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): August 9, 2005
SPAR Group, Inc.
(Exact Name of Registrant as Specified in Charter)
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Delaware 0-27824 33-0684451
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File No.) Identification No.)
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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 August 9, 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 second quarter and six months ended
June 30, 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 August 9, 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: August 11, 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 August 9, 2005.
EXHIBIT 99.1
[LETTERHEAD OF PONDEL WILKINSON INC.]
CONTACTS: Charles Cimitile
Chief Financial Officer
SPAR Group, Inc.
(914) 332-4100
Roger S. Pondel
PondelWilkinson Inc.
(310) 279-5980
SPAR GROUP REPORTS CONTINUED IMPROVEMENT
IN FINANCIAL RESULTS FOR 2005 SECOND QUARTER
TARRYTOWN, NY--AUGUST 9, 2005--SPAR Group, Inc. (NASDAQ:SGRP) today
reported continued improvement in net revenues and earnings for the second
quarter and six months ended June 30, 2005, posting its fourth consecutive
quarter of profitability.
Net revenues for the 2005 second quarter increased 7.3% to $12.8
million from $11.9 million last year. SPAR Group reported net income of
$116,000, or $0.01 per share, for the quarter, compared with a net loss of $12.2
million, or $0.65 per share, for the 2004 second quarter. The 2004 second
quarter loss included impairment and tax charges totaling $9.4 million.
The gross margin percentage for the 2005 second quarter improved
significantly to 36.2% from 26.1% in the corresponding period last year.
Selling, general and administrative expenses were sharply lower, amounting to
$4.2 million, versus $5.5 million a year ago.
For the first half of 2005, net revenues rose 10.5% to $27.3 million
from $24.7 million for the corresponding prior year period. The company had net
income of $1.3 million, equal to $0.07 per share, for the first six months of
2005, compared with a net loss of $13.0 million, or $0.69 per share, last year.
The loss in the first six months of 2004 included impairment and tax charges
totaling $9.4 million.
"The positive second quarter financial results reflect contributions
from our international operations, as well as benefits achieved from
restructuring efforts and associated cost reduction measures," said Robert G.
Brown, SPAR Group's chairman and chief executive officer. "While the business
environment in our domestic sector remains challenging, we believe the company
is well positioned for the long term, with a strong business foundation and
respected industry name. Moreover, we look forward to continuing growth of our
existing international operations, as well as entering additional countries."
Brown said the company's joint venture in Romania, signed during the
first quarter, is now in its' start-up phase, and the China joint venture is
expected to be operational before the end
of 2005. Similar agreements were signed last year in South Africa and India.
For the second quarter, SPAR Group revenue in the U.S. amounted to $9.2
million, compared with $10.6 million last year, with a quarterly net loss of
$33,000 in the 2005 quarter, versus a net loss of $10.9 in 2004 (inclusive of
impairment and tax charges of $8.6 million). International revenue for the 2005
second quarter rose to $3.6 million from $1.3 million last year, primarily as
result of the consolidation of the joint venture in Japan, commencement of
operations in South Africa, Turkey and India, as well as an increase in the
Canadian business. International net income amounted to $149,000, compared with
a net loss of $1.3 million in the 2004 second quarter (inclusive of impairment
and tax charges of $0.8 million).
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 and cost reduction measures, contributions from international
operation, expansion into new countries, 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.
# # #
(Tables follow)
SPAR GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in thousands,
except per share data)
Three Months Ended Six Months Ended
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June 30, June 30, June 30, June 30,
2005 2004 2005 2004
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Net Revenues $ 12,800 $ 11,933 $ 27,321 $ 24,736
Cost of revenues 8,169 8,816 16,820 17,511
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Gross profit 4,631 3,117 10,501 7,225
Selling, general and administrative expenses 4,242 5,477 8,498 10,445
Impairment Charges -- 8,141 -- 8,141
Depreciation and amortization 272 369 551 730
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Operating income (loss) 117 (10,870) 1,452 (12,091)
Interest expense 33 64 73 98
Other (income) expense (13) 7 (13) 8
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Income (loss) before provision for income taxes and 97 (10,941) 1,392 (12,197)
Provision for income taxes 15 1,236 30 771
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Income (loss) before minority interest 82 (12,177) 1,362 (12,968)
Minority interest (34) -- 77 --
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Net Income (loss) $ 116 $(12,177) $ 1,285 $(12,968)
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Basic/diluted net income (loss) per common share:
Net Income (loss) - basic/diluted $ 0.01 $ (0.65) $ 0.07 $ (0.69)
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Weighted average common shares - basic 18,870 18,859 18,865 18,859
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Weighted average common shares - diluted 19,550 18,859 19,202 18,859
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SPAR GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
June 30, December 31,
2005 2004
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(Unaudited) (Note)
ASSETS
Current Assets:
Cash and cash equivalents $ 1,158 $ 887
Accounts receivable, net 10,526 11,307
Prepaid expenses and other current assets 423 657
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Total current assets 12,107 12,851
Property and equipment, net 1,242 1,536
Goodwill 798 798
Other assets 198 636
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Total assets $ 14,345 $ 15,821
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,533 $ 2,158
Accrued expenses and other current liabilities 3,039 2,391
Accrued expense due to affiliates 714 987
Restructuring charges 99 250
Customer Deposits 1,316 1,147
Lines of credit 2,449 4,956
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Total current liabilities 9,150 11,889
Other long-term liabilities 56 12
Minority Interest 117 206
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Total liabilities 9,323 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-
18,881,397 - June 30, 2005
18,858,972 - December 31, 2004 189 189
Treasury Stock (3) (108)
Additional paid-in capital 11,018 11,011
Accumulated other comprehensive loss (175) (86)
Accumulated deficit (6,007) (7,292)
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Total stockholders' equity 5,022 3,714
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Total liabilities and stockholders' equity $ 14,345 $ 15,821
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Note: The Balance Sheet at December 31, 2004, is an excerpt from the Company's
10-K as filed with the Securities and Exchange Commission on April 12, 2005.