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National Research Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 13, 2010 04:17PM
National Research Corp. (NRCI) filed Quarterly Report for the period ended 2010-06-30.
Highlight of Business Operations:
The Company had a working capital deficiency of $1.4 million as of June 30, 2010, compared to a working capital deficiency of $4.4 million on December 31, 2009. The decrease in the working capital deficiency was primarily due to a $4.7 million increase in cash and cash equivalents and a $2.7 million increase in accounts receivable, partially offset by an increase in deferred revenue of $4.0 million. The working capital deficiency balance was primarily due to a deferred revenue balance of $15.9 million as of June 30, 2010, and $11.9 million as of December 31, 2009.
Net cash provided by operating activities was $9.2 million and $7.6 million for the six-month periods ended June 30, 2010, and June 30, 2009, respectively, an increase of $1.5 million, or approximately 19.8%. The increase in cash provided by operating activities is primarily the result of an increase of $2.9 million in the change in deferred revenue, partially offset by an increase in the change in accounts receivables and unbilled revenue of $1.6 million. The increases in deferred revenue collections and accounts receivable balances are primarily the result of $2.0 million in new sales compared to the same period in 2009, with the majority of the contract amounts billed at the start of the contract. The decrease in unbilled revenue is primarily the result of changes in the timing of billing and growth in subscription-based contracts which are normally billed fully at the start of the contract. The remaining $300,000 increase in cash provided by operating activities is attributable to increased net income adjusted for non-cash changes including depreciation and amortization, deferred income taxes, and share-based compensation.
Net cash used in investing activities was $760,000 and $2.1 million for the six-month periods ended June 30, 2010, and June 30, 2009, respectively, a decrease of $1.3 million, or approximately 63.5%. The decrease in cash used by investing activities is due to a decrease of $1.5 million in property and equipment purchases, partially offset by a $172,000 earn-out payment related to the MIV acquisition.
Net cash used in financing activities was $3.7 million and $6.3 million for the six-month periods ended June 30, 2010, and June 30, 2009, respectively, a decrease of $2.7 million, or approximately 42.3%. The decrease in cash used by financing activities is principally due to a $7.2 million decrease in payments on the Company s term note and revolving credit note, partially offset by a $3.7 million decrease in proceeds from borrowings on the revolving credit note. These decreases were partially offset by an increase in dividends paid of $398,000. Additionally, the Company s treasury stock purchases increased by $399,000.
Shareholders equity increased $2.2 million to $46.4 million as of June 30, 2010, from $44.2 million as of December 31, 2009. The increase was primarily due to net income of $4.8 million, partly offset by dividends paid of $2.5 million.
On August 3, 2010, the Company acquired all of the issued and outstanding shares of stock and stock rights of OCS, a leading provider of clinical, financial and operational benchmarks and analytics to home care and hospice providers. The OCS acquisition complements and expands the Company s product offerings across the continuum of care. The all-cash purchase price, excluding transaction costs, of $15.0 million, plus a $1.3 million payment for the estimated working capital adjustment, was funded with available cash on hand and borrowings of $1.3 million under the Company s existing revolving credit note and $10.0 million under a new term note. The new term note is payable in 35 monthly installments of $121,190 with a balloon payment for the remaining principal balance and interest due on July 31, 2013. Borrowings under the term note bear interest at a rate of 3.79% per year. The term note is secured by certain of the Company s assets including land, building, accounts receivable and intangible assets. The term note contains the same covenants and restrictions included in the Company s other term borrowings.