<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------------------
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition 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 (IRS Employer Identification No.)
incorporation or organization)
7850 North Belt Line Road 75063
Irving, Texas (ZIP Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (972) 506-3400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Name of each exchange
Title of each class on which registered
------------------- -------------------
Common stock NASDAQ
Indicate by check mark whether the Registrant (1) has filed all reports 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 reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].
As of March 18, 1998, 5,215,415 common shares were outstanding, and the
aggregate market value of the common shares held by nonaffiliates (based upon
the closing price of these shares on the National Association of Securities
Dealers National Market System) was approximately $59,128,186 (includes the
market value of shares in ESOT participants' accounts).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference into the
indicated part or parts of this report:
The Registrant's Annual Report to Shareholders for the year ended December
31, 1997--Parts I, II and IV; the Registrant's definitive Proxy Statement
to be filed with the Securities and Exchange Commission not later than 120
days after the end of the fiscal year covered by this report--Part III; and
the Exhibits listed on page 15. There is a total of 16 pages in this
document.
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TABLE OF CONTENTS
M/A/R/C INC.
FORM 10-K
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART I
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Item 1. Business 3
Item 2. Properties 8
Item 3. Legal Proceedings 9
Item 4. Submission of Matters to a
Vote of Security Holders 9
PART II
-------
Item 5. Market for the Registrant's Common Equity
and Related Stockholder Matters 10
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 8. Financial Statements and Supplementary Data 11
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure 11
PART III
--------
Item 10. Directors and Executive Officers of the Registrant 11
Item 11. Executive Compensation 11
Item 12. Security Ownership of Certain Beneficial Owners
and Management 11
Item 13. Certain Relationships and Related Transactions 11
PART IV
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Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K 12
Index to Exhibits 15
Signatures 16
</TABLE>
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PART I
ITEM 1. BUSINESS.
BACKGROUND AND RECENT DEVELOPMENTS
Marketing And Research Counselors, Inc., the predecessor of M/A/R/C Inc.
(the "Registrant"), was organized in 1965 as a majority owned subsidiary of
Tracy-Locke Company, Inc. ("Tracy-Locke"), an advertising agency. In
connection with the acquisition of Tracy-Locke by BBDO International, Inc.
("BBDO"), the Registrant was organized in 1981 as a wholly owned subsidiary of
Tracy-Locke to hold the stock of Marketing And Research Counselors, Inc. and
certain of the Tracy-Locke film, audio, and advertising operations not to be
acquired by BBDO. All of the stock of the Registrant was distributed to the
shareholders of Tracy-Locke in February 1982. Once separated from Tracy-Locke,
the Registrant disposed of its operations unrelated to marketing research.
In January 1985, the Registrant and certain shareholders of the Registrant
sold an aggregate of 2,860,923 shares of common stock at a per share price to
the public of $3.70. The Registrant received net proceeds of approximately
$5,500,000 from its sale of 1,687,500 shares of common stock.
In January 1991, the Registrant renamed itself The M/A/R/C Group, and
placed each of its marketing information businesses into four separate
operating companies. Consolidation of operations in 1994 resulted in the
Registrant's two current operating divisions: Targetbase Marketing, a
full-service database marketing agency, and M/A/R/C Research, a custom
marketing research firm. In August 1995, the Registrant organized Digital
Marketing Services, Inc. ("DMS") with America Online Incorporated and now owns
30% of DMS and accounts for its ownership under the equity method of
accounting. These designated primary businesses are considered one segment for
accounting purposes.
Information concerning the Registrant's revenues, operating profit, and
assets is included in the financial statements incorporated by reference into
Item 8 of this report.
Since the Registrant's initial public offering in January 1985, three
stock splits have been paid in the form of stock dividends. In December 1985,
a three-for-two split; in February 1992, a six-for-five split; and in February
1997, a three-for-two split. All references to shares and per share data in
this report have been adjusted to reflect all such stock splits.
The Registrant's principal executive offices and corporate headquarters
are located at 7850 North Belt Line Road, Irving, Texas 75063, and its
telephone number is (972) 506-3400.
GENERAL
Through its two operating companies, M/A/R/C Research and Targetbase
Marketing, the Registrant provides marketing services to large consumer and
business product and service companies. The Registrant has designed and
developed proprietary, computer-based systems for providing an integrated
offering of marketing intelligence services. The marketing research services
include forecasting the business impact of marketing strategies through market
segmentation, market testing, market forecasting and market tracking. The
Registrant also provides a full complement of database marketing services that
include marketing consulting, database construction and management, creative
design and production, and strategic analysis.
ORGANIZATION
The Registrant provides marketing services to more than 200 clients
who market consumer, business, or industrial products or services.
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M/A/R/C RESEARCH
The majority of the Registrant's custom marketing research activities
are conducted through its M/A/R/C Research operating company.
The purpose of the custom marketing research performed by the
Registrant is to evaluate and forecast the business impact of clients'
marketing strategies and execution. Data is gathered, processed, and analyzed
about clients' products or services and the population to which they are
marketed. Clients use the data collected by the Registrant and the resulting
analyses to assist in determining, among other things, the most valuable
customer segments to pursue, what types of products or services to introduce or
discontinue, and what types of marketing and advertising strategies to use to
attract and retain customers.
The Registrant generally contracts separately with clients for each
research project. The typical project has a duration of several months except
for market tracking projects which generally run for a year with an option for
annual renewal. The process for initiating a project includes consultation
with the client to define the scope of information required, preparation of a
study plan outlining the specifications for data collection and analysis, and
negotiation of a price estimate. Upon approval, the Registrant designs the
questionnaire, designates the sampling requirements, and initiates the data
collection. After interviewing is completed, data are validated and processed,
analysis is conducted, and results accompanied by recommendations are presented
to the client.
M/A/R/C Research gathers data from target consumers and businesses
through the telephone, face-to-face, the mail, and online networks. The data
is gathered through telephone interviewers utilizing telephone service centers
located in Denton, Texas, and Killeen, Texas. M/A/R/C Research has
approximately 250 CRT-equipped interviewing positions. The Registrant also
uses marketing research field supervisors in local markets to conduct
face-to-face or telephone interviews through their interviewers. Data are
further collected by mailed questionnaires and through interactive online
services by way of a joint venture with America Online as well as an exclusive
agreement with Peapod Interactive. M/A/R/C Research's data collection
capabilities, when combined with the function of its ACRS software to fully
integrate all aspects of the marketing research process, significantly reduce
the time required to complete most projects.
Building upon the scope of advanced data collection technology and
resources, M/A/R/C Research is staffed by professionals with training and
experience in advanced marketing research methods and analysis as well as
business application of marketing intelligence. The staff consults with
clients on business problem definition, solution design, and marketing strategy
implementation.
The principle services provided by M/A/R/C Research are designed to
address strategic marketing intelligence needs and can be segmented into four
categories: market segmentation, market testing, market forecasting, and
market tracking:
Market segmentation studies identify distinct groups of consumers or
businesses according to their similarity on relevant dimensions such
as their need for products and/or the benefits they are seeking or
their purchase volume and brand loyalty. These results can be used to
identify unmet needs and corresponding new product opportunities as
well as to determine how consumers perceive particular brands versus
competition and how to develop strategies to enhance a product's
position. Additionally, these results can be used to target
advertising and marketing activities to the most desirable and
valuable groups of consumers.
Market testing studies may be conducted to evaluate any element of the
marketing mix. The predominant types of market testing conducted are
concept tests which determine consumer acceptance of a new product,
service or advertising concept, and product tests which determine the
strengths and weaknesses of a particular product among consumers.
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Market forecasting studies size the potential business impact of sales
and return on investment of different marketing strategies. M/A/R/C
Research has developed a family of proprietary research and modeling
services styled "Assessor Market Modeling System" that provides
guidance to clients across all phases of the marketing process through
its market modeling technology. It is used worldwide to forecast
sales potential for new as well as repositioned products and services.
Additionally, the results can be used to size target market
opportunities and to optimize spending across different advertising
media and promotion tactics.
Market tracking consists of conducting a continuing study or series of
similar studies over a period of time to determine changes or trends
in customer acceptance or reaction to products, services, advertising
campaigns, etc. The Customer Satisfaction tracking programs offered by
M/A/R/C Research are used to identify the drivers of satisfaction with
a product or service and to track changes in satisfaction over time.
The results of these programs are used to identify improvement
opportunities in manufacturing and marketing processes and are linked
to predictions of how these improvements will impact sales and return
on investment.
TARGETBASE MARKETING
The Registrant's Targetbase Marketing operating company is a
full-service database marketing agency offering the full complement of
analytic, technology, and creative services needed to target marketing
activities directly to clients' high potential customers and prospects. The
purpose of the database marketing performed by the Registrant is to improve the
return on marketing investments by targeting customers and prospects that
represent the most value to a product or service. Data is gathered, processed,
and analyzed to create a strategic business analysis that identifies the most
valuable target groups and appropriate direct marketing strategies for reaching
these target groups. Targetbase creates and maintains marketing databases of
both existing customers and high potential prospects of client products and
services and executes marketing and promotional programs directed at these
databases. The implementation of these closed-loop marketing programs can
incorporate a variety of response-oriented techniques, such as contests,
coupons, and frequency incentives as well as a variety of media, including
mail, telephone, direct TV, and online interactive.
Targetbase generally works on an exclusive basis with a client in a
product category. Once a client has selected Targetbase as its database
marketing agency, a scope of work is defined and a team of professional staff
with the skills required to accomplish the scope of work is assigned to the
client. Compensation formats generally include a retainer fee for the
dedicated team and/or management of a marketing database and variable fees for
project-specific costs.
The customer data housed in the marketing databases for clients
represent the foundation of the marketing intelligence used to build effective
direct marketing strategies and programs for clients. The Registrant has
developed proprietary software for managing and accessing marketing databases
to support the integration of its full complement of database marketing
services. Targetbase's proprietary ARM system is scalable to the size of the
database, allows for customization to individual clients, and provides
functional access to both internal staff groups as well as to clients for
planning and implementing programs.
Targetbase provides services in all three of the necessary segments of
strategic business analysis, technology, and creative production:
Strategic business analysis is performed to identify the high
potential customer and prospect target groups for client products and
services and to develop direct marketing strategies that will yield a
high return on related marketing investments. Services include market
segmentation, media mix analysis, ROI analysis of strategic options
and program concepts, and
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loyalty analysis. The results of these analyses are used to screen
and select additions to the database audience, develop communication
strategies to the audience, and select the appropriate media through
which to reach the audience. These techniques are also used to
evaluate ROI on the investments that are made by the client.
Technology services are used to enable the database marketing
strategy. Targetbase's advanced technology assists in the targeting
process by providing a means to efficiently segment the marketplace
and tailor various marketing strategies to multiple target groups.
Services include technology consulting for design and integration with
client systems as well as ongoing database management and development
of tailored decision support tools.
Creative services translate the marketing strategy into advertising
messages and promotional programs that attract and retain business for
client products and services. Full creative capabilities have been
developed with expertise in a variety of industries and a variety of
media including print, direct TV, and online interactive.
Response-oriented programs are designed to yield valuable customer
feedback which is incorporated into the database to expand client
information about its customers and to refine the targeting and
creative process for future programs.
PROPRIETARY SOFTWARE
The Registrant has developed data processing and data communications
capabilities, with a large staff of systems analysts and programmers trained to
design software for marketing research, telemarketing, and database marketing.
The proprietary software developed by the Registrant includes the Automated
Custom Research System ("ACRS") and the Acquisition Retention and Maximization
System ("ARM"). ACRS is an effective marketing research software system
because it integrates all facets of the marketing research process into one
on-line system and is capable of handling complex studies. ARM is the software
used for managing and accessing marketing databases. ARM is an advanced tool
for database marketing because it incorporates production and analytical
processes along with scalability and customization. The Registrant's systems
analysts and programmers continually enhance the systems.
CLIENTS
The Registrant directs its marketing efforts toward companies having
relatively sophisticated and comprehensive research and marketing needs; these
companies tend to be global suppliers of consumer goods and business services.
During the year ended December 31, 1997, no single client accounted for as
much as 10% of the Registrant's revenues.
Because the Registrant generally performs its marketing research
assignments on a custom basis, it has no long-term contracts to perform custom
marketing research.
FEE ARRANGEMENTS
The Registrant's research assignments generally are obtained by
competitive estimating based on a specified fee. Therefore, the ability of the
Registrant to realize a profit on a particular research project depends on its
ability to accurately estimate in advance the costs involved in the project.
Database marketing assignments, however, are usually defined in terms of the
scope of work and are longer term in nature. Typically a team of professional
staff is assigned to the client and compensation arrangements tend toward
retainers for the dedicated staff and variable fees for other work. Revenues
are recognized as services are performed and billed to clients.
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COMPETITION
The business in which the Registrant is principally engaged is highly
competitive and is characterized by a large number of relatively small
organizations and a few concerns of substantial resources. The Registrant
frequently competes with small specialty companies having low overhead. While
precise information about the industry is not available, the May 19, 1997,
issue of Advertising Age rated the Registrant as the sixteenth largest
marketing research company in the United States. Additionally, the
Registrant's database marketing agency was ranked as the eleventh largest
direct response agency in the United States by the Direct Marketing Association
in its July 1997 report. The Registrant is also subject to competition from
marketing and research departments of various companies, advertising agencies,
and business consulting firms. The Registrant believes that the principal
methods of competition in the custom marketing research business are the
quality of information; consistency; the ability to direct, acquire and report
on marketing programs in a short period of time; and price. The Registrant
believes that the principal methods of competition in the database marketing
business are the quality of database construction and management, creative
design and production, strategic analysis, price, and marketing consulting.
EMPLOYEES
At December 31, 1997, the Registrant employed 575 full-time staff
employees and approximately 587 part-time hourly employees for data gathering
and processing purposes. The permanent staff is composed primarily of
marketing and research consultants and specialists. Turnover at the Registrant
is low at the present time; however, the possibility of key personnel leaving
always exists.
SERVICE MARKS
The Registrant has obtained federal and state registration of several
service marks and has filed service mark applications for certain other names
and designs. Management believes that the Registrant's marketing efforts,
timely implementation of technological advances, responsiveness to customer
requirements, depth of technical expertise, and high level of customer support
enhance the value of its service marks and overall goodwill of the Registrant.
These service marks are held by a wholly owned subsidiary of the Registrant and
are licensed to the Registrant's operating companies.
EXECUTIVE OFFICERS
Set forth below is certain information concerning the executive officers
of the Registrant:
<TABLE>
<CAPTION>
Name Age Position with the Registrant
---- --- ----------------------------
<S> <C> <C>
Cecil B. Phillips 73 Chairman Emeritus since January 1998; Chairman of the Board from August
1993 to January 1998; Chairman of the Board and Chief Executive Officer
from May 1983 to August 1993; President of the Registrant from July 1965
to November 1986; Chief Operating Officer of the Registrant from February
1982 to May 1983; Director since 1981.
Sharon M. Munger 51 Chairman of the Board and Chief Executive Officer since January 1998;
President and Chief Executive Officer from August 1993 to January 1998;
President and Chief Operating Officer of the Registrant from November
1986 to August 1993; President and Chief Operating Officer of the
Registrant's Marketing Services Group from December 1984 to November
1986; Executive Vice President of Marketing And Research Counselors from
May 1983 to December
</TABLE>
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<TABLE>
<S> <C> <C>
1984; Senior Vice President of Marketing And Research Counselors from
January 1981 to May 1983; Director since 1983.
Jack D. Wolf 44 President and Chief Operating Officer since January 1998; Executive Vice
President of the Registrant from November 1990 to January 1998; President
of Targetbase Marketing since January 1, 1991; Senior Vice President of
the Registrant from November 1986 to December 1990; Executive Vice
President from October 1984 to November 1986; Senior Vice President from
June 1984 to October 1984; Vice President from June 1981 to June 1984.
Corinne F. Maginnis 50 Executive Vice President of the Registrant since November 1990; President
of the Registrant's Quality Strategies subsidiary from January 1991 to
November 1994; Senior Vice President of the Registrant from November 1986
to December 1990; Executive Vice President from January 1985 to November
1986; Senior Vice President from July 1984 to January 1985; Vice
President from January 1983 to July 1984; Research Associates Manager
from September 1982 to January 1983. Ms. Maginnis is the sister of Sharon
M. Munger, President and Chief Executive Officer of the Registrant.
Scott E. Bailey 40 Executive Vice President of the Registrant since November 1996; President
of M/A/R/C Research since November 1996; Senior Vice President of M/A/R/C
Research from February 1991 to November 1996; Vice President of M/A/R/C
Research from November 1986 to February 1991; Manager of Marketing
Science from November 1985 to November 1986; Senior Statistical Analyst
from January 1985 to November 1985; Research Analyst from July 1984 to
January 1985.
Harold R. Curtis 59 Senior Vice President of the Registrant since November 1986; Chief
Financial Officer, Secretary, and Treasurer of the Registrant since 1982.
</TABLE>
The executive officers of the Registrant were elected to hold office until the
annual meeting of the directors of the Registrant, which meeting immediately
follows the annual meeting of shareholders, or until their respective
successors are elected and have qualified. No arrangements or understandings
exist between the listed officers and other persons pursuant to which any of
the individuals listed above were to be selected as officers.
ITEM 2. PROPERTIES.
As of December 31, 1997, the Registrant was leasing approximately 107,338
square feet in Atlanta, Georgia; Chicago, Illinois; Greensboro, North Carolina;
Newport Beach, California; Killeen, Texas; Irving, Texas; Norwalk,
Connecticut; and Toronto, Canada. The aggregate lease payments of the
Registrant for the year ended December 31, 1997, amounted to $1,218,000.
The Registrant also owns a 16,000 square foot building in Denton, Texas.
The Registrant purchased a warehouse in December 1983 at an approximate cost of
$475,000 and completely
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refurbished and converted it into office space and a telephone interviewing
facility at an approximate cost of $1,100,000.
In May 1984 the Registrant purchased 9.36 acres of undeveloped land in the
Las Colinas area of Irving, Texas, for a purchase price of $1,643,000. In
April 1985, the Registrant sold approximately 4.3 acres of the land for
$816,000 and entered into related agreements with the purchaser of the property
to construct and lease to the Registrant a corporate headquarters facility on
that portion of the site. The Registrant's facilities were completed in April
1986 and presently serve as the principal offices of the Registrant. The
facility has approximately 141,500 net square feet of space. On May 1, 1991,
the Registrant renegotiated its lease for 9.25 years (111 months). The
Registrant exercised its option to purchase the facility in March 1996 for
approximately $20,600,000. The purchase price was financed with new debt in
the form of an $11,200,000 mortgage loan from a life insurance company and
approximately $9,400,000 in bank debt.
The Registrant believes that the properties used in its operations are
fully utilized, suitable, and adequate for present operations.
ITEM 3. LEGAL PROCEEDINGS.
The Registrant is not a party to any material legal proceedings, nor, to
the Registrant's knowledge, are there any other material legal proceedings
contemplated against it.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Registrant did not submit any matters to a vote of its security
holders during the fourth quarter of the fiscal year covered by this report.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The Registrant's Common Stock was held by approximately 485 holders of
record as of March 18, 1998, as traded in the over-the-counter market under the
Nasdaq symbol "MARC."
The following table sets forth, for the periods indicated, the high and
low closing sale prices for the Registrant's Common Stock on the Nasdaq
National Market System. From February 1982 until the Registrant's public
offering on January 29, 1985 (see "Business--Background and Recent
Developments"), the Registrant's Common Stock was occasionally traded in the
over-the-counter market. The bid prices reflect inter-dealer prices without
retail markups, markdowns, or commissions and do not necessarily represent
actual transactions. Nasdaq National Market System quotations, which began on
January 29, 1985, are based on actual transactions and not bid prices.
<TABLE>
<CAPTION>
Bid Quotation
or Sale Price
-------------
High Low
---- ---
<S> <C> <C>
Calendar Year 1996
------------------
First Quarter $11.25 $ 8.75
Second Quarter 14.63 10.13
Third Quarter 13.38 11.88
Fourth Quarter 15.63 12.63
Calendar Year 1997
------------------
First Quarter 12.67 12.00
Second Quarter 17.88 15.84
Third Quarter 22.67 20.67
Fourth Quarter 20.21 18.17
Calendar Year 1998
------------------
(Through January 1998) 18.00 16.00
</TABLE>
Beginning with the second quarter of 1995, the Registrant began paying
quarterly dividends at an annual rate of $.27 per share, currently paying at an
annual rate of $.30 per share. Although the terms of the credit agreement
between the Registrant and its principal lending bank impose requirements with
respect to the Registrant's working capital, ratio of current assets to current
liabilities, tangible net worth and other financial conditions, these
requirements do not currently materially limit the Registrant's ability to pay
dividends.
ITEM 6. SELECTED FINANCIAL DATA.
Selected Financial Data on page 1 of the Annual Report to Shareholders for
the year ended December 31, 1997, is incorporated herein by reference.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 9 through 10 of the Annual Report to Shareholders for the
year ended December 31, 1997, is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA.
The financial statement information and supplemental data required in
response to this Item is incorporated herein by reference to pages 11 through
30 of the Annual Report to Shareholders for the year ended December 31, 1997.
Certain financial statement schedules are included in Part IV (Item 14(b))
of this report.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
The Registrant has had no disagreements on accounting and financial
disclosures with its independent accountants.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required in response to this item with respect to executive
officers of the Registrant is set forth above in "Item 1. Business." The
information with respect to directors of the Registrant is incorporated by
reference to the Registrant's Proxy Statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A not later than 120 days
after the end of the fiscal year covered by this report.
ITEM 11. EXECUTIVE COMPENSATION.
The information required in response to this item is incorporated by
reference to the Registrant's Proxy Statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A not later than 120 days
after the end of the fiscal year covered by this report.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required in response to this item is incorporated by
reference to the Registrant's Proxy Statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A not later than 120 days
after the end of the fiscal year covered by this report.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required in response to this item is incorporated by
reference to the Registrant's Proxy Statement to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A not later than 120 days
after the end of the fiscal year covered by this report.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this report:
(1) Financial Statements and Supplementary Data.
The following consolidated financial statements and supplementary
data included in Part II of this report are incorporated by
reference from the Registrant's Annual Report to Shareholders for
the year ended December 31, 1997, from the respective page numbers
indicated:
<TABLE>
<CAPTION>
Page Reference in
Item Annual Report
---- -------------
<S> <C>
Report of independent accountants 31
Financial statements 11-30
Consolidated balance sheets as of December 31, 1997,
and December 31, 1996 11-12
Consolidated statements of income for the years ended
December 31, 1997, 1996, and 1995 13
Consolidated statements of changes in shareholders'
equity for the years ended December 31, 1997,
1996, and 1995 14
Consolidated statements of cash flows for the years
ended December 31, 1997, 1996, and 1995 15
Notes to consolidated financial statements 16-30
</TABLE>
(2) Financial Statement Schedules.
The following supplemental schedules can be found on the indicated
pages in this report:
<TABLE>
<CAPTION>
Item Page in This Report
---- -------------------
<S> <C>
Report of independent accountants on
financial statement schedule 13
Financial statement schedule for the
years ended December 31, 1997, 1996, and 1995
Schedule II - Valuation and qualifying accounts 14
</TABLE>
Schedules other than those listed above have been omitted since
they either are not required, are not applicable, or the required
information is shown in the financial statements or related notes
in the Annual Report.
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REPORT OF INDEPENDENT ACCOUNTANTS ON SCHEDULE
Our report on the consolidated financial statements of M/A/R/C Inc. has been
incorporated by reference in this Form 10-K from the 1997 annual report to
shareholders of M/A/R/C Inc. on page 31 therein. In connection with our audits
of such financial statements, we have also audited the related financial
statement schedule listed in the index on page 14 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
Coopers & Lybrand L.L.P.
Dallas, Texas
February 23, 1998
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M/A/R/C INC.
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Column A Column B Column C(1) Column D Column E
(a)
Balance at Additions
Beginning of charged to costs Balance at
Description Period and expenses Deductions end of period
----------- ------------ ---------------- ---------- -------------
(amounts in thousands)
<S> <C> <C> <C> <C>
Year ended December 31, 1997
Allowance for
doubtful accounts $241 $100 $ 0 $341
---- ---- ----- ----
Year ended December 31, 1996
Allowance for
doubtful accounts $241 $ 0 $ 0 $241
---- ----- ----- ----
Year ended December 31, 1995
Allowance for
doubtful accounts $252 $ 10 $ 21 $241
---- ---- ---- ----
</TABLE>
Notes:
(a) Column "C(2)" is omitted as the answer would be "none."
14
<PAGE> 15
(3) Exhibits.
<TABLE>
<S> <C>
3.3 Restated Articles of Incorporation of the Registrant (3.3)***
3.4 Restated Bylaws of the Registrant (3.4)***
4.3 Loan Agreement, dated as of July 1, 1984, between City of Denton Industrial Development Authority and
Registrant, in the principal amount of $1,350,000, and related agreements (4.3)*
10.1 Registrant's Employee Stock Ownership Plan and Trust Agreement and Amendment Number One to the Plan
(10.1)**
10.2 Amendment Two to Registrant's Employee Stock Ownership Plan (10.2)*
10.3 Registrant's First Amended Pension Plan and Trust Agreement and Second Amendment to the Plan (10.2)**
10.4 Third Amendment to Registrant's Pension Plan (10.4)*
10.5 Registrant's 1983 Stock Option Plan (10.5)**
10.6 Amendment No. 1 to Registrant's 1983 Stock Option Plan (10.6)*
10.9 Supplemental Executive Retirement Plan (10.9)***
10.11 1991 Executive Stock Plan (10.11) ****
11.1 Statement Re: Computation of Per Share Earnings*****
13.1 Annual Report to Shareholders of the Registrant for year ended December 31, 1997 (portions of which
are incorporated herein by reference)
27 Financial Data Schedule
</TABLE>
- -------------------------
* Incorporated by reference to the exhibit shown in parentheses filed
with Registrant's Registration Statement on Form S-1 (File No.
2-94849).
** Incorporated by reference to the exhibit shown in parentheses filed
with Registrant's Annual Report on Form 10-K for the year ended March
31, 1984.
*** Incorporated by reference to the exhibit shown in parentheses filed
with Registrant's Annual Report on Form 10-K for the year ended
December 31, 1990.
**** Incorporated by reference to the exhibit shown in parentheses filed
with Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992.
***** Incorporated by reference to page 29 of the Registrant's Annual
Report for the year ended December 31, 1997.
(b) None
(c) None
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has caused this report to be signed on its behalf
by the undersigned thereunto duly authorized, in Dallas, Texas, on the 27th day
of March, 1998.
M/A/R/C INC.
By: /s/ H. R. Curtis
-------------------------------
Harold R. Curtis
Senior Vice President, Finance
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on
the dates indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Cecil B. Phillips Chairman Emeritus March 27, 1998
- ------------------------------- and Director
Cecil B. Phillips
/s/ H. R. Curtis Senior Vice President, March 27, 1998
- ------------------------------- Principal Financial and
Harold R. Curtis Accounting Officer
/s/ Sharon M. Munger Principal Executive March 27, 1998
- ------------------------------- Officer and Director
Sharon M. Munger
/s/ Jack D. Wolf President and Director March 27, 1998
- -------------------------------
Jack D. Wolf
/s/ Edward R. Anderson Director March 27, 1998
- -------------------------------
Edward R. Anderson
/s/ Elmer L. Taylor, Jr. Director March 27, 1998
- -------------------------------
Elmer L. Taylor, Jr.
/s/ Rolan G. Tucker Director March 27, 1998
- -------------------------------
Rolan G. Tucker
</TABLE>
16
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
3.3 Restated Articles of Incorporation of the Registrant (3.3)***
3.4 Restated Bylaws of the Registrant (3.4)***
4.3 Loan Agreement, dated as of July 1, 1984, between City of Denton Industrial Development Authority and
Registrant, in the principal amount of $1,350,000, and related agreements (4.3)*
10.1 Registrant's Employee Stock Ownership Plan and Trust Agreement and Amendment Number One to the Plan
(10.1)**
10.2 Amendment Two to Registrant's Employee Stock Ownership Plan (10.2)*
10.3 Registrant's First Amended Pension Plan and Trust Agreement and Second Amendment to the Plan (10.2)**
10.4 Third Amendment to Registrant's Pension Plan (10.4)*
10.5 Registrant's 1983 Stock Option Plan (10.5)**
10.6 Amendment No. 1 to Registrant's 1983 Stock Option Plan (10.6)*
10.9 Supplemental Executive Retirement Plan (10.9)***
10.11 1991 Executive Stock Plan (10.11) ****
11.1 Statement Re: Computation of Per Share Earnings*****
13.1 Annual Report to Shareholders of the Registrant for year ended December 31, 1997 (portions of which
are incorporated herein by reference)
27 Financial Data Schedule
</TABLE>
- -------------------------
* Incorporated by reference to the exhibit shown in parentheses filed
with Registrant's Registration Statement on Form S-1 (File No.
2-94849).
** Incorporated by reference to the exhibit shown in parentheses filed
with Registrant's Annual Report on Form 10-K for the year ended March
31, 1984.
*** Incorporated by reference to the exhibit shown in parentheses filed
with Registrant's Annual Report on Form 10-K for the year ended
December 31, 1990.
**** Incorporated by reference to the exhibit shown in parentheses filed
with Registrant's Annual Report on Form 10-K for the year ended
December 31, 1992.
***** Incorporated by reference to page 29 of the Registrant's Annual
Report for the year ended December 31, 1997.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 6,374
<SECURITIES> 0
<RECEIVABLES> 14,853
<ALLOWANCES> 341
<INVENTORY> 5,888
<CURRENT-ASSETS> 30,234
<PP&E> 45,146
<DEPRECIATION> 15,802
<TOTAL-ASSETS> 74,974
<CURRENT-LIABILITIES> 6,496
<BONDS> 17,453
0
0
<COMMON> 6,530
<OTHER-SE> 41,031
<TOTAL-LIABILITY-AND-EQUITY> 74,974
<SALES> 0
<TOTAL-REVENUES> 96,709
<CGS> 0
<TOTAL-COSTS> 87,328
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 360
<INCOME-PRETAX> 9,021
<INCOME-TAX> 2,946
<INCOME-CONTINUING> 6,075
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,075
<EPS-PRIMARY> 1.27
<EPS-DILUTED> 1.21
</TABLE>
