-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q/2AWGtH8S2pRInWN8qjLzfLxyvo9H/gfrgmZrYyh6NZ1OwxCCt17l6T6+ibbGJH 6HbniCrVMse0jOr/yvN51w== 0000950142-97-000388.txt : 19970515 0000950142-97-000388.hdr.sgml : 19970515 ACCESSION NUMBER: 0000950142-97-000388 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970514 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NFO RESEARCH INC CENTRAL INDEX KEY: 0000897940 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT [8700] IRS NUMBER: 061327424 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21460 FILM NUMBER: 97603901 BUSINESS ADDRESS: STREET 1: 2 PICKWICK PLAZA STREET 2: STE 400 CITY: GREENWICH STATE: CT ZIP: 06830 BUSINESS PHONE: 2036298888 MAIL ADDRESS: STREET 1: TWO PICKWICK PLAZA CITY: GREENWICH STATE: CT ZIP: 06830 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 1997 OR [ ] 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 - 21460 NFO RESEARCH, INC. ----------------- (Exact name of registrant as specified in its charter) DELAWARE 06-1327424 ------------------------------- --------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) TWO PICKWICK PLAZA, GREENWICH, CT 06830 -------------------------------------------------- (Address of principal executive offices, zip code) (203) 629 - 8888 -------------------------------------------------- (Registrant's telephone number, including area code) -------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicated 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 ------ ------ APPLICABLE ONLY TO CORPORATE ISSUERS: At May 9, 1997, Registrant had outstanding 12,141,370 shares of Common Stock. NFO RESEARCH, INC. INDEX PAGE Part I FINANCIAL INFORMATION NUMBER FINANCIAL STATEMENTS Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Income 4 Condensed Consolidated Statements of Cash Flows 5 Condensed Consolidated Statement of Stockholders' Equity 7 Notes to Condensed Consolidated Financial Statements 8 Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Part II OTHER INFORMATION Item 6 - Exhibits and Reports on Form 8-K 12 Signature 13 2 NFO RESEARCH, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PER SHARE DATA) MARCH 31 DECEMBER 31 1997 1996 ---- ---- (UNAUDITED) CURRENT ASSETS: CASH AND CASH EQUIVALENTS $ 4,252 $ 4,086 RECEIVABLES: TRADE 21,338 24,728 UNBILLED 4,387 3,963 PREPAID EXPENSES AND OTHER CURRENT ASSETS 4,425 3,309 --------- --------- TOTAL CURRENT ASSETS 34,402 36,086 PROPERTY AND EQUIPMENT, NET 11,401 11,013 CUSTOMER LIST, GOODWILL AND OTHER INTANGIBLE ASSETS 49,001 49,412 OTHER ASSETS 4,734 4,946 ---------- --------- TOTAL ASSETS $ 99,538 $ 101,457 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: CURRENT MATURITIES OF LONG-TERM DEBT $ 521 $ 459 ACCOUNTS PAYABLE 2,058 2,182 ACCRUED EXPENSES 9,059 13,568 CUSTOMER BILLINGS IN EXCESS OF REVENUES EARNED 7,214 9,106 --------- --------- TOTAL CURRENT LIABILITIES 18,852 25,315 LONG-TERM DEBT 4,611 4,821 OTHER LONG-TERM LIABILITIES 4,851 4,579 ---------- --------- TOTAL LIABILITIES 28,314 34,715 ---------- --------- STOCKHOLDERS' EQUITY: COMMON STOCK, PAR VALUE $.01 PER SHARE; 60,000 SHARES AUTHORIZED, 10,404 AND 10,280 ISSUED AND OUTSTANDING IN 1997 AND 1996, RESPECTIVELY 104 103 ADDITIONAL PAID-IN CAPITAL 43,072 40,541 RETAINED EARNINGS 28,371 26,421 ADDITIONAL MINIMUM LIABILITY (323) (323) ---------- --------- TOTAL STOCKHOLDERS' EQUITY 71,224 66,742 ---------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 99,538 $ 101,457 ========== ========= The accompanying notes are an integral part of these statements. 3 NFO RESEARCH, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED MARCH 31 1997 1996 ---- ---- REVENUES $ 30,123 $ 24,106 COST OF REVENUES 14,456 10,794 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 11,020 8,809 DEPRECIATION EXPENSE 444 390 AMORTIZATION EXPENSE 742 775 -------- -------- OPERATING INCOME 3,461 3,338 INTEREST EXPENSE, NET 33 43 EQUITY INTEREST IN NET LOSS OF JOINT VENTURES 78 130 -------- -------- INCOME BEFORE INCOME TAXES 3,350 3,165 PROVISION FOR INCOME TAXES 1,400 1,464 -------- -------- NET INCOME $ 1,950 $ 1,701 ======== ======== PRIMARY WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING(a) 10,597 10,603 ======== ======== PRIMARY EARNINGS PER WEIGHTED AVERAGE SHARE(a) $ .18 $ .16 ======== ======== (a) For comparability, the earnings per share and share data reflect the three-for-two stock split effected on February 5, 1996. Fully diluted earnings per common share has not been presented on the basis that the difference between fully diluted and primary earnings per share is less than $0.01 per share. The accompanying notes are an integral part of these statements. 4 NFO RESEARCH, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS) THREE MONTHS ENDED MARCH 31 1997 1996 ---- ---- CASH FLOW FROM OPERATING ACTIVITIES: NET INCOME $ 1,950 $ 1,701 ADJUSTMENTS TO RECONCILE TO NET CASH PROVIDED BY OPERATING ACTIVITIES: DEPRECIATION 444 390 AMORTIZATION 742 775 EQUITY INTEREST IN NET LOSS OF JOINT VENTURES 78 130 SUBTOTAL 3,214 2,996 ------- ------- CHANGE IN ASSETS AND LIABILITIES THAT PROVIDED (USED) CASH: TRADE RECEIVABLES 3,390 3,528 UNBILLED RECEIVABLES (424) (1,095) PREPAID EXPENSES AND OTHER CURRENT ASSETS (1,116) (268) OTHER ASSETS 316 (14) ACCOUNTS PAYABLE, ACCRUED AND OTHER LIABILITIES (760) 7 CUSTOMER BILLINGS IN EXCESS OF REVENUES EARNED (1,892) (920) ------- ------- NET CASH PROVIDED BY OPERATING ACTIVITIES 2,728 4,234 ------- ------- CASH FLOW FROM INVESTING ACTIVITIES: CAPITAL EXPENDITURES (832) (411) ACQUISITIONS (NET OF CASH ACQUIRED) (1,080) (5,695) INVESTMENTS IN JOINT VENTURES (182) (894) PURCHASE OF LICENSE AGREEMENT AND OTHER (331) (37) ------- ------- NET CASH USED IN INVESTING ACTIVITIES (2,425) (7,037) ------- ------- CASH FLOW FROM FINANCING ACTIVITIES: NET PROCEEDS FROM ISSUANCE OF STOCK 11 226 PAYMENTS ON LONG-TERM DEBT (4,148) (3,192) COSTS ASSOCIATED WITH NEW CREDIT FACILITY BORROWINGS ON LINE OF CREDIT 4,000 5,000 ------- ------- NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (137) 2,034 ------- ------- CHANGE IN CASH 166 (769) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,086 5,677 ------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,252 $ 4,908 ======= ======= 5 NFO RESEARCH, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, IN THOUSANDS) THREE MONTHS ENDED MARCH 31 1997 1996 ---- ---- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: CASH PAID DURING THE PERIOD FOR: INTEREST $ 78 $ 96 INCOME TAXES $560 $338 The accompanying notes are an integral part of these statements. 6 NFO RESEARCH, INC. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED, IN THOUSANDS) ADDITIONAL ADDITIONAL COMMON PAID-IN RETAINED MINIMUM SHARES STOCK CAPITAL EARNINGS LIABILITY ------ ------ ---------- -------- ---------- BALANCE AT JANUARY 1, 1997 10,280 $ 103 $ 40,541 $ 26,421 $ (323) COMMON STOCK ISSUED IN CONJUNCTION WITH ACQUISITIONS 123 1 2,520 OTHER STOCK ISSUANCES 1 0 11 NET INCOME 1,950 ------- ------- -------- -------- ------- BALANCE AT MARCH 31, 1997 10,404 $ 104 $ 43,072 $ 28,371 $ (323) ======= ======= ======== ======== ======= The accompanying notes are an integral part of this statement. 7 NFO RESEARCH, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. Financial Statements: These condensed consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All significant intercompany amounts have been eliminated. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Company as of March 31, 1997 and the results of its operations for the three month periods ended March 31, 1997 and 1996. These financial statements are presented in accordance with the requirements of Form 10-Q. Accordingly, the financial statements and related notes in the Company's Audited Financial Statements for the fiscal year ended December 31, 1996, included in the Company's Form 10- K filed with the SEC on March 31, 1997, should be read in conjunction with the accompanying condensed consolidated financial statements. The information included herein may not be indicative of the results to be expected for a full year. Note 2. Acquisition Subsequent to Period End: On April 1, 1997 the Company issued 1,726,480 shares of NFO common stock in conjunction with the plan of merger to acquire 100% of the stock of Prognostics, a leading provider of survey-based quantitative customer satisfaction research to information technology companies worldwide. The purchase will be accounted for as a pooling of interests and, accordingly, historical financial data in future reports will be restated to include Prognostics. The Company plans to issue a report on Form 8-K. 8 NFO RESEARCH, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following information should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto included in this Quarterly Report. RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, certain operating statement data for the Company, expressed as a percentage of revenues, and the percentage change in such items compared to amounts for the prior year. THREE MONTHS ENDED MARCH 31 PERCENTAGE OF PERCENTAGE REVENUES CHANGE FROM -------- PRIOR YEAR 1997 1996 ---------- REVENUES 100.0% 100.0% 25.0% COST OF REVENUES 48.0 44.8 33.9 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 36.6 36.6 25.1 DEPRECIATION EXPENSE 1.5 1.6 13.8 AMORTIZATION EXPENSE 2.4 3.2 (4.3) ----- ----- OPERATING INCOME 11.5 13.8 3.7 INTEREST EXPENSE, NET 0.1 0.2 (23.3) EQUITY INTEREST IN NET LOSS OF JOINT VENTURES 0.3 0.5 (40.0) ----- ----- INCOME BEFORE INCOME TAXES 11.1 13.1 5.8 PROVISION FOR INCOME TAXES 4.6 6.0 (4.4) ----- ----- NET INCOME 6.5% 7.1% 14.6% ===== ===== 9 NFO RESEARCH, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OPERATIONS The Company's revenues for the three months ended March 31, 1997 increased 25% to $30.1 million from $24.1 million for the same period last year. The SPECTREM Group, acquired in August 1996 and which specializes in financial services research and consulting, contributed $1.4 million to this quarter's revenue increase. Excluding the SPECTREM Group's increase, revenues were up 19% over the same period last year, led by strong showings in NFO's pharmaceutical/ healthmed, financial services and telecommunications business units. Cost of revenues increased 34% to $14.5 million from $10.8 million a year ago primarily due to the first time inclusion of the SPECTREM Group ($.8 million), overall increased business volume ($2.2 million), cost relating to the Company's interactive initiatives ($.2 million) and a shift in product mix. Selling, general and administrative expenses increased 25% to $11.0 million from $8.8 million last year. The principal contributing factors were the inclusion of the SPECTREM Group ($.6 million), increased costs due to increased business activity, especially in the Company's pharmaceutical/ healthmed business units ($.8 million), expenses relating to the Company's interactive initiatives ($.2 million), and inflationary increases. Net operating losses associated with NFO's European joint venture activities equaled $.1 million for the quarter, slightly below the year ago level. The Company's effective tax rate for the quarter ended March 31, 1997 was 41.8% compared to 46.3% for the same period last year. The decrease is primarily the result of lower state and local income taxes attributed to several tax savings strategies implemented in late 1996. Net income for the first quarter of 1997 increased 15% to $2.0 million from $1.7 million last year. Primary earnings per share increased 13% to $.18 from $.16 . LIQUIDITY AND CAPITAL RESOURCES Working capital as of March 31, 1997 was $15.6 million compared to $10.8 million at December 31, 1996. The increase in working capital resulted primarily from the results of operations for the quarter ended March 31, 1997, and payment in cash and stock of previously accrued acquisition related liabilities. Offsetting these gains were: capital expenditures ($.8 million) and investments in European Joint Ventures ($.2 million). related to acquisitions settled in common stock of the Company ($2.5 million). Offsetting these gains were: capital expenditures ($.8 million) and investments in European Joint Ventures ($.2 million). As of March 31, 1997 the Company had $4.0 million outstanding on its $45.0 million credit facility with three major U.S. banks. 10 Capital expenditures for the quarter ended March 31, 1997 were $.8 million. Capital expenditures for 1997 are anticipated to be approximately $9 million including approximately $5 million due to a planned expansion of the Company's operations capacity. The Company anticipates that existing cash, together with internally generated funds and its credit availabilities will provide the Company with the resources that are needed to satisfy potential acquisitions, capital expenditures and the Company's growing working capital requirements. The timing and magnitude of future acquisitions will be the single most important factor in determining the Company's long term capital needs. FORWARD LOOKING STATEMENTS Statements in this Form 10-Q relating to matters that are not historical facts are forward-looking statements. Such forward-looking statements are based on the Company's current forecasts and actual results may differ materially. To understand the risks which may affect the Company's future performance, please refer to Part 1 of NFO's 1996 Annual Report on Form 10-K. FUTURE REQUIRED ACCOUNTING CHANGES In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings per Share (SFAS No. 128). This statement introduces new methods for calculating earnings per share. The adoption of this standard will not impact results from operations, financial condition, or long-term liquidity, but will require the Company to restate earnings per share reported in prior periods to conform with this statement. The Company is required to adopt the new standard for periods ending after December 15, 1997. The Company believes that the adoption of this standard will result in higher earnings per share when comparing the current, primary and fully diluted earnings per share calculations to the calculations of basic and diluted earnings per share required by SFAS No. 128. 11 PART II OTHER INFORMATION ITEM 6 Exhibits and Reports on Form 8-K. --------------------------------- (a) Exhibits 11. Computations of Net Income per Common Share 27. Financial Data Schedule (b) Reports on Form 8-K The Company did not file any reports on Form 8-K during the quarter for which this report is filed. 12 NFO RESEARCH, INC. SIGNATURE 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. NFO RESEARCH, INC. ------------------ (Registrant) Dated: May 15, 1996 /s/ Patrick G. Healy --------------------- Patrick G. Healy, Executive Vice President and Chief Financial Officer (Authorized Officer of Registrant and Principal Financial Officer) 13 NFO RESEARCH, INC. INDEX TO EXHIBITS SEQUENTIAL PAGE NUMBER EXHIBITS 11 Computations of Net Income per Common Share 27 Financial Data Schedule NFO RESEARCH, INC. EXHIBIT 11 COMPUTATIONS OF NET INCOME PER COMMON SHARE (IN THOUSANDS, EXCEPT PER SHARE DATA) THREE MONTHS ENDED MARCH 31 --------------------------- 1997 1996 ---- ---- PRIMARY: WEIGHTED AVERAGE SHARES OUTSTANDING 10,297 10,098 DILUTIVE STOCK OPTIONS 280 449 OTHER COMMON SHARE EQUIVALENTS 20 56 ------- ------- 10,597 10,603 ======= ======= NET INCOME $ 1,950 $ 1,701 ======= ======= PRIMARY EARNINGS PER SHARE $.18 $.16 ======= ======= The earnings per share and share data reflect the three-for-two stock split effected on February 5, 1996. Fully diluted earnings per common share has not been presented on the basis that the difference between fully diluted and primary earnings per share is less than $0.01 per share. EX-27 2 ART.5 FDS FOR 1ST QUARTER 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS CONTAINED IN NFO RESEARCH, INC.'S REPORT ON FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1997 MAR-31-1997 3,367 0 25,868 143 0 34,402 17,641 6,240 99,538 18,852 4,611 0 0 104 71,120 99,538 30,123 30,123 14,456 26,662 (5) 0 116 3,350 1,400 1,950 0 0 0 1,950 .18 .18
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