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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 JUNE 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 13-3015410
(STATE OF INCORPORATION) (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: 22,494,931 shares outstanding as of
July 31, 1997.
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<PAGE>
INDEX
<TABLE>
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PAGE
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Part I--Financial Information
Item 1. Financial Statements
Consolidated and Combined Statements of Operations for the three month
and six month periods ended June 30, 1997 and 1996................... 1
Consolidated and Combined Balance Sheets as of June 30, 1997 and
December 31, 1996.................................................... 2
Consolidated and Combined Statements of Cash Flows for the six month
period ended June 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............................................... 7
Item 2. Changes in Securities........................................... *
Item 3. Defaults Upon Senior Securities................................. *
Item 4. Submission of Matters to a Vote of Security Holders............. 8
Item 5. Other Information............................................... 8
Item 6. Exhibits and Reports on Form 8-K................................ 9
</TABLE>
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*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 SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
---------------- ----------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Direct marketing sales...................... $41,664 $37,121 $76,813 $64,105
Database marketing sales.................... 17,809 18,838 34,348 33,748
Reference sales............................. 14,336 13,387 28,448 25,862
------- ------- ------- -------
Total net sales......................... 73,809 69,346 139,609 123,715
------- ------- ------- -------
Database and production costs............... 44,918 37,845 86,096 71,451
Amortization of goodwill.................... 1,908 1,890 3,816 3,779
Selling expenses............................ 13,497 13,569 26,314 25,390
General and administrative expenses......... 7,634 6,765 13,656 11,674
Provision for doubtful accounts............. 528 564 1,016 983
------- ------- ------- -------
Earnings from operations................ 5,324 8,713 8,711 10,438
Interest expense--related party............. -- 4,833 -- 10,178
Interest expense............................ 240 271 531 331
Other (income)--net......................... (151) (40) (268) (45)
------- ------- ------- -------
Earnings (loss) before income taxes..... 5,235 3,649 8,448 (26)
Income tax expense.......................... 2,632 2,165 4,582 1,377
------- ------- ------- -------
Net income (loss)....................... $ 2,603 $ 1,484 $ 3,866 $(1,403)
======= ======= ======= =======
Net income (loss) per share............. $ .12 $ .07 $ .17 $ (.06)
======= ======= ======= =======
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Weighted average number of shares
of
common stock and common stock
equivalents outstanding.......... 22,289,000 22,434,000 22,289,000 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>
JUNE 30, DECEMBER 31,
ASSETS 1997 1996
- ------ -------- ------------
<S> <C> <C>
Cash and equivalents.................................... $ 12,160 $ 18,530
Receivables, less sales allowances and allowances for
doubtful accounts of $4,086
in 1997 and $4,461 in 1996............................. 95,071 99,219
Inventories............................................. 6,924 6,722
Prepaid expenses........................................ 20,211 8,552
Deferred income taxes................................... 793 793
-------- --------
Total current assets................................ 135,159 133,816
Net property, plant and equipment, at cost, less
accumulated depreciation of
$54,019 in 1997 and $50,701 in 1996.................... 46,542 45,313
Goodwill and other intangibles, net of accumulated
amortization of $92,136 in
1997 and $86,372 in 1996............................... 257,062 255,799
Other assets............................................ 7,517 8,478
-------- --------
Total assets........................................ $446,280 $443,406
======== ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
<S> <C> <C>
Accounts payable........................................ $ 4,732 $ 6,608
Accrued compensation.................................... 6,658 8,540
Deferred revenue........................................ 9,096 9,050
Other accrued liabilities............................... 32,232 28,560
-------- --------
Total current liabilities........................... 52,718 52,758
Long-term debt.......................................... 21,729 21,468
Deferred income taxes................................... 1,593 1,591
Other noncurrent liabilities............................ 6,598 7,041
-------- --------
Total noncurrent liabilities........................ 29,920 30,100
Shareholders' equity:
Common stock, $.01 par value, authorized 75,000,000
shares; issued
22,437,000. Preferred stock, $.01 par value,
authorized 20,000,000 shares; no
shares issued........................................ 224 224
Treasury stock (180,100 shares June 30, 1997 and
125,100 shares
December 31, 1996)................................... (3,137) (2,146)
Unearned compensation--restricted stock............... (584) --
Additional paid-in capital............................ 375,590 374,832
Retained deficit (includes cumulative adjustment for
currency translation of $48 in 1997 and $3 in 1996).. (8,451) (12,362)
-------- --------
Total shareholders' equity.......................... 363,642 360,548
-------- --------
Total liabilities and shareholders' equity.......... $446,280 $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>
SIX MONTHS ENDED
JUNE 30,
-----------------
1997 1996
------- --------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net income (loss) from operations........................ $ 3,866 $ (1,403)
Depreciation and amortization of intangibles............. 11,968 9,162
Amortization of goodwill................................. 3,816 3,780
Other--net............................................... 277 --
Net change in assets and liabilities..................... (7,233) 3,331
------- --------
Net cash provided by operating activities............ 12,694 14,870
Cash flows used for investing activities:
Capital expenditures..................................... (16,429) (15,406)
Other investments including acquisitions, net of cash.... (1,950) --
------- --------
Net cash used for investing activities............... (18,379) (15,406)
Cash flows provided by (used for) financing activities:
Borrowings and advances from related parties............. -- 129,210
Repayments of borrowings and advances from related
parties................................................. -- (380,084)
Change in borrowings..................................... 261 (1,849)
Proceeds from initial public offering.................... -- 267,500
Purchase of treasury stock............................... (991) --
------- --------
Net cash provided by (used for) financing activities. (730) 14,777
------- --------
Effect of exchange rate changes on cash and cash
equivalents............................................... 45 98
------- --------
Net increase (decrease) in cash and equivalents............ (6,370) 14,339
Cash and equivalents at beginning of period.......... 18,530 --
------- --------
Cash and equivalents at end of period................ $12,160 $ 14,339
======= ========
The changes in assets and liabilities, net of balances
assumed through acquisitions were as follows:
Decrease (increase) in assets:
Receivables--net....................................... 4,148 (700)
Inventories--net....................................... (202) (1,266)
Prepaid expenses....................................... (11,659) 1,920
Other assets........................................... 961 (1,335)
Increase (decrease) in liabilities:
Accounts payable....................................... (1,876) 1,911
Accrued compensation................................... (1,882) 701
Deferred revenue....................................... 46 (450)
Other accrued liabilities.............................. 3,672 1,901
Deferred income taxes.................................. 2 --
Other noncurrent liabilities........................... (443) 649
------- --------
Net change in assets and liabilities................. $(7,233) $ 3,331
======= ========
</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.
RESULTS OF OPERATIONS
Three months ended June 30, 1997 compared to three months ended June 30, 1996
Total net sales increased 6.4% to $73.8 million for the second quarter of
1997 from $69.3 million for the second quarter of 1996. This $4.5 million
increase was comprised of a $4.5 million, or 12.2%, increase in direct
marketing sales; a $1.0 million, or 5.5%, decrease in database marketing sales
(previously included in direct marketing sales); and a $0.9 million, or 7.1%,
increase in reference sales. Comparability of second quarter net sales was
affected by the planned shift in 1997 of U.K. survey information sales from
the second quarter to the second half, primarily the third quarter. If second
quarter 1996 sales are adjusted to remove sales of the U.K. survey information
of $7.4 million, total net sales would have increased 19.0% and direct
marketing sales would have increased 40% in the second quarter. Within direct
marketing services, sales of list services in the U.S. grew 24.2% to $20.5
million and sales of lettershop services grew 47.0% to $17.2 million. These
increases were partially offset by a $5.0 million decrease resulting from the
planned timing shift of the 1997 U.K. survey information sales. Database
marketing services, which include software sales and list enhancement
services, decreased from the second quarter of 1996 due to an 11.4%, or $1.5
million, decrease in sales of list enhancement services, partially offset by a
7.8% increase to $6.1 million in sales of the Company's AnalytiX(R) and
Explore(TM) software products. The growth in reference sales was primarily due
to a 21.3% increase in sales of the Company's MetroNet(R) and National
Directory Assistance ("NDA(R)") on-line services while sales in the directory
business were flat compared to the prior year quarter.
4
<PAGE>
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 June 30, 1997 to
$44.9 million, or 60.9% as a percentage of total net sales, from $37.8 million
for the three months ended June 30, 1996, or 54.6% as a percentage of total
net sales. Approximately $4.1 million of the increase was due to increased
volume in the lettershops and $1.8 million was due to increased staffing and
facility costs to support the growth of the Company's software business and
online services. The estimated one-time costs for consolidation of the
Company's data processing centers in Lombard, Illinois and Lincoln, Nebraska
into a single center in Lombard, accounted for $0.7 million of the increase.
Increased salary costs across all operations accounted for the balance of the
increase, offset by expense reductions of $1.8 million resulting from the
shift of the U.K. survey to the second half, primarily the third quarter. The
increase as a percentage of total net sales was primarily due to the 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, and the estimated data center consolidation costs.
Selling expense of $13.5 million was essentially unchanged from the prior
year quarter, and decreased as a percentage of total net sales to 18.3% from
19.6% in the prior year period. Selling expense increases across most
operations were offset by a $1.1 million decrease for the U.K. operation
related to the planned shift of the U.K. survey to the second half. 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 $0.9 million, or 12.8%, from
the three months ended June 30, 1996 primarily due to increased staff costs
associated with being a stand alone public company and certain costs
associated with acquisition activity. None of these costs were incurred in the
second quarter of 1996.
Earnings from operations of $5.3 million decreased $3.4 million for the
three months ended June 30, 1997 from $8.7 million for the three months ended
June 30, 1996 due to the foregoing factors.
Interest expense-related party, primarily paid to a subsidiary of R. R.
Donnelley, of $4.8 million for the three months ended June 30, 1996, was zero
for the three months ended June 30, 1997 due to the elimination of the related
party debt subsequent to completion of the IPO.
The Company's tax expense increased $0.5 million compared to the second
quarter of 1996 due to the increase 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.
Net income increased $1.1 million to $2.6 million compared to $1.5 million
for the second quarter of 1996 as a result of the foregoing factors.
Six months ended June 30, 1997 compared to six months ended June 30, 1996
Total net sales increased 12.9% to $139.6 million for the six months ended
June 30, 1997 from $123.7 million for the six months ended June 30, 1996. This
$15.9 million increase was comprised of a $12.7 million, or 19.8%, increase in
direct marketing sales; a $0.6 million, or 1.8%, increase in database
marketing sales (previously included in direct marketing sales); and a $2.6
million, or 10.0%, increase in reference sales. Comparability of net sales for
the six months was affected by the planned shift in 1997 of U.K. survey
information sales from the second quarter to the second half, primarily the
third quarter. If sales in the six months ended June 30, 1996 are adjusted to
remove sales of U.K. survey information, which contributed $7.4 million, total
net sales would have increased 20.0% and direct marketing sales would have
increased 35.4% in the first six months of 1997. Within direct marketing
services, sales of list services in the U.S. grew 23.2% to $37.7 million,
sales of lettershop services grew 39.7% to $32.4 million and U.K. sales
decreased $3.7 million due to the planned timing shift of the 1997 survey
discussed above. Database marketing services increased $0.6 million from the
first half of 1996 due to a 20.8% increase to $11.2 million for the Company's
AnalytiX(R) and Explore(TM)
5
<PAGE>
software products, offset by 5.3%, or $1.3 million, decrease in list
enhancement services. The growth in reference sales was primarily due to a
25.0% increase in sales of the Company's MetroNet(R) and NDA(R) on-line
services, while sales in the directory business were flat compared to the
prior year first half.
Database and production costs increased for the six months ended June 30,
1997 to $86.1 million, or 61.7% as a percentage of total net sales, from $71.5
million for the six months ended June 30, 1996, or 57.8% as a percentage of
total net sales. Approximately $7.2 million of the increase was due to
increased volume in the lettershops and $4.3 million was due to increased
staffing and facility costs to support the growth of the Company's software
business and online services. Increased salary costs across all operations
accounted for the balance of the increase, offset by expense reductions of
$1.5 million resulting from the shift of the U.K. survey to the second half,
primarily the third quarter. The increase as a percentage of total net sales
was primarily due to the 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 $26.3 million decreased from the prior year first half,
and decreased as a percentage of total net sales to 18.9% from 20.5% in the
prior year period. The decrease from the prior year was due to the planned
timing shift of expenses for the U.K. survey. 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 $2.0 million, or 17.1%, from
the six months ended June 30, 1996 primarily due to increased staff costs
associated with being a stand alone public company. None of these costs were
incurred in the first half of 1996.
Earnings from operations of $8.7 million decreased $1.7 million for the six
months ended June 30, 1997 from $10.4 million for the six months ended June
30, 1996 due to the foregoing factors.
Interest expense-related party, primarily paid to a subsidiary of R. R.
Donnelley, of $10.2 million for the six months ended June 30, 1996, was zero
for the six months ended June 30, 1997 due to the elimination of the related
party debt subsequent to completion of the IPO.
The Company's tax expense increased $3.2 million compared to the first half
of 1996 due to the increase 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.
Net income increased $5.3 million to $3.9 million compared to a loss of $1.4
million for the first half of 1996 as a result of the foregoing factors.
CHANGES IN FINANCIAL CONDITION
For the first six months of 1997, operating cash flow (net income plus
depreciation and amortization) of $19.7 million increased $8.2 million over
the prior year period. The Company believes that cash flows from operations
will be sufficient to fund its ongoing operations on a long-term basis, as
well as continued growth and investment.
Capital expenditures and investments for the first six months of 1997
totaled $18.4 million, an increase of $3.0 million over the first six months
of 1996, primarily due to a minority investment in a database company.
The Company has entered into a credit agreement with a syndicate of banks
(the "Credit Agreement") under which it is entitled to borrow up to $45
million on a revolving credit basis. Borrowings under the Credit Agreement
mature in 2001 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
June 30, 1997 there was $21.7 million outstanding under the credit agreement
resulting from the repayment of related party debt and borrowings to provide
operating funds for the Company's U.K. operations. The Company expects to
increase this revolving credit facility to $100 million and extend its term by
one year, primarily to provide operating flexibility and to enable it to fund
additional investments, acquisitions and stock repurchases.
6
<PAGE>
Under the terms of a stock repurchase program approved by the Board of
Directors in December 1996, the Company repurchased 180,100 shares of Common
Stock for $1.0 million during the six months ended June 30, 1997 and 461,400
shares for $9.2 million during July 1997.
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 to occur again in 1997. Furthermore,
in 1997, the U.K. operations will distribute only one survey (in the second
half, primarily the third quarter 1997) compared to two in 1996 (second
quarter and fourth quarter) reflecting the new nine month production cycle for
this portion of the U.K. operation's business. The 1996 surveys produced $7.4
million and $9.8 million of revenue in the second and fourth quarters of 1996,
respectively. Accordingly, the second quarter of 1997 did not include any U.K.
survey revenue, but included additional revenue from the sale of information
from the U.K. database. The third quarter of 1997 will include U.K. survey
revenue, as well as additional information sales, compared to the third
quarter of 1996 which contains no U.K. survey revenue. Although the third
quarter will include a substantial portion of the 1997 U.K. survey revenue, a
portion will be completed in the fourth quarter resulting in revenue in the
fourth quarter. Revenues in 1998 are expected to include two surveys for the
Company's U.K. operations.
On July 1, 1997, the Company completed its acquisition of Atlantes
Corporation by issuing 698,431 shares of common stock and paying approximately
$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 expects the acquisition to positively contribute to the Company's
sales, operating earnings and cash flow in the second half of 1997 and to have
a neutral effect on earnings per share in 1997 and a positive effect on
earnings per share in 1998.
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.
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.
7
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on April 24, 1997. The
matters voted upon at the Annual Meeting were:
<TABLE>
<C> <S>
1. Election of Director 19,196,009 For
720,710 Withheld
Jonathan P. Ward Authority
0 Broker
Non-Votes
2. Approval of the Amended and Restated 18,632,986 For
Metromail Corporation 1996 Stock Incentive Plan 364,695 Against
2,140
Abstentions
916,878 Broker
Non-Votes
3. Approval of the Metromail Corporation 1997 18,819,571 For
Employee Stock Purchase Plan 179,410 Against
840
Abstentions
916,878 Broker
Non-Votes
</TABLE>
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 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;
(vi) the need to develop and introduce new or enhanced software products; and
(vii) factors affecting Atlantes' results of operations or the Company's plans
regarding the implementation of the Atlantes acquisition. 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.
8
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
<TABLE>
<CAPTION>
<C> <S> <C>
Amended and Restated Metromail Corporation 1996 Stock Incentive
10.1* Plan.(1)
10.2* Metromail Corporation 1997 Employee Stock Purchase Plan.(2)
27 Financial Data Schedule.
</TABLE>
(b) No Current Report on Form 8-K was filed by the Company during the second
quarter of 1997.
- --------
* Denotes management contract or compensatory plan or arrangement.
(1) Filed as an Exhibit to the Company's Registration Statement on Form S-8
(No. 333-28143) that became effective on May 30, 1997, and incorporated
herein by reference.
(2) Filed as an Exhibit to the Company's Registration Statement on Form S-8
(No. 333-28137) that became effective on May 30, 1997, and incorporated
herein by reference.
9
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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: August 13, 1997
10
<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 June 30, 1997, and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 12,160
<SECURITIES> 0
<RECEIVABLES> 99,157
<ALLOWANCES> (4,086)
<INVENTORY> 6,924
<CURRENT-ASSETS> 135,159
<PP&E> 100,561
<DEPRECIATION> (54,019)
<TOTAL-ASSETS> 446,280
<CURRENT-LIABILITIES> 52,718
<BONDS> 0
<COMMON> 224
0
0
<OTHER-SE> 363,642
<TOTAL-LIABILITY-AND-EQUITY> 446,280
<SALES> 0
<TOTAL-REVENUES> 139,609
<CGS> 0
<TOTAL-COSTS> 129,882
<OTHER-EXPENSES> (268)
<LOSS-PROVISION> 1,016
<INTEREST-EXPENSE> 531
<INCOME-PRETAX> 8,448
<INCOME-TAX> 4,582
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,866
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
