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 June 30, 2004
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 July 30, 2004, was approximately 94.2 million.
| Description |
Page | |||
| Item 1. | Legal Proceedings | 36 | ||
| Item 2. | Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities | 36 | ||
| Item 4. | Submission of Matters to a Vote of Security Holders | 36 | ||
| Item 6. | Exhibit Listing and Reports on Form 8-K | 37 | ||
| Signatures | 38 | |||
| Exhibits | ||||
2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
In millions, except per share amounts
| Three Months Ended June 30 |
Six Months Ended June 30 |
|||||||||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||||||||
| Product revenue |
$ | 761 | $ | 675 | $ | 1,389 | $ | 1,266 | ||||||||||||||
| Service revenue |
691 | 691 | 1,353 | 1,334 | ||||||||||||||||||
| Total revenue |
1,452 | 1,366 | 2,742 | 2,600 | ||||||||||||||||||
| Cost of products |
478 | 444 | 888 | 827 | ||||||||||||||||||
| Cost of services |
581 | 563 | 1,139 | 1,107 | ||||||||||||||||||
| Selling, general and administrative expenses |
281 | 287 | 554 | 567 | ||||||||||||||||||
| Research and development expenses |
59 | 56 | 116 | 115 | ||||||||||||||||||
| Total operating expenses |
1,399 | 1,350 | 2,697 | 2,616 | ||||||||||||||||||
| Income (loss) from operations |
53 | 16 | 45 | (16 | ) | |||||||||||||||||
| Interest expense |
6 | 6 | 11 | 13 | ||||||||||||||||||
| Other (income) expense, net |
(4 | ) | 33 | (11 | ) | 31 | ||||||||||||||||
| Income (loss) before income taxes |
51 | (23 | ) | 45 | (60 | ) | ||||||||||||||||
| Income tax benefit |
71 | 10 | 72 | 20 | ||||||||||||||||||
| Net income (loss) |
$ | 122 | $ | (13 | ) | $ | 117 | $ | (40 | ) | ||||||||||||
| Net income (loss) per common share |
||||||||||||||||||||||
| Basic |
$ | 1.30 | $ | (0.14 | ) | $ | 1.24 | $ | (0.42 | ) | ||||||||||||
| Diluted |
$ | 1.27 | $ | (0.14 | ) | $ | 1.22 | $ | (0.42 | ) | ||||||||||||
| Weighted average common shares outstanding |
||||||||||||||||||||||
| Basic |
94.1 | 94.8 | 94.4 | 95.4 | ||||||||||||||||||
| Dilu ted |
96.1 | 94.8 | 96.1 | 95.4 | ||||||||||||||||||
See Notes to Condensed Consolidated Financial Statements.
3
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
In millions, except per share amounts
| June 30 2004 |
December 31 2003 | |||||
| Assets |
||||||
| Current assets |
||||||
| Cash and cash equivalents |
$ | 633 | $ | 689 | ||
| Accounts receivable, net |
1,195 | 1,230 | ||||
| Inventories, net |
382 | 308 | ||||
| Other current assets |
205 | 195 | ||||
| Total current assets |
2,415 | 2,422 | ||||
| Reworkable service parts and rental equipment, net |
221 | 232 | ||||
| Property, plant and equipment, net |
482 | 514 | ||||
| Goodwill |
105 | 105 | ||||
| Prepaid pension cost |
1,382 | 1,386 | ||||
| Deferred income taxes |
553 | 558 | ||||
| Other assets |
282 | 263 | ||||
| Total assets |
$ | 5,440 | $ | 5,480 | ||
| Liabilities and Stockholders’ Equity |
||||||
| Current liabilities |
||||||
| Short-term borrowings |
$ | 4 | $ | 3 | ||
| Accounts payable |
425 | 414 | ||||
| Payroll and benefits liabilities |
236 | 300 | ||||
| Customer deposits and deferred service revenue |
427 | 362 | ||||
| Other current liabilities |
508 | 500 | ||||
| Total current liabilities |
1,600 | 1,579 | ||||
| Long-term debt |
306 | 307 | ||||
| Pension and indemnity plan liabilities |
479 | 484 | ||||
| Postretirement and postemployment benefits liabilities |
261 | 272 | ||||
| Other liabilities |
838 | 941 | ||||
| Minority interests |
15 | 22 | ||||
| Total liabilities |
3,499 | 3,605 | ||||
| Commitments and contingencies (Note 9) |
||||||
| Stockholders’ equity |
||||||
| Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding at June 30, 2004 and December 31, 2003, respectively |
— | — | ||||
| Common stock: par value $0.01 per share, 500.0 shares authorized, 93.9 and 94.7 shares issued and outstanding at June 30, 2004 and December 31, 2003, respectively |
1 | 1 | ||||
| Paid-in capital |
1,095 | 1,166 | ||||
| Retained earnings |
816 | 699 | ||||
| Accumulated other comprehensive income |
29 | 9 | ||||
| Total stockholders’ equity |
1,941 | 1,875 | ||||
| Total liabilities and stockholders’ equity |
$ | 5,440 | $ | 5,480 | ||
See Notes to Condensed Consolidated Financial Statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
In millions
| Six Months Ended June 30 |
||||||||
| 2004 |
2003 |
|||||||
| Operating Activities |
||||||||
| Net income (loss) |
$ | 117 | $ | (40 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
136 | 163 | ||||||
| Deferred income taxes |
4 | (8 | ) | |||||
| Income tax settlement (Note 7) |
(85 | ) | — | |||||
| Other adjustments, net |
(1 | ) | 4 | |||||
| Changes in assets and liabilities: |
||||||||
| Receivables |
35 | 72 | ||||||
| Inventories |
(75 | ) | (34 | ) | ||||
| Current payables |
(74 | ) | (70 | ) | ||||
| Customer deposits and deferred service revenue |
65 | 64 | ||||||
| Employee severance and pension |
7 | 11 | ||||||
| Other assets and liabilities |
(39 | ) | 38 | |||||
| Net cash provided by operating activities |
90 | 200 | ||||||
| Investing Activities |
||||||||
| Net expenditures and proceeds for service parts |
(39 | ) | (45 | ) | ||||
| Expenditures for property, plant and equipment |
(33 | ) | (29 | ) | ||||
| Proceeds from sales of property, plant and equipment |
7 | 4 | ||||||
| Expenditures for capitalized software |
(40 | ) | (33 | ) | ||||
| Other investing activities, net |
(17 | ) | (3 | ) | ||||
| Net cash used in investing activities |
(122 | ) | (106 | ) | ||||
| Financing Activities |
||||||||
| Purchases of company common stock |
(182 | ) | (59 | ) | ||||
| Short-term borrowings, net |
1 | 1 | ||||||
| Long-term borrowings, net |
— | — | ||||||
| Cash received from real estate transaction (Note 4) |
50 | — | ||||||
| Cash received from employee exercise of stock compensation |
108 | 11 | ||||||
| Other financing activities, net |
1 | 2 | ||||||
| Net cash used in financing activities |
(22 | ) | (45 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents |
(2 | ) | 10 | |||||
| (Decrease) increase in cash and cash equivalents |
(56 | |||||||