SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 1997
( ) 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 (I.R.S. Employer
of incorporation or organization) Identification No.)
1185 Avenue of the Americas 10036
18th Floor (Zip Code)
New York, New York
(Address of principal executive offices)
Registrant's telephone number: (212) 730-2000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
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. [X]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
<PAGE>
The number of shares outstanding of the Registrant's Common Stock is
940,350 (as of December 17, 1997).
The aggregate market value of the voting stock held by non-affiliates of
the Registrant is approximately $4,411,770 (as of December 17, 1997).
DOCUMENTS INCORPORATED BY REFERENCE
NONE
<PAGE>
Forward-Looking Statements
This Report contains, in addition to historical information, forward-
looking statements regarding Corporate Renaissance Group, Inc. (the "Company"),
which represent the Company's expectations or beliefs including, but not limited
to, statements concerning the Company's operations, performance, financial
condition, business strategies and other information. For this purpose, any
statements contained in this Report that are not statements of historical fact
may be deemed to be forward-looking statements. Without limiting the generality
of the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "intend," "could," "estimate," or "continue" or the negative or
other variations thereof or comparable terminology are intended to identify
forward-looking statements. The statements by their nature involve substantial
risks and uncertainties, certain of which are beyond the Company's control, and
actual results may differ materially depending on a variety of important
factors, including those described in this Report and the Company's other
filings with the Securities and Exchange Commission (the "SEC").
<PAGE>
PART I
ITEM 1. BUSINESS
Introduction
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 ("BDC") 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 Investments"), 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 (a
"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
SEC. In addition to Portfolio Investments, the Company may invest in other
securities, including securities of financially distressed companies, where the
Company believes that it can generate capital appreciation by engaging in
portfolio trading ("Other Investments").
The Company has retained the Investment Adviser as the Company's investment
adviser pursuant to a Financial Advisory Agreement (the "Financial Advisory
Agreement") 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.
The Company is deemed to have commenced operations on November 1, 1994,
when the Company consummated an initial public offering (the "IPO") and a
contemporaneous placement to foreign institutional investors (the "Overseas
Placement"). Since that time, the Company has made five Portfolio Investments,
two of which subsequently were sold. At September 30, 1997, the Company had
three Portfolio Investments: Computervision Corporation ("Computervision"), a
publicly-held developer, producer and marketer of manufacturing design software
and support services; CVSI, Inc. ("CVSI"), a privately-held provider of computer
hardware and software integration services, which was formerly a unit of
Computervision; and Seaman Furniture Company, Inc. ("Seamans"), a publicly-held
New York based furniture retailer. Such Portfolio Investments are held jointly
with the Investment Adviser and its other affiliates. In addition to the
foregoing, the Company has also invested, subject to applicable restrictions
under the 1940 Act, in Other Investments of equity and debt securities of
various companies.
<PAGE>
On November 25, 1996, the Company's Board of Directors authorized the
implementation of an open market share repurchase program, pursuant to which the
Company, from time to time, may purchase up to an aggregate of 175,000 shares of
its Common Stock in open market transactions. As of December 17, 1997, the
Company had repurchased 15,750 shares pursuant to this program.
The Company was incorporated in Delaware on June 19, 1992. The Company's
executive offices are located at 1185 Avenue of the Americas, 18th Floor, New
York, New York 10036 and its telephone number is (212) 730-2000.
Investment Objectives and Policies
The Company, together with co-investors (as described below) generally
seeks to acquire a controlling (25% or greater) equity interest (either common
or preferred stock) in a Reorganized Company by investing directly in a company
either by acquiring common or preferred stock from existing stockholders (in the
case of a Reorganized Company which has completed a Restructuring) or debt from
existing creditors (in the case of a company which is in the process of
undergoing a Restructuring) which it anticipates will then be converted to
common or preferred stock in the Restructuring.
In selecting Portfolio Investments, the Company targets potential companies
that satisfy the following criteria, among others:
v $50 million in annualized revenues generated by a core business in an
established market;
v operating profitability (earnings before interest and taxes) of the
core business or the potential to achieve operating profitability
within 12 months of the Restructuring;
v a credible Restructuring plan developed or capable of being
developed, which in the opinion of the Investment Adviser, will
result in the Company realizing positive cash flow within a
reasonable period of time following the implementation thereof;
v competent operating management in place or to be retained in
connection with the Restructuring;
v ability of the Company to obtain a controlling position in the equity
securities of a portfolio company at a discount from market value for
comparable companies which are not financially troubled; and
v potential to develop a liquid market for the securities held by the
Company in the Reorganized Company within 12 months of the
Restructuring.
The Company's investment objectives (other than its election to be treated
as a BDC) may be changed by the Board of Directors without the approval of
holders of a majority of the Company's outstanding voting securities as defined
in the 1940 Act. The withdrawal of the Company's election to be treated as a
BDC would require such stockholder approval.
<PAGE>
The Company believes that because of the proliferation of leveraged buy-
outs in the 1980's, the economic recession of the early 1990's and the record
levels of high-yield debt issuances during the past several years, there are a
large number of companies that have undergone, are undergoing or will undergo a
Restructuring over the next several years in order to remain viable. Such
companies typically undertake Restructurings because of high levels of debt
and/or problems with operating management. Additional capital may be required
by a Reorganized Company to effect a Restructuring or finance post-Restructuring
operations. Further, a Reorganized Company may require managerial assistance in
certain instances to negotiate the terms of a proposed Restructuring,
renegotiate the terms of a completed Restructuring where debt service
requirements continue to adversely affect operating results, retain new
operating management and/or favorably renegotiate existing contractual
commitments. In a Restructuring, creditors are often issued equity securities
in a Reorganized Company (generally common or preferred stock) for which there
may be no or only a limited market. Certain creditors, in particular senior
lenders, may not desire to or may be restricted in their ability to hold such
equity securities for extended periods of time.
The Company believes that it will be able to invest in Reorganized
Companies at discounts from market values for comparable companies which are not
financially troubled, because it may be offering necessary capital to a
Reorganized Company in the case of a direct investment and liquidity to holders
of equity, bank debt, debt securities and/or trade credits in a Reorganized
Company in the case of a purchase from such parties. Although the Company is
focusing its efforts on Reorganized Companies which have completed or are
undergoing a Restructuring, the Company may seek to invest in financially
troubled companies which intend to undergo a Restructuring and where a credible
plan to effect such Restructuring has been, or in the opinion of the Company,
can be developed. The Company only invests in transactions recommended by the
Investment Adviser.
Up to 30% of the Company's total assets may be invested in Other
Investments including securities of Reorganized Companies or other financially
distressed companies, where the Company's objective is not to obtain a
controlling interest, but rather where it believes capital appreciation can be
achieved by engaging in portfolio trading. Income or realized gains from this
portion of the Company's portfolio will be used in part to pay the Company's
operating expenses, including legal and auditing fees, taxes and fees to the
Investment Adviser.
Given the amount of its capital resources (including that which may be
available from co-investors as described below), the Company estimates that it
will be able to make Portfolio Investments in between one and four Reorganized
Companies at any one time and therefore will most likely not be able to
diversify its portfolio. However, in order to provide as much diversification
as possible, the Company will likely make its investments jointly with other
investors including affiliates of the Investment Adviser. 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 SEC.
<PAGE>
Following an initial investment, the Company anticipates that it may
provide additional funds to a portfolio company. Follow-on investments may be
made pursuant to rights to acquire additional securities or otherwise in order
to increase the Company's position in a successful or promising portfolio
company. The Company may also be called upon to provide follow-on investments
for a number of other reasons, including providing additional capital to a
company to implement fully its business plans, to develop a new line of business
or to recover from subsequent unexpected business problems. The Company may use
leverage (i.e., borrowed funds or senior securities) to raise all or a portion
of the funds required to make follow-on investments, subject to certain
restrictions. The Company may also borrow to fund general working capital needs
including paying operating expenses. In addition, the Company may issue its
securities to purchase the assets of or a controlling interest in another
company or companies.
Present Portfolio Investments
Computervision. The Company and certain other affiliates of the Investment
Adviser own approximately 17 % of the issued and outstanding Common Stock of
Computervision (approximately 1% of which is owned by the Company). James B.
Rubin, an executive officer and director of the Company, serves as a director of
Computervision.
Computervision develops, produces and markets software and provides support
services that are designed to aid manufacturing companies in enhancing their
product development and manufacturing process. Computervision's principal
products include design automation and product data management software.
Manufacturers use Computervision's software to design, enhance and modify their
products and to access, share and manage their product data collaboratively.
Computervision's support services include implementation, consulting and
training services designed to assist customers in re-engineering their product
development processes and in increasing productivity. During 1994, 1995, and
1996, international sales including U. S. export sales, accounted for
approximately 69%, 73% and 73% of total revenue, respectively.
The software markets in which Computervision operates are highly
competitive and characterized by rapid advances in technology. To compete
successfully, Computervision must continue to enhance its current products and
services and develop new products and services which can be offered at
competitive prices and on a timely basis.
For the fiscal year ended December 31, 1996 total revenues decreased 5.9%
to $477.2 million from $507.1 million for the fiscal year ended December 31,
1996. However, software product revenue grew 17% over the prior fiscal year
which enabled the Company to offset much of the decline in its service revenues
increasing net income to $39 million or $.60 per share in 1996 versus $30
million of net income or $.58 per share in 1995.
In November 1997, Computervision agreed to be acquired by Parametric
Technology Corporation ("Parametric"), a publicly-held competitor, in a stock-
for-stock transaction pursuant to which each share of Computervision common
stock will be exchanged for .0866 shares of Parametric common stock. Closing of
the transaction, which is expected to occur in January 1998, is subject to the
satisfaction of certain conditions, including approval by Computervision's
shareholders and receipt of regulatory approvals.
The foregoing information with respect to Computervision has been derived
from Computervision's filings with the SEC.
<PAGE>
CVSI. In July 1997, the Investment Adviser and certain of its affiliates,
including the Company (collectively, the "Buyer"), purchased a majority interest
(the "OSS Acquisition") in the Open Service Solutions business unit ("CVSI") of
Computervision, through CVSI Acquisition Co., L.L.C. CVSI provides services to
both Computervision's software customers and to customers of selected third
party hardware and software vendors. CVSI's offerings include system hardware
and operating systems services, network design and implementation, systems
integration, and database support and consulting for enterprise-wide systems and
networks. CVSI is a worldwide support organization that is ISO 9000 certified.
James B. Rubin, an executive officer and director of the Company, serves as
Chairman and a director of CVSI.
The markets in which CVSI operates are highly competitive and characterized
by rapid advances in technology. To compete successfully, CVSI must continue to
enhance its current products and services and develop new products and services
which can be offered at competitive prices and on a timely basis.
In the OSS Acquisition, the Buyer paid $7.6 million to Computervision for
76% of CVSI's Class A Voting Stock (the "Class A Stock"). In addition, CVSI
paid Computervision $25.0 million in cash and issued Computervision a $10.0
million subordinated note (the "Subordinated Note"). Further, Computervision
retained 24% of CVSI's Class A Stock and 100% of CVSI's Class B Non-Voting Stock
(the "Class B Stock"). The Buyer also has options to purchase (i) the Class A
Stock held by Computervision should the Buyer retire the Subordinated Note
within one year of the transaction and (ii) the Class B Stock for $15.0 million.
Moreover, if CVSI does not achieve certain specified levels of product revenues
and operating margins from Computervision-initiated referrals, CVSI will have
the option to purchase, at a nominal price, some or all of the Class A Stock
held by Computervision. In connection with the acquisition, the Company
received $89,535 of investment banking fees and $35,814 of consulting fees.
As a stand alone operation, CVSI would have reported $174.4 million in
total revenues for the fiscal year ended December 31, 1996, down 18% from $212.7
for the fiscal year ended December 31, 1995. Net income also declined in fiscal
year 1996 to $15.5 million down from $36.7 million in 1995.
The foregoing information with respect to CVSI has been derived from
Computervision's filings with the SEC and information otherwise furnished by
CVSI.
Seamans. The Company and certain other affiliates of the Investment
Adviser own approximately 38% of the issued and outstanding Common Stock of
Seamans (approximately 3.3% of which is owned by the Company). James B. Rubin,
an executive officer and director of the Company, serves as a director of
Seamans.
Seamans believes that it is one of the largest regional specialty furniture
retailers in the northeastern United States in terms of sales and that it has
the leading market position in the greater New York metropolitan area. Seamans
currently operates a chain of 41 stores. Of these, 27 are in the New York, New
Jersey and Connecticut tri-state area, eight are in Philadelphia metropolitan
area and six are in the Cleveland/Akron, Ohio Metropolitan area. The Company's
stores sell a variety of living room, bedroom, dining room and other home
furniture and accessories in contemporary, traditional, country and casual
styles. All aspects of Seamans' business are highly competitive.
For the fiscal year ended April 30, 1997 revenues increased 8.4% to $264.0
million from $243.5 million for the fiscal year ended April 30, 1996.
Comparable store sales increased 1.8% from the prior fiscal year. Net income
for the fiscal year ended April 30, 1997 was $4.1 million or $.82 per share
compared to $3.9 million or $.78 per share.
In August 1997, Seamans entered into an Agreement and Plan of Merger, as
amended on September 4, 1997 (the "Merger Agreement") with SFC Merger Company
("Newco"), a Delaware corporation formed and wholly owned by the Investment
Adviser and its affiliates (including the Company), T. Rowe Price Recovery Fund,
L.P. ("Price") and Carl Marks Management Co., L.P. ("Marks," and collectively
with the Investment Adviser and Price, the "Funds"), pursuant to which the Funds
will acquire through a merger (the "Merger") all of the outstanding common stock
of Seamans not already owned by the Funds (the "Public Stock"). Upon
consummation of the Merger, Newco will be merged with and into Seamans and each
share of Public Stock (other than dissenting shares) will be converted into the
right to receive $25.05 in cash and each existing Seamans stock option will be
converted into the right to receive $25.05 in cash per share purchasable
thereunder, less the exercise price with respect thereto, other than certain
options of officers of the Company which will be cancelled and reissued as
options of equivalent or greater value following the Merger. Consummation of
the Merger is subject to the approval of Seamans' stockholders at a meeting
scheduled for December 23, 1997, and the satisfaction or waiver of certain other
conditions.
<PAGE>
Following consummation of the Merger, the Funds will own all of the
outstanding shares of Seamans Common Stock of which approximately 47.5% will be
owned by the Investment Adviser and its affiliates, including 4.1% by the
Company. In addition, 19.3% of Seamans Common Stock, on a fully diluted basis,
will be reserved for issuance to certain officers and employees of Seamans upon
the exercise of options. Following the Merger, it is anticipated that the Funds
will receive a dividend of approximately $67.0 million on the shares of Seamans
held by them, approximately $2.74 million of which will be received by the
Company.
The foregoing information with respect to Seamans has been derived from
Seamans' filings with the SEC.
For further information concerning the Company's Portfolio and Other
Investments, including purchase prices and valuation at September 30, 1997, see
the Financial Statements including the Notes thereto set forth in Item 8 of this
Report.
Regulation
The following is a summary description of the 1940 Act as modified by the
Incentive Act as applied to BDCs. The Company elected to be treated as a BDC on
August 3, 1992. The Company may not withdraw its election without first
obtaining the approval of a majority of its outstanding voting securities.
Generally, to be eligible to elect BDC status, a company must be primarily
engaged in the business of furnishing capital and managerial expertise to
companies which do not have ready access to capital through conventional
financial channels and/or are in financial difficulty, which companies are
termed "portfolio companies." More specifically, in order to qualify as a BDC,
a company must (i) be a domestic company; (ii) have registered a class of its
equity securities or have filed a registration statement with the SEC pursuant
to Section 12 of the Securities Exchange Act; (iii) operate for the purpose of
investing in the securities of certain types of portfolio companies, namely,
immature or emerging companies and businesses suffering or just recovering from
financial distress; (iv) extend significant managerial assistance to certain
portfolio companies; (v) have a majority of "disinterested" directors (as
defined in the 1940 Act); and (vi) file (or, under certain circumstances, intend
to file) a proper notice of election with the SEC.
<PAGE>
An eligible portfolio company generally is a United States company that is
not an investment company and that (i) does not have a class of securities
registered on an exchange or included in the Federal Reserve Board's over-the-
counter margin list; (ii) has total assets of $4.0 million or less and capital
and surplus of more than $2.0 million (with respect to which category of
portfolio company no managerial assistance need be offered); (iii) is actively
controlled by a BDC and has an affiliate of a BDC on its board of directors; or
(iv) meets such other criteria as may be established by the SEC. Control under
the 1940 Act is presumed to exist where a BDC owns 25% of the outstanding voting
securities of the portfolio company.
The 1940 Act prohibits or restricts the Company from investing in certain
types of companies, including brokerage firms, insurance companies, investment
banking firms and investment companies. Moreover, while the 1940 Act
contemplates that a BDC will invest in concerns other than "eligible portfolio
companies," the type of assets that the Company may acquire is limited to
"qualifying assets" and certain assets necessary for its operations (such as
office furniture, equipment and facilities) if, at the time of the acquisition,
less than 70% of the value of the Company's assets consists of qualifying
assets. Qualifying assets include: (1) securities of companies that were
eligible portfolio companies at the time the Company acquired their securities;
(2) certain securities of bankrupt or insolvent companies that are not otherwise
eligible portfolio companies; (3) securities acquired as follow-on investments
in companies that were eligible portfolio companies at the time of the Company's
initial acquisition of their securities but are no longer eligible, provided
that the Company has maintained a substantial portion of its initial investment
in those companies; (4) securities received in exchange for or distributed on or
with respect to any of the foregoing; and (5) cash items, government securities
and high-quality short-term debt. The 1940 Act also places restrictions on the
nature of the transactions in which, and the person from whom, securities can be
purchased in order for the securities to be considered qualifying assets. Such
restrictions include limiting purchases to transactions not involving a public
offering and acquiring securities from either the portfolio company or their
officers, directors or affiliates.
The Company is permitted by the 1940 Act, under specified conditions, to
issue multiple classes of senior debt, a single class of preferred stock and
other senior securities. The Company currently has no policy regarding the
issuance of senior securities.
The Company may sell its securities at a price that is below the prevailing
net asset value per share only upon the approval by the holders of a majority of
its outstanding voting securities, including a majority, of the voting
securities held by non-affiliated persons. As defined in the 1940 Act, the term
majority of the Company's outstanding voting securities means the vote of
(i) 67% or more of the Company's Common Stock present at a meeting, if the
holders of more than 50% of the outstanding Common Stock are present or
represented by proxy, or (ii) more than 50% of the Company's outstanding Common
Stock, whichever is less.
Most of the transactions involving the Company and its affiliates (as well
as affiliates of those affiliates) which were prohibited without the prior
approval of the SEC under the 1940 Act prior to its amendment by the Incentive
Act now require the prior approval of a majority of the Company's independent
directors and a majority of the directors having no financial interest in the
transactions. However, certain transactions involving certain closely
affiliated persons of the Company, including its directors, officers and
employees, may still require the prior approval of the SEC. In general, (i) any
person who owns, controls or holds with power to vote, more than 5% of the
Company's outstanding Common Stock; (ii) any director, officer or general
partner of that person; and (iii) any person who directly or indirectly
controls, is controlled by, or is under common control with, that person, must
obtain the prior approval of a majority of the Company's independent directors
and, in some situations, the prior approval of the SEC, before engaging in
certain transactions involving the Company or any company controlled by the
Company. The SEC has granted an exemptive order which sets forth certain
conditions for co-investments with affiliates of the Company. In accordance
with the 1940 Act, a majority of the members of the Company's Board of Directors
are independent. The 1940 Act generally does not restrict transactions between
the Company and portfolio companies in which the Company invest.
<PAGE>
The Company may seek to maximize stockholder value by dissolving or merging
with another corporation (including a company in which it has made a Portfolio
Investment) and withdraw its election to be treated as a BDC. While a BDC may
change the nature of its business so as to cease being a BDC (and in connection
therewith withdraw its election to be treated as a BDC) only if authorized to do
so by a majority of its outstanding voting securities, stockholder approval of
changes in other fundamental investment policies of a BDC is not required (in
contrast to the general 1940 Act requirement of stockholder approval for a
change in any fundamental investment policy). Other than its status as a BDC
and its primary investment objective, none of the Company's objectives or
policies are deemed fundamental.
Competition
Given the size of the Company's assets, the Company's portfolio will likely
not be diversified and the Company will not be able to achieve the same level of
diversification as much larger entities engaged in similar activities. The
Company expects to encounter substantial competition for investments from other
investors, including entities having similar investment objectives, including
other business development companies, investment or so-called "vulture" funds,
investment affiliates of large industrial and financial companies, small
business investment companies and wealthy individuals. Many of these investors
will have greater experience, financial resources and managerial capabilities
than the Company and therefore will be in a better position than the Company to
obtain access to attractive investments.
Employees
The Company has no employees other than its officers and, because of the
Financial Advisory Agreement with the Investment Adviser, is not expected to
have any additional employees.
ITEM 2. PROPERTIES
The Company presently occupies office space in facilities located at 1185
Avenue of the Americas, New York, New York, which space is also occupied by the
Investment Adviser. The cost of all necessary office space is included in the
fees to be paid by the Company to the Investment Adviser under the Financial
Advisory Agreement between the Company and the Investment Adviser.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
(a) Market Information
The Company's Common Stock is listed on the Nasdaq Small Cap Market under
the symbol CREN. The following table sets forth, for the periods indicated, the
range of high and low prices for the Common Stock as reported by the Nasdaq
Stock Market, Inc. These quotations represent prices between dealers, do not
include retail markups, markdowns or commissions and do not necessarily
represent actual transactions:
<TABLE>
Common Stock
High Low
<S> <C> <C>
Calendar 1994
Fourth Quarter (commencing October 25, 1994) $10-1/4 $9-3/4
Calendar 1995
First Quarter 11 9-1/2
Second Quarter 11-1/8 8-5/8
Third Quarter 11 8-1/4
Fourth Quarter 10 9
Calendar 1996
First Quarter 10-1/8 8-5/8
Second Quarter 9 8-1/8
Third Quarter 8-3/8 7-1/4
Fourth Quarter 8-3/8 7-5/8
Calendar 1997
First Quarter 8 6-1/2
Second Quarter 6-1/4 4-1/2
Third Quarter 6 5
</TABLE>
(b) Holders
At December 17, 1997, there were approximately 12 holders of record of the
Company's Common Stock. The Company believes the number of beneficial owners of
its Common Stock is in excess of 300.
<PAGE>
(c) Dividends
The Company has not paid any cash dividends since its inception and the
Board of Directors does not contemplate doing so in the near future. Any
decision as to future payment of dividends will depend on the earnings and
financial position of the Company and such other factors as the Board of
Directors deems relevant.
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
Period From
11/1/94 (Commencement of
Year Ended or Year Ended or Operations) to or
At 9/30/97 at 9/30/96 at 9/30/95
<S> <C> <C> <C>
Operating Data:
Net operating loss before
security transactions $(164,095) $(471,831) $(821,159)
Net realized gains/(losses)
from portfolio investments --- $(1,123,937) $2,593,738
Net realized gains/(losses)
from other investments $248,345 $(101,045) $238,526
Change in net unrealized
appreciation/(depreciation)
from portfolio investments $(3,079,438) $(127,394) $127,394
Change in net unrealized
appreciation/(depreciation)
from other investments $772,344 $(1,817,064) $4,351,827
Income tax benefit/(expense)
arising from net realized
gains and net unrealized
appreciation in investments $660,069 $1,065,538 $(2,502,545)
Net increase/(decrease) in net
assets resulting from operations $(1,562,775) $(2,575,733) $3,987,781
Per Share Amounts:
Net Asset Value, beginning
of period $9.66 $12.36 $10.00
Common Stock offering
costs of initial public offering --- --- (1.81)
Net operating loss before
security transactions (.17) (.50) (.86)
Net realized gains/(losses)
from sales of investments .17 (.85) 1.95
Change in net unrealized
appreciation/(depreciation)
of investments held (1.66) (1.35) 3.08
Net gain on treasury stock transactions .03 --- ---
Net Asset Value, end of period $8.03 $9.66 $12.36
Balance Sheet Data:
Total Assets $7,604,762 $10,079,562 $14,542,064
Net Assets $7,548,957 $9,236,869 $11,812,602
Total Return Based on:
Stock Price (29.69%) (16.88%) (3.75%)
Net Asset Value (16.87%) (21.85%) 23.60%
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Prior to November 1, 1994, the Company had only nominal assets and focused
its efforts on raising capital in the IPO and Overseas Placement. On November
1, 1994, the Company consummated the IPO, in which it sold 600,000 shares of
Common Stock at a price of $10.00 per share, and the Overseas Placement, in
which it sold 356,000 shares of Common Stock at a price of $10.00 per share.
Proceeds from the IPO and the Overseas Placement were $7,823,821, net of
underwriting discounts, the underwriters' non-accountable expense allowance,
placement fees and other expenses associated with the offerings. The Company is
deemed to have commenced operations on November 1, 1994.
The Company's primary source of working capital is proceeds generated from
investment activities. At September 30, 1997, the Company had cash and cash
equivalents of $950,692 as compared to $509,257 at September 30, 1996. The
increase in cash and cash equivalents was a result of the liquidation of certain
investments during the period.
Results of Operations
Year ended September 30, 1997 ("fiscal 1997") as compared to the Year ended
September 30, 1996 ("fiscal 1996")
During fiscal 1997, the Company had interest income of $30,317 as compared
to interest income of $28,901 in fiscal 1996. Operating expenses during fiscal
1997 were $379,456 as compared to $739,695 in fiscal 1996. This decrease is
attributable in large part to $224,128 in incentive fees payable to the
Investment Adviser accrued during fiscal 1996 as compared to $0 in fiscal 1997
and a decrease in fees payable pursuant to an investment banking agreement from
$100,000 in the fiscal 1996 period to $8,333 in fiscal 1997. For fiscal 1997
the Company had a pre-tax operating loss and a net operating loss of $253,635
and $164,095, respectively, as compared to a pre-tax loss and net operating loss
for fiscal 1996 of $710,794 and $471,831, respectively. Since the Company
typically does not purchase securities with the objective of generating
investment income, net operating losses are expected to routinely occur.
During fiscal 1997, the Company had net realized gains from sale of
investments of $248,345 as opposed to net realized losses from sale of
investments of $1,224,982 during fiscal 1996. For fiscal 1997, the Company had
net unrealized depreciation of investments of $2,307,094, as compared to net
unrealized depreciation of investments of $1,944,458 in fiscal 1996. For fiscal
1997, the Company had net realized and unrealized losses on investments of
$1,398,680, as compared to net realized and unrealized losses on investments of
$2,103,902 for fiscal 1996 and after giving effect to net operating losses, a
decrease in net assets resulting from operations of $1,562,775 in fiscal 1997,
as compared to a decrease in net assets resulting from operations of $2,575,733
in fiscal 1996.
<PAGE>
Fiscal 1996 as compared to period from November 1, 1994 (commencement of
operations) to September 30, 1995 ("fiscal 1995")
During fiscal 1996, the Company had interest income of $28,901 as compared
to interest income of $244,846 in fiscal 1995. 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 fiscal 1996 were $739,695
as compared to $1,492,820 in fiscal 1995. This decrease is attributable in
large part to $996,947 in incentive fees payable to the Investment Adviser
accrued during fiscal 1995 as compared to $224,128 in fiscal 1996. For fiscal
1996 the Company had a pre-tax operating loss and a net operating loss of
$710,794 and $471,831, respectively, as compared to a pre-tax loss and net
operating loss for fiscal 1995 of $1,247,974 and $821,159, respectively. Since
the Company typically does not purchase securities with the objective of
generating investment income, net operating losses are expected to routinely
occur.
During fiscal 1996, the Company had net realized losses from sale of
investments of $1,224,982 as opposed to net realized gains from sale of
investments of $2,832,264 during fiscal 1995. For fiscal 1996, the Company had
net unrealized depreciation of investments of $1,944,458, as compared to net
unrealized appreciation of investments of $4,479,221 in fiscal 1995. During
fiscal 1995, the Company recorded a gain on the sale of one Portfolio
Investment. During fiscal 1996, the Company realized losses on the sale of a
second Portfolio Investment and a decline in valuation of another investment.
For fiscal 1996, the Company had net realized and unrealized losses on
investments of $2,103,902, as compared to net realized and unrealized gains on
investments of $4,808,940 for fiscal 1995 and after giving effect to net
operating losses, a decrease in net assets resulting from operations of
$2,575,733 in fiscal 1996, as compared to a net increase in net assets resulting
from operations of $3,987,781 in fiscal 1995.
Net Asset Value
At September 30, 1997, the Company had a net asset value of $8.03 per share
of Common Stock, a decrease of $1.63 per share from the net asset value of $9.66
per share of Common Stock at September 30, 1996.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CORPORATE RENAISSANCE GROUP, INC.
INDEX
Page
Independent Auditor's Report
Statements of Assets and Liabilities
s of September 30, 1997 and September 30, 1996
Statements of Operations as of September 30, 1997,
September 30, 1996 and the period from November 1, 1994
(Commencement of Operations) to September 30, 1995
Statements of Changes in Net Assets for the Years
ended September 30, 1997, September 30, 1996 and
September 30, 1995
Statements of Cash Flows for the Years ended
September 30, 1997, September 30, 1996
and September 30, 1995
Schedule of Investments as of September 30, 1997
Notes to Financial Statements
<PAGE>
Report of Independent Auditors
Board of Directors
Corporate Renaissance Group, Inc.
We have audited the accompanying statements of assets and liabilities of
Corporate Renaissance Group, Inc., as of September 30, 1997 and 1996,
including the schedule of investments as of September 30, 1997, and the related
statement of operations for the years ended September 30, 1997 and 1996
and the period from November 1, 1994 (commencement of operations) to
September 30, 1995, and the statements of changes in net assets and cash
flows for the year ended September 30, 1997, the year ended September 30, 1996,
and the period ended September 30, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these 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.
Our audit procedures included confirmation of securities owned at September
30, 1997 by correspondence with the custodian; where confirmation was not
possible, we satisfied ourselves by other audit procedures. 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 financial statements referred to above present fairly,
in all material respects, the financial position of Corporate Renaissance
Group, Inc. at September 30, 1997 and 1996, and the results of its operations
for the years ended September 30, 1997 and 1996, and the period from
November 1, 1994 (commencement of operations) to September 30, 1995,
and changes in net assets and cash flows for the years ended September 30,
1997, September 30, 1996, and the period ended September 30, 1995 in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
December 5, 1997
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
ASSETS SEPTEMBER 30, 1997 SEPTEMBER 30, 1996
<S> <C> <C>
Investments in securities, at market value
(cost $6,411,446 and $6,663,601 respectively) $6,639,114 $9,217,962
Cash and cash equivalents 950,692 509,257
Income taxes receivable 9,755 345,511
Accrued interest receivable 1,204 585
Other assets 3,997 6,247
TOTAL ASSETS 7,604,762 10,079,562
LIABILITIES
Call options written, at market value
(premiums received $41,827 at September 30, 1996) - 61,425
Deferred fees 29,845 -
Accounts payable and accrued expenses 25,960 31,659
Deferred taxes payable - 749,609
TOTAL LIABILITIES 55,805 842,693
NET ASSETS $7,548,957 $9,236,869
NET ASSETS
Common stock (par value $.01
per share, 20,000,000 shares authorized;
940,350 and 956,100 shares issued and
outstanding, respectively) $ 9,404 $ 9,561
Additional paid-in capital 7,690,280 7,815,260
Accumulated income (loss):
Accumulated net operating loss
before security transactions (1,457,085) (1,292,990)
Accumulated net realized gains
from sale of investments 1,210,438 1,049,765
Net unrealized appreciation of investments 95,920 1,655,273
(150,727) 1,412,048
Net Assets $7,548,957 $9,236,869
Net asset value per share of
common stock outstanding $ 8.03 $ 9.66
</TABLE>
See notes to financial statements
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
STATEMENTS OF OPERATIONS
<TABLE>
For the Period
from 11/1/94
For the year For the year (commencement
Ended ended of operations)
9/30/97 9/30/96 To 9/30/95
<S> <C> <C> <C>
Income:
Fee Income $95,504 $ - $ -
Interest Income 30,317 28,901 244,846
Total investment income 125,821 28,901 244,846
Expenses:
Incentive fees - 224,128 996,947
Financial advisory fees 200,000 200,000 183,333
Investment banking fees 8,333 100,000 91,667
Professional fees 49,200 59,800 84,861
Insurance expense 49,250 74,247 70,547
Board of directors fees 50,000 50,000 45,833
Other operating expenses 22,673 31,520 19,632
Total expenses 379,456 739,695 1,492,820
Operating loss before income tax benefit (253,635) (710,794) (1,247,974)
Income tax benefit 89,540 238,963 426,815
NET OPERATING LOSS BEFORE
SECURITY TRANSACTIONS (164,095) (471,831) (821,159)
NET REALIZED AND UNREALIZED
GAINS/(LOSSES) FROM INVESTMENTS:
Net realized gains/(losses)
from sale of investments 248,345 (1,224,982) 2,832,264
Change in net unrealized appreciation/
(depreciation) of investments (2,307,094) (1,944,458) 4,479,221
Income tax (expense)/benefit arising
from net realized gains/(losses) and net
unrealized appreciation/(depreciation)
of investments. 660,069 1,065,538 (2,502,545)
Net realized and unrealized (losses)
on investments (1,398,680) (2,103,902) 4,808,940
NET INCREASE/(DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $(1,562,775) $(2,575,733) $3,987,781
Per share net increase/(decrease) in
net assets resulting from operations $(1.63) $(2.70) $4.17
</TABLE>
See notes to financial statements
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
Period from 11/1/94
(commencement of
Year Ended Year Ended operations) to
9/30/97 9/30/96 9/30/95
<S> <C> <C> <C>
CHANGES IN NET ASSETS FROM OPERATIONS:
Net operating loss before security
transactions $(164,095) $(471,831) $(821,159)
Net realized gains/(losses) from sale of
investments 160,673 (813,154) 1,862,919
Change in net unrealized appreciation/
(depreciation) of investments (1,559,353) (1,290,748) 2,946,021
Net increase/(decrease) in net assets
resulting from operations (1,562,775) (2,575,733) 3,987,781
CAPITAL STOCK TRANSACTIONS:
Net proceeds from issuance of
capital stock - - 7,823,821
Net (decrease) in net assets
resulting from treasury stock purchases (125,137) - -
Net increase/(decrease) in net assets
resulting from capital stock transactions (125,137) - 7,823,821
NET INCREASE/(DECREASE) IN
NET ASSETS (1,687,912) 2,575,733 11,811,602
NET ASSETS
Beginning of period 9,236,869 11,812,602 1,000
End of period $7,548,957 $9,236,869 $11,812,602
</TABLE>
See notes to financial statements
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
Period from 11/1/94
(commencement of
Year Ended Year Ended operations) to
9/30/97 9/30/96 9/30/95
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net increase/(decrease) in net
assets resulting from operations $(1,562,775) $(2,575,733) $3,987,781
Adjustments to reconcile net increase/
(decrease) in net assets resulting
from operations to net cash provided
by (used in) operating activities:
Change in net unrealized (appreciation)/
depreciation of investments 2,307,094 1,944,458 (4,479,221)
Realized (gains)/losses on sale
of investments (248,345) 1,224,982 (2,832,264)
Deferred income tax (benefit ) provision (749,609) (783,591) 1,533,200
(Increase)/decrease in operating assets:
Income taxes receivable 335,756 (345,511) -
Accrued interest receivable (619) 2,315 (2,900)
Other assets 2,250 246 118,507
Increase (decrease) in operating liabilities:
Accrued incentive fee payable (996,947) 996,947
Accounts payable and accrued expenses (5,699) (2,523) (90,818)
Deferred liability 29,845 - -
Income taxes payable - (132,008) 132,008
Net cash flows provided by (used in)
operating activities 107,898 (1,664,312) (636,760)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of securities (695,298) (3,025,360) (11,263,
743)
Proceeds from sale of securities 1,153,972 3,026,288 6,146,546
Proceeds from securities sold short,
not yet purchased - 78,778 22,999
Net cash flows provided by (used in)
investing activities 458,674 79,706 (5,094,198)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock - - 9,560
Increase in additional paid-in capital - - 7,814,261
Purchase of treasury stock (125,137) - -
Net cash flows provided by
(used in) financing activities (125,137) - 7,823,821
Net increase/(decrease) in cash and
cash equivalents 441,435 (1,584,606) 2,092,863
CASH AND CASH EQUIVALENTS,
at the beginning of the period 509,257 2,093,863 1,000
CASH AND CASH EQUIVALENTS,
at the end of the period $950,692 $509,257 $2,093,863
SUPPLEMENTAL DISCLOSURE:
Income Taxes paid / (refunded) $(335,756) $ 366,409 $410,521
Interest Paid $ - $ 10,189 $ -
</TABLE>
See notes to financial statements
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
SCHEDULE OF INVESTMENTS (1)
SEPTEMBER 30, 1997
<TABLE>
Shares or Type of Issue and Original Market % of Net
Face Value Name of Issuer Cost Value Assets
<C> <S> <C> <C> <C>
ASSETS
Reorganized Companies
Common Stock
607,400 Computervision Corporation New $ 3,182,038 $2,239,788 29.7%
453,620 CVSI Acquisition Co., L.L.C. (2) 453,620 453,620 6.0%
148,824 Seaman Furniture Company, Inc. 2,676,691 3,618,283 47.9%
Total Reorganized Companies 6,312,349 6,311,691
Other Investments
Common Stock
11,242 Tenet Healthcare Corp. (3) 99,097 327,423 4.3%
Total Other Investments 99,097 327,423
Total Investments $6,411,446 $6,639,114
(1) Notes to Schedule of Investments:
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) Represents a beneficial interest in 453,620 shares of CVSI Inc., which is
not considered to be a readily marketable security.
(3) Effective January 30, 1997, OrNda Healthcorp merged with Tenet Healthcare
Corp., in which the Company received 1.35 shares of Tenet for each share of
OrNda.
See Notes to Financial Statements
<PAGE>
CORPORATE RENAISSANCE GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
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.
On November 25, 1996, the Company's Board of Directors authorized the
implementation of an open market share repurchase program, pursuant to which the
Company, from time to time, may purchase up to an aggregate of 175,000 shares of
its common stock in open market transactions. The purpose of the program is to
provide stockholders desiring to sell their shares with enhanced market
liquidity. At the same time, the Company believes that open-market purchases of
its shares at a discount from net asset value will enhance long-term shareholder
value. As of September 30, 1997, 15,750 shares have been repurchased at an
average cost of $7.93 per share.
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
("NASDAQ") 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
Advisor.
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 on sales of securities are determined on a first-in, first-out
or specific identification basis.
<PAGE>
c. 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 September 30, 1997 for federal income tax purposes and
financial reporting purposes was the same.
d. Cash and Cash Equivalents
For the purpose of reporting cash flows, cash and cash equivalents consist
of cash and short-term interest-bearing deposits.
e. 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 amounts reported in the financial statements and
accompanying notes.
3. Income Taxes
The components of income tax (benefit) on pre-tax loss of ($2,312,384) are
as follows:
Federal:
Deferred $(792,207)
(792,207)
State and Local:
Deferred (23,402)
(23,402)
Allowance for deferred tax asset 66,000
Total $(749,609)
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 create a temporary
difference. The components of the Company's deferred income tax liability is
comprised of the following.
Deferred tax liability:
Net unrealized appreciation on investments $ 80,373
Deferred tax assets:
Net operating loss carryforwards (146,373)
Valuation allowance 66,000
Net deferred tax liability $ 0 -
A valuation allowance must be established to offset any portion of a
deferred tax asset which more likely than not will not produce a future benefit.
A valuation allowance in the amount of $66,000 was established as of September
30, 1997.
The Company's effective income tax rate and the U.S. federal statutory rate
are substantially the same. The benefit from the graduated federal tax rate is
offset by the state and local tax liability.
<PAGE>
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 will
receive 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 will receive 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 September 30, 1997.
The Company was party to an Investment Banking Agreement with UI USA, for a
period of one year, ending October 31, 1996. Pursuant to this agreement, UI USA
furnished investment banking services to the Company for a fee of $100,000 per
annum. Such services consisted of assisting the Company and Investment Adviser
in the evaluation, structuring and negotiation of investment opportunities. The
Company paid $8,333 for such services covering the period from October 1, 1996,
through the date of termination of the agreement.
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.
6. Investment Transactions
As of September 30, 1997 the accumulated unrealized appreciation on
investments was $227,668, consisting of $1,169,918 of gross unrealized
appreciation and $942,250 of gross unrealized depreciation.
7. 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 counterparty 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.
<PAGE>
8. Investment in CVSI, Inc.
In July 1997, the Investment Adviser and certain of its affiliates,
including the Company (collectively, the "Buyer"), purchased a majority interest
in the Open Service Solutions business unit ("CVSI") of Computervision
Corporation ("Computervision"), through CVSI Acquisition Co., L.L.C., a newly
formed Delaware limited liability company. In the transaction, the Buyer paid
$7.6 million to Computervision for 76% of CVSI's Class A Voting Stock (the
"Class A Stock"). In addition, CVSI paid Computervision $25.0 million in cash
and issued Computervision a $10.0 million subordinated note (the "Subordinated
Note"). Further, Computervision retained its ownership of 24% of CVSI's Class A
Stock and 100% of CVSI's Class B Non-Voting Stock (the "Class B Stock"). The
Buyer also received options to purchase (i) the Class A Stock held by
Computervision should the Buyer retire the Subordinated Note within one year of
the transaction and (ii) the Class B Stock for $15.0 million. Moreover, if CVSI
does not achieve certain specified levels of product revenues and operating
margins from Computervision-initiated referrals, CVSI will have the option to
purchase, at a nominal price, some or all of the Class A Stock held by
Computervision. The Buyer is a principal stockholder of Computervision and
James B. Rubin, an executive officer and director of the Company, serves as a
director of Computervision.
In connection with the acquisition of CVSI, the Company received $89,535 of
investment banking fees and $35,814 of consulting fees. The consulting fees are
being amortized over a one year period. As of September 30, 1997, $5,969 of
consulting income has been recognized. The Investment Advisor and certain of
its clients and affiliates who acquired shares of CVSI also received investment
banking and consulting fees.
9. Investment in Seaman Furniture Company, Inc.
In August 1997, Seaman Furniture Company, Inc. ("Seamans") entered into an
Agreement and Plan of Merger, as amended on September 4, 1997 (the "Merger
Agreement") with SFC Merger Company ("Newco"), a Delaware corporation formed and
wholly owned by the Investment Adviser and its affiliates (including the
Company), T. Rowe Price Recovery Fund, L.P. ("Price") and Carl Marks Management
Co., L.P. ("Marks," and collectively with the Investment Adviser and Price, the
"Funds"), pursuant to which the Funds will acquire through a merger (the
"Merger") all of the outstanding common stock of Seamans not already owned by
the Funds (the "Public Stock"). Upon consummation of the Merger, Newco will be
merged with and into Seamans and each share of Public Stock (other than
dissenting shares) will be converted into the right to receive $25.05 in cash
and each existing Seamans stock option will be converted into the right to
receive $25.05 in cash per share purchasable thereunder, less the exercise price
with respect thereto, other than certain options of officers of the Company
which will be cancelled and reissued as options of equivalent or greater value
following the Merger. Consummation of the Merger is subject to the approval of
Seamans' stockholders at a meeting scheduled for December 23, 1997, and the
satisfaction or waiver of certain other conditions.
Following consummation of the Merger, the Funds will own all of the
outstanding shares of Seamans Common Stock of which approximately 47.5% will be
owned by the Investment Adviser and its affiliates, including 4.1% by the
Company. In addition, 19.3% of Seamans Common Stock, on a fully diluted basis,
will be reserved for issuance to certain officers and employees of Seamans upon
the exercise of options. Following the Merger, it is anticipated that the Funds
will receive a dividend of approximately $67.0 million on the shares of Seamans
held by them, approximately $2.74 million of which will be received by the
Company.
10. Subsequent Events
On November 4, 1997, Computervision Corporation ("CVN") and Parametric
Technology Corporation ("PTC") announced a definitive merger agreement under
which PTC will acquire CVN in a stock-for-stock transaction. Under the terms of
the Agreement, each share of CVN common stock will be exchanged for .0866 shares
of PTC common stock. The transaction is subject to several conditions including
regulatory approvals and approval of CVN's shareholders. PTC has stated that it
expects the transaction to close in January 1998.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Executive Officers and Directors
Listed below are the name, age and position with the Company of each of the
Company's officers and directors. All directors of the Company are serving a
current term of office which continues until the next annual meeting of
stockholders, and all officers are serving a current term of office which
continues until the next annual meeting of directors.
Name and Age Position with the Company
Martin D. Sass (55)* Chairman of the Board, Chief
Executive Officer
and Director
Hugh R. Lamle (52)* Executive Vice President and
Director
James B. Rubin (44)* Senior Vice President and Director
Martin E. Winter (43)* Secretary-Treasurer
Thomas M. Garvin (61) Director
Lawrence W. Leighton (63) Director
Edward Lowenthal (53) Director
Daniel R. Mazziota (60) Director
Guy E. Waldvogel (61) Director
_________________________
*Director who is an "Interested Person" within the meaning of the 1940 Act.
The following is a detailed description of the profession and business
background of each officer and director.
MARTIN D. SASS is an executive officer and principal of the Investment
Adviser and various affiliated registered investment advisers and other entities
which comprise the M.D. Sass organization ("M.D. Sass"), founded by Mr. Sass in
1972. Mr. Sass also serves as a consultant to and a member of the Partnership
Board of Chase & MD Sass Partners, and as Co-Chairman and Chief Executive
Officer of Resurgence Asset Management, L.L.C. Prior to founding M.D. Sass, Mr.
Sass was President and principal shareholder of Neuwirth Management and Research
Corp. from 1969 to 1972, where he managed several portfolios and mutual funds.
Mr. Sass was also a security analyst at Argus Research Corp. from 1963 to 1969,
where he founded and directed the Special Situations Department. Mr. Sass holds
a B.S. degree in Accounting from Brooklyn College, and has also studied finance
in graduate programs in New York University and City College of New York.
<PAGE>
HUGH R. LAMLE is Executive Vice President and a principal of M.D. Sass,
which he joined in 1974. Mr. Lamle is responsible for the formulation of fixed
income and quantitative investment policy and strategy, directing the management
at M.D. Sass of debt securities portfolios and directing the firm's new products
research efforts. Mr. Lamle also serves as the President and Chief Investment
Officer of Chase & MD Sass Partners, and President of Resurgence Asset
Management, L.L.C. He also serves as a public director of the Finex division of
the New York Cotton Exchange. Prior to joining M.D. Sass, Mr. Lamle in 1972
founded Lenox Capital Management, the investment management subsidiary of DuPont
Glore Forgan, Inc. Mr. Lamle holds a B.A. degree in Political Science and
Economics from Queens College and an M.B.A. degree in Finance and Investments
from Baruch College.
JAMES B. RUBIN joined M.D. Sass as Senior Managing Director in 1989, with
over 15 years experience in advising firms in reorganizations and other special
situations. At M.D. Sass, Mr. Rubin is head of the firm's Distressed Securities
Division and serves as Co-Chairman and Chief Investment Officer of Resurgence
Asset Management, L.L.C. Mr. Rubin also serves as a director of Seamans and
Computervision, and was Chairman of the Board of Directors of Ranger Industries,
Inc. from February 1990 to July 1997. From 1986 until joining M.D. Sass, he was
the principal of J.B. Rubin and Company. From 1985 to 1986, Mr. Rubin was a
Senior Financial Analyst with Smith Vasiliou and its affiliates, including the
distressed securities brokerage firm of R.D. Smith & Company, Inc. Mr. Rubin is
a graduate of Cornell University, with an undergraduate degree in Industrial
Engineering. He also participated in graduate M.B.A. studies in Finance at
Cornell and Pace Universities.
MARTIN E. WINTER is Senior Vice President-Finance of M.D. Sass, having
joined the firm in 1988. He was previously a principal in the Financial
Services Industry and Mergers and Acquisitions Groups of Arthur Young & Company
(predecessor to Ernst & Young LLP) in New York, and he has 20 years of diverse
financial experience. He is a certified public accountant and obtained his B.S.
in Accounting from the Wharton School of the University of Pennsylvania. Mr.
Winter also has a M.A. in Economics from the University of Pennsylvania.
THOMAS M. GARVIN currently has an industrial partnership with Ripplewood
Holdings L.L.C., an equity investment fund. Through that fund, he has made
direct investments in six leveraged acquisitions over the last two years in
pursuit of a focused strategy in the food industry. He is Chairman and Chief
Executive Officer of the platform company, Edwards Fine Foods. Formerly, Mr.
Garvin served in various executive capacities at Keebler Company, the second
largest U.S. manufacturer and marketer of cookies and crackers, from 1969 to
1993, including those of President and Chief Executive Officer from 1978 to 1993
and Chief Operating Officer from 1976 to 1978. During his tenure at Keebler
Company, the company progressed from a single product biscuit company to its
current position of prominence in the baking and snack industries. Mr. Garvin
holds B.S. and M.B.A. degrees from Loyola University and is a certified public
accountant.
<PAGE>
LAWRENCE W. LEIGHTON is a Senior Advisor at Bentley Associates, an
investment bank specializing in private transactions. Mr. Leighton was a
Managing Director of L.M. Capital, an investment banking and buy-out firm, from
September 1994 to January 1996. From January 1994 to December 1994, he also was
Vice Chairman of 21, Inc., a publicly-held company. From January 1989 to
January 1994, Mr. Leighton was President and Chief Executive Officer of UI USA,
the United States merchant bank of Credit Agricole, a large French-based bank.
From 1982 until joining UI USA, Mr. Leighton was Managing Director responsible
for the international mergers and acquisitions activity of Chase Investment
Bank. From 1977 until 1982. Mr. Leighton was a limited partner in the mergers
and acquisitions department of Bear, Stearns & Co. and from 1974 until 1977, he
was Director of Strategic Planning of Norton Simon, Inc. Mr. Leighton is a
graduate of Princeton University with a B.S.E. degree in Engineering and holds
an M.B.A. degree from Harvard Business School.
EDWARD LOWENTHAL is a founder, Director and President of Wellsford Real
Properties, Inc. ("WRP"), an American Stock Exchange listed real estate company.
He was President and a Trustee of Wellsford Residential Property Trust until it
was acquired by Equity Residential Property Trust ("EQR") in 1997. Mr.
Lowenthal serves as a director of United American Energy Corporation, a
developer, owner and operator of hydroelectric and other alternative energy
facilities, a director of Omega Healthcare, Inc., a healthcare real estate
investment trust; and as a trustee of EQR, a real estate investment trust. Mr.
Lowenthal is a member of the Board of Governors of the National Association of
Real Estate Investment Trusts. Mr. Lowenthal holds a B.A. degree from Case
Western Reserve University and a J.D. degree from Georgetown University Law
Center.
DANIEL R. MAZZIOTA is principal of RSA Executive Search ("RSA"), which was
founded in 1978. RSA specializes in recruitment of key executives and
management personnel in the consumer goods and services, healthcare and
pharmaceutical, finance, electronics and telecommunications industries. In
1967, Mr. Mazziota founded Microwave Power Devices, Inc. ("MPD"), which was sold
to M/A-Com, Inc. in 198 1. Mr. Mazziota continued as President of MPD until
1987, when he became Chairman of RSA. Mr. Mazziota also serves as President of
IDM Consulting, which provides business consulting in the high technology
mergers and acquisitions field. Mr. Mazziota holds Bachelors and Masters
degrees in Electrical Engineering from New York Polytechnic Institute.
GUY E. WALDVOGEL has been an independent consultant specializing in the
management of troubled companies in Europe since September 1989. He is
presently holding directorships in various important enterprises in Europe and
the United States. From 1983 to 1989, he was the Senior Executive Vice
President of Societe Generale de Surveillance. From 1980 to 1983, Mr. Waldvogel
served as President and chief Executive Officer of North American Operations of
The Alusuisse-Lonza Group. He was president and Chief Executive Officer of
Givaudan, a subsidiary of Hoffmann-LaRoche, from 1973 to 1981, and held various
other positions within the Hoffmann-LaRoche Group from 1965 until 1973.
Indemnification of Directors and Officers
As permitted by Delaware law, the Company's Certificate of Incorporation
contains an article limiting the personal liability of directors. The
Certificate of Incorporation provides that a director of the Company shall not
be personally liable for monetary damages for a breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General Corporation Law of the State of Delaware, which prohibits the
unlawful payment of dividends or the repurchase or redemption of stock, or
(iv) for any transaction from which the director derived an improper personal
benefit. The Company's Certificate of Incorporation also provides that the
Company will indemnify all persons (including officers, directors and employees)
whom it is empowered to indemnify pursuant to the provisions of Section 145 of
the Delaware General Corporation Law (or any similar provision of applicable law
at the time in effect) to the full extent permitted thereby. The foregoing
provisions are subject, however, to Section 17(h) of the 1940 Act which
provides, in part, that neither the Certificate of Incorporation nor the by-laws
of any BDC shall contain a provision which protects or purports to protect any
officer or director of such BDC against any liability to such company or its
security holders to which he would otherwise be subject due to his willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office. The Company currently maintains $5.0
million of officer and director liability insurance.
<PAGE>
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers, directors and holders of more than ten percent of the
Company's Common Stock, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission and Nasdaq. Such persons are
required to furnish the Company with copies of all Section 16(a) forms they
file. During the year ended September 30, 1997, all filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with.
ITEM 11. EXECUTIVE COMPENSATION
Compensation of Executive Officers and Directors
No cash compensation was paid by the Company to any of its executive
officers during fiscal 1997, fiscal 1996 or fiscal 1995. It is not anticipated
that executive officers will receive direct cash compensation in the foreseeable
future.
Each director who is not an executive officer of the Company is compensated
for his services at a fee of $10,000 per annum. Each director is also
reimbursed for travel and other out-of-pocket disbursements actually incurred in
the business of the Company.
Executive officers and directors of the Company are permitted to retain any
compensation received for services to other companies, including companies in
which the Company invests and to which it renders managerial assistance.
Financial Advisory Agreement and Fees
The Investment Adviser
The Company has retained M.D. Sass Investors Services, Inc. (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.
<PAGE>
The Investment Adviser is a registered investment adviser under the
Investment Advisers Act of 1940. The Investment Adviser is part of a group of
affiliated investment advisers and other affiliated entities comprising M.D.
Sass. Founded in 1972, M.D. Sass is engaged in investment management for
approximately 100 clients, including pension and profit sharing funds, municipal
employee benefits funds, insurance companies, endowment and charitable funds,
large corporations and wealthy individuals. M.D. Sass currently has
approximately $11 billion in assets under management.
The Investment Adviser and certain other M.D. Sass affiliates currently
serve as general partners of M.D. Sass Re/Enterprise Partners, L.P.
("Re/Enterprise "), M.D. Sass Corporate Resurgence Partners, L.P. ("Resurgence")
and M.D. Sass Re/Enterprise-II, L.P. ("Re/Enterprise-II"), private limited
partnerships which have investment objectives similar to that of the Company,
achieving long-term capital appreciation of its assets by investing primarily in
securities of companies that are experiencing significant financial or business
difficulties.
Re/Enterprise, formed in October 1989, had approximately $130 million in
assets as of September 30, 1997. Re/Enterprise-II, formed in February 1996, had
approximately $30 million in assets as of the same date. Resurgence completed
its initial closing in May, 1997, with committed capital of approximately $160
million. Re/Enterprise was a member of a group which acquired a controlling
interest in Seamans and assisted Seamans in a Restructuring. Re/Enterprise also
participated in the Restructurings of other companies, including Memorex Telex
Corp., Emerson Radio Corp., Ranger Industries, Inc. (formerly known as Coleco,
Inc.), SPI Holding, Inc., Leaseway Transportation Corp. and Forstmann & Company,
Inc.
In addition to the two Re/Enterprise partnerships, the Investment Adviser
and/or other affiliates of M.D. Sass serve as general partners of a more
aggressive, higher-risk private limited partnership that invests in financially
troubled companies, a fund of funds, a private limited partnership that utilizes
a market-neutral strategy, and other private limited partnerships that invest in
municipal and government securities and distressed real estate that appears to
have a potential for recovery. The Investment Adviser also serves as investment
adviser to two private offshore investment companies pursuing investment
strategies similar to the Re/Enterprise partnerships, Resurgence and the
Company, as well as a corporate pension fund of a Fortune 100 company.
The principals of the Investment Adviser and other affiliates of M.D. Sass
are Martin D. Sass and Hugh R. Lamle, each of whom serves as an officer and
director of the Company. James B. Rubin and Martin E. Winter, officers of the
Investment Adviser and other affiliates of M.D. Sass, serve as officers of the
Company. In addition, Mr. Rubin serves as a director of the Company.
The offices of the Investment Adviser are located at 1185 Avenue of the
Americas, 18th Floor, New York, New York 10036, and its telephone number is
(212) 730-2000.
The Financial Advisory Agreement
The Company is party to a Financial Advisory Agreement with the Investment
Adviser (the "Financial Advisory Agreement"). The Investment Adviser's duties
under the Financial Advisory Agreement include locating, structuring, acquiring,
monitoring and disposing of investments for the Company. The Company only makes
investments recommended by the Investment Adviser. In addition, the Investment
Adviser also provides administrative services to the Company, including all
necessary executive, administrative, internal accounting and support services
and furnishes the Company with necessary office space. The activities of the
Investment Adviser on behalf of the Company are subject to the supervision of
the independent Directors of the Company.
<PAGE>
Pursuant to the Financial Advisory Agreement, the Investment Adviser
receives a base fee of $200,000 per annum for furnishing the Company with the
administrative services described above.
In addition to the base fee, the Investment Adviser receives an incentive
fee for its investment advisory services equal to 20% of net new appreciation,
if any, in the net asset value of the shares of Common Stock outstanding,
adjusted for all operating expenses, including accruals for any tax liabilities
on income or realized gains from portfolio transactions. The initial incentive
fee calculation was made in November 1995 and a new calculation has been and
will continue to be made at the end of each calendar quarter thereafter, with
the Investment Adviser receiving 20% of any net new appreciation occurring
during the preceding four calendar quarters. Thus, the fee is computed and paid
on a "rolling quarter" basis.
At any time the incentive fee is to be calculated, if the net asset value
per share previously has reached a level at which an incentive fee was paid (a
"previous high peak"), an additional incentive fee will be paid only on the
incremental appreciation of the shares of Common Stock over the shares' net
asset value after payment of the previous incentive fee at such peak. In no
event will an incentive fee be paid for recoupment of losses. Thus, if the net
asset value of the shares of Common Stock falls below the initial net asset
value, or the previous high peak at which the incentive fee was paid (less the
incentive fee paid at such level), no incentive fee will be due the Investment
Adviser. The Investment Adviser will only be entitled to a further incentive
fee if the net asset value of the shares increases beyond the initial net asset
value, or its net asset value following payment of the incentive fee at the
previous high peak, as the case may be. Notwithstanding the foregoing,
incentive fees payable to the Investment Adviser under the Financial Advisory
Agreement will not exceed the maximum amount which the Investment Adviser is
entitled to receive under the 1940 Act. During fiscal 1997, the Company paid
the Investment Adviser the base fee of $200,000. No incentive fee has been
accrued in fiscal 1997 since the Company's net asset value has been below the
previous high peak.
The Investment Adviser bears the expense of maintaining the staff necessary
for performing its obligations under the Financial Advisory Agreement and all
other expenses associated with its duties as Investment Adviser. Other than
fees payable under the Financial Advisory Agreement, the Company bears no
operating expenses other than normal operating expenses such as legal and
auditing fees, taxes and all direct expenses related to an investment including
all investment, legal and accounting expenses.
The Financial Advisory Agreement continues from year to year if approved by
a majority of independent directors and unless not less than 30 days prior
written notice is given by a party of its intention not to renew. In November
1997, the independent directors of the Company approved the renewal of the
Financial Advisory Agreement for a one-year period. The Financial Advisory
Agreement is not assignable and may be terminated by either party upon 60 days
prior written notice given to the other party.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth, as of December 17, 1997, the beneficial
ownership of the shares of Common Stock of the Company of (i) each person known
by the Company to beneficially own more than five percent of the Common Stock,
(ii) each director of the Company, (iii) the Company's Chief Executive Officer
and (iv) all executive officers and directors as a group.
Name and Address Amount and Nature
of Beneficial Stockholder of Beneficial Percentage
of
or Identity of Group(1) Ownership Common
Stock
Officers and Directors:
Martin D. Sass 71,300 7.6
Hugh R. Lamle 48,600 5.2
James B. Rubin -0- -0-
Thomas M. Garvin -0- -0-
Lawrence W. Leighton 1,000 *
Edward Lowenthal 3,000 *
Daniel R. Mazziota 200 *
Guy E. Waldvogel -0- -0-
All executive officers and directors
as a group (nine persons) 124,300(2) 13.2
5% or Greater Shareholders:
Curators Partners, L.P. 94,034(3)(4) 10.0
420 Lexington Avenue
New York, New York
Robert Schneider 52,945(3)(5) 5.6
2 Broadway
New York, New York
____________________
*Less than one percent
(1) Unless otherwise indicated, the address of each beneficial owner is c/o the
Company, 1185 Avenue of the Americas, 18th Floor, New York, NY 10036.
(2) Includes 200 shares of Common Stock held by Martin E. Winter, the Company's
Secretary-Treasurer.
(3) Based on a Schedule 13D filed with the SEC.
(4) Includes 56,900 shares of Common Stock held by certain accounts managed by
Curators Capital Management, Inc., an affiliate of Curators Partners, L.P.
(5) Includes 12,000 shares of Common Stock owned jointly with Mr. Schneider's
spouse. Excludes 18,650 shares of Common Stock owned by Mr. Schneider's
spouse over which Mr. Schneider disclaims beneficial ownership and 31,449
shares owned by RAS Securities Corp., a registered broker-dealer, acquired
in its ordinary course of business and over which Mr. Schneider has voting
and dispositive power.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Item 11. Executive Compensation" with respect to the Financial
Advisory Agreement entered into with the Investment Adviser.
As described in "Item 1. Business," the Company invests from time to time
jointly with affiliates of the Investment Adviser subject to restrictions under
the 1940 Act and conditions set forth in an exemptive order granted by the SEC.
The Company from time to time also effects securities sales to or purchases
from affiliates of the Investment Adviser pursuant to a plan adopted in
accordance with Rule 17a-7 under the 1940 Act.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
(1) Financial Statements
Reference is made to the Index to Financial Statements of Corporate
Renaissance Group, Inc. included in Part II, Item 8, of this Report.
(2) Financial Statement Schedules
All schedules for which provision is made in applicable regulations of
the SEC are not required under the related instructions, are
inapplicable or the required information has been included in the
Financial Statements and therefore such schedules have been omitted.
(3) Exhibits
Exhibit Description of Exhibit
1 Form of Amended and Restated Certificate of Incorporation(1)
2 By-Laws, as amended(1)
4 Form of Common Stock certificate (1)
10.2 Revised Form of Financial Advisory Agreement between the
Company and M.D. Sass Investors Services, Inc.(1)
27.1 Financial Data Schedule (SEC use only)
_________________________
(1) Previously filed as an Exhibit of the same number to the Company's
Registration Statement on Form N-2 (File No. 33-50424), and incorporated
herein by reference.
(b) Reports on Form 8-K
None.
(c) Item 601 Exhibits
The exhibits required by Item 601 of Regulation S-K are set forth in (a)(3)
above.
(d) Financial Statement Schedules
The financial statement schedules required by Regulation S-K are set forth
in (a)(2) above.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant has caused the report or amendment thereto to be signed on
its behalf by the undersigned, thereunto duly authorized.
CORPORATE RENAISSANCE GROUP, INC.
By: /s/ Martin D. Sass
Martin D. Sass
Chairman of the Board and
Chief Executive Officer
Dated: December ____, 1997
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.
Signatures Title Date
/s/ Martin D. Sass Chairman of the Board, Chief ________________
Martin D. Sass Executive Officer and Director
(Principal Executive Officer)
/s/ Hugh R. Lamle Executive Vice President ________________
Hugh R. Lamle and Director
/s/ James B. Rubin Senior Vice President ________________
James B. Rubin and Director
/s/ Martin E. Winter Secretary-Treasurer (Principal ________________
Martin E. Winter Financial and Accounting Officer)
/s/ Thomas M. Garvin Director ________________
Thomas M. Garvin
/s/ Lawrence W. Leighton Director ________________
Lawrence W. Leighton
/s/ Edward Lowenthal Director ________________
Edward Lowenthal
/s/ Daniel R. Mazziota Director ________________
Daniel R. Mazziota
/s/ Guy E. Waldvogel Director ________________
Guy E. Waldvogel
</TABLE>
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