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 5, "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 October 1, 2017, 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, 2017

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	1,329		$	91		$	1,454		$	(295	)	$	2,579
Service revenue	2,051			29			1,857			—			3,937
Total revenue	3,380			120			3,311			(295		)	6,516
Cost of products	1,044			37			1,240			(295		)	2,026
Cost of services	1,378			10			1,238			—			2,626
Selling, general and administrative expenses	502			3			427			—			932
Research and development expenses	192			—			64			—			256
Restructuring-related charges	—			—			—			—			—
Total operating expenses	3,116			50			2,969			(295		)	5,840
Income (loss) from operations	264			70			342			—			676
Interest expense	(204		)	—			(10		)	51			(163		)
Other (expense) income, net	11			1			8			(51		)	(31		)
Income (loss) from continuing operations before income taxes	71			71			340			—			482
Income tax expense (benefit)	113			107			22			—			242
Income (loss) from continuing operations before earnings in subsidiaries	(42		)	(36		)	318			—			240
Equity in earnings of consolidated subsidiaries	279			291			—			(570		)	—
Income (loss) from continuing operations	237			255			318			(570		)	240
Income (loss) from discontinued operations, net of tax	(5		)	—			—			—			(5		)
Net income (loss)	$	232		$	255		$	318		$	(570	)	$	235
Net income (loss) attributable to noncontrolling interests	—			—			3			—			3
Net income (loss) attributable to NCR	$	232		$	255		$	315		$	(570	)	$	232
Total comprehensive income (loss)	238			269			317			(585		)	239
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			1			—			1
Comprehensive income (loss) attributable to NCR common stockholders	$	238		$	269		$	316		$	(585	)	$	238



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	1,962			36			1,808			—			3,806
Total revenue	3,255			147			3,576			(435		)	6,543
Cost of products	1,028			50			1,459			(435		)	2,102
Cost of services	1,369			12			1,278			—			2,659
Selling, general and administrative expenses	534			4			388			—			926
Research and development expenses	164			—			78			—			242
Restructuring-related charges	3			—			12			—			15
Total operating expenses	3,098			66			3,215			(435		)	5,944
Income (loss) from operations	157			81			361			—			599
Interest expense	(165		)	—			(10		)	5			(170		)
Other (expense) income, net	(20		)	(23		)	(2		)	(5		)	(50		)
Income (loss) from continuing operations before income taxes	(28		)	58			349			—			379
Income tax expense (benefit)	(20		)	21			91			—			92
Income (loss) from continuing operations before earnings in subsidiaries	(8		)	37			258			—			287
Equity in earnings of consolidated subsidiaries	291			304			—			(595		)	—
Income (loss) from continuing operations	283			341			258			(595		)	287
Income (loss) from discontinued operations, net of tax	(13		)	—			—			—			(13		)
Net income (loss)	$	270		$	341		$	258		$	(595	)	$	274
Net income (loss) attributable to noncontrolling interests	—			—			4			—			4
Net income (loss) attributable to NCR	$	270		$	341		$	254		$	(595	)	$	270
Total comprehensive income (loss)	215			277			195			(473		)	214
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			(1		)	—			(1		)
Comprehensive income (loss) attributable to NCR common stockholders	$	215		$	277		$	196		$	(473	)	$	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	1,868			33			1,761			—			3,662
Total revenue	3,057			138			4,100			(922		)	6,373
Cost of products	904			43			2,047			(922		)	2,072
Cost of services	1,289			13			1,530			—			2,832
Selling, general and administrative expenses	567			4			471			—			1,042
Research and development expenses	133			—			97			—			230
Restructuring-related charges	36			—			26			—			62
Total operating expenses	2,929			60			4,171			(922		)	6,238
Income (loss) from operations	128			78			(71		)	—			135
Interest expense	(168		)	—			(10		)	5			(173		)
Other (expense) income, net	(47		)	4			(9		)	(5		)	(57		)
Income (loss) from continuing operations before income taxes	(87		)	82			(90		)	—			(95		)
Income tax expense (benefit)	(38		)	52			41			—			55
Income (loss) from continuing operations before earnings in subsidiaries	(49		)	30			(131		)	—			(150		)
Equity in earnings of consolidated subsidiaries	(104		)	(161		)	—			265			—
Income (loss) from continuing operations	(153		)	(131		)	(131		)	265			(150		)
Income (loss) from discontinued operations, net of tax	(25		)	—			1			—			(24		)
Net income (loss)	$	(178	)	$	(131	)	$	(130	)	$	265		$	(174	)
Net income (loss) attributable to noncontrolling interests	—			—			4			—			4
Net income (loss) attributable to NCR	$	(178	)	$	(131	)	$	(134	)	$	265		$	(178	)
Total comprehensive income (loss)	(192		)	(154		)	(145		)	300			(191		)
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			1			—			1
Comprehensive income (loss) attributable to NCR common stockholders	$	(192	)	$	(154	)	$	(146	)	$	300		$	(192	)



Consolidating Balance Sheet
December 31, 2017

(in millions)	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	97	$	11	$	429	$	—		$	537
Accounts receivable, net	62		12		1,196		—			1,270
Inventories	311		7		462		—			780
Due from affiliates	646		1,801		283		(2,730		)	—
Other current assets	78		39		162		(36		)	243
Total current assets	1,194		1,870		2,532		(2,766		)	2,830
Property, plant and equipment, net	207		—		134		—			341
Goodwill	2,228		—		513		—			2,741
Intangibles, net	503		—		75		—			578
Prepaid pension cost	—		—		118		—			118
Deferred income taxes	334		—		157		(31		)	460
Investments in subsidiaries	3,008		2,942		—		(5,950		)	—
Due from affiliates	31		1		39		(71		)	—
Other assets	472		63		51		—			586
Total assets	$	7,977	$	4,876	$	3,619	$	(8,818	)	$	7,654

Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	52	$	—	$	—	$	—		$	52
Accounts payable	382		—		380		—			762
Payroll and benefits liabilities	124		—		95		—			219
Deferred service revenue and customer deposits	216		6		236		—			458
Due to affiliates	1,884		130		716		(2,730		)	—
Other current liabilities	204		5		225		(36		)	398
Total current liabilities	2,862		141		1,652		(2,766		)	1,889
Long-term debt	2,937		—		2		—			2,939
Pension and indemnity plan liabilities	515		—		283		—			798
Postretirement and postemployment benefits liabilities	20		3		110		—			133
Income tax accruals	20		5		123		—			148
Due to affiliates	—		39		32		(71		)	—
Other liabilities	94		36		101		(31		)	200
Total liabilities	6,448		224		2,303		(2,868		)	6,107
Redeemable noncontrolling interest	—		—		15		—			15
Series A convertible preferred stock	810		—		—		—			810
Stockholders’ equity
Total NCR stockholders’ equity	719		4,652		1,298		(5,950		)	719
Noncontrolling interests in subsidiaries	—		—		3		—			3
Total stockholders’ equity	719		4,652		1,301		(5,950		)	722
Total liabilities and stockholders’ equity	$	7,977	$	4,876	$	3,619	$	(8,818	)	$	7,654



Consolidating Balance Sheet
December 31, 2016

(in millions)	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	67	$	12	$	419	$	—		$	498
Accounts receivable, net	107		25		1,150		—			1,282
Inventories	272		13		414		—			699
Due from affiliates	658		1,509		385		(2,552		)	—
Other current assets	120		37		154		(33		)	278
Total current assets	1,224		1,596		2,522		(2,585		)	2,757
Property, plant and equipment, net	142		—		145		—			287
Goodwill	2,228		—		499		—			2,727
Intangibles, net	574		—		98		—			672
Prepaid pension cost	—		—		94		—			94
Deferred income taxes	360		98		82		35			575
Investments in subsidiaries	2,744		2,822		—		(5,566		)	—
Due from affiliates	52		—		35		(87		)	—
Other assets	443		56		62		—			561
Total assets	$	7,767	$	4,572	$	3,537	$	(8,203	)	$	7,673

Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	46	$	—	$	4	$	—		$	50
Accounts payable	344		2		435		—			781
Payroll and benefits liabilities	140		—		94		—			234
Deferred service revenue and customer deposits	196		5		267		—			468
Due to affiliates	1,700		154		698		(2,552		)	—
Other current liabilities	228		6		231		(33		)	432
Total current liabilities	2,654		167		1,729		(2,585		)	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		52		(87		)	—
Other liabilities	59		5		39		35			138
Total liabilities	6,225		214		2,310		(2,637		)	6,112
Redeemable noncontrolling interest	—		—		15		—			15
Series A Convertible Preferred Stock	847		—		—		—			847
Stockholders’ equity
Total NCR stockholders’ equity	695		4,358		1,208		(5,566		)	695
Noncontrolling interests in subsidiaries	—		—		4		—			4
Total stockholders’ equity	695		4,358		1,212		(5,566		)	699
Total liabilities and stockholders’ equity	$	7,767	$	4,572	$	3,537	$	(8,203	)	$	7,673



Consolidating Statement of Cash Flows
For the year ended December 31, 2017

(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	459		$	(180	)	$	486		$	(10	)	$	755
Investing activities
Expenditures for property, plant and equipment	(87		)	—			(41		)	—			(128		)
Proceeds from the sale of property, plant and equipment	—			—			6			—			6
Additions to capitalized software	(133		)	—			(33		)	—			(166		)
Acquisitions	(8		)	—			—			—			(8		)
Proceeds from (payments of) intercompany notes	230			180			2			(412		)	—
Proceeds from divestitures	3			—			—			—			3
Investments in equity affiliates	3			—			—			(3		)	—
Other investing activities, net	(1		)	—			4			—			3
Net cash provided by (used in) investing activities	7			180			(62		)	(415		)	(290		)
Financing activities
Short term borrowings, net	(5		)	—			1			—			(4		)
Payments on term credit facilities	(56		)	—			(5		)	—			(61		)
Payments on revolving credit facilities	(1,700		)	—			(240		)	—			(1,940		)
Borrowings on revolving credit facilities	1,700			—			240			—			1,940
Tax withholding payments on behalf of employees	(31		)	—			—			—			(31		)
Proceeds from employee stock plans	15			—			—			—			15
Other financing activities	(1		)	—			(2		)	—			(3		)
Dividend distribution to consolidated subsidiaries	—			—			(10		)	10			—
Repurchases of Company common stock	(350		)	—			—			—			(350		)
Equity contribution	—			—			(3		)	3			—
Borrowings (repayments) of intercompany notes	—			(2		)	(410		)	412			—
Net cash provided by (used in) financing activities	(428		)	(2		)	(429		)	425			(434		)
Cash flows from discontinued operations
Net cash used in discontinued operations operating activities	(8		)	—			—			—			(8		)
Effect of exchange rate changes on cash and cash equivalents	—			1			15			—			16
Increase (decrease) in cash and cash equivalents	30			(1		)	10			—			39
Cash and cash equivalents at beginning of period	67			12			419			—			498
Cash and cash equivalents at end of period	$	97		$	11		$	429		$	—		$	537



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	$	336		$	(160	)	$	721		$	(3	)	$	894
Investing activities
Expenditures for property, plant and equipment	(33		)	—			(40		)	—			(73		)
Additions to capitalized software	(114		)	—			(40		)	—			(154		)
Proceeds from (payments of) intercompany notes	365			115			—			(480		)	—
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	222			165			(55		)	(521		)	(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	(16		)	—			(464		)	480			—
Net cash provided by (used in) financing activities	(469		)	—			(522		)	524			(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		)
Increase (decrease) in cash and cash equivalents	50			(8		)	128			—			170
Cash and cash equivalents at beginning of period	17			20			291			—			328
Cash and cash equivalents at end of period	$	67		$	12		$	419		$	—		$	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	$	423		$	(335	)	$	670		$	(77	)	$	681
Investing activities
Expenditures for property, plant and equipment	(25		)	—			(54		)	—			(79		)
Proceeds from sales of property, plant and equipment	—			—			19			—			19
Additions to capitalized software	(111		)	—			(39		)	—			(150		)
Proceeds from (payments of) intercompany notes	217			347			—			(564		)	—
Investments in equity affiliates	(1		)	—			—			1			—
Other investing activities, net	(6		)	—			7			—			1
Net cash provided by (used in) investing activities	74			347			(67		)	(563		)	(209		)
Financing activities
Short term borrowings, net	3			—			5			—			8
Payments on revolving 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
Equity contribution	—			—			1			(1		)	—
Borrowings (repayments) of intercompany notes	—			—			(564		)	564			—
Tender offer share repurchase	(1,005		)	—			—			—			(1,005		)
Net cash provided by (used in) financing activities	(485		)	—			(738		)	640			(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	(31		)	11			(163		)	—			(183		)
Cash and cash equivalents at beginning of period	48			9			454			—			511
Cash and cash equivalents at end of period	$	17		$	20		$	291		$	—		$	328