) recently commenced an offering of senior unsecured notes worth
$500.0 million, to institutional buyers in the U.S. The notes will
mature in 2022, though the rate of interest was not disclosed.
The notes have been assigned a "Ba2" rating by
). The rating indicates that the obligator could meet its financial
obligations like short-term debt. The credit ratings act as
financial indicators for potential investors.
The raised amount will enable NCR to increase fund availability and
finance its continuing working capital requirements,
pension-related expenses, offering-related expenses and capital
expenditure, while at the same time facilitating the repayment of
its senior secured notes.
As of June 30, 2012, NCR had a total debt balance of $740.0
million, down from $827.0 million in the prior quarter. The senior
notes balance at the end of the second quarter was $5.0 million,
NCR exited the second quarter with $377.0 million in cash and cash
equivalents, down from $414.0 million reported in the previous
quarter. During the quarter, debt-capitalization ratio improved to
43.0%, from 48.5% in the previous quarter.
Following the recent issuance, the senior notes balance will go up
by an additional $500.0 million. This will impact the debt
capitalization ratio to some extent in the coming quarters. Also,
the raised debt burden will have an impact on its interest charges.
The interest expense in the second quarter was $8.0 million or 5
cents per share, which is quite significant.
Overall, NCR's performance was decent in the second quarter with
the bottom line surpassing the Zacks Consensus Estimate. The
company's Financial Services segment performed well, while other
segment results were weak. However, the company seems positive
about its performance in fiscal 2012.
We remain positive about NCR's deal wins from various industrial
sectors. But, a high debt burden, European exposure and stiff
) and Wincor Nixdorf in the ATM market keep us concerned.
Currently, NCR has a Zacks #3 Rank, implying a short-term Hold
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