10-Q

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 June 30, 2017

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  ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐    (Do not check if a smaller reporting company)	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act.)

Yes ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

Class A Common Stock, $.001 par value, outstanding as of July 28, 2017: 20,942,785 shares

Class B Common Stock, $.001 par value, outstanding as of July 28, 2017: 3,540,244 shares

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NATIONAL RESEARCH CORPORATION

FORM 10-Q INDEX

For the Quarter Ended June 30, 2017

			Page No.
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Condensed Consolidated Balance Sheets	4
		Condensed Consolidated Statements of Income	5
		Condensed Consolidated Statements of Comprehensive Income	6
		Condensed Consolidated Statements of Cash Flows	7
		Notes to Condensed Consolidated Financial Statements	8-15
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16-22
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
	Item 4.	Controls and Procedures	22
PART II.	OTHER INFORMATION
	Item 1A.	Risk Factors	23
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
	Item 6.	Exhibits	23
	Signatures		24
	Exhibit Index		25

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Special Note Regarding Forward-Looking Statements

Certain matters discussed in this Quarterly Report on Form 10-Q are “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements can generally be identified as such because the context of the statement includes phrases such as National Research Corporation, doing business as NRC Health (“NRC Health,” the “Company,” “we,” “our,” “us” or similar terms), “believes,” “expects,” or other words of similar import. Similarly, statements that describe the Company’s future plans, objectives or goals are also forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties which could cause actual results or outcomes to differ materially from those currently anticipated. Factors that could affect actual results or outcomes include, without limitation, the following factors:

● The possibility of non-renewal of the Company’s client service contracts and retention of key clients;

● The Company’s ability to compete in its markets, which are highly competitive, and the possibility of increased price pressure and expenses;

● The effects of an economic downturn;

● The impact of consolidation in the healthcare industry;

● The impact of federal healthcare reform legislation or other regulatory changes;

● The Company’s ability to attract and retain key managers and other personnel;

● The possibility that the Company’s intellectual property and other proprietary information technology could be copied or independently developed by its competitors;

● The possibility that the Company could be subject to security breaches or computer viruses; and

● The factors set forth under the caption “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as such section may be updated or supplemented by Part II, Item 1A of the Company’s subsequently filed Quarterly Reports on Form 10-Q (including this Report).

Shareholders, potential investors and other readers are urged to consider these and other factors in evaluating the forward-looking statements, and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included are only made as of the date of this Quarterly Report on Form 10-Q and the Company undertakes no obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

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PART I – Financial Information

ITEM 1. Financial Statements

NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts and par value)

	June 30, 2017			December 31, 2016
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	31,628		$	33,021
Trade accounts receivable, less allowance for doubtful accounts of $182 and $169 in 2017 and 2016, respectively		13,138			10,864
Unbilled revenue		1,644			1,546
Prepaid expenses		3,378			1,585
Income tax receivable		1,172			14
Other current assets		23			35
Total current assets		50,983			47,065
Property and equipment, net		12,138			11,806
Intangible assets, net		2,830			3,124
Goodwill		57,942			57,861
Other		683			768
Total assets	$	124,576		$	120,624
Liabilities and Shareholders’ Equity
Current liabilities:
Current portion of notes payable	$	2,107		$	2,683
Accounts payable		883			765
Accrued wages, bonus and profit sharing		4,076			4,543
Accrued expenses		2,730			3,069
Current portion of capital lease obligations		102			82
Income taxes payable		-			662
Dividends payable		4,218			4,213
Deferred revenue		16,735			15,497
Total current liabilities		30,851			31,514
Notes payable, net of current portion		-			857
Deferred income taxes		5,057			4,670
Other long term liabilities		838			777
Total liabilities		36,746			37,818
Shareholders’ equity:
Preferred stock, $0.01 par value; authorized 2,000,000 shares, none issued		--			--
Class A Common stock, $0.001 par value; authorized 60,000,000 shares, issued 25,796,457 in 2017 and 25,656,760 in 2016, outstanding 20,940,790 in 2017 and 20,891,069 in 2016		26			26
Class B Common stock, $0.001 par value; authorized 80,000,000 shares, issued 4,317,656 in 2017 and 4,308,875 in 2016, outstanding 3,540,244 in 2017 and 3,539,931 in 2016		4			4
Additional paid-in capital		49,620			46,725
Retained earnings		75,343			71,507
Accumulated other comprehensive loss		(2,127	)		(2,626	)
Treasury stock, at cost; 4,855,667 Class A shares, 777,412 Class B shares in 2017 and 4,765,691 Class A shares, 768,944 Class B shares in 2016		(35,036	)		(32,830	)
Total shareholders’ equity		87,830			82,806
Total liabilities and shareholders’ equity	$	124,576		$	120,624

 
See accompanying notes to condensed consolidated financial statements

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except for per share amounts, unaudited)

	Three months ended June 30,						Six months ended June 30,
	2017			2016			2017			2016
Revenue	$	28,435		$	26,114		$	58,710		$	53,984
Operating expenses:
Direct		11,939			10,734			24,439			22,273
Selling, general and administrative		6,905			7,270			13,591			14,627
Depreciation and amortization		1,139			1,092			2,244			2,060
Total operating expenses		19,983			19,096			40,274			38,960
Operating income		8,452			7,018			18,436			15,024
Other income (expense):
Interest income		15			11			29			22
Interest expense		(23	)		(36	)		(50	)		(121	)
Other, net		27			43			35			118
Total other income (expense)		19			18			14			19
Income before income taxes		8,471			7,036			18,450			15,043
Provision for income taxes		2,719			2,478			6,178			4,978
Net income	$	5,752		$	4,558		$	12,272		$	10,065
Earnings Per Share of Common Stock:
Basic Earnings Per Share:
Class A	$	0.14		$	0.11		$	0.29		$	0.24
Class B	$	0.82		$	0.65		$	1.75		$	1.44
Diluted Earnings Per Share:
Class A	$	0.13		$	0.11		$	0.28		$	0.24
Class B	$	0.80		$	0.64		$	1.71		$	1.41
Dividends Per Share of Common Stock:
Class A	$	0.10		$	0.08		$	0.20		$	0.16
Class B	$	0.60		$	0.48		$	1.20		$	0.96
Weighted average shares and share equivalents outstanding:
Class A – basic		20,752			20,711			20,745			20,711
Class B – basic		3,514			3,508			3,514			3,498
Class A – diluted		21,525			20,992			21,404			21,002
Class B – diluted		3,591			3,565			3,584			3,557

See accompanying notes to condensed consolidated financial statements

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, unaudited)

	Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016
Net income	$	5,752	$	4,558	$	12,272	$	10,065
Other comprehensive income:
Foreign currency translation adjustment		381		5		499		878
Other comprehensive income	$	381	$	5	$	499	$	878
Comprehensive Income	$	6,133	$	4,563	$	12,771	$	10,943

See accompanying notes to condensed consolidated financial statements.

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands, unaudited)

	Six months ended
	June 30,
	2017			2016
Cash flows from operating activities:
Net income	$	12,272		$	10,065
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,244			2,060
Deferred income taxes		386			926
Reserve for uncertain tax positions		73			(84	)
Non-cash share-based compensation expense		792			1,081
Net changes in assets and liabilities:
Trade accounts receivable		(2,217	)		(1,225	)
Unbilled revenue		(82	)		(356	)
Prepaid expenses		(1,696	)		(637	)
Accounts payable		222			74
Accrued expenses, wages, bonuses and profit sharing		(750	)		(627	)
Income taxes receivable and payable		(1,818	)		(1,271	)
Deferred revenue		1,194			1,219
Net cash provided by operating activities		10,620			11,225
Cash flows from investing activities:
Purchases of property and equipment		(2,390	)		(2,217	)
Net cash used in investing activities		(2,390	)		(2,217	)
Cash flows from financing activities:
Payments on notes payable		(1,433	)		(1,192	)
Payments on capital lease obligations		(53	)		(46	)
Cash paid for non-controlling interest		--			(2,000	)
Proceeds from exercise of stock options		--			547
Payment of employee payroll tax withholdings on share-based awards exercised		(105	)		(147	)
Payment of dividends on common stock		(8,431	)		(21,809	)
Net cash used in financing activities		(10,022	)		(24,647	)
Effect of exchange rate changes on cash		399			686
Change in cash and cash equivalents		(1,393	)		(14,953	)
Cash and cash equivalents at beginning of period		33,021			42,145
Cash and cash equivalents at end of period	$	31,628		$	27,192
Supplemental disclosure of cash paid for:
Interest, net of capitalized amounts	$	44		$	118
Income taxes	$	7,539		$	5,484
Supplemental disclosure of non-cash investing and financing activities:
Capital lease obligations originated for property and equipment	$	64		$	109
Stock tendered to the Company for cashless exercise of stock options in connection with equity incentive plans	$	2,101		$	162

See accompanying notes to condensed consolidated financial statements.

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NATIONAL RESEARCH CORPORATION AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF CONSOLIDATION AND PRESENTATION

National Research Corporation, doing business as NRC Health (“NRC Health,” the “Company,” “we,” “our,” “us” or similar terms), is a leading provider of analytics and insights that facilitate measurement and improvement of the patient and employee experience while also increasing patient engagement and customer loyalty for healthcare providers, payers and other healthcare organizations in the United States and Canada. The Company’s solutions enable its clients to understand the voice of the customer with greater clarity, immediacy and depth.

The Company’s six operating segments are aggregated into one reporting segment because they have similar economic characteristics and meet the other aggregation criteria from the Financial Accounting Standards Board (“FASB”) guidance on segment disclosure. The six operating segments are Experience, The Governance Institute, Market Insights, Transparency, NRC Health Canada and Transitions (formerly Connect), which offer a portfolio of solutions that address specific needs around market insight, experience, transparency and governance for healthcare providers, payers and other healthcare organizations.

The condensed consolidated balance sheet of the Company at December 31, 2016, was derived from the Company’s audited consolidated 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.

Information and footnote disclosures included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto that are included in the Company’s Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (the “SEC”) on March 3, 2017.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, National Research Corporation Canada, doing business as NRC Health Canada. The condensed consolidated statement of income for the three and six months ended June 30, 2016 also included Customer-Connect LLC.  Customer-Connect LLC became a wholly-owned subsidiary in March 2016 and was previously a variable interest entity for which NRC Health was deemed the primary beneficiary. On June 30, 2016, Customer-Connect LLC was dissolved. All significant intercompany transactions and balances have been eliminated.

The functional currency of the Company’s foreign subsidiary, National Research Corporation Canada, doing business as NRC Health Canada, is the subsidiary’s local currency. The Company translates the assets and liabilities of its foreign subsidiary at the period-end rate of exchange and its foreign subsidiary’s income statement balances at the average rate prevailing during the period. The Company records the resulting translation adjustment in accumulated other comprehensive loss, a component of shareholders’ equity. Since the undistributed earnings of the Company’s foreign subsidiary are considered to be indefinitely reinvested, no taxes were provided for on currency translation adjustments arising from converting the investment denominated in a foreign currency to U.S. dollars. Gains and losses related to transactions denominated in a currency other than the subsidiary’s local currency and short-term intercompany accounts are included in other income (expense) in the condensed consolidated statements of income.

Reclassifications

Reclassifications have been made from noncurrent deferred income taxes to other noncurrent liabilities in the 2016 condensed consolidated balance sheet to present the unrecognized tax benefits related to state taxes gross of federal tax benefits, consistent with the 2017 financial statement presentation. There was no impact on the previously reported net income and earnings per share.

-8-

Fair Value Measurements

The Company’s valuation techniques are based on maximizing observable inputs and minimizing the use of unobservable inputs when measuring fair value. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect the Company’s market assumptions. The inputs are then classified into the following hierarchy: (1) Level 1 Inputs—quoted prices in active markets for identical assets and liabilities; (2) Level 2 Inputs—observable market-based inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities in active markets, quoted prices for similar or identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data; and (3) Level 3 Inputs—unobservable inputs.

Commercial paper and Eurodollar deposits are included in cash equivalents and are valued at amortized cost, which approximates fair value due to their short-term nature. Eurodollar deposits are United States dollars deposited in a foreign bank branch of a United States bank and have daily liquidity. Both of these are included as a Level 2 measurement in the table below.

The following details the Company’s financial assets and liabilities within the fair value hierarchy at June 30, 2017 and December 31, 2016:

Fair Values Measured on a Recurring Basis

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of June 30, 2017
Money Market Funds	$	12,078	$	--	$	--	$	12,078
Commercial Paper		--		9,096		--		9,096
Eurodollar Deposits		--		10,000		--		10,000
Total	$	12,078	$	19,096	$	--	$	31,174
As of December 31, 2016
Money Market Funds	$	11,200	$	--	$	--	$	11,200
Commercial Paper		--		21,450		--		21,450
Total	$	11,200	$	21,450	$	--	$	32,650

The Company’s long-term debt is recorded at historical cost. The following are the carrying amounts and estimated fair values, using a Level 2 discounted cash flow analysis based primarily on estimated current rates available for debt of the same remaining duration and adjusted for nonperformance and credit risk:

	June 30, 2017		December 31, 2016
	(In thousands)
Total carrying amounts of long-term debt	$	2,107	$	3,540
Estimated fair value of long-term debt	$	2,102	$	3,533

The Company believes that the carrying amounts of trade accounts receivable, accounts payable and accrued expenses approximate their fair value due to the short maturity of those instruments. All non-financial assets that are not recognized or disclosed at fair value in the financial statements on a recurring basis, which includes goodwill and non-financial long-lived assets, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). As of June 30, 2017, and December 31, 2016, there was no indication of impairment related to the Company’s non-financial assets.

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2. INCOME TAXES

The effective tax rate for the three-month period ended June 30, 2017 decreased to 32.1% compared to 35.2% for the same period in 2016. The effective tax rate for the six-month period ended June 30, 2017 increased to 33.5% compared to 33.1% for the same period in 2016. The decrease in the effective tax rate for the three-month period ending June 30, 2017 was mainly due to a $323,000 increase in tax benefits from the exercise of options and dividends paid to non-vested shareholders. The increase in the effective tax rate for the six-month period ended June 30, 2017 was due to increases in the estimated state tax rates as well as a greater proportion of United States income subject to higher tax rates than Canadian income, partially offset by increased tax benefits in 2017 from the exercise of options and dividends paid to non-vested shareholders.  In addition, state tax incentives decreased by $38,000, and, in 2016, the United States federal tax examination adjustments decreased tax expense by $48,000.

3.   NOTES PAYABLE

The Company’s term note is payable in monthly installments of $212,468. Borrowings under the term note bear interest at an annual rate of 3.12%. The outstanding balance of the term note at June 30, 2017 was $2.1 million.

The Company also has a revolving credit note which was amended and extended effective June 30, 2017 with a maturity date of June 30, 2018. The maximum aggregate amount available under the revolving credit note is $12.0 million. Borrowings under the revolving credit note bear interest at a variable annual rate, with three rate options at the discretion of management as follows: (1) 2.1% plus the one-month London Interbank Offered Rate (“LIBOR”) or (2) 2.1% plus the one-, two- or three- month LIBOR rate, or (3) the bank’s one-, two, three, six, or twelve month Money Market Loan Rate. As of June 30, 2017 the revolving credit note did not have a balance and the Company had the capacity to borrow $12.0 million.

The term note and revolving credit note are secured by certain of the Company’s assets, including the Company’s land, building, trade accounts receivable and intangible assets. The term note and revolving credit note contain various restrictions and covenants applicable to the Company, including requirements that the Company maintain certain financial ratios at prescribed levels and restrictions on the ability of the Company to consolidate or merge, create liens, incur additional indebtedness or dispose of assets. As of June 30, 2017, the Company was in compliance with its financial covenants.

4. SHARE-BASED COMPENSATION

The Company measures and recognizes compensation expense for all share-based payments based on the grant-date fair value of those awards. All of the Company’s existing stock option awards and unvested stock awards have been determined to be equity-classified awards.

The Company’s 2001 Equity Incentive Plan provided for the granting of stock options, stock appreciation rights, restricted stock, performance shares and other share-based awards and benefits up to an aggregate of 1,800,000 shares of class A common stock and 300,000 shares of class B common stock. Stock options granted could have been either nonqualified or incentive stock options. Stock options vest over one to five years following the date of grant and option terms are generally five to ten years following the date of grant.

The Company’s 2004 Non-Employee Director Stock Plan, as amended (the “2004 Director Plan”), is a nonqualified plan that provides for the granting of options with respect to 3,000,000 shares of class A common stock and 500,000 shares of class B common stock. The 2004 Director Plan provides for grants of nonqualified stock options to each director of the Company who is not employed by the Company. On the date of each annual meeting of shareholders of the Company, options to purchase 36,000 shares of class A common stock and 6,000 shares of class B common stock are granted to directors that are elected or retained as a director at such meeting. Stock options vest one year following the date of grant and option terms are generally ten years following the date of grant, or three years in the case of termination of the outside director’s service.

The Company’s 2006 Equity Incentive Plan provides for the granting of stock options, stock appreciation rights, restricted stock, performance shares and other share-based awards and benefits up to an aggregate of 1,800,000 shares of class A common stock and 300,000 shares of class B common stock. Stock options granted may be either incentive stock options or nonqualified stock options. Vesting terms vary with each grant and option terms are generally five to ten years following the date of grant.

-10-

The Company granted options to purchase 299,917 shares of the Company’s class A common stock and 49,986 shares of the class B common stock during the six-month period ended June 30, 2017. Options to purchase shares of common stock were granted with exercise prices equal to the fair value of the common stock on the date of grant. The fair value of the stock options granted was estimated using a Black-Scholes valuation model with the following assumptions:

	2017						2016
	Class A			Class B			Class A			Class B
Expected dividend yield at date of grant	2.46	to	2.87%	7.99	to	8.10%	2.96	to	3.02%	6.67	to	8.12%
Expected stock price volatility	32.20	to	32.62%	26.47	to	27.18%	31.33	to	34.61%	27.64	to	31.77%
Risk-free interest rate	2.08	to	2.33%	2.08	to	2.33%	1.36	to	2.12%	1.36	to	2.12%
Expected life of options (in years)	6	to	8	6	to	8	6	to	8	6	to	8

The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of the grant. The expected volatility was based on historical monthly price changes of the Company’s common stock based on the expected life of the options at the date of grant. The expected life of options is the average number of years the Company estimates that options will be outstanding. The Company considers groups of associates that have similar historical exercise behavior separately for valuation purposes.

The following table summarizes stock option activity under the Company’s 2001 and 2006 Equity Incentive Plans and the 2004 Director Plan for the three months ended June 30, 2017:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Class A
Outstanding at December 31, 2016		1,705,483		$	12.31
Granted		299,917		$	22.13
Exercised		(159,011	)	$	11.07			$	1,754
Forfeited		(24,982	)	$	17.03
Outstanding at June 30, 2017		1,821,407		$	13.97		6.24	$	23,544
Exercisable at June 30, 2017		1,313,134		$	12.03		5.23	$	19,523
Class B
Outstanding at December 31, 2016		250,493		$	29.70
Granted		49,986		$	42.90
Exercised		(12,000	)	$	28.41			$	142
Forfeited		(4,163	)	$	37.30
Outstanding at June 30, 2017		284,316		$	31.96		6.48	$	4,486
Exercisable at June 30, 2017		200,550		$	29.06		5.49	$	3,747

As of June 30, 2017, the total unrecognized compensation cost related to non-vested stock option awards was approximately $2.0 million and $239,000 for class A and class B common shares, respectively, which is expected to be recognized over a weighted average period of 2.33 years and 2.48 years for class A and class B common stock shares, respectively.

-11-

The following table summarizes information for the six months ended June 30, 2017 regarding non-vested stock granted to associates under the 2001 and 2006 Equity Incentive Plans:

	Class A Shares Outstanding			Class A Weighted Average Grant Date Fair Value Per Share		Class B Shares Outstanding			Class B Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2016		174,487		$	13.93		29,081		$	37.21
Granted		--			--		--			--
Vested		--			--		--			--
Forfeited		(19,314	)	$	14.27		(3,219	)	$	34.69
Outstanding at June 30, 2017		155,173		$	13.89		25,862		$	37.53

As of June 30, 2017, the total unrecognized compensation cost related to non-vested stock awards was approximately $1.2 million and is expected to be recognized over a weighted average period of 2.59 years.

5. GOODWILL AND OTHER INTANGIBLE ASSETS

The following represents a summary of changes in the Company’s carrying amount of goodwill for the six months ended June 30, 2017:

	(In thousands)
Balance as of December 31, 2016	$	57,861
Foreign currency translation		81
Balance as of June 30, 2017	$	57,942

Intangible assets consisted of the following:

	June 30, 2017			December 31, 2016
	(In thousands)
Non-amortizing other intangible assets:
Trade name	$	1,191		$	1,191
Amortizing other intangible assets:
Customer related		9,339			9,331
Technology		1,110			1,110
Trade name		1,572			1,572
Total other intangible assets		13,212			13,204
Accumulated amortization		(10,382	)		(10,080	)
Other intangible assets, net	$	2,830		$	3,124

6. PROPERTY AND EQUIPMENT

	June 30, 2017			December 31, 2016
	(In thousands)
Property and equipment	$	40,209		$	37,890
Accumulated depreciation		(28,071	)		(26,084	)
Property and equipment, net	$	12,138		$	11,806

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 7. EARNINGS PER SHARE

Net income per share of class A common stock and class B common stock is computed using the two-class method. Basic net income per share is computed by allocating undistributed earnings to common shares and using the weighted-average number of common shares outstanding during the period.

Diluted net income per share is computed using the weighted-average number of common shares and, if dilutive, the potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock. The dilutive effect of outstanding stock options is reflected in diluted earnings per share by application of the treasury stock method.

The liquidation rights and the rights upon the consummation of an extraordinary transaction are the same for the holders of class A common stock and class B common stock. Other than share distributions and liquidation rights, the amount of any dividend or other distribution payable on each share of class A common stock will be equal to one-sixth (1/6^th) of the amount of any such dividend or other distribution payable on each share of class B common stock. As a result, the undistributed earnings for each period are allocated based on the contractual participation rights of the class A and class B common stock as if the earnings for the period had been distributed.

For the three months ended June 30, 2017, the Company excluded 17,473 options of class B shares from the diluted net income per share computation because the exercise or grant price exceeded the fair market value. For the three months ended June 30, 2016, 798,421 options of class A shares and 46,813 options of class B shares have been excluded from the diluted net income per share computation because the exercise or grant price exceeded the fair market value. For the three months ended June 30, 2017, an additional 104,835 options of class A shares were excluded as their inclusion would be anti-dilutive. For the three months ended June 30, 2016, an additional 66,428 options of class A shares and 34,830 of class B shares were excluded as their inclusion would be anti-dilutive.

	For the Three Months Ended June 30, 2017						For the Three Months Ended June 30, 2016
	Class A Common Stock			Class B Common Stock			Class A Common Stock			Class B Common Stock
	(In thousands, except per share data)
Numerator for net income per share - basic:
Net income	$	2,855		$	2,897		$	2,260		$	2,298
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(22	)		(22	)		(19	)		(20	)
Net income attributable to common shareholders	$	2,833		$	2,875		$	2,241		$	2,278
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic		20,752			3,514			20,711			3,508
Net income per share – basic	$	0.14		$	0.82		$	0.11		$	0.65
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$	2,833		$	2,875		$	2,241		$	2,278
Denominator for net income per share - diluted:
Weighted average common shares outstanding – basic		20,752			3,514			20,711			3,508
Weighted average effect of dilutive securities – stock options		773			77			281			57
Denominator for diluted earnings per share – adjusted weighted average shares		21,525			3,591			20,992			3,565
Net income per share – diluted	$	0.13		$	0.80		$	0.11		$	0.64

-13-

For the six months ended June 30, 2017 and 2016, the Company had 52,707 and 550,561 options of class A shares and 38,784 and 38,407 options of class B shares, respectively, which have been excluded from the diluted net income per share computation because the exercise or grant price exceeded the fair market value. For the six months ended June 30, 2017 and 2016, an additional 115,908 and 260,868 options of class A shares and 19,318 and 34,333 of Class B shares were excluded as their inclusion would be anti-dilutive, respectively.

	For the Six Months Ended June 30, 2017						For the Six Months Ended June 30, 2016
	Class A Common Stock			Class B Common Stock			Class A Common Stock			Class B Common Stock
	(In thousands, except per share data)
Numerator for net income per share - basic:
Net income	$	6,088		$	6,184		$	4,994		$	5,071
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(48	)		(49	)		(43	)		(44	)
Net income attributable to common shareholders	$	6,040		$	6,135		$	4,951		$	5,027
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic		20,745			3,514			20,711			3,498
Net income per share – basic	$	0.29		$	1.75		$	0.24		$	1.44
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$	6,040		$	6,135		$	4,951		$	5,027
Denominator for net income per share - diluted:
Weighted average common shares outstanding – basic		20,745			3,514			20,711			3,498
Weighted average effect of dilutive securities – stock options		659			70			291			59
Denominator for diluted earnings per share – adjusted weighted average shares		21,404			3,584			21,002			3,557
Net income per share – diluted	$	0.28		$	1.71		$	0.24		$	1.41

8.     RELATED PARTY     

A director of the Company serves as an officer of Ameritas Life Insurance Corp. (“Ameritas”). In connection with the Company’s regular assessment of its insurance-based associate benefits, which is conducted by an independent insurance broker, and the costs associated therewith, the Company purchases dental and vision insurance for certain of its associates from Ameritas. The total value of these purchases was $62,000 and $57,000 for the three-month periods ended June 30, 2017 and 2016, respectively, and $120,000 and $115,000 for the six-month periods ended June 30, 2017 and 2016, respectively.

Mr. Hays, the Chief Executive Officer, majority shareholder and director of the Company, is an owner of 14% of the equity interest of Nebraska Global Investment Company LLC (“Nebraska Global”).  The Company, directly or indirectly through its former subsidiary Customer-Connect LLC, purchased certain services from Nebraska Global, primarily consisting of software development services.  The total value of these purchases were $204,000 and $420,000 in the three-month and six-month periods ended June 30, 2016, respectively. There were no purchases from Nebraska Global in 2017.

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9.     RECENT ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”).  ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in accounting principles generally accepted in the United States when it becomes effective. The standard is effective for annual and interim reporting periods in fiscal years beginning after December 15, 2017, with early adoption allowed for years beginning after December 15, 2016. An entity may choose to adopt ASU 2014-09 either retrospectively or through a cumulative effect adjustment as of the start of the first period for which it applies the standard.  The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements as well as developing and testing changes to our processes and systems. Due to cost benefit considerations reviewed during the second quarter of 2017, the Company now plans to adopt the guidance beginning January 1, 2018 by recording a cumulative effect adjustment rather than retrospectively, as previously planned. The Company currently expects the most significant changes to result from deferring commissions and recognizing the expense over the estimated life of the client relationship rather than expensing as incurred, which is the Company’s current practice, and estimating variable consideration at the outset of the contract. 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU requires lessees to recognize a lease liability and a right-to-use asset for all leases, including operating leases, with a term greater than twelve months on its balance sheet. This ASU is effective in fiscal years beginning after December 15, 2018, with early adoption permitted, and requires a modified retrospective transition method. The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements and does not plan to elect early adoption.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326):  Measurement of Credit Losses on Financial Instruments.  This ASU will require the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after December 15, 2019 and interim periods within those fiscal years. The Company believes its adoption will not significantly impact the Company’s results of operations and financial position.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) Classification of Certain Cash Receipts and Cash Payments which eliminates the diversity in practice related to eight cash flow classification issues.  This ASU is effective for the Company on January 1, 2018 with early adoption permitted.  The Company plans to adopt this update on January 1, 2018 and believes its adoption will not significantly impact the Company’s results of operations and financial position.

In October 2016, the FASB issued ASU 2016-16, Intra-Entity Transfers of Asset Other Than Inventory (“ASU 2016-16”), which requires entities to recognize the tax consequences of intercompany asset transfers other than inventory transfers in the period in which the transfer takes place. ASU 2016-16 is effective for fiscal years and interim periods within fiscal years beginning after December 15, 2017. ASU 2016-16 is to be adopted using a modified retrospective approach with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The cumulative effect adjustment will include recognition of the income tax consequences of intra-entity transfers of assets other than inventory that occur before the adoption date.  The Company believes the adoption of ASU 2016-16 will not significantly impact the consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230), Restricted Cash (“ASU 2016-18”), which requires that the amounts generally described as restricted cash or restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-the period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 does not provide a definition of restricted cash or restricted cash equivalents. ASU 2016-18 is effective for fiscal years and interim periods beginning after December 15, 2017. The Company does not expect the adoption of ASU 2016-18 to have any impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment (“ASU 2017-04”). The new guidance eliminates Step 2 of the goodwill impairment testing which requires the fair value of individual assets and liabilities of a reporting unit to be determined when measuring goodwill impairment. The new guidance may result in different amounts of impairment that could be recognized compared to existing guidance. In addition, failing step 1 of the impairment test may not result in impairment under existing guidance. However, under the revised guidance, failing step 1 will always result in a goodwill impairment. ASU 2017-04 is to be applied prospectively for goodwill impairment testing performed in years beginning after December 15, 2019.  The Company does not believe the adoption will significantly impact the Company's results of operations or financial position.

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ITEM 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Company is a leading provider of analytics and insights that facilitate measurement and improvement of the patient and employee experience while also increasing patient engagement and customer loyalty for healthcare providers, payers and other healthcare organizations. The Company’s solutions enable its clients to understand the voice of the customer with greater clarity, immediacy and depth. NRC Health’s heritage, proprietary methods, and holistic approach enable our partners to better understand the people they care for and design experiences that inspire loyalty and trust, while also facilitating regulatory compliance and the shift to population-based health management. The Company’s ability to measure what matters most and systematically capture, analyze and deliver insights based on self-reported information from patients, families and consumers is critical in today’s healthcare market. NRC Health believes that access to and analysis of its extensive consumer-driven information is becoming more valuable as healthcare providers increasingly need to more deeply understand and engage patients and consumers in an effort towards effective population-based health management.

The Company’s portfolio of subscription-based solutions provide actionable information and analysis to healthcare organizations and payers across a range of mission-critical, constituent-related elements, including patient experience and satisfaction, community population health risks, workforce engagement, community perceptions, and physician engagement. NRC Health partners with clients across the continuum of healthcare services. The Company’s clients range from integrated health systems and post-acute providers, such as home health, long term care and hospice, to numerous payer organizations. The Company believes this cross-continuum positioning is a unique and an increasingly important capability as evolving payment models drive healthcare providers and payers towards a more collaborative and integrated service model.

Results of Operations

The following table and graphs set forth, for the periods indicated, select financial information derived from the Company’s condensed consolidated financial statements expressed as a percentage of total revenue. The trends illustrated may not necessarily be indicative of future results. The discussion that follows the table should be read in conjunction with the condensed consolidated financial statements.

	Three months ended						Six months ended
	June 30,						June 30,
	2017			2016			2017			2016
Revenue:		100.0	%		100.0	%		100.0	%		100.0	%
Operating expenses:
Direct		42.0			41.1			41.6			41.3
Selling, general and administrative		24.3			27.8			23.2			27.1
Depreciation and amortization		4.0			4.2			3.8			3.8
Total operating expenses		70.3			73.1			68.6			72.2
Operating income		29.7	%		26.9	%		31.4	%		27.8	%

-16-

 

Three Months Ended June 30, 2017, Compared to Three Months Ended June 30, 2016

Revenue. Revenue for the three-month period ended June 30, 2017, increased 8.9% to $28.4 million, compared to $26.1 million in the three-month period ended June 30, 2016. The increase was due to new customer sales, as well as increases in sales to the existing client base.

Direct expenses. Direct expenses increased 11.2% to $11.9 million for the three-month period ended June 30, 2017, compared to $10.7 million in the same period in 2016. This was due to an increase in variable expenses of $371,000 and fixed expenses of $834,000. Variable expense increased mainly due to higher contracted voice recognition technology, phone costs, and labor costs, partially offset by decreased postage, printing and paper costs due to changes in survey methodologies. Fixed expenses increased primarily as a result of increased salary and benefit costs in the customer service area. Direct expenses increased as a percentage of revenue to 42.0% in the three-month period ended June 30, 2017, compared to 41.1% during the same period of 2016 as expenses increased by 11.2% while revenue for the same period increased by 8.9%.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased 5.0% to $6.9 million for the three-month period ended June 30, 2017, compared to $7.3 million for the same period in 2016, primarily due to lower salary and benefit costs, including lower incentives, commissions, and share based compensation expense totaling $641,000, and reduced bad debt expense of $48,000, partially offset by increased public company related costs and legal expenses of $134,000, computer supplies and software license fees of $122,000, and increased recruiting fees of $116,000. Selling, general, and administrative expenses decreased as a percentage of revenue to 24.3% for the three-month period ended June 30, 2017, from 27.8% for the same period in 2016 as expenses decreased by 5.0% while revenue for the same period increased by 8.9%.

Depreciation and amortization. Depreciation and amortization remained at $1.1 million for the three-month periods ended June 30, 2017 and 2016. Depreciation and amortization expenses as a percentage of revenue was 4.0% for the three-month period ended June 30, 2017, and 4.2% for the same period in 2016.

Provision for income taxes. Provision for income taxes was $2.7 million (32.1% effective tax rate) for the three-month period ended June 30, 2017, compared to $2.5 million (35.2% effective tax rate) for the same period in 2016. The effective tax rate for the three-month period ended June 30, 2017, was lower mainly due to a $323,000 increase in tax benefits from the exercise of options and dividends paid to non-vested shareholders.

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Six Months Ended June 30, 2017, Compared to Six Months Ended June 30, 2016

Revenue. Revenue for the six-month period ended June 30, 2017, increased 8.8% to $58.7 million, compared to $54.0 million in the six-month period ended June 30, 2016. The increase was due to new customer sales, as well as increases in sales to the existing client base.

Direct expenses. Direct expenses increased 9.7% to $24.4 million for the six-month period ended June 30, 2017, compared to $22.3 million in the same period in 2016. This was due to an increase in variable expenses of $587,000 and fixed expenses of $1.6 million. Variable expense increased mainly due to higher contracted voice recognition technology, phone costs, and labor costs, partially offset by decreased postage, printing and paper costs due to a reduction in postage fees and changes in survey methodologies. Fixed expenses increased primarily as a result of increased salary and benefit costs in the customer service area, partially offset by decreased contracted service costs. Direct expenses increased as a percentage of revenue to 41.6% in the six-month period ended June 30, 2017, compared to 41.3% during the same period of 2016 as expenses increased by 9.7% while revenue for the same period increased by 8.8%.

Selling, general and administrative expenses. Selling, general and administrative expenses decreased 7.1% to $13.6 million for the six-month period ended June 30, 2017, compared to $14.6 million for the same period in 2016, primarily due to lower salary and benefit costs, including lower incentives, commissions, and share based compensation expense totaling $1.1 million, less public company related costs and legal expenses of $162,000 (mainly due to shelf registration fees expensed in 2016 of $177,000), and lower travel costs of $103,000; partially offset by higher computer supplies and software license fees of $215,000. Selling, general, and administrative expenses decreased as a percentage of revenue to 23.2% for the six-month period ended June 30, 2017, from 27.1% for the same period in 2016 as expenses decreased by 7.1% while revenue for the same period increased by 8.8%.

Depreciation and amortization. Depreciation and amortization expenses increased to $2.2 million for the six-month period ended June 30, 2017, compared to $2.1 million for the same period in 2016 primarily due to increased amortization of $250,000 from additional computer software investments, partially offset by decreased amortization of $66,000 as a result of certain intangibles becoming fully amortized. Depreciation and amortization expenses as a percentage of revenue was 3.8% for the six-month periods ended June 30, 2017 and 2016.

Provision for income taxes. Provision for income taxes was $6.2 million (33.5% effective tax rate) for the six-month period ended June 30, 2017, compared to $5.0 million (33.1% effective tax rate) for the same period in 2016. The effective tax rate for the six-month period ended June 30, 2017 increased slightly due to increases in the estimated state tax rates as well as a greater proportion of United States income subject to higher tax rates than Canadian income, partially offset by increased tax benefits in 2017 from the exercise of options and dividends paid to non-vested shareholders.  In addition, state tax incentives decreased $38,000, and, in 2016, the United States federal tax examination adjustments decreased tax expense by $48,000.

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Liquidity and Capital Resources

The Company believes that its existing sources of liquidity, including cash and cash equivalents, borrowing availability, and operating cash flows will be sufficient to meet its projected capital and debt maturity needs and dividend policy for the foreseeable future.

As of June 30, 2017, our principal sources of liquidity included $31.6 million of cash and cash equivalents and up to $12.0 million of unused borrowings under our revolving credit note. Of this cash, $12.6 million was held in Canada. All of the amounts held in Canada are intended to be indefinitely reinvested in foreign operations. The amounts held in Canada are eligible for repatriation, but under current law, would be subject to U.S. federal income taxes less applicable foreign tax credits. The Company estimated at December 31, 2016, that an additional tax liability of $536,000 would become due if repatriation of undistributed earnings would occur.

Working Capital

The Company's working capital was $20.1 million and $15.6 million on June 30, 2017 and December 31, 2016, respectively. The change was primarily due to increases in trade accounts receivable of $2.3 million, increases in prepaid expenses of $1.8 million, increases in recoverable income taxes of $1.2 million, decreases in income taxable payable of $662,000, decreases in current portion of notes payable of $576,000, decreases in accrued wages, bonus and profit sharing of $467,000 and decreases in accrued expenses of $339,000. This was partially offset by increases in deferred revenue of $1.2 million, increases in accounts payable of $118,000 and decreases in cash and cash equivalents of $1.4 million. Trade accounts receivable and unbilled revenue increased due to the timing of billings and collections on new and renewal contracts. Accrued wages, bonus and profit sharing decreased due to the payment of 2016 annual bonuses in the six-month period ended June 30, 2017. Accrued and prepaid expenses changed due to the timing of vendor payments and pre-payments for services. Income taxes payable and recoverable changed due to the timing of income tax payments. Current portion of notes payable decreased due to normal payment and amortization of the term note. The Company’s working capital is significantly impacted by its large deferred revenue balances which will vary based on the timing and frequency of billings on annual agreements. The deferred revenue balances as of June 30, 2017 and December 31, 2016 were $16.7 million and $15.5 million, respectively.

The deferred revenue balance is primarily due to timing of initial billings on new and renewal contracts. The Company typically invoices clients for performance tracking services and custom research projects before they have been completed. Billed amounts are recorded as billings in excess of revenue earned, or deferred revenue, on the Company’s consolidated financial statements, and are recognized as income when earned. In addition, when work is performed in advance of billing, the Company records this work as revenue earned in excess of billings, or unbilled revenue. Substantially all deferred revenue and all unbilled revenue will be earned and billed respectively, within 12 months of the respective period ends.

-19-

Cash Flow Analysis

A summary of operating, investing, and financing activities is shown in the following table:

	Six Months Ended June 30,
	2017			2016
	(In thousands)
Provided by operating activities	$	10,620		$	11,225
Used in investing activities		(2,390	)		(2,217	)
Used in financing activities		(10,022	)		(24,647	)
Effect of exchange rate change on cash		399			686
Net change in cash and cash equivalents		(1,393	)		(14,953	)
Cash and cash equivalents at end of period	$	31,628		$	27,192

Cash Flows from Operating Activities

Cash flows from operating activities consist of net income adjusted for non-cash items including depreciation and amortization, deferred taxes, share-based compensation and related taxes, reserve for uncertain tax positions and the effect of working capital changes.

Net cash provided by operating activities was $10.6 million for the six months ended June 30, 2017, which included net income of $12.3 million, plus non-cash charges (benefits) for deferred tax expense, depreciation and amortization, reserve for uncertain tax positions and non-cash stock compensation totaling $3.5 million. Changes in working capital decreased cash flows from operating activities by $5.1 million, primarily due to increases in trade accounts receivables, increases in prepaid expenses, increases in unbilled revenue and decreases in accrued expenses wages, bonuses and profit sharing. These were partially offset by increases in deferred revenue, which fluctuate due to the timing and frequency of billings on new and renewal contracts, and increases in accounts payable due to timing of payments.

Net cash provided by operating activities was $11.2 million for the six months ended June 30, 2016, which included net income of $10.1 million, plus non-cash charges (benefits) for deferred tax expense, depreciation and amortization, provision for uncertain tax positions and non-cash stock compensation totaling $4.0 million. Changes in working capital decreased 2016 cash flows from operating activities by $2.8 million, primarily due to increases in trade accounts receivable and income taxes receivable, net of increases in deferred revenue due to the timing of billing, collections and revenue recognition on new or renewal contracts.

Cash Flows from Investing Activities

Net cash of $2.4 million and $2.2 million was used for investing activities in the six months ended June 30, 2017 and 2016, respectively, for purchases of property and equipment.

-20-

Cash Flows from Financing Activities

Net cash used in financing activities was $10.0 million in the six months ended June 30, 2017. Cash was used to repay borrowings under the term note totaling $1.4 million and for capital lease obligations of $53,000. Cash was also used to pay $8.4 million of dividends on common stock, and to pay payroll tax withholdings related to share-based compensation of $105,000.

Net cash used in financing activities was $24.6 million in the six months ended June 30, 2016. The exercise of stock options provided cash of $547,000. Cash was used to pay payroll taxes on vested restricted shares of $147,000, to pay capital lease obligations of $46,000, to repay borrowings under the term note totaling $1.2 million, to pay dividends on common stock of $21.8 million, and to pay $2.0 million for Customer-Connect LLC non-controlling interests.

The effect of changes in foreign exchange rates increased cash and cash equivalents by $399,000 and $686,000 in the six months ended June 30, 2017 and ended June 30, 2016, respectively.

Capital Expenditures

Cash paid for capital expenditures was $2.4 million for the six-month period ended June 30, 2017. These expenditures consisted mainly of computer software classified in property and equipment. The Company expects similar capital expenditure purchases for the remainder of 2017 consisting primarily of computer software and hardware and other equipment to be funded through cash generated from operations.

Debt and Equity

The Company’s term note is payable in monthly installments of $212,468. Borrowings under the term note bear interest at an annual rate of 3.12%. The outstanding balance of the term note at June 30, 2017 was $2.1 million.

The Company also has a revolving credit note which was amended and extended effective June 30, 2017 with a maturity date of June 30, 2018. The maximum aggregate amount available under the revolving credit note is $12.0 million. Borrowings under the revolving credit note bear interest at a variable annual rate, with three rate options at the discretion of management as follows: (1) 2.1% plus the one-month London Interbank Offered Rate (“LIBOR”) or (2) 2.1% plus the one-, two- or three- month LIBOR rate, or (3) the bank’s one-, two, three, six, or twelve month Money Market Loan Rate. As of June 30, 2017 the revolving credit note did not have a balance. The Company had the capacity to borrow $12.0 million as of June 30, 2017.

The term note and revolving credit note are secured by certain of the Company’s assets, including the Company’s land, building, trade accounts receivable and intangible assets. The term note and revolving credit note contain various restrictions and covenants applicable to the Company, including requirements that the Company maintain certain financial ratios at prescribed levels and restrictions on the ability of the Company to consolidate or merge, create liens, incur additional indebtedness or dispose of assets. As of June 30, 2017, the Company was in compliance with its financial covenants.

The Company has capital leases for computer equipment, office equipment, printing and inserting equipment. The balance of the capital leases as of June 30, 2017 was $202,000.

-21-

Shareholders’ equity increased $5.0 million to $87.8 million at June 30, 2017, from $82.8 million at December 31, 2016. The increase was mainly due to net income of $12.3 million, share-based compensation of $792,000 and changes in the cumulative translation adjustment of $499,000. This was partially offset by dividends declared of $8.4 million.

Contractual Obligations

The Company had contractual obligations to make payments in the following amounts in the future as of June 30, 2017:

Contractual Obligations(1)	Total Payments		Remainder of 2017		One to Three Years		Three to Five Years		After Five Years
(In thousands)
Operating leases	$	1,168	$	266	$	796	$	106	$	--
Capital leases		213		100		81		32		--
Uncertain tax positions(2)		--		--		--		--		--
Long-term debt		2,136		1,274		862		--		--
Total	$	3,517	$	1,640	$	1,739	$	138	$	--

(1)	Amounts are inclusive of interest payments, where applicable.
(2)	We have $730,000 in liabilities associated with uncertain tax positions. We are unable to reasonably estimate the expected cash settlement dates of these uncertain tax positions with the taxing authorities.

Stock Repurchase Program

The Board of Directors of the Company authorized the repurchase of up to 2,250,000 class A and 375,000 class B shares of common stock in the open market or in privately negotiated transactions under a stock repurchase program that was originally approved in February 2006 and subsequently amended in May 2013. As of June 30, 2017 the remaining number of common stock shares that could be purchased under this authorization was 280,491 class A shares and 69,491 class B shares.

ITEM 3.     Quantitative and Qualitative Disclosures about Market Risk

There are no material changes to the disclosures regarding the Company’s market risk exposures made in its Annual Report on Form 10-K for the year ended December 31, 2016.

ITEM 4.     Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective.

There have been no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the quarter ended June 30, 2017, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II – Other Information

ITEM 1A. Risk Factors

There have been no material changes to the risk factors relating to the Company set forth in Part I, Item 1A of its Annual Report on Form 10-K for the year ended December 31, 2016.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The Board of Directors of the Company authorized the repurchase of up to 2,250,000 class A and 375,000 class B shares of common stock in the open market or in privately negotiated transactions under a stock repurchase program that was originally approved in February 2006 and subsequently amended in May 2013. Unless terminated earlier by resolution of the Company’s Board of Directors, the repurchase program will expire when the Company has repurchased all shares authorized for repurchase thereunder. As of July 28, 2017, 1,969,509 shares of class A common stock and 305,509 shares of class B common stock have been repurchased under that authorization. No stock was repurchased under the program during the three-month period ended June 30, 2017.

ITEM 6. Exhibits

The exhibits listed in the accompanying index of exhibits are filed as part of this Quarterly Report on Form 10-Q.

-23-

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: August 4, 2017	By:	/s/ Michael D. Hays
		Michael D. Hays
		Chief Executive Officer (Principal Executive Officer)
Date: August 4, 2017	By:	/s/ Kevin R. Karas
		Kevin R. Karas Senior Vice President Finance, Treasurer, Secretary and Chief Financial Officer (Principal Financial and Accounting Officer)

-24-

NATIONAL RESEARCH CORPORATION

EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q

For the Quarterly Period ended June 30, 2017

Exhibit

(31.1) Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.

(31.2) Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934.

(32) Written Statement of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

(101)* Financial statements from the Quarterly Report on Form 10-Q of National Research Corporation for the quarter ended June 30, 2017, formatted in eXtensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Notes to Condensed Consolidated Financial Statements, and (vi) document and entity information.

* In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

-25-

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

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 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2017 /s/ Michael D. Hays Michael D. Hays Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

Pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934

I, Kevin R. Karas, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of National Research Corporation;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial information included in this 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 report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 4, 2017 /s/ Kevin R. Karas Kevin R. Karas Chief Financial Officer

EX-32

Exhibit 32

Certification Pursuant to 18 U.S.C. Section 1350
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the accompanying Quarterly Report on Form 10-Q of National Research Corporation (the “Company”) for the three-month period ended June 30, 2017 (the “Report”), I, Michael D. Hays, Chief Executive Officer of the Company, and I, Kevin R. Karas, Chief Financial Officer, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, based on my knowledge, that:

1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2) The 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

Chief Executive Officer

/s/ Kevin R. Karas

Kevin R. Karas

Chief Financial Officer

Date: August 4, 2017                                                        

A signed original of this written statement required by Section 906 has been provided to National Research Corporation and will be retained by National Research Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2017	Jul. 28, 2017
Document Information [Line Items]
Entity Registrant Name	National Research Corporation
Entity Central Index Key	0000070487
Trading Symbol	nrci
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Amendment Flag	false
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		20,942,785
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		3,540,244

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 31,628	$ 33,021
Trade accounts receivable, less allowance for doubtful accounts of $182 and $169 in 2017 and 2016, respectively	13,138	10,864
Unbilled revenue	1,644	1,546
Prepaid expenses	3,378	1,585
Income tax receivable	1,172	14
Other current assets	23	35
Total current assets	50,983	47,065
Property and equipment, net	12,138	11,806
Intangible assets, net	2,830	3,124
Goodwill	57,942	57,861
Other	683	768
Total assets	124,576	120,624
Current liabilities:
Current portion of notes payable	2,107	2,683
Accounts payable	883	765
Accrued wages, bonus and profit sharing	4,076	4,543
Accrued expenses	2,730	3,069
Current portion of capital lease obligations	102	82
Income taxes payable		662
Dividends payable	4,218	4,213
Deferred revenue	16,735	15,497
Total current liabilities	30,851	31,514
Notes payable, net of current portion		857
Deferred income taxes	5,057	4,670
Other long term liabilities	838	777
Total liabilities	36,746	37,818
Shareholders’ equity:
Preferred stock, $0.01 par value; authorized 2,000,000 shares, none issued	0	0
Additional paid-in capital	49,620	46,725
Retained earnings	75,343	71,507
Accumulated other comprehensive loss	(2,127)	(2,626)
Treasury stock, at cost; 4,855,667 Class A shares, 777,412 Class B shares in 2017 and 4,765,691 Class A shares, 768,944 Class B shares in 2016	(35,036)	(32,830)
Total shareholders’ equity	87,830	82,806
Total liabilities and shareholders’ equity	124,576	120,624
Common Class A [Member]
Shareholders’ equity:
Common stock, value	26	26
Common Class B [Member]
Shareholders’ equity:
Common stock, value	$ 4	$ 4

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Allowance for doubtful accounts	$ 182	$ 169
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	2,000,000	2,000,000
Preferred stock, shares issued (in shares)	0	0
Common Class A [Member]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	60,000,000	60,000,000
Common stock, shares issued (in shares)	25,796,457	25,656,760
Common stock, shares outstanding (in shares)	20,940,790	20,891,069
Treasury stock, shares (in shares)	4,855,667	4,765,691
Common Class B [Member]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	80,000,000	80,000,000
Common stock, shares issued (in shares)	4,317,656	4,308,875
Common stock, shares outstanding (in shares)	3,540,244	3,539,931
Treasury stock, shares (in shares)	777,412	768,944

XML

Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Revenue	$ 28,435	$ 26,114	$ 58,710	$ 53,984
Operating expenses:
Direct	11,939	10,734	24,439	22,273
Selling, general and administrative	6,905	7,270	13,591	14,627
Depreciation and amortization	1,139	1,092	2,244	2,060
Total operating expenses	19,983	19,096	40,274	38,960
Operating income	8,452	7,018	18,436	15,024
Other income (expense):
Interest income	15	11	29	22
Interest expense	(23)	(36)	(50)	(121)
Other, net	27	43	35	118
Total other income (expense)	19	18	14	19
Income before income taxes	8,471	7,036	18,450	15,043
Provision for income taxes	2,719	2,478	6,178	4,978
Net income	5,752	4,558	12,272	10,065
Common Class A [Member]
Other income (expense):
Net income	$ 2,855	$ 2,260	$ 6,088	$ 4,994
Basic Earnings Per Share:
Basic earnings per share (in dollars per share)	$ 0.14	$ 0.11	$ 0.29	$ 0.24
Diluted Earnings Per Share:
Diluted earnings per share (in dollars per share)	0.13	0.11	0.28	0.24
Dividends Per Share of Common Stock:
Dividends per share (in dollars per share)	$ 0.10	$ 0.08	$ 0.20	$ 0.16
Weighted average shares and share equivalents outstanding:
Weighted average shares and share equivalents outstanding, basic (in shares)	20,752	20,711	20,745	20,711
Weighted average shares and share equivalents outstanding, diluted (in shares)	21,525	20,992	21,404	21,002
Common Class B [Member]
Other income (expense):
Net income	$ 2,897	$ 2,298	$ 6,184	$ 5,071
Basic Earnings Per Share:
Basic earnings per share (in dollars per share)	$ 0.82	$ 0.65	$ 1.75	$ 1.44
Diluted Earnings Per Share:
Diluted earnings per share (in dollars per share)	0.80	0.64	1.71	1.41
Dividends Per Share of Common Stock:
Dividends per share (in dollars per share)	$ 0.60	$ 0.48	$ 1.20	$ 0.96
Weighted average shares and share equivalents outstanding:
Weighted average shares and share equivalents outstanding, basic (in shares)	3,514	3,508	3,514	3,498
Weighted average shares and share equivalents outstanding, diluted (in shares)	3,591	3,565	3,584	3,557

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Net income	$ 5,752	$ 4,558	$ 12,272	$ 10,065
Other comprehensive income:
Foreign currency translation adjustment	381	5	499	878
Other comprehensive income	381	5	499	878
Comprehensive Income	$ 6,133	$ 4,563	$ 12,771	$ 10,943

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net income	$ 12,272	$ 10,065
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	2,244	2,060
Deferred income taxes	386	926
Reserve for uncertain tax positions	73	(84)
Non-cash share-based compensation expense	792	1,081
Net changes in assets and liabilities:
Trade accounts receivable	(2,217)	(1,225)
Unbilled revenue	(82)	(356)
Prepaid expenses	(1,696)	(637)
Accounts payable	222	74
Accrued expenses, wages, bonuses and profit sharing	(750)	(627)
Income taxes receivable and payable	(1,818)	(1,271)
Deferred revenue	1,194	1,219
Net cash provided by operating activities	10,620	11,225
Cash flows from investing activities:
Purchases of property and equipment	(2,390)	(2,217)
Net cash used in investing activities	(2,390)	(2,217)
Cash flows from financing activities:
Payments on notes payable	(1,433)	(1,192)
Payments on capital lease obligations	(53)	(46)
Cash paid for non-controlling interest		(2,000)
Proceeds from exercise of stock options		547
Payment of employee payroll tax withholdings on share-based awards exercised	(105)	(147)
Payment of dividends on common stock	(8,431)	(21,809)
Net cash used in financing activities	(10,022)	(24,647)
Effect of exchange rate changes on cash	399	686
Change in cash and cash equivalents	(1,393)	(14,953)
Cash and cash equivalents at beginning of period	33,021	42,145
Cash and cash equivalents at end of period	31,628	27,192
Supplemental disclosure of cash paid for:
Interest, net of capitalized amounts	44	118
Income taxes	7,539	5,484
Supplemental disclosure of non-cash investing and financing activities:
Capital lease obligations originated for property and equipment	64	109
Stock tendered to the Company for cashless exercise of stock options in connection with equity incentive plans	$ 2,101	$ 162

XML

Note 1 - Basis of Consolidation and Presentation

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

1. BASIS OF CONSOLIDATION AND PRESENTATION

National Research Corporation, doing business as NRC Health (“NRC Health,” the “Company,” “we,” “our,” “us” or similar terms), is a leading provider of analytics and insights that facilitate measurement and improvement of the patient and employee experience while also increasing patient engagement and customer loyalty for healthcare providers, payers and other healthcare organizations in the United States and Canada. The Company

’s solutions enable its clients to understand the voice of the customer with greater clarity, immediacy and depth.

The Company

’s

six

operating segments are aggregated into

one

reporting segment because they have similar economic characteristics and meet the other aggregation criteria from the Financial Accounting Standards Board (“FASB”) guidance on segment disclosure. The

six

operating segments are Experience, The Governance Institute, Market Insights, Transparency, NRC Health Canada and Transitions (formerly Connect), which offer a portfolio of solutions that address specific needs around market insight, experience, transparency and governance for healthcare providers, payers and other healthcare organizations.

The condensed consolidated balance sheet of the Company at

December 31, 2016,

was derived from the Company

’s audited consolidated 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.

Information and footnote disclosures included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto that are included in the Company

’s Form

10

-K for the year ended

December 31, 2016,

filed with the Securities and Exchange Commission (the “SEC”) on

March 3, 2017.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, National Research Corporation Canada, doing business as NRC Health Canada. The condensed consolidated statement of income for the

three

and

six

months ended

June 30, 2016

also included Customer-Connect LLC.  Customer-Connect LLC became a wholly-owned subsidiary in

March 2016

and was previously a variable interest entity for which NRC Health was deemed the primary beneficiary. On

June 30, 2016,

Customer-Connect LLC was dissolved. All significant intercompany transactions and balances have been eliminated.

The functional currency of the Company

’s foreign subsidiary, National Research Corporation Canada, doing business as NRC Health Canada, is the subsidiary’s local currency. The Company translates the assets and liabilities of its foreign subsidiary at the period-end rate of exchange and its foreign subsidiary’s income statement balances at the average rate prevailing during the period. The Company records the resulting translation adjustment in accumulated other comprehensive loss, a component of shareholders’ equity. Since the undistributed earnings of the Company’s foreign subsidiary are considered to be indefinitely reinvested,

no

taxes were provided for on currency translation adjustments arising from converting the investment denominated in a foreign currency to U.S. dollars. Gains and losses related to transactions denominated in a currency other than the subsidiary’s local currency and short-term intercompany accounts are included in other income (expense) in the condensed consolidated statements of income.

Reclassifications

Reclassifications have been made from noncurrent deferred income taxes to other noncurrent liabilities in the

2016

condensed consolidated balance sheet to present the unrecognized tax benefits related to state taxes gross of federal tax benefits, consistent with the

2017

financial statement presentation. There was

no

impact on the previously reported net income and earnings per share.

Fair Value Measurements

The Company

’s valuation techniques are based on maximizing observable inputs and minimizing the use of unobservable inputs when measuring fair value. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect the Company’s market assumptions. The inputs are then classified into the following hierarchy: (

1

) Level

1

Inputs—quoted prices in active markets for identical assets and liabilities; (

2

) Level

2

Inputs—observable market-based inputs other than Level

1

inputs, such as quoted prices for similar assets or liabilities in active markets, quoted prices for similar or identical assets or liabilities in markets that are

not

active, or other inputs that are observable or can be corroborated by observable market data; and (

3

) Level

3

Inputs—unobservable inputs.

Commercial paper

and Eurodollar deposits are included in cash equivalents and are valued at amortized cost, which approximates fair value due to their short-term nature. Eurodollar deposits are United States dollars deposited in a foreign bank branch of a United States bank and have daily liquidity. Both of these are included as a Level

2

measurement in the table below.

The following details the Company

’s financial assets and liabilities within the fair value hierarchy at

June 30, 2017

and

December 31, 2016:

Fair Values Measured on a Recurring Basis

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of June 30, 2017
Money Market Funds	$	12,078	$	--	$	--	$	12,078
Commercial Paper		--		9,096		--		9,096
Eurodollar Deposit s		--		10,000		--		10,000
Total	$	12,078	$	19,096	$	--	$	31,174
As of December 31, 2016
Money Market Funds	$	11,200	$	--	$	--	$	11,200
Commercial Paper		--		21,450		--		21,450
Total	$	11,200	$	21,450	$	--	$	32,650

The Company

’s long-term debt is recorded at historical cost. The following are the carrying amounts and estimated fair values, using a Level

2

discounted cash flow analysis based primarily on estimated current rates available for debt of the same remaining duration and adjusted for nonperformance and credit risk:

	June 30 , 2017		December 31, 2016
	(In thousands)
Total carrying amounts of long-term debt	$	2,107	$	3,540
Estimated fair value of long-term debt	$	2,102	$	3,533

The Company believes that the carrying amounts of trade accounts receivable, accounts payable and accrued expenses approximate their fair value due to the short maturity of those instruments. All non-financial assets that are

not

recognized or disclosed at fair value in the financial statements on a recurring basis, which includes goodwill and non-financial long-lived assets, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). As of

June 30, 2017,

and

December 31, 2016,

there was

no

indication of impairment related to the Company’s non-financial assets.

XML

Note 2 - Income Taxes

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Income Tax Disclosure [Text Block]

2. INCOME TAXES

The effective tax rate for the

three

-month period ended

June 30, 2017

decreased to

32.1%

compared to

35.2%

for the same period in

2016.

The effective tax rate for the

six

-month period ended

June 30, 2017

increased to

33.5%

compared to

33.1%

for the same period in

2016.

The decrease in the effective tax rate for the

three

-month period ending

June 30, 2017

was mainly due to a

$323,000

 increase in tax benefits from the exercise of options and dividends paid to non-vested shareholders. The increase in the effective tax rate for the

six

-month period ended

June 30, 2017

was due to increases in the estimated state tax rates as well as a greater proportion of United States income subject to higher tax rates than Canadian income, partially offset by increased tax benefits in

2017

from the exercise of options and dividends paid to non-vested shareholders.  In addition, state tax incentives decreased by

$38,000,

and, in

2016,

the United States federal tax examination adjustments decreased tax expense by

$48,000.

XML

Note 3 - Notes Payable

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Debt Disclosure [Text Block]

3 .   NOTES PAYABLE

The Company

’s term note is payable in monthly installments of

$212,468.

Borrowings under the term note bear interest at an annual rate of

3.12%.

The outstanding balance of the term note at

June 30, 2017

was

$2.1

million.

T

he Company also has a revolving credit note which was amended and extended effective

June 30, 2017

with a maturity date of

June 30, 2018.

The maximum aggregate amount available under the revolving credit note is

$12.0

million. Borrowings under the revolving credit note bear interest at a variable annual rate, with

three

rate options at the discretion of management as follows: (

1

)

2.1%

plus the

one

-month London Interbank Offered Rate (“LIBOR”) or (

2

)

2.1%

plus the

one

-,

two

- or

three

- month LIBOR rate, or (

3

) the bank’s

one

-, two, three, six, or

twelve

month Money Market Loan Rate. As of

June 30, 2017

the revolving credit note did

not

have a balance and the Company had the capacity to borrow

$12.0

million.

The term note and revolving credit note are secured by certain of the Company

’s assets, including the Company’s land, building, trade accounts receivable and intangible assets. The term note and revolving credit note contain various restrictions and covenants applicable to the Company, including requirements that the Company maintain certain financial ratios at prescribed levels and restrictions on the ability of the Company to consolidate or merge, create liens, incur additional indebtedness or dispose of assets. As of

June 30, 2017,

the Company was in compliance with its financial covenants.

XML

Note 4 - Share-based Compensation

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

4.   SHARE-BASED COMPENSATION

The Company measures and recognizes compensation expense for all share-based payments based on the grant-date fair value of those awards. All of the Company

’s existing stock option awards and unvested stock awards have been determined to be equity-classified awards.

The Company

’s

2001

Equity Incentive Plan provided for the granting of stock options, stock appreciation rights, restricted stock, performance shares and other share-based awards and benefits up to an aggregate of

1,800,000

shares of class A common stock and

300,000

shares of class B common stock. Stock options granted could have been either nonqualified or incentive stock options. Stock options vest over

one

to

five

years following the date of grant and option terms are generally

five

to

ten

years following the date of grant.

The Company

’s

2004

Non-Employee Director Stock Plan, as amended (the

“2004

Director Plan”), is a nonqualified plan that provides for the granting of options with respect to

3,000,000

shares of class A common stock and

500,000

shares of class B common stock. The

2004

Director Plan provides for grants of nonqualified stock options to each director of the Company who is

not

employed by the Company. On the date of each annual meeting of shareholders of the Company, options to purchase

36,000

shares of class A common stock and

6,000

shares of class B common stock are granted to directors that are elected or retained as a director at such meeting. Stock options vest

one

year following the date of grant and option terms are generally

ten

years following the date of grant, or

three

years in the case of termination of the outside director’s service.

The Company

’s

2006

Equity Incentive Plan provides for the granting of stock options, stock appreciation rights, restricted stock, performance shares and other share-based awards and benefits up to an aggregate of

1,800,000

shares of class A common stock and

300,000

shares of class B common stock. Stock options granted

may

be either incentive stock options or nonqualified stock options. Vesting terms vary with each grant and option terms are generally

five

to

ten

years following the date of grant.

The Company granted options to purchase

299,917

shares of the Company’s class A common stock and

49,986

shares of the class B common stock during the

six

-month period ended

June 30, 2017.

Options to purchase shares of common stock were granted with exercise prices equal to the fair value of the common stock on the date of grant. The fair value of the stock options granted was estimated using a Black-Scholes valuation model with the following assumptions:

	2017						2016
	Class A			Class B			Class A			Class B
Expected dividend yield at date of grant	2.46	to	2.87%	7.99	to	8.10%	2.96	to	3.02%	6.67	to	8.12%
Expected stock price volatility	32.20	to	32.62%	26.47	to	27.18%	31.33	to	34.61%	27.64	to	31.77%
Risk-free interest rate	2.08	to	2.33%	2.08	to	2.33%	1.36	to	2.12%	1.36	to	2.12%
Expected life of options (in years)	6	to	8	6	to	8	6	to	8	6	to	8

The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of the grant. The expected volatility was based on historical monthly price changes of the Company

’s common stock based on the expected life of the options at the date of grant. The expected life of options is the average number of years the Company estimates that options will be outstanding. The Company considers groups of associates that have similar historical exercise behavior separately for valuation purposes.

The following table summarizes stock option activity under the Company

’s

2001

and

2006

Equity Incentive Plans and the

2004

Director Plan for the

three

months ended

June 30, 2017:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Class A
Outstanding at December 31, 2016		1,705,483		$	12.31
Granted		299,917		$	22.13
Exercised		(159,011	)	$	11.07			$	1,754
Forfeited		(24,982	)	$	17.03
Outstanding at June 30, 2017		1,821,407		$	13.97		6.24	$	23,544
Exercisable at June 30, 2017		1,313,134		$	12.03		5.23	$	19,523
Class B
Outstanding at December 31, 2016		250,493		$	29.70
Granted		49,986		$	42.90
Exercised		(12,000	)	$	28.41			$	142
Forfeited		(4,163	)	$	37.30
Outstanding at June 30, 2017		284,316		$	31.96		6.48	$	4,486
Exercisable at June 30, 2017		200,550		$	29.06		5.49	$	3,747

As of

June 30, 2017,

the total unrecognized compensation cost related to non-vested stock option awards was approximately

$2.0

million and

$239,000

for class A and class B common shares, respectively, which is expected to be recognized over a weighted average period of

2.33

years and

2.48

years for class A and class B common stock shares, respectively.

The following table summarizes information for the

six

months ended

June 30, 2017

regarding non-vested stock granted to associates under the

2001

and

2006

Equity Incentive Plans

:

	Class A Shares Outstanding			Class A Weighted Average Grant Date Fair Value Per Share		Class B Shares Outstanding			Class B Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2016		174,487		$	13.93		29,081		$	37.21
Granted		--			--		--			--
Vested		--			--		--			--
Forfeited		(19,314	)	$	14.27		(3,219	)	$	34.69
Outstanding at June 30, 2017		155,173		$	13.89		25,862		$	37.53

As of

June 30, 2017,

the total unrecognized compensation cost related to non-vested stock awards was approximately

$1.2

million and is expected to be recognized over a weighted average period of

2.59

years.

XML

Note 5 - Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

5.    GOODWILL AND OTHER INTANGIBLE ASSETS

The following represents a summary of changes in the Company

’s carrying amount of goodwill for the 

six

months ended

June 30, 2017:

	(In thousands)
Balance as of December 31, 2016	$	57,861
Foreign currency translation		81
Balance as of June 30, 2017	$	57,942

Intangible assets consisted of the following:

	June 30 , 2017			December 31, 2016
	(In thousands)
Non-amortizing other intangible assets:
Trade name	$	1,191		$	1,191
Amortizing other intangible assets:
Customer related		9,339			9,331
Technology		1,110			1,110
Trade name		1,572			1,572
Total other intangible assets		13,212			13,204
Accumulated amortization		(10,382	)		(10,080	)
Other intangible assets, net	$	2,830		$	3,124

XML

Note 6 - Property and Equipment

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

6.     PROPERTY AND EQUIPMENT

	June 30, 2017			December 31, 2016
	(In thousands)
Property and equipment	$	40,209		$	37,890
Accumulated depreciation		(28,071	)		(26,084	)
Property and equipment, net	$	12,138		$	11,806

XML

Note 7 - Earnings Per Share

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Earnings Per Share [Text Block]

  7. EARNINGS PER SHARE

Net income per share of class A common stock and class B common stock is computed using the

two

-class method. Basic net income per share is computed by allocating undistributed earnings to common shares and using the weighted-average number of common shares outstanding during the period.

Diluted net income per share is computed using the weighted-average number of common shares and, if dilutive, the potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock. The dilutive effect of outstanding stock options is reflected in diluted earnings per share by application of the treasury stock method.

The liquidation rights and the rights upon the consummation of an extraordinary transaction are the same for the holders of class A common stock and class B common stock. Other than share distributions and liquidation rights, the amount of any dividend or other distribution payable on each share of class A common stock will be equal to

one

-

sixth

(

1/6

th

) of the amount of any such dividend or other distribution payable on each share of class B common stock. As a result, the undistributed earnings for each period are allocated based on the contractual participation rights of the class A and class B common stock as if the earnings for the period had been distributed.

For the

three

months ended

June 30, 2017

, the Company excluded

17,473

options of class B shares from the diluted net income per share computation because the exercise or grant price exceeded the fair market value. For the

three

months ended

June 30, 2016,

798,421

options of class A shares and

46,813

options of class B shares have been excluded from the diluted net income per share computation because the exercise or grant price exceeded the fair market value. For the

three

months ended

June 30, 2017,

an additional

104,835

options of class A shares were excluded as their inclusion would be anti-dilutive. For the

three

months ended

June 30, 2016,

an additional

66,428

options of class A shares and

34,830

of class B shares were excluded as their inclusion would be anti-dilutive.

	For the Three Months Ended June 30, 2017						For the Three Months Ended June 30, 2016
	Class A Common Stock			Class B Common Stock			Class A Common Stock			Class B Common Stock
	(In thousands, except per share data)
Numerator for net income per share - basic:
Net income	$	2,855		$	2,897		$	2,260		$	2,298
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(22	)		(22	)		(19	)		(20	)
Net income attributable to common shareholders	$	2,833		$	2,875		$	2,241		$	2,278
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic		20,752			3,514			20,711			3,508
Net income per share – basic	$	0.14		$	0.82		$	0.11		$	0.65
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$	2,833		$	2,875		$	2,241		$	2,278
Denominator for net income per share - diluted:
Weighted average common shares outstanding – basic		20,752			3,514			20,711			3,508
Weighted average effect of dilutive securities – stock options		773			77			281			57
Denominator for diluted earnings per share – adjusted weighted average shares		21,525			3,591			20,992			3,565
Net income per share – diluted	$	0.13		$	0.80		$	0.11		$	0.64

For the

six

months ended

June 30, 2017

and

2016,

the Company had

52,707

and

550,561

options of class A shares and

38,784

and

38,407

options of class B shares, respectively, which have been excluded from the diluted net income per share computation because the exercise or grant price exceeded the fair market value. For the

six

months ended

June 30, 2017

and

2016,

an additional

115,908

and

260,868

options of class A shares and

19,318

and

34,333

of Class B shares were excluded as their inclusion would be anti-dilutive, respectively.

	For the Six Months Ended June 30, 2017						For the Six Months Ended June 30, 2016
	Class A Common Stock			Class B Common Stock			Class A Common Stock			Class B Common Stock
	(In thousands, except per share data)
Numerator for net income per share - basic:
Net income	$	6,088		$	6,184		$	4,994		$	5,071
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(48	)		(49	)		(43	)		(44	)
Net income attributable to common shareholders	$	6,040		$	6,135		$	4,951		$	5,027
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic		20,745			3,514			20,711			3,498
Net income per share – basic	$	0.29		$	1.75		$	0.24		$	1.44
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$	6,040		$	6,135		$	4,951		$	5,027
Denominator for net income per share - diluted:
Weighted average common shares outstanding – basic		20,745			3,514			20,711			3,498
Weighted average effect of dilutive securities – stock options		659			70			291			59
Denominator for diluted earnings per share – adjusted weighted average shares		21,404			3,584			21,002			3,557
Net income per share – diluted	$	0.28		$	1.71		$	0.24		$	1.41

XML

Note 8 - Related Party

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

8.

     RELATED PARTY     

A

 director of the Company serves as an officer of Ameritas Life Insurance Corp. (“Ameritas”). In connection with the Company’s regular assessment of its insurance-based associate benefits, which is conducted by an independent insurance broker, and the costs associated therewith, the Company purchases dental and vision insurance for certain of its associates from Ameritas. The total value of these purchases was

$62,000

and

$57,000

for the

three

-month periods ended

June 30, 2017

and

2016,

respectively, and

$120,000

and

$115,000

for the

six

-month periods ended

June 30, 2017

and

2016,

respectively.

Mr. Hays, the Chief Executive Officer, majority shareholder and director of the Company, is an owner of

14%

of the equity interest of Nebraska Global Investment Company LLC (“Nebraska Global”).

  The Company, directly or indirectly through its former subsidiary Customer-Connect LLC, purchased certain services from Nebraska Global, primarily consisting of software development services.  The total value of these purchases were

$204,000

and

$420,000

in the

three

-month and

six

-month periods ended

June 30, 2016,

respectively. There were

no

purchases from Nebraska Global in

2017.

XML

Note 9 - Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

9.

     RECENT ACCOUNTING PRONOUNCEMENTS

In

May 2014,

the FASB issued Accounting Standards Update ("ASU")

2014

-

09,

Revenue from Contracts with Customers (Topic

606

)

(“ASU

2014

-

09”

).  ASU

2014

-

09

requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU

2014

-

09

will replace most existing revenue recognition guidance in accounting principles generally accepted in the United States when it becomes effective. The standard is effective for annual and interim reporting periods in fiscal years beginning after

December 15, 2017,

with early adoption allowed for years beginning after

December 15, 2016.

An entity

may

choose to adopt ASU

2014

-

09

either retrospectively or through a cumulative effect adjustment as of the start of the

first

period for which it applies the standard.  The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements as 

well as developing and testing changes to our processes and systems. Due to cost benefit considerations reviewed during the

second

quarter of

2017,

the Company now plans to adopt the guidance beginning

January 1, 2018

by recording a cumulative effect adjustment rather than retrospectively, as previously planned. The Company currently expects the most significant changes to result from deferring commissions and recognizing the expense over the estimated life of the client relationship rather than expensing as incurred, which is the Company’s current practice, and estimating variable consideration at the outset of the contract. 

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases

(Topic

842

)

. This ASU requires lessees to recognize a lease liability and a right-to-use asset for all leases, including operating leases, with a term greater than

twelve

months on its balance sheet. This ASU is effective in fiscal years beginning after

December 15, 2018,

with early adoption permitted, and requires a modified retrospective transition method. The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements and does

not

plan to elect early adoption.

In

June 2016,

the FASB issued ASU

2016

-

13,

Financial Instruments – Credit Losses (Topic

326

):  Measurement of Credit Losses on Financial Instruments

.  This ASU will require the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after

December 15, 2019

and interim periods within those fiscal years. The Company believes its adoption will

not

significantly impact the Company’s results of operations and financial position.

In

August 2016,

the FASB issued ASU

2016

-

15,

Statement of Cash Flows (Topic

230

) Classification of Certain Cash Receipts and Cash Payments

which eliminates the diversity in practice related to

eight

cash flow classification issues.  This ASU is effective for the Company on

January 1, 2018

with early adoption permitted.  The Company plans to adopt this update on

January 1, 2018

and believes its adoption will

not

significantly impact the Company’s results of operations and financial position.

In

October 2016,

the FASB issued ASU

2016

-

16,

Intra-Entity Transfers of Asset Other Than Inventory

(“ASU

2016

-

16”

), which requires entities to recognize the tax consequences of intercompany asset transfers other than inventory transfers in the period in which the transfer takes place. ASU

2016

-

16

is effective for fiscal years and interim periods within fiscal years beginning after

December 15, 2017.

ASU

2016

-

16

is to be adopted using a modified retrospective approach with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The cumulative effect adjustment will include recognition of the income tax consequences of intra-entity transfers of assets other than inventory that occur before the adoption date.  The Company believes the adoption of ASU

2016

-

16

will

not

significantly impact the consolidated financial statements.

In

November 2016,

the FASB issued ASU

2016

-

18,

Statement of Cash Flows (Topic

230

), Restricted Cash

(“ASU

2016

-

18”

), which requires that the amounts generally described as restricted cash or restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-the period and end-of-period total amounts shown on the statement of cash flows. ASU

2016

-

18

does

not

provide a definition of restricted cash or restricted cash equivalents. ASU

2016

-

18

is effective for fiscal years and interim periods beginning after

December 15, 2017.

The Company does

not

expect the adoption of ASU

2016

-

18

to have any impact on the consolidated financial statements.

In

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles—Goodwill and Other (Topic

350

), Simplifying the Test for Goodwill Impairment

(“ASU

2017

-

04”

). The new guidance eliminates Step

2

of the goodwill impairment testing which requires the fair value of individual assets and liabilities of a reporting unit to be determined when measuring goodwill impairment. The new guidance

may

result in different amounts of impairment that could be recognized compared to existing guidance. In addition, failing step

1

of the impairment test

may

not

result in impairment under existing guidance. However, under the revised guidance, failing step

1

will always result in a goodwill impairment. ASU

2017

-

04

is to be applied prospectively for goodwill impairment testing performed in years beginning after

December 15, 2019. 

The Company does

not

believe the adoption will significantly impact the Company's results of operations or financial position.

XML

Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Reclassification, Policy [Policy Text Block]

Reclassifications

Reclassifications have been made from noncurrent deferred income taxes to other noncurrent liabilities in the

2016

condensed consolidated balance sheet to present the unrecognized tax benefits related to state taxes gross of federal tax benefits, consistent with the

2017

financial statement presentation. There was

no

impact on the previously reported net income and earnings per share.

Fair Value Measurement, Policy [Policy Text Block]

Fair Value Measurements

The Company

’s valuation techniques are based on maximizing observable inputs and minimizing the use of unobservable inputs when measuring fair value. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect the Company’s market assumptions. The inputs are then classified into the following hierarchy: (

1

) Level

1

Inputs—quoted prices in active markets for identical assets and liabilities; (

2

) Level

2

Inputs—observable market-based inputs other than Level

1

inputs, such as quoted prices for similar assets or liabilities in active markets, quoted prices for similar or identical assets or liabilities in markets that are

not

active, or other inputs that are observable or can be corroborated by observable market data; and (

3

) Level

3

Inputs—unobservable inputs.

Commercial paper

and Eurodollar deposits are included in cash equivalents and are valued at amortized cost, which approximates fair value due to their short-term nature. Eurodollar deposits are United States dollars deposited in a foreign bank branch of a United States bank and have daily liquidity. Both of these are included as a Level

2

measurement in the table below.

The following details the Company

’s financial assets and liabilities within the fair value hierarchy at

June 30, 2017

and

December 31, 2016:

Fair Values Measured on a Recurring Basis

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of June 30, 2017
Money Market Funds	$	12,078	$	--	$	--	$	12,078
Commercial Paper		--		9,096		--		9,096
Eurodollar Deposit s		--		10,000		--		10,000
Total	$	12,078	$	19,096	$	--	$	31,174
As of December 31, 2016
Money Market Funds	$	11,200	$	--	$	--	$	11,200
Commercial Paper		--		21,450		--		21,450
Total	$	11,200	$	21,450	$	--	$	32,650

The Company

’s long-term debt is recorded at historical cost. The following are the carrying amounts and estimated fair values, using a Level

2

discounted cash flow analysis based primarily on estimated current rates available for debt of the same remaining duration and adjusted for nonperformance and credit risk:

	June 30 , 2017		December 31, 2016
	(In thousands)
Total carrying amounts of long-term debt	$	2,107	$	3,540
Estimated fair value of long-term debt	$	2,102	$	3,533

The Company believes that the carrying amounts of trade accounts receivable, accounts payable and accrued expenses approximate their fair value due to the short maturity of those instruments. All non-financial assets that are

not

recognized or disclosed at fair value in the financial statements on a recurring basis, which includes goodwill and non-financial long-lived assets, are measured at fair value in certain circumstances (for example, when there is evidence of impairment). As of

June 30, 2017,

and

December 31, 2016,

there was

no

indication of impairment related to the Company’s non-financial assets.

New Accounting Pronouncements, Policy [Policy Text Block]

In

May 2014,

the FASB issued Accounting Standards Update ("ASU")

2014

-

09,

Revenue from Contracts with Customers (Topic

606

)

(“ASU

2014

-

09”

).  ASU

2014

-

09

requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU

2014

-

09

will replace most existing revenue recognition guidance in accounting principles generally accepted in the United States when it becomes effective. The standard is effective for annual and interim reporting periods in fiscal years beginning after

December 15, 2017,

with early adoption allowed for years beginning after

December 15, 2016.

An entity

may

choose to adopt ASU

2014

-

09

either retrospectively or through a cumulative effect adjustment as of the start of the

first

period for which it applies the standard.  The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements as 

well as developing and testing changes to our processes and systems. Due to cost benefit considerations reviewed during the

second

quarter of

2017,

the Company now plans to adopt the guidance beginning

January 1, 2018

by recording a cumulative effect adjustment rather than retrospectively, as previously planned. The Company currently expects the most significant changes to result from deferring commissions and recognizing the expense over the estimated life of the client relationship rather than expensing as incurred, which is the Company’s current practice, and estimating variable consideration at the outset of the contract. 

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases

(Topic

842

)

. This ASU requires lessees to recognize a lease liability and a right-to-use asset for all leases, including operating leases, with a term greater than

twelve

months on its balance sheet. This ASU is effective in fiscal years beginning after

December 15, 2018,

with early adoption permitted, and requires a modified retrospective transition method. The Company is currently in the process of evaluating the impact that this new guidance will have on its consolidated financial statements and does

not

plan to elect early adoption.

In

June 2016,

the FASB issued ASU

2016

-

13,

Financial Instruments – Credit Losses (Topic

326

):  Measurement of Credit Losses on Financial Instruments

.  This ASU will require the measurement of all expected credit losses for financial assets, including trade receivables, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance is effective for annual reporting periods beginning after

December 15, 2019

and interim periods within those fiscal years. The Company believes its adoption will

not

significantly impact the Company’s results of operations and financial position.

In

August 2016,

the FASB issued ASU

2016

-

15,

Statement of Cash Flows (Topic

230

) Classification of Certain Cash Receipts and Cash Payments

which eliminates the diversity in practice related to

eight

cash flow classification issues.  This ASU is effective for the Company on

January 1, 2018

with early adoption permitted.  The Company plans to adopt this update on

January 1, 2018

and believes its adoption will

not

significantly impact the Company’s results of operations and financial position.

In

October 2016,

the FASB issued ASU

2016

-

16,

Intra-Entity Transfers of Asset Other Than Inventory

(“ASU

2016

-

16”

), which requires entities to recognize the tax consequences of intercompany asset transfers other than inventory transfers in the period in which the transfer takes place. ASU

2016

-

16

is effective for fiscal years and interim periods within fiscal years beginning after

December 15, 2017.

ASU

2016

-

16

is to be adopted using a modified retrospective approach with a cumulative effect adjustment to retained earnings as of the beginning of the period of adoption. The cumulative effect adjustment will include recognition of the income tax consequences of intra-entity transfers of assets other than inventory that occur before the adoption date.  The Company believes the adoption of ASU

2016

-

16

will

not

significantly impact the consolidated financial statements.

In

November 2016,

the FASB issued ASU

2016

-

18,

Statement of Cash Flows (Topic

230

), Restricted Cash

(“ASU

2016

-

18”

), which requires that the amounts generally described as restricted cash or restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-the period and end-of-period total amounts shown on the statement of cash flows. ASU

2016

-

18

does

not

provide a definition of restricted cash or restricted cash equivalents. ASU

2016

-

18

is effective for fiscal years and interim periods beginning after

December 15, 2017.

The Company does

not

expect the adoption of ASU

2016

-

18

to have any impact on the consolidated financial statements.

In

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles—Goodwill and Other (Topic

350

), Simplifying the Test for Goodwill Impairment

(“ASU

2017

-

04”

). The new guidance eliminates Step

2

of the goodwill impairment testing which requires the fair value of individual assets and liabilities of a reporting unit to be determined when measuring goodwill impairment. The new guidance

may

result in different amounts of impairment that could be recognized compared to existing guidance. In addition, failing step

1

of the impairment test

may

not

result in impairment under existing guidance. However, under the revised guidance, failing step

1

will always result in a goodwill impairment. ASU

2017

-

04

is to be applied prospectively for goodwill impairment testing performed in years beginning after

December 15, 2019. 

The Company does

not

believe the adoption will significantly impact the Company's results of operations or financial position.

XML

Note 1 - Basis of Consolidation and Presentation (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Fair Value, by Balance Sheet Grouping [Table Text Block]

	June 30 , 2017		December 31, 2016
	(In thousands)
Total carrying amounts of long-term debt	$	2,107	$	3,540
Estimated fair value of long-term debt	$	2,102	$	3,533

Fair Value, Measurements, Recurring [Member]

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	Level 1		Level 2		Level 3		Total
	(In thousands)
As of June 30, 2017
Money Market Funds	$	12,078	$	--	$	--	$	12,078
Commercial Paper		--		9,096		--		9,096
Eurodollar Deposit s		--		10,000		--		10,000
Total	$	12,078	$	19,096	$	--	$	31,174
As of December 31, 2016
Money Market Funds	$	11,200	$	--	$	--	$	11,200
Commercial Paper		--		21,450		--		21,450
Total	$	11,200	$	21,450	$	--	$	32,650

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Note 4 - Share-based Compensation (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2017						2016
	Class A			Class B			Class A			Class B
Expected dividend yield at date of grant	2.46	to	2.87%	7.99	to	8.10%	2.96	to	3.02%	6.67	to	8.12%
Expected stock price volatility	32.20	to	32.62%	26.47	to	27.18%	31.33	to	34.61%	27.64	to	31.77%
Risk-free interest rate	2.08	to	2.33%	2.08	to	2.33%	1.36	to	2.12%	1.36	to	2.12%
Expected life of options (in years)	6	to	8	6	to	8	6	to	8	6	to	8

Share-based Compensation, Activity [Table Text Block]

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (Years)		Aggregate Intrinsic Value (In thousands)
Class A
Outstanding at December 31, 2016		1,705,483		$	12.31
Granted		299,917		$	22.13
Exercised		(159,011	)	$	11.07			$	1,754
Forfeited		(24,982	)	$	17.03
Outstanding at June 30, 2017		1,821,407		$	13.97		6.24	$	23,544
Exercisable at June 30, 2017		1,313,134		$	12.03		5.23	$	19,523
Class B
Outstanding at December 31, 2016		250,493		$	29.70
Granted		49,986		$	42.90
Exercised		(12,000	)	$	28.41			$	142
Forfeited		(4,163	)	$	37.30
Outstanding at June 30, 2017		284,316		$	31.96		6.48	$	4,486
Exercisable at June 30, 2017		200,550		$	29.06		5.49	$	3,747

Schedule of Nonvested Share Activity [Table Text Block]

	Class A Shares Outstanding			Class A Weighted Average Grant Date Fair Value Per Share		Class B Shares Outstanding			Class B Weighted Average Grant Date Fair Value Per Share
Outstanding at December 31, 2016		174,487		$	13.93		29,081		$	37.21
Granted		--			--		--			--
Vested		--			--		--			--
Forfeited		(19,314	)	$	14.27		(3,219	)	$	34.69
Outstanding at June 30, 2017		155,173		$	13.89		25,862		$	37.53

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Note 5 - Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Goodwill [Table Text Block]

	(In thousands)
Balance as of December 31, 2016	$	57,861
Foreign currency translation		81
Balance as of June 30, 2017	$	57,942

Schedule of Intangible Assets [Table Text Block]

	June 30 , 2017			December 31, 2016
	(In thousands)
Non-amortizing other intangible assets:
Trade name	$	1,191		$	1,191
Amortizing other intangible assets:
Customer related		9,339			9,331
Technology		1,110			1,110
Trade name		1,572			1,572
Total other intangible assets		13,212			13,204
Accumulated amortization		(10,382	)		(10,080	)
Other intangible assets, net	$	2,830		$	3,124

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Note 6 - Property and Equipment (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Property, Plant and Equipment [Table Text Block]

	June 30, 2017			December 31, 2016
	(In thousands)
Property and equipment	$	40,209		$	37,890
Accumulated depreciation		(28,071	)		(26,084	)
Property and equipment, net	$	12,138		$	11,806

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Note 7 - Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2017

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the Three Months Ended June 30, 2017						For the Three Months Ended June 30, 2016
	Class A Common Stock			Class B Common Stock			Class A Common Stock			Class B Common Stock
	(In thousands, except per share data)
Numerator for net income per share - basic:
Net income	$	2,855		$	2,897		$	2,260		$	2,298
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(22	)		(22	)		(19	)		(20	)
Net income attributable to common shareholders	$	2,833		$	2,875		$	2,241		$	2,278
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic		20,752			3,514			20,711			3,508
Net income per share – basic	$	0.14		$	0.82		$	0.11		$	0.65
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$	2,833		$	2,875		$	2,241		$	2,278
Denominator for net income per share - diluted:
Weighted average common shares outstanding – basic		20,752			3,514			20,711			3,508
Weighted average effect of dilutive securities – stock options		773			77			281			57
Denominator for diluted earnings per share – adjusted weighted average shares		21,525			3,591			20,992			3,565
Net income per share – diluted	$	0.13		$	0.80		$	0.11		$	0.64

	For the Six Months Ended June 30, 2017						For the Six Months Ended June 30, 2016
	Class A Common Stock			Class B Common Stock			Class A Common Stock			Class B Common Stock
	(In thousands, except per share data)
Numerator for net income per share - basic:
Net income	$	6,088		$	6,184		$	4,994		$	5,071
Allocation of distributed and undistributed income to unvested restricted stock shareholders		(48	)		(49	)		(43	)		(44	)
Net income attributable to common shareholders	$	6,040		$	6,135		$	4,951		$	5,027
Denominator for net income per share - basic:
Weighted average common shares outstanding - basic		20,745			3,514			20,711			3,498
Net income per share – basic	$	0.29		$	1.75		$	0.24		$	1.44
Numerator for net income per share - diluted:
Net income attributable to common shareholders for basic computation	$	6,040		$	6,135		$	4,951		$	5,027
Denominator for net income per share - diluted:
Weighted average common shares outstanding – basic		20,745			3,514			20,711			3,498
Weighted average effect of dilutive securities – stock options		659			70			291			59
Denominator for diluted earnings per share – adjusted weighted average shares		21,404			3,584			21,002			3,557
Net income per share – diluted	$	0.28		$	1.71		$	0.24		$	1.41

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Note 1 - Basis of Consolidation and Presentation (Details Textual) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)
Number of Operating Segments	6
Number of Reportable Segments	1
Goodwill and Intangible Asset Impairment	$ 0	$ 0

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Note 1 - Basis of Consolidation and Presentation - Fair Value of Financial Assets and Liabilities (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Assets, fair value	$ 31,174	$ 32,650
Money Market Funds [Member]
Assets, fair value	12,078	11,200
Commercial Paper [Member]
Assets, fair value	9,096	21,450
Eurodollar Deposits [Member]
Assets, fair value	10,000
Fair Value, Inputs, Level 1 [Member]
Assets, fair value	12,078	11,200
Fair Value, Inputs, Level 1 [Member] | Money Market Funds [Member]
Assets, fair value	12,078	11,200
Fair Value, Inputs, Level 1 [Member] | Commercial Paper [Member]
Assets, fair value
Fair Value, Inputs, Level 1 [Member] | Eurodollar Deposits [Member]
Assets, fair value
Fair Value, Inputs, Level 2 [Member]
Assets, fair value	19,096	21,450
Fair Value, Inputs, Level 2 [Member] | Money Market Funds [Member]
Assets, fair value
Fair Value, Inputs, Level 2 [Member] | Commercial Paper [Member]
Assets, fair value	9,096	21,450
Fair Value, Inputs, Level 2 [Member] | Eurodollar Deposits [Member]
Assets, fair value	10,000
Fair Value, Inputs, Level 3 [Member]
Assets, fair value
Fair Value, Inputs, Level 3 [Member] | Money Market Funds [Member]
Assets, fair value
Fair Value, Inputs, Level 3 [Member] | Commercial Paper [Member]
Assets, fair value
Fair Value, Inputs, Level 3 [Member] | Eurodollar Deposits [Member]
Assets, fair value

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Note 1 - Basis of Consolidation and Presentation - Fair Values of Long-term Debt (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Total carrying amounts of long-term debt	$ 2,107	$ 3,540
Estimated fair value of long-term debt	$ 2,102	$ 3,533

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Note 2 - Income Taxes (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Effective Income Tax Rate Reconciliation, Percent	32.10%	35.20%	33.50%	33.10%
Increase (Decrease) in Income Tax Expense from Exercise of Options and Dividends Paid to Non-vested Shareholders	$ (323,000)
Increase (Decrease) in Income Tax Expense from Change in State Tax Incentives			$ 38,000
Increase (Decrease) in Income Tax Expense from Adjustments Related to Federal Tax Examinations				$ (48,000)

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Note 3 - Notes Payable (Details Textual) - USD ($)	6 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Long-term Debt	$ 2,107,000	$ 3,540,000
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity	12,000,000
Long-term Line of Credit	0
Line of Credit Facility, Remaining Borrowing Capacity	$ 12,000,000
Revolving Credit Facility [Member] | One Month LIBOR [Member]
Debt Instrument, Basis Spread on Variable Rate	2.10%
Revolving Credit Facility [Member] | One, Two, or Three Month LIBOR [Member]
Debt Instrument, Basis Spread on Variable Rate	2.10%
Term Note [Member]
Debt Instrument, Periodic Payment	$ 212,468
Debt Instrument, Interest Rate, Stated Percentage	3.12%

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Note 4 - Share-based Compensation (Details Textual)	6 Months Ended
	Jun. 30, 2017 USD ($) shares
Common Class A Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	299,917
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $	$ 2,000,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years 120 days
Common Class B Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	49,986
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $	$ 239,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years 175 days
The 2001 Equity Incentive Plan [Member] | Employee Stock Option [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	5 years
The 2001 Equity Incentive Plan [Member] | Employee Stock Option [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Director Plan 2004 [Member] | Nonqualified Stock Options [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	1 year
Director Plan 2004 [Member] | Nonqualified Stock Options [Member] | Minimum [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	3 years
Director Plan 2004 [Member] | Nonqualified Stock Options [Member] | Maximum [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
The 2006 Equity Incentive Plan [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	5 years
The 2006 Equity Incentive Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period	10 years
Common Class A [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	299,917
Common Class A [Member] | The 2001 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	1,800,000
Common Class A [Member] | Director Plan 2004 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	3,000,000
Common Class A [Member] | Director Plan 2004 [Member] | Nonqualified Stock Options [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options Granted at Annual Meeting	36,000
Common Class A [Member] | The 2006 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	1,800,000
Common Class B [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	49,986
Common Class B [Member] | The 2001 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	300,000
Common Class B [Member] | Director Plan 2004 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	500,000
Common Class B [Member] | Director Plan 2004 [Member] | Nonqualified Stock Options [Member] | Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options Granted at Annual Meeting	6,000
Common Class B [Member] | The 2006 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized	300,000
Nonvested Stock [Member]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized | $	$ 1,200,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years 215 days

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Note 4 - Share-based Compensation - Stock Options Valuation Assumptions (Details)	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Common Class A [Member] | Minimum [Member]
Expected dividend yield at date of grant	2.46%	2.96%
Expected stock price volatility	32.20%	31.33%
Risk-free interest rate	2.08%	1.36%
Expected life of options (in years) (Year)	6 years	6 years
Common Class A [Member] | Maximum [Member]
Expected dividend yield at date of grant	2.87%	3.02%
Expected stock price volatility	32.62%	34.61%
Risk-free interest rate	2.33%	2.12%
Expected life of options (in years) (Year)	8 years	8 years
Common Class B [Member] | Minimum [Member]
Expected dividend yield at date of grant	7.99%	6.67%
Expected stock price volatility	26.47%	27.64%
Risk-free interest rate	2.08%	1.36%
Expected life of options (in years) (Year)	6 years	6 years
Common Class B [Member] | Maximum [Member]
Expected dividend yield at date of grant	8.10%	8.12%
Expected stock price volatility	27.18%	31.77%
Risk-free interest rate	2.33%	2.12%
Expected life of options (in years) (Year)	8 years	8 years

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Note 4 - Share-based Compensation - Stock Option Activity (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($) $ / shares shares
Common Class A [Member]
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 13.97
Outstanding, weighted average remaining contractual term (Year)	6 years 87 days
Outstanding, aggregate intrinsic value | $	$ 23,544
Exercisable, number of options (in shares) | shares	1,313,134
Weighted average exercise price (in dollars per share) | $ / shares	$ 12.03
Exercisable, weighted average remaining contractual term (Year)	5 years 83 days
Exercisable, aggregate intrinsic value | $	$ 19,523
Outstanding, number of options (in shares) | shares	1,705,483
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 12.31
Granted, number of options (in shares) | shares	299,917
Granted, weighted average exercise price (in dollars per share) | $ / shares	$ 22.13
Exercised, number of options (in shares) | shares	(159,011)
Exercised, weighted average exercise price (in dollars per share) | $ / shares	$ 11.07
Exercised, aggregate intrinsic value | $	$ 1,754
Forfeited, number of options (in shares) | shares	(24,982)
Forfeited, weighted average exercise price (in dollars per share) | $ / shares	$ 17.03
Outstanding, number of options (in shares) | shares	1,821,407
Common Class B [Member]
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 31.96
Outstanding, weighted average remaining contractual term (Year)	6 years 175 days
Outstanding, aggregate intrinsic value | $	$ 4,486
Exercisable, number of options (in shares) | shares	200,550
Weighted average exercise price (in dollars per share) | $ / shares	$ 29.06
Exercisable, weighted average remaining contractual term (Year)	5 years 178 days
Exercisable, aggregate intrinsic value | $	$ 3,747
Outstanding, number of options (in shares) | shares	250,493
Outstanding, weighted average exercise price (in dollars per share) | $ / shares	$ 29.70
Granted, number of options (in shares) | shares	49,986
Granted, weighted average exercise price (in dollars per share) | $ / shares	$ 42.90
Exercised, number of options (in shares) | shares	(12,000)
Exercised, weighted average exercise price (in dollars per share) | $ / shares	$ 28.41
Exercised, aggregate intrinsic value | $	$ 142
Forfeited, number of options (in shares) | shares	(4,163)
Forfeited, weighted average exercise price (in dollars per share) | $ / shares	$ 37.30
Outstanding, number of options (in shares) | shares	284,316

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Note 4 - Share-based Compensation - Non-vested Stock (Details)	6 Months Ended
	Jun. 30, 2017 $ / shares shares
Common Class A [Member]
Outstanding (in dollars per share) | $ / shares	$ 13.93
Outstanding (in shares) | shares	174,487
Granted (in shares) | shares
Granted (in dollars per share) | $ / shares
Vested (in shares) | shares
Vested (in dollars per share) | $ / shares
Outstanding (in dollars per share) | $ / shares	$ 13.89
Forfeited (in shares) | shares	(19,314)
Forfeited (in dollars per share) | $ / shares	$ 14.27
Outstanding (in shares) | shares	155,173
Common Class B [Member]
Outstanding (in dollars per share) | $ / shares	$ 37.21
Outstanding (in shares) | shares	29,081
Granted (in shares) | shares
Granted (in dollars per share) | $ / shares
Vested (in shares) | shares
Vested (in dollars per share) | $ / shares
Outstanding (in dollars per share) | $ / shares	$ 37.53
Forfeited (in shares) | shares	(3,219)
Forfeited (in dollars per share) | $ / shares	$ 34.69
Outstanding (in shares) | shares	25,862

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Note 5 - Goodwill and Other Intangible Assets - Summary of Changes in the Carrying Amount of Goodwill (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2017 USD ($)
Balance, beginning of period	$ 57,861
Foreign currency translation	81
Balance, end of period	$ 57,942

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Note 5 - Goodwill and Other Intangible Assets - Summary of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Total other intangible assets	$ 13,212	$ 13,204
Accumulated amortization	(10,382)	(10,080)
Other intangible assets, net	2,830	3,124
Customer Relationships [Member]
Intangible assets	9,339	9,331
Technology-Based Intangible Assets [Member]
Intangible assets	1,110	1,110
Trade Names [Member]
Intangible assets	1,572	1,572
Trade Names 1 [Member]
Trade name	$ 1,191	$ 1,191

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Note 6 - Property and Equipment - Summary of Property and Equipment (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Property and equipment	$ 40,209	$ 37,890
Accumulated depreciation	(28,071)	(26,084)
Property and equipment, net	$ 12,138	$ 11,806

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Note 7 - Earnings Per Share (Details Textual)	3 Months Ended		6 Months Ended
	Jun. 30, 2017 shares	Jun. 30, 2016 shares	Jun. 30, 2017 shares	Jun. 30, 2016 shares
Common Class A [Member]
Common Stock to Dividend or Distribution Payable			0.167
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	104,835	66,428	115,908	260,868
Common Class A [Member] | Exercise Price Exceeds Market Price [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		798,421	52,707	550,561
Common Class B [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount		34,830	19,318	34,333
Common Class B [Member] | Exercise Price Exceeds Market Price [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	17,473	46,813	38,784	38,407

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Note 7 - Earnings Per Share - Net Income Per Share Computation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Net income	$ 5,752	$ 4,558	$ 12,272	$ 10,065
Common Class A [Member]
Net income per share – basic (in dollars per share)	$ 0.14	$ 0.11	$ 0.29	$ 0.24
Denominator for diluted earnings per share – adjusted weighted average shares (in shares)	21,525	20,992	21,404	21,002
Net income per share – diluted (in dollars per share)	$ 0.13	$ 0.11	$ 0.28	$ 0.24
Net income	$ 2,855	$ 2,260	$ 6,088	$ 4,994
Allocation of distributed and undistributed income to unvested restricted stock shareholders	(22)	(19)	(48)	(43)
Net income attributable to common shareholders	$ 2,833	$ 2,241	$ 6,040	$ 4,951
Weighted average common shares outstanding - basic (in shares)	20,752	20,711	20,745	20,711
Weighted average effect of dilutive securities – stock options (in shares)	773	281	659	291
Common Class B [Member]
Net income per share – basic (in dollars per share)	$ 0.82	$ 0.65	$ 1.75	$ 1.44
Denominator for diluted earnings per share – adjusted weighted average shares (in shares)	3,591	3,565	3,584	3,557
Net income per share – diluted (in dollars per share)	$ 0.80	$ 0.64	$ 1.71	$ 1.41
Net income	$ 2,897	$ 2,298	$ 6,184	$ 5,071
Allocation of distributed and undistributed income to unvested restricted stock shareholders	(22)	(20)	(49)	(44)
Net income attributable to common shareholders	$ 2,875	$ 2,278	$ 6,135	$ 5,027
Weighted average common shares outstanding - basic (in shares)	3,514	3,508	3,514	3,498
Weighted average effect of dilutive securities – stock options (in shares)	77	57	70	59

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Note 8 - Related Party (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Ameritas Life Insurance Corp [Member]
Related Party Transaction, Amounts of Transaction	$ 62,000	$ 57,000	$ 120,000	$ 115,000
Nebraska Global Investment Company LLC [Member]
Related Party Transaction, Amounts of Transaction		$ 204,000	$ 0	$ 420,000
Nebraska Global Investment Company LLC [Member] | Chief Executive Officer [Member]
Officer Ownership Percentage in Vendor	14.00%		14.00%