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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): July 8, 1999
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.)
19900 MacArthur Boulevard, Suite 900, Irvine, California 92612
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (949) 476-2200
PIA MERCHANDISING SERVICES, INC.
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On July 8, 1999, the transactions contemplated by the Agreement and
Plan of Merger dated as of February 28, 1999 and amended on May 14, 1999 (as
amended, the "Merger Agreement") among SPAR Group, Inc., a Delaware corporation
formerly known as PIA Merchandising Services, Inc. (the "Company"), SG
Acquisition, Inc., a Nevada corporation and, prior to the consummation of the
transactions contemplated by the Merger Agreement, a wholly-owned subsidiary of
the Company ("PIA Acquisition"), PIA Merchandising, Co., Inc., a California
corporation and a wholly-owned subsidiary of the Company ("PIA Merchandising"),
SPAR Acquisition, Inc., a Nevada corporation ("SAI"), SPAR MCI Performance
Group, Inc., a Delaware corporation ("SMCI"), SPAR Incentive Marketing, Inc., a
Delaware corporation ("SIM"), SPAR Marketing Force, Inc., a Nevada corporation
("SMF"), SPAR Marketing, Inc., a Delaware corporation ("SMI"), SPAR, Inc., a
Nevada corporation ("SINC"), SPAR/Burgoyne Retail Services, Inc., an Ohio
corporation ("SBRS"), SPAR Marketing, Inc., a Nevada corporation ("SMNEV"), and
SPAR Trademarks, Inc., a Nevada corporation ("STM," and together with SMCI, SIM,
SMF, SINC, SMI, SBRS, SMNEV and STM, the "SPAR Companies"), were consummated.
Immediately prior to the consummation of the Merger, SAI owned,
directly or indirectly, all of the issued and outstanding capital stock of the
SPAR Companies. Pursuant to the Merger Agreement, on July 8, 1999, following the
approval of the Company's stockholders at the annual meeting of stockholders
held on that date (the "Annual Meeting"), PIA Acquisition merged with and into
SAI (the "Merger"), with SAI continuing as the surviving corporation and a
wholly-owned subsidiary of the Company. In addition, on July 8, 1999, as part of
the transactions contemplated by the Merger Agreement, the Company (a) amended
its certificate of incorporation to (i) change its name to "SPAR Group, Inc.",
(ii) increase the number of authorized shares of the Company's common stock, par
value $.01 per share (the "Company Common Stock"), from 15,000,000 to 47,000,000
and (iii) delete the prohibition on stockholder action by written consent
without a meeting under Delaware law and (b) amended its Amended and Restated
1995 Stock Option Plan (the "1995 Stock Option Plan"), to increase the number of
shares of Company Common Stock reserved for issuance upon exercise of stock
options granted thereunder from 1.3 million to 3.5 million.
As a result of the Merger, (a) the holder of each share of SAI common
stock issued and outstanding at the effective time of the Merger received one
share of Company Common Stock (an aggregate of 12,659,487 million shares of
Company Common Stock) and (b) the Company assumed all of the stock options of
SAI outstanding at the effective time of the Merger and issued substitute
options to acquire 134,114 shares of Company Common Stock, at an exercise price
of $.01 per share, to the holders thereof. The Company also issued stock options
to acquire an aggregate of approximately 2.1 million shares of Company Common
Stock.
In exchange for their shares of SAI common stock, the existing
stockholders of SAI, including the principal stockholders of SAI prior to the
Merger, Robert G. Brown and William H.
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Bartels, were issued shares of Company Common Stock and substitute options
representing approximately 70% of the outstanding shares of Company Common Stock
immediately following the Merger. As a result of the Merger, Robert G. Brown,
the new Chairman, Chief Executive Officer, President and a director of the
Company, may be deemed to be the beneficial owner, directly or indirectly, of
approximately 41.7% of the outstanding shares of the Company Common Stock and
Mr. William H. Bartels, the Vice Chairman and a director of the Company, may be
deemed to be the beneficial owner of approximately 26.5% of the outstanding
shares of the Company Common Stock. An aggregate of 1,245,949 shares of Company
Common Stock owned by Messrs. Brown and Bartels, directly or indirectly through
their family members, are currently held in escrow pursuant to an indemnity
escrow agreement to cover certain indemnity obligations under the Merger
Agreement. Neither the Company nor any of its officers, directors, or holders of
at least 10% of the Company Common Stock prior to the consummation of the Merger
owned, directly or indirectly, any voting securities of SAI.
In connection with the consummation of the Merger, except for Mr.
Patrick W. Collins and Mr. J. Christopher Lewis, all of the Company's seven
directors elected at the Annual Meeting resigned from the Board of Directors of
the Company. Messrs. Collins and Lewis appointed Messrs. Brown and Bartels and
Mr. Robert O. Aders to fill three of the remaining five vacancies on the Board.
There are currently two vacancies on the Board.
The terms and conditions of the Merger, a description of the businesses
of the Company prior to and following consummation of the Merger, details about
the consideration paid by the Company in connection with the Merger, and further
information about the terms of the Merger are contained in the Company's
Definitive Proxy Statement filed with the Securities and Exchange Commission on
June 28, 1999. The description of the Merger Agreement in the Definitive Proxy
Statement does not purport to be complete and is qualified in its entirety by
the express terms and provision of the Merger Agreement. A copy of the Merger
Agreement is filed as Exhibits 2.1 and 2.2 hereto and is incorporated by
reference herein. Copies of the Company's press release dated July 8, 1999
relating to the consummation of the Merger is filed as Exhibit 99.1 to this Form
8-K.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
The terms of the Merger were determined in arms-length negotiations
between the Company and SAI. For a discussion of the Merger, please see Item 1
above and the information set forth in the Definitive Proxy Statement. The
information related to this transaction which would otherwise be required to be
reported under Item 2 is not provided herein pursuant to General Instructions
B.3. of Form 8-K as substantially the same information required by Item 2 has
been "previously reported" (as defined in Rule 12b-2) by the Company in
connection with the Definitive Proxy Statement.
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FORWARD-LOOKING INFORMATION
This Form 8-K contains forward-looking statements, which are generally
identified by words such as "may," "might", "should," "seeks," "believes,"
"expects," "intends," "estimates," "projects," "strategy" and similar
expressions or the negative of those words. Those statements may appear in a
number of places in this Form 8-K and include statements regarding the intent,
belief, expectation, strategies or projections of the Company and its management
at that time. Forward-looking statements are subject to a number of known and
unknown risks and uncertainties that could cause actual results to differ
materially from those projected, expressed or implied in the forward-looking
statements. These risks and uncertainties, many of which are not within the
Company's control, include, but are not limited to, the uncertainty of potential
operating difficulties, the dependence on key personnel, the possible impact of
competitive products and pricing, the Company's continued ability to finance its
operations, general economic conditions and the achievement and maintenance of
profitable operations and positive cash flow. Forward-looking statements speak
only as of the date made, and neither the Company nor its management undertakes
any obligation to update or revise any forward-looking statements. It is likely
that if one or more of the risks and uncertainties materialize, the current
expectations of the Company and its management will not be recognized.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
The financial information required by this Item 7 is not included in
this initial report on Form 8-K, but will be filed as an amendment to this
report not later than 60 days after the date that this initial report on Form
8-K must be filed.
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(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit
No. Description
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<C> <S>
2.1 Agreement and Plan of Merger dated as of February 28, 1999
among the Company, SAI, PIA Merchandising, PIA Acquisition
and the SPAR Companies (incorporated by reference to Exhibit
10.10 of the Company's Form 10-K, filed with the Securities
and Exchange Commission on March 31, 1999).
2.2 First Amendment to Agreement and Plan of Merger dated as of
May 14, 1999, among the Company, SAI, PIA Merchandising, PIA
Acquisition and the SPAR Companies (incorporated by
reference to Exhibit 10.13 of the Company's Form 10- K/A,
filed with the Securities and Exchange Commission on May 25,
1999).
99.1 Press Release of the Company dated July 8, 1999.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: July 22, 1999
SPAR Group, Inc.
By: /s/ Cathy L. Wood
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Cathy L. Wood
Executive Vice President,
Chief Financial Officer and Secretary
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description
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<C> <S>
2.1 Agreement and Plan of Merger dated as of February 28, 1999
among the Company, SAI, PIA Merchandising, PIA Acquisition
and the SPAR Companies (incorporated by reference to Exhibit
10.10 of the Company's Form 10-K, filed with the Securities
and Exchange Commission on March 31, 1999).
2.2 First Amendment to Agreement and Plan of Merger dated as of
May 14, 1999, among the Company, SAI, PIA Merchandising, PIA
Acquisition and the SPAR Companies (incorporated by
reference to Exhibit 10.13 of the Company's Form 10- K/A,
filed with the Securities and Exchange Commission on May 25,
1999).
99.1 Press Release of the Company dated July 8, 1999.
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EXHIBIT 99.1
CONTACTS: Cathy L. Wood
PIA Merchandising Services, Inc.
(949) 476-2200
Roger S. Pondel/Gary S. Maier
Pondel Parsons & Wilkinson
(310) 207-9300
FOR IMMEDIATE RELEASE
PIA MERCHANDISING AND SPAR COMPANIES COMPLETE MERGER
-- CREATES ONE OF THE LARGEST PROVIDERS OF OUTSOURCED MARKETING AND
RETAIL MERCHANDISING SERVICES --
IRVINE, CALIFORNIA -- JULY 8, 1999 -- PIA Merchandising Services, Inc.
(Nasdaq: PIAM) today announced that its shareholders approved the previously
announced proposed merger with the SPAR Companies, headquartered in Tarrytown,
New York, and that the merger was consummated following such approval. PIA will
operate under the name SPAR Group, Inc. and trade under the symbol SGRP,
effective July 9, 1999.
The combination creates one of the nation's largest providers of
outsourced marketing and retail merchandising services, with an estimated 1998
combined annual sales of approximately $197 million.
Under the terms of the transaction, PIA issued approximately 12.8
million shares of PIA stock to stockholders of the SPAR Companies.
Robert G. Brown, chairman, chief executive officer and president of the
SPAR Companies, was named chairman, chief executive officer and president of the
combined company. Terry R. Peets, formerly president and chief executive officer
of PIA, and Bill Bartels formerly Senior Vice President of the SPAR Companies,
are now vice chairmen of the combined company, and Cathy Wood, PIA's executive
vice president and chief financial officer, retains her position in the combined
company.
"We have made significant progress over the past several months
planning a smooth
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transition that we believe will create tremendous economies of scale and enable
us to offer our customers substantially expanded services. We believe the new
organization will provide a quantum leap in technological sophistication. A key
component will be our use of proprietary, Internet technology, which already is
being used to collect and distribute store-level information to our customers on
a real-time basis, and to manage the activities of our field force" said Brown.
Peets added, "We believe the savings created by combining the companies
will be significant and will take effect almost immediately. Our goals in this
merger were to create value for PIA shareholders while improving service to our
customers, and we are confident we have done so with this combination."
SPAR Group's focus will be on providing clients a wide array of
marketing and sales solutions through a single point of contact. The combined
company will serve more than 18,000 grocery stores, 6,200 drug stores and 8,800
mass merchandiser stores with retail merchandising. The company also offers
incentive marketing, teleservices, database marketing, and marketing research
services.
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, failure to achieve expected synergies as a result of the
merger and other factors discussed in PIA's Definitive Proxy Statement, Form
10-K and Form 10-Q on file with the SEC and other filings made with the SEC from
time to time.
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