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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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31-0387920
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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þ
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Accelerated filer
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o
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Non-accelerated filer
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o
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(Do not check if a smaller reporting company)
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Smaller reporting company
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o
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Emerging Growth Company
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o
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PART I. Financial Information
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Description
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II. Other Information
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Description
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Page
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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Item 1.
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FINANCIAL STATEMENTS
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In millions, except per share amounts
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Three months ended September 30
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Nine months ended September 30
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||||||||||||
2017
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2016
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2017
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2016
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|||||||||
Product revenue
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$
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657
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$
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708
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|
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$
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1,829
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|
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$
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1,932
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Service revenue
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1,006
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969
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2,905
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2,809
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||||
Total revenue
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1,663
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1,677
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4,734
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4,741
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||||
Cost of products
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528
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528
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1,430
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1,487
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||||
Cost of services
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662
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672
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1,955
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1,951
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|
||||
Selling, general and administrative expenses
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220
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|
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225
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|
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676
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|
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678
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||||
Research and development expenses
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53
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|
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56
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|
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178
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|
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159
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||||
Restructuring-related charges
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—
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7
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|
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—
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13
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||||
Total operating expenses
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1,463
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1,488
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4,239
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4,288
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||||
Income from operations
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200
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|
|
189
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|
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495
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453
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||||
Interest expense
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(42
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)
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(41
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)
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(122
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)
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(130
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)
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||||
Other (expense), net
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(8
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)
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(8
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)
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(22
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)
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(33
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)
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||||
Income from continuing operations before income taxes
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150
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|
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140
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351
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290
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||||
Income tax expense
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31
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31
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78
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|
|
75
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||||
Income from continuing operations
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119
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109
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273
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|
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215
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||||
(Loss) income from discontinued operations, net of tax
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—
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(2
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)
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5
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(2
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)
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Net income
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119
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|
|
107
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|
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278
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|
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213
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||||
Net income attributable to noncontrolling interests
|
1
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2
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|
|
1
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|
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—
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||||
Net income attributable to NCR
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$
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118
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|
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$
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105
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$
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277
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$
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213
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Amounts attributable to NCR common stockholders:
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||||||||
Income from continuing operations
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$
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118
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$
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107
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$
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272
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$
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215
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Series A convertible preferred stock dividends
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(12
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)
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(13
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)
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(36
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)
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(37
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)
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||||
Deemed dividend on modification of Series A convertible preferred stock
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—
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—
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(4
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)
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—
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||||
Deemed dividend on Series A convertible preferred stock related to redemption
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—
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—
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(58
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)
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—
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Income from continuing operations attributable to NCR common stockholders
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106
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|
94
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174
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178
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(Loss) income from discontinued operations, net of tax
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—
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(2
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)
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5
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(2
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)
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||||
Net income attributable to NCR common stockholders
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$
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106
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$
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92
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$
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179
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$
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176
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Income per share attributable to NCR common stockholders:
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||||||||
Income per common share from continuing operations
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Basic
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$
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0.87
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$
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0.76
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$
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1.43
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$
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1.41
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Diluted
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$
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0.77
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$
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0.69
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$
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1.37
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$
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1.37
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Net income per common share
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Basic
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$
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0.87
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$
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0.74
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$
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1.47
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$
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1.40
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Diluted
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$
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0.77
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$
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0.68
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$
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1.41
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$
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1.36
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Weighted average common shares outstanding
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Basic
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121.5
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123.9
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121.9
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126.0
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Diluted
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153.1
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155.4
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126.9
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156.8
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In millions
|
Three months ended September 30
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Nine months ended September 30
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||||||||||||
2017
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2016
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2017
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2016
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|||||||||
Net income
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$
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119
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$
|
107
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$
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278
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$
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213
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Other comprehensive income (loss):
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||||||||
Currency translation adjustments
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||||||||
Currency translation gains (losses)
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6
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3
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35
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(23
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)
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Derivatives
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||||||||
Unrealized (losses) gains on derivatives
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(5
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)
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4
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(15
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)
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4
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(Gains) losses on derivatives recognized during the period
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1
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—
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(2
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)
|
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2
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||||
Less income tax benefit (expense)
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—
|
|
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(1
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)
|
|
3
|
|
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(1
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)
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||||
Employee benefit plans
|
|
|
|
|
|
|
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||||||||
Amortization of prior service benefit
|
(1
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)
|
|
(4
|
)
|
|
(6
|
)
|
|
(14
|
)
|
||||
Amortization of actuarial benefit
|
(1
|
)
|
|
—
|
|
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(2
|
)
|
|
(1
|
)
|
||||
Less income tax benefit
|
—
|
|
|
1
|
|
|
2
|
|
|
4
|
|
||||
Other comprehensive (loss) income
|
—
|
|
|
3
|
|
|
15
|
|
|
(29
|
)
|
||||
Total comprehensive income
|
119
|
|
|
110
|
|
|
293
|
|
|
184
|
|
||||
Less comprehensive income attributable to noncontrolling interests:
|
|
|
|
|
|
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|
||||||||
Net income (loss)
|
1
|
|
|
2
|
|
|
1
|
|
|
—
|
|
||||
Currency translation losses
|
(2
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(7
|
)
|
||||
Amounts attributable to noncontrolling interests
|
(1
|
)
|
|
1
|
|
|
(1
|
)
|
|
(7
|
)
|
||||
Comprehensive income attributable to NCR
|
$
|
120
|
|
|
$
|
109
|
|
|
$
|
294
|
|
|
191
|
|
In millions, except per share amounts
|
September 30, 2017
|
|
December 31, 2016
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
405
|
|
|
$
|
498
|
|
Accounts receivable, net
|
1,408
|
|
|
1,282
|
|
||
Inventories
|
824
|
|
|
699
|
|
||
Other current assets
|
263
|
|
|
278
|
|
||
Total current assets
|
2,900
|
|
|
2,757
|
|
||
Property, plant and equipment, net
|
321
|
|
|
287
|
|
||
Goodwill
|
2,741
|
|
|
2,727
|
|
||
Intangibles, net
|
591
|
|
|
672
|
|
||
Prepaid pension cost
|
115
|
|
|
94
|
|
||
Deferred income taxes
|
595
|
|
|
575
|
|
||
Other assets
|
587
|
|
|
561
|
|
||
Total assets
|
$
|
7,850
|
|
|
$
|
7,673
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Short-term borrowings
|
$
|
269
|
|
|
$
|
50
|
|
Accounts payable
|
720
|
|
|
781
|
|
||
Payroll and benefits liabilities
|
202
|
|
|
234
|
|
||
Deferred service revenue and customer deposits
|
465
|
|
|
468
|
|
||
Other current liabilities
|
390
|
|
|
432
|
|
||
Total current liabilities
|
2,046
|
|
|
1,965
|
|
||
Long-term debt
|
2,984
|
|
|
3,001
|
|
||
Pension and indemnity plan liabilities
|
771
|
|
|
739
|
|
||
Postretirement and postemployment benefits liabilities
|
127
|
|
|
127
|
|
||
Income tax accruals
|
138
|
|
|
142
|
|
||
Other liabilities
|
197
|
|
|
138
|
|
||
Total liabilities
|
6,263
|
|
|
6,112
|
|
||
Commitments and Contingencies (Note 7)
|
|
|
|
||||
Redeemable noncontrolling interest
|
14
|
|
|
15
|
|
||
Series A convertible preferred stock: par value $0.01 per share, 3.0 shares authorized, 0.8 shares issued and outstanding as of September 30, 2017 and, 0.9 shares issued and outstanding as of December 31, 2016; redemption amount and liquidation preference of $813 and $870 as of September 30, 2017 and December 31, 2016, respectively
|
799
|
|
|
847
|
|||
Stockholders’ equity
|
|
|
|
||||
NCR stockholders’ equity
|
|
|
|
||||
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
|
—
|
|
|
—
|
|
||
Common stock: par value $0.01 per share, 500.0 shares authorized, 121.5 and 124.6 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
|
1
|
|
|
1
|
|
||
Paid-in capital
|
44
|
|
|
32
|
|
||
Retained earnings
|
913
|
|
|
867
|
|
||
Accumulated other comprehensive loss
|
(188
|
)
|
|
(205)
|
|
||
Total NCR stockholders’ equity
|
770
|
|
|
695
|
|
||
Noncontrolling interests in subsidiaries
|
4
|
|
|
4
|
|
||
Total stockholders’ equity
|
774
|
|
|
699
|
|
||
Total liabilities and stockholders’ equity
|
$
|
7,850
|
|
|
$
|
7,673
|
|
In millions
|
Nine months ended September 30
|
||||||
2017
|
|
2016
|
|||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
278
|
|
|
$
|
213
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
(Income) loss from discontinued operations
|
(5
|
)
|
|
2
|
|
||
Depreciation and amortization
|
263
|
|
|
259
|
|
||
Stock-based compensation expense
|
60
|
|
|
45
|
|
||
Deferred income tax expense
|
19
|
|
|
39
|
|
||
Gain on sale of property, plant and equipment
|
(2
|
)
|
|
—
|
|
||
Loss on divestiture
|
—
|
|
|
1
|
|
||
Impairment of other assets
|
1
|
|
|
2
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Receivables
|
(107
|
)
|
|
(138
|
)
|
||
Inventories
|
(120
|
)
|
|
(128
|
)
|
||
Current payables and accrued expenses
|
(132
|
)
|
|
68
|
|
||
Deferred service revenue and customer deposits
|
20
|
|
|
78
|
|
||
Employee benefit plans
|
(13
|
)
|
|
(38
|
)
|
||
Other assets and liabilities
|
9
|
|
|
(34
|
)
|
||
Net cash provided by operating activities
|
271
|
|
|
369
|
|
||
Investing activities
|
|
|
|
||||
Expenditures for property, plant and equipment
|
(81
|
)
|
|
(45
|
)
|
||
Proceeds from sale of property, plant and equipment
|
6
|
|
|
—
|
|
||
Additions to capitalized software
|
(125
|
)
|
|
(115
|
)
|
||
Proceeds from divestiture
|
—
|
|
|
47
|
|
||
Other investing activities, net
|
—
|
|
|
(8
|
)
|
||
Net cash used in investing activities
|
(200
|
)
|
|
(121
|
)
|
||
Financing activities
|
|
|
|
||||
Short term borrowings, net
|
10
|
|
|
(2
|
)
|
||
Payments on term credit facilities
|
(37
|
)
|
|
(84
|
)
|
||
Payments on revolving credit facilities
|
(1,110
|
)
|
|
(736
|
)
|
||
Borrowings on revolving credit facilities
|
1,335
|
|
|
856
|
|
||
Debt issuance costs
|
—
|
|
|
(8
|
)
|
||
Repurchases of Company common stock
|
(350
|
)
|
|
(250
|
)
|
||
Proceeds from employee stock plans
|
11
|
|
|
10
|
|
||
Tax withholding payments on behalf of employees
|
(24
|
)
|
|
(7
|
)
|
||
Other financing activities
|
(1
|
)
|
|
(2
|
)
|
||
Net cash used in financing activities
|
(166
|
)
|
|
(223
|
)
|
||
Cash flows from discontinued operations
|
|
|
|
||||
Net cash used in operating activities
|
(14
|
)
|
|
(30
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
16
|
|
|
(5
|
)
|
||
(Decrease) increase in cash and cash equivalents
|
(93
|
)
|
|
(10
|
)
|
||
Cash and cash equivalents at beginning of period
|
498
|
|
|
328
|
|
||
Cash and cash equivalents at end of period
|
$
|
405
|
|
|
$
|
318
|
|
|
•
|
The new standard removes the current limitation on contingent revenue, and we expect that this may result in revenue being recognized earlier for certain contracts.
|
•
|
The new standard modifies the accounting for the costs to obtain a contract, such as the capitalization and deferral of commission expenses for certain recurring revenue streams, and we expect that this will be a change to our current policy to expense as incurred.
|
|
December 31, 2016
|
|
|
|
|
|
|
|
September 30, 2017
|
||||||||||||||||||||||||||
In millions
|
Goodwill
|
|
Accumulated Impairment Losses
|
|
Total
|
|
Additions
|
|
Impairment
|
|
Other
|
|
Goodwill
|
|
Accumulated Impairment Losses
|
|
Total
|
||||||||||||||||||
Software
|
$
|
1,930
|
|
|
$
|
(7
|
)
|
|
$
|
1,923
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
1,944
|
|
|
$
|
(7
|
)
|
|
$
|
1,937
|
|
Services
|
658
|
|
|
—
|
|
|
658
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
658
|
|
|
—
|
|
|
658
|
|
|||||||||
Hardware
|
162
|
|
|
(16
|
)
|
|
146
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
162
|
|
|
(16
|
)
|
|
146
|
|
|||||||||
Total goodwill
|
$
|
2,750
|
|
|
$
|
(23
|
)
|
|
$
|
2,727
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
2,764
|
|
|
$
|
(23
|
)
|
|
$
|
2,741
|
|
|
Amortization
Period
(in Years)
|
|
September 30, 2017
|
|
December 31, 2016
|
||||||||||||
In millions
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|||||||||
Identifiable intangible assets
|
|
|
|
|
|
|
|
|
|
||||||||
Reseller & customer relationships
|
1 - 20
|
|
$
|
659
|
|
|
$
|
(159
|
)
|
|
$
|
656
|
|
|
$
|
(128
|
)
|
Intellectual property
|
2 - 8
|
|
394
|
|
|
(339
|
)
|
|
392
|
|
|
(302
|
)
|
||||
Customer contracts
|
8
|
|
89
|
|
|
(77
|
)
|
|
89
|
|
|
(66
|
)
|
||||
Tradenames
|
2 - 10
|
|
73
|
|
|
(49
|
)
|
|
73
|
|
|
(42
|
)
|
||||
Total identifiable intangible assets
|
|
|
$
|
1,215
|
|
|
$
|
(624
|
)
|
|
$
|
1,210
|
|
|
$
|
(538
|
)
|
In millions
|
Three months ended September 30, 2017
|
|
Nine months ended September 30, 2017
|
|
Remainder of 2017 (estimated)
|
||||||
Amortization expense
|
$
|
29
|
|
|
$
|
86
|
|
|
$
|
30
|
|
|
|
For the years ended December 31 (estimated)
|
||||||||||||||||||
In millions
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
||||||||||
Amortization expense
|
|
$
|
85
|
|
|
$
|
75
|
|
|
$
|
57
|
|
|
$
|
49
|
|
|
$
|
45
|
|
|
September 30, 2017
|
|
December 31, 2016
|
|||||||||
In millions, except percentages
|
Amount
|
|
Weighted-Average Interest Rate
|
|
Amount
|
|
Weighted-Average Interest Rate
|
|||||
Short-Term Borrowings
|
|
|
|
|
|
|
|
|||||
Current portion of Senior Secured Credit Facility
(1)
|
$
|
56
|
|
|
2.99%
|
|
$
|
45
|
|
|
2.88%
|
|
Trade Receivables Securitization Facility
(1)
|
200
|
|
|
2.09%
|
|
—
|
|
|
|
|||
Other
(2)
|
13
|
|
|
13.08%
|
|
5
|
|
|
7.41%
|
|||
|
Total short-term borrowings
|
$
|
269
|
|
|
|
|
$
|
50
|
|
|
|
Long-Term Debt
|
|
|
|
|
|
|
|
|||||
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
|||||
|
Term loan facility
(1)
|
$
|
776
|
|
|
2.99%
|
|
$
|
821
|
|
|
2.88%
|
|
Revolving credit facility
(1)
|
25
|
|
|
2.99%
|
|
—
|
|
|
|
||
Senior notes:
|
|
|
|
|
|
|
|
|
||||
|
5.00% Senior Notes due 2022
|
600
|
|
|
|
|
600
|
|
|
|
||
|
4.625% Senior Notes due 2021
|
500
|
|
|
|
|
500
|
|
|
|
||
|
5.875% Senior Notes due 2021
|
400
|
|
|
|
|
400
|
|
|
|
||
|
6.375% Senior Notes due 2023
|
700
|
|
|
|
|
700
|
|
|
|
||
Deferred financing fees
|
(25
|
)
|
|
|
|
(29
|
)
|
|
|
|||
Other
(2)
|
8
|
|
|
6.51%
|
|
9
|
|
|
6.64%
|
|||
|
Total long-term debt
|
$
|
2,984
|
|
|
|
|
$
|
3,001
|
|
|
|
(1)
|
Interest rates are weighted-average interest rates as of
September 30, 2017
and
December 31, 2016
.
|
(2)
|
Interest rates are weighted-average interest rates as of
September 30, 2017
and
December 31, 2016
primarily related to various international credit facilities and a note payable in the U.S.
|
•
|
a consolidated leverage ratio on the last day of any fiscal quarter, not to exceed (i) in the case of any fiscal quarter ending on or prior to December 31, 2017, (a) the sum of
4.25
and an amount (not to exceed
0.50
) to reflect debt used to reduce NCR’s unfunded pension liabilities to (b)
1.00
, (ii) in the case of any fiscal quarter ending after December 31, 2017 and on or prior to December 31, 2019, (a) the sum of
4.00
and an amount (not to exceed
0.50
) to reflect debt used to reduce NCR’s unfunded pension liabilities to (b)
1.00
, and (iii) in the case of any fiscal quarter ending after December 31, 2019, the sum of (a)
3.75
and an amount (not to exceed
0.50
) to reflect debt used to reduce NCR’s unfunded pension liabilities to (b)
1.00
; and
|
•
|
an interest coverage ratio on the last day of any fiscal quarter greater than or equal to
3.50
to
1.00
.
|
In millions
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Restricted stock units
|
$
|
18
|
|
|
$
|
16
|
|
|
$
|
57
|
|
|
$
|
45
|
|
Employee stock purchase plan
|
1
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Stock-based compensation expense
|
19
|
|
|
16
|
|
|
60
|
|
|
45
|
|
||||
Tax benefit
|
(9)
|
|
|
(6)
|
|
|
(21)
|
|
|
(14
|
)
|
||||
Total stock-based compensation expense (net of tax)
|
$
|
10
|
|
|
$
|
10
|
|
|
$
|
39
|
|
|
$
|
31
|
|
In millions
|
U.S. Pension Benefits
|
|
International Pension Benefits
|
|
Total Pension Benefits
|
||||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||||||
Net service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
2
|
|
Interest cost
|
18
|
|
|
23
|
|
|
4
|
|
|
7
|
|
|
22
|
|
|
30
|
|
||||||
Expected return on plan assets
|
(14
|
)
|
|
(18
|
)
|
|
(9
|
)
|
|
(10
|
)
|
|
(23
|
)
|
|
(28
|
)
|
||||||
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||||
Net periodic benefit cost (income)
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
5
|
|
In millions
|
U.S. Pension Benefits
|
|
International Pension Benefits
|
|
Total Pension Benefits
|
||||||||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||||||
Net service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
5
|
|
|
$
|
6
|
|
Interest cost
|
54
|
|
|
68
|
|
|
14
|
|
|
21
|
|
|
68
|
|
|
89
|
|
||||||
Expected return on plan assets
|
(43
|
)
|
|
(54
|
)
|
|
(26
|
)
|
|
(28
|
)
|
|
(69
|
)
|
|
(82
|
)
|
||||||
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||||
Net periodic benefit cost (income)
|
$
|
11
|
|
|
$
|
14
|
|
|
$
|
(6
|
)
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
14
|
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
In millions
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest cost
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Amortization of:
|
|
|
|
|
|
|
|
||||||||
Prior service benefit
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
(4
|
)
|
|
(11
|
)
|
||
Actuarial loss
|
—
|
|
|
1
|
|
|
1
|
|
|
2
|
|
||||
Net postretirement benefit
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
(2
|
)
|
|
$
|
(9
|
)
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
In millions
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net service cost
|
$
|
7
|
|
|
$
|
4
|
|
|
$
|
26
|
|
|
$
|
12
|
|
Interest cost
|
1
|
|
|
—
|
|
|
2
|
|
|
1
|
|
||||
Amortization of:
|
|
|
|
|
|
|
|
||||||||
Prior service benefit
|
(1
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
(4
|
)
|
||||
Actuarial gain
|
(1
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
(3
|
)
|
||||
Net benefit cost
|
$
|
6
|
|
|
$
|
2
|
|
|
$
|
22
|
|
|
$
|
6
|
|
Restructuring severance cost
|
—
|
|
|
2
|
|
|
—
|
|
|
4
|
|
||||
Total postemployment cost
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
22
|
|
|
$
|
10
|
|
In millions
|
2017
|
|
2016
|
||||
Warranty reserve liability
|
|
|
|
||||
Beginning balance as of January 1
|
$
|
27
|
|
|
$
|
24
|
|
Accruals for warranties issued
|
29
|
|
|
31
|
|
||
Settlements (in cash or in kind)
|
(31
|
)
|
|
(29
|
)
|
||
Ending balance as of September 30
|
$
|
25
|
|
|
$
|
26
|
|
in millions
|
NCR Stockholders' Equity
|
Non-Redeemable Noncontrolling Interests in Subsidiaries
|
Total Stockholders' Equity
|
||||||
Balance at December 31, 2016
|
$
|
695
|
|
$
|
4
|
|
$
|
699
|
|
Adoption of share-based compensation accounting standard update
|
39
|
|
—
|
|
39
|
|
|||
Balance at January 1, 2017
|
734
|
|
4
|
|
738
|
|
|||
Net income
|
277
|
|
2
|
|
279
|
|
|||
Other comprehensive income
|
17
|
|
(2
|
)
|
15
|
|
|||
Repurchases of Company common stock
|
(350
|
)
|
—
|
|
(350
|
)
|
|||
Series A Convertible Preferred Stock dividends
|
(36
|
)
|
—
|
|
(36
|
)
|
|||
Deemed dividend on modification of Series A Convertible Preferred Stock
|
(4
|
)
|
—
|
|
(4
|
)
|
|||
Redemption of Series A Convertible Preferred Stock
|
87
|
|
—
|
|
87
|
|
|||
Employee stock compensation expense
|
60
|
|
—
|
|
60
|
|
|||
Tax witholdings related to vesting of stock based awards
|
(26
|
)
|
—
|
|
(26
|
)
|
|||
Proceeds from employee stock plans
|
11
|
|
—
|
|
11
|
|
|||
Balance at September 30, 2017
|
$
|
770
|
|
$
|
4
|
|
$
|
774
|
|
In millions, except per share amounts
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
|
$
|
118
|
|
|
$
|
107
|
|
|
$
|
272
|
|
|
$
|
215
|
|
Series A Convertible Preferred Stock dividends
|
|
(12
|
)
|
|
(13
|
)
|
|
(36
|
)
|
|
(37
|
)
|
||||
Deemed dividend on modification of Series A Convertible Preferred Stock
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
||||
Deemed dividend on Series A Convertible Preferred Stock redemption
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
—
|
|
||||
Net income from continuing operations attributable to NCR common stockholders
|
|
106
|
|
|
94
|
|
|
174
|
|
|
178
|
|
||||
Income (loss) from discontinued operations, net of tax
|
|
—
|
|
|
(2
|
)
|
|
5
|
|
|
(2
|
)
|
||||
Net income attributable to NCR common stockholders
|
|
$
|
106
|
|
|
$
|
92
|
|
|
$
|
179
|
|
|
$
|
176
|
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average number of shares outstanding
|
|
121.5
|
|
|
123.9
|
|
|
121.9
|
|
|
126.0
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
From continuing operations
|
|
$
|
0.87
|
|
|
$
|
0.76
|
|
|
$
|
1.43
|
|
|
$
|
1.41
|
|
From discontinued operations
|
|
—
|
|
|
(0.02
|
)
|
|
0.04
|
|
|
(0.01
|
)
|
||||
Total basic earnings per share
|
|
$
|
0.87
|
|
|
$
|
0.74
|
|
|
$
|
1.47
|
|
|
$
|
1.40
|
|
In millions, except per share amounts
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
|
$
|
118
|
|
|
$
|
107
|
|
|
$
|
272
|
|
|
$
|
215
|
|
Series A Convertible Preferred Stock dividends
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
||||
Deemed dividend on modification of Series A Convertible Preferred Stock
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
||||
Deemed dividend on Series A Convertible Preferred Stock redemption
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
|
—
|
|
||||
Net income from continuing operations attributable to NCR common stockholders
|
|
118
|
|
|
107
|
|
|
174
|
|
|
215
|
|
||||
(Loss) income from discontinued operations, net of tax
|
|
—
|
|
|
(2
|
)
|
|
5
|
|
|
(2
|
)
|
||||
Net income attributable to NCR common stockholders
|
|
$
|
118
|
|
|
$
|
105
|
|
|
$
|
179
|
|
|
$
|
213
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average number of shares outstanding
|
|
121.5
|
|
|
123.9
|
|
|
121.9
|
|
|
126.0
|
|
||||
Dilutive effect of as-if converted Series A Convertible Preferred Stock
|
|
26.9
|
|
|
28.4
|
|
|
—
|
|
|
28.0
|
|
||||
Dilutive effect of restricted stock units
|
|
4.7
|
|
|
3.1
|
|
|
5.0
|
|
|
2.8
|
|
||||
Denominator - from continuing operations and total
|
|
153.1
|
|
|
155.4
|
|
|
126.9
|
|
|
156.8
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
From continuing operations
|
|
$
|
0.77
|
|
|
$
|
0.69
|
|
|
$
|
1.37
|
|
|
$
|
1.37
|
|
From discontinued operations
|
|
—
|
|
|
(0.01
|
)
|
|
0.04
|
|
|
(0.01
|
)
|
||||
Total diluted earnings per share
|
|
$
|
0.77
|
|
|
$
|
0.68
|
|
|
$
|
1.41
|
|
|
$
|
1.36
|
|
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
|
September 30, 2017
|
||||||||||||||||||
In millions
|
Balance Sheet
Location
|
|
Notional
Amount
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Notional
Amount
|
|
Fair
Value
|
||||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current assets
|
|
$
|
213
|
|
|
$
|
1
|
|
|
Other current liabilities
|
|
$
|
134
|
|
|
$
|
2
|
|
Total derivatives designated as hedging instruments
|
|
|
|
|
$
|
1
|
|
|
|
|
|
|
$
|
2
|
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current assets
|
|
$
|
132
|
|
|
$
|
1
|
|
|
Other current liabilities
|
|
$
|
167
|
|
|
$
|
1
|
|
Total derivatives not designated as hedging instruments
|
|
|
|
|
1
|
|
|
|
|
|
|
1
|
|
||||||
Total derivatives
|
|
|
|
|
$
|
2
|
|
|
|
|
|
|
$
|
3
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
|
December 31, 2016
|
||||||||||||||||||
In millions
|
Balance Sheet
Location
|
|
Notional
Amount
|
|
Fair
Value
|
|
Balance Sheet
Location
|
|
Notional
Amount
|
|
Fair
Value
|
||||||||
Derivatives designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current assets
|
|
$
|
251
|
|
|
$
|
18
|
|
|
Other current liabilities
|
|
$
|
56
|
|
|
$
|
1
|
|
Total derivatives designated as hedging instruments
|
|
|
|
|
$
|
18
|
|
|
|
|
|
|
$
|
1
|
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current assets
|
|
$
|
165
|
|
|
$
|
1
|
|
|
Other current liabilities
|
|
$
|
218
|
|
|
$
|
1
|
|
Total derivatives not designated as hedging instruments
|
|
|
|
|
1
|
|
|
|
|
|
|
1
|
|
||||||
Total derivatives
|
|
|
|
|
$
|
19
|
|
|
|
|
|
|
$
|
2
|
|
In millions
|
Amount of Gain (Loss) Recognized in Other Comprehensive Income (OCI) on Derivative
(Effective Portion) |
|
|
|
Amount of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations
(Effective Portion) |
|
|
|
Amount of (Gain) Loss Recognized in the Condensed Consolidated Statement of Operations (Ineffective Portion and Amount Excluded from Effectiveness Testing)
|
||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships
|
For the three months ended September 30, 2017
|
|
For the three months ended September 30, 2016
|
|
Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations (Effective Portion)
|
|
For the three months ended September 30, 2017
|
|
For the three months ended September 30, 2016
|
|
Location of (Gain) Loss Recognized in the Condensed Consolidated Statement of Operations (Ineffective Portion and Amount Excluded from Effectiveness Testing)
|
|
For the three months ended September 30, 2017
|
|
For the three months ended September 30, 2016
|
||||||||||||
Foreign exchange contracts
|
$
|
(5
|
)
|
|
$
|
4
|
|
|
Cost of products
|
|
$
|
1
|
|
|
$
|
—
|
|
|
Other (expense), net
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
In millions
|
Amount of Gain (Loss) Recognized in Other Comprehensive Income (OCI) on Derivative
(Effective Portion) |
|
|
|
Amount of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations
(Effective Portion) |
|
|
|
Amount of (Gain) Loss Recognized in the Condensed Consolidated Statement of Operations (Ineffective Portion and Amount Excluded from Effectiveness Testing)
|
||||||||||||||||||
Derivatives in Cash Flow Hedging Relationships
|
For the nine months ended September 30, 2017
|
|
For the nine months ended September 30, 2016
|
|
Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations (Effective Portion)
|
|
For the nine months ended September 30, 2017
|
|
For the nine months ended September 30, 2016
|
|
Location of (Gain) Loss Recognized in the Condensed Consolidated Statement of Operations (Ineffective Portion and Amount Excluded from Effectiveness Testing)
|
|
For the nine months ended September 30, 2017
|
|
For the nine months ended September 30, 2016
|
||||||||||||
Interest rate swap
(1)
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
Interest expense
|
|
$
|
—
|
|
|
$
|
2
|
|
|
Interest expense
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts
|
$
|
(15
|
)
|
|
$
|
5
|
|
|
Cost of products
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
Other (expense), net
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
September 30, 2017
|
||||||||||||
In millions
|
September 30, 2017
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Deposits held in money market mutual funds
(1)
|
$
|
4
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts
(2)
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Total
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
2
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
(3)
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
Total
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
|
|
December 31, 2016
|
||||||||||||
In millions
|
December 31, 2016
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Deposits held in money market mutual funds
(1)
|
$
|
5
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts
(2)
|
19
|
|
|
—
|
|
|
19
|
|
|
—
|
|
||||
Total
|
$
|
24
|
|
|
$
|
5
|
|
|
$
|
19
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
(3)
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Total
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
•
|
Software
- Our software portfolio includes industry-based software applications and application suites for the financial services, retail, hospitality and small business industries. We also offer other industry-oriented software applications, including cash management software, video banking software, fraud and loss-prevention applications, check and document imaging, remote-deposit capture and customer-facing digital banking applications for the financial services industry; and secure electronic and mobile payment solutions, sector-specific point of sale software applications, and back-office inventory and store and restaurant management software applications for the retail and hospitality industries. Additionally, we provide ongoing software support and maintenance services, as well as consulting and implementation services for our software solutions.
|
•
|
Services
- Our global end-to-end services solutions include assessment and preparation, staging, installation, implementation, and maintenance and support for our hardware solutions. We also provide systems management and complete managed services for our product offerings. In addition, we provide servicing for third party networking products and computer hardware from select manufacturers.
|
•
|
Hardware
- Our hardware solutions include our suite of financial-oriented self-service ATM-related hardware, and our retail- and hospitality-oriented point of sale terminal, self-checkout kiosk and related hardware. We also offer other self-service kiosks, such as self-check in/out kiosks for airlines, and wayfinding solutions for buildings and campuses.
|
In millions
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Revenue by segment
|
|
|
|
|
|
|
|
||||||||
Software
|
$
|
476
|
|
|
$
|
468
|
|
|
$
|
1,392
|
|
|
$
|
1,339
|
|
Services
|
609
|
|
|
591
|
|
|
1,754
|
|
|
1,708
|
|
||||
Hardware
(1)
|
578
|
|
|
618
|
|
|
1,588
|
|
|
1,694
|
|
||||
Consolidated revenue
|
1,663
|
|
|
1,677
|
|
|
4,734
|
|
|
4,741
|
|
||||
Operating income by segment
|
|
|
|
|
|
|
|
||||||||
Software
|
148
|
|
|
146
|
|
|
401
|
|
|
405
|
|
||||
Services
|
89
|
|
|
56
|
|
|
209
|
|
|
139
|
|
||||
Hardware
|
(2
|
)
|
|
28
|
|
|
—
|
|
|
32
|
|
||||
Subtotal - segment operating income
|
235
|
|
|
230
|
|
|
610
|
|
|
576
|
|
||||
Other adjustments
(2)
|
35
|
|
|
41
|
|
|
115
|
|
|
123
|
|
||||
Income from operations
|
$
|
200
|
|
|
$
|
189
|
|
|
$
|
495
|
|
|
$
|
453
|
|
(1)
|
On May 27, 2016, NCR completed the sale of all but the Middle East and Africa (MEA) assets of its Interactive Printer Solutions (IPS) business to Atlas Holdings LLC. For
the three and nine months ended
September 30, 2016
, revenues from the results of IPS operations, other than MEA, were
zero
and
$124 million
, respectively.
|
(2)
|
The following table presents the other adjustments for NCR:
|
In millions
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Transformation / restructuring costs
|
$
|
5
|
|
|
$
|
8
|
|
|
$
|
26
|
|
|
$
|
23
|
|
Acquisition-related amortization of intangible assets
|
29
|
|
|
31
|
|
|
86
|
|
|
95
|
|
||||
Acquisition-related costs
|
1
|
|
|
2
|
|
|
3
|
|
|
5
|
|
||||
Total other adjustments
|
$
|
35
|
|
|
$
|
41
|
|
|
$
|
115
|
|
|
$
|
123
|
|
In millions
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
2017
|
|
2016
|
|
2017
|
|
2016
|
|||||||||
Product revenue
|
$
|
657
|
|
|
$
|
708
|
|
|
$
|
1,829
|
|
|
$
|
1,932
|
|
Professional services and installation services revenue
|
278
|
|
|
266
|
|
|
766
|
|
|
729
|
|
||||
Recurring revenue, including maintenance and cloud revenue
|
728
|
|
|
703
|
|
|
2,139
|
|
|
2,080
|
|
||||
Total revenue
|
$
|
1,663
|
|
|
$
|
1,677
|
|
|
$
|
4,734
|
|
|
$
|
4,741
|
|
In millions
|
Currency Translation Adjustments
|
Changes in Employee Benefit Plans
|
Changes in Fair Value of Effective Cash Flow Hedges
|
Total
|
||||||||
Balance as of December 31, 2016
|
$
|
(224
|
)
|
$
|
6
|
|
$
|
13
|
|
$
|
(205
|
)
|
Other comprehensive income (loss) before reclassifications
|
37
|
|
—
|
|
(12
|
)
|
25
|
|
||||
Amounts reclassified from AOCI
|
—
|
|
(6
|
)
|
(2
|
)
|
(8
|
)
|
||||
Net current period other comprehensive income (loss)
|
37
|
|
(6
|
)
|
(14
|
)
|
17
|
|
||||
Balance as of September 30, 2017
|
$
|
(187
|
)
|
$
|
—
|
|
$
|
(1
|
)
|
$
|
(188
|
)
|
|
|
For the three months ended September 30, 2017
|
||||||||||||
|
Employee Benefit Plans
|
|
|
|
||||||||||
In millions
|
Amortization of Actuarial Gain
|
Amortization of Prior Service (Benefit) Loss
|
Effective Cash Flow Hedge Loss
|
|
Total
|
|||||||||
Affected line in Condensed Consolidated Statement of Operations:
|
|
|
|
|
|
|||||||||
|
Cost of products
|
$
|
—
|
|
$
|
—
|
|
$
|
1
|
|
|
$
|
1
|
|
|
Cost of services
|
—
|
|
(2
|
)
|
—
|
|
|
(2
|
)
|
||||
|
Research and development expenses
|
(1
|
)
|
1
|
|
—
|
|
|
—
|
|
||||
|
Total before tax
|
$
|
(1
|
)
|
$
|
(1
|
)
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
Tax expense
|
|
|
|
|
—
|
|
|||||||
|
Total reclassifications, net of tax
|
|
|
|
|
$
|
(1
|
)
|
|
|
For the three months ended September 30, 2016
|
||||||||||||
|
Employee Benefit Plans
|
|
|
|
||||||||||
In millions
|
Amortization of Actuarial (Gain) Loss
|
Amortization of Prior Service Benefit
|
Effective Cash Flow Hedge Gain
|
|
Total
|
|||||||||
Affected line in Condensed Consolidated Statement of Operations:
|
|
|
|
|
|
|||||||||
|
Cost of services
|
$
|
(1
|
)
|
$
|
(3
|
)
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
Selling, general and administrative expenses
|
1
|
|
(1
|
)
|
—
|
|
|
—
|
|
||||
|
Total before tax
|
$
|
—
|
|
$
|
(4
|
)
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
Tax expense
|
|
|
|
|
2
|
|
|||||||
|
Total reclassifications, net of tax
|
|
|
|
|
$
|
(2
|
)
|
|
|
For the nine months ended September 30, 2017
|
||||||||||||
|
Employee Benefit Plans
|
|
|
|
||||||||||
In millions
|
Amortization of Actuarial Gain
|
Amortization of Prior Service Benefit
|
Effective Cash Flow Hedge Gain
|
|
Total
|
|||||||||
Affected line in Condensed Consolidated Statement of Operations:
|
|
|
|
|
|
|||||||||
|
Cost of products
|
$
|
—
|
|
$
|
—
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
Cost of services
|
—
|
|
(4
|
)
|
—
|
|
|
(4
|
)
|
||||
|
Selling, general and administrative expenses
|
(1
|
)
|
(2
|
)
|
—
|
|
|
(3
|
)
|
||||
|
Research and development expenses
|
(1
|
)
|
—
|
|
—
|
|
|
(1
|
)
|
||||
|
Total before tax
|
$
|
(2
|
)
|
$
|
(6
|
)
|
$
|
(2
|
)
|
|
$
|
(10
|
)
|
|
Tax expense
|
|
|
|
|
2
|
|
|||||||
|
Total reclassifications, net of tax
|
|
|
|
|
$
|
(8
|
)
|
|
|
For the nine months ended September 30, 2016
|
||||||||||||
|
Employee Benefit Plans
|
|
|
|
||||||||||
In millions
|
Amortization of Actuarial Gain
|
Amortization of Prior Service Benefit
|
Effective Cash Flow Hedge Loss
|
|
Total
|
|||||||||
Affected line in Condensed Consolidated Statement of Operations:
|
|
|
|
|
|
|||||||||
|
Cost of services
|
$
|
(1
|
)
|
$
|
(8
|
)
|
$
|
—
|
|
|
$
|
(9
|
)
|
|
Selling, general and administrative expenses
|
—
|
|
(4
|
)
|
—
|
|
|
(4
|
)
|
||||
|
Research and development expenses
|
—
|
|
(2
|
)
|
—
|
|
|
(2
|
)
|
||||
|
Interest expense
|
—
|
|
—
|
|
2
|
|
|
2
|
|
||||
|
Total before tax
|
$
|
(1
|
)
|
$
|
(14
|
)
|
$
|
2
|
|
|
$
|
(13
|
)
|
|
Tax expense
|
|
|
|
|
4
|
|
|||||||
|
Total reclassifications, net of tax
|
|
|
|
|
$
|
(9
|
)
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
In millions
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Severance and other employee-related costs
|
|
|
|
|
|
|
|
||||||||
ASC 712 charges included in restructuring-related charges
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
4
|
|
ASC 420 charges included in restructuring-related charges
|
—
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
||||
Inventory-related charges
|
|
|
|
|
|
|
|
||||||||
Charges included in cost of services
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Asset-related charges
|
|
|
|
|
|
|
|
||||||||
External and internal use software impairment charges
included in restructuring-related charges
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||
Other exit costs
|
|
|
|
|
|
|
|
||||||||
Other exit costs included in restructuring-related charges
|
—
|
|
|
4
|
|
|
—
|
|
|
8
|
|
||||
Total restructuring charges
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
17
|
|
In millions
|
2017
|
|
2016
|
||||
Employee Severance and Other Exit Costs
|
|
|
|
||||
Beginning balance as of January 1
|
$
|
1
|
|
|
$
|
20
|
|
Cost recognized during the period
|
—
|
|
|
13
|
|
||
Change in estimated payments
|
—
|
|
|
(2
|
)
|
||
Utilization
|
(1
|
)
|
|
(28
|
)
|
||
Ending balance as of September 30
|
$
|
—
|
|
|
$
|
3
|
|
In millions
|
September 30, 2017
|
|
December 31, 2016
|
||||
Accounts receivable
|
|
|
|
||||
Trade
|
$
|
1,409
|
|
|
$
|
1,266
|
|
Other
|
39
|
|
|
57
|
|
||
Accounts receivable, gross
|
1,448
|
|
|
1,323
|
|
||
Less: allowance for doubtful accounts
|
(40
|
)
|
|
(41
|
)
|
||
Total accounts receivable, net
|
$
|
1,408
|
|
|
$
|
1,282
|
|
In millions
|
September 30, 2017
|
|
December 31, 2016
|
||||
Inventories
|
|
|
|
||||
Work in process and raw materials
|
$
|
197
|
|
|
$
|
154
|
|
Finished goods
|
220
|
|
|
149
|
|
||
Service parts
|
407
|
|
|
396
|
|
||
Total inventories
|
$
|
824
|
|
|
$
|
699
|
|
•
|
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.
|
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||
For the three months ended September 30, 2017
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
(in millions)
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Product revenue
|
$
|
338
|
|
|
$
|
13
|
|
|
$
|
357
|
|
|
$
|
(51
|
)
|
|
$
|
657
|
|
Service revenue
|
427
|
|
|
6
|
|
|
573
|
|
|
—
|
|
|
1,006
|
|
|||||
Total revenue
|
765
|
|
|
19
|
|
|
930
|
|
|
(51
|
)
|
|
1,663
|
|
|||||
Cost of products
|
264
|
|
|
8
|
|
|
307
|
|
|
(51
|
)
|
|
528
|
|
|||||
Cost of services
|
295
|
|
|
1
|
|
|
366
|
|
|
—
|
|
|
662
|
|
|||||
Selling, general and administrative expenses
|
97
|
|
|
1
|
|
|
122
|
|
|
—
|
|
|
220
|
|
|||||
Research and development expenses
|
40
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|
53
|
|
|||||
Total operating expenses
|
696
|
|
|
10
|
|
|
808
|
|
|
(51
|
)
|
|
1,463
|
|
|||||
Income (loss) from operations
|
69
|
|
|
9
|
|
|
122
|
|
|
—
|
|
|
200
|
|
|||||
Interest expense
|
(40
|
)
|
|
—
|
|
|
(19
|
)
|
|
17
|
|
|
(42
|
)
|
|||||
Other (expense) income, net
|
1
|
|
|
1
|
|
|
7
|
|
|
(17
|
)
|
|
(8
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
30
|
|
|
10
|
|
|
110
|
|
|
—
|
|
|
150
|
|
|||||
Income tax expense (benefit)
|
11
|
|
|
1
|
|
|
19
|
|
|
—
|
|
|
31
|
|
|||||
Income (loss) from continuing operations before earnings in subsidiaries
|
19
|
|
|
9
|
|
|
91
|
|
|
—
|
|
|
119
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
99
|
|
|
73
|
|
|
—
|
|
|
(172
|
)
|
|
—
|
|
|||||
Income (loss) from continuing operations
|
118
|
|
|
82
|
|
|
91
|
|
|
(172
|
)
|
|
119
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income (loss)
|
$
|
118
|
|
|
$
|
82
|
|
|
$
|
91
|
|
|
$
|
(172
|
)
|
|
$
|
119
|
|
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Net income (loss) attributable to NCR
|
$
|
118
|
|
|
$
|
82
|
|
|
$
|
90
|
|
|
$
|
(172
|
)
|
|
$
|
118
|
|
Total comprehensive income (loss)
|
121
|
|
|
91
|
|
|
95
|
|
|
(188
|
)
|
|
119
|
|
|||||
Less comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Comprehensive income (loss) attributable to NCR common stockholders
|
$
|
121
|
|
|
$
|
91
|
|
|
$
|
96
|
|
|
$
|
(188
|
)
|
|
$
|
120
|
|
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||
For the three months ended September 30, 2016
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
(in millions)
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Product revenue
|
$
|
358
|
|
|
$
|
15
|
|
|
$
|
435
|
|
|
$
|
(100
|
)
|
|
$
|
708
|
|
Service revenue
|
415
|
|
|
9
|
|
|
545
|
|
|
—
|
|
|
969
|
|
|||||
Total revenue
|
773
|
|
|
24
|
|
|
980
|
|
|
(100
|
)
|
|
1,677
|
|
|||||
Cost of products
|
282
|
|
|
14
|
|
|
332
|
|
|
(100
|
)
|
|
528
|
|
|||||
Cost of services
|
323
|
|
|
3
|
|
|
346
|
|
|
—
|
|
|
672
|
|
|||||
Selling, general and administrative expenses
|
117
|
|
|
1
|
|
|
107
|
|
|
—
|
|
|
225
|
|
|||||
Research and development expenses
|
26
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
56
|
|
|||||
Restructuring-related charges
|
4
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
7
|
|
|||||
Total operating expenses
|
752
|
|
|
18
|
|
|
818
|
|
|
(100
|
)
|
|
1,488
|
|
|||||
Income (loss) from operations
|
21
|
|
|
6
|
|
|
162
|
|
|
—
|
|
|
189
|
|
|||||
Interest expense
|
(40
|
)
|
|
—
|
|
|
(18
|
)
|
|
17
|
|
|
(41
|
)
|
|||||
Other (expense) income, net
|
10
|
|
|
(6
|
)
|
|
5
|
|
|
(17
|
)
|
|
(8
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
(9
|
)
|
|
—
|
|
|
149
|
|
|
—
|
|
|
140
|
|
|||||
Income tax expense (benefit)
|
2
|
|
|
7
|
|
|
22
|
|
|
—
|
|
|
31
|
|
|||||
Income (loss) from continuing operations before earnings in subsidiaries
|
(11
|
)
|
|
(7
|
)
|
|
127
|
|
|
—
|
|
|
109
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
118
|
|
|
114
|
|
|
—
|
|
|
(232
|
)
|
|
—
|
|
|||||
Income (loss) from continuing operations
|
107
|
|
|
107
|
|
|
127
|
|
|
(232
|
)
|
|
109
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Net income (loss)
|
$
|
105
|
|
|
$
|
107
|
|
|
$
|
127
|
|
|
$
|
(232
|
)
|
|
$
|
107
|
|
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||
Net income (loss) attributable to NCR
|
$
|
105
|
|
|
$
|
107
|
|
|
$
|
125
|
|
|
$
|
(232
|
)
|
|
$
|
105
|
|
Total comprehensive income (loss)
|
109
|
|
|
103
|
|
|
132
|
|
|
(234
|
)
|
|
110
|
|
|||||
Less comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Comprehensive income (loss) attributable to NCR common stockholders
|
$
|
109
|
|
|
$
|
103
|
|
|
$
|
131
|
|
|
$
|
(234
|
)
|
|
$
|
109
|
|
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||
For the nine months ended September 30, 2017
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
(in millions)
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Product revenue
|
$
|
948
|
|
|
$
|
66
|
|
|
$
|
1,030
|
|
|
$
|
(215
|
)
|
|
$
|
1,829
|
|
Service revenue
|
1,254
|
|
|
20
|
|
|
1,631
|
|
|
—
|
|
|
2,905
|
|
|||||
Total revenue
|
2,202
|
|
|
86
|
|
|
2,661
|
|
|
(215
|
)
|
|
4,734
|
|
|||||
Cost of products
|
728
|
|
|
30
|
|
|
887
|
|
|
(215
|
)
|
|
1,430
|
|
|||||
Cost of services
|
871
|
|
|
6
|
|
|
1,078
|
|
|
—
|
|
|
1,955
|
|
|||||
Selling, general and administrative expenses
|
331
|
|
|
3
|
|
|
342
|
|
|
—
|
|
|
676
|
|
|||||
Research and development expenses
|
100
|
|
|
—
|
|
|
78
|
|
|
—
|
|
|
178
|
|
|||||
Total operating expenses
|
2,030
|
|
|
39
|
|
|
2,385
|
|
|
(215
|
)
|
|
4,239
|
|
|||||
Income (loss) from operations
|
172
|
|
|
47
|
|
|
276
|
|
|
—
|
|
|
495
|
|
|||||
Interest expense
|
(118
|
)
|
|
—
|
|
|
(54
|
)
|
|
50
|
|
|
(122
|
)
|
|||||
Other (expense) income, net
|
10
|
|
|
—
|
|
|
18
|
|
|
(50
|
)
|
|
(22
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
64
|
|
|
47
|
|
|
240
|
|
|
—
|
|
|
351
|
|
|||||
Income tax expense (benefit)
|
20
|
|
|
19
|
|
|
39
|
|
|
—
|
|
|
78
|
|
|||||
Income (loss) from continuing operations before earnings in subsidiaries
|
44
|
|
|
28
|
|
|
201
|
|
|
—
|
|
|
273
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
228
|
|
|
170
|
|
|
—
|
|
|
(398
|
)
|
|
—
|
|
|||||
Income (loss) from continuing operations
|
272
|
|
|
198
|
|
|
201
|
|
|
(398
|
)
|
|
273
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
Net income (loss)
|
$
|
277
|
|
|
$
|
198
|
|
|
$
|
201
|
|
|
$
|
(398
|
)
|
|
$
|
278
|
|
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Net income (loss) attributable to NCR
|
$
|
277
|
|
|
$
|
198
|
|
|
$
|
200
|
|
|
$
|
(398
|
)
|
|
$
|
277
|
|
Total comprehensive income (loss)
|
294
|
|
|
233
|
|
|
214
|
|
|
(448
|
)
|
|
293
|
|
|||||
Less comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Comprehensive income (loss) attributable to NCR common stockholders
|
$
|
294
|
|
|
$
|
233
|
|
|
$
|
215
|
|
|
$
|
(448
|
)
|
|
$
|
294
|
|
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||
For the nine months ended September 30, 2016
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
(in millions)
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Product revenue
|
$
|
910
|
|
|
$
|
70
|
|
|
$
|
1,222
|
|
|
$
|
(270
|
)
|
|
$
|
1,932
|
|
Service revenue
|
1,191
|
|
|
26
|
|
|
1,592
|
|
|
—
|
|
|
2,809
|
|
|||||
Total revenue
|
2,101
|
|
|
96
|
|
|
2,814
|
|
|
(270
|
)
|
|
4,741
|
|
|||||
Cost of products
|
712
|
|
|
30
|
|
|
1,015
|
|
|
(270
|
)
|
|
1,487
|
|
|||||
Cost of services
|
893
|
|
|
9
|
|
|
1,049
|
|
|
—
|
|
|
1,951
|
|
|||||
Selling, general and administrative expenses
|
367
|
|
|
3
|
|
|
308
|
|
|
—
|
|
|
678
|
|
|||||
Research and development expenses
|
83
|
|
|
—
|
|
|
76
|
|
|
—
|
|
|
159
|
|
|||||
Restructuring-related charges
|
10
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
13
|
|
|||||
Total operating expenses
|
2,065
|
|
|
42
|
|
|
2,451
|
|
|
(270
|
)
|
|
4,288
|
|
|||||
Income (loss) from operations
|
36
|
|
|
54
|
|
|
363
|
|
|
—
|
|
|
453
|
|
|||||
Interest expense
|
(126
|
)
|
|
—
|
|
|
(56
|
)
|
|
52
|
|
|
(130
|
)
|
|||||
Other (expense) income, net
|
35
|
|
|
(11
|
)
|
|
(5
|
)
|
|
(52
|
)
|
|
(33
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
(55
|
)
|
|
43
|
|
|
302
|
|
|
—
|
|
|
290
|
|
|||||
Income tax expense (benefit)
|
(19
|
)
|
|
32
|
|
|
62
|
|
|
—
|
|
|
75
|
|
|||||
Income (loss) from continuing operations before earnings in subsidiaries
|
(36
|
)
|
|
11
|
|
|
240
|
|
|
—
|
|
|
215
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
251
|
|
|
247
|
|
|
—
|
|
|
(498
|
)
|
|
—
|
|
|||||
Income (loss) from continuing operations
|
215
|
|
|
258
|
|
|
240
|
|
|
(498
|
)
|
|
215
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
|||||
Net income (loss)
|
$
|
213
|
|
|
$
|
258
|
|
|
$
|
240
|
|
|
$
|
(498
|
)
|
|
$
|
213
|
|
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income (loss) attributable to NCR
|
$
|
213
|
|
|
$
|
258
|
|
|
$
|
240
|
|
|
$
|
(498
|
)
|
|
$
|
213
|
|
Total comprehensive income (loss)
|
191
|
|
|
204
|
|
|
207
|
|
|
(418
|
)
|
|
184
|
|
|||||
Less comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||||
Comprehensive income (loss) attributable to NCR common stockholders
|
$
|
191
|
|
|
$
|
204
|
|
|
$
|
214
|
|
|
$
|
(418
|
)
|
|
$
|
191
|
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||
September 30, 2017
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
(in millions)
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
35
|
|
|
$
|
10
|
|
|
$
|
360
|
|
|
$
|
—
|
|
|
$
|
405
|
|
Accounts receivable, net
|
56
|
|
|
14
|
|
|
1,338
|
|
|
—
|
|
|
1,408
|
|
|||||
Inventories
|
303
|
|
|
8
|
|
|
513
|
|
|
—
|
|
|
824
|
|
|||||
Due from affiliates
|
689
|
|
|
1,643
|
|
|
516
|
|
|
(2,848
|
)
|
|
—
|
|
|||||
Other current assets
|
115
|
|
|
41
|
|
|
173
|
|
|
(66
|
)
|
|
263
|
|
|||||
Total current assets
|
1,198
|
|
|
1,716
|
|
|
2,900
|
|
|
(2,914
|
)
|
|
2,900
|
|
|||||
Property, plant and equipment, net
|
173
|
|
|
—
|
|
|
148
|
|
|
—
|
|
|
321
|
|
|||||
Goodwill
|
988
|
|
|
—
|
|
|
1,753
|
|
|
—
|
|
|
2,741
|
|
|||||
Intangibles, net
|
155
|
|
|
—
|
|
|
436
|
|
|
—
|
|
|
591
|
|
|||||
Prepaid pension cost
|
—
|
|
|
—
|
|
|
115
|
|
|
—
|
|
|
115
|
|
|||||
Deferred income taxes
|
517
|
|
|
97
|
|
|
82
|
|
|
(101
|
)
|
|
595
|
|
|||||
Investments in subsidiaries
|
3,538
|
|
|
2,928
|
|
|
—
|
|
|
(6,466
|
)
|
|
—
|
|
|||||
Due from affiliates
|
1,020
|
|
|
1
|
|
|
39
|
|
|
(1,060
|
)
|
|
—
|
|
|||||
Other assets
|
437
|
|
|
56
|
|
|
94
|
|
|
—
|
|
|
587
|
|
|||||
Total assets
|
$
|
8,026
|
|
|
$
|
4,798
|
|
|
$
|
5,567
|
|
|
$
|
(10,541
|
)
|
|
$
|
7,850
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
212
|
|
|
$
|
—
|
|
|
$
|
269
|
|
Accounts payable
|
292
|
|
|
1
|
|
|
427
|
|
|
—
|
|
|
720
|
|
|||||
Payroll and benefits liabilities
|
102
|
|
|
—
|
|
|
100
|
|
|
—
|
|
|
202
|
|
|||||
Deferred service revenue and customer deposits
|
212
|
|
|
5
|
|
|
248
|
|
|
—
|
|
|
465
|
|
|||||
Due to affiliates
|
2,019
|
|
|
129
|
|
|
700
|
|
|
(2,848
|
)
|
|
—
|
|
|||||
Other current liabilities
|
180
|
|
|
5
|
|
|
271
|
|
|
(66
|
)
|
|
390
|
|
|||||
Total current liabilities
|
2,862
|
|
|
140
|
|
|
1,958
|
|
|
(2,914
|
)
|
|
2,046
|
|
|||||
Long-term debt
|
2,982
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2,984
|
|
|||||
Pension and indemnity plan liabilities
|
483
|
|
|
—
|
|
|
288
|
|
|
—
|
|
|
771
|
|
|||||
Postretirement and postemployment benefits liabilities
|
24
|
|
|
3
|
|
|
100
|
|
|
—
|
|
|
127
|
|
|||||
Income tax accruals
|
17
|
|
|
2
|
|
|
119
|
|
|
—
|
|
|
138
|
|
|||||
Due to affiliates
|
—
|
|
|
39
|
|
|
1,021
|
|
|
(1,060
|
)
|
|
—
|
|
|||||
Other liabilities
|
89
|
|
|
5
|
|
|
204
|
|
|
(101
|
)
|
|
197
|
|
|||||
Total liabilities
|
6,457
|
|
|
189
|
|
|
3,692
|
|
|
(4,075
|
)
|
|
6,263
|
|
|||||
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
|||||
Series A convertible preferred stock
|
799
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
799
|
|
|||||
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total NCR stockholders’ equity
|
770
|
|
|
4,609
|
|
|
1,857
|
|
|
(6,466
|
)
|
|
770
|
|
|||||
Noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Total stockholders’ equity
|
770
|
|
|
4,609
|
|
|
1,861
|
|
|
(6,466
|
)
|
|
774
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
8,026
|
|
|
$
|
4,798
|
|
|
$
|
5,567
|
|
|
$
|
(10,541
|
)
|
|
$
|
7,850
|
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||
December 31, 2016
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
(in millions)
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
65
|
|
|
$
|
12
|
|
|
421
|
|
|
$
|
—
|
|
|
$
|
498
|
|
|
Accounts receivable, net
|
64
|
|
|
25
|
|
|
1,193
|
|
|
—
|
|
|
1,282
|
|
|||||
Inventories
|
272
|
|
|
13
|
|
|
414
|
|
|
—
|
|
|
699
|
|
|||||
Due from affiliates
|
680
|
|
|
1,509
|
|
|
400
|
|
|
(2,589
|
)
|
|
—
|
|
|||||
Other current assets
|
140
|
|
|
37
|
|
|
162
|
|
|
(61
|
)
|
|
278
|
|
|||||
Total current assets
|
1,221
|
|
|
1,596
|
|
|
2,590
|
|
|
(2,650
|
)
|
|
2,757
|
|
|||||
Property, plant and equipment, net
|
129
|
|
|
—
|
|
|
158
|
|
|
—
|
|
|
287
|
|
|||||
Goodwill
|
988
|
|
|
—
|
|
|
1,739
|
|
|
—
|
|
|
2,727
|
|
|||||
Intangibles, net
|
176
|
|
|
—
|
|
|
496
|
|
|
—
|
|
|
672
|
|
|||||
Prepaid pension cost
|
—
|
|
|
—
|
|
|
94
|
|
|
—
|
|
|
94
|
|
|||||
Deferred income taxes
|
499
|
|
|
98
|
|
|
82
|
|
|
(104
|
)
|
|
575
|
|
|||||
Investments in subsidiaries
|
3,275
|
|
|
2,822
|
|
|
—
|
|
|
(6,097
|
)
|
|
—
|
|
|||||
Due from affiliates
|
1,053
|
|
|
—
|
|
|
35
|
|
|
(1,088
|
)
|
|
—
|
|
|||||
Other assets
|
405
|
|
|
56
|
|
|
100
|
|
|
—
|
|
|
561
|
|
|||||
Total assets
|
$
|
7,746
|
|
|
$
|
4,572
|
|
|
$
|
5,294
|
|
|
$
|
(9,939
|
)
|
|
$
|
7,673
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
50
|
|
Accounts payable
|
310
|
|
|
2
|
|
|
469
|
|
|
—
|
|
|
781
|
|
|||||
Payroll and benefits liabilities
|
129
|
|
|
—
|
|
|
105
|
|
|
—
|
|
|
234
|
|
|||||
Deferred service revenue and customer deposits
|
193
|
|
|
5
|
|
|
270
|
|
|
—
|
|
|
468
|
|
|||||
Due to affiliates
|
1,736
|
|
|
154
|
|
|
699
|
|
|
(2,589
|
)
|
|
—
|
|
|||||
Other current liabilities
|
224
|
|
|
6
|
|
|
263
|
|
|
(61
|
)
|
|
432
|
|
|||||
Total current liabilities
|
2,638
|
|
|
167
|
|
|
1,810
|
|
|
(2,650
|
)
|
|
1,965
|
|
|||||
Long-term debt
|
2,998
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3,001
|
|
|||||
Pension and indemnity plan liabilities
|
473
|
|
|
—
|
|
|
266
|
|
|
—
|
|
|
739
|
|
|||||
Postretirement and postemployment benefits liabilities
|
24
|
|
|
3
|
|
|
100
|
|
|
—
|
|
|
127
|
|
|||||
Income tax accruals
|
17
|
|
|
4
|
|
|
121
|
|
|
—
|
|
|
142
|
|
|||||
Due to affiliates
|
—
|
|
|
35
|
|
|
1,053
|
|
|
(1,088
|
)
|
|
—
|
|
|||||
Other liabilities
|
54
|
|
|
5
|
|
|
183
|
|
|
(104
|
)
|
|
138
|
|
|||||
Total liabilities
|
6,204
|
|
|
214
|
|
|
3,536
|
|
|
(3,842
|
)
|
|
6,112
|
|
|||||
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|||||
Series A convertible preferred stock
|
847
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
847
|
|
|||||
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Total NCR stockholders’ equity
|
695
|
|
|
4,358
|
|
|
1,739
|
|
|
(6,097
|
)
|
|
695
|
|
|||||
Noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Total stockholders’ equity
|
695
|
|
|
4,358
|
|
|
1,743
|
|
|
(6,097
|
)
|
|
699
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
7,746
|
|
|
$
|
4,572
|
|
|
$
|
5,294
|
|
|
$
|
(9,939
|
)
|
|
$
|
7,673
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the nine months ended September 30, 2017
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
(in millions)
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
284
|
|
|
$
|
(58
|
)
|
|
$
|
52
|
|
|
$
|
(7
|
)
|
|
$
|
271
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenditures for property, plant and equipment
|
(54
|
)
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
(81
|
)
|
|||||
Additions to capitalized software
|
(86
|
)
|
|
—
|
|
|
(39
|
)
|
|
—
|
|
|
(125
|
)
|
|||||
Proceeds from sale of property, plant and equipment
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|||||
Proceeds from (payments of) intercompany notes
|
216
|
|
|
55
|
|
|
—
|
|
|
(271
|
)
|
|
—
|
|
|||||
Investments in equity affiliates
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|||||
Other investing activities, net
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
73
|
|
|
55
|
|
|
(59
|
)
|
|
(269
|
)
|
|
(200
|
)
|
|||||
Financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short term borrowings, net
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||
Payments on term credit facilities
|
(34
|
)
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(37
|
)
|
|||||
Payments on revolving credit facilities
|
(1,070
|
)
|
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
(1,110
|
)
|
|||||
Borrowings on revolving credit facilities
|
1,095
|
|
|
—
|
|
|
240
|
|
|
—
|
|
|
1,335
|
|
|||||
Repurchase of Company common stock
|
(350
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(350
|
)
|
|||||
Proceeds from employee stock plans
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||
Other financing activities
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Equity contribution
|
—
|
|
|
—
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|||||
Dividend distribution to consolidated subsidiaries
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
7
|
|
|
—
|
|
|||||
Borrowings (repayments) of intercompany notes
|
—
|
|
|
—
|
|
|
(271
|
)
|
|
271
|
|
|
—
|
|
|||||
Tax withholding payments on behalf of employees
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(373
|
)
|
|
—
|
|
|
(69
|
)
|
|
276
|
|
|
(166
|
)
|
|||||
Cash flows from discontinued operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash used in operating activities
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
1
|
|
|
15
|
|
|
—
|
|
|
16
|
|
|||||
Increase (decrease) in cash and cash equivalents
|
(30
|
)
|
|
(2
|
)
|
|
(61
|
)
|
|
—
|
|
|
(93
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
65
|
|
|
12
|
|
|
421
|
|
|
—
|
|
|
498
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
35
|
|
|
$
|
10
|
|
|
$
|
360
|
|
|
$
|
—
|
|
|
$
|
405
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the nine months ended September 30, 2016
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
(in millions)
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
362
|
|
|
$
|
(103
|
)
|
|
$
|
113
|
|
|
$
|
(3
|
)
|
|
$
|
369
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenditures for property, plant and equipment
|
(16
|
)
|
|
—
|
|
|
(29
|
)
|
|
—
|
|
|
(45
|
)
|
|||||
Additions to capitalized software
|
(70
|
)
|
|
—
|
|
|
(45
|
)
|
|
—
|
|
|
(115
|
)
|
|||||
Proceeds from (payments of) intercompany notes
|
166
|
|
|
98
|
|
|
—
|
|
|
(264
|
)
|
|
—
|
|
|||||
Investments in equity affiliates
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|||||
Proceeds from divestiture
|
22
|
|
|
—
|
|
|
25
|
|
|
—
|
|
|
47
|
|
|||||
Other investing activities, net
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||
Net cash provided by (used in) investing activities
|
85
|
|
|
98
|
|
|
(49
|
)
|
|
(255
|
)
|
|
(121
|
)
|
|||||
Financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short term borrowings, net
|
(4
|
)
|
|
—
|
|
|
2
|
|
|
—
|
|
|
(2
|
)
|
|||||
Payments on term credit facilities
|
(78
|
)
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
(84
|
)
|
|||||
Payments on revolving credit facilities
|
(656
|
)
|
|
—
|
|
|
(80
|
)
|
|
—
|
|
|
(736
|
)
|
|||||
Borrowings on revolving credit facilities
|
576
|
|
|
—
|
|
|
280
|
|
|
—
|
|
|
856
|
|
|||||
Repurchase of Company common stock
|
(250
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(250
|
)
|
|||||
Debt issuance costs
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|||||
Proceeds from employee stock plans
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||
Other financing activities
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||||
Equity contribution
|
—
|
|
|
—
|
|
|
9
|
|
|
(9
|
)
|
|
—
|
|
|||||
Dividend distribution to consolidated subsidiaries
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
3
|
|
|
—
|
|
|||||
Borrowings (repayments) of intercompany notes
|
—
|
|
|
—
|
|
|
(264
|
)
|
|
264
|
|
|
—
|
|
|||||
Tax withholding payments on behalf of employees
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(417
|
)
|
|
—
|
|
|
(64
|
)
|
|
258
|
|
|
(223
|
)
|
|||||
Cash flows from discontinued operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash used in operating activities
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
(2
|
)
|
|
(3
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Increase (decrease) in cash and cash equivalents
|
—
|
|
|
(7
|
)
|
|
(3
|
)
|
|
—
|
|
|
(10
|
)
|
|||||
Cash and cash equivalents at beginning of period
|
15
|
|
|
20
|
|
|
293
|
|
|
—
|
|
|
328
|
|
|||||
Cash and cash equivalents at end of period
|
$
|
15
|
|
|
$
|
13
|
|
|
$
|
290
|
|
|
$
|
—
|
|
|
$
|
318
|
|
Item 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
|
•
|
Revenue
decreased
approximately
1%
from the prior year period;
|
•
|
Software revenue increased
2%
from the prior year period, driven by cloud and professional services growth of
5%
and
6%
, respectively;
|
•
|
Services revenue increased
3%
and operating margin rate expanded
510
basis points from the prior year period; and
|
•
|
Hardware revenue decreased
6%
and operating margin rate declined
480
basis points from the prior year period
|
•
|
Sales Enablement
- Providing our sales force with the training, tools and processes necessary for consultative selling, supported by a strong solutions management function that innovates the way in which we go to market, and expanding our organization of channel partners.
|
•
|
Services Transformation
- Driving improved services performance by focusing on a higher mix of managed services, improving our productivity and efficiency, expanding our remote diagnostics and repair capabilities and creating greater discipline in our product lifecycle management.
|
•
|
Evolving our Business Model
- Continuing the shift in our business model to provide innovative end-to-end software platform solutions for our customers, with best in class software support while keeping an efficient cost structure to create competitive advantage.
|
•
|
Investing in Innovation
- Optimizing our operating model and prioritizing investments in areas with the greatest potential for profitable growth, such as cloud solutions and professional, managed and other services.
|
•
|
Cultivating our Culture and Team
- Organizing and recruiting with an eye toward the future, and investing in, training and developing our employees to accelerate the delivery of our innovative solutions and to focus on the needs of our customers and changes in consumer behavior.
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
In millions
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
1,663
|
|
|
$
|
1,677
|
|
|
$
|
4,734
|
|
|
$
|
4,741
|
|
Gross margin
|
$
|
473
|
|
|
$
|
477
|
|
|
$
|
1,349
|
|
|
$
|
1,303
|
|
Gross margin as a percentage of revenue
|
28.4
|
%
|
|
28.4
|
%
|
|
28.5
|
%
|
|
27.5
|
%
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses
|
$
|
220
|
|
|
$
|
225
|
|
|
$
|
676
|
|
|
$
|
678
|
|
Research and development expenses
|
53
|
|
|
56
|
|
|
178
|
|
|
159
|
|
||||
Restructuring-related charges
|
—
|
|
|
7
|
|
|
—
|
|
|
13
|
|
||||
Income from operations
|
$
|
200
|
|
|
$
|
189
|
|
|
$
|
495
|
|
|
$
|
453
|
|
In millions
|
2017
|
% of Total
|
|
2016
|
% of Total
|
|
% Increase (Decrease)
|
% Increase (Decrease) Constant Currency
(1)
|
||||
Americas
|
$
|
989
|
|
59%
|
|
$
|
986
|
|
58%
|
|
—%
|
—%
|
Europe, Middle East Africa (EMEA)
|
448
|
|
27%
|
|
464
|
|
28%
|
|
(3)%
|
(5)%
|
||
Asia Pacific (APJ)
|
226
|
|
14%
|
|
227
|
|
14%
|
|
—%
|
—%
|
||
Consolidated revenue
|
$
|
1,663
|
|
100%
|
|
$
|
1,677
|
|
100%
|
|
(1)%
|
(1)%
|
In millions
|
2017
|
% of Total
|
|
2016
|
% of Total
|
|
% Increase (Decrease)
|
% Increase (Decrease) Adjusted Constant Currency
(1)
|
||||
Americas
|
$
|
2,751
|
|
58%
|
|
$
|
2,724
|
|
58%
|
|
1%
|
4%
|
Europe, Middle East Africa (EMEA)
|
1,324
|
|
28%
|
|
1,368
|
|
28%
|
|
(3)%
|
2%
|
||
Asia Pacific (APJ)
|
659
|
|
14%
|
|
649
|
|
14%
|
|
2%
|
4%
|
||
Consolidated revenue
|
$
|
4,734
|
|
100%
|
|
$
|
4,741
|
|
100%
|
|
—%
|
3%
|
In millions
|
2017
|
% of Total
|
|
2016
|
% of Total
|
|
% Increase (Decrease)
|
% Increase (Decrease) Constant Currency
(1)
|
||||
Software
|
$
|
476
|
|
29%
|
|
$
|
468
|
|
28%
|
|
2%
|
2%
|
Services
|
609
|
|
36%
|
|
591
|
|
35%
|
|
3%
|
3%
|
||
Hardware
|
578
|
|
35%
|
|
618
|
|
37%
|
|
(6)%
|
(7)%
|
||
Consolidated revenue
|
$
|
1,663
|
|
100%
|
|
$
|
1,677
|
|
100%
|
|
(1)%
|
(1)%
|
In millions
|
2017
|
% of Total
|
|
2016
|
% of Total
|
|
% Increase (Decrease)
|
% Increase (Decrease) Adjusted Constant Currency
(1)
|
||||
Software
|
$
|
1,392
|
|
29%
|
|
$
|
1,339
|
|
28%
|
|
4%
|
4%
|
Services
|
1,754
|
|
37%
|
|
1,708
|
|
36%
|
|
3%
|
4%
|
||
Hardware
|
1,588
|
|
34%
|
|
1,694
|
|
36%
|
|
(6)%
|
1%
|
||
Consolidated revenue
|
$
|
4,734
|
|
100%
|
|
$
|
4,741
|
|
100%
|
|
—%
|
3%
|
|
Revenue % Growth (GAAP)
|
Favorable (unfavorable) FX impact
|
Revenue % Growth Constant Currency (non-GAAP)
|
Americas
|
—%
|
—%
|
—%
|
EMEA
|
(3)%
|
2%
|
(5)%
|
APJ
|
—%
|
—%
|
—%
|
Consolidated revenue
|
(1)%
|
—%
|
(1)%
|
|
Revenue % Growth (GAAP)
|
Favorable (unfavorable) FX impact
|
Divestiture impact
|
Revenue % Growth Adjusted Constant Currency (non-GAAP)
|
Americas
|
1%
|
—%
|
(3)%
|
4%
|
EMEA
|
(3)%
|
(2)%
|
(3)%
|
2%
|
APJ
|
2%
|
—%
|
(2)%
|
4%
|
Consolidated revenue
|
—%
|
—%
|
(3)%
|
3%
|
|
Revenue % Growth (GAAP)
|
Favorable (unfavorable) FX impact
|
Revenue % Growth Constant Currency (non-GAAP)
|
Software
|
2%
|
—%
|
2%
|
Services
|
3%
|
—%
|
3%
|
Hardware
|
(6)%
|
1%
|
(7)%
|
Consolidated revenue
|
(1)%
|
—%
|
(1)%
|
|
Revenue % Growth (GAAP)
|
Favorable (unfavorable) FX impact
|
Divestiture impact
|
Revenue % Growth Adjusted Constant Currency (non-GAAP)
|
Software
|
4%
|
—%
|
—%
|
4%
|
Services
|
3%
|
(1)%
|
—%
|
4%
|
Hardware
|
(6)%
|
—%
|
(7)%
|
1%
|
Consolidated revenue
|
—%
|
—%
|
(3)%
|
3%
|
•
|
Software
- Our software portfolio includes industry-based software applications and application suites for the financial services, retail, hospitality and small business industries. We also offer other industry-oriented software applications including cash management software, video banking software, fraud and loss prevention applications, check and document
|
•
|
Services
- Our global end-to-end services solutions include assessment and preparation, staging, installation, implementation, and maintenance and support for our hardware solutions. We also provide systems management and complete managed services for our product offerings. In addition, we provide servicing for third party networking products and computer hardware from select manufacturers.
|
•
|
Hardware
- Our hardware solutions include our suite of financial-oriented self-service ATM-related hardware, and our retail- and hospitality-oriented POS terminal and self-checkout kiosk and related hardware. We also offer other self-service kiosks, such as self-check in/out kiosks for airlines, and wayfinding solutions for buildings and campuses.
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
In millions
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
476
|
|
|
$
|
468
|
|
|
$
|
1,392
|
|
|
$
|
1,339
|
|
Operating income
|
$
|
148
|
|
|
$
|
146
|
|
|
$
|
401
|
|
|
$
|
405
|
|
Operating income as a percentage of revenue
|
31.1
|
%
|
|
31.2
|
%
|
|
28.8
|
%
|
|
30.2
|
%
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
In millions
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
609
|
|
|
$
|
591
|
|
|
$
|
1,754
|
|
|
$
|
1,708
|
|
Operating income
|
$
|
89
|
|
|
$
|
56
|
|
|
$
|
209
|
|
|
$
|
139
|
|
Operating income as a percentage of revenue
|
14.6
|
%
|
|
9.5
|
%
|
|
11.9
|
%
|
|
8.1
|
%
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
In millions
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Revenue
|
$
|
578
|
|
|
$
|
618
|
|
|
$
|
1,588
|
|
|
$
|
1,694
|
|
Operating income
|
$
|
(2
|
)
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
32
|
|
Operating income as a percentage of revenue
|
(0.3
|
)%
|
|
4.5
|
%
|
|
—
|
%
|
|
1.9
|
%
|
|
Nine months ended September 30
|
||||||
In millions
|
2017
|
|
2016
|
||||
Net cash provided by operating activities
|
$
|
271
|
|
|
$
|
369
|
|
Less: Expenditures for property, plant and equipment
|
(81
|
)
|
|
(45
|
)
|
||
Less: Additions to capitalized software
|
(125
|
)
|
|
(115
|
)
|
||
Net cash used in discontinued operations
|
(14
|
)
|
|
(30
|
)
|
||
Free cash flow (non-GAAP)
|
$
|
51
|
|
|
$
|
179
|
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
LEGAL PROCEEDINGS
|
Item 1A.
|
RISK FACTORS
|
Item 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
2.1
|
Separation and Distribution Agreement, dated as of August 27, 2007, between NCR Corporation and Teradata Corporation (Exhibit 10.1 to the Current Report on Form 8-K of Teradata Corporation dated September 6, 2007).
|
|
|
Articles of Amendment and Restatement of NCR Corporation (incorporated by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q of NCR Corporation for the quarter ended June 30, 2016).
|
|
|
|
Bylaws of NCR Corporation, as amended and restated on October 11, 2016 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of NCR Corporation dated October 11, 2016).
|
|
|
|
4.1
|
Common Stock Certificate of NCR Corporation (incorporated by reference to Exhibit 4.1 from the NCR Corporation Annual Report on Form 10-K for the year ended December 31, 1999).
|
|
|
Indenture, dated September 17, 2012, among NCR Corporation, as issuer, NCR International Inc. and Radiant Systems Inc. as subsidiary guarantors and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.01 to the Current Report on Form 8-K of NCR Corporation dated September 17, 2012).
|
|
|
|
Indenture, dated December 18, 2012, among NCR Corporation, as issuer, NCR International Inc. and Radiant Systems Inc. as subsidiary guarantors and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.01 to the Current Report on Form 8-K of NCR Corporation filed December 18, 2012).
|
|
|
|
Indenture, dated December 19, 2013, between NCR Escrow Corp. and U.S. Bank National Association relating to the $400 million aggregate principal amount of 5.875% senior notes due 2021 (the “5.875% Notes”) (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of NCR Corporation dated December 19, 2013 (the “December 19, 2013 Form 8-K”)).
|
|
|
|
First Supplemental Indenture relating to the 5.875% Notes, dated January 10, 2014, among NCR Corporation, NCR International, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of NCR Corporation dated January 10, 2014 (the “January 10, 2014 Form 8-K”)).
|
|
|
|
Indenture, dated December 19, 2013, between NCR Escrow Corp. and U.S. Bank National Association relating to the $700 million aggregate principal amount of 6.375% senior notes due 2023 (the “6.375% Notes”) (incorporated by reference to Exhibit 4.2 to the December 19, 2013 Form 8-K).
|
|
|
|
First Supplemental Indenture relating to the 6.375% Notes, dated January 10, 2014, among NCR Corporation, NCR International, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 to the January 10, 2014 Form 8-K).
|
|
|
|
NCR Director Compensation Program.
|
|
|
|
Certification pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934.
|
|
|
|
Certification pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934.
|
|
|
|
Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
101
|
Financials in XBRL Format.
|
|
|
|
|
NCR CORPORATION
|
||
|
|
|
|
|
Date:
|
October 27, 2017
|
By:
|
|
/s/ Robert Fishman
|
|
|
|
|
Robert Fishman
Executive Vice President and Chief Financial Officer
|
1.1
|
Committee
means the Committee on Directors and Governance of the Board.
|
1.2
|
Common Stock
means the common stock of the Company, par value $0.01 per share.
|
1.3
|
Company
means NCR Corporation, a Maryland corporation, or any successor entity, as applicable.
|
1.4
|
Deferred Stock Award
means the annual retainer and/or meeting fees, if any, elected by a Participant to be deferred as set forth in ARTICLE III.
|
1.5
|
Deferred Stock Grant
means the annual or mid-year equity grants, if any, elected by a Participant to be deferred as set forth in ARTICLE IV.
|
1.6
|
Director
means a member of the Board who is not an employee of the Company.
|
1.7
|
Fair Market Value
of a share of Common Stock as of a specified date means, unless otherwise determined by the Committee, the closing price of a share of Common Stock on the New York Stock Exchange or such other securities exchange as may at the applicable time be the principal market for the Common Stock (the “Applicable Exchange”) on the trading date, or if shares of Common Stock were not traded on the Applicable Exchange on the trading date, then on the immediately preceding date on which shares of Common Stock were traded, all as reported by such source as the Committee may select. If the Common Stock is not listed on a national securities exchange, Fair Market Value shall be determined by the Committee in its good faith discretion.
|
1.8
|
Participant
means a Director, and any former Director entitled to payment of a benefit from the Program.
|
1.9
|
Restricted Stock
means shares of Common Stock bearing restrictions or conditions and issued to a Director pursuant to the Stock Incentive Plan.
|
1.10
|
Restricted Stock Units
means awards denominated in shares of Common Stock that will be settled in shares of Common Stock equal to the number of shares of Common Stock underlying such awards.
|
1.11
|
Year of Service
means the approximately 12 month period beginning on the date of an annual stockholders’ meeting of the Company and ending on the day before the Company’s annual stockholders’ meeting of the next following year, during which an individual serves as a Director.
|
2.1
|
Annual Compensation
. Subject to the applicable terms and conditions of the Stock Incentive Plan, including any Director compensation cap or other applicable limit specified in Article III thereof, a Director will receive the compensation described in Sections 2.2 through 2.5 below, as determined by the Committee in its discretion, based on review of competitive data.
|
2.2
|
Annual Retainer
. For each Year of Service, a Director will receive an annual retainer as determined by the Committee, which may include an additional retainer amount for committee chairs and members who serve on any committee of the Board. Directors who are newly elected to the Board after the annual stockholders’ meeting of the Company will receive a prorated annual retainer for the first Year of Service. A Director may elect to receive the retainer in cash, in Common Stock, or as a Deferred Stock Award, as described in ARTICLE III. If no election is made, the retainer will be paid in cash. If paid in cash or Common Stock, payment of 25% of the annual amount will be made on June 30, September 30, December 31, and March 31, provided the individual is serving as a Director on such dates. If the individual is not serving as a Director on any such date, the remaining amount of the retainer shall be forfeited.
|
2.3
|
Meeting Fees
. The Committee may determine that Directors will receive a meeting fee for each meeting attended, and may determine that committee chairs will determine whether a particular special meeting is subject to a meeting fee. Meeting fees, if any, will be paid quarterly at the same time as the retainer, for meetings attended in the immediately preceding quarter, and may be paid in cash, Common Stock or as a Deferred Stock Award as provided in Article III.
|
2.4
|
Annual Equity Grant
. At each annual stockholders’ meeting of the Company, each individual then serving as a Director or newly elected as a Director shall receive an equity grant under the Stock Incentive Plan, determined by the Committee, consisting of Restricted Stock, Restricted Stock Units and/or nonqualified stock options for Common Stock. If stock options are granted, the exercise price for each optioned share will be the Fair Market Value of one share of Common Stock on the grant date. The stock options will be fully vested and exercisable on the first anniversary of the grant, and will have a term of ten years from the date of grant. If Restricted Stock or Restricted Stock Units are awarded, the Committee may determine that the shares or units will be forfeited if the Director ceases
|
2.5
|
Mid-Year Equity Grants
. The Committee in its discretion may grant stock options and/or awards of Restricted Stock or Restricted Stock Units, as described in Section 2.4, to Directors who are newly elected to the Board after the annual stockholders’ meeting. If Restricted Stock or Restricted Stock Units are awarded, the Committee may determine that the shares or units will be forfeited if the Director ceases to serve as a director during a restriction period determined by the Committee. If a mid-year equity grant is made in the form of Restricted Stock Units, a Director may elect to defer receipt of the Common Stock payable in respect of vested Restricted Stock Units as a Deferred Stock Grant as provided in ARTICLE IV.
|
3.1
|
Election to Defer
. For each calendar year, a Director may elect to defer receipt of pay for services relating to the retainer and meeting fees, if any, to be received in that calendar year, and receive such amounts instead as a Deferred Stock Award. The election must be made prior to the January 1 of the calendar year in which the services relating to the retainer or meeting fees will be rendered by a Director or such later date as is permitted by guidance issued under Section 409A of the Internal Revenue Code (the “Code”). The election to defer shall be irrevocable commencing on December 31 of the calendar year prior to the calendar year that such election is in effect. Notwithstanding the foregoing, a newly-elected Director may make an election within 30 days after the date of his or her election to the Board, which election shall become irrevocable as of the thirtieth (30th) day following the Director's election to the Board (or such earlier date as specified on the deferral election form) and shall apply only to the unvested retainer and meeting fees for services to be performed after the deferral election becomes irrevocable. A new election to defer may be made for each subsequent calendar year, provided the deferral election is made prior to the January 1 of the calendar year and will be irrevocable for such calendar year. If a new election is not made, or a prior election is not revoked for the immediately succeeding calendar year, the most recent election to defer will remain in effect and be irrevocable for the following calendar year.
|
3.2
|
Form of Election
. The election to defer must be made in writing on a form provided by the Company.
|
3.3
|
Deferral Periods
. A Director may elect to receive the Deferred Stock Award at one of the following times:
|
(a)
|
on the date of termination as a Director consistent with the definition of separation of service as defined pursuant to Section 409A of the Code; provided, however, that if a Director is a "specified employee" (as determined under the Company's policy for determining specified employees) on the date of separation from service, such Deferred Stock Award shall be paid on the first business day after the date that is six months following the Director's separation from service within the meaning of Section 409A of the Code, or
|
(b)
|
in one to five equal annual installments, payable on April 30 of each year, beginning on the April 30 next following the date of termination as a Director consistent with the definition of separation of service as defined pursuant to Section 409A of the Code; provided, however,
|
3.4
|
Deferred Stock Awards
. If a Director elects to receive the annual retainer and meeting fees, if any, as a Deferred Stock Award, the Company will maintain a deferred stock account credited, as of the date a payment of the retainer or meeting fee would have otherwise been paid, with a number of stock units equal to the shares of Common Stock (rounded up to the nearest whole share) that could have been purchased with the amount deferred as of such date at the Fair Market Value of the Common Stock on such date. As of the date any dividend is paid to stockholders of Common Stock, the Director’s deferred stock account shall also be credited with an additional number of stock units equal to the number of shares of Common Stock (including fractions of a share) that could have been purchased at the Fair Market Value on such date with the dividend paid on the number of shares of Common Stock equivalent to the number of share units credited to the Director’s deferred stock account. In case of dividends paid in property, the dividend shall be deemed to be the fair market value of the property at the same time of distribution of the dividend, as determined by the Committee.
|
3.5
|
Distribution of Deferred Stock Award
. Payment of a Director’s Deferred Stock Award shall be made at the times elected by the Director at the time of his or her deferral election. Distribution shall be made in shares of Common Stock. The total number of shares of Common Stock that a Participant shall receive shall equal the number of stock units credited to the Participant’s deferred stock account as of the date of termination of the Participant’s service as a Director;
provided
that, in the case of a Participant who elects to receive the distribution in installments, such number of stock units shall be increased in accordance with Section 3.4 to reflect any dividends paid to stockholders of Common Stock during the period commencing on the date of termination of the Participant’s service as a Director and ending on the date that distribution of the Deferred Stock Award is complete. The shares of Common Stock distributed pursuant to this Section 3.5 shall be paid from, and shall count against the share reserve of, the Stock Incentive Plan.
|
4.1
|
Election to Defer
. If and to the extent Restricted Stock Units are granted to a Director in connection with the annual or mid-year equity grants described in Sections 2.4 and 2.5, respectively, a Director may elect to defer receipt of the Common Stock otherwise payable to the Director as such Restricted Stock Units vest. For the annual equity grant, the election to defer must be made prior to January 1 of the calendar year in which the grant is made. The election to defer shall be irrevocable commencing on December 31 of the calendar year prior to the calendar year that such election is in effect. To the extent permitted by the Committee, for the mid-year equity grant for newly-elected Directors, such Directors may make the deferral election within 30 days after the date of his or her election to the Board, which election shall become irrevocable as of the thirtieth (30th) day following the Director's election to the Board (or such earlier date as specified on the deferral election form) and shall apply only to the mid-year equity grant for services to be performed after the deferral election becomes irrevocable.
|
4.2
|
Form of Election
. The election to defer must be made in writing or electronically on a form provided by the Company.
|
4.3
|
Deferral Periods
. A Director may elect to receive the Common Stock at one of the times specified in Section 3.3 above.
|
4.4
|
Deferred Stock Accounts
. If a Director elects to defer receipt of the Common Stock otherwise payable in respect of Restricted Stock Units awarded as annual or mid-year equity grants, the Company will maintain a deferred stock account credited, as of the date of election to the Board, with a number of stock units equal to the shares of Common Stock the Director was entitled to receive as such Restricted Stock Units vested. As of the date any dividend is paid to stockholders of Common Stock, the Director’s deferred stock account shall also be credited with an additional number of stock units equal to the number of shares of Common Stock (including fractions of a share) that could have been purchased at the Fair Market Value on such date with the dividend paid on the number of shares of Common Stock equivalent to the number of share units credited to the Director’s deferred stock account. In case of dividends paid in property, the dividend shall be deemed to be the fair market value of the property at the same time of distribution of the dividend, as determined by the Committee. Any additional stock units credited pursuant to this Section shall be subject to all of the terms, conditions and restrictions, including vesting requirements, that apply to the underlying Restricted Stock Units that generated such additional stock units.
|
4.5
|
Distribution of Deferred Stock Grant
. Payment of a Director’s Deferred Stock Grant shall be made at the times elected by the Director at the time of deferral, in shares of Common Stock. The Participant shall receive the number of whole shares of Common Stock to which the amount of the distribution is equivalent. The shares of Common Stock shall be paid from, and shall count against the share reserve of, the Stock Incentive Plan.
|
5.1
|
Distribution Upon Death
. In the event of the death of a Participant, whether before or after termination of service as a Director, any Deferred Stock Award or Deferred Stock Grant to which he or she was entitled shall be distributed in a lump sum to the Participant’s designated beneficiary, or if no beneficiary is designated, to the Participant’s estate. Distribution shall be made in shares of Common Stock. The total number of shares of Common Stock that shall be distributed shall be the number of stock units credited to the Participant’s deferred stock account as of the date of the Participant’s death. Distribution of a Participant’s stock options will be according to the terms of the stock option agreements.
|
5.2
|
Designation of Beneficiary
. A Participant may designate an individual or entity as his or her beneficiary to receive payment of any Deferred Stock Award, Deferred Stock Grant, or retainer or
|
6.1
|
Withholding Taxes
. The Company shall deduct from all distributions under the Program any taxes required to be withheld by federal, state, local or foreign governments at the statutory withholding rate determined applicable in the discretion of the Company (up to the maximum required tax withholding rate) that will not result in an adverse accounting consequence or cost. If distributions are made in shares of Common Stock, the Company shall have the right to retain the value of sufficient shares equal to the amount of the tax required to be withheld with respect to such distributions. In lieu of withholding the value of shares, the Company may require a recipient of a distribution in Common Stock to reimburse the Company for any such taxes required to be withheld upon such terms and conditions as the Company may prescribe.
|
6.2
|
Unfunded Nature of Program
. This Program shall be unfunded. The funds used for payment of benefits hereunder shall, until such actual payment, continue to be part of the general funds of the Company, and no person other than the Company shall, by virtue of this Program, have any interest in any such funds. Nothing contained herein shall be deemed to create a trust of any kind or create any fiduciary relationship. To the extent that any person acquires a right to receive payments from the Company under this Program, such right shall be no greater than the right of any unsecured general creditor of the Company.
|
6.3
|
Non-alienation of Benefits
. Except as otherwise provided by the Committee, no benefit under this Program shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, including assignment pursuant to a domestic relations order, and any attempt to do so shall be void. No such benefit shall, prior to receipt thereof by the Participant, be in any manner liable for or subject to the debts, contracts, liabilities, or torts of the Participant.
|
6.4
|
Acceleration Upon a Change in Control
. As provided in Article X of the Stock Incentive Plan and applicable provisions of a Director’s individual award agreement or statement under this Program, the vesting of nonqualified stock options, Restricted Stock and Restricted Stock Units, and the payment of Deferred Stock Awards and Deferred Stock Grants, may accelerate upon the occurrence of a Change in Control. For purposes of the Program, Change in Control shall be applied to the extent necessary to comply with Section 409A(a)(2)(a)(v) of the Code, and in Treasury Regulations issued pursuant to Section 409A(e) of the Code, rather than as defined in Article X of the Stock Incentive Plan.
|
6.5
|
Amendment or Termination of the Program
. The Committee at any time may amend or terminate the Program, provided that no such action shall adversely affect the right of any Participant or beneficiary to a benefit to which he or she has become entitled pursuant to the Program, and no amendment or termination of the Program can alter the Participant’s deferrals of compensation in
|
6.6
|
Interpretation of the Program
. The Program is intended to comply with the provisions of Section 409A of the Code, and the Treasury Regulations issued pursuant thereto; and the provisions of the Program will at all times be administered consistent therewith. Any provision of the Program that is inconsistent with, or in violation of, Section 409A of the Code, shall be void and of no effect. The Chief Human Resources Officer and the General Counsel of the Company are delegated the responsibility to interpret and administer the Program consistent with Section 409A of the Code and to take necessary action pursuant to this Section 6.6 and Section 6.5 to assure that the Program is administered consistent with such provisio
|
Date:
|
October 27, 2017
|
|
/s/ William Nuti
|
|
|
|
William Nuti
|
|
|
|
Chairman of the Board and Chief Executive Officer
|
Date:
|
October 27, 2017
|
|
/s/ Robert Fishman
|
|
|
|
Robert Fishman
|
|
|
|
Executive Vice President and Chief Financial Officer
|
(1)
|
the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
Dated:
|
October 27, 2017
|
|
/s/ William Nuti
|
|
|
|
William Nuti
|
|
|
|
Chairman of the Board and Chief Executive Officer
|
Dated:
|
October 27, 2017
|
|
/s/ Robert Fishman
|
|
|
|
Robert Fishman
|
|
|
|
Executive Vice President and Chief Financial Officer
|