National Computer Systems Inc – ‘10-K’ for 1/31/95

As of:  Thursday, 4/27/95   ·   For:  1/31/95   ·   Accession #:  69999-95-5   ·   File #:  0-03713

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Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         15±    69K 
 2: EX-10.1     Material Contract                                      7±    29K 
 3: EX-10.2     Material Contract                                      3±    11K 
 4: EX-10.3     Material Contract                                      7±    29K 
 5: EX-11       Statement re: Computation of Earnings Per Share        2±     9K 
 6: EX-13       Annual or Quarterly Report to Security Holders        24±   111K 
 7: EX-21       Subsidiaries of the Registrant                         1      5K 
 8: EX-23       Consent of Experts or Counsel                          1      7K 
 9: EX-24       Power of Attorney                                      1      9K 
10: EX-27       Financial Data Schedule (Pre-XBRL)                     1      9K 

10-K   —   Annual Report
Document Table of Contents

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K 

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED:                             COMMISSION FILE NUMBER:  
JANUARY 31, 1995                                           0-3713       
------------------------  
NATIONAL COMPUTER SYSTEMS, INC. 
(Exact name of registrant as specified in its charter)

MINNESOTA                                     41-0850527
 (State or other jurisdiction of          (I.R.S. Employer Identification No.)
incorporation or organization)                                              
11000 PRAIRIE LAKES DRIVE                                                   
EDEN PRAIRIE, MINNESOTA                                    55344            
(Address of principal executive offices)                 (Zip Code)         

Registrant's telephone number, including area code: 612/829-3000      
------------------------  
Securities registered pursuant to Section 12(g) of the Act:     

Common Shares--par value $.03 a share 
(Title of Class)

Rights to Purchase Series A Participating Preferred Stock 
(Title of Class)
------------------------

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12 months  (or such  shorter  periods  that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes _X_ No ____                              

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of  registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by  reference in Part III of this Form 10-K or any  amendments  to
this Form 10-K. _X_                                                             

State the aggregate market value of the voting shares held by  non-affiliates of
the registrant as of March 31, 1995.                                            
Common Shares, $.03 par value -- $212,612,000 
                                ------------
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of March 31, 1995.                                             

Common Shares, $.03 par value -- 15,342,474 shares
                          ----------

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DOCUMENTS INCORPORATED BY REFERENCE 

Portions of the Annual  Report to  Stockholders  for the year ended  January 31,
1995 are incorporated by reference into Parts I, II and IV.                     

Portions of the definitive proxy statement dated April 19, 1995 are incorporated
by reference into Part III.                                                     

PART I

ITEM 1.  BUSINESS                                                               

     National  Computer  Systems,   Inc.  ("NCS"  or  the  "Company")   provides
integrated information management products and services, designed to collect and
interpret data, to four primary markets:                                        

     EDUCATION -- NCS develops and markets  systems and services  which  include
optical scanning systems,  related proprietary  software,  hardware and software
maintenance,    scannable   documents,   proprietary   student   and   financial
administrative systems,  assessment test processing and other data gathering and
processing services.                                                            

     BUSINESS  AND  GOVERNMENT  -- The  Company  develops  and  markets  optical
scanning hardware,  image-based data collection systems,  related work stations,
proprietary  software and  scannable  documents.  Using  forms-based  data entry
scanning  technology,  customers  are  able  to  automate  labor-intensive  data
collection and information processes with significantly increased efficiency and
accuracy. Data gathering and processing services are also provided.             

     HEALTH CARE -- The Company publishes and markets  psychological  assessment
instruments,  scoring systems and scanning products to clinical professionals in
the behavioral and mental health markets.  Organizational  survey and assessment
testing  and  services  and  vocational  counseling  tests are  marketed  to the
corporate human resources market.  The Company markets optical scanning hardware
and  proprietary   software  for  patient  data  collection  and  administrative
management.                                                                     

     BANKING AND  FINANCIAL -- NCS develops and markets  computer-based  systems
with  proprietary  software and services for automating  asset management in the
financial services industry, primarily banking.                                 

     Applications  for NCS' products and services  within the  education  market
include  administrative  applications  such  as  attendance,  scheduling,  grade
reporting  and   registration/enrollment;   library  and  inventory  management;
financial  management  and  payroll;  and testing  applications  including  test
generation,  teacher-created  tests and norm- or criterion-  referenced testing.
NCS also  provides  scanning  and  computer  processing  services  for the large
volume,  complex  processing  needs of major test  publishers,  state  education
agencies, the federal government and local school districts.                    

     In the business,  government  and health care  marketplaces,  the Company's
products and services are  directed to  sales/marketing  applications  including
sales/order entry,  customer  satisfaction surveys and customer data collection;
operations  applications  including quality  measurement and inventory analysis;
administrative applications including billing,  collections and payroll; general
data collection,  analysis and management;  health care administration including
the gathering of individual  patient  information;  human resource  applications
including  applicant  tracking,  benefits  enrollment  and employee  evaluation;
aptitude, vocational interest and organizational assessment testing; and surveys
or ballots.                                                                     

     The Company provides the financial services marketplace with computer-based
systems including proprietary software products and services for automated asset
management  systems for trust asset  management  in  personal  trust,  corporate
trust, private banking and employee benefits accounting.                        

     NCS operates two business segments: (1) Optical Scanning Products, Services
and Related Software and (2) Financial Systems.  See Note 11 -- Business Segment
Data of Notes to Consolidated Financial Statements included in the Annual Report
to  Stockholders  for the year ended  January 31, 1995,  incorporated  herein by
reference.                                                                      

     The Company's  headquarters are located at 11000 Prairie Lakes Drive,  Eden
Prairie, Minnesota 55344, telephone 612/829-3000.                               

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OPTICAL SCANNING PRODUCTS, SERVICES AND RELATED SOFTWARE                        

SCANNING SYSTEMS                                                                

     NCS  manufactures  optical mark reading (OMR)  scanners which can read data
from  specially   designed  forms  printed  by  the  Company  with  specifically
formulated  inks.  Computing  capability is built into most  scanners.  Scanners
usually  incorporate  or  interface  directly  with  software  developed  by the
Company.                                                                        

     Optical scanning equipment is most effective for applications where highest
accuracy,  precise  response  definition  and cost  effective  data  capture  is
required. Such applications include multiple choice tests; employee and benefits
administration;  quality measurement and customer satisfaction surveys; customer
order  entry;  market  research  and  field  sales  reporting;  and  personality
assessment or psychological diagnostic information.                             

     The Company's major lines of scanning hardware include scanners marketed as
Sentry-R-  and  OpScan-R-  products.  In the last year, a new family of low-cost
scanners,  NCS OpScan 2, 3 and 4, was introduced to expand the Company's line of
scanning products.  These lines of scanners provide a wide range of capabilities
to meet  the  needs  of  customers.  The  optical  scanning  systems  utilize  a
proprietary  mark  discrimination   system  to  distinguish  valid  marks,  thus
providing a very high degree of accuracy in processing responses. To enhance the
usefulness  of the OpScan  line,  optional  features  offered  include  bar code
reading  capability,  a  transport  printer to print  alphanumeric  messages  on
scanned  documents,  optional  read  formats and  upgraded  computer  capability
options.                                                                        

     NCS  markets  the  Precept-R-  image-based  data  collection  system  which
represents an extension of the Company's optical mark reading  technology.  When
attached to a  workstation  computer  and using  sophisticated  software,  these
scanners allow customers to efficiently and accurately collect and interpret the
widest possible range of information  from a printed form including  printed and
handwritten data.                                                               

SCANNING AND APPLICATION SOFTWARE                                               

     NCS offers a number of standard software programs for use with NCS systems.
Application software is an important component in the Company's marketing of its
scanning products and services. A principal strategy of the Company in servicing
the education  marketplace is to  concentrate  on those systems that  facilitate
accountability  in  school  administration  and in the  measurement  of  student
progress.  The Company offers standard  integrated  software  systems in lieu of
custom design and programming work performed by the customers. This has resulted
in the introduction  and marketing of new and enhanced  software  products.  The
MicroCIMS-TM-product,  an  advanced  student  management  software  system,  was
released for general distribution in 1994.                                      

     Software   products   include  software  to  assist  educators  in  student
management including such applications as grade reporting,  attendance gathering
and  scheduling,  as  well  as  financial  management;  software  for  obtaining
information  about student  performance  and for  analyzing  and reporting  test
results and student  progress;  software to enable  users to easily  develop new
scanning  applications;  software  to assist  scanner  users  with data entry to
statistical  analysis  or  data  base  management  systems  and  other  software
applications  packages;  software  packages to  statistically  analyze survey or
assessment  data and produce a wide range of reports  designed to meet a variety
of reporting requirements; and software for health care administration.         

SCANNABLE FORMS                                                                 

     The  design,   manufacture   and  sale  of   scannable   forms,   including
multiple-page  booklets,  accounts for a  significant  portion of the  Company's
revenues and operating  income.  A variety of custom forms are produced that are
tailored to meet specific  customer needs. In addition,  standardized  forms are
increasingly  used,  especially  with  microcomputer-based   scanners,  in  such
standard applications as testing, attendance,  scheduling and student evaluation
at the classroom  level or customer  surveys or market  research in the business
setting.                                                                        

     The Company  believes that the use of a properly  designed and printed form
is an  essential  element in  assuring  that a  scanning  system  performs  with
greatest  accuracy and optimum  capability.  In order to assure a high degree of
consistency,  reliability and accuracy,  NCS has emphasized the use of its forms
with its equipment. The Company prints its forms to exacting specifications.    

MEASUREMENT AND DATA SERVICES                                                   

     NCS  markets  scanning  and  computer  processing  services  to major  test
publishers,  state  education  agencies,  the federal  government,  local school
districts  and  commercial  customers.  For these  customers,  NCS  develops and
executes projects including planning,  document design,  distribution logistics,
data collection, editing, analysis and final reporting.                         

     Examples of high volume processing  services include test scoring for major
test  publishers,  educational  assessment  testing  for states and  information
processing  for various  agencies of the federal  government  such as processing
student financial aid information for the U.S. Department of Education.         

ASSESSMENT AND SURVEY SERVICES                                                  

     The Company  publishes and distributes  tests and provides scoring services
and  equipment  for the  professional  counseling  market;  for  industrial  and
clinical  psychologists,  psychiatrists  and human resource  professionals;  and
educators.   These  tests  and  services  include  personality   assessment  and
psychological  diagnostic testing,  career development,  guidance counseling and
human resource organizational assessments.                                      

     NCS  provides  specialized  survey  and  scannable  information  processing
services to selected  industries in the commercial  marketplace.  In addition to
scoring,  analyzing and reporting survey results,  the Company assists customers
in designing survey  instruments,  conducting  surveys and  interpreting  survey
results.                                                                        

FINANCIAL SYSTEMS                                                               

     NCS  develops,   sells  and  supports  systems  for  asset  and  investment
management  reporting and  recordkeeping  for bank trust  departments  and other
organizations with trust powers.  Applications include personal trust, corporate
trust  and  employee  benefits.   These  systems  utilize  proprietary  software
developed  by NCS and  licensed  for  periods  of five  years or more as well as
hardware  manufactured by others.  Each system is designed to address the unique
needs of customers.  NCS supports  these  installations  with customer  response
centers, trust consultants, system conversion specialists and training staffs.  

     For corporate trust  customers,  and personal trust  departments of smaller
banks, the Company offers management of customer systems for offsite  processing
and computer  processing  services  from its service  bureau  facility.  For the
personal trust market, the Company provides trust accounting systems to small to
medium sized banks through its Trustware-R-  Series 7 product line and to larger
banks  through  the  Trustware  Series  11  product  line.  Management  of  debt
securities  is  provided  by  the  Company's   BondMaster-R-software system  or 
CertMaster-R-  software  for  complex  debt  instruments.  These  offerings  are
enhanced with the addition of an optical disk-based system for data storage.    

     NCS provides  software  support  service by periodically  issuing  software
program revisions to improve systems  performance and to accommodate  changes in
the tax law and other regulatory changes. The Company also periodically releases
new software applications which it licenses to its customers.                   

MARKETING                                                                       

     NCS markets its information  systems hardware and software and scanning and
computer processing services directly through sales employees located throughout
the United States, who direct their efforts to either the education, government,
business or health care  marketplaces.  Outside the United States, the Company's
systems and associated  products and services are sold through sales  employees,
distributors  or  independent  sales agents.  NCS markets its financial  systems
through a separate staff of sales employees.  The Company's  published tests and
test scoring  services are marketed  principally  in the United  States  through
telemarketing,  direct mail,  professional  journal advertising and professional
trade  convention  attendance and elsewhere  through  distributors.  Each of the
Company's  sales  organizations  is  supported by  marketing  and sales  support
personnel.                                                                      

SOFTWARE SUPPORT, TECHNICAL SUPPORT AND MAINTENANCE                             

     Software support is provided on a contractual basis to customers  licensing
application software systems. NCS assists customers with installation, training,
hardware or software upgrades and development of specific  customer  application
software on a fee for service basis.                                            

         The Company  offers  technical  support  and  hardware  maintenance  to
customers  purchasing or leasing its equipment either on a contractual  basis or
through its  national  network of customer  service and support  engineers.  NCS
emphasizes prompt, reliable service and close customer relationships.  Technical
and  maintenance  support may include labor,  parts,  operational  training and,
where applicable, programming of the equipment and design of forms.             

DEVELOPMENT OF PRODUCTS AND SERVICES                                            

     The  Company's   development   efforts  are  directed  toward  new  product
development and enhancements to existing products. During the fiscal years ended
January  31,  1995,  1994  and  1993,  the  Company  spent,   including  certain
capitalized  software  development  costs,  approximately  $20.4 million,  $20.8
million  and  $17.3  million,  respectively,  principally  on  software  product
development  (primarily  focused on application  software) and scanning software
and equipment development.                                                      

MANUFACTURING                                                                   

     The Company  assembles its scanning  equipment from electronic  components,
metal stampings, molded plastic parts and mechanical sub-assemblies. These parts
are generally available from multiple sources. The Company assembles most of the
scanning systems equipment at its Eagan, Minnesota facility.  Computer hardware,
other than scanning equipment, is purchased from other manufacturers.           

     Scannable   forms  are  produced  at  NCS'  printing  plants  in  Columbia,
Pennsylvania;  Owatonna, Minnesota; and Rotherham, South Yorkshire, England. The
ink  and  paper  used  in  forms   production  are  produced  to  the  Company's
specifications  by a limited  number of  suppliers.  Although the Company has no
long-term supply contracts with its paper or ink suppliers,  the Company has had
long-term   relationships   with  such   suppliers   and  believes   that  these
relationships are good.                                                         

COMPETITION                                                                     

     Competition  in the  information  management  industry is intense.  Optical
scanning is only one of numerous data input  methods.  The Company has attempted
to develop  education,  government,  business  and  health  care  markets  where
scanning  technology  has  advantages  over other data entry  technologies.  NCS
scanning systems incorporate  optical scanning equipment,  computer hardware and
proprietary software which are marketed and sold as turn-key systems.           

     In addition to the functional  competition  provided by alternative methods
of data capture,  including  on-line  terminal  keyboards and optical  character
readers,  other scanning  vendors supply products that compete with those of the
Company.                                                                        

     The Company's scannable forms compete with those produced by commercial and
specialized forms printers in various  localities  throughout the United States.
Principal  competitive  factors in the  scannable  forms  printing  industry are
product quality, service and price.                                             

     NCS' data  processing,  test  publishing and computer  processing  services
compete with several test publishers and data processing  service  bureaus.  The
Company's  customer  support  maintenance  organization  competes  with  service
provided by manufacturers,  other national service companies and local providers
of maintenance services.                                                        

     NCS' financial  systems  compete with systems  developed by users,  service
bureaus  and other  direct  competitors  offering  asset  management  accounting
systems. The Company believes that it is one of the leading suppliers of systems
to bank trust departments.                                                      

PATENTS, TRADEMARKS AND LICENSES                                                

     The Company holds certain patents,  registered and unregistered  trademarks
and  copyrights.  The Company  also has  license  rights to a number of patents,
trademarks, copyrights and manufacturing processes and materials. Included among
these  licenses  are   agreements   with   publishers  of  various   copyrighted
psychological,  aptitude and  achievement  tests to distribute  these tests,  to
print and sell answer sheets for such tests, and to score such tests. Payment of
royalties is usually based upon the volume of tests  distributed,  answer sheets
sold, and tests scored. NCS believes that its business is not dependent upon any
one individual patent, trademark, copyright or license right or group thereof.  

     "Sentry", "Trustware",  "BondMaster",  "CertMaster", "OpScan" and "Precept"
appearing herein are registered trademarks of National Computer Systems, Inc.   

EMPLOYEES                                                                       

     As of February 28, 1995, the Company employed approximately 2,700 full-time
employees.  None  of  the  Company's  employees  are  subject  to  a  collective
bargaining  agreement,  and the Company believes that its employee relations are
excellent.                                                                      

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EXECUTIVE OFFICERS OF THE REGISTRANT                                            

     The names,  ages and  positions  of all of the  executive  officers  of the
Company as of  February  28,  1995 are listed  below  along with their  business
experience during the past five years.                                          

NAME                      AGE       POSITION                                    
--------------------      ---       ------------------------------------------  
Charles W. Oswald         67        Chairman of the Board                       
Russell A. Gullotti       52        President and Chief Executive Officer       
Robert C. Bowen           53        Senior Vice President                       
John W. Fenton, Jr.       54        Secretary-Treasurer                         
Donald J. Gibson          64        Senior Vice President                       
Richard L. Poss           49        Vice President                              
David W. Smith            50        Vice President                              
Jeffrey W. Taylor         41        Vice President and Chief Financial Officer  
Adrienne T. Tietz         48        Vice President                              

     Mr. Oswald has been Chairman of the Board since October,  1994 and prior to
that Chairman of the Board and Chief Executive Officer of NCS for more than five
years.                                                                          

     Mr. Gullotti has been President and Chief Executive  Officer since October,
1994 and prior to that held senior  executive  positions in sales and marketing,
services  and  administration  with  Digital  Equipment   Corporation  (computer
manufacturing and services) for more than five years.                           

     Mr. Bowen has been a Senior Vice President of NCS for more than five years.

  Mr. Fenton has been Secretary-Treasurer of NCS for more than five years.

Mr. Gibson has been a Senior Vice President of NCS for more than five 
years.                                                                          

Mr. Poss has been a Vice President of NCS for more than five years.   

Mr. Smith has been a Vice President of NCS for more than five years.  

     Mr. Taylor has been Vice President and Chief  Financial  Officer since May,
1994 and prior to that Vice  President and Corporate  Controller of NCS for more
than five years.                                                                

Ms. Tietz has been a Vice President of NCS for more than five years.  

     Officers  are  elected  annually  by the Board of  Directors.  There are no
family relationships among these officers,  nor any arrangement or understanding
between  any  officer  and any other  person  pursuant  to which the officer was
selected.                                                                       

ITEM 2.  PROPERTIES                                                             

The Company's principal facilities are as follows:                              

SQUARE                          
LOCATION          FOOTAGE                 GENERAL PURPOSE             
-------------------    -------     ----------------------------------------     
Eden Prairie, MN        76,000     Executive general offices; education and     
                              international general offices, sales and
marketing 

Mesa, AZ (1)            40,000     Education software product development and   
support   

Iowa City, IA                      Assessment test processing and data proces-  
     Building 1 (1)    168,000     sing services, general offices and operations
Building 2 (1)    112,000                                             

Minnetonka, MN (1)      54,000     Test publishing and scoring general offices  
    and operations

Eagan, MN (1)          109,000     Scanner hardware development and manu-       
                                  facturing; customer support services general
                               offices and operations; and forms general
offices   

Edina, MN  (1)         101,000     Business systems and services general        
                           offices, sales and marketing; scanner
          software development

Owatonna, MN (1)       128,000     Forms design and production                  

Columbia, PA (1)       121,000     Forms design and production                  

Rotherham, South        34,000     Forms design and production                  
Yorkshire England (1)                                                           

Huntsville, AL          15,000     Financial systems software development       

Atlanta, GA             16,000     Financial systems sales offices with support 
  and training

Cambridge, MA           33,000     Financial systems software development,sales,
                  support and training offices

Wayne, PA               27,000     Corporate trust general offices and          
operations

---------------------------                                                     
(1)  Denotes NCS owned facility.                                                

     The Company  believes that its  facilities are adequate to meet its current
needs.                                                                          

ITEM 3.  LEGAL PROCEEDINGS                                                      

     The Company is not a party to nor is its  property  subject to any material
pending legal proceedings.                                                      

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    

     There were no matters submitted during the fourth quarter of the year ended
January 31,  1995 to a vote of security  holders  through  the  solicitation  of
proxies or otherwise.                                                           

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PART II 

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 

     "Quarterly  Market Data" included in the Annual Report to Stockholders  for
the year ended January 31, 1995 is incorporated herein by reference.            

ITEM 6.   SELECTED FINANCIAL DATA                                               

     "Five-Year  Financial  Data" included in the Annual Report to  Stockholders
for the year ended January 31, 1995 is incorporated herein by reference.        

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND       
RESULTS OF OPERATIONS                                       

     "Management's   Discussion  and  Analysis  of  Results  of  Operations  and
Financial  Condition" included in the Annual Report to Stockholders for the year
ended January 31, 1995 is incorporated herein by reference.                     

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                           

     The following  consolidated  financial statements and supplementary data of
the  registrant  and  its  subsidiaries,   included  in  the  Annual  Report  to
Stockholders  for the year ended January 31, 1995,  are  incorporated  herein by
reference:                                                                      

Consolidated Balance Sheets -- January 31, 1995 and 1994              

     Consolidated Statements of Income -- Years ended January 31, 1995, 1994 and
1993                                                                            

     Consolidated  Statements of Changes in Stockholders'  Equity -- Years ended
January 31, 1995, 1994 and 1993                                                 

     Consolidated Statements of Cash Flows -- Years ended January 31, 1995, 1994
and 1993                                                                        

Notes to Consolidated Financial Statements -- January 31, 1995        

Report of Independent Auditors dated March 15, 1995                   

"Quarterly Results of Operations (Unaudited)"                         

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND       
FINANCIAL DISCLOSURE                                        

None.                                                                 

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PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                    

     "Election  of  Directors"  included  in  the  Company's   definitive  proxy
statement  dated April 19, 1995 and  "Executive  Officers of the  Registrant" in
Part I of this report are incorporated herein by reference.                     

ITEM 11.  EXECUTIVE COMPENSATION                                                

     "Summary  Compensation Table" and "Stock Options" included in the Company's
definitive  proxy  statement  dated  April 19, 1995 are  incorporated  herein by
reference.                                                                      

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT        

     "Election  of  Directors"  and  "Ownership  of NCS Common  Stock by Certain
Beneficial Owners and Executive  Officers" included in the Company's  definitive
proxy statement dated April 19, 1995 is incorporated herein by reference.       

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                        

     The  information  contained  in the  fourth  paragraph  which  follows  the
footnotes to the table set forth under the caption  "Election of  Directors"  in
the Company's  definitive  proxy  statement dated April 19, 1995 is incorporated
herein by reference.                                                            

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PART IV 

ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.     

(a)   List of Financial Statements and Financial Statement Schedules  

     (1)   The following  consolidated financial statements of National Computer
           Systems, Inc. and subsidiaries,  included in the annual report of the
           registrant to its  stockholders  for the year ended January 31, 1995,
are incorporated by reference in Item 8:                  

Consolidated  Balance Sheets -- January 31, 1995 and 1994 

Consolidated Statements of Income --                      
Years ended January 31, 1995, 1994 and 1993       

   Consolidated Statements of Changes in Stockholders' Equity --
Years ended January 31, 1995, 1994 and 1993       

Consolidated Statements of Cash Flows --                  
Years ended January 31, 1995, 1994 and 1993       

    Notes to Consolidated Financial Statements -- January 31, 1995

Report of Independent Auditors dated March 15, 1995.      

     (2)   The following  consolidated financial statement schedules of National
         Computer Systems, Inc. and subsidiaries are included in Item 14(d):

           All  schedules  for  which   provision  is  made  in  the  applicable
accounting  regulations  of the  Securities  and  Exchange  Commission  are  not
required under the related instructions or are inapplicable,  and therefore have
been omitted.                                                                   

(3) -- Listing of Exhibits:                                             

EXHIBIT                                                                       

   3A   -- Restated Articles of Incorporation, as amended,are incorporated
         herein by reference to Exhibit 3 to the NCS Form 10-Q for the
quarter ended April 30, 1987.                       

3B   -- By-Laws, as amended, are incorporated herein by reference to
   Exhibit 3(b) to the NCS Form 10-Q for the quarter ended
July 31, 1985.                                      

4A   -- Instruments  with  respect to  long-term  debt where the    
        total debt authorized  thereunder does not exceed 10% of the
        consolidated  total assets of the  registrant  are not being
        filed;  the  registrant  will  furnish  a copy  of any  such
instrument to the Commission upon request.          

4B   -- Rights  Agreement  dated as of June 23, 1987  between NCS   
        and Norwest  Bank  Minnesota,  N.A.  (including  the form of
        Right   Certificate   attached  as  Exhibit  B  thereto)  is
        incorporated  herein by  reference to Exhibit 4.1 to the NCS
Form 8-K -- reporting date: June 23, 1987.          

4C   -- Amended and Restated  Credit  Agreement  dated as of July   
        31, 1991 between NCS and First Bank National Association, as
        agent, and as further amended by the First Amendment thereto
        dated as of  January  25,  1994 is  incorporated  herein  by
        reference to Exhibit 4C to the  Company's  Form 10-K for the
fiscal year ended January 31, 1994.                 

*10A   -- NCS 1982 Employee Stock Option Plan is incorporated herein by 
          reference to Exhibit 28 to Form S-8 Registration Statement and
    Exhibit 28 to Post Effective Amendment No. 1 to Form S-8
Registration Statement No. 2-80386.                 

*10B   -- NCS 1984 Employee Stock Option Plan is incorporated herein by 
      reference to Exhibit 10 to the Company's Form 10-Q for the
quarter ended July 31, 1984.                        

*10C   -- NCS 1986 Employee Stock Option Plan is incorporated herein by 
       reference to Exhibit 10D to the Company's Form 10-K for the
fiscal year ended January 31, 1986.                 

*10D   -- NCS Non-Employee Director Stock Option Plan is incorporated   
    herein by reference to Exhibit 10F to the Company's Form
10-K for the fiscal year ended January 31, 1989.    

  *10E   -- NCS 1990 Employee Stock Option Plan, as amended, is incorporated
         herein by reference to Exhibit 10F to the Company's Form 10-K
for the fiscal year ended January 31, 1993.         

*10F   -- NCS 1995 Employee Stock Option Plan.                          

*10G   -- NCS 1990 Long-Term Incentive Plan is incorporated herein by   
       reference to Exhibit 10H to the Company's Form 10-K for the
fiscal year ended January 31, 1990.                 

*10H   -- NCS 1992 Employee Stock Purchase Plan is incorporated herein  
          by reference to Exhibit 10I to the Company's Form 10-K for the
fiscal year ended January 31, 1992.                 

*10I   -- Description of Retirement Arrangements with David C. Malmberg 
    is incorporated herein by reference to exhibit 19 to the
              Company's Form 10-Q for the fiscal quarter ended October 31, 1992.

*10J   -- Agreement  dated  August 4, 1994  between NCS and Russell A.  
        Gullotti,  as amended August 8, 1994, is incorporated herein
        by reference to Exhibit 10(a) to the Company's Form 10-Q for
the fiscal quarter ended October 31, 1994.          

*10K   -- Agreement  dated  August 22, 1994 between NCS and Charles W.  
        Oswald is incorporated  herein by reference to Exhibit 10(b)
        to the  Company's  Form 10-Q for the  fiscal  quarter  ended
October 31, 1994.                                   

 *10L   -- NCS Corporate Management Incentive Plan -- 1993 is incorporated
         herein by reference to Exhibit 10J to the Company's Form 10-K
for the fiscal year ended January 31, 1993.         

 *10M   -- NCS Corporate Management Incentive Plan -- 1994 is incorporated
         herein by reference to Exhibit 10J to the Company's Form 10-K
for the fiscal year ended January 31, 1994.         

*10N   -- NCS Corporate Management Incentive Plan -- 1995.              

*10O   -- Oswald Stock Option Plan.                                     

11    -- Statement Re:  Computation of Earnings Per Share.            

13    -- Portions of NCS' Annual Report to Stockholders for the fiscal
year ended January 31, 1995.                        

21    -- Significant Subsidiaries.                                    

23    -- Consent of Independent Auditors.                             

24    -- Power of Attorney authorizing J.W. Fenton, Jr. to sign the   
          NCS Form 10-K for the year ended January 31, 1995 on behalf of
other officers and directors.                       

27    -- Financial Data Schedule.                                     
----------------                                                                

* Indicates  management contract or compensatory plan or arrangement required to
be filed as an exhibit to this report.                                          

(b)   Reports on Form 8-K                                             

           There were no reports  on Form 8-K filed for the three  months  ended
January 31, 1995.                                                               

(c)   Exhibits                                                        

           The  response to this  portion of Item 14 is  submitted as a separate
section of this report.                                                         

(d)   Financial Statement Schedules                                   

           Financial  Statement Schedules have been omitted because they are not
required or are inapplicable.                                                   

SIGNATURES

    Pursuant  to the  requirements  of  Section  13 or 15(d)  of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.                       

                                             NATIONAL COMPUTER SYSTEMS, INC.

Dated: April 27, 1995                          By:    /s/ J. W. FENTON, JR.     
                                              ------------------------
                                                 J. W. Fenton, Jr.
                                                 SECRETARY-TREASURER

    Pursuant to the  requirements  of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.                    

By  CHARLES W. OSWALD*          Chairman of the Board of Directors              
---------------------------                                             
Charles W. Oswald                                                       

By  RUSSELL A. GULLOTTI*        Director, President and Chief Executive Officer 
--------------------------  (principal executive officer)               
Russell A. Gullotti                                                     

By  DR. DAVID P. CAMPBELL*                                                      
--------------------------  Director                                    
Dr. David P. Campbell                                                   

By  DAVID C. COX*                                                               
--------------------------  Director                                    
David C. Cox                                                            

By  JEAN B. KEFFELER*                                                           
--------------------------  Director                                    
Jean B. Keffeler                                                        

By  STEPHEN G. SHANK*                                                           
--------------------------  Director                                    
Stephen G. Shank                                                        

By  JOHN E. STEURI*                                                             
--------------------------- Director                                    
John E. Steuri                                                          

By  JEFFREY E. STIEFLER*                                                        
--------------------------- Director                                    
Jeffrey E. Stiefler                                                     

By  JOHN W. VESSEY*                                                             
--------------------------- Director                                    
John W. Vessey                                                          

By JEFFREY W. TAYLOR*          Vice President and Chief Financial Officer     
--------------------------- (principal financial officer and principal  
Jeffrey W. Taylor           accounting officer)                         

     *     Executed on behalf of the  indicated  officers  and  directors of the
           registrant by J. W. Fenton, Jr., Secretary-Treasurer,  duly appointed
attorney-in-fact.                                         

/s/ J. W. FENTON, JR.                                                     
-----------------------------------                    Dated: April 27, 1995    
(ATTORNEY-IN-FACT)                                                        

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FORM 10-K 
NATIONAL COMPUTER SYSTEMS, INC. 
FOR THE FISCAL YEAR ENDED JANUARY 31, 1995

EXHIBIT INDEX 

EXHIBIT                                                                       
-------------                                                                   

10F            NCS 1995 Employee Stock Option Plan.                   

10N            NCS Corporate Management Incentive Plan -- 1995.       

10O            Oswald Stock Option Plan.                              

11             Statement Re:  Computation of Earnings per Share.      

13             Portions of the Annual Report to Stockholders for the  
fiscal year ended January 31, 1995.     

21             Significant Subsidiaries.                              

23             Consent of Independent Auditors.                       

24             Power of Attorney  authorizing a certain person to sign
               the NCS Form 10-K for the year ended  January  31, 1995
  on behalf of other officers and directors.

27             Financial Data Schedule.                               

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K’ Filing		Date		First		Last			Other Filings
Filed on:		4/27/95		7
		4/19/95		2		6			DEF 14A
		3/31/95		1
		3/15/95		5		7
		2/28/95		3		4
For Period End:		1/31/95		2		8
		10/31/94		7					10-Q
		8/22/94		7
		8/8/94		7
		8/4/94		7
		1/31/94		3		7			10-K
		1/25/94		7
		1/31/93		3		7
		10/31/92		7
		1/31/92		7
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