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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
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, 1994 0-3713
------------------------
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 (Zip Code)
executive offices)
Registrant's telephone number, including area code: 612/829-3000
------------------------
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)
------------------------
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 March 31, 1994.
Common Shares, $.03 par value -- $147,344,000
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of March 31, 1994.
Common Shares, $.03 par value -- 15,014,617 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Stockholders for the year ended January 31,
1994 are incorporated by reference into Parts I, II and IV.
Portions of the definitive proxy statement dated April 20, 1994 are
incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
National Computer Systems, Inc. ("NCS" or the "Company") provides integrated
information management products and services, designed to collect and interpret
data, to four primary markets:
EDUCATION -- NCS develops and markets systems and services which include
optical scanning systems, related proprietary software, hardware and software
maintenance, scannable documents, proprietary student and financial
administrative systems, assessment test processing and other data gathering and
processing services.
BUSINESS -- The Company develops and markets optical scanning hardware,
image-based data collection systems, related work stations, proprietary software
and forms for applications within the commercial marketplace. Using forms-based
data entry scanning technology, customers are able to automate labor-intensive
data collection and information processes with significantly increased
efficiency and accuracy.
ASSESSMENTS -- The Company publishes and markets psychological assessment
instruments, scoring systems and scanning products to clinical professionals in
the behavioral and mental health markets. Organizational survey and assessment
testing and services and vocational counseling tests are marketed to the
corporate human resources market.
FINANCIAL SERVICES -- NCS develops and markets computer-based systems with
proprietary software and services for automating asset management in the
financial services industry, primarily banking.
Applications for NCS' products and services within the education market
include administrative applications such as attendance, scheduling, grade
reporting and registration/enrollment; library and inventory management;
financial management and payroll; and testing applications including test
generation, teacher-created tests and norm-referenced and criterion-referenced
testing. NCS also provides scanning and computer processing services for the
large volume, complex processing needs of major test publishers, state education
agencies, the federal government and local school districts.
In the business marketplace, the Company's products and services are
directed to sales/marketing applications including sales/order entry and
customer satisfaction surveys; operations applications including quality
measurement and inventory analysis; administrative applications including
billing, collections and payroll; health care administration including the
gathering of individual patient information; human resource applications
including applicant tracking, benefits enrollment and employee evaluation;
aptitude, vocational interest and organizational assessment testing; and surveys
or ballots.
The Company provides the financial services marketplace with computer-based
systems including proprietary software products and services for automated asset
management systems for trust asset management in personal trust, corporate
trust, private banking and employee benefits accounting.
NCS operates two business segments: (1) Optical Scanning Products, Services
and Related Software and (2) Financial Systems. See Note 10 -- Business Segment
Data of Notes to Consolidated Financial Statements included in the Annual Report
to Stockholders for the year ended January 31, 1994, incorporated herein by
reference.
The Company's headquarters are located at 11000 Prairie Lakes Drive, Eden
Prairie, Minnesota 55344, telephone 612/829-3000.
1
OPTICAL SCANNING PRODUCTS, SERVICES AND RELATED SOFTWARE
SCANNING SYSTEMS
NCS manufactures optical mark reading (OMR) scanners which 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. Such applications include multiple choice tests; employee and benefits
administration; quality measurement and customer satisfaction surveys; customer
order entry; market research and field sales reporting; and personality
assessment or psychological diagnostic information.
The Company's major lines of scanning hardware include scanners marketed as
Sentry-R- and OpScan-R- products. Recently, new low-cost scanners were
introduced to expand the Company's line of scanning products. These lines of
scanners provide a wide range of capabilities to meet the needs of all
customers. The optical 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, optional features offered include bar code reading capability, a
transport printer to print alphanumeric messages on scanned documents, optional
read formats and upgraded computer capability options.
NCS markets the Precept-R- image-based data collection system which
represents an extension of the Company's optical mark reading technology. When
attached to a workstation computer and using sophisticated software, these
scanners allow customers to efficiently and accurately collect and interpret the
widest possible range of information from a printed form including printed and
handwritten data.
SCANNING AND APPLICATION SOFTWARE
NCS offers a number of standard software programs for use with NCS systems.
Application software is an important component in the Company's marketing of its
scanning products and services. A principal strategy of the Company in servicing
the education marketplace is to concentrate on those systems that facilitate
accountability in school administration and in the measurement of student
progress. The Company offers standard integrated software systems in lieu of
custom design and programming work performed by the customers. This has resulted
in the introduction and marketing of new and enhanced software products. The
MicroCIMS-TM- product, an advanced student management software system, is in the
initial distribution stage following product release.
Software products include software to assist educators in student management
including such applications as grade reporting, attendance gathering and
scheduling, as well as financial management; software for obtaining information
about student performance and for analyzing and reporting test results and
student progress; software to enable users to easily develop new scanning
applications; software to assist scanner users with data entry to statistical
analysis or data base management systems and other software applications
packages; software packages to statistically analyze survey or assessment data
and produce a wide range of reports designed to meet a variety of reporting
requirements; and software for healthcare administration.
SCANNABLE FORMS
The design, manufacture and sale of scannable forms, including multiple-page
booklets, represents an important contribution to the Company's revenues and
operating income. A variety of custom forms are produced that are tailored to
meet specific customer needs. In addition, standardized forms are increasingly
used, especially with microcomputer-based scanners, in such standard
applications as testing, attendance, scheduling and student evaluation at the
classroom level or customer surveys or market research in the business setting.
2
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. TransOptic-R- paper
is used to permit Sentry scanners to read both sides of the form at the same
time. Special inks are used in printing all forms.
MEASUREMENT AND DATA SERVICES
NCS markets scanning and computer processing services to major test
publishers, state education agencies, the federal government and local school
districts. For these customers, NCS develops and executes projects including
planning, document design, distribution logistics, data collection, editing,
analysis and final reporting.
Examples of high volume processing services include test scoring for major
test publishers, educational assessment testing for states and information
processing for the federal government such as processing student financial aid
information for the U.S. Department of Education.
ASSESSMENT AND SURVEY SERVICES
The Company publishes and distributes tests and provides scoring services
and equipment for the professional counseling market; for industrial and
clinical psychologists, psychiatrists and 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.
NCS provides specialized survey and scannable information processing
services to selected industries in the commercial marketplace. In addition to
scoring, analyzing and reporting survey results, the Company assists customers
in designing survey instruments, conducting surveys and interpreting survey
results.
FINANCIAL SYSTEMS
NCS develops, sells and supports systems for asset and investment management
reporting and record keeping for bank trust departments and other organizations
with trust powers. Applications include personal trust, corporate trust and
employee benefits. These systems utilize proprietary software developed by NCS
and licensed for periods of five years or more as well as hardware manufactured
by others. Each system is designed to address the unique needs of customers. NCS
supports these installations with customer response centers, trust consultants,
system conversion specialists and training staffs.
For corporate trust customers and personal trust departments of smaller
banks the Company offers outsourcing and computer processing services from its
service bureau facility. For the personal trust market, the Company provides
trust accounting systems to small to medium sized banks through its Trustware-R-
Series 7 product line and to larger banks through the Trustware Series 11
product line. Management of debt securities is provided by the Company's
BondMaster-R- software system or CertMaster-R- software for complex debt
instruments. These offerings are enhanced with the addition of an optical
disk-based system for data storage.
The ULTRUST-R- system, an advanced trust accounting system for money center,
super-regional and large international banks, was discontinued during the fourth
quarter of fiscal 1993. See Note 2 -- Restructuring Charge of Notes to
Consolidated Financial Statements included in the Annual Report to Stockholders
for the year ended January 31, 1994, incorporated herein by reference.
NCS provides software support service by periodically issuing software
program revisions to improve systems performance and to accommodate changes in
the tax law and other regulatory changes. The Company also periodically releases
new software applications which it licenses to its customers.
3
MARKETING
NCS markets its information systems hardware and software and scanning and
computer processing services directly through sales employees located throughout
the United States, who direct their efforts to either the education or business
marketplace. Outside the United States, the Company's systems and associated
products and services are sold through sales employees, distributors or
independent sales agents. NCS markets its financial systems through a separate
staff of sales employees. The Company's published tests and test scoring
services are marketed principally in the United States through telemarketing,
direct mail, professional journal advertising and professional trade convention
attendance and elsewhere through distributors. Each of the Company's sales
organizations is 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. 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 field 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. Substantially all customer leased or purchased
equipment manufactured by NCS is maintained by Company personnel.
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, 1994, 1993 and 1992, the Company spent, including certain
capitalized software development costs, approximately $22.0 million, $17.3
million and $17.7 million, respectively, principally on software product
development (primarily focused on application software) and scanning software
and equipment development.
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,
other than scanning equipment, 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 either 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 information management industry is intense. Optical
scanning is only one of numerous data input methods. The Company has attempted
to develop education, business and assessment markets where scanning technology
has advantages over other data entry technologies. NCS scanning systems
incorporate optical scanning equipment, computer hardware and proprietary
software which are marketed and sold as turn-key systems.
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 compete with those of the
Company.
The Company's scannable forms compete with those produced by commercial and
specialized forms printers in various localities throughout the United States.
Principal competitive factors in the scannable forms printing industry are
product quality, service and price.
4
NCS' data 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 service
provided by manufacturers, other national service companies and local providers
of maintenance services.
NCS' financial systems compete with systems developed by users, service
bureaus and other direct competitors offering asset management accounting
systems. The Company believes that it is one of the leading suppliers of systems
to bank trust departments.
PATENTS, TRADEMARKS AND LICENSES
The Company holds certain patents, registered and unregistered trademarks,
and copyrights. The Company also has license rights to a number of patents,
trademarks, copyrights and manufacturing processes and materials. Included among
these licenses are agreements with publishers of various copyrighted
psychological, aptitude and achievement tests 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.
"Trans-Optic", "Sentry", "Trustware", "ULTRUST", "BondMaster", "CertMaster",
"OpScan" and "Precept" appearing herein are registered trademarks of National
Computer Systems, Inc.
EMPLOYEES
As of February 28, 1994, the Company employed approximately 2,700 full-time
employees. None of the Company's employees are subject to a collective
bargaining agreement, and 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, 1994 are listed below along with their business
experience during the past five years.
NAME AGE POSITION
- ----------------------- --- ---------------------------------------
Charles W. Oswald 66 Chairman of the Board and Chief
Executive Officer
David C. Malmberg 51 Vice Chairman of the Board
Robert C. Bowen 52 Senior Vice President
Norman A. Cocke 48 Senior Vice President and Chief
Financial Officer
John W. Fenton, Jr. 53 Secretary-Treasurer
Donald J. Gibson 63 Senior Vice President
Richard L. Poss 48 Vice President
David W. Smith 49 Vice President
Jeffrey W. Taylor 40 Vice President and Corporate Controller
Adrienne T. Tietz 47 Vice President
Arthur E. Weisberg 68 Senior Staff Officer
Mr. Oswald has been Chairman of the Board and Chief Executive Officer of NCS
for more than five years.
Mr. Malmberg has been Vice Chairman of the Board since August, 1992 and
prior to that was President and Chief Operating Officer of NCS for more than
five years.
5
Mr. Bowen has been a Senior Vice President of NCS since November 1989 and a
Vice President of NCS since August 1989. From June 1988 to July 1989 he was
President of Science Research Associates, Inc. (publishing/communications).
Mr. Cocke has been Senior Vice President and Chief Financial Officer of NCS
since March 1992. From March 1987 to November 1991 he was Vice President,
Finance and Administration of the United States Group of AT&T Global Information
Solutions (formerly NCR Corporation) (information processing systems).
Mr. Fenton has been Secretary-Treasurer of NCS for more than five years.
Mr. Gibson has been a Senior Vice President of NCS since November 1989 and
prior to that was a Vice President for more than five years.
Mr. Poss has been a Vice President of NCS 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 Corporate Controller of NCS for more
than five years.
Ms. Tietz has been a Vice President of NCS since November 1989. From March
1989 to October 1989 she was Director of Strategic Planning for NCS.
Mr. Weisberg has been a Senior Staff Officer of NCS since May 1989 and prior
to that was a lawyer with the law firm of Dorsey & Whitney 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.
6
ITEM 2. PROPERTIES
The Company's principal facilities are as follows:
SQUARE
LOCATION FOOTAGE GENERAL PURPOSE
- ---------------------------- --------- ------------------------------------------------------------------------
Eden Prairie, MN 76,000 Executive general offices; education and international general offices,
sales and marketing
Mesa, AZ 22,000 Education software product development and support
Iowa City, IA (1) 168,000 Assessment test processing and data processing services general offices
and operations
Minnetonka, MN (1) 54,000 Test publishing and scoring general offices and operations
Eagan, MN (1) 109,000 Scanner hardware development and manufacturing; customer support
services general offices and operations; and forms general offices
Edina, MN (1) 101,000 Business systems and services general offices, sales and marketing;
scanner software development
Owatonna, MN (1) 128,000 Forms design and production
Columbia, PA (1) 121,000 Forms design and production
Rotherham, South Yorkshire, 34,000 Forms design and production
England (1)
Huntsville, AL 15,000 Financial systems software development
Atlanta, GA 16,000 Financial systems sales offices with support and training
Cambridge, MA 33,000 Financial systems software development, sales, support and training
offices
Wayne, PA 27,000 Corporate trust general offices and operations
<FN>
- ------------------------
(1) Denotes NCS owned facility.
The Company believes that its facilities are adequate to meet its current
needs.
ITEM 3. LEGAL PROCEEDINGS
The Company is not a party to nor is its property subject to any material
pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted during the fourth quarter of the year ended
January 31, 1994 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, 1994 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, 1994 is incorporated herein by reference.
7
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, 1994 is incorporated herein by reference.
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, 1994, are incorporated herein by
reference:
Consolidated Balance Sheets -- January 31, 1994 and 1993
Consolidated Statements of Income -- Years ended January 31, 1994, 1993 and
1992
Consolidated Statements of Changes in Stockholders' Equity --Years ended
January 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows -- Years ended January 31, 1994, 1993
and 1992
Notes to Consolidated Financial Statements -- January 31, 1994
Report of Independent Auditors dated March 16, 1994
"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
dated April 20, 1994 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 dated April 20, 1994 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 dated April 20, 1994 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained in footnote 7 to the "Summary Compensation Table"
included under the caption "Executive Compensation" in the Company's definitive
proxy statement dated April 20, 1994 is incorporated herein by reference.
The information contained in the third and sixth paragraphs which follow the
footnotes to the table set forth under the caption "Election of Directors" in
the Company's definitive proxy statement dated April 20, 1994 is incorporated
herein by reference.
8
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 of the registrant
to its stockholders for the year ended January 31, 1994, are incorporated by
reference in Item 8:
Consolidated Balance Sheets -- January 31, 1994 and 1993
Consolidated Statements of Income -- Years ended January 31, 1994, 1993
and 1992
Consolidated Statements of Changes in Stockholders' Equity -- Years
ended January 31, 1994, 1993 and 1992
Consolidated Statements of Cash Flows -- Years ended January 31, 1994,
1993 and 1992
Notes to Consolidated Financial Statements -- January 31, 1994
Report of Independent Auditors dated March 16, 1994.
(2) The following consolidated financial statement schedules of National
Computer Systems, Inc. and subsidiaries are included in Item 14(d):
Schedule II -- Amounts receivable from related parties and underwriters,
promoters, and employees other than related parties
Schedule V -- Property, plant and equipment
Schedule VI -- Accumulated depreciation, depletion and amortization of
property, plant and equipment
All other 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
- ---------
3A -- Restated Articles of Incorporation, as amended, are incorporated herein by reference to Exhibit 3
to the NCS Form 10-Q for the quarter ended April 30, 1987.
3B -- By-Laws, as amended, are incorporated herein by reference to Exhibit 3(b) to the NCS Form 10-Q for
the quarter ended July 31, 1985.
4A -- 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.
4B -- Rights Agreement dated as of June 23, 1987 between NCS and Norwest Bank Minnesota, N.A. (including
the form of Right Certificate attached as Exhibit B thereto) is incorporated herein by reference
to Exhibit 4.1 to the NCS Form 8-K -- reporting date: June 23, 1987.
4C -- Amended and Restated Credit Agreement dated as of July 31, 1991 between NCS and First Bank National
Association, as agent, and as further amended by the First Amendment thereto dated as of January
25, 1994.
*10A -- NCS 1982 Employee Stock Option Plan is incorporated herein by reference to Exhibit 28 to Form S-8
Registration Statement and Exhibit 28 to Post Effective Amendment No. 1 to Form S-8 Registration
Statement No. 2-80386.
*10B -- 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.
9
EXHIBIT
- ---------
*10C -- 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.
*10D -- NCS Non-Employee Director Stock Option Plan is incorporated herein by reference to Exhibit 10F to
the Company's Form 10-K for the fiscal year ended January 31, 1989.
*10E -- NCS 1990 Employee Stock Option Plan, as amended, is incorporated herein by reference to Exhibit 10F
to the Company's Form 10-K for the fiscal year ended January 31, 1993.
*10F -- NCS 1990 Long-Term Incentive Plan is incorporated herein by reference to Exhibit 10H to the
Company's Form 10-K for the fiscal year ended January 31, 1990.
*10G -- 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.
*10H -- 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.
*10I -- NCS Corporate Management Incentive Plan -- 1993 is incorporated herein by reference to Exhibit 10J
to the Company's Form 10-K for the fiscal year ended January 31, 1993.
*10J -- NCS Corporate Management Incentive Plan -- 1994.
*10K -- Agreement dated December 3, 1993 between NCS and Philip W. Arneson and Delores A. Arneson.
11 -- Statement Re: Computation of Earnings Per Share.
13 -- Portions of NCS' Annual Report to Stockholders for the fiscal year ended January 31, 1994.
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, 1994 on behalf of other officers and directors.
<FN>
- ------------------------
* Indicates management contract or compensatory plan or arrangement required
to be filed as an exhibit to this report.
(b) Reports on Form 8-K
In a report filed on Form 8-K dated January 5, 1994, the Company reported a
fourth quarter fiscal 1993 charge for product discontinuance and
restructuring. See Note 2 -- Restructuring Charge of Notes to Consolidated
Financial Statements included in the Annual Report to Stockholders for the
year ended January 31, 1994, incorporated herein by reference.
(c) Exhibits
The response to this portion of Item 14 is submitted as a separate section
of this report.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a separate section
of this report.
10
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 26, 1994 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 CHARLES W. OSWALD* Chairman of the Board of
------------------------------ Directors
Charles W. Oswald (principal executive
officer)
By DAVID C. MALMBERG*
------------------------------ Director
David C. Malmberg
By DR. DAVID P. CAMPBELL*
------------------------------ Director
Dr. David P. Campbell
By WILLIAM W. CHORSKE*
------------------------------ Director
William W. Chorske
By DAVID C. COX*
------------------------------ Director
David C. Cox
By JEAN B. KEFFELER*
------------------------------ Director
Jean B. Keffeler
By STEPHEN G. SHANK*
------------------------------ Director
Stephen G. Shank
By JOHN E. STEURI*
------------------------------ Director
John E. Steuri
By JEFFREY E. STIEFLER*
------------------------------ Director
Jeffrey E. Stiefler
By JOHN W. VESSEY*
------------------------------ Director
John W. Vessey
11
By ROBERT F. ZICARELLI*
------------------------------ Director
Robert F. Zicarelli
By NORMAN A. COCKE* Senior Vice President and
------------------------------ Chief Financial Officer
Norman A. Cocke (principal financial
officer)
By JEFFREY W. TAYLOR* Vice President and
------------------------------ Controller (principal
Jeffrey W. Taylor 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 26, 1994
(ATTORNEY-IN-FACT)
12
FORM 10-K
NATIONAL COMPUTER SYSTEMS, INC.
FOR THE FISCAL YEAR ENDED JANUARY 31, 1994
INDEX TO
CONSOLIDATED FINANCIAL SCHEDULES
SCHEDULE
NUMBER
- ---------
II -- Amounts receivable from related parties and underwriters, promoters, and employees other than related
parties
V -- Property, plant and equipment
VI -- Accumulated depreciation, depletion and amortization of property, plant and equipment
All other schedules have been omitted because they are not required or are
inapplicable.
13
SCHEDULE II -- AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS, AND EMPLOYEES OTHER THAN RELATED PARTIES
NATIONAL COMPUTER SYSTEMS, INC.
COL. D
COL. E
COL. B DEDUCTIONS
BALANCE -------------------- BALANCE AT END OF
AT AMOUNTS PERIOD
COL. A BEGINNING COL. C AMOUNTS WRITTEN ----------------------
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED OFF CURRENT NOT CURRENT
- ------------------------------- --------- --------- --------- --------- --------- -----------
Year Ended January 31, 1994:
Philip W. Arneson (A)........ $ 373,646 $ 121,354 $ -0- $ 295,000 $ 200,000 $ -0-
Year Ended January 31, 1993:
Philip W. Arneson............ $ 173,646 $ 200,000 $ -0- $ -0- $ 373,646 $ -0-
Year Ended January 31, 1992:
Philip W. Arneson............ $ -0- $ 225,000 $ 51,354 $ -0- $ 173,646 $ -0-
<FN>
- ------------------------
(A) Mr. Arneson ceased being a Senior Vice President and President, NCS
Financial on August 4, 1993. On June 29, 1992, Mr. Arneson filed a
petition under Chapter 7 of the Federal Bankruptcy Code and, on October
14, 1992, a notice of discharge was issued. On October 7, 1992, Mr.
Arneson entered into an agreement with NCS reaffirming his obligation to
repay the loans obtained from NCS. The loans have been restructured and
collection of a portion of the loans has been permanently forgiven. All
after-tax amounts from gains realized on the sale of NCS Common Stock plus
certain other contractual amounts from NCS, if payable, will be applied to
the loan balance or forgiven amounts. The loans bear an interest rate of
1% over the prime rate and are secured by mortgages on Mr. Arneson's home
and an assignment of life insurance proceeds.
14
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
NATIONAL COMPUTER SYSTEMS, INC.
COL. B COL. E
BALANCE OTHER COL. F
AT COL. C CHANGES-ADD BALANCE
COL. A BEGINNING ADDITIONS COL. D (DEDUCT)- AT END OF
CLASSIFICATION OF PERIOD AT COST RETIREMENTS DESCRIBE (A) PERIOD
- ----------------------------------- --------- --------- -------------- ------------- ---------
(IN THOUSANDS)
Year Ended January 31, 1994:
Land............................. $ 3,270 $ 1,026 $ -- $ 2 $ 4,298
Building and improvements........ 28,165 4,901 209 99 32,956
Machinery and equipment.......... 82,443 14,832 7,878 (447 ) 88,950
Equipment held for lease......... 9,012 1,176 1,950 (33 ) 8,205
Rotable service parts............ 12,667 1,917 4,663 1,164 11,085
--------- --------- -------------- ------------- ---------
$ 135,557 $ 23,852 $ 14,700 $ 785 $ 145,494
--------- --------- -------------- ------------- ---------
--------- --------- -------------- ------------- ---------
Year Ended January 31, 1993:
Land............................. $ 3,565 $ -- $ 295 $ -- $ 3,270
Building and improvements........ 28,513 482 889 59 28,165
Machinery and equipment.......... 72,755 11,643 3,481 1,526 82,443
Equipment held for lease......... 9,869 769 1,777 151 9,012
Rotable service parts............ 15,218 1,490 4,917 876 12,667
--------- --------- -------------- ------------- ---------
$ 129,920 $ 14,384 $ 11,359 $ 2,612 $ 135,557
--------- --------- -------------- ------------- ---------
--------- --------- -------------- ------------- ---------
Year Ended January 31, 1992:
Land............................. $ 3,551 $ -- $ -- $ 14 $ 3,565
Building and improvements........ 29,127 1,216 399 (1,431 ) 28,513
Machinery and equipment.......... 70,809 6,666 6,873 2,153 72,755
Equipment held for lease......... 11,035 1,422 2,581 (7 ) 9,869
Rotable service parts............ 19,461 2,153 6,396 -- 15,218
--------- --------- -------------- ------------- ---------
$ 133,983 $ 11,457 $ 16,249 $ 729 $ 129,920
--------- --------- -------------- ------------- ---------
--------- --------- -------------- ------------- ---------
<FN>
- ------------------------
(A) Includes equipment and rotable service parts obtained through acquisition,
translation adjustment of property, plant and equipment held by NCS
foreign subsidiaries and transfers from other balance sheet captions.
15
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
NATIONAL COMPUTER SYSTEMS, INC.
COL. C COL. E
COL. B ADDITIONS OTHER COL. F
BALANCE AT CHARGED TO CHANGES-ADD BALANCE AT
COL. A BEGINNING COSTS AND COL. D (DEDUCT)- END OF
DESCRIPTION OF PERIOD EXPENSES (A) RETIREMENTS DESCRIBE (B) PERIOD
- --------------------------------- ----------- ------------- ----------- ------------- -----------
Year Ended January 31, 1994:
Building and improvements...... $ 6,736 $ 1,113 $ 118 $ -- $ 7,731
Machinery and equipment........ 54,484 9,655 7,676 (20) 56,443
Equipment held for lease....... 7,141 1,040 1,265 (7) 6,909
Rotable service parts.......... 5,063 4,481 4,629 (10) 4,905
----------- ------------- ----------- ------------- -----------
$ 73,424 $ 16,289 $ 13,688 $ (37) $ 75,988
----------- ------------- ----------- ------------- -----------
----------- ------------- ----------- ------------- -----------
Year Ended January 31, 1993:
Building and improvements...... $ 6,625 $ 967 $ 856 $ -- $ 6,736
Machinery and equipment........ 46,028 10,190 3,306 1,572 54,484
Equipment held for lease....... 6,927 1,020 950 144 7,141
Rotable service parts.......... 3,431 6,249 4,917 300 5,063
----------- ------------- ----------- ------------- -----------
$ 63,011 $ 18,426 $ 10,029 $ 2,016 $ 73,424
----------- ------------- ----------- ------------- -----------
----------- ------------- ----------- ------------- -----------
Year Ended January 31, 1992:
Building and improvements...... $ 5,897 $ 1,002 $ 274 $ -- $ 6,625
Machinery and equipment........ 42,169 9,232 5,373 -- 46,028
Equipment held for lease....... 7,516 1,395 1,984 -- 6,927
Rotable service parts.......... 3,598 6,229 6,396 -- 3,431
----------- ------------- ----------- ------------- -----------
$ 59,180 $ 17,858 $ 14,027 $ -0- $ 63,011
----------- ------------- ----------- ------------- -----------
----------- ------------- ----------- ------------- -----------
<FN>
- ------------------------
(A) Depreciation has been computed based on estimated useful lives of the
assets as follows:
YEARS
---------
Plant and equipment:
Building and improvements........................ 5 to 40
Machinery and equipment.......................... 3 to 20
Equipment held for lease......................... 2 to 5
Rotable service parts............................ 1 to 7
<FN>
(B) Includes translation adjustment of accumulated depreciation of property,
plant and equipment held by NCS foreign subsidiaries and transfers from
other balance sheet captions.
16
FORM 10-K
NATIONAL COMPUTER SYSTEMS, INC.
FOR THE FISCAL YEAR ENDED JANUARY 31, 1994
EXHIBIT INDEX
EXHIBIT
- ---------
4C Amended and Restated Credit Agreement dated as of July 31, 1991 between NCS and First Bank National
Association, as agent, and as further amended by the First Amendment dated as of January 25, 1994.
10J NCS Corporate Management Incentive Plan -- 1994.
10K Agreement dated December 3, 1993 between NCS and Philip W. Arneson and Delores A. Arneson.
11 Statement Re: Computation of Earnings per Share.
13 Portions of the Annual Report to Stockholders for the fiscal year ended January 31, 1994.
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,
1994 on behalf of other officers and directors.
17