NCR reported a first-quarter loss from continuing operations
(attributable to NCR) of
“NCR is managing through this global economic downturn by executing
consistently on our strategy, accelerating our multi-year cost structure
improvement plan, and pressing our competitive advantages in the global
marketplace,” said
First-Quarter 2009 Highlights
Financial highlights - Year-over-year revenue was impacted by the
overall downturn in the global economy, particularly in the retail
industry. Revenues declined 6 percent in the Americas region, primarily
due to lower sales to customers in the retail and hospitality industry
in
Loss from operations was
NCR generated
Other expense was
NCR ended the quarter with
Business highlights - In the first quarter of 2009, NCR recorded several important customer wins, delivering enhanced solutions to customers in the financial and retail industries, as well as verticals such as healthcare that offer additional growth opportunities for self-service solutions.
Unified Grocers, a leading U.S. cooperative grocery wholesaler, expanded
their point-of sale (POS) technology relationship with NCR to provide
unique technology solutions to smaller grocery stores through Unified
Grocers’ Neighborhood Markets program. NCR and Unified Grocers jointly
designed solutions for independent grocers in smaller footprint stores,
which typically have three or four check-out lanes. Previously, NCR and
H-E-B, one of the nation’s largest independently owned food retailers, signed on with NCR’s Advanced Marketing Solution to provide the retailer with the capability to create, distribute, manage and evaluate shopper specific promotions across multiple channels. Through centrally accessed promotions H-E-B now delivers consistent marketing messages to increase shopper sales and generate additional shopper trips.
Also in the first quarter, NCR introduced software that will allow consumers to deposit checks into their checking or savings accounts without leaving their homes and without purchasing any new hardware. This new software, NCR APTRA Consumer Passport, can be integrated with any financial institution’s online banking site and gives consumers the ability to deposit checks remotely, a service previously offered only to businesses.
NCR extended its self-service portfolio further into the healthcare
market as NCR and
2009 Outlook
NCR announced on
NCR now expects full-year 2009 revenues to be in the range of 5 percent
to 10 percent lower on a constant currency basis compared with 2008.
Based on average exchange rates for March, this would translate to
reported revenue being down in the range of 10 percent to 15 percent for
the year. Including the planned
Revised 2009
Guidance |
Prior 2009
Guidance |
|||
Year-over-year revenue (constant currency) | (5%) – (10%) | (2%) – (6%) | ||
Non-pension operating income(2) | $310 - $350 million | $360 - $400 million | ||
Diluted earnings per share (GAAP) | $0.60 - $0.75 | $0.85 - $1.00 | ||
Diluted earnings per share (non-GAAP)(1) | $0.60 - $0.75 | $0.85 - $1.00 |
2009
A conference call is scheduled today at
About
NCR is a trademark of
Reconciliation of Diluted Earnings from Continuing Operations GAAP to Non-GAAP Measures |
|||||||
Q1 2009 Actual | Q1 2008 Actual | Revised 2009 Guidance | |||||
Diluted Earnings Per Share (GAAP) | ($0.09) | $0.28 | $0.60-$0.75 | ||||
Gain on sale of Canadian manufacturing facility | - | 0.07 | - | ||||
Impairment of equity method investment | (0.03) | - | (0.03) | ||||
Fox River environmental matter | 0.03 | - | 0.03 | ||||
Diluted Earnings Per Share (non-GAAP)(1) | ($0.09) | $0.21 | $0.60-$0.75 |
Free Cash Flow | ||||
For the Period Ended March 31
(in millions) |
||||
Three Months | ||||
2009 | 2008 | |||
Cash provided by operating activities (GAAP) | $38 | $81 | ||
Less capital expenditures for: | ||||
Expenditures for property, plant and equipment | (10) | (17) | ||
Additions to capitalized software | (15) | (15) | ||
Total capital expenditures | (25) | (32) | ||
Free cash flow (non-GAAP)(3) | $13 | $49 |
(1) NCR’s management evaluates 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
(2) The segment results included in Schedule B and non-GAAP income from operations 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 evaluates 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.
(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 determined in accordance with 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,
in particular the current global credit crisis, could impact the ability
of our customers to make capital expenditures, thereby affecting their
ability to purchase our products, and consolidation in the financial
services sector could impact our business by reducing our customer base;
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 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
Schedule A | ||||||
NCR CORPORATION | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||
(Unaudited) | ||||||
(in millions, except per share amounts) | ||||||
For the Periods Ended March 31 | ||||||
Three Months | ||||||
2009 | 2008 | |||||
Revenue | ||||||
Products | $ | 458 | $ | 603 | ||
Services | 550 | 580 | ||||
Total revenue | 1,008 | 1,183 | ||||
Cost of products | 370 | 441 | ||||
Cost of services | 454 | 483 | ||||
Total gross margin | 184 | 259 | ||||
% of Revenue | 18.3% | 21.9% | ||||
Selling, general and administrative expenses | 159 | 159 | ||||
Research and development expenses | 35 | 35 | ||||
(Loss) income from operations | (10) | 65 | ||||
% of Revenue | (1.0%) | 5.5% | ||||
Interest expense | 5 | 6 | ||||
Other income, net | - | (7) | ||||
Total other expense (income), net | 5 | (1) | ||||
(Loss) income before income taxes and discontinued operations | (15) | 66 | ||||
% of Revenue | (1.5%) | 5.6% | ||||
Income tax (benefit) expense | (1) | 17 | ||||
(Loss) income from continuing operations | (14) | 49 | ||||
Loss from discontinued operations, net of tax | - | (1) | ||||
Net (loss) income | (14) | 48 | ||||
Net income attributable to noncontrolling interests | 1 | - | ||||
Net (loss) income attributable to NCR | $ | (15) | $ | 48 | ||
Amounts attributable to NCR common stockholders: | ||||||
(Loss) income from continuing operations | $ | (15) | $ | 49 | ||
Loss from discontinued operations | - | (1) | ||||
Net (loss) income | $ | (15) | $ | 48 | ||
(Loss) income per share attributable to NCR common stockholders: | ||||||
Net (loss) income per common share from continuing operations | ||||||
Basic | $ | (0.09) | $ | 0.28 | ||
Diluted | $ | (0.09) | $ | 0.28 | ||
Net (loss) income per common share | ||||||
Basic | $ | (0.09) | $ | 0.28 | ||
Diluted | $ | (0.09) | $ | 0.27 | ||
Weighted average common shares outstanding | ||||||
Basic | 158.3 | 173.0 | ||||
Diluted | *158.3 | 175.7 | ||||
* Due to the net loss from continuing operations, potential common shares that would cause dilution, such as stock options and restricted stock, have been excluded from the diluted share count because their effect would have been anti-dilutive. As of March 31, 2009, absent the net loss, fully diluted shares would have been 159.4 million shares. |
Schedule B | |||||||||||
NCR CORPORATION | |||||||||||
CONSOLIDATED REVENUE and OPERATING INCOME SUMMARY | |||||||||||
(Unaudited) | |||||||||||
(in millions) | |||||||||||
For the Periods Ended March 31 | |||||||||||
Three Months | |||||||||||
% | |||||||||||
2009 | 2008 | Change | |||||||||
Revenue by segment | |||||||||||
Americas | $ | 459 | $ | 487 | (6 | %) | |||||
EMEA | 386 | 493 | (22 | %) | |||||||
APJ | 163 | 203 | (20 | %) | |||||||
Consolidated revenue | $ | 1,008 | $ | 1,183 | (15 | %) | |||||
Gross margin by segment | |||||||||||
Americas | $ | 80 | $ | 93 | |||||||
% of Revenue | 17.4 | % | 19.1 | % | |||||||
EMEA | 92 | 122 | |||||||||
% of Revenue | 23.8 | % | 24.7 | % | |||||||
APJ | 33 | 46 | |||||||||
% of Revenue | 20.2 | % | 22.7 | % | |||||||
Total - segment gross margin | $ | 205 | $ | 261 | |||||||
% of Revenue | 20.3 | % | 22.1 | % | |||||||
Selling, general and administrative expenses | 142 | 174 | |||||||||
Research and development expenses | 35 | 32 | |||||||||
Non-GAAP income from operations | $ | 28 | $ | 55 | |||||||
Pension expense | (38 | ) | (6 | ) | |||||||
Other adjustments (1) | - | 16 | |||||||||
(Loss) income from operations | $ | (10 | ) | $ | 65 | ||||||
(1) Other adjustments in 2008 includes $16 million of gain from the sale of a manufacturing facility in Canada. |
Schedule C | ||||||||
NCR CORPORATION | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(Unaudited) | ||||||||
(in millions, except per share amounts) | ||||||||
March 31 | December 31 | |||||||
2009 | 2008 | |||||||
Assets |
||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 717 | $ | 711 | ||||
Accounts receivable, net | 855 | 913 | ||||||
Inventories, net | 697 | 692 | ||||||
Other current assets | 254 | 241 | ||||||
Total current assets | 2,523 | 2,557 | ||||||
Property, plant and equipment, net | 297 | 308 | ||||||
Goodwill | 83 | 84 | ||||||
Prepaid pension cost | 224 | 251 | ||||||
Deferred income taxes | 627 | 645 | ||||||
Other assets | 387 | 410 | ||||||
|
||||||||
Total assets | $ | 4,141 | $ | 4,255 | ||||
Liabilities and stockholders' equity |
||||||||
Current liabilities | ||||||||
Short-term borrowings | $ | 301 | $ | 301 | ||||
Accounts payable | 463 | 492 | ||||||
Payroll and benefits liabilities | 134 | 210 | ||||||
Deferred service revenue and customer deposits | 385 | 317 | ||||||
Other current liabilities | 355 | 373 | ||||||
Total current liabilities | 1,638 | 1,693 | ||||||
Long-term debt | 7 | 7 | ||||||
Pension and indemnity plan liabilities | 1,386 | 1,424 | ||||||
Postretirement and postemployment benefits liabilities | 365 | 359 | ||||||
Deferred income taxes | 10 | 9 | ||||||
Income tax accruals | 145 | 155 | ||||||
Other liabilities | 141 | 143 | ||||||
Total liabilities | 3,692 | 3,790 | ||||||
Stockholders' equity | ||||||||
NCR stockholders' equity: | ||||||||
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at March 31, 2009, and December 31, 2008, respectively | ||||||||
- | - | |||||||
Common stock: par value $0.01 per share, 500.0 shares authorized, 158.6, and 158.1 shares issued and outstanding at March 31, 2009, and December 31, 2008, respectively | ||||||||
2 | 2 | |||||||
Paid-in capital | 252 | 248 | ||||||
Retained earnings | 1,819 | 1,834 | ||||||
Accumulated other comprehensive loss | (1,649 | ) | (1,644 | ) | ||||
Total NCR stockholders' equity | 424 | 440 | ||||||
Noncontrolling interests in subsidiaries | 25 | 25 | ||||||
Total stockholders' equity | 449 | 465 | ||||||
Total liabilities and stockholders' equity | $ | 4,141 | $ | 4,255 |
Schedule D | ||||
NCR CORPORATION | ||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(Unaudited) | ||||
(in millions) | ||||
For the Periods Ended March 31 | ||||
Three Months | ||||
2009 | 2008 | |||
Operating activities | ||||
Net (loss) income | $ (14) | $ 48 | ||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||
Loss from discontinued operations | - | 1 | ||
Depreciation and amortization | 28 | 29 | ||
Stock-based compensation expense | 4 | 10 | ||
Deferred income taxes | - | 7 | ||
Gain on sale of property, plant, and equipment | - | (17) | ||
Changes in assets and liabilities: | ||||
Receivables | 58 | 119 | ||
Inventories | (5) | (35) | ||
Current payables and accrued expenses | (117) | (94) | ||
Deferred service revenue and customer deposits | 68 | 73 | ||
Employee severance and pension | 18 | (21) | ||
Other assets and liabilities | (2) | (39) | ||
Net cash provided by operating activities | 38 | 81 | ||
Investing activities | ||||
Expenditures for property, plant and equipment | (10) | (17) | ||
Proceeds from sales of property, plant and equipment | - | 38 | ||
Additions to capitalized software | (15) | (15) | ||
Net cash (used in) provided by investing activities | (25) | 6 | ||
Financing activities | ||||
Purchase of Company common stock | (1) | (193) | ||
Proceeds from employee stock plans | 2 | 4 | ||
Net cash provided by (used in) financing activities | 1 | (189) | ||
Cash Flows from discontinued operations | ||||
Net cash used in operating activities | - | (13) | ||
Effect of exchange rate changes on cash and cash equivalents | (8) | 14 | ||
Increase (decrease) in cash and cash equivalents | 6 | (101) | ||
Cash and cash equivalents at beginning of period | 711 | 952 | ||
Cash and cash equivalents at end of period | $ 717 | $ 851 |
Source:
NCR Corporation
News Media Contact:
Alan Ulman,
770-623-7998
alan.ulman@ncr.com
or
Investor
Contact:
Gavin Bell, 212-589-8468
gavin.bell@ncr.com