Financial: NCS Reports Record Results for Second Quarter Fiscal 1998

Edge: Work-Group Computing Report, August 24, 1998

                  NATIONAL COMPUTER SYSTEMS, INC.

                  Consolidated Income Statement

                          July 31, 1998

                           Second Quarter           Six Months

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

                          (in thousands except per share amounts)

                           1998       1997       1998        1997

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

Revenues:

 Information Services   $ 73,497   $ 45,488   $ 122,282   $ 79,352

 Product Sales            41,556     38,857      78,065     72,894

 Maintenance & Support    13,075     11,684      25,696     22,754

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

  Total Revenue          128,128     96,029     226,043    175,000

Costs and Expenses:

 Cost of Information

  Services                50,593     32,152      86,982     57,648

 Cost of Product Sales    17,481     17,804      33,495     33,039

 Cost of Maintenance &

  Support                  8,778      8,006      16,767     15,435

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

Gross Margin              51,276     38,067      88,799     68,878

 Sales & Marketing        16,508     13,688      31,580     26,126

 Research & Development    2,383      1,549       4,716      3,702

 General & Administrative 15,671     10,957      26,828     19,877

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

Income from Operations    16,714     11,873      25,675     19,173

 Interest Expense            215        310         533        635

 Other (Income)/Expense, net 157        (48)        305        179

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

Income from Continuing

 Operations Before Income

  Taxes                   16,342     11,611      24,837     18,359

Provision for Income Taxes 6,600      4,600      10,000      7,300

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

Net Income               $ 9,742    $ 7,011    $ 14,837   $ 11,059

                         =======    =======     =======    =======

Earnings Per Share        $ 0.30     $ 0.22      $ 0.46     $ 0.35

Average Shares Outstanding

 (Diluted)                32,524     31,704      32,416     31,478

                         =======    =======     =======    =======

NATIONAL COMPUTER SYSTEMS, INC.

CONSOLIDATED BALANCE SHEETS

                           July 31, 1998       January 31, 1998

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

                                      (In thousands)

Cash                     $        10,436      $          23,267

Accounts receivable              114,609                101,334

Inventories                       30,314                 16,239

Other current assets               7,120                  6,562

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

 Total Current Assets            162,479                147,402

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

Property, plant & equipment, net  98,331                 94,024

Software products, net            13,062                 14,967

Assessment instruments, net        9,572                 10,317

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

 Intellectual Properties          22,634                 25,284

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

Goodwill, net                     44,442                 45,634

Other assets, net                  6,969                  3,070

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

Total Assets                   $ 334,855               $315,414

                               ==========              =========

Current maturities             $   3,460               $  6,448

Accounts payable                  26,165                 26,767

Accrued expenses                  43,360                 36,237


Deferred income                   35,851                 29,026

Income taxes                       3,773                  4,156

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

 Total Current Liabilities       112,609                102,634

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

Long-term debt                     7,712                 12,396

Deferred income taxes              5,347                  6,390

Stockholders' Equity             209,187                193,994

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

Total Liabilities and

 Stockholders' Equity          $ 334,855               $315,414

                               ==========              =========

(NASDAQ: NLCS) National Computer Systems, Inc. (NCS) reported Wednesday that revenues for the second quarter ended July 31, 1998, grew 33 percent to $128.1 million from last year's $96.0 million. Net income for the first quarter increased 39 percent to a record $9.7 million compared to $7.0 million in the second quarter of fiscal 1997. Diluted earnings per share grew 36 percent to $0.30 per share from $0.22 per share the year earlier.