<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 March 31, 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
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(Address of Principal Executive Offices) (Zip Code)
(214) 506-3400
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(Registrant's Telephone Number, Including Area Code)
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(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: 2,814,301 shares as of March
31, 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
March 31, 1995, and December 31, 1994 . . . . . . . . . . . . . . . . . . 1
Consolidated Statements of Income
Three Months Ended March 31, 1995, and 1994 . . . . . . . . . . . . . . . 2
Consolidated Statement of Changes in Stockholders' Equity
Three Months Ended March 31, 1995 . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1995, and 1994 . . . . . . . . . . . . . . . 4
Consolidated Notes to Financial Statements . . . . . . . . . . . . . . . . 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . 6-8
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security Holders
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
THE M/A/R/C GROUP
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, 1995 Dec. 31, 1994
-------------- -------------
(Dollars in Thousands)
ASSETS
- ------
<S> <C> <C>
Current Assets:
Cash and short-term investments $ 3,401 $ 3,337
Trade accounts receivable, net 9,158 9,131
Expenditures billable to clients, net 3,048 3,242
Notes receivable 8 248
Prepaid expenses and other current assets 2,733 2,379
------- -------
Total Current Assets 18,348 18,337
------- -------
Notes receivable, less current portion 277 40
Property and equipment, less accumulated depreciation of
$12,597,000 and $12,069,000, respectively 7,454 7,149
Capitalized development cost, net 8 59
Investments at cost 9,350 9,384
Intangibles, less accumulated amortization of $2,577,000
and $2,537,000, respectively 868 931
Prepaid pension costs and other assets 5,183 4,984
------- -------
TOTAL ASSETS $41,488 $40,884
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Trade accounts payable $ 1,738 $ 2,876
Advance payments from clients 1,739 2,970
Other accrued liabilities 1,135 1,662
------- -------
Total Current Liabilities 4,612 7,508
Long-term debt, less current portion 2,124 123
Deferred taxes payable and other liabilities 3,043 3,181
------- -------
Total Liabilities 9,779 10,812
------- -------
Stockholders' Equity:
Common stock, $1 par value, 15,000,000 shares authorized,
3,677,331 and 3,544,666 issued, respectively 3,677 3,545
Capital in excess of par value 6,170 5,264
Retained earnings 32,921 32,346
Less treasury stock at cost, 863,030 and 861,444 shares, respectively (7,562) (7,546)
Unearned compensation (1,440) (1,440)
Unearned ESOP shares (2,057) (2,097)
------- -------
Total Stockholders' Equity 31,709 30,072
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $41,488 $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 MARCH 31, 1995, AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1991 1994
---- ----
(Dollars in Thousands,
Except Per Share Data)
<S> <C> <C>
Revenues $ 16,510 $ 14,203
Costs and expenses 15,782 13,748
----------- -----------
Operating income 728 455
Interest and other income net 196 212
----------- -----------
Income before taxes 924 667
Federal and state income tax provision 342 247
----------- -----------
NET INCOME $ 582 $ 420
=========== ===========
Net income per share $ .21 $ .14
=========== ===========
Weighted average common shares outstanding 2,786,639 3,064,715
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 5
THE M/A/R/C GROUP
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 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 132 886
Purchase treasury stock (16)
Issued restricted stock
Release of ESOP shares 20 40
Foreign currency adjustment (7)
Net income 582
-------- -------- ------- --------- --------- ---------
Balance at March 31, 1995 $ 3,677 $ 6,170 $32,921 ($1,440) ($2,057) ($7,562)
======== ======== ======= ========= ========= =========
</TABLE>
3
<PAGE> 6
THE M/A/R/C GROUP
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1995, AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
(Dollars in Thousands)
<S> <C> <C>
Net cash flow from operating activities:
Net income $ 582 $ 420
Noncash items:
Depreciation and amortization 647 680
Net (increase) in receivables and
expenditures billable to clients (107) (1,582)
Net (increase) decrease in prepaid expenses and other assets (640) 163
Increase (decrease) in trade accounts payable (1,138) (33)
Increase (decrease) in accrued liabilities and other liabilities (253) (13)
------- -------
Net cash used by operating activities (909) (365)
------- -------
Cash flows from investing activities:
Acquisition of property and equipment (835) (299)
Disposition of property and equipment 0 18
Net (additions to) reductions in notes receivable 2 (18)
Net (increase in) reduction of investments 34 (221)
------- -------
Net cash used by investing activities (799) (520)
------- -------
Cash flows from financing activities:
Net (decrease) increase in customer advances (1,231) (1,056)
Payment of long-term debt 2,001 0
Issuance of common stock 1,019 30
Loan to ESOP 0 (1,613)
Issue/(purchase of) treasury stock (17) (370)
------- -------
Net cash provided (used) by financing activities (1,772) (1,396)
------- -------
Net increase (decrease) in cash 64 (2,281)
Cash and short-term investments at December 31 3,337 7,006
------- -------
Cash and short-term investments at March 31 $ 3,401 $ 4,725
======= =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 7
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 March
31, 1995, the consolidated results of its operations for the three months
ended March 31, 1995, and March 31, 1994, and its consolidated cash flows
for the three months ended March 31, 1995, and March 31, 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.
5
<PAGE> 8
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.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1995, WITH THREE MONTHS ENDED
MARCH 31, 1994
Revenues increased to $16,510,000 for the three-month period ended March
31, 1995, compared with revenues of $14,203,000 for the three-month period
ended March 31, 1994. Production and administrative expenses were 95.6% of
revenues, compared with 96.8% for the prior year.
The Company attributed the stronger quarterly 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. Nearly three-quarters of the Company's 35
largest clients increased their expenditures with M/A/R/C during the first
quarter of 1995 when compared with the same quarter last year. In addition, we
had 18 new accounts who each spent $45,000 or more on our services in the first
quarter, who were not clients at this time last year.
6
<PAGE> 9
THE M/A/R/C GROUP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Operating income increased to $728,000 from $455,000 last year for the
comparable quarter.
Interest and other income decreased $16,000 to $196,000 for the
comparable three-month period.
Net income for the three-month period ended March 31, 1995, increased
$162,000 to $582,000 ($.21 a share) from $420,000 ($.14 a share) for the
comparable three-month period ended March 31, 1994.
The weighted average number of shares outstanding decreased to 2,786,639
from 3,064,715 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 1,376 shares of its stock during the
three-month period ended March 31, 1995.
7
<PAGE> 10
THE M/A/R/C GROUP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
CAPITAL RESOURCES AND LIQUIDITY
From December 31, 1994, to March 31, 1995, cash and short-term
investments increased $64,000. During the three-month period, $16,000 in cash
was used to repurchase common stock of the Company. The March 31, 1995, cash
and short-term investments position of $3,401,387, the temporary investment
position of $9,350,215, the working capital position of $13,676,000, 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.
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.
8
<PAGE> 11
PART II--OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On April 20, 1995, subsequent to the close of the first quarter, The M/A/R/C
Group held its annual shareholders' meeting for the fiscal year ended December
31, 1994. The shareholders voted on the following proposal:
A. To elect three directors, Cecil B. Phillips, Rolan G. Tucker, and
Jack D. Wolf, to hold office for a three-year term expiring at the 1998
shareholders' meeting or until their successors are elected and have
qualified. Over 96% of the votes were cast by shareholders in favor of
this proposal, less than 1% were withheld, and 3% were not represented.
Incumbent directors serving for a three-year term expiring at the
1996 shareholders' meeting are Elmer L. Taylor, Jr. and Alvin A.
Achenbaum. Incumbent directors serving for a three-year term expiring at
the 1997 shareholders' meeting are Thomas J. Tierney and Sharon M.
Munger.
B. No other matters were voted on at the meeting.
9
<PAGE> 12
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.
The M/A/R/C Group
---------------------------------
(Registrant)
Date: April 29, 1994 /s/ Sharon M. Munger
------------------------------ ---------------------------------
Sharon M. Munger
(President and
Chief Executive Officer)
Date: April 29, 1994 /s/ Harold R. Curtis
------------------------------ ---------------------------------
Harold R. Curtis
(Chief Financial Officer)
10
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1995
<PERIOD-START> JAN-01-1994 JAN-01-1995
<PERIOD-END> MAR-31-1994 MAR-31-1995
<CASH> 3,337 3,401
<SECURITIES> 0 0
<RECEIVABLES> 9,131 9,158
<ALLOWANCES> 0 0
<INVENTORY> 3,242 3,048
<CURRENT-ASSETS> 18,337 18,348
<PP&E> 7,149 7,454
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 40,884 41,488
<CURRENT-LIABILITIES> 7,508 4,612
<BONDS> 0 0
<COMMON> 3,545 3,677
0 0
0 0
<OTHER-SE> 26,527 28,032
<TOTAL-LIABILITY-AND-EQUITY> 40,884 41,488
<SALES> 14,203 16,510
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 13,748 15,782
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 212<F1> 196<F1>
<INCOME-PRETAX> 667 924
<INCOME-TAX> 247 342
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 420 582
<EPS-PRIMARY> 0.14 0.21
<EPS-DILUTED> 0.14 0.21
<FN>
<F1>Represents net interest income for the periods represented.
</FN>
</TABLE>
