8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report
(Date of earliest event reported):	February 14, 2006

National Research Corporation

(Exact name of registrant as specified in its charter)

Wisconsin	0-29466	47-0634000
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation)		Identification No.)

1245 Q Street, Lincoln, Nebraska 68508

(Address of principal executive offices, including zip code)

(402) 475-2525

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[   ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[   ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[   ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[   ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.      Results of Operations and Financial Condition.

        On February 14, 2006, National Research Corporation (the “Company”) issued a press release announcing its earnings for the quarter and year ended December 31, 2005. A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

        On February 15, 2006, the Company held a conference call in connection with the Company’s announcement of its earnings for the quarter and year ended December 31, 2005. A copy of the script for such conference call is furnished as Exhibit 99.2 and is incorporated by reference herein. An archive of such conference call and the related question and answer session will be available online at www.earnings.com.

Item 9.01.      Financial Statements and Exhibits.

(a) Not applicable.

(b) Not applicable.

(c) Not applicable.

(d) Exhibits. The following exhibits are being furnished herewith:

(99.1) Press Release of National Research Corporation, dated February 14, 2006.

(99.2) Script for conference call, held February 15, 2006.

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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.

Date: February 15, 2006

NATIONAL RESEARCH CORPORATION

By:  /s/ Patrick E. Beans

        Patrick E. Beans

        Vice President, Treasurer, Secretary and Chief Financial Officer

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NATIONAL RESEARCH CORPORATION

Exhibit Index to Current Report on Form 8-K
Dated February 14, 2006

Exhibit
Number

(99.1) Press Release of National Research Corporation, dated February 14, 2006.

(99.2) Script for conference call, held February 15, 2006.

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EX-99.1

1245 “Q” Street
Lincoln, NE 68508
Phone: 402-475-2525
Fax: 402-475-9061

Contact: Patrick E. Beans
Chief Financial Officer
402-475-2525

NATIONAL RESEARCH CORPORATION ANNOUNCES
FOURTH QUARTER AND YEAR-END 2005 RESULTS

Board of Directors Authorizes Increase in Quarterly Dividend
and Implementation of Stock Repurchase Program

LINCOLN, Nebraska (February 14, 2006) — National Research Corporation (NASDAQ/NM:NRCI), a leader in healthcare performance measurement, today announced results for the fourth quarter and year ended December 31, 2005.

        The Company also announced that its Board of Directors has increased the Company’s regular quarterly cash dividend to $0.10 (ten cents) per share. The dividend is payable on March 31, 2006, to shareholders of record as of the close of business on March 10, 2006.

        In addition, the Company’s Board of Directors has authorized the repurchase of up to 750,000 shares of the Company’s common stock. The repurchased shares will be added to the treasury shares of the Company and may be used for employee stock plans and other corporate purposes.

        Commenting on the results, Michael D. Hays, chief executive officer of National Research Corporation, said, “Our fourth quarter performance provided for a strong finish to 2005. I am even more pleased that we began 2006 with a backlog of $37.7 million in recurring contract value, which is 28% greater than our starting point for 2005.”

        Revenues for the quarter ended December 31, 2005, were $8.6 million compared with revenues of $6.4 million for the same period in 2004. Net income for the quarter ended December 31, 2005, was $1.5 million, or $0.22 per basic and diluted share, compared with net income of $921,000, or $0.13 per basic and diluted share, in the prior year period.

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NRCI Announces Fourth Quarter and Year-End Results
Page 2
February 14, 2006

        Revenues for the year ended December 31, 2005, were $32.4 million compared with revenues of $29.7 million for the same period in 2004. Net income for the year ended December 31, 2005, was $5.2 million, or $0.74 per basic and diluted share, compared with $4.6 million, or $0.63 per basic and diluted share, in the prior-year period.

        In closing, Patrick E. Beans, chief financial officer of National Research Corporation, added, “Our sales expansion efforts are delivering top line growth, which, in concert with our history of fiscal discipline, speaks well for continuing earnings growth.”

        A listen-only simulcast of National Research Corporation’s fourth quarter and year-end 2005 conference call will be available online at www.earnings.com on February 15, 2006, beginning at 11:00 a.m. Eastern time. The online replay will follow approximately an hour later and continue for 30 days.

        National Research Corporation, headquartered in Lincoln, Nebraska, is a leading provider of ongoing survey-based performance measurement, analysis, tracking and improvement services to the healthcare industry in the United States and Canada. The Company addresses the growing need of healthcare providers and payors to measure the care outcomes, specifically satisfaction and health status, of their patients and/or members. The Company develops tools that enable healthcare organizations to obtain performance measurement information necessary to improve their business practices.

        This press release includes “forward-looking” statements related to the Company that can generally be identified as describing the Company’s future plans, objectives or goals. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the factors that could affect the Company’s future results, please see the Company’s filings with the Securities and Exchange Commission.

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NRCI Announces Fourth Quarter and Year-End Results
Page 3
February 14, 2006

NATIONAL RESEARCH CORPORATION
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)

	Three Months Ended December 31,						Year Ended December 31,
	2005			2004			2005			2004
Revenues	$	8,558		$	6,430		$	32,436		$	29,683
Operating expenses:
Direct expenses		3,801			2,680			13,642			12,869
Selling, general and administrative		2,012			1,817			8,617			7,394
Depreciation and amortization		428			526			1,762			2,018
Total operating expenses		6,241			5,023			24,021			22,281
Operating income		2,317			1,407			8,415			7,402
Other income (expense):
Interest income		120			96			488			345
Interest expense		(76	)		(104	)		(380	)		(459	)
Other, net		--			32			(9	)		(5	)
Total other income (expense)		44			24			99			(119	)
Income before income taxes		2,361			1,431			8,514			7,283
Provision for income taxes		827			510			3,278			2,732
Net income	$	1,534		$	921		$	5,236		$	4,551
Net income per share, basic	$	0.22		$	0.13		$	0.74		$	0.63
Net income per share, diluted	$	0.22		$	0.13		$	0.74		$	0.63
Weighted average shares outstanding:
Basic		6,921			7,142			7,038			7,181
Diluted		7,012			7,211			7,118			7,249

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NRCI Announces Fourth Quarter and Year-End Results
Page 4
February 14, 2006

NATIONAL RESEARCH CORPORATION
Unaudited Consolidated Condensed Balance Sheets
(Dollars in thousands)

	Dec. 31, 2005			Dec. 31, 2004
ASSETS
Current Assets:
Cash and cash equivalents	$	844		$	3,648
Short-term investments		9,452			15,348
Accounts receivable, net		5,495			3,392
Other current assets		2,427			3,066
Total current assets		18,218			25,454
Net property and equipment		11,891			12,355
Other, net		14,438			10,145
Total Assets	$	44,547		$	47,954
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	1,878		$	851
Deferred revenue		5,434			4,036
Accrued compensation		1,248			976
Notes payable		1,471			156
Income taxes payable		--			--
Total current liabilities		10,031			6,019
Non-current liabilities		1,922			6,917
Total Liabilities		11,953			12,936
Shareholders’ Equity:
Common stock, $0.001 par value; 20,000,000 shares authorized;
issued 7,740,571 in 2005 and 7,684,006 in 2004;
outstanding 6,845,571 in 2005 and 7,174,706 in 2004		8			8
Additional paid-in capital		20,046			19,346
Retained earnings		23,360			20,382
Unearned compensation		(432	)		(182	)
Accumulated other comprehensive income		300			220
Treasury stock		(10,688	)		(4,756	)
Total shareholders’ equity		32,594			35,018
Total Liabilities and Shareholders’ Equity	$	44,547		$	47,954

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EX-99.2

Mike:

Thank you ___________, and welcome everyone to National Research Corporation’s fourth quarter and year-end 2005 conference call. My name is Mike Hays, the Company’s CEO, and joining me on the call today is Patrick Beans our CFO.

Before we commence our remarks, I would ask Pat to review conditions related to any forward-looking statements that may be made as part of today’s call. Pat.

Pat:

Thank you, Mike. This conference call includes forward-looking statements related to the Company that involve risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the facts that could affect the company’s future results, please see the company’s filings with the Securities and Exchange Commission. With that, I’ll turn it back to you, Mike.

Mike:

Thank you, Pat.

During the call today, I will report on the global metrics we track and outline our focus for 2006, but first let me have Pat provide a detailed review of our financial performance for the fourth quarter and the year. After Pat and I conclude our remarks, we will open the call to your questions. Pat.

1

Pat:

Thanks, Mike.

For the three-months ended December 31, 2005, the Company achieved revenue for the quarter of $8.6 million, compared to $6.4 million during the same period in 2004, a 33.1% increase.

For the three-months ended December 31, 2005, the quarterly net income for the Company was $1.5 million or $0.22 per share, compared to $921,000 or $0.13 per share for the same period in 2004. The net income margin was 17.9% of revenue which increased from 14.3% in the same period 2004. This performance is above our model of 15%.

For the twelve-months ended December 31, 2005, revenues were $32.4 million, compared to $29.7 million during the same period in 2004. Achieving an annual revenue increase of only 9.3% is clearly lower than our growth goal. This was the result of a very poor first half of 2005 which was flat in revenue growth; in fact it was down 1%. During the last half of 2005, the Company finished strong with an 18.7% growth in top line revenue.

For the twelve -months ended December 31, 2005, the Company’s net income was $5.2 million or $0.74 per share, compared to $4.6 million or $0.63 per share for the same period 2004. Year-to-date net income margin was 16.1% of revenue, compared to 15.3% in the same period 2004.

During the fourth quarter 2005, the direct expenses as a percentage of revenue were 44.4%, up from 41.7% in the fourth quarter 2004. This change was driven by the mix of business during the quarter. Our annual goal for direct expenses is in the range of 43 to 45% of revenue which, for the year ending 2005, was within that model.

2

During the quarter, the selling, general and administrative costs were $2.0 million or 23.5% of revenue, compared to 28.3% in the fourth quarter 2004. For the year, SG&A was $8.6 million, compared to $7.4 million in 2004. As a percentage of revenue, the annual SG&A cost was 26.6% for 2005, compared to 24.9% in 2004. We expect SG&A to be slightly higher than our model of 23 to 25% of revenue in 2006, as we continue to expand our sales and marketing departments.

Depreciation and amortization was 5.0% of revenue during the fourth quarter 2005, compared to 8.2% of revenue during the same period in 2004. We expect this expense will increase slightly in dollar amount, but remain at the lower end of our model at 4.5 to 6.0% of revenue in 2006.

During the quarter, other income and expenses remained improved compared to the prior year which was the result of higher interest income and lower interest expense. This should continue into 2006. As you can see by the Balance Sheet, the Company paid down a large portion of the note payable we took out in November 2000 at 8.25%. As of December 31, 2005, we had paid off $3.4 million, with the balance of $1.5 million to be paid off during this first quarter 2006.

Cash flow from operations for the year 2005 was $8.1 million, compared to $7.8 million for the same period in 2004. Cash and short-term investments as of December 31, 2005, were approximately $10.3 million.

The Board has approved repurchasing up to 750,000 shares of the Company’s common stock with the primary purpose of covering stock options to avoid dilution. From time to time, we will also repurchase shares over and above the amount required to cover option grants, as we feel the stock price is attractive in comparison to the Company’s future opportunities.

3

As stated in the press release, the Board of Directors declared a cash dividend of $0.10 per share payable on March 31, 2006, to shareholders of record as of March 10, 2006.

I will now turn the call back over to Mike for additional discussion.

Mike:

Thank you, Pat.

During our earnings calls, we have reported our performance against several key metrics. The purpose is to enable you to follow our historical progress and, if you so elect, forecast our progress going forward.

The first metric is Total Recurring Contract Value. This represents the annualized dollar amount of projects that we feel are ongoing in nature. Another way to look at this metric is that it represents our pipeline, or backlog. Total Recurring Contract Value as of December 31, 2005, was $37.7 million, up 28% from year-end 2004.

Net New Sales is the second measure of performance we focus on. This metric is the percentage growth in the value of new contracts signed and reduced for any change orders that would decrease a current contract’s value. Net New Sales represents our ability to generate new business from current clients and add new clients, without respect to when such contract value will be recognized.

4

Net New Sales for the fourth quarter 2005 were $1.3 million, compared to $1.5 million for the fourth quarter 2004. For the year 2005, net new sales were $6.3 million, compared to $3.5 million in 2004.

The third metric is sales to new clients for our syndicated Healthcare Market Guide product. For the year 2005, sales to our 33 new clients were $900,000, compared to $1.1 million from 32 new client sales in 2004, a decrease of $200,000. However, HCMG’s 2005 overall revenues increased $300,000. While the metric of sales from new clients is worthwhile, this metric in isolation did not accurately reflect the overall performance of HCMG, at least for 2005.

Before I open the call to questions, let me touch on what will be our focus in 2006. First will be sales expansion. Increasing the number of “feet on the street” is working, and completing the three-year plan which commenced during the fourth quarter 2003, is a high priority in our view, especially given the opportunities that have opened up with HCAHPS.

Second is Leadership Development. Within our organization this past year, it has been and will be going forward, a key area of management focus as we continue to ensure we have in place adequate leadership for our envisioned growth.

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And third, we have stepped up product development activities to capitalize on our increasing installed base of clients and our new payer platform, that being our recent purchase of GHS.

In summary, we feel good about the contract value of client relationships we have in place starting the year 2006, and look forward to building upon that base again this year and for years to come.

_____, I would now like to open the Q&A portion of the call.

Closing statement.

I’m looking forward to talking to you again next quarter, and thank you again for your time this morning.

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