-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CRbTeoozO5hfpXXsEcKSUvz9k2T6yxBYaSwHU/Q2NNX0iaVxq1fffVaj0ArW2ynr eK211xuTAi50B5x/QArlEQ== 0000070033-95-000012.txt : 19951016 0000070033-95-000012.hdr.sgml : 19951016 ACCESSION NUMBER: 0000070033-95-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950831 FILED AS OF DATE: 19951013 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: 95580323 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 AUG 31, 1995 NATIONAL DATA CORPORATION Condensed Consolidated Statement of Income (In Thousands Except Per Share Data) Three Months Ended August 31, 1995 1994 ---- ---- Revenue $65,625 $55,969 Operating expenses: Cost of service 33,928 30,658 Sales, general and administrative 24,343 20,371 ------- ------- 58,271 51,029 Operating income 7,354 4,940 Other income (expense): Interest and other income 1,127 455 Interest and other expense (709) (587) ------- ------- 418 (132) Income before income taxes 7,772 4,808 Provision for income taxes 2,798 1,731 ------- ------- Net income 4,974 3,077 ------- ------- Earnings per common and common equivalent share (Note 2) $0.21 $0.16 ------- ------- Earnings per common and common equivalent share, assuming full dilution (Note2) $0.21 $0.15 ------- ------- See Notes to Unaudited Condensed Consolidated Financial Statements ============================================================================== NATIONAL DATA CORPORATION P. 1 of 2 Condensed Consolidated Balance Sheet (In Thousands) AUGUST 31, MAY 31, 1995 1995 ASSETS ------------ ----------- Current assets: Cash and cash equivalents $88,519 $30,740 Short-term investments 25 25 Accounts receivable: Trade (less allowances of $1,363, and $1,409) 39,023 38,348 Other (less allowances of $5,123, and $4,869) 19,412 21,082 Deferred income taxes 601 601 Inventory 2,777 2,900 Prepaid expenses and other current assets 4,361 4,345 ------- ------- Total current assets 154,718 98,041 Property and equipment, at cost: Land 402 402 Building 6,503 6,503 Equipment 78,392 79,536 Software 21,719 25,777 Leasehold improvements 13,735 14,052 Furniture and fixtures 10,125 10,238 Work in progress 4,120 3,633 ------- ------- 134,996 140,141 Less-Accumulated depreciation and amortization (106,389) (111,307) ------- ------- 28,607 28,834 Property acquired under capital leases, net of accumulated amortization 8,605 9,033 ------- ------- 37,212 37,867 Deposits 139 439 Other assets: Acquired intangibles and goodwill, net of accumulated amortization of $40,120 and $38,132 76,469 78,094 Other 1,911 2,320 ------- ------- 78,380 80,414 Total Assets $270,449 $216,761 ========== ========== See Notes to Unaudited Condensed Consolidated Financial Statements NATIONAL DATA CORPORATION P. 2 of 2 Condensed Consolidated Balance Sheet (In Thousands) AUGUST 31, MAY 31, 1995 1995 LIABILITIES AND STOCKHOLDERS' EQUITY ------------ ----------- Current liabilities: Accounts payable $5,863 $9,042 Notes payable on acquired business, current portion 1,931 1,958 Earn-out payable on acquired businesses, current portion 869 1,180 Accrued compensation and benefits 4,029 6,199 Merchant processing payables 18,608 22,363 Income tax payable 4,536 7,989 Obligations under capital leases, current portion 2,770 2,785 Mortgage payable, current portion 168 164 Deferred income 4,387 4,766 Other accrued liabilities 11,393 11,149 ------- ------- Total current liabilities 54,554 67,595 Mortgage payable 10,892 10,936 Notes payable on acquired business 1,415 2,580 Deferred income taxes 3,193 3,193 Obligations under capital leases 5,808 6,140 Other long-term liabilities 3,292 3,402 ------- ------- Total liabilities 79,154 93,846 Minority interest in equity of subsidiary 508 392 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; 22,696,233 and 19,306,733 shares issued 2,837 2,413 Capital in excess of par value 97,735 33,145 Retained earnings 91,066 87,789 Cumulative translation adjustment (634) (550) ------- ------- 191,004 122,797 Less: Deferred compensation (217) (274) ------- ------- Total Stockholders' Equity 190,787 122,523 Total Liabilities and Stockholders' Equity $270,449 $216,761 ========== ========== See Notes to Unaudited Condensed Consolidated Financial Statements ============================================================================== NATIONAL DATA CORPORATION Condensed Consolidated Statement of Cash Flows (In Thousands) Three Months Ended August 31, 1995 1994 Cash flows from operating activities: ----- ----- Net income $ 4,974 $ 3,077 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,821 3,335 Amortization of acquired intangibles and goodwill 1,985 1,655 Provision for bad debts 219 246 Changes in assets and liabilities, net of the effects of acquisitions: Increase in trade accounts receivable, net (901) (4,817) Decrease in other accounts receivable, net 1,669 2,634 Decrease in investment in sales-type leases 168 1,489 Decrease (increase) in inventory 123 (460) Decrease in prepaid expenses and other assets 527 645 Decrease in accounts payable and accrued liabilities (9,229) (206) Decrease in income taxes payable and deferred income taxes payable (3,452) (1,515) --------- -------- Net cash (used in) provided by operating activities (96) 6,083 Cash flows from investing activities: Capital expenditures (2,846) (1,757) Business acquisitions, net of cash acquired - (8,985) Proceeds from the sale of equipment 71 - -------- -------- Net cash used in investing activities (2,775) (10,742) Cash flows from financing activities: Payments on notes payable (1,189) - Principal payments under mortgage, capital lease arrangements and other long-term debt (785) (536) Principal payments on earn-out payable (686) (1,294) Net proceeds from secondary public offering 63,652 - Net proceeds from the issuance of stock under employee stock plan 1,362 549 Effect of exchange rates on cash (7) 4 Dividends paid (1,697) (1,390) -------- -------- Net cash provided by (used in) financing activities 60,650 (2,667) Increase (decrease) in cash and cash equivalents 57,779 (7,326) Cash, beginning of period 30,740 38,012 -------- -------- Cash, end of period $88,519 $30,686 ======== ======== Supplemental schedule of noncash investing and financing activities: Capital leases entered into in exchange for property and equipment $ 332 $ 6 ======== ======== 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 1995 consolidated financial statements to conform to the fiscal 1996 presentation. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company's latest annual report on Form 10-K for the fiscal year ended May 31, 1995. In the opinion of management, the information furnished reflects all adjustments necessary to present fairly the results for such interim periods. NOTE 2 - EARNINGS PER SHARE: Primary earnings per common share and common equivalent share 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. Fully diluted earnings per common and common equivalent share 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 primary and fully diluted number of common and common equivalent shares outstanding is as follows (in thousands): Quarter Ended August 31, 1995 1994 Primary 24,137 19,752 Fully Diluted 24,236 19,967 NOTE 3 - COMMON STOCK OFFERING: In June, 1995, the Company completed a secondary public offering of 3,162,500 shares of its Common Stock. The stock was sold at a price of $21.25 per share. This transaction, net of underwriting discount and expenses associated with this offering, added approximately $63,652,000 in cash to the Company. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations The first quarter of fiscal year 1996, ended August 31, 1995 compared to the same quarter last year is reflected as follows: ($ Millions) FY 1996 FY 1995 Inc.(Dec.) $ % $ % % --- --- --- --- ----------- Revenue: Payment Systems 37.1 57% 32.3 58% 15% Health Care 22.9 35% 16.8 30% 37% Information Systems & Services 5.6 8% 6.7 12% (16%) Other - - .2 - - ------ ----- ------ ----- ------- Total Revenue 65.6 100% 56.0 100% 17% Cost of Service: Operations 26.2 40% 24.2 43% 8% Deprec. & Amort. 5.0 8% 4.1 8% 22% Hardware Sales 2.7 4% 2.4 4% 13% ------ ----- ------ ----- ------- Total Cost of Service 33.9 52% 30.7 55% 10% Gross Margin 31.7 48% 25.3 45% 25% Sales, General & Administrative 24.3 37% 20.4 36% 19% ------ ----- ------ ----- ------- Operating Margin 7.4 11% 4.9 9% 51% Interest and Other Income 1.1 2% 0.5 1% 120% Interest and Other Expense (0.7) (1%) (0.6) (1%) 17% ------ ----- ------ ----- ------- Income Before Income Taxes 7.8 12% 4.8 8% 63% Provision for Income Taxes 2.8 4% 1.7 3% 64% ------ ----- ------ ----- ------- Net Income 5.0 8% 3.1 5% 62% ------ ----- ------ ----- ------- Revenue Total revenue for the first quarter of fiscal 1996 was $65,625,000, an increase of $9,656,000 (17%) from the same period of the prior year. The revenue increase in the first quarter was the result of increased revenue in Health Care, $6,150,000 (37%), and Payment Systems, $4,769,000 (15%), partially offset by a decrease in Information Systems and Services revenue of $1,073,000 (16%). Health Care. Revenue for the first quarter of fiscal 1996 increased 37% as compared to the same period in fiscal 1995 as a result of (i) increases in electronic claims processing and (ii) increases in revenue for the Company's practice management systems for the pharmacy, dental, physician and institutional sectors, including the impact of acquisitions completed after the first quarter of fiscal 1995. Payment Systems. Payment Systems revenues increased 15% in the first quarter of fiscal 1996 as compared to the same period last year. Direct Payment Systems revenue increased due to higher volume of merchant sales processed and equipment sales. Offsetting this increase, revenue in the Company's Indirect Payment Services (distribution through banks) business decreased for the first quarter of fiscal 1996, as compared to the same period last year, as a result of price adjustments, generally made in return for increased volume and term commitments. Information Systems and Services. Revenue decreased 16% for the first quarter of fiscal 1996 primarily as a result of a decline in revenue associated with software licenses for electronic data interchange (EDI) applications as compared to the same period in fiscal 1995. Other. As a result of the Company's decision to exit the communication services market in 1991, there is no longer any residual revenue from these activities. The customer contracts associated with this business expired in the first quarter of fiscal 1995. Costs and Expenses Total cost of service for the first quarter of fiscal 1996 was $33,928,000, an increase of $3,270,000 (10%) from the same period last year. While the cost of operations increased $2,005,000 (8%) from the same period last year, the cost of operations as a percentage of revenue decreased from 43% last year to 40% this year. Depreciation and amortization as a percentage of revenue increased 22%, primarily as a result of acquisitions made during 1995. Gross margin increased to 48% in the first quarter of fiscal 1996 as compared to 45% in the same period last year. Sales, general and administrative expenses were $24,343,000 in the quarter ended August 31, 1995. This is an increase of $3,972,000 (19%) from the prior year. This increase is primarily due to increased product development and sales expansion programs in the Payment Systems and Health Care areas as well as increased sales, general, administrative and product development expenses associated with acquired businesses. Interest and Other Income Interest and other income for the first quarter of fiscal 1996 was $1,127,000, an increase of $672,000 (148%) from last year. This increase is principally the result of increased cash balances associated with the secondary stock offering. Interest and Other Expense Interest and other expense for the first quarter of fiscal 1996 increased $122,000 (21%). This was primarily as a result of interest paid associated with refunded customer deposits. Income Taxes The provision for income taxes, as a percentage of taxable income, was 36% for the quarters ended August 31, 1995 and 1994, respectively. Net Income Net income for the first quarter of fiscal 1996 was $4,974,000, an increase of $1,897,000, as compared to the same period of the prior year. Earnings per share for the period ended August 31, 1995 and 1994 were $0.21 and $0.15, respectively. The fully diluted number of common and common equivalent shares outstanding for the first quarter of fiscal 1996 was 24,236,000, an increase of 4,269,000 (21%) as compared to the same period last year. This increase is primarily a result of 3,162,500 shares issued in the supplementary stock offering completed in June, 1995, and shares issued under employee stock option plans. Liquidity and Capital Resources Cash flows from operations for the first quarter of fiscal 1996 consisting of net income adjusted for depreciation, amortization and provision for bad debts totaled $10,999,000, an increase over the same period in the previous fiscal year of $2,686,000. Net cash used in operating activities was $96,000 for the three months ended August 31, 1995, a decrease of $6,179,000 (102%) from the prior year amount provided of $6,083,000. The working capital decrease includes income tax payments and refunds of customer deposits. Cash used in investing activities was $2,775,000 compared to the prior year of $10,742,000. In the first three months of fiscal 1995, two business acquisitions were made totaling $8,985,000, net of cash acquired. Net cash provided by financing activities was $60,650,000, an increase of $63,317,000 over the prior year. The net proceeds from the issuance of stock under the secondary offering (as discussed in Note 3) were $63,652,000. Net proceeds from the employee stock purchase plan increased $813,000 over the same three month period last year. Dividends of approximately $1,697,000 and $1,390,000 were paid in the three month periods ending August 31, 1995 and 1994, respectively. The Company has entered into a $15,000,000, working capital line of credit expiring in August 1996. In addition, the Company has a $40,000,000 acquisition line of credit which expires in August 1996. The Company believes funds generated from operations along with its committed lines of credit and the $88,519,000 cash on hand is adequate to meet normal business operating needs, including possible acquisitions. Stockholders' Equity Stockholders' equity increased $68,264,000 (56%), from May 31, 1995 to $190,787,000 at August 31, 1995, principally the result of the secondary offering as previously discussed. Part II ITEM 1 - PENDING LEGAL PROCEEDINGS _____________________________________ None ITEM 2 - OTHER INFORMATION _____________________________ None ITEM 3 - EXHIBITS AND REPORTS FILED ON FORM 8-K ___________________________________________________ None. 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: October 13, 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-1 MAY-31-1996 AUG-31-1995 88,519 0 39,023 1,363 2,777 154,718 134,996 106,389 270,449 54,554 0 2,837 0 0 187,950 270,449 65,625 65,625 33,928 58,271 0 0 709 7,772 2,798 4,974 0 0 0 4,974 .21 .21 -----END PRIVACY-ENHANCED MESSAGE-----