<PAGE>
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 quarter 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: 0-27680
-------
INTELLIQUEST INFORMATION GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 74-2775377
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1250 Capital of Texas Highway
Austin, Texas 78746
(512) 329-0808
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES)
_________________________
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AT APRIL 30, 1997
Common Stock, $.0001 par value 8,345,766
1
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INTELLIQUEST INFORMATION GROUP, INC.
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheet
March 31, 1997 (unaudited) and December 31, 1996 3
Condensed Consolidated Statement of Operations (unaudited)
Three months ended March 31, 1997 and 1996 4
Condensed Consolidated Statement of Cash Flows (unaudited)
Three months ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
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PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
INTELLIQUEST INFORMATION GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
MARCH 31, DECEMBER 31,
1997 1996
----------- ------------
(UNAUDITED)
ASSETS
Current assets:
Cash and equivalents. . . . . . . . . . . . . . . . $ 1,544 $ 734
Short-term investments. . . . . . . . . . . . . . . 47,941 51,152
Accounts receivable, net. . . . . . . . . . . . . . 7,949 6,636
Unbilled revenues . . . . . . . . . . . . . . . . . 2,023 2,651
Projects in process . . . . . . . . . . . . . . . . 1,010 98
Prepaid expenses and other assets . . . . . . . . . 531 324
------- -------
Total current assets. . . . . . . . . . . . . . . . 60,998 61,595
Furniture and equipment, net. . . . . . . . . . . . 2,853 2,396
Other assets. . . . . . . . . . . . . . . . . . . . 287 291
------- -------
Total assets. . . . . . . . . . . . . . . . . . $64,138 $64,282
------- -------
------- -------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable. . . . . . . . . . . . . . . . . . $ 2,029 $ 1,930
Accrued liabilities . . . . . . . . . . . . . . . . 1,598 1,795
Deferred revenues . . . . . . . . . . . . . . . . . 2,734 2,800
Other current liabilities . . . . . . . . . . . . . 67 253
------- -------
Total current liabilities . . . . . . . . . . . 6,428 6,778
Obligations under capital leases and deferred rent. . 36 302
------- -------
Total liabilities . . . . . . . . . . . . . . . 6,464 7,080
------- -------
Preferred stock, $.0001 par value, 1,000,000 shares
authorized, no shares issued or outstanding . . . . -- --
Common Stockholders' Equity:
Common stock, $.0001 par value, 30,000,000 shares
authorized, 8,346,000 and 8,332,000 shares
issued and outstanding, respectively. . . . . . . 1 1
Capital in excess of par value. . . . . . . . . . . 58,291 58,362
Deferred compensation . . . . . . . . . . . . . . . (45) (47)
Other . . . . . . . . . . . . . . . . . . . . . . . (17) 25
Accumulated deficit . . . . . . . . . . . . . . . . (556) (1,139)
------- -------
Total common stockholders' equity . . . . . . . 57,674 57,202
------- -------
Total liabilities and stockholders' equity. . . $64,138 $64,282
------- -------
------- -------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
3
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INTELLIQUEST INFORMATION GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
Revenues:
Continuous services . . . . . . . . . . . . . $6,529 $3,850
Other services. . . . . . . . . . . . . . . . 955 564
------ ------
Total revenues. . . . . . . . . . . . . . . . 7,484 4,414
Operating expenses:
Costs of revenues . . . . . . . . . . . . . . 3,957 1,878
Sales, general and administrative . . . . . . 2,717 1,561
Product development . . . . . . . . . . . . . 409 608
Depreciation and amortization . . . . . . . . 213 151
------ ------
Total operating expenses. . . . . . . . . . . 7,296 4,198
------ ------
Operating income. . . . . . . . . . . . . . . . 188 216
Interest income, net. . . . . . . . . . . . . . 463 20
------ ------
Income before income taxes. . . . . . . . . . . 651 236
Provision for income taxes. . . . . . . . . . . 68 79
------ ------
Net income. . . . . . . . . . . . . . . . . . . $ 583 $ 157
------ ------
------ ------
Net income per share. . . . . . . . . . . . . . $ .07 $ .03
Weighted average shares outstanding . . . . . . 8,328 5,974
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
4
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INTELLIQUEST INFORMATION GROUP, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
Cash flows from operating activities:
Net income. . . . . . . . . . . . . . . . . . $ 583 $ 157
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization . . . . . . 213 168
Bad debt expense. . . . . . . . . . . . . 25 29
Loss on disposal. . . . . . . . . . . . . 30 --
Deferred compensation . . . . . . . . . . 2 4
Net changes in assets and liabilities:
Accounts receivable and unbilled
revenues. . . . . . . . . . . . . . . . (710) 253
Prepaid expenses and other assets . . . . (207) (55)
Projects in process . . . . . . . . . . . (912) (855)
Accounts payable and accrued expenses . . (99) 186
Deferred revenues . . . . . . . . . . . . (66) 323
Other . . . . . . . . . . . . . . . . . . 161 (9)
-------- -------
Net cash provided by (used in) operating
activities. . . . . . . . . . . . . . . . . (980) 201
-------- -------
Cash flows from investing activities:
Purchases of short-term investments . . . . . (76,108) --
Sales and maturities of short-term
investments . . . . . . . . . . . . . . . . 79,164 --
Purchases of equipment and leasehold
improvements. . . . . . . . . . . . . . . . (700) (422)
Other . . . . . . . . . . . . . . . . . . . . (42) (124)
-------- -------
Net cash provided by (used in) investing
activities. . . . . . . . . . . . . . . . 2,314 (546)
-------- -------
Cash flows from financing activities:
Proceeds from issuance of stock, net. . . . . 53 25,787
Offering costs. . . . . . . . . . . . . . . . (124) --
Borrowings under line of credit . . . . . . . 2,029 59
Repayments under line of credit . . . . . . . (2,216) --
Other . . . . . . . . . . . . . . . . . . . . (266) (17)
-------- -------
Net cash provided by (used in)
financing activities. . . . . . . . . . . (524) 25,829
-------- -------
Net increase in cash and equivalents. . . . . 810 25,484
Cash and equivalents at the beginning of the
period. . . . . . . . . . . . . . . . . . . 734 1,678
-------- -------
Cash and equivalents at the end of the
period. . . . . . . . . . . . . . . . . . . $1,544 $27,162
-------- -------
Supplemental cash flow disclosures:
Interest paid . . . . . . . . . . . . . . . . 13 3
Property and equipment acquired under capital
leases. . . . . . . . . . . . . . . . . . . 0 47
Taxes paid. . . . . . . . . . . . . . . . . . 435 230
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS.
5
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INTELLIQUEST INFORMATION GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL AND BASIS OF FINANCIAL STATEMENTS
The accompanying unaudited financial statements include the accounts of
IntelliQuest Information Group, Inc., a Delaware corporation, and its
consolidated subsidiaries (collectively, the "Company" or "IntelliQuest").
The Company provides international quantitative marketing information to
technology companies.
In February 1997, the Company merged with Zona Research, Inc. ("Zona"), a
privately held company. See Note 2.
The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with the rules and regulations of the Securities
and Exchange Commission and, accordingly, do not include all information and
notes required under generally accepted accounting principles for complete
financial statements. In the opinion of management, the accompanying
unaudited interim consolidated financial statements contain all adjustments
consisting of a normal recurring nature considered necessary for a fair
presentation of the financial position of the Company as of March 31, 1997
and the results of the Company's operations and its cash flows for the
three-month periods ended March 31, 1997 and 1996. This report on Form 10-Q
should be read in conjunction with the Company's audited consolidated
financial statements and related notes on Form 10-K for the year ended
December 31, 1996. The results of operations for interim periods are not
necessarily indicative of the results of operations to be expected for the
year.
2. ACQUISITIONS
In February 1997, IntelliQuest completed a merger with Zona in which Zona
became a wholly-owned subsidiary of IntelliQuest. A total of 250,000 shares
of IntelliQuest common stock were exchanged for all the outstanding shares
of common stock of Zona. The transaction was accounted for as a pooling of
interests and, therefore, all prior period financial statements have been
restated as if the acquisition took place at the beginning of such periods.
Separate results of operations for the periods prior to the acquisition
with Zona are as follows (in thousands):
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE THREE FOR THE THREE
ENDED ENDED ENDED MONTHS ENDED MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, MARCH 31, 1997 MARCH 31, 1996
1994 1995 1996 (UNAUDITED) (UNAUDITED)
------------ ------------ ------------ -------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues
IntelliQuest. . . . . . . . . $13,989 $19,114 $26,452 $7,035 $4,099
Zona (unaudited). . . . . . . 579 623 1,936 449 315
------- ------- ------- ------ ------
Combined. . . . . . . . . . . . $14,568 $19,737 $28,388 $7,484 $4,414
Net Income (loss)
IntelliQuest. . . . . . . . . $ (289) $ 565 $ 2,579 $ 774 $ 102
Zona (unaudited). . . . . . . (17) (21) (370) (191) 55
------- ------- ------- ------ ------
Combined. . . . . . . . . . . . $ (306) $ 544 $ 2,209 $ 583 $ 157
</TABLE>
3. NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128, "Earnings per Share" (FAS No. 128). FAS
No. 128 provides new guidance on the computation of earnings per share.
The Company will adopt the statement in the fourth quarter of 1997, as
required. The Company does not anticipate that the adoption of FAS No. 128
will have a material effect on Earnings per Share.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
THE FOLLOWING MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS CONTAINS TREND ANALYSIS AND OTHER FORWARD LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. SUCH FORWARD LOOKING
STATEMENTS INCLUDE, BUT ARE NOT LIMITED TO, THE COMPANY'S EXPECTATIONS
REGARDING ITS FUTURE FINANCIAL CONDITION AND OPERATING RESULTS, PRODUCT
DEVELOPMENT, BUSINESS AND GROWTH STRATEGY, MARKET CONDITIONS AND COMPETITIVE
ENVIRONMENT. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THE FORWARD-LOOKING STATEMENTS AS THE RESULT OF CERTAIN
FACTORS, INCLUDING THOSE SET FORTH UNDER THE SECTION ENTITLED "RISK FACTORS."
OVERVIEW
IntelliQuest Information Group, Inc. (the "Company") is a leading
provider of information, technologies, and analysis services that are designed
to improve the marketing performance of technology companies. The Company
provides timely, objective, accurate and cost-effective information about
technology markets, customers and products on both a subscription basis and a
proprietary project basis. The Company also licenses custom proprietary
software applications and associated services to technology manufacturers for
customer registration.
The Company's continuous services are composed of renewable
subscription-based products as well as renewable proprietary products. The
Company's renewable subscription-based product revenues are substantially
derived from three product families: IntelliTrack IQ, the Computer Industry
Media Study ("CIMS") and Internet-related products. IntelliTrack IQ is a
collection of fourteen distinct product modules covering a variety of
technologies and geographic markets. This study targets all relevant
customer segments including non-users as well as users. CIMS is an annual
study that measures the readership and viewership habits of technology
purchase influencers. Internet-related products include a variety of reports
and subscription-based services providing information related to the Internet
and intranet markets based upon quantitative data and market observations.
The Company's renewable proprietary product revenues typically consist of
revenues from proprietary recurring tracking studies and customer information
products. The proprietary recurring tracking studies provide the customer
with longitudinal information for tracking designated metrics over a
continuous period of time. Revenues from the customer information products
are derived from a variety of sources including proprietary customer
registration products and proprietary customer satisfaction products.
The Company's other revenues are composed of proprietary research and
conferences. Traditional proprietary project research provides customized
information to customers utilizing a variety of proprietary models, research
techniques and data collection methods. The Company hosts various
conferences which provide forums for presentation and discussion of
technology related issues.
In February 1997, the Company acquired Zona Research, Inc. ("Zona"),
a privately held company that provides in-depth analysis and assessment of
the Internet and intranet markets based upon factual market data and
observations. The transaction was accounted for as a pooling of interests;
thus the Company's results of operations as discussed herein include those
of Zona and all periods presented have been restated.
7
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RESULTS OF OPERATIONS
TOTAL REVENUES. Total revenues increased from $4.4 million to
$7.5 million for the quarters ended March 31, 1996 and 1997, respectively.
This growth represents a 69.6% increase for the three-month period ended
March 31, 1997 from the comparable 1996 period. Revenues from continuous
services increased 69.6% to $6.5 million during the three months ended
March 31, 1997 from $3.9 million for the same period in 1996 due primarily to
new sales of customer information products as well as increased demand for
proprietary recurring tracking products. Other revenues increased 69.3% to
$955,000 for the three months ended March 31, 1997 from $564,000 for the first
quarter of 1996, due primarily to growth in customer demand for the Company's
Technology Panel research. Revenues attributable to international market
research increased 93.4% to $2.7 million in the first quarter of 1997 from
$1.4 million in the first quarter of 1996 representing 36% and 32% of total
revenues over each respective period. The quarter to quarter percentage
increase in international revenues is primarily due to an overall increase in
the level of international activity. However, due to the timing of the
dramatic growth in international customer information product revenues during
1996, the quarter to quarter percentage increase is unusually high.
COSTS OF REVENUES. Costs of revenues are primarily composed of data
collection, labor charges, telecommunications charges and other costs
directly attributable to products or projects. Costs of revenues for the
first quarter of 1997 increased 110.7% to $4.0 million, from $1.9 million in
the first quarter of 1996. Costs of revenues increased as a percentage of
total revenues from 42.6% to 52.9% for the quarters ended March 31, 1996 and
1997. This increase was due to increases in customer information product
revenues quarter over quarter which yield higher costs of revenues as a
percentage of total revenues than other product lines as well as a delay in
the closure of a material IntelliTrack contract.
SALES, GENERAL AND ADMINISTRATIVE EXPENSES. Sales, general and
administrative expenses consist primarily of personnel and other costs
associated with sales, marketing, administration, finance, information
systems, human resources and general management. Sales, general and
administrative expenses for the first quarter of 1997 increased 74.1% to $2.7
million, from $1.6 million in the first quarter of 1996. As a percentage of
total revenues, sales, general and administrative expenses increased slightly
to 36.3% for the first quarter of 1997 from 35.4% for the first quarter of
1996 The aggregate dollar and percentage increases were the result of several
items including additional expenses associated with becoming a public
company, the acquisition of Zona, as well as expansion of the Company's
United Kingdom facilities. Acquisition costs expensed during the first
quarter 1997 were $137,000.
PRODUCT DEVELOPMENT EXPENSES. Product development expenses are composed
of resources, primarily labor and data collection charges, dedicated to the
development of several new products. Product development expenses were
$409,000 and $608,000 for the three months ended March 31, 1997 and 1996,
respectively. As a percentage of total revenues, product development expenses
represented 5.5% and 13.8% for the first quarters of 1997 and 1996. In the
first quarter of 1996 the Company's product development expenses consisted
primarily of costs to develop the Technology Panel. Product development in
the first quarter of 1997 focused on expansion of completed proprietary
customer information and syndicated projects which were less cost intensive
than the Company's 1996 projects.
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
41.1% from $151,000 to $213,000 for the quarters ended March 31, 1996 and
1997, respectively. This increase was principally due to computer equipment
and purchases of advanced data delivery alternatives to improve
communications and data processing systems required to support business
growth and international expansion.
8
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INCOME TAXES. Provision for income taxes as a percentage of income
before income taxes represents 10.4% for the quarter ended March 31, 1997.
This rate is below the Company's combined federal and state income tax rates
due to a combination of two factors. First, the net proceeds from the
Company's initial and follow-on public offerings in 1996 have typically been
invested in tax-free investments. Also, the Company did not record tax
expense on earnings which offset prior period losses for which no tax benefit
was recorded.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Company had cash of $1.5 million, short term
investments of $47.9 million and working capital of $54.6 million.
During the three months ended March 31, 1997, the Company used $1.0
million in operating activities while it generated $201,000 during the same
period last year. This decrease in cash flow from operations was primarily
due to the timing of costs incurred in advance of sales on certain projects
as well as the timing of collection of accounts receivable. Although the
Company's increased earnings provided an increase in cash flow, an increase
in accounts receivable and unbilled receivables, which resulted from typical
billing activity as discussed below, caused an offsetting decrease in cash
flow.
Pursuant to billing terms between the Company and its customers, the
Company typically bills customers for products or projects before they have
been delivered. Billed amounts are recorded as deferred revenues on the
Company's financial statements and are recognized as income when earned. As
of March 31, 1997 and 1996, the Company had $2.7 million and $1.6 million of
deferred revenues respectively. In addition, when work is performed in
advance of billing, the Company will record this work as unbilled revenue.
As of March 31, 1997 and 1996, the Company had $2.0 million and $1.0 million
of unbilled revenues, respectively. Substantially all deferred and unbilled
revenues will be earned and billed, respectively, within 12 months of the
respective period ends.
For the three months ended March 31, 1996 net cash used in investing
activities primarily for the purchase of fixed assets was $546,000. During
the first quarter 1997, net cash provided by short term investments in the
amount of $3.1 million was utilized primarily in operating activities as
described above. During the first quarter of 1997 the Company invested
$700,000 in equipment, furniture and internally developed software.
Financing activities provided cash of $25.8 million in the first quarter
of 1996. The increased cash flow during this period was generated by net
proceeds from the Company's initial public offering that closed in March
1996. During the first quarter of 1997 the Company used a net $524,000 in
financing activities, primarily for repayments of the line of credit, a note
payable to a related party and capital lease obligations.
The Company maintains a $3 million revolving bank line of credit to fund
cash requirements from time to time. Borrowings under such line of credit
bear interest at a rate per annum equal to the prime rate and are subject to
compliance by the Company with certain financial covenants. At March 31,
1997, the Company was in compliance with all such covenants and there was no
amount outstanding under such line of credit. The line of credit matures on
November 21, 1997.
The Company believes that the cash flows from operations, together with
existing cash balances, short term investments and the line of credit will be
sufficient to meet its working capital and capital expenditure requirements
for at least the next 12 months. Beyond that time, if cash flows from
operations
9
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and available borrowing from the line of credit are not sufficient to satisfy
its financing needs, the Company may seek additional funding through the sale
of its securities, including equity securities. There can be no assurance
that such funding can be obtained on favorable terms, if at all.
RISK FACTORS
RELIANCE ON KEY CUSTOMERS; TECHNOLOGY INDUSTRY CONSOLIDATION. The
Company has relied on a limited number of key customers for the majority of
its revenues. In 1996, the Company's two largest customers, IBM and
Microsoft, each accounted for over 10% of the Company's revenues and together
accounted for 29.8% of revenues. The Company expects that these two customers
will each account for over 10% of revenues in 1997 as well. Substantially all
of the Company's subscriptions and customer contracts are renewable annually
at the option of the Company's customers, although no obligation to renew
exists and a customer generally has no minimum purchase commitments
thereunder. In addition, there is significant consolidation of companies in
the technology industries served by the Company, a trend which the Company
believes will continue. Consolidation among the Company's top customers could
adversely affect aggregate customer budgets for the Company's products and
services. No assurances can be given that the Company will maintain its
existing customer base or that it will be able to attract new customers. The
loss of one or more of the Company's large customers or a significant
reduction in business from such customers, regardless of the reason, would
have a material adverse effect on the Company.
EXPANSION OF DIRECT SALES FORCE. The Company has historically relied on
customer referrals, supplemented by its own sales and marketing efforts, to
generate the majority of its revenue growth. Although the Company has a small
number of dedicated account representatives, it only recently began to
develop a formal sales management structure. As the Company develops new
products and services targeted at broader-based market segments, it intends
to continue to expand its sales force. The Company's plans for future growth
may depend in part on, among other things, its unproven ability to hire,
train, deploy, manage and retain an increasingly large direct sales force.
There can be no assurance that the Company will be able to develop or manage
such a sales force.
DEPENDENCE ON SUBSCRIPTION AND CONTRACT RENEWALS. In 1996, 84% of the
Company's revenues were derived from subscriptions to the Company's renewable
subscription-based products and contracts for renewable proprietary products.
The Company expects that a material portion of its revenues for the
foreseeable future will continue to be derived from such subscriptions and
contracts. Substantially all such subscriptions and customer contracts are
renewable annually at the option of the Company's customers, although no
obligation to renew exists and a customer generally has no minimum purchase
commitments thereunder. At March 31, 1997, one material contract which the
Company had expected to be renewed in the first quarter had not yet been
renewed. While the Company expects this contract to be renewed in the second
quarter, to the extent that other customers fail to renew or defer their
renewals from the quarter anticipated by the Company, the Company's quarterly
results may be materially adversely affected. The Company's ability to secure
renewals is dependent upon, among other things, its ability to deliver
consistent, high-quality and timely data. In addition, the marketing and
market research activities of the Company's customers are dependent on the
timing of their new product introductions, size of marketing budgets,
operating performance, industry and economic conditions and changes in
management or ownership. As a result of such factors, there can be no
assurance that the Company will be able to maintain its historically high
renewal rates. Any material decline in renewal rates from such levels would
have a material adverse effect on the Company's operating results.
FLUCTUATIONS IN OPERATING RESULTS; SEASONALITY. The Company's operating
results in any particular fiscal period have fluctuated in the past and will
likely fluctuate significantly in the future due to various factors. The
Company expects that revenues from customer registration products will
continue to increase during the remainder of 1997. However, such revenues
are primarily a function of the timing of customer shipments, which can be
difficult to forecast and over which the Company has no control. Any delay
in customer orders for the Company's customer registration products, or a
decrease in orders due to adoption by customers of custom software
applications, could have a material adverse effect on the Company's future
operating results. Substantially all revenues and expenses attributable to
the Company's CIMS product for a particular year are recognized when the
final study is completed and
10
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delivered, usually in the third quarter of that year. Delay in delivering the
final study in any given year could postpone recognition of such revenues and
expenses until the fourth quarter of such year, which would materially affect
operating results for such third and fourth quarters. Furthermore, all costs
related to CIMS are included in cost of revenues and none are allocated to
sales, general and administrative costs, which tends to reduce the Company's
third quarter gross margin below that of other quarters. Many of the
Company's customers operate in industry segments that are becoming
increasingly seasonal as technology vendors have increased their focus on
consumer markets, with sales in the fourth calendar quarter constituting a
growing portion of the annual sales of such customers. This may translate
into seasonal demand for the Company's products, particularly the customer
registration products. In addition, the Company's operating results may
fluctuate as a result of a variety of other factors, including the timing of
orders from customers, the size and timing of orders for customer
registration products, response rates on customer registration products,
delays in development and customer acceptance of custom software
applications, product or panel development expenses, new product or service
introductions or announcements by the Company or its competitors, levels of
market acceptance for new products and services, the hiring and training of
additional staff and customer demand for market research, as well as general
economic conditions. Because a significant portion of the Company's overhead
is fixed in the short term and because spending commitments must be made in
advance of revenue commitments by customers, the Company's results of
operations may be materially adversely affected in any particular quarter if
revenues fall below the Company's expectations. These factors, among others,
make it likely that in some future quarter the Company's operating results
may be below the expectations of securities analysts and investors, which
would have a material adverse effect on the market price of the Company's
common stock.
COMPETITION. Overall, the technology-focused market research industry is
highly competitive. The Company has traditionally competed directly with
relatively small, local providers of survey-based technology-focused market
research. The Company also competes directly with third party providers of
customer registration software (such as KAO Infosystems Company) as well as
vendors' own customer registration software. In addition, the Company
competes indirectly with significant providers of (i) analyst-based,
technology-focused market research (such as Gartner Group, Inc., META Group,
Inc. and Forrester Research, Inc.); (ii) survey-based, general market
research (such as A.C. Nielsen Company, NFO Research, Inc., Information
Resources Inc. and The NPD Group, Inc.); and (iii) analyst-based, general
business consulting. Although only a few of these competitors have to date
offered survey-based, technology-focused market research that competes
directly with the Company's products and services, many of these competitors
have substantially greater financial, information gathering and marketing
resources than the Company and could decide to increase their resource
commitments to the Company's market. Moreover, each of these companies
currently competes indirectly, if not directly, for funds available within
aggregate industry-wide market research budgets. There are few barriers to
entry into the Company's market, and the Company expects increased competition
in one or more market segments addressed by the Company, which could
adversely affect the Company's operating results through pricing pressure,
required increased marketing expenditures and loss of market share, among
other factors. There can be no assurance that the Company will continue to
compete successfully against existing or new competitors.
RAPID TECHNOLOGICAL CHANGE AND NEW PRODUCT INTRODUCTION. The Company's
customers compete in markets characterized by rapid, continual technological
change. The Company's success will depend in part upon its ability to
anticipate and keep pace with rapidly changing technology and to add new
products and services which address the increasingly sophisticated, rapidly
changing and demanding needs of its customers and their evolving market
strategies. In particular, the Company is expending significant resources to
develop its proprietary customer registration products to take
11
<PAGE>
advantage of certain market opportunities. However, such software products
may contain defects following customization or when new versions are
released; the Company has in the past discovered software defects in certain
of its products and may experience delays or lost revenue to correct such
defects in the future. In addition, the significant growth in the use of the
World Wide Web has created the opportunity to use the Internet as an
information transmission medium. Accordingly, the Company is expending
significant resources to develop Internet-based information collection tools.
There can be no assurance, however, that the Company will be successful in
developing and marketing, on a timely basis, these or other new or improved
products and services that adequately and competitively address the needs of
the marketplace. Any failure to continue to provide insightful and timely
data in a manner that meets rapidly changing market needs could materially
and adversely affect the Company's future operating results.
DATA COLLECTION RISKS. The Company currently collects information both
telephonically and electronically. In addition, certain of the Company's new
products and services involve the use of the Internet and commercial online
services to gather information from end users for processing and sale to
customers of the Company. A number of legislative initiatives exist
domestically and abroad that seek to regulate the telephonic or electronic
collection of data about persons. In addition, an increasing number of court
cases have been brought seeking damages and injunctive relief for actions
allegedly violating so-called "rights of privacy." The law in this area, both
statutory and case law, is highly unsettled. No assurance can be given,
therefore, that the Company will be allowed to continue to pursue existing or
proposed new products and services. In addition, the Company's ability to
provide timely and accurate market research to its customers depends on its
ability to collect large quantities of high quality data through interviews,
customer registrations, product satisfaction questionnaires and certain other
surveys. If receptivity to the Company's customer registration, interview and
survey methods by respondents declines, or for some other reason their
willingness to complete and return surveys, registrations, or other
information declines, or if the Company for any reason cannot rely on the
integrity of the data it receives, it would reduce the quantity and/or
quality of the data the Company seeks to disseminate and would have a
material adverse effect on the Company's ability to market and sell its
market research products and on its results of operations.
RISKS RELATED TO CIMS. CIMS is one of the leading databases of media
readership and viewership habits of both business and household technology
purchase influencers in the United States. Because many advertisers use CIMS
data as a key component in their media buying decisions and because many
media companies use CIMS data to promote their media properties, such data
can have a significant impact on advertiser demand for, and advertising rates
charged by, such media properties. In the past, it has not been unusual for
media companies with properties that have not performed well in the studies
to be dissatisfied with the results of the studies or the manner in which
such results have been used by their competitors. Furthermore, the Company in
1996 revised data from a study that was inaccurate due to software defects,
which it remedied and disclosed to its customers. Although neither media
company dissatisfaction nor the inaccurate study has resulted in litigation
against the Company, there can be no assurance that the Company will not face
future litigation as a result of media company dissatisfaction with CIMS or
the results thereof, and if initiated, that such litigation will not have a
material adverse effect on the Company's business, financial condition or
results of operations.
MANAGEMENT OF GROWTH; POSSIBLE ACQUISITIONS. Since inception, the
Company's growth has placed significant demands on the Company's management,
administrative, operational and financial resources. In order to manage its
growth, the Company will need to continue to implement and improve its
operational, financial and management information systems and continue to
expand, motivate and effectively manage an evolving and expanding workforce.
If the Company's management is unable to
12
<PAGE>
effectively manage under such circumstances, the quality of the Company's
products, its ability to retain key personnel and its results of operations
could be materially adversely affected. Furthermore, there can be no
assurance that the Company's business will continue to expand. The Company's
growth could be adversely affected by reductions in customers' spending on
market research or customer registration products, increased competition,
possible pricing pressures and other general economic trends. Although market
research expenditures by technology companies have increased in recent years
as such companies have adopted certain marketing strategies traditionally
utilized by consumer goods manufacturers, there can be no assurance that this
trend will continue or that technology companies will continue to rely on
externally-generated market research to enhance the marketing of their
products.
The Company hopes to achieve a portion of its future revenue growth, if
any, through acquisitions of complementary businesses, products or
technologies, although the Company currently has no commitments or agreements
with respect to any such acquisition. As part of this strategy, the Company
acquired IntelliQuest Communications Inc. in May 1996 and Zona Research Inc.
("Zona") in February 1997. The Company's management has limited experience
dealing with the issues of product, systems, personnel and business strategy
integration posed by acquisitions, and no assurance can be given that the
integration of the IntelliQuest Communications acquisition, the Zona
acquisition, or any possible future acquisitions will be managed without a
material adverse effect on the business of the Company. In addition, there
can be no assurance that any possible future acquisition will not dilute the
Company's earnings per share.
DEPENDENCE ON KEY PERSONNEL. The Company's future performance will
depend to a significant extent upon the efforts and abilities of key
personnel who have expertise in developing, interpreting and selling
survey-based information for technology markets. Although customer
relationships are managed at many levels in the Company, the loss of one or
more of IntelliQuest's corporate officers or senior managers could have an
adverse effect on the Company's business. The Company's success may also
depend on its ability to hire, train and retain skilled personnel in all
areas of its business. Competition for qualified personnel in the Company's
industry is intense, and many of the companies with which the Company
competes for qualified personnel have substantially greater financial and
other resources than the Company. Furthermore, competition for qualified
personnel can be expected to become more intense as competition in the
Company's industry increases. There can be no assurance that the Company will
be able to recruit, retain and motivate a sufficient number of qualified
personnel to compete successfully.
LIMITED PROTECTION OF PROPRIETARY SYSTEMS, SOFTWARE AND PROCEDURES. The
Company's success is in part dependent upon its proprietary software
technology, research methods, data analysis techniques, and internal systems
and procedures that it has developed specifically to serve customers in the
technology industry. The Company has no patents; consequently, it relies on a
combination of copyright, trademark and trade secret laws and employee and
third party non-disclosure agreements to protect its proprietary systems,
software and procedures. There can be no assurance that the steps taken by
the Company to protect its proprietary rights will be adequate to prevent
misappropriation of such
13
<PAGE>
rights or that third parties will not independently develop functionally
equivalent or superior systems, software or procedures. The Company believes
that its systems, software and procedures and other proprietary rights do not
infringe upon the proprietary rights of third parties. There can be no
assurance, however, that third parties will not assert infringement claims
against the Company in the future or that any such claims will not require
the Company to enter into materially adverse license arrangements or result
in protracted and costly litigation, regardless of the merits of such claims.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS. Revenues attributable to
international market research represented 20.2%, 28.3% and 27.8%,
respectively, of the Company's revenues for 1994, 1995 and 1996. The Company
expects that revenues from international market research will continue to
account for a significant portion of its revenues and intends to continue to
expand its international market research efforts. However, the Company's
international data collection operations are subject to numerous inherent
challenges and risks, including maintenance of an international data
collection network that adheres to the Company's quality standards,
fluctuations in exchange rates, foreign political and economic conditions,
tariffs and other trade barriers, longer accounts receivable collection
cycles and potentially adverse tax consequences. In addition, demand for the
Company's international market research depends on the international sales
and operations of its customers, which may increase or decrease over time.
The addition of market research coverage in new geographic territories can be
expected to require the commitment of considerable management and financial
resources and may negatively impact the Company's near-term results of
operations. Any material decline in the Company's ability to provide and
market timely, high-quality data that is consistent across international
markets would have a material adverse effect on the Company's results of
operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.8.1 Amendment To Lease dated September 18th 1996
10.8.2 Amendment To Lease dated January 17th 1997
11.1 Statement re: computation of per share earnings.
(b) Reports on Form 8-K
None.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATED May 15, 1997
IntelliQuest Information Group, Inc.
(Registrant)
By: /s/ Susan Georgen-Saad
------------------------------------
Susan Georgen-Saad
Chief Financial Officer
15
<PAGE>
Page 1 of 3
AMENDMENT TO LEASE
EXPANSION & EXTENSION
THIS AMENDMENT TO LEASE is made as of the 18th day of September, 1996, by and
between JMB GROUP TRUST III ("Landlord") and INTELLIQUEST, INC. ("Tenant")
R E C I T A L S:
A. Landlord and Tenant entered into a certain Lease (the original
"Lease") dated as of SEPT. 15, 1992, whereby Landlord leased to Tenant
certain premises (the original "Premises") on the FIRST AND SECOND (1ST &
2ND) floors of the certain building (the "Building") known as CIELO CENTER
BUILDING TWO and located at 1250 CAPITAL OF TEXAS HWY.S. AUSTIN, TEXAS 78746.
The Original Premises contain approximately 10,600 rentable square feet.
Landlord and Tenant also entered into Expansion Agreements dated 9/15/92 -
1,544 RSF, 9/15/92 - 582 RSF, 12/3/93 - 2,799 RSF, 11/29/93 - 1,693 RSF,
5/16/94 - 1,186 RSF, 4/24/95 - 3,633 RSF, and 1/24/96 - 1,786 RSF consisting
of 13,223 rentable square feet for a total leased of 23,823 rentable square
feet.
B. The parties desire to extend the Lease, all on the terms and
conditions set forth below.
C. The parties desire to relocate the Present Premises to BUILDING ONE,
SUITES 500 & 600 (the "Substitution Premises"), consisting of approximately
23,823 rentable square feet of space. The Substitution Premises and
Expansion Space defined below are sometimes herein referred to collectively
as the "Premises."
D. Tenant has requested to lease additional space in the "Property"
consisting of approximately 6,528 square feet of rentable space (the
"Expansion Space") and that the Lease be appropriately amended, and Landlord
is willing to do the same, all on the terms and conditions hereinafter set
forth whereupon the Premises will consist of a total of approximately 30,351
rentable square feet as described or shown on EXHIBIT A.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein and in the Lease contained, it is hereby agreed as follows:
1. DEFINED TERMS. Each capitalized term used as a defined term in this
Amendment but not otherwise defined in this Amendment shall have the same
meaning ascribed to such term in the Lease.
2. EXTENSION. The term of the Lease is hereby modified such that the
current term will expire and a new extended term ("Extended Term") will
commence on FEBRUARY 1, 1998 (the "Extension Date") with such Extension Term
continuing until FEBRUARY 28, 2002 (the "New Expiration Date"), unless sooner
terminated in accordance with the terms of the Lease or as provided below.
3. RELOCATION. On MARCH 1, 1997 or on the fifth day after such later
date on which the Substitution Premises have been substantially completed by
Landlord as provided in Exhibit B attached hereto (the "Relocation Date")
Tenant shall relocate to the Substitution Premises, effective as of the
relocation date, surrender the Present Premises which Landlord agreees to
accept and enter possession of pursuant to Article 13 of the certain Lease
dated 9/15/92, lease the Substitution Premises but all of the other terms and
conditions of the Lease currently in effect except as expressly modified
herein.
4. EXPANSION. Commencing on the Relocation Date, the Expansion Space
shall be added to and become a part of the Premises, subject to all of the
terms and conditions of the Lease currently in effect, except as modified
herein.
<PAGE>
Page 2 of 3
5. BASE RENTAL RATE:
ANNUAL BASE RENT MONTHLY BASE RENT
---------------- -----------------
3/1/97 - 2/28/98 $611,572.65 $50,964.39
3/1/98 - 2/28/99 631,300.80 52,608.40
3/1/99 - 2/29/00 644,958.75 53,746.56
3/1/00 - 2/28/01 666,204.45 55,517.04
3/1/01 - 2/28/02 687,450.15 57,287.51
The above table will be adjusted if relocation date is other than 3/1/97.
6. TENANT IMPROVEMENTS. Landlord shall provide a $16.00 per rentable
square foot allowance for construction, mechanical drawings, and tenant
improvements per the attached Work Letter Agreement, EXHIBIT B. As of the
date of this Amendment, to the best of Landlord's knowledge, the mechanical
and electrical systems in the substitution premises are in operable working
order. An additional amount of up to $3.00 per rentable square foot shall be
made available to Tenant, and if used, amortized into the Base Rental at 10%
interest per annum.
7. BASE YEAR. Commencing on 3/1/97, the new Base Year shall be 1997 with
a 7% Cap on controllable expenses. See EXHIBIT C.
8. RIGHT OF FIRST OFFER. Landlord shall give Tenant a Right of First
Offer on the space on floor two of Building One. Space will be co-terminous
with existing Lease and shall be at the then prevailing Rental Rate. See
EXHIBIT D.
9. SECURITY DEPOSIT. A security deposit of $21,905.96 is currently on
file with Landlord. Tenant shall deposit an additional $32,118.82 as
security upon Execution of this Amendment to Lease into an interest bearing
account. Provided Tenant is not in default under this Lease, at the end of
the 24th month, the $32,118.82 additional security deposit will be returned
to Tenant with interest. If additional tenant improvement dollars are
amortized in the Base Rent, the security deposit shall be increased by 10%
for every additional $1.00 per rentable square foot spent. By way of
example, if the total amount of $3.00 per square foot additional tenant
improvement was spent, the security deposit would be increased by $5,415.
10. PARKING. Tenant's covered parking in the garage shall be increased
to thirty four (34) spaces at the initial rate of $25 per space per month.
Two runner spaces at the back of Building One will be provided by Landlord at
the initial rate of $50 per space per month. Tenant will have the option to
exchange their previously held parking spaces with parking spaces held by
GSD&M.
11. STORAGE SPACE. Landlord will provide additional storage to Tenant at
prevailing market rate when available.
12. BROKER. Tenant represents that except for Heitman Properties of
Texas Ltd. ("Heitman")and CB Commercial, Tenant has not retained, contracted
or otherwise dealt with any real estate broker, salesperson or finder in
connection with this Amendment, and no such person initiated or participated
in the negotiation of this Amendment. Tenant shall indemnify and hold
Landlord and Heitman harmless from and against any and all liabilities and
claims for commissions and fees arising out of a breach of the foregoing
representation. Landlord agrees to pay all commissions on account of this
Amendment.
<PAGE>
Page 3 of 3
13. CONFLICT. If any conflict exists between the terms or provisions of
the Lease and the terms or provisions of this Amendment, the terms and
provisions of this Amendment shall govern and control.
14. EFFECT OF AMENDMENT. As amended by this Amendment, the Lease shall
remain in full force and effect and is ratified by Landlord and Tenant. This
Amendment contains the entire agreement of the parties with respect to the
Premises, and all preliminary negotiations with respect thereto are merged
into and superseded by this Amendment.
15. EXCULPATION OF LANDLORD AND HEITMAN. Notwithstanding anything to
the contrary contained in this Lease or in any exhibits, Riders or addenda
hereto attached (collectively the "Lease Documents"), it is expressly
understood and agreed by and between the parties hereto that: (a) the
recourse of Tenant or its successors or assigns against Landlord with respect
to the alleged breach by or on the part of Landlord of any representation,
warranty, covenant, undertaking or agreement contained in any of the Lease
Documents or otherwise arising out of Tenant's use of the Premises or the
Building (collectively, "Landlord's Lease Undertakings") shall extend only to
Landlord's interest in the real estate of which the Premises demised under
the Lease Documents are a part ("Landlord's Real Estate") and not to any
other assets of Landlord or its beneficiaries; and (b) except to the extent
of Landlord's interest in Landlord's Real Estate, no personal liability or
personal responsibility of any sort with respect to any of Landlord's Lease
Undertakings or any alleged breach thereof is assumed by, or shall at any
time be asserted or enforceable against, Landlord, its beneficiaries, Heitman
Capital Management Corporation, Heitman Properties Ltd. or Heitman
Properties of Texas Ltd., Inc., or against any of their respective directors,
officers, employees, agents, constituent partners, beneficiaries, trustees or
representatives.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
Lease to be duly executed and delivered as of the day and year first written
above.
TENANT:
INTELLIQUEST, INC.
By: ___________________________________
Its: ___________________________________
LANDLORD:
JMB GROUP TRUST III, an Illinois trust
By: HEITMAN/JMB INSTITUTIONAL ADVISORS, an Illinois general
partnership, agent
By: HEITMAN CAPITAL MANAGEMENT CORPORATION,
an Illinois corporation, managing partner
By: ___________________________________
Its: ___________________________________
<PAGE>
AMENDMENT TO LEASE
EXPANSION & EXTENSION
THIS AMENDMENT TO LEASE is made as of the 17th day of January, 1997, by and
between JMB GROUP TRUST III ("Landlord") and INTELLIQUEST, INC. ("Tenant")
R E C I T A L S:
A. Landlord and Tenant entered into a certain Lease (the original
"Lease") dated as of SEPT. 15, 1992, whereby Landlord leased to Tenant
certain premises (the original "Premises") on the FIRST AND SECOND (1ST &
2ND) floors of the certain building (the "Building") known as CIELO CENTER
BUILDING TWO and located at 1250 CAPITAL OF TEXAS HIGHWAY SOUTH, AUSTIN,
TEXAS 78746. The Original Premises contain approximately 10,600 rentable
square feet. Landlord and Tenant also entered into Expansion Agreements
dated 9/15/92 - 1,544 RSF, 9/15/92 - 582 RSF, 12/3/93 - 2,799 RSF, 11/29/93 -
1,693 RSF, 5/16/94 - 1,186 RSF, 4/24/95 - 3,633 RSF, and 1/24/96 - 1,786 RSF
consisting of 13,223 rentable square feet for a total leased of 23,823
rentable square feet. Landlord and Tenant also entered into an additional
Amendment to Lease dated SEPTEMBER 18, 1996 which expanded the Lease to a
total of 30,351 RENTABLE SQUARE FEET and extended the Lease to FEBRUARY 28,
2002 and relocated the space to BUILDING ONE, SUITES 500 AND 600.
B. Tenant has requested to exercise its right to increase the Tenant
Improvement Allowance and Rent according to EXHIBIT B-1A in the Amendment to
Lease dated SEPTEMBER 18, 1996.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein and in the Lease contained, it is hereby agreed as follows:
1. DEFINED TERMS. Each capitalized term used as a defined term in this
Amendment but not otherwise defined in this Amendment shall have the same
meaning ascribed to such term in the Lease.
2. The Tenant Improvement Allowance provided by Landlord shall be
increased from $16.00 per rentable square foot to $18.96 per rentable square
foot and shall include construction, mechanical drawings, and tenant
improvements per the Work Letter Agreement, EXHIBIT B in the Amendment to
Lease dated SEPTEMBER 18, 1996.
3. BASE RENTAL RATE:
The Base Rental Rate shall be adjusted FROM:
ANNUAL BASE RENT MONTHLY BASE RENT
---------------- -----------------
3/1/97 - 2/28/98 $611,572.65 $50,964.39
3/1/98 - 2/28/99 631,300.80 52,608.40
3/1/99 - 2/29/00 644,958.75 53,746.56
3/1/00 - 2/28/01 666,204.45 55,517.04
3/1/01 - 2/28/02 687,450.15 57,287.51
TO:
ANNUAL BASE RENT MONTHLY BASE RENT
---------------- -----------------
3/1/97 - 2/28/98 $637,371.00 $53,114.25
3/1/98 - 2/28/99 654,064.05 54,505.34
3/1/99 - 2/29/00 669,239.55 55,769.96
3/1/00 - 2/28/01 687,450.15 57,287.51
3/1/01 - 2/28/02 707,178.30 58,931.53
<PAGE>
4. SECURITY DEPOSIT. An additional security deposit of $5,390.34 shall
be deposited by Tenant into an interest bearing account. Provided Tenant is
not in default under this Lease, at the end of the 24th month, the additional
security deposit of $5,390.34 will be returned to Tenant with interest.
5. CONFLICT. If any conflict exists between the terms or provisions of
the Lease and the terms or provisions of this Amendment, the terms and
provisions of this Amendment shall govern and control.
6. EFFECT OF AMENDMENT. As amended by this Amendment, the Lease shall
remain in full force and effect and is ratified by Landlord and Tenant. This
Amendment contains the entire agreement of the parties with respect to the
Premises, and all preliminary negotiations with respect thereto are merged
into and superseded by this Amendment.
7. EXCULPATION OF LANDLORD AND HEITMAN. Notwithstanding anything to the
contrary contained in this Lease or in any exhibits, Riders or addenda hereto
attached (collectively the "Lease Documents"), it is expressly understood and
agreed by and between the parties hereto that: (a) the recourse of Tenant or
its successors or assigns against Landlord with respect to the alleged breach
by or on the part of Landlord of any representation, warranty, covenant,
undertaking or agreement contained in any of the Lease Documents or otherwise
arising out of Tenant's use of the Premises or the Building (collectively,
"Landlord's Lease Undertakings") shall extend only to Landlord's interest in
the real estate of which the Premises demised under the Lease Documents are a
part ("Landlord's Real Estate") and not to any other assets of Landlord or
its beneficiaries; and (b) except to the extent of Landlord's interest in
Landlord's Real Estate, no personal liability or personal responsibility of
any sort with respect to any of Landlord's Lease Undertakings or any alleged
breach thereof is assumed by, or shall at any time be asserted or enforceable
against, Landlord, its beneficiaries, Heitman Capital Management Corporation,
Heitman Properties Ltd. or Heitman Properties of Texas Ltd., Inc., or
against any of their respective directors, officers, employees, agents,
constituent partners, beneficiaries, trustees or representatives.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
Lease to be duly executed and delivered as of the day and year first written
above.
TENANT:
INTELLIQUEST, INC.
By: ___________________________________
Its: ___________________________________
LANDLORD:
JMB GROUP TRUST III, an Illinois trust
By: HEITMAN/JMB INSTITUTIONAL ADVISORS, an Illinois general
partnership, agent
By: HEITMAN CAPITAL MANAGEMENT CORPORATION,
an Illinois corporation, managing partner
By: ___________________________________
Its: ___________________________________
<PAGE>
Exhibit 11.1
INTELLIQUEST INFORMATION GROUP, INC.
STATEMENT REGARDING COMPUTATION OF NET INCOME PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS
ENDED
MARCH 31, 1997
--------------------
Net income available to common stockholders. . . . . . . $ 583
------
Weighted average shares outstanding:
Common stock . . . . . . . . . . . . . . . . . . . . . 8,185
Common stock issued upon exercise of options
and warrants . . . . . . . . . . . . . . . . . . . . 143
Weighted average common shares and equivalents . . . . . 8,328
Net income per share . . . . . . . . . . . . . . . . . . $ .07
------
- --------------------
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<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM UNITED
STATES SECURITIES AND EXCHANGE COMMISSION FORM 10Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,544
<SECURITIES> 47,941
<RECEIVABLES> 7,949
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 60,998
<PP&E> 4,948
<DEPRECIATION> 2,095
<TOTAL-ASSETS> 64,138
<CURRENT-LIABILITIES> 6,428
<BONDS> 0
0
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<COMMON> 1
<OTHER-SE> 57,673
<TOTAL-LIABILITY-AND-EQUITY> 64,138
<SALES> 0
<TOTAL-REVENUES> 7,484
<CGS> 0
<TOTAL-COSTS> 3,957
<OTHER-EXPENSES> 3,339
<LOSS-PROVISION> 25
<INTEREST-EXPENSE> 13
<INCOME-PRETAX> 651
<INCOME-TAX> 68
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