<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 Quarterly Period Ended September 30, 1999
[_] 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 0-22554
-------
OPINION RESEARCH CORPORATION
---------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-3118960
- ------------------------ --------------------------
(State of incorporation) (I.R.S. Employer
23 Orchard Road
Skillman, NJ 08558
- ------------------------ --------------------------
(Address of principle (Zip Code)
executive offices)
908-281-5100
--------------------------------------------------------
(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) 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 practical date.
Common Stock, $0.01 Par Value - 4,243,889 shares outstanding as of September 30,
1999
<PAGE>
INDEX
Opinion Research Corporation and Subsidiaries
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - September 30, 1999 and
December 31, 1998
Condensed consolidated statements of income - Three and nine months
periods ended September 30, 1999 and 1998
Condensed consolidated statements of cash flows - Nine months ended
September 30, 1999 and 1998
Notes to condensed consolidated financial statements -
September 30, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
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
<PAGE>
OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(in thousands, except share amounts)
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1,999 1,998
---------- ----------
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 306 $ 1,058
Accounts receivable:
Billed 19,495 9,457
Unbilled services 13,773 3,383
---------- ----------
33,268 12,840
Less: allowance for doubtful accounts 254 209
---------- ----------
33,014 12,631
Prepaid and other current assets 3,367 4,244
---------- ----------
Total current assets 36,687 17,933
Property and equipment, net 8,795 5,421
Intangibles, net 4,491 2,134
Goodwill, net 35,217 23,659
Other assets 4,180 1,463
---------- ----------
$ 89,370 $ 50,610
========= =========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 4,511 $ 1,688
Accrued expenses 9,402 4,695
Deferred revenues 2,010 2,683
Acquisition payable - 3,000
Short term borrowings 2,037 2,623
---------- ----------
Total current liabilities 17,960 14,689
Long term debt 46,910 15,600
Deferred income taxes 1,846 404
Other liabilities 3,215 3,226
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,
4,281,747 shares issued and 4,243,889 outstanding in 1999
and 1998 42 42
Additional paid-in capital 15,399 14,216
Retained earnings 4,258 2,507
Treasury stock, at cost, 37,858 shares in 1999 and 1998 (186) (186)
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment (74) 112
---------- ----------
Total stockholders' equity 19,439 16,691
---------- ----------
$ 89,370 $ 50,610
========= =========
- -----------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Income
(in thousands, except share and per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- --------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 34,546 $ 18,265 $ 80,754 $ 54,905
Cost of revenues 22,338 11,587 51,031 33,825
------------ ------------ ------------ ------------
Gross profit 12,208 6,678 29,723 21,080
Selling, general and administrative expenses 8,095 4,543 19,636 14,280
Depreciation and amortization 1,601 936 4,070 3,138
------------ ------------ ------------ ------------
Operating income 2,512 1,199 6,017 3,662
Interest expense, net 1,315 462 2,617 1,251
------------ ------------ ------------ ------------
Income before provision for income taxes and
extraordinary loss 1,197 737 3,400 2,411
Provision for income taxes 503 337 1,559 1,124
------------ ------------ ------------ ------------
Income before extraordinary loss 694 400 1,841 1,287
Extraordinary loss on debt refinancings,
net of tax benefit of $60 in 1999 and $133 in 1998 - - (90) (150)
------------ ------------ ------------ ------------
Net income $ 694 $ 400 $ 1,751 $ 1,137
=========== =========== =========== ===========
Income before extraordinary loss per common share:
Basic $ 0.16 $ 0.10 $ 0.43 $ 0.31
=========== =========== =========== ===========
Diluted $ 0.16 $ 0.09 $ 0.43 $ 0.29
=========== =========== =========== ===========
Extraordinary loss on debt refinancings
per common share:
Basic $ - $ - $ (0.02)$ (0.04)
=========== =========== =========== ===========
Diluted $ - $ - $ (0.02)$ (0.03)
=========== =========== =========== ===========
Net income per common share:
Basic $ 0.16 $ 0.10 $ 0.41 $ 0.27
=========== =========== =========== ===========
Diluted $ 0.16 $ 0.09 $ 0.41 $ 0.26
=========== =========== =========== ===========
Weighted average common shares outstanding:
Basic 4,243,889 4,193,889 4,243,889 4,193,889
Diluted 4,303,249 4,405,296 4,304,453 4,378,038
- ------------------------------------------------------------------- ------------------------------ ------------
</TABLE>
See notes to financial statements
<PAGE>
OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------
1999 1998
--------- --------
<S> <C> <C>
Net cash provided (used) by operating activities $ 1,752 $ (102)
Cash flows from investing activities:
Payments for acquisitions (26,383) (12,131)
Proceeds from disposal of assets 106 142
Capital expenditures (2,598) (1,508)
--------- --------
Net cash used in investing activities (28,875) (13,497)
--------- --------
Cash flows from financing activities:
Borrowings under line-of-credit agreements 18,881 41,233
Repayments under line-of-credit agreements (25,735) (33,174)
Issuance of notes payable 43,970 20,092
Repayments of notes payable (11,846) (12,935)
Issuance of warrants 1,183 -
Repayments under capital lease arrangements (82) (155)
--------- --------
Net cash provided by financing activities 26,371 15,061
--------- --------
Increase (decrease) in cash and cash equivalents (752) 1,462
Cash and cash equivalents at beginning of period 1,058 160
--------- --------
Cash and cash equivalents at end of period $ 306 $ 1,622
======== =======
- -----------------------------------------------------------------------
</TABLE>
See notes to financial statements
<PAGE>
OPINION RESEARCH CORPORATION AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
September 30, 1999
(Unaudited)
(in thousands, except per share data)
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 nine-month period ended September 30,
1999 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1999. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998, as
amended.
NOTE B - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per
share for income before extraordinary loss:
<TABLE>
<CAPTION>
Three Months Ended Nine Months
September 30, Ended
September 30,
------------------------ --------------------------
1999 1998 1999 1998
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Numerator:
Income before extraordinary loss $ 694 $ 400 $1,841 $1,287
---------- ---------- ----------- -----------
Numerator for basic and diluted earnings
per share $ 694 $ 400 $1,841 $1,287
========== ========== =========== ===========
Denominator:
Denominator for basic earnings per
share,
Weighted-average shares 4,244 4,194 4,244 4,194
Effect of dilutive stock options 59 211 60 184
---------- ---------- ----------- -----------
Denominator for diluted earnings per
share
Adjusted weighted-average shares 4,303 4,405 4,304 4,378
========== ========== =========== ===========
Basic earnings per share $ 0.16 $ 0.10 $ 0.43 $ 0.31
========== ========== =========== ===========
Diluted earnings per share $ 0.16 $ 0.09 $ 0.43 $ 0.29
========== ========== =========== ===========
</TABLE>
<PAGE>
NOTE C - ACQUISITION
The Company acquired all of the outstanding shares of stock of Macro
International Inc. ("Macro") pursuant to a Stock Purchase Agreement dated April
30, 1999. The purchase price was comprised of a $22,300 cash payment and
approximately $1,010 of additional costs related to the acquisition. The fair
value of the net assets acquired was $8,742. Identifiable intangible assets
valued at $2,960 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 and identifiable intangible assets of $11,608 has
been recorded as goodwill and is being amortized using the straight-line method
over a period of twenty years.
In addition, over the next two years, the sellers may earn up to an additional
$8,700 of cash payments, contingent upon Macro achieving certain future targets
for revenues and earnings before interest, income taxes, depreciation and
amortization. The pro forma amounts presented below do not give effect to any
such contingent payments.
The unaudited pro forma results of operations for the nine months ended
September 30, 1999 and 1998, which assumes the consummation of the Macro
purchase as of the beginning of the respective periods are as follows:
<TABLE>
<CAPTION>
Pro Forma Nine Months Ended
September 30,
1999 1998
--------------- --------------
<S> <C> <C>
Revenues $102,847 $100,811
Income before extraordinary loss 921 819
Net income 831 669
Income before extraordinary loss per share:
Basic $ 0.22 $ 0.20
Diluted $ 0.21 $ 0.18
Net income per share:
Basic $ 0.20 $ 0.16
Diluted $ 0.19 $ 0.15
</TABLE>
The pro forma income before extraordinary loss and net income include
adjustments for amortization of goodwill and intangible assets, interest
expense, and the related income tax effects of such adjustments. Also included
in the 1999 period are expenses of $870 incurred by Macro prior to the
acquisition for losses on the closure of certain subsidiaries and merger related
costs.
<PAGE>
NOTE D - CREDIT FACILITIES
In May 1999, in connection with the acquisition of Macro, the Company entered
into a credit agreement with a financial institution for a new facility of
$50,000 (the "Senior Facility"). This financial institution later syndicated
the facility to include four additional financial institutions. The Senior
Facility provides $30,000 of term notes and up to $20,000 of revolving credit
for a six-year term and is secured by substantially all of the assets of the
Company. The Senior Facility carries an interest rate at the discretion of the
Company of either the financial institution's designated base rate (8.25% at
September 30, 1999) plus 125 basis points or LIBOR (3-month LIBOR was 5.51% at
September 30, 1999) plus 275 basis points for both revolving credit and term
notes. Principal payments on the term notes are due in escalating quarterly
installments commencing September 30, 1999. As of September 30, 1999, the
Company had approximately $15,000 of additional credit available under the
Senior Facility.
In May 1999, the Company also issued $15,000 of subordinated debentures to a
financial institution. In exchange for consideration received in connection
with this debt, the Company also issued warrants to purchase a maximum of
437,029 shares of the Company's common stock at an exercise price of $5.422 per
share. The warrants are exercisable from the date of issuance and expire in
2007. The subordinated financing has an eight-year term and a coupon rate of
12%.
All debt outstanding as of May 26, 1999 was repaid with proceeds from the above
borrowings. In conjunction with its new credit facilities, the Company recorded
an after-tax, non-cash charge of $90 for the write-off of unamortized loan fees.
This charge was recorded as an extraordinary loss from debt refinancing in the
second quarter of 1999.
NOTE E - COMPREHENSIVE INCOME
The Company's comprehensive income for the three and nine months ended September
30, 1999 and 1998, are set forth in the following table:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
--------------------------- ---------------------------
1999 1998 1999 1998
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
Net income $ 694 $ 400 $1,751 $1,137
Other comprehensive income (loss):
Foreign currency translation 95 254 (186) 348
adjustment ----------- ------------ ----------- -----------
Comprehensive income $ 789 $ 654 $1,565 $1,485
=========== ============ =========== ===========
</TABLE>
<PAGE>
NOTE F - SEGMENTS
The Company's operations by business segments for the three and nine months
ended September 30, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
U.S. Market U.K. Market Teleservices Macro Total
Research Research International Segments Other Consolidated
- ----------------------------------------------------------------------------------------------------------------------------------
Three months ended September 30, 1999:
- --------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues from external
customers $ 9,131 $ 4,124 $ 4,220 $16,052 $33,527 $1,019 $34,546
Operating income 933 146 441 902 2,422 90 2,512
Interest expense, net 1,315
Income before income taxes
and extraordinary loss 1,197
Total assets 24,809 9,598 16,544 36,188 87,139 2,231 89,370
Three months ended September 30, 1998:
- --------------------------------------
Revenues from external
customers $ 9,940 $ 3,656 $ 3,698 - $17,294 $ 971 $18,265
Operating income 533 100 541 - 1,174 25 1,199
Interest expense, net 462
Income before income taxes
and extraordinary loss 737
Total assets 24,155 9,623 15,415 - 49,193 1,685 50,878
Nine months ended September 30, 1999:
- ------------------------------------
Revenues from external
customers $27,676 $11,108 $12,530 $26,625 $77,939 $2,815 $80,754
Operating income 2,708 244 1,519 1,383 5,854 163 6,017
Interest expense, net 2,617
Income before income taxes
and extraordinary loss 3,400
Total assets 24,809 9,598 16,544 36,188 87,139 2,231 89,370
Nine months ended September 30, 1998:
- ------------------------------------
Revenues from external
customers $29,748 $10,744 $11,456 - $51,948 $2,957 $54,905
Operating income 2,568 310 799 - 3,677 (15) 3,662
Interest expense, net 1,251
Income before income taxes
and extraordinary loss 2,411
Total assets 24,155 9,623 15,415 - 49,193 1,685 50,878
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
(in thousands)
RESULTS OF OPERATIONS - THIRD QUARTER 1999 AS COMPARED TO THIRD QUARTER 1998
Revenues for the third quarter of 1999 increased $16,281, or 89%, from $18,265
in the third quarter of 1998 to $34,546 in the third quarter of 1999. The
acquisition of Macro International Inc. (the "Acquisition") in the second
quarter of 1999 accounted for substantially all the increase in revenues for the
three months ended September 30, 1999 relative to the same period in 1998.
Revenues from the Company's Teleservice business increased from $3,698 to
$4,220, or 14%, from the third quarter of 1998 to the third quarter of 1999 as
operations at the new St. John facility continued to ramp up. Revenues in the
core market research business were down by $293, or 2%, as compared to the same
period a year ago.
Gross profit for the three months ended September 30, 1999 was $12,208, an
increase of $5,530, or 83%, over the same period in 1998. The Acquisition
contributed $4,570 to gross profit. Gross profit of the Company's core market
research business increased $721, or 15%, for the third quarter of 1999 as
compared to the same period in 1998, primarily due to enhanced operations in the
international subsidiaries. Gross profit of the Company's Teleservice business
increased $239, or 14%, for the third quarter of 1999. As a percentage of
revenues, gross profit decreased to 35% for the third quarter of 1999 compared
to 37% in 1998 due to the impact of the Acquisition. The gross profit as a
percentage of revenues for the Acquisition was 28% for the third quarter of
1999. Non-acquisition gross profit increased from 37% to 41%.
Selling, general and administrative expenses ("SG&A") increased to $8,095 from
$4,543 for the three months ended September 30, 1999 relative to the same period
in 1998. The Acquisition accounted for $3,095, or 87%, of the total increase.
Inclusive of the Acquisition, combined SG&A as a percentage of revenues has
decreased to 23% for the three months ended September 30, 1999 from 25% for the
comparable period in 1998.
The lower gross profit and lower SG&A percentages for the Acquisition are due to
the nature of its business, as approximately 70% of Macro's business is
conducted with government entities. Consequently, in accordance with the
prescribed accounting procedures for government contractors, Macro's cost of
revenues reflect certain costs attributable to its contract projects which the
Company classifies as general and administrative expenses for its other
operating segments. Therefore, the inclusion of Macro in the operating results
of the Company has, and will continue to have, the effect of lowering, as a
percentage of revenues, the consolidated gross profit and SG&A.
Depreciation and amortization expense increased to $1,601 from $936 for the
three months ended September 30, 1999 relative to the same period in 1998. The
Acquisition accounted for $573, or 86%, of the increase. Non-acquisition
depreciation and amortization increased from $936 to $1,028, or 10%, from the
third quarter of 1998 to the third quarter of 1999 principally
<PAGE>
due to additional goodwill amortization on a $3,000 acquisition earn-out payment
in the Teleservices business and the depreciation of new capital investments.
Interest expense increased to $1,315 from $462 for the third quarter of 1999
relative to the same period in 1998 primarily due to the increased borrowings to
fund the Acquisition.
As a result of all of the above, net income for the Company increased from $400
to $694 for the three months ended September 30, 1998 and 1999, respectively.
Results of Operations - Nine Months Ended September 30, 1999 as Compared to Nine
Months Ended September 30, 1998
Revenues for the first nine months of 1999 increased $25,849, or 47%, as
compared to the first nine months of 1998. The Acquisition added $26,625 to the
total revenues in 1999. Non-acquisition revenues decreased by $776, or 1%, for
the first nine months of 1999 compared to the same period in 1998. Revenues
from the Company's Teleservice business increased from $11,456 to $12,530, or
9%, while revenues in the core market research business were down by $1,850, or
4%, as compared to the same period a year ago.
Gross profit for the nine months ended September 30, 1999 increased by $8,643,
or 41%, from $21,080 to $29,723. As a percentage of revenues, gross profit
decreased from 38% in 1998 to 37% in 1999. The decrease in the gross profit
percentage is attributable to the inclusion of the Acquisition for 1999, for
which the gross profit percentage is 28%. Non-acquisition gross profit has
increased by $1,158, or 5%, during 1999. As a percentage of revenues, non-
acquisition gross profit has increased from 38% in 1998 to 41% in 1999.
Selling, general and administrative expenses increased from $14,280 to $19,636
for the nine months ended September 30, 1999, relative to the same period in
1998. As a percentage of revenues, SG&A has decreased from 26% for the nine
months ended September 30, 1998 to 24% for the comparable period in 1999.
Substantially all of the dollar increase in SG&A is due to the inclusion of the
Acquisition.
The lower gross profit and lower SG&A percentages for the Acquisition are due to
the nature of its business, as approximately 70% of Macro's business is
conducted with government entities. Consequently, in accordance with the
prescribed accounting procedures for government contractors, Macro's cost of
revenues reflect certain costs attributable to its contract projects which the
Company classifies as general and administrative expenses for its other
operating segments. Therefore, the inclusion of Macro in the operating results
of the Company has, and will continue to have, the effect of lowering, as a
percentage of revenues, the consolidated gross profit and SG&A.
Depreciation and amortization expense increased from $3,138 to $4,070 for the
nine months ended September 30, 1999, relative to the same period in 1998. The
increase in depreciation and amortization is principally attributable to the
inclusion of the Acquisition for 1999 and additional amortization related to a
$3,000 acquisition earn-out payment in the Teleservices business.
<PAGE>
Interest expense increased to $2,617 from $1,251 for the first nine months of
1999 relative to the same period in 1998 primarily due to the increased
borrowings to fund the Acquisition.
The Company recorded extraordinary losses, net of tax benefits, of $90 and $150,
for the second quarters of 1999 and 1998, respectively. These non-cash charges
resulted from the write-off of unamortized loan origination fees in connection
with debt refinancings during each period.
As a result of all of the above, net income for the Company increased from
$1,137 to $1,751 for the nine months ended September 30, 1998 and 1999,
respectively.
Liquidity and Capital Resources
Net cash provided by operations for the first nine months of 1999 was $1,752.
Investing and financing activities for the first nine months of 1999 included
capital expenditures of $2,598 and payments of $26,383 with respect to the
Acquisition and earn-out payments for previous 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.
In May 1999, in connection with the acquisition of Macro, the Company entered
into a credit agreement with a financial institution for a new facility of
$50,000 (the "Senior Facility"). This financial institution later syndicated
the facility to include four additional financial institutions. The Senior
Facility provides $30,000 of term notes and up to $20,000 of revolving credit
for a six-year term and is secured by substantially all of the assets of the
Company. The Senior Facility carries an interest rate at the discretion of the
Company of either the financial institution's designated base rate (8.25% at
September 30, 1999) plus 125 basis points or LIBOR (3-month LIBOR was 5.51% at
September 30, 1999) plus 275 basis points for both revolving credit and term
notes. Principal payments on the term notes are due in escalating quarterly
installments commencing September 30, 1999. As of September 30, 1999, the
Company had approximately $15,000 of additional credit available under the
Senior Facility.
In May 1999, the Company also issued $15,000 of subordinated debentures to a
financial institution. In exchange for consideration received in connection
with this debt, the Company also issued warrants to purchase a maximum of
437,029 shares of the Company's common stock at an exercise price of $5.422 per
share. The warrants are exercisable from the date of issuance and expire in
2007. The subordinated financing has an eight-year life and a coupon rate of
12%.
All debt outstanding as of May 26, 1999 was repaid with proceeds from the above
borrowings. In conjunction with its new credit facilities, the Company recorded
an after-tax, non-cash charge of $90 for the write-off of unamortized loan fees.
This charge was recorded as an extraordinary loss from debt refinancing in the
second quarter of 1999.
<PAGE>
Readiness for Year 2000
The Year 2000 issue concerns the inability of some computer hardware and
software to distinguish between the year 1900 and the year 2000. If not
corrected, the potential exists for computer system failures or miscalculations.
The Company uses computer systems in many aspects of its business, and Year 2000
problems in such systems, if not corrected, could disrupt operations and have an
adverse impact on the Company's operating results. The Company is also exposed
to the risk that one or more of its vendors or service providers could
experience Year 2000 problems that impact the ability of such vendor or service
provider to provide goods and services. To date, the Company is not aware of
any vendor or service provider Year 2000 issue that would have a material
adverse impact on the Company's operations.
The implementation of Year 2000 compliance procedures at the Company has
consisted of: compiling information as to the information technology (IT) and
non-IT systems that are sensitive to the Year 2000 problem; coordinating with
clients, vendors, service providers, and other third parties who are affected
by, or may affect, the Company's plans to address the Year 2000 issue.
Additionally, analysis of critical systems to determine which systems are not
Year 2000 compliant and evaluating the costs to repair or replace those systems
have been undertaken by the Company. As potential problems are identified,
affected programs have been modified, or are in the process of being modified by
the Company's system support group to ensure future compliance.
The Company has completed the testing of Year 2000 compliance of its critical
and non-critical systems. The Company has replaced or upgraded all critical
systems. Testing and confirmation of compliance of the remaining non-critical
systems will be completed by November 30, 1999. Incremental out-of-pocket costs
incurred through September 30, 1999 have not been significant. The Company
estimates that no more than $100 will be needed to modify or replace its
existing software and hardware in order to be Year 2000 compliant. All
maintenance and modification costs are expensed as incurred, while the costs of
new systems are being capitalized according to generally accepted accounting
principles.
Based upon its analysis to date, management believes that the Company will be
able to continue operations in the year 2000 and beyond without a material
adverse effect caused by the Year 2000 problems. The Company relies upon
commercially available hardware and software which have been certified by the
Company's suppliers as Year 2000 compliant. Therefore, the Company is reliant
on the claims and statements provided by vendors, the majority of whom have a
national presence and reputation. A worst case scenario resulting from one or
more of the Company's systems being non-compliant might be an inability to
service one or more of our clients until such problem was corrected. The
Company believes that such Year 2000 difficulties experienced by the Company
would be isolated in nature and will not have a material adverse effect on the
Company's operations.
<PAGE>
Forward-looking Statements
Certain statements contained in Management's Discussion and Analysis, and
elsewhere in this quarterly report, are forward-looking statements. The
forward-looking statements are subject to risks and uncertainties, including,
but not limited to, competition, foreign exchange fluctuations, uncertainties of
international economies, and other risk factors discussed in this filing.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Market risks relating to the Company's operations result primarily from changes
in interest rates and changes in foreign exchange rates. The table below
presents principal cash flows and related weighted average interest rates by
expected maturity dates for its debt obligations.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Interest Rate Sensitivity
Principal Amount by Expected Maturity
Average Interest Rate
There- Fair Value
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1999 2000 2001 2002 2003 After Total 9/30/99
- --------------------------------------------------------------------------------------------------------------
Liabilities
Long-term debt including current portion:
Variable rate debt $ 500 $2,000 $3,000 $4,500 $6,000 $18,873 $34,873 $ 34,873
Average interest rate -
LIBOR+2.75%
Fixed rate debt - 12% $15,000 $15,000 $ 13,999
Other, average interest rate - 10.1% $ 37 $ 38 $ 75 $ 75
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on August 31,
1999 at the Company's headquarters for the following purposes:
1. To elect two directors to serve until the 2002 Annual Meeting of
Stockholders of the Company and until their respective successors
have been duly elected and qualified. Each of the nominees was
approved by the following votes:
<TABLE>
<CAPTION>
Votes Votes Abstentions and
For Against Broker Non-Votes
--------------- -------------- ---------------------
<S> <C> <C> <C>
John F. Short 3,224,964 0 621,610
Stephen A. Greyser 3,224,964 0 621,610
</TABLE>
The following directors continue in office after the 1999 Annual
Meeting of Stockholders:
Derek B. Smith
Gregory C. Ellis
Lenard B. Tessler
James T. Heisler
Dale J. Florio
2. To ratify the appointment of Ernst & Young LLP as the Company's
independent auditors for the 1999 fiscal year. The matter was
approved by the following votes:
<TABLE>
<CAPTION>
Abstentions and
Votes For Votes Against Broker Non-Votes
------------------------------- ------------------------ ----------------------------
<S> <C> <C>
3,238,264 608,310 0
</TABLE>
<PAGE>
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Financial Data Schedule (EDGAR only).
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
---------------------------------------
(Registrant)
Date: November 12, 1999 /s/ Douglas L. Cox
----------------- ---------------------------------------
Douglas L. Cox
Executive Vice President &
Chief Financial Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1999 AND THE RELATED CONSOLIDATED
STATEMENTS OF INCOME AND CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 306
<SECURITIES> 0
<RECEIVABLES> 33,268
<ALLOWANCES> 254
<INVENTORY> 0
<CURRENT-ASSETS> 36,687
<PP&E> 8,795
<DEPRECIATION> 0
<TOTAL-ASSETS> 89,370
<CURRENT-LIABILITIES> 17,960
<BONDS> 46,910
0
0
<COMMON> 42
<OTHER-SE> 19,397
<TOTAL-LIABILITY-AND-EQUITY> 89,370
<SALES> 0
<TOTAL-REVENUES> 80,754
<CGS> 0
<TOTAL-COSTS> 51,031
<OTHER-EXPENSES> 23,706
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,617
<INCOME-PRETAX> 3,400
<INCOME-TAX> 1,559
<INCOME-CONTINUING> 1,841
<DISCONTINUED> 0
<EXTRAORDINARY> (90)
<CHANGES> 0
<NET-INCOME> 1,751
<EPS-BASIC> 0.43
<EPS-DILUTED> 0.43
</TABLE>
