<PAGE>
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 June 30, 1994
[_] 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 0-11428
INFORMATION RESOURCES, INC.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 36-2947987
------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 North Clinton Street, Chicago, Illinois 60661
------------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 726-1221
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
-------------------
Common, $.01 par value per share
Preferred Stock Purchase Rights
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 [_]
The number of shares of the registrant's common stock, $.01 par value per share
outstanding, as of July 29, 1994, was 26,122,950.
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
INDEX
-----
<TABLE>
<CAPTION>
PAGE
NUMBER
------
PART I. FINANCIAL INFORMATION
- - ----------------------------------
<S> <C>
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results
of Operations 10
PART II. OTHER INFORMATION
- - ------------------------------
Item 1 - Legal Proceedings 14
Item 4 - Submission of Matters to Vote of Security Holders 14
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 16
</TABLE>
2
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1994 DECEMBER 31, 1993
- - ------ ------------- -----------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 10,292 $ 19,368
Accounts receivable - net 126,434 116,637
Deferred income taxes 10,129 9,205
Prepaid expenses and other 4,924 4,230
-------- --------
Total Current Assets 151,779 149,440
-------- --------
PROPERTY AND EQUIPMENT 138,156 124,185
Accumulated depreciation and amortization (79,422) (71,013)
-------- --------
58,734 53,172
INVESTMENTS 16,896 11,764
OTHER ASSETS
Deferred data procurement costs
(net of amortization) 80,764 71,131
Capitalized software costs - net 23,393 21,481
Goodwill - net 3,779 3,931
Other 15,081 16,596
-------- --------
123,017 113,139
-------- --------
$350,426 $327,515
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
CURRENT LIABILITIES
Current maturities of capitalized leases $ 1,762 $ 1,691
Bank borrowings 23,500 --
Accounts payable 16,366 14,512
Accrued expenses 20,246 21,521
Deferred revenue 16,980 13,844
Other 5,888 5,902
-------- --------
Total Current Liabilities 84,742 57,470
-------- --------
LONG-TERM CAPITALIZED LEASES 2,381 3,087
DEFERRED INCOME TAXES 26,760 31,040
DEFERRED GAIN 4,670 4,878
OTHER LIABILITIES 1,550 1,176
MINORITY INTEREST 438 1,202
STOCKHOLDERS' EQUITY
Preferred stock-authorized, 1,000,000 shares
$.01 par value - none issued -- --
Common stock - authorized 60,000,000 shares
in 1994 and in 1993, $.01 par value,
issued in 1994: 26,122,223 shares;
issued in 1993: 25,416,502 shares 261 254
Capital in excess of par value 165,231 157,972
Retained earnings 65,151 72,333
Cumulative translation adjustment (758) (1,897)
-------- --------
Total Stockholders' Equity 229,885 228,662
-------- --------
$350,426 $327,515
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ --------------------
JUNE 30 JUNE 30
------- -------
1994 1993 1994 1993
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenues $92,183 $82,110 $179,861 $157,760
Costs and expenses:
Operating expenses 79,200 62,860 151,781 122,220
Selling, general and
administrative expenses 10,842 8,684 21,413 16,344
Loss on disposition of assets -- -- -- 2,200
------- ------- -------- --------
90,042 71,544 173,194 140,764
------- ------- -------- --------
Operating profit 2,141 10,566 6,667 16,996
Other income (expense):
Interest income 83 315 234 692
Interest expense (556) (273) (771) (578)
Litigation provision -- -- (5,000) --
Other - net 162 (10) 281 100
------- ------- -------- --------
(311) 32 (5,256) 214
------- ------- -------- --------
Equity in loss of affiliated companies (2,071) (284) (4,329) (596)
------- ------- -------- --------
Earnings (loss) before income taxes,
minority interest and cumulative effect
of change in accounting principle (241) 10,314 (2,918) 16,614
Income tax expense (benefit) 9 4,334 (886) 7,004
------- ------- -------- --------
Earnings (loss) before minority interest
and cumulative effect of change in
accounting principle (250) 5,980 (2,032) 9,610
Minority interest 262 479 756 776
------- ------- -------- --------
Earnings (loss) before cumulative effect
of change in accounting principle 12 6,459 (1,276) 10,386
Cumulative effect on prior years of
change in accounting principle:
Income taxes -- -- -- 1,864
Revenue recognition -- -- (6,594) --
------- ------- -------- --------
Net earnings (loss) $ 12 $ 6,459 $ (7,870) $ 12,250
======= ======= ======== ========
Earnings (loss) per common and
common equivalent share:
Before cumulative effect of accounting change $ -- $ .24 $ (.05) $ .39
Cumulative effect of accounting change -- -- (.26) .07
------- ------- -------- --------
Net earnings (loss) $ -- $ .24 $ (.31) $ .46
======= ======= ======== ========
Weighted average common and common
equivalent shares 26,091 26,738 25,835 26,606
======= ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
-------------------------
1994 1993
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (7,870) $ 12,250
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization 13,847 10,507
Amortization of deferred data procurement costs 31,033 23,434
Deferred income taxes (861) 3,361
Equity in loss of affiliated companies 4,329 596
Minority interest (756) (776)
Cumulative effect of change in revenue recognition 6,594 --
Cumulative effect of adoption of FAS 109 -- (1,864)
Litigation provision 5,000 --
Stock option and other compensation expense 2,091 --
Other 337 (129)
Change in assets and liabilities:
Increase in current assets (20,828) (13,764)
Increase in other assets (528) (16)
Increase (Decrease) in current liabilities (4,248) 5,166
Increase in other liabilities 374 100
-------- --------
Total adjustments 36,384 26,615
-------- --------
Net cash provided by operating activities 28,514 38,865
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment - net (13,021) (11,701)
Software costs (6,146) (4,761)
Deferred data procurement costs (40,239) (32,234)
Net assets acquired in business acquisition -- (1,252)
Investment in joint ventures (2,469) (16,677)
-------- --------
Net cash used in investing activities (61,875) (66,625)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of capitalized leases (864) (756)
Net bank borrowings 23,500 --
Proceeds from exercise of stock options 763 6,296
Capital contributions from minority interest 132 606
-------- --------
Net cash provided by financing activities 23,531 6,146
EFFECT OF EXCHANGE RATE ON CASH 754 (253)
-------- --------
NET DECREASE IN CASH (9,076) (21,867)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 19,368 53,593
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,292 $ 31,726
======== ========
</TABLE>
(continued)
5
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT'D.
UNAUDITED
(IN THOUSANDS)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
------------------------
<S> <C> <C>
1994 1993
----- ------
CASH PAID (REFUNDED) DURING THE PERIOD FOR:
Interest $ 770 $ 584
Income taxes (refund) $(393) $2,770
</TABLE>
In March 1994, the Company and Datos, C.A., formed a joint venture company,
Datos Information Resources, Inc. The Company contributed $5.8 million of stock
for a 49% interest in the joint venture.
The accompanying notes are an integral part of these statements.
6
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments (consisting only
of normal recurring accruals) necessary to present fairly the financial
position as of June 30, 1994 and December 31, 1993 and the results of
operations for the three months and the six months ended June 30, 1994 and
June 30, 1993 and cash flows for the six months ended June 30, 1994 and
June 30, 1993.
2. These financial statements are presented in accordance with the
requirements of Form 10-Q and consequently may not include all disclosures
normally required by generally accepted accounting principles or those
normally made in the Company's Annual Report on Form 10-K. Accordingly,
the financial statements and related notes in the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1993 should be read in
conjunction with the accompanying condensed consolidated financial
statements.
3. Earnings (loss) per common and common equivalent share is based on the
weighted average number of shares of common stock and common stock
equivalents outstanding. The effect of dilution from the exercise of stock
options is considered in the computation of earnings (loss) per common and
common equivalent share by the use of the modified treasury stock method
for the quarters ended June 30, 1994 and 1993 and March 31, 1994 and 1993,
since options outstanding exceeded 20% of the shares of common stock
outstanding. In applying the modified treasury stock method for the period
ended June 30, 1994 and March 31, 1994, stock options were not included as
they were anti-dilutive.
4. Effective January 1, 1994, the Company changed its method of recognizing
revenue on InfoScan, PromotionScan and BehaviorScan products whereby
revenue is recognized over the term of the contract on a straight-line
basis. Previously, the Company recognized a portion of the initial
contract revenue in the period between client commitment and either the
start of forward data or the test commencement in order to match revenue
with the costs associated with the efforts to set up and customize client
reports and furnish the initial historical data (backdata) with the
remaining revenue recognized ratably over the initial contract term.
The Company believes this change is preferable because the new accounting
policy is consistent with the Company's change in business strategies to
emphasize value added service to existing clients. Other factors also
having a bearing on this decision include:
(a) Set-up and backdata activities associated with new customers as a
percentage of total IRI's business have decreased and are expected to
decrease further in the future as customers continue to renew and
extend their existing contracts.
(b) The Company is expanding its business internationally through
acquisitions and has found that contract revenues for information
services have been accounted for on a straight-line basis by many of
the acquired companies. As a result, the implementation of the
Company's accounting policies is difficult because the accounting
systems of many foreign companies often do not routinely provide
adequate cost information.
The cumulative effect of this change for periods prior to January 1, 1994
of $6,594,000 (after reduction for the income tax effect of $4,440,000) is
shown separately in the condensed consolidated statement of operations. The
effect of the change on the quarter ended March 31, 1994 was to reduce the
loss, before the cumulative effect, by approximately $455,000 after tax
($.02 per share).
7
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D.
(UNAUDITED)
The pro forma amounts summarized below have been adjusted for the effect of
retroactive application on revenues and the change in minority interest and
related income taxes that would have been made had the new method been in
effect. The actual amounts for each quarter and year are being reported for
comparative purposes.
<TABLE>
<CAPTION>
Three Months Three Months Three Months Three Months
Ended Ended Ended Ended
March 31, 1993 June 30, 1993 Sept. 30, 1993 Dec. 31, 1993
-------------- ------------- -------------- -------------
(In Thousands, except per share data)
<S> <C> <C> <C> <C>
Revenues
- Actual $75,650 $82,110 $87,784 $89,000
======= ======= ======= =======
- Pro forma $77,905 $82,562 $86,322 $87,812
======= ======= ======= =======
Earnings before
cumulative effect of
accounting change
- Actual $ 3,927 $ 6,459 $ 7,358 $ 4,471
======= ======= ======= =======
- Pro forma $ 5,277 $ 6,781 $ 6,570 $ 3,821
======= ======= ======= =======
Earnings per
common and common
equivalent share before
cumulative effect of
accounting change
- Actual $ .15 $ .24 $ .27 $ .16
======= ======= ======= =======
- Pro forma $ .20 $ .25 $ .24 $ .14
======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------
(In Thousands, except per share data)
1993 1992 1991 1990
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues
- Actual $334,544 $276,362 $222,689 $179,789
======== ======== ======== ========
- Pro forma $334,601 $279,187 $213,926 $178,552
======== ======== ======== ========
Earnings before
cumulative effect of
accounting change
- Actual $ 22,215 $ 19,247 $ 15,386 $ 5,668
======== ======== ======== ========
- Pro forma $ 22,449 $ 20,971 $ 10,058 $ 4,916
======== ======== ======== ========
Earnings per
common and common
equivalent share before
cumulative effect of
accounting change
- Actual $ .82 $ .78 $ .66 $ .29
======== ======== ======== ========
- Pro forma $ .83 $ .85 $ .43 $ .25
======== ======== ======== ========
</TABLE>
8
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D.
(UNAUDITED)
5. In the first quarter of 1994, the Company established a pre-tax reserve of
$5.0 million related to shareholder litigation.
6. In April 1994, the Company and the privately held Asia-based SRG Holdings
Limited, agreed to cancel plans to merge. The Company recorded a pre-tax
charge of $1.4 million related to expenses incurred in connection with the
cancelled merger. The pre-tax effect of the charge was reflected as of
March 31, 1994 in the Company's selling, general and administrative
expenses.
7. In April 1994, the Company signed an agreement in principle with Tokyo-
based Mitsui & Co., Ltd., to form a joint venture named Information
Resources Japan, Ltd., to provide efficient consumer response (ECR)
initiatives, syndicated market tracking services, logistics and business
intelligence software products and value-added consulting in Japan. The
joint venture is expected to begin operations on October 1, 1994.
9
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
relationship to revenue of certain items in the Condensed Consolidated
Statements of Operations, and the percentage changes from period to period in
such items.
<TABLE>
<CAPTION>
PERCENTAGE INCREASE/
(DECREASE)
PERCENTAGE OF REVENUE OVER PRIOR PERIOD
------------------------------ ------------------------
THREE MONTHS SIX MONTHS THREE MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30 JUNE 30 1994/ 1994/
1994 1993 1994 1993 1993 1993
------ ------ ------ ------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0% 12.3 14.0
Operating expenses 85.9 76.5 84.4 77.4 26.0 24.2
Selling, general & admin. 11.8 10.6 11.9 10.4 24.9 31.0
Loss on disposition of assets -- -- -- 1.4 -- *
Operating profit 2.3 12.9 3.7 10.8 * *
Other income (expense) * * * * * *
Litigation provision -- -- (2.8) -- -- *
Equity in loss of affiliates (2.2) (.3) (2.4) (.4) * *
Income tax expense (benefit) -- 5.3 (.5) 4.4 * *
Minority interest * * * * * *
Cumulative effect of
accounting change -- -- (3.7) 1.2 -- *
Net earnings (loss) -- 7.9 (4.4) 7.8 * *
</TABLE>
* Not meaningful
REVENUES
The Company's revenue from operations for the six months ended June 30, 1994
increased 14.0% to $179.9 million compared to $157.8 million for the first six
months of 1993. Revenue for the three month period ended June 30, 1994
increased 12.3% to $92.2 million compared to $82.1 million for the same period
of 1993. The revenue growth resulted principally from growth in InfoScan
revenues and, to a lesser extent, increased revenues from software support
services.
10
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.
Revenues from the Company's InfoScan product line for the six months ended June
30, 1994 were $99.7 million, an increase of 18.7% over the same period in 1993.
InfoScan revenues for the second quarter of 1994 were $51.5 million, an increase
of 16.3% over the same period in 1993. The growth in InfoScan's revenues was
principally the result of increased utilization of InfoScan services by existing
clients. The Company's competitor in the information services business, the A.C.
Nielsen Company, introduced unusual price competition late in the fourth quarter
1993 which has continued into 1994. This has had the effect of limiting the
Company's ability to achieve domestic InfoScan revenue growth through new
clients switching from the A.C. Nielsen Company to the Company for scanner-based
market tracking services. Management has no reason to expect that the A.C.
Nielsen Company will discontinue its current pricing practices. Management is
investigating whether pricing and other practices by the A.C. Nielsen Company
are anticompetitive, and, if so, what appropriate remedies might be sought.
The Company recently implemented a change in its domestic InfoScan strategy
which management believes will better focus the Company's resources on
delivering added value, and thereby build revenue, with its existing clients.
Revenues from the Company's software support services were $49.2 million, an
increase of 5.4% over the same six month period in 1993. Second quarter 1994
revenues were $25.0 million, increasing 6.3% over the second quarter of 1993.
The revenue growth in software support services was less than prior quarters of
1993 which the Company attributes to delays in the introduction of, and
transition to, the Windows versions for certain of the Company's software
products.
BehaviorScan and related testing services revenues for the six months ended
June 30, 1994 were $11.0 million compared to $10.5 million for the same period
in 1993. For the three months ended June 30, 1994 BehaviorScan revenues were
$5.3 million compared to $5.6 million for the same period in 1993.
OPERATING EXPENSES
Operating expenses for the six months ended June 30, 1994 were $151.8 million,
an increase of 24.2% over the same period in 1993. Operating expenses for the
second quarter of 1993 increased 26.0% to $79.2 million from $62.9 million for
the same period in 1993. These increases were primarily due to increases in
compensation, amortization of deferred data procurement costs, and other costs
related to increases in the client service staff and computer operations
required to deliver InfoScan services and other information services which
include InfoScan NMRA Limited Joint Venture (NMRA). Client service staffing
increased in support of current and planned future revenue increases, and
computer operations increased in support of the Company's "OMEGA" production re-
engineering and cost reduction program and support for current revenue growth.
Deferred data procurement costs increased primarily due to the Company's
expansion of its data collection into convenience store outlets and its
continuing expansion through NMRA of data collection in the United Kingdom. In
software support services, increased staff and computer hardware and software
expansion to support current and planned revenue growth also contributed to
increases in operating expenses.
11
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the six months ended June 30,
1994 and 1993 were $21.4 million and $16.3 million, respectively, an increase of
31.0%. SG&A expenses for the second quarter of 1994 were $10.8 million, an
increase of 24.9% over the same period of 1993. The increases in SG&A expenses
are attributable to increased spending in marketing, recruiting, employee
development, training and professional fees associated with the Company's
international expansion, and to a lesser extent, increases in compensation and
related staffing costs associated with the Company's growth in both domestic and
international operations. In the first quarter of 1994, the Company recorded
expenses of $1.4 million incurred in connection with the cancelled merger with
Asia-based SRG Holdings Limited.
OTHER INCOME (EXPENSE)
Other expense increased to $5.3 million for the six months ended June 30, 1994.
For the same period in 1993, the Company recorded other income of $214,000. The
overall increase was due to interest expense on bank borrowings and a pre-tax
provision of $5.0 million related to shareholder litigation.
EQUITY IN LOSS OF AFFILIATED COMPANIES
Equity in loss of affiliated companies reflects losses recognized related to
equity investments. The increase resulted principally from the equity losses
recognized by the Company related to the Company's investments in France and
Holland as the Company continued to expand its InfoScan services in these
countries.
INCOME TAXES
The Company's effective tax rate was 30.4% and 42.2% for the six months ended
June 30, 1994 and 1993, respectively. The tax rate on operations including
minority interest was 41.0% and 40.3% for the six months ended June 30, 1994 and
1993, respectively.
CUMULATIVE EFFECT ON PRIOR YEARS OF CHANGE IN ACCOUNTING PRINCIPLE
Effective January 1, 1994, the Company changed its method of recognizing
revenue on InfoScan, PromotionScan and BehaviorScan products. Revenue now is
recognized over the term of the contract on a straight-line basis. Previously,
the Company recognized a portion of the initial contract revenue in the period
between client commitment and either the start of forward data or the test
commencement. The cumulative effect of this change as of January 1, 1994 is a
$6.6 million after-tax charge.
The Company adopted Statement of Financial Accounting Standards No. 109 -
Accounting for Income Taxes effective January 1, 1993. The cumulative effect of
this change at January 1, 1993 was to recognize a tax benefit of $1,864,000.
12
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.
NET EARNINGS (LOSS)
As a result of the factors described above, net earnings (loss), were
essentially break-even for the second quarter and $(7.9) million loss for the
first six months of 1994 versus 1993 second quarter and year-to-date net income
of $6.5 million and $12.3 million, respectively. Net earnings (loss) per share
was break-even and $(.31) for 1994 second quarter and first six months,
respectively, versus $.24 and $.46 for the comparable periods of 1993.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 30, 1994 was $67.0 million, a decrease of $25.0 million
from December 31, 1993. The decrease results from non-cash charges of $11.2
million relating to the change in the method of recognizing revenue and a $5.0
million litigation provision. The decrease is also due to continued expansion
of the Company's business.
The Company increased its bank borrowings under its existing credit facility to
$23.5 million at the end of the second quarter of 1994. The Company anticipates
continued borrowings under its credit facility to meet its cash needs through
the end of the year. During May 1994, the Company replaced its $25 million
credit facility with a new $50 million credit facility ($30 million after 1994).
The Company anticipates that it will have sufficient funds from its cash
balances, internally generated funds and its bank credit facility to satisfy
working capital needs through the end of 1994. The Company is currently
exploring several alternatives available to it to satisfy its potential working
capital needs beyond 1994. These include (without limitation) additional bank
borrowings, investments in the Company by strategic partners, issuance of long
term debt, and sale of preferred or common equity in public or private
transactions.
13
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
As previously disclosed in the Company's Annual Report on Form 10-K for
the year ended December 31, 1993, the Company was involved in a
shareholder class action suit filed by certain shareholders in 1989. On
June 7, 1994, a federal district court jury returned a unanimous verdict
in favor of the Company and the four individual defendants. The
plaintiffs in such action are seeking to overturn such decision though the
Company does not believe the plaintiffs will prevail.
Item 4. Submission of Matters to Vote of Security Holders.
(a) The annual meeting of Stockholders of the Company was held May 26,
1994.
(b) Without solicitation in opposition, the nominees listed in the proxy
statement soliciting proxies were elected as directors to serve for a
three-year term ending in 1997 as follows:
<TABLE>
<CAPTION>
Name Votes For Votes Withheld Broker Non-Votes
---- ---------- -------------- ----------------
<S> <C> <C> <C>
Gerald J. Eskin, Ph.D. 21,302,759 85,411 --
John D. C. Little, Ph.D. 21,302,759 85,411 --
George G. Montgomery, Jr. 21,302,759 85,411 --
Glen L. Urban, Ph.D. 21,303,959 84,211 --
</TABLE>
Following is the name of each other director whose term of office as a director
continued after the meeting for terms ending in either 1995 or 1996: Gian M.
Fulgoni, James G. Andress, Leonard M. Lodish, Edith W. Martin, Thomas W. Wilson,
Jr., Edwin E. Epstein, Edward E. Lucente, Jeffrey P. Stamen and Thomas M.
Walker.
14
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION (CONT'D.)
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits
Exhibit No. Description of Exhibit Page
----------- ---------------------- ----
11 Computations of earnings (loss) per common
and common equivalent share (filed herewith). EF
b. The Registrant has not filed any reports on Form 8-K during the quarter
for which this report is filed.
15
<PAGE>
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
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, Registrant's principal financial officer, thereunto duly
authorized.
INFORMATION RESOURCES, INC.
---------------------------
(Registrant)
/s/Thomas M. Walker
------------------------------------------
Thomas M. Walker
Executive Vice President
and Chief Financial Officer
(Authorized officer of Registrant and
principal financial officer)
August 15, 1994
16
<PAGE>
EXHIBIT 11
INFORMATION RESOURCES, INC. AND SUBSIDIARIES
COMPUTATIONS OF EARNINGS (LOSS) PER COMMON
AND COMMON EQUIVALENT SHARE
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, 1994 ENDED JUNE 30, 1994
<S> <C> <C>
Earnings (loss) for the period (A)
Before cumulative effect of accounting change: $ 12,000 $ (1,276,000)
Cumulative effect of accounting change -- (6,594,000)
----------- ------------
Net earnings (loss) $ 12,000 $ (7,870,000)
=========== ============
Weighted common shares outstanding during
the period 26,091,000 25,835,000
Net additional shares in excess of 20% of
outstanding issuable pursuant to
modified treasury stock method -- --
----------- ------------
Total common and common equivalent shares (B) 26,091,000 25,835,000
=========== ============
Earnings (loss) per common and common equivalent
shares (A)/(B):
Before cumulative effect of accounting change $ -- $ (.05)
Cumulative effect of accounting change -- (.26)
----------- ------------
Net earnings (loss) $ -- $ (.31)
=========== ============
</TABLE>
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, 1993 ENDED JUNE 30, 1993
FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Earnings for the period (A)
Before cumulative effect of accounting change: $ 6,459,000 $ 6,459,000 $10,386,000 $10,386,000
Cumulative effect of accounting change -- -- 1,864,000 1,864,000
----------- ----------- ----------- -----------
Net earnings $ 6,459,000 $ 6,459,000 $12,250,000 $12,250,000
=========== =========== =========== ===========
Weighted common shares outstanding during
the period 24,868,000 24,868,000 24,736,000 24,736,000
Net additional shares in excess of 20% of
outstanding issuable pursuant to
modified treasury stock method 1,721,000 1,870,000 1,638,000 1,870,000
----------- ----------- ----------- -----------
Total common and common equivalent shares (B) 26,589,000 26,738,000 26,374,000 26,606,000
=========== =========== =========== ===========
Earnings per common and common equivalent
shares (A)/(B):
Before cumulative effect of accounting change $ .24 $ .24 $ .39 $ .39
Cumulative effect of accounting change -- -- .07 .07
----------- ----------- ----------- -----------
Net earnings $ .24 $ .24 $ .46 $ .46
=========== =========== =========== ===========
</TABLE>
