DAYTON, Ohio, Jan. 23 /PRNewswire/ -- NCR Corporation (NYSE: NCR) today announced that revenue for the fourth quarter ended December 31, 2000, increased to $1.79 billion, a 2 percent increase over the $1.76 billion reported in the year-ago period. On a local currency basis, revenue increased 7 percent. Net income of $90 million, or $0.90 per diluted share, for the fourth quarter compared to $235 million, or $2.44 per diluted share, in the year-ago period. Excluding the impact of restructuring and other related charges, and one-time charges related to acquisitions, fourth quarter and full year net income increased 44 percent and 41 percent, respectively, to $105 million, or $1.05 per diluted share, for the fourth quarter, and $229 million, or $2.34 per diluted share, for the full year.
Commenting on the results, NCR Chairman and CEO Lars Nyberg said, "Despite several challenges in 2000, NCR improved operationally and financially, delivering substantially increased operating earnings for the year. We are not satisfied that our original revenue and operating income targets were not attained. However, we are convinced that NCR is now better positioned for growth and enhanced profitability due to the underlying value proposition of our key solutions, the exiting of commodity businesses, a reduced cost structure and the strengthening of our management team."
Nyberg added, "The year 2000 was a breakthrough year for our Teradata(R) data warehousing solution. With impressive revenue growth, Teradata demonstrated its potential to be a very successful business. Our ATM business ended the year with solid revenue growth and strong order activity, and is well positioned for 2001."
Revenue
At $1.79 billion, worldwide revenues increased 2 percent in the quarter, or 7 percent on a constant currency basis. By solution, Data Warehousing continued its impressive growth, up 20 percent for the quarter. Retail Store Automation revenue grew 14 percent, Financial Self Service increased 5 percent, or 13 percent on a constant currency basis, and Customer Services Maintenance revenues improved 3 percent. Revenue for Systemedia decreased 11 percent, while Payment and Imaging grew 8 percent in the quarter.
For the full year, NCR's revenue declined 4%, mainly due to exited businesses and the effects of currency. Data Warehousing reported a very strong 31 percent increase in revenues. Retail Store Automation revenue declined 8 percent. Financial Self Service revenue decreased 2 percent, but increased 4 percent on a constant currency basis, and Customer Services Maintenance revenue declined 3 percent. Systemedia revenue decreased 1 percent, while Payment and Imaging revenue declined 10 percent.
Gross Margin
Total gross margin for NCR products and services was 32.1 percent, up 1.3 points over last year's fourth quarter, a result of higher gross margins for both services and products. Excluding special items, total gross margin for the fourth quarter increased 1.8 percentage points to 33.1 percent. Product gross margin increased 0.4 points to 36.9 percentage points of revenue, and services gross margin increased 3.4 points to 28.3 percentage points of revenue.
Expenses
Total expenses in the fourth quarter were $463 million compared to $570 million last year; excluding special items, expenses increased $9 million over $453 million in the prior year. Goodwill amortization included in selling, general and administrative expense in the quarter was $14 million compared with $5 million in the year ago period. Research and development expenses were $87 million, or 4.9 percent of revenue, versus $94 million, or 5.3 percent of revenue, in the prior year.
Operating and Net Income
Operating income for the quarter was $113 million compared with $27 million operating loss a year ago. Excluding special items, operating income for the quarter was $131 million compared to $98 million a year ago. Other income in the quarter was $18 million compared to $97 million a year ago, which included a $77 million significant gain on the sale of real estate. The effective tax rate for the quarter was 29.4 percent, reflecting success in progressively reducing the operating tax rate for the year, which was 33 percent in 2000 versus 38 percent in 1999.
Net income was $90 million compared with $235 million reported a year ago, which included a favorable tax valuation release of $232 million. Reported earnings per basic share were $0.93 and $0.90 on a fully diluted basis compared to $2.47 per basic share and $2.44 per diluted share in the prior year. The weighted average number of shares outstanding on a fully diluted basis increased to 99.8 million in the fourth quarter from 96.2 million a year ago. Without the impacts of restructuring and other special items, net income would have been $105 million, or $1.05 per diluted share, in the fourth quarter and $229 million, or $2.34 per diluted share, for the full year, compared to $73 million, or $0.75 per diluted share, in the year-ago quarter and $162 million, or $1.61 per diluted share, for the prior year.
Special items, which impacted both 2000 and 1999 and are detailed on a separate exhibit, are summarized below:
2000 1999
Operating Income
1999 Restructuring
Initiative $38 million of charges $125 million charge
- Acquisitions-related $27 million of charges
Other Income
Significant Real Estate
Gains $98 million of gains
Income Taxes
- Tax Valuation Allowance Release $232 million credit
Balance Sheet
NCR ended the fourth quarter with $357 million in cash and short-term investments, down from $763 million on December 31, 1999, primarily as a result of acquisitions ($319 million), share repurchases ($110 million), and severance payments (approximately $100 million) related to NCR's 1999 restructuring initiatives. Operating cash flow for the quarter and year was $107 million and $171 million, respectively. As of December 31, 2000, NCR had debt of $107 million and total shareholders' equity of $1.8 billion.
In addition to the $181 million remaining on the October 1999 $250 million repurchase authorization, NCR's board authorized a systematic repurchase program in December 2000 to actively manage the effects of the company's employee stock purchase and stock option programs. During the quarter, NCR repurchased approximately 1.8 million shares.
At the end of the fourth quarter, NCR employed approximately 32,900 people worldwide, including contractors, an increase of approximately 1,000 from 31,900 at the end of the third quarter. The increase is primarily due to the addition of employees associated with the acquisition of 4Front Technologies, Inc.
Outlook and Financial Guidance
For 2001, NCR will maintain its focus on revenue growth and increasing profitability from its key businesses. Supporting previous guidance, overall revenue growth is expected to be 5 percent, including:
20-25 percent increase for Data Warehousing
5 percent increase for the Financial Self Service and Customer Services Maintenance businesses
0-1 percent increase for Retail Store Automation
Revenue decline from exited businesses of approximately $250 million.
Momentum in the Data Warehousing and Financial Self Service businesses and the benefit from the 4Front Technologies Inc. acquisition support the overall growth target.
First quarter 2001 revenue growth is targeted at 2-4 percent, including 15-20 percent revenue growth from Data Warehousing. NCR's other key businesses -- Retail Store Automation, Financial Self Service, and Customer Services -- should generate revenue growth in the low single digits or higher in the first quarter. The company expects to have positive operating income in the quarter.
About NCR Corporation
NCR Corporation (NYSE: NCR) is a leader in providing Relationship Technology(TM) solutions to customers worldwide in the retail, financial, communications, manufacturing, travel and transportation, and insurance markets. NCR's Relationship Technology solutions include privacy-enabled Teradata(R) warehouses and customer relationship management (CRM) applications, store automation and automated teller machines (ATMs). The company's business solutions are built on the foundation of its long-established industry knowledge and consulting expertise, value-adding software, global customer support services, a complete line of consumable and media products, and leading edge hardware technology. NCR employs 32,900 in more than 100 countries, and is a component stock of the Standard & Poor's 500 Index. More information about NCR and its solutions may be found at www.ncr.com .
NCR and Teradata are trademarks or registered trademarks of NCR Corporation in the United States and other countries.
Financial Information
Detailed financial information regarding NCR's fourth quarter and 2000 results is available on NCR's web site http://www.ncr.com. NCR Chairman and Chief Executive Officer Lars Nyberg and Senior Vice President and Chief Financial Officer David Bearman will also discuss the company's financial performance during a conference call today at 10:00 A.M. (ET). Access is available from NCR's web site at http://www.ncr.com/investors/invest_rel.htm. A replay is accessible by calling (402) 220-0204 beginning at 11:30 A.M. (ET) today until 5:00 P.M. (ET) on January 26, 2001.
Note to Investors:
This news release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, including statements as to anticipated or expected results, beliefs, opinions, and future financial performance. These forward-looking statements include projecting revenue and profit growth, and statements expressing comfort with analysts' earnings estimates. These forward-looking statements are based on current expectations and assumptions and involve known and unknown 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, but are not limited to, general economic and business conditions; the timely development, production or acquisition, and market acceptance of new and existing products and services; shifts in market demands; continued competitive factors and pricing pressures; short product-cycles and rapidly changing technologies; turnover of workforce and the ability to attract and retain skilled employees; tax rates; ability to execute the company's business plan; and other factors detailed from time to time in the company'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.
NCR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
For the Periods Ended December 31
Three Months Twelve Months
2000 1999 2000 1999
Revenue
Products $1,000 $966 $3,178 $3,290
Services 792 795 2,781 2,906
Total Revenue 1,792 1,761 5,959 6,196
Cost of Products 631 621 2,000 2,099
Cost of Services 585 597 2,092 2,207
Total Gross Margin 576 543 1,867 1,890
% of Revenue 32.1% 30.8% 31.3% 30.5%
Selling, General and
Administrative
Expenses 376 476 1,329 1,471
Research and
Development
Expenses 87 94 333 341
Income/(Loss) from
Operations 113 (27) 205 78
% of Revenue 6.3% (1.5%) 3.4% 1.3%
Interest and Other
Income (net) 18 97 70 157
Income Before Income
Taxes 131 70 275 235
% of Revenue 7.3% 4.0% 4.6% 3.8%
Income Tax Expense/
(Benefit) 41 (165) 97 (102)
Net Income $90 $235 $178 $337
% of Revenue 5.0% 13.3% 3.0% 5.4%
Net Income per Common
Share
Basic $0.93 $2.47 $1.87 $3.45
Diluted $0.90 $2.44 $1.82 $3.35
Weighted Average
Common Shares
Outstanding
Basic 95.9 95.3 95.1 97.6
Diluted 99.8 96.2 98.0 100.6
Excluding Significant
Special Items
Income from
Operations $131 $98 $270 $203
Net Income $105 $73 $229 $162
Net Income per Common
Share (Diluted) $1.05 $0.75 $2.34 $1.61
Significant special items represent restructuring and other related
charges ($16 million in Q4 and $38 million year-to-date) in connection
with the action announced in October 1999, in-process research and
development charges ($25 million year-to-date), and one-time charges
related to the integration of 4Front Technologies, Inc. ($2 million in Q4
and year-to-date).
Certain prior year amounts have been reclassified to conform to the 2000
presentation.
NCR CORPORATION
IMPACT OF SIGNIFICANT SPECIAL ITEMS
(in millions, except per share amounts)
For the Periods Ended December 31
Three Months Twelve Months
2000 1999 2000 1999
Revenue $1,792 $1,761 $5,959 $6,196
Gross Margin - base
business 593 551 1,905 1,898
% of Revenue 33.1% 31.3% 32.0% 30.6%
Special items (17) (8) (38) (8)
Reported Gross Margin 576 543 1,867 1,890
% of Revenue 32.1% 30.8% 31.3% 30.5%
Expenses - base
business 462 453 1,635 1,695
% of Revenue 25.8% 25.7% 27.4% 27.4%
Special items 1 117 27 117
Reported Expenses 463 570 1,662 1,812
% of Revenue 25.8% 32.4% 27.9% 29.2%
Income from Operations
- base business 131 98 270 203
Special items (18) (125) (65) (125)
Reported Income/(Loss)
from Operations 113 (27) 205 78
Other Income, net
- base business 18 20 70 59
Special items - 77 - 98
Reported Other Income 18 97 70 157
Income before Income
Taxes - base
business 149 118 340 262
Special items (18) (48) (65) (27)
Reported Income before
Income Taxes 131 70 275 235
Income Taxes - base
business 44 45 111 100
Income Taxes related
to special items (3) (210) (14) (202)
Reported Income Taxes 41 (165) 97 (102)
Net Income - base
business 105 73 229 162
Special items (15) 162 (51) 175
Reported Net Income $90 $235 $178 $337
Earnings per Diluted
Share - base
business $1.05 $0.75 $2.34 $1.61
Earnings per Diluted
Share - special
items $(0.15) $1.69 $(0.52) $1.74
Reported Earnings per
Diluted Share $0.90 $2.44 $1.82 $3.35
Significant special items represent restructuring and other related
charges ($16 million in Q4 and $38 million year-to-date) in connection
with the action announced in October 1999, in-process research and
development charges ($25 million year-to-date), and one-time charges
related to the integration of 4Front Technologies, Inc. ($2 million in Q4
and year-to-date).
Certain prior year amounts have been reclassified to conform to the 2000
presentation.
NCR CORPORATION
CONSOLIDATED REVENUE SUMMARY and OPERATING INCOME SUMMARY
(in millions)
For the Periods Ended December 31
Three Months Twelve Months
2000 1999 % Change 2000 1999 % Change
Revenue By Solution Offering
Store Automation $296 $260 14% $894 $969 (8%)
Self Service/ATMs 369 352 5% 1,077 1,098 (2%)
Data Warehousing 288 241 20% 961 735 31%
Customer Services
Maintenance:
Store Automation 119 120 (1%) 465 466 (0%)
Self Service/ATMs 107 117 (9%) 434 467 (7%)
Data Warehousing 43 46 (7%) 173 165 5%
Payment and Imaging 30 30 0% 119 118 1%
Other 173 146 18% 560 584 (4%)
Total Customer Services
Maintenance 472 459 3% 1,751 1,800 (3%)
Systemedia 137 154 (11%) 502 506 (1%)
Payment and Imaging 54 50 8% 185 206 (10%)
Other 176 245 (28%) 589 882 (33%)
Total Revenue $1,792 $1,761 2% $5,959 $6,196 (4%)
Operating Income/(Loss) - Including Customer Services Maintenance
Store Automation $17 $(9) - $(17) $20 -
Self Service/ATMs 81 69 - 201 224 -
Data Warehousing (7) (12) - (34) (142) -
Systemedia 4 15 - 15 30 -
Payment and Imaging 12 0 - 42 17 -
Other 24 35 - 63 54 -
Total Operating
Income* $131 $98 - $270 $203 -
Goodwill Amortization
Reflected in
Operating Income $14 $5 - $33 $20 -
Excludes significant special items.
Certain prior year amounts have been reclassified to conform to the 2000
presentation.
NCR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
December 31 December 31
2000 1999
Assets
Current assets
Cash and short-term investments $357 $763
Accounts receivable, net 1,338 1,197
Inventories 288 299
Other current assets 251 282
Total Current Assets 2,234 2,541
Property, plant and equipment, net 960 1,002
Other assets 1,912 1,352
Total Assets $5,106 $4,895
Liabilities and Stockholders' Equity
Current liabilities
Short-term borrowings $96 $37
Accounts payable 521 378
Other current liabilities 1,218 1,247
Total Current Liabilities 1,835 1,662
Long-term debt 11 40
Other long-term liabilities 1,502 1,584
Total Liabilities 3,348 3,286
Total Stockholders' Equity 1,758 1,609
Total Liabilities and Stockholders' Equity $5,106 $4,895
Certain prior year amounts have been reclassified to conform to the 2000
presentation.
NCR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
For the Periods Ended December 31
Three Months Twelve Months
2000 1999 2000 1999
Operating Activities
Net Income $90 $235 $178 $337
Adjustments to reconcile
net income to net
cash provided by (used
in) operating activities
Depreciation and
amortization 89 80 361 358
Net gain on sales
of assets 4 (72) (33) (107)
Deferred income taxes 32 (187) 32 (187)
Purchased research and
development from
acquisitions - - 25 -
Changes in assets and
liabilities
Receivables (141) 93 (80) 358
Inventories 39 94 28 85
Current payables 99 9 80 (41)
Deferred revenue and
customer deposits (35) 1 (42) 13
Timing of
disbursements for
employee severance
and pension (31) 10 (248) (148)
Other assets and
liabilities (39) (10) (130) (61)
Net Cash Provided by
Operating Activities 107 253 171 607
Investing Activities
Short-term
investments, net 130 (72) 182 (165)
Net expenditures and
proceeds for service
parts (32) (30) (108) (104)
Expenditures for property,
plant and equipment (53) (51) (216) (187)
Proceeds from sales of
property, plant and
equipment 1 151 173 240
Business acquisitions and
investments (248) (32) (319) (32)
Other investing activities (6) (10) (79) (78)
Net Cash (Used in)
Investing Activities (208) (44) (367) (326)
Financing Activities
Purchase of Company
common stock (73) (108) (110) (269)
Short-term borrowings, net 7 (25) 15 (13)
Long-term debt, net (26) 7 (29) 7
Other financing
activities 62 10 117 81
Net Cash (Used in)
Financing Activities (30) (116) (7) (194)
Effect of exchange rate
changes on cash and cash
equivalents (4) 2 (21) (4)
(Decrease) Increase in
Cash and Cash
Equivalents (135) 95 (224) 83
Cash and Cash Equivalents
at Beginning of Period 482 476 571 488
Cash and Cash Equivalents
at End of Period $347 $571 $347 $571
Certain prior year amounts have been reclassified to conform to the 2000
presentation. SOURCE NCR Corporation
CONTACT: Media, John Hourigan, 973-445-2078, or john.hourigan@ncr.com, or Investors, Gregg Swearingen, 937-445-4700, or gregg.swearingen@ncr.com; both of NCR/