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,
2009
|
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
|
For
the transition period from ________ to
________
|
Commission
File Number
0-29466
National
Research
Corporation
(Exact
name of Registrant as specified in its charter)
|
Wisconsin
|
|
47-0634000
|
|
(State
or other jurisdiction of
|
|
(I.R.S.
Employer
|
|
incorporation
or organization)
|
|
Identification
No.)
|
1245 “Q” Street, Lincoln,
Nebraska 68508
(Address
of principal executive offices) (Zip Code)
(Registrant’s
telephone number, including area code)
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 has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). (Registrant is not yet required to provide
financial disclosure in an Interactive Data File
format.) Yes
¨
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 issuer’s classes of common stock
as of the latest practicable date.
Common Stock, $.001 par
value, outstanding as of November 1, 2009: 6,660,321
shares
NATIONAL
RESEARCH CORPORATION
FORM 10-Q
INDEX
For the
Quarter Ended September 30, 2009
|
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Page No.
|
|
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|
|
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PART
I.
|
FINANCIAL
INFORMATION
|
|
|
|
|
|
|
|
|
Item
1.
|
Financial
Statements
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets
|
4
|
|
|
|
|
Condensed
Consolidated Statements of Income
|
5
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows
|
6
|
|
|
|
|
Condensed
Notes to Consolidated Financial Statements
|
7-11
|
|
|
|
|
|
|
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of
Financial
Condition and Results of Operations
|
12-15
|
|
|
|
|
|
|
|
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About
Market
Risk
|
15
|
|
|
|
|
|
|
|
PART
II.
|
OTHER
INFORMATION
|
|
|
|
|
|
|
|
|
|
Item
1A.
|
Risk
Factors
|
15
|
|
|
|
|
|
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and
Use
of Proceeds
|
16
|
|
|
|
|
|
|
|
|
|
Item
6.
|
Exhibits
|
16
|
|
|
|
|
|
|
|
|
|
Signatures
|
17
|
|
|
|
|
|
|
|
|
Exhibit
Index
|
18
|
|
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 Company’s 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:
|
|
·
|
The
Company’s ability to retain its limited number of key
clients;
|
|
|
·
|
The
possibility of non-renewal of the Company’s performance tracking
contracts;
|
|
|
·
|
The
Company’s ability to compete in its markets, which are highly competitive,
and the possibility of increased price pressure and
expenses;
|
|
|
·
|
The
effects of the economic downturn:
|
|
|
·
|
The
possibility of consolidation in the healthcare
industry;
|
|
|
·
|
The
Company’s ability to manage its growth, including by identifying
acquisition candidates and effectively integrating acquired
companies;
|
|
|
·
|
The
Company’s ability to collect the data on which its business
relies;
|
|
|
·
|
The
Company’s ability to attract and retain key managers and other
personnel;
|
|
|
·
|
The
possibility that the Company’s intellectual property and other proprietary
information technology could be copied or independently developed by its
competitors;
|
|
|
·
|
Errors
in, or dissatisfaction with, performance tracking and other surveys
provided by the Company;
|
|
|
·
|
Regulatory
developments; and
|
|
|
·
|
The
factors set forth under the caption “Risk Factors” in Part I, Item 1A of
the Company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2008, as such section may be updated by Part II,
Item 1A of the Company’s 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.
PART
I – Financial Information
ITEM
1.
Financial
Statements
NATIONAL
RESEARCH CORPORATION AND SUBSIDIARY
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
thousands, except share amounts)
|
|
|
September 30,
2009
|
|
|
December 31,
2008
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
1,460
|
|
|
$
|
1,109
|
|
|
Trade
accounts receivable, less allowance for doubtful accounts of $319 and $241
in 2009 and 2008, respectively
|
|
|
8,385
|
|
|
|
6,531
|
|
|
Unbilled
revenue
|
|
|
729
|
|
|
|
810
|
|
|
Prepaid
expenses and other
|
|
|
1,514
|
|
|
|
1,300
|
|
|
Recoverable
income taxes
|
|
|
1,082
|
|
|
|
574
|
|
|
Deferred
income taxes
|
|
|
126
|
|
|
|
115
|
|
|
Total
current assets
|
|
|
13,296
|
|
|
|
10,439
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
14,233
|
|
|
|
13,747
|
|
|
Goodwill
|
|
|
38,982
|
|
|
|
39,276
|
|
|
Intangible
assets, net
|
|
|
7,171
|
|
|
|
8,056
|
|
|
Other
|
|
|
644
|
|
|
|
627
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
74,326
|
|
|
$
|
72,145
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’
Equity
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
|
Current
portion of note payable
|
|
$
|
765
|
|
|
$
|
4,581
|
|
|
Accounts
payable
|
|
|
1,025
|
|
|
|
863
|
|
|
Accrued
wages, bonus and profit sharing
|
|
|
2,086
|
|
|
|
1,375
|
|
|
Accrued
expenses
|
|
|
774
|
|
|
|
1,344
|
|
|
Billings
in excess of revenue earned
|
|
|
14,538
|
|
|
|
12,926
|
|
|
Total
current liabilities
|
|
|
19,188
|
|
|
|
21,089
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
payable, net of current portion
|
|
|
7,794
|
|
|
|
8,374
|
|
|
Deferred
income taxes
|
|
|
4,773
|
|
|
|
4,084
|
|
|
Total
liabilities
|
|
|
31,755
|
|
|
|
33,547
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders’
equity:
|
|
|
|
|
|
|
|
|
|
Common
stock, $.001 par value; authorized 20,000,000 shares, issued 8,016,021 in
2009 and 8,019,922 in 2008, outstanding 6,660,298 in 2009 and
6,667,517
in
2008
|
|
|
8
|
|
|
|
8
|
|
|
Additional
paid-in capital
|
|
|
27,635
|
|
|
|
27,217
|
|
|
Retained
earnings
|
|
|
36,734
|
|
|
|
33,677
|
|
|
Accumulated
other comprehensive income (loss)
|
|
|
571
|
|
|
|
(6
|
)
|
|
Treasury
stock, at cost; 1,355,723 shares in 2009 and
1,352,405
shares
in 2008
|
|
|
(22,377
|
)
|
|
|
(22,298
|
)
|
|
Total
shareholders’ equity
|
|
|
42,571
|
|
|
|
38,598
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and shareholders’ equity
|
|
$
|
74,326
|
|
|
$
|
72,145
|
|
See
accompanying condensed notes to consolidated financial
statements.
NATIONAL
RESEARCH CORPORATION AND SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(In
thousands, except for share amounts)
(Unaudited)
|
|
|
Three
months ended
September 30,
|
|
|
Nine
months ended
September 30,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
13,517
|
|
|
$
|
13,469
|
|
|
$
|
43,850
|
|
|
$
|
38,824
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
expenses
|
|
|
5,446
|
|
|
|
6,598
|
|
|
|
19,027
|
|
|
|
17,845
|
|
|
Selling,
general and administrative
|
|
|
3,872
|
|
|
|
3,053
|
|
|
|
11,548
|
|
|
|
9,960
|
|
|
Depreciation
and amortization
|
|
|
901
|
|
|
|
661
|
|
|
|
2,902
|
|
|
|
2,003
|
|
|
Total
operating expenses
|
|
|
10,219
|
|
|
|
10,312
|
|
|
|
33,477
|
|
|
|
29,808
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
3,298
|
|
|
|
3,157
|
|
|
|
10,373
|
|
|
|
9,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
—
|
|
|
|
6
|
|
|
|
1
|
|
|
|
33
|
|
|
Interest
expense
|
|
|
(91
|
)
|
|
|
(21
|
)
|
|
|
(314
|
)
|
|
|
(118
|
)
|
|
Other,
net
|
|
|
(75
|
)
|
|
|
29
|
|
|
|
(132
|
)
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other income (expense)
|
|
|
(166
|
)
|
|
|
14
|
|
|
|
(445
|
)
|
|
|
(76
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
|
3,132
|
|
|
|
3,171
|
|
|
|
9,928
|
|
|
|
8,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
1,138
|
|
|
|
1,205
|
|
|
|
3,675
|
|
|
|
3,390
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
1,994
|
|
|
$
|
1,966
|
|
|
$
|
6,253
|
|
|
$
|
5,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per share – basic
|
|
$
|
.30
|
|
|
$
|
.30
|
|
|
$
|
.94
|
|
|
$
|
.83
|
|
|
Net
income per share – diluted
|
|
$
|
.30
|
|
|
$
|
.29
|
|
|
$
|
.93
|
|
|
$
|
.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares and share equivalents outstanding – basic
|
|
|
6,637,474
|
|
|
|
6,643,535
|
|
|
|
6,635,997
|
|
|
|
6,699,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares and share equivalents outstanding – diluted
|
|
|
6,735,045
|
|
|
|
6,803,123
|
|
|
|
6,723,365
|
|
|
|
6,845,447
|
|
See
accompanying condensed notes to consolidated financial
statements.
NATIONAL
RESEARCH CORPORATION AND SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In
thousands, unaudited)
|
|
|
Nine months ended
|
|
|
|
|
September 30,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
6,253
|
|
|
$
|
5,550
|
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
2,902
|
|
|
|
2,003
|
|
|
Deferred
income taxes
|
|
|
1,352
|
|
|
|
200
|
|
|
Tax
benefit from exercise of stock options
|
|
|
—
|
|
|
|
70
|
|
|
Loss
on disposal of property & equipment
|
|
|
1
|
|
|
|
—
|
|
|
Non-cash
share-based compensation expense
|
|
|
412
|
|
|
|
772
|
|
|
Net
changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Trade
accounts receivable
|
|
|
(1,858
|
)
|
|
|
(3,201
|
)
|
|
Unbilled
revenue
|
|
|
97
|
|
|
|
678
|
|
|
Prepaid
expenses and other
|
|
|
(201
|
)
|
|
|
31
|
|
|
Accounts
payable
|
|
|
150
|
|
|
|
(57
|
)
|
|
Accrued
expenses, wages, bonuses and profit sharing
|
|
|
171
|
|
|
|
426
|
|
|
Income
taxes recoverable and payable
|
|
|
(547
|
)
|
|
|
222
|
|
|
Billings
in excess of revenue earned
|
|
|
1,541
|
|
|
|
5,111
|
|
|
Net
cash provided by operating activities
|
|
|
10,273
|
|
|
|
11,805
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
|
Purchases
of property and equipment
|
|
|
(2,524
|
)
|
|
|
(2,019
|
)
|
|
Payment
of acquisition earn-out obligation
|
|
|
—
|
|
|
|
(715
|
)
|
|
Purchase
of customer base
|
|
|
—
|
|
|
|
(249
|
)
|
|
Proceeds
from the maturities of securities available-for-sale
|
|
|
—
|
|
|
|
99
|
|
|
Net
cash used in investing activities
|
|
|
(2,524
|
)
|
|
|
(2,884
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
|
Proceeds
from notes payable
|
|
|
4,666
|
|
|
|
8,700
|
|
|
Payments
on notes payable
|
|
|
(9,062
|
)
|
|
|
(11,454
|
)
|
|
Proceeds
from exercise of stock options
|
|
|
—
|
|
|
|
1,076
|
|
|
Purchases
of treasury stock
|
|
|
(79
|
)
|
|
|
(7,448
|
)
|
|
Excess
tax benefit from share-based compensation
|
|
|
6
|
|
|
|
380
|
|
|
Payment
of dividends on common stock
|
|
|
(3,197
|
)
|
|
|
(2,842
|
)
|
|
Net
cash used in financing activities
|
|
|
(7,666
|
)
|
|
|
(11,588
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes on cash
|
|
|
268
|
|
|
|
(11
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Increase
(decrease) in cash and cash equivalents
|
|
|
351
|
|
|
|
(2,678
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of period
|
|
|
1,109
|
|
|
|
3,355
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$
|
1,460
|
|
|
$
|
677
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental
disclosure of cash paid for:
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
$
|
374
|
|
|
$
|
118
|
|
|
Income
taxes
|
|
$
|
2,853
|
|
|
$
|
2,506
|
|
See
accompanying condensed notes to consolidated financial
statements.
NATIONAL
RESEARCH CORPORATION AND SUBSIDIARY
CONDENSED
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
Company has six operating segments that are aggregated into one reporting
segment because they have similar economic characteristics and meet the other
aggregation criteria from the Financial Accounting Standards Board (FASB)
guidance on segment disclosure. The six operating segments are as
follows: NRC Picker U.S. and NRC Picker Canada, which each offer renewable
performance tracking and improvement services, custom research,
subscription-based educational services, and a renewable syndicated service;
Healthcare Market Guide (HCMG) offers stand-alone market information as well as
a comparative performance database to allow the Company’s clients to assess
their performance relative to the industry, to access best practice examples,
and to utilize competitive information for marketing purposes; Payer Solutions
offers functional disease-specific and health status measurement tools; The
Governance Institute (TGI) offers subscription-based governance information and
educational conferences designed to improve the effectiveness of hospital and
healthcare systems by continually strengthening their healthcare boards, medical
leadership, and management performance in the United States; and My InnerView
(MIV) provides quality and performance improvement solutions to the senior care
profession.
The
consolidated balance sheet of the Company at December 31, 2008, was derived from
the Company’s 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. The Company has evaluated subsequent events through November
13, 2009, the date the financial statements were filed.
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 Company’s Form 10-K for the fiscal year ended
December 31, 2008, filed with the Securities and Exchange Commission in
March 2009.
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. Because there are no minority interests in the
consolidated subsidiary, all of the Company’s net income, comprehensive income
and shareholders’ equity are attributable to controlling
interests.
The
functional currency of the Company’s foreign subsidiary, National Research
Corporation Canada, is the subsidiary’s local currency. The Company
translates the assets and liabilities of its foreign subsidiary 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 (loss), a
component of shareholders’ equity. Gains and losses related to
transactions denominated in a currency other than the subsidiary’s local
currency and short-term intercompany accounts are included in other income
(expense), net in the consolidated statements of income.
The
Company’s valuation techniques are based on maximizing observable inputs and
minimizing the use of unobservable inputs when measuring fair
value. Observable inputs reflect readily obtainable data from
independent sources, while unobservable inputs reflect the Company’s market
assumptions. The inputs are then classified into the following
hierarchy: (1) Level 1 Inputs—quoted prices in active markets for identical
assets and liabilities, (2) Level 2 Inputs—observable inputs other than quoted
prices in active markets for identical assets and liabilities and (3) Level 3
Inputs—unobservable inputs.
As of
September 30, 2009, those assets and liabilities that are measured at fair value
on a recurring basis consisted of the Company’s money market
funds. They totaled $1.5 million and are considered Level 1
inputs. The Company believes that the carrying amounts of its other
financial instruments, including cash, accounts payable and accrued expenses,
approximate their fair value due to the short-term maturities of these
instruments.
The
Company also follows disclosure guidelines on the methods and significant
assumptions used to estimate the fair value of financial instruments and any
changes in methods and significant assumptions during the
period. Based on the borrowing rates currently available to the
Company for bank loans with similar terms and average maturities, the fair value
of the Company’s long-term debt approximates its carrying value as of September
30, 2009.
2. 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)
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
1,994
|
|
|
$
|
1,966
|
|
|
$
|
6,253
|
|
|
$
|
5,550
|
|
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
currency translation
|
|
|
318
|
|
|
|
(120
|
)
|
|
|
577
|
|
|
|
(238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
other comprehensive income (loss)
|
|
|
318
|
|
|
|
(120
|
)
|
|
|
577
|
|
|
|
(238
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
|
$
|
2,312
|
|
|
$
|
1,846
|
|
|
$
|
6,830
|
|
|
$
|
5,312
|
|
3.
INCOME
TAXES
For the
nine-month period ended September 30, 2009, 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’s
effective tax rate decreased to 37.0% in the nine-month period ended September
30, 2009, from 37.9% in the same period in 2008 due to a decrease in Canadian
statutory income tax rates and increases in research and development tax
credits.
The
Company's 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. The Company is not subject to tax
examinations for years prior to 2004.
4.
NOTES PAYABLE
On
December 19, 2008, the Company borrowed $9.0 million under a term note to
partially finance the acquisition of MIV. The term note is payable in
35 equal installments of $97,000 with the balance of principal and interest
payable in a balloon payment due on December 31, 2011. Borrowings
under the term note bear interest at a rate of 5.2% per year.
The term
note is secured by certain of the Company’s assets, including the Company’s
land, building, accounts receivable and intangible assets. The term
note 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, 2009, the Company was in compliance with
these restrictions and covenants.
The
Company also entered into a revolving credit note in 2006. The
maximum aggregate amount available under the revolving credit note was
originally $3.5 million, but an addendum to the note dated March 26, 2008,
changed the amount to $6.5 million. The revolving credit note was
renewed in July 2009 to extend the term to June 30, 2010. The Company
may borrow, repay and re-borrow amounts under the revolving credit note from
time to time until its maturity on June 30, 2010. The maximum
aggregate amount available under the revolving credit note is $6.5 million,
subject to a borrowing base equal to 75% of the Company’s eligible accounts
receivable. Borrowings under the revolving credit note bear interest
at a variable rate equal to (1) prime (as defined in the credit facility) less
0.50% or (2) one-, two-, three-, six- or twelve-month LIBOR. As of
September 30, 2009, the revolving credit note did not have a
balance. According to borrowing base requirements, the Company had
the capacity to borrow $5.5 million as of September 30, 2009.
5.
SHARE-BASED COMPENSATION
The
Company measures and recognizes compensation expense for all share-based
payments. The compensation expense is recognized based on the
grant-date fair value of those awards. All of the Company’s existing
stock option awards and non-vested stock awards have been determined to be
equity awards.
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 Company’s 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 Company’s
common stock are granted to directors that are re-elected or retained as a
director at such meeting. On May 7, 2009, the Board of Directors
amended the plan to increase the number of shares of common stock authorized for
issuance under the plan from 250,000 to 550,000 shares, subject to approval of
the Company’s shareholders at the 2010 annual meeting of
shareholders. The grants of options to directors on the date of the
2009 annual meeting of shareholders was also made subject to approval of the
Company’s shareholders at the 2010 annual meeting of
shareholders. Given the CEO’s current ownership, approval will be
perfunctory. 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 director’s service. At
September 30, 2009, pending shareholder approval of the increased number of
shares at the 2010 annual meeting of shareholders, there were 277,000 shares
available for issuance pursuant to future grants under the 2004 Director
Plan.
The
Company did not grant stock options during either of the three-month periods
ended September 30, 2009 and 2008, and granted 102,739 and 118,475 during the
nine-month periods ending September 30, 2009 and 2008,
respectively.
6.
GOODWILL AND OTHER INTANGIBLE
ASSETS
Goodwill
and other intangible assets consisted of the following:
|
|
|
September 30, 2009
|
|
|
December 31, 2008
|
|
|
|
|
(In
thousands)
|
|
|
(In
thousands)
|
|
|
Goodwill
|
|
$
|
38,982
|
|
|
$
|
39,276
|
|
|
Non-amortizing
other intangible assets:
|
|
|
|
|
|
|
|
|
|
Trade
name
|
|
|
1,191
|
|
|
|
1,191
|
|
|
Amortizing
other intangible assets:
|
|
|
|
|
|
|
|
|
|
Customer
related intangibles
|
|
|
8,164
|
|
|
|
8,150
|
|
|
Trade
name
|
|
|
1,572
|
|
|
|
1,572
|
|
|
Total
other intangible assets
|
|
|
10,927
|
|
|
|
10,913
|
|
|
Less
accumulated amortization
|
|
|
3,756
|
|
|
|
2,857
|
|
|
Other
intangible assets, net
|
|
$
|
7,171
|
|
|
$
|
8,056
|
|
The
following represents a summary of changes in the Company’s carrying amount of
goodwill for the nine months ended September 30, 2009.
|
|
|
(In
thousands)
|
|
|
Balance
as of December 31, 2008
|
|
$
|
39,276
|
|
|
MIV
purchase price adjustments
|
|
|
(605
|
)
|
|
Foreign
currency translation
|
|
|
311
|
|
|
Balance
as of September 30, 2009
|
|
$
|
38,982
|
|
The
change in the carrying amount of goodwill relates to foreign currency
translation and purchase price adjustments of $605,000 primarily related to
deferred income taxes from the MIV acquisition. On December 19, 2008,
the Company acquired MIV, a provider of quality and performance improvement
solutions to the senior care profession. MIV offers resident, family
and employee satisfaction measurement and improvement products to the long-term
care, assisted and independent living markets in the United
States. The acquisition was completed in order to pursue the
Company’s strategy of expanding additional service offerings to the healthcare
industry in the United States and Canada. This acquisition gives the
Company a foundation upon which to expand in the senior care
profession. The consideration paid at closing for MIV included a
payment of $11.5 million in cash and $387,000 of direct expenses capitalized as
purchase price. The merger agreement under which the Company acquired
MIV provided for contingent earn-out payments payable in February 2010, 2011,
and 2012 based on revenue and operating income increases, which are not included
in this discussion of the purchase price.
7.
EARNINGS PER SHARE
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, 2009 and
2008, the Company excluded 102,739 and -0- 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)
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
Weighted
average shares and share equivalents - basic
|
|
|
6,637
|
|
|
|
6,644
|
|
|
|
6,636
|
|
|
|
6,699
|
|
|
Weighted
average dilutive effect of options
|
|
|
84
|
|
|
|
146
|
|
|
|
75
|
|
|
|
134
|
|
|
Weighted
average dilutive effect of restricted stock
|
|
|
14
|
|
|
|
13
|
|
|
|
12
|
|
|
|
12
|
|
|
Weighted
average shares and share equivalents - dilutive
|
|
|
6,735
|
|
|
|
6,803
|
|
|
|
6,723
|
|
|
|
6,845
|
|
8.
ADOPTION OF
NEW ACCOUNTING PRONOUNCEMENTS
In June
2009, FASB issued the Accounting Standards Codification™ (“Codification”) as the
source of authoritative U.S. generally accepted accounting principles (“GAAP”)
recognized by FASB to be applied by nongovernmental entities. The
Codification supersedes all then-existing non-SEC accounting and reporting
standards. In accordance with the Codification, references to
accounting literature in this report are presented in plain
English. The Codification did not change GAAP but reorganizes the
literature. The Codification is effective for financial statements
issued for interim and annual periods ending after September 15,
2009. The adoption of the Codification has not had an impact on the
consolidated financial statements.
9. RECENT
ACCOUNTING PRONOUNCEMENTS
In
September 2009, the FASB issued new guidance for revenue recognition with
multiple deliverables, which is effective for revenue arrangements entered into
or materially modified in fiscal years beginning on or after June 15, 2010,
although early adoption is permitted. This guidance eliminates the residual
method under the current guidance and replaces it with the “relative selling
price” method when allocating revenue in a multiple deliverable
arrangement. The selling price for each deliverable shall be
determined using vendor specific objective evidence of selling price, if it
exists, otherwise third-party evidence of selling price. If neither
exists for a deliverable, the vendor shall use its best estimate of the selling
price for that deliverable. After adoption, this guidance will also
require expanded qualitative and quantitative disclosures. As of
September 30, 2009, management believes that adoption of this new guidance will
not have a material effect on the consolidated financial
statements.
10. RELATED
PARTY TRANSACTIONS
A Board
member of the Company also serves as an officer of Ameritas Life Insurance
Corp. In connection with the Company’s regular assessment of its
insurance-based associate benefits and the costs associated therewith, which is
conducted by an independent insurance broker, in 2007 the Company began
purchasing dental insurance for certain of its associates from Ameritas Life
Insurance Corp. and in 2009, the Company also began purchasing vision insurance
for certain of its associates from Ameritas Life Insurance Corp. The
total value of these purchases was $36,000 and $20,000 for the three-month
periods and $88,000 and $59,000 for the nine-month periods ended September 30,
2009 and 2008, respectively.
ITEM
2.
Management’s 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, payers, nursing homes, and assisted living facilities 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 future
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 Company’s primary types
of information services are renewable performance tracking and improvement
services, custom research, subscription-based educational services, and a
renewable syndicated service, 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 select financial
information derived from the Company’s 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.
|
|
|
Three months ended
|
|
|
Nine months ended
|
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
expenses
|
|
|
40.3
|
|
|
|
49.0
|
|
|
|
43.4
|
|
|
|
46.0
|
|
|
Selling,
general and administrative
|
|
|
28.6
|
|
|
|
22.7
|
|
|
|
26.3
|
|
|
|
25.7
|
|
|
Depreciation
and amortization
|
|
|
6.7
|
|
|
|
4.9
|
|
|
|
6.6
|
|
|
|
5.2
|
|
|
Total
operating expenses
|
|
|
75.6
|
|
|
|
76.6
|
|
|
|
76.3
|
|
|
|
76.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
24.4
|
%
|
|
|
23.4
|
%
|
|
|
23.7
|
%
|
|
|
23.1
|
%
|
Three
Months Ended September 30, 2009, Compared to Three Months Ended September 30,
2008
Revenue
. Revenue
remained virtually constant at $13.5 million in the three-month periods ended
September 30, 2009 and 2008. The additional revenue from the
acquisition of MIV in December 2008, was offset by reductions of revenue due to
decreased volumes in the NRC Picker U.S. and Payer Solutions operating
segments.
Direct
expenses
. Direct expenses decreased 17.5% to $5.4 million in
the three-month period ended September 30, 2009, compared to $6.6 million in the
same period during 2008. The change was primarily due to the
implementation of the monthly subscription Market Guide in
2008. Until September 2008, the Company deferred the costs of
preparing the survey data for Market Guide and expensed these at the time the
annual contract revenue was recognized. Starting in October 2008,
these costs were expensed monthly. The three-month period ended
September 30, 2008 was the last period in which all of the expenses were
recognized on the deferred basis. The annual subscription Market
Guide continued to be sold this year, but costs were expensed monthly based on
work performed with the monthly subscription product. In addition,
costs of servicing revenue were down due to decreased volumes in other areas of
the Company. Direct expenses decreased as a percentage of revenue to
40.3% in the three-month period ended September 30, 2009, from 49.0% during the
same period of 2008 primarily due to the expense changes with the Market Guide
and current business model of MIV. The business model of MIV has been
different in comparison to the rest of the operating segments. MIV
direct expenses as a percentage of revenue were lower, as the business consists
mainly of a large volume of small, high margin contracts.
Selling, general and administrative
expenses.
Selling, general and administrative expenses
increased 26.8% to $3.9 million for the three-month period ended September 30,
2009, compared to $3.1 million for the same period in 2008. The
increase was primarily due to increases in expenses related to the MIV
acquisition. Selling, general, and administrative expenses increased
as a percentage of revenue to 28.6% for the three-month period ended September
30, 2009, from 22.7% for the same period in 2008 mainly due to MIV’s current
business model with selling, general, and administrative expenses higher as a
percentage of revenue than the other operating segments of the Company due to an
expansion of the sales force.
Depreciation and
amortization.
Depreciation and amortization expenses increased
36.4% to $901,000 for the three-month period ended September 30, 2009, compared
to $661,000 in the same period of 2008. The increase was primarily
due to the amortization of intangible assets associated with the acquisition of
MIV. Depreciation and amortization expenses as a percentage of
revenue increased to 6.7% for the three-month period ended September 30, 2009,
from 4.9% in the same period of 2008.
Provision for income taxes.
The provision for income taxes totaled $1.1 million (36.3% effective tax
rate) for the three-month period ended September 30, 2009, compared to $1.2
million (38.0% effective tax rate) for the same period in 2008. The
effective tax rate was lower in the three-month period ended September 30, 2009,
due to a decrease in Canadian statutory income tax rates and increases in
research and development tax credits.
Nine
Months Ended September 30, 2009, Compared to Nine Months Ended September 30,
2008
Revenue
. Revenue
for the nine-month period ended September 30, 2009, increased 12.9% to $43.9
million compared to $38.8 million in the nine-month period ended September 30,
2008, primarily due to the acquisition of MIV in December 2008.
Direct
expenses
. Direct expenses increased 6.6% to $19.0 million in
the nine-month period ended September 30, 2009, compared to $17.8 million in the
same period during 2008. The increase was mainly due to increased
costs of servicing the additional revenue from the MIV business, partially
offset by reductions in costs of servicing other revenue due to decreased
volumes in other areas of the Company. Direct expenses decreased as a
percentage of revenue to 43.4% in the nine-month period ended September 30,
2009, from 46.0% during the same period of 2008, primarily due to MIV’s current
business model with direct expenses as a percentage of revenue lower than the
other operating segments of the Company.
Selling, general and administrative
expenses.
Selling, general and administrative expenses
increased 15.9% to $11.5 million for the nine-month period ended September 30,
2009, compared to $10.0 million for the same period in 2008. The
increase was primarily due to the acquisition of MIV in December 2008, offset by
decreases in expenses due to changes in the business model and the allocation of
responsibilities related to sales and servicing clients. Selling,
general, and administrative expenses increased as a percentage of revenue to
26.3% for the nine-month period ended September 30, 2009, from 25.7% for the
same period in 2008 due to MIV’s current business model with selling, general,
and administrative expenses higher as a percentage of revenue than the other
operating segments of the Company.
Depreciation and
amortization.
Depreciation and amortization expenses for the
nine-month period ended September 30, 2009, increased 44.9% to $2.9 million,
compared to $2.0 million for the same period in 2008, primarily due to the
amortization of intangible assets associated with the acquisition of MIV and
additional depreciation taken on software that was no longer
utilized. Depreciation and amortization expenses as a percentage of
revenue increased to 6.6% in the nine-month period ended September 30, 2009,
from 5.2% in the same period of 2008.
Provision for income taxes.
The provision for income taxes totaled $3.7 million (37.0% effective tax
rate) for the nine-month period ended September 30, 2009, compared to $3.4
million (37.9% effective tax rate) for the same period in 2008. The
effective tax rate was lower in 2009 due to a decrease in Canadian statutory
income tax rates and increases in research and development tax
credits.
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 Company’s
borrowing arrangements.
Working
Capital
The
Company had a working capital deficiency of $5.9 million as of September 30,
2009, compared to a working capital deficiency of $10.7 million on December 31,
2008. The decrease in the working capital deficiency was primarily
due to a $3.8 million reduction in the current notes payable, and increases in
recoverable income taxes, cash and cash equivalents, and prepaid expenses of
$547,000, $351,000, and $201,000 respectively.
Capital
Expenditures
Capital
expenditures for the nine-month period ended September 30, 2009, were $2.5
million. The Company expects that the additional capital expenditures
during 2009 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
December 19, 2008, the Company borrowed $9.0 million under a term note to
partially finance the acquisition of MIV. The term note is payable in
35 equal installments of $97,000 with the balance of principal and interest
payable in a balloon payment due on December 31, 2011. Borrowings
under the term note bear interest at a rate of 5.2% per year.
The term
note is secured by certain of the Company’s assets, including the Company’s
land, building, accounts receivable and intangible assets. The term
note 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, 2009, the Company was in compliance with
these restrictions and covenants.
The
Company entered into a revolving credit note in 2006. The maximum aggregate
amount available under the revolving credit note was originally $3.5 million,
but an addendum to the note dated March 26, 2008, changed the amount to $6.5
million. The revolving credit note was renewed in July 2009 to extend
the term to June 30, 2010. The Company may borrow, repay and
re-borrow amounts under the revolving credit note from time to time until its
maturity on June 30, 2010. The maximum aggregate amount available
under the revolving credit note is $6.5 million, subject to a borrowing base
equal to 75.0% of the Company’s eligible accounts
receivable. Borrowings under the revolving credit note bear interest
at a variable rate equal to (1) prime (as defined in the credit facility) less
0.50% or (2) one-, two-, three-, six- or twelve-month LIBOR. As of
September 30, 2009, the revolving credit note did not have a
balance. According to borrowing base requirements, the Company had
the capacity to borrow $5.5 million as of September 30, 2009.
Shareholders’
equity increased $4.0 million to $42.6 million as of September 30, 2009, from
$38.6 million as of December 31, 2008. The increase was primarily due
to net income, partly offset by dividends paid of $3.2 million.
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, 2009, the
remaining number of shares that could be purchased was 289,275.
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, 2008.
ITEM
4.
Controls and
Procedures
The
Company’s management, with the participation of the Company’s principal
executive officer and principal financial officer, has evaluated the
effectiveness of the design and operation of the Company’s disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934) as of the end of the period covered by this
report and has concluded that, as of the end of such period, the Company’s
disclosure controls and procedures were effective.
There
have been no changes in the Company’s internal control over financial reporting
(as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities
Exchange Act of 1934) that occurred during the Company’s most recent fiscal
quarter that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.
PART
II – Other Information
Risk
factors relating to the Company are contained in Part I, Item 1A of its Annual
Report on Form 10-K for the fiscal year ended December 31, 2008. No
material change to such risk factors has occurred during the three months ended
September 30, 2009.
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 Company’s Board of Directors, the repurchase program will
expire when the Company has repurchased all shares authorized for repurchase
thereunder. As of November 1, 2009, 460,725 shares have been
repurchased under that authorization.
The table
below summarizes stock repurchases for the three-month period ended September
30, 2009.
|
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, 2009
|
|
|
0
|
|
|
$
|
0.00
|
|
|
|
0
|
|
|
|
289,424
|
|
|
August
1 – August31, 2009
|
|
|
219
|
|
|
$
|
26.35
|
|
|
|
219
|
|
|
|
289,275
|
|
|
September
1 – September 30, 2009
|
|
|
0
|
|
|
$
|
0.00
|
|
|
|
0
|
|
|
|
289,275
|
|
ITEM
6.
Exhibits
The
exhibits listed in the accompanying index of exhibits are filed as part of this
Quarterly Report on Form 10-Q.
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 13, 2009
|
By:
|
/s/ Michael D. Hays
|
|
|
|
Michael
D. Hays
|
|
|
|
President
and Chief Executive Officer
|
|
|
|
(Principal
Executive Officer)
|
|
|
|
|
|
Date:
November 13, 2009
|
By:
|
/s/ Patrick E. Beans
|
|
|
|
Patrick
E. Beans
|
|
|
|
Vice
President, Treasurer, Secretary and
|
|
|
|
Chief
Financial Officer (Principal
|
|
|
|
Financial
and Accounting Officer)
|
NATIONAL
RESEARCH CORPORATION
EXHIBIT
INDEX TO QUARTERLY REPORT ON FORM 10-Q
For the
Quarterly Period ended September 30, 2009
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.
|