Product Development Strategy Alan Chow SVP, Product Development & CTO

Transcription

1 Product Development Strategy Alan Chow SVP, Product Development & CTO

2 Creating Shareholder Value

3 Innovation Drives Profitable Revenue Growth

4 Innovation Drives Profitable Revenue Growth

5 Innovation Drives Profitable Revenue Growth

6 Innovation Drives Profitable Revenue Growth

7 Driving Efficient Innovation Common Hardware & Software Platforms Re-use and modularity Accelerate time to market Reduce service incidents

8 Driving Efficient Innovation Reduce parts and product ID Customer Focus and Responsiveness Reduce product cost Reduce conversion cost Remote Diagnostics System and Asset Management Reduce time and cost to service

9 Global Operations Strategy Peter Dorsman SVP, Global Operations

10 Creating Shareholder Value

11 NCR s Global Operations - Prior Outsourced Manufacturing NCR Manufacturing Facilities NCR Fulfillment Centers Waterloo Dundee Rotterdam Atlanta Columbia, SC Ebina San Diego Guadalajara Sao Paulo

12 NCR s Global Operations Contract Manufacturing NCR Manufacturing Facilities NCR Fulfillment Centers Budapest Atlanta Columbia, SC Rotterdam Beijing Ebina Guadalajara Pondicherry Sao Paulo

13 Manufacturing Mix Shift ATM Assembly Mix ATM Module Assembly Mix Low-Cost Region 27% Low-Cost Region 46% 78% 90% High-Cost Region 73% High-Cost Region 54% 22% 10%

14 Business Unit Organization Model - Prior Separate organizations performing same functions

15 One Global Operations Organization (2008 Plus) Lowers our Cost Improves Quality Increases Productivity

16 Global Operations Focus Fast, Low Cost Flexible & Responsive Continuous Improvement Asset Management Lean Six Sigma Manufacturing Fulfillment Supply Base Lowest Total Cost Sourcing Efficient Distribution and Logistics Simplified, Common Processes Increased Asset and Labor Flexibility Design for Manufacturability Implement Industry Best Practices Lean Order Management & Fulfillment Processes Efficient Product Phase-In and Phase-Out Robust Demand to Supply Processes Vendor Managed Inventory (VMI) Information Flow Drive Speed, Efficiency and Effectiveness

17 Operations: Enabling NCR s Success

18 Customer Services Strategy Chris Wallace SVP, Customer Services

19 Creating Shareholder Value

20 Leveraging Our Worldwide Service Model One of the top 10 support providers in the world Thousands of dedicated, NCR badged Service professionals EMEA Providing a competitive advantage for NCR solutions Americas Asia Managing 20,000 service actions every day in over 110 countries Supporting: 9 of the world s top 10 banks, 8 of the top 10 retailers 9 of the top 10 telecoms and 8 of the top 10 airlines Supporting New markets with major airlines, gaming, health care and public sector entities Generating over $1.8B in profitable services revenue

21 Customer Services Strategy Enable growth of the new NCR with cost-effective service delivery and the world s highest levels of customer satisfaction and solution availability Cost Obsession Revenue Growth Opportunities Enhancing People Relationships Expanding CS Margins Through Innovations Total organization productivity 4 dimensions of growth Developing our people and our customers focusing on the moments of truth to make a difference Breaking out of the box with new services and new ways to deliver service

22 Customer Services Capabilities Example 1 st /2 nd Line SW Maintenance & Maintenance Support HW Maintenance ATM Network Design Services Site Assessment & Preparation Staging (preloading SW) On-site Installation Service Mgmt. Help Desk Incident Mgmt. Remote Monitoring Currency Mgmt. Cash Services SW Management Project Management Electronic Journal Asset Mgmt. ecommerce

23 Leveraging Offers into Emerging Industries Financial - Retail Travel & Hospitality - Healthcare - Entertainment & Gaming - Public Sector Standard Services HW/SW Maintenance Design & Staging Services Installation, Rollout and Project Mgt. Managed Services Asset & SW Management Help Desk & Service Mgt. Application Hosting Remote Monitoring & Management New Services Asset Profitability Site Sensitive Availability Customer- Specific Predictive Services Reusable Now Reusable within 18 Months To Be Scoped

24 Global Customer Services Market Landscape $20+Billion Market* NCR Position = $1.8 B Travel & Hospitality Healthcare Entertainment & Gaming Public Sector ecommerce * Derived from analyst reports and NCR estimates

25 Managing Down the Cost Continuum $ Cost Replace Product On-Site Repair Depot Repair Today Self Repair with Part Assisted Support eassisted Support Key Enablers 1. Productivity gains 2. New Service technology 3. Design for Serviceability Tomorrow Self Support Self Healing Our Opportunity

26 Taking Customer Services to the NEXT Level Service Productivity Service Our Brand Market Expansion Software Services Managed Services New Self-Service innovations Design for Service Remote Incident Resolution Service Technology Asset Management

27 NCR Financial Strategy Bob Fishman, CPA, CFA Interim CFO and Corporate Controller

28 Creating Shareholder Value

29 NCR Revenue Trends Revenue - $ Millions Q YTD Revenue Mix

30 Operating Margins by Segment NPOI Margin G Financial Self Service Retail Store Automation 15% 12% 12-13% 4% 4% 5% Customer Services 3% 5% 6% Total NCR 5% 6% ~7% Non-pension Operating Income Operating income before pension expense Does not include special charges

31 Continued EPS Expansion EPS Excluding Special Items Non-GAAP results; see NCR.com for GAAP to non-gaap reconciliation

32 Creating Shareholder Value

33 Profitable Revenue Growth to 2010 $100M $150M $350M Core Solutions $100M Adjacent Solutions New Industry Growth Higher Value Services & Better Attach Rates

34 Optimizing Cost Structure 2007 to 2010 Company Organization Functional Model Synergies Product Development Common Platform Product Lifecycle Management DfM/DfS Global Operations Manufacturing Productivity Demand to Supply Supplier Collaboration Customer Services Parts and Logistics Delivery Productivity Remote Systems Management $ M of savings opportunities $75-100M improves net income Other savings recycled into growth opportunities

35 Revenue Growth and NPOI Margin Revenue Growth G G CAGR Financial Self Service Retail Store Automation 1% 2% 9-11% 5-6% (1%) 2% 7-8% 5-7% Customer Services (5)% (1)% 4-5% 4-5% Total NCR (2)% 0% 5-6% ~5% NPOI Margin G 2010G Financial Self Service Retail Store Automation 15% 12% 12-13% 14-15% 4% 4% 5% ~7% Customer Services 3% 5% 6% ~9% Total NCR 5% 6% 7% ~9%

36 New Reporting Structure Current 2008 Reporting Structure Revenue & Gross Margin Revenue & NPOI Benefits Mirrors the way the business is managed More efficient sales motions Lower cost structure No more elimination item

37 Capital Available for Investment Cash Balance at spin-off ~$1,000 Minimum operating cash ($300) Currently available for investment $700 Authorized share repurchase program of $583M

38 Free Cash Flow Assumptions Net Income less pension adjustment Free Cash Flow Pension adjustment = Cash pension contributions less pension expense $50M per year Focus on working capital CAPEX Depreciation $110M per year including Capitalized Software Funding to implement cost savings initiatives Tax rate 25%

39 Capital Structure Strategy Invest cash to create value Share repurchases of $583M in the next one to two years Disciplined Organic Investment M&A Increase self-service R&D and demand creation Recycled $ Acquire self-service technology to gain speed to market Do not increase leverage at this time Would not reduce WACC, which is close to optimal at current debt levels Conservative capital structure helps support any potential pension funding requirement Maintains near-term flexibility Do not pursue dividend payment at this time Significant investment opportunities exist Would require high percentage of FCF / high commitment / low flexibility

40 Creating Shareholder Value $ /share $ /share $ /share

41 Continued EPS Expansion EPS Excluding Special Items ~20% CAGR ~15% CAGR $ $2.15 Revenue $0.15 $0.25 Cost Structure $0.35 $0.45 Capital Structure $0.15 $0.20 Non-GAAP results; see NCR.com for GAAP to non-gaap reconciliation

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