Condensed Consolidating Supplemental Guarantor Information

3 Months Ended

Mar. 31, 2019

Condensed Consolidating Supplemental Guarantor Information [Abstract]

CONDENSED CONSOLIDATED SUPPLEMENTAL GUARANTOR INFORMATION

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 5. 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 March 31, 2019
In millions	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	272		$	3		$	310		$	(46	)	$	539
Service revenue	517			8			472			—			997
Total revenue	789			11			782			(46		)	1,536
Cost of products	244			2			253			(46		)	453
Cost of services	361			3			308			—			672
Selling, general and administrative expenses	139			1			112			—			252
Research and development expenses	33			—			26			—			59
Total operating expenses	777			6			699			(46		)	1,436
Income (loss) from operations	12			5			83			—			100
Interest expense	(43		)	—			(5		)	3			(45		)
Other (expense) income, net	(13		)	2			6			(3		)	(8		)
Income (loss) from continuing operations before income taxes	(44		)	7			84			—			47
Income tax expense (benefit)	38			(1		)	(28		)	—			9
Income (loss) from continuing operations before earnings in subsidiaries	(82		)	8			112			—			38
Equity in earnings of consolidated subsidiaries	119			93			—			(212		)	—
Income (loss) from continuing operations	37			101			112			(212		)	38
Income (loss) from discontinued operations, net of tax	—			—			—			—			—
Net income (loss)	$	37		$	101		$	112		$	(212	)	$	38
Net income (loss) attributable to noncontrolling interests	—			—			1			—			1
Net income (loss) attributable to NCR	$	37		$	101		$	111		$	(212	)	$	37
Total comprehensive income (loss)	53			117			127			(243		)	54
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			1			—			1
Comprehensive income (loss) attributable to NCR common stockholders	$	53		$	117		$	126		$	(243	)	$	53

Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
For the three months ended March 31, 2018
In millions	Parent Issuer			Guarantor Subsidiary		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	277		$	5	$	282		$	(38	)	$	526
Service revenue	517			8		466			—			991
Total revenue	794			13		748			(38		)	1,517
Cost of products	229			4		225			(38		)	420
Cost of services	342			3		332			—			677
Selling, general and administrative expenses	164			1		80			—			245
Research and development expenses	46			—		20			—			66
Total operating expenses	781			8		657			(38		)	1,408
Income (loss) from operations	13			5		91			—			109
Interest expense	(39		)	—		(3		)	1			(41		)
Other (expense) income, net	(3		)	1		(2		)	(1		)	(5		)
Income (loss) from continuing operations before income taxes	(29		)	6		86			—			63
Income tax expense (benefit)	(8		)	2		13			—			7
Income (loss) from continuing operations before earnings in subsidiaries	(21		)	4		73			—			56
Equity in earnings of consolidated subsidiaries	76			59		—			(135		)	—
Income (loss) from continuing operations	55			63		73			(135		)	56
Income (loss) from discontinued operations, net of tax	(35		)	—		—			—			(35		)
Net income (loss)	$	20		$	63	$	73		$	(135	)	$	21
Net income (loss) attributable to noncontrolling interests	—			—		1			—			1
Net income (loss) attributable to NCR	$	20		$	63	$	72		$	(135	)	$	20
Total comprehensive income (loss)	35			62		88			(149		)	36
Less comprehensive income (loss) attributable to noncontrolling interests	—			—		1			—			1
Comprehensive income (loss) attributable to NCR common stockholders	$	35		$	62	$	87		$	(149	)	$	35

Condensed Consolidating Balance Sheet
March 31, 2019
In millions	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	18	$	6	$	390	$	—		$	414
Accounts receivable, net	43		14		1,278		—			1,335
Inventories	293		7		574		—			874
Due from affiliates	615		2,074		404		(3,093		)	—
Other current assets	133		46		255		(41		)	393
Total current assets	1,102		2,147		2,901		(3,134		)	3,016
Property, plant and equipment, net	257		1		115		—			373
Goodwill	2,194		—		511		—			2,705
Intangibles, net	515		—		58		—			573
Operating lease assets	282		—		151		—			433
Prepaid pension cost	—		—		148		—			148
Deferred income taxes	318		—		148		(13		)	453
Investments in subsidiaries	3,338		3,001		—		(6,339		)	—
Due from affilates	16		1		35		(52		)	—
Other assets	442		3		52		—			497
Total assets	$	8,464	$	5,153	$	4,119	$	(9,538	)	$	8,198
Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	91	$	—	$	206	$	—		$	297
Accounts payable	379		2		407		—			788
Payroll and benefits liabilities	90		—		94		—			184
Contract liabilities	283		13		270		—			566
Due to affiliates	2,231		126		736		(3,093		)	—
Other current liabilities	213		4		370		(41		)	546
Total current liabilities	3,287		145		2,083		(3,134		)	2,381
Long-term debt	2,911		—		3		—			2,914
Pension and indemnity plan liabilities	508		—		252		—			760
Postretirement and postemployment benefits liabilities	17		4		99		—			120
Income tax accruals	19		6		68		—			93
Due to affiliates	—		35		17		(52		)	—
Operating lease liabilities	307		—		99		—			406
Other liabilities	94		19		84		(13		)	184
Total liabilities	7,143		209		2,705		(3,199		)	6,858
Redeemable noncontrolling interest	—		—		14		—			14
Series A convertible preferred stock	872		—		—		—			872
Stockholders’ equity
Total NCR stockholders’ equity	449		4,944		1,395		(6,339		)	449
Noncontrolling interests in subsidiaries	—		—		5		—			5
Total stockholders’ equity	449		4,944		1,400		(6,339		)	454
Total liabilities and stockholders’ equity	$	8,464	$	5,153	$	4,119	$	(9,538	)	$	8,198

Condensed Consolidating Balance Sheet
December 31, 2018
In millions	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	6	$	8	450		$	—		$	464
Accounts receivable, net	37		10		1,309		—			1,356
Inventories	288		4		514		—			806
Due from affiliates	708		2,092		457		(3,257		)	—
Other current assets	137		47		255		(42		)	397
Total current assets	1,176		2,161		2,985		(3,299		)	3,023
Property, plant and equipment, net	245		1		113		—			359
Goodwill	2,168		—		524		—			2,692
Intangibles, net	536		—		59		—			595
Prepaid pension cost	—		—		140		—			140
Deferred income taxes	317		—		149		(18		)	448
Investments in subsidiaries	3,244		2,854		—		(6,098		)	—
Due from affiliates	16		1		35		(52		)	—
Other assets	453		4		47		—			504
Total assets	$	8,155	$	5,021	$	4,052	$	(9,467	)	$	7,761
Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	85	$	—	$	100	$	—		$	185
Accounts payable	397		2		498		—			897
Payroll and benefits liabilities	141		—		97		—			238
Contract liabilities	221		5		235		—			461
Due to affiliates	2,177		143		937		(3,257		)	—
Other current liabilities	201		6		336		(42		)	501
Total current liabilities	3,222		156		2,203		(3,299		)	2,282
Long-term debt	2,978		—		2		—			2,980
Pension and indemnity plan liabilities	502		—		257		—			759
Postretirement and postemployment benefits liabilities	18		3		97		—			118
Income tax accruals	19		5		67		—			91
Due to affiliates	—		36		16		(52		)	—
Other liabilities	162		24		91		(18		)	259
Total liabilities	6,901		224		2,733		(3,369		)	6,489
Redeemable noncontrolling interest	—		—		14		—			14
Series A convertible preferred stock	859		—		—		—			859
Stockholders’ equity
Total NCR stockholders’ equity	395		4,797		1,301		(6,098		)	395
Noncontrolling interests in subsidiaries	—		—		4		—			4
Total stockholders’ equity	395		4,797		1,305		(6,098		)	399
Total liabilities and stockholders’ equity	$	8,155	$	5,021	$	4,052	$	(9,467	)	$	7,761

Condensed Consolidating Statement of Cash Flows
For the three months ended March 31, 2019
In millions	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	112		$	(22	)	$	(106	)	$	—		$	(16	)
Investing activities
Expenditures for property, plant and equipment	(13		)	—			(9		)	—			(22		)
Additions to capitalized software	(36		)	—			(7		)	—			(43		)
Proceeds from (payments of) intercompany notes	29			30			—			(59		)	—
Investments in equity affiliates	—			—			10			(10		)	—
Acquisitions	(6		)	—			—			—			(6		)
Other investing activities, net	3			—			—			—			3
Net cash provided by (used in) investing activities	(23		)	30			(6		)	(69		)	(68		)
Financing activities
Short term borrowings, net	—			—			7			—			7
Payments on term credit facilities	(17		)	—			—			—			(17		)
Payments on revolving credit facilities	(375		)	—			—			—			(375		)
Borrowings on revolving credit facilities	330			—			100			—			430
Proceeds from employee stock plans	4			—			—			—			4
Equity contribution	—			(10		)	—			10			—
Borrowings (repayments) of intercompany notes	—			—			(59		)	59			—
Tax withholding payments on behalf of employees	(13		)	—			—			—			(13		)
Net cash provided by (used in) financing activities	(71		)	(10		)	48			69			36
Cash flows from discontinued operations
Net cash used in operating activities	(6		)	—			—			—			(6		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			1			—			1
Increase (decrease) in cash, cash equivalents and restricted cash	12			(2		)	(63		)	—			(53		)
Cash, cash equivalents and restricted cash at beginning of period	7			8			461			—			476
Cash, cash equivalents and restricted cash at end of period	$	19		$	6		$	398		$	—		$	423

In millions	March 31, 2019
Reconciliation of cash, cash equivalents and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash and cash equivalents	$	18	$	6	$	390	$	—	$	414
Restricted cash included in Other assets	1		—		8		—		9
Total cash, cash equivalents and restricted cash	$	19	$	6	$	398	$	—	$	423

Condensed Consolidating Statement of Cash Flows
For the three months ended March 31, 2018
In millions	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	26		$	(124	)	$	74		$	—		$	(24	)
Investing activities
Expenditures for property, plant and equipment	(24		)	—			(5		)	—			(29		)
Additions to capitalized software	(35		)	—			(7		)	—			(42		)
Proceeds from (payments of) intercompany notes	54			125			—			(179		)	—
Other investing activities, net	(3		)	—			—			—			(3		)
Net cash provided by (used in) investing activities	(8		)	125			(12		)	(179		)	(74		)
Financing activities
Short term borrowings, net	(1		)	—			—			—			(1		)
Payments on term credit facilities	(34		)	—			—			—			(34		)
Payments on revolving credit facilities	(260		)	—			(238		)	—			(498		)
Borrowings on revolving credit facilities	375			—			238			—			613
Repurchase of Company common stock	(165		)	—			—			—			(165		)
Proceeds from employee stock plans	5			—			—			—			5
Borrowings (repayments) of intercompany notes	—			—			(179		)	179			—
Tax withholding payments on behalf of employees	(11		)	—			—			—			(11		)
Net cash provided by (used in) financing activities	(91		)	—			(179		)	179			(91		)
Cash flows from discontinued operations
Net cash used in operating activities	(4		)	—			—			—			(4		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			5			—			5
Increase (decrease) in cash, cash equivalents, and restricted cash	(77		)	1			(112		)	—			(188		)
Cash, cash equivalents and restricted cash at beginning of period	98			10			435			—			543
Cash, cash equivalents and restricted cash at end of period	$	21		$	11		$	323		$	—		$	355

In millions	March 31, 2018
Reconciliation of cash, cash equivalents and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash and cash equivalents	$	21	$	11	$	316	$	—	$	348
Restricted cash included in Other assets	—		—		7		—		7
Total cash, cash equivalents and restricted cash	$	21	$	11	$	323	$	—	$	355