8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

_________________

Date of Report
(Date of earliest
event reported):    February 10, 2004

National Research Corporation
(Exact name of registrant as specified in its charter)

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

1245 Q Street, Lincoln, Nebraska 68508
(Address of principal executive offices, including zip code)

(402) 475-2525
(Registrant's telephone number)

Item 7.  Financial Statements and Exhibits.

(a) Not applicable.

(b) Not Applicable.

(c) Exhibits. The following exhibits are being furnished herewith:

(99.1) Press Release of National Research Corporation, dated February 10, 2004.

(99.2) Script for conference call, held February 11, 2004.

Item 12.  Results of Operations and Financial Condition.

        On February 10, 2004, National Research Corporation (the “Company”) issued a press release announcing its earnings for the fourth quarter and year ended December 31, 2003. A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

        On February 11, 2004, the Company held a conference call in connection with the Company’s announcement of its earnings for the fourth quarter and year ended December 31, 2003. A copy of the script for such conference call is furnished as Exhibit 99.2 and is incorporated by reference herein. An archive of such conference call and the related question and answer session will be available online at www.fulldisclosure.com.

-2-

SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	NATIONAL RESEARCH CORPORATION
Date: February 10, 2004	By:  /s/ Patrick E. Beans
	Patrick E. Beans
	Vice President, Treasurer, Secretary and Chief
	Financial Officer

-3-

NATIONAL RESEARCH CORPORATION

Exhibit Index to Current Report on Form 8-K
Dated February 10, 2004

Exhibit
Number

(99.1) Press Release of National Research Corporation, dated February 10, 2004.

(99.2) Script for conference call, held February 11, 2004.

-4-

EX-99.1

[GRAPHIC OMITTED] [NATIONAL RESEARCH CORPORATION LOGO]

Contact: Patrick E. Beans
Chief Financial Officer
402-475-2525

NATIONAL RESEARCH CORPORATION REPORTS
     YEAR-END REVENUE GROWTH OF 20%      

Company Awarded Contract for First Major Use of National Standard Survey

LINCOLN, Nebraska (February 10, 2004) — National Research Corporation (NASDAQ/NM:NRCI), a leader in healthcare performance measurement, today announced results for the fourth quarter and year ended December 31, 2003.

        Commenting on the year-end performance, Michael D. Hays, president and chief executive officer of National Research Corporation, said, “We are pleased with our 20% revenue growth for 2003, and we believe that we can meet or exceed that growth rate in 2004. A major new driver of revenue in 2004 will be ‘The Quality Initiative,’ the national program to publicly report hospital performance. Voluntary participation in the program increased 59% to 2,711 hospitals from 1,700 last quarter, due in part to the financial incentive enacted into law by Congress. It is anticipated now that many more of the approximately 4,661 hospitals targeted will take advantage of this financial incentive. We are also pleased that National Research Corporation was awarded the contract for the first major use of the new Hospital CAHPS survey, which includes fielding the pilot survey for 200 hospitals. This contract represents the first tangible revenue resulting from the national program and will commence in the first quarter of 2004.”

        Revenues for the fourth quarter ended December 31, 2003, increased 8.4% to $6.7 million compared with revenues of $6.2 million for the fourth quarter of 2002. Net income for the fourth quarter of 2003 remained flat with the year 2002, both at $1.2 million, or $0.17 per basic and diluted share.

        Revenues for the year ended December 31, 2003, increased 20.3% to $26.9 million compared with revenues of $22.4 million for the year ended December 31, 2002. Net income for the year ended December 31, 2003, increased 13.9% to $4.4 million, or $0.60 per basic and diluted share, compared with net income of $3.9 million, or $0.54 per basic and diluted share, in 2002.

-MORE-

NRCI Announces Fourth Quarter and Year-End Results
Page 2
February 10, 2004

        Patrick E. Beans, chief financial officer of National Research Corporation, added, “During the fourth quarter, our stepped-up focus on business development resulted in increased expenses of $302,000, or $0.03 per share, over the prior year level. Notwithstanding the fact that these additional expenses resulted in $0.02 less in earnings per share than our goal for the fourth quarter, our belief is that these development efforts will position National Research Corporation to capitalize on revenue opportunities in 2004. Given our current visibility, we are anticipating earnings per share for the first quarter of 2004 of $0.16, an increase in excess of 23% over the prior year period.”

        A listen-only simulcast of National Research Corporation’s fourth quarter and year-end conference call will be available online at www.fulldisclosure.com on February 11, 2004, beginning at 11:00 a.m. Eastern time. The online replay will follow approximately two hours later and continue for 30 days.

        National Research Corporation, headquartered in Lincoln, Nebraska, is a leading provider of ongoing survey-based performance measurement, analysis and tracking services to the healthcare industry. The Company addresses the growing need of healthcare providers and payors to measure the care outcomes, specifically satisfaction and health status, of their patients and/or members.

        This press release includes “forward-looking” statements related to the Company that can generally be identified as describing the Company’s future plans, objectives or goals. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the factors that could affect the Company’s future results, please see the Company’s filings with the Securities and Exchange Commission.

-MORE-

NRCI Announces Fourth Quarter and Year-End Results
Page 3
February 10, 2004

NATIONAL RESEARCH CORPORATION
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)

	Three Months Ended December 31,						Year Ended December 31,
	2003			2002			2003			2002
Revenues	$	6,742		$	6,222		$	26,922		$	22,387
Operating expenses:
Direct expenses		2,748			2,593			12,029			9,556
Selling, general and administrative		1,606			1,175			5,987			4,738
Depreciation and amortization		478			451			1,941			1,675
Total operating expenses		4,832			4,219			19,957			15,969
Operating income		1,910			2,003			6,965			6,418
Other income (expense):
Interest income		79			70			293			258
Interest expense		(107	)		(109	)		(428	)		(450	)
Other, net		38			6			85			(65	)
Total other income (expense)		10			(33	)		(49	)		(257	)
Income before income taxes		1,920			1,970			6,916			6,161
Provision for income taxes		665			735			2,532			2,311
Net income	$	1,255		$	1,235		$	4,384		$	3,850
Net income per share, basic	$	0.17		$	0.17		$	0.60		$	0.54
Net income per share, diluted	$	0.17		$	0.17		$	0.60		$	0.54
Weighted average shares outstanding:
Basic		7,271			7,236			7,259			7,163
Diluted		7,314			7,264			7,326			7,193

-MORE-

NRCI Announces Fourth Quarter and Year-End Results
Page 4
February 10, 2004

NATIONAL RESEARCH CORPORATION
Unaudited Consolidated Condensed Balance Sheets
(Dollars in thousands)

	Dec. 31, 2003			Dec. 31, 2002
ASSETS
Current Assets:
Cash and cash equivalents	$	3,441		$	991
Short-term investments		12,767			9,987
Accounts receivable, net		5,479			4,579
Other current assets		1,834			2,391
Total current assets		23,521			17,948
Net property and equipment		12,189			12,346
Other, net		9,963			8,538
Total Assets	$	45,673		$	38,832
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	1,074		$	933
Deferred revenue		4,439			3,277
Accrued compensation		805			633
Notes payable		142			132
Income taxes payable		244			55
Total current liabilities		6,704			5,030
Noncurrent liabilities		6,545			5,784
Total Liabilities		13,249			10,814
Shareholders' Equity:
Common stock, $0.001 par value; 20,000,000 shares authorized;
7,639,819 and 7,560,610 shares issued, respectively;
7,305,819 and 7,245,110 outstanding, respectively		8			8
Additional paid-in capital		18,875			18,124
Retained earnings		15,831			11,447
Unearned compensation		(394	)		0
Accumulated other comprehensive income		(27	)		35
Treasury stock		(1,869	)		(1,596	)
Total shareholders' equity		32,424			28,018
Total Liabilities and Shareholders' Equity	$	45,673		$	38,832

-END-

EX-99.2

Mike

Thank you ____________, and welcome to all those joining us today for National Research Corporation’s year-end 2003 earnings conference call. My name is Mike Hays, CEO of National Research. Joining me on the call today is our CFO, Pat Beans. Before we commence the call, I would ask Pat to review with us conditions that relate to forward looking statements we may make during today’s call. Pat.

Pat

Thank you, Mike. This conference call includes “forward-looking” statements related to the company that involve risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the facts that could affect the company’s future results, please see the company’s filings with the Securities and Exchange Commission. With that, I’ll turn it back to you, Mike.

Mike

Thank you, Pat.

During today’s call I will review highlights of the last quarter of 2003 and summarize our performance for the year. I will then turn the call back to Pat to provide you the details of our financial performance for the quarter and the year just ended, after which, and before opening the call to questions, I will review the current year 2004.

Fourth quarter financial performance resulted in revenue of $6.7 million, up from $6.2 million for the fourth quarter of 2002. We are also pleased with the 2003 annual revenue of $26.9 million, which equates to a 20% revenue growth over 2002. We see no reason that we cannot meet or exceed that growth rate in 2004.

Fourth quarter EPS was $0.17 matching the fourth quarter 2002. The lack of growth in fourth quarter earnings was a result of accelerating marketing and sales efforts in light of the increasing pace surrounding the National Standard which I will focus on later in the call.

Earnings per share for the year was $0.60 compared to $0.54 per share in 2002. This equals an 11% growth which we feel we can surpass in 2004.

At this time, Pat, may I ask that you provide details for the 4^th quarter and year-end December 2003

Pat

Thank you, Mike.

During the 4th quarter of 2003, NRC achieved revenues of $6.7 million exceeding $6.2 million in the 4^th quarter 2002. This revenue growth is primarily the outcome of additional new clients.

2003 was a record year for the company’s annual revenues, reaching $26.9 million compared to $22.4 million in 2002. This was a 20.3% increase over 2002. Over the last two years, National Research Corporation has grown its revenues over 50%. In 2003 we did exceed our annual minimum revenue growth rate goal of 20%. We believe that this growth rate, which we have worked hard to create over the last couple of years, will continue into 2004.

The net income for the 4^th quarter of 2003 remained flat at $1.2 million or $0.17 per basic and diluted share which matched the 4^th quarter 2002. As we stated in the press release, during the 4^th quarter of 2003, we stepped-up our focus on business development resulting in $302,000 of increased marketing expenses, or $0.03 per share, over the 4^th quarter 2002. Our belief is that these development efforts will position Nation Research Corporation to capitalize on revenue opportunities in 2004.

The EPS for 2003 was $0.60 cents per share, compared to $0.54 cents per share in 2002. Our net income for 2003 was $4.4 million compared to $3.9 million in 2002. Our net income growth rate of 11.8% for 2003 was below our goal of 20%, but with the business plan we have in place, we feel that we can at least reach our minimum goal of 20% EPS growth rate in 2004.

Our direct expenses as a percentage of revenue were 40.8% for the quarter which was in line with our expectations for the 4th quarter 2003. We expected direct expenses would decrease during the 4^th quarter compared to the 3^rd quarter. Direct expenses for 2003 were in line with our goal at 44.7% of revenue. Direct expenses going into 2004 should be in line on an annual basis with the expected annual margin goal of 42 to 45% of revenue.

Selling, General and Administrative expenses in total dollars increased to $1.6 million during the 4^th quarter 2003 compared to $1.2 million during the 4^th quarter 2002. This increased the SG&A to 23.8% of revenue for the quarter, which was slightly higher than our goal for 2003. We expect that SG&A expenses will stay in this range as a percent of revenue during 2004; with our goal being in the range of 23 to 25% of revenue.

Depreciation and amortization was 7.1% of revenue during the 4^th quarter 2003, or $478,000. For the year it was 7.2% of revenue or $1.9 million. The depreciation and amortization goal for 2004 should be in the range of 5.5% to 6.5% of revenue.

The company continues to improve its strong financial position. The balance sheet has improved each quarter and should continue to improve even more during the first quarter of 2004. Cash flow from operations for 2003 was $8.3 million. Cash and short-term investments as of December 31, 2003, was approximately $16.2 million, or $2.22 per share. The net cash and short-term investments improved by $5.2 million during 2003.

The strong revenue and earnings growth momentum which started two years ago continues to improve our strong financial position. We feel that this momentum is continuing into 2004. As stated yesterday in the press release, we believe with our current visibility, we are anticipating our earnings per share in the first quarter 2004 to be $0.16 per share, an increase of approximately 23% over the prior year period.

I will now turn it back over to Mike for additional discussion.

Mike

Thank you Pat

Given the events surrounding the national standard, I would like to focus my remarks on that topic. However, Pat and I will be glad to address any topics you have during the Q&A.

As you know, we have held the belief that a key driver to NRC’s growth and our category in general, will be the increased demand for performance measurement and improvement products driven by the national public reporting program that we have discussed many times. I am happy to report our forecasts are coming true and we are now seeing revenue being generated by this national program. In our estimation, this is just the beginning of what will be a multi-year run.

The national program of healthcare transparency has taken major leaps forward over the last twelve months. In fact, in the last quarter alone, roughly 1,000 additional hospitals committed to participate, an increase of 59% from 90 days ago. The current voluntary participation now stands at 2,711 hospitals, up from 1,783 we reported on the last call. The driver of this massive increase in participation is due to the financial incentive that will be paid to hospitals publicly reporting their performance. This new incentive was introduced as a rider to the prescription drug bill that was enacted last fall. Given this new law, we now envision that the number of participating hospitals will include the vast majority of the 4,600 odd hospitals that can participate.

The first signs of revenue for National Research Corporation came from a contract for the pilot of the new survey which will include 200 hospitals in California and represents the first major use of the tool. That project is now under way and will help drive quarter one revenue and EPS which we anticipate to show a 23% growth.

In addition, we are now seeing a return on our investments made over 24 months ago when we started new product development efforts to support hospitals with public reporting of performance. These new sets of offerings have expanded our current product portfolio and now have proven themselves by generating recurring revenue. For example, one of our new products first sold during 2003 has just been renewed for the year 2004 through 2005. This simple example illustrates not only market acceptance, but helps build future recurring revenues.

Mid last year we started to expand our sales and marketing areas including our sales force, and that effort continues. Today we have 31 sales associates, up from 27 associates last November and feel we are in a good position to capitalize on the growing market that is now emerging

I would now like to open the call to questions.