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): August 23, 2004
SPAR Group, Inc.
(Exact Name of Registrant as Specified in Charter)
- --------------------------------------------------------------------------------
Delaware 0-27824 33-0684451
--------- -------- ----------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
580 White Plains Road, Tarrytown, New York 10591
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (914) 332-4100
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Item 2.02 Results of Operations and Financial Condition.
On August 20, 2004, 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 second quarter ended June 30, 2004,
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, Pro Forma Financial Information and Exhibits.
(c) Exhibits:
99.1 Press Release of the Registrant dated August 20, 2004.
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: August 23, 2004 By: /s/ Charles Cimitile
--------------------
Charles Cimitile
Chief Financial Officer
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
99.1 Press Release of the Registrant dated August 20, 2004.
Exhibit 99.1
CONTACTS: Charles Cimitile
Chief Financial Officer
SPAR Group, Inc.
(914) 332-4100
Roger S. Pondel
PondelWilkinson Inc.
(310) 279-5980
SPAR GROUP REPORTS FINANCIAL RESULTS
FOR 2004 SECOND QUARTER
--COMPANY'S OPERATING LOSS REFLECTS NON-CASH CHARGES--
TARRYTOWN, NY -- AUGUST 20, 2004 -- SPAR Group, Inc. (NASDAQ:SGRP)
today reported financial results for the second quarter and six months ended
June 30, 2004.
For the 2004 second quarter, the company sustained a net loss of $12.2
million, equal to $0.65 per share, which includes approximately $9.3 million in
non cash expenses ($8.1 million in non-cash impairment charges, and a $1.2
million non-cash charge against net deferred tax assets and tax benefits
recorded in the first quarter of 2004). Net revenues for the 2004 second quarter
amounted to $11.9 million. The company reported net income of $608,000, or $0.03
per diluted share, on net revenues of $17.4 million for the second quarter of
2003.
For the first six months of 2004, the company posted a net loss of
$13.0 million, or $0.69 per share, on revenues of $24.7 million, compared with
net income of $1.9 million, equal to $0.10 per fully diluted share, on net
revenues of $36.1 million for the corresponding prior year period.
Robert G. Brown, SPAR Group's chairman and chief executive officer,
said more than 77% of the loss for the second quarter and 68% of the loss for
the six month period was attributable to non-cash, non-recurring items.
(more)
"While we have lost some key business, resulting in part from our
largest customer completing the sale of its business and a major retailer
closing some of its stores and changing some of its merchandising policies to
emerge from bankruptcy, we have taken swift and decisive action in a
restructuring plan aimed at restoring SPAR's financial health by downsizing our
fixed expense structure to reflect our lower revenue base and returning the
company to profitability in 2005," Brown said. "We plan to cut fixed costs, but
not at the expense of the quality of service we provide to our customers. In
addition, we plan to continue investing in technology, local in-store
demonstration services and international expansion. We believe these areas
though currently contributing to our losses, will improve profits in the future.
It is our intent to build a profitable company and add tangible shareholder
value. We are taking steps now to help assure that our long-term objectives will
be met," Brown said.
SPAR Group, Inc. is a diversified international marketing services
company, providing a broad array of productivity enhancing products and services
to help Fortune 1000 companies improve their sales, operating efficiency and
profits. The company provides in-store merchandising, in-store demonstrations,
technology and research to manufacturers and retailers covering all product
classifications and all classes of trade, including mass market, drug store,
convenience store and grocery chains, throughout the United States and
internationally.
Certain statements in this news release are forward-looking, including,
but not limited to, the benefits to be derived from the company's restructuring
plan and the ability to return to profitability in 2005. 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's selling and marketing
functions, continued customer satisfaction and contract renewal, new product
development, continued technological superiority over its competitors, 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 respecting certain of these and other factors that
could effect future results, performance or trends are discussed in SPAR Group'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.
# # #
SPAR GROUP, INC.
Consolidated Statements of Operations
(unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
---------------------------------------------------------------------
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
---------------------------------------------------------------------
Net revenues $ 11,933 $ 17,351 $ 24,736 $ 36,090
Cost of revenues 8,716 11,146 17,411 22,397
------------------------------------------------------------------
Gross profit 3,217 6,205 7,325 13,693
Selling, general and administrative expenses 5,577 4,768 10,545 9,711
Impairment charges 8,141 - 8,141 -
Depreciation and amortization 369 399 730 777
------------------------------------------------------------------
Operating (loss) income (10,870) 1,038 (12,091) 3,205
Interest expense 64 72 98 140
Other expense (income) 7 (10) 8 28
------------------------------------------------------------------
(Loss) income before provision for income taxes (10,941) 976 (12,197) 3,037
Provision for income taxes 1,236 368 771 1,151
------------------------------------------------------------------
Net (loss) income $ (12,177) $ 608 $ (12,968) $ 1,886
==================================================================
Basic/diluted net (loss) income per common share:
Net (loss) income - basic/diluted $ (0.65) $ 0.03 $ (0.69) $ 0.10
==================================================================
Weighted average common shares - basic 18,859 18,858 18,859 18,850
==================================================================
Weighted average common shares - diluted 18,859 19,538 18,859 19,447
==================================================================
SPAR GROUP, INC.
Consolidated Balance Sheets
(In thousands, except share and per share data)
June 30, December 31,
2004 2003
---------------------- --------------------
(Unaudited) (Note)
ASSETS
Current assets:
Accounts receivable, net $ 7,743 $ 13,942
Prepaid expenses and other current assets 310 415
Deferred income taxes - 1,305
---------------------- --------------------
Total current assets 8,053 15,662
Property and equipment, net 1,751 2,099
Goodwill 798 8,749
Deferred income taxes - 434
Other assets 448 926
---------------------- --------------------
Total assets $ 11,050 $ 27,870
====================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,083 $ 1,445
Accrued expenses and other current liabilities 1,192 4,350
Accrued expenses, due to affiliates 1,296 996
Restructuring charges, current - 685
Customer deposits 932 17
Line of credit, short-term 1,856 4,084
---------------------- --------------------
Total current liabilities 7,359 11,577
Other long-term liabilities 513 270
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 -
18,858,972 - June 30, 2004 and
December 31, 2003 189 189
Treasury stock (213) (384)
Accumulated other comprehensive loss (3) (7)
Additional paid-in capital 11,197 11,249
Accumulated (deficit) retained earnings (7,992) 4,976
---------------------- --------------------
Total stockholders' equity 3,178 16,023
---------------------- --------------------
Total liabilities and stockholders' equity $ 11,050 $ 27,870
====================== ====================
Note: The Balance Sheet at December 31, 2003, has been derived from the
- ----- audited financial statements at that date but does not include any of
the information and footnotes required by accounting principles
generally accepted in the United States for complete financial
statements.