SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------------------------------------
FORM 10-Q
(mark one)
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Quarter Ended July 3, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 0-18095
THE RANDERS KILLAM GROUP INC.
(Exact name of Registrant as specified in its charter)
Delaware 38-2788025
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
27 Bleeker Street
Milburn, New Jersey 07041
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (781) 622-1000
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Class Outstanding at July 30, 1999
Common Stock, $.0001 par value 25,429,344
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
THE RANDERS KILLAM GROUP INC.
Consolidated Balance Sheet
(Unaudited)
Assets
July 3, April 3,
(In thousands) 1999 1999
- ------------------------------------------------------------------------------------- ----------- ----------
Current Assets:
<S> <C> <C>
Cash and cash equivalents (includes $15,015 under repurchase agreement $ 1,293 $15,921
with related party in fiscal 1999)
Advance to affiliate (Note 6) 15,510 -
Accounts receivable, less allowances of $1,076 and $1,291 15,005 12,677
Unbilled contract costs and fees 8,937 9,942
Prepaid and refundable income taxes 1,735 1,735
Prepaid expenses 602 433
------- -------
43,082 40,708
------- -------
Property, Plant, and Equipment, at Cost 16,490 16,738
Less: Accumulated depreciation and amortization 5,543 5,373
------- ------
10,947 11,365
------- -------
Other Assets 1,750 1,966
------- ------
Cost in Excess of Net Assets of Acquired Companies (Note 4) 31,643 44,106
------- ------
$87,422 $98,145
======= =======
2
<PAGE>
THE RANDERS KILLAM GROUP INC.
Consolidated Balance Sheet (continued)
(Unaudited)
Liabilities and Shareholders' Investment
July 3, April 3,
(In thousands except share amounts) 1999 1999
- ------------------------------------------------------------------------------------- ----------- ---------
Current Liabilities:
Current maturities of long-term obligations $ 1,129 $1,145
Accounts payable 5,281 4,784
Accrued payroll and employee benefits 3,381 3,228
Accrued income taxes 1,702 2,364
Accrued restructuring costs (Note 4) 2,669 -
Other accrued expenses 474 669
Due to parent company and affiliated companies 361 94
------- -------
14,997 12,284
------- -------
Deferred Income Taxes 997 997
------- ------
Other Deferred Items 1,076 1,076
------- ------
Long-term Obligations 743 774
------- ------
Shareholders' Investment:
Common stock, $.0001 par value, 30,000,000 shares authorized; 25,429,344 3 3
shares issued and outstanding
Capital in excess of par value 79,379 79,379
Retained earnings (Accumulated deficit) (9,773) 3,632
------- ------
69,609 83,014
------- -------
$87,422 $98,145
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
THE RANDERS KILLAM GROUP INC.
Consolidated Statement of Operations
(Unaudited)
Three Months Ended
July 3, July 4,
(In thousands except per share amounts) 1999 1998
- ------------------------------------------------------------------------------------ ----------- ----------
Revenues $ 18,603 $20,083
-------- -------
Costs and Operating Expenses:
Cost of revenues 13,904 15,054
Selling, general, and administrative expenses 3,129 3,589
Restructuring costs (Note 4) 15,668 -
-------- -------
32,701 18,643
-------- -------
Operating Income (Loss) (14,098) 1,440
Interest Income 199 125
Interest Expense (33) (43)
-------- -------
Income (Loss) Before Income Taxes (13,932) 1,522
Income Tax Benefit (Provision) 527 (734)
-------- -------
Net Income (Loss) $(13,405) $ 788
======== =======
Basic and Diluted Earnings (Loss) per Share (Note 2) $ (.53) $ .03
======== =======
Weighted Average Shares (Note 2):
Basic 25,429 25,429
======== =======
Diluted 25,429 25,481
======== =======
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
THE RANDERS KILLAM GROUP INC.
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
July 3, July 4,
(In thousands) 1999 1998
- ------------------------------------------------------------------------------------ ----------- ----------
Operating Activities:
Net income (loss) $(13,405) $ 788
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 492 682
Provision for losses on accounts receivable - 257
Noncash restructuring costs (Note 4) 12,999 -
Other noncash items (96) 5
Changes in current accounts:
Accounts receivable (1,999) 417
Unbilled contract costs and fees 1,005 (1,112)
Other current assets (169) (203)
Accounts payable 497 1,176
Other current liabilities 2,234 (196)
-------- -------
Net cash provided by operating activities 1,558 1,814
-------- -------
Investing Activities:
Advances to affiliate, net (Note 6) (15,510) -
Purchases of property, plant, and equipment (567) (272)
Proceeds from sale of property, plant, and equipment - 12
Other (46) -
-------- -------
Net cash used in investing activities (16,123) (260)
-------- -------
Financing Activities:
Repayment of note payable and long-term obligations (63) (47)
-------- -------
Net cash used in financing activities (63) (47)
-------- -------
Increase (Decrease) in Cash and Cash Equivalents (14,628) 1,507
Cash and Cash Equivalents at Beginning of Period 15,921 9,763
-------- -------
Cash and Cash Equivalents at End of Period $ 1,293 $11,270
======== =======
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
Notes to Consolidated Financial Statements
1. General
The interim consolidated financial statements presented have been prepared
by The Randers Killam Group Inc. (the Company) without audit and, in the opinion
of management, reflect all adjustments of a normal recurring nature necessary
for a fair statement of the financial position at July 3, 1999, and the results
of operations and cash flows for the three-month periods ended July 3, 1999, and
July 4, 1998. Interim results are not necessarily indicative of results for a
full year.
The consolidated balance sheet presented as of April 3, 1999, has been
derived from the consolidated financial statements that have been audited by the
Company's independent public accountants. The consolidated financial statements
and notes are presented as permitted by Form 10-Q and do not contain certain
information included in the annual financial statements and notes of the
Company. The consolidated financial statements and notes included herein should
be read in conjunction with the financial statements and notes included in the
Company's Annual Report on Form 10-K for the fiscal year ended April 3, 1999,
filed with the Securities and Exchange Commission.
2. Earnings (Loss) per Share
Basic and diluted earnings (loss) per share were calculated as follows:
Three Months Ended
July 3, July 4,
(In thousands except per share amounts) 1999 1998
- ------------------------------------------------------------------------------------ ----------- ----------
Basic
Net Income (Loss) $(13,405) $ 788
-------- -------
Weighted Average Shares 25,429 25,429
-------- -------
Basic Earnings (Loss) per Share $ (.53) $ .03
======== =======
Diluted
Net Income (Loss) $(13,405) $ 788
-------- -------
Weighted Average Shares 25,429 25,429
Effect of Stock Options - 52
-------- -------
Weighted Average Shares, as Adjusted 25,429 25,481
-------- -------
Diluted Earnings (Loss) per Share $ (.53) $ .03
======== =======
The computation of diluted earnings (loss) per share excludes the effect
of assuming the exercise of certain outstanding stock options because the effect
would be antidilutive. As of July 3, 1999, there were 1,348,000 of such options
outstanding, with exercise prices ranging from $1.90 to $7.65 per share.
6
<PAGE>
3. Business Segment Information
Three Months Ended
July 3, July 4,
(In thousands) 1999 1998
- ------------------------------------------------------------------------------------ ----------- ----------
Revenues:
Water and Wastewater Treatment $ 10,656 $ 11,027
Process Engineering and Construction 2,788 4,789
Highway and Bridge Engineering 3,198 2,916
Infrastructure Engineering 2,001 1,516
Intersegment sales elimination (40) (165)
-------- --------
$ 18,603 $ 20,083
======== ========
Income (Loss) Before Income Taxes:
Water and Wastewater Treatment (a) $ 1,238 $ 1,440
Process Engineering and Construction (b) (5,927) 364
Highway and Bridge Engineering (c) (9,334) (148)
Infrastructure Engineering 190 156
Corporate (d) (265) (372)
-------- --------
Total operating income (loss) (14,098) 1,440
Interest and other income, net 166 82
-------- --------
$(13,932) $ 1,522
======== ========
(a) Includes restructuring costs of $380,000 in fiscal 2000.
(b) Includes restructuring costs of $5,720,000 in fiscal 2000.
(c) Includes restructuring costs of $9,568,000 in fiscal 2000.
(d) Primarily general and administrative expenses.
During the first quarter of fiscal 2000, the Company recorded
restructuring costs in connection with the planned sale of three businesses
(Note 4). As a result, total assets decreased by $200,000 at the Water and
Wastewater Treatment segment, $4,778,000 at the Process Engineering and
Construction segment, and $8,021,000 at the Highway and Bridge Engineering
segment.
4. Restructuring Costs
During the first quarter of fiscal 2000, the Company recorded
restructuring costs of $15,668,000 in connection with the planned sale of three
businesses. These businesses consist of the Randers division, which constitutes
the Company's Process Engineering and Construction segment; BAC Killam Inc.,
which represents the Company's Highway and Bridge Engineering segment; and
E3-Killam Inc., which represents a small component of the Water and Wastewater
Treatment segment. These costs primarily include a write-off of $12,239,000 of
cost in excess of net assets of acquired companies and a write-down of $760,000
of property and equipment to reduce the carrying value of the businesses
proposed to be sold to the estimated proceeds from their sale, $2,562,000 of
ongoing lease costs for facilities that will be exited in connection with the
sale of these businesses, and $107,000 of severance costs for 9 employees across
all functions, all of whom were terminated by the end of the first quarter of
fiscal 2000. As of July 3, 1999, the remaining obligation for the restructuring
actions totaled $2,669,000, which represents ongoing lease costs and severance.
The Company expects to incur additional restructuring costs of approximately
$925,000, primarily for employee retention bonuses during the remainder of
fiscal 2000. The bonuses are payable upon the sale of the businesses described
above. Unaudited revenues and operating income before restructuring costs of
these business units aggregated $6,303,000 and $41,000, in the first quarter of
fiscal 2000, respectively. Revenues and operating
7
<PAGE>
4. Restructuring Costs (continued)
losses aggregated $31,655,000 and $478,000 in fiscal 1999, respectively. As a
result of the restructuring actions, depreciation has been discontinued on the
facilities to be sold and amortization has been discontinued on the cost in
excess of net assets of acquired companies which was written off. During the
first quarter of fiscal 2000, discontinuing depreciation and amortization
reduced the pretax operating loss of $209,000.
5. Proposed Reorganization
Thermo Electron Corporation has announced a proposed reorganization
involving certain of Thermo Electron's subsidiaries, including the Company.
Under this plan, the Company and its sister subsidiary, ThermoRetec Corporation,
as well as their parent company, Thermo TerraTech Inc., would be merged into
Thermo Electron. As a result, all three companies would become wholly owned
subsidiaries of Thermo Electron. The public shareholders of the Company,
ThermoRetec, and Thermo TerraTech would receive common stock in Thermo Electron
in exchange for their shares. The completion of these transactions is subject to
numerous conditions, including the establishment of prices and exchange ratios;
confirmation of anticipated tax consequences; the approval of the Board of
Directors of ThermoRetec and Thermo TerraTech; the negotiation and execution of
a definitive merger agreement; the receipt of a fairness opinion from an
investment banking firm that the transaction is fair to the Company's
shareholders (other than Thermo TerraTech and Thermo Electron) from a financial
point of view; the approval of the Company's Board of Directors, including its
independent directors; and completion of review by the Securities and Exchange
Commission of any necessary documents regarding the proposed transactions.
6. Cash Management Arrangement
Effective June 1, 1999, the Company and Thermo Electron commenced use of a
new domestic cash management arrangement. Under the new arrangement, amounts
advanced to Thermo Electron by the Company for domestic cash management purposes
bear interest at the 30-day Dealer Commercial Paper Rate plus 50 basis points,
set at the beginning of each month. Thermo Electron is contractually required to
maintain cash, cash equivalents, and/or immediately available bank lines of
credit equal to at least 50% of all funds invested under this cash management
arrangement by all Thermo Electron subsidiaries other than wholly owned
subsidiaries. The Company has the contractual right to withdraw its funds
invested in the cash management arrangement upon 30 days' prior notice. Amounts
invested in this arrangement are included in "advance to affiliate" in the
accompanying balance sheet.
Item 2 - 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 under the heading "Forward-looking
Statements" in Exhibit 13 to the Company's Annual Report on Form 10-K for the
fiscal year ended April 3, 1999, filed with the Securities and Exchange
Commission.
Overview
The Company's businesses provide comprehensive engineering and outsourcing
services and operate in four segments: Water and Wastewater Treatment, Process
Engineering and Construction, Highway and Bridge Engineering, and Infrastructure
Engineering. The Company's clients include municipalities, government agencies,
and companies in the manufacturing, pharmaceutical, and chemical-processing
industries. The Company's strategy is to market its technical expertise and
low-cost solutions to a broad base of clients.
8
<PAGE>
Overview (continued)
In May 1997, Thermo TerraTech Inc. purchased a controlling interest in The
Randers Group Incorporated (Randers), 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 its wholly
owned engineering and consulting businesses (known as The Killam Group) to
Randers in exchange for additional shares of Randers' common stock. As a result
of these transactions, as approved at the January 1999 Special Meeting of the
Company's Shareholders, the Killam Group was 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 Randers division, comprised of Randers Engineering, Inc.; Redco
Incorporated; and Viridian Technology Incorporated, represents the Company's
Process Engineering and Construction segment. The Company's Killam Associates,
Inc.; Duncan, Lagnese and Associates, Incorporated; Killam Management and
Operational Services, Inc.; and E3-Killam, Inc. subsidiaries, represent the
Water and Wastewater Treatment segment and provide environmental consulting and
engineering services and specialize in wastewater treatment and water resources
management. The Company's BAC Killam Inc. subsidiary represents the Company's
Highway and Bridge Engineering segment and provides both private and public
sector clients with a broad range of consulting services that address
transportation planning and design. The Company's CarlanKillam Consulting Group,
Inc. subsidiary provides transportation and environmental consulting,
professional engineering, and architectural services, and represents the
Company's Infrastructure Engineering segment.
In May 1999, the Company announced the planned sale of three businesses,
the Randers division, which represents the Company's Process Engineering and
Construction segment; BAC Killam, which represents the Company's Highway and
Bridge Engineering segment; and E3-Killam, which represents a small component of
the Company's Water and Wastewater Treatment segment (Note 4).
Results of Operations
First Quarter of Fiscal 2000 Compared With First Quarter of Fiscal 1999
Revenues decreased to $18.6 million in the first quarter of fiscal 2000
from $20.1 million in the first quarter of fiscal 1999, primarily due to a
decrease in contract revenue at the Process Engineering and Construction segment
and the Water and Wastewater Treatment segment, due in part to a recession in
the chemical industry. These decreases in revenues were offset in part by an
increase in revenues at the Infrastructure Engineering segment due to an
increase in demand.
The gross profit margin remained unchanged at 25% in the first quarter of
fiscal 2000 and 1999.
Selling, general, and administrative expenses as a percentage of revenues
decreased to 17% in the first quarter of fiscal 2000 from 18% in the first
quarter of fiscal 1999, due primarily to lower depreciation and amortization
expenses as a result of the restructuring actions discussed in Note 4. The
reduction in depreciation and amortization expenses had a favorable effect on
pretax earnings of $0.2 million for the first quarter of fiscal 2000.
During the first quarter of fiscal 2000, the Company recorded
restructuring costs of $15.7 million in connection with the planned sale of
three businesses (Note 4).
Interest income increased to $0.2 million in the first quarter of fiscal
2000 from $0.1 million in the first quarter of fiscal 1999, primarily due to
higher average invested balances.
9
<PAGE>
First Quarter of Fiscal 2000 Compared with First Quarter of Fiscal 1999 (continued)
The Company recorded a tax benefit of $0.5 million in the first quarter of
fiscal 2000 on pretax losses of $13.9 million. The effective tax rate was lower
than the statutory federal income tax rate principally due to nondeductible
charges, including the write-off of cost in excess of net assets of acquired
companies of $12.2 million (Note 4). The Company recorded a tax provision of
$0.7 million in the first quarter of fiscal 1999 on pretax income of $1.5
million, resulting in an effective tax rate of 48%. The effective tax rate was
higher than the statutory federal income tax rate, principally due to the effect
of nondeductible amortization of cost in excess of net assets of acquired
companies and the impact of the state income taxes.
Liquidity and Capital Resources
Consolidated working capital was $28.1 million at July 3, 1999, compared
with $28.4 million at April 3, 1999. Included in working capital are cash and
cash equivalents of $1.3 million at July 3, 1999, compared with $15.9 million at
April 3, 1999. In addition, as of July 3, 1999, the Company had $15.5 million
invested in an advance to affiliate. Prior to the use of a new domestic cash
management arrangement between the Company and Thermo Electron Corporation (Note
6), which became effective June 1, 1999, amounts invested with Thermo Electron
were included in cash and cash equivalents. During the first quarter of fiscal
2000, $1.6 million of cash was provided by operating activities. During this
period, $2.7 million of cash was provided by an increase in accounts payable and
other current liabilities, primarily due to restructuring costs recorded during
the first quarter of fiscal 2000, which were not paid as of July 3, 1999. An
increase in accounts receivable used $2.0 million in cash, primarily due to the
timing of customer payments. The days sales outstanding in unbilled contract
costs and fees and in accounts receivable at July 3, 1999, were 44 and 71 days,
respectively, compared with 48 and 59 days, respectively, at April 3, 1999.
Management does not believe that the change in the number of days sales
outstanding is indicative of any trend that would materially affect the
Company's future results of operations or liquidity.
Excluding advances to affiliate activity (Note 6), the Company's primary
investing activities in the first quarter of fiscal 2000 consisted of capital
additions of $0.6 million. The Company expects to expend approximately $0.7
million for capital additions during the remainder of fiscal 2000.
In the first quarter of fiscal 2000, the Company's financing activities
used $0.1 million of cash for the repayment of long-term obligations.
The Company generally 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 and/or short-term borrowings from Thermo
TerraTech Inc. or Thermo Electron, 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.
Year 2000
The following constitutes a "Year 2000 Readiness Disclosure" under the
Year 2000 Information and Readiness Disclosure Act. The Company continues to
assess the potential impact of the year 2000 date recognition issue on the
Company's internal business systems, products, and operations. The Company's
year 2000 initiatives include (i) testing and upgrading significant information
technology systems and facilities; (ii) assessing the year 2000 readiness of its
key suppliers and vendors; and (iii) developing a contingency plan.
10
<PAGE>
Year 2000 (continued)
The Company's State of Readiness
The Company has implemented a compliance program to ensure that its
critical information technology systems and non-information technology systems
will be ready for the year 2000. The first phase of the program, testing and
evaluating the Company's critical information technology systems and
non-information technology systems for year 2000 compliance, has been completed.
During phase one, the Company tested and evaluated its significant computer
systems, software applications, and related equipment for year 2000 compliance.
The Company also evaluated the potential year 2000 impact on its critical
non-information technology systems. The Company's efforts included testing the
year 2000 readiness of its utility and telecommunications systems at its
critical facilities. The Company is currently in phase two of its program,
during which any material noncompliant information technology systems or
non-information technology systems that were identified during phase one are
prioritized and remediated. Based on its evaluations, the Company does not
believe that any material upgrades or modifications to its critical
non-information technology systems are required. As of July 3, 1999, the Company
has upgraded or replaced its material noncompliant information technology
systems. In many cases, such upgrades or replacements were made in the ordinary
course of business, without accelerating previously scheduled upgrades or
replacements.
The Company identified and assessed the year 2000 readiness of key
suppliers and vendors that are believed to be significant to the Company's
business operations. As part of this effort, the Company has developed and
distributed questionnaires relating to year 2000 compliance to its significant
suppliers and vendors. To date, no significant supplier or vendor has indicated
that its business operations will be materially disrupted by the year 2000
issue. The Company is following up with significant suppliers and vendors that
have not responded to the Company's questionnaires. As of July 3, 1999, the
Company is substantially complete with the majority of its assessment of
third-party risk.
Contingency Plan
The Company is developing a contingency plan that will allow its primary
business operations to continue despite disruptions due to year 2000 problems.
This plan may include identifying manual or backup systems in the event of a
failure of the Company's material information technology systems. As the Company
continues to evaluate the year 2000 readiness of its business systems and
facilities and significant suppliers and vendors, it will modify and adjust its
contingency plan as may be required. The Company expects to complete its
contingency plan by October 1999.
Estimated Costs to Address the Company's Year 2000 Issues
The Company had not incurred material third-party expenses (external
costs) related to year 2000 issues as of July 3, 1999, and the total external
costs of year 2000 remediation are not expected to be material. The Company does
not track the internal costs incurred for its year 2000 compliance project. Such
costs are principally the related payroll costs for its information systems
group.
Reasonably Likely Worst Case Scenario
At this point in time, the Company is not able to determine the most
reasonably likely worst case scenario to result from the year 2000 issue. One
possible worst case scenario would be that the Company experiences year 2000
problems in its material information technology systems that cause the Company
to be unable to access data, to process transactions, and to maintain accurate
books and records. In such an event, the Company's operations could be delayed
or temporarily shut down, and it could be unable to meet its obligations to
customers in a timely fashion. The Company's business, operations, and financial
condition could be adversely affected in amounts that cannot be reasonably
estimated at this time.
11
<PAGE>
Year 2000 (continued)
Risks of the Company's Year 2000 Issues
While the Company is attempting to minimize any negative consequences
arising from the year 2000 issue, there can be no assurance that year 2000
problems will not have a material adverse impact on the Company's business,
operations, or financial condition. While the Company expects that upgrades to
its internal business systems will be completed in a timely fashion, there can
be no assurance that the Company will not encounter unexpected costs or delays.
Some services provided by the Company may involve the delivery to clients of
third-party software and hardware. Accordingly, the Company may see an increase
in warranty and other claims related to Company services that incorporate such
software or hardware. In addition, certain older third-party products, which the
Company no longer uses in providing its services to clients, may not be year
2000 compliant, which may expose the Company to claims. As discussed above, if
any of the Company's key suppliers or vendors experience business disruptions
due to year 2000 issues, the Company might also be materially adversely
affected. There is expected to be a significant amount of litigation relating to
the year 2000 issue and there can be no assurance that the Company will not
incur material costs in defending or bringing lawsuits. In addition, if any year
2000 issues are identified, there can be no assurance that the Company will be
able to retain qualified personnel to remedy such issues. Any unexpected costs
or delays arising from the year 2000 issue could have a material adverse impact
on the Company's business, operations, and financial condition in amounts that
cannot be reasonably estimated at this time.
Item 3 - Quantitative and Qualitative Disclosures About Market Risks
The Company's exposure to market risk from changes in interest rates has
not changed materially from its exposure at fiscal year-end 1999.
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index on the page immediately preceding exhibits.
(b) Reports on Form 8-K
On May 12, 1999, the Company filed a Current Report on Form 8-K, dated as
of May 5, 1999, with respect to modifications to the previously announced
reorganization plan of the Company's ultimate parent, Thermo Electron
Corporation, involving certain of Thermo Electron's subsidiaries, including the
Company.
On May 25, 1999, the Company filed a Current Report on Form 8-K, dated as
of May 24, 1999, with respect to certain pretax restructuring and other charges
that will be taken by the Company.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized as of the 6th day of August 1999.
THE RANDERS KILLAM GROUP INC.
/s/ Paul F. Kelleher
Paul F. Kelleher
Chief Accounting Officer
/s/ Theo Melas-Kyriazi
Theo Melas-Kyriazi
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
27 Financial Data Schedule.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE RANDERS
KILLAM GROUP INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED JULY 3,
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
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<FISCAL-YEAR-END> APR-01-2000
<PERIOD-END> JUL-03-1999
<CASH> 1,293
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<RECEIVABLES> 16,081
<ALLOWANCES> 1,076
<INVENTORY> 0
<CURRENT-ASSETS> 43,082
<PP&E> 16,490
<DEPRECIATION> 5,543
<TOTAL-ASSETS> 87,422
<CURRENT-LIABILITIES> 14,997
<BONDS> 743
0
0
<COMMON> 3
<OTHER-SE> 69,606
<TOTAL-LIABILITY-AND-EQUITY> 87,422
<SALES> 0
<TOTAL-REVENUES> 18,603
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<TOTAL-COSTS> 13,904
<OTHER-EXPENSES> 15,668
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33
<INCOME-PRETAX> (13,932)
<INCOME-TAX> (527)
<INCOME-CONTINUING> (13,405)
<DISCONTINUED> 0
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<CHANGES> 0
<NET-INCOME> (13,405)
<EPS-BASIC> (0.53)
<EPS-DILUTED> (0.53)
</TABLE>
