UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15
(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________________to____________________
Commission file number: 0 - 21460
NFO RESEARCH, INC.
------------------
(Exact name of registrant as specified in its charter)
DELAWARE 06-1327424
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
TWO PICKWICK PLAZA, GREENWICH, CT 06830
--------------------------------------------------
(Address of principal executive offices, zip code)
(203) 629 - 8888
----------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicated by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
APPLICABLE ONLY TO CORPORATE ISSUERS:
At August 1, 1997, Registrant had outstanding
13,667,895 shares of Common Stock.
<PAGE>
NFO RESEARCH, INC.
INDEX
PAGE
PART I FINANCIAL INFORMATION NUMBER
FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Condensed Consolidated Statement of
Stockholders' Equity 8
Notes to Condensed Consolidated Financial Statements 9
Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11
Part II OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K 14
Signature 15
2
<PAGE>
NFO RESEARCH, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30 DECEMBER 31
1997 1996
---- ----
ASSETS (UNAUDITED)
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $ 1,409 $ 4,980
RECEIVABLES:
TRADE 31,366 28,742
UNBILLED 7,425 3,963
PREPAID EXPENSES AND OTHER CURRENT ASSETS 4,660 3,412
--------- ---------
TOTAL CURRENT ASSETS 44,860 41,097
PROPERTY AND EQUIPMENT, NET 12,644 11,122
CUSTOMER LIST, GOODWILL AND
OTHER INTANGIBLE ASSETS 52,515 49,412
OTHER ASSETS 4,100 4,502
--------- ---------
TOTAL ASSETS $ 114,119 $ 106,133
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
CURRENT MATURITIES OF LONG-TERM DEBT $ 320 $ 459
ACCOUNTS PAYABLE 2,563 2,332
ACCRUED EXPENSES 7,644 14,111
CUSTOMER BILLINGS IN EXCESS OF REVENUES EARNED 12,751 11,346
--------- ---------
TOTAL CURRENT LIABILITIES 23,278 28,248
LONG-TERM DEBT 9,614 4,821
OTHER LONG-TERM LIABILITIES 5,146 4,579
--------- ---------
TOTAL LIABILITIES 38,038 37,648
--------- ---------
STOCKHOLDERS' EQUITY:
COMMON STOCK, PAR VALUE $.01 PER SHARE;
60,000 SHARES AUTHORIZED, 12,175 AND
12,006 ISSUED AND OUTSTANDING
IN 1997 AND 1996, RESPECTIVELY 122 120
ADDITIONAL PAID-IN CAPITAL 43,505 40,525
RETAINED EARNINGS 32,777 28,163
ADDITIONAL MINIMUM LIABILITY (323) (323)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 76,081 68,485
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 114,119 $ 106,133
========= =========
The accompanying notes are an integral part of these statements.
3
<PAGE>
NFO RESEARCH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
------------- -------------
1997 1996 1997 1996
------- ------- ------- -------
REVENUES $35,923 $27,827 $67,892 $53,426
COST OF REVENUES 16,440 11,974 31,666 23,572
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 13,414 9,837 25,241 19,352
DEPRECIATION EXPENSE 505 415 972 826
AMORTIZATION EXPENSE 714 775 1,476 1,550
------- ------- ------- -------
OPERATING INCOME 4,850 4,826 8,537 8,126
INTEREST EXPENSE, NET 74 43 90 76
EQUITY INTEREST IN NET LOSS
OF JOINT VENTURES AND OTHER 102 136 180 258
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 4,674 4,647 8,267 7,792
PROVISION FOR INCOME TAXES 2,140 2,131 3,653 3,587
------- ------- ------- -------
NET INCOME $ 2,534 $ 2,516 $ 4,614 $ 4,205
======= ======= ======= =======
EARNINGS PER WEIGHTED AVERAGE
SHARE OUTSTANDING(a):
PRIMARY $ .20 $ .20 $ .37 $ .34
======= ======= ======= =======
FULLY DILUTED $ .20 $ .20 $ .36 $ .33
======= ======= ======= =======
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING(a):
PRIMARY 12,407 12,439 12,357 12,364
======= ======= ======= =======
FULLY DILUTED 12,535 12,515 12,475 12,475
======= ======= ======= =======
(a) For comparability, the earnings per share and share data reflect the
three-for-two stock split effected on February 5, 1996.
The accompanying notes are an integral part of these statements.
4
<PAGE>
NFO RESEARCH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
----------------- -----------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
NET INCOME $ 2,534 $ 2,516 $ 4,614 $ 4,205
ADJUSTMENTS TO RECONCILE TO NET CASH
(USED IN)/PROVIDED BY OPERATING ACTIVITIES:
DEPRECIATION EXPENSE 505 415 972 826
AMORTIZATION EXPENSE 714 775 1,476 1,550
EQUITY INTEREST IN NET LOSS FROM
JOINT VENTURES 102 140 180 270
------- ------- ------- -------
SUBTOTAL 3,855 3,846 7,242 6,851
CHANGE IN ASSETS AND LIABILITIES THAT
PROVIDED (USED) CASH:
TRADE RECEIVABLES (5,145) (4,737) (2,454) (2,338)
UNBILLED RECEIVABLES (3,038) 1,153 (3,462) 58
PREPAID EXPENSES AND OTHER
CURRENT ASSETS (145) 271 (1,240) 9
OTHER ASSETS 175 170 472 156
ACCOUNTS PAYABLE, ACCRUED AND
OTHER LIABILITIES (1,643) 633 (2,263) 505
CUSTOMER BILLINGS IN EXCESS OF
REVENUES EARNED 1,832 (1,445) 1,309 (677)
------- ------- ------- -------
NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES (4,109) (109) (396) 4,564
------- ------- ------- -------
CASH FLOW FROM INVESTING ACTIVITIES:
CAPITAL EXPENDITURES (1,558) (1,290) (2,442) (1,743)
ACQUISITIONS (NET OF CASH ACQUIRED) (3,892) (523) (4,972) (6,218)
INVESTMENTS IN JOINT VENTURES (69) (39) (251) (933)
PURCHASE OF LICENSE AGREEMENT AND
OTHER INTANGIBLES (138) (3) (469) (40)
------- ------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES (5,657) (1,855) (8,134) (8,934)
------- ------- ------- -------
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
NFO RESEARCH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
(Continued)
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
----------------- -----------------
1997 1996 1997 1996
------- ------- ------- -------
CASH FLOW FROM FINANCING ACTIVITIES:
NET PROCEEDS FROM ISSUANCE OF STOCK 294 346 303 572
PAYMENTS ON LONG-TERM DEBT (198) (451) (4,344) (3,643)
BORROWINGS ON LINE OF CREDIT 5,000 -- 9,000 5,000
------- ------- ------- -------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES 5,096 (105) 4,959 1,929
------- ------- ------- -------
CHANGE IN CASH (4,670) (2,069) (3,571) (2,441)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 6,079 5,993 4,980 6,365
------- ------- ------- -------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 1,409 $ 3,924 $ 1,409 $ 3,924
======= ======= ======= =======
The accompanying notes are an integral part of these statements.
6
<PAGE>
NFO RESEARCH, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, IN THOUSANDS)
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
---------------- ----------------
1997 1996 1997 1996
------ ------ ------ ------
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
CASH PAID DURING THE PERIOD FOR:
INTEREST $ 126 $ 64 $ 204 $ 160
INCOME TAXES $2,435 $2,688 $2,995 $3,075
The accompanying notes are an integral part of these statements.
7
<PAGE>
NFO RESEARCH, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(UNAUDITED, IN THOUSANDS)
ADDITIONAL ADDITIONAL
COMMON PAID-IN RETAINED MINIMUM
SHARES STOCK CAPITAL EARNINGS LIABILITY
------ ----- ------- -------- ---------
BALANCE AT JANUARY 1, 1997,
AS PREVIOUSLY REPORTED 10,280 $ 103 $ 40,541 $26,421 $(323)
ACQUISITION OF PROGNOSTICS,
ACCOUNTED FOR AS A POOLING
OF INTERESTS 1,726 17 (16) 1,742
------ ------ -------- ------- -----
BALANCE AT
JANUARY 1, 1997, AS RESTATED 12,006 $ 120 $ 40,525 $28,163 $(323)
COMMON STOCK ISSUED IN
CONJUNCTION WITH
ACQUISITION EARNOUTS 132 1 2,678
EXERCISE OF STOCK OPTIONS 37 1 302
NET INCOME 4,614
------ ------ -------- ------- -----
BALANCE AT JUNE 30, 1997 12,175 $ 122 $ 43,505 $32,777 $(323)
====== ====== ======== ======= =====
The accompanying notes are an integral part of this statement.
8
<PAGE>
NFO RESEARCH, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1. Financial Statements:
These condensed consolidated financial statements include the accounts of the
Company, including its subsidiaries, all of which are wholly owned. All
significant intercompany amounts have been eliminated. In the opinion of the
Company, the accompanying unaudited condensed consolidated financial statements
reflect all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the financial position of the Company as of June 30,
1997 and the results of its operations for the three and six month periods ended
June 30, 1997 and June 30, 1996, respectively.
These financial statements are presented in accordance with the requirements of
Form 10-Q. Accordingly, the financial statements and related notes in the
Company's Audited Financial Statements for the fiscal year ended December 31,
1996, included in the Company's Form 10-K filed with the SEC on March 31, 1997,
should be read in conjunction with the accompanying condensed consolidated
financial statements. The information included herein may not be indicative of
the results to be expected for a full year.
Note 2. Acquisitions:
On April 1, 1997 the Company issued 1,726,480 shares of NFO common stock in
conjunction with the plan of merger to acquire 100% of the stock of Prognostics,
a leading provider of survey-based quantitative customer satisfaction research
to information technology companies worldwide. The acquisition has been
accounted for as a pooling of interests and, accordingly, the accompanying
financial statements have been restated to include Prognostics.
Separate results of operations for the periods prior to the merger with
Prognostics are as follows:
(UNAUDITED), IN THOUSANDS
---------------------------------------
FIRST SECOND FIRST SIX
QUARTER QUARTER MONTHS
1997 1996 1996
---------------------------------------------------------------------------
REVENUES
NFO $30,123 $25,644 $49,750
PROGNOSTICS 1,846 2,183 3,676
---------------------------------------------------------------------------
COMBINED $31,969 $27,827 $53,426
======= ======= =======
NET INCOME
NFO $ 1,950 $ 2,240 $ 3,941
PROGNOSTICS 130 276 264
---------------------------------------------------------------------------
COMBINED $ 2,080 $ 2,516 $ 4,205
======= ======= =======
---------------------------------------------------------------------------
On May 29, 1997 the Company acquired Access Research, Inc. ("Access"). Access is
a research based financial services consulting firm specializing in the
retirement market. Access is a leading source of quantitative and qualitative
research, consulting and communications services addressing pension sales,
operations and marketing issues, especially in the 401(k) market. The entire
purchase price of approximately $4.0 million was paid in cash at closing. The
Access acquisition has been accounted for as a purchase and the accompanying
financial statements include the results of operations from the effective date
of the acquisition. The purchase price allocations are based on preliminary
estimates of Fair Market Value and are subject to revision. The results of
operations for Access are included in the Financial Statements for one month of
the second quarter of 1997 and the pro forma effects are not material to the
consolidated results of operations for the Company in 1997 and 1996.
9
<PAGE>
Note 3. Acquisition Subsequent to Period End:
On July 11, 1997 the Company issued approximately 1.36 million shares of NFO
common stock in conjunction with the plan of merger to acquire 100% of the
outstanding stock of The MBL Group Plc, a leading international market research
firm. NFO has also entered into agreements with minority shareholder employees
of the various MBL Group operating companies whereby the Company has agreed to
repurchase a portion of the minority shares during 1997 and the remainder in
three years utilizing a combination of cash and NFO common stock. The total
purchase price for 100% of the outstanding stock of all the MBL Group companies
is estimated to be $55 million (U.S. dollars). The purchase of The MBL Group Plc
will be accounted for as a pooling of interests and, accordingly, historical
financial data in future reports will be restated to include the combined
results of the Company and MBL. The acquisitions of the MBL Group operating
companies' minority shares will be accounted for as purchases. The Company filed
an initial report on Form 8-K on July 25, 1997 related to the acquisition of
MBL. An amended Form 8-K containing the appropriate restated historical
financial statements and pro forma financial information will be filed within
sixty days of the initial filing date.
10
<PAGE>
NFO RESEARCH, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following information should be read in conjunction with the unaudited
condensed consolidated financial statements and the notes thereto included in
this Quarterly Report.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, certain operating
statement data for the Company, expressed as a percentage of revenues, and the
percentage change in such items compared to amounts for the prior year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30
-------------------------- ---------------------------
PERCENTAGE OF PERCENTAGE OF
REVENUES PERCENTAGE REVENUES PERCENTAGE
------------- CHANGE FROM ------------- CHANGE FROM
1997 1996 PRIOR YEAR 1997 1996 PRIOR YEAR
---- ---- ---------- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES 100.0% 100.0% 29.1% 100.0% 100.0% 27.1%
COST OF REVENUES 45.8 43.0 37.3 46.6 44.1 34.3
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 37.3 35.4 36.4 37.2 36.2 30.4
DEPRECIATION EXPENSE 1.4 1.5 21.7 1.4 1.6 17.7
AMORTIZATION EXPENSE 2.0 2.8 (7.9) 2.2 2.9 (4.8)
----- ----- ----- ----- ----- -----
OPERATING INCOME 13.5 17.3 0.5 12.6 15.2 5.1
INTEREST EXPENSE, NET 0.2 0.1 72.1 0.1 0.1 18.4
EQUITY INTEREST IN NET LOSS
OF JOINT VENTURES AND OTHER 0.3 0.5 (25.0) 0.3 0.5 (30.2)
----- ----- ----- ----- ----- -----
INCOME BEFORE INCOME TAXES 13.0 16.7 0.6 12.2 14.6 6.1
PROVISION FOR INCOME TAXES 5.9 7.7 0.4 5.4 6.7 1.8
----- ----- ----- ----- ----- -----
NET INCOME 7.1% 9.0% 0.7% 6.8% 7.9% 9.7%
===== ===== ===== ===== ===== =====
</TABLE>
11
<PAGE>
NFO RESEARCH, INC.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OPERATIONS
Effective April 1, 1997, the Company acquired Prognostics in a transaction which
was accounted for as a pooling of interests. Accordingly, all historical
financial information has been restated to include the combined financial
results of NFO and Prognostics.
The Company's revenues for the three months ended June 30, 1997 increased 29% to
$35.9 million from $27.8 million for the same period last year. Revenues in the
second quarter increased $8.1 million over the same period last year, led by
strong performance in the Company's financial services, healthcare and packaged
goods and foods business units where revenues grew by over 20% in each sector.
For the six months ended June 30, 1997, revenues increased 27% to $67.9 million
from $53.4 million in the same period last year, with these same sectors as well
as the Company's hi-tech/telecommunications business unit all growing at double
digit rates for the six month period. The SPECTREM Group, acquired in August
1996, and Access Research, acquired in May 1997, contributed $1.6 million to the
quarter's increase in revenues, and $3.0 million to the six month increase.
Cost of revenues increased 37% in the second quarter to $16.4 million from $12.0
million a year ago. This increase is primarily due to overall increased business
volume, the first time inclusion of Spectrem and Access Research ($.8 million),
the Company's interactive initiatives and a slight shift in product mix. For the
six months ended June 30, 1997 cost of revenues increased 34% to $31.7 million
from $23.6 million last year, primarily due to overall increased business
volume, the late 1996 and 1997 acquisitions ($1.5 million) and the Company's
interactive initiatives.
Selling, general and administrative expenses increased 36% in the second quarter
to $13.4 million from $9.8 million in the same period last year. The major
factors for the increase were: transaction costs associated with the acquisition
of Prognostics ($.4 million), the inclusion of Spectrem and Access Research ($.7
million), increased costs due to increased business activity, especially in the
Company's pharmaceutical/ healthmed business units ($.8 million), the expenses
relating to the Company's interactive initiatives ($.4 million) and inflationary
increases. For the six month period ended June 30, 1997 selling, general and
administrative expenses increased 30% to $25.2 million from $19.4 million last
year. The primary reasons for the increase were the inclusion of the new
acquisitions ($1.3 million), transaction costs
associated with the acquisition of Prognostics ($.4 million), increased staffing
caused by increased business activity, the development of on-line interactive
research activities, and inflationary increases.
As a result of the items above operating income for the quarter ended June 30,
1997 increased .5% to $4.9 million from $4.8 million, and for the first six
months of 1997 increased 5% to $8.5 million from $8.1 million, compared to the
same periods a year ago. Excluding the transaction costs associated with the
acquisition of Prognostics, operating income increased 10% and 11% over three
and six month periods, respectively, in the previous year.
Net operating losses associated with NFO's European joint venture activities
equaled $.1 million for the quarter and $.2 million for the six month period,
$.1 million below the year ago level.
The Company's effective tax rate for the quarter ended June 30, 1997 was 45.8%
compared to 45.9% for the same period last year. For the six month period ended
June 30, 1997 the effective tax rate was 44.2% compared to 46.0% in the same
period last year. The decrease was primarily the result of lower state and local
income taxes attributed to several tax savings strategies implemented in late
1996.
12
<PAGE>
Net income for the second quarter of 1997 increased .7% to $2.5 million. Primary
earnings per share, including the $.04 per share relating to transaction costs
associated with the acquisition of Prognostics, were $.20, equal to the same
period last year, but 20% ahead of the prior year when this charge is excluded.
Net income for the six months ended June 30, 1997 increased 10% to $4.6 million
from $4.2 million a year ago. Net income, excluding the $.4 million charge for
the transaction cost of Prognostics, increased 21% over the same six month
period a year ago. Primary earnings per share for the six month period,
including the $.04 charge for the acquisition, were $.37 compared to $.34 for
the same period last year. Excluding the $.04 charge, primary earnings per share
were $.41, a 21% increase compared to the first six months of 1996.
LIQUIDITY AND CAPITAL RESOURCES
Working capital as of June 30, 1997 was $21.6 million compared to $12.9 million
at December 31, 1996. The increase in working capital resulted primarily from
the results of operations for the six months ended June 30, 1997 and payments in
cash (financed by long term debt) and stock of previously accrued acquisition
related liabilities. Offsetting these increases were capital expenditures ($2.4
million) and investments in European Joint Ventures ($.3 million).
As of June 30, 1997 the Company had $9.0 million outstanding on its $45.0
million credit facility with three major U.S. banks.
Capital expenditures for the quarter ended June 30, 1997 were $1.6 million
compared to $1.3 million for the same period last year. For the six months ended
June 30, 1997 capital expenditures were $2.4 million compared to $1.7 million a
year ago. Capital expenditures for 1997 are anticipated to be approximately $9
million including approximately $4 million due to planned expansion of the
Company's operations capacity.
The Company has reviewed the changes to its systems required to be made to
convert to the year 2000 and believes these changes will not have a material
effect on the Company's cash requirements in the next several years.
The Company anticipates that existing cash, together with internally generated
funds and its credit and stock availabilities will provide the Company with the
resources that are needed to satisfy potential acquisitions, capital
expenditures and the Company's growing working capital requirements. The timing
and magnitude of future acquisitions will be the single most important factor in
determining the Company's long term capital needs.
FORWARD LOOKING STATEMENTS
Statements in this Form 10-Q relating to matters that are not historical facts
are forward-looking statements. Such forward-looking statements are based on the
Company's current forecasts and actual results may differ materially. To
understand the risks which may affect the Company's future performance, please
refer to Part 1 of NFO's 1996 Annual Report on Form 10-K.
FUTURE REQUIRED ACCOUNTING CHANGES
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings per Share (SFAS No. 128). This
statement introduces new methods for calculating earnings per share. The
adoption of this standard will not impact results from operations, financial
condition, or long-term liquidity, but will require the Company to restate
earnings per share reported in prior periods to conform with this statement. The
Company is required to adopt the new standard for periods ending after December
15, 1997. The Company believes that the adoption of this standard will result in
higher earnings per share when comparing the current, primary and fully diluted
earnings per share calculations to the calculations of basic and diluted
earnings per share required by SFAS No. 128.
13
<PAGE>
On June 30, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS No.
130). This statement establishes standards for reporting and display of
comprehensive income and its components in financial statements. The adoption of
this standard will not impact results from operations, financial condition, or
long-term liquidity, but will require the Company to classify items of other
comprehensive income by their nature in a financial statement and display the
accumulated balance of other comprehensive income separately in the equity
section of the balance sheet. The Company is required to adopt the new standard
for periods beginning after December 15, 1997.
PART II OTHER INFORMATION
ITEM 6 Exhibits and Reports on Form 8-K
(a) Exhibits
11. Computations of Net Income per Common Share
27. Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a report on Form 8-K with the Commission on
June 11, 1997 to voluntarily report certain financial
statements related to the acquisition of Prognostics by the
Company effective April 1, 1997. The acquisition of
Prognostics was accounted for as a pooling of interests and,
accordingly, all historical financial information has been
restated to include the combined results of the Company and
Prognostics, and included in the Form 8-K dated June 11, 1997.
14
<PAGE>
NFO RESEARCH, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NFO RESEARCH, INC.
-----------------------
(Registrant)
Dated: August 14, 1997 /s/ Patrick G. Healy
-----------------------
Patrick G. Healy,
Executive Vice President
and Chief Financial Officer
(Authorized Officer of
Registrant and
Principal Financial Officer)
NFO RESEARCH, INC.
EXHIBIT 11
COMPUTATIONS OF NET INCOME PER COMMON SHARE
(UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
---------------- ----------------
1997 1996 1997 1996
------- ------- ------- -------
PRIMARY:
NET INCOME $ 2,534 $ 2,516 $ 4,614 $ 4,205
======= ======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING 12,148 11,893 12,086 11,859
DILUTIVE STOCK OPTIONS 248 513 260 472
OTHER COMMON SHARES EQUIVALENTS 11 33 11 33
------- ------- ------- -------
12,407 12,439 12,357 12,364
======= ======= ======= =======
PRIMARY EARNINGS PER SHARE $ .20 $ .20 $ .37 $ .34
======= ======= ======= =======
FULLY DILUTED:
NET INCOME $ 2,450 $ 2,473 $ 4,514 $ 4,118
======= ======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING 12,148 11,893 12,086 11,859
DILUTIVE STOCK OPTIONS 287 537 289 531
OTHER COMMON SHARES EQUIVALENTS 11 33 11 33
CONTINGENT SHARES 89 52 89 52
------- ------- ------- -------
12,535 12,515 12,475 12,475
======= ======= ======= =======
FULLY DILUTED EARNINGS PER SHARE $ .20 $ .20 $ .36 $ .33
======= ======= ======= =======
Effective April 1, 1997, the Company acquired Prognostics in a transaction which
was accounted for as a pooling of interests. Accordingly, all historical
financial information has been restated to include the combined financial
results of NFO and Prognostics.
The earnings per share and share data reflect the three-for-two stock split
effected on February 5, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements contained in NFO Research, Inc.'s report on Form 10-Q for
the quarter ended June 30, 1997, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,409
<SECURITIES> 0
<RECEIVABLES> 38,934
<ALLOWANCES> 143
<INVENTORY> 0
<CURRENT-ASSETS> 44,860
<PP&E> 19,768
<DEPRECIATION> 7,124
<TOTAL-ASSETS> 114,119
<CURRENT-LIABILITIES> 23,278
<BONDS> 9,614
0
0
<COMMON> 122
<OTHER-SE> 75,959
<TOTAL-LIABILITY-AND-EQUITY> 114,119
<SALES> 67,892
<TOTAL-REVENUES> 67,892
<CGS> 31,666
<TOTAL-COSTS> 59,355
<OTHER-EXPENSES> 180
<LOSS-PROVISION> 26
<INTEREST-EXPENSE> 224
<INCOME-PRETAX> 8,267
<INCOME-TAX> 3,653
<INCOME-CONTINUING> 4,614
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,614
<EPS-PRIMARY> .37
<EPS-DILUTED> .36
</TABLE>
