8-K

UNITED STATES
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):	August 2, 2005

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)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

        On August 2, 2005, National Research Corporation (the “Company”) issued a press release announcing its earnings for the quarter ended June 30, 2005. A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

        On August 3, 2005, the Company held a conference call in connection with the Company’s announcement of its earnings for the quarter ended June 30, 2005. 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.earnings.com.

Item 9.01. 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 August 2, 2005.

(99.2) Script for conference call, held August 3, 2005.

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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.

Date: August 3, 2005

NATIONAL RESEARCH CORPORATION

By: /s/ Patrick E. Beans                                                                

      Patrick E. Beans

      Vice President, Treasurer, Secretary and Chief Financial Officer

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NATIONAL RESEARCH CORPORATION

Exhibit Index to Current Report on Form 8-K
Dated August 2, 2005

Exhibit
Number

(99.1) Press Release of National Research Corporation, dated August 2, 2005.

(99.2) Script for conference call, held August 3, 2005.

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EX-99.1

Exhibit 99.1

NATIONAL RESEARCH	1245 "Q" Street
Corporation	Lincoln, NE 68508
	Phone: 402-475-2525
	Fax: 202-475-9061

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

NATIONAL RESEARCH CORPORATION ANNOUNCES
SECOND QUARTER RESULTS

Company Reports 194% Growth in Net New Sales

LINCOLN, Nebraska (August 2, 2005) — National Research Corporation (NASDAQ/NM:NRCI), a leader in healthcare performance measurement, today announced results for the second quarter and six months ended June 30, 2005.

        Commenting on second quarter results, Michael D. Hays, chief executive officer of National Research Corporation, said, “This was an excellent quarter for us with significant improvement in virtually all operating and financial metrics. We are particularly pleased with the rapid pace at which we are adding new contracts as well as our net income growth of 26%, which outpaced a strong 12% increase in revenues. The increasing demand for our services is becoming a material driver for the Company.”

        Revenues for the quarter ended June 30, 2005, were $7.1 million compared with revenues of $6.4 million for the same period in 2004. Net income for the quarter ended June 30, 2005, was $925,000 compared with net income of $738,000 in the prior year period. Earnings per share were $0.13 per basic and diluted share compared with $0.10 per basic and diluted share in the prior-year period.

        Revenues for the first half of 2005 were $13.7 million compared with revenues of $14.0 million for the first half of 2004. Net income for the six months ended June 30, 2005, was $1.7 million, or $0.23 per basic and diluted share, compared with $1.9 million, or $0.26 per basic and diluted share, in the prior-year period.

        Patrick E. Beans, chief financial officer of National Research Corporation, added, “Our strong second quarter performance was also driven by lower depreciation and lower interest expense, which are trends we expect to continue. Also, the volatility in our government business appears to have subsided; in fact, the value of government contracts increased slightly this past quarter.”

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NRCI Announces Second Quarter Results
Page 2
August 2, 2005

        In closing, Mr. Hays added, “I am also very pleased with the future prospects of our company. Total recurring contract value (TRCV), always a good predictor of future success, was up almost 14% over the same quarter last year and up more than 5% compared with the first quarter of 2005. On the commercial side of our business, TRCV was up 21% period over period.”

        A listen-only simulcast of National Research Corporation’s second quarter conference call will be available online at www.earnings.com on August 3, 2005, beginning at 11:00 a.m. Eastern time. The online replay will follow approximately an hour later and continue for 30 days.

        National Research Corporation, headquartered in Lincoln, Nebraska, is a leading provider of ongoing survey-based performance measurement, analysis, tracking and improvement services to the healthcare industry in the United States and Canada. 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. The Company develops tools that enable healthcare organizations to obtain performance measurement information necessary to improve their business practices.

        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.

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NRCI Announces Second Quarter Results
Page 3
August 2, 2005

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Revenues	$	7,150		$	6,371		$	13,746		$	13,933
Operating expenses:
Direct expenses		3,073			2,717			5,822			6,015
Selling, general and administrative		2,089			1,850			4,274			3,754
Depreciation and amortization		454			489			878			953
Total operating expenses		5,616			5,056			10,974			10,722
Operating income		1,534			1,315			2,772			3,211
Other income (expense):
Interest income		130			80			239			162
Interest expense		(101	)		(137	)		(202	)		(250	)
Other, net		(23	)		(56	)		(28	)		(66	)
Total other income (expense)		6			(113	)		9			(154	)
Income before income taxes		1,540			1,202			2,781			3,057
Provision for income taxes		615			464			1,108			1,143
Net income	$	925		$	738		$	1,673		$	1,914
Net income per share, basic	$	0.13		$	0.10		$	0.23		$	0.26
Net income per share, diluted	$	0.13		$	0.10		$	0.23		$	0.26
Weighted average shares outstanding:
Basic		7,122			7,191			7,136			7,224
Diluted		7,179			7,284			7,191			7,316

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NRCI Announces Second Quarter Results
Page 4
August 2, 2005

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

	June 30, 2005			Dec. 31, 2004
ASSETS
Current Assets:
Cash and cash equivalents	$	3,125		$	3,648
Short-term investments		15,563			15,348
Accounts receivable, net		4,553			3,392
Other current assets		3,049			3,066
Total current assets		26,290			25,454
Net property and equipment		11,992			12,355
Other, net		10,083			10,145
Total Assets	$	48,365		$	47,954
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	1,320		$	851
Deferred revenue		6,282			4,036
Accrued compensation		1,267			976
Notes payable		162			156
Total current liabilities		9,031			6,019
Long-term liabilities		6,820			6,917
Total Liabilities		15,851			12,936
Shareholders' Equity:
Common stock, $0.001 par value; 20,000,000 shares authorized;
issued 7,727,362 in 2005 and 7,684,006 in 2004;
outstanding 7,004,151 in 2005 and 7,174,706 in 2004		8			8
Additional paid-in capital		19,897			19,346
Retained earnings		20,905			20,382
Unearned compensation		(468	)		(182	)
Accumulated other comprehensive income		189			220
Treasury stock		(8,017	)		(4,756	)
Total shareholders' equity		32,514			35,018
Total Liabilities and Shareholders' Equity	$	48,365		$	47,954

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EX-99.2

Exhibit 99.2

Mike:

Thank you ___________. I’d like to welcome all participants to National Research Corporation’s second quarter conference call. My name is Mike Hays, the Company’s CEO, and joining me on the call today is Patrick Beans our CFO.

Before we commence our remarks, I would ask Pat to review conditions related to any forward-looking statements that may be made as part of 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 the call today I will report on the global metrics we track and have Pat provide a detailed review of our financial performance for the quarter quarter, after which we will open the call to your questions.

By way of a few highlights, we are very pleased with our second quarter performance. We exceeded our earnings per share estimate, total recurring contract value is increasing, and new contracts signed in the quarter once again showed a massive increase driven by the traction of the national standard. Before I get into the overall metrics, let me turn the call over to Pat to review the second quarter’s income statement and balance sheet. Pat.

Pat:

Thanks, Mike.

For the three-months ended June 30, 2005, the Company achieved revenues of $7.1 million compared to $6.4 million during the same period in 2004. This was a 12.2% increase, a large portion of which was from new clients since June 30, 2004.

For the three-months ended June 30, 2005, the Company’s net income was $925,000 or $0.13 per share, compared to $738,000 or $0.10 per share for the same period 2004. The net income margin was 12.9% of revenue which increased from 11.6% in the same period of 2004 and 11.3% from the first quarter of 2005. This performance is still below our model of 15%.

For the six-months ended June 30, 2005, we had revenues of $13.7 million compared to $13.9 million during the same period in 2004. This was a slight decrease which is the result of a lower first quarter 2005.

For the six-months ended June 30, 2005, the Company’s net income was $1.7 million or $0.23 per share, compared to $1.9 million or $0.26 per share for the same period 2004. The net income margin was 12.2% of revenue compared to 13.7% in the same period of 2004. This reduction is also the result of lower first quarter 2005 results.

During the second quarter 2005, the direct expenses as a percentage of revenue increased slightly to 43.0% from 42.6% in 2004, which was driven by the mix of business during the quarter. As we stated on the last conference call, we would expect the direct expense percentage to be within our annual goal of 43% to 45% of revenue by year end.

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During the quarter, the selling, general and administrative costs were $2.1 million or 29.2% of revenue. We expect SG&A to remain similar or slightly higher during the third quarter and, as a percentage of revenue, to be within our goal of 23 to 25%.

Depreciation and amortization was 6.4% of revenue during the second quarter of 2005 compared to 7.7% of revenue during the same period in 2004. We expect this expense will continue to decrease, but remain within our model of 5.5 to 6.5% of revenue during 2005 and into 2006.

During the quarter, other income and expenses decreased by just over $100,000. This improvement was the result of higher interest income and lower interest expense and should continue for the balance of the year. The Canadian exchange rate is, of course, an unknown.

Cash flow from operations for the first six months of 2005 was $4.5 million which matched the same period in 2004. The Company continues to improve its strong financial position. Cash and short-term investments as of June 30, 2005, were approximately $18.7 million, or $2.60 per share.

For the balance of the year, we expect quarterly EPS growth to be somewhere around 20%.

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

Mike:

Thank you, Pat.

During our quarterly calls we have been highlighting several key metrics.

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The first metric is Total Recurring Contract Value. This represents the annualized dollar amount of projects that we feel are ongoing in nature. Another way to look at this metric is that it represents our pipeline, or as some refer to it, our backlog. Total Recurring Contract Value at June 30, 2005, was $32.4 million, up 13.7% over June 30, 2004, and up 10.1% from year end 2004. Compared to first quarter 2005, Total Recurring Contract is up 5.3%. If we dive into this metric, we see that Total Recurring Contract Value for our commercial business is up 21.5% year-over-year, and 11.3% from year-end 2004. We are very pleased with this growth. From our perspective, this is the most important metric from which we gain visibility to forecast future revenues.

Net New Sales is the second measure of performance we focus on. This metric is the percentage growth in the value of new contracts signed, reduced for any change orders that would decrease a current contract’s value. Net new sales represent our ability to generate new business from current clients and add new clients, without respect to when such contract value will be recognized.

Net New Sales were up 194% second quarter 2005 over second quarter 2004. As you can see, sales in the quarter were very strong and are increasing at a growing rate as evidenced by the trends over the past four quarters. Net New Sales a year ago this quarter were up 32% followed by quarterly increases of 28%, 52%, 129%, and now 194%. This trend started to accelerate disproportionately in and around the rollout of our HCAHPS solution. In order to provide some dollar figures to make tangible the financial contribution this trend is having on the Company, consider that Net New Sales in the second quarter last year were $586,000 compared to the quarter just ending of $1,729,000. While we don’t expect new sales growth to run in the hundreds of percentage points every quarter, we do know we are still at the very early stages of the HCAHPS event.

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The third metric is growth in new sales for our syndicated Healthcare Market Guide product and the one metric which we did not perform very well at all. In the second quarter we added only four new HCMG clients. Consequently, we have generate only $340,000 in new sales year to date compared to our far better performance a year ago at $550,000, thus our HCMG new sales metric is a minus 39%. While I don’t see this as a trend, we do need to get back on plan.

Before I open the call for questions, let me touch on a few additional activities underway that we believe will drive growth. In Canada, we own the market for measuring and improving the experience of long-term care or nursing home residents. However, in the United States we have a very limited share of the 12,000-long term care facilities. By capitalizing on our deep expertise north of the border, we should be able to gain meaningful share in the States. We also are outlining plans to enter the health plan market. It appears as though the payer market may hold a potential equal to the provider market from which most all our current revenues are generated. Our goal in expanding markets, such as the two I just touched on, will provide us additional runways from which to enhance our growth.

________, I would now like to open the Q&A portion of the call.

In summary, we had a great quarter and I’m now looking forward to talking to you again next quarter with similar positive results. Thank you again for your time today.

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