SPAR Group Reports Third Quarter/Nine-Month Results

SPAR Group Reports Third Quarter/Nine-Month Results

Company on Track Following Merger

TARRYTOWN, N.Y., Nov. 8, 1999 -- SPAR Group, Inc. (Nasdaq:SGRP) today reported results for its third quarter ended September 30,1999, representing the first consolidated report since the merger of the prior SPAR Group companies and PIA Merchandising Services, Inc. in July 1999.

Robert G. Brown, chairman, chief executive officer and president of SPAR Group, Inc. said, "We are extremely encouraged and pleased with the progress of theintegration, the cost-savings and other operating efficiencies we were able to realize since the completion of the merger."

For the third quarter, SPAR recorded pro forma net income of $98,000, or $0.01 per pro forma diluted share, compared with pro forma net income of $1.3 million, or$0.10 per pro forma diluted share, in the 1998 third quarter. These results are based upon a 45 percent increase in the pro forma diluted weighted shares outstanding inthe 1999 quarter. Revenues for the same period increased more than three fold to $36.4 million from $11.1 million a year ago.

For the nine months, pro forma net income was $1.1 million, or $0.08 per pro forma diluted share, compared with pro forma net income of $3.0 million, or $0.24 per proforma diluted share, for the same prior-year period. These results are based upon a 14 percent increase in the pro forma diluted weighted shares outstanding for the ninemonths. Revenues for the nine months climbed more than two and a half times to $77.9 million from $30.1 million in the same period a year ago.

Consolidated figures for the third quarter include a non-cash, non-recurring provision for income tax for conversion of the prior SPAR Group companies from asubchapter S status to a C corporation.

Brown noted that since the merger of the prior SPAR Group companies and PIA, fixed overhead costs have already been reduced by approximately $6 million on anannualized basis and PIA's gross margin has improved 4 percentage points from 26% in the third quarter of 1998 to over 31% in this quarter. Brown stated, "Some ofthe savings we have achieved have already been redirected to improve client services and in-store activities. The progress we have made so quickly at PIAdemonstrates SPAR's ability to quickly integrate acquisitions, while continuing to be a low cost producer of services. We expect to realize additional cost savings as wefurther integrate SPAR's business plan and aggressively pursue synergistic savings."

"Our goal is to create one of the nation's largest providers of retail merchandising and other marketing services utilizing SPAR's advanced Internet reporting and controlservices. This innovative technology allows clients real-time access to their accounts and on-demand marketing services, providing enhanced quality, a range of tailoredprograms and improved profitability and growth for SPAR. We are well-positioned to capitalize on the opportunities in a growing and dynamic industry which sourcesestimate to be approximately $85 billion annually worldwide," said Brown.

Separately, the company announced that Terry Peets, vice chairman and former chief executive of PIA Merchandising Services, Inc., has resigned his position. "Withthe successful integration of SPAR and PIA, Terry has decided that the time was right for him to leave and spend more time with his family. We appreciate his manycontributions and his desire to make the merger and transition period as smooth as possible," stated Brown.

SPAR Group, Inc. is focused on providing clients a wide array of marketing and sales solutions through a single point of contact. The company serves more than 18,000grocery stores, 6,200 drug stores and 8,800 mass merchandiser stores with retail merchandising. The company also offers incentive marketing, teleservices, databasemarketing and marketing research services.

Certain statements in this news release are forward-looking and involve a number of risks and uncertainties. The company's actual results could differ materially fromthose indicated by such statements as a result of various factors, including the continued building of sales momentum, the ability to achieve expected synergies as a resultof the merger and other factors discussed in PIA's Definitive Proxy Statement, Form 10-K and Form 10-Q on file with the SEC and other filings made with the SECfrom time to time.

SPAR GROUP INC.(Unaudited)(in thousands, except per share data)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


                             Quarter Ended         Nine Months Ended
                         Sept. 30    Sept. 30    Sept. 30     Sept. 30
                             1999        1998        1999         1998


Net Revenues            $ 36,390     $ 11,095    $ 77,949     $ 30,076
Cost of Revenues          24,466        5,415      52,921       15,133
Gross Profit              11,924        5,680      25,028       14,943

Operating Expenses:
Selling, general and
 administrative
 expenses                 10,688        3,521      20,427        9,841
Depreciation and
 amortization                704           34       1,218          104

Total operating
 expenses                 11,392        3,555      21,645        9,945

Operating Income             532        2,125       3,383        4,998

Other Expenses               250          120       1,059          264

Income Before Provision
 for Income Taxes            282        2,005       2,324        4,734

Provision for income taxes:
  Nonrecurring charge for
  termination of Subchapter
  S election               3,100           --       3,100           --
  C Corporation taxes         23           --          23           --

Net Income (Loss)       $ (2,841)    $  2,005    $   (799)    $  4,734

Unaudited pro forma information:
  Historical Income (Loss)
  Before Provision for
  Income Taxes          $    282     $  2,005    $  2,324     $  4,734

  Pro forma provision
  (benefit) for
  income taxes               184          740       1,216        1,747

Pro Forma Net Income    $     98     $  1,265    $  1,108     $  2,987

Pro Forma Basic
 Earnings Per Share     $   0.01     $   0.10    $   0.08     $   0.24

Pro Forma Diluted
 Earnings Per Share     $   0.01     $   0.10    $   0.08     $   0.24

Pro Forma Basic
 Weighted Average
 Common Shares            18,153       12,659      14,350       12,659

Pro Forma Diluted
 Weighted Average
 Common Shares            18,295       12,659      14,491       12,659



CONDENSED BALANCE SHEET
                                        September 30       December 31
                                              1999              1998

ASSETS
Cash and cash equivalents                 $  2,429          $    910
Accounts receivable, net                    26,587            10,628
Goodwill, net                               22,873                 0
Other assets                                11,607             3,326
Total assets                              $ 63,496          $ 14,864

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities                       $ 51,080          $ 15,958
Non-current liabilities                      1,839               311
Shareholders' equity                        10,577            (1,405)
Total liabilities and
 shareholders' equity                     $ 63,496          $ 14,864

CONTACT:  SPAR Group, Inc., Irvine
          Cathy L. Wood, 949/476-2200
          or
          Pondel/Wilkinson Group
          Gary S. Maier/Kristin Bruno, 310/207-9300