NATIONAL DATA CORP, S-3/A, 1995-05-25

NATIONAL DATA CORP
S-3/A, 1995-05-25
BUSINESS SERVICES, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 25, 1995

REGISTRATION NO. 33-59377
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------

AMENDMENT NO. 2

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------

NATIONAL DATA CORPORATION
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 58-0977458
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
</TABLE>

NATIONAL DATA PLAZA
ATLANTA, GEORGIA 30329-2010
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

E. MICHAEL INGRAM
GENERAL COUNSEL AND SECRETARY
NATIONAL DATA CORPORATION
NATIONAL DATA PLAZA
ATLANTA, GEORGIA 30329-2010
(404) 728-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

THE COMMISSION IS REQUESTED TO SEND COPIES OF ALL COMMUNICATIONS TO:

<TABLE>
<S> <C>
JEFFREY P. ADAMS RANDOLPH C. COLEY
ALSTON & BIRD KING & SPALDING
ONE ATLANTIC CENTER 191 PEACHTREE STREET
1201 WEST PEACHTREE STREET ATLANTA, GEORGIA 30303-1763
ATLANTA, GEORGIA 30309-3424 (404) 572-4600
(404)881-7000
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.

If the only securities being registered on this form are being registered
pursuant to dividend or interest reinvestment plans, check the following box:
/ /

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
---------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED MAY 23, 1995

2,750,000 SHARES

(LOGO) NATIONAL DATA CORPORATION

COMMON STOCK

(PAR VALUE $.125 PER SHARE)

---------------------

All of the 2,750,000 shares of Common Stock offered hereby are being sold
by the Company.

The Company's Common Stock is quoted on the New York Stock Exchange under
the symbol "NDC." The last reported sale price of the Common Stock on the New
York Stock Exchange Composite Tape on May 22, 1995 was $20.00 per share. See
"Price Range of Common Stock and Dividends."

SEE "CERTAIN CONSIDERATIONS" FOR CERTAIN MATTERS RELEVANT TO AN INVESTMENT
IN THE COMMON STOCK ON PAGE 6.

---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

---------------------

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
------------------ ------------------ ------------------
<S> <C> <C> <C>
Per Share.................... $ $ $
Total(3)..................... $ $ $
</TABLE>

---------------

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(2) Before deducting estimated expenses of $325,000 payable by the Company.
(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 412,500 shares at the initial public offering price per
share, less the underwriting discount, solely to cover over-allotments. If
such option is exercised in full, the total initial public offering price,
underwriting discount and proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."

---------------------

The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York, on or about
June , 1995.

GOLDMAN, SACHS & CO. SALOMON BROTHERS INC
---------------------
The date of this Prospectus is June , 1995.
<PAGE> 3

AVAILABLE INFORMATION

National Data Corporation (the "Company" or "NDC") has filed a Registration
Statement on Form S-3 (together with all amendments and exhibits filed or to be
filed in connection therewith, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Common Stock offered hereby. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Securities and
Exchange Commission (the "Commission"). Statements contained herein concerning
the provisions of documents are necessarily summaries of such documents, and
each statement is qualified in its entirety by reference to the copy of the
applicable document filed with the Commission.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith,
files reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices located at 7 World Trade Center, Suite 1300, New York, New York 10048
and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The common stock of the Company, $.125 par value per share (the "Common
Stock"), is listed on the New York Stock Exchange (the "NYSE") under the symbol
"NDC," and such reports, proxy statements and other information concerning the
Company are available for inspection at the office of the NYSE, 20 Broad Street,
New York, New York 10005.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed with the Commission (File No.
0-3966) pursuant to the 1934 Act are hereby incorporated in this Prospectus by
reference:

1. The Company's Annual Report on Form 10-K for the year ended May 31,
1994, as amended on September 19, 1994 and May 23, 1995;

2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
August 31, 1994, November 30, 1994, and February 28, 1995, as amended on
May 23, 1995;

3. The Company's Current Reports on Form 8-K dated November 17, 1994,
as amended on May 23, 1995, and February 2, 1995;

4. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A as filed with the Commission on
September 11, 1969; and

5. The description of the Company's Junior Preferred Stock Purchase
Rights contained in the Company's Registration Statement on Form 8-A as
filed with the Commission on January 22, 1991, as amended on October 5,
1993.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the 1934 Act subsequent to the date of this Prospectus and prior to the
termination of this offering shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the respective dates of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified and superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person to whom a Prospectus
is delivered, upon written or oral request of such person, a copy of any and all
of the information that has been incorporated by reference in this Prospectus
(excluding exhibits unless such exhibits are specifically incorporated by
reference into such documents). Please direct such requests to the Secretary,
National Data Corporation, National Data Plaza, Atlanta, Georgia, 30329-2010,
telephone number (404) 728-2000.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

2
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto appearing
elsewhere or incorporated by reference into this Prospectus. Except as otherwise
indicated, (i) the information in this Prospectus assumes the Underwriters'
overallotment option is not exercised, (ii) share and per share data have been
restated to reflect a three-for-two stock split effected on March 20, 1995, and
(iii) references to the "Company" or "NDC" include NDC and its subsidiaries. The
Company's fiscal year ends on May 31st of each calendar year. References to
fiscal years by date refer to the fiscal year ending May 31 of that calendar
year.

THE COMPANY

National Data Corporation (the "Company" or "NDC") is a leading provider of
high-volume transaction processing services and application systems to the
health care and payment systems markets. The Company serves a diverse customer
base comprised of more than 60,000 health care providers, 350,000 merchant
locations, 35,000 corporations and 200 banking institutions, as well as federal
and state government agencies. The Company markets its services directly to
merchants and health care providers and indirectly through business alliances
with a wide range of banks, insurance companies and distributors. The Company is
one of the largest independent providers of health care transaction processing
and integrated payment systems services in the United States, having processed
over 1.5 billion transactions during fiscal 1994.

NDC provides electronic claims processing and adjudication services,
practice management systems and clinical data base information for pharmacies,
dentists, physicians, hospitals, health maintenance organizations, clinics and
nursing homes, as well as other health care providers. Management believes that
the Company is the largest independent processor of real-time health care
transactions, and that it is well positioned to capitalize on the growing demand
for cost containment and improved patient care in the health care industry.
Approximately 33% of the Company's total revenue for the first nine months of
fiscal 1995 was derived from the Company's health care systems and services
which represent the fastest growing portion of the Company's business.

The Company's integrated payment systems business offers transaction
processing solutions to merchants, health care providers, universities and
colleges and government agencies. The Company is one of the largest providers of
credit card, debit card and check verification/guarantee processing services.
NDC also offers electronic tax filing and payment services to government and
corporate customers. The Company recently introduced a purchase card that
provides electronic payment capabilities for business-to-business purchasing
transactions. Approximately 56% of the Company's total revenue for the first
nine months of fiscal 1995 was derived from the Company's integrated payment
systems and services. NDC also provides cash management, information reporting
and electronic data interchange (EDI) services for government and corporate
customers, which represented approximately 8% of the Company's total revenue for
the first nine months of fiscal 1995.

The Company's products offer greater convenience to purchasers and
providers of goods and services and reduce processing costs, settlement delays
and losses from fraudulent transactions. NDC's advanced high speed computer and
telecommunications network enables the Company to electronically process,
capture and transmit a high volume of point-of-service transactions 24 hours a
day, seven days a week. While the transition from paper-based to electronic
transaction processing continues, the earliest and most significant penetration
has occurred in the areas of credit card authorization and settlement and
pharmacy transaction processing. NDC believes that the rapid transition to
electronic transaction processing demonstrates the potential for automation of
other markets still dominated by paper-based processing, such as additional
health care applications and the transfer of information between businesses.

The Company's business strategy is to be a total solution provider of
value-added transaction processing systems and services in the markets it
serves. NDC believes that both the integrated payment

3
<PAGE> 5

systems and the health care markets present attractive opportunities for
continued growth. In pursuing its strategy, the Company seeks both to increase
its penetration of existing application systems and point-of-use transaction
processing markets and to continue to identify and create new markets for its
services. The Company will also continue to seek to enhance existing products
and develop new systems and services; for example, services relating to
financial electronic data interchange and medical claims processing.

To support its business strategy, NDC has expanded its focus on acquisition
opportunities and alliances with other companies that allow NDC to increase its
market penetration, technological capabilities, product offerings and
distribution capabilities. Since the beginning of fiscal 1995, the Company has
completed six acquisitions with an aggregate cash purchase price of
approximately $46 million. These acquisitions give NDC expanded capabilities and
customer bases in the physician and dental practice management, pharmacy
practice management, hospital and medical claims processing and retail customer
check guarantee areas.

The Company's address is National Data Plaza, Atlanta, Georgia 30329-2010
and its telephone number is (404) 728-2000.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered......................... 2,750,000 shares
Common Stock to be outstanding after the
Offering................................... 22,001,429 shares(1)
Use of proceeds.............................. The net proceeds of this offering will be
added to the Company's working capital and
will be available for general corporate
purposes, including acquisitions.
NYSE symbol.................................. NDC
</TABLE>

---------------

(1) Excludes 2,747,620 shares subject to options outstanding under the Company's
stock option and employee stock purchase plans as of May 10, 1995.

4
<PAGE> 6

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Net income (loss)(1)(2)...... $ 3,082 $(14,136) $ 7,419 $ 8,489 $ 9,710 $ 5,877 $ 10,449
Fully diluted earnings (loss)
per share.................. $ .17 $ (.80) $ .41 $ .45 $ .50 $ .30 $ .51
</TABLE>

<TABLE>
<CAPTION>
AT FEBRUARY 28, 1995
---------------------------
ACTUAL AS ADJUSTED(3)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................................... $ 27,017 $ 78,942
Acquired intangibles and goodwill, net of accumulated amortization........ 75,692 75,692
Total assets.............................................................. 201,739 253,664
Long-term obligations..................................................... 21,549 21,549
Stockholders' equity...................................................... 118,013 169,938
</TABLE>

---------------

(1) For fiscal 1990 and 1991, includes, among other items, certain restructuring
costs relating to the Company's decision to exit the communication services
business. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations -- General." For fiscal 1994 and the first nine
months of fiscal 1994, includes a charge of $2,500,000 relating to the
settlement of a shareholder lawsuit originally filed in 1990.
(2) For fiscal 1990, includes income of $1,119,000, net of taxes, relating to
discontinued computer timesharing operations.
(3) Adjusted to give effect to the sale by the Company of 2,750,000 shares of
Common Stock offered hereby at an assumed initial public offering price of
$20.00 per share (after deduction of the estimated underwriting discounts
and estimated expenses of the offering) and the receipt of the estimated net
proceeds therefrom. See "Use of Proceeds."

5
<PAGE> 7

CERTAIN CONSIDERATIONS

In addition to the other information contained in this Prospectus, the
following factors should be considered carefully in evaluating an investment in
the Common Stock.

COMPETITION

The markets for the applications systems and services offered by the
Company are highly competitive. Competition in the health care transaction
processing and integrated payment systems markets affects the Company's ability
to gain new customers and the prices it can charge. The key competitive factors
for the Company are functionality of products, quality of service and price.
Many of the Company's competitors have access to significant capital and
management, marketing and technological resources that are equal to or greater
than those of the Company, and there can be no assurance that the Company will
continue to be able to compete successfully with them. In addition, the Company
competes with businesses that internally perform data processing or other
services offered by the Company. See "Business -- Competition."

MARKETS AND APPLICATIONS

The Company's future growth and profitability will depend, in part, upon
the further expansion of the health care transaction processing and integrated
payment systems markets, the emergence of other markets for electronic
transaction processing services and the Company's ability to penetrate such
markets. Further expansion of these markets is dependent upon the continued
growth in the number of transactions available to be processed and the continued
automation of traditional paper-based processing systems. The Company's ability
to penetrate such markets will depend, in turn, upon its ability to apply its
existing technology, or to develop new technology, to meet the particular
service needs of each new market. There can be no assurance that markets for the
Company's services will continue to expand and develop or that the Company will
be successful in its efforts, or have adequate financial, marketing and
technological resources, to penetrate new markets. See "Business -- Business
Strategy."

INTEGRATED PAYMENT SYSTEMS BUSINESS

The Company's merchant customers have liability for charges disputed by
cardholders. However, in the case of merchant fraud, or insolvency or bankruptcy
of the merchant, the Company may be liable for any of such charges disputed by
cardholders. The Company requires cash deposits and other types of collateral by
certain merchants to minimize any such contingent liability. In addition, the
Company believes that the diversification of its merchant portfolio among
industries and geographic regions minimizes its risk of loss. Based on its
historical loss experience, the Company has established reserves for estimated
losses on transactions processed which management believes are adequate. There
can be no assurance, however, that such reserves for losses will be adequate.
Any such losses in excess of reserves could have a material adverse effect on
the financial condition and results of operations of the Company.

ACQUISITION RISKS

The Company intends to seek additional acquisition opportunities and
alliance relationships with other businesses that will allow it to increase its
market penetration, technological capabilities, product offerings and
distribution capabilities. There can be no assurance that the Company will be
able successfully to identify suitable acquisition candidates, complete
acquisitions, integrate acquired operations into its existing operations or
expand into new markets. There can also be no assurance that future acquisitions
will not have an adverse effect upon the Company's operating results,
particularly in the fiscal quarters immediately following the completion of such
acquisitions while the operations of the acquired business are being integrated
into the Company's operations. Once integrated, acquired operations may not
achieve levels of revenues, profitability or productivity comparable with those

6
<PAGE> 8

achieved by the Company's existing operations, or otherwise perform as expected.
In addition, the Company competes for acquisition and expansion opportunities
with companies that have substantially greater resources.

DISCRETION IN USE OF PROCEEDS

The net proceeds of this offering will be added to the Company's working
capital and will be available for general corporate purposes, including
acquisitions. As of the date of this Prospectus, the Company cannot specify with
certainty the particular uses for the net proceeds to be added to its working
capital and accordingly management will have broad discretion in the application
of such net proceeds. Although the Company has recently entered into non-binding
letters of intent with respect to two possible acquisitions, the Company
currently has no other agreements, arrangements or understandings with respect
to any particular acquisition, and there can be no assurance that these two
acquisitions or any other acquisition will be completed. See "Use of Proceeds,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Business -- Business
Strategy."

USE OF PROCEEDS

The net proceeds from the sale of the shares of Common Stock offered by the
Company are estimated to be $51.9 million ($59.8 million if the Underwriters'
over-allotment option is exercised in full) at an assumed initial public
offering price of $20.00 and after deduction of the estimated underwriting
discount and estimated expenses of the offering. The proceeds of this offering
will be added to the Company's working capital and will be available for general
corporate purposes, including acquisitions. An important component of the
Company's growth strategy is the ability to pursue acquisitions. The purpose of
this offering is to provide the Company with increased financial flexibility to
pursue acquisitions of other businesses that are consistent with the Company's
growth strategy. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources" and
"Business -- Business Strategy."

Pending use of the net proceeds of this offering, the Company will make
temporary investments in interest-bearing savings accounts, certificates of
deposit, United States Government obligations, money market accounts, interest
bearing securities or other insured short-term, interest-bearing investments.

7
<PAGE> 9

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
February 28, 1995, and as adjusted to reflect the sale of 2,750,000 shares of
Common Stock offered hereby by the Company at an assumed initial public offering
price of $20.00 per share (after deduction of the estimated underwriting
discount and estimated expenses of the offering) and the receipt of the
estimated $51.9 million in net proceeds therefrom. See "Use of Proceeds."

<TABLE>
<CAPTION>
AT FEBRUARY 28, 1995
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term obligations............................................... $ 21,549 $ 21,549
Stockholders' equity:
Preferred Stock, $1.00 par value per share; 1,000,000 shares
authorized; none issued........................................ -- --
Common Stock, $.125 par value per share; 30,000,000 shares
authorized; 19,251,429 shares issued; 22,001,249 shares issued as
adjusted(1)(2).................................................... 2,406 2,750
Capital in excess of par value.................................... 32,019 83,600
Retained earnings................................................. 85,105 85,105
Cumulative translation adjustment................................. (1,010) (1,010)
Less:
Deferred compensation........................................ (507) (507)
Total stockholders' equity................................ 118,013 169,938
-------- -----------
Total capitalization...................................... $139,562 $ 191,487
========= ==========
</TABLE>

---------------

(1) On January 24, 1995 the Company's Board of Directors declared a
three-for-two stock split, effected in the form of a dividend, of the
Common Stock and the rights to purchase one one-hundredth of a share of the
Company's $1.00 par value Series A Junior Participating Preferred Stock
(the "Junior Participating Preferred Stock"). The stock split was effected
on March 20, 1995. As a result of the stock split, the Company issued an
additional 6,417,895 shares of Common Stock and related rights to purchase
one one-hundredth of a share of the Junior Participating Preferred Stock.
(2) Excludes 2,747,620 shares subject to options outstanding under the Company's
stock option and employee stock purchase plans as of May 10, 1995.

8
<PAGE> 10

PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The Common Stock has been traded on the New York Stock Exchange under the
symbol NDC since October 14, 1993. Prior to that time, the Common Stock was
traded on The Nasdaq Stock Market's National Market. The table below sets forth
the high and low sales prices of the Common Stock and the quarterly cash
dividends declared per share of Common Stock during the periods indicated.

<TABLE>
<CAPTION>
PRICE RANGE
------------------- CASH DIVIDENDS
HIGH LOW DECLARED
------- ------- --------------
<S> <C> <C> <C>
FISCAL YEAR ENDED MAY 31, 1993
First Quarter....................................... $ 7.67 $ 6.17 $0.073
Second Quarter...................................... 8.67 5.33 0.073
Third Quarter....................................... 12.00 8.00 0.073
Fourth Quarter...................................... 12.17 9.50 0.073
FISCAL YEAR ENDED MAY 31, 1994
First Quarter....................................... 13.00 9.50 0.073
Second Quarter...................................... 12.83 10.00 0.073
Third Quarter....................................... 14.17 9.75 0.073
Fourth Quarter...................................... 15.33 11.00 0.073
FISCAL YEAR ENDING MAY 31, 1995
First Quarter....................................... 13.50 10.33 0.073
Second Quarter...................................... 14.67 12.92 0.073
Third Quarter....................................... 17.58 13.83 0.073
Fourth Quarter (through May 22, 1995)............... 21.38 16.50 0.075(1)
</TABLE>

---------------

(1) Payable on May 31, 1995 to holders of record on May 22, 1995.

The last sale price of the Common Stock as reported on the New York Stock
Exchange Composite Tape on May 22, 1995 was $20.00. As of May 12, 1995, there
were 2,134 holders of record of the Common Stock.

The ability of the Company to pay dividends in the future will be dependent
upon general business conditions, earnings, capital requirements, funds legally
available for such dividends, contractual provisions of debt agreements and
other relevant factors.

9
<PAGE> 11

SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following selected financial data for the five years ended May 31, 1994
are derived from the consolidated financial statements of the Company which have
been audited by Arthur Andersen LLP, independent public accountants. The
financial data for the nine-month periods ended February 28, 1994 and 1995 are
derived from the unaudited consolidated financial statements of the Company. In
the Company's opinion, the unaudited consolidated financial statements of the
Company include all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation of its consolidated financial position and
results of operations for these periods. Operating results for the nine months
ended February 28, 1995 are not necessarily indicative of the results that may
be expected for fiscal 1995. The data should be read in conjunction with the
consolidated financial statements of the Company and related notes incorporated
by reference in this Prospectus and "Management's Discussion and Analysis of
Financial Condition and Results of Operations," included elsewhere herein.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
FISCAL YEAR ENDED MAY 31, FEBRUARY 28,
---------------------------------------------------- -------------------
1990 1991 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenue from operations:
Integrated Payment Systems....................... $128,044 $132,918 $121,774 $113,793 $112,427 $ 86,179 $100,078
Health Care Application Systems and Services..... 36,767 37,488 47,735 56,268 63,005 45,392 58,962
Government and Corporate Information Systems and
Services....................................... 26,645 29,386 24,767 21,549 20,565 14,626 14,802
Other............................................ 82,313 27,299 22,210 12,946 8,009 6,388 4,094
-------- -------- -------- -------- -------- -------- --------
Total........................................ $273,769 $227,091 $216,486 $204,556 $204,006 $152,585 $177,936
Operating expenses:
Cost of service.................................. 166,320 143,997 130,569 122,537 117,208 89,348 97,286
Sales, general and administrative................ 80,544 75,381 71,242 66,998 68,411 50,496 63,594
Restructuring costs(1)........................... 15,452 28,772 -- -- -- -- --
Settlement of shareholder litigation(2).......... -- -- -- -- 2,500 2,500 --
-------- -------- -------- -------- -------- -------- --------
Operating income (loss)............................ 11,453 (21,059) 14,675 15,021 15,887 10,241 17,056
Other income (expense):
Interest and other income........................ 2,341 2,754 2,512 2,532 1,489 1,109 1,214
Interest and other expense....................... (7,387) (5,566) (4,396) (2,917) (2,517) (1,887) (1,944)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before taxes and extraordinary
item............................................. 6,407 (23,871) 12,791 14,636 14,859 9,463 16,326
Provision (benefit) for income taxes............... 4,444 (9,735) 5,372 6,147 5,149 3,586 5,877
-------- -------- -------- -------- -------- -------- --------
Net income (loss) from:
Continuing operations(1)....................... $ 1,963 $(14,136) $ 7,419 $ 8,489 $ 9,710 $ 5,877 $ 10,449
Discontinued operations........................ 1,119 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss).................................. $ 3,082 $(14,136) $ 7,419 $ 8,489 $ 9,710 $ 5,877 $ 10,449
========= ========= ========= ========= ========= ========= =========
Fully diluted earnings (loss) per share:
Continuing operations(1)......................... $ .11 $ (.80) $ .41 $ .45 $ .50 $ .30 $ .51
Discontinued operations.......................... .06 -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Fully diluted earnings (loss) per share............ $ .17 $ (.80) $ .41 $ .45 $ .50 $ .30 $ .51
========= ========= ========= ========= ========= ========= =========
</TABLE>

<TABLE>
<CAPTION>
AT MAY 31, AT FEBRUARY 28,
---------------------------------------------------- ----------------
1990 1991 1992 1993 1994 1995
-------- -------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................................ $ (4,153) $ 3,080 $ 16,464 $ 37,742 $ 48,873 $ 27,017
Acquired intangibles and goodwill, net of accumulated
amortization......................................... 64,626 54,850 53,264 46,299 41,250 75,692
Total assets........................................... 277,200 212,146 194,882 175,348 183,326 201,739
Long-term obligations.................................. 54,071 39,055 40,424 26,329 23,063 21,549
Stockholders' equity................................... 110,891 93,023 96,450 101,261 109,331 118,013
</TABLE>

---------------

(1) In fiscal 1990 and 1991, includes, among other items, certain restructuring
costs relating to the effects of the Company's decision to exit the
communication services business. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations -- General."
(2) Relates to the settlement by the Company of a shareholder lawsuit originally
filed in 1990.

10
<PAGE> 12

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the
consolidated financial statements of the Company and related notes incorporated
by reference in this Prospectus.

GENERAL

Founded in 1967, NDC's business initially focused on the utilization of
toll-free 800 telephone service to authorize petroleum company credit cards.
Shortly thereafter, the Company expanded the use of its technology to provide
credit card authorization for bank issued credit cards. This service has now
grown into the broad array of integrated payment systems offered by the Company.
During the 1970's and 1980's, the Company diversified its business and added
services such as cash management and communications services. The Company's
communication services business provided telemarketing services, operator
services and related telecommunications services to retailers and long distance
telephone companies. From fiscal 1987 to fiscal 1990, the Company's
communications services revenue increased at a compound annual rate of
approximately 50%, substantially as a result of a service contract with one
company. In February 1990, that company elected to take its operator service
operations in-house and, as a result, the Company's communication services
revenue declined substantially. The Company subsequently decided in fiscal 1991
to exit the communication services business.

In addition to providing integrated payment systems and services, since the
late 1980's the Company has provided pharmacy and dental practice management
systems and health care transactions processing services. In 1988, the Company
pioneered the development of the pharmacy claims processing business.

In fiscal 1993, under the leadership of new management, the Company focused
its core operations on the further development of its integrated payment systems
and services business and expansion into new segments of the health care
industry.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, selected items
in the Company's consolidated statements of income as a percentage of total
revenue.

<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED MAY ENDED
31, FEBRUARY 28,
---------------------- -------------
1992 1993 1994 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenue from operations:
Integrated Payment Systems............................ 56 % 56 % 55 % 56 % 57 %
Health Care Application Systems and Services.......... 22 28 31 30 33
Government and Corporate Information Systems and
Services........................................... 11 10 10 10 8
Other................................................. 11 6 4 4 2
---- ---- ---- ---- ----
Total......................................... 100 % 100 % 100 % 100 % 100 %
Cost of service......................................... 60 60 57 59 55
---- ---- ---- ---- ----
Gross margin.......................................... 40 40 43 41 45
Sales, general and administrative expense............... 33 33 34 33 35
Settlement of shareholder litigation.................... -- -- 1 1 --
---- ---- ---- ---- ----
Operating margin...................................... 7 7 8 7 10
Interest and other income............................... 1 1 0 1 0
Interest and other expense.............................. (2 ) (1 ) (1 ) (1 ) (1 )
---- ---- ---- ---- ----
Income before income taxes............................ 6 7 7 7 9
Provision for income taxes.............................. 3 3 2 3 3
---- ---- ---- ---- ----
Net income.............................................. 3 % 4 % 5 % 4 % 6 %
==== ==== ==== ==== ====
</TABLE>

11
<PAGE> 13

NINE MONTHS ENDED FEBRUARY 28, 1995 COMPARED TO NINE MONTHS ENDED FEBRUARY 28,
1994

REVENUE
Total revenue for the first nine months of fiscal 1995 was $177,936,000, an
increase of $25,351,000 (17%) from the same period in fiscal 1994. The revenue
increase was the result of increased revenue in Health Care Application Systems
and Services, $13,570,000 (30%), Integrated Payment Systems, $13,899,000 (16%),
and Government and Corporate Information Systems and Services, $176,000 (1%),
partially offset by a decrease in Other Revenue of $2,294,000 (36%).

HEALTH CARE APPLICATION SYSTEMS AND SERVICES. Health Care revenue
increased for the first nine months of fiscal 1995 as compared to the same
period in fiscal 1994 as a result of (i) increases in electronic claims
processing, which increased $9,108,000 (45%), and (ii) increases in revenue from
the Company's practice management systems for the pharmacy, dental, physician,
government and institutional sectors of 26%, including the impact of
acquisitions completed during the period.

INTEGRATED PAYMENT SYSTEMS. Integrated Payment Systems revenues increased
16% for the first nine months of fiscal 1995 compared to the same period in
fiscal 1994. This increase was the result of several factors. First, direct
payment services revenue for the first nine months of fiscal 1995 increased
$6,811,000 (14%) over the same period in fiscal 1994, primarily due to increased
volume of merchant sales processed and equipment sales. Second, two check
guarantee businesses were acquired during fiscal 1995. Offsetting these
increases, revenue in the Company's indirect merchant processing business
(distribution through banks) decreased 9% for the first nine months of fiscal
1995 from the same period in fiscal 1994, as a result of lower revenue per
electronic transaction. This decrease was primarily a result of reduced prices
associated with the renewal of a number of contracts with increased volume
commitments and movement from voice to electronic transactions.

GOVERNMENT AND CORPORATE INFORMATION SYSTEMS AND SERVICES. Government and
Corporate Information Systems and Services revenue increased 1% for the first
nine months of fiscal 1995 over the same period of the prior year due to
increased sales of software for electronic data interchange (EDI) applications.

OTHER. The decrease in Other Revenue of 36% for the first nine months of
fiscal 1995 as compared to the same period in fiscal 1994 was principally
related to the Company's decision to exit the communication services market in
fiscal 1991. The customer contracts associated with this business expired in the
first quarter of fiscal 1995. The remaining revenue in the Other category
reflects revenue from international operations.

COSTS AND EXPENSES
Cost of service for the first nine months of fiscal 1995 was $97,286,000,
an increase of $7,938,000 (9%) from the same period in fiscal 1994. While the
cost of operations increased $5,700,000 (8%) for the first nine months of fiscal
1995 as compared to the same period in fiscal 1994, cost of operations as a
percentage of revenue decreased from 47% for the first nine months of fiscal
1994 to 43% for the first nine months of fiscal 1995. Depreciation and
amortization as a percentage of revenue held constant at 7%. Hardware costs
increased $357,000 (5%), primarily related to volume associated with increased
equipment sales in the Integrated Payment Systems business.

Gross margin increased to 45% from 41% for the first nine months of fiscal
1995 as compared to the same period in fiscal 1994.

Sales, general and administrative expense increased $13,098,000 (26%) for
the first nine months of fiscal 1995 as compared to the same period in fiscal
1994. This increase was primarily due to sales expansion programs in the
Integrated Payment Systems and Health Care Applications Systems and Services
areas as well as increased sales, general and administrative expenses associated
with acquired businesses.

The Company reported a charge relating to the settlement of shareholder
litigation of $2,500,000 in the first quarter of fiscal 1994, representing the
settlement costs of a lawsuit originally filed in 1990.

12
<PAGE> 14

INTEREST AND OTHER INCOME
Interest and other income for the first nine months of fiscal 1995 was
$1,214,000, an increase of $105,000 (9%) over the same period in fiscal 1994.
The increase in interest and other income was principally related to increased
cash available for investment during the first six months of fiscal 1995 and
increased interest rates on the investment of those cash balances.

INTEREST AND OTHER EXPENSE
The first nine months of fiscal 1995 showed an increase in interest and
other expense of $57,000 (3%) from the same period in fiscal 1994. The increase
in interest and other expense was principally the result of reflecting the
minority interest of an investor in Yes Check, Inc., an acquisition completed by
the Company in the first three months of fiscal 1995.

INCOME TAXES
The provision for income taxes, as a percentage of taxable income, was 36%
and 39% for the first nine months in fiscal 1995 and fiscal 1994, respectively.
The overall decreased rate in the current year was primarily due to the
resolution of issues associated with prior years.

NET INCOME
Net income for the first nine months of fiscal 1995 was $10,449,000, an
increase of $4,572,000 as compared to the same period in fiscal 1994. Fully
diluted earnings per share for the first nine months of fiscal 1995 and fiscal
1994 were $0.51 and $0.30, respectively. The fully diluted average number of
common and common equivalent shares outstanding for the first nine months of
fiscal 1995 was 20,307,000, an increase of 556,000 (3%) as compared to the same
period in fiscal 1994.

FISCAL YEAR ENDED MAY 31, 1994 COMPARED TO FISCAL YEAR ENDED MAY 31, 1993

REVENUE
Total revenue for fiscal 1994 was $204,006,000, a decrease of $550,000
(less than 1%) from revenue of $204,556,000 for fiscal 1993. The reduction was
due principally to two factors. First, the decision to exit the Communication
Services business caused a decline in revenue of $3,733,000 from the prior
fiscal year. Second, the Integrated Payment Systems business continued to be
impacted by the shift from voice to electronic authorization, as well as
declining price trends on existing and new transactions in the indirect payment
services business, resulting in a decline in revenue of $1,366,000. These
decreases were offset by an increase of $6,737,000 in revenue from the Health
Care Applications Systems and Services business principally due to increased
electronic claims transaction volume.

HEALTH CARE APPLICATIONS SYSTEMS AND SERVICES. Revenue for fiscal 1994 was
$63,005,000, an increase of $6,737,000 (12%) from revenue of $56,268,000 for
fiscal 1993.

Electronic claims processing revenue increased $9,663,000 (50%) in fiscal
1994 as compared to fiscal 1993. This increase was the result of an increase in
claims processed for the current customer base and new customers added during
fiscal 1994. Pharmacy/dental practice management systems revenue decreased
$1,970,000 (7%) in fiscal 1994. This decrease was primarily the result of
decreased sales of the microcomputer-based pharmacy and dental practice
management systems (DataStat(R)), which was affected by the Company's
introduction of a new dental product. This decrease was offset by an increase in
recurring maintenance revenue associated with the growing installed systems
base. Revenue from sales to government and institutional customers decreased
$956,000 (10%), primarily as a result of decreased turnkey systems sales to
institutional customers and reductions in U.S. Department of Defense spending.

INTEGRATED PAYMENT SYSTEMS. Revenue for fiscal 1994 was $112,427,000, a
decrease of $1,366,000 (1%) from revenue of $113,793,000 for fiscal 1993, with
the decline occurring principally in the indirect side of the payment services
business. The indirect business represented approximately 45% of total
Integrated Payment Systems revenues for fiscal 1994.

13
<PAGE> 15

Direct merchant processing revenue increased $2,387,000 (4%) in fiscal 1994
as compared to fiscal 1993. Transaction volumes processed increased by 4% and
terminal sales and fees increased as well, primarily as a result of a sales
expansion program.

Indirect payment services (distribution through banking institutions)
revenue decreased $3,753,000 (7%) in fiscal 1994 as compared to fiscal 1993.
Voice authorization revenue decreased $561,000 (6%) and electronic authorization
and data capture revenue decreased $3,192,000 (7%). The decrease in voice
authorization revenue was attributable to a continued shift of business to
electronic authorization due to lower prices to the merchant and industry
mandates. Voice authorization processing volume declined approximately 10% in
the period and represented approximately 8% of total Integrated Payment Systems
revenue. The decrease in electronic authorization and data capture revenue was
primarily the result of price reductions of approximately 7%. The number of
electronic authorization and data capture transactions processed increased
modestly in fiscal 1994.

GOVERNMENT AND CORPORATE INFORMATION SYSTEMS AND SERVICES. Revenue for
fiscal 1994 was $20,565,000, a decrease of $984,000 (5%) from revenue of
$21,549,000 for fiscal 1993. Reduced demand for cash management services was
caused largely by a trend toward movement of these services to in-house,
microcomputer-based systems. The reductions were partially offset by the
emerging electronic tax filing/payment systems and applications for electronic
data interchange.

COSTS AND EXPENSES
Total cost of service was $117,208,000 for fiscal 1994, representing a
decrease of $5,329,000 (4%) from fiscal 1993. This decrease was largely the
result of a reduction in cost of operations of $2,662,000 (3%), consisting
principally of payroll and telecommunications cost reductions. Hardware costs
decreased $1,251,000 (11%), directly related to volume associated with reduced
sales of health care practice management systems. Depreciation expense decreased
$1,411,000 (9%).

Gross margin increased to 43% in fiscal 1994 from 40% in fiscal 1993.

Sales, general and administrative expense was $68,411,000 for fiscal 1994,
representing an increase of $1,413,000 (2%) from fiscal 1993. This increase was
primarily due to sales expansion programs in the Integrated Payment Systems and
the Health Care Applications Systems and Services areas.

The Company reported a charge relating to the settlement of shareholder
litigation of $2,500,000 in fiscal 1994, representing the settlement cost of a
lawsuit originally filed in 1990.

INTEREST AND OTHER INCOME
Interest and other income for fiscal 1994 was $1,489,000, a decrease of
$1,043,000 (41%) below the fiscal 1993 amount of $2,532,000. This decrease was
principally a result of a decrease in interest income as a consequence of the
Company's sale of its pharmacy and dental systems lease portfolio in fiscal
1993.

INTEREST AND OTHER EXPENSE
Interest and other expense for fiscal 1994 was $2,517,000, a decrease of
$400,000 (14%) from fiscal 1993 interest expense of $2,917,000. This decrease
was largely attributable to lower borrowings on the Company's line of credit, a
decrease in interest rates and a decrease in the imputed interest rate
associated with earn-out liabilities relating to the Company's purchase of
several merchant processing businesses.

INCOME TAXES
The provision for income taxes, as a percentage of taxable income, was 35%
and 42% for fiscal years 1994 and 1993, respectively. The decreased rate in
fiscal 1994 was primarily due to research and development tax credits.

14
<PAGE> 16

NET INCOME
Net income for fiscal 1994 was $9,710,000, an increase of $1,221,000 (14%),
as compared to fiscal 1993 net income of $8,489,000. Fully diluted earnings per
share for fiscal 1994 were $0.50, an increase of $0.05 (10%) from the prior
year. The fully diluted average number of common and common equivalent shares
outstanding for fiscal 1994 was 19,480,500, an increase of 679,500 (4%) as
compared to fiscal 1993.

FISCAL YEAR ENDED MAY 31, 1993 COMPARED TO FISCAL YEAR ENDED MAY 31, 1992

REVENUE
Total revenue for fiscal 1993 was $204,556,000, a decrease of $11,930,000
(6%) from revenue of $216,486,000 for fiscal 1992. The reduction was due
principally to two factors. First, the decision to exit the Communication
Services business caused a decline in revenue of $7,593,000. Second, the
Integrated Payment Systems business was impacted by the shift from voice to
electronic authorization, as well as price trends on new transactions in the
indirect business, resulting in a decline in revenue of $7,981,000. These
decreases were offset by an increase of $8,533,000 in the Health Care
Applications Systems and Services business principally due to increased
electronic claims transaction volume.

HEALTH CARE APPLICATION SYSTEMS AND SERVICES. Revenue for fiscal 1993 was
$56,268,000, an increase of $8,533,000 (18%) from revenue of $47,735,000 for
fiscal 1992. Electronic claims processing revenue increased $5,173,000 (36%).
This increase was the result of a 48% increase in claims processed for the
current customer base and customers added in fiscal 1993. Pharmacy/dental
practice management systems revenue increased $3,442,000 (14%) in fiscal 1993.
This increase was primarily the result of increased sales of the DataStat(R)
systems and an increase in recurring maintenance revenue associated with the
growing installed systems base. Revenue from sales to government and
institutional customers decreased $82,000 (1%), primarily as a result of
decreased turnkey systems sales to institutional customers and overall
reductions in U.S. Department of Defense spending.

INTEGRATED PAYMENT SYSTEMS. Revenue for fiscal 1993 was $113,793,000, a
decrease of $7,981,000 (7%) from revenue of $121,774,000 for fiscal 1992, with
the decline occurring principally in the indirect payment services side of the
business. The indirect business represented approximately 50% of total
Integrated Payment Systems revenues for fiscal 1993.

Direct merchant processing revenue decreased $2,007,000 (3%) in fiscal 1993
as compared to fiscal 1992, although transaction volumes processed increased by
12% and terminal sales and fees increased as well. Increased transaction volume
had a favorable revenue impact of $5,104,000, primarily as a result of improved
sales productivity. Terminal sales and other fees increased $440,000. These
increases were offset by a reduction in the prices charged to merchants of
$7,550,000, or approximately 15%, reflecting the shift from paper to
electronic-based processing.

Indirect payment services revenue decreased $5,974,000 (10%) in fiscal 1993
as compared to fiscal 1992. Voice authorization revenue decreased $2,608,000
(21%) and electronic authorization and data capture revenue decreased $3,367,000
(7%). The decrease in voice authorization revenue was attributable to the
continued shift of business to electronic authorizations due to lower prices to
the merchant and industry mandates. Voice authorization processing volume
declined approximately 20% between the two years and represented approximately
9% of total Integrated Payment Systems revenue for fiscal 1993. The decrease in
electronic authorization and data capture revenue was primarily the result of
price reductions of 10%. The number of electronic authorization and data capture
transactions processed were essentially the same in both years.

GOVERNMENT AND CORPORATE INFORMATION SYSTEMS AND SERVICES. Revenue for
fiscal 1993 was $21,549,000, a decrease of $3,218,000 (13%) from revenue of
$24,767,000 for fiscal 1993. Reduced demand for cash management services in a
period of low interest rates and a trend toward movement of these services to
in-house microcomputer-based systems were largely responsible for these
reductions.

15
<PAGE> 17

OTHER. Revenue for fiscal 1993 was $12,946,000, a decrease of $9,264,000
(42%) from revenue of $22,210,000 for fiscal 1992. This decrease was the result
of the Company's decision to exit the Communication Services market in fiscal
1991. Weak economies in Europe and Japan and the same cash management demand
trends noted above were the primary causes of a revenue decline in the
international business.

COSTS AND EXPENSES
Total cost of service was $122,537,000 for fiscal 1993, representing a
decrease of $8,032,000 (6%) from fiscal 1992. This decrease was primarily the
result of a reduction in the cost of operations of $11,100,000 (10%), consisting
principally of payroll and telecommunications cost reductions. Hardware costs
increased $2,700,000 (32%) as a result of the increased volume of sales of
health care practice management systems and retail point-of-sale terminal
devices. Depreciation expense was essentially flat at approximately $16,000,000
in both years.

Gross margin realized for each year was 40%.

Sales, general and administrative expense was $66,998,000 for fiscal 1993,
representing a decrease of $4,244,000 (6%) from fiscal 1992. The decrease was
the result of cost containment programs focused on elimination of redundancy and
non-essential activities which were initiated in the second quarter of fiscal
1993. As a percentage of revenue, sales, general and administrative expense for
fiscal 1993 and 1992 was 33% in both years.

INTEREST AND OTHER INCOME
Interest and other income for fiscal 1993 was relatively unchanged at
$2,532,000 as compared to the fiscal 1992 amount of $2,512,000.

INTEREST AND OTHER EXPENSE
Interest and other expense for fiscal 1993 was $2,917,000, a decrease of
$1,479,000 (34%) from fiscal 1992 interest expense of $4,396,000. This decrease
was largely attributable to lower borrowings on the Company's line of credit, a
decrease in interest rates and a decrease in the imputed interest expense
associated with earn-out liabilities relating to the Company's purchase of
several merchant processing businesses.

INCOME TAXES
The provision for income taxes, as a percentage of taxable income, was 42%
for fiscal 1993 and 1992.

NET INCOME
Net income for fiscal 1993 was $8,489,000, an increase of $1,070,000 (14%)
as compared to fiscal 1992 net income of $7,419,000. Fully diluted earnings per
share for fiscal 1993 were $0.45, an increase of $0.04 (10%) from fiscal 1992.
The fully diluted average number of common and common equivalent shares
outstanding for fiscal 1993 was 18,801,000, an increase of 757,500 (4%) as
compared to fiscal 1992.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities increased 35% to $32,109,000 for
the first nine months of fiscal 1995, from $23,738,000 for the same period in
fiscal 1994. This increase was primarily related to increased earnings. The
significant cash flows generated from operating activities are reinvested by the
Company in existing businesses and are used to fund acquisitions.

For the first nine months of fiscal 1995, cash used in investing activities
increased to $42,515,000 compared to $8,526,000 in the same period of fiscal
1994. During the first nine months of fiscal 1995, the Company completed five
acquisitions for an aggregate cash purchase price of approximately $44 million.

16
<PAGE> 18

In addition, $2,000,000, previously escrowed, was refunded to the Company in the
second quarter of fiscal 1995.

Net cash used in financing activities increased 26% to $6,396,000 for the
first nine months of fiscal 1995 from $5,090,000 in the prior year period,
primarily as a result of an increase in principal payments on capital lease
agreements of $405,000 and a decrease in the net proceeds from the issuance of
stock under the Company's employee stock purchase plan of $590,000. Dividends of
approximately $4,207,000 and $4,116,000 were paid in the first nine months of
fiscal 1995 and 1994, respectively.

The Company has a $15,000,000 working capital line of credit which expires
in August 1995, and which management expects to be extended on substantially the
same terms. The Company also has a $40,000,000 acquisition line of credit which
expires in August 1996. As of May 15, 1995, there were no amounts outstanding
under either line of credit. The Company believes the net proceeds of this
offering together with funds generated from operations and borrowings available
under its lines of credit will be adequate to meet normal business operating
needs, including possible acquisitions.

17
<PAGE> 19

BUSINESS

INDUSTRY BACKGROUND

Advances in computer software, telecommunications and microprocessor
technology have aided the development of on-line, real-time information
processing systems that capture and transmit electronically high volumes of
information. These technology advances allow information processors to offer
greater convenience to purchasers and providers of goods and services and reduce
processing costs, settlement delays and losses from fraudulent transactions.
While the transition from paper-based to electronic information processing
continues, the earliest and most significant penetration of electronic
information processing has occurred in the areas of credit card authorization
and settlement and pharmacy transaction processing. The Company believes that
the rapid transition to electronic transaction processing in these markets
demonstrates the potential for automation of other markets still dominated by
paper-based processing, such as additional health care applications and the
transfer of information between businesses.

HEALTH CARE MARKET

The health care sector of the market for information systems is growing
rapidly due to the need of employers and health care payors and providers to
control costs and to improve quality of care. A high percentage of health care
claims are still processed using manually processed paper-based systems. Third
party payors and health care providers continue to seek methods to automate
processing in order to reduce costs and improve the delivery of health care
services. The Company believes the health care industry is one of the largest
potential markets for electronic information processing services, including the
electronic transmission and capture of data for on-line eligibility verification
and settlement of insurance claims. The application of technology to improve the
flow of information to address patient care quality is expanding as well.

Since the late 1980s, electronic processing technology has been applied to
the transmission and capture of data for pharmacy claims and transaction
processing. During 1994, approximately 80% of prescription claims were submitted
electronically or by magnetic tape. This technology is being adapted to the
processing of other health care data, including insurance claims for dentists,
physicians and hospitals. As of December 31, 1994, there were approximately
150,000 dentists, 600,000 physicians and 6,500 hospitals in the United States,
which represented the largest and least automated segment of the health care
industry in terms of claims submitted, with only a small percentage of
transactions processed electronically in real-time. Many physicians and
hospitals have computer systems and therefore possess the basic capability to
transmit claims electronically once standardized processing protocols are
established and installed.

The Company believes that the ability to offer total solutions, including
practice management systems as well as information processing services, to both
payors and providers in the health care markets will be an important competitive
factor as automated claims processing and the availability of information in
this service area continues to grow. As electronic processing of health care
claims accelerates, the Company believes it will be important for companies to
be able to offer integrated, value-added systems and services to industry
participants who shift to automation of claims processing.

PAYMENT SYSTEMS MARKET

Electronic transaction processing for the payment systems market involves
transaction authorization, data capture and settlement for credit and debit
cards, check verification and guarantee services and financial electronic data
interchange. Most retail credit card transactions are no longer processed
through paper-based systems and are instead electronically authorized, with an
increasing number electronically settled as well. According to industry sources,
during 1994 the number of outstanding VISA and MasterCard sponsored credit and
debit cards in the United States increased 20% to 341 million, the

18
<PAGE> 20

volume of VISA and MasterCard credit and debit card sales increased 26% to $463
billion and the number of VISA and MasterCard purchase transactions increased
22% to 5.3 billion. The Company believes that the number of transactions will
continue to grow and that an increasing percentage of these transactions will be
processed electronically due to convenience, efficiency and a desire to reduce
fraud and other processing costs.

The Company believes that there are significant opportunities for continued
growth in the application of electronic transaction processing services to the
payment systems market. Utilization of debit cards as a general payment
mechanism for goods and services continues to increase, principally in the
supermarket, travel and leisure, and gasoline industries. There is also
significant potential for growth in the use of credit and debit cards in other
traditional cash payment markets, such as fast-food restaurants, gaming
establishments, cinemas and convenience stores. The increased use of credit and
debit cards for such transactions is primarily driven by the convenience they
provide as well as the ability to efficiently track expenses and purchase
activity. In addition, the Company believes the proliferation of affinity or co-
branded cards that provide consumers with added benefits, such as discounts on
gasoline or airline tickets, should contribute to increased use of credit and
debit cards and the growth of the payment systems market.

VISA and MasterCard, as well as other independent service providers such as
the Company, provide high volume electronic transaction processing services
directly to merchants and other customers as well as indirectly through banking
institutions. The direct electronic transaction processing business has shown
increasing growth recently as the result of a consolidation of the industry
toward independent providers and away from traditional providers. The Company
believes this shift is due in large part to more efficient distribution channels
as well as the increased technological capabilities required for the rapid and
efficient creation, processing, handling, storage and retrieval of information.
These technological capabilities have become increasingly complex, requiring
significant capital commitments to develop, maintain and update the systems
necessary to provide these technologically advanced services at a competitive
price. As a result, several large merchant processors including the Company have
expanded their operations with acquisitions of new merchant accounts from banks
who previously serviced those accounts. In addition, many small information
processing organizations are consolidating with larger service providers.

In addition to services that enable merchants to accept credit and debit
cards, the payment systems market continues to expand to include increasing
levels of check verification and guarantee services. Demand for these services
has been growing in recent years as merchants seek to reduce losses related to
bad checks and use check acceptance to increase sales. Although credit cards are
rapidly growing as a method of payment, in 1994 checks were used in
approximately 20% of all consumer purchases, representing 35% of the aggregate
value of such purchases.

BUSINESS STRATEGY

The Company's business strategy is to be a total solution provider of
value-added information processing services and application systems in the
markets it serves. NDC believes that both the health care and the integrated
payment systems markets present attractive opportunities for continued growth.
In pursuing its business strategy, the Company seeks both to increase its
penetration of existing information processing and application systems markets
and to continue to identify and create new markets through the:

- development of value-added applications, enhancement of existing products
and development of new systems and services;

- acquisition of, or alliance with, companies that have desirable products
and/or distribution capabilities; and

- extension of the terms and commitments of existing customer contracts.

19
<PAGE> 21

The resources required to effectively compete in the Company's markets
include an extensive computer and telecommunications network, a skilled customer
support, operations and systems development staff, and sophisticated software
systems. Management believes that the substantial investment required for the
development of technologically advanced automated processing systems,
accompanied by demand for enhanced service at reduced costs, will continue to
cause many small and regional operators to leave the business or sell to larger
competitors, resulting in industry consolidation. As a result, the Company
believes that there is opportunity for increased market penetration for its
services as well as the addition of new markets through acquisitions and
alliances.

To support its business strategy, NDC has focused on acquisition
opportunities and alliances with other companies that allow it to increase its
market penetration, technological capabilities, product offerings and
distribution capabilities. Since the beginning of fiscal 1995, the Company has
completed six acquisitions with an aggregate cash purchase price of
approximately $46 million. These acquisitions give NDC expanded capabilities and
customer bases in physician and dental practice management, pharmacy practice
management, hospital and medical claims processing and check guarantee. Although
the Company has recently entered into non-binding letters of intent with respect
to two possible acquisitions, the Company currently has no other agreements,
arrangements or understandings with respect to any particular acquisition, and
there can be no assurance that these two acquisitions or any other acquisition
will be completed.

PRODUCTS AND SERVICES

The following diagram depicts NDC's application systems and transaction
processing network:

(CHART)

HEALTH CARE APPLICATION SYSTEMS AND SERVICES

The Company is a leading provider of a full range of products and services
that address health care cost containment and improved patient care issues. The
Company's products include electronic claims processing, adjudication and
payment systems, funding capabilities, practice management systems and clinical
data base information for pharmacies, dentists, physicians, hospitals, HMO's,
clinics and nursing homes. Revenue for Health Care Application Systems and
Services products and services consists of

20
<PAGE> 22

transaction processing fees and recurring monthly maintenance and support fees,
software license revenue and proceeds from the sale of practice management
systems as well as upgrade charges for additional applications. Fees for
electronic claims processing services are based on a per transaction rate, with
the rate varying depending upon the volume and scope of services provided.
Approximately 31% and 33%, respectively, of the Company's revenue in fiscal 1994
and the first nine months of fiscal 1995 was derived from Health Care
Application Systems and Services, which represent the fastest growing portion of
the Company's business.

ELECTRONIC PROCESSING SERVICE
The Company's electronic processing services are offered to pharmacies,
dentists, hospitals, HMO's and preferred provider organizations. These services
include eligibility verification, patient-specific benefit coverage, claims data
capture and editing, claim adjudication and retrospective and prospective drug
utilization review. The Company's network includes approximately 60,000 health
care provider locations. Electronic processing for health care transactions
represents the Company's fastest growing service. The Company recently expanded
its presence in the health care claims processing market with two acquisitions,
one of a company specializing in hospital claims processing and another of a
product relating to claims clearing and processing systems for physicians'
offices.

PRACTICE MANAGEMENT SYSTEMS
The Company's practice management systems are designed to provide the
health care market with applications solutions that improve the efficiency of
operations, address cost containment concerns and enhance overall quality of
patient care. In addition, NDC's practice management systems are offered with
the Company's claims processing services, credit and debit card processing
capabilities and other associated functions such as inventory reporting and
ordering.

PHARMACY MANAGEMENT SYSTEMS. The Company's pharmacy practice management
systems, including its DataStat(R) systems, provide solutions for independent
and chain pharmacies, hospitals, HMO's, clinics and nursing homes. These systems
enable pharmacists to manage and perform patient registration, drug
record-keeping, private and third-party billing, inventory control and ordering,
price updates, management reporting and drug database updates to detect
potential clinical dispensing and prescribing problems. In addition, the
Company's systems provide value-added claims processing services. The Company's
systems are sold and maintained by the Company and can be tailored to the needs
of users utilizing micro- and mini-computer platforms. In fiscal 1994, the
Company expanded its offering of pharmacy management systems with the
acquisition of a Canadian-based company that focuses on providing systems to
pharmacy chains in the U.S. and Canada.

DENTAL MANAGEMENT SYSTEMS. The Company's dental management systems are
designed to provide dentists with patient record accounting, patient scheduling
and recall, billing and collection, insurance claims information and electronic
processing to improve the efficiency of office management. The Company expanded
its dental management product line in fiscal 1994 with the introduction of the
NDC Dental System, which incorporates advanced clinical functionality with
customary business automation functions.

PHYSICIAN MANAGEMENT SYSTEM. The Company's physician management system is
designed to provide physicians with patient scheduling, billing and collection,
patient record accounting, insurance claims information and electronic
processing designed to improve the efficiency of office management. The Company
entered the physician practice management systems market in fiscal 1995 through
the acquisition of one of the leading providers of automated systems to this
market, with approximately 7,000 users of the acquired company's products.

21
<PAGE> 23

INTEGRATED PAYMENT SYSTEMS

The Company's Integrated Payment Systems products provide a wide range of
transaction processing alternatives to the retail, hospitality, health care and
government markets. The Company offers merchant credit and debit card
processing, check verification and guarantee and other services directly to
merchants and, with the exception of check guarantee, indirectly through banking
institutions. Approximately 55% and 57% of the Company's revenue for fiscal 1994
and the first nine months of fiscal 1995, respectively, was derived from these
services.

MERCHANT PROCESSING SERVICES
NDC is one of the leading merchant processing companies in the nation,
serving approximately 350,000 merchant locations. NDC's merchant processing
services include credit and debit card authorization, data capture and product
and customer support functions, primarily for VISA and MasterCard bank cards.
For merchants with a direct processing relationship, the Company also performs
the financial settlement between the merchant and the card associations,
reconciliation of the financial settlement and resolution of disputes between
the Company's merchants and cardholders. Fees for the Company's merchant
processing services are principally based on the dollar volume of transactions
processed directly for merchants and a per transaction rate for transactions
processed for banks on behalf of merchants.

The Company provides credit and debit authorization services utilizing
point-of-sale terminals, electronic cash registers and proprietary personal
computer applications. These systems provide merchants with a comprehensive,
nationwide authorization network for credit cards, debit cards and checks. The
Company also provides electronic data capture (EDC) systems that incorporate the
capabilities of its electronic point-of-sale authorization system, combined with
enhanced software, to enable the Company to electronically capture the entire
transaction and transmit the necessary value-added information directly to the
Company's central computer system for faster clearing through the banking
system. These systems allow the merchant quicker access to its funds and avoid
the necessity and cost of physically processing paper charge slips. Customized
value-added applications for specialty retailers, restaurants, hotels and oil
companies are marketed by the Company.

CHECK VERIFICATION AND GUARANTEE SERVICES
The Company offers merchants a nationwide check verification service which
verifies that the individual presenting a check at the point-of-sale does not
have a history of writing uncollectible checks. In fiscal 1995, the Company
expanded its payment system services to include check guarantee services through
the acquisition of two check guarantee businesses. Check guarantee differs from
check verification in that the Company not only verifies the transaction but
also guarantees payment. If a check is not paid, the Company assumes the right
to collect from the individual writing the check. Fees for the Company's check
verification services are based on a per transaction rate, while fees for its
check guarantee services are based on a percentage, or discount, of the face
value of each check guaranteed by the Company.

OTHER PAYMENT AND RELATED SERVICES
During fiscal 1994, the Company introduced a purchase card service. This
service is aimed at high volume corporate or government purchases of low dollar
value items. The product is credit card-based and is intended to significantly
reduce the cost of making such small purchases, while at the same time making
available to the purchasing department needed controls and management
information relating to its purchases. The Company also offers tax products that
provide for the electronic filing and payment of corporate taxes. The Company
initiates the electronic funds transfer process for payment of the taxes due,
while delivering the information summary to the appropriate government agency.

22
<PAGE> 24

GOVERNMENT AND CORPORATE INFORMATION SYSTEMS AND SERVICES

NDC's Government and Corporate Information Systems and Services include
cash management, information reporting and electronic data interchange (EDI).
The services provide financial, management and operational data to corporate and
government institutions worldwide. Corporate and government organizations use
these services to collect, consolidate and report financial, administrative and
operating data from more than 230,000 locations. Approximately 10% and 8% of the
Company's revenue for fiscal 1994 and the first nine months of fiscal 1995,
respectively, was derived from these services.

SALES AND MARKETING

The Company's electronic transaction processing services are offered to the
health care markets directly through Company personnel and through alliances.
The Company's pharmacy and dental practice management systems are marketed
primarily through the Company's personnel but also jointly through alliances.
The Company offers its physician practice management system through value-added
resellers and by direct marketing. The Company markets its Integrated Payment
Systems products and services through its own sales personnel and also through
independent contractors, bank alliance programs and traditional third-party
processing for banks.

OPERATIONS AND SYSTEMS

The Company's primary computer systems are housed in two adjacent data
centers in Atlanta with key systems and data redundant across the two centers.
The Company also operates a data center in southern California. Each data center
has full access security, fire and smoke protection, and backup electrical
power. All key communications feeds are redundant with links from separate
central offices as well as microwave backup systems. Other processing
capabilities are located in Dallas, Toronto and the United Kingdom.

Because of the large number and variety of NDC's products and services, the
Company does not rely on a single technology to satisfy its sophisticated
computer systems needs but instead employs the best available technology that is
suitable for each particular task. Given this approach, NDC utilizes (i) the
latest Unisys mainframe class systems and the OS/2200 operating system for large
scale transaction and batch data base processing; (ii) Tandem fault-tolerant
computers and the Guardian operating system for high volume, fast response
transaction processing; (iii) client-server technology for end-user data base
applications; and (iv) UNIX and Windows(TM) based systems for focused
communication applications systems. All of these systems are linked via high
speed, fiber optic-based networked backbones for file exchange and inter-system
communication purposes. NDC also maintains storage systems connected to the
backbones, including a robotic tape library and optical storage for archival
storage purposes. All of the Company's systems are supported by a systems
support, operations and production control staff with an advanced network
control center.

The Unisys systems employed by NDC are the latest 2200/500 series. These
systems combine the latest cost effective hardware with the transaction
processing functionality of the OS/2200 series operating system. NDC has its
Unisys back-end systems cross barred into Unisys's unique fault-tolerant Record
Lock Processor which coordinates all disk access and operations to permit a
triple processor system configuration to appear and act as a single system.
Processors and systems may be brought on and off-line without customer impact
for capacity requirements and redundancy.

The Unisys back-end systems are front-ended by dual Tandem Computers
Himalayan K10000 5 processor systems. Each of these systems represents Tandem's
latest RISC-based technology, allowing incremental, cost-effective transaction
processing and switching capacity. NDC intends during fiscal 1996 to upgrade to
Tandem's recently announced K20000 technology to keep pace with growing capacity
needs.

The Company's communications network family is made up of several networks,
each for a different customer purpose. NDC maintains three primary networks: a
high speed, short transaction network called

23
<PAGE> 25

FASTNET; a private line nationwide high bandwidth backbone network; and a
dial-up voice/data network for interactive and voice traffic. The Company also
maintains a number of support services offering satellite, wireless, INTERNET
and ISDN/DOV connectivity.

COMPETITION

The markets for the applications systems and services offered by the
Company are highly competitive. The Company has a number of actual and potential
competitors as to all of the systems and services that it offers. Many of the
Company's services compete directly with computer manufacturers that encourage
businesses to purchase or lease the manufacturers' computers and establish
in-house systems. In addition to this competition, the Company believes that
there are several companies that have the capability to offer some of the
Company's services in competition with the Company, certain of which are
substantially larger than the Company. The Company believes that its ability to
offer integrated solutions to its customers, including hardware, software,
processing and network facilities, is a positive factor pertaining to the
competitive position of the Company. The Company recognizes, however, that its
industry segment is increasingly competitive. The key competitive factors for
the Company are functionality of products, quality of service and price.

RESEARCH AND DEVELOPMENT

The Company has a research and development staff of approximately 265
persons. During fiscal 1992, 1993, 1994 and the first nine months of fiscal
1995, the Company spent approximately $7.5 million, $10.0 million, $9.5 million
and $9.6 million, respectively, on activities relating to the development,
improvement and maintenance of new and existing products, services and
techniques.

24
<PAGE> 26

MANAGEMENT

Set forth below is the name, age, position with the Company, present
principal occupation or employment and five-year employment history of each of
the directors and executive officers of the Company.

<TABLE>
<CAPTION>
NAME BUSINESS EXPERIENCE AGE
---- ------------------- ---
<S> <C> <C>
DIRECTORS
Robert A. Yellowlees Chairman of the Board of the Company since June 1992; 56
President, Chief Executive Officer and Chief Operating
Officer of the Company since May 1992; Chairman of the
Board of Spectrum Research Group, consultants on
management of technology; director of John H. Harland
Co. Mr. Yellowlees has been a director of the Company
since April 1985.

Edward L. Barlow General Partner, Whitcom Partners, an investment 60
partnership, for more than five years. Mr. Barlow has
been a director of the Company since January 1969.

James B. Edwards President of the Medical University of South Carolina 67
since November 1982; director of The Harry Frank
Guggenheim Foundation, Phillips Petroleum Company, The
William Benton Foundation, Encyclopedia Britannica,
Inc., SCANA Corporation, IMO Industries, Inc., WMX
Technologies, Inc. and Norfolk-Southern Corporation
Advisory Board. Dr. Edwards has been a director of the
Company since January 1989.

Don W. Sands Member of the Board of Governors of the Georgia World 68
Congress Center since 1985; Chief Executive Officer
Emeritus and Counselor to the Board of Directors of Gold
Kist, Inc. since November 1991; President, Chief
Executive Officer and Chairman of the Management
Committee of Gold Kist Inc. from July 1988 through
October 1991; director of Golden Poultry Co. Mr. Sands
has been a director of the Company since September 1989.

Neil Williams Managing Partner of Alston & Bird since 1985, attorneys 59
and counsel for the Company. Mr. Williams has been a
director of the Company since April 1977.

EXECUTIVE OFFICERS
Jerry W. Braxton Chief Financial Officer of the Company since January 1992; 48
Vice President -- Treasurer and Vice
President -- Controller of Contel Corporation from 1976
through 1991.

Richard S. Cohan General Manager, Health Care Information Network, of the 42
Company since April 1995; Senior Vice President, Health
Care Business Development from December 1993 through
March 1995; Senior Vice President of the Health Care
Application Systems and Services unit of the Company
from September 1992 to November 1993; Group Vice
President and General Manager of the Health Care
Institutional Services unit of the Company from December
1987 through August 1992.

Donald B. Graham Senior Vice President, Operations, of the Company since 54
January 1994; President and Chief Executive Officer of
Information Systems of America from February 1988 until
July 1993.
</TABLE>

25
<PAGE> 27

<TABLE>
<CAPTION>
NAME BUSINESS EXPERIENCE AGE
-------------------------------------------------------------------------------------- ---
<S> <C> <C>
James R. Henderson General Manager, Pharmacy and Dental Application Systems, 49
of the Company since April 1995; Executive Vice
President, Health Care Application Systems and Services
from December 1993 through March 1995; Executive Vice
President, Product Line Management from September 1992
through November 1993; Executive Vice President of
Worldwide Sales, Marketing and Operations for Quality
Micro Systems, Inc. from 1988 until 1991.

Donald L. Howard Vice President -- Human Resources of the Company since 56
February 1980.

E. Michael Ingram General Counsel and Secretary of the Company since January 43
1985.

J. David Lyons General Manager, Payment Services, of the Company since 56
April 1995; Executive Vice President, Marketing & Sales
of the Company from July 1993 through March 1995; Senior
Vice President of Sales and Marketing of Syncordia from
September 1990 to March 1993; Vice President and General
Manager of International Sales and Service for Data
General Corporation from 1988 to 1990.

Kevin C. Shea General Manager, Integrated Payment Systems, of the 44
Company since April 1995; Executive Vice President,
Integrated Payment Systems from September 1992 through
March 1995; Executive Vice President, National Data
Payment Systems, Inc. ("NDPS") from December 1990
through August 1992; Group Vice President, NDPS from
June 1988 through November 1990.

M.P. Stevenson, Jr. Vice President and Controller of the Company since 40
September 1992; Division Controller, NDPS from March
1992 to August 1992; Director, Internal Audit from March
1986 to February 1992.
</TABLE>

26
<PAGE> 28

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 30,000,000 shares
of Common Stock, par value $.125 per share, and 1,000,000 shares of Preferred
Stock, par value $1.00 per share. The following description of the capital stock
is qualified in all respects by reference to the Restated Certificate of
Incorporation, as amended, and Bylaws, as amended, of the Company, copies of
which are on file at the Company's principal executive offices.

COMMON STOCK

The holders of Common Stock, subject to such rights as may be granted to
the holders of Preferred Stock, elect all directors and are entitled to one vote
per share. All shares of Common Stock participate equally in dividends when, as
and if declared by the Board of Directors and share ratably, subject to the
rights and preferences of any Preferred Stock, in net assets on liquidation. The
shares of Common Stock outstanding prior to this offering are, and the shares to
be outstanding upon completion of this offering will be, duly authorized,
validly issued, fully paid and nonassessable. The shares of Common Stock have no
preference, conversion, exchange, preemptive or cumulative voting rights.

STOCK PURCHASE RIGHTS

Pursuant to a Rights Agreement dated as of January 18, 1991, each share of
Common Stock is issued one right (a "Right") which entitles the registered
holder to purchase from the Company one one-hundredth of a share (a "Unit") of
Series A Junior Participating Preferred Stock, par value $1.00 per share (the
"Junior Preferred Stock"), at a purchase price of $45.00 per Unit, subject to
adjustment. Until the Distribution Date the Rights are unexercisable and attach
to and transfer with the Common Stock certificates. The Distribution Date will
occur upon the earlier of an announcement of the acquisition by a third party of
15% or more of the Common Stock, or the commencement of a tender offer for 15%
or more of the Common Stock.

The Rights may have certain anti-takeover effects because the rights will
cause substantial dilution to a person or group that attempts to acquire the
Company on terms not approved by the Board of Directors of the Company unless
the offer is conditioned on a substantial number of Rights being acquired.
However, the Rights should not interfere with any merger or other business
combination approved by a majority of the directors since the Rights may be
redeemed by the Company at $.01 per Right at any time on or prior to a stock
acquisition. Thus, the Rights are intended to encourage persons who may seek to
acquire control of the company to initiate such an acquisition through
negotiations with the Board of Directors. However, the effect of the Rights may
be to discourage a third party from making a partial tender offer or otherwise
attempting to obtain a substantial equity position in the equity securities of,
or seeking to obtain control of, the Company. To the extent any potential
acquirers are deterred by the Rights, the Rights may have the effect of
preserving incumbent management in the office.

PREFERRED STOCK

The Company is authorized to issue 1,000,000 shares of Preferred Stock, par
value $1.00 per share, none of which is outstanding, although 300,000 shares of
Preferred Stock have been reserved for issuance pursuant to the Rights described
above. Preferred Stock may be issued from time to time by the Board of Directors
of the Company, without stockholder approval, in such series and with such
voting powers, full or limited, and such designations, preferences and relative,
participating, optional or other special rights, qualifications, limitations or
restrictions as may be fixed by the Board of Directors. The issuance of
Preferred Stock by the Board of Directors could adversely affect the rights of
holders of shares of Common Stock since Preferred Stock may be issued having
preference with respect to dividends and in liquidation over the Common Stock,
and have voting rights, contingent or otherwise, that could dilute the voting
rights, net income per share and net book value of the Common Stock. In
addition, while the Board of Directors has no current intention of doing so, the
ability of the Board of Directors to issue shares of Preferred Stock and to set
the voting powers and such designations, preferences and

27
<PAGE> 29

relative, participating, optional or other special rights, qualifications,
limitations or restrictions thereof without further stockholder action could
help to perpetuate incumbent management of the Company or prevent a business
combination involving the Company that is favored by the Company's stockholders.
As of the date of this Prospectus, other than in connection with the Rights
described above, the Board of Directors has not authorized the issuance of any
shares of Preferred Stock, and the Company has no agreements, arrangements or
understandings with respect to the issuance of any shares of Preferred Stock.

REGISTRAR AND TRANSFER AGENT

The Company's registrar and transfer agent is Wachovia Bank of North
Carolina, N.A., Winston-Salem, North Carolina.

28
<PAGE> 30

UNDERWRITING

Subject to the terms and conditions of an underwriting agreement (the
"Underwriting Agreement"), the Company has agreed to sell to each of the
Underwriters named below, and each of such Underwriters, for whom Goldman, Sachs
& Co. and Salomon Brothers Inc are acting as representatives, has severally
agreed to purchase from the Company, the respective number of shares of Common
Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
SHARES
UNDERWRITER OF COMMON STOCK
-------------------------------------------------------------------- ---------------
<S> <C>
Goldman, Sachs & Co. ...............................................
Salomon Brothers Inc................................................

---------------
Total..................................................... 2,750,000
==============
</TABLE>

Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the shares of Common Stock
offered hereby, if any are taken.

The Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus, and in part to certain securities dealers at such
price less a concession of $ per share. The Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per share to certain
brokers and dealers. After the shares of Common Stock are released for sale to
the public, the offering price and other selling terms may from time to time be
varied by the representatives.

The Company has granted the Underwriters an option exercisable for 30 days
after the date of this Prospectus to purchase up to an aggregate of 412,500
additional shares of Common Stock to cover over-allotments, if any. If the
Underwriters exercise their over-allotment option, the Underwriters have
severally agreed, subject to certain conditions, to purchase approximately the
same percentage thereof that the number of shares to be purchased by each of
them, as shown in the foregoing table, bears to the 2,750,000 shares of Common
Stock offered hereby.

The Company, its directors and executive officers have agreed, subject to
limited exceptions, not to offer, sell, contract to sell, pledge or otherwise
dispose of, or, with respect to the Company, file a registration statement under
the Securities Act with respect to, any Common Stock or any securities of the
Company that are substantially similar to the Common Stock, including but not
limited to any securities that are convertible into or exercisable or
exchangeable for, or that represent the right to receive, Common Stock or any
substantially similar securities for a period of 90 days after the date of this
Prospectus without the prior written consent of the representatives of the
Underwriters.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

LEGAL MATTERS

Certain legal matters with respect to the legality of the shares of Common
Stock offered will be passed upon for the Company by Alston & Bird, Atlanta,
Georgia. Certain legal matters in connection with this offering are being passed
upon for the Underwriters by King & Spalding, Atlanta, Georgia.

29
<PAGE> 31

EXPERTS

The consolidated financial statements and schedules of the Company included
in the Company's Annual Report on Form 10-K for the year ended May 31, 1994, as
amended, incorporated in this Prospectus and Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their reports with respect thereto, and are incorporated herein in reliance upon
the authority of said firm as experts in accounting and auditing in giving said
reports. Such Form 10-K should be read in conjunction with Notes 3 and 5 to the
Company's Quarterly Report on Form 10-Q for the quarter ended February 28, 1995
and Item 7 to the Company's Current Report on Form 8-K dated November 17, 1994
for a description and information relating to significant events subsequent to
the filing of the Form 10-K.

The financial statements of Mercantile Systems, Inc. included in the
Company's Current Report on Form 8-K dated November 17, 1994, incorporated in
this Prospectus and Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated herein in reliance upon the authority of said firm
as experts in accounting and auditing in giving said report.

The combined financial statements of Yes Check Services, Inc. and Select
Check, Inc. included in the Company's Current Report on Form 8-K dated November
17, 1994, incorporated in this Prospectus and Registration Statement have been
audited by KPMG Peat Marwick LLP, independent public accountants, as indicated
in their report with respect thereto, and incorporated herein in reliance upon
the authority of said firm as experts in accounting and auditing in giving said
report.

30
<PAGE> 32

---------------------------------------------------------
---------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

---------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information................... 2
Incorporation of Certain Documents by
Reference............................. 2
Prospectus Summary...................... 3
Certain Considerations.................. 6
Use of Proceeds......................... 7
Capitalization.......................... 8
Price Range of Common Stock and
Dividends............................. 9
Selected Financial Data................. 10
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................ 11
Business................................ 18
Management.............................. 25
Description of Capital Stock............ 27
Underwriting............................ 29
Legal Matters........................... 29
Experts................................. 30
</TABLE>

---------------------------------------------------------
---------------------------------------------------------

---------------------------------------------------------
---------------------------------------------------------
2,750,000 SHARES

NATIONAL DATA CORPORATION

COMMON STOCK
(PAR VALUE $.125 PER SHARE)
---------------------

---------------------

(LOGO)

GOLDMAN, SACHS & CO.

SALOMON BROTHERS INC

REPRESENTATIVES OF THE UNDERWRITERS

---------------------------------------------------------
---------------------------------------------------------
<PAGE> 33

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The expenses in connection with the issuance and distribution of the Common
Stock, other than underwriting discounts, are set forth in the following table.
All amounts except the Securities and Exchange Commission registration fee and
the NASD filing fee are estimated.

<TABLE>
<S> <C>
Securities and Exchange Commission registration fee..................... $ 22,492
NASD filing fee......................................................... 7,023
NYSE listing fee........................................................ 11,000
Printing and engraving expenses......................................... 60,000
Accountants' fees and expenses.......................................... 100,000
Legal fees and expenses................................................. 85,000
Blue Sky fees and expenses.............................................. 8,000
Transfer agent and registrar fees....................................... 2,500
Miscellaneous........................................................... 28,985
----------
Total......................................................... $ 325,000
==========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's Bylaws provide for indemnification of directors and officers
of the Company to the full extent permitted by Delaware law.

Section 145 of the General Corporation Law of the State of Delaware
provides generally that a corporation may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at its request in
such capacity in another corporation or business association, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.

In addition, pursuant to the authority of Delaware law, the Restated
Certificate of Incorporation of the Company also eliminates the monetary
liability of directors to the fullest extent permitted by Delaware law.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is
therefore unenforceable.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
------ ----------------------------------------------------------------------
<C> <S> <C>
1* Form of Underwriting Agreement
5* Opinion of Alston & Bird
23.1* Consent of Alston & Bird (included in Exhibit 5 above)
23.2 Consent of Arthur Andersen LLP
23.3* Consent of KPMG Peat Marwick LLP
</TABLE>

---------------

* Previously Filed

II-1
<PAGE> 34

ITEM 17. UNDERTAKINGS.

(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein and the offering of such securities at that time shall be deemed the
initial bona fide offering thereof.

(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

(i) The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-2
<PAGE> 35

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 2 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Atlanta, and State of Georgia, on May
25, 1995.

NATIONAL DATA CORPORATION

By: /s/ E. MICHAEL INGRAM

--------------------------------------

E. Michael Ingram

General Counsel and Secretary

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed below by the following
persons in the capacities indicated on May 25, 1995.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------------------------------------------- ----------------------------------------------
<C> <S>
* Chairman of the Board and Chief Executive
--------------------------------------------- Officer
Robert A. Yellowlees (Principal Executive Officer)

* Chief Financial Officer (Principal Financial
--------------------------------------------- and Accounting Officer)
Jerry W. Braxton

* Director
---------------------------------------------
Edward L. Barlow

* Director
---------------------------------------------
James B. Edwards

* Director
---------------------------------------------
Don W. Sands

* Director
---------------------------------------------
Neil Williams

* /s/ E. MICHAEL INGRAM
---------------------------------------------
E. Michael Ingram
Attorney-In-Fact
</TABLE>

II-3

<PAGE> 1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
by reference in this Registration Statement on Form S-3 of our report dated May
23, 1995 included in National Data Corporation's Annual Report on Form 10-K/A
for the year ended May 31, 1994 and our report dated March 4, 1994 included in
National Data Corporation's Current Report on Form 8-K/A dated May 23, 1995 and
to all references to our firm included in this Registration Statement.

Arthur Andersen LLP

Atlanta, Georgia
May 23, 1995