Business Combinations and Divestitures (Notes)

9 Months Ended

Sep. 30, 2019

Business Combination Disclosure [Text Block]

3. BUSINESS COMBINATIONS

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 has not been completed as of September 30, 2019; however, the preliminary purchase price allocation is presented in the table below.



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 Long-Lived Assets for the carrying amounts of goodwill by segment as of September 30, 2019.

The following table sets forth the components of the intangible assets acquired as of the acquisition date:



	Estimated 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 Condensed Consolidated Statements of Operations for the year-to-date period ended September 30, 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 dates have not been provided as this acquisition did not have a material impact on the Company's Condensed Consolidated Statements of Operations.