-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, IjUvphXnlDfnT6l6Hjfqt0Dp4zExfWolQvpJqfSQ2QDzvTw8vJmX104Iyq+7SZ5+ Zm87pDeZ2fN5x0pKY6lrCA== 0000070033-95-000001.txt : 19950509 0000070033-95-000001.hdr.sgml : 19950508 ACCESSION NUMBER: 0000070033-95-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941130 FILED AS OF DATE: 19950117 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NATIONAL DATA CORP CENTRAL INDEX KEY: 0000070033 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 580977458 STATE OF INCORPORATION: DE FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12392 FILM NUMBER: 95501670 BUSINESS ADDRESS: STREET 1: NATIONAL DATA COPRORATION STREET 2: NATIONAL DATA PLAZA CITY: ATLANTA STATE: GA ZIP: 30329 BUSINESS PHONE: 4047282000 MAIL ADDRESS: STREET 1: NATIONAL DATA PLZ CITY: ATLANTA STATE: GA ZIP: 30329-2010 10-Q 1 10-Q FOR QUARTERLY PERIOD ENDED NOV 30, 1994 NATIONAL DATA CORPORATION Condensed Consolidated Statements of Income (In Thousands Except Per Share Data) Quarter Ended November 30, 1994 1993 ---- ---- Revenue $59,812 $50,854 Operating Expenses: Cost of service 32,847 29,728 Sales, general and administrative 21,110 16,612 ------- ------- 53,957 46,340 Operating income 5,855 4,514 Other income (expense): Investment and other income 64 142 Interest expense, net (424) (397) ------- ------- (360) (255) Income before income taxes 5,495 4,259 Provision for income taxes 1,978 1,681 ------- ------- Net income 3,517 2,578 ------- ------- Earnings per common and common equivalent share $0.26 $0.20 ------- ------- Earnings per common and common equivalent share,assuming full dilution $0.26 $0.20 ------- ------- See Notes to Unaudited Condensed Consolidated Financial Statements ============================================================================== NATIONAL DATA CORPORATION Condensed Consolidated Statements of Income (In Thousands Except Per Share Data) Six Months Ended November 30, 1994 1993 ---- ---- Revenue $115,781 $101,571 Operating Expenses: Cost of service 63,505 59,665 Sales, general and administrative 41,481 33,445 ------- ------- 104,986 93,110 Operating income 10,795 8,461 Other income (expense): Investment and other income 136 296 Interest expense, net (628) (863) ------- ------- (492) (567) Income before income taxes and extraordinary item 10,303 7,894 Provision for income taxes 3,709 3,208 ------- ------- Net income before extraordinary item 6,594 4,686 Extraordinary item: Settlement of shareholder lawsuit (net of income tax benefit of $1,050) (Note 2) - (1,450) ------- ------- Net income $6,594 $3,236 ------- ------- Earnings per common and common equivalent share Income before extraordinary item $0.50 $0.37 Extraordinary item - (0.12) ------- ------- Net Income $0.50 $0.25 ------- ------- Earnings per common and common equivalent share, assuming full dilution: Income before extraordinary item $0.49 $0.37 Extraordinary item - (0.12) ------- ------- Net Income $0.49 $0.25 ------- ------- See Notes to Unaudited Condensed Consolidated Financial Statements ============================================================================== NATIONAL DATA CORPORATION P. 1 of 2 Condensed Consolidated Balance Sheets (In Thousands) NOVEMBER 30, MAY 31, 1994 1994 ASSETS ------------ ----------- Current assets: Cash and cash equivalents $14,514 $38,012 Short-term investments 601 25 Accounts receivable: Trade receivables (less allowances of $1,661, and $1,168) 39,476 31,763 Other (less allowances of $3,691, and $968) 20,724 19,701 Investment in sales-type leases, current portion, (less allowances of $354 and $575) 835 2,357 Inventory 3,956 3,518 Prepaid expenses and other current assets 5,362 4,429 ------- ------- Total current assets 85,468 99,805 Investment in sales-type leases (less allowances of $485 and $367) 1,217 1,500 Property and equipment, at cost: Land 402 402 Building 6,503 6,503 Equipment 78,121 71,213 Software 28,687 27,519 Leasehold improvements 14,419 13,949 Furniture and fixtures 9,840 8,744 Work in progress 1,649 2,736 ------- ------- 139,621 131,066 Less-Accumulated depreciation and amortization (111,760) (102,754) ------- ------- 27,861 28,312 Property acquired under capital leases, net of accumulated amortization 6,655 7,317 ------- ------- 34,516 35,629 Deposits 439 2,029 Other assets: Acquired intangibles and goodwill, net of accumulated amortization of $33,616 and $30,882 71,046 41,250 Other 2,419 3,113 ------- ------- 73,465 44,363 Total Assets $195,105 $183,326 ========== ========== See Notes to Unaudited Condensed Consolidated Financial Statements NATIONAL DATA CORPORATION P. 2 of 2 Condensed Consolidated Balance Sheets (In Thousands) NOVEMBER 30, MAY 31, 1994 1994 LIABILITIES AND STOCKHOLDERS' EQUITY ------------ ----------- Current liabilities: Accounts payable $8,509 $6,783 Notes payable on acquired business, current portion (Note 4) 1,011 - Earn-out payable on acquired businesses, current portion 1,711 2,598 Accrued compensation and benefits 5,034 4,462 Merchant processing payables 16,080 15,154 Income tax payable 6,696 6,358 Deferred income taxes, current portion 776 776 Obligations under capital leases, current portion 2,352 1,985 Mortgage payable, current portion 157 149 Other accrued liabilities 14,753 12,667 ------- ------- Total current liabilities 57,079 50,932 Mortgage payable 11,020 11,100 Notes payable on acquired business (Note 4) 3,088 Earn-out payable on acquired businesses 471 1,238 Deferred income taxes 1,796 1,685 Obligations under capital leases 4,393 5,193 Other long-term liabilities 1,823 3,847 ------- ------- Total Liabilities 79,670 73,995 Stockholders' Equity: Preferred stock, par value $1.00 per share, 1,000,000 shares authorized; none issued - - Common stock, par value $.125 per share, 30,000,000 shares authorized; 12,775,483 and 12,610,262 shares issued 1,597 1,576 Capital in excess of par value 32,213 30,215 Retained earnings 82,663 78,865 Minority interest in equity of subsidiaries 175 - Cumulative translation adjustment (460) (533) ------- ------- 116,188 110,123 Less: Deferred compensation (753) (792) ------- ------- Total Stockholders' Equity 115,435 109,331 Total Liabilities and Stockholders' Equity $195,105 $183,326 ========== ========== See Notes to Unaudited Condensed Consolidated Financial Statements ============================================================================== NATIONAL DATA CORPORATION Condensed Consolidated Statements of Cash Flows (In Thousands) Six Months Ended November 30, 1994 1993 Cash flows from operating activities: ----- ----- Net income $6,594 $ 3,236 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 6,748 5,694 Amortization of acquired intangibles and goodwill 3,363 3,035 Provision for bad debt, sales allowances and operational losses 4,249 2,086 Loss on disposal of fixed assets 34 79 Changes in assets and liabilities, net of the effects of acquisitions: (Increase) decrease in trade accounts receivable (6,465) 605 Increase in other accounts receivable (1,791) (1,795) Decrease in investment in sales-type leases 1,834 1,982 (Decrease) increase in inventory 313 (1,097) Decrease in prepaid expenses and other assets 1,352 423 (Decrease)increase in accounts payable and accrued liabilities (1,574) 3,410 Increase in income taxes payable and deferred income taxes payable 323 193 --------- -------- Net cash provided by operating activities 14,980 17,851 Cash flows from investing activities: Capital expenditures (4,358) (3,938) Business acquisitions, net of cash acquired (32,340) (400) Increase in investments and other non-current assets 2,204 6 -------- -------- Net cash used in investing activities (34,494) (4,332) Cash flows from financing activities: Principal payments under mortgage, capital lease arrangements and other long-term debt (1,188) (918) Principal payments on earn-out payable (1,627) (1,499) Net proceeds from the issuance of stock under employee stock plan 1,611 2,230 Dividends paid (2,796) (2,733) -------- -------- Net cash used in financing activities (4,000) (2,920) Effect of exchange rate changes on cash 16 (25) (Decrease) Increase in cash and cash equivalents (23,498) 10,574 Cash, beginning of period 38,012 17,150 -------- -------- Cash, end of period $14,514 $27,724 ======== ======== Supplemental schedule of noncash investing and financing activities: Promissory notes entered into in exchange for capital stock $ 3,006 - Capital leases entered into in exchange for property and equipment $ 297 $ 1,447 ======== ======== See Notes to Unaudited Condensed Consolidated Financial Statements ============================================================================== NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes the disclosures are adequate to make the information presented not misleading. In addition, certain reclassifications have been made to the fiscal 1994 consolidated financial statements to conform to the fiscal 1995 presentation. It is suggested that these financial statements be read in conjunction with financial statements and the notes thereto included in the Company's latest annual report on Form 10-K for the fiscal year ended May 31, 1994. In the opinion of management, the information furnished reflects all adjustments necessary to present fairly the results for such interim periods. NOTE 2 - SHAREHOLDER SUIT: The Company and certain of its previous officers were party to three lawsuits, which were consolidated as "National Data Corporation Shareholder Litigation." The plaintiffs, purporting to act on behalf of a class, alleged violations of rule 10(b)(5) under the Securities and Exchange Act of 1934 under a "fraud on the market" theory for alleged misrepresentations and omissions relating to expected earnings which resulted in, the plaintiffs contend, the Company's common stock being overvalued in the market. The Company and the plaintiffs signed an agreement on September 27, 1993 to settle this matter for $6,950,000. The Company's insurer bore two-thirds of the settlement and related future costs. The cost to the Company, net of income taxes, was approximately $1,450,000. Both the Company and its insurer paid their full share of the settlement amount and the settlement received final approval from the court on December 16, 1993. NOTE 3 - EARNINGS PER SHARE: Earnings per common share and common equivalent share on a primary basis are computed by dividing net income by the weighted average number of common shares and common equivalent shares outstanding during the period. Common equivalent shares represent stock options that, if exercised, would have a dilutive effect on earnings per share. All options with an exercise price less than the average market share price for the period are assumed to have a dilutive effect on earnings per share. Earnings per common and common equivalent share on a fully diluted basis are computed by the same method as described for primary earnings per share except that the higher of (1) the ending market share price for the period or (2) the average market share price for the period is used to compute the fully diluted earnings per share, as compared to the average market share price for primary earnings per share. The primary and fully diluted weighted average number of common and common equivalent shares outstanding is as follows (in thousands): Quarter Ended Six Months Ended November 30, November 30, 1994 1993 1994 1993 ------ ------ ------ ------ Weighted Average 12,737 12,449 12,695 12,368 Primary 13,437 12,963 13,297 12,924 Fully Diluted 13,452 12,963 13,410 12,924 NOTE 4 - BUSINESS ACQUISITIONS The Company closed four acquisition transactions during the period beginning June 1, 1994 and ending October 26, 1994. Each is described below. On June 1, 1994, the Company acquired a majority interest in certain assets and liabilities of Yes Check Services, Inc. (hereinafter "Yes Check"). These assets and liabilities were purchased directly from Yes Check. The assets and liabilities are used in a Chicago-based check guarantee business. Effective September 2, 1994, the Company acquired a Chicago-based check guarantee business through the purchase of all of the capital stock of Mercantile Systems, Inc. (hereinafter "Mercantile") The stock was purchased from the individual shareholders of Mercantile, a group of approximately 13 persons. On July 15, 1994, the Company acquired substantially all of the assets and liabilities of Lytec Systems, Inc. (hereinafter "Lytec"), a Salt Lake City, Utah-based physician and dental practice management software development company. The assets and liabilities were bought by the Company from Lytec. Effective October 26, 1994, the Company acquired all of the capital stock of Zadall Systems Group, Inc. (hereinafter "Zadall"), a Vancouver, British Columbia-based pharmacy and dental practice management software development company. The stock was purchased from the individual shareholders of Zadall. The aggregate price paid for these acquisitions was $36,177,000 plus future earn-out payments required for both the Yes Check and Lytec transactions. These subsequent payments are not estimable at this time. Cash from internally generated funds was used to finance $33,171,000 of the purchase price and non-negotiable installment notes in the face amount of $3,006,000, payable over 3 years, were issued to finance the remainder. The net value of the tangible assets acquired was $3,096,000. The excess of cost over tangible assets acquired of $33,081,000 was allocated to intangibles including goodwill. These will be amortized over their estimated useful life, which in the aggregate approximates 20 years. The following pro forma information for the four acquisitions discussed above is presented for information purposes only and is not necessarily indicative of the operating results that would have occurred had the acquisitions taken place on June 1, 1993, nor are they necessarily indicative of future operations. Fiscal Year Ended Quarter Ended Six Months Ended (In thousands, May 31, 1994 Nov. 30, 1994 Nov. 30, 1994 except per share data) ___________________________________________________________________________ Revenue $234,439 $61,630 $117,599 Net Income Before Extraordinary Item 12,152 3,431 6,508 Net Income 10,702 3,431 6,508 Earnings Per Share, fully diluted .82 .26 .49 The pro forma results listed above are unaudited and reflect purchase price accounting adjustments assuming the acquisitions occurred at the beginning of the fiscal year and include estimates for differences in year-end. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The second quarter of fiscal year 1995 ended November 30, 1994 compared to the same quarter last year is reflected as follows: ($ Millions) FY1995 FY 1994 Inc.(Dec.) $ % $ % % --- --- --- --- ----------- Revenue: Integrated Payments 33.5 56% 28.4 56% 18% Health Care 20.0 33% 15.5 31% 29% Government & Corporate 5.1 9% 4.8 9% 8% Other 1.2 2% 2.2 4% (45%) ------ ----- ------ ----- ------- Total Revenue 59.8 100% 50.9 100% 18% Cost of Service: Operations 26.0 43% 23.7 47% 10% Deprec. & Amort. 4.0 7% 3.4 7% 18% Hardware Sales 2.8 5% 2.6 5% 8% ------ ----- ------ ----- ------- Total Cost of Service 32.8 55% 29.7 59% 10% Gross Margin 27.0 45% 21.2 42% 27% Sales, General & Administrative 21.1 35% 16.6 33% 27% ------ ----- ------ ----- ------- Operating Margin 5.9 10% 4.6 9% 28% Investment & Other Income 0.1 0% 0.1 0% 0% Interest Expense,(net) (0.5) (1%) (0.4) (1%) 0% ------ ----- ------ ----- ------- Income Before Income Taxes 5.5 9% 4.3 8% 28% Provision for Income Taxes 2.0 3% 1.7 3% 18% ------ ----- ------ ----- ------- Net Income 3.5 6% 2.6 5% 35% ------ ----- ------ ----- ------- Revenue Total revenue for the second quarter was $59,812,000, an increase of $8,958,000 (18%) from revenue of $50,854,000 for the same period of the prior year. The revenue increase in the period was the result of increased revenue in Health Care Application Systems and Services, $4,565,000 (29%), Integrated Payment Systems, $4,996,000 (18%) and Government and Corporate Information Systems and Services, $389,000 (8%), partially offset by a decrease in Other Revenue of $992,000 (45%). Health Care revenue growth was principally related to increases in electronic claims processing which increased $3,007,000 (45%) in the period compared to the prior year. Overall revenue from the Company's practice management systems for the pharmacy, dental, government and institutional sectors increased 20%, principally due to acquisitions. Revenue from recurring maintenance fees increased 14%. Integrated Payments Systems (IPS) revenues increased 18% over the same period last year. The increase is a result of several factors. The direct (merchant processing) business increased $6,170,000 and accounts for 65% of total IPS revenue. This increase was primarily due to increased volume of merchant sales processed and equipment sales. In addition, two check guarantee businesses were acquired during fiscal year 1995. Revenue in the Company's indirect (distribution through banks) business decreased 8% as a result of lower revenue per electronic transaction. This decrease was primarily a result of mix changes and reduced prices associated with the renewal of a number of long term contracts. Government and Corporate Information Systems and Services (GCISS) revenue increased 8% over the same period last year primarily due to increased sales of applications for electronic data interchange products. The decrease in Other Revenue of 45% is principally related to the Company's decision to exit the communication services market in 1991. The customer contracts associated with this business expired in the first quarter of fiscal year 1995. Costs and Expenses Total cost of service for the second quarter was $32,847,000, an increase of $3,119,000 (10%) from the same period last year. While the cost of operations increased $2,287,000 (10%) from the same period last year, cost of operations as a percentage of revenue decreased from 47% last year to 43% this year. Depreciation and amortization as a percentage of revenue held constant. Hardware costs increased $217,000 (8%), directly related to volume associated with increased equipment sales in the Integrated Payment Systems business. Gross margin increased to 45% from 42% in the same period last year. Sales, general and administrative expense was $21,110,000 in the quarter ended November 30, 1994. This is an increase of $4,498,000 (27%) from the prior year. The increase is primarily due to sales expansion programs in the Integrated Payment Systems and Health Care areas as well as increased sales, general, and administrative expenses associated with acquired businesses. Investment and Other Income Investment and other income for the second quarter of fiscal year 1995 was $64,000, a decrease of $78,000 (55%) from last year. This decreased interest income is related to a decline in the number of leases held directly by the Company. The Company no longer offers leases directly to its customers. Interest Expense, Net Interest expense for the first quarter increased $27,000 (7%) from the same period last year. This increase is primarily attributable to decreased cash balances and resulting lower interest income. Income Taxes The provision for income taxes, as a percentage of taxable income, was 36% and 39% for the quarters ended November 30, 1994 and 1993, respectively. The decreased rate in the current year is primarily due to research and development tax credits. The Company expects this lower rate to continue. Net Income Net income for the second quarter of fiscal year 1995 was $3,517,000, an increase of $939,000, as compared to the prior year net income for the quarter of $2,578,000. Earnings per share for the period ended November 30, 1994 and 1993 were $0.26 and $ 0.20, respectively. The weighted average number of common and common equivalent shares outstanding for the second quarter of fiscal 1995 was 12,737,000, an increase of 288,000 (4%) as compared to the same period last year. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The six months ended November 30, 1994 compared to the same period last year is reflected as follows: ($ Millions) % FY1995 FY 1994 Inc.(Dec.) $ % $ % of Dollars --- --- --- --- ----------- Revenue: Integrated Payments 65.8 57% 57.6 56% 14% Health Care 36.8 32% 29.6 29% 24% Government & Corporate 10.4 9% 9.7 10% 7% Other 2.8 2% 4.7 5% (40%) ------ ----- ------ ----- ------- Total Revenue 115.8 100% 101.6 100% 14% Cost of Service: Operations 50.4 44% 47.7 47% 6% Deprec. & Amort. 8.0 7% 6.9 7% 16% Hardware Sales 5.1 4% 5.1 5% 0% ------ ----- ------ ----- ------- Total Cost of Service 63.5 55% 59.7 59% 6% Gross Margin 52.3 45% 41.9 41% 25% Sales, General & Administrative 41.5 36% 33.4 33% 24% ------ ----- ------ ----- ------- Operating Margin 10.8 9% 8.5 8% 27% Investment & Other Income 0.1 0% 0.3 0% (67%) Interest Expense,(net) (0.6) (0%) (0.9) (0%) 33% ------ ----- ------ ----- ------- Income Before Taxes and Extraordinary Item 10.3 9% 7.9 8% 30% Provision for Income Taxes 3.7 3% 3.2 3% 16% ------ ----- ------ ----- ------- Net Income Before Extraordinary Item 6.6 6% 4.7 5% 40% Extraordinary Item, (net of taxes) - 0% (1.5) (2%) - ------ ----- ------ ----- ------- Net Income 6.6 6% 3.2 3% 106% ------ ----- ------ ----- ------- Revenue Total revenue for the first six months was $115,781,000, an increase of $14,210,000 (14%) from revenue of $101,571,000 for the same period of the prior year. The revenue increase in the period was the result of increased revenue in Health Care Application Systems and Services, $7,229,000 (24%), Integrated Payment Systems, $8,168,000 (14%) and Government and Corporate Information Systems and Services, $711,000 (7%), partially offset by a decrease in Other Revenue of $1,898,000 (40%). Health Care revenue growth was principally related to increases in electronic claims processing which increased $5,878,000 (46%) in the period compared to the prior year. Overall revenue from the Company's practice management systems for the pharmacy, dental, government and institutional sectors increased 5%. Revenue from recurring maintenance fees increased 6%. Integrated Payments Systems (IPS) revenues increased 14% over the same period last year. The increase is a result of several factors. The direct (merchant processing) business increased $10,414,000 and represents 63% of total IPS revenue. This increase was primarily due to increased volume of merchant sales processed and equipment sales. In addition, two check guarantee businesses were acquired during fiscal year 1995. Revenue in the Company's indirect (distribution through banks) business decreased 7% as a result of lower revenue per electronic transaction. This decrease was primarily a result of mix changes and reduced prices associated with the renewal of a number of long term contracts. Government and Corporate Information Systems and Services (GCISS) revenue increased 7% over the same period last year primarily due to increased sales of applications for electronic data interchange products. The decrease in Other Revenue of 40% is principally related to the Company's decision to exit the communication services market in 1991. The customer contracts associated with this business expired in the first quarter of fiscal year 1995. Costs and Expenses Total cost of service for the first six months was $63,505,000, an increase of $3,840,000 (6%) from the same period last year. While the cost of operations increased $2,750,000 (6%) from the same period last year, cost of operations as a percentage of revenue decreased from 47% last year to 44% this year. Depreciation and amortization increased $1,077,000 (16%) as a result of a computer system upgrade in the latter half of fiscal year 1994. Hardware costs as a percentage of revenue remained con stant. Gross margin increased to 45% from 41% in the same period last year. Sales, general and administrative expense was $41,481,000 in the six months ended November 30, 1994. This is an increase of $8,036,000 (24%) from the prior year. The increase is primarily due to sales expansion programs in the Integrated Payment Systems and Health Care areas as well as increased sales, general, and administrative expenses related to acquired businesses. Investment and Other Income Investment and other income for the first six months of fiscal year 1995 was $136,000, a decrease of $160,000 (54%) from last year. This decreased interest income is related to a decline in the number of leases held directly by the Company. The Company no longer offers leases directly to its customers. Interest Expense, Net Interest expense for the period decreased $235,000 (27%) from the same period last year. This decrease is primarily attributable to an adjustment of imputed interest expense on acquired merchant portfolios made in the first quarter of fiscal year 19 94. Income Taxes The provision for income taxes, as a percentage of taxable income, was 36% and 40% for the six months ended November 30, 1994 and 1993, respectively. The decreased rate in the current year is primarily due to research and development tax credits. The Company expects this lower rate to continue. Net Income Before Extraordinary Item The Company's net income before extraordinary item for the first six months of fiscal year 1995 was $6,594,000, an increase of $1,908,000 from the prior year's net income before extraordinary item of $4,686,000. Extraordinary Item The Company reported an extraordinary charge of $1,450,000 (net of income taxes) in the first quarter of fiscal 1994, representing the settlement costs of a lawsuit brought against the Company. (See Note 2 of the unaudited condensed consolidated financial statements for further discussion of the extraordinary item). Net Income Net income for the period was $6,594,000, an increase of $3,358,000, as compared to the prior year's net income for the period of $3,236,000. Earnings per share for the period ended November 30, 1994 and 1993 were $0.49 and $0.25, respectively. The weighted average number of common and common equivalent shares outstanding for the six month period ended November 30, 1994 was 12,695,000, an increase of 327,000 (3%) as compared to the same period last year. Liquidity and Capital Resources Net cash provided by operating activities was $14,980,000 for the six months ended November 30, 1994, a decrease of $2,871,000 (16%) from the prior year amount of $17,851,000. The decrease is primarily related to increased trade receivable balances due to increased sales over the same period last year. Cash used in investing activities was $34,494,000 compared to the prior year of $4,332,000. In the first six months of fiscal 1995, four business acquisitions were made totaling $32,340,000, net of cash acquired. In addition, a $2,000,000 bank compensating balance was refunded to the Company. Net cash used in financing activities was $4,000,000, an increase of $1,080,000 (37%) over the prior year. Principal payments on earn-out agreements increased $128,000 in the current period. Dividends of approximately $2,796,000 and $2,733,000 were paid in the six month periods ending November 30, 1994 and 1993, respectively. The Company has entered into a $15,000,000, working capital line of credit with two banks expiring in August 1995. The Company believes funds generated from operations along with its committed line of credit and the $14,514,000 cash on hand will be adequate to meet normal business operating needs. In addition to the working capital line of credit, the Company has obtained a committed $40,000,000 acquisition line of credit which expires in August of 1996. The Company also has a $500,000 working line of credit with Royal Bank of Canada expiring in March 1995. Stockholders' Equity Stockholders' equity increased $6,104,000 (6%), from May 31, 1994 to $115,435,000 at November 30, 1994. Part II ITEM 1 - PENDING LEGAL PROCEEDINGS _____________________________________ None ITEM 2 - OTHER INFORMATION _____________________________ None ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS __________________________________________________________________ The Company's annual meeting of stockholders was held on November 17, 1994. At the annual meeting, the stockholders of the Company approved the following items: 1. Election of two directors in Class II, Edward L. Barlow and Neil Williams, to serve until the annual meeting of stockholders in 1997 and thereafter until their successors are duly elected and qualified; and 2. Amendment of the Company's 1981 Employee Stock Purchase Plan to increase the number of shares that may be issued thereunder from 600,000 to 900,000. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. National Data Corporation (Registrant) Date: January 16, 1995 By: /s/ Jerry W. Braxton ________________ ____________________ Jerry W. Braxton Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 QTR-2 MAY-31-1995 NOV-30-1994 14,514 0 39,476 1,661 3,956 85,468 139,621 111,760 195,105 57,079 0 1,597 0 0 113,838 195,105 115,781 115,781 63,505 104,986 0 0 628 10,303 3,709 6,594 0 0 0 6,594 .50 .49 -----END PRIVACY-ENHANCED MESSAGE-----