STRATEGIC PARTNERS
January 13, 2003
DAYTON, Ohio -- NCR Corporation (NYSE:NCR) says that it will include pre-tax, real estate consolidation and restructuring and asset-impairment charges of approximately $43 million in its 2002 fourth-quarter results, which is expected to result in the company reporting lower-than-expected operating income.
According to a news release, NCR expects to report fourth quarter operating income of $75 million to $80 million, below its previous operating income guidance range of $100 million to $115 million.
According to the release, approximately $25 million of the charges relate to the company's previously announced re-engineering initiatives to improve the profitability of NCR and are primarily comprised of costs incurred from consolidation of facilities. Another $18 million of the charges relate to the impairment of marketable securities in Japan and the write-down of other assets.
NCR also says it expects to benefit from a lower annual effective tax rate for the quarter. Including the combined effect of the fourth-quarter charges and the lower tax rate, NCR expects to report earnings per share of approximately 50 cents.
NCR Senior Vice President and Chief Financial Officer Earl Shanks said in the release, "These charges are a result of our actions to better position NCR and to drive lower infrastructure costs. At the same time we focused on these initiatives, we also delivered solid operating results in the fourth quarter."
Shanks also noted in the release that, due to the poor performance of equity markets over the last few years and reduced actuarial assumptions, NCR's 2003 operating income will see a $169 million year-over-year decline related to its pension plan.
"We expect to partially offset this decline with improved operating performance of our businesses in 2003. This performance should enable us to continue improving the cash flow generation of the company, leading to positive free cash flow in 2003," Shanks said.
Including the effects of pension expense and approximately $50 million to $60 million of cost savings from re-engineering initiatives, NCR anticipates 2003's operating income to be approximately $90 million to $100 million and earnings per share of 45 cents to 50 cents.
Although re-engineering efforts should benefit NCR's financial results throughout 2003, the company says in the release that the first quarter will be challenging due to seasonal patterns and continued adverse market conditions.
NCR will release its 2002 fourth-quarter financial results on Jan. 23.
