SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED: COMMISSION FILE NUMBER:
JANUARY 31, 1998 0-3713
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NATIONAL COMPUTER SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-0850527
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
11000 PRAIRIE LAKES DRIVE
EDEN PRAIRIE, MINNESOTA 55344
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 612/829-3000
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Securities registered pursuant to Section 12(g) of the Act:
Common Shares--par value $.03 a share
(Title of Class)
Rights to Purchase Series A Participating Preferred Stock
(Title of Class)
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Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes _X_ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. _X_
State the aggregate market value of the voting shares held by non-affiliates of
the registrant as of April 17, 1998.
Common Shares, $.03 par value -- $ 644,923,000
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of April 17, 1998.
Common Shares, $.03 par value - 31,044,252 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the year ended January 31,
1998 are incorporated by reference into Parts I, II and IV.
Portions of the definitive proxy statement for the Annual Meeting of
Stockholders to be held on May 21, 1998 are incorporated by reference into Part
III.
PART I
ITEM 1. BUSINESS
National Computer Systems, Inc. ("NCS" or the "Company") is a global
information services company, which provides quality services, software and
systems for the collection, management and interpretation of data.
The Company's services include data capture and processing, analysis, data
management, reporting, network services, software services, hardware maintenance
and other professional services to meet customer needs.
The Company's application software products are focused on specific
applications within targeted markets, particularly K-12 education, where NCS has
a substantial presence.
NCS systems are used to: capture and aggregate data; create a database or
datastream; process the data using proprietary software; and analyze, interpret
and report results. Data collection systems include optical mark read and image
scanning hardware, other data collection technologies, proprietary software and
pre-printed forms. The Company utilizes its own products, as well as other
technologies, to provide data collection services to those customers who prefer
not to purchase systems for internal use.
NCS markets its data collection, management and reporting services and
systems within two broad markets: Education and Data Management.
EDUCATION
NCS develops and markets data collection services and systems which provide
optical scanning, image-based or electronic data collection and computer
processing services for the high accuracy, large volume, complex processing
needs of major test publishers, state education agencies, universities and
colleges, and local school districts. NCS also develops and markets enterprise
application software for the administration and management of curriculum,
student instruction, and financial data at the classroom, school, school
district and state levels. In addition to its services for training, consulting
and project management NCS, more recently, has offered network services,
including design, hardware and software procurement, Internet utilization,
maintenance and support, network administration and outsourcing for its K-12
customers.
By using the Company's optical scanning and image-based systems and forms,
individual school districts can perform in-house student assessment testing
applications, including teacher created or administration developed norm- or
criterion-referenced tests; administrative applications such as attendance,
scheduling, grade reporting and registration; library and inventory management;
and financial management and payroll.
The Company's information processing services are also provided in support
of federal student financial aid programs for post-secondary education.
DATA MANAGEMENT
NCS develops, markets and manages complex data collection, processing and
reporting services and products targeted for certain key applications in the
data management market. These applications include sales/marketing applications,
such as sales/order entry, billing, quality measurement, product warranty and
customer satisfaction surveys and customer data collection; payroll; human
resource applications, including applicant tracking, organizational development,
employee attitude surveys, benefits enrollment and employee evaluation;
telephone equal access balloting; and general data collection, analysis,
management and reporting.
NCS provides scanners and forms for customers to do their own paper-based
data collection. The Company also provides solutions to more complex information
management needs through services and products that include comprehensive data
collection technologies, software development, telecommunications support and
information dissemination systems. All of these processing, data management and
reporting services are available from NCS in support of customers that prefer to
outsource these services. In addition, NCS offers network design, hardware and
software acquisition, implementation, maintenance and support, and network
administration.
BUSINESS SEGMENT AND OTHER INFORMATION
NCS operates in a single business segment. See Note 10 of Notes to
Consolidated Financial Statements for business segment data, which financial
statements are included in the Annual Report to Stockholders for the fiscal year
ended January 31, 1998, and incorporated herein by reference.
The Company's headquarters are located at 11000 Prairie Lakes Drive, Eden
Prairie, Minnesota 55344, telephone 612/829-3000.
PRIMARY PRODUCT AND SERVICE OFFERINGS
Assessment and Testing Services
NCS is the largest commercial processor of student assessment tests for
grades K-12 in the United States. NCS markets test scoring services to major
test publishers, state education agencies, the federal government, local school
districts and commercial customers. For these customers, NCS service offerings
include program design, item development, program management, software
development, printing, packaging, distribution and collection logistics,
scoring, editing, analysis and final reporting. Scoring services include
selected response scoring and professional scoring of constructed response items
such as essays. Both optical mark reading (OMR) and image scanning technologies
are utilized in the scoring process.
The acquisition of Virtual University Enterprises in fiscal 1997 added a
secure Internet-based electronic testing delivery capability, thereby allowing
NCS to participate in the professional certification market, as well as offer an
electronic testing option to traditional statewide grade K-12 testing programs.
The Company also publishes and distributes test instruments and provides
scoring services to industrial and clinical psychologists, psychiatrists, human
resource professionals and educators. These tests and services include
personality assessment and psychological diagnostic testing, career development,
guidance counseling and human resource organizational assessments. With the
acquisition of the London House business from The McGraw-Hill Companies in
fiscal 1997, the Company's test and scoring services have expanded to include
assessments for personnel selection, skill assessment and workforce development.
Enterprise Software for Schools
A principal strategy of the Company in servicing the education marketplace
is to concentrate on enterprise software for school administration. Software
products include student administrative software to assist educators in student
management, including such applications as academic reporting, attendance
gathering and scheduling. The Company's instructional and curriculum management
software products manage information about student achievement against
educational objectives. In conjunction with the instructional management
software, NCS offers a Model Curriculum and Assessment Database (MCAD) to assist
schools in establishing stated curriculum objectives with specific test items to
measure progress against those objectives.
NCS software products also include financial management software for schools
and school districts, which includes accounting and financial reporting,
payroll, human resources, inventory and many other financial and administrative
functions. The Company offers teacher-training software specifically aimed at
improving assessment of writing and composition skills.
NCS offers services associated with its enterprise software to assist with
the design and implementation of these installations. Services offered by NCS
include professional consulting; project management; network planning, design
and implementation; systems installation and integration; training; help desk
and ongoing support. The Company also offers outsourcing services to install its
software and third-party computing and network hardware and operate the system
on a day-to-day basis for the school district.
Data Management Services
NCS provides a comprehensive package of services and products that include
systems analysis and design; software development; comprehensive data collection
technologies, including paper based and electronic; telecommunication and
telephone call center support; information management and dissemination; and
network support, including Internet connectivity; and training. These services
and products can be delivered on-site or outsourced off-site to NCS.
The U.S. Department of Education has outsourced to NCS the processing and
eligibility of the free federal application for student aid in post-secondary
education, and is the Company's single largest customer. NCS also manages, under
contract, the wide area network over which this information is distributed to
and from member colleges, universities and other post-secondary institutions.
Scanning Products
NCS manufactures OMR scanners that can read data from specially designed
forms printed by the Company with specifically formulated inks. Computing
capability is built into most scanners. Scanners usually incorporate, or
interface directly with, software developed by the Company. Optical scanning
equipment is most effective for applications where highest accuracy, precise
response definition and cost effective data capture is required.
The Company's lines of OMR hardware include scanners marketed as OpScan(R)
products. These lines of scanners provide a wide range of capabilities to meet
the needs of customers. The OMR scanning systems utilize a proprietary mark
discrimination system to distinguish valid marks, thus providing a very high
degree of accuracy in processing responses. To enhance the usefulness of the
OpScan line, the Company offers optional features, such as bar code reading
capability, a transport printer to print alphanumeric messages on scanned
documents, optional read formats and upgraded computer capability options.
NCS markets image-based data collection systems which represent an extension
of the Company's optical mark reading technology. These are marketed as NCS(R)
products and contain NCS proprietary character recognition technology as well as
integrated third-party technologies. When attached to a workstation computer and
using sophisticated software, these scanners allow customers to efficiently and
accurately collect and interpret a wide range of information from a printed
form, including machine- and hand-printed data.
NCS offers a number of standard software programs for use with NCS systems.
Processing and application software is an important component of its scanning
products and services. The Company also offers non-proprietary data collection
products and technology to address specific customer data collection needs.
Scannable Forms
The Company designs, manufactures and sells scannable forms, including
multiple-page booklets. A variety of custom forms are produced that are tailored
to meet specific customer needs. In addition, standardized forms are used,
especially with microcomputer-based scanners, in such applications as testing,
attendance, scheduling and student evaluation in the education market or
customer surveys or market research in the commercial setting.
The Company believes that the use of a properly designed and printed form is
an essential element in assuring that a scanning system performs with greatest
accuracy and optimum capability. In order to assure a high degree of
consistency, reliability and accuracy, NCS has emphasized the use of its forms
with its equipment. The Company prints its forms to exacting specifications.
MARKETING
NCS markets its data collection hardware and software and its data
collection and computer processing services directly through sales employees,
business partners and original equipment manufacturers and resellers located
throughout the United States. Outside the United States, the Company's systems,
products and services are sold through sales employees, distributors or
independent sales agents. The Company's published test products and related
test-scoring services are marketed principally in North America through
telemarketing, direct mail, professional journal advertising and professional
trade convention attendance and elsewhere through distributors. Each of the
Company's sales organizations are supported by marketing and sales support
personnel.
SOFTWARE SUPPORT, TECHNICAL SUPPORT AND MAINTENANCE
Software support is provided on a contractual basis to customers licensing
application software systems from the Company. NCS assists customers with
installation, training, hardware or software upgrades and development of
specific customer application software on a fee for service basis.
The Company offers technical support and hardware maintenance to customers
purchasing or leasing its equipment either on a contractual basis or through its
national network of customer service and support engineers. NCS emphasizes
prompt, reliable service and close customer relationships. Technical and
maintenance support may include labor, parts, operational training and, where
applicable, programming of the equipment and design of forms.
The Company supports its large scale, complex data management projects with
information processing expertise in areas such as needs assessment, software
development, data collection technologies, data base management, secure Internet
applications, networking, telecommunications, help desk services, system
acquisition and implementation and ongoing training and support.
DEVELOPMENT OF PRODUCTS AND SERVICES
The Company's development efforts are directed toward new product
development and enhancements to existing products. During the fiscal years ended
January 31, 1998, 1997 and 1996, the Company spent approximately $8.6 million,
$9.9 million and $8.5 million, respectively (including certain internally
developed, capitalized software development costs). The expenditures relate
principally to software product development (primarily focused on applications
software) and scanning software and equipment development. See Note 2 to Notes
to Consolidated Financial Statements for a description of additional new
products and enhancements to existing products acquired through acquisitions,
which financial statements are included in the Annual Report to Stockholders for
the fiscal year ended January 31, 1998, and incorporated herein by reference.
MANUFACTURING
The Company assembles its scanning equipment from electronic components,
metal stampings, molded plastic parts and mechanical sub-assemblies. These parts
are generally available from multiple sources. The Company assembles most of the
scanning systems equipment at its Eagan, Minnesota facility. Computer hardware
is purchased from other manufacturers.
Scannable forms are produced at NCS' printing plants in Columbia,
Pennsylvania; Owatonna, Minnesota; and Rotherham, South Yorkshire, England. The
ink and paper used in forms production are produced to the Company's
specifications by a limited number of suppliers. Although the Company has no
long-term supply contracts with its paper or ink suppliers, the Company has had
long-term relationships with such suppliers and believes that these
relationships are good.
COMPETITION
Competition in the data collection and information management industry is
intense. Numerous companies offer various combinations of data collection and
data management services. Optical scanning and imaging are only two of numerous
data collection methods available and successfully in use in the marketplace
today. The Company continues to focus on the development of education,
government and commercial market niches where scanning technology has advantages
over other data entry technologies.
In addition to the functional competition provided by alternative methods of
data capture (including on-line terminal keyboards and optical character
readers), other scanning vendors supply products that directly compete with
those of the Company.
Enterprise software for the education market is competitive with in-house
systems, national and regional software and service providers, data processing
service bureaus, test publishers and providers of educational curriculum and
instruction management products and services.
The Company's scannable forms compete with those produced by commercial and
specialized forms printers. Principal competitive factors in the scannable forms
printing industry are product quality, service and price.
NCS' test processing, test publishing and computer processing services
compete with several test publishers and data processing service bureaus. The
Company's customer support maintenance organization competes with services
provided by manufacturers, other national service companies and local providers
of maintenance services.
PATENTS, TRADEMARKS AND LICENSES
The Company holds certain patents, registered and unregistered trademarks
and copyrights. The Company also has rights under licensing arrangements to a
number of patents, trademarks, copyrights and manufacturing processes and
materials. These licensing arrangements are agreements with publishers of
various copyrighted psychological, aptitude and achievement tests that license
NCS to distribute these tests, to print and sell answer sheets for such tests,
and to score such tests. Payment of royalties is usually based upon the volume
of tests distributed, answer sheets sold, and tests scored. NCS believes that
its business is not dependent upon any one individual patent, trademark,
copyright or license right or group thereof.
"OpScan" and "NCS" appearing herein are registered trademarks of the
Company.
EMPLOYEES
As of February 28, 1998, the Company employed approximately 3,500 full-time
employees. The Company believes that its employee relations are excellent.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages and positions of all of the executive officers of the
Company as of February 28, 1998 are listed below along with their business
experience during the past five years.
NAME AGE POSITION
- ------------------- -------- -------------------------------------
Russell A. Gullotti 55 Chairman of the Board,
President and Chief Executive Officer
Robert C. Bowen 56 Senior Vice President
Michael C. Brewer 51 Vice President and General Counsel
Jay V. Clark 56 Vice President
John W. Fenton, Jr. 57 Secretary-Treasurer
Clive M. Hay-Smith 40 Vice President
Robert C. Hickcox 44 Vice President
Gary L. Martini 47 Vice President
Michael A. Morache 47 Vice President
David W. Smith 53 Vice President
Jeffrey W. Taylor 44 Vice President and Chief Financial Officer
Adrienne T. Tietz 51 Vice President
Mr. Gullotti has been President and Chief Executive Officer since October,
1994 and Chairman of the Board since May, 1995. Prior to that he held senior
executive positions in sales and marketing, services and administration with
Digital Equipment Corporation (computer manufacturing and services) for more
than five years.
Mr. Bowen has been a Senior Vice President of NCS for more than five years.
Mr. Brewer has been Vice President and General Counsel of NCS since May,
1995. Prior to that he was General Counsel of NCS from May, 1992 until May, 1995
and Associate General Counsel of NCS from May, 1990 until May, 1992.
Mr. Clark has been a Vice President of NCS for more than five years.
Mr. Fenton has been Secretary-Treasurer of NCS for more than five years.
Mr. Hay-Smith has been a Vice President of NCS since December, 1993. Prior
to that he was a sales and distribution executive with Control Data Systems,
Inc. (computer systems integrator) from March, 1989 to August, 1993.
Mr. Hickcox has been a Vice President of NCS since February, 1997. Prior to
that he was Director, Methods and Tools of NCS from April, 1995 to February,
1997 and prior to that, Manager, Tools and Systems with Digital Equipment
Corporation (computer manufacturing and services) for more than five years.
Mr. Martini has been a Vice President of NCS since August, 1997. Prior to
that he was owner and President of Martini & Associates (organizational
development consulting) for more than five years and was Senior Consultant,
Organization Development with Medtronic, Inc. (manufacturer of implantable
cardiac devices) from April, 1991 to June 1993.
Mr. Morache has been a Vice President of NCS since May, 1996. Prior to that
he was a Vice President of Unisys Corporation (information management company)
from September, 1995 to May, 1996 and prior to that, a Senior Vice President
with ALLTEL Information Services, Inc. (information processing management,
outsourcing services and application software) for more than five years.
Mr. Smith has been a Vice President of NCS for more than five years.
Mr. Taylor has been Vice President and Chief Financial Officer since May,
1994 and prior to that Vice President and Corporate Controller of NCS for more
than five years.
Ms. Tietz has been a Vice President of NCS for more than five years.
Officers are elected annually by the Board of Directors. There are no
family relationships among these officers, nor any arrangement or understanding
between any officer and any other person pursuant to which the officer was
selected.
PRIVATE SECURITIES LITIGATION REFORM ACT
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company is hereby filing, as Exhibit 99
hereto, cautionary statements identifying important factors that could cause the
Company's actual results to differ materially from those projected in forward
looking statements of the Company made by, or on behalf of, the Company.
ITEM 2. PROPERTIES
The Company's principal facilities are as follows:
SQUARE
LOCATION FOOTAGE GENERAL PURPOSE
- --------------- ---------- -------------------------------
Mesa, AZ (1) (2) 40,000 Education software and services
general offices, sales and
marketing, product
development and support
Cedar Rapids, IA 205,000 Data processing services and
warehouse
Iowa City, IA Assessment and test processing
Building 1 (1) 168,000 and data processing services,
Building 2 (1) 112,000 general offices and operations
Lawrence, KS 90,000 Data processing services,
general offices and operations
Eagan, MN (1) 109,000 Scanner hardware development
and manufacturing; NCS
services general offices,
sales and marketing;
customer support services
general offices and
operations; and
international operations
general offices, sales and
marketing
Eden Prairie, MN 45,000 Executive general offices
Edina, MN (1) 101,000 Data collection systems and
services general offices,
data processing services,
sales and marketing; and
scanner software
development
Minnetonka, MN (1) 54,000 Test publishing and scoring
general offices and
operations
Owatonna, MN (1) 128,000 Documents design and
production
Columbia, PA (1) 121,000 Documents design and
production
Austin, TX Data processing services,
Building 1 35,000 general offices and
Building 2 41,000 operations
Nunawading, Victoria 30,000 NCS Australasia Pty. Ltd,
(Melbourne) (joint venture) general
Australia (1) offices, data processing
services, sales and
marketing
Rotherham, South Yorkshire 34,000 Documents design and
England (1) production, general offices,
sales and marketing
- --------------------------
(1) Denotes owned facility.
(2) Construction of a 56,000 square foot addition to be used for the same
general purpose will commence in May, 1998 with completion estimated for
the last quarter of 1998.
The Company believes that its facilities, with the construction of the
addition described above, will be adequate to meet its current needs.
ITEM 3. LEGAL PROCEEDINGS
On April 30, 1997, the Company was served with a Summons and Complaint in a
lawsuit filed against the Company by Edu-Cap, Inc. (formerly University Support
Services, Inc.) ("Edu-Cap") in the United States District Court, District of
Minnesota, Fourth Division. See also Item 5 of the Company's Current Report on
Form 8-K dated April 30,1997. In the lawsuit, Edu-Cap alleges certain claims
against the Company in connection with three student loan processing and
servicing agreements between the Company and Edu-Cap. Edu-Cap seeks
out-of-pocket damages, an undisclosed amount of lost profits, and has tendered
to NCS certain student loans with unpaid principal, interest and late charges,
which loans it claims are or have been in default and were incorrectly
originated or serviced by NCS. The Company tendered the defense of the claims to
its insurer, and the insurer accepted the defense subject to a reservation of
rights. The Company has filed an Answer to Edu-Cap's Complaint denying Edu-Cap's
claims, and the Company intends to vigorously defend against the lawsuit. In
addition, the Company has filed a Counterclaim against Edu-Cap and a claim
against a corporation affiliated with Edu-Cap seeking compensatory damages. The
case is in the early stages of discovery, and Edu-Cap has not set forth the
factual basis for its lost profits claims. The Company does not believe that the
outcome in this litigation would result in a material adverse effect on the
Company's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted during the fourth quarter of the fiscal
year ended January 31, 1998 to a vote of security holders through the
solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
"Quarterly Market Data" included in the Annual Report to Stockholders for
the year ended January 31, 1998 is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
"Five Year Financial Data" included in the Annual Report to Stockholders
for the year ended January 31, 1998 is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
"Management's Discussion and Analysis of Results of Operations and
Financial Condition" included in the Annual Report to Stockholders for the year
ended January 31, 1998 is incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements and supplementary data of
the registrant and its subsidiaries, included in the Annual Report to
Stockholders for the year ended January 31, 1998 are incorporated herein by
reference:
Consolidated Balance Sheets -- January 31, 1998 and 1997
Consolidated Statements of Income -- Years ended January 31, 1998, 1997 and
1996
Consolidated Statements of Changes in Stockholders' Equity -- Years ended
January 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows -- Years ended January 31, 1998, 1997
and 1996
Notes to Consolidated Financial Statements -- January 31, 1998
Report of Independent Auditors dated March 2, 1998
Quarterly Results of Operations (Unaudited)
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
"Election of Directors" included in the Company's definitive proxy
statement for the Annual Meeting of Stockholders to be held on May 21, 1998 and
"Executive Officers of the Registrant" in Part I of this report are incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
"Summary Compensation Table" and "Stock Options" included in the Company's
definitive proxy statement for the Annual Meeting of Stockholders to be held on
May 21, 1998 are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
"Election of Directors" and "Ownership of NCS Common Stock by Certain
Beneficial Owners and Executive Officers" included in the Company's definitive
proxy statement for the Annual Meeting of Stockholders to be held on May 21,
1998 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
"Election of Directors" included in the Company's definitive proxy
statement for the Annual Meeting of Stockholders to be held on May 21, 1998 is
incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) List of Financial Statements and Financial Statement Schedules
(1) The following consolidated financial statements of National Computer
Systems, Inc. and subsidiaries, included in the Annual Report to
Stockholders for the year ended January 31, 1998, are incorporated by
reference in Item 8:
Consolidated Balance Sheets -- January 31, 1998 and 1997
Consolidated Statements of Income -- Years ended January 31, 1998,
1997 and 1996
Consolidated Statements of Changes in Stockholders' Equity -- Years
ended January 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows -- Years ended January 31, 1998,
1997 and 1996
Notes to Consolidated Financial Statements -- January 31, 1998
Report of Independent Auditors dated March 2, 1998
(2) Consolidated financial statement schedules of National Computer
Systems, Inc. and subsidiaries required to be filed by Item 14(d):
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and therefore have
been omitted.
(3) Listing of Exhibits:
EXHIBIT
3.1 Restated Articles of Incorporation, as amended.
3.2 Bylaws, as amended and restated, are incorporated herein by
reference to Exhibit 3.2 to the NCS Form 8-K dated March 4, 1996.
4.1 Instruments with respect to long-term debt where the total debt
authorized thereunder does not exceed 10% of the consolidated total
assets of the registrant are not being filed; the registrant will
furnish a copy of any such instrument to the Commission upon
request.
4.2 Amended and Restated Rights Agreement dated as of March 4, 1996
between NCS and Norwest Bank Minnesota, National Association
(including the form of Right Certificate attached as Exhibit B
thereto) is incorporated herein by reference to Exhibit 1 to
Amendment No. 2 to Form 8-A/A dated March 13, 1996.
4.3 Credit Agreement dated as of November 17, 1997 between NCS and The
First National Bank of Chicago (as Agent); Norwest Bank Minnesota,
National Association; Suntrust Bank, Central Florida, National
Association; and The Bank of Tokyo - Mitsubishi Ltd., Chicago
Branch is incorporated herein by reference to Exhibit 4 to the
Company's Form 10-Q for the quarter ended October 31, 1997.
*10.1 Change of Control Agreement dated April 15, 1996, by and between
NCS and certain executives of NCS is incorporated herein by
reference to Exhibit 10.2 to the Company's Form 10-Q for the fiscal
quarter ended April 30, 1996.
*10.2 NCS 1984 Employee Stock Option Plan is incorporated herein by
reference to Exhibit 10 to the Company's Form 10-Q for the quarter
ended July 31, 1984.
*10.3 NCS 1986 Employee Stock Option Plan is incorporated herein by
reference to Exhibit 10D to the Company's Form 10-K for the fiscal
year ended January 31, 1986.
*10.4 NCS Non-Employee Director Stock Option Plan, as amended.
*10.5 NCS 1990 Employee Stock Option Plan, as amended, is incorporated
herein by reference to Exhibit 10.1 to the Company's Form 10-Q for
the quarter ended October 31, 1995.
*10.6 NCS 1995 Employee Stock Option Plan, as amended, is incorporated
herein by reference to Exhibit 10.2 to the Company's Form 10-Q for
the quarter ended October 31, 1995.
*10.7 NCS 1990 Long-Term Incentive Plan, as amended, is incorporated
herein by reference to Exhibit 10.3 to the Company's Form 10-Q for
the quarter ended October 31, 1995.
*10.8 NCS 1992 Employee Stock Purchase Plan is incorporated herein by
reference to Exhibit 10I to the Company's Form 10-K for the fiscal
year ended January 31, 1992.
*10.9 Description of Retirement Arrangements with David C. Malmberg is
incorporated herein by reference to Exhibit 19 to the Company's
Form 10-Q for the fiscal quarter ended October 31, 1992.
*10.10 Amended and Restated Severance Agreement dated May 23, 1996, by and
between NCS and Russell A. Gullotti is incorporated herein by
reference to Exhibit 10.1 to the Company's Form 10-Q for the fiscal
quarter ended April 30, 1996.
*10.11 Agreement dated August 22, 1994 between NCS and Charles W. Oswald
is incorporated herein by reference to Exhibit 10(b) to the
Company's Form 10-Q for the fiscal quarter ended October 31, 1994.
*10.12 Oswald Stock Option Plan is incorporated herein by reference to
Exhibit 100 to the Company's Form 10-K for the fiscal year ended
January 31, 1995.
*10.13 NCS 1997 Long-Term Incentive Plan is incorporated herein by
reference to Exhibit 10.13 to the Company's Form 10-K for the year
ended January 31, 1997.
*10.14 NCS 1997 Employee Stock Option Plan is incorporated herein by
reference to Exhibit 10.14 to the Company's Form 10-K for the year
ended January 31, 1997.
*10.15 NCS Corporate Management Incentive Plan -- 1997 is incorporated
herein by reference to Exhibit 10.16 to the Company's Form 10-K for
the fiscal year ended January 31, 1997.
*10.16 NCS Corporate Management Incentive Plan -- 1998.
*10.17 NCS 1998 Employee Stock Purchase Plan
13 Portions of NCS' Annual Report to Stockholders for the fiscal year
ended January 31, 1998.
21 Significant Subsidiaries.
23 Consent of Independent Auditors.
24 Power of Attorney authorizing J.W. Fenton, Jr. to sign the NCS Form
10-K for the year ended January 31, 1998 on behalf of other
officers and directors.
27 Financial Data Schedules, including Restated Financial Data
Schedules for the fiscal year ended January 31, 1997 and 1996 and
for the quarterly periods ended April 30, July 31 and October 31 in
1997 and 1996.
99 Cautionary statements identifying important factors that could
cause the Company's actual results to differ from those projected
in forward looking statements.
- ----------------
* Indicates management contract or compensatory plan or arrangement required
to be filed as an exhibit to this report.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three months ended
January 31, 1998.
(c) Exhibits
The response to this portion of Item 14 is submitted as a separate
section of this report.
(d) Financial Statement Schedules
Financial Statement Schedules have been omitted because they are not
required or are inapplicable.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 COMPUTER SYSTEMS, INC.
Dated: April 22, 1998 By: /s/ J. W. FENTON, JR.
------------------------
J. W. Fenton, Jr.
SECRETARY-TREASURER
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By RUSSELL A. GULLOTTI * Chairman of the Board of Directors,
------------------------ President and Chief Executive
Russell A. Gullotti Officer(principal executive officer)
By DAVID C. COX * Director
------------------------
David C. Cox
By MOSES JOSEPH* Director
------------------------
Moses Joseph
By JEAN B. KEFFELER* Director
------------------------
Jean B. Keffeler
By CHARLES W. OSWALD * Director
------------------------
Charles W. Oswald
By STEPHEN G. SHANK * Director
------------------------
Stephen G. Shank
By JOHN E. STEURI * Director
------------------------
John E. Steuri
By JOHN W. VESSEY * Director
------------------------
John W. Vessey
By JEFFREY W. TAYLOR * Vice President and Chief
------------------------ Financial Office (principal
Jeffrey W. Taylor financial officer and
principal accounting officer)
* Executed on behalf of the indicated officers and directors of the
registrant by J. W. Fenton, Jr., Secretary-Treasurer, duly appointed
attorney-in-fact.
/s/ J. W. FENTON, JR.
- ----------------------------------- Dated: April 22, 1998
J. W. Fenton, Jr.
(ATTORNEY-IN-FACT)
FORM 10-K
NATIONAL COMPUTER SYSTEMS, INC.
FOR THE FISCAL YEAR ENDED JANUARY 31, 1998
EXHIBIT INDEX
EXHIBIT
- --------
3.1 Restated Articles of Incorporation, as amended.
10.4 NCS Non-Employee Director Stock Option Plan, as amended.
10.16 NCS Corporate Management Incentive Plan -- 1998.
10.17 NCS 1998 Employee Stock Purchase Plan.
13 Portions of NCS' Report to Stockholders for the fiscal year ended
January 31, 1998.
21 Significant Subsidiaries.
23 Consent of Independent Auditors.
24 Power of Attorney authorizing a certain person to sign the NCS Form
10-K for the year ended January 31, 1998 on behalf of other officers
and directors.
27 Financial Data Schedules, including Restated Financial Data
Schedules for the fiscal years ended January 31, 1997 and 1996 and
for the quarterly periods ended April 30, July 31 and October 31 in
1997 and 1996.
99 Cautionary statements identifying important factors that could cause
the Company's actual results to differ from those projected in
forward looking statements.