<PAGE>
United States
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 Period Ended June 30, 1997
Commission file number 0-22554
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OPINION RESEARCH CORPORATION
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(Exact name of registrant as specified in its charter)
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<S> <C>
Delaware 22-3118960
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(State of incorporation) (I.R.S. Employer
Identification No.)
23 Orchard Road
Skillman, NJ 08558
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(Address of principle executive offices) (Zip Code)
</TABLE>
908-281-5100
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(Registrant's telephone number, including area code)
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 periods that the
registrant was required to file such reports): Yes X No ________and;
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(2) has been subject to such filing requirements for the past 90 days:
Yes X No ________
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common Stock, $0.01 Par Value - 4,143,889 shares as of June 30, 1997
<PAGE>
INDEX
Opinion Research Corporation and Subsidiaries
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - June 30, 1997
and December 31, 1996
Condensed consolidated statements of income - Six months ended
June 30, 1997 and 1996
Condensed consolidated statements of cash flows - Six months ended
June 30, 1997 and 1996
Notes to condensed consolidated financial statements - June 30, 1997
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II. Other Information
Item 1. Legal Proceedings
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
Item 6. Exhibits and Reports on Form 8-K
Signature
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OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(in thousands, except share amounts)
(unaudited)
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<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
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<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $0 $865
Accounts receivable:
Billed 8,713 7,480
Unbilled services 3,907 2,867
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12,620 10,347
Less: allowance for doubtful accounts 162 162
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12,458 10,185
Prepaid and other current assets 2,549 2,655
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Total current assets 15,007 13,705
Property and equipment, net 5,274 5,511
Capitalized production costs, net 382 516
Intangibles, net 1,403 1,427
Goodwill, net 11,073 10,971
Other assets 965 642
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Total assets $34,104 $32,772
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $2,371 $1,979
Accrued expenses 1,043 1,305
Deferred revenues 4,191 2,782
Revolving credit line 2,515 380
Notes payable 1,200 6,047
Current maturities of obligations under capital leases 208 220
Deferred interest payable 0 1,203
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Total current liabilities 11,528 13,916
Long term debt 4,700 993
Long term maturities of obligations under capital leases 175 276
Deferred income taxes 1,081 1,103
Other liabilities 898 839
Stockholders' Equity:
Preferred Stock, $.01 par value, 1,000,000 shares authorized,
none issued or outstanding
Common stock, $.01 par value, 10,000,000 shares authorized,
4,231,747 shares issued and 4,143,889 outstanding in 1997 and 1996 42 42
Additional paid-in capital 14,011 14,011
Retained earnings 1,958 1,526
Foreign currency translation adjustment 201 556
Treasury stock, at cost, 87,858 shares in 1997 and 1996 (490) (490)
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Total stockholders' equity 15,722 15,645
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Total liabilities and stockholders' equity $34,104 $32,772
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See notes to financial statements
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OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except share and per share amounts)
(Unaudited)
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<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Revenues $13,844 $11,704 $26,363 $23,261
Cost of revenues 8,654 6,866 16,644 13,799
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Gross Profit 5,190 4,838 9,719 9,462
Selling, general and administrative expenses 3,877 3,008 7,282 6,025
Depreciation and amortization 670 547 1,328 1,085
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Operating Income 643 1,283 1,109 2,352
Interest expense, net 116 207 293 343
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Income before provision for income taxes 527 1,076 816 2,009
Provision for income taxes 248 490 384 904
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Net Income $279 $586 $432 $1,105
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Net income per common share:
Primary $0.07 $0.14 $0.10 $0.26
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Fully diluted $0.07 $0.13 $0.10 $0.25
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Weighted average common shares outstanding:
Primary 4,143,889 4,247,547 4,143,889 4,228,379
Fully diluted 4,143,889 4,936,455 4,143,889 4,925,057
</TABLE>
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See notes to financial statements
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OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
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<TABLE>
<CAPTION>
Six Months Ended June 30,
1997 1996
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<S> <C> <C>
Cash provided by (used in) operating activities: ($335) $1,722
Cash flows from investing activities:
Payments for acquisitions (959) (752)
Proceeds from the sale of fixed assets 12
Capital expenditures (457) (899)
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Net cash used in investing activities (1,416) (1,639)
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Cash flows from financing activities:
Issuance of note payable 6,073
Repayment of note payable (7,213) (1,031)
Borrowings under line-of-credit facilities 7,584 7,606
Repayment under line-of-credit facilities (5,449) (6,147)
Capital stock repurchased (373)
Repayments under capitalized lease obligations (109) (136)
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Net cash provided by (used in) financing activities 886 (81)
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Increase (decrease) in cash and cash equivalents (865) 2
Cash and cash equivalents at beginning of period 865 340
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Cash and cash equivalents at end of period $0 $342
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See notes to financial statements
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OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
June 30, 1997
(Unaudited)
(in thousands, except share and per share amounts)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month period ended June 30, 1997
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Registrant Company
and Subsidiaries' Annual Report on Form 10-K for the year ended December 31,
1996.
NOTE B - EARNINGS PER SHARE
Primary earnings per share is determined by dividing net income by the weighted
average common shares and stock options outstanding. Fully diluted earnings per
share for the six months ended June 30, 1996, takes into account the conversion
of convertible debentures outstanding adjusted for related interest expense.
Common stock equivalents and shares attributable to the conversion of
convertible debentures are not included in the earnings per share calculation
for the six months ended June 30, 1997 as they expired on November 30, 1996.
NOTE C - CREDIT FACILITY
During May of 1997 the Company executed an agreement for an increased credit
facility with its senior lender. The new facility is for $15,000; $9,000 of
revolving credit and $6,000 of 5 year notes. Subordinated debt of $3,000 and
deferred interest of $1,203 was repaid from the proceeds of this credit
facility. The agreement is for 3 years and is secured by substantially all
assets of the Company.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS - SECOND QUARTER 1997 AS COMPARED TO SECOND QUARTER 1996
Revenues for the second quarter of 1997 increased $2,140 or 18%, from $11,704 in
the second quarter of 1996 to $13,844 in the second quarter of 1997. This
increase in second quarter revenues can be attributed to the inclusion of
GSR/SIA and ORC Korea ("the Acquisitions") for the quarter and an increase in
U.S. revenues. These increases were offset somewhat by a decrease in revenues
by Gordon Simmons Research Group ("GSR"), a UK subsidiary. Although less than
the revenues generated in the second quarter of 1996, GSR has shown a steady
increase in revenues since the fourth quarter of 1996.
Gross profit for the three months ended June 30, 1997 increased by $352 from
$4,838 to $5,190 or 7%. As a percent of revenues, gross profit decreased from
41% in 1996 to 38% in 1997. This decrease in gross profit is attributable to
the addition of the Acquisitions for the quarter, whose revenues generate
slightly lower margins than the Company's core business, as well as the reduced
margins resulting from GSR's decrease in revenues.
Selling, general and administrative expenses increased from $3,008 to $3,877 for
the three months ended June 30, 1997, relative to the same period in 1996. As a
percent of revenues, SG&A has increased from 26% for the three months ended
June 30, 1996 to 28% for the comparable period in 1997. The absolute increase
in SG&A is primarily due to the inclusion of the Acquisitions, whereas
approximately one half of the increase of SG&A as a percent of revenue can be
attributed to the decrease in GSR revenues.
Depreciation and amortization expense increased from $547 in the second quarter
of 1996 to $670 in the second quarter 1997. Approximately one half of this
increase in expense is attributable to the inclusion of the Acquisitions in the
1997 figures.
RESULTS OF OPERATIONS - SIX MONTHS YEAR-TO-DATE 1997 AS COMPARED TO SIX MONTHS
YEAR-TO-DATE 1996
Revenues for the first six months of 1997 increased $3,102, or 13%, as compared
to the first six months of 1996. The six month increase in revenues can be
attributed to the inclusion of the Acquisitions for 1997 coupled with an
increase in U.S. revenues. These increases were offset somewhat by a decrease in
GSR revenues. Although down significantly from the first half of 1996, the first
half revenues for GSR for 1997 are only off slightly from the second half of
1996.
<PAGE>
Gross profit for the six months ended June 30, 1997 increased by $257 from
$9,462 to $9,719 or 3%. As a percent of revenues, gross profit decreased from
41% in 1996 to 37% in 1997. This decrease in the gross profit percentage is
attributable to the inclusion of the Acquisitions for 1997 coupled with the
decrease in GSR revenues.
Selling, general and administrative expenses increased from $6,025 to $7,282 for
the six months ended June 30, 1997, relative to the same period in 1996. As a
percent of revenues, SG&A has increased from 26% for the six months ended June
30, 1996 to 28% for the comparable period in 1997. The absolute increase in
SG&A is primarily due to the inclusion of the Acquisitions, whereas
approximately one half of the increase of SG&A as a percent of revenue can be
attributed to the decrease in GSR revenues.
Depreciation and amortization expense increased from $1,085 to $1,328 for the
six months ended June 30, 1997, relative to the same period in 1996.
Approximately 50% of this 22% increase in depreciation and amortization is
attributable to the inclusion of the Acquisitions for 1997.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operations for the first six months of 1997 was $335. This use
of cash includes the one time repayment of $1,203 of deferred interest
associated with the repayment of the Company's subordinated debt.
Investing and financing activities for the first six months of 1997 included
capital expenditures of $457 and payments totaling $959 for various
acquisitions. The Company believes that its current sources of liquidity and
capital will be sufficient to fund its long-term obligations and working capital
needs for the foreseeable future.
During the second quarter of 1997 the Company entered into an agreement with
its senior lender for an increased credit facility. The Company repaid all
subordinated debt and associated deferred interest and restructured the
outstanding loans.
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of ORC was held on June 17, 1997
at the Company's headquarters for the following purposes:
1. To elect three directors to serve until the 2000 Annual Meeting
of Shareholders of the Company and until his respective
successors shall have been duly elected and qualified.
-- James C. Fink
-- George G. Gordon
-- Derek B. Smith
2. To approve the Opinion Research Corporation 1997 Stock Incentive
Plan.
All questions were approved by the stockholders.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a) (11) Statement regarding computation of per share earnings
b) Reports on Form 8-K
None.
<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.
Opinion Research Corporation
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(Registrant)
Date: August 13, 1997 /s/ John F. Short
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John F. Short, Vice Chairman & CFO
<PAGE>
OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Exhibit (11)-Statement Re:Computation of Earnings per Share
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<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
1997 1996 1997 1996
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(000's omitted, except per share data)
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 4,144 4,170 4,144 4,159
Net effect of dilutive stock options -
based on the treasury stock method 78 69
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Totals 4,144 4,248 4,144 4,228
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Net income $279 $586 $432 $1,105
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Per share amount $0.07 $0.14 $0.10 $0.26
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Fully diluted:
Average shares outstanding 4,144 4,170 4,144 4,159
Net effect of dilutive stock options -
based on the treasury stock method 112 112
Assumed conversion of convertible
debentures 654 654
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Totals 4,144 4,936 4,144 4,925
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Net income $279 $586 $432 $1,105
Add debenture interest, net of tax
effect 52 107
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Totals $279 $638 $432 $1,212
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Per share amount $0.07 $0.13 $0.10 $0.25
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</TABLE>
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See notes to financial statements
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF 6/30/97 AND THE RELATED CONSOLIDATED
STATEMENTS OF INCOME AND CASH FLOWS FOR THE SIX MONTHS 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-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 12,620
<ALLOWANCES> 162
<INVENTORY> 0
<CURRENT-ASSETS> 15,007
<PP&E> 5,274
<DEPRECIATION> 0
<TOTAL-ASSETS> 34,104
<CURRENT-LIABILITIES> 11,528
<BONDS> 4,875
0
0
<COMMON> 42
<OTHER-SE> 15,680
<TOTAL-LIABILITY-AND-EQUITY> 34,104
<SALES> 0
<TOTAL-REVENUES> 26,363
<CGS> 16,644
<TOTAL-COSTS> 16,644
<OTHER-EXPENSES> 8,610
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 293
<INCOME-PRETAX> 816
<INCOME-TAX> 384
<INCOME-CONTINUING> 432
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 432
<EPS-PRIMARY> .104
<EPS-DILUTED> .104
</TABLE>
