17. 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.



Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
For the three months ended September 30, 2017

(in millions)	Parent Issuer			Guarantor Subsidiary		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	338		$	13	$	357		$	(51	)	$	657
Service revenue	427			6		573			—			1,006
Total revenue	765			19		930			(51		)	1,663
Cost of products	264			8		307			(51		)	528
Cost of services	295			1		366			—			662
Selling, general and administrative expenses	97			1		122			—			220
Research and development expenses	40			—		13			—			53
Total operating expenses	696			10		808			(51		)	1,463
Income (loss) from operations	69			9		122			—			200
Interest expense	(40		)	—		(19		)	17			(42		)
Other (expense) income, net	1			1		7			(17		)	(8		)
Income (loss) from continuing operations before income taxes	30			10		110			—			150
Income tax expense (benefit)	11			1		19			—			31
Income (loss) from continuing operations before earnings in subsidiaries	19			9		91			—			119
Equity in earnings of consolidated subsidiaries	99			73		—			(172		)	—
Income (loss) from continuing operations	118			82		91			(172		)	119
Income (loss) from discontinued operations, net of tax	—			—		—			—			—
Net income (loss)	$	118		$	82	$	91		$	(172	)	$	119
Net income (loss) attributable to noncontrolling interests	—			—		1			—			1
Net income (loss) attributable to NCR	$	118		$	82	$	90		$	(172	)	$	118
Total comprehensive income (loss)	121			91		95			(188		)	119
Less comprehensive income (loss) attributable to noncontrolling interests	—			—		(1		)	—			(1		)
Comprehensive income (loss) attributable to NCR common stockholders	$	121		$	91	$	96		$	(188	)	$	120



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	$	358		$	15		$	435		$	(100	)	$	708
Service revenue	415			9			545			—			969
Total revenue	773			24			980			(100		)	1,677
Cost of products	282			14			332			(100		)	528
Cost of services	323			3			346			—			672
Selling, general and administrative expenses	117			1			107			—			225
Research and development expenses	26			—			30			—			56
Restructuring-related charges	4			—			3			—			7
Total operating expenses	752			18			818			(100		)	1,488
Income (loss) from operations	21			6			162			—			189
Interest expense	(40		)	—			(18		)	17			(41		)
Other (expense) income, net	10			(6		)	5			(17		)	(8		)
Income (loss) from continuing operations before income taxes	(9		)	—			149			—			140
Income tax expense (benefit)	2			7			22			—			31
Income (loss) from continuing operations before earnings in subsidiaries	(11		)	(7		)	127			—			109
Equity in earnings of consolidated subsidiaries	118			114			—			(232		)	—
Income (loss) from continuing operations	107			107			127			(232		)	109
Income (loss) from discontinued operations, net of tax	(2		)	—			—			—			(2		)
Net income (loss)	$	105		$	107		$	127		$	(232	)	$	107
Net income (loss) attributable to noncontrolling interests	—			—			2			—			2
Net income (loss) attributable to NCR	$	105		$	107		$	125		$	(232	)	$	105
Total comprehensive income (loss)	109			103			132			(234		)	110
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			1			—			1
Comprehensive income (loss) attributable to NCR common stockholders	$	109		$	103		$	131		$	(234	)	$	109



Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
For the nine months ended September 30, 2017

(in millions)	Parent Issuer			Guarantor Subsidiary		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	948		$	66	$	1,030		$	(215	)	$	1,829
Service revenue	1,254			20		1,631			—			2,905
Total revenue	2,202			86		2,661			(215		)	4,734
Cost of products	728			30		887			(215		)	1,430
Cost of services	871			6		1,078			—			1,955
Selling, general and administrative expenses	331			3		342			—			676
Research and development expenses	100			—		78			—			178
Total operating expenses	2,030			39		2,385			(215		)	4,239
Income (loss) from operations	172			47		276			—			495
Interest expense	(118		)	—		(54		)	50			(122		)
Other (expense) income, net	10			—		18			(50		)	(22		)
Income (loss) from continuing operations before income taxes	64			47		240			—			351
Income tax expense (benefit)	20			19		39			—			78
Income (loss) from continuing operations before earnings in subsidiaries	44			28		201			—			273
Equity in earnings of consolidated subsidiaries	228			170		—			(398		)	—
Income (loss) from continuing operations	272			198		201			(398		)	273
Income (loss) from discontinued operations, net of tax	5			—		—			—			5
Net income (loss)	$	277		$	198	$	201		$	(398	)	$	278
Net income (loss) attributable to noncontrolling interests	—			—		1			—			1
Net income (loss) attributable to NCR	$	277		$	198	$	200		$	(398	)	$	277
Total comprehensive income (loss)	294			233		214			(448		)	293
Less comprehensive income (loss) attributable to noncontrolling interests	—			—		(1		)	—			(1		)
Comprehensive income (loss) attributable to NCR common stockholders	$	294		$	233	$	215		$	(448	)	$	294



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	$	910		$	70		$	1,222		$	(270	)	$	1,932
Service revenue	1,191			26			1,592			—			2,809
Total revenue	2,101			96			2,814			(270		)	4,741
Cost of products	712			30			1,015			(270		)	1,487
Cost of services	893			9			1,049			—			1,951
Selling, general and administrative expenses	367			3			308			—			678
Research and development expenses	83			—			76			—			159
Restructuring-related charges	10			—			3			—			13
Total operating expenses	2,065			42			2,451			(270		)	4,288
Income (loss) from operations	36			54			363			—			453
Interest expense	(126		)	—			(56		)	52			(130		)
Other (expense) income, net	35			(11		)	(5		)	(52		)	(33		)
Income (loss) from continuing operations before income taxes	(55		)	43			302			—			290
Income tax expense (benefit)	(19		)	32			62			—			75
Income (loss) from continuing operations before earnings in subsidiaries	(36		)	11			240			—			215
Equity in earnings of consolidated subsidiaries	251			247			—			(498		)	—
Income (loss) from continuing operations	215			258			240			(498		)	215
Income (loss) from discontinued operations, net of tax	(2		)	—			—			—			(2		)
Net income (loss)	$	213		$	258		$	240		$	(498	)	$	213
Net income (loss) attributable to noncontrolling interests	—			—			—			—			—
Net income (loss) attributable to NCR	$	213		$	258		$	240		$	(498	)	$	213
Total comprehensive income (loss)	191			204			207			(418		)	184
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			(7		)	—			(7		)
Comprehensive income (loss) attributable to NCR common stockholders	$	191		$	204		$	214		$	(418	)	$	191



Condensed Consolidating Balance Sheet
September 30, 2017

(in millions)	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	35	$	10	$	360	$	—		$	405
Accounts receivable, net	56		14		1,338		—			1,408
Inventories	303		8		513		—			824
Due from affiliates	689		1,643		516		(2,848		)	—
Other current assets	115		41		173		(66		)	263
Total current assets	1,198		1,716		2,900		(2,914		)	2,900
Property, plant and equipment, net	173		—		148		—			321
Goodwill	988		—		1,753		—			2,741
Intangibles, net	155		—		436		—			591
Prepaid pension cost	—		—		115		—			115
Deferred income taxes	517		97		82		(101		)	595
Investments in subsidiaries	3,538		2,928		—		(6,466		)	—
Due from affiliates	1,020		1		39		(1,060		)	—
Other assets	437		56		94		—			587
Total assets	$	8,026	$	4,798	$	5,567	$	(10,541	)	$	7,850

Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	57	$	—	$	212	$	—		$	269
Accounts payable	292		1		427		—			720
Payroll and benefits liabilities	102		—		100		—			202
Deferred service revenue and customer deposits	212		5		248		—			465
Due to affiliates	2,019		129		700		(2,848		)	—
Other current liabilities	180		5		271		(66		)	390
Total current liabilities	2,862		140		1,958		(2,914		)	2,046
Long-term debt	2,982		—		2		—			2,984
Pension and indemnity plan liabilities	483		—		288		—			771
Postretirement and postemployment benefits liabilities	24		3		100		—			127
Income tax accruals	17		2		119		—			138
Due to affiliates	—		39		1,021		(1,060		)	—
Other liabilities	89		5		204		(101		)	197
Total liabilities	6,457		189		3,692		(4,075		)	6,263
Redeemable noncontrolling interest	—		—		14		—			14
Series A convertible preferred stock	799		—		—		—			799
Stockholders’ equity
Total NCR stockholders’ equity	770		4,609		1,857		(6,466		)	770
Noncontrolling interests in subsidiaries	—		—		4		—			4
Total stockholders’ equity	770		4,609		1,861		(6,466		)	774
Total liabilities and stockholders’ equity	$	8,026	$	4,798	$	5,567	$	(10,541	)	$	7,850



Condensed 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



Condensed Consolidating Statement of Cash Flows
For the nine months ended September 30, 2017

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	284		$	(58	)	$	52		$	(7	)	$	271
Investing activities
Expenditures for property, plant and equipment	(54		)	—			(27		)	—			(81		)
Additions to capitalized software	(86		)	—			(39		)	—			(125		)
Proceeds from sale of property, plant and equipment	—			—			6			—			6
Proceeds from (payments of) intercompany notes	216			55			—			(271		)	—
Investments in equity affiliates	(2		)	—			—			2			—
Other investing activities, net	(1		)	—			1			—			—
Net cash provided by (used in) investing activities	73			55			(59		)	(269		)	(200		)
Financing activities
Short term borrowings, net	—			—			10			—			10
Payments on term credit facilities	(34		)	—			(3		)	—			(37		)
Payments on revolving credit facilities	(1,070		)	—			(40		)	—			(1,110		)
Borrowings on revolving credit facilities	1,095			—			240			—			1,335
Repurchase of Company common stock	(350		)	—			—			—			(350		)
Proceeds from employee stock plans	11			—			—			—			11
Other financing activities	(1		)	—			—			—			(1		)
Equity contribution	—			—			2			(2		)	—
Dividend distribution to consolidated subsidiaries	—			—			(7		)	7			—
Borrowings (repayments) of intercompany notes	—			—			(271		)	271			—
Tax withholding payments on behalf of employees	(24		)	—			—			—			(24		)
Net cash provided by (used in) financing activities	(373		)	—			(69		)	276			(166		)
Cash flows from discontinued operations
Net cash used in operating activities	(14		)	—			—			—			(14		)
Effect of exchange rate changes on cash and cash equivalents	—			1			15			—			16
Increase (decrease) in cash and cash equivalents	(30		)	(2		)	(61		)	—			(93		)
Cash and cash equivalents at beginning of period	65			12			421			—			498
Cash and cash equivalents at end of period	$	35		$	10		$	360		$	—		$	405



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	$	362		$	(103	)	$	113		$	(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 costs	(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	—			(7		)	(3		)	—			(10		)
Cash and cash equivalents at beginning of period	15			20			293			—			328
Cash and cash equivalents at end of period	$	15		$	13		$	290		$	—		$	318