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 7, 2007

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 7, 2007, National Research Corporation (the “Company”) issued a press release announcing its earnings for the quarter ended March 31, 2007. A copy of such press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

        On August 8, 2007, the Company held a conference call and online Web simulcast in connection with the Company’s announcement of its earnings for the quarter ended June 30, 2007. A copy of the script for such conference call and simulcast is furnished as Exhibit 99.2 and is incorporated by reference herein. An archive of such conference call and simulcast 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) Not applicable.

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

(99.1) Press Release of National Research Corporation, dated August 7, 2007.

(99.2) Script for conference call and online Web simulcast, held August 8, 2007.

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 8, 2007

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 7, 2007

Exhibit
Number

(99.1) Press Release of National Research Corporation, dated August 7, 2007.

(99.2) Script for conference call and online Web simulcast, held August 8, 2007.

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EX-99.1

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

NATIONAL RESEARCH CORPORATION ANNOUNCES
SECOND QUARTER 2007 RESULTS AND THIRD QUARTER DIVIDEND

Net Income up 24% in the Second Quarter

LINCOLN, Nebraska (August 7, 2007) — National Research Corporation (NASDAQ:NRCI) today announced results for the second quarter ended June 30, 2007.

• Quarterly revenue increased by 12%

• Quarterly net income increased by 24%

• Quarterly diluted earnings per share of $0.23, up 21%

• Quarterly net new contracts of $2.5 million, up 18%

        Commenting on the second quarter results, Michael D. Hays, chief executive officer of National Research Corporation, said, “Our quarterly financial results were mixed. Revenue was below our desired growth range, while net income and EPS growth was within the range. Our sales engine continues to perform well and going forward, will be focused on the commercial versus federal sector where we continue to experience volatility.”

        Revenue for the quarter ended June 30, 2007, was $11.9 million, compared to $10.7 million for the same period in 2006. Net income for the quarter ended June 30, 2007, was $1.6 million, or $0.24 per basic and $0.23 per diluted earnings per share, compared with net income of $1.3 million, or $0.19 per basic and diluted share, in the prior year period.

        Revenue for the first half of 2007 increased 20% to $24.1 million, compared to $20.1 million for the same period in 2006. Net income for the first six months of 2007 increased 28% to $3.2 million resulting in $0.47 per basic and $0.46 per diluted earnings per share, up 27% and 24% respectively, over the same period in 2006.

        In closing, Patrick E. Beans, chief financial officer of National Research Corporation, said, “Again this quarter, we realized margin expansion driven by revenue growth and a larger proportion of higher margin improvement products in our revenue mix as was our stated goal at the beginning of the year.”

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NRCI Announces Second Quarter Results
Page 2
August 7, 2007

        The Company also announced that its Board of Directors has declared a regular quarterly cash dividend of $0.12 (twelve cents) per share payable September 28, 2007, to shareholders of record as of the close of business on September 7, 2007.

        A listen-only simulcast of National Research Corporation’s year-end conference call will be available online at www.earnings.com on August 8, 2007, 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 performance measurement, improvement services, and governance education to the healthcare industry in the United States and Canada.

        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 7, 2007

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2007			2006			2007			2006
Revenue	$	11,945		$	10,663		$	24,150		$	20,140
Operating expenses:
Direct expenses		5,366			4,980			10,815			9,080
Selling, general and administrative		3,250			3,042			6,650			6,047
Depreciation and amortization		623			500			1,250			971
Total operating expenses		9,239			8,522			18,715			16,098
Operating income		2,706			2,141			5,435			4,042
Other income (expense):
Interest income		55			56			69			138
Interest expense		(136	)		(82	)		(303	)		(92	)
Other, net		51			(10	)		68			(24	)
Total other income (expense)		(30	)		(36	)		(166	)		22
Income before income taxes		2,676			2,105			5,269			4,064
Provision for income taxes		1,035			786			2,034			1,528
Net income	$	1,641		$	1,319		$	3,235		$	2,536
Net income per share, basic	$	0.24		$	0.19		$	0.47		$	0.37
Net income per share, diluted	$	0.23		$	0.19		$	0.46		$	0.37
Weighted average shares outstanding:
Basic		6,845			6,845			6,844			6,832
Diluted		7,002			6,970			6,979			6,938

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NRCI Announces Second Quarter Results
Page 4
August 7, 2007

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

	June 30, 2007			Dec. 31, 2006
ASSETS	(Unaudited)
Current Assets:
Cash and cash equivalents	$	2,122		$	876
Short-term investments		753			1,110
Accounts receivable, net		7,725			6,734
Income taxes recoverable		56			898
Other current assets		3,729			3,379
Total current assets		14,385			12,997
Net property and equipment		11,634			11,716
Other, net		37,273			36,819
Total Assets	$	63,292		$	61,532
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable and accrued expenses	$	1,632		$	1,511
Deferred revenue		11,045			8,264
Accrued compensation		1,438			1,594
Notes payable		686			3,110
Total current liabilities		14,801			14,479
Non-current liabilities		9,041			10,303
Total Liabilities		23,842			24,782
Shareholders’ Equity:
Common stock, $0.001 par value; 20,000,000 shares authorized;
issued 7,876,957 in 2007 and 7,837,848 in 2006;
outstanding 6,925,042 in 2007 and 6,890,631 in 2006		8			8
Additional paid-in capital		22,747			21,820
Retained earnings		28,061			26,488
Accumulated other comprehensive income		674			358
Treasury stock		(12,040	)		(11,924	)
Total shareholders’ equity		39,450			36,750
Total liabilities and shareholders’ equity	$	63,292		$	61,532

-END-

EX-99.2

Mike:

Thank you, ___________, and welcome everyone to National Research Corporation’s second quarter 2007 conference call. My name is Mike Hays, the Company’s CEO, and joining me on the call today is Pat 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.

1

Mike:

Thank you, Pat, and again, welcome everyone to our second quarter 2007 earnings call.

In my view, our financial performance for the second quarter was mixed. Our 12% top-line growth was poor, while our net income growth rate of 24% was within our acceptable range. For the first six months, revenue has increased 20% while net income grew 28% as a result of leveraging our cost structure against higher revenue.

Let me turn the call back to Pat for a detailed review of the quarterly and year-to-date financials.

Pat

Thanks, Mike.

For the three-months ended June 30, 2007, the Company achieved revenue for the quarter of $11.9 million, compared to $10.7 million during the same period in 2006, a 12% increase. For the six-months ended June 30, 2007, the Company achieved revenue of $25.1 million, compared to $20.1 million during the same period in 2006, a 20% increase.

2

For the three-months ended June 30, 2007, net income for the Company was $1.6 million or $0.23 per share, compared to $1.3 million or $0.19 per share for the same period in 2006. Net income is up 24% while earnings per share increased 21% for the three months. Net income was 14% of revenue, up from 13% for the first quarter, yet slightly below our model of 15%.

For the six-months ended June 30, 2007, net income for the Company was $3.2 million or $0.46 per share, compared to $2.5 million or $0.37 per share for the same period in 2006, a 28% increase in net income and a 24% increase in earnings per share.

During the second quarter 2007, direct expenses as a percentage of revenue were 44% compared to 47% in 2006. We continue to maintain our direct expenses within the model and increase our higher margin improvement products as a percentage of total revenue. Our annual goal for direct expenses remains in the range of 43 to 45% of revenue.

3

During the second quarter, the selling, general and administrative costs were $3.3 million, compared to $3 million in 2006. SG&A expenses for this quarter were 27% of revenue, compared to 29% in the same quarter 2006.

Depreciation and amortization were 5% of revenue during the second quarters in both 2007 and 2006. We expect this expense to remain at the lower end of our model of 4.5 to 6.0% of revenue in 2007.

Cash flow from operations for the second quarter was $3.1 million, compared to $1.0 million for the same period in 2006. During the first six months of 2007, we reduced notes payable from the TGI acquisition by $4.3 million. Cash and short-term investments as of June 30, 2007, were $2.9 million.

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

Mike:

Thanks, Pat.

4

Sales for the quarter were $2.5 million, up 18% over the second quarter 2006. Healthcare Market Guide sales for the second quarter were $371,000 which is an improvement over the first quarter performance.

Total Recurring Contract Value for the second quarter ended at $47.6 million, which is $1.3 million lower than where we stood at the end of the first quarter. This reduction was driven by categorizing the remaining value of our VA contract as non-recurring after being notified that we were unsuccessful as the incumbent in the re-compete bidding process. Directly after this, however, the VA initiated discussions to extend that same contract which speaks to the inherent shifting of direction.

Given this continued lack of stability with federal contracts, we’ve elected to materially reduce our focus on this segment. Maybe sour grapes, but we are simply having far too great of success building the commercial side of our business to allow our focus to be diverted to what has proven to be a lesser quality revenue source. In fact, over the last 12 months, Recurring Contract Value for the Company’s commercial business has increased 22% driven by our highly effective sales efforts. Yet, given the need to first back fill reductions in federal contract value, we are only realizing 50% of this incremental growth in our top and bottom line performance. Sales for the last four quarters have equaled $12.6 million offset by $6.3 million in federal contract value reduction.

5

Given good July sales, we have all but replaced the VA contract value. Going forward, we should see new sales add greater incremental growth to our Total Recurring Contract Value since we now have no material risk associated with revenue concentration.

We have also made a major change to Healthcare Market Guide in order to achieve greater top-line growth and benefit from its disproportionate bottom line contribution. I personally engaged myself in the day-to-day of HCMG this past quarter and found we, as a company, are holding back its growth. The 800 pound gorilla, the NRC+Picker business unit, commands the attention and resources here in Lincoln which places HCMG as a second priority.

In order to unleash HCMG’s potential, we have elected to manage HCMG as a stand-alone division of NRC, similar to our TGI division. I’m happy to announce that Ginny Martin has accepted the position of president of this new division. Ms. Martin has a very impressive list of achievements all around aggressively building businesses over the past 15 years since earning her M.B.A. in Finance. Our goal is to double revenue and more than double its net income contribution by fiscal year end 2009.

6

During the past quarter, we also established a unique partnership with Ipsos, the world’s third largest research company which is headquartered in Paris and has offices in 47 countries. The partnership allows NRC to generate revenue outside the U.S. and Canada without adding infrastructure and other overhead costs. Ipsos provides the local presence and NRC provides the unique family of Picker patient experience surveys and the online reporting engine for joint clients. It’s hard to gauge the size of this opportunity, however, out of the gate the Ipsos-NRC effort has won a major contract in Australia, a contract that neither organization would have won alone.

We are also wrapping up market testing on the first group of new products and will likely begin to roll out new subscription-based products by year end, if not sooner.

________, I would now open the call to questions.

Thank you all for your time today and as always, Pat and I look forward to speaking to you on our next call.

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