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Segment Information

12 Months Ended

Dec. 31, 2019

4. SEGMENT INFORMATION AND CONCENTRATIONS

As noted in Note 1, Basis of Presentation and Summary of Significant Accounting Policies, effective January 1, 2019, NCR changed the management of its business to an industry basis from the previous model of management on a solution basis, which resulted

in a corresponding change to NCR's reportable segments. We have reclassified prior period segment disclosures to conform to the current period presentation. As a result of the change, the Company manages and reports its business in the following segments:

•

Banking - We offer solutions to enable customers in the financial services industry to reduce costs, generate new revenue streams and enhance customer loyalty. These solutions include a comprehensive line of ATM and payment processing hardware and software; cash management and video banking software and customer-facing digital banking services; and related installation, maintenance, and managed and professional services.

•

Retail - We offer solutions to customers in the retail industry designed to improve selling productivity and checkout processes as well as increase service levels. These solutions primarily include retail-oriented technologies, such as POS terminals and POS software; a retail software platform with a comprehensive suite of retail software applications; innovative self-service kiosks, such as self-checkout; as well as bar-code scanners. We also offer installation, maintenance, managed and professional services as well as payment processing solutions.


•	Hospitality - We offer technology solutions to customers in the hospitality industry, serving businesses that range from a single store or restaurant to global chains and sports and entertainment venues. Our solutions include POS hardware and software solutions, installation, maintenance, managed and professional services as well as payment processing solutions.


•	Other - This category includes telecommunications and technology solutions where we offer maintenance as well as managed and professional services for third-party hardware provided to select manufacturers who value and leverage our global service capability.

These segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker in assessing segment performance and in allocating the Company's resources. Management evaluates the performance of the segments based on revenue and segment operating income. Assets are not allocated to segments, and thus are not included in the assessment of segment performance, and consequently, we do not disclose total assets by reportable segment.

The accounting policies used to determine the results of the operating segments are the same as those utilized for the consolidated financial statements as a whole. Intersegment sales and transfers are not material.

To maintain operating focus on business performance, non-operational items are excluded from the segment operating results utilized by our chief operating decision maker in evaluating segment performance and are separately delineated to reconcile back to total reported income from operations.

The following table presents revenue and operating income by segment for the years ended December 31:



In millions	2019		2018		2017
Revenue by segment
Banking	$	3,512	$	3,183	$	3,175
Retail	2,217		2,097		2,169
Hospitality	843		817		878
Other	343		308		294
Consolidated revenue	$	6,915	$	6,405	$	6,516
Operating income by segment
Banking	$	514	$	412	$	421
Retail	144		142		231
Hospitality	56		85		140
Other	44		49		48
Subtotal - segment operating income	758		688		840
Other adjustments⁽¹⁾	147		497		149
Income from operations	$	611	$	191	$	691

⁽¹⁾ The following table presents the other adjustments for NCR for the years ended December 31:



In millions	2019		2018		2017
Transformation and restructuring costs	$	58	$	223	$	29
Acquisition-related amortization of intangibles	86		85		115
Acquisition-related costs	3		6		5
Asset impairment charges	—		183		—
Total other adjustments	$	147	$	497	$	149

The following table presents revenue from products and services for NCR for the years ended December 31:



In millions	2019		2018		2017
Product revenue	$	2,681	$	2,341	$	2,579
Professional services and installation services revenue	1,089		1,094		1,055
Recurring revenue, including maintenance and cloud revenue	3,145		2,970		2,882
Consolidated revenue	$	6,915	$	6,405	$	6,516

Revenue is attributed to the geographic area to which the product is delivered or in which the service is provided. The following table presents revenue by geographic area for NCR for the years ended December 31:



In millions	2019		%		2018		%		2017		%
Revenue by Geographic Area
United States	$	3,481	50	%	$	3,076	48	%	$	3,224	50	%
Americas (excluding United States)	693		10	%	631		10	%	585		9	%
Europe, Middle East and Africa (EMEA)	1,843		27	%	1,751		27	%	1,786		27	%
Asia Pacific (APJ)	898		13	%	947		15	%	921		14	%
Consolidated revenue	$	6,915	100	%	$	6,405	100	%	$	6,516	100	%

The following table presents property, plant and equipment by geographic area as of December 31:



In millions	2019		2018
Property, plant and equipment, net
United States	$	280	$	247
Americas (excluding United States)	14		13
Europe, Middle East and Africa (EMEA)	74		57
Asia Pacific (APJ)	45		42
Consolidated property, plant and equipment, net	$	413	$	359

Concentrations No single customer accounts for more than 10% of NCR’s consolidated revenue. As of December 31, 2019, NCR is not aware of any significant concentration of business transacted with a particular customer that could, if suddenly eliminated, have a material adverse effect on NCR’s operations. NCR also lacks a concentration of available sources of labor, services, licenses or other rights that could, if suddenly eliminated, have a material adverse effect on its operations.

A number of NCR’s products, systems and solutions rely primarily on specific suppliers for microprocessors and other component products, manufactured assemblies, operating systems, commercial software and other central components. NCR also utilizes contract manufacturers in order to complete manufacturing activities. There can be no assurances that any sudden impact to the availability or cost of these technologies or services would not have a material adverse effect on NCR’s operations.