<PAGE>
 
                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-Q

(Mark One)

   X    Quarterly Report Pursuant to Section 13 or 15(d) of The Securities
 -----  Exchange Act of 1934.
 
          For the quarterly period ended September 30, 1996

        Transition report pursuant to Section 13 or 15(d) of the
 -----  Securities Exchange Act of 1934.


        Commission file number 0-11428


                          INFORMATION RESOURCES, INC.
           --------------------------------------------------------
            (Exact name of registrant as specified in its charter)

                 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)

       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, $.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
                                        -----      -----

The number of shares of the registrant's common stock, $.01 par value per share
outstanding, as of October 31, 1996 was 27,809,469.

<PAGE>
 
                 INFORMATION RESOURCES, INC. AND SUBSIDIARIES

                                     INDEX
                                     -----
                                       
<TABLE>
<CAPTION>
                                                                          PAGE
                                                                         NUMBER
                                                                         ------
<S>                                                                      <C>
PART I.  FINANCIAL INFORMATION
------------------------------

Condensed Consolidated Balance Sheets                                        3
 
Condensed Consolidated Statements of Operations                              4
 
Condensed Consolidated Statements of Cash Flows                              5
 
Notes to Condensed Consolidated Financial Statements                         6
 
Management's Discussion and Analysis of
  Financial Condition and Results of Operations                              9


PART II. OTHER INFORMATION
--------------------------

Item 6 - Exhibits and Reports on Form 8-K                                   15

Signatures                                                                  16
</TABLE> 

                                       2
<PAGE>
 
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
ASSETS                                          SEPTEMBER 30, 1996   DECEMBER 31, 1995
------                                          ------------------   -----------------
                                                    (UNAUDITED)
<S>                                             <C>                  <C>
CURRENT ASSETS
--------------
  Cash and cash equivalents                          $  8,260            $ 24,884
  Accounts receivable, net                            101,582              95,862
  Escrow receivable                                     8,000               8,000
  Prepaid expenses and other                            4,890               5,169
                                                     --------            --------
     Total Current Assets                             122,732             133,915
                                                     --------            --------
Property and equipment, at cost                       147,336             136,946
  Accumulated depreciation and amortization           (87,507)            (76,541)
                                                     --------            --------
     Net property and equipment                        59,829              60,405
Investments                                            19,152              18,791
Other assets                                          138,793             125,425
                                                     --------            --------
                                                     $340,506            $338,536
                                                     ========            ========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
  Current maturities of capitalized leases           $  2,859            $  2,317
  Accounts payable                                     36,273              36,214
  Accrued compensation and benefits                    13,244              19,812
  Accrued property, payroll and other taxes             3,670               3,981
  Accrued expenses                                      6,967              11,571
  Deferred revenue                                     19,916              15,599
                                                     --------            --------
     Total Current Liabilities                         82,929              89,494
                                                     --------            --------
Long-term bank debt                                    10,750                  --
Long-term capitalized leases                            2,962               3,760
Deferred income taxes, net                              6,554               8,643
Deferred gain                                           3,736               4,047
Other liabilities                                       3,001               2,838

STOCKHOLDERS' EQUITY
  Preferred stock-authorized, 1,000,000 shares
     $.01 par value - none issued                          --                  --
  Common stock - authorized 60,000,000 shares,
     $.01 par value; 27,802,370 and
     27,587,176 shares issued and
     outstanding, respectively                            278                 276
  Capital in excess of par value                      186,531             183,615
  Retained earnings                                    43,833              45,828
  Cumulative translation adjustment                       (68)                 35
                                                     --------            --------
     Total Stockholders' Equity                       230,574             229,754
                                                     --------            --------
                                                     $340,506            $338,536
                                                     ========            ========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       3
<PAGE>
 
                 INFORMATION RESOURCES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   UNAUDITED
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)



<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED           NINE MONTHS ENDED
                                                           -----------------------      ------------------------
                                                                SEPTEMBER 30                 SEPTEMBER 30
                                                           -----------------------      ------------------------
                                                             1996          1995           1996           1995
                                                           ---------     ---------      ---------      ---------    
<S>                                                        <C>            <C>           <C>            <C>          
Revenues:
  U.S. and International services                          $ 101,980     $  83,853      $ 297,933      $ 261,217
  Software products business sold to Oracle                       --         3,435             --         40,198
                                                           ---------     ---------      ---------      ---------
                                                             101,980        87,288        297,933        301,415
Costs and expenses:                                                                                 
  Information services                                       (93,390)      (88,203)      (275,498)      (250,547)
  Software products business sold to Oracle                       --        (3,379)            --        (41,142)
  Selling, general and administrative expenses                (8,562)      (17,252)       (26,110)       (41,285)
  Nonrecurring expenses                                           --       (22,759)            --        (22,759)
                                                           ---------     ---------      ---------      ---------
                                                            (101,952)     (131,593)       301,608       (355,733)
                                                           ---------     ---------      ---------      ---------

Operating profit (loss)                                           28       (44,305)        (3,675)       (54,318)

Net gain on disposition of assets                                 --        41,126             --         41,126

Interest expense and other, net                                 (415)         (446)        (1,074)        (3,132)

Equity in earnings of affiliated companies                        94            91             26            246
                                                           ---------     ---------      ---------      ---------

Loss before income taxes and                                                                          
  minority interests                                            (293)       (3,534)        (4,723)       (16,078)

Income tax (expense) benefit                                      --        (1,400)         2,038          4,244
                                                           ---------     ---------      ---------      ---------

Loss before minority interests                                  (293)       (4,934)        (2,685)       (11,834)

Minority interests                                               303           132            690            132
                                                           ---------     ---------      ---------      ---------

Net earnings (loss)                                        $      10     $  (4,802)     $  (1,995)     $ (11,702)
                                                           =========     =========      =========      =========

Net earnings (loss) per common and                                    
 common equivalent share                                   $      --     $    (.18)     $    (.07)     $    (.44)
                                                           =========     =========      =========      =========

Weighted average common and                                           
 common equivalent shares                                     27,775        27,128         27,727         26,856
                                                           =========     =========      =========      =========
                                                                                                      
</TABLE>



        The accompanying notes are an integral part of these statements.

                                       4
<PAGE>
 
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   UNAUDITED
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
 
 
                                                                             NINE MONTHS ENDED SEPTEMBER 30
                                                                            --------------------------------
                                                                                 1996             1995
                                                                            ---------------  ---------------
<S>                                                                         <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss:                                                                      $ (1,995)        $(11,702)
  Adjustments to reconcile net loss to net cash provided by
   operating activities:
    Amortization of deferred data procurement costs                              64,698           62,434
    Depreciation expense                                                         14,921           15,547
    Amortization of capitalized software costs                                    2,887            5,893
    Amortization of intangibles                                                   2,079            3,661
    Deferred income tax provision                                                (2,038)          (4,671)
    Equity in earnings of affiliated companies and minority interests              (716)            (378)
    Provision for losses on accounts receivable                                     385            5,799
    Net gain on disposition of assets                                                --          (41,126)
    Nonrecurring expenses                                                            --           22,759
    Other                                                                           490            2,192
    Change in assets and liabilities:
      Accounts receivable                                                        (6,400)          (9,984)
      Other current assets                                                          279           (4,318)
      Accounts payable and accrued liabilities                                  (11,049)          (2,578)
      Deferred revenue                                                            1,827           10,808
      Other, net                                                                    718           (1,016)
                                                                               --------         --------
       Total adjustments                                                         68,081           65,022
                                                                               --------         --------
         Net cash provided by operating activities                               66,086           53,320
 
CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from disposition of assets                                                --           92,000
  Deferred data procurement costs                                               (75,050)         (72,482)
  Purchase of property and equipment                                            (14,578)         (18,369)
  Capitalized software costs                                                     (4,367)          (7,179)
  Investments relating to joint ventures                                           (600)          (4,812)
                                                                               --------         --------
     Net cash used in investing activities                                      (94,595)         (10,842)
 
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net bank borrowings (repayments)                                               10,750          (29,000)
  Net (repayments) borrowings of capitalized leases                              (1,387)           2,291
  Proceeds from exercise of stock options and other                               2,862            7,844
                                                                               --------         --------
     Net cash provided by (used in) financing activities                         12,225          (18,865)
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH                                            (340)             177
                                                                               --------         --------
 
  Net (decrease) increase in cash and cash equivalents                          (16,624)          23,790
 
  Cash and cash equivalents at beginning of period                               24,884           11,792
                                                                               --------         --------
 
  Cash and cash equivalents at end of period                                   $  8,260         $ 35,582
                                                                               ========         ========
 
</TABLE>



        The accompanying notes are an integral part of these statements.

                                       5
<PAGE>
 
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)



NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

Basis of presentation:  The accompanying condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements included in Information Resources, Inc.'s Annual Report on Form 10-K
for the year ended December 31, 1995.  The condensed consolidated financial
information furnished herein reflects all adjustments (consisting of normal
recurring accruals) which are, in the opinion of management, necessary for a
fair presentation of the condensed consolidated financial statements for the
periods shown.

Principles of consolidation:  The condensed consolidated financial statements
include the accounts of Information Resources, Inc. and its subsidiaries
(collectively "the Company") after elimination of intercompany transactions.

Reclassifications:  Certain amounts in the 1995 condensed consolidated financial
statements have been reclassified to conform to the 1996 presentation.

Adoption of Statement of Financial Accounting Standards:  On January 1, 1996,
the Company adopted the Statement of Financial Accounting Standards, No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of".  The adoption of this Standard did not have a material impact
on the Company's consolidated financial statements.


NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION
-------------------------------------------

Cash paid (refunded) for interest and income taxes during the period was as
follows (in thousands):
<TABLE>
<CAPTION>
 
                                NINE MONTHS ENDED SEPTEMBER 30
                                      1996             1995
                               ---------------  ---------------
<S>                            <C>              <C>
 
    Interest                        $1,580            $3,155
    Income taxes                      (550)             (836)
</TABLE>

In March 1995, Information Resources, Inc. ("IRI") and Middle East Market
Research Bureau ("MEMRB") International entered into a strategic alliance
agreement.  In connection with this agreement, IRI issued common stock having a
market value of approximately $2.6 million to the stockholders of MEMRB and
obtained an option to acquire up to a 49% ownership interest in MEMRB.

                                       6
<PAGE>
 
                 INFORMATION RESOURCES, INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D.
                                  (UNAUDITED)

<TABLE>
<CAPTION>
NOTE 3 - ACCOUNTS RECEIVABLE
----------------------------

Accounts receivable were as follows (in thousands):

                                           SEPTEMBER 30, 1996   DECEMBER 31, 1995
                                           ------------------   -----------------
  <S>                                      <C>                  <C>
  Billed                                       $ 58,956             $62,580
  Unbilled                                       43,064              34,903
  Other                                           3,764               2,239
                                               --------             -------
                                                105,784              99,722
  Reserve for accounts receivable                (4,202)             (3,860)
                                               --------             -------

                                               $101,582             $95,862
                                               ========             =======
</TABLE>

<TABLE>
<CAPTION>
NOTE 4 - OTHER ASSETS
---------------------

Other assets were as follows (in thousands):



                                           SEPTEMBER 30, 1996   DECEMBER 31, 1995
                                           ------------------   -----------------
<S>                                        <C>                  <C>

  Deferred data procurement costs -
   net of accumulated amortization of
   $108,188 in 1996 and $92,912 in 1995         $111,875            $ 98,602

  Intangible assets, including goodwill
   primarily related to acquisitions -
   net of accumulated amortization of
   $6,610 in 1996 and $14,026 in 1995             11,468              13,395

  Capitalized software costs - net of
   accumulated amortization of $5,289
   in 1996 and $3,648 in 1995                     11,337               9,857

  Other                                            4,113               3,571
                                                --------            --------

                                                $138,793            $125,425
                                                ========            ========
</TABLE>

                                       7
<PAGE>
 
                 INFORMATION RESOURCES, INC. AND SUBSIDIARIES
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONT'D.
                                  (UNAUDITED)



NOTE 5 - ACCRUED EXPENSES
-------------------------

In 1995, the Company decided to transition its Towne-Oller service from the use
of warehouse withdrawal data to InfoScan scanner data and close down its New
York operation. Amounts charged against the $2.9 million reserve established in
1995 for facility operating leases and severance aggregated $1.0 million through
September 30, 1996.


NOTE 6 - LONG-TERM DEBT
-----------------------

The Company increased its bank borrowings to $10.8 million at September 30,
1996. The primary use of borrowings has been the expansion of the Company's
International services business in Europe.

The Company currently has a $50.0 million bank credit facility maturing in 1998
with fixed or floating interest rate options at or below prime. Facility fees of
 .15% are payable on the bank credit facility, and there are no commitment fees.
The credit facility contains financial covenants which restrict the Company's
ability to incur additional indebtedness or liens on its assets. The financial
covenants also require the Company to meet tangible net worth levels, cash flow
coverage amounts, leverage limitations and quick ratio minimums.

Certain of the Company's loan and lease agreements include various financial
covenants which require that the Company maintain a minimum tangible net worth,
as defined, and otherwise limit IRI's ability to declare dividends or make
distributions to holders of capital stock, or redeem or otherwise acquire shares
of the Company. Approximately $10.5 million is available for such distributions
under the most restrictive of these covenants.

NOTE 7 - 1995 UNUSUAL ITEMS
---------------------------

The third quarter of 1995 included a nonrecurring pre-tax gain of $41.1 million
attributable to the sale of a portion of the Company's software business to
Oracle Corporation. This gain was partially offset by a nonrecurring pre-tax
charge of ($22.8) million primarily related to the accelerated recognition of
deferred European data procurement costs and the reorganization of the Company's
Towne-Oller unit. In addition, selling, general and administrative expenses in
third quarter of 1995 reflect approximately ($7.0) million of special charges.

                                       8
<PAGE>
 
                 INFORMATION RESOURCES, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
               OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



OVERVIEW OF OPERATIONS

Over the periods presented, the Company has generated increased revenues
resulting from the continued growth of its U.S. services business and the
startup and significant expansion of its International services business. The
U.S. revenue gains for the nine months ended September 30, 1996 were achieved in
spite of the effect of an intensely competitive pricing environment that began
in late 1993, continued through 1995, and moderated somewhat in 1996. Due to the
longer-term nature of most InfoScan contracts, pricing changes have a delayed
effect on the results of operations as reported in the Company's condensed
consolidated financial statements. This lagged effect is especially apparent in
the Company's U.S. operations because only a portion of all InfoScan contracts
come up for renewal in any particular year.

The development of the Company's International services business has resulted in
significant operating losses which will likely continue until these operations
achieve a substantially higher level of revenues. The Company's European
operations also will continue to require substantial cash investment. On an
ongoing basis, the Company reviews the outlook of its European services
business, including current and near term economic conditions, expected market
growth and the regulatory and competitive environment. Based upon currently
projected operating results and cash flows, the Company's assessment is that the
realizability of its European assets is not currently impaired. To the extent
that actual operating results and cash flows are lower than these projections,
the Company may be required to write down a portion of these assets.

In July 1995, the Company completed the sale to Oracle Corporation ("Oracle") of
certain assets, liabilities and software products relating to its on-line
analytical processing (OLAP) business, the software products business previously
operated by the Company's software division. Since this business was not a
separate business segment, prior period's consolidated financial statements have
not been restated. The sale resulted in a pre-tax gain of $41.1 million. This
gain was partially offset by a nonrecurring pre-tax charge of ($22.8) million
primarily related to the accelerated recognition of deferred European data
procurement costs and the reorganization of the Company's Towne-Oller unit. In
addition, selling, general and administrative expenses in the third quarter of
1995 reflect approximately ($7.0) million of special charges.

Ongoing business revenues in the first nine months of 1996 increased over the
same period in 1995. The Company reported break-even results for the third
quarter of 1996 and a consolidated net loss for both nine month periods. A
number of factors influenced results in the first nine months of 1996,
including: (a) the continued competitive environment in Europe and costs
relating to the development of the Company's International services business;
(b) the effects of price competition on past U.S. InfoScan renewals; (c) costs
related to building the Company's InfoScan Census data base and its Omega re-
engineering initiatives; (d) increased client deliverables associated with past
InfoScan contract renewals; and (e) increased costs of software development
efforts.

                                       9
<PAGE>
 
                 INFORMATION RESOURCES, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
           OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.



Based upon discussions with financial analysts, the Company considers the
aggregation of operating profit (loss), equity earnings (losses) and minority
interests ("Operating Results") to be a meaningful and readily comparable
measure of the Company's relative performance. A comparative analysis of
consolidated revenues and Operating Results for the three and nine months ended
September 30, 1996 and 1995 follows (in thousands):
<TABLE>
<CAPTION>


                                                         THREE MONTHS ENDED          NINE MONTHS ENDED
                                                         ------------------          -----------------
                                                            SEPTEMBER 30                SEPTEMBER 30
                                                            ------------               -------------

                                                           1996        1995           1996        1995
                                                         --------    --------       --------    --------
<S>                                                      <C>         <C>            <C>         <C>
Revenues:
 U.S. Services                                           $ 86,848    $ 73,379       $253,783    $232,078
 International Services                                    15,132      10,474         44,150      29,139
                                                         --------    --------       --------    --------
     Subtotal                                             101,980      83,853        297,933     261,217
 Software products business sold to Oracle                     --       3,435             --      40,198
                                                         --------    --------       --------    --------

                                                         $101,980    $ 87,288       $297,933    $301,415
                                                         ========    ========       ========    ========

Operating Results:
 U.S. Services
   Operating profit                                      $  8,168    $ (7,664)      $ 20,764    $  8,143
   Equity in loss of affiliated companies                      --          --             --        (200)
                                                         --------    --------       --------    --------
     Subtotal - U.S.                                        8,168      (7,664)        20,764       7,943
 International Services
   Operating loss                                          (7,808)    (10,439)       (23,225)    (27,576)
   Equity in earnings (loss) of affiliated companies           94          91             26         446
   Minority interests                                         303         132            690         132
                                                         --------    --------       --------    --------
     Subtotal - International                              (7,411)    (10,216)       (22,509)    (26,998)
 Corporate and other expenses                                (332)     (1,203)        (1,214)     (4,082)
 Software products business sold
  to Oracle operating loss                                     --      (2,240)            --      (8,044)
 Nonrecurring expenses                                         --     (22,759)            --     (22,759)
                                                         --------    --------       --------    --------

 Operating Results                                       $    425    $(44,082)      $ (2,959)   $(53,940)
                                                         ========    ========       ========    ========

</TABLE>


  In the third quarter of 1996, revenues from the Company's U.S. services
business were $86.8 million, an increase of 18% compared to $73.4 million for
the corresponding 1995 quarter. This increase was primarily the result of
revenue growth from existing, as well as new clients, and increased InfoScan
Census revenues which nearly doubled over the third quarter of 1995.

                                      10
<PAGE>
 
                 INFORMATION RESOURCES, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
           OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.



Revenues from the Company's U.S. services business in the first nine months of
1996 were 9% higher than in the corresponding period of 1995, with increased
1996 revenue being partially offset by the effect of the previously announced
close-down of the Company's Towne-Oller service during late 1995. Operating
Results for the Company's U.S. businesses, after direct overhead charges, were
$8.2 million in the third quarter of 1996 compared to ($7.7) million for the
third quarter of 1995. Excluding third quarter 1995 unusual items which affect
the year-ago comparison, operating earnings in the third quarter of 1996 for the
U.S. businesses were significantly higher, reflecting the impact of revenue
increases and cost containment initiatives. U.S. Operating Results for the nine
months ended September 30, 1996 were $20.8 million, up almost 40% over the
comparable period in 1995, after excluding nonrecurring and special charges in
1995. This increase was due to strong revenue gains and the benefit of lower
expense growth resulting from the Company's cost containment programs.

  Third quarter 1996 revenues from the Company's International businesses were
$15.1 million, an increase of 44% over the corresponding 1995 quarter. The
revenue gains resulted from an increase in the number of InfoScan clients and
expanded usage among existing clients, particularly in France and Italy.
International services revenues for the nine months ended September 30, 1996
increased 52% to $44.2 million primarily as a result of significant revenue
gains in France and Italy. Operating Results for the Company's International
businesses were a ($7.4) million loss in the third quarter of 1996 compared to a
($10.2) million loss in the corresponding 1995 quarter which has been restated
to include direct overhead. International's Operating Results were a ($22.5)
million loss for the nine months ended September 30, 1996 compared to a ($27.0)
million loss for the same period of 1995 which has been restated to include
direct overhead. International results for the three and nine month periods
continue to reflect a difficult competitive environment in Europe, the ramp-up
of Italian operations and high retailer costs in the U.K.

RESULTS OF OPERATIONS

  Consolidated net earnings were break-even for the third quarter of 1996
compared to a loss of ($4.8) million for the corresponding 1995 quarter.
Consolidated net loss was ($2.0) million for the nine months ended September 30,
1996 compared to a net loss of ($11.7) million for the same period of 1995.

  Consolidated revenues for the three and nine months ended September 30, 1996
were up 22% and 14%, respectively, after adjusting revenues for the three and
nine months ended September 30, 1995 to remove that portion of the Company's
software business that was sold to Oracle in July 1995.

                                      11
<PAGE>
 
                 INFORMATION RESOURCES, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
           OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.



  Consolidated revenues increased to $102.0 million for the quarter ended
September 30, 1996 from $87.3 million for the same quarter of 1995. This
increase was the result of revenue growth from existing, as well as new clients,
increased InfoScan Census revenues and strong international growth, particularly
in France and Italy. Due to the effect of the July 1995 sale of the OLAP
software products business to Oracle Corporation, consolidated revenues
decreased to $297.9 million for the nine months ended September 30, 1996
compared to $301.4 million for the same period in 1995.

  Consolidated costs of information services increased 6% to $93.4 million for
the three months ended September 30, 1996 compared to $88.2 million for the same
period in 1995. Consolidated costs of information services increased 10% to
$275.5 million for the nine months ended September 30, 1996 compared to $250.5
million for the same period in 1995. The increase in the first nine months of
1996 was primarily due to: (a) a $14.3 million increase in U.S. services
compensation expense resulting primarily from higher headcount required for
software development and client servicing; (b) a $7.3 million increase in
International services compensation expense resulting from the continued
expansion of operations; (c) a $2.3 million increase in amortization of deferred
data procurement costs, principally resulting from the expansion of the
information services business in Europe; and (d) a $1.9 million increase in
depreciation and computer expenses due to increasing levels of InfoScan services
in Europe and the U.S. and the cost of production re-engineering projects.

  Consolidated results for the three and nine months ended September 30, 1995
include the operations of the software products business which was sold to
Oracle. This part of the Company's overall software business reported costs of
software products sold of $3.4 million and $41.1 million for the three and nine
months ended September 30, 1995. Consolidated results for the three and nine
months ended September 30, 1995 included a pre-tax loss of ($2.2) million and
($8.0) million, respectively, from the business sold to Oracle.

  Consolidated selling, general and administrative expenses decreased $8.7
million to $8.6 million for the third quarter of 1996 and decreased $15.2
million to $26.1 million for the nine months ended September 30, 1996. Excluding
that portion of selling, general and administrative expenses attributable to the
software products business sold to Oracle, consolidated selling, general and
administrative expenses decreased $6.4 million or 43% for the third quarter of
1996 and decreased $8.1 million or 24% for the nine months ended September 30,
1996 compared to the same periods of 1995. These decreases were primarily
attributable to cost reduction programs and the $7.0 million special charge in
the third quarter of 1995.

  Interest and other expenses, net, were $.4 million in both the third quarter
of 1996 and 1995. Interest and other expenses, net, for the nine months ended
September 30, 1996 and 1995 were $1.1 million and $3.1 million, respectively.
The decrease was principally due to application of proceeds from the Oracle sale
to reduce bank debt.

                                      12
<PAGE>
 
                 INFORMATION RESOURCES, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
           OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.


  The Company's effective income tax rate is greater than the Federal statutory
rate due to certain unbenefitted foreign losses, goodwill amortization and other
nondeductible expenses.

LIQUIDITY AND CAPITAL RESOURCES

  The Company's cash requirements continue to be extensive, primarily caused by
expenses incurred in the expansion of its information services in Europe. The
Company's current cash resources include its $8.3 million consolidated cash
balance, $39.2 million available under the bank line of credit and internally
generated funds from its U.S. operations. The Company anticipates that it will
have sufficient funds from these sources to satisfy its international capital
needs for the foreseeable future. Bank line availability is subject to
compliance with covenants relating to tangible net worth levels, cash flow
coverage amounts, leverage limitations and quick ratios.

  Certain of the Company's loan and lease agreements include various financial
covenants which require that the Company maintain a minimum tangible net worth,
as defined, and otherwise limit IRI's ability to declare dividends or make
distributions to holders of capital stock, or redeem or otherwise acquire shares
of the Company. Approximately $10.5 million is available for such distributions
under the most restrictive of these covenants.

  Cash Flow: Consolidated net cash provided by operating activities was $66.1
million for the nine months ended September 30, 1996 compared to $53.3 million
for the same period in 1995, primarily due to improved operating performance in
1996. Consolidated cash used in net investing activities was ($94.6) million in
1996 compared to ($10.8) million for the same period in 1995 as the 1995 period
benefitted from the $92.0 million of proceeds received from the sale of the
General Software Business to Oracle. Net cash provided (used) before financing
activities was ($28.5) million for the nine months ended September 30, 1996 and
$42.5 million for the same period of 1995. Consolidated cash provided by (used
in) net financing activities was $12.2 million for the nine months ended
September 30, 1996 compared to ($18.9) million for the same period in 1995. The
1995 net financing activities primarily reflect the repayment of bank borrowings
using proceeds from the Oracle sale.

  Financings:  The Company increased its bank borrowings by $1.3 million during
the third quarter of 1996 to $10.8 million at September 30, 1996. The primary
use of borrowings has been the expansion of the Company's information services
business in Europe.

  Other Deferred Costs and Capital Expenditures: Consolidated deferred data
procurement expenditures were $75.1 million for the nine months ended September
30, 1996 and $72.5 million for the same period in 1995. 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 InfoScan
data base. Such expenditures for the Company's U.S. services business were $50.0
million and $48.4 million for the periods ended September 30, 1996 and 1995,
respectively, and $25.1 million and $24.1 million, respectively, for the
Company's International services business.

                                      13
<PAGE>
 
                 INFORMATION RESOURCES, INC. AND SUBSIDIARIES
                     MANAGEMENT'S DISCUSSION AND ANALYSIS
           OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONT'D.



  The Company's European operations will continue to require substantial
investment in data procurement costs. Based upon currently projected operating
results and cash flows, the Company's assessment is that the realizability of
these assets is not impaired. To the extent that actual operating results and
cash flows are lower than these projections, the Company may be required to
write down a portion of these assets.

  Consolidated capital expenditures were $14.6 million and $18.7 million for the
nine months ended September 30, 1996 and 1995, respectively. Capital
expenditures for the Company's U.S. services business were $11.2 million and
$14.8 million for the nine months ended September 30, 1996 and 1995,
respectively, while related depreciation expense was $11.9 million and $13.3
million, respectively. The Company's International services business capital
expenditures were $3.4 million and $3.9 million for the nine months ended
September 30, 1996 and 1995, respectively, while related depreciation expense
was $3.0 million and $2.2 million, respectively.

  Consolidated capitalized software development costs were $4.4 million and $7.2
million for the nine months ended September 30, 1996 and 1995, respectively. Due
to the sale of the software products business to Oracle, software development
costs declined from historical levels.

  NOL Carryforwards: As of December 31, 1995, the Company had cumulative Federal
net operating loss ("NOL") carryforwards of approximately $41.1 million that
expire primarily in 2009 and 2010. In addition, at December 31, 1995, various
foreign subsidiaries of IRI had aggregate cumulative NOL carryforwards for
foreign income tax purposes of approximately $3.9 million which are subject to
various income tax provisions of each respective country. Approximately $2.7
million of these foreign NOL's may be carried forward indefinitely while the
remaining $1.2 million expire in 1999 and 2000. A majority of the European
foreign pre-tax losses are deducted as partnership losses in IRI's consolidated
U.S. income tax return in accordance with the Internal Revenue Code.

                                      14
<PAGE>
 
                  INFORMATION RESOURCES, INC. AND SUBSIDIARIES
                                    PART II

                               OTHER INFORMATION



Item 6.  Exhibits and Reports on Form 8-K

         a. Exhibits

               Exhibit No.  Description of Exhibit                      Page
               -----------  ----------------------                      ----

                    27      Financial Data Schedule (filed herewith).    EF

         b. Reports on Form 8-K.

            Form 8-K dated August 29, 1996

            Items Reported:

            Item 4:  Change in Registrant's Certifying Accountant


            Form 8-K\A dated August 30, 1996

            Items Reported:

            Item 4:  Change in Registrant's Certifying Accountant

                                       15
<PAGE>
 
                 INFORMATION RESOURCES, INC. AND SUBSIDIARIES



                                  SIGNATURES



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



                                INFORMATION RESOURCES, INC.
                                ---------------------------
                                (Registrant)


 


                                /s/  Gary M. Hill
                                ----------------------------------------
                                Gary M. Hill
                                Executive Vice President
                                 and Chief Financial Officer
                                (Authorized officer of Registrant and
                                principal financial officer)



                                /s/  John P. McNicholas, Jr.
                                ----------------------------------------
                                John P. McNicholas, Jr.
                                Controller
                                (Principal accounting officer)



November 13, 1996
-----------------



                                 
                                       16