Exhibit 99.1
| | | | |
 | | | | 1700 South Patterson Boulevard Dayton, OH 45479 |
| | |
| | | | NEWS RELEASE |
| | | | |
| For media information: | | | | For investor information: |
| | |
| Janet Brewer | | | | Tom Mullarkey |
| NCR Corporation | | | | NCR Corporation |
| (937) 445-6779 | | | | (937) 445-4222 |
| janet.brewer@ncr.com | | | | tom.mullarkey@ncr.com |
For Release on October 31, 2007
NCR Announces 2007 Third-Quarter Results from Continuing Operations
| | • | | NCR reports GAAP EPS from continuing operations of $0.18, non-GAAP EPS from continuing operations of |
| | • | | Revenue from continuing operations shows 12 percent growth, with Financial Self Service revenue up 17 percent, Retail Store Automation revenue up 27 percent and Customer Services revenue up 9 percent |
| | • | | Board authorizes additional funds for share repurchase; $583 million now available for share repurchase during the next two years |
| | • | | NCR successfully completes the spin off of Teradata |
DAYTON, Ohio–NCR Corporation (NYSE: NCR) today reported its financial results for the third quarter of 2007. NCR’s results from continuing operations exclude the results of the company’s Teradata data warehousing business, due to the spin off to shareholders which occurred at the end of the quarter and resulted in Teradata being accounted for as a discontinued operation. NCR reported revenue of $1.28 billion from continuing operations for the quarter ended Sept. 30, 2007. The 12 percent increase in revenue from the third quarter of 2006 included 3 percentage points of benefit from currency fluctuations.
NCR reported third-quarter income from continuing operations of $33 million, or $0.18 per diluted share. Earnings from continuing operations for the third quarter of 2007 included $39 million or $0.21 per diluted share of costs from items related to NCR’s manufacturing realignment, the Teradata spin off and a realignment primarily in the Customer Services division in Japan. Excluding these items, non-GAAP earnings from continuing operations were $0.39 per diluted share(1), which compares to $0.21 per diluted share in the third quarter of 2006.
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“New NCR delivered better-than-expected operational results in the third quarter, featuring both strong revenue growth and operating margin expansion. We accomplished these results while also successfully launching Teradata Corporation as an independent publicly traded company. I am proud of our employees for driving excellent business results across each of our major business units while also managing to successfully complete our strategic separation. With the Teradata separation behind us, NCR’s focus on the implementation of our long-term vision and business strategy will sharpen, as will the focus on working capital and our overall cost structure. While we are excited about new NCR’s strategy and pleased with our business results, we have significant work ahead to realize our vision of leading how the world connects, interacts and transacts with business,” said Bill Nuti, chairman and chief executive officer of NCR.
Operating Segment Results(2)
Financial Self Service (ATMs)
NCR’s Financial Self Service segment generated third-quarter revenue of $407 million, an increase of 17 percent from the third quarter of 2006, driven by strong growth in the Asia-Pacific market and the Europe, Middle East and Africa market. The third-quarter year-over-year revenue comparison included 4 percentage points of benefit from currency translation.
Operating income of $56 million increased from the $43 million generated in the third quarter of 2006, primarily due to higher volume.
Retail Store Automation
The Retail Store Automation segment reported revenue of $278 million, up 27 percent from the third quarter of 2006. The year-over-year revenue comparison included 2 percentage points of benefit from currency translation. Revenue growth was driven by several large rollouts in the quarter with a continued momentum in self-service solutions.
Operating income of $20 million improved from $11 million in the third quarter of 2006, as revenue growth and an improved mix of self-service solutions outpaced pricing pressure and increased investment in sales, marketing and research and development related to the company’s self-service initiatives.
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Customer Services
Customer Services revenue of $497 million increased 9 percent from the $457 million recorded in the third quarter of 2006. The third-quarter year-over-year revenue comparison included a 3 percentage-point benefit from currency translation. NCR continues to be successful in increasing the mix of revenues from the service of NCR-branded products, while reducing lower-margin revenues associated with servicing third-party products. Revenues from the maintenance of ATMs increased 14 percent in the third quarter, while revenues from the maintenance of third-party products declined by 10 percent. Operating income increased to $34 million from $27 million generated in the third quarter of 2006, largely due to higher revenue and productivity improvements.
Other Items (From Continuing Operations)
Other Income of $12 million favorably compared to $2 million of Other Income in the third quarter of 2006, primarily due to an increase in interest income as a result of higher cash balances.
NCR incurred approximately $27 million of costs associated with a realignment that primarily impacted our Customer Services business in Japan. These costs include severance benefits related to the realignment. This action is expected to deliver annual cost savings of $10 million to $12 million for the company.
The effective tax rate in the third quarter of 2007 was 34 percent. The effective tax rate was higher than expected due to the realignment activities in Japan, which increased the effective tax rate by 6 percentage points.(1)
NCR intends to reinstate the share repurchase program during the fourth quarter of 2007. Currently, the company has $583 million of board authorized funds available for share repurchase. This amount includes $264 million of funds previously allocated for share repurchases, an additional $250 million of funds approved by the board on Oct. 31 and $69 million related to a dilution-offset program.
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Cash Flow (From Continuing Operations)
During the third quarter, NCR generated $65 million of cash from operating activities, compared to $91 million in the year-ago period. Capital expenditures of $25 million in the third quarter of 2007 were down from $34 million in the year-ago period. NCR generated $40 million of free cash flow (cash from operations less capital expenditures)(3) in the third quarter of 2007, versus generating $57 million in the year-ago period. The third quarter of 2007 included $10 million of cash payments related to the company’s manufacturing realignment, which impacted the operating cash flow as well as free cash flow.
Year to date, cash from operating activities was $92 million, a $17 million increase from the prior year. In the first nine months of the year, NCR’s free cash flow increased to $14 million, compared to $11 million of cash used in the first nine months of 2006. (3) Year to date, NCR has made $24 million of cash payments related to the company’s manufacturing realignment, which impacted operating cash flow as well as free cash flow.
| | | | | | | | | | | | | | | | |
| | | For the period ended September 30 | |
| Results from Continuing Operations | | Three Months | | | Nine Months | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Cash provided by operating activities (GAAP) | | $ | 65 | | | $ | 91 | | | $ | 92 | | | $ | 75 | |
Less capital expenditures for: | | | | | | | | | | | | | | | | |
Property, plant and equipment | | | (13 | ) | | | (22 | ) | | | (43 | ) | | | (50 | ) |
Additions to capitalized software | | | (12 | ) | | | (12 | ) | | | (35 | ) | | | (36 | ) |
| | | | | | | | | | | | | | | | |
Total capital expenditures | | | (25 | ) | | | (34 | ) | | | (78 | ) | | | (86 | ) |
| | | | |
Free cash flow (non-GAAP measure) (3) | | $ | 40 | | | $ | 57 | | | $ | 14 | | | $ | (11 | ) |
Balance Sheet
NCR ended the third quarter with $1,033 million in cash and cash equivalents. NCR transferred approximately $200 million of cash to Teradata Corporation as part of the spin off.
As of Sept. 30, 2007, NCR had short- and long-term debt of $307 million, the same as of June 30, 2007.
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2007 Outlook
NCR expects its 2007 GAAP earnings from continuing operations to be $0.75 to $0.80 per share. Excluding $42 million of cost related to the restructuring of NCR’s global manufacturing, $27 million of cost and expense associated with customer services realignment, $15 million of Teradata spin off related expenses incurred through the third quarter, an $11 million tax adjustment recorded in the second quarter and $7 million of net expense related to the Fox River environmental matter, NCR is increasing its guidance for non-GAAP earnings per diluted share from continuing operations by $0.05. NCR expects to deliver non-GAAP earnings of $1.20 to $1.25 per diluted share for the full-year 2007. (1)
NCR expects 2007 year-over-year revenue growth of 5 to 6 percent from continuing operations, as detailed below.
| | | | | | | | |
| | | Previous 2007 Guidance | | | Revised 2007 Guidance | |
Year-over-year revenue growth: | | | | | | | | |
| | |
Total NCR | | | | * | | | 5 - 6 | % |
Financial Self Service (ATMs) | | | 5 - 7 | % | | | 9 - 11 | % |
Retail Store Automation | | | 4 - 5 | % | | | 7 - 8 | % |
Customer Services | | | 3 - 4 | % | | | 4 - 5 | % |
| | |
Earnings per share – GAAP | | $ | 0.91 - $0.96 | | | $ | 0.75 - $0.80 | |
Non-GAAP (does not include certain items) (1) | | $ | 1.15 - $1.20 | | | $ | 1.20 - $1.25 | |
| * | NCR’s prior guidance for total company revenue growth included revenue from Teradata. That guidance is not comparable to NCR’s continuing operations; therefore, it has been omitted. |
This earnings release includes schedules E and F which present historical quarterly data from NCR’s continuing operations.
2007 Third-quarter Earnings Conference Call
A conference call is scheduled today at 10:00 a.m. (EDT) to discuss the company’s 2007 third-quarter results and guidance for full-year 2007. Access to the conference call, as well as a replay of the call, is available on NCR’s Web site athttp://investor.ncr.com/. Supplemental financial information regarding NCR’s third-quarter 2007 operating results is also available on NCR’s Web site.
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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.
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NCR is a trademark of NCR Corporation in the United States and other countries.
NCR reports its results in accordance with Generally Accepted Accounting Principles in the United States, or GAAP. However, as described below, the company believes that certain non-GAAP measures found in this release are useful for investors. The following table reconciles certain non-GAAP measures contained in this release.
Reconciliation of Continuing Operations GAAP to Non-GAAP Measures(1)
| | | | | | | | | | | |
| | | Q3 2007
Actual | | | Q3 2006
Actual | | FY 2007
Guidance | |
Diluted Earnings Per Share (GAAP) | | $ | 0.18 | | | $ | 0.21 | | $ | 0.75-$0.80 | |
Manufacturing realignment costs, net | | | (0.02 | ) | | | — | | | (0.18 | ) |
Strategic separation charges – Teradata spin off | | | (0.06 | ) | | | — | | | (0.06 | ) |
Fox River environmental matter | | | — | | | | — | | | (0.02 | ) |
Customer Services realignment costs, net | | | (0.13 | ) | | | — | | | (0.13 | ) |
Tax adjustment | | | — | | | | — | | | (0.06 | ) |
| | | | | | | | | | | |
Adjusted Diluted Earnings Per Share (Non-GAAP)(1) | | $ | 0.39 | | | $ | 0.21 | | $ | 1.20-$1.25 | |
| (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. |
| (2) | The operating segment results discussed in this earnings release exclude the impact of $12 million of pension expense from continuing operations in the third quarter of 2007 and $27 million of pension expense from continuing operations in the third quarter of 2006. In addition, the operating segment results for the third quarter of 2007 excluded $7 million of manufacturing realignment costs, $15 million of strategic separation expense related to continuing operations and a $27 million restructuring charge for the company’s Customer Services division in Japan. When evaluating the year-over-year performance of and making decisions regarding its operating segments, NCR excludes the effect of pension expense/income and certain non-operational items. Schedule B, included in this earnings release, reconciles total income from continuing operations excluding pension expense/income and certain non-operational items for all of the company’s operating segments to “Total income from continuing operations” for the company. |
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| (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’ definition 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 separation of Teradata and NCR’s other businesses, including the ability of NCR to operate as an independent entity; 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 and 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; 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.
Schedule A
NCR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millions, except per share amounts)
| | | | | | | | | | | | | | | | |
| | | For the Periods Ended September 30 | |
| | | Three Months | | | Nine Months | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Revenue | | | | | | | | | | | | | | | | |
| | | | |
Products | | $ | 693 | | | $ | 600 | | | $ | 1,809 | | | $ | 1,669 | |
Services | | | 585 | | | | 542 | | | | 1,640 | | | | 1,568 | |
| | | | | | | | | | | | | | | | |
Total revenue | | | 1,278 | | | | 1,142 | | | | 3,449 | | | | 3,237 | |
| | | | |
Cost of products | | | 513 | | | | 443 | | | | 1,378 | | | | 1,250 | |
Cost of services | | | 503 | | | | 458 | | | | 1,383 | | | | 1,358 | |
| | | | | | | | | | | | | | | | |
Total gross margin | | | 262 | | | | 241 | | | | 688 | | | | 629 | |
% of Revenue | | | 20.5 | % | | | 21.1 | % | | | 19.9 | % | | | 19.4 | % |
| | | | |
Selling, general and administrative expenses | | | 187 | | | | 165 | | | | 492 | | | | 486 | |
Research and development expenses | | | 37 | | | | 28 | | | | 96 | | | | 86 | |
| | | | | | | | | | | | | | | | |
Income from operations | | | 38 | | | | 48 | | | | 100 | | | | 57 | |
% of Revenue | | | 3.0 | % | | | 4.2 | % | | | 2.9 | % | | | 1.8 | % |
| | | | |
Interest expense | | | 6 | | | | 6 | | | | 18 | | | | 18 | |
Other income, net | | | (18 | ) | | | (8 | ) | | | (34 | ) | | | (22 | ) |
| | | | | | | | | | | | | | | | |
Income before income taxes and discontinued operations | | | 50 | | | | 50 | | | | 116 | | | | 61 | |
% of Revenue | | | 3.9 | % | | | 4.4 | % | | | 3.4 | % | | | 1.9 | % |
| | | | |
Income tax expense | | | 17 | | | | 11 | | | | 41 | | | | 5 | |
| | | | | | | | | | | | | | | | |
Income from continuing operations | | | 33 | | | | 39 | | | | 75 | | | | 56 | |
Income from discontinued operations, net of tax | | | — | | | | 50 | | | | 90 | | | | 152 | |
| | | | | | | | | | | | | | | | |
Net income | | $ | 33 | | | $ | 89 | | | $ | 165 | | | $ | 208 | |
| | | | | | | | | | | | | | | | |
% of Revenue | | | 2.6 | % | | | 7.8 | % | | | 4.8 | % | | | 6.4 | % |
| | | | |
Net income per common share from continuing operations | | | | | | | | | | | | | | | | |
Basic | | $ | 0.18 | | | $ | 0.22 | | | $ | 0.42 | | | $ | 0.31 | |
| | | | | | | | | | | | | | | | |
Diluted | | $ | 0.18 | | | $ | 0.21 | | | $ | 0.41 | | | $ | 0.31 | |
| | | | | | | | | | | | | | | | |
Net income per common share | | | | | | | | | | | | | | | | |
Basic | | $ | 0.18 | | | $ | 0.50 | | | $ | 0.92 | | | $ | 1.15 | |
| | | | | | | | | | | | | | | | |
Diluted | | $ | 0.18 | | | $ | 0.49 | | | $ | 0.90 | | | $ | 1.13 | |
| | | | | | | | | | | | | | | | |
Weighted average common shares outstanding | | | | | | | | | | | | | | | | |
Basic | | | 180.6 | | | | 178.7 | | | | 180.0 | | | | 180.5 | |
Diluted | | | 182.3 | | | | 181.4 | | | | 182.4 | | | | 183.5 | |
Schedule B
NCR CORPORATION
CONSOLIDATED REVENUE and OPERATING INCOME (LOSS) SUMMARY
(Unaudited)
(in millions)
| | | | | | | | | | | | | | | | | | | | | | |
| | | For the Periods Ended September 30 | |
| | | Three Months | | | Nine Months | |
| | | 2007 | | | 2006 | | | %
Change | | | 2007 | | | 2006 | | | %
Change | |
Revenue by segment | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Financial Self Service (ATMs) | | | 407 | | | | 349 | | | 17 | % | | | 1,099 | | | | 951 | | | 16 | % |
| | | | | | |
Retail Store Automation | | | 278 | | | | 219 | | | 27 | % | | | 654 | | | | 612 | | | 7 | % |
| | | | | | |
Customer Services | | | | | | | | | | | | | | | | | | | | | | |
Customer Service Maintenance: | | | | | | | | | | | | | | | | | | | | | | |
Financial Self Service | | | 193 | | | | 170 | | | 14 | % | | | 544 | | | | 492 | | | 11 | % |
Retail Store Automation | | | 130 | | | | 124 | | | 5 | % | | | 381 | | | | 363 | | | 5 | % |
Payment & Imaging and Other | | | 30 | | | | 32 | | | (6 | )% | | | 90 | | | | 94 | | | (4 | )% |
Third-Party Products and Exited Businesses | | | 54 | | | | 60 | | | (10 | )% | | | 165 | | | | 186 | | | (11 | )% |
| | | | | | | | | | | | | | | | | | | | | | |
Total Customer Services Maintenance | | | 407 | | | | 386 | | | 5 | % | | | 1,180 | | | | 1,135 | | | 4 | % |
Third-Party Product Sales | | | 11 | | | | 7 | | | 57 | % | | | 30 | | | | 23 | | | 30 | % |
Professional and installation-related services | | | 79 | | | | 64 | | | 23 | % | | | 202 | | | | 181 | | | 12 | % |
| | | | | | | | | | | | | | | | | | | | | | |
Total Customer Services | | | 497 | | | | 457 | | | 9 | % | | | 1,412 | | | | 1,339 | | | 5 | % |
| | | | | | |
Systemedia | | | 119 | | | | 118 | | | 1 | % | | | 327 | | | | 339 | | | (4 | )% |
| | | | | | |
Payment & Imaging and Other | | | 33 | | | | 43 | | | (23 | )% | | | 97 | | | | 119 | | | (18 | )% |
| | | | | | |
Elimination of installation-related services revenue included in both the Customer Services segment and other segments | | | (56 | ) | | | (44 | ) | | 27 | % | | | (140 | ) | | | (123 | ) | | 14 | % |
| | | | | | | | | | | | | | | | | | | | | | |
Total revenue | | $ | 1,278 | | | $ | 1,142 | | | 12 | % | | $ | 3,449 | | | $ | 3,237 | | | 7 | % |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Operating income (loss) by segment | | | | | | | | | | | | | | | | | | | | | | |
Financial Self Service (ATMs) | | $ | 56 | | | $ | 43 | | | | | | $ | 130 | | | $ | 87 | | | | |
Retail Store Automation | | | 20 | | | | 11 | | | | | | | 19 | | | | 12 | | | | |
Customer Services | | | 34 | | | | 27 | | | | | | | 93 | | | | 72 | | | | |
Systemedia | | | 5 | | | | 2 | | | | | | | 11 | | | | 3 | | | | |
Payment & Imaging and Other | | | (2 | ) | | | 4 | | | | | | | (5 | ) | | | 9 | | | | |
| | | | | | |
Elimination of installation-related services operating income included in both the Customer Services segment and other segments | | | (14 | ) | | | (12 | ) | | | | | | (35 | ) | | | (32 | ) | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Subtotal—Segment operating income | | | 99 | | | | 75 | | | | | | | 213 | | | | 151 | | | | |
| | | | | | |
Pension expense | | | (12 | ) | | | (27 | ) | | | | | | (29 | ) | | | (94 | ) | | | |
Other adjustments (1) | | | (49 | ) | | | — | | | | | | | (84 | ) | | | — | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Total income from operations | | $ | 38 | | | $ | 48 | | | | | | $ | 100 | | | $ | 57 | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
(1) | Includes restructuring and spin-off costs from continuing operations. |
Schedule C
NCR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in millions)
| | | | | | | | | | | | |
| | | September 30
2007 | | | June 30
2007 | | | December 31
2006 | |
Assets | | | | | | | | | | | | |
| | | |
Current assets | | | | | | | | | | | | |
Cash and cash equivalents | | $ | 1,033 | | | $ | 1,139 | | | $ | 947 | |
Accounts receivable, net | | | 1,014 | | | | 1,007 | | | | 1,016 | |
Inventories, net | | | 767 | | | | 704 | | | | 641 | |
Other current assets | | | 319 | | | | 311 | | | | 265 | |
Assets held for spin-off | | | — | | | | 445 | | | | 463 | |
| | | | | | | | | | | | |
Total current assets | | | 3,133 | | | | 3,606 | | | | 3,332 | |
| | | |
Property, plant and equipment, net | | | 304 | | | | 301 | | | | 314 | |
Goodwill | | | 61 | | | | 59 | | | | 60 | |
Prepaid pension cost | | | 715 | | | | 723 | | | | 635 | |
Deferred income taxes | | | 204 | | | | 189 | | | | 212 | |
Other assets | | | 330 | | | | 332 | | | | 272 | |
Assets held for spin-off | | | — | | | | 405 | | | | 402 | |
| | | | | | | | | | | | |
Total assets | | $ | 4,747 | | | $ | 5,615 | | | $ | 5,227 | |
| | | | | | | | | | | | |
| | | |
Liabilities and stockholders’ equity | | | | | | | | | | | | |
| | | |
Current liabilities | | | | | | | | | | | | |
Short-term borrowings | | $ | — | | | $ | 1 | | | $ | 1 | |
Accounts payable | | | 481 | | | | 454 | | | | 467 | |
Payroll and benefits liabilities | | | 195 | | | | 182 | | | | 213 | |
Deferred service revenue and customer deposits | | | 339 | | | | 333 | | | | 318 | |
Other current liabilities | | | 484 | | | | 453 | | | | 385 | |
Liabilities related to spin-off | | | — | | | | 413 | | | | 386 | |
| | | | | | | | | | | | |
Total current liabilities | | | 1,499 | | | | 1,836 | | | | 1,770 | |
| | | |
Long-term debt | | | 307 | | | | 306 | | | | 306 | |
Pension and indemnity plan liabilities | | | 391 | | | | 442 | | | | 446 | |
Postretirement and postemployment benefits liabilities | | | 351 | | | | 376 | | | | 395 | |
Deferred income taxes | | | 66 | | | | 42 | | | | 27 | |
Income tax accruals | | | 173 | | | | 168 | | | | 132 | |
Other liabilities | | | 162 | | | | 174 | | | | 147 | |
Minority interests | | | 18 | | | | 17 | | | | 20 | |
Liabilities related to spin-off | | | — | | | | 107 | | | | 103 | |
| | | | | | | | | | | | |
Total liabilities | | | 2,967 | | | | 3,468 | | | | 3,346 | |
| | | |
Stockholders’ equity | | | | | | | | | | | | |
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively | | | — | | | | — | | | | — | |
Common stock: par value $0.01 per share, 500.0 shares authorized, 180.7 and 178.9 shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively | | | 2 | | | | 2 | | | | 2 | |
Paid-in capital | | | 774 | | | | 720 | | | | 655 | |
Retained earnings | | | 1,512 | | | | 2,032 | | | | 1,900 | |
Accumulated other comprehensive loss | | | (508 | ) | | | (607 | ) | | | (676 | ) |
| | | | | | | | | | | | |
Total stockholders’ equity | | | 1,780 | | | | 2,147 | | | | 1,881 | |
| | | | | | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 4,747 | | | $ | 5,615 | | | $ | 5,227 | |
| | | | | | | | | | | | |
Schedule D
NCR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
| | | | | | | | | | | | | | | | |
| | | For the Periods Ended September 30 | |
| | | Three Months | | | Nine Months | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
Operating activities | | | | | | | | | | | | | | | | |
Net income from continuing operations | | $ | 33 | | | $ | 39 | | | $ | 75 | | | $ | 56 | |
| | | | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 27 | | | | 26 | | | | 81 | | | | 77 | |
Stock-based compensation expense | | | 19 | | | | 5 | | | | 28 | | | | 14 | |
Excess tax benefit from stock-based compensation | | | (2 | ) | | | (1 | ) | | | (7 | ) | | | (8 | ) |
Deferred income taxes | | | 6 | | | | 16 | | | | 28 | | | | 26 | |
Other adjustments to income, net | | | (1 | ) | | | (4 | ) | | | (5 | ) | | | (5 | ) |
Changes in assets and liabilities: | | | | | | | | | | | | | | | | |
Receivables | | | (11 | ) | | | 14 | | | | (2 | ) | | | (5 | ) |
Inventories | | | (64 | ) | | | (42 | ) | | | (127 | ) | | | (110 | ) |
Current payables and accrued expenses | | | 16 | | | | 69 | | | | (37 | ) | | | 30 | |
Deferred service revenue and customer deposits | | | 9 | | | | (11 | ) | | | 24 | | | | 14 | |
Employee severance and pension | | | 17 | | | | 8 | | | | 7 | | | | 35 | |
Other assets and liabilities | | | 16 | | | | (28 | ) | | | 27 | | | | (49 | ) |
| | | | | | | | | | | | | | | | |
Net cash provided by operating activities | | | 65 | | | | 91 | | | | 92 | | | | 75 | |
| | | | |
Investing activities | | | | | | | | | | | | | | | | |
Expenditures for property, plant and equipment | | | (13 | ) | | | (22 | ) | | | (43 | ) | | | (50 | ) |
Proceeds from sales of property, plant and equipment | | | 4 | | | | 1 | | | | 15 | | | | 13 | |
Additions to capitalized software | | | (12 | ) | | | (12 | ) | | | (35 | ) | | | (36 | ) |
Other investing activities, business acquisitions and divestitures, net | | | (5 | ) | | | 7 | | | | (4 | ) | | | (9 | ) |
| | | | | | | | | | | | | | | | |
Net cash used in investing activities | | | (26 | ) | | | (26 | ) | | | (67 | ) | | | (82 | ) |
| | | | |
Financing activities | | | | | | | | | | | | | | | | |
Purchase of Company common stock | | | — | | | | (94 | ) | | | — | | | | (280 | ) |
Excess tax benefit from stock-based compensation | | | 2 | | | | 1 | | | | 7 | | | | 8 | |
Short-term borrowings, additions | | | — | | | | 3 | | | | (1 | ) | | | 3 | |
Long-term debt, additions | | | — | | | | 1 | | | | — | | | | 1 | |
Proceeds from employee stock plans | | | 7 | | | | 7 | | | | 43 | | | | 68 | |
Distribution to discontinued operations | | | (196 | ) | | | — | | | | (196 | ) | | | — | |
Other financing activities, net | | | — | | | | (3 | ) | | | 1 | | | | (3 | ) |
| | | | | | | | | | | | | | | | |
Net cash used in financing activities | | | (187 | ) | | | (85 | ) | | | (146 | ) | | | (203 | ) |
| | | | |
Cash Flows from Discontinued Operations | | | | | | | | | | | | | | | | |
Net cash provided by operating activities | | | 55 | | | | 51 | | | | 261 | | | | 213 | |
Net cash used in investing activities | | | (23 | ) | | | (18 | ) | | | (74 | ) | | | (63 | ) |
Net cash provided by financing activities | | | 2 | | | | — | | | | 5 | | | | 5 | |
| | | | | | | | | | | | | | | | |
Net cash provided from discontinued operations | | | 34 | | | | 33 | | | | 192 | | | | 155 | |
| | | | |
Effect of exchange rate changes on cash and cash equivalents | | | 8 | | | | 1 | | | | 15 | | | | 6 | |
| | | | | | | | | | | | | | | | |
(Decrease) increase in cash and cash equivalents | | | (106 | ) | | | 14 | | | | 86 | | | | (49 | ) |
Cash and cash equivalents at beginning of period | | | 1,139 | | | | 747 | | | | 947 | | | | 810 | |
| | | | | | | | | | | | | | | | |
| | | | |
Cash and cash equivalents at end of period | | $ | 1,033 | | | $ | 761 | | | $ | 1,033 | | | $ | 761 | |
| | | | | | | | | | | | | | | | |
Schedule E
NCR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millions, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2006 | | | 2007 | |
| | | Q1 | | | Q2 | | | Q3 | | | Q4 | | | Full
Year | | | Q1 | | | Q2 | |
Revenue | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Products | | $ | 474 | | | $ | 595 | | | $ | 600 | | | $ | 759 | | | $ | 2,428 | | | $ | 486 | | | $ | 630 | |
Services | | | 486 | | | | 540 | | | | 542 | | | | 586 | | | | 2,154 | | | | 506 | | | | 549 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total revenue | | | 960 | | | | 1,135 | | | | 1,142 | | | | 1,345 | | | | 4,582 | | | | 992 | | | | 1,179 | |
| | | | | | | |
Cost of products | | | 353 | | | | 454 | | | | 443 | | | | 553 | | | | 1,803 | | | | 411 | | | | 454 | |
Cost of services | | | 435 | | | | 465 | | | | 458 | | | | 494 | | | | 1,852 | | | | 424 | | | | 456 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total gross margin | | | 172 | | | | 216 | | | | 241 | | | | 298 | | | | 927 | | | | 157 | | | | 269 | |
% of Revenue | | | 17.9 | % | | | 19.0 | % | | | 21.1 | % | | | 22.2 | % | | | 20.2 | % | | | 15.8 | % | | | 22.8 | % |
| | | | | | | |
Selling, general and administrative expenses | | | 158 | | | | 163 | | | | 165 | | | | 168 | | | | 654 | | | | 145 | | | | 160 | |
Research and development expenses | | | 27 | | | | 31 | | | | 28 | | | | 33 | | | | 119 | | | | 29 | | | | 30 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Loss) income from operations | | | (13 | ) | | | 22 | | | | 48 | | | | 97 | | | | 154 | | | | (17 | ) | | | 79 | |
% of Revenue | | | (1.4 | )% | | | 1.9 | % | | | 4.2 | % | | | 7.2 | % | | | 3.4 | % | | | (1.7 | )% | | | 6.7 | % |
| | | | | | | |
Interest expense | | | 6 | | | | 6 | | | | 6 | | | | 6 | | | | 24 | | | | 6 | | | | 6 | |
Other income, net | | | (9 | ) | | | (5 | ) | | | (8 | ) | | | (7 | ) | | | (29 | ) | | | (9 | ) | | | (7 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total other (income) expense, net | | | (3 | ) | | | 1 | | | | (2 | ) | | | (1 | ) | | | (5 | ) | | | (3 | ) | | | (1 | ) |
| | | | | | | |
(Loss) income before taxes and discontinued operations | | | (10 | ) | | | 21 | | | | 50 | | | | 98 | | | | 159 | | | | (14 | ) | | | 80 | |
% of Revenue | | | (1.0 | )% | | | 1.9 | % | | | 4.4 | % | | | 7.3 | % | | | 3.5 | % | | | (1.4 | )% | | | 6.8 | % |
| | | | | | | |
Income tax (benefit) expense | | | (8 | ) | | | 2 | | | | 11 | | | | 3 | | | | 8 | | | | (5 | ) | | | 29 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(Loss) income from continuing operations | | | (2 | ) | | | 19 | | | | 39 | | | | 95 | | | | 151 | | | | (9 | ) | | | 51 | |
Income from discontinued operations, net of tax | | | 43 | | | | 59 | | | | 50 | | | | 79 | | | | 231 | | | | 43 | | | | 47 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 41 | | | $ | 78 | | | $ | 89 | | | $ | 174 | | | $ | 382 | | | $ | 34 | | | $ | 98 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
% of Revenue | | | 4.3 | % | | | 6.9 | % | | | 7.8 | % | | | 12.9 | % | | | 8.3 | % | | | 3.4 | % | | | 8.3 | % |
| | | | | | | |
Net (loss) income per common share from continuing operations | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | (0.01 | ) | | $ | 0.10 | | | $ | 0.22 | | | $ | 0.53 | | | $ | 0.84 | | | $ | (0.05 | ) | | $ | 0.28 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Diluted | | $ | (0.01 | ) | | $ | 0.10 | | | $ | 0.21 | | | $ | 0.52 | | | $ | 0.83 | | | $ | (0.05 | ) | | $ | 0.28 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income per common share | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 0.23 | | | $ | 0.43 | | | $ | 0.50 | | | $ | 0.97 | | | $ | 2.12 | | | $ | 0.19 | | | $ | 0.54 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Diluted | | $ | 0.22 | | | $ | 0.42 | | | $ | 0.49 | | | $ | 0.96 | | | $ | 2.09 | | | $ | 0.19 | | | $ | 0.54 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Weighted average common shares outstanding | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | 181.7 | | | | 181.1 | | | | 178.7 | | | | 178.5 | | | | 180.0 | | | | 179.3 | | | | 180.1 | |
Diluted | | | 181.7 | | | | 184.2 | | | | 181.4 | | | | 181.2 | | | | 182.9 | | | | 179.3 | | | | 182.8 | |
Schedule F
NCR CORPORATION
CONSOLIDATED REVENUE and OPERATING INCOME (LOSS) SUMMARY
(Unaudited)
(in millions)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2006 | | | 2007 | |
| | | Q1 | | | Q2 | | | Q3 | | | Q4 | | | Full
Year | | | Q1 | | | Q2 | |
Revenue by segment | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Financial Self Service (ATMs) | | | 259 | | | | 343 | | | | 349 | | | | 472 | | | | 1,423 | | | | 312 | | | | 380 | |
| | | | | | | |
Retail Store Automation | | | 172 | | | | 221 | | | | 219 | | | | 258 | | | | 870 | | | | 155 | | | | 221 | |
| | | | | | | |
Customer Services | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Customer Service Maintenance: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial Self Service | | | 155 | | | | 167 | | | | 170 | | | | 173 | | | | 665 | | | | 170 | | | | 181 | |
Retail Store Automation | | | 119 | | | | 120 | | | | 124 | | | | 126 | | | | 489 | | | | 125 | | | | 126 | |
Payment & Imaging and Other | | | 30 | | | | 32 | | | | 32 | | | | 29 | | | | 123 | | | | 30 | | | | 30 | |
Third-Party Products and Exited Businesses | | | 59 | | | | 67 | | | | 60 | | | | 62 | | | | 248 | | | | 54 | | | | 57 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Customer Services Maintenance | | | 363 | | | | 386 | | | | 386 | | | | 390 | | | | 1,525 | | | | 379 | | | | 394 | |
Third-Party Product Sales | | | 8 | | | | 8 | | | | 7 | | | | 13 | | | | 36 | | | | 8 | | | | 11 | |
Professional and installation-related services | | | 51 | | | | 66 | | | | 64 | | | | 82 | | | | 263 | | | | 54 | | | | 69 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Customer Services | | | 422 | | | | 460 | | | | 457 | | | | 485 | | | | 1,824 | | | | 441 | | | | 474 | |
| | | | | | | |
Systemedia | | | 101 | | | | 120 | | | | 118 | | | | 134 | | | | 473 | | | | 94 | | | | 114 | |
| | | | | | | |
Payment & Imaging and Other | | | 39 | | | | 37 | | | | 43 | | | | 51 | | | | 170 | | | | 28 | | | | 36 | |
| | | | | | | |
Elimination of installation-related services revenue included in both the Customer Services segment and other segments | | | (33 | ) | | | (46 | ) | | | (44 | ) | | | (55 | ) | | | (178 | ) | | | (38 | ) | | | (46 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total revenue | | $ | 960 | | | $ | 1,135 | | | $ | 1,142 | | | $ | 1,345 | | | $ | 4,582 | | | $ | 992 | | | $ | 1,179 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Operating income (loss) by segment | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financial Self Service (ATMs) | | $ | 13 | | | $ | 31 | | | $ | 43 | | | $ | 84 | | | $ | 171 | | | $ | 28 | | | $ | 46 | |
Retail Store Automation | | | (7 | ) | | | 8 | | | | 11 | | | | 22 | | | | 34 | | | | (9 | ) | | | 8 | |
Customer Services | | | 20 | | | | 25 | | | | 27 | | | | 24 | | | | 96 | | | | 29 | | | | 30 | |
Systemedia | | | — | | | | 1 | | | | 2 | | | | 1 | | | | 4 | | | | 2 | | | | 4 | |
Payment & Imaging and Other | | | 6 | | | | (1 | ) | | | 4 | | | | 6 | | | | 15 | | | | (3 | ) | | | — | |
| | | | | | | |
Elimination of installation-related services operating income included in both the Customer Services segment and other segments | | | (8 | ) | | | (12 | ) | | | (12 | ) | | | (12 | ) | | | (44 | ) | | | (9 | ) | | | (12 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Subtotal—Segment operating income | | | 24 | | | | 52 | | | | 75 | | | | 125 | | | | 276 | | | | 38 | | | | 76 | |
| | | | | | | |
Pension expense | | | (37 | ) | | | (30 | ) | | | (27 | ) | | | (28 | ) | | | (122 | ) | | | (9 | ) | | | (8 | ) |
Other adjustments (1) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (46 | ) | | | 11 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total income from operations | | $ | (13 | ) | | $ | 22 | | | $ | 48 | | | $ | 97 | | | $ | 154 | | | $ | (17 | ) | | $ | 79 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) | Includes restructuring and spin-off costs from continuing operations. |
