Exhibit 99.1
1700 South Patterson Boulevard
[LOGO] Dayton, OH 45479
Transforming Transactions
into Relationships NEWS RELEASE
For media information: For investor information:
John Hourigan Gregg Swearingen
NCR Corporation NCR Corporation
937-445-2078 937-445-4700
john.hourigan@ncr.com gregg.swearingen@ncr.com
For Release on April 24, 2003
NCR Reports First-Quarter Results
.. Operating loss was significantly less than anticipated due to favorable
revenue mix, reduced spending and foreign currency fluctuations.
.. Data Warehouse revenue exceeded expectations generating $31 million of
operating income due to a more favorable revenue mix of software and
support services.
.. Financial Self Service continues to gain market share with 10 percent
year-over-year revenue growth led by strong performance in the Americas
region.
.. Retail Store Automation reported year-over-year revenue growth of 18
percent and improved operating performance by $7 million.
.. Customer Services segment revenue was up 4 percent versus the first quarter
of 2002 driven by maintenance growth in core businesses; however, lower
maintenance revenue related to businesses NCR exited in the late 1990s led
to operating income decline of $8 million.
.. Operating cash flow improved $21 million versus the first quarter of 2002.
DAYTON, Ohio - NCR Corporation (NYSE: NCR) today announced that revenue for
the quarter ended March 31, 2003, was $1.23 billion, a decrease of 1 percent
versus the prior-year period. The 1 percent decline includes a year-over-year
benefit of 6 percentage points from foreign currency fluctuations.
NCR reported a first-quarter operating loss of $32 million compared to $9
million of operating income reported in the first quarter of 2002. A $44 million
year-over-year decline in operating income resulting from pension expense of $24
million in the first quarter of 2003, versus $20 million of pension income in
the first quarter of 2002, significantly impacted operating performance.
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Net loss for the first quarter was $27 million, or $0.28 per basic share.
In the first quarter of 2002, NCR reported a net loss of $344 million, or $3.51
per basic share and $3.41 per diluted share. Included in the net loss in the
first quarter of 2002 was a $348 million net-of-tax cumulative effect from
adopting Statement of Financial Accounting Standards No. 142 (SFAS 142),
"Goodwill and Other Intangible Assets."
"NCR is making progress across its businesses, with financial improvement
most visible in Data Warehousing and Financial Self Service results in the first
quarter," said Mark Hurd, president and chief executive officer of NCR.
"I am encouraged by our team's responsiveness in executing the operating
plan established last fall. We are in the early stages of a large-scale cost
reduction and efficiency initiative and are building momentum that ultimately
will lead to meaningful financial improvement over the next several quarters,"
concluded Hurd.
Operating Segment Results
The segment results below exclude the impact of pension expense/income. Schedule
B, found later in this earnings release, reconciles total company "Income from
operations excluding pension expense/income" to the GAAP measure "Total income
from operations."
Data Warehousing Segment
NCR's Data Warehousing business provides the market-leading Teradata(R)
data warehousing database software, hardware platform and related services that
enable companies to gain a competitive advantage by efficiently analyzing
customer behavior and then delivering that business intelligence to company
decision-makers. This operating segment reported first-quarter revenue of $278
million, outpacing guidance, but down 4 percent from a strong 2002 first
quarter, including a year-over-year benefit of 6 percentage points from foreign
currency fluctuations. Operating income of $31 million for the quarter increased
almost 50 percent from the first quarter of 2002, reflecting a favorable revenue
mix of software and support services, as well as continued cost and expense
improvements. Looking ahead, the company expects second-quarter revenues,
including support services, to be down about 5 percent compared to the second
quarter of 2002.
Financial Self Service Segment
NCR's Financial Self Service business continues to gain market share as it
provides high-quality automated teller machines (ATMs) and the APTRA(TM)
multivendor application software
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that delivers advanced functionality to banks, credit unions and retailers. This
business generated first-quarter revenue of $226 million, up 10 percent from the
comparable period in 2002, led by strong growth in the Americas region. The 10
percent increase includes a year-over-year benefit of 8 percentage points from
foreign currency fluctuations. 2003 first-quarter operating income was $9
million compared to break-even operating performance in the first quarter of
2002. Second-quarter 2003 revenues in the Financial Self Service segment are
anticipated to be consistent with the second quarter of 2002.
Retail Store Automation Segment
NCR's Retail Store Automation business provides store-automation
technologies such as point-of-sale terminals, bar-code scanners and software, as
well as innovative self-checkout systems and electronic shelf labels, to
retailers. In the first quarter of 2003, this operating segment recorded revenue
of $149 million, up 18 percent from the first quarter of 2002, including a
year-over-year benefit of 6 percentage points from foreign currency
fluctuations. Retail Store Automation improved its operating performance by $7
million from the $30 million operating loss recorded in the first quarter of
2002. The operating improvement was primarily due to increased volume. In the
second quarter of 2003, Retail Store Automation revenue is expected to be up 8
percent to 10 percent versus the second quarter of 2002 due to a continued
strong order backlog.
Customer Services Segment
NCR's Customer Services division provides hardware and software
maintenance, deployment and management services around the world for NCR's
Financial Self Service, Retail Store Automation and Payment and Imaging
customers as well as for third-party technology providers. 2003 first-quarter
revenues for this segment were $448 million, up 4 percent from the first quarter
of 2002. This 4 percent revenue growth includes a year-over-year benefit of 6
percentage points from foreign currency fluctuations. Maintenance revenue gains
in NCR's core businesses offset declines in maintenance revenue related to
businesses the company exited in the late 1990s. Maintenance revenues relating
to exited businesses declined by approximately $20 million in the first quarter
from the same period in 2002. Operating income declined from $11 million to $3
million due to adverse changes in revenue mix and continued price erosion.
Customer Service revenue is expected to be up 0 percent to 5 percent in the
second quarter of
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2003 as the growth in Financial Self Service and Retail Store Automation
maintenance revenues are expected to be offset by the continued decline of
maintenance revenues related to exited businesses.
Systemedia Segment
Systemedia provides world-class business consumables and products including
ink-jet and laser printer supplies, thermal transfer ribbons, labels, paper
rolls, ink ribbons, laser documents, business forms and retail office products.
In the first quarter of 2003, this business reported revenue of $112 million,
down 3 percent from the first quarter of 2002, including a year-over-year
benefit of approximately 5 percentage points from foreign currency fluctuations.
Systemedia reported a $1 million operating loss in the quarter versus break-even
operating performance in the first quarter of 2002. Revenue in the second
quarter is anticipated to be roughly flat compared to the second quarter of 2002
as increases in sales of retail office products and a higher capture rate of
NCR's solution customers are expected to be offset by declines in traditional
paper products.
Payment and Imaging Segment
NCR's Payment and Imaging business provides end-to-end solutions for both
traditional paper-based and image-based item processing. This business utilizes
advanced image recognition and workflow technologies to automate item
processing, helping banks and other financial industry businesses increase
efficiency and reduce operating costs. In the first quarter of 2003, this
operating segment generated revenue of $31 million, compared to $41 million in
the first quarter of 2002. This 24 percent revenue decline includes a
year-over-year benefit of 3 percentage points from foreign currency
fluctuations. Despite the $10 million decline in revenue, which was due to the
timing of major 2003 installations, operating income was $5 million versus $6
million in the first quarter of 2002. Favorable revenue mix and operational
efficiencies offset a large part of the revenue decline. Payment & Imaging
revenue in the second quarter of 2003 is expected to be relatively flat compared
to 2002 levels.
Non-Operating Items
Interest and other expense in the first quarter of 2003 was $5 million, up
from $3 million in the prior-year period. A $6 million benefit was included in
other expense as the payment
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related to a Lucent indemnification claim is expected to be less than the amount
recorded in 2002. Due to developments during the quarter, the company also added
$7 million to various legal and environmental reserves.
The weighted average number of basic shares outstanding decreased to 96.0
million from 97.9 million in the prior-year period due to NCR's repurchase of
approximately 2.7 million of its common shares during the quarter. NCR used
approximately $50 million of cash to repurchase the shares at an average price
of $18.65 per share.
Balance Sheet
NCR ended the first quarter with $529 million in cash and short-term
investments, a slight increase from $526 million on December 31, 2002. As of
March 31, 2003, NCR had short- and long-term debt of $318 million, up from $311
million on December 31, 2002.
Cash Flow Improvement
NCR generated $102 million of cash flow from operations in the first
quarter of 2003 versus $81 million of operating cash flow in the same period in
2002. Capital expenditures in the first quarter of 2003 were $62 million
compared to $58 million of capital expenditures in the year-ago period.
NCR's free cash flow was $40 million in the first quarter of 2003 compared
to $23 million in the year-ago period. NCR defines free cash flow as operating
cash flow less capital expenditures for property, plant and equipment,
reworkable service parts and additions to capitalized software.
For the Periods Ended March 31
------------------------------
Three Months
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2003 2002
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Cash Provided by operating activities (GAAP) $ 102 $ 81
Net expenditures for reworkable service parts 32 23
Expenditures for property, plant and equipment 14 20
Additions to capitalized software 16 15
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Free cash flow (non-GAAP measure) (1) $ 40 $ 23
(1) NCR believes that free cash flow is an important non-GAAP financial
measure that is useful to investors because it relates the operating
cash flow of the company to the capital that is being spent to
continue and improve the business operations of the company.
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Outlook
2003
Second Quarter
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Year-over-year revenue change (0-2)%
Data Warehousing (5)%
Financial Self Service Flat
Retail Store Automation 8-10%
Systemedia Flat
Payment & Imaging Flat
Customer Services 0-5%
Other (20-25)%
NCR is comfortable with the current ranges of analysts' earnings
expectations, which are $0.00 - $(0.10) per share for the second quarter and
$0.40 - $0.47 per share for the full year.
2003 First-Quarter Earnings Conference Call
NCR President and Chief Executive Officer Mark Hurd and Senior Vice
President and Chief Financial Officer Earl Shanks will discuss the company's
first-quarter results during a conference call today at 10:00 a.m. (ET). Live
access to the conference call, as well as a replay, is available on NCR's web
site at http://investor.ncr.com/.
About NCR Corporation
NCR Corporation (NYSE: NCR) is a leading global technology company helping
businesses build stronger relationships with their customers. NCR's ATMs, retail
systems, Teradata(R) data warehouses and IT services provide Relationship
Technology(TM) solutions that maximize the value of customer interactions. Based
in Dayton, Ohio, NCR (www.ncr.com) employs approximately 29,600 people
worldwide.
# # #
NCR and Teradata are trademarks or registered trademarks of NCR Corporation in
the United States and other countries. APTRA and Relationship Technology are
either trademarks or registered trademarks of NCR Corporation in the United
States and/or other countries.
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Description of Non-GAAP Financial Measures
NCR reports its financial results using generally accepted accounting
principles (GAAP). In addition, in this earnings release and attached financial
schedules, NCR has provided certain non-GAAP financial information, such as
"free cash flow" and "non-pension operating income" (NPOI) to describe the
company's overall, and operating segment, results. NCR's management utilizes the
non-GAAP financial information provided in this release to assess the financial
performance of the company and its operating segments, and believes it is useful
to investors.
For example, operating segment results shown on Schedule B do not include
the effects of pension expense/income since these items are not controllable by
the business unit. By excluding pension expense/income from operating results,
investors can better analyze the operating performance and trends for both NCR
and its operating businesses. The company believes that this information will
enhance an overall understanding of its financial results due to the significant
change in pension expense/income from period to period and the non-operational
nature of pension expense/income.
Supplemental financial information regarding NCR's 2003 first-quarter
operating results is available on NCR's web site at http://investor.ncr.com/.
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: the duration and intensity of the economic downturn and
its impact on the markets in general or on our ability to meet our commitments
to customers, the ability of our suppliers to meet their commitments to us, or
the timing of purchases (including upgrades to existing data warehousing
solutions and retail point of service solutions) by our current and potential
customers and other general economic and business conditions, including the
impact of SARS on the Asia-Pacific economy; the timely development, production
or acquisition and market acceptance of new and
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ATM outsourcing and enterprise data warehousing), 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 such as Retail Store Automation and Financial Self Service
solutions; short product cycles, rapidly changing technologies and maintaining
competitive leadership position with respect to our solution offerings,
particularly data warehousing technologies; 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 recent cost-control
measures taken by us; availability and successful exploitation of new
acquisition and alliance opportunities; and 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 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
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NCR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
For the Periods Ended March 31
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Three Months
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2003 2002
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Revenue
Products $ 591 $ 612
Services 643 635
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Total revenue 1,234 1,247
Cost of products 383 400
Cost of services 544 497
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Total gross margin 307 350
% of Revenue 24.9% 28.1%
Selling, general and administrative expenses 280 285
Research and development expenses 59 56
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(Loss) income from operations (32) 9
% of Revenue (2.6%) 0.7%
Interest and other expense, net 5 3
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(Loss) income before income taxes and cumulative
effect of accounting change (37) 6
% of Revenue (3.0%) 0.5%
Income tax (benefit) expense (10) 2
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(Loss) income before cumulative effect of accounting change (27) 4
Cumulative effect of accounting change -
Goodwill impairment, net of tax -- (348)
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Net (loss) $ (27) $ (344)
% of Revenue (2.2%) (27.6%)
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Net (loss) income per common share
Basic before cumulative effect of accounting change $ (0.28) $ 0.04
Cumulative effect of accounting change - Goodwill impairment -- (3.55)
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Basic $ (0.28) $ (3.51)
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Diluted before cumulative effect of accounting change $ (0.28) $ 0.04
Cumulative effect of accounting change - Goodwill impairment -- (3.45)
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Diluted $ (0.28) $ (3.41)
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Weighted average common shares outstanding
Basic 96.0 97.9
Diluted 96.0 100.6
Schedule B
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NCR CORPORATION
CONSOLIDATED REVENUE and OPERATING INCOME SUMMARY
(in millions)
For the Periods Ended March 31
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Three Months
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%
2003 2002 Change
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Revenue by segment
Data Warehousing
Data Warehousing solution 217 235 (8%)
Data Warehousing support services 61 55 11%
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Total Data Warehousing 278 290 (4%)
Financial Self Service 226 205 10%
Retail Store Automation 149 126 18%
Systemedia 112 115 (3%)
Payment and Imaging 31 41 (24%)
Customer Services
Products -- 1 (100%)
Professional and installation-related services 63 42 50%
Customer Service Maintenance:
Financial Self Service 132 124 6%
Retail Store Automation 119 109 9%
Payment and Imaging 26 25 4%
Other 108 131 (18%)
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Total Customer Services 448 432 4%
Other 48 77 (38%)
Elimination of installation-related services included in both
the Customer Services segment and the other reported segments (58) (39) 49%
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Total Revenue $ 1,234 $ 1,247 (1%)
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Operating Income by segment
Data Warehousing $ 31 $ 21
Financial Self Service 9 --
Retail Store Automation (23) (30)
Systemedia (1) --
Payment and Imaging 5 6
Customer Services 3 11
Other (14) (11)
Elimination of installation-related services
operating income included in both the
Customer Services segment and the other
reported segments (18) (8)
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(Loss) income excluding pension (expense)/income (8) (11)
Pension (expense)/income (24) 20
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Total (Loss) Income from operations (32) 9
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Schedule C
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NCR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
March 31 December 31
2003 2002
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Assets
Current assets
Cash, cash equivalents and short-term investments $ 529 $ 526
Accounts receivable, net 1,107 1,204
Inventories 274 263
Other current assets 187 193
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Total current assets 2,097 2,186
Property, plant and equipment, net 776 792
Other assets 1,695 1,694
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Total assets $4,568 $4,672
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Liabilities and stockholders' equity
Current liabilities
Short-term borrowings $ 13 $ 5
Accounts payable 307 364
Other current liabilities 1,045 1,048
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Total current liabilities 1,365 1,417
Long-term debt 305 306
Other long-term liabilities 1,641 1,624
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Total liabilities 3,311 3,347
Total stockholders' equity 1,257 1,325
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Total liabilities and stockholders' equity $4,568 $4,672
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Schedule D
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NCR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
For the Periods Ended March 31
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Three Months
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2003 2002
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Operating Activities
Net (loss) $ (27) $ (344)
Adjustments to reconcile net (loss) to cash
provided by operating activities
Depreciation and amortization 83 80
Deferred income taxes (9) (5)
Goodwill impairment -- 348
Other adjustments to loss, net 1 1
Changes in assets and liabilities
Receivables 97 34
Inventories (11) (1)
Current payables (116) (45)
Customer deposits and deferred service revenue 94 88
Employee severance and pension 5 (33)
Other assets and liabilities (15) (42)
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Net cash provided by operating activities 102 81
Investing Activities
Net expenditures for reworkable service parts (32) (23)
Expenditures for property, plant and equipment (14) (20)
Proceeds from sales of property, plant and equipment 1 1
Additions to capitalized software (16) (15)
Other investing activities (2) 19
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Net cash (used in) investing activities (63) (38)
Financing Activities
Purchase of Company common stock (50) --
Short-term borrowings, net 8 (32)
Long-term debt, net -- (2)
Other financing activities 5 34
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Net cash (used in) provided by financing activities (37) --
Effect of exchange rate changes on cash and cash
equivalents -- --
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Increase in cash and cash equivalents 2 43
Cash and cash equivalents at beginning of period 526 335
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Cash and cash equivalents at end of period $ 528 $ 378
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