NCR Corporation (NYSE: NCR) reported financial results today for the
three months ended June 30, 2013. Reported revenue of $1.54 billion
increased 9% from the second quarter of 2012. Second-quarter revenue
includes an unfavorable impact of 1% as a result of foreign currency
translation.
NCR reported second quarter income from continuing operations
(attributable to NCR) of $86 million, or $0.51 per diluted share,
compared to income from continuing operations (attributable to NCR) of
$89 million, or $0.54 per diluted share, in the second quarter of 2012.
Excluding pension and special items, non-GAAP income from continuing
operations(2) in the second quarter of 2013 was $182 million,
or $0.68 per diluted share, compared to $154 million, or $0.65 per
diluted share, in the prior-year period. An identification of those
special items, and the impact of pension and those special items on
income from continuing operations and diluted earnings per share, are
set forth in the supplemental non-GAAP reconciliation tables and
accompanying footnotes that are included following the "Note to
Investors" at the end of this earnings release.
“Solid second quarter results were driven by strong growth in our Retail
and Hospitality businesses and continued steady performance in Financial
Services,” said Bill Nuti, Chairman and CEO of NCR. “The growing
contribution of software and services offerings to our revenue mix is
delivering profitable growth and margin expansion, further aided by the
strong performance of our recently acquired Retalix business.
Innovations in key transaction technology areas like omni-commerce and
financial services branch transformation are generating significant
customer activity across our core business verticals and further
differentiating NCR with our customers globally. We enter the second
half of the year confident in our outlook, with strong momentum across
our lines of business and a sharp focus on continuing to innovate and
deliver solutions that create growth opportunities for our customers.”
Second Quarter 2013 Operating Segment Results(2)
Financial Services
NCR's Financial Services segment generated second quarter revenue of
$782 million, a decrease of 1% from the second quarter of 2012. The
decrease was driven by declines in the Americas theater partially offset
by growth in the Asia Middle East Africa (AMEA) theater. Foreign
currency fluctuations negatively impacted the year-over-year revenue
comparison by 1%.
Operating income for Financial Services was $95 million in the second
quarter of 2013 as compared to $86 million in the second quarter of
2012. The increase in operating income was driven by lower service
delivery costs and reduced selling and research and development expenses
in the second quarter of 2013 as compared to the second quarter of 2012.
The lower service delivery costs were primarily due to reimbursement
from a supplier of some previously incurred costs.
Retail Solutions
The Retail Solutions segment generated revenue of $515 million in the
second quarter of 2013, an increase of 26% from the second quarter of
2012. The increase was driven by growth in the Americas, Europe and AMEA
theaters, which includes the impact of the Retalix business. Revenue
growth was 6% in the second quarter of 2013 excluding the impact of the
Retalix business. The year-over-year revenue comparison was negatively
impacted by 2% due to foreign currency fluctuations.
Operating income for Retail Solutions was $49 million in the second
quarter of 2013 as compared to $28 million in the second quarter of
2012. The increase was driven by increased revenues, a higher mix of
software and the contribution of the Retalix business as noted above.
Hospitality
The Hospitality segment generated revenue of $158 million in the second
quarter of 2013, an increase of 22% from the second quarter of 2012. The
increase was driven by growth in the Americas theater. Foreign currency
fluctuations negatively impacted the year-over-year revenue comparison
by 1%.
Operating income for Hospitality was $27 million in the second quarter
of 2013 compared to $21 million in the second quarter of 2012. The
increase was driven by a favorable mix of revenues slightly offset by
investment in sales, software as a service and research and development.
Emerging Industries
The Emerging Industries segment generated second quarter revenue of $80
million, a decrease of 5% from the second quarter of 2012. The decrease
was driven by declines in the Americas and Europe theaters. The
year-over-year revenue comparison was positively impacted by 2% due to
foreign currency fluctuations.
Operating income for Emerging Industries was $11 million in the second
quarter of 2013 as compared to $19 million in the second quarter of
2012. The decrease in operating income was due to the decline in revenue
and an unfavorable mix of revenues.
Second Quarter 2013 Business Highlights
Financial Services
In the Financial Services segment, NCR maintained its global leadership
position through the deployment of various advanced technologies and
solutions.
Strategic research and consulting firm RBR identified NCR as the world's
largest supplier of multivendor ATM middleware and applications. In
addition, the report showed that more financial institution ATMs in
North America and the Middle East and Africa region rely on NCR's APTRA™
software suite than any other provider.
Conestoga Bank, a full-service commercial bank serving Southeastern
Pennsylvania, decided to expand its interactive video banking program.
Conestoga was one of the first financial institutions in the country to
use interactive video tellers to conduct transactions beginning in 2012.
Conestoga is now expanding its use of video banking technology by
installing two additional personal teller machines at one of its
branches.
In addition, Wright-Patt Credit Union became the first financial
institution in the greater Dayton, Ohio region to adopt new video teller
services for its members. Cadence Bank, a leading regional bank serving
the Southeast and Texas, announced that it will be the first bank in
Birmingham, Alabama to begin using interactive video technology.
NCR also continued to expand availability and usability of its
multivendor software through certification of its NCR APTRA™ software by
Elan Financial Services. Elan's network supports more than 33,000 ATMs
for financial institutions across the U.S., many of which operate
mixed-vendor fleets comprised of ATMs from NCR and other manufacturers.
The certification of NCR APTRA™ will allow U.S. deployers to consolidate
a single ATM software infrastructure across their self-service fleets.
Dollar Bank agreed to replace 60 older non-NCR ATMs with NCR's most
advanced deposit-taking ATMs, NCR SelfServ™ with Scalable Deposit Module
(SDM). NCR SelfServ™ ATMs with SDM make the deposit portion of an ATM
transaction twice as fast. SDM is the only technology in deployment that
allows consumers to deposit both cash and checks simultaneously, in any
orientation, through a single slot. Additionally, all of Dollar Bank's
ATMs will run on NCR APTRA™ Edge multivendor software.
ING DIRECT deployed NCR's APTRATM Passport for Mobile,
branded as Cheque-In™. Cheque-In™ is a simple and convenient way for
consumers to deposit checks into their accounts remotely and allows
clients to take a picture of their check using their mobile device and
have it deposited immediately into their ING DIRECT account. This is the
first such feature available on all major platforms, including Apple
iPhone®, iPad®, iPod®, AndroidTM Phone, AndroidTM
Tablet, BlackBerry® Mobile devices with BB10 OS, and tablets
running Windows® 8.
NCR and ANZ Bank New Zealand (ANZ) agreed to conduct Asia-Pacific's
biggest deployment of NCR's next-generation teller cash recycler. NCR
Cash Recycler 11 quickly accepts and dispenses cash for teller staff,
removing barriers within the branch and allowing staff to focus their
attention on the customer rather than counting bank notes. At ANZ, NCR
Cash Recycler 11 will run on NCR APTRA™ Cash Connect advanced software
to help significantly reduce the risk of accepting and distributing
counterfeit banknotes.
NCR installed the first EMV compliant ATM in the U.S. at People's United
Bank. EMV is a set of specifications defined by payments companies
Europay International, MasterCard Worldwide and Visa to define
interoperability standards for smart card transactions. The
specifications - also known as “chip and PIN” - have been in place in
countries around the world since 1996 and include a microprocessor chip
on cards as an eventual replacement for the magnetic stripe, which has
been used to carry card data since the 1960s. The EMV upgrade includes
upgrades to card reader hardware as well as software.
Nationwide Building Society, a leading U.K. retail banking organization,
chose NCR's Skimming Protection Solution as it seeks to offer
increasingly secure banking services, inspire consumer confidence and
drive customer loyalty. The deployment of the NCR security solution
across 424 cash machines in the U.K. will also help Nationwide improve
the availability and usability of its cash machines and manage business
risk more effectively.
Retail Solutions
In Retail Solutions, NCR was named the world's largest supplier of
retail self-checkout (SCO) technology in a new report titled “Global
EPOS and Self-Checkout 2013” published by RBR. According to RBR, NCR is
the leader in SCO shipments with a total of 70 percent ship share, an
increase of six percent in 2012. The nearest competitor had a 13.5
percent ship share, and the research found that NCR had more than double
the number of SCO shipments than all other competitors combined.
NCR Corporation and its Retalix division were named leaders by Gartner
in a study that assessed retail software companies on five primary CRM
capabilities: campaign management, loyalty, in-store CRM, customer
analytics and real-time offers. The study addressed a total of 32
capabilities, with Gartner deeming 17 of those capabilities critical.
Retalix placed No. 1 in CRM software, with 31 of 32 capabilities, and
NCR placed No. 2 in CRM software with 30 of 32 capabilities.
Suncor Energy selected NCR's Retalix StorePoint point-of-sale (POS) and
fuel management software for the company's Petro-Canada branded retail
network. Petro-Canada, known as “Canada's gas station,” has more than
1,500 retail outlets across the country and is rapidly expanding its use
of technology to enhance shopper experiences and drive shopper loyalty.
Suncor Energy chose StorePoint because the software met the company's
immediate needs and is easily expandable and adaptable to meet future
needs. The StorePoint solution can help Petro-Canada with forecourt fuel
management, back-office operations, pricing and promotions,
comprehensive replenishment management, and food service management.
Massdiscounters of South Africa, a leading retail division of MassMart
Management Group, deployed NCR's Retalix Transportation Management
software to improve its logistics operations by automating scheduling
processes, synchronizing yard and dock activities and optimizing inbound
and outbound shipments. Transportation Management is designed to help
Massdiscounters save labor and infrastructure costs and provides
enhanced supply chain productivity, compliance and visibility.
NCR Silver™, NCR's tablet and mobile-based POS system for small
businesses, continued to gain ground. NCR formed a strategic partnership
with Vantiv, Inc. to bring innovative POS technology integrated with
leading payments solutions to the small business market. Together NCR
and Vantiv have introduced Vantiv Mobile Checkout powered by NCR
Silver™. This easy-to-implement product provides single shop and small
chain owners a complete solution that makes managing their sales,
inventory, marketing and customers easier. The package includes the
payment processing services, software and cloud-based back-office
functions, and hardware peripherals that can transform a merchant's own
iPad® into a turnkey mobile POS system.
Spinx Company agreed to deploy NCR ConvenienceGo (C-Go) mobile shopping
technology to make fueling and shopping at the convenience store chain
easier. Spinx, which operates stores in North Carolina and South
Carolina, will roll out C-Go to 57 of its stores. C-Go is a mobile
shopping app that allows shoppers to initiate a fuel transaction, select
the amount of gas they want and pay with their smartphones.
Hospitality
In the Hospitality segment, NCR continued to deploy its advanced
transaction technologies. NCR announced that it and Jamba Juice, in
collaboration with PayPal, are working on a series of customized mobile
solutions, including a Jamba Juice branded iOS® and Android™
mobile ordering and payment solution. This ordering functionality is
available today in select Jamba Juice locations via the PayPal app to
millions of customers and allows consumers to place mobile orders and
pay directly from their smartphone. The customized mobile ordering
solution is designed to seamlessly integrate with the NCR Aloha POS
platform and is expected to improve speed of service and offer a
differentiated experience to Jamba Juice customers.
NCR also secured multiple customer wins for its NCR Pulse Real-Time
smartphone application. This SaaS-based mobile analytics engine helps
restaurant operators solve the everyday challenges of low visibility
into current operational performance, lack of predictable data and the
inability to be in several places simultaneously. The application,
available for iOS® and Android® devices, delivers
real-time performance metrics and notifications directly to a user's
smartphone. Operational data is segmented for quick, easy review, such
as voids and comps, net sales by hour, employee performance and overtime
alerts. Shake Shack implemented NCR Pulse Real-Time in the U.S. while
Burger King franchisee Hybrid Dining deployed NCR Pulse Real-Time in the
U.K.
LevelUp and NCR announced an agreement in which LevelUp will integrate
its mobile payment and loyalty solution into NCR's restaurant POS
systems. The integration will provide restaurants with an easy-to-use
digital payment method and offer consumers a seamless experience when
paying for their meal with the LevelUp application. LevelUp will
initially interface with the industry-leading NCR Aloha POS system using
a site-based integration, while developing its solution for deployment
via NCR Cloud Connect, which is expected later this year.
Dunkin' Donuts began deploying NCR's high-definition Vitalcast™ digital
signage solution at locations across the U.S. The easy-to-use digital
signage solution will provide Dunkin' Donuts restaurants the opportunity
to showcase a wider variety of food and beverages with high resolution
product shots and video to enhance the overall guest experience. The
digital signage solution will also make it easier and more cost
effective to update information in real-time, feature new and limited
time products, and display nutritional information. NCR Vitalcast™
digital signage has been installed in approximately 400 Dunkin' Donuts
restaurants with more than 2,000 restaurants anticipated to transition
from static menu boards to digital signage by year-end.
PURE taqueria, one of the most popular Mexican restaurants and Tequila
bars in metro Atlanta, began making life easier for its guests with NCR
Guest Pad. Guest Pad is an iPad® application that provides
mobile wait list and reservation support for restaurants. The innovative
stand-alone app replaces traditional “pen and paper” wait lists and
delivers a simple way for restaurants of all types to better manage
walk-in parties, call ahead requests and reservations.
Emerging Industries
In Emerging Industries, NCR was ranked the global market share leader in
retail industry product support in 2012 by Gartner, the leading provider
of research and analysis on the global information technology industry.
Gartner also reported that NCR ranks third worldwide in financial
services product support revenue and ninth worldwide across all vertical
markets in hardware maintenance and support revenue for the same period.
NCR was also ranked on the International Association of Outsourcing
Professionals® (IAOP®) Global Outsourcing 100® list, marking the third
consecutive year that NCR has been ranked in the Top 10. The Global
Outsourcing 100 is an annual ranking representing the standard of
excellence in outsourcing. NCR demonstrated excellence in evaluation
categories such as global presence, customer references, company
recognitions and certifications and executive leadership.
NCR continued advancing its self-service technologies for the travel
industry. China Southern Airlines, a Sky Team Alliance member, began
making everyday easier for its passengers at key domestic hub airports
with the addition of a complete self-service airport check-in solution
from NCR. NCR TouchPort™ kiosks were deployed at 10 key domestic hub
airports in Haikou, Dalian, Wuhan, Hefei, Chongqing, Urumqi, Guilin,
Nanning, Changsha and Zhengzhou. The NCR solution includes hardware as
well as common-use self-service platform software, which allows
applications from other SkyTeam Alliance member airlines to also run on
the kiosks. NCR will also provide support services to China Southern to
help ensure maximum availability.
Hertz Corporation won the Digital Screenmedia Association's Industry
Excellence Award for “Best Travel Deployment” for their ExpressRent
virtual agent kiosks, designed and deployed with the help of NCR. Hertz
ExpressRent kiosks combine the flexibility and speed of self-service
with the option of a personal touch by enabling live video chat with a
Hertz agent who walks customers through the entire transaction. The car
rental kiosks accept debit and credit card payments, validate drivers'
licenses and print out the car rental agreement. The kiosks speed up the
car rental process and optimize staffing during peak times. It also
allows Hertz to expand its reach to non-traditional locations where
people may want to rent a car, like auto body shops or car dealerships,
but which do not generate the volume to support a full-service location.
In the Telecom and Technology segment, NCR and North American
Communications Resource, a leading communications system integrator and
service provider, entered into a master services agreement to provide
complementary support, maintenance and managed services when
implementing unified communications solutions throughout North America.
This agreement enables both companies to expand their respective
portfolios of services offerings, drive growth and deliver exceptional
customer experiences.
Second Quarter 2013 Financial Highlights
Income from operations was $139 million in the second quarter of 2013,
which included $9 million of pension expense, $17 million of
acquisition-related amortization of intangibles, $14 million of
acquisition-related costs, and $3 million of acquisition-related
purchase price adjustments. This compares to $130 million of income from
operations in the second quarter of 2012, which included $10 million of
pension expense, $10 million of acquisition-related amortization of
intangible assets, and $4 million of acquisition-related costs.
Excluding these items, non-GAAP income from operations(2) was
$182 million in the second quarter of 2013 compared to $154 million in
the second quarter of 2012.
Net cash used in operating activities was $32 million during the second
quarter of 2013 compared to net cash provided by operating activities of
$31 million in the year-ago period. Capital expenditures of $44 million
in the second quarter of 2013 increased from $37 million in the second
quarter of 2012. Free cash flow (net cash from operations and
discontinued operations, less capital expenditures for property, plant
and equipment, and additions to capitalized software)(3) was
a cash outflow of $101 million in the second quarter of 2013, compared
to a cash outflow of $41 million in the second quarter of 2012. Both net
cash used in operating activities and free cash used in the second
quarter of 2013 were negatively impacted by an $80 million settlement of
the U.S. non-qualified pension plans. Excluding the settlement, free
cash used was $21 million in the second quarter of 2013 compared to free
cash used of $41 million in the second quarter of 2012. The decrease in
free cash used, excluding the pension plan settlement, was positively
impacted by an improvement in operating results period over period.
Discontinued operations resulted in $25 million of cash outflow in the
second quarter of 2013 as compared to $35 million of cash outflow in the
second quarter of 2012. The change was driven by cash outflows
associated with selling the Entertainment business in 2012.
NCR contributed approximately $102 million to its international,
executive and U.S. qualified pension plans in the second quarter of 2013
compared to $52 million in the second quarter of 2012. The net unfunded
status of the Company's global pension plans was $(468) million as of
December 31, 2012.
Other expense, net was $29 million in the second quarter of 2013
compared to other expense, net, of $13 million in the prior year period,
mainly due to higher interest expense in the current period.
Income tax expense was $23 million in the second quarter of 2013
compared to income tax expense of $28 million in the second quarter of
2012.
NCR ended the second quarter of 2013 with $460 million in cash and cash
equivalents compared to a balance of $483 million as of March 31, 2013.
As of June 30, 2013, NCR had a total debt balance of $2.16 billion
compared to a total debt balance of $2.09 billion as of March 31, 2013.
As previously announced, effective in the first quarter of 2013, NCR
changed the accounting methodology for recognizing expense for its
company-sponsored U.S. and international pension benefit plans. From
2013 forward, NCR will recognize changes in fair values of plan assets
and net actuarial gains and losses in the year incurred, generally in
the fourth quarter of each year, which were previously deferred and
amortized over time into pension expense. The results and guidance
included in this release give effect to the change in accounting
methodology.
2013 Outlook
NCR expects full year results to be in line with its previously released
guidance, as described below.
NCR expects its full-year 2013 revenues to increase in the range of 9%
to 11% on a constant currency basis(4) compared with 2012.
NCR expects its full-year 2013 Income from Operations (GAAP) to be $546
million to $566 million, non-pension operating income (NPOI)(2)
to be in the range of $700 million to $720 million, GAAP diluted
earnings per share to be $2.08 to $2.18 and non-GAAP diluted earnings
per share(2) to be in the range of $2.70 to $2.80 per diluted
share. The 2013 NPOI and non-GAAP diluted EPS guidance excludes
the items set forth in the supplemental non-GAAP reconciliation tables
and accompanying footnotes that follow the "Note to Investors" at the
end of this earnings release. NCR expects approximately $95 million to
$100 million of Other Expense, net including interest expense in 2013
and that its full-year 2013 effective income tax rate will be
approximately 26%.
For the third quarter of 2013, the Company expects non-pension operating
income (NPOI)(2) to be in the range of $175 million to $180
million, compared to $153 million in the third quarter of 2012 and
income from operations to be in the range of $138 million to $143
million, compared to $129 million in the third quarter of 2012. NCR
expects its third quarter 2013 tax rate to be approximately 27% and
Other Expense, net including interest expense to be approximately $25
million.
|
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2013
Guidance
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2012
Actual
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Year-over-year revenue growth (constant currency) (4) |
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9% - 11%
|
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11%
|
|
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Income from Operations (GAAP)
|
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$546 - $566 million
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$741 million
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Non-pension operating income(2) |
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$700- $720 million
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$589 million
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Diluted earnings per share (GAAP)
|
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$2.08 - $2.18
|
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$2.87
|
|
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Diluted earnings per share excluding pension
expense and
special items (non-GAAP)(2)
|
|
$2.70 - $2.80
|
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$2.49
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2013 Second Quarter Earnings Conference Call
A conference call is scheduled for today at 4:30 p.m. (EDT) to discuss
the Company's 2013 second quarter results and guidance for full-year
2013. Access to the conference call and accompanying slides, as well as
a replay of the call, is available on NCR's Web site at http://investor.ncr.com/.
About NCR Corporation
NCR Corporation (NYSE: NCR) is the global leader in consumer transaction
technologies, turning everyday interactions with businesses into
exceptional experiences. With its software, hardware, and portfolio of
services, NCR enables more than 300 million transactions daily across
the financial, retail, hospitality, travel, telecom and technology
industries. NCR solutions run the everyday transactions that make your
life easier.
NCR is headquartered in Duluth, Georgia with over 26,000 employees and
does business in 180 countries. NCR is a trademark of NCR Corporation in
the United States and other countries. NCR encourages investors to visit
its web site which is updated regularly with financial and other
important information about NCR.
Web site: www.ncr.com
Twitter:
@NCRCorporation
Facebook: www.facebook.com/ncrcorp
LinkedIn:
http://linkd.in/ncrgroup
YouTube:
www.youtube.com/user/ncrcorporation
Note to Investors - This news release contains 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,” “anticipate,” “outlook,” “intend,” “plan,” “target,”
“believe,” “estimate,” “forecast,” “pursue” and other similar
expressions or future or conditional verbs such as “will,” “should,”
“would” and “could”. They include statements about the contribution of
software and services to NCR's revenue mix, statements as to NCR's
anticipated or expected results and financial performance, including its
outlook for the third quarter of 2013 and the 2013 fiscal year
(including in the sections entitled “Second Quarter 2013 Business
Highlights” and “2013 Outlook”) and its expectations for revenue and
growth across its core verticals; projections of revenue, profit growth
and other financial items; discussion of strategic initiatives and
related actions; comments about future market or industry performance or
behaviors, including how NCR's products and services may be used and the
benefits they might create or provide for its customers; 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.
Forward-looking statements are not guarantees of future performance, and
there are a number of factors, risks and uncertainties that could cause
actual outcomes and results to differ materially from the results
contemplated by such forward-looking statements. In addition to the
factors discussed in this release, these other factors, risks and
uncertainties include those relating to: domestic and global economic
and credit conditions, including the ongoing sovereign debt conditions
in Europe and the uneven global economic recovery; our indebtedness and
the impact that it may have on our financial and operating activities
and our ability to incur additional debt; the financial covenants in our
senior secured credit facility and the indentures for our outstanding
senior unsecured notes and their impact on our financial and business
operations; the adequacy of our future cash flows to service our
indebtedness; the variable interest rates borne by our indebtedness
under our senior secured credit facility and the effects of changes in
those rates; our ability to raise funds necessary to finance a required
change in control purchase of our outstanding senior unsecured notes;
the effect on our future borrowing costs and access to capital of a
lowering or withdrawal of the ratings assigned to our debt securities;
shifts in market demands, continued competitive factors and pricing
pressures; shorter product cycles, rapidly changing technologies and
maintaining a competitive leadership position with respect to our
solution offerings; manufacturing disruptions affecting product quality
or delivery times; the historical seasonality of our sales; the effect
of currency translation; our ability to achieve targeted cost
reductions; maintaining profitability of our professional services
consulting engagements and appropriate utilization rates for our
consultants; market volatility and the funded status of our pension
plans; the success of our pension strategy, including "Phase III" of our
pension strategy; tax rates; our ability to sell higher-margin software
and services in addition to hardware; business and legal risks
associated with multinational operations; availability and successful
exploitation of new acquisition and alliance opportunities; expected
benefits related to acquisitions and alliances not materializing; the
timely development, production or acquisition and market acceptance of
new and existing products and services; the ability of third party
suppliers on which we rely being able to fulfill our needs; our ability
to successfully develop and protect intellectual property that drives
innovation; our ability to execute our business and reengineering plans;
turnover of workforce and the ability to attract and retain skilled
employees; compliance with requirements relating to data privacy and
protection; continued efforts to establish and maintain best-in-class
internal information technology and control systems; exposure to
post-closing liabilities resulting from the sale of assets of our
entertainment business; environmental exposures from our historical and
ongoing manufacturing activities; changes in GAAP and the resulting
impact, if any, on the Company's accounting policies; uncertainties with
regard to regulations, lawsuits, claims and other matters across various
jurisdictions; and other factors detailed from time to time in the
Company's U.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.
Reconciliation of Diluted Earnings Per Share (EPS) from Continuing
Operations (attributable to NCR) (GAAP) to Non-GAAP Measures
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Q2 2013
Actual
|
|
|
Q2 2012
Actual
|
|
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2013
Guidance
|
|
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2012
Actual
|
|
Diluted EPS from Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(attributable to NCR) (GAAP)
|
|
$
|
0.51
|
|
|
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$
|
0.54
|
|
|
|
$2.08 - $2.18
|
|
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$
|
2.87
|
|
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Pension expense (benefit)
|
|
0.03
|
|
|
|
0.04
|
|
|
|
0.10
|
|
|
|
(0.69
|
)
|
|
Acquisition-related costs
|
|
0.06
|
|
|
|
0.02
|
|
|
|
0.18
|
|
|
|
0.10
|
|
|
Acquisition-related amortization of intangibles
|
|
0.07
|
|
|
|
0.04
|
|
|
|
0.27
|
|
|
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0.15
|
|
|
Acquisition-related purchase price adjustments
|
|
0.01
|
|
|
|
—
|
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0.06
|
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—
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OFAC and FCPA Investigations *
|
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—
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—
|
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0.01
|
|
|
|
0.01
|
|
|
Impairment charge and related valuation allowance
|
|
—
|
|
|
|
0.01
|
|
|
|
—
|
|
|
|
0.05
|
|
|
Diluted EPS from Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(attributable to NCR) (non-GAAP)(2)
|
|
$
|
0.68
|
|
|
|
$
|
0.65
|
|
|
|
$2.70 - $2.80
|
|
|
$
|
2.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Income from Operations (GAAP) to Non-GAAP Measure
(in millions)
|
|
|
Q2 2013
Actual
|
|
|
Q2 2012
Actual
|
|
|
2013
Guidance
|
|
|
2012
Actual
|
|
|
Q3 2013
Guidance
|
|
|
Q3 2012
Actual
|
|
Income from Operations (GAAP)
|
|
$
|
139
|
|
|
|
$
|
130
|
|
|
|
$546 - $566
|
|
|
$
|
741
|
|
|
|
$138 - $143
|
|
|
$
|
129
|
|
Pension expense (benefit)
|
|
9
|
|
|
|
10
|
|
|
|
30
|
|
|
|
(217
|
)
|
|
|
7
|
|
|
|
10
|
|
Acquisition-related costs
|
|
14
|
|
|
|
4
|
|
|
|
42
|
|
|
|
23
|
|
|
|
9
|
|
|
|
4
|
|
Acquisition-related amortization of intangibles
|
|
17
|
|
|
|
10
|
|
|
|
65
|
|
|
|
38
|
|
|
|
17
|
|
|
|
10
|
|
Acquisition-related purchase price adjustments
|
|
3
|
|
|
|
—
|
|
|
|
15
|
|
|
|
—
|
|
|
|
3
|
|
|
|
—
|
|
OFAC and FCPA Investigations *
|
|
—
|
|
|
|
—
|
|
|
|
2
|
|
|
|
4
|
|
|
|
1
|
|
|
|
—
|
|
Non-pension Operating Income (non-GAAP) (2)
|
|
$
|
182
|
|
|
|
$
|
154
|
|
|
|
$700 - $720
|
|
|
$
|
589
|
|
|
|
$175 - $180
|
|
|
$
|
153
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Amounts shown reflect legal expenses only. Q3 2012 Actual and 2012
Actual amounts do not include approximately $0.8 million incurred during
the third quarter of 2012. There can be no assurance that the Company
will not be subject to fines or other remedial measures as a result of
OFAC's, the SEC's or the DOJ's investigations.
Free Cash Flow
|
|
|
For the Periods Ended June 30
|
|
|
|
Three Months
|
|
|
Six Months
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
Net cash (used in) provided by operating activities (GAAP)
|
|
$
|
(32
|
)
|
|
|
$
|
31
|
|
|
|
$
|
(11
|
)
|
|
|
$
|
120
|
|
|
Less capital expenditures for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment
|
|
(20
|
)
|
|
|
(18
|
)
|
|
|
(44
|
)
|
|
|
(31
|
)
|
|
Capitalized software
|
|
(24
|
)
|
|
|
(19
|
)
|
|
|
(45
|
)
|
|
|
(37
|
)
|
|
Total capital expenditures, net
|
|
(44
|
)
|
|
|
(37
|
)
|
|
|
(89
|
)
|
|
|
(68
|
)
|
|
Net cash provided by (used in) discontinued operations
|
|
(25
|
)
|
|
|
(35
|
)
|
|
|
(24
|
)
|
|
|
(44
|
)
|
|
Free cash (used) flow (non-GAAP)(3) |
|
(101
|
)
|
|
|
(41
|
)
|
|
|
(124
|
)
|
|
|
8
|
|
|
Add Pension Settlement
|
|
80
|
|
|
|
—
|
|
|
|
80
|
|
|
|
—
|
|
|
Adjusted free cash (used) flow (non-GAAP)(3) |
|
$
|
(21
|
)
|
|
|
$
|
(41
|
)
|
|
|
$
|
(44
|
)
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant Currency
|
|
|
|
|
2012
Actual
|
|
Revenue growth % (GAAP)
|
|
|
|
8
|
%
|
|
Unfavorable foreign currency fluctuation impact
|
|
|
|
3
|
%
|
|
Constant currency revenue growth % (non-GAAP) (4) |
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) While NCR reports its results in accordance with Generally Accepted
Accounting Principles in the United States, or GAAP, it believes that
certain non-GAAP measures provide additional useful information
regarding NCR's financial results. NCR's management evaluates the
Company's results excluding certain items, such as pension expense and
the effect of foreign currency translation, 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.
(2) The segment results included in this release and Schedule B hereto
and the non-GAAP income from operations (i.e. non-pension operating
income) and non-GAAP earnings per share discussed in this earnings
release 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. These
non-GAAP measures should not be considered as substitutes for, or
superior to, results determined in accordance with GAAP.
(3) Free cash flow does not have a uniform definition under GAAP and,
therefore, NCR's definition may differ from other companies' definitions
of this measure. 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.
This non-GAAP measure should not be considered a substitute for, or
superior to, cash flows from operating activities determined in
accordance with GAAP.
(4) NCR's results with respect to year-over-year revenue growth on a
constant currency basis exclude the effects of foreign currency
translation. Due to the variability of foreign exchange rates from year
to year, NCR's management uses revenue on a constant currency basis to
evaluate year-over-year operating performance. Revenue growth on a
constant currency basis is calculated by translating prior-year revenue
at current year monthly average exchange rates. Similarly, NCR's
guidance with respect to year-over-year revenue growth on a constant
currency basis excludes the potential effects of foreign currency
translation due to the variability and unpredictability of future
exchange rates.
|
Schedule A
|
|
|
|
|
|
NCR CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(Unaudited)
|
|
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
For the Periods Ended June 30
|
|
|
|
Three Months
|
|
|
Six Months
|
|
|
|
2013
|
|
|
2012
|
|
|
2013
|
|
|
2012
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
Products
|
|
$
|
743
|
|
|
|
$
|
706
|
|
|
|
$
|
1,410
|
|
|
|
$
|
1,276
|
|
|
Services
|
|
792
|
|
|
|
703
|
|
|
|
1,535
|
|
|
|
1,377
|
|
|
Total Revenue
|
|
1,535
|
|
|
|
1,409
|
|
|
|
2,945
|
|
|
|
2,653
|
|
|
Cost of products
|
|
550
|
|
|
|
532
|
|
|
|
1,053
|
|
|
|
977
|
|
|
Cost of services
|
|
559
|
|
|
|
503
|
|
|
|
1,097
|
|
|
|
987
|
|
|
Total gross margin
|
|
426
|
|
|
|
374
|
|
|
|
795
|
|
|
|
689
|
|
|
% of Revenue
|
|
27.8
|
%
|
|
|
26.5
|
%
|
|
|
27.0
|
%
|
|
|
26.0
|
%
|
|
Selling, general and administrative expenses
|
|
232
|
|
|
|
195
|
|
|
|
461
|
|
|
|
386
|
|
|
Research and development expenses
|
|
55
|
|
|
|
49
|
|
|
|
110
|
|
|
|
95
|
|
|
Income from operations
|
|
139
|
|
|
|
130
|
|
|
|
224
|
|
|
|
208
|
|
|
% of Revenue
|
|
9.1
|
%
|
|
|
9.2
|
%
|
|
|
7.6
|
%
|
|
|
7.8
|
%
|
|
Interest expense
|
|
(26
|
)
|
|
|
(8
|
)
|
|
|
(47
|
)
|
|
|
(17
|
)
|
|
Other (expense), net
|
|
(3
|
)
|
|
|
(5
|
)
|
|
|
(1
|
)
|
|
|
(7
|
)
|
|
Total other (expense), net
|
|
(29
|
)
|
|
|
(13
|
)
|
|
|
(48
|
)
|
|
|
(24
|
)
|
|
Income before income taxes and discontinued operations
|
|
110
|
|
|
|
117
|
|
|
|
176
|
|
|
|
184
|
|
|
% of Revenue
|
|
7.2
|
%
|
|
|
8.3
|
%
|
|
|
6.0
|
%
|
|
|
6.9
|
%
|
|
Income tax expense
|
|
23
|
|
|
|
28
|
|
|
|
25
|
|
|
|
35
|
|
|
Income from continuing operations
|
|
87
|
|
|
|
89
|
|
|
|
151
|
|
|
|
149
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
—
|
|
|
|
13
|
|
|
|
(1
|
)
|
|
|
4
|
|
|
Net Income
|
|
87
|
|
|
|
102
|
|
|
|
150
|
|
|
|
153
|
|
|
Net income attributable to noncontrolling interests
|
|
1
|
|
|
|
—
|
|
|
|
3
|
|
|
|
1
|
|
|
Net income attributable to NCR
|
|
$
|
86
|
|
|
|
$
|
102
|
|
|
|
$
|
147
|
|
|
|
$
|
152
|
|
|
Amounts attributable to NCR common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
86
|
|
|
|
$
|
89
|
|
|
|
$
|
148
|
|
|
|
$
|
148
|
|
|
Income (loss) from discontinued operations, net of tax
|
|
—
|
|
|
|
13
|
|
|
|
(1
|
)
|
|
|
4
|
|
|
Net income
|
|
$
|
86
|
|
|
|
$
|
102
|
|
|
|
$
|
147
|
|
|
|
$
|
152
|
|
|
Net income per share attributable to NCR common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.52
|
|
|
|
$
|
0.56
|
|
|
|
$
|
0.90
|
|
|
|
$
|
0.93
|
|
|
Diluted
|
|
$
|
0.51
|
|
|
|
$
|
0.54
|
|
|
|
$
|
0.88
|
|
|
|
$
|
0.91
|
|
|
Net income per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.52
|
|
|
|
$
|
0.64
|
|
|
|
$
|
0.89
|
|
|
|
$
|
0.96
|
|
|
Diluted
|
|
$
|
0.51
|
|
|
|
$
|
0.62
|
|
|
|
$
|
0.87
|
|
|
|
$
|
0.93
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
165.2
|
|
|
|
159.0
|
|
|
|
164.5
|
|
|
|
158.6
|
|
|
Diluted
|
|
168.8
|
|
|
|
163.9
|
|
|
|
168.1
|
|
|
|
163.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule B
|
|
|
|
|
|
NCR CORPORATION
|
|
CONSOLIDATED REVENUE AND OPERATING INCOME SUMMARY
|
|
(Unaudited)
|
|
(in millions)
|
|
|
|
|
|
|
|
|
For the Periods Ended June 30
|
|
|
|
Three Months
|
|
|
Six Months
|
|
|
|
2013
|
|
|
2012
|
|
|
% Change
|
|
|
2013
|
|
2012
|
|
|
% Change
|
|
Revenue by segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services
|
|
$
|
782
|
|
|
|
$
|
786
|
|
|
|
(1
|
)%
|
|
|
$
|
1,496
|
|
|
$
|
1,481
|
|
|
|
1
|
%
|
|
Retail Solutions
|
|
515
|
|
|
|
409
|
|
|
|
26
|
%
|
|
|
1,004
|
|
|
756
|
|
|
|
33
|
%
|
|
Hospitality
|
|
158
|
|
|
|
130
|
|
|
|
22
|
%
|
|
|
289
|
|
|
243
|
|
|
|
19
|
%
|
|
Emerging Industries
|
|
80
|
|
|
|
84
|
|
|
|
(5
|
)%
|
|
|
156
|
|
|
173
|
|
|
|
(10
|
)%
|
|
Total Revenue
|
|
$
|
1,535
|
|
|
|
$
|
1,409
|
|
|
|
9
|
%
|
|
|
$
|
2,945
|
|
|
$
|
2,653
|
|
|
|
11
|
%
|
|
Operating income by segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Services
|
|
$
|
95
|
|
|
|
$
|
86
|
|
|
|
|
|
|
$
|
152
|
|
|
$
|
143
|
|
|
|
|
|
% of Revenue
|
|
12.1
|
%
|
|
|
10.9
|
%
|
|
|
|
|
|
10.2
|
%
|
|
9.7
|
%
|
|
|
|
|
Retail Solutions
|
|
49
|
|
|
|
28
|
|
|
|
|
|
|
90
|
|
|
30
|
|
|
|
|
|
% of Revenue
|
|
9.5
|
%
|
|
|
6.8
|
%
|
|
|
|
|
|
9.0
|
%
|
|
4.0
|
%
|
|
|
|
|
Hospitality
|
|
27
|
|
|
|
21
|
|
|
|
|
|
|
48
|
|
|
40
|
|
|
|
|
|
% of Revenue
|
|
17.1
|
%
|
|
|
16.2
|
%
|
|
|
|
|
|
16.6
|
%
|
|
16.5
|
%
|
|
|
|
|
Emerging Industries
|
|
11
|
|
|
|
19
|
|
|
|
|
|
|
21
|
|
|
42
|
|
|
|
|
|
% of Revenue
|
|
13.8
|
%
|
|
|
22.6
|
%
|
|
|
|
|
|
13.5
|
%
|
|
24.3
|
%
|
|
|
|
|
Subtotal-segment operating income
|
|
$
|
182
|
|
|
|
$
|
154
|
|
|
|
|
|
|
$
|
311
|
|
|
$
|
255
|
|
|
|
|
|
% of Revenue
|
|
11.9
|
%
|
|
|
10.9
|
%
|
|
|
|
|
|
10.6
|
%
|
|
9.6
|
%
|
|
|
|
|
Pension Expense
|
|
9
|
|
|
|
10
|
|
|
|
|
|
|
16
|
|
|
20
|
|
|
|
|
|
Other adjustments (1)
|
|
34
|
|
|
|
14
|
|
|
|
|
|
|
71
|
|
|
27
|
|
|
|
|
|
Total income from operations
|
|
$
|
139
|
|
|
|
$
|
130
|
|
|
|
|
|
|
$
|
224
|
|
|
$
|
208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Other adjustments for the three months ended June 30, 2013
include $14 million of acquisition related costs, $17 million of
acquisition-related amortization of intangible assets, and $3
million of acquisition-related purchase price adjustments and for
the three months ended June 30, 2012 include $4 million of
acquisition-related costs and $10 million of acquisition-related
amortization of intangible assets. Other adjustments for the six
months ended June 30, 2013 include $30 million of
acquisition-related costs, $31 million of acquisition-related
amortization of intangible assets, $9 million of
acquisition-related purchase price adjustments and $1 million of
legal costs related to the previously disclosed OFAC and FCPA
investigations and for the six months ended June 30, 2012 include
$8 million of acquisition-related costs and $19 million of
acquisition-related amortization of intangible assets.
|
|
|
|
Schedule C
|
|
|
|
|
|
NCR CORPORATION
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(Unaudited)
|
|
(in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
June 30,
2013
|
|
March 31,
2013
|
|
December 31,
2012
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
460
|
|
|
$
|
483
|
|
|
$
|
1,069
|
|
|
Accounts receivable, net
|
1,266
|
|
|
1,193
|
|
|
1,086
|
|
|
Inventories, net
|
825
|
|
|
847
|
|
|
797
|
|
|
Other current assets
|
525
|
|
|
490
|
|
|
454
|
|
|
Total current assets
|
3,076
|
|
|
3,013
|
|
|
3,406
|
|
|
Property, plant and equipment, net
|
327
|
|
|
327
|
|
|
308
|
|
|
Goodwill
|
1,455
|
|
|
1,453
|
|
|
1,003
|
|
|
Intangibles, net
|
490
|
|
|
502
|
|
|
304
|
|
|
Prepaid pension cost
|
394
|
|
|
372
|
|
|
368
|
|
|
Deferred income taxes
|
536
|
|
|
538
|
|
|
534
|
|
|
Other assets
|
428
|
|
|
450
|
|
|
448
|
|
|
Total assets
|
$
|
6,706
|
|
|
$
|
6,655
|
|
|
$
|
6,371
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Short-term borrowings
|
$
|
85
|
|
|
$
|
77
|
|
|
$
|
72
|
|
|
Accounts payable
|
582
|
|
|
593
|
|
|
611
|
|
|
Payroll and benefits liabilities
|
208
|
|
|
193
|
|
|
197
|
|
|
Deferred service revenue and customer deposits
|
543
|
|
|
558
|
|
|
455
|
|
|
Other current liabilities
|
420
|
|
|
416
|
|
|
407
|
|
|
Total current liabilities
|
1,838
|
|
|
1,837
|
|
|
1,742
|
|
|
Long-term debt
|
2,079
|
|
|
2,014
|
|
|
1,891
|
|
|
Pension and indemnity plan liabilities
|
738
|
|
|
814
|
|
|
812
|
|
|
Postretirement and postemployment benefits liabilities
|
191
|
|
|
194
|
|
|
246
|
|
|
Income tax accruals
|
139
|
|
|
140
|
|
|
138
|
|
|
Environmental liabilities
|
137
|
|
|
146
|
|
|
171
|
|
|
Other liabilities
|
100
|
|
|
119
|
|
|
79
|
|
|
Total liabilities
|
5,222
|
|
|
5,264
|
|
|
5,079
|
|
|
Redeemable noncontrolling interests
|
16
|
|
|
17
|
|
|
15
|
|
|
Stockholders' equity
|
|
|
|
|
|
|
NCR stockholders' equity:
|
|
|
|
|
|
|
Preferred stock: par value $0.01 per share, 100.0 shares
authorized,
no shares issued and outstanding as of June 30, 2013,
March
31, 2013, and December 31, 2012, respectively
|
—
|
|
|
—
|
|
|
—
|
|
|
Common stock: par value $0.01 per share, 500.0 shares
authorized,
165.9, 164.3 and 162.8 shares issued and outstanding
as of
June 30, 2013, March 31, 2013 and December 31, 2012 respectively
|
2
|
|
|
2
|
|
|
2
|
|
|
Paid-in capital
|
419
|
|
|
381
|
|
|
358
|
|
|
Retained earnings
|
1,231
|
|
|
1,145
|
|
|
1,084
|
|
|
Accumulated other comprehensive loss
|
(222
|
)
|
|
(192
|
)
|
|
(197
|
)
|
|
Total NCR stockholders' equity
|
1,430
|
|
|
1,336
|
|
|
1,247
|
|
|
Noncontrolling interests in subsidiaries
|
38
|
|
|
38
|
|
|
30
|
|
|
Total stockholders' equity
|
1,468
|
|
|
1,374
|
|
|
1,277
|
|
|
Total liabilities and stockholders' equity
|
$
|
6,706
|
|
|
$
|
6,655
|
|
|
$
|
6,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Schedule D
|
|
|
|
|
|
NCR CORPORATION
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
(in millions)
|
|
|
|
|
|
|
|
For the Periods Ended June 30
|
|
|
|
Three Months
|
|
Six Months
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
87
|
|
|
$
|
102
|
|
|
$
|
150
|
|
|
$
|
153
|
|
|
Adjustments to reconcile net income to net cash (used in) provided
by operating activities:
|
|
|
|
|
|
|
|
|
|
Loss (income) from discontinued operations
|
|
—
|
|
|
(13
|
)
|
|
1
|
|
|
(4
|
)
|
|
Depreciation and amortization
|
|
50
|
|
|
40
|
|
|
97
|
|
|
81
|
|
|
Stock-based compensation expense
|
|
12
|
|
|
11
|
|
|
22
|
|
|
22
|
|
|
Deferred income taxes
|
|
(1
|
)
|
|
9
|
|
|
(10
|
)
|
|
23
|
|
|
Gain on sale of property, plant and equipment and other assets
|
|
(1
|
)
|
|
(6
|
)
|
|
(5
|
)
|
|
(7
|
)
|
|
Impairment of long-lived and other assets
|
|
—
|
|
|
4
|
|
|
—
|
|
|
7
|
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
(76
|
)
|
|
(14
|
)
|
|
(67
|
)
|
|
(47
|
)
|
|
Inventories
|
|
22
|
|
|
(6
|
)
|
|
(25
|
)
|
|
(40
|
)
|
|
Current payables and accrued expenses
|
|
2
|
|
|
13
|
|
|
(34
|
)
|
|
(4
|
)
|
|
Deferred service revenue and customer deposits
|
|
(17
|
)
|
|
(35
|
)
|
|
56
|
|
|
50
|
|
|
Pension and indemnity plan
|
|
(98
|
)
|
|
(41
|
)
|
|
(132
|
)
|
|
(54
|
)
|
|
Other assets and liabilities
|
|
(12
|
)
|
|
(33
|
)
|
|
(64
|
)
|
|
(60
|
)
|
|
Net cash (used in) provided by operating activities
|
|
(32
|
)
|
|
31
|
|
|
(11
|
)
|
|
120
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
Expenditures for property, plant and equipment
|
|
(20
|
)
|
|
(18
|
)
|
|
(44
|
)
|
|
(31
|
)
|
|
Proceeds from sales of property, plant and equipment
|
|
2
|
|
|
8
|
|
|
2
|
|
|
8
|
|
|
Additions to capitalized software
|
|
(24
|
)
|
|
(19
|
)
|
|
(45
|
)
|
|
(37
|
)
|
|
Business acquisition, net
|
|
(15
|
)
|
|
(25
|
)
|
|
(696
|
)
|
|
(25
|
)
|
|
Other investing activities, net
|
|
1
|
|
|
10
|
|
|
6
|
|
|
8
|
|
|
Net cash used in investing activities
|
|
(56
|
)
|
|
(44
|
)
|
|
(777
|
)
|
|
(77
|
)
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Tax withholding payments on behalf of employees
|
|
(2
|
)
|
|
—
|
|
|
(27
|
)
|
|
(9
|
)
|
|
Short term borrowings, net
|
|
5
|
|
|
2
|
|
|
6
|
|
|
2
|
|
|
Payments on term credit facility
|
|
(17
|
)
|
|
—
|
|
|
(35
|
)
|
|
—
|
|
|
Payments on revolving credit facility
|
|
(75
|
)
|
|
(240
|
)
|
|
(495
|
)
|
|
(305
|
)
|
|
Borrowings on revolving credit facility
|
|
160
|
|
|
150
|
|
|
725
|
|
|
190
|
|
|
Debt issuance costs
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
Proceeds from employee stock plans
|
|
27
|
|
|
6
|
|
|
45
|
|
|
13
|
|
|
Net cash provided by (used in) financing activities
|
|
97
|
|
|
(82
|
)
|
|
216
|
|
|
(109
|
)
|
|
Cash flows from discontinued operations
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
(25
|
)
|
|
(35
|
)
|
|
(24
|
)
|
|
(44
|
)
|
|
Net cash provided by investing activities
|
|
—
|
|
|
99
|
|
|
—
|
|
|
98
|
|
|
Net cash (used in) provided by discontinued operations
|
|
(25
|
)
|
|
64
|
|
|
(24
|
)
|
|
54
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
(7
|
)
|
|
(6
|
)
|
|
(13
|
)
|
|
(9
|
)
|
|
Decrease in cash and cash equivalents
|
|
(23
|
)
|
|
(37
|
)
|
|
(609
|
)
|
|
(21
|
)
|
|
Cash and cash equivalents at beginning of period
|
|
483
|
|
|
414
|
|
|
1,069
|
|
|
398
|
|
|
Cash and cash equivalents at end of period
|
|
$
|
460
|
|
|
$
|
377
|
|
|
$
|
460
|
|
|
$
|
377
|
|
Copyright Business Wire 2013