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 September 30, 2016

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	352		$	15		$	441		$	(100	)	$	708
Service revenue	410			9			550						969
Total revenue	762			24			991			(100		)	1,677
Cost of products	277			14			337			(100		)	528
Cost of services	321			3			348			—			672
Selling, general and administrative expenses	114			1			110			—			225
Research and development expenses	26			—			30			—			56
Restructuring-related charges	4			—			3			—			7
Total operating expenses	742			18			828			(100		)	1,488
Income (loss) from operations	20			6			163			—			189
Interest expense	(40		)	—			(18		)	17			(41		)
Other (expense) income, net	10			(6		)	5			(17		)	(8		)
Income (loss) from continuing operations before income taxes	(10		)	—			150			—			140
Income tax expense (benefit)	2			7			22			—			31
Income (loss) from continuing operations before earnings in subsidiaries	(12		)	(7		)	128			—			109
Equity in earnings of consolidated subsidiaries	119			115			—			(234		)	—
Income (loss) from continuing operations	107			108			128			(234		)	109
Income (loss) from discontinued operations, net of tax	(2		)	—			—			—			(2		)
Net income (loss)	$	105		$	108		$	128		$	(234	)	$	107
Net income (loss) attributable to noncontrolling interests	—			—			2			—			2
Net income (loss) attributable to NCR	$	105		$	108		$	126		$	(234	)	$	105
Total comprehensive income (loss)	109			104			133			(236		)	110
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			1			—			1
Comprehensive income (loss) attributable to NCR common stockholders	$	109		$	104		$	132		$	(236	)	$	109



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

(in millions)	Parent Issuer			Guarantor Subsidiary		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	301		$	32	$	703		$	(348	)	$	688
Service revenue	394			8		523			—			925
Total revenue	695			40		1,226			(348		)	1,613
Cost of products	224			13		623			(348		)	512
Cost of services	282			3		359			—			644
Selling, general and administrative expenses	122			1		101			—			224
Research and development expenses	32			—		21			—			53
Restructuring-related charges	7			—		5			—			12
Total operating expenses	667			17		1,109			(348		)	1,445
Income (loss) from operations	28			23		117			—			168
Interest expense	(41		)	—		(19		)	18			(42		)
Other (expense) income, net	13			—		(2		)	(18		)	(7		)
Income (loss) from continuing operations before income taxes	—			23		96			—			119
Income tax expense (benefit)	(10		)	14		12			—			16
Income (loss) from continuing operations before earnings in subsidiaries	10			9		84			—			103
Equity in earnings of consolidated subsidiaries	93			113		—			(206		)	—
Income (loss) from continuing operations	103			122		84			(206		)	103
Income (loss) from discontinued operations, net of tax	(5		)	—		1			—			(4		)
Net income (loss)	$	98		$	122	$	85		$	(206	)	$	99
Net income (loss) attributable to noncontrolling interests	—			—		1			—			1
Net income (loss) attributable to NCR	$	98		$	122	$	84		$	(206	)	$	98
Total comprehensive income (loss)	60			50		45			(98		)	57
Less comprehensive income (loss) attributable to noncontrolling interests	—			—		(3		)	—			(3		)
Comprehensive income (loss) attributable to NCR common stockholders	$	60		$	50	$	48		$	(98	)	$	60



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

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	898		$	70		$	1,234		$	(270	)	$	1,932
Service revenue	1,177			26			1,606			—			2,809
Total revenue	2,075			96			2,840			(270		)	4,741
Cost of products	701			30			1,026			(270		)	1,487
Cost of services	885			9			1,057			—			1,951
Selling, general and administrative expenses	361			3			314			—			678
Research and development expenses	83			—			76			—			159
Restructuring-related charges	10			—			3			—			13
Total operating expenses	2,040			42			2,476			(270		)	4,288
Income (loss) from operations	35			54			364			—			453
Interest expense	(126		)	—			(56		)	52			(130		)
Other (expense) income, net	35			(11		)	(5		)	(52		)	(33		)
Income (loss) from continuing operations before income taxes	(56		)	43			303			—			290
Income tax expense (benefit)	(19		)	32			62			—			75
Income (loss) from continuing operations before earnings in subsidiaries	(37		)	11			241			—			215
Equity in earnings of consolidated subsidiaries	252			252			—			(504		)	—
Income (loss) from continuing operations	215			263			241			(504		)	215
Income (loss) from discontinued operations, net of tax	(2		)	—			—			—			(2		)
Net income (loss)	$	213		$	263		$	241		$	(504	)	$	213
Net income (loss) attributable to noncontrolling interests	—			—			—			—			—
Net income (loss) attributable to NCR	$	213		$	263		$	241		$	(504	)	$	213
Total comprehensive income (loss)	191			209			208			(424		)	184
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			(7		)	—			(7		)
Comprehensive income (loss) attributable to NCR common stockholders	$	191		$	209		$	215		$	(424	)	$	191



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

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	878		$	78		$	1,599		$	(560	)	$	1,995
Service revenue	1,109			23			1,566			—			2,698
Total revenue	1,987			101			3,165			(560		)	4,693
Cost of products	683			32			1,384			(560		)	1,539
Cost of services	792			8			1,361			—			2,161
Selling, general and administrative expenses	350			4			434			—			788
Research and development expenses	76			—			99			—			175
Restructuring-related charges	14			—			19			—			33
Total operating expenses	1,915			44			3,297			(560		)	4,696
Income (loss) from operations	72			57			(132		)	—			(3		)
Interest expense	(128		)	—			(58		)	55			(131		)
Other (expense) income, net	33			2			6			(55		)	(14		)
Income (loss) from continuing operations before income taxes	(23		)	59			(184		)	—			(148		)
Income tax expense (benefit)	(9		)	30			29			—			50
Income (loss) from continuing operations before earnings in subsidiaries	(14		)	29			(213		)	—			(198		)
Equity in earnings of consolidated subsidiaries	(187		)	(190		)	—			377			—
Income (loss) from continuing operations	(201		)	(161		)	(213		)	377			(198		)
Income (loss) from discontinued operations, net of tax	(5		)	—			1			—			(4		)
Net income (loss)	$	(206	)	$	(161	)	$	(212	)	$	377		$	(202	)
Net income (loss) attributable to noncontrolling interests	—			—			4			—			4
Net income (loss) attributable to NCR	$	(206	)	$	(161	)	$	(216	)	$	377		$	(206	)
Total comprehensive income (loss)	(245		)	(196		)	(264		)	457			(248		)
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			(3		)	—			(3		)
Comprehensive income (loss) attributable to NCR common stockholders	$	(245	)	$	(196	)	$	(261	)	$	457		$	(245	)



Condensed Consolidating Balance Sheet
September 30, 2016

(in millions)	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	12	$	13	$	293	$	—		$	318
Accounts receivable, net	50		26		1,311		—			1,387
Inventories	289		6		481		—			776
Due from affiliates	620		1,417		526		(2,563		)	—
Other current assets	118		34		186		(68		)	270
Total current assets	1,089		1,496		2,797		(2,631		)	2,751
Property, plant and equipment, net	124		1		164		—			289
Goodwill	988		—		1,749		—			2,737
Intangibles, net	183		—		521		—			704
Prepaid pension cost	—		—		132		—			132
Deferred income taxes	442		152		81		(129		)	546
Investments in subsidiaries	3,434		1,585		—		(5,019		)	—
Due from affiliates	1,054		18		37		(1,109		)	—
Other assets	390		58		104		—			552
Total assets	$	7,704	$	3,310	$	5,585	$	(8,888	)	$	7,711

Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	46	$	—	$	210	$	—		$	256
Accounts payable	287		1		430		—			718
Payroll and benefits liabilities	108		1		103		—			212
Deferred service revenue and customer deposits	188		10		273		—			471
Due to affiliates	1,817		129		617		(2,563		)	—
Other current liabilities	158		1		254		(68		)	345
Total current liabilities	2,604		142		1,887		(2,631		)	2,002
Long-term debt	3,028		—		5		—			3,033
Pension and indemnity plan liabilities	448		—		261		—			709
Postretirement and postemployment benefits liabilities	26		2		99		—			127
Income tax accruals	14		13		142		—			169
Due to affiliates	17		37		1,055		(1,109		)	—
Other liabilities	60		11		209		(129		)	151
Total liabilities	6,197		205		3,658		(3,869		)	6,191
Redeemable noncontrolling interest	—		—		10		—			10
Series A convertible preferred stock	835		—		—		—			835
Stockholders’ equity
Total NCR stockholders’ equity	672		3,105		1,914		(5,019		)	672
Noncontrolling interests in subsidiaries	—		—		3		—			3
Total stockholders’ equity	672		3,105		1,917		(5,019		)	675
Total liabilities and stockholders’ equity	$	7,704	$	3,310	$	5,585	$	(8,888	)	$	7,711



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 nine months ended September 30, 2016

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	359		$	(103	)	$	116		$	(3	)	$	369
Investing activities
Expenditures for property, plant and equipment	(16		)	—			(29		)	—			(45		)
Additions to capitalized software	(70		)	—			(45		)	—			(115		)
Proceeds from (payments of) intercompany notes	166			98			—			(264		)	—
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	85			98			(49		)	(255		)	(121		)
Financing activities
Short term borrowings, net	(4		)	—			2			—			(2		)
Payments on term credit facilities	(78		)	—			(6		)	—			(84		)
Payments on revolving credit facilities	(656		)	—			(80		)	—			(736		)
Borrowings on revolving credit facilities	576			—			280			—			856
Repurchase of Company common stock	(250		)	—			—			—			(250		)
Debt issuance cost	(8		)	—			—			—			(8		)
Proceeds from employee stock plans	10			—			—			—			10
Other financing activities	—			—			(2		)	—			(2		)
Equity contribution	—			—			9			(9		)	—
Dividend distribution to consolidated subsidiaries	—			—			(3		)	3			—
Borrowings (repayments) of intercompany notes	—			—			(264		)	264			—
Tax withholding payments on behalf of employees	(7		)	—			—			—			(7		)
Net cash provided by (used in) financing activities	(417		)	—			(64		)	258			(223		)
Cash flows from discontinued operations
Net cash used in operating activities	(30		)	—			—			—			(30		)
Effect of exchange rate changes on cash and cash equivalents	—			(2		)	(3		)	—			(5		)
Increase (decrease) in cash and cash equivalents	(3		)	(7		)	—			—			(10		)
Cash and cash equivalents at beginning of period	15			20			293			—			328
Cash and cash equivalents at end of period	$	12		$	13		$	293		$	—		$	318



Condensed Consolidating Statement of Cash Flows
For the nine months ended September 30, 2015

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	235		$	(226	)	$	451		$	(44	)	$	416
Investing activities
Expenditures for property, plant and equipment	(16		)	—			(31		)	—			(47		)
Additions to capitalized software	(72		)	—			(45		)	—			(117		)
Proceeds from (payments of) intercompany notes	169			227			—			(396		)	—
Investments in equity affiliates	(1		)	—			—			1			—
Other investing activities, net	(7		)	—			7			—			—
Net cash provided by (used in) investing activities	73			227			(69		)	(395		)	(164		)
Financing activities
Payments on term credit facilities	(307		)	—			(5		)	—			(312		)
Payments on revolving credit facilities	(404		)	—			(573		)	—			(977		)
Borrowings on revolving credit facilities	404			—			477			—			881
Proceeds from employee stock plans	12			—			—			—			12
Equity contribution	—			—			1			(1		)	—
Dividend distribution to consolidated subsidiaries	—			—			(44		)	44			—
Borrowings (repayments) of intercompany notes	—			—			(396		)	396			—
Tax withholding payments on behalf of employees	(10		)	—			—			—			(10		)
Net cash provided by (used in) financing activities	(305		)	—			(540		)	439			(406		)
Cash flows from discontinued operations
Net cash used in operating activities	(27		)	—			—			—			(27		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(27		)	—			(27		)
Increase (decrease) in cash and cash equivalents	(24		)	1			(185		)	—			(208		)
Cash and cash equivalents at beginning of period	44			9			458			—			511
Cash and cash equivalents at end of period	$	20		$	10		$	273		$	—		$	303