2nd UPDATE: NCR 1Q Loss Widens On Pension Costs
April 22 2010 - 6:53PM
Dow Jones News
NCR Corp.'s (NCR) first-quarter loss widened as the company
continued to plow funds into its struggling pension program, even
as the company posted a robust order backlog and reiterated its
full-year forecast.
NCR, best known for automated teller machines and cash
registers, struggled during the recession because its main bank and
retail clients cut back on expenditures. But the Duluth, Ga.,
company, which also sells airport check-in machines and Blockbuster
Express DVD rental kiosks, suggested some stress may be easing. It
reported an 18% increase in orders over the year-ago period, as
well as sequential growth.
The company said on a conference call with analysts that both
the financial and retail segments had double-digit order increases
and it is still on track to deliver up to 10,000 DVD kiosks by
year-end.
"Their message was that there's a gradual improvement across the
board, and that's a good message," Wedbush Morgan Securities
analyst Gil Luria said.
Shares of NCR dropped 5.5% to $15.05 in after-hours trading,
after closing up nearly 4%. The stock is up 43% so far this
year.
NCR reported a loss of $19 million, or 12 cents a share,
compared with a loss of $15 million, or 9 cents a share, a year
earlier. Excluding pension and relocation charges, NCR posted
first-quarter earnings of 15 cents a share. The company moved its
headquarters from Ohio earlier this year.
Revenue edged up 2%, to $1.03 billion, with the
Asia-Pacific-Japan region boasting 24% growth.
Analysts polled by Thomson Reuters most recently forecast a loss
of 8 cents and $1.04 billion in revenue.
Chairman and Chief Executive Bill Nuti said on a conference call
that regional and other bank business is picking up "modestly," a
good sign as contracts to overhaul ATM fleets at a few large
financial institutions close out. While retailers remain cautious,
Nuti said the company is seeing "pockets" of activity.
Still, the company's pension plans are underfunded by nearly $1
billion. Even if it can improve its funding status, NCR will
continue to book pension expenses related to the amortization of
prior losses for years to come, Chief Financial Officer Robert
Fishman said. The company expects to book a $215 million pension
expense in 2010 and will contribute $110 million to the plans this
year.
NCR spent much of its conference call discussing plans to fix
those pension woes. The company will shift its U.S. portfolio
entirely to fixed income by the end of 2012 and will work with
local trustee boards on asset allocations in its international
pensions.
The company will also stop pre-funding its plans, which could
spook some investors, Luria said. While the plan details may have
been overwhelming, Luria said, "that level of disclosure is
helpful" as investors try to value the company. He sees the moves
as an indication the company is looking long-term.
NCR reiterated its full-year non-GAAP earnings forecast, saying
it expects per-share earnings of $1.35 to $1.45. NCR also said it
still expects revenue growth of 2% to 5% on a constant currency
basis, but the company cut its full-year per-share earnings
forecast by 2 cents, saying it now expects a range of 39 cents to
49 cents.
-By Melissa Korn, Dow Jones Newswires; 212-416-2271;
melissa.korn@dowjones.com
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