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8-K - FORM 8-K - NCR CORP | form8-k.htm |
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On February 3, 2012, NCR Corporation, a Maryland corporation (“NCR”) entered into an Asset Purchase Agreement (the “Agreement”) with Redbox Automated Retail, LLC (“Purchaser”) a Delaware limited liability company, pursuant to which NCR agreed to sell certain assets of its Entertainment business (the “Entertainment Business”) to Purchaser (the “Transaction”).
Pursuant to the terms of the Agreement, as amended on June 22, 2012, and upon the terms and conditions thereof, on June 22, 2012, NCR completed the disposition of the assets of its Entertainment business to Purchaser for cash consideration of $100 million.
The unaudited pro forma condensed consolidated balance sheet of NCR as of March 31, 2012 is presented as if the disposition occurred on March 31, 2012. The unaudited pro forma condensed consolidated statements of operations for the three months ended March 31, 2012 and for each of the years ended December 31, 2011, 2010 and 2009 are presented as if the disposition occurred on January 1, 2009 and exclude results from discontinued operations.
The results of operations of the Entertainment business were classified as a discontinued operation in the unaudited condensed consolidated financial statements and notes thereto included in our Quarterly Report on Form 10-Q as of and for the three months ended March 31, 2012. As such, in the condensed consolidated statement of operations for the three months ended March 31, 2012, there are no pro forma adjustments to continuing operations necessary to reflect the disposition.
The unaudited pro forma condensed consolidated financial statements are not intended to represent or be indicative of our consolidated results of operations or financial position that we would have reported had the Transaction been completed as of the dates presented, and should not be taken as representation of our future consolidated results of operations or financial condition.
The unaudited pro forma condensed consolidated financial statements are based upon and should be read in conjunction with historical consolidated financial statements and related notes of NCR included in our Annual Report on Form 10-K for the years ended December 31, 2011, 2010 and 2009 and our Quarterly Report on Form 10-Q for the three month period ended March 31, 2012.
NCR Corporation
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 2012
NCR Historical (Note 2) | Pro Forma Adjustments (Note 3) | NCR Pro Forma | |||||||||
In millions, except per share amounts | |||||||||||
Assets | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 414 | $ | 86 | (a) | $ | 500 | ||||
Accounts receivable, net | 1,065 | — | 1,065 | ||||||||
Inventories, net | 802 | (7 | ) | (b) | 795 | ||||||
Assets held for sale | 61 | (61 | ) | (b) | — | ||||||
Other current assets | 336 | — | 336 | ||||||||
Total current assets | 2,678 | 18 | 2,696 | ||||||||
Property, plant and equipment, net | 298 | — | 298 | ||||||||
Goodwill | 918 | — | 918 | ||||||||
Intangible assets, net | 302 | — | 302 | ||||||||
Prepaid pension cost | 355 | — | 355 | ||||||||
Deferred income taxes | 715 | (6 | ) | (c) | 709 | ||||||
Other assets | 424 | — | 424 | ||||||||
Total assets | $ | 5,690 | $ | 12 | $ | 5,702 | |||||
Liabilities and stockholders’ equity | |||||||||||
Current liabilities | |||||||||||
Short-term borrowings | $ | 18 | $ | — | $ | 18 | |||||
Accounts payable | 582 | — | 582 | ||||||||
Payroll and benefits liabilities | 164 | — | 164 | ||||||||
Deferred service revenue and customer deposits | 503 | — | 503 | ||||||||
Other current liabilities | 406 | — | 406 | ||||||||
Total current liabilities | 1,673 | — | 1,673 | ||||||||
Long-term debt | 809 | — | 809 | ||||||||
Pension and indemnity plan liabilities | 1,667 | — | 1,667 | ||||||||
Postretirement and postemployment benefits liabilities | 256 | — | 256 | ||||||||
Income tax accruals | 128 | — | 128 | ||||||||
Environmental liabilities | 208 | — | 208 | ||||||||
Other liabilities | 56 | — | 56 | ||||||||
Total liabilities | 4,797 | — | 4,797 | ||||||||
Redeemable noncontrolling interest | 15 | 15 | |||||||||
Stockholders’ equity | |||||||||||
NCR stockholders’ equity | |||||||||||
Preferred stock | — | — | — | ||||||||
Common stock | 2 | — | 2 | ||||||||
Paid-in capital | 300 | — | 300 | ||||||||
Retained earnings | 2,017 | 12 | (c) | 2,029 | |||||||
Accumulated other comprehensive (loss) income | (1,475 | ) | — | (1,475 | ) | ||||||
Total NCR stockholders’ equity | 844 | 12 | 856 | ||||||||
Noncontrolling interests in subsidiaries | 34 | — | 34 | ||||||||
Total stockholders’ equity | 878 | 12 | 890 | ||||||||
Total liabilities and stockholders’ equity | $ | 5,690 | $ | 12 | $ | 5,702 |
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
NCR Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the three months ended March 31, 2012
NCR Historical (Note 2) | Pro Forma Adjustments (Note 3) | NCR Pro Forma | |||||||||
In millions, except per share amounts | |||||||||||
Product Revenue | $ | 570 | $ | — | $ | 570 | |||||
Service Revenue | 674 | — | 674 | ||||||||
Total Revenue | 1,244 | — | 1,244 | ||||||||
Cost of Products | 446 | — | 446 | ||||||||
Cost of services | 500 | — | 500 | ||||||||
Selling, general and administrative expenses | 199 | — | 199 | ||||||||
Research and development expenses | 50 | — | 50 | ||||||||
Total operating expenses | 1,195 | — | 1,195 | ||||||||
Income from operations | 49 | — | 49 | ||||||||
Interest expense | (9 | ) | — | (9 | ) | ||||||
Other expense, net | (2 | ) | — | (2 | ) | ||||||
Income from continuing operations before income taxes | 38 | — | 38 | ||||||||
income tax (benefit) expense | (1 | ) | — | (1 | ) | ||||||
Income from continuing operations | 39 | — | 39 | ||||||||
Net income attributable to noncontrolling interests | 1 | — | 1 | ||||||||
Income from continuing operations attributable to NCR common stockholders | $ | 38 | $ | — | $ | 38 | |||||
Income per share attributable to NCR common stockholders: | |||||||||||
Basic | $ | 0.24 | $ | 0.24 | |||||||
Diluted | $ | 0.23 | $ | 0.23 | |||||||
Weighted average common shares outstanding | |||||||||||
Basic | 158.2 | 158.2 | |||||||||
Diluted | 162.3 | 162.3 |
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
NCR Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 2011
NCR Historical (Note 2) | Pro Forma Adjustments (Note 3) | NCR Pro Forma | |||||||||
In millions, except per share amounts | |||||||||||
Product revenue | $ | 2,744 | $ | 152 | (d) | $ | 2,592 | ||||
Service revenue | 2,699 | — | 2,699 | ||||||||
Total revenue | 5,443 | 152 | 5,291 | ||||||||
Cost of products | 2,209 | 198 | (d) | 2,011 | |||||||
Cost of services | 2,099 | 1 | (d) | 2,098 | |||||||
Selling, general and administrative expenses | 805 | 11 | (d) | 794 | |||||||
Research and development expenses | 177 | 1 | (d) | 176 | |||||||
Impairment of long-lived and other assets | 88 | 88 | (d) | — | |||||||
Total operating expenses | 5,378 | 299 | 5,079 | ||||||||
Income (loss) from operations | 65 | (147 | ) | 212 | |||||||
Interest expense | (13 | ) | — | (13 | ) | ||||||
Other expense, net | (3 | ) | — | (3 | ) | ||||||
Income (loss) from continuing operations before income taxes | 49 | (147 | ) | 196 | |||||||
Income tax expense (benefit) | — | (52 | ) | (d) | 52 | ||||||
Income (loss) from continuing operations | 49 | (95 | ) | 144 | |||||||
Net loss attributable to noncontrolling interests | (1 | ) | — | (1 | ) | ||||||
Income (loss) from continuing operations attributable to NCR common stockholders | $ | 50 | $ | (95 | ) | $ | 145 | ||||
Income per share attributable to NCR common stockholders: | |||||||||||
Basic | $ | 0.32 | $ | 0.92 | |||||||
Diluted | $ | 0.31 | $ | 0.90 | |||||||
Weighted average common shares outstanding | |||||||||||
Basic | 158.0 | 158.0 | |||||||||
Diluted | 161.0 | 161.0 |
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
NCR Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 2010
NCR Historical (Note 2) | Pro Forma Adjustments (Note 3) | NCR Pro Forma | |||||||||
In millions, except per share amounts | |||||||||||
Product revenue | $ | 2,400 | $ | 99 | (d) | $ | 2,301 | ||||
Service revenue | 2,410 | — | 2,410 | ||||||||
Total revenue | 4,810 | 99 | 4,711 | ||||||||
Cost of products | 1,923 | 124 | (d) | 1,799 | |||||||
Cost of services | 1,923 | 1 | (d) | 1,922 | |||||||
Selling, general and administrative expenses | 696 | 10 | (d) | 686 | |||||||
Research and development expenses | 162 | 6 | (d) | 156 | |||||||
Total operating expenses | 4,704 | 141 | 4,563 | ||||||||
Income (loss) from operations | 106 | (42 | ) | 148 | |||||||
Interest expense | (2 | ) | — | (2 | ) | ||||||
Other expense, net | (11 | ) | — | (11 | ) | ||||||
Income (loss) from continuing operations before income taxes | 93 | (42 | ) | 135 | |||||||
Income tax expense (benefit) | (26 | ) | (15 | ) | (d) | (11 | ) | ||||
Income (loss) from continuing operations | 119 | (27 | ) | 146 | |||||||
Net income attributable to noncontrolling interests | 3 | — | 3 | ||||||||
Income (loss) from continuing operations attributable to NCR common stockholders | $ | 116 | $ | (27 | ) | $ | 143 | ||||
Income per share attributable to NCR common stockholders: | |||||||||||
Basic | $ | 0.73 | $ | 0.89 | |||||||
Diluted | $ | 0.72 | $ | 0.89 | |||||||
Weighted average common shares outstanding | |||||||||||
Basic | 159.8 | 159.8 | |||||||||
Diluted | 161.2 | 161.2 |
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
NCR Corporation
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 2009
NCR Historical (Note 2) | Pro Forma Adjustments (Note 3) | NCR Pro Forma | |||||||||
In millions, except per share amounts | |||||||||||
Product revenue | $ | 2,228 | $ | 20 | (d) | $ | 2,208 | ||||
Service revenue | 2,371 | — | 2,371 | ||||||||
Total revenue | 4,599 | 20 | 4,579 | ||||||||
Cost of products | 1,808 | 37 | (d) | 1,771 | |||||||
Cost of services | 1,911 | — | (d) | 1,911 | |||||||
Selling, general and administrative expenses | 636 | 7 | (d) | 629 | |||||||
Research and development expenses | 141 | 7 | (d) | 134 | |||||||
Total operating expenses | 4,496 | 51 | 4,445 | ||||||||
Income (loss) from operations | 103 | (31 | ) | 134 | |||||||
Interest expense | (10 | ) | — | (10 | ) | ||||||
Other expense, net | (31 | ) | — | (31 | ) | ||||||
Income (loss) from continuing operations before income taxes | 62 | (31 | ) | 93 | |||||||
Income tax expense (benefit) | (3 | ) | (11 | ) | (d) | 8 | |||||
Income (loss) from continuing operations | 65 | (20 | ) | 85 | |||||||
Net income attributable to noncontrolling interests | 3 | — | 3 | ||||||||
Income (loss) from continuing operations attributable to NCR common stockholders | $ | 62 | $ | (20 | ) | $ | 82 | ||||
Income per share attributable to NCR common stockholders: | |||||||||||
Basic | $ | 0.39 | $ | 0.52 | |||||||
Diluted | $ | 0.39 | $ | 0.51 | |||||||
Weighted average common shares outstanding | |||||||||||
Basic | 158.9 | 158.9 | |||||||||
Diluted | 160.1 | 160.1 |
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
NCR Corporation
Notes to Unaudited Pro Forma Condensed Consolidated Statement of Operations
1. DESCRIPTION OF THE TRANSACTION
On February 3, 2012, NCR Corporation, a Maryland corporation (“NCR”) entered into an Asset Purchase Agreement (the “Agreement”) with Redbox Automated Retail, LLC (“Purchaser”) a Delaware limited liability company, pursuant to which NCR agreed to sell certain assets of its Entertainment business (the “Entertainment Business”) to Purchaser (the “Transaction”).
Pursuant to the terms of the Agreement, as amended on June 22, 2012, and upon the terms and conditions thereof, on June 22, 2012, NCR completed the disposition of the assets of its Entertainment business to Purchaser for cash consideration of $100 million.
2. BASIS OF PRESENTATION
The unaudited pro forma condensed consolidated financial statements have been derived from historical financial information for NCR Corporation included in our Quarterly Report on Form 10-Q as of and for the three months ended March 31, 2012 and included in our Annual Report of Form 10-K for the years ended December 31, 2011, 2010 and 2009.
3. PRO FORMA ADJUSTMENTS
(a) | Represents cash proceeds of $100 million offset by approximately $14 million of costs incurred directly attributable to the Transaction. |
(b) | Adjustment to reflect the decrease in assets held for sale of approximately $61 million, comprised of property, plant and equipment and certain related assets. In addition, we decreased inventory by approximately $7 million related to inventory which was not sold in connection with the Transaction and has no future value. |
(c) | Adjustment to reflect net gain from the Transaction of approximately $12 million, net of related tax expense, calculated as follows: |
(in millions) | ||||
Cash proceeds | $ | 100 | ||
Less: | ||||
Basis in assets sold | 61 | |||
Costs incurred directly attributable to the Transaction | 14 | |||
Inventory write-down | 7 | |||
Estimated pro forma gain before income taxes | 18 | |||
Income tax expense | 6 | |||
Estimated pro forma net gain | $ | 12 |
(d) | Adjustment to present the operations of the Entertainment business for the years ended December 31, 2011, 2010 and 2009 as a discontinued operation. An estimated tax rate of approximately 36% was used which is based on applicable enacted statutory tax rates for the years presented. The Entertainment business was included in discontinued operations in our Quarterly Report on Form 10-Q for the three month period ended March 31, 2012 and as such, , there are no pro forma adjustments to continuing operations necessary to reflect the disposition. |