-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CCZlXRuxvlcBw5Y7F4Kof+XAsO/1oIgTX3lXD/9GCXFBzOIQ8a3Tzlv3SsZeHcGc OAoFZvENGbD9DR2LCwvrYA== 0000897069-02-000900.txt : 20021114 0000897069-02-000900.hdr.sgml : 20021114 20021114142553 ACCESSION NUMBER: 0000897069-02-000900 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL RESEARCH CORP CENTRAL INDEX KEY: 0000070487 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-TESTING LABORATORIES [8734] IRS NUMBER: 470634000 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-29466 FILM NUMBER: 02824224 BUSINESS ADDRESS: STREET 1: 1245 Q STREET CITY: LINCOLN STATE: NE ZIP: 68508 BUSINESS PHONE: 4024752525 MAIL ADDRESS: STREET 1: 1245 Q STREET CITY: LINCOLN STATE: NE ZIP: 68508 10-Q 1 sdc262.txt 10-Q QUARTERLY REPORT 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, 2002 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 0-29466 National Research Corporation (Exact name of Registrant as specified in its charter) Wisconsin 47-0634000 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1245 "Q" Street, Lincoln Nebraska 68508 (Address of principal executive offices) (Zip Code) (402) 475-2525 (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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes No X --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.001 par value, outstanding as of October 31, 2002: 7,236,712 shares NATIONAL RESEARCH CORPORATION FORM 10-Q INDEX For the Quarter Ended September 30, 2002 Page No. -------- PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Balance Sheets 3 Condensed Statements of Income 4 Condensed Statements of Cash Flows 5 Notes to Condensed Financial Statements 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-11 Item 3. Quantitative and Qualitative Disclosures About 12 Market Risk Item 4. Controls and Procedures 12 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 13 Signatures 14 Certifications 15-16 Exhibit Index 17 2 PART I - Financial Information ITEM 1 Financial Statements NATIONAL RESEARCH CORPORATION CONDENSED BALANCE SHEETS September 30, December 31, 2002 2001 ------------- ------------ (unaudited) Assets Current assets: Cash and cash equivalents $ 1,658,296 $ 1,080,053 Investments in marketable debt securities 8,931,761 6,636,543 Trade accounts receivable, less allowance for doubtful accounts of $60,820 and $101,674 in 2002 and 2001, respectively 2,837,594 2,141,104 Unbilled revenues 2,284,300 1,671,079 Prepaid expenses and other 274,183 286,653 Income taxes recoverable --- 266,034 Deferred income taxes 181,529 210,452 ----------- ----------- Total current assets 16,167,663 12,291,918 ----------- ----------- Net property and equipment 12,552,646 12,907,197 ----------- ----------- Customer lists, net of accumulated amortization 599,949 631,135 Goodwill and other intangibles, net of accumulated amortization 7,910,965 7,908,043 Other 29,724 34,099 ------------ ----------- Total assets $37,260,947 $33,772,392 =========== =========== Liabilities and Shareholders' Equity Current liabilities: Current portion of notes payable $ 128,082 $ 132,312 Accounts payable 400,673 1,391,043 Accrued wages, bonuses and profit sharing 639,651 494,446 Accrued expenses 423,687 364,642 Income taxes payable 670,059 --- Billings in excess of revenues earned 2,984,963 2,649,370 ----------- ----------- Total current liabilities 5,247,115 5,031,813 Notes payable, net of current portion 5,078,570 5,169,757 Deferred income taxes 412,455 217,424 ----------- ----------- Total liabilities 10,738,140 10,418,994 ----------- ----------- Shareholders' equity: Preferred stock, $.01 par value; authorized 2,000,000 shares, no shares issued and outstanding - - Common stock, $.001 par value; authorized 20,000,000 shares, issued 7,535,434 in 2002 and 7,395,593 in 2001 outstanding 7,230,834 in 2002 and 7,093,893 in 2001 7,527 7,395 Additional paid-in capital 17,798,883 17,255,917 Retained earnings 10,213,675 7,597,340 Accumulated other comprehensive income (loss), net of taxes 24,520 (4,185) Treasury stock, at cost; 304,600 in 2002 and 301,700 shares in 2001 (1,521,798) (1,503,069) ----------- ----------- Total shareholders' equity 26,522,807 23,353,398 ----------- ----------- Total liabilities and shareholders' equity $37,260,947 $33,772,392 =========== =========== See accompanying notes to condensed financial statements. 3 NATIONAL RESEARCH CORPORATION CONDENSED STATEMENTS OF INCOME (Unaudited)
Three months ended Nine months ended September 30, September 30, 2002 2001 2002 2001 ------------ ------------ ------------ ------------ Revenues $ 7,317,037 $ 6,104,832 $ 16,165,316 $ 13,562,930 ------------ ------------ ------------ ------------ Operating expenses: Direct expenses 3,388,030 2,688,610 6,962,252 6,323,551 Selling, general and administrative 1,200,381 1,383,983 3,562,212 3,516,858 Depreciation and amortization 400,884 509,139 1,223,240 1,377,086 ------------ ------------ ------------ ------------ Total operating expenses 4,989,295 4,581,732 11,747,704 11,217,495 ------------ ------------ ------------ ------------ Operating income 2,327,742 1,523,100 4,417,612 2,345,435 Other income (expense): Interest income 63,091 74,092 187,976 317,981 Interest expense (109,313) (112,920) (340,689) (342,142) Other, net (696) (2,269) (72,250) (11,435) ------------ ------------ ------------ ------------ Total other expense (46,918) (41,097) (224,963) (35,596) ------------ ------------ ------------ ------------ Income before income taxes 2,280,824 1,482,003 4,192,649 2,309,839 Provision for income taxes 854,282 550,086 1,576,313 831,550 ------------ ------------ ------------ ------------ Net income 1,426,542 931,917 2,616,336 1,478,289 ============ ============ ============ ============ Net income per share--basic and diluted $ .20 $ .13 $ .37 $ .21 ============ ============ ============ ============ Weighted average shares and share equivalents outstanding--basic 7,176,323 7,056,563 7,138,581 7,047,463 ============ ============ ============ ============ Weighted average shares and share equivalents outstanding--diluted 7,200,344 7,101,548 7,162,602 7,092,448 ============ ============ ============ ============ See accompanying notes to condensed financial statements.
4 NATIONAL RESEARCH CORPORATION CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) Nine months ended September 30, 2002 2001 ----------- ----------- Cash flows from operating activities: Net income $ 2,616,336 $ 1,478,289 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 1,223,240 1,377,086 Deferred income taxes 209,164 103,345 Gain on sale of property and equipment (1,420) (598) Gain on sale of other investments (18) --- Changes in assets and liabilities: Trade accounts receivable (696,490) 117,438 Unbilled revenues (613,221) (53,004) Prepaid expenses and other 30,572 (56,092) Accounts payable (521,212) 132,056 Accrued expenses, wages, bonuses, and profit sharing 204,250 (254,509) Income taxes recoverable and (payable) 936,093 482,561 Billings in excess of revenues earned 335,593 (214,566) ----------- ----------- Net cash provided by operating activities 3,722,887 3,112,006 ----------- ----------- Cash flows from investing activities: Purchases of property and equipment (1,301,743) (1,270,030) Proceeds from sale of property and equipment 1,420 598 Acquisition of healthcare survey business (21,565) (3,762,229) Purchases of securities available-for-sale (7,536,519) (9,211,601) Proceeds from the maturities of securities available-for-sale 5,284,811 10,808,011 ----------- ----------- Net cash used in investing activities (3,573,596) (3,435,251) ----------- ----------- Cash flows from financing activities: Payments on notes payable (95,417) (96,021) Proceeds from exercise of stock options 543,098 124,231 Purchase of treasury stock (18,729) --- ----------- ----------- Net cash provided by financing activities 428,952 28,210 ----------- ----------- Net increase (decrease) in cash and cash equivalents 578,243 295,035) ----------- ----------- Cash and cash equivalents at beginning of period 1,080,053 3,218,805 ----------- ----------- Cash and cash equivalents at end of period $ 1,658,296 $ 2,923,770 =========== =========== Supplemental disclosure of cash paid for: Interest $ 340,689 $ 342,131 =========== =========== Taxes $ 429,660 $ 245,754 =========== =========== Supplemental disclosures of noncash investing activities: Accounts payable included $210,335 in 2001 for purchases of property and equipment. In connection with the Company's acquisition of a business in 2001, the Company assumed unearned revenues of $0.3 million for uncompleted customer contracts. See accompanying notes to condensed financial statements. 5 NATIONAL RESEARCH CORPORATION Notes to Condensed Financial Statements 1. INTERIM FINANCIAL REPORTING The condensed balance sheet of National Research Corporation (the "Company") at December 31, 2001 was derived from the Company's audited balance sheet as of that date. All other financial statements contained herein are unaudited and, in the opinion of management, include all adjustments (consisting only of normal recurring adjustments) the Company considers necessary for a fair presentation of financial position, results of operations and cash flows in accordance with accounting principles generally accepted in the United States of America. Information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. These condensed financial statements should be read in conjunction with the financial statements and notes thereto that are included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001, filed with the Securities and Exchange Commission in March 2002. 2. COMPREHENSIVE INCOME Other than its net income, the Company's only other source of comprehensive income is unrealized gains or losses on marketable debt securities. Other comprehensive income from marketable debt securities was $28,705 and $30,328 for the nine month periods ended September 30, 2002 and 2001, respectively. 3. GOODWILL AND OTHER INTANGIBLE ASSETS In June 2001, the Financial Accounting Standards Board issued SFAS No. 142. Goodwill and Other Intangible Assets. This statement replaces the requirement to amortize goodwill and certain other intangible assets (with indefinite useful lives) with an annual impairment test. SFAS No. 142 also requires an evaluation of the estimated useful lives of intangible assets and an impairment test for goodwill and non-amortizable assets upon adoption. The Company adopted the provisions of SFAS No. 142 as of January 1, 2002. As a result of adopting this standard, the Company ceased amortizing goodwill and certain other non-amortizable intangible assets effective January 1, 2002. Total amortization expense was $16,610 and $175,745 during the three months ended September 30, 2002 and 2001, respectively, and $49,828 and $385,756 during the nine months ended September 30, 2002 and 2001, respectively. The following is the September 30, 2002 and 2001 statement of income data, adjusted as if SFAS No. 142 had been effective as of January 1, 2001: 6 Three months ended Nine months ended September 30, September 30, --------------------- --------------------- 2002 2001 2002 2001 --------- --------- --------- --------- Reported net income 1,426,542 931,917 2,616,336 1,478,289 Amortization of goodwill, net of taxes -- 105,029 -- 231,063 Adjusted net income 1,426,542 1,036,946 2,616,336 1,709,352 Reported net income per share $0.20 $0.13 $0.37 $0.21 Amortization of goodwill, net of taxes -- $0.01 -- $0.03 Adjusted net income per share $0.20 $0.14 $0.37 $0.24 All of the Company's goodwill and non-amortizable intangible assets are allocated to one reporting unit, the healthcare survey business. The Company also completed it's transitional evaluation of the recoverability of goodwill and non-amortizable intangible assets as of January 1, 2002, using the fair value methodology of SFAS No. 142. The Company's analysis did not result in the recognition of an impairment loss on goodwill or other non-amortizable intangible assets. 4. EARNINGS PER SHARE Net income per share has been calculated and presented for "basic" and "diluted" data. "Basic" net income per share is computed by dividing net income by the weighted average number of common shares outstanding, whereas "diluted" net income per share is computed by dividing net income by the weighted average number of common shares outstanding adjusted for the dilutive effects of options and common equivalent shares outstanding. At September 30, 2002 and 2001, 34,080 and 51,931 options, respectively, have been excluded from the diluted net income per share computation because their exercise prices (ranging from $7.10 to $8.00 per share) exceed the average quoted market value of the Company's stock. 7 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The following table sets forth, for the periods indicated, selected financial information derived from the Company's condensed financial statements, expressed as a percentage of total revenues. The trends illustrated in the following table may not necessarily be indicative of future results. The discussion that follows the table should be read in conjunction with the condensed financial statements. Percentage of Total Revenues -------------------------------------------- Three months ended Nine months ended September 30, September 30, -------------------- --------------------- 2002 2001 2002 2001 -------------------- --------------------- Revenues: 100.0% 100.0% 100.0% 100.0% ==================== ===================== Operating expenses: Direct expenses 46.3 44.0 43.1 46.6 Selling, general and administrative 16.4 22.7 22.0 25.9 Depreciation and amortization 5.5 8.3 7.6 10.2 -------------------- --------------------- Total operating expenses: 68.2 75.0 72.7 82.7 -------------------- --------------------- Operating income 31.8% 25.0% 27.3% 17.3% ==================== ===================== Three Months Ended September 30, 2002 Compared to Three Months Ended September 30, 2001 Total revenues. Total revenues increased 19.9% in the three month period ended September 30, 2002 to $7.3 million from $6.1 million in the three month period ended September 30, 2001. The increase was primarily due to the addition of new clients(including a major contract signed in January 2002). The third quarter in both years includes the seasonal quarterly increase in revenue from the annual release of the Healthcare Market Guide. Direct expenses. Direct expenses increased 26.0% to $3.4 million in the three month period ended September 30, 2002 from $2.7 million in the same period during 2001. The increase in direct expenses in the 2002 period was primarily due to increases in revenue and consisted of increases in printing and postage costs of $631,000, fieldwork and fees of $238,000, and computer related expenses of $20,000. This increase was partially offset by decreases in labor and payroll expenses of $193,000. Direct expenses as a percentage of total revenues increased to 46.3% in the three month period ended September 30, 2002 from 44.0% during the same period of 2001. Selling, general and administrative expenses. Selling, general and administrative expenses decreased 13.3% to $1.2 million for the three month period ended September 30, 2002 from $1.4 8 million for the same period in 2001. This decrease was primarily due to decreases in legal and consulting fees of $279,000 incurred primarily in connection with a previously disclosed legal proceeding. This decrease was offset by increases in product development costs and marketing costs of $76,000 and increases in salaries and benefits of $36,000. Selling, general, and administrative expenses decreased as a percentage of total revenues to 16.4% for the three month period ended September 30, 2002 from 22.7% for the same period in 2001. Depreciation and amortization. Depreciation and amortization expenses decreased 21.3% to $401,000 in the three month period ended September 2002 from $509,000 in the same period of 2001. The decrease is primarily due to the adoption of SFAS No. 142 on January 1, 2002. In connection with the adoption of SFAS No. 142, the Company ceased amortizing goodwill and certain other intangible assets. The three month period ended September 30, 2001 included $159,135 for amortization of certain intangible assets no longer subject to amortization. This was partially offset by additional depreciation in 2002 of software, computer equipment and production equipment. Depreciation and amortization expenses as a percentage of total revenues decreased to 5.5% in the three-month period ended September 30, 2002 from 8.3% in the same period of 2001. Provision for income taxes. The provision for income taxes totaled $854,000 (37.5% effective tax rate) for the three month period ended September 30, 2002 as compared to $550,000 (37.2% effective tax rate) for the same period in 2001. The effective tax rate was lower in 2001 due to differences in state income taxes. Nine Months Ended September 30, 2002 Compared to Nine Months Ended September 30, 2001 Total revenues. Total revenues increased 19.2% in the nine month period ended September 30, 2002 to $16.2 million from $13.6 million in the nine month period ended September 30, 2001. The increase was primarily due to the addition of new clients(including a major new contract signed in January 2002)and, to a lesser extent, an increase in scope of work from existing clients. Direct expenses. Direct expenses increased 10.1% to $7.0 million in the nine month period ended September 30, 2002 from $6.3 million in the same period during 2001. The increase was primarily due to increases in revenue and consisted of increases in printing and postage of $679,000, fieldwork and fees of $266,000 and computer expenses of $105,000. This increase was partially offset by decreases in labor and payroll expenses of $447,000. Direct expenses decreased as a percentage of total revenues to 43.1% in the nine month period ended September 30, 2002 from 46.6% during the same period of 2001. Selling, general and administrative expenses. Selling, general and administrative expenses increased 1.3% to $3.6 million in the nine month periods ended September 30, 2002 from $3.5 million in the same period during 2001. Increases in salaries and benefits of $188,000, contract services of $100,000 and marketing of $57,000 were partially offset by decreases in legal and consulting fees of $316,000 incurred primarily in connection with a previously disclosed legal proceeding. Selling, general, and administrative expenses as a percentage of total revenues decreased to 22.0% for the nine month period ended September 30, 2002 from 25.9% for the same period in 2001. 9 Depreciation and amortization. Depreciation and amortization expenses decreased 11.2% to $1.2 million in the nine month period ended September 2002 from $1.4 million in the same period of 2001. The decrease is primarily due to the adoption of SFAS No. 142 on January 1, 2002. In connection with the adoption of SFAS No. 142, the Company ceased amortizing goodwill and certain other intangible assets. The nine month period ended September 30, 2001 included $350,095 for amortization of certain intangible assets no longer subject to amortization. This was partially offset by the additional depreciation of software, computer equipment and production equipment. Depreciation and amortization expenses as a percentage of total revenues decreased to 7.6% in the nine-month period ended September 30, 2002 from 10.2% in the same period of 2001. Provision for income taxes. The provision for income taxes totaled $1.6 million (37.6% effective tax rate) for the nine month period ended September 30, 2002 as compared to $832,000 (36.0% effective tax rate) for the same period in 2001. The effective tax rate was lower in 2001 due to differences in state income taxes. Liquidity and Capital Resources The Company's principal source of funds historically has been cash flow from its operations. The Company's cash flow has been sufficient to provide funds for working capital and capital expenditures, other than expenditures related to the Company's building, which were paid, in part, from the proceeds of borrowings and the sales of securities available-for-sale. As of September 30, 2002, the Company had cash and cash equivalents of $1.7 million and working capital of $10.9 million. During the nine months ended September 30, 2002, the Company generated $3.7 million of net cash from operating activities as compared to $3.1 million during the same period in the prior year. The increase in cash flow was mainly due to higher net income, as well as changes in accrued expenses and income taxes payable. This was offset by the timing of collections of accounts receivable, the timing of costs incurred in advance of billings on certain projects and a decrease in accounts payable. For the nine months ended September 30, 2002, net cash used in investing activities was $3.6 million as compared to $3.4 million during the same period in the prior year. The 2002 net cash used in investing activities was primarily due to the investment of $1.3 million in furniture, computer equipment, software and production equipment to support the expansion of the Company's business, and an increase of the net purchases of securities available-for sale over the proceeds from the maturities of securities of $2.3 million. The 2001 net cash used in investing activities was primarily due to the purchase of The Picker Institute's healthcare survey business ($3.8 million) and investment of $1.3 million in furniture, computer equipment, software and production equipment to support the expansion of the Company's business, and was partially offset by the net proceeds of maturities of securities available-for-sale over the purchase of securities available for sale of $1.6 million. 10 Net cash generated in financing activities was $429,000 for the nine months ended September 30, 2002 compared to $28,000 of net cash generated during the same period in the prior year. The cash provided by financing activities during 2002 and 2001 was primarily due to proceeds from exercised stock options. The Company typically bills clients for projects before they have been completed. Billed amounts are recorded as billings in excess of revenues earned or deferred revenue on the Company's financial statements and are recognized as income when earned. As of September 30, 2002 and as of December 31, 2001, the Company had $3.0 million and $2.6 million of deferred revenues, respectively. The increase in deferred revenues at September 30, 2002 results primarily from project billing before revenues were earned. In addition, when work is performed in advance of billing, the Company records this work as a cost in excess of billings or unbilled revenue. At September 30, 2002 and December 31, 2001, the Company had $2.3 million and $1.7 million of unbilled revenues, respectively. Substantially all deferred and unbilled revenues will be earned and billed, respectively, within 12 months of the respective period ends. In October 1998, the Company announced plans to repurchase up to 245,000 shares of common stock in the open market or in privately negotiated transactions. The Company repurchased 245,000 shares between October 1998 and March 1999. In April 1999, the Board of Directors of the Company authorized the repurchase of an additional 150,000 shares. As of October 31, 2002, 68,100 shares have been repurchased under the new authorization. Accounting Pronouncements In June 2002, the Financial Accounting Standards Board issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. Under SFAS No. 146, a liability for exit costs would not be recognizable based upon the date that an entity commits to an exit plan. Instead, liabilities and expenses associated with exit plan activities are required to be expensed as incurred under the new standard. This statement also establishes that fair value is the objective for initial measurement of the liability. This statement addresses financial accounting and reporting for costs associated with exit or disposal activities and is effective for exit or disposal activities that are initiated after December 31, 2002. In October 2002, the Emerging Issues Task Force of the Financial Accounting Standards Board reached a tentative conclusion on the accounting for revenues in transactions that involve multiple deliverables. The guidance governs how to identify whether goods or services or both, that are to be delivered separately in a bundled sales arrangement, should be accounted for separately. This guidance is expected to be effective for fiscal years beginning after December 15, 2002, so we expect to adopt the guidance in our financial statements for the quarter ended March 31, 2003. We have not yet determined the impact of this tentative conclusion on our financial statements. 11 ITEM 3 Quantitative and Qualitative Disclosures About Market Risk The Company has not experienced any material changes in its market risk exposures since December 31, 2001. ITEM 4 Controls and Procedures (a) Based on their evaluation as of a date within 90 days of the filing of this Quarterly Report on Form 10-Q, the Company's principal executive officer and principal financial officer have concluded that the Company's disclosure controls and procedures (as defined in Rules 13a-14(c) and 15 d-14 (c) under the Securities Exchange Act of 1934 ( the "Exchange Act")) are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. (b) No significant changes were made in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. 12 PART II - Other Information ITEM 6 Exhibits and Reports on Form 8-K (a) Exhibits (99.1) Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. ss. 1350 (99.2) Certification of the Vice President, Treasurer and Chief Financial Officer pursuant to 18 U.S.C. ss. 1350 (b) Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended September 30, 2002. 13 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 thereunto duly authorized. NATIONAL RESEARCH CORPORATION Date: November 14, 2002 By: /s/ Michael D. Hays ---------------------------------------- Michael D. Hays President and Chief Executive Officer Date: November 14, 2002 By: /s/ Patrick E. Beans ---------------------------------------- Patrick E. Beans Vice President, Treasurer, Secretary and Chief Financial Officer (Principal Financial and Accounting Officer) 14 Certification I, Michael D. Hays, certify that: 1. I have reviewed this quarterly report on Form 10-Q of National Research Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 /s/ Michael D. Hays --------------------------------------- Michael D. Hays President and Chief Executive Officer 15 Certification I, Patrick E. Beans, certify that: 1. I have reviewed this quarterly report on Form 10-Q of National Research Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: (a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; (b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and (c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): (a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and (b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 /s/ Patrick E. Beans --------------------------------------- Patrick E. Beans Vice President, Treasurer and Chief Financial Officer 16 NATIONAL RESEARCH CORPORATION EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q For the Quarterly Period ended September 30, 2002 Exhibit ------- (99.1) Certification of the President and Chief Executive Officer pursuant to 18 U.S.C. ss. 1350 (99.2) Certification of the Vice President, Treasurer and Chief Financial Officer pursuant to 18 U.S.C. ss. 1350 17 EX-99.1 3 sdc262a.txt WRITTEN STATEMENT OF PRESIDENT AND CEO Exhibit (99.1) Written Statement of the President and Chief Executive Officer Pursuant to 18 U.S.C. ss.1350 Solely for the purposes of complying with 18 U.S.C. ss.1350, I, the undersigned President and Chief Executive Officer of National Research Corporation (the "Company"), hereby certify, based on my knowledge, that the Quarterly Report on Form10-Q of the Company for the quarter ended September 30, 2002 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Michael D. Hays - ----------------------------------- Michael D. Hays November 14, 2002 EX-99.1 4 sdc262b.txt WRITTEN STATEMENT OF VP, TREASURER AND CFO Exhibit (99.2) Written Statement of the Vice President, Treasurer and Chief Financial Officer Pursuant to 18 U.S.C. ss.1350 Solely for the purposes of complying with 18 U.S.C. ss.1350, I, the undersigned Vice President, Treasurer and Chief Financial Officer of National Research Corporation (the "Company"), hereby certify, based on my knowledge, that the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2002 (the "Report") fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Patrick E. Beans - ----------------------------------- Patrick E. Beans November 14, 2002 -----END PRIVACY-ENHANCED MESSAGE-----