<PAGE>   1
 
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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ---------------------
                                   FORM 10-K
 
<TABLE>
<S>           <C>
(Mark One)
   [X]
             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
          THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
               FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
                                    OR
   [ ]
           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
          THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
</TABLE>
 
                FOR THE TRANSITION PERIOD FROM        TO
 
                          COMMISSION FILE NO. 0-11428
                             ---------------------
                          INFORMATION RESOURCES, INC.
             (Exact name of registrant as specified in its charter)
 
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<S>                                              <C>
                    DELAWARE                                        36-2947987
        (State or Other Jurisdiction of                          (I.R.S. Employer
         Incorporation or Organization)                        Identification No.)
  150 NORTH CLINTON STREET, CHICAGO, ILLINOIS                         60661
    (Address of Principal Executive Offices)                        (Zip Code)
</TABLE>
 
       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (312) 726-1221
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
 
                              TITLE OF EACH CLASS
 
                     COMMON STOCK, $.01 PAR VALUE PER SHARE
                        PREFERRED STOCK PURCHASE RIGHTS
                             ---------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes  [X]     No  [ ]
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]
 
The aggregate market value of the voting stock held by nonaffiliates of the
registrant as of February 26, 1999 (based on the closing price as quoted by
NASDAQ as of such date) was $224,887,627.
 
The number of shares of the registrant's common stock, $.01 par value per
outstanding share, as of February 26, 1999 was 27,867,884.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
Portions of the registrant's definitive proxy statement for the annual meeting
of stockholders to be held May 20, 1999 to be filed pursuant to Regulation 14A
are incorporated by reference into Part III of this Form 10-K.
 
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<PAGE>   2
 
                                     PART I
 
ITEM 1. BUSINESS
 
INTRODUCTION
 
     Information Resources, Inc. ("IRI") and its subsidiaries (collectively the
"Company") is a leading provider of universal product code ("UPC"),
scanner-based business solutions services to the consumer packaged goods ("CPG")
industry, offering services in the U.S., Europe and other international markets.
The Company supplies CPG manufacturers, retailers and brokers with information
and analysis critical to their sales, marketing and supply chain operations. IRI
provides services designed to deliver value through an enhanced understanding of
the consumer to a majority of the Fortune 500 companies in the CPG industry.
 
     The Company currently generates approximately 78% of its revenues from
sales and services provided in the U.S. These services center in large part
around the Company's flagship InfoScan(R) service, which tracks consumer
purchasing of products sold in grocery stores, drug stores, mass merchandisers,
convenience stores and other retail outlets across the United States. The
Company also offers a number of other services to CPG manufacturers, including
household-level information collected via consumer panels. One such service is
BehaviorScan(R) which is used for the testing and evaluation of alternative
marketing strategies and tactics for both new and established products. Closely
related to its information services, the Company also markets its suite of
software applications to the CPG industry. In addition, the Company maintains a
family of software application products based on EXPRESS(TM) technology owned by
Oracle Corporation ("Oracle"). In July 1995, the Company sold its EXPRESS
technology to Oracle, while retaining certain rights to market and distribute
Oracle EXPRESS software.
 
     The Company provides business information services in Europe and other
international markets primarily using scanner based data. Revenues from the
Company's U.S. and International Services were as follows for the years ended
December 31 (in thousands):
 
<TABLE>
<CAPTION>
                                                       1998        1997        1996
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
U.S. Services......................................  $396,992    $366,678    $344,612
International Services.............................   114,331      89,649      60,991
                                                     --------    --------    --------
          Total....................................  $511,323    $456,327    $405,603
                                                     ========    ========    ========
</TABLE>
 
U.S. AND INTERNATIONAL SERVICES
 
     The Company's U.S. and International Services include InfoScan product
tracking services, related software product sales, consumer panel services,
analytical and consulting services, BehaviorScan product testing services and a
variety of applications of the Company's census (i.e., all stores within
participating retail chains) scanner databases.
 
     InfoScan.  The Company's principal information service marketed in the
United States and internationally is InfoScan. InfoScan is a service used by the
CPG industry to monitor and evaluate the market performance of products sold in
retail stores. The InfoScan service provides subscribers with a variety of
information including how much product they and their competitors are selling,
where the products are being purchased, at what price the products are being
sold and under what promotional conditions sales are occurring. This information
helps subscribers make fundamental strategic and tactical decisions for their
businesses in the areas of sales, marketing, pricing, promotion and logistics.
 
     InfoScan utilizes data collected from UPC bar codes on CPG product
packaging. Scanners at retail checkouts read the UPC code and record product
sales electronically. On an on-going basis, the Company procures such electronic
sales data along with related promotional data from a sample of national and
local market retail stores. The Company also collects consumer purchase
information directly from individual households across the United States using
consumer identification cards in a store and/or proprietary in-home scanning
devices. The consumer purchase information can be used in a complementary
fashion with InfoScan data. The Company processes the information at its
computer facilities and stores it in the Company's
<PAGE>   3
 
proprietary databases. InfoScan subscribers access the information in the
Company's databases through a variety of means, including the use of analytical
software provided by the Company.
 
     Subscriptions to InfoScan by CPG manufacturers are a principal source of
revenue for the Company. Manufacturers subscribe to InfoScan by contracting with
the Company to obtain access to the InfoScan databases for specified product
categories. InfoScan contracts generally have multi-year terms, usually of three
years or more in the U.S.
 
     InfoScan Census. InfoScan Census applications are derived from a product
tracking service based on scanner data collected from all stores within
participating retail chains, as opposed to collection from a sample of such
stores. InfoScan Census offers the CPG industry more complete and accurate data
than sample services, since it has no sampling or projection errors, and its
applications can go beyond traditional market tracking uses.
 
     InfoScan Census revenues come primarily from manufacturers purchasing key
account data, which are sales data for a product category based on all the
stores of a specific retailer. This service enables manufacturers' sales
representatives to negotiate with retail buyers based on a mutually consistent
and accurate measure of retail product movement. In addition, an evaluation of
differences in brand and product category purchasing across individual stores
within a chain can often pin-point opportunities to effectively build sales to
the benefit of both manufacturers and retailers. Beyond key account information,
census applications include improved management of trade promotions, validation
of "pay-for-performance" promotions, more effective sales force and broker
compensation programs and improved inventory and distribution management.
 
     There are presently approximately 14,800 grocery stores, approximately
11,200 drug stores and approximately 3,100 mass merchandisers in the Company's
InfoScan Census U.S. database. The Company is also beginning to develop InfoScan
Census services in certain European markets.
 
     InfoScan Data Collection. For the Company's InfoScan sample service, the
Company continuously collects weekly product sales and price information from
representative retail outlets. Included in the Company's national and local
market samples in the U.S. are approximately 4,500 stores in the aggregate,
including grocery stores, drug stores, mass merchandisers and convenience
stores. Contracting retailers typically deliver their scanner data
electronically to the Company's computer facilities in Wood Dale, Illinois.
While most retail stores in the United States have installed scanner equipment
to record product sales information, certain convenience stores and other retail
outlets have not. When scanner data are not available, the Company's field
personnel visit stores and obtain sales information via a manual audit of the
stores' product purchases and inventory. Collection practices for weekly product
sales information in the Company's operation in foreign countries are largely
scanner-based, though they vary somewhat on a country-by-country basis, as does
scanner data availability.
 
     The InfoScan U.S. and international databases typically contain both
product movement and price information and "causal" data. Causal data consist of
information which may explain changes in product sales, such as price
promotions, retailers' newspaper ads and in-store displays, as well as other
promotion and merchandising data related to the sale of CPG products. The
Company employs a field force of full-time and part-time workers to collect
causal data. These employees conduct weekly on-site visits to retail stores
participating in the InfoScan service to collect causal information such as
in-store promotions and displays. Field force personnel perform other services
as well, including those related to the Company's test marketing services and
InfoForce services.
 
     The Company often pays cash for scanner data covering a sample or census of
retailers' stores. However, the Company also exchanges software, product
movement information and other services to obtain access to data for all stores
within certain grocery stores and drug chains. The Company provides its QScan(R)
system to U.S. retailers in exchange for their participation in the provision of
their all-store data for InfoScan Census. QScan is an information system
designed to provide retailers with easy access to their scanner data. The system
addresses retailers' problems of organizing and analyzing their own databases of
information for products sold in their stores. With a RISC workstation at a
retailer's buying office or the Company's data
 
                                        2
<PAGE>   4
 
center along with software provided by the Company, the QScan system allows for
the processing and analysis of scanner data from all of the retailer's stores on
a weekly basis. Typical data procurement contracts run from year-to-year and
generally are cancelable by either party on 90 days notice.
 
     Consumer Panel. The Company also collects consumer purchase information
from approximately 115,000 individual households in the United States. Shoppers
from approximately 60,000 of these households present an identification card
when shopping at participating grocery stores, thereby allowing scanners to
record specific details of their product purchases. The Company also provides
about 55,000 households with hand-held scanners to record their product
purchases. Thus the Company is able to ascertain product movement information
from stores which either do not have scanners or do not otherwise participate in
the Company's household data collection system. Household panel information is
available in European markets usually from alliance partners of the Company.
 
     Data Processing. With respect to its operations in the U.S., Great Britain,
France, Italy, the Netherlands and Spain, the Company receives and processes
data at its production center and computer facilities located in Wood Dale,
Illinois. The Company's production center operates with numerous mainframe and
RISC-based computers as well as proprietary production software and related
technology developed exclusively by the Company to process and store very large
amounts of data. Through direct telecommunication connections with InfoScan
clients in the U.S., the Company also provides electronic on-line access to
InfoScan data services. The Company typically leases its mainframe computers
from third party financial institutions.
 
     Data Delivery. Subscriptions to the InfoScan service entitle the Company's
clients to access the Company's databases and receive information for specific
product categories. Because large amounts of data are involved, clients usually
either take electronic delivery of the data or obtain electronic access to the
Company's databases through the Company's on-line service. Clients taking
electronic delivery generally license software from the Company. The Company's
on-line service permits clients to build and store their own databases which
remain resident on the Company's computers. Clients then access the databases
through remote electronic connection. Clients may also purchase software
services from the Company. (See "Software and Related Products" below for more
information on Company revenues derived from software licensing.)
 
     Other Client Services. The Company places a major emphasis on the provision
of experienced and knowledgeable client service personnel to assist InfoScan
subscribers in the use and interpretation of InfoScan data as well as the use of
the Company's analytical software. The Company also provides numerous analytical
and consulting services to both CPG manufacturers and retailers. These revenues
mostly follow from subscriptions to the Company's InfoScan service and
principally relate to analytical use of InfoScan data. These services are
generally billed on a time and materials basis.
 
     Analytical and consulting services are directed at helping clients identify
new marketing opportunities, more effectively manage their marketing mix,
identify appropriate opportunities for product line optimization and increase
productivity of marketing expenditures through more effective couponing,
advertising and in-store merchandising programs. The Company's Neo, Inc.
subsidiary provides management consulting services focused on sales force
effectiveness, retailer marketing, information utilization and training and
support for selling organizations.
 
     Software and Related Products. In close association with its retail
tracking services around the world, the Company markets analytical software to
the CPG industry principally for use in accessing, managing and analyzing the
Company's databases. The Company also markets the Apollo line of space
management software for use in managing retail shelf space, software for the
improved management of a manufacturer's promotion expenditures and software
applications to facilitate enhanced uses of InfoScan data. The Company markets a
line of software application products based on Oracle EXPRESS technology
primarily to the CPG industry. Oracle EXPRESS is a software technology designed
for working with large and complex databases. In July 1995, the Company sold its
EXPRESS technology and certain software products to Oracle, while retaining
ownership of certain EXPRESS-based sales and marketing software application
products for use in the CPG industry. Through licensing agreements with Oracle,
the Company continues to market and distribute many Oracle EXPRESS software
products.
 
                                        3
<PAGE>   5
 
     Many of the Company's U.S. and International clients use the Oracle
EXPRESS-based software application, Oracle Sales Analyzer(R), in order to
access, manage and analyze the Company's databases. Oracle Sales Analyzer is a
decision support software application built in Oracle EXPRESS and now owned by
Oracle. The product provides users with a range of analytical and reporting
tools. The Company typically licenses its own applications as well as Oracle
Sales Analyzer in conjunction with a client's InfoScan data subscription.
 
     A principal source of software revenues is the provision of on-line access
services to InfoScan subscribers who access InfoScan databases residing in the
Company's data warehouses. Other software revenues derive from the sale of
Oracle software product licenses to InfoScan subscribers who load InfoScan data
on their own computer systems and do not use the Company's on-line services.
Licenses typically require a one-time paid-up license fee upon acceptance of the
software and annual maintenance payments for update and support services
thereafter. Oracle is generally entitled to receive royalties on relevant
licenses granted by the Company and its distributors within the CPG industry
until July 2001; however, the Company is not required to pay royalties to Oracle
on licenses granted by the Company and its data affiliates to CPG end-users for
use with data provided by the Company or its data affiliates. The Company
anticipates that it and Oracle will negotiate new royalty rates payable to
Oracle after July 2001.
 
     Prior to the 1995 sale to Oracle, the Company operated a decision support
software business engaged in general application development using the EXPRESS
product line. Following the sale to Oracle, the Company obtained rights to
market, distribute and provide first line customer support for many of the
Oracle EXPRESS products. Software development work by the Company is now
directed exclusively toward the development of applications for specific use in
the CPG industry using the best available technology.
 
     The Company markets its proprietary APOLLO(R) Space Management System
software to CPG retailers, wholesalers, manufacturers and brokers in the United
States and internationally. APOLLO software is designed to assist in the
management of retail shelf space, providing a range of tools for space
management including production of picture schematics of shelf layouts, software
for evaluating space utilization and a national database of product dimensions
and product images. Variety Planner(R) is a product assortment application
offered by the Company which can be used independently or in conjunction with
the APOLLO product.
 
     The Company develops and markets a number of other software products for
use in the CPG industry. These include a variety of tools which help clients
receive, analyze and interpret InfoScan data.
 
     Testing Services. The Company also provides a number of testing services
primarily for CPG manufacturers. These include controlled retail testing,
matched market analyses and related special analyses using the Company's
InfoScan databases. Controlled testing involves testing the placement of new
products or changes in advertising, shelf location, price or promotional
conditions in different retail outlets or different markets and involves custom
manipulation and analysis of the Company's InfoScan databases. The Company's
BehaviorScan service is a test marketing system available in the United States
which enables CPG manufacturers to measure the impact of different marketing
variables on consumer purchase behavior on new and existing products. Typical
marketing variables tested in BehaviorScan are television advertisements,
newspaper ads, manufacturers' coupons, free samples, in-store displays, shelf
price and packaging changes. BehaviorScan tests compare the purchases of a group
of consumers exposed to test variable(s) with the purchases of a control group
of consumers not exposed to the test variable(s). A unique feature of the
BehaviorScan system is its ability to deliver alternative television advertising
to different groups of panel households using the Company's patented targetable
television technology. BehaviorScan is currently available in seven markets and
is the only such electronic test marketing system in the United States. Major
costs associated with the BehaviorScan system include payments to retailers,
compensation to participating panel households, field personnel costs, cable
television studio operation, computer resources and client service personnel
costs.
 
INTERNATIONAL BUSINESS DEVELOPMENT
 
     Through subsidiaries and joint ventures with other leading marketing
information firms, the Company in 1992 began offering information services in a
number of countries outside of the United States. Specific
                                        4
<PAGE>   6
 
services offered depend upon local country competitive conditions and the
general retailer environment. The Company's major European subsidiaries and
joint venture companies rely on the Company's data production facilities in the
United States as well as the Company's know-how and trade secrets to provide
InfoScan retail tracking services.
 
     The Company's only significant competitor offering product tracking
services internationally is the ACNielsen Company ("ACNielsen"). (See
"Competition" below.) The Company competes with ACNielsen in virtually every
foreign market where the Company has established information services. ACNielsen
maintains a dominant market position throughout most of Europe where the
Company's expenditures to establish product tracking services over the last five
years have been most significant.
 
     United Kingdom. The Company's subsidiary in the United Kingdom offers a
retail tracking service under the InfoScan name to the British market. Organized
in 1992 as a joint venture, the Company's initial partners were Taylor Nelson
AGB plc of the United Kingdom and GfK AG of Germany ("GfK"). The Company now
owns substantially all of the joint venture. In 1993, the venture expanded its
sample of scanning stores, initiated the collection of causal data and began
offering a fully operational scanning service covering major chains under the
InfoScan name. It also expanded the service to cover stores selling health and
beauty aids. Pursuant to contractual arrangements, the Company provides data
production services to the subsidiary from the Company's computer facilities in
Wood Dale, Illinois.
 
     France. The Company's subsidiary in France offers scanner-based tracking
services under the InfoScan name. In 1993, the Company organized a joint
venture, IRI-SECODIP S.C.S. with GfK and SECODIP S.A. to acquire the operations
of SECODIP's retail audit business and the business of a former
development-stage scanner-based operation of GfK. Since 1994, the Company has
funded substantially all of the joint venture's capital requirements and the
Company now owns substantially all of the joint venture interests. Pursuant to
contractual arrangements, the Company provides data production services to the
subsidiary from the Company's computer facilities in Wood Dale, Illinois.
 
     Italy. In 1994, the Company began development of an information service in
Italy through the formation of a wholly-owned subsidiary, IRI InfoScan Italy. In
early 1995, the subsidiary produced its initial reports to clients. Its basic
service consists of retail sales and promotion tracking using a sample of retail
grocery outlets. Supermarket sales are tracked by means of scanning data, while
sales in smaller, traditional shops are measured by manual audit techniques.
Pursuant to contractual arrangements, the Company provides production services
to IRI InfoScan Italy from the Company's computer facilities in Wood Dale,
Illinois.
 
     Germany. The Company operates a retail tracking service joint venture in
Germany through a subsidiary whose minority shares are held by GfK. From 1993
through 1996, the Company owned a 15% interest in GfK Panel Services GmbH ("GfK
Panel"), then a subsidiary of GfK. During that time, GfK Panel offered both
retail and consumer panel tracking services based on consumer household panel
data, retail audit data, scanner data and provided related consulting studies.
 
     In February 1997, the retail tracking service and related software
businesses were put into a new joint venture company, IRI/GfK Retail Services
GmbH ("IRI/GfK Retail") in which the Company took a 51% ownership interest and
GfK the remainder. Scanner data are not available from all major retailers in
Germany. Such scanner data, when available, are primarily used for diagnostic
and promotion analysis rather than for provision of a product tracking service
as in other major European countries. GfK provides production services to
IRI/GfK Retail through GfK's facilities in Nuremberg, Germany.
 
     In 1997, the Company sold its 15% ownership interest in GfK Panel to GfK.
GfK Panel continues to provide consumer panel and ad hoc research services to
the German market, and GfK Panel and IRI/GfK Retail cooperate in selling and
delivering services to common clients.
 
     Benelux. The Company and GfK operate a joint venture which offers a
scanner-based retail tracking service to the Netherlands market. This
scanner-based retail tracking service became fully-operational in 1994. Until
early 1998, this joint venture was owned 80.1% by GfK and 19.9% by the Company.
In February 1998, the Company increased its ownership to 51% and took over
management responsibilities. It
 
                                        5
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operates under the InfoScan name, and pursuant to contractual arrangements, the
Company provides production services to the joint venture through the Company's
computer facilities in Wood Dale, Illinois.
 
     In 1998, the Company also sold a 9.9% interest in GfK Panel Services
Benelux B.V. and GfK Belgium S.A. reducing its ownership to 10%. Those companies
operate household panel services in the Netherlands and Belgium and continue to
cooperate with the Netherlands joint venture scanner operation in the sale and
delivery of services to common customers.
 
     Spain. IRI began a start-up venture in Spain during April 1998. In November
1998, the Company executed a joint venture agreement with Media Planning, S.A.
to create a new retail tracking business to serve the Spanish market under the
name Information Resources Espana, S.L. ("IRI-Spain"). In January 1999,
IRI-Spain and Dympanel, S.A. signed a cooperation agreement which added
Dympanel, S.A. as a third investor in IRI-Spain. The aforementioned agreements
resulted in the Company, Media Planning, S.A., and Dympanel, S.A. owning 60%,
30% and 10%, respectively, of the capital shares of IRI-Spain. IRI-Spain will
begin providing InfoScan service to the Spanish market in early 1999, using the
Company's production facilities in Wood Dale, Illinois.
 
     Turkey. Until December 1998, the Company owned and operated a retail audit
business in Turkey which it acquired in 1993. This business conducted its
service in a national sample of supermarkets, large and small grocery stores,
pharmacies, cosmetic shops and other stores, provided related special consulting
services and distributed IRI software products in Turkey. Effective January 1999
the Company contributed all of the operating assets and liabilities of its
Turkish subsidiary ("IRI-Turkey") to a joint venture, Panel-IRI Pazar Arastirma
ve Danismanlik A.S. ("Panel"), a Turkish company. IRI-Turkey owns 35% of Panel.
 
     Greece. The Company operates a retail audit business in Greece which it
acquired in 1994. The operation includes collecting, reporting, analyzing and
interpreting national and regional sales data from retail audits.
 
     Sweden. The Company owns an 8% interest in a joint venture formed in 1995
with GfK for the provision of scanner-based product tracking services in Sweden.
The business is managed by GfK.
 
     Eastern Europe, Middle East and North Africa. In 1995, the Company entered
into a strategic alliance with Middle East Market Research Bureau ("MEMRB"), a
market research company based in Cyprus. MEMRB provides market research
throughout more than 20 countries in the Middle East, Eastern Europe, the
Mediterranean, the Commonwealth of Independent States and North Africa. Under
the terms of the agreement, MEMRB has agreed to cooperate in the adoption of
multi-country technical standards developed by the Company and co-market certain
information and software products with the Company. In October 1998, IRI
exercised its option to acquire a 19.9% ownership interest in MEMRB. The Company
holds an option to increase its ownership interest of MEMRB to 49%.
 
     Asia and Australia. The Company has a wholly-owned software distribution
subsidiary and a joint venture in Japan with Tokyo-based Mitsui & Co., Ltd., to
provide software and information services, respectively, in Japan. The Company's
ownership in the joint venture, which was formed in 1995, was 60%. Effective May
21, 1998, Mitsui & Co., Ltd., increased its ownership to 60% and the Company's
ownership was reduced to 40%. The Company also has a wholly-owned software
distribution subsidiary in Australia and New Zealand.
 
     Latin America. The Company has operations in certain Latin American markets
through joint ventures and subsidiaries in Venezuela, Puerto Rico and Guatemala.
The Company owns 49% of the Venezuelan joint venture, Datos Information
Resources, which provides audit-based product tracking as well as ad hoc and
software services to the Venezuelan market. The Company's subsidiary in Puerto
Rico offers both audit-based product tracking and ad hoc marketing research
services. The Company owns 19.9% of a Guatemalan based company that provides
research services in Central America. The Company has strategic alliance
agreements with companies in Peru and Argentina.
 
TRADEMARKS, PATENTS, LICENSES AND SOFTWARE PROTECTION
 
     The Company is the owner of various trademarks, including InfoScan(R),
InfoScan Census(TM), InfoForce(TM), QScan(TM), IRI Software(TM), IRI
Logistics(TM), BehaviorScan(R), APOLLO(TM), The Partners(TM), Targeter(TM),
 
                                        6
<PAGE>   8
 
TradeWins(TM), Shoppers' Hotline(R), EZPrompt(R), CouponScan(TM), InSite
Reporting(TM), XLerate(TM), PromoProphet(TM), ReviewNet(TM) and
PromotionScan(TM). The Company also holds certain patents relating to the
targetable television technology utilized in its BehaviorScan service. The
patents expire at various dates between 1999 and 2005. Loss or infringement of
these patents would likely not have a material adverse effect upon the Company's
revenues.
 
     As a result of the sale of the EXPRESS technology and line of software
products to Oracle in July 1995, the Company no longer owns a large portion of
the software that is used in the delivery of InfoScan data. The Company secured
a license back from Oracle assuring the continued use of certain of the EXPRESS
software products in the Company's business, including rights to sublicense
software to clients of the Company. The initial term of the license is six
years. After July 2001, the royalty rates owed to Oracle will be subject to
renegotiation between the Company and Oracle. The Company also has rights to use
various trademarks owned by Oracle, including Oracle EXPRESS(R).
 
     The Company regards its databases as proprietary and, in addition to
copyright protection, relies upon trade secret laws, limitations on access to
its computer source codes, confidentiality agreements with clients and internal
nondisclosure safeguards to protect its rights to proprietary interests. The
Company's own computer software is also proprietary and bears appropriate
copyright notices.
 
     Because of the rapid pace of technological change in the computer industry,
trademark, patent or copyright protection is of less significance than the
knowledge and experience of the Company's personnel and their ability to develop
and market new systems or software products.
 
WORKING CAPITAL PRACTICES
 
     The Company invoices its information service clients in accordance with
agreed contract terms. Typical billing cycles are quarterly or monthly for
long-term contracts and payment is typically due within 30 days of receipt of
invoice. Software licenses generally require payment in full upon acceptance of
software.
 
     The Company pays certain retailers cash in accordance with negotiated terms
for providing scanner data for use in the InfoScan sample service. Payments to
other vendors are normally made in accordance with vendor terms.
 
CUSTOMERS
 
     The Company had approximately 2,400, 2,300 and 1,700 clients using its
information services in 1998, 1997 and 1996, respectively. Most of the Company's
clients are CPG manufacturers in the United States or in foreign countries where
the Company offers its services. No client of the Company accounted for revenues
in excess of 10% of the Company's total revenues. The Company's top ten clients
accounted for approximately 33% of the Company's 1998 revenues.
 
BACKLOG ORDERS
 
     At December 31, 1998, 1997 and 1996, the Company had committed contract
revenues for information services of approximately $392 million, $335 million
and $265 million, respectively. Revenues on contracts generally have terms of
not less than one year. Such contracts are generally categorized into one of two
classes: 1) cancelable at the end of each year by the giving of six months
written notice by either party, or 2) multi-year contracts either non-cancelable
or cancelable only with significant penalties, generally by the giving of six
months written notice after the initial multi-year term. Committed contract
revenues include only the noncancelable portion of a contract. The portion of
these committed contract revenues expected to be earned subsequent to 1999 is
approximately 49%.
 
COMPETITION
 
     Numerous firms supply marketing and advertising research products and
services to CPG manufacturers and retailers. However, the Company and ACNielsen
are the only two firms which provide national scanner-based product tracking
services in the United States to such manufacturers and retailers. While the
Company
                                        7
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generates more revenues than ACNielsen in the United States market, ACNielsen is
far larger than the Company in terms of worldwide revenues, giving it access to
greater financial resources than the Company. In the product tracking services
markets across Europe, ACNielsen currently maintains a dominant market position
in most European countries and is the Company's only competitor.
 
     Principal competitive factors include: quality, reliability, timeliness and
comprehensiveness of analytical services and data provided; flexibility and
innovation in tailoring services to client needs; experience; the capability of
technical and client service personnel; data processing and decision support
software; reputation; price; and geographical coverage.
 
RESEARCH AND DEVELOPMENT
 
     The Company is continuously developing new business products and services.
In this regard, the Company is actively engaged in research and development of
new software services and new database analyses and applications. Expenditures
for research and development for the years ended December 31, 1998, 1997 and
1996 approximated $33.0 million, $25.0 million and $24.9 million, respectively.
Included in these expenditures were $7.1 million, $3.7 million and $5.8 million
of software development costs that were capitalized. Expenditures not
capitalized were expensed as incurred.
 
PERSONNEL
 
     At December 31, 1998, the Company had approximately 4,600 full-time and
2,900 part-time employees worldwide. The Company depends to a significant extent
on its skilled technical personnel. Its future success will depend to a large
degree upon its ability to continue to hire, train and retain its professional
staff.
 
ITEM 2. PROPERTIES
 
     The Company markets and provides its information services and software
support services to U.S. clients from full-service sales offices in San
Francisco and Los Angeles, California; Norwalk, Connecticut; Atlanta, Georgia;
Cincinnati, Ohio; Minneapolis, Minnesota; Fairfield, New Jersey; Winston-Salem,
North Carolina; Fort Washington, Pennsylvania as well as from its corporate
headquarters in Chicago, Illinois and software development headquarters in
Waltham, Massachusetts. The Company markets to international clients through
subsidiaries, joint ventures and/or offices in Australia, Belgium, Canada,
France, Germany, Guatemala, Greece, Italy, Japan, Mexico, the Netherlands, New
Zealand, Puerto Rico, Spain, Sweden, United Kingdom, Venezuela and through its
various distributors.
 
     Principal leased facilities of the Company are as follows:
 
<TABLE>
<CAPTION>
                                                                           APPROXIMATE
                                                                           FLOOR AREA
LOCATION                                     PRINCIPAL OPERATION            (SQ. FT.)
--------                                     -------------------           -----------
<S>                                  <C>                                   <C>
Chicago, IL........................  Corporate headquarters and offices
                                     for professional staff                  427,000
Waltham, MA........................  Professional staff and computer
                                     facilities                               72,000
Wood Dale, IL......................  Computer facilities                      45,000
Regional sales and client service
  offices..........................  Sales, client service and analysis      254,000
International offices..............  Sales, client service, computer
                                     facilities and professional staff       231,000
Data collection facilities.........  Data collection and client test
                                     market control, cable TV studio
                                       facilities, warehouse                 160,000
</TABLE>
 
                                        8
<PAGE>   10
 
ITEM 3. LEGAL PROCEEDINGS
 
     On July 29, 1996, IRI filed an action against The Dun & Bradstreet Corp.,
The A.C. Nielsen Company (now a subsidiary of ACNielsen) and IMS International,
Inc. (collectively, "the Defendants") in the United States District Court for
the Southern District of New York entitled Information Resources, Inc. v. The
Dun & Bradstreet Corp., et. al. No. 96 CIV. 5716 (the "Action"). IRI alleged
that, among other things, the Defendants violated Sections 1 and 2 of the
Sherman Act, 15 U.S.C. Sections 1 and 2, by engaging in a series of
anti-competitive practices aimed at excluding the Company from various export
markets for retail tracking services and regaining monopoly power in the United
States market for such services. These practices included: i) entering into
exclusionary contracts with retailers in several countries, in order to restrict
the Company's access to sales data necessary to provide retail tracking
services; ii) illegally tying/bundling services in markets over which
Defendants' had monopoly power with services in markets in which ACNielsen
competed with the Company; iii) predatory pricing; iv) acquiring foreign market
competitors with the intent of impeding the Company's efforts at export market
expansion; v) tortiously interfering with Company contracts and relationships
with clients, joint venture partners and other market research companies; and
vi) disparaging the Company to financial analysts and clients. By the Action,
the Company seeks to enjoin the Defendants' anti-competitive practices and to
recover damages in excess of $350 million, prior to trebling.
 
     The Action followed legal proceedings by the Canadian Competition Tribunal
in 1995 and the European Commission in 1996 against ACNielsen for
anti-competitive practices. In 1995, the Canadian Competition Tribunal concluded
that ACNielsen had engaged in "anti-competitive acts" with the express intent
"to exclude potential competitors generally and IRI specifically" from the
Canadian retail tracking and services market. In December 1996, ACNielsen signed
an Undertaking to the European Commission agreeing to halt numerous contractual
practices which the Company contended was part of ACNielsen's intentional and
unlawful strategy aimed at preventing the Company from establishing a
competitive position in Europe and eliminating the Company as a competitor.
 
     On January 15, 1999, IRI filed an action against Manugistics, Inc.
("Manugistics") in the Circuit Court of Cook County, Illinois, Case No. 99 L
00599. In its two count action, IRI has alleged that Manugistics has breached a
Data Marketing and Revenue Agreement between IRI and Manugistics ("Agreement")
by failing to pay certain amounts due to IRI thereunder. The Agreement was
entered into by IRI and Manugistics in connection with the sale by IRI to
Manugistics of certain assets relating to the manufacture, sale and servicing of
certain logistics software. IRI has also alleged that Manugistics committed an
anticipatory breach of the Agreement with respect to certain other amounts not
yet due thereunder. IRI seeks damages in excess of $11.9 million in connection
with these claims. IRI has also alleged that Manugistics breached a related non-
competition and solicitation agreement between IRI and Manugistics. IRI seeks
unspecified damages to be determined at trial under this count. On March 2,
1999, Manugistics filed a Motion to Stay Proceedings and Compel Arbitration
which is currently pending before the Court.
 
     In the ordinary course of business, IRI and its subsidiaries become
involved as plaintiffs or defendants in various other legal proceedings. The
claims and counterclaims in such litigation, including those for punitive
damages, individually in certain cases and in the aggregate, involve amounts
which may be material. However, it is the opinion of the Company's management,
based upon the advice of counsel, that the ultimate disposition of pending
litigation against the Company will not be material.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
     None.
 
                                        9
<PAGE>   11
 
ITEM 4(A). EXECUTIVE OFFICERS OF THE REGISTRANT
 
<TABLE>
<CAPTION>
                                                                  POSITION WITH COMPANY
NAME                                         AGE                 AND BUSINESS EXPERIENCE
----                                         ---                 -----------------------
<S>                                          <C>   <C>
Thomas W. Wilson, Jr.......................  67    Chairman of the Board of Directors of the Company
                                                   since April 1995. Chief Executive Officer since
                                                   November 1998. Director of the Company since 1991.
                                                   Senior Partner of McKinsey & Company, management
                                                   consultants, from 1973 until 1990 (retired).
                                                   Director of Aerial Communications Inc. since
                                                   October 1996.
Randall S. Smith...........................  47    President of International Services Group since
                                                   January 1995 and President of Information
                                                   Technology Group from February 1996 until March
                                                   1998; President -- International Operations
                                                   Division from prior to March 1994 until January
                                                   1995.
James R. Chambers..........................  41    President of U.S. Commercial Businesses Group since
                                                   October 1997; President -- Refrigerated Foods
                                                   Division of Nabisco Foods from January 1996 to
                                                   October 1997; Senior Vice President -- Sales and
                                                   Customer Service of Nabisco Foods from prior to
                                                   March 1994 to December 1996.
Gary M. Hill...............................  51    Executive Vice President and Chief Financial
                                                   Officer of the Company since May 1995. Financial
                                                   consultant from August 1994 to December 1994.
                                                   Senior Vice President -- Finance of Itel
                                                   Corporation from prior to March 1994 to July 1994.
Monica M. Weed.............................  38    Executive Vice President and General Counsel of the
                                                   Company since November 1998; Assistant Secretary
                                                   since May 1993; Senior Vice President and Assistant
                                                   General Counsel of the Company from December 1994
                                                   to November 1998; Vice President of the Company
                                                   from prior to March 1994 to December 1994.
John P. McNicholas, Jr.....................  45    Senior Vice President and Controller of the Company
                                                   since June 1995; Vice President -- Controller of
                                                   Itel Corporation from prior to March 1994 to March
                                                   1995.
</TABLE>
 
All of the foregoing executive officers hold office until the next annual
meeting of the Board of Directors and until their successors are elected and
qualified.
 
                                       10
<PAGE>   12
 
                                    PART II
 
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER'S MATTERS
 
     The Company's Common Stock has been traded on the NASDAQ Stock Market under
the symbol "IRIC" since 1983. The stock currently trades on the National Market
System. Share data has been adjusted for all stock splits and stock dividends to
date.
 
     The high and low closing sales prices for the Company's Common Stock were
as follows:
 
<TABLE>
<CAPTION>
QUARTERS                                                       HIGH       LOW
--------                                                      -------   -------
<S>                                                           <C>       <C>
1997
  1st quarter...............................................  $16.000   $13.500
  2nd quarter...............................................   15.125    11.875
  3rd quarter...............................................   18.563    14.000
  4th quarter...............................................   19.625    13.375
1998
  1st quarter...............................................  $16.250   $12.750
  2nd quarter...............................................   19.188    15.750
  3rd quarter...............................................   19.250     9.750
  4th quarter...............................................   13.000     6.938
</TABLE>
 
     The last sale price on February 26, 1999 was $8.375 per share. As of
February 26, 1999 there were 1,706 record holders of the Company's Common Stock.
 
     The Company has never paid cash dividends. It is the present policy of the
Company's Board of Directors to retain earnings for use in the Company's
business. Accordingly, the Board of Directors does not anticipate that cash
dividends will be paid in the foreseeable future. There are restrictions in
IRI's bank revolving credit facility and certain lease agreements which limit
the payment of dividends and the purchases or redemption of Common Stock. (See
Note 9 of the Notes to the Consolidated Financial Statements.)
 
                                       11
<PAGE>   13
 
ITEM 6. SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                             YEARS ENDED DECEMBER 31
                                                    ------------------------------------------
                                                     1998     1997     1996     1995     1994
                                                    ------   ------   ------   ------   ------
                                                       (IN MILLIONS, EXCEPT PER SHARE DATA)
<S>                                                 <C>      <C>      <C>      <C>      <C>
HISTORICAL RESULTS OF OPERATIONS(1)(2)(3)
Revenue...........................................  $511.3   $456.3   $405.6   $399.9   $376.6
                                                    ======   ======   ======   ======   ======
Nonrecurring expenses(5)..........................      --       --     (4.8)   (22.8)      --
                                                    ======   ======   ======   ======   ======
Operating profit (loss)...........................     7.0     14.8     (5.1)   (54.9)     5.3
                                                    ======   ======   ======   ======   ======
Net gain (loss) on sale of assets(6)..............      --       --     (4.6)    41.1       --
                                                    ======   ======   ======   ======   ======
Net earnings (loss) before cumulative effect of
  change in accounting principle(7)...............  $  3.8   $  7.7   $ (7.6)  $(11.7)  $ (8.9)
Cumulative effect on prior years of change in
  accounting principle(4).........................      --       --       --       --     (6.6)
                                                    ------   ------   ------   ------   ------
Net earnings (loss)...............................  $  3.8   $  7.7   $ (7.6)  $(11.7)  $(15.5)
                                                    ======   ======   ======   ======   ======
Net earnings (loss) per common share -- basic:
  Before cumulative effect of accounting
     changes......................................  $  .13   $  .27   $ (.27)  $ (.43)  $ (.34)
  Cumulative effect of accounting changes.........      --       --       --       --     (.26)
                                                    ------   ------   ------   ------   ------
  Net earnings (loss).............................  $  .13   $  .27   $ (.27)  $ (.43)  $ (.60)
                                                    ======   ======   ======   ======   ======
Weighted average common shares -- basic...........    28.6     28.5     27.8     27.0     26.1
                                                    ======   ======   ======   ======   ======
Net earnings (loss) per common and common
  equivalent share -- diluted:
  Before cumulative effect of accounting
     changes......................................  $  .13   $  .26   $ (.27)  $ (.43)  $ (.34)
  Cumulative effect of accounting changes(4):.....      --       --       --       --     (.26)
                                                    ------   ------   ------   ------   ------
  Net earnings (loss) -- diluted..................  $  .13   $  .26   $ (.27)  $ (.43)  $ (.60)
                                                    ======   ======   ======   ======   ======
Weighted average common and common equivalent
  shares -- diluted...............................    29.0     29.1     27.8     27.0     26.1
                                                    ======   ======   ======   ======   ======
BALANCE SHEET DATA(1)(2)(3)
Total assets......................................  $369.3   $366.6   $334.5   $338.5   $346.8
                                                    ======   ======   ======   ======   ======
Working capital...................................     5.2     24.9     34.6     44.4     66.9
                                                    ======   ======   ======   ======   ======
Long-term debt....................................     4.6       .6      7.9      3.8     31.5
                                                    ======   ======   ======   ======   ======
Stockholders' equity..............................  $238.5   $241.5   $226.3   $229.8   $227.2
                                                    ======   ======   ======   ======   ======
Book value per common and common equivalent
  share...........................................  $ 8.56   $ 8.41   $ 8.12   $ 8.33   $ 8.58
                                                    ======   ======   ======   ======   ======
Dividends paid per common share...................      --       --       --       --       --
                                                    ======   ======   ======   ======   ======
ADDITIONAL FINANCIAL INFORMATION(1)
Deferred data procurement costs...................  $120.5   $111.8   $ 98.0   $ 96.8   $ 79.2
                                                    ======   ======   ======   ======   ======
Capital expenditures..............................    33.7     34.4     18.8     24.5     24.0
                                                    ======   ======   ======   ======   ======
</TABLE>
 
---------------
 
(1) In February 1998, the Company increased its ownership to 51% in a joint
    venture which offers a retail tracking service to the Netherlands market. In
    addition, effective May 21, 1998, the Company reduced its ownership of
    Information Resources Japan, Ltd. from 60% to 40%. The consolidation of the
    Netherlands joint venture operations, the exercise of its MEMRB option, and
    the deconsolidation of Information Resources Japan, Ltd., did not have a
    material impact on the consolidated financial results or position of the
    Company.
 
                                       12
<PAGE>   14
 
(2) In February 1997, the Company and GfK formed a new company, IRI/GfK Retail,
    of which the Company has a 51% ownership interest. IRI/GfK Retail purchased
    the German retail tracking business of GfK Panel. The consolidation of
    IRI/GfK Retail did not have a material impact on the consolidated financial
    results or position of the Company.
 
(3) In 1995, the Company purchased 39% of its French joint venture, IRI-SECODIP,
    from its joint venture partner increasing IRI's ownership from 50% to 89%.
    As a result of capital contributions made since 1994, the Company now owns
    substantially all of the joint venture interests. IRI-SECODIP has been
    consolidated effective January 1, 1995.
 
(4) Effective January 1, 1994, the Company changed its method of recognizing
    revenue on its information service products whereby revenue is recognized
    over the term of the contract on a straight-line basis. Previously, the
    Company recognized a portion of the initial contract revenue in the period
    between client commitment and either the start of forward data or the test
    commencement, with the remaining revenue recognized ratably over the initial
    contract term.
 
(5) The $4.8 million nonrecurring charge in 1996 principally related to the
    disposal of certain cable TV advertising cut-in equipment originally
    developed for use in the Company's market testing operation. Nonrecurring
    expenses in 1995 included a $12.4 million write-down of assets, principally
    related to European deferred data procurement costs, to net realizable value
    and a $10.4 million charge principally related to a U.S. facility closing.
 
(6) In December 1996, the Company recorded a $4.6 million charge primarily for
    the final settlement of the escrow account related to the sale of a portion
    of the Company's software business to Oracle in 1995. In July 1995, the
    Company sold to Oracle certain assets, liabilities and related software
    application products of its software products business, resulting in a $41.1
    million gain. (See Note 4 of the Notes to Consolidated Financial
    Statements.)
 
(7) The 1994 results reflected a pre-tax provision of $8.3 million related to
    shareholder litigation.
 
                                       13
<PAGE>   15
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
 
RESULTS OF OPERATIONS
 
     Overview: Over the periods presented, the Company has generated increased
revenues in its U.S. business in spite of a period of intensely competitive
pricing that began in 1993, through the offering of new products and services.
While this intense price competition began moderating somewhat in 1996, pricing
changes have a somewhat delayed effect on reported revenues in the Company's
consolidated financial statements. This lagging effect is due to the long-term
nature of many contracts and the fact that only a portion of such contracts come
up for renewal and therefore are subject to competitive bidding in any
particular year. In addition, because of the relatively high fixed cost
component of the Company's database operations, small variations in revenue can
have a significant impact on profitability.
 
     In 1992, the Company began introducing its InfoScan tracking service into
Europe. Due to the inherent fixed cost nature of the business and the alleged
anticompetitive business practices and tactics of its major competitor,
ACNielsen, losses from the International services business have been
significant. In December 1996, ACNielsen signed an Undertaking to the European
Commission agreeing to halt numerous contractual practices which the Company
believes had hampered the Company's participation in European markets. As a
result of the Undertaking, the Company believes that ACNielsen clients can begin
to benefit from the Company's services without risk of financial penalties being
imposed by ACNielsen, and that a significant artificial barrier to the Company's
efforts to provide services to the European markets has been removed. While the
Company's International losses are now declining, cash investment in Europe will
be significant until revenues increase further.
 
     Special Items: In 1996 the Company recorded a $4.8 million nonrecurring
charge principally due to the disposal of certain cable TV advertising cut-in
equipment originally developed for use in the Company's market testing operation
and a $4.6 million net loss on sale of assets attributable to the final
settlement of the sale of assets to Oracle Corporation.
 
     Operations: Consolidated revenues in 1998 increased 12.1% over 1997 while
1997 revenues were 12.5% higher than 1996. Net earnings were $3.8 million in
1998, compared to net earnings of $7.7 million in 1997, and a net loss of ($7.6)
million in 1996.
 
     The Company considers the aggregation of operating profit (loss), equity
earnings (losses) and minority interests, ("Operating Results"), on a geographic
basis to be a meaningful measure of the Company's operating performance. A
comparative analysis of consolidated revenues and Operating Results for the
years ended December 31, 1998, 1997 and 1996 follows (in thousands):
 
<TABLE>
<CAPTION>
                                                         1998       1997       1996
                                                       --------   --------   --------
<S>                                                    <C>        <C>        <C>
Revenues:
  U.S. Services......................................  $396,992   $366,678   $344,612
  International Services.............................   114,331     89,649     60,991
                                                       --------   --------   --------
          Total......................................  $511,323   $456,327   $405,603
                                                       ========   ========   ========
Operating Results:
  U.S. Services......................................  $ 31,515   $ 38,613   $ 31,106
  International Services
     Operating loss..................................   (15,689)   (19,920)   (29,425)
     Minority interests benefit (expense)............       342       (304)       986
     Equity in earnings of affiliated companies......       443        444         30
                                                       --------   --------   --------
          Subtotal -- International Services.........   (14,904)   (19,780)   (28,409)
  Corporate and other expenses.......................    (8,856)    (3,926)    (1,965)
  Nonrecurring expenses..............................        --         --     (4,808)
                                                       --------   --------   --------
          Operating Results..........................  $  7,755   $ 14,907   $ (4,076)
                                                       ========   ========   ========
</TABLE>
 
                                       14
<PAGE>   16
 
     Revenues from the Company's U.S. services business in 1998 were 8.3% higher
than in 1997, while revenues in 1997 increased 6.4% over 1996. These revenue
increases were primarily due to the expanded use of the Company's services and
products, particularly its retailer specific and all store (i.e., Census)
databases. Revenue increases came primarily from existing customers, as the
Company's market share in the U.S. has remained relatively unchanged over the
period. U.S. operating profit decreased 18.4% in 1998 due to an 11.4% increase
in expenses. Results in 1998 were negatively affected by higher costs, including
compensation, benefits, training and recruiting and by increased data collection
efforts related to the Company's expanded household panel and convenience store
operations. U.S. operating profit increased 24.1% in 1997 as margins expanded on
the benefit of lower expense growth resulting from the Company's cost
containment and reengineering initiatives.
 
     Total international service revenues in 1998 increased 27.5% over 1997.
Revenues in 1998 reflect the benefit of the consolidation of IRI's
majority-owned Netherlands operation, IRI/GfK Retail Services, B.V., effective
in 1998. Excluding the Netherlands, European revenues increased 21.8% compared
to 1997. International service revenues in 1997 increased 47.0% over 1996 in
dollar terms despite the dampening effect of a strong U.S. dollar against
European currencies. Revenues in 1997 also reflect the benefit of the
consolidation of IRI's majority-owned German operation, IRI/GfK Retail,
effective in early 1997. Excluding the German results and foreign exchange
effect, European revenues increased 27.0% in 1997 compared to 1996 as the
Company made continued inroads with multi-national customers. Operating Results
for the Company's International businesses were a ($14.9) million loss in 1998,
24.7% below the ($19.8) million loss in 1997. The improved International
Operating Results were principally due to continuing revenue growth of the
Company's major European services, primarily France, the U.K. and Italy. The
International Operating Results were a ($19.8) million loss in 1997 compared to
a ($28.4) million loss in 1996. The reduced international losses are principally
due to continued sharp revenue increases in each of the Company's major European
countries.
 
     Corporate and other expenses increased in 1998 and 1997 over prior years
due to higher legal expenses in the U.S. attributable to the anti-trust
litigation, and increased compensation expense in 1998 primarily related to
severance and recruiting costs.
 
     Year Ended December 31, 1998: Consolidated net earnings were $3.8 million
in 1998 compared to net earnings of $7.7 million in 1997. Results in 1998
reflect a decrease in operating earnings in the Company's U.S. business caused
by increased employee related expenses and data collection costs.
 
     Consolidated revenues increased 12.1% to $511.3 million in 1998. Revenues
in 1998 reflect strong market share growth in Europe specifically in the U.K.,
France and Italy. Revenues in 1998 also benefited somewhat from the inclusion of
the Company's majority-owned operations in the Netherlands, effective February
1, 1998.
 
     Consolidated cost of information services sold increased by $48.4 million,
or 12.0% to $450.2 million in 1998. Major components of the 1998 increase
included: (a) a $26.8 million increase in compensation expense resulting
primarily from salary increases in the U.S. and growing European operations; (b)
a $10.1 million increase in the amortization of deferred data procurement costs,
principally resulting from expansion of information services businesses in
Europe; and (c) a $5.8 million increase in operating expenses due to the 1998
consolidation of the Netherlands operation.
 
     Consolidated selling, general and administrative expenses increased by
$14.4 million or 36.4% to $54.1 million for 1998. This increase was primarily
attributable to recruiting, training and severance costs relating to the
reorganization and transformation of the Company's U.S. sales, marketing and
other operating functions, legal expenses in the U.S., and worldwide increases
in other general expenses, including compensation. Increased legal expenses
related to the Company's anti-trust lawsuit against The Dun and Bradstreet
Corporation, ACNielsen Company and IMS International, Inc. The case is currently
in the discovery and deposition phase, and the Company anticipates that it will
continue to incur a high level of legal expenses as the case continues to
progress toward trial.
 
                                       15
<PAGE>   17
 
     Interest and other expenses were $1.2 million for 1998 compared to $.5
million in 1997. The increase in 1998 is due to increased bank borrowings during
1998 primarily resulting from the Company's purchases of Common Stock. The
Company's 1998 income tax expense was higher than the income tax expense
computed using the U.S. Federal statutory rate due to certain unbenefitted
foreign losses, goodwill amortization and other nondeductible expenses.
 
     Year Ended December 31, 1997: Consolidated net earnings were $7.7 million
in 1997 compared to a net loss of ($7.6) million in 1996. Results in 1996
included a $4.8 million nonrecurring pretax charge principally related to the
disposal of certain cable TV advertising cut-in equipment and a $4.6 million
pretax charge primarily related to the final settlement on the sale of a portion
of the Company's software business to Oracle in 1995.
 
     Consolidated revenues increased 12.5% to $456.3 million in 1997. Revenues
in 1997 reflected strong market share growth in Europe. International revenues
also reflected the benefit of consolidating IRI's majority-owned German
operation, IRI/GfK Retail, effective February 1, 1997. Excluding the German
results and foreign exchange effect, consolidated revenues increased 9.5%
compared to 1996.
 
     Consolidated cost of information services sold increased by $32.9 million,
or 8.9% to $401.9 million in 1997. Major components of the 1997 increase
included: (a) a $15.9 million increase in operating expenses due to the 1997
consolidation of the German operation; (b) a $10.3 million increase in the
amortization of deferred data procurement costs, principally resulting from the
expansion of the information services business in Europe; and (c) a $9.1 million
increase in compensation expense resulting primarily from the growing European
operations and salary increases in the U.S.
 
     Consolidated selling, general and administrative expenses increased by $2.7
million or 7.4% to $39.7 million in 1997. These increases were primarily
attributable to higher compensation expenses worldwide and legal expenses in the
U.S. Increased legal expenses related directly to the Company's antitrust
lawsuit against The Dun & Bradstreet Corporation, ACNielsen Company and IMS
International, Inc. In that suit, the Company is seeking $1 billion in trebled
damages from the defendants for violations of U.S. antitrust laws. The case is
currently in the discovery phase, and the Company anticipates incurring
continued high legal expenses as the case progresses toward trial.
 
     Interest and other expenses were $.5 million for 1997 compared to $1.2
million in 1996. The decrease in 1997 is due to decreased bank borrowings in
1997 resulting from positive cash flow from operations. The Company's 1997
income tax expense was higher than the income tax expense computed using the
U.S. Federal statutory rate due to certain unbenefitted foreign losses, goodwill
amortization and other nondeductible expenses.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company's current cash resources include its $11.1 million consolidated
cash balance and $57.0 million available under the Company's bank revolving
credit facility. The Company anticipates that it will have sufficient funds from
these sources and internally generated funds from its U.S. operations to satisfy
its cash needs for the foreseeable future. The Company's bank credit agreement
contains covenants which restrict the Company's ability to incur additional
indebtedness.
 
     Cash Flow for the Year Ended December 31, 1998: Consolidated net cash
provided by operating activities was $159.8 million for the year ended December
31, 1998 compared to $151.4 million in 1997. While earnings were lower in 1998,
operating cash flow in 1998 contained greater amortization and depreciation
elements than in 1997. Consolidated cash used in net investing activities was
($161.1) million in 1998 compared to ($147.6) million in 1997. Investing
activity in 1998 reflects higher expenditures for data procurement and software
development. Net cash provided (used) before financing activities was ($1.2)
million in 1998 and $3.8 million in 1997 primarily due to higher investing
activities in 1998. Consolidated cash provided (used) by net financing
activities was ($8.7) million in 1998 compared to $6.4 million in 1997. The
Company borrowed $3.0 million under its revolving line of credit during 1998 and
during 1998 purchased $20.2 million of the Company's stock under its stock
purchase plan.
 
                                       16
<PAGE>   18
 
     Cash Flow for the Year Ended December 31, 1997: Consolidated net cash
provided by operating activities was $151.4 million for the year ended December
31, 1997 compared to $102.1 million for the year ended December 31, 1996. Cash
provided by operating activities increased primarily due to improved operating
performance both in Europe and in the U.S. and significantly lower working
capital investment in the U.S. in 1997. Consolidated cash used in net investing
activities was ($147.6) million in 1997 compared to ($121.2) million in 1996.
Investing activity for 1997 reflected higher purchases of equipment and deferred
data procurement costs offset by lower investment in capitalized software
compared to 1996. Net cash provided (used) before financing activities was $3.8
million in 1997 and ($19.1) million for 1996. Consolidated cash provided by
financing activities was $6.4 million in 1997 compared to $7.1 million in 1996
when the bank line was used to fund international operating needs. Proceeds from
exercises of stock options were approximately $17.2 million in 1997 and $1.7
million in 1996. In the fourth quarter of 1997, the Company purchased shares of
Common Stock at an aggregate purchase price of $3.0 million.
 
     Financings: On February 10, 1999, the Company amended its $75 million bank
revolving credit facility to (1) reduce the maximum commitments to $60 million,
(2) extend the termination date to 2002, and (3) amend certain financial
covenants and other terms and conditions of the agreement. The amended facility
has floating rate options at or below prime and commitment fees of up to .25%
payable on the unused portion. The weighted average interest rate at December
31, 1998 was 6.25%. In October 1997, the Company replaced its $50 million bank
revolving credit facility maturing in 1998 with a $75 million facility maturing
in 2001.
 
     The financial covenants in the bank credit agreement, as well as in the
lease agreement for the Company's Chicago headquarters, require the Company to
maintain a minimum tangible net worth and to meet certain cash flow coverage and
leverage ratios. The agreements also limit the Company's ability to declare
dividends or make distributions to holders of capital stock, or redeem or
otherwise acquire shares of the Company. Approximately $23.0 million is
currently available for such distributions under the most restrictive of these
covenants. The bank credit agreement contains covenants which restrict the
Company's ability to incur additional indebtedness.
 
     Common Stock Purchase Plan: In November 1997 the Company's Board of
Directors approved a plan to purchase up to two million shares of the Company's
Common Stock from time to time in the open market. Purchases under the plan are
subject to a number of considerations including the market price of the
Company's Common Stock and general market conditions. As of December 31, 1998,
the Company had purchased and retired 1,861,800 shares under the plan at an
average cost of $12.46 per share of which 1,442,600 shares were purchased during
1998 at an average cost of $11.96 per share.
 
     Other Deferred Costs: Consolidated deferred data procurement expenditures
were $120.5 million, $111.8 million and $98.0 million for the years ended
December 31, 1998, 1997 and 1996, respectively. These expenditures are amortized
over a period of 28 months and include payments to retailers for point-of-sale
data and costs related to collecting, reviewing and verifying other data (i.e.,
causal factors) which are an essential part of the Company's database. The
increase in deferred data procurement expenditures was related to the expansion
of the Company's International services business and increased convenience store
collection costs and expenses related to the expansion of its multi-outlet
household panel in the U.S., in 1998 and 1997. Deferred data procurement
expenditures for the Company's U.S. services business were $76.9 million, $71.7
million and $65.6 million for the years ended December 31, 1998, 1997 and 1996,
respectively. The Company's International services business deferred data
procurement expenditures were $43.6 million, $40.1 million and $32.4 million for
the years ended December 31, 1998, 1997 and 1996, respectively.
 
     NOL Carryforwards: As of December 31, 1998, the Company had cumulative U.S.
Federal net operating loss ("NOL") carryforwards of approximately $67.9 million
that expire primarily in 2009 and 2011. Certain of these carryforwards have not
been examined by the Internal Revenue Service and, therefore, are subject to
adjustment. At December 31, 1998 the Company also had general business tax
credit carryforwards of approximately $9.6 million which expire primarily
between 1999 and 2012, and are available to reduce future Federal income tax
liabilities. In addition, at December 31, 1998, various foreign subsidiaries of
IRI had aggregate cumulative NOL carryforwards for foreign income tax purposes
of approximately $10.9 million which are subject to various income tax
provisions of each respective country. Approximately $3.6 million of
 
                                       17
<PAGE>   19
 
these foreign NOLs may be carried forward indefinitely, while the remaining $7.3
million expire in 2000 through 2003.
 
     Impact of Inflation: Inflation has slowed in recent years and is currently
not an important determinant of the Company's results of operations. To the
extent permitted by competitive conditions, the Company passes increased costs
on to customers by adjusting sales prices and, in the case of multi-year
contracts, through consumer price index provisions of such agreements.
 
YEAR 2000 ISSUES
 
     Background: Many systems (including computers, software and other
equipment) include programming code in which calendar year data is abbreviated
to only two digits. As a result of this design decision, some of these systems
could fail to operate or to produce correct results if "00" is interpreted to
mean "1900". For the Company, such failures would cause disruptions of
operations including, among other things, a temporary inability to obtain data
from retailers, process transactions, communicate information to tracking
service clients, send invoices or engage in normal business activities.
 
     In 1996 and 1997, various internal review teams within the Company began
addressing the Year 2000 issue in their respective areas. In early 1998, a
steering committee was established to represent all operating, administrative
and finance areas of the Company to direct the process of identifying, assessing
and resolving significant Year 2000 issues in a timely manner. The process
includes development of remediation plans, where necessary, as they relate to
internally used software, commercial software applications licensed to clients,
computer hardware and the use of computer applications in the Company's data
warehouse operations. In addition, the Company is engaged in assessing the Year
2000 issue with third parties including significant suppliers, such as data
vendors and tracking service clients. Executive management including the
Company's chairman of the Board of Directors is represented on the steering
committee and monitors the status of the Company's Year 2000 plans. In addition,
management reports the status of the Year 2000 project to the Board of
Directors.
 
     The operations of office and facilities equipment, such as fax machines,
photocopiers, telephone switches, security systems, elevators and other common
devices may also be affected by the Year 2000. The Company's current assessment
of the potential effect of the Year 2000 issues on its office and facilities
equipment is considered to be minimal, in terms of risk and incremental cost of
remediation.
 
     Risks: The Company has identified potential Year 2000 risks in the
following four categories:
(1) reliance upon third party retailers in the U.S. and Europe for data for use
     in its InfoScan tracking services;
(2) processing of data by the various computer applications in its Wood Dale,
     Illinois facilities;
(3) commercial software products and applications produced and/or marketed by
     the Company; and
(4) Company data interfaces with client developed applications which may not be
     Year 2000 compliant.
 
     Third Party Retailers: The Company has identified and has initially
contacted, using surveys, all of its critical retailers in the U.S. and Europe
to determine the extent to which the Company's interface systems are vulnerable
to those third parties' failure to remedy their own Year 2000 issues. It is
expected that full certification of Year 2000 compliance for all key suppliers
of tracking data to the Company will be completed during the fourth quarter of
1999. To the extent that retailer responses to Year 2000 readiness are
unsatisfactory, the Company intends to follow up to assess whether all critical
retailers are Year 2000 compliant. In addition, the Company is currently
investigating alternative sources or methodologies to provide the Company with
reasonable assurance of source retailer data should a U.S. or European key
retailer encounter unforeseen difficulties during early 2000.
 
     Wood Dale Computer Applications: The Company has commenced a review of its
information and operational systems used to process data in its InfoScan
tracking services in order to identify those systems that are not Year 2000
compliant. The Company has determined that its InfoScan tracking service is
largely Year 2000 compliant due to the Company's main feature of programming
design which accounts for data by "weeks" as opposed to calendar dates. However,
the Company has identified certain systems which might be
 
                                       18
<PAGE>   20
 
negatively impacted by Year 2000. Accordingly, it is building a Year 2000 test
database and a test environment to assess compliance on programs affecting major
services to clients. The test environment will also provide an ongoing benefit
to the Company for future programs developed by the Company. The Company
estimates that completion of the test database and test environment will occur
by mid-1999 and that remediation will be completed by the third quarter of 1999.
 
     Commercial Software Products and Applications: During 1997, the Company
began an internal review of each of its software products which it intends to
maintain through the Year 2000. Based upon this assessment, the Company
concluded that its standard policy of regular software maintenance, upgrades and
lifecycle evaluation will provide adequate assurance that the Company's current
portfolio of software products will be Year 2000 compliant by mid-year 1999. In
1998, the Company began the process of identifying and contacting clients and
former clients in both the U.S. and Europe for whom the Company previously
developed custom applications. These investigations will determine the extent to
which custom applications developed by the Company require Year 2000 remediation
and whether the Company will provide software consulting services in order to
assist these clients and former clients in such remediation. The Company
believes it has completed the identification of all material custom application
issues and has no significant obligation for remediation.
 
     Data Interfaces with Client Applications: As part of its ongoing services,
the Company has begun making inquiries of major clients to identify and resolve
potential Year 2000 issues resulting from IRI interfaces with client
applications, including any custom applications developed by clients. However,
management believes that it may not be possible for it to determine with
complete certainty that Year 2000 issues affecting client applications can be
identified or corrected due to the complexity of these applications and the fact
that these systems interact and operate with computer systems which are not
under the Company's control. Consequently, the Company is unable to estimate a
timetable for completion of this assessment including remediation and any
related costs, as the decision to allow the Company to conduct such
investigations on a timely basis resides with each client.
 
     Costs: The Company uses both internal and external resources in the
assessment and remediation of Year 2000 issues and believes these resources will
provide adequate support for such resolution. While the costs of external
resources are quantifiable, the costs of internal resources who deal with data
vendors and tracking service and software clients on a daily basis on a variety
of subjects, including Year 2000 issues, are difficult for the Company to
estimate. Accordingly, costs included in the Company's disclosures are subject
to uncertainty with respect to internal personnel. The Company currently
estimates that the combined 1998 and 1999 internal and external Year 2000
project costs will range from $10 million to $12 million and will be funded
through operating cash flow. To date, the Company estimates that approximately
$2 million has been spent and expensed, and of the remaining estimated costs, up
to approximately $4 million may be capitalized for new systems and equipment.
 
     Most Likely Consequences of Year 2000 Problems: The Company expects to
identify and resolve all Year 2000 issues that could materially adversely affect
its business operations. However, management believes that it may not be
possible for it to determine with complete certainty that all Year 2000 issues
affecting the Company will be identified or corrected on a timely basis. The
number of devices that could be affected and the interactions among these
devices are innumerable. In addition, accurate predictions of the extent of Year
2000 problem-related failures or the severity, duration, or financial
consequences of these failures, cannot be made. As a result, management expects
that the Company could likely suffer the following consequences:
 
          1. A significant number of operational inconveniences and
     inefficiencies for the Company, its retailers and its clients may divert
     management's time and attention and financial and human resources from
     their ordinary business activities; and
 
          2. A lesser number of serious system failures may require significant
     efforts by the Company, its retailers or its clients to prevent or
     alleviate material business disruptions.
 
     Contingency Plans: The Company is currently developing contingency plans to
be implemented as part of its efforts to identify and correct Year 2000 issues
affecting its internal systems. The Company expects to
 
                                       19
<PAGE>   21
 
complete its contingency plans by mid-1999. Depending on the systems affected,
these plans could include accelerated replacement of affected equipment or
software, short to medium-term use of backup equipment and software, or use of
contract personnel to correct on an accelerated schedule any year 2000 issues
that arise or to provide manual workarounds for information systems, and similar
approaches. If the Company actually is required to implement any of these
contingency plans, it could have a material effect on the Company's financial
condition and results of operations. However, based on the activities described
above, the Company does not believe that the Year 2000 issues will have a
material adverse effect on the Company's business or results of operations.
 
     Disclaimer: The discussion of the Company's efforts, and management's
expectations, relating to Year 2000 compliance are forward-looking statements.
The Company's ability to achieve Year 2000 compliance and the level of
incremental costs associated therewith, could be adversely impacted by, among
other things, the availability and cost of programming and testing resources,
retailers' and vendors' ability to modify proprietary software, and
unanticipated problems identified in the ongoing compliance review.
 
EUROPEAN CURRENCY CONVERSION ISSUES
 
     In accordance with the 1992 treaty of the European Union, on January 1,
1999, a new single European currency, the "euro", became legal tender, which
will replace the sovereign currencies ("legacy currencies") of the eleven
initial members of the European Union ("participating countries"). On this date,
fixed conversion rates between the euro and the legacy currencies in those
particular countries were established. During the transition period, which ends
on January 1, 2002, the entities within participating countries have the option
of accounting for their transactions in either euros or their legacy currencies.
Euros are currently available for non-cash transactions only; euro bills and
coins will be available for cash transactions at the conclusion of the
transition period. No later than July 1, 2002, the participating countries will
withdraw their legacy currencies from circulation and they will cease to be
legal tender. Participating countries have ceded certain aspects of their
monetary policy authority, including money supply and official interest rates
for the euro, to the European Central Bank.
 
     As the Company has operations in several of the participating countries, it
will be affected by issues surrounding the introduction of and transition to the
euro. The Company's European Executive Committee ("the Committee") is charged
with formulating and executing all aspects of the Company's response concerning
the conversion to the euro.
 
     The Committee is currently investigating the impact of the euro on all
computer systems that affect the Company. Specific systems concerns include the
ability to provide its clients InfoScan services in euros and to pay bills, to
receive payments, to invoice and to provide pricing in euros. The Company
expects all systems issues to be resolved by the conclusion of the transition
period and accordingly, anticipates no significant interruptions in its business
operations.
 
     During the transition period, the Company's clients have the right to
settle transactions in both the euro and legacy currencies. The Company may also
be affected by other economic, legal, political, and social factors relating to
the transition to the euro. The Company may also be impacted by: the ability of
the banking systems to function smoothly during and after the transition period;
the monetary policy as set by the European Central Bank; the interpretation of
the Company's contracts and tax laws, regulations and treaties within the
European Union, United States and the World Trade Organization; and by
additional macroeconomic and other factors beyond the Company's control.
 
FORWARD LOOKING INFORMATION
 
     Certain matters discussed above are forward-looking statements that are
subject to risks and uncertainties that could cause actual results to differ
materially from those anticipated, including customer renewals of service
contracts, the timing of significant new customer engagements, the success of
transforming its domestic operations, competitive conditions, changes in client
spending for the non-contractual services the Company offers, the release of
chain-specific data by European retailers, foreign currency exchange rates, Year
2000 and European currency conversion issues and other factors beyond the
Company's control. These
                                       20
<PAGE>   22
 
risks and uncertainties are described in reports and other documents filed by
the Company with the Securities and Exchange Commission.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
     Not applicable.
 
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
     Listed below are the financial statements and supplementary data included
in this part of the Annual Report on Form 10-K:
 
<TABLE>
<CAPTION>
                                                                    PAGE
                                                                    NO.
                                                                    ----
<S>  <C>                                                            <C>
(a)  Financial Statements
     Report of Independent Auditors..............................    22
     Consolidated Balance Sheets at December 31, 1998 and 1997...    23
     Consolidated Statements of Operations for the years ended
     December 31, 1998, 1997 and 1996............................    24
     Statement of Changes in Stockholders' Equity and
     Comprehensive Income for the years ended December 31, 1998,
     1997 and 1996...............................................    25
     Consolidated Statements of Cash Flows for the years ended
     December 31, 1998, 1997 and 1996............................    26
     Notes to Consolidated Financial Statements..................    27
(b)  Supplementary Data
     Summary of Quarterly Data...................................    40
</TABLE>
 
     Financial statement schedule is included on page 43 preceding the signature
pages of this report (see Item 14).
 
                                       21
<PAGE>   23
 
                         REPORT OF INDEPENDENT AUDITORS
 
Board of Directors and Stockholders
Information Resources, Inc. and Subsidiaries
 
     We have audited the accompanying consolidated balance sheets of Information
Resources, Inc. and Subsidiaries as of December 31, 1998 and 1997 and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1998. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
 
     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Information
Resources, Inc. and Subsidiaries at December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles. Also, in our opinion, the related financial
statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
 
                                            ERNST & YOUNG LLP
 
Chicago, Illinois
February 11, 1999
 
                                       22
<PAGE>   24
 
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
                          CONSOLIDATED BALANCE SHEETS
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              -----------------------
                                                                1998          1997
                                                              --------      ---------
                                                                  (IN THOUSANDS)
<S>                                                           <C>           <C>
CURRENT ASSETS
  Cash and cash equivalents.................................  $ 11,149      $  20,925
  Accounts receivable, net..................................    87,637         96,209
  Prepaid expenses and other................................     9,223          9,563
                                                              --------      ---------
          Total Current Assets..............................   108,009        126,697
                                                              --------      ---------
  Property and equipment, at cost...........................   177,443        180,043
  Accumulated depreciation..................................   (97,940)      (111,628)
                                                              --------      ---------
          Net Property and Equipment........................    79,503         68,415
  Investments...............................................     9,792         13,061
  Other assets..............................................   171,989        158,447
                                                              --------      ---------
                                                              $369,293      $ 366,620
                                                              ========      =========
 
                        LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES
  Current maturities of capitalized leases..................  $    521      $   2,266
  Accounts payable..........................................    43,640         49,306
  Accrued compensation and benefits.........................    20,925         20,357
  Accrued property, payroll and other taxes.................     4,486          3,068
  Accrued expenses..........................................    11,287          6,324
  Deferred revenue..........................................    21,940         20,469
                                                              --------      ---------
          Total Current Liabilities.........................   102,799        101,790
                                                              --------      ---------
  Long-term debt............................................     4,575            640
  Deferred income taxes, net................................    14,017         13,660
  Other liabilities.........................................     9,450          8,988
STOCKHOLDERS' EQUITY
  Preferred stock -- authorized 1,000,000 shares, $.01 par
     value; none issued.....................................        --             --
  Common stock -- authorized 60,000,000 shares, $.01 par
     value; 27,867,884 and 28,713,943 shares issued and
     outstanding, respectively..............................       279            287
  Capital in excess of par value............................   190,701        198,537
  Retained earnings.........................................    49,778         45,932
  Accumulated other comprehensive income (loss).............    (2,306)        (3,214)
                                                              --------      ---------
          Total Stockholders' Equity........................   238,452        241,542
                                                              --------      ---------
                                                              $369,293      $ 366,620
                                                              ========      =========
</TABLE>
 
        The accompanying notes to consolidated financial statements are
                     an integral part of these statements.
 
                                       23
<PAGE>   25
 
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
 
<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                          --------------------------------------
                                                             1998          1997          1996
                                                          ----------    ----------    ----------
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                       <C>           <C>           <C>
Information services revenues...........................  $ 511,323     $ 456,327     $ 405,603
Costs and expenses:
  Information services sold.............................   (450,236)     (401,876)     (368,951)
  Selling, general and administrative expenses..........    (54,117)      (39,684)      (36,936)
  Nonrecurring expenses.................................         --            --        (4,808)
                                                          ---------     ---------     ---------
                                                           (504,353)     (441,560)     (410,695)
                                                          ---------     ---------     ---------
Operating profit (loss).................................      6,970        14,767        (5,092)
Net loss on sale of assets..............................         --            --        (4,600)
Interest expense and other, net.........................     (1,174)         (545)       (1,182)
Equity in earnings of affiliated companies..............        443           444            30
Minority interests benefit (expense)....................        342          (304)          986
                                                          ---------     ---------     ---------
Earnings (loss) before income taxes.....................      6,581        14,362        (9,858)
Income tax (expense) benefit............................     (2,735)       (6,700)        2,300
                                                          ---------     ---------     ---------
Net earnings (loss).....................................  $   3,846     $   7,662     $  (7,558)
                                                          =========     =========     =========
Net earnings (loss) per common share -- basic...........  $     .13     $     .27     $    (.27)
                                                          =========     =========     =========
Net earnings (loss) per common and common equivalent
  share -- diluted......................................  $     .13     $     .26     $    (.27)
                                                          =========     =========     =========
Weighted average common shares -- basic.................     28,578        28,476        27,755
                                                          =========     =========     =========
Weighted average common and common equivalent shares --
  diluted...............................................     28,986        29,069        27,755
                                                          =========     =========     =========
</TABLE>
 
        The accompanying notes to consolidated financial statements are
                     an integral part of these statements.
 
                                       24
<PAGE>   26
 
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
     STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                            YEARS ENDED DECEMBER 31,
 
<TABLE>
<CAPTION>
                                                                            ACCUMULATED
                                                                               OTHER           TOTAL
                                            COMMON   PAID-IN    RETAINED   COMPREHENSIVE   STOCKHOLDERS'
                                            STOCK    CAPITAL    EARNINGS      INCOME          EQUITY
                                            ------   --------   --------   -------------   -------------
                                                                   (IN THOUSANDS)
<S>                                         <C>      <C>        <C>        <C>             <C>
Balance at December 31, 1995..............   $276    $183,615   $45,828       $    35        $229,754
                                             ----    --------   -------       -------        --------
Comprehensive income (loss):
  Net loss................................     --          --    (7,558)           --          (7,558)
  Other comprehensive income (loss),
     foreign currency translation
     adjustment...........................     --          --        --           531             531
                                                                                             --------
  Comprehensive income (loss).............                                                     (7,027)
Shares issued from employee stock option
  plan exercises and other................      3       3,598        --            --           3,601
                                             ----    --------   -------       -------        --------
Balance at December 31, 1996..............    279     187,213    38,270           566         226,328
                                             ----    --------   -------       -------        --------
Comprehensive income:
  Net earnings............................     --          --     7,662            --           7,662
  Other comprehensive income, foreign
     currency translation adjustment......     --          --        --        (3,780)         (3,780)
                                                                                             --------
  Comprehensive income....................                                                      3,882
Shares issued from employee stock option
  plan exercises and other................     12      17,269        --            --          17,281
Shares purchased and retired..............     (4)     (5,945)       --            --          (5,949)
                                             ----    --------   -------       -------        --------
Balance at December 31, 1997..............    287     198,537    45,932        (3,214)        241,542
                                             ----    --------   -------       -------        --------
Comprehensive income:
  Net earnings............................     --          --     3,846            --           3,846
  Other comprehensive income, foreign
     currency translation adjustment......     --          --        --           908             908
                                                                                             --------
  Comprehensive income....................                                                      4,754
Shares issued from employee stock option
  plan exercises and other................      6       9,398        --            --           9,404
Shares purchased and retired..............    (14)    (17,234)       --            --         (17,248)
                                             ----    --------   -------       -------        --------
Balance at December 31, 1998..............   $279    $190,701   $49,778       $(2,306)       $238,452
                                             ====    ========   =======       =======        ========
</TABLE>
 
        The accompanying notes to consolidated financial statements are
                     an integral part of these statements.
 
                                       25
<PAGE>   27
 
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
 
<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                            ---------------------------------
                                                              1998        1997        1996
                                                            ---------   ---------   ---------
                                                                     (IN THOUSANDS)
<S>                                                         <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss).......................................  $   3,846   $   7,662   $  (7,558)
Adjustments to reconcile net earnings (loss) to net cash
  provided by operating activities:
  Amortization of deferred data procurement costs.........    112,111     101,625      87,944
  Depreciation............................................     23,238      20,421      20,204
  Amortization of capitalized software costs and
     intangibles..........................................      6,894       6,689       7,140
  Deferred income tax expense (benefit)...................      2,606       6,329      (2,938)
  Equity in earnings of affiliated companies and minority
     interests............................................       (785)       (140)     (1,016)
  Nonrecurring expenses and loss on disposition of
     assets...............................................         --          --       9,408
  Other...................................................     (2,864)     (3,529)     (3,002)
  Change in assets and liabilities:
     Decrease (increase) in accounts receivable, net......      9,615       6,514      (5,444)
     Increase (decrease) in other current assets..........        560      (2,379)     (1,334)
     Increase (decrease) in accounts payable and accrued
       liabilities........................................      3,147       8,168      (3,314)
     Increase (decrease) in deferred revenue..............      1,471        (672)        (84)
     Other, net...........................................          3         679       2,077
                                                            ---------   ---------   ---------
          Total adjustments...............................    155,996     143,705     109,641
                                                            ---------   ---------   ---------
          Net cash provided by operating activities.......    159,842     151,367     102,083
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from disposition of assets.......................         --       1,500       2,900
Deferred data procurement costs...........................   (120,493)   (111,814)    (98,005)
Purchase of property, equipment and software..............    (33,731)    (34,444)    (18,772)
Capitalized software costs................................     (7,167)     (3,682)     (5,784)
Investments and net assets acquired in business
  acquisitions and other, net.............................        319         889      (1,550)
                                                            ---------   ---------   ---------
          Net cash used by investing activities...........   (161,072)   (147,551)   (121,211)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net bank borrowings (repayments)..........................      3,000      (5,500)      5,500
Net borrowings (repayments) of capitalized leases.........       (810)     (2,291)       (880)
Purchases of Common Stock.................................    (20,185)     (3,012)         --
Proceeds from exercise of stock options and other.........      9,256      17,154       2,445
                                                            ---------   ---------   ---------
          Net cash provided (used) by financing
            activities....................................     (8,739)      6,351       7,065
EFFECT OF EXCHANGE RATE CHANGES ON CASH...................        193      (1,437)       (626)
                                                            ---------   ---------   ---------
          Net increase (decrease) in cash and cash
            equivalents...................................     (9,776)      8,730     (12,689)
Cash and cash equivalents at beginning of year............     20,925      12,195      24,884
                                                            ---------   ---------   ---------
Cash and cash equivalents at end of year..................  $  11,149   $  20,925   $  12,195
                                                            =========   =========   =========
</TABLE>
 
        The accompanying notes to consolidated financial statements are
                     an integral part of these statements.
 
                                       26
<PAGE>   28
 
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 1998, 1997 AND 1996
 
1. SUMMARY OF ACCOUNTING POLICIES
 
BUSINESS
 
     Information Resources, Inc. ("IRI") and its subsidiaries (collectively the
"Company") is a leading provider of universal product code ("UPC"),
scanner-based business solutions services to the consumer packaged goods ("CPG")
industry, offering services in the U.S., Europe and other international markets.
The Company supplies CPG manufacturers, retailers and brokers with information
and analysis critical to their sales, marketing and supply chain operations. IRI
provides services designed to deliver value through an enhanced understanding of
the consumer to a majority of the Fortune 500 companies in the CPG industry.
 
PRINCIPLES OF CONSOLIDATION
 
     The consolidated financial statements include the accounts of Information
Resources, Inc. and all wholly or majority owned subsidiaries and affiliates.
Minority interests reflect the non-Company owned stockholder interests in IRI
InfoScan Limited (U.K.), IRI/GfK Retail Services GmbH (Germany) ("IRI/GfK
Retail"), effective February 1997, IRI/GfK Retail Services B.V. (the
Netherlands), effective February 1998 and Information Resources Espana, S.L.,
effective November 1998. The equity method of accounting is used for investments
in which the Company has a 20% to 50% ownership interest and exercises
significant influence over operating and financial policies. All significant
intercompany accounts and transactions have been eliminated in consolidation.
 
ACCOUNTING ESTIMATES
 
     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results may differ from estimates.
 
RECLASSIFICATIONS
 
     Certain reclassifications have been made in the prior years' consolidated
financial statements to conform to the 1998 presentation.
 
REVENUE RECOGNITION
 
     Revenues on contracts for retail tracking services, which generally have
terms of not less than one year, are recognized over the terms of the contracts.
Such contracts are generally categorized into one of two classes: 1) cancelable
at the end of each year by the giving of six months written notice by either
party; or 2) multi-year contracts either non-cancelable or cancelable only with
significant penalties, generally by the giving of six months written notice
after the initial multi-year term. Revenues for special analytical services,
market research and consulting projects are recognized as services are
performed. Certain of these projects are fixed-price in nature and use the
percentage-of-completion method for the recognition of revenue.
 
     Revenues from the sale of software application products, or products sold
under licensing agreements, are recognized upon delivery when there is a
reasonable basis for estimating collectibility and the Company has no
significant remaining obligations. Related software maintenance fees are
recognized as earned over the terms of their respective contracts.
 
                                       27
<PAGE>   29
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
RESEARCH AND DEVELOPMENT
 
     Expenditures for research and development for the years ended December 31,
1998, 1997 and 1996 approximated $33.0 million, $25.0 million and $24.9 million,
respectively. Included in these expenditures were $7.1 million, $3.7 million and
$5.8 million of commercial software development costs that were capitalized for
the years ended December 31, 1998, 1997 and 1996, respectively. Expenditures not
capitalized are charged to expense as incurred.
 
BENEFITS PLAN
 
     The Company sponsors an employee savings plan that qualifies as a deferred
salary arrangement under Section 401(k) of the Internal Revenue Code. The plan
allows eligible employees to contribute a portion of their pre-tax income in
accordance with specified guidelines. The Company matches a percentage of
employee contributions up to certain limits. The expense recognized for the
401(k) plan totaled approximately $2.9 million, $2.4 million and $2.0 million in
1998, 1997 and 1996, respectively.
 
CASH AND CASH EQUIVALENTS
 
     For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, commercial paper and funds held in money market accounts with a
maturity of three months or less.
 
FAIR VALUE OF FINANCIAL INSTRUMENTS AND CREDIT RISK
 
     The carrying value of the Company's financial instruments, cash and cash
equivalents, investments and debt obligations represent a reasonable estimate of
their fair value. As of December 31, 1998 and 1997, the Company had no
significant concentrations of credit risk related to cash equivalents and
accounts receivable.
 
PROPERTY AND EQUIPMENT
 
     Property and equipment is recorded at cost and is depreciated over the
estimated service lives. For financial statement purposes, depreciation is
provided by the straight-line method. The Company also capitalizes the cost of
internal-use computer software as incurred and amortizes such costs over the
related project estimated useful lives of three to seven years. Leasehold
improvements are amortized over the shorter of their estimated service lives or
the terms of their respective lease agreements. Estimated useful lives are as
follows:
 
<TABLE>
<S>                                                           <C>
Computer equipment and software.............................   3 to 7 years
Market testing and other operating equipment................   3 to 7 years
Leasehold improvements......................................  5 to 20 years
Equipment and furniture.....................................   3 to 8 years
</TABLE>
 
OTHER ASSETS
 
     Other assets include deferred data procurement costs, intangible assets and
capitalized software costs held for sale. Data procurement costs are amortized
over a period of 28 months and include payments and services to retailers for
point-of-sale data and causal costs related to collecting, reviewing and
verifying other data (i.e., causal factors) which are an essential part of the
database. Intangible assets include goodwill, solicitation rights and
non-compete agreements, all of which arose from acquisitions, investments or
strategic alliances. Goodwill is amortized on a straight-line basis over periods
from ten to twenty years. Solicitation rights are amortized on a straight-line
basis over the expected useful lives of six to ten years. Non-compete agreements
are being amortized over periods from five to seven years. Capitalized costs of
computer software
 
                                       28
<PAGE>   30
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
held for sale are amortized on a straight-line basis beginning upon the
software's general release date over a period not to exceed three years.
 
     On an ongoing basis, management reviews the valuation and amortization of
these assets to determine possible impairment by comparing the carrying value to
the undiscounted future cash flows of the related assets. Based upon currently
projected cash flows, the Company's assessment is that the realizability of
these assets is not impaired.
 
INCOME TAXES
 
     Deferred income taxes are recognized at statutory rates to reflect the
future effects of tax carryforwards and temporary differences arising between
the tax bases of assets and liabilities and their financial reporting amounts at
each year end. Deferred income taxes arise in business combinations accounted
for as purchases as a result of differences between the fair value of assets
acquired and their tax bases.
 
EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE AND STOCK-BASED
COMPENSATION
 
     The Company adopted the Statement of Financial Accounting Standards No.
128, "Earnings per Share" effective January 1, 1997. Net earnings (loss) per
share is based upon the weighted average number of shares of common stock
outstanding during each year. Net earnings (loss) per common and common
equivalent share -- diluted is based upon the weighted average number of shares
of common stock and common stock equivalents, entirely comprised of stock
options, outstanding during each year. For the years ended December 31, 1998 and
1997, stock options with an exercise price greater than $17.41 and $16.50 per
share, aggregating 540,176 and 750,262, respectively, were excluded from the
weighted average shares outstanding calculation because they were antidilutive.
 
     The Company accounts for stock option grants in accordance with provisions
of APB Opinion No. 25, "Accounting for Stock Issued to Employees."
 
ADOPTION OF RECENT STATEMENT OF FINANCIAL ACCOUNTING STANDARDS
 
     Adoption of Recent Statement of Financial Accounting Standards: The Company
adopted Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income", and Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information", in its
December 31, 1998 consolidated financial statements.
 
2. SUPPLEMENTAL CASH FLOW INFORMATION
 
     Interest expense paid and income taxes paid (refunded) during the years
ended December 31, was as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                              1998     1997     1996
                                                             ------   ------   ------
<S>                                                          <C>      <C>      <C>
Interest...................................................  $1,257   $1,346   $2,103
Income taxes...............................................   1,548      262     (735)
</TABLE>
 
     Excluded from the consolidated statements of cash flows was the effect of
several non-cash investing and financing activities. In 1998, 1997 and 1996,
receivables of $1.6 million, $.5 million and $.7 million, respectively, were
reclassified to investment in joint ventures.
 
3. ACQUISITIONS AND JOINT VENTURES
 
     IRI began a start-up venture in Spain during April 1998. In November 1998,
the Company executed a joint venture agreement with Media Planning, S.A. to
create a new retail tracking business to serve the
 
                                       29
<PAGE>   31
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
Spanish market under the name Information Resources Espana, S.L. ("IRI-Spain").
On January 18, 1999, IRI-Spain and Dympanel, S.A. signed a cooperation agreement
which added Dympanel, S.A. as a third investor in IRI-Spain. The aforementioned
agreements resulted in the Company, Media Planning, S.A., and Dympanel, S.A.
owning 60%, 30% and 10%, respectively, of the capital shares of IRI-Spain.
 
     Under the terms of a 1995 agreement, the Company had a strategic alliance
with Middle East Market Research Bureau ("MEMRB"), a market research company
based in Cyprus. In October 1998 IRI exercised its option to acquire a 19.9%
ownership interest in MEMRB and holds an option to increase its ownership
interest of MEMRB to 49%.
 
     The Company and GfK AG of Germany ("GfK") operate a joint venture which
offers a scanner-based product tracking service to the Netherlands market
operating under the InfoScan name. Until early 1998, this joint venture was
owned 80.1% by GfK and 19.9% by the Company. In February 1998, the Company
increased its ownership to 51% and assumed overall management responsibilities.
 
     In 1998, the Company sold a 9.9% interest in GfK Panel Services Benelux
B.V. and GfK Belgium S.A., reducing its ownership to 10%. Those companies
operate household panel services in the Netherlands and Belgium and continue to
cooperate with the Netherlands InfoScan operation in the sale and delivery of
services to common customers.
 
     Effective May 21, 1998, the Company reduced its ownership in Information
Resources, Japan, Ltd., from 60% to 40% by selling a 20% ownership interest to
Mitsui & Co., Ltd.
 
     In February 1997, the Company and GfK organized a new joint venture
company, IRI/GfK Retail. The Company has a 51% ownership interest in IRI/GfK
Retail, and GfK owns the remainder. IRI/GfK Retail purchased the German retail
tracking business of GfK Panel Services GmbH ("GfK Panel").
 
     In a separate transaction, the Company sold its previously held 15%
ownership interest in GfK Panel to GfK at no book gain or loss. GfK Panel, a
provider of consumer panel and ad hoc research services, will cooperate with
IRI/GfK Retail in selling and delivering services to customers.
 
     The consolidation of the Company's Netherlands operations, the exercise of
its MEMRB option and the sale of its 20% interest in Information Resources
Japan, Ltd. did not have a material impact on the consolidated financial results
or position of the Company.
 
4. NONRECURRING EXPENSES AND NET LOSS ON DISPOSITION OF ASSETS
 
     Nonrecurring expenses in 1996 included a $4.8 million charge principally
related to the disposal of certain cable TV advertising cut-in equipment
originally developed for use in the Company's market-testing operation.
 
     In 1995, the Company sold to Oracle Corporation certain assets, liabilities
and related software application products relating to the on-line analytical
processing business previously operated by the Company's software division. A
portion of the cash proceeds were placed into an interest-bearing escrow
account. In December 1996, the Company recorded a $4.6 million charge related
primarily to the final settlement of the escrow account.
 
5. INCOME TAXES
 
     IRI and its U.S. subsidiaries and partnerships file their U.S. Federal
income tax return on a consolidated basis. As of December 31, 1998, the Company
had cumulative U.S. Federal net operating loss ("NOL") carryforwards of
approximately $67.9 million that expire primarily in 2009 and 2011. Certain of
these carryforwards have not been examined by the Internal Revenue Service and,
therefore, are subject to adjustment. At December 31, 1998 the Company also had
general business tax credit carryforwards of
 
                                       30
<PAGE>   32
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
approximately $9.6 million which expire primarily between 1999 and 2012, and are
available to reduce future U.S. Federal income tax liabilities. In addition, at
December 31, 1998, various foreign subsidiaries of IRI had aggregate cumulative
NOL carryforwards for foreign income tax purposes of approximately $10.9 million
which are subject to the various income tax provisions of each respective
country. Approximately $3.6 million of these foreign NOLs may be carried forward
indefinitely, while the remaining $7.3 million expire in 2000 through 2003.
 
     Domestic earnings before income taxes were $16.6 million, $31.4 million and
$11.7 million for 1998, 1997 and 1996, respectively. The foreign loss before
income taxes was ($10.0) million, ($17.0) million and ($21.6) million for 1998,
1997 and 1996, respectively. A majority of the foreign pre-tax losses are
deducted as partnership losses in IRI's consolidated U.S. Federal income tax
return in accordance with the U.S. Internal Revenue Code.
 
     Income tax (expense) benefit relating to earnings (loss) for the years
ended December 31, 1998, 1997 and 1996 consisted of the following components (in
thousands):
 
<TABLE>
<CAPTION>
                                                            1998      1997      1996
                                                           -------   -------   ------
<S>                                                        <C>       <C>       <C>
Current income tax (expense) benefit
  Federal................................................  $    --   $    --   $   --
  Foreign................................................     (129)     (371)    (638)
  State and local........................................       --        --       --
                                                           -------   -------   ------
                                                              (129)     (371)    (638)
                                                           -------   -------   ------
Deferred income tax (expense) benefit
  Federal................................................   (1,939)   (6,366)   3,805
  Foreign................................................       21       549     (937)
  State and local........................................     (688)     (512)      70
                                                           -------   -------   ------
                                                            (2,606)   (6,329)   2,938
                                                           -------   -------   ------
Income tax (expense) benefit.............................  $(2,735)  $(6,700)  $2,300
                                                           =======   =======   ======
</TABLE>
 
     The Company has reduced its deferred tax liability by its Federal, state
and certain foreign NOL carryforwards in its consolidated financial statements.
The Company's recognition of future tax benefits is due to the expected
utilization of those benefits based upon future receipt of substantial taxable
income, specifically resulting from over $110.0 million of existing net
temporary differences at December 31, 1998, primarily deferred data procurement
costs, capitalized software costs, and other items, most of which will reverse
over the next three years.
 
                                       31
<PAGE>   33
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Significant components of the Company's deferred tax liabilities and assets
were as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                              -----------------
                                                               1998      1997
                                                              -------   -------
<S>                                                           <C>       <C>
Deferred tax liabilities:
  Deferred data procurement costs...........................  $48,581   $45,366
  Capitalized software costs................................    2,385     4,669
  Acquisition related costs.................................    4,536     4,493
  Other.....................................................   11,767     8,635
                                                              -------   -------
          Total deferred tax liabilities....................   67,269    63,163
Deferred tax assets:
  Domestic NOL carryforwards................................   25,003    26,904
  Domestic tax credit carryforwards.........................    9,571     9,467
  Foreign NOL carryforwards.................................    4,409     3,648
  Revenue recognition change................................      710     1,404
  Reserve for compensation related items....................    4,866     5,021
  Other.....................................................   17,486    11,785
                                                              -------   -------
          Total deferred tax assets.........................   62,045    58,229
Valuation allowance on deferred tax assets..................   (8,793)   (8,726)
                                                              -------   -------
Net deferred tax assets.....................................   53,252    49,503
                                                              -------   -------
Net deferred tax liability..................................  $14,017   $13,660
                                                              =======   =======
</TABLE>
 
     The valuation allowance increased by $.1 million in 1998 and $2.2 million
in 1997, as it is more likely than not that the net operating loss and domestic
tax credit carryforwards recorded by certain Company subsidiaries in these years
will not be fully utilized to offset taxable income.
 
     Income tax (expense) benefit differs from the statutory U.S. Federal income
tax rate of 35% applied to earnings (loss) before income taxes for the years
ended December 31, 1998, 1997 and 1996 as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                            1998      1997      1996
                                                           -------   -------   ------
<S>                                                        <C>       <C>       <C>
Statutory tax (expense) benefit..........................  $(2,303)  $(5,027)  $3,450
Effects of --
  State income taxes, net of Federal income tax
     benefit.............................................     (447)     (333)      45
  Nondeductible meals and entertainment..................     (428)     (407)    (365)
  Nondeductible acquisition/organization costs...........     (180)     (127)    (210)
  Other non-taxable income (nondeductible expenses)......       --       (11)      18
  Foreign losses and taxes...............................      558    (1,089)    (805)
  Change in valuation allowance..........................      400       216      419
  Other..................................................     (335)       78     (252)
                                                           -------   -------   ------
                                                           $(2,735)  $(6,700)  $2,300
                                                           =======   =======   ======
</TABLE>
 
                                       32
<PAGE>   34
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
6. ACCOUNTS RECEIVABLE
 
     Accounts receivable at December 31, were as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                               1998       1997
                                                              -------   --------
<S>                                                           <C>       <C>
Billed......................................................  $71,141   $ 70,761
Unbilled....................................................   21,258     29,288
                                                              -------   --------
                                                               92,399    100,049
Reserve for accounts receivable.............................   (4,762)    (3,840)
                                                              -------   --------
                                                              $87,637   $ 96,209
                                                              =======   ========
</TABLE>
 
     Payments received in advance of revenue recognition are reflected in the
consolidated financial statements as deferred revenue. Unbilled accounts
receivable represent revenues and fees on contracts and other services earned to
date for which customers were not invoiced as of the balance sheet date.
 
7 . PROPERTY AND EQUIPMENT
 
     Property and equipment at December 31, were as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                1998       1997
                                                              --------   ---------
<S>                                                           <C>        <C>
Computer equipment and software.............................  $ 96,302   $ 102,283
Market testing and other operating equipment................    30,730      24,581
Leasehold improvements......................................    14,963      16,513
Equipment and furniture.....................................    35,448      36,666
                                                              --------   ---------
                                                               177,443     180,043
Accumulated depreciation....................................   (97,940)   (111,628)
                                                              --------   ---------
                                                              $ 79,503   $  68,415
                                                              ========   =========
</TABLE>
 
8. INVESTMENTS AND OTHER ASSETS
 
     Investments at December 31 were as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                               1998      1997
                                                              ------    -------
<S>                                                           <C>       <C>
Datos Information Resources, at cost plus equity in
  undistributed earnings....................................  $5,268    $ 5,143
GfK Panel Services Benelux B.V., at cost....................   1,272      5,919
Other.......................................................   3,252      1,999
                                                              ------    -------
                                                              $9,792    $13,061
                                                              ======    =======
</TABLE>
 
     Other assets at December 31 were as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                1998       1997
                                                              --------   --------
<S>                                                           <C>        <C>
Deferred data procurement costs -- net of accumulated
  amortization of $123,440 in 1998 and $108,491 in 1997.....  $138,356   $126,733
Intangible assets, including goodwill -- net of accumulated
  amortization of $13,616 in 1998 and $10,233 in 1997.......    18,610     16,463
Capitalized software costs -- net of accumulated
  amortization of $3,701 in 1998 and $3,578 in 1997.........     9,258      6,093
Other.......................................................     5,765      9,158
                                                              --------   --------
                                                              $171,989   $158,447
                                                              ========   ========
</TABLE>
 
                                       33
<PAGE>   35
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
9. LONG-TERM DEBT
 
     Long-term debt at December 31, was as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                               1998     1997
                                                              ------   -------
<S>                                                           <C>      <C>
Bank borrowings.............................................  $3,000   $    --
Capitalized leases and other................................   2,096     2,906
                                                              ------   -------
                                                               5,096     2,906
Less current maturities.....................................    (521)   (2,266)
                                                              ------   -------
                                                              $4,575   $   640
                                                              ======   =======
</TABLE>
 
     Financings: On February 10, 1999 the Company amended its $75 million bank
revolving credit facility to (1) reduce the maximum commitments to $60 million,
(2) extend the termination date to 2002, and (3) amend certain financial
covenants and other terms and conditions of the agreement. The amended facility
has floating rate options at or below prime and commitment fees of up to .25%
payable on the unused portion. The weighted average interest rate at December
31, 1998 was 6.25%. In October 1997, the Company replaced its $50 million bank
revolving credit facility maturing in 1998 with a $75 million facility maturing
in 2001.
 
     The financial covenants in the bank credit agreement, as well as in the
lease agreement for the Company's Chicago headquarters, require the Company to
maintain a minimum tangible net worth and to meet certain cash flow coverage and
leverage ratios. The agreements also limit the Company's ability to declare
dividends or make distributions to holders of capital stock, or redeem or
otherwise acquire shares of the Company. Approximately $23.0 million is
currently available for such distributions under the most restrictive of these
covenants. The bank credit agreement contains covenants which restrict the
Company's ability to incur additional indebtedness.
 
     Capitalized leases and other primarily consist of leases for computer and
communications equipment expiring through 2000. Maturities of capitalized leases
in 1999 and 2000 are $.5 million and $1.6 million, respectively.
 
10. CAPITAL STOCK
 
PREFERRED STOCK PURCHASE RIGHTS
 
     In 1989, IRI adopted a shareholder rights plan which attached preferred
stock rights ("Rights") to each share of its Common Stock. Each Right entitles
the holder to purchase one one-hundredth share of Preferred Stock at an exercise
price of $60. The Rights become exercisable upon the acquisition of a certain
percentage of IRI Common Stock or a tender offer or exchange offer for IRI
Common Stock by a person or group. IRI may redeem the Rights at $.01 per Right
at any time prior to a public announcement that a person or group has acquired a
certain percentage of IRI's Common Stock. The Rights will expire on October 27,
2007. IRI has authority to issue one million shares of $.01 par value Preferred
Stock.
 
COMMON STOCK
 
     At December 31, 1998, 1997 and 1996, 27,867,884, 28,713,943 and 27,886,406
shares of Common Stock, respectively were issued and outstanding. At December
31, 1998, .9 million and 3.3 million options were available for grant under the
Executive Stock Option Plan and the Employee Stock Option Plan, respectively. In
connection with all IRI employee and director stock plans, 11.6 million shares
were reserved for issuance at December 31, 1998.
 
     In November 1997 the Company's Board of Directors approved a plan to
purchase up to two million shares of the Company's Common Stock from time to
time in the open market. Purchases under the plan are
 
                                       34
<PAGE>   36
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
subject to a number of considerations including the market price of the
Company's Common Stock and general market conditions. As of December 31, 1998,
the Company had purchased and retired 1,861,800 shares under the plan at an
average cost of $12.46 per share, including 1,442,600 shares purchased during
1998 at an average cost of $11.96 per share.
 
     In May 1996, the Company's shareholders approved a stock plan for
non-employee directors (the Director's Plan), authorizing the issuance of up to
100,000 shares of Common Stock. Under the Directors' Plan an eligible director
is paid annually in shares of Common Stock in lieu of 75% of the cash retainer
otherwise payable for services on the Board. The number of shares issued is
based upon the fair market value of the Company's Common Stock. The Company
issued 8,154, 9,873, and 10,692 shares in 1998, 1997 and 1996 at a price of
$17.38, $14.36 and $14.25 per share, respectively, under the Director's Plan.
 
     There are restrictions in IRI's bank revolving credit facility and lease
agreements which limit the payment of dividends and the purchases or redemption
of Common Stock. (See Note 9.)
 
STOCK OPTIONS
 
     The Company has several stock option plans. The Employee Stock Option Plan
covers most employees other than executive officers and directors. Substantially
all options under these plans have been granted at fair market value or higher.
Most option grants are exercisable in equal annual increments of 25% beginning
on the first anniversary of the grant date and expire ten years after the date
of grant. IRI also has an Executive Stock Option Plan covering executive
officers and directors which at inception authorized up to 2.5 million stock
options. Most options under this plan were granted at fair market value and are
exercisable in equal annual increments of 25% beginning on the first anniversary
of the grant date and expire ten years after the date of grant. For options
granted at less than fair market value, the Company recognizes compensation
expense over the vesting period for the difference between the total fair market
value and the total exercise price on the date of grant.
 
     The following table presents, on a pro forma basis, net earnings (loss) and
net earnings (loss) per share for the years ended December 31, 1998, 1997 and
1996 as if an alternate method of accounting as prescribed by Statement of
Financial Accounting Standard No. 123 "Accounting for Stock-Based Compensation"
for stock options had been adopted (in thousands, except per share data):
 
<TABLE>
<CAPTION>
                                                             1998     1997     1996
                                                            ------   ------   -------
<S>                                                         <C>      <C>      <C>
Net earnings (loss) -- as reported........................  $3,846   $7,662   $(7,558)
                                                            ======   ======   =======
Net earnings (loss) -- pro forma..........................  $  981   $6,096   $(8,673)
                                                            ======   ======   =======
Net earnings (loss) per common share -- basic -- as
  reported................................................  $  .13   $  .27   $  (.27)
                                                            ======   ======   =======
Net earnings (loss) per common share -- basic -- pro
  forma...................................................  $  .03   $  .21   $  (.31)
                                                            ======   ======   =======
Net earnings (loss) per common and common equivalent
  share -- diluted -- as reported.........................  $  .13   $  .26   $  (.27)
                                                            ======   ======   =======
Net earnings (loss) per common and common equivalent
  share -- diluted -- pro forma...........................  $  .03   $  .21   $  (.31)
                                                            ======   ======   =======
</TABLE>
 
     The above table is based upon the valuation of option grants using the
Black-Scholes pricing model for traded options with assumed risk-free interest
rates of 5.5%, 6.6% and 6.7% for 1998, 1997 and 1996, respectively; stock price
volatility factor of 55.9%, 46.6% and 41.4% for 1998, 1997 and 1996,
respectively; and an expected life of the options of five years. Using the
foregoing assumptions, the calculated weighted-average fair value of options
granted in 1998, 1997 and 1996 was $6.64, $7.21 and $5.85, respectively. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the input
assumptions can materially affect the fair value estimate, in management's
opinion, the model does not necessarily provide a reliable single measure of the
fair value of its employee stock options.
                                       35
<PAGE>   37
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Transactions involving stock options for the Executive and Employee Stock
Option Plans are summarized as follows:
 
<TABLE>
<CAPTION>
                                                                           WEIGHTED
                                                                           AVERAGE
                                                                NUMBER     EXERCISE
                                                              OF OPTIONS    PRICE
                                                              ----------   --------
<S>                                                           <C>          <C>
Outstanding January 1, 1996.................................   8,852,261    $14.44
Granted.....................................................     430,000     12.90
Canceled/Expired............................................    (645,543)    18.43
Exercised...................................................    (288,538)     8.32
                                                              ----------    ------
Outstanding December 31, 1996...............................   8,348,180     14.26
Granted.....................................................     801,390     14.59
Canceled/Expired............................................    (651,083)    17.06
Exercised...................................................  (1,236,864)    12.38
                                                              ----------    ------
Outstanding December 31, 1997...............................   7,261,623     14.36
Granted.....................................................   1,647,345     12.52
Canceled/Expired............................................    (997,762)    15.89
Exercised...................................................    (584,972)    13.88
                                                              ----------    ------
Outstanding December 31, 1998...............................   7,326,234    $13.73
                                                              ==========    ======
Exercisable December 31, 1998...............................   4,985,449    $14.16
                                                              ==========    ======
</TABLE>
 
     Stock options outstanding at December 31, 1998 are as follows:
 
<TABLE>
<CAPTION>
                                              WEIGHTED     OUTSTANDING                 EXERCISABLE
                                               AVERAGE      WEIGHTED                    WEIGHTED
                                              REMAINING      AVERAGE                     AVERAGE
                                 NUMBER      CONTRACTUAL    EXERCISE       NUMBER       EXERCISE
RANGE OF EXERCISE PRICES       OUTSTANDING      LIFE          PRICE      EXERCISABLE      PRICE
------------------------       -----------   -----------   -----------   -----------   -----------
<S>                            <C>           <C>           <C>           <C>           <C>
$ 6.94-$12.75................   1,941,440       5.87         $10.09       1,107,791      $10.23
$12.78-$14.00................   2,314,345       7.34          13.74       1,222,558       13.60
$14.13-$17.25................   2,530,273       4.90          14.50       2,216,049       14.40
$17.50-$34.00................     540,176       4.96          23.25         439,051       24.43
                                ---------       ----         ------       ---------      ------
$ 6.94-$34.00................   7,326,234       5.93         $13.73       4,985,449      $14.16
                                =========       ====         ======       =========      ======
</TABLE>
 
11. COMMITMENTS, CONTINGENCIES AND LITIGATION
 
LEASE AGREEMENTS AND OTHER COMMITMENTS
 
     The Company leases certain property and equipment under operating leases
expiring at various dates through 2010. At December 31, 1998 obligations to make
future minimum payments under all operating leases were $124.0 million in the
aggregate and $27.8 million, $21.8 million, $13.5 million, $11.9 million and
$11.3 million for the five years ended December 31, 2003, respectively. Rent
expense for all operating leases was $30.9 million, $36.1 million and $32.0
million for the years ended December 31, 1998, 1997 and 1996, respectively.
 
LEGAL PROCEEDINGS
 
     In July 1996, IRI filed an action against The Dun & Bradstreet Corp., The
A.C. Nielsen Company (now a subsidiary of ACNielsen) ("ACNielsen") and IMS
International, Inc. (collectively, "the Defendants") in the United States
District Court for the Southern District of New York entitled Information
Resources, Inc. v. The Dun & Bradstreet Corp., et. al. No. 96 CIV. 5716 (the
"Action"). IRI alleged that, among other
 
                                       36
<PAGE>   38
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
things, the Defendants violated Sections 1 and 2 of the Sherman Act, 15 U.S.C.
Section 1 and 2, by engaging in a series of anti-competitive practices aimed at
excluding the Company from various export markets for retail tracking services
and regaining monopoly power in the United States market for such services.
These practices included: (i) entering into exclusionary contracts with
retailers in several countries, in order to restrict the Company's access to
sales data necessary to provide retail tracking services; (ii) illegally
tying/bundling services in markets over which Defendants' had monopoly power
with services in markets in which ACNielsen competed with the Company; (iii)
predatory pricing; (iv) acquiring foreign market competitors with the intent of
impeding the Company's efforts at export market expansion; (v) tortiously
interfering with Company contracts and relationships with clients, joint venture
partners and other market research companies; and (vi) disparaging the Company
to financial analysts and clients. By the Action, the Company seeks to enjoin
the Defendants' anti-competitive practices and to recover damages in excess of
$350 million, prior to trebling.
 
     The Action followed legal proceedings by the Canadian Competition Tribunal
in 1995 and the European Commission in 1996 against ACNielsen for
anti-competitive practices. In 1995, the Canadian Competition Tribunal concluded
that ACNielsen had engaged in "anti-competitive acts" with the express intent
"to exclude potential competitors generally and IRI specifically" from the
Canadian retail tracking and services market. In December 1996, ACNielsen signed
an Undertaking to the European Commission agreeing to halt numerous contractual
practices which the Company contended was part of an intentional and unlawful
strategy aimed at preventing the Company from establishing a competitive
position in Europe and eliminating the Company as a competitor.
 
     On January 15, 1998, IRI filed an action against Manugistics, Inc.
("Manugistics") in the Circuit Court of Cook County, Illinois, Case No. 99 L
00599. In its two count action, IRI has alleged that Manugistics has breached a
Data Marketing and Revenue Agreement between IRI and Manugistics ("Agreement")
by failing to pay certain amounts due to IRI thereunder. The Agreement was
entered into by IRI and Manugistics in connection with the sale by IRI to
Manugistics of certain assets relating to the manufacture, sale and servicing of
certain logistics software. IRI has also alleged that Manugistics committed an
anticipatory breach of the Agreement with respect to certain other amounts not
yet due thereunder. IRI seeks damages in excess of $11.9 million in connection
with these claims. IRI has also alleged that Manugistics breached a related non-
competition and solicitation agreement between IRI and Manugistics. IRI seeks
unspecified damages to be determined at trial under this count. On March 2,
1999, Manugistics filed a Motion to Stay Proceedings and Compel Arbitration
which is currently pending before the Court.
 
     In the ordinary course of business, IRI and its subsidiaries become
involved as plaintiffs or defendants in various other legal proceedings. The
claims and counterclaims in such litigation, including those for punitive
damages, individually in certain cases and in the aggregate, involve amounts
which may be material. However, it is the opinion of the Company's management,
based upon advice of counsel, that the ultimate disposition of pending
litigation against the Company will not be material.
 
12. SEGMENT INFORMATION
 
     The Company develops and maintains databases, decision support software,
and mathematical models, primarily for the analysis of detailed information on
purchasing of consumer goods, all within one industry segment -- business
information services. The Company's business information services are conducted
almost exclusively in the United States and Europe. The Company's operations in
other markets account for approximately 1% of consolidated revenues. Executive
management of the Company routinely evaluates the performance of its operations
against short-term and long-term objectives.
 
     In December 1998, the Company adopted the provisions of SFAS No. 131. As a
result, the Company's segment disclosure has been reported along geographic
areas, which is consistent with the management structure of the Company. The
executive management of the Company considers revenues from third parties
                                       37
<PAGE>   39
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
and the aggregation of operating profit (loss), equity earnings (losses) and
minority interests, ("Operating Results"), on a geographic basis to be the most
meaningful measure of the operating performance of each respective geographic
segment and of the Company as a whole.
 
     The following tables and discussion present certain information regarding
the operations of the Company by geographic segment as of December 31, 1998,
1997, and 1996 (in thousands):
 
Segmented Results:
 
<TABLE>
<CAPTION>
                                                                1998       1997       1996
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Revenues:
  U.S. Services.............................................  $396,992   $366,678   $344,612
  International Services....................................   114,331     89,649     60,991
                                                              --------   --------   --------
          Total.............................................  $511,323   $456,327   $405,603
                                                              ========   ========   ========
</TABLE>
 
<TABLE>
<CAPTION>
                                                                1998       1997       1996
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Operating Results:
  U.S. Services.............................................  $ 31,515   $ 38,613   $ 31,106
International Services:
  Operating loss............................................   (15,689)   (19,920)   (29,425)
  Minority interests benefit (expense)......................       342       (304)       986
  Equity in earnings of affiliated companies................       443        444         30
                                                              --------   --------   --------
          Subtotal -- International Services................   (14,904)   (19,780)   (28,409)
Corporate and other expenses................................    (8,856)    (3,926)    (1,965)
Nonrecurring expenses (a)...................................        --         --     (4,808)
                                                              --------   --------   --------
          Operating Results.................................     7,755     14,907     (4,076)
                                                              --------   --------   --------
Net gain (loss) on sale of assets...........................        --         --     (4,600)
Interest expense and other, net.............................    (1,174)      (545)    (1,182)
                                                              --------   --------   --------
          Earnings (loss) before income taxes...............  $  6,581   $ 14,362   $ (9,858)
                                                              ========   ========   ========
</TABLE>
 
Identifiable Assets:
 
<TABLE>
<CAPTION>
                                                                1998       1997       1996
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
U.S. Services...............................................  $232,851   $237,755   $211,634
International Services......................................   126,650    115,804    104,122
Corporate(b)................................................     9,792     13,061     18,737
                                                              --------   --------   --------
          Total Identifiable Assets.........................  $369,293   $366,620   $334,493
                                                              ========   ========   ========
</TABLE>
 
---------------
 
(a)  Operating profit includes nonrecurring expenses of $4.8 million in 1996.
     Operating profit excludes net loss on disposition of assets of ($4.6)
     million in 1996. (See Note 4.)
 
(b)  Identifiable corporate assets represent investments aggregating $9.8
     million, $13.1 million and $18.7 million at December 31, 1998, 1997 and
     1996, respectively. (See Note 8.)
 
                                       38
<PAGE>   40
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
Other Cash Flow Information:
 
<TABLE>
<CAPTION>
                                                     UNITED
                                                     STATES    INTERNATIONAL   CORPORATE    TOTAL
                                                     -------   -------------   ---------   --------
                                                                     (IN THOUSANDS)
<S>                                                  <C>       <C>             <C>         <C>
Capital expenditures
  1998.............................................  $26,976      $ 5,453       $1,302     $ 33,731
  1997.............................................   27,293        5,136        2,015       34,444
  1996.............................................   14,428        3,614          730       18,772
Depreciation expense
  1998.............................................  $16,556      $ 4,921       $1,761     $ 23,238
  1997.............................................   14,745        3,916        1,760       20,421
  1996.............................................   14,212        4,208        1,784       20,204
Data procurement expenditures
  1998.............................................  $76,940      $43,553       $   --     $120,493
  1997.............................................   71,757       40,057           --      111,814
  1996.............................................   65,613       32,392           --       98,005
Amortization of data procurement expenditures
  1998.............................................  $74,583      $37,528       $   --     $112,111
  1997.............................................   69,844       31,781           --      101,625
  1996.............................................   64,410       23,534           --       87,944
</TABLE>
 
                                       39
<PAGE>   41
 
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
SUMMARY OF QUARTERLY DATA (UNAUDITED)
 
     Summaries of consolidated results on a quarterly basis are as follows (in
thousands, except per share data):
 
<TABLE>
<CAPTION>
                                                               1998
                                             -----------------------------------------
                                              FIRST      SECOND     THIRD      FOURTH
                                             QUARTER    QUARTER    QUARTER    QUARTER
                                             --------   --------   --------   --------
<S>                                          <C>        <C>        <C>        <C>
Revenues...................................  $119,190   $129,392   $125,346   $137,395
                                             ========   ========   ========   ========
Operating profit (loss)....................  $  3,286   $  5,917   $ (2,341)  $    108
                                             ========   ========   ========   ========
Net earnings (loss)........................  $  1,910   $  3,441   $ (1,538)  $     33
                                             ========   ========   ========   ========
Net earnings (loss) per common
  share -- basic...........................  $    .07   $    .12   $   (.05)  $     --
                                             ========   ========   ========   ========
Net earnings (loss) per common and common
  equivalent share -- diluted..............  $    .07   $    .12   $   (.05)  $     --
                                             ========   ========   ========   ========
Weighted average common shares -- basic....    28,671     28,860     28,708     28,071
                                             ========   ========   ========   ========
Weighted average common and common
  equivalent shares -- diluted.............    28,946     29,839     28,708     28,093
                                             ========   ========   ========   ========
</TABLE>
 
<TABLE>
<CAPTION>
                                                               1997
                                             -----------------------------------------
                                              FIRST      SECOND     THIRD      FOURTH
                                             QUARTER    QUARTER    QUARTER    QUARTER
                                             --------   --------   --------   --------
<S>                                          <C>        <C>        <C>        <C>
Revenues...................................  $105,128   $113,973   $115,601   $121,625
                                             ========   ========   ========   ========
Operating profit (loss)....................  $    (38)  $  4,587   $  4,282   $  5,936
                                             ========   ========   ========   ========
Net earnings...............................  $     55   $  2,129   $  1,982   $  3,496
                                             ========   ========   ========   ========
Net earnings per common share -- basic.....  $     --   $    .08   $    .07   $    .12
                                             ========   ========   ========   ========
Net earnings per common and common
  equivalent share -- diluted..............  $     --   $    .07   $    .07   $    .12
                                             ========   ========   ========   ========
Weighted average common shares -- basic....    28,052     28,260     28,610     28,974
                                             ========   ========   ========   ========
Weighted average common and common
  equivalent shares -- diluted.............    28,563     28,553     29,468     29,691
                                             ========   ========   ========   ========
</TABLE>
 
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
 
     None
 
                                       40
<PAGE>   42
 
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
     The sections entitled "Election of Directors" and "Section 16(a) Beneficial
Ownership Reporting Compliance" are incorporated by reference from the
definitive proxy statement to be filed with the Securities and Exchange
Commission in connection with the Company's 1999 annual meeting of stockholders
scheduled for May 20, 1999. Information about the Company's executive officers
is set forth in Item 4(a) in Part I of this Report.
 
ITEM 11. EXECUTIVE COMPENSATION
 
     The section entitled "Executive Compensation" excluding the Board
Compensation Committee Report and the stock price performance graph is
incorporated by reference from the definitive proxy statement to be filed with
the Securities and Exchange Commission in connection with the Company's 1999
annual meeting of stockholders scheduled for May 20, 1999.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The section entitled "Ownership of Securities" is incorporated by reference
from the definitive proxy statement to be filed with the Securities and Exchange
Commission in connection with the Company's 1999 annual meeting of stockholders
scheduled for May 20, 1999.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
     The section entitled "Certain Transactions" is incorporated by reference
from the definitive proxy statement to be filed with the Securities and Exchange
Commission in connection with the Company's 1999 annual meeting of stockholders
scheduled for May 20, 1999.
 
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
 
     (a) Documents filed as a part of this Report:
 
<TABLE>
        1.   Financial Statements
 
             The consolidated financial statements of the Company are
             included in Part II, Item 8 of this Report.
                                                                             PAGE
                                                                             NO.
                                                                              --
        <S>  <C>                                                             <C>
        2.   Financial Statement Schedules
 
             Schedule II -- Valuation and Qualifying Accounts; Reserve
             for Accounts Receivable.....................................     43
 
             All other schedules are omitted because they are not
             applicable, or not required, or because the required
             information is included in the financial statements or notes
             thereto.
 
        3.   Executive Compensation Plans and Arrangements. The following
             Executive Compensation Plans and Arrangements are listed as
             exhibits to this Form 10-K:
             Employment Agreement dated November 27, 1978 between the
             Company and Gerald Eskin.
             Employment Agreement dated March 15, 1985 between the
             Company and Jeffrey Stamen.
             Employment Agreement dated March 15, 1985 between the
             Company and Leonard Lodish.
</TABLE>
 
                                       41
<PAGE>   43

             Noncompetition Agreements dated March 15, 1985
             between the Company and John D.C. Little, Glen
             Urban, and Leonard Lodish, respectively.
            
             Letter agreement dated January 17, 1989 between
             the Company and Glen Urban.
             Form of letter agreement between the Company
             and John D.C. Little.
            
             Consulting and Noncompetition Agreement dated
             January 16, 1987 between the Company and Edwin
             Epstein.
            
             Agreement effective January 1, 1989 between the
             Company and Edwin Epstein, amending the
             Consulting and Non-competition Agreement dated
             January 16, 1987, which Consulting and
             Noncompetition Agreement is referred to above.
            
             Letter agreement dated August 7, 1989 between
             the Company and Leonard Lodish.
            
             Employment Agreement dated November 16, 1989
             between the Company and James G. Andress.
            
             Amended and Restated Employment Agreement dated
             March 16, 1994 between the Company and Thomas
             M. Walker.
            
             1992 Executive Stock Option Plan, as amended.
            
             1992 Employee Incentive Stock Option Plan.
            
             Employment Agreement dated November 4, 1993
             between the Company and George R. Garrick.
            
             1994 Employee Nonqualified Stock Option Plan.
            
             Form of Information Resources, Inc.
             Directorship/Officership Agreement between the
             Company and its directors, its executive
             officers and certain other officers.
            
             Employment Termination Agreement dated as of
             March 4, 1996, between the Company and George
             R. Garrick.
            
             Employment Agreement dated as of August 22,
             1996, between the Company and Randall S. Smith
             and First Amendment to Employment Agreement
             dated November 11, 1996.
            
             Information Resources, Inc. Executive Deferred
             Compensation Plan effective January 1, 1999.
            
             Consulting Agreement dated as of February 16,
             1999, between the Company and Gian M. Fulgoni.
            
             Employment letter agreement dated April 26,
             1995 between the Company and Gary M. Hill.
            
             Employment letter agreement dated September 23,
             1997 between the Company and James R. Chambers,
             as amended by letter agreement dated August 31,
             1998.
 
     (b) Reports on 8-K:
 
        None
 
     (c) Exhibits
 
        See Exhibit Index (immediately following the signature pages)
 
                                       42
<PAGE>   44
                                  SCHEDULE II
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
 
                       VALUATION AND QUALIFYING ACCOUNTS
                        RESERVE FOR ACCOUNTS RECEIVABLE
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                CHARGED
                                                   BALANCE AT   TO COSTS     DEDUCTIONS      BALANCE AT
                                                   BEGINNING      AND      (NET WRITEOFFS/     END OF
                   DESCRIPTION                     OF PERIOD    EXPENSES     RECOVERIES)       PERIOD
                   -----------                     ----------   --------   ---------------   ----------
<S>                                                <C>          <C>        <C>               <C>
Year ended December 31, 1996.....................    $3,860      $  719        $  (242)        $4,337
Year ended December 31, 1997.....................    $4,337      $1,046        $(1,543)        $3,840
Year ended December 31, 1998.....................    $3,840      $1,883        $  (961)        $4,762
</TABLE>
 
                                       43
<PAGE>   45
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) 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.
 
     Dated: March 29, 1999
 
                                            INFORMATION RESOURCES, INC.
 
                                            By:  /s/ THOMAS W. WILSON, JR.
                                              ----------------------------------
                                                    Thomas W. Wilson, Jr.
                                                   Chief Executive Officer
 
     Pursuant to the Requirement of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on March 29, 1999.
 
<TABLE>
<CAPTION>
                  SIGNATURE                                        TITLE
                  ---------                                        -----
<C>                                            <S>
          /s/ THOMAS W. WILSON, JR.            Chairman of the Board of Directors
---------------------------------------------    Chief Executive Officer and Director
            Thomas W. Wilson, Jr.
 
              /s/ GARY M. HILL                 Executive Vice President and Chief Financial
---------------------------------------------    Officer
                Gary M. Hill                     [Principal financial officer]
 
         /s/ JOHN P. MCNICHOLAS, JR.           Senior Vice President and Controller
---------------------------------------------    [Principal accounting officer]
           John P. McNicholas, Jr.
 
           * /s/ JAMES G. ANDRESS              Director
---------------------------------------------
              James G. Andress
 
            * /s/ GERALD J. ESKIN              Director
---------------------------------------------
               Gerald J. Eskin
 
           * /s/ EDWIN E. EPSTEIN              Director
---------------------------------------------
              Edwin E. Epstein
 
            * /s/ GIAN M. FULGONI              Director
---------------------------------------------
               Gian M. Fulgoni
 
           * /s/ JOHN D.C. LITTLE              Director
---------------------------------------------
              John D.C. Little
 
           * /s/ LEONARD M. LODISH             Director
---------------------------------------------
              Leonard M. Lodish
 
           * /s/ EDWARD E. LUCENTE             Director
---------------------------------------------
              Edward E. Lucente
 
            * /s/ EDITH W. MARTIN              Director
---------------------------------------------
               Edith W. Martin
</TABLE>
 
                                       44
<PAGE>   46
 
<TABLE>
<CAPTION>
                  SIGNATURE                                        TITLE
                  ---------                                        -----
<C>                                            <S>
           * /s/ JEFFREY P. STAMEN             Director
---------------------------------------------
              Jeffrey P. Stamen
 
             * /s/ GLEN L. URBAN               Director
---------------------------------------------
                Glen L. Urban
 
       *By: /s/ THOMAS W. WILSON, JR.
---------------------------------------------
       Pursuant to a Power of Attorney
</TABLE>
 
                                       45
<PAGE>   47
 
                                 EXHIBIT INDEX
 
     The following documents are the exhibits to this Report. For convenient
reference, each exhibit is listed according to the number assigned to it in the
Exhibit Table of Item 601 of Regulation S-K.
 
<TABLE>
<CAPTION>
                                                                      SEQUENTIAL
EXHIBIT                                                                DOCUMENT
NUMBER                    DESCRIPTION OF DOCUMENT                       FILING
-------                   -----------------------                     ----------
<C>     <S>                                                           <C>
  3(a)  -- Copy of the certificate of incorporation of the Company
           dated May 27, 1982, as amended. (Incorporated by
           reference. Previously filed as Exhibit 3(a) to the
           Company's Annual Report on Form 10-K for the fiscal year
           ended December 31, 1988.)                                     IBRF
   (b)  -- Copy of the bylaws of the Company, as amended.
           (Incorporated by reference. Previously filed as Exhibit
           3(b) to the Company's Annual Report on Form 10-K for the
           fiscal year ended December 31, 1988.)                         IBRF
   (c)  -- Copy of amendments to the Certificate of Incorporation
           approved by the stockholders on May 16, 1989.
           (Incorporated by reference. Previously as Exhibit 3(c) to
           the Company's Annual Report 10-K for the fiscal year
           ended December 31, 1989.)                                     IBRF
   (d)  -- Copy of amendments to the bylaws of the Company as
           approved by the Board of Directors bringing the bylaws
           into conformity with the amendments to the Certificate of
           Incorporation approved by the stockholders May 16, 1989.
           (Incorporated by reference. Previously filed as Exhibit
           3(d) to the Company's Annual Report on Form 10-K for the
           fiscal year ended December 31, 1989.)                         IBRF
   (e)  -- Certificate of Designations of Series A Participating
           Preferred Stock, as adopted by the Board of Directors of
           the Company on March 2, 1989 and duly filed with the
           Secretary of State of the State of Delaware March 15,
           1989. (Incorporated by reference. Previously filed as
           Exhibit 3(e) to the Company's Annual Report on Form 10-K
           for the fiscal year ended December 31, 1989.)                 IBRF
 10     -- Material Contracts
   (a)  -- 1982 Incentive Stock Option Plan adopted November 3,
           1982, as amended. (Incorporated by reference. Previously
           filed as Exhibit 10(a) to the Company's Registration
           Statement on Form S-8 filed with the SEC on December 31,
           1988.)                                                        IBRF
   (b)  -- Information Resources, Inc., Nonqualified Stock Option
           Plan effective January 1, 1984, as amended. (Incorporated
           by reference. Previously filed as Exhibit 10(b) to the
           Company's Quarterly Report on Form 10-Q for the quarter
           ended June 30, 1988.)                                         IBRF
   (c)  -- Employment Agreement dated November 27, 1978 between the
           Company and Gerald Eskin. (Incorporated by reference.
           Previously filed as Exhibit 10(e) to Registration
           Statement No. 2-81544.)                                       IBRF
   (d)  -- Consulting and Noncompetition Agreement dated January 16,
           1987 between the Company and Edwin Epstein. (Incorporated
           by reference. Previously filed as Exhibit 10(e) to the
           Company's Annual Report on Form 10-K for the fiscal year
           ended December 31, 1987.)                                     IBRF
   (e)  -- Employment agreement dated March 15, 1985 between the
           Company and Jeffrey Stamen. (Incorporated by reference.
           Previously filed as Exhibit 10(d) to the Company's Annual
           Report on Form 10-K for the fiscal year ended December
           31, 1985, as amended on Form 8 dated April 29, 1986 and
           August 25, 1986.)                                             IBRF
   (f)  -- Employment agreements dated March 15, 1985 between the
           Company and Leonard Lodish. (Incorporated by reference.
           Previously filed as Exhibit 10.14 to Registration
           Statement No. 2-96940.)                                       IBRF
   (g)  -- Noncompetition Agreement dated March 15, 1985 between the
           Company and John Little, Glen Urban, and Leonard Lodish,
           respectively. (Incorporated by reference. Previously
           filed as Exhibit 10.15 to Registration Statement No.
           2-96490.)                                                     IBRF
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<PAGE>   48
 
<TABLE>
<CAPTION>
                                                                      SEQUENTIAL
EXHIBIT                                                                DOCUMENT
NUMBER                    DESCRIPTION OF DOCUMENT                       FILING
-------                   -----------------------                     ----------
<C>     <S>                                                           <C>
   (h)  -- Letter agreement dated January 17, 1989 between the
           Company and Glen Urban (Incorporated by reference.
           Previously filed as Exhibit 10(1) to the Company's Annual
           Report on Form 10-K for the fiscal year ended December
           31, 1989.)                                                    IBRF
   (i)  -- Form of letter agreement between the Company and John
           D.C. Little (Incorporated by reference. Previously filed
           as Exhibit 10(m) to the Company's Annual Report on Form
           10-K for the fiscal year ended December 31, 1989.)            IBRF
   (j)  -- Agreement effective January 1, 1989 between the Company
           and Edwin Epstein, amending the Consulting and
           Noncompetition Agreement dated January 16, 1987, which
           Consulting and Noncompetition Agreement is referred to in
           Exhibit 10(d) hereof. (Incorporated by reference.
           Previously filed as Exhibit 19(a) to the Company's Annual
           Report on Form 10-K for the fiscal year ended December
           31, 1989.)                                                    IBRF
   (k)  -- Letter agreement dated August 7, 1989 between the Company
           and Leonard Lodish (Incorporated by reference. Previously
           filed as Exhibit 3(q) to the Company's Annual Report on
           Form 10-K for the fiscal year ended December 31, 1989.)       IBRF
   (l)  -- Employment Agreement dated November 16, 1989 between the
           Company and James G. Andress (Incorporated by reference.
           Previously filed as Exhibit 3(r) to the Company's Annual
           Report on Form 10-K for the fiscal year ended December
           31, 1989.)                                                    IBRF
   (m)  -- Amended and Restated Employment Agreement dated March 16,
           1994 between the Company and Thomas M. Walker.
           (Incorporated by reference. Previously filed as Exhibit
           10(s) to the Company's Annual Report on Form 10-K for the
           fiscal year ended December 31, 1993.)                         IBRF
   (n)  -- Lease Agreement dated September 27, 1990 between
           Randolph/Clinton Limited Partnership and the Company
           (Incorporated by reference. Previously filed as Exhibit
           2.1 to the Company's Current Report on Form 8-K dated
           September 27, 1990.)                                          IBRF
   (o)  -- 1992 Employee Incentive Stock Option Plan (Incorporated
           by reference. Previously filed as Exhibit 10(x) to the
           Company's Annual Report on Form 10-K for the fiscal year
           ended December 31, 1992.)                                     IBRF
   (p)  -- 1994 Employee Nonqualified Stock Option Plan.
           (Incorporated by reference. Previously filed as Exhibit
           10(y) to the Company's Annual Report on Form 10-K for the
           fiscal year ended December 31, 1993.)                         IBRF
   (q)  -- Employment Agreement dated November 4, 1993 between the
           Company and George Garrick. (Incorporated by reference.
           Previously filed as Exhibit 10(z) to the Company's Annual
           Report on Form 10-K for the fiscal year ended December
           31, 1993.)                                                    IBRF
   (r)  -- Second Amendment to Lease Agreement dated September 27,
           1990 between the Company and Randolph/Clinton Limited
           Partnership. (Incorporated by reference. Previously filed
           as Exhibit 10 to the Company's Quarterly Report on Form
           10-Q for the quarter ended March 31, 1995.)                   IBRF
   (s)  -- 1992 Executive Stock Option Plan, as amended effective
           May 24, 1995. (Incorporated by reference. Previously
           filed as Exhibit 3 to the Company's Quarterly Report on
           Form 10-Q for the quarter ended June 30, 1995.)               IBRF
   (t)  -- Amended and Restated Asset Purchase Agreement dated as of
           June 12, 1995 by and between the Company and Oracle
           Corporation. (Incorporated by reference. Previously filed
           as Exhibit 2.1 to the Company's Current Report on Form
           8-K dated July 27, 1995 and filed August 11, 1995.)           IBRF
</TABLE>
<PAGE>   49
 
<TABLE>
<CAPTION>
                                                                      SEQUENTIAL
EXHIBIT                                                                DOCUMENT
NUMBER                    DESCRIPTION OF DOCUMENT                       FILING
-------                   -----------------------                     ----------
<C>     <S>                                                           <C>
   (u)  -- Licenses-Back Agreement dated as of July 27, 1995 between
           the Company and Oracle Corporation. (Incorporated by
           reference. Previously filed as Exhibit B to the Amended
           and Restated Asset Purchase Agreement dated as of July
           27, 1995 filed as Exhibit 2.1 to the Current Report on
           Form 8-K dated July 27, 1995 and filed August 11, 1995.)      IBRF
   (v)  -- Employment Termination Agreement, dated as of March 4,
           1996 between the Company and George R. Garrick
           (Incorporated by reference. Previously filed as Exhibit
           10(dd) to the Company's Annual Report on Form 10-K for
           the fiscal year ended December 31, 1995.)                     IBRF
   (w)  -- Form of Information Resources, Inc.
           Directorship/Officership Agreement between the Company
           and each of its directors, executive officers and certain
           other officers. (Incorporated by reference. Previously
           filed as Exhibit 10(x) to the Company's Annual Report on
           Form 10-K for the fiscal year ended December 31, 1994.)       IBRF
   (x)  -- Employment Agreement dated as of August 22, 1996, between
           the Company and Randall S. Smith and First Amendment to
           Employment Agreement dated November 11, 1996.
           (Incorporated by reference. Previously filed as Exhibit
           10(gg) to the Company's Annual Report on Form 10-K for
           the fiscal year ended December 31, 1996.)                     IBRF
   (y)  -- Information Resources, Inc. Amended and Restated 401(k)
           Retirement Savings Plan and Trust adopted by the Company
           effective May 24, 1995. (Incorporated by reference.
           Previously filed as Exhibit 10(hh) to the Company's
           Annual Report on Form 10-K for the fiscal year ended
           December 31, 1996.                                            IBRF
   (z)  -- First Amendment to the Information Resources, Inc.
           Amended and Restated 401(k) Retirement Savings Plan
           effective July 1, 1996. (Incorporated by reference.
           Previously filed as Exhibit 10(ii) to the Company's
           Annual Report on Form 10-K for the fiscal year ended
           December 31, 1996.)                                           IBRF
   (aa) -- Second Amendment to the Information Resources, Inc.
           Amended and Restated 401(k) Retirement Savings Plan
           effective March 1, 1997. (Incorporated by reference.
           Previously filed as Exhibit 10(jj) to the Company's
           Annual Report on Form 10-K for the fiscal year ended
           December 31, 1996.)                                           IBRF
   (bb) -- Trust Agreement between Information Resources, Inc. and
           Fidelity Management Trust Company dated as of July 1,
           1996. (Incorporated by reference. Previously filed as
           Exhibit 10(kk) to the Company's Annual Report on Form
           10-K for the fiscal year ended December 31, 1996.)            IBRF
   (cc) -- First Amendment to Trust Agreement between Fidelity
           Management Trust Company and Information Resources, Inc.
           effective March 1, 1997. (Incorporated by reference.
           Previously filed as Exhibit 10(ll) to the Company's
           Annual Report on Form 10-K for the fiscal year ended
           December 31, 1996.)                                           IBRF
   (dd) -- Credit Agreement dated October 31, 1997 among the
           Company, the Bank Parties thereto and Harris Trust and
           Savings Bank, as Agent. (Incorporated by reference.
           Previously filed as Exhibit 10 to the Company's Quarterly
           Report on Form 10-Q for the quarter ended September 30,
           1997.)                                                        IBRF
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<PAGE>   50
 
<TABLE>
<CAPTION>
                                                                      SEQUENTIAL
EXHIBIT                                                                DOCUMENT
NUMBER                    DESCRIPTION OF DOCUMENT                       FILING
-------                   -----------------------                     ----------
<C>     <S>                                                           <C>
   (ee) -- Rights Agreement between Information Resources, Inc. and
           Harris Trust and Savings Bank, amended and restated as of
           October 27, 1997. (Incorporated by reference. Previously
           filed as Exhibit 4.2 to the Company's Current Report on
           Form 8-A/A dated October 27, 1997 and filed October 28,
           1997.)                                                        IBRF
   (ff) -- Information Resources, Inc. Executive Deferred
           Compensation Plan effective January 1, 1999                     EF
   (gg) -- Consulting Agreement dated as of February 16, 1999,
           between the Company and Gian M. Fulgoni                         EF
   (hh) -- First Amendment to Credit Agreement dated as of February
           10, 1999 between the Company, the Banks Party thereto and
           Harris Trust and Savings Bank, as agent for the Banks           EF
   (ii) -- Employment letter agreement dated April 26, 1995 between
           the Company and Gary M. Hill.                                   EF
   (jj) -- Employment letter agreement dated September 23, 1997
           between the Company and James R. Chambers, as amended by
           letter agreement dated August 31, 1998.                         EF
 18     -- Letter regarding change in accounting principle.
           (Incorporated by reference. Previously filed as Exhibit
           18 to the Company's Quarterly Report on Form 10-Q for the
           quarter ended March 31, 1994.)                                IBRF
 21     -- Subsidiaries of the Registrant (filed herewith).                EF
 23     -- Consent of Independent Auditors (filed herewith).               EF
 24     -- Powers of Attorney (filed herewith).                            EF
 27     -- Financial Data Schedule (filed herewith).                       EF
</TABLE>