<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): March 19, 1998
(January 6, 1998)
----------------
OPINION RESEARCH CORPORATION
-----------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 000-22554 22-3118960
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
23 Orchard Road, Skillman, NJ 08558
- ------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:(908) 281-5100
--------------
<PAGE>
Item 2. Acquisition of Assets.
---------------------
On January 6, 1997 the Registrant filed with the Securities and
Exchange Commission a Current Report on Form 8-K (the "January 8-K") regarding
its acquisition of a portion of the assets of ProTel Marketing, Inc., an
Illinois corporation ("ProTel"), pursuant to a certain Asset Purchase Agreement
(the "Agreement"), dated as of January 6, 1998, by and among the Registrant, ORC
ProTel, Inc., ProTel, Ruth Wolf, Janice Katz, Allen Wolf and David Katz.
In accordance with Rule 3-05(b)(i) and Article 11 under Regulation S-X,
as referenced by Items 7(a) and 7(b) of Form 8-K, the Registrant is required to
furnish (i) the below-listed financial statements of Obdyke and (ii) certain pro
forma information with regard to the Registrant in filing its Form 8-K. The
Registrant hereby amends the January 8-K to file such financial statements and
pro forma information, in accordance with Item 7(a)(4) of Form 8-K.
(i) The Balance Sheet of ProTel at December 31,
1997 and December 31, 1996; and
(ii) The Statement of Income and Statement of Cash Flow
of ProTel for the years ended December
31, 1997, December 31, 1996 and December 31, 1995.
<PAGE>
Item 7. Financial Statements and Exhibits
Financial Statements of the acquired business.
- ----------------------------------------------
The following financial statements are included herein.
I. Financial Statements of Pro Tel Marketing, Inc.
- - Report of Independent Auditors
- - Balance Sheet as of December 31, 1997 and 1996
- - Statements of Income for the years ended December 31, 1997,
1996 and 1995
- - Statements of Stockholders' Equity for the years ended
December 31, 1997, 1996 and 1995
- - Statements of Cash Flows for the years ended December 31,
1997, 1996 and 1995
- - Notes to Financial Statements
Pro forma financial information
- -------------------------------
The following pro forma financial information is included herein:
I. Pro Forma Consolidated Financial Statements of Opinion
Research Corporation
- - Introduction
- - Pro Forma Consolidated Balance Sheet - December 31, 1997
(unaudited)
- - Pro Forma Consolidated Statement of Operations for the Year
Ended December 31, 1997 (unaudited)
- - Notes to Pro Forma Consolidated Financial Statements
(c.) Exhibits
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OPINION RESEARCH CORPORATION
Dated: March 19, 1998 By: /s/ John F. Short
---------------------------
John F. Short
Vice Chairman and
Chief Financial Officer
<PAGE>
Financial Statements
Pro Tel Marketing, Inc.
December 31, 1997, 1996 and 1995
<PAGE>
Pro Tel Marketing, Inc.
Financial Statements
December 31, 1997, 1996 and 1995
Contents
Report of Independent Auditors.......................................... 1
Balance Sheets.......................................................... 2
Statements of Income.................................................... 3
Statements of Stockholders' Equity...................................... 4
Statements of Cash Flows................................................ 5
Notes to Financial Statements........................................... 6
<PAGE>
Report of Independent Auditors
The Board of Directors and Stockholders
Pro Tel Marketing, Inc.
We have audited the accompanying balance sheets of Pro Tel Marketing, Inc. as of
December 31, 1997 and 1996, and the related statements of income, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pro Tel Marketing, Inc. at
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997 in conformity
with generally accepted accounting principles.
/s/ Ernst & Young LLP
February 19, 1998
<PAGE>
Pro Tel Marketing, Inc.
Balance Sheets
DECEMBER 31
1997 1996
------------------------
ASSETS
Current assets:
Cash and cash equivalents $1,342,393 $1,619,223
Accounts receivable 3,309,128 2,888,160
Prepaid and other current assets 9,608 16,347
------------------------
Total current assets 4,661,129 4,523,730
Property and equipment, net 727,257 973,497
Other assets - 16,934
------------------------
$5,388,386 $5,514,161
========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 123,393 $ 111,062
Accrued compensation 294,234 227,541
State income taxes payable 31,704 27,204
Deferred state income taxes 19,000 18,500
------------------------
Total current liabilities 468,331 384,307
Stockholders' equity:
Common stock, no par value; 10,000 shares authorized,
1,000 shares issued and outstanding 50,000 50,000
Retained earnings 4,870,055 5,079,854
------------------------
Total stockholders' equity 4,920,055 5,129,854
------------------------
$5,388,386 $5,514,161
========================
See accompanying notes.
<PAGE>
Pro Tel Marketing, Inc.
Statements of Income
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995
-----------------------------------------
<S> <C> <C> <C>
Revenues $14,420,037 $12,067,739 $10,830,921
Cost of revenues 8,694,713 7,290,033 6,082,246
-----------------------------------------
Gross profit 5,725,324 4,777,706 4,748,675
Selling, general and administrative expenses 1,978,340 1,895,326 1,791,096
Depreciation and amortization 339,804 357,120 338,585
-----------------------------------------
Operating income 3,407,180 2,525,260 2,618,994
Other income, net (93,952) (99,785) (123,461)
-----------------------------------------
Income before income taxes 3,501,132 2,625,045 2,742,455
Provision for income taxes 31,500 22,900 39,600
-----------------------------------------
Net income $ 3,469,632 $ 2,602,145 $ 2,702,855
=========================================
</TABLE>
See accompanying notes.
<PAGE>
Pro Tel Marketing, Inc.
Statements of Stockholders' Equity
COMMON STOCK TOTAL
----------------- RETAINED STOCKHOLDERS'
SHARES AMOUNT EARNINGS EQUITY
----------------------------------------------
BALANCE, JANUARY 1, 1995 1,000 $50,000 $ 5,716,554 $ 5,766,554
Net income 2,702,855 2,702,855
Dividends paid (3,371,700) (3,371,700)
----------------------------------------------
BALANCE, DECEMBER 31, 1995 1,000 50,000 5,047,709 5,097,709
Net income 2,602,145 2,602,145
Dividends paid (2,570,000) (2,570,000)
BALANCE, DECEMBER 31, 1996 1,000 50,000 5,079,854 5,129,854
Net income 3,469,632 3,469,632
Dividends paid (3,679,431) (3,679,431)
----------------------------------------------
BALANCE, DECEMBER 31, 1997 1,000 $50,000 $ 4,870,055 $ 4,920,055
==============================================
See accompanying notes.
<PAGE>
Pro Tel Marketing, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1997 1996 1995
-----------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 3,469,632 $ 2,602,145 $ 2,702,855
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 339,804 357,120 338,585
Deferred state income taxes 500 (4,100) 12,600
Change in operating assets and liabilities:
Accounts receivable (420,968) (104,642) 109,812
Prepaid and other assets 23,673 13,888 (11,189)
Accounts payable 12,331 (17,125) (1,016)
Compensation payable 66,693 29,846 44,039
State income taxes payable 4,500 220 (9,064)
-----------------------------------------
Net cash provided by operating activities 3,496,165 2,877,352 3,186,622
-----------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (93,564) (18,782) (473,088)
-----------------------------------------
Net cash used in investing activities (93,564) (18,782) (473,088)
-----------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to stockholders (3,679,431) (2,570,000) (3,371,700)
-----------------------------------------
Net cash used in financing activities (3,679,431) (2,570,000) (3,371,700)
-----------------------------------------
(Decrease) increase in cash and cash equivalents (276,830) 288,570 (658,166)
Cash and cash equivalents at beginning of year 1,619,223 1,330,653 1,988,819
-----------------------------------------
Cash and cash equivalents at end of year $ 1,342,393 $ 1,619,223 $ 1,330,653
=========================================
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for income taxes $ 26,500 $ 26,780 $ 36,064
=========================================
</TABLE>
See accompanying notes.
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Pro Tel Marketing, Inc. (the "Company") performs automated outbound and inbound
telemarketing nation-wide for high profile, large volume clients with the major
emphasis on outbound programs. Consumer-oriented programs include direct selling
of services and/or products, credit card acquisition, insurance/insurance
related programs, lead generation and market research. Business-to-business
programs include direct selling of services and/or products, lead generation,
customer retention, data base building and market research. The Company operates
in one industry segment and has phone centers in Illinois, Kansas and Wisconsin.
REVENUE RECOGNITION
Revenues from services are recognized at the time services are performed. The
Company grants credit primarily to large public companies and performs periodic
credit evaluations of its clients' financial condition. The Company does not
generally require collateral. As of December 31, 1997 and 1996, one client
constituted 95% and 86%, respectively, of net accounts receivable. This client
accounted for 93%, 85% and 83% of the Company's revenues for the years ended
December 31, 1997, 1996 and 1995, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CASH EQUIVALENTS
The Company considers as cash equivalents all highly liquid debt instruments
with an original maturity of three months or less when purchased.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using the
straight-line method over the estimated useful lives of the related assets (5-7
years). Leasehold improvements are amortized using the straight-line method
over their estimated lives or the remaining life of the lease, whichever is
shorter.
<PAGE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Deferred income tax assets and liabilities are computed annually for differences
between the financial statement and tax basis of assets and liabilities that
will result in taxable for deductible amounts in the future based on enacted tax
laws and rates applicable to the periods in which the differences are expected
to affect taxable income. Valuation allowances are established when necessary
to reduce deferred tax assets to the amount expected to be realized. Income tax
expense is the tax payable or refundable for the period plus or minus the change
during the period in deferred tax assets and liabilities.
ADVERTISING
The Company advertises primarily through trade journals and trade publications.
All advertising costs are expensed as incurred. Advertising expense was
$33,000, $111,000 and $110,000 for the years ended December 31, 1997, 1996 and
1995, respectively.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
DECEMBER 31
1997 1996
---------------------------
Equipment $ 2,134,027 $ 2,049,965
Furniture and fixtures 182,985 173,483
Leasehold improvements 149,486 149,486
Vehicles 363,161 363,161
---------------------------
2,829,659 2,736,095
Less accumulated depreciation and amortization (2,102,402) (1,762,598)
---------------------------
Property and equipment, net $ 727,257 $ 973,497
===========================
3. INCOME TAXES
The Company is an "S" Corporation for federal income tax purposes. This
election generally eliminates federal income taxes at the corporate level and
profits are taxed directly to the Company's shareholders. Therefore, no
provision for federal income taxes is included in the accompanying financial
statements.
<PAGE>
3. INCOME TAXES (CONTINUED)
The Company is also an "S" Corporation for state income tax purposes. This
election generally reduces state income taxes at the corporate level. The
Company's shareholders are also taxed directly by various states on the
Company's profits.
The provision (benefit) for income taxes consists of the following:
YEAR ENDED DECEMBER 31
1997 1996 1995
----------------------------
Current $31,000 $27,000 $27,000
Deferred 500 (4,100) 12,600
----------------------------
$31,500 $22,900 $39,600
============================
Deferred state income taxes are primarily attributable to temporary differences
which are not currently taxable for income tax purposes principally related to
the use of the cash basis of reporting partially offset by differences between
book and state tax depreciation and accrued expenses which are not currently
deductible.
4. COMMITMENTS AND CONTINGENCIES
The Company leases three facilities on long-term leases. Rent expense under
these leases was approximately $528,000, $507,000 and $390,000 for the years
ended December 31, 1997, 1996 and 1995, respectively. Real estate taxes,
insurance and maintenance expenses generally are obligations of the Company and,
accordingly, are not included as part of rental payments. It is expected that,
in the normal course of business, leases that expire will be renewed or replaced
by leases on similar properties.
Future minimum payments required under operating leases that have noncancelable
lease terms in excess of one year are as follows:
1998 $ 475,870
1999 488,690
2000 280,140
2001 165,470
Thereafter -
------------
Total minimum lease payments $1,410,170
============
<PAGE>
4. COMMITMENTS AND CONTINGENCIES (CONTINUED)
The Company is subject to legal proceedings which arise in the ordinary course
of business. In the opinion of management and counsel, the ultimate amount of
liability, if any, resulting from these actions will not materially affect the
financial position or results of operations of the Company.
5. SUBSEQUENT EVENTS
Pursuant to a Asset Purchase Agreement by and among Opinion Research
Corporation's ("ORC") subsidiary ORC ProTel, the Company and its stockholders,
dated January 6, 1998, ORC ProTel purchased certain assets (not including cash
and accounts receivable) and assumed certain liabilities of the Company. The
purchase price was comprised of cash of $10,000,000 and options to purchase
400,000 shares of common stock of ORC, with a provision that such options may,
at the option of the holders, be returned to the Company for a cash payment of
$2,000,000 on the second anniversary of the closing.
In addition, over the next three years, the stockholders may earn up to an
additional $10,000,000 of cash payments, contingent upon the Company achieving
certain future targets for revenues and earnings before interest, income taxes,
depreciation and amortization.
6. YEAR 2000 (UNAUDITED)
The Company's operational technology software package is considered Year 2000
compliant and, therefore, the Company does not believe any Year 2000 changes are
needed for this package. Certain other systems are currently being assessed to
determine their status with respect to the Year 2000 issue. The Company does
not expect the conversion of such systems will have a significant effect on its
operations or a material adverse impact on its financial statements.
<PAGE>
Opinion Research Corporation
Pro Forma Consolidated Financial Statements
(Unaudited)
The accompanying unaudited pro forma consolidated balance sheet of the Company
as of December 31, 1997 gives effect to the acquisition of Pro Tel Marketing,
Inc. completed by the Company subsequent to such date and financing of such
acquisition, as if the transaction had occurred on December 31, 1997.
The accompanying unaudited pro forma consolidated statement of operations of the
Company for the year ended December 31, 1997 gives effect to the acquisition and
the financing thereof, as if all such transactions had occurred at the beginning
of the period.
The unaudited pro forma consolidated financial statements are based upon certain
assumptions and estimates which are subject to change. These statements are not
necessarily indicative of the actual results of operations that might have
occurred, nor are they necessarily indicative of expected results in the future.
The unaudited pro forma consolidated financial statements should be read in
conjunction with the Company's historical Consolidated Financial Statements and
related Notes filed as an Exhibit hereto.
Opinion Research Corporation
Pro Forma Consolidated Balance Sheet
December 31, 1997
(Unaudited)
(Amounts in thousands)
<TABLE>
<CAPTION>
OPINION PRO TEL
RESEARCH MARKETING, PRO FORMA PRO FORMA
CORPORATION INC. ADJUSTMENTS CONSOLIDATED
------------------------------------------------------------
ASSETS
Current assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 160 $1,342 $10,543 (A) $ 160
(10,543)(B)
(1,342)(D)
Accounts receivable, net 11,133 3,309 (3,309)(D) 11,133
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Prepaid and other current assets 2,215 10 2,225
------------------------------------------------------------
Total current assets 13,508 4,661 (4,651) 13,518
Property and equipment, net 5,041 727 (105)(D) 5,663
Capitalized production costs, net 145 145
Goodwill and other intangibles, net 12,379 11,745 (E) 24,124
Other assets 1,407 1,407
------------------------------------------------------------
$32,480 $5,388 $ 6,989 $44,857
============================================================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued $ 3,692 $ 417 $(274)(D) $ 3,835
expenses
Advanced billings 4,024 4,024
Short-term borrowings 2,458 3,876 (A) 5,791
Other current liabilities 68 32 (32)(D) 68
------------------------------------------------------------
Total current liabilities 10,242 449 3,027 13,718
Long-term debt 4,194 6,667 (A) 11,404
Deferred income taxes 425 19 (19)(D) 425
Other liabilities 1,259 1,259
------------------------------------------------------------
Total liabilities 16,120 468 10,218 26,806
Redeemable equity 1,691 (C) 1,691
Stockholders' equity:
Common stock 42 50 (50)(F) 42
Additional paid-in capital 13,976 13,976
Retained earnings 2,677 4,870 (4,870)(F) 2,677
Cumulative foreign currency (149) (149)
translation
Treasury stock (186) (186)
------------------------------------------------------------
Total stockholders' equity 16,360 4,920 (4,920) 16,360
------------------------------------------------------------
$32,480 $5,388 $ 6,989 $44,857
============================================================
</TABLE>
<PAGE>
The accompanying notes are an integral part
of these pro forma consolidated financial statements.
Opinion Research Corporation
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 1997
(unaudited)
(Amounts, except per share amounts, in thousands)
<TABLE>
<CAPTION>
OPINION PRO TEL
RESEARCH MARKETING, PRO FORMA PRO FORMA
CORPORATION INC. ADJUSTMENTS CONSOLIDATED
------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $56,673 $14,420 $71,093
Cost of revenues 34,374 8,695 43,069
------------------------------------------------------------
Gross profit 22,299 5,725 28,024
Selling, general and administrative 16,844 1,978 $107 (A) 18,929
expenses
Depreciation and amortization 2,654 340 767 (B) 3,761
------------------------------------------------------------
Operating income 2,801 3,407 (874) 5,334
Interest expense, net 674 923 (C) 1,745
148 (D)
Other income, net (94) 94 (E) -
------------------------------------------------------------
Income before income taxes 2,127 3,501 (2,039) 3,589
Provision for income taxes 976 31 554 (F) 1,561
------------------------------------------------------------
Net income $ 1,151 $ 3,470 $(2,593) $ 2,028
============================================================
Earnings Per Share:
Basic $ 0.28 $ 0.49
============== ==================
Diluted $ 0.28 $ 0.49
============== ==================
</TABLE>
<PAGE>
The accompanying notes are an integral part of
these pro forma consolidated financial statements.
(Amounts, except per share amounts, in thousands)
1. BACKGROUND
Opinion Research Corporation, which was founded in 1938, provides market
research , marketing services, and business information services. The Company
offers a variety of products and services for clients in the North American,
European, Asian and Latin American markets. The Company offers such services as
customer satisfaction, market demand and forecasting, corporate image,
competitive positioning, and telemarketing. Some products such as business
panels and shared-cost programs are marketed independently as well as used by
the Company to deliver the above listed services.
2. HISTORICAL FINANCIAL STATEMENTS
The historical financial data presented in these pro forma consolidated
financial statements represent the financial position and results of operations
of (i) the Company as of and for the year ended December 31, 1997 and (ii) Pro
Tel Marketing, Inc. as of and for the year ended December 31, 1997. Such data
is derived from the respective financial statements of the Company and Pro Tel
Marketing, Inc.
3. ACQUISITION
The purchase price was comprised of a $10,000 cash payment and 400,000 options
to purchase shares of the Company's common stock, with the provision that such
options may, at the option of the holders, be returned to the Company for a cash
payment of $2,000 ("Option Guarantee Obligation") on the second anniversary of
the closing. The fair value of such options at the acquisition date is $1,691.
The fair value of the assets acquired and liabilities was $632 and $143,
respectively. The Company incurred $543 of costs related to the acquisition.
Identifiable intangible assets valued at $1,250 are being amortized using the
straight-line method over a period of five years. The excess consideration paid
over the estimated fair value of net assets acquired amount to $10,495 has been
recorded as goodwill to be amortized using the straight-line method over a
period of fifteen years.
In addition, over the next three years, the sellers may earn up to an additional
$10,000 of cash payments, contingent upon Pro Tel achieving certain future
targets for revenues and earnings before interest, income taxes, depreciation
and amortization. The pro forma adjustments presented do not give effect to any
such contingent payments.
PRO FORMA ADJUSTMENTS
Balance sheet adjustments:
<PAGE>
(a) Records the funding of the purchase price through borrowings under the
Company's credit facility.
(b) Records the payment of the cash portion of the purchase price together
with payments of closing costs.
(c) Records the Option Guarantee Obligation at its fair value.
(d) Records the elimination of assets not acquired and liabilities not
assumed.
(e) Records the allocation of the purchase price over the estimated fair
value of the net assets acquired, $1,250 for covenants not to compete
and $10,495 for goodwill.
(f) Records the elimination of the stockholders' equity of Pro Tel
Marketing, Inc.
Statement of operations adjustments:
(a) Adjusts the compensation to the former owners and executives of the
acquired company to contractual levels of compensation.
(b) Adjusts depreciation of property and equipment based upon the adjusted
carrying values of such assets and records the amortization (i) of the
covenants not to compete over a period of five years; and (ii) of the
excess or cost over net assets acquired attributable to the acquisition
over a period of fifteen years.
(c) Records interest expense relating to the portion of the purchase price
funded through borrowing under the Company's credit facility using a
rate per annum of 8.75%.
(d) Records interest expense reflecting the accretion of the Option
Guarantee Obligation at a rate per annum of 8.75%.
(e) To eliminate the historical non-operating income.
(f) Records an additional provision for income taxes at an effective tax
rate of 40%.
5. EARNINGS PER SHARE
Earnings per share is calculated by dividing the net income by the weighted
average outstanding shares during the period. The weighted average outstanding
shares during the period is calculated as follows:
Basic:
Shares outstanding December 31, 1997 4,144,164
===========
Dilutive:
Shares outstanding at December 31, 1997 4,145,866
===========
