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): March 21, 2001
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Commission File No. 001-12392
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NATIONAL DATA CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 58-0977458
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(State or other jurisdiction of (IRS Employer
incorporation) Identification Number)
National Data Plaza, Atlanta, Georgia 30329-2010
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 728-2000
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N/A
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(Former name, former address and former fiscal year, if
changed since last year)
Item 7. Financial Statements and Exhibits
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Exhibit 99.1
(a) Press Release dated March 21, 2001
(b) Schedules:
1) National Data Corporation (unaudited) Consolidated Statements
of Income (normalized) for the third quarter ended February
28, 2001 and February 29, 2000,
2) National Data Corporation (unaudited) Consolidated Statements
of Income (GAAP) for the third quarter ended February 28, 2001
and February 29, 2000,
3) National Data Corporation (unaudited) Consolidated Statements
of Income (normalized) for the nine month periods ended
February 28, 2001 and February 29, 2000,
4) National Data Corporation (unaudited) Consolidated Statements
of Income (Loss) (GAAP) for the nine month periods ended
February 28, 2001 and February 29, 2000,
5) National Data Corporation (unaudited) Consolidated Balance
Sheets for February 28, 2001 and May 31, 2000,
6) National Data Corporation (unaudited) Consolidated Statement
of Cash Flows for the nine months ended February 28, 2001,
7) National Data Corporation (unaudited) Consolidated Statements
of Income (normalized) for fiscal 1999 and 2000 (by quarter)
and the first, second and third quarters of fiscal 2001.
(Normalized for certain items discussed below), and
8) National Data Corporation (unaudited) Consolidated Statements
of Income or (Loss) for fiscal 1999 and 2000 (by quarter) and
the first, second and third quarters of fiscal 2001.
Item 9. Regulation FD Disclosure
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On March 21, 2001, National Data Corporation issued a press release
which is filed herewith as Exhibit 99.1 (a) and (b) 1, 2, 3, 4, 5 and 6 and
incorporated in this Item 9 by this reference.
General
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On January 31, 2001, National Data Corporation completed the spin-off
of our Global Payments Inc. subsidiary.
As an indication of the historical performance of the continuing
NDCHealth business, in Exhibit 99.1 (b) 7 to this report, we have provided
certain financial information regarding NDCHealth, the stand-alone healthcare
information business segment that remains after the spin-off of Global Payments
Inc. These stand alone NDCHealth
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consolidated income statements for fiscal 1999 and 2000 and the first, second
and third quarters of fiscal 2001 have been "normalized" by adjusting for the
following:
a) Discontinued operations, net of tax, for all periods (discussed
below),
b) Restructuring and impairment charges in the amount of $34.4 million
and $2.2 million previously recorded in the second quarter of
fiscal 2000 and the second quarter of fiscal 2001, respectively
(discussed below),
c) Unusual expenses in the amount of $11.1 million also previously
recorded in the second quarter of fiscal 2000 (discussed below),
d) Other income related to the gain from sale of marketable securities
in the amount of $1.6 million previously recorded in the first
quarter of fiscal 2000,
e) Other income related to the gain on the divestiture of a business
in the amount of $2.3 million previously recorded in the second
quarter of fiscal 2000,
f) Other expense related to the non-cash loss recorded to mark to
market the Medicalogic/Medscape, Inc. investment in the amount of
$9.7 million previously recorded in the fourth quarter of fiscal
2000, and
g) Revenue and operating expenses related to divested businesses, as
follows:
1) Fiscal 1999: Revenue $68.2 million; and Operating Expenses
$61.2 million
2) Fiscal 2000: Revenue $56.4 million; Operating Expenses $57.2
million; and Other Income $0.7 million.
3) Quarter ended August 31, 2000: Revenue $5.6 million; and
Operating expenses $5.3 million.
4) Quarter ended November 30, 2000: Revenue $0.2 million; and
Operating expenses $0.2 million.
5) Quarter ended February 28, 2001: No adjustments were made.
h) Incremental Sales, General and Administrative expenses associated
with being a separate public company of approximately $2.3 million
have been added to fiscal 1999 and 2000. These expenses are
estimates for the additional functionality needed for corporate
activities such as legal, financial, human resources, communication
and similar functions.
In addition to the stand alone NDCHealth (Normalized) consolidated income
statements described above, Exhibit 99.1 (b) 8 presents the National Data
Corporation (GAAP) consolidated income statement for fiscal 1999 and 2000 and
the first, second and third quarters of fiscal 2001. The Global Payments data,
along with data from other businesses discontinued by NDCHealth as described
below, is recorded as discontinued operations in Exhibits 99.1 (b) 2, 4, 5, 6
and 8.
Operating costs and expenses in these income statements reflect direct charges
of the business together with certain allocations by NDC for corporate services
and other shared services that have been charged to the NDCHealth business on a
reasonable and consistent basis. Except for the adjustments (estimated
incremental Sales, General and Administrative expenses associated with being a
separate public company) described above, these allocations approximate all
material incremental costs management believes would have been incurred had we
been operating on a stand-alone basis.
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NDC corporate interest expense has been allocated to NDCHealth based on the
corporate debt allocations to NDCHealth and Global Payments at the spin-off
date. The approach taken was to allocate the anticipated portion of the NDC
consolidated group's debt and interest expense for all historical periods
presented. This treatment records the current proposed debt allocation
percentage for all historical periods presented. The total convertible debt
remains with NDCHealth. The allocated debt amount was less than this total
convertible debt; therefore, Global Payments Inc. had a liability to NDCHealth
for its net portion of the outstanding debt. As of January 31, 2001, this net
amount due from Global Payments Inc. to NDCHealth was $77.6 million. At the date
of the spin-off and shortly thereafter, Global Payments Inc. made net cash
payments to NDCHealth equal to $77.6 million.
Financial Results
During the last 24 months, NDCHealth completed a significant strategy review and
implemented a plan to focus on its core products and services. As a result, the
last two years represented a major transition period for NDCHealth. As a part
of that plan, NDCHealth determined to divest its PHSS (Physician and Hospital
Support Services) businesses in the third quarter of fiscal 2000. The sale of
these PHSS units as well as our related health management services businesses
was completed in the first quarter of fiscal 2001. The PHSS portion of these
businesses is accounted for as discontinued operations in accordance with
Accounting Principles Board Opinion No. 30, "Reporting the Results of
Operations" and prior periods have also been restated to reflect this treatment.
During the last year NDCHealth has also divested other non-core products and
services. The financial results for the first nine months of fiscal 2001 include
$4.4 million of corporate and division overhead previously allocated to these
divested businesses.
In addition to these divestitures, other actions were initiated by management as
a part of the strategic review, including acceleration of clearing house
integration, consolidation of locations, associated staff and expense
reductions, and elimination of obsolete and redundant product and service
offerings. Total charges related to restructuring and asset impairment were
$34.4 million during fiscal 2000.
During the second quarter of fiscal 2000, management also evaluated certain
significant business risks related to recent acquisitions and those locations
that were closed as part of the strategic review, including bankrupt accounts
and customer disputes. As a result of this review, unusual expenses were
recorded in the second quarter of fiscal 2000 as follows: accounts receivable
write-off of $8.0 million; bad debt allowance increases of $2.0 million;
litigation settlement expenses of $1.3 million; and write-off of $0.8 million of
prepaid expenses and recording of $1.2 million of accrued expenses.
Approximately $2.2 million of these unusual expenses were related to the PHSS
operation and are reflected in the results of the discontinued operations.
Accordingly, the results of fiscal 2000 include approximately $45.5 million of
charges related to restructuring and asset impairment ($34.4 million) and other
unusual expenses ($11.1 million).
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At the end of the second quarter of fiscal 2000, we disclosed that we would have
additional restructuring and other unusual charges of up to $10 million in the
next twelve months. In the second quarter of fiscal 2001, both our Salt Lake
City and Cleveland operations were closed. We also wrote down and divested a
managed care operation. Therefore, in the second quarter of fiscal 2001, $2.2
million of restructuring and impairment charges are reflected. These actions
essentially complete all of the programs identified in our strategic review. The
financial results for the first half of fiscal 2001 also include $0.9 million of
transition expenses related to the spin-off.
We had previously provided guidance for our outlook for the second half of 2001.
At the end of the first half, our expectation was that revenue for the full year
would be $330-335 million resulting in basic earnings per share of $1.00 plus or
minus 2% on a normalized basis. We had also disclosed that we expected dilution
from options of about 3 cents for the year. Including the strong revenue
recorded in the third quarter, we now expect that revenue for the year will now
be in the range of $335 to $340 million. Our outlook for basic earnings per
share is still $1.00 plus or minus 2%, with dilution of $0.03, as we continue to
make investments in future growth.
At this time, we are also reiterating our previously provided guidance of
revenue and earnings growth in the low double digits for next year, with
earnings growing faster than revenue.
Preliminary Interpretation of the FASB's current exposure draft on "Business
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Combinations and Intangible Assets - Amortization of Goodwill"
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The FASB recently issued an exposure draft on "Business Combinations and
Intangibles Assets - Amortization of Goodwill" which deals with, among other
things, proposed changes in amortization of goodwill. Total amortization for the
third quarter was $4.1 million. Of this $4.1 million, we estimate that $2.7
million of amortization related to acquisition goodwill would not have been
recorded in the third quarter if this proposed standard were applied. Based on
our preliminary interpretation of this exposure draft, adjusting for the impact
of goodwill that would no longer be amortized ($0.05) and the resulting
applicable tax adjustments ($0.01), the approximate increase in diluted earnings
per share would have been $0.06 per share for the third quarter.
As a result of the adjustments and the other principles and assumptions
discussed above, which are the basis of our presentation of the financial
schedules filed in Exhibit 99.1 (b) 1, 3 and 7, please note that these financial
schedules do not reflect our historical financial statements.
When used in this report, and the exhibits hereto, the words "believes,"
"anticipates," "plans," "expects," "intends" and similar expressions and
statements that are necessarily dependent on future events are intended to
identify forward-looking statements concerning the Company's business
operations, economic performance and financial condition, including in
particular, the Company's business strategy and means to implement the strategy,
the Company's objectives, the amount of future capital expenditures, the
likelihood of the Company's success in developing and introducing new products
and expanding its business, and the timing of the introduction of new and
modified products or services. For such statements, the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995 is applicable and invoked. Such statements are
based on a number of assumptions, estimates, projections or plans that are
inherently subject to significant risks, uncertainties and contingencies that
are subject to change. Actual revenues, revenue growth and margins will be
dependent upon all such factors and results subject to risks related to the
implementation of changes by the Company, the failure to implement changes,
customer acceptance of such changes or lack of change. Actual results of events
could differ materially from those anticipated in the Company's forward-looking
statements as a result of a variety of factors, including: (a) those set forth
in Exhibit 99.1 to the Registrant's Annual Report on Form 10-K for the period
ended May 31, 2000 which are incorporated herein by this reference; (b) those
set forth elsewhere herein; (c) those set forth from time to time in the
Company's press releases and reports and other filings made with the Securities
and Exchange Commission; and (d) those set forth from time to time in the
Company's analyst calls and discussions. The Company cautions that such factors
are not exclusive. Consequently, all of the forward-looking statements made
herein are qualified by these cautionary statements and readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. The Company undertakes no obligation to update
forward-looking or other statements or to publicly release the results of any
revisions of such forward-looking statements that may be made to reflect events
or circumstances after the date hereof, or thereof, as the case may be, or to
reflect the occurrence of unanticipated events.
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NATIONAL DATA CORPORATION
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(Registrant)
By: /s/ David H. Shenk
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David H. Shenk
Corporate Controller
(Chief Accounting Officer)
Date: March 21, 2001
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