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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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||||||||||||
2018
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2017
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2018
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2017
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|||||||||
Product revenue
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$
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534
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$
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657
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$
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1,585
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$
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1,829
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Service revenue
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1,016
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1,006
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3,019
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2,905
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||||
Total revenue
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1,550
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1,663
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4,604
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4,734
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||||
Cost of products
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473
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528
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1,344
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1,430
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||||
Cost of services
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667
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663
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2,027
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1,959
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||||
Selling, general and administrative expenses
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226
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|
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220
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|
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732
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|
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678
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||||
Research and development expenses
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59
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53
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|
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190
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|
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178
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|
||||
Asset impairment charges
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—
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—
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183
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—
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||||
Total operating expenses
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1,425
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1,464
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4,476
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4,245
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||||
Income from operations
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125
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|
|
199
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|
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128
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|
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489
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||||
Interest expense
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(43
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)
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(42
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)
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(125
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)
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(122
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)
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||||
Other (expense), net
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(10
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)
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(7
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)
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(24
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)
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(16
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)
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||||
Income (loss) from continuing operations before income taxes
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72
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150
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(21
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)
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351
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Income tax (benefit) expense
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(15
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)
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31
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(20
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)
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78
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||||
Income (loss) from continuing operations
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87
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|
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119
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(1
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)
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273
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||||
(Loss) income from discontinued operations, net of tax
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(1
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)
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—
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(38
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)
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5
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Net income (loss)
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86
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|
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119
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(39
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)
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278
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|
||||
Net income attributable to noncontrolling interests
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2
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1
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2
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1
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||||
Net (loss) income attributable to NCR
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$
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84
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$
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118
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$
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(41
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)
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$
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277
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Amounts attributable to NCR common stockholders:
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||||||||
Income (loss) from continuing operations
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$
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85
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$
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118
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$
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(3
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)
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$
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272
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Series A convertible preferred stock dividends
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(12
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)
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(12)
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(36
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)
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(36
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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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—
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(4
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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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—
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(58
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)
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||||
Income (loss) from continuing operations attributable to NCR common stockholders
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73
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106
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(39
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)
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174
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||||
(Loss) income from discontinued operations, net of tax
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(1
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)
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—
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(38
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)
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5
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Net income (loss) attributable to NCR common stockholders
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$
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72
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$
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106
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$
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(77
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)
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$
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179
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Income (loss) per share attributable to NCR common stockholders:
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||||||||
Income (loss) per common share from continuing operations
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Basic
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$
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0.62
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$
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0.87
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$
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(0.33
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)
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$
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1.43
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Diluted
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$
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0.57
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$
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0.77
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$
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(0.33
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)
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$
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1.37
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Net income (loss) per common share
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Basic
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$
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0.61
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$
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0.87
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$
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(0.65
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)
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$
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1.47
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Diluted
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$
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0.56
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$
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0.77
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$
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(0.65
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)
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$
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1.41
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Weighted average common shares outstanding
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Basic
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118.0
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121.5
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118.4
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121.9
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Diluted
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149.3
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153.1
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118.4
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126.9
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In millions
|
Three months ended September 30
|
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Nine months ended September 30
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||||||||||||
2018
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2017
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2018
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2017
|
|||||||||
Net income (loss)
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$
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86
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|
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$
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119
|
|
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$
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(39
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)
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$
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278
|
|
Other comprehensive (loss) income:
|
|
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||||||||
Currency translation adjustments
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|
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||||||||
Currency translation (losses) gains
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(13
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)
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6
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|
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(43
|
)
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35
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|
||||
Derivatives
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|
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||||||||
Unrealized gains (losses) on derivatives
|
1
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(5
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)
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5
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(15
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)
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||||
(Losses) gains on derivatives recognized during the period
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(2
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)
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|
1
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(2
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)
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(2
|
)
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||||
Less income tax (benefit) provision
|
(1
|
)
|
|
—
|
|
|
(1
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)
|
|
3
|
|
||||
Employee benefit plans
|
|
|
|
|
|
|
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||||||||
Amortization of prior service benefit
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(2
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)
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(1
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)
|
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(7
|
)
|
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(6
|
)
|
||||
Amortization of actuarial loss (benefit)
|
—
|
|
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(1
|
)
|
|
1
|
|
|
(2
|
)
|
||||
Less income tax provision
|
—
|
|
|
—
|
|
|
1
|
|
|
2
|
|
||||
Other comprehensive (loss) income
|
(17
|
)
|
|
—
|
|
|
(46
|
)
|
|
15
|
|
||||
Total comprehensive income (loss)
|
69
|
|
|
119
|
|
|
(85
|
)
|
|
293
|
|
||||
Less comprehensive income (loss) attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
||||||||
Net income
|
2
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Currency translation gains (losses)
|
1
|
|
|
(2
|
)
|
|
(2
|
)
|
|
(2
|
)
|
||||
Amounts attributable to noncontrolling interests
|
3
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Comprehensive income (loss) attributable to NCR
|
$
|
66
|
|
|
$
|
120
|
|
|
$
|
(85
|
)
|
|
294
|
|
In millions, except per share amounts
|
September 30, 2018
|
|
December 31, 2017
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
334
|
|
|
$
|
537
|
|
Accounts receivable, net
|
1,309
|
|
|
1,270
|
|
||
Inventories
|
916
|
|
|
780
|
|
||
Other current assets
|
296
|
|
|
243
|
|
||
Total current assets
|
2,855
|
|
|
2,830
|
|
||
Property, plant and equipment, net
|
348
|
|
|
341
|
|
||
Goodwill
|
2,589
|
|
|
2,741
|
|
||
Intangibles, net
|
501
|
|
|
578
|
|
||
Prepaid pension cost
|
133
|
|
|
118
|
|
||
Deferred income taxes
|
488
|
|
|
460
|
|
||
Other assets
|
591
|
|
|
586
|
|
||
Total assets
|
$
|
7,505
|
|
|
$
|
7,654
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Short-term borrowings
|
$
|
246
|
|
|
$
|
52
|
|
Accounts payable
|
804
|
|
|
762
|
|
||
Payroll and benefits liabilities
|
225
|
|
|
219
|
|
||
Contract liabilities
|
427
|
|
|
458
|
|
||
Other current liabilities
|
302
|
|
|
398
|
|
||
Total current liabilities
|
2,004
|
|
|
1,889
|
|
||
Long-term debt
|
2,881
|
|
|
2,939
|
|
||
Pension and indemnity plan liabilities
|
803
|
|
|
798
|
|
||
Postretirement and postemployment benefits liabilities
|
130
|
|
|
133
|
|
||
Income tax accruals
|
118
|
|
|
148
|
|
||
Other liabilities
|
261
|
|
|
200
|
|
||
Total liabilities
|
6,197
|
|
|
6,107
|
|
||
Commitments and Contingencies (Note 9)
|
|
|
|
||||
Redeemable noncontrolling interest
|
14
|
|
|
15
|
|
||
Series A convertible preferred stock: par value $0.01 per share, 3.0 shares authorized, 0.9 and 0.8 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively; redemption amount and liquidation preference of $859 and $825 as of September 30, 2018 and December 31, 2017, respectively
|
846
|
|
|
810
|
|||
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, 2018 and December 31, 2017, respectively
|
—
|
|
|
—
|
|
||
Common stock: par value $0.01 per share, 500.0 shares authorized, 118.0 and 122.0 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively
|
1
|
|
|
1
|
|
||
Paid-in capital
|
19
|
|
|
60
|
|
||
Retained earnings
|
666
|
|
|
857
|
|
||
Accumulated other comprehensive loss
|
(242
|
)
|
|
(199)
|
|
||
Total NCR stockholders’ equity
|
444
|
|
|
719
|
|
||
Noncontrolling interests in subsidiaries
|
4
|
|
|
3
|
|
||
Total stockholders’ equity
|
448
|
|
|
722
|
|
||
Total liabilities and stockholders’ equity
|
$
|
7,505
|
|
|
$
|
7,654
|
|
In millions
|
Nine months ended September 30
|
||||||
2018
|
|
2017
|
|||||
Operating activities
|
|
|
|
||||
Net (loss) income
|
$
|
(39
|
)
|
|
$
|
278
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
||||
Income (loss) from discontinued operations
|
38
|
|
|
(5
|
)
|
||
Depreciation and amortization
|
249
|
|
|
263
|
|
||
Stock-based compensation expense
|
55
|
|
|
60
|
|
||
Deferred income taxes
|
(15
|
)
|
|
19
|
|
||
Gain on sale of property, plant and equipment
|
(2
|
)
|
|
(2
|
)
|
||
Impairment of goodwill and long-lived assets
|
193
|
|
|
1
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Receivables
|
(102
|
)
|
|
(107
|
)
|
||
Inventories
|
(182
|
)
|
|
(120
|
)
|
||
Current payables and accrued expenses
|
31
|
|
|
(132
|
)
|
||
Contract liabilities
|
(36
|
)
|
|
20
|
|
||
Employee benefit plans
|
(18
|
)
|
|
(13
|
)
|
||
Other assets and liabilities
|
(9
|
)
|
|
8
|
|
||
Net cash provided by operating activities
|
163
|
|
|
270
|
|
||
Investing activities
|
|
|
|
||||
Expenditures for property, plant and equipment
|
(104
|
)
|
|
(81
|
)
|
||
Proceeds from sale of property, plant and equipment
|
3
|
|
|
6
|
|
||
Additions to capitalized software
|
(130
|
)
|
|
(125
|
)
|
||
Other investing activities, net
|
(4
|
)
|
|
—
|
|
||
Net cash used in investing activities
|
(235
|
)
|
|
(200
|
)
|
||
Financing activities
|
|
|
|
||||
Short term borrowings, net
|
7
|
|
|
10
|
|
||
Payments on term credit facilities
|
(51
|
)
|
|
(37
|
)
|
||
Payments on revolving credit facilities
|
(1,433
|
)
|
|
(1,110
|
)
|
||
Borrowings on revolving credit facilities
|
1,608
|
|
|
1,335
|
|
||
Repurchases of Company common stock
|
(210
|
)
|
|
(350
|
)
|
||
Proceeds from employee stock plans
|
16
|
|
|
11
|
|
||
Tax withholding payments on behalf of employees
|
(30
|
)
|
|
(24
|
)
|
||
Other financing activities
|
—
|
|
|
(1
|
)
|
||
Net cash used in financing activities
|
(93
|
)
|
|
(166
|
)
|
||
Cash flows from discontinued operations
|
|
|
|
||||
Net cash used in operating activities
|
(23
|
)
|
|
(14
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(12
|
)
|
|
16
|
|
||
Decrease in cash, cash equivalents, and restricted cash
|
(200
|
)
|
|
(94
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
543
|
|
|
507
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
343
|
|
|
$
|
413
|
|
in millions
|
September 30
|
||||||
2018
|
|
2017
|
|||||
Reconciliation of cash, cash equivalents and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows
|
|
|
|
||||
Cash and cash equivalents
|
$
|
334
|
|
|
$
|
405
|
|
Restricted cash included in Other assets
|
9
|
|
|
8
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
343
|
|
|
$
|
413
|
|
|
•
|
Identification of the contract(s) with a customer
|
•
|
Identification of the performance obligation(s) in the contract
|
•
|
Determination of the transaction price
|
•
|
Allocation of the transaction price to the performance obligations in the contract
|
•
|
Recognition of revenue when, or as, we satisfy performance obligations
|
In millions
|
Location in the Condensed Consolidated Balance Sheet
|
|
September 30, 2018
|
|
January 1, 2018
|
||||
Current portion of contract assets
|
Other current assets
|
|
$
|
18
|
|
|
$
|
28
|
|
Current portion of contract liabilities
|
Contract liabilities
|
|
$
|
427
|
|
|
$
|
458
|
|
Non-current portion of contract liabilities
|
Other liabilities
|
|
$
|
95
|
|
|
$
|
95
|
|
|
Three months ended September 30, 2018
|
||||||||||
In millions, except per share amounts
|
Under Current Guidance
|
|
Adjustments
|
|
Under Previous Guidance
|
||||||
Condensed Consolidated Statement of Operations
|
|
|
|
|
|
||||||
Product revenue
|
$
|
534
|
|
|
$
|
(20
|
)
|
|
$
|
514
|
|
Cost of products
|
473
|
|
|
(12
|
)
|
|
461
|
|
|||
Income from operations
|
125
|
|
|
(8
|
)
|
|
117
|
|
|||
Income from continuing operations before income taxes
|
72
|
|
|
(8
|
)
|
|
64
|
|
|||
Income tax benefit
|
(15
|
)
|
|
(3
|
)
|
|
(18
|
)
|
|||
Income from continuing operations
|
87
|
|
|
(5
|
)
|
|
82
|
|
|||
Net income
|
86
|
|
|
(5
|
)
|
|
81
|
|
|||
Net income attributable to NCR
|
$
|
84
|
|
|
$
|
(5
|
)
|
|
$
|
79
|
|
Loss per common share from continuing operations
|
|
|
|
|
|
||||||
Basic
|
$
|
0.62
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.58
|
|
Diluted
|
$
|
0.57
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.54
|
|
Net loss per common share
|
|
|
|
|
|
||||||
Basic
|
$
|
0.61
|
|
|
$
|
(0.04
|
)
|
|
$
|
0.57
|
|
Diluted
|
$
|
0.56
|
|
|
$
|
(0.03
|
)
|
|
$
|
0.53
|
|
|
Nine months ended September 30, 2018
|
||||||||||
In millions, except per share amounts
|
Under Current Guidance
|
|
Adjustments
|
|
Under Previous Guidance
|
||||||
Condensed Consolidated Statement of Operations
|
|
|
|
|
|
||||||
Product revenue
|
$
|
1,585
|
|
|
$
|
(30
|
)
|
|
$
|
1,555
|
|
Cost of products
|
1,344
|
|
|
(14
|
)
|
|
1,330
|
|
|||
Income (loss) from operations
|
128
|
|
|
(16
|
)
|
|
112
|
|
|||
Loss from continuing operations before income taxes
|
(21
|
)
|
|
(16
|
)
|
|
(37
|
)
|
|||
Income tax benefit
|
(20
|
)
|
|
(5
|
)
|
|
(25
|
)
|
|||
Loss from continuing operations
|
(1
|
)
|
|
(11
|
)
|
|
(12
|
)
|
|||
Net loss
|
(39
|
)
|
|
(11
|
)
|
|
(50
|
)
|
|||
Net loss attributable to NCR
|
$
|
(41
|
)
|
|
$
|
(11
|
)
|
|
$
|
(52
|
)
|
Loss per common share from continuing operations
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.33
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.42
|
)
|
Diluted
|
$
|
(0.33
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.42
|
)
|
Net loss per common share
|
|
|
|
|
|
||||||
Basic
|
$
|
(0.65
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.74
|
)
|
Diluted
|
$
|
(0.65
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.74
|
)
|
In millions
|
Under Current Guidance
|
|
Adjustments
|
|
Under Previous Guidance
|
||||||
Condensed Consolidated Balance Sheet
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Accounts receivable, net
|
$
|
1,309
|
|
|
$
|
13
|
|
|
$
|
1,322
|
|
Other current assets
|
296
|
|
|
(7
|
)
|
|
289
|
|
|||
Total current assets
|
2,855
|
|
|
6
|
|
|
2,861
|
|
|||
Deferred income taxes
|
488
|
|
|
6
|
|
|
494
|
|
|||
Other assets
|
591
|
|
|
(27
|
)
|
|
564
|
|
|||
Total Assets
|
$
|
7,505
|
|
|
$
|
(15
|
)
|
|
$
|
7,490
|
|
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Contract liabilities
|
$
|
427
|
|
|
$
|
1
|
|
|
$
|
428
|
|
Other current liabilities
|
302
|
|
|
(2
|
)
|
|
300
|
|
|||
Total current liabilities
|
2,004
|
|
|
(1
|
)
|
|
2,003
|
|
|||
Total liabilities
|
6,197
|
|
|
(1
|
)
|
|
6,196
|
|
|||
Retained earnings
|
666
|
|
|
(14
|
)
|
|
652
|
|
|||
Total NCR stockholders’ equity
|
444
|
|
|
(14
|
)
|
|
430
|
|
|||
Total stockholders’ equity
|
448
|
|
|
(14
|
)
|
|
434
|
|
|||
Total liabilities and stockholders’ equity
|
$
|
7,505
|
|
|
$
|
(15
|
)
|
|
$
|
7,490
|
|
|
December 31, 2017
|
|
|
|
|
|
|
|
September 30, 2018
|
||||||||||||||||||||||||||
In millions
|
Goodwill
|
|
Accumulated Impairment Losses
|
|
Total
|
|
Additions
|
|
Impairment
|
|
Other
|
|
Goodwill
|
|
Accumulated Impairment Losses
|
|
Total
|
||||||||||||||||||
Software
|
$
|
1,944
|
|
|
$
|
(7
|
)
|
|
$
|
1,937
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6
|
)
|
|
$
|
1,938
|
|
|
$
|
(7
|
)
|
|
$
|
1,931
|
|
Services
|
658
|
|
|
—
|
|
|
658
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
658
|
|
|
—
|
|
|
658
|
|
|||||||||
Hardware
|
162
|
|
|
(16
|
)
|
|
146
|
|
|
—
|
|
|
(146
|
)
|
|
—
|
|
|
162
|
|
|
(162
|
)
|
|
—
|
|
|||||||||
Total goodwill
|
$
|
2,764
|
|
|
$
|
(23
|
)
|
|
$
|
2,741
|
|
|
$
|
—
|
|
|
$
|
(146
|
)
|
|
$
|
(6
|
)
|
|
$
|
2,758
|
|
|
$
|
(169
|
)
|
|
$
|
2,589
|
|
|
Amortization
Period
(in Years)
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
In millions
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|||||||||
Identifiable intangible assets
|
|
|
|
|
|
|
|
|
|
||||||||
Reseller & customer relationships
|
1 - 20
|
|
$
|
659
|
|
|
$
|
(205
|
)
|
|
$
|
659
|
|
|
$
|
(170
|
)
|
Intellectual property
|
2 - 8
|
|
397
|
|
|
(369
|
)
|
|
410
|
|
|
(351
|
)
|
||||
Customer contracts
|
8
|
|
89
|
|
|
(85
|
)
|
|
89
|
|
|
(81
|
)
|
||||
Tradenames
|
2 - 10
|
|
73
|
|
|
(58
|
)
|
|
73
|
|
|
(51
|
)
|
||||
Total identifiable intangible assets
|
|
|
$
|
1,218
|
|
|
$
|
(717
|
)
|
|
$
|
1,231
|
|
|
$
|
(653
|
)
|
In millions
|
Three months ended September 30, 2018
|
|
Nine months ended September 30, 2018
|
|
Remainder of 2018 (estimated)
|
||||||
Amortization expense
|
$
|
20
|
|
|
$
|
64
|
|
|
$
|
21
|
|
|
|
For the years ended December 31 (estimated)
|
||||||||||||||||||
In millions
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
||||||||||
Amortization expense
|
|
$
|
76
|
|
|
$
|
58
|
|
|
$
|
50
|
|
|
$
|
45
|
|
|
$
|
43
|
|
|
September 30, 2018
|
|
December 31, 2017
|
|||||||||
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)
|
$
|
62
|
|
|
3.92%
|
|
$
|
51
|
|
|
3.21%
|
|
Trade Receivables Securitization Facility
|
175
|
|
|
3.11%
|
|
—
|
|
|
|
|||
Other
(2)
|
9
|
|
|
31.33%
|
|
1
|
|
|
3.71%
|
|||
|
Total short-term borrowings
|
$
|
246
|
|
|
|
|
$
|
52
|
|
|
|
Long-Term Debt
|
|
|
|
|
|
|
|
|||||
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
|||||
|
Term loan facility
(1)
|
$
|
698
|
|
|
3.92%
|
|
$
|
759
|
|
|
3.21%
|
|
Revolving credit facility
|
—
|
|
|
|
|
—
|
|
|
|
||
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
|
(19
|
)
|
|
|
|
(23
|
)
|
|
|
|||
Other
(2)
|
2
|
|
|
0.96%
|
|
3
|
|
|
1.62%
|
|||
|
Total long-term debt
|
$
|
2,881
|
|
|
|
|
$
|
2,939
|
|
|
|
(1)
|
Interest rates are weighted-average interest rates as of
September 30, 2018
and
December 31, 2017
.
|
(2)
|
Interest rates are weighted-average interest rates as of
September 30, 2018
and
December 31, 2017
primarily related to various international credit facilities.
|
•
|
a consolidated leverage ratio on the last day of any fiscal quarter, not to exceed (i) 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 (ii) 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
|
||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
Restricted stock units
|
$
|
13
|
|
|
$
|
18
|
|
|
$
|
50
|
|
|
$
|
57
|
|
Stock options
|
1
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Employee stock purchase plan
|
1
|
|
|
1
|
|
|
3
|
|
|
3
|
|
||||
Stock-based compensation expense
|
15
|
|
|
19
|
|
|
55
|
|
|
60
|
|
||||
Tax benefit
|
—
|
|
|
(9)
|
|
|
(7
|
)
|
|
(21
|
)
|
||||
Total stock-based compensation expense (net of tax)
|
$
|
15
|
|
|
$
|
10
|
|
|
$
|
48
|
|
|
$
|
39
|
|
|
Nine months ended September 30, 2018
|
||
Dividend yield
|
$
|
—
|
|
Risk-free interest rate
|
2.50
|
%
|
|
Expected volatility
|
34.88
|
%
|
|
Expected holding period (years)
|
3.8
|
|
In millions
|
U.S. Pension Benefits
|
|
International Pension Benefits
|
|
Total Pension Benefits
|
||||||||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||||||
Net service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
Interest cost
|
16
|
|
|
18
|
|
|
4
|
|
|
4
|
|
|
20
|
|
|
22
|
|
||||||
Expected return on plan assets
|
(10
|
)
|
|
(14
|
)
|
|
(9
|
)
|
|
(9
|
)
|
|
(19
|
)
|
|
(23
|
)
|
||||||
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||||
Net periodic benefit cost (income)
|
$
|
6
|
|
|
$
|
4
|
|
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
|
$
|
4
|
|
|
$
|
1
|
|
In millions
|
U.S. Pension Benefits
|
|
International Pension Benefits
|
|
Total Pension Benefits
|
||||||||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||||||
Net service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
5
|
|
Interest cost
|
46
|
|
|
54
|
|
|
15
|
|
|
14
|
|
|
61
|
|
|
68
|
|
||||||
Expected return on plan assets
|
(32
|
)
|
|
(43
|
)
|
|
(25
|
)
|
|
(26
|
)
|
|
(57
|
)
|
|
(69
|
)
|
||||||
Amortization of prior service cost
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||||
Net periodic benefit cost (income)
|
$
|
14
|
|
|
$
|
11
|
|
|
$
|
(3
|
)
|
|
$
|
(6
|
)
|
|
$
|
11
|
|
|
$
|
5
|
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
Interest cost
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Amortization of:
|
|
|
|
|
|
|
|
||||||||
Prior service benefit
|
(1
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(4
|
)
|
||||
Actuarial loss
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Net postretirement benefit
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
(2
|
)
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
In millions
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net service cost
|
$
|
4
|
|
|
$
|
7
|
|
|
$
|
23
|
|
|
$
|
26
|
|
Interest cost
|
—
|
|
|
1
|
|
|
2
|
|
|
2
|
|
||||
Amortization of:
|
|
|
|
|
|
|
|
||||||||
Prior service benefit
|
(2
|
)
|
|
(1
|
)
|
|
(4
|
)
|
|
(3
|
)
|
||||
Actuarial gain
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Net benefit cost
|
$
|
2
|
|
|
$
|
6
|
|
|
$
|
21
|
|
|
$
|
22
|
|
In millions
|
2018
|
|
2017
|
||||
Warranty reserve liability
|
|
|
|
||||
Beginning balance as of January 1
|
$
|
26
|
|
|
$
|
27
|
|
Accruals for warranties issued
|
27
|
|
|
29
|
|
||
Settlements (in cash or in kind)
|
(32
|
)
|
|
(31
|
)
|
||
Ending balance as of September 30
|
$
|
21
|
|
|
$
|
25
|
|
in millions
|
NCR Stockholders' Equity
|
Non-Redeemable Noncontrolling Interests in Subsidiaries
|
Total Stockholders' Equity
|
||||||
Balance at December 31, 2017
|
$
|
719
|
|
$
|
3
|
|
$
|
722
|
|
Adoption of accounting standard updates
|
15
|
|
—
|
|
15
|
|
|||
Balance at January 1, 2018
|
734
|
|
3
|
|
737
|
|
|||
Net loss
|
(41
|
)
|
1
|
|
(40
|
)
|
|||
Other comprehensive loss
|
(44
|
)
|
—
|
|
(44
|
)
|
|||
Repurchases of Company common stock
|
(210
|
)
|
—
|
|
(210
|
)
|
|||
Series A Convertible Preferred Stock dividends
|
(36
|
)
|
—
|
|
(36
|
)
|
|||
Employee stock compensation expense
|
55
|
|
—
|
|
55
|
|
|||
Tax witholdings related to vesting of stock based awards
|
(30
|
)
|
—
|
|
(30
|
)
|
|||
Proceeds from employee stock plans
|
16
|
|
—
|
|
16
|
|
|||
Balance at September 30, 2018
|
$
|
444
|
|
$
|
4
|
|
$
|
448
|
|
In millions, except per share amounts
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
|
$
|
85
|
|
|
$
|
118
|
|
|
$
|
(3
|
)
|
|
$
|
272
|
|
Series A Convertible Preferred Stock dividends
|
|
(12
|
)
|
|
(12
|
)
|
|
(36
|
)
|
|
(36
|
)
|
||||
Deemed dividend on modification of Series A Convertible Preferred Stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||
Deemed dividend on Series A Convertible Preferred Stock redemption
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
||||
Net income (loss) from continuing operations attributable to NCR common stockholders
|
|
73
|
|
|
106
|
|
|
(39
|
)
|
|
174
|
|
||||
(Loss) income from discontinued operations, net of tax
|
|
(1
|
)
|
|
—
|
|
|
(38
|
)
|
|
5
|
|
||||
Net income (loss) attributable to NCR common stockholders
|
|
$
|
72
|
|
|
$
|
106
|
|
|
$
|
(77
|
)
|
|
$
|
179
|
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average number of shares outstanding
|
|
118.0
|
|
|
121.5
|
|
|
118.4
|
|
|
121.9
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
From continuing operations
|
|
$
|
0.62
|
|
|
$
|
0.87
|
|
|
$
|
(0.33
|
)
|
|
$
|
1.43
|
|
From discontinued operations
|
|
(0.01
|
)
|
|
—
|
|
|
(0.32
|
)
|
|
0.04
|
|
||||
Total basic earnings (loss) per share
|
|
$
|
0.61
|
|
|
$
|
0.87
|
|
|
$
|
(0.65
|
)
|
|
$
|
1.47
|
|
In millions, except per share amounts
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
|
$
|
85
|
|
|
$
|
118
|
|
|
$
|
(3
|
)
|
|
$
|
272
|
|
Series A Convertible Preferred Stock dividends
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
|
(36
|
)
|
||||
Deemed dividend on modification of Series A Convertible Preferred Stock
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||
Deemed dividend on Series A Convertible Preferred Stock redemption
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(58
|
)
|
||||
Net income (loss) from continuing operations attributable to NCR common stockholders
|
|
85
|
|
|
118
|
|
|
(39
|
)
|
|
174
|
|
||||
(Loss) income from discontinued operations, net of tax
|
|
(1
|
)
|
|
—
|
|
|
(38
|
)
|
|
5
|
|
||||
Net income (loss) attributable to NCR common stockholders
|
|
$
|
84
|
|
|
$
|
118
|
|
|
$
|
(77
|
)
|
|
$
|
179
|
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average number of shares outstanding
|
|
118.0
|
|
|
121.5
|
|
|
118.4
|
|
|
121.9
|
|
||||
Dilutive effect of as-if converted Series A Convertible Preferred Stock
|
|
28.4
|
|
|
26.9
|
|
|
—
|
|
|
—
|
|
||||
Dilutive effect of restricted stock units
|
|
2.9
|
|
|
4.7
|
|
|
—
|
|
|
5.0
|
|
||||
Denominator
|
|
149.3
|
|
|
153.1
|
|
|
118.4
|
|
|
126.9
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings (loss) per share:
|
|
|
|
|
|
|
|
|
||||||||
From continuing operations
|
|
$
|
0.57
|
|
|
$
|
0.77
|
|
|
$
|
(0.33
|
)
|
|
$
|
1.37
|
|
From discontinued operations
|
|
(0.01
|
)
|
|
—
|
|
|
(0.32
|
)
|
|
0.04
|
|
||||
Total diluted earnings (loss) per share
|
|
$
|
0.56
|
|
|
$
|
0.77
|
|
|
$
|
(0.65
|
)
|
|
$
|
1.41
|
|
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
|
September 30, 2018
|
||||||||||||||||||
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
|
|
$
|
80
|
|
|
$
|
3
|
|
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
Total derivatives designated as hedging instruments
|
|
|
|
|
$
|
3
|
|
|
|
|
|
|
$
|
—
|
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current assets
|
|
$
|
164
|
|
|
$
|
1
|
|
|
Other current liabilities
|
|
$
|
227
|
|
|
$
|
1
|
|
Total derivatives not designated as hedging instruments
|
|
|
|
|
1
|
|
|
|
|
|
|
1
|
|
||||||
Total derivatives
|
|
|
|
|
$
|
4
|
|
|
|
|
|
|
$
|
1
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
|
December 31, 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
|
|
$
|
104
|
|
|
$
|
—
|
|
|
Other current liabilities
|
|
$
|
142
|
|
|
$
|
1
|
|
Total derivatives designated as hedging instruments
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
1
|
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current assets
|
|
$
|
101
|
|
|
$
|
1
|
|
|
Other current liabilities
|
|
$
|
292
|
|
|
$
|
1
|
|
Total derivatives not designated as hedging instruments
|
|
|
|
|
1
|
|
|
|
|
|
|
1
|
|
||||||
Total derivatives
|
|
|
|
|
$
|
1
|
|
|
|
|
|
|
$
|
2
|
|
In millions
|
Amount of Gain (Loss) Recognized in Other Comprehensive Income (OCI) on Derivative
|
|
|
|
Amount of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations
|
||||||||||||
Derivatives in Cash Flow Hedging Relationships
|
For the three months ended September 30, 2018
|
|
For the three months ended September 30, 2017
|
|
Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations
|
|
For the three months ended September 30, 2018
|
|
For the three months ended September 30, 2017
|
||||||||
Foreign exchange contracts
|
$
|
1
|
|
|
$
|
(5
|
)
|
|
Cost of products
|
|
$
|
(2
|
)
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
In millions
|
Amount of Gain (Loss) Recognized in Other Comprehensive Income (OCI) on Derivative
|
|
|
|
Amount of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations
|
||||||||||||
Derivatives in Cash Flow Hedging Relationships
|
For the nine months ended September 30, 2018
|
|
For the nine months ended September 30, 2017
|
|
Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations (Effective Portion)
|
|
For the nine months ended September 30, 2018
|
|
For the nine months ended September 30, 2017
|
||||||||
Foreign exchange contracts
|
$
|
5
|
|
|
$
|
(15
|
)
|
|
Cost of products
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
In millions
|
|
|
Amount of Gain (Loss) Recognized in the
Condensed Consolidated Statement of Operations
|
||||||||||||||
|
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
Derivatives not Designated as Hedging Instruments
|
Location of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Foreign exchange contracts
|
Other (expense), net
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
(4
|
)
|
|
$
|
(3
|
)
|
|
September 30, 2018
|
||||||||||||||
In millions
|
Total
|
|
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)
|
$
|
25
|
|
|
$
|
25
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts
(2)
|
4
|
|
|
—
|
|
|
4
|
|
|
—
|
|
||||
Total
|
$
|
29
|
|
|
$
|
25
|
|
|
$
|
4
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
(3)
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Total
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
December 31, 2017
|
||||||||||||||
In millions
|
Total
|
|
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)
|
$
|
90
|
|
|
$
|
90
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts
(2)
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Total
|
$
|
91
|
|
|
$
|
90
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
(3)
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Total
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
•
|
Software
- Our software offerings include industry-based software platforms, applications and application suites for the financial services, retail, hospitality and small business industries. We also offer a portfolio of 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 mobile and digital banking
|
•
|
Services
- Our global end-to-end services solutions include assessment and preparation, staging, installation, implementation, and maintenance and support for our solutions. We also provide systems management and complete managed services for our product offerings. In addition, we provide installation, maintenance and 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 (POS) terminal, self-checkout (SCO) 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
|
||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
Revenue by segment
|
|
|
|
|
|
|
|
||||||||
Software License
|
$
|
80
|
|
|
$
|
79
|
|
|
$
|
218
|
|
|
$
|
241
|
|
Software Maintenance
|
92
|
|
|
95
|
|
|
276
|
|
|
278
|
|
||||
Cloud
|
158
|
|
|
149
|
|
|
468
|
|
|
436
|
|
||||
Professional Services
|
150
|
|
|
153
|
|
|
448
|
|
|
437
|
|
||||
Software
|
480
|
|
|
476
|
|
|
1,410
|
|
|
1,392
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Services
|
616
|
|
|
609
|
|
|
1,827
|
|
|
1,754
|
|
||||
|
|
|
|
|
|
|
|
||||||||
ATM
|
237
|
|
|
273
|
|
|
612
|
|
|
709
|
|
||||
SCO
|
60
|
|
|
79
|
|
|
236
|
|
|
276
|
|
||||
POS
|
157
|
|
|
221
|
|
|
519
|
|
|
588
|
|
||||
IPS
|
—
|
|
|
5
|
|
|
—
|
|
|
15
|
|
||||
Hardware
|
454
|
|
|
578
|
|
|
1,367
|
|
|
1,588
|
|
||||
Consolidated revenue
|
1,550
|
|
|
1,663
|
|
|
4,604
|
|
|
4,734
|
|
||||
Operating income (loss) by segment
|
|
|
|
|
|
|
|
||||||||
Software
|
127
|
|
|
148
|
|
|
351
|
|
|
399
|
|
||||
Services
|
90
|
|
|
88
|
|
|
229
|
|
|
206
|
|
||||
Hardware
|
(56
|
)
|
|
(2
|
)
|
|
(106
|
)
|
|
(1
|
)
|
||||
Subtotal - segment operating income
|
161
|
|
|
234
|
|
|
474
|
|
|
604
|
|
||||
Other adjustments
(1)
|
36
|
|
|
35
|
|
|
346
|
|
|
115
|
|
||||
Income from operations
|
$
|
125
|
|
|
$
|
199
|
|
|
$
|
128
|
|
|
$
|
489
|
|
(1)
|
The following table presents the other adjustments for NCR:
|
In millions
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
Transformation and restructuring costs
|
$
|
16
|
|
|
$
|
5
|
|
|
$
|
98
|
|
|
$
|
26
|
|
Asset impairment charges
|
—
|
|
|
—
|
|
|
183
|
|
|
—
|
|
||||
Acquisition-related amortization of intangible assets
|
20
|
|
|
29
|
|
|
64
|
|
|
86
|
|
||||
Acquisition-related costs
|
—
|
|
|
1
|
|
|
1
|
|
|
3
|
|
||||
Total other adjustments
|
$
|
36
|
|
|
$
|
35
|
|
|
$
|
346
|
|
|
$
|
115
|
|
In millions
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
Americas
|
$
|
898
|
|
|
$
|
989
|
|
|
$
|
2,662
|
|
|
$
|
2,751
|
|
Europe, Middle East and Africa (EMEA)
|
414
|
|
|
448
|
|
|
1,240
|
|
|
1,324
|
|
||||
Asia Pacific (APJ)
|
238
|
|
|
226
|
|
|
702
|
|
|
659
|
|
||||
Total revenue
|
$
|
1,550
|
|
|
$
|
1,663
|
|
|
$
|
4,604
|
|
|
$
|
4,734
|
|
In millions
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
Product revenue
|
$
|
534
|
|
|
$
|
657
|
|
|
$
|
1,585
|
|
|
$
|
1,829
|
|
Professional services and installation services revenue
|
276
|
|
|
278
|
|
|
803
|
|
|
766
|
|
||||
Recurring revenue, including maintenance and cloud revenue
|
740
|
|
|
728
|
|
|
2,216
|
|
|
2,139
|
|
||||
Total revenue
|
$
|
1,550
|
|
|
$
|
1,663
|
|
|
$
|
4,604
|
|
|
$
|
4,734
|
|
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, 2017
|
$
|
(183
|
)
|
$
|
(15
|
)
|
$
|
(1
|
)
|
$
|
(199
|
)
|
Impact of adoption of new accounting standard
(1)
|
—
|
|
1
|
|
—
|
|
1
|
|
||||
Other comprehensive income (loss) before reclassifications
|
(41
|
)
|
—
|
|
—
|
|
(41
|
)
|
||||
Amounts reclassified from AOCI
|
—
|
|
(5
|
)
|
2
|
|
(3
|
)
|
||||
Net current period other comprehensive (loss) income
|
(41
|
)
|
(5
|
)
|
2
|
|
(44
|
)
|
||||
Balance as of September 30, 2018
|
$
|
(224
|
)
|
$
|
(19
|
)
|
$
|
1
|
|
$
|
(242
|
)
|
|
|
For the three months ended September 30, 2018
|
||||||||||||
|
Employee Benefit Plans
|
|
|
|
||||||||||
In millions
|
Amortization of Actuarial Loss (Gain)
|
Amortization of Prior Service Benefit
|
Effective Cash Flow Hedge Loss (Gain)
|
|
Total
|
|||||||||
Affected line in Condensed Consolidated Statement of Operations:
|
|
|
|
|
|
|||||||||
|
Cost of products
|
$
|
—
|
|
$
|
—
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
Cost of services
|
—
|
|
(2
|
)
|
—
|
|
|
(2
|
)
|
||||
|
Selling, general and administrative expenses
|
—
|
|
(1
|
)
|
—
|
|
|
(1
|
)
|
||||
|
Research and development expenses
|
—
|
|
1
|
|
—
|
|
|
1
|
|
||||
|
Total before tax
|
$
|
—
|
|
$
|
(2
|
)
|
$
|
(2
|
)
|
|
$
|
(4
|
)
|
|
Tax expense
|
|
|
|
|
—
|
|
|||||||
|
Total reclassifications, net of tax
|
|
|
|
|
$
|
(4
|
)
|
|
|
For the three months ended September 30, 2017
|
||||||||||||
|
Employee Benefit Plans
|
|
|
|
||||||||||
In millions
|
Amortization of Actuarial Loss (Gain)
|
Amortization of Prior Service Benefit
|
Effective Cash Flow Hedge Loss (Gain)
|
|
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 nine months ended September 30, 2018
|
||||||||||||
|
Employee Benefit Plans
|
|
|
|
||||||||||
In millions
|
Amortization of Actuarial Loss (Gain)
|
Amortization of Prior Service Benefit
|
Effective Cash Flow Hedge Loss (Gain)
|
|
Total
|
|||||||||
Affected line in Condensed Consolidated Statement of Operations:
|
|
|
|
|
|
|||||||||
|
Cost of products
|
$
|
—
|
|
$
|
—
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
Cost of services
|
1
|
|
(5
|
)
|
—
|
|
|
(4
|
)
|
||||
|
Selling, general and administrative expenses
|
—
|
|
(2
|
)
|
—
|
|
|
(2
|
)
|
||||
|
Total before tax
|
$
|
1
|
|
$
|
(7
|
)
|
$
|
(2
|
)
|
|
$
|
(8
|
)
|
|
Tax expense
|
|
|
|
|
1
|
|
|||||||
|
Total reclassifications, net of tax
|
|
|
|
|
$
|
(7
|
)
|
|
|
For the nine months ended September 30, 2017
|
||||||||||||
|
Employee Benefit Plans
|
|
|
|
||||||||||
In millions
|
Amortization of Actuarial Loss (Gain)
|
Amortization of Prior Service Benefit
|
Effective Cash Flow Hedge Loss (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
|
)
|
In millions
|
September 30, 2018
|
||
Employee Severance and Other Exit Costs
|
|
||
Beginning balance as of January 1
|
$
|
—
|
|
Cost recognized during the period
|
9
|
|
|
Utilization
|
(7
|
)
|
|
Ending balance as of September 30
|
$
|
2
|
|
In millions
|
September 30, 2018
|
|
December 31, 2017
|
||||
Accounts receivable
|
|
|
|
||||
Trade
|
$
|
1,307
|
|
|
$
|
1,270
|
|
Other
|
28
|
|
|
37
|
|
||
Accounts receivable, gross
|
1,335
|
|
|
1,307
|
|
||
Less: allowance for doubtful accounts
|
(26
|
)
|
|
(37
|
)
|
||
Total accounts receivable, net
|
$
|
1,309
|
|
|
$
|
1,270
|
|
In millions
|
September 30, 2018
|
|
December 31, 2017
|
||||
Inventories
|
|
|
|
||||
Work in process and raw materials
|
$
|
273
|
|
|
$
|
185
|
|
Finished goods
|
261
|
|
|
190
|
|
||
Service parts
|
382
|
|
|
405
|
|
||
Total inventories
|
$
|
916
|
|
|
$
|
780
|
|
•
|
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, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Product revenue
|
$
|
234
|
|
|
$
|
7
|
|
|
$
|
348
|
|
|
$
|
(55
|
)
|
|
$
|
534
|
|
Service revenue
|
541
|
|
|
9
|
|
|
466
|
|
|
—
|
|
|
1,016
|
|
|||||
Total revenue
|
775
|
|
|
16
|
|
|
814
|
|
|
(55
|
)
|
|
1,550
|
|
|||||
Cost of products
|
225
|
|
|
4
|
|
|
299
|
|
|
(55
|
)
|
|
473
|
|
|||||
Cost of services
|
357
|
|
|
4
|
|
|
306
|
|
|
—
|
|
|
667
|
|
|||||
Selling, general and administrative expenses
|
132
|
|
|
1
|
|
|
93
|
|
|
—
|
|
|
226
|
|
|||||
Research and development expenses
|
40
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
59
|
|
|||||
Asset impairment charges
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||||
Total operating expenses
|
755
|
|
|
9
|
|
|
716
|
|
|
(55
|
)
|
|
1,425
|
|
|||||
Income (loss) from operations
|
20
|
|
|
7
|
|
|
98
|
|
|
—
|
|
|
125
|
|
|||||
Interest expense
|
(42
|
)
|
|
—
|
|
|
(4
|
)
|
|
3
|
|
|
(43
|
)
|
|||||
Other (expense) income, net
|
—
|
|
|
2
|
|
|
(9
|
)
|
|
(3
|
)
|
|
(10
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
(22
|
)
|
|
9
|
|
|
85
|
|
|
—
|
|
|
72
|
|
|||||
Income tax expense (benefit)
|
(80
|
)
|
|
2
|
|
|
63
|
|
|
—
|
|
|
(15
|
)
|
|||||
Income (loss) from continuing operations before earnings in subsidiaries
|
58
|
|
|
7
|
|
|
22
|
|
|
—
|
|
|
87
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
26
|
|
|
38
|
|
|
—
|
|
|
(64
|
)
|
|
—
|
|
|||||
Income (loss) from continuing operations
|
84
|
|
|
45
|
|
|
22
|
|
|
(64
|
)
|
|
87
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Net income (loss)
|
$
|
84
|
|
|
$
|
45
|
|
|
$
|
21
|
|
|
$
|
(64
|
)
|
|
$
|
86
|
|
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||
Net income (loss) attributable to NCR
|
$
|
84
|
|
|
$
|
45
|
|
|
$
|
19
|
|
|
$
|
(64
|
)
|
|
$
|
84
|
|
Total comprehensive income (loss)
|
66
|
|
|
40
|
|
|
5
|
|
|
(42
|
)
|
|
69
|
|
|||||
Less comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Comprehensive income (loss) attributable to NCR common stockholders
|
$
|
66
|
|
|
$
|
40
|
|
|
$
|
2
|
|
|
$
|
(42
|
)
|
|
$
|
66
|
|
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
|
518
|
|
|
6
|
|
|
482
|
|
|
—
|
|
|
1,006
|
|
|||||
Total revenue
|
856
|
|
|
19
|
|
|
839
|
|
|
(51
|
)
|
|
1,663
|
|
|||||
Cost of products
|
264
|
|
|
8
|
|
|
307
|
|
|
(51
|
)
|
|
528
|
|
|||||
Cost of services
|
340
|
|
|
1
|
|
|
322
|
|
|
—
|
|
|
663
|
|
|||||
Selling, general and administrative expenses
|
110
|
|
|
1
|
|
|
109
|
|
|
—
|
|
|
220
|
|
|||||
Research and development expenses
|
43
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
53
|
|
|||||
Total operating expenses
|
757
|
|
|
10
|
|
|
748
|
|
|
(51
|
)
|
|
1,464
|
|
|||||
Income (loss) from operations
|
99
|
|
|
9
|
|
|
91
|
|
|
—
|
|
|
199
|
|
|||||
Interest expense
|
(41
|
)
|
|
—
|
|
|
(3
|
)
|
|
2
|
|
|
(42
|
)
|
|||||
Other (expense) income, net
|
(13
|
)
|
|
1
|
|
|
7
|
|
|
(2
|
)
|
|
(7
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
45
|
|
|
10
|
|
|
95
|
|
|
—
|
|
|
150
|
|
|||||
Income tax expense (benefit)
|
14
|
|
|
1
|
|
|
16
|
|
|
—
|
|
|
31
|
|
|||||
Income (loss) from continuing operations before earnings in subsidiaries
|
31
|
|
|
9
|
|
|
79
|
|
|
—
|
|
|
119
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
87
|
|
|
73
|
|
|
—
|
|
|
(160
|
)
|
|
—
|
|
|||||
Income (loss) from continuing operations
|
118
|
|
|
82
|
|
|
79
|
|
|
(160
|
)
|
|
119
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income (loss)
|
$
|
118
|
|
|
$
|
82
|
|
|
$
|
79
|
|
|
$
|
(160
|
)
|
|
$
|
119
|
|
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Net income (loss) attributable to NCR
|
$
|
118
|
|
|
$
|
82
|
|
|
$
|
78
|
|
|
$
|
(160
|
)
|
|
$
|
118
|
|
Total comprehensive income (loss)
|
120
|
|
|
95
|
|
|
81
|
|
|
(177
|
)
|
|
119
|
|
|||||
Less comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Comprehensive income (loss) attributable to NCR common stockholders
|
$
|
120
|
|
|
$
|
95
|
|
|
$
|
82
|
|
|
$
|
(177
|
)
|
|
$
|
120
|
|
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||
For the nine months ended September 30, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Product revenue
|
$
|
769
|
|
|
$
|
36
|
|
|
$
|
936
|
|
|
$
|
(156
|
)
|
|
$
|
1,585
|
|
Service revenue
|
1,577
|
|
|
25
|
|
|
1,417
|
|
|
—
|
|
|
3,019
|
|
|||||
Total revenue
|
2,346
|
|
|
61
|
|
|
2,353
|
|
|
(156
|
)
|
|
4,604
|
|
|||||
Cost of products
|
690
|
|
|
15
|
|
|
795
|
|
|
(156
|
)
|
|
1,344
|
|
|||||
Cost of services
|
1,053
|
|
|
10
|
|
|
964
|
|
|
—
|
|
|
2,027
|
|
|||||
Selling, general and administrative expenses
|
426
|
|
|
2
|
|
|
304
|
|
|
—
|
|
|
732
|
|
|||||
Research and development expenses
|
115
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
190
|
|
|||||
Asset impairment charges
|
166
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
183
|
|
|||||
Total operating expenses
|
2,450
|
|
|
27
|
|
|
2,155
|
|
|
(156
|
)
|
|
4,476
|
|
|||||
Income (loss) from operations
|
(104
|
)
|
|
34
|
|
|
198
|
|
|
—
|
|
|
128
|
|
|||||
Interest expense
|
(121
|
)
|
|
—
|
|
|
(10
|
)
|
|
6
|
|
|
(125
|
)
|
|||||
Other (expense) income, net
|
(15
|
)
|
|
4
|
|
|
(7
|
)
|
|
(6
|
)
|
|
(24
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
(240
|
)
|
|
38
|
|
|
181
|
|
|
—
|
|
|
(21
|
)
|
|||||
Income tax expense (benefit)
|
(56
|
)
|
|
6
|
|
|
30
|
|
|
—
|
|
|
(20
|
)
|
|||||
Income (loss) from continuing operations before earnings in subsidiaries
|
(184
|
)
|
|
32
|
|
|
151
|
|
|
—
|
|
|
(1
|
)
|
|||||
Equity in earnings of consolidated subsidiaries
|
179
|
|
|
159
|
|
|
—
|
|
|
(338
|
)
|
|
—
|
|
|||||
Income (loss) from continuing operations
|
(5
|
)
|
|
191
|
|
|
151
|
|
|
(338
|
)
|
|
(1
|
)
|
|||||
Income (loss) from discontinued operations, net of tax
|
(36
|
)
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(38
|
)
|
|||||
Net income (loss)
|
$
|
(41
|
)
|
|
$
|
191
|
|
|
$
|
149
|
|
|
$
|
(338
|
)
|
|
$
|
(39
|
)
|
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
|||||
Net income (loss) attributable to NCR
|
$
|
(41
|
)
|
|
$
|
191
|
|
|
$
|
147
|
|
|
$
|
(338
|
)
|
|
$
|
(41
|
)
|
Total comprehensive income (loss)
|
(85
|
)
|
|
148
|
|
|
102
|
|
|
(250
|
)
|
|
(85
|
)
|
|||||
Less comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Comprehensive income (loss) attributable to NCR common stockholders
|
$
|
(85
|
)
|
|
$
|
148
|
|
|
$
|
102
|
|
|
$
|
(250
|
)
|
|
$
|
(85
|
)
|
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
|
1,522
|
|
|
20
|
|
|
1,363
|
|
|
—
|
|
|
2,905
|
|
||||||
Total revenue
|
2,470
|
|
|
86
|
|
|
2,393
|
|
|
(215
|
)
|
|
4,734
|
|
||||||
Cost of products
|
728
|
|
|
30
|
|
|
887
|
|
|
(215
|
)
|
|
1,430
|
|
||||||
Cost of services
|
1,013
|
|
|
6
|
|
|
940
|
|
|
—
|
|
|
1,959
|
|
||||||
Selling, general and administrative expenses
|
373
|
|
|
3
|
|
|
302
|
|
|
—
|
|
|
678
|
|
||||||
Research and development expenses
|
115
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
178
|
|
||||||
Total operating expenses
|
2,229
|
|
|
39
|
|
|
2,192
|
|
|
(215
|
)
|
|
4,245
|
|
||||||
Income (loss) from operations
|
241
|
|
|
47
|
|
|
201
|
|
|
—
|
|
|
489
|
|
||||||
Interest expense
|
(118
|
)
|
|
—
|
|
|
(8
|
)
|
|
4
|
|
|
(122
|
)
|
||||||
Other (expense) income, net
|
(41
|
)
|
|
—
|
|
|
29
|
|
|
(4
|
)
|
|
(16
|
)
|
||||||
Income (loss) from continuing operations before income taxes
|
82
|
|
|
47
|
|
|
222
|
|
|
—
|
|
|
351
|
|
||||||
Income tax expense (benefit)
|
23
|
|
|
19
|
|
|
36
|
|
|
—
|
|
|
78
|
|
||||||
Income (loss) from continuing operations before earnings in subsidiaries
|
59
|
|
|
28
|
|
|
186
|
|
|
—
|
|
|
273
|
|
||||||
Equity in earnings of consolidated subsidiaries
|
213
|
|
|
170
|
|
|
—
|
|
|
(383
|
)
|
|
—
|
|
||||||
Income (loss) from continuing operations
|
272
|
|
—
|
|
198
|
|
|
186
|
|
|
(383
|
)
|
|
273
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||||
Net income (loss)
|
$
|
277
|
|
|
$
|
198
|
|
|
$
|
186
|
|
|
$
|
(383
|
)
|
|
$
|
278
|
|
|
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Net income (loss) attributable to NCR
|
$
|
277
|
|
|
$
|
198
|
|
|
$
|
185
|
|
|
$
|
(383
|
)
|
|
$
|
277
|
|
|
Total comprehensive income (loss)
|
294
|
|
|
235
|
|
|
199
|
|
|
(435
|
)
|
|
293
|
|
||||||
Less comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||||
Comprehensive income (loss) attributable to NCR common stockholders
|
$
|
294
|
|
|
$
|
235
|
|
|
$
|
200
|
|
|
$
|
(435
|
)
|
|
$
|
294
|
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||
September 30, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
31
|
|
|
$
|
5
|
|
|
$
|
298
|
|
|
$
|
—
|
|
|
$
|
334
|
|
Accounts receivable, net
|
39
|
|
|
12
|
|
|
1,258
|
|
|
—
|
|
|
1,309
|
|
|||||
Inventories
|
326
|
|
|
6
|
|
|
584
|
|
|
—
|
|
|
916
|
|
|||||
Due from affiliates
|
639
|
|
|
2,077
|
|
|
386
|
|
|
(3,102
|
)
|
|
—
|
|
|||||
Other current assets
|
130
|
|
|
45
|
|
|
160
|
|
|
(39
|
)
|
|
296
|
|
|||||
Total current assets
|
1,165
|
|
|
2,145
|
|
|
2,686
|
|
|
(3,141
|
)
|
|
2,855
|
|
|||||
Property, plant and equipment, net
|
244
|
|
|
1
|
|
|
103
|
|
|
—
|
|
|
348
|
|
|||||
Goodwill
|
2,081
|
|
|
—
|
|
|
508
|
|
|
—
|
|
|
2,589
|
|
|||||
Intangibles, net
|
438
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
501
|
|
|||||
Prepaid pension cost
|
—
|
|
|
—
|
|
|
133
|
|
|
—
|
|
|
133
|
|
|||||
Deferred income taxes
|
345
|
|
|
—
|
|
|
153
|
|
|
(10
|
)
|
|
488
|
|
|||||
Investments in subsidiaries
|
3,177
|
|
|
2,806
|
|
|
—
|
|
|
(5,983
|
)
|
|
—
|
|
|||||
Long-term intercompany notes receivable
|
31
|
|
|
1
|
|
|
36
|
|
|
(68
|
)
|
|
—
|
|
|||||
Other assets
|
490
|
|
|
51
|
|
|
50
|
|
|
—
|
|
|
591
|
|
|||||
Total assets
|
$
|
7,971
|
|
|
$
|
5,004
|
|
|
$
|
3,732
|
|
|
$
|
(9,202
|
)
|
|
$
|
7,505
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
62
|
|
|
$
|
—
|
|
|
$
|
184
|
|
|
$
|
—
|
|
|
$
|
246
|
|
Accounts payable
|
357
|
|
|
3
|
|
|
444
|
|
|
—
|
|
|
804
|
|
|||||
Payroll and benefits liabilities
|
121
|
|
|
—
|
|
|
104
|
|
|
—
|
|
|
225
|
|
|||||
Contract liabilities
|
205
|
|
|
6
|
|
|
216
|
|
|
—
|
|
|
427
|
|
|||||
Due to affiliates
|
2,192
|
|
|
116
|
|
|
794
|
|
|
(3,102
|
)
|
|
—
|
|
|||||
Other current liabilities
|
139
|
|
|
3
|
|
|
199
|
|
|
(39
|
)
|
|
302
|
|
|||||
Total current liabilities
|
3,076
|
|
|
128
|
|
|
1,941
|
|
|
(3,141
|
)
|
|
2,004
|
|
|||||
Long-term debt
|
2,879
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2,881
|
|
|||||
Pension and indemnity plan liabilities
|
528
|
|
|
—
|
|
|
275
|
|
|
—
|
|
|
803
|
|
|||||
Postretirement and postemployment benefits liabilities
|
19
|
|
|
3
|
|
|
108
|
|
|
—
|
|
|
130
|
|
|||||
Income tax accruals
|
17
|
|
|
10
|
|
|
91
|
|
|
—
|
|
|
118
|
|
|||||
Due to affiliates
|
—
|
|
|
37
|
|
|
31
|
|
|
(68
|
)
|
|
—
|
|
|||||
Other liabilities
|
162
|
|
|
16
|
|
|
93
|
|
|
(10
|
)
|
|
261
|
|
|||||
Total liabilities
|
6,681
|
|
|
194
|
|
|
2,541
|
|
|
(3,219
|
)
|
|
6,197
|
|
|||||
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
|||||
Series A convertible preferred stock
|
846
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
846
|
|
|||||
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Total NCR stockholders’ equity
|
444
|
|
|
4,810
|
|
|
1,173
|
|
|
(5,983
|
)
|
|
444
|
|
|||||
Noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Total stockholders’ equity
|
444
|
|
|
4,810
|
|
|
1,177
|
|
|
(5,983
|
)
|
|
448
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
7,971
|
|
|
$
|
5,004
|
|
|
$
|
3,732
|
|
|
$
|
(9,202
|
)
|
|
$
|
7,505
|
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||
December 31, 2017
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
97
|
|
|
$
|
11
|
|
|
429
|
|
|
$
|
—
|
|
|
$
|
537
|
|
|
Accounts receivable, net
|
62
|
|
|
12
|
|
|
1,196
|
|
|
—
|
|
|
1,270
|
|
|||||
Inventories
|
311
|
|
|
7
|
|
|
462
|
|
|
—
|
|
|
780
|
|
|||||
Due from affiliates
|
646
|
|
|
1,801
|
|
|
283
|
|
|
(2,730
|
)
|
|
—
|
|
|||||
Other current assets
|
78
|
|
|
39
|
|
|
162
|
|
|
(36
|
)
|
|
243
|
|
|||||
Total current assets
|
1,194
|
|
|
1,870
|
|
|
2,532
|
|
|
(2,766
|
)
|
|
2,830
|
|
|||||
Property, plant and equipment, net
|
207
|
|
|
—
|
|
|
134
|
|
|
—
|
|
|
341
|
|
|||||
Goodwill
|
2,228
|
|
|
—
|
|
|
513
|
|
|
—
|
|
|
2,741
|
|
|||||
Intangibles, net
|
503
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
578
|
|
|||||
Prepaid pension cost
|
—
|
|
|
—
|
|
|
118
|
|
|
—
|
|
|
118
|
|
|||||
Deferred income taxes
|
334
|
|
|
—
|
|
|
157
|
|
|
(31
|
)
|
|
460
|
|
|||||
Investments in subsidiaries
|
3,008
|
|
|
2,942
|
|
|
—
|
|
|
(5,950
|
)
|
|
—
|
|
|||||
Due from affiliates
|
31
|
|
|
1
|
|
|
39
|
|
|
(71
|
)
|
|
—
|
|
|||||
Other assets
|
472
|
|
|
63
|
|
|
51
|
|
|
—
|
|
|
586
|
|
|||||
Total assets
|
$
|
7,977
|
|
|
$
|
4,876
|
|
|
$
|
3,619
|
|
|
$
|
(8,818
|
)
|
|
$
|
7,654
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
52
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
52
|
|
Accounts payable
|
382
|
|
|
—
|
|
|
380
|
|
|
—
|
|
|
762
|
|
|||||
Payroll and benefits liabilities
|
124
|
|
|
—
|
|
|
95
|
|
|
—
|
|
|
219
|
|
|||||
Contract liabilities
|
216
|
|
|
6
|
|
|
236
|
|
|
—
|
|
|
458
|
|
|||||
Due to affiliates
|
1,884
|
|
|
130
|
|
|
716
|
|
|
(2,730
|
)
|
|
—
|
|
|||||
Other current liabilities
|
204
|
|
|
5
|
|
|
225
|
|
|
(36
|
)
|
|
398
|
|
|||||
Total current liabilities
|
2,862
|
|
|
141
|
|
|
1,652
|
|
|
(2,766
|
)
|
|
1,889
|
|
|||||
Long-term debt
|
2,937
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2,939
|
|
|||||
Pension and indemnity plan liabilities
|
515
|
|
|
—
|
|
|
283
|
|
|
—
|
|
|
798
|
|
|||||
Postretirement and postemployment benefits liabilities
|
20
|
|
|
3
|
|
|
110
|
|
|
—
|
|
|
133
|
|
|||||
Income tax accruals
|
20
|
|
|
5
|
|
|
123
|
|
|
—
|
|
|
148
|
|
|||||
Due to affiliates
|
—
|
|
|
39
|
|
|
32
|
|
|
(71
|
)
|
|
—
|
|
|||||
Other liabilities
|
94
|
|
|
36
|
|
|
101
|
|
|
(31
|
)
|
|
200
|
|
|||||
Total liabilities
|
6,448
|
|
|
224
|
|
|
2,303
|
|
|
(2,868
|
)
|
|
6,107
|
|
|||||
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
|||||
Series A convertible preferred stock
|
810
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
810
|
|
|||||
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Total NCR stockholders’ equity
|
719
|
|
|
4,652
|
|
|
1,298
|
|
|
(5,950
|
)
|
|
719
|
|
|||||
Noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|||||
Total stockholders’ equity
|
719
|
|
|
4,652
|
|
|
1,301
|
|
|
(5,950
|
)
|
|
722
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
7,977
|
|
|
$
|
4,876
|
|
|
$
|
3,619
|
|
|
$
|
(8,818
|
)
|
|
$
|
7,654
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the nine months ended September 30, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
226
|
|
|
$
|
(151
|
)
|
|
$
|
102
|
|
|
$
|
(14
|
)
|
|
$
|
163
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenditures for property, plant and equipment
|
(85
|
)
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
|
(104
|
)
|
|||||
Proceeds from sale of property, plant and equipment
|
1
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
3
|
|
|||||
Additions to capitalized software
|
(111
|
)
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
|
(130
|
)
|
|||||
Proceeds from (payments of) intercompany notes
|
207
|
|
|
145
|
|
|
—
|
|
|
(352
|
)
|
|
—
|
|
|||||
Other investing activities, net
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||
Net cash provided by (used in) investing activities
|
8
|
|
|
145
|
|
|
(36
|
)
|
|
(352
|
)
|
|
(235
|
)
|
|||||
Financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short term borrowings, net
|
(1
|
)
|
|
—
|
|
|
8
|
|
|
—
|
|
|
7
|
|
|||||
Payments on term credit facilities
|
(51
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(51
|
)
|
|||||
Payments on revolving credit facilities
|
(1,055
|
)
|
|
—
|
|
|
(378
|
)
|
|
—
|
|
|
(1,433
|
)
|
|||||
Borrowings on revolving credit facilities
|
1,055
|
|
|
—
|
|
|
553
|
|
|
—
|
|
|
1,608
|
|
|||||
Repurchase of Company common stock
|
(210
|
)
|
|
|
|
|
|
|
|
|
|
|
(210
|
)
|
|||||
Proceeds from employee stock plans
|
16
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|||||
Dividend distribution to consolidated subsidiaries
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
14
|
|
|
—
|
|
|||||
Borrowings (repayments) of intercompany notes
|
—
|
|
|
—
|
|
|
(352
|
)
|
|
352
|
|
|
—
|
|
|||||
Tax withholding payments on behalf of employees
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(276
|
)
|
|
—
|
|
|
(183
|
)
|
|
366
|
|
|
(93
|
)
|
|||||
Cash flows from discontinued operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash used in operating activities
|
(23
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
(65
|
)
|
|
(6
|
)
|
|
(129
|
)
|
|
—
|
|
|
(200
|
)
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
97
|
|
|
11
|
|
|
435
|
|
|
—
|
|
|
543
|
|
|||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
32
|
|
|
$
|
5
|
|
|
$
|
306
|
|
|
$
|
—
|
|
|
$
|
343
|
|
In millions
|
September 30, 2018
|
||||||||||||||||||
Reconciliation of cash, cash equivalents and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash and cash equivalents
|
$
|
31
|
|
|
$
|
5
|
|
|
$
|
298
|
|
|
$
|
—
|
|
|
$
|
334
|
|
Restricted cash included in Other assets
|
1
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
9
|
|
|||||
Total cash, cash equivalents and restricted cash
|
$
|
32
|
|
|
$
|
5
|
|
|
$
|
306
|
|
|
$
|
—
|
|
|
$
|
343
|
|
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
|
$
|
332
|
|
|
$
|
(58
|
)
|
|
$
|
3
|
|
|
$
|
(7
|
)
|
|
$
|
270
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenditures for property, plant and equipment
|
(55
|
)
|
|
—
|
|
|
(26
|
)
|
|
—
|
|
|
(81
|
)
|
|||||
Proceeds from sales of property, plant and equipment
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|||||
Additions to capitalized software
|
(101
|
)
|
|
—
|
|
|
(24
|
)
|
|
—
|
|
|
(125
|
)
|
|||||
Proceeds from (payments of) intercompany notes
|
182
|
|
|
55
|
|
|
—
|
|
|
(237
|
)
|
|
—
|
|
|||||
Investments in equity affiliates
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|||||
Other investing activities, net
|
(1
|
)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
23
|
|
|
55
|
|
|
(43
|
)
|
|
(235
|
)
|
|
(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
|
—
|
|
|
—
|
|
|
(237
|
)
|
|
237
|
|
|
—
|
|
|||||
Tax withholding payments on behalf of employees
|
(24
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(373
|
)
|
|
—
|
|
|
(35
|
)
|
|
242
|
|
|
(166
|
)
|
|||||
Cash flows from discontinued operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash used in operating activities
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
|
1
|
|
|
15
|
|
|
—
|
|
|
16
|
|
|||||
Increase (decrease) in cash, cash equivalents, and restricted cash
|
(32
|
)
|
|
(2
|
)
|
|
(60
|
)
|
|
—
|
|
|
(94
|
)
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
67
|
|
|
12
|
|
|
428
|
|
|
—
|
|
|
507
|
|
|||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
35
|
|
|
$
|
10
|
|
|
$
|
368
|
|
|
$
|
—
|
|
|
$
|
413
|
|
In millions
|
September 30, 2017
|
||||||||||||||||||
Reconciliation of cash, cash equivalents and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash and cash equivalents
|
$
|
35
|
|
|
$
|
10
|
|
|
$
|
360
|
|
|
$
|
—
|
|
|
$
|
405
|
|
Restricted cash included in Other assets
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|||||
Total cash, cash equivalents and restricted cash
|
$
|
35
|
|
|
$
|
10
|
|
|
$
|
368
|
|
|
$
|
—
|
|
|
$
|
413
|
|
Item 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
|
•
|
Revenue
decreased
approximately
7%
from the prior year period and
5%
excluding unfavorable foreign currency impacts;
|
•
|
Software revenue increased
1%
from the prior year period, driven by cloud revenue growth of
6%
, and operating margin declined
460
basis points from the prior year period;
|
•
|
Services revenue increased
1%
and operating margin rate increased
20
basis points from the prior year period; and
|
•
|
Hardware revenue decreased
21%
and operating margin rate declined significantly from the prior year period.
|
•
|
Customer Experience
- Improving the customer experience by improving solution quality, availability and security.
|
•
|
Strategic and Recurring Revenue
- Continuing our focus on cloud, software platform, smart-edge devices and professional and managed services to drive profitable revenue and operating income.
|
•
|
Sales Effectiveness
- Providing our sales force with the training, tools, support and coverage model necessary to optimize efficiency and achieve our sales plan.
|
•
|
Services Transformation
- Driving performance and sustainable margin improvement by focusing on productivity and efficiency improvements, expanding our remote diagnostics and repair capabilities, creating greater discipline in our product lifecycle management, and employing a higher mix of managed services.
|
•
|
Evolving our Business Model
- Continuing the shift in our business model to provide innovative end-to-end solutions for our customers, with best in class support while keeping an efficient cost structure to create competitive advantage.
|
•
|
New Products
- Launching new industry products, powered by our platform software with best in class product lifecycle management and go-to-market support, and migrating and releasing existing licensed software products as cloud-based products.
|
•
|
Operating Model Innovation
- Eliminating waste, utilizing effective product lifecycle management, increasing productivity, using technology as an enabler, and executing on business process improvements to reduce costs and use savings to invest in strategic initiatives, product innovation and people.
|
•
|
Team and Talent
- Attracting, developing and retaining top talent by deploying competitive recruiting and training programs, evolving our brand, and continuously engaging with employees.
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
In millions
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
$
|
1,550
|
|
|
$
|
1,663
|
|
|
$
|
4,604
|
|
|
$
|
4,734
|
|
Gross margin
|
$
|
410
|
|
|
$
|
472
|
|
|
$
|
1,233
|
|
|
$
|
1,345
|
|
Gross margin as a percentage of revenue
|
26.5
|
%
|
|
28.4
|
%
|
|
26.8
|
%
|
|
28.4
|
%
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses
|
$
|
226
|
|
|
$
|
220
|
|
|
$
|
732
|
|
|
$
|
678
|
|
Research and development expenses
|
59
|
|
|
53
|
|
|
190
|
|
|
178
|
|
||||
Asset impairment charges
|
—
|
|
|
—
|
|
|
183
|
|
|
—
|
|
||||
Income from operations
|
$
|
125
|
|
|
$
|
199
|
|
|
$
|
128
|
|
|
$
|
489
|
|
In millions
|
2018
|
% of Total
|
|
2017
|
% of Total
|
|
% Increase (Decrease)
|
% Increase (Decrease) Constant Currency
(1)
|
||||
Americas
|
$
|
898
|
|
58%
|
|
$
|
989
|
|
59%
|
|
(9)%
|
(8)%
|
Europe, Middle East and Africa (EMEA)
|
414
|
|
27%
|
|
448
|
|
27%
|
|
(8)%
|
(6)%
|
||
Asia Pacific (APJ)
|
238
|
|
15%
|
|
226
|
|
14%
|
|
5%
|
10%
|
||
Consolidated revenue
|
$
|
1,550
|
|
100%
|
|
$
|
1,663
|
|
100%
|
|
(7)%
|
(5)%
|
In millions
|
2018
|
% of Total
|
|
2017
|
% of Total
|
|
% Increase (Decrease)
|
% Increase (Decrease) Constant Currency
(1)
|
||||
Americas
|
$
|
2,662
|
|
58%
|
|
$
|
2,751
|
|
58%
|
|
(3)%
|
(3)%
|
Europe, Middle East and Africa (EMEA)
|
1,240
|
|
27%
|
|
1,324
|
|
28%
|
|
(6)%
|
(10)%
|
||
Asia Pacific (APJ)
|
702
|
|
15%
|
|
659
|
|
14%
|
|
7%
|
6%
|
||
Consolidated revenue
|
$
|
4,604
|
|
100%
|
|
$
|
4,734
|
|
100%
|
|
(3)%
|
(3)%
|
In millions
|
2018
|
% of Total
|
|
2017
|
% of Total
|
|
% Increase (Decrease)
|
% Increase (Decrease) Constant Currency
(1)
|
||||
Software
|
$
|
480
|
|
31%
|
|
$
|
476
|
|
29%
|
|
1%
|
2%
|
Services
|
616
|
|
40%
|
|
609
|
|
36%
|
|
1%
|
4%
|
||
Hardware
|
454
|
|
29%
|
|
578
|
|
35%
|
|
(21)%
|
(20)%
|
||
Consolidated revenue
|
$
|
1,550
|
|
100%
|
|
$
|
1,663
|
|
100%
|
|
(7)%
|
(5)%
|
In millions
|
2018
|
% of Total
|
|
2017
|
% of Total
|
|
% Increase (Decrease)
|
% Increase (Decrease) Constant Currency
(1)
|
||||
Software
|
$
|
1,410
|
|
30%
|
|
$
|
1,392
|
|
29%
|
|
1%
|
1%
|
Services
|
1,827
|
|
40%
|
|
1,754
|
|
37%
|
|
4%
|
3%
|
||
Hardware
|
1,367
|
|
30%
|
|
1,588
|
|
34%
|
|
(14)%
|
(14)%
|
||
Consolidated revenue
|
$
|
4,604
|
|
100%
|
|
$
|
4,734
|
|
100%
|
|
(3)%
|
(3)%
|
|
Revenue % Growth (GAAP)
|
Favorable (unfavorable) FX impact
|
Revenue % Growth Constant Currency (non-GAAP)
|
Americas
|
(9)%
|
(1)%
|
(8)%
|
EMEA
|
(8)%
|
(2)%
|
(6)%
|
APJ
|
5%
|
(5)%
|
10%
|
Consolidated revenue
|
(7)%
|
(2)%
|
(5)%
|
|
Revenue % Growth (GAAP)
|
Favorable (unfavorable) FX impact
|
Revenue % Growth Constant Currency (non-GAAP)
|
Americas
|
(3)%
|
—%
|
(3)%
|
EMEA
|
(6)%
|
4%
|
(10)%
|
APJ
|
7%
|
1%
|
6%
|
Consolidated revenue
|
(3)%
|
—%
|
(3)%
|
|
Revenue % Growth (GAAP)
|
Favorable (unfavorable) FX impact
|
Revenue % Growth Constant Currency (non-GAAP)
|
Software
|
1%
|
(1)%
|
2%
|
Services
|
1%
|
(3)%
|
4%
|
Hardware
|
(21)%
|
(1)%
|
(20)%
|
Consolidated revenue
|
(7)%
|
(2)%
|
(5)%
|
|
Revenue % Growth (GAAP)
|
Favorable (unfavorable) FX impact
|
Revenue % Growth Constant Currency (non-GAAP)
|
Software
|
1%
|
—%
|
1%
|
Services
|
4%
|
1%
|
3%
|
Hardware
|
(14)%
|
—%
|
(14)%
|
Consolidated revenue
|
(3)%
|
—%
|
(3)%
|
•
|
Software
- Our software offerings include industry-based software platforms, applications and application suites for the financial services, retail, hospitality and small business industries. We also offer a portfolio of 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 mobile and 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 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 solutions. We also provide systems management and complete
|
•
|
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.
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
In millions
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
$
|
480
|
|
|
$
|
476
|
|
|
$
|
1,410
|
|
|
$
|
1,392
|
|
Operating income
|
$
|
127
|
|
|
$
|
148
|
|
|
$
|
351
|
|
|
$
|
399
|
|
Operating income as a percentage of revenue
|
26.5
|
%
|
|
31.1
|
%
|
|
24.9
|
%
|
|
28.7
|
%
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
In millions
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
$
|
616
|
|
|
$
|
609
|
|
|
$
|
1,827
|
|
|
$
|
1,754
|
|
Operating income
|
$
|
90
|
|
|
$
|
88
|
|
|
$
|
229
|
|
|
$
|
206
|
|
Operating income as a percentage of revenue
|
14.6
|
%
|
|
14.4
|
%
|
|
12.5
|
%
|
|
11.7
|
%
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||
In millions
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
$
|
454
|
|
|
$
|
578
|
|
|
$
|
1,367
|
|
|
$
|
1,588
|
|
Operating (loss) income
|
$
|
(56
|
)
|
|
$
|
(2
|
)
|
|
$
|
(106
|
)
|
|
$
|
(1
|
)
|
Operating (loss) income as a percentage of revenue
|
(12.3
|
)%
|
|
(0.3
|
)%
|
|
(7.8
|
)%
|
|
(0.1
|
)%
|
|
Nine months ended September 30
|
||||||
In millions
|
2018
|
|
2017
|
||||
Net cash provided by operating activities
|
$
|
163
|
|
|
$
|
270
|
|
Expenditures for property, plant and equipment
|
(104
|
)
|
|
(81
|
)
|
||
Additions to capitalized software
|
(130
|
)
|
|
(125
|
)
|
||
Net cash used in discontinued operations
|
(23
|
)
|
|
(14
|
)
|
||
Free cash (outflow) flow (non-GAAP)
|
$
|
(94
|
)
|
|
$
|
50
|
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
LEGAL PROCEEDINGS
|
Item 1A.
|
RISK FACTORS
|
•
|
we manufactured our ATMs in facilities located in Columbus, Georgia, USA; Manaus, Brazil; Budapest, Hungary; Beijing, China; and Chengalpattu, India;
|
•
|
our self-checkout solutions were manufactured in facilities located in Columbus, Georgia, USA and Budapest, Hungary;
|
•
|
our financial kiosk solutions were manufactured in facilities located in Beijing, China; Budapest, Hungary; Manaus, Brazil; and Chengalpattu, India;
|
•
|
our POS/Display terminals were manufactured in facilities located in Columbus, Georgia, USA; and Budapest, Hungary, and certain hand-held solutions were manufactured in Salzburg, Austria; and
|
•
|
we outsourced the manufacturing in all geographic regions of its payment solutions, some POS terminals, printers, bar code scanners and various other kiosks.
|
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 February 20, 2018 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K of NCR Corporation dated February 23, 2018.
|
|
|
|
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).
|
|
|
|
Employment Agreement, dated July 18, 2018, between Owen Sullivan and NCR Corporation.
|
|
|
|
Amendment, effective as of July 26, 2018, to Employment Agreement, dated May 2, 2018, between Paul Langenbahn and NCR Corporation.
|
|
|
|
Employment Agreement, dated August 27, 2018, between Andre J. Fernandez and NCR Corporation.
|
|
|
|
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:
|
November 2, 2018
|
By:
|
|
/s/ Andre Fernandez
|
|
|
|
|
Andre Fernandez
Executive Vice President and Chief Financial Officer
|
•
|
an option to purchase NCR shares with a grant date value equal to US$1,500,000, vesting in equal annual installments over four years (subject to your employment with NCR through the applicable vesting date), having a seven-year term and a strike price equal to the closing price of NCR shares on the grant date, and such other terms as set forth in NCR’s form of option award agreement (“Sign-On Option”);
|
•
|
an option to purchase NCR shares with a grant date value equal to US$2,250,000, vesting in equal annual installments over four years (subject to your employment with NCR through the applicable vesting date), having a seven-year term and a strike price equal to the closing price of NCR shares on the grant date, and such other terms as set forth in NCR’s form of option award agreement (“2018 Option”); and
|
•
|
restricted stock units corresponding to NCR shares with a grant date value equal to US$2,250,000, vesting in equal installments over three years, subject to your employment with NCR through the applicable vesting dates and such other terms as set forth in NCR’s form of restricted stock unit award agreement (“2018 RSU”);
|
•
|
“Cause” means (1) your conviction for committing a felony under U.S. federal law or the law of the state or country in which such action occurred, (2) your willful and continued failure to perform substantially your duties with NCR or any of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness) for a period of at least thirty (30) days after a written demand for substantial performance is delivered to you by the NCR Board of Directors, specifically identifying the manner in which the NCR Board of Directors believes that you have not substantially performed your duties; (3) your willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to NCR or (4) your material violation of NCR’s Code of Conduct. For purposes of this provision, no act or failure to act, on your part, shall be considered “willful” unless it is done, or omitted to be done, by you in bad faith or without reasonable belief that your action or omission was in the best interests of the Company. Any act, or
|
•
|
“Good Reason” means any of the following events without your prior written consent: (1) the assignment to you of any duties inconsistent in any respect with your position (including offices, titles and reporting requirements), authority, duties or responsibilities or any other diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by NCR promptly after receipt of notice thereof given by you; (2) NCR requiring you to be based at any office or location that is more than forty (40) miles distant from the location of your principal place of employment set forth herein; or (3) a material breach of this letter agreement or the grant agreements with respect to the Sign-On Option, the 2018 Option or the 2018 RSU;
provided
,
however
, that your termination of employment shall not be deemed to be for Good Reason unless (x) you have notified NCR in writing describing the occurrence of one or more Good Reason events within ninety (90) days of such occurrence, (y) NCR fails to cure such Good Reason event within thirty (30) days after its receipt of such written notice and (z) the termination of employment occurs within 180 days after the occurrence of the applicable Good Reason event.
|
Owen J. Sullivan
|
|
/s/ Owen J. Sullivan
|
Date:
July 18, 2018
|
I.
|
Position and Compensation:
|
II.
|
Retention Incentive:
|
III.
|
Executive Severance Plan Benefits/Guaranteed Treatment Through April 30, 2020:
|
IV.
|
Adjustment to Succession Good Reason Termination:
|
V.
|
General
|
•
|
an option to purchase NCR shares with a grant date value equal to $1,000,000, vesting in equal annual installments over four years (subject to your employment with NCR through the applicable vesting date), having a seven-year term and a strike price equal to the closing price of NCR shares on the grant date, and such other terms as set forth in NCR’s form of option award agreement (“Sign-On Option”); and
|
•
|
restricted stock units corresponding to NCR shares with a grant date value equal to $3,000,000, vesting in equal installments over three years, subject to your employment with NCR through the applicable vesting dates and such other terms as set forth in NCR’s form of restricted stock unit award agreement (“Sign-On RSU”);
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“Cause” means (1) your conviction for committing a felony under U.S. federal law or the law of the state or country in which such action occurred, (2) your willful and continued failure to perform substantially your duties with NCR or any of its affiliates (other than any such failure resulting from incapacity due to physical or mental illness) for a period of at least thirty (30) days after a written demand for substantial performance is delivered to you by the NCR Board of Directors, specifically identifying the manner in which the NCR Board of Directors believes that you have not substantially performed your duties; (3) your willful engaging in illegal conduct or gross misconduct which is materially and demonstrably injurious to NCR or (4) your material violation of NCR’s Code of Conduct. For purposes of this provision, no act or failure to act, on your part, shall be considered “willful” unless it is done, or omitted to be done, by you in bad faith or without reasonable belief that your action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by you in good faith and in the best interests of the Company.
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“Good Reason” means any of the following events without your prior written consent: (1) the assignment to you of any duties inconsistent in any respect with your position (including offices, titles and reporting requirements), authority, duties or responsibilities or any other diminution in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by NCR promptly after receipt of notice thereof given by you; (2) NCR requiring you to be based at any office or location that is more than forty (40) miles distant from the location of your principal place of employment set forth herein; or (3) a material breach of this letter agreement or the grant agreements with respect to the Sign-On Option, the 2018 Option or the 2018 RSU;
provided
,
however
, that your termination of employment shall not be deemed to be for Good Reason unless (x) you have notified NCR in writing describing the occurrence of one or more Good Reason events within ninety (90) days of such occurrence, (y) NCR fails to cure such Good Reason event within thirty (30) days after its receipt of such written notice and (z) the termination of employment occurs within 180 days after the occurrence of the applicable Good Reason event.
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Accepting This Offer of Employment
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NCR Corporation Employment Terms & Conditions
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Arbitration Agreement, and Class, Collective, and Representative Action Waiver
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Non-Compete, Non-Solicit, & Non-Recuit/Hire Post-Employment Restrictive Covenants
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Date:
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November 2, 2018
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/s/ Michael Hayford
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Michael Hayford
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President and Chief Executive Officer
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Date:
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November 2, 2018
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/s/ Andre Fernandez
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Andre Fernandez
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Executive Vice President and Chief Financial Officer
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(1)
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the Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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Dated:
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November 2, 2018
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/s/ Michael Hayford
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Michael Hayford
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President and Chief Executive Officer
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Dated:
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November 2, 2018
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/s/ Andre Fernandez
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Andre Fernandez
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Executive Vice President and Chief Financial Officer
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