Menu
Media releases are provided as is by companies and have not been edited or checked for accuracy. Any queries should be directed to the company itself.

NCR Reports Strong Fourth-Quarter Operating Results

  • 28 January, 2004 11:58

<p>Please see below NCR’s Quarter Four 2003 financial results. NCR has announced a four per cent raise in revenue for the fourth quarter with a reduction in cost and expense structure by more than US$100 million.</p>
<p>For further information or should you wish to speak with a NCR or Teradata spokesperson, please contact Skye Eggleton or Simon Murphy on 02 9904 4533 or pr@howorth.com.au.</p>
<p>NCR Reports Strong Fourth-Quarter Operating Results</p>
<p>• Better-than-expected revenues in Data Warehousing and Financial Self Service</p>
<p>• Operating margin expansion led by improvements in Retail Store Automation,</p>
<p>Data Warehousing and Financial Self Service</p>
<p>• Operating cash flow for the year improved $194 million, up 79 percent, versus 2002</p>
<p>SYDNEY, 28 January 2004 – NCR Corporation (NYSE: NCR) today reported financial results for the quarter ended December 31, 2003, including earnings of US$0.84 per diluted share and revenue of US$1.64 billion, up 4 percent from revenue in the fourth quarter of 2002. Included in the year-overyear revenue comparison for the fourth quarter was 6 percentage points of benefit from foreign currency fluctuations. At the beginning of the quarter, NCR had expected 3 to 4 percentage points of benefit from currency.</p>
<p>Operating income for the fourth quarter was US$113 million versus US$76 million in the fourth quarter of 2002. Included in the year-over-year comparison was US$42 million of negative impact from pension expense, which was partially offset by US$21 million of asset impairment, real estate consolidation and restructuring charges recorded in the fourth quarter of 2002. Aided by currency translation, operating margin for the fourth quarter improved more than 2 percentage points versus the prior-year period.</p>
<p>NCR reported fourth-quarter 2003 net income of US$80 million, or US$0.84 per diluted share, versus net income of US$57 million, or US$0.57 per diluted share in the fourth quarter of 2002.</p>
<p>“NCR improved its operational performance during 2003, despite headwind from pension expense and a challenging capital-spending climate. We made progress on each of the cost and expense initiatives we established a year ago. Additionally, we enhanced the value propositions of our products and services, improved our demand-creation capability and significantly improved our operating cash flow,” said Mark Hurd, president and chief executive officer of NCR.</p>
<p>“During 2003 we reduced our cost and expense structure by more than US$100 million, putting us solidly on track to achieve our annual cost savings target of US$250 million by the end of 2005. As we continue to successfully execute our operating plan, NCR should make further improvements in 2004,” Hurd said.</p>
<p>Data Warehousing Operating Segment</p>
<p>Operating margin improves 7 percentage points to 17 percent</p>
<p>NCR’s Data Warehousing segment reported fourth-quarter revenue of US$361 million, up 6 percent from the fourth quarter of 2002. Fourth-quarter year-over-year revenue comparison included a benefit of 5 percentage points from foreign currency fluctuations.</p>
<p>Operating income of US$61 million for the quarter increased more than 75 percent from US$34 million in the fourth quarter of 2002, due to higher volume, increasing contributions from support services, higher hardware and software margins, a more favorable mix of software, a lower cost structure and favorable impact from currency.</p>
<p>With increasing regulatory, economic and competitive pressures, companies are recognizing a growing need for enterprise analytics and investing in their technology</p>
<p>infrastructures. Companies continue to install and upgrade their Teradata® data warehouses; however, Data Warehousing revenue growth continues to be limited by the capital-spending environment.</p>
<p>Financial Self Service Operating Segment</p>
<p>Strong revenue growth and lower cost lead to 4 points of operating margin expansion</p>
<p>The Financial Self Service segment generated fourth-quarter revenue of US$392 million, up 13 percent from the year-ago period. Fourth-quarter revenue growth included a year-over-year benefit of 8 percentage points from foreign currency fluctuations.</p>
<p>Operating income of US$77 million improved 38 percent from US$56 million generated in the prior-year period. Fourth-quarter operating margin improved 4 percentage points to 20 percent versus the fourth quarter of 2002 due to higher revenue, improved supply-chain costs, better expense management and favorable impact from currency.</p>
<p>As a result of regulatory changes, increased automated teller machine (ATM) upgrade and replacement activity is likely over the next several years as financial institutions install new generation modular ATMs that can facilitate automated check and cash deposit. These new deposit-capable ATMs should allow banks to reduce check processing and transport costs, thereby providing very attractive return on investment for the banks and added convenience for their customers.</p>
<p>Retail Store Automation Operating Segment</p>
<p>Operating margin improvement generated from better cost and expense management</p>
<p>For the fourth quarter of 2003, Retail Store Automation generated US$234 million in revenue, in line with the US$233 million in the fourth quarter of 2002. Fourth-quarter year-overyear revenue comparison for Retail Store Automation included a benefit of 6 percentage points from foreign currency fluctuations.</p>
<p>Fourth-quarter operating income of US$14 million was a US$15 million improvement from the prior-year period. Operating margin in the fourth quarter improved to 6 percent from an operating loss in the fourth quarter of 2002, due to favorable impact from foreign currency fluctuations and a reduction in supply-chain, engineering and infrastructure costs.</p>
<p>Although retailers continue to be cautious with capital spending, several are installing NCR’s newest line of point-of-sale terminals and expanding their self-checkout system pilots to rollouts.</p>
<p>Customer Services Operating Segment</p>
<p>Operational improvement offset by unfavorable revenue mix and continued pricing pressure</p>
<p>Customer Services revenue increased to US$482 million in the fourth quarter of 2003, up 4 percent from the prior-year period. Fourth-quarter year-over-year revenue comparison for Customer Services included a benefit of 6 percentage points from foreign currency fluctuations.</p>
<p>Operating income of US$6 million in the quarter declined from the US$13 million reported in the fourth quarter of 2002, due to pricing pressure and the continued decline in higher-margin revenue from exited businesses. Operating margin declined to 1 percent from 3 percent in the fourth quarter of 2002.</p>
<p>Systemedia Operating Segment</p>
<p>Improved operating margin on lower revenues</p>
<p>Systemedia fourth-quarter revenue was US$141 million, down 2 percent from the revenue generated in the year-ago period due to softness in the printer-consumables market worldwide. Fourth-quarter year-over-year revenue comparison included a benefit of 6 percentage points from foreign currency fluctuations.</p>
<p>Although revenue declined, operating income improved to US$7 million from the US$3 million reported in fourth quarter of 2002 as Systemedia continued to improve its operating leverage due to lower production and materials cost and reduced overhead expenses.</p>
<p>Payment and Imaging Operating Segment</p>
<p>Higher revenue leads to improved profitability</p>
<p>Payment and Imaging generated US$51 million in revenue during the fourth quarter, up 24 percent from the prior-year period. The higher revenue reflects the timing of major imaging solution implementations that occurred during the quarter. Fourth-quarter revenue growth included a year-over-year benefit of 4 percentage points from foreign currency fluctuations.</p>
<p>Aided by the higher revenue during the quarter, Payment and Imaging generated US$7 million of operating income, an increase of US$2 million from the fourth quarter of 2002. Due to actions to improve operational efficiency and higher volume leveraged against fixed costs, operating margin improved by 2 percentage points.</p>
<p>Non-Operating Items</p>
<p>Net Interest and Other Expense in the fourth quarter of 2003 totaled US$6 million, down from US$25 million in the prior-year period. In the fourth quarter of 2002, Other Expense included US$22 million of asset impairment charges.</p>
<p>The weighted average number of shares outstanding on a fully diluted basis decreased to 95.6 million in the fourth quarter of 2003 from 98.8 million in the fourth quarter of 2002 due to the company’s continued share-repurchase activity. During the fourth quarter of 2003, NCR repurchased approximately 500,000 shares of NCR common stock for approximately US$16 million. During the year, NCR used approximately US$90 million to repurchase 4.1 million shares.</p>
<p>The company’s tax rate for the fourth quarter was lower than anticipated due to the finalization of international tax matters. The lower tax rate resulted in US$0.04 of incremental earnings per share.</p>
<p>Balance Sheet</p>
<p>NCR ended the fourth quarter with US$689 million in cash and short-term investments, a significant increase from the US$581 million cash balance on September 30, 2003. As of December 31, 2003, NCR had short- and long-term debt of US$310 million, down from US$317 million on September 30, 2003.</p>
<p>Due to strong return on pension plan assets during 2003, which resulted in a decrease in minimum liability associated with its pension plans, NCR’s Stockholders’ Equity increased by approximately US$489 million. This non-cash, after-tax, adjustment did not have any effect on NCR’s fourth-quarter or 2003 earnings per share.</p>
<p>Cash Flow Improvement</p>
<p>NCR generated US$167 million of cash flow from operations in the fourth quarter of 2003 versus US$144 million of cash generated from operations in the same period in 2002. Capital expenditures in the fourth quarter of 2003 were US$70 million compared to US$60 million of capital expenditures in the year-ago period.</p>
<p>NCR generated US$97 million of free cash flow in the fourth quarter of 2003 versus free cash flow of US$84 million in the year-ago period, a US$13 million improvement. For the full year, free cash flow generation was US$212 million, versus negative free cash flow of US$12 million in 2002. The US$224 million improvement in free cash flow resulted from stronger operations and improvements in working capital management. NCR defines free cash flow as cash provided by operating activities less capital expenditures for reworkable service parts, property, plant and equipment and additions to capitalized software.</p>
<p>Outlook</p>
<p>NCR expects growth in its Data Warehousing and Financial Self Service businesses in 2004. Furthermore, Retail Store Automation revenue in 2004 should be comparable to the 2003 revenue level that was aided by 12 percent growth.</p>
<p>NCR expects to make further progress on its operating plan in 2004. This progress should more than offset the impact of higher pension expense in 2004 and should result in net earnings growth. This improvement is reflected in the following guidance, for both the full year as well as the seasonally weak first quarter.</p>
<p>Assuming approximately US$275 million of capital expenditures, NCR expects cash flow from operations less capital expenditures, or free cash flow, of approximately US$100 million in 2004. Given the working capital improvements NCR made in 2003, going forward, free cash flow should more closely approximate net income.</p>
<p>2003 Fourth-Quarter Earnings Conference Call</p>
<p>NCR’s senior management will discuss the company’s fourth-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/. Supplemental financial information regarding NCR’s 2003 fourth-quarter operating results is also available on NCR’s Web site.</p>
<p>About NCR Corporation</p>
<p>NCR Corporation (NYSE: NCR) is a leading global technology company helping businesses build stronger relationships with their customers. NCR’s ATMs, retail systems, Teradata® data warehouses and IT services provide Relationship Technology™ solutions that maximize the value of customer interactions. Based in Dayton, Ohio, NCR (www.ncr.com) employs approximately 29,000 people worldwide.</p>
<p># # #</p>
<p>NCR and Teradata are trademarks or registered trademarks of NCR Corporation in the United States and other countries.</p>
<p>Howorth Communications | an Ogilvy PR Worldwide Company | Level 3, 357-359 Military Road Mosman NSW 2088 | T +61 (2) 9904 4533 | F + 61 (2) 9904 9460 I www.howorth.com.au</p>
<p>"Working with companies that innovate through technology"</p>

Most Popular
Computerworld
ARN
Techworld
CMO