Trade Receivables Facility

9 Months Ended

Sep. 30, 2023

Receivables [Abstract]

TRADE RECEIVABLES FACILITY

6. TRADE RECEIVABLES FACILITY

The Company maintains a trade receivables facility (the “T/R Facility”) pursuant to which the Company’s wholly-owned, bankruptcy remote subsidiary, NCR Receivables LLC (the “U.S. SPE”), may sell certain trade receivables acquired by it from the Company and other affiliates to the T/R Facility to PNC Bank, National Association, MUFG Bank, Ltd. and other unaffiliated purchasers that may from time to time be party to the T/R Facility (the “Purchasers”). The T/R Facility was originally established on November 21, 2014 and was amended and restated on September 30, 2021. In connection with the Spin-Off, on October 16, 2023, the Company entered into amendments to the T/R Facility to, among other things, provide for the repurchase by Cardtronics USA, Inc., ATM National, LLC, and Cardtronics Canada Holdings Inc. (the “Released Originators”) of any receivables originated by them that were owned by the U.S. SPE, the Canadian SPE (as defined below) and/or the Purchasers, release the Released Originators from all of their obligations under the T/R Facility, extend the scheduled maturity of the T/R Facility by two years, and make adjustments to the factors used to determine the availability of capital for investment by the Purchasers in the pool of receivables subject to the T/R Facility. The maximum amount of capital committed by the Purchasers under the T/R Facility remained $300 million.

As of September 30, 2023, under the T/R Facility, the Company and certain United States and Canadian operating subsidiaries of the Company continuously sold their trade receivables as they were originated to the U.S. SPE and a Canadian bankruptcy-remote special purpose entity (the “Canadian SPE” and collectively with the U.S. SPE, the “SPEs”), as applicable. None of the assets or credit of either SPE is available to satisfy the debts and obligations owed to the creditors of the Company or any other person until the obligations of the SPEs under the T/R Facility have been satisfied. The Company controls and therefore consolidates the SPEs in its condensed consolidated financial statements.

As cash is collected on the trade receivables, the U.S. SPE has the ability to continuously transfer ownership and control of new qualifying trade receivables the Purchasers such that the total outstanding balance of trade receivables sold can be up to $300 million at any point in time, which is the maximum purchase commitment of the Purchasers. The future outstanding balance of trade receivables that are sold is expected to vary based on the level of activity and other factors and could be less than the maximum purchase commitment of $300 million. The total outstanding balance of trade receivables that were sold to the Purchasers and derecognized by the U.S. SPE was approximately $300 million and $300 million as of September 30, 2023 and December 31, 2022, respectively. Excluding the trade receivables sold to the Purchasers, the SPEs collectively owned $316 million and $321 million of trade receivables as of September 30, 2023 and December 31, 2022, respectively, and these amounts are included in Accounts receivable, net in the Company’s Condensed Consolidated Balance Sheets.

Continuous cash activity related to the T/R Facility is reflected in Net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows. During the nine months ended September 30, 2023, the Company paid $99 million to the Purchasers and received $99 million as the outstanding balance of trade receivables sold fluctuated during the quarter. The U.S. SPE incurs fees under the T/R Facility, including fees due and payable to the Purchasers. Those fees, which are immaterial, are recorded within Other income (expense), net in the Condensed Consolidated Statements of Operations. In addition, each of the SPEs has provided a full recourse guarantee in favor of the Purchasers of the full and timely payment of all trade receivables sold to them by the U.S. SPE. The guarantee is secured by all the trade receivables owned by each of the SPEs

that have not been sold to the Purchasers. The reserve recognized for this recourse obligation as of September 30, 2023 is not material.

The Company, or in the case of any Canadian trade receivables, NCR Canada Corp., continues to be involved with the trade receivables even after they are transferred to the SPEs (or further transferred to the Purchasers) by acting as servicer. In addition to any obligations as servicer, the Company and each of its subsidiaries acting as an originator under the T/R Facility provide the SPEs with customary recourse in respect of (i) certain dilutive events with respect to the trade receivables sold to the SPEs that are caused by the Company or other applicable originator and (ii) in the event of certain violations by the Company or other applicable originator of its respective representations and warranties with respect to the trade receivables sold to the SPEs. The Company guarantees that any of its subsidiaries (other than the SPEs) party to the T/R Facility will duly and punctually perform its obligations under the T/R Facility (whether as servicer or as originator). These servicer and originator liabilities of the Company and its subsidiaries (other than the SPEs) under the T/R Facility are not expected to be material, given the high quality of the customers underlying the receivables and the anticipated short collection period.

The T/R Facility includes other customary representations and warranties, affirmative and negative covenants and default and termination provisions, which provide for the acceleration of amounts owed to the Purchasers thereunder in circumstances including, but not limited to, failure to pay capital or yield when due, breach of representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.