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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: October 15, 1997
NCR CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 001-00395 31-0387920
(STATE OR OTHER JURISDICTION OF (COMMISSION (I.R.S. EMPLOYER
INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
1700 S. PATTERSON BLVD., DAYTON, OH 45479
(937) 445-5000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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Item 5. Other Events
The Registrant's news release dated October 15, 1997, with respect to its
financial results for the quarter ended September 30, 1997, including condensed
consolidated balance sheets as of September 30, 1997, and condensed consolidated
statements of operations, consolidated revenue summary, and condensed
consolidated statements of cash flows for the three months and nine months ended
September 30, 1997, is attached and incorporated herein by reference.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
NCR Corporation
Date: October 20, 1997 By: /s/ John L. Giering
------------------------
John L. Giering, Senior
Vice President and Chief
Financial Officer
NCR CORPORATION
INVESTOR RELATIONS DEPARTMENT
Tel: 937-445-5905
Fax: 937-445-5541
HTTP://WWW.NCR.COM
NEWS RELEASE
NCR REPORTS NARROWED THIRD-QUARTER LOSS
DAYTON, Ohio - NCR Corporation reported a narrowed third-quarter loss of
$9 million or $.09 per share, compared to a loss of $33 million or $.32 per
share in the year-earlier period. Revenue in the quarter was $1.563 billion
compared to $1.658 billion in last year's third quarter, a decline of six
percent. On a local currency basis, revenue declined one percent. Gross margins
in the quarter declined to 27.6 percent from 29.1 percent in the year-ago
period.
Total orders in the quarter were below the year-ago period. On a local
currency basis, orders posted a mid single-digit decline.
"Our business has the potential for significantly-improved results," said
Lars Nyberg, NCR Chairman and CEO. "We are announcing today a realignment of our
business structure to be more effective and efficient globally. We also remain
committed to making NCR a
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great place to work for our employees, and an excellent partner for our
customers, all while creating value for our shareholders.
"Revenue and operating income at the end of nine months is down compared
to 1996. Our seasonally-strong fourth quarter will not be able to offset these
year-to-date declines," Nyberg said. "We are redoubling our efforts for revenue
generation, order conversion, margin improvement and expense reduction. Although
there are challenges, we remain confident of continuing improvement and
longer-term success," Nyberg added.
ORDERS
Total orders posted a mid single-digit decline on a local currency basis,
compared to the year-ago period. On a product basis, reported orders for retail
systems as well as entry level servers and PCs posted percentage gains in the
twenties. Financial product orders showed continued strength with a percentage
gain in the teens. However, these gains were offset by order declines in
computer systems and professional services. On a geographic basis, orders were
flat in the Asia/Pacific region with the Americas and Europe/Middle East/Africa
regions posting percentage declines ranging from low double-digits to teens.
REVENUE
Worldwide revenue declined six percent on a reported dollar basis and one
percent on a local currency basis. On a reported basis, revenue gains in retail
products of 14 percent, professional services of 14 percent and financial
systems of 2 percent were more than offset by revenue declines in computer
systems, systemedia and customer services. Revenue increased in the Asia/Pacific
region but declined in both the Americas and Europe/Middle East/Africa regions
compared to the year-ago period. On a local currency basis revenue was up ten
percent in the Asia/Pacific region and seven percent in Europe/Middle
East/Africa.
GROSS MARGINS
Gross margins for NCR products and systems declined to 29.8 percent from
33.5 percent in the year-ago period, with the strengthening of the U.S. dollar
against most key foreign currencies playing a major role. Gross margins for NCR
services improved to 24.8 percent compared to 23.5 percent in the year-ago
period. Total gross margin declined to 27.6 percent of revenue compared to 29.1
percent in last year's third quarter.
EXPENSES
SG&A expenses of $351 million declined overall from $364 million in the
comparable period last year. Selling expenses increased slightly, but general
and
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administrative expenses declined reflecting ongoing efforts to improve the
efficiency of company business processes.
Research and development expenses increased eight percent to $96 million
compared to $89 million in the period a year ago, reflecting our continued
investment in new offerings.
During the quarter, AT&T and NCR finalized the allocation of 1996 year-end
pension plan assets to NCR. In that connection, the valuation of assets used to
determine NCR's 1997 pension expense was increased by approximately $200
million. Accordingly, both gross margin and expenses were positively impacted by
a year-to-date increase in the return on pension plan assets calculated using
this year's long-term rate of return of 9.5 percent.
INCOME TAXES
Income tax expense in the quarter was $2 million compared to $62 million
in the year-ago period. The tax expense in the quarter results from tax expense
on NCR's international profits and the inability to recognize tax benefits on
domestic losses.
BALANCE SHEET
NCR ended the third quarter in a strong financial position with $1.027
billion in cash and short-term investments, debt of $105 million and total
shareholders equity of $1.358 billion.
As of September 30, 1997, NCR employed 38,500 people worldwide, including
contractors.
NCR Corporation is a recognized world leader in data warehousing
solutions; open high-availability transaction processing systems; automated
teller machines; scanners and point-of-sale terminals, service and support for
transaction-based systems for the retail, financial, communications and other
select markets.
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NOTE TO INVESTORS:
This news release contains forward-looking statements, including
statements as to anticipated or expected results, beliefs, opinions, and future
financial performance. 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 timely development, production or acquisition, and
market acceptance of new and existing products and services; shifts in market
demands; continued competitive factors and
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pricing pressures; short product-cycles and rapidly changing technologies;
turnover of sales force and the ability to attract and retain skilled employees;
tax rates; ability to execute the company's business plan; general economic and
business conditions; and other factors detailed from time to time in the
company's Securities and Exchange Commission reports, including the Form 10
filed in November 1996, the Form 10-K for the year ended December 31, 1996, the
Form 10-Qs for the quarters ended March 31 and June 30, 1997, and the company's
annual report to stockholders for 1996.
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.
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NCR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
For the Periods Ended September 30
----------------------------------------------
Three Months Nine Months
-------------------- --------------------
1997 1996 1997 1996
------- ------- ------- -------
REVENUES
Sales $ 866 $ 926 $ 2,499 $ 2,738
Services 697 732 2,098 2,185
------- ------- ------- -------
TOTAL REVENUES 1,563 1,658 4,597 4,923
Cost of sales 608 616 1,744 1,916
Cost of services 524 560 1,600 1,656
------- ------- ------- -------
GROSS MARGIN 431 482 1,253 1,351
------- ------- ------- -------
% of Revenue 27.6% 29.1% 27.3% 27.4%
Selling, general, and administrative expenses 351 364 1,027 1,075
% of Revenue 22.5% 22.0% 22.3% 21.8%
Research and development expenses 96 89 279 273
% of Revenue 6.1% 5.4% 6.1% 5.5%
------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS (16) 29 (53) 3
------- ------- ------- -------
% of Revenue -1.0% 1.7% -1.2% 0.1%
Interest expense 4 14 10 40
Other (income) expense, net (13) (14) (43) (17)
------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES (7) 29 (20) (20)
------- ------- ------- -------
% of Revenue -0.4% 1.7% -0.4% -0.4%
Income tax expense 2 62 9 96
------- ------- ------- -------
NET LOSS $ (9) $ (33) $ (29) $ (116)
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% of Revenue -0.6% -2.0% -0.6% -2.4%
NET LOSS PER COMMON SHARE $ (0.09) $ (0.32) $ (0.28) $ (1.14)
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WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (IN MILLIONS) 102.5 101.4 102.0 101.4
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NCR CORPORATION
CONSOLIDATED REVENUE SUMMARY
(Unaudited)
(DOLLARS IN MILLIONS)
For the Periods Ended September 30
------------------------------------
Three Months Nine Months
---------------- ----------------
1997 1996 1997 1996
------ ------ ------ ------
Retail Products $ 120 $ 105 $ 334 $ 300
Financial Products 230 225 679 666
Computer Products 281 343 785 945
PCs/Entry Level Server Products 107 106 306 377
Systemedia Products 119 133 367 405
Customer Support Services 518 561 1,548 1,645
Professional Services 151 133 456 417
Data Services 26 30 82 94
Other 11 22 40 74
------ ------ ------ ------
Total Revenues $1,563 $1,658 $4,597 $4,923
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NCR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
September 30 June 30 December 31
1997 1997 1996
------------ ----------- -----------
(Unaudited) (Unaudited)
ASSETS
Current assets
Cash and short-term investments $1,027 $1,156 $1,203
Accounts receivable, net 1,363 1,446 1,457
Inventories 540 517 439
Other current assets 236 244 219
------ ------ ------
TOTAL CURRENT ASSETS 3,166 3,363 3,318
Property, plant, and equipment, net 1,118 1,146 1,207
Other assets 841 776 755
------ ------ ------
TOTAL ASSETS $5,125 $5,285 $5,280
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ 69 $ 56 $ 28
Accounts payable 300 303 352
Other current liabilities 1,485 1,581 1,587
------ ------ ------
TOTAL CURRENT LIABILITIES 1,854 1,940 1,967
Long-term debt 36 36 48
Other long-term liabilities 1,877 1,879 1,869
------ ------ ------
TOTAL LIABILITIES 3,767 3,855 3,884
TOTAL SHAREHOLDERS' EQUITY 1,358 1,430 1,396
------ ------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,125 $5,285 $5,280
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NCR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(DOLLARS IN MILLIONS)
For the Periods Ended September 30
-------------------------------------------
Three Months Nine Months
------------------- -------------------
1997 1996 1997 1996
------- ------- ------- -------
OPERATING ACTIVITIES
Net Loss $ (9) $ (33) $ (29) $ (116)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 92 100 278 275
Changes in operating assets and liabilities
Receivables 83 (201) 94 532
Inventories (23) 1 (101) 62
Other (193) 88 (218) (449)
------- ------- ------- -------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (50) (45) 24 304
INVESTING ACTIVITIES
Short-term investments, net 63 (32) (214) (49)
Expenditures for service parts & property,
plant, and equipment (66) (79) (215) (310)
Other investing activities (6) 24 9 42
------- ------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES (9) (87) (420) (317)
FINANCING ACTIVITIES
Short-term borrowings, net 13 3 41 (3)
Long-term debt, net -- (9) (12) (240)
Transfers from AT&T, net -- 43 -- 638
Other financing activities 11 -- 29 --
------- ------- ------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 24 37 58 395
Effect of exchange rate changes on cash
and cash equivalents (31) 6 (52) (1)
------- ------- ------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (66) (89) (390) 381
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 839 784 1,163 314
------- ------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 773 $ 695 $ 773 $ 695
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