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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000897069-02-000900.txt : 20021114
<SEC-HEADER>0000897069-02-000900.hdr.sgml : 20021114
<ACCEPTANCE-DATETIME>20021114142553
ACCESSION NUMBER:		0000897069-02-000900
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20020930
FILED AS OF DATE:		20021114

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NATIONAL RESEARCH CORP
		CENTRAL INDEX KEY:			0000070487
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-TESTING LABORATORIES [8734]
		IRS NUMBER:				470634000
		STATE OF INCORPORATION:			WI
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-29466
		FILM NUMBER:		02824224

	BUSINESS ADDRESS:	
		STREET 1:		1245 Q STREET
		CITY:			LINCOLN
		STATE:			NE
		ZIP:			68508
		BUSINESS PHONE:		4024752525

	MAIL ADDRESS:	
		STREET 1:		1245 Q STREET
		CITY:			LINCOLN
		STATE:			NE
		ZIP:			68508
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>sdc262.txt
<DESCRIPTION>10-Q QUARTERLY REPORT
<TEXT>


                                  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, 2002

                                       or

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from ________ to ________

                         Commission File Number 0-29466

                          National Research Corporation
             (Exact name of Registrant as specified in its charter)

                 Wisconsin                                 47-0634000
     (State or other jurisdiction of                   (I.R.S. Employer
     incorporation or organization)                    Identification No.)

                     1245 "Q" Street, Lincoln Nebraska 68508
               (Address of principal executive offices) (Zip Code)

                                 (402) 475-2525
              (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 period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.   Yes X    No
                                        ---     ---

Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).  Yes      No X
                                                ---     ---

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Common Stock, $.001 par value, outstanding as of October 31, 2002: 7,236,712
shares


<PAGE>


                          NATIONAL RESEARCH CORPORATION

                                 FORM 10-Q INDEX

                    For the Quarter Ended September 30, 2002

                                                                        Page No.
                                                                        --------

PART I.   FINANCIAL INFORMATION

          Item 1.   Financial Statements

                    Condensed Balance Sheets                                 3
                    Condensed Statements of Income                           4
                    Condensed Statements of Cash Flows                       5
                    Notes to Condensed Financial Statements                6-7

          Item 2.   Management's Discussion and Analysis of
                    Financial Condition and Results of Operations         8-11

          Item 3.   Quantitative and Qualitative Disclosures About          12
                    Market Risk

          Item 4.   Controls and Procedures                                 12


PART II.  OTHER INFORMATION

          Item 6.     Exhibits and Reports on Form 8-K                      13

          Signatures                                                        14

          Certifications                                                 15-16

          Exhibit Index                                                     17


                                       2
<PAGE>

                         PART I - Financial Information

ITEM 1   Financial Statements
                          NATIONAL RESEARCH CORPORATION
                            CONDENSED BALANCE SHEETS

                                                   September 30,    December 31,
                                                        2002            2001
                                                   -------------    ------------
                                                    (unaudited)
                   Assets

Current assets:
   Cash and cash equivalents                        $ 1,658,296     $ 1,080,053
   Investments in marketable debt securities          8,931,761       6,636,543
   Trade accounts receivable, less allowance
    for doubtful accounts of $60,820 and
    $101,674 in 2002 and 2001, respectively           2,837,594       2,141,104
   Unbilled revenues                                  2,284,300       1,671,079
   Prepaid expenses and other                           274,183         286,653
   Income taxes recoverable                                 ---         266,034
   Deferred income taxes                                181,529         210,452
                                                    -----------     -----------
      Total current assets                           16,167,663      12,291,918
                                                    -----------     -----------
Net property and equipment                           12,552,646      12,907,197
                                                    -----------     -----------

Customer lists, net of accumulated amortization         599,949         631,135
Goodwill and other intangibles, net of
 accumulated amortization                             7,910,965       7,908,043
Other                                                    29,724          34,099
                                                    ------------    -----------
      Total assets                                  $37,260,947     $33,772,392
                                                    ===========     ===========

      Liabilities and Shareholders' Equity

Current liabilities:
   Current portion of  notes payable                $   128,082     $   132,312
   Accounts payable                                     400,673       1,391,043
   Accrued wages, bonuses and profit sharing            639,651         494,446
   Accrued expenses                                     423,687         364,642
   Income taxes payable                                 670,059             ---
   Billings in excess of revenues earned              2,984,963       2,649,370
                                                    -----------     -----------
      Total current liabilities                       5,247,115       5,031,813

Notes payable, net of current portion                 5,078,570       5,169,757
Deferred income taxes                                   412,455         217,424
                                                    -----------     -----------
      Total liabilities                              10,738,140      10,418,994
                                                    -----------     -----------
Shareholders' equity:
   Preferred stock, $.01 par value; authorized
    2,000,000 shares, no shares issued and
    outstanding                                               -               -
   Common stock, $.001 par value; authorized
    20,000,000 shares, issued 7,535,434 in 2002
    and 7,395,593 in 2001 outstanding 7,230,834
    in 2002 and 7,093,893 in 2001                         7,527           7,395
   Additional paid-in capital                        17,798,883      17,255,917
   Retained earnings                                 10,213,675       7,597,340
   Accumulated other comprehensive income
    (loss), net of taxes                                 24,520          (4,185)
   Treasury stock, at cost; 304,600 in 2002 and
    301,700 shares in 2001                           (1,521,798)     (1,503,069)
                                                    -----------     -----------
      Total shareholders' equity                     26,522,807       23,353,398
                                                    -----------     -----------
      Total liabilities and shareholders' equity    $37,260,947     $33,772,392
                                                    ===========     ===========

See accompanying notes to condensed financial statements.


                                       3
<PAGE>

<TABLE>
                                    NATIONAL RESEARCH CORPORATION
                                   CONDENSED STATEMENTS OF INCOME
                                             (Unaudited)

<CAPTION>
                                                Three months ended            Nine months ended
                                                   September 30,                September 30,
                                               2002           2001           2002           2001
                                           ------------   ------------   ------------   ------------

<S>                                        <C>            <C>            <C>            <C>
Revenues                                   $  7,317,037   $  6,104,832   $ 16,165,316   $ 13,562,930
                                           ------------   ------------   ------------   ------------

Operating expenses:
  Direct expenses                             3,388,030      2,688,610      6,962,252      6,323,551
  Selling, general and administrative         1,200,381      1,383,983      3,562,212      3,516,858
  Depreciation and amortization                 400,884        509,139      1,223,240      1,377,086
                                           ------------   ------------   ------------   ------------

      Total operating expenses                4,989,295      4,581,732     11,747,704     11,217,495
                                           ------------   ------------   ------------   ------------

      Operating income                        2,327,742      1,523,100      4,417,612      2,345,435

Other income (expense):
  Interest income                                63,091         74,092        187,976        317,981
  Interest expense                             (109,313)      (112,920)      (340,689)      (342,142)
  Other, net                                       (696)        (2,269)       (72,250)       (11,435)
                                           ------------   ------------   ------------   ------------

      Total other expense                       (46,918)       (41,097)      (224,963)       (35,596)
                                           ------------   ------------   ------------   ------------

      Income before income taxes              2,280,824      1,482,003      4,192,649      2,309,839

Provision for income taxes                      854,282        550,086      1,576,313        831,550
                                           ------------   ------------   ------------   ------------

      Net income                              1,426,542        931,917      2,616,336      1,478,289
                                           ============   ============   ============   ============

Net income per share--basic and diluted    $        .20   $        .13   $        .37   $        .21
                                           ============   ============   ============   ============

Weighted average shares and share
 equivalents outstanding--basic               7,176,323      7,056,563      7,138,581      7,047,463
                                           ============   ============   ============   ============

Weighted average shares and share
 equivalents outstanding--diluted             7,200,344      7,101,548      7,162,602      7,092,448
                                           ============   ============   ============   ============

See accompanying notes to condensed financial statements.
</TABLE>

                                                 4
<PAGE>

                          NATIONAL RESEARCH CORPORATION
                       CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                                          Nine months ended
                                                            September 30,
                                                          2002         2001
                                                      -----------   -----------
Cash flows from operating activities:
  Net income                                          $ 2,616,336   $ 1,478,289
  Adjustments to reconcile net income to net cash
   provided by operating activities:
    Depreciation and amortization                       1,223,240     1,377,086
    Deferred income taxes                                 209,164       103,345
    Gain on sale of property and equipment                 (1,420)         (598)
    Gain on sale of other investments                         (18)          ---
    Changes in assets and liabilities:
      Trade accounts receivable                          (696,490)      117,438
      Unbilled revenues                                  (613,221)      (53,004)
      Prepaid expenses and other                           30,572       (56,092)
      Accounts payable                                   (521,212)      132,056
      Accrued expenses, wages, bonuses, and
       profit sharing                                     204,250      (254,509)
      Income taxes recoverable and (payable)              936,093       482,561
      Billings in excess of revenues earned               335,593      (214,566)
                                                      -----------   -----------
          Net cash provided by operating activities     3,722,887     3,112,006
                                                      -----------   -----------

Cash flows from investing activities:
  Purchases of property and equipment                  (1,301,743)   (1,270,030)
  Proceeds from sale of property and equipment              1,420           598
  Acquisition of healthcare survey business               (21,565)   (3,762,229)
  Purchases of securities available-for-sale           (7,536,519)   (9,211,601)
  Proceeds from the maturities of securities
   available-for-sale                                   5,284,811    10,808,011
                                                      -----------   -----------
          Net cash used in investing activities        (3,573,596)   (3,435,251)
                                                      -----------   -----------

Cash flows from financing activities:
  Payments on notes payable                               (95,417)      (96,021)
  Proceeds from exercise of stock options                 543,098       124,231
  Purchase of treasury stock                              (18,729)          ---
                                                      -----------   -----------
          Net cash provided by financing activities       428,952        28,210
                                                      -----------   -----------

          Net increase (decrease) in cash and cash
           equivalents                                    578,243       295,035)

                                                      -----------   -----------
Cash and cash equivalents at beginning of period        1,080,053     3,218,805
                                                      -----------   -----------

Cash and cash equivalents at end of period            $ 1,658,296   $ 2,923,770
                                                      ===========   ===========
Supplemental disclosure of cash paid for:
    Interest                                          $   340,689   $   342,131
                                                      ===========   ===========
    Taxes                                             $   429,660   $   245,754
                                                      ===========   ===========

Supplemental disclosures of noncash investing activities:
  Accounts payable included $210,335 in 2001 for purchases of property and
   equipment.
  In connection with the Company's acquisition of a business in 2001, the
   Company assumed unearned revenues of $0.3 million for uncompleted customer
   contracts. See accompanying notes to condensed financial statements.

                                        5
<PAGE>


                          NATIONAL RESEARCH CORPORATION
                     Notes to Condensed Financial Statements

1.   INTERIM FINANCIAL REPORTING

The condensed balance sheet of National Research Corporation (the "Company") at
December 31, 2001 was derived from the Company's audited balance sheet as of
that date. All other financial statements contained herein are unaudited and, in
the opinion of management, include all adjustments (consisting only of normal
recurring adjustments) the Company considers necessary for a fair presentation
of financial position, results of operations and cash flows in accordance with
accounting principles generally accepted in the United States of America.

Information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America have been condensed or omitted. These condensed
financial statements should be read in conjunction with the financial statements
and notes thereto that are included in the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001, filed with the Securities and
Exchange Commission in March 2002.

2.   COMPREHENSIVE INCOME

Other than its net income, the Company's only other source of comprehensive
income is unrealized gains or losses on marketable debt securities. Other
comprehensive income from marketable debt securities was $28,705 and $30,328 for
the nine month periods ended September 30, 2002 and 2001, respectively.

3.   GOODWILL AND OTHER INTANGIBLE ASSETS

In June 2001, the Financial Accounting Standards Board issued SFAS No. 142.
Goodwill and Other Intangible Assets. This statement replaces the requirement to
amortize goodwill and certain other intangible assets (with indefinite useful
lives) with an annual impairment test. SFAS No. 142 also requires an evaluation
of the estimated useful lives of intangible assets and an impairment test for
goodwill and non-amortizable assets upon adoption.

The Company adopted the provisions of SFAS No. 142 as of January 1, 2002. As a
result of adopting this standard, the Company ceased amortizing goodwill and
certain other non-amortizable intangible assets effective January 1, 2002. Total
amortization expense was $16,610 and $175,745 during the three months ended
September 30, 2002 and 2001, respectively, and $49,828 and $385,756 during the
nine months ended September 30, 2002 and 2001, respectively. The following is
the September 30, 2002 and 2001 statement of income data, adjusted as if SFAS
No. 142 had been effective as of January 1, 2001:


                                       6
<PAGE>

                                    Three months ended      Nine months ended
                                       September 30,          September 30,
                                  ---------------------   ---------------------
                                     2002        2001        2002        2001
                                  ---------   ---------   ---------   ---------
Reported net income               1,426,542     931,917   2,616,336   1,478,289
Amortization of goodwill, net
 of taxes                                --     105,029          --     231,063
Adjusted net income               1,426,542   1,036,946   2,616,336   1,709,352
Reported net income per share         $0.20       $0.13       $0.37       $0.21
Amortization of goodwill, net
 of taxes                                --       $0.01          --       $0.03
Adjusted net income per share         $0.20       $0.14       $0.37       $0.24


All of the Company's goodwill and non-amortizable intangible assets are
allocated to one reporting unit, the healthcare survey business. The Company
also completed it's transitional evaluation of the recoverability of goodwill
and non-amortizable intangible assets as of January 1, 2002, using the fair
value methodology of SFAS No. 142. The Company's analysis did not result in the
recognition of an impairment loss on goodwill or other non-amortizable
intangible assets.


4.   EARNINGS PER SHARE

Net income per share has been calculated and presented for "basic" and "diluted"
data. "Basic" net income per share is computed by dividing net income by the
weighted average number of common shares outstanding, whereas "diluted" net
income per share is computed by dividing net income by the weighted average
number of common shares outstanding adjusted for the dilutive effects of options
and common equivalent shares outstanding. At September 30, 2002 and 2001, 34,080
and 51,931 options, respectively, have been excluded from the diluted net income
per share computation because their exercise prices (ranging from $7.10 to $8.00
per share) exceed the average quoted market value of the Company's stock.


                                       7
<PAGE>



ITEM 2

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations

The following table sets forth, for the periods indicated, selected financial
information derived from the Company's condensed financial statements, expressed
as a percentage of total revenues. The trends illustrated in the following table
may not necessarily be indicative of future results. The discussion that follows
the table should be read in conjunction with the condensed financial statements.

                                            Percentage of Total Revenues
                                    --------------------------------------------
                                     Three months ended      Nine months ended
                                        September 30,          September 30,
                                    --------------------   ---------------------
                                      2002        2001        2002        2001
                                    --------------------   ---------------------
Revenues:                            100.0%      100.0%      100.0%      100.0%
                                    ====================   =====================
Operating expenses:
  Direct expenses                     46.3        44.0        43.1        46.6
  Selling, general and
   administrative                     16.4        22.7        22.0        25.9
  Depreciation and amortization        5.5         8.3         7.6        10.2
                                    --------------------   ---------------------
      Total operating expenses:       68.2        75.0        72.7        82.7
                                    --------------------   ---------------------
Operating income                      31.8%       25.0%       27.3%       17.3%
                                    ====================   =====================

Three Months Ended September 30, 2002 Compared to Three Months Ended September
30, 2001

Total revenues. Total revenues increased 19.9% in the three month period ended
September 30, 2002 to $7.3 million from $6.1 million in the three month period
ended September 30, 2001. The increase was primarily due to the addition of new
clients(including a major contract signed in January 2002). The third quarter in
both years includes the seasonal quarterly increase in revenue from the annual
release of the Healthcare Market Guide.

Direct expenses. Direct expenses increased 26.0% to $3.4 million in the three
month period ended September 30, 2002 from $2.7 million in the same period
during 2001. The increase in direct expenses in the 2002 period was primarily
due to increases in revenue and consisted of increases in printing and postage
costs of $631,000, fieldwork and fees of $238,000, and computer related expenses
of $20,000. This increase was partially offset by decreases in labor and payroll
expenses of $193,000. Direct expenses as a percentage of total revenues
increased to 46.3% in the three month period ended September 30, 2002 from 44.0%
during the same period of 2001.

Selling, general and administrative expenses. Selling, general and
administrative expenses decreased 13.3% to $1.2 million for the three month
period ended September 30, 2002 from $1.4


                                       8
<PAGE>

million for the same period in 2001. This decrease was primarily due to
decreases in legal and consulting fees of $279,000 incurred primarily in
connection with a previously disclosed legal proceeding. This decrease was
offset by increases in product development costs and marketing costs of $76,000
and increases in salaries and benefits of $36,000. Selling, general, and
administrative expenses decreased as a percentage of total revenues to 16.4% for
the three month period ended September 30, 2002 from 22.7% for the same period
in 2001.

Depreciation and amortization. Depreciation and amortization expenses decreased
21.3% to $401,000 in the three month period ended September 2002 from $509,000
in the same period of 2001. The decrease is primarily due to the adoption of
SFAS No. 142 on January 1, 2002. In connection with the adoption of SFAS No.
142, the Company ceased amortizing goodwill and certain other intangible assets.
The three month period ended September 30, 2001 included $159,135 for
amortization of certain intangible assets no longer subject to amortization.
This was partially offset by additional depreciation in 2002 of software,
computer equipment and production equipment. Depreciation and amortization
expenses as a percentage of total revenues decreased to 5.5% in the three-month
period ended September 30, 2002 from 8.3% in the same period of 2001.

Provision for income taxes. The provision for income taxes totaled $854,000
(37.5% effective tax rate) for the three month period ended September 30, 2002
as compared to $550,000 (37.2% effective tax rate) for the same period in 2001.
The effective tax rate was lower in 2001 due to differences in state income
taxes.

Nine Months Ended September 30, 2002 Compared to Nine Months Ended September 30,
2001

Total revenues. Total revenues increased 19.2% in the nine month period ended
September 30, 2002 to $16.2 million from $13.6 million in the nine month period
ended September 30, 2001. The increase was primarily due to the addition of new
clients(including a major new contract signed in January 2002)and, to a lesser
extent, an increase in scope of work from existing clients.

Direct expenses. Direct expenses increased 10.1% to $7.0 million in the nine
month period ended September 30, 2002 from $6.3 million in the same period
during 2001. The increase was primarily due to increases in revenue and
consisted of increases in printing and postage of $679,000, fieldwork and fees
of $266,000 and computer expenses of $105,000. This increase was partially
offset by decreases in labor and payroll expenses of $447,000. Direct expenses
decreased as a percentage of total revenues to 43.1% in the nine month period
ended September 30, 2002 from 46.6% during the same period of 2001.

Selling, general and administrative expenses. Selling, general and
administrative expenses increased 1.3% to $3.6 million in the nine month periods
ended September 30, 2002 from $3.5 million in the same period during 2001.
Increases in salaries and benefits of $188,000, contract services of $100,000
and marketing of $57,000 were partially offset by decreases in legal and
consulting fees of $316,000 incurred primarily in connection with a previously
disclosed legal proceeding. Selling, general, and administrative expenses as a
percentage of total revenues decreased to 22.0% for the nine month period ended
September 30, 2002 from 25.9% for the same period in 2001.

                                       9
<PAGE>

Depreciation and amortization. Depreciation and amortization expenses decreased
11.2% to $1.2 million in the nine month period ended September 2002 from $1.4
million in the same period of 2001. The decrease is primarily due to the
adoption of SFAS No. 142 on January 1, 2002. In connection with the adoption of
SFAS No. 142, the Company ceased amortizing goodwill and certain other
intangible assets. The nine month period ended September 30, 2001 included
$350,095 for amortization of certain intangible assets no longer subject to
amortization. This was partially offset by the additional depreciation of
software, computer equipment and production equipment. Depreciation and
amortization expenses as a percentage of total revenues decreased to 7.6% in the
nine-month period ended September 30, 2002 from 10.2% in the same period of
2001.

Provision for income taxes. The provision for income taxes totaled $1.6 million
(37.6% effective tax rate) for the nine month period ended September 30, 2002 as
compared to $832,000 (36.0% effective tax rate) for the same period in 2001. The
effective tax rate was lower in 2001 due to differences in state income taxes.


Liquidity and Capital Resources

The Company's principal source of funds historically has been cash flow from its
operations. The Company's cash flow has been sufficient to provide funds for
working capital and capital expenditures, other than expenditures related to the
Company's building, which were paid, in part, from the proceeds of borrowings
and the sales of securities available-for-sale.

As of September 30, 2002, the Company had cash and cash equivalents of $1.7
million and working capital of $10.9 million.

During the nine months ended September 30, 2002, the Company generated $3.7
million of net cash from operating activities as compared to $3.1 million during
the same period in the prior year. The increase in cash flow was mainly due to
higher net income, as well as changes in accrued expenses and income taxes
payable. This was offset by the timing of collections of accounts receivable,
the timing of costs incurred in advance of billings on certain projects and a
decrease in accounts payable.

For the nine months ended September 30, 2002, net cash used in investing
activities was $3.6 million as compared to $3.4 million during the same period
in the prior year. The 2002 net cash used in investing activities was primarily
due to the investment of $1.3 million in furniture, computer equipment, software
and production equipment to support the expansion of the Company's business, and
an increase of the net purchases of securities available-for sale over the
proceeds from the maturities of securities of $2.3 million. The 2001 net cash
used in investing activities was primarily due to the purchase of The Picker
Institute's healthcare survey business ($3.8 million) and investment of $1.3
million in furniture, computer equipment, software and production equipment to
support the expansion of the Company's business, and was partially offset by the
net proceeds of maturities of securities available-for-sale over the purchase of
securities available for sale of $1.6 million.

                                       10
<PAGE>

Net cash generated in financing activities was $429,000 for the nine months
ended September 30, 2002 compared to $28,000 of net cash generated during the
same period in the prior year. The cash provided by financing activities during
2002 and 2001 was primarily due to proceeds from exercised stock options.

The Company typically bills clients for projects before they have been
completed. Billed amounts are recorded as billings in excess of revenues earned
or deferred revenue on the Company's financial statements and are recognized as
income when earned. As of September 30, 2002 and as of December 31, 2001, the
Company had $3.0 million and $2.6 million of deferred revenues, respectively.
The increase in deferred revenues at September 30, 2002 results primarily from
project billing before revenues were earned. In addition, when work is performed
in advance of billing, the Company records this work as a cost in excess of
billings or unbilled revenue. At September 30, 2002 and December 31, 2001, the
Company had $2.3 million and $1.7 million of unbilled revenues, respectively.
Substantially all deferred and unbilled revenues will be earned and billed,
respectively, within 12 months of the respective period ends.

In October 1998, the Company announced plans to repurchase up to 245,000 shares
of common stock in the open market or in privately negotiated transactions. The
Company repurchased 245,000 shares between October 1998 and March 1999. In April
1999, the Board of Directors of the Company authorized the repurchase of an
additional 150,000 shares. As of October 31, 2002, 68,100 shares have been
repurchased under the new authorization.

Accounting Pronouncements

In June 2002, the Financial Accounting Standards Board issued SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities. Under SFAS No.
146, a liability for exit costs would not be recognizable based upon the date
that an entity commits to an exit plan. Instead, liabilities and expenses
associated with exit plan activities are required to be expensed as incurred
under the new standard. This statement also establishes that fair value is the
objective for initial measurement of the liability. This statement addresses
financial accounting and reporting for costs associated with exit or disposal
activities and is effective for exit or disposal activities that are initiated
after December 31, 2002.

In October 2002, the Emerging Issues Task Force of the Financial Accounting
Standards Board reached a tentative conclusion on the accounting for revenues in
transactions that involve multiple deliverables. The guidance governs how to
identify whether goods or services or both, that are to be delivered separately
in a bundled sales arrangement, should be accounted for separately. This
guidance is expected to be effective for fiscal years beginning after December
15, 2002, so we expect to adopt the guidance in our financial statements for the
quarter ended March 31, 2003. We have not yet determined the impact of this
tentative conclusion on our financial statements.


                                       11
<PAGE>




ITEM 3    Quantitative and Qualitative Disclosures About Market Risk

The Company has not experienced any material changes in its market risk
exposures since December 31, 2001.

ITEM 4    Controls and Procedures

(a) Based on their evaluation as of a date within 90 days of the filing of this
Quarterly Report on Form 10-Q, the Company's principal executive officer and
principal financial officer have concluded that the Company's disclosure
controls and procedures (as defined in Rules 13a-14(c) and 15 d-14 (c) under the
Securities Exchange Act of 1934 ( the "Exchange Act")) are effective to ensure
that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange Commission
rules and forms.

(b) No significant changes were made in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation.



                                       12
<PAGE>



PART II - Other Information


ITEM 6    Exhibits and Reports on Form 8-K

     (a)  Exhibits

          (99.1)  Certification of the President and Chief Executive Officer
                  pursuant to 18 U.S.C. ss. 1350

          (99.2)  Certification of the Vice President, Treasurer and Chief
                  Financial Officer pursuant to 18 U.S.C. ss. 1350

     (b)  Reports on Form 8-K

     There were no reports on Form 8-K filed during the quarter ended September
     30, 2002.



                                       13
<PAGE>



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                   NATIONAL RESEARCH CORPORATION



Date: November 14, 2002            By:  /s/ Michael D. Hays
                                       ----------------------------------------
                                        Michael D. Hays
                                        President and Chief Executive Officer



Date: November 14, 2002            By:  /s/ Patrick E. Beans
                                       ----------------------------------------
                                        Patrick E. Beans
                                        Vice President, Treasurer, Secretary and
                                        Chief Financial Officer (Principal
                                        Financial and Accounting Officer)



                                       14
<PAGE>


                                  Certification

                  I, Michael D. Hays, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of National Research
     Corporation;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a)  designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this quarterly
          report is being prepared;

     (b)  evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     (c)  presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):

     (a)  all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: November 14, 2002                 /s/ Michael D. Hays
                                        ---------------------------------------
                                        Michael D. Hays
                                        President and Chief Executive Officer


                                       15
<PAGE>

                                  Certification

                  I, Patrick E. Beans, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of National Research
     Corporation;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

4.   The registrant's other certifying officers and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a)  designed such disclosure controls and procedures to ensure that
          material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this quarterly
          report is being prepared;

     (b)  evaluated the effectiveness of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this quarterly report (the "Evaluation Date"); and

     (c)  presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

5.   The registrant's other certifying officers and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent functions):

     (a)  all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and

     (b)  any fraud, whether or not material, that involves management or other
          employees who have a significant role in the registrant's internal
          controls; and

6.   The registrant's other certifying officers and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


Date: November 14, 2002                 /s/ Patrick E. Beans
                                        ---------------------------------------
                                        Patrick E. Beans
                                        Vice President, Treasurer and
                                        Chief Financial Officer

                                       16
<PAGE>


                          NATIONAL RESEARCH CORPORATION

                 EXHIBIT INDEX TO QUARTERLY REPORT ON FORM 10-Q
                For the Quarterly Period ended September 30, 2002

               Exhibit
               -------

(99.1)         Certification of the President and Chief Executive Officer
               pursuant to 18 U.S.C. ss. 1350

(99.2)         Certification of the Vice President, Treasurer and Chief
               Financial Officer pursuant to 18 U.S.C. ss. 1350




                                       17

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>sdc262a.txt
<DESCRIPTION>WRITTEN STATEMENT OF PRESIDENT AND CEO
<TEXT>
                                                                  Exhibit (99.1)


         Written Statement of the President and Chief Executive Officer
                          Pursuant to 18 U.S.C. ss.1350


     Solely for the purposes of complying with 18 U.S.C. ss.1350, I, the
undersigned President and Chief Executive Officer of National Research
Corporation (the "Company"), hereby certify, based on my knowledge, that the
Quarterly Report on Form10-Q of the Company for the quarter ended September 30,
2002 (the "Report") fully complies with the requirements of Section 13(a) of the
Securities Exchange Act of 1934 and that information contained in the Report
fairly presents, in all material respects, the financial condition and results
of operations of the Company.



/s/ Michael D. Hays
- -----------------------------------
Michael D. Hays
November 14, 2002



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>sdc262b.txt
<DESCRIPTION>WRITTEN STATEMENT OF VP, TREASURER AND CFO
<TEXT>

                                                                  Exhibit (99.2)


 Written Statement of the Vice President, Treasurer and Chief Financial Officer
                          Pursuant to 18 U.S.C. ss.1350


     Solely for the purposes of complying with 18 U.S.C. ss.1350, I, the
undersigned Vice President, Treasurer and Chief Financial Officer of National
Research Corporation (the "Company"), hereby certify, based on my knowledge,
that the Quarterly Report on Form 10-Q of the Company for the quarter ended
September 30, 2002 (the "Report") fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of 1934 and that information
contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.



/s/ Patrick E. Beans
- -----------------------------------
Patrick E. Beans
November 14, 2002


</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
