UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2003
Commission File Number 001-00395
NCR CORPORATION
(Exact name of registrant as specified in its charter)
| Maryland |
31-0387920 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1700 South Patterson Blvd.
Dayton, Ohio 45479
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (937) 445-5000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Act): Yes x No ¨
Number of shares of common stock, $0.01 par value per share, outstanding as of April 30, 2003 was approximately 95.4 million.
PART I. Financial Information
| Description |
Page | |||
| Item 1. |
Financial Statements |
|||
| 3 | ||||
| Condensed Consolidated Balance Sheets (Unaudited) March 31, 2003 and December 31, 2002 |
4 | |||
| 5 | ||||
| 6 | ||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
16 | ||
| Item 3. |
28 | |||
| Item 4. |
29 | |||
| PART II. Other Information |
||||
| Description |
Page | |||
| Item 1. |
30 | |||
| Item 4. |
30 | |||
| Item 6. |
31 | |||
| 33 | ||||
| 34 | ||||
2
Part I. Financial Information
Item 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
In millions, except per share amounts
| Three Months Ended March 31 |
||||||||
| 2003 |
2002 |
|||||||
| Product revenue |
$ |
591 |
|
$ |
612 |
| ||
| Service revenue |
|
643 |
|
|
635 |
| ||
| Total revenue |
|
1,234 |
|
|
1,247 |
| ||
| Cost of products |
|
383 |
|
|
400 |
| ||
| Cost of services |
|
544 |
|
|
497 |
| ||
| Selling, general and administrative expenses |
|
280 |
|
|
285 |
| ||
| Research and development expenses |
|
59 |
|
|
56 |
| ||
| Total operating expenses |
|
1,266 |
|
|
1,238 |
| ||
| (Loss) income from operations |
|
(32 |
) |
|
9 |
| ||
| Interest expense |
|
7 |
|
|
2 |
| ||
| Other (income)/expense, net |
|
(2 |
) |
|
1 |
| ||
| (Loss) income before income taxes and cumulative effect of accounting change |
|
(37 |
) |
|
6 |
| ||
| Income tax (benefit) expense |
|
(10 |
) |
|
2 |
| ||
| (Loss) income before cumulative effect of accounting change |
|
(27 |
) |
|
4 |
| ||
| Cumulative effect of accounting change, net of tax |
|
— |
|
|
(348 |
) | ||
| Net loss |
$ |
(27 |
) |
$ |
(344 |
) | ||
| Net (loss) income per common share |
||||||||
| Basic before cumulative effect of accounting change |
$ |
(0.28 |
) |
$ |
0.04 |
| ||
| Cumulative effect of accounting change |
|
— |
|
|
(3.55 |
) | ||
| Basic |
$ |
(0.28 |
) |
$ |
(3.51 |
) | ||
| Diluted before cumulative effect of accounting change |
$ |
(0.28 |
) |
$ |
0.04 |
| ||
| Cumulative effect of accounting change |
|
— |
|
|
(3.45 |
) | ||
| Diluted |
$ |
(0.28 |
) |
$ |
(3.41 |
) | ||
| Weighted average common shares outstanding |
||||||||
| Basic |
|
96.0 |
|
|
97.9 |
| ||
| Diluted |
|
96.0 |
|
|
100.6 |
| ||
See Notes to Condensed Consolidated Financial Statements.
3
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In millions, except per share amounts
| March 31 2003 |
December 31 2002 |
|||||||
| Assets |
||||||||
| Current assets |
||||||||
| Cash, cash equivalents and short-term investments |
$ |
529 |
|
$ |
526 |
| ||
| Accounts receivable, net |
|
1,107 |
|
|
1,204 |
| ||
| Inventories, net |
|
274 |
|
|
263 |
| ||
| Other current assets |
|
187 |
|
|
193 |
| ||
| Total current assets |
|
2,097 |
|
|
2,186 |
| ||
| Reworkable service parts and rental equipment, net |
|
240 |
|
|
234 |
| ||
| Property, plant and equipment, net |
|
536 |
|
|
558 |
| ||
| Goodwill |
|
103 |
|
|
102 |
| ||
| Other assets |
|
1,592 |
|
|
1,592 |
| ||
| Total assets |
$ |
4,568 |
|
$ |
4,672 |
| ||
| Liabilities and Stockholders’ Equity |
||||||||
| Current liabilities |
||||||||
| Short-term borrowings |
$ |
13 |
|
$ |
5 |
| ||
| Accounts payable |
|
307 |
|
|
364 |
| ||
| Payroll and benefits liabilities |
|
189 |
|
|
227 |
| ||
| Customer deposits and deferred service revenue |
|
433 |
|
|
339 |
| ||
| Other current liabilities |
|
423 |
|
|
482 |
| ||
| Total current liabilities |
|
1,365 |
|
|
1,417 |
| ||
| Long-term debt (Note 6) |
|
305 |
|
|
306 |
| ||
| Pension and indemnity liabilities |
|
708 |
|
|
696 |
| ||
| Postretirement and postemployment benefits liabilities |
|
310 |
|
|
312 |
| ||
| Other liabilities |
|
605 |
|
|
596 |
| ||
| Minority interests |
|
18 |
|
|
20 |
| ||
| Total liabilities |
|
3,311 |
|
|
3,347 |
| ||
| Commitments and contingencies (Note 8) |
||||||||
| Stockholders’ equity |
||||||||
| Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively |
|
— |
|
|
— |
| ||
| Common stock: par value $0.01 per share, 500.0 shares authorized, 94.7 and 97.0 shares issued and outstanding at March 31, 2003 and December 31, 2002, respectively |
|
1 |
|
|
1 |
| ||
| Paid-in capital |
|
1,173 |
|
|
1,217 |
| ||
| Retained earnings |
|
614 |
|
|
641 |
| ||
| Accumulated other comprehensive loss |
|
(531 |
) |
|
(534 |
) | ||
| Total stockholders’ equity |
|
1,257 |
|
|
1,325 |
| ||
| Total liabilities and stockholders’ equity |
$ |
4,568 |
|
$ |
4,672 |
| ||
See Notes to Condensed Consolidated Financial Statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
In millions
| Three Months Ended March 31 |
||||||||
| 2003 |
2002 |
|||||||
| Operating Activities |
||||||||
| Net loss |
$ |
(27 |
) |
$ |
(344 |
) | ||
| Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
|
83 |
|
|
80 |
| ||
| Deferred income taxes |
|
(9 |
) |
|
(5 |
) | ||
| Goodwill Impairment |
|
— |
|
|
348 |
| ||
| Other loss on assets, net |
|
1 |
|
|
1 |
| ||
| Changes in assets and liabilities: |
||||||||
| Receivables |
|
97 |
|
|
34 |
| ||
| Inventories |
|
(11 |
) |
|
(1 |
) | ||
| Current payables |
|
(116 |
) |
|
(45 |
) | ||
| Customer deposits and deferred service revenue |
|
94 |
|
|
88 |
| ||
| Employee severance and pension |
|
5 |
|
|
(33 |
) | ||
| Other assets and liabilities |
|
(15 |
) |
|||||