NCR Corporation (NYSE:NCR) today announced that it anticipates its second-quarter earnings to exceed its prior guidance.
NCR now expects second-quarter earnings of $0.64 or more per share, including certain non-operational items that benefited NCR's results. Excluding the benefit of such items discussed below, earnings per share is expected to be $0.34(1) or more, which compares to NCR's previous guidance of $0.25 to $0.30 per share,(1) also excluding the benefit of such items. The $0.34(1) of earnings per share compares to $0.19(1) in the second quarter of 2004, which also excluded the benefit of certain non-operational items, and the $0.30 mean earnings per share estimate among Wall Street analysts for NCR's 2005 second quarter results, according to First Call.
Non-operational items in NCR's GAAP results for the quarter include $0.34 of benefit from the favorable settlement of prior-year tax audits, a $0.04 net benefit from other non-operational items, as well as $0.08 of incremental pension expense associated with a previously announced early-retirement program.
NCR expects to report second-quarter revenue of approximately $1.47 billion, an increase of 1 percent from the second quarter of 2004. The year-over-year revenue increase was benefited by 2 percentage points from foreign currency fluctuations.
Stronger-than-anticipated profitability in the company's Teradata Data Warehousing and Customer Services businesses more than offset lower-than-expected revenue and profitability in Financial Self Service, which was largely due to the adverse timing of transactions in international markets and the impact of currency fluctuations.
NCR is increasing its earnings expectation for 2005. Including the net favorable impact of non-operational items in the first and second quarters of 2005, full-year earnings per share is expected to be in the $1.68 to $1.73 range.
Excluding the net benefit of these items, full-year earnings per share is expected to be $1.40 to $1.45. Earnings per share in the third quarter is expected to be in the $0.28 to $0.33 range.
(1) While NCR reports its results in accordance with Generally Accepted Accounting Principles in the United States, or GAAP, the company believes that the exclusion of certain non-operating items is useful for investors because it provides a more complete understanding of NCR's underlying operational performance, as well as consistency and comparability with past reports of financial results. In addition, management uses its earnings per share excluding these items to manage and determine the effectiveness of its business managers and as a basis for incentive compensation. This non-GAAP measure should not be considered as a substitute for or superior to earnings per share determined in accordance with GAAP.
2) Items include a $0.05 per share charge to decrease the value of an equity investment which was partially offset by a $0.03 per share benefit from the reduction of accruals made in previous periods for purchased goods and services.
NCR will provide more detailed information regarding its second-quarter results when it reports earnings on July 26, 2005.