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 (date of earliest event reported): May 17, 2010
NCR CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number 001-00395
| Maryland | 31-0387920 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
3097 Satellite Boulevard
Duluth, Georgia 30096
(Address of principal executive offices and zip code)
Registrant’s telephone number, including area code: (937) 445-5000
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01 | Regulation FD Disclosure. |
On May 18, 2010, NCR Corporation (the “Company” or “NCR”) will present at the J.P. Morgan 38th Annual Global Technology, Media and Telecom Conference, and on May 20, 2010 at the Robert W. Baird 2010 Growth Stock Conference. During these presentations, the Company will discuss its business and strategy, and expects to affirm its earlier guidance relating to revenue growth, non-pension operating income (“NPOI”), GAAP diluted earnings per share, non-GAAP diluted earnings per share and free cash flow for 2010. A copy of the materials to be used in conjunction with the presentation is furnished as Exhibit 99.1 hereto.
On May 17, 2010, the Company issued a press release announcing its participation at these conferences. A copy of the press release is furnished as Exhibit 99.2 hereto.
The information contained in this Current Report on Form 8-K, including Exhibit 99.1 and Exhibit 99.2, is furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except as shall be expressly stated by specific reference in such filing.
This report and the attached exhibits may contain forward-looking statements, including statements as to anticipated or expected results, beliefs, opinions and future financial performance, within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements include projections of revenue, profit growth and other financial items, future economic performance and statements concerning analysts’ earnings estimates, among other things. 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.
These risks and uncertainties include those relating to: the uncertain economic climate, in particular the current global economic conditions, which could impact the ability of NCR’s customers to make capital expenditures thereby affecting their ability to purchase NCR’s products, and continued consolidation in the financial services sector, which could impact NCR’s business by reducing its customer base; the timely development, production or acquisition and market acceptance of new and existing products and services (such as self-service technologies), including NCR’s ability to accelerate market acceptance of new products and services; shifts in market demands, continued competitive factors and pricing pressures and their impact on NCR’s ability to improve gross margins and profitability, especially in its more mature offerings; the effect of currency translation; short product cycles, rapidly changing technologies and maintaining a competitive leadership position with respect to NCR’s solution offerings; tax rates; ability to execute NCR’s business and reengineering plans, including potential impact from NCR’s transition from a business unit to functional organizational model; turnover of workforce and the ability to attract and retain skilled employees, especially in light of continued cost-control measures being taken by the Company and the relocation of NCR’s corporate headquarters; availability and successful exploitation of new acquisition and alliance opportunities; changes in Generally Accepted Accounting Principles (GAAP) and the resulting impact, if any, on the Company’s accounting policies; continued efforts to establish and maintain best-in-class internal information technology and control systems; and other factors detailed from time to time in the Company’s U.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.
-2-
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits:
The following exhibits are furnished with this current report on Form 8-K:
| Exhibit No. |
Description | |
| 99.1 | Presentation of the Company, dated May 2010 | |
| 99.2 | Press Release of the Company, dated May 17, 2010 | |
-3-
SIGNATURES
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: May 17, 2010 | By: | /s/ Robert Fishman | ||||||
| Robert Fishman Senior Vice President and Chief Financial Officer | ||||||||
-4-
Index to Exhibits
| Exhibit No. |
Description | |
| 99.1 | Presentation of the Company, dated May 2010 | |
| 99.2 | Press Release of the Company, dated May 17, 2010 | |
-5-
 NCR Investor
Presentation May, 2010
Exhibit 99.1 |
 2
NCR Confidential
Note to Investors
Certain non-GAAP financial information regarding NCR’s operating results may be
discussed during this presentation. Reconciliation of the differences between GAAP and
non-GAAP measures are included elsewhere in this presentation and are available on
the Investor page of NCR’s website at www.ncr.com.
NCR reports its results in accordance with Generally Accepted Accounting Principles in the
United States, or GAAP. However, the Company believes that certain non-GAAP
measures found in this presentation are useful for investors. NCR’s management
evaluates the Company’s results excluding certain items, such as pension expense,
to assess the financial performance of the Company and believes this information is
useful for investors because it provides a more complete understanding of NCR’s
underlying operational performance, as well as consistency and comparability with past
reports of financial results. In addition, management uses earnings per share
excluding these items to manage and determine effectiveness of its business managers
and as a basis for incentive compensation. These non-GAAP measures should not
be considered as substitutes for or superior to results determined
in
accordance
with
GAAP.
A
full
description
of
these
non-GAAP
measures,
including free cash flow, are included in NCR’s SEC reports.
Remarks and responses associated with this presentation include forward-looking
statements that are based on current expectations and assumptions. These forward-looking
statements are subject to a number of risks and uncertainties that
could cause actual results
to
vary
materially.
These
risk
factors
are
detailed
from
time
to
time
in
NCR’s
SEC
reports, including, but not limited to, Forms 10Q, 10K, 8K and NCR’s annual report to
shareholders. NCR 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. These charts and the associated remarks are integrally related and are
intended to be presented and understood together. |
     3
NCR Confidential
Vision and Mission
Our
Vision
Our
Vision
Our
Mission
Our
Mission
Leading how the world
Leading how the world
connects, interacts, and
connects, interacts, and
transacts with business.
transacts with business.
“Provide our customers with
the next generation of
productivity gains and
customer experience
innovation through our deep
knowledge of the changing
global consumer and
technology.” |
 4
NCR Confidential
The NCR Story
NCR is a global leader in providing products and services that support
customer transactions
•
Number 1 or 2 globally in key solutions
•
At forefront of self-service revolution
•
Top Services provider across end-markets
Consumer demand for self-service technologies creates a global
opportunity that NCR is positioned to capture
•
Consumers are driving demand for self-service across all industries
•
Self-service technologies grow revenues, lower costs and increase
productivity •
Entertainment
market
–
a
$1
billion+
opportunity
over
the
next
5
years
NCR is executing on a multi-year program for improving execution and
efficiency
•
More than $600 million in cost takeout from 2003 to 2011
•
New manufacturing facilities in Brazil and Columbus, Georgia
NCR plans to optimize its capital structure and create value for
shareholders
•
$577 million in stock repurchases in 2007 and 2008
•
Pension strategy underway |
 5
NCR Confidential
Revenue up 2% to $1.03B
Gross margin up 120 bps, inclusive of
negative 70 bps effect from Entertainment
NPOI
(1)
up 54% to $43M
Non-GAAP EPS ex pension expense
(1)
$0.15; up 150% from $0.06 in Q1 2009
Improved backlog driven by 18% increase
in orders; Double digit order growth
balanced; Financial & Retail
(1)
See reconciliation of GAAP to non-GAAP measures in the appendix to this
presentation and/or the Investor page of NCR’s
website Q1 2010 vs. Q1 2009 Financial Highlights |
 6
NCR Confidential
NCR core vs. key competitors
•
Core produces more
revenue
•
Core produces more
profit
•
Core enterprise value is less than
competitors
Primary competitors
•
Trade at higher EBITDA and EPS
multiples based on 2010 analyst
consensus
Grow revenue
•
Low-mid single digit market growth
in core
•
Select strategic acquisitions to grow
faster than the secular market
•
New markets and new geographies;
adjacencies
Continue to manage costs and
increase productivity
•
Cost savings of $200-$250 million
from 2008 through 2011 (50% re-
invested)
Financials
•
Expect 2010 revenue of $125-
$150 million and approx. $30
million loss from operations
•
Goal to be breakeven
(EBITDA) by Q4 2010; goal
$25M-$35M positive EBITDA
in 2011
•
$1B+ revenue opportunity
Largest competitor
•
Consensus $1B+ revenue in
2010
•
EBITDA margin high-teens+
for DVD rental-only business
Brand
•
License to use Blockbuster
brand in the kiosk channel
Grow revenue
•
Build out kiosk network -
up
to 10k units by year-end 2010
•
Continued domestic and
international build-out in 2011
Create new category; higher
growth and margins than core
•
Only multi-channel, multi-
segment offer in industry
GAAP impacts
•
$1 billion underfunded status as of
2009 year end
•
$215 million expected expense in
2010
•
Majority of pension expense is
amortization of prior losses (non-
cash)
Cash impacts
•
Pre-tax net cash liability of ~$1
billion (~$750 million after-tax) as
of 2009 year end
•
Expect cash contributions of ~$110
million in 2010
Eliminate current underfunded
liability
•
Rebalance asset portfolio to fixed
income by end of 2012
•
Interest rate increases and asset
price improvement would reduce
the underfunded position
Eliminate future volatility of plan
expense and funded status
•
Match assets and liabilities
Overview:
Core Business
Core Business
Entertainment
Entertainment
Pension
Pension
Overview of NCR’s Business
Strategy: |
 7
NCR Confidential
Financial Industry Growth Opportunities
Ongoing roll-out of advanced ATM technologies
at large banks
•
Intelligent deposit & remittance are top apps
•
Customers building competitive advantage
•
NCR the global leader in multi-vendor software for self-
service¹
Other sectors of banking industry expected to
narrow the technology gap over the next 12-
36 months
Strong
adoption
rate
of
our
Self-Serv
line
of
ATM’s –
most successful launch in company
history
Continued business strength in emerging
markets
•
Extending ATM leadership in China
•
Continued progress in India –
secured largest ATM
order in country’s history
*1 Source: RBR |
           8
NCR Confidential
Emerging Regions will Continue to Grow
Caribbean & Latin America
+58k Units
Target ATM/100K ppl: 40 ATMs
Current Penetration: ~ 22 ATMs
Caribbean & Latin America
+58k Units
Target ATM/100K ppl: 40 ATMs
Current Penetration: ~ 22 ATMs
Middle East & Africa
+278k Units
Target per 100k ppl: 40 ATMs
Current Penetration: ~ 6 ATMs
Middle East & Africa
+278k Units
Target per 100k ppl: 40 ATMs
Current Penetration: ~ 6 ATMs
Eastern Europe
+172k Units
Target per 100k ppl: 80 ATMs
Current penetration: ~ 40 ATMs
Eastern Europe
+172k Units
Target per 100k ppl: 80 ATMs
Current penetration: ~ 40 ATMs
Northern Asia Pacific
+374k Units
Target ATM/100K ppl: 40 ATMs
Current Penetration: ~ 12 ATMs
Northern Asia Pacific
+374k Units
Target ATM/100K ppl: 40 ATMs
Current Penetration: ~ 12 ATMs
Southern Asia Pacific
+587k Units
Target ATM/100K ppl: 40 ATMs
Current Penetration : ~ 5 ATMs
Southern Asia Pacific
+587k Units
Target ATM/100K ppl: 40 ATMs
Current Penetration : ~ 5 ATMs
*Based on target ATM penetration threshold of at least 40 ATMs per hundred thousand
population in all regions except Eastern Europe (80 ATMs per hundred thousand
population) Source:
Worldbank
Database,
Retail
Banking
Research,
NCR
Internal
Analysis
Fewer
than
30
ATM
markets
globally
have
reached
a
“developed
state”
threshold
.
. .
Still potential for another 1.4 million ATMs in emerging countries
|
 9
NCR Confidential
Manufacturing Efficiencies –
New Facilities
Manaus, Brazil
•
Strengthen our position and capabilities in the world’s
3rd
largest ATM market
•
Capitalize on self-service ATM demand in Brazil and
surrounding regions
•
Well positioned for Intelligent Deposit
•
In-country R&D and manufacturing serves as key
competitive advantage
Columbus, Georgia
•
North American ATM manufacturing brought in-house
to
reduce costs and improve lead times
•
Engineering, services and operations co-located
•
Ability to improve products through integration
of manufacturing, design and services
Both facilities shipped product during Q1 2010 |
 10
NCR Confidential
Self-Service Has Become a Retail Imperative
NCR SelfServ
Checkout
•
Market-leading solution installed in 22 countries
•
> 65k units installed at > 150 global retailers;
penetration rate in grocery channel of ~ 20% with
potential to achieve 90% + over the next ten years
•
Strongest value proposition; density of placements
improving from initial 4-unit installation
•
Launched Release 5.0 latest generation
-
Compact design for convenience, drug, and space
constrained retailers
-
Note and Coin Recycling
-
2ST
-
Usability enhancements
-
NCR APTRA Vision for systems management
•
Self-checkout now accounts for 20% of Tesco’s
transactions in U.K., and 100% in US Fresh & Easy
subsidiary
•
"The retailer (ASDA) is saving money with the shift
to self-scan checkouts -
with staff deployed
elsewhere -…" *
*Source: The Guardian |
 11
NCR Confidential
Retail Industry Growth Opportunities
Offering leading edge solutions
•
NCR Advanced Marketing Solution in-store offer
delivery platform in use at multiple Tier 1 U.S.
Grocers (Marsh Supermarkets), Drug and C-stores
•
Broadest range of POS applications covering Food,
GMS and Hospitality
•
Software solution more relevant; higher value-add
Strong value proposition
•
Expertise in retail self-service channels. #1 in self-
checkout in key customers such as Tesco, Sainsbury
and SuperValu
•
Self-service offers economic advantages and
ability to differentiate and improve customer service
Expand advance product suite
•
NCR Netkey acquisition –
deliver a growing range of
multi-industry digital signage and self-service applications
|
 12
NCR Confidential
Entertainment: NCR’s 3
rd
Vertical
Entertainment
is
a
$1B
growth
opportunity
currently
available
to
NCR
-
“Third Vertical”
that will validate multi-industry self-service strategy
•
Number 1 or 2 globally in key solutions
•
At forefront of self-service revolution
•
Top services provider across end markets
Acquisition of TNR and DVD Play and partnership with Blockbuster
gives
NCR an installed base and customer relationships from which to ramp under
ISO model.
Working
with
movie
studios
–
expect
announcement
over
next
several
months.
Consumption
habits
continue
to
change
-
NCR
is
well
positioned
Packaged media will continue to grow modestly, driven by consumer preference and
migration to Blu-Ray
DVD kiosk business is a proven model with near-term opportunity for competitive entry
– share of video rental market could triple by end of 2010
NCR kiosks deployed are digital download ready
Consumer
shift
to
Kiosks
driven
by
value
and
convenience;
Kiosks
potential
to
be
50%
of ~
$8B
DVD
rental
market
within
3
years
•
•
•
• |
 13
NCR Confidential
Differentiated Entertainment Solutions
NCR Application Capabilities
•
DVD Rental
•
Packaged Media Sell-Through
•
Capacity
and Title Depth
•
Digital Download and Portability
•
Games
•
Buy, Sell, Trade
•
In-store and Outdoor Kiosk
•
Home |
 14
NCR Confidential
Execution Roadmap
Expect to deploy up to 10,000 kiosks by year-
end 2010 –
capitalize on rapid transition of
DVD rental share
Customer wins underscore market demand
•
Growing customer base -
deployments across high
traffic areas (supermarkets, convenience food shops)
$85 million investment in 2010 ($75M capex)
•
Expect revenue of $125M-$150M in 2010; goal to be
EBITDA break-even in Q4 2010
Expect to generate positive EBITDA in the
range of $25M-$35M in FY 2011 -
Goal to be
EBIT breakeven by Q4 2011 (based on 10K
units installed) |
 15
NCR Confidential
Emerging Industry Profiles
Travel & Lodging
Healthcare & Public Sector
Telecom & Technology
•
Patient Registration
•
Revenue Cycle Management
•
Lab Results
•
Patient Portal
•
Rx Management
•
Airline Check-in
•
Car Rental
•
Hotel/Resort Registration
•
Restaurant Order and Pay
•
Gaming
•
Multi-billion dollar market
•
Network design & implementation
•
Wireless implementation
•
Telco Bill Pay
-
No. 1 in Airline Check-in
-
4 of the Top 10 QSR Operators
-
Most widely deployed
CUSS platform
-
No. 1 in Healthcare
Self-Service Patient
Registration
-
Largest Global Postal
Deployment
-
Preferred
international
services
implementation
provider
for
networking
and
telco
solutions
to
global
corporations |
 16
NCR Confidential
NCR the Largest Services Provider in Our Industry
NCR the largest provider across our end
markets
•
Powers over 2 million consumer points of service
worldwide
•
Designed to grow/scale capability/leverage into
new industries
•
Strategically aligned with Engineering and
Operations
NCR is also the largest managed service
provider in our industry
Poised to continue as a growth driver for
the company
•
Opportunity for margin expansion through
productivity and innovation
•
Global market leader-in managed services offers |
 17
NCR Confidential
Financial Summary
Expecting
improved
performance
in
2010
and
progress
towards
long
term
goals
2010 Guidance
•
Revenue growth of 2-5%; NPOI
(1)
in range of $310-$330 million (includes estimated $30M
loss from Entertainment business)
•
GAAP
diluted
EPS
of
$0.39-$0.49;
non-GAAP
diluted
EPS
excluding
pension
expense
(1)
of
$1.35 -
$1.45 (includes approx. $0.15 negative impact from
Entertainment investment) •
Breakeven free cash flow (includes $85M investment in Entertainment)
Executing our multi-year operating plan calling for NPOI margin
improvement driven by profitable revenue growth, cost structure and
working capital improvements
Self-service demand will be a secular driver of our revenue growth in
core solutions and in new verticals like Entertainment
NCR’s balance sheet and cash flow generation capability support an
environment of growth, investment and enhanced returns to
shareholders
(1)
See
reconciliation
of
GAAP
to
non-GAAP
measures
in
the
Appendix
to
this
presentation
and/or
the
Investor
page
of
NCR’s
website. |
 18
NCR Confidential
Revenue Performance
Revenue from Continuing Operations
$4,000
$4,250
$4,500
$4,750
$5,000
$5,250
$5,500
$5,750
$6,000
2005
2006
2007
2008
2009
2010(e)
$4,561m
$4,582m
$4,970m
$5,315m
$4,612m
+1%
+8%
+7%
-12%
+2% to 5% |
 19
NCR Confidential
Managing for Margin
Reducing our Cost Structure
Key Initiatives
•
Value engineering
•
Product lifecycle management
•
Efx
= Servicability, manufacturability and quality
•
Continuous improvement organization installed
•
Streamlined organization
•
Accelerating labor costs & expense reduction
$200 million to $250 million savings for
the period 2008-2011 (50% reinvested) |
 20
NCR Confidential
NPOI: Poised to Return to Growth
NPOI: Non Pension Operating Income
(1)
$0
$400
2005
2006
2007
2008
2009
2010(e)
$248m
$276m
$349m
$400m
$284m
$310m -
$330M
+11%
+26%
+15%
-29%
+9% to 16%
(1)
See reconciliation of GAAP to non-GAAP measures in the Appendix to this presentation
and/or on the Investor page of NCR’s
website
|
 21
NCR Confidential
Strong Balance Sheet
Cash balance
$451
Debt balance
$ 15
Net cash position
$436
12.31.09
12.31.09
Near Term Objectives
•
Liquidity
•
Financial Flexibility
•
Working Capital Improvements
Long Term Objectives
•
Free Cash Flow generation
($ in Millions) |
 22
NCR Confidential
Pension Management Strategy
•
Global underfunded status of $1,048M at 12/31/09; improved to approximately $990M
(A)
underfunded status at 3/31/10 (see appendix #29)
•
Historically NCR has seen significant volatility (see appendix #33 and 34). Pension
strategy is to reduce
volatility
and
riskiness
of
plan
assets
over
a
three
year
period
•
Shift asset allocation of US Pension Plans to 100% fixed income by the end of 2012
–
Target 60% by end of 2010, 80% by end of 2011, and 100% by end of 2012. Mostly high grade
corporate bonds
with
an
overall
duration
that
approximates
the
duration
of
the
liability
–
No cash contribution for U.S. qualified plan is expected to be required until 2012 (see
appendix #29) –
Pension legislation could provide significant relief (see appendix #32)
–
US underfunded position at $822M at 12/31/09. Significant upside if interest rates rise
or asset returns improve (see sensitivity appendix on #35)
•
For International Pension Plans, work with local pension trustee
boards to make similar changes
in asset allocation
–
International underfunded position of $226M at 12/31/09 ($470M of underfunded plans offset by
$244M overfunded plans (see appendix #29)
–
Funding
of
international
plans
expected
to
decline
significantly
after
2013,
reaching
an
annual
amount of
$10-$20M
(excluding
the
funding
of
future
service
cost)
by
2015
as
some
underfunded
plans
reach
fully
funded status (see appendix #29)
–
Due
to
pension
plan
closures,
service
cost
expected
to
gradually
decline
from
~$15M
in
2010
to
~$10M
per year (see appendix #34)
Actions to Address Pension
(A)
Estimated
based
on
data
available
at
March
31,2010;
for
accounting
purposes
the
pension
plans
are
not
marked-to-market
on
a
quarterly
basis |
 23
NCR Confidential
3-Year Vision for NCR
Leading Financial Solutions
provider
Leading Retail Solutions
provider
Leader in Hospitality, Travel,
Gaming and Healthcare
Solutions
Multi-Channel leadership
Leader in Managed Services;
50% recurring revenue
stream
Sustainable, industry
leading cost structure
Continued significant cash
flow production
#1 or #2 market share
leader in DVD Kiosk Market
(US & Intl)
Physical DVD rental & sell-
through; digital download
leadership “Automated
Retail”
Market leader in multi-
channel distribution of
digital entertainment media
High growth; Significant
EBITDA; Positive cash flow
Brand leadership
Under-funded pension
position significantly
reduced
Volatility and risk of
current pension asset
allocation eliminated
Core Business
Entertainment
Pension |
 24
NCR Confidential
NCR Value Equation
Strong NPOI, EBITDA and
Operational EPS
Core Markets (excluding
Entertainment business)
NPOI of $340-$360M in 2010
EBITDA pre Pension of $465-
$485M in 2010
Operational EPS of $1.50 to
$1.60 in 2010
PE and EBITDA multiples
should
increase
to
historical
averages due to reduced
pension volatility and leadership
position in core markets
Bulk of investing
complete by 2010 y/e
–
$85M investment, $30M
NPOI loss and approx.
negative $0.15 EPS in
2010
+ $25-$35M of EBITDA
in 2011
Potential EBITDA multiple
of 10X or $250 -
$350M
valuation benefit
Less
after tax
underfunded position of
~$750M at 12/31/09
Less
after tax present
value of future service
cost (not included in
liability above) of ~$90M
Less
after
tax
present
value of post retirement
obligation of ~$80M at
12/31/09
Plus
net cash on balance
sheet of ~$436M at
12/31/09
Core Business
Entertainment
Pension + Other B/S
Items |
 25
NCR Confidential
Why Invest in NCR?
Positioned for success
•
Growth strategy
•
Expanding market leadership
•
Global share and balance
•
Marquee customers
•
Strong balance sheet
•
Compelling value propositions
•
World-class employees
•
Track record is one of execution
•
Growth initiatives
•
Cost structure initiatives |
 26
NCR Confidential
Appendix |
 27
NCR Confidential
Reconciliation of GAAP to non-GAAP Measures
$ 284
$310 -
$330
$ 28
$ 43
Non-Pension Operating Income (non-GAAP)
159
215
38
56
Pension Expense
6
5
-
5
Global Headquarters Relocation
22
-
-
-
Impairment of Assets Related to Equity Investment
$ 97
$90 -
$110
$ (10)
$ (18)
Income (Loss) from Operations (GAAP)
FY 2009
FY 2010
2009
2010
Actual
Guidance
Q1
Q1
$ 1.27
$1.35 -
$1.45
$ 0.06
$ 0.15
Diluted Earnings Per Share (non-GAAP)
(0.67)
(0.94)
(0.15)
(0.25)
Pension Expense
(0.03)
-
-
-
Litigation Charge
(0.03)
(0.02)
-
(0.02)
Global Headquarters Relocation
(0.18)
-
(0.03)
-
Impairment of Equity Investment and Related Assets
(0.57)
-
0.03
-
Fox River Environmental Matter, Net
$ (0.21)
$0.39 -
$0.49
$ (0.09)
$ (0.12)
Diluted Earnings (Loss) Per Share (GAAP)
FY 2009
FY 2010
2009
2010
Actual
Guidance
Q1
Q1
$ 50
$ -
Free Cash Flow (non-GAAP)
(173)
(215)
Net Capital Expenditures
$ 223
$ 215
Cash Provided by Operating Activities (GAAP)
FY 2009
FY 2010
Actual
Guidance
Income (Loss) from Operations (GAAP) to Non-Pension Operating Income (non-GAAP)
Diluted Earnings (Loss) Per Share (GAAP) to Diluted Earnings Per
Share (non-GAAP)
Cash Provided by Operating Activities (GAAP) to Free Cash Flow (non-GAAP)
|
 28
NCR Confidential
NCR trades at a material discount to the market and its peers, largely due
to the current pension situation
Pension assets invested in equities are not only volatile, but correlated with
NCR’s operating businesses
A significant portion of NCR’s capital is allocated to its “pension-
management”
business
•
This allocation has limited NCR’s ability to invest in our core operating businesses and
to provide immediate shareholder returns
•
Under-utilization of NCR balance sheet
To fix the valuation gap, NCR plans to:
•
Reduce risk and volatility by re-allocating our domestic pension portfolio to
fixed- income securities by year-end 2012
•
Direct freed-up risk-taking capacity to the highest value-added investment
alternatives: organic investments, strategic acquisitions
•
Fund the pension plan according to regulatory requirements (i.e., do not pre-fund)
Addressing NCR’s Valuation Gap |
 29
NCR Confidential
NCR Pension Update –
Q1 2010
Cash
Funding
for
Pension
Plans
2008
2009
2010E
2011E
2012E
2013E
US Qualified Plan**
0
0
0
0
125
175
US Non-qualified Plan
9
9
10
10
10
10
International Plans***
74
74
100
115
115
115
Total
83
83
110
125
250
300
Pension
Metrics
&
Funded
Status
Asset
Return Discount rate
Funded
Status
3/31/10
YTD
(A)
12/31/09
3/31/10
(A)
12/31/09
3/31/10
(A)
US Plans
3.5%
5.75%
5.88%
(822)
(740)
International Plans
2%
4.9%
4.8%
(226)*
(250)
Global
2.9%
5.4%
5.45%
(1,048)
(990)
( $ Millions)
( $ Millions)
The estimated improvement in the global funded status was approximately $58m in
Q1 *The ($226m) net funded status of international plans is comprised
underfunded plans of ($470m), and overfunded plans of $244m The overfunded
plans are a result of local funding methodologies that use more conservative
actuarial assumptions than GAAP ** The funding requirement for
the US qualified plan assumes no funding relief legislation *** The funding of
international plans is expected to decline significantly after 2013 reaching an annual amount of $10-$20 million
(excluding the funding of future service cost) by 2015 as some of the underfunded
plans reach fully funded status Due to pension plan closures, service
cost is expected to decline to a level of about $10m per year (see slide #34)
All future funding estimates are approximations based on expected asset returns,
discount rates, and local requirements (A) Estimated based on data available at March
31,2010; for accounting purposes the pension plans are not marked-to-market on a quarterly basis |
 30
NCR Confidential
US Plans Only
–
Funded Status Bridge
•
Funded
Status
of
US
Plans
improved
~$82m
in
Q1
to
(740m)
•
Improvement
was
due
to
good
asset
returns
and
a
13bp
increase
in
discount
rate
Liabilities
Assets
Benefit
Payments
Asset
Returns
Fees &
Expenses
Asset Value,
12/31/09
(52)
(6)
2,610
Asset Value,
3/31/10
Benefit
Payments
Interest
Liability Value,
12/31/09
(54)
46
3,350
Liability Value,
3/31/10
88
2,580
3,402
(44)
Discount Rate
Movement
($Millions)
Funded Status
(822)
(740)
+2
+38
+42
(A)
(A)
(A)
(A)
(A) Estimated based on data available at March 31,2010; for accounting purposes the pension
plans are not marked-to-market on a quarterly basis |
 31
NCR Confidential
Shift pension asset allocation to 100% fixed income by end of 2012
•
Risk of equity exposure in pension plan must be reduced
–
Size of NCR pension plan (and therefore the associated risk) is disproportionate to the size
of NCR –
Riskiness and volatility of pension plan increases stock price volatility and places a
discount on the stock price –
The US pension plan is closed and the duration of the liability is becoming shorter
•
Shifting over 3 years allows for some additional recovery from the recent market downturn
–
Potential additional upside in the equity markets and/or benefit from increase in the
discount rate Pre-fund of US pension plan analyzed
•
Given NCR’s tax position, there is not a compelling financial benefit for NCR to fund
early –
NCR has minimal near-term U.S. tax liability, so cannot take advantage of accelerating
tax deductions by funding earlier than required
–
Similarly,
would
not
be
able
to
take
advantage
of
tax
deductions
for
interest
expense
(if
funded
with
debt)
•
Inefficient capital allocation
–
The
underfunded
pension
liability
is
analogous
to
unsecured
debt
of
NCR.
NCR
has
no
other
outstanding
debt.
We
believe
we
have
better
investment
uses
for
our
cash
balances
and
operating
cash
flow
than
choosing
to
pre-pay
debt
at
the present time
•
Cash flow deployed into business opportunities
–
No cash funding is projected to be required for the U.S. qualified pension plan in 2010 or
2011 –
A
pre-fund
now
does
not
materially
change
required
funding
in
2012
and
2013
Rationale –
Analyzed Various Options |
NCR Confidential 32
Possible Impact of Pension Funding Relief
Legislation on NCR
Two relief options; 2+7 and 15-year vs. current
law
Two options potentially subject to “cash flow
rules”
(e.g., limits on employee compensation,
dividends, and stock redemption)
Balanced legislation passed in Senate –
provides relief; currently bill in House Ways and
Means Committee; anticipated closure by Q3
2010
Key
Provisions
Impact on NCR
Conditions
Status
2+7 vs.
Current Law
Provides marginal
relief. NCR not
likely to use.
Senate: 2 yrs of
cash flow rules
House: 3 yrs TBD
Senate: passed
House: TBD
15-Year vs.
Current Law
Likely provides
meaningful relief for
NCR.
Senate: 5 yrs of
cash flow rules
House: 3-5 yrs of
cash flow rules
and “active plan”
requirement
Senate: passed
House: active
plan issue
Investment
Expenses not
Included in
Normal Cost
Helpful to NCR.
N/A
Senate: not
addressed
House: TBD
NCR Leading Industry Coalition to
Secure Passage of Pension Relief
Possible Impact of Pension Funding
Relief Legislation on NCR
Pension Legislation Could Provide Relief |
 33
NCR Confidential
Plan
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
U.S. Plans
$3,026
$2,686
$2,208
$2,797
$3,016
$3,098
$3,385
$3,423
$2,208
$2,582
International Plans
1,514
1,089
1,138
1,397
1,658
1,748
2,085
2,114
1,467
1,737
Total Plans
$4,540
$3,775
$3,346
$4,194
$4,674
$4,846
$5,470
$5,537
$3,675
$4,319
Plan
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
U.S. Plans
$2,408
$2,494
$2,700
$2,960
$3,194
$3,372
$3,290
$3,199
$3,227
$3,404
International Plans
1,185
1,127
1,380
1,635
1,939
1,932
2,046
2,020
1,645
1,963
Total Plans
$3,593
$3,621
$4,080
$4,595
$5,133
$5,304
$5,336
$5,219
$4,872
$5,367
Plan
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
U.S. Plans
$618
$192
($492)
($163)
($178)
($274)
$95
$224
($1,019)
($822)
International Plans
329
(38)
(242)
(238)
(281)
(184)
39
94
(178)
(226)
Total Plans
$947
$154
($734)
($401)
($459)
($458)
$134
$318
($1,197)
($1,048)
Pension Assets
Pension Liability
Funded Status
($ Millions)
NCR Historical Pension Overview |
 34
NCR Confidential
Historical Funded Status, Funding and Expense
($ Millions)
Plan
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
U.S. Plans
126%
108%
82%
94%
94%
92%
103%
107%
68%
76%
International Plans
128%
97%
82%
85%
86%
90%
102%
105%
89%
88%
Total Plans
126%
104%
82%
91%
91%
91%
103%
106%
75%
80%
Plan
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
All Plans
62
59
55
70
111
110
112
92
83
83
Plan
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
All Plans
(124)
(124)
(74)
105
135
150
145
44
25
159
Plan
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
All Plans
78
77
76
88
89
87
89
38
27
17
Funded Status
Pension Funding
Pension Expense / (Income)
Service Cost
NCR has experienced significant volatility in the funded status of its pension plans
over the years NCR’s focus moving forward will be to manage and reduce
the risk of funded status volatility Due to pension plan closures, the annual
service cost is expected to continue to decline to approximately $10m There are approximately 20
international plans, with approximately half still open at this time. |
 35
NCR Confidential
(A) Assumes 6% at end 2010, 6.25% at end of 2011, and 6.5% at end of 2012
(B) Contribution required for US Qualified plan in 2012 (no required contribution
expected in 2010 or 2011), also assumes no pension reform legislation
(C) Includes the impact of contributions on funded status
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
10 yr
avg
20 yr
avg
Asset Returns
-2%
-6%
-12%
36%
15%
10%
16%
7%
-31%
28%
4%
10%
Discount Rate
7.5%
7.3%
6.8%
6.3%
5.8%
5.5%
5.8%
6.3%
6.3%
5.8%
6.3%
7.0%
Historical Asset Returns and discount Rates for US Plan
($ Millions)
Projected Funded Status $ Contributions –
Sensitivity Analysis
Discount Rate remains at 5.75%
Discount Rate increases to 6.5%
(A)
Scenario
Annual Equity
Returns
through 2012
Required
Contribution in
2012
(B)
Projected
Funded Status
12/31/2012
(C)
Required
Contribution in
2012
(B)
Projected
Funded Status
12/31/2012
(C)
3 yr. shift to 100% fixed income
5%
$145
($880)
$130
($770)
3 yr. shift to 100% fixed income
10%
$125
($775)
$115
($670)
3 yr. shift to 100% fixed income
15%
$115
($670)
$100
($565)
Funded Status as of 12/31/2009 = ($822)
Sensitivity Analysis -
US Plans ONLY |
Exhibit 99.2
|
NEWS RELEASE |
May 17, 2010
NCR to Participate in Upcoming Investor Conferences
DULUTH, Georgia – NCR Corporation (NYSE: NCR) today announced its participation in two upcoming investor conferences.
Bill Nuti, chairman and chief executive officer, and Bob Fishman, chief financial officer, will present at the J.P. Morgan 38th Annual Global Technology, Media & Telecom Conference on Tuesday, May 18, 2010 at 1:50 EDT in Boston, Massachusetts. Mr. Fishman will also be presenting at the Robert W. Baird 2010 Growth Stock Conference on Thursday, May 20, 2010 at 9:55 EDT in Chicago, Illinois.
The presentation materials to be used at the conferences, including updated information to the pension strategy discussed on NCR’s most recent earnings conference call, are currently available on the Company’s web site at www.ncr.com and were filed on Form 8-K with the SEC on May 12, 2010.
About NCR Corporation
NCR Corporation (NYSE: NCR) is a global technology company leading how the world connects, interacts and transacts with business. NCR’s assisted- and self-service solutions and comprehensive support services address the needs of retail, financial, travel, healthcare, hospitality, entertainment, gaming and public sector organizations in more than 100 countries. NCR (www.ncr.com) is headquartered in Duluth, Georgia.
# # #
NCR is a trademark of NCR Corporation in the United States and other countries. BLOCKBUSTER Express is a trademark of the BB 2009 Trust and is licensed to NCR.
Note to investors – This news release contains forward-looking statements, including statements as to anticipated or expected results, beliefs, opinions and future financial performance, within the meaning of Section 21E of the Securities and Exchange Act of 1934. Forward-looking statements include projections of revenue, profit growth and other financial items, future economic performance and statements concerning analysts’ earnings estimates, among other things. 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 those relating to: the uncertain economic climate, in particular the current global economic conditions, which could impact the ability of our customers to make capital expenditures thereby affecting their ability to purchase our products, and continued consolidation in the financial services sector, which could impact our business by reducing our customer base; the timely development, production or acquisition and market acceptance of new and
-2-
existing products and services (such as self-service technologies), including our ability to accelerate market acceptance of new products and services; shifts in market demands, continued competitive factors and pricing pressures and their impact on our ability to improve gross margins and profitability, especially in our more mature offerings; the effect of currency translation; short product cycles, rapidly changing technologies and maintaining a competitive leadership position with respect to our solution offerings; tax rates; ability to execute our business and reengineering plans, including potential impact from our transition from a business unit to functional organizational model; turnover of workforce and the ability to attract and retain skilled employees, especially in light of continued cost-control measures being taken by the company and the relocation of our corporate headquarters; availability and successful exploitation of new acquisition and alliance opportunities; changes in Generally Accepted Accounting Principles (GAAP) and the resulting impact, if any, on the company’s accounting policies; continued efforts to establish and maintain best-in-class internal information technology and control systems; and other factors detailed from time to time in the company’s U.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.
Investor Contact
Gavin Bell, 212-589-8468
gavin.bell@ncr.com