1 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, 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) 2 Item 5. Other Events The Registrant's news release dated January 21, 1997, with respect to its financial results for the quarter and year ended December 31, 1996, including a consolidated balance sheet as of December 31, 1996, a consolidated statement of cash flows for the year ended December 31, 1996, and consolidated statements of operations, consolidated revenue summary, and supplemental consolidated statements of operating income (excluding restructuring and other charges) for the quarter and year ended December 31, 1996 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: February 6, 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 FOURTH-QUARTER AND FULL-YEAR 1996 FINANCIAL RESULTS DAYTON, OHIO, JANUARY 21, 1997 -- NCR Corporation reported fourth-quarter net income of $7 million, or $.07 per share, compared to a net loss of $305 million, or $3.01 per share, in the comparable period last year. In the fourth quarter, NCR completed a review of its remaining business restructuring reserves. This review resulted in a favorable adjustment of $55 million to operating income. A concurrent review of the tax benefit of restructuring reserves recorded in the third quarter of 1995 resulted in a one-time unfavorable adjustment to the fourth-quarter 1996 provision for income taxes of $82 million. The net effect of restructuring-related adjustments in the fourth quarter of 1996 reduced net income by $27 million or $0.27 per share. 3 Revenue in the quarter was $2.04 billion, a decline of 10 percent from the $2.27 billion reported in the year ago period. The decline in revenue was primarily due to the company's decision to discontinue the sale of PCs and entry-level servers through high-volume indirect channels. "Traditional quarterly comparisons, which include results from businesses discontinued as part of our restructuring, tend to mask the solid operational achievements we made during the year in turning the business around," said NCR Chairman & CEO Lars Nyberg. "This marks the third consecutive quarter that we have generated an operating profit. The performance of the businesses that are the foundation for the new NCR indicates the scope of our turnaround, which may be the fastest ever for a company of our size and complexity." Total orders in the fourth quarter were above the comparable period last year. However, for its "core operations," which exclude PCs and entry-level servers, NCR posted very good gains over the comparable period last year. Orders for computer products showed substantial gains while financial products, retail products and professional services all posted growth in the quarter. For core operations geographically, fourth quarter order increases were led by substantial gains in the Asia/Pacific region and by very good gains in the Americas region. Revenue in the quarter from core operations increased three percent over the comparable period a year ago and five percent on a local currency basis. On a product line basis, revenue for computer products increased 25 percent in the quarter and revenue for financial products increased 12 percent over year ago levels. For core operations on a geographic basis, the Americas region had a revenue gain of nine percent over the prior year quarter, driven primarily by financial and computer products. Revenue in the Europe/Middle East/Africa region was down one percent compared with last year's fourth quarter. The Asia/Pacific region reported a decline in revenue of three percent for the quarter principally due to the strengthening of the U. S. dollar against the Japanese yen. Gross margins increased 7.2 percentage points in the quarter to 30.1 percent. This year-to-year increase was favorably impacted by a provision for restructuring in the fourth quarter of 1995 and the release of restructuring reserves in the fourth quarter of 1996. Excluding these restructuring amounts from both periods, gross margins in the fourth quarter of 1996 reached 29.6 percent, an increase of 5.6 percentage points of revenue over the comparable period last year. Operating expenses in the fourth quarter were $488 million compared to $706 million in the year ago period, a decrease of $218 million. When the impact of restructuring is excluded from both periods, expenses declined by $149 million, a decrease of 22 percent, or 3.9 percentage points of revenue from the prior year period. NCR reported operating income of $127 million in the fourth quarter compared to an operating loss of $187 million in the year-ago period. Excluding the impact of restructuring, 4 operating income was $72 million in the 1996 fourth quarter as contrasted to a loss of $135 million in 1995. "Our performance in the fourth quarter helped to put us ahead of our objective for the year which was for break-even operating results on flat revenues in our core operations," said Nyberg. "The challenge for NCR is very clear now; we must achieve growth in revenue and gross margins." Full-Year Financial Results For the full year, NCR reported a net loss of $109 million, or $1.07 per share, compared to a loss of $2.28 billion, or $22.49 per share, in 1995. Revenue for the year was $6.96 billion, a decline of 15 percent from the $8.16 billion reported in 1995. The revenue decline was primarily due to the company's decision to discontinue the sale of PCs and entry-level servers through high-volume indirect channels and from businesses sold. Excluding these factors, revenue increased one percent on a reported basis and increased three percent on a local currency basis. Excluding restructuring and other charges; - the gross margin percentage improved to 28.1 percent from 21.8 percent a year ago, - expenses were down $619 million, exceeding the company's target by three percent, and - an operating profit of $75 million was posted in 1996 compared to an operating loss of $722 million in 1995. Orders for the year were below the prior year level due to the restructuring of NCR's PC and entry-level server business. Orders for NCR's core operations, however, showed very good gains over the prior year. NCR ended the year in a strong financial position with $1.2 billion in cash, debt of $76 million and shareholders' equity of $1.4 billion. As of December 31, 1996, NCR employed 38,600 people worldwide, including contractors. 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 8:00 P.M. (EST) tomorrow. The phone number for access to this broadcast is (402) 220-6021. The results reported today by NCR (NYSE: NCR) were its first as an independent company following its December 31, 1996 spin-off from AT&T. NCR Corporation's computer systems, store automation, banking systems, consulting services, and support services are used by customers in more than 130 countries. 5 Attachment 1 [NCR CORPORATION LOGO] NCR CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS - PRELIMINARY (DOLLARS IN MILLIONS)
Quarter Ended December 31 Year Ended December 31 ------------------------- ---------------------- 1996 1995 1996 1995 ------- ------- ------- ------- Revenue $ 2,040 $ 2,269 $ 6,963 $ 8,162 Cost of Revenue 1,425 1,750 4,997 7,316 ------- ------- ------- ------- Gross Margin 615 519 1,966 846 ------- ------- ------- ------- % of Revenue 30.1% 22.9% 28.2% 10.4% Selling, General, and Administrative Expense 383 562 1,458 2,632 % of Revenue 18.8% 24.8% 20.9% 32.2% Research and Development Expense 105 144 378 585 % of Revenue 5.1% 6.3% 5.4% 7.2% ------- ------- ------- ------- Operating Income/Loss 127 (187) 130 (2,371) ------- ------- ------- ------- % of Revenue 6.2% -8.2% 1.9% -29.0% Interest Expense 16 24 56 90 Other Income/(Loss), Net (19) 41 (36) (45) ------- ------- ------- ------- Income/(Loss) Before Taxes 130 (252) 110 (2,416) ------- ------- ------- ------- % of Revenue 6.4% -11.1% 1.6% -29.6% Income Tax Expense (Benefit) 123 53 219 (136) ------- ------- ------- ------- Net Income/(Loss) $ 7 $ (305) $ (109) $(2,280) ======= ======= ======= ======= % of Revenue 0.3% -13.4% -1.6% -27.9% Net Income/(Loss) per Common Share $ 0.07 $ (3.01) $ (1.07) $(22.49) Weighted average common and common equivalents shares (millions) 101.4 101.4 101.4 101.4 6 Attachment 2 [NCR CORPORATION LOGO] NCR CORPORATION CONSOLIDATED REVENUE SUMMARY - PRELIMINARY (DOLLARS IN MILLIONS)
Quarter Ended December 31 Year Ended December 31 ------------------------- ---------------------- 1996 1995 1996 1995 ------ ------ ------ ------ Retail Systems Group $ 128 $ 128 $ 428 $ 424 Financial Systems Group 341 305 1,007 1,026 Computer Systems Group 453 363 1,398 1,078 PCs / Entry Level Servers 126 415 503 1,724 Systemedia Group 147 159 551 577 Customer Support Services 593 582 2,238 2,174 Professional Services 199 211 616 638 Data Services 30 40 123 167 Other Products 23 66 99 354 ------ ------ ------ ------ Total Revenue $2,040 $2,269 $6,963 $8,162 ====== ====== ====== ====== 7 Attachment 3 [NCR CORPORATION LOGO] NCR CORPORATION SUPPLEMENTAL CONSOLIDATED STATEMENTS OF OPERATING INCOME - PRELIMINARY EXCLUDING RESTRUCTURING AND OTHER CHARGES (DOLLARS IN MILLIONS)
Quarter Ended December 31 Year Ended December 31 ------------------------- ---------------------- 1996 1995 1996 1995 ------ ------- ------ ------- Revenue $2,040 $ 2,269 $6,963 $ 8,162 Cost of Revenue 1,437 1,724 5,009 6,386 ------ ------- ------ ------- Gross Margin 603 545 1,954 1,776 ------ ------- ------ ------- % of Revenue 29.6% 24.0% 28.1% 21.8% Selling, General, and Administrative Expense 414 536 1,489 2,016 % of Revenue 20.3% 23.6% 21.4% 24.7% Research and Development Expense 117 144 390 482 % of Revenue 5.7% 6.3% 5.6% 5.9% ------ ------- ------ ------- Operating Income/(Loss) 72 (135) 75 (722) ====== ======= ====== ======= % of Revenue 3.5% -5.9% 1.1% -8.8% 8 Attachment 4 [NCR CORPORATION LOGO] NCR CORPORATION CONSOLIDATED BALANCE SHEET - PRELIMINARY (DOLLARS IN MILLIONS)
At December 31 ------------------ 1996 1995 ------ ------ ASSETS Current Assets: Cash and Short-term Investments $1,203 $ 338 Accounts Receivable, Net 1,457 1,908 Inventories 439 621 Other Current Assets 219 451 ------ ------ TOTAL CURRENT ASSETS 3,318 3,318 Property, Plant and Equipment, Net 1,207 1,215 Other Assets 755 723 ------ ------ TOTAL ASSETS $5,280 $5,256 ====== ====== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Short-term Borrowings $ 28 $ 45 Accounts Payable 352 478 Taxes Payable 18 118 Other Current Liabilities 1,569 2,280 ------ ------ TOTAL CURRENT LIABILITIES 1,967 2,921 Long-term Debt 48 330 Other Long-term Liabilities 1,869 1,647 ------ ------ TOTAL LIABILITIES 3,884 4,898 TOTAL SHAREHOLDERS' EQUITY 1,396 358 ------ ------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,280 $5,256 ====== ====== 9 Attachment 5 [NCR CORPORATION LOGO] NCR CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS - PRELIMINARY (DOLLARS IN MILLIONS)
At December 31 -------------------- 1996 1995 ------- ------- OPERATING ACTIVITIES Net Loss $ (109) $(2,280) Adjustments to Reconcile Net Loss to Net Cash Provided by (Used in) Operating Activities: Restructuring and Other Charges (55) 1,649 Depreciation and Amortization 385 350 Other 254 (237) Changes in Operating Assets and Liabilities: Receivables 451 (102) Inventories 182 (72) Other (740) (132) ------- ------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 368 (824) INVESTING ACTIVITIES Short-term Investments, Net (16) 174 Expenditures for Service Parts & Property, Plant and Equipment (423) (498) Other Investing Activities 44 313 ------- ------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (395) (11) FINANCING ACTIVITIES Short-term Borrowings, Net (17) (35) Long-term Debt, Net (282) (303) Transfers from AT&T, Net 1,194 1,034 ------- ------- NET CASH PROVIDED BY FINANCING ACTIVITIES 895 696 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (19) (10) ------- ------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 849 (149) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 314 463 ------- ------- CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,163 $ 314 ======= =======