UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): May 5, 2005
SPAR Group, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 0-27824 33-0684451
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
580 White Plains Road, Tarrytown, New York 10591
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(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:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] 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.
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(a) On May 5, 2005, 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 first quarter ended March 31, 2005,
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.
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(c) Exhibits:
99.1 Press Release of the Registrant dated May 5, 2005.
SIGNATURES
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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: May 6, 2005 By: /s/ Charles Cimitile
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Charles Cimitile
Chief Financial Officer
EXHIBIT INDEX
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Exhibit
Number Description
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99.1 Press Release of the Registrant dated May 5, 2005.
EXHIBIT 99.1
SPAR Group Reports Improved Financial Results for 2005 First Quarter
TARRYTOWN, N.Y., May 5, 2005 -- SPAR Group, Inc. (SGRP) today reported higher
net revenues and a sharp improvement in earnings for the first quarter ended
March 31, 2005.
Net revenues for the 2005 first quarter rose more than 13.4% to $14.5 million
from $12.8 million a year ago. The company posted net income for the 2005 period
of $1.2 million, equal to $0.06 per share, compared with a net loss of $790,000,
or a loss of $0.04 per share, for the 2004 first quarter.
"The first three months of 2005 marked the third consecutive quarter that the
company has achieved profitable operations," said Robert G. Brown, SPAR Group's
chairman and chief executive officer. "The turnaround reflects the benefits from
our major restructuring program and cost reduction measures in our domestic
business, along with significant growth of our international operations. In
addition, both domestic and international revenues and profits were favorably
impacted by strong project revenues in the quarter."
The gross margin percentage for the 2005 first quarter improved to 40.4% from
32.1% in the corresponding period last year. Selling, general and administrative
expenses for the 2005 first quarter were reduced to $4.3 million from $5.0
million a year ago.
Brown said the company announced new joint venture agreements in Romania and
China during the first quarter of 2005, and similar pacts were signed last year
in South Africa and India. He said the company is now providing merchandising
and related marketing services to manufacturers and retailers in each of the
foreign markets where it has operations, except in China where the company's
joint venture is awaiting government approval. SPAR Group expects operations to
begin in China late in the third quarter of 2005.
"Although the general business environment remains challenging, we are
continuing to experience international growth, particularly in Canada and Japan
where our operations have been established for a longer time. We remain
optimistic about the company's long term prospects," Brown added.
For the first quarter, SPAR Group said revenue in the U.S. amounted to $10.8
million, compared with $12.7 million a year ago, with net income of $863,000 in
2005, versus a net loss of $581,000 in 2004. International revenue for the 2005
first quarter rose to $3.7 million from $139,000 last year as result of the
consolidation of our Japan joint venture, commencement of operations in South
Africa, Turkey and India, as well as an increase in our Canadian business.
International net income amounted to $306,000, compared with a net loss of
$209,000 in the 2004 first quarter.
SPAR Group, Inc. is a diversified international marketing services company,
providing a broad array of services to help companies improve their sales,
operating efficiency and profits at retail worldwide. The company provides
in-store merchandising, in-store event staffing, RFID and other technology, as
well as 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, further benefits to be derived from the company's restructuring
plan, cost reduction measures, contributions from international expansion
efforts, an improving external economic environment and the ability to sustain
positive operating results. 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'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
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March 31, March 31,
2005 2004
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Net Revenues $ 14,521 $ 12,803
Cost of revenues 8,651 8,694
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Gross profit 5,870 4,109
Selling, general and administrative expenses 4,256 4,967
Depreciation and amortization 279 362
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Operating income (loss) 1,335 (1,220)
Interest expense 40 35
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Income (loss) before provision for income
taxes and minority interest 1,295 (1,255)
Provision (benefit) for income taxes 15 (465)
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Net income (loss) before minority interest 1,280 (790)
Minority interest 111 -
Net Income (loss) $ 1,169 $ (790)
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Basic/diluted net income (loss) per common share:
Net income (loss) - basic/diluted $ 0.06 $ (0.04)
Weighted average common shares - basic 18,859 18,859
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Weighted average common shares - diluted 19,004 18,859
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SPAR Group, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share data)
March 31, December 31,
2005 2004
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Assets
Current Assets:
Cash and cash equivalents $ 277 $ 887
Accounts receivable, net 9,851 11,307
Prepaid expenses and other current assets 400 657
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Total current assets 10,528 12,851
Property and equipment, net 1,363 1,536
Goodwill 798 798
Other assets 541 636
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Total assets $ 13,230 $ 15,821
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Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 1,346 $ 2,158
Accrued expenses and other current
liabilities 2,527 2,391
Accrued expense due to affiliates 1,020 987
Restructuring charges 99 250
Customer deposits 1,029 1,147
Lines of credit 2,124 4,956
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Total current liabilities 8,145 11,889
Other long-term liabilities 15 12
Minority Interest 217 206
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Total liabilities 8,377 12,107
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 - March 31, 2005
18,858,972 - December 31, 2004 189 189
Treasury Stock (3) (108)
Accumulated other comprehensive loss (146) (86)
Additional paid-in capital 10,936 11,011
Accumulated deficit (6,123) (7,292)
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Total stockholders' equity 4,853 3,714
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Total liabilities and stockholders' equity $ 13,230 $ 15,821
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Contact:
SPAR Group, Inc.
Charles Cimitile, 914-332-4100
or
PondelWilkinson Inc.
Roger S. Pondel, 310- 279-5980