NRCI National Research Corp. (MM)

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 June 30, 2010

	or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

National Research Corporation

(Exact name of Registrant as specified in its charter)

 

1245 “Q” Street, Lincoln, Nebraska          68508

(Address of principal executive offices)  (Zip Code)

(402) 475-2525

(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  T 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 T      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 T  

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 August 6, 2010: 6,653,001 shares

 

NATIONAL RESEARCH CORPORATION

FORM 10-Q INDEX

For the Quarter Ended June 30, 2010

 

 

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 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 impact of federal healthcare reform legislation or other regulatory changes;

 

·

The Company’s ability to retain its limited number of key clients;

 

·

The Company’s ability to manage its growth, including 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, 2009, 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)

 

		June 30,  2010  (Unaudited)				December 31,  2009
Assets
Current assets:
Cash and cash equivalents		$	7,236			$	2,512
Trade accounts receivable, less allowance for doubtful accounts of $310 and $279 in 2010 and 2009, respectively			7,902				5,214
Unbilled revenue			1,248				1,173
Prepaid expenses and other			1,451				1,864
Recoverable income taxes			1,325				803
Deferred income taxes			201				98
Total current assets			19,363				11,664
Property and equipment, net			13,031				13,975
Intangible assets, net			6,307				6,883
Goodwill			39,927				39,924
Other			196				53
Total assets		$	78,824			$	72,499
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of note payable		$	819			$	816
Accounts payable			564				598
Accrued wages, bonus and profit sharing			2,281				1,926
Accrued expenses			1,166				848
Deferred revenue			15,909				11,907
Total current liabilities			20,739				16,095
Note payable, net of current portion			6,149				6,903
Deferred income taxes			5,306				5,126
Deferred revenue			253				204
Other long term liabilities			9				--
Total liabilities			32,456				28,328
Shareholders’ equity:
Common stock, $.001 par value; authorized 20,000,000 shares, issued 8,029,282 in 2010 and 8,018,044 in 2009, outstanding 6,653,001 in 2010 and 6,662,111 in 2009			8				8
Additional paid-in capital			28,274				27,871
Retained earnings			40,165				37,905
Accumulated other comprehensive income			766				769
Treasury stock, at cost; 1,376,281 shares in 2010 and 1,355,933 shares in 2009			(22,845	)			(22,382	)
Total shareholders’ equity			46,368				44,171
Total liabilities and shareholders’ equity		$	78,824			$	72,499

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for share amounts, unaudited)

 

		Three months ended June 30,								Six months ended June 30,
		2010				2009				2010				2009
Revenue		$	14,139			$	13,594			$	31,509			$	30,334
Operating expenses:
Direct expenses			5,877				6,114				12,333				13,242
Selling, general and administrative			4,545				3,887				9,014				8,016
Depreciation and amortization			1,059				891				2,157				2,001
Total operating expenses			11,481				10,892				23,504				23,259
Operating income			2,658				2,702				8,005				7,075
Other income (expense):
Interest income			2				-				3				1
Interest expense			(93	)			(85	)			(191	)			(223	)
Other, net			49				(98	)			6				(57	)
Total other income (expense)			(42	)			(183	)			(182	)			(279	)
Income before income taxes			2,616				2,519				7,823				6,796
Provision for income taxes			956				910				3,034				2,537
Net income		$	1,660			$	1,609			$	4,789			$	4,259
Net income per share – basic		$	.25			$	.24			$	.72			$	.64
Net income per share – diluted		$	.25			$	.24			$	.71			$	.63
Weighted average shares and share equivalents outstanding – basic			6,634				6,637				6,637				6,635
Weighted average shares and share equivalents outstanding – diluted			6,732				6,734				6,724				6,720

See accompanying condensed notes to consolidated financial statements.

 

 NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

 

 

See accompanying condensed notes to consolidated financial statements.

 

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS