SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 11-K Annual Report Pursuant to Section 15 (d) of the Securities Exchange Act of 1934 (Mark One) Annual Report pursuant to Section 15 (d) of the Securities Exchange Act of 1934 X (No Fee Required) ----- For the fiscal year ended December 31, 1998 - -------------------------------------------------------------------------------- OR Transition report pursuant to Section 15 (d) of the Securities Exchange Act of _____ 1934 (No Fee Required) For the transition period from ______ to ______ Commission File number 1-1105 - -------------------------------------------------------------------------------- A. Full title of the plan and the address of the plan, if different from that of the issuer named below: NCR SAVINGS PLAN B. Name and issuer of the securities held pursuant to the plan and the address of its principal executive office: NCR CORPORATION 1700 South Patterson Boulevard, Dayton, OH 45479
NCR Savings Plan Financial Statements and Supplemental Schedules December 31, 1998 and 1997
NCR Savings Plan Index to Financial Statements and Supplemental Schedules -------------------------- Pages ----- Report of Independent Accountants............................... 2 Financial Statements: Statements of Net Assets Available for Benefits as of December 31, 1998 and 1997 (with fund information)... 3 Statement of Changes in Net Assets Available for Benefits for the year ended December 31, 1998 (with fund information).................................... 4 Notes to Financial Statements................................. 5-13 Supplemental Schedules:......................................... 14 Line 27a - Schedule of Assets Held for Investment Purposes as of December 31, 1998.................................... 15 Line 27d - Schedule of Reportable Transactions for the year ended December 31, 1998....................... 16 1
[LOGO OF PRICEWATERHOUSECOOPERS APPEARS HERE] [LETTERHEAD OF PRICEWATERHOUSECOOPERS APPEARS HERE] Report of Independent Accountants To the Participants, Beneficiaries and Administrators of the NCR Savings Plan In our opinion, the accompanying statements of net assets available for benefits and the related statement of changes in net assets available for benefits present fairly, in all material respects, the net assets available for benefits of the NCR Savings Plan (the Plan) at December 31, 1998 and 1997, and the changes in net assets available for benefits for the year ended December 31, 1998, in conformity with generally accepted accounting principles. These financial statements are the responsibility of the Plan's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The additional information included in schedules 27a and 27d is presented for purposes of additional analysis and is not a required part of the basic financial statements but is additional information required by ERISA. The fund information in the statement of net assets available for benefits and the statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for plan benefits and changes in net assets available for benefits of each fund. Schedules 27a and 27d and the fund information have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects. /s/ PriceWaterhouseCoopers Dayton, Ohio June 11, 1999 2
NCR Savings Plan Statements of Net Assets Available for Benefits (with fund information) December 31, 1998 and 1997 - -------------------------------------------------------------------------------------------------------------------------------- December 31, 1998 --------------------------------------------------------------------------------------------- Very Moderately Moderately Conservative Conservative Cautious Moderate Aggressive Aggressive Option Strategy Strategy strategy Strategy Strategy ------------- ------------ ----------- ------------- ------------- ------------- Assets Investment at fair value $ 87,014,273 $ 90,585,940 $90,390,421 $ 136,188,981 $ 166,482,245 $ 554,309,685 Receivables 650,316 756,632 558,808 357,243 389,697 1,066,496 ------------- ------------ ----------- ------------- ------------- ------------- Total assets 87,664,589 91,342,572 90,949,229 136,546,224 166,871,942 555,376,181 Liabilities Payables (196,318) (368,694) (143,665) (76,379) (211,129) (910,952) ------------- ------------ ----------- ------------- ------------- ------------- Net assets available for benefits $ 87,468,271 $ 90,973,879 $90,805,564 $ 136,469,845 $ 166,660,813 $ 554,465,229 ============= ============ =========== ============= ============= ============= December 31, 1998 Participant-Directed -------------------------------------------------------------------------------------------------- Very Market Index Options -------------------------------------------- Aggressive Style Fixed Income S&P 500 International Participant Strategy Options Index Index Equity Index Loans --------------- -------------- ------------- ------------- -------------- ------------- Assets Investment at fair value $ 10,096,433 $ 351,664,334 $ 5,419,403 $ 14,038,031 $ 874,788 $22,223,759 Receivables 159,011 211,193 1,887,376 178,383 1,883 - --------------- -------------- ------------- ------------- ---------------- ----------- Total assets 10,255,444 351,875,527 7,306,779 14,216,414 876,671 22,223,759 Liabilities Payables (54,849) (26,515) (124,971) (1,380) (381) - --------------- -------------- ------------- ------------- ----------------- ----------- Net assets available for benefits $ 10,200,595 $ 351,849,012 $ 7,181,808 $ 14,215,034 $ 876,290 $22,223,759 =============== ============== ============= ============= ================= =========== December 31, 1998 Non-Participant Directed ---------------------------------------------------- --------------- See Note 4 ---------------------------------------------------- AT&T Lucent NCR Unitized Unitized Unitized Short-Term Stock Fund Stock Fund Stock Fund Investments Total ------------- -------------- ------------ ------------- ------------- Assets Investment at fair value $ - $ - $58,404,562 $ - $ 1,587,692,855 Receivables - - 341,727 - 6,558,765 ------------- ------------- ----------- ------------- --------------- Total assets - - 58,746,289 - 1,594,251,620 Liabilities Payables - - (118,471) - (2,233,704) ------------- ------------- ----------- ------------- --------------- Net assets available for benefits $ - $ - $58,627,818 $ - $ 1,592,017,917 ============= ============= =========== ============= =============== December 31, 1997 --------------------------------------------------------------------------------------------- Very Moderately Moderately Conservative Conservative Cautious Moderate Aggressive Aggressive Option Strategy Strategy Strategy Strategy Strategy ------------- ------------ ----------- ------------- ------------- ------------- Assets Investment at fair value $ 41,691,328 $84,483,783 $79,542,193 $ 123,953,506 $ 143,389,344 $ 478,687,753 Receivables 535,240 403,147 223,066 402,727 1,395,449 3,200,311 ------------- ------------ ----------- ------------- ------------- ------------- Total assets 42,226,568 84,886,930 79,765,259 124,356,233 144,784,793 481,888,064 Liabilities Payables (151,047) (234,966) (211,168) (149,367) (288,734) (167,198) ------------- ------------ ----------- ------------- ------------- ------------- Net assets available for benefits $ 42,075,521 $84,651,964 $79,554,091 $ 124,206,866 $ 144,496,059 $ 481,720,866 ============= ============ =========== ============= ============= ============= December 31, 1997 Participant-Directed ------------------------------------------------------------------------------------------------ Very Mutual Market Index Options -------------------------------------------- Aggressive Fund Fixed Income S&P 500 International Participant strategy Window Index Index Equity Index Loans ------------- -------------- ------------- ----------- ------------- -------------- Assets Investment at fair value $ - $ 243,408,389 $ - $ - $ - $ 23,011,264 Receivables - - - - - - ------------ -------------- -------------- ------------ ------------- ----------- Total assets - 243,408,389 - - - 23,011,264 Liabilities Payables - - - - - ------------ -------------- -------------- ------------ ------------- ----------- Net assets available for benefits $ - $ 243,408,389 $ - $ - $ - $23,011,264 ============ ============== ============== ============ ============= =========== December 31, 1997 Non-Participant Directed ---------------------------------------------- ---------------------- See Note 4 ---------------------------------------------- AT&T Lucent NCR Unitized Unitized Unitized Short-Term Stock Fund Stock Fund Stock Fund Investments Total -------------- ------------- ----------- ------------ -------------- Assets Investment at fair value $ 47,799,366 $ 26,023,008 $29,082,479 $ 1,508,989 $1,322,581,402 Receivables 2,827,988 1,364,452 1,262,043 (6,066,457) 5,547,966 -------------- ------------ ----------- ------------ -------------- Total assets 50,627,354 27,387,460 30,344,522 (4,557,468) 1,328,129,368 Liabilities Payables (6,789,779) (4,169,575) (1,056,412) 6,066,456 (7,151,790) -------------- ------------ ----------- ------------ -------------- Net assets available for benefits $ 43,837,574 $ 23,217,885 $29,288,110 $ 1,508,988 $1,320,977,578 ============== ============ =========== ============ ==============
NCR SAVINGS PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (WITH FUND INFORMATION) FOR THE YEAR ENDED DECEMBER 31, 1998 - -------------------------------------------------------------------------------- ---------------------------------------------------------------------------- Very Moderately Moderately Conservative Conservative Cautious Moderate Aggressive Option Strategy Strategy Strategy Strategy ------------ ------------ ---------- -------- ----------- Additions Additions to net assets attributed to: Contributions: Company $ 184,118 $ 1,397,006 $ 1,356,805 $ 2,533,157 $ 3,666,689 Participants 2,501,899 3,029,057 3,077,999 5,647,924 8,704,993 Principal loan payments 700,384 887,893 685,848 1,049,765 1,429,191 ------------ ------------ ------------ ------------- ------------- 3,386,401 5,313,956 5,120,652 9,230,846 13,800,873 ------------ ------------ ------------ ------------- ------------- Investment income: Interest 4,713,838 4,778,671 925,236 20,026 28,232 Dividends - - - - - Interest on loan repayments 50,421 62,540 46,670 77,714 102,065 Net realized and unrealized gains (losses) - 869,610 9,424,145 18,483,030 29,330,290 ------------ ------------ ------------ ------------- ------------- 4,764,259 5,710,821 10,396,051 18,580,770 29,460,587 ------------ ------------ ------------ ------------- ------------- Net forfeitures 669,570 (21,406) (24,121) (58,492) (124,263) ------------ ------------ ------------ ------------- ------------- Deductions Deductions from net assets attributed to: Benefit payments (11,557,557) (7,879,405) (6,199,661) (8,096,701) (10,113,965) Investment management fees (12,350) (122,552) (56,111) (95,833) (168,269) ------------ ------------ ------------ ------------- ------------- (11,569,907) (8,001,957) (6,255,772) (8,192,534) (10,282,234) ------------ ------------ ------------ ------------- ------------- Other transactions: Participant loans (894,636) (1,067,539) (869,177) (1,305,899) (1,705,417) Net interfund transfers 48,975,625 4,374,367 2,873,899 (6,005,438) (9,002,403) Other 61,438 13,673 9,941 13,726 17,611 ------------ ------------ ------------ ------------- ------------- 48,142,427 3,320,501 2,014,663 (7,297,611) (10,690,209) ------------ ------------ ------------ ------------- ------------- Net increase (decrease) 45,392,750 6,321,915 11,251,473 12,262,979 22,164,754 Net assets available for benefits: Beginning of year 42,075,521 84,651,964 79,554,091 124,206,866 144,496,059 ------------ ------------ ------------ ------------- ------------- End of year $ 87,468,271 $ 90,973,879 $ 90,805,564 $ 136,469,845 $ 166,660,813 ============ ============ ============ ============= ============= Participant-Directed ----------------------------------------------------------------------------------- Very Market Index Options ---------------------------- Aggressive Aggressive Style Fixed Income S&P 500 Strategy Strategy Options Index Index -------------- ------------ ------------- ------------ ------------ Additions Additions to net assets attributed to: Contributions: Company $ 9,701,954 $ 343,906 $ 6,836,414 $ 75,651 $ 282,156 Participants 22,644,565 910,676 17,902,451 198,512 842,274 Principal loan payments 4,661,704 146,961 2,298,510 24,888 52,407 -------------- ------------ ------------- ------------ ------------ 37,008,223 1,401,543 27,037,375 299,051 1,176,837 -------------- ------------ ------------- ------------ ------------ Investment income: Interest 82,904 680 - 202 490 Dividends 6,960,637 50,208 20,881,737 - - Interest on loan repayments 364,148 7,663 165,119 2,108 4,241 Net realized and unrealized gains (losses) 105,106,769 1,052,315 52,746,135 156,281 2,156,924 -------------- ------------ ------------- ------------ ------------ 112,514,458 1,110,866 73,792,991 158,591 2,161,655 -------------- ------------ ------------- ------------ ------------ Net forfeitures (234,432) (4,109) (184,917) (28) (3,430) -------------- ------------ ------------- ------------ ------------ Deductions Deductions from net assets attributed to: Benefit payments (31,401,820) (436,048) (20,034,171) (286,192) (346,164) Investment management fees (922,468) (14,719) (3,312) (615) (3,185) -------------- ------------ ------------- ------------ ------------ (32,324,288) (450,767) (20,037,483) (286,807) (349,349) -------------- ------------ ------------- ------------ ------------ Other transactions: Participant loans (5,068,757) (98,367) (2,496,019) (6,671) (124,765) Net interfund transfers (39,236,796) 8,240,710 30,262,716 7,017,532 11,353,764 Other 85,955 719 65,960 140 322 -------------- ------------ ------------- ------------ ------------ (44,219,598) 8,143,062 27,832,657 7,011,001 11,229,321 -------------- ------------ ------------- ------------ ------------ Net increase (decrease) 72,744,363 10,200,595 108,440,623 7,181,808 14,215,034 Net assets available for benefits: -------------- ------------ ------------- ------------ ------------ Beginning of year 481,720,866 - 243,408,389 - - -------------- ------------ ------------- ------------ ------------ End of year $ 554,465,229 $ 10,200,595 $ 351,849,012 $ 7,181,808 $ 14,215,034 ============== ============ ============= ============ ============ See Note 4 ---------------------------------------------- AT&T Lucent NCR International Participant Unitized Unitized Unitized Equity Index Loans Stock Fund Stock Fund Stock Fund -------------- ------------ ------------- ------------ ------------ Additions Additions to net assets attributed to: Contributions: Company $ 15,094 $ - $ - $ - $ 2,076,361 Participants 39,865 - - - 4,479,660 Principal loan payments 3,922 (13,420,708) 111 - 1,479,124 ----------- --------------- -------------- ------------ ------------ 58,881 (13,420,708) 111 - 8,035,145 ----------- --------------- -------------- ------------ ------------ Investment income: Interest 24 - - - 38,176 Dividends - - 320,758 - - Interest on loan repayments 361 - (111) - 103,924 Net realized and unrealized gains (losses) 87,819 - (2,130,861) 23,380 18,522,923 ----------- --------------- -------------- ------------ ------------ 88,204 - (1,810,214) 23,380 18,665,023 ----------- --------------- -------------- ------------ ------------ Net forfeitures - - - - (14,372) ----------- --------------- -------------- ------------ ------------ Deductions Deductions from net assets attributed to: Benefit payments (31,480) (2,034,697) - - (1,695,640) Investment management fees (794) - - - (22,867) ----------- --------------- -------------- ------------ ------------ (32,274) (2,034,697) - - (1,718,507) ----------- --------------- -------------- ------------ ------------ Other transactions: Participant loans (4,434) 14,667,900 - - (1,026,219) Net interfund transfers 765,910 - (41,706,713) (23,241,265) 5,328,092 Other 3 - (320,758) - 70,546 ----------- --------------- -------------- ------------ ------------ 761,479 14,667,900 (42,027,471) (23,241,265) 4,372,419 ----------- --------------- -------------- ------------ ------------ Net increase (decrease) 876,290 (787,505) (43,837,574) (23,217,885) 29,339,708 Net assets available for benefits: Beginning of year - 23,011,264 43,837,574 23,217,885 29,288,110 ----------- --------------- -------------- ------------ ------------ End of year $ 876,290 $ 22,223,759 $ - $ - $ 58,627,818 =========== =============== ============== ============ ============ Non-Participant Directed --------------- Short-Term Investments Total -------------- ---------------- Additions Additions to net assets attributed to: Contributions: Company $ (1,508,989) $ 26,960,322 Participants - 69,979,875 Principal loan payments - - -------------- ---------------- (1,508,989) 96,940,197 -------------- ---------------- Investment income: Interest - 10,588,479 Dividends - 28,213,340 Interest on loan repayments - 986,863 Net realized and unrealized gains (losses) - 235,828,760 -------------- ---------------- - 275,617,442 -------------- ---------------- Net forfeitures - - -------------- ---------------- Deductions Deductions from net assets attributed to: Benefit payments - (100,113,501) Investment management fees - (1,423,075) -------------- ---------------- - (101,536,576) -------------- ---------------- Other transactions: Participant loans - - Net interfund transfers - - Other - 19,276 -------------- ---------------- - 19,276 -------------- ---------------- Net increase (decrease) (1,508,989) 271,040,339 Net assets available for benefits: Beginning of year 1,508,989 1,320,977,578 -------------- ---------------- End of year $ - $ 1,592,017,917 ============== ================ The accompanying notes are an integral part of these financial statements 4
NCR Savings Plan Notes to Financial Statements 1. Description of the Plan General The NCR Savings Plan ("the Plan") is a defined contribution plan established May 1, 1985 by NCR Corporation (the "Company") to give the Company's employees more control over, and participation in, the accumulation of capital for their retirement. As discussed further in Note 4, until December 31, 1996, the Company was a wholly-owned subsidiary of AT&T Corp. (AT&T). The Plan is designed to qualify as a profit-sharing plan with a qualified cash or deferred arrangement under Section 401(k) of the Internal Revenue Code of 1986, as amended. It is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. The Plan covers all eligible U.S. employees of the Company (other than certain categories of part-time, temporary and intern employees) and its domestic subsidiaries, except for employees covered by a collective bargaining agreement. Contributions and Funding All eligible employees of the Company may defer a portion of their compensation by making tax-deferred contributions, as well as after-tax contributions to the Plan. Participants may elect to contribute up to twenty percent of their eligible compensation; however, tax-deferred contributions are limited to sixteen percent of eligible compensation. The maximum contribution percentage limits vary based upon the participant's base salary. Annual tax-deferred contributions per participant for the 1998 and 1997 Plan years were limited to $10,000 and $9,500, respectively. For each dollar contributed by a participant up to six percent of compensation, the Company funds an additional matching amount. The Company's matching contributions are seventy-five percent of the first three percent of pay contributed by a participant and fifty percent of the next three percent of pay contributed by a participant whether on a tax-deferred or after-tax basis. Vesting Participants are immediately vested in their contributions plus actual earnings thereon. Company matching contributions vest in increments of one- fifth each year, over a five-year period beginning with the participant's hire date. 5
A participant becomes fully vested in their account (i) upon attainment of age 65, (ii) upon retirement, (iii) upon termination of employment due to a "reduction in force", (iv) in the event of death, or (v) in the event of total and permanent disability. Upon termination of employment, a participant is entitled to full distribution of their contributions and all vested Company match contributions; all non-vested Company match contributions will be forfeited. These forfeitures are reallocated to the Plan's Very Conservative Option and used to reduce future Company contributions. Participant Accounts A participant may withdraw any employee tax-deferred contributions during their employment in the case of a "hardship" (as defined by the Plan), and a participant may withdraw after-tax employee contributions for any reason. The participant may not withdraw any Company match contributions or any earnings on Company match or employee contributions until they terminate employment with the Company. Participant Loans Participants may borrow from the Plan, limited by restrictions set forth in the Plan document. A fixed interest rate is applied to the loan based on the prime rate (as reported by the Wall Street Journal) in effect on the twentieth business day of the month, prior to the month of the transaction. The term of the loan may be between 12 to 56 months. Upon default, participants are considered to have received a distribution and are subject to income taxes on the distribution amount. Termination of the Plan It is the present intention of the Company to continue the Plan indefinitely. However, the Company reserves the right to terminate the Plan at any time by action of the board of directors. No amendment or termination of the Plan may adversely affect a participant's accrued benefit on the date of the amendment or termination. No amendment may change the requirement that the assets of the Savings Plan Trust (the Trust) must be used for the exclusive benefit of the participants, the former participants and the beneficiaries. Upon termination of the Plan, the Company may, at its option, continue the Trust in existence or cause the Trust to be liquidated. If the Trust is liquidated, distributions will be made to the various participants, former participants and beneficiaries in a single lump sum promptly after liquidation is effective. If the Trust is not liquidated, distributions will be made to the various participants when they cease employment. For a complete description of the Plan, participants should refer to the Plan Prospectus. 6
2. Summary of Significant Accounting Policies Basis of Accounting The financial statements of the Plan are prepared under the accrual basis of accounting. Investment Valuation and Income Recognition All of the Plan's investments are stated at fair value, except for guaranteed investment contracts included in the Plan's Conservative Strategy which, in accordance with generally accepted accounting principles, are stated at contract value. Fair values have been estimated based on quoted market amounts of the underlying investments. Purchases and sales of securities are recorded on a trade-date basis. Realized gains and losses from security transactions are reported on the average cost method. Plan Expenses All initial and ongoing administrative costs of the Plan are paid by the Company (the Plan Administrator) except for a $50 participant loan application fee, brokerage fees and commissions which are included in the cost of investments when purchased and in determining the net proceeds on sales of investments, and investment management fees which will be paid from the respective assets of the investment option. The Plan's primary investment manager is Fidelity Investments ("Fidelity"). An affiliate of Fidelity serves as the record keeper for the Plan's participant data. Another affiliate of Fidelity serves as the trustee of the Plan. Payments to Withdrawing Participants The Plan records payments to withdrawing participants at the time of disbursement. Rollover Contributions and Transfers Participant rollover contributions and transfers from other defined contribution plans are included as participant contributions in the Statement of Changes in Net Assets Available for Benefits. 7
Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to the 1997 financial statements to conform with the 1998 presentation. 3. Taxes The Company received its latest favorable determination letter dated November 6, 1995, from the Internal Revenue Service as to the qualified status of the Plan under Section 401(a) of the Internal Revenue Code (the Code). Therefore, the Plan's Administrator believes that the Plan was qualified and the related Trust is exempt from federal income taxes under Section 501(a) of the Code. Accordingly, income taxes are not provided for in the accompanying financial statements. Participant contributions, except for those contributions which participants elect to be tax-deferred under Section 401(k), are taxable to the participants in the year their contributions are made. Participants are liable for federal income taxes relative to their Section 401(k) contributions, the Company match contributions, and the earnings of the Plan when the contributions are distributed to them. The Plan has been amended since receiving the determination letter. However, the Plan's Administrator and the Plan's tax counsel believe that the Plan is designed and currently being operated in compliance with the applicable requirements of the Internal Revenue Code. 4. Description of AT&T, Lucent and NCR Unitized Stock Funds Prior to January 1, 1997, the Plan offered a stock fund that invested in common stock of NCR's then parent company, AT&T. In October 1996, shares of Lucent Technologies, Inc. ("Lucent") were distributed to shareholders of AT&T. On December 31, 1996, shares of NCR were distributed to shareholders of AT&T. The Plan established the Lucent and NCR Unitized Stock Funds to hold the respective shares distributed to the Plan. 8
During 1997, no new contributions were directed to the Lucent or the AT&T Unitized Stock Funds. Amounts invested in these two funds were to be directed into the other investment options offered under the Plan until December 31, 1997, at which time these funds were to be discontinued and any remaining balances were to be transferred to the Very Conservative Option. The Plan transferred the remaining balances into the Very Conservative Option on January 3, 1998. The NCR Unitized Stock Fund continues to be a Plan investment option. 5. Description of Investment Strategies and Other Options The Plan offers participants a Very Conservative Option, six Investment Strategies, Style Options (consisting of nine mutual funds), three Market Index Options, and the NCR Unitized Stock Fund. The investment composition of the strategies, options, and NCR Unitized Stock Fund are described below, but the exact mix, or percentage invested in each of the underlying investments or strategies, will vary from time to time. Very Conservative Option Offers a portfolio of two funds managed by Fidelity Investments; the Fidelity Retirement Money Market Fund and the Fidelity Institutional Cash Portfolio. Conservative Strategy Offers a portfolio consisting of investment contracts issued by insurance companies and banks, institutionally investable government and corporate bonds and mortgage-backed securities, and U.S. dollar denominated money market securities of domestic and foreign issuers. Investments include the Fidelity Managed Investment Contract Portfolio, The BGI U.S. Debt Index Fund, and the Fidelity Institutional Cash Portfolio. For the years ended December 31, 1998 and 1997, contracts with insurance companies held in the Conservative Strategy had average yields of 6.84% and 6.76%, respectively. Moderately Cautious Strategy Offers a broad range of investment grade, interest-bearing securities issued by the U.S. Government and its agencies, and by domestic and foreign corporations. In addition, a portion of the portfolio will be invested in common stocks traded in the U.S. and in the Standard & Poor's Composite Index 500 stocks. Investments include the BGI U.S. Debt Index Fund, BGI Index Fund, the BGI Money Market Fund and the Fidelity Institutional Cash Portfolio. 9
Moderate Strategy Offers a portfolio consisting of thirty-five to fifty-five percent in common stocks publicly traded in the U.S., five percent in securities issued on international equity markets, with the remainder invested in a broad rage of investment grade, fixed income securities. Investments include Fidelity U.S. Equity Index Portfolio, BGI U.S. Debt Index Fund, BGI Russell 2000 Index Fund, and the BGI EAFE Equity Index Fund. Moderately Aggressive Strategy Offers a portfolio of approximately seventy to eighty percent in U.S. and internationally traded common stocks with the remainder consisting of a broad range of investment grade, interest-bearing securities issued by the U.S. Government and its agencies, and by corporations. Investments include the Fidelity Select Market Index Fund, BGI EAFE Equity Fund, Columbus Circle Small Cap Fund, Axe-Houghton Small Capitalization Growth Fund, and the Fidelity Targeted Active Management - Broad Duration Fund. Aggressive Strategy Offers a portfolio primarily of common stocks diversified across sectors of domestic and foreign markets. Investments include the Fidelity Magellan Fund, Fidelity Select Market Index Fund, Fidelity Select International EAFE Index Fund, Fidelity Aggressive Equity Portfolio, Alliance Small Capitalization Equity Fund, Legg Mason Value Equity Fund, and the Axe-Houghton Small Capitalization Growth Fund. Very Aggressive Strategy Offers a portfolio consisting entirely of stock of large corporations and smaller companies, both domestic and foreign. Investments include Fidelity Magellan Fund, Legg Mason Value Equity Fund, Axe-Houghton Small Capitalization Growth Fund, Alliance Small Capitalization Equity Fund, Fidelity Select Market Index Portfolio, and the Fidelity Select International EAFE Index Portfolio. Style Options Offers a choice of the following nine retail mutual funds: Fidelity Growth and Income Fund, Fidelity Contrafund, American Century Ultra Investors Fund, Fidelity Puritan Fund, Fidelity Magellan Fund, Fidelity Diversified International Fund, Alliance Quasar Fund, Janus Worldwide Fund, and Legg Mason Value Trust. The funds are presented in the aggregate in the accompanying financial statements. See Note 6 regarding changes in investment strategies. Market Index Options Offers a choice of three index funds invested in stocks or bonds that are represented by a published investment index. The Fixed Income Index Fund (BGI U.S. Debt Index Fund) is composed of 55% U.S. Treasury and agency bonds, 20% corporate bonds, and 25% in high-quality mortgages - GNMAs, FNMAs, FHLMCs, conventional pass-through and FHA projects. 10
The S&P 500 Index Fund (BGI Equity Index Fund) invests in all S&P Index issues in their appropriate capitalization and industry weights. The International Equity Index Fund (BGI EAFE Equity Index Fund) invests in all of the securities in the MSCI EAFE Index - over 1,000 securities across 21 countries. NCR Unitized Stock Fund Offers a fund invested primarily in the shares of the Company. Portions of the Fund may be invested by Fidelity, the manager, in short-term obligations and money market instruments for administrative purposes. Other The Plan had invested in an Executive Life contract which represented a separate account whose balance was frozen as of April 1991 due to the Chapter 11 bankruptcy filing of Executive Life's parent, First Executive Corporation. As a result, participants could not withdraw or transfer the segregated amounts from their accounts until the court-supervised reorganization of Executive Life progressed. During 1994, the Company obtained approval from the Department of Labor to loan to the Plan the amount necessary to liquidate the participants' frozen investment in the contract, including earnings at a reasonable interest rate during the frozen period. Accordingly, the Company made a loan to the Plan of approximately $3,400,000 consisting of $2,100,000 of principal and $1,300,000 of interest. Prior to the loan, Executive Life paid to the Plan $2,800,000 toward the frozen contract. All subsequent payments received from Executive Life will be used as credit against future Company contributions. Approximately $560,000 of payments were received by the Plan during 1995. No payments were received in 1996, 1997 or 1998. The loan has not been recorded in the December 31, 1998 or 1997 financial statements of the Plan, as it will be forgiven by the Company to the extent the ultimate recovery on the contract is less than the amount of the loan. As of December 31, 1998, the Fidelity Select Equity Fund, Fidelity Magellan Fund, BGI U.S. Debt Index Fund, Fidelity Growth & Income Fund, Fidelity Contrafund, Legg Mason Small Cap Fund, and the Fidelity Institutional Cash Portfolio, which are held as investments by some of the above investment strategies and other options accounted for 14%, 10%, 9%, 7% , 6%, 6% and 5%, respectively, of the total net assets available for benefits. As of December 31, 1997, the Fidelity Select Equity Fund, Fidelity Magellan Fund, Fidelity Broad Market Fund, Fidelity Growth & Income Fund, and the Fidelity Contrafund, which are held as investments by some of the above investment strategies and other options accounted for 15%, 10%, 9%, 6% and 6%, respectively, of the total net assets available for benefits. 11
6. Changes in Investment Strategies During 1997, the Plan offered a Mutual Fund Window containing six retail mutual funds. Three of these funds - Fidelity Growth and Income Fund, Fidelity Contrafund and American Century Ultra Investors Fund - continued to be offered in the Plan as part of the Style Options (a new investment option offered in 1998 containing nine mutual funds). The remaining three mutual funds under the Mutual Fund Window - Columbia Fixed Income Securities Fund, Fidelity Balanced Fund and Templeton Foreign Fund -were discontinued on December 31, 1998. Amounts invested within these funds could be directed into the other investment options offered under the Plan until December 31, 1998, at which time, any remaining balances within the Columbia Fixed Income Securities Fund, Fidelity Balanced Fund and Templeton Foreign Fund were transferred to the Fixed Income Index Fund (within the Market Index Options), Fidelity Puritan Fund and Fidelity Diversified International Fund, respectively. 12
NCR SAVINGS PLAN Notes to Financial Statements - -------------------------------------------------------------------------------- 7. COST AND FAIR MARKET VALUES OF INVESTMENT STRATEGIES AND OTHER OPTIONS December 31, 1998 ------------------------------------------------------------------------------- Number of Price Fair Market Investments Cost Units Per Unit Value - ----------------------------------------------- -------------------- ----------------- --------------- -------------------- Very conservative option $ 87,014,273 87,014,273 $ 1.00 $ 87,014,273 Conservative strategy 88,800,630 5,615,991 $ 16.13 90,585,940 Moderately cautious strategy 65,057,637 3,518,506 $ 25.69 90,390,421 Moderate strategy 113,544,531 4,056,866 $ 33.57 136,188,981 Moderately aggressive strategy 107,313,252 3,980,924 $ 41.82 166,482,245 Aggressive strategy 428,469,331 10,009,203 $ 55.38 554,309,685 Very aggressive strategy 9,297,131 854,182 $ 11.82 10,096,433 Style Options: Alliance Quasar Fund 3,269,287 119,795 $ 25.00 2,994,868 American Century Ultra Investors Fund 56,042,958 1,901,101 $ 33.41 63,515,770 Columbia Fixed Income Fund - - $ - - Fidelity Contrafund 73,636,451 1,620,358 $ 56.79 92,020,115 Fidelity Diversifed International 11,805,023 667,130 $ 17.72 11,821,541 Fidelity Growth & Income Fund 87,158,989 2,477,210 $ 45.84 113,555,310 Fidelity Balanced Fund - - $ - - Fidelity Magellan Fund 11,994,081 112,459 $ 120.82 13,587,330 Fidelity Puritan Fund 9,061,670 454,665 $ 20.07 9,125,124 Janus Worldwide Fund 15,204,161 347,475 $ 47.36 16,456,432 Legg Mason Value Trust 22,586,474 1,936,846 $ 14.76 28,587,844 Templeton Foreign Fund - - $ - - Market Index Options: Fixed Income Index 5,322,507 499,945 $ 10.84 5,419,403 S&P 500 Index 12,021,760 1,097,579 $ 12.79 14,038,031 International Equity Index 815,498 72,717 $ 12.03 874,788 AT&T Unitized Stock Fund - - $ - - Lucent Unitized Stock Fund - - $ - - NCR Unitized Stock Fund 44,292,952 2,504,484 $ 23.32 58,404,562 Short-term investments - - $ - - Participant loans 22,223,759 N/A N/A 22,223,759 -------------------- -------------------- Total Investments $ 1,274,932,355 N/A N/A $ 1,587,692,855 -------------------- -------------------- December 31, 1997 -------------------------------------------------------------------------------- Number of Price Fair Market Investments Cost Units Per Unit Value - ----------------------------------------------- ---------------------- ----------------- ------------- -------------------- Very conservative option $ 41,691,328 41,691,328 $ 1.00 $ 41,691,328 Conservative strategy 75,125,162 5,572,809 $ 15.16 84,483,783 Moderately cautious strategy 49,230,795 3,497,898 $ 22.74 79,542,193 Moderate strategy 72,373,983 4,252,264 $ 29.15 123,953,506 Moderately aggressive strategy 96,382,908 4,145,399 $ 34.59 143,389,344 Aggressive strategy 422,942,171 10,747,368 $ 44.54 478,687,753 Very aggressive strategy - - $ - - Style Options: Alliance Quasar Fund - - $ - - American Century Ultra Investors Fund 48,803,929 1,716,281 $ 27.30 46,854,477 Columbia Fixed Income Fund 4,037,119 306,498 $ 13.41 4,110,143 Fidelity Contrafund 70,808,765 1,663,401 $ 46.63 77,564,375 Fidelity Diversifed International - - $ - - Fidelity Growth & Income Fund 71,958,333 2,220,020 $ 38.10 84,582,746 Fidelity Balanced Fund 6,833,746 461,840 $ 15.27 7,052,301 Fidelity Magellan Fund - - $ - - Fidelity Puritan Fund - - $ - - Janus Worldwide Fund - - $ - - Legg Mason Value Trust - - $ - - Templeton Foreign Fund 23,790,654 2,336,115 $ 9.95 23,244,347 Market Index Options: Fixed Income Index - - $ - - S&P 500 Index - - $ - - International Equity Index - - $ - - AT&T Unitized Stock Fund 25,585,048 1,399,279 $ 34.16 47,799,366 Lucent Unitized Stock Fund 13,415,015 582,040 $ 44.71 26,023,008 NCR Unitized Stock Fund 32,430,937 1,858,305 $ 15.65 29,082,479 Short-term investments 1,500,453 1,508,989 $ 1.00 1,508,989 Participant loans 23,011,264 N/A N/A 23,011,264 ---------------------- -------------------- Total Investments $ 1,079,921,610 N/A N/A $ 1,322,581,402 ---------------------- -------------------- 13
NCR Savings Plan Supplemental Schedules 14
NCR Savings Plan Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1998 - -------------------------------------------------------------------------------------------------- Fair Market Identity of Issue Cost Value -------------------------------------------------------------- --------------- --------------- Common/Collective Trusts: BGI Equity Index $ 19,919,113 $ 36,404,538 BGI EAFE Index 18,176,413 24,296,695 BGI Russell 2000 14,159,677 13,970,053 BGI U.S. Debt Index Fund 125,800,066 143,733,917 Registered Investment Companies: Alliance Quasar 3,269,287 2,994,868 Alliance Small Cap Fund 44,751,985 44,760,341 American Century Ultra Invests Fund 56,042,958 63,515,770 Axe Houghton Small Cap Fund 65,744,693 67,171,678 Columbus Circle Small Cap Fund 10,735,835 17,100,465 Fidelity Aggressive Equity Fund (a) 43,381,200 55,275,301 Fidelity Broad Market Management (a) 34,823,898 41,523,137 Fidelity Contrafund (a) 73,636,451 92,020,115 Fidelity Diversified International (a) 11,805,023 11,821,541 Fidelity Growth & Income Portfolio (a) 87,158,989 113,555,310 Fidelity Inst. Cash Portfolio (a) 94,359,795 94,359,795 Fidelity Magellan Fund Inc. (a) 101,517,916 152,432,571 Fidelity Managed Inv. Contract Portfolio (GIC's) (a) 25,089,654 25,089,654 Fidelity Puritan Fund (a) 9,061,670 9,125,124 Fidelity Retirement Money Market (a) 56,559,277 56,559,277 Fidelity Select Equity Portfolio (a) 146,357,081 220,386,885 Fidelity Select International Portfolio (a) 55,862,285 71,218,889 Fidelity U.S. Equity Index Portfolio (a) 30,783,838 47,314,789 Janus Worldwide 15,204,161 16,456,432 Legg Mason Small Cap Fund 64,791,934 86,554,944 Employer Related Investments NCR Common Stock 43,715,397 57,827,007 Participant Loans (b) 22,223,759 22,223,759 --------------- --------------- $1,274,932,355 $1,587,692,855 =============== =============== (a) Separate affiliates of Fidelity (party in interest) act as the trustee and record keeper of the Plan. (b) The participant loan interest rates are between 6% - 9%. The loan terms are between 12 to 56 months. 15
NCR Savings Plan Line 27d - Schedule of Reportable Transactions For the Year Ended December 31, 1998 - -------------------------------------------------------------------------------- (f) Expense (a) Identity of Party (b) Description Number of (c) Purchase (d) Selling (e) Lease Incurred with Involved of Assets Transactions Price Price Rental Transaction Fidelity Investments Very Conservative 256 $ 134,642,733 - - - Option 252 $ 89,250,345 - - Fidelity Investments Conservative Strategy 252 52,246,409 - - - 252 51,458,422 - - Fidelity Investments Aggressive Strategy 252 70,234,592 - - - 252 108,733,616 - - Fidelity Investments NCR Stock Fund 252 46,334,902 - - - 252 35,536,015 - - Fidelity Investments Fidelity Growth & Income 252 46,586,920 - - - 252 36,224,867 - - ------------- --------------- -------------- ---------- -------------- 2,524 $ 350,045,556 $ 321,203,265 - - ============= =============== ============== ========== ============== (h) Current Value (a) Identity of Party (b) Description (g) Cost of of Assets on Involved of Assets Assets Transaction Date (i) Net Gain Fidelity Investments Very Conservative - $ 134,642,733 - Option $ 89,250,345 89,250,345 - Fidelity Investments Conservative Strategy - 52,246,409 - 47,485,425 51,458,422 $ 3,972,997 Fidelity Investments Aggressive Strategy - 70,234,592 - 70,350,589 108,733,616 38,383,027 Fidelity Investments NCR Stock Fund - 46,334,902 - 33,767,640 35,536,015 1,768,375 Fidelity Investments Fidelity Growth & Income - 46,586,920 - 31,397,521 36,224,867 4,827,346 -------------- --------------- ------------- $ 272,251,520 $ 671,248,821 $ 48,951,745 ============== =============== ============= 16
NCR Savings Plan. Pursuant to the requirements of the Securities Exchange Act of - ----------------- 1934, the NCR Corporation has duly caused this annual report to be signed by the undersigned thereunto duly authorized. NCR SAVINGS PLAN By: /s/Craig Brooks NCR Savings Plan Administrator Date: June 28, 1999
Exhibit Index Exhibit No. - ----------- 23 Consent of PricewaterhouseCoopers LLP
Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 of the NCR Savings Plan (Registration No. 333-18803) of our report dated June 11, 1999 appearing in this Annual Report on Form 11-K for the years ended December 31, 1998 and 1997. PricewaterhouseCoopers LLP Dayton, Ohio June 11, 1999