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Business Combinations and Divestitures
12 Months Ended
Dec. 31, 2016
Business Combinations [Abstract]  
Acquisitions
2. BUSINESS COMBINATIONS AND DIVESTITURES

Interactive Printer Solutions (IPS) Divestiture

As of December 31, 2015, we determined that it was probable that we would dispose of our Interactive Printer Solutions (IPS) business, which triggered an impairment assessment of the related assets which include long-lived assets and goodwill. The assets related to the IPS business were valued using a market approach based on an independent third-party market price. The assessment resulted in charges to reduce the carrying values of goodwill and property, plant and equipment, net by $16 million and $18 million, respectively, for a total charge of $34 million recorded in other (expense), net in the Consolidated Statements of Operations for the year ended December 31, 2015. The remaining assets and liabilities of $89 million and $39 million, respectively, were classified as held for sale and were included in other current assets and other current liabilities, respectively, in the Consolidated Balance Sheets as of December 31, 2015.
 
On May 27, 2016, NCR completed the sale of all but the Middle East and Africa (MEA) assets of the IPS business to Atlas Holdings LLC for cash consideration of $47 million. In connection with the sale, NCR agreed to provide Atlas Holdings with certain support services on a short-term basis following the closing under a transition services agreement. During the year ended December 31, 2016, a loss on sale of $2 million was recorded to other (expense), net in the Consolidated Statement of Operations. The remaining assets and liabilities related to the MEA IPS business are held for use in the Consolidated Balance Sheet for the year ended December 31, 2016.

Digital Insight Acquisition

On January 10, 2014, NCR completed its acquisition of Digital Insight Corporation (Digital Insight), for which it paid an aggregate purchase price of $1.65 billion, which includes $5 million that was withheld by the Company as a source of recovery for possible claims pursuant to the acquisition agreement and was paid to the sellers in the third quarter of 2014 pursuant to the terms of such agreement. The purchase price was paid from the net proceeds of the December 2013 offer and sale of NCR's 5.875% and 6.375% senior unsecured notes and borrowings under NCR's senior secured credit facility. As a result of the acquisition, Digital Insight became a wholly owned subsidiary of NCR.

Digital Insight was a leading U.S. based provider of cloud-based customer-facing digital banking software to domestic financial institutions. The acquisition is consistent with NCR's continued transformation to a software-driven, hardware-enabled business. Digital Insight complements and extends our existing capabilities in the banking industry to form a complete enterprise software platform across both physical and digital channels - mobile, online, branch, and ATM. From the acquisition date of January 10, 2014 through December 31, 2014, Digital Insight contributed $349 million in revenue and $104 million in operating income.

Recording of Assets Acquired and Liabilities Assumed The fair value of consideration transferred to acquire Digital Insight was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair market values as of the date of the acquisition as set forth below. This allocation was final as of December 31, 2014.

The allocation of the purchase price for Digital Insight was as follows:
In millions
Fair Value
Tangible assets acquired
$73
Acquired intangible assets other than goodwill
559
Acquired goodwill
1,243
Deferred tax liabilities
(190)
Liabilities assumed
(37)
Total purchase consideration
$1,648


Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The goodwill arising from the acquisition consists of the revenue synergies expected from combining the operations of NCR and Digital Insight. It is expected that none of the goodwill recognized in connection with the acquisition will be deductible for tax purposes. Refer to Note 4, "Goodwill and Purchased Intangible Assets" for the carrying amounts of goodwill by segment.

The intangible assets acquired in the acquisition include the following:
 
Estimated Fair Value
 
Weighted Average Amortization Period (1)
 
(In millions)
 
(In years)
Direct customer relationships
$
336

 
18
Technology - Software
121

 
5
Customer contracts
89

 
8
Tradenames
13

 
7
Total acquired intangible assets
$
559

 
13
(1)
Determination of the weighted average amortization period of the individual categories of intangible assets was based on the nature of the applicable intangible asset and the expected future cash flows to be derived from the intangible asset. Amortization of intangible assets with definite lives is recognized over the period of time the assets are expected to contribute to future cash flows.
The Company incurred $8 million of transaction expenses relating to the acquisition which are included in selling, general and administrative expenses in the Company's Consolidated Statement of Operations for the year ended December 31, 2014.

Unaudited Pro forma Information The following unaudited pro forma information presents the consolidated results of NCR and Digital Insight for the year ended 2014. The unaudited pro forma information is presented for illustrative purposes only. It is not necessarily indicative of the results of operations of future periods, or the results of operations that actually would have been realized had the entities been a single company during the periods presented or the results that the combined company will experience after the acquisition. The unaudited pro forma information does not give effect to the potential impact of current financial conditions, regulatory matters or any anticipated synergies, operating efficiencies or cost savings that may be associated with the acquisition. The unaudited pro forma information also does not include any integration costs or remaining future transaction costs that the companies may incur related to the acquisition as part of combining the operations of the companies.

The unaudited pro forma financial information for the year ended 2014 combines the results of NCR for the year ended December 31, 2014, which include the results of Digital Insight subsequent to January 10, 2014 (the acquisition date) and the historical results for Digital Insight for the 10 days preceding the acquisition date.

The unaudited pro forma consolidated results of operations, assuming the acquisition had occurred on January 1, 2014, are as follows:
In millions
 
For the year ended December 31, 2014
Revenue
 
$
6,599

Net income attributable to NCR
 
$
175



The unaudited pro forma results for the year ended December 31, 2014 include $8 million, net of tax, in eliminated transaction costs as if those costs had been recognized in the prior-year period.