basic
Net Income $ 3,153 $ 3,580 $ 2,379
-------- -------- --------
Shares Issuable in Connection
With the Acquisition of
The Killam Group (Note 2) 113,031 113,031 113,031
Randers' Weighted Average
Shares Outstanding From
May 12, 1997, Date of
Acquisition by Thermo
TerraTech (Note 2) 12,526 - -
-------- -------- --------
Pro Forma Weighted Average Shares 125,557 113,031 113,031
-------- -------- --------
Basic Earnings per Share $ .03 $ .03 $ .02
======== ======== ========
Diluted
Net Income $ 3,153 $ 3,580 $ 2,379
-------- -------- --------
Pro Forma Weighted Average Shares 125,557 113,031 113,031
Effect of Stock Options 452 - -
-------- -------- --------
Pro Forma Weighted Average Shares,
as Adjusted 126,009 113,031 113,031
-------- -------- --------
Diluted Earnings per Share $ .03 $ .03 $ .02
======== ======== ========
The computation of diluted earnings per share excludes the effect of
assuming the exercise of certain outstanding stock options because the
effect would be antidilutive. As of April 4, 1998, there were 212,000 shares
of such options outstanding, with an exercise price of $.88 per share.
21
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Notes to Consolidated Financial Statements
11. Unaudited Quarterly Information
(In thousands except per share amounts)
1998 First(a) Second Third Fourth
-----------------------------------------------------------------------
Revenues $16,844 $18,231 $18,269 $18,239
Gross Profit 4,492 4,745 5,024 4,484
Net Income 841 984 906 422
Basic and Diluted Earnings
per Share .01 .01 .01 -
1997 First Second Third(b) Fourth
-----------------------------------------------------------------------
Revenues $17,722 $15,893 $15,346 $15,413
Gross Profit 4,283 4,256 3,999 3,788
Net Income 1,029 1,048 792 711
Basic and Diluted Earnings
per Share .01 .01 .01 .01
(a) Reflects the May 1997 acquisition of Randers by Thermo TerraTech (Note
2), subsequently transferred to the Company.
(b) Reflects the November 1996 acquisition of Carlan by Thermo TerraTech
(Note 2), subsequently transferred to the Company.
22
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Report of Independent Public Accountants
To the Shareholders and Board of Directors of The Randers Group
Incorporated:
We have audited the accompanying consolidated balance sheet of The
Randers Group Incorporated (a Delaware Corporation and a 53%-owned
subsidiary of Thermo TerraTech Inc.) as of April 4, 1998, and March 29,
1997, and the related consolidated statements of income, cash flows and
shareholders' investment for each of the three years in the period ended
April 4, 1998. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The
Randers Group Incorporated as of April 4, 1998, and March 29, 1997, and the
results of their operations and their cash flows for each of the three years
in the period ended April 4, 1998, in conformity with generally accepted
accounting principles.
Arthur Andersen LLP
Boston, Massachusetts
May 12, 1998
23
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Forward-looking statements, within the meaning of Section 21E of the
Securities Exchange Act of 1934, are made throughout this Management's
Discussion and Analysis of Financial Condition and Results of Operations.
For this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," "seeks," "estimates," and similar expressions are intended to
identify forward-looking statements. There are a number of important factors
that could cause the results of the Company to differ materially from those
indicated by such forward-looking statements, including those detailed
immediately after this Management's Discussion on Analysis of Financial
Condition and Results of Operation under the heading "Forward-looking
Statements."
Overview
The Randers Group Incorporated (the Company) provides comprehensive
engineering and outsourcing services in such areas as water and wastewater
treatment, highway and bridge projects, process engineering, construction
management, and inspection and operational services.
In May 1997, Thermo TerraTech purchased a controlling interest in
Randers (Note 2), a provider of design, engineering, project management, and
construction services for industrial clients in the manufacturing,
pharmaceutical, and chemical-processing industries. Subsequently, Thermo
TerraTech entered into a definitive agreement to transfer The Killam Group
to Randers in exchange for additional shares of Randers' common stock. As a
result of these transactions (as more fully described in Note 2), The Killam
Group is deemed to be the "accounting acquiror" and historical results for
Randers have been restated to solely reflect the financial information of
The Killam Group for periods prior to May 12, 1997, and to reflect the
combined results of The Killam Group and Randers (collectively, the Company)
from May 12, 1997, the date on which Thermo TerraTech became the
majority-owner of Randers. The Company's Killam Associates, Inc. subsidiary
provides environmental consulting and engineering services and specializes
in wastewater treatment and water resources management. The Company's
BACKillam subsidiary provides both private- and public-sector clients with a
range of consulting services that address transportation planning and
design. In November 1996, Thermo TerraTech acquired Carlan Consulting Group,
Inc., a provider of transportation and environmental consulting and
professional engineering and architectural services, and subsequently
transferred it to the Company.
Results of Operations
Fiscal 1998 Compared With Fiscal 1997
Revenues increased 11% to $71,583,000 in fiscal 1998 from $64,374,000 in
fiscal 1997, primarily due to the inclusion of $15,030,000 of revenues from
Carlan and Randers (Note 2), acquired in November 1996 and May 1997,
respectively, offset in part by a decrease in revenues due to the completion
of two major contracts in fiscal 1997 at Killam Associates and BACKillam.
24
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Fiscal 1998 Compared With Fiscal 1997 (continued)
The gross profit margin increased to 26% in fiscal 1998 from 25% in
fiscal 1997, primarily due to a change in sales mix to higher-margin
contracts at Killam Associates, and the inclusion of higher margin revenues
from Randers.
Selling, general, and administrative expenses as a percentage of
revenues increased to 18% in fiscal 1998 from 15% in fiscal 1997, primarily
due to the inclusion of Randers in May 1997, which has higher expenses as a
percentage of revenues and, to a lesser extent, increased marketing costs at
Killam Associates.
Interest income increased to $195,000 in fiscal 1998 from $110,000 in
fiscal 1997, primarily due to interest earned on larger cash balances.
Interest expense remained relatively unchanged in fiscal 1998 and 1997.
The effective tax rates were 47% in fiscal 1998 and 1997. The effective
tax rates exceeded the statutory federal income tax rate primarily due to
nondeductible amortization of cost in excess of net assets of acquired
companies and the impact of state income taxes.
The Company is currently assessing the potential impact of the year 2000
on the processing of date-sensitive information by the Company's
computerized information systems as well as products purchased by the
Company. The Company believes that its internal information systems are
either year 2000 compliant or will be so prior to the year 2000 without
incurring material costs. There can be no assurance, however, that the
Company will not experience unexpected costs and delays in achieving year
2000 compliance for its internal information systems, which could result in
a material adverse effect on the Company's future results of operations.
The Company is presently assessing whether its key suppliers are
adequately addressing the year 2000 issue and the effect this might have on
the Company. The Company has not completed its analysis and is unable to
conclude at this time that the year 2000 problem as it relates to products
purchased from key suppliers is not reasonably likely to have a material
adverse effect on the Company's future results of operations.
Fiscal 1997 Compared With Fiscal 1996
Revenues increased 10% to $64,374,000 in fiscal 1997 from $58,515,000 in
fiscal 1996. This increase was due to the inclusion of $2,608,000 of
revenues from Carlan, acquired in November 1996, an increase in subcontract
revenues and, to a lesser extent, revenues from a large contract, which
began in December 1995 and ended in December 1996.
The gross profit margin increased to 25% in fiscal 1997 from 23% in
fiscal 1996, primarily due to a change in sales mix to higher-margin
contracts in fiscal 1997.
Selling, general, and administrative expenses as a percentage of
revenues increased to 15% in fiscal 1997 from 14% in fiscal 1996 due
primarily to increased marketing efforts.
Interest income decreased to $110,000 in fiscal 1997 from $173,000 in
fiscal 1996, primarily due to the timing of cash transfers to parent
company, offset in part by interest income received in fiscal 1997 from a
long-term note receivable. Interest expense decreased to $184,000 in fiscal
1997 from $257,000 in fiscal 1996, primarily due to lower average
outstanding debt during fiscal 1997.
25
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Fiscal 1997 Compared With Fiscal 1996 (continued)
During fiscal 1996, the
Company sold the assets of an engineering
office and wrote off an intangible asset of $569,000 in connection with the
sale (Note 9).
The effective tax rates were 47% and 50% in fiscal 1997 and 1996,
respectively. The effective tax rates exceeded the statutory federal income
tax rate primarily due to the impact of state income taxes and nondeductible
amortization of cost in excess of net assets of acquired companies. The tax
rate decreased in fiscal 1997 as a result of the smaller relative effect of
nondeductible amortization of cost in excess of net assets of acquired
companies due to higher pre-tax income in fiscal 1997.
Liquidity and Capital Resources
Consolidated working capital was $25,822,000 at April 4, 1998, compared
with $16,038,000 at March 29, 1997. Included in working capital were cash
and cash equivalents of $9,763,000 at April 4, 1998, compared with
$1,737,000 at March 29, 1997. During fiscal 1998, $4,480,000 of cash was
provided by operating activities. The Company funded increases of $1,338,000
and $874,000 in unbilled contract costs and fees and accounts receivable,
respectively. The increase in unbilled contract costs and fees is primarily
due to costs incurred under a $6,200,000 design contract for which work
began during the fourth quarter. The increase in accounts receivable is
primarily related to the timing of cash collections at Killam Associates.
The Company's investing activities in fiscal 1998 primarily consisted of
capital additions. The Company expended $1,531,000 for purchases of
property, plant, and equipment in fiscal 1998. The Company expects to expend
approximately $1,600,000 on purchases of property, plant, and equipment in
fiscal 1999.
In fiscal 1998, the Company's financing activities provided cash of
$5,086,000, primarily due to transfers from parent company through September
1997.
The Company expects to have positive cash flow from its existing
operations. Although the Company does not presently intend to actively seek
to acquire additional businesses in the near future, it may acquire one or
more complimentary businesses if they are presented to the Company on terms
the Company believes to be attractive. Such acquisitions may require
significant amounts of cash. The Company expects that it will finance any
such acquisitions through a combination of internal funds, additional debt
or equity financing from the capital markets, or short-term borrowings from
Thermo TerraTech Inc. or Thermo Electron Corporation, although it has no
agreement with these companies to ensure that funds will be available on
acceptable terms, or at all. The Company believes that its existing
resources are sufficient to meet the capital requirements of its existing
businesses for the foreseeable future.
26
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Forward-looking Statements
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company wishes to caution
readers that the following important factors, among others, in some cases
have affected, and in the future could affect, the Company's actual results
and could cause its actual results in fiscal 1999 and beyond to differ
materially from those expressed in any forward-looking statements made by,
or on behalf of, the Company.
Dependence on Sales to Government Entities. A significant portion of the
Company's revenues is derived from municipalities, state governments, and
government utility authorities. Any decreases in purchases by these
entities, including, without limitation, decreases resulting from shifts in
priorities or overall budgeting limitations, could have a material adverse
effect on the Company's business, financial condition, and results of
operations. In addition, most of the Company's contracts require the Company
to perform specific services for a fixed fee. Contracts with governmental
entities often permit the purchaser to cancel the agreement at any time. A
significant overrun in the Company's expenses or cancellation of a
significant contract could also result in a material adverse effect on the
Company's business, financial condition, and results of operations. The
Company's contracts with governmental entities are also subject to other
risks, including contract suspensions; protests by disappointed bidders of
contract awards, which can result in the re-opening of the bidding process;
and changes in government policies or regulations.
Competition. The markets for many of the Company's services are regional
and are characterized by intense competition from numerous local
competitors. Some of the Company's competitors have greater technical and
financial resources than those of the Company. As a result, they may be able
to adapt more quickly to changes in customer requirements and new or
emerging technologies, or to devote greater resources to the promotion and
sale of their services than the Company. Competition could increase if new
companies enter the market or its existing competitors expand their service
lines. There can be no assurance that the Company's current technology,
technology under development, or ability to develop new technologies will be
sufficient to enable it to compete effectively with its competitors.
Dependence on Environmental Regulation. Federal, state, and local
environmental laws govern most of the markets in which the Company conducts
business, as well as many of the Company's operations. The markets for many
of the Company's services, including water supply design and inspection
services, wastewater treatment facility design and inspection services,
solid and hazardous waste management services, environmental testing
services, natural resource management, and air pollution testing and
management services, were directly or indirectly created by, and are
dependent on, the existence and enforcement of those laws. There can be no
assurance that these laws and regulations will not change in the future,
requiring new technologies or stricter standards with which the Company must
comply. In addition, there can be no assurance that these laws and
regulations will not be made more lenient
27
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Forward-looking Statements
in the future, thereby reducing the size of the markets addressed by the
Company. Any such change in such federal, state, and local environmental
laws and regulations may have a material adverse effect on the Company's
business.
Potential Environmental and Regulatory Liability. The Company's
operations are subject to comprehensive laws and regulations related to the
protection of the environment. Among other things, these laws and
regulations impose requirements to control air, soil, and water pollution,
and regulate health, safety, zoning, land use, and the handling and
transportation of hazardous and nonhazardous materials. Such laws and
regulations also impose liability for remediation and cleanup of
environmental contamination, both on-site and off-site, resulting from past
and present operations. These requirements may also be imposed as conditions
of operating permits or licenses that are subject to renewal, modification,
or revocation. Existing laws and regulations, and new laws and regulations,
may require the Company to modify, supplement, replace, or curtail its
operating methods, facilities, or equipment at costs which may be
substantial without any corresponding increase in revenue. The Company's
water, wastewater, and hazardous waste-treatment management services
operations may expose the Company to liabilities to clients and third
parties. In addition, the Company is also potentially subject to monetary
fines, penalties, remediation, cleanup or stop orders, injunctions, or
orders to cease or suspend certain of its practices. The outcome of any
proceedings and associated costs and expenses could have a material adverse
impact on the Company's business. In addition, the Company is subject to
numerous laws and regulations related to the protection of human health and
safety. Such laws and regulations may pose liability on the Company for
exposure of its employees to radiation or other hazardous contamination.
The Company endeavors to operate its business to minimize its exposure
to environmental and other regulatory liabilities. Although no claims giving
rise to such liabilities have been asserted by the Company's customers or
employees to date, there can be no assurance that such claims cannot or will
not be asserted against the Company.
Potential Professional Liability. The Company's business exposes it to
potential liability for the negligent performance of its services and, as
such, the Company may face substantial liability to clients and third
parties for damages resulting from faulty designs or other professional
services. The Company currently maintains professional errors and omissions
insurance, but there can be no assurance that this insurance will provide
sufficient coverage in the event of a claim, that the Company will be able
to maintain such coverage on acceptable terms, if at all, or that a
professional liability claim would not result in a material adverse effect
on the Company's business, financial condition, and results of operations.
Seasonal Influences. A majority of the Company's businesses experience
seasonal fluctuations. Site investigation work and certain environmental
testing services may decline in winter months as a result of severe weather
conditions.
28
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Forward-looking Statements
Risks Associates with Acquisition Strategy. The Company's strategy has
included the acquisition of businesses that complement or augment the
Company's existing services. The Company does not presently intend to
actively seek to make additional acquisitions in the near future, and
expects instead to concentrate its resources on strengthening its core
businesses. The Company may, however, acquire one or more additional
businesses if they are presented to the Company on terms the Company
believes to be attractive. Promising acquisitions are difficult to identify
and complete for a number of reasons, including competition among
prospective buyers and the need for regulatory approvals. Any acquisitions
completed by the Company may be made at substantial premiums over the fair
value of the net assets of the acquired companies. There can be no assurance
that the Company will be able to complete future acquisitions or that the
Company will be able to successfully integrate any acquired businesses. In
order to finance such acquisitions, it may be necessary for the Company to
raise additional funds through public or private financings. Any equity or
debt financing, if available at all, may be on terms that are not favorable
to the Company and, in the case of equity financing, may result in dilution
to the Company's shareholders.
Potential Impact of Year 2000 on Processing of Date-sensitive
Information. The Company is currently assessing the potential impact of the
year 2000 on the processing of date-sensitive information by the Company's
computerized information systems as well as products purchased by the
Company. The Company believes that its internal information systems are
either year 2000 compliant or will be so prior to the year 2000 without
incurring material costs. There can be no assurance, however, that the
Company will not experience unexpected costs and delays in achieving year
2000 compliance for its internal information systems, which could result in
a material adverse effect on the Company's future results of operations.
The Company is presently assessing whether its key suppliers are
adequately addressing the year 2000 issue and the effect this might have on
the Company. The Company has not completed its analysis and is unable to
conclude at this time that the year 2000 problem as it relates to products
purchased from key suppliers is not reasonably likely to have a material
adverse effect on the Company's future results of operations.
29
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Selected Financial Information
(In thousands except
per share amounts) 1998(a) 1997(b) 1996 1995(c) 1994
-----------------------------------------------------------------------
Statement of Income Data:
Revenues $71,583 $64,374 $58,515 $27,735 $21,009
Gross Profit 18,745 16,326 13,503 5,640 3,258
Net Income 3,153 3,580 2,379 693 (7)
Basic and Diluted
Earnings per Share .03 .03 .02 .01 -
Balance Sheet Data:
Working Capital $25,822 $16,038 $13,084 $14,348 $ 4,253
Total Assets 93,193 75,434 71,893 71,886 18,069
Long-term
Obligations 1,948 1,260 1,883 2,551 2
Shareholders'
Investment 79,998 64,731 58,725 60,278 15,200
(a) Reflects the May 1997 acquisition of Randers by Thermo TerraTech (Note
2), subsequently transferred to the Company.
(b) Reflects the November 1996 acquisition of Carlan Consulting Group by
Thermo TerraTech (Note 2), subsequently transferred to the Company.
(c) Reflects the February 1995 acquisition of Killam Associates by Thermo
TerraTech, subsequently transferred to the Company.
30
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Common Stock Market Information
The Company's common stock is traded on the American Stock Exchange's
Emerging Company Marketplace under the symbol RGI.EC. The following table
sets forth the high and low sales prices for the periods noted of the
Company's common stock as reported in the consolidated transaction reporting
system:
1998 1997
------------------ ------------------
Quarter High Low High Low
------------------------------------------------------------------------
First $1 1/8 $ 1/2 $15/16 $9/16
Second 1 13/16 5/8 3/8
Third 1 1/2 1/2 3/8
Fourth 7/8 5/8 7/8 5/16
As of May 29, 1998, the Company had 200 holders of record of its common
stock. This does not include holdings in street or nominee names. The
closing market price on the American Stock Exchange for the Company's common
stock on May 29, 1998, was $11/16 per share.
Shareholder Services
Shareholders of The Randers Group Incorporated who desire information
about the Company are invited to contact John N. Hatsopoulos, Chief
Financial Officer, The Randers Group Incorporated, 81 Wyman Street, P.O. Box
9046, Waltham, Massachusetts 02254-9046, (781) 622-1111. A mailing list is
maintained to enable shareholders whose stock is held in street name, and
other interested individuals, to receive quarterly reports, annual reports,
and press releases as quickly as possible. Distribution of printed quarterly
reports is limited to the second quarter report only. All material is
available through the Internet from Thermo Electron's home page on the World
Wide Web (http://www.thermo.com/subsid/rgi1.html).
Stock Transfer Agent
First Union National Bank of North Carolina is the stock transfer agent
and maintains shareholder activity records. The agent will respond to
questions on issuance of stock certificates, change of ownership, lost stock
certificates, and change of address. For these and similar matters, please
direct inquiries to:
First Union National Bank of North Carolina
Shareholder Services Group
230 South Tryon Street, 11th Floor
Charlotte, NC 28288-1153
(704) 590-7518
Dividend Policy
The Company has never paid cash dividends and does not expect to pay
cash dividends in the foreseeable future as its policy has been to use
earnings to finance expansion and growth. Payment of dividends will rest
within the discretion of the Company's Board of Directors and will depend
upon, among other factors, the Company's earnings, capital requirements, and
financial condition.
31
<PAGE>
The Randers Group Incorporated 1998 Financial Statements
Form 10-K Report
A copy of the Annual Report on Form 10-K for the fiscal year ended April
4, 1998, as filed with the Securities and Exchange Commission, may be
obtained at no charge by writing to John N. Hatsopoulos, Chief Financial
Officer, The Randers Group Incorporated, 81 Wyman Street, P.O.
Box 9046, Waltham, Massachusetts 02254-9046.
Annual Meeting
The annual meeting of shareholders will be held on Tuesday, September
15, 1998, at 2:30 p.m. at Thermo Electron Corporation, 81 Wyman Street,
Waltham, Massachusetts.
32
<PAGE>
Exhibit 21
THE RANDERS GROUP INCORPORATED
Subsidiaries of the Registrant
As of May 29, 1998, The Randers Group Incorporated owned the following
companies:
STATE OR
JURISDICTION PERCENT
NAME OF OF
INCORPORATION OWNERSHIP
- ------------------------------------------------------------------------------
The Randers Group Incorporated Delaware 53.3
(additionally, 1.03% of the shares are owned
directly by Thermo Electron Corporation)
Clark-Trombley Consulting Engineers, Inc. Michigan 100
Randers Engineering, Inc. Michigan 100
Randers Engineering of Massachusetts, Inc. Michigan 100
Randers Group Property Corporation Michigan 100
Redeco Incorporated Michigan 100
Viridian Technology Incorporated Michigan 100
The Killam Group, Inc. Delaware 100
CarlanKillam Consulting Group, Inc. Florida 100
CarlanKillam Consulting Group of Alabama 100
Alabama, Inc.
Thermo Consulting & Design Inc. Delaware 100
Engineering Technology and Knowledge Delaware 100
Corporation
Elson T. Killam Associates, Inc. New Jersey 100
BACKillam Inc. New York 100
N.H. Bettigole Co., Inc. Delaware 100
N.H. Bettigole P.A. New Jersey 100
N.H. Bettigole P.C. New York 100
CarlanKillam Construction Florida 100
Services, Inc.
Duncan, Lagnese and Associates, Pennsylvania 100
Incorporated
E3-Killam, Inc. New York 100
Killam Associates, Inc. Ohio 100
Killam Management and Operational New Jersey 100
Services, Inc.
Fellows, Read & Associates, Inc. New Jersey 100
Killam Associates, New England Inc. Delaware 100
George A. Schock & Associates, Inc. New Jersey 100
Jennison Engineering, Inc. Vermont 100
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RANDERS
GROUP INCORPORATED ANNUAL REPORT ON FORM 10-K FOR THE PERIOD ENDED APRIL 4,1998
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> APR-04-1998
<PERIOD-END> APR-04-1998
<CASH> 9,763
<SECURITIES> 0
<RECEIVABLES> 15,064
<ALLOWANCES> 760
<INVENTORY> 0
<CURRENT-ASSETS> 93,193
<PP&E> 15,716
<DEPRECIATION> 4,052
<TOTAL-ASSETS> 93,193
<CURRENT-LIABILITIES> 9,310
<BONDS> 1,948
0
0
<COMMON> 13
<OTHER-SE> 79,985
<TOTAL-LIABILITY-AND-EQUITY> 93,193
<SALES> 0
<TOTAL-REVENUES> 71,583
<CGS> 0
<TOTAL-COSTS> 52,838
<OTHER-EXPENSES> 12,788
<LOSS-PROVISION> 293
<INTEREST-EXPENSE> 196
<INCOME-PRETAX> 5,956
<INCOME-TAX> 2,803
<INCOME-CONTINUING> 3,153
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,153
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RANDERS
GROUP INCORPORATED ANNUAL REPORT ON FORM 10-K FOR THE PERIOD ENDED MARCH 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-30-1996
<PERIOD-END> MAR-30-1996
<CASH> 794
<SECURITIES> 0
<RECEIVABLES> 12,607
<ALLOWANCES> 576
<INVENTORY> 0
<CURRENT-ASSETS> 22,144
<PP&E> 10,696
<DEPRECIATION> 1,915
<TOTAL-ASSETS> 71,893
<CURRENT-LIABILITIES> 9,060
<BONDS> 1,883
0
0
<COMMON> 12
<OTHER-SE> 58,713
<TOTAL-LIABILITY-AND-EQUITY> 71,893
<SALES> 0
<TOTAL-REVENUES> 58,515
<CGS> 0
<TOTAL-COSTS> 45,012
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 208
<INTEREST-EXPENSE> 257
<INCOME-PRETAX> 4,719
<INCOME-TAX> 2,340
<INCOME-CONTINUING> 2,379
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,379
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RANDERS
GROUP INCORPORATED QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 29,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-29-1997
<PERIOD-END> JUN-29-1996
<CASH> 1,628
<SECURITIES> 0
<RECEIVABLES> 11,456
<ALLOWANCES> 428
<INVENTORY> 0
<CURRENT-ASSETS> 24,313
<PP&E> 10,868
<DEPRECIATION> 2,097
<TOTAL-ASSETS> 73,770
<CURRENT-LIABILITIES> 9,464
<BONDS> 1,855
0
0
<COMMON> 12
<OTHER-SE> 60,217
<TOTAL-LIABILITY-AND-EQUITY> 73,770
<SALES> 0
<TOTAL-REVENUES> 17,722
<CGS> 0
<TOTAL-COSTS> 13,439
<OTHER-EXPENSES> 2,342
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42
<INCOME-PRETAX> 1,925
<INCOME-TAX> 896
<INCOME-CONTINUING> 1,029
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,029
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RANDERS
GROUP INCORPORATED QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER
28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-29-1997
<PERIOD-END> SEP-26-1996
<CASH> 1,256
<SECURITIES> 0
<RECEIVABLES> 12,249
<ALLOWANCES> 512
<INVENTORY> 0
<CURRENT-ASSETS> 24,166
<PP&E> 10,910
<DEPRECIATION> 2,168
<TOTAL-ASSETS> 73,277
<CURRENT-LIABILITIES> 7,425
<BONDS> 1,298
0
0
<COMMON> 12
<OTHER-SE> 62,317
<TOTAL-LIABILITY-AND-EQUITY> 73,277
<SALES> 0
<TOTAL-REVENUES> 33,615
<CGS> 0
<TOTAL-COSTS> 25,076
<OTHER-EXPENSES> 4,647
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90
<INCOME-PRETAX> 3,865
<INCOME-TAX> 1,788
<INCOME-CONTINUING> 2,077
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,077
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RANDERS
GROUP INCORPORATED QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED DECEMBER
28, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-29-1997
<PERIOD-END> DEC-26-1996
<CASH> 3,246
<SECURITIES> 0
<RECEIVABLES> 12,427
<ALLOWANCES> 521
<INVENTORY> 0
<CURRENT-ASSETS> 25,502
<PP&E> 11,560
<DEPRECIATION> 2,406
<TOTAL-ASSETS> 77,819
<CURRENT-LIABILITIES> 7,433
<BONDS> 1,287
0
0
<COMMON> 12
<OTHER-SE> 66,866
<TOTAL-LIABILITY-AND-EQUITY> 77,819
<SALES> 0
<TOTAL-REVENUES> 48,961
<CGS> 0
<TOTAL-COSTS> 36,423
<OTHER-EXPENSES> 7,121
<LOSS-PROVISION> 50
<INTEREST-EXPENSE> 139
<INCOME-PRETAX> 5,367
<INCOME-TAX> 2,498
<INCOME-CONTINUING> 2,869
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,869
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RANDERS
GROUP INCORPORATED ANNUAL REPORT ON FORM 10-K FOR THE PERIOD ENDED MARCH 29,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-29-1997
<PERIOD-END> MAR-29-1997
<CASH> 1,737
<SECURITIES> 0
<RECEIVABLES> 12,319
<ALLOWANCES> 706
<INVENTORY> 0
<CURRENT-ASSETS> 23,372
<PP&E> 11,863
<DEPRECIATION> 2,828
<TOTAL-ASSETS> 75,434
<CURRENT-LIABILITIES> 7,334
<BONDS> 1,260
0
0
<COMMON> 12
<OTHER-SE> 64,719
<TOTAL-LIABILITY-AND-EQUITY> 75,434
<SALES> 0
<TOTAL-REVENUES> 64,374
<CGS> 0
<TOTAL-COSTS> 64,374
<OTHER-EXPENSES> 9,555
<LOSS-PROVISION> 149
<INTEREST-EXPENSE> 184
<INCOME-PRETAX> 6,697
<INCOME-TAX> 3,117
<INCOME-CONTINUING> 3,580
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,580
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RANDERS
GROUP INCORPORATED QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JUNE 28,
1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-04-1998
<PERIOD-END> JUN-28-1997
<CASH> 807
<SECURITIES> 0
<RECEIVABLES> 11,456
<ALLOWANCES> 428
<INVENTORY> 0
<CURRENT-ASSETS> 25,186
<PP&E> 12,205
<DEPRECIATION> 3,103
<TOTAL-ASSETS> 76,744
<CURRENT-LIABILITIES> 7,444
<BONDS> 1,232
0
0
<COMMON> 13
<OTHER-SE> 65,950
<TOTAL-LIABILITY-AND-EQUITY> 76,744
<SALES> 0
<TOTAL-REVENUES> 16,844
<CGS> 0
<TOTAL-COSTS> 12,352
<OTHER-EXPENSES> 2,921
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9
<INCOME-PRETAX> 1,568
<INCOME-TAX> 727
<INCOME-CONTINUING> 841
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 841
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RANDERS
GROUP INCORPORATED QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER
27, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-04-1998
<PERIOD-END> SEP-27-1997
<CASH> 2,463
<SECURITIES> 0
<RECEIVABLES> 15,628
<ALLOWANCES> 531
<INVENTORY> 0
<CURRENT-ASSETS> 32,288
<PP&E> 15,095
<DEPRECIATION> 3,380
<TOTAL-ASSETS> 90,645
<CURRENT-LIABILITIES> 9,022
<BONDS> 2,042
0
0
<COMMON> 13
<OTHER-SE> 77,562
<TOTAL-LIABILITY-AND-EQUITY> 90,645
<SALES> 0
<TOTAL-REVENUES> 35,075
<CGS> 0
<TOTAL-COSTS> 25,838
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 81
<INTEREST-EXPENSE> 116
<INCOME-PRETAX> 3,272
<INCOME-TAX> 1,447
<INCOME-CONTINUING> 1,825
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,825
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RANDERS
GROUP INCORPORATED QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JANUARY 3,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-04-1998
<PERIOD-END> JAN-03-1998
<CASH> 4,682
<SECURITIES> 0
<RECEIVABLES> 16,994
<ALLOWANCES> 551
<INVENTORY> 0
<CURRENT-ASSETS> 34,005
<PP&E> 15,511
<DEPRECIATION> 3,756
<TOTAL-ASSETS> 92,174
<CURRENT-LIABILITIES> 9,731
<BONDS> 1,973
0
0
<COMMON> 13
<OTHER-SE> 78,466
<TOTAL-LIABILITY-AND-EQUITY> 92,174
<SALES> 0
<TOTAL-REVENUES> 53,344
<CGS> 0
<TOTAL-COSTS> 39,083
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 157
<INTEREST-EXPENSE> 160
<INCOME-PRETAX> 4,907
<INCOME-TAX> 2,176
<INCOME-CONTINUING> 2,731
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,731
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
