<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-14348
METROMAIL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
(STATE OF INCORPORATION)
13-3015410
(I.R.S. EMPLOYER IDENTIFICATION NO.)
360 EAST 22ND STREET, LOMBARD, IL 60148-4989
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (630) 620-3300
Indicate by check mark whether the registrant (1) has filed all reports
required 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.
Common Stock, par value $.01 per share: 22,518,557 shares outstanding as of
September 30, 1997.
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<PAGE>
INDEX
<TABLE>
<S> <C>
PART I--FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated and Combined Statements of Operations for the three month
and
nine month periods ended September 30, 1997 and 1996................... 1
Consolidated and Combined Balance Sheets as of September 30, 1997 and
December 31, 1996...................................................... 2
Consolidated and Combined Statements of Cash Flows for the nine month
periods ended September 30, 1997 and 1996.............................. 3
Notes to Consolidated and Combined Financial Statements................. 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................... 4
Item 3. Quantitative and Qualitative Disclosures About Market Risk........ *
PART II--OTHER INFORMATION
Item 1. Legal Proceedings................................................. 8
Item 2. Changes in Securities............................................. *
Item 3. Defaults Upon Senior Securities................................... *
Item 4. Submission of Matters to a Vote of Security Holders............... *
Item 5. Other Information................................................. 8
Item 6. Exhibits and Reports on Form 8-K.................................. 8
</TABLE>
- --------
* No response to this item is included herein for the reason that it is
inapplicable or the answer to such item is negative.
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS.
METROMAIL CORPORATION AND AFFILIATES
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- ----------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Direct marketing services..... $ 55,419 $ 34,028 $ 132,232 $ 98,133
Database marketing services... 19,063 20,792 53,411 54,540
Reference services............ 17,097 13,410 45,545 39,272
---------- ---------- ---------- ----------
Total net sales........... 91,579 68,230 231,188 191,945
---------- ---------- ---------- ----------
Database and production costs. 74,508 37,345 160,604 108,796
Amortization of goodwill...... 2,054 1,894 5,870 5,673
Selling expenses.............. 15,757 11,942 42,071 37,332
General and administrative
expenses..................... 8,968 5,463 22,624 17,137
Provisions for doubtful
accounts..................... 812 693 1,828 1,676
---------- ---------- ---------- ----------
Earnings (loss) from
operations............... (10,520) 10,893 (1,809) 21,331
Interest expense--related
party........................ -- -- -- 10,178
Interest expense.............. 957 256 1,488 587
Other (income)--net........... (297) (97) (565) (142)
---------- ---------- ---------- ----------
Earnings (loss) before
income taxes............. (11,180) 10,734 (2,732) 10,708
Income tax expense (benefit).. (4,101) 4,787 481 6,164
---------- ---------- ---------- ----------
Net income (loss)......... $ (7,079) $ 5,947 $ (3,213) $ 4,544
========== ========== ========== ==========
Net income (loss) per
share.................... $ (0.31) $ 0.27 $ (0.14) $ 0.20
========== ========== ========== ==========
Weighted average number of
shares of common stock and
common stock equivalents
outstanding.................. 22,487,000 22,434,000 22,487,000 22,434,000
========== ========== ========== ==========
</TABLE>
See accompanying Notes to Consolidated and Combined Financial Statements.
1
<PAGE>
METROMAIL CORPORATION AND AFFILIATES
CONSOLIDATED AND COMBINED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
ASSETS 1997 1996
- ------ ------------- ------------
<S> <C> <C>
Cash and equivalents................................ $ 8,462 $ 18,530
Receivables, less sales allowances and allowances
for doubtful accounts of
$4,688 in 1997 and $4,461 in 1996.................. 104,791 99,219
Inventories......................................... 6,525 6,722
Prepaid expenses.................................... 10,436 8,552
Current and deferred income taxes................... 2,020 793
-------- --------
Total current assets............................ 132,234 133,816
Net property, plant and equipment, at cost, less
accumulated depreciation of
$58,684 in 1997 and $50,701 in 1996................ 50,882 45,313
Goodwill and other intangibles, net of accumulated
amortization of $100,007 in 1997 and $86,372 in
1996............................................... 285,201 255,799
Deferred income taxes............................... 10,393 --
Other assets........................................ 16,058 8,478
-------- --------
Total assets.................................... $494,768 $443,406
======== ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
<S> <C> <C>
Accounts payable.................................... $ 4,255 $ 6,608
Accrued compensation................................ 8,559 8,540
Deferred revenue.................................... 9,286 9,050
Other accrued liabilities........................... 28,800 28,560
-------- --------
Total current liabilities....................... 50,900 52,758
Long-term debt...................................... 65,338 21,468
Deferred income taxes............................... 1,608 1,591
Other noncurrent liabilities........................ 12,308 7,041
-------- --------
Total noncurrent liabilities.................... 79,254 30,100
Shareholders' equity
Common stock, $.01 par value, authorized
75,000,000 shares; 23,136,431 shares issued,
22,518,557 outstanding in 1997; 22,437,000 shares
issued, 22,311,900 outstanding in 1996. Preferred
stock, $.01 par value, authorized 20,000,000
shares; no shares issued......................... 231 224
Treasury stock (617,874 shares in 1997 and 125,100
shares in 1996).................................. (11,864) (2,146)
Unearned compensation--restricted stock........... (584) --
Additional paid-in capital........................ 392,083 374,832
Retained deficit (includes cumulative adjustment
for currency translation of $326 in 1997 and $3
in 1996)......................................... (15,252) (12,362)
-------- --------
Total shareholders' equity...................... 364,614 360,548
-------- --------
Total liabilities and shareholders' equity...... $494,768 $443,406
======== ========
</TABLE>
See accompanying Notes to Consolidated and Combined Financial Statements.
2
<PAGE>
METROMAIL CORPORATION AND AFFILIATES
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------
1997 1996
-------- --------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss) from operations....................... $ (3,213) $ 4,544
Depreciation of fixed assets and amortization of
intangibles............................................ 19,596 14,369
Amortization of goodwill................................ 5,870 5,673
Write-off of acquired in-process research and
development............................................ 23,000 --
Other--net.............................................. 277 --
Net change in assets and liabilities.................... (16,747) (8,616)
-------- --------
Net cash provided by operating activities........... 28,783 15,970
Cash flows used for investing activities:
Capital expenditures.................................... (26,873) (23,967)
Acquisitions and other investments...................... (45,605) --
-------- --------
Net cash used for investing activities.............. (72,478) (23,967)
Cash flows provided by (used for) financing activities:
Borrowings and advances from related parties............ -- 131,592
Repayments of borrowings and advances from related
parties................................................ -- (380,084)
Change in borrowings and capital lease obligations...... 43,022 14,755
Proceeds from initial public offering................... -- 266,414
Proceeds from employee stock purchase and option plans.. 447 --
Purchase of treasury stock.............................. (10,165) --
-------- --------
Net cash provided by financing activities........... 33,304 32,677
-------- --------
Effect of exchange rate changes on cash and cash
equivalents.............................................. 323 154
-------- --------
Net increase (decrease) in cash and equivalents........... (10,068) 24,834
Cash and equivalents at beginning of period......... 18,530 --
-------- --------
Cash and equivalents at end of period............... $ 8,462 $ 24,834
======== ========
The changes in assets and liabilities, net of balances
assumed through acquisitions,
were as follows:
Decrease (increase) in assets:
Receivables--net...................................... $ (2,913) $ (8,546)
Inventories--net...................................... 197 (1,597)
Prepaid expenses...................................... (1,751) (4,430)
Current and deferred income taxes..................... (1,227) --
Deferred income taxes................................. (10,393) (28)
Other assets.......................................... 2,691 (1,974)
Increase (decrease) in liabilities:
Accounts payable...................................... (3,213) 264
Accrued compensation.................................. (588) 1,003
Deferred revenue...................................... 236 145
Other accrued liabilities............................. (2,601) 5,898
Deferred income taxes................................. 17 --
Other noncurrent liabilities.......................... 2,798 649
-------- --------
Net change in assets and liabilities................ $(16,747) $ (8,616)
======== ========
</TABLE>
See accompanying Notes to Consolidated and Combined Financial Statements.
3
<PAGE>
METROMAIL CORPORATION AND AFFILIATES
NOTES TO CONSOLIDATED AND COMBINED
FINANCIAL STATEMENTS
NOTE 1.
The consolidated and combined financial statements included herein are
unaudited and have been prepared by Metromail Corporation (the "Company") to
conform with the requirements applicable to this Quarterly Report on Form 10-
Q. Certain information and disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted as permitted by such requirements. However, the
Company believes that the disclosures made are adequate to make the
information presented not misleading. These consolidated and combined
financial statements should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 1996.
The consolidated and combined financial statements included herein reflect,
in the opinion of the Company, all adjustments (which include only normal,
recurring adjustments) necessary to present fairly the financial information
for such periods.
NOTE 2.
On June 19, 1996, the Company completed an initial public offering of
13,800,000 shares of Common Stock (the "IPO"). Prior to the IPO, the Company
had been a wholly-owned subsidiary of R.R. Donnelley & Sons Company ("R.R.
Donnelley"). Approximately $247.4 million of the net proceeds of $267.4
million from the IPO were used to repay the amounts owed by the Company to a
subsidiary of R.R. Donnelley and the amounts owed by a subsidiary of the
Company under a revolving credit facility.
As a result of the IPO, the number of outstanding shares of Common Stock
increased to 22,434,000 shares from 8,600,000 shares outstanding prior to the
IPO. Additional paid-in capital was increased to $379.1 million primarily due
to the proceeds from the IPO.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RECENT ACQUISITIONS
The Company completed three acquisitions during the three months ended
September 30, 1997: (i) the acquisition of Atlantes Corporation ("Atlantes"),
a company that obtains, processes and manages information from product
registration questionnaires, which closed on July 1, 1997 (the "Atlantes
Acquisition"); (ii) the acquisition of Marketing Information Technologies,
Inc. ("MIT"), a database marketing and strategic marketing services and
consulting firm, which closed on August 21, 1997 (the "MIT Acquisition"); and
(iii) the acquisition of Saxe, Inc. ("Saxe"), a provider of object-oriented,
open-architecture software solutions and databases for database marketing
purposes, which closed on September 26, 1997 (the "Saxe Acquisition"). In the
Atlantes Acquisition, the Company issued 698,431 shares of common stock and
paid $2.9 million in cash to Atlantes holders. Up to an additional $12.5
million in the form of common stock could be paid to Atlantes shareholders in
the 1999-2002 time period based upon achievement of specified performance
targets. The Company paid cash in the MIT Acquisition and the Saxe
Acquisition, and the Company may be required to make additional cash payments
during the 1998-2000 time period in connection with the MIT Acquisition
depending on achievement of specified performance targets.
RESULTS OF OPERATIONS
Three months ended September 30, 1997 compared to three months ended
September 30, 1996
Total net sales increased 34.2% to $91.6 million for the third quarter of
1997 from $68.2 million for the third quarter of 1996. This $23.4 million
increase was comprised of a $21.4 million, or 62.9%, increase in direct
4
<PAGE>
marketing sales, a $1.7 million, or 8.3%, decrease in database marketing sales
(previously included in direct marketing sales) and a $3.7 million, or 27.5%,
increase in reference sales. Within direct marketing services, list sales in
the U.S. grew 49.1% to $25.0 million, including the initial fees related to a
new multi-year contract for data usage. Lettershop sales grew 17.0% to $17.2
million and U.K. sales grew 40.0% to $12.5 million, primarily because of
survey information sales. Direct marketing sales would have increased 34.8% in
the third quarter of 1997 as compared to the third quarter of 1996 if adjusted
for the U.K. survey which contributed $9.5 million in the third quarter of
1997 (there being no comparable U.K. survey sales in the third quarter of 1996
because the 1996 U.K. surveys were conducted in the second and fourth quarters
of 1996, see "Outlook" below). Database marketing sales, which includes sales
of software and list enhancement services, decreased from the third quarter of
1996 due to a 4.5%, or $.6 million, decrease in sales of list enhancement
services and a 27.7% decrease, to $4.8 million, in sales of the Company's
AnalytiX(R) and Explore(TM) software products, reflecting the longer sales
cycle being experienced by the Company for its database marketing software
products. The growth in reference sales was primarily due to a 60.7% increase
in sales of the Company's on-line services, primarily National Directory
Assistance ("NDA(R)"). NDA(R) sales included a portion of the revenues
associated with an extended contract. Sales in the Cole(R) directory business
were flat compared to the prior year quarter.
Database and production costs primarily represent expenses incurred to
maintain the Company's database and to customize data for client use,
including salaries and wages, annual costs to acquire data and amortization of
capitalized data costs, facility costs and depreciation of equipment. Database
and production costs increased for the three months ended September 30, 1997
to $74.5 million, or 81.4% as a percentage of total net sales, from $37.3
million for the three months ended September 30, 1996, or 54.7% as a
percentage of total net sales. Approximately $23.0 million of the increase, or
25.1% of total net sales, was due to the write-off of in process research and
development associated with the allocation of purchase price for the Saxe
Acquisition (the "In Process R&D Write-Off"). In addition, the increase was
attributable to $4.1 million of increased costs for the Company's U.K.
operations (primarily costs associated with the production of the third
quarter survey), increased volume in the lettershops and increased staffing
and facility costs to support expected full-year growth. The increase as a
percentage of total net sales was primarily due to the In Process R&D Write-
Off and increased costs incurred for the increased volume at the lettershops,
which have higher production costs as a percentage of total net sales compared
to the other operations of the Company.
Amortization of goodwill increased 8.4% to $2.1 million due to the
amortization associated with the acquisitions completed in the third quarter
of 1997. See "Recent Acquisitions" above.
Selling expenses of $15.8 million increased $3.8 million, or 31.9%, from the
prior year quarter, and decreased as a percentage of total net sales to 17.2%
from 17.5% in the prior year period. The increase in the amount was due to the
selling expense associated with the completion of the U.K. survey and the
increase in sales across the Company. The improvement in selling expense as a
percentage of total net sales was due to increased efficiencies across the
sales organizations.
General and administrative expenses increased $3.5 million, or 64.2%, from
the three months ended September 30, 1996 primarily due to costs associated
with the completion of the U.K. survey.
The loss from operations of $10.5 million for the three months ended
September 30, 1997 represents a decrease from $10.9 million of earnings from
operations for the three months ended September 30, 1996 due primarily to the
In Process R&D Write-Off.
The Company's tax expense decreased $8.8 million compared to the third
quarter of 1996 due to the decrease in earnings before income taxes. The
effective tax rate exceeds the U.S. federal statutory rate primarily due to
the effect of non-deductible goodwill amortization.
The net loss of $7.1 million for the third quarter of 1997 represents a
decrease from $5.9 million of net income for the third quarter of 1996 as a
result of the foregoing factors.
5
<PAGE>
Nine months ended September 30, 1997 compared to nine months ended September
30, 1996
Total net sales increased 20.4% to $231.2 million for the nine months ended
September 30, 1997 from $191.9 million for the nine months ended September 30,
1996. This $39.3 million increase was comprised of a $34.1 million, or 34.7%,
increase in direct marketing sales, a $1.1 million, or 2.1%, decrease in
database marketing sales (previously included in direct marketing sales) and a
$6.3 million, or 16.0%, increase in reference sales. Within direct marketing
services, list sales in the U.S. grew 32.5% to $62.7 million, including the
initial fees related to a new multi-year contract for data usage. Lettershop
sales grew 31.1% to $49.6 million and U.K. sales grew 48.7% due to increased
survey information sales and list database sales. Database marketing services
sales decreased $1.1 million from the first nine months of 1996 due to a 5.1%,
or $1.9 million, decrease in sales of list enhancement services and no growth
in sales of the Company's AnalytiX(R) and Explore(TM) software products,
reflecting the longer sales cycle being experienced by the Company for its
database marketing software products. The growth in reference sales was
primarily due to a 39.0% increase in sales of the Company's on-line services,
primarily NDA(R). NDA(R) sales included a portion of the revenues associated
with an extended contract. Sales in the Cole(R) directory business were flat
compared to the prior year period.
Database and production costs increased for the nine months ended September
30, 1997 to $160.6 million, or 69.5% as a percentage of total net sales, from
$108.8 million for the nine months ended September 30, 1996, or 56.7% as a
percentage of total net sales. More than 40% of the increase was due to the In
Process R&D Write-Off. Higher costs were also due to increased volume in the
lettershops, U.K. survey-related costs, higher facility and staff costs to
support the Company's database marketing software products and higher costs to
support the growth of the Company's on-line services business. The increase as
a percentage of total net sales was primarily due to the In Process R&D Write-
Off and increased costs incurred for the increased volume at the lettershops,
which have higher production costs as a percentage of total net sales compared
to the other operations of the Company.
Selling expense of $42.1 million decreased as a percentage of total net
sales to 18.2% from 19.5% in the prior year period but increased 12.7% over
the first nine months of 1996. The increased expense over the prior year was
due to increased selling expenses for the U.K. survey business and the
increase in sales across the Company.
General and administrative expenses increased $5.5 million, or 32.0%, from
the nine months ended September 30, 1996 primarily due to costs associated
with the Company's U.K. survey in the third quarter and increased costs
associated with being a stand alone public company. None of the stand alone
costs were incurred in the first half of 1996.
The loss from operations of $1.8 million for the nine months ended September
30, 1997 represents a decrease of $23.0 million from $21.3 million of earnings
from operations for the nine months ended September j30, 1996 due to the
foregoing factors, particularly the In Process R&D Write-Off.
Interest expense-related party, primarily paid to a subsidiary of R. R.
Donnelley, of $10.2 million for the nine months ended September 30, 1996, was
zero for the nine months ended September 30, 1997 due to the elimination of
the related party debt subsequent to completion of the IPO.
Interest expense of $1.5 million for the nine months ended September 30,
1997, was $.9 million higher than the nine months ended September 30, 1996 due
to increased borrowings to fund the stock repurchase program and certain of
the acquisitions completed in 1997. See "Recent Acquisitions" above and
"Changes in Financial Condition" below.
The Company's tax expense decreased $5.7 million compared to the first nine
months of 1996 due to the decrease in earnings before income taxes. The
effective tax rate exceeds the U.S. federal statutory rate primarily due to
the effect of non-deductible goodwill amortization.
The net loss of $3.2 million represents a decrease of $7.8 million compared
to net income of $4.5 million for the first nine months of 1996 as a result of
the foregoing factors.
6
<PAGE>
CHANGES IN FINANCIAL CONDITION
For the first nine months of 1997, net cash provided by operating activities
of $28.8 million increased $12.8 million over the prior year period. The
Company believes that cash flows from operating activities will be sufficient
to fund its ongoing operations on a long-term basis, as well as continued
growth and investment. The Company expects the credit agreement described
below to be available for seasonal cash needs and acquisitions.
Capital expenditures and investments for the first nine months of 1997
totaled $72.5 million, an increase of $48.5 million over the first nine months
of 1996, primarily due to the Saxe Acquisition, the MIT Acquisition and the
acquisition of 516,400 shares of Common Stock for $10.2 million under the
Company's stock repurchase program, which shares substantially offset shares
issued in the Atlantes Acquisition.
The Company amended its existing credit agreement on August 18, 1997. Under
the amended credit agreement (the "Amended Credit Agreement"), the Company is
entitled to borrow up to $100 million on a revolving credit basis. Borrowings
under the Amended Credit Agreement mature in 2002 and bear interest (i) at the
prime rate announced by the bank acting as agent for the syndicate, (ii) at
the LIBOR rate plus, depending on the Company's leverage ratio and fixed
charge coverage ratio, up to 42.5 basis points per annum, or (iii) at a rate
determined by competitive bidding. At September 30, 1997 there was $65.3
million outstanding under the Amended Credit Agreement resulting primarily
from the Saxe Acquisition and the MIT Acquisition and the purchase of treasury
stock.
OUTLOOK
Historically, the Company's net sales build quarterly through the year, with
the majority of net sales being achieved in the second half of a given year.
In 1994, 1995 and 1996, total net sales of the Company during the second half
of the year constituted 56.3%, 55.3% and 56.0%, respectively, of total net
sales for the year.
Many of the Company's expenses are incurred ratably throughout the year and,
when combined with the quarterly revenue pattern discussed above, result
historically in fluctuations in earnings from operations. Earnings from
operations are strongest in the second half of the year. Earnings from
operations in the second half of 1994, 1995 and 1996 constituted 70.4%, 55.6%
and 72.0%, respectively, of total earnings from operations for the year. Had
the deferral of approximately $2.0 million of expenses from the second quarter
of 1995 to the third and fourth quarters of 1995 (resulting in a $2.0 million
negative impact on earnings from operations for the second half of 1995) not
taken place, the Company estimates that the percentage of earnings from
operations for the second half of 1995 would have been approximately 62.1% of
the full year's earnings from operations.
Management expects the historical patterns of larger second half portions of
the year's sales and operating earnings (after excluding the effect of the In
Process R&D Write-Off) to occur again in 1997. Furthermore, in 1997, the U.K.
operations distributed only one survey (primarily in the third quarter 1997)
compared to two in 1996 (second quarter and fourth quarter 1997) reflecting
the new nine month production cycle for this portion of the U.K. operations'
business. The 1996 surveys produced $7.4 million and $9.8 million of revenue
in the second and fourth quarters of 1996, respectively. The 1997 survey
produced $9.5 million of revenue in the third quarter of 1997 and is expected
to produce a modest amount of revenue in the fourth quarter of 1997. 1998
results are expected to reflect two surveys conducted by the Company's U.K.
operations.
The Company is required to adopt Statement of Financial Accounting Standards
(SFAS) No. 128 on Earnings per Share and SFAS No. 129 on Capital Structure for
both interim and annual periods ending after December 15, 1997. Earlier
adoption is prohibited. The expected impact of the adoption of these standards
is not expected to be material to the Company's financial statements.
See "Item 5. Other Information" below for a discussion of the risks,
uncertainties and other factors that could cause actual results to be
materially different from those described above.
7
<PAGE>
PART-II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company has previously reported that it is a party to a lawsuit filed in
the District Court of Travis County, Texas, entitled Beverly J. Dennis v.
Metromail Corporation et al., Cause No. 96-04451. Refer to Part II, Item 1 of
the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1997 and to Part I, Item 3 of the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 for additional disclosure regarding this lawsuit.
ITEM 5. OTHER INFORMATION.
Certain statements in this filing and elsewhere (such as in other filings by
the Company with the Securities and Exchange Commission, press releases,
presentations by the Company or its management and oral statements) may
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties, and other factors which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include
(i) changes in, or adoption of new, federal or state laws or regulations or
guidelines of self-regulatory organizations such as the Direct Marketing
Association; (ii) the lack of predictability of the Company's sales resulting,
in part, from the absence of long-term contracts with, and fluctuations in the
direct marketing activities of, the Company's clients; (iii) fluctuations in
the Company's operating results affected, in part, by the seasonal
characteristics of its business; (iv) competition with current or new
competitors; (v) the need to periodically implement technological improvements
in the Company's systems; and (vi) the need to develop and introduce new or
enhanced software products. Refer to the Company's Registration Statement (No.
333-2042) under "Risk Factors," and Part II, Item 7 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 for a more detailed
description of such factors.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
<TABLE>
<C> <S>
27 Financial Data Schedule.
</TABLE>
(b) No Current Report on Form 8-K was filed by the Company during the third
quarter of 1997.
8
<PAGE>
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.
METROMAIL CORPORATION
/s/ Kenneth A. Glowacki
By __________________________________
Kenneth A. Glowacki
Vice President, Finance
(Authorized Officer and
Chief Accounting Officer)
Date: November 12, 1997
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the Form 10-Q quarterly report for the quarter ended September 30, 1997, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 8,462
<SECURITIES> 0
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0
0
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<EPS-PRIMARY> (.14)
<EPS-DILUTED> (.14)
</TABLE>
