EXHIBIT 99.1
SPAR Group Reports Financial Results for 2004 Third Quarter; Company
Reports Profitable Third Quarter
TARRYTOWN, N.Y., Nov 12, 2004 -- SPAR Group, Inc. (SGRP) today reported a profit
for the third quarter ended September 30, 2004.
The company achieved net income of $210,000, equal to $.01 per diluted share,
for the 2004 third quarter, compared with a net loss of $345,000, or a loss of
$.02 per share, a year ago. Net revenues for the 2004 third quarter declined to
$10.7 million from $16.6 million last year.
Robert G. Brown, SPAR Group's chairman and chief executive officer, said the
significant expense reductions are evidence of SPAR's restructuring to reflect
the company's current size. He said the lower comparative revenue, in part,
resulted from the company's largest customer completing the sale of its
business.
"Our restructuring plan is focused on improving SPAR's financial health," Brown
said. "We are downsizing our expense structure and cutting fixed costs
throughout the company. At the same time, we are not losing sight of SPAR's
future and continue to invest in technology, local in-store demonstration
services and international expansion.
"While business conditions remain challenging, we are optimistic about the
company's long-term future and the progress being made to achieve and sustain
positive operating results," Brown said.
For the three months ended September 30, 2004, the gross margin percentage
improved to 34.8% from 31.5% last year. Selling, general and administrative
expenses totaling $4.0 million, include $500,000 of restructuring expenses and
were reduced from $5.3 million for the corresponding period last year. SPAR also
reported $800,000 of other income that includes non-recurring income of
approximately $600,000 resulting from the restructuring of debt due to the
company from a prior subsidiary.
For the first nine months of 2004, SPAR posted a net loss of $12.8 million, or
$0.68 per share, on net revenues of $35.4 million. The company had net income of
$1.5 million, equal to $0.08 per diluted share, on net revenues of $52.7 million
for the corresponding prior year period.
Brown said more than 63%, or $8.1 million of the loss for the 2004 year-to-date
period, was attributable to non-cash, non-recurring items related to the write
off of goodwill and other impairment charges.
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 achieve and 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'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 regarding 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 Nine Months Ended
----------------------- -----------------------
September September September September
30, 2004 30, 2003 30, 2004 30, 2003
-------- -------- -------- --------
Net revenues $ 10,683 $ 16,615 $ 35,418 $ 52,704
Cost of revenues 6,963 11,380 24,474 33,777
-------- -------- -------- --------
Gross profit 3,720 5,235 10,944 18,927
Selling, general and
administrative expenses 4,028 5,334 14,471 15,044
Impairment charges - - 8,141 -
Depreciation and amortization 275 385 1,005 1,162
-------- -------- -------- --------
Operating (loss) income (583) (484) (12,673) 2,721
Interest expense (29) (69) (127) (209)
Other income (expense) 773 - 764 (28)
-------- -------- -------- --------
Income (loss) before provision
for income taxes 161 (553) (12,036) 2,484
Provision (benefit) for income
taxes 15 (208) 783 943
-------- -------- -------- --------
Net income (loss) before
minority interest 146 (345) (12,819) 1,541
Minority interest 64 - 64 -
-------- -------- -------- --------
Net income (loss) $ 210 $ (345) $(12,755) $ 1,541
======== ======== ======== ========
Net income (loss) per common
share:
Basic $ 0.01 $ (0.02) $ (0.68) $ 0.08
Diluted $ 0.01 $ (0.02) $ (0.68) $ 0.08
======== ======== ======== ========
Weighted average common shares
- basic 18,859 18,859 18,859 18,853
======== ======== ======== ========
Weighted average common shares
- diluted 19,206 18,859 18,859 19,508
======== ======== ======== ========
SPAR Group, Inc.
Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share data)
September December
30, 2004 31, 2003
-------- --------
Assets
Current assets:
Cash and cash equivalents $ 236 $ -
Accounts receivable, net 7,966 13,942
Prepaid expenses and other current assets 1,267 659
Deferred income taxes - 1,305
-------- --------
Total current assets $ 9,469 $ 15,906
Property and equipment, net 1,686 2,099
Goodwill 798 8,749
Deferred income taxes - 434
Other assets 431 926
-------- --------
Total assets $ 12,384 $ 28,114
======== ========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 1,593 $ 1,350
Accrued expenses and other current liabilities 1,194 4,081
Accrued expenses, due to affiliates 1,889 1,091
Restructuring charges, current 162 685
Customer deposits 915 530
Line of credit, short-term 2,809 4,084
-------- --------
Total current liabilities $ 8,562 $ 11,821
Other long-term liabilities 476 270
Restructuring charges, long term 117 -
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 - September 30, 2004
18,858,972 - December 31, 2003 189 189
Treasury stock (176) (384)
Accumulated other comprehensive loss (56) (7)
Additional paid-in capital 11,051 11,249
Accumulated (deficit) retained earnings (7,779) 4,976
-------- --------
Total stockholders' equity $ 3,229 $ 16,023
-------- --------
Total liabilities and stockholders' equity $ 12,384 $ 28,114
======== ========
Contacts:
Charles Cimitile, 914-332-4100
PondelWilkinson Inc.
Roger S. Pondel, 310-279-5980