<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-20514
CORPORATE RENAISSANCE GROUP, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3701354
[State or other jurisdiction of (I.R.S. Employer
incorporation or organization] Identification Number)
1185 Avenue of the Americas
18th Floor
New York, New York 10036
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 730-2000
Former name, former address and fiscal year, if changed since last report
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 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 _____
The number of shares outstanding of the Registrant's common stock is 956,100 (as
of March 31, 1996).
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
INDEX
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1.
Statements of Assets and Liabilities as of March 31, 1996 and
September 30, 1995-------------------------------------------------------------3
Statements of Operations and Changes in Net Assets for the Quarter ended March
31, 1996 and March 31, 1995 and for the Six Months ended March 31, 1996 and for
the Period from November 1, 1994 (Commencement of Operations) to March 31,
1995---------------------------------------------------------------------------4
Statements of Cash Flows for the Six Months ended March 31, 1996 and for the
Period from November 1, 1994 (Commencement of Operations) to March 31,
1995---------------------------------------------------------------------------5
Schedule of Investments, March 31, 1996----------------------------------------6
Schedule of Call Options written, March 31, 1996-------------------------------7
Notes to Financial Statements--------------------------------------------------8
ITEM 2.
Management's Discussion and Analysis of Financial
Condition and Results of Operations-------------------------------------------12
PART II - OTHER INFORMATION
2
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
STATEMENTS OF ASSETS AND LIABILITIES
(Unaudited)
MARCH 31, 1996 SEPTEMBER 30, 1995
-------------- ------------------
ASSETS
Investments in securities, at market value
(cost $8,671,769 at March 31, 1996 and
$7,949,461 at September 30, 1995) $ 11,352,689 $ 12,438,808
Cash and cash equivalents 2,093,863
Income taxes receivable 179,884
Accrued interest receivable 2,900
Other assets 43,335 6,493
------------ ------------
Total Assets 11,575,908 14,542,064
LIABILITIES
Call options written, at market value
(premiums received $36,951 at March 31, 1996 and
$22,999 at September 30, 1995) 38,513 33,125
Due to broker 353,724
Accrued incentive fee payable 996,947
Income taxes payable 132,008
Accounts payable and accrued expenses 33,470 34,182
Deferred taxes payable 945,886 1,533,200
------------ ------------
Total liabilities 1,371,593 2,729,462
------------ ------------
Net assets $ 10,204,315 $ 11,812,602
============ ============
NET ASSETS
Common stock, (par value $.01 per share
20,000,000 shares authorized;
956,100 shares issued and outstanding) $ 9,561 $ 9,561
Additional paid-in capital 7,815,260 7,815,260
Accumulated income (losses):
Accumulated net operating loss before security
transactions (1,105,020) (821,159)
Accumulated net realized gains from sale of
investments 1,751,042 1,862,919
Net unrealized appreciation of investments 1,733,472 2,946,021
------------ ------------
2,379,494 3,987,781
------------ ------------
Net assets $ 10,204,315 $ 11,812,602
============ ============
Net asset value per share of common stock
outstanding $ 10.67 $ 12.36
============ ============
See notes to financial statements
3
<PAGE>
CORPORATE RENAISSANCE GROUP, INC
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
NOVEMBER 1, 1994
(COMMENCEMENT OF
FOR THE SIX MONTHS PERATIONS) TO
FOR THE QUARTER ENDED MARCH 31, ENDED MARCH 31, MARCH 31,
1996 1995 1996 1995
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Income:
Interest Income $ 2,332 $ 60,064 $ 17,673 $ 108,649
------------ ------------ ------------ ------------
Total investment income 2,332 60,064 17,673 108,649
------------ ------------ ------------ ------------
Expenses:
Incentive fees 396,415 224,128 396,415
Financial advisory fees 50,000 50,000 100,000 83,333
Investment banking fees 25,000 25,000 50,000 41,667
Professional fees 15,300 12,900 27,600 39,471
Insurance expense 18,500 19,240 37,247 32,067
Board of directors fees 12,500 12,500 25,000 20,833
Other operating expenses 9,787 9,346 12,736 12,986
------------ ------------ ------------ ------------
Total expenses 131,087 525,401 476,711 626,772
------------ ------------ ------------ ------------
Operating loss before income tax benefit (128,755) (465,337) (459,038) (518,123)
Income tax benefit 45,454 153,471 175,177 176,642
------------ ------------ ------------ ------------
Net operating loss before security transactions (83,301) (311,866) (283,861) (341,481)
------------ ------------ ------------ ------------
NET REALIZED AND UNREALIZED GAINS/(LOSSES)
FROM INVESTMENTS:
Net realized gains/(losses) from sales of
investments (59,541) 1,375 (125,992) 15,941
Change in net unrealized appreciation/
(depreciation) of investments (3,683,282) 2,724,497 (1,799,862) 3,120,269
Income tax expense arising from net
realized gains /(losses) and net unrealizd
appreciation/(depreciation) of investments 1,321,318 (929,971) 601,428 (1,073,371)
------------ ------------ ------------ ------------
Net realized and unrealized
gains/(losses) on investments (2,421,505) 1,795,901 (1,324,426) 2,062,839
------------ ------------ ------------ ------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $ (2,504,806) $ 1,484,035 $ (1,608,287) $ 1,721,358
------------ ------------ ------------ ------------
Net assets at beginning of period 12,709,121 8,062,144 11,812,602 1,000
Net increase in net assets resulting from
capital stock transactions 7,823,821
------------ ------------ ------------ ------------
Net assets at end of period $ 10,204,315 $ 9,546,179 $ 10,204,315 $ 9,546,179
============ ============ ============ ============
Per Share Data:
Net operating loss before security
transactions $ (.09) $ (.33) $ (.30) $ (.36)
Net realized gains/(losses) from sales of
investments (.04) .00 (.12) .01
Net unrealized appreciation/(depreciation)
of investments (2.49) 1.88 (1.27) 2.15
------------ ------------ ------------ ------------
Net increase/(decrease) in net asset value
resulting from operations (2.62) 1.55 (1.69) 1.80
Net asset value per common
share after beginning of period 13.29 8.43 12.36 8.18
------------ ------------ ------------ ------------
Net asset value per common
share at end of period $ 10.67 $ 9.98 $ 10.67 $ 9.98
============ ============ ============ ============
</TABLE>
See notes to financial statements
4
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
NOVEMBER 1, 1994
(COMMENCEMENT OF
FOR THE SIX MONTHS ENDED OPERATIONS)
MARCH 31, 1996 MARCH 31, 1995
------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net increase/(decrease) in net assets resulting from
operations (1,608,287) 1,721,358
Adjustments to reconcile net increase in net assets resulting
from operations to net cash (used in) operating activiities:
Change in net unrealized (appreciation)/depreciation of
investments 1,799,862 (3,120,269)
Realized (gains)/losses from sale of investments 125,992 (15,941)
Deferred income tax provision (587,314) 896,000
(Increase)/decrease in operating assets:
Prepaid registration costs 125,000
Income taxes receivable (179,884)
Accrued interest receivable 2,900 (20,444)
Other assets (36,842) (44,974)
Increase/(decrease) in operating liabilities:
Accrued incentive fee payable (996,947) 396,415
Income taxes payable (132,008)
Due to broker 353,724
Accounts payable and accrued expenses (712) 21,599
Accrued registration costs (125,000)
----------- -----------
Net cash flows (used in) operating activities (1,259,516) (166,256)
----------- -----------
Cash Flows from Investing Activities:
Purchase of securities (1,671,666) (4,980,045)
Proceeds from sale of securities 800,368 124,759
Proceeds from securities sold short, not yet
purchased 36,951
----------- -----------
Net cash flows (used in) investing activities (834,347) (4,855,286)
----------- -----------
Cash Flows from Financing Activities:
Issuance of common stock 9,560
Increase in additional paid-in capital 7,814,261
----------- -----------
Net cash flows provided by financing activities 7,823,821
----------- -----------
Net increase/(decrease) in cash and cash equivalents (2,093,863) 2,802,279
Cash and Cash Equivalents, at the beginning of the period 2,093,863 1,000
----------- -----------
Cash and Cash Equivalents, at the end of the period 0 2,803,279
=========== ===========
Supplemental Disclosure:
Income taxes paid $ 122,600 --
=========== ===========
</TABLE>
See notes to financial statements
5
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
SCHEDULE OF INVESTMENTS(1)
MARCH 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
TYPE OF ISSUE % OF
SHARES OR AND ORIGINAL MARKET NET
FACE VALUE NAME OF ISSUER COST VALUE ASSETS(2)
---------- -------------- ---- ----- ---------
Reorganized Companies(3)
------------------------------------------
Bank Debt
<S> ------------------------------------------
$ 2,145,000 Wherehouse Entertainment, Inc. Term
Loan $ 1,614,414 $ 1,072,500 10.51%
$ 2,300,000 Wherehouse Entertainment, Inc. Working
Capital Loan 1,723,744 1,150,000 11.27%
$ 11,369 Wherehouse Entertainment, Inc. Letter of
Credit Facility 11,369 5,684 .06%
---------- -----------
Total Reorganized Companies 3,349,527 2,228,184
---------- -----------
Other Investments
<S> ------------------------------------------
Common Stock
<S> ------------------------------------------
607,400 Computervision Corp. New 3,177,562 6,301,775 61.76%
40,176 OrNda Healthcorp 575,969 1,155,060 11.32%
77,547 Seaman Furniture Co., Inc. 1,335,366 1,434,620 14.06%
---------- -----------
5,088,897 8,891,455
---------- -----------
Option Contracts
<S> ------------------------------------------
118 S & P 500 Index/Dec/625/Puts 233,345 233,050 2.28%
---------- -----------
Total Other Investments 5,322,242 9,124,505
---------- -----------
Total Investments $8,671,769 $11,352,689
========== ===========
</TABLE>
- - --------------------------
Notes to Schedule of Investments
(1) The above investments are non-income producing. Equity investments that have
not paid dividends within the last twelve months are considered to be non-income
producing. See Note 1.
(2) Total exceeds 100% since total assets exceeds net assets.
(3) Wherehouse Entertainment, Inc. ("Wherehouse"), a Delaware corporation, is a
wholly owned subsidiary of WEI Holding, Inc. ("WEI"). On August 2, 1995,
Wherehouse and WEI filed a voluntary petition for relief under Chapter 11 of the
U.S. Bankruptcy Code in United States Bankuptcy Court for the District of
Delaware in Wilmington. As a result of the bankruptcy filing and other events,
Wherehouse and WEI are each in default under various agreements including the
Term Loan and Working Capital Loan.
See notes to financial statements
6
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
SCHEDULE OF CALL OPTIONS WRITTEN
MARCH 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
MARKET
NUMBER OF CONTRACTS TYPE OF ISSUE PROCEEDS VALUE
------------------- ------------- -------- -----
Option Contracts
--------------------------------------
<S> <C> <C> <C>
39 S & P 500 Index/Sep/700 $36,951 $38,513
------- -------
</TABLE>
See notes to financial statements
7
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
1. Organization and Operation of the Company
Corporate Renaissance Group, Inc. (the "Company") was incorporated
under the laws of the State of Delaware on June 19, 1992. The Company is a
non-diversified, closed-end investment company which has elected to be treated
as a business development company ("BDC") under the Investment Company Act of
1940, as amended by the Small Business Incentive Act of 1980. The Company offers
investors the opportunity to participate in investments in companies which the
Company believes have viable existing businesses generating substantial revenues
in established markets, and have recently completed or are in the process of
undergoing financial restructuring ("Reorganized Companies") and where, as a
result, the Company can ultimately obtain an equity position at a discount from
market value for comparable companies that are not financially troubled. The
Company's investments are generally not expected to produce meaningful levels of
investment income. It is the Company's objective to select investment
opportunities which the Company believes offer the potential for substantial
capital appreciation.
The Company completed its initial public offering and commenced
operations on November 1, 1994. The Company consummated the initial public
offering (the "Domestic Offering") and an overseas offering (the "Overseas
Placement") of 956,000 shares at $10.00 per share. Pursuant to the Domestic
Offering, 600,000 shares were sold; 356,000 shares were sold in the Overseas
Placement (including 45,000 shares sold to Union d'Etudes et d'Investissments
("UI")). The net proceeds to the Company of both the Domestic Offering and
Overseas Placement were $7,823,821 after deducting all costs associated with the
registration and offering, resulting in an initial net asset value per share of
$8.18.
2. Significant Accounting Policies
a. Valuation of Securities
The Company's securities which are subject to last-sale reporting are
valued by reference to the market price on a national securities exchange or as
reported on the National Association of Securities Dealers Automated Quotation
System. Other unlisted securities are valued at representative "bid" quotations
if held long by the Company and representative "asked" quotations if held short
by the Company. The value of securities for which market quotations are not
readily available and securities as to which the Company believes the method of
valuation set forth above does not fairly reflect market value are determined by
one or more independent third parties selected by the Investment Adviser.
b. Recognition of Security Transactions and Related Investment Income
Security transactions are recorded on the date the order to buy or sell
is executed (the trade date). Dividend income is recognized on the ex-dividend
date and interest income is recognized on an accrual basis. The net realized
gains and losses in sales of securites are determined on a first in, first out
or specific identification basis.
8
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
c. Accounting for Foreign Exchange Gains and Losses
Investments denominated in foreign currencies are translated into U.S.
dollars at the closing foreign exchange rate. Resulting foreign exchange gains
and losses are reflected in the change in net unrealized appreciation of
investments.
d. Income Taxes
The Company is not entitled to the special treatment available to
regulated investment companies and is taxed as a regular corporation for federal
and state income tax purposes. The Company has accounted for income taxes in
accordance with FASB Statement No. 109, "Accounting for Income Taxes." The
aggregate cost of securities at March 31, 1996 for federal income tax purposes
and financial reporting purposes was the same.
e. Cash and Cash Equivalents
For the purpose of reporting cash flows, cash and cash equivalents
consist of cash and short-term interest-bearing deposits.
3. Income Taxes
The components of income tax expense/(benefit) on pre-tax book loss of
$(2,384,892) are as follows:
Federal:
Current $(203,616)
Deferred (624,899)
---------
(828,515)
---------
State and Local:
Current 14,324
Deferred 37,586
---------
51,910
---------
Total $(776,605)
=========
Deferred income taxes arise from temporary differences between the tax
basis of assets and liabilities and their reported amounts in the financial
statements. For example, unrealized gains or losses on investments are not
recognized for tax purposes until realized and therefore creates a temporary
difference. The Company's deferred income tax liability is primarily
attributable to the net unrealized appreciation in its investments.
9
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
3. Income Taxes (continued)
The Company's effective income tax rate and the U.S. federal statutory
rate are reconciled as follows:
Expected federal tax benefit 34.0%
State and local income tax, net of federal income tax benefit (1.4%)
-----
Total 32.6%
-----
4. Financial Advisory and Investment Banking Fees and
Other Transactions with Affiliates and Related Parties
The Company has retained M.D. Sass Investors Services, Inc. (the
"Investment Adviser") as the Company's investment adviser. The Investment
Adviser is a registered investment adviser under the Investment Advisers Act of
1940, as amended. The Investment Adviser is part of a group of affiliated
investment advisers and other affiliated entities comprising the M.D. Sass
organization ("M.D. Sass"). Upon completion of the Company's offering of its
common shares, the Company entered into a two-year Financial Advisory Agreement
with the Investment Adviser, pursuant to which the Investment Adviser receives a
base fee of $200,000 per annum, for furnishing the Company with administrative
services, including necessary executive, administrative, internal accounting and
support services. In addition to the base fee, the Investment Adviser receives
an incentive fee for its investment advisory services equal to 20% of the
increase in net asset value of the Company's shares, as defined in the Financial
Advisory Agreement. There were no incentive fees earned or payable at March 31,
1996.
The Company has entered into an extension of its Investment Banking
Agreement with UI USA, the United States subsidiary of UI, for a period of one
year, ending October 31, 1996. Pursuant to this agreement, UI USA furnishes
investment banking services to the Company for a fee of $100,000 per annum. Such
services consist of assisting the Company and Investment Adviser in the
evaluation, structuring and negotiation of investment opportunities.
5. Board of Directors Fees
The Company pays each of its five independent directors an annual fee
of $10,000 for the directors services, as such.
10
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(Unaudited)
6. Investment Transactions
As of March 31, 1996, the gross unrealized appreciation of securities
was $3,802,558 and the gross unrealized depreciation of securities was
$1,123,200; accumulated net realized losses on investment transactions totaled
$125,992.
7. Due to Broker
Due to broker consists of the margin borrowings with the Company's
custodial broker. At March 31, 1996, the interest rate on margin indebtedness,
which varies with changes in the broker call rate, was 6.75%.
8. Concentration of Credit Risk and Off-Balance Sheet Risk
The Company engages in security purchase and sale transactions with
regulated broker-dealers. In connection with these transactions, the Company may
be subject to credit risk in the event the counterpart or the Company's
regulated clearing brokers cannot fulfill their contractual obligations.
The Company's activities with off balance sheet risk include the
writing of traded stock market index options. The Company is subject to market
risk associated with changes in the value of the underlying stock index. As a
writer of options, the Company receives a premium at the outset and then bears
the risk of unfavorable changes in the price of the stock index underlying the
option.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
This discussion contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those expressed in or indicated by
such forward-looking statements.
Liquidity and Capital Resources
Corporate Renaissance Group, Inc. (the "Company") is a non-diversified,
closed-end management investment company which has elected to be treated as a
special type of investment company known as a business development company under
the Investment Company Act of 1940 (the "1940 Act") as amended by the Small
Business Incentive Act of 1980. The Company's primary investment objective is to
achieve long-term capital appreciation through investments in companies
("Portfolio Investment") which the Company believes have viable existing
businesses generating substantial revenues in established markets, but which
have recently completed, are in the process of undergoing or are likely to
undergo a financial restructuring pursuant to bankruptcy or reorganization
proceedings or on a negotiated basis outside of bankruptcy or reorganization
proceedings (a "Reorganized Company") and where, as a result, the Company can
ultimately obtain an equity position (either common or preferred stock) at a
discount from market value for comparable companies that are not financially
troubled. Such investments are not generally available to the public because
they require large financial commitments and, in some cases, managerial
assistance. The Company may make these investments either on its own or, more
likely, jointly with other investors, including investment partnerships managed
or advised by M.D. Sass Investors Services, Inc. (the "Investment Adviser") and
its affiliates. Any investments with affiliates of the Company will be subject
to restrictions under the 1940 Act and conditions set forth in an exemptive
order granted by the Securities and Exchange Commission in November 1994. A
portion of the Company's portfolio is invested in other securities, including
securities of financially distressed companies, where the Company believes that
it can generate capital appreciation by engaging in portfolio trading.
The Company has retained the Investment Adviser as the Company's
investment adviser to identify, negotiate, manage and liquidate investments for
the Company. The Company invests only in transactions recommended by the
Investment Adviser. The activities of the Investment Adviser on behalf of the
Company are subject to supervision by the independent directors of the Company.
On November 1, 1994, the Company consummated an initial public offering
and a contemporaneous placement to foreign institutional investors
(collectively, the "Offering") from which it received $7,823,821 of net
proceeds. The Company is deemed to have commenced operations on November 1,
1994.
The Company's primary sources of working capital to date have been the
net proceeds from the Offering and funds generated from investment activities.
At March 31, 1996, the Company had no cash and cash equivalents, as compared to
cash and cash equivalents of $2,093,863 at September 30, 1995 and has incurred
borrowing pursuant to a margin agreement with its custodial broker of $353,724.
The decline in cash and cash equivalents and the increase in margin debt
outstanding during the quarter was a result of the use of cash equivalents to
make additional investments and pay certain operating expenses during the
period.
Results of Operations
12
<PAGE>
Quarter ended March 31, 1996 as compared to quarter ended
March 31, 1995
During the quarter ended March 31, 1996, the Company had interest
income of $2,332 as compared to interest income of $60,604 in the 1995 quarter.
The decline in interest income reflects the increased percentage of the
Company's assets invested in other than cash or cash equivalents. Operating
expenses during the 1996 quarter were $131,087 as compared to $525,401 in the
1995 period. The decrease is attributable in large part to $396,415 in incentive
fees payable to the Investment Adviser accrued during the 1995 quarter as
compared to $0 in the 1996 quarter. For the quarter ended March 31, 1996, the
Company had a pre-tax operating loss and a net operating loss of $128,755 and
$83,301, respectively, as compared to a pre-tax operating loss and net operating
loss for the 1995 quarter of $465,337 and $311,866, respectively. Since the
Company typically does not purchase securities with the objective of generating
investment income, net investment losses are expected to routinely occur.
During the quarter ended March 31, 1996, the Company had net realized
losses from sale of investments of $59,541 as opposed to net realized gains from
sale of investments of $1,375 during the 1995 quarter. For the quarter ended
March 31, 1996, the Company had net unrealized depreciation of investments of
$3,683,282, as compared to net unrealized appreciation of investments of
$2,724,497 in the 1995 quarter. During the 1995 quarter, the Company recorded
substantial unrealized appreciation on its Portfolio Investment in Leaseway
Transportation Corp. ("Leaseway"), which was sold during the third fiscal
quarter of 1995. During the 1996 quarter, the Company recorded a decline in
valuation in two of its other investments. For the 1996 quarter, the Company had
net realized and unrealized losses on investments of $2,421,505, as compared to
net unrealized gains on investments of $1,795,901 for the 1995 quarter and,
after giving effect to net operating losses, a decrease in net assets resulting
from operations of $2,504,806 in the 1996 quarter, as compared to a net increase
in net assets resulting from operations of $1,484,035 in the 1995 quarter.
Six months ended March 31, 1996 as compared to period from
November 1, 1994 (Commencement of Operations) to March 31, 1995
During the six months ended March 31, 1996, the Company had interest
income of $17,673 as compared to interest income of $108,649 in the 1995 period.
The decline in interest income reflects the increased percentage of the
Company's assets invested in other than cash or cash equivalents. Operating
expenses during the 1996 period were $476,711 as compared to $626,772 in the
1995 period. The decrease is attributable in large part to $396,415 in incentive
fees payable to the Investment Adviser accrued during the 1995 period as
compared to $224,128 in the 1996 period. For the six months ended March 31,
1996, the Company had a pre-tax operating loss and a net operating loss of
$459,038 and $283,861, respectively, as compared to a pre-tax operating loss and
net operating loss for the 1995 period of $518,123 and $341,481, respectively.
Since the Company typically does not purchase securities with the objective of
generating investment income, net investment losses are expected to routinely
occur.
During the six months ended March 31, 1996, the Company had net
realized losses from sale of investments of $125,992 as opposed to net realized
gains from sale of investments of $15,941 during the 1995 period. For the six
months ended March 31, 1996, the Company had net unrealized depreciation of
investments of $1,799,862, as compared to net unrealized appreciation of
investments of $3,120,269 in the 1995 period. During the 1995 period, the
Company recorded substantial unrealized appreciation in its Portfolio Investment
in Leaseway, which was sold during the third fiscal quarter of 1995. During the
1996 period, the Company recorded a decline in valuation in two of its other
investments. For the 1996 period, the Company had net realized and unrealized
losses on investments of $1,324,426, as compared to net unrealized gains on
investments of $2,062,839 for the 1995 period and, after giving effect to net
operating losses, a decrease in net assets resulting from operations of
$1,608,287 in the 1996 period, as compared to a net increase in net assets
resulting from operations of $1,721,358 in the 1995 period.
Net Asset Value
At March 31, 1996, the Company had a net asset value of $10.67 per
share of Common Stock, a decrease of $1.69 per share from net asset value at
September 30, 1995 of $12.36 per share and an increase of $0.69 per share from
net asset value at March 31, 1995 of $9.98 per share.
13
<PAGE>
PART II - OTHER INFORMATION
1. Legal Proceedings
Not applicable.
2. Changes in Securities
Not applicable.
3. Default Upon Senior Securities
Not applicable.
4. Submission of Matters to a Vote of Security Holders
(a) On February 12, 1995, the Company held its Annual Meeting
of Stockholders (the "Meeting").
(b) Not applicable.
(c) At the Meeting, the following matters were voted upon:
(i) Election of Directors.
The following table sets forth the name of each
nominee and the voting with respect to each nominee
for director:
14
<PAGE>
Withhold Broker
Name For Authority Non-Votes
---- --- --------- ---------
Martin D. Sass 700,693 26,900 0
Hugh R. Lamle 700,693 26,900 0
James B. Rubin 700,693 26,900 0
Thomas M. Garvin 700,693 26,900 0
Lawrence W. Leighton 700,493 27,100 0
Edward Lowenthal 700,693 26,900 0
Daniel E. Mazziota 700,693 26,900 0
Guy E. Waldvogel 700,693 26,900 0
(ii) Ratification of the appointment of Ernst & Young LLP
as the Company's independent public accountants for
the year ending September 30, 1996.
With respect to the foregoing matter, 724,493 shares
voted in favor, 1,400 shares against and 1,700
shares abstained. There were no broker non-votes.
5. Other Information
Not applicable.
6. Exhibits and Reports on Form 8-K
(a) Exhibits -- None.
(b) Reports on Form 8-K -- None.
15
<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.
Date: May 14, 1996 CORPORATE RENAISSANCE GROUP, INC.
By: /s/ Martin D. Sass
---------------------------------
Martin D. Sass, Chairman of the
Board and Chief Executive Officer
By: /s/ Martin E. Winter
---------------------------------
Martin E. Winter, Secretary-
Treasurer (Principal Financial
and Accounting Officer)
16
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