Filed Pursuant to Rule
424(b)(3)
Registration No. 333-159370
PROSPECTUS
1,500,000 Shares
NATIONAL RESEARCH
CORPORATION
Common Stock
This
prospectus relates to 1,500,000 shares of our common stock that we previously issued. The
shareholders named in this prospectus under the heading Selling Shareholders,or
their donees, may offer and sell this common stock over time. References in this
prospectus to selling shareholders include any donees of the selling shareholders unless
the context indicates otherwise. We will not receive any of the proceeds from the sale of
the common stock.
Our
common stock is traded on the Nasdaq Global Market under the symbol NRCI. On
July 31, 2009, the closing sale price of our common stock was $25.76 per share.
The
selling shareholders may sell their common stock in public or private transactions at
prevailing market prices, at negotiated prices or otherwise. They may sell the stock
directly or through brokers or dealers. Brokers or dealers may receive discounts or
commissions from the selling shareholders, which will be paid by the selling
shareholders. See Plan of Distribution.
Investing
in our common stock involves risks that are described in the Risk Factorssection
beginning on page 2 of
this prospectus.
_________________
Neither
the Securities and Exchange Commission nor any state securities commission has approved
or disapproved of these securities or passed upon the adequacy or accuracy of this
prospectus. Any representation to the contrary is a criminal offense.
_________________
The date of this
prospectus is August 6, 2009.
TABLE OF CONTENTS
|
Page
|
THE COMPANY
|
1
|
RISK FACTORS
|
2
|
FORWARD-LOOKING STATEMENTS
|
8
|
USE OF PROCEEDS
|
8
|
SELLING SHAREHOLDERS
|
9
|
DIVIDEND POLICY
|
13
|
DESCRIPTION OF CAPITAL STOCK
|
13
|
PLAN OF DISTRIBUTION
|
17
|
LEGAL MATTERS
|
18
|
EXPERTS
|
18
|
WHERE YOU CAN FIND MORE INFORMATION
|
19
|
_________________
You should
rely only on the information contained or incorporated by reference in this prospectus or
to which we have referred you. We have not authorized anyone to provide you with different
information. This prospectus does not offer to sell or seek an offer to buy shares of
common stock in jurisdictions where offers and sales are not permitted. The information
contained in this prospectus is accurate only as of the date of this prospectus,
regardless of the time of delivery of this prospectus or any sale of the common stock.
-i-
THE COMPANY
We
believe we are a leading provider of ongoing survey-based performance measurement,
improvement services and governance education to the healthcare industry in the United
States and Canada. We believe we have achieved this leadership position based on 28 years
of industry experience and our relationships with many of the industrys largest
payers and providers. We address the growing needs of healthcare providers and payers to
measure the care outcomes, specifically experience and health status, of their patients
and/or members. We develop 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 that they can maximize new member
and/or patient attraction, experience, member retention and profitability.
Since
our founding 28 years ago in 1981 as a Nebraska corporation (we reincorporated in
Wisconsin in September 1997), we have focused on the information needs of the healthcare
industry. Our primary types of information services are renewable performance tracking
services, custom research, subscription-based governance information and educational
services, and a renewable syndicated service.
While
performance data has always been of interest to healthcare providers and payers, such
information has become increasingly important to these entities as a result of regulatory,
industry and competitive requirements. In recent years, the healthcare industry has been
under significant pressure from consumers, employers and the government to reduce costs.
However, the same parties that demanded cost reductions are now concerned that healthcare
service quality is being compromised under managed care. This
concern has created a demand for consistent, objective performance information by which
healthcare providers and payers can be measured and compared, and on which
physicians compensation can, in part, be based.
We
address healthcare organizations growing need to track their performance at the
enterprise-wide, departmental and physician/caregiver levels. We have been developing
tools designed to enable our clients to collect, in an unobtrusive manner, a substantial
amount of comparative performance information in order to analyze and improve their
practices to maximize new member and/or patient attraction, experience, member retention
and profitability. Our performance assessments offer a tangible measurement of health
service quality of the type currently demanded by consumers, employers, industry
accreditation organizations and lawmakers.
Our
solutions are designed to respond to managed cares redefined relationships among
consumers, employers, payers and providers. Instead of relying exclusively on static, mass
produced questionnaires, we utilize a dynamic data collection process to create a
personalized questionnaire which evaluates service issues specific to each
respondents healthcare experience. The flexibility of our data collection process
allows healthcare organizations to add timely, market-driven questions relevant to matters
such as industry performance mandates, employer performance guarantees and internal
quality improvement initiatives. In addition, we assess core service factors relevant to
all healthcare respondent groups (patients, members, employers, employees, physicians,
residents, families, etc.) and to all service points of a healthcare system (inpatient,
emergency room, outpatient, home health, rehabilitation, behavioral health, long-term
care, hospice, assisted living, dental, etc.).
We
offer renewable performance tracking and improvement services, custom research,
subscription-based educational services, and a renewable syndicated service, the NRC
Healthcare Market Guide (Market Guide). We have renewable performance
tracking tools, including those produced and delivered under our NRC Picker trade name,
for gathering and analyzing data from survey respondents on an ongoing basis with
comparisons over time. These tools may be coupled with our improvement tool, eToolKit, to
help clients not only measure performance, but know where to focus with ideas and
solutions for making improvements. We have the capacity to measure performance beyond the
enterprise-wide level. We have the ability and experience to determine key performance
indicators at the department and individual physician/caregiver measurement levels, where
our services can best guide the efforts of our clients to improve quality and enhance
their market position. The educational services of NRC Picker provide a way of bridging
the gap between measurement and improvement. Additional offerings under our Payer
Solutionss division include functional disease-specific and health status
measurement tools. The syndicated Market Guide, a stand-alone market information and
competitive intelligence source, as well as a comparative performance database, allows our
clients to assess their performance relative to the industry, to access best practice
examples, and to utilize competitive information for marketing purposes.
-1-
Through
our division known as The Governance Institute (TGI), we also offer
subscription-based governance information and educational conferences designed to improve
the effectiveness of hospital and health care systems by continually strengthening their
boards, medical leadership, and management performance in the United States. TGI conducts
timely conferences, produces publications, videos, white papers, and research studies, and
tracks industry trends showcasing the best practices of healthcare boards across the
country.
On
December 19, 2008, we acquired My InnerView, Inc., a leading provider of quality and
performance improvement solutions to the senior care profession. My InnerView, Inc. offers
resident, family and employee satisfaction measurement and improvement products to the
long term care and assisted and independent living markets in the United States. My
InnerView, Inc. works with over 8,000 senior care providers throughout the United States,
housing what the Company believes is the largest dataset of senior care satisfaction
metrics in the nation.
Our
headquarters are located at 1245 Q Street, Lincoln, Nebraska 68508, telephone (402)
475-2525.
RISK FACTORS
We rely on a limited number of
key clients, and a loss of one or more of these key clients will adversely affect our
operating results.
We
rely on a limited number of key clients for a substantial portion of our revenue. Our ten
largest clients accounted for 24%, 29% and 32% of our total revenue in 2008, 2007 and
2006, respectively. The U.S. Department of Veterans Affairs accounted for 7%, 8% and 8% of
total revenue in 2008, 2007 and 2006, respectively.
We
cannot assure you that we will maintain our existing client base, maintain or increase the
level of revenue or profits generated by our existing clients, or be able to attract new
clients. Furthermore, the healthcare industry continues to undergo consolidation and we
cannot assure you that such consolidation will not cause us to lose clients. The loss of
one or more of our large clients or a significant reduction in business from such clients,
regardless of the reason, will have a negative effect on our revenue and a corresponding
effect on our operating and net income. See Risk Factors Because our clients
are concentrated in the healthcare industry, our revenue and operating results may be
adversely affected by a business downturn or consolidation with respect to the healthcare
industry.
-2-
We depend on
performance tracking contract renewals for a large share of our revenue and our operating
results could be adversely affected.
We
expect that a substantial portion of our revenue for the foreseeable future will continue
to be derived from written and oral contracts for renewable performance tracking services.
Substantially all such written contracts are renewable annually at the option of our
clients, although a client generally has no minimum purchase commitment under a contract
and the contracts are generally cancelable on short or no notice without penalty. To the
extent that clients fail to renew or defer their renewals from the quarter we anticipate,
our quarterly results may be materially adversely affected. Our ability to secure renewals
depends on, among other things, our ability to gather and analyze performance data in a
consistent, high-quality and timely fashion. In addition, the performance tracking and
market research activities of our clients are affected by accreditation requirements,
enrollment in managed care plans, the level of use of satisfaction measures in healthcare
organizations overall management and compensation programs, the size of operating
budgets, clients operating performance, industry and economic conditions, and
changes in management or ownership. As these factors are beyond our control, we cannot
assure you that we will be able to maintain our renewal rates. Any material decline in
renewal rates from existing levels would have an adverse effect on our revenue and a
corresponding effect on our operating and net income.
Our operating results
may fluctuate on a quarterly basis, and this may cause our stock price to decline.
Our
operating results have fluctuated from period to period in the past and will likely
fluctuate significantly in the future due to various factors. There has historically been
fluctuation in our financial results related to the Market Guide, a stand-alone market
information intelligence source and comparative performance database. In the future, we
expect such fluctuations will continue, but to a lesser degree. Until May 2008, the Market
Guides were deliverable on an annual basis, and historically we recognized revenue when
they were delivered to the principal customers pursuant to their contracts, typically in
the third quarter of the year. Substantially all of the related costs were deferred and
subsequently charged to direct expenses contemporaneously with the recognition of the
revenue. Starting in May 2008, the Market Guide became deliverable on a subscription
basis. Accordingly, we now recognize much of the Market Guide revenue ratably over a
twelve-month period and, since October of 2008, all of the related costs are expensed in
the month they are incurred. We will continue to have some annual sales which could
increase fluctuation of operating results in the third quarter. A delay in completing and
delivering the Market Guide, the timing of which is dependent upon our ability to access a
third-partys respondent panel on a timely basis, could delay recognition of such
revenue and expenses, which could materially affect operating results for the affected
periods. We generate additional revenue from incidental customers subsequent to the
completion of each monthly edition. Revenue and costs for these subsequent services are
recognized as the services are performed and completed.
In
addition, our overall operating results may fluctuate as a result of a variety of other
factors, including the size and timing of orders from clients, client demand for our
services (which, in turn, is affected by factors such as accreditation requirements,
enrollment in managed care plans, operating budgets and clients operating
performance), the hiring and training of additional staff, postal rate changes, and
industry and general economic conditions. Because a significant portion of our overhead,
particularly some costs associated with owning and occupying our building and full-time
personnel expenses, is fixed in the short-term, our results of operations may be
materially adversely affected in any particular quarter if revenue falls below our
expectations. These factors, among others, make it possible that in some future quarter
our operating results may be below the expectations of securities analysts and investors,
which would have a material adverse effect on the market price of our common stock.
-3-
We operate in a
highly competitive market and we could experience increased price pressure and expenses
as a result.
The
healthcare information and market research industry is highly competitive. We compete with
healthcare organizations internal marketing, market research and/or quality
improvement departments that create their own performance measurement tools, and with
relatively small specialty research firms that provide survey-based healthcare market
research and/or performance assessment. Our main competitors among such specialty firms
are Press Ganey, which we believe has revenue that is significantly larger than our
revenue, and three or four other companies that we believe have revenue that is smaller
than our revenues. We, to a certain degree, currently compete with, and we anticipate that
in the future we may increasingly compete with, traditional market research firms that are
significant providers of survey-based, general market research and firms that provide
services or products that complement healthcare performance assessments, such as
healthcare software or information systems. Although only a few of these competitors have
to date offered survey-based, healthcare market research that competes directly with our
services, many of these competitors have substantially greater financial, information
gathering and marketing resources than we do and could decide to increase their resource
commitments to our market. There are relatively few barriers to entry into our market, and
we expect increased competition in our market, which could adversely affect our operating
results through pricing pressure, increased client service and marketing expenditures and
market share losses, among other factors. We cannot assure you that we will continue to
compete successfully against existing or new competitors, and our revenue and operating
net income could be adversely affected as a result.
Because our clients
are concentrated in the healthcare industry, our revenue and operating results may be
adversely affected by a business downturn or consolidation with respect to the healthcare
industry.
Substantially
all of our revenue is derived from clients in the healthcare industry. As a result, our
business, financial condition and results of operations are influenced by conditions
affecting this industry, including changing political, economic, competitive and
regulatory influences that may affect the procurement practices and operation of
healthcare providers and payers. Many federal and state legislators have proposed or have
announced that they intend to propose programs to reform portions of the U.S. healthcare
system. These programs could result in lower reimbursement rates and otherwise change the
environment in which providers and payers operate. In addition, large private purchasers
of healthcare services are placing increasing cost pressure on providers. Healthcare
providers may react to these cost pressures and other uncertainties by curtailing or
deferring purchases, including purchases of our services. Moreover, there has been
consolidation of companies in the healthcare industry, a trend which we believe will
continue. Consolidation in this industry, including the potential acquisition of certain
of our clients, could adversely affect aggregate client budgets for our services, or could
result in the termination of a clients relationship with us. The impact of these
developments on the healthcare industry is difficult to predict and could have an adverse
effect on our revenue and a corresponding effect on our operating and net income.
Our future success
depends on our ability to manage our growth, including identifying acquisition candidates
and effectively integrating acquired companies.
Since
our inception, our growth has placed significant demands on our management,
administrative, operational and financial resources. In order to manage our growth, we
will need to continue to implement and improve our operational, financial and management
information systems and continue to expand, motivate and effectively manage an evolving
workforce. If our management is unable to effectively manage under such circumstances, the
quality of our services, our ability to retain key personnel and our results of operations
could be materially adversely affected. Furthermore, we cannot assure you that our
business will continue to expand. Reductions in clients spending on performance
tracking and market research, increased competition, pricing pressures and other general
economic and industry trends could adversely affect our growth.
-4-
We
may achieve a portion of our future revenue growth, if any, through acquisitions of
complimentary businesses, products, services or technologies, although we currently have
no commitments or agreements with respect to any such acquisitions. Our management has
limited experience dealing with the issues of product and service, systems, personnel and
business strategy integration posed by acquisitions, and has encountered minor problems
with integrating people and processes in connection with past acquisitions. We cannot
assure you that the integration of any possible future acquisitions will be managed
without incurring higher than expected costs and expenses. In addition, we cannot assure
you that, as a result of such unexpected costs and expenses, any possible future
acquisition will not negatively affect our operating and net income.
We face several risks
relating to our ability to collect the data on which our business relies.
Our
ability to provide timely and accurate performance tracking and market research to our
clients depends on our ability to collect large quantities of high quality data through
surveys and interviews. If receptivity to our survey and interview methods by respondents
declines, or for some other reason their willingness to complete and return surveys
declines, or if we, for any reason, cannot rely on the integrity of the data we receive,
then our revenue could be adversely affected, with a corresponding effect on our operating
and net income. In addition, we currently rely primarily on mail and telephone surveys for
gathering information. If one or more of our competitors were to develop an online survey
process that more effectively and efficiently gathers information, then we would be at a
competitive disadvantage and our revenue could be adversely affected, with a corresponding
effect on our operating and net income.
We
also rely on a third-party panel of pre-recruited consumer households to produce in a
timely manner the Market Guide. If we are not able to continue to use this panel, or the
time period in which we use this panel is altered and we cannot find an alternative panel
on a timely, cost competitive basis, we could face an increase in our costs or an
inability to effectively produce the Market Guide. In either case, our operating and net
income would be negatively affected.
Our principal
shareholder effectively controls our company.
Prior
to this offering, Michael D. Hays, a selling shareholder who is also our President and
Chief Executive Officer, beneficially owned 72.1% of our outstanding common stock as of
July 31, 2009 (including the 500,000 shares Mr. Hays transferred to the Michael D. Hays
2009 Two-Year GRAT Agreement on March 31, 2009, all or a portion of which will be returned
to Mr. Hays over the next two years). As a result, he is able to control matters requiring
shareholder approval, including the election of directors and the approval of significant
corporate matters such as change of control transactions. The effects of such influence
could be to delay or prevent a change of control of our company unless the terms are
approved by Mr. Hays. See Selling Shareholders.
Our business and
operating results could be adversely affected if we are unable to attract or retain key
managers and other personnel.
Our
future performance will depend, to a significant extent, upon the efforts and ability of
our key personnel who have expertise in gathering, interpreting and marketing survey-based
performance information for healthcare markets. Although client relationships are managed
at many levels within our company, the loss of the services of Michael D. Hays, our
President and Chief Executive Officer, or one or more of our other senior managers could
have a material adverse effect, at least in the short to medium term, on most significant
aspects of our business, including strategic planning, product development, and sales and
customer relations. As of the date of this prospectus, we maintain $500,000 of key officer
life insurance on Mr. Hays. Our success will also depend on our ability to hire, train and
retain skilled personnel in all areas of our business. Currently, we do not have
employment agreements with our officers or our other key personnel. Competition for
qualified personnel in our industry is intense, and many of the companies that compete
with us for qualified personnel have substantially greater financial and other resources
than us. Furthermore, we expect competition for qualified personnel to become more intense
as competition in our industry increases. We cannot assure you that we will be able to
recruit, retain and motivate a sufficient number of qualified personnel to compete
successfully.
-5-
If intellectual
property and other proprietary information technology were copied or independently
developed by our competitors, our operating results could be negatively affected.
Our
success depends in part upon our data collection process, research methods, data analysis
techniques, and internal systems and procedures that we have developed specifically to
serve clients in the healthcare industry. We have no patents. Consequently, we rely on a
combination of copyright, trade secret laws and associate nondisclosure agreements to
protect our systems, survey instruments and procedures. We cannot assure you that the
steps we have taken to protect our rights will be adequate to prevent misappropriation of
such rights, or that third parties will not independently develop functionally equivalent
or superior systems or procedures. We believe that our systems and procedures and other
proprietary rights do not infringe upon the proprietary rights of third parties. We cannot
assure you, however, that third parties will not assert infringement claims against us in
the future, or that any such claims will not result in protracted and costly litigation,
regardless of the merits of such claims, or whether we are ultimately successful in
defending against such claims.
Errors in, or
dissatisfaction with, performance tracking and other surveys could adversely affect our
business.
Many
healthcare providers, payers and other entities or individuals use our renewable
performance tracking and other healthcare surveys in promoting and/or operating their
businesses, and as a factor in determining physician or employee compensation. Consequently,
any errors in the data received or in the final surveys, as well as the actual results of
such surveys, can have a significant impact on such providers, payers or other
entities businesses, and on any such individuals compensation. In addition,
parties who have not performed well in our surveys may be dissatisfied with the results of
the surveys or the manner in which the results may be used by competitors or others.
Although any such errors or dissatisfaction with the results of the surveys, or the manner
in which the surveys have been used, has not resulted in litigation against us, we cannot
assure you that we will not face future litigation, which may be costly, as a result of a
healthcare providers, payers, other entitys or individuals
allegation of errors in our surveys or dissatisfaction with the results thereof.
Regulatory
developments could adversely affect our revenue and results of operations.
In
the operation of our business, we have access to, or gather certain confidential
information, such as medical histories of our respondents. As a result, we could be
subject to potential liability for any inappropriate disclosure or use of such
information. Even if we do not improperly disclose confidential information, privacy laws,
including the U.S. Health Insurance Portability and Accountability Act of 1996, the U.S.
Patriot Act and Canadian legislation relating to personal health information, have had,
and could in the future have, the effect of increasing our costs and restricting our
ability to gather and disseminate information which could ultimately have a negative
effect on our revenue.
-6-
In
addition, several years ago, the Centers for Medicare and Medicaid Services initiated a
nationwide effort to collect and publicly report hospital quality data, including the
patient experience of care questionnaire. This questionnaire is called the HCAHPS
questionnaire and was developed by the Agency for Healthcare Research and Quality. After
several years of development and consensus building, the HCAHPS survey program began in
2006. This survey program may increase competition and pricing pressures, which could
adversely affect our operating and net income.
-7-
FORWARD-LOOKING
STATEMENTS
This
prospectus and the information we incorporate by reference into this prospectus contain
forward-looking statements intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995. These
forward-looking statements can generally be identified as such because the context of the
statement includes phrases such as we believe, expect or other
similar expressions. Similarly, statements that describe our future plans, objectives or
goals are also forward-looking statements. Such forward-looking statements are subject to
risks and uncertainties which could cause actual results or outcomes to differ materially
from those currently expressed in, or implied by, those statements. Some, but not all, of
the risks and uncertainties include those described in Risk Factors. We urge
you to consider these factors in evaluating the forward-looking statements and we caution
you not to place undue reliance on such forward-looking statements. We assume no
obligation, and disclaim any duty, to publicly update such forward-looking statements to
reflect subsequent events or circumstances.
USE OF PROCEEDS
All
proceeds from the sale of the shares of common stock to be sold pursuant to this
prospectus will be for the account of the selling shareholders. As a consequence, we will
not receive any proceeds from the sale of the shares of common stock offered by the
selling shareholders.
-8-
SELLING SHAREHOLDERS
The
following table sets forth information as of July 31, 2009 with respect to the number of
shares of our common stock beneficially owned by each selling shareholder prior to this
offering, the number of shares that may be offered for sale by each selling shareholder by
this prospectus and the number of shares that each selling shareholder would have
following the sale of all of the shares of common stock offered by this prospectus. Only
those selling shareholders listed below or their donees may offer and sell the common
stock pursuant to this prospectus. The selling shareholders may offer for sale pursuant to
this prospectus from time to time any or all of the shares of our common stock listed
below. Accordingly, the numbers of shares shown in the following table as beneficially
owned after the offering are only estimates, based on the assumption that all of the
shares offered by this prospectus will be sold. Mr. Hays is our controlling shareholder,
our President and Chief Executive Officer and a member of our board of directors. The
selling shareholders acquired the shares being offered by this prospectus as described in
the footnotes to the table below.
Selling Shareholder
|
Shares of
Common Stock
Beneficially Owned
Prior to Offering
|
Shares of
Common Stock
Being Offered
|
Shares of
Common Stock
to be
Beneficially Owned
After Offering
|
Percent of
Common
Stock
to be
Beneficially Owned
After Offering
|
Michael D. Hays
|
4,800,896
(1)
|
1,355,377
(2)
|
3,445,519
(1)
|
51.7%
(1)
|
Foundation for Tomorrow (f/k/a
|
16,583
|
16,583
(3)
|
0
|
0.0%
|
Hays Family Foundation)
|
Thomas Hays Irrevocable Trust dated
|
11,086
|
11,086
(4)
|
0
|
0.0%
|
December 28, 1999
|
Mark Oliver Irrevocable Trust dated
|
12,850
|
12,850
(5)
|
0
|
0.0%
|
December 28, 1999
|
Cynthe Oliver Irrevocable Trust dated
|
13,349
|
13,349
(6)
|
0
|
0.0%
|
December 28, 1999
|
Scott Oliver Irrevocable Trust dated
|
13,442
|
13,442
(7)
|
0
|
0.0%
|
December 28, 1999
|
Ashley E. Rinaker Trust dated March
|
2,470
|
2,470
(8)
|
0
|
0.0%
|
31, 2005
|
Ian G. Rinaker Trust dated June 2,
|
2,663
|
2,663
(9)
|
0
|
0.0%
|
2005
|
Kailey P. Rinaker Trust dated June 2,
|
2,735
|
2,735
(10
)
|
0
|
0.0%
|
2005
|
Elissa C.G. Hunt Trust dated June 12,
|
1,334
|
1,334
(11)
|
0
|
0.0%
|
2007
|
Makayla L. Hunt Irrevocable Trust
|
2,126
|
2,126
(12)
|
0
|
0.0%
|
dated December 30, 2008
|
Andrew C. Hunt Irrevocable Trust
|
2,126
|
2,126
(13)
|
0
|
0.0%
|
dated December 30, 2008
|
Tyler J. Vanderzee Irrevocable Trust
|
7,182
|
7,182
(14)
|
0
|
0.0%
|
dated December 30, 2008
|
Nicole J. Requena Irrevocable Trust
|
6,998
|
6,998
(15)
|
0
|
0.0%
|
dated December 30, 2008
|
Hannah L. McMahon Irrevocable Trust
|
2,126
|
2,126
(16)
|
0
|
0.0%
|
dated December 30, 2008
|
-9-
Selling Shareholder
|
Shares of
Common Stock
Beneficially Owned
Prior to Offering
|
Shares of
Common Stock
Being Offered
|
Shares of
Common Stock
to be
Beneficially Owned
After Offering
|
Percent of
Common
Stock
to be
Beneficially Owned
After Offering
|
|
|
|
|
|
Morgan P. McMahon Irrevocable Trust
|
2,126
|
2,126
(17)
|
0
|
0.0%
|
dated December 30, 2008
|
Kailey P. Rinaker Irrevocable Trust
|
1,066
|
1,066
(18)
|
0
|
0.0%
|
dated January 23, 2009
|
Ian G. Rinaker Irrevocable Trust
|
1,250
|
1,250
(19)
|
0
|
0.0%
|
dated January 23, 2009
|
Elissa C.G. Hunt Irrevocable Trust
|
1,250
|
1,250
(20)
|
0
|
0.0%
|
dated January 23, 2009
|
Ashley E. Hunt Irrevocable Trust
|
41,861
|
41,861
(21)
|
0
|
0.0%
|
dated June 11, 2009
|
(1)
|
Includes
500,000 shares Mr. Hays transferred to the Michael D. Hays 2009
Two-Year GRAT Agreement on March 31, 2009, all or a portion of which
will be returned to Mr. Hays over the next two years.
|
(2)
|
Mr.
Hays acquired more than 93% of these shares in 1981 when he founded our
company. The remaining shares (less than 7%) were acquired by Mr.
Hays as follows: (a) in an open-market purchase in 1998, (b) in a
2007 private purchase from an employee of our company and (c) upon
the exercise in 2008 of stock options that we had granted to Mr. Hays
as compensation for service he had provided to us.
|
(3)
|
Consists
of shares donated by Mr. Hays to the selling shareholder for no
consideration on December 31, 2008.
|
(4)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder
for no consideration on the dates indicated, less 2,025 shares that
the selling shareholder previously sold:
|
Shares
|
Date Donated
|
1,250
|
March 4, 2009
|
415
|
December 29, 2008
|
354
|
August 1, 2008
|
465
|
August 1, 2007
|
500
|
August 2, 2006
|
670
|
August 1, 2005
|
665
|
August 2, 2004
|
910
|
August 1, 2003
|
1,555
|
August 1, 2002
|
1,092
|
August 1, 2001
|
608
|
August 1, 2001
|
1,820
|
October 4, 2000
|
2,807
|
December 23, 1999
|
(5)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
Shares
|
Date Donated
|
1,250
|
March 4, 2009
|
415
|
December 29, 2008
|
370
|
September 19, 2008
|
473
|
September 20, 2007
|
475
|
September 20, 2006
|
700
|
September 20, 2005
|
696
|
September 20, 2004
|
830
|
September 22, 2003
|
1,279
|
December 19, 2002
|
1,735
|
September 20, 2001
|
174
|
October 4, 2000
|
1,646
|
October 4, 2000
|
2,807
|
December 23, 1999
|
-10-
(6)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
Shares
|
Date Donated
|
1,250
|
March 4, 2009
|
415
|
December 29, 2008
|
419
|
November 14, 2008
|
432
|
November 14, 2007
|
500
|
November 15, 2006
|
635
|
November 14, 2005
|
675
|
November 15, 2004
|
725
|
November 17, 2003
|
1,279
|
December 19, 2002
|
1,900
|
November 14, 2001
|
1,598
|
November 14, 2000
|
714
|
November 14, 2000
|
2,807
|
December 23, 1999
|
(7)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
Shares
|
Date Donated
|
1,250
|
March 4, 2009
|
830
|
December 29, 2008
|
460
|
December 27, 2007
|
529
|
December 27, 2006
|
650
|
December 23, 2005
|
715
|
December 27, 2004
|
700
|
December 29, 2003
|
1,279
|
December 19, 2002
|
1,427
|
December 27, 2001
|
1,852
|
December 22, 2000
|
943
|
December 22, 2000
|
2,807
|
December 23, 1999
|
(8)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
Shares
|
Date Donated
|
415
|
December 29, 2008
|
382
|
June 3, 2008
|
460
|
June 5, 2007
|
535
|
June 6, 2006
|
678
|
July 29, 2005
|
(9)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
Shares
|
Date Donated
|
415
|
December 29, 2008
|
455
|
March 11, 2008
|
540
|
March 12, 2007
|
575
|
March 13, 2006
|
678
|
July 29, 2005
|
(10)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
-11-
Shares
|
Date Donated
|
415
|
December 29, 2008
|
477
|
January 22, 2008
|
495
|
January 22, 2007
|
670
|
January 23, 2006
|
678
|
July 29, 2005
|
(11)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
Shares
|
Date Donated
|
415
|
December 29, 2008
|
459
|
March 24, 2008
|
460
|
July 17, 2007
|
(12)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
Shares
|
Date Donated
|
1,250
|
March 4, 2009
|
876
|
December 31, 2008
|
(13)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
Shares
|
Date Donated
|
1,250
|
March 4, 2009
|
876
|
December 31, 2008
|
(14)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
Shares
|
Date Donated
|
5,056
|
March 9, 2009
|
693
|
March 4, 2009
|
557
|
March 4, 2009
|
876
|
December 31, 2008
|
(15)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
Shares
|
Date Donated
|
5,056
|
March 9, 2009
|
458
|
February 20, 2009
|
51
|
February 20, 2009
|
557
|
February 20, 2009
|
876
|
December 31, 2008
|
(16)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
Shares
|
Date Donated
|
1,250
|
March 4, 2009
|
876
|
December 31, 2008
|
(17)
|
Consists
of the following shares donated by Mr. Hays to the selling shareholder for no
consideration on the dates indicated:
|
-12-
Shares
|
Date Donated
|
1,250
|
March 4, 2009
|
876
|
December 31, 2008
|
(18)
|
Consists
of shares donated by Mr. Hays to the selling shareholder for no consideration
on February 20, 2009.
|
(19)
|
Consists
of shares donated by Mr. Hays to the selling shareholder for no consideration
on March 4, 2009.
|
(20)
|
Consists
of shares donated by Mr. Hays to the selling shareholder for no consideration
on March 4, 2009.
|
(21)
|
Consists
of shares donated by Mr. Hays to the selling shareholder for no consideration
on June 24, 2009.
|
DIVIDEND POLICY
In
March 2005, we announced the commencement of a quarterly cash dividend. During the
quarterly periods ended June 30, 2009 and March 31, 2009 and the twelve-month periods
ended December 31, 2008 and 2007, we declared and paid quarterly cash dividends in the
amounts indicated in the following table.
|
Dividends on Common Stock
(per
share)
|
2009
|
|
|
|
|
|
2nd Quarter
|
|
|
$
|
0.16
|
|
1st Quarter
|
|
|
|
0.16
|
|
2008
|
|
|
4th Quarter
|
|
|
|
0.14
|
|
3rd Quarter
|
|
|
|
0.14
|
|
2nd Quarter
|
|
|
|
0.14
|
|
1st Quarter
|
|
|
|
0.14
|
|
2007
|
|
|
4th Quarter
|
|
|
|
0.12
|
|
3rd Quarter
|
|
|
|
0.12
|
|
2nd Quarter
|
|
|
|
0.12
|
|
1st Quarter
|
|
|
|
0.12
|
|
On
July 29, 2009, our board of directors declared a quarterly cash dividend of $0.16 per
share payable September 30, 2009 to shareholders of record as of the close of business on
September 4, 2009. The payment and amount of future dividends is at the discretion of our
board of directors and will depend on our future earnings, our financial condition,
general business conditions and other factors.
DESCRIPTION OF CAPITAL
STOCK
Our
authorized capital stock consists of 20,000,000 shares of common stock and 2,000,000
shares of preferred stock. As of July 31, 2009, 6,660,517 shares of our common stock were
issued and outstanding and no shares of our preferred stock were issued and outstanding.
Common Stock
After
all cumulative dividends have been paid or declared and set apart for payment on any
shares of preferred stock that are outstanding, the common stock is entitled to such
dividends as may be declared from time to time by our board of directors in accordance
with applicable law.
-13-
Except
as provided under Wisconsin law and except as may be determined by our board of directors
with respect to any series of preferred stock, only the holders of common stock shall be
entitled to vote for the election of directors of the company and on all other matters.
Holders of common stock are entitled to one vote for each share of common stock held by
them on all matters properly submitted to a vote of shareholders, subject to Section
180.1150 of the Wisconsin Business Corporation Law. Shareholders have no cumulative voting
rights, which means that the holders of shares entitled to exercise more than 50% of the
voting power are able to elect all of the directors to be elected.
All
shares of common stock are entitled to participate equally in distributions in
liquidation, subject to the prior rights of any preferred stock which may be outstanding.
Holders of common stock have no preemptive rights to subscribe for or purchase shares of
our capital stock. There are no conversion rights, sinking fund or redemption provisions
applicable to common stock. The outstanding shares of our common stock, including the
shares offered by the selling shareholders under this prospectus, are fully paid and
nonassessable, except for certain statutory liabilities that may be imposed by former
Section 180.0622(2)(b) of the Wisconsin Business Corporation Law for unpaid employee
wages.
The
transfer agent for our common stock is Illinois Stock Transfer Company, Chicago, Illinois.
Preferred Stock
Pursuant
to our articles of incorporation, the board of directors has the authority, without
further action by the shareholders, to issue up to 2,000,000 shares of preferred stock in
one or more series and to fix the designations, powers, preferences, privileges and
relative participating, optional or special rights and the qualifications, limitations or
restrictions thereof, including dividend rights, conversion rights, voting rights, terms
of redemption and liquidation preferences, any or all of which may be greater than the
rights of our common stock. The board of directors, without shareholder approval, can
issue preferred stock with voting, conversion or other rights that could adversely affect
the voting power and other rights of the holders of common stock. As a result, preferred
stock could be issued quickly with terms calculated to delay or prevent a change of
control of the company or make removal of management more difficult. Additionally, the
issuance of preferred stock may have the effect of decreasing the market price of our
common stock and may adversely affect the voting and other rights of the holders of common
stock. At present, there are no shares of preferred stock outstanding and we have no plans
to issue any preferred stock.
Anti-Takeover Effects of
Various Provisions of Wisconsin Law and Our Articles of Incorporation and By-Laws
Section
180.1150 of the Wisconsin Business Corporation Law provides that the voting power of
shares of public Wisconsin corporations such as us held by any person or persons acting as
a group in excess of 20% of the voting power in the election of directors is limited to
10% of the full voting power of those shares. This statutory voting restriction does not
apply to shares acquired directly from us or in certain specified transactions or shares
for which full voting power has been restored pursuant to a vote of shareholders.
Sections
180.1140 to 180.1144 of the Wisconsin Business Corporation Law regulate a broad range of
business combinations between a Wisconsin corporation and an interested
stockholder. Wisconsin Business Corporation Law defines a business
combination to include a merger or share exchange, sale, lease, exchange, mortgage,
pledge, transfer, or other disposition of assets equal to at least 5% of the market value
of the stock or assets of a corporation or 10% of its earning power, issuance of stock or
rights to purchase stock with a market value equal to at least 5% of the outstanding
stock, adoption of a plan of liquidation, and certain other transactions involving an
interested stockholder. An interested stockholder is defined as a
person who beneficially owns, directly or indirectly, 10% of the voting power of the
outstanding voting stock of a corporation, or who is an affiliate or associate of the
corporation and beneficially owned 10% of the voting power of the then outstanding voting
stock within the last three years. Sections 180.1140 to 180.1144 prohibit a corporation
from engaging in a business combination (other than a business combination of a type
specifically excluded from the coverage of the statute) with an interested stockholder for
a period of three years following the date such person becomes an interested stockholder,
unless the board of directors approved the business combination or the acquisition of the
stock that resulted in a person becoming an interested stockholder before such
acquisition. Business combinations after the three-year period following the stock
acquisition date are permitted only if:
-14-
|
|
the
board of directors approved the acquisition of the stock prior to the acquisition date; or
|
|
|
the
business combination is approved by a majority of the outstanding voting stock not
beneficially owned by the interested stockholder; or
|
|
|
the
consideration to be received by shareholders meets certain requirements with respect to
form and amount; or
|
|
|
the
business combination is of a type specifically excluded from the coverage of the statute.
|
Sections 180.1140 to 180.1144 do not
currently apply to Michael D. Hays, a selling shareholder, since by their terms they do
not apply to the shares of common stock held by a selling shareholder at the time of our
initial public offering and our board of directors approved for purposes of Sections
180.1140 to 180.1144 any acquisitions, whether by purchase, gift or otherwise, made by Mr.
Hays after that time. Our articles of incorporation contain provisions that are similar to
the provisions of Sections 180.1140 to 180.1144.
Sections
180.1130 to 180.1133 of the Wisconsin Business Corporation Law provide that some
business combinations not meeting specified adequacy-of-price standards must
be approved by a vote of at least 80% of the votes entitled to be cast by shareholders and
by two-thirds of the votes entitled to be cast by shareholders other than a
significant shareholder who is a party to the transaction. The term
business combination is defined to include, subject to some exceptions, a
merger or consolidation of us (or any subsidiary of ours) with, or the sale or other
disposition of substantially all of our assets to, any significant shareholder or
affiliate thereof. Significant shareholder is defined generally to include a
person that is the beneficial owner of 10% or more of the voting power of the common
stock.
Section
180.1134 provides that, in addition to the vote otherwise required by law or the articles
of incorporation of an issuing public corporation, the approval of the holders of a
majority of the shares entitled to vote is required before such corporation can take
certain action while a takeover offer is being made or after a takeover offer has been
publicly announced and before it is concluded. Under Section 180.1134, shareholder
approval is required for the corporation to:
|
|
acquire
more than 5% of the outstanding voting shares at a price above the market price from any
individual or organization that owns more than 3% of the outstanding voting shares and
has held such shares for less than two years, unless a similar offer is made to acquire
all voting shares; or
|
-15-
|
|
sell
or option assets of the corporation that amount to at least 10% of the market value of
the corporation, unless the corporation has at least three independent directors and a
majority of the independent directors vote not to have the provision apply to the
corporation.
|
The restrictions described in the
first bullet point above may have the effect of deterring a shareholder from acquiring our
shares with the goal of seeking to have us repurchase such shares at a premium over the
market price.
Under
our articles of incorporation and by-laws, our board of directors is divided into three
classes, with staggered terms of three years each. Each year the term of one class
expires. The articles of incorporation provide that any vacancies on the board of
directors shall be filled only by the affirmative vote of a majority of the directors in
office, even if less than a quorum. Any director so elected will serve until the next
election of the class for which such director is chosen and until his or her successor is
duly elected and qualified.
Our
articles of incorporation provide that any directors may be removed from office, but only
for cause by the affirmative vote of at least 66-2/3% of all outstanding shares entitled
to vote in the election of directors. However, if at least two-thirds of the board of
directors plus one director vote to remove a director, such director may be removed
without cause by a majority of the voting power of our outstanding shares of capital stock
entitled to vote thereon.
In
addition, our by-laws establish a procedure that shareholders seeking to call a special
meeting of shareholders must satisfy. This procedures involves notice to us, our receipt
of written demands for a special meeting from holders of 10% or more of the issued and
outstanding shares of common stock, a review of the validity of such demands by an
independent inspector appointed by us and the fixing of the record and meeting dates by
the board of directors. In addition, shareholders demanding such a special meeting must
deliver to us a written agreement to pay the costs we incur in holding a special meeting,
including the costs of preparing and mailing the notice of meeting and the proxy material
for our solicitation of proxies for use at such meeting, in the event such shareholders
are unsuccessful in their proxy solicitation.
Our
by-laws also provide the board of directors with discretion in postponing shareholder
meetings, including, within some limits, special meetings of shareholders. Additionally,
the chief executive officer or the board of directors, acting by resolution, may adjourn a
shareholder meeting at any time prior to the transaction of business at such meeting. Our
by-laws also contain strict time deadlines and procedures applicable to shareholders
seeking to nominate a person for election as a director or to otherwise bring business
before a meeting.
These
provisions of our articles of incorporation and by-laws and the Wisconsin Business
Corporation Law could have the effect of delaying or preventing a change of control of our
company.
-16-
PLAN OF DISTRIBUTION
The
selling shareholders may offer and sell shares of common stock offered by this prospectus
from time to time and may also decide not to sell all the shares they are allowed to sell
under this prospectus. Sales that the selling shareholders do make may be sold in one or
more of the following transactions:
|
|
on
the Nasdaq Global Market or any other securities exchange or quotation service that
lists or quotes the common stock for trading;
|
|
|
in
the over-the-counter market;
|
|
|
in
privately negotiated transactions;
|
|
|
through
put or call option transactions relating to the shares or through short sales of shares;
and
|
|
|
in
a combination of any of the above transactions.
|
The
selling shareholders may sell their shares at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, at negotiated prices or at fixed
prices. The transactions listed above may include block transactions.
To
the extent required, this prospectus may be amended or supplemented from time to time to
describe a specific plan of distribution.
The
selling shareholders may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with these transactions, broker-dealers or other
financial institutions may engage in short sales of the shares of our common stock or of
securities convertible into or exchangeable for these shares in the course of hedging
positions they assume with the selling shareholders. The selling shareholders may also
sell shares short and redeliver shares to close out such short positions. In addition, the
selling shareholders may enter into options or other transactions with broker-dealers or
other financial institutions that require the delivery to these broker-dealers or other
financial institutions of the shares of common stock offered by this prospectus, which
these broker-dealers or other financial institutions may resell pursuant to this
prospectus (as amended or supplemented to reflect such transaction).
The
selling shareholders have advised us that they have not made any arrangements with any
underwriters or broker-dealers relating to the distribution of the shares covered by this
prospectus. The selling shareholders may sell their shares directly to purchasers, use
broker-dealers to sell their shares or may sell their shares to broker-dealers acting as
principals. If this happens, then broker-dealers may either receive discounts or
commissions from the selling shareholders, or they may receive commissions from purchasers
of shares for whom they acted as agents, or both. This compensation may be in excess of
the compensation customary in the type of transactions involved. If a broker-dealer
purchases shares as a principal, then it may resell the shares for its own account under
this prospectus.
We
will pay all registration fees and expenses for the common stock offered by this
prospectus. The selling shareholders and any agent, broker or dealer that participates in
sales of common stock offered by this prospectus may be deemed underwriters
under the Securities Act of 1933 and any commissions or other consideration received by
any agent, broker or dealer may be considered underwriting discounts or commissions under
the Securities Act.
-17-
We
and the selling shareholders may agree to indemnify any agent, broker or dealer that
participates in sales of common stock against liabilities arising under the Securities Act
from sales of common stock. Because the selling shareholders may be deemed to be
underwriters within the meaning of Section 2(11) of the Securities Act, the
selling shareholders will be subject to the prospectus delivery requirements of the
Securities Act. We have informed the selling shareholders that the anti-manipulation
provisions of Regulation M under the Securities Exchange Act of 1934 may apply to their
sales of common stock.
Instead
of selling common stock under this prospectus, the selling shareholders may sell common
stock in compliance with the provisions of Rule 144 under the Securities Act, if
available.
We
will file a supplement to this prospectus, if required, pursuant to Rule 424(b) under the
Securities Act upon being notified by the selling shareholders that any material
arrangement has been entered into with a broker-dealer for the sale of shares of our
common stock through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer. Any such supplement will disclose:
|
|
the
name of the participating broker-dealer(s);
|
|
|
the
number of shares involved;
|
|
|
the
price at which such shares were sold;
|
|
|
the
commissions paid or discounts or concessions allowed to such broker-dealer(s), where
applicable;
|
|
|
that
such broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus; and
|
|
|
other
facts material to the transaction.
|
LEGAL MATTERS
Certain
legal matters with respect to this offering and the shares of our common stock offered by
this prospectus will be passed upon for us by Foley & Lardner LLP, Milwaukee,
Wisconsin.
EXPERTS
The
consolidated financial statements and schedule of National Research Corporation and
subsidiaries as of December 31, 2008 and 2007, and for each of the years in the three-year
period ended December 31, 2008, have been incorporated by reference herein in
reliance upon the report of KPMG LLP, independent registered public accounting firm,
incorporated by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
The
consolidated balance sheets of My InnerView, Inc. and Affiliate as of December 31, 2007
and 2006, and the related consolidated statements of income and accumulated deficit and
cash flows for the years then ended have been incorporated by reference herein in reliance
upon the report of Wipfli LLP, independent registered public accounting firm, incorporated
by reference herein, and upon the authority of said firm as experts in accounting and
auditing.
-18-
WHERE YOU CAN FIND
MORE INFORMATION
We
file annual, quarterly and current reports, proxy statements and other information with
the Securities and Exchange Commission (the SEC). We have also filed a
registration statement on Form S-3, including exhibits, under the Securities Act of 1933
with respect to the common stock offered by this prospectus. This prospectus is part of
the registration statement, but does not contain all of the information included in the
registration statement or the exhibits. You may read and copy the registration statement
and any other document that we file at the SECs public reference room at 100 F.
Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. Our SEC filings are also available to the public
on the internet at a website maintained by the SEC located at
http://www.sec.gov
.
The
SEC allows us to incorporate by reference the information we file with them,
which means we can disclose important information to you by referring to those documents.
The information incorporated by reference is an important part of this prospectus. The
most recent information that we file with the SEC automatically updates and supersedes any
older information. We incorporate by reference the following documents we have filed and
any future filings we make with the SEC pursuant to Sections 13(a), 13(c), 14 and 15(d) of
the Securities Exchange Act of 1934 until the selling shareholders terminate the offering:
|
|
Our
Annual Report on Form 10-K for the fiscal year ended December 31, 2008;
|
|
|
Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2009;
|
|
|
Our
Amendment on Form 8-K/A, filed March 10, 2009, to our Current Report on Form 8-K dated
December 19, 2008;
|
|
|
Our
Current Report on Form 8-K dated May 8, 2009; and
|
|
|
The
description of our common stock contained in Item 1 of our Registration Statement on Form
8-A dated October 2, 1997, and any amendment or report updating that description.
|
You
may request a copy of any of these documents at no cost, by writing or telephoning us at
the following: Mr. Patrick E. Beans, Secretary, National Research Corporation, 1245 Q
Street, Lincoln, Nebraska 68508, telephone number (402) 475-2525.
-19-
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