8-K
NCR CORP false 0000070866 0000070866 2021-03-22 2021-03-22

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 22, 2021

 

 

 

LOGO

NCR CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   001-00395   31-0387920

(State or other jurisdiction

of incorporation or organization)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

864 Spring Street NW

Atlanta, GA 30308

(Address of principal executive offices and zip code)

Registrant’s telephone number, including area code: (937) 445-5000

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading
Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share   NCR   New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 7.01.

Regulation FD Disclosure.

In connection with a previously announced private financing transaction, NCR Corporation (“NCR”) anticipates disclosing to prospective investors certain information that has not been previously publicly reported. This information is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

This report shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

The information furnished under Item 7.01 in this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933 or the Exchange Act, except as set forth by specific reference in such filing. This report shall not be deemed an admission as to the materiality of any information in this report that is being disclosed pursuant to Regulation FD.

 

Item 8.01.

Other Events.

On March 22, 2021, NCR announced that it plans to offer, subject to market and customary conditions, senior notes due 2029 and senior notes due 2031. A copy of the press release announcing the launch of the offering is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

 

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits:

The following exhibits are attached with this current report on Form 8-K:

 

Exhibit No.    Description
99.1   

Unaudited Pro Forma Combined Financial Statements.

99.2   

Press Release issued by NCR Corporation, dated March 22, 2021.

104    Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    NCR CORPORATION
Date: March 22, 2021     By:  

/s/ Timothy C. Oliver

      Timothy C. Oliver
      Executive Vice President and Chief Financial Officer
EX-99.1

Exhibit 99.1

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

On January 25, 2021, NCR Corporation, a Maryland corporation (“NCR” or the “Company”), Cardtronics plc, a public limited company incorporated under the laws of England and Wales (“Cardtronics”) and solely for purposes of Section 8.2, Section 8.4 and Article IX of the Cardtronics Acquisition Agreement (as defined below), Cardtronics USA, Inc. a corporation incorporated in Delaware and a wholly owned subsidiary of Cardtronics , entered into an Acquisition Agreement (the “Cardtronics Acquisition Agreement”), pursuant to which the Company has agreed to acquire Cardtronics by means of a court-sanctioned scheme of arrangement under Part 26 of the U.K. Companies Act of 2006 for $39.00 per share, subject to the terms and conditions of the Cardtronics Acquisition Agreement (such transaction, the “Cardtronics Acquisition”). The board of directors of the Company has unanimously approved the Cardtronics Acquisition Agreement and the transactions completed thereby, including the Cardtronics Acquisition.

The following unaudited pro forma combined financial information (the “Pro Forma Financial Statements”) give effect to the Cardtronics Acquisition, which will be accounted for using the acquisition method of accounting with NCR identified as the accounting acquirer. Under the acquisition method of accounting, NCR will record assets acquired and liabilities assumed from Cardtronics at their respective acquisition date fair values on the closing date of the Cardtronics Acquisition.

The Pro Forma Financial Statements have been prepared from the respective historical consolidated financial statements of NCR and Cardtronics, adjusted to give effect to the Cardtronics Acquisition. The unaudited pro forma combined balance sheet (the “Pro Forma Balance Sheet”) combines the historical consolidated balance sheets of NCR and Cardtronics as of December 31, 2020, giving effect to the Cardtronics Acquisition as if it had been completed on December 31, 2020. The unaudited pro forma combined statements of operations (the “Pro Forma Statement of Operations”) for the year ended December 31, 2020, combines the historical consolidated statements of operations of NCR and Cardtronics, giving effect to the Cardtronics Acquisition as if it had been completed on January 1, 2020. The Pro Forma Financial Statements contain certain reclassification adjustments to conform the historical Cardtronics financial statement presentation to NCR’s financial statement presentation.

The Pro Forma Financial Statements are presented to reflect the Cardtronics Acquisition and the expected financing arrangements of the Company in connection therewith and do not represent what NCR’s financial position or results of operations would have been had the Cardtronics Acquisition occurred on the dates noted above, nor do they project the financial position or results of operations of the combined company following the Cardtronics Acquisition. The Pro Forma Financial Statements are intended to provide information about the continuing impact of the Cardtronics Acquisition as if it had been consummated earlier. The pro forma adjustments are based on available information as of the date hereof and certain assumptions that management believes are factually supportable and are expected to have a continuing impact on NCR’s results of operations with the exception of certain non-recurring charges to be incurred in connection with the Cardtronics Acquisition, as further described below. In the opinion of management, all material adjustments necessary to present fairly the Pro Forma Financial Statements have been made.

NCR and Cardtronics anticipate that certain non-recurring charges will be incurred in connection with the Cardtronics Acquisition, the substantial majority of which will consist of fees paid to financial, legal and accounting advisors, and certain bank-related fees. Any such charge could affect the future results of the post-acquisition company in the period in which such charges are incurred; however, these costs are not expected to be incurred in any period beyond twelve months from the closing date of the Cardtronics Acquisition. Accordingly, the Pro Forma Statement of Operations for the year ended December 31, 2020 reflects the effects of these non-recurring charges, which are not included in the historical balance sheets of NCR or Cardtronics as of December 30, 2020.

 

1


While the Pro Forma Financial Statements do not include the realization of any cost savings from operating efficiencies, synergies or other restructuring activities which might result from the Cardtronics Cardtronics Acquisition, management’s estimates of certain cost savings to be realized following closing of the Cardtronics Acquisition are illustrated in Note 7 to the Pro Forma Financial Statements. Further, there may be additional charges related to other integration activities resulting from the Cardtronics Acquisition, the timing, nature and amount of which management cannot identify as of the date hereof, and thus, such charges are not reflected in the Pro Forma Financial Statements.

As of the date hereof, NCR has used currently available information to determine preliminary fair value estimates for the Cardtronics Acquisition consideration and its allocation to the Cardtronics tangible assets and identifiable intangible assets acquired and liabilities assumed. Until the Cardtronics Acquisition is completed, NCR and Cardtronics are limited in their ability to share certain information. Therefore, NCR estimated the fair value of Cardtronics’ assets and liabilities based on reviews of Cardtronics’ annual report on Form 10-K for the year ended December 31, 2020, certain discussions with Cardtronics’ management, other due diligence procedures and based on past similar acquisitions which NCR believes were most relevant. The assumptions and estimates used to determine the preliminary purchase price allocation and fair value adjustments are described in the notes accompanying the Pro Forma Financial Statements.

The final determination of the fair value of Cardtronics’ assets and liabilities will be based on the actual net tangible and intangible assets of Cardtronics that exist as of the closing date of the Cardtronics Acquisition and, therefore, cannot be made prior to the completion of the Cardtronics Acquisition.

As a result of the foregoing, the transaction accounting adjustments are preliminary and subject to change as additional information becomes available and additional analysis is performed. The preliminary transaction accounting adjustments have been made solely for the purpose of providing the Pro Forma Financial Statements presented below. Any increases or decreases in the fair value of assets acquired and liabilities assumed upon completion of the final valuation will result in adjustments to the Pro Forma Balance Sheet and if applicable, the Pro Forma Statement of Operations. The final purchase price allocation may be materially different than that reflected in the preliminary purchase price allocation presented herein.

The Pro Forma Financial Statements have been developed from and should be read in conjunction with the separate historical consolidated financial statements and related notes thereto in each of NCR’s and Cardtronics’ respective annual report on Form 10-K for the year ended December 31, 2020.

 

2


NCR CORPORATION

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

As of December 31, 2020

 

     Historical      Transaction Accounting
Adjustments
            
(in millions, except per share amounts)    NCR      Cardtronics      Reclassification
Adjustments
(Note 5)
    Pro Forma
Adjustments
(Note 6)
         Pro Forma
Combined
 

Assets

               

Current assets

               

Cash and cash equivalents

   $ 338    $ 174    $ —     $ —          $ 512  

Accounts receivable, net

     1,117        90      —         (6 )     6(a)      1,201  

Inventories

     601        7      —         —            608  

Restricted cash

     —          137      59       —            196  

Other current assets

     422        54      (59     (2 )     6(b)      415  
  

 

 

    

 

 

    

 

 

   

 

 

      

 

 

 

Total current assets

     2,478        462        —         (8        2,932  
  

 

 

    

 

 

    

 

 

   

 

 

      

 

 

 

Property, plant and equipment, net

     373        430      —         (34 )     6(c)      769  

Goodwill

     2,837        759      —         809      6(d)      4,405  

Intangibles, net

     532        85      —         831      6(e)      1,448  

Operating lease assets

     344        60      —         —            404  

Prepaid pension cost

     199        —          —         —            199  

Deferred income taxes

     965        17      —         (173 )     6(g)      809  

Other assets

     686        18      —         (4 )     6(b)      700  
  

 

 

    

 

 

    

 

 

   

 

 

      

 

 

 

Total assets

   $ 8,414    $ 1,831    $ —     $ 1,421        $ 11,666
  

 

 

    

 

 

    

 

 

   

 

 

      

 

 

 

Liabilities and stockholders’ equity

               

Current liabilities

               

Short-term borrowings

   $ 8    $ 5    $ —     $ 108     6(h)    $ 121

Accounts payable

     632        40      —         (3 )     6(a)      669  

Payroll and benefits liabilities

     268        —          19       —            287  

Deferred service revenue and customer deposits

     507        —          —         —            507  

Current portion of other long term liabilities

     —          65        (65     —            —    

Accrued liabilities

     —          366        (366     —            —    

Other current liabilities

     673        —          412       62      6(a), 6(f), 6(h)      1,147  
  

 

 

    

 

 

    

 

 

   

 

 

      

 

 

 

Total current liabilities

     2,088        476        —         167          2,731  
  

 

 

    

 

 

    

 

 

   

 

 

      

 

 

 

Long-term debt

     3,270        773        1,743          5,786  

Pension and indemnity plan liabilities

     851        —          —         —            851  

Postretirement and postemployment benefits liabilities

     120        —          —         —            120  

Asset retirement obligations

     —          57      (57     —            —    

 

3


     Historical     Transaction Accounting
Adjustments
            
(in millions, except per share amounts)    NCR     Cardtronics     Reclassification
Adjustments
(Note 5)
    Pro Forma
Adjustments
(Note 6)
         Pro Forma
Combined
 

Income tax accruals

     102       —         —         —            102  

Deferred tax liabilities, net

     —         51     (51     —            —    

Operating lease liabilities

     325       57     —         —            382  

Other liabilities

     334       38     108       (50 )   6(g)      430  
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities

     7,090       1,452     —         1,860          10,402  
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Commitments and Contingencies

             

Series A convertible preferred stock

     273       —         —         —            273

Stockholders’ equity

             

Stockholders’ equity

             

Preferred stock

     —         —         —         —            —    

Common stock

     1     —         —         —            1

Paid-in capital

     368     343     —         (318   6(j)      393

Retained earnings

     950     130     —         (215   6(i)      865

Accumulated other comprehensive loss

     (271     (94     —         94     6(k)      (271
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Total stockholders’ equity

     1,048     379     —         (439        988

Noncontrolling interests in subsidiaries

     3     —         —         —            3
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Total stockholders’ equity

     1,051     379     —         (439        991
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Total liabilities and stockholders’ equity

   $ 8,414   $ 1,831   $ —       $ 1,421        $ 11,666
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

 

4


NCR CORPORATION

UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS

For the year ended December 31, 2020

 

     Historical     Transaction Accounting
Adjustments
            
(in millions, except per share amounts)    NCR     Cardtronics     Reclassification
Adjustments
(Note 5)
    Pro Forma
Adjustments
(Note 6)
         Pro Forma
Combined
 

Product revenue

   $ 2,005   $ —       $ 53   $ (54 )     6(l)    $ 2,004

Service revenue

     4,202     —         1,041     (37 )     6(l)      5,206

ATM operating revenue

     —         1,041     (1,041     —            —    

ATM product sales and other revenues

     —         53     (53     —            —    
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Total revenue

     6,207     1,094     —         (91        7,210
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Cost of products

     1,733     —         40     (45 )     6(l)      1,728

Cost of services

     2,950     —         754     18      6(l), 6(m), 6(o)      3,722

Cost of ATM operating revenue

     —         653     (653     —            —    

Cost of ATM product sales and other revenues

     —         40     (40     —            —    

Selling, general and administrative expenses

     1,051     160     54     146     

6(m), 6(n),

6(o), 6(p), 6(r)

     1,411

Research and development expenses

     234     —         —         —            234

Asset impairment charges

     18     4     (4     —            18

Restructuring charges

     —         9     (9     —            —    

Acquisition related expenses

     —         9     (9     —            —    

Depreciation and accretion expense

     —         133     (133     —            —    

Amortization of intangible assets

     —         32     —         (32 )     6(m)      —    
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Total operating expenses

     5,986     1,040     —         87          7,113
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Income from operations

     221     54     —         (178        97
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Loss on extinguishment of debt

     (20     (3     —         —            (23

Interest expense

     (218     (37     (12     (56 )     6(q)      (323

Amortization of deferred financing costs and note discount

     —         (12     12     —            —    

Other income (expense), net

     (42     18     —         (17 )     6(r)      (41
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Income (loss) from continuing operations before income taxes

     (59     20     —         (251        (290

Income tax expense (benefit)

     (53     1       (44 )     6(s)      (96
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Income (loss) from continuing operations

     (6     19     —         (207        (194

Loss from discontinued operations, net of tax

     (72     —         —         —            (72
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Net income (loss)

     (78     19     —         (207        (266

Net income attributable to noncontrolling interests

     1     —         —         —            1
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Net income (loss) attributable to NCR

   $ (79   $ 19   $ —       $ (207      $ (267
  

 

 

   

 

 

   

 

 

   

 

 

      

 

 

 

Amounts attributable to NCR common stockholders:

             

Income (loss) from continuing operations

   $ (7            $ (195

Series A preferred stock dividends

     (31              (31
  

 

 

            

 

 

 

Income (loss) from continuing operations attributable to NCR

     (38              (226

 

5


Loss from discontinued operations, net of tax

     (72              (72
  

 

 

            

 

 

 

Net income (loss) attributable to NCR

   $ (110       
                                

 
    
                                                     

 
   $ (298
  

 

 

            

 

 

 

Income (loss) per common share from continuing operations

             

Basic

   $ (0.30   $ 0.43          $ (1.76
  

 

 

   

 

 

          

 

 

 

Diluted

   $ (0.30   $ 0.42          $ (1.76
  

 

 

   

 

 

          

 

 

 

Net income (loss) per common share

             

Basic

   $ (0.86   $ 0.43          $ (2.32
  

 

 

   

 

 

          

 

 

 

Diluted

   $ (0.86   $ 0.42          $ (2.32
  

 

 

   

 

 

          

 

 

 

Weighted average common shares outstanding

             

Basic

     128.4     44.5            128.4

Diluted

     128.4     45.4            128.4

 

6


NCR CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

1.     DESCRIPTION OF THE TRANSACTION

On January 25, 2021, NCR Corporation, a Maryland corporation (“NCR” or the “Company”), Cardtronics plc, a public limited company incorporated under the laws of England and Wales (“Cardtronics”) and solely for purposes of Section 8.2, Section 8.4 and Article IX of the Cardtronics Acquisition Agreement (as defined below), Cardtronics USA, Inc. a corporation incorporated in Delaware and a wholly owned subsidiary of Cardtronics, entered into an Acquisition Agreement (the “Cardtronics Acquisition Agreement”), pursuant to which the Company has agreed to acquire Cardtronics by means of a court-sanctioned scheme of arrangement under Part 26 of the U.K. Companies Act of 2006 for $39.00 per share, subject to the terms and conditions of the Cardtronics Acquisition Agreement (such transaction, the “Cardtronics Acquisition”). The board of directors of the Company has unanimously approved the Cardtronics Acquisition Agreement and the transactions completed thereby, including the Cardtronics Acquisition.

NCR and Cardtronics currently expect the Cardtronics Acquisition to close in mid-2021, subject to the satisfaction of certain regulatory approvals and other customary closing conditions. There can be no assurance the Cardtronics Acquisition will close as expected or at all.

2.     DESCRIPTION OF THE DEBT FINANCING

In connection with the Cardtronics Acquisition, on February 16, 2021, the Company entered into (a) a second amended and restated commitment letter (the “Commitment Letter”), with certain financial institutions party thereto (the “Commitment Parties”), (b) an incremental term loan A facility agreement (the “Incremental Term Agreement”) with certain financial institutions party thereto as lenders (the “Term Loan A Lenders”), JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), and NCR International, Inc, (the “Guarantor Subsidiary”) and (c) an incremental revolving facility agreement (the “Incremental Revolving Agreement”) with certain financial institutions party thereto as lenders (the “Revolving Credit Lenders”), the Administrative Agent, the Guarantor Subsidiary and certain of the foreign subsidiaries (the “Foreign Borrowers”).

Pursuant to the Commitment Letter, the Commitment Parties (or lending affiliates thereof) have committed to provide a senior secured incremental term loan B facility under the Company’s existing senior secured credit facilities, in an aggregate principal amount of $195 million (as such amount may be adjusted pursuant to the terms of the Commitment Letter) (the “Term Loan B Facility”). Pursuant to the Incremental Term Agreement, the Term A Lenders have committed to provide senior secured incremental term loan A facilities under the Company’s existing senior secured credit facilities, in an aggregate principal amount of up to $1,505 million (the “Term Loan A Facilities”). The Term Loan B Facility and the Term Loan A Facilities will be available to the Company subject to certain conditions precedent, including, among other things, the closing of the Cardtronics Acquisition. Pursuant to the Incremental Term Agreement, $200 million of the Term Loan A Facilities will convert into revolving credit commitments under the Senior Secured Credit Facilities, and the revolving credit commitments thereunder will increase by an equal amount (the “Additional Revolving Commitments”), on the date that is three business days after the closing of the initial funding of the Term Loan A Facilities (or such other date that is acceptable to the Administrative Agent), subject to the satisfaction of certain conditions precedent, including repayment in full of the portion of the Term Loan A Facilities to be converted into Additional Revolving Commitments and customary conditions for borrowings of loans under the New Revolving Credit Facility (as defined herein).

Pursuant to the Incremental Revolving Agreement, the Revolving Credit Lenders have committed to provide the Company and the Foreign Borrowers with a $1,100 million revolving credit facility (the “New

 

7


NCR CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

Revolving Credit Facility”) under the Senior Secured Credit Facilities to replace the Company’s existing revolving credit facility, which will be available to the Company upon the satisfaction of certain customary conditions precedent, including, among other things, the closing of the Cardtronics Acquisition, and subject to increase in connection with the conversion of a portion of the Term Loan A Facilities into Additional Revolving Commitments (as described above).

3.    BASIS OF PRESENTATION

The NCR and Cardtronics historical financial information have been derived from each respective company’s historical audited financial statements for the year ended December 31, 2020. Certain of Cardtronics’ historical amounts have been reclassified to conform to NCR’s financial statement presentation, as discussed further in Note 5. The Pro Forma Financial Statements should be read in conjunction with NCR’s and Cardtronics’ historical consolidated financial statements and the notes thereto included in their respective Annual Reports on Form 10-K for the year ended December 31, 2020, which have been incorporated by reference into this report. The Pro Forma Balance Sheet gives effect to the Cardtronics Acquisition as if it had been completed on December 31, 2020. The Pro Forma Statement of Operations give effect to the Cardtronics Acquisition as if it had been completed on January 1, 2020.

The transaction accounting adjustments are described in the accompanying notes to the Pro Forma Financial Statements. In the opinion of NCR’s management, based on reviews of Cardtronics’ annual report on Form 10-K for the year ended December 31, 2020, certain discussions with Cardtronics’ management, other due diligence procedures and based on past similar acquisitions which NCR believes were most relevant, all material adjustments have been made that are necessary to present fairly, in accordance with Article 11 of Regulation S-X of the SEC, the Pro Forma Financial Statements.

The Pro Forma Financial Statements were prepared using the acquisition method of accounting in accordance with Accounting Standards Codification 805, Business Combinations (“ASC 805”), with NCR as the accounting acquirer, using the fair value concepts defined in Accounting Standards Codification 820 Fair Value Measurement, and based on the historical consolidated financial statements of NCR and Cardtronics. Under ASC 805, all assets acquired and liabilities assumed in a business combination are recognized and measured at their assumed acquisition date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of purchase price consideration over the fair value of assets acquired and liabilities assumed, if any, is allocated to goodwill.

The allocation of the purchase price consideration depends upon certain estimates and assumptions, all of which are preliminary. The allocation of the purchase price consideration has been made for the purpose of developing the Pro Forma Financial Statements. NCR estimated the fair value of Cardtronics’ assets and liabilities based on reviews of Cardtronics’ annual report on Form 10-K for the year ended December 31, 2020, certain discussions with Cardtronics’ management, other due diligence procedures and based on past similar acquisitions which NCR believes were most relevant. A final determination of fair values of assets acquired and liabilities assumed relating to the Cardtronics Acquisition could differ materially from the preliminary allocation of the purchase price consideration. This final valuation will be based on the actual net tangible and intangible assets of Cardtronics existing at the closing date of the Cardtronics Acquisition. The final valuation may materially change the allocation of purchase price consideration, which could materially affect the fair values assigned to the assets and liabilities and could result in a material change to the Pro Forma Financial Statements.

Upon completion of the Cardtronics Acquisition, NCR will perform a comprehensive review of Cardtronics’ accounting policies. As a result of the review, NCR may identify differences between the

 

8


NCR CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

accounting policies of the two companies, which when conformed, could have a material impact on the Pro Forma Financial Statements. Based on a preliminary analysis, NCR did not identify any differences that would have a material impact on the Pro Forma Financial Statements. As a result, the Pro Forma Financial Statements assume there are no differences in accounting policies.

The Pro Forma Financial Statements are for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the Cardtronics Acquisition had been completed on the dates indicated, nor is it indicative of future operating results or financial position. The Pro Forma Financial Statements do not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the Cardtronics Acquisition, the costs to integrate the operations of NCR and Cardtronics or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements.

4.     PRELIMINARY ACQUISITION ACCOUNTING

Preliminary purchase price consideration. The following table presents the preliminary purchase price consideration:

 

In millions       

Estimated cash paid for outstanding shares of Cardtronics (1)

   $ 1,761

Estimated cash paid for certain outstanding equity awards of Cardtronics (2)

     6

Estimated replacement equity awards issued for certain outstanding equity awards of Cardtronics (3)

     25

Estimated cash paid to settle the outstanding debt of Cardtronics (4)

     809

Cash paid on behalf of Cardtronics for contract termination penalty

     36

Settlement of estimated pre-existing relationships between NCR & Cardtronics

     6
  

 

 

 

Estimated purchase price consideration

   $     2,643
  

 

 

 

 

(1)

The cash component of the preliminary purchase price consideration is determined based on 100% of the outstanding Cardtronics shares being exchanged for the per share cash amount of $39.00.

 

In millions, except per share amounts    Shares      Per Share      Total  

Cardtronics shares outstanding as of February 25, 2021

     45.16    $ 39.00    $ 1,761

 

(2)

Estimated cash consideration for the settlement of certain outstanding vested equity awards which will be paid out on the closing date of the Cardtronics Acquisition.

(3)

Estimated consideration for replacement of certain outstanding equity awards of Cardtronics. Certain outstanding equity awards will be replaced by NCR’s equity awards with similar terms. A portion of the fair value of NCR’s equity awards issued represents consideration transferred, while a portion represents compensation expense based on the vesting terms of the equity awards.

 

9


NCR CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

(4)

The estimated cash paid to settle the outstanding the debt of Cardtronics consists of the following components:

 

In millions       

Estimated cash paid to settle the term loan facility of Cardtronics

   $ 498

Estimated cash paid to settle the senior unsecured notes of Cardtronics

     300

Estimated call premium on extinguishment of senior unsecured notes of Cardtronics

     8

Estimated cash paid to settle the accrued and unpaid interest of the term loan facility and senior unsecured notes

     3
  

 

 

 

Total estimated cash paid to settle the outstanding debt of Cardtronics

   $     809
  

 

 

 

Preliminary purchase price allocation. The following table presents the preliminary purchase price allocation of the assets acquired and the liabilities assumed in the Cardtronics Acquisition as of December 31, 2020, using currently available information:

 

In millions       

Assets acquired

  

Cash and cash equivalents

   $ 174

Accounts receivable

     90

Inventory

     7

Restricted cash

     137

Other current assets

     52

Property, plant and equipment

     396

Right of use assets - operating leases

     60

Deferred income tax assets

     17

Acquired goodwill

     1,568

Acquired intangible assets other than goodwill

     916

Other non-current assets

     14
  

 

 

 
   $ 3,431

Liabilities assumed

  

Accounts payable

   $ 37

Accrued liabilities

     360

Current portion of long-term liabilities

     65

Asset retirement obligations

     57

Long term lease liability - Operating leases

     57

Deferred income tax liabilities

     174

Other non-current liabilities

     38
  

 

 

 
   $ 788
  

 

 

 

Estimated purchase price consideration

   $ 2,643
  

 

 

 

Goodwill represents the future economic benefits arising from other assets acquired that could not be individually separately recognized. The goodwill arising from the Cardtronics Acquisition consists of revenue and cost synergies expected from combining the operations of NCR and Cardtronics. It is expected that none of the goodwill recognized in connection with the Cardtronics Acquisition will be deductible for tax purposes.

 

10


NCR CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

Preliminary identifiable intangible assets in the unaudited pro forma combined financial information consist of the following:

 

     Preliminary Fair
Value
     Estimated Average Lives
Amortization Period
 
     (In millions)      (In years)  

Merchant & Bank Branding/Customer Relationships

   $         586      8 years  

Technology

     275      5 years  

Tradenames

     46      2 years  

Noncompete agreements

     9      2 years  
  

 

 

    

Total estimated acquired intangible assets

   $ 916   
  

 

 

    

The identifiable intangible assets and related amortization are preliminary and are based on management’s estimates after consideration of similar transactions. As discussed above, the amount that will ultimately be allocated to identifiable intangible assets, and the related amount of amortization, may differ materially from this preliminary allocation. In addition, the periods the amortization impacts will ultimately be based upon the periods in which the associated economic benefits or detriments are expected to be derived, or where appropriate, based on the assumption using a straight-line method. Therefore, the amount of amortization may differ significantly between periods based upon the final value assigned and amortization period and methodology used for each identifiable intangible asset and liability.

5.     RECLASSIFICATION ADJUSTMENTS

The reclassification adjustments to the Pro Forma Balance Sheet as of December 31, 2020 are as follows:

 

   

Reclassification of $59 million from Other current assets to Restricted cash

 

   

Reclassification of $65 million from Current portion of long term liabilities to Other current liabilities

 

   

Reclassification of $366 million from Accrued liabilities to Other current liabilities

 

   

Reclassification of $57 million from Asset retirement obligations to Other liabilities

 

   

Reclassification of $51 million from Deferred tax liabilities, net to Other liabilities

 

   

Reclassification of $19 million from Other current liabilities to Payroll and benefits liabilities

The reclassification adjustments to the Pro Forma Statement of Operations for the year ended December 31, 2020 are as follows:

 

   

Reclassification of $1,041 million from ATM operating revenue to Service revenue

 

   

Reclassification of $53 million from ATM product sales and other revenue to Product revenue

 

   

Reclassification of $653 million from Cost of ATM operating revenue to Cost of services

 

   

Reclassification of $40 million from Cost of ATM product sales and other revenue to Cost of products

 

   

Reclassification of $101 million from Depreciation and accretion expense to Cost of Services

 

   

Reclassification of $32 million from Depreciation and accretion expense to Selling, general and administrative expenses

 

   

Reclassification of $4 million from Asset impairment charges to Selling, general and administrative expenses

 

11


NCR CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

   

Reclassification of $9 million from Restructuring charges to Selling, general and administrative expenses

 

   

Reclassification of $9 million from Acquisition related charges to Selling, general and administrative expenses

 

   

Reclassification of $12 million from Amortization of deferred financing costs and note discount to Interest expense

6.    PRO FORMA ADJUSTMENTS

The pro forma adjustments to the Pro Forma Balance Sheet as of December 31, 2020 are as follows:

 

(a)

Reflects the elimination of outstanding accounts receivable and accounts payable balances between NCR and Cardtronics.

 

In millions    Balance sheet location    Adjustment  

Elimination of amounts due from Cardtronics

   Accounts receivable, net    $ (6

Elimination of amounts due to NCR

   Accounts payable    $ (3

Elimination of amounts due to NCR

   Other current liabilities    $ (3

 

(b)

Reflects the preliminary purchase accounting adjustment to remove the current and non-current deferred sales commissions balances from other current assets and other assets.

 

(c)

Reflects the elimination of Cardtronics’ software capitalization balances from property, plant and equipment, net.

 

(d)

Reflects the elimination of Cardtronics’ goodwill and the recognition of the preliminary estimate of goodwill for the estimated purchase price consideration in excess of the fair value of the net assets acquired. Refer to Note 4 for additional information on the goodwill expected to be recognized.

 

In millions    Adjustment  

Elimination of Cardtronics’ goodwill

   $ (759

Preliminary estimate of goodwill from the Cardtronics Acquisition

     1,568
  

 

 

 

Net adjustment to goodwill

   $         809
  

 

 

 

 

(e)

Reflects the preliminary purchase accounting adjustment for estimated intangible assets based on the acquisition method of accounting. Refer to Note 4 for additional information on the acquired intangible assets expected to be recognized.

 

In millions    Adjustment  

Elimination of Cardtronics’ intangible assets

   $ (85

Preliminary estimate for intangible assets from the Cardtronics Acquisition

     916
  

 

 

 

Net adjustment to intangible assets

   $ 831
  

 

 

 

 

(f)

Reflects the accrual of the estimated transaction costs of $68 million expected to be incurred by NCR and Cardtronics related to the Cardtronics Acquisition.

 

12


NCR CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

(g)

Reflects the origination of deferred tax balances resulting from the preliminary purchase accounting adjustments based on applicable statutory tax rates for jurisdictions associated with the respective estimated purchase price allocation. The estimate of deferred tax liability is preliminary and is subject to change based upon NCR’s final determination of the fair value of assets acquired and liabilities assumed, by jurisdiction including the final allocation across such legal entities and related jurisdictions.

 

In millions    Adjustment  

Adjustment for presentation of deferred tax balances

   $ (50

Deferred tax liability originating from preliminary purchase price accounting adjustments

     (123
  

 

 

 

Net adjustment to deferred tax assets

   $ (173
  

 

 

 

Adjustment for presentation of deferred tax balances

   $ (50
  

 

 

 

Net adjustment to other liabilities

   $ (50
  

 

 

 

 

(h)

Reflects the new debt financing of the Cardtronics Acquisition as described in Note 2, the payment of the financing fees and elimination of Cardtronics’ historical debt and related debt financing fees:

 

In millions    Adjustment  

Elimination of Cardtronics’ historical short term borrowings balance

   $ (5

Current portion of bridge facility and senior unsecured term loan facilities

     113
  

 

 

 

Net adjustment to short term borrowings

   $ 108
  

 

 

 

Bridge facility

   $ 1,000

Senior secured term loan facilities

     1,505

Senior secured revolving credit facility

     159  

Current portion of bridge facility and senior unsecured term loan facilities

     (113

Estimate of new deferred financing fees

     (35

Elimination of Cardtronics’ historical long-term debt balance

     (773
  

 

 

 

Net adjustment to long term debt

   $ 1,743  
  

 

 

 

Additionally, there was an adjustment to reflect to elimination of Cardtronics’ historical balance of accrued interest of $3 million from other current liabilities.

 

(i)

Reflects the impact to retained earnings for the accrual of the estimated transaction costs related to the Cardtronics Acquisition described in (f) above and bank-related fees as well as the elimination of Cardtronics’ historical retained earnings

 

In millions    Adjustment  

Estimated transaction costs

   $ (68

Estimated bank-related fees

     (17

Elimination of Cardtronics’ retained earnings

     (130
  

 

 

 

Net adjustment to retained earnings

   $ (215
  

 

 

 

 

13


NCR CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

(j)

Reflects the elimination of Cardtronics’ historical paid in capital and record paid in capital for the pre-combination stock compensation expense related to the replacement awards.

 

In millions    Adjustment  

Pre-combination stock compensation expense related to replacement awards

   $ 25

Elimination of Cardtronics’ paid in capital

     (343
  

 

 

 

Net adjustment to paid in capital

   $ (318
  

 

 

 

 

(k)

Reflects the elimination of Cardtronics’ historical accumulated other comprehensive loss balance.

The adjustments to the Pro Forma Statement of Operations for the year ended December 31, 2020 are as follows:

 

(l)

Reflects the elimination of the impact of revenue and cost transactions between NCR and Cardtronics.

 

(m)

Reflects the elimination of Cardtronics’ historical amortization of intangible assets and to record expense for the estimated intangible assets related to the Cardtronics Acquisition.

 

In millions    Income statement
location
   For the year ended
December 31, 2020
 

Elimination of Cardtronics’ historical amortization of intangible assets

   Amortization of intangible
assets
   $ (32

Estimated amortization expense for intangible assets

   Cost of Services    $ 55

Estimated amortization expense for intangible assets

   Selling, general and
administrative
   $ 101

 

(n)

Reflects the elimination of the amortization of the deferred sales commissions of $3 million for the year ended December 31, 2020.

 

(o)

Reflects the elimination of Cardtronics’ historical stock compensation expense and the stock compensation expense for the post-combination expense from the replacement awards issued as of the closing date of the Cardtronics Acquisition for the year ended December 31, 2020.

 

In millions    Income statement
location
   For the year ended
December 31, 2020
 

Elimination of Cardtronics’ historical stock compensation expense

   Cost of services    $ (1

Elimination of Cardtronics’ historical stock compensation expense

   Selling, general and
administrative expenses
   $ (21

Post-combination stock compensation expense for the replacement awards

   Cost of services    $ 1

Post-combination stock compensation expense for the replacement awards

   Selling, general and
administrative expenses
   $ 17

 

14


NCR CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

(p)

Reflects the elimination of Cardtronics’ historical amortization expense on software capitalization balances of $16 million for the year ended December 31, 2020.

 

(q)

Reflects the elimination of Cardtronics’ historical interest expense and amortization of deferring financing costs and record interest expense and amortization of deferred financing costs related to the new debt financing of the Cardtronics Acquisition described in (h) above.

 

In millions    Income statement
location
     For the year ended
December 31, 2020
 

Elimination of Cardtronics’ historical interest expense

     Interest Expense      $ (30

Elimination of Cardtronics’ historical amortization of deferred financing costs

     Interest Expense      $ (3

Record estimated interest expense from new debt financings

     Interest Expense      $ 82

Record estimated amortization of new deferred financing costs

     Interest Expense      $ 7

The effective interest rates used to calculate the estimated interest expense from the new debt were LIBOR plus 2.5% for the term loan and revolver facilities and 4.0% for the bridge loan facility. A change in interest rates by 0.125% would increase or decrease the estimated interest expense by approximately $3 million.

 

(r)

Reflects the estimated transaction costs of the Cardtronics Acquisition and bank-related fees related to the new debt financing as described in Note 2 that are expected to be incurred.

 

In millions    Income statement
location
  For the year ended
December 31, 2020
 

Estimated transaction costs

   Selling, general and
administrative expenses
  $ 68

Estimated bank-related fee

   Other income (expense),
net
  $ 17

 

(s)

Reflects the income tax expense (benefit) effects of the transaction accounting adjustments based on the applicable statutory rates associated with the respective adjustments.

7.    MANAGEMENT’S ADJUSTMENTS

Management expects that, following completion of the Cardtronics Acquisition, the post-acquisition company will realize certain cost savings as compared to the historical combined costs of NCR and Cardtronics operating independently. management’s adjustments, which are based on estimated cost savings as a result of the integration of personnel and the manner in which the post-acquisition company will be integrated and managed prospectively are not reflected in the Pro Forma Statement of Operations. Management is targeting to achieve approximately $120 million in annualized synergies primarily related to operating cost and selling, general and administrative savings within 18 months from the consummation of the Cardtronics Acquisition. Additionally, the Company estimates that the cost to achieve the annual synergies could be approximately $30 million.

Material limitations of these adjustments include not fully realizing the anticipated benefits, taking longer to realize these cost savings, or other adverse effects that NCR does not currently foresee. Cost savings expectations are inherently estimates that are difficult to predict and are necessarily speculative in nature, and there can be no assurance that NCR will achieve expected or any actual cost savings. A variety of factors could cause NCR not to realize some or all of the expected cost savings, including,

 

15


NCR CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

among others, delays in the anticipated timing of activities related to NCR’s cost savings programs, lack of sustainability in cost savings over time, unexpected costs associated with operating its business, NCR’s ability to reduce headcount and NCR’s ability to achieve the efficiencies contemplated by the cost savings initiative. Further, there may be additional charges incurred in achieving these cost savings for which management cannot determine the nature and amount as of the date hereof. Certain of the assumptions relate to business decisions that are subject to change, including, among others, NCR’s anticipated business strategies, NCR’s marketing strategies, NCR’s product development and licensing strategies and NCR’s ability to anticipate and react to business trends. Other assumptions relate to risks and uncertainties beyond NCR’s control, including, among others, the economic environment in which NCR operates and other developments in NCR’s industry as well as capital markets conditions from time to time. The actual results of implementing the various cost savings initiatives may differ materially from the estimates set forth herein if any of these assumptions prove incorrect. Moreover, NCR’s continued efforts to implement these cost savings may divert management attention from the rest of its business and may preclude NCR from seeking attractive new product opportunities, any of which may materially and adversely affect its business. These adjustments reflect all management’s adjustments that are, in the opinion of management, necessary to a fair statement of the Pro Forma Financial Statements presented.

Had the Cardtronics Acquisition been completed as of January 1, 2020, management estimates that operating costs and selling, general and administrative expenses of $90 million, on a pre-tax basis, would not have been incurred for the year ended December 31, 2020.

The tax effect has been calculated based on the applicable statutory rates to the aforementioned adjustments.

 

16


NCR CORPORATION

NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

 

     For the year ended December 31, 2020  
In millions, except per share amounts    Pro Forma
Combined
     Management’s
Adjustment
     As
Adjusted
 

Income (loss) from continuing operations before income taxes

   $ (290    $ 90    $ (200

Income (loss) from continuing operations

   $ (194    $ 70    $ (124

Net income (loss)

   $ (266    $ 70    $ (196

Income (loss) from continuing operations attributable to NCR common stockholders

   $ (226    $ 70    $ (156

Net income (loss) attributable to NCR common stockholders

   $ (298    $ 70    $ (228

Income (loss) per common share from continuing operations

        

Basic

   $ (1.76       $ (1.21

Diluted

   $ (1.76       $ (1.21

Net income (loss) per common share

        

Basic

   $ (2.32       $ (1.78

Diluted

   $ (2.32       $ (1.78

Weighted average common shares outstanding

        

Basic

     128.4         128.4

Diluted

     128.4         128.4

 

17

EX-99.2

Exhibit 99.2

 

LOGO      NEWS RELEASE

March 22, 2021

NCR CORPORATION ANNOUNCES OFFERING OF SENIOR NOTES

ATLANTA – March 22, 2021NCR Corporation (NYSE: NCR) (the “Company”) announced today its intention to offer, subject to market and customary conditions, senior notes due 2029 (the “2029 Notes”) and senior notes due 2031 (the “2031 Notes” and, together with the 2029 Notes, the “Notes”) in an aggregate principal amount of $1.0 billion, in connection with its previously announced acquisition (the “Cardtronics Acquisition”) of Cardtronics plc, a public limited company incorporated in England and Wales (“Cardtronics”). The Notes will be general unsecured senior obligations of the Company and will be initially guaranteed by the Company’s wholly-owned subsidiary, NCR International, Inc., a Delaware corporation.

The Company intends to use the net proceeds from the offering, together with borrowings under its senior secured credit facilities and its trade receivables securitization facility and/or cash on hand, to finance the consideration payable in connection with the Cardtronics Acquisition, to repay certain indebtedness of Cardtronics and to pay related fees and expenses. The closing of this offering is not conditioned on the closing of the Cardtronics Acquisition which, if completed, will occur subsequent to the closing of this offering. The proceeds of the offering will be held in escrow until satisfaction of the escrow release conditions.

If such escrow release conditions are not satisfied on or prior to the earlier of November 1, 2021 and the date on which the Company notifies the escrow agent and the trustee in writing that the Company has determined that the escrow release conditions will not be satisfied, then the 2029 Notes will be subject to a special mandatory redemption. The 2031 Notes are not subject to special mandatory redemption; accordingly, if the Cardtronics Acquisition is not consummated, the net proceeds of such notes will be used for general corporate purposes.

The Notes and the related subsidiary guarantee will be offered in the United States to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and outside the United States pursuant to Regulation S under the Securities Act. The Notes and the related subsidiary guarantee have not been registered under the Securities Act and may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements.

This press release shall not constitute an offer to sell, or the solicitation of an offer to buy, nor shall there be any sale of Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About NCR Corporation

NCR Corporation (NYSE: NCR) is a leading software- and services-led enterprise provider in the financial, retail and hospitality industries. NCR is headquartered in Atlanta, Georgia, with 36,000 employees globally. NCR is a trademark of NCR Corporation in the United States and other countries.

News Media Contact

Cameron Smith

NCR Corporation

678.808.5313

cameron.smith@ncr.com

Investor Contact

Michael Nelson

NCR Corporation

678.808.6995

michael.nelson@ncr.com


Cautionary Statement Regarding Forward-Looking Statements

This release contains forward-looking statements. Forward-looking statements use words such as “expect,” “anticipate,” “outlook,” “intend,” “plan,” “believe,” “will,” “should,” “would,” “could,” and words of similar meaning. Statements that describe or relate to the Company’s plans, goals, intentions, strategies, financial outlook, the Company’s expectations regarding the Cardtronics Acquisition, the aggregate principal amount of the Notes to be sold or the intended use of proceeds from the offering of the Notes, and statements that do not relate to historical or current fact, are examples of forward-looking statements. Forward-looking statements are based on our current beliefs, expectations and assumptions, which may not prove to be accurate, and involve a number of known and unknown risks and uncertainties, many of which are out of the Company’s control. Forward-looking statements are not guarantees of future performance, and there are a number of important factors that could cause actual outcomes and results to differ materially from the results contemplated by such forward-looking statements. Additional information concerning these and other factors can be found in the Company’s filings with the U.S. Securities and Exchange Commission, including the Company’s most recent annual report on Form 10-K and current reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made. The Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.