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NCR Announces 2008 First-Quarter Results, Including Record Year-Over-Year Revenue Growth

(PresseBox) (DAYTON, Ohio, ) .
- Total revenue growth of 19 percent from continuing operations
- Balanced revenue growth across geographies and major industries
- GAAP EPS from continuing operations was $0.28 per diluted share; non-GAAP EPS from continuing operations was $0.21 per diluted share(1)
- NCR repurchased approximately 9 million shares in the first quarter
- Cash provided by operating activities from continuing operations increased 88 percent to $81 million

NCR Corporation (NYSE: NCR) reported financial results today for the three months ended March 31, 2008. Reported revenue of $1.18 billion from continuing operations increased 19 percent over the first quarter of 2007 and included approximately 6 percentage points of benefit from foreign currency translation.

NCR reported first-quarter net income from continuing operations of $49 million, or $0.28 per diluted share, compared to a loss of $9 million or a $0.05 loss per share in the first quarter of 2007. Income from continuing operations for the first quarter of 2008 included a $16 million ($13 million after-tax) gain, or $0.07 gain per diluted share, resulting from the sale of a Canadian manufacturing facility. Income from continuing operations for the first quarter of 2007 included $46 million ($39 million after-tax) of costs, or $0.21 per diluted share, related to a global manufacturing realignment in that year. Excluding these items(1), non-GAAP earnings from continuing operations in the first quarter of 2008 were $0.21 per diluted share, which compares to $0.16 per diluted share in the prior-year period.

"The new NCR has started 2008 on a positive note, delivering strong revenue growth, margin expansion and much improved cash flow," said Bill Nuti, chairman and chief executive officer of NCR. "Our vision for the new NCR is to lead how the world connects, interacts and transacts with business, and early in 2008 we're seeing increased traction for our newer self-service offerings as well as continued solid demand for core solutions and services across our geographic regions. Throughout this year and going forward, we are focused on implementing our strategies of generating profitable revenue growth, building a leading cost structure and improving our working capital. We have significant work ahead on each of these initiatives, but the progress exhibited by our first-quarter results indicates we are on the right path."

First Quarter 2008 Highlights
Financial Highlights

As stated in NCR's most recent Form 10-K filing with the Securities and Exchange Commission, as of Jan. 1, 2008, NCR began management of its business on a geographic basis, changing from the previous model of global business units. The first quarter of 2008 marks the first quarter for the company's geographic segment reporting structure. This organizational model is expected to deliver improved sales productivity and is expected to reduce overall operating costs.

Revenue growth in the Americas region of 15 percent was driven primarily by sales growth to financial institutions and retailers. In the Europe-Middle East-Africa region, revenues increased 30 percent as every major country experienced revenue growth. NCR experienced 7 percent revenue growth in the Asia-Pacific-Japan region.

As shown on Schedule B, Income from Operations was $65 million in the first quarter of 2008 and included $6 million of pension expense and a $16 million gain from the sale of the Canadian manufacturing facility, as previously described. This compares to a $17 million loss from operations in the first quarter of 2007, which included $9 million of pension expense and $46 million of manufacturing realignment costs, also as previously described. Excluding these items and pension expense, non-GAAP income from operations(2) was up 45 percent to $55 million in the first quarter of 2008 compared to $38 million in the first quarter of 2007.

NCR generated $81 million of cash from operating activities during the first quarter of 2008, compared to $43 million in the year-ago period. Capital expenditures of $32 million in the first quarter of 2008 were down from $34 million in the year-ago period. NCR generated $49 million of free cash flow (cash from operations less capital expenditures) (3) in the first quarter of 2008, compared to $9 million in the first quarter of 2007. Increased focus on collection management benefited free cash flow in the quarter and will be a focus going forward in 2008.

In addition, the company used $193 million of cash to repurchase approximately 9 million shares of NCR stock in the quarter.

New Product Highlights

NCR began the worldwide rollout of its NCR SelfServ(TM) automated teller machine (ATM) family in the first quarter of 2008. This new and innovative ATM kiosk product line offers "self-healing" technology, greater levels of availability and enhanced management tools. The NCR SelfServ family of ATM kiosks also completed certification testing with strategic switch partners ACI Worldwide, Inc., Postilion (a division of S1 Corporation) and Fidelity National Information Systems. The NCR SelfServ ATM kiosk product family began a global customer roadshow in the quarter, which will continue throughout the summer.

In January, NCR introduced the new NCR FastLane Self-Return solution at the 2008 National Retail Federation trade show. This new self-service solution enables retailers to provide more queue-busting convenience to their customers, increasing customer satisfaction and lowering overall cost.

NCR extended its self-service portfolio into the digital media market with the January announcement of NCR Xpress Entertainment, a next-generation multichannel entertainment kiosk solution. The launch of NCR Xpress Entertainment follows NCR's acquisition of Touch Automation LLC on Dec. 31, 2007.

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