TARRYTOWN, N.Y., July 26, 2001 -- SPAR Group, Inc. (Nasdaq:SGRP) today announced results for its second quarter ended June 30, 2001, with net income up 280 percent and operating income climbing 21 percent.
For the second quarter of 2001, SPAR reported net income of $319,000, or $0.02 per diluted share, compared with net income of $113,000, or $0.01 per diluted share, a year ago. Revenues for the second quarter of 2001 were $23.5 million compared with $28.3 million in the second quarter a year ago. Revenues for the 2001 second quarter reflect discontinued in-store merchandising programs previously contracted with PIA Merchandising Co. Inc., a subsidiary of PIA Merchandising Services, Inc., which SPAR Group acquired in July 1999 and completed integrating in the third quarter of 2000.
For the six months ended June 30, 2001, SPAR reported net income of $996,000, or $0.05 per diluted share, compared with net income of $529,000, or $0.03 per diluted share. Revenues for the first half of 2001 were $51.2 million compared with $60.7 million in the comparable 2000 period.
"Results for the second quarter continue to reflect the success of applying SPAR's technology for our day-to-day management of accounts, while offering clients efficient and cost-effective marketing services," said Bob Brown, SPAR Group's chairman and chief executive officer. "We have conducted numerous customer surveys designed to monitor our performance and the results are very positive. Based upon current business prospects, we remain optimistic regarding our targets of $0.14 per share earnings for the year 2001 and $0.28 per share in 2002."
Brown noted that SPAR's International Division, which is initially focused on expanding its merchandising services to the Pacific Rim region, is proceeding according to plan in Japan. The Japanese reporting and other technical support systems now operate from the company's Detroit facility and are running 24 hours a day, seven days a week. He added that SPAR's Incentive division is expected to benefit from several new product introductions, supported by the company's systems and technology that have successfully improved performance within the merchandising services division.
"We are clearly on the right track and look forward to other opportunities to further enhance shareholder value," said Brown.
SPAR Group, Inc., a diversified marketing services company, provides a broad array of productivity enhancing products and services to help Fortune 1000 companies improve their sales, operating efficiency and profits. SPAR is organized into four operating divisions. SPAR's Merchandising Division provides in-store merchandising, database and research services to general retail, mass market, drug, and grocery chains. SPAR's Incentive Division provides a wide variety of consulting, creative program administration, travel and merchandising fulfillment services to companies seeking to retain, train, and motivate employees to higher levels of productivity. SPAR's Internet Division offers a series of Internet-based productivity improvement applications designed to help clients increase operating efficiencies and train employees in remote locations. SPAR's International Division, through a joint venture with a large Japanese wholesaler, is poised to provide in-store merchandising, database and research services in general retail, mass market, drug, and grocery chains in the Far East.
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 from those indicated by such statements as a result of various factors, including the continued building of sales momentum, the success of marketing its Internet application software products and other factors discussed in SPAR Group's Form 10-K, Form 10-Q, and other filings made with the Securities and Exchange Commission from time to time.
SPAR Group, Inc.
Condensed, 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,
2001 2000 2001 2000
Net revenues $23,509 $28,290 $51,187 $60,737
Cost of revenues 15,990 19,177 34,816 42,142
Gross profit 7,519 9,113 16,371 18,595
Selling, general,
and administrative
expenses 5,690 7,567 12,065 15,843
Depreciation and
amortization 969 838 1,889 1,638
Operating income 860 708 2,417 1,114
Interest expense 332 494 719 951
Other (income)
expense -- 5 -- (785)
Income before
provision for
income taxes 528 209 1,698 948
Provision for income
taxes 209 96 702 419
Net income $319 $113 $996 $529
Basic earnings per
share $0.02 $0.01 $0.05 $0.03
Basic weighted
average common
shares 18,272 18,176 18,272 18,165
Diluted earnings per
share $0.02 $0.01 $0.05 $0.03
Diluted weighted
average common
shares 18,336 18,299 18,329 18,289
SPAR Group, Inc.
Condensed, Consolidated Balance Sheets
(in thousands, except per share data)
June 30, December 31,
2001 2000
(unaudited) (audited)
ASSETS
Cash and cash equivalents $ -- $ --
Accounts receivable, net 19,239 23,207
Prepaid expenses and other
current assets 1,306 880
Prepaid program costs 2,196 3,542
Deferred income taxes 1,718 1,718
Total current assets 24,459 29,347
Property and equipment, net 3,588 3,561
Goodwill and other
intangibles, net 20,370 21,485
Deferred income taxes 1,082 1,082
Other assets 223 143
Total assets $49,722 $55,618
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $3,972 $5,849
Accrued expenses and other
current liabilities 10,044 10,178
Deferred revenue 4,839 8,581
Restructuring and other
charges, current 1,655 2,205
Due to certain
stockholders, current 3,133 3,505
Current portion of
long-term debt 928 1,211
Total current liabilities 24,571 31,529
Line of credit and
long-term liabilities, net
of current portion 8,549 8,093
Long-term debt due to
certain stockholders 2,230 2,160
Restructuring and other
charges, long-term 1,136 1,596
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 -- 18,272,330
as of June 30, 2001
and December 31, 2000 182 182
Additional paid-in capital 10,127 10,127
Retained earnings 2,927 1,931
Total stockholders' equity 13,236 12,240
Total liabilities and
stockholders' equity $49,722 $55,618
Contacts:
SPAR Group, Inc.
Charles Cimitile
914/332-4100
PondelWilkinson MS&L
Gary S. Maier
310/207-9300
