Condensed Consolidating Supplemental Guarantor Information

3 Months Ended

Mar. 31, 2020

Condensed Consolidating Supplemental Guarantor Information [Abstract]

CONDENSED CONSOLIDATED SUPPLEMENTAL GUARANTOR INFORMATION

16. CONDENSED CONSOLIDATING SUPPLEMENTAL GUARANTOR 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 4, Debt Obligations for additional information.

In connection with the previously completed registered 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 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, 2020
In millions	Parent Issuer			Guarantor Subsidiary		Non-Guarantor Subsidiaries			Eliminations			Consolidated
Product revenue	$	211		$	1	$	313		$	(51	)	$	474
Service revenue	547			1		481			—			1,029
Total revenue	758			2		794			(51		)	1,503
Cost of products	177			—		265			(51		)	391
Cost of services	389			1		325			—			715
Selling, general and administrative expenses	176			—		79			—			255
Research and development expenses	33			—		32			—			65
Total operating expenses	775			1		701			(51		)	1,426
Income (loss) from operations	(17		)	1		93			—			77
Interest expense	(48		)	—		(3		)	1			(50		)
Other (expense) income, net	5			—		(6		)	(1		)	(2		)
Income (loss) from continuing operations before income taxes	(60		)	1		84			—			25
Income tax expense (benefit)	(7		)	1		7			—			1
Income (loss) from continuing operations before earnings in subsidiaries	(53		)	—		77			—			24
Equity in earnings of consolidated subsidiaries	76			74		—			(150		)	—
Income (loss) from continuing operations	23			74		77			(150		)	24
Income (loss) from discontinued operations, net of tax	—			—		—			—			—
Net income (loss)	$	23		$	74	$	77		$	(150	)	$	24
Net income (loss) attributable to noncontrolling interests	—			—		1			—			1
Net income (loss) attributable to NCR	$	23		$	74	$	76		$	(150	)	$	23
Total comprehensive income (loss)	(37		)	15		15			(30		)	(37		)
Less comprehensive income (loss) attributable to noncontrolling interests	—			—		—			—			—
Comprehensive income (loss) attributable to NCR common stockholders	$	(37	)	$	15	$	15		$	(30	)	$	(37	)

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	$	273		$	2		$	310		$	(46	)	$	539
Service revenue	523			2			472			—			997
Total revenue	796			4			782			(46		)	1,536
Cost of products	246			—			253			(46		)	453
Cost of services	363			1			308			—			672
Selling, general and administrative expenses	140			—			112			—			252
Research and development expenses	33			—			26			—			59
Total operating expenses	782			1			699			(46		)	1,436
Income (loss) from operations	14			3			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	(42		)	5			84			—			47
Income tax expense (benefit)	49			(1		)	(39		)	—			9
Income (loss) from continuing operations before earnings in subsidiaries	(91		)	6			123			—			38
Equity in earnings of consolidated subsidiaries	128			97			—			(225		)	—
Income (loss) from continuing operations	37			103			123			(225		)	38
Income (loss) from discontinued operations, net of tax	—			—			—			—			—
Net income (loss)	$	37		$	103		$	123		$	(225	)	$	38
Net income (loss) attributable to noncontrolling interests	—			—			1			—			1
Net income (loss) attributable to NCR	$	37		$	103		$	122		$	(225	)	$	37
Total comprehensive income (loss)	53			120			138			(257		)	54
Less comprehensive income (loss) attributable to noncontrolling interests	—			—			1			—			1
Comprehensive income (loss) attributable to NCR common stockholders	$	53		$	120		$	137		$	(257	)	$	53

Condensed Consolidating Balance Sheet
March 31, 2020
In millions	Parent Issuer		Guarantor Subsidiary		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Current assets
Cash and cash equivalents	$	945	$	3	$	266	$	—		$	1,214
Accounts receivable, net	77		1		1,275		—			1,353
Inventories	236		1		510		—			747
Due from affiliates	853		2,218		1,794		(4,865		)	—
Other current assets	220		1		242		—			463
Total current assets	2,331		2,224		4,087		(4,865		)	3,777
Property, plant and equipment, net	265		—		134		—			399
Goodwill	2,186		—		635		—			2,821
Intangibles, net	456		—		124		—			580
Operating lease assets	238		—		124		—			362
Prepaid pension cost	—		—		176		—			176
Deferred income taxes	331		2		475		—			808
Investments in subsidiaries	4,119		3,958		—		(8,077		)	—
Due from affiliates	16		1		74		(91		)	—
Other assets	563		1		68		—			632
Total assets	$	10,505	$	6,186	$	5,897	$	(13,033	)	$	9,555
Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings	$	9	$	—	$	295	$	—		$	304
Accounts payable	357		—		433		—			790
Payroll and benefits liabilities	88		—		98		—			186
Contract liabilities	336		1		279		—			616
Due to affiliates	2,963		109		1,793		(4,865		)	—
Other current liabilities	218		1		291		—			510
Total current liabilities	3,971		111		3,189		(4,865		)	2,406
Long-term debt	4,078		—		3		—			4,081
Pension and indemnity plan liabilities	590		—		265		—			855
Postretirement and postemployment benefits liabilities	16		3		93		—			112
Income tax accruals	30		—		59		—			89
Due to affiliates	—		74		17		(91		)	—
Operating lease liabilities	269		—		77		—			346
Other liabilities	132		—		112		—			244
Total liabilities	9,086		188		3,815		(4,956		)	8,133
Redeemable noncontrolling interest	—		—		—		—			—
Series A convertible preferred stock	395		—		—		—			395
Stockholders’ equity
Total NCR stockholders’ equity	1,024		5,998		2,079		(8,077		)	1,024
Noncontrolling interests in subsidiaries	—		—		3		—			3
Total stockholders’ equity	1,024		5,998		2,082		(8,077		)	1,027
Total liabilities and stockholders’ equity	$	10,505	$	6,186	$	5,897	$	(13,033	)	$	9,555

Condensed 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
Contract liabilities	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

Condensed Consolidating Statement of Cash Flows
For the three months ended March 31, 2020
In millions	Parent Issuer			Guarantor Subsidiary			Non-Guarantor Subsidiaries			Eliminations			Consolidated
Net cash provided by (used in) operating activities	$	(67	)	$	(10	)	$	139		$	(1	)	$	61
Investing activities
Expenditures for property, plant and equipment	(2		)	—			(8		)	—			(10		)
Proceeds from sales of property, plant and equipment	7			—			—			—			7
Additions to capitalized software	(55		)	—			(14		)	—			(69		)
Proceeds from (payments of) intercompany notes	242			10			—			(252		)	—
Business acquisitions, net	(6		)	—			(20		)	—			(26		)
Net cash provided by (used in) investing activities	186			10			(42		)	(252		)	(98		)
Financing activities
Short term borrowings, net	2			—			1			—			3
Payments on term credit facilities	(2		)	—			—			—			(2		)
Payments on revolving credit facilities	(430		)	—			(143		)	—			(573		)
Borrowings on revolving credit facilities	1,310			—			87			—			1,397
Repurchase of Common Stock	(41		)	—			—			—			(41		)
Debt issuance cost	(1		)	—			—			—			(1		)
Series A Preferred Stock Dividends	(6		)	—			—			—			(6		)
Proceeds from employee stock plans	3			—			—			—			3
Other financing activities	(2		)	—			(1		)	—			(3		)
Dividend distribution to consolidated subsidiaries	—			—			(1		)	1			—
Borrowings (repayments) of intercompany notes	—			—			(252		)	252			—
Tax withholding payments on behalf of employees	(24		)	—			—			—			(24		)
Net change in client funds obligations	—			—			12			—			12
Net cash provided by (used in) financing activities	809			—			(297		)	253			765
Cash flows from discontinued operations
Net cash used in operating activities	3			—			—			—			3
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			(14		)	—			(14		)
Increase (decrease) in cash, cash equivalents and restricted cash	931			—			(214		)	—			717
Cash, cash equivalents and restricted cash at beginning of period	15			3			530			—			548
Cash, cash equivalents and restricted cash at end of period	$	946		$	3		$	316		$	—		$	1,265

In millions	March 31, 2020
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	$	945	$	3	$	266	$	—	$	1,214
Restricted cash and restricted cash equivalents including funds held for clients included in other assets	1		—		50		—		51
Total cash, cash equivalents and restricted cash	$	946	$	3	$	316	$	—	$	1,265

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	$	111		$	(20	)	$	(107	)	$	—		$	(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		)	—
Business acquisitions, net	(6		)	—			—			—			(6		)
Net change in funds held for clients	—			—			—			—			—
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			—
Net change in client funds obligations	—			—			17			—			17
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		)	65			69			53
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	11			—			(47		)	—			(36		)
Cash, cash equivalents and restricted cash at beginning of period	11			3			508			—			522
Cash, cash equivalents and restricted cash at end of period	$	22		$	3		$	461		$	—		$	486

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	$	21	$	3	$	390	$	—	$	414
Restricted cash and restricted cash equivalents including funds held for clients included in other assets	1		—		71		—		72
Total cash, cash equivalents and restricted cash	$	22	$	3	$	461	$	—	$	486