16. GUARANTOR FINANCIAL STATEMENTS

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 6, "Debt Obligations" for additional information.

In connection with the previously completed 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.



Consolidating Statements of Operations and Comprehensive Income (Loss)
For the year ended December 31, 2016

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	1,293		$	111		$	1,768		$	(435	)	$	2,737
Service revenue	1,615			36			2,155			—			3,806
Total revenue	2,908			147			3,923			(435		)	6,543
Cost of products	1,024			50			1,463			(435		)	2,102
Cost of services	1,170			12			1,477			—			2,659
Selling, general and administrative expenses	484			4			438			—			926
Research and development expenses	139			—			103			—			242
Restructuring-related charges	11			—			4			—			15
Total operating expenses	2,828			66			3,485			(435		)	5,944
Income (loss) from operations	80			81			438			—			599
Interest expense	(165		)	—			(74		)	69			(170		)
Other (expense) income, net	44			(23		)	(2		)	(69		)	(50		)
Income (loss) from continuing operations before income taxes	(41		)	58			362			—			379
Income tax expense (benefit)	(18		)	21			89			—			92
Income (loss) from continuing operations before earnings in subsidiaries	(23		)	37			273			—			287
Equity in earnings of consolidated subsidiaries	306			304			—			(610		)	—
Income (loss) from continuing operations	283			341			273			(610		)	287
Income (loss) from discontinued operations, net of tax	(13		)	—			—			—			(13		)
Net income (loss)	$	270		$	341		$	273		$	(610	)	$	274
Net income (loss) attributable to noncontrolling interests	—			—			4			—			4
Net income (loss) attributable to NCR	$	270		$	341		$	269		$	(610	)	$	270
Total comprehensive income (loss)	215			277			210			(488		)	214
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			(1		)	—			(1		)
Comprehensive income (loss) attributable to NCR common stockholders	$	215		$	277		$	211		$	(488	)	$	215



Consolidating Statements of Operations and Comprehensive Income (Loss)
For the year ended December 31, 2015

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	1,189		$	105		$	2,339		$	(922	)	$	2,711
Service revenue	1,528			33			2,101			—			3,662
Total revenue	2,717			138			4,440			(922		)	6,373
Cost of products	904			43			2,047			(922		)	2,072
Cost of services	1,103			13			1,716			—			2,832
Selling, general and administrative expenses	501			4			537			—			1,042
Research and development expenses	102			—			128			—			230
Restructuring-related charges	32			—			30			—			62
Total operating expenses	2,642			60			4,458			(922		)	6,238
Income (loss) from operations	75			78			(18		)	—			135
Interest expense	(168		)	—			(78		)	73			(173		)
Other (expense) income, net	22			4			(10		)	(73		)	(57		)
Income (loss) from continuing operations before income taxes	(71		)	82			(106		)	—			(95		)
Income tax expense (benefit)	(33		)	52			36			—			55
Income (loss) from continuing operations before earnings in subsidiaries	(38		)	30			(142		)	—			(150		)
Equity in earnings of consolidated subsidiaries	(115		)	(161		)	—			276			—
Income (loss) from continuing operations	(153		)	(131		)	(142		)	276			(150		)
Income (loss) from discontinued operations, net of tax	(25		)	—			1			—			(24		)
Net income (loss)	$	(178	)	$	(131	)	$	(141	)	$	276		$	(174	)
Net income (loss) attributable to noncontrolling interests	—			—			4			—			4
Net income (loss) attributable to NCR	$	(178	)	$	(131	)	$	(145	)	$	276		$	(178	)
Total comprehensive income (loss)	(192		)	(154		)	(156		)	311			(191		)
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			1			—			1
Comprehensive income (loss) attributable to NCR common stockholders	$	(192	)	$	(154	)	$	(157	)	$	311		$	(192	)



Consolidating Statements of Operations and Comprehensive Income (Loss)
For the year ended December 31, 2014

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	1,103		$	111		$	2,099		$	(421	)	$	2,892
Service revenue	1,445			28			2,226			—			3,699
Total revenue	2,548			139			4,325			(421		)	6,591
Cost of products	867			41			1,666			(421		)	2,153
Cost of services	1,119			13			1,574			—			2,706
Selling, general and administrative expenses	519			2			491			—			1,012
Research and development expenses	161			—			102			—			263
Restructuring-related charges	32			1			71			—			104
Total operating expenses	2,698			57			3,904			(421		)	6,238
Income (loss) from operations	(150		)	82			421			—			353
Interest expense	(177		)	(1		)	(75		)	72			(181		)
Other (expense) income, net	39			(4		)	2			(72		)	(35		)
Income (loss) from continuing operations before income taxes	(288		)	77			348			—			137
Income tax expense (benefit)	(169		)	68			53			—			(48		)
Income (loss) from continuing operations before earnings in subsidiaries	(119		)	9			295			—			185
Equity in earnings of consolidated subsidiaries	300			373			—			(673		)	—
Income (loss) from continuing operations	181			382			295			(673		)	185
Income (loss) from discontinued operations, net of tax	10			—			—			—			10
Net income (loss)	$	191		$	382		$	295		$	(673	)	$	195
Net income (loss) attributable to noncontrolling interests	—			—			4			—			4
Net income (loss) attributable to NCR	$	191		$	382		$	291		$	(673	)	$	191
Total comprehensive income (loss)	93			300			188			(487		)	94
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			1			—			1
Comprehensive income (loss) attributable to NCR common stockholders	$	93		$	300		$	187		$	(487	)	$	93



Consolidating Balance Sheet
December 31, 2016

(in millions)	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	65	$	12	$	421	$	—		$	498
Accounts receivable, net	64		25		1,193		—			1,282
Inventories	272		13		414		—			699
Due from affiliates	680		1,509		400		(2,589		)	—
Other current assets	140		37		162		(61		)	278
Total current assets	1,221		1,596		2,590		(2,650		)	2,757
Property, plant and equipment, net	129		—		158		—			287
Goodwill	988		—		1,739		—			2,727
Intangibles, net	176		—		496		—			672
Prepaid pension cost	—		—		94		—			94
Deferred income taxes	499		98		82		(104		)	575
Investments in subsidiaries	3,275		2,822		—		(6,097		)	—
Due from affiliates	1,053		—		35		(1,088		)	—
Other assets	405		56		100		—			561
Total assets	$	7,746	$	4,572	$	5,294	$	(9,939	)	$	7,673

Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	46	$	—	$	4	$	—		$	50
Accounts payable	310		2		469		—			781
Payroll and benefits liabilities	129		—		105		—			234
Deferred service revenue and customer deposits	193		5		270		—			468
Due to affiliates	1,736		154		699		(2,589		)	—
Other current liabilities	224		6		263		(61		)	432
Total current liabilities	2,638		167		1,810		(2,650		)	1,965
Long-term debt	2,998		—		3		—			3,001
Pension and indemnity plan liabilities	473		—		266		—			739
Postretirement and postemployment benefits liabilities	24		3		100		—			127
Income tax accruals	17		4		121		—			142
Due to affiliates	—		35		1,053		(1,088		)	—
Other liabilities	54		5		183		(104		)	138
Total liabilities	6,204		214		3,536		(3,842		)	6,112
Redeemable noncontrolling interest	—		—		15		—			15
Series A convertible preferred stock	847		—		—		—			847
Stockholders’ equity
Total NCR stockholders’ equity	695		4,358		1,739		(6,097		)	695
Noncontrolling interests in subsidiaries	—		—		4		—			4
Total stockholders’ equity	695		4,358		1,743		(6,097		)	699
Total liabilities and stockholders’ equity	$	7,746	$	4,572	$	5,294	$	(9,939	)	$	7,673



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	99		33		1,119		—			1,251
Inventories	235		6		402		—			643
Due from affiliates	573		1,325		288		(2,186		)	—
Other current assets	132		31		203		(39		)	327
Total current assets	1,054		1,415		2,305		(2,225		)	2,549
Property, plant and equipment, net	140		1		181		—			322
Goodwill	980		—		1,753		—			2,733
Intangibles, net	212		—		586		—			798
Prepaid pension cost	—		—		130		—			130
Deferred income taxes	475		152		84		(129		)	582
Investments in subsidiaries	3,172		2,729		—		(5,901		)	—
Due from affiliates	1,072		17		38		(1,127		)	—
Other assets	362		55		104		—			521
Total assets	$	7,467	$	4,369	$	5,181	$	(9,382	)	$	7,635

Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	4	$	—	$	9	$	—		$	13
Accounts payable	281		—		376		—			657
Payroll and benefits liabilities	95		1		93		—			189
Deferred service revenue and customer deposits	183		24		269		—			476
Due to affiliates	1,408		137		641		(2,186		)	—
Other current liabilities	216		3		266		(39		)	446
Total current liabilities	2,187		165		1,654		(2,225		)	1,781
Long-term debt	3,229		—		10		—			3,239
Pension and indemnity plan liabilities	436		—		260		—			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	5,949		218		3,409		(3,481		)	6,095
Redeemable noncontrolling interest	—		—		16		—			16
Series A Convertible Preferred Stock	798		—		—		—			798
Stockholders’ equity
Total NCR stockholders’ equity	720		4,151		1,750		(5,901		)	720
Noncontrolling interests in subsidiaries	—		—		6		—			6
Total stockholders’ equity	720		4,151		1,756		(5,901		)	726
Total liabilities and stockholders’ equity	$	7,467	$	4,369	$	5,181	$	(9,382	)	$	7,635



Consolidating Statement of Cash Flows
For the year ended December 31, 2016

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	272		$	(160	)	$	785		$	(3	)	$	894
Investing activities
Expenditures for property, plant and equipment	(31		)	—			(42		)	—			(73		)
Proceeds from the sale of property, plant and equipment	—			—			—			—			—
Additions to capitalized software	(95		)	—			(59		)	—			(154		)
Proceeds from (payments of) intercompany notes	409			115			—			(524		)	—
Proceeds from divestitures	22			—			25			—			47
Investments in equity affiliates	(9		)	50			—			(41		)	—
Other investing activities, net	(9		)	—			—			—			(9		)
Net cash provided by (used in) investing activities	287			165			(76		)	(565		)	(189		)
Financing activities
Short term borrowings, net	(4		)	—			(4		)	—			(8		)
Payments on term credit facilities	(89		)	—			(8		)	—			(97		)
Payments on revolving credit facilities	(1,151		)	—			(280		)	—			(1,431		)
Borrowings on revolving credit facilities	1,051			—			280			—			1,331
Debt issuance costs	(9		)	—			—			—			(9		)
Tax withholding payments on behalf of employees	(16		)	—			—			—			(16		)
Proceeds from employee stock plans	15			—			—			—			15
Other financing activities	—			—			(2		)	—			(2		)
Dividend distribution to consolidated subsidiaries	—			—			(53		)	53			—
Repurchases of Company common stock	(250		)	—			—			—			(250		)
Equity contribution	—			—			9			(9		)	—
Borrowings (repayments) of intercompany notes	(17		)	—			(507		)	524			—
Net cash provided by (used in) financing activities	(470		)	—			(565		)	568			(467		)
Cash flows from discontinued operations
Net cash used in discontinued operations operating activities	(39		)	—			—			—			(39		)
Effect of exchange rate changes on cash and cash equivalents	—			(13		)	(16		)	—			(29		)
(Decrease) increase in cash and cash equivalents	50			(8		)	128			—			170
Cash and cash equivalents at beginning of period	15			20			293			—			328
Cash and cash equivalents at end of period	$	65		$	12		$	421		$	—		$	498



Consolidating Statement of Cash Flows
For the year ended December 31, 2015

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	346		$	(335	)	$	747		$	(77	)	$	681
Investing activities
Expenditures for property, plant and equipment	(22		)	—			(57		)	—			(79		)
Proceeds from sales of property, plant and equipment	—			—			19			—			19
Additions to capitalized software	(91		)	—			(59		)	—			(150		)
Proceeds from (payments of) intercompany notes	272			347			—			(619		)	—
Investments in equity affiliates	(1		)	—			—			1			—
Other investing activities, net	(6		)	—			7			—			1
Net cash provided by (used in) investing activities	152			347			(90		)	(618		)	(209		)
Financing activities
Short term borrowings, net	3			—			5			—			8
Payments on term credit facilities	(376		)	—			(7		)	—			(383		)
Payments on revolving credit facilities	(729		)	—			(965		)	—			(1,694		)
Borrowings on revolving credit facilities	829			—			869			—			1,698
Tax withholding payments on behalf of employees	(16		)	—			—			—			(16		)
Proceeds from employee stock plans	15			—			—			—			15
Dividend distribution to consolidated subsidiaries	—			—			(77		)	77			—
Series A convertible preferred stock issuance	794			—			—			—			794
Tender offer share repurchase	(1,005		)	—			—			—			(1,005		)
Equity contribution	—			—			1			(1		)	—
Borrowings (repayments) of intercompany notes	—			—			(619		)	619			—
Net cash provided by (used in) financing activities	(485		)	—			(793		)	695			(583		)
Cash flows from discontinued operations
Net cash used in discontinued operations operating activities	(43		)	—			—			—			(43		)
Effect of exchange rate changes on cash and cash equivalents	—			(1		)	(28		)	—			(29		)
Increase (decrease) in cash and cash equivalents	(30		)	11			(164		)	—			(183		)
Cash and cash equivalents at beginning of period	45			9			457			—			511
Cash and cash equivalents at end of period	$	15		$	20		$	293		$	—		$	328



Consolidating Statement of Cash Flows
For the year ended December 31, 2014

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	405		$	(108	)	$	322		$	(95	)	$	524
Investing activities
Expenditures for property, plant and equipment	(54		)	—			(64		)	—			(118		)
Proceeds from sales of property, plant and equipment	—			—			1			—			1
Additions to capitalized software	(82		)	—			(58		)	—			(140		)
Business acquisitions, net	(1,647		)	—			—			—			(1,647		)
Changes in restricted cash	1,114			—			—			—			1,114
Proceeds from (payments of) intercompany notes	42			106			—			(148		)	—
Investments in equity affiliates	(2		)	—			—			2			—
Other investing activities, net	(5		)	—			7			—			2
Net cash provided by (used in) investing activities	(634		)	106			(114		)	(146		)	(788		)
Financing activities
Payments on revolving credit facilities	(34		)	—			(3		)	—			(37		)
Borrowings on term credit facilities	250			—			—			—			250
Payments on revolving credit facilities	(946		)	—			(104		)	—			(1,050		)
Borrowings on revolving credit facilities	946			—			200			—			1,146
Debt issuance costs	(4		)	—			(1		)	—			(5		)
Tax withholding payments on behalf of employees	(28		)	—			—			—			(28		)
Proceeds from employee stock plans	13			—			—			—			13
Other financing activities	(1		)	—			(4		)	—			(5		)
Dividend distribution to consolidated subsidiaries	—			—			(95		)	95			—
Equity contribution	—			—			2			(2		)	—
Borrowings (repayments) of intercompany notes	—			—			(148		)	148			—
Net cash provided by (used in) financing activities	196			—			(153		)	241			284
Cash flows from discontinued operations
Net cash used in discontinued operations operating activities	(1		)	—			—			—			(1		)
Effect of exchange rate changes on cash and cash equivalents	—			—			(36		)	—			(36		)
Increase (decrease) in cash and cash equivalents	(34		)	(2		)	19			—			(17		)
Cash and cash equivalents at beginning of period	79			11			438			—			528
Cash and cash equivalents at end of period	$	45		$	9		$	457		$	—		$	511