[GRAPHIC OMITTED] [NATIONAL RESEARCH CORPORATION LOGO]
| Contact: | Patrick E. Beans Chief Financial Officer 402-475-2525 |
NATIONAL RESEARCH CORPORATION REPORTS
YEAR-END REVENUE GROWTH OF 20%
Company Awarded Contract for First Major Use of National Standard Survey
LINCOLN, Nebraska (February 10, 2004) — National Research Corporation (NASDAQ/NM:NRCI), a leader in healthcare performance measurement, today announced results for the fourth quarter and year ended December 31, 2003.
Commenting on the year-end performance, Michael D. Hays, president and chief executive officer of National Research Corporation, said, “We are pleased with our 20% revenue growth for 2003, and we believe that we can meet or exceed that growth rate in 2004. A major new driver of revenue in 2004 will be ‘The Quality Initiative,’ the national program to publicly report hospital performance. Voluntary participation in the program increased 59% to 2,711 hospitals from 1,700 last quarter, due in part to the financial incentive enacted into law by Congress. It is anticipated now that many more of the approximately 4,661 hospitals targeted will take advantage of this financial incentive. We are also pleased that National Research Corporation was awarded the contract for the first major use of the new Hospital CAHPS survey, which includes fielding the pilot survey for 200 hospitals. This contract represents the first tangible revenue resulting from the national program and will commence in the first quarter of 2004.”
Revenues for the fourth quarter ended December 31, 2003, increased 8.4% to $6.7 million compared with revenues of $6.2 million for the fourth quarter of 2002. Net income for the fourth quarter of 2003 remained flat with the year 2002, both at $1.2 million, or $0.17 per basic and diluted share.
Revenues for the year ended December 31, 2003, increased 20.3% to $26.9 million compared with revenues of $22.4 million for the year ended December 31, 2002. Net income for the year ended December 31, 2003, increased 13.9% to $4.4 million, or $0.60 per basic and diluted share, compared with net income of $3.9 million, or $0.54 per basic and diluted share, in 2002.
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NRCI Announces Fourth Quarter and Year-End Results
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February 10, 2004
Patrick E. Beans, chief financial officer of National Research Corporation, added, “During the fourth quarter, our stepped-up focus on business development resulted in increased expenses of $302,000, or $0.03 per share, over the prior year level. Notwithstanding the fact that these additional expenses resulted in $0.02 less in earnings per share than our goal for the fourth quarter, our belief is that these development efforts will position National Research Corporation to capitalize on revenue opportunities in 2004. Given our current visibility, we are anticipating earnings per share for the first quarter of 2004 of $0.16, an increase in excess of 23% over the prior year period.”
A listen-only simulcast of National Research Corporation’s fourth quarter and year-end conference call will be available online atwww.fulldisclosure.com on February 11, 2004, beginning at 11:00 a.m. Eastern time. The online replay will follow approximately two hours later and continue for 30 days.
National Research Corporation, headquartered in Lincoln, Nebraska, is a leading provider of ongoing survey-based performance measurement, analysis and tracking services to the healthcare industry. The Company addresses the growing need of healthcare providers and payors to measure the care outcomes, specifically satisfaction and health status, of their patients and/or members.
This press release includes “forward-looking” statements related to the Company that can generally be identified as describing the Company’s future plans, objectives or goals. Such forward-looking statements are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those currently anticipated. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. For further information about the factors that could affect the Company’s future results, please see the Company’s filings with the Securities and Exchange Commission.
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NRCI Announces Fourth Quarter and Year-End Results
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February 10, 2004
NATIONAL RESEARCH CORPORATION
Unaudited Consolidated Statements of Operations
(In thousands, except per share data)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2003 | 2002 | 2003 | 2002 | |||||||||||
| Revenues | $ | 6,742 | $ | 6,222 | $ | 26,922 | $ | 22,387 | ||||||
| Operating expenses: | ||||||||||||||
| Direct expenses | 2,748 | 2,593 | 12,029 | 9,556 | ||||||||||
| Selling, general and administrative | 1,606 | 1,175 | 5,987 | 4,738 | ||||||||||
| Depreciation and amortization | 478 | 451 | 1,941 | 1,675 | ||||||||||
Total operating expenses | 4,832 | 4,219 | 19,957 | 15,969 | ||||||||||
Operating income | 1,910 | 2,003 | 6,965 | 6,418 | ||||||||||
Other income (expense): | ||||||||||||||
| Interest income | 79 | 70 | 293 | 258 | ||||||||||
| Interest expense | (107 | ) | (109 | ) | (428 | ) | (450 | ) | ||||||
| Other, net | 38 | 6 | 85 | (65 | ) | |||||||||
Total other income (expense) | 10 | (33 | ) | (49 | ) | (257 | ) | |||||||
Income before income taxes | 1,920 | 1,970 | 6,916 | 6,161 | ||||||||||
| Provision for income taxes | 665 | 735 | 2,532 | 2,311 | ||||||||||
Net income | $ | 1,255 | $ | 1,235 | $ | 4,384 | $ | 3,850 | ||||||
Net income per share, basic | $ | 0.17 | $ | 0.17 | $ | 0.60 | $ | 0.54 | ||||||
| Net income per share, diluted | $ | 0.17 | $ | 0.17 | $ | 0.60 | $ | 0.54 | ||||||
| Weighted average shares outstanding: | ||||||||||||||
| Basic | 7,271 | 7,236 | 7,259 | 7,163 | ||||||||||
| Diluted | 7,314 | 7,264 | 7,326 | 7,193 | ||||||||||
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NRCI Announces Fourth Quarter and Year-End Results
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February 10, 2004
NATIONAL RESEARCH CORPORATION
Unaudited Consolidated Condensed Balance Sheets
(Dollars in thousands)
| Dec. 31, 2003 | Dec. 31, 2002 | |||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 3,441 | $ | 991 | ||||
| Short-term investments | 12,767 | 9,987 | ||||||
| Accounts receivable, net | 5,479 | 4,579 | ||||||
| Other current assets | 1,834 | 2,391 | ||||||
| Total current assets | 23,521 | 17,948 | ||||||
Net property and equipment | 12,189 | 12,346 | ||||||
| Other, net | 9,963 | 8,538 | ||||||
Total Assets | $ | 45,673 | $ | 38,832 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
Current Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 1,074 | $ | 933 | ||||
| Deferred revenue | 4,439 | 3,277 | ||||||
| Accrued compensation | 805 | 633 | ||||||
| Notes payable | 142 | 132 | ||||||
| Income taxes payable | 244 | 55 | ||||||
| Total current liabilities | 6,704 | 5,030 | ||||||
Noncurrent liabilities | 6,545 | 5,784 | ||||||
Total Liabilities | 13,249 | 10,814 | ||||||
Shareholders' Equity: | ||||||||
| Common stock, $0.001 par value; 20,000,000 shares authorized; | ||||||||
| 7,639,819 and 7,560,610 shares issued, respectively; | ||||||||
| 7,305,819 and 7,245,110 outstanding, respectively | 8 | 8 | ||||||
| Additional paid-in capital | 18,875 | 18,124 | ||||||
| Retained earnings | 15,831 | 11,447 | ||||||
| Unearned compensation | (394 | ) | 0 | |||||
| Accumulated other comprehensive income | (27 | ) | 35 | |||||
| Treasury stock | (1,869 | ) | (1,596 | ) | ||||
| Total shareholders' equity | 32,424 | 28,018 | ||||||
Total Liabilities and Shareholders' Equity | $ | 45,673 | $ | 38,832 | ||||
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