UNITED STATES 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 20, 1999 NCR CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MARYLAND 001-00395 31-0387920 (STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER OF 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) Item 5. Other Events The Registrant's news release dated January 20, 1999, with respect to its financial results for the quarter ended December 31, 1998, including condensed consolidated balance sheets as of December 31, 1998, and condensed consolidated statements of operations, consolidated revenue summary, and condensed consolidated statements of cash flows for the three and twelve month periods ended December 31, 1998, 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, 1999 By: /s/ David Bearman ------------------------ David Bearman, Senior Vice President and Chief Financial Officer
News Release - -------------------------------------------------------------------------------- For further media information: For investor information: Anthony A. Sprauve Sajid Malhotra 937-445-2311 (office) 937-445-8253 (office) 937-223-1166 (home) 888-519-7495 For Release on Wednesday January 20, 1999 - ------------------------------------------ NCR Reports Substantial Fourth-Quarter and Full Year Profit; Quarterly Revenue Improves Four Percent: The First Increase Since 1995 Fourth Quarter Earnings per Share at $0.77, Excluding One-time Items DAYTON, Ohio -- Completing a breakthrough year for profitability, NCR Corporation today reported fourth-quarter net income of $49 million, or $0.49 per diluted share, compared to $36 million, or $0.35 per diluted share, in the comparable period last year. Fourth quarter results included a $50 million one- time charge related to employment reduction in Japan. Without the charge, fourth-quarter net income would have been $77 million or $0.77 per share on a basic and diluted basis. Full-year net income jumped to $122 million, or $1.20 per diluted share from $7 million or $0.07 per share a year ago. The company reported $2.067 billion in revenue for the quarter, a 4 percent increase from last year. This is the first revenue growth versus the prior year quarter in thirteen quarters. Revenue was down 1 percent for the year, but up 1 percent on a constant currency basis. Gross margins in the quarter increased 2.2 percentage points over last year's fourth quarter from 28.5 percent to 30.7 percent and 1.2 percentage points for the year from 28.4 percent to 29.6 percent. "I am very pleased by these results. They show that our strategy is working and that the tough decisions we made a year ago are paying off," said NCR Chairman and CEO Lars Nyberg. "It has been a breakthrough year in terms of profitability and sales mix changes from commodity hardware to solutions and professional services. We still have work to do, but I am encouraged and optimistic about the future." - more - - 2 - Fourth Quarter Results Orders Total NCR orders were down 10 percent compared to last year. Excluding the 40 percent decline in other computers, orders were up 2 percent. Over the last two years, NCR has intentionally de-emphasized selling commodity hardware in favor of solutions sales. Revenue Worldwide revenue increased 4 percent on a dollar reported basis and was up 2 percent on a local currency basis. Revenue was up 9 percent without the impact of a 20 percent decline in the sales of other computers. Retail Products led the gains with a 38 percent revenue increase. Other gainers were Financial Products up 9 percent, Professional Services up 9 percent, Customer Support Services up 8 percent and Systemedia up 9 percent. Enterprise Servers revenue was down 12 percent largely because of a $20 million year-over-year drop in revenue from Japan and Asia/Pacific regions. By industry, revenues for Retail Industry were up 19 percent, Financial Industry revenues were up 3 percent, National Accounts revenue was down 2 percent and Systemedia revenue was up 9 percent. Gross Margin Total gross margin for NCR products and services increased 2.2 percentage points to 30.7 percent from 28.5 percent in last year's fourth quarter. Products and systems gross margin increased 2.8 percentage points of revenue, while services gross margin increased 1.9 percentage points of revenue. Expenses In the quarter, selling, general and administrative expenses were $25 million lower than a year ago, at 19.6 percent of revenue, or $405 million, compared to 21.6 percent of revenue, or $430 million, in the related prior period. Research and development expenses were $100 million versus $103 million, last year. Other Expenses In the quarter, NCR recorded a one-time pension charge of $50 million related to the reduction of 1,000 employees in Japan. - more - - 3 - Income Taxes Income tax expense in the quarter was $30 million, bringing the annual effective tax rate to 42.5 percent. In the year ago quarter, NCR recorded an $11 million tax expense. Full-Year Results For the full-year, NCR reported net income of $122 million or $1.20 per diluted share, compared to $7 million or $0.07 per share in 1997. Revenue for the year was $6.505 billion, a one percent decline from the $6.589 billion reported in 1997. Gross margins increased by 1.2 percentage points to 29.6 percent from 28.4 percent in the prior year period. Selling, general and administrative expenses improved by 1.2 percentage points and declined by $96 million compared to the prior year. Operating income, excluding the one-time pension charge related to workforce reduction in Japan, improved to a profit of $152 million from a loss of $19 million in 1997. The tax rate declined to 42.5 percent from 74.1 percent, a year ago. Net income for 1998 was $122 million or $1.20 per diluted share compared to $7 million or $0.07 per diluted share in 1997. Excluding the two one-time items (the sale of Top-End in the second quarter and the one-time charge related to workforce reduction in the fourth quarter), net income rose to $119 million, or $1.17 per diluted share. NCR ended the year in a strong financial position with $514 million in cash and short-term investments. This was down from $1.129 billion at the end of 1997, largely due to the purchase of the minority interest in NCR's Japanese subsidiary and a $200 million stock repurchase. During the year the company spent $200 million to repurchase 6.3 million shares of NCR stock and $274 million to raise its ownership of NCR Japan to over 97 percent from 70 percent. At December 31, 1998, NCR had debt of only $83 million and total shareholders' equity of $1.447 billion. For 1999, NCR expects to continue showing revenue growth, further gross margin improvement, continuing expense discipline and a further reduction in the tax rate. As of December 31, 1998, NCR employed 33,100 people worldwide, including contractors, a decline of 5,200 people from a year ago. - more - - 4 - NCR Corporation (NYSE: NCR) is in the business of transforming transactions into relationships. NCR is a recognized world leader in data warehousing solutions, ATMs, point-of-sale, high performance scanners, and support services for retail, financial and national accounts markets. NCR's business solutions are built on the foundation of the company's long-established industry knowledge and consulting expertise, value-adding software, global customer support services, a complete line of consumable and media products, and world-leading hardware technology. More information about NCR and its products may be found on the World Wide Web at: http://www.ncr.com. Financial Information Detailed financial information regarding NCR's fourth quarter and year-end results is available on the Internet: http://www.ncr.com. Lars Nyberg, NCR's Chairman and CEO, David Bearman, Senior Vice President and Chief Financial Officer, will discuss the company's financial performance in a taped broadcast. Access is available beginning at 11:30 A.M. (EDT) today continuing until 5:00 P.M. (EDT) on January 22, 1999. 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 workforce and the ability to attract and retain skilled employees; tax rates; impact of Year 2000; general economic and business conditions; 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. - 5 - NCR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per share amounts) Certain prior year amounts have been reclassified to conform to the 1998 presentation.
For the Periods Ended December 31 ------------------------------------- Three Months Twelve Months ------------------ ----------------- 1998 1997 1998 1997 -------- -------- -------- ------- Revenues Products $1,206 $1,195 $3,577 $3,709 Services 861 797 2,928 2,880 ------ ------ ------ ------ Total Revenues 2,067 1,992 6,505 6,589 Cost of products 777 803 2,362 2,528 Cost of services 655 622 2,221 2,187 ------ ------ ------ ------ Gross Margin 635 567 1,922 1,874 % of Revenue 30.7% 28.5% 29.6% 28.4% ------ ------ ------ ------ Selling, general and administrative expenses 405 430 1,414 1,510 Research and development expenses 100 103 356 383 One-time charge - Japan pension settlement 50 - 50 - Total Expenses 555 533 1,820 1,893 % of Revenue 26.9% 26.8% 28.0% 28.7% Income (Loss) from Operations 80 34 102 (19) % of Revenue 3.9% 1.7% 1.6% -0.3% Interest expense 4 5 13 15 Other (income) expense, net (2) (18) (68) (61) Non-recurring gain from asset disposition - - (55) - ------ ------ ------ ------ Income Before Income Taxes 78 47 212 27 % of Revenue 3.8% 2.4% 3.3% 0.4% Income tax expense 30 11 90 20 ------ ------ ------ ------ Net Income $ 49 $ 36 $ 122 $ 7 % of Revenue 2.4% 1.8% 1.9% 0.1% ====== ====== ====== ====== Net Income per Common Share Basic $ 0.50 $ 0.35 $ 1.21 $ 0.07 Diluted $ 0.49 $ 0.35 $ 1.20 $ 0.07 Weighted Average Common Shares Outstanding Basic 98.2 103.0 101.0 102.0 Diluted 99.8 103.0 102.1 102.0 Excluding one-time charge and non-recurring gain: Income (Loss) from Operations $ 130 $ 34 $ 152 $ (19) Net Income $ 77 $ 36 $ 119 $ 7 Net Income per Common Share (Diluted) $ 0.77 $ 0.35 $ 1.17 $ 0.07 NCR CORPORATION CONSOLIDATED REVENUE SUMMARY (in millions)
For the Periods Ended December 31 --------------------------------- Three Months Twelve Months ---------------- --------------- 1998 1997 1998 1997 ------- ------- ------- ------ By Product Line Retail Products $ 194 $ 140 $ 509 $ 474 Financial Products 427 390 1,146 1,069 Enterprise Servers 111 125 411 420 Other Computer 297 373 948 1,170 Systemedia 157 144 514 510 Customer Support Services 615 571 2,182 2,142 Professional Services 215 199 631 628 Other Products & Services 51 50 164 176 ------ ------ ------ ------ Total Revenues $2,067 $1,992 $6,505 $6,589 ====== ====== ====== ====== Certain prior year amounts have been reclassified to conform to the 1998 presentation.
For the Periods Ended December 31 --------------------------------- Three Months Twelve Months ---------------- --------------- 1998 1997 1998 1997 ------- ------- ------- ------ By Industry/Customer Served Retail Industry $ 477 $ 401 $1,449 $1,373 Financial Industry 934 903 2,886 2,845 National Accounts Solutions Group 466 477 1,498 1,562 Systemedia 157 144 514 510 Other 33 67 158 299 ------ ------ ------ ------ Total Revenues $2,067 $1,992 $6,505 $6,589 ====== ====== ====== ====== NCR CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in millions) Certain prior year amounts have been reclassified to conform to the 1998 presentation.
December 31 December 31 1998 1997 ----------- ----------- Assets Current assets Cash and short-term investments $ 514 $1,129 Accounts receivable, net 1,556 1,471 Inventories 384 489 Other current assets 178 196 ------ ------ Total Current Assets 2,632 3,285 Property, plant and equipment, net 1,104 1,106 Other assets 1,156 985 ------ ------ Total Assets $4,892 $5,376 ====== ====== Liabilities and Shareholders' Equity Current liabilities Short-term borrowings $ 50 $ 59 Accounts payable 376 378 Other current liabilities 1,274 1,541 ------ ------ Total Current Liabilities 1,700 1,978 Long-term debt 33 35 Other long-term liabilities 1,712 2,010 ------ ------ Total Liabilities 3,445 4,023 Total Shareholders' Equity 1,447 1,353 ------ ------ Total Liabilities and Shareholders' Equity $4,892 $5,376 ====== ====== NCR CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Certain prior year amounts have been reclassified to conform to the 1998 presentation.
For the Periods Ended December 30 --------------------------------------- Three Months Twelve Months --------------- ----------------- 1998 1997 1998 1997 ------- ------ ---------- ----- Operating Activities Net income $ 49 $ 36 $ 122 $ 7 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 90 105 364 383 Net gain on sales of assets 8 - (47) 4 Restructuring and other charges 50 - 50 - Deferred income taxes 54 21 54 13 Changes in operating assets and liabilities: Receivables (79) (108) (85) (14) Inventories 71 51 15 (50) Other (173) 119 (530) (95) ----- ----- ----- ------ Net Cash Provided by (Used in) Operating Activities 70 224 (57) 248 ----- ----- ----- ------ Investing Activities Short-term investments, net 67 11 217 (203) Expenditures for service parts and property, plant, and equipment (124) (94) (367) (309) Acquisition of minority interest in subsidiary (3) - (274) - Proceeds from sales of facilities and other assets 11 - 183 - Other investing activities 7 (21) 33 (12) ----- ----- ----- ------ Net Cash Provided by (Used in) Investing Activities (42) (104) (208) (524) ----- ----- ----- ------ Financing Activities Treasury stock acquired - - (200) - Short-term borrowings, net (25) (10) (9) 31 Long-term debt, net - (1) (2) (13) Other financing activities 13 15 57 44 ----- ----- ----- ------ Net Cash Provided by (Used in) Financing Activities (12) 4 (154) 62 ----- ----- ----- ------ Effect of exchange rate changes on cash and cash equivalents 29 (11) 21 (63) ----- ----- ----- ------ Increase (Decrease) in Cash and Cash Equivalents 45 113 (398) (277) Cash and Cash Equivalents at Beginning of Period 443 773 886 1,163 ----- ----- ----- ------ Cash and Cash Equivalents at End of Period $ 488 $ 886 $ 488 $ 886 ===== ===== ===== ======