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):  August 2, 2011

National Research Corporation

(Exact name of registrant as specified in its charter)

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

1245 Q Street, Lincoln, Nebraska  68508

(Address of principal executive offices, including zip code)

(402) 475-2525

(Registrant’s telephone number)

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 August 2, 2011, National Research Corporation (the “Company”) issued a press release announcing its earnings for the quarter ended June 30, 2011.  A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

On August 3, 2011, the Company held a conference call and online Web simulcast in connection with the Company’s announcement of its earnings for the quarter ended June 30, 2011.  A copy of the script for such conference call and simulcast is furnished as Exhibit 99.2 and is incorporated by reference herein.  An archive of such conference call and simulcast and the related question and answer session will be available online at www.earnings.com.

Item9.01. 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 August 2, 2011.

(99.2) Script for conference call and online Web simulcast, held August 3, 2011.

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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.

	NATIONAL RESEARCH CORPORATION
Date:  August 3, 2011	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 August 2, 2011

Exhibit

Number

(99.1)           Press Release of National Research Corporation, dated August 2, 2011.

(99.2)           Script for conference call and online Web simulcast, held August 3, 2011.

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EX-99.1

Exhibit 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

SECOND QUARTER 2011 RESULTS

Market Demand and Company Strategies Drive Accelerated Growth

Board of Directors Declares Third Quarter Dividend

LINCOLN, Nebraska (August 2, 2011) — National Research Corporation (NASDAQ:NRCI) today announced results for the second quarter 2011.

· Quarterly Net New Sales of $5.0 million up 33%

· Quarterly revenue up 30% to $18.3 million

· Quarterly net income up 40% to $2.3 million

· Quarterly diluted earnings per share of $0.34 up 36%

Commenting on the second quarter results, Michael D. Hays, chief executive officer of National Research Corporation, said, “We continue to benefit from changes imposed under health reform which shifts the business model of healthcare from volume to value driving increased demand for our entire cross-continuum product portfolio.  Subscription upgrades, winning new clients and cross-selling products among our installed base, are all contributing to our robust growth.”

Revenue for the quarter ended June 30, 2011, was $18.3 million, compared to $14.1 million for the same quarter in 2010.  Net income for the quarter ended June 30, 2011, was $2.3 million, or $0.35 per basic and $0.34 per diluted share, compared to $1.7 million for the second quarter 2010, or $0.25 per basic and diluted share.

The Company also announced that its Board of Directors has declared a regular quarterly cash dividend of $0.22 (twenty-two cents) per share payable September 30, 2011, to shareholders of record as of the close of business on September 2, 2011.

In closing, Pat Beans, chief financial officer of National Research Corporation, said, “Leverage, driven by scale and higher proportions of subscription-based revenue, has clearly benefited the Company as evidenced by our net income growth of 40% on revenue gains of 30%.”

NRCI Announces Second Quarter 2011 Results

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August 2, 2011

A listen-only simulcast of National Research Corporation’s 2011 second quarter conference call will be available online at www.earnings.com on August 3, 2011, beginning at 11:00 a.m. Eastern time.  The online replay will follow approximately one hour later and continue for 30 days.

National Research Corporation, headquartered in Lincoln, Nebraska, is a leading provider of performance measurement, improvement services, and governance education to the healthcare industry in the United States and Canada.

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.

NRCI Announces Second Quarter 2011 Results

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August 2, 2011

NATIONAL RESEARCH CORPORATION

Unaudited Consolidated Statements of Operations

(In thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
Revenue	$	18,316		$	14,139		$	38,107		$	31,509
Operating expenses:
Direct expenses		7,260			5,877			14,018			12,333
Selling, general and administrative		5,990			4,545			12,080			9,014
Depreciation and amortization		1,235			1,059			2,478			2,157
Total operating expenses		14,485			11,481			28,576			23,504
Operating income		3,831			2,658			9,531			8,005
Other income (expense), net:
Interest income		3			2			5			3
Interest expense		(156	)		(93	)		(326	)		(191	)
Other, net		9			49			(19	)		6
Total other income (expense), net		(144	)		(42	)		(340	)		(182	)
Income before income taxes		3,687			2,616			9,191			7,823
Provision for income taxes		1,358			956			3,406			3,034
Net income	$	2,329		$	1,660		$	5,785		$	4,789
Net income per share, basic	$	0.35		$	0.25		$	0.87		$	0.72
Net income per share, diluted	$	0.34		$	0.25		$	0.85		$	0.71
Weighted average shares outstanding:
Basic		6,665			6,634			6,659			6,637
Diluted		6,855			6,732			6,832			6,724

NRCI Announces Second Quarter 2011 Results

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August 2, 2011

NATIONAL RESEARCH CORPORATION

Unaudited Consolidated Condensed Balance Sheets

(Dollars in thousands)

ASSETS	Jun. 30, 2011			Dec. 31, 2010
Current Assets:
Cash and cash equivalents	$	4,464		$	3,519
Accounts receivable, net		11,587			9,172
Income taxes recoverable		800			1,277
Other current assets		3,994			3,373
Total current assets		20,845			17,341
Net property and equipment		13,804			14,482
Other, net		65,649			63,947
Total Assets	$	100,298		$	95,770
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	2,387		$	3,872
Deferred revenue		17,960			17,701
Accrued compensation		3,540			2,750
Notes payable and short-term borrowing		3,260			1,827
Total current liabilities		27,147			26,150
Non-current liabilities		20,607			21,036
Total Liabilities		47,754			47,186
Shareholders’ Equity:
Common stock, $0.001 par value; 20,000,000 shares authorized; issued 8,108,932 in 2011 and 8,044,855 in 2010; outstanding 6,728,354 in 2011 and 6,668,574 in 2010		8			8
Additional paid-in capital		30,059			28,970
Retained earnings		44,172			41,343
Accumulated other comprehensive income		1,294			1,108
Treasury stock		(22,989	)		(22,845
Total shareholders’ equity		52,544			48,584
Total liabilities and shareholders’ equity	$	100,298		$	95,770

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EX-99.2

Exhibit 99.2

Mike:

Thank you, ___________, and welcome everyone to National Research Corporation’s second quarter 2011 conference call.  My name is Mike Hays, the Company’s CEO.  Joining me on the call today are Pat Beans, our CFO, and Kevin Karas, our SVP of Finance.  To kick off the call today I’m excited to announce that Kevin will take on the responsibilities of the Company’s Chief Financial Officer effective September 1st.  Pat Beans will transition to the role of Senior Vice President Corporate Development as we refine our focus on that front.  Susan Henricks is joining us on the call today as well and will be commenting on her newly created role of President and COO of National Research Corporation.

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

Kevin :

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, Kevin.  And again, welcome everyone.

As noted in our earnings release, we are experiencing accelerated demand for our entire cross-continuum product portfolio driven by changes imposed by health reform.  In addition, our recently deployed strategy of bundling services and subscription-based pricing could not have happened at a better time as confirmed by our material step up in new sales over the past few quarters.  Before I add color to these trends and speak to the exciting addition of Susan Henricks as our President and COO, I will ask Kevin to review our second quarter financial performance.  Kevin.

Kevin

Thank you, Mike.

The second quarter 2011 results clearly reflect the continued strength of our value proposition in the market and effectiveness of our sales organization.  Our revenue growth trend continued to accelerate and we were also able to significantly leverage our growth in the second quarter to drive earnings.  Revenue was $18.3 million, increasing 30%, compared to the second quarter 2010, while net income increased 40% to $2.3 million.

Revenue growth for the quarter was driven by double-digit increases from every category within our portfolio.  These increases are attributed to a combination of the OCS acquisition, market share growth, increased pricing from our enhanced offerings, and vertical growth in our existing client base from successful cross-selling activities.

We ended the quarter with total contract value at $78.7 million, with subscription-based agreements representing 64% of our contract value.  Our sales force grew during the quarter, with 69 full-time sales professionals employed as of June 30th.

Operating expenses were $13.2 million for the quarter, compared to $10.4 million for the second quarter 2010.  The increase is attributed to variable costs associated with higher revenue volumes, sales force expansion, and operating expenses added from the OCS acquisition.

Direct expenses for the quarter were 40% of revenue, compared to 42% of revenue in the second quarter of 2010.  This 2% improvement is driven in part by the impact of margin expansion realized from growth in subscription-based contract revenue.  For the remainder of the year, we expect our subscription contract revenue growth to continue to produce margin improvement over 2010.  For the full year, we expect direct expenses to be in the 37% range, a reduction of 2% compared to 2010.

2

Selling, general and administrative expenses for the second quarter were $6.0 million, an increase of $1.5 million compared to the same quarter in the prior year.  One-third of this increase is attributed to the SG&A expenses added from the OCS business.  The remaining increase is primarily due to higher business development costs related to the expansion of the sales force, helping to drive the 33% increase in net new sales for the quarter compared to the prior year.  For the full year, we expect SG&A expenses to be in the 31% range, an improvement of 1% compared to 2010.

The depreciation and amortization expense for the quarter was $1.2 million, or 7% of revenue, which is consistent with the second quarter of 2010.  This expense is expected to remain fairly constant for the balance of the year, with the full year expense also expected to be at 7% of revenue.

Interest expense increased during the quarter compared to the same period in 2010 as a result of the debt secured to finance the purchase of OCS in August 2010.

Second quarter income tax expense increased from $1.0 million in 2010, to $1.4 million in 2011, based on higher earnings.  The effective tax rate for the second quarter remained relatively constant with the second quarter 2010 rate of 37%.

Net income for the second quarter was $2.3 million, an increase of 40% over 2010.  As I mentioned earlier, we were able to achieve this strong earnings growth as a result of our revenue growth in the quarter combined with effective expense management to expand our operating margin.

3

Diluted earnings per share increased to $0.34 for the quarter compared to $0.25 in the same period last year.

Cash flows from operations for the second quarter were $4.2 million.

Based upon our year-to-date results and the current trends in the business, we continue to estimate 2011 earnings per share at $1.65 on a fully diluted basis.

With that, I’ll turn it back to you, Mike.

Mike

Thanks, Kevin.

As reviewed by Kevin, we had a very good quarter and a number of very positive trends are continuing, if not accelerating, for the Company.  Subscription-based contracts comprised 62% of our second quarter’s revenue, up from 49% of first quarter revenue.

One benefit of our subscription offering is the pricing symmetry between each of our products which enhances the ease with which we can cross-sell our portfolio across our current user base of 2,500 acute care hospital clients and 10,000 post acute-care facilities.  We mentioned this opportunity in our first quarter call and now, in the second quarter, have seen cross-selling accelerate.  In addition, we will roll out in the third quarter, an Enterprise Solution Group to capture even more of the revenue upside among our current installed base.

Net new contracts reached $5.0 million in the second quarter, an increase of 21% over first quarter 2011, and a 33% increase year-over-year.  Our approach to value-based purchasing, the attractiveness to prospects of our capacity to serve needs across the entire continuum of care, and our subscription-based and bundled offerings are proving a key differential at point of sale.  Each of these strategies is adding momentum.

4

As many of you are aware, for the largest sector of the economy, healthcare, to shift business models from volume-based to value-based creates unprecedented change for the industry and resulting opportunities for our company.  While this shift is just beginning and will evolve over the foreseeable future, its approach has been very visible for a few years.  As many of you are aware, we saw this trend coming and have focused on attracting the leadership talent needed to more fully capitalize on these now addressable opportunities.  The capstone event to this journey of adding management depth is the addition of Susan Henricks to our leadership team as President and COO.

Susan is an innovative leader with exceptional experience managing data, information services, and direct marketing and technology companies.  With world-class expertise garnered in many environments, including the president of various businesses of First Data Corporation, the directories business of RR Donnelley and also Metromail Corporation, Susan clearly is ready to drive our growth.  Susan.

Susan

Good morning and thank you for the kind words, Mike.  I have now been with NRC for five weeks and am even more excited about being part of the organization.  As you have heard from Mike and Kevin, NRC is poised for growth.  I look forward to speaking with you again in the future.  Mike.

Mike

Thanks, Susan.

Before I open the call for questions, I would like to welcome all new associates that joined NRC in the second quarter.  To further provide perspective as to the level of talent we are attracting, let me highlight Feria Bacchus on the NRC Picker Canada team.  Feria joins NRC most recently from Sodexo Canada where she held the position of Vice President Business Development and Marketing.  Welcome Feria!

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This talent, when combined with more than 325 other associates, will ensure we capitalize on the opportunities that are unfolding.

_______________, I would now like to open the call to questions.

Closing Statement - Mike

Thank you for your time today.   We look forward to reporting our progress next quarter.

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