Condensed Consolidating Supplemental Guarantor Information (Notes)

12 Months Ended

Dec. 31, 2019

Condensed Consolidating Supplemental Guarantor Information [Abstract]

Condensed Consolidating Supplemental Guarantor Information

17. GUARANTOR FINANCIAL INFORMATION

The Company's 5.00% 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 7, "Debt Obligations" for additional information.

In connection with the previously completed exchange offers for the 5.00% 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 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 statements of operations and comprehensive income (loss), the balance sheets and the 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. During the fourth quarter of 2019, we completed an internal reorganization and transfer of certain intangible assets among our wholly-owned subsidiaries. Accordingly, all prior period consolidating guarantor financial information were updated to reflect the reorganization.

Consolidating Statements of Operations and Comprehensive Income (Loss)
For the year ended December 31, 2019
(in millions)	Parent Issuer			Guarantor Subsidiary		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	1,348		$	25	$	1,628		$	(320	)	$	2,681
Service revenue	2,208			6		2,020			—			4,234
Total revenue	3,556			31		3,648			(320		)	6,915
Cost of products	1,170			3		1,293			(320		)	2,146
Cost of services	1,444			4		1,400			—			2,848
Selling, general and administrative expenses	648			1		402			—			1,051
Research and development expenses	88			—		171			—			259
Total operating expenses	3,350			8		3,266			(320		)	6,304
Income (loss) from operations	206			23		382			—			611
Interest expense	(188		)	—		(14		)	5			(197		)
Other income (expense), net	(79		)	3		8			(5		)	(73		)
Income (loss) from continuing operations before income taxes	(61		)	26		376			—			341
Income tax expense (benefit)	(28		)	12		(257		)	—			(273		)
Income (loss) from continuing operations before earnings in subsidiaries	(33		)	14		633			—			614
Equity in earnings of consolidated subsidiaries	634			594		—			(1,228		)	—
Income (loss) from continuing operations	601			608		633			(1,228		)	614
Income (loss) from discontinued operations, net of tax	(37		)	—		(13		)	—			(50		)
Net income (loss)	$	564		$	608	$	620		$	(1,228	)	$	564
Net income (loss) attributable to noncontrolling interests	—			—		—			—			—
Net income (loss) attributable to NCR	$	564		$	608	$	620		$	(1,228	)	$	564
Total comprehensive income (loss)	541			1,158		595			(1,756		)	538
Less comprehensive income (loss) attributable to noncontrolling interests	—			—		(3		)	—			(3		)
Comprehensive income (loss) attributable to NCR common stockholders	$	541		$	1,158	$	598		$	(1,756	)	$	541

Consolidating Statements of Operations and Comprehensive Income (Loss)
For the year ended December 31, 2018
(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	1,104		$	23		$	1,440		$	(226	)	$	2,341
Service revenue	2,143			7			1,914			—			4,064
Total revenue	3,247			30			3,354			(226		)	6,405
Cost of products	1,027			5			1,182			(226		)	1,988
Cost of services	1,451			5			1,286			—			2,742
Selling, general and administrative expenses	578			1			426			—			1,005
Research and development expenses	102			—			150			—			252
Asset impairment charges	210			—			17			—			227
Total operating expenses	3,368			11			3,061			(226		)	6,214
Income (loss) from operations	(121		)	19			293			—			191
Interest expense	(161		)	—			(15		)	8			(168		)
Other income (expense), net	6			7			11			(8		)	16
Income (loss) from continuing operations before income taxes	(276		)	26			289			—			39
Income tax expense (benefit)	(55		)	71			57			—			73
Income (loss) from continuing operations before earnings in subsidiaries	(221		)	(45		)	232			—			(34		)
Equity in earnings of consolidated subsidiaries	183			225			—			(408		)	—
Income (loss) from continuing operations	(38		)	180			232			(408		)	(34		)
Income (loss) from discontinued operations, net of tax	(50		)	—			(2		)	—			(52		)
Net income (loss)	$	(88	)	$	180		$	230		$	(408	)	$	(86	)
Net income (loss) attributable to noncontrolling interests	—			—			2			—			2
Net income (loss) attributable to NCR	$	(88	)	$	180		$	228		$	(408	)	$	(88	)
Total comprehensive income (loss)	(136		)	127			179			(306		)	(136		)
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			—			—			—
Comprehensive income (loss) attributable to NCR common stockholders	$	(136	)	$	127		$	179		$	(306	)	$	(136	)

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	$	1,349		$	71		$	1,454		$	(295	)	$	2,579
Service revenue	2,073			7			1,857			—			3,937
Total revenue	3,422			78			3,311			(295		)	6,516
Cost of products	1,077			2			1,237			(295		)	2,021
Cost of services	1,365			5			1,270			—			2,640
Selling, general and administrative expenses	492			1			430			—			923
Research and development expenses	184			—			57			—			241
Total operating expenses	3,118			8			2,994			(295		)	5,825
Income (loss) from operations	304			70			317			—			691
Interest expense	(159		)	—			(9		)	5			(163		)
Other income (expense), net	(76		)	3			32			(5		)	(46		)
Income (loss) from continuing operations before income taxes	69			73			340			—			482
Income tax expense (benefit)	112			108			22			—			242
Income (loss) from continuing operations before earnings in subsidiaries	(43		)	(35		)	318			—			240
Equity in earnings of consolidated subsidiaries	280			296			—			(576		)	—
Income (loss) from continuing operations	237			261			318			(576		)	240
Income (loss) from discontinued operations, net of tax	(5		)	—			—			—			(5		)
Net income (loss)	$	232		$	261		$	318		$	(576	)	$	235
Net income (loss) attributable to noncontrolling interests	—			—			3			—			3
Net income (loss) attributable to NCR	$	232		$	261		$	315		$	(576	)	$	232
Total comprehensive income (loss)	238			346			317			(662		)	239
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			1			—			1
Comprehensive income (loss) attributable to NCR common stockholders	$	238		$	346		$	316		$	(662	)	$	238

Consolidating Balance Sheet
December 31, 2019
(in millions)	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	15	$	3	$	491	$	—		$	509
Accounts receivable, net	54		1		1,435		—			1,490
Inventories	315		1		468		—			784
Due from affiliates	909		2,217		531		(3,657		)	—
Other current assets	122		1		238		—			361
Total current assets	1,415		2,223		3,163		(3,657		)	3,144
Property, plant and equipment, net	280		—		133		—			413
Goodwill	2,183		—		649		—			2,832
Intangibles, net	471		—		136		—			607
Operating lease assets	254		—		137		—			391
Prepaid pension cost	—		—		178		—			178
Deferred income taxes	335		2		484		—			821
Investments in subsidiaries	4,118		3,938		—		(8,056		)	—
Due from affiliates	16		1		74		(91		)	—
Other assets	527		1		73		—			601
Total assets	$	9,599	$	6,165	$	5,027	$	(11,804	)	$	8,987
Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	8	$	—	$	274	$	—		$	282
Accounts payable	427		—		413		—			840
Payroll and benefits liabilities	188		—		120		—			308
Deferred service revenue and customer deposits	245		1		256		—			502
Due to affiliates	2,730		108		819		(3,657		)	—
Other current liabilities	261		1		344		—			606
Total current liabilities	3,859		110		2,226		(3,657		)	2,538
Long-term debt	3,199		—		78		—			3,277
Pension and indemnity plan liabilities	586		—		272		—			858
Postretirement and postemployment benefits liabilities	17		3		91		—			111
Income tax accruals	29		—		63		—			92
Due to affiliates	—		74		17		(91		)	—
Operating lease liabilities	282		—		87		—			369
Other liabilities	128		—		112		—			240
Total liabilities	8,100		187		2,946		(3,748		)	7,485
Redeemable noncontrolling interest	—		—		—		—			—
Series A convertible preferred stock	395		—		—		—			395
Stockholders’ equity
Total NCR stockholders’ equity	1,104		5,978		2,078		(8,056		)	1,104
Noncontrolling interests in subsidiaries	—		—		3		—			3
Total stockholders’ equity	1,104		5,978		2,081		(8,056		)	1,107
Total liabilities and stockholders’ equity	$	9,599	$	6,165	$	5,027	$	(11,804	)	$	8,987

Consolidating Balance Sheet
December 31, 2018
(in millions)	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	11	$	3	$	450	$	—		$	464
Accounts receivable, net	46		1		1,309		—			1,356
Inventories	291		1		514		—			806
Due from affiliates	706		2,092		457		(3,255		)	—
Other current assets	141		43		255		(42		)	397
Total current assets	1,195		2,140		2,985		(3,297		)	3,023
Property, plant and equipment, net	246		—		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	3,264		2,900		—		(6,164		)	—
Due from affiliates	16		1		35		(52		)	—
Other assets	455		2		47		—			504
Total assets	$	8,197	$	5,043	$	4,052	$	(9,531	)	$	7,761
Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	85	$	—	$	100	$	—		$	185
Accounts payable	398		1		498		—			897
Payroll and benefits liabilities	141		—		97		—			238
Deferred service revenue and customer deposits	225		1		235		—			461
Due to affiliates	2,200		118		937		(3,255		)	—
Other current liabilities	205		2		336		(42		)	501
Total current liabilities	3,254		122		2,203		(3,297		)	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	24		—		67		—			91
Due to affiliates	—		36		16		(52		)	—
Other liabilities	167		19		91		(18		)	259
Total liabilities	6,943		180		2,733		(3,367		)	6,489
Redeemable noncontrolling interest	—		—		14		—			14
Series A Convertible Preferred Stock	859		—		—		—			859
Stockholders’ equity
Total NCR stockholders’ equity	395		4,863		1,301		(6,164		)	395
Noncontrolling interests in subsidiaries	—		—		4		—			4
Total stockholders’ equity	395		4,863		1,305		(6,164		)	399
Total liabilities and stockholders’ equity	$	8,197	$	5,043	$	4,052	$	(9,531	)	$	7,761

Consolidating Statement of Cash Flows
For the year ended December 31, 2019
(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	498		$	(281	)	$	412		$	(1	)	$	628
Investing activities
Expenditures for property, plant and equipment	(43		)	—			(48		)	—			(91		)
Additions to capitalized software	(195		)	—			(43		)	—			(238		)
Investments in equity affiliates	—			—			98			(98		)	—
Proceeds from (payments of) intercompany notes	352			330			169			(851		)	—
Acquisitions	(91		)	—			(112		)	—			(203		)
Proceeds from the sale of PPE	3			—			8			—			11
Net change in funds held for clients	—			—			(15		)	—			(15		)
Other investing activities, net	9			—			—			—			9
Net cash provided by (used in) investing activities	35			330			57			(949		)	(527		)
Financing activities
Tax withholding payments on behalf of employees	(29		)	—			—			—			(29		)
Repurchases of Company common stock	(96		)	—			—			—			(96		)
Short term borrowings, net	—			—			—			—			—
Borrowings on term facility	1,000			—			—			—			1,000
Payments of term credit facilities	(761		)	—			—			—			(761		)
Repayment of senior unsecured notes	(900		)	—			—			—			(900		)
Borrowing on term credit facilities	750			—			—			—			750
Redemption of preferred shares	(302		)	—			—			—			(302		)
Proceeds from employee stock plans	16			—			—			—			16
Debt issuance costs	(32		)	—			—			—			(32		)
Other financing activities	(5		)	—			(3		)	—			(8		)
Payments on revolving credit facilities	(2,830		)	—			(386		)	—			(3,216		)
Borrowings on revolving credit facilities	2,900			—			635			—			3,535
Net increase (decrease) in client funds obligations	—			—			15			—			15
Purchase of non-controlling interest	—			—			(3		)	—			(3		)
Equity contribution	(84		)	(14		)	—			98			—
Dividends distribution to consolidated subsidiaries	—			—			(1		)	1			—
Borrowings (repayments) of intercompany notes	(135		)	(35		)	(681		)	851			—
Net cash provided by (used in) financing activities	(508		)	(49		)	(424		)	950			(31		)
Cash flows from discontinued operations
Net cash used in discontinued operations operating activities	(22		)	—			(2		)	—			(24		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			(6		)	$	—		(6		)

Increase (decrease) in cash, cash equivalents and restricted cash	3		—		37		—		40
Cash, cash equivalents and restricted cash at beginning of period	12		3		461		—		476
Cash, cash equivalents and restricted cash at end of period	$	15	$	3	$	498	$	—	$	516

In millions	December 31, 2019
Reconciliation of cash, cash equivalents and restricted cash as shown in the Consolidated Statements of Cash Flows	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash and cash equivalents	$	15	$	3	$	491	$	—	$	509
Restricted cash included in Other assets	—		—		7		—		7
Total cash, cash equivalents and restricted cash	$	15	$	3	$	498	$	—	$	516

Consolidating Statement of Cash Flows
For the year ended December 31, 2018
(in millions)	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	359		$	(144	)	$	375		$	(18	)	$	572
Investing activities
Expenditures for property, plant and equipment	(109		)	—			(34		)	—			(143		)
Additions to capitalized software	(144		)	—			(26		)	—			(170		)
Proceeds from (payments of) intercompany notes	228			135			—			(363		)	—
Acquisitions	(206		)	—			—			—			(206		)
Proceeds from the sale of PPE	1			—			2			—			3
Investments in equity affiliates	(14		)	10			—			4			—
Other investing activities, net	(4		)	—			—			—			(4		)
Net cash provided by (used in) investing activities	(248		)	145			(58		)	(359		)	(520		)
Financing activities
Short term borrowings, net	(1		)	—			—			—			(1		)
Payments on term credit facilities	(51		)	—			—			—			(51		)
Payments on revolving credit facilities	(1,755		)	—			(478		)	—			(2,233		)
Borrowings on revolving credit facilities	1,875			—			578			—			2,453
Tax withholding payments on behalf of employees	(36		)	—			—			—			(36		)
Proceeds from employee stock plans	20			—			—			—			20
Other financing activities	—			—			—			—			—
Dividend distribution to consolidated subsidiaries	—			—			(18		)	18			—
Repurchases of Company common stock	(210		)	—			—			—			(210		)
Equity contribution	(10		)	—			14			(4		)	—
Borrowings (repayments) of intercompany notes	—			—			(363		)	363			—
Net cash provided by (used in) financing activities	(168		)	—			(267		)	377			(58		)
Cash flows from discontinued operations
Net cash used in discontinued operations operating activities	(36		)	—			—			—			(36		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1		)	—			(24		)	—			(25		)
Increase (decrease) in cash, cash equivalents and restricted cash	(94		)	1			26			—			(67		)
Cash, cash equivalents and restricted cash at beginning of period	106			2			435			—			543
Cash, cash equivalents and restricted cash at end of period	$	12		$	3		$	461		$	—		$	476

In millions	December 31, 2018
Reconciliation of cash, cash equivalents and restricted cash as shown in the Consolidated Statements of Cash Flows	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash and cash equivalents	$	11	$	3	$	450	$	—	$	464
Restricted cash included in Other assets	1		—		11		—		12
Total cash, cash equivalents and restricted cash	$	12	$	3	$	461	$	—	$	476

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	$	447		$	(168	)	$	483		$	(10	)	$	752
Investing activities
Expenditures for property, plant and equipment	(87		)	—			(41		)	—			(128		)
Additions to capitalized software	(133		)	—			(33		)	—			(166		)
Proceeds from (payments of) intercompany notes	230			180			2			(412		)	—
Acquisitions	(8		)	—			—			—			(8		)
Proceeds from the sale of PPE	—			—			6			—			6
Investments in equity affiliates	13			—			—			(13		)	—
Other investing activities, net	2			—			4			—			6
Net cash provided by (used in) investing activities	17			180			(62		)	(425		)	(290		)
Financing activities
Short term borrowings, net	(5		)	—			1			—			(4		)
Payments on revolving 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
Dividend distribution to consolidated subsidiaries	—			—			(10		)	10			—
Other financing activities	(1		)	—			(2		)	—			(3		)
Equity contribution	—			(10		)	(3		)	13			—
Borrowings (repayments) of intercompany notes	—			(2		)	(410		)	412			—
Repurchases of Company common stock	(350		)	—			—			—			(350		)
Net cash provided by (used in) financing activities	(428		)	(12		)	(429		)	435			(434		)
Cash flows from discontinued operations
Net cash used in discontinued operations operating activities	(8		)	—			—			—			(8		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	1			—			15			—			16
Increase (decrease) in cash, cash equivalents and restricted cash	29			—			7			—			36
Cash, cash equivalents and restricted cash at beginning of period	77			2			428			—			507
Cash, cash equivalents and restricted cash at end of period	$	106		$	2		$	435		$	—		$	543

In millions	December 31, 2017
Reconciliation of cash, cash equivalents and restricted cash as shown in the Consolidated Statements of Cash Flows	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations		Consolidated
Cash and cash equivalents	$	106	$	2	$	429	$	—	$	537
Restricted cash included in Other assets	—		—		6		—		6
Total cash, cash equivalents and restricted cash	$	106	$	2	$	435	$	—	$	543