Media releases are provided as is by companies and have not been edited or checked for accuracy. Any queries should be directed to the company itself.

NCR Reports Fourth-Quarter 2004 Results

  • 28 January, 2005 12:45

<p>NCR today announced fourth-quarter 2004 financial results, generating double-digit growth in three of its core product segments – Retail Store Automation, Financial Self Service and Teradata Data Warehousing.</p>
<p>Teradata’s key highlights include:</p>
<p>* Record revenue of $412 million – 14 percent growth from the fourth quarter of 2003</p>
<p>* Fourth quarter year-over-year revenue included a 3 percentage benefit from fluctuations</p>
<p>* Operating income of $72 million increased 18 percent from the fourth quarter of 2003</p>
<p>* Improvement in services profitability</p>
<p>SYDNEY, 28 January 2005 – NCR Corporation (NYSE: NCR) today reported earnings of $1.30 per pre-stock-split diluted share and revenue of $1.79 billion for the quarter ended Dec. 31, 2004. The year-over-year revenue increase of 9 percent includes 3 percentage points of benefit from foreign currency fluctuations.</p>
<p>Operating income for the fourth quarter was $129 million versus $113 million in the prior-year period. Included in NCR’s fourth-quarter operating results was $33 million of pension expense, compared to the $26 million of pension expense included in the fourth quarter of 2003.</p>
<p>NCR reported fourth-quarter net income of $124 million, or $1.30 per diluted share, versus net income of $80 million, or $0.84 per diluted share, in the fourth quarter of 2003.</p>
<p>These results include a $13 million gain from a real estate transaction, $5 million of costs associated with exiting real estate facilities and the release of a $9 million reserve the company established in prior years when it anticipated losses on the sale of specifically identified subsidiaries, primarily in Africa. The company now plans to continue operations in these countries.</p>
<p>Excluding these items, earnings per share for the fourth quarter were $1.14(1). NCR’s tax rate for the fourth quarter of 2004 was 16 percent versus the 25 percent effective tax rate estimated at the end of the third quarter of 2004. The lower tax rate in the fourth quarter was due to an increased proportion of operating profits attributable to several foreign operations, which have lower effective tax rates due to prior-year losses. NCR’s earnings per share for the quarter would have been $1.02 if the 25 percent effective tax rate included in the company’s fourth quarter guidance had been applied to NCR’s earnings, excluding the items described above. According to First Call, the mean estimate among Wall Street analysts for the fourth quarter was $0.77 per share, on a pre-stock-split basis.</p>
<p>“The fourth quarter was one of the strongest quarters ever for NCR in terms of both revenue growth and operating profit. A favourable market environment enabled us to generate double-digit growth in our three core product segments, which positively leveraged our initiatives to improve the operating model at NCR,” said Mark Hurd, president and chief executive officer of NCR.</p>
<p>“Entering 2005, we remain focused on making continued improvements to our operating model, including our actions to restructure our customer services business and stimulate revenue growth. Additionally, our improving operating model generates more free cash flow, which will allow us greater flexibility to invest for earnings-per-share expansion,” said Hurd.</p>
<p>Operating Segment Results</p>
<p>Teradata Data Warehousing</p>
<p>NCR’s Teradata Data Warehousing segment reported record fourth-quarter revenue of $412 million, up 14 percent from the fourth quarter of 2003. The fourth-quarter year-over-year revenue comparison included a 3 percentage point benefit from currency fluctuations. Operating income of $72 million increased 18 percent from the fourth quarter of 2003 due to higher volume, improvement in services profitability and the positive effect of currency fluctuations.</p>
<p>Financial Self Service</p>
<p>The Financial Self Service segment generated record fourth-quarter revenue of $451 million, up 15 percent from the year-ago period. Fourth-quarter revenue growth included a year-over-year benefit of 4 percentage points from currency fluctuations.</p>
<p>Operating Income of $88 million increased 14 percent from the fourth quarter of 2003 due to higher volume and expense reductions.</p>
<p>Retail Store Automation</p>
<p>For the fourth quarter of 2004, Retail Store Automation generated $270 million of revenue, up 15 percent from the fourth quarter of 2003. The fourth-quarter year-over-year revenue comparison for Retail Store Automation included a benefit of 3 percentage points from currency fluctuations.</p>
<p>Retail Store Automation generated $18 million of operating income in the quarter, an increase of 29 percent from the prior-year period, due to increased volume, expense reductions and the positive effect of currency fluctuations.</p>
<p>Customer Services</p>
<p>Customer Services reported revenue of $482 million, the same as generated in the fourth quarter of 2003. The fourth-quarter year-over-year revenue comparison for Customer Services included a benefit of 3 percentage points from currency fluctuations.</p>
<p>The Customer Services operating segment generated $5 million of operating income in the quarter, versus $6 million of operating income in the fourth quarter of 2003. Operating profit was comparable to the fourth quarter of 2003, but better than expected, as actions to reduce cost offset continued pricing pressure and the remaining effects of declining revenue from exited businesses. The company’s cost-reduction and revenue-mix actions are expected to improve Customer Services profitability in 2005.</p>
<p>Non-Operating Items</p>
<p>Other Income of $18 million in the fourth quarter of 2004 compared to $6 million of Other Expense in the prior-year period. Other Income in the fourth quarter of 2004 included a</p>
<p>$13 million gain from a real estate transaction and the release of a $9 million reserve the company established in prior years when it anticipated losses on the sale of specifically identified subsidiaries, primarily in Africa. Due to a renewed/realigned operating strategy, the company now plans to continue operations in these countries.</p>
<p>The company’s tax rate of 16 percent for the fourth quarter was lower than the 25 percent effective tax rate estimated at the end of the third quarter of 2004, due to more of the company’s profit being generated in several foreign countries, which have lower effective tax rates due to prior-year losses. NCR’s total-year effective tax rate for 2004 was 20 percent, excluding the benefit of an $85 million tax item in the second quarter. NCR expects its effective tax rate for 2005 to be 25 percent.</p>
<p>During the fourth quarter of 2004, the company repurchased approximately 2.6 million shares of NCR common stock for approximately $157 million. In 2004, NCR repurchased approximately 8.6 million shares, which more than offset 6.6 million options that were exercised during the year.</p>
<p>Cash Flow</p>
<p>NCR increased its cash from operations in the fourth quarter to $195 million from $167 million in the fourth quarter of 2003. Capital expenditures in the fourth quarter of 2004 were $71 million, comparable to the $70 million of capital expenditures in the year-ago period. NCR generated $124 million of free cash flow (cash from operations less capital expenditures) in the fourth quarter of 2004 versus the $97 million of free-cash-flow generation in the year-ago period.</p>
<p>For the year, cash provided by operating activity was $436 million. After capital expenditures of $254 million, NCR produced $182 million of free cash flow in 2004.</p>
<p>Balance Sheet</p>
<p>NCR ended the fourth quarter with $750 million in cash, cash equivalents and short-term investments, a meaningful increase from the $625 million cash balance on Sept. 30, 2004. NCR’s cash balance increased due to strong operating cash flow in the fourth quarter. As of Dec. 31, 2004, NCR had short- and long-term debt of $309 million versus $311 million on Sept. 30, 2004.</p>
<p>Outlook</p>
<p>Assuming 3 percent to 4 percent revenue growth in 2005, NCR is further increasing its guidance for 2005 earnings per share, excluding stock option expense, to $2.40 to $2.50, on a pre-stock-split basis. On a post-stock-split basis, this revised guidance range equates to $1.20 to $1.25 per share.</p>
<p>For the first quarter, NCR expects 2 percent to 3 percent revenue growth. On a pre-stocksplit basis, earnings per share in the seasonally weak first quarter are expected to be $0.04 to $0.10 versus the $0.05 loss the company reported for the first quarter of 2004. On a post-stocksplit basis, earnings per share are expected to be in the $0.02 to $0.05 range, versus the $0.03 loss in the first quarter of 2004.</p>
<p>About NCR Corporation</p>
<p>NCR Corporation (NYSE: NCR) is a leading global technology company helping businesses build stronger relationships with their customers. NCR’s ATMs, retail systems, Teradata® data warehouses and IT services provide Relationship Technology™ solutions that maximise the value of customer interactions and help organisations create a stronger competitive position. Based in Dayton, Ohio, NCR (www.ncr.com) employs approximately 28,500 people worldwide.</p>
<p># # #</p>
<p>NCR and Teradata are trademarks or registered trademarks of NCR Corporation in the United States and other countries.</p>

Most Popular