UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For
the quarterly period ended September 30, 2008
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or
[ ]
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For
the transition period from ________ to ________
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Commission File Number
0-29466
National Research Corporation
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(Exact name of Registrant as specified in its charter)
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Wisconsin
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47-0634000
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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1245 Q Street, Lincoln, Nebraska 68508
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(Address of principal executive offices) (Zip Code)
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(402) 475-2525
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(Registrants telephone number, including area code)
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Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No [ ]
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or
a smaller reporting company. See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of
the Exchange Act.
Large accelerated filer [ ]
Accelerated filer [ ] Non-accelerated filer |X| Smaller reporting company [ ]
|
(Do
not check if a smaller reporting company)
|
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Act.) Yes [_] No |X|
Indicate the number of shares
outstanding of each of the issuers classes of common stock as of the latest
practicable date.
Common Stock, $.001
par value, outstanding as of November 1, 2008: 6,696,776 shares
NATIONAL RESEARCH
CORPORATION
FORM 10-Q INDEX
For the Quarter Ended
September 30, 2008
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Page No.
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PART I.
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FINANCIAL INFORMATION
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|
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Item 1.
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Financial Statements
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|
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Consolidated Balance Sheets
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4
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Consolidated Statements of Income
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5
|
|
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Consolidated Statements of Cash Flows
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6
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Notes to Consolidated Financial Statements
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7-14
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Item 2.
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Managements Discussion and Analysis of
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Financial Condition and Results of Operations
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14-17
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Item 3.
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Quantitative and Qualitative Disclosures About
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Market Risk
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17
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Item 4.
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Controls and Procedures
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18
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PART II.
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OTHER INFORMATION
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Item 1A.
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Risk Factors
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18
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Item 2.
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Unregistered Sales of Equity Securities and
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|
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Use of Proceeds
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18
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Item 6.
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Exhibits
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18
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Signatures
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19
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Exhibit Index
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20
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-2-
Special Note
Regarding Forward-Looking Statements
Certain matters discussed in this
Quarterly Report on Form 10-Q are forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements can generally be identified as such because the context of the
statement includes phrases such as National Research Corporation (the Company)
believes, expects, or other words of similar import. Similarly,
statements that describe the Companys future plans, objectives or goals are also
forward-looking statements. Such forward-looking statements are subject to certain risks
and uncertainties which could cause actual results or outcomes to differ materially from
those currently anticipated. Factors that could affect actual results or outcomes include,
without limitation, the following factors:
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The
Companys ability to retain its limited number of key clients;
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The
possibility of non-renewal of the Companys performance tracking contracts;
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The
Companys ability to compete in its markets, which are highly competitive, and the
possibility of increased price pressure and expenses;
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The
possibility of a business downturn or consolidation in the healthcare industry;
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The
Companys ability to manage its growth, including by identifying acquisition
candidates and effectively integrating acquired companies;
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The
Companys ability to collect the data on which its business relies;
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The
Companys ability to attract and retain key managers and other personnel;
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The
possibility that the Companys intellectual property and other proprietary
information technology could be copied or independently developed by its competitors;
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Errors
in, or dissatisfaction with, performance tracking and other surveys provided by the
Company;
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Regulatory
developments; and
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The
factors set forth under the caption Risk Factors in Item 1A of the Companys
Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as such
section may be updated by Part II, Item 1A of the Companys subsequently filed
Quarterly Reports on Form 10-Q (including this Report).
|
Shareholders, potential investors and
other readers are urged to consider these and other factors in evaluating the
forward-looking statements, and are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements included are only made as of
the date of this Quarterly Report on Form 10-Q and the Company undertakes no obligation to
publicly update such forward-looking statements to reflect subsequent events or
circumstances.
-3-
PART I Financial
Information
ITEM 1.
Financial
Statements
NATIONAL RESEARCH
CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
|
September 30,
2008
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December 31,
2007
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Assets
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(Unaudited)
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Current assets:
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|
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|
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|
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Cash and cash equivalents
|
|
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$
|
677,108
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$
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3,355,141
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Investments in marketable securities
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237
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99,497
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Trade accounts receivable, less allowance for doubtful accounts of $44,926 and $70,212
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in 2008 and 2007, respectively
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9,442,141
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6,378,914
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Unbilled revenue
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696,625
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1,377,427
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Prepaid expenses and other
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1,003,389
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1,068,446
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Recoverable income taxes
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|
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54,987
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|
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272,219
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Deferred income taxes
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79,315
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48,657
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Total current assets
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11,953,802
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12,600,301
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Property and equipment, net
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12,595,334
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11,974,029
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Goodwill
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30,882,292
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31,051,202
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Intangible assets, net
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5,272,169
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5,615,910
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Deferred income taxes
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|
|
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--
|
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590,034
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Other
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60,205
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37,317
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|
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Total assets
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$
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60,763,802
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$
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61,868,793
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Liabilities and Shareholders Equity
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Current liabilities:
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Current portion of note payable
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$
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239,292
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$
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1,092,754
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Accounts payable
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|
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1,041,326
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|
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1,106,317
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Accrued wages, bonus and profit sharing
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1,457,492
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|
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1,477,021
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Accrued expenses
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1,109,123
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1,386,133
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Billings in excess of revenue earned
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14,970,332
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9,921,763
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Total current liabilities
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|
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18,817,565
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14,983,988
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Note payable, net of current portion
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|
|
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--
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1,900,598
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Deferred income taxes
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|
|
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2,338,900
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|
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2,697,774
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|
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Total liabilities
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21,156,465
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19,582,360
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Shareholders equity:
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Common stock, $.001 par value; authorized 20,000,000 shares, issued 7,949,013 in 2008
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and 7,883,289,in 2007, outstanding 6,698,480 in 2008 and 6,926,442 in 2007
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7,949
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7,883
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Additional paid-in capital
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25,807,413
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23,508,717
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Retained earnings
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32,711,673
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30,003,606
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Accumulated other comprehensive income, net of taxes
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694,140
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931,655
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Treasury stock, at cost; 1,250,533 shares in 2008 and 956,847 shares in 2007
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(19,613,838
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)
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(12,165,428
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)
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|
|
|
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Total shareholders equity
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|
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39,607,337
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42,286,433
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Total liabilities and shareholders equity
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$
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60,763,802
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$
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61,868,793
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|
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See accompanying notes to
consolidated financial statements.
-4-
NATIONAL RESEARCH
CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
Three months ended
September 30,
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Nine months ended
September 30,
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|
2008
|
2007
|
2008
|
2007
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Revenue
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|
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$
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13,468,639
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$
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13,951,875
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$
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38,823,616
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$
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38,102,215
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Operating expenses:
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|
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Direct expenses
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6,598,199
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5,929,869
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17,844,682
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16,744,265
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Selling, general and administrative
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|
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3,052,782
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3,240,034
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9,960,160
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9,890,403
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Depreciation and amortization
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|
|
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660,800
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671,728
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2,003,080
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|
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1,921,992
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|
|
|
|
|
|
|
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Total operating expenses
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|
|
|
10,311,781
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|
|
9,841,631
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|
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29,807,922
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|
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28,556,660
|
|
|
|
|
|
|
|
|
|
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Operating income
|
|
|
|
3,156,858
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|
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4,110,244
|
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|
9,015,694
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9,545,555
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Other income (expense):
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Interest income
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5,666
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31,806
|
|
|
32,780
|
|
|
101,025
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Interest expense
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|
|
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(21,009
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)
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(109,839
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)
|
|
(118,213
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)
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(413,079
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)
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Other, net
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29,412
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21,120
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9,511
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|
88,430
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|
|
|
|
|
|
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Total other income (expense)
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|
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|
14,069
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|
|
(56,913
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)
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|
(75,922
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)
|
|
(223,624
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)
|
|
|
|
|
|
|
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Income before income taxes
|
|
|
|
3,170,927
|
|
|
4,053,331
|
|
|
8,939,772
|
|
|
9,321,931
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|
Provision for income taxes
|
|
|
|
1,205,400
|
|
|
1,557,915
|
|
|
3,389,925
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|
|
3,591,851
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
1,965,527
|
|
$
|
2,495,416
|
|
$
|
5,549,847
|
|
$
|
5,730,080
|
|
|
|
|
|
|
|
|
|
|
Net income per share - basic
|
|
|
$
|
.30
|
|
$
|
.36
|
|
$
|
.83
|
|
$
|
.84
|
|
|
|
|
|
|
|
|
|
|
Net income per share - diluted
|
|
|
$
|
.29
|
|
$
|
.36
|
|
$
|
.81
|
|
$
|
.82
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares and share equivalents
|
|
|
outstanding - basic
|
|
|
|
6,643,535
|
|
|
6,850,898
|
|
|
6,699,493
|
|
|
6,845,999
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares and share equivalents
|
|
|
outstanding - diluted
|
|
|
|
6,803,123
|
|
|
7,013,283
|
|
|
6,845,447
|
|
|
6,994,837
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to
consolidated financial statements.
-5-
NATIONAL RESEARCH
CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
Nine months ended
September 30,
|
|
2008
|
2007
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
5,549,847
|
|
$
|
5,730,080
|
|
Adjustments to reconcile net income to net cash
|
|
|
provided by operating activities:
|
|
|
Depreciation and amortization
|
|
|
|
2,003,080
|
|
|
1,921,992
|
|
Deferred income taxes
|
|
|
|
200,418
|
|
|
(8,185
|
)
|
Tax benefit from exercise of stock options
|
|
|
|
70,086
|
|
|
--
|
|
Loss on disposal of property & equipment
|
|
|
|
--
|
|
|
128
|
|
Non-cash share-based compensation expense
|
|
|
|
772,142
|
|
|
855,525
|
|
Net changes in assets and liabilities:
|
|
|
|
--
|
|
Trade accounts receivable
|
|
|
|
(3,200,657
|
)
|
|
(3,069,398
|
)
|
Unbilled revenue
|
|
|
|
678,376
|
|
|
903,727
|
|
Prepaid expenses and other
|
|
|
|
29,494
|
|
|
159,659
|
|
Accounts payable
|
|
|
|
(56,755
|
)
|
|
(444,615
|
)
|
Accrued expenses, wages, bonuses and profit sharing
|
|
|
|
425,757
|
|
|
483,219
|
|
Income taxes recoverable and payable
|
|
|
|
222,270
|
|
|
1,681,453
|
|
Billings in excess of revenue earned
|
|
|
|
5,110,815
|
|
|
2,160,454
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
11,804,873
|
|
|
10,374,039
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
Purchases of property and equipment
|
|
|
|
(2,018,878
|
)
|
|
(1,063,136
|
)
|
Proceeds from sale of property and equipment
|
|
|
|
--
|
|
|
200
|
|
Payment of acquisition earn-out obligation
|
|
|
|
(715,400
|
)
|
|
--
|
|
Purchase of customer related intangibles
|
|
|
|
(249,473
|
)
|
|
--
|
|
Purchases of securities available-for-sale
|
|
|
|
--
|
|
|
(2,891,012
|
)
|
Proceeds from the maturities of securities
|
|
|
|
99,477
|
|
|
3,512,117
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
|
(2,884,274
|
)
|
|
(441,831
|
)
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
Proceeds from notes payable
|
|
|
|
8,700,000
|
|
|
375,000
|
|
Payments on notes payable
|
|
|
|
(11,454,060
|
)
|
|
(6,652,900
|
)
|
Proceeds from exercise of stock options
|
|
|
|
1,076,307
|
|
|
184,498
|
|
Purchases of treasury stock
|
|
|
|
(7,448,410
|
)
|
|
(180,553
|
)
|
Excess tax benefit from exercise of share-based compensation
|
|
|
|
380,227
|
|
|
70,838
|
|
Payment of dividends on common stock
|
|
|
|
(2,841,780
|
)
|
|
(2,492,541
|
)
|
|
|
|
|
|
Net cash used in financing activities
|
|
|
|
(11,587,716
|
)
|
|
(8,695,658
|
)
|
|
|
|
|
|
Effect of exchange rate changes on cash
|
|
|
|
(10,916
|
)
|
|
(53,645
|
)
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
(2,678,033
|
)
|
|
1,182,905
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
3,355,141
|
|
|
876,360
|
|
|
|
|
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
677,108
|
|
$
|
2,059,265
|
|
|
|
|
|
|
Supplemental disclosure of cash paid for:
|
|
|
Interest expense
|
|
|
$
|
118,213
|
|
$
|
413,079
|
|
Income taxes
|
|
|
$
|
2,506,466
|
|
$
|
1,827,836
|
|
See accompanying notes to
consolidated financial statements.
-6-
NATIONAL RESEARCH
CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.
|
BASIS
OF CONSOLIDATION AND PRESENTATION
|
National Research Corporation (the
Company) is a provider of ongoing survey-based performance measurement,
analysis, tracking, improvement services and governance education to the healthcare
industry in the United States and Canada. The Company provides market research services to
hospitals and insurance companies and develops tools that enable healthcare organizations
to obtain performance measurement information necessary to comply with industry and
regulatory standards, and to improve their business practices.
The consolidated balance sheet of the
Company at December 31, 2007, was derived from the Companys audited consolidated
balance sheet as of that date. All other financial statements contained herein are
unaudited and, in the opinion of management, include all adjustments (consisting only of
normal recurring adjustments) the Company considers necessary for a fair presentation of
financial position, results of operations and cash flows in accordance with accounting
principles generally accepted in the United States of America.
Information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been condensed or
omitted. These consolidated financial statements should be read in conjunction with the
financial statements and notes thereto that are included in the Companys Form 10-K
for the fiscal year ended December 31, 2007, filed with the Securities and Exchange
Commission in March 2008.
The preparation of financial
statements in conformity with accounting principles generally accepted in the United
States of America requires management to make certain estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
The consolidated financial statements
include the accounts of National Research Corporation and its wholly-owned subsidiary,
National Research Corporation Canada. All significant intercompany transactions and
balances have been eliminated.
The functional currency of the
Companys foreign subsidiary is the subsidiarys local currency. The Company
translates the assets and liabilities of foreign subsidiaries at the period-end rate of
exchange, and income statement items at the average rate prevailing during the period. The
Company records the resulting translation adjustment in accumulated other comprehensive
income, a component of shareholders equity. Gains and losses related to transactions
denominated in a currency other than the subsidiarys local currency and short-term
intercompany accounts are included in other income (expense) in the statements of income.
-7-
2.
|
ACCUMULATED
OTHER COMPREHENSIVE INCOME
|
Comprehensive income, including
components of other comprehensive income, was as follows:
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
(in thousands)
|
(in thousands)
|
|
2008
|
2007
|
2008
|
2007
|
Net income
|
|
|
$
|
1,966
|
|
$
|
2,495
|
|
$
|
5,550
|
|
$
|
5,730
|
|
Other comprehensive income:
|
|
|
Unrealized gain (loss) from investments
|
|
|
Unrealized gain (loss)
|
|
|
|
--
|
|
|
(3
|
)
|
|
--
|
|
|
8
|
|
Related tax benefit (loss)
|
|
|
|
--
|
|
|
1
|
|
|
--
|
|
|
(3
|
)
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
--
|
|
|
(2
|
)
|
|
--
|
|
|
5
|
|
Foreign currency translation
|
|
|
|
(120
|
)
|
|
235
|
|
|
(238
|
)
|
|
543
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive income
|
|
|
|
(120
|
)
|
|
233
|
|
|
(238
|
)
|
|
548
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income
|
|
|
$
|
1,846
|
|
$
|
2,728
|
|
$
|
5,312
|
|
$
|
6,278
|
|
|
|
|
|
|
|
|
|
|
The components of accumulated other
comprehensive income were as follows (in thousands):
|
Foreign Currency
Translation
|
Balance at September 30, 2008
|
|
|
$
|
694
|
|
|
|
|
Balance at December 31, 2007
|
|
|
$
|
932
|
|
|
|
|
Effective January 1, 2007, the
Company adopted Financial Accounting Standards Board (FASB) Interpretation No.
48
Accounting for Uncertainty in Income TaxesAn Interpretation of FASB Statement
No. 109.
The Company had no liability for unrecognized tax benefits, or related
interest and penalties, as of the adoption date. For the nine-month period ended September
30, 2008, there were no changes to the total amount of unrecognized tax benefits or to the
amount of accrued interest and penalties. The Company does not have any unrecognized tax
benefits that would impact the effective tax rate if recognized. The Company does not
expect any changes in the amount of unrecognized tax benefits within the 12 months
following adoption.
The Companys policy is to
recognize potential accrued interest and penalties related to unrecognized tax benefits in
income tax expense. The Company files a federal income tax return as well as returns in
various state and foreign jurisdictions. With few exceptions, the Company is no longer
subject to tax examinations for years prior to 2006.
-8-
On May 26, 2006, the Company entered
into a credit facility pursuant to which it borrowed $9.0 million under a term note and
$3.5 million under a revolving credit note in order to partially finance the acquisition
of The Governance Institute (TGI). The original term note was payable pursuant
to the credit facility in 83 equal installments of $106,000, with the balance of principal
and interest payable on May 31, 2013. Borrowings under the term note bore interest at
a rate of 7.21% per year. The term note was refinanced on February 25, 2008, for the
remaining balance of the term note of $1,602,675. The refinanced term note requires
payments of principal and interest in 17 monthly installments of $92,821, beginning March
31, 2008, and ending August 31, 2009. Borrowings under the refinanced term note bear
interest at an annual rate of 5.14%. In addition, the revolving credit note was renewed in
July 2008, to extend the term to July 31, 2009. The maximum aggregate amount available
under the revolving credit note was originally $3.5 million, subject to a borrowing base
equal to 75% of the Companys eligible accounts receivable. An addendum to the
revolving credit note dated March 26, 2008, changed the revolving credit note amount to
$6.5 million. The Company may borrow, repay and re-borrow amounts under the revolving
credit note from time to time until its maturity. Borrowings under the revolving credit
note bear interest at a variable rate equal to (a) prime (as defined in the credit note)
less 0.50% or (b) one-, two-, three-, six- or twelve-month LIBOR. As of September 30,
2008, the Companys debt totaled $239,000, which consisted of the remaining balance
on the refinanced term note. Monthly installment payments were made on the term note in
accordance with the credit facility. The Company has classified the $239,000 of debt as a
current liability as of September 30, 2008, since the Company repaid the balance of the
debt in October 2008. The credit facility is secured by certain of the Companys
assets, including the Companys land, building, accounts receivable and intangibles.
5.
|
SHARE-BASED
COMPENSATION
|
The Company applies Statement of
Financial Accounting Standards (SFAS) No. 123 (revised 2004),
Share-Based
Payment
(SFAS No. 123R) which requires the measurement and recognition of
compensation expense for all share-based payments. The compensation expense is recognized
based on the grant-date fair value of those awards calculated under SFAS No. 123R. All of
the Companys existing stock option awards and non-vested stock awards have been
determined to be equity awards in accordance with SFAS No. 123R.
The Company currently intends that
shares of common stock issued upon the exercise of options or otherwise in connection with
any of these plans will be newly-issued shares. Amounts recognized in the financial
statements with respect to these plans under SFAS No. 123R are as follows:
|
Three months
ended
September 30, 2008
|
Nine months
ended
September 30, 2008
|
|
(in thousands)
|
(in thousands)
|
Amounts charged against income,
|
|
|
|
|
|
|
|
|
before income tax benefit
|
|
|
$
|
247
|
|
$
|
772
|
|
Amount of related income tax benefit
|
|
|
|
95
|
|
|
297
|
|
|
|
|
|
|
Total net income impact
|
|
|
$
|
152
|
|
$
|
475
|
|
|
|
|
|
|
A description of the share-based
compensation plans are as follows:
The National Research Corporation
2001 Equity Incentive Plan (2001 Equity Incentive Plan) is a nonqualified plan
that provides for the granting of stock options, stock appreciation rights, restricted
stock, performance shares and other share-based awards and benefits up to an aggregate of
600,000 shares of the Companys common stock. Options granted may be either
nonqualified or incentive stock options. Options vest over one to five years following the
date of grant and option terms are generally five to ten years following the date of
grant. At September 30, 2008, there were 71,082 shares available for issuance pursuant to
future grants under the 2001 Equity Incentive Plan. The Company has accounted for grants
of 528,918 options under the 2001 Equity Incentive Plan using the date of grant as the
measurement date for financial accounting purposes.
-9-
The National Research Corporation
2004 Director Plan (the 2004 Director Plan) is a nonqualified plan that
provides for the granting of options with respect to 250,000 shares of the Companys
common stock. The 2004 Director Plan provides for grants of nonqualified options to each
director of the Company who is not employed by the Company. On the date of each Annual
Meeting of Shareholders of the Company, options to purchase 12,000 shares of the
Companys common stock are granted to directors that are re-elected or retained as a
director at such meeting. Options vest one year following the date of grant and option
terms are generally ten years following the date of grant, or three years in the case of
termination of the outside directors service. At September 30, 2008, there were
25,000 shares available for issuance pursuant to future grants under the 2004 Director
Plan. The Company has accounted for grants of 225,000 options under the 2004 Director Plan
using the date of grant as the measurement date for financial accounting purposes.
The National Research Corporation
2006 Equity Incentive Plan (the 2006 Equity Incentive Plan) is a nonqualified
plan that provides for the granting of stock options, stock appreciation rights,
restricted stock, performance shares and other share-based awards and benefits up to an
aggregate of 600,000 shares of the Companys common stock. Options granted may be
either incentive stock options or nonqualified stock options. Options vest over one to
five years following the date of grant and option terms are generally five to ten years
following the date of grant. At September 30, 2008, there were 472,388 shares available
for issuance pursuant to future grants under the 2006 Equity Incentive Plan. The Company
has accounted for grants of 127,612 options under the 2006 Equity Incentive Plan using the
date of grant as the measurement date for financial accounting purposes.
The Company did not grant stock
options during either of the three-month periods ended September 30, 2008 and 2007, and
granted 118,475 and 131,382 during the nine-month periods ending September 30, 2008 and
2007, respectively. Options to purchase shares of common stock were granted with exercise
prices equal to the fair market value of the common stock on the date of grant. The fair
value of stock options granted was estimated using a Black-Scholes valuation model with
the following assumptions:
|
Nine Months Ended September 30,
|
|
2008
|
2007
|
Expected dividend yield at date of grant
|
1.87 to 2.11%
|
1.76 to 1.92%
|
Expected stock price volatility
|
21.10 to 24.20%
|
22.70 to 29.90%
|
Risk-free interest rate
|
3.18%
|
4.54 to 4.59%
|
Expected life of options (in years)
|
4.00 to 6.00
|
4.00 to 6.00
|
The risk-free interest rate
assumptions were based on the U.S. Treasury yield curve in effect at the time of the
grant. The expected volatility was based on historical monthly price changes of the
Companys stock based on the expected life of the options at the date of grant. The
expected life of options is the average number of years the Company estimates that options
will be outstanding. The Company considers groups of associates (employees) that have
similar historical exercise behavior separately for valuation purposes.
The following table summarizes stock
option activity under the Companys 2001 and 2006 Equity Incentive Plans, and the
1997 Equity Incentive Plan (under which no additional options will be granted) and the
2004 Director Plan for the nine months ended September 30, 2008.
-10-
|
Number of
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Terms Years
|
Aggregate
Intrinsic
Value
|
Outstanding at beginning of period
|
|
|
|
539,660
|
|
$
|
17.04
|
|
|
|
|
|
|
|
Granted
|
|
|
|
118,475
|
|
$
|
27.87
|
|
|
|
|
|
|
|
Exercised
|
|
|
|
(73,705
|
)
|
$
|
14.56
|
|
|
|
|
|
|
|
Canceled/expired
|
|
|
|
(21,090
|
)
|
$
|
19.73
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at end of period
|
|
|
|
563,340
|
|
$
|
19.54
|
|
|
7.13
|
|
$
|
5,220,812
|
|
|
|
|
|
|
|
|
|
|
Exercisable at end of period
|
|
|
|
227,000
|
|
$
|
16.40
|
|
|
6.25
|
|
$
|
2,794,320
|
|
|
|
|
|
|
|
|
|
|
The weighted-average grant date fair
value of stock options granted during the nine months ended September 30, 2008 and 2007,
was $5.67 and $6.39, respectively. The total intrinsic value of stock options exercised
during the nine months ended September 30, 2008 and 2007, was approximately $1.1 million
and $107,000 respectively. As of September 30, 2008, the total unrecognized compensation
cost related to non-vested stock option awards was approximately $1.1 million, which was
expected to be recognized over a weighted average period of 2.85 years.
Cash received from stock options
exercised for the nine-month periods ended September 30, 2008 and 2007, was $1,073,000 and
$184,000, respectively. The actual tax benefit realized for the tax deduction from stock
options exercised was $360,000 and $41,000 for the nine months ended September 30, 2008
and 2007, respectively.
As of September 30, 2008, the Company
had 37,168 non-vested shares of common stock outstanding under the 2006 Equity Incentive
plan and no shares were granted during the nine-month period then ended. These shares vest
over one to five years following the date of grant and holders thereof are entitled to
receive dividends from the date of grant, whether or not vested. The fair value of the
awards is calculated as the fair market value of the shares on the date of grant.
The following table summarizes
information regarding non-vested stock granted to associates under the Companys 2001
and 2006 Equity Incentive Plans for the nine months ended September 30, 2008.
|
Shares
Outstanding
|
Weighted
Average
Grant
Date Fair
Value
Per
Share
|
Outstanding at beginning of period
|
|
|
|
66,183
|
|
$
|
19.75
|
|
Granted
|
|
|
|
--
|
|
|
--
|
|
Vested
|
|
|
|
(21,034
|
)
|
$
|
17.71
|
|
Forfeited
|
|
|
|
(7,981
|
)
|
$
|
16.15
|
|
|
|
|
|
|
Outstanding at end of period
|
|
|
|
37,168
|
|
$
|
21.68
|
|
|
|
|
|
|
Non-vested stock was not granted
during the nine months ended September 30, 2008. The weighted-average grant date fair
value of non-vested stock granted during the nine months ended September 30, 2007, was
$23.54. As of September 30, 2008, the total unrecognized compensation cost related to
non-vested stock awards was approximately $411,000 and is expected to be recognized over a
weighted average period of 1.62 years.
-11-
6.
|
GOODWILL
AND OTHER INTANGIBLE ASSETS
|
Goodwill and other intangible assets
consisted of the following at September 30, 2008, and December 31, 2007:
|
Sept. 30, 2008
|
Dec. 31, 2007
|
Goodwill
|
|
|
$
|
30,882,292
|
|
$
|
31,051,202
|
|
|
|
|
|
|
Non-amortizing other intangible assets:
|
|
|
Trade name
|
|
|
|
1,190,559
|
|
|
1,190,559
|
|
Amortizing other intangible assets:
|
|
|
Customer related intangibles
|
|
|
|
5,193,964
|
|
|
4,922,275
|
|
Trade name
|
|
|
|
1,572,000
|
|
|
1,572,000
|
|
|
|
|
|
|
Total other intangible assets
|
|
|
|
7,956,523
|
|
|
7,684,834
|
|
Less accumulated amortization
|
|
|
|
2,684,354
|
|
|
2,068,924
|
|
|
|
|
|
|
Other intangible assets, net
|
|
|
$
|
5,272,169
|
|
$
|
5,615,910
|
|
|
|
|
|
|
The change in the carrying amount of goodwill
relates to foreign currency translation. In addition, amortizing customer related
intangibles increased during the second quarter 2008 from the purchase of customer
contracts. On April 1, 2008, approximately 10 customer contracts were purchased from SQ
Strategies for $249,473. The recording of this purchase increased customer related
intangibles by $260,462 and deferred revenues by $10,989. The intangibles are being
amortized on a straight-line basis over 5 15 years.
Net income per share has been
calculated and presented for basic and diluted data.
Basic net income per share was computed by dividing net income by the weighted
average number of common shares outstanding, whereas diluted net income per
share was computed by dividing net income by the weighted average number of common shares
outstanding adjusted for the dilutive effects of options and restricted stock. As of
September 30, 2008 and 2007, the Company excluded -0- and 48,000 options, respectively,
from the diluted net income per share computation because their exercise price exceeded
the fair market value of the common stock on such date.
The following table shows the amounts
used in computing earnings per share and the effect on the weighted average number of
shares of dilutive potential common stock.
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
(in thousands)
|
(in thousands)
|
|
2008
|
2007
|
2008
|
2007
|
Weighted average shares and share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equivalents - basic
|
|
|
|
6,644
|
|
|
6,851
|
|
|
6,699
|
|
|
6,846
|
|
Weighted average dilutive effect of options
|
|
|
|
146
|
|
|
125
|
|
|
134
|
|
|
119
|
|
Weighted average dilutive effect of
|
|
|
restricted stock
|
|
|
|
13
|
|
|
37
|
|
|
12
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares and share
|
|
|
equivalents - dilutive
|
|
|
|
6,803
|
|
|
7,013
|
|
|
6,845
|
|
|
6,995
|
|
|
|
|
|
|
|
|
|
|
-12-
8.
|
ADOPTION
OF NEW ACCOUNTING PRONOUNCEMENTS
|
Effective January 1, 2008, the
Company adopted the provisions of SFAS No. 157,
Fair Value Measurements
(SFAS
157), for financial assets and financial liabilities. In accordance with Financial
Accounting Standards Board Staff Position No. 157-2,
Effective Date of FASB Statement
No. 157
, the Company will delay application of SFAS 157 for non-financial assets and
non-financial liabilities, until January 1, 2009. SFAS 157 defines fair value, establishes
a framework for measuring fair value in generally accepted accounting principles and
expands disclosures about fair value measurements. The adoption of SFAS 157 has not had a
material effect on the consolidated financial statements.
Certain non-financial assets and
non-financial liabilities measured at fair value on a recurring basis include reporting
units measured at fair value in the first step of a goodwill impairment test. Certain
non-financial assets measured at fair value on a non-recurring basis include non-financial
assets and non-financial liabilities measured at fair value in the second step of a
goodwill impairment test, as well as intangible assets and other non-financial long-lived
assets measured at fair value for impairment assessment. As stated above, SFAS 157 will be
applicable to these fair value measurements beginning January 1, 2009. Management believes
that adoption of SFAS 157-2 will not have a material effect on the consolidated financial
statements.
In June 2007, the FASB ratified
the consensus reached by the Emerging Issues Task Force (EITF) in EITF Issue
No. 07-3, Accounting for Nonrefundable Advance Payments for Goods or Services
Received for Use in Future Research and Development Activities (EITF 07-3), which requires
that nonrefundable advance payments for goods or services that will be used or rendered
for future research and development activities be deferred and amortized over the period
that the goods are delivered or the related services are performed, subject to an
assessment of recoverability. EITF 07-3 is effective as of the beginning of a
companys first fiscal year that begins after December 15, 2007. The adoption of
EITF 07-3 has had no impact on the consolidated financial statements.
9.
|
RECENT
ACCOUNTING PRONOUNCEMENTS
|
In December 2007, the FASB issued
SFAS No. 141(R),
Business Combinations
(SFAS 141(R)), which replaces
SFAS 141. SFAS 141(R) establishes principles and requirements for how an acquirer in a
business combination recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any controlling interest; recognizes and
measures the goodwill acquired in the business combination or a gain from a bargain
purchase; and determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business combination. SFAS
141(R) is to be applied prospectively to business combinations for which the acquisition
date is on or after an entitys fiscal year that begins after December 15, 2008.
Management will assess the impact of SFAS 141(R) if and when a future acquisition occurs.
In December 2007, the FASB issued
SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements-an
amendment of ARB No. 51
(SFAS 160). This statement amends
Accounting
Research Bulletin No. 51
to establish accounting and reporting standards for the
noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The
provisions of SFAS No. 160 are effective for fiscal years, and interim periods within
those fiscal years, beginning on or after December 15, 2008. Management believes that the
adoption of SFAS 160 will not have a material effect on the consolidated financial
statements.
-13-
In May 2008, the FASB issued SFAS No.
162,
The Hierarchy of Generally Accepted Accounting Principles
(SFAS
162). This statement identifies the sources of and framework for selecting the
accounting principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally accepted
accounting principles (GAAP) in the United States (GAAP
hierarchy). Because the current GAAP hierarchy is set forth in the American
Institute of Certified Public Accountants Statement on Auditing Standards No. 69, it is
directed to the auditor rather than to the entity responsible for selecting accounting
principles for financial statements presented in conformity with GAAP. Accordingly, the
FASB concluded the GAAP hierarchy should reside in the accounting literature established
by the FASB and issued this statement to achieve that result. The provisions of SFAS 162
are effective November 15, 2008, which is 60 days following the SECs approval of the
Public Company Accounting Oversight Board amendments to AU Section 411,
The Meaning of
Present Fairly in Conformity with Generally Accepted Accounting Principles
. Management
believes that adoption of SFAS 162 will not have a material effect on the consolidated
financial statements.
10.
|
RELATED
PARTY TRANSACTIONS
|
A member of the Companys Board
of Directors also serves as a director of the Picker Institute. The Company advanced
$300,000 in each of 2004 and 2003 to the Picker Institute to fund designated research
projects. During the nine-month period ended September 30, 2008 and 2007, the Picker
Institute used $129,000 and $208,000, respectively, of these deposited amounts for
research and, as a result, the Company recognized expense equal to that amount. In
addition, the Company is a party to a support services agreement with the Picker Institute
under which the Company conducts the annual Patient-Centered Care Institute Symposium.
Under the support services agreement, the Picker Institute receives a portion of the gross
receipts of each Symposium. For the nine months ended September 30, 2008 and 2007, the
Picker Institute received $11,000 and $15,000, respectively.
ITEM 2.
|
Managements
Discussion and Analysis of Financial Condition and Results of Operations
|
Overview
The Company believes it is a leading
provider of ongoing survey-based performance measurement, analysis, tracking, improvement
services and governance education to the healthcare industry in the United States and
Canada. Since 1981, the Company has provided these services using traditional market
research methodologies, such as direct mail, telephone-based surveys, focus groups and
in-person interviews. The current primary data collection methodology used is direct mail,
but the Company uses other methodologies for certain types of studies. The Company
addresses the growing need of healthcare providers and payers to measure the care
outcomes, specifically experience and health status of their patients and/or members, and
provides information on governance issues. The Company develops tools that enable
healthcare organizations to obtain performance measurement information necessary to comply
with industry and regulatory standards, and to improve their business practices so they
can maximize new member and/or patient attraction, experience, member retention and
profitability. The Company believes that a driver of its growth, and the growth of its
industry in general, will be the increase in demand for performance measurement,
improvement, and educational services as a result of more public reporting programs. The
Companys primary types of information services are renewable performance tracking
and improvement services, custom research, subscription-based educational services, and a
renewable syndicated service, the NRC Healthcare Market Guide (Market
Guide), including the new on-going data collection service Ticker.
Results of Operations
The following table sets forth for
the periods indicated, selected financial information derived from the Companys
consolidated financial statements expressed as a percentage of total revenue. The trends
illustrated in the following table may not necessarily be indicative of future results.
The discussion that follows the table should be read in conjunction with the consolidated
financial statements.
-14-
|
Three months ended
September
30,
|
Nine months ended
September
30,
|
|
2008
|
2007
|
2008
|
2007
|
Revenue
|
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
Direct expenses
|
|
|
|
49.0
|
|
|
42.5
|
|
|
46.0
|
|
|
43.9
|
|
Selling, general and
|
|
|
|
22.7
|
|
|
23.2
|
|
|
25.7
|
|
|
26.0
|
|
administrative
|
|
|
Depreciation and amortization
|
|
|
|
4.9
|
|
|
4.8
|
|
|
5.2
|
|
|
5.0
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
|
76.6
|
|
|
70.5
|
|
|
76.9
|
|
|
74.9
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
23.4
|
%
|
|
29.5
|
%
|
|
23.1
|
%
|
|
25.1
|
%
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, 2008, Compared to Three Months Ended September 30, 2007
Revenue
. Revenue
for the three-month period ended September 30, 2008, decreased 3.5% to $13.5
million, compared to $14.0 million in the three-month period ended September
30, 2007. In connection with the addition of the Healthcare Market Guides
new subscription-based Ticker product, the Company deferred revenue of $636,000
during this period. This revenue will be recognized over a 12-month period that
began in the three-month period ended September 30, 2008, and will continue
into the same period in 2009.
Direct expenses
. Direct
expenses increased 11.3% to $6.6 million in the three-month period ended September 30,
2008, compared to $5.9 million in the same period during 2007. The change was due to an
increase in salaries, benefits and travel of $600,000, the result of the change in the
business model and the allocation of responsibilities related to sales and servicing
clients. The Company divided its sales force into two groups, one focused only on bringing
on new prospective clients and the second focused exclusively on current clients. As a
result, salaries, benefits and travel attributable to the group focused on current clients
are now classified as direct expenses rather than selling, general and administrative
expenses. Direct expenses increased as a percentage of revenue to 49% in the three-month
period ended September 30, 2008, from 42.5% during the same period of 2007.
Selling, general and
administrative expenses.
Selling, general and administrative expenses decreased 5.8%
to $3.1 million for the three-month period ended September 30, 2008, compared to $3.2
million for the same period in 2007, largely due to the change in the business model and
the allocation of responsibilities related to sales and servicing clients. Selling,
general, and administrative expenses decreased as a percentage of revenue to 22.7% for the
three-month period ended September 30, 2008, from 23.2% for the same period in 2007.
Depreciation and amortization.
Depreciation and amortization expenses decreased 1.6% to $661,000 for the three-month
period ended September 30, 2008, compared to $672,000 in the same period of 2007.
Depreciation and amortization expenses as a percentage of revenue increased to 4.9% for
the three-month period ended September 30, 2008, from 4.8% in the same period of 2007.
Provision for income taxes.
The provision for income taxes totaled $1.2 million (38.0% effective tax rate) for the
three-month period ended September 30, 2008, compared to $1.6 million (38.4% effective tax
rate) for the same period in 2007. The effective tax rate was lower in 2008 due to
differences in state and provincial income taxes.
-15-
Nine Months Ended
September 30, 2008, Compared to Nine Months Ended September 30, 2007
Revenue
. Revenue
for the nine-month period ended September 30, 2008, increased 1.9% to $38.8
million, compared to $38.1 million in the nine-month period ended September 30,
2007, primarily due to the increase in scope of work from existing clients and
the addition of new clients.
Direct expenses
. Direct
expenses increased 6.6% to $17.8 million in the nine-month period ended September 30,
2008, compared to $16.7 million in the same period during 2007. The change in direct
expenses included increases in salaries, benefits and travel of $800,000 due to the change
in the business model and allocation of responsibilities related to sales and servicing
clients. Postage costs and conference costs also increased $226,000 and $272,000
respectively. Direct expenses increased as a percentage of revenue to 46.0% in the
nine-month period ended September 30, 2008, from 43.9% during the same period of 2007.
Selling, general and
administrative expenses.
Selling, general and administrative expenses increased 0.7%
to $10 million for the nine-month period ended September 30, 2008, compared to $9.9
million for the same period in 2007. The change was primarily due to increases in salary
and benefit expenses. Selling, general, and administrative expenses decreased as a
percentage of revenue to 25.7% for the nine-month period ended September 30, 2008, from
26.0% for the same period in 2007.
Depreciation and amortization.
Depreciation and amortization expenses increased 4.2% to $2.0 million for the
nine-month period ended September 30, 2008, compared to $1.9 million for the same period
in 2007. Depreciation and amortization expenses as a percentage of revenue increased to
5.2% in the nine-month period ended September 30, 2008, from 5.0% in the same period of
2007.
Provision for income taxes.
The provision for income taxes totaled $3.4 million (37.9% effective tax rate) for the
nine-month period ended September 30, 2008, compared to $3.6 million (38.5% effective tax
rate) for the same period in 2007. The effective tax rate was higher in 2007 due to
differences in state and provincial income taxes.
Liquidity and Capital
Resources
The Company believes it has adequate
capital resources and operating cash flow to meet its projected capital and debt maturity
needs for the foreseeable future. Requirements for working capital, capital expenditures,
and debt maturities will continue to be funded by operations and the Companys
borrowing arrangements.
Working Capital
The Company had a working capital
deficiency of $6.9 million as of September 30, 2008, compared to a working capital
deficiency of $322,000 on September 30, 2007. The increase in the working capital
deficiency was primarily due to billings in excess of revenue earned increasing by $4.8
million over the same period in 2007. Cash and cash equivalents also decreased by $1.4
million to fund share repurchases and make additional prepayments on the term note.
Billings in excess of revenue earned
increased in 2008 compared to 2007 primarily due to the timing of initial billings on new
and renewal contracts. The Company typically invoices clients for performance tracking
services and custom research projects before they have been completed. Billed amounts are
recorded as billings in excess of revenue earned, or deferred revenue, on the
Companys consolidated financial statements, and are recognized as income when
earned. In addition, when work is performed in advance of billing, the Company records
this work as revenue earned in excess of billings, or unbilled revenue. Substantially all
deferred and unbilled revenue will be earned and billed, respectively, within 12 months of
the respective period ends.
-16-
Capital Expenditures
Capital expenditures for the
nine-month period ended September 30, 2008, were $2.0 million. The Company expects that
the additional capital expenditures during 2008 will be primarily for computer hardware
and software, production equipment, and furniture that will be funded by cash generated
from operations.
Debt and Equity
On May 26, 2006, the Company entered
into a credit facility pursuant to which it borrowed $9.0 million under a term note and
$3.5 million under a revolving credit note in order to partially finance the acquisition
of TGI. The term note was refinanced on February 25, 2008, for the remaining balance of
the term note of $1,602,675. The refinanced term note requires payments of principal and
interest in 17 monthly installments of $92,821, beginning March 31, 2008, and ending
August 31, 2009. Borrowings under the refinanced term note bear interest at an annual rate
of 5.14%. The maximum aggregate amount available under the revolving credit note was
originally $3.5 million, but an addendum to the revolving credit note dated March 26,
2008, changed the revolving credit note amount to $6.5 million. The revolving credit note
was renewed in July 2008 to extend the term to July 31, 2009. As of September 30, 2008,
the Companys debt totaled $239,000, which consisted of the remaining balance on the
term note. Monthly installment payments were made on the term note in accordance with the
credit facility. Also, additional pay-downs on the loan were made with no prepayment
penalties. The Company repaid the remainder of the debt in October 2008.
The credit facility contains various
restrictions and covenants applicable to the Company, including requirements that the
Company maintain certain financial ratios at prescribed levels and restrictions on the
ability of the Company to consolidate or merge, create liens, incur additional
indebtedness or dispose of assets. As of September 30, 2008, the Company was in compliance
with these restrictions and covenants.
The purchase price for the Smaller
World Communications Inc. acquisition in 2003 included two additional scheduled payments
in 2006 and 2008. In 2006, the Company made the first aggregate payment of $536,200 based
on meeting certain revenue goals. The second aggregate payment, also based upon certain
revenue goals, was made in February 2008 for $715,400.
Shareholders equity decreased
$2.7 million to $39.6 million as of September 30, 2008, from $42.3 million as of December
31, 2007. The decrease was primarily due to the increase in treasury stock of $7.4
million. This was partially offset by an increase in net income and the exercise of stock
options.
Stock Repurchase Program
In February 2006, the Board of
Directors of the Company authorized the repurchase of an additional 750,000 shares of
common stock in the open market or in privately negotiated transactions. As of September
30, 2008, the remaining shares that can be purchased were 394,465.
ITEM 3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
The Company has not experienced any
material changes in its market risk exposures since December 31, 2007.
-17-
ITEM 4.
|
Controls
and Procedures
|
The Companys management, with
the participation of the Companys principal executive officer and principal
financial officer, has evaluated the Companys disclosure controls and procedures as
of September 30, 2008. Based on that evaluation, the Companys principal executive
officer and principal financial officer have concluded that the Companys disclosure
controls and procedures were effective to ensure that information required to be disclosed
by the Company in reports that it files or submits under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods specified in
Securities and Exchange Commission rules and forms.
There have been no changes in the
Companys internal control over financial reporting that occurred during the
Companys most recent fiscal quarter that have materially affected, or are reasonably
likely to materially affect, the Companys internal control over financial reporting.
PART II Other
Information
Risk factors relating to the Company
are contained in Item 1A of its Annual Report on Form 10-K for the fiscal year ended
December 31, 2007. No material change to such risk factors has occurred during the nine
months ended September 30, 2008.
ITEM 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
In February 2006, the Board of
Directors of the Company authorized the repurchase of an additional 750,000 shares of
Common Stock in the open market or in privately negotiated transactions. Unless terminated
earlier by resolution of the Companys Board of Directors, the repurchase program
will expire when the Company has repurchased all shares authorized for repurchase
thereunder. As of November 1, 2008, 355,535 shares have been repurchased under that
authorization.
The table below summarizes stock
repurchases for the three-month period ended September 30, 2008.
Period
|
Total
Number of
Shares
Purchased
|
Average Price
Paid per Share
|
Total Number of
Shares Purchased
as Part of
Publicly
Announced Plans
or Programs
|
Maximum Number of
Shares that May Yet
Be Purchased Under
the
Plans or Programs
|
July 1 - July 31, 2008
|
9,380
|
$24.32
|
9,380
|
412,629
|
August 1 - August 31, 2008
|
18,164
|
$31.92
|
18,164
|
394,465
|
September 1 - September 30, 2008
|
0
|
$ 0.00
|
0
|
394,465
|
The exhibits listed in the
accompanying index of exhibits are filed as part of this Quarterly Report on Form 10-Q.
-18-
SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
|
|
|
NATIONAL RESEARCH CORPORATION
|
Date: November 10, 2008
|
By:
/s/ Michael D. Hays
|
|
Michael D. Hays
|
|
President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
Date: November 10, 2008
|
By:
/s/ Patrick E. Beans
|
|
Patrick E. Beans
|
|
Vice President, Treasurer, Secretary and
|
|
Chief Financial Officer (Principal
|
|
Financial and Accounting Officer)
|
-19-
NATIONAL RESEARCH
CORPORATION
EXHIBIT INDEX TO
QUARTERLY REPORT ON FORM 10-Q
For the Quarterly Period ended September 30, 2008
Exhibit
(31.1)
|
Certification
by the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a)
under the Securities Exchange Act of 1934.
|
(31.2)
|
Certification
by the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a)
under the Securities Exchange Act of 1934.
|
(32)
|
Written
Statement of the Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350.
|
-20-
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