UNITED STATES
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 (date of earliest event reported): July 29, 2008
NCR CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number 001-00395
| Maryland | 31-0387920 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1700 S. Patterson Blvd.
Dayton, Ohio 45479
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (937) 445-5000
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition. |
The Company is furnishing the following information as required under Item 2.02 “Results of Operations and Financial Condition” of Form 8-K and item 7.01 “Regulation FD Disclosure.” Such information, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934.
On July 29, 2008, the Company issued a press release setting forth its second quarter 2008 revenue and earnings per share amounts along with its forecast for 2008 earnings per share. A copy of the press release is attached hereto as Exhibit 99.1 and hereby incorporated by reference.
| Item 7.01 | Regulation FD Disclosure. |
The information set forth above under Item 2.02 “Results of Operations and Financial Condition” is furnished pursuant to this Item 7.01 and Exhibit 99.1 is hereby incorporated by reference into this Item 7.01.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits: |
The following exhibit is attached with this current report on Form 8-K:
| Exhibit No. |
Description | |
| 99.1 | Press Release, dated July 29, 2008, issued by the Company. |
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SIGNATURES
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: July 29, 2008 | By: | /s/ Anthony Massetti | ||
| Anthony Massetti | ||||
| Senior Vice President and Chief Financial Officer | ||||
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Index to Exhibits
| Exhibit No. |
Description | |
| 99.1 | Press Release, dated July 29, 2008, issued by the Company. |
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Exhibit 99.1
 |
1700 South Patterson Boulevard Dayton, OH 45479
NEWS RELEASE | |||
|
For media information:
Janet Brewer NCR Corporation (937) 445-6779 janet.brewer@ncr.com |
For investor information:
Gavin Bell NCR Corporation (937) 445-3276 gavin.bell@ncr.com |
For Release on July 29, 2008
NCR Announces 2008 Second-Quarter Results
| • | Total revenue growth of 13 percent versus Q2-2007 |
| • | Double-digit revenue growth across key geographies |
| • |
GAAP EPS from continuing operations was $0.26 per diluted share; non-GAAP EPS from continuing operations was $0.40 per diluted share(1) |
| • | Cash provided by operating activities from continuing operations improved $85 million versus Q2-2007 |
| • | NCR repurchased approximately 5 million shares in the second quarter |
DAYTON, Ohio – NCR Corporation (NYSE: NCR) reported financial results today for the three months ended June 30, 2008. Reported revenue of $1.33 billion increased 13 percent over the second quarter of 2007 and included approximately 5 percentage points of benefit from foreign currency translation.
NCR reported second-quarter income from continuing operations of $45 million, or $0.26 per diluted share, compared to $51 million or $0.28 per diluted share in the second quarter of 2007. Income from continuing operations for the second quarter of 2008 included $32 million ($23 million after-tax) in costs, or $0.14 per diluted share, resulting from organizational realignment activities. In the second quarter of 2007, income from continuing operations included $6 million of after-tax costs, or $0.03 per diluted share, related to the manufacturing realignment, a tax adjustment related to prior periods, and the Fox River environmental matter. Excluding these items, non-GAAP earnings from continuing operations(1) in the second quarter of 2008 were $0.40 per diluted share, which compares to $0.31 per diluted share in the prior year period.
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“NCR’s strong second quarter results were broad-based geographically and speak to continued solid demand for our self-service solutions,” said Bill Nuti, chairman and chief executive officer of NCR. “Even in a challenging global economy, consumers want to connect, interact and transact with businesses in new ways, and NCR is at the forefront of helping our customers meet that demand. At the same time, we are striving to make the most of this opportunity by managing for profitable revenue growth, building a sustainable and leading cost structure, and improving our working capital position.”
Second Quarter-2008 Highlights
Financial Highlights
Revenue growth in the Americas region of 11 percent was driven primarily by sales growth to financial institutions. In the Europe-Middle East-Africa (EMEA) region, revenues increased 16 percent due to strong demand for NCR products from Eastern European and Middle Eastern customers. NCR experienced 10 percent revenue growth in the Asia-Pacific-Japan (APJ) region. Total revenue growth of 13 percent was aided by approximately 5 percentage points of benefit from foreign currency translation.
As shown on Schedule B, income from operations was $62 million in the second quarter of 2008 and included $7 million of pension expense and $32 million of costs related to the organizational realignment activities, as previously described. This compares to $79 million of income from operations in the second quarter of 2007, which included $8 million of pension expense and an $11 million benefit related to an update of estimated costs associated with the manufacturing realignment initiative, as previously described. Excluding these items and pension expense, non-GAAP income from operations(2) increased 33 percent to $101 million in the second quarter of 2008 compared to $76 million in the second quarter of 2007.
NCR generated $69 million of cash from operating activities during the second quarter of 2008, compared to using $16 million of cash in the year-ago period. Capital expenditures of $36 million in the second quarter of 2008 were up from $19 million in the year-ago period. NCR generated $33 million of free cash flow (cash from operations less capital expenditures)(3) in the second quarter of 2008, compared to a negative free cash flow of $35 million in the second quarter of 2007. Free cash flow, in the most recent quarter, benefited from reduced levels of accounts receivable and inventory.
2
Year-to-date, NCR generated $150 million of cash from operating activities, compared to $27 million during the year-ago period. Capital expenditures of $68 million in the first half of 2008 were up from $53 million in the first half of 2007. NCR generated $82 million of free cash flow (cash from operations less capital expenditures)(3) in the first half of 2008, compared to a negative free cash flow of $26 million in the first half of 2007.
In addition, the company used $127 million of cash to repurchase approximately 5 million shares of NCR stock in the quarter.
New Product Highlights
In the second quarter, NCR continued to execute on the largest new product rollout in the company’s history, delivering enhanced solutions to customers in the financial and retail industry markets, as well as verticals such as travel and hospitality that offer newer growth opportunities for self-service solutions.
The rollout of NCR SelfServTM, NCR’s new ATM product family, continues to progress successfully with over 4,000 units ordered by more than 120 customers around the globe year-to-date. NCR SelfServ has been installed by major customers in Australia, Canada, China, Spain and the United States. By year-end 2008, the company anticipates that new customer orders for NCR SelfServ will surpass those of the NCR Personas product line, further validating customer confidence in NCR’s SelfServ family of ATMs.
In May, the next generation NCR FastLaneTM self-checkout solution was introduced at the 2008 Food Marketing Institute and MARKETECHNICS® show in Las Vegas. NCR FastLane now features a more refined, compact design that allows the device to be deployed beyond high-volume retail and grocery environments into other formats, such as department stores, convenience stores, pharmacies and more. The solution allows consumers to scan, bag and pay for goods on their own using cash and debit or credit, including the increasingly popular contactless payment cards.
NCR extended its self-service portfolio further into the hospitality market with the unveiling of the new NCR XpressPort kiosk, a sophisticated and modular hotel check-in kiosk designed to meet consumer demand for self-service in a high-touch environment. The NCR XpressPort kiosk is part of the NCR Xpress Hotel self-service solution, which allows guests to perform a number of tasks including checking-in and out, printing room keys, locating and modifying reservations and viewing and printing messages.
3
2008 Outlook
NCR now expects 2008 year-over-year revenue growth of 6 to 8 percent, up from previously provided guidance of 5 to 7 percent revenue growth.
Additionally, NCR now expects its full-year 2008 GAAP earnings from continuing operations to be $1.55 to $1.60 per diluted share and non-GAAP earnings from continuing operations to be $1.62 to $1.67 per diluted share.(1)
| Revised 2008 Guidance |
Prior 2008 Guidance |
|||||||
| Year-over-year revenue growth: |
||||||||
| Total NCR |
6 - 8 | % | 5 - 7 | % | ||||
| Diluted earnings per share – GAAP |
$ | 1.55 - $1.60 | $ | 1.59 - $1.64 | ||||
| Non-GAAP (does not include certain items)(1) |
$ | 1.62 - $1.67 | $ | 1.52 - $1.57 | ||||
2008 Second Quarter Earnings Conference Call
A conference call is scheduled today at 8:00 a.m. (EDT) to discuss the company’s 2008 second-quarter results and guidance for full-year 2008. Access to the conference call, as well as a replay of the call, is available on NCR’s website at http://investor.ncr.com/. Supplemental financial information regarding NCR’s second quarter 2008 operating results is also available on NCR’s website.
About NCR Corporation
NCR Corporation (NYSE: NCR) is a global technology company leading how the world connects, interacts and transacts with business. NCR’s assisted- and self-service solutions and comprehensive support services address the needs of retail, financial, travel, healthcare, hospitality, gaming and public sector organizations in more than 100 countries. NCR (www.ncr.com) is headquartered in Dayton, Ohio.
# # #
NCR is a trademark of NCR Corporation in the United States and other countries.
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Reconciliation of Diluted Earnings From Continuing Operations GAAP to Non-GAAP Measures
| Q2 2008 Actual |
Q2 2007 Actual |
Revised 2008 Guidance |
||||||||||
| Diluted Earnings Per Share (GAAP) |
$ | 0.26 | $ | 0.28 | $ | 1.55-$1.60 | ||||||
| Gain on sale of Canadian manufacturing facility |
— | — | 0.07 | |||||||||
| Organizational realignment costs, net |
(0.14 | ) | — | (0.14 | ) | |||||||
| Tax adjustment |
— | (0.06 | ) | — | ||||||||
| Fox River environmental matter, net |
— | (0.02 | ) | — | ||||||||
| Manufacturing realignment benefit, net |
— | 0.05 | — | |||||||||
| Diluted Earnings Per Share (non-GAAP)(1) |
$ | 0.40 | $ | 0.31 | $ | 1.62-$1.67 | ||||||
Free Cash Flow From Continuing Operations
(in millions)
| For the Periods Ended June 30 | ||||||||||||||||
| Three Months | Six Months | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Cash provided by (used in) operating activities (GAAP) |
$ | 69 | $ | (16 | ) | $ | 150 | $ | 27 | |||||||
| Less capital expenditures for: |
||||||||||||||||
| Expenditures for property, plant and equipment |
(19 | ) | (8 | ) | (36 | ) | (30 | ) | ||||||||
| Additions to capitalized software |
(17 | ) | (11 | ) | (32 | ) | (23 | ) | ||||||||
| Total capital expenditures |
(36 | ) | (19 | ) | (68 | ) | (53 | ) | ||||||||
| Free cash flow (non-GAAP)(3) |
$ | 33 | $ | (35 | ) | $ | 82 | $ | (26 | ) | ||||||
| (1) | NCR’s management looks at the company’s results excluding certain items to assess the financial performance of the company and believes this information is useful for investors because it provides a more complete understanding of NCR’s underlying operational performance, as well as consistency and comparability with past reports of financial results. In addition, management uses earnings per share excluding these items to manage and determine effectiveness of its business managers and as a basis for incentive compensation. These non-GAAP measures should not be considered as substitutes for or superior to results determined in accordance with GAAP. |
NCR reports its results in accordance with Generally Accepted Accounting Principles in the United States, or GAAP. However, the company believes that certain non-GAAP measures found in this release are useful for investors.
| (2) | The segment results discussed in this earnings release exclude the impact of pension expense and certain items. Schedule B, included in this earnings release, reconciles total income from operations excluding pension expense and certain items to income from operations for the company. NCR’s management looks at the company’s results excluding certain items to assess the financial performance of the company and believes this information is useful for investors because it provides a more complete understanding of NCR’s underlying operational performance, as well as consistency and comparability with past reports of financial results. These non-GAAP measures should not be considered as substitutes for or superior to results determined in accordance with GAAP. |
5
| (3) | NCR defines free cash flow as cash provided/used by operating activities less capital expenditures for property, plant and equipment, and additions to capitalized software. Free cash flow does not have a uniform definition under GAAP and, therefore, NCR’s definition may differ from other companies’ definitions of this measure. NCR’s management uses free cash flow to assess the financial performance of the company and believes it is useful for investors because it relates the operating cash flow of the company to the capital that is spent to continue and improve business operations. In particular, free cash flow indicates the amount of cash generated after capital expenditures for, among other things, investment in the company’s existing businesses, strategic acquisitions, strengthening the company’s balance sheet, repurchase of company stock and repayment of the company’s debt obligations. Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other nondiscretionary expenditures that are not deducted from the measure. This non-GAAP measure should not be considered a substitute for or superior to cash flows from operating activities under GAAP. |
Note to Investors
This news release contains forward-looking statements, including statements as to anticipated or expected results, beliefs, opinions and future financial performance, within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements include projections of revenue, profit growth and other financial items, future economic performance and statements concerning analysts’ earnings estimates, among other things. 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 those relating to: the uncertain economic climate and its impact on the markets in general or on the ability of our suppliers to meet their commitments to us, or the timing of purchases by our current and potential customers, particularly customers in the financial services sector, which has been impacted by difficulties related to the sub-prime mortgage business and our retail customers who have seen dampening consumer demand, as well as other general economic and business conditions; the timely development, production or acquisition and market acceptance of new and existing products and services (such as self-service technologies), including our ability to accelerate market acceptance of new products and services; shifts in market demands, continued competitive factors and pricing pressures and their impact on our ability to improve gross margins and profitability, especially in our more mature offerings; the effect of currency translation; short product cycles, rapidly changing technologies and maintaining a competitive leadership position with respect to our solution offerings; tax rates; ability to execute our business and reengineering plans, including potential impact from our recent transition from a business unit to functional organizational model; turnover of workforce and the ability to attract and retain skilled employees, especially in light of continued cost-control measures being taken by the company; availability and successful exploitation of new acquisition and alliance opportunities; changes in Generally Accepted Accounting Principles (GAAP) and the resulting impact, if any, on the company’s accounting policies; continued efforts to establish and maintain best-in-class internal information technology and control systems; and other factors detailed from time to time in the company’s U.S. Securities and Exchange Commission reports and the company’s annual reports to stockholders. 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
Schedule A
NCR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millions, except per share amounts)
| For the Periods Ended June 30 | ||||||||||||||||
| Three Months | Six Months | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Revenue |
||||||||||||||||
| Products |
$ | 704 | $ | 630 | $ | 1,307 | $ | 1,116 | ||||||||
| Services |
628 | 549 | 1,208 | 1,055 | ||||||||||||
| Total revenue |
1,332 | 1,179 | 2,515 | 2,171 | ||||||||||||
| Cost of products |
512 | 454 | 953 | 865 | ||||||||||||
| Cost of services |
533 | 456 | 1,016 | 880 | ||||||||||||
| Total gross margin |
287 | 269 | 546 | 426 | ||||||||||||
| % of Revenue |
21.5 | % | 22.8 | % | 21.7 | % | 19.6 | % | ||||||||
| Selling, general and administrative expenses |
184 | 160 | 343 | 305 | ||||||||||||
| Research and development expenses |
41 | 30 | 76 | 59 | ||||||||||||
| Income from operations |
62 | 79 | 127 | 62 | ||||||||||||
| % of Revenue |
4.7 | % | 6.7 | % | 5.0 | % | 2.9 | % | ||||||||
| Interest expense |
5 | 6 | 11 | 12 | ||||||||||||
| Other income, net |
(5 | ) | (7 | ) | (12 | ) | (16 | ) | ||||||||
| Income before income taxes and discontinued operations |
62 | 80 | 128 | 66 | ||||||||||||
| % of Revenue |
4.7 | % | 6.8 | % | 5.1 | % | 3.0 | % | ||||||||
| Income tax expense |
17 | 29 | 34 | 24 | ||||||||||||
| Income from continuing operations |
45 | 51 | 94 | 42 | ||||||||||||
| (Loss) income from discontinued operations, net of tax |
(1 | ) | 47 | (2 | ) | 90 | ||||||||||
| Net income |
$ | 44 | $ | 98 | $ | 92 | $ | 132 | ||||||||
| Net income per common share from continuing operations |
||||||||||||||||
| Basic |
$ | 0.27 | $ | 0.28 | $ | 0.55 | $ | 0.23 | ||||||||
| Diluted |
$ | 0.26 | $ | 0.28 | $ | 0.54 | $ | 0.23 | ||||||||
| Net income per common share |
||||||||||||||||
| Basic |
$ | 0.26 | $ | 0.54 | $ | 0.54 | $ | 0.73 | ||||||||
| Diluted |
$ | 0.26 | $ | 0.54 | $ | 0.53 | $ | 0.72 | ||||||||
| Weighted average common shares outstanding |
||||||||||||||||
| Basic |
166.8 | 180.1 | 169.9 | 179.7 | ||||||||||||
| Diluted |
169.9 | 182.8 | 172.8 | 182.4 | ||||||||||||
Schedule B
NCR CORPORATION
CONSOLIDATED REVENUE and OPERATING INCOME SUMMARY
(Unaudited)
(in millions)
| For the Periods Ended June 30 | ||||||||||||||||||||||
| Three Months | Six Months | |||||||||||||||||||||
| 2008 | 2007 | % Change |
2008 | 2007 | % Change |
|||||||||||||||||
| Revenue by segment |
||||||||||||||||||||||
| Americas |
$ | 578 | $ | 519 | 11 | % | $ | 1,065 | $ | 943 | 13 | % | ||||||||||
| EMEA |
513 | 441 | 16 | % | 1,006 | 819 | 23 | % | ||||||||||||||
| APJ |
241 | 219 | 10 | % | 444 | 409 | 9 | % | ||||||||||||||
| Consolidated revenue |
$ | 1,332 | $ | 1,179 | 13 | % | $ | 2,515 | $ | 2,171 | 16 | % | ||||||||||
| Gross margin by segment |
||||||||||||||||||||||
| Americas |
$ | 108 | $ | 106 | $ | 201 | $ | 191 | ||||||||||||||
| % of Revenue |
18.7 | % | 20.4 | % | 18.9 | % | 20.3 | % | ||||||||||||||
| EMEA |
146 | 109 | 268 | 194 | ||||||||||||||||||
| % of Revenue |
28.5 | % | 24.7 | % | 26.6 | % | 23.7 | % | ||||||||||||||
| APJ |
57 | 49 | 103 | 88 | ||||||||||||||||||
| % of Revenue |
23.7 | % | 22.4 | % | 23.2 | % | 21.5 | % | ||||||||||||||
| Total—segment gross margin |
$ | 311 | $ | 264 | $ | 572 | $ | 473 | ||||||||||||||
| % of Revenue |
23.3 | % | 22.4 | % | 22.7 | % | 21.8 | % | ||||||||||||||
| Selling, general and administrative expenses |
175 | 158 | 349 | 301 | ||||||||||||||||||
| Research and development expenses |
35 | 30 | 67 | 58 | ||||||||||||||||||
| Non-GAAP income from operations |
$ | 101 | $ | 76 | $ | 156 | $ | 114 | ||||||||||||||
| Pension expense |
(7 | ) | (8 | ) | (13 | ) | (17 | ) | ||||||||||||||
| Other adjustments (1) |
(32 | ) | 11 | (16 | ) | (35 | ) | |||||||||||||||
| Income from operations |
$ | 62 | $ | 79 | $ | 127 | $ | 62 | ||||||||||||||
| (1) |
Other adjustments include $32 million of organizational realignment costs in the second quarter of 2008 and a $16 million gain from the sale of a manufacturing facility in Canada in the first quarter of 2008. Other adjustments for the first and second quarter of 2007 include amounts associated with the manufacturing realignment initiative. |
Schedule C
NCR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions, except per share amounts)
| June 30 2008 |
March 31 2008 |
December 31 2007 |
||||||||||
| Assets |
||||||||||||
| Current assets |
||||||||||||
| Cash and cash equivalents |
$ | 754 | $ | 851 | $ | 952 | ||||||
| Accounts receivable, net |
991 | 1,048 | 1,167 | |||||||||
| Inventories, net |
735 | 752 | 717 | |||||||||
| Other current assets |
285 | 260 | 252 | |||||||||
| Total current assets |
2,765 | 2,911 | 3,088 | |||||||||
| Property, plant and equipment, net |
305 | 309 | 313 | |||||||||
| Goodwill |
67 | 66 | 64 | |||||||||
| Prepaid pension cost |
841 | 831 | 776 | |||||||||
| Deferred income taxes |
202 | 208 | 210 | |||||||||
| Other assets |
376 | 331 | 329 | |||||||||
| Total assets |
$ | 4,556 | $ | 4,656 | $ | 4,780 | ||||||
| Liabilities and stockholders’ equity |
||||||||||||
| Current liabilities |
||||||||||||
| Short-term borrowings |
$ | 301 | $ | 1 | $ | 1 | ||||||
| Accounts payable |
469 | 481 | 516 | |||||||||
| Payroll and benefits liabilities |
176 | 163 | 231 | |||||||||
| Deferred service revenue and customer deposits |
411 | 432 | 359 | |||||||||
| Other current liabilities |
418 | 380 | 423 | |||||||||
| Total current liabilities |
1,775 | 1,457 | 1,530 | |||||||||
| Long-term debt |
8 | 308 | 307 | |||||||||
| Pension and indemnity plan liabilities |
442 | 450 | 433 | |||||||||
| Postretirement and postemployment benefits liabilities |
362 | 362 | 359 | |||||||||
| Deferred income taxes |
56 | 53 | 45 | |||||||||
| Income tax accruals |
181 | 179 | 165 | |||||||||
| Other liabilities |
127 | 158 | 165 | |||||||||
| Minority interests |
19 | 22 | 19 | |||||||||
| Total liabilities |
2,970 | 2,989 | 3,023 | |||||||||
| Stockholders’ equity |
||||||||||||
| Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at June 30, 2008, March 31, 2008 and December 31, 2007, respectively |
— | — | — | |||||||||
| Common stock: par value $0.01 per share, 500.0 shares authorized, 165.1, 169.8 and 178.2 shares issued and outstanding at June 30, 2008, March 31, 2008 and December 31, 2007, respectively |
2 | 2 | 2 | |||||||||
| Paid-in capital |
389 | 503 | 683 | |||||||||
| Retained earnings |
1,700 | 1,656 | 1,608 | |||||||||
| Accumulated other comprehensive loss |
(505 | ) | (494 | ) | (536 | ) | ||||||
| Total stockholders’ equity |
1,586 | 1,667 | 1,757 | |||||||||
| Total liabilities and stockholders’ equity |
$ | 4,556 | $ | 4,656 | $ | 4,780 | ||||||
Schedule D
NCR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
| For the Periods Ended June 30 | ||||||||||||||||
| Three Months | Six Months | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Operating activities |
||||||||||||||||
| Income from continuing operations |
$ | 45 | $ | 51 | $ | 94 | $ | 42 | ||||||||
| Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating activities: |
||||||||||||||||
| Depreciation and amortization |
26 | 27 | 55 | 54 | ||||||||||||
| Stock-based compensation expense |
10 | 4 | 20 | 9 | ||||||||||||
| Excess tax benefit from stock-based compensation |
(1 | ) | (3 | ) | (1 | ) | (5 | ) | ||||||||
| Deferred income taxes |
14 | 17 | 21 | 22 | ||||||||||||
| Gains on sale of property, plant and equipment |
(10 | ) | — | (27 | ) | (4 | ) | |||||||||
| Changes in assets and liabilities: |
||||||||||||||||
| Receivables |
57 | (58 | ) | 176 | 9 | |||||||||||
| Inventories |
17 | (26 | ) | (18 | ) | (63 | ) | |||||||||
| Current payables and accrued expenses |
(9 | ) | 21 | (103 | ) | (53 | ) | |||||||||
| Deferred service revenue and customer deposits |
(21 | ) | (26 | ) | 52 | 15 | ||||||||||
| Employee severance and pension |
17 | (36 | ) | (4 | ) | (10 | ) | |||||||||
| Other assets and liabilities |
(76 | ) | 13 | (115 | ) | 11 | ||||||||||
| Net cash provided by (used in) operating activities |
69 | (16 | ) | 150 | 27 | |||||||||||
| Investing activities |
||||||||||||||||
| Expenditures for property, plant and equipment |
(19 | ) | (8 | ) | (36 | ) | (30 | ) | ||||||||
| Proceeds from sales of property, plant and equipment |
15 | — | 53 | 11 | ||||||||||||
| Additions to capitalized software |
(17 | ) | (11 | ) | (32 | ) | (23 | ) | ||||||||
| Other investing activities, business acquisitions and divestitures, net |
(23 | ) | 1 | (23 | ) | 1 | ||||||||||
| Net cash used in investing activities |
(44 | ) | (18 | ) | (38 | ) | (41 | ) | ||||||||
| Financing activities |
||||||||||||||||
| Purchase of Company common stock |
(127 | ) | — | (320 | ) | — | ||||||||||
| Excess tax benefit from stock-based compensation |
1 | 3 | 1 | 5 | ||||||||||||
| Short-term borrowings, additions (repayments) |
1 | (1 | ) | 1 | (1 | ) | ||||||||||
| Proceeds from employee stock plans |
6 | 18 | 10 | 36 | ||||||||||||
| Other financing activities, net |
— | 1 | — | 1 | ||||||||||||
| Net cash (used in) provided by financing activities |
(119 | ) | 21 | (308 | ) | 41 | ||||||||||
| Cash flows from discontinued operations |
||||||||||||||||
| Net cash (used in) provided by operating activities |
(3 | ) | 98 | (16 | ) | 206 | ||||||||||
| Net cash used in investing activities |
— | (32 | ) | — | (51 | ) | ||||||||||
| Net cash provided by financing activities |
— | 1 | — | 3 | ||||||||||||
| Net cash (used in) provided by discontinued operations |
(3 | ) | 67 | (16 | ) | 158 | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents |
— | 5 | 14 | 7 | ||||||||||||
| (Decrease) increase in cash and cash equivalents |
(97 | ) | 59 | (198 | ) | 192 | ||||||||||
| Cash and cash equivalents at beginning of period |
851 | 1,080 | 952 | 947 | ||||||||||||
| Cash and cash equivalents at end of period |
$ | 754 | $ | 1,139 | $ | 754 | $ | 1,139 | ||||||||