NCR Reports Fourth-Quarter Results Data warehouse profitability driven by lower expense structure

and higher-than-expected revenues



    DAYTON, Ohio, Jan. 22 /PRNewswire/ -- NCR Corporation (NYSE:   NCR) today
 reported that revenue for the fourth quarter ended December 31, 2001,
 decreased to $1.60 billion, an 11 percent decline from the $1.79 billion
 reported in the year-ago period.  On a local currency basis, revenue decreased
 10 percent.
     Net income was $71 million, or $0.72 per diluted share, for the fourth
 quarter compared to $90 million, or $0.90 per diluted share, in the year-ago
 period.  Excluding special items, fourth-quarter net income was $72 million,
 or $0.73 per diluted share, compared to $105 million, or $1.05 per diluted
 share in the fourth quarter of 2000.
     Highlights for the quarter include:
 
     * Teradata data warehousing showed strength in a difficult economy, with
       revenue increasing 32 percent over the 2001 third quarter, while down 8
       percent from the fourth quarter of 2000, which was Teradata's best-ever
       quarter.  The number of new customer wins continued at a pace consistent
       with last year's fourth quarter.
     * Top-line performance and expense rationalization enabled Teradata to
       achieve its first material quarterly operating profit and positions
       Teradata for continued profitability in 2002.
     * Despite a revenue decline, Financial Self Service maintained operating
       margins at 17 percent due to lower product costs and a reduced expense
       structure.
     * Retail Store Automation lowered expenses by more than $10 million in the
       fourth quarter, and approximately $40 million for the year, positioning
       the business for improved profitability as capital spending returns.
 
     Commenting on the quarterly results, NCR Chairman and Chief Executive
 Officer Lars Nyberg said, "NCR performed well in a difficult environment
 driven by product cost reductions and effective expense management.
 Particularly encouraging is Teradata's success in reducing its breakeven
 point, resulting in fourth-quarter profitability, while continuing to gain
 market share quarter over quarter."
     "More importantly, our success in lowering the expense structure within
 each of our core solutions better positions NCR for enhanced profitability
 when the economic environment improves," Nyberg said.
 
                                    Revenue
     By solution, Data Warehousing revenue exceeded expectations, decreasing
 only 8 percent for the quarter compared to the prior-year period.  Revenues
 for Retail Store Automation, Financial Self Service and Customer Services
 Maintenance declined in the quarter by 23 percent, 5 percent and 4 percent,
 respectively.  Systemedia revenue increased 1 percent, while Payment and
 Imaging revenue decreased 4 percent in the quarter.
     For the full year, NCR's revenue declined 1 percent, primarily due to
 exited businesses, the impact of the slower economy and currency translation.
 In constant currency, 2001 revenue increased 2 percent versus the prior year.
 For the full year, Data Warehousing revenues were flat compared to 2000, while
 Financial Self Service and Customer Services Maintenance revenues increased 5
 percent and 4 percent, respectively.  Currency translation negatively affected
 revenue growth by 3 percentage points for the Financial Self Service business.
 Retail Store Automation revenues declined 7 percent, while Systemedia revenue
 was flat compared to last year, and Payment and Imaging revenue increased 1
 percent.
 
                                  Gross Margin
     Total gross margin for NCR products and services was flat quarter over
 quarter at 32.1 percent, with higher product gross margins offsetting lower
 customer service gross margins. Product gross margins increased 1.6 points to
 38.5 percent of revenue, while services gross margins decreased 1.3 points to
 24.8 percent of revenue.  Excluding special items, total gross margin for the
 fourth quarter decreased 1.0 point to 32.1 percent.
 
                                    Expenses
     Total expenses in the fourth quarter were $402 million compared to $463
 million in last year's fourth quarter due to the company's actions to improve
 profitability.  Goodwill amortization included in selling, general and
 administrative expense in the quarter was $18 million compared with $14
 million in the year-ago period.  Research and development expenses were $72
 million, or 4.5 percent of revenue, versus $87 million, or 4.9 percent of
 revenue, in the prior year.
     For 2001, total expenses declined by $54 million to $1.61 billion compared
 to last year.  Goodwill amortization included in selling, general and
 administrative expense for the year was $67 million compared with $33 million
 last year.  Research and development expenses were $293 million, or 5.0
 percent of revenue, versus $333 million, or 5.6 percent of revenue, in 2000.
 
                            Operating and Net Income
     Operating income for the quarter was $111 million compared with $113
 million a year ago.  Excluding special items, operating income for the quarter
 was $113 million compared to $131 million for the fourth quarter of 2000.
 Other expense in the quarter was $4 million compared to $18 million of other
 income in the year-ago quarter.  (Included in Other expense for the quarter
 was $20 million related to a gain on the sale of a non-strategic business and
 the gain on an investment.  Offsetting these gains were investment basis
 write-downs, net interest expense, real estate losses and miscellaneous other
 items.)
     For the full year, operating income was $186 million versus $205 million
 for 2000.  Excluding special items, full-year operating income was $234
 million compared to $270 million for the full year 2000.  Other expense in
 2001 was $62 million contrasted to other income of $70 million in 2000.
     Fourth-quarter net income was $71 million compared with $90 million
 reported a year ago.  Reported earnings per diluted share were $0.72 compared
 to $0.90 in the prior year. Excluding special items, fourth-quarter net income
 was $72 million, or $0.73 per diluted share, compared to net income and
 earnings per diluted share of $105 million and $1.05 in the fourth quarter of
 last year.  The effective tax rate for the quarter was 33 percent.  The
 weighted average number of shares outstanding on a fully diluted basis
 decreased to 99.1 million in the fourth quarter from 99.8 million a year ago.
     For the year, reported net income was $217 million, or $2.18 per diluted
 share, compared to $178 million, or $1.82 per diluted share, in 2000.
 Excluding special items, net income was $142 million, or $1.43 per diluted
 share, compared to 2000 net income and diluted earnings per share of  $229
 million and $2.34, respectively.
     The fourth quarter of 2001 included the impact of $2 million of
 integration charges related to an acquisition.  Special items in the fourth
 quarter of 2000 included $16 million of charges related to the company's 1999
 restructuring plan and $2 million of acquisition integration charges.
     Special items in 2001 included a $40 million charge to write down loans
 and receivables from Credit Card Center, $9 million of acquisition-related
 integration expenses, a $138 million release of prior-year tax-exposure
 reserves, the $4 million after-tax cumulative effect of adopting SFAS 133 and
 a $40 million charge to increase reserves for environmental matters.  For
 2000, special items included a $38 million charge related to the company's
 1999 restructuring plan, $25 million of in-process research and development
 charges, and $2 million of acquisition integration charges.
     Excluding goodwill amortization expense and special items, earnings per
 diluted share would have been $0.89 and $2.09 for the quarter and year,
 respectively.  In 2000, earnings per diluted share excluding goodwill
 amortization expense and special items would have been $1.19 for the fourth
 quarter and $2.67 for the full year.
 
                                 Balance Sheet
     NCR ended the fourth quarter with $336 million in cash and short-term
 investments, up from $284 million on September 30, 2001.  As of December 31,
 2001, NCR had debt of $148 million.  During the quarter, NCR repurchased
 150,000 shares for approximately $5 million.  For the year, NCR repurchased
 1.2 million shares for approximately $46 million.
 
                                    Outlook
     NCR's 2002 outlook assumes improvement in economic conditions in the
 second half of 2002.  As a result, the company expects relatively flat
 revenues for the year versus 2001.  Data Warehousing revenues are expected to
 increase 10 percent, while revenues for Financial Self Service are expected to
 increase 0-5 percent.  Retail Store Automation is anticipated to be down 0-5
 percent.  Customer Services maintenance and Systemedia are expected to be
 relatively flat.  Payment and Imaging revenue will decline 20 percent due to
 the sale of its item-processing outsourcing business in the fourth quarter of
 2001.  Other revenue is expected to decrease 15 percent, driven by declining
 revenues from exited businesses.  Operating income is expected to be
 approximately $350 million with earnings per diluted share in the range of
 $2.25 - $2.30.
     First-quarter 2002 revenue for NCR is expected to decline 8-10 percent
 against a relatively strong comparison.  Data Warehousing revenue for the
 first quarter is expected to be down 0-5 percent against a difficult prior-
 year comparison, while Retail Store Automation revenue is expected to be down
 25 percent.  Financial Self Service and Customer Services revenues will each
 be down 0-5 percent.  Systemedia revenues are expected to be flat, with
 Payment and Imaging and Other revenues declining 25 percent each.  The company
 expects earnings per share in the $0.00 - $0.05 range for the first quarter.
 
     About NCR Corporation
     NCR Corporation (NYSE:   NCR) is a leader in providing Relationship
 Technology(TM) solutions to customers worldwide in the retail, financial,
 communications, manufacturing, travel and transportation, and insurance
 markets.  NCR's Relationship Technology solutions include privacy-enabled
 Teradata(R) warehouses and customer relationship management (CRM)
 applications, store automation and automated teller machines (ATMs).  The
 company's business solutions are built on the foundation of its long-
 established industry knowledge and consulting expertise, value-adding
 software, global customer support services, a complete line of consumable and
 media products, and leading edge hardware technology.  NCR employs 31,400 in
 more than 100 countries, and is a component stock of the Standard & Poor's 500
 Index.  More information about NCR and its solutions may be found at
 www.ncr.com .
 
    NCR and Teradata are trademarks or registered trademarks of NCR Corporation
 in the United States and other countries.
 
     Other Information
     Detailed financial information regarding NCR's fourth-quarter and 2001
 results is available on NCR's Web site http://www.ncr.com.  NCR's Chairman and
 Chief Executive Officer Lars Nyberg, and Senior Vice President and Chief
 Financial Officer Earl Shanks, will discuss the company's financial
 performance during a conference call today at 10:30 A.M. (ET).  Live access
 and a replay of the conference call is available from NCR's Web site at
 http://investor.ncr.com /.
 
     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: the impact of recent terrorist activity on the economy
 or the markets in general or on the ability of NCR to meet its commitments to
 customers, the ability of NCR's suppliers to meet their commitments to NCR, or
 the timing of purchases by NCR's customers; the timely development, production
 or acquisition, and market acceptance of new and existing products and
 services; shifts in market demands; continued competitive factors and pricing
 pressures; short product cycles and rapidly changing technologies; turnover of
 workforce and the ability to attract and retain skilled employees; tax rates;
 ability to execute the company's business plan; general economic and business
 conditions; and other factors detailed from time to time in the company's
 Securities and Exchange Commission reports and the company's annual reports to
 stockholders.  The company does not undertake any obligation to publicly
 update or revise any forward-looking statements, whether as a result of new
 information, future events or otherwise.
 
 
                                 NCR CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in millions, except per share amounts)
 
                                           For the Periods Ended December 31
                                              Three Months    Twelve Months
                                             2001     2000    2001     2000
     Revenue
 
     Products                                $850   $1,000   $3,048   $3,178
     Services                                 750      792    2,869    2,781
 
     Total Revenue                          1,600    1,792    5,917    5,959
 
     Cost of Products                         523      631    1,947    2,000
     Cost of Services                         564      585    2,176    2,092
 
     Total Gross Margin                       513      576    1,794    1,867
       % of Revenue                          32.1%    32.1%    30.3%    31.3%
 
     Selling, General and Administrative
      Expenses                                330      376    1,315    1,329
     Research and Development Expenses         72       87      293      333
 
     Income from Operations                   111      113      186      205
       % of Revenue                           6.9%     6.3%     3.1%     3.4%
 
     Interest and Other (Expense) Income,
      Net                                      (4)      18      (62)      70
 
     Income before Income Taxes and
      Cumulative Effect of Accounting
      Change                                  107      131      124      275
       % of Revenue                           6.7%     7.3%     2.1%     4.6%
 
     Income Tax Expense (Benefit)              36       41      (97)      97
 
     Income before Cumulative Effect of
      Accounting Change                        71       90      221      178
     Cumulative Effect of Accounting
      Change, Net of Tax (SFAS 133)             -        -       (4)       -
 
     Net Income                               $71      $90     $217     $178
       % of Revenue                           4.4%     5.0%     3.7%     3.0%
 
     Net Income per Common Share
       Basic before Cumulative Effect of
        Accounting Change                   $0.73    $0.93    $2.29    $1.87
       Cumulative Effect of Accounting
        Change (SFAS 133)                       -        -    (0.04)       -
       Basic                                $0.73    $0.93    $2.25    $1.87
 
       Diluted before Cumulative Effect of
        Accounting Change                   $0.72    $0.90    $2.22    $1.82
       Cumulative Effect of Accounting
        Change (SFAS 133)                       -        -    (0.04)       -
       Diluted                              $0.72    $0.90    $2.18    $1.82
 
     Weighted Average Common Shares
      Outstanding
       Basic                                 97.0     95.9     96.7     95.1
       Diluted                               99.1     99.8     99.6     98.0
 
     2001 - YTD significant special items represent charges related to the
            write-down of loans and receivables with Credit Card Center ($40
            million), integration charges related to acquisitions ($9 million;
            $2 million in Q4), the release of prior-year tax-exposure reserves
            ($138 million), the after-tax, cumulative effect of adopting SFAS
            133 ($4 million) and a charge for long-term liabilities associated
            with environmental matters ($40 million).
     2000 - YTD significant special items represent restructuring and other
            related charges ($38 million; $16 million in Q4) in connection with
            the 1999 restructuring plan, in-process research and development
            charges related to acquisitions ($25 million) and integration
            charges related to acquisitions ($2 million; $2 million in Q4).
 
 
                                  NCR CORPORATION
                        IMPACT OF SIGNIFICANT SPECIAL ITEMS
                      (in millions, except per share amounts)
 
                                            For the Periods Ended December 31
                                              Three Months     Twelve Months
                                             2001     2000     2001     2000
 
     Revenue                                $1,600   $1,792   $5,917   $5,959
 
     Gross Margin - base business              514      593    1,800    1,905
       % of Revenue                           32.1%    33.1%    30.4%    32.0%
     Special items                              (1)     (17)      (6)     (38)
 
     Reported Gross Margin                     513      576    1,794    1,867
       % of Revenue                           32.1%    32.1%    30.3%    31.3%
 
     Expenses - base business                  401      462    1,566    1,635
       % of Revenue                           25.1%    25.8%    26.5%    27.4%
     Special items                               1        1       42       27
 
     Reported Expenses                         402      463    1,608    1,662
       % of Revenue                           25.1%    25.8%    27.2%    27.9%
 
     Income from Operations - base
      business                                 113      131      234      270
     Special items                              (2)     (18)     (48)     (65)
 
     Reported Income from Operations           111      113      186      205
 
     Other (Expense) Income, Net - base
      business                                  (4)      18      (21)      70
     Special items                               -        -      (41)       -
 
     Reported Other (Expense) Income            (4)      18      (62)      70
 
     Income before Income Taxes - base
      business                                 109      149      213      340
     Special items                              (2)     (18)     (89)     (65)
 
     Reported Income before Income Taxes
      and Cumulative Effect of Accounting
      Change                                   107      131      124      275
 
     Income Taxes - base business               37       44       71      111
     Income Taxes related to special items      (1)      (3)    (168)     (14)
 
     Reported Income Tax Expense (Benefit)      36       41      (97)      97
 
     Cumulative Effect of Accounting
      Change, Net of Tax (SFAS 133)              -        -       (4)       -
 
     Net Income - base business                 72      105      142      229
     Special items                              (1)     (15)      75      (51)
 
     Reported Net Income                       $71      $90     $217     $178
 
     Earnings per Diluted Share - base
      business                               $0.73    $1.05    $1.43    $2.34
     Earnings per Diluted Share - special
      items                                  (0.01)   (0.15)    0.75    (0.52)
     Reported Earnings per Diluted Share     $0.72    $0.90    $2.18    $1.82
 
     2001 - YTD significant special items represent charges related to the
            write-down of loans and receivables with Credit Card Center ($40
            million), integration charges related to acquisitions ($9 million;
            $2 million in Q4), the release of prior-year tax-exposure reserves
            ($138 million), the after-tax, cumulative effect of adopting
            SFAS 133 ($4 million) and a charge for long-term liabilities
            associated with environmental matters ($40 million).
     2000 - YTD significant special items represent restructuring and other
            related charges ($38 million; $16 million in Q4) in connection with
            the 1999 restructuring plan, in-process research and development
            charges related to acquisitions ($25 million) and integration
            charges related to acquisitions ($2 million; $2 million in Q4).
 
 
                                  NCR CORPORATION
             CONSOLIDATED REVENUE SUMMARY and OPERATING INCOME SUMMARY
                                   (in millions)
 
                                         For the Periods Ended December 31
                                        Three Months         Twelve Months
                                                     %                     %
                                     2001    2000  Change  2001    2000  Change
 
     Revenue By Solution Offering
 
     Data Warehousing
     Solution                         $266    $288   (8%)   $957    $961    -
     Customer Services Maintenance      51      43   19%     192     173   11%
     Total Data Warehousing            317     331   (4%)  1,149   1,134    1%
 
     Financial Self Service
     Solution                          349     369   (5%)  1,136   1,077    5%
     Customer Services Maintenance     119     107   11%     479     434   10%
     Total Financial Self Service      468     476   (2%)  1,615   1,511    7%
 
     Retail Store Automation
     Solution                          227     296  (23%)    834     894   (7%)
     Customer Services Maintenance     111     119   (7%)    438     465   (6%)
     Total Retail Store Automation     338     415  (19%)  1,272   1,359   (6%)
 
     Systemedia                        138     137    1%     503     502    -
 
     Payment and Imaging
     Solution                           52      54   (4%)    186     185    1%
     Customer Services Maintenance      26      30  (13%)    115     119   (3%)
     Total Payment and Imaging          78      84   (7%)    301     304   (1%)
 
     Other
     Solution                          114     176  (35%)    483     589  (18%)
     Customer Services Maintenance     147     173  (15%)    594     560    6%
     Total Other                       261     349  (25%)  1,077   1,149   (6%)
 
     Total Revenue                  $1,600  $1,792  (11%) $5,917  $5,959   (1%)
 
     Memo:  Total Customer Services
      Maintenance Revenue             $454    $472   (4%) $1,818  $1,751    4%
 
     Operating Income (Loss) by
      Solution Offering
 
     Data Warehousing                  $18     $(7)         $(32)   $(34)
     Financial Self Service             80      81           249     201
     Retail Store Automation            10      17             4     (17)
     Systemedia                          1       4             9      15
     Payment and Imaging                15      12            44      42
     Other                             (11)     24           (40)     63
 
     Operating Income Excluding
      Special Items                    113     131           234     270
 
     Special items                      (2)    (18)          (48)    (65)
 
     Total Operating Income           $111    $113          $186    $205
 
     Goodwill Amortization
      Reflected in
      Operating Income                 $18     $14           $67     $33
 
     2001 - YTD significant special items in operating income represent charges
            related to the write-down of loans and receivables with Credit Card
            Center ($39 million) and integration charges related to
            acquisitions ($9 million; $2 million in Q4).
     2000 - YTD significant special items in operating income represent
            restructuring and other related charges ($38 million; $16 million
            in Q4) in connection with the 1999 restructuring plan, in-process
            research and development charges related to acquisitions ($25
            million) and integration charges related to acquisitions ($2
            million; $2 million in Q4).
 
 
                                  NCR CORPORATION
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (in millions)
 
                                                   December 31      December 31
                                                       2001              2000
 
     Assets
 
     Current assets
       Cash and short-term investments                 $336              $357
       Accounts receivable, net                       1,126             1,338
       Inventories                                      280               288
       Other current assets                             221               251
 
     Total Current Assets                             1,963             2,234
 
     Property, plant and equipment, net                 853               960
     Other assets                                     2,039             1,912
 
     Total Assets                                    $4,855            $5,106
 
     Liabilities and Stockholders' Equity
 
     Current liabilities
       Short-term borrowings                         $138               $96
       Accounts payable                               362               521
       Other current liabilities                    1,018             1,219
 
     Total Current Liabilities                        1,518             1,836
 
     Long-term debt                                      10                11
     Other long-term liabilities                      1,300             1,501
 
     Total Liabilities                                2,828             3,348
 
     Total Stockholders' Equity                       2,027             1,758
 
     Total Liabilities and Stockholders'
      Equity                                         $4,855            $5,106
 
 
                                  NCR CORPORATION
                  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (in millions)
 
                                             For the Periods Ended December 31
                                               Three Months     Twelve Months
                                               2001     2000     2001     2000
     Operating Activities
     Net Income                                 $71      $90     $217     $178
 
     Adjustments to reconcile net income to
      cash provided by Operating Activities
        Depreciation and amortization           106       89      423      361
        Deferred income taxes                    14        9     (127)      32
        Other (gain) loss, net                  (15)       4      (23)      (8)
        Changes in assets and liabilities
           Receivables                          (79)    (141)     212      (80)
           Inventories                           31       39        8       28
           Current payables                      15       99     (146)      80
           Customer deposits and deferred
            service revenue                     (21)     (35)     (25)     (42)
           Timing of disbursements for
            employee severance and pension      (51)     (31)    (263)    (248)
           Other assets and liabilities         (24)     (16)    (130)    (130)
 
     Net Cash Provided by Operating
      Activities                                 47      107      146      171
 
     Investing Activities
     Short-term investments, net                 18      130        9      182
     Net expenditures and proceeds for
      service parts                             (15)     (32)    (117)    (108)
     Expenditures for property, plant and
      equipment                                 (28)     (53)    (141)    (216)
     Proceeds from sales of property, plant
      and equipment                              14        1       40      173
     Business acquisitions, investments and
      divestitures                               41     (248)      38     (319)
     Other investing activities                 (17)      (6)     (62)     (79)
 
     Net Cash Provided by (Used in)
      Investing Activities                       13     (208)    (233)    (367)
 
     Financing Activities
     Purchase of Company common stock           (10)     (73)     (60)    (110)
     Short-term borrowings, net                   3        7       42       15
     Long-term debt, net                         (1)     (26)      (1)     (29)
     Other financing activities                  22       62      106      117
 
     Net Cash Provided by (Used in)
      Financing Activities                       14      (30)      87       (7)
 
     Effect of exchange rate changes on
      cash and cash equivalents                  (4)      (4)     (12)     (21)
 
     Increase (Decrease) in Cash and Cash
      Equivalents                                70     (135)     (12)    (224)
     Cash and Cash Equivalents at Beginning
      of Period                                 265      482      347      571
 
     Cash and Cash Equivalents at End of
      Period                                   $335     $347     $335     $347
 
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SOURCE NCR Corporation

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