16. CONDENSED CONSOLIDATING SUPPLEMENTAL GUARANTOR INFORMATION

The Company's 5.00% Notes, 4.625% Notes, 5.875% Notes and 6.375% Notes are guaranteed by the Company's subsidiary, NCR International, Inc. (Guarantor Subsidiary), which is 100% owned by the Company and has guaranteed fully and unconditionally the obligations to pay principal and interest for these senior unsecured notes. The guarantees are subject to release under certain circumstances as described below:


•	the designation of the Guarantor Subsidiary as an unrestricted subsidiary under the indenture governing the notes;


•	the release of the Guarantor Subsidiary from its guarantee under the Senior Secured Credit Facility;


•	the release or discharge of the indebtedness that required the guarantee of the notes by the Guarantor Subsidiary;


•	the permitted sale or other disposition of the Guarantor Subsidiary to a third party; and


•	the Company's exercise of its legal defeasance option of its covenant defeasance option under the indenture governing the notes.

Refer to Note 3, "Debt Obligations," for additional information.

In connection with the previously completed registered exchange offers for the 5.00% Notes, 4.625% Notes, 5.875% Notes and 6.375% Notes, the Company is required to comply with Rule 3-10 of SEC Regulation S-X (Rule 3-10), and has therefore included the accompanying Condensed Consolidating Financial Statements in accordance with Rule 3-10(f) of SEC Regulation S-X.

The following supplemental information sets forth, on a consolidating basis, the condensed statements of operations and comprehensive income (loss), the condensed balance sheets and the condensed statements of cash flows for the parent issuer of these senior unsecured notes, for the Guarantor Subsidiary and for the Company and all of its consolidated subsidiaries. As of January 1, 2016, certain non-guarantor subsidiaries were acquired by, and merged into, the parent issuer. Accordingly, all prior period condensed consolidating guarantor financial statements were updated to reflect the mergers.



Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
For the three months ended June 30, 2016

(in millions)	Parent Issuer			Guarantor Subsidiary		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	315		$	39	$	428		$	(106	)	$	676
Service revenue	390			9		545			—			944
Total revenue	705			48		973			(106		)	1,620
Cost of products	245			9		369			(106		)	517
Cost of services	280			3		374			—			657
Selling, general and administrative expenses	127			1		101			—			229
Research and development expenses	29			—		21			—			50
Restructuring-related charges	4			—		—			—			4
Total operating expenses	685			13		865			(106		)	1,457
Income (loss) from operations	20			35		108			—			163
Interest expense	(41		)	—		(20		)	18			(43		)
Other (expense) income, net	14			—		(11		)	(18		)	(15		)
Income (loss) from continuing operations before income taxes	(7		)	35		77			—			105
Income tax expense (benefit)	—			20		11			—			31
Income (loss) from continuing operations before earnings in subsidiaries	(7		)	15		66			—			74
Equity in earnings of consolidated subsidiaries	83			89		—			(172		)	—
Income (loss) from continuing operations	76			104		66			(172		)	74
Income (loss) from discontinued operations, net of tax	—			—		—			—			—
Net income (loss)	$	76		$	104	$	66		$	(172	)	$	74
Net income (loss) attributable to noncontrolling interests	—			—		(2		)	—			(2		)
Net income (loss) attributable to NCR	$	76		$	104	$	68		$	(172	)	$	76
Total comprehensive income (loss)	58			70		47			(121		)	54
Less comprehensive income (loss) attributable to noncontrolling interests	—			—		(4		)	—			(4		)
Comprehensive income (loss) attributable to NCR common stockholders	$	58		$	70	$	51		$	(121	)	$	58



Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
For the three months ended June 30, 2015

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	314		$	27		$	485		$	(123	)	$	703
Service revenue	371			8			522			—			901
Total revenue	685			35			1,007			(123		)	1,604
Cost of products	244			9			414			(123		)	544
Cost of services	262			3			649			—			914
Selling, general and administrative expenses	116			1			222			—			339
Research and development expenses	22			—			45			—			67
Restructuring-related charges	3			—			3			—			6
Total operating expenses	647			13			1,333			(123		)	1,870
Income (loss) from operations	38			22			(326		)	—			(266		)
Interest expense	(44		)	—			(20		)	19			(45		)
Other (expense) income, net	12			2			5			(19		)	—
Income (loss) from continuing operations before income taxes	6			24			(341		)	—			(311		)
Income tax expense (benefit)	4			11			17			—			32
Income (loss) from continuing operations before earnings in subsidiaries	2			13			(358		)	—			(343		)
Equity in earnings of consolidated subsidiaries	(346		)	(359		)	—			705			—
Income (loss) from continuing operations	(344		)	(346		)	(358		)	705			(343		)
Income (loss) from discontinued operations, net of tax	—			—			—			—			—
Net income (loss)	$	(344	)	$	(346	)	$	(358	)	$	705		$	(343	)
Net income (loss) attributable to noncontrolling interests	—			—			1			—			1
Net income (loss) attributable to NCR	$	(344	)	$	(346	)	$	(359	)	$	705		$	(344	)
Total comprehensive income (loss)	(323		)	(274		)	(334		)	609			(322		)
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			1			—			1
Comprehensive income (loss) attributable to NCR common stockholders	$	(323	)	$	(274	)	$	(335	)	$	609		$	(323	)



Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
For the six months ended June 30, 2016

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	546		$	55		$	793		$	(170	)	$	1,224
Service revenue	767			17			1,056			—			1,840
Total revenue	1,313			72			1,849			(170		)	3,064
Cost of products	424			16			689			(170		)	959
Cost of services	564			6			709			—			1,279
Selling, general and administrative expenses	247			2			204			—			453
Research and development expenses	57			—			46			—			103
Restructuring-related charges	6			—			—			—			6
Total operating expenses	1,298			24			1,648			(170		)	2,800
Income (loss) from operations	15			48			201			—			264
Interest expense	(86		)	—			(38		)	35			(89		)
Other (expense) income, net	25			(5		)	(10		)	(35		)	(25		)
Income (loss) from continuing operations before income taxes	(46		)	43			153			—			150
Income tax expense (benefit)	(21		)	25			40			—			44
Income (loss) from continuing operations before earnings in subsidiaries	(25		)	18			113			—			106
Equity in earnings of consolidated subsidiaries	133			137			—			(270		)	—
Income (loss) from continuing operations	108			155			113			(270		)	106
Income (loss) from discontinued operations, net of tax	—			—			—			—			—
Net income (loss)	$	108		$	155		$	113		$	(270	)	$	106
Net income (loss) attributable to noncontrolling interests	—			—			(2		)	—			(2		)
Net income (loss) attributable to NCR	$	108		$	155		$	115		$	(270	)	$	108
Total comprehensive income (loss)	82			105			75			(188		)	74
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			(8		)	—			(8		)
Comprehensive income (loss) attributable to NCR common stockholders	$	82		$	105		$	83		$	(188	)	$	82



Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
For the six months ended June 30, 2015

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	577		$	46		$	896		$	(212	)	$	1,307
Service revenue	715			15			1,043			—			1,773
Total revenue	1,292			61			1,939			(212		)	3,080
Cost of products	459			19			761			(212		)	1,027
Cost of services	510			5			1,002			—			1,517
Selling, general and administrative expenses	228			3			333			—			564
Research and development expenses	44			—			78			—			122
Restructuring-related charges	7			—			14			—			21
Total operating expenses	1,248			27			2,188			(212		)	3,251
Income (loss) from operations	44			34			(249		)	—			(171		)
Interest expense	(87		)	—			(39		)	37			(89		)
Other (expense) income, net	20			2			8			(37		)	(7		)
Income (loss) from continuing operations before income taxes	(23		)	36			(280		)	—			(267		)
Income tax expense (benefit)	1			16			17			—			34
Income (loss) from continuing operations before earnings in subsidiaries	(24		)	20			(297		)	—			(301		)
Equity in earnings of consolidated subsidiaries	(280		)	(303		)	—			583			—
Income (loss) from continuing operations	(304		)	(283		)	(297		)	583			(301		)
Income (loss) from discontinued operations, net of tax	—			—			—			—			—
Net income (loss)	$	(304	)	$	(283	)	$	(297	)	$	583		$	(301	)
Net income (loss) attributable to noncontrolling interests	—			—			3			—			3
Net income (loss) attributable to NCR	$	(304	)	$	(283	)	$	(300	)	$	583		$	(304	)
Total comprehensive income (loss)	(305		)	(246		)	(309		)	555			(305		)
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			—			—			—
Comprehensive income (loss) attributable to NCR common stockholders	$	(305	)	$	(246	)	$	(309	)	$	555		$	(305	)



Condensed Consolidating Balance Sheet
June 30, 2016

(in millions)	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	17	$	22	$	293	$	—		$	332
Accounts receivable, net	64		22		1,276		—			1,362
Inventories	282		12		471		—			765
Due from affiliates	670		1,413		498		(2,581		)	—
Other current assets	104		35		206		(51		)	294
Total current assets	1,137		1,504		2,744		(2,632		)	2,753
Property, plant and equipment, net	128		1		161		—			290
Goodwill	988		—		1,748		—			2,736
Intangibles, net	193		—		541		—			734
Prepaid pension cost	—		—		130		—			130
Deferred income taxes	460		152		81		(129		)	564
Investments in subsidiaries	3,296		1,476		—		(4,772		)	—
Due from affiliates	1,074		17		38		(1,129		)	—
Other assets	384		56		104		—			544
Total assets	$	7,660	$	3,206	$	5,547	$	(8,662	)	$	7,751

Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	46	$	—	$	213	$	—		$	259
Accounts payable	278		1		397		—			676
Payroll and benefits liabilities	71		1		119		—			191
Deferred service revenue and customer deposits	213		9		313		—			535
Due to affiliates	1,762		137		682		(2,581		)	—
Other current liabilities	172		1		234		(51		)	356
Total current liabilities	2,542		149		1,958		(2,632		)	2,017
Long-term debt	3,194		—		4		—			3,198
Pension and indemnity plan liabilities	441		—		261		—			702
Postretirement and postemployment benefits liabilities	25		3		100		—			128
Income tax accruals	14		13		147		—			174
Due to affiliates	17		37		1,075		(1,129		)	—
Other liabilities	50		11		209		(129		)	141
Total liabilities	6,283		213		3,754		(3,890		)	6,360
Redeemable noncontrolling interest	—		—		9		—			9
Series A convertible preferred stock	822		—		—		—			822
Stockholders’ equity
Total NCR stockholders’ equity	555		2,993		1,779		(4,772		)	555
Noncontrolling interests in subsidiaries	—		—		5		—			5
Total stockholders’ equity	555		2,993		1,784		(4,772		)	560
Total liabilities and stockholders’ equity	$	7,660	$	3,206	$	5,547	$	(8,662	)	$	7,751



Condensed Consolidating Balance Sheet
December 31, 2015

(in millions)	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	15	$	20	293		$	—		$	328
Accounts receivable, net	94		33		1,124		—			1,251
Inventories	233		6		404		—			643
Due from affiliates	571		1,325		286		(2,182		)	—
Other current assets	129		31		206		(39		)	327
Total current assets	1,042		1,415		2,313		(2,221		)	2,549
Property, plant and equipment, net	140		1		181		—			322
Goodwill	979		—		1,754		—			2,733
Intangibles, net	212		—		586		—			798
Prepaid pension cost	—		—		130		—			130
Deferred income taxes	475		152		84		(129		)	582
Investments in subsidiaries	3,173		1,449		—		(4,622		)	—
Due from affiliates	1,072		17		38		(1,127		)	—
Other assets	362		55		104		—			521
Total assets	$	7,455	$	3,089	$	5,190	$	(8,099	)	$	7,635

Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	4	$	—	$	9	$	—		$	13
Accounts payable	280		—		377		—			657
Payroll and benefits liabilities	94		1		94		—			189
Deferred service revenue and customer deposits	180		24		272		—			476
Due to affiliates	1,405		137		640		(2,182		)	—
Other current liabilities	215		3		267		(39		)	446
Total current liabilities	2,178		165		1,659		(2,221		)	1,781
Long-term debt	3,229		—		10		—			3,239
Pension and indemnity plan liabilities	433		—		263		—			696
Postretirement and postemployment benefits liabilities	27		3		103		—			133
Income tax accruals	14		13		140		—			167
Due to affiliates	18		37		1,072		(1,127		)	—
Other liabilities	38		—		170		(129		)	79
Total liabilities	5,937		218		3,417		(3,477		)	6,095
Redeemable noncontrolling interest	—		—		16		—			16
Series A convertible preferred stock	798		—		—		—			798
Stockholders’ equity
Total NCR stockholders’ equity	720		2,871		1,751		(4,622		)	720
Noncontrolling interests in subsidiaries	—		—		6		—			6
Total stockholders’ equity	720		2,871		1,757		(4,622		)	726
Total liabilities and stockholders’ equity	$	7,455	$	3,089	$	5,190	$	(8,099	)	$	7,635



Condensed Consolidating Statement of Cash Flows
For the six months ended June 30, 2016

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	203		$	(74	)	$	17		$	(2	)	$	144
Investing activities
Expenditures for property, plant and equipment	(9		)	—			(15		)	—			(24		)
Additions to capitalized software	(45		)	—			(29		)	—			(74		)
Proceeds from (payments of) intercompany notes	123			78			—			(201		)	—
Investments in equity affiliates	(9		)	—			—			9			—
Proceeds from divestiture	22			—			25			—			47
Other investing activities, net	(8		)	—			—			—			(8		)
Net cash provided by (used in) investing activities	74			78			(19		)	(192		)	(59		)
Financing activities
Short term borrowings, net	(4		)	—			5			—			1
Payments on term credit facilities	(67		)	—			(6		)	—			(73		)
Payments on revolving credit facilities	(351		)	—			(80		)	—			(431		)
Borrowings on revolving credit facilities	426			—			280			—			706
Repurchase of Company common stock	(250		)	—			—			—			(250		)
Debt issuance cost	(8		)	—			—			—			(8		)
Proceeds from employee stock plans	6			—			—			—			6
Equity contribution	—			—			9			(9		)	—
Dividend distribution to consolidated subsidiaries	—			—			(2		)	2			—
Borrowings (repayments) of intercompany notes	—			—			(201		)	201			—
Tax withholding payments on behalf of employees	(7		)	—			—			—			(7		)
Net cash provided by (used in) financing activities	(255		)	—			5			194			(56		)
Cash flows from discontinued operations
Net cash used in operating activities	(20		)	—			—			—			(20		)
Effect of exchange rate changes on cash and cash equivalents	—			(2		)	(3		)	—			(5		)
Increase (decrease) in cash and cash equivalents	2			2			—			—			4
Cash and cash equivalents at beginning of period	15			20			293			—			328
Cash and cash equivalents at end of period	$	17		$	22		$	293		$	—		$	332



Condensed Consolidating Statement of Cash Flows
For the six months ended June 30, 2015

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	62		$	(75	)	$	300		$	(41	)	$	246
Investing activities
Expenditures for property, plant and equipment	(8		)	—			(23		)	—			(31		)
Additions to capitalized software	(48		)	—			(31		)	—			(79		)
Proceeds from (payments of) intercompany notes	96			80			—			(176		)	—
Investments in equity affiliates	(1		)	—			—			1			—
Other investing activities, net	(7		)	—			4			—			(3		)
Net cash provided by (used in) investing activities	32			80			(50		)	(175		)	(113		)
Financing activities
Short term borrowings, net	15			—			13			—			28
Payments on term credit facilities	(111		)	—			(5		)	—			(116		)
Payments on revolving credit facilities	(223		)	—			(385		)	—			(608		)
Borrowings on revolving credit facilities	223			—			289			—			512
Proceeds from employee stock plans	11			—			—			—			11
Equity contribution	—			—			1			(1		)	—
Dividend distribution to consolidated subsidiaries	—			—			(41		)	41			—
Borrowings (repayments) of intercompany notes	—			—			(176		)	176			—
Tax withholding payments on behalf of employees	(10		)	—			—			—			(10		)
Net cash provided by (used in) financing activities	(95		)	—			(304		)	216			(183		)
Cash flows from discontinued operations
Net cash used in operating activities	(17		)	—			—			—			(17		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(19		)	—			(19		)
Increase (decrease) in cash and cash equivalents	(18		)	5			(73		)	—			(86		)
Cash and cash equivalents at beginning of period	44			9			458			—			511
Cash and cash equivalents at end of period	$	26		$	14		$	385		$	—		$	425