10-Q/A 1 10-Q/A FOR QUARTERLY PERIOD ENDED FEB 28, 1995 AMENDMENT #1 NATIONAL DATA CORPORATION Condensed Consolidated Statements of Income (In Thousands Except Per Share Data) Quarter Ended February 28, 1995 1994 ---- ---- Revenue $62,155 $51,014 Operating Expenses: Cost of service 33,781 29,683 Sales, general and administrative 22,113 17,051 ------- ------- 55,894 46,734 Operating income 6,261 4,280 Other income (expense): Interest and other income 411 332 Interest and other expense (649) (543) -------- ------- (238) (211) Income before income taxes 6,023 4,069 Provision for income taxes 2,168 1,428 ------- ------- Net income 3,855 2,641 ------- ------- Earnings per common and common equivalent share $0.19 $0.13 (See Notes 3 and 4) ------- ------- Earnings per common and common equivalent share,assuming full dilution $0.19 $0.13 (See Notes 3 and 4) ------- ------- See Notes to Unaudited Condensed Consolidated Financial Statements ============================================================================== NATIONAL DATA CORPORATION Condensed Consolidated Statements of Income (In Thousands Except Per Share Data) Nine Months Ended February 28, 1995 1994 ---- ---- Revenue $177,936 $152,585 Operating Expenses: Cost of service 97,286 89,348 Sales, general and administrative 63,594 50,496 Settlement of shareholder litigation (Note 2) - 2,500 ------- ------- 160,880 142,344 Operating income 17,056 10,241 Other income (expense): Interest and other income 1,214 1,109 Interest and other expense (1,944) (1,887) ------- ------- (730) (778) Income before income taxes 16,326 9,463 Provision for income taxes 5,877 3,586 ------- ------- Net income $10,449 $5,877 ------- ------- Earnings per common and common equivalent share (See Notes 3 and 4) $0.52 $0.30 ------- ------- Earnings per common and common equivalent share, assuming full dilution (See Notes 3 and 4) $0.51 $0.30 ------- ------- See Notes to Unaudited Condensed Consolidated Financial Statements ============================================================================== NATIONAL DATA CORPORATION P. 1 of 2 Condensed Consolidated Balance Sheets (In Thousands) FEBRUARY 28, MAY 31, 1995 1994 ASSETS ------------ ----------- Current assets: Cash and cash equivalents $21,198 $38,012 Short-term investments 25 25 Accounts receivable: Trade (less allowances of $1,539, and $1,168) 40,193 31,763 Other (less allowances of $3,495, and $968) 18,300 19,701 Investment in sales-type leases, current portion, (less allowances of $288 and $575) 417 2,357 Inventory 3,587 3,518 Prepaid expenses and other current assets 5,212 4,429 ------- ------- Total current assets 88,932 99,805 Investment in sales-type leases (less allowances of $392 and $367) 637 1,500 Property and equipment, at cost: Land 402 402 Building 6,503 6,503 Equipment 79,132 71,213 Software 29,388 27,519 Leasehold improvements 14,494 13,949 Furniture and fixtures 10,279 8,744 Work in progress 1,474 2,736 ------- ------- 141,672 131,066 Less-Accumulated depreciation and amortization (114,549) (102,754) ------- ------- 27,123 28,312 Property acquired under capital leases, net of accumulated amortization 6,805 7,317 ------- ------- 33,928 35,629 Deposits 439 2,029 Other assets: Acquired intangibles and goodwill, net of accumulated amortization of $36,158 and $30,882 75,692 41,250 Other 2,111 3,113 ------- ------- 77,803 44,363 Total Assets $201,739 $183,326 ========== ========== See Notes to Unaudited Condensed Consolidated Financial Statements NATIONAL DATA CORPORATION P. 2 of 2 Condensed Consolidated Balance Sheets (In Thousands) FEBRUARY 28, MAY 31, 1995 1994 LIABILITIES AND STOCKHOLDERS' EQUITY ------------ ----------- Current liabilities: Accounts payable $9,161 $6,783 Notes payable on acquired business, current portion (Note 5) 1,935 - Earn-out payable on acquired businesses, current portion 1,561 2,598 Accrued compensation and benefits 4,134 4,462 Merchant processing payables 18,575 15,154 Income tax payable 6,709 6,358 Deferred income taxes, current portion 776 776 Obligations under capital leases, current portion 2,319 1,985 Mortgage payable, current portion 160 149 Deferred income 4,718 1,032 Other accrued liabilities 11,867 11,635 ------- ------- Total current liabilities 61,915 50,932 Mortgage payable 10,978 11,100 Notes payable on acquired business (Note 5) 2,607 - Earn-out payable on acquired businesses 35 1,238 Deferred income taxes 1,685 1,685 Obligations under capital leases 4,440 5,193 Other long-term liabilities 1,804 3,847 ------- ------- Total Liabilities 83,464 73,995 Minority interest in equity of subsidiaries 262 - Stockholders' Equity: Preferred stock, par value $1.00 per share, 1,000,000 shares authorized; none issued - - Common stock, par value $.125 per share, 45,000,000 shares authorized; 19,251,429 and 12,610,262 shares issued (Note 3) 1,604 1,576 Capital in excess of par value 32,821 30,215 Retained earnings 85,105 78,865 Cumulative translation adjustment (1,010) (533) ------- ------- 118,520 110,123 Less: Deferred compensation (507) (792) ------- ------- Total Stockholders' Equity 118,013 109,331 Total Liabilities and Stockholders' Equity $201,739 $183,326 ========== ========== See Notes to Unaudited Condensed Consolidated Financial Statements ============================================================================== NATIONAL DATA CORPORATION Condensed Consolidated Statements of Cash Flows (In Thousands) Nine Months Ended February 28, 1995 1994 Cash flows from operating activities: ----- ----- Net income $10,449 $ 5,877 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 10,279 8,822 Amortization of acquired intangibles and goodwill 5,277 4,509 Provision for bad debt, sales allowances and operational losses 6,909 3,171 Loss on disposal of fixed assets 34 64 Changes in assets and liabilities, net of the effects of acquisitions: (Increase) decrease in trade accounts receivable (6,834) 1,807 (Increase) decrease in other accounts receivable (770) 132 Decrease in investment in sales-type leases 2,939 4,027 Decrease (increase) in inventory 675 (1,847) Decrease in prepaid expenses and other assets 2,074 1,507 Increase (decrease) in accounts payable and accrued liabilities 808 (5,303) Increase in income taxes payable and deferred income taxes payable 269 972 --------- -------- Net cash provided by operating activities 32,109 23,738 Cash flows from investing activities: Capital expenditures (6,367) (8,726) Business acquisitions, net of cash acquired (38,081) (400) Increase in investments and other non-current assets 1,933 600 -------- -------- Net cash used in investing activities (42,515) (8,526) Cash flows from financing activities: Payments on notes payable (285) - Principal payments under mortgage, capital lease arrangements and other long-term debt (1,963) (1,558) Principal payments on earn-out payable (2,213) (2,278) Net proceeds from the issuance of stock under employee stock plan 2,272 2,862 Dividends paid (4,207) (4,116) -------- -------- Net cash used in financing activities (6,396) (5,090) Effect of exchange rate changes on cash (12) (35) (Decrease) increase in cash and cash equivalents (16,814) 10,087 Cash, beginning of period 38,012 17,150 -------- -------- Cash, end of period $21,198 $27,237 ======== ======== Supplemental schedule of noncash investing and financing activities: Promissory notes entered into in exchange for capital stock $ 3,506 - Capital leases entered into in exchange for property and equipment $ 1,057 $ 1,814 ======== ======== 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, before income taxes, was approximately $2,500,000. 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 - STOCK SPLIT On January 24, 1995 the Company's Board of Directors approved a three-for-two split, effected in the form of a dividend, of the Company's $.125 par value Common Stock and the rights to purchase one one-hundreth of a share of the $1.00 par value Series A Junior Participating Preferred Stock. Shareholders of record on February 20, 1995 were entitled to the stock distribution resulting from the three-for-two split. The stock split was effective March 20, 1995. As a result of the stock split the Company issued an additional 6,417,895 shares of Common Stock and rights to purchase on one-hundreth of a share of the $1.00 par value Series A Junior Participating Preferred Stock. The effects of the split have been reflected in all earnings per share calculations and the February 28, 1995 balance sheet in the accompanying financial statements. NOTE 4 - 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. Earnings per share calculations are presented in the accompanying financial statements . The effects of the stock split (discussed in Note 3) have been retroactively applied to all periods for which financial statements are presented. The primary and fully diluted weighted average number of common and common equivalent shares outstanding as presented after the effects of the stock split is as follows (in thousands): Quarter Ended Nine Months Ended February 28, February 28, 1995 1994 1995 1994 ------- ------- ------- ------- Weighted Average 19,230 18,924 19,106 18,639 Primary 20,480 19,712 20,100 19,574 Fully Diluted 20,480 19,751 20,307 19,751 Prior to the effects of the stock split, the primary and fully diluted weighted average number of common and common equivalent shares outstanding is as follows (in thousands): Quarter Ended Nine Months Ended February 28, February 28, 1995 1994 1995 1994 ------- ------- ------- ------- Weighted Average 12,820 12,542 12,737 12,426 Primary 13,653 13,141 13,400 13,049 Fully Diluted 13,653 13,141 13,538 13,167 NOTE 5 - BUSINESS ACQUISITIONS The Company closed five acquisition transactions during the nine months ended February 28, 1995. 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. 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 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. 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. Effective January 12, 1995, the Company acquired all of the capital stock of Learned-Mahn, Inc. (hereinafter "Learned-Mahn"), a Boise, Idaho-based healthcare and financial services software development company. The stock was purchased from the individual shareholders of Learned-Mahn. The aggregate price paid for these acquisitions was $43,878,000 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 $40,372,000 of the purchase price and non-negotiable installment notes in the face amount of $3,506,000, payable over periods from 1 to 3 years, were issued to finance the remainder. The net value of the tangible assets acquired was $3,479,000. The excess of cost over tangible assets acquired of $40,399,000 was allocated to intangibles assets. These intangible assets will be amortized over their estimated useful life, which in the aggregate approximates 20 years. The following pro forma information for the five 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 Nine Months Ended (In thousands, May 31, 1994 February 28, 1995 February 28, 1995 except per share data) ___________________________________________________________________________ Revenue $237,777 $62,405 $179,686 Net Income 10,749 3,860 10,484 Earnings Per Share, fully diluted .55 .19 .52 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. NOTE 6 - MERCHANT RESERVES The Company processes VISA and MasterCard charges for its direct merchant customers. These Company's customers have liability for the charges disputed by the cardholders, based on VISA and MasterCard rules and regulations. However, in the case of merchant fraud, insolvency or bankruptcy by the merchant, the Company may be liable for any such charges disputed by the cardholder. The Company recognizes revenue based on a percentage of gross amount charged and has a potential liability for the full amount of the charge. The Company establishes reserves for operational charges based upon historical and projected experiences concerning such charges. Expenses of $222,000 and $57,000 were recorded for the third fiscal quarters of fiscal years 1995 and 1994 respectively, for this activity. Expenses of $538,000 and $599,000 were recorded for the nine months ending February 28, 1995 and 1994, respectively, for this activity. The Company made two acquisitions of check guarantee businesses in the first part of fiscal year 1995. Similar to the credit card business, the Company charges its merchants a percentage of the gross amount of the check and guarantees payment of the check to the merchant in the event the check is not honored by the checkwriter's bank. As a result, the Company also incurs operational charges in this line of business. The Company has the right to collect the full amount of the check from the checkwriter but has not historically recovered 100% of the guaranteed checks. The Company establishes reserves for the activity based upon historical and projected experiences. Expenses of $1,420,000 and $3,414,000 were recorded for the current fiscal quarter and the nine months ending February 28, 1995, respectively, for this activity. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The third quarter of fiscal year 1995 ended February 28,1994 compared to the same quarter last year is reflected as follows: ($ Millions) FY1995 FY 1994 Inc.(Dec.) $ % $ % % --- --- --- --- ----------- Revenue: Integrated Payments 34.3 55% 28.6 56% 20% Health Care 22.1 36% 15.8 31% 40% Government & Corporate 4.4 7% 4.9 10% (10%) Other 1.4 2% 1.7 3% (18%) ------ ----- ------ ----- ------- Total Revenue 62.2 100% 51.0 100% 22% Cost of Service: Operations 26.8 43% 23.8 47% 13% Deprec. & Amort. 4.4 7% 3.6 7% 22% Hardware Sales 2.6 4% 2.3 4% 13% ------ ----- ------ ----- ------- Total Cost of Service 33.8 54% 29.7 58% 14% Gross Margin 28.4 46% 21.3 42% 33% Sales, General & Administrative 22.1 36% 17.0 33% 30% ------ ----- ------ ----- ------- Operating Margin 6.3 10% 4.3 8% 47% Interest and Other Income 0.4 1% 0.3 1% 33% Interest and Other Expense (0.7) (1%) (0.6) (1%) 17% ------ ----- ------ ----- ------- Income Before Income Taxes 6.0 10% 4.0 8% 50% Provision for Income Taxes 2.1 4% 1.4 3% 50% ------ ----- ------ ----- ------- Net Income 3.9 6% 2.6 5% 50% ------ ----- ------ ----- ------- Results of Operations The nine months ended February 28, 1995 compared to the same period last year is reflected as follows: ($ Millions) FY1995 FY 1994 Inc.(Dec.) $ % $ % % --- --- --- --- ----------- Revenue: Integrated Payments 100.1 57% 86.2 56% 16% Health Care 59.0 33% 45.4 30% 30% Government & Corporate 14.8 8% 14.6 10% 1% Other 4.1 2% 6.4 4% (36%) ------ ----- ------ ----- ------- Total Revenue 178.0 100% 152.6 100% 17% Cost of Service: Operations 77.1 44% 71.4 47% 8% Deprec. & Amort. 12.4 7% 10.5 7% 18% Hardware Sales 7.8 4% 7.4 5% 5% ------ ----- ------ ----- ------- Total Cost of Service 97.3 55% 89.3 59% 9% Gross Margin 80.7 45% 63.3 41% 27% Sales, General & Administrative 63.6 35% 50.5 33% 26% Settlement of Shareholder Litigation - - 2.5 1% - ------ ----- ------ ----- ------- Operating Margin 17.1 10% 10.3 7% 66% Interest and Other Income 1.2 0% 1.1 1% 9% Interest and Other Expense (1.9) (1%) (1.9) (1%) - ------ ----- ------ ----- ------- Income Before Income Taxes 16.4 9% 9.5 7% 73% Provision for Income Taxes 5.9 3% 3.6 3% 64% ------ ----- ------ ----- ------- Net Income 10.5 6% 5.9 4% 78% ------ ----- ------ ----- ------- Revenue Total revenue for the third quarter was $62,155,000, an increase of $11,141,000 (22%) from the same period of the prior year. The revenue increase in the third quarter as compared to the same period of the prior year was the result of increased revenue in Health Care Application Systems and Services, $6,341,000 (40%), and Integrated Payment Systems, $5,728,000 (20%), partially offset by decreases in Government and Corporate Information Systems and Services, $532,000 (10%) and Other Revenue, $396,000 (18%). Total revenue for the nine months ended February 28, 1995 was $177,936,000, an increase of $25,351,000 (17%) from the same period of the prior year. The revenue increase was the result of increased revenue in Health Care Application Systems and Services, $13,570,000 (30%), Integrated Payment Systems, $13,899,000 (16%) and Government and Corporate Information Systems and Services, $176,000 (1%), partially offset by a decrease in Other Revenue of $2,294,000 (36%). Health Care revenue growth was related to increases in electronic claims processing which increased $3,230,000 (42%) in the third quarter and $9,108,000 (45%) for the nine months ended February 28, 1995 as compared to the same periods in the prior year. Revenue from the Company's practice management systems for the pharmacy, dental, physician and government and institutional sectors increased 77% for the quarter and 26% for the nine months which included the impact of acquisitions. Integrated Payments Systems (IPS) revenues increased 20% in the third quarter and 16% for the nine months ended February 28, 1995 compared to the same periods last year. These increases were a result of several factors. Two check guarantee businesses were acquired during fiscal year 1995. The direct (merchant processing) business for the third quarter increased $2,343,000 (15%). The direct business for the nine month period increased $6,811,000 (14%). These increases were primarily due to increased volume of merchant sales processed and equipment sales. Revenue in the Company's indirect (distribution through banks) business decreased 8% for the quarter and 9% for the nine month period as a result of lower revenue per electronic transaction. These decreases were primarily a result of reduced prices associated with the renewal of a number of contracts with increased volume commitments. Government and Corporate Information Systems and Services (GCISS) revenue decreased 11% for the third quarter from the same period last year primarily as a result of a decline in revenue associated with the cash management product, partially offset by revenues from financial electronic data interchange. Revenues for the nine month period increased 1% over the same period of the prior year due to increased sales of software for electronic data interchange applications. The decrease in Other Revenue of 18% for the third quarter and 36% for the nine month period 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. The remaining revenue in the "Other" category reflects revenue from International operations. Costs and Expenses Total cost of service for the third quarter was $33,781,000, an increase of $4,098,000 (14%) from the same period last year. While the cost of operations increased $2,950,000 (12%) from the same period last year, the 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 $344,000 (15%), related to increased cost of personal computer equipment associated with our pharmacy and dental practice management systems. Cost of service for the nine month period ended February 28, 1995 was $97,286,000, an increase of $7,938,000 (9%) from the same period last year. While the cost of operations increased $5,700,000 (8%) as compared to the prior 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 $357,000 (5%), primarily related to volume associated with increased equipment sales in the IPS business. Gross margin increased to 46% from 42% in the third quarter and to 45% from 41% for the nine month period as compared to the same periods last year. Sales, general and administrative expense was $22,113,000 in the quarter ended February 28, 1995, This is an increase of $5,062,000 (30%) from the prior year. Sales, general and adminstrative expense increased $13,098,000 (26%) for the nine month period. These increases are primarily due to sales expansion programs in the Integrated Payment Systems and Health Care Applications Systems and Services areas as well as increased sales, general, and administrative expenses associated with acquired businesses. The Company reflected a charge of $2,500,000 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 this item). Interest and Other Income Interest and other income for the third quarter was $411,000, an increase of $79,000 (24%) from last year. Interest and other income for the first nine months of fiscal year 1995 was $1,214,000 an increase of $105,000 (9%). These increases are principally related to increased cash available for investment during the first six months of the current fiscal year and increased interest rates on the investment of these cash balances. Interest and Other Expense Interest and other expense for the third quarter increased $106,000 (20%). For the first nine months of fiscaly year 1995, interest and other expense increased $57,000 (3%). These increases are principally the result of reflecting the minority interest of an investor in Yes Check,Inc., an acquisition completed in the first quarter of the current fiscal year. The amount of the minority interest is $86,000 and $261,000 for the current quarter and nine months ending February 28, 1995, respectively. Income Taxes The provision for income taxes, as a percentage of taxable income, was 36% and 35% for the quarters ended February 28, 1995 and 1994, respectively, and 36% and 39% for the nine month periods. The overall decreased rate in the current year is primarily due to the resolution of issues associated with prior years. Net Income Net income for the third quarter of fiscal year 1995 was $3,855,000, an increase of $1,214,000, as compared to the same period of the prior year. Earnings per share for the period ended February 28, 1995 and 1994 were $0.19 and $0.13, respectively, as presented after the effects of the stock split. Earnings per share for the third quarter for fiscal year 1995 and 1994 as presented prior to the effects of the stock split were $0.28 and $0.20, respectively. The weighted average number of common and common equivalent shares outstanding as presented after the effects of the stock split for the third quarter of fiscal 1995 was 19,230,000, an increase of 306,000 (2%) as compared to the same period last year. Net income for the first nine months of fiscal year 1995 was $10,449,000, an increase of $4,572,000, as compared to the same period of the prior year. Earnings per share, assuming effects of the stock split (see Note 3 to the unaudited condensed consolidated financial statements), for the nine month period ended February 28, 1995 and 1994 were $0.52 and $0.31, respectively. Earnings per share before the effects of the stock split for the nine month period ended February 18, 1995 and 1994 were $0.77 and $0.45, respectively. The weighted average number of common and common equivalent shares outstanding as presented after the effects of the stock split for the nine month period ended February 28, 1995 was 19,106,000, an increase of 467,000 (3%) as compared to the same period last year. Liquidity and Capital Resources Net cash provided by operating activities was $32,109,000 for the nine months ended February 28, 1995, an increase of $8,371,000 (35%) from the prior year amount of $23,738,000. The increase is primarily related to increased earnings. Cash used in investing activities was $42,515,000 compared to the prior year of $8,526,000. In the first nine months of fiscal 1995, five business acquisitions were made totaling $38,081,000, net of cash acquired. In the third quarter of fiscal year 1994, significant investments in computer systems were made. In addition, a $2,000,000 bank compensating balance was refunded to the Company in the second quarter of fiscal year 1995. Net cash used in financing activities was $6,396,000, an increase of $1,306,000 (26%) over the prior year. Principal payments on capital lease agreements increased $405,000 in the current period and net proceeds from the issuance of stock under the employee stock purchase plan decreased $590,000 in the current nine month period. Dividends of approximately $4,207,000 and $4,116,000 were paid in the nine month periods ending February 28, 1995 and 1994, 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 $21,198,000 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 August 1995 and a $250,000 working line or credit with First Security Bank of Idaho expiring in May 1995. Stockholders' Equity Stockholders' equity increased $8,944,000 (8%), from May 31, 1994 to $118,275,000 at February 28, 1995. Part II ITEM 1 - PENDING LEGAL PROCEEDINGS _____________________________________ None ITEM 2 - OTHER INFORMATION _____________________________ None ITEM 3 - EXHIBITS AND REPORTS FILED ON FORM 8-K ___________________________________________________ On February 2, 1995, the Company filed Form 8-K outlining the resolutions of the Board of Directors regarding a three-for-two stock split. 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: May 23, 1995 By: /s/ Jerry W. Braxton ________________ ____________________ Jerry W. Braxton Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE AMENDMENT #1 WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 QTR-3 MAY-31-1995 FEB-28-1995 21,198 0 40,193 1,539 3,587 88,932 141,672 114,549 201,739 61,915 0 1,604 0 0 116,916 201,739 177,936 177,936 97,286 160,880 0 0 1,944 16,326 5,877 10,449 0 0 0 10,449 .52 .51