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 16, 2012
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.
Members of the executive team of NCR Corporation (the “Company”) today will make presentations to attendees of the Company’s 2012 Investor Day regarding, among other things, the Company’s business strategy and long-term outlook. A copy of materials to be used in conjunction with the presentations is included as Exhibit 99.1 hereto. The presentation materials and a live audio webcast also will be made available through the Investor Relations page of the Company website (www.ncr.com).
The information contained in this Current Report on Form 8-K, including Exhibit 99.1, 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.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
The following exhibit is attached with this current report on Form 8-K:
| Exhibit No. |
Description | |
| 99.1 | Presentation Materials of the Company, dated May 16, 2012 |
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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 16, 2012 |
By: | /s/ Robert Fishman | ||
| Robert Fishman | ||||
| Senior Vice President and Chief Financial Officer | ||||
-3-
Index to Exhibits
| Exhibit No. |
Description | |
| 99.1 | Presentation Materials of the Company, dated May 16, 2012 |
-4-
Exhibit 99.1
|
|
Gavin Bell
Vice President Investor Relations
Welcome and Agenda
Investor Day May 16, 2012 New York Stock Exchange
Note to Investors
Comments made during this event and in the related presentation materials may contain forward -looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward -looking statements use words such as “seek,” “potential,” “expect,” “strive,” “continue,” “continuously,” “accelerate,” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could. “ They include statements as to NCR’s anticipated or expected results; future financial performance; projections of revenue, profit growth and other financial items, including those set forth in slide 11 of the materials titled “Financial Strategy”; expectations regarding pension metrics and funding obligations, including those set forth in slide 14 of the materials titled “Financial Strategy”; discussion of strategic initiatives and related actions; comments about future market or industry performance; and beliefs, expectations, intentions, and strategies, among other things.
Forward -looking statements are based on management’s current beliefs, expectations and assumptions, and involve a number of known and unknown risks and uncertainties, many of which are out of NCR’s control. These forward -looking statements are not guarantees of future performance, and there are a number of factors, including those detailed from time to time in NCR’s SEC reports, including those listed in item 1a “Risk Factors” of its Annual Report on Form 10-K, that could cause actual outcomes and results to differ materially from the results contemplated by such forward -looking statements. 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.
The results and cash flows related to NCR’s Entertainment line of business have been classified as discontinued operations as of March 31, 2012. Therefore, all financial results and guidance presented during this event and in the related presentation materials, including the financial results and guidance in the materials titled “Reinventing NCR” and “Financial Strategy”, have been recast to exclude the Entertainment line of business.
Note to Investors
While NCR reports its results in accordance with generally accepted accounting principles in the United States, or GAAP, certain materials presented during this event will include “non-GAAP” measures in an effort to provide additional useful information regarding NCR’s financial results. A reconciliation of these non-GAAP measures to comparable GAAP measures and other related information is included in the portion of these presentation materials entitled “Supplementary Non-GAAP Materials” and is available . on the Investor Relations page of NCR’s website at www.ncr.com Descriptions of many of these non-GAAP measures, including free cash flow, also are included in NCR’s SEC reports.
NCR’s management evaluates NCR’s results excluding certain items, such as pension expense, to assess the company’s financial performance, 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 NCR’s past reports of financial results. In addition, NCR management uses certain of these measures to manage and determine effectiveness of its business managers and as a basis for incentive compensation. Management’s calculation of the non-GAAP measures included in these materials may differ from similarly -titled measures reported by other companies and cannot, therefore, be compared with similarly -titled measures of other companies. The non-GAAP measures presented during this event should not be considered as substitutes for, or superior to, results determined in accordance with GAAP.
These presentation materials and the associated remarks made during this event are integrally related and are intended to be presented and understood together.
Agenda
Bill Nuti John Bruno Peter Dorsman Bob Fishman Chairman and CEO EVP and CTO EVP ISG CFO NCR Innovation ISG Overview. Financial Overview Business Strategy Services Emerging Industries, Operations and Continuous Improvement
Lines of Business Presentations Demo
Q and A Meeting Adjourns
Andy Heyman Michael O’Laughlin Scott Kingsfield GM Hospitality GM Financial GM Retail Solutions
Reinventing
Reinventing the way consumers experience business
Bridging back to the 2010 analyst meeting
“We have exceeded or met the expectations we set”
forecasted What we in 2010
What we are on path to achieve
Revenue
NPOI
NON-GAAP EPS
FY ‘10–FY ‘13
6–8% CAGR
FY ‘10–FY ‘13
15-20% CAGR
FY ‘10–FY ‘13
15-20% CAGR
FY ‘10–FY ‘12* Guidance
12% CAGR
FY ‘10–FY ‘12* Guidance
23% CAGR
FY ‘10–FY ‘12* Guidance
19% CAGR
We said FY ‘13 NPOI% of Revenue would be 9-10% – our midpoint guidance for FY ‘12 is 10%*
We said we would achieve 25%+ gross margins in the medium
term – our midpoint guidance for FY ‘12 is 26%*
Record $1B backlog
entering 2012 – highest ever
24.5%—28.4%
Services from 2010 margin – midpoint expansion 2012
Combined maintenance SW & , SW SaaS 65% revenue ; >$ > 500M $120M, 2012 up SW revenue goal
Source: Company Public Reports
Combined SW, SW maintenance & SaaS revenue in Q1 2012 >$120M, up 65% Y/Y
Combined 2012 SW revenue goal >$500M
| * |
|
FY ‘12 represents midpoint of current guidance |
| ** |
|
Gross margin as a percentage of revenue excludes pension and special items |
Shareholder Value: Business performance driving growth
April Pension 2010: Strategy Phase I
2012: Phase II Pension Strategy
2012
2-Year Relative Price Performance
200 180 160 140 120 100 80 60
Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12
~ 50%
Stock price increase since 2010
NCR Corp. Wincor Nixdorf AG S&P Mid Cap 400 KBW Bank Index Diebold Inc. Micros Systems Inc. NASDAQ Composite Index
Significantly out
performing peer group
and benchmark indices
On the back of a consistent vision, mission and business strategy
Our Vision
Lead how the world connects , interacts , and transacts with business
Our Mission
Provide our customers with the next generation of productivity gains and consumer experience innovation
And, what continues to be a successful reinvention
Freeze Pension Plan SDM Released Technology NCR to launch Silver Corporate to Duluth, HQ GA Move
Line of Business
Teradata Spin -off Entertainment
In-source Reporting Scopus Alliance ERP Initiative CRVE Manufacturing Employee Implementation (Flextronics to NCR) Implementation Engagement Survey Business Unit to World’s First Dual Central Spend Functional Core POS Terminal Customer Council ISG and Sales Cost Reductions Model Released (80xrt) Relationship Implementation Alignment Survey
2006 rebuilding our foundation Leadership & Culture Change reinventing an icon 2012
Critical Phase II Cost Functional to Lean Deals Desk Accounts Run the Current World’s best Bi-Optic Global Reduction Line of Business Model Operations Implementation
Play—Learn the Scanner Program Finance Grading Move to Productivity Network Company Program Released (7878) Transformation NCR Employee Industry Leading Leadership Continuous Development
Serviceability All-in- Development and Anticipated Sales of 2ST Released Improvement Management Services University one Terminal Emerging Leaders Entertainment to Org./SDP/ System Consolidation Released (70XRT) Program (Top 300) Coinstar Advantage Installation
Manuf. Restructuring Manaus, Brazil Radiant Acquisition Dundee to Budapest R&D and Manuf.
Columbus, GA Puducherry, India Manuf. Facility Manufacturing Facility
Translating into consistent business performance:
revenue growth, margin expansion and improved customer loyalty
Revenue NPOI (1)
NPOI
Revenue Y/YTrend Growth Analysis $180 Y/Y Growth 35%
$1,800
17% 2%
$135 19%
$1,500 3% 16% 15% 27% 18% 42%
10%
3% 5% 18%
$90
$1,200 34%
1% 5% 71%
$45
$900 5.3* 8.5 8.8 9.3 6.7 9.1 9.0 10.7 8.1
%%%%%%%%%
$0
$600 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
*NPOI % 2010 2011 2012
2010 2011 2012 of Revenue
Gross Margin % of Revenue(2) Customer Loyalty
GM % of RevenueBps(# representsY/Y GrowthInc / (Dec) in Bps Y/Y) 50% Y/Y Growth 47%
27%
270 280 40%
40%
25% 70 70
100 170 120 28% 29%
120 30%
23% 190
20%
21%
10%
19%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
0%
2010 2011 2012
2009 2010 2011 Wave 1 2012
(1) See reconciliation of GAAP to non-GAAP measure in the non-GAAP supplemental materials and/or on the investor relations page of NCR’s website.
(2) Gross margin as a percentage of revenue excludes pension and special items. See reconciliation of GAAP to non-GAAP measures in the non-GAAP
Source: Company Public Reports supplemental materials and/or on the investor relations page of NCR’s website.
We have a clear vision for our future: 2015 business model
Revenue Gross Margin (1) NPOI % Expansion of Revenue
$7.5B 500 bps 13%
$1B of Software
| (1) |
|
Gross margin as a percentage of revenue excludes pension and special items.
Architecture for Growth and Margin Expansion
Market expansion into proximate adjacencies
and Industry diversification balance
SMB growth
Leveraging our past to create a future… small business
Improved geographic balance
Indirect expansion channel
Software Services , SaaS growth and
competition & customer goals market share consumerism consumer behavior geopolitical events
economic assumptions & scenarios macroeconomics rise of emerging markets megatrends NCR talent profile
Our strategy is shaped by the world around us
Our decisions are purposeful
Forces of change: “The New Consumer”
Omni -46% of all 18-24 channel 2012 is a milestone year-oldschoose accesswould to year. Children born in 1994 will turn 18 – theaccess internet to a car. over Multi -adults becoming to live their the first channel } presence entire life in the of online retailing. Single channel }
Omni-channel shoppers are better While multichannel shoppers for business – spending 15-30% are good for business – they spend more than multi -channel 15-30% more than single-channel shoppers
Source: Yahoo Finance, “Eight Products the Facebook Generation will not Buy” – April 2012
Productivity and consumer experience during change
Store Branch
Transformation Transformation
NCR’s hardware -enabled,
software -driven, services -
led approach is the solution
[Graphic Appears Here]
Airport Restaurant
Transformation Transformation
And, while the industries we serve are growing modestly …
spending in front office technology is increasing
New solution:
APTRA Mobile Banking
Despite low-mid single will Spending grow to on $132B banking by technology 2015 – …we are anticipating New solution:
digit growth across a 24% average annual increase the demand with NCR Silver
our core industries new solutions
Retail sales growth of 3.4 Smartphone spend grew
percent this year, down 46 percent from 2010
from 4.7 percent in 2011 Spending on retail technology will
grow to nearly $21B in 2014 – followed by tablets
from $14.8B in 2009 and software.
Source: Ovum’s “Retail Banking Technology Spending Model Through
2015” report—January 2011; ABI Research “Spending on Retail
Technology Systems will exceed $20B in 2014”—March 2010
Our Addressable Market: Growing faster than the markets we serve
$40,000
$34.6B
$35,000
$31.8B
$29.5B
$30,000 $27.0B
$25.5B
$25,000
$20,000
$15,000
$10,000 $5,000
$0
2011 2012 2013 2014 2015 Fin ATM HW & SW Fin Branch Automation Fin Other Bank Sol Fin Multichannel Services—Financial Ret POS & Scanners Ret Self Checkout Ret Digital Signage & Kiosks Ret POS & C-Tailing SW SMB Hosted SW Services—Retail & Hospitality Hospitality HW & SW
Travel Kiosks Travel Mobile Services—Travel Services—T&T
The market is coming toward us:
And we are capitalizing
For the 10th
consecutive quarter we
have exceeded analyst
expectations
| 1 |
|
2 3 4 5 6 7 8 9 10 At the close of Q1 2012 |
we raised 2012
guidance to 11-13%
Q4 2009 Q1 2012 revenue growth
“Anything that won’t sell, I don’t want to invent.” Thomas Edison (1847 – 1931) NCR makes the list of world’s 100 most innovative companies John Bruno CTO and EVP Corporate Development TRANSFORMATION Hardware-enabled, Software-driven Business DISRUPTIVE INNOVATION
HOW WE DEFINE DISRUPTIVE INNOVATION 1/2 the cost 2x the quality Component Reuse Parts Reduction DFx Remote Diagnostics Design for Serviceability Design for Manufacturability Design to ‘Win’ Comprehensive Quality Metrics and Process Value Engineering Product Cost Reduction ‘Platforming’ 4x the customer value Increase Our Points of Service (Cost = Growth) Increase the Adoption Rate of Our Software Offers (Per Site, Per Customer and with New Customers) $
HOW WE OPERATIONALIZE Contributing to our financial performance 18 to 6 Motherboard 15 to 3 Chipsets 11 to 5 Card Readers 2 to 1 Media Handling Module Common displays reduction in complexity Improvement in Component Reuse 20% R&D Spending 25% 813 Ideas in OpenIdea Portal @ Development Centers 3 to 7 SW:HW Engineers 2:1 0 to 9 NCR Enterprise Platform Solutions Increased focus on ~$500M product cost savings since 2009 Time-to-Market ‘Platforming’ New Product Introduction (NPI) 20% DISRUPTIVE INNOVATION
(1) See reconciliation of GAAP to non-GAAP measure in the non-GAAP supplemental materials and/or on the investor relations page of NCR’s website.
(2) Gross margin as a percentage of revenue excludes pension and special items. See reconciliation of GAAP to non-GAAP measures in the non-GAAP supplemental materials and/or on the investor relations page of NCR’s website.
February 25, 1889 1906 Charles Kettering developed the first electric cash register 1968 John Janning perfected liquid crystal displays (LCD) NCR started an R&D department . And, was one of the first companies to do so INNOVATION @ NCR Patents and more than 1600 pending patent applications worldwide nearly 2400 ~9000 1.2 million 1995 With Alaska Airlines deployed first self- service e-ticket solutions Mobile Boarding passes since Mobiqa acquisition NOW tomorrow yesterday NCR APTRA Interactive Teller Customer Playbooks Dislocated Interface Self-Service Checkout Kiosk Scalable Deposit Module (SDM) Units NCR Silver Point of Sale Pulse
Mobile Enabled 6 Billion TEXT MESSAGES SENT AND RECEIVED PER DAY Someone on LinkedIn with just 170 contacts has the potential to connect with and influence more than Generation Y represents more than 750 million ? $ Multi- industry focus Secure Payment Transactions Socially Empowered Smartphone owners now the majority 50.4% Of U.S. mobile subscribers own a smart phone 1.7 billion consumers worldwide MEGATRENDS & CONSUMER BEHAVIOR INFORM OUR R&D STRATEGY users globally on Facebook 2.1 million PEOPLE Says a Nielsen survey Mastercard introduces digital wallet “Merchants want flexibility to easily accept digital payments so they can convert more browsers to buyers.” ~ Ed McLaughlin, chief emerging payments officer of MasterCard
OUR R&D STRATEGY CONSUMER EXPERIENCE & DESIGN INFORMS
BEING A BETTER INNOVATOR Means being a better partner COLLABORATIVE INNOVATION Financial Services Retail Hospitality Travel
Financial Services Travel Hospitality Retail Merged channel Hardware-enabled software-driven Improved Time-to-Market Common Maintenance End-to-End Closed Loop Marketing Transaction Ownership CUSTOMER VALUE PROPOSITION
WHY CUSTOMERS LOOK TO US TO 39,452 52,603 245 27 21,311 RETAIL POS TRANSACTIONS 9,748 125,600 Hospitality ePOS TRANSACTIONS RETAIL SCO TRANSACTIONS CASH ONLY ATM TRANSACTIONS “ALL” ATM TRANSACTIONS PASSENGER KIOSK CHECK-IN MOBILE CHECK-IN that translates to At your service every day and around the world INNOVATE 300M transactions per day.
GETTING IT RIGHT SCALABLE DEPOSIT MODULE (sdm) Self-checkout Self and Mobile Check-in Restaurant Guard Retail Travel Hospitality
COMING SOON INTERACTIVE TELLER MOBILE CAPTURE PULSE
NCR Enterprise Platform Contemporary Business Models (C2B) Public & Private Clouds Consumer Experience and Design Merged Channel DISRUPTIVE INNOVATION SUSTAINABLE LONG-TERM VALUE CREATION
Peter Dorsman
Executive Vice President
Industry Solutions Group
Lines of Business
Investor Day
May 16, 2012
New York Stock Exchange
NCR’s Lines of Business
Financial Retail Hospitality Travel Telecom and Services Technology
Healthcare Entertainment
Leverage our Core Competencies
Point of Service Integration Secure Payments Cash and Cashless Transactions Mobile Technologies
Consulting, Implementation and Maintenance Services
Mega Trends
Macro Economic The Changing Consumer
Regulatory
Conditions Environment
Driving the Need for Change
Front-end business Achievement of next Integrated and synchronized
transformation and the shift of generation productivity gains multi-channel experience.
capital spending to support it. and lower costs.
Front -end Business Transformation (Financial Services)
Improve the effectiveness of branches
Create new delivery formats including smaller branches, video enablement, kiosks and multi-function ATM’s
Change the processes associated with the branch banking experience
Improve customer experience and access
Next generation productivity and lower costs
Technology alone is rarely the key to unlocking economic value:
Companies create real wealth when they combine technology with new ways of doing business.
Source: McKinsey Quarterly. com
Integrated and Synchronized Multi-channel Experience
Point of Service Mobile On-line Social Media
Multi-channel Businesses are Rewarded by Consumers
The average multichannel
“Customers are multi-channel shopper spends 6 times
creatures and they will no longer more than a single-channel
tolerate inconsistent experiences shopper
across a financial institution’s Source: Forrester
delivery channels.”
73% of travelers would be more likely to choose a travel provider that offered them greater control over managing their entire travel experience through self-service.
Source: Buzzback research
NCR is Uniquely Positioned
Business Model Enhanced Consumer
Innovation Experience
Transforming How Main Street Small Businesses Operate
“We’re helping retailers know what inventory
they need, when they need it, and what price
it needs to be at.”
- Fast Company
Andy Heyman
SVP & GM, Hospitality
At your service every day and around the world
Hospitality Strategy
Investor Day May 16, 2012 New York Stock Exchange
What is our market?
Why do restaurants buy from us?
How do we maximize our opportunity?
What results will the strategy achieve?
What is our
market?
Quick Service Fast Casual Theaters Table Service Sports Venues
Restaurants Restaurants
50% available to NCR
million FB&E Sites in the World
Our Value Potential
Margin Improvement
20% 2015 Operational Impact Increase Revenue
Data Analytics
IT Outsourcing Control Cost 15% Marketing Services Receipt on Label Digital Menu Boards 12% Customer Voice Pulse Mobile Pay
9% RSS Online Ordering Customer Connect
6% Restaurant Guard
$180 billion Handheld
Loyalty & Gift
3% Labor Management
Current Total Value Potential
Customers Kiosk Inventory Management
0% Point of Sale
100,000 500,000 1.0M 1995
Sites
Source: NCR internal data and customer feedback
Why do restaurants buy from us?
Profitability Guest &Infrastructure Connections Productivity Experience
Security Kitchen
Site Mgt Inventory & Labor POS Theft Reporting
Feedback Digital Menu Online Mobile POS Ordering Takeout Mobile Pay Guest Mgt Loyalty Drive-thru
Analytics
$1M restaurant
Average NCR Results
Restaurant Improvements
Guests 100,000/year 2,000/year 102,000
Spend $10/guest $1/guest $11/guest
Total Sales $1M $122,000 $1,122,000
30% -2% 28%
Food Costs $300,000($22,440) $314,160
30% -2% 28%
Labor Costs $300,000($22,440) $314,160
2% -0.50% 1.5%
IT Costs $20,000($5,610) $16,830
33% 0% 33%
OH Costs $330,000($0) $330,000
5% 4.50% 9.5%
Profit $50,000 $56,590 $106,590
* Hypothetical results of investment in NCR Hospitality Solutions by restaurant with $1M in annual revenues; based on NCR internal data and customer feedback
How do we maximize our opportunity?
The foundation
New Site Recurring
2011: $265M
2011: $217M
New Sites Recurring Results
Year New sites $ per site Total New Sites $ pspm Total
$482.5M
2011 20,000 $13,250 $265M 125,000 $145 $217.5M
New site strategy
Increase Adoption Deepen SMB Presence Expand Globally
35,000 $400 M
30,000 $350 M $300 M 25,000 $250 M
Sites 20,000
New $200 M Revenue 15,000 $150 M
10,000 $100 M
5,000 $50 M 0 $0 2011 2012(e) 2013(e) 2014(e) 2015(e)
Direct SMB International Revenue
Recurring strategy
Add Salespeople Expand Solutions
200,000 $400 M 180,000 $350 M 160,000 $300 M 140,000 $161 pspm $250 M 120,000 $153
100,000 $150 pspm Revenue $147 $200 M pspm
80,000 $145 pspm $150 M pspm
60,000
40,000 $100 M 20,000 $50 M
0 $0 2011 2012(e) 2013(e) 2014(e) 2015(e)
Cumulative Sites Revenue
What results will the strategy achieve?
Takeaways
2012-2015
Significant opportunity that is growing
Unique and proven value proposition
Growth strategy which delivers consumer and customer trends
Michael O’Laughlin
SVP & GM, Financial Services
At your service every day and around the world
Financial Services Strategy
Analyst Day
May 16,2012
New York Stock Exchange
57
A Global Perspective from a Global Business
North America Western Europe Eastern Europe
• Branch transformation • Intelligent deposit • Bill payment & Financial Kiosk
• Remote data capture • Branch transformation • Intelligent Deposit
• Intelligent deposit • Multichannel software solutions • ATM penetration below European
• Multichannel convergence • Financial kiosk averages
• Growing replacement market • Growing replacement market • Network expansion is driving
• Predictive Services • Logical and physical security increased interest in Management
systems and managed services
Caribbean & Latin America Middle East & Africa Asia
• Capitalize on Brazilian investments • Intelligent Deposit • Cash Dispenser growth in Southeast
to target new opportunities • Bill payments Asia
• Introduction of Intelligent Deposit • Mobile Solutions • China Pocket Recycling
• Managed services growth with • Remittance solution • Multichannel software solutions
introduction of Aptra™ Vision, SW • Managed Services Distributer • Cash Deposit growth
Distribution, SW Security enablement • India Cash Dispense outsourcing
ATM Shipment View: Markets that Will “Move the Needle”
Size of Circle =Total ATM Shipments 2011 -2013 Total Shipments = 1,058,240 units
20%
UAE, Serbia India
CEE Other, Asia Pac Other, Kenya, Vietnam, Pakistan
15%
IEgypt, Kazakhstan, B.R.I.C.
China
Nigeria
10%
Russia
Install Base CAGR
2011 => 2013
5%
Brazil
Large
S Korea
Japan Mature USA 0.0%
Netherlands, Norway,
Estonia, Denmark 100,000 200,000 300,000 400,000 500,000
UK, Spain,
71 largest countries Germany, Canada, Source: RBR 2010, NCR ? 5% France, Italy
Top -15 = 77% of base, 78% of shipments
Delivering an integrated customer experience
Hardware Software Service
Innovation is driving growth
Strategic value
Preemptive
Predictive
Dual Roll
Reactiv Proactiv
Efficiency e e Predictive Service
Branch Transformation NCR Interactive Teller
Mobile Data 2ST
Capture
[Graphic Appears Here]
Drive-thru Authentication
Iconic ATM Scalable Deposit Module Dislocated interface & Staging
NCR Enterprise Software Platform
Clearing & SYSTEMS Settlement
Global Leader in: MOBILE MANAGEMENT
• Multivendor software BANKING
• ATM management
APPOINTMENT
• Payment systems
SCHEDULING
BILL PAYMENT
Assisted CHECK Service CASHING
REMITTANCE
ADJUNCT TRANSACTIONS
ATM SelfServ Solutions
NCR Financial Services Solution Portfolio
PATCH
Global Leader in: SOFTWARE MANAGEMNENT
• Managed Services DISTRIBUTION
• Multivendor Support LOGICAL
• Service Innovation SECURITY
MS Complete End to End Portfolio EMERGING
CASH MANAGEMENT & Total Premise Based on Voice of Customer GEOGRAPHIES
FORCASTING Adjacencies Core Hosted &
Managed Services l Lifecycle Support l Transaction l Channel SaaS Solutions
Service Innovation
Business Model Predictive Defect Elimination
Transformation Penetration
Continuous Improvement & Supply Chain Innovation
Customer Experience
MULTI-VENDOR Service Quality ‘Pulse Check’ Survey Channel INCIDENT MANAGEMENT &
MAINTENANCE Index Infrastructure HELP DESK
FIRST & SECOND
LINE MAINTENANCE
PREDICTIVE
TOTAL PREMISE SERVICE
SERVICE
Financial Services Market Leader
ATM’s
No. 1 US ATM provider
No. 1 Global ATM install base & shipments
[Graphic Appears Here]
Advanced Functionality
ATM Multivendor Middleware & Apps: No. 1 US & Global
Automated Deposit: No. 1 US & Global
TCR Middleware: No. 1 Global
[Graphic Appears Here]
[Graphic Appears Here]
Financial & Service Industries
A leader in item processing, 8 of top 10 US banks
Top 5 in FinTech Top 100 Global Solution Providers to the Financial Industry
Top 10 in 2011 IAOP Global Outsourcing 100TM
Sources: RBR Research, Phoenix ESP Consulting, American Banker, IAOP
Scott Kingsfield
SVP & GM, Retail Business
At your service every day and around the world
Retail Strategy
Analyst Day May 16, 2012 New York Stock Exchange
Agenda
NCR Retail – Expand our Value Proposition The Self Checkout Evolution NCR Silver – Back to the Future
NCR Converged Retailing
Transforming Retail
Food and Drug Specialty Retail Convenience General SMB
Store Merchandise
Expanding our Value Proposition – The Consumer
Give me control of the shopping experience Know my preferences
Reward my loyalty
Make my visit fast and convenient Customer
The Store is Evolving … NCR is Leading
Click and Pharmacy Pharmacy
Collect Deli Kiosk Vending POS
Machine
Loyalty &
Offer Mgmt
Recipe Kiosk Pharmacy
Teleconferencing
Consumer Order and
Preference Pay Mobile Order
Mgmt and Pay
Wine
Self-service Referral
Scale Kiosk Loyalty Kiosk
Assisted
Checkout
Mobile Self- Self Branch
Checkout Checkout Automation
POS Fuel
Interface
ATM
Tender
Station
Service
Center
Kiosk
Customer
Expanding our Value Proposition – The Store
Make it easier to run my business I need to improve productivity and reduce costs
I need to meet the demands of my customers
I need to grow customer wallet share Store Manager
The Store is Evolving … NCR is Leading
Click and Pharmacy
Collect Pharmacy Deli Kiosk Vending POS
Loyalty & Machine Offer Mgmt
Recipe Kiosk Pharmacy Consumer Teleconferencing Preference Mgmt Order and
Pay Mobile Order and Pay Wine Self-service Referral Enterprise Scale Kiosk Loyalty Kiosk Direct Store Solutions Delivery Assisted Checkout Mobile Self- Self Branch Checkout Checkout Automation
POS Fuel Inventory Interface Management
ATM Tender Station
Service Mobile Center Manager Kiosk
Store Manager
Expanding our Value Proposition – The CIO
I need to support solutions across all channels I need to protect customer data
I need to maximize uptime
I need to support multiple locations
IT Manager
The Store is Evolving … NCR is Leading
Predictive Services
Click and Pharmacy
Collect Pharmacy Deli Kiosk Vending POS
Loyalty & Machine Offer Mgmt
Recipe Kiosk Pharmacy Consumer Teleconferencing Preference Mgmt Order and
Pay Mobile Order and Pay Remote SW Wine Direct Store Mgmt Self-service Referral Delivery Enterprise Scale Kiosk Loyalty Kiosk Enterprise Solutions Solutions Assisted Checkout Mobile Self-Self Branch Checkout Checkout Automation
POS Fuel Inventory Interface Management
ATM Tender Station
Service Mobile Center Manager Kiosk
IT Manager
The Most Comprehensive Solution in the Market
Predictive Services
Click and Pharmacy
Collect Pharmacy Deli Kiosk Vending POS
Loyalty & Machine Offer Mgmt
Recipe Kiosk Pharmacy Consumer Teleconferencing Preference Mgmt Order and
Pay Mobile Order and Pay Remote SW Wine Direct Store Mgmt Self-service Referral Delivery Enterprise Scale Kiosk Loyalty Kiosk Enterprise Solutions Solutions Assisted Checkout Mobile Self-Self Branch Checkout Checkout Automation
POS Fuel Inventory Interface Management
ATM Tender Station
Service Mobile Center Manager Kiosk
SelfServ Checkout Momentum
Total Global Self-Checkout Transactions (Millions) NCR SelfServ Checkout Global Expansion
9,000.0 8,000.0 7,000.0 6,000.0 5,000.0
4,000.0 Market NCR
3,000.0 Entry 2,000.0 1,000.0
—1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Pending install (6) Deployed (23)
Widely deployed (5) Under evaluation (6)
NCR ships 2 out of 3 Self -checkout units worldwide
The Self Checkout Evolution
Common
SelfServ Checkout
Application Add Note Recycling
Take-Away Belt
Express Configuration
Input Belt 3-Bag
2-Bag Convertible
Configurations 1-Bag
Single -Window
Scanner Remove Single -Window Cash, No-Scale Cash Scanner Modules SelfServ
Card-Only Mobile Self-Checkout CashPay
SSCO Kiosk
Back to the Future – NCR
Silver
Our Mission:
To help a small business easily run their business, connect with customers and sell anywhere
Silver Target Market
No store Away from store Near store In store
Service provider Retailer
4,000,000
j u s t l i k e t h e m i n t h e U S
8,000,000
j u s t l i k e t h e m w o r l d w i d e
1916 90%+
The Company that invented the Retail technology industry 128 years ago is introducing the most significant advancement in 100 years!
Why we
will win
Keys to our Success
World Class
Solution Great Distribution Strong Brand
Total Retail Solution
Connect with
Run your Business Sell Anywhere
Customers
The Right Solution
Revel ShopKeep Square
iPad Registration Platform
Retail SMB Target
Cash and Credit Transactions Run your Business.
Scanning
Sales Analytics
Smart Alerts Connect with Customers.
Inventory Tracking
Profitability Analytics
Encrypted Card Security
Sell Anywhere.
eMail Marketing
Multi Location Support
Accounting Integration
Silver Packages
Silver Mobile Silver Tablet Silver Register
$79 per month $79 per month $99 per month
Launch in July 2012
Expected Customers Aspiration
2012 5,000 X 2
2013 40,000 X 3
2014 95,000 X 4
Run your Business. Connect with Customers. Sell Anywhere.
Peter Dorsman
Executive Vice President
At your service every day and around the world
Telecom and Technology
Line of Business
Investor Day May 16, 2012 New York Stock Exchange
Unmatched, Global End-to-end Services Portfolio
NCR Well Positioned to Capture Enterprise Customer Demand for Outsourcing
NCR provides global, high availability, mission critical, NCR Growing 3x Faster than Market
“white label” managed and deployment services for
multi-vendor networking technologies to Services Addressable Market
| 8 |
|
of Top 10 Telecoms and Networking OEMs $4B |
NCR CAGR
~13%
Market CAGR
~4%
“. end-user organizations are actively pushing for consolidated support contracts to realize cost savings, reduce contract management overhead and simplify operational processes ..”
Market: Source: Gartner Dataquest, Network IT Services, Worldwide Forecast, Q1 2011; IDC Black Book 2010
Gartner: “Competitive Landscape: Integrated Infrastructure Support Providers, Western Europe” Rob Addy, Dec 2011
Growing Customer Segment Provides Opportunity for Outsourcing to NCR
Bharti
Aruba
50% Vivendi Lenovo
Riverbed
Polycom HCL Idea
Huawei FarEast TIM
F5 QTel
China EMC
Uni Saudi
Juniper
Growth ZTE Tel
Tele It Embratel BCE
Telenor/ China China Uninor Mob Tel Singtel Telesp Brocade ALU
StarHub
C&W KDDI
NZ Tel Taiwan
Reliance Sprint Ericsson ACS Telstra
0% TelMex
CSC $500M
? 10%
Accenture
Revenue ($B)
Represents Category Leaders
Top 33 Telecoms I Top 20 OEMs I Top 4 Systems Integrators
Intel/
McAfee
NTT
Amer
Movil IBM
Voda VZB
Cisco
AT&T HP
FRT Dell Siemens DT
Telefon
BT
Fujitsu
$35B
Telecom
OEM
Systems Integrator
Source: Fortune 2000
3Q10 vs 3Q11 Revenue Growth*
Scaling the Business
NCR Advantage — the Multi-Factor: Multi-Geographies, Multi-Industry, Multi-Vendor, Multi-Channel
Managed IT Domain Services
NCR enables Design Integrate Support Manage always available Solution and Multi-vendor Service Desk/ customer Deployment Architecture Maintenance NOC experience Network Audit WANx Certified Partner Cloud and Analysis Benchmarking Programs
Common Tools, Processes, Methodologies
Uniquely Positioned to Capture Market Demand
Unmatched Service Portfolio
~100,000
NOC Users Supported
Service Intelligence Optimization, Six Sigma
Certifications
ITIL, ISO, NSA …
Global, Badged Certified Service Professionals
Complementary Proven Partner
~1,000,000
Networking Maintained Devices
~200,000
Installs Per Year
Breadth of Multi-Vendor Support +200 OEMs
> 99.999%
TierAvailability 4 Data Center
Growth Opportunity
Outsourcing Demand Accelerating
Customer Segment Growing and ExpandingDevices Multiplying Requires Seamless, High Availability
Global Capability
Creates High
Barrier to Entry
Services Led Model
“Complementary” Trusted Partner
Peter Dorsman
Executive Vice President
Transforming the Travel Experience
Travel
Line of Business
Investor Day May 16, 2012 New York Stock Exchange
Travel Industry Transformation
Airline/Airport Focus
Hierarchy of
Consumer Needs Loyalty to
differentiated
experience Increase Revenue
Ancillary Sources
Personalized offers
Terminal Concessions and Fees
Improve the Passenger Experience
Integrated and synchronized multi-channel experience
Convenience
Relevant Information
Increase Productivity
Basic passenger processing transactions and Reduce Costs
•Passenger Processing Efficiency
•Cashless Concourse
Increase Productivity and Reduce Costs
By 2014 there will be 3.3 billion
air travelers, up 800 million
from 2.5 billion in 2009.
-IATA 2011
Lobby Security
Cashless Travel Card Solutions
Improve the Passenger Experience
Consumers today have more choices and seek greater control over where, when and how they interact with business
At Home In Transit At their Destination
Dubai Airport Wayfinding
Major aviation hub in Middle East
6,000+ flights per week
43 million passengers
Help passengers locate gates, flight information, retailers and concessions
Interactive access to hotel reservations and local attractions
Fifty 42-inch touchscreen monitors with HD graphics and video powered by NCR
Netkey software
Increase Revenue
Ancillary revenue generation has
spread from low-cost and US
carriers to full service carriers
worldwide and become an
increasingly important source of
revenue. Airlines can now lower
their base fares to offer more
competitive prices to customers.
Consumers can then tailor their
travel with optional services
according to their budget.
Retailing and Merchandising to Passengers at the Gate
60% of travelers are likely to
redeem coupons for a meal, coffee,
spa treatment or other airport
services if they are delivered to
their mobile while at the airport
Source: NCR Travel Consumer Research Survey, July 2011
End-to-End Service Support to the Travel Industry
Mobile Interactive Self-Service, Digital
Signage, Wayfinding ATMs Airline Check-In
Common Use Terminal Equipment (CUTE)
Consumables
Network Infrastructure Point of Sale
eMarketing
Travel Segment Expansion
Hotel Guest Check-in
Virtual Agent Self-Ticketing
Rental Car Bus
John Bruno
Executive Vice President
At your service every day and around the world
Customer Services Strategy
Investor Day May 16, 2012 New York Stock Exchange
NCR Services Leadership
Global Leader Providing Unmatched Portfolio, Service Intelligence, and Innovation to Enable Seamless Consumer Experience Across all Channels
13,000 90 16
Badged & Certified Direct Countries Centers of Excellence
515 300+ 2,000,000+
Stocking Locations Vendors Supported Points-of-Service Maintained
We take a call every 3 seconds and service a device every 6 seconds
Capitalizing on Profitable Growth Engine Enables NCR Services Led Model
Growing 2X Faster than the Market
Leveraging Core to Scale into Adjacencies, Emerging and Small Business Markets
Leading Growth Indicators
Revenue
~ 20% Customer Sat
~ 1700 bps Gross Margin
~ 900 bps File Value
~ 25%
Customer Services Business Model Innovation Drives Sustainable Cost Scaling and Efficiencies
djacency Expansion1
Multi Managed -vendor/Total Services, Premise T&T
~ 30 %
Defect Elimination2
~ 160,000
2008 2009 2010 2011 2012 (e)
Near Shore 3
~ 300 bps
Labor % of Revenue 3
~ -700 bps
| 1 |
|
2010-2012 |
| 2 |
|
2012 target |
| 3 |
|
2008-2012 |
Portfolio Innovation a Catalyst to Sustained Growth
Portfolio Expansion Opens Emerging Markets, Industries, New Customer Segments and Channels
Software Cloud Services Management
& Integrity
Transform
Cloud Cloud
Hosting Services Solutions
Total Premise Operational Migration Cx Global Expansion Consulting Consulting
Reactive Proactive & Predictive Seamless Experience
APTRA Vision Predictive Services Managed Services
Interact
Channel NOC Managed Services Managed Services
Services Executing on Strategy
Moving up the Value Chain with Managed Services and Total Premise Transitioning from Break -Fix Provider to Strategic Partner
“Consolidating our managed services enables us
to deliver a great shopping experience
while driving greater efficiencies that
“By turning to NCR for our ATM maintenance support our growth plans”
and management, we can apply more of
our resources to our customers “
“These services will help us simplify our IT
network and more time focused on
delivering a premier shopping experience to
“(with NCR Incident Management services) we our customers.”
have been able to increase the uptime from
89% to almost 97% “
Top 10 Outsourcing Provider Top 10 Support Provider
Transforming the Customer Experience Through Service Innovation
Business Model Innovation Driving Sustainable Cost Scaling, Efficiencies and Customer Delight
Reactive Predictive
Enables Seamless Successful Customer Interactions Every Time
Right Parts & Skills Fix It Before It Breaks
Service
Needed
Failed Consumer
Interaction
Dispatch and Repair Service Completed
Scheduled Visit Detailed Status info
Close with Customer
Transforming the Service Model – A Game Changer
“NCR is currently the
only major provider to
be offering a truly predictive
hardware maintenance
service.”
Did you know?
In 2012, Predictive will be deployed on:
I 125,000 devices
I 4 continents
Predictive Recognition:
VIDEO: Best Technology Implementation
http://www.youtube.com/watch?v=D4yXjiuKX1Y&feature=plcp TAG Excalibur Award
Gartner: “Market Trends: The Product Support Beast Awakens, Worldwide, 2012”
Rob Addy, 23 February 2012
Leveraging Our Core to Penetrate New Markets
Delivering unmatched Live Customer Care and Support to get small businesses started and keep them up and running.
Retailers can focus on their customers . We’ll take care of the rest.
Phone/Email/Chat Hardware
Support Maintenance
Small Business Technical Advisors Enabling Seamless Experience
Services Very Well Positioned; Capitalizing on Growth
Global Leader with Providing Unmatched Portfolio, Service Intelligence, and Innovation to Enable Seamless Consumer Experience Across all Channels
Sustainable, Profitable growth engine for NCR
Leveraging our core to scale into adjacencies, emerging and small business markets
Eliminating defects across the enterprise value chain for GM expansion
Transforming customer experience with Predictive Service Innovation
Peter Dorsman
Executive Vice President
Global Operations and Customer Advocacy/Continuous Improvement
Investor Day
May 16, 2012
New York Stock Exchange
NCR is Driving the Industrial Revolution 2.0
Bringing highly innovative
products to market faster
Localization
Operational Excellence
Controlling manufacturing intellectual property
Regional Innovation Hubs
Budapest, Hungary
Columbus, GA Beijing, China
USA
Puducherry,
India
Manaus, Brazil
New Product Introduction
Partners Customers
Product Development Suppliers
Government and Universities Manufacturing
Next-in-Class Facilities
Budapest Puducherry
Columbus
Beijing Manaus
Demand Sensing and Shaping
Demantra
Demand Demand Management Operations and Product
Sensing
Sensing
Demand Assess/Supply
Shaping Chain Plan
Sales Operations
Analyze
Demand Shaping the Market
Demand Sensing
Product Management
True North Metrics Driving Operational Excellence
Productivity
People Working Capital
Schedule Cost
Quality
Continuous Improvement
| 1. |
|
Alignment 2. Sustainability 3. Customer Focus |
Cost Savings $100+ Million CI DNA Loyalty Index
Annually
Enterprise Approach 23,500 Problem Solvers Listening and Execution
Continuous Improvement Journey
Internal Focus External Focus
Cost Defect Defect Enterprise
Cutting Correction Elimination Improvement
(Function)(Value Stream)
Impact
Continuous Improvement Savings
($ in millions)
2008 2009 2010 2011 2012 Plan
Benefits
$64
$116
$117
$189
$125
$- $20 $40 $60 $80 $100 $120 $140 $160 $180 $200
Improving Customer Lifetime Value
Customers are Retained and More Likely to Buy More from NCR
[Graphic Appears Here]
Loyalty Will Increase
[Graphic Appears Here]
Sustainable Changes Noticed by Customers Will Improve Attitudes
Improve Daily Experiences Most Important to Customers
Greater Lifetime Value
Greater Share of Wallet
Fewer Vulnerable Relationships
Customer Focus
Brand
Overall Experience
Sales Representation
Support Services
Solution Implementation
Bob Fishman
Chief Financial Officer
Financial Strategy
Investor Day
May 16, 2012
New York Stock Exchange
Creating Shareholder Value – Going Forward
Build a
Profitable Sustainable
Revenue & Leading
NCR Skimming Growth Protection Cost Solution – SPS
For SelfServ ATMs Structure
with Motorized card readers
Free NCR
Cash Flow Confidential
Generation
|
|
Revenue Profile – Balanced Global Growth
Strong Revenue Growth Geographic Diversity
(2011)
12%- 25% 30%
13%* AMEA Emerging
NCR+12%Skimming Protection Solution48%– SPS Markets
(USA 36%) Revenue
$5,291 Americas
+3% 70%
Developed
$4,711 For SelfServ ATMs Europe 27% Areas
$4,579 with Motorized card readers Revenue
2009 2010 2011 2012(e)
($’s in Millions); *2012(e) in constant currency
Revenue and Gross Margin by Products and Services
Strong revenue growth. GM expanded in Products and Services as a result of higher volume, improved mix and cost reductions.
Revenue 2009 2010 2011
Products $2,208 $2,301 $2,592
Services $2,371 $2,410 $2,699
Total $4,579 $4,711 $5,291
GM% (1) 2009 2010 2011
Products 21.2% 22.3% 23.0%
Services 22.8% 24.5% 26.7%
Total 22.0% 23.4% 24.9%
($’s in Millions) (1) Gross Margin as a percentage of Revenue excludes pension and special items. See reconciliation of GAAP to non-GAAP measures in the non-GAAP supplementary materials and/or on the investor relations page of NCR’s website.
Revenue and OI by Segment
Revenue growth and segment operating margin improvement led by volume growth, mix and cost reductions.
Revenue 2009 2010 2011
Financial Services $2,614 $2,645 $2,999
Retail Solutions $1,627 $1,717 $1,778
Hospitality $- $- $141
Emerging Industries $338 $349 $373
Consolidated revenue $4,579 $4711 $5,291
Segment OI% 2009 2010 2011
Financial Services 9.6% 9.5% 10.4%
Retail Solutions 0.7% 4.1% 3.9%
Hospitality—- 15.6%
Emerging Industries 16.9% 17.2% 20.6%
Total Segment OI% (1) 7.0% 8.1% 9.1%
(1) Total Segment Operating Income as percentage of Revenue excluding pension and special items. See reconciliation of GAAP to non-GAAP measures in the non-GAAP supplementary materials and/or on the investor relations page of NCR’s website.
NPOI: Consistently Strong Growth
NPOI: Non-Pension Operating Income (1)
+ 19-22%
$570-$585
$500
+ 26%
$481
+19%
$381
$321
$0
2009 2010 2011 2012(e)
($’s in Millions)
(1) See reconciliation of GAAP to non-GAAP measures in the non-GAAP supplementary materials and/or on the investor relations page of NCR’s website.
Revenue and NPOI Growth
7-9% CAGR
Revenue($’s in Millions)
11%-13%
$5,291
2011 2012(e) 2015(e)
NPOI(1)
15-20% CAGR
19%-22%
$570-$585
~13% of
$481 Revenue
~10% of
| 9.1% |
|
of Revenue |
Revenue
2011 2012(e) 2015(e)
(1) See reconciliation of GAAP to non-GAAP measures in the non-GAAP supplementary materials and/or on the investor relations page of NCR’s website.
Continued EPS Expansion
EPS: Excluding Pension and Special Items (1)
| $3.65—$4.25 |
|
| $2.40—$2.47 |
|
15-20% CAGR
$2.06
$1.72
$1.42
2009 2010 2011 2012(e) 2015(e)
(1) See reconciliation of GAAP to non-GAAP measures in the non-GAAP supplementary materials and/or on the investor relations page of NCR’s website.
Revenue Growth and Higher Margin Opportunity
$400
$500
$700 Services
2015 (e)
Software* Revenue
Products
7-9%
2012 (e) CAGR
Revenue
*Software includes SW, SW Maintenance and SaaS($’s in Millions)
Managing for Margin
Improving our Sales Mix and Reducing our Cost Structure
Key Initiatives
Cost reduction and value engineering
Product lifecycle management
Design for serviceability, manufacturability, cost
Continuous Improvement
Improving labor productivity
$200 million to $300 million savings for
the period 2012-2015 (50% reinvested)
Forecast Revenue Growth and OI Margin Expansion by Segment
Revenue 2015(e)
Segment * ‘12 – ‘15 CAGR OI% **
Financial Services CAGR 6-8% 11-13%
Retail Solutions
CAGR 7-9%
8-10%
Hospitality CAGR 13-15% 20-22%
Emerging Industries CAGR 10-15% 23-25%
Each Segment includes NCR Services
Estimated OI (segment operating income excludes pension and special items) as a percentage of revenue by segment
Working Capital Metrics – AR and Inventory (Excluding Hospitality)
2010 2011
Key Working Capital Metrics
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Accounts Receivable $884 $879 $957 $928 $946 $980 $1,069 $987
DSO (External) 77 67 71 59 78 67 70 58
Inventory Balance $720 $729 $815 $741 $793 $810 $807 $731
Inventory Turns 5.3 5.3 5.2 5.1 5.1 5.1 5.2 5.3
(Rolling 4 Qtr Average)
($’s in Millions)
Net Debt Progression
($ Millions)
Term Loan
Revolver
Other Debt
Cash
Total Net Debt (a+b+c-d)
2010 2010 2011 2011 2012 2012
Q3 Q4 Q1 Q2 Q3 Q4 Q1
0 0 0 0(700)(700)(700)
0 0 0 0(350)(140)(115)
(10)(11)(11)(11)(12)(13)(12)
360 496 480 457 341 398 414
350 485 469 446(721)(455)(413)
Net debt has improved significantly since Q3 2011 acquisition of Radiant
Pension Update – Q1 2012
Pension Metrics & Funded Status
($Millions)
Asset Return Discount rate Funded Status
3/31/12 YTD(1) 12/31/10 12/31/11 3/31/12(1) 12/31/10 12/31/11 3/31/12(1)
US Plans 3% 5.25% 4.0% 4.25%(903)(1,294)(1,180)
International Plans 2% 4.6% 4.1% 3.9%(94)(53)*(29)
Global 3% 5.0% 4.0% 4.1%(997)(1,347)(1,209)
*The ($53m) net funded status of international plans is comprised of underfunded plans of ($385m), and overfunded plans of $332m
The overfunded plans are a result of local funding methodologies that use more conservative actuarial assumptions than GAAP
Cash Funding for Pension Plans
($Millions) 2010 2011 2012E 2013E
US Qualified Plan** 0 0 85 110
US Non-qualified Plan 9 9 10 10
International Plans** 96 116 120 125
Total 105 125 215 245
** The funding requirements for the U.S. Qualified Plan incorporate 15 year funding relief for the 2010 and 2011 plan years
** The funding of international plans is expected to decline to an annual amount of $10-$20 million (excluding the funding of future service cost) by 2017 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
All future funding estimates are approximations based on expected asset returns, discount rates, and local requirements
(1) Estimated based on data available at March 31,2012; for accounting purposes the pension plans are not marked-to-market on a quarterly basis
Current Pension Strategy – Phase 1
NCR’s legacy pension assets and liabilities are large relative to current market capitalization.
Reduce risk and volatility by re-allocating our domestic pension portfolio to fixed-income securities by year- end 2012.
At the end of 2011, we had reallocated approx. 80% of pension assets to fixed income assets as compared to 60% at the end of 2010. By the end of 2012, we target a portfolio of entirely fixed income assets.
Work with trustee boards of international pension plans to make similar changes where possible.
Continue shifting retirement benefits from DB to DC
Amortize gains/losses over average remaining lifetime if less than 10% of a plan’s participants are active
Phase 1 very effective in reducing volatility and reducing underfunded position compared to previous allocation model
Pension Strategy Discussion – Phase 2
Economics Investor Complexity Financial Flexibility
Progression
of Strategies NPV Analysis Enterprise GAAP/Non- GAAP P/E NPOI/FCF Conversion Debt Liquidity
Risk EPS Impacts Capacity
Fund minimum,
complete asset shift,
(Stay the Course) Accounting
Liability Management Exercise
to hedge interest rate risk
Prefund & Immunize Pension
Prefund & Begin process
to settle liabilities
GOAL: Create NCR Shareholder Value
Additional Considerations
• Long Term Execution Process • Fiduciary Responsibility to Plans • Pension Relief
• Develop consistent global strategy • Tax Position
Pension Strategy Discussion – Phase 2
Objectives of Phase 2
Improve free cash flow by reducing annual pension contributions
Reduce volatility and size of underfunded position
Decrease complexity of pension for investors – GAAP to Non-GAAP
Alternatives being considered
Fund minimum, complete asset shift
Liability management exercise to hedge interest rate risk
Prefund and immunize
Prefund and begin process to settle liabilities
Other Considerations
Favorable debt market, good time to borrow
Tax position of NCR
Positive NPV driving economic value for company
Pension relief
Timeline for decision
Currently considering options
Expect announcement of decision on or before Q3 earnings call
Capital Structure Strategy
Maintain strong liquidity
Maintain low cost bank debt in capital structure
Pricing has moved to LIBOR + 150
Significant capacity to pursue opportunities
Free Cash Flow priorities
Organic growth of business
Bolt-on acquisitions and strategic initiatives
Debt Reduction
Share repurchase
No dividend initiation at this time
Interest Rate Management
70% of debt currently fixed through use of interest rate swap
Free Cash Flow Generation (1)
2010 2011 2015(e)
$400-500M
$188M
$37M
Cash flow from core businesses Cash flow for Pension
Cash flow from Entertainment Total Free Cash Flow
(1) See reconciliation of GAAP to non-GAAP measures in the non-GAAP supplementary materials and/or on the investor relations page of NCR’s website.
Key Takeaways
[Graphic Appears Here]
Growth and significant profitability improvement in 2011
Strong revenue growth expected over next three years, especially in software and services Cost reduction initiatives provide additional support to NPOI growth outlook Free Cash Flow generation expected to improve as core businesses drive additional cash flow Execute on pension strategy
Solve for large underfunded position, GAAP to non-GAAP difference and significantly improve FCF in next 3 years
Continue to manage the balance sheet for flexibility and liquidity, continued focus on working capital Cash generated to be used for organic growth, strategic opportunities and share repurchases
Questions
Supplementary Non-GAAP Materials
Investor Day
May 16, 2012
New York Stock Exchange
Non-GAAP Measures
While NCR reports its results in accordance with generally accepted accounting principles in the United States, or GAAP, certain materials presented during this event will include non-GAAP measures in an effort to provide additional useful information regarding NCR’s financial results. 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 NCR’s past reports of financial results. In addition, management uses certain of these measures to manage and determine effectiveness of its business managers and as a basis for incentive compensation. NCR management’s calculation of these non-GAAP measures may differ from similarly -titled measures reported by other companies and cannot, therefore, be compared with similarly -titled measures of other companies. These non-GAAP measures should not be considered as substitutes for or superior to results determined in accordance with GAAP. The reconciliations of non-GAAP measures to comparable GAAP measures and other related information on the following slides are also available on the Investor Relations page of NCR’s website at www.ncr.com .
The results and cash flows related to NCR’s Entertainment line of business have been classified as discontinued operations as of March 31, 2012. Therefore, the financial results and guidance in the reconciliations of GAAP to non-GAAP measures included in the following slides have been recast to exclude the Entertainment line of business.
Non-GAAP Measures
NPOI and Non-GAAP EPS. The non-GAAP income from operations (i.e., non-pension operating income, or NPOI) and non-GAAP earnings per share included in these materials exclude the impact of pension expense and certain special items. Due to the significant change in its pension expense from year to year and the non-operational nature of pension expense and these special items, including amortization of acquisition related intangibles, NCR’s management uses non-pension operating income and non-GAAP earnings per share to evaluate year-over-year operating performance. NCR may, in addition, segregate special items from its GAAP results from time to time to reflect the ongoing earnings per share performance of the company. NCR also uses non-pension operating income and non-GAAP earnings per share to manage and determine the effectiveness of its business managers and as a basis for incentive compensation. NCR determines non-pension operating income based on its GAAP income (loss) from operations excluding pension expense and special items.
Free Cash Flow Free cash flow (or FCF) does not have a. uniform definition under GAAP. NCR defines free cash flow as net cash provided by/used in operating activities and cash flow provided by/used in discontinued operations less capital expenditures for property, plant and equipment, and additions to capitalized software. NCR’s management uses free cash flow to assess the financial performance of the company and believes it is useful for investors because it relates the operating cash flow of the company to the capital that is spent to continue and improve business operations. In particular, free cash flow indicates the amount of cash generated after capital expenditures which can be used for, among other things, investment in the company’s existing businesses, strategic acquisitions, strengthening the company’s balance sheet, repurchase of company stock and repayment of the company’s debt obligations. Free cash flow does not represent the residual cash flow available for discretionary expenditures since there may be other nondiscretionary expenditures that are not deducted from the measure.
Income (Loss) from Continuing Operations (GAAP) to Non-Pension Operating Income (non-GAAP)
FY 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 FY 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 FY 2011 Q1 2012 FY 2012 (e)
Income from Continuing Operations (GAAP) $ 134 $(8) $ 41 $ 47 $ 67 $ 147 $ 20 $ 62 $ 28 $ 100 $ 210 $ 49 $ 366—$ 381
Pension expense 165
159 56 50 50 52 208 51 53 62 56 222 39
Impairment of assets related to an equity investment –
| 22———————- |
|
Global headquarters relocation –
| 6 |
|
5 7 6—18———— |
Legal settlements and charges –
———8 8————
Acquisition related costs 4
—————1 30 6 37 4
Acquisition related amortization of intangibles 35
—————- 3 9 12 9
Non-Pension Operating Income (non-GAAP) $ 321 $ 53 $ 98 $ 103 $ 127 $ 381 $ 71 $ 116 $ 123 $ 171 $ 481 $ 101 $ 570—$ 585
Diluted Earnings (Loss) Per Share from Continuing Operations (GAAP) to Diluted Earnings Per Share from Continuing Operations (non-GAAP)
2009
2010
2011
2012 (e)
Diluted Earnings Per Share from Continuing Operations (GAAP) $0.51 $0.88 $0.89 $1.48-$1.55
Pension expense(0.68)(0.93)(0.96)(0.74)
Impairment charge(0.19)(0.05) -(0.01)
Global Headquarters relocation(0.02)(0.07)—-
Japanese subsidiary valuation reserve—0.24—-
Legal settlements and charges(0.02)(0.03) 0.01 -
Acquisition related costs—-(0.17)(0.02)
Acquisition related amortization of intangibles(0.05)(0.15)
Diluted Earnings Per Share from Continuing Operations (non-GAAP) $1.42 $1.72 $2.06 $2.40-$2.47
Cash Provided by (Used in) Operating Activities (GAAP) to Free Cash Flow (non-GAAP)
2010
2011
2015(e)
Cash provided by (used in) Operating
Activities (GAAP) $277 $387 $605—$705
Cash provided by (used in) Discontinued(114)(76)(40)
Operations
Net capital expenditures(126)(123)(165)
Free Cash Flow (non-GAAP) $37 $188 $400—$500
($’s in Millions)
Gross Margin as a % of Revenue (GAAP) to Gross Margin as a % of Revenue Excluding Pension and Special Items
FY 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 FY 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 FY 2011 Q1 2012
Gross Margin as a % of Revenue (GAAP) 19.6% 19.2% 21.2% 21.6% 21.5% 21.0% 20.7% 21.9% 22.0% 23.9% 22.3% 24.0%
Pension expense 1.9% 3.0% 2.5% 2.4% 2.2% 2.4% 2.7% 2.5% 2.7% 2.1% 2.5% 1.8%
Impairment of assets related to an equity 0.5%
investment———————-
Acquisition related amortization of intangibles 0.4% 0.1% 0.4%
Gross Margin as a % of Revenue Excluding
Pension and Special Items 22.0% 22.2% 23.7% 24.0% 23.7% 23.4% 23.4% 24.4% 24.7% 26.4% 24.9% 26.2%