-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, E4yOPRB4MU2/kf7jgKFlindsnLgOszUSvm6tLMFceMijJ7ABKMg+sTokC4itDl/e 0E9lewTi00rwTDkNFBqiYg== 0001021408-01-509911.txt : 20020410 0001021408-01-509911.hdr.sgml : 20020410 ACCESSION NUMBER: 0001021408-01-509911 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: OPINION RESEARCH CORP CENTRAL INDEX KEY: 0000911673 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING, ACCOUNTING, RESEARCH, MANAGEMENT [8700] IRS NUMBER: 223118960 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-14927 FILM NUMBER: 1783569 BUSINESS ADDRESS: STREET 1: 23 ORCHARD RD CITY: SKILLMAN STATE: NJ ZIP: 08558 BUSINESS PHONE: 9082815100 10-Q 1 d10q.txt 3RD QUARTER FORM 10-Q United States Securities and Exchange Commission Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 2001 [_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Period from : ____________ to ____________ Commission file number 0-22554 ------- OPINION RESEARCH CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 22-3118960 - ------------------------------------------ ----------------------------------- (State of incorporation) (I.R.S. Employer Identification No.) 23 Orchard Road Skillman, NJ 08558 - ------------------------------------------ ----------------------------------- (Address of principal executive offices) (Zip Code) 908-281-5100 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) 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 periods 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 _____ ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. Common Stock, $0.01 Par Value - 5,801,326 shares as of September 30, 2001 INDEX Opinion Research Corporation and Subsidiaries Part I. Financial Information Item 1. Financial Statements (Unaudited) Consolidated balance sheets - September 30, 2001 and December 31, 2000 Consolidated statements of income - Three and nine months ended September 30, 2001 and 2000 Consolidated statements of cash flows - Nine months ended September 30, 2001 and 2000 Notes to consolidated financial statements - September 30, 2001 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosure About Market Risk Part II. Other Information Item 1. Legal Proceedings Item 2. Changes in Securities and Use of Proceeds Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Report on Form 8-K Signature OPINION RESEARCH CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets (in thousands, except share amounts) (Unaudited) - --------------------------------------------------------------------------------
September 30, December 31, 2001 2000 ------------- ------------ Assets Current Assets: Cash and cash equivalents $ 2,274 $ 3,235 Accounts receivable: Billed 23,928 27,162 Unbilled services 15,219 14,185 ------------- ------------ 39,147 41,347 Less: allowance for doubtful accounts 264 246 ------------- ------------ 38,883 41,101 Prepaid and other current assets 2,664 2,319 ------------- ------------ Total current assets 43,821 46,655 Property and equipment, net 9,844 9,610 Intangibles, net 3,875 4,924 Goodwill, net 54,047 51,108 Other assets 3,364 3,660 ------------- ------------ $ 114,951 $ 115,957 ============= ============ Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 4,645 $ 4,737 Accrued expenses 9,246 13,683 Deferred revenues 2,547 4,834 Acquisition payable 5,000 3,226 Short-term borrowings 4,125 3,002 Other current liabilities 1,144 2,340 ------------- ------------ Total current liabilities 26,707 31,822 Long-term debt 50,857 48,776 Deferred income taxes 533 548 Other liabilities 925 951 Redeemable Equity: Preferred stock: Series B - 10 shares designated, issued and outstanding, liquidation value of $10 per share - - Series C - 588,229 shares designated, none issued or outstanding - - Common stock, 1,176,458 shares issued and outstanding 8,900 8,900 Stockholders' Equity: Preferred stock, $.01 par value, 1,000,000 shares authorized: Series A - 10,000 shares designated, none issued or outstanding - - Common stock, $.01 par value, 10,000,000 shares authorized, 4,673,690 shares issued and 4,624,868 outstanding in 2001, and 4,474,412 shares issued and 4,436,554 outstanding in 2000 47 45 Additional paid-in capital 18,272 17,473 Retained earnings 9,663 8,235 Treasury stock, at cost, 48,822 shares in 2001, 37,858 in 2000 (261) (186) Accumulated other comprehensive loss (692) (607) ------------- ------------ Total stockholders' equity 27,029 24,960 ------------- ------------ $ 114,951 $ 115,957 ============= ============
- -------------------------------------------------------------------------------- See notes to financial statements OPINION RESEARCH CORPORATION AND SUBSIDIARIES Consolidated Statements of Income (in thousands, except share and per share amounts) (Unaudited) - --------------------------------------------------------------------------------
Three Months Ended Nine Months Ended September 30, September 30, ----------------------- ----------------------- 2001 2000 2001 2000 ---------- ---------- ---------- ---------- Revenues $ 41,943 $ 37,661 $ 132,937 $ 117,231 Cost of revenues 28,901 24,576 90,762 77,339 ---------- ---------- ---------- ---------- Gross profit 13,042 13,085 42,175 39,892 Selling, general and administrative expenses 9,327 8,372 28,869 26,176 Depreciation and amortization 2,160 1,866 6,305 5,276 ---------- ---------- ---------- ---------- Operating income 1,555 2,847 7,001 8,440 Interest and other non-operating expenses, net 1,357 1,516 4,147 4,224 ---------- ---------- ---------- ---------- Income before provision for income taxes 198 1,331 2,854 4,216 Provision for income taxes 193 554 1,426 1,821 ---------- ---------- ---------- ---------- Net income $ 5 $ 777 $ 1,428 $ 2,395 ========== ========== ========== ========== Net income per common share: Basic $ 0.00 $ 0.17 $ 0.25 $ 0.54 ========== ========== ========== ========== Diluted $ 0.00 $ 0.16 $ 0.24 $ 0.50 ========== ========== ========== ========== Weighted average common shares outstanding: Basic 5,794,859 4,658,923 5,735,569 4,399,999 Diluted 5,977,348 4,931,194 6,021,450 4,820,872
- -------------------------------------------------------------------------------- See notes to financial statements OPINION RESEARCH CORPORATION AND SUBSIDIARIES Consolidated Statements of Cash Flows (in thousands) - --------------------------------------------------------------------------------
Nine Months Ended September 30, -------------------- 2001 2000 -------- -------- Cash flows from operating activities: Net income $ 1,428 $ 2,495 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,305 5,276 Loss (gain) on disposal of fixed assets (8) 45 Provision for doubtful accounts 18 (32) Non-cash interest expense 80 70 Amortization of loan fees 247 212 Deferred income taxes (14) (176) Changes in operating assets and liabilities, net of effects from acquisitions, Accounts receivable 2,135 (697) Other assets (312) 105 Accounts payable and accrued expenses (4,452) 1,278 Deferred revenues (2,257) 366 Other liabilities (1,213) (523) -------- -------- Net cash provided by operating activities 1,957 8,419 -------- -------- Cash flows from investing activities: Payments for acquisitions, net of cash acquired (3,726) (15,525) Capital expenditures (3,011) (2,770) -------- -------- Net cash used in investing activities (6,737) (18,295) -------- -------- Cash flows from financing activities: Borrowings under line-of-credit agreement 22,612 20,554 Repayments under line-of-credit agreement (17,225) (18,504) Repayments of note payable (2,250) (1,548) Repayments under capital lease arrangements (20) (22) Redemption of acquisition stock options - (2,000) Proceeds from issuance of capital stock, warrants, and options 726 9,970 -------- -------- Net cash provided by financing activities 3,843 8,450 -------- -------- Effect of exchange rate changes on cash and cash equivalents (24) (18) -------- -------- Decrease in cash and cash equivalents (961) (1,444) Cash and cash equivalents at beginning of period 3,235 2,808 -------- -------- Cash and cash equivalents at end of period $ 2,274 $ 1,364 ======== ========
See notes to consolidated financial statements. OPINION RESEARCH CORPORATION AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements September 30, 2001 (Unaudited) (in thousands, except per share data) NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. NOTE B - EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: Three Months Nine Months Ended Ended September 30, September 30, ---------------- ---------------- 2001 2000 2001 2000 ------- ------- ------- ------- Numerator: Net income $ 5 $ 777 $ 1,428 $ 2,395 ------- ------- ------- ------- Numerator for basic and diluted earnings per share $ 5 $ 777 $ 1,428 $ 2,395 ======= ======= ======= ======= Denominator: Denominator for basic earnings per share, Weighted-average shares 5,795 4,659 5,736 4,400 Effect of dilutive stock options 182 272 285 421 ------- ------- ------- ------- Denominator for diluted earnings per share, Adjusted weighted-average shares 5,977 4,931 6,021 4,821 ======= ======= ======= ======= Net income per common share: Basic earnings per share $ 0.00 $ 0.17 $ 0.25 $ 0.54 ======= ======= ======= ======= Diluted earnings per share $ 0.00 $ 0.16 $ 0.24 $ 0.50 ======= ======= ======= ======= NOTE C - ACQUISITIONS Pursuant to the Stock Purchase Agreement dated April 30, 1999 between the Company and the previous shareholders of Macro International Inc. ("Macro"), additional payments of $5,500 were due to the sellers based on Macro's operating results for the 12-month period ended April 30, 2001. In July 2001, the Company paid $500 in cash and issued a promissory note to the previous Macro shareholders which deferred the remaining payment from July 31, 2001 to November 1, 2001. The principal amount of the note was $5,000, with interest at a rate of 10% per annum. Both the principal amount and the accrued interest were paid in October 2001. The $5,500 earn-out amount has been recorded as goodwill and is being amortized over the remaining life of the goodwill. On August 31, 2000, the Company acquired substantially all of the assets of C/J Research, Inc. ("C/J"). The purchase price was comprised of a $9,225 cash payment and approximately $325 of additional costs related to the acquisition. The fair value of the net assets acquired was $637. Identifiable intangible assets valued at $1,300 are being amortized using the straight-line method over a period of five years. The excess consideration paid over the estimated fair value of net assets and identifiable intangible assets acquired in the amount of $7,613, has been recorded as goodwill and is being amortized using the straight- line method over a period of twenty years. Pursuant to a Stock Purchase Agreement dated October 31, 2000, the Company, through its wholly owned subsidiary Macro, acquired all of the outstanding shares of stock of Social & Health Services, Ltd. ("SHS"), a communications and information management company based in Rockville, Maryland. The purchase price was comprised of $3,750 in cash, 144,990 shares of the Company's common stock valued at $1,000, and approximately $180 of other acquisition related costs. The fair value of the net assets acquired was $2,340. Identifiable intangible assets valued at $594 are being amortized using the straight-line method over a period of five years. The excess consideration paid over the estimated fair value of net assets and identifiable intangible assets acquired in the amount of $1,996, has been recorded as goodwill and is being amortized using the straight-line method over a period of twenty years. The unaudited pro forma results of operations for the nine months ended September 30, 2000, which assumes the consummation of C/J and SHS purchases as of the beginning of the period, are as follows: Revenues $ 135,791 Net income $ 3,393 Net income per share: Basic $ 0.59 Diluted $ 0.55 The shares used in the per share computation included 1,176,458 shares issued to LLR Equity Partners, L.P. and LLR Equity Partners Parallel, L.P. (collectively, "LLR"), and 144,990 shares issued to the previous shareowners of SHS. A portion of the proceeds received from the LLR transaction was used to fund the C/J acquisition. The pro forma net income includes adjustments for amortization of goodwill and intangible assets, interest expense, and the related income tax effects of such adjustments. NOTE D - CREDIT FACILITY In May 1999, the Company entered into a credit agreement with a financial institution for a facility which provided $30,000 of term notes and up to $20,000 of revolving credit for a six-year term (the "Senior Facility"). The Senior Facility carried an interest rate at the discretion of the Company of either the financial institution's designated base rate plus 100 basis points or LIBOR plus 250 basis points for both revolving credit and term notes. As of September 30, 2001, the outstanding balance under the revolving credit was $16,037 and the outstanding balance under the term notes was $24,750. On October 4, 2001, the Company completed an amendment to the Senior Facility to increase the amount available under the revolving credit to up to $24,000 and to shorten the maturity for both the revolving credit and the term notes to June 1, 2004 from May 31, 2005 (the "Amendment"). Additionally, the Amendment provides an increase in interest rate to LIBOR plus 325 basis points or the financial institution's designated base rate plus 200 basis points. As of October 4, 2001, the Company had approximately $3,623 of additional credit available under the amended facility. In conjunction with the Amendment, the Company incurred additional costs of $458, which are to be recorded as other long-term assets in the Company's consolidated financial statements and, together with the previously unamortized loan fees of $611, are to be amortized over the remaining term of the facility under the new Amendment. NOTE E - COMPREHENSIVE INCOME The Company's comprehensive income for the three and nine months ended September 30, 2001 and 2000, are set forth in the following table: Three Months Nine Months Ended Ended September 30, September 30, 2001 2000 2001 2000 ------- ------- ------- ------- Net income $ 5 $ 777 $ 1,428 $ 2,395 Other comprehensive gain (loss): Foreign currency translation adjustment 184 (394) (85) (723) ------- ------- ------- ------- Comprehensive income $ 189 $ 383 $ 1,343 $ 1,672 ======= ======= ======= ======= NOTE F - SEGMENTS The Company's operations by business segments for the three and nine months ended September 30, 2001 and 2000 are as follows:
U.S. Market U.K. Market Social Total Research Research Teleservices Research Segments Other Consolidated - --------------------------------------------------------------------------------------------------------------------------------- Three months ended September 30, 2001: - -------------------------------------- Revenues from external Customers $ 10,000 $ 4,585 $ 3,159 $ 23,326 $ 41,070 $ 873 $ 41,943 Operating income (loss) (762) 458 22 1,971 1,689 (134) 1,555 Interest and other non- operating expenses, net 1,357 Income before income taxes $ 198 Three months ended September 30, 2000: - -------------------------------------- Revenues from external Customers $ 8,931 $ 4,054 $ 4,519 $ 19,613 $ 37,117 $ 544 $ 37,661 Operating income (loss) 481 229 339 1,805 2,854 (7) 2,847 Interest and other non- operating expenses, net 1,516 Income before income taxes $ 1,331 Nine months ended September 30, 2001: - ------------------------------------- Revenues from external Customers $ 33,160 $13,411 $13,168 $ 70,801 $130,540 $2,397 $132,937 Operating income (loss) 22 1,178 1,264 5,123 7,587 (586) 7,001 Interest and other non- operating expenses, net 4,147 Income before income taxes $ 2,854 Nine months ended September 30, 2000: - ------------------------------------- Revenues from external Customers $ 26,384 $12,532 $14,464 $ 61,614 $114,994 $2,237 $117,231 Operating income (loss) 1,410 678 1,502 4,886 8,476 (36) 8,440 Interest and other non- operating expenses, net 4,224 Income before income taxes $ 4,216 - ---------------------------------------------------------------------------------------------------------------------------------
NOTE G - RECENT ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board issued Statement No. 141, Business Combinations, and Statement No. 142, Goodwill and Other Intangible Assets, effective for fiscal years beginning after December 15, 2001. Under the new rules, goodwill and intangible assets deemed to have indefinite lives will no longer be amortized but will be subject to annual impairment tests. Other intangible assets will continue to be amortized over their useful lives. The Company will continue to amortize existing goodwill through the remainder of 2001, at which time goodwill amortization will cease and a transitional goodwill impairment test will be performed in connection with the adoption of No. 142 on January 1, 2002. The Company is currently reviewing the impact of these standards and the ultimate impact of the new accounting standards has not yet been determined. The Company recorded $2,518 of goodwill amortization expense for the nine months ended September 30, 2001. In August, the FASB issued Statement No. 143, Accounting for Asset Retirement Obligations. That standard requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred. In October, the FASB issued Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and provides a single accounting model for long-lived assets to be disposed of. Although retaining many of the fundamental recognition and measurement provisions of Statement 121, the new rules significantly change the criteria that would have to be met to classify an asset as held-for-sale. The Company will adopt Statement No. 143 on January 1, 2003 and Statement No. 144 on January 1, 2002 with transition provisions for certain matters. The Company is currently evaluating the effects of these standards on the Company's financial position and results of operations. NOTE H - RECLASSIFICATION OF REDEEMABLE EQUITY INSTRUMENTS On July 19, 2001, guidance was issued in EITF Topic No. D-98, Classification and Measurement of Redeemable Securities, which requires securities with redemption features, including those that become exercisable only upon a change-in-control, be classified outside of permanent equity. As described in the paragraphs below, certain of the Company's equity instruments purchased by LLR on September 1, 2000 contain such change-in-control redemption rights. Accordingly, the Company restated its consolidated balance sheets as of December 31, 2000 to report redeemable equity and reduce stockholders' equity in the amount of $8,900. Pursuant to the terms of a September 1, 2000 Purchase Agreement, the Company sold and LLR purchased in a private placement (i) 1,176,458 shares of the Company's Common Stock, (ii) 10 shares of the Series B Preferred Stock, and (iii) warrants to purchase 740,500 shares of the Company's Common Stock at an exercise price of $12.00 per share, for aggregate gross proceeds of $10 million. The warrants are exercisable from the date of issuance and expire in 2010. If the Company sells shares of Common Stock in the future at a per share price below $8.50, the exercise price of the warrants would be proportionately reduced and certain contingent warrants issued to LLR at an exercise price of $.01 per share become exercisable. The holders of Series B Preferred Stock are entitled to nominate and elect two directors to the Company's Board of Directors. The holders of the Series B Preferred Stock are not entitled to receive dividends. In the event of liquidation, each share of the Series B Preferred Stock is entitled to a liquidation preference of $10.00 per share. The Company may redeem the outstanding shares of Series B Preferred Stock at any time LLR's shareholdings fall below 10% of the Company's outstanding common shares, at a per share amount equal to the greater of the fair market value or the liquidation preference. At any time after the fifth anniversary of the closing, LLR may exchange each share of Common Stock for one-half of a share of the Company's Series C Preferred Stock. After conversion, the holders of Series C Preferred Stock are entitled to receive cumulative quarterly cash dividends at an annual rate of $2.04 per share. In the event of liquidation, each share of the Series C Preferred Stock is entitled to a liquidation preference of $17.00 per share (the "Preference Amount") plus all accrued and unpaid dividends. The Company may redeem the outstanding shares of Series C Preferred Stock at any time at a per share amount equal to the greater of the fair market value or the Preference Amount multiplied by 25% per annum, compounded annually from September 30, 2000, plus any accrued but unpaid dividends per share. Each share of Series C Preferred Stock is convertible at all times into two shares of Common Stock. The holders of Series C Preferred Stock are entitled to vote on all matters before the common holders, as a single class with the Common Stock, on an as if converted basis. Additionally, holders of Series C Preferred Stock as a class, may also nominate and elect two additional directors to the Company's Board of Directors, subject to LLR maintaining certain specified ownership percentages. In the event of (i) the sale of substantially all of the assets of the Company, (ii) any consolidation or merger of the Company into another corporation or entity in which the stockholders of the Company immediately prior to such transaction hold less than 50% of the Company's voting power immediately after such transaction, or (iii) any transactions in which in excess of 50% of the Company's voting power is transferred to one or more affiliated persons, the holders of the Series B Preferred Stock and the Series C Preferred Stock may require the Company to redeem such securities at their respective liquidation preferences. Because such redemption features are not solely within the control of the Company, the Series B Preferred Stock and the 1,176,458 shares of Common Stock held by LLR (which may be exchanged into shares of Series C Preferred Stock), have been presented outside of stockholders' equity in the Company's consolidated balance sheets. The 1,176,458 shares of Common Stock held by LLR are carried at their aggregate fair value at issuance of $8.9 million, and no changes will be made to such carrying value until a change-in-control of the Company is probable. Finally, because the rights to exchange shares of Common Stock into shares of Series C Preferred Stock may not be transferred by LLR to any parties other than affiliates of LLR, these rights will terminate upon any resale or transfer of the 1,176,458 LLR common shares to an unaffiliated entity. Accordingly, upon the occurrence of any such resale or transfer, the Company will reclassify a pro- rata portion of the carrying value of the LLR Common Stock into stockholders' equity. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (dollars in thousands) Results of Operations - Third Quarter 2001 as Compared to Third Quarter 2000 Revenues for the third quarter of 2001 increased $4,282, or 11%, to $41,943 from $37,661 in the third quarter of 2000. The acquisitions of C/J Research, Inc. and Social & Health Services, Ltd. (the "Acquisitions") added $5,981 to revenues. Non-acquisition revenues increased 13% (16% in local currency) in U.K. Market Research, declined 7% in U.S. Market Research, 30% in Teleservices and 2% in Social Research. The declines in U.S. Market Research and Teleservices reflect reduced demand for services, which was impacted by the current economic climate in the United States. The decline in Social Research is due to the temporary reduction in the level of work on certain continuing contracts. Cost of revenues increased $4,325, or 18%, to $28,901 in the third quarter of 2001 from $24,576 in the third quarter of 2000. The Acquisitions added $4,930 to cost of revenues. Cost of revenues for the remainder of the Company declined, generally in line with revenue changes, but with higher costs in U.S. Market Research, offset in part with improvements in Teleservices, U.K. Market Research and Social Research. Gross profit as a percentage of revenues for the Company decreased to 31% in the third quarter of 2001 from 35% in the third quarter of 2000. Approximately 57% of this decline is due to the impact of the Acquisitions, for which the gross profit percentage was 22%. The gross profit percentage for the reminder of the Company declined to 33% from 34% and reflects increased costs in U.S. Market Research, offset in part with improvements in Teleservices, U.K. Market Research and Social Research. Selling, general and administrative expenses ("SG&A") increased $955, or 11%, to $9,327 in the third quarter of 2001 from $8,372 in the third quarter of 2000. The Acquisitions accounted for 57% of the increase. As a percent of revenues, consolidated SG&A was stable at 22%. Depreciation and amortization expense increased by $294, or 16%, to $2,160 in the third quarter of 2001 from $1,866 in the third quarter of 2000. The Acquisitions accounted for $187, or 64%, of the increase. Depreciation and amortization on a consolidated basis was stable at 5% of revenues. Interest expense decreased by $159 to $1,357 in the third quarter of 2001 from $1,516 in the third quarter of 2000. The decrease in interest expense is attributable to lower interest rates offset by the additional borrowings incurred to fund one of the Acquisitions and to fund earn-out payments with respect to earlier acquisitions. The provision for income taxes for the third quarter of 2001 and the third quarter of 2000 was $193 and $554, respectively. The provisions for these periods are higher than the amount that results from applying the federal statutory rate to income primarily because of amortization of non-deductible goodwill generated from acquisitions and the impact of state taxes. In addition, the tax rate in the third quarter of 2001 reflects an increase in the expected tax rate for the year to 50% from 46% recorded in the first six months. As a result of all of the above, net income decreased to $5 in the third quarter of 2001 from $777 in the third quarter of 2000. Results of Operations - Nine Months Year-to-Date 2001 as Compared to Nine Months Year-to-Date 2000 Revenues for the first nine months of 2001 increased $15,706, or 13%, to $132,937 from $117,231 in the first nine months of 2000. The acquisitions added $19,713 to revenues. Non-acquisition revenues were flat in U.S. Market Research, declined 9% in Teleservices, and declined 5% in Social Research. The decline in Teleservices reflects reduced demand for services, which was impacted by the current economic climate in the United States. The decline in Social Research is due to the temporary reduction in the level of work on certain continuing contracts. Cost of revenues increased $13,423, or 17%, to $90,762 in the first nine months of 2001 from $77,339 in the first nine months of 2000. The Acquisitions added $15,271 to cost of revenues. Cost of revenues for the remainder of the Company declined, generally in line with revenue changes, but with higher costs in U.S. Market Research, offset in part with improvements in Teleservices and U.K. Market Research. Gross profit as a percentage of revenues for the Company decreased to 32% in the first nine months of 2001 from 34% in the first nine months of 2000. Approximately 69% of this decline is due to the impact of the Acquisitions, for which the gross profit percentage was 24%. The gross profit percentage for the remainder of the Company declined to 33% from 34% and reflects increased costs in U.S. Market Research, offset in part with improvements in Teleservices and U.K. Market Research. Selling, general and administrative expenses ("SG&A") increased $2,693, or 10%, to $28,869 in the first nine months of 2001 from $26,176 in the first nine months of 2000. The Acquisitions accounted for 83% of the increase. As a percent of revenues, consolidated SG&A decreased slightly to 21.7% from 22.3%. Depreciation and amortization expense increased by $1,029, or 20%, to $6,305 in the first nine months of 2001 from $5,276 in the first nine months of 2000. The Acquisitions accounted for $657, or 64%, of the increase. Depreciation and amortization on a consolidated basis increased to 4.7% of revenues from 4.5%. Interest expense declined by $77, or 2%, to $4,147 in the first nine months of 2001 from $4,224 in the first nine months of 2000. The decrease in interest expense is attributable to lower interest rates offset by the additional borrowings incurred to fund one of the Acquisitions and to fund earn-out payments with respect to earlier acquisitions. The provision for income taxes for the first nine months of 2001 and the first nine months of 2000 was $1,426 and $1,821, respectively. The provisions for these periods are higher than the amount that results from applying the federal statutory rate to income primarily because of amortization of non-deductible goodwill generated from acquisitions and the impact of state taxes. As a result of all of the above, net income decreased to $1,428 in the first nine months of 2001 from $2,395 in the first nine months of 2000. Liquidity and Capital Resources Net cash provided by operating activities for the first nine months of 2001 was $1,957 as compared to $8,419 in the first nine months of 2000. The decrease is due to a decrease in current period net income combined with an increase in working capital requirements. For the nine months ended September 30, 2001, the net cash provided by operating activities was primarily generated by net income, after adjusting for depreciation and amortization, and a decrease in accounts receivable of $2,135, substantially offset by significant decreases in payables and accrued expenses of $4,452, deferred revenue of $2,257, and other liabilities of $1,213. For the nine months ended September 30, 2000, the net cash provided by operating activities was primarily generated by net income, after adjusting for depreciation and amortization, an increase in payables and accrued expenses of $1,278 and an increase in deferred revenues of $366, offset by an increase in accounts receivable of $697 and a decrease in other liabilities of $523. Investing and financing activities for the first nine months of 2001 included capital expenditures of $3,011 and payments of $3,726 with respect to earn-out payments relating to prior acquisitions. In July 2001, the Company issued a promissory note to former shareholders of Macro International Inc. which deferred the payment of $5,000 of the aggregate $5,500 earn-out from July 31, 2001 to November 1, 2001 with an interest rate of 10% per annum. Both the principal amount and the accrued interest were paid in October 2001. In May 1999, the Company entered into a credit agreement with a financial institution for a facility which provided $30,000 of term notes and up to $20,000 of revolving credit for a six-year term (the "Senior Facility"). The Senior Facility carried an interest rate at the discretion of the Company of either the financial institution's designated base rate plus 100 basis points or LIBOR plus 250 basis points for both revolving credit and term notes. As of September 30, 2001, the outstanding balance under the revolving credit was $16,037 and the outstanding balance under the term notes was $24,750. On October 4, 2001, the Company completed an amendment to the Senior Facility to increase the amount available under the revolving credit to up to $24,000 and to shorten the maturity for both the revolving credit and the term notes to June 1, 2004 from May 31, 2005 (the "Amendment"). Additionally, the Amendment provides an increase in interest rate to LIBOR plus 325 basis points or the financial institution's designated base rate plus 200 basis points. As of October 4, 2001, the Company had approximately $3,623 of additional credit available under the amended facility. The Company believes that its current sources of liquidity and capital will be sufficient to fund its long-term obligations and working capital needs for the foreseeable future. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Market risks relating to the Company's operations result primarily from changes in interest rates and changes in foreign exchange rates. The Company monitors its interest rate and foreign exchange rate exposures on an ongoing basis. Historically, the Company has entered into interest rate hedging contracts and will continue to evaluate their appropriateness. Historically, the Company has not entered into foreign exchange contracts, but such contracts may be used in the future if the Company deems them to be an appropriate resource to manage the Company's exposure to foreign currency exchange rates. The Company does not consider its current foreign exchange exposure, which is primarily related to changes between the U.S. dollar and the U.K. pound, to be material. Historically, the impact of changes in foreign exchange rates has not had a significant impact on the Company's results of operations. The following table provides information about the financial instruments of the Company that are sensitive to changes in interest rates. For debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates.
- -------------------------------------------------------------------------------------------------------------------- Interest Rate Sensitivity Principal Amount by Expected Maturity Average Interest Rate There- Fair Value 2001 2002 2003 2004 2005 After Total 9/30/01 - -------------------------------------------------------------------------------------------------------------------- Liabilities Long-term debt including current portion: Variable rate debt $750 $4,500 $6,000 $29,537 - - $40,787 $ 40,787 Average interest rate - LIBOR+3.25% Fixed rate debt - 12% $3,750 $11,250 $15,000 $ 12,633 - --------------------------------------------------------------------------------------------------------------------
PART II: OTHER INFORMATION Item 1. Legal Proceedings None. Item 2. Changes in Securities and Use of Proceeds None. Item 3. Defaults upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K a) Exhibits 10.1 Waiver and Fifth Amendment to Credit Agreement dated October 4, 2001 among Opinion Research Corporation, ORC Inc., and Heller Financial, Inc. 10.2 Amendment to the Opinion Research Corporation 1997 Stock Incentive Plan. b) Reports on Form 8-K None. SIGNATURE 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 thereunto duly authorized. Opinion Research Corporation ------------------------------------------ (Registrant) Date: November 13, 2001 /s/ Douglas L. Cox ----------------- ------------------------------------------ Douglas L. Cox Executive Vice President & Chief Financial Officer EX-10.1 3 dex101.txt WAIVER AND FIFTH AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.1 WAIVER AND FIFTH AMENDMENT TO CREDIT AGREEMENT This WAIVER AND FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated as of October 4, 2001, and is entered into by and among Opinion Research Corporation, a Delaware corporation ("Parent"), ORC Inc., a Delaware corporation ("ORC"; Parent and ORC are sometimes referred to individually as a "Borrower" and collectively as the "Borrowers"), Heller Financial, Inc., individually as a Lender and in its capacity as agent (in such capacity, "Agent") for the Lenders party to the Credit Agreement described below, and the Lenders which are signatories hereto. WHEREAS, Agent, Lenders (other than New Lender, which is becoming a party to the Credit Agreement pursuant to Section 4 of this Amendment) and Borrowers are parties to a certain Credit Agreement dated as of May 26, 1999 (as such agreement may from time to time be amended, supplemented or otherwise modified, the "Credit Agreement"); and WHEREAS, the parties hereto desire to amend the Credit Agreement by increasing the amount of the Revolving Loan Commitment and making such other amendments to the Credit Agreement as are more fully set forth herein. NOW THEREFORE, in consideration of the mutual conditions and agreements set forth in the Credit Agreement and this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions. Capitalized terms used in this Amendment, unless ----------- otherwise defined herein, shall have the meaning ascribed to such terms in the Credit Agreement. 2. Waiver. Upon satisfaction of the conditions precedent set forth in ------ Section 5 below, and in reliance upon the representations and warranties of - --------- Borrowers set forth herein, the Agent and the Lenders hereby waive the Event of Default under Section 6.1(C) of the Credit Agreement arising from Borrowers' breach of Section 3.15 of the Credit Agreement that occurred when Borrowers made a $500,000 payment on July 31, 2001 with respect to the Macro Earn-Out at such time as Section 3.15 prohibited such payment to be made. This is a limited waiver and shall not be deemed to constitute a waiver of any other Event of Default or any future breach of the Credit Agreement or any of the other Loan Documents. Borrowers agree that they shall remain obligated to comply with the terms of the Credit Agreement, including, but not limited to, Section 3.15 thereof, and that Agent and Lenders shall not be obligated in the future to waive any provision of the Credit Agreement or any Loan Document. 3. Amendments. Subject to the conditions set forth below, the Credit ---------- Agreement is amended as follows: (a) The Lenders, Agent and Borrowers hereby agree that each Lender's commitment to make Revolving Loans and the outstanding principal amount of each Lender's Term Loan shall be amended and restated as set forth on Schedule 4(b) ------------- 1 hereto. The Lenders, Agent and Borrowers hereby agree that the defined term "Pro Rata Share" set forth in Section 10.1 of the Credit Agreement shall be deemed to be amended in all relevant respects to give effect to the terms of the preceding sentence. (b) Section 1.1(A) of the Credit Agreement is amended by (i) inserting in the table of Scheduled Installments a new Scheduled Installment due and payable on June 1, 2004 in the amount of $11,375,000 and (ii) deleting all Scheduled Installments due and payable on and after June 30, 2004. (c) Section 1.1(B)(1) of the Credit Agreement is amended in its entirety and as so amended shall read as follows: (B) Revolving Loans. (1) Each Lender agrees, severally and not --------------- jointly, to lend to Borrowers from the Closing Date to the Expiry Date its Pro Rata Share of the loans requested by Parent, on behalf of Borrowers, to be made by Lenders under this subsection 1.1(B), up to an aggregate maximum for all Lenders of (i) $20,000,000 until the Fifth Amendment Effective Date and (ii) $24,000,000 on and after the Fifth Amendment Effective Date (as the same may be reduced and otherwise in effect from time to time hereunder, the "Revolving Loan Commitment"). Advances or amounts outstanding under the Revolving Loan Commitment will be called "Revolving Loans". Revolving Loans may be repaid and reborrowed. The Revolving Loans shall be repaid in full on the Expiry Date. The "Maximum Revolving Loan Balance" will be the lower of: (a) the "Borrowing Base" (as calculated on Exhibit 4.8(E), the "Borrowing Base Certificate") less the sum of (i) outstanding Risk ---- Participation Liability, plus (ii) the Earn-Out Reserve; or ---- (b) the Revolving Loan Commitment less the sum of (i) outstanding ---- Risk Participation Liability, plus (ii) the Earn-Out Reserve. ---- The amount computed under clause (a) of the immediately preceding sentence is herein referred to as "Borrowing Base Availability". If at any time the outstanding Revolving Loans exceed the Maximum Revolving Loan Balance (as it may be deemed increased from time to time pursuant to subsection 1.1(B)(2)), Lenders shall not be obligated to make Revolving Loans and issue Lender Letters of Credit and Risk Participation Agreements, and Revolving Loans must be repaid immediately in an amount sufficient to eliminate any excess. Revolving Loans may be requested in any amount with one (1) Business Day prior notice required for amounts equal to or greater than $5,000,000. For amounts less than $5,000,000, written or telephonic notice must be provided by noon Chicago time on the day on which the Loan is to be made. All LIBOR Loans require three (3) Business Day's notice. All Loans requested telephonically must be confirmed in writing within one (1) Business Day. Neither Agent nor any Lender shall incur any liability to Borrowers for acting upon any telephonic notice that Agent believes in good faith to have been given by a duly authorized officer or other person authorized to borrow on behalf of Borrowers. 2 The parties hereto hereby agree that Borrowers shall be permitted to borrow up to $5,000,000 of Revolving Loans on the Fifth Amendment Effective Date to satisfy all outstanding obligations with respect to the Macro Earn-Out. (d) The definition of "Base Rate Margin" in Section 1.2(A) of the Credit Agreement shall be amended in its entirety and as so amended shall read as follows: "Base Rate Margin" shall mean, as of October 4, 2001, two percent (2.00%) per annum. (e) The definition of "LIBOR Margin" in Section 1.2(A) of the Credit Agreement shall be amended in its entirety and as so amended shall read as follows: "LIBOR Margin" shall mean, as of October 4, 2001, three and one- quarter percent (3.25%) per annum. (f) Section 1.2(A) of the Credit Agreement is amended by deleting in its entirety from such section each of the following: (i) the definition of "Total Indebtedness to Adjusted EBITDA Ratio", (ii) the Pricing Table and (iii) the paragraph immediately following the Pricing Table. (g) Subsection (C) of Section 1.3 of the Credit Agreement is amended by inserting the parenthetical "(including reasonable attorneys' fees and legal expenses, which may consist of fees and legal expenses of outside counsel retained by Agent or any Lender or the allocated costs of in-house counsel of Agent or any Lender)" immediately after the phrase "Borrowers' agree to promptly pay all fees, costs and expenses" set forth in the second sentence thereof. (h) Section 3.1(B) of the Credit Agreement is amended by deleting the phrase "amount of all Loans" in such section and inserting in lieu thereof the phrase "amount of all such intercompany Indebtedness". (i) Section 3.5 of the Credit Agreement is amended by (i) deleting the current subsection (C) thereof in its entirety and (ii) redesignating subsection (D) thereof as subsection (C). (j) Subsection (B) of Section 4.5 of the Credit Agreement is amended in its entirety and as so amended shall read as follows: (B) Borrowers shall not permit Total Interest Coverage for any twelve (12) month period ending on the last day of any calendar quarter ending on the date set forth below to be less than the ratio set forth below for such period: 3 Period Ending Ratio ------------- ----- December 31, 2000 through December 31, 2001 2.50 March 31, 2002 & the last day of each calendar quarter thereafter 2.75 (k) Section 4.6 of the Credit Agreement is amended in its entirety and as so amended shall read as follows: 4.6 Senior Indebtedness to Adjusted EBITDA Ratio. Borrowers shall not -------------------------------------------- permit the ratio of Senior Indebtedness calculated as of the last day of any calendar quarter ending during any of the periods set forth below to Adjusted EBITDA for the twelve (12) month period ending on such day to be greater than the amount set forth below for such period. Period Ending Amount ------------- ------ June 30, 1999 through September 30, 2000 3.00 December 31, 2000 through December 31, 2001 2.75 March 31, 2002 through September 30, 2002 2.50 December 31, 2002 & the last day of each calendar quarter thereafter 2.25 "Senior Indebtedness" shall be calculated as illustrated on Exhibit 4.8(C). (l) Subsection (B) of Section 4.8 of the Credit Agreement shall be amended by deleting the "." at the end of such subsection and inserting in lieu thereof the following: and (4) commencing with the fiscal year of Borrowers ending December 31, 2001, an "Auditor's Privity" letter from the Certified Public Accountants described in the immediately preceding clause (3), such letter to be in form and substance reasonably acceptable to Agent and addressed to Agent and Lenders. (m) Clause (a) of Section 8.1 of the Credit Agreement shall be amended in its entirety and as so amended shall read as follows: (a) such Lender (excluding Heller) shall first obtain the written consent of Agent, which consent shall not be unreasonably withheld and, provided no Default or Event of Default has occurred and is continuing, Borrowers (which consent of Borrowers shall not be unreasonably withheld or delayed); provided Borrowers' consent shall not be required with respect to an assignment by a Lender to an affiliate thereof; (n) Section 9.13 of the Credit Agreement shall be amended by inserting the phrase "or Affiliates" immediately after the phrase "or such Lender's assignees or participants" set forth in such section. 4 (o) The definition of "Earn-Out Reserve" set forth in Section 10.1 of the Credit Agreement is amended in its entirety and as so amended shall read as follows: "Earn-Out Reserve" means as of any calculation date, the aggregate amount calculated with respect to the Macro Earn-Out as set forth herein. Calculations of the Earn-Out Reserve shall be made as of the earlier of (a) each date on which the amount of an earn-out payment with respect to the Macro Earn-Out is determinable or (b) each date which is forty-five (45) days prior to the date on which such payment is to be made. The Earn-Out Reserve shall equal the amount of the earn-out payment to be made or, if the amount is in dispute, the maximum amount which may be payable in respect of the Macro Earn-Out. At such time as a payment is made in respect of the Macro Earn-Out, the Earn-Out Reserve shall be reduced on a dollar for dollar basis. (p) The definition of "Expiry Date" set forth in Section 10.1 of the Credit Agreement is amended by deleting the date "May 31, 2005" in clause (c) of said definition and inserting in lieu thereof the date "June 1, 2004". (q) Section 10.1 of the Credit Agreement shall be amended by adding thereto the new defined terms "Fifth Amendment" and "Fifth Amendment Effective Date" in proper alphabetical order, such definitions to read as follows: "Fifth Amendment" means that certain Waiver and Fifth Amendment to Credit Agreement dated as of October 4, 2001 by and among Agent, Lenders (including the Exiting Lender and the New Lender thereto) and Borrowers. "Fifth Amendment Effective Date" means the date upon which all of the conditions precedent to the effectiveness of the Fifth Amendment shall have been satisfied." (r) The Credit Agreement and each Loan Document shall be generally amended by deleting from such agreements the term "ProTel Earn-Out" in each instance where such term is used in such agreements. (s) Exhibits 4.8(C) and 4.8(E) to the Credit Agreement shall be deleted in their entirety and replaced with Exhibits 4.8(C) and 4.8(E) attached hereto. 4. Lender Joinder. -------------- (a) PNC BANK, NATIONAL ASSOCIATION, a national banking association (the "New Lender") and the Lenders, other than the New Lender (the "Existing Lenders"), hereby agree that, upon giving effect to the assignments and acceptances described below, (i) the New Lender shall be a party to the Credit Agreement and shall have all of the rights and obligations under the Loan Documents, and shall be deemed to have made all of the covenants and agreements contained in the Loan Documents, arising out of or otherwise related to the assigned interests in the Loans, and (ii) the Existing Lenders shall be absolutely released from any of such obligations, covenants and agreements assumed or made by the New Lender in respect of the assigned interests in the Loans. The New Lender hereby acknowledges and agrees that the agreement set forth in this Section 4 is expressly made for the benefit of Borrowers, Agent and the Existing Lenders and their respective successors and permitted assigns. 5 (b) Each Lender, including without limitation the New Lender, hereby agrees that the Lenders' Pro Rata Shares of the Revolving Loan Commitment and the Term Loan, in each case effective upon the effectiveness of the amendments set forth above, shall be as set forth on Schedule 4(b) hereto. To the extent ------------- necessary to give effect to the provisions of the preceding sentence, the Existing Lenders hereby agree on the date hereof to sell and to assign to each other Lender (including, without limitation, the New Lender), without recourse, representation or warranty (except as set forth below), and each such other Lender hereby purchases and assumes from such Existing Lenders, a percentage interest in the Revolving Loan Commitment and the Term Loan in amounts required to give effect to the Pro Rata Shares set forth on Schedule 4(b) hereto. The ------------- Lenders hereby agree, on the effective date of the amendments set forth above, to effect such inter-Lender transfers to give effect to the respective Pro Rata Shares set forth on such Schedule 4(b). The Credit Agreement is hereby amended ------------- in all relevant respects to give effect to the respective Pro Rata Shares set forth on Schedule 4(b). As a result of such assignments and acceptances, the ------------- Existing Lenders are absolutely released from any of such obligations, covenants and agreements, to the extent of their assigned shares of the Term Loans and the Revolving Loan Commitment (it being understood that Finova Capital Corporation (the "Exiting Lender") is hereby assigning all of its interests with respect to the Revolving Loan Commitment and outstanding principal amount of Term Loans of such Lender, and upon such assignment Finova Capital Corporation shall no longer be deemed to be a Lender under the Credit Agreement). Interest accrued on the Loans transferred as contemplated by this paragraph and fees accrued in respect of the commitments transferred as contemplated by this paragraph shall accrue to the transferor Lender through the date such transfer is actually made by payment by the transferee Lender for such Loans transferred and such interest and fees shall accrue to the transferee Lender thereafter. (c) Each Existing Lender represents and warrants that it is the legal and beneficial owner of the portion of the Loans assigned above, free and clear of any adverse claim. (d) Neither the Existing Lenders nor the Agent makes any representation or warranty to the New Lender with respect to, and shall not be responsible to the New Lender for, the execution, effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of any of the Loan Documents or for any representations, warranties, recitals or statements made therein or made in any written or oral statements or in any financial or other statements, instruments, reports or certificates or any other documents furnished or made by or on behalf of Borrowers or any other Loan Party in connection with the Loan Documents and the transactions contemplated thereby or for the financial condition or business affairs of Borrowers or any other Loan Party, nor shall the Existing Lenders or the Agent be required to ascertain or inquire as to (i) the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained in any of the Loan Documents, (ii) the use of the proceeds of the Loans, (iii) the use of the Lender Letters of Credit or Risk Participation Liability or (iv) the existence or possible existence of any Event of Default or Default. 6 (e) The New Lender represents and warrants that it satisfies any eligibility requirements to be a Lender under the Credit Agreement; that it is not a foreign person (i.e., a person other than a United States person for United States Federal income tax purposes); that it has experience and expertise in the making or the purchasing of loans such as the Loans; that it has acquired an interest in the Loans for its own account and without any present intention of selling all or any portion of such interest; and that it has received, reviewed and approved a copy of the Credit Agreement (including all Exhibits and Schedules thereto) and copies of all other Loan Documents which it has requested. (f) The New Lender represents and warrants that it has received such financial information regarding Borrowers and the other Loan Parties as such New Lender has requested, that it has made its own independent investigation of the financial condition and affairs of Borrowers and the other Loan Parties in connection with the assignment evidenced by this Amendment, and that it has made and shall continue to make its own appraisal of the creditworthiness of Borrowers and the other Loan Parties. Neither Existing Lenders nor Agent shall have any duty or responsibility, either initially or on a continuing basis, to make any such investigation or any such appraisal on behalf of the New Lender or to provide the New Lender with any other credit or other information with respect thereto, whether coming into its possession before the effective date of this Amendment or at any time or times thereafter, and neither the Existing Lenders nor Agent shall have any responsibility with respect to the accuracy of or the completeness of any information provided to the New Lender. (g) Each Lender party to this Amendment represents and warrants to the other Lenders and Agent that it has full power and authority to enter into this Amendment and to perform its obligations hereunder in accordance with the provisions hereof, that this Amendment has been duly authorized, executed and delivered by such party and that this Amendment constitutes a legal, valid and binding obligation of such party, enforceable against such party in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general principles of equity. (h) Any notice or other communication required or permitted to be given to the New Lender shall be given in the manner set forth in the Credit Agreement and addressed as follows: PNC BANK, NATIONAL ASSOCIATION Two Tower Center Blvd. East Brunswick, NJ 08816 Attention: Jeffrey Blakemore Telecopy: (732) 220-2296 5. Conditions Precedent. The effectiveness of this Amendment is subject -------------------- to the following conditions precedent: 7 (a) Lenders and Borrowers shall have executed and delivered (and Borrowers covenant to execute and deliver) this Amendment, and Borrowers and the other Loan Parties shall have executed and delivered to Agent such other documents and instruments as Agent may have reasonably required; (b) All proceedings taken in connection with the transactions contemplated by this Amendment and all documents, instruments and other legal matters incident thereto shall be satisfactory to Agent and its legal counsel; (c) Both before and after giving effect to the transactions contemplated in this Amendment, no Default or Event of Default shall have occurred and be continuing (other than the Event of Default described in Section 2 hereof); (d) There shall have occurred no material adverse change in the business, operations, financial condition, profits or prospects of Borrowers and their Subsidiaries, or in the Collateral since December 31, 2000; (e) Borrowers shall have paid to the Agent, for the benefit of the Lenders (other than the New Lender and the Exiting Lender) who have executed this Amendment a consent fee in the amount of $187,950.00, such fee to be payable to the Lenders (other than the New Lender and the Exiting Lender) in the following amounts: (i) $60,412.50 to be paid to Heller Financial, Inc., (ii) $55,937.50 to be paid to First Union National Bank, (iii) $35,800.00 to be paid to Merrill Lynch Business Financial Services, Inc. and (iv) $35,800.00 to be paid to Fleet National Bank; and (f) payment of all fees, costs and expenses as agreed to between Borrower and each Lender or Agent as set forth in such Lender's or Agent's respective fee letter with Borrower. 6. Representations and Warranties. To induce Agent and Lenders to enter ------------------------------ into this Amendment, each Borrower represents and warrants to Agent and Lenders: (a) that the execution, delivery and performance of this Amendment has been duly authorized by all requisite corporate action on the part of each Borrower and that this Amendment has been duly executed and delivered by each Borrower; and (b) that each of the representations and warranties set forth in the Credit Agreement (other than those which, by their terms, specifically are made as of certain date prior to the date hereof) and in each Loan Document are true and correct in all material respects as of the date hereof. 7. Severability. Any provision of this Amendment held by a court of ------------ competent jurisdiction to be invalid or unenforceable shall not impair or invalidate the remainder of this Amendment and the effect thereof shall be confined to the provision so held to be invalid or unenforceable. 8 8. References. Any reference to the Credit Agreement contained in any ---------- document, instrument or agreement executed in connection with the Credit Agreement shall be deemed to be a reference to the Credit Agreement as modified by this Amendment. 9. Counterparts. This Amendment may be executed in one or more ------------ counterparts, each of which shall constitute an original, but all of which taken together shall be one and the same instrument. 10. Ratification. The terms and provisions set forth in this Amendment ------------ shall modify and supersede all inconsistent terms and provisions of the Credit Agreement and shall not be deemed to be a consent to the modification or waiver of any other term or condition of the Credit Agreement. Except as expressly modified and superseded by this Amendment, the terms and provisions of the Credit Agreement are ratified and confirmed and shall continue in full force and effect. The execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any right, power or remedy of Agent or any Lender under the Credit Agreement or any Loan Document to which Agent or such Lender is a party nor constitute a waiver of any provision in or Event of Default (now or hereafter existing) under the terms of the Credit Agreement or any Loan Document (other than the waiver provided for in Section 2 above). Agent's and Lenders' agreement to the terms of this Amendment shall not be deemed to establish or create a custom or course of dealing among Borrowers, Agent and Lenders. [rest of page intentionally left blank; signature page follows] 9 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed under seal and delivered by their respective duly authorized officers on the date first written above. HELLER FINANCIAL, INC., OPINION RESEARCH CORPORATION, as Agent and Lender a Delaware corporation By: /s/ Francois Delangle By: /s/ Kevin P. Croke -------------------------------- -------------------------------- Name: Francois Delangle Name: Kevin P. Croke ------------------------------ ------------------------------ Title: Vice President Title: EVP & Director of Finance ----------------------------- ----------------------------- FIRST UNION NATIONAL BANK, ORC INC., as a Lender a Delaware corporation By: /s/ John L. Thomas By: /s/ Kevin P. Croke -------------------------------- -------------------------------- Name: John L. Thomas Name: Kevin P. Croke ------------------------------ ------------------------------ Title: Vice President Title: President ----------------------------- ----------------------------- FLEET NATIONAL BANK FINOVA CAPITAL CORPORATION, as a Lender as Exiting Lender By: /s/ Thomas Hamilton By: /s/ William D. Robinson -------------------------------- -------------------------------- Name: Thomas Hamilton Name: William D. Robinson ------------------------------ ------------------------------ Title: Assistant Vice President Title: VP, Senior Credit Officer ----------------------------- ----------------------------- MERRILL LYNCH BUSINESS FINANCIAL SERVICES, INC., as a Lender By: /s/ Valerie Wilder Moore -------------------------------- Name: Valerie Wilder Moore ------------------------------- Title: Assistant Vice President ------------------------------ PNC BANK, NATIONAL ASSOCIATION, as New Lender By: /s/ Jeffrey A. Blakemore -------------------------------- Name: Jeffrey A. Blakemore ------------------------------ Title: Senior Vice President ----------------------------- EX-10.2 4 dex102.txt AMEND. TO 1997 STOCK INCENTIVE PLAN EXHIBIT 10.2 AMENDMENT TO THE OPINION RESEARCH CORPORATION 1997 STOCK INCENTIVE PLAN July 1, 2001 1. Section 6 of the Plan is amended in its entirety to read: "6. Shares Subject to Plan. The aggregate maximum number of Shares ---------------------- for which Options and Awards may be granted pursuant to the Plan (taking into account all Options and Awards granted under the Plan and under the 1993 Plan and the 1994 Plan prior to their merger and restatement set forth herein) is one million six hundred twenty five thousand (1,625,000), subject to adjustment as provided in Section 11 of the Plan. The Shares shall be issued from authorized and unissued Common Stock or Common Stock held in or hereafter acquired for the treasury of the Company. If an Option terminates or expires without having been fully exercised for any reason, or if Shares granted pursuant to an Award are forfeited for any reason, such Shares may again be the subject of one or more Options or Awards granted pursuant to the Plan." 2. The second paragraph of Section 10 of the Plan is amended in its entirety to read: "A "Change of Control" shall be deemed to have occurred upon the earliest to occur of the following events: (i) the date the stockholders of the Company (or the Board of Directors, if stockholder action is not required) approve a plan or other arrangement pursuant to which the Company will be dissolved or liquidated, or (ii) the date the stockholders of the Company (or the Board of Directors, if stockholder action is not required) approve a definitive agreement to sell or otherwise dispose of substantially all of the assets of the Company, or (iii) the date the stockholders of the Company (or the Board of Directors, if stockholder action is not required) and the stockholders of the other constituent corporation (or its board of directors if stockholder action is not required) have approved a definitive agreement to merge or consolidate the Company with or into such other corporation, other than, in either case, a merger or consolidation of the Company in which holders of shares of the Company's Common Stock immediately prior to the merger or consolidation will have at least a majority of the ownership of common stock of the surviving corporation (and, if one class of common stock is not the only class of voting securities entitled to vote on the election of directors of the surviving corporation, a majority of the voting power of the surviving corporation's voting securities) immediately after the merger or consolidation, which common stock (and, if applicable, voting securities) is to be held in the same proportion as such holders' ownership of Common Stock of the Company immediately before the merger or consolidation, or (iv) the date any entity, person or group, within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than the Company or any of its subsidiaries or any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its subsidiaries or John F. Short shall have become the beneficial owner of, or shall have obtained voting control over, more than forty percent (40%) of the outstanding Shares of the Company's Common Stock, or (v) the first day after the date this Plan is effective when directors are elected such that a majority of the Board of Directors shall have been members of the Board of Directors for less than two (2) years, unless the nomination for election of each new director who was not a director at the beginning of such two (2) year period was approved by a vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period." 3. In all other respects, the Plan remains in full force and effect. OPINION RESEARCH CORPORATION By: /s/ Douglas L. Cox ------------------------------ Douglas L. Cox Executive Vice President and Chief Financial Officer 2 -----END PRIVACY-ENHANCED MESSAGE-----