-----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, MHOlVJiVEt5mTzG2LrGAQX4DNFhWrgM/4zRmaBDc+uOKL3jJEKnVu/SjHiedTeTk vywgYdUJvIEl3wd2uEU/QA== 0001193125-04-064655.txt : 20040419 0001193125-04-064655.hdr.sgml : 20040419 20040419165708 ACCESSION NUMBER: 0001193125-04-064655 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20040419 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20040419 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NDCHEALTH 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: 1934 Act SEC FILE NUMBER: 001-12392 FILM NUMBER: 04741055 BUSINESS ADDRESS: STREET 1: NDCHEALTH CORPORATION STREET 2: NDC PLAZA CITY: ATLANTA STATE: GA ZIP: 30329 BUSINESS PHONE: 4047282000 MAIL ADDRESS: STREET 1: NDC PLAZA CITY: ATLANTA STATE: GA ZIP: 30329-2010 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL DATA CORP DATE OF NAME CHANGE: 19920703 8-K 1 d8k.htm FORM 8-K Form 8-K

UNITED STATES

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): April 19, 2004

 

Commission File No. 001-12392

 


 

NDCHealth Corporation

(Exact name of registrant as specified in its charter)

 


 

DELAWARE   58-0977458

(State or other jurisdiction

of incorporation)

 

(IRS Employer

Identification Number)

NDC Plaza, Atlanta, Georgia   30329-2010
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code (404) 728-2000

 

None

(Former name or former address, if changed since last report.)

 



Item 7. Financial Statements and Exhibits

 

  (c) Exhibits

 

  99.1 Press Release dated April 19, 2004.

 

Item 9. Regulation FD Disclosure

 

EBITDA

 

EBITDA is a key measurement related to our debt covenants. EBITDA is defined in our credit agreement as income before equity in losses of affiliated companies, plus income taxes, interest expense, depreciation and amortization, and certain other non-cash charges, less minority interest in income and losses. EBITDA is not a Generally Accepted Accounting Principle (GAAP) measurement and may not be comparable to EBITDA reported by other companies. The table below reconciles EBITDA for the three months ended February 27, 2004 and February 28, 2003 to our results determined under GAAP.

 

(in thousands)


   Three months
ended
February 27, 2004


    Three months
ended
February 28, 2003


 

Net income

   $ 9,276     $ (3,700 )

Equity in losses of affiliated companies

     410       359  

Income taxes

     5,811       3,121  

Interest expense and related costs

     7,471       8,020  

Depreciation and amortization

     9,761       7,842  

Amortization of restricted stock

     684       344  

Other non-cash charges

     392       17,238  

Minority interest in losses

     (776 )     (185 )
    


 


EBITDA

   $ 33,029     $ 33,039  
    


 


 

2


Free Cash Flow

 

In light of our goal of reducing our levels of senior debt and interest expense, we believe that free cash flow is a meaningful measure of our ability to generate cash for the payment of debt. We define free cash flow as net cash provided by operating activities less capital expenditures and dividends paid. Free cash flow is not a GAAP measurement and may not be comparable to free cash flow reported by other companies. The table below reconciles free cash flow for the nine months ended February 27, 2004 and February 28, 2003 to our results determined under GAAP.

 

(in thousands)


   Nine months ended
February 27, 2004


    Nine months ended
February 28, 2003


 

Net cash provided by operating activities

   $ 70,365     $ 70,281  

Capital expenditures

     (33,633 )     (31,767 )

Dividends paid

     (4,254 )     (4,170 )
    


 


Free cash flow

   $ 32,478     $ 34,344  
    


 


 

3


CAUTIONARY NOTICE REGARDING

NON-GAAP MEASURES AND

FORWARD LOOKING STATEMENTS

 

This report contains forward-looking statements. The statements related to the Company’s expected business outlook and the Company’s guidance for fiscal year 2004 are forward-looking statements. In general, forward-looking statements may include statements preceded by, followed by or that include the words “may,” “could,” “would,” “should,” “believe,” “expect,” “anticipate,” “plan,” “estimate,” “target,” “project,” “intend,” or similar expressions. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in the forward-looking statements. Among other things, the Company’s business outlook and the projected results for the remainder of fiscal year 2004 are based on preliminary estimates, assumptions and projections that management believes to be reasonable at this time, but are beyond management’s control. Some of management’s assumptions that underlie the Company’s forward-looking statements include, among others, assumptions regarding demand for the Company’s products, the cost and timing of product upgrades and new product introductions, gains in market share, industry conditions affecting the Company’s customers, expected pricing levels, expected growth of revenue and net income, the timing and cost of planned capital expenditures, any regulatory action, outcomes of pending or threatened litigation, the aging of accounts receivable from the company’s value-added resellers and levels of inventory purchased by these VARs, as well as recognition of VAR revenue and the adequacy of associated VAR accounts-receivable reserves, and expected synergies relating to acquisitions, joint ventures and alliances.

 

Additional factors that could cause results to materially differ from current expectations include, but are not limited to, the following:

 

  intense competition could damage our sales and profitability;

 

  our substantial indebtedness could adversely affect our financial health;

 

  we may lose customers or revenue due to consolidation in the healthcare industry;

 

  our profitability could suffer if we are unable to continue our expansion in new and existing markets;

 

  failure to install our backlog of pharmacy and hospital systems could negatively impact our revenue and profitability;

 

  defaults in payment or a material reduction in purchases of our products by large customers could have a significant negative impact on our financial condition, results of operations and liquidity;

 

  we may spend significant resources developing and promoting new products or solutions that may not meet the demands of our customers;

 

  interruptions may occur in some of our information services;

 

  proprietary technology protections may not be adequate and proprietary rights may infringe on rights of third parties;

 

  recent and future combinations and strategic relationships may not be profitable;

 

  complex state and federal regulations could depress the demand for information products or impact the availability to us of certain data, and we could incur redesign costs or be subject to penalties;

 

  changes in the United States healthcare environment could have a material negative impact on our revenues;

 

4


  unanticipated changes in our accounting policies may be required because of mandates by standards setting organizations and could have a material impact on our financial statements;

 

  we may need additional capital to continue our growth and expansion; and

 

  our data suppliers may restrict or modify access to their data.

 

For further discussion of the factors noted above and other relevant factors, please see the information set forth under the caption “Additional Factors That May Affect Future Performance” in Item 7 of our Annual Report on Form 10-K/A for the fiscal year ended May 30, 2003, which are incorporated herein by this reference.

 

Forward-looking statements speak only as of the date they are made, and the Company disclaims any obligation to update or amend these statements in light of new information, future events or otherwise. Forward-looking statements are only predictions and are not guarantees of performance.

 

Item 12. Results of Operations and Financial Condition

 

On April 19, 2004, NDCHealth Corporation issued a press release announcing financial results for its third fiscal quarter ended February 27, 2004. The full text of the press release is attached as Exhibit 99.1.

 

The information in this Current Report on Form 8-K, including the exhibit attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference into future filings under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, unless expressly set forth in such future filing that such information is to be considered “filed” or incorporated by reference therein.

 

5


SIGNATURE

 

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.

 

NDCHealth Corporation

            (Registrant)

By:

 

/s/ Randolph L.M. Hutto


   

Randolph L.M. Hutto

   

Chief Financial Officer

   

(Authorized Signing Officer and Principal

Financial Officer)

 

Date: April 19, 2004

 

6

EX-99.1 3 dex991.htm QUARTERLY RESULTS Quarterly Results

Exhibit 99.1

 

NDCHealth Reports Fiscal Third Quarter Results

 

ATLANTA, April 19, 2004 – NDCHealth Corporation (NYSE: NDC) today announced financial results for its fiscal third quarter ended February 27, 2004. Revenue increased to $116.1 million from $109.0 million in the third quarter of fiscal 2003.

 

Net income in the third quarter of fiscal 2004 was $9.3 million, or $0.26 per diluted share. During the third quarter, the company estimated that inventory levels of physician system units held by value-added resellers (VARs) increased. In addition, the aging of accounts receivable from VARs in the company’s physician business unit also increased. As a result, the company delayed until future periods the recognition of $2.3 million of revenue from certain third quarter sales to these VARs, which impacted net income by $0.8 million. The company also increased accounts receivable reserves in its physician business unit by approximately $0.9 million. Together, these factors reduced third quarter EPS by $0.04 per diluted share. EPS also included the impact of $0.7 million in after-tax costs, or $0.02 per diluted share, associated with the ArcLight transaction, which closed in December 2003. The majority of these costs were non-cash or were fully reimbursed by ArcLight and consisted of transaction and other expenses associated with transition activities and amortization from the ArcLight transaction.

 

Third quarter fiscal 2004 net income and per share results compare to a net loss of $(3.7) million, or $(0.11) per diluted share, in the fiscal third quarter last year. The fiscal 2003 third quarter loss included total pre-tax charges of approximately $18.7 million, or $0.43 per diluted share after tax, related to early extinguishment of debt and charges, including investment losses related to the sale of MedUnite.

 

For the nine-month period ended February 27, 2004, net cash provided by operating activities was $70.4 million, a level similar to the $70.3 million reported in the same period of fiscal 2003. Improved management of working capital was offset by an additional $21.3 million in cash interest paid this fiscal year when compared to the same nine-month period in fiscal 2003. The company also reduced debt by approximately $14.5 million since its fiscal second quarter ended November 28, 2003.

 

Free cash flow, a non-GAAP measure defined as net cash provided by operating activities less capital expenditures and dividends paid, was $32.5 million for the first nine months of this fiscal year.

 

“We set out at the beginning of this fiscal year with an eight-quarter plan, and we are making solid progress against it,” said Walter Hoff, NDCHealth’s chairman and chief executive officer. “Our execution priorities are to grow revenue through business solution sales, control costs and leverage our infrastructure to realize margin improvement, and generate increasing cash flow to reduce debt.”


NDCHealth Reports Third Quarter Results

 

“We are in the midst of our most active new product development and introduction cycle ever, and the initial market enthusiasm for our new solutions has generated strong early sales. We continue to invest in our businesses and are combining ArcLight prescription data with our Intelligent Health Repository to build next-generation products for pharmaceutical manufacturers,” Hoff continued. “We intend to take advantage of our extensive market presence. We will be focusing our efforts on converting current customers to our new platforms in addition to selling into new prospects with the goal of increasing revenue per claim, expanding profit margins and improving cash flow.”

 

On March 31, 2004, a special committee of NDCHealth’s board comprised of the members of its Audit Committee, each of whom is an independent director, and independent legal and accounting advisors retained by the Special Committee, initiated a review of practices and procedures relating to the timing of revenue recognition of sales to the VAR channel in the company’s physician business unit. The Special Committee has completed its review and analysis. After a discussion of the results of the review with the company’s outside auditors, it was concluded based on the review that there was no impact on any reported prior period results. The company did, however, implement a change that had the impact of delaying revenue recognition of $2.3 million of third quarter sales to VARs, which impacted net income by $0.8 million.

 

Management is revising its financial guidance for fiscal 2004. Full-year revenue is expected to be in the range of $460 million to $466 million, which reflects the company’s shift in sales strategy to a solution-based approach, the continued constraints due to pressure on discretionary spending from U.S. pharmaceutical manufacturers, and the possibility of a near-term reduction in sales in the physician business unit.

 

The company is not providing earnings and cash flow guidance at this time due to the undetermined professional fees and expenses, and possible sales impact in the physician unit related to the independent review noted above. In the fourth quarter ending May 28, 2004, the company expects to incur charges related to the conclusion of activities to eliminate financial losses in Europe. Additional actions taken in the U.S. to reduce headcount are expected to result in a decrease of approximately $6.0 million in annualized compensation-related costs. This expense reduction is expected to be used to fund the sales and marketing of recently introduced and new products to accelerate future growth.

 

Management continues to believe NDCHealth will achieve its eight-quarter plan objectives, and is focused on executing on key business strategies to accelerate the rollout and drive the sale of new pharmacy and hospital solutions, integrate the ArcLight assets and develop new information solutions for the pharmaceutical industry, and improve cash flow.

 

For additional information on NDCHealth’s strategies and financial and business outlook, please refer to the company’s Current Report on Form 8-K, Quarterly Report on Form 10-Q and its Annual Report on Form 10-K/A filed with the Securities and Exchange Commission, which can be accessed from the Investor Relations page, SEC Filings section of the NDCHealth web site, http://www.ndchealth.com.


NDCHealth Reports Third Quarter Results

 

Conference Call and Web Cast

Management will host a conference call to discuss these results today, April 19, 2004 beginning at 5:00 pm ET. The conference call can be accessed by dialing 877-421-3895 (706-679-0822 for international/local callers), or by web cast at http://www.ndchealth.com. A replay of the conference call will be available through 11:59 pm ET on April 29, 2004, and can be accessed either via archived web cast at our corporate web site, or by dialing 800-642-1687 (706-645-9291 for international/local callers) and entering conference ID 5846059.

 

About NDCHealth

NDCHealth is a leading provider of health information solutions that add value to pharmacy, hospital, physician, pharmaceutical and payer businesses.

 

Safe Harbor

This press release contains forward-looking statements related to the company’s expected business outlook and guidance for fiscal year 2004. These statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in the forward-looking statements. Among other things, the company’s business outlook and the projected revenue for the remainder of fiscal year 2004 are based on preliminary estimates, assumptions and projections that management believes to be reasonable at this time, but are beyond management’s control. Some of management’s assumptions that underlie the company’s forward-looking statements include, among others, assumptions regarding demand for the company’s products, the cost and timing of product upgrades and new product introductions, gains in market share, industry conditions affecting the company’s customers, expected pricing levels, expected growth of revenue and net income, the timing and cost of planned capital expenditures, any regulatory action, outcomes of pending or threatened litigation, the aging of accounts receivable from the company’s value-added resellers and levels of inventory purchased by these VARs, as well as recognition of VAR revenue and the adequacy of associated VAR accounts-receivable reserves, and expected synergies relating to acquisitions, joint ventures and alliances. Additional factors that could cause results to materially differ from current expectations include, but are not limited to, changes in demand for the company’s services or products, changes in the U.S. healthcare industry, consolidation within the healthcare industry as well as other factors discussed in NDCHealth’s Annual Report on Form 10-K/A for the fiscal year ended May 30, 2003, filed with the SEC. Forward-looking statements speak only as of the date they are made, and the company disclaims any obligation to update or amend these statements in light of new information, future events or otherwise. Forward-looking statements are only predictions and are not guarantees of performance.

 

###

 

Contact:

Robert Borchert

VP, Investor Relations

404-728-2906

robert.borchert@ndchealth.com


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

NDCHealth Corporation and Subsidiaries

 

(In thousands, except per share data)             

 
     Three Months Ended

 
     February 27,
2004


    February 28,
2003


 

Revenues:

                

Network services and systems

   $ 74,241     $ 67,987  

Information management

     41,872       41,020  
    


 


       116,113       109,007  
    


 


Operating expenses:

                

Cost of service

     58,914       53,130  

Sales, general and administrative

     25,863       22,341  

Depreciation and amortization

     9,761       7,842  

Restructuring, impairment and other charges

     —         2,283  
    


 


       94,538       85,596  
    


 


Operating income

     21,575       23,411  
    


 


Other income (expense):

                

Interest and other income

     126       343  

Interest and other expense

     (6,980 )     (7,766 )

Minority interest in losses

     776       185  

Loss related to investments

     —         (14,955 )

Early extinguishment of debt charges

     —         (1,438 )
    


 


       (6,078 )     (23,631 )
    


 


Income (loss) before income taxes and equity in losses of affiliated companies:

                

Network services and systems

     10,879       9,424  

Information management

     4,618       6,749  

Other

     —         (16,393 )
    


 


       15,497       (220 )
    


 


Provision for income taxes

     5,811       3,121  
    


 


Income (loss) before equity in losses of affiliated companies

     9,686       (3,341 )

Equity in losses of affiliated companies

     (410 )     (359 )
    


 


Net income (loss)

   $ 9,276     $ (3,700 )
    


 


Basic earnings (loss) per share:

   $ 0.26     $ (0.11 )
    


 


Shares

     35,232       34,623  

Diluted earnings (loss) per share:

   $ 0.26     $ (0.11 )
    


 


Shares

     36,284       34,623  

 

4


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

NDCHealth Corporation and Subsidiaries

 

(In thousands, except per share data)             

 
     Nine Months Ended

 
     February 27,
2004


    February 28,
2003


 

Revenues:

                

Network services and systems

   $ 216,715     $ 199,681  

Information management

     123,523       114,694  
    


 


       340,238       314,375  
    


 


Operating expenses:

                

Cost of service

     171,248       156,881  

Sales, general and administrative

     73,871       64,555  

Depreciation and amortization

     28,519       22,952  

Restructuring, impairment and other charges

     3,999       2,283  
    


 


       277,637       246,671  
    


 


Operating income

     62,601       67,704  
    


 


Other income (expense):

                

Interest and other income

     450       1,088  

Interest and other expense

     (22,296 )     (14,682 )

Minority interest in losses

     1,399       1,216  

Loss related to investments

     —         (14,955 )

Early extinguishment of debt charges

     —         (2,359 )
    


 


       (20,447 )     (29,692 )
    


 


Income (loss) before income taxes and equity in losses of affiliated companies:

                

Network services and systems

     31,722       36,972  

Information management

     13,353       18,354  

Other

     (2,921 )     (17,314 )
    


 


       42,154       38,012  
    


 


Provision for income taxes

     15,797       16,886  
    


 


Income before equity in losses of affiliated companies

     26,357       21,126  

Equity in losses of affiliated companies

     (993 )     (984 )
    


 


Net income

   $ 25,364     $ 20,142  
    


 


Basic earnings per share:

   $ 0.73     $ 0.58  
    


 


Shares

     34,934       34,561  

Diluted earnings per share:

   $ 0.71     $ 0.58  
    


 


Shares

     35,672       34,923  

 

5


CONDENSED CONSOLIDATED BALANCE SHEETS

NDCHealth Corporation and Subsidiaries

 

(In thousands, except share data)             

 
     February 27,
2004


    May 30,
2003


 

ASSETS

                

Current assets:

                

Cash and cash equivalents

   $ 33,602     $ 16,103  

Accounts receivable

     82,720       78,988  

Allowance for doubtful accounts

     (8,555 )     (6,785 )
    


 


Accounts receivable, net

     74,165       72,203  
    


 


Income tax receivable

     2,050       1,199  

Deferred income taxes

     10,022       21,663  

Prepaid expenses and other current assets

     31,862       34,304  
    


 


Total current assets

     151,701       145,472  
    


 


Property and equipment, net

     128,494       116,678  

Intangible assets, net

     492,078       479,234  

Deferred income taxes

     —         5,018  

Debt issuance cost

     13,476       12,756  

Investments

     17,979       15,662  

Other

     15,669       12,432  
    


 


Total Assets

   $ 819,397     $ 787,252  
    


 


LIABILITIES AND STOCKHOLDERS' EQUITY

                

Current liabilities:

                

Current portion of long-term debt

   $ 6,037     $ 6,558  

Current portion of obligations under capital leases

     1,019       1,028  

Accounts payable and accrued liabilities

     67,993       61,211  

Accrued interest

     7,074       13,281  

Deferred revenue

     37,444       38,137  
    


 


Total current liabilities

     119,567       120,215  
    


 


Long-term debt

     305,666       321,262  

Obligations under capital leases

     124       558  

Deferred revenue

     8,794       9,461  

Deferred income taxes

     742       —    

Other long-term liabilities

     30,557       30,225  
    


 


Total liabilities

     465,450       481,721  
    


 


Commitments and contingencies

     —         —    

Minority interest in equity of subsidiaries

     7,620       9,019  

Stockholders' 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; 35,961,257 and 34,888,753 shares issued, respectively.

     4,495       4,361  

Capital in excess of par value

     242,423       216,156  

Retained earnings

     100,338       79,228  

Deferred compensation and other

     (5,722 )     (4,301 )

Other comprehensive income

     4,793       1,068  
    


 


Total stockholders' equity

     346,327       296,512  
    


 


Total Liabilities and Stockholders' Equity

   $ 819,397     $ 787,252  
    


 


 

6


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

NDCHealth Corporation and Subsidiaries

 

(In thousands)             

 
     Nine Months Ended

 
     February 27,
2004


    February 28,
2003


 

Cash flows from operating activities:

                

Net income

   $ 25,364     $ 20,142  

Adjustments to reconcile net income to cash provided by operating activities:

                

Equity in losses of affiliated companies

     993       984  

Non-cash portion of restructuring, impairment and other charges

     1,049       2,283  

Non-cash in process research and development charges

     350       —    

Non-cash early extinguishment of debt charges

     —         1,217  

Loss related to investments

     —         14,955  

Depreciation and amortization

     28,519       22,952  

Deferred income taxes

     17,709       12,072  

Provision for bad debts

     3,246       2,115  

Other, net

     2,211       5,333  

Changes in assets and liabilities which provided (used) cash, net of the effects of acquisitions:

                

Accounts receivable, net

     (6,092 )     (5,307 )

Prepaid expenses and other assets

     (1,728 )     (8,612 )

Accounts payable and accrued liabilities

     7,312       (1,304 )

Accrued interest on long term debt

     (6,207 )     6,490  

Deferred revenue

     (1,499 )     (3,896 )

Income taxes

     (862 )     857  
    


 


Net cash provided by operating activities

     70,365       70,281  
    


 


Cash flows from investing activities:

                

Capital expenditures

     (33,633 )     (31,767 )

Proceeds from the sale of equipment

     2,148       —    

Investing activities and other non-current assets

     (7,077 )     (13,831 )
    


 


Net cash used in investing activities

     (38,562 )     (45,598 )
    


 


Cash flows from financing activities:

                

Net repayments under lines of credit

     —         (91,000 )

Net principal payments under capital lease arrangements and other long-term debt

     (16,559 )     (1,888 )

Net cash from refinancing activities

     (395 )     168,070  

Net proceeds from stock activities

     8,431       1,283  

Dividends paid

     (4,254 )     (4,170 )
    


 


Net cash (used in) provided by financing activities

     (12,777 )     72,295  
    


 


Cash flows from discontinued operations:

                

Cash provided by tax benefits of discontinued operations

     —         6,106  

Cash used in discontinued operations

     (1,527 )     (4,393 )
    


 


Net cash (used in) provided by discontinued operations

     (1,527 )     1,713  
    


 


Increase in cash and cash equivalents

     17,499       98,691  

Cash and cash equivalents, beginning of period

     16,103       13,447  
    


 


Cash and cash equivalents, end of period

   $ 33,602     $ 112,138  
    


 


 

7


FREE CASH FLOW RECONCILIATION

NDCHealth Corporation and Subsidiaries

 

In light of our goal of reducing our levels of senior debt and interest expense, we believe that free cash flow is a meaningful measure of our ability to generate cash for the payment of debt. We define free cash flow as net cash provided by operating activities less capital expenditures and dividends paid. Free cash flow is not a Generally Accepted Accounting Principles (GAAP) measurement and may not be comparable to free cash flow reported by other companies. The tables below reconcile free cash flow for the nine months ended February 27, 2004 and February 28, 2003 to our results determined under GAAP.

 

(In thousands)             

 
     Nine Months Ended

 
     February 27,
2004


    February 28,
2003


 

Net cash provided by operating activities

   $ 70,365     $ 70,281  

Capital expenditures

     (33,633 )     (31,767 )

Dividends paid

     (4,254 )     (4,170 )
    


 


Free cash flow

   $ 32,478     $ 34,344  
    


 


 

8

-----END PRIVACY-ENHANCED MESSAGE-----