News notes
Chicago-based Information Resources, Inc. has received an unsolicited, non-binding indication of interest from Open Ratings, Inc. to acquire all of the outstanding shares of IRI common stock for at least $3.75 per share in cash, together with contingent value rights (CVRs) associated with IRI’S antitrust lawsuit pending against ACNielsen Co.,The Dun & Bradstreet Corp. and IMS International, Inc., and certain commitments to fund the antitrust lawsuit, on terms at least as favorable as those being offered by Gingko Acquisition Corp.
Under the terms of IRI’s previously announced merger agreement with Gingko, the IRI board, consistent with its fiduciary duties, may consider alternative transactions that could reasonably be expected to lead to a proposal that is superior to Gingko’s. After careful: consideration, including consultation with its independent financial and legal advisors, the board of directors determined that Open 1Kafings’ indication of interest could not reasonably be expected to lead to a binding offer superior to the Gingko transaction.The IKI Board also unanimously reaffirmed its recommendation that IKI shareholders tender their shares into the Gingko offer.
VNU has completed its strategic review of ACNielsen’s European Customized Research business which it commenced earlier this year. VNU has concluded that shareholder value will be maximized from continued ownership of its Customized Research activities and their development within a strategy leveraging the company’s Customized Research proprietary assets and capabilities. At the beginning of the year, VNU also announced the strategic reevaluation of Claritas Europe. At press time, this review process had not yet been completed.
New York-based Arbitron has announced preliminary results in a research test for its new television, cable and radio audience measurement system, the Portable People Meter (PPM). "For the better part of a year, Arbitron, Nielsen and the industry have pointed to response rates as a key issue that had to be resolved before the Portable People Meter could be deployed as a means of measuring audiences for radio as well as broadcast and cable television in local markets," said Stephen Morris, president and chief executive officer of Arbitron, in a company press release."We said that Arbitron would work with Nielsen to devise techniques that could increase the percentage of consumers who would accept our invitation to take part in PPM surveys and then carry the meters on a continuing basis.
"I am pleased to report that Arbitron and Nielsen have developed two separate methods that have increased the rate at which we can recruit consumers for PPM surveys. Initial results are in fine with what Nielsen would expect when recruiting a new set-top meter panel, which is what we both wanted to achieve. While the response rate test needs to be completed so that we can confirm that acceptable rates can be sustained over time, and the turnover rates also remain acceptable, Arbitron is confident that we have found a solution for this key issue."
Acquisitions
Synovate has acquired ISIS Research Limited (ISIS), a health care research firm. ISIS will become a part of Synovate Healthcare, Synovate’s global health care division.
Paris-based Ipsos has acquired the Research Division of the NCS Pearson group, the Australian subsidiary of the British media group Pearson. Specialized in the provision of data collection services, software and systems to address the information processing needs of the clients, the division has offices in Sydney, Melbourne and Brisbane.
Separately, Ipsos also acquired the assets of Mackay Research, a company founded in 1979 by social researcher Hugh Mackay.The company publishes The Mackay Report, a subscriber-based series of four quarterly studies which delve into the mind and mood of Anstralians on specific topics. These new business lines will be gathered under the Ipsos Australia umbrella.
Awards/rankings
Inc. magazine has ranked research firm ath Power Consulting Corporation #361 on its annual Inc. 500 ranking of the fastest-growing private companies in the country. The Inc. 500 ranks privately hdd companies according to sales growth over the past five years.The Andover, Mass., company had five-year sales growth of 494 percent.
Herndon,Va., research firm WebSurveyor Corporation has been named a Prising Star on the 2003 Deloitte Technology Fast 500, a ranking of the 500 fastest-growing technology companies in North America. A special category, the Rising Star list ranks 25 winners that have been in business less than five years, but at least three years. They are ranked based on average percentage of growth in revenues over three years (2000 to 2002).
Separately, Seattle-based research firm NetReflector, Inc. ranked #275 on the 2003 Deloitte Technology Fast 500. Rankings are based on average percentage revenue growth over five years, from 1998 to 2002. NetKeflector grew by 1,087 percent from $123,000 to $1,460,000 during this period. Overall, companies ranking on the 2003 Deloitte Technology Fast 500 had growth rates ranging from 469 to 296,080 percent over five years, with an average growth rate of 5,493 percent.
Four technology providers have been nominated by the Association for Survey Computing (ASC) for the MRS/ASC Joint Award for Technology Effectiveness.The aim of this new award is to identify the company or individual that has achieved the highest level of excellence in creating software or technology that promotes greater effectiveness in the practice and delivery of research. An independent panel ofindnstry experts is judging the award, which the ASC is coponsoring with the Market Research Society (MRS). Tim Macer, panel chair, announced the short list at the ASC’s international conference at the University of Warwick in September.
Nominees are (product/provider): Harmoni/Information Tools. A data analysis and investigative tool for consumers of research data which allows them to combine data from a wide variety of sources, ranging from consumer research at the respondent level, sales and retail audit data, to aggregated data such as economic indicators, climate statistics, media expenditure and ratings.
AccessPoint/Open Air. Hand-held CAPI interviewing which uses integrated GPRS-based cellular data communications to achieve economical always-on two-way communication between research or fieldwork organizations and their interviewers in the field, across the Internet.
Dimensions Data Model/SPSS MR. A new open platform for research applications using a common metadata modal to facilitate free exchange of research data between any compatible applications, and incorporating an open development environment for building MR-specific applications.
InterviewerVCC (Virtual Call Center)/Voxco. A Web-based CATI system with fi.fll telephony integration which allows interviewers to work from many different locations via the Internet, and yet access telephony functions including automated dialing, centralized sound capture, audio and visual monitoring and call transfer to expert interviewers.
The overall winner was scheduled to be announced at the Research Excellence and Effectiveness Awards at the London Mayfair Millennium Hotel in November.
New accounts/projects
TNS’ television audience research tool InfoSysTV has been selected by the BBC to undertake detailed TV audience measurement across both its
terrestrial and satellite channels.
New companies/new divisions/relocations/expansions
Reston,Va.-based Wirthlin Worldwide has opened a new office in Shanghai. Heading the office will be WeeKeng Lee and Su Lin. Vincent J. Breglio, managing director of WirthlinWorldwide Asia, will assist in sales and client service.
Customer management firm dunnhumbyUSA has opened a new office in Cincinnati. Located on the corner of 3rd and Plum in the downtown area, dunnhumbyUSA employs 26 people and will expand to a workforce of 45 by the end of the year, with plans to have 100 employees in 2004.
Seattle-based Q2 Brand Intelligence has opened three regional offices on the East Coast, in Cambridge, Mass.,Adantic City, NJ., and Orlando, Fla.
Cincianati-based Directions Research, Inc. (DRI), will expand operations into Dallas, its third expansion in three years. Beth Dansh and Brook Fagley have been named vice president of client services.They will share in the management of the new office. DRI was founded in 1988 and
recorded revenues of $17.2 million in 2002.
Company earnings reports
For the third quarter ended September 30, New York-based Arbitron Inc. reported revenue of $75.3 million, an increase of 8.3 percent over revenue of $69.6 million during the third quarter of 2002. Net income for the quarter was $17.0 million, compared with $15.4 million for the third quarter of 2002. Earnings before interest and taxes (EBIT) for the quarter were $30.6 million, compared with EBIT of $29,0 million during the comparable period last year.
Costs and expenses for the third quarter increased by 10.5 percent, from $39.9 million in 2002 to $44.1 million in 2003. Interest expense for the quarter declined 29.3 percent, from $4.1 m_iJlion in 2002 to $2.9 million in 2003, due to reductions in the company’s long-term debt.
Net income per share for the third quarter 2003 increased to $0.55 (diluted), compared with $0.51 (diluted). during the comparable period last year. In the third quarter 2003, Arbitron reduced its long-term debt by $20.0 million from $135.0 to $115.0 million.
For the nine months ended September 30, revenue was $208.1 million, an increase of 8.4 percent over the same period last year. Net income for the nine months increased 13.4 percent to $41.1 million or $1.35 per share (diluted), compared with $36.3 million or $1.21 per share (diluted) last year. EBIT was $76.6 million, compared to $71.6 million in 2002.
Opinion Research Corp., Princeton, NJ., announced financial results for the third quarter ended September 30. Revenues for the third quarter were $44.9 million, an increase of 4 percent compared to the corresponding quarter in 2002. Social research revenues were $29.1 million versus $26.3 million last year. Market research revenues totaled $12.0 million versus $13.3 million in the prior year. Teleservices revenues were $3.7 million versus $3.8 million last year.
Net income for the third quarter was $0.7 million, or $0.11 per diluted share, versus net income of $0.9 million, or $0.15 per diluted share, in last year’s third quarter.The increase in the effective tax rate from the prior year period is due to the company not providing a tax benefit for non-U.S. losses in the current year as well as higher state taxes from profitable segments.The company is not providing a tax benefit on state losses. Summarizing the quarter’s results in a company press rdease, Chairman and CEO John E Short said, "Both our social research and United Kingdom market research units turned in an excellent performance, with revenues increasing by 11 percent and 22 percent, respectively. Our U.S. market research and tdeservices businesses continued to fed the impact of weak business spending in the United States."
For its third quarter ended September 30, Chicago-based SPSS Inc. reported revenues and diluted earnings per share were $52.1 million and $0.19 in the quarter, as compared to $52.7 million and a loss per share of ($0.26) in the same period last year, respectively. Operating income improved to $4.6 million in the quarter from an operating loss of ($7.4) million in the same period last year. Included in the results for the quarter were technology write-offs, restructuring costs and other nonrecurring charges of $10.9 million.
The company’s improved profitability was primarily due to expense reduction programs implemented in the third quarter of 2002, which included a field operations restructuring, the downsizing or closing of certain facilities and the termination of certain investments. SPSS also increased its cash flow from operadons to $18.8 million in the first nine. months of the year, up from $13.4 million in the first half of 2003 and ($1.5) million in the same nine-month period last year.
"We saw no changes this quarter in closure rates, sales cycles or transaction values," said Jack Noonan, SPSS Inc. president and chief executive officer, in a company press release." And despite increased activity in almost every part of our business, there was still little sense ofnrgency exhibited by customers in making purchasing decisions. Some evidence suggests that organizations will be more motivated in the coming quarters. While we are prepared for this possible change, we are not counting on it."
Revenues and diluted earnings per share for the first nine months of 2003 were $152.5 million and $0.39, as compared to $155.3 million and a loss per share of ($0.42) in the same period last year, respectively. Operating income improved to $10.2 million in the first nine months of 2003 from an operating loss of ($13.5) million in the same period last year. Included in the results for the nine months ended September 30, 2002 were technology write-offs, resrructuring costs and acquisition and other nonrecurring charges of $16.5 million.
Chicago-based Information Resources, Inc. reported results for the third quarter 2003 ended September 30, posting a net loss of ($0.1) million or ($0.00) per share compared to net income of $0.9 million or $0.03 per share for the third quarter of 2002. P,.esults for the 2003 third quarter include severance-related restructuring charges of $0.7 million, transaction costs of $1.6 million related to Gingko Acquisition Corps tender offer for all of the outstanding shares of IPI common stock, and the write-down of certain international data costs of $0.8 million.
Third-quarter consolidated revenues of $136.0 million were 3 percent lower than prior year. U.S. revenues of $94.8 million were 9 percent below the same period last year, reflecting the previously announced decision of Procter 8: Gamble to not renew its U.S. contract with IRI beginning with the third quarter. International revenues of$41.3 million were 13 percent higher than prior year Or 2 percent higher in local currencies.
"IRI’s third quarter earnings reflect the full impact of the loss of the Procter 8: Gamble business. However, our ongoing efforts to reduce expenses in both the U.S. and Europe and improved performance in Germany have helped offset the margin impact of the lost P&G business," said IRI chairman and CEO Joe Durrett in a company press release.
For the nine months ended September 30, the company reported near break-even results. This compares to a net loss of ($8.2) million or ($0.28) per share for the same period last year.Year-to-date 2003 results include severance-related restructuring charges of $3.0 million, transaction costs related to the proposed tender offer for IRI of $2.3 million, and one-time charges related to the write-down of cerfain data related assets of $2.0 million.Year 2002 results include restructuring charges of $7.2 million and a charge of $7.1 million due to a change in the accounting treatment for goodwill.
Consolidated revenues of $416.1 million for the nine months ended September 30 were 1 percent higher than prior year. U.S. revenues of 296.6 million were 4 percent lower than the same period last year while international revenues of $119.5 million were 14 percent higher than prior year, but I percent lower in local currencies.
For the third quarter 2003, IRI’s U.S. business reported operating profit of $4.1 million on revenue of $94.8 million.This compares to operating profit of $5.2 million on revenue of $104.2 million for the third quarter of 2002.
Most of the revenue decline of $9.4 million, or 9 percent, was due to the loss of the P&G business, which became effective with the third quarter of 2003.The impact of this loss was felt in both Retail Tracking, which represents 73 percent of U.S. revenue, and Panel and Analytics, which represents 22 percent of U.S. revenue. Compared with third quarter a year ago, tketail Tracking declined by 6 percent while Panel and Analytics declined by 13 percent. However, U.S. expenses were reduced by 8 percent versus prior year, partially offsetting the revenue decline. IRI continues to aggressively manage expenses akross the business through outsourcing and process and technology improvements.
Excluding the impact of P&G, IRI’s U.S. Retail Tracking revenue grew 1 percent for the quarter. As of the end of the third quarter 2003, 17 of IRI’s top 25 U.S. Retail Tracking clients are under contract through 2004 or beyond and seven have committed to IRI and are in the final stages of negotiation for new multi-year agreements. Panel andAnalytics reported a 4 percent decline in revenue excluding the impact of P&G, primarily the result of decreased demand for IRI’s proprietary BehaviorScan testing service. The other principal components of Panel and Analytics, syndicated and custom household panels and modeling, continue to perform well.
For the third quarter 2003, IRI’s international operations reported an operating loss of ($0.4) million on revenue of $41.3 million.This result includes the write-down of $0.8 million of certain data-related costs. For the third quarter of 2002, the company reported an operating loss of ($2.0) million on revenue of $36.4 million.
The improved performance versus 2002 is driven by a combination of increased revenue and lower expenses. In local currency, revenue grew 2 percent versus prior year, while expenses declined 2 percent. Improvements in the German business account for much of the overall improvement in international results. While IRI continues to lose money in Germany, those losses have been reduced as the company stabilizes its operations and begins to rebuild lost revenue. In IRI’s other European markets, revenue growth continues to be a challenge; however, cost reduction actions taken earlier this year have helped enhance European profitability.
Corporate expenses for the third quarter ended September 30 were $2.7 million, including $1.6 million of transaction costs related to the pending tender offer for all of the outstanding shares of IRI common stock.
Harris Interactive, Rochester, N.Y., released its financial results for the first quarter of fiscal 2004. Revenue for the quarter was $33.3 million, up 10 percent versus $30.3 million of revenue for the same period a year ago. Internet-based revenue for the quarter was $17.9 million, up 57 percent from last year, while traditional revenue contracted by $3.5 million or 19 percent. "We believe that the uncertainty and confusion surrounding the FTC’s national Do Not Call registry dragged our telephone-based revenue lower than expected and caused us to miss both revenue and profit expectations for the quarter," said Gordon S. Black, chairman and CEO, in a company press release. "Industry sources indicate that telephone response rates have plummeted, and respondent irritation over receiving market research calls has recently grown dramatically. Therefore we believe that the downturn in telephone revenue will not only continue, but may accelerate. We are at much less risk than other market research firms however, since our U.S. telephone-based revenue comprises less than one-third of our total U.S. revenue."
Pre-tax net income for the quarter was $2.1 million, or $0.04 per share, up 102 percent versus pre-tax net income of $1.0 million or $0.02 per share for Q1 of fiscal 2003.
In accordance with GAAP requirements, the company booked an income tax provision of $800,000, based on pre-tax income as if the company did not have net operating loss carry-forwards available for use. The tax benefit associated with the utilization of those carry-forwards to offset expected fiscal 2004 earnings was recognized in June 2003. In the future, in accordance with GAAP, the company will account for the tax effect of the remaining NOL carry-forwards, which currently are in excess of $80 million. Therefore, for this quarter, after-tax net income was $1.3 million or $0.02 per diluted share.
Internet-based revenue for the fiscal first quarter was $17.9 million; up 57 percent from the $11.4 million of Internet revenue reported for the same period last year. "Our year-over-year Internet revenue growth rate actually accelerated slightly this quarter, and continues to grow faster than the industry average. As our online research in Europe builds, we believe that this growth rate will continue, and perhaps accelerate if the DNC registry drives a more rapid conversion to online research," said Black.