-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EKCv9h4EOHqYv44k9F+nA1IDUlk8OxgJfuUczBuqw9Jtm3ayMC2rYy8kmgcJDxet R7PyLsqX7J9mcMcO4PNh9g== 0000950134-97-002525.txt : 19970401 0000950134-97-002525.hdr.sgml : 19970401 ACCESSION NUMBER: 0000950134-97-002525 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARC GROUP CENTRAL INDEX KEY: 0000356287 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT [8700] IRS NUMBER: 751781525 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13217 FILM NUMBER: 97570834 BUSINESS ADDRESS: STREET 1: 7850 N BELT LINE RD STREET 2: P O BOX 650083 CITY: IRVING STATE: TX ZIP: 75063 BUSINESS PHONE: 2145063400 MAIL ADDRESS: STREET 1: 7850 N BELT LINE RD STREET 2: P O BOX 650083 CITY: IRVING STATE: TX ZIP: 75063 FORMER COMPANY: FORMER CONFORMED NAME: M/A/R/C INC DATE OF NAME CHANGE: 19930602 FORMER COMPANY: FORMER CONFORMED NAME: MARC INC DATE OF NAME CHANGE: 19920324 FORMER COMPANY: FORMER CONFORMED NAME: ALLCOM INC DATE OF NAME CHANGE: 19841202 10-K 1 FORM 10-K FOR YEAR ENDED DECEMBER 31, 1996 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, 1996 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 6, 1997, 4,969,536 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 $51,342,789 (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, 1996--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 17 pages in this document. 2 TABLE OF CONTENTS M/A/R/C INC. FORM 10-K
Page ---- PART I Item 1. Business 3 Item 2. Properties 9 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 Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 12 Index to Exhibits 15 Signatures 17
2 3 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. 3 4 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. 4 5 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 loyalty analysis. The results of these analyses are used to screen and select additions to the 5 6 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, 1996, RJR Nabisco, a tobacco, food, and beverage products company, accounted for approximately 11.5% of the Registrant's revenues. Accordingly, the loss of such a customer could have a materially adverse effect on the Registrant. During the year ended December 31, 1996, no other 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. 6 7 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 20, 1996, issue of Advertising Age rated the Registrant as the fourteenth largest marketing research company in the United States. Additionally, the Registrant's database marketing agency was ranked as the twelfth largest direct response agency in the United States by the Direct Marketing Association in its September 1996 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, 1996, the Registrant employed 507 full-time staff employees and approximately 723 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. 7 8 EXECUTIVE OFFICERS Set forth below is certain information concerning the executive officers of the Registrant:
NAME AGE POSITION WITH THE REGISTRANT ---- --- ---------------------------- Cecil B. Phillips 72 Chairman of the Board since August 1993; 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 50 President and Chief Executive Officer since August 1993; 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 1984; Senior Vice President of Marketing And Research Counselors from January 1981 to May 1983; Director since 1983. Jack D. Wolf 43 Executive Vice President of the Registrant since November 1990; 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 49 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 39 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 58 Senior Vice President of the Registrant since November 1986; Chief Financial Officer, Secretary, and Treasurer of the Registrant since 1982.
8 9 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, 1996, the Registrant was leasing approximately 55,299 square feet in Atlanta, Georgia; Chicago, Illinois; Greensboro, North Carolina; Newport Beach, California; Killeen, Texas; and Toronto, Canada. The aggregate lease payments of the Registrant for the year ended December 31, 1996, amounted to $1,747,000. 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 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. 9 10 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The Registrant's Common Stock was held by approximately 500 holders of record as of March 6, 1997, 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.
Bid Quotation or Sale Price ------------- High Low ---- --- Calendar Year 1995 First Quarter $ 9.63 $ 7.75 Second Quarter 9.00 8.13 Third Quarter 9.50 8.13 Fourth Quarter 9.63 8.63 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 (Through January 1997) 14.17 13.33
Beginning with the second quarter of 1995, the Registrant began paying quarterly dividends at an annual rate of $.27 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, 1996, is incorporated herein by reference. 10 11 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, 1996, 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, 1996. 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. 11 12 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, 1996, from the respective page numbers indicated:
Page Reference in Item Annual Report ---- ------------- Report of independent accountants 30 Financial statements 11-29 Consolidated balance sheets as of December 31, 1996, and December 31, 1995 11-12 Consolidated statements of income for the years ended December 31, 1996, 1995 and 1994 13 Consolidated statements of changes in shareholders' equity for the years ended December 31, 1996, 1995, and 1994 14 Consolidated statements of cash flows for the years ended December 31, 1996, 1995, and 1994 15 Notes to consolidated financial statements 16-28
(2) Financial Statement Schedules. The following supplemental schedules can be found on the indicated pages in this report:
Item Page in This Report ---- ------------------- Report of independent accountants on financial statement schedule 13 Financial statement schedule for the years ended December 31, 1996, 1995, and 1994 Schedule II - Valuation and qualifying accounts 14 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.
12 13 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 1996 annual report to shareholders of M/A/R/C Inc. on page 30 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, present fairly, in all material respects, the information required to be included therein. Coopers & Lybrand L.L.P. Dallas, Texas February 28, 1997 13 14 M/A/R/C INC. SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
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) 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 ---- ---- --- ---- Year ended December 31, 1994 Allowance for doubtful accounts $ 67 $205 $20 $252 ---- ---- --- ----
Notes: (a) Column "C(2)" is omitted as the answer would be "none." 14 15 (3) Exhibits. 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, 1996 (portions of which are incorporated herein by reference) 27.1 Financial Data Schedule - ------------- * 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. (b) None (c) None 15 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, 1997. 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.
Signature Capacity Date --------- -------- ---- /s/ Cecil B. Phillips Chairman of the Board March 27, 1997 - ----------------------------------------- and Director Cecil B. Phillips /s/ H. R. Curtis Senior Vice President, March 27, 1997 - ----------------------------------------- Principal Financial and Harold R. Curtis Accounting Officer /s/ Sharon M. Munger Principal Executive March 27, 1997 - ------------------------------------------ Officer and Director Sharon M. Munger /s/ Jack D. Wolf Executive Vice President March 27, 1997 - ------------------------------------------ and Director Jack D. Wolf /s/ Rolan G. Tucker Director March 27, 1997 - ---------------------------------------- Rolan G. Tucker /s/ Thomas J. Tierney Director March 27, 1997 - --------------------------------------- Thomas J. Tierney /s/ Elmer L. Taylor, Jr. Director March 27, 1997 - ---------------------------------------- Elmer L. Taylor, Jr.
17 17 EXHIBIT INDEX (3) Exhibits. 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, 1996 (portions of which are incorporated herein by reference) 27.1 Financial Data Schedule - ------------- * 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. (b) None (c) None EX-11.1 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11.1 M/A/R/C INC. EXHIBIT 11.1--STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT NUMBER OF SHARES AND PER SHARE AMOUNTS)
Year Ended December 31 ----------------------------------------------- 1996 1995 1994 ----------- ----------- ----------- PRIMARY Average shares outstanding 4,387,809 3,865,506 3,929,415 Assumed exercise of outstanding options and warrants 717,663 978,666 1,411,091 Assumed purchase of treasury shares from proceeds of option/warrant exercise (443,012) (608,305) (761,454) ----------- ----------- ----------- 4,662,460 4,235,867 4,579,052 Net income $ 4,690 $ 3,275 $ 2,677 Add assumed interest income from investment of option/warrant proceeds -- -- 115 ----------- ----------- ----------- $ 4,690 $ 3,275 $ 2,792 Primary net income per share $ 1.01 $ 0.77 $ 0.61 =========== =========== =========== FULLY DILUTED Average shares outstanding 4,387,809 3,865,506 3,929,415 Assumed exercise of outstanding options and warrants 717,663 978,666 1,411,091 Assumed purchase of treasury shares from proceeds of option/warrant exercise (407,128) (574,415) (761,454) ----------- ----------- ----------- 4,698,344 4,269,757 4,579,052 Net income $ 4,690 $ 3,275 $ 2,677 Add assumed interest income from investment of option/warrant proceeds -- -- 41 ----------- ----------- ----------- $ 4,690 $ 3,275 $ 2,718 Primary net income per share $ 1.00 $ 0.77 $ 0.59 =========== =========== ===========
16 EX-13.1 3 ANNUAL REPORT TO SHAREHOLDERS OF THE REGISTRANT 1 EXHIBIT 13.1 THE M/A/R/C GROUP CONSOLIDATED BALANCE SHEETS
December 31, December 31, ASSETS (dollars in thousands) 1996 1995 ------- ------- Current assets: Cash and cash equivalents $ 6,075 -- Investments 3,252 $ 1,848 Trade accounts receivable, less allowance for doubtful accounts of $241 and $241, respectively 11,308 13,292 Expenditures billable to clients 5,401 3,204 Notes receivable 232 284 Prepaid expenses 1,349 1,691 Federal income tax receivable -- 56 Deferred income taxes 261 168 Other current assets 707 650 ------- ------- Total current assets 28,585 21,193 Notes receivable, less current portion 74 82 Property and equipment, net 28,093 7,377 Investments - noncurrent 7,640 10,049 Cash surrender value of life insurance 3,542 3,211 Intangibles, less accumulated amortization of $2,865 and $2,788, respectively 603 680 Other assets 2,796 1,612 ------- ------- Total assets $71,333 $44,204 ======= =======
The accompanying notes are an integral part of the financial statements. 1 2 THE M/A/R/C GROUP CONSOLIDATED BALANCE SHEETS
LIABILITIES (dollars in thousands, December 31, December 31, except share and per share amounts) 1996 1995 -------- -------- Current liabilities: Book overdraft -- $ 457 Trade accounts payable $ 2,060 2,072 Current portion of long-term debt 1,634 -- Advance payments from clients 3,537 2,145 Income tax payable 581 -- Accrued liabilities 2,093 1,457 -------- -------- Total current liabilities 9,905 6,131 Long-term debt 17,961 5 Deferred income taxes 1,186 99 Deferred compensation and other 2,719 2,672 Other liabilities -- 2,856 -------- -------- Total liabilities 31,771 11,763 -------- -------- Commitments and contingencies (Note 7) SHAREHOLDERS' EQUITY Common stock, $1.00 par value, 15,000,000 shares authorized, 6,288,326 shares and 5,675,312 shares issued, respectively 6,288 5,676 Capital in excess of par value 8,152 4,963 Retained earnings 38,275 34,758 -------- -------- 52,715 45,397 Treasury stock at cost 1,350,333 and 1,315,588 shares, respectively (8,174) (7,760) Unearned compensation (3,208) (1,440) Pension liability -- (1,822) Unearned ESOP shares (1,771) (1,934) -------- -------- Total shareholders' equity 39,562 32,441 -------- -------- Total liabilities and shareholders' equity $ 71,333 $ 44,204 ======== ========
The accompanying notes are an integral part of the financial statements. 2 3 THE M/A/R/C GROUP CONSOLIDATED STATEMENTS OF INCOME (dollars in thousands, except share and per share amounts)
Years Ended December 31, ----------------------------------------------- 1996 1995 1994 ----------- ----------- ----------- Operating revenues $ 85,459 $ 74,387 $ 68,462 Production and administrative expenses 77,487 70,242 64,793 ----------- ----------- ----------- Operating income 7,972 4,145 3,669 Other income (expense): Interest and other income 880 976 725 Interest and other expense (1,476) (121) (236) ----------- ----------- ----------- Income before taxes 7,376 5,000 4,158 Provision for income taxes 2,686 1,725 1,481 ----------- ----------- ----------- Net income $ 4,690 $ 3,275 $ 2,677 =========== =========== =========== Earnings per share $ 1.01 $ .77 $ .61 =========== =========== =========== Weighted average shares outstanding 4,662,460 4,235,867 4,579,052 =========== =========== ===========
The accompanying notes are an integral part of the financial statements. 3 4 THE M/A/R/C GROUP CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
Treasury Stock Common Capital in ------------------- Unearned Stock, $1 Excess of Retained Pension Compen- ESOP (dollars in thousands) Par Value Par Value Earnings Shares Cost Liability sation Shares --------- --------- --------- --------- ------- --------- ------- ------- Balance at January 1, 1994 $ 5,955 $ 5,264 $ 31,588 1,000,095 ($6,067) ($1,018) ($2,122) ($2,260) --------- ------- --------- ---------- ------- ------- ------- ------- Exercise of common stock options and warrants 125 397 127,728 (682) 682 Purchase of treasury stock 927,398 (5,670) Retirement of treasury stock (762) (2,192) (1,919) (762,605) 4,873 Release of ESOP shares 23 163 Adjustment for minimum pension liability 1,018 Net income 2,677 --------- ------- --------- --------- ------- ------- ------- ------- Balance at December 31, 1994 $ 5,318 $ 3,492 $ 32,346 1,292,616 ($7,546) -- ($1,440) ($2,097) --------- ------- --------- --------- ------- ------- ------- ------- Exercise of common stock options and warrants 358 1,365 Purchase of treasury stock 22,972 (214) Adjustment for minimum pension liability (1,822) Dividends paid ($.20 per share) (863) Release of ESOP shares 106 163 Net income 3,275 --------- ------- --------- --------- ------- ------- ------- ------- Balance at December 31, 1995 $ 5,676 $ 4,963 $ 34,758 1,315,588 ($7,760) ($1,822) ($1,440) ($1,934) --------- ------- --------- --------- ------- ------- ------- ------- Exercise of common stock options and warrants 612 2,019 Purchase of treasury stock 130,098 (1,432) Retirement of treasury stock (96) (922) (95,353) 1,018 Issued restricted stock 315 2,835 (3,150) Retirement of restricted stock (219) (954) 1,172 Amortization of compensation expense 210 Adjustment for minimum pension liability 1,822 Release of ESOP shares 211 163 Dividends paid ($.27 per share) (1,173) Net income 4,690 --------- ------- --------- --------- ------- ------- ------- ------- Balance at December 31, 1996 $ 6,288 $ 8,152 $ 38,275 1,350,333 ($8,174) -- ($3,208) ($1,771) ========= ======= ========= ========== ======= ======= ======= =======
The accompanying notes are an integral part of the financial statements. 4 5 THE M/A/R/C GROUP CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
Year Ended December 31, ---------------------------- 1996 1995 1994 -------- ------- ------- Cash flows from operating activities: Net income $ 4,690 $ 3,275 $ 2,677 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,863 2,563 2,910 Gain on sale of assets (12) (27) (22) ESOP expense 374 269 186 Decrease in income taxes receivable 56 113 75 (Decrease) increase in deferred income taxes 994 (939) 581 Increase in income taxes payable 581 -- -- (Increase) decrease in receivables and expenditures billable to clients (213) (4,123) (3,458) Increase in prepaids, intangibles, and other assets (1,153) (158) (296) (Decrease) increase in trade accounts payable (12) (804) 605 (Decrease) increase in customer advances 1,392 (825) (41) (Decrease) increase in accrued liabilities 636 (205) 556 Increase (decrease) in deferred compensation, other liabilities, and income taxes payable (4,577) 3,405 (1,830) (Recognition) reduction of pension liability, net of tax 1,822 (1,822) 1,018 -------- ------- ------- Net cash provided by operating activities 7,441 722 2,961 -------- ------- ------- Cash flows from investing activities: Acquisition of property and equipment (23,411) (2,287) (2,108) Proceeds from sale of assets 6 81 141 Purchase of investments - held to maturity (600) (2,950) (2,875) Maturity of investments - held to maturity 1,445 1,857 2,830 Sale of investments - available for sale -- -- 943 Issuance of notes receivable -- (86) (37) Collection of notes receivable 60 8 133 -------- ------- ------- Net cash used in investing activities (22,500) (3,377) (973) -------- ------- ------- Cash flows from financing activities: (Decrease) increase in book overdraft (457) 457 -- Issuance of debt 20,920 -- 7,894 Payment of debt (1,332) (118) (7,896) Issuance of common stock 3,590 1,724 521 Purchase of treasury stock (414) (214) (5,670) Payment of dividends (1,173) (863) -- -------- ------- ------- Net cash provided by (used in) financing activities 21,134 986 (5,151) -------- ------- ------- Net increase (decrease) in cash and cash equivalents 6,075 (1,669) (3,163) Cash and cash equivalents at beginning of period -- 1,669 4,832 -------- ------- ------- Cash and cash equivalents at end of period $ 6,075 $ 1,669 ======== =======
Cash payments for interest expense were $1,080, $121, and $137, and cash payments for income taxes were $1,055, $1,875, and $1,350 for 1996, 1995, and 1994, respectively. The accompanying notes are an integral part of the financial statements. 5 6 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation 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 Fortune 500 companies. The M/A/R/C Group offers a wide range of marketing information services through our two operating companies: M/A/R/C Research and Targetbase Marketing. The financial statements include the accounts of M/A/R/C Inc. (the Company) and its wholly owned companies and corporations. All intercompany accounts have been eliminated in consolidation. The Company refers to itself as The M/A/R/C Group. On January 24, 1997, the Board of Directors of the Company authorized a three-for-two stock split to be effected in the form of a 50% stock dividend. All share, per share, option and warrant amounts, and related prices have been restated for all periods presented to reflect the split paid on February 28, 1997, to shareholders of record on February 7, 1997. The preparation of these consolidated financial statements in conformity with generally accepted accounting principles requires the use of management's estimates. These estimates are subjective in nature and involve matters of judgment. Actual amounts could differ from these estimates. Cash and Cash Equivalents For purposes of the statements of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. The carrying amount approximates fair value because of the short maturity of those instruments. Revenues Revenues from marketing research, database marketing, and consulting projects are recognized as services are performed. Certain of these projects are fixed price in nature and use the percentage-of-completion method for the recording of revenue. The Company presents reimbursed client printing and mailing list costs on a net basis. Expenditures Billable to Clients Expenditures billable to clients represent costs related to marketing research and other services. Expenditures relating to presentations to prospective clients are expensed as incurred. 6 7 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property and Equipment Property and equipment are stated at cost. Depreciation and amortization are provided principally using the straight-line method over estimated useful lives as follows: Buildings 20 to 40 years Furniture and equipment 3 to 10 years Leasehold improvements 1 to 10 years When assets are sold, retired, or disposed of, any resulting gain or loss is recognized. The Company periodically reviews its property and equipment to determine if its carrying cost will be recovered from future operating cash flows. In cases when the Company does not expect to recover its carrying cost, the Company recognizes an impairment loss. No such losses have been recognized to date. Maintenance and Repairs Maintenance and repairs for equipment and facilities are expensed, except that substantial renewals which prolong the life of the asset beyond the date previously contemplated are capitalized. Amounts expensed were $641,000, $641,000, and $559,000, for the years ended December 31, 1996, 1995, and 1994, respectively. Capitalized Software Costs Capitalized development and software costs relate to amounts expended during the development of various products. Capitalized costs are amortized over the estimated useful life of the product, typically ranging from three to five years. Upon completion of development, future costs associated with maintenance of the product are expensed as incurred. Total amortization expense was $0, $59,000, and $201,000, for the years ended December 31, 1996, 1995, and 1994, respectively. Investments The Company has deemed all of its securities to be held-to-maturity securities, which are securities that management has the positive intent and ability to hold until maturity. These securities include tax-exempt governmental securities. Held-to-maturity securities are stated at cost, adjusted for accretion of discount or amortization of premium. Discounts or premiums are accreted or amortized to interest income over the terms of the securities using the straight-line method, which approximates the interest method. The fair values of investments are based on quoted market prices for those or similar investments. 7 8 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Intangibles Intangible assets are recorded at cost at the date of acquisition. Amortization is provided using the straight-line method for periods of 7 to 30 years for identifiable assets. Federal Income Taxes Deferred tax liabilities and assets are recognized for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Deferred income taxes arise from temporary differences between financial and tax reporting, principally relating to depreciation, capitalized development costs, the supplemental executive retirement plan, installment sales, and pension costs. Earnings Per Share Earnings per common share and common share equivalents are based upon the weighted average number of common shares outstanding during each year plus the common stock equivalents which would arise from the exercise of stock options and warrants, after assuming the proceeds from such exercise would be used to repurchase treasury stock at the average market price during the respective periods. 8 9 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 2 - NOTES RECEIVABLE Notes receivable consisted of the following:
December 31, December 31, (dollars in thousands) 1996 1995 ---- ---- Note receivable, monthly installments of $1 through September 1999, bearing interest of 7% $ 30 $ 40 Notes receivable from two directors bearing interest at prime, due on demand 222 232 Note receivable bearing interest at prime plus 1%, interest only through January 1998, thereafter due in equal annual installments through January 2005 54 54 Noninterest-bearing note receivable from employee, due on demand -- 40 ---- ---- 306 366 Less current portion 232 284 ---- ---- $ 74 $ 82 ==== ====
The prime rate of interest at December 31, 1996, was 8.25%. 9 10 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 3 - PROPERTY AND EQUIPMENT Property and equipment consisted of the following:
December 31, December 31, (dollars in thousands) 1996 1995 ------- ------- Land and buildings $22,653 $ 2,036 Furniture and equipment 16,414 15,582 Leasehold improvements 3,900 3,814 ------- ------- 42,967 21,432 Less accumulated depreciation and amortization 14,874 14,055 ------- ------- $28,093 $ 7,377 ======= =======
10 11 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 - INVESTMENTS The amortized cost and estimated market value of investment securities as of December 31, 1996, and 1995, were (dollars in thousands):
Gross Gross Amortized Unrealized Unrealized 1996 Cost Gains Losses Fair Value ---- ---- ----- ------ ---------- Tax-exempt bonds: Maturing within 1 year $ 3,252 $ 46 $ 7 $ 3,291 Maturing after 1 through 5 years 4,823 225 2 5,046 Maturing after 5 through 10 years 407 12 4 415 Maturing after 10 years 2,410 214 26 2,598 ------- ---- ------- ------- $10,892 $497 $ 39 $11,350 ======= ==== ======= =======
Gross Gross Amortized Unrealized Unrealized 1996 Cost Gains Losses Fair Value ---- ---- ----- ------ ---------- Tax-exempt bonds: Maturing within 1 year $ 1,848 $ 51 $ 7 $ 1,892 Maturing after 1 through 5 years 6,848 240 30 7,058 Maturing after 5 through 10 years 753 15 7 761 Maturing after 10 years 2,448 281 20 2,709 ------- ---- ------- ------- $11,897 $587 $ 64 $12,420 ======= ==== ======= =======
11 12 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 - LONG-TERM DEBT In March 1996, the Company exercised its option to acquire the corporate headquarters for $20,617,000. The Company financed $11,212,000 of the purchase price with a conventional mortgage. The mortgage loan, which bears interest at a fixed rate of 8.93%, is scheduled for ten years of payments on an amortization of 25 years. Annual payments are $1,122,000, with a final payment of $9,307,000 due March 2006. The principal balance of the mortgage loan at December 31, 1996, was $11,125,000. The remainder of the purchase price of the corporate headquarters facility was financed on a five-year term loan. Principal payments are scheduled quarterly at $150,000 with a minimum annual reduction of $1,500,000 required with the final payment of $2,233,000 due March 2001. Interest on the bank debt is based on either the bank's prime rate or LIBOR plus 1.25% at the option of the Company. The principal balance of the bank loan at December 31, 1996, was $8,463,000. The five-year term loan with the bank requires the Company to maintain minimum levels of working capital and tangible net worth, restricts the use of certain assets, and limits additional indebtedness. Maturities of long-term debt for years ending December 31, are as follows: 1997 $ 1,634,000 1998 1,655,000 1999 1,660,000 2000 1,675,000 2001 and thereafter 12,971,000 ----------- $19,593,000 ===========
Based on the borrowing rates currently available to the Company for similar types of borrowing arrangements, the fair value of the mortgage loan would be $11,402,000. The bank debt associated with the purchase of the Company's corporate headquarters is at an adjustable rate; therefore the carrying value approximates fair value. The Company maintains a revolving line of credit with a bank in the amount of $3,000,000 which expires in April 1997. At the Company's option, outstanding borrowings bear interest at prime rate or LIBOR plus 1.125% and are due upon demand. At December 31, 1996, the line of credit was unused. 12 13 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 - EMPLOYEE BENEFIT PLANS The Company has a defined benefit pension plan to provide pension benefits to substantially all employees. The benefits are based on years of service and the employee's compensation. The Company's funding policy is to make annual contributions that meet or exceed minimum funding requirements. Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pension Costs," requires that an additional pension liability be recognized when the accumulated pension benefit obligation exceeds the fair value of pension plan assets. At December 31, 1995, this liability was the sum of the unfunded accumulated benefit obligation and the prepaid pension asset. Shareholders' equity was reduced by a corresponding amount, net of tax. No additional liability was required at December 31, 1996. The following table sets forth the plan's funded status and amounts recognized in the Company's financial statements:
December 31, December 31, (dollars in thousands) 1996 1995 ------- ------- Actuarial present value of benefit obligations: Vested benefit obligation $ 4,465 $ 4,755 ======= ======= Accumulated benefit obligation $ 4,708 $ 4,989 ======= ======= Projected benefit obligation $ 5,860 $ 5,938 Plan assets at fair value, primarily stocks and bonds 5,211 3,549 ------- ------- Excess (deficit) of plan assets over projected benefit obligation (649) (2,389) Unrecognized net loss from experience, different from actuarial assumptions 2,972 3,795 Prior service cost (credit) not yet recognized in net periodic pension cost (65) (70) Unrecognized transition asset being amortized over 15 years (13) (15) ------- ------- Prepaid pension asset, excluding additional liability 2,245 1,321 Additional pension liability -- (2,760) ------- ------- Net pension asset (liability) $ 2,245 ($1,439) ======= =======
13 14 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 - EMPLOYEE BENEFIT PLANS (Continued) Pension costs are as follows:
Year Ended December 31, --------------------------------- (dollars in thousands) 1996 1995 1994 ----- ----- ----- Benefit cost for service during the year $ 453 $ 255 $ 287 Interest cost on projected benefit obligations 488 378 375 Actual return on plan assets (667) (611) 23 Net amortization and deferral 510 367 (263) ----- ----- ----- $ 784 $ 389 $ 422 ===== ===== =====
The expected long-term rate of return on assets was 12% for the years ended December 31, 1996, 1995, and 1994. The rate of salary progression was 3.9% for the years ended December 31, 1996, 1995, and 1994. The settlement rates used to determine the actuarial present value of projected benefits were 7.75% for the year ended December 31, 1996, 7.25% for the year ended December 31, 1995, and 9.0% for the year ended December 31, 1994. The vested benefit obligation includes the actuarial present value of the vested benefits to which an active employee is entitled, if employment is terminated immediately. Benefits are payable monthly commencing on the latter of age 65, 66, or 67 (in accordance with Social Security retirement age policy), or the participant's date of retirement. Additionally, all salaried employees are eligible for participation in the employer stock ownership plan (ESOP), the fully insured health and benefit contract in 1996, and the health and benefit trust in 1995 and 1994. The ESOP/401(k) allows employer contributions under Section 401(k) of the Internal Revenue Code. Company contributions are determined by the Compensation Committee of the Board of Directors based on the performance of the Company. The Company absorbs the costs incurred for the administration of the ESOP/401(k). The health and benefit trust charged health costs, as incurred, based upon amounts required to pay insurance premiums and fund medical claims and administrative expenses incurred. On January 1, 1996, the Company entered into a fully insured health and benefit contract with a major insurance carrier. Included in the Company's results of operations are the following costs for the pension plan, ESOP/401(k), the fully insured health and benefit contract in 1996, and health and benefit trust in 1995 and 1994.
Year Ended December 31, --------------------------------- (dollars in thousands) 1996 1995 1994 ------ ------ ------ Pension plan $ 784 $ 389 $ 422 ESOP/401(k) 552 345 266 Health and benefit 1,468 1,455 1,322
14 15 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 6 - EMPLOYEE BENEFIT PLANS (Continued) In January 1993, the Company loaned $2,500,000 to the ESOP for the acquisition of 458,277 shares of the Company's common stock. The loan is being repaid over a 15-year period. The rate of interest on the loan is 7.04%. As of December 31, 1996, and 1995, shares allocated to plan participants totaled 122,208 and 91,656 shares, respectively. All remaining shares from the January 1993 acquisition are committed to be released ratably over the remaining life of the ESOP loan. Dividends on allocated shares are paid to participant accounts. Through 1996, dividends on the unallocated shares were reinvested in the Company's common stock and allocated to participants. Beginning in 1997, dividends on unallocated shares will be used to repay the loan. The fair market value of the unearned ESOP shares at December 31, 1996, and 1995, was $4,257,000 and $3,385,000, respectively. Prior to October 1993, the Company had individual supplemental executive retirement plans for 27 executives. In October 1993, the Compensation Committee of the Board of Directors discontinued the plans for all participants except the Chairman of the Board and two Senior Vice Presidents. During 1995, one Senior Vice President was reinstated and another was added to the plan. As of December 31, 1996, of the five participants, the Chairman and two former Senior Vice Presidents, or their beneficiaries, are vested in the plan and drawing benefits. As of December 31, 1996, and 1995, the Company has accrued $2,047,000 and $2,130,000, respectively, for benefits due under the plans. The Company recognizes annual service cost for the plans, plus interest on the accumulated balance. Amounts expensed, including interest, for the years ended December 31, 1996, 1995, and 1994, were $229,000, $372,000, and $141,000, respectively. The Company follows the provisions of SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," which requires recognition of the cost of providing postretirement benefits, such as medical and life insurance coverage, over the employee service period based upon the estimated amount and timing of future benefit payments. The Company currently provides medical and life insurance benefits for five retired employees. Executive officers and their dependents are also entitled to receive benefits upon retirement. The costs of these benefits charged to expense during the years ended December 31, 1996, 1995, and 1994, were approximately $16,000, $12,000, and $31,000, respectively. The Company's obligation under SFAS No. 106 at December 31, 1996, and 1995, was not material. 15 16 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 7 - COMMITMENTS AND CONTINGENCIES Through March 1996, the Company leased space for its corporate headquarters facility under an operating lease. Company exercised an option to purchase the facility in March 1996. The Company also leases office space and certain equipment under operating lease agreements. Minimum annual future rentals under the terms of the above leases are as follows:
Year ending December 31: 1997 $2,372,000 1998 1,321,000 1999 589,000 2000 387,000 2001 308,000 ---------- $4,977,000 ==========
Lease expense for facilities and equipment was $2,559,000, $4,959,000, and $5,063,000, for the years ended December 31, 1996, 1995, and 1994, respectively. The Company provides a letter of credit from a bank for $106,000, in lieu of paying deposits for facility rentals. 16 17 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 8 - CONCENTRATIONS OF CREDIT RISK The Company provides marketing information services primarily to consumer-product companies. The Company performs ongoing credit evaluations of its customers. The Company's ten largest customers accounted for approximately 48% of sales in 1996 and approximately 51% and 46% of trade accounts receivable and work in process, respectively, at December 31, 1996. One customer, RJR Nabisco Holdings Corporation, accounted for revenues of $9,818,000, $11,988,000, and $9,158,000, for the years ended December 31, 1996, 1995, and 1994, respectively. The Company invests its excess cash in deposits with major banks, government securities, tax-exempt securities, and money market type securities. The Company has $6,073,000 of its, $10,892,000 investment in tax-exempt bonds in the state of Texas. 17 18 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 - INCOME TAXES Income tax expense (benefit) on income before income taxes consists of (dollars in thousands):
Year Ended December 31, ------------------------------------ 1996 1995 1994 ------ ------- ------ Current provision: Federal $2,373 $ 1,556 $1,330 State 259 169 130 ------ ------- ------ 2,632 1,725 1,460 Deferred provision 54 -- 21 ------ ------- ------ Provision for income taxes charged to operations 2,686 1,725 1,481 Stockholders' equity - pension component 939 (939) 560 ------ ------- ------ Comprehensive provision for income taxes $3,625 $ 786 $2,041 ====== ======= ======
Reconciliation's of the U.S. corporate income tax rate and the effective tax rate on income before income taxes are summarized below (dollars in thousands):
Year Ended December 31, ----------------------------------------- 1996 1995 1994 ------- ------- ------- U.S. corporate tax rate 34% 34% 34% Income before taxes $ 7,376 $ 5,000 $ 4,158 ------- ------- ------- Tax expense at statutory rates 2,508 1,700 1,414 Tax-exempt income (203) (227) (202) Officers' life insurance 41 (188) 10 Meals and entertainment 82 60 48 State income tax (88) (23) (44) Differences between financial reporting and tax bases of fixed assets 14 (28) -- Other 73 262 125 ------- ------- ------- Federal income tax 2,427 1,556 1,351 State income tax 259 169 130 ------- ------- ------- Provision for income taxes charged to operations 2,686 1,725 1,481 Stockholders' equity - pension component 939 (939) 560 ------- ------- ------- Comprehensive provision for income taxes $ 3,625 $ 786 $ 2,041 ======= ======= =======
18 19 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 - INCOME TAXES (Continued) The components of the net deferred tax asset (liability) as of December 31, 1996, and 1995, are as follows (dollars in thousands):
1996 1995 ----------------------- ---------------------- Current Noncurrent Current Noncurrent ------- ---------- ------- ---------- ASSETS Differences between book and tax bases of property and equipment, excluding building $ -- $ 338 $ -- $ 318 Allowance for expenditures billable to clients 179 -- 86 -- Accounts receivable allowance for doubtful accounts 82 -- 82 -- Liability for director retirement plan -- 226 -- 185 Other liabilities -- 128 -- 182 Unrecognized net pension obligation -- -- -- 939 ----- ------- ---- ------- Deferred tax asset 261 692 168 1,624 ----- ------- ---- ------- LIABILITIES Differences between financial reporting and tax bases of building acquired -- 937 -- 856 Differences between financial reporting and tax reporting of sales of fixed assets -- 215 -- -- Prepaid pension asset -- 719 -- 628 Excess tax over book amortization of intangibles -- 7 -- 42 Other differences between financial reporting and tax reporting of asset dispositions -- -- -- 197 ----- ------- ---- ------- Deferred tax liability -- 1,878 -- 1,723 ----- ------- ---- ------- Net current/noncurrent deferred tax asset (liability) $ 261 ($1,186) $168 ($ 99) ----- ------- ---- ------- Net deferred tax asset (liability) ($925) $ 69 ======= =======
19 20 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 - STOCK OPTIONS AND WARRANTS 1983 Stock Option Plan In March 1993, the 1983 Incentive Stock Option Plan approved by shareholders was terminated, leaving no additional options available for grant under the plan. The 1983 Plan provided for issuance of shares upon exercise of the options and Limited Stock Appreciation Rights (Limited SARs). Shares under option relating to the 1983 Stock Option Plan for the periods ended December 31 are summarized as follows:
1996 1995 1994 ---- ---- ---- Number Weighted Number Weighted Number Weighted Of Shares Average Of Shares Average Of Shares Average Underlying Exercise Underlying Exercise Underlying Exercise Options Prices Options Prices Options Prices ------- ------ ------- ------ ------- ------ Options outstanding at beginning of period 407,817 $4.21 573,789 $4.23 709,805 $4.33 Options canceled (5,895) 5.17 (14,345) 4.80 (42,140) 5.17 Options exercised (357,054) 4.07 (151,628) 4.50 (93,876) 4.33 Options outstanding at end of period 44,868 5.19 407,817 4.21 573,789 4.23 Options exercisable at end of period 34,668 5.26 363,117 4.11 423,048 4.24
20 21 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 - STOCK OPTIONS AND WARRANTS (Continued) 1991 Nonstatutory Executive Stock Plan On April 19, 1991, the Board of Directors adopted a Nonstatutory Executive Stock Plan, reserving 360,000 shares of the Company's common stock for issuance. The term of each option shall not exceed ten years. The Committee may set the price, vesting requirement, and exercise terms of options granted under the Plan at its discretion. In September 1994, the Board of Directors amended the plan changing the aggregate number of shares available for grant to 810,000 shares of common stock. As of December 31, 1996, 29,400 shares had been exercised and 167,805 shares remained available for grant. Shares under option relating to the 1991 Nonstatutory Executive Stock Option Plan for the periods ended December 31 are summarized as follows:
1996 1995 1994 ---- ---- ---- Number Weighted Number Weighted Number Weighted Of Shares Average Of Shares Average Of Shares Average Underlying Exercise Underlying Exercise Underlying Exercise Options Prices Options Prices Options Prices Options outstanding at beginning of period 465,525 $ 6.39 554,325 $6.35 180,000 $6.53 Options granted 188,250 11.26 - - 374,325 6.26 Options canceled (22,980) 6.33 (77,400) 6.03 - - Options exercised (18,000) 6.02 (11,400) 6.33 - - Options outstanding at end of period 612,795 7.91 465,525 6.39 554,325 6.35 Options exercisable at end of period 298,260 6.91 234,543 6.46 180,000 6.53
21 22 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 - STOCK OPTIONS AND WARRANTS (Continued) The following summarizes information about all stock options outstanding at December 31, 1996:
Options Outstanding Options Exercisable -------------------------------------------------- ------------------------------- Weighted Average Weighted Weighted Range of Remaining Average Average Exercise Number Contractual Exercise Number Exercise Prices Outstanding Life Price Exercisable Price $4.33 to $6.00 39,240 1.94 $ 4.70 29,040 $ 4.67 $6.01 to $12.33 618,423 3.17 7.90 303,888 6.49 - --------------- ------- ------- ------- ------- ------- $4.33 to $12.33 657,663 3.10 $ 7.69 332,928 $ 6.30
In 1995, the Financial Accounting Standards Board issued Statement No. 123, "Accounting for Stock-Based Compensation," which provides the Company the option of recognizing the cost of options granted based on fair values of the options at the time of grant. The Company has decided not to elect the cost-recognition provisions of SFAS 123. The weighted average fair value of the 188,250 options granted during 1996 was $3.71 per option. The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-averaged assumptions for grants in 1996: dividend yield between 2.1% and 2.4%; risk-free interest rates are different for each grant and range from 6.10% to 6.27%, expected lives of the options are five years, and a volatility factor of 35.27% was used for all grants. Had the compensation expense for the 188,250 shares granted during 1996 been based on the fair value pricing model described above, additional compensation expense (net of tax) of $66,000 would have been recognized, and net income and net income per share would have been $4,624,000 and $.99, respectively. The effects of applying SFAS 123 in this pro forma disclosure are not indicative of future amounts. SFAS 123 does not apply to awards prior to 1995. The Company anticipates making awards in the future under its stock-based compensation plans. 22 23 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 10 - STOCK OPTIONS AND WARRANTS (Continued) Stock Warrants The Company has issued warrants on 500,400 shares of its common stock to seven senior executives. The warrants were sold for their estimated fair market value of $.55 each. Each warrant represents the right to purchase one share of the Company's common stock at prices ranging from $4.30 to $5.00 per share prior to March 1, 1997. On January 18, 1993, the Board of Directors authorized the issuance of 500,400 shares of restricted common stock of the Company. Such shares were issued in tandem with the 500,400 warrants. The exercise of a warrant results in the corresponding loss of a restricted share. Warrants for 449,100 shares of common stock have been exercised, 237,090 of those in 1996. Concurrent with the exercise of the warrants, an equal number of the restricted shares were returned to the Company and retired. At December 31, 1996, there were warrants outstanding on 51,300 shares and a corresponding number of restricted shares remaining. The restriction on the common stock will lapse when the Company has pretax earnings of $13,500,000 in any fiscal year. As the Company did not achieve the target, there was no impact to the income statement for 1996. If the target is not met by March 1, 1997, the restricted stock must be returned to the Company. The Company has an additional 75,000 warrants on its common stock issued at an exercise price of $7.17. Restricted Stock In January 1996, the Company issued 315,000 shares of restricted common stock valued at the then market price of $10 per share to the Chief Executive Officer and one Executive Vice President of the Company. The related deferred compensation is presented as a reduction to shareholders' equity. As the restriction on these shares lapses ratably over the next 15 years, compensation expense will be recognized. 23 24 NOTE 11 - RELATED PARTY TRANSACTIONS At December 31, 1996, and 1995, the Company had outstanding loans of approximately $316,000 and $272,000, respectively, to employees, directors, and officers of the Company. The loans are for various periods up to one year and bear interest at the prime interest rate. At December 31, 1996, the Company had outstanding advances of $110,000 to the Chairman of the Board of the Company. Subsequent to year-end, the advances were repaid to the Company. The Company also guarantees a $200,000 bank loan on behalf of the Chairman of the Board. The Company has entered into a noncompetition agreement with the Vice Chairman of the Board of Directors, under which the Vice Chairman will provide certain consulting services to the Company. The agreement expires December 31, 1997, and provides for the Company to pay fees of $60,000 during each calendar year. The Company also provides certain benefits including an automobile, health insurance coverage, life insurance coverage, and operating expenses. The Company sponsors a director retirement plan for all directors who are not employees of the Company. Benefits are payable to any director who completes five years or more of service when the director retires from the Board of Directors and continue for a period of time equal to the term of service on the Board. The directors' benefit under the plan is equal to the average of the annual retainer and committee fees paid during the three years served with the highest compensation. The amounts expensed in 1996, 1995, and 1994, were approximately $122,000, $122,000, and $155,000, respectively. Subsequent to year-end, the Board of Directors approved the discontinuation of the retirement plan for all outside directors whose initial term of service begins after January 24, 1997. In January 1993, the Company entered into a consulting agreement with a director, under which the director would provide certain consulting services to the Company. The agreement was amended January 1, 1994, to reflect payments of $50,000 annually, plus furniture and equipment costs. The agreement was again modified in mid-1994. In lieu of the $50,000 annual payment, the Company paid the director based on the work performed. During 1994, the Company recorded total expenses of approximately $120,000 related to this agreement. The Company canceled the agreement in early 1995; amounts paid during 1995 were immaterial. 24 25 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 12 - EARNINGS PER SHARE In calculating earnings per share for the year ended December 31, 1994, the number of shares assumed to be issued from the exercise of outstanding options and warrants exceeded 20% of the Company's outstanding shares. Furthermore, the proceeds from the assumed exercise of the options and warrants would have been sufficient for the Company to repurchase more than 20% of its outstanding shares. Accordingly, the Company's application of the treasury stock method was modified from the above description such that the Company was assumed to have repurchased only 20% of its outstanding shares. The excess of the assumed proceeds over the cost of repurchasing shares at the average market price was assumed to have been invested in U.S. Government securities. The assumed increase in net income from the investments of proceeds, which was reflected in the calculation of earnings per share, was approximately $115,000. 25 26 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 13 - INTERIM FINANCIAL INFORMATION (Unaudited) The following represents unaudited interim financial information for the years ended December 31, 1996, and 1995 (dollars in thousands, except per share and share amounts).
Year Ended December 31, 1996 --------------------------------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter ---------- ----------- ----------- ----------- Revenues $ 19,292 $ 22,240 $ 22,184 $ 21,743 Costs and expenses 18,315 19,910 19,961 19,301 ---------- ----------- ----------- ----------- Operating income 977 2,330 2,223 2,216 Interest and other income (expense) 169 (311) (326) (128) ---------- ----------- ----------- ----------- Income before taxes 1,146 2,019 1,897 2,442 Income taxes 412 727 683 864 ---------- ----------- ----------- ----------- Net income $ 734 $ 1,292 $ 1,214 $ 1,450 ========== =========== =========== =========== Earnings per share $ .16 $ .27 $ .27 $ .31 ========== =========== =========== =========== Weighted average shares outstanding 4,609,500 4,755,000 4,705,500 4,917,300
26 27 THE M/A/R/C GROUP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 13 - INTERIM FINANCIAL INFORMATION (Continued) (Unaudited)
Year Ended December 31, 1995 ---------------------------------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter ---------- ---------- ---------- ---------- Revenues $ 16,510 $ 18,020 $ 18,730 $ 21,127 Costs and expenses 15,782 17,023 17,673 19,764 ---------- ---------- ---------- ---------- Operating income 728 997 1,057 1,363 Interest and other income 196 255 291 113 ---------- ---------- ---------- ---------- Income before taxes 924 1,252 1,348 1,476 Income taxes 342 463 499 421 ---------- ---------- ---------- ---------- Net income $ 582 $ 789 $ 849 $ 1,055 ========== ========== ========== ========== Earnings per share $ .14 $ .18 $ .20 $ .25 ========== ========== ========== ========== Weighted average shares outstanding 4,180,000 4,261,500 4,323,000 4,336,800 ========== ========== ========== ==========
27 EX-27.1 4 FINANCIAL DATA SCHEDULE
5 1,000 YEAR DEC-31-1996 DEC-31-1996 6,075 10,892 11,308 241 5,401 28,858 28,093 14,874 71,333 9,905 19,595 0 0 6,288 33,274 71,333 85,459 85,459 77,487 77,487 0 0 596 7,376 2,686 0 0 0 0 4,690 1.01 1.00 Item 5-03(b)(8) combines Interest Income of $880 with interest and other expense of (1,476)
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