-----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, FaX3hPS5x9I1lzQM4hn8OpO/3y41aPF6Iw2NtXheFiUNU5O4ldFBAtBIkQqNncVa FwJWM8Px8gOfoy0NUN0EAA== 0000931763-00-002759.txt : 20001222 0000931763-00-002759.hdr.sgml : 20001222 ACCESSION NUMBER: 0000931763-00-002759 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20001220 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20001220 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: 8-K SEC ACT: SEC FILE NUMBER: 001-12392 FILM NUMBER: 792755 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 8-K 1 0001.txt CURRENT REPORT SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 20, 2000 ----------------- Commission File No. 001-12392 --------- NATIONAL DATA CORPORATION ------------------------- (Exact name of registrant as specified in its charter) DELAWARE 58-0977458 -------- ---------- (State or other jurisdiction of (IRS Employer incorporation) Identification Number) National Data Plaza, Atlanta, Georgia 30329-2010 ------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (404) 728-2000 -------------- N/A --- (Former name, former address and former fiscal year, if changed since last year) Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. ------------------------------------------------------------------- The following exhibit has been filed herewith as part of Item 9, and pursuant to the instructions to an Item 9 filing, shall not be deemed to be "filed" information for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended: Exhibit 99.1 a) NDC Health Business Description. b) Schedules 1) Stand-alone NDC Health (Normalized) (unaudited) Consolidated Statements of Income for fiscal 1999 and 2000 (by quarter) and the first and second quarters of fiscal 2001. (Normalized by adjusting for certain items discussed below.) 2) National Data Corporation (unaudited) Consolidated Statements of Income or (Loss) for fiscal 1999, fiscal 2000 (by quarter) and the first and second quarters of fiscal 2001. 3) National Data Corporation (unaudited) Consolidated Balance Sheets for May 31, 2000 and November 30, 2000. Item 9. Regulation FD Disclosure ------------------------ General In connection with its previously announced intention to spin-off its eCommerce business segment into a separate publicly traded company, Global Payments Inc., with its own management and Board of Directors, National Data Corporation has received a private letter ruling from the Internal Revenue Service. The IRS has ruled that the transaction will be tax free to stockholders of NDC. The timing of the spin transaction and related share distribution depends upon completion of Global Payments' registration with the Securities and Exchange Commission. National Data Corporation's healthcare information business segment will be the remaining stand-alone business after the spin-off of Global Payments. Accordingly, subsequent to the spin-off, National Data Corporation will do business as NDC Health. National Data is providing stand-alone financial information included in this Form 8-K in order to reflect the business of NDC Health as if the spin off of Global Payments had occurred. This data is presented under the assumption that the spin-off will be successfully accomplished. As an indication of the historical performance of the continuing business, in Exhibit 99.1 (b) 1 to this report, we have provided certain financial information regarding NDC Health, the stand-alone healthcare information business segment that will remain after the spin-off. These stand alone NDC Health consolidated income statements for fiscal 1999 and 2000 and the first and second quarters of fiscal 2001 have been "normalized" by adjusting for the following: a) Discontinued operations, net of tax, for all periods (discussed below), b) Restructuring and impairment charges in the amount of $34.4 million and $2.2 million previously recorded in the second quarter of fiscal 2000 and the second quarter of fiscal 2001, respectively (discussed below), c) Unusual expenses in the amount of $11.1 million also previously recorded in the second quarter of fiscal 2000 (discussed below), d) Other income related to the gain from sale of marketable securities in the amount of $1.6 million previously recorded in the first quarter of fiscal 2000, e) Other income related to the gain on the divestiture of a business in the amount of $2.3 million previously recorded in the second quarter of fiscal 2000, f) Other expense related to the non-cash loss recorded to mark to market the Medicalogic/Medscape, Inc. investment in the amount of $9.7 million previously recorded in the fourth quarter of fiscal 2000, and g) Revenue and operating expenses related to divested businesses, as follows: 1) Fiscal 2000: Revenue $56.4 million; Operating Expenses $57.2 million; and Other Income $0.7 million. 2) Quarter ended August 31, 2000: Revenue $5.6 million; and Operating expenses $5.3 million. 3) Quarter ended November 30, 2000: Revenue $0.2 million; and Operating expenses $0.2 million. h) Incremental Sales, General and Administrative expenses associated with being a separate public company of approximately $2.3 million have been added to fiscal 1999 and 2000. These expenses are estimates for the additional functionality needed for corporate activities such as legal, financial, human resources, communication and similar functions. In addition to the stand alone NDC Health (Normalized) consolidated income statements described above, Exhibit 99.1 (b) 2 presents the National Data Corporation consolidated income statement for fiscal 1999 and 2000 and the first and second quarters of fiscal 2001. Exhibit 99.1 (b) 3 presents the National Data Corporation balance sheets as of May 31, 2000 and November 30, 2000. The eCommerce segment data, along with data from other businesses discontinued by NDC Health as described below, is recorded as discontinued operations in Exhibits 99.1 (b) 2 and 3. Operating costs and expenses in these income statements reflect direct charges of the business together with certain allocations by NDC for corporate services and other shared services that have been charged to the NDC Health business on a reasonable and consistent basis. Except for the adjustments (estimated incremental Sales, General and Administrative expenses associated with being a separate public company) described above, these allocations approximate all material incremental costs management believes would have been incurred had we been operating on a stand-alone basis. NDC corporate interest expense has been allocated to NDC Health based on the anticipated corporate debt allocations to NDC Health and Global Payments at the spin-off date. The approach taken was to allocate the anticipated portion of the NDC consolidated group's debt and interest expense for all historical periods presented. This treatment records the current proposed debt allocation percentage for all historical periods presented. The total convertible debt remains with NDC Health. The allocated debt amount is less than this total convertible debt; therefore, the eCommerce segment (Global Payments Inc.) has a liability to NDC Health for its net portion of the outstanding debt. As of November 30, 2000, this net amount due from Global Payments Inc. to NDC Health is $60.2 million. At the date of the spin-off, Global Payments Inc. will make a net cash payment to NDC Health equal to $60.2 million adjusted for the net cash contributions of eCommerce operations between December 1, 2000 and the actual date of the distribution. For further data regarding the eCommerce segment and the proposed spin-off, please refer to the Global Payments Inc. Form 10, with amendments, as filed with the Securities and Exchange Commission. Financial Results During the last 24 months, NDC Health completed a significant strategy review and implemented a plan to focus on its core products and services. As a result, the last two years represented a major transition period for NDC Health. As a part of that plan, NDC Health determined to divest its PHSS (Physician and Hospital Support Services) businesses in the third quarter of fiscal 2000. The sale of these PHSS units as well as our related health management services businesses was completed in the first quarter of fiscal 2001. The PHSS portion of these businesses is accounted for as discontinued operations in accordance with Accounting Principles Board Opinion No. 30, "Reporting the Results of Operations" and prior periods have also been restated to reflect this treatment. During the last year NDC Health has also divested other non-core products and services. The financial results for the first half of fiscal 2001 include $2.6 million of corporate and division overhead previously allocated to these divested businesses. In addition to these divestitures, other actions were initiated by management as a part of the strategic review, including acceleration of clearing house integration, consolidation of locations, associated staff and expense reductions, and elimination of obsolete and redundant product and service offerings. Total charges related to restructuring and asset impairment were $34.4 million during fiscal 2000. During the second quarter of fiscal 2000, management also evaluated certain significant business risks related to recent acquisitions and those locations that were closed as part of the strategic review, including bankrupt accounts and customer disputes. As a result of this review, unusual expenses were recorded in the second quarter of fiscal 2000 as follows: accounts receivable write-off of $8.0 million; bad debt allowance increases of $2.0 million; litigation settlement expenses of $1.3 million; and write-off of $0.8 million of prepaid expenses and recording of $1.2 million of accrued expenses. Approximately $2.2 million of these unusual expenses were related to the PHSS operation and are reflected in the results of the discontinued operations. Accordingly, the results of fiscal 2000 include approximately $45.5 million of charges related to restructuring and asset impairment ($34.4 million) and other unusual expenses ($11.1 million). At the end of the second quarter of fiscal 2000, we disclosed that we would have additional restructuring and other unusual charges of up to $10 million in the next twelve months. In the second quarter of fiscal 2001, both our Salt Lake City and Cleveland operations were closed. We also wrote down and divested a managed care operation. Therefore, in the second quarter of fiscal 2001, $2.2 million of restructuring and impairment charges are reflected. These actions essentially complete all of the programs identified in our strategic review. The financial results for the first half of fiscal 2001 also include $0.9 million of transition expenses related to the planned spin-off. We believe that NDC Health is extremely well positioned to provide processing products and services to the healthcare industry through our integrated intelligent network and point of service systems and information management services. By implementing our revised strategy, we expect to generate, on an adjusted basis, annual revenue growth from $289 million in fiscal 2000 to $330 - $335 million in fiscal 2001. Near term, revenue growth is being impacted in our information management business due to the consolidation in the pharmaceutical manufacturers' market. During the second quarter of fiscal 2001, we began to see the results of our strategy to offset the impact of the pharmaceutical industry consolidation to our revenue growth by adding new customers, new products and expanding distribution channels. We expect that our basic earnings per share, on a stand-alone basis for the fiscal year ending May 31, 2001 will be in the range of $1.00, plus or minus two percent. The Global Payments spin-off must be completed in order to compute dilution resulting from our outstanding options and convertible debentures. Prior to that time, we are unable to compute a range of fully diluted earnings per share. As a result of the adjustments and the other principles and assumptions discussed above, which are the basis of our presentation of the financial schedule filed in Exhibit 99.1 (b) 1, please note that this financial schedule does not reflect our historical financial statements. When used in this report, and the exhibits hereto, the words "believes," "anticipates," "plans," "expects," "intends" and similar expressions are intended to identify forward-looking statements concerning the Company's business operations, economic performance and financial condition, including in particular, the Company's business strategy and means to implement the strategy, the Company's objectives, the amount of future capital expenditures, the likelihood of the Company's success in developing and introducing new products and expanding its business, and the timing of the introduction of new and modified products or services. For those statements, the Company claims the protection of the safe harbor for forward- looking statements contained in the Private Securities Litigation Reform Act of 1995. These statements are based on a number of assumptions and estimates that are inherently subject to significant risks and uncertainties, many of which are beyond the control of the Company, cannot be foreseen, and reflect future business decisions that are subject to change. Actual revenues, revenue growth and margins will be dependent upon all such factors and results subject to risks related to the implementation of changes by the Company, the failure to implement changes, customer acceptance of such changes or lack of change. As a result of a variety of factors, actual results could differ materially from those anticipated in the Company's forward-looking statements, including the following factors: (a) those set forth in Exhibit 99.1 to the Annual Report on Form 10-K which are incorporated herein by this reference, and those set forth elsewhere herein; and (b) those set forth from time to time in the Company's press releases and reports and other filings made with the Securities and Exchange Commission. The Company has announced its intent to spin-off the NDC eCommerce business segment into a separate publicly traded company with its own management and Board of Directors. This spin-off has not yet been completed and there can be no assurance that it will be completed. NDC Health has obtained a commitment for an amended credit agreement. While NDC Health expects the new facility to be available upon consummation of the spin-off, no assurance can be given that the facility will be available on the terms set forth herein, if at all. The Company cautions that such factors are not exclusive. Consequently, all of the forward-looking statements made herein are qualified by these cautionary statements and readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to publicly release the results of any revisions of such forward-looking statements that may be made to reflect events or circumstances after the date hereof, or thereof, as the case may be, or to reflect the occurrence of unanticipated events. 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 hereunto duly authorized. NATIONAL DATA CORPORATION ------------------------- (Registrant) By: /s/ David H. Shenk _______________ David H. Shenk Interim Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer) Date: December 20, 2000 EX-99.1A 2 0002.txt NDC HEALTH BUSINESS DESCRIPTION Exhibit 99.1 (a) ---------------- NDC Health Business Description ------------------------------- NDC Health is the healthcare information business of National Data Corporation ("NDC"). Following the spin-off of Global Payments Inc., NDC's eCommerce businesses, NDC Health will operate as a stand-alone integrated company. NDC Health will continue its focus on providing a full range of services to the healthcare industry through our integrated intelligent network solutions and point of service systems and information management solutions. Our point of service systems, offered directly and indirectly through alliances, are often tightly linked to our intelligent network and serve to enhance our connectivity and increase our transaction volume and data sources. We provide high volume, network based information solutions and point of service systems to the healthcare industry. Our products and services also include electronic claims processing, eligibility, claims adjudication and payment systems, processing of administrative and clinical transactions, database information reporting on prescription drug sales and pharmacy operations, consulting services, and practice management systems. We provide products and services to pharmacies, physicians, hospitals, integrated delivery systems, managed care organizations, payers, government healthcare agencies, distributors, clinics, Internet portals, pharmaceutical manufacturers and other healthcare providers and those who serve them and who have need for our services. Our business strategy centers on providing integrated solutions, which means that we believe we offer answers to fulfill all of our customers' needs with respect to information processing services to the healthcare industry. We believe that this strategy provides the greatest opportunity for leveraging our existing infrastructure to maintain a consistent base of recurring revenues. We believe that the healthcare market offers attractive opportunities for continued growth. In pursuing our business strategy, we seek both to increase our penetration of existing markets and to identify and create new related markets through the development of new applications, enhancement of existing products, and increasing Internet utilization. Additionally, we are expanding our distribution channels, including through the Internet, and, where appropriate, investing in or forging alliances with companies that have compatible products, services, development and/or distribution capabilities. NDC Health serves a diverse customer base comprised of more than 180,000 physicians, ninety percent of the pharmacies in North America and greater than thirty percent of the pharmacies in the United Kingdom, more than twenty percent of the nation's hospitals, over 100 pharmaceutical manufacturers and over 1,000 health care payers. In addition, we are in the start up phase of entering the German and U.K. information markets. We believe that our presence in the multiple pharmacy, managed care organization, physician, hospital, pharmaceutical manufacturer, and healthcare payer markets is broader than any other similar healthcare information company and provides us with a strong competitive advantage. Further, the Internet provides NDC Health with new product opportunities for handling financial, administrative and clinical transactions as well as for information management services. We are aggressively building on our systems, network and information management capabilities to take advantage of the Internet. As the Internet has expanded the market to new users and provided new distribution channels, we have and will continue to Internet-enable our existing and new products and services in a robust security environment. Our intelligent network solutions provide transaction processing services between providers and payers. Our intelligent network goes beyond simple data transport by offering customized validation and information processes for a broad range of transaction types between multiple providers and payers. The point-of-service systems that we offer directly and through various alliances and strategic investments provide our customers with applications to improve their efficiency of operation, promote cost containment and enhance the overall quality and predictability of patient care outcomes, while providing enhanced connectivity and additional transaction volume to our intelligent network. Our information management service solutions include proprietary healthcare information, consulting services and customized business intelligence solutions for our customers' emerging healthcare business issues. These services are currently offered primarily to pharmaceutical manufacturers and retail chain pharmacies. It is our intent to expand our markets to include hospitals, physicians and payers. Our services assist our customers to manage costs and enhance the quality of patient care. Our applications strengthen their management of revenue and cash flow, reduce overhead costs, react quickly to changing market conditions, improve business operations and streamline administrative processes. Our revenue consists of recurring transaction processing fees, monthly maintenance and support fees, information management subscription fees, consulting services and software license revenue. Healthcare Market - ----------------- We believe that the integrated services that we offer to the healthcare industry place us strategically in the center of a very dynamic marketplace. Because of our unique position, we manage healthcare related information from the point of patient contact through the point of payment. Through our information management service solutions we provide our customers with useable information from such data while maintaining the highest standards for patient confidentiality. There is a growing worldwide need in healthcare for information solutions and health information technology services. Industry estimates are that over $1.2 trillion is spent annually on healthcare in the United States alone. Of this amount, $210 billion is spent on administrative tasks and $400 billion is spent on inappropriate treatment, while only $590 billion is spent on appropriate treatment. We believe that our integrated solutions provide information and services useful in reducing administrative and other related healthcare costs and expenses. Additionally, the aging worldwide population is providing more need for improved information technology services relating to the healthcare industry. Because a high percentage of healthcare transactions are still handled using manual, paper-based methods, or are not being consistently performed, we believe that the healthcare industry is one of the largest untapped markets for providing information services. Our solutions provide the tools to help providers and payers reduce administrative expense and improve the clinical experience, while at the same time providing a robust source for statistical and analytical information required by our customers. The healthcare industry is heavily regulated at both the federal and state level. Recent legislation offers unique opportunities to NDC Health. We expect that the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") will have far reaching effects on the healthcare industry. HIPAA requires healthcare providers and payers electronically transmitting healthcare information (e.g. eligibility, claims/encounters, and remittance advice) to use a standard format by October 16, 2002. Providers and payers are able to satisfy many HIPAA obligations through the solutions offered by NDC Health. We believe that we are well positioned to provide these solutions as we currently provide many of the services that meet the expected HIPAA requirements. Products, Services and Distribution Channels - -------------------------------------------- The following discussion provides greater detail on our major products and services and our distribution channels. Provider and Payer Solutions We believe our intelligent network and the point-of-service systems that we offer streamline our customers' workflow, improve cash flow, provide real-time information to help providers better manage their practices, and give the healthcare industry new and improved methods to assure a higher quality of care at a lower cost. We process over 4 billion transactions per year including those that we process for Global Payments Inc. Over 2 billion of these transactions are healthcare transactions and the value of the claims processed is over $250 billion. NDC Health believes that its real-time health intelligent network is the world's largest and most advanced. Since 1996, Faulkner & Gray's Health Data Directory has listed the NDC Health intelligent network as the largest independent clearinghouse for healthcare transaction processing in the nation. We offer our customers NDC proprietary solutions as well as those of our alliance partners, such as the pharmacy solution we sell for our partner TechRx. The point-of-service systems that we offer help our clients to improve efficiency and reduce costs while also serving as an additional source of transaction volume for our intelligent network. NDC Health offers payers customized real-time electronic connectivity to their provider networks through the NDC Health intelligent network including Internet access for claims/encounter editing, submission and adjudication, eligibility verification, remittance advice, referral authorization, claim status and tracking and provider enrollment services. NDC Health also offers payers the ability to submit or receive non-HIPAA transactions through the NDC Health intelligent network, saving payers from costly legacy system conversions. Electronic transactions demand in the healthcare market is generally under penetrated. We believe that with the growing acceptance of healthcare technology and the need to speed payment while reducing costs, there will be a significant increase in the number and types of electronic transactions. Many of the new transaction types may have broad impact across the health care continuum. For example, new solutions such as electronic prescriptions add new information needs as well as directly impacting the way physicians, hospitals, pharmacies and payers practice and do business. Other examples include electronic referrals from physicians to hospitals and the increased use of medical data from physicians, hospitals and other providers to satisfy new types of healthcare information needs. Accordingly, we expect significant growth opportunities from further automating existing NDC Health customers. This will happen as a result of the continued increase in transactions as the population ages and increased use of electronic transmission for both existing transaction sets and new transaction sets. We believe that the HIPAA standards will accelerate this trend. Our provider and payer solutions distributed to the pharmacy, hospital and physician markets are described below: Pharmacy Solutions Our pharmacy solutions include transaction processing, information management services, value added pre- and post-transaction edit processes, payer adjudication services and in-store practice management systems. We currently provide one or more of these solutions to more than 90% of the pharmacies in North America and 30% of the pharmacies in the United Kingdom, totaling over 55,000 chain, independent, mail order, managed care and institutional outlets. Pharmacy practice management systems in North America are offered through our strategic alliance with TechRx and our payer adjudication services are offered through our relationship with HealthTrans. We are often able to leverage the non-patient identifiable anonymous data from these transactions by providing input not only for our pharmacy information management service solutions but also for the solutions we provide to pharmaceutical manufacturers. Our pharmacy solutions are currently offered in the United States and the United Kingdom through both the Internet and our direct sales force. We compete with many companies; however, we believe that we are the largest provider of pharmacy solutions in North America. Hospital Solutions We provide hospitals with transaction processing, Internet-based services and application software to support the administrative, financial and clinical information management requirements of over 1,200 hospitals and health systems in the United States. Our customers represent almost 40% of those hospitals in the United States with more than 400 beds. Our application software solutions include claims preparation and submission, payer specific edits, eligibility verification, remittance management, compliance management and document storage. These solutions provide additional transaction volume and interface with our intelligent network to access our transaction processing solutions. We compete with many companies; however, we believe that we are the largest provider of hospital solutions in North America. Our hospital solutions are offered in the United States through our direct sales force as well as through multiple strategic alliances, such as with Shared Medical Systems. Physician Solutions Our physician solutions provide practice management systems, transaction processing and Internet-based services to support the administrative, financial and clinical information management requirements of physicians. We believe more than 180,000 physicians in the United States use one or more of our services. In addition, we have a number of alliance partners, such as InfoCure, ParkStone Medical Information Systems, Healinx, Trizetto, Galt Associates, Cybear and Medscape, through which we offer our solutions. Our industry leading, Windows-based practice management systems include MediSoft patient accounting software and LYTEC practice management systems. We believe that approximately 130,000 physicians (29% of the available market) use our MediSoft or LYTEC systems. Our transaction processing solutions provide claim/encounter editing, submission and adjudication, authorization, and prescription order and refill authorization through our intelligent network. We recently established relationships with providers of hand-held personal digital assistant systems to exchange real-time physician prescription orders with our pharmacy solutions customers via our intelligent network. We believe we are the leading direct provider of physician intelligent solutions in our targeted market segment in the United States. Our physician solutions are offered in the United States through value- added resellers, direct mail, our direct sales force and the Internet. Our provider and payer solutions generally represent between 55 and 60% of our revenues. Information Management Solutions We provide sales and marketing management information, research and consulting services, and customized business intelligence information solutions to more than 100 pharmaceutical manufacturers and 45 pharmacy chains. Our offerings include numerous major products and services and customized solutions that draw statistical and analytical inferences and models from our data repository. Our repository is managed and maintained in a 28-terabyte dynamic data warehouse. Our solutions transform this vast volume of patient anonymous data into information that our customers can use in order to more effectively manage their businesses and provide better patient care. This information includes data sets with information on prescription sales, rebates, and sampling as well as demographic and prescription information on managed care payers, pharmacy providers, physician over the counter recommendations, physician and healthcare providers, retail prescription sales, non-retail institutional sales and non- retail outlets. NDC Health is able to provide this information in a secure environment respecting the confidentiality, privacy and ownership of patient and provider records. Our customers are able to use this information in analyzing issues such as prescriber targeting and profiling, product research and development, new product launch, sales compensation and management, the influence of managed care, pricing, clinical information and payment information. These solutions generally represent between 40 and 45% of our revenue. Our information solutions are offered in the United States and in start-up operations in the United Kingdom and Germany through our direct sales force. Our primary competitor in providing these solutions is IMS Health. Operations and Systems Infrastructure - ------------------------------------- We operate multiple data and customer support facilities. The primary facilities are in Atlanta, Georgia; Phoenix, Arizona; Tulsa, Oklahoma; the United Kingdom; and Germany. Because of the large number and variety of our products and services, we do not rely on a single technology to satisfy our sophisticated computer systems needs but instead employ technology that is suitable for each particular processing requirement. Given this approach, we utilize (i) fault-tolerant computers for high volume, real time transaction processing; (ii) award-winning client- server technology for end-user data base applications; (iii) Internet technology for transaction processing among computers in our solutions; (iv) Internet solutions to reach directly to providers and pharmaceutical manufacturers; (v) the latest central systems for large scale transaction and batch data processing; and (vi) HP, Compaq, SUN, IBM, UNIX, Dell, NT and Windows-based systems for specialized communication and data base applications systems. The larger systems are linked via high speed, fiber optic-based networked backbones for file exchange and inter-system communication purposes; other systems use high speed LAN connections. The bulk of these system connections utilize the Internet TCP/IP architecture. We also maintain storage systems connected to the backbones, including robotic tape libraries and optical storage for archival purposes. Our experienced systems, operations and production control staff support our systems, with advanced network control. Our communications network is made up of numerous discrete networks, each designed for a different purpose. We maintain three primary networks in addition to our support of the public Internet: a dial-up, short transaction network; a private line nationwide high bandwidth network; and a dial-up voice/data network for interactive and voice traffic. We also maintain a number of support services offering wireless, Internet and ISDN connectivity. The network environment supports a diverse set of telecommunication protocols to respond to its diverse customer requirements. Employees - --------- As of November 30, 2000, NDC Health had approximately 1,600 employees. Many of our employees are highly skilled in technical areas specific to the healthcare industry, and we believe that our current and future operations depend substantially on retaining such employees. Our employees are not represented by any labor union and we believe our employee relations to be excellent. Line of Credit Commitment - ------------------------- NDC Health has a commitment for a new credit facility providing a $50 million revolving line of credit. This credit facility will become effective upon completion of the spin-off and will be available for working capital and general corporate purposes after the spin-off. The line will have a variable interest rate based on market rates and customary origination-related fees and expenses. The credit agreement will contain certain financial and non-financial covenants customary for financings of this nature. The facility will have a one-year term, with the option for NDC Health to convert any outstanding borrowings at the maturity date to a term loan repayable at the first anniversary of the initial maturity date. We feel that this facility meets our requirements over the two- year period, while allowing us the flexibility to reset our credit facility based on requirements that solidify over the next twelve months. EX-99.1B1 3 0003.txt STAND-ALONE NDC HEALTH CON. STATEMENTS OF INCOME
Consolidated Statement of Income (Unaudited) Exhibit 99.1 (b) 1 Stand Alone NDC Health (Normalized) (in thousands, except per share data) ================================================================================================================================== FY 99 FY 00 FY01 ------------ ------------------------------------------------------ ------------------- Total Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Total Year Qtr 1 Qtr 2 ----------- ------------------------------------------------------ ------------------- Revenue $ 270,793 $ 71,159 $ 71,211 $ 71,703 $ 75,207 $ 289,280 $ 80,245 $ 83,433 Operating expenses: Cost of service 156,876 40,258 41,229 40,257 43,427 165,171 46,421 49,163 Sales, general and administrative 61,158 15,542 15,838 18,360 18,993 68,733 19,956 19,299 ----------- ------------------------------------------------------ ------------------- 218,034 55,800 57,067 58,617 62,420 233,904 66,377 68,462 ----------- ------------------------------------------------------ ------------------- Operating income 52,759 15,359 14,144 13,086 12,787 55,376 13,868 14,971 EBITDA 79,801 22,809 21,425 19,461 20,876 84,571 21,857 23,609 Other expense (6,383) (1,772) (1,679) (1,639) (1,490) (6,580) (1,942) (1,781) ----------- ------------------------------------------------------ ------------------- Income before income taxes 46,376 13,587 12,465 11,447 11,297 48,796 11,926 13,190 Income taxes 17,855 5,231 4,799 4,407 4,349 18,786 4,592 5,078 ----------- ------------------------------------------------------ ------------------- Net income $ 28,521 $ 8,356 $ 7,666 $ 7,040 $ 6,948 $ 30,010 $ 7,334 $ 8,112 =========== ====================================================== =================== Basic shares 33,725 33,876 33,376 32,920 32,755 33,232 32,778 32,889 =========== =========================================================================== Basic earnings per share $ 0.85 $ 0.25 $ 0.23 $ 0.21 $ 0.21 $ 0.90 $ 0.22 $ 0.25 =========== ===========================================================================
Note: These statements have been adjusted to reflect an estimated normalized stand alone NDC Health. For more explanation of the assumptions used to prepare these statements, please refer to the Form 8K text. EX-99.1B2 4 0004.txt NATL. DATA CORPORATION CON. STMTS OF INCOME Exhibit 99.1(b)2 Consolidated Statement of Income (Loss) (Unaudited) NATIONAL DATA CORPORATION (in thousands)
=================================================================================================================================== FY 99 FY 00 FY01 ---------- ------------------------------------------------------- -------------------- Total Year Qtr 1 Qtr 2 Qtr 3 Qtr 4 Total Qtr 1 Qtr 2 Year ---------- ------------------------------------------------------- -------------------- Revenue $ 338,996 $ 85,720 $ 85,027 $ 85,868 $ 89,058 $ 345,673 $ 85,874 $ 83,666 Operating expenses: Cost of service 203,992 50,743 53,950 50,684 52,136 207,513 50,522 49,349 Sales, general and administrative 72,900 19,154 29,014 20,853 22,363 91,384 21,165 19,381 Restructuring and impairment charges - - 34,393 - - 34,393 - 2,156 ---------- ------------------------------------------------------- -------------------- 276,892 69,897 117,357 71,537 74,499 333,290 71,687 70,886 Operating income (loss) 62,104 15,823 (32,330) 14,331 14,559 12,383 14,187 12,780 EBITDA 91,765 23,963 10,075 21,321 23,251 78,610 22,400 23,619 Other income/(expense) (6,384) (173) 616 (1,639) (10,525) (11,721) (1,942) (1,781) ---------- ------------------------------------------------------- -------------------- Income (loss) before income taxes and discontinued operations 55,720 15,650 (31,714) 12,692 4,034 662 12,245 10,999 Provision (benefit) for income taxes 21,858 6,017 (10,546) 4,882 1,472 1,825 4,714 4,310 ---------- ------------------------------------------------------- -------------------- Income (loss) before discontinued operations 33,862 9,633 (21,168) 7,810 2,562 (1,163) 7,531 6,689 ---------- ------------------------------------------------------- -------------------- Discontinued operations, net of tax 37,575 (4,696) 5,700 (6,616) (33,390) (39,002) 8,649 (326) ---------- ------------------------------------------------------- -------------------- Net income $ 71,437 $ 4,937 $ (15,468) $ 1,194 $ (30,828) $ (40,165) $ 16,180 $ 6,363 ========== ======================================================= ==================== Basic shares 33,725 33,876 33,376 32,920 32,755 33,232 32,778 32,889 ========== ======================================================= ==================== Basic earnings per share $ 2.12 $ 0.15 $ (0.46) $ 0.04 $ (0.94) $ (1.21) $ 0.49 $ 0.19 ========== ======================================================= ==================== Diluted shares 37,823 35,265 34,128 33,810 32,755 33,232 36,193 34,057 ========== ======================================================= ==================== Diluted earnings per share $ 2.02 $ 0.14 $ (0.46) $ 0.04 $ (0.94) $ (1.21) $ 0.48 $ 0.19 ========== ======================================================= ====================
EX-99.1B3 5 0005.txt NATL. DATA CORPORATION CON. BALANCE SHEETS Exhibit 99.1(b)3 UNAUDITED CONSOLIDATED BALANCE SHEETS NATIONAL DATA CORPORATION AND SUBSIDIARIES (In thousands, except share and per share data) ================================================================================
November 30, May 31, 2000 2000 ----------- ---------- ASSETS Current assets: Cash and cash equivalents $ 7,286 $ 1,789 Accounts receivable 61,648 73,025 Allowance for doubtful accounts (6,243) (7,316) ----------- ---------- Accounts receivable, net 55,405 65,709 ----------- ---------- Income tax receivable 28,867 1,962 Deferred income taxes 298 20,097 Prepaid expenses and other current assets 17,275 13,857 ----------- ---------- Total current assets 109,131 103,414 ----------- ---------- Property and equipment, net 79,130 69,265 Intangible assets, net 217,275 214,800 Deferred income taxes 15,565 32,247 Investments 36,322 5,948 Other 9,539 4,346 Net assets of discontinued operations 205,702 220,312 ----------- ---------- Total Assets $ 672,664 $ 650,332 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Line of credit $ 57,000 $ 68,500 Current portion of long-term debt 164 159 Obligations under capital leases 5,362 5,803 Accounts payable and accrued liabilities 57,183 55,082 Accrued spinoff related liabilities 10,819 - Deferred income 23,899 23,319 ----------- ---------- Total current liabilities 154,427 152,863 ----------- ---------- Long-term debt 152,425 152,495 Obligations under capital leases 1,607 1,793 Other long-term liabilities 15,016 13,045 ----------- ---------- Total liabilities 323,475 320,196 ----------- ---------- Commitments and contingencies Shareholders' equity: Preferred stock, par value $1.00 per share; 1,000,000 shares authorized, none issued - - Common stock, par value $.125 per share; 200,000,000 shares authorized; 33,953,008 shares issued 4,244 4,244 Capital in excess of par value 348,174 349,387 Treasury stock, at cost, 1,019,859 and 1,211,880 shares, respectively (26,897) (31,960) Retained earnings 38,375 20,763 Deferred compensation (6,798) (7,332) Unrealized holding loss (4,264) (1,727) Cumulative translation adjustment (3,645) (3,239) ----------- ---------- Total shareholders' equity 349,189 330,136 ----------- ---------- Total Liabilities and Shareholders' Equity $ 672,664 $ 650,332 =========== ==========
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