1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT: October 15, 1997 NCR CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MARYLAND 001-00395 31-0387920 (STATE OR OTHER JURISDICTION OF (COMMISSION (I.R.S. EMPLOYER INCORPORATION) FILE NUMBER) IDENTIFICATION NO.) 1700 S. PATTERSON BLVD., DAYTON, OH 45479 (937) 445-5000 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) 2 Item 5. Other Events The Registrant's news release dated October 15, 1997, with respect to its financial results for the quarter ended September 30, 1997, including condensed consolidated balance sheets as of September 30, 1997, and condensed consolidated statements of operations, consolidated revenue summary, and condensed consolidated statements of cash flows for the three months and nine months ended September 30, 1997, is attached and incorporated herein by reference. Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NCR Corporation Date: October 20, 1997 By: /s/ John L. Giering ------------------------ John L. Giering, Senior Vice President and Chief Financial Officer NCR CORPORATION INVESTOR RELATIONS DEPARTMENT Tel: 937-445-5905 Fax: 937-445-5541 HTTP://WWW.NCR.COM NEWS RELEASE NCR REPORTS NARROWED THIRD-QUARTER LOSS DAYTON, Ohio - NCR Corporation reported a narrowed third-quarter loss of $9 million or $.09 per share, compared to a loss of $33 million or $.32 per share in the year-earlier period. Revenue in the quarter was $1.563 billion compared to $1.658 billion in last year's third quarter, a decline of six percent. On a local currency basis, revenue declined one percent. Gross margins in the quarter declined to 27.6 percent from 29.1 percent in the year-ago period. Total orders in the quarter were below the year-ago period. On a local currency basis, orders posted a mid single-digit decline. "Our business has the potential for significantly-improved results," said Lars Nyberg, NCR Chairman and CEO. "We are announcing today a realignment of our business structure to be more effective and efficient globally. We also remain committed to making NCR a 3 great place to work for our employees, and an excellent partner for our customers, all while creating value for our shareholders. "Revenue and operating income at the end of nine months is down compared to 1996. Our seasonally-strong fourth quarter will not be able to offset these year-to-date declines," Nyberg said. "We are redoubling our efforts for revenue generation, order conversion, margin improvement and expense reduction. Although there are challenges, we remain confident of continuing improvement and longer-term success," Nyberg added. ORDERS Total orders posted a mid single-digit decline on a local currency basis, compared to the year-ago period. On a product basis, reported orders for retail systems as well as entry level servers and PCs posted percentage gains in the twenties. Financial product orders showed continued strength with a percentage gain in the teens. However, these gains were offset by order declines in computer systems and professional services. On a geographic basis, orders were flat in the Asia/Pacific region with the Americas and Europe/Middle East/Africa regions posting percentage declines ranging from low double-digits to teens. REVENUE Worldwide revenue declined six percent on a reported dollar basis and one percent on a local currency basis. On a reported basis, revenue gains in retail products of 14 percent, professional services of 14 percent and financial systems of 2 percent were more than offset by revenue declines in computer systems, systemedia and customer services. Revenue increased in the Asia/Pacific region but declined in both the Americas and Europe/Middle East/Africa regions compared to the year-ago period. On a local currency basis revenue was up ten percent in the Asia/Pacific region and seven percent in Europe/Middle East/Africa. GROSS MARGINS Gross margins for NCR products and systems declined to 29.8 percent from 33.5 percent in the year-ago period, with the strengthening of the U.S. dollar against most key foreign currencies playing a major role. Gross margins for NCR services improved to 24.8 percent compared to 23.5 percent in the year-ago period. Total gross margin declined to 27.6 percent of revenue compared to 29.1 percent in last year's third quarter. EXPENSES SG&A expenses of $351 million declined overall from $364 million in the comparable period last year. Selling expenses increased slightly, but general and 4 administrative expenses declined reflecting ongoing efforts to improve the efficiency of company business processes. Research and development expenses increased eight percent to $96 million compared to $89 million in the period a year ago, reflecting our continued investment in new offerings. During the quarter, AT&T and NCR finalized the allocation of 1996 year-end pension plan assets to NCR. In that connection, the valuation of assets used to determine NCR's 1997 pension expense was increased by approximately $200 million. Accordingly, both gross margin and expenses were positively impacted by a year-to-date increase in the return on pension plan assets calculated using this year's long-term rate of return of 9.5 percent. INCOME TAXES Income tax expense in the quarter was $2 million compared to $62 million in the year-ago period. The tax expense in the quarter results from tax expense on NCR's international profits and the inability to recognize tax benefits on domestic losses. BALANCE SHEET NCR ended the third quarter in a strong financial position with $1.027 billion in cash and short-term investments, debt of $105 million and total shareholders equity of $1.358 billion. As of September 30, 1997, NCR employed 38,500 people worldwide, including contractors. NCR Corporation is a recognized world leader in data warehousing solutions; open high-availability transaction processing systems; automated teller machines; scanners and point-of-sale terminals, service and support for transaction-based systems for the retail, financial, communications and other select markets. ### NOTE TO INVESTORS: This news release contains forward-looking statements, including statements as to anticipated or expected results, beliefs, opinions, and future financial performance. These forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties that could cause NCR's actual results to differ materially. In addition to the factors discussed in this release, other risks and uncertainties include the timely development, production or acquisition, and market acceptance of new and existing products and services; shifts in market demands; continued competitive factors and 5 pricing pressures; short product-cycles and rapidly changing technologies; turnover of sales force and the ability to attract and retain skilled employees; tax rates; ability to execute the company's business plan; general economic and business conditions; and other factors detailed from time to time in the company's Securities and Exchange Commission reports, including the Form 10 filed in November 1996, the Form 10-K for the year ended December 31, 1996, the Form 10-Qs for the quarters ended March 31 and June 30, 1997, and the company's annual report to stockholders for 1996. The company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 6 NCR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
For the Periods Ended September 30 ---------------------------------------------- Three Months Nine Months -------------------- -------------------- 1997 1996 1997 1996 ------- ------- ------- ------- REVENUES Sales $ 866 $ 926 $ 2,499 $ 2,738 Services 697 732 2,098 2,185 ------- ------- ------- ------- TOTAL REVENUES 1,563 1,658 4,597 4,923 Cost of sales 608 616 1,744 1,916 Cost of services 524 560 1,600 1,656 ------- ------- ------- ------- GROSS MARGIN 431 482 1,253 1,351 ------- ------- ------- ------- % of Revenue 27.6% 29.1% 27.3% 27.4% Selling, general, and administrative expenses 351 364 1,027 1,075 % of Revenue 22.5% 22.0% 22.3% 21.8% Research and development expenses 96 89 279 273 % of Revenue 6.1% 5.4% 6.1% 5.5% ------- ------- ------- ------- INCOME (LOSS) FROM OPERATIONS (16) 29 (53) 3 ------- ------- ------- ------- % of Revenue -1.0% 1.7% -1.2% 0.1% Interest expense 4 14 10 40 Other (income) expense, net (13) (14) (43) (17) ------- ------- ------- ------- INCOME (LOSS) BEFORE INCOME TAXES (7) 29 (20) (20) ------- ------- ------- ------- % of Revenue -0.4% 1.7% -0.4% -0.4% Income tax expense 2 62 9 96 ------- ------- ------- ------- NET LOSS $ (9) $ (33) $ (29) $ (116) ======= ======= ======= ======= % of Revenue -0.6% -2.0% -0.6% -2.4% NET LOSS PER COMMON SHARE $ (0.09) $ (0.32) $ (0.28) $ (1.14) ======= ======= ======= ======= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (IN MILLIONS) 102.5 101.4 102.0 101.4 ======= ======= ======= ======= 7 NCR CORPORATION CONSOLIDATED REVENUE SUMMARY (Unaudited) (DOLLARS IN MILLIONS)
For the Periods Ended September 30 ------------------------------------ Three Months Nine Months ---------------- ---------------- 1997 1996 1997 1996 ------ ------ ------ ------ Retail Products $ 120 $ 105 $ 334 $ 300 Financial Products 230 225 679 666 Computer Products 281 343 785 945 PCs/Entry Level Server Products 107 106 306 377 Systemedia Products 119 133 367 405 Customer Support Services 518 561 1,548 1,645 Professional Services 151 133 456 417 Data Services 26 30 82 94 Other 11 22 40 74 ------ ------ ------ ------ Total Revenues $1,563 $1,658 $4,597 $4,923 ====== ====== ====== ====== 8 NCR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (DOLLARS IN MILLIONS)
September 30 June 30 December 31 1997 1997 1996 ------------ ----------- ----------- (Unaudited) (Unaudited) ASSETS Current assets Cash and short-term investments $1,027 $1,156 $1,203 Accounts receivable, net 1,363 1,446 1,457 Inventories 540 517 439 Other current assets 236 244 219 ------ ------ ------ TOTAL CURRENT ASSETS 3,166 3,363 3,318 Property, plant, and equipment, net 1,118 1,146 1,207 Other assets 841 776 755 ------ ------ ------ TOTAL ASSETS $5,125 $5,285 $5,280 ====== ====== ====== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Short-term borrowings $ 69 $ 56 $ 28 Accounts payable 300 303 352 Other current liabilities 1,485 1,581 1,587 ------ ------ ------ TOTAL CURRENT LIABILITIES 1,854 1,940 1,967 Long-term debt 36 36 48 Other long-term liabilities 1,877 1,879 1,869 ------ ------ ------ TOTAL LIABILITIES 3,767 3,855 3,884 TOTAL SHAREHOLDERS' EQUITY 1,358 1,430 1,396 ------ ------ ------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,125 $5,285 $5,280 ====== ====== ====== 9 NCR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (DOLLARS IN MILLIONS)
For the Periods Ended September 30 ------------------------------------------- Three Months Nine Months ------------------- ------------------- 1997 1996 1997 1996 ------- ------- ------- ------- OPERATING ACTIVITIES Net Loss $ (9) $ (33) $ (29) $ (116) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 92 100 278 275 Changes in operating assets and liabilities Receivables 83 (201) 94 532 Inventories (23) 1 (101) 62 Other (193) 88 (218) (449) ------- ------- ------- ------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (50) (45) 24 304 INVESTING ACTIVITIES Short-term investments, net 63 (32) (214) (49) Expenditures for service parts & property, plant, and equipment (66) (79) (215) (310) Other investing activities (6) 24 9 42 ------- ------- ------- ------- NET CASH USED IN INVESTING ACTIVITIES (9) (87) (420) (317) FINANCING ACTIVITIES Short-term borrowings, net 13 3 41 (3) Long-term debt, net -- (9) (12) (240) Transfers from AT&T, net -- 43 -- 638 Other financing activities 11 -- 29 -- ------- ------- ------- ------- NET CASH PROVIDED BY FINANCING ACTIVITIES 24 37 58 395 Effect of exchange rate changes on cash and cash equivalents (31) 6 (52) (1) ------- ------- ------- ------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (66) (89) (390) 381 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 839 784 1,163 314 ------- ------- ------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 773 $ 695 $ 773 $ 695 ======= ======= ======= =======