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): October 1, 1996 --------------- Commission File No. 001-12392 --------- NATIONAL DATA CORPORATION ------------------------- (Exact name of registrant as specified in charter) DELAWARE 58-0977458 ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) National Data Plaza, Atlanta, Georgia 30329-2010 - ---------------------------------------- ---------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code 404-728-2000 ------------ NONE ------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last year) Item 2. Acquisition or Disposition of Assets ------------------------------------ On October 1, 1996, the Company acquired all of the capital stock of Equifax Healthcare EDI Services, Inc. ("Equifax Health EDI"). The stock was purchased from Equifax Healthcare Information Services, Inc., a wholly-owned subsidiary of Equifax, Inc., pursuant to a Stock Purchase Agreement ("Agreement") dated as of September 3, 1996. The purchase price paid for the transfer of Equifax Health EDI's shares was $46,701,422 (subject to a final purchase price adjustment pursuant to Article 2.4 of the Agreement). The net assets acquired consisted of tangible personal property, leased personal and real property, customer contracts, assembled work force and the goodwill of the business. The acquisition of Equifax Health EDI will be accounted for using the purchase method of accounting. The net value of the assets acquired was approximately $2,622,000 creating an excess of cost over tangible assets of $44,079,286. It is estimated that the goodwill and intangibles resulting from the acquisition will be amortized over an approximate weighted average period of 25 years. The Company is in the process of receiving an independent appraisal of the value of the assets acquired. The Company intends to make an IRS Section 338(h)(10) election for income tax reporting purposes. Equifax Health EDI provides health care information services which link health care providers, insurance carriers, health maintenance organizations, preferred provider organizations and other payors including government intermediaries and financial institutions. The Company intends to continue the same or similar use of the net assets of Equifax Health EDI. Item 7. Financial Statements and Exhibits --------------------------------- The following financial statements, pro forma financial information and exhibits are filed as part of this report. (a) Financial Statements of the Business Acquired: (1) Equifax Healthcare EDI Services, Inc. Balance Sheets for the years ended June 30, 1996 and 1995. (2) Equifax Healthcare EDI Services, Inc. Statements of Operations for the years ended June 30, 1996 and 1995. (3) Equifax Healthcare EDI Services, Inc. Statements of Shareholder's Equity for the years ended June 30, 1996 and 1995. (4) Equifax Healthcare EDI Services, Inc. Statements of Cash Flows for the years ended June 30, 1996 and 1995. (5) Notes to the Financial Statements. (6) Report of Independent Public Accountants. (b) Pro Forma Financial Information (1) Pro Forma Financial Information. Unaudited Pro Forma Condensed Combined Balance Sheet as of August 31, 1996. (2) Unaudited Pro Forma Condensed Combined Income Statement for the fiscal year ended May 31, 1996. (3) Unaudited Pro Forma Condensed Combined Income Statement for the three months ended August 31, 1996. (4) Notes to Unaudited Pro Forma Condensed Combined Financial Statements. (c) Exhibits. Exhibit No. Description ----------- ----------- 2 Stock Purchase Agreement dated September 3, 1996, as amended on September 24, 1996 (Pursuant to the regulations (the "Regulations") under the Securities and Exchange Act of 1934, as amended, the Registrant has omitted all schedules and similar attachments to the Stock Purchase Agreement. The Registrant agrees to furnish upon the request of the Commission and in accordance with the Regulations, copies of all such omitted schedules and similar attachments.) 23 Consent of Arthur Andersen LLP Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NATIONAL DATA CORPORATION ------------------------- (Registrant) Date: October 7, 1996 By: /s/ M.P. Stevenson, Jr. --------------- ---------------------------- M.P. Stevenson, Jr. Interim Chief Financial Officer Equifax Healthcare EDI Services, Inc. Financial Statements as of June 30, 1996 and 1995 Together With Auditors' Report REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Shareholder of Equifax Healthcare EDI Services, Inc.: We have audited the accompanying balance sheets of EQUIFAX HEALTHCARE EDI SERVICES, INC. (a wholly owned subsidiary of Equifax Inc.) as of June 30, 1996 and 1995, and the related statements of operations, shareholder's equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Equifax Healthcare EDI Services, Inc. as of June 30, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Atlanta, Georgia September 18, 1996 EQUIFAX HEALTHCARE EDI SERVICES, INC. BALANCE SHEETS JUNE 30, 1996 AND 1995 ASSETS 1996 1995 - ---------------------------------------------------------------------- ------------- ------------- CURRENT ASSETS: Cash $ 248,935 $ 253,692 Accounts receivable, net of allowance for doubtful accounts of $489,230 and $292,552 in 1996 and 1995, respectively 2,400,280 3,041,476 Interest receivable 0 241,389 Deferred taxes (Note 3) 418,048 379,216 Other current assets 242,810 266,383 ------------- ------------- Total current assets 3,310,073 4,182,156 PROPERTY AND EQUIPMENT, net (Note 2) 2,166,097 1,927,298 GOODWILL, net (Note 2) 11,728,396 12,561,582 PURCHASED SOFTWARE, net (Note 2) 4,932,326 6,520,006 LONG-TERM INVESTMENTS--CONVERTIBLE NOTE (Note 2) 0 10,025,404 CONSULTING FEES, net (Note 7) 0 333,330 OTHER ASSETS 0 4,869 ------------- ------------- Total assets $ 22,136,892 $ 35,554,645 ============= ============= LIABILITIES AND SHAREHOLDER'S EQUITY 1996 1995 - ---------------------------------------------------------------- ------------- ------------- CURRENT LIABILITIES: Accounts payable $ 539,852 $ 470,121 Accrued expenses 1,116,946 1,534,034 Accrued income taxes (Note 3) 534,227 0 Accrued relocation costs 118,162 304,208 Unearned income 46,563 161,693 Current portion of capital lease 38,033 234,871 Note payable 7,053 9,403 ------------- ------------- Total current liabilities 2,400,836 2,714,330 DEFERRED TAXES (Note 3) 1,725,729 2,253,658 CAPITAL LEASE OBLIGATIONS, noncurrent 32,228 5,250 SHAREHOLDER'S EQUITY: Common stock, $1 par value; 3,000,000 shares authorized; 500 shares issued and outstanding in 1996 and 1995 500 500 Additional paid-in capital 15,322,332 31,930,147 Retained earnings (accumulated deficit) 2,655,267 (1,349,240) ------------- ------------- Total shareholder's equity 17,978,099 30,581,407 ------------- ------------- Total liabilities and shareholder's equity $ 22,136,892 $ 35,554,645 ============= ============= The accompanying notes are an integral part of these balance sheets. EQUIFAX HEALTHCARE EDI SERVICES, INC. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED JUNE 30, 1996 AND 1995 1996 1995 ----------- ----------- REVENUES $16,756,851 $12,775,344 COST OF SERVICES 2,768,312 2,219,343 ----------- ----------- 13,988,539 10,556,001 ----------- ----------- OPERATING EXPENSES: Salaries and benefits 5,873,912 5,427,661 Depreciation and amortization 2,999,739 2,745,529 General and administrative expenses 2,475,585 2,344,649 Corporate overhead (Note 6) 1,357,169 390,738 Vendor commissions 1,324,871 728,329 Temporary and contract labor 876,028 486,202 Restructuring charges (Note 2) 352,800 0 Miscellaneous 588,075 434,016 ----------- ----------- Total operating expenses 15,848,179 12,557,124 ----------- ----------- Loss from operations (1,859,640) (2,001,123) GAIN ON SALE OF INVESTMENT (Note 2) 8,232,257 0 OTHER INCOME 453,044 264,907 INTEREST EXPENSE (29,927) (57,238) ----------- ----------- Income (loss) before income tax expense (benefit) 6,795,734 (1,793,454) INCOME TAX EXPENSE (BENEFIT) 2,791,227 (670,504) ----------- ----------- NET INCOME (LOSS) $ 4,004,507 $(1,122,950) =========== =========== The accompanying notes are an integral part of these statements. EQUIFAX HEALTHCARE EDI SERVICES, INC. STATEMENTS OF SHAREHOLDER'S EQUITY FOR THE YEARS ENDED JUNE 30, 1996 AND 1995 Retained Additional Earnings Common Paid-In (Accumulated Stock Capital Deficit) Total ------- ------------ ----------- ------------ BALANCE, June 30, 1994 $500 $ 7,364,311 $ (226,290) $ 7,138,521 Contributions from parent company 0 12,180,836 0 12,180,836 Contribution of net assets of Electronic Tabulating Services 0 12,385,000 0 12,385,000 Net loss 0 0 (1,122,950) (1,122,950) ---- ----------- ---------- ----------- BALANCE, June 30, 1995 500 31,930,147 (1,349,240) 30,581,407 Return of capital to parent company 0 (16,607,815) 0 (16,607,815) Net income 0 0 4,004,507 4,004,507 ---- ----------- ---------- ----------- BALANCE, June 30, 1996 $500 $15,322,332 $2,655,267 $17,978,099 ==== =========== ========== =========== The accompanying notes are an integral part of these statements. EQUIFAX HEALTHCARE EDI SERVICES, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED JUNE 30, 1996 AND 1995 1996 1995 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 4,004,507 $ (1,122,950) ------------ ------------ Adjustments to reconcile net income (loss) to net cash used in operating activities (net of ETS acquisition): Depreciation and amortization 2,999,739 2,745,529 Gain on sale of PCN investment (8,232,257) 0 Loss on sale of fixed assets 30,073 0 Changes in assets and liabilities: Accounts receivable 641,196 (1,276,218) Interest receivable 241,389 (241,389) Change in current deferred taxes (38,832) (316,105) Other current assets 23,573 41,693 Consulting fees 333,330 0 Other assets 4,869 (2,619) Other current liabilities (86,273) 551,876 Deferred taxes (358,427) (487,618) Other noncurrent liabilities 32,228 (512,537) ------------ ------------ Total adjustments (4,409,392) 502,612 ------------ ------------ Net cash used in operating activities (404,885) (620,338) ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (1,462,978) (755,180) Increase in investment in convertible note (88,400) (10,025,404) Proceeds from sale of investment 18,356,062 0 Proceeds from sale of fixed assets 445,730 0 ------------ ------------ Net cash provided by (used in) investing activities 17,250,414 (10,780,584) ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Payments on capital lease obligations (240,121) (483,609) Payments on short-term borrowings (2,350) (280,943) Capital (distribution to) contribution from parent company (16,607,815) 12,180,836 ------------ ------------ Net cash (used in) provided by financing activities (16,850,286) 11,416,284 ------------ ------------ (DECREASE) INCREASE IN CASH (4,757) 15,362 CASH AT BEGINNING OF YEAR 253,692 238,330 ------------ ------------ CASH AT END OF YEAR $ 248,935 $ 253,692 ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for taxes $ 2,881,290 $ 0 ============ ============ Interest paid $ 29,927 $ 57,238 ============ ============ The accompanying notes are an integral part of these statements. EQUIFAX HEALTHCARE EDI SERVICES, INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 1996 AND 1995 1. NATURE OF OPERATIONS Equifax Healthcare EDI Services, Inc. (the "Company" or "EDI") is a wholly owned subsidiary of Equifax Inc. ("Equifax" or the "Parent"). The Company provides electronic eligibility verification and claims processing services to health care providers and other electronic communications among healthcare providers, payors, intermediaries, and financial institutions. Cooperative Healthcare Network ("CHN") was acquired by Equifax in January 1994. Electronic Tabulating Services ("ETS") was acquired in September 1994. Effective January 1, 1995, CHN was merged into ETS to form the Company. Financial information for ETS has been included in these financial statements as of September 1, 1994. See Note 8 where discussed. 2. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Revenue Recognition The Company's revenues are primarily derived from fee income associated with claims and eligibility processing fees charged on a per transaction or per site basis and registration/renewal and start-up costs. Per transaction and per site revenues are recognized in the month network subscribers receive services. Registration/renewal and start-up fees are recognized at the beginning of the respective contract period. Property and Equipment Property and equipment are stated at cost. Improvements which extend the useful lives of the assets are capitalized, while repairs and maintenance are charged to operations as incurred. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. The useful lives of property and equipment range from three to eight years. -2- The following summarizes the components of property and equipment at June 30, 1996 and 1995: 1996 1995 ----------- ------------ Computer hardware $2,080,849 $2,387,867 Office equipment 315,003 311,171 Telephone and miscellaneous equipment 305,541 286,921 Leasehold improvements 241,599 32,486 Computer software 354,057 61,076 ----------- ------------ 3,297,049 3,079,521 Accumulated depreciation (1,130,952) (1,152,223) ----------- ------------ $2,166,097 $1,927,298 ----------- ------------ Depreciation expense for 1996 and 1995 was $708,570 and $605,619, respectively. Goodwill The Company recognized goodwill in conjunction with the purchase of ETS. Goodwill is amortized on the straight-line basis over 20 years. During the year ended June 30, 1996, the Company reduced goodwill by $169,502 to reflect a purchase price adjustment. Amortization expense was $663,684 and $606,170 for 1996 and 1995, respectively. Purchased Software The Company capitalized purchased software costs in conjunction with the acquisitions of CHN and ETS of $1,000,000 and $7,000,000, respectively. These amounts are reflected in the financial statements net of $3,067,674 of accumulated amortization. Purchased software is being amortized on the straight-line basis over five years. Amortization expense was $1,600,404 and $1,367,070 for 1996 and 1995, respectively. Restructuring Charges During 1996, EDI initiated a restructuring program designed to streamline operations. A restructuring charge of $352,800 was recorded to accrue severance and termination benefits for affected employees. Of these expenses, $211,116 was paid as of June 30, 1996 and $141,684 is included in accrued expenses. Migration Costs During 1996, the Company began merging the computer systems used by CHN and ETS. As of June 30, 1996, costs of approximately $945,000 have been capitalized and are included in fixed assets. An estimate of costs to complete this project has not been made. Gain on Sale of Investment In April 1995, the Company invested in Physicians Computer Networks, Inc. ("PCN") by purchasing a $10,000,000 note, which was convertible to stock at 130% of the base price of $4 per share, adjusted for the dilutive effect of additional issuances of stock by PCN. In -3- May 1996, PCN had an additional public offering, at which time the Company converted the note into stock and then sold the shares at a pretax gain of $8,232,257. The related federal tax liability of $2,881,290 was paid by the Parent as of June 30, 1996. 3. INCOME TAXES The provision for income taxes for the years ended June 30, 1996 and 1995 consisted of the following: 1996 1995 ---------------- -------------- Provision (benefit) for federal income taxes: Current $2,726,913 $ (72,599) Deferred (375,447) (464,472) Total provision (benefit) for federal ---------------- -------------- income taxes 2,351,466 (537,071) ---------------- -------------- Provision (benefit) for state income taxes: Current 511,143 2,696 Deferred (71,382) (136,129) Total provision (benefit) for state income taxes ---------------- -------------- 439,761 (133,433) ---------------- -------------- Total $2,791,227 $(670,504) ================ ============== Temporary differences resulting in a deferred tax liability at June 30, 1996 and 1995 are as follows: 1996 1995 ---------------- -------------- Current: Assets: Bad debt expense $ 134,410 $ 98,749 Miscellaneous accruals 234,443 211,980 Other 49,195 68,487 ---------------- -------------- 418,048 379,216 Liability 0 0 ---------------- -------------- Total current deferred tax $ 418,048 $ 379,216 ================ ============== -4- 1996 1995 ---------------- -------------- Noncurrent: Asset: Miscellaneous $ 18,546 $ 2,750 ---------------- -------------- Liabilities: Purchased software amortization (1,594,508) (2,191,132) Depreciation (35,972) (20,671) Amortization (74,342) (44,605) Other (39,453) 0 ---------------- -------------- (1,744,275) (2,256,408) ---------------- -------------- Total noncurrent deferred tax $(1,725,729) $(2,253,658) ================ =============== Differences between the statutory rate and the effective rate are due primarily to goodwill amortization. 4. COMMITMENTS The Company leases certain office space and equipment under noncancelable operating lease agreements which expire through fiscal 2002. Future minimum annual lease payments under the related noncancelable operating leases, net of sublease, as of June 30, 1996 are as follows: 1997 $ 894,396 1998 848,909 1999 583,987 2000 468,004 2001 502,192 Thereafter 376,644 ----------- Total $3,674,132 =========== Rental expense under noncancelable operating lease agreements for the years ended June 30, 1996 and 1995 totaled $766,160 and $732,948, respectively. The Company is party to various claims and assessments in the ordinary course of business. In management's opinion, these matters will not have a material effect on the Company's financial position, results of operations, or cash flows. 5. SIGNIFICANT CUSTOMERS A substantial portion of the Company's revenues are derived from a limited number of customers. During the year ended June 30, 1996, three customers accounted for 46% of total revenues. Individually, each of these customers accounted for 14% to 16% of total revenues. During 1996, the contract with another of these significant customers was renegotiated which resulted in a one-time payment to the Company of $1.5 million which is included in 1996 revenues. The contracts with two of these significant customers will expire on December 31, 1996 and September 30, 1997. The Company will review these contracts, but there can be no guarantee that the contracts will be renewed. If either or both of these contracts are not renewed, it could have a material adverse affect on the Company's results of operations and liquidity. Revenues from these customers were $3.4 million for the year ended June 30, 1996 excluding the one-time payment discussed above. -5- 6. RELATED-PARTY TRANSACTION The Company is allocated certain costs from Equifax. During 1996 and 1995, the Parent allocated costs of $1,357,169 and $390,738, respectively. 7. CONSULTING AGREEMENT As part of the purchase of ETS, a consulting agreement with a former member of ETS management was capitalized. The amount was being amortized over the life of the agreement (30 months). The liability under this agreement is included in accrued expenses. The asset and liability at June 30, 1995 were $333,330 and $331,250, respectively. During 1996, the agreement ceased; accordingly, the asset and liability were removed from the accounting records. 8. ACQUISITION OF ETS AND CREATION OF EDI ETS was acquired by Equifax on September 1, 1994 in exchange for 355,666 shares of Equifax stock. The following summarizes the net assets acquired: Current assets $ 631,802 Property and equipment 534,970 Goodwill 8,665,595 Purchased software 7,000,000 Other intangibles 500,000 ------------ 17,332,367 Liabilities assumed (4,947,367) ------------ Net assets transferred $12,385,000 ============ Effective January 1, 1995, CHN was then merged into ETS to form EDI. 9. SUBSEQUENT EVENTS On September 6, 1996, the Company entered into an agreement to be acquired by National Data Corporation for $46,925,000 in cash, subject to adjustments for changes in working capital since June 30, 1996. The effective date of the transaction will be October 1, 1996. -6- On August 16, 1996, the Company entered into a software licensing agreement with Intermed Healthcare Systems, Inc. ("Intermed") requiring the Company to pay Intermed $117,000 in past-due licensing fees and $508,000 for use of its software in future periods. The $117,000 is included in accrued expenses as of June 30, 1996. In accordance with the agreement, the Company paid $625,000 during September 1996. An additional fee of $175,000 is payable by Equifax under this agreement when the license is transferred to National Data Corporation. Pro Forma Financial Information (Unaudited) The following pro forma financial information has been prepared as if the Equifax Health EDI transaction had taken place on August 31, 1996 for the pro forma condensed combined balance sheet and June 1, 1995 for the pro forma condensed combined income statements. For comparability purposes, Equifax Health EDI's twelve months ended June 30, 1996 and three months ended August 31, 1996, are used in conjunction with National Data Corporation's twelve months ended May 31, 1996 and three months ended August 31, 1996. Accordingly, Equifax Health EDI's operating results for June 1996 were duplicated in each of the twelve months ended May 31, 1996 and the three months ended August 31, 1996. Equifax Health EDI's revenue and net income, excluding non-recurring and unusual items for that period were $1,349,000 and $46,000. The pro forma condensed combined income statement for the fiscal year ended May 31, 1996, also includes the impact of the Company's acquisition of the Merchant Automated Point-of-Sale Program ("MAPP") from MasterCard International Incorporated on April 1, 1996 as if the acquisition had occurred on June 1, 1995. The operations of MAPP from April 1, 1996 forward, as well as the balance sheet data are reflected in the National Data Corporation historical balance sheet at May 31, 1996. It is suggested that these pro forma condensed combined financial statements be read in conjunction with the pro forma condensed combined financial statements and notes thereto included in the Company's Form 8-K filed on April 15, 1996 regarding the MAPP acquisition. National Data Corporation and Equifax Health EDI's non-recurring and unusual items have been excluded from the pro forma condensed combined income statements, as follows (in millions): NDC Equifax Health EDI ------------------ ------------------ FY 1996 FY 1997 FY 1996 FY 1997 ------------------ ------------------ Restructuring charges $ 44.8 $ - $ 0.4 $ - One-time payment from a major customer - - (1.5) - Gain on sale of investments - - (8.2) (8.2) Amortization of intangibles - - 2.2 0.6 ------------------ ------------------ Net adjustments to increase (decrease) historical operating income $ 44.8 $ - $ (7.1) $ (7.6) ------------------ ------------------ Intangible assets acquired as a result of Equifax Health EDI's business acquisitions have no fair value to the Company as of the acquisition date. These acquisitions have been accounted for using the purchase method. Any adjustments to the purchase price allocations are not expected to be material to the pro forma financial information taken as a whole. The pro forma financial information presented is unaudited, for information purposes only and is not necessarily indicative of the operating results that would have occurred had the acquisition taken place on the dates indicated, nor are they necessarily indicative of the results of future operations. Historical income statements of the acquired company have been adjusted to reflect differing fiscal years. Non-recurring items were excluded from the pro forma presentation. The pro forma financial information should be read in conjunction with the accompanying notes. NATIONAL DATA CORPORATION PRO FORMA CONDENSED COMBINED BALANCE SHEET AUGUST 31, 1996 (in thousands) - ------------------------------------------------------------------------------------------------ Equifax Pro Forma Pro Forma NDC Health EDI Adjustments Combined ---------- ---------- ----------- --------- ASSETS Current assets: Cash and cash equivalents $ 10,656 $ 64 $ 299 b $ 11,019 Accounts receivable, net 66,722 2,612 -- 69,334 Other current assets 7,971 92 -- 8,063 -------- ------ -------- -------- Total current assets 85,349 2,768 299 88,416 -------- ------ -------- -------- Property and equipment, net of depreciation 49,220 1,989 -- 51,209 Acquired intangibles and goodwill, net 220,640 -- 44,079 b 264,719 Other 14,208 -- -- 14,208 -------- ------ -------- -------- Total Assets $369,417 $4,757 $ 44,378 $418,552 ======== ====== ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 50,315 $2,046 $ -- $ 52,361 Line of credit payable 15,000 -- 47,000 b 62,000 Notes and earn-out payable 1,479 7 -- 1,486 Mortgage payable 10,892 -- -- 10,892 Deferred income 5,125 48 -- 5,173 Other current liabilities 11,778 34 -- 11,812 -------- ------ -------- -------- Total current liabilities 94,589 2,135 47,000 143,724 -------- ------ -------- -------- Notes payable on acquired businesses 3,103 -- -- 3,103 Other long-term liabilities 9,750 -- -- 9,750 -------- ------ -------- -------- Total liabilities 107,442 2,135 47,000 156,577 -------- ------ -------- -------- Minority interest 19,841 -- -- 19,841 Shareholders' Equity 242,134 2,622 (2,622) 242,134 -------- ------ -------- -------- Total Liabilities and Shareholders' Equity $369,417 $4,757 $ 44,378 $418,552 ======== ====== ======== ======== See Notes to Pro Forma Condensed Combined Financial Statements. NATIONAL DATA CORPORATION PRO FORMA CONDENSED COMBINED INCOME STATEMENT FOR THE FISCAL YEAR ENDED MAY 31, 1996 (in thousands except per share data) - ------------------------------------------------------------------------------- MAPP 6/1/95 to Equifax Pro Forma Pro Forma NDC 3/31/96 Health EDI Adjustments Combined ---------- --------- ---------- ----------- --------- Revenue $ 325,803 $42,780 $ 15,257 $ -- $ 383,840 --------- ------- -------- -------- --------- Operating Expenses: Cost of service 163,323 23,816 12,167 4,950 b 204,256 Sales, general and administrative 130,246 11,847 3,833 -- 145,926 --------- ------- -------- -------- --------- 293,569 35,663 16,000 4,950 350,182 --------- ------- -------- -------- --------- Operating income (loss) 32,234 7,117 (743) (4,950) 33,658 --------- ------- -------- -------- --------- Other income (expense): Interest and other income 4,476 -- 453 (3,917)c 1,012 Interest and other expense (3,750) -- (30) (3,113)d (6,893) Minority interest (628) -- -- (103)e (731) --------- ------- -------- -------- --------- 98 -- 423 (7,133) (6,612) --------- ------- -------- -------- --------- Income (loss) before income taxes 32,332 7,117 (320) (12,083) 27,046 Provision (benefit) for income taxes 10,993 2,420 (131) (4,086)f 9,196 --------- ------- -------- -------- --------- Net income (loss) $ 21,339 $ 4,697 $ (189) $ (7,997) $ 17,850 ========= ======= ======== ======== ========= Number of common and common equivalent shares 27,189 27,189 Earnings per share $ 0.79 $ 0.66 --------- --------- See Notes to Pro Forma Condensed Combined Financial Statements. NATIONAL DATA CORPORATION PRO FORMA CONDENSED COMBINED INCOME STATEMENT FOR THE THREE MONTHS ENDED AUGUST 31, 1996 (in thousands except per share data) - ----------------------------------------------------------------------------------------------------------------------------- Equifax Pro Forma Pro Forma NDC Health EDI Adjustments Combined ---------------- ---------------- --------------- ----------------- Revenue $ 101,164 $ 3,856 $ - $ 105,020 ---------------- ---------------- --------------- ----------------- Operating Expenses: Cost of service 49,076 2,113 441 b 51,630 Sales, general and administrative 38,154 1,742 - 39,896 ---------------- ---------------- --------------- ----------------- 87,230 3,855 441 91,526 ---------------- ---------------- --------------- ----------------- Operating income (loss) 13,934 1 (441) 13,494 ---------------- ---------------- --------------- ----------------- Other income (expense): Interest and other income 319 61 - 380 Interest and other expense (935) (1) (671)d (1,607) Minority interest (498) - - (498) ---------------- ---------------- --------------- ----------------- (1,114) 60 (671) (1,725) ---------------- ---------------- --------------- ----------------- Income (loss) before income taxes 12,820 61 (1,112) 11,769 Provision (benefit) for income taxes 4,615 24 (402)f 4,237 ---------------- ---------------- --------------- ----------------- Net income (loss) $ 8,205 $ 37 $ (710) $ 7,532 ---------------- ---------------- --------------- ----------------- Number of common and common equivalent shares 27,800 27,800 Earnings per share $ 0.30 $ 0.27 --------------- ----------------- See Notes to Pro Forma Condensed Combined Financial Statements. Notes to Unaudited Pro Forma Condensed Combined Financial Statements Note 1. Narrative description of pro forma adjustments ---------------------------------------------- a. Stockholder's equity adjustments represent the elimination of the book equity of Equifax Health EDI, which in this presentation is the value of the net assets acquired. b. The Company will fund the purchase price by utilizing its credit facility. Intangibles and goodwill associated with Equifax Health EDI are calculated as follows: Purchase price $46,701,422 Less: Net assets acquired (2,622,136) ------------ $44,079,286 =========== An approximate weighted average life of 25 years is assumed for amortization of these intangibles. Intangibles and goodwill associated with the MAPP acquisition totaled $126,120,000. These intangibles and goodwill have an approximate weighted average life of 34 years for amortization of these intangibles. The pro forma adjustment to reflect amortization expense for the periods presented is as follows: Equifax MAPP Total ------- ---- ----- Health EDI ---------- Fiscal year ended May 31, 1996 $1,763,000 $3,187,000 $4,950,000 Three months ended August 31, 1996 441,000 * 441,000 c. Interest and other income is reduced by the following amounts to reflect pro forma reduction in funds available for investment purposes had the MAPP transaction occurred on June 1, 1995. The average interest rate earned on investments was approximately 5% in all periods presented. Fiscal year ended May 31, 1996 $3,917,000 Three months ended August 31, 1996 * d. Interest expense is increased by the estimated amount of interest that would have been incurred if $47,000,000 related to the Health EDI transaction and $9,000,000 related to the MAPP transactions, were borrowed on June 1, 1995 and continued to remain outstanding through August 31, 1996. The interest calculation is estimated based on the Company's average LIBOR borrowing rate of 5.7% in all periods presented. Equifax MAPP Total ------- ---- ----- Health EDI ---------- Fiscal year ended May 31, 1996 $2,685,000 $428,000 $3,113,000 Three months ended August 31, 1996 671,000 * 671,000 e. Minority interest (per the terms of the MAPP agreement) for the first two years is calculated at 1% of operating income (adjusted for amortization of purchase price), before income taxes. The additional minority interest assuming the MAPP transaction occurred on June 1, 1995 is presented as follows: Fiscal year ended May 31, 1996 $103,000 Three months ended August 31, 1996 * f. Income tax rates for the periods presented were computed using the effective rates for those periods. g. Earnings per share is presented using the weighted average fully diluted number of shares outstanding. * Pro forma adjustment not necessary, as the impact of the MAPP transaction is already reflected in the historical results. COMMISSION FILE NUMBER 001-12392 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 EXHIBITS FILED ON FORM 8-K DATED OCTOBER 1, 1996 NATIONAL DATA CORPORATION National Data Plaza Atlanta, Georgia 30329-2010 NATIONAL DATA CORPORATION FORM 8-K INDEX TO EXHIBITS ------------------------------ Exhibit Numbers Description - ------- ----------- 2 Stock Purchase Agreement, dated September 3, 1996, as amended on September 24, 1996 23 Consent of Arthur Andersen LLP