-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, gmqGBv+8MoEUHoFAVujTB5TKvCJL1DVlMIVUw0hGaSBV8EJ0q1nLyKaOEa6PbC33 CLZxqRZnzKaoSOltGXEIaA== 0000950131-94-000464.txt : 19940404 0000950131-94-000464.hdr.sgml : 19940404 ACCESSION NUMBER: 0000950131-94-000464 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19931231 FILED AS OF DATE: 19940331 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFORMATION RESOURCES INC CENTRAL INDEX KEY: 0000714278 STANDARD INDUSTRIAL CLASSIFICATION: 7370 IRS NUMBER: 362947987 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 34 SEC FILE NUMBER: 000-11428 FILM NUMBER: 94519649 BUSINESS ADDRESS: STREET 1: 150 N CLINTON ST CITY: CHICAGO STATE: IL ZIP: 60661-1416 BUSINESS PHONE: 3127261221 10-K 1 FORM 10-K Washington, D.C. 20549 FORM 10-K (Mark One) X Annual Report Pursuant to Section 13 or 15(d) of The Securities - ----- Exchange Act of 1934. [Fee Required] For the fiscal year ended December 31, 1993 or Transition report pursuant to Section 13 or 15(d) of The Securities - ----- Exchange Act of 1934. [No Fee Required] For the transition period from to Commission file number: 0-11428 ------- INFORMATION RESOURCES, INC. -------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 36-2947987 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 150 North Clinton Street, Chicago, Illinois 60661 ------------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (312) 726-1221 -------------- Securities registered pursuant to Section 12(g) of the Act: Title of each class -------------------------------------- Common Stock, $.01 par value per share Preferred Stock Purchase Rights Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ] The aggregate market value of the voting stock held by nonaffiliates of the registrant as of February 28, 1994 (based on the closing price as quoted by NASDAQ as of such date) was $661,483,030. The number of shares of the registrant's common stock, $.01 par value per share outstanding, as of February 28, 1994 was 25,441,655. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant's definitive proxy statement for the annual meeting of stockholders to be held May 26, 1994 to be filed pursuant to Regulation 14A are incorporated by reference into Part III of this Form 10-K. PART I ITEM 1. BUSINESS - ----------------- INTRODUCTION ------------ Information Resources, Inc. (the "Company") provides a variety of information services and business intelligence software products to its customers. The Company is a leading provider of information services to the consumer packaged goods industry and believes that its proprietary data bases, analytical models and business intelligence software enable consumer packaged goods manufacturers and retailers to make better, more cost-effective decisions in marketing and selling their products. The Company's business intelligence software products are also used across a wide range of industries and governmental agencies worldwide. The consumer packaged goods industry is comprised of numerous firms which manufacture and market products distributed in supermarket, drug, mass merchandiser and other outlets. Consumer packaged goods manufacturers require information on consumer purchasing to measure market performance and to evaluate the impact of marketing activities. The Company provides consumer purchase data through its range of information services. Consumer packaged goods clients may also purchase the Company's software products to help them analyze, manipulate and interpret consumer purchase data. The Company's software products can be used in tandem with the Company's information services or can be used separately with other data bases. Approximately 31% of the Company's clients currently purchasing the Company's information services also purchase its business intelligence software and services. The Company's business intelligence software products are widely applicable and are used outside of the consumer packaged goods industry by Fortune 1000 corporations and comparable companies around the world covering a variety of businesses and industries, including pharmaceuticals, health care, telecommunications, financial services, transportation and government agencies. In 1993, approximately 51% of the Company's software and support services revenue was derived from clients outside of the consumer packaged goods industry. The Company operates in one industry segment, business information services. The business of the Company has evolved into primarily two categories of services, information services and software products and services. The Company's principal information services are InfoScan(R), InfoScan(R) Census, QScan/TM/, BehaviorScan(R), other testing services and Towne-Oller. InfoScan Census and QScan are national and local market tracking and evaluation services for the consumer packaged goods industry. Using the universal product code ("UPC") printed on products and scanners installed in supermarket, drug, mass merchandiser and other retail stores, InfoScan tracks consumer purchasing of products sold in a representative, national, projectable sample of stores. In 1992, the Company began development of a retailer service named QScan which obtains scan data from all stores within a chain (i.e., a "census") rather than just a sample. In 1994, the Company is introducing its InfoScan Census service for manufacturers which tracks consumer purchasing in all stores within participating retail chains rather than just stores within projectable samples. Major costs to deliver the InfoScan services are data acquisition costs, provision of software and hardware to participating retailers, expenses associated with the collection of causal [i.e., promotional] data, compensation to participating panel households, computer and personnel resources to process the data and personnel costs for 2 interpreting and analyzing data for clients. BehaviorScan is a test marketing system that enables clients to measure the effect of different marketing variables on consumer purchasing. It uses supermarket, drug store and mass merchandiser scan data to measure the impact of changes in marketing variables on consumer purchasing. Major costs to deliver the BehaviorScan service are data costs (comprised of store equipment depreciation expense and cash payments to retailers), compensation to participating panel households, field personnel costs, costs to operate and maintain cable television studios, computer resources and client service personnel costs. Towne-Oller is in the business of tracking deliveries of health and beauty care products from retailer and wholesaler warehouses to approximately 30,000 individual drug stores and 30,000 individual supermarkets. Towne-Oller is currently the only supplier of such data to the U. S. consumer packaged goods industry. Major costs to deliver the Towne- Oller service are data acquisition payments to retailers, computer and personnel resources to process the data, and personnel costs related to client service. "IRI Software", the Company's software business unit, provides business intelligence software, including decision support software ("DSS") executive information systems ("EIS") and related support services. DSS and EIS are licensed as the EXPRESS(R) family of computer software and application solutions. Through another division, the Company also markets retailer software products that mainly carry the APOLLO(tm) name. Major costs to deliver these software products are costs to develop and maintain software, personnel costs to develop custom applications for clients and costs for computer resources. Only a portion of the cost to deliver information services and software support services is directly attributable to any specific product. A significant portion of the cost elements is provided by shared resources. The approximate revenues attributable to the Company's information and software support services were as follows for the periods shown:
Year Ended December 31, -------------------------------- (In thousands) 1993 1992 1991 -------- -------- -------- Information Services - -------------------- InfoScan $180,623 $151,097 $120,590 BehaviorScan/Other Testing Services 21,938 22,741 21,323 Towne-Oller 17,546 15,543 15,006 Other 7,785 2,993 -- -------- -------- -------- Total Information Services $227,892 $192,374 $156,919 -------- -------- -------- Software Products and Support Services - -------------------------------------- Business Intelligence Software $ 95,397 $ 75,331 $ 57,690 Retailer Services 11,255 8,657 8,080 -------- -------- -------- Total Software Services $106,652 $ 83,988 $ 65,770 -------- -------- -------- Total Company $334,544 $276,362 $222,689 ======== ======== ========
3 The majority of the Company's information services business is of a recurring nature performed subject to a written contract. The Company's software business is comprised of a mix of new client projects, sale of new application solutions to existing clients and a growing software maintenance base. For a fee, implementation and consulting services are also provided to client companies as required to deliver EXPRESS-based solutions. In 1993, approximately 64% of the Company's total revenue from information services and software products and services was attributed to ongoing contractual arrangements. Other nonrecurring revenues were attributed to licenses of software and from the sale of customized analytical projects. The Company was incorporated in Delaware in 1982. Its principal offices and corporate headquarters are located at 150 North Clinton Street, Chicago, Illinois 60661. Its telephone number is (312) 726-1221. DESCRIPTION OF THE COMPANY'S BUSINESS A. Principal Products & Services 1. Information Services -------------------- The Company provides a variety of products and services utilizing its data bases to assist its clients in tracking and understanding consumer purchase behavior and the impact of promotions, advertising and price changes on that behavior, evaluating the sales potential of new products and media advertising, and providing clients with comparative information about their competitors. Based upon revenues, the Company believes it is the second largest marketing research firm providing continuous sales measurement services to the consumer packaged goods industry worldwide. (a) InfoScan, InfoScan Census and QScan InfoScan, InfoScan Census and QScan are national and local market scanner tracking services for the consumer packaged goods industry. InfoScan tracks consumer purchasing of UPC-coded products sold in a representative, national, projectable sample of supermarkets, drug stores, mass merchandisers, convenience stores, and warehouse membership clubs covering major metropolitan markets, smaller cities and individual chains. InfoScan also tracks promotional activities which motivate consumer purchasing, such as temporary price reductions, newspaper feature advertising, couponing and in-store displays. During 1992, the Company began collecting scan data from all stores within individual supermarket chains (i.e. "census" data) to be utilized in its InfoScan and QScan services. The Company is currently collecting such data from approximately 9,000 supermarkets. The Company's InfoScan Census service provides manufacturers with a measurement of consumer purchasing in all stores within participating individual retail chains rather than just stores within projectable samples. The Company's QScan service provides retailers with consumer purchasing information based on all stores within participating chains. The Company expects to complete the introduction of its enhanced InfoScan Census service for supermarkets by the third quarter of 1994, with an expansion to drug and mass merchandisers planned for 1995 and beyond. A benefit of census 4 based retail account data is that it is expected to provide more complete and accurate information because it eliminates sampling error. In addition, the Company believes that census based scan data will facilitate the implementation of "pay-for-performance" promotions, more effective salesforce and broker compensation programs, improved inventory and distribution management, and just-in-time inventory replenishment systems. InfoScan tracking reports are available to clients in hard copy format and/or via electronic access through proprietary Company software or other software. Clients may elect to receive periodic hard copy tracking reports which include scanner-based sales data measuring volume, market share, and price, together with information relating store sales to promotional and merchandising conditions. Weekly InfoScan data are available before printed four-week reports are issued and may be accessed by personal computers through proprietary software developed by the Company using pcInfoScan(R), DataServer(TM) and The Partners(TM) software packages specifically designed to analyze scanner data. In addition, clients may select tracking reports that provide national data or reports that reflect results for individual markets, groups of markets, or custom-defined sales geographies. Further, through agreements with many retailer chains, the Company is able to provide its manufacturer clients with "key account" retailer reports that track consumer purchasing in specific identifiable chains. The majority of supermarket key account reports are now census based (i.e., reflect all stores within participating individual chains rather than just projectable samples). The Company believes that its ability to be a single source for both sample and census data, in conjunction with its analytical software applications, represents a significant competitive advantage. Through the Company's panel data base, InfoScan provides access to individual household purchase data collected from approximately 60,000 households in the Company's metro-sampling pods and mini-markets. Quarterly reports which tabulate household purchase data by four-week periods may be presented to the client. Household panel data are also used for custom client analysis of issues such as store and brand loyalties, trial and repeat purchasing of new products, demographic patterns, consumer response to promotional activities, and overall store shopping behavior. The Company's computerized software system, EZ Prompt(TM), provides on-line access to its InfoScan panel data base through a terminal and telephone link. Through this computer access to the data base, which may be accomplished either by Company representatives or directly by the client, a client is able to address numerous marketing issues for the specific brand or category in question. Such issues are addressed using the Company's software packages and may involve evaluation of issues such as the socioeconomic profiles of buyers, the degree of interaction between a major national brand and its regional competitor, the role of price features in promoting brand switching, or numerous other marketing issues. Under the typical InfoScan contract, the client subscribes to services on a specified consumer product category. The Company agrees that during the term of the contract it will maintain data collection facilities in its mini-markets, in specified major metropolitan markets and in other geographically dispersed areas, and that scanner sales data will be collected from a minimum of 2,380 supermarkets. In contracts for drug, mass merchandiser and warehouse membership clubs, the Company also guarantees data collection from a minimum number of such outlets. The Company also agrees to collect data on newspaper feature ads and retail displays from stores that provide sample scan data and to collect manufacturer coupon distribution data on a weekly basis. The Company also agrees to maintain facilities for the collection of household purchase 5 data (i.e., panel data) in several mini-markets and in specified major metropolitan markets and to maintain an average sample size of 60,000 households across these markets. Initial InfoScan contracts generally require a one-year client commitment and increasingly include commitments for up to three years or more. After the initial commitment, the contract generally continues indefinitely unless cancelled by the client on six months prior notice. (b) BehaviorScan/Other Testing Services The Company's BehaviorScan system offers consumer packaged goods manufacturers and other non-CPG marketers a cost-effective, accurate and technologically advanced method for testing alternative marketing strategies. The BehaviorScan system permits clients to measure the impact of different marketing variables on product purchases. In a typical marketing test performed by the Company, one group of consumer panelists is exposed to one or more test variables while another group of panelists is used as a control group. Typical marketing variables tested are television advertisements, newspaper ads, manufacturers' coupons, free samples, in-store displays, shelf price, and packaging changes. With the BehaviorScan system, the Company can target alternate advertising messages over cable television to groups of pre-selected households, collect household purchase data through the use of supermarket and drug store point-of- sale scanners, and analyze the effect of client advertising by means of the Company's computer systems and analytical software. A feature of the BehaviorScan system is the ability to send different television messages to selected panel households using the Company's patented targetable television technology. Using the Company's proprietary software, a microcomputer at the Company's television studio is able to substitute, for the advertisement which would normally appear, a special test advertisement being simultaneously broadcast by the Company on an unused cable channel. This advertising substitution can be done on a household-by-household basis for the majority of panel households and is computer-controlled. Thus, by using targetable television, a manufacturer can expose select groups of panelists to alternative levels of advertising or alternative advertising campaigns and use the UPC-scanner data to obtain an accurate measure of sales response. The Company has made arrangements with supermarkets, mass merchandiser outlets, drug stores, newspapers, selected magazines, television stations, and cable television operators in the BehaviorScan markets to cooperate with the Company in controlling marketing variables. These arrangements are contractual in nature and provide that the Company may measure, and in some cases control, the nature and content of advertising and other marketing programs to which consumers are exposed, for purposes of measuring the relative sales impact of such programs. Typical BehaviorScan tests last about one year, although many tests are of shorter duration and a few last longer than a year. Clients receive four-week period summaries of household purchases and store sales along with other statistical summaries. The Company's senior research consultants work with the client to design marketing tests, analyze test results, and interpret the marketing implications of such tests. A detailed analysis of test results and recommendations is provided on an interim and final basis as scheduled by the client. 6 A typical BehaviorScan contract grants the client the exclusive right to the Company's service with respect to one specified product category and within specified mini-markets for the term of the contract. The Company has divided consumer packaged goods available in its market areas into approximately 450 categories. Individual clients utilizing the BehaviorScan system for more than one category generally enter into a separate contract for each category. Because the client can run multiple tests within a product category, some clients with multiple brands maintain an ongoing usage of the BehaviorScan system. Expired contracts have tended to involve tests which were one-time in nature, such as a new product introduction. The Company may not terminate a contract with a client for the purpose of offering a category to a third party. In a typical BehaviorScan contract, the Company agrees to maintain the following within each of the specified markets: (1) UPC scanners at checkouts in at least six supermarkets representing not less than 80% of total supermarket volume within the area; (2) consumer panels of approximately 2,500 households for whom individual purchase records will be maintained for all UPC-coded items purchased at participating stores; (3) apparatus for delivery of commercial messages by cable television to separate groups of panel households within each market, with selection capability on a household-by-household basis for approximately 1,500 households in each market; (4) cooperation of retailers for in-store placement by the Company of test products not generally available except in such test markets; and (5) apparatus for in-store coding of products not coded with the UPC. The Company also agrees to collect sales data for a specified term on the relevant category for all scanner-equipped stores and for all panel members on a household-by-household basis and to provide a specified number of cable television advertising test insertions during the term of the contract. In addition to BehaviorScan, the Company also provides other testing services primarily for consumer packaged goods manufacturers including Controlled Retail Testing, Matched Market analyses, and other special analyses accessing the Company's proprietary data bases. Controlled Retail Testing involves conducting experiments outside the BehaviorScan markets wherein the Company will arrange for and implement special conditions in retail stores and read the results through scanner data and/or manual audits. Typical tests involve the placement of new products or manipulation of shelf location, price or promotional conditions in retail outlets. The Company's existing field organization and InfoScan data bases are customarily utilized in conjunction with Controlled Retail Testing. Matched Market and other special analyses to evaluate the impact of advertising and other marketing variables as they occur outside the BehaviorScan markets typically do not involve field activities by the Company, but simply involve custom manipulation and analysis of the Company's InfoScan data. (c) Towne-Oller Towne-Oller is in the business of tracking deliveries of health and beauty care products from retailer and wholesaler warehouses to approximately 30,000 individual drug stores and 30,000 individual supermarkets. Towne-Oller data represents approximately 80% of total food and drug store health and beauty care sales. Towne-Oller purchases computerized records of these shipments from warehouses to individual supermarket and drug stores. Towne-Oller is currently the only supplier of such data to the U.S. consumer packaged goods industry. 7 Towne-Oller clients receive periodic reports measuring store receipt volume and market share within specific consumer product categories. Clients may elect to receive their reports via DataServer computerized software, which provides user-friendly access of data as well as the capability of downloading to other software applications. In general, the client subscribes to the store receipt service on a specified consumer product category. Initial contracts require a one-year commitment, continue indefinitely and are cancelable by the client on 90 days written notice. 2. Software Support Services (a) Decision Support Software Primarily through its software business unit, "IRI Software", the Company provides business intelligence software products and services to major corporations and governmental agencies around the world to assist marketing, sales, operations, financial and executive decision-making. These products and services provide decision makers with access to corporate and external data, together with tools and applications developed by the Company to analyze that data. Business intelligence applications are made available through the use of the Company's principal software product known as EXPRESS, which is available to end users on a direct license or on-line basis through a variety of third party channels. Customers utilizing EXPRESS generally also engage the Company in its consulting capacity to help define solutions to business problems and build or enhance applications with EXPRESS to deliver these solutions. (i) EXPRESS At the core of EXPRESS is a multi-dimensional data base management system. This system differs from traditional data base management systems that organize data on an individual transaction or record basis which is the way in which data is collected. Instead, EXPRESS stores data in a manner that is more useful for user analysis. The EXPRESS data base is flexible enough to accommodate the need to handle current, historical and forecast data, internal and external data sources, periodic updates, dynamic restructuring, data sharing, and data organized for ease of understanding and use. The data base is accessed through a fourth generation language integrated with a range of query, graphics, statistical and modeling tools. In addition, the data base may be accessed through a variety of graphical user interfaces. EXPRESS has been used to build and support a wide range of application products for end users across numerous functional areas. (ii) Application Products Using EXPRESS technology, the Company has developed a family of strategic software application products. Most are applicable across all industries, but some have been designed specifically for the consumer packaged goods industry. They include: . DataServer - DataServer is a business intelligence application that integrates sales and marketing data from multiple internal and external sources and provides a wide range of 8 ad hoc analysis and reporting tools. The system allows users to retrieve, view and analyze internal and external information to identify problems and opportunities. Through a Microsoft Windows interface, users can perform competitive analyses, track new product introductions, evaluate promotional effectiveness, conduct market-by-market comparisons, isolate trouble spots, and adjust marketing and sales strategies based on insight delivered by the system. DataServer is used by companies in a wide variety of industries, including pharmaceuticals, retail, financial services, telecommunications, transportation and consumer packaged goods. . Sales Management System - This application helps sales professionals develop, manage and evaluate sales strategies and tactics. Recognizing time constraints and performance pressures that sales professionals encounter, Sales Management System delivers a library of sales-oriented, pre-defined reports and graphs. This library is organized by subject area, with each area focused on a typical business sales issue. These issues include: quota; distribution; ranking; exceptions; trends; comparisons; and growth. By simply choosing a report or graph, users get answers to a wide variety of sales performance questions. Now in DOS, the Microsoft Windows version is scheduled to be available mid year. . The Partners(TM) - The Partners (an integration of products formerly known as BrandPartner(R), SalesPartner(TM), and Promotion Manager(TM)) is an interactive sales and marketing system that addresses the day-to-day business issues of the consumer packaged goods industry. The Partners help sales and marketing professionals understand product performance, identify opportunities to improve performance and automate the creation of high quality presentations to retailers and senior management. The Partners offer a focused approach to gaining an accurate picture of how a product or retail account is performing in any given market. By providing a connection to multi-outlet sales, promotion, distribution, consumer franchise, advertising and pricing data, The Partners provide users with the information needed to develop appropriate sales and marketing strategies. Now in DOS, the Windows version of The Partners is scheduled to be available by mid-year. . EXPRESS(R)/Financial Management System - The EXPRESS Financial Management System addresses the full range of financial management problems, from financial consolidation, management reporting and budgeting to forecasting and planning. The system is built on a single integrated architecture specifically designed to address the needs of finance and the enterprise as a whole. With distributed budget preparation, EXPRESS Financial Management System also provides the controls for central budgeting departments to coordinate an enterprise-wide process. It delivers easy-to-use budget preparation and exception reporting, as well as the ability to perform comprehensive analyses. The Microsoft Windows version of EXPRESS Financial Management System is expected to be released in May 1994. . Financial CoverStory - Financial CoverStory is a value-added supplemental option to EXPRESS/Financial Management System which utilizes expert system concepts to deliver a rule-based exception reporting and analysis system for financial analysis. Leveraging the Company's expertise in delivering similar systems to marketing and sales 9 users, Financial CoverStory brings to financial analysis an automated, in- depth understanding of financial data and the causal relationships driving financial performance. . EXPRESS(R)/EIS - EXPRESS/EIS is an enterprise-wide business intelligence system that provides an interactive environment for executives, managers and analysts to investigate, review, annotate and communicate key business management information. EXPRESS/EIS combines a powerful set of tools for designing and implementing customized, enterprise-wide applications. By delivering fast, flexible access to information to support all business tracking and management activities, EXPRESS/EIS alerts executives to the important news in the data, provides line managers with ad hoc query and trend capabilities and gives analysts the ability to perform integrated analyses. The value of EXPRESS/EIS is derived from EXPRESS, the system's underlying architecture, which permits users to perform data-driven analysis and reporting to find more detail, rotate dimensions to view data from different perspectives and highlight exceptions. (b) Retailer Products The Company offers the APOLLO Space Management System(TM) which utilizes proprietary software to enable manufacturers and retailers to better manage retail shelf space. The APOLLO Space Management System provides a complete range of tools for space management, including APOLLO VIVID(TM) for producing picture schematics of shelf layouts, Total Store APOLLO(TM) for evaluating space utilization within a total supermarket, APOLLO Briefcase(TM) which utilizes Windows technology and is designed for field sales use, and the National Product Library(TM), which provides a national data base of product dimensions and product images for use in the APOLLO system. Other retail products include Pricing Manager(TM) which is designed to help retailers optimize price points for individual products and categories to remain competitive while meeting profit objectives and Merchandising Manager(TM) which evaluates various promotional program scenarios. 3. Efficient Consumer Response ("ECR") Efficient Consumer Response ("ECR") is an initiative being pursued by manufacturers, retailers and wholesalers of consumer packaged goods products that is aimed at reducing the cost of distributing products through the supermarket channel. Some $30 billion of excess costs in the U.S. supermarket distribution system have been identified that could be eliminated by more efficient procedures. Through ECR initiatives, the supply chain from manufacturers to supermarket retailers and finally to consumers is expected to be re-engineered and redesigned to maximize effectiveness and reduce costs. The Company is utilizing its proprietary software and unique data bases to offer a full line of ECR services: (i) InfoScan Census and QScan - These services are being used to provide manufacturers and retailers with the most accurate information on consumer 10 purchasing at the retail chain and individual store level, thereby improving decision making regarding a variety of sales and marketing issues. (ii) Catalina Information Resources ("CIR") - This joint venture with Catalina Marketing Corporation utilizes Catalina's electronic network to efficiently and quickly retrieve daily, store-specific scan data from a large sample of supermarkets. Coupled with the Company's analytical application software, the data can be used by manufacturers and retailers to more effectively monitor local marketing/sales programs and to improve inventory management techniques, thereby helping to reduce costs in the supply chain. (iii) Customer Marketing Resources ("CMR") - The Company's CMR division plans, executes and administers scanner-based product movement and merchandising performance-based trade marketing programs. By utilizing the Company's and CIR's census data bases, CMR helps manufacturers issue promotional payments to retailers based upon actual consumer purchasing, thereby helping improve the efficiency of promotional programs for manufacturers and retailers alike. (iv) LogiCNet - LogiCNet (an abbreviation for Logistics Communications Network) is an integrated single source system aimed at improving the efficiency of product replenishment across the entire grocery distribution channel. The LogiCNet system utilizes Distribution Resource Planning (DRP) software, training/integration support and forecasts of consumer demand based upon the Company's and CIR's various census data bases. LogiCNet is designed to eliminate the need for manufacturers to have different inventory and distribution systems for each retailer and provides accurate and consistent data flows between retailer and manufacturer. B. Data Collection The Company's proprietary data bases include sales and price information for individual product items collected by universal product code scanners in retail outlets (scan data), together with detailed data on promotion and merchandising activities (causal data). Scan data are currently collected from approximately 9,000 supermarkets in 75 individual markets and in a number of other communities across the United States, and from nearly 2,000 drug stores, 250 mass merchandiser outlets and approximately 350 warehouse membership clubs. Causal data are available for a representative subset of these stores. Scan data utilized in the Company's business are obtained through data purchase contracts, usually in exchange for a payment in cash or equivalent services, independently negotiated with supermarkets, drug stores, mass merchandisers, warehouse membership clubs and independent outlets. Data from approximately 60,000 individual households are collected in eight small cities called "mini-markets" (including six BehaviorScan markets) and in 22 "metro sampling pods" in 19 large cities. Promotion and merchandising data are collected by the Company's own employees, and include weekly audit visits to the stores. In 1993, the Company introduced its InfoScan convenience store service, based upon the collection of sales and causal data from convenience stores and small grocery outlets. Forward data collection activities for certain categories began in April 1993 for a sample of 575 stores, with sales data being obtained through a combination of in-store scanners and manual sales audits. 11 Towne-Oller is in the business of tracking deliveries of health and beauty care products from retailer and wholesaler warehouses to approximately 30,000 individual drug stores and 30,000 individual supermarkets. Towne-Oller data represents approximately 80% of total food and drug store health and beauty care sales. Towne-Oller purchases computerized records of these individual food and drug store health and beauty care receipts to produce its reports. Towne-Oller is currently the only supplier of such data to the U.S. consumer packaged goods industry. 1. Mini-Market Facilities In each mini-market, the Company installs UPC scanners and on-site computers or otherwise establishes procedures for the collection of data in supermarkets representing substantially all of the supermarket sales in the local marketing area. Data collection procedures have also been established in drug stores and mass merchandisers in several of the mini-markets. The Company currently has mini-market facilities located in Pittsfield, Massachusetts; Marion, Indiana; Midland, Texas; Eau Claire, Wisconsin; Grand Junction, Colorado; Cedar Rapids, Iowa; Rome, Georgia; and Visalia, California. The Company organizes consumer panels in each of its mini-markets consisting of approximately 2,000 to 3,000 households. Each panel member is issued an identification card which is presented at checkout stations in participating supermarkets and drug stores. Sales data at a total store level, not at the panel household level, are captured in mass merchandiser outlets in several of the mini-markets. The Company maintains incentive programs to encourage panelists to present their identification cards on all shopping trips to any participating store. When an identification card is presented, the cashier enters the panelist's identification number into the on-site computer to identify the panelist's scanner-recorded purchases with the panel household. Through UPC scanning, the Company collects data on the purchases made by all panelists as well as data on all coded products sold by the store. The Company then receives each store's data (generally via telecommunication lines) at its central computer facility, where it becomes a part of the Company's data base. The Company employs in-market personnel to train cashiers, perform quality control checks at the stores, and assist the retailers in maintaining efficient, accurate scanning practices. Daily data retrieval occurs with nearly all stores in the mini-market sample, allowing the Company to identify any problems quickly. Technical support personnel in the Company's headquarters are responsible for resolving hardware and software issues with respect to scanning equipment. Since substantially all of the supermarket retailers in the BehaviorScan market area are participating in the system, household panelists can shop at virtually any store in the area and have their purchases monitored by the Company. The Company also maintains facilities in six of its mini-markets to implement and support various marketing tests conducted under the BehaviorScan system. The active BehaviorScan markets are located in Pittsfield, Massachusetts; Marion, Indiana; Eau Claire, Wisconsin; Midland, Texas; Grand Junction, Colorado; and Cedar Rapids, Iowa. One of the key features of the BehaviorScan system is its targetable cable television capability, which permits the Company to direct television advertising to selected households within the consumer panel. The Company also maintains warehouse facilities and staff in its BehaviorScan markets to support tests run for the Company's clients, including tests of new 12 products, television and newspaper advertising, in-store displays, price, couponing and free sample promotions. The Company maintains facilities in cable television studios in its BehaviorScan markets which are used to direct television advertisements as described above. The studio equipment includes modulators and demodulators, switching and monitoring equipment, microcomputers, and auxiliary equipment used to originate test advertisements. 2. Metro-Sampling Pods The Company has installed two metro-sampling pods in each of the three largest cities in the United States (Chicago, Los Angeles, and New York) and one pod in each of 16 other cities across the country (Atlanta, Boston, Charlotte, Cleveland, Denver, Detroit, Houston, Kansas City, Memphis, Minneapolis, Philadelphia, Pittsburgh, San Francisco, Seattle, St. Louis and Tampa). The Company installs UPC scanners or otherwise establishes data collection procedures in substantially all of the supermarkets within a selected neighborhood or neighborhoods within the metropolitan area. In some instances, participating retail stores have already purchased their own UPC-scanning equipment, in which case the Company contracts to purchase the scanning data directly from the retailer. The Company's metro-sampling contracts expire at various dates in 1994 and thereafter. While there can be no assurance that retailer contracts will be renewed at the end of their terms, the Company has generally been successful in negotiating renewals of these contracts as they expire, on essentially the same terms. Metro-sampling pods are similar to mini-markets except that they have fewer participating retail stores. None of the pods have the targetable cable television capability. The Company maintains consumer panels of 1,000 to 1,500 households in each metro-sampling pod in substantially the same manner as in the mini-markets. Also, the Company collects and generally transmits data to its central computers in the same manner as in the mini-markets. The Company maintains a staff in each city to record newspaper advertising by retailers, to verify the presence of in-store displays, and to collect coupons redeemed by panelists. 3. Retail Outlet Data Collection (i) InfoScan Sample Stores - The Company has contracted with supermarkets, drug, mass merchandisers, and warehouse club stores to purchase weekly scanner sales and price data for all UPC-coded items from a representative sample of stores. Generally, these contracts are for one-year periods, renewing automatically unless cancelled on 90 days' prior notice. (ii) InfoScan Census Stores - The Company has obtained census scan data covering approximately 11,000 stores, most of which are supermarkets. Generally, these data are obtained in exchange for retailer use of the Company's data management and category management software, including computer work stations as required. These contracts are typically for a three to five year period. In 1993, the Company began negotiating for data collection rights with convenience stores and small supermarket operators with the launch of the Company's "convenience store" InfoScan service. A sample of nearly 575 stores is now in place, with most of the retailer contracts involving cash payments for scanner data and/or cooperation with manual audits. For 13 some retailers, the Company pays for, and helps install, scanning equipment. Maintenance and refinement of the InfoScan sample, along with changes in retailer merchandising practices and market shares, require that the Company regularly drop individual stores from the sample and replace them with others from the same or alternate retailers. For example, the entry of a new retailer into an established InfoScan market will cause the Company to reallocate its sample across chains to include the new retailer. Turnover may also be caused by stores closing, ceasing to collect data via scanners or failing to provide accurate data in a timely fashion. The Company's personnel are continually monitoring the quality of data received from each store and work with participating retailers to correct problems and/or identify alternate stores to include in its sample. Changes in the sample also result from the Company's efforts to refine and improve the set of stores selected from key chains, often with the suggestions for changes in the composition of the stores coming from the retailers themselves. For the reasons such as those referenced above, a minor percentage of the stores in the sample turn over on an annual basis, with the vast majority of these changes resulting from Company-initiated action. Such turnover reflects the nature of sample-based data collection techniques and the Company's procedures for addressing these changes helps ensure consistency in the data provided to clients. One of the key benefits of census scan data is that it eliminates the need to maintain a representative sample of stores and eliminates sampling error. The Company employs full-time and part-time personnel in the InfoScan markets to collect newspaper ad, in-store display and other merchandising data. This "causal" data is incorporated into the InfoScan service offered to clients. The Company's field personnel also confirm the description of new items that appear in the general marketplace. 4. Importance of Contractual Relationships With Data Sources Scanner installations for the collection of household panel data are made pursuant to contracts which typically provide that, in the Company's mini-market and metro sampling pod facilities, the Company will install the equipment for the use by the retailer. Where scanners have been installed previously by the retail operator, the contracts typically provide for cash payments to the retailer for the information collected. Generally, contracts for panel data collection are for seven-year periods (subject to earlier termination in certain circumstances), and contracts with nonsupermarket retailers are generally for five to seven-year terms. These contracts provide that the parties will jointly own the information collected, and provide that the retailer may not sell the information collected to third parties. The Company's panel data collection contracts with retailers expire at various dates between 1994 and 2000. While there can be no assurance that retailer contracts for either BehaviorScan, InfoScan or Towne-Oller stores will be renewed at the end of their terms, the Company has generally been successful in negotiating renewals of these contracts as they expire, on essentially the same terms. C. Developments in 1993 During 1993, the Company added InfoScan coverage of convenience and wholesale club stores. Also during 1993, the Company continued to add stores under its QScan initiative. The Company views this expanded data base capability as a significant competitive advantage for its InfoScan service, both in terms of data accuracy and new applications of the information. The Company anticipates expanding its census based services to drug and mass merchandise retailers 14 in 1994 and 1995. The Company believes that census based data will facilitate the implementation of a variety of ECR services, including "pay-for-performance" promotions, more effective salesforce and broker compensation programs, improved inventory and distribution management and just-in-time replenishment systems. In 1993, the Company began equipping participating households with small handheld scanners, which allow a shopper to record its purchases of consumer package goods across all types of outlets, thereby enhancing the coverage of the Company's household panel data base. The Company expects to eventually build a sample of approximately 20,000 households using this device. For a discussion of business acquisitions and joint ventures by the Company in 1993, see Management's Discussion and Analysis of Financial Condition and Results of Operations - Other Developments. D. Patents and Proprietary Software Protection The Company holds certain patents relating to the targetable television technology utilized in its BehaviorScan service. The patents expire at various dates between 1999 and 2005. Loss or infringement of these patents may have a material adverse effect upon the Company's BehaviorScan revenues. The Company's computer software bears appropriate copyright notices. The Company is the owner of various trademarks, including BehaviorScan, InfoScan, Shoppers' Hotline, APOLLO, EXPRESS, pcEXPRESS, DataServer, The Partners, SalesPartner(TM), BrandPartner(R), EZ Prompt(R), IRI Software(TM), QScan(TM), InfoScan(R) Census, LogiCNet(TM), CouponScan(TM), PromotionScan(TM) and Customer Marketing Resources(TM) as well as other major branded products and services. The Company believes that, because of the rapid pace of technological change in the computer industry, patent or copyright protection is of less significance than factors such as the knowledge and experience of the Company's personnel and their ability to develop and market new systems and services. The Company regards its software and data bases as proprietary and, in addition to copyright protection, relies upon trade secret laws, the limitations it imposes on access to its computer source codes, confidentiality agreements with clients and internal nondisclosure safeguards to protect its rights to proprietary interests. E. Working Capital Practices Clients are invoiced in accordance with contract terms. Information services contracts generally require payment at the time the contract is signed for 25% to 50% of the first year contract amount. However, in some circumstances delayed billings are granted. Generally, subsequent invoices and renewals are prorated quarterly or monthly. Software support services licenses usually require payment in full upon acceptance of the software. Supplies and services are accrued for as received or incurred. Payments to vendors are generally made in accordance with vendor terms. Company management believes these payment practices and policies are consistent with industry practices. 15 F. Customers The Company had approximately 820, 630 and 520 clients using its information services in 1993, 1992 and 1991, respectively. Many of the Company's clients are nationally recognized manufacturers of consumer packaged goods. No client of the Company accounted for revenues in excess of 10% of the Company's total revenues. G. Backlog Orders At December 31, 1993, 1992 and 1991, the Company had committed contract revenues for information services of approximately $152 million, $142 million and $74 million, respectively. Initial InfoScan contracts generally require a minimum one-year client commitment and increasingly include commitments up to three years or more. Contracts continuing beyond the initial commitment are generally cancelable at any time by the client on six months prior notice. Committed contract revenues include only the noncancelable portion of a contract. The portion of these committed contract revenues expected to be earned subsequent to 1994 is approximately 45%. H. Competition There are numerous other firms engaged in supplying marketing and advertising research services to consumer packaged goods manufacturers. Some of these firms may have financial, research and development and marketing resources equal to or greater than the Company. Principal competitive factors include innovation, the quality, reliability and comprehensiveness of the analytical services and data provided, flexibility in tailoring services to client needs, experience, the capability of technical and client service personnel, data processing and decision support software, reputation, price and geographical coverage. The Company has a history of successful innovation and considers itself to be the second largest marketing research firm (based upon revenues) providing sales measurement services to the consumer packaged goods industry worldwide. Competition for software support services comes primarily from specialized products which perform some, but not all, of EXPRESS's functions. These specialized products, including data base management systems, front-end query tools, financial modeling languages, graphics and statistical packages, apply competitive pressure on the Company on an application-by-application basis. Microcomputer software also represents competition as a substitute product in the general decision support area, although not in the Company's major application areas. I. Research and Development The Company is continuously developing new business products and services. In this regard, the Company is actively engaged in research and development of new software technologies and new data base analyses and applications. Expenditures for research and development for the years ended December 31, 1993, 1992 and 1991 approximated $33.7 million, $19.5 million and $15.2 million, respectively. Included in these expenditures were $10.2 million, $8.8 million and $6.5 million of software development costs that were capitalized. Expenditures not capitalized were charged to expense as incurred. 16 J. Personnel At December 31, 1993, the Company had 3,600 full-time and 2,200 part-time employees. The Company depends to a significant extent on its skilled technical personnel. Its future success will depend to a large degree upon its ability to continue to hire, train and retain its professional staff. The Company competes with many other companies in attracting qualified personnel. K. Foreign Operations The Company maintains offices in France, Germany, Great Britain, the Netherlands and Turkey to market its information and software support services. The Company also maintains offices in Australia, Belgium, Canada, Denmark, Hong Kong, India, Italy, Japan, Singapore and United Arab Emirates to market its software support services. The Company has also entered into distributorship agreements in Canada, France, Germany, Holland, Japan and Sweden to market APOLLO Space Management System software in those countries. The Company participates in a joint venture in Great Britain with GfK AG ("GfK") of Nuremberg and Taylor Nelson Group Limited (now known as Taylor Nelson AGB plc) of London. This joint venture operates InfoScan NMRA Limited, a retail audit and scanner-based information business. During 1993, the Company continued its expansion of its international information services business through the formation of a joint venture in France with SECODIP, S.A., ("SECODIP") of Paris, a subsidiary of SOFRES, S.A., and GfK. The joint venture, known as IRI-SECODIP, S.N.C., operates a retail audit and scanner based information business. In July 1993, the Company and GfK completed the reorganization of their 1988 EuroScan joint venture, which now operates exclusively in Germany. In July 1993, a joint venture was created in the Netherlands by the Company, De Vin Holding Company of the Netherlands, GfK and Secodip to launch a scanner based information business in the Netherlands. The business of each joint venture will operate exclusively in the respective country providing the development of the Company's scanner-based information services through InfoScan and other information services. See NOTES B and D to Consolidated Financial Statements. See Management's Discussion and Analysis of Financial Condition and Results of Operations. 17 ITEM 2. PROPERTIES The Company markets and provides its information services and software support services to domestic clients from full-service sales offices in New York, New York; San Francisco and Los Angeles, California; Cincinnati, Ohio; Darien, Connecticut; Fairfield, New Jersey; Plano, Texas and Toronto, Canada as well as from its headquarters in Chicago and systems development headquarters in Waltham, Massachusetts. The Company markets to international clients through subsidiaries and/or offices in Australia, Belgium, Canada, Denmark, France, Germany, Great Britain, Hong Kong, India, Italy, Japan, Netherlands, Singapore, Turkey and United Arab Emirates and through its various distributors. Principal leased facilities of the Company are as follows:
APPROXIMATE FLOOR AREA LOCATION PRINCIPAL OPERATION (SQ. FT.) - ---------- --------------------------------------------- ----------- Chicago, IL Corporate headquarters and offices for 345,000 professional staff Waltham, MA Professional staff and computer facilities 112,000 Wood Dale, IL Computer facilities 44,000 Regional sales Sales, client service and analysis 182,000 and client service offices Data col- Data collection and client test control, cable 170,000 lection TV studio facilities, warehouse facilities
The Company maintains $18,335,000 of business interruption insurance. 18 ITEM 3. LEGAL PROCEEDINGS On May 8, 1989, two shareholders each filed a class action complaint against the Company in the United States District Court for the Northern District of Illinois. Shortly thereafter, a third shareholder filed a similar class action complaint. All three cases have been consolidated. In their consolidated complaint, the plaintiffs purport to represent a class consisting generally of persons who purchased the Company's common stock between February 6, 1989 and May 2, 1989. The plaintiffs allege Section 10(b) and Rule 10b-5 violations of the Securities Exchange Act of 1934, and common law fraud and deceit charges, by reason of alleged omissions of the Company in setting forth material facts in disclosures and public statements about the Company. These alleged omissions include information relating to the Company's finances, results of operations and prospects of achieving growth in earnings and revenues during the referenced period when class members were acquiring shares of the Company's stock. The plaintiffs seek compensatory and punitive damages and attorneys' fees against the Company, five of its former directors and one of its former officers. The Court previously granted defendants' motion to dismiss plaintiffs' claims of negligent misrepresentation from the case, and as a result, the officer and certain of its directors previously named as defendants have been voluntarily dropped from the case by the plaintiffs. The two claims which remain pending against the defendants are for violation of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 and for common law fraud and deceit. The plaintiffs retained an individual who testified in his deposition that the total damages suffered by the class as a result of the allegedly wrongful conduct of the defendants were approximately $21.7 million. The Company retained an expert who testified in his deposition that the total damages suffered by the plaintiffs, assuming the defendants are to be found liable, would approximate $850,000. The Company has a directors and officers liability insurance policy having a policy limit of $10 million. Proceeds of the policy have been used for certain defense costs of the directors. The remainder of the proceeds may be available to cover damages assessed against the director defendants. The policy does not cover damages which may be assessed against the Company itself. Discovery with respect to the action is now completed and trial is currently scheduled to commence in early April 1994. The Company's management believes that the Company has valid defenses to these claims and that the ultimate resolution of the case will not have a material impact on the Company's consolidated financial position. The Company has been involved in patent infringement litigation concerning its targetable cable television technology used in its BehaviorScan mini- markets. In December 1990, a trial court ruled that the Company had infringed the opposing parties' patent during the period from 1979 to 1986. On December 21, 1992, a United States District Court assessed damages against the Company of approximately $4 million plus interest and costs (The "District Court Order"). In the fourth quarter of 1992, the Company established a reserve of $4 million for such damages and $391,000 of legal costs related to the case. On December 27, 1993, the Court of Appeals for the Federal Circuit of Washington D.C. affirmed the award of damages against the Company. The Company has satisfied the judgment by full payment of the amount due and, as a result, the case has been concluded. See Management's Discussion and Analysis of Financial Condition and Results of Operations -- Other Income (Expense). ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 19 ITEM 4(A). EXECUTIVE OFFICERS OF THE REGISTRANT NAME AGE POSITION WITH COMPANY AND BUSINESS EXPERIENCE ------------ --- ---------------------------------------------- Gian M. Fulgoni 46 Chairman of the Board of the Company since February 1991; Chief Executive Officer since January 1986; Vice Chairman from November 1988 until February 1991; President and Chief Operating Officer from December 1981 until November 1989; Director since 1981; Director of PLATINUM technology, inc., and U. S. Robotics, Inc. James G. Andress 55 President and Chief Operating Officer of the Company since March 1994; Chief Executive Officer since May 1990; Vice Chairman from July 1993 until March 1994; President from November 1989 until July 1993; Chief Operating Officer from November 1989 until May 1990; Director since November 1989. Chairman of Smith Kline Beecham Healthcare Products and Services from July 1989 until November 1989; Chairman of Beecham Pharmaceuticals from July 1988 until July 1989; President and Chief Operating Officer of Sterling Drug, Inc., from May 1985 until July 1988; Director of the Liposome Co., Inc., NeoRx Corp., Sepracor, Inc., Genelabs Technologies, Inc., Genetics Institute, Inc., OptionCare, Inc., America Online, Inc., Walsh International, Inc. and Allstate Insurance Co., Inc. Gerald Eskin, Ph.D. 59 Co-Founder of the Company; Vice Chairman since December 1981; Professor of Marketing at the University of Iowa since 1974 (currently adjunct status); Director since 1977. Magid Abraham, Ph.D. 35 Vice Chairman of the Company since March 1994; President and Chief Operating Officer from July 1993 until March 1994; Group President -Information Services Group from February 1991 until July 1993; President of the Product Development Division from December 1988 until February 1991; Vice President since December 1988; Divisional Executive Vice President from August 1988 until December 1988; Employed by the Company in product development positions since June 1985; Director since July 1993. Thomas M. Walker 46 Executive Vice President and Chief Financial and Administrative Officer of the Company since March 1994; President of the Finance and Administration Group since September 1990; Chief Financial Officer and Treasurer from September 1990 until March 1994; Vice President of Finance and Administration, and Chief Financial Officer of Praxis Biologics, Inc. from 1988 until September 1990; Corporation Director of Finance and Administration of Sterling Drug, Inc. from 1986 until 1988; Vice President of Finance and Planning for the Japan-Canada-Australia-Pacific, International Group and the world-wide Chemical Group of Sterling Drug, Inc. from 1983 until 1986; Director of the Company since March 1994. 20 NAME AGE POSITION WITH COMPANY AND BUSINESS EXPERIENCE ------------ --- ---------------------------------------------- Jeffrey P. Stamen 48 Vice President of the Company since January 1986; President - IRI Software Group (formerly known as the Software Products Group) since February 1991; President of the DSS Division from February 1988 until February 1991; Employed by the Company in senior management positions since June 1985; Director of the Company since March 1994. Randall S. Smith 42 Vice President of the Company since January 1986 and President - International Operations Division since December 1993; President of European Data Operations Division from February 1993 until December 1993; President of the Testing Services Division from October 1990 to January 1993; President of Operations Group from January 1988 until February 1989; President of the Data Base Division and Vice President since January 1986; President of the Administration Division from January 1987 until September 1990. George R. Garrick 41 Vice President of the Company and President - IRI North America Group since November 1993; President and Chief Operating Officer of the Nielsen Marketing Research U.S.A. unit of A.C. Nielsen Co. from July 1993 to October 1993; President of European Information Services from July 1992 until June 1993; President of the Syndicated Information Services Division from February 1991 to June 1992; President of the Consumer Packaged Goods Division from February 1989 until February 1991; Vice President since May 1988; Divisional Executive Vice President from March 1984 until January 1989. Edward S. Berger 53 Division Executive Vice President since June 1993; Secretary and General Counsel of the Company since September 1988; Division Senior Vice President of the Company from February 1991 until June 1993; Vice President, Assistant Secretary and General Attorney from December 1985 until September 1988. All of the foregoing executive officers hold office until the next annual meeting of the Board of Directors and until their successors are elected and qualified. 21 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER'S MATTERS - -------------------------------------------------------------------------------- The Company's common stock has been traded in the NASDAQ over-the-counter market since March 4, 1983 and in the NASDAQ National Market System since February 1984. Share data has been adjusted for all stock splits and stock dividends to date. The high and low closing sales prices for the Company's common stock are as follows:
Quarters High Low ----------- ------- ------- 1992 1st quarter $35-3/4 $23-1/2 2nd quarter 25-7/8 18-1/2 3rd quarter 27 21-1/2 4th quarter 34-3/4 25-3/4 1993 1st quarter $33-1/4 $27 2nd quarter 37-1/4 27-1/2 3rd quarter 44 33-5/8 4th quarter 41-3/4 34
The last sale price on February 28, 1994 was $26 per share. As of February 28, 1994 there were 507 record holders of the Company's common stock. The Company has never paid cash dividends. It is the present policy of the Company's Board of Directors to retain earnings for use in the Company's business. Accordingly, the Board of Directors does not anticipate that cash dividends will be paid in the foreseeable future. In addition, the Company's lease agreement pertaining to the Company's corporate headquarters contains certain restrictions on the payment of cash dividends. 22 ITEM 6. SELECTED FINANCIAL DATA - --------------------------------
Year Ended December 31, 1993 --------------------------------------------------------------------------------------- 1993 1992 1991 1990 1989 --------------- --------------- --------------- --------------- --------------- (In thousands, except per share data) -------- ----- -------- ----- -------- ----- -------- ----- -------- ----- OPERATING STATEMENT DATA Revenues from continuing operations $334,544 100.0% $276,362 100.0% $222,689 100.0% $179,789 100.0% $144,939 100.0% Operating expenses 258,686 77.4% 209,065 75.7 175,332 78.7 143,488 79.8 119,728 82.6 Selling, general and administrative expenses 34,922 10.4% 29,594 10.7 22,042 9.9 20,258 11.3 18,090 12.5 Loss on disposition and write-off of assets 3,005 0.9% -- -- -- -- -- -- -- -- Restructuring costs -- -- -- -- -- -- -- -- 5,000 3.4 -------- ----- -------- ----- -------- ----- -------- ----- -------- ----- Operating profit 37,931 11.3% 37,703 13.6 25,315 11.4 16,043 8.9 2,121 1.5 Other income (expense) - net 168 0.1% (680) (0.2) (897) (0.4) (1,549) (0.9) (4,325) (3.0) Litigation settlement -- (4,391) -- -- -- Equity in loss of affiliated companies (2,050) (466) -- (312) (225) Income tax (expense) benefit (15,416) (12,919) (9,032) (7,934) 279 Minority interest 1,582 -- -- -- -- Loss from discontinued operations -- -- -- (580) (10,724) Cumulative effect on prior years of change in accounting principles (1) 1,864 -- -- (1,369) 1,500 -------- ----- -------- ----- -------- ----- -------- ----- -------- ----- Net income (loss) $ 24,079 7.20% $ 19,247 7.0% $ 15,386 6.9% $ 4,299 2.4% $(11,374) (7.8)% ======== ===== ======== ===== ======== ===== ======== ===== ======== ===== Income (loss) per common and common equivalent share Continuing operations $ .82 $ .78 $ .66 $ .32 $ (.12) Discontinued operations -- -- -- (.03) (.60) -------- -------- -------- -------- -------- Income (loss) before cumulative effect of accounting changes .82 .78 .66 .29 (.72) Cumulative effect of accounting changes .07 -- -- (.07) .08 -------- -------- -------- -------- -------- Net income (loss) $ .89 $ .78 $ .66 $ .22 $ (.64) ======== ======== ======== ======== ======== Weighted average common and common equivalent shares 27,160 24,817 23,398 19,579 17,834 ======== ======== ======== ======== ======== BALANCE SHEET DATA Total assets $327,515 $263,999 $202,808 $142,576 $141,780 Working capital 91,970 87,941 53,155 24,253 4,174 Long-term debt 3,087 4,718 9,285 23,155 29,395
(1) (See NOTE C to Consolidated Financial Statements.) 23 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company experienced significant growth in revenues and earnings over the past three years. During the three year period, operating profits have increased while operating and selling, general and administrative expenses have also increased. The Company made a decision to dispose of certain non-strategic assets which impacted 1993 operating results. Also in 1993, the Company made a change in its policy for the accounting of income taxes. RESULTS OF OPERATIONS REVENUES FROM CONTINUING OPERATIONS. Revenues from continuing operations increased from $222.7 million in 1991 to $276.4 million in 1992 and $334.5 million in 1993. The percentage growth rates were 23.9% in 1991, 24.1% in 1992 and 21.1% in 1993. The Company's revenue growth was principally due to strong growth in InfoScan services and increased revenues from its line of business intelligence software products. The growth in InfoScan's revenues was the result of both new clients and increased utilization of InfoScan's services by existing clients. The Company continues to generate additional revenue from its expansion of its InfoScan's supermarket, drug and mass merchandiser services. Business intelligence software products, primarily EXPRESS Software products, experienced significant growth in both domestic and international revenues. BehaviorScan/Other Testing Services remained relatively constant over the prior years' amounts. OPERATING EXPENSES. Operating expenses increased from $175.3 million in 1991 to $209.1 million in 1992 and $258.7 million in 1993. As a percentage of revenues, operating expenses decreased from 78.7% to 75.7% and increased to 77.4% over the three-year period. The 1993 increase over 1992 in operating expenses reflected a $29.7 million increase in compensation expense, an $11.5 million increase in amortization of deferred data procurement costs and a $4.8 million increase in travel related expenses. Operating expenses in 1992 increased from 1991 levels principally as a result of a $24.0 million increase in compensation expense, an $8.0 million increase in the amortization of deferred data procurement costs and a $1.0 million increase in computer operation expenses. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses increased from $22.0 million in 1991 to $29.6 million in 1992 and $34.9 million in 1993. As a percentage of revenue, SG&A expenses increased from 9.9% in 1991 to 10.7% in 1992 and decreased to 10.4% in 1993. The increase in 1993 expense, as in prior years, was primarily due to increases in compensation and related staffing costs associated with the Company's growth in both domestic and international operations, and increased recruiting and employee development expenses. The decrease as a percentage of revenue in 1993 from 1992 was due to control of expenses and the spreading of fixed administrative expenses over a larger revenue base. LOSS ON DISPOSITION AND WRITE-OFF OF ASSETS. The Company recorded a pre-tax charge of approximately $805,000 in the third quarter of 1993 to expense various intangibles related to its 1991 agreements with VideOcart, Inc. Also in the first quarter of 1993, the Company provided for the expected loss of $2.2 million on the disposition of certain nonstrategic assets. 24 OPERATING PROFIT. Operating margins improved as a percentage of revenues from 11.4% in 1991 to 13.6% in 1992 and decreased to 11.3% in 1993. Operating margins were adversely affected by higher operating expense levels and expenses related to the loss on disposition and write-off of assets. The 1992 operating margin improvement reflected increased revenues from the Company's InfoScan product line and business intelligence software products, the lower cost of maintaining a reduced number of BehaviorScan markets and, in general, the impact of spreading fixed administrative and operating expenses over a larger revenue base. OTHER INCOME (EXPENSE). Other expense increased from $897,000 in 1991 to $5.1 million in 1992. In 1993, the Company recorded other income of $168,000. The fluctuation of expense to income was principally due to the reduction in interest expense from $2.5 million in 1992 to $1.0 million in 1993. Reduced interest expense levels reflected lower borrowing levels. The increase in other expense in 1992 was principally due to the nonrecurring provision for patent infringement litigation. See Legal Proceedings. EQUITY IN LOSS OF AFFILIATED COMPANIES. Equity in loss of affiliated companies reflected losses recognized related to equity investments. (See NOTE D of Notes to Consolidated Financial Statements). INCOME TAX EXPENSE. The Company's effective tax rates for 1991, 1992 and 1993 were 37.0%, 40.2% and 42.8%, respectively. The 1993 tax rate on operations including minority interest was 41.0%. The 1993 tax rate includes the effect of the Company increasing its domestic deferred tax liability in 1993 as a result of legislation enacted during 1993 increasing the Federal corporate tax rate from 34% to 35%. The 1991 tax rate reflected a tax benefit from the liquidation of a foreign subsidiary, the disposition of an equity investment and the utilization of net operating loss carryforwards for which tax benefits had not previously been reflected. The 1991, 1992 and 1993 tax rates also reflect the effect of state income taxes net of the federal benefits. MINORITY INTEREST. Minority interest reflects non-Company owned stockholder interest in InfoScan NMRA Limited. (See NOTE B of Notes to Consolidated Financial Statements). CUMULATIVE EFFECT ON PRIOR YEARS OF CHANGES IN ACCOUNTING PRINCIPLE. In 1993, the Company adopted Statement of Financial Accounting Standards No. 109 - Accounting for Income Taxes effective January 1, 1993. The cumulative effect of this change at January 1, 1993 was to recognize a tax benefit of $1.9 million or $.07 per share. NET INCOME. As a result of the factors described above, net income increased from $15.4 million in 1991 to $19.2 million in 1992 and to $24.1 million in 1993. FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES. During 1993 and 1992, the Company's cash requirements were satisfied through internally generated funds and proceeds from previous equity offerings. Working capital at December 31, 1993 was $92.0 million, reflecting an increase of $4.0 million over December 31, 1992. The net increase results from the adoption of Statement of Financial Accounting Standards No. 109 - Accounting for Income Taxes, which increased working capital by $17.1 million, net of a reduction in working capital items other than deferred income taxes 25 of $13.1 million. In 1992, the Company replaced its $25 million credit facility with a new facility of the same amount. The new facility expires in 1996. The Company has received a firm commitment from its lender to increase its credit facility to $50 million. In September 1992, the Company issued 1,380,000 shares of its common stock for $24.00 per share, resulting in net proceeds of approximately $31.2 million. Working capital requirements continue to be extensive due to the Company's expansion of its business and investment in its InfoScan data base, international operations and its software development activities. As of December 31, 1993, the Company had capital commitments of approximately $3.9 million, which were primarily for computer equipment and scanner equipment. Although not yet committed, the Company expects to spend a substantially greater amount than its initial commitments during 1994 for such capital items. For 1993 and 1992, total capital expenditures were $25.9 million and $20.0 million respectively. The investment in the InfoScan data bases and software development will continue to increase due to expansion of operations. The Company also expects to expand its operations and investments internationally, which may require significant resources. See Other Developments. The Company believes it will have sufficient funds from its cash balances, internally generated funds and bank credit facility to satisfy its working capital requirements for 1994 and the foreseeable future. OTHER DEVELOPMENTS In April 1993, the Company acquired a 45% ownership interest in a French market information business through the formation of a joint venture with SECODIP, S.A. of Paris, a subsidiary of SOFRES, S.A., and GfK AG of Germany. SECODIP and SOFRES held a 45% and 10% interest, respectively. The Company and GfK AG contributed their investments in the former EuroScan France operations to the joint venture company, while SECODIP, S.A. contributed certain assets related to its retail audit business. The name of the joint venture company is IRI-SECODIP, S.N.C. The business of the joint venture includes the development of the Company's scanner-based information services in the French markets. In connection with the formation of the joint venture, the Company obtained certain intangible rights from SECODIP, S.A., some of which the Company then licensed to the joint venture. The Company's investments in connection with the joint venture, including its acquisition costs, approximated $13.0 million. In July 1993, the Company and GfK AG completed the reorganization of their 1988 EuroScan joint venture. GfK AG contributed its consumer panel and retail audit businesses to the already established scanner-based information businesses of the EuroScan joint venture. The Company's ownership interest in the joint venture company, GfK Panel Services GmbH, is 15%. The Company's net investment made to the joint venture company in connection with the reorganization was $7.2 million, including transaction costs. The Company also reacquired certain Western European rights to its InfoScan production technology for $2.0 million. In February 1994, the Company signed an agreement in principle with privately held Asia-based SRG Holdings Limited ("SRG") to acquire SRG in an exchange of stock valued at approximately $76.0 million. SRG is Asia's largest market research firm, operating in 12 countries in the Asia Pacific Region. SRG had worldwide sales in excess of $70.0 million in 1993. See NOTE P to Consolidated Financial Statements. 26 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Listed below are the financial statements and supplementary data included in this part of the Annual Report on Form 10-K:
(a) Financial Statements Page No. -------------------- -------- Report of Independent Certified Public Accountants 28 Consolidated Balance Sheets at December 31, 1993 and 1992 29-30 Consolidated Statements of Income for the years ended December 31, 1993, 1992 and 1991 31 Consolidated Statements of Stockholders' Equity for the years ended December 31, 1993, 1992 and 1991 32 Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1992 and 1991 33 Notes to Consolidated Financial Statements 34-53 (b) Supplementary Data ------------------ Summary of Quarterly Data 54-55
Financial statement schedules are included on pages 62 to 64 following the signature pages of this report (See Item 14). 27 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors and Stockholders Information Resources, Inc. and Subsidiaries We have audited the accompanying consolidated balance sheets of Information Resources, Inc. and Subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1993. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Information Resources, Inc. and Subsidiaries at December 31, 1993 and 1992, and the consolidated results of their operations and their consolidated cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles. As discussed in NOTE C, effective January 1, 1993, the Company changed its method of accounting for income taxes. GRANT THORNTON Chicago, Illinois February 10, 1994 28 Information Resources, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, (Dollars in thousands)
ASSETS 1993 1992 -------- -------- CURRENT ASSETS Cash and cash equivalents $ 19,368 $ 53,593 Accounts receivable Customers 113,495 82,060 Related parties 4,257 2,384 Other 1,135 1,842 -------- -------- 118,887 86,286 Allowance for doubtful receivables (2,250) (2,051) -------- -------- 116,637 84,235 Deferred income taxes (NOTE I) 9,205 -- Prepaid expenses and other current assets 4,230 3,698 -------- -------- Total current assets 149,440 141,526 -------- -------- PROPERTY AND EQUIPMENT Computer equipment 58,206 47,553 Market advertising and testing equipment 19,631 13,119 Store operating equipment 6,309 19,014 Leasehold improvements 12,572 10,804 Equipment and furniture 27,467 21,546 -------- -------- 124,185 112,036 Accumulated depreciation and amortization (71,013) (71,271) ------- -------- 53,172 40,765 INVESTMENTS (NOTE D) 11,764 1,598 OTHER ASSETS (NOTE E) 113,139 80,110 -------- -------- $327,515 $263,999 ======== ========
The accompanying notes to consolidated financial statements are an integral part of these statements. 29 Information Resources, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, (Dollars in thousands)
LIABILITIES 1993 1992 -------- -------- CURRENT LIABILITIES Current maturities of long-term debt (NOTE H) $ 1,691 $ 1,676 Accounts payable 14,512 13,034 Accrued expenses (NOTE G) 21,521 17,279 Deferred income taxes (NOTE I) -- 7,926 Deferred revenue 13,844 9,548 Other (NOTES L & M) 5,902 4,122 -------- -------- Total current liabilities 57,470 53,585 -------- -------- LONG-TERM DEBT (NOTE H) 3,087 4,718 DEFERRED INCOME TAXES (NOTE I) 31,040 11,403 DEFERRED GAIN 4,878 5,294 OTHER LIABILITIES 1,176 938 MINORITY INTEREST 1,202 1,173 COMMITMENTS & CONTINGENCIES (NOTE M) -- -- STOCKHOLDERS' EQUITY (NOTE K) Preferred stock - authorized 1,000,000 shares, $.01 par value, none issued -- -- Common stock - authorized 60,000,000 shares, $.01 par value, issued 25,416,502 shares in 1993 and 24,546,345 shares in 1992 254 245 Capital in excess of par value 157,972 139,537 Retained earnings 72,333 48,254 Cumulative translation adjustment (1,897) (1,148) -------- -------- Total stockholders' equity 228,662 186,888 -------- -------- $327,515 $263,999 ======== ========
The accompanying notes to consolidated financial statements are an integral part of these statements. 30 Information Resources, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME Year Ended December 31, (Dollars in thousands, except per share data)
1993 1992 1991 -------- -------- -------- Revenues $334,544 $276,362 $222,689 -------- -------- -------- Costs and expenses Operating expenses 258,686 209,065 175,332 Selling, general and administrative expenses 34,922 29,594 22,042 Loss on disposition and write-off of assets 3,005 -- -- -------- -------- -------- 296,613 238,659 197,374 -------- -------- -------- Operating profit 37,931 37,703 25,315 Other income (expense) Interest income 1,257 1,631 1,772 Interest expense (1,049) (2,542) (2,636) Litigation provision (432) (4,391) -- Other - net 392 231 (33) -------- -------- -------- 168 (5,071) (897) -------- -------- -------- Equity in loss of affiliated companies (2,050) (466) -- -------- -------- -------- Income before income taxes, minority interest and cumulative effect of change in accounting principle 36,049 32,166 24,418 Income tax expense 15,416 12,919 9,032 -------- -------- -------- Income before minority interest and cumulative effect of change in accounting principle 20,633 19,247 15,386 Minority interest 1,582 -- -- -------- -------- -------- Income before cumulative effect of change in accounting principle 22,215 19,247 15,386 Cumulative effect on prior years of change in accounting principle (NOTE C) 1,864 -- -- -------- -------- -------- Net income $ 24,079 $ 19,247 $ 15,386 ======== ======== ======== Income per common and common equivalent share: Before cumulative effect of accounting change $ .82 $ .78 $ .66 Cumulative effect of accounting change .07 -- -- -------- -------- -------- Net income $ .89 $ .78 $ .66 ======== ======== ======== Weighted average common and common equivalent shares 27,160 24,817 23,398 ======== ======== ========
The accompanying notes to consolidated financial statements are an integral part of these statements. 31 Information Resources, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Three Years Ended December 31, (Dollars in thousands)
Capital in Cumulative Treasury Preferred Common Excess of Retained Translation Common Stock Stock Par Value Earnings Adjustment Stock Total --------- ----- ----------- ---------- ----------- ------------ --------- Balance at January 1, 1991 $ -- $207 $ 51,433 $14,600 $ 757 $(1,613) $ 65,384 Exercise of stock options -- -- 5,408 -- -- 847 6,255 Income tax benefit from the exercise of stock options -- -- 3,313 -- -- -- 3,313 Compensation for issuance of stock options at less than fair market value -- -- 248 -- -- -- 248 Issuance of 2,270,000 shares -- 22 45,809 -- -- -- 45,831 Purchase of Citicorp warrants -- -- (12,500) -- -- -- (12,500) Retirement of treasury stock -- -- -- (979) -- -- (979) Foreign currency translation -- -- -- -- 393 -- 393 Net income for the year -- -- -- 15,386 -- -- 15,386 --------- ---- -------- ------- ------- ------- -------- Balance at December 31, 1991 -- 229 93,711 29,007 1,150 (766) 123,331 --------- ---- -------- ------- ------- ------- -------- Exercise of stock options -- 1 5,494 -- -- 766 6,261 Income tax benefit from the exercise of stock options -- -- 5,890 -- -- -- 5,890 Issuance of 160,000 shares -- 1 3,172 -- -- -- 3,173 Compensation for issuance of stock options at less than fair market value -- -- 124 -- -- -- 124 Issuance of 1,380,000 shares -- 14 31,146 -- -- -- 31,160 Foreign currency translation -- -- -- -- (2,298) -- (2,298) Net income for the year -- -- -- 19,247 -- -- 19,247 --------- ---- -------- ------- ------- ------- -------- Balance at December 31, 1992 -- 245 139,537 48,254 (1,148) -- 186,888 --------- ---- -------- ------- ------- ------- -------- Exercise of stock options -- 9 11,169 -- -- -- 11,178 Income tax benefit from the exercise of stock options -- -- 6,846 -- -- -- 6,846 Compensation for issuance of stock options at less than fair market value -- -- 420 -- -- -- 420 Foreign currency translation -- -- -- -- (749) -- (749) Net income for the year -- -- -- 24,079 -- -- 24,079 --------- ---- -------- ------- ------- ------- -------- Balance at December 31, 1993 $ -- $254 $157,972 $72,333 $(1,897) $ -- $228,662 ========= ==== ======== ======= ======= ======= ========
The accompanying notes to consolidated financial statements are an integral part of these statements 32 Information Resources, Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (Dollars in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES: 1993 1992 1991 --------- -------- -------- Net income: $ 24,079 $ 19,247 $ 15,386 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 21,429 18,510 16,016 Amortization of deferred data procurement costs 50,464 38,742 30,709 Deferred income taxes 6,559 5,537 3,283 Equity in loss of affiliated companies 2,050 466 -- Minority interest (1,582) -- -- Cumulative effect of adoption of FAS 109 (1,864) -- -- Loss on disposition and write-off of assets 3,005 -- -- Other 48 (528) 730 Change in assets and liabilities: Increase in accounts receivable (34,728) (6,678) (26,467) (Increase)/Decrease in other current assets (458) 275 (355) Increase in other assets (1,505) (2,538) (2,872) Increase/(Decrease) in accounts payable 1,344 2,226 (1,771) Increase/(Decrease) in other current liabilities 1,756 5,986 (3,245) Increase in income taxes 4,922 5,734 2,877 Increase in deferred revenue 4,296 1,161 3,813 Increase in other liabilities 192 349 128 --------- -------- -------- Total adjustments 55,928 69,242 22,846 --------- -------- -------- Net cash provided by operating activities 80,007 88,489 38,232 CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of property and equipment 168 56 426 Purchase of property and equipment (25,906) (19,993) (12,228) Software costs (10,202) (8,808) (6,458) Deferred data procurement costs (67,991) (51,881) (36,752) Net assets acquired in business acquisitions (1,252) (2,921) -- Investments relating to joint ventures (20,287) (425) -- --------- -------- -------- Net cash used by investing activities (125,470) (83,972) (55,012) CASH FLOWS FROM FINANCING ACTIVITIES: Net repayments under line-of-credit agreements -- -- (16,415) Net repayments of long-term debt (1,500) (20,216) (2,035) Proceeds from exercise of stock options 11,598 6,385 6,503 Proceeds from issuance of common stock, net of expenses -- 34,333 45,831 Capital contributions from minority interest 1,486 1,173 -- Purchase of treasury stock by subsidiary acquired in pooling transaction -- -- (979) --------- -------- -------- Net cash provided by financing activities 11,584 21,675 32,905 EFFECT OF EXCHANGE RATE CHANGES ON CASH (346) (1,093) 37 --------- -------- -------- NET INCREASE (DECREASE) IN CASH (34,225) 25,099 16,162 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 53,593 28,494 12,332 --------- -------- -------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 19,368 $ 53,593 $ 28,494 ========= ======== ========
The accompanying notes to consolidated financial statements are an integral part of these statements. 33 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1993, 1992, and 1991 NOTE A - SUMMARY OF ACCOUNTING POLICIES A summary of significant accounting policies applied in the preparation of the accompanying consolidated financial statements follows: 1. Principles of Consolidation --------------------------- The consolidated financial statements include the accounts of Information Resources, Inc. ("IRI" or the "Company") and all wholly or majority owned subsidiaries. The minority interest separately disclosed herein reflects the non-Company owned stockholder interest in InfoScan NMRA Limited. The equity method of accounting is used for investments in which the Company has a 50% or less ownership and exercises significant influence over operating and financial policies. All significant intercompany accounts and transactions have been eliminated in consolidation. 2. Revenue Recognition ------------------- InfoScan and PromotionScan products generally have contract terms of a period not less than one year. Contracts are generally categorized into one of two classes: 1) cancelable at the end of each year with six months written notice by either party, or 2) multi-year contracts either non-cancelable or cancelable only with significant penalties generally cancelable with six months notice after the initial term. A portion of the base contract revenue, approximately 15% of a calculated first year price, is recognized in the period between client commitment and the delivery of forward data to match revenue with costs to customize and set up client reports. An additional 25% is recognized in the period between commitment and the delivery of forward data to match revenue with the costs allocated to the period for which historical data, usually one to two years, is furnished. The remaining revenue from the first commitment period is recognized ratably over the initial contract term. Revenues from remaining years of multi-year contracts, extensions and renewals are recognized ratably over their extension periods. After the initial commitment, the contract generally continues indefinitely, unless cancelled by the client on six months prior notice. Revenue for special analytical services is recognized as services are performed. Initial BehaviorScan contracts typically commence within three months after execution and provide clients with historical data covering the six-month to one-year period prior to a contract's commencement date and with data, testing services and analyses for the twelve-month period covering the minimum term of the contract. A portion of the revenue from the contract, approximately 25% of the first year minimum, is recognized in the period between the client's commitment and the test commencement. This revenue is recognized to match revenue with cost allocated to the period for which historical data is furnished. The remaining revenue from the minimum period is recognized ratably over the initial contract term. Revenues from contract extensions are recognized ratably over their extension periods, typically year-to-year. 34 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1993, 1992, and 1991 NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued Revenues from the sale of EXPRESS, APOLLO and other software application products, under licensing agreements, are recognized upon delivery where there is a reasonable basis for estimating collectibility and the Company has no significant remaining obligations. If there are significant other obligations, revenues are recognized on the basis of estimated cost. Related software maintenance fees are recognized as earned over the terms of their respective contracts. Revenues from market research and consulting projects are recognized as services are performed. Certain of these projects are fixed-price in nature and use the percentage-of-completion method for the recognition of revenue. Revenues for projects that include a timesharing aspect are allocated over the timesharing period based on the costs incurred to provide the service. Billings to customers in advance of revenue recognition are reflected in the consolidated financial statements as deferred revenue. Unbilled charges are included as a part of accounts receivable and represent accrued revenues and fees on contracts and other services incurred to date. 3. Property and Equipment ---------------------- Property and equipment is recorded at cost and depreciated over the estimated service lives. For financial statement purposes, depreciation is provided by the straight-line method. For income tax purposes, accelerated methods are used. Leasehold improvements are amortized over the shorter of their estimated service lives or the terms of their respective lease agreements for financial statement purposes. For income tax purposes, leasehold improvements are amortized over the service lives of the buildings. During 1993, the Company reduced store operating equipment and related accumulated depreciation by $13.0 million for equipment which was no longer used, obsolete or reverted to store owners. 4. Other Assets ------------ Other assets include deferred data procurement costs, goodwill, capitalized software, data and solicitation rights and non-compete agreements. Data procurement costs are capitalized as incurred and amortized over periods not exceeding twenty-eight months. Goodwill represents the unamortized cost in excess of fair value of the net assets of acquired subsidiaries and the excess of cost over the allocation to data and solicitation rights. Goodwill is amortized on a straight-line basis over periods from ten to twenty years. Capitalized costs of computer software to be sold are amortized on a straight- line basis beginning upon general release date and not exceeding three years. Solicitation rights are amortized on a straight line basis over the expected useful lives of six to ten years. Non-compete agreements are being amortized over periods from two to seven years. 35 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 1993, 1992, and 1991 NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued 5. Stock Options ------------- For options granted at fair market value, the proceeds are credited to the capital accounts upon exercise. For options granted at less than fair market value, the difference between the exercise price and fair market value at date of grant is recognized as compensation expense over the vesting period. With respect to nonqualified options, the Company recognizes a tax benefit upon exercise of these options in an amount equal to the difference between the option price and the fair market value of the common stock. With respect to incentive stock options, tax benefits arising from disqualifying dispositions are recognized at the time of disposition. Tax benefits related to stock options are credited to capital in excess of par value. 6. Income per Common and Common Equivalent Share --------------------------------------------- Income per common and common equivalent share is based on the weighted average number of shares of common stock and common stock equivalents (if dilutive) outstanding during each year. The effect of dilution from the exercise of stock options is considered in the computation of income per common and common equivalent share. The modified treasury stock method was used to compute income per common and common equivalent share for the quarters ended June 30 and September 30, 1992 and for all quarters in 1993 since options and warrants outstanding exceeded 20% of the shares of common stock outstanding. The treasury stock method was used to calculate income per common and common equivalent share for other periods. 7. Income Taxes ------------ The Company adopted Statement of Financial Accounting Standards No. 109 - Accounting for Income Taxes (FAS 109) effective January 1, 1993. FAS 109 requires an asset and liability approach in accounting for income taxes. Under this method, deferred income taxes are recognized, at enacted rates, to reflect the future effects of tax carryforwards and temporary differences arising between the tax bases of assets and liabilities and their financial reporting amounts at each year end. (See NOTE C). Prior to January 1, 1993, the Company followed the provisions of Financial Accounting Standards No. 96 - Accounting for Income Taxes. Among other things, its provisions include providing deferred taxes based upon enacted tax rates which would apply during the period in which taxes become payable (receivable) and the adjustment of cumulative deferred taxes for any changes in the tax rates. Deferred U.S. income taxes are not provided on the undistributed earnings of foreign subsidiaries since such earnings are considered to be permanently invested in those operations. Cumulative undistributed earnings of foreign subsidiaries were not significant at December 31, 1993. 36 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued 8. Reclassifications ----------------- Certain reclassifications have been made in the prior years' consolidated financial statements to conform to the 1993 presentation. 9. Cash and Cash Equivalents ------------------------- For purposes of reporting cash flows, cash and cash equivalents include cash on hand and funds held in money market accounts with a maturity of three months or less. The carrying amount approximates fair value. 10. Supplemental Cash Flow Information ---------------------------------- Cash paid for interest and income taxes during the years ended December 31, was as follows:
1993 1992 1991 ------ ------ ------ (In thousands) Interest $1,055 $2,866 $2,949 Income taxes $3,935 $1,648 $2,872
The Company had noncash financing transactions relating to capital lease obligations for new equipment. These totaled $1,053,000 and $6,881,000 for 1992 and 1991, respectively. The Company had noncash investing transactions resulting from the reclassification of receivables due from some of the Company's joint ventures and joint venture partners in satisfaction of cash contributions the Company otherwise would have made to various joint ventures. The amounts totaled $1,800,000 in 1993. The Company had noncash financing transactions relating to income tax benefits realized from the exercise of nonqualified stock options. These totaled $6,846,000, $5,890,000 and $3,313,000 for 1993, 1992 and 1991, respectively. In 1991 the Company purchased all of the outstanding warrants held by Citicorp Credit Services, Inc. (Citicorp) in exchange for a promissory note in the principal amount of $12.5 million. In 1992, this promissory note was repaid in full. 11. Fair Value of Financial Instruments ----------------------------------- The carrying value of the Company's financial instruments is a reasonable approximation of their fair values. 37 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE A - SUMMARY OF ACCOUNTING POLICIES - Continued 12. Concentrations of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash equivalents and trade receivables. The Company's cash equivalents are placed in high quality securities and diverse investment funds. Concentrations of credit risk with respect to trade receivables are limited due to the large number of customers comprising the Company's customer base, and their dispersion across different businesses and geographic areas. As of December 31, 1993 and 1992, the Company had no significant concentrations of credit risk. NOTE B - ACQUISITIONS In July 1993, the Company and GfK AG completed the reorganization of their 1988 EuroScan joint venture. GfK AG contributed its consumer panel and retail audit businesses to the already established scanner-based information businesses of the EuroScan joint venture. The Company's ownership interest in the joint venture company, GfK Panel Services GmbH, is 15%. The Company's net investment made to the joint venture company in connection with the reorganization was $7.2 million, including transaction costs. The Company also reacquired certain Western European rights to its InfoScan production technology for $2.0 million. In April 1993, the Company acquired a 45% ownership interest in a French market information business through the formation of a joint venture with certain European market research companies. SECODIP, S.A. of Paris, a subsidiary of SOFRES, S.A., holds a 45% interest in the joint venture company, and GfK AG of Germany has a 10% interest. The Company and GfK AG contributed their investments in the former EuroScan France operations to the joint venture company, while SECODIP, S.A. contributed certain assets related to its retail audit business. The name of the joint venture company is IRI - SECODIP, S.N.C. The purpose of the joint venture includes the development of the Company's scanner-based information services in the French markets. In connection with the formation of the joint venture, the Company obtained certain intangible rights from SECODIP, S.A., some of which the Company then licensed to the joint venture. The Company's investments in connection with the joint venture, including its acquisition costs, approximated $13.0 million. In December 1992, the Company organized LogiCNet, Inc. as a joint venture company along with other parties to pursue development of a distribution resource planning system incorporating inventory management and product reordering systems. The Company intends to underwrite development costs, for which it may be reimbursed by others, and has the option to acquire up to a 65% ownership interest in the venture. In November 1992, Catalina Marketing Corporation and the Company formed a joint venture company, Catalina Information Resources, Inc., to develop products and services designed to enhance decision-making capabilities involving quick response product reordering and day-after sales performance tracking. The Company initially contributed $425,000 in cash and licensed certain software capabilities in return for a 50% ownership interest. During 1993, the Company contributed $350,000 in cash to the joint venture. 38 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE B - ACQUISITIONS - Continued In June 1992, the Company formed a joint venture, InfoScan NMRA Limited, with GfK AG of Nuremberg, Germany and Taylor Nelson Group Limited (now known as Taylor Nelson AGB plc) of London to purchase certain assets of the NMRA Retail Audit business of BGA Audits Limited (formerly Audits of Great Britain), a United Kingdom market research company in administration. The Company purchased 60% of the joint venture for $2.9 million including direct costs of acquisition. During 1993, as a result of disproportionate capital contributions made by the joint venture partners, the Company's ownership interest increased to approximately 75% at December 31, 1993. The other partners may reestablish their ownership interest percentages to their original levels within a specified period of time. The accounts of the joint venture have been included in the accompanying consolidated financial statements. In May 1992, the Company acquired Towne-Oller & Associates ("Towne-Oller"). The transaction was effected through the exchange of approximately 690,000 shares of the Company's common stock for all of the issued and outstanding shares of Towne-Oller. The acquisition has been accounted for as a pooling-of-interests and accordingly, the accompanying consolidated financial statements have been restated to reflect the acquisition. NOTE C - CHANGE IN ACCOUNTING PRINCIPLE Effective January 1, 1993, the Company adopted Statement of Financial Accounting Standards No. 109 -Accounting for Income Taxes (FAS 109). The effect of the adoption was to record a $1,864,000 favorable cumulative effect adjustment as of January 1, 1993 in the statement of income for the year ended December 31, 1993. The adjustment primarily represents the impact of recognizing tax benefits for future taxable losses that could not be recorded under FAS 96. 39 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE D - INVESTMENTS Investments at December 31 are as follows:
1993 1992 ------- ------ (In Thousands) GfK Panel Services GmbH, at cost $ 7,155 $ 591 IRI-SECODIP, S.N.C., at cost plus equity in undistributed earnings 4,012 558 Other, at cost plus equity in undistributed earnings 597 449 ------- ------ $11,764 $1,598 ======= ======
At December 31, 1993 and 1992, the amount of investments in companies accounted for by the equity method included goodwill in the amount of $3,246,000 and $559,000 which is being amortized into income over periods not exceeding 15 years. This amortization is included in the equity in loss of affiliated companies. At December 31, 1993, the Company had outstanding receivables of $2.5 million due from affiliates. 40 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE E - OTHER ASSETS Other assets at December 31 are as follows:
1993 1992 -------- -------- (In thousands) Deferred data procurement costs - net of accumulated amortization of $62,333 in 1993 and $44,736 in 1992 $ 71,131 $53,416 Goodwill - net of accumulated amortization of $1,439 in 1993 and $888 in 1992 3,931 3,355 Capitalized software costs - net of accumulated amortization of $10,081 in 1993 and $11,827 in 1992 21,481 15,245 Solicitation rights - net of accumulated amortization of $3,112 in 1993 and $1,843 in 1992 7,815 3,067 Non-compete agreements - net of accumulated amortization of $2,272 in 1993 and $1,127 in 1992 4,328 1,473 Other 4,453 3,554 -------- ------- $113,139 $80,110 ======== =======
In 1993 and 1992, deferred data procurement costs of $32,867,000 and $30,594,000 respectively, became fully amortized. Such fully amortized costs are excluded from the amounts shown above. In 1993 and 1992, capitalized software costs of $6,712,000 and $8,283,000 respectively became fully amortized. Such fully amortized costs are excluded from the amounts shown above. 41 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE F - NOTE PAYABLE On November 25, 1991, the Company purchased the outstanding warrants held by Citicorp in exchange for a promissory note in the principal amount of $12.5 million. The note bore an interest rate of 1% over the Citicorp base rate with interest payable monthly. The note was due December 31, 1992 and the outstanding principal and related interest were paid in full. NOTE G - ACCRUED EXPENSES Accrued expenses at December 31 are as follows:
1993 1992 ------- ------- (In thousands) Accrued payroll $ 8,446 $ 7,361 Accrued property, payroll and other taxes 4,701 3,370 Other 8,374 6,548 ------- ------- $21,521 $17,279 ======= =======
NOTE H- LONG-TERM DEBT Long-term debt at December 31, is as follows:
1993 1992 ------- ------- (In thousands) Capitalized leases $ 4,778 $ 6,394 Less current maturities 1,691 1,676 ------- ------- $ 3,087 $ 4,718 ======= =======
Maturities of long-term debt during each of the years 1994 through 1997 are $1,691,000, $1,523,000, $912,000 and $652,000, respectively. The amount consists primarily of leases for telephone and computer equipment expiring in 1997. Total interest in the amount of $605,000 to be paid over the period of the lease is not included in the lease commitment. On December 22, 1992, the Company entered into a new bank credit facility replacing its previous facility dated October 30, 1990. The credit facility allows borrowings up to $25 million due April 30, 1996 at an interest rate at or below prime. Interest is payable quarterly. The credit facility contains certain financial covenants including: limitations on acquisitions, restrictions on additional indebtedness and liens and maintenance of minimum levels of tangible net worth, current and cash flow coverage ratios. There were no amounts outstanding under the credit facility at December 31, 1993 and December 31, 1992. 42 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE I - INCOME TAXES The components of income before income taxes are as follows:
1993 1992 1991 ------- ------- ------- (In thousands) Domestic $38,426 $28,860 $23,159 Foreign (2,377) 3,306 1,259 ------- ------- ------- $36,049 $32,166 $24,418 ======= ======= =======
Income tax expense for the three years ended December 31 consists of the following components:
1993 1992 1991 -------- ------- ------ (In thousands) Current income tax expense Federal $ 6,048 $ 4,572 $4,431 Foreign 989 966 499 State and local 1,820 1,844 819 ------- ------- ------ 8,857 7,382 5,749 ------- ------- ------ Deferred income tax expense Federal 5,148 4,877 2,760 State and local 1,411 660 523 ------- ------- ------ 6,559 5,537 3,283 ------- ------- ------ $15,416 $12,919 $9,032 ======= ======= ======
43 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE I - INCOME TAXES - Continued Temporary differences and carryforwards, which give rise to deferred income tax assets and liabilities at December 31, 1993 are as follows:
Deferred Deferred Tax Tax Assets Liabilities -------- ----------- (In thousands) Capitalized software costs, net of amortization $ -- $ 7,999 Property and equipment -- 1,963 Deferred data procurement costs, net of amortization -- 26,594 Tax credit carryforwards 4,100 -- Tax loss carryforwards 896 -- Litigation provision 1,810 -- Deferred gain 1,962 -- Other 6,009 56 ------- ------- Total deferred taxes $14,777 $36,612 ======= =======
In 1992 and 1991, deferred income tax expense included taxes resulting from timing differences in the recognition of revenue and expense for income tax and financial statement purposes. The sources of these differences and their net tax effects for the two years ended December 31 are as follows:
1992 1991 ------- ------- (In thousands) Deferred tax expense Excess tax (book) depreciation $ (501) $ 1,080 Capitalized software costs, net of amortization 1,861 996 Deferred data procurement costs, net of amortization 3,574 2,463 Reversal due to general business tax credit utilization 2,112 362 Capitalized leases 290 (1,021) Accruals not currently deductible for tax 224 (913) Litigation provision not currently deductible for tax (1,619) -- Other (404) 316 ------- ------- $ 5,537 $ 3,283 ======= =======
44 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE I - INCOME TAXES - Continued Income tax expense differs from the statutory U.S. Federal income tax rate of 35% for 1993 and 34% for 1992 and 1991 applied to income before income taxes as follows:
1993 1992 1991 ------- ------- ------ (In thousands) Income tax expense at statutory Federal tax rate $12,617 $10,936 $8,302 State income taxes, net of Federal income tax benefit 1,974 1,603 1,325 Change in tax rates 443 -- -- Loss on liquidation of subsidiary -- -- (814) Nondeductible acquisition/organization costs 345 460 -- Other 37 (80) 219 ------- ------ ------ Actual income tax expense $15,416 $12,919 $9,032 ======= ======= ====== "Effective" income tax rate 42.8% 40.2% 37.0% ======= ======= ======
At December 31, 1993, the Company had general business tax credit carryforwards of approximately $2,500,000 available to reduce future Federal income tax liabilities which will expire between 1995 and 2000 if not utilized. At December 31, 1993, the Company had tax loss carryforwards of $2,200,000 which will expire between 1998 and 2008 if not utilized. The full realization of the tax benefits associated with the carryforwards depends predominantly upon the recognition of ordinary income, and to a lesser extent, capital gain income during the carryforward period. The Company believes it is more likely than not that such benefits will be realized. For financial reporting purposes, the Company has recognized the tax effects of the tax loss and tax credit carryforwards as reductions of deferred Federal income taxes. The Tax Reform Act of 1986 enacted an alternative minimum tax system for corporations, generally effective for taxable years beginning after December 31, 1986. The alternative minimum tax is imposed at a 20% rate on the corporation's alternative minimum taxable income which is determined by making a statutory adjustment to the corporation's regular taxable income. The Company is subject to the alternative minimum tax for financial reporting purposes resulting in an alternative minimum tax carryforward of $1,600,000 as of December 31, 1993. This amount will be allowed as a credit carryover against regular tax in the future in the event the regular tax expense exceeds the alternative minimum tax expense. The Company increased its U.S. deferred tax liability in 1993 as a result of legislation enacted during 1993 increasing the corporate tax rate from 34% to 35% effective January 1, 1993. Provision has not been made for U.S. or additional foreign taxes on undistributed earnings of foreign subsidiaries which the Company intends to continue to reinvest. It is not practicable to estimate the amount of additional tax that might be payable on the foreign earnings if they were remitted as dividends, were lent to the Company, or if the Company should sell its stock in the subsidiaries or ventures. However, the Company believes that U.S. foreign tax credits would substantially eliminate any additional tax effects. 45 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE J - STOCK OPTIONS The 1982 Incentive Stock Option Plan, a qualified plan within the meaning of relevant sections of the Internal Revenue Code, authorizing the granting of incentive stock options, expired on November 3, 1992. All remaining outstanding stock options must be exercised within ten years of their respective grant dates. In 1991, the Board of Directors approved an increase in the number of shares authorized under the Company's 1984 Nonqualified Stock Option Plan of 2,000,000 shares, bringing the total maximum shares available for grant to 6,000,000. In 1992, an additional 2,000,000 shares were authorized increasing the total to 8,000,000. In 1993, an additional 2,000,000 shares were authorized increasing the total to 10,000,000. Options are granted pursuant to terms and conditions set forth by the Executive Committee of the Company's Board of Directors. The 1984 Non-Qualified Stock Option Plan expired on January 1, 1994 and was replaced by the 1994 Non-Qualified Stock Option Plan which was adopted and approved by the Executive Committee of the Company's Board of Directors. The Company has reserved for issuance up to 3,000,000 shares of Common Stock to be issued upon the exercise of options to be granted pursuant to the plan. The Company's 1994 Non-Qualified Plan is administered by the Executive Committee of the Company's Board of Directors. All outstanding stock options remaining under the 1984 Non- Qualified Stock Option Plan must be exercised within ten years of their respective grant dates. On May 27, 1992, the stockholders of the Company adopted the Company's 1992 Executive Stock Option Plan and 1992 Incentive Stock Option Plan. Only the Company's executive officers and directors are eligible to participate in the 1992 Executive Stock Option Plan. The 1992 Executive Stock Option Plan is administered by a Stock Option Committee of at least two directors who are "disinterested persons" within the meaning of Rule 16b-3 under the Exchange Act. The Company has reserved for issuance up to 2,000,000 shares of Common Stock to be issued upon the exercise of options granted or to be granted pursuant to the 1992 Executive Stock Option Plan. The Company's 1992 Incentive Stock Option Plan is administered by the Executive Committee of the Company's Board of Directors. The Company's executive officers and directors are not eligible to participate in the 1992 Incentive Stock Option Plan. The Company has reserved for issuance up to 2,000,000 shares of its common stock to be issued upon exercise of options to be granted pursuant to the 1992 Incentive Stock Option Plan. It is intended that options issued under these plans and designated by the respective Committees will or may qualify as incentive stock options under relevant sections of the Internal Revenue Code. As of December 31, 1993, no options had been granted pursuant to the Company's 1992 Incentive Stock Option Plan. Future deferred compensation expense with respect to options granted at less than fair market value at grant date was approximately $4,847,000 (net of approximately $420,000 expense in 1993) and will be recognized over the remaining vesting period. 46 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE J - STOCK OPTIONS - Continued A summary of transactions in the above described plans during the three years ended December 31 is as follows:
1993 1992 1991 ---------- ---------- ---------- 1982 Incentive Stock Option Plan - -------------------------------- Options outstanding at beginning of year 6,989 15,672 81,280 Granted -- -- -- Exercised (6,694) (8,683) (60,565) Cancelled -- -- (5,043) --------- --------- --------- Options outstanding at end of year 295 6,989 15,672 ========= ========= ========= Available for grant -- -- 1,431,372 ========= ========= ========= Options exercisable at end of year 295 6,989 15,672 ========= ========= ========= 1984 Nonqualified Stock Option Plan - ----------------------------------- Options outstanding at beginning of year 4,592,596 3,872,491 3,518,029 Granted 2,402,323 2,055,419 1,096,376 Exercised (825,581) (706,215) (642,010) Cancelled (139,482) (629,099) (99,904) --------- --------- --------- Options outstanding at end of year 6,029,856 4,592,596 3,872,491 ========= ========= ========= Available for grant -- 1,892,547 1,318,938 ========= ========= ========= Options exercisable at end of year 2,705,550 2,240,518 2,087,670 ========= ========= =========
47 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE J - STOCK OPTIONS - CONTINUED
1993 1992 1991 ---------- ---------- ---- 1992 Executive Stock Option Plan - -------------------------------- Options outstanding at beginning of year 177,447 -- -- Granted 1,136,869 178,587 -- Exercised (37,882) (1,140) -- Cancelled (11,259) -- -- --------- --------- ---- Options outstanding at end of year 1,265,175 177,447 -- ========= ========= ==== Available for grant 695,803 1,821,413 -- ========= ========= ==== Options exercisable at end of year 104,409 55,590 -- ========= ========= ==== 1992 Incentive Stock Option Plan - -------------------------------- Available for grant 2,000,000 2,000,000 -- ========= ========= ==== 1994 Nonqualified Stock Option Plan - ----------------------------------- Available for grant (effective January 1, 1994) 3,000,000 -- -- ========= ========= ====
Price Range of Options: 1993 1992 1991 -------------- --------------- -------------- Granted $0.01 - $42.75 $18.50 - $33.25 $9.50 - $26.00 Exercised $6.86 - $34.25 $ 0.01 - $22.50 $1.41 - $15.75 Cancelled $8.13 - $34.25 $ 8.13 - $23.50 $6.86 - $22.00 Outstanding $0.01 - $42.75 $ 6.86 - $33.25 $0.01 - $26.00
48 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE K - CAPITAL STOCK IRI is authorized to issue 60,000,000 shares (increased from 30,000,000 in May 1992) of common stock and 1,000,000 shares of preferred stock. Preferred stock may be issued in series with the rights and limitations of each series being determined by the Board of Directors. In September 1992, the Company issued 1,380,000 shares of common stock at a price of $24.00 per share. The proceeds, net of expenses, were $31.2 million. Issuance costs are included as a reduction of capital in excess of par value. In May 1992, the Company acquired, in a pooling-of-interests transaction, all the outstanding capital stock of privately-held Towne-Oller in return for approximately 690,000 shares of Company Common Stock. In November 1991, the Company purchased the outstanding warrants held by Citicorp in exchange for a promissory note in the principal amount of $12.5 million, payable December 31, 1992. The warrants represented Citicorp's right to purchase approximately 2.4 million shares of the Company's Common Stock. The warrants, bearing an exercise price of $16.00 per share, were originally acquired by Citicorp in 1990 as part of a transaction wherein Citicorp also acquired 900,000 shares. These shares are not affected by the warrant purchase transaction. In May 1991, the Company issued 2,270,000 shares of common stock at a price of $21.50 per share. The proceeds, net of expenses, were $45.8 million. Issuance costs are included as a reduction of capital in excess of par value. NOTE L - LOSS ON DISPOSITION AND WRITE-OFF OF ASSETS The Company recorded a pre-tax charge of approximately $805,000 in the third quarter of 1993 to expense various intangibles related to its 1991 agreements with VideOcart, Inc. Also in the first quarter of 1993, the Company provided for the expected loss of $2.2 million on the disposition of certain non- strategic assets. 49 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE M - COMMITMENTS AND CONTINGENCIES 1. Lease Agreements ---------------- The Company leases its Chicago, Illinois headquarters facilities. Under the terms of the lease agreement, the Company leased the facility under a long-term operating lease having a minimum term of 15 years and rental rates subject to increases in cost of living expenses. The lease agreement contains financial and other covenants including restrictions on the payment of dividends. The Company and subsidiaries lease certain property and equipment under operating leases expiring at various dates through 2013. At December 31, 1993, obligations to make future minimum payments under these leases for the five years ending in 1998 are $26,232,000, $21,183,000, $16,654,000, $11,633,000 and $8,399,000, respectively. Minimum rental commitments for the above leases in the aggregate are $125,169,000. Rent expense under such operating leases for the three years ended December 31 was as follows:
1993 1992 1991 --------- ---------- --------- (In thousands) Gross rent $26,288 $23,730 $22,445 Sublease rental income -- (266) (680) ------- ------- -------- $26,288 $23,464 $21,765 ======= ======= ========
2. Licensing Agreements -------------------- The Company has entered into licensing agreements with certain cable television companies expiring at various dates through 1998. At December 31, 1993, obligations to make minimum license payments under these agreements for the five years ending in 1998 are $811,000, $408,000, $351,000, $169,000 and $112,000, respectively. Licensing expense under these agreements was approximately $892,000, $889,000 and $871,000 in 1993, 1992, and 1991, respectively. 50 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE M - COMMITMENTS AND CONTINGENCIES - Continued 3. Litigation ---------- On May 8, 1989, two shareholders each filed a class action complaint against the Company in the United States District Court for the Northern District of Illinois. Shortly thereafter, a third shareholder filed a similar class action complaint. All three cases have been consolidated. In their consolidated complaint, the plaintiffs purport to represent a class consisting generally of persons who purchased the Company's common stock between February 6, 1989 and May 2, 1989. The plaintiffs allege Section 10(b) and Rule 10b-5 violations of the Securities Exchange Act of 1934, and common law fraud and deceit charges, by reason of alleged omissions of the Company in setting forth material facts in disclosures and public statements about the Company. These alleged omissions include information relating to the Company's finances, results of operations and prospects of achieving growth in earnings and revenues during the referenced period when class members were acquiring shares of the Company's stock. The plaintiffs seek compensatory and punitive damages and attorneys' fees against the Company, five of its former directors and one of its former officers. The Court previously granted defendants' motion to dismiss plaintiffs' claims of negligent misrepresentation from the case, and as a result, the officer and certain of its directors previously named as defendants have been voluntarily dropped from the case by the plaintiffs. The two claims which remain pending against the defendants are for violation of Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 and for common law fraud and deceit. The plaintiffs retained an individual who testified in his deposition that the total damages suffered by the class as a result of the allegedly wrongful conduct of the defendants were approximately $21.7 million. The Company retained an expert who testified in his deposition that the total damages suffered by the plaintiffs, assuming the defendants are to be found liable, would approximate $850,000. The Company has a directors and officers liability insurance policy having a policy limit of $10 million. Proceeds of the policy have been used for certain defense costs of the directors. The remainder of the proceeds may be available to cover damages assessed against the director defendants. The policy does not cover damages which may be assessed against the Company itself. Discovery with respect to the action is now completed and trial is currently scheduled to commence in early April 1994. The Company's management believes that the Company has valid defenses to these claims and that the ultimate resolution of the case will not have a material impact on the Company's consolidated financial position. 51 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE M - COMMITMENTS AND CONTINGENCIES - Continued The Company had been involved in patent infringement litigation concerning its targetable cable television technology used in its BehaviorScan mini-markets. A judgment was entered against the Company for approximately $4.0 million plus interest and costs. The Company has satisfied the judgment in January 1994 by full payment of the amount due. NOTE N - RESEARCH AND DEVELOPMENT Expenditures for research and development for the years ended December 31, 1993, 1992, and 1991 approximated $33,717,000, $19,479,000 and $15,255,000, respectively. Included in these expenditures were $10,202,000, $8,808,000 and $6,458,000 of software development cost that were capitalized. Expenditures not capitalized were charged to expense as incurred. 52 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE O - GEOGRAPHIC AREAS INFORMATION The Company develops and maintains computer-based proprietary data bases, decision support software, and mathematical models, primarily for the analysis of detailed information on purchasing of consumer goods, all within one industry segment - business information services. The following table presents information about the Company by geographic areas.
1993 1992 1991 -------- -------- -------- (In thousands) Operating revenues: To unaffiliated customers: United States $284,338 $241,205 $198,587 International 50,206 35,157 24,102 Transfers between geographic areas: United States 8,695 6,102 4,540 International 1,943 1,677 1,161 Eliminations (10,638) (7,779) (5,701) -------- -------- -------- Total operating revenues $334,544 $276,362 $222,689 ======== ======== ======== Operating profit (loss): United States $ 40,213 $ 34,612 $ 23,747 International (2,282) 3,091 1,568 -------- -------- -------- Operating profit $ 37,931 $ 37,703 $ 25,315 ======== ======== ======== Identifiable assets: United States $309,996 $248,857 $191,808 International 45,567 27,980 18,780 Eliminations (28,048) (12,838) (7,780) -------- -------- -------- Total identifiable assets $327,515 $263,999 $202,808 ======== ======== ========
Included in United States revenue for the years ended December 31, 1993, 1992 and 1991, are $2,064,000, $1,187,000 and $811,000 respectively, of export sales to unaffiliated customers. Total international revenues, including export sales, were $52,270,000, $36,344,000 and $24,913,000 for 1993, 1992 and 1991, respectively. NOTE P - SUBSEQUENT DEVELOPMENTS In February 1994, the Company signed an agreement in principle with privately held Asia-based SRG Holdings Limited ("SRG") to acquire SRG in an exchange of stock valued at approximately $76.0 million. 53 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE Q - SUMMARY OF QUARTERLY DATA (UNAUDITED) Summaries of consolidated 1993 and 1992 results on a quarterly basis are as follows:
1993 ---------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- (In thousands except per share data) Revenues $75,650 $82,110 $87,784 $89,000 Operating & selling, general and administrative expenses 67,020 71,544 74,121 80,923 Loss on disposition & write-off of assets 2,200 -- 805 -- ------- ------- ------- ------- Operating profit 6,430 10,566 12,858 8,077 Other income (expense) - net 182 32 248 (294) Equity in loss of affiliated companies (312) (284) (811) (643) ------- ------- ------- ------- Income before income taxes, minority interest & cumulative effect of accounting principle 6,300 10,314 12,295 7,140 Income tax expense 2,670 4,334 5,350 3,062 ------- ------- ------- ------- Income before minority interest & cumulative effect of accounting principle 3,630 5,980 6,945 4,078 Minority interest 297 479 413 393 ------- ------- ------- ------- Income before cumulative effect of change in accounting principle 3,927 6,459 7,358 4,471 Cumulative effect on prior years of change in accounting principle 1,864 -- -- -- ------- ------- ------- ------- Net income $ 5,791 $ 6,459 $ 7,358 $ 4,471 ======= ======= ======= ======= Net income per common and common equivalent share: Before cumulative effect of accounting change $ .15 $ .24 $ .27 $ .16 Cumulative effect of accounting change .07 -- -- -- ------- ------- ------- ------- Net income $ .22 $ .24 $ .27 $ .16 ======= ======= ======= ======= Weighted average common and common equivalent shares 26,157 26,738 27,253 27,494 ======= ======= ======= =======
54 Information Resources, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED December 31, 1993, 1992, and 1991 NOTE Q - SUMMARY OF QUARTERLY DATA (UNAUDITED) (Cont'd.)
1992 ---------------------------------------- First Second Third Fourth Quarter Quarter Quarter Quarter ------- ------- ------- ------- (In thousands except per share data) Revenues $61,465 $66,196 $71,653 $77,048 Operating & selling, general and administrative expenses 54,567 58,010 61,463 64,619 ------- ------- ------- ------- Operating profit 6,898 8,186 10,190 12,429 Other expense - net (246) (148) (205) (81) Equity in loss of affiliated companies -- -- -- (466) Litigation provision -- -- -- (4,391) ------- ------- ------- ------- Income from operations before income taxes 6,652 8,038 9,985 7,491 Income tax expense 2,591 3,265 4,164 2,899 ------- ------- ------- ------- Net income $ 4,061 $ 4,773 $ 5,821 $ 4,592 ======= ======= ======= ======= Net income per common and common equivalent shares $ .17 $ .20 $ .24 $ .18 ======= ======= ======= ======= Weighted average common and common equivalent shares 23,955 23,934 24,481 26,055 ======= ======= ======= =======
55 ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES - -------------------------------------------------------------- None PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------------------------------ The sections entitled "Election of Directors" and "Ownership of Securities" are incorporated by reference from the definitive proxy statement to be filed with the Securities and Exchange Commission in connection with the Company's 1994 annual meeting of stockholders scheduled for May 26, 1994. Information about the Company's executive officers is set forth in Item 4(a) in Part I of this Report. ITEM 11. EXECUTIVE COMPENSATION - -------------------------------- The section entitled "Executive Compensation" [excluding the Board Compensation Committee Report and the stock price performance graph] is incorporated by reference from the definitive proxy statement to be filed with the Securities and Exchange Commission in connection with the Company's 1994 annual meeting of stockholders scheduled for May 26, 1994. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - ------------------------------------------------------------------------ The section entitled "Ownership of Securities" is incorporated by reference from the definitive proxy statement to be filed with the Securities and Exchange Commission in connection with the Company's 1994 annual meeting of stockholders scheduled for May 26, 1994. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - -------------------------------------------------------- The section entitled "Certain Transactions" is incorporated by reference from the definitive proxy statement to be filed with the Securities and Exchange Commission in connection with the Company's 1994 annual meeting of stockholders scheduled for May 26, 1994. 56 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K - ------------------------------------------------------------------------- (a) Documents filed as a part of this Report: 1. Financial Statements -------------------- The consolidated financial statements of the Company are included in Part II, Item 8 of this Report. 2. Financial Statement Schedules Page No. ----------------------------- -------- Report of Independent Certified Public Accountants on Schedules 61 Schedule II - Amounts Receivable from Related Parties and Underwriters, Promoters and Employees Other than Related Parties 62 Schedule VIII - Valuation and Qualifying Accounts; Allowance for Doubtful Receivables 63 Schedule X - Supplementary Income Statement Information 64 All other schedules are omitted because they are not applicable, or not required, or because the required information is included in the financial statements or notes thereto. 3. Exhibits -------- (i) See Exhibit Index (Immediately Following the Financial Statement Schedules attached hereto) (ii) Executive Compensation Plans and Arrangements. The following Executive Compensation Plans and Arrangements are listed as exhibits to this Form 10-K: Employment Agreement dated November 27, 1978 between the Company and Gerald Eskin. Employment agreement dated March 15, 1985 between the Company and Jeffrey Stamen. Employment agreements dated March 15, 1985 between the Company and Leonard Lodish. 57 Noncompetition Agreement dated March 15, 1985 between the Company and John D.C. Little, Glen Urban, and Leonard Lodish, respectively. Letter agreement dated January 17, 1989 between the Company and Glen Urban. Form of letter agreement between the Company and John D.C. Little. Employment Agreement effective June 1, 1985 between the Company and Magid Abraham. Agreement effective January 1, 1989 between the Company and Edwin Epstein, amending the Consulting and Non- competition Agreement dated January 16, 1987, which Consulting and Noncompetition Agreement is referred to above. Letter agreement dated August 7, 1989 between the Company and Leonard Lodish. Employment Agreement dated November 16, 1989 between the Company and James G. Andress. Nonqualified Stock Option Agreement dated June 29, 1989 between the Company and Magid Abraham. Amended and Restated Employment Agreement dated March 16, 1994 between the Company and Thomas M. Walker. 1992 Executive Stock Option Plan. 1992 Employee Incentive Stock Option Plan. Employment Agreement dated November 4, 1993 between the Company and George Garrick. 1994 Employee Nonqualified Stock Option Plan. 58 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Dated: March 29, 1994 INFORMATION RESOURCES, INC. By: /s/ Gian M. Fulgoni ----------------------------- Gian M. Fulgoni, Chairman and Chief Executive Officer Pursuant to the requirement of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 29, 1994. By: /s/ Gian M. Fulgoni ------------------------------------------ Gian M. Fulgoni, Chairman and Chief Executive Officer and Director [Principal executive officer] /s/ James G. Andress ------------------------------------------ James G. Andress, Chief Executive Officer, President, Chief Operating Officer and Director */s/ Gerald J. Eskin ------------------------------------------ Gerald J. Eskin, Vice Chairman and Director /s/ Thomas W. Walker ------------------------------------------ Thomas M. Walker, Executive Vice President, Chief Financial and Administrative Officer and Director [Principal financial and accounting officer] /s/ Magid Abraham ------------------------------------------ Magid Abraham, Vice Chairman and Director /s/ Jeffrey P. Stamen ------------------------------------------ Jeffrey P. Stamen, President, IRI Software and Director 59 ------------------------------------------- Edwin E. Epstein, Director */s/ John D. C. Little ------------------------------------------- John D.C. Little, Director */s/ Leonard M. Lodish ------------------------------------------- Leonard M. Lodish, Director */s/ Edward E. Lucente ------------------------------------------- Edward E. Lucente, Director */s/ Edith W. Martin ------------------------------------------- Edith W. Martin, Director */s/ George G. Montgomery, Jr. ------------------------------------------- George G. Montgomery, Jr., Director */s/ Glen L. Urban ------------------------------------------- Glen L. Urban, Director */s/ Thomas W. Wilson, Jr. ------------------------------------------- Thomas W. Wilson, Jr., Director */s/ Gian M. Fulgoni - ------------------------------------ By Gian M. Fulgoni pursuant to a power of attorney 60 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON SCHEDULES Board of Directors Information Resources, Inc. In connection with our audit of the consolidated financial statements of Information Resources, Inc. and Subsidiaries referred to in our report dated February 10, 1994 which is included in Part II of this form, we have also audited Schedules II, VIII, and X for each of the three years in the period ended December 31, 1993. In our opinion, these schedules present fairly, in all material respects, the information required to be set forth therein. GRANT THORNTON Chicago, Illinois February 10, 1994 61 SCHEDULE II INFORMATION RESOURCES, INC. AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS, PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES (Dollars in thousands)
Deductions Balance at End Balance at ---------------------- of Period Beginning Amounts Amounts ------------------- Name of Debtor of Period Additions Collected Written Off Current Noncurrent - ------------------- ---------- -------------- --------- ----------- ------- ---------- Year Ended December 31, 1991 Mr. T. Walker $ 340 $ -- $ 340 $ -- $ -- $ -- Year Ended December 31, 1992 Mr. J. Sullivan $ -- $ 120 $ -- $ -- $ 120 $ -- Mr. A. Martin $ -- $ 150 $ -- $ -- $ 150 $ -- Year Ended December 31, 1993 Mr. G. Garrick $ -- $1,200 $ -- $ -- $1,200 $ -- Mr. A. Martin $ 150 $ -- $ -- $ -- $ 150 $ -- Mr. J. Sullivan $ 120 $ -- $ 120 $ -- $ -- $ -- Mr. D. Windish $ -- $ 108 $ -- $ -- $ 108 $ --
All receivables outstanding as of December 31, 1993 bear no interest and are due on or before December 31, 1994. 62 SCHEDULE VIII Information Resources, Inc. and Subsidiaries VALUATION AND QUALIFYING ACCOUNTS ALLOWANCE FOR DOUBTFUL RECEIVABLES (Dollars in thousands)
Balance at Additions Deductions Balance at Beginning of Charged to (Net Writeoffs/ End of Description Period Costs & Expenses Recoveries) Period - ------------------------------ ------------ ---------------- --------------- ---------- Year ended December 31, 1991 $ 923 $ 518 $ 34 $1,475 Year ended December 31, 1992 $1,475 $ 704 $ (128) $2,051 Year ended December 31, 1993 $2,051 $ 627 $ (428) $2,250
63 SCHEDULE X Information Resources, Inc. and Subsidiaries SUPPLEMENTARY INCOME STATEMENT INFORMATION Amount Charged to Costs and Expenses -------------------------------------- Year Ended December 31 ---------------------- (In thousands)
Item 1993 1992 1991 - ----------------------------------- -------- -------- -------- Maintenance and repairs $ 5,040 $ 4,103 $ 3,817 ======= ======= ======= Depreciation and amortization of intangible assets, preoperating costs and similar deferrals Deferred data procurement costs $50,464 $38,742 $30,709 Capitalized software costs 4,966 4,293 4,373 Other/(1)/ 4,138 2,396 2,232 ------- ------- ------- $59,568 $45,431 $37,314 ======= ======= ======= Advertising and promotion costs $ 3,905 $ 3,407 $ 2,379 ======= ======= ======= Taxes, other than payroll and income taxes/(2)/ Royalties/(2)/
/(1)/ Includes amounts for investee companies reflected in equity in loss of affiliated companies. /(2)/ Less than 1% of consolidated revenues. 64 EXHIBIT INDEX The following documents are the exhibits to this Report. For convenient reference, each exhibit is listed according to the number assigned to it in the Exhibit Table of Item 601 of Regulation S-K. The page number, if any, listed opposite an exhibit indicates the page number in the sequential numbering system in the manually signed original of this Report where such exhibit can be found.
EXHIBIT SEQUENTIAL NUMBER DESCRIPTION OF DOCUMENT DOCUMENT FILING - ------- ----------------------- --------------- 3(a) Copy of the certificate of incorporation of the Company dated May 27, 1982, as amended. (Incorporated by reference. Previously filed as Exhibit 3(a) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1988). IBRF (b) Copy of the bylaws of the Company, as amended. (Incorporated by reference. Previously filed as Exhibit 3(b) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1988). IBRF (c) Copy of amendments to the Certificate of Incorporation approved by the stockholders on May 16, 1989 (Incorporated by reference. Previously as Exhibit 3(c) to the Company's Annual Report 10-K for the fiscal year ended December 31, 1989). IBRF (d) Copy of amendments to the bylaws of the Company as approved by the Board of Directors bringing the bylaws into conformity with the amendments to the Certificate of Incorporation approved by the stockholders May 16, 1989 (Incorporated by reference. Previously filed as Exhibit 3(d) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989). IBRF (e) Certificate of Designations of Series A Participating Preferred Stock, as adopted by the Board of Directors of the Company on March 2, 1989 and duly filed with the Secretary of State of the State of Delaware March 15, 1989 (Incorporated by reference. Previously filed as Exhibit 3(e) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989). IBRF
65
EXHIBIT SEQUENTIAL NUMBER DESCRIPTION OF DOCUMENT DOCUMENT FILING - ------- ------------------------------------------------------------------- --------------- 10 MATERIAL CONTRACTS (a) 1982 Incentive Stock Option Plan adopted November 3, 1982, as amended. (Incorporated by reference. Previously filed as Exhibit 10(a) to the Company's Registration Statement on Form S-8 filed with the SEC on December 31, 1988). IBRF (b) Information Resources, Inc., Nonqualified Stock Option Plan effective January 1, 1984, as amended. (Incorporated by reference. Previously filed as Exhibit 10(b) to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1988). IBRF (c) Employment Agreement dated November 27, 1978 between the Company and Gerald Eskin. (Incorporated by reference. Previously filed as Exhibit 10(e) to Registration Statement No. 2-81544). IBRF (d) Consulting and Noncompetition Agreement dated January 16, 1987 between the Company and Edwin Epstein. (Incorporated by reference. Previously filed as Exhibit 10(e) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1987). IBRF (e) OPEN (f) Employment agreement dated March 15, 1985 between the Company and Jeffrey Stamen. (Incorporated by reference. Previously filed as Exhibit 10(d) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1985, as amended on Form 8 dated April 29, 1986 and August 25, 1986). IBRF (g) Employment agreements dated March 15, 1985 between the Company and Leonard Lodish. (Incorporated by reference. Previously filed as Exhibit 10.14 to Registration Statement No. 2-96940). IBRF
66
EXHIBIT SEQUENTIAL NUMBER DESCRIPTION OF DOCUMENT DOCUMENT FILING - ------- ------------------------------------------------------------------- --------------- (h) Noncompetition Agreement dated March 15, 1985 between the Company and John Little, Glen Urban, and Leonard Lodish, respectively. (Incorporated by reference. Previously filed as Exhibit 10.15 to Registration Statement No. 2-96490). IBRF (i) Letter agreement dated January 17, 1989 between the Company and Glen Urban (Incorporated by reference. Previously filed as Exhibit 10(1) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989). IBRF (j) Form of letter agreement between the Company and John D.C. Little (Incorporated by reference. Previously filed as Exhibit 10(m) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989). IBRF (k) Employment Agreement effective June 1, 1985 between the Company and Magid Abraham (Incorporated by reference. Previously filed as Exhibit 10(n) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989). IBRF (l) Form of Rights Plan Agreement between the Company and Harris Trust and Savings Bank. (Incorporated by reference. Previously filed on Form 8-A Registration Statement filed with the SEC on March 15, 1989). IBRF (m) Agreement effective January 1, 1989 between the Company and Edwin Epstein, amending the Consulting and Noncompetition Agreement dated January 16, 1987. IBRF (n) Letter agreement dated August 7, 1989 between the Company and Leonard Lodish (Incorporated by reference. Previously filed as Exhibit 3(q) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989). IBRF
67
EXHIBIT SEQUENTIAL NUMBER DESCRIPTION OF DOCUMENT DOCUMENT FILING - ------- ----------------------- --------------- (o) Employment Agreement dated November 16, 1989 between the Company and James G. Andress (Incorporated by reference. Previously filed as Exhibit 3(r) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989). IBRF (p) Nonqualified Stock Option Agreement dated June 29, 1989 between the Company and Magid Abraham (Incorporated by reference. Previously filed as Exhibit 3(s) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989). IBRF (q) Form of 401(k) Retirement Savings Plan and Trust adopted by the Company effective August 1, 1989. (Incorporated by reference. Previously filed as Exhibit 3(v) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1989). IBRF (r) Consulting and Non-Competition Agreement dated October 31, 1990 between the Company and John Malec. (Incorporated by reference. Previously filed as Exhibit 3(r) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1990). IBRF (s) Amended and Restated Employment Agreement dated March 16, 1994 between the Company and Thomas M. Walker (filed herewith). EF (t) Credit Agreement dated as of December 31, 1992 among the Company, Harris Trust and Savings Bank, individually and as agent, and certain other banks signatory thereto. (Incorporated by reference. Previously filed as Exhibit 10(t) to Annual Report on Form 10-K for fiscal year ended December 31, 1992). IBRF (u) Lease Agreement dated September 27, 1990 between Randolph/Clinton Limited Partnership and the Company (Incorporated by reference. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated September 27, 1990). IBRF
68
EXHIBIT SEQUENTIAL NUMBER DESCRIPTION OF DOCUMENT DOCUMENT FILING - ------- ----------------------- --------------- (v) Reorganization Agreement and Plan of Distribution dated as of October 19, 1990 between the Company and VideOcart, Inc. (Incorporated by reference. Previously filed as Exhibit 2.1 to the Company's Current Report or Form 8-K dated October 31, 1990). IBRF (w) 1992 Executive Stock Option Plan (Incorporated by reference. Previously filed as Exhibit 10 (w) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992). IBRF (x) 1992 Employee Incentive Stock Option Plan (Incorporated by reference. Previously filed as Exhibit 10 (x) to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1992). IBRF (y) 1994 Employee Nonqualified Stock Option Plan (filed herewith). EF (z) Employment Agreement dated November 4, 1993 between the Company and George Garrick (filed herewith). EF 11 Statement of computation of per share income (filed herewith). EF 21 Subsidiaries of the Registrant (filed herewith). EF 23 Consent of Independent Certified Public Accountants (filed herewith). EF 24 Powers of Attorney (filed herewith). EF
69 EX-10.S 2 AMEN. AND REST. EMPLY. AGREEMENT Exhibit 10s AMENDED AND RESTATED EMPLOYMENT AGREEMENT THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement") is effective as of the 16th day of March, 1994, and is made by and between INFORMATION RESOURCES, INC., a Delaware corporation ("Information Resources") and THOMAS M. WALKER ("Walker"). WHEREAS, Information Resources has employed Walker in an executive capacity pursuant to the terms and conditions of an Employment Agreement by and between Walker and Information Resources dated September 27, 1990; and WHEREAS, Information Resources desires to continue to employ Walker in an executive capacity on the terms and subject to the conditions set forth in this Agreement and Walker desires to accept such continued employment with Information Resources on the terms and subject to the conditions set forth in this Agreement. NOW THEREFORE, in consideration of the foregoing and of the mutual covenants of Information Resources and Walker set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Information Resources and Walker, the parties agree as follows: ARTICLE I Employment and Duties 1.0 Employment Duties. Information Resources agrees to employ Walker, and he agrees to serve Information Resources, on a full time basis in an executive capacity, according to the terms and subject to the conditions hereinafter set forth, for the period commencing on the effective date hereof, and ending with the effective date of termination of employment as provided in Article V (the "Employment Period"). During the Employment Period, Walker shall devote his best efforts and all of his normal business time and attention (excluding vacation and sick leave provided herein and reasonable time devoted to civic and charitable activities) to the business of Information Resources and its affiliated companies, and to serve as corporate Executive Vice President of Information Resources and as the Chief Financial Officer, Treasurer and President -- Administration of Information Resources for those periods he is elected to such offices by the Information Resources' Board of Directors (the "Board") or to serve as such officer or employee of Information Resources or any of its affiliated companies as the Board and Walker may from time to time stipulate. Information Resources represents and warrants that the office of corporate Executive Vice President is the most senior executive office of Information Resources other than the offices of Chief Executive Officer and President. As an officer of Information Resources, Walker shall have all the responsibilities and authority normally incident to the office he holds as provided in the by-laws of Information Resources, subject to the authority and responsibilities of the Chief Executive Officer, the Board and its committees, and he shall have such additional duties, not inconsistent with the Agreement March 16, 1994 Page 2 of 14 responsibilities of his offices, as the Chief Executive Officer, the Board and its committees may prescribe. 1.1 Service on the Board and Executive Committee thereof. Contemporaneously with the execution and delivery of this Agreement, the Board has appointed Walker to serve on the Board and will nominate him for election to the Board for a three year term commencing with the election of directors at the 1994 Annual Meeting of Stockholders of Information Resources to be held in May 1994. The Board has also elected Walker to the Executive Committee of the Board. During the Employment Period, Walker shall serve on the Board and on the Executive Committee thereof so long as he is elected to so serve. 1.2 Place of Employment. In connection with his employment with Information Resources, Walker shall be based at the principal offices of Information Resources in the Greater Chicago area. Walker may be required to perform ordinary business travel consistent with the responsibilities of his office. ARTICLE II Compensation 2.0 Compensation. Information Resources agrees to compensate Walker for the services rendered by him during the Employment Period as follows: 2.1 Base Salary. Information Resources shall pay Walker a base salary ("Base Salary") during the Employment Period at the rate of Two Hundred Eighty Thousand Dollars ($280,000.00) per year, subject to adjustment as required under the following sentence. Information Resources shall increase Walker's Base Salary (i) by not less than six percent (6%) on each annual anniversary of the date of this Agreement and (ii) by such additional amount as is necessary so that Walker, during the Employment Period, will receive a Base Salary not less than the base salary received by any other chief executive officer of any Group of Information Resources. The Base Salary shall be payable in accordance with the practice followed by Information Resources with respect to its other senior officers. 2.2 Bonus or Incentive Compensation. Information Resources shall award Walker, in respect to each year of the Employment Period, bonus or incentive compensation as provided under any present or future incentive compensation plan of Information Resources or, in the absence of any such plan, under such bonus or incentive compensation as the Board, or the appropriate committee of the Board, deems appropriate in light of the amount of bonus or other incentive compensation awarded by Information Resources to other senior officers. 2.3 Employee Benefit Plans. Walker shall participate during the Employment Period in all employee benefit plans (including, but not necessarily limited to, health and welfare plans, life insurance, disability, and retirement plans, and vacation allowances) Agreement March 16, 1994 Page 3 of 14 generally applicable to senior officers of Information Resources, as those plans may be in effect from time to time, and continue that participation after his retirement on a basis comparable to that upon which other senior officers of Information Resources generally may continue participation following their retirement. During the Employment Period, Walker shall be entitled to all other employee benefits generally provided to senior officers of Information Resources in accordance with then prevailing practice concerning such employee benefits. Walker shall be eligible for four weeks vacation during 1994 and during each full calendar year of service thereafter. ARTICLE III Disability 3.0 Disability. In the event of any illness or disability (other than death) of Walker of a nature, degree, or effect such that, within the Employment Period, Walker becomes unable to perform his duties under the terms of this Agreement on a full-time basis (a "Disability") and such that Information Resources reasonably believes that Walker will be unable to perform his duties under the terms of this Agreement on a full-time basis for a period not less than one hundred eighty (180) consecutive days as reasonably determined by the Board on the basis of the facts available to it (such period of Disability determined by the Board shall be referred to herein as the "Disability Period"), the following provisions shall apply: 3.1 Acting or Successor Officer. During any Disability Period, the Board may appoint an acting or successor officer to any office then held by Walker. 3.2 Disability Payments. During the portion of any Disability Period following the first 180 days of such Disability Period, Information Resources' obligation to pay Walker any compensation under Sections 2.1 or 2.2 hereof shall be suspended. During any Disability Period, Walker shall be entitled to disability benefits, if any, pursuant to the terms of any Information Resources employee benefits in which Walker is a participant ("Disability Benefits"). During the period of the suspension of the obligation on the part of Information Resources to pay Walker compensation under the provisions of Sections 2.1 or 2.2, Information Resources shall be obligated to pay to Walker, and Walker shall be entitled to receive from Information Resources, the following amounts: (i) the amount, if any, payable on a monthly basis at the end of the particular calendar month in question, which, when added to the amount of Disability Benefits which are actually received by Walker during that particular calendar month, is necessary to cause the sum of the aforesaid two amounts to be not less than fifty percent (50%) of Walker's Base Salary (calculated on a monthly basis) as of the end of the first 180 days of the Disability Period; and (ii) an amount payable at the end of each calendar month equal to the "401(k) Plan Contribution" for that particular calendar month. For the purpose of this Agreement, the term "401(k) Plan Agreement March 16, 1994 Page 4 of 14 Contribution" shall mean, with respect to any particular calendar month, an amount equal to one-twelfth the amount actually contributed by both Information Resources and Walker (or, if greater, the amount required to have been contributed by both Information Resources and Walker) for the benefit of Walker to the Information Resources 401(k) tax-qualified retirement plan for the twelve-month period ended immediately prior to the 181st day of the Disability Period. 3.3 Employee Benefits During Disability Period. During any Disability Period, Walker shall continue to participate in all employee benefit plans for which he is eligible pursuant to Section 2.3 of this Agreement or otherwise, provided that Walker shall cease to be eligible to earn or receive additional grants of stock options during the period starting with the 181st day of the Disability Period until the cessation of such Disability Period. A Disability Period shall be deemed to be a period of service by Walker for purposes of the vesting of any stock options granted to him prior to the 181st day of the Disability Period. 3.4 Cessation of Disability. If and when, in the reasonable judgment of the Board, after the commencement of a Disability Period Walker regains his ability to perform his duties hereunder on a full-time basis for a period of not less than one hundred eighty (180) consecutive days, such Disability Period and Information Resources' obligation to make Disability Payments pursuant to Section 3.2 hereof shall cease, and Information Resources' obligation to pay Walker compensation under Sections 2.1 and 2.2 hereof shall cease to be suspended. Walker shall thereafter, for the Employment Period, be entitled to be paid the Base Salary Walker would have been paid if Walker had not been disabled, and to resume participation in any Information Resources bonus or incentive compensation plans in accordance with Section 2.2, and to participate in accordance with Section 2.3 in Information Resources' employee benefit plans as though he had not been disabled. The Board shall consider his redesignation to the office held by him prior to the Disability Period, although the Board shall be under no obligation with respect thereto. Notwithstanding any other provision of this Agreement, a Disability Period for Walker, once having commenced, shall in no event be considered to have ceased prior to the earlier of Walker's death or his attainment of age 65, unless in the reasonable judgment of the Board Walker is able to resume his duties on a full-time basis for a period of not less than one hundred eighty (180) consecutive days. 3.5 Survival of Obligations. The obligations of Information Resources under Section 3.2 and 3.3 of this Agreement shall survive the termination of this Agreement and continue in effect until the earlier of (i) cessation of the Disability Period; (ii) the cessation of Walker's entitlements under Section 5.3(c) hereof, after Walker's submission of his resignation for Cause; (iii) the cessation of Walker's entitlements under Section 5.2(d) hereof, after effectiveness of termination by Walker for Good Reason; (iv) the elapsing of 24 months following Walker's death; or (v) Walker's 65th birthday. Agreement March 16, 1994 Page 5 of 14 ARTICLE IV Stock Option Award 4.0 Stock Option Award. Information Resources, effective as of the date hereof, hereby grants and awards to Walker, pursuant to the Information Resources Executive Stock Option Plan (the "Plan"), and evidenced by a Stock Option Agreement ("Option Agreement"), options to purchase 150,000 shares of Information Resources Common Stock, at the closing NASDAQ bid price per share on the date hereof. 4.1 Conditions. Notwithstanding any provisions in the Plan or the Option Agreement to the contrary, Walker shall be deemed to have sufficient years of service so that such options can be exercised as follows: a. up to one-third (33.33%) upon execution of this Agreement. b. up to two-thirds (66.66%) after completing one year of employment following the date hereof. c. 100% after completion of two years of employment following the date hereof. 4.2 Existing Options. The award of stock options made in Section 4.0 hereof is granted to Walker in addition to any stock options to purchases shares of Information Resources Common Stock which have been previously, or will be subsequently, granted to Walker. The number of shares of Information Resources Common Stock subject to stock options previously granted to Walker which are unexercised on the date hereof is estimated to be 106,000. 4.3 Additional Grants. For 1994 and subsequent years during the Employment Period, Walker shall be entitled to discretionary awards of additional stock options, consistent with the compensation packages of other senior Information Resources executives. Walker shall also be entitled to such an award for 1993, currently anticipated to be made by the end of April 1994. 4.4 Acceleration. Notwithstanding any provisions of the Plan or the Option Agreement to the contrary, in the event of "Change of Control", (defined as any merger, consolidation or reorganization in which Information Resources is a merging, consolidating or reorganizing party and pursuant to which neither Information Resources nor any entity controlled by Information Resources is the surviving entity; or as the change of beneficial ownership of, or power to vote, 30% or more of the outstanding voting securities of Agreement March 16, 1994 Page 6 of 14 Information Resources), then all options (other than terminated or expired options) to purchase shares of Information Resources Common Stock held by Walker shall immediately become fully vested and exercisable and Walker, or his estate if he is not then living, shall be entitled to immediately exercise in full any such unexercised options then held by him or his estate. In the event any such options are unexercisable for any reason, Information Resources shall pay to Walker or his estate, in exchange for such options, an amount of cash equal to the aggregate spread between the exercise price of all such options and the higher of (a) the highest mean between the high and the low price on any stock exchange or the NASDAQ market where the stock of Information Resources is then publicly traded, as of the date of the Change of Control upon which this Section 4.4 becomes operative or (b) the highest price per share actually paid in connection with any Change of Control of Information Resources. ARTICLE V Term and Termination 5.0 Term of Employment. The employment of Walker shall commence on the effective date hereof and shall automatically continue thereafter until terminated in accordance with this Agreement. 5.1 Termination without cause. (a) Either Information Resources or Walker may elect to terminate this Agreement at any time (including during any Disability Period) by giving the other party at least 24 months prior written notice thereof (a "Section 5.1 Notice"). If so requested by Information Resources after the giving of a Section 5.1 Notice by either party, Walker shall resign from any or all offices then held at Information Resources and any of its subsidiaries or affiliates; provided, however, that until the earlier to occur of either the passage of 24 months from the date of the Section 5.1 Notice or the engagement of Walker in full-time employment elsewhere at a compensation level not less than the Base Salary in effect for him at Information Resources on the date of the Section 5.1 Notice, (i) Walker shall continue to be treated as an employee of Information Resources (but he shall not be required to perform services for Information Resources; and he shall be required and permitted to make a good faith effort to secure new full-time employment elsewhere at a level of compensation which may be greater or less than the Base Salary in effect for him at Information Resources on the date of the Section 5.1 Notice) and (ii) the Employment Period shall be considered to continue for purposes of Sections 2.1, 2.3, 3.0, 3.3 and 6.0 (so that Walker will continue to be entitled to receive Base Salary and participate in all employee benefit plans applicable to him, and it will continue to be possible for a Disability Period to begin). Neither Walker's death nor Walker's acceptance of new full-time employment at a compensation level less than the Base Salary in effect for him at Agreement March 16, 1994 Page 7 of 14 Information Resources on the date of the Section 5.1 Notice shall cause a cessation of Information Resources' obligations to Walker pursuant to the immediately preceding sentence, but such obligations may be subject to offsetting credits pursuant to Sections 5.4 and 5.5 hereof. (b) After the giving of a Section 5.1 Notice by Information Resources or Walker, anything in the Plan or the Option Agreement or any other provision of this Employment Agreement to the contrary notwithstanding, (i) Walker shall cease accruing periods of service with Information Resources for stock option vesting purposes and (ii) all stock options (other than terminated or expired options) held by Walker at the time of the giving of the Section 5.1 Notice shall continue to be exercisable (if vested prior to exercise) for a period of 37 months following the giving of such Section 5.1 Notice. 5.2 Termination by Walker for Good Reason. (a) For the purpose of this Agreement, Walker shall have "Good Reason" to terminate his employment hereunder if, during the Employment Period and prior to the giving of a Section 5.1 Notice by Information Resources, within 30 days of the occurrence of one or more of the events described in sub-paragraphs 5.2 (a) (i) through (iv) below or within one year of an event described in sub-paragraph 5.2 (a) (v) below Walker provides Information Resources with written notice thereof and his intention to terminate this Agreement (a "Section 5.2 Notice"): (i) without the express written consent of Walker, he is assigned any duties inconsistent with his positions, duties, responsibilities and status with Information Resources immediately prior to a change in his reporting responsibilities, titles or offices, or he is removed from or not re- elected to any of those positions, except in connection with any of the following: (A) his resignation for Cause under Section 5.3 hereof; (B) the appointment of an acting or successor officer in accordance with Section 3.1 hereof during a Disability Period; (C) the delivery of a Section 5.1 Notice; (ii) a reduction is made by Information Resources in his Base Salary as in effect on the date hereof or as the same may be increased from time to time; (iii) Information Resources fails to continue in effect any benefit, bonus or compensation plan, stock ownership plan, stock purchase plan, stock option plan, life insurance plan, health-and-accident plan or disability plan (other than those plans which expire by the express terms thereof) in which Walker is participating without providing him with a plan having substantially similar benefits; or takes any action which would adversely affect his participation in or materially reduces his benefits under any of those plans or deprives him of a material fringe benefit enjoyed by him; Agreement March 16, 1994 Page 8 of 14 provided that such action or failure to continue in effect any such benefit shall not be deemed to be constitute Good Reason if it was not directed specifically at Walker but was effected for all employees or all officers or senior executives generally. (iv) Information Resources fails to obtain from any successor entity to Information Resources an agreement to perform this Agreement to the extent and in the manner required to the performed by Information Resources; or (v) Information Resources experiences a "Change of Control" as defined in Article IV, paragraph 4.4 hereof. (b) Upon receipt of a Section 5.2 Notice, Information Resources shall have 30 days thereafter within which to take corrective or remedial action. Upon the completion of any corrective or remedial action within such time to the reasonable satisfaction of Walker, the Section 5.2 Notice will be deemed withdrawn. A termination by Walker for Good Reason shall become effective upon the passage of 30 days from the date of delivery of the Section 5.2 Notice without such notice being deemed withdrawn. (c) Upon the effectiveness of a termination by Walker for "Good Reason", Walker shall be entitled to exercise immediately in full any unexercised options then held by him, all of which options shall be deemed to be fully vested and exercisable upon such termination. (d) Upon the effectiveness of a termination by Walker for Good Reason and until the earlier to occur of either the passage of 24 months from the date of the Section 5.2 Notice or the engagement of Walker in full-time employment elsewhere at a compensation level not less than the Base Salary in effect for him at Information Resources on the date of the Section 5.2 Notice, (i) Walker shall continue to be treated as an employee of Information Resources (but he shall not be required to perform services for Information Resources; and he shall be required and permitted to make a good faith effort to secure new full- time employment elsewhere at a level of compensation which may be greater or less than the Base Salary in effect for him at Information Resources on the date of the Section 5.2 Notice) and (ii) the Employment Period shall be considered to continue for purposes of Sections 2.1, 2.3, 3.0, 3.3 and 6.0 of this Agreement (so that Walker will continue to be entitled to receive Base Salary and participate in all employee benefit plans applicable to him, and it will continue to be possible for a Disability Period to begin). Neither Walker's death nor Walker's acceptance of new full-time employment at a compensation level less than the Base Salary in effect for him at Information Resources on the date of the Section 5.2 Notice shall cause a cessation of Information Resources' obligations to Walker pursuant to the immediately preceding sentence, but such obligations may be subject to offsetting credits pursuant to Sections 5.4 and 5.5 hereof. Agreement March 16, 1994 Page 9 of 14 (e) Anything in the Plan or the Option Agreement to the contrary notwithstanding, all stock options (other than terminated or expired options) held by Walker at the time of the effectiveness of a termination by Walker for Good Reason shall continue to be exercisable (if vested prior to exercise) for a period of 37 months following the effectiveness of such termination by Walker for Good Reason. 5.3 Resignation for Cause. (a) Information Resources shall have the right to require Walker to submit his resignation at any time for Cause. "Cause" shall be deemed to exist under the following circumstances: (i) if Walker refuses or willfully fails or neglects to perform his obligations under this Agreement and Walker fails to rectify such deficiency within 30 days after written notice from the Board for any reason other than Disability; (ii) if Walker has developed or pursued interests substantially adverse, or substantially inconsistent with the material fulfillment of his obligations hereunder to Information Resources and fails to cease such conduct within ten days after written notice from the Board; (iii) if Walker engages in illegal or other wrongful conduct which is detrimental to the business or reputation of Information Resources; or (iv) if Walker engages in any conduct or activity prohibited by paragraph 7.0 or 7.1 of this Agreement. (b) After the effectiveness of a resignation for Cause, anything in the Plan or the Option Agreement or any other provision of this Employment Agreement to the contrary notwithstanding, Walker shall cease accruing periods of service with Information Resources for stock option vesting purposes. (c) Upon the effectiveness of a resignation for Cause and until the earlier to occur of either the passage of 24 months from the date of the effectiveness of the resignation for Cause or the engagement of Walker in full-time employment elsewhere at a compensation level not less than the Base Salary in effect for him at Information Resources on the date of the effectiveness of the resignation for Cause, (i) Walker shall continue to be treated as an employee of Information Resources (but he shall not be required to perform services for Information Resources; and he shall be required and permitted to make a good faith effort to secure new full-time employment elsewhere at a level of compensation which may be greater or less than the Base Salary in effect for him at Information Resources on the date of the effectiveness of the resignation for Cause) and (ii) the Employment Period shall be considered to continue for purposes of Sections 2.1, 2.3, 3.0, 3.3 and 6.0 of this Agreement Agreement March 16, 1994 Page 10 of 14 (so that Walker will continue to be entitled to receive Base Salary and participate in all employee benefit plans applicable to him, and it will continue to be possible for a Disability Period to begin). Neither Walker's death nor Walker's acceptance of new full-time employment at a compensation level less than the Base Salary in effect for him at Information Resources on the date of the effectiveness of the resignation for Cause shall cause a cessation of Information Resources' obligations to Walker pursuant to the immediately preceding sentence, but such obligations may be subject to offsetting credits pursuant to Sections 5.4 and 5.5 hereof. (d) Anything in the Plan or the Option Agreement to the contrary notwithstanding, all stock options (other than terminated or expired options) held by Walker at the time of the effectiveness of a resignation for Cause shall continue to be exercisable (if vested prior to exercise) for a period of 37 months following the effectiveness of such resignation for Cause. 5.4 Credit against Continued Compensation. In the event Information Resources is obligated to make payments to Walker by reason of Sections 3.2 or 5.2 (d) or 5.3 (c) or to provide Walker with compensation under Section 2.1 following the giving of a Section 5.1 Notice (hereinafter "Continued Compensation"), Information Resources shall be entitled to a credit, against its payment obligations to Walker, equal to the amount of any compensation Walker receives or earns for any services rendered to any third party during the period of time Continued Compensation is owed Walker, either by reason of an employment relationship with such third party or as an independent contractor. 5.5 Credit against other Continued Benefits. In the event Information Resources is obligated to provide Walker with employee benefits under Sections 3.2 or 5.2 (d) or 5.3 (c) or to provide Walker with employee benefits under Section 2.3 following the giving of a Section 5.1 Notice (hereinafter "Continued Benefits"), Information Resources shall be excused from such obligation to provide Continued Benefits to the extent that Walker is entitled to receive comparable or better benefits as a result of or in connection with any services rendered by Walker to any third party during the period of time Continued Benefits are to be provided to Walker, either by reason of an employment relationship with such third party or as an independent contractor. 5.6 Termination upon Death. This Agreement, and the Employment Period, shall terminate automatically upon the death of Walker; provided, however, that if Walker's death occurred prior to the giving of any Section 5.1 Notice or Section 5.2 Notice and prior to the effectiveness of any resignation for Cause pursuant to Section 5.3, then in addition to any benefits otherwise provided to Walker, his spouse or his estate, (i) for a period of 24 months following Walker's death, Information Resources shall pay to his surviving spouse, or his estate if his spouse does not survive him, the Base Salary or Disability Payments then in effect immediately prior to his death, and (ii) Agreement March 16, 1994 Page 11 of 14 all options (other than expired or terminated options) held by Walker at the time of his death shall continue to be exercisable (if vested prior to exercise) by his estate for a period of 37 months after his death. ARTICLE VI Covenant Not to Compete 6.0 Covenant Not to Compete. Following the date of termination of Walker's Employment Period, Walker shall not, without the prior written consent of Information Resources, directly or indirectly, for himself or for others, individually, jointly or as a partner, stockholder (except as a holder or not more than 5% of the outstanding shares of a publicly-held corporation) employee, agent, consultant or otherwise: (a) for a period of two consecutive years, work or perform any service for The Dun & Bradstreet Corporation, the A.C. Nielsen Company or any parent, subsidiary, affiliate or successor thereof, or (b) for a period of one year, work or perform any service for, or engage in, any business operating within 100 miles of the Chicago or Waltham, Massachusetts offices of Information Resources which (i) solicits sales or contracts from customers of Information Resources or any of its divisions, subsidiaries or affiliates and (ii) provides products or services which directly compete with products or services provided by Information Resources or any of its divisions, subsidiaries or affiliates. Walker acknowledges that the restrictions set forth in this Article VI are (i) reasonable and necessary for the protection of Information Resources' interests and (ii) are entered into by him specially in consideration of the stock options granted to him pursuant to Article IV of this Agreement. In the event that any portion of this Covenant is found by a court of competent jurisdiction to be unreasonable, the parties agree that a lesser restriction, found to be reasonable, shall be enforceable against Walker. ARTICLE VII Confidentiality; Ideas and Improvements 7.0. Confidentiality: Information Resources is engaged in various lines and methods of doing business, and utilizes processes, programs, data, software and techniques which consist of or involve confidential business information. Such information has been or will be available to and used by Walker during the course of his employment as well as confidential client information including data disclosing the identity of clients of Information Agreement March 16, 1994 Page 12 of 14 Resources, their particular needs, methods, data and other similar information. Walker agrees that so long as such information is confidential in fact and is not readily ascertainable by third parties through lawful means, Walker will not, during the Employment Period and for a period of five consecutive years immediately thereafter, disclose or use such confidential information, either directly or indirectly for the benefit of any person or entity other than Information Resources. Walker agrees to return all programs, manuals, documents, records, and other information relating to the business of Information Resources, including materials prepared by Walker, to Information Resources immediately upon the termination of employment hereunder. 7.1 Ideas and Improvements. Walker agrees to promptly disclose to Information Resources all ideas, designs, improvements, creations, inventions, whether or not patentable or subject to other legal protection, which have significant relationship to the business of Information Resources or any affiliates of Information Resources, and which were developed or created by Walker at any place or time during the Employment Period. Walker further agrees to take all steps and execute and deliver to Information Resources copyright or patent rights on matters suitable for such protection, and to otherwise cooperate to the extent within Walker's control to ensure Information Resources' use and enjoyment of such ideas and creations, provided that Walker is not under any obligation to assign an invention for which no equipment, supplies, facility, or trade secret information of Information Resources was used and which was developed entirely on Walker's own time, unless (i) the invention relates to the business of Information Resources or to Information Resources' actual or demonstrably anticipated research or development, or (ii) the invention results from any work performed by Walker for Information Resources. ARTICLE VIII Miscellaneous Provisions 8.0 Legal Remedies: Walker hereby acknowledges that Information Resources would suffer irreparable injury if the provisions of Articles VI and VII above, which shall survive the termination of this Agreement, were breached and that Information Resources' remedies at law would be inadequate in the event of such breach. Accordingly, Walker hereby agrees that any such breach or threatened breach may, in addition to any other available remedies, be temporarily or permanently enjoined by Information Resources without bond. In the event of litigation under this Agreement, each side shall pay its own attorneys' fees and expenses, except that if Walker is temporarily or permanently enjoined after an evidentiary hearing, then Walker shall pay the attorneys' fees and expenses of Information Resources in connection with that evidentiary hearing, and if such evidentiary hearing results in a court refusing a temporary or permanent injunction then Information Resources shall pay Walker's attorneys' fees and expenses in connection with such hearing. Agreement March 16, 1994 Page 13 of 14 8.1 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of Walker and Information Resources and each of their respective heirs, personal representatives, permitted assigns, and successors in interest, including, in the case of Information Resources, any company with which Information Resources may be merged or consolidated or to which all or substantially all of Information Resources' assets may be transferred. Except as otherwise provided above, this Agreement shall not be assignable by Information Resources or Walker without the express written consent of the other party. 8.2 Governing Law. This Agreement shall be construed and enforced in accordance with the law of the State of Illinois. 8.3 Notices. All notices required or permitted hereunder shall be given in writing, either delivered personally or by registered or certified mail, addressed to Information Resources at its principal office to the attention of the Corporate Secretary, or to Walker at his residence address shown on the employment records of Information Resources. Notice delivered personally shall be deemed effectively given as of the time of personal delivery, and notice given by mail shall be deemed effectively given as of the date of such mailing. 8.4 Other payments. Information Resources shall pay Walker the sum of $9,000, less statutory withholdings, as a retroactive salary increase, and shall reimburse Walker for any legal expenses in connection with the negotiation and execution of this Agreement up to a maximum amount of $3,000. 8.5 Entire Agreement; Amendments; Headings. This Agreement amends and restates the employment agreement previously entered into on September 27, 1990 by and between Walker and Information Resources. This Agreement embodies the entire Agreement of Information Resources and Walker with respect to the subject matter hereof. No amendment or modification of the terms of this Agreement shall be effective unless reduced to a written instrument executed by Information Resources and Walker. The headings of sections in this Agreement are for convenience only. Agreement March 16, 1994 Page 14 of 14 IN WITNESS WHEREOF, Information Resources and Walker have caused this Agreement to be duly executed as of the date first written above. INFORMATION RESOURCES, INC. By: /s/ James G. Andress --------------------------------------------- President and Chief Executive Officer /s/ Thomas M. Walker ---------------------------------------------- Thomas M. Walker EX-10.Y 3 EMPLOY. NON. QUAL. STK. PLAN Exhibit 10y INFORMATION RESOURCES, INC. EMPLOYEE NONQUALIFIED STOCK OPTION PLAN 1. Introduction and Purpose. The purpose of this Employee Nonqualified Stock Option Plan is to advance the interests of Information Resources, Inc. by encouraging and enabling the acquisition of a personal proprietary interest in the Corporation by Eligible Employees upon whose efforts and interest the Corporation and its Subsidiaries are largely dependent for the successful conduct of its operations. It is anticipated that the acquisition of such proprietary interest in the Corporation will stimulate the efforts of such Eligible Employees, on behalf of the Corporation and its Subsidiaries, and strengthen their desire to remain with the Corporation and its Subsidiaries. It is also expected that the opportunity to acquire such a proprietary interest will enable the Corporation and its Subsidiaries to attract key personnel of outstanding abilities. This plan replaces the Information Resources, Inc. Nonqualified Stock Option Plan adopted effective January 1, 1984. 2. Definitions. When used in this Plan, unless the context otherwise requires: a. "Board of Directors" or "Board" shall mean the Board of Directors of Information Resources, Inc. as constituted at any time. b. "Committee" shall mean the Executive Committee of the Board, as constituted at any time, acting as the Stock Option Plan Committee, under this Plan. c. "Common Stock" means the common stock of the Corporation at a par value of $.01, including outstanding shares, treasury shares and authorized but unissued shares, or any equity security of the Corporation issued in substitution, exchange or lieu of such common stock. d. "Corporation" shall mean Information Resources, Inc. e. "Eligible Employees" shall mean the employees of and consultants to the Corporation or its Subsidiaries who are potential recipients of Options pursuant to this Plan, as provided in Section 4 herein. f. "Fair Market Value" on a specified date shall mean (i) the closing price at which one Share is traded on the over-the- counter market, as reported on the National Association of Securities Dealers Automated Quotation System, but if there are no sales on such date, then on the last previous date on which a Share was so traded; or (ii) if the foregoing is not applicable, the average of the high and low prices at which one Share is traded on the stock exchange on which the Common Stock generally has the greatest trading volume, but if there are no sales on such date, then on the last previous date on which a Share was so traded; or (iii) if neither of the above is applicable, the value of a Share as established by the Committee for such date using any reasonable method of valuation. g. "Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as amended, or any successor thereto. h. "Options" shall mean the stock options issued pursuant to this Plan. i. "Plan" shall mean this Information Resources, Inc. Employee Nonqualified Stock Option Plan, effective as of the date set forth in Section 21 hereof and as amended from time to time. j. "Retirement Date" shall mean, with respect to an Eligible Employee, the effective date of his or her retirement from the Corporation or any of its Subsidiaries. k. "Securities Act of 1933" shall mean the Securities Act of 1933, as amended from time to time, or any successor thereto. l. "Securities Exchange Act of 1934" shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto. m. "Share" shall mean a share of Common Stock of the Corporation at a par value of $.01. n. "Subsidiary" shall mean any subsidiary corporation of the Corporation or any other entity in which the Corporation holds an ownership interest. 3. Administration of the Plan. a. The Plan shall be administered by the Stock Option Plan Committee, which shall be the Executive Committee of the Board constituted as such. The Committee shall have the authority, subject to the provisions of this Plan, to (i) grant Options under the Plan, (ii) determine which Eligible Employees shall receive Options and the number of Options each Eligible Employee shall receive, (iii) determine the terms and conditions of the Options, including, but not limited to, exercise dates, limitations on exercise and the price and payment terms, (iv) determine the limitation, if any, on the number of Shares acquired under an Option which may be sold by the Option holder in any year, (v) prescribe the form or forms of the instruments evidencing any Options granted under the Plan and of any other instruments required under the Plan and to change such forms from time to 2 time, and (vi) administer the Plan as provided herein and, in exercising this authority, establish such rules and procedures as are necessary or advisable to administer the Plan. 4. Plan Participants. Except as hereinafter provided, the class of individuals who are potential recipients of Options to be granted under this Plan ("Eligible Employees") consists of those individuals who are (i) employees of or consultants to the Corporation or any of its Subsidiaries and (ii) who are not subject to Section 16 of the Securities Exchange Act of 1934. 5. Shares of Stock Subject to the Plan. The Committee may, but shall not be required to, grant Options under the Plan to purchase an aggregate of up to 3,000,000 Shares, which may be either treasury Shares or authorized but unissued Shares. The exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available under this Plan, and the amount of such decrease shall be the number of Shares as to which the Option is exercised. If any such Option expires or is terminated for any reason, without being exercised in full, the Shares covered by the unexercised portion of such Option may again be made subject to Options under the Plan. 6. Listing and Registration of Shares. Each Option shall be subject to the requirement that, if at any time the Committee shall determine, in its sole and exclusive discretion, (i) the listing, registration, or qualification of the Shares covered thereby upon any securities exchange or over-the-counter market or under any state, federal or foreign law, (ii) the consent or approval of any government regulatory body or (iii) obtaining an investment intent representation or other undertaking from the Option holder, is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issue or purchase of Shares thereunder, such Option may not be exercised in whole or in part unless and until such listing, registration, qualification, consent, approval, representation, or undertaking shall have been effected or obtained free of any conditions not acceptable to the Committee. 7. Requirements of Law. a. In the event the Shares issuable upon the exercise of an Option are not registered under the Securities Act of 1933, the Corporation shall imprint on the certificate representing such Shares the following legend or any other legend which counsel for the Corporation considers necessary or advisable to comply with the Securities Act of 1933: The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any State and may not be sold or transferred except upon such registration or upon receipt by the Corporation of an opinion of counsel in form and substance 3 satisfactory to the Corporation that registration is not required for such sale or transfer. b. The Corporation may, but in no event shall be obligated to, register any securities covered hereby pursuant to the Securities Act of 1933, as now in effect or as hereafter amended, and, in the event any Shares are so registered, the Corporation may remove any legend on certificates representing such Shares. The Corporation shall make reasonable efforts to cause the exercise of an Option or the issuance of Shares pursuant thereto to comply with any law or regulation of any governmental authority. c. Notwithstanding any other provision of this Plan, no Option may be granted or exercised pursuant to the provisions of this Plan when such Option, or the granting or exercise thereof, may result in the violation of any federal or state law, order or regulation. 8. Grant of Options. a. Subject to the provisions of this Plan, the Committee may, from time to time prior to the termination of the Plan, grant Options to those Eligible Employees whose efforts may materially affect the profitability and growth of the Corporation, to purchase the number of Shares authorized by the Committee, subject to such terms and conditions as the Committee may determine in accordance with the provisions herein. The day on which the Committee approves the granting of an Option shall be considered the date on which such Option is granted unless the Committee designates a subsequent date as the effective date of the grant. b. The terms and conditions of the Option shall be set forth in writing in a certificate or agreement (the "Option Agreement") signed by the Option holder and on behalf of the Corporation by the Chief Executive Officer, President, any Vice President or the Treasurer of the Corporation. 9. Price. The exercise price per Share to be purchased pursuant to any Option shall be fixed by the Committee at the time an Option is granted and may be less than, equal to, or greater than the Fair Market Value of one Share on the date such Option is granted. 10. Duration of Options. The duration of any Option granted under this Plan shall be for a period fixed by the Committee, in its sole and exclusive discretion, but not longer than ten (10) years from the date upon which the Option is granted. The period of the Option, once it is granted, may be reduced only as provided for in Section 16 herein, in connection with the termination of employment or death of the Option holder, or in Section 13(a) herein, in the case of less than satisfactory performance. 4 11. Amount Exercisable. Except as otherwise provided in this Plan, an Option granted in accordance with Section 8 herein shall be exercisable by the Option holder at such rate and times as may be fixed by the Committee at the time the Option is granted. The partial exercise of an Option or a combination of such Options shall in no event be for less than one hundred (100) Shares, unless a purchase of fewer Shares would entirely exhaust the Options held by the Option holder. 12. Method of Exercising Options. a. An Option shall be exercised by the delivery of a written notice duly signed by the Option holder (or the transferee of the Option, as permitted herein), together with the Option Agreement, and either (i) cash, (ii) a certified check payable to the order of the Corporation, (iii) outstanding Shares duly endorsed over to the Corporation which have been previously owned by the Option holder for a period of at least six months (such Shares shall be valued at their Fair Market Value as of the date preceding the day of such exercise), (iv) any combination of such methods of payment which together amount to the full exercise price of the Shares purchased pursuant to the exercise of the Option, (v) delivery of a properly executed exercise notice with irrevocable instructions to the broker to promptly pay to the Corporation the amount of proceeds from the sale of Shares acquired upon exercise necessary to satisfy the exercise price, or (vi) any other method of payment provided for in the Option Agreement. Such payment shall be delivered to the Treasurer, Secretary, Assistant Secretary or any other officer or employee of the Corporation who has been designated by the Committee for the purpose of receiving the same. b. Within a reasonable time after the exercise of an Option, the Corporation shall cause to be delivered to the person entitled thereto a certificate for the Shares purchased pursuant to the exercise of the Option. If the Option shall have been exercised with respect to less than all of the Shares subject to the Option, the Option holder may request the Corporation to (i) cause a new Option Agreement to be issued in replacement of the Option Agreement surrendered at the time of the exercise of the Option, indicating the number of Shares with respect to which the Option remains available for exercise or (ii) endorse the original Option Agreement to give effect to the partial exercise thereof; provided, however, that if no such request is made, then the number of Shares available for exercise shall be determined by the Committee in its sole and exclusive discretion. 13. Limitations on Exercise of Options. a. Following the grant of an Option, the Committee may, in its sole and exclusive discretion, if it determines that the Option holder is not satisfactorily performing the duties to which he or she is currently assigned (or the consulting services currently contracted for) or duties of at least equal responsibility, (i) prescribe longer time periods and additional requirements with respect to the exercise of an Option which has not yet become exercisable and/or (ii) terminate in whole or in part any portion of an Option which 5 has not yet become exercisable. Subject to the provisions of this Section 13 and Section 16 herein, no Option granted to an Eligible Employee may be exercised unless the Option holder is at the time of such exercise in the employ of the Corporation or of a Subsidiary as an employee or consultant thereof and shall have been continuously so employed since the grant of the Option. b. In no event may an Option be exercised after the expiration of its term or after its termination. 14. Option Holder Not a Stockholder. An Option holder, or his or her legal representative, legatees or distributees, as the case may be ("Successor"), shall not be deemed to be the holder of Common Stock or to have any of the rights of a stockholder with respect to any Shares subject to such Option, unless and until (i) the Option shall have been exercised pursuant to the terms thereof, (ii) the Corporation shall have issued and delivered stock certificates for such Shares to the Option holder or his or her Successor, and (iii) the Option holder's or his or her Successor's name shall have been entered as a stockholder of record on the books of the Corporation. Thereupon, the Option holder or his or her Successor shall have full voting, dividend and other ownership rights with respect to such Shares; provided, however, that, except as otherwise provided in Section 19 herein, no adjustment for dividends or otherwise shall be made if the Corporation's record date is prior to the issuance of such stock certificate. 15. Non-Transferability of Options. Options and all rights thereunder shall be non-transferable and non-assignable by the Option holder thereof otherwise than by will or the laws of descent and distribution and, during the Option holder's lifetime, shall be exercisable only by the Option holder or by his or her legal representative. Except as permitted by the preceding sentence, no Option granted under the Plan or any of the rights and privileges thereby conferred shall be transferred, assigned, pledged, or hypothecated in any way, whether by operation of law or otherwise, and no such Option, right, or privilege shall be subject to execution, attachment or similar process. Upon any attempt so to transfer, assign, pledge, hypothecate, or otherwise dispose of the Option, or of any right or privilege conferred thereby, contrary to the provisions hereof, or upon the levy of any attachment or similar process upon such Option, right or privilege, the Option shall terminate and such rights and privileges shall immediately become null and void. 16. Effect of Termination of Employment, Death, Disability or Retirement of Option Holder. a. Except as otherwise provided herein or in the Option Agreement or except as otherwise provided by the Committee, all Options granted hereunder shall terminate upon the earlier of the date of the expiration of such Options or upon termination of the employment or consulting relationship between the Corporation or a Subsidiary and the Option holder for any reason excepting the Option holder's death, disability or retirement. In the event of termination of the employment or consulting relationship due 6 to death or disability, Options may be exercised upon the earlier of (i) the date of the expiration of the Option Term or (ii) within one year after such termination. In the event of termination of the employment or consulting relationship due to retirement, Options may be exercised upon the earlier of (i) the date of the expiration of the Option Term or (ii) within 90 days after the Option holder's Retirement Date; provided, however, that in the event of an Option holder's death within 90 days after his or her Retirement Date, Options may be exercised within one year of the date of such death. For purposes of this Plan, "disability" shall be defined in the same manner as such term is defined in Section 22(e)(3) of the Internal Revenue Code. b. Subject to the terms and conditions of the Plan and of the Option Agreement, in the event of the termination of the employment or consulting relationship between and Corporation or a Subsidiary and an Option holder by reason of the Option holder's death or disability from the Corporation or a Subsidiary, all Options held by the Option holder shall become immediately exercisable in full. c. Subject to applicable federal and state law, the Committee, in its sole and exclusive discretion, shall determine whether the Option holder's authorized leave of absence from his or her employment with or consulting obligations to the Corporation or a Subsidiary or absence on military or government service shall constitute termination, severance or interruption of such employment or consulting obligations by the Option holder for purpose of this Section 16. The transfer of an Option holder from the employment with or consulting obligations to the Corporation to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment or consulting obligations for purposes of this Plan. 17. Adjustment of Shares. In the event of a capital adjustment resulting from a stock dividend, stock split, reorganization, merger, consolidation, or a combination or exchange of Shares, the number of Shares subject to issuance under the Plan and subject to issuance upon the exercise of Options granted or to be granted under the Plan shall be adjusted in a manner consistent with such capital adjustment. In addition, the price of any Shares under the Options shall be adjusted so that there will be no change in the aggregate purchase price payable upon the exercise of any such Option. The Corporation shall not be required to issue fractional Shares pursuant to this Plan. Any fractional Shares resulting from appropriate adjustments made by the Committee in accordance with this Section 17 shall be eliminated from the respective Options, and no adjustments shall be made for cash, dividends or the issuance to the stockholder of rights to subscribe for additional Common Stock or other equity securities of the Corporation. 18. Amendment of the Plan. Except as hereinafter provided, the Board of Directors may terminate the Plan at any time or from time to time may modify or amend the Plan. In no event shall such termination, modification or amendment of the Plan adversely affect an Option holder's rights with respect to an Option which is exercisable as 7 of the date of such termination, modification or amendment without the Option holder's consent. 19. Employment Obligation. Nothing contained herein or in the Option Agreement shall be construed to confer on any Eligible Executive any right to continue in the employ of the Corporation or its Subsidiaries as an employee or consultant thereof, or derogate from any right of the Corporation or its Subsidiaries to request, in its sole and exclusive discretion, the retirement, resignation or discharge of such Eligible Executive, at any time, with or without cause. 20. Applicability of Plan to Outstanding Stock Options. This Plan shall govern stock options issued under the former Information Resources, Inc. Non- Qualified Stock Option Plan (the "Old Non-qualified Plan") to the extent the terms of this Plan do not adversely affect the terms and conditions of any stock options granted to any employee of or consultant to the Corporation or its Subsidiaries pursuant to the Old Non-qualified Plan. Except as provided in the foregoing sentence, this Plan shall not affect the terms and conditions of any stock options heretofore or hereafter granted to any employee of or consultant to the Corporation or its Subsidiaries pursuant to any other plan of the Corporation or its Subsidiary, including, without limitation, the Corporation's 1982 or 1992 Incentive Stock Option Plans and the 1992 Executive Stock Option Plan, nor shall it affect any of the rights of any employee of or consultant to the Corporation or its Subsidiaries to whom such stock options were granted. 21. Effective Date of the Plan. This Plan shall become effective as of January 1, 1994, upon the adoption and approval by the Board of Directors or the Executive Committee of the Board of Directors of the Plan. 22. Expiration and Termination of the Plan. The Plan shall remain in full force and effect until the close of business on December 31, 2003, at which time the right to grant Options under the Plan shall automatically terminate. Any Options granted before the termination of the right to grant Options under the Plan shall continue to be governed thereafter by the terms of the Plan. No Option shall be granted pursuant to the Plan after ten (10) years from the effective date of the Plan. 23. Income Tax Withholding. If the Corporation or its Subsidiaries shall be required to withhold any amounts by reason of federal, state, local or foreign tax laws, rules or regulations in respect of the grant of an Option or the issuance of Shares pursuant to the exercise of an Option, the Option holder shall, at the request of the Corporation, be required to promptly pay to or to make available to the Corporation or its Subsidiaries sufficient funds to satisfy such withholding obligations or, if Shares issued pursuant to the exercise of an Option are immediately sold through a broker in a cash-less exercise, the Option holder shall deliver to the Corporation a properly executed exercise notice with irrevocable instructions to the broker to promptly pay to the Corporation the amount of sales proceeds from the sale of such Shares necessary to satisfy the withholding requirement. 8 If the Option holder fails to satisfy such requirement, the Corporation or the affected Subsidiaries shall be entitled to deduct and withhold cash in the amount of such withholding obligation from any funds due or to become due from the Corporation or its Subsidiaries to the Option holder, including but not limited to salary and bonus payments, reimbursement of expenses advanced and payments for consulting services. The Corporation and its Subsidiaries shall be entitled to take and authorize such steps as it may deem advisable in order to assure its receipt of such funds from the Option holder or from funds or property due or payable to or to become due or payable to the Option holder from any person. 24. Severability. If any provision herein shall be held unlawful or otherwise invalid or unenforceable in whole or in part, such unlawfulness, invalidity or unenforceability shall not affect any other provision of the Plan or part thereof, each of which shall remain in full force and effect. If the making of any payment or issuance required under the Plan shall be held unlawful or otherwise invalid or unenforceable, such unlawfulness, invalidity or unenforceability shall not prevent any other payment or issuance from being made under the Plan, and if the making of any such payment or issuance in full, as required under the Plan, would be unlawful or otherwise invalid or unenforceable, then such unlawfulness, invalidity or unenforceability shall not prevent such payment or issuance from being made in part, to the extent that it would not be unlawful, invalid, or unenforceable, and the maximum payment or issuance that would not be unlawful, invalid or unenforceable shall be made under the Plan. 25. Governing Law. The Plan and all determinations made and actions taken hereunder, to the extent not otherwise governed by the Internal Revenue Code or the laws of the United States of America, shall be governed by the laws of the State of Illinois and construed accordingly. INFORMATION RESOURCES, INC. By: /s/ Gian Fulgoni ---------------------------- Gian Fulgoni, Chairman 9 EX-10.Z 4 EMPLOYMENT AGREEMENT Exhibit 10z EMPLOYMENT AGREEMENT THIS AGREEMENT is made this 4th day of November, 1993 and becomes effective at the close of business on the 5th day of November, 1993 ("Effective Date"), between INFORMATION RESOURCES, INC., a Delaware corporation (the "Company"), and George R. Garrick ("Employee"). WHEREAS, the Company desires to employ Employee in an executive capacity on the terms and subject to the conditions set forth in this Agreement and Employee desires to accept such employment with the Company on the terms and subject to the conditions set forth in this Agreement; and WHEREAS, Employee represents and warrants that, as of the Effective Date hereof, he has terminated his employment with A.C. Nielsen Company and any affiliates thereof as of the close of business on the Effective Date and that he is not restricted in any manner whatsoever from entering into this Agreement or performing any of his obligations hereunder, including without limitation his employment duties described in Article I below, or engaging in any activities competitive with those of A.C. Nielsen or any of its affiliates except as set forth in that certain Agreement dated June 28, 1993 ("June 28th Agreement"); and WHEREAS, Employee represents and warrants that he has not signed or otherwise entered into any agreements or contracts not to compete or, to the best of his knowledge, has not, except as reflected in the June 28th Agreement, made other arrangements which will hamper, limit or restrain in any way Employee's ability to carry out the employment duties stated in this Agreement; and WHEREAS, Employee represents and warrants that the Company has not requested that he disclose or cause to be disclosed any trade secrets or confidential information, as those terms are defined under the Illinois Trade Secrets Act, that Employee obtained in his prior employment, and that Employee states that he will not and does not intend to disclose or cause to be disclosed to the Company any trade secrets or confidential information he obtained during his prior employment. Therefore, in consideration of the foregoing and of the mutual covenants of the Company and Employee set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the Company and Employee, the parties agree as follows: ARTICLE I Employment and Duties 1. Employment Duties. The Company agrees to employ Employee, and he agrees to serve the Company, on a full time basis in an executive capacity, according to the terms and subject to the conditions hereinafter set forth. During his employment hereunder, Employee shall devote his best efforts and all of his normal business time and attention (excluding vacation and sick leave provided herein) to the business of the Company and its affiliated companies. The initial assignment of Employee shall be as President and Chief Executive Officer of the Company, North America, Group (an operating unit to be formed promptly after the Effective Date, subject to all proper corporate action to effect the same). His duties, as of the Effective Date, will be to manage all aspects of the Company's information business in North America, comprising the existing U.S. operations and the development of operations in Canada and Mexico. Thereafter, the Company may reassign Employee to a position of comparable responsibility and stature; provided, however, that in the event Employee is reassigned to a position which, in the reasonable opinion of Employee, is not of comparable responsibility and stature, then Employee shall have the right, exercisable within 30 days of such reassignment, to have this Agreement be considered to be terminated without cause by the Company. 1.1 Place of Employment. Employee shall be based at the offices of the Company at Chicago, Illinois. Employee may be required to perform ordinary business travel consistent with the responsibilities of his office. 1.2 Date of Employment. Employee's employment hereunder shall begin on the Effective Date; provided, however, that Employee need not report to work until December 15, 1993. ARTICLE II Compensation 2. Compensation. The Company agrees to compensate Employee for the services rendered by him during his employment hereunder as follows: 2.1 Base Salary. The Company shall pay Employee a base salary at the rate of Two Hundred Seventy Five Thousand Dollars ($275,000.00) per year. Thereafter, the Company shall increase Employee's base salary (i) by not less than six percent (6%) on each annual anniversary of the Effective Date and (ii) by such additional amount so that Employee, during the Employment Term 2 (as hereinafter defined in paragraph 3.0) will receive a base salary not less than the base salary received by any other chief executive officer of each Group of the Company. The base salary shall be payable in accordance with the practices followed by the Company with respect to its other senior executives. 2.2 Bonus or Incentive Compensation. The Company shall award Employee bonus or incentive compensation as provided under any applicable present or future incentive compensation plan of the Company, or, in the absence of any such plan, such bonus or incentive compensation as senior management of the Company deems appropriate in light of the amount of bonus or other incentive compensation awarded by the Company to other executives in comparable positions to Employee. 2.3 Stock Options. Employee is hereby granted 255,000 options under the Company' Executive Stock Option Plan, 155,000 of which will have an exercise price of $.01 per share, and 100,000 of which will have an exercise price equal to the closing bid price on NASDAQ on the Effective Date (hereinafter "FMV"), vesting and becoming fully exercisable into freely tradable shares of the Common Stock of the Company, without any restrictions whatsoever except as required by law, as follows: A. 155,000 options at $.01 per share 1. 55,000 vest on July 15, 1994 2. 50,000 vest on January 15, 1995 3. 50,000 vest on January 15, 1996 B. 100,000 options at FMV on date hereof 1. 1/3 after two years of employment 2. 1/3 after three years of employment 3. 1/3 after four years of employment Such grant will also be governed by the other terms and conditions of the Plan as administered by the Executive Stock Option Plan Committee, and will be further evidenced by a separate Option Agreement to be entered into as soon as practicable after the Effective Date and on terms and conditions consistent herewith, and if not so entered into, this Agreement and the Executive Stock Option Plan shall alone control the granting and exercise of the stock options hereunder. In addition, the Company will, at Employee's written request any time during the Employment Term and for three (3) years thereafter, purchase from Employee any or all of the shares issued upon exercise of the above-noted options, at FMV. In the event the terms and conditions of this Agreement conflict or are inconsistent with the terms and conditions of the Executive Stock Option Plan or the Options Agreement, this Agreement shall control and govern. 3 In the event the Company terminates Employee's employment hereunder, with or without cause, all unvested options held by Employee shall be deemed to be fully vested as of the date such notice of termination is given to Employee, and all options shall be exercisable for a period of three years from the effective date of termination if terminated without cause and for a period of ninety (90) days from the effective day of termination if terminated with cause. 2.4 Loan. The Company agrees to loan Employee, on the Effective Date, the sum of One Million Two Hundred Thousand Dollars ($1,200,000), interest free, to be repaid during the Employment Term as follows: A. $400,000 due December 31, 1994 B. $400,000 due December 31, 1995 C. $400,000 due December 31, 1996 In the event that Employee's employment hereunder terminates prior to December 31, 1996, the outstanding balance of the loan shall be due and payable 30 days after the termination date. Employee agrees to execute a promissory note evidencing the above-described loan, collateralized by his equity in the stock options granted hereunder. 2.5 Employee Benefit Plans. Employee shall participate in all employee benefit plans (including health and welfare plans, life insurance, disability, and vacation allowances) generally applicable to comparable executives of the Company, as those plans may be in effect from time to time. employee shall be credited under such plans and any other benefits with 12 years of prior employment as an executive. Employee shall be entitled to all other benefits provided to comparable executives of the Company in accordance with the Company's then prevailing practices concerning such benefits. ARTICLE III Term of Employment and Termination 3.0 Term of Employment. The employment of Employee under this Agreement shall commence on the Effective Date for an initial term of four (4) years ("Initial Term") and shall thereafter continue indefinitely unless duly terminated by either party (the Initial Term and any term of this Agreement thereafter are collectively referred to herein as the "Employment Term"). 3.1 Termination Without Cause. (a) The Company may terminate Employee's employment hereunder, without cause, at any time during the 4 Employment Term, provided that written notice of such termination is given to Employee at least twelve (12) months prior to the effective date of termination. (b) Employee may terminate Employee's employment hereunder, without cause, at any time during the Employment Term, provided that written notice of such termination is given the Company at least ninety (90) days prior to the effective date of termination. (c) In the event Employee's employment hereunder is terminated without cause, the Company shall pay Employee severance equal to the sum of the following: (i) two (2) years' base salary then in effect, inclusive of base salary increases, (ii) two times the amount of Employee's cash bonus paid in respect of Employee's service for the immediately preceding calendar year, and (iii) two times the cash value (based on a Black Scholes or similar valuation model) of the stock options granted to Employee under the Company's Executive Stock Option Plan for the immediately preceding calendar year. 3.2 Termination for Cause. Employee's employment hereunder is also subject to termination by the Company for "Cause." "Cause" shall be deemed to exist under the following circumstances: (i) if Employee refuses or fails or neglects, without reasonable justification by way of either injury or personal hardship giving rise to Employee's permitted absence or personal leave, to substantially perform his material obligations under this Agreement, and Employee fails to rectify such deficiency within thirty (30) days or such additional time period that may be reasonable under the circumstances, after written notice from the Company senior management; (ii) if Employee has developed or pursued interests substantially adverse, or substantially inconsistent with the material fulfillment of his obligations hereunder to the Company and fails to cease such conduct within thirty (30)days, or such additional time period that may be reasonable under the circumstances, after written notice from senior management of the Company; (iii) if Employee is convicted of a criminal act which constitutes a felony under the laws of any state or of the United States; or (vi) if Employee engages in any conduct or activity prohibited by paragraph 4, 5.1 or 5.2 of this Agreement. In the event of termination in accordance with this paragraph 3.2, the Company shall have no further liability in respect of Employee's employment, except to pay the value of any accrued salary or other compensation due Employee on the date of termination, and further provided that the exercise of vested options granted in this Agreement shall be permitted for a period of 90 days following such date of termination. 5 ARTICLE IV Restrictive Covenants 4.0 Restrictive Covenants. Immediately following the date of termination of Employee's employment hereunder, Employee shall not, without the prior written consent of the Company, directly or indirectly, for himself or for others, individually, jointly or as a partner, stockholder (except as a holder or not more than five percent (5%) of the outstanding shares of a publicly-held corporation) employee, agent, consultant or otherwise, (a) for a period of two (2) years, work or perform any service for Efficient Market Services, Inc. (EMS), the A.C. Nielsen Company, The Dun & Bradstreet Corporation or any subsidiary or affiliate of any of the foregoing which is engaged in the marketing research business; (b) for a period of one (1) year, work or perform any service for, or engage in, any business which (i) solicits sales or contracts from customers of the Company or any of its divisions, groups, subsidiaries or affiliates and (ii) provides products or services which directly compete with products or services provided by the Company or any of its divisions, subsidiaries or affiliates. (c) for a period of two (2) years, induce or attempt to induce any employee or agent of the Company or any of its subsidiaries or affiliates to terminate his or her relationship or breach his or her agreements with the Company, or to perform work or services for Employee or for a competitor of the Company as described in subparagraph 4.0(a) or (b) above; (d) for a period of two (2) years, hire or attempt to hire, directly or indirectly, either on behalf of Employee or any entity having any affiliation with Employee, any employee or agent of the Company or any of its subsidiaries or affiliates; or (e) for a period of two (2) years, attempt in any manner to solicit from any customer of the Company, or any of its subsidiaries or affiliates, business of the type performed by the Company, or to persuade any customer of the Company, or any of its subsidiaries or affiliates to cease doing business or to reduce the amount of business which any such customer has customarily done or contemplates doing with the Company or any such subsidiary or affiliate, whether or not the 6 relationship between the Company or the subsidiary or affiliate or employee and such customer was originally established in whole or in part through Employee's efforts. 4.1 Acknowledgements. Employee acknowledges that the restrictions set forth in this Article IV are (a) reasonable and necessary for the protection of the Company' interests, and (b) are entered into by him specially in consideration of the grant of stock options as described in paragraph 2.3 of this Agreement and of the loan described in paragraph 2.4 of this Agreement and other consideration payable to Employee pursuant to this Agreement. The Company acknowledges the June 28th Agreement signed by Employee and agrees not to take any action which will result in Employee breaching said agreement. The Company and Employee agree that Employee will not personally solicit any customer which he had called on or solicited on behalf of his previous employer for a period of six (6) months from the Effective Date. 4.2 Enforceability. In the event that any portion of any of the restrictive covenants set forth in paragraph 4.0 above is found by a court of competent jurisdiction to be unreasonable, the parties agree that a lesser restriction, found to be reasonable, shall be enforceable against Employee. ARTICLE V Confidentiality; Ideas and Improvements. 5.0 Confidentiality; Ideas and Improvements. 5.1 Confidentiality. The Company is engaged in various methods of doing business and processes, and utilizes programs, data, software and techniques which consist of or involve confidential business information. Such information has been or will be available to and used by Employee during the course of his employment as well as confidential client information including data disclosing the identity of clients of the Company, their particular needs, methods, data and other similar information. Employee agrees that so long as such information is confidential in fact and is not readily ascertainable by third parties through lawful means, he will not, during the period of employment and for a period of five years after employment ceases, disclose or use such confidential information, either directly or indirectly for the benefit of any person or entity other than the Company. Employee agrees to immediately return all programs, manuals, documents, records, and other information relating to the business of the Company, including materials prepared by Employee, to the Company on the termination of employment hereunder. 7 5.2 Ideas and Improvements. Employee agrees to promptly disclose to the Company all ideas, designs, improvements, creations, inventions, whether or not patentable or subject to other legal protection, which have significant relationship to the business of the Company or any affiliates of the Company, and which were developed or created by Employee at any place or time during the period of employment. Employee further agrees to take all steps and execute and deliver to the Company copyright or patent rights on matters suitable for such protection and otherwise cooperate to the extent within Employee's control to ensure the Company' use and enjoyment of such ideas and creations, provided that there is no obligation to assign an invention for which no equipment, supplies, facility, or trade secret information of the Company was used and which was developed entirely on Employee's own time, unless (a) the invention relates (i) to the business of the Company, or (ii) to the Company' actual or demonstrably anticipated research or development, or (b) the invention results from any work performed by Employee for the Company. ARTICLE VI Miscellaneous Provisions 6.0 Miscellaneous Provisions. 6.1 Legal Remedies. Employee hereby acknowledges that the Company would suffer irreparable injury if the provisions of paragraphs 4, 5.1 or 5.2 above, which shall survive the termination of this Agreement, were breached and that the Company' remedies at law would be inadequate in the event of such breach. Accordingly, Employee hereby agrees that any such breach or threatened breach may, in addition to any other available remedies, be preliminarily enjoined by the Company without bond. In the event of litigation under this Agreement, each side shall pay its own attorneys' fees and expenses, except that if Employee is enjoined either preliminarily or permanently, after an evidentiary hearing, then Employee shall pay the attorneys' fees and expenses of the Company in connection with that evidentiary hearing and, similarly, if such evidentiary hearing results in a court refusing a preliminary or permanent injunction, then the Company shall pay Employee's attorneys' fees and expenses in connection with such hearing. 6.2 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of Employee and the Company and each of their respective heirs, personal representatives, permitted assigns, and successors in interest, including, in the case of the Company, any company with which the Company may be merged or consolidated or to which all or substantially all of the Company' assets may be transferred. Except in the case of a merger, consolidation, sale of 8 substantially all the assets of the Company (in which case the Company may assign this Agreement), this Agreement shall not be assignable by the Company or Employee without the express written consent of the other party. In the event of any merger or consolidation in which the Company is not the surviving entity, all unvested options then held by Employee shall become fully vested as of the effective date of such merger, consolidation or sale of substantially all the assets of the Company, all options shall be exercisable for a period of not less than three years from the closing date of such merger, consolidation or sale. 6.3 Governing Law. This Agreement shall be construed and enforced in accordance with the law of the State of Illinois. 6.4 Notices. All notices required or permitted hereunder shall be given in writing, either delivered personally or by registered or certified mail, addressed to the Company at its principal office to the attention of the Corporate Secretary, or to Employee either at his residence address shown on the employment records of the Company or in care of the principal office of the Company. Notice delivered personally shall be deemed effectively given as of the time of personal delivery, and notice given by mail shall be deemed effectively given as of the date of such mailing. 6.5 Entire Agreement; Amendments; Headings. This Agreement embodies the entire Agreement of the Company and Employee with respect to the subject matter hereof. No amendment or modification of the terms of this Agreement shall be effective unless reduced to a written instrument executed by the Company and Employee. The headings of sections in this Agreement are for convenience only. 9 IN WITNESS WHEREOF, the Company and Employee have caused this Agreement to be duly executed as of the date first written above. INFORMATION RESOURCES,INC. BY: /s/ Magid Abraham ------------------------ TITLE: President and Chief Operating Officer EMPLOYEE /s/George R. Garrick --------------------------- George R. Garrick 10 EX-11 5 COMP. OF INCOME COM. & EQ. S EXHIBIT 11 Information Resources, Inc. and Subsidiaries COMPUTATION OF INCOME PER COMMON AND COMMON EQUIVALENT SHARE
1993 1992 1991 ------------------- ----------------- -------------------- Fully Fully Fully Year Ended December 31, Primary Diluted Primary Diluted Primary Diluted -------- ------- ------- ------- ------- ------- Net Income for the period: Income before cumulative effect of change in accounting principle $22,215 $22,215 $19,247 $19,247 $15,386 $15,386 Cumulative effect of change in accounting principle 1,864 1,864 -- -- -- -- ------ ------ ------ ------ ------ ------ Net Income 24,079 24,079 19,247 19,247 15,386 15,386 Adjustment of net income for the period for assumed interest reduction, net of tax effect, pursuant to modified treasury stock method (1) 68 39 -- -- 177 77 ------ ------ ------ ------ ------ ------ Adjusted net income (A) $24,147 $24,118 $19,247 $19,247 $15,563 $15,463 ====== ====== ====== ====== ====== ====== Weighted common shares outstanding: 24,991 24,991 23,120 23,120 21,161 21,161 Net additional shares in excess of 20% of outstanding issuable pursuant to modified treasury stock method (1) 1,848 2,169 618 -- 1,516 1,702 Dilutive effect of options outstanding during the period (2) -- -- 768 1,697 480 535 ------- ------ ------ ------ ------ ------ Total common and common equivalent shares (B) 26,839 27,160 24,506 24,817 23,157 23,398 ====== ====== ====== ====== ====== ====== Income per common and common equivalent shares (A) / (B): Before cumulative effect of accounting change $ 0.83 $ 0.82 $ 0.79 $ 0.78 $ 0.67 $ 0.66 Cumulative effect of accounting change 0.07 0.07 -- -- -- -- ------ ------- ------ ------ ------ ------ Net income $ 0.90 $ 0.89 $ 0.79 $ 0.78 $ 0.67 $ 0.66 ======= ======== ====== ======= ======= =======
(1) The modified treasury stock method was used to compute income per common and common equivalent share for the quarters ended March 31, June 30, and September 30, 1991, the quarters ended June 30 and September 30, 1992 and for all quarters in 1993 since options and warrants outstanding exceeded 20% of shares of common stock outstanding. The treasury stock method was used to calculate income per common and common equivalent share for all other periods. (2) Since the fourth quarter incremental shares were greater than the average of the four quarters in 1992 and 1993, the fourth quarter incremental shares were used in the year-to-date fully diluted calculation. EX-21 6 SUBSIDIARIES Exhibit 21 INFORMATION RESOURCES, INC. SUBSIDIARIES DOMESTIC SUBSIDIARIES --------------------- Subsidiary State of Incorporation - ---------- ---------------------- Shopper's Hotline, Inc. Illinois 564 Randolph #2 Delaware Richard E. Shulman, Inc. New York Towne-Oller & Associates, Inc. New York IRI French Holdings, Inc. Delaware FOREIGN SUBSIDIARIES -------------------- Subsidiary Country of Incorporation - ---------- ------------------------ Information Resources S.A. France IRI Software, Ltd. (formerly known as Management Decision Systems, Limited) d/b/a Information Resources United Kingdom Information Resources GmbH Federal Republic of Germany InfoScan NMRA Limited (approximately 75% through its interest in Precis (1136) Limited) United Kingdom Information Resources Australia Pty. Ltd. Australia Information Resources Japan, Ltd. Japan Information Resources New Zealand Pty. Ltd. New Zealand Information Resources Singapore Pte. Ltd. Singapore IRI Software (India) Private Limited India Panel Pazar Arastirma ve Danismanlik A.S. Turkey EX-23 7 CONSENT OF INDEPEND. CERTIFIED ACCT. EXHIBIT 23 INFORMATION RESOURCES, INC. & SUBSIDIARIES CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our reports dated February 10, 1994 accompanying the consolidated financial statements and schedules included in the Annual Report of Information Resources, Inc. & Subsidiaries on Form 10-K for the year ended December 31, 1993. We hereby consent to the incorporation by reference of said reports in the Registration Statements of Information Resources, Inc. on Forms S-8 (File Nos. 33-48289, 33-48290, 33-48291, 33-52719 and 33-52721). GRANT THORNTON Chicago, Illinois March 15, 1994 EX-24 8 POWER OF ATTORNEY EXHIBIT 24 INFORMATION RESOURCES, INC. AND SUBSIDIARIES POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned constitutes and appoints Gian M. Fulgoni, James G. Andress and Thomas M. Walker, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K for the year ended December 31, 1993 of Information Resources, Inc., together with any and all amendments to such Annual report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agent of either of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Dated: March 20, 1994 /s/ Gerald J. Eskin --------------------------------- Gerald J. Eskin, Vice Chairman and Director /s/ John D.C. Little --------------------------------- John D.C. Little, Director /s/ Leonard M. Lodish --------------------------------- Leonard M. Lodish, Director /s/ Edward E. Lucente --------------------------------- Edward E. Lucente, Director /s/ Edith W. Martin --------------------------------- Edith W. Martin, Director /s/ George G. Montgomery, Jr. --------------------------------- George G. Montgomery, Jr., Director /s/ Glen L. Urban --------------------------------- Glen L. Urban, Director /s/ Thomas W. Wilson, Jr. --------------------------------- Thomas W. Wilson, Jr., Director -----END PRIVACY-ENHANCED MESSAGE-----