-----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, tdegB94sO7OqkmQ87pf8w8R/1XmJn4n4Rdq6XbT3EhEwgIYZUdQNgWhkPE/Iw/l8 kGZ5/qoXXjLttIp3u+2CQA== 0000950131-94-001330.txt : 19940822 0000950131-94-001330.hdr.sgml : 19940822 ACCESSION NUMBER: 0000950131-94-001330 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940630 FILED AS OF DATE: 19940815 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: 94544138 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, 1994 [_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the transition period from to 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 29, 1994, was 26,122,950. 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 10 PART II. OTHER INFORMATION - - ------------------------------ Item 1 - Legal Proceedings 14 Item 4 - Submission of Matters to Vote of Security Holders 14 Item 6 - Exhibits and Reports on Form 8-K 15 Signatures 16
2 INFORMATION RESOURCES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED (IN THOUSANDS)
ASSETS JUNE 30, 1994 DECEMBER 31, 1993 - - ------ ------------- ----------------- CURRENT ASSETS Cash and cash equivalents $ 10,292 $ 19,368 Accounts receivable - net 126,434 116,637 Deferred income taxes 10,129 9,205 Prepaid expenses and other 4,924 4,230 -------- -------- Total Current Assets 151,779 149,440 -------- -------- PROPERTY AND EQUIPMENT 138,156 124,185 Accumulated depreciation and amortization (79,422) (71,013) -------- -------- 58,734 53,172 INVESTMENTS 16,896 11,764 OTHER ASSETS Deferred data procurement costs (net of amortization) 80,764 71,131 Capitalized software costs - net 23,393 21,481 Goodwill - net 3,779 3,931 Other 15,081 16,596 -------- -------- 123,017 113,139 -------- -------- $350,426 $327,515 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY - - ------------------------------------ CURRENT LIABILITIES Current maturities of capitalized leases $ 1,762 $ 1,691 Bank borrowings 23,500 -- Accounts payable 16,366 14,512 Accrued expenses 20,246 21,521 Deferred revenue 16,980 13,844 Other 5,888 5,902 -------- -------- Total Current Liabilities 84,742 57,470 -------- -------- LONG-TERM CAPITALIZED LEASES 2,381 3,087 DEFERRED INCOME TAXES 26,760 31,040 DEFERRED GAIN 4,670 4,878 OTHER LIABILITIES 1,550 1,176 MINORITY INTEREST 438 1,202 STOCKHOLDERS' EQUITY Preferred stock-authorized, 1,000,000 shares $.01 par value - none issued -- -- Common stock - authorized 60,000,000 shares in 1994 and in 1993, $.01 par value, issued in 1994: 26,122,223 shares; issued in 1993: 25,416,502 shares 261 254 Capital in excess of par value 165,231 157,972 Retained earnings 65,151 72,333 Cumulative translation adjustment (758) (1,897) -------- -------- Total Stockholders' Equity 229,885 228,662 -------- -------- $350,426 $327,515 ======== ========
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 ------- ------- 1994 1993 1994 1993 ------- ------- -------- -------- Revenues $92,183 $82,110 $179,861 $157,760 Costs and expenses: Operating expenses 79,200 62,860 151,781 122,220 Selling, general and administrative expenses 10,842 8,684 21,413 16,344 Loss on disposition of assets -- -- -- 2,200 ------- ------- -------- -------- 90,042 71,544 173,194 140,764 ------- ------- -------- -------- Operating profit 2,141 10,566 6,667 16,996 Other income (expense): Interest income 83 315 234 692 Interest expense (556) (273) (771) (578) Litigation provision -- -- (5,000) -- Other - net 162 (10) 281 100 ------- ------- -------- -------- (311) 32 (5,256) 214 ------- ------- -------- -------- Equity in loss of affiliated companies (2,071) (284) (4,329) (596) ------- ------- -------- -------- Earnings (loss) before income taxes, minority interest and cumulative effect of change in accounting principle (241) 10,314 (2,918) 16,614 Income tax expense (benefit) 9 4,334 (886) 7,004 ------- ------- -------- -------- Earnings (loss) before minority interest and cumulative effect of change in accounting principle (250) 5,980 (2,032) 9,610 Minority interest 262 479 756 776 ------- ------- -------- -------- Earnings (loss) before cumulative effect of change in accounting principle 12 6,459 (1,276) 10,386 Cumulative effect on prior years of change in accounting principle: Income taxes -- -- -- 1,864 Revenue recognition -- -- (6,594) -- ------- ------- -------- -------- Net earnings (loss) $ 12 $ 6,459 $ (7,870) $ 12,250 ======= ======= ======== ======== Earnings (loss) per common and common equivalent share: Before cumulative effect of accounting change $ -- $ .24 $ (.05) $ .39 Cumulative effect of accounting change -- -- (.26) .07 ------- ------- -------- -------- Net earnings (loss) $ -- $ .24 $ (.31) $ .46 ======= ======= ======== ======== Weighted average common and common equivalent shares 26,091 26,738 25,835 26,606 ======= ======= ======== ========
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 ------------------------- 1994 1993 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings (loss) $ (7,870) $ 12,250 Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: Depreciation and amortization 13,847 10,507 Amortization of deferred data procurement costs 31,033 23,434 Deferred income taxes (861) 3,361 Equity in loss of affiliated companies 4,329 596 Minority interest (756) (776) Cumulative effect of change in revenue recognition 6,594 -- Cumulative effect of adoption of FAS 109 -- (1,864) Litigation provision 5,000 -- Stock option and other compensation expense 2,091 -- Other 337 (129) Change in assets and liabilities: Increase in current assets (20,828) (13,764) Increase in other assets (528) (16) Increase (Decrease) in current liabilities (4,248) 5,166 Increase in other liabilities 374 100 -------- -------- Total adjustments 36,384 26,615 -------- -------- Net cash provided by operating activities 28,514 38,865 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment - net (13,021) (11,701) Software costs (6,146) (4,761) Deferred data procurement costs (40,239) (32,234) Net assets acquired in business acquisition -- (1,252) Investment in joint ventures (2,469) (16,677) -------- -------- Net cash used in investing activities (61,875) (66,625) CASH FLOWS FROM FINANCING ACTIVITIES: Net repayments of capitalized leases (864) (756) Net bank borrowings 23,500 -- Proceeds from exercise of stock options 763 6,296 Capital contributions from minority interest 132 606 -------- -------- Net cash provided by financing activities 23,531 6,146 EFFECT OF EXCHANGE RATE ON CASH 754 (253) -------- -------- NET DECREASE IN CASH (9,076) (21,867) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 19,368 53,593 -------- -------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 10,292 $ 31,726 ======== ========
(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 ------------------------ 1994 1993 ----- ------ CASH PAID (REFUNDED) DURING THE PERIOD FOR: Interest $ 770 $ 584 Income taxes (refund) $(393) $2,770
In March 1994, the Company and Datos, C.A., formed a joint venture company, Datos Information Resources, Inc. The Company contributed $5.8 million of stock for a 49% interest in the joint venture. The accompanying notes are an integral part of these statements. 6 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of June 30, 1994 and December 31, 1993 and the results of operations for the three months and the six months ended June 30, 1994 and June 30, 1993 and cash flows for the six months ended June 30, 1994 and June 30, 1993. 2. These financial statements are presented in accordance with the requirements of Form 10-Q and consequently may not include all disclosures normally required by generally accepted accounting principles or those normally made in the Company's Annual Report on Form 10-K. Accordingly, the financial statements and related notes in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 should be read in conjunction with the accompanying condensed consolidated financial statements. 3. Earnings (loss) per common and common equivalent share is based on the weighted average number of shares of common stock and common stock equivalents outstanding. The effect of dilution from the exercise of stock options is considered in the computation of earnings (loss) per common and common equivalent share by the use of the modified treasury stock method for the quarters ended June 30, 1994 and 1993 and March 31, 1994 and 1993, since options outstanding exceeded 20% of the shares of common stock outstanding. In applying the modified treasury stock method for the period ended June 30, 1994 and March 31, 1994, stock options were not included as they were anti-dilutive. 4. Effective January 1, 1994, the Company changed its method of recognizing revenue on InfoScan, PromotionScan and BehaviorScan products whereby revenue 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 in order to match revenue with the costs associated with the efforts to set up and customize client reports and furnish the initial historical data (backdata) with the remaining revenue recognized ratably over the initial contract term. The Company believes this change is preferable because the new accounting policy is consistent with the Company's change in business strategies to emphasize value added service to existing clients. Other factors also having a bearing on this decision include: (a) Set-up and backdata activities associated with new customers as a percentage of total IRI's business have decreased and are expected to decrease further in the future as customers continue to renew and extend their existing contracts. (b) The Company is expanding its business internationally through acquisitions and has found that contract revenues for information services have been accounted for on a straight-line basis by many of the acquired companies. As a result, the implementation of the Company's accounting policies is difficult because the accounting systems of many foreign companies often do not routinely provide adequate cost information. The cumulative effect of this change for periods prior to January 1, 1994 of $6,594,000 (after reduction for the income tax effect of $4,440,000) is shown separately in the condensed consolidated statement of operations. The effect of the change on the quarter ended March 31, 1994 was to reduce the loss, before the cumulative effect, by approximately $455,000 after tax ($.02 per share). 7 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D. (UNAUDITED) The pro forma amounts summarized below have been adjusted for the effect of retroactive application on revenues and the change in minority interest and related income taxes that would have been made had the new method been in effect. The actual amounts for each quarter and year are being reported for comparative purposes.
Three Months Three Months Three Months Three Months Ended Ended Ended Ended March 31, 1993 June 30, 1993 Sept. 30, 1993 Dec. 31, 1993 -------------- ------------- -------------- ------------- (In Thousands, except per share data) Revenues - Actual $75,650 $82,110 $87,784 $89,000 ======= ======= ======= ======= - Pro forma $77,905 $82,562 $86,322 $87,812 ======= ======= ======= ======= Earnings before cumulative effect of accounting change - Actual $ 3,927 $ 6,459 $ 7,358 $ 4,471 ======= ======= ======= ======= - Pro forma $ 5,277 $ 6,781 $ 6,570 $ 3,821 ======= ======= ======= ======= Earnings per common and common equivalent share before cumulative effect of accounting change - Actual $ .15 $ .24 $ .27 $ .16 ======= ======= ======= ======= - Pro forma $ .20 $ .25 $ .24 $ .14 ======= ======= ======= =======
Year Ended December 31 ----------------------------------------- (In Thousands, except per share data) 1993 1992 1991 1990 -------- -------- -------- -------- Revenues - Actual $334,544 $276,362 $222,689 $179,789 ======== ======== ======== ======== - Pro forma $334,601 $279,187 $213,926 $178,552 ======== ======== ======== ======== Earnings before cumulative effect of accounting change - Actual $ 22,215 $ 19,247 $ 15,386 $ 5,668 ======== ======== ======== ======== - Pro forma $ 22,449 $ 20,971 $ 10,058 $ 4,916 ======== ======== ======== ======== Earnings per common and common equivalent share before cumulative effect of accounting change - Actual $ .82 $ .78 $ .66 $ .29 ======== ======== ======== ======== - Pro forma $ .83 $ .85 $ .43 $ .25 ======== ======== ======== ========
8 INFORMATION RESOURCES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D. (UNAUDITED) 5. In the first quarter of 1994, the Company established a pre-tax reserve of $5.0 million related to shareholder litigation. 6. In April 1994, the Company and the privately held Asia-based SRG Holdings Limited, agreed to cancel plans to merge. The Company recorded a pre-tax charge of $1.4 million related to expenses incurred in connection with the cancelled merger. The pre-tax effect of the charge was reflected as of March 31, 1994 in the Company's selling, general and administrative expenses. 7. In April 1994, the Company signed an agreement in principle with Tokyo- based Mitsui & Co., Ltd., to form a joint venture named Information Resources Japan, Ltd., to provide efficient consumer response (ECR) initiatives, syndicated market tracking services, logistics and business intelligence software products and value-added consulting in Japan. The joint venture is expected to begin operations on October 1, 1994. 9 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'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 1994/ 1994/ 1994 1993 1994 1993 1993 1993 ------ ------ ------ ------ ------------ ---------- Revenues 100.0% 100.0% 100.0% 100.0% 12.3 14.0 Operating expenses 85.9 76.5 84.4 77.4 26.0 24.2 Selling, general & admin. 11.8 10.6 11.9 10.4 24.9 31.0 Loss on disposition of assets -- -- -- 1.4 -- * Operating profit 2.3 12.9 3.7 10.8 * * Other income (expense) * * * * * * Litigation provision -- -- (2.8) -- -- * Equity in loss of affiliates (2.2) (.3) (2.4) (.4) * * Income tax expense (benefit) -- 5.3 (.5) 4.4 * * Minority interest * * * * * * Cumulative effect of accounting change -- -- (3.7) 1.2 -- * Net earnings (loss) -- 7.9 (4.4) 7.8 * *
* Not meaningful REVENUES The Company's revenue from operations for the six months ended June 30, 1994 increased 14.0% to $179.9 million compared to $157.8 million for the first six months of 1993. Revenue for the three month period ended June 30, 1994 increased 12.3% to $92.2 million compared to $82.1 million for the same period of 1993. The revenue growth resulted principally from growth in InfoScan revenues and, to a lesser extent, increased revenues from software support services. 10 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. Revenues from the Company's InfoScan product line for the six months ended June 30, 1994 were $99.7 million, an increase of 18.7% over the same period in 1993. InfoScan revenues for the second quarter of 1994 were $51.5 million, an increase of 16.3% over the same period in 1993. The growth in InfoScan's revenues was principally the result of increased utilization of InfoScan services by existing clients. The Company's competitor in the information services business, the A.C. Nielsen Company, introduced unusual price competition late in the fourth quarter 1993 which has continued into 1994. This has had the effect of limiting the Company's ability to achieve domestic InfoScan revenue growth through new clients switching from the A.C. Nielsen Company to the Company for scanner-based market tracking services. Management has no reason to expect that the A.C. Nielsen Company will discontinue its current pricing practices. Management is investigating whether pricing and other practices by the A.C. Nielsen Company are anticompetitive, and, if so, what appropriate remedies might be sought. The Company recently implemented a change in its domestic InfoScan strategy which management believes will better focus the Company's resources on delivering added value, and thereby build revenue, with its existing clients. Revenues from the Company's software support services were $49.2 million, an increase of 5.4% over the same six month period in 1993. Second quarter 1994 revenues were $25.0 million, increasing 6.3% over the second quarter of 1993. The revenue growth in software support services was less than prior quarters of 1993 which the Company attributes to delays in the introduction of, and transition to, the Windows versions for certain of the Company's software products. BehaviorScan and related testing services revenues for the six months ended June 30, 1994 were $11.0 million compared to $10.5 million for the same period in 1993. For the three months ended June 30, 1994 BehaviorScan revenues were $5.3 million compared to $5.6 million for the same period in 1993. OPERATING EXPENSES Operating expenses for the six months ended June 30, 1994 were $151.8 million, an increase of 24.2% over the same period in 1993. Operating expenses for the second quarter of 1993 increased 26.0% to $79.2 million from $62.9 million for the same period in 1993. These increases were primarily due to increases in compensation, amortization of deferred data procurement costs, and other costs related to increases in the client service staff and computer operations required to deliver InfoScan services and other information services which include InfoScan NMRA Limited Joint Venture (NMRA). Client service staffing increased in support of current and planned future revenue increases, and computer operations increased in support of the Company's "OMEGA" production re- engineering and cost reduction program and support for current revenue growth. Deferred data procurement costs increased primarily due to the Company's expansion of its data collection into convenience store outlets and its continuing expansion through NMRA of data collection in the United Kingdom. In software support services, increased staff and computer hardware and software expansion to support current and planned revenue growth also contributed to increases in operating expenses. 11 INFORMATION RESOURCES, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES Selling, general and administrative expenses for the six months ended June 30, 1994 and 1993 were $21.4 million and $16.3 million, respectively, an increase of 31.0%. SG&A expenses for the second quarter of 1994 were $10.8 million, an increase of 24.9% over the same period of 1993. The increases in SG&A expenses are attributable to increased spending in marketing, recruiting, employee development, training and professional fees associated with the Company's international expansion, and to a lesser extent, increases in compensation and related staffing costs associated with the Company's growth in both domestic and international operations. In the first quarter of 1994, the Company recorded expenses of $1.4 million incurred in connection with the cancelled merger with Asia-based SRG Holdings Limited. OTHER INCOME (EXPENSE) Other expense increased to $5.3 million for the six months ended June 30, 1994. For the same period in 1993, the Company recorded other income of $214,000. The overall increase was due to interest expense on bank borrowings and a pre-tax provision of $5.0 million related to shareholder litigation. EQUITY IN LOSS OF AFFILIATED COMPANIES Equity in loss of affiliated companies reflects losses recognized related to equity investments. The increase resulted principally from the equity losses recognized by the Company related to the Company's investments in France and Holland as the Company continued to expand its InfoScan services in these countries. INCOME TAXES The Company's effective tax rate was 30.4% and 42.2% for the six months ended June 30, 1994 and 1993, respectively. The tax rate on operations including minority interest was 41.0% and 40.3% for the six months ended June 30, 1994 and 1993, respectively. 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. The cumulative effect of this change as of January 1, 1994 is a $6.6 million after-tax charge. The Company adopted Statement of Financial Accounting Standards No. 109 - Accounting for Income Taxes effective January 1, 1993. The cumulative effect of this change at January 1, 1993 was to recognize a tax benefit of $1,864,000. 12 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 earnings (loss), were essentially break-even for the second quarter and $(7.9) million loss for the first six months of 1994 versus 1993 second quarter and year-to-date net income of $6.5 million and $12.3 million, respectively. Net earnings (loss) per share was break-even and $(.31) for 1994 second quarter and first six months, respectively, versus $.24 and $.46 for the comparable periods of 1993. FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES Working capital at June 30, 1994 was $67.0 million, a decrease of $25.0 million from December 31, 1993. The decrease results from non-cash charges of $11.2 million relating to the change in the method of recognizing revenue and a $5.0 million litigation provision. The decrease is also due to continued expansion of the Company's business. The Company increased its bank borrowings under its existing credit facility to $23.5 million at the end of the second quarter of 1994. The Company anticipates continued borrowings under its credit facility to meet its cash needs through the end of the year. During May 1994, the Company replaced its $25 million credit facility with a new $50 million credit facility ($30 million after 1994). The Company anticipates that it will have sufficient funds from its cash balances, internally generated funds and its bank credit facility to satisfy working capital needs through the end of 1994. The Company is currently exploring several alternatives available to it to satisfy its potential working capital needs beyond 1994. These include (without limitation) additional bank borrowings, investments in the Company by strategic partners, issuance of long term debt, and sale of preferred or common equity in public or private transactions. 13 INFORMATION RESOURCES, INC. AND SUBSIDIARIES PART II OTHER INFORMATION Item 1. Legal Proceedings. As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 1993, the Company was involved in a shareholder class action suit filed by certain shareholders in 1989. On June 7, 1994, a federal district court jury returned a unanimous verdict in favor of the Company and the four individual defendants. The plaintiffs in such action are seeking to overturn such decision though the Company does not believe the plaintiffs will prevail. Item 4. Submission of Matters to Vote of Security Holders. (a) The annual meeting of Stockholders of the Company was held May 26, 1994. (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 1997 as follows:
Name Votes For Votes Withheld Broker Non-Votes ---- ---------- -------------- ---------------- Gerald J. Eskin, Ph.D. 21,302,759 85,411 -- John D. C. Little, Ph.D. 21,302,759 85,411 -- George G. Montgomery, Jr. 21,302,759 85,411 -- Glen L. Urban, Ph.D. 21,303,959 84,211 --
Following is the name of each other director whose term of office as a director continued after the meeting for terms ending in either 1995 or 1996: Gian M. Fulgoni, James G. Andress, Leonard M. Lodish, Edith W. Martin, Thomas W. Wilson, Jr., Edwin E. Epstein, Edward E. Lucente, Jeffrey P. Stamen and Thomas M. Walker. 14 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 ----------- ---------------------- ---- 11 Computations of earnings (loss) per common and common equivalent share (filed herewith). EF b. The Registrant has not filed any reports on Form 8-K during the quarter for which this report is filed. 15 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/Thomas M. Walker ------------------------------------------ Thomas M. Walker Executive Vice President and Chief Financial Officer (Authorized officer of Registrant and principal financial officer) August 15, 1994 16 EX-11 2 COMPUTATION OF EARNINGS EXHIBIT 11 INFORMATION RESOURCES, INC. AND SUBSIDIARIES COMPUTATIONS OF EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
THREE MONTHS SIX MONTHS ENDED JUNE 30, 1994 ENDED JUNE 30, 1994 Earnings (loss) for the period (A) Before cumulative effect of accounting change: $ 12,000 $ (1,276,000) Cumulative effect of accounting change -- (6,594,000) ----------- ------------ Net earnings (loss) $ 12,000 $ (7,870,000) =========== ============ Weighted common shares outstanding during the period 26,091,000 25,835,000 Net additional shares in excess of 20% of outstanding issuable pursuant to modified treasury stock method -- -- ----------- ------------ Total common and common equivalent shares (B) 26,091,000 25,835,000 =========== ============ Earnings (loss) per common and common equivalent shares (A)/(B): Before cumulative effect of accounting change $ -- $ (.05) Cumulative effect of accounting change -- (.26) ----------- ------------ Net earnings (loss) $ -- $ (.31) =========== ============
THREE MONTHS SIX MONTHS ENDED JUNE 30, 1993 ENDED JUNE 30, 1993 FULLY FULLY PRIMARY DILUTED PRIMARY DILUTED ----------- ----------- ----------- ----------- Earnings for the period (A) Before cumulative effect of accounting change: $ 6,459,000 $ 6,459,000 $10,386,000 $10,386,000 Cumulative effect of accounting change -- -- 1,864,000 1,864,000 ----------- ----------- ----------- ----------- Net earnings $ 6,459,000 $ 6,459,000 $12,250,000 $12,250,000 =========== =========== =========== =========== Weighted common shares outstanding during the period 24,868,000 24,868,000 24,736,000 24,736,000 Net additional shares in excess of 20% of outstanding issuable pursuant to modified treasury stock method 1,721,000 1,870,000 1,638,000 1,870,000 ----------- ----------- ----------- ----------- Total common and common equivalent shares (B) 26,589,000 26,738,000 26,374,000 26,606,000 =========== =========== =========== =========== Earnings per common and common equivalent shares (A)/(B): Before cumulative effect of accounting change $ .24 $ .24 $ .39 $ .39 Cumulative effect of accounting change -- -- .07 .07 ----------- ----------- ----------- ----------- Net earnings $ .24 $ .24 $ .46 $ .46 =========== =========== =========== ===========
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