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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: January 21, 1998
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 January 21, 1998, with respect to its
financial results for the quarter and year ended December 31, 1997, including
condensed consolidated balance sheets as of December 31, 1997, and condensed
consolidated statements of operations, consolidated revenue summary, and
condensed consolidated statements of cash flows for the three months and twelve
months ended December 31, 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: January 28, 1998 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 POSTS FOURTH-QUARTER PROFIT
AND IMPROVED FULL-YEAR RESULTS
DAYTON, OHIO -- NCR Corporation reported fourth-quarter net income of
$36 million, or $.35 per share, compared to net income of $7 million, or $.07
per share, in the comparable period last year. Full-year earnings of $7 million
or $0.07 per share, was the first reported net income since 1992 and compared to
a net loss of $1.07 per share, a year ago.
Revenue in the quarter was $1.992 billion, a decline of two percent
from the $2.040 billion reported in the year-ago period. On a local currency
basis, revenue increased three percent in the quarter.
In the year-ago fourth quarter, NCR recorded a favorable impact of a
$55 million pre-tax release of restructuring reserves and an adverse impact of
an $82 million tax adjustment associated with restructuring. In order to
facilitate both quarterly and yearly comparisons, the discussion below excludes
these one-time impacts.
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Gross margins in the quarter declined to 27.4 percent from 29.6 percent
in last year's fourth quarter.
Total orders in the quarter declined from the year-ago level. On a
local currency basis, orders posted a high-single digit decline.
"Our results for the quarter show important progress and also where we
must improve," said NCR Chairman & CEO Lars Nyberg. "Our financial and retail
businesses are performing well, posting respectable revenue gains in the quarter
and growing order backlogs for the year.
"We have made significant changes for 1998 that make me confident we
are well positioned to succeed," said Nyberg. "We have focused on 11 specific
solution portfolios, aligned our sales and professional services people around
these solutions in business units that now have full profit responsibility, and
are improving our operating efficiency by moving from redundant local practices
to global processes. And with our tightened focus on data warehousing, where we
have a strong market position and technology leadership, we believe we have the
right strategy for success."
ORDERS
Total NCR orders were down compared to last year's quarter. On a local
currency basis, orders declined by a high-single digit percentage. On a product
basis, orders for financial products registered the largest fourth quarter
increase on record. Orders for retail systems, computers, and PCs and entry
level servers declined compared to the year-ago period. Orders for professional
services were flat in the quarter.
On a geographic basis, orders in Europe/Middle East/Africa posted a
high single digit gain over the year-ago period. Low-single digit order declines
in Asia/Pacific and double-digit order declines in the Americas were recorded.
On a local currency basis, orders grew in the teens in Europe/Middle East/Africa
and in the high-single digits in the Asia/Pacific region.
REVENUE
Worldwide revenue increased three percent on a local currency basis but
was down two percent on a reported dollar basis. Revenue gains of 14 percent for
financial systems, 13 percent for PCs and entry level servers, nine percent for
retail products, and five percent for professional services were reported on a
dollar basis compared to the year-earlier period. However, these gains were
offset by a 21 percent decline in computers, a one percent decline in Systemedia
and a five percent decline in customer services revenues. Revenue increased
three percent in Europe/Middle East/Africa but declined three percent in
Asia/Pacific and nine percent in the Americas. On a local currency basis,
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Europe/Middle East/Africa region reported a twelve percent gain and Asia/Pacific
reported a ten percent gain.
GROSS MARGINS
Gross margins for NCR products and services declined 2.2 percentage
points of revenue to 27.4 percent from 29.6 percent in last year's fourth
quarter. Services gross margins declined by 5.3 percentage points due largely to
lower reported revenues across an essentially fixed cost structure and higher
costs than anticipated on certain major professional services projects. Gross
margins for products and systems decreased 0.2 percentage points of revenue to
31.7 percent from 31.9 percent in the year-ago period.
EXPENSES
Total expenses were at $511 million compared to $531 million in the
year-ago period. An increase in selling expenses for the quarter was offset by
declines in general and administrative expenses and research and development
expenses.
INCOME TAXES
Income taxes declined 73 percent from the year-ago period to $11
million from $41 million. The programs designed to lower high income tax rates
resulting from worldwide operations are beginning to show favorable results.
FULL-YEAR RESULTS
For the full-year, NCR reported net income of $7 million, or $.07 per
share, compared to a reported loss of $109 million, or $1.07 per share in 1996.
After excluding the effects of restructuring items discussed above, the 1996 net
loss was $82 million, or $0.81 per share. Revenue for the year was $6.589
billion, a decline of five percent from the $6.963 billion reported in 1996, but
down one percent in local currency. Orders for the year were below the prior
year level, but flat in local currency. Declines in orders for computer
products, PCs and entry level servers, and professional services offset gains in
financial and retail systems orders.
Gross margins declined to 27.3 percent from 28.1 percent in the prior
year period, or a decline of 0.8 percentage points of revenue. Total expenses
declined three percent for the year to $1.817 billion from $1.879 billion in
1996. Income taxes declined to $20 million for the year compared to $137 million
in 1996.
NCR ended the year with a strong financial position. At year-end, NCR
recorded $1.129 billion in cash and short term investments, debt of $94 million
and total shareholders' equity of $1.353 billion.
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As of December 31, 1997, NCR employed 38,300 people worldwide,
including contractors.
NCR Corporation (www.ncr.com) is a recognized world leader in data
warehousing solutions; open high-availability transaction processing systems;
automated teller machines; high performance retail scanners and point-of-sale
terminals; services and customer support for transaction-based systems for the
retail, financial, and communications industries and other select markets.
FINANCIAL INFORMATION
Detailed financial information regarding NCR's fourth quarter and
full-year results is available on the Internet: http://www.ncr.com. NCR's senior
vice president and Chief Financial Officer, John Giering, will discuss the
company's financial performance in a taped broadcast. Access is available
beginning at 12:00 noon (EST) today and will run until 5:00 P.M. (EST) on
January 23. The broadcast can be accessed by calling 402-220-5185.
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 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, June 30, and September 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
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended December 31 Year Ended December 31
--------------------------------------- ----------------------------------------
1997 1996 1997 1996
--------- ------------------------ --------- -----------------------
As As As As
Reported Adjusted Reported Adjusted
REVENUES
<S> <C> <C> <C> <C> <C> <C>
Sales $ 1,188 $ 1,208 $ 1,208 $ 3,687 $ 3,946 $ 3,946
Services 804 832 832 2,902 3,017 3,017
------- ------- ------- ------- ------- -------
TOTAL REVENUES 1,992 2,040 2,040 6,589 6,963 6,963
Cost of sales 811 835 823 2,555 2,751 2,739
Cost of services 636 590 614 2,236 2,246 2,270
------- ------- ------- ------- ------- -------
GROSS MARGIN 545 615 603 1,798 1,966 1,954
------- ------- ------- ------- ------- -------
% of Revenue 27.4% 30.1% 29.6% 27.3% 28.2% 28.1%
Selling, general, and
administrative expenses 409 383 414 1,436 1,458 1,489
% of Revenue 20.5% 18.8% 20.3% 21.8% 20.9% 21.4%
Research and
development expenses 102 105 117 381 378 390
% of Revenue 5.1% 5.1% 5.7% 5.8% 5.4% 5.6%
------- ------- ------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS 34 127 72 (19) 130 75
------- ------- ------- ------- ------- -------
% of Revenue 1.7% 6.2% 3.5% -0.3% 1.9% 1.1%
Interest expense 5 16 16 15 56 56
Other (income) expense, net (18) (19) (19) (61) (36) (36)
------- ------- ------- ------- ------- -------
INCOME BEFORE INCOME TAXES 47 130 75 27 110 55
------- ------- ------- ------- ------- -------
% of Revenue 2.4% 6.4% 3.7% 0.4% 1.6% 0.8%
Income tax expense 11 123 41 20 219 137
------- ------- ------- ------- ------- -------
NET INCOME (LOSS) $ 36 $ 7 $ 34 $ 7 $ (109) $ (82)
======= ======= ======= ======= ======= =======
% of Revenue 1.8% 0.3% 1.7% 0.1% -1.6% -1.2%
NET INCOME (LOSS) PER
COMMON SHARE $ 0.35 $ 0.07 $ 0.34 $ 0.07 $ (1.07) $ (0.81)
======= ======= ======= ======= ======= =======
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING (IN MILLIONS) 103.0 101.4 101.4 102.0 101.4 101.4
======= ======= ======= ======= ======= =======
</TABLE>
Note: The three months and year ended December 31, 1996 "As Adjusted" amounts
exclude the effects of a $55 million pre-tax restructuring reserve release and a
provision for income taxes of $82 million related to restructuring activities.
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NCR CORPORATION
CONSOLIDATED REVENUE SUMMARY
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
For the Periods Ended December 31
---------------------------------
Three Months Twelve Months
------------ -------------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Retail Products $ 140 $ 128 $ 474 $ 428
Financial Products 390 341 1,069 1,007
Computer Products 356 453 1,141 1,398
PCs/Entry Level Server Products 143 126 449 503
Systemedia Products 144 146 511 551
Customer Support Services 564 593 2,112 2,238
Professional Services 208 199 664 616
Data Services 28 29 110 123
Other 19 25 59 99
------ ------ ------ ------
Total Revenues $1,992 $2,040 $6,589 $6,963
====== ====== ====== ======
</TABLE>
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NCR CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
December 31 December 31
1997 1996
------ ------
<S> <C> <C>
ASSETS
Current assets
Cash and short-term investments $1,129 $1,203
Accounts receivable, net 1,471 1,457
Inventories 489 439
Other current assets 182 219
------ ------
TOTAL CURRENT ASSETS 3,271 3,318
Property, plant, and equipment, net 1,106 1,207
Other assets 916 755
------ ------
TOTAL ASSETS $5,293 $5,280
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Short-term borrowings $ 59 $ 28
Accounts payable 378 352
Other current liabilities 1,527 1,587
------ ------
TOTAL CURRENT LIABILITIES 1,964 1,967
Long-term debt 35 48
Other long-term liabilities 1,941 1,869
------ ------
TOTAL LIABILITIES 3,940 3,884
TOTAL SHAREHOLDERS' EQUITY 1,353 1,396
------ ------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,293 $5,280
====== ======
</TABLE>
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NCR CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
For the Periods Ended December 31
---------------------------------
Three Months Twelve Months
---------------------- ----------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net Income (Loss) $ 36 $ 7 $ 7 $ (109)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization 105 110 383 385
Changes in operating assets and liabilities
Receivables (108) (81) (14) 451
Inventories 51 120 (50) 182
Other 140 (92) (78) (541)
------- ------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 224 64 248 368
INVESTING ACTIVITIES
Short-term investments, net 11 33 (203) (16)
Expenditures for service parts & property,
plant, and equipment (94) (113) (309) (423)
Other investing activities (21) 2 (12) 44
------- ------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES (104) (78) (524) (395)
FINANCING ACTIVITIES
Short-term borrowings, net (10) (14) 31 (17)
Long-term debt, net (1) (42) (13) (282)
Transfers from AT&T, net -- 556 -- 1,194
Other financing activities 15 -- 44 --
------- ------- ------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4 500 62 895
Effect of exchange rate changes on cash
and cash equivalents (11) (18) (63) (19)
------- ------- ------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 113 468 (277) 849
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 773 695 1,163 314
------- ------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 886 $ 1,163 $ 886 $ 1,163
======= ======= ======= =======
</TABLE>
