UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13
OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 14, 2007
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SPAR Group, Inc. |
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| (Exact Name of Registrant as Specified in Charter) | ||
Delaware (State or Other Jurisdiction of Incorporation) |
0-27824 (Commission File No.) |
33-0684451 (IRS Employer Identification No.) |
555 White Plains Road, Suite 250, Tarrytown, New York |
10591 |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant's telephone number, including area code: (914) 332-4100
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| (Former Name or Former Address, if Changed Since Last Report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition. |
(a) On March 14, 2007, SPAR Group, Inc. (the “Registrant”) issued the press release attached to this Current Report on Form 8-K (the “Report”) as Exhibit 99.1 reporting its financial results for the fiscal year ended December 31, 2006, which is incorporated herein by reference.
The information in this Report, including the exhibit, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section. It shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits:
| 99.1 | Press Release of the Registrant dated March 14, 2007. |
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.
| SPAR GROUP, INC. |
| Date: March 19, 2007 |
By: /s/ Charles Cimitile
Charles Cimitile Chief Financial Officer |
EXHIBIT INDEX
| Exhibit Number |
Description |
| 99.1 | Press Release of the Registrant dated March 14, 2007. |
EXHIBIT 99.1
SPAR GROUP REPORTS 2006 FINANCIAL RESULTS
TARRYTOWN, NY — March 14, 2007 — SPAR Group, Inc. (NASDAQ:SGRP) today reported financial results for the fourth quarter and year ended December 31, 2006.
For the 2006 fourth quarter, net revenues rose 20% to $15.8 million from $13.2 million for the fourth quarter of 2005. The company recorded a net loss of $105,000, equal to $0.01 per share, for the 2006 fourth quarter, compared with net income of $733,000, or $0.04 per share, a year ago. Operating income for the 2006 fourth quarter was $11,000, compared with $1.1 million for the corresponding period last year. Selling, general and administrative expenses for the 2006 fourth quarter amounted to $6.0 million, compared with $4.4 million a year ago.
For the full 2006 year, revenues advanced 11% to $57.3 million from $51.6 million for the prior year. SPAR Group recorded a net loss of $621,000, equal to $0.03 per share, for 2006, compared with net income of $878,000, or $0.05 per share, for 2005. The operating loss for all of 2006 was $724,000, versus operating income of $1.9 million last year. Selling, general and administrative expenses for 2006 amounted to $19.8 million, compared with $16.7 million a year ago.
Robert G. Brown, SPAR Group’s chairman and chief executive officer said the revenue increases for the 2006 fourth quarter and full year reflected contributions from the company’s international operations. He said SPAR Group’s performance was impacted primarily by higher selling, general and administrative expenses, including costs associated with launching the new joint venture operations, along with initial operating losses associated with the international division, and investments in future marketing and technology programs.
For the fourth quarter of 2006, international revenues advanced to $7.1 million from $3.9 million a year earlier. The international division had a net loss of $264,000 for the 2006 fourth quarter versus a loss of $322,000 for the 2005 fourth quarter. International revenues for the full 2006 year rose to $23.2 million from $14.9 million last year. Included in the 2006 revenue was an additional quarter of revenue, totaling approximately $1.3 million, associated with the change to the reporting year of the company’s joint venture in Japan, as well as revenue from the company’s new joint venture operations in Australia and Lithuania. The international division sustained a net loss of $630,000 for 2006, compared with net income of $162,000 for 2005.
For the fourth quarter of 2006, U.S. revenues amounted to $8.7 million, compared with $9.3 million a year earlier. The domestic operations registered net income of $159,000 for the 2006 fourth quarter versus $1.1 million for the 2005 fourth quarter. Revenues in the U.S. for the full 2006 year totaled $34.1 million, including $770,000 from the termination of a customer service agreement during the first quarter, versus $36.7 million for 2005. The company’s domestic business posted net income of $9,000 for 2006, compared with $716,000 the prior year. Included in U.S. net income for 2006 was approximately $100,000 resulting from a favorable $1.3 million judgment awarded in a lawsuit offset by the 2006 related legal expenses of approximately $1.2 million.
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Spar Group, Inc.
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“We continued to expand our international division in 2006, establishing a joint venture operation in Australia that today is beginning to provide tangible contributions to the company,” Brown said. “While the U.S. markets continued to be challenging throughout most of 2006, we successfully launched a significant new customer relationship during the year that we anticipate will provide solid returns in 2007.”
“We strengthened our management team as well and launched important technology-based programs utilizing RFID that we believe will provide tangible benefits to the company in the years ahead. We also were pleased to have augmented our board of directors during the year with the addition of C. Manly Molpus, formerly president and chief executive officer of the Grocery Manufacturers Association and one of our industry’s leading executives,” Brown added.
About SPAR Group
SPAR Group, Inc., a diversified international marketing services company, provides a broad array of services to help manufacturers and retailers improve their sales, operating efficiency and profits at retail worldwide. Services include in-store merchandising and event staffing, RFID and other technology and research, covering all product classifications and all classes of trade, including mass market, drug store, electronic store, convenience store and grocery chains. The company operates throughout the United States and internationally in Japan, Canada, Turkey, South Africa, India, Romania, China, Lithuania, Australia, Latvia and New Zealand. For more information, visit SPAR Group’s Web site, www.sparinc.com.
Certain statements in this news release are forward-looking, including, but not limited to, currently anticipated tangible contributions from the company’s Australian joint venture operation and benefits from a new U.S. customer relationship. The company’s actual results, performance and trends could differ materially from those indicated or implied by such statements as a result of various factors, including (without limitation) the continued strengthening of SPAR Group’s selling and marketing functions, continued customer satisfaction and contract renewal, new product development, continued availability of capable dedicated personnel, continued cost management,the success of its international efforts, success and availability of acquisitions, availability of financing and other factors, as well as by factors applicable to most companies such as general economic, competitive and other business and civil conditions. Information regarding certain of these and other factors that could affect future results, performance or trends are discussed in SPAR Group Inc.‘s annual report on Form 10-K, quarterly reports on Form 10-Q, and other filings made with the Securities and Exchange Commission from time to time.
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(Tables follow)
Spar Group, Inc.
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SPAR Group, Inc.
Consolidated
Statements of Operations
(unaudited)
(in thousands, except per share data)
| Three Months Ended |
Twelve Months Ended |
|||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2006 |
December 31, 2005* |
December 31, 2006 |
December 31, 2005* |
|||||||||||||||||||||||
| Net Revenues | $ | 15,839 | $ | 13,205 | $ | 57,316 | $ | 51,586 | ||||||||||||||||||
| Cost of revenues | 9,610 | 7,525 | 37,463 | 31,939 | ||||||||||||||||||||||
| Gross profit | 6,229 | 5,680 | 19,853 | 19,647 | ||||||||||||||||||||||
| Selling, general and administrative expenses | 6,037 | 4,401 | 19,831 | 16,691 | ||||||||||||||||||||||
| Depreciation and amortization | 181 | 219 | 746 | 1,031 | ||||||||||||||||||||||
| Operating income (loss) | 11 | 1,060 | (724 | ) | 1,925 | |||||||||||||||||||||
| Interest expense | 75 | 89 | 237 | 191 | ||||||||||||||||||||||
| Other expense (income) | 204 | 38 | (338 | ) | 446 | |||||||||||||||||||||
| (Loss) income before provision for income taxes and minority interests |
(268 | ) | 933 | (623 | ) | 1,288 | ||||||||||||||||||||
| Provision for income taxes | (73 | ) | 198 | 99 | 242 | |||||||||||||||||||||
| (Loss) income before minority interest | (195 | ) | 735 | (722 | ) | 1,046 | ||||||||||||||||||||
| Minority interest | (90 | ) | 2 | (101 | ) | 168 | ||||||||||||||||||||
| Net (loss) income | $ | (105 | ) | $ | 733 | $ | (621 | ) | $ | 878 | ||||||||||||||||
| Basic/diluted net (loss) income per common share: | ||||||||||||||||||||||||||
| Net (loss) income - basic/diluted | $ | (0.01 | ) | $ | 0.04 | $ | (0.03 | ) | $ | 0.05 | ||||||||||||||||
| Weighted average common shares -- basic | 18,934 | 18,917 | 18,934 | 18,904 | ||||||||||||||||||||||
| Weighted average common shares - diluted | 18,934 | 19,147 | 18,934 | 19,360 | ||||||||||||||||||||||
* Certain reclassifications have been made to the 2005 financial statements to conform to the 2006 presentation.
Spar Group, Inc.
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SPAR Group, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share data)
| December 31, 2006 |
December 31, 2005* | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||||||||
| Current Assets: | ||||||||||||||
| Cash and cash equivalents | $ | 1,148 | $ | 1,914 | ||||||||||
| Accounts receivable, net | 12,982 | 10,656 | ||||||||||||
| Prepaid expenses and other current assets | 553 | 702 | ||||||||||||
| Total current assets | 14,683 | 13,272 | ||||||||||||
| Property and equipment, net | 901 | 1,131 | ||||||||||||
| Goodwill | 798 | 798 | ||||||||||||
| Other assets | 1,695 | 216 | ||||||||||||
| Total assets | $ | 18,077 | $ | 15,417 | ||||||||||
| Liabilities and stockholders' equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 2,551 | $ | 1,597 | ||||||||||
| Accrued expenses and other current liabilities | 2,864 | 2,639 | ||||||||||||
| Accrued expense due to affiliates | 1,752 | 1,190 | ||||||||||||
| Restructuring charges | - | 99 | ||||||||||||
| Customer Deposits | 560 | 1,658 | ||||||||||||
| Lines of credit | 5,318 | 2,969 | ||||||||||||
| Total current liabilities | 13,045 | 10,152 | ||||||||||||
| Minority Interest and other long-term liabilities | 504 | 415 | ||||||||||||
| Total liabilities | 13,549 | 10,567 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Stockholders' equity: | ||||||||||||||
| Preferred stock, $.01 par value: | ||||||||||||||
| Authorized shares-3,000,000 | ||||||||||||||
| Issued and outstanding shares-none | - | - | ||||||||||||
| Common stock, $.01 par value: | ||||||||||||||
| Authorized shares-47,000,000 | ||||||||||||||
| Issued and outstanding shares- | ||||||||||||||
| 18,934,182 - December 31, 2006 | ||||||||||||||
| 18,916,847 - December 31, 2005 | 189 | 189 | ||||||||||||
| Treasury Stock | (1 | ) | (1 | ) | ||||||||||
| Additional paid-in capital | 11,484 | 11,059 | ||||||||||||
| Accumulated other comprehensive (loss) gain | (109 | ) | 17 | |||||||||||
| Accumulated deficit | (7,035 | ) | (6,414 | ) | ||||||||||
| Total stockholders' equity | 4,528 | 4,850 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 18,077 | $ | 15,417 | ||||||||||
* Certain reclassifications have been made to the 2005 financial statements to conform to the 2006 presentation.