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Previous: UNITED STATIONERS INC, S-1/A, 1995-08-15 |
Next: MINING SERVICES INTERNATIONAL CORP/, NT 10-Q, 1995-08-15 |
<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period from _______________________ to ______________________
Commission file number 0-13217
M/A/R/C INC.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-1781525
------------------------------------ ------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
7850 North Belt Line Road, Irving, Texas 75063
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(214) 506-3400
--------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 2,880,439 shares as of June
30, 1995.
<PAGE> 2
THE M/A/R/C GROUP
INDEX
(UNAUDITED)
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 1995, and December 31, 1994 . . . . . . . . . . . . . . . . . . 1
Consolidated Statements of Income
Three Months Ended June 30, 1995, and 1994 . . . . . . . . . . . . . . . 2
Consolidated Statements of Income
Six Months Ended June 30, 1995, and 1994 . . . . . . . . . . . . . . . . 3
Consolidated Statement of Changes in Stockholders' Equity
Six Months Ended June 30, 1995 . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1995, and 1994 . . . . . . . . . . . . . . . . 5
Consolidated Notes to Financial Statements . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . 7-11
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
THE M/A/R/C GROUP
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, 1995 Dec. 31, 1994
------------- -------------
(Dollars in Thousands)
<S> <C> <C>
ASSETS
------
Current Assets:
Cash and short-term investments $ 2,423 $ 3,337
Trade accounts receivable, net 10,718 9,131
Expenditures billable to clients, net 4,977 3,242
Notes receivable 8 248
Prepaid expenses and other current assets 2,929 2,379
------- -------
Total Current Assets 21,055 18,337
------- -------
Notes receivable, less current portion 268 40
Property and equipment, less accumulated depreciation of
$13,125,000 and $12,069,000, respectively 7,419 7,149
Capitalized development cost, net 0 59
Investments at cost 9,235 9,384
Intangibles, less accumulated amortization of $2,657,000
and $2,537,000, respectively 805 931
Prepaid pension costs and other assets 5,354 4,984
------- -------
TOTAL ASSETS $44,136 $40,884
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Trade accounts payable 856 2,876
Advance payments from clients 2,864 2,970
Other accrued liabilities 1,686 1,662
------- -------
Total Current Liabilities 5,406 7,508
Long-term debt, less current portion 2,673 123
Deferred taxes payable and other liabilities 3,435 3,181
------- -------
Total Liabilities 11,514 10,812
------- -------
Stockholders' Equity:
Common stock, $1 par value, 15,000,000 shares authorized,
3,748,820 and 3,544,666 issued, respectively 3,749 3,545
Capital in excess of par value 6,591 5,264
Retained earnings 33,431 32,346
Less treasury stock at cost, 868,381 and 861,444 shares, respectively (7,693) (7,546)
Unearned compensation (1,440) (1,440)
Unearned ESOP shares (2,016) (2,097)
------- -------
Total Stockholders' Equity 32,622 30,072
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $44,136 $40,884
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
1
<PAGE> 4
THE M/A/R/C GROUP
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 1995, AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
(Dollars in Thousands,
Except Per Share Data)
<S> <C> <C>
Revenues $ 18,020 $ 18,262
Costs and expenses 17,023 17,333
--------- ---------
Operating income 997 929
Net interest and other income 255 102
--------- ---------
Income before taxes 1,252 1,031
Federal and state income tax provision 463 381
--------- ---------
NET INCOME $ 789 $ 650
========= =========
Net income per share $ .28 $ .23
========= =========
Weighted average common shares outstanding 2,841,436 2,842,220
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 5
THE M/A/R/C GROUP
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1995, AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
(Dollars in Thousands,
Except Per Share Data)
<S> <C> <C>
Revenues $ 34,530 $ 32,465
Costs and expenses 32,805 31,081
--------- ---------
Operating income 1,725 1,384
Net interest and other income 451 314
--------- ---------
Income before taxes 2,176 1,698
Federal and state income tax provision 805 628
--------- ---------
NET INCOME $ 1,371 $ 1,070
========= =========
Net income per share $ .49 $ .36
========= =========
Weighted average common shares outstanding 2,802,812 2,966,479
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 6
THE M/A/R/C GROUP
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Common Capital in Unearned Cost of
Stock, $1 Excess of Retained Unearned ESOP Treasury
Par Value Par Value Earnings Compensation Shares Stock
--------- --------- -------- ------------ ------ -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 $3,545 $5,264 $32,346 ($1,440) ($2,097) ($7,546)
Exercise options/warrants 204 1,276
Purchase treasury stock (147)
Issued restricted stock
Release of ESOP shares 51 81
Cash dividends paid (286)
Net income 1,371
------ ------ ------- ------- ------- -------
Balance at June 30, 1995 $3,749 $6,591 $33,431 ($1,440) ($2,016) ($7,693)
====== ====== ======= ======= ======= =======
</TABLE>
4
<PAGE> 7
THE M/A/R/C GROUP
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1995, AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
(Dollars in Thousands)
<S> <C> <C>
Net cash flow from operating activities:
Net income $ 1,371 $ 1,070
Noncash items:
Depreciation and amortization 1,269 1,348
Net (increase) in receivables and
expenditures billable to clients (3,598) (4,265)
Net (increase) decrease in prepaid expenses and other assets (1,004) 278
Increase (decrease) in trade accounts payable (2,019) (671)
Increase (decrease) in accrued liabilities and other liabilities 629 550
------- -------
Net cash provided (used) by operating activities (3,352) (1,690)
------- -------
Cash flows from investing activities:
Acquisition of property and equipment (1,351) (660)
Disposition of property and equipment 2 41
Net (additions to) reductions in notes receivable (12) (14)
(Gain) loss on sale of investments 0 52
Net (increase in) reduction of investments 150 844
------- -------
Net cash used by investing activities (1,187) 263
------- -------
Cash flows from financing activities:
Net (decrease) increase in customer advances (106) (1,114)
Proceeds (repayment) of long-term debt 2,551 4,180
Issuance of common stock 1,533 68
Cash dividends paid (286) 0
Loan to ESOP 81 0
Issue/(purchase of) treasury stock (148) (5,671)
------- -------
Net cash provided (used) by financing activities 3,625 (2,537)
------- -------
Net increase (decrease) in cash (914) (3,964
Cash and short-term investments at December 31 3,337 7,007
------- -------
Cash and short-term investments at June 30 $ 2,423 $ 3,043
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 8
THE M/A/R/C GROUP
CONSOLIDATED NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments necessary to
present fairly the Company's consolidated financial position as of June
30, 1995, the consolidated results of its operations for the six months
ended June 30, 1995, and June 30, 1994, and its consolidated cash flows
for the six months ended June 30, 1995, and June 30, 1994.
2. These condensed consolidated financial statements are presented in
accordance with the requirements of Form 10-Q and consequently do not
include all disclosures normally required by generally accepted accounting
principles or those normally made in the Company's Annual Report on Form
10-K. Accordingly, the financial statements and related notes in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994,
should be read in conjunction with the accompanying condensed consolidated
financial statements.
6
<PAGE> 9
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The M/A/R/C Group is a marketing information services company, providing
service to over 200 clients nationwide. The majority of our clients are large
public companies. The Company offers a wide range of marketing information
services through its two operating companies: Marketing And Research
Counselors and Targetbase Marketing.
The following Management's Discussion is presented comparing the six
months ended June 30, 1995, with the six months ended June 30, 1994, and the
three months ended June 30, 1995, with the three months ended June 30, 1994.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1995, WITH SIX MONTHS ENDED JUNE 30,
1994
Revenues increased to $34,530,000 for the six-month period ended June
30, 1995, compared with revenues of $32,465,000 for the six-month period ended
June 30, 1994. Production and administrative expenses were 95.0% of revenues,
compared with 95.7% for the prior year.
The Company attributed the stronger financial performance primarily to
increased revenues in both of its core businesses along with higher
profitability due to reduced information processing and operating costs. The
business continued to benefit from increased demand from existing clients and
the addition of new accounts.
7
<PAGE> 10
THE M/A/R/C GROUP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Operating income increased to $1,725,000 from $1,384,000 last year for
the comparable six months. The Company's cost management program implemented
during the latter part of 1993 contributed to the improvement; the remainder
can be attributed to improved sales volume.
Interest and other income increased $137,000 to $451,000 for the
comparable six-month period and included a nonrecurring income item amounting
to $100,000.
Net income for the six-month period ended June 30, 1995, increased
$301,000 to $1,371,000 ($.49 a share) from $1,070,000 ($.36 a share) for the
comparable six-month period ended June 30, 1994. Earnings per share rose 36.1%
reflecting a decrease in the number of weighted average shares outstanding.
The weighted average number of shares outstanding decreased to 2,802,812
from 2,966,479 last year. In accordance with Statement of Position 93-6,
"Employers' Accounting for Employee Stock Option Plans," the Company did not
treat as outstanding for calculating earnings per share 264,782 shares held in
the Employee Shareholders Ownership Plan that have not been released to
participants. The Company repurchased 10,712 shares of its stock during the
six-month period ended June 30, 1995.
8
<PAGE> 11
THE M/A/R/C GROUP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1995, WITH THREE MONTHS ENDED
JUNE 30, 1994
Revenues decreased to $18,020,000 for the three-month period ended June
30, 1995, compared with revenues of $18,262,000 for the three-month period
ended June 30, 1994. Production and administrative expenses were 94.5% of
revenues, compared with 94.9% for the prior year.
The Company experienced slightly improved margins on relatively flat
sales volume for the comparable quarters. The improvement was attributable
primarily to the Company's continuing cost management program.
Operating income increased to $997,000 from $929,000 last year for the
comparable quarter.
Interest and other income increased $153,000 to $255,000 for the
comparable three-month period and contained a nonrecurring income item of
$100,000.
9
<PAGE> 12
THE M/A/R/C GROUP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Net income for the three-month period ended June 30, 1995, increased
$139,000 to $789,000 ($.28 a share) from $650,000 ($.22 a share) for the
comparable three-month period ended June 30, 1994.
The weighted average number of shares outstanding decreased to 2,841,436
from 2,842,220 last year. The Company repurchased 9,336 shares of its stock
during the three-month period ended June 30, 1995.
CAPITAL RESOURCES AND LIQUIDITY
From December 31, 1994, to June 30, 1995, cash and short-term
investments decreased $914,000. During the six-month period, $147,000 in cash
was used to repurchase common stock of the Company. The June 30, 1995, cash
and short-term investments position of $2,423,002, the temporary investment
position of $9,234,959, the working capital position of $15,517,224, and the
existing and unused lines of bank credit totaling $3,000,000 are adequate to
support the Company's cash requirements for operating and capital expenditures.
10
<PAGE> 13
THE M/A/R/C GROUP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
EFFECT OF INFLATION ON OPERATIONS
Due to a wide diversity in terms of project size, costs and project
duration, the Company is unable to estimate accurately the effects of inflation
on its revenue and profit. The major consequence of inflation is mitigated by
controlling cost estimating procedures in a timely manner where possible.
11
<PAGE> 14
SIGNATURES
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.
<TABLE>
<S> <C> <C>
The M/A/R/C Group
---------------------------------------
(Registrant)
Date: August 11, 1994 /s/ Sharon M. Munger
------------------------------- ----------------------------------------
Sharon M. Munger
(President and
Chief Executive Officer)
Date: August 11, 1994 /s/ Harold R. Curtis
------------------------------- -------------------------------------------
Harold R. Curtis
(Chief Financial Officer)
</TABLE>
12
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1995
<PERIOD-START> JAN-01-1994 JAN-01-1995
<PERIOD-END> JUN-30-1994 JUN-30-1995
<CASH> 3,043 2,423
<SECURITIES> 0 0
<RECEIVABLES> 10,156 10,718
<ALLOWANCES> 0 0
<INVENTORY> 3,024 4,977
<CURRENT-ASSETS> 18,248 21,065
<PP&E> 6,801 7,419
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 40,508 44,136
<CURRENT-LIABILITIES> 5,356 5,406
<BONDS> 0 0
<COMMON> 3,981 3,749
0 0
0 0
<OTHER-SE> 22,819 28,873
<TOTAL-LIABILITY-AND-EQUITY> 40,508 44,136
<SALES> 32,465 34,530
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 31,081 32,805
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 314 461
<INCOME-PRETAX> 1,698 2,176
<INCOME-TAX> 628 805
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,070 1,371
<EPS-PRIMARY> .36 .49
<EPS-DILUTED> .36 .49
</TABLE>
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