First Quarter 2016 Operating Results Revenue: First quarter revenue of $1.44 billion was down 2% year-over-year. On a constant currency basis, first quarter revenue was slightly up. Software: Revenue increased 1% to $419 million from $414 million. On a constant currency basis, first quarter Software revenue was up 3%. Services: Revenue increased 4% to $543 million from $523 million. On a constant currency basis, first quarter Services revenue was up 8%. Hardware: Revenue decreased 11% to $482 million from $539 million. On a constant currency basis, first quarter Hardware revenue was down 9%. Gross Margin :First quarter gross margin of $380 million decreased from $390 million. First quarter gross margin (non-GAAP) of $396 million decreased from $407 million, with a decrease in Hardware partially offset by an increase in Services. Expenses: First quarter operating expenses of $279 million decreased from $295 million. First quarter operating expenses (non-GAAP) of $257 million decreased from $261 million. Operating Income: First quarter operating income of $101 million increased from $95 million. First quarter operating income (non-GAAP) of $139 million decreased from $146 million. First quarter operating income (non-GAAP) was negatively impacted by an additional $5 million of pension expense. Other (Expense): First quarter other (expense) of $56 million increased from $51 million. First quarter other (expense) includes $4 million for the write-off of deferred financing fees as a result of the amendment of the credit facility. Income Tax Expense: First quarter income tax expense of $13 million increased from $2 million. First quarter income tax expense (non-GAAP) of $22 million increased from $20 million. Net Income from Continuing Operations Attributable to NCR: First quarter net income from continuing operations attributable to NCR of $32 million decreased from $40 million. First quarter net income from continuing operations attributable to NCR (non-GAAP) of $61 million decreased from $73 million. The decrease is primarily due to an additional $5 million of pension expense and the write-off of $4 million of deferred financing fees. Free Cash Flow: First quarter cash provided by operating activities of $23 million decreased from $79 million. Free cash outflow was $29 million in the first quarter of 2016 as compared to free cash flow of $24 million. The decrease was due to higher working capital as we plan for increased revenues later in the year. Share Repurchase Program: NCR repurchased approximately 8.6 million shares of its common stock for approximately $213 million during the first quarter under its previously disclosed authorized share repurchase programs. 2016 Outlook In 2016, revenue is now expected to be $6.25 billion to $6.35 billion (previous guidance $6.1 billion to $6.2 billion), GAAP diluted earnings per share is expected to be $2.25 to $2.35 (previous guidance $2.20 to $2.30), non-GAAP diluted earnings per share is expected to be $2.90 to $3.00 (previous guidance $2.85 to $2.95), and free cash flow is expected to be $425 million to $475 million (same as previous guidance). The 2016 guidance includes the impact of the pending divestiture of the Interactive Printer Solutions business, expected foreign currency headwinds, and ongoing pension expense. For the second quarter of 2016, revenue is expected to be $1.56 billion to $1.58 billion, GAAP diluted earnings per share is expected to be $0.42 to $0.47, and non-GAAP diluted earnings per share is expected to be $0.60 to $0.65. The second quarter 2016 guidance includes the impact of the pending divestiture of the Interactive Printer Solutions business, expected foreign currency headwinds and ongoing pension expense. NCR will provide additional information regarding its 2016 second quarter guidance during its first quarter first earnings conference call and webcast.]]>
