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Business Combinations and Divestitures | 12 Months Ended
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Dec. 31, 2019
Business Combinations [Abstract] |
Acquisitions | 3. BUSINESS COMBINATIONS AND DIVESTITURES 2019 Acquisitions Acquisition of D3 Technology, Inc. On July 1, 2019, NCR completed its acquisition of D3 Technology, Inc. (D3), a leading provider of online and mobile banking for the Large Financial Institution market, for approximately $84 million, of which $83 million was paid in cash. The remaining $1 million is payable within 12 months from the date of acquisition. The D3 acquisition further expands our digital banking strategy as we extend our market share in large domestic banks and international banks. As a result of the acquisition, D3 became a wholly owned subsidiary of NCR. Recording of Assets Acquired and Liabilities Assumed The fair value of consideration transferred to acquire D3 was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition as set forth below. This allocation is open as of December 31, 2019. The allocation of the purchase price for D3 is as follows:
In millions | Fair Value
Cash acquired | $ | 9 |
Tangible assets acquired | 6 |
Acquired intangible assets other than goodwill | 20 |
Acquired goodwill | 54 |
Deferred tax assets | 3 |
Liabilities assumed | (8 | )
Total purchase consideration | $ | 84 |
Goodwill represents the future economic benefits arising from other assets acquired that could not be individually separately recognized. The goodwill arising from the acquisition consists of revenue synergies expected from combining the operations of NCR and D3. It is expected that none of the goodwill recognized in connection with the acquisition will be deductible for tax purposes. The goodwill arising from the acquisition has been allocated to our Banking segment. Refer to Note 5, "Goodwill and Purchased Intangible Assets" for the carrying amounts of goodwill by segment as of December 31, 2019. The following table sets forth the components of the intangible assets acquired as of the acquisition date:
| Fair Value |  | Weighted Average Amortization Period (1)
| (In millions) |  | (In years)
Direct customer relationships | $ | 7 |  |  | 11
Technology - Software | 11 |  |  | 5
Tradenames | 2 |  |  | 7
Total acquired intangible assets | $ | 20 |  |  |
(1) Determination of the weighted average period of the individual categories of intangible assets was based on the nature of 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. In connection with the closing of the acquisition, the Company incurred approximately $1 million of transaction costs, which has been included within selling, general and administrative expenses in the Consolidated Statement of Operations for the year ended December 31, 2019. The operating results of D3 have been included within NCR's results as of the closing date of the acquisition. Supplemental pro forma information and actual revenue and earnings since the acquisition date have not been provided as this acquisition did not have a material impact on the Company's Consolidated Statements of Operations. Acquisition of Zynstra Ltd. On December 21, 2019, NCR completed its acquisition of Zynstra, Ltd. (Zynstra), a leading provider of edge virtualization technology, for approximately $134 million, of which $112 million was paid in cash. The remaining $22 million is expected to be paid in 2020. The Zynstra acquisition further expands our digital retail strategy as we further enhance our next generation store architecture. As a result of the acquisition, Zynstra became a wholly owned subsidiary of NCR. Recording of Assets Acquired and Liabilities Assumed The fair value of consideration transferred to acquire Zynstra was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition as set forth below. This allocation is open as of December 31, 2019. The allocation of the purchase price for Zynstra is as follows:
In millions | Fair Value
Cash acquired | $ | 1 |
Tangible assets acquired | 1 |
Acquired intangible assets other than goodwill | 76 |
Acquired goodwill | 67 |
Deferred tax liability | (10 | )
Liabilities assumed | (1 | )
Total purchase consideration | $ | 134 |
Goodwill represents the future economic benefits arising from other assets acquired that could not be individually separately recognized. The goodwill arising from the acquisition consists of revenue and cost synergies expected from combining the operations of NCR and Zynstra. It is expected that none of the goodwill recognized in connection with the acquisition will be deductible for tax purposes. The goodwill arising from the acquisition has been allocated to our Retail segment. Refer to Note 5, "Goodwill and Purchased Intangible Assets" for the carrying amounts of goodwill by segment as of December 31, 2019. The following table sets forth the components of the intangible assets acquired as of the acquisition date:
| Fair Value |  | Weighted Average Amortization Period (1)
| (In millions) |  | (In years)
Technology - Software | 75 |  |  | 8
Tradenames | 1 |  |  | 1
Total acquired intangible assets | $ | 76 |  |  |
(1) Determination of the weighted average period of the individual categories of intangible assets was based on the nature of 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. In connection with the closing of the acquisition, the Company incurred approximately $2 million of transaction costs, which has been included within selling, general and administrative expenses in the Consolidated Statement of Operations for the year ended December 31, 2019. The operating results of Zynstra have been included within NCR's results as of the closing date of the acquisition. Supplemental pro forma information and actual revenue and earnings since the acquisition date have not been provided as this acquisition did not have a material impact on the Company's Consolidated Statements of Operations. Other 2019 acquisitions During the year ended December 31, 2019, the Company completed four acquisitions of local resellers in the hospitality industry for an aggregate purchase consideration of approximately $20 million, plus related acquisition costs. Approximately $2 million was withheld by the Company as a source of recovery for possible claims and payments under the related acquisition agreements and will be paid to the respective sellers pursuant to the terms of such agreements. Goodwill recognized related to these acquisitions was $17 million, all of which is expected to be deductible for tax purposes. The goodwill arising from these acquisitions has been allocated to the Hospitality segment. As a result of these acquisitions, NCR recorded $6 million related to identifiable intangible assets consisting primarily of customer relationships, which have a weighted-average amortization period of 8 years. Supplemental pro forma information and actual revenue and earnings since the acquisition dates have not been provided as these acquisitions did not have a material impact, individually or in the aggregate, on the Company's Consolidated Statements of Operations. Pending acquisition During the year ended December 31, 2019, the Company entered into a definitive agreement with Oki Electric Industry Co., Ltd., to purchase OKI Brasil's IT services and software assets, which is subject to customary closing conditions. The transaction is currently expected to close in the first half of 2020; however, it is possible that factors outside of our control could require us to complete the transaction at a later time or not at all. 2018 Acquisitions Acquisition of JetPay Corporation On December 6, 2018, NCR completed its acquisition of JetPay Corporation (JetPay), for which it purchased (i) all outstanding shares of common stock at a price of $5.05 per share, (ii) shares of Series A Preferred Stock at $5.05 per share, (iii) shares of Series A-1 Convertible Preferred Stock at a price of $600 per share, (iv) shares of Series A-2 Convertible Preferred Stock of JetPay at a price of $600 per share, and (v) transaction costs paid on behalf of the seller for an aggregate purchase price of $193 million which was paid in cash. As a result of the acquisition, JetPay became a fully owned subsidiary of NCR. JetPay is a provider of end-to-end payment processing and human capital management solutions. The acquisition is consistent with NCR's continued transformation to a software- and services-driven business. JetPay complements and extends our existing capabilities by allowing us to monetize transactions via payments. Recording of Assets Acquired and Liabilities Assumed The fair value of consideration transferred to acquire JetPay was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition as set forth below. The allocation of the purchase price for JetPay is as follows:
In millions | Fair Value
Cash acquired | $ | 4 |
Tangible assets acquired | 76 |
Acquired intangible assets other than goodwill | 104 |
Acquired goodwill | 96 |
Deferred tax liabilities | (11 | )
Liabilities assumed | (76 | )
Total purchase consideration | $ | 193 |
Goodwill represents the future economic benefits arising from other assets acquired that could not be individually separately recognized. The goodwill arising from the acquisition consists of revenue synergies expected from combining the operations of NCR and JetPay. It is expected that none of the goodwill recognized in connection with the acquisition will be deductible for tax purposes. The goodwill arising from the acquisition has been allocated to our Retail and Hospitality segments. Refer to Note 5, "Goodwill and Purchased Intangible Assets" for the carrying amounts of goodwill by segment as of December 31, 2018. The following table sets forth the components of the intangible assets acquired as of the acquisition date:
| Fair Value |  | Weighted Average Amortization Period (1)
| (In millions) |  | (In years)
Direct customer relationships | $ | 64 |  |  | 17
Technology - Software | 39 |  |  | 9
Tradenames | 1 |  |  | 1
Total acquired intangible assets | $ | 104 |  |  |
(1) Determination of the weighted average period of the individual categories of intangible assets was based on the nature of 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. In connection with the closing of the acquisition, the Company incurred approximately $4 million of transaction costs, which has been included within selling, general and administrative expenses in the Consolidated Statement of Operations for the year ended December 31, 2018. Unaudited Pro forma Information The following unaudited pro forma information presents the consolidated results of NCR and JetPay for the years ended December 31, 2018 and 2017. 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 consolidated results of operations, assuming the acquisition had occurred on January 1, 2017, are as follows:
In millions |  | 2018 |  | 2017
Revenue |  | $ | 6,468 |  |  | $ | 6,592 |
Net income attributable to NCR |  | $ | (46 | ) |  | $ | 217 |
The unaudited pro forma results for the year ended December 31, 2018 include:
• | $4 million, net of tax, in additional amortization expense for acquired intangible assets;
• | $4 million, net of tax, in eliminated transaction costs as if those costs were incurred in the prior year period; and
• | $7 million, net of tax, in additional interest expense from the incremental borrowings under the senior secured credit facility.
The unaudited pro forma results for the year ended December 31, 2017, include:
• | $5 million, net of tax, in additional amortization expense for acquired intangible assets;
• | $4 million, net of tax, in transaction costs; and
• | $7 million, net of tax, in additional interest expense from the incremental borrowings under the senior secured credit facility.
Other 2018 acquisitions During the third quarter of 2018, we completed the acquisition of Zipscene, LLC which aggregates and enriches data from hospitality customers to provide marketing insights back to our customers and will enable us to increase data monetization. During the fourth quarter of 2018, we completed its acquisition of StopLift Checkout Vision Systems ("StopLift"). StopLift designs artificial intelligence technology which identifies fraudulent behavior at the POS and in SCO systems.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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