News

Pension expenses hurt NCR's 3Q '03 profits

October 23, 2003

DAYTON, Ohio - NCR Corporation's (NYSE:NCR - News)'s third-quarter profit fell 56 percent, amid a slight revenue decline and higher pension expense, but earnings-per-share were well above the company's guidance and Wall Street's mean estimate.

NCR said net income decreased to $18 million, or 19 cents a share, from $41 million, or 42 cents a share, in 2002's third quarter.

The results include a $50 million year-over-year negative impact from pension expense. Excluding this impact, the company said it generated a "substantial" improvement in operating earnings. Pension costs for the quarter were $31 million, compared with pension income of $19 million a year earlier. Pension costs have risen due to the drop in the stock market since the run-up of the 1990s and changes in interest rates.

Revenue for the third quarter slipped 1.6 percent to $1.36 billion from $1.38 billion in 2002's third quarter, including a benefit of four percentage points on foreign currency fluctuations.

Revenues from NCR's Teradata data warehouse business fell 4 percent due to restrained capital spending on big-ticket items. ATM sales fell 6 percent on weaker-than-expected installations in the Asia-Pacific region.

The Financial Self Service segment, which includes ATMs, generated third-quarter revenue of $271 million, down 6 percent from 2002's third quarter. The company said revenue growth in the Americas and Europe/Middle East/Africa (EMEA) regions offset a slower-than-anticipated pace of ATM installations in the Asia/Pacific region.

NCR received ATM orders from nine of the top 15 banks in the United States valued in excess of $45 million. In the EMEA region, NCR received orders from three major banks in the UK valued at $21 million. In addition, NCR won four deals in Germany valued in excess of $9 million.

In the Asia Pacific region, deals were won at three major banks in China valued at more than $30 million, including China's first multivendor APTRA Edge software order at the Industrial and Commercial Bank of China. NCR also received orders from three Indian banks valued in excess of $10 million.

The Data Warehousing segment reported third-quarter revenue of $274 million, down 4 percent from 2002's third quarter. The Retail Store Automation segment generated a stronger-than-expected $210 million in revenue, up 16 percent from $181 million in 2002's third quarter.

NCR Chief Executive Mark Hurd said he is "pleased" with the progress the company has made in its ongoing restructuring plan, and he now expects NCR to deliver more than $60 million in cost savings in 2003 as it moves toward the goal of $250 million.

For the fourth quarter, NCR expects revenue for each of its core business segments to be roughly flat, but said a 15 percent to 25 percent decline in the "other" segment should cause total revenue to be flat to down 3 percent in the period. NCR also expects a weaker dollar to aid fourth-quarter revenue comparisons by three to four percentage points.

As a result, NCR projects fourth-quarter earnings of 55 cents to 60 cents a share, reflecting continued progress in improving operational efficiency and an unpredictable capital spending environment.