-----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, hrR3I/YgJwobHjohuKvUzatyZyc065SDrVjxdmXMumjnB+pXk2lhDUcXQb5H2old ZMjTWInz+s1EowwkX8XnUQ== 0000950131-95-002247.txt : 19950823 0000950131-95-002247.hdr.sgml : 19950823 ACCESSION NUMBER: 0000950131-95-002247 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950814 SROS: NASD 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11428 FILM NUMBER: 95563442 BUSINESS ADDRESS: STREET 1: 150 N CLINTON ST CITY: CHICAGO STATE: IL ZIP: 60661-1416 BUSINESS PHONE: 3127261221 MAIL ADDRESS: STREET 1: 150 N CLINTON ST CITY: CHICAGO STATE: IL ZIP: 60661-1416 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION ---------------------------------- WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) X Quarterly Report Pursuant to Section 13 or 15(d) of The Securities ---- Exchange Act of 1934. For the quarterly period ended June 30, 1995 ____ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. 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, $.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 -------- ------- The number of shares of the registrant's common stock, $.01 par value per share outstanding, as of July 28, 1995, was 26,884,375. INFORMATION RESOURCES, INC. and Subsidiaries INDEX ----- PAGE NUMBER ------ PART I. FINANCIAL INFORMATION - ------------------------------- Condensed Consolidated Balance Sheets 3 Condensed Consolidated Statements of Operations 4 Condensed Consolidated Statements of Cash Flows 5 Notes to Condensed Consolidated Financial Statements 7 Management's Discussion and Analysis of Financial Condition and Results of Operations 11 PART II. OTHER INFORMATION - --------------------------- Item 4 - Submission of Matters to Vote of Security Holders 17 Item 6 - Exhibits and Reports on Form 8-K 18 Signatures 19 2 INFORMATION RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
ASSETS JUNE 30, 1995 DECEMBER 31, 1994 - ------ ------------- ----------------- (UNAUDITED) CURRENT ASSETS Cash and cash equivalents $ 12,778 $ 11,792 Accounts receivable, net 143,885 119,851 Deferred income taxes 4,963 4,471 Prepaid expenses and other 7,994 7,075 -------- -------- Total Current Assets 169,620 143,189 -------- -------- Property and equipment 147,471 145,537 Accumulated depreciation and amortization (82,348) (85,244) -------- -------- 65,123 60,293 Investments 19,604 20,995 Other assets 148,737 130,077 -------- -------- $403,084 $354,554 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES Current maturities of capitalized leases $ 2,103 $ 1,998 Accounts payable 28,997 19,665 Accrued expenses 29,974 28,012 Deferred revenue 36,118 17,733 Other 5,915 6,207 -------- -------- Total Current Liabilities 103,107 73,615 -------- -------- Long-term debt 53,750 29,000 Long-term capitalized leases 3,471 2,452 Deferred income taxes 9,441 16,122 Deferred gain 4,255 4,463 Other liabilities 1,772 1,701 STOCKHOLDERS' EQUITY Preferred stock-authorized, 1,000,000 shares $.01 par value - none issued -- -- Common stock - authorized 60,000,000 shares in 1995 and in 1994, $.01 par value, issued and outstanding in 1995: 26,868,000 shares; issued and outstanding in 1994: 26,493,277 shares 269 265 Capital in excess of par value 175,154 169,703 Retained earnings 50,606 57,506 Cumulative translation adjustment 1,259 (273) -------- -------- Total Stockholders' Equity 227,288 227,201 -------- -------- $403,084 $354,554 ======== ========
The accompanying notes are an integral part of these statements. 3 INFORMATION RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED (IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED -------------------- ---------------------- JUNE 30 JUNE 30 -------------------- ---------------------- 1995 1994 1995 1994 --------- -------- --------- --------- Revenues $ 109,332 $ 92,183 $ 214,127 $ 179,861 Costs and expenses: Operating expenses (101,956) (79,200) (200,107) (151,781) Selling, general and administrative expenses (12,409) (10,842) (24,033) (21,413) --------- -------- --------- --------- (114,365) (90,042) (224,140) (173,194) --------- -------- --------- --------- Operating profit (loss) (5,033) 2,141 (10,013) 6,667 Interest expense and other, net (1,732) (311) (2,686) (256) Litigation provision -- -- -- (5,000) Equity in gain (loss) of affiliated companies 204 (2,071) 155 (4,329) --------- -------- --------- --------- Loss before income taxes, minority interest and cumulative effect of change in accounting principle (6,561) (241) (12,544) (2,918) Income tax (expense) benefit 2,952 (9) 5,644 886 --------- -------- --------- --------- Loss before minority interest and cumulative effect of change in accounting principle (3,609) (250) (6,900) (2,032) Minority interest -- 262 -- 756 --------- -------- --------- --------- Earnings (loss) before cumulative effect of change in accounting principle (3,609) 12 (6,900) (1,276) Cumulative effect on prior years of change in accounting principle -- -- -- (6,594) --------- -------- --------- --------- Net earnings (loss) $ (3,609) $ 12 $ (6,900) $ (7,870) ========= ======== ========= ========= Earnings (loss) per common and common equivalent share: Before cumulative effect of accounting change $ (.13) $ $ (.26) $ (.05) Cumulative effect of accounting change -- -- -- (.26) --------- -------- --------- --------- Net earnings (loss) $ (.13) $ -- $ (.26) $ (.31) ========= ======== ========= ========= Weighted average common and common equivalent shares 26,826 26,091 26,721 25,835 ========= ======== ========= =========
The accompanying notes are an integral part of these statements. 4 INFORMATION RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED (IN THOUSANDS)
SIX MONTHS ENDED JUNE 30 -------------------------- 1995 1994 ------------ ------------ OPERATING ACTIVITIES: Net loss $ (6,900) $ (7,870) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 12,933 9,872 Amortization of capitalized software costs 4,597 3,975 Amortization of deferred data procurement costs 40,767 31,033 Deferred income taxes (7,508) (861) Equity in (gain) loss of affiliated companies and minority interest (155) 3,573 Cumulative effect of change in revenue recognition -- 6,594 Other 2,378 337 Change in assets and liabilities: Increase in current assets (22,179) (20,828) Increase in other assets (1,333) (1,165) Increase in current liabilities, principally deferred revenue in 1995 20,011 1,918 Other, net (92) 374 -------- -------- Total adjustments 49,419 34,822 -------- -------- Net cash provided by operating activities 42,519 26,952 INVESTING ACTIVITIES: Purchase of property and equipment - net (11,064) (13,021) Software costs (5,043) (6,146) Deferred data procurement costs (48,404) (39,283) Investment in joint ventures (4,812) (1,832) -------- -------- Net cash used in investing activities (69,323) (60,282) FINANCING ACTIVITIES: Net borrowings (repayments) of capitalized leases 1,124 (864) Net bank borrowings 24,750 23,500 Proceeds from exercise of stock options 1,236 732 Capital contributions from minority interest -- 132 -------- -------- Net cash provided by financing activities 27,110 23,500 Effect of exchange rate on cash 680 754 -------- -------- Net increase (decrease) in cash 986 (9,076) Cash and cash equivalents at beginning of period 11,792 19,368 -------- -------- Cash and cash equivalents at end of period $ 12,778 $ 10,292 ======== ========
(continued) 5 INFORMATION RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT'D. UNAUDITED (IN THOUSANDS) SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: SIX MONTHS ENDED JUNE 30 ------------------------ 1995 1994 ------- ---- Cash paid (refunded) during the period for: Interest $ 2,408 $ 770 Income taxes (refund) $(1,064) $(393) In March, 1995, the Company and Middle East Market Research Bureau ("MEMRB") International entered into a strategic alliance agreement. In connection with this agreement, the Company issued 176,000 shares of its common stock having a market value of approximately $2.6 million to the stockholders of MEMRB and obtained an option to acquire up to a 49% ownership interest in MEMRB. The accompanying notes are an integral part of these statements. 6 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - --------------------------------------------------- Basis of presentation: The accompanying condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in Information Resources, Inc.'s Annual Report on Form 10-K for the year ended December 31, 1994. The condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the condensed consolidated financial statements for the periods shown. Principles of consolidation: The condensed consolidated financial statements include the accounts of Information Resources, Inc. and its subsidiaries (collectively "the Company") after elimination of intercompany transactions. Reclassifications: Certain amounts in the 1994 consolidated financial statements have been reclassified to conform to the 1995 presentation. NOTE 2 - ACCOUNTS RECEIVABLE - ---------------------------- Accounts receivable are as follows:
June 30, 1995 December 31, 1994 ------------- ----------------- (in 000's) Billed $ 83,907 $ 58,666 Unbilled 57,987 59,806 Other 5,739 4,305 -------- -------- 147,633 122,777 Allowance for doubtful receivables (3,748) (2,926) -------- -------- $143,885 $119,851 ======== ========
NOTE 3 - INVESTMENTS - -------------------- In February 1995, the Company purchased 39% of its French joint venture, IRI-SECODIP, from its joint venture partner increasing the Company's ownership in the joint venture from 50% to 89%. IRI - SECODIP has been consolidated since January 1, 1995. 7 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D. (UNAUDITED) In March 1995, the Company entered into an alliance with MEMRB, a market research company based in Cyprus. In connection with this agreement, the Company issued 176,000 shares of its common stock having a market value of approximately $2.6 million and obtained an option to acquire up to a 49% ownership interest in MEMRB. The Company's $2.6 million investment in MEMRB has been accounted for as a cost investment in the consolidated financial statements. MEMRB provides market research throughout 22 countries in the Middle East, Eastern Europe, the Mediterranean, the Commonwealth of Independent States and North Africa. Under the terms of the alliance, MEMRB has agreed to cooperate in the adoption of multi-country technical standards developed by the Company for its InfoScan syndicated tracking business and co-market certain information and software products with the Company. NOTE 4 - OTHER ASSETS - --------------------- Other assets are as follows:
June 30, 1995 December 31, 1994 -------------- ----------------- (in 000's) Deferred data procurement costs - net of accumulated amortization of of $119,175 in 1995 and $78,408 in 1994 $103,385 $ 87,799 Capitalized software costs - net of accumulated amortization of $18,852 in 1995 and $14,255 in 1994 24,186 23,357 Goodwill - net of accumulated amortization of $2,311 in 1995 and $1,436 in 1994 8,532 4,450 Other 12,634 14,471 -------- -------- $148,737 $130,077 ======== ========
NOTE 5 - LONG TERM DEBT - ----------------------- In November 1994, the Company established a three-year unsecured revolving bank credit facility. The credit facility allows borrowings of up to $65,000,000 through December 30, 1995 decreasing to $55,000,000 on December 31, 1995 and to $45,000,000 on December 31, 1996. The credit facility contains certain financial covenants including restrictions on additional indebtedness and liens, limitations on acquisitions and investments, and maintenance of minimum levels of tangible net worth, current, leverage and cash flow coverage ratios. At June 30, 1995 the Company was not in compliance with certain financial covenants and noncompliance with these covenants was waived by the banks. The Company has classified its debt according to its terms. In the third quarter of 1995, the entire amount outstanding under the credit facility was repaid by application of proceeds from the sale of the Company's general software business. (See Note 6 - Subsequent Event). 8 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D. (UNAUDITED) NOTE 6 - SUBSEQUENT EVENT - ------------------------- On July 27, 1995 (the "Closing Date"), Information Resources, Inc. ("IRI") completed the sale to Oracle Corporation ("Oracle") of certain assets, liabilities and related software application products relating to its on-line analytical processing business ("the General Software Business") previously operated by IRI's software division. The sale transaction was consummated pursuant to the terms of an Amended and Restated Asset Purchase Agreement dated as of June 12, 1995 between IRI and Oracle (the "Purchase Agreement"). Oracle acquired the EXPRESS technology and the general purpose EXPRESS-based products including the DataServer platform, Express Financial Management System and Express Enterprise Information System. The Company retained sales and marketing application products for use in the consumer packaged goods industry. IRI and Oracle also entered into certain on-going licensing and support agreements. In consideration for such assets and liabilities Oracle paid approximately $100 million in cash, subject to post-closing adjustment. Approximately $11.8 million of the sales proceeds were deposited to an interest-bearing escrow trust account. Of that amount, $8.0 million constitutes a general escrow to be held for at least one year. The remaining $3.8 million will be released upon completion of various closing events in Europe, which the Company anticipates will take place within 60 days after the closing. A portion of the sale proceeds were used to repay the bank credit facility. The remainder of the proceeds will be used to pay expenses of the sale and held for general corporate purposes. The following information sets forth, for the periods and at the dates indicated, summarized unaudited pro forma condensed consolidated financial information for the Company. This financial information is derived from the historical consolidated financial statements and notes thereto and reflects (a) the condensed consolidated results of operations as if the following transactions had occurred on December 31, 1993 and (b) the condensed consolidated balance sheet as if the sale of the General Software Business occurred on June 30, 1995. The transactions impacting pro forma financial information are: (1) In July 1995 the Company sold its General Software Business to Oracle for approximately $100 million. (2) In July 1995 the Company repaid all of its outstanding bank borrowings using the cash proceeds of the sale. The pro forma condensed consolidated financial information reflects: (1) recognition of the impact of the sale of the General Software Business to Oracle and (2) the decrease of net interest expense resulting from the assumed payment of bank loans with proceeds from the sale. The net gain on the sale of the General Software Business to Oracle is not reflected in the unaudited pro forma condensed consolidated statement of operations for the periods presented. In addition, in accordance with the rules and regulations of the Securities and Exchange Commission, interest income on the remaining excess cash proceeds from the sale of the General Software Business after repayment of bank indebtedness and related expenses has not been benefited in the unaudited pro forma condensed consolidated statements of operations for the periods presented. The pro forma unaudited condensed consolidated financial information is not necessarily indicative of the consolidated results of operations as they might have been if the sales had been consummated on the assumed date. 9 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D. (UNAUDITED) NOTE 6 - SUBSEQUENT EVENT, CONT'D. - --------------------------------- The following table presents, on a pro forma basis, a condensed consolidated balance sheet at June 30, 1995 and a condensed consolidated statement of operations for the six months ended June 30, 1995 and the year ended December 31, 1994 (in millions, except per share data): Condensed Consolidated Balance Sheet - ------------------------------------
Pro Forma June 30, 1995 ------------- Current assets $ 161.7 Property and equipment, net 59.7 Investments 19.6 Deferred data procurement costs, net 103.4 Capitalized software, net 7.5 Other assets 20.0 ------- $ 371.9 ======= Current liabilities $ 85.0 Long-term debt -- Other long-term liabilities, principally deferred income taxes 35.6 Stockholders' equity 251.3 ------- $ 371.9 =======
Condensed Consolidated Statement of Operations - ----------------------------------------------
Pro Forma Pro Forma Six Months Ended Twelve Months Ended June 30, 1995 December 31, 1994 ---------------- ------------------- Revenues $ 177.4 $ 313.3 ======= ======= Operating profit (loss) (5.6) 12.5 ======= ======= Interest expense and other, net (.1) .3 ======= ======= Loss before income taxes, minority interest and cumulative effect of change in accounting principle (5.8) (4.7) ======= ======= Net loss before cumulative effect of change in accounting principle $ (2.8) $ (3.5) ======= ======= Net loss per common and common equivalent share $ (.11) $ (.13) ======= ======= Weighted average common and common equivalent shares 26,721 26,056 ======= =======
If the remaining excess cash proceeds from sale were invested in U.S. Treasury securities, pro forma net loss before cumulative effect of change in accounting principle would be benefited by $.02 and $.07 per share for the six months ended June 30, 1995 and the year ended December 31, 1994, respectively. 10 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, the percentage relationship to revenue of certain items in the Condensed Consolidated Statements of Operations, and the percentage changes from period to period in such items.
PERCENTAGE INCREASE/(DECREASE) PERCENTAGE OF REVENUE OVER PRIOR PERIOD ------------------------- ------------------------------ THREE MONTHS SIX MONTHS THREE MONTHS SIX MONTHS ENDED ENDED ENDED ENDED JUNE 30 JUNE 30 1995/ 1995/ 1995 1994 1995 1994 1994 1994 ------ ------ ------ ------ ------------ ---------- Revenues 100.0% 100.0% 100.0% 100.0% 18.6% 19.1% Operating expenses (93.3) (85.9) (93.5) (84.4) 28.8 31.8 Selling, general & admin. (11.3) (11.8) (11.2) (11.9) 14.8 12.1 Operating profit (loss) (4.6) 2.3 (4.7) 3.7 * * Interest expense and other, net (1.6) * (1.3) * * * Litigation provision -- -- -- (2.8) -- * Equity in gain (loss) of affiliates * (2.2) * (2.4) * * Income tax (expense) benefit 2.7 -- 2.6 .5 * * Minority interest -- * -- * * * Cumulative effect of accounting change -- -- -- (3.7) -- * Net earnings (loss) (3.3) -- (3.2) (4.4) * *
* Not meaningful 11 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. REVENUES Revenues attributable to the Company's data and analysis services and business intelligence software are as follows:
SIX MONTHS ENDED THREE MONTHS ENDED JUNE 30 JUNE 30 ------------------- ------------------ 1995 1994 1995 1994 -------- -------- --------- ------- (IN 000'S) Domestic Data and Analysis Services: InfoScan and Testing Services $116,945 $110,637 $ 59,883 $56,790 Towne-Oller and Other 7,686 8,235 3,375 4,074 Retailer Services 7,969 6,285 3,710 3,401 -------- -------- -------- ------- Total Domestic Data and Analysis Services 132,600 125,157 66,968 64,265 -------- -------- -------- ------- International Data and Analysis Services 18,499 5,519 9,613 2,921 -------- -------- -------- ------- Total Data and Analysis Services 151,099 130,676 76,581 67,186 -------- -------- -------- ------- Business Intelligence Software 63,028 49,185 32,751 24,997 -------- -------- -------- ------- Total Revenues $214,127 $179,861 $109,332 $92,183 ======== ======== ======== =======
The Company's consolidated revenue from operations for the six months ended June 30, 1995 increased 19.1% to $214.1 million compared to $179.9 million for the first six months of 1994. Consolidated revenue for the three month period ended June 30, 1995 increased 18.6% to $109.3 million compared to $92.2 million for the same period of 1994. The revenue growth resulted principally from sharply increased revenues from its business intelligence software products and the expansion of international data and analysis services. Revenues from the Company's domestic data and analysis services business for the six months ended June 30, 1995 were $132.6 million, an increase of 5.9% over the same period in 1994. Domestic data and analysis services revenues for the second quarter of 1995 were $67.0 million, an increase of 4.2% over the same three month period in 1994. Revenue growth of the Company's domestic data and analysis services business was lower than the prior year comparable periods due to the continued effects of an intense pricing environment which began in late 1993. The Company's InfoScan contract revenues were most severely affected, and as a result, base contract revenues remained relatively constant compared to the prior year. However, non-base contract, or ad hoc use of the Company's information services continued to increase. The Company's international data and analysis services business made a significant contribution to the overall revenue growth. International data and analysis services revenue for the six months ended June 30, 1995 increased $13.0 million to $18.5 million from $5.5 million in the comparable period of 1994. Revenue for the three months ended June 30, 1995 increased $6.7 million to $9.6 million from $2.9 million in the comparable period of 1994. Revenues generated by the Company's data business operating in France, which was consolidated beginning in 1995, were $7.1 million and $3.9 million for the six and three month periods ended June 30, 1995. 12 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. In dollar terms the Company's foreign revenues also benefited from the weakening of the U.S. dollar compared to certain local currencies. Revenues from the Company's business intelligence software products for the first six months of 1995 and 1994 were $63.0 million and $49.2 million, respectively, and for the second quarter of 1995 and 1994 were $32.8 million and $25.0 million, respectively. Consolidated results for all periods include the operations of the General Software Business which was sold to Oracle on July 27, 1995. This part of the software business reported revenue for the six and three months ended June 30, 1995 of approximately $37 million and $19 million, respectively, compared to approximately $26 million and $13 million for the same periods in 1994, respectively, as revenues rebounded from somewhat depressed year-earlier levels. The portion of the software business being retained by the Company reported revenue of approximately $26 million for the six months ended June 30, 1995, an 11.2% increase compared to the revenue achieved for the same period of 1994. The portion of the software business retained by the Company reported revenue of approximately $13 million for the three months ended June 30, 1995, a 10.3% increase compared to second quarter of 1994. The Company achieved revenue growth in its business intelligence software products due to sharp increases in both delivery of software applications to new and existing customers and additional consulting revenue along with increased software maintenance revenue. OPERATING EXPENSES Consolidated operating expenses increased $48.3 million or 31.8% to $200.1 million in the first six months of 1995 from $151.8 million in the first six months of 1994. Consolidated operating expenses increased $22.8 million or 28.8% to $102.0 million in the second quarter of 1995 from $79.2 million in the second quarter of 1994. For the six and three months ended June 30, 1995 approximately $19.6 million and $9.7 million, respectively, of the increases were attributable to the expansion of the Company's international data and analysis services business, of which approximately $11.0 million and $5.4 million, respectively, is due to the inclusion in the consolidated financial statements of the Company's recently acquired majority interest in its French affiliate. Expenses for foreign operations were also negatively affected by the weakening of the U.S. dollar. The overall increase in the Company's total operating expenses for the six month period ended June 30, 1995 reflected a $13.8 million increase in domestic compensation expense, a $13.0 million increase in international compensation expense, a $9.7 million increase in amortization of deferred data procurement costs, principally in Europe, and a $5.2 million increase in computer expenses required to deliver InfoScan services in Europe and the United States. Aside from expense increases relating to the international expansion, consolidated operating expenses also increased as a result of increases in computer operations and in client service staff to support current and planned future revenue increases, primarily related to census data. In addition, increases in computer operations to support the Company's "OMEGA" production re-engineering and cost reduction project were required. Consolidated results for all periods include the operations of the General Software Business sold to Oracle Corporation on July 27, 1995. This part of the software business reported operating expenses for the six and three months ended June 30, 1995 of approximately $35.1 million and $18.3 million compared to $27.4 million and $14.3 million for the same periods in 1994. 13 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Consolidated selling, general and administrative expenses increased $2.6 million or 12.1% to $24.0 million in the first six months of 1995 from $21.4 million in the same six month period in 1994. Consolidated selling, general and administrative expenses increased $1.6 million or 14.8% to $12.4 million in the second quarter of 1995 compared to $10.8 million in the same three month period of 1994. For the six and three months ended June 30, 1995 approximately $1.2 million and $.8 million, respectively, of the increase in total selling, general and administrative expense were due to consolidation of the Company's French affiliate. The dollar increases in consolidated selling, general and administrative expenses were attributable to increased spending in corporate related expenditures, promotion and advertising and employee recruiting and development. Consolidated selling, general and administrative expense in 1994 includes a one-time charge of $1.4 million incurred in connection with the cancelled acquisition of Asia-based SRG Holdings Limited. Consolidated results for all periods include the operations of a portion of the Company's General Software Business sold to Oracle on July 27, 1995. This part of the software business reported selling, general and administrative expenses for the six and three months ended June 30, 1995 of approximately $5.9 million and $2.8 million compared to $4.7 million and $2.9 million for the same periods in 1994. OTHER EXPENSE Other expenses for the six months ended June 30, 1995 and 1994 were $2.7 million and $5.3 million, respectively. Other expenses for the quarter ended June 30, 1995 and 1994 were $1.7 million and $.3 million respectively. The 1994 results reflect a pre-tax provision of $5.0 million related to shareholder litigation, for which a settlement was approved by the federal district court on March 3, 1995. Interest expense relating to bank borrowings increased in the first six months of 1995 by $1.9 million relative to the first six months of 1994, due to extensive cash requirements needed to further the expansion of the Company's international data and analysis services business into Europe. EQUITY IN GAIN (LOSS) OF AFFILIATED COMPANIES Equity in gain (loss) of affiliated companies reflects gains and losses recognized related to equity investments. The increase was primarily due to the Company's increased ownership interest in its French affiliate which, effective January 1, 1995, has been included as a consolidated subsidiary of the Company. INCOME TAXES The Company's effective tax rate on operations including minority interest was 45.0% and 41% for the six months ended June 30, 1995 and 1994, respectively. The principle causes of the Company's effective tax rate in excess of the Federal statutory rate are state and local taxes and, in 1995, certain unbenefited foreign losses. CUMULATIVE EFFECT ON PRIOR YEARS OF CHANGE IN ACCOUNTING PRINCIPLE Effective January 1, 1994, the Company changed its method of recognizing revenue on InfoScan, PromotionScan and BehaviorScan products. Revenue now is recognized over the term of the contract on a straight-line basis. Previously, the Company recognized a portion of the initial contract revenue in the period between client commitment and either the start of forward data or the test commencement. 14 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. NET EARNINGS (LOSS) As a result of the factors described above, net loss was ($3.6) million for the second quarter of 1995 and ($6.9) million for the six months ended June 30, 1995 versus break-even for the second quarter of 1994 and a net loss of ($7.9) million for the six months ended June 30, 1994. Included in 1994 results, however, were one-time charges of ($10.3) million, or ($0.41) per share relating to the cumulative effect of change in accounting principle for revenue recognition, shareholder litigation reserves and charges for the cancelled acquisition of SRG Holdings Limited. FINANCIAL LIQUIDITY AND CAPITAL RESOURCES CASH FLOW: Consolidated net cash provided by operating activities was $42.5 million for the first six months of 1995 compared to $27.0 million for the same period in 1994. Cash provided by operating activities increased due primarily to cash received from customers in 1995 reflected as deferred revenue. Cash used for net investing activities was $69.3 million for the first six months of 1995 versus $60.3 million for the same period in 1994. This increase is primarily due to data procurement costs attributable to the expansion of the Company's data collection efforts in Europe and, to a much lesser degree, the United States. Cash provided by financing activities was $27.1 million for the first six months of 1995 in comparison to $23.5 million for the first six months of 1994. The net financing activities in 1995 and 1994 reflect net bank borrowings of $24.8 million and $23.5 million, respectively used to fund the Company's continuing development of its international data and analysis services business. SALE OF GENERAL SOFTWARE BUSINESS: On July 27, 1995, the Company sold its General Software Business to Oracle for approximately $100 million in cash, of which $11.8 million was placed in escrow. On July 28, 1995 the entire amount outstanding under the credit facility was repaid by application of a portion of the proceeds from the sale of the General Software Business. The remainder of the proceeds will be used to pay expenses associated with the sale and held for general corporate purposes. FINANCINGS: The Company increased its bank borrowings to $53.8 million at June 30, 1995 from $29.0 million at December 31, 1994. The primary use of borrowings has been the expansion of the Company's data and analysis services business in Europe. The Company's bank credit facility is limited to $65.0 million and decreases to $55.0 million at December 31, 1995 and to $45.0 million at December 31, 1996. At June 30, 1995 the Company was not in compliance with certain financial covenants, and noncompliance with these covenants was waived by the banks. The Company intends to renegotiate or replace its bank credit facility during the second half of 1995. As a result of the cash generated from the sale of the General Software Business to Oracle in July 1995 the Company does not expect to have any drawings under its bank credit facility during the remainder of 1995. The Company has agreed not to borrow under the current bank credit facility until new financial covenants have been established. 15 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. CAPITAL EXPENDITURES: Consolidated capital expenditures were $11.1 million and $13.0 million for the six months of 1995 and 1994, respectively. This decline was due to the implementation of an aggressive program to minimize capital spending in the first half of 1995. Consolidated deferred data procurement expenditures were $48.4 million and $39.3 million for the six months of 1995 and 1994, respectively. The increase in deferred data procurement expenditures is principally related to the expansion of the Company's international data and analysis services business. Management expects to continue its investment in its information data and analysis services business in Europe. These operations will continue to require substantial investment through at least the end of 1996. Consolidated software development costs were $5.0 million and $6.1 million for the six months of 1995 and 1994, respectively. Due to the sale of the General Software Business to Oracle, software development costs are expected to decrease over the remaining months of 1995 compared to 1994. 16 INFORMATION RESOURCES, INC. AND SUBSIDIARIES PART II OTHER INFORMATION Item 4. Submission of Matters to Vote of Security Holders. (a) The annual meeting of Stockholders of the Company was held May 24, 1995. (b) Without solicitation in opposition, the nominees listed in the proxy statement soliciting proxies were elected as directors to serve for a three-year term ending in 1998 as follows:
Name Votes For Votes Withheld ---- ---------- -------------- Gian M. Fulgoni 22,024,297 127,501 James G. Andress 22,025,197 126,601 Leonard M. Lodish, Ph.D. 22,025,265 126,533 Edith W. Martin, Ph.D. 22,025,497 126,301 Thomas W. Wilson, Jr. 22,025,397 126,401
Following is the name of each other director whose term of office as a director continued after the meeting for terms ending in either 1996 or 1997: Edwin E. Epstein, Edward E. Lucente, Jeffrey P. Stamen, Gerald J. Eskin, John D.C. Little, Ph.D., George G. Montgomery, Jr., and Glen L. Urban, Ph.D. (c) The appointment of Grant Thornton LLP, independent certified public accountants for the Company for the year ended December 31, 1995, was ratified as follows:
Votes For Votes Against Votes Withheld ---------- ------------- -------------- 22,067,811 46,075 37,912
(d) The amendment to the Executive Stock Option Plan increasing the number of shares authorized for issuance thereunder was approved as follows:
Votes For Votes Against Votes Withheld Broker Non-Votes - ------------------ ------------- -------------- ---------------- 14,352,291 7,580,623 80,947 137,937
(e) The amendment to the Executive Stock Option designed to preserve the tax deductibility of certain compensation paid thereunder was approved as follows:
Votes For Votes Against Votes Withheld Broker Non-Votes - ------------------ ------------- -------------- ---------------- 21,820,765 162,760 88,742 79,531
17 INFORMATION RESOURCES, INC. AND SUBSIDIARIES PART II OTHER INFORMATION (CONT'D.) Item 6. Exhibits and Reports on Form 8-K. a. Exhibits Exhibit No. Description of Exhibit Page ----------- ---------------------- ------- 2 Amended and Restated Asset Purchase Agreement dated as of June 12, 1995 by and between the Company and Oracle Corporation (Incorporated by reference. Previously filed as Exhibit 2.1 to the Company's Current Report on Form 8-K dated July 27, 1995 and filed August 11, 1995). IBRF 3 1992 Executive Stock Option Plan, as amended effective May 24, 1995 (filed herewith). EF 10.2 Amendment to Credit Agreement dated November 3, 1994, between the Company and Harris Trust and Savings Bank (filed herewith). EF 10.2 Licenses - Back Agreement dated as of July 27, 1995 between the Company and Oracle Corporation (Incorporated by reference. Previously filed as Exhibit B to the Amended and Restated Asset Purchase Agreement dated as of July 27, 1995 filed as Exhibit 2.1 to the Current Report on Form 8-K dated July 27, 1995 and filed August 11, 1995). IBRF 27 Financial Data Schedule (filed herewith). EF b. Reports on Form 8-K. Form 8-K dated July 27, 1995 (filed with the SEC on August 11, 1995). Items Reported: Item 2: Disposition of Assets Item 7: Financial Statements and Exhibits 18 INFORMATION RESOURCES, INC. AND SUBSIDIARIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, Registrant's principal financial officer, thereunto duly authorized. INFORMATION RESOURCES, INC. --------------------------- (Registrant) /s/ Gary M. Hill ---------------------------------------- Gary M. Hill Executive Vice President and Chief Financial Officer (Authorized officer of Registrant and principal financial officer) August 14, 1995 19 EX-3 2 STOCK OPTION PLAN EXHIBIT 3 INFORMATION RESOURCES, INC. 1992 EXECUTIVE STOCK OPTION PLAN (AS AMENDED EFFECTIVE MAY 24, 1995) 1. Introduction and Purpose. The purpose of this Stock Option Plan is to advance the interests of Information Resources, Inc. by encouraging and enabling the acquisition of a larger personal proprietary interest in the Corporation by Eligible Executives upon whose judgment and keen interest the Corporation and its Subsidiaries are largely dependent for the successful conduct of their service and operations. It is anticipated that the acquisition of such proprietary interest in the Corporation will stimulate the efforts of such Eligible Executives, 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 desirable candidates for the Corporation's Board of Directors and executive management. 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 Stock Option Committee, as described in Section 3 hereof, appointed by the Board to administer 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 Executives" shall mean the directors and executive officers of 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 average of the bid and asked prices 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 consistent with Section 422(c)(7) of the Internal Revenue Code. (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. 1992 Executive Stock Option Plan, effective as of the date set forth in Section 23 hereof, 1992, and as amended from time to time. (j) "Plan Year" means the calendar year. (k) "Retirement Date" shall mean, with respect to an Eligible Executive, the effective date of his or her retirement from the Corporation or one of its Subsidiaries upon reaching the age of 60 years, or, if applicable, his or her retirement upon such earlier date as shall be permitted under the Corporation s or Subsidiary's retirement plan, as the case may be. (l) "Rule 16b-3" means Rule 16b-3 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended from time to time, or any successor thereto. (m) "Securities Act of 1933" shall mean the Securities Act of 1933, as amended from time to time, or any successor thereto. (n) "Securities Exchange Act of 1934" shall mean the Securities Exchange Act of 1934, as amended from time to time. or any successor thereto. (o) "Share" shall mean a share of Common Stock of the Corporation at a par value of $.01. (p) "Subsidiary" shall mean any "subsidiary corporation", as such term is defined in Section 424(f) of the Internal Revenue Code. (q) "Voting Power," as of any date, means the total combined voting power of all classes of stock of the Corporation or its parent, if any, or Subsidiary, as measured for purposes of Section 422(b)(6) of the Internal Revenue Code. 2 3. Administration of the Plan. (a) The Committee shall be appointed by the Board of Directors and shall consist of at least two members of the Board of Directors, who shall each be a "disinterested person" within the meaning of Rule 16b-3. The Committee shall have the authority, subject to the provisions of this Plan, to (i) determine which Eligible Executives shall receive Options and the number of Options each Eligible Executive shall receive, (ii) grant the Options, (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 time, and (vi) administer the Plan as provided herein and, in exercising this authority, shall establish such rules and procedures as are necessary or advisable to administer the Plan. (b) Each member of the Committee shall hold his or her position on the Committee until the next regular annual meeting of the Board of Directors following his or her designation and until his or her successor is designated as a member of the Committee; provided, however, that (i) any member of the Committee may be removed at any time, with or without cause, by resolution adopted by a majority of the Board of Directors and (ii) a member of the Committee may resign from the Committee at any time by giving written notice to the President, Secretary or Assistant Secretary of the Corporation in person or by certified or registered mail, return receipt requested, sent to 150 North Clinton Street, Chicago, Illinois 60661, and, unless otherwise specified therein, such resignation shall take effect upon receipt of such written notice. The acceptance of such resignation by the President, Secretary or Assistant Secretary of the Corporation shall not be necessary for such resignation to be effective. Any vacancy in the Committee may be filled by a resolution adopted by a majority of the Board of Directors. (c) Each member of the Committee shall receive, annually, Options to purchase 2,500 shares of Common Stock. Such Options shall be issued on June 15 of each year, beginning in 1992, and, except as otherwise provided in this Plan, the exercise price per share of Common Stock thereunder shall be equal to the Fair Market Value of one Share as of the date of Option issuance. Except as provided in this Section 3(c), no Options shall be granted to Committee members under this Plan. The provisions of this Section 3(c) may not be amended more than once every six months, other than to comport with the changes in the Internal Revenue Code, the Employee Retirement Income Security Act of 1974, as amended, and the rules or regulations under such statutes. 4. Plan Participants. Except as hereinafter provided, the class of individuals who are potential recipients of Options to be granted under this Plan ("Eligible Executives") consists of those individuals who are executive officers or directors of the Corporation or any of its Subsidiaries and are subject to Section 16 of the Exchange Act. Directors who, at the time of 3 such Option grants, are not also executive officers or employees of the Corporation or its Subsidiaries shall be Eligible Executives; provided that only Options which the Committee has designated as non-qualified stock options may be granted to such directors. 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 2,500,000 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 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 4 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. (d) Notwithstanding any other provision of this Plan, any provision included herein which is inconsistent with Rule 16b-3 shall be inoperative and shall not affect the validity of the Plan. 8. Grant of Options. (a) Options granted under this Plan may be either non-qualified stock options or incentive stock options within the meaning of Section 422 of the Internal Revenue Code. Options which are not designated as incentive stock options shall not be treated as incentive stock options for purposes of this Plan or the Internal Revenue Code. (b) Subject to the provisions of this Plan, the Committee may, from time to time prior to the termination of the Plan, grant Options to Eligible Executives 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; provided that, if such Option is designated as an incentive stock option, then such terms and conditions shall not be inconsistent with Section 422 of the Internal Revenue Code. 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. (c) 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 President, any Vice President or the Treasurer of the Corporation. The Option Agreement shall designate the Option as either an incentive stock option or a non- qualified stock option. (d) In no event may an Eligible Executive be granted an Option under the Plan in any year in excess of that person's Individual Limit. For purposes hereof, the "Individual Limit" is 250,000 shares. 9. Price. Except with respect to an Option described in Section 3(c) herein, 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; and provided that, if the Option is designated as an incentive stock option, in no event shall the price be less than the greater of (i) the Fair Market Value of a Share on the day on which the Option is granted or (in) if the Option 5 holder owns stock possessing more than 10% of the Voting Power, the price specified in Section 14 herein. 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 (i) 10 years from the date upon which the Option is granted or (ii) in the case of an Option designated as an incentive stock option where the Option holder owns stock possessing more than 10% of the Voting Power, the duration specified in Section 14 herein. The period of the Option, once it is granted, may be reduced only as provided for in Section 17 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. 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 100 Shares, unless a purchase of fewer Shares would entirely exhaust the Options held by the Option holder; provided however, that no Option may be exercised in part or in full prior to the approval of the Plan by a majority vote of the stockholders of the Corporation, as provided in Section 23 herein. 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 Shares shall be valued at their Fair Market Value as of the date preceding the day of such exercise) or (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. Such payment shall be delivered to the Treasurer, Secretary or Assistant Secretary of the Corporation who has been designated 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 Corporation shall (i) cause to be delivered to the person entitled thereto a new Option Agreement 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. 6 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 was assigned on the date the Option was granted 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 (ii) terminate in whole or in part any portion of an Option which has not yet become exercisable. With the exception of those Eligible Executives described in Section 4 herein who are directors of the Corporation but who are not also executive officers of the Corporation or a Subsidiary and, subject to the provisions of this Section 13 and Section 17 herein, no Option may be exercised unless the Option holder is at the time of such exercise in the employ of the Corporation or of a Subsidiary 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. (c) Notwithstanding any other provision of this Plan, any Option granted under this Plan which is designated as an incentive stock option shall not be exercisable to the extent that (i) the Fair Market Value of the Shares (determined as of the date of Option grant), with respect to which such Option (and any other incentive stock option granted to the Option holder under this Plan or any other stock option plan maintained by the Corporation or any Subsidiary or parent corporation) first becomes exercisable in any calendar year, exceeds $100,000; and (ii) Section 422(d) of the Internal Revenue Code would otherwise preclude such Option from being treated as an incentive stock option. (d) No Option designated as an incentive stock option shall be exercised by an Eligible Executive until such individual has been in the employ of the Corporation for a period of at least three months following the date such Option is granted. 14. Limitations Regarding Ten Percent Stockholders. No Option which is designated as an incentive stock option may be granted under this Plan to any Eligible Executive who, at the time the Option is granted, owns, or is considered to own, within the meaning of Section 422 of the Internal Revenue Code, Shares possessing more than 10% of the Voting Power, unless (i) the exercise price under such Option is at least 110% of the Fair Market Value of a Share on the date such Option is granted and (ii) the duration of such Option is no more than five years. 15. 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 7 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. 16. 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, except as prohibited under Internal Revenue Code Section 422 with respect to an Option designated as an incentive stock option, 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 and such rights and privileges shall immediately become null and void. 17. Effect of Termination of Employment, Death, Disability or Retirement of Option Holder. (a) Except as otherwise provided herein or except as otherwise set forth in an agreement authorized by the Committee or the Board of Directors, all Options granted hereunder shall terminate upon the earlier of the date of the expiration of such Options or the date one year after termination of the employment or directorship relationship between the Corporation or a Subsidiary and the Option holder, provided that the stock Option Agreement may provide for a shorter time period in cases other than termination of employment or directorship due to death or disability, and, to the extent such Options are otherwise exercisable within the provisions of this Plan or of the Option Agreement, may be exercised in whole or in part during such one year period, subject to the terms and conditions of the Plan and of the Option Agreement; provided, however, that in the event of the termination of employment of an Option holder by reason of the Option holder's retirement at his or her Retirement Date, all Options granted hereunder to the Option holder which are designated as incentive stock options shall terminate upon the earlier of the date of expiration of such Options or the date three months after such termination of employment and those Options which have vested at his or her Retirement Date may be exercised in whole or in part during such three month period, subject to the terms and conditions of the Plan and of the Option Agreement. In the event of the termination of employment or directorship of an Option holder by reason of the Option holder's death or disability, but not in the event of other termination of employment or directorship, all Options held by the Option holder shall become immediately exercisable in full. For purposes of this Plan, "disability" shall be defined in the same manner as such 8 term is defined in Section 22(e)(3) of the Internal Revenue Code. (b) The Committee, in its sole discretion, shall determine whether the Option holder's authorized leave of absence from his or her employment from the Corporation or a Subsidiary or absence on military or government service shall constitute termination, severance or interruption of employment by the Option holder, for purpose of this Section 17, except that, in the case of an Option designated as an incentive stock option, the determination by the Committee shall not be inconsistent with the characterization of such leave of absence as being (or not being) an interruption of employment for purposes of Internal Revenue Code Section 422. The transfer of an Option holder from the employment of the Corporation to a Subsidiary, or vice versa, or from one Subsidiary to another, shall not be deemed to constitute a termination of employment for purposes of this Plan. 18. Disposition of Shares. No Option or the Shares issued pursuant to the exercise of an Option shall be disposed of, within the meaning of Rule 16b-3, until six months after the date such Option was granted. 19. 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 19 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. 20. Amendment of the Plan. Except as hereinafter provided, the Board of Directors may, at any time and from time to time, modify or amend the Plan; provided, however, that no such modification or amendment shall (i) increase or decrease the number of Shares issuable under the Plan or under any Option or the exercise price associated with such Option, with the exception of an increase or decrease resulting from a stock split, stock dividend or any other increase or decrease as provided in Section 19 herein, (ii) change the class of individuals to whom Options may be granted, or (iii) extend the period or periods during which Options may be granted or exercised, without the approval of the stockholders of the Corporation within 12 months of such modification or amendment. In no event shall such modification or amendment of the Plan affect an Option holder's rights with respect to an Option granted to the Option holder without his or her consent. 9 21. 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 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. 22. Applicability of Plan to Outstanding Stock Options. This Plan shall not affect the terms and conditions of any stock options heretofore granted to any employee of 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 Plan and Non-qualified Stock Option Plan, nor shall it affect any of the rights of any employee of the Corporation or its Subsidiaries to whom such stock options were granted. 23. Effective Date of the Plan. This Plan is conditioned upon its approval by the stockholders of the Corporation on or before June 30, 1992, pursuant to the affirmative vote of the holders of a majority of the outstanding Shares of the Corporation's voting stock, either in person, by proxy or by consent; except that, prior to or following such approval of the Plan by the stockholders of the Corporation, this Plan shall be adopted and approved by the Board of Directors or the Executive Committee of the Board of Directors to permit the grant of Options. Notwithstanding any other provision of this Plan, in the event that this Plan is not approved by the stockholders of the Corporation as aforesaid, this Plan and any Options granted hereunder shall be void and of no force or effect. 24. Expiration and Termination of the Plan. The Plan shall remain in full force and effect until the close of business on May 27, 2002, 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 10 years from the effective date of the Plan. 25. 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. 10 26. Governing Law. The Plan and all determinations made and actions taken hereunder, to the extent not otherwise governed by the 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 M. Fulgoni ---------------------------- Gian M. Fulgoni, Chairman 11 EX-10.2 3 AMD TO CREDIT AGREEMENT EXHIBIT 10.2 INFORMATION RESOURCES, INC. AND SUBSIDIARIES AMENDMENT TO CREDIT AGREEMENT Information Resources, Inc. 150 North Clinton Street Chicago, IL 60606 Gentlemen: We refer to the Credit Agreement dated as of November 3, 1994, as amended, between you (the "Borrower") and us (the "Banks") (the "Credit Agreement"). All capitalized terms used herein without definition shall have the same meanings herein as such terms are defined in the Credit Agreement. The Borrower has notified the Banks that the Borrower intends to sell its EXPRESS technology and certain related assets of the Borrower to Oracle Corporation for a purchase price of approximately $100,000,000, all as more fully set forth in the Borrower's June 12, 1995 press release regarding the sale heretofore furnished to the Banks (the "Oracle Sale"). Pursuant to Section 11.13 of the Credit Agreement, the Borrower has requested that the Required Banks waive Section 7.15 of the Credit Agreement to permit the Oracle Sale. To induce the Required Banks to waive Section 7.15 of the Credit Agreement to permit the Oracle Sale, the Borrower hereby agrees that (i) upon the occurrence of the Oracle Sale, all Loans outstanding under the Credit Agreement shall be repaid within two Business Days of the Oracle Sale together with any amounts due the Banks under Section 1.11 of the Credit Agreement, (ii) following the Oracle Sale, the Borrower and the Banks agree to negotiate in good faith to reestablish financial covenants applicable to the Borrower and its Subsidiaries pursuant to such financial covenants and established at such amounts and ratios are acceptable to the Borrower and all of the Banks, (iii) upon the occurrence of the Oracle Sale and thereafter prior to the establishment of amended financial covenants pursuant to clause (ii) above, the Borrower agrees that it will not request any new Loans or request any new Letters of Credit under the Credit Agreement and (iv) if the Borrower and all of the Banks fail to establish mutually agreeable financial covenants pursuant to clause (ii) above on or before 60 days after the occurrence of the Oracle Sale, the Borrower hereby agrees that the Commitments shall terminate on the date occurring 60 days after the occurrence of the Oracle Sale, and all Obligations owing under the Credit Agreement and the other Loan Documents shall then be paid and satisfied in full. Nothing herein contained shall prohibit the Borrower from terminating the Commitments pursuant to Section 1.12 of the Credit Agreement. By signing in the space provided for that purpose below, the Required Banks hereby agree to waive Section 7.15 to permit the Oracle Sale, provided that (a) the Oracle Sale occur on or before December 31, 1995, and (b) this waiver shall be subject to each of the conditions set forth in clauses (i) through (iv) above, it being understood and agreed by the Borrower that its promises set forth in clauses (i) through (iv) above have been relied on by the Banks in agreeing to the waiver set forth herein. Except as specifically waived hereby, all of the terms and conditions of the Credit Agreement shall stand and remain unchanged and in full force and effect. This waiver letter may be executed in any number of counterparts, all of which taken together shall constitute one instrument. Dated this 14th day of July 1995. HARRIS TRUST AND SAVINGS BANK, COMERICA BANK - ILLINOIS individually and as Agent By: /s/ Richard H. Robb By: /s/ Harve C. Light -------------------- ------------------------- Name: Richard H. Robb Name: Harve C. Light Title: Vice President Title: Corporate Banking Officer NBD BANK, NATIONAL ASSOCIATION THE SAKURA BANK, LIMITED By: /s/ Art Littlefield By: /s/ Hajima Miyagi -------------------- ---------------------- Name: Art Littlefield Name: Hajima Miyagi Title: -------------------- Title: Deputy General Manager MERCANTILE BANK OF ST. LOUIS NATIONAL ASSOCIATION By: /s/ David Bensinger --------------------------- Name: David Bensinger Title: Vice President Accepted and agreed to as of the date last above written. INFORMATION RESOURCES, INC. By: /s/ Edward S. Berger --------------------------- Name: Edward S. Berger Title: Vice President EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 6-MOS DEC-31-1995 JUN-30-1995 12,778 0 147,633 (3,748) 0 169,620 147,471 (82,348) 403,084 103,107 0 269 0 0 227,019 403,084 214,127 214,127 0 200,107 0 0 2,886 (12,544) 5,644 (6,900) 0 0 0 (6,900) (.26) (.26)
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