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☑
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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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Smaller reporting company
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☐
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Emerging Growth Company
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☐
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
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NCR
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New York Stock Exchange
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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
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Product revenue
|
$
|
664
|
|
|
$
|
525
|
|
|
$
|
1,203
|
|
|
$
|
1,051
|
|
Service revenue
|
1,046
|
|
|
1,012
|
|
|
2,043
|
|
|
2,003
|
|
||||
Total revenue
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1,710
|
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|
1,537
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3,246
|
|
|
3,054
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|
||||
Cost of products
|
539
|
|
|
451
|
|
|
992
|
|
|
871
|
|
||||
Cost of services
|
700
|
|
|
683
|
|
|
1,372
|
|
|
1,360
|
|
||||
Selling, general and administrative expenses
|
252
|
|
|
261
|
|
|
504
|
|
|
506
|
|
||||
Research and development expenses
|
62
|
|
|
65
|
|
|
121
|
|
|
131
|
|
||||
Asset impairment charges
|
—
|
|
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183
|
|
|
—
|
|
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183
|
|
||||
Total operating expenses
|
1,553
|
|
|
1,643
|
|
|
2,989
|
|
|
3,051
|
|
||||
Income (loss) from operations
|
157
|
|
|
(106)
|
|
|
257
|
|
|
3
|
|
||||
Interest expense
|
(45
|
)
|
|
(41
|
)
|
|
(90
|
)
|
|
(82
|
)
|
||||
Other expense, net
|
(9
|
)
|
|
(9
|
)
|
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(17
|
)
|
|
(14
|
)
|
||||
Income (loss) from continuing operations before income taxes
|
103
|
|
|
(156)
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|
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150
|
|
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(93
|
)
|
||||
Income tax expense (benefit)
|
15
|
|
|
(12)
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24
|
|
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(5
|
)
|
||||
Income (loss) from continuing operations
|
88
|
|
|
(144
|
)
|
|
126
|
|
|
(88
|
)
|
||||
Loss from discontinued operations, net of tax
|
—
|
|
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(2
|
)
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—
|
|
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(37
|
)
|
||||
Net income (loss)
|
88
|
|
|
(146)
|
|
|
126
|
|
|
(125
|
)
|
||||
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
||||
Net income (loss) attributable to NCR
|
$
|
88
|
|
|
$
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(145
|
)
|
|
$
|
125
|
|
|
$
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(125
|
)
|
Amounts attributable to NCR common stockholders:
|
|
|
|
|
|
|
|
||||||||
Income (loss) from continuing operations
|
$
|
88
|
|
|
$
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(143
|
)
|
|
$
|
125
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|
|
$
|
(88
|
)
|
Dividends on convertible preferred stock
|
(12
|
)
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(12)
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(25
|
)
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(24
|
)
|
||||
Income (loss) from continuing operations attributable to NCR common stockholders
|
76
|
|
|
(155
|
)
|
|
100
|
|
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(112
|
)
|
||||
Loss from discontinued operations, net of tax
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(37
|
)
|
||||
Net income (loss) attributable to NCR common stockholders
|
$
|
76
|
|
|
$
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(157
|
)
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$
|
100
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|
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$
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(149
|
)
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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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0.63
|
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$
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(1.31
|
)
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$0.83
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$
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(0.94
|
)
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Diluted
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$
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0.58
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$
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(1.31
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)
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$0.81
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$
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(0.94
|
)
|
||
Net income (loss) per common share
|
|
|
|
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||||||||
Basic
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$
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0.63
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$
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(1.33
|
)
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$0.83
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|
$
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(1.26
|
)
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Diluted
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$
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0.58
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$
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(1.33
|
)
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$0.81
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$
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(1.26
|
)
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Weighted average common shares outstanding
|
|
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||||||||
Basic
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120.2
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117.9
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119.8
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118.6
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|||||
Diluted
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152.7
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117.9
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123.0
|
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118.6
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In millions
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Net income (loss)
|
$
|
88
|
|
|
$
|
(146
|
)
|
|
$
|
126
|
|
|
$
|
(125
|
)
|
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Currency translation adjustments
|
|
|
|
|
|
|
|
||||||||
Currency translation gains (losses)
|
(8
|
)
|
|
(49
|
)
|
|
11
|
|
|
(30
|
)
|
||||
Derivatives
|
|
|
|
|
|
|
|
||||||||
Unrealized gains on derivatives
|
—
|
|
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9
|
|
|
1
|
|
|
4
|
|
||||
Gains on derivatives recognized during the period
|
(2
|
)
|
|
(1
|
)
|
|
(3
|
)
|
|
—
|
|
||||
Less income tax provision
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Employee benefit plans
|
|
|
|
|
|
|
|
||||||||
Amortization of prior service benefit
|
(2
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(5
|
)
|
||||
Amortization of actuarial (losses) gains
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
1
|
|
||||
Less income tax benefit
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Other comprehensive income (loss)
|
(11
|
)
|
|
(43
|
)
|
|
5
|
|
|
(29
|
)
|
||||
Total comprehensive income (loss)
|
77
|
|
|
(189
|
)
|
|
131
|
|
|
(154
|
)
|
||||
Less comprehensive income attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
||||||||
Net income (loss)
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
||||
Currency translation losses
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
||||
Amounts attributable to noncontrolling interests
|
—
|
|
|
(4
|
)
|
|
1
|
|
|
(3
|
)
|
||||
Comprehensive income (loss) attributable to NCR
|
$
|
77
|
|
|
$
|
(185
|
)
|
|
$
|
130
|
|
|
(151
|
)
|
In millions, except per share amounts
|
June 30, 2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
335
|
|
|
$
|
464
|
|
Accounts receivable, net
|
1,430
|
|
|
1,356
|
|
||
Inventories
|
868
|
|
|
806
|
|
||
Other current assets
|
402
|
|
|
397
|
|
||
Total current assets
|
3,035
|
|
|
3,023
|
|
||
Property, plant and equipment, net
|
372
|
|
|
359
|
|
||
Goodwill
|
2,707
|
|
|
2,692
|
|
||
Intangibles, net
|
553
|
|
|
595
|
|
||
Operating lease assets
|
414
|
|
|
—
|
|
||
Prepaid pension cost
|
151
|
|
|
140
|
|
||
Deferred income taxes
|
468
|
|
|
448
|
|
||
Other assets
|
522
|
|
|
504
|
|
||
Total assets
|
$
|
8,222
|
|
|
$
|
7,761
|
|
Liabilities and stockholders’ equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Short-term borrowings
|
$
|
198
|
|
|
$
|
185
|
|
Accounts payable
|
769
|
|
|
897
|
|
||
Payroll and benefits liabilities
|
235
|
|
|
238
|
|
||
Contract liabilities
|
546
|
|
|
461
|
|
||
Other current liabilities
|
555
|
|
|
501
|
|
||
Total current liabilities
|
2,303
|
|
|
2,282
|
|
||
Long-term debt
|
2,918
|
|
|
2,980
|
|
||
Pension and indemnity plan liabilities
|
767
|
|
|
759
|
|
||
Postretirement and postemployment benefits liabilities
|
120
|
|
|
118
|
|
||
Income tax accruals
|
94
|
|
|
91
|
|
||
Operating lease liabilities
|
389
|
|
|
—
|
|
||
Other liabilities
|
186
|
|
|
259
|
|
||
Total liabilities
|
6,777
|
|
|
6,489
|
|
||
Commitments and Contingencies (Note 9)
|
|
|
|
||||
Redeemable noncontrolling interest
|
14
|
|
|
14
|
|
||
Series A convertible preferred stock: par value $0.01 per share, 3.0 shares authorized, 0.9 and 0.9 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively; redemption amount and liquidation preference of $895 and $871 as of June 30, 2019 and December 31, 2018, respectively
|
884
|
|
|
859
|
|
||
Stockholders’ equity
|
|
|
|
||||
NCR stockholders’ equity
|
|
|
|
||||
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively
|
—
|
|
|
—
|
|
||
Common stock: par value $0.01 per share, 500.0 shares authorized, 120.3 and 118.7 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively
|
1
|
|
|
1
|
|
||
Paid-in capital
|
76
|
|
|
34
|
|
||
Retained earnings
|
706
|
|
|
606
|
|
||
Accumulated other comprehensive loss
|
(241
|
)
|
|
(246
|
)
|
||
Total NCR stockholders’ equity
|
542
|
|
|
395
|
|
||
Noncontrolling interests in subsidiaries
|
5
|
|
|
4
|
|
||
Total stockholders’ equity
|
547
|
|
|
399
|
|
||
Total liabilities and stockholders’ equity
|
$
|
8,222
|
|
|
$
|
7,761
|
|
In millions
|
Six months ended June 30
|
||||||
2019
|
|
2018
|
|||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
126
|
|
|
$
|
(125
|
)
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Loss from discontinued operations
|
—
|
|
|
37
|
|
||
Depreciation and amortization
|
160
|
|
|
171
|
|
||
Stock-based compensation expense
|
48
|
|
|
40
|
|
||
Deferred income taxes
|
(17
|
)
|
|
1
|
|
||
Impairment of goodwill and long-lived assets
|
—
|
|
|
193
|
|
||
Gain on sale of property, plant and equipment
|
(6
|
)
|
|
—
|
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Receivables
|
(71
|
)
|
|
(41
|
)
|
||
Inventories
|
(64
|
)
|
|
(88
|
)
|
||
Current payables and accrued expenses
|
(144
|
)
|
|
(57
|
)
|
||
Contract liabilities
|
76
|
|
|
—
|
|
||
Employee benefit plans
|
(9
|
)
|
|
(8
|
)
|
||
Other assets and liabilities
|
(28
|
)
|
|
(28
|
)
|
||
Net cash provided by operating activities
|
71
|
|
|
95
|
|
||
Investing activities
|
|
|
|
||||
Expenditures for property, plant and equipment
|
(35
|
)
|
|
(70
|
)
|
||
Proceeds from sale of property, plant and equipment
|
11
|
|
|
—
|
|
||
Additions to capitalized software
|
(103
|
)
|
|
(86
|
)
|
||
Business acquisitions, net
|
(12
|
)
|
|
—
|
|
||
Other investing activities, net
|
5
|
|
|
(3
|
)
|
||
Net cash used in investing activities
|
(134
|
)
|
|
(159
|
)
|
||
Financing activities
|
|
|
|
||||
Short term borrowings, net
|
4
|
|
|
2
|
|
||
Payments on term credit facilities
|
(39
|
)
|
|
(34
|
)
|
||
Payments on revolving credit facilities
|
(914
|
)
|
|
(1,013
|
)
|
||
Borrowings on revolving credit facilities
|
897
|
|
|
1,163
|
|
||
Repurchases of Company common stock
|
—
|
|
|
(210
|
)
|
||
Proceeds from employee stock plans
|
10
|
|
|
11
|
|
||
Tax withholding payments on behalf of employees
|
(16
|
)
|
|
(29
|
)
|
||
Net cash used in financing activities
|
(58
|
)
|
|
(110
|
)
|
||
Cash flows from discontinued operations
|
|
|
|
||||
Net cash used in operating activities
|
(11
|
)
|
|
(11
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
1
|
|
|
(8
|
)
|
||
Decrease in cash, cash equivalents, and restricted cash
|
(131
|
)
|
|
(193
|
)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
476
|
|
|
543
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
345
|
|
|
$
|
350
|
|
In millions
|
June 30
|
||||||
2019
|
|
2018
|
|||||
Reconciliation of cash, cash equivalents and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows
|
|
|
|
||||
Cash and cash equivalents
|
$
|
335
|
|
|
$
|
343
|
|
Restricted cash included in other assets
|
10
|
|
|
7
|
|
||
Total cash, cash equivalents and restricted cash
|
$
|
345
|
|
|
$
|
350
|
|
|
|
NCR Stockholders
|
|
|
|
|
|||||||||||||||||||||
|
|
Common Stock
|
|
|
|
|
|
Accumulated Other Comprehensive (Loss) Income
|
|
Non-Redeemable Noncontrolling Interests in Subsidiaries
|
|
|
|||||||||||||||
In millions
|
|
Shares
|
|
Amount
|
|
Paid-in Capital
|
|
Retained Earnings
|
|
|
|
Total
|
|||||||||||||||
December 31, 2018
|
|
119
|
|
|
$
|
1
|
|
|
$
|
34
|
|
|
$
|
606
|
|
|
$
|
(246
|
)
|
|
$
|
4
|
|
|
$
|
399
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
—
|
|
|
1
|
|
|
38
|
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
—
|
|
|
16
|
|
||||||
Total comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
16
|
|
|
1
|
|
|
54
|
|
||||||
Employee stock purchase and stock compensation plans
|
|
1
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
||||||
Series A convertible preferred stock dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
||||||
March 31, 2019
|
|
120
|
|
|
1
|
|
|
48
|
|
|
630
|
|
|
(230
|
)
|
|
5
|
|
|
454
|
|
||||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|
—
|
|
|
—
|
|
|
88
|
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
(11
|
)
|
|
—
|
|
|
(11
|
)
|
||||||
Total comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|
(11
|
)
|
|
—
|
|
|
77
|
|
||||||
Employee stock purchase and stock compensation plans
|
|
—
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
||||||
Series A convertible preferred stock dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
||||||
June 30, 2019
|
|
120
|
|
|
$
|
1
|
|
|
$
|
76
|
|
|
$
|
706
|
|
|
$
|
(241
|
)
|
|
$
|
5
|
|
|
$
|
547
|
|
|
|
NCR Stockholders
|
|
|
|
|
|||||||||||||||||||||
|
|
Common Stock
|
|
|
|
|
|
Accumulated Other Comprehensive (Loss) Income
|
|
Non-Redeemable Noncontrolling Interests in Subsidiaries
|
|
|
|||||||||||||||
In millions
|
|
Shares
|
|
Amount
|
|
Paid-in Capital
|
|
Retained Earnings
|
|
|
|
Total
|
|||||||||||||||
December 31, 2017
|
|
122
|
|
|
$
|
1
|
|
|
$
|
60
|
|
|
$
|
857
|
|
|
$
|
(199
|
)
|
|
$
|
3
|
|
|
$
|
722
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
||||||
Total comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
14
|
|
|
—
|
|
|
34
|
|
||||||
Effects of adoption of new accounting standards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
1
|
|
|
—
|
|
|
15
|
|
||||||
Employee stock purchase and stock compensation plans
|
|
1
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||||
Repurchase of Company common stock
|
|
(5
|
)
|
|
—
|
|
|
(68
|
)
|
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
(165
|
)
|
||||||
Series A convertible preferred stock dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
||||||
March 31, 2018
|
|
118
|
|
|
1
|
|
|
—
|
|
|
782
|
|
|
(184
|
)
|
|
3
|
|
|
602
|
|
||||||
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
||||||
Other comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
—
|
|
|
(40
|
)
|
||||||
Total comprehensive income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(145
|
)
|
|
(40
|
)
|
|
—
|
|
|
(185
|
)
|
||||||
Employee stock purchase and stock compensation plans
|
|
1
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
||||||
Repurchase of Company common stock
|
|
(1
|
)
|
|
—
|
|
|
(14
|
)
|
|
(31
|
)
|
|
—
|
|
|
—
|
|
|
(45
|
)
|
||||||
Series A convertible preferred stock dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
||||||
June 30, 2018
|
|
118
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
594
|
|
|
$
|
(224
|
)
|
|
$
|
3
|
|
|
$
|
374
|
|
|
In millions
|
Location in the Condensed Consolidated Balance Sheet
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
Current portion of contract assets
|
Other current assets
|
|
$
|
16
|
|
|
$
|
22
|
|
Current portion of contract liabilities
|
Contract liabilities
|
|
$
|
546
|
|
|
$
|
461
|
|
Non-current portion of contract liabilities
|
Other liabilities
|
|
$
|
79
|
|
|
$
|
85
|
|
In millions
|
Location in the Condensed Consolidated Balance Sheet
|
|
June 30, 2019
|
||
Assets
|
|
|
|
||
Operating lease assets
|
Operating lease assets
|
|
$
|
414
|
|
Finance lease assets
|
Property, plant and equipment, net
|
|
11
|
|
|
Accumulated Amortization of Finance lease assets
|
Property, plant and equipment, net
|
|
(1
|
)
|
|
Total leased assets
|
|
|
$
|
424
|
|
Liabilities
|
|
|
|
||
Current
|
|
|
|
||
Operating lease liabilities
|
Other current liabilities
|
|
$
|
99
|
|
Finance lease liabilities
|
Other current liabilities
|
|
3
|
|
|
Noncurrent
|
|
|
|
||
Operating lease liabilities
|
Operating lease liabilities
|
|
389
|
|
|
Finance lease liabilities
|
Other liabilities
|
|
7
|
|
|
Total lease liabilities
|
|
|
$
|
498
|
|
In millions
|
|
Three months ended June 30, 2019
|
|
Six months ended June 30, 2019
|
||||
Operating lease cost
|
|
$
|
34
|
|
|
$
|
69
|
|
Finance lease cost
|
|
|
|
|
||||
Amortization of leased assets
|
|
1
|
|
|
1
|
|
||
Interest on lease liabilities
|
|
—
|
|
|
—
|
|
||
Short-Term lease cost
|
|
1
|
|
|
3
|
|
||
Variable lease cost
|
|
7
|
|
|
16
|
|
||
Total lease cost
|
|
$
|
43
|
|
|
$
|
89
|
|
In millions
|
|
Three months ended June 30, 2019
|
|
Six months ended June 30, 2019
|
||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
||||
Operating cash flows from operating leases
|
|
$
|
38
|
|
|
$
|
70
|
|
Operating cash flows from finance leases
|
|
$
|
—
|
|
|
$
|
—
|
|
Financing cash flows from finance leases
|
|
$
|
—
|
|
|
$
|
—
|
|
Lease Assets Obtained in Exchange for Lease Obligations
|
|
|
|
|
||||
Operating Leases
|
|
$
|
8
|
|
|
$
|
20
|
|
Finance Leases
|
|
$
|
8
|
|
|
$
|
9
|
|
In millions
|
|
Operating Leases
|
|
Finance Leases
|
||||
2019
|
|
$
|
68
|
|
|
$
|
2
|
|
2020
|
|
107
|
|
|
3
|
|
||
2021
|
|
81
|
|
|
3
|
|
||
2022
|
|
61
|
|
|
2
|
|
||
2023
|
|
44
|
|
|
1
|
|
||
Thereafter
|
|
307
|
|
|
—
|
|
||
Total lease payments
|
|
668
|
|
|
11
|
|
||
Less: Amount representing interest
|
|
(180
|
)
|
|
(1
|
)
|
||
Present value of lease liabilities
|
|
$
|
488
|
|
|
$
|
10
|
|
|
|
June 30, 2019
|
|
Weighted average lease term:
|
|
|
|
Operating leases
|
|
9.1 years
|
|
Finance leases
|
|
3.8 years
|
|
Weighted average interest rates:
|
|
|
|
Operating leases
|
|
6.51
|
%
|
Finance leases
|
|
4.67
|
%
|
•
|
Banking - We offer solutions to enable customers in the financial services industry to reduce costs, generate new revenue streams and enhance customer loyalty. These solutions include a comprehensive line of ATM and payment processing hardware and software; cash management and video banking software and customer-facing digital banking services; and related installation, maintenance, and managed and professional services.
|
•
|
Retail - We offer solutions to customers in the retail industry designed to improve selling productivity and checkout processes as well as increase service levels. These solutions primarily include retail-oriented technologies, such as point of sale terminals and point of sale software; a retail software platform with a comprehensive suite of retail software applications; innovative self-service kiosks, such as self-checkout; as well as bar-code scanners. We also offer installation, maintenance, managed and professional services as well as payment processing solutions.
|
•
|
Hospitality - We offer technology solutions to customers in the hospitality industry, serving businesses that range from a single store or restaurant to global chains and sports and entertainment venues. Our solutions include point of sale hardware and software solutions, installation, maintenance, managed and professional services as well as payment processing solutions.
|
•
|
Other - This category includes telecommunications and technology solutions where we offer maintenance as well as managed and professional services for third-party hardware provided to select manufacturers who value and leverage our global service capability.
|
In millions
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Revenue by segment
|
|
|
|
|
|
|
|
||||||||
Banking
|
$
|
868
|
|
|
$
|
725
|
|
|
$
|
1,626
|
|
|
$
|
1,446
|
|
Retail
|
558
|
|
|
537
|
|
|
1,069
|
|
|
1,058
|
|
||||
Hospitality
|
202
|
|
|
198
|
|
|
395
|
|
|
402
|
|
||||
Other
|
82
|
|
|
77
|
|
|
156
|
|
|
148
|
|
||||
Consolidated revenue
|
$
|
1,710
|
|
|
$
|
1,537
|
|
|
$
|
3,246
|
|
|
$
|
3,054
|
|
Operating income by segment
|
|
|
|
|
|
|
|
||||||||
Banking
|
$
|
129
|
|
|
$
|
94
|
|
|
$
|
224
|
|
|
$
|
178
|
|
Retail
|
40
|
|
|
41
|
|
|
66
|
|
|
76
|
|
||||
Hospitality
|
13
|
|
|
19
|
|
|
29
|
|
|
38
|
|
||||
Other
|
10
|
|
|
11
|
|
|
20
|
|
|
21
|
|
||||
Subtotal - segment operating income
|
192
|
|
|
165
|
|
|
339
|
|
|
313
|
|
||||
Other adjustments (1)
|
35
|
|
|
271
|
|
|
82
|
|
|
310
|
|
||||
Income from operations
|
$
|
157
|
|
|
$
|
(106
|
)
|
|
$
|
257
|
|
|
$
|
3
|
|
(1)
|
The following table presents the other adjustments for NCR:
|
In millions
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Transformation and restructuring costs
|
$
|
14
|
|
|
$
|
66
|
|
|
$
|
40
|
|
|
$
|
82
|
|
Asset impairment charges
|
—
|
|
|
183
|
|
|
—
|
|
|
183
|
|
||||
Acquisition-related amortization of intangible assets
|
21
|
|
|
21
|
|
|
42
|
|
|
44
|
|
||||
Acquisition-related costs
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Total other adjustments
|
$
|
35
|
|
|
$
|
271
|
|
|
$
|
82
|
|
|
$
|
310
|
|
In millions
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Americas
|
$
|
1,029
|
|
|
$
|
875
|
|
|
$
|
1,949
|
|
|
$
|
1,764
|
|
Europe, Middle East and Africa (EMEA)
|
452
|
|
|
418
|
|
|
871
|
|
|
826
|
|
||||
Asia Pacific (APJ)
|
229
|
|
|
244
|
|
|
426
|
|
|
464
|
|
||||
Total revenue
|
$
|
1,710
|
|
|
$
|
1,537
|
|
|
$
|
3,246
|
|
|
$
|
3,054
|
|
In millions
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Product revenue
|
$
|
664
|
|
|
$
|
525
|
|
|
$
|
1,203
|
|
|
$
|
1,051
|
|
Professional services and installation services revenue
|
270
|
|
|
271
|
|
|
508
|
|
|
527
|
|
||||
Recurring revenue, including maintenance, cloud revenue and payments
|
776
|
|
|
741
|
|
|
1,535
|
|
|
1,476
|
|
||||
Total revenue
|
$
|
1,710
|
|
|
$
|
1,537
|
|
|
$
|
3,246
|
|
|
$
|
3,054
|
|
In millions
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Software
|
$
|
496
|
|
|
$
|
470
|
|
|
$
|
963
|
|
|
$
|
930
|
|
Services
|
622
|
|
|
610
|
|
|
1,207
|
|
|
1,211
|
|
||||
Hardware
|
592
|
|
|
457
|
|
|
1,076
|
|
|
913
|
|
||||
Total revenue
|
$
|
1,710
|
|
|
$
|
1,537
|
|
|
$
|
3,246
|
|
|
$
|
3,054
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
June 30, 2019
|
||||||||||||||||||||||||||
In millions
|
Goodwill
|
|
Accumulated Impairment Losses
|
|
Total
|
|
Additions
|
|
Impairment
|
|
Other
|
|
Goodwill
|
|
Accumulated Impairment Losses
|
|
Total
|
||||||||||||||||||
Banking
|
$
|
1,718
|
|
|
$
|
(101
|
)
|
|
$
|
1,617
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
1,717
|
|
|
$
|
(101
|
)
|
|
$
|
1,616
|
|
Retail
|
571
|
|
|
(34
|
)
|
|
537
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
576
|
|
|
(34
|
)
|
|
542
|
|
|||||||||
Hospitality
|
385
|
|
|
(23
|
)
|
|
362
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
396
|
|
|
(23
|
)
|
|
373
|
|
|||||||||
Other
|
187
|
|
|
(11
|
)
|
|
176
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
187
|
|
|
(11
|
)
|
|
176
|
|
|||||||||
Total goodwill
|
$
|
2,861
|
|
|
$
|
(169
|
)
|
|
$
|
2,692
|
|
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
2,876
|
|
|
$
|
(169
|
)
|
|
$
|
2,707
|
|
|
Amortization
Period
(in Years)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
In millions
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|||||||||
Identifiable intangible assets
|
|
|
|
|
|
|
|
|
|
||||||||
Reseller & customer relationships
|
1 - 20
|
|
$
|
726
|
|
|
$
|
(244
|
)
|
|
$
|
726
|
|
|
$
|
(218
|
)
|
Intellectual property
|
2 - 8
|
|
443
|
|
|
(384
|
)
|
|
443
|
|
|
(373
|
)
|
||||
Customer contracts
|
8
|
|
89
|
|
|
(88
|
)
|
|
89
|
|
|
(87
|
)
|
||||
Tradenames
|
2 - 10
|
|
75
|
|
|
(64
|
)
|
|
75
|
|
|
(60
|
)
|
||||
Total identifiable intangible assets
|
|
|
$
|
1,333
|
|
|
$
|
(780
|
)
|
|
$
|
1,333
|
|
|
$
|
(738
|
)
|
In millions
|
Three months ended June 30, 2019
|
Six months ended June 30, 2019
|
Remainder of 2019 (estimated)
|
||||||
Amortization expense
|
$
|
21
|
|
$
|
42
|
|
$
|
43
|
|
|
|
For the years ended December 31 (estimated)
|
||||||||||||||||||
In millions
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
||||||||||
Amortization expense
|
|
$
|
68
|
|
|
$
|
59
|
|
|
$
|
55
|
|
|
$
|
52
|
|
|
$
|
47
|
|
|
June 30, 2019
|
|
December 31, 2018
|
|||||||||
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)
|
$
|
90
|
|
|
4.41%
|
|
$
|
84
|
|
|
4.51%
|
|
Trade Receivables Securitization Facility
|
100
|
|
|
3.25%
|
|
100
|
|
|
3.37%
|
|||
Other (2)
|
8
|
|
|
5.73%
|
|
1
|
|
|
4.92%
|
|||
|
Total short-term borrowings
|
$
|
198
|
|
|
|
|
$
|
185
|
|
|
|
Long-Term Debt
|
|
|
|
|
|
|
|
|||||
Senior Secured Credit Facility:
|
|
|
|
|
|
|
|
|||||
|
Term loan facility (1)
|
$
|
630
|
|
|
4.41%
|
|
$
|
675
|
|
|
4.51%
|
|
Revolving credit facility (1)
|
100
|
|
|
4.41%
|
|
120
|
|
|
4.49%
|
||
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
|
(15
|
)
|
|
|
|
(18
|
)
|
|
|
|||
Other (1)
|
3
|
|
|
0.44%
|
|
3
|
|
|
0.59%
|
|||
|
Total long-term debt
|
$
|
2,918
|
|
|
|
|
$
|
2,980
|
|
|
|
(1)
|
Interest rates are weighted-average interest rates as of June 30, 2019 and December 31, 2018.
|
•
|
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 June 30
|
|
Six months ended June 30
|
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Restricted stock units
|
$
|
22
|
|
|
$
|
24
|
|
|
$
|
42
|
|
|
$
|
37
|
|
Stock options
|
2
|
|
|
1
|
|
|
4
|
|
|
1
|
|
||||
Employee stock purchase plan
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
||||
Stock-based compensation expense
|
25
|
|
|
26
|
|
|
48
|
|
|
40
|
|
||||
Tax benefit
|
(4
|
)
|
|
(4)
|
|
|
(7
|
)
|
|
(7
|
)
|
||||
Total stock-based compensation expense (net of tax)
|
$
|
21
|
|
|
$
|
22
|
|
|
$
|
41
|
|
|
$
|
33
|
|
|
Six months ended June 30
|
||||||
|
2019
|
|
2018
|
||||
Dividend yield
|
$
|
—
|
|
|
$
|
—
|
|
Risk-free interest rate
|
2.50
|
%
|
|
2.50
|
%
|
||
Expected volatility
|
34.79
|
%
|
|
34.80
|
%
|
||
Expected holding period (years)
|
3.9
|
|
|
3.8
|
|
In millions
|
U.S. Pension Benefits
|
|
International Pension Benefits
|
|
Total Pension Benefits
|
||||||||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||||||
Net service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
2
|
|
|
$
|
1
|
|
|
$
|
2
|
|
Interest cost
|
17
|
|
|
15
|
|
|
5
|
|
|
6
|
|
|
22
|
|
|
21
|
|
||||||
Expected return on plan assets
|
(12
|
)
|
|
(11
|
)
|
|
(7
|
)
|
|
(8
|
)
|
|
(19
|
)
|
|
(19
|
)
|
||||||
Net periodic benefit cost (income)
|
$
|
5
|
|
|
$
|
4
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
4
|
|
In millions
|
U.S. Pension Benefits
|
|
International Pension Benefits
|
|
Total Pension Benefits
|
||||||||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||||||
Net service cost
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
3
|
|
|
$
|
4
|
|
Interest cost
|
33
|
|
|
30
|
|
|
10
|
|
|
11
|
|
|
43
|
|
|
41
|
|
||||||
Expected return on plan assets
|
(22
|
)
|
|
(22
|
)
|
|
(15
|
)
|
|
(16
|
)
|
|
(37
|
)
|
|
(38
|
)
|
||||||
Net periodic benefit cost (income)
|
$
|
11
|
|
|
$
|
8
|
|
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
|
$
|
9
|
|
|
$
|
7
|
|
In millions
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Amortization of:
|
|
|
|
|
|
|
|
||||||||
Prior service benefit
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
$
|
(3
|
)
|
Actuarial loss
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Net postretirement benefit
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
In millions
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net service cost
|
$
|
5
|
|
|
$
|
9
|
|
|
$
|
19
|
|
|
$
|
19
|
|
Interest cost
|
1
|
|
|
1
|
|
|
2
|
|
|
2
|
|
||||
Amortization of:
|
|
|
|
|
|
|
|
||||||||
Prior service benefit
|
(1
|
)
|
|
(1
|
)
|
|
(2
|
)
|
|
(2
|
)
|
||||
Actuarial gain
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||
Net benefit cost
|
$
|
5
|
|
|
$
|
9
|
|
|
$
|
18
|
|
|
$
|
19
|
|
In millions
|
2019
|
|
2018
|
||||
Warranty reserve liability
|
|
|
|
||||
Beginning balance as of January 1
|
$
|
26
|
|
|
$
|
26
|
|
Accruals for warranties issued
|
16
|
|
|
12
|
|
||
Settlements (in cash or in kind)
|
(20
|
)
|
|
(17
|
)
|
||
Ending balance as of June 30
|
$
|
22
|
|
|
$
|
21
|
|
In millions, except per share amounts
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
|
$
|
88
|
|
|
$
|
(143
|
)
|
|
$
|
125
|
|
|
$
|
(88
|
)
|
Series A Convertible Preferred Stock dividends
|
|
(12
|
)
|
|
(12
|
)
|
|
(25
|
)
|
|
(24
|
)
|
||||
Income from continuing operations attributable to NCR common stockholders
|
|
76
|
|
|
(155
|
)
|
|
100
|
|
|
(112
|
)
|
||||
Loss from discontinued operations, net of tax
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(37
|
)
|
||||
Net income attributable to NCR common stockholders
|
|
$
|
76
|
|
|
$
|
(157
|
)
|
|
$
|
100
|
|
|
$
|
(149
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Denominator
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average number of shares outstanding
|
|
120.2
|
|
|
117.9
|
|
|
119.8
|
|
|
118.6
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
From continuing operations
|
|
$
|
0.63
|
|
|
$
|
(1.31
|
)
|
|
$
|
0.83
|
|
|
$
|
(0.94
|
)
|
From discontinued operations
|
|
—
|
|
|
(0.02
|
)
|
|
—
|
|
|
(0.32
|
)
|
||||
Total basic earnings per share
|
|
$
|
0.63
|
|
|
$
|
(1.33
|
)
|
|
$
|
0.83
|
|
|
$
|
(1.26
|
)
|
In millions, except per share amounts
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
|
$
|
88
|
|
|
$
|
(143
|
)
|
|
$
|
125
|
|
|
$
|
(88
|
)
|
Series A Convertible Preferred Stock dividends
|
|
—
|
|
|
(12
|
)
|
|
(25
|
)
|
|
(24
|
)
|
||||
Income from continuing operations attributable to NCR common stockholders
|
|
88
|
|
|
(155
|
)
|
|
100
|
|
|
(112
|
)
|
||||
Loss from discontinued operations, net of tax
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(37
|
)
|
||||
Net income attributable to NCR common stockholders
|
|
$
|
88
|
|
|
$
|
(157
|
)
|
|
$
|
100
|
|
|
$
|
(149
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Basic weighted average number of shares outstanding
|
|
120.2
|
|
|
117.9
|
|
|
119.8
|
|
|
118.6
|
|
||||
Dilutive effect of as-if converted Series A Convertible Preferred Stock
|
|
29.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Dilutive effect of restricted stock units
|
|
2.9
|
|
|
—
|
|
|
3.2
|
|
|
—
|
|
||||
Denominator
|
|
152.7
|
|
|
117.9
|
|
|
123.0
|
|
|
118.6
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share:
|
|
|
|
|
|
|
|
|
||||||||
From continuing operations
|
|
$
|
0.58
|
|
|
$
|
(1.31
|
)
|
|
$
|
0.81
|
|
|
$
|
(0.94
|
)
|
From discontinued operations
|
|
—
|
|
|
(0.02
|
)
|
|
—
|
|
|
(0.32
|
)
|
||||
Total diluted earnings per share
|
|
$
|
0.58
|
|
|
$
|
(1.33
|
)
|
|
$
|
0.81
|
|
|
$
|
(1.26
|
)
|
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
|
June 30, 2019
|
||||||||||||||||||
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
|
|
$
|
89
|
|
|
$
|
3
|
|
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
Total derivatives designated as hedging instruments
|
|
|
|
|
$
|
3
|
|
|
|
|
|
|
$
|
—
|
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current assets
|
|
$
|
154
|
|
|
$
|
—
|
|
|
Other current liabilities
|
|
$
|
280
|
|
|
$
|
1
|
|
Total derivatives not designated as hedging instruments
|
|
|
|
|
$
|
—
|
|
|
|
|
|
|
$
|
1
|
|
||||
Total derivatives
|
|
|
|
|
$
|
3
|
|
|
|
|
|
|
$
|
1
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Fair Values of Derivative Instruments
|
||||||||||||||||||
|
December 31, 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
|
|
$
|
169
|
|
|
$
|
4
|
|
|
Other current liabilities
|
|
$
|
—
|
|
|
$
|
—
|
|
Total derivatives designated as hedging instruments
|
|
|
|
|
$
|
4
|
|
|
|
|
|
|
$
|
—
|
|
||||
Derivatives not designated as hedging instruments
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts
|
Other current assets
|
|
$
|
219
|
|
|
$
|
1
|
|
|
Other current liabilities
|
|
$
|
157
|
|
|
$
|
1
|
|
Total derivatives not designated as hedging instruments
|
|
|
|
|
$
|
1
|
|
|
|
|
|
|
$
|
1
|
|
||||
Total derivatives
|
|
|
|
|
$
|
5
|
|
|
|
|
|
|
$
|
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 three months ended June 30, 2019
|
|
For the three months ended June 30, 2018
|
|
Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations
|
|
For the three months ended June 30, 2019
|
|
For the three months ended June 30, 2018
|
||||||||
Foreign exchange contracts
|
$
|
—
|
|
|
$
|
9
|
|
|
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 six months ended June 30, 2019
|
|
For the six months ended June 30, 2018
|
|
Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations
|
|
For the six months ended June 30, 2019
|
|
For the six months ended June 30, 2018
|
||||||||
Foreign exchange contracts
|
$
|
1
|
|
|
$
|
4
|
|
|
Cost of products
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
In millions
|
|
|
Amount of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations
|
|||||||||||||
|
|
|
Three months ended June 30
|
Six months ended June 30
|
||||||||||||
Derivatives not Designated as Hedging Instruments
|
Location of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations
|
|
2019
|
|
2018
|
2019
|
|
2018
|
||||||||
Foreign exchange contracts
|
Other (expense), net
|
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
$
|
(8
|
)
|
|
$
|
(3
|
)
|
|
June 30, 2019
|
||||||||||||||
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)
|
$
|
2
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts (2)
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||
Total
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts (3)
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Total
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
December 31, 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)
|
$
|
8
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign exchange contracts (2)
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Total
|
$
|
13
|
|
|
$
|
8
|
|
|
$
|
5
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign exchange contracts (3)
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Total
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
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, 2018
|
$
|
(234
|
)
|
$
|
(14
|
)
|
$
|
2
|
|
$
|
(246
|
)
|
Other comprehensive income (loss) before reclassifications
|
11
|
|
—
|
|
1
|
|
12
|
|
||||
Amounts reclassified from AOCI
|
—
|
|
(5
|
)
|
(2
|
)
|
(7
|
)
|
||||
Net current period other comprehensive (loss) income
|
11
|
|
(5
|
)
|
(1
|
)
|
5
|
|
||||
Balance as of June 30, 2019
|
$
|
(223
|
)
|
$
|
(19
|
)
|
$
|
1
|
|
$
|
(241
|
)
|
|
|
For the three months ended June 30, 2019
|
||||||||||||
|
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
|
)
|
|
Selling, general and administrative expenses
|
—
|
|
(2
|
)
|
—
|
|
|
(2
|
)
|
||||
|
Total before tax
|
$
|
—
|
|
$
|
(2
|
)
|
$
|
(2
|
)
|
|
$
|
(4
|
)
|
|
Tax expense
|
|
|
|
|
1
|
|
|||||||
|
Total reclassifications, net of tax
|
|
|
|
|
$
|
(3
|
)
|
|
|
For the three months ended June 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
|
$
|
—
|
|
$
|
—
|
|
$
|
(1
|
)
|
|
$
|
(1
|
)
|
|
Cost of services
|
1
|
|
(1
|
)
|
—
|
|
|
—
|
|
||||
|
Selling, general and administrative expenses
|
—
|
|
(1
|
)
|
—
|
|
|
(1
|
)
|
||||
|
Research and development expenses
|
—
|
|
(1
|
)
|
—
|
|
|
(1
|
)
|
||||
|
Total before tax
|
$
|
1
|
|
$
|
(3
|
)
|
$
|
(1
|
)
|
|
$
|
(3
|
)
|
|
Tax expense
|
|
|
|
|
—
|
|
|||||||
|
Total reclassifications, net of tax
|
|
|
|
|
$
|
(3
|
)
|
|
|
For the six months ended June 30, 2019
|
||||||||||||
|
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
|
$
|
—
|
|
$
|
—
|
|
$
|
(3
|
)
|
|
$
|
(3
|
)
|
|
Cost of services
|
(1
|
)
|
(2
|
)
|
—
|
|
|
(3
|
)
|
||||
|
Selling, general and administrative expenses
|
—
|
|
(2
|
)
|
—
|
|
|
(2
|
)
|
||||
|
Total before tax
|
$
|
(1
|
)
|
$
|
(4
|
)
|
$
|
(3
|
)
|
|
$
|
(8
|
)
|
|
Tax expense
|
|
|
|
|
1
|
|
|||||||
|
Total reclassifications, net of tax
|
|
|
|
|
$
|
(7
|
)
|
|
|
For the six months ended June 30, 2018
|
|||||||||
|
Employee Benefit Plans
|
|
|
||||||||
In millions
|
Amortization of Actuarial Loss (Gain)
|
Amortization of Prior Service Benefit
|
|
Total
|
|||||||
Affected line in Condensed Consolidated Statement of Operations:
|
|
|
|
|
|||||||
|
Cost of services
|
$
|
1
|
|
$
|
(3
|
)
|
|
$
|
(2
|
)
|
|
Selling, general and administrative expenses
|
—
|
|
(1
|
)
|
|
(1
|
)
|
|||
|
Research and development expenses
|
—
|
|
(1
|
)
|
|
(1
|
)
|
|||
|
Total before tax
|
$
|
1
|
|
$
|
(5
|
)
|
|
$
|
(4
|
)
|
|
Tax expense
|
|
|
|
1
|
|
|||||
|
Total reclassifications, net of tax
|
|
|
|
$
|
(3
|
)
|
In millions
|
For the three months ended June 30, 2019
|
|
For the six months ended June 30, 2019
|
||||
Severance and other employee related costs
|
$
|
—
|
|
|
$
|
1
|
|
Inventory related charges
|
7
|
|
|
7
|
|
||
Asset related charges
|
(6
|
)
|
|
(6
|
)
|
||
Other exit costs
|
1
|
|
|
2
|
|
||
Total charge
|
$
|
2
|
|
|
$
|
4
|
|
In millions
|
For the three months ended June 30, 2018
|
|
For the six months ended June 30, 2018
|
||||
Severance and other employee related costs
|
$
|
5
|
|
|
$
|
5
|
|
Inventory related charges
|
17
|
|
|
17
|
|
||
Other exit costs
|
2
|
|
|
2
|
|
||
Total charge
|
$
|
24
|
|
|
$
|
24
|
|
In millions
|
June 30, 2019
|
||
Employee Severance and Other Exit Costs
|
|
||
Beginning balance as of January 1
|
$
|
2
|
|
Cost recognized during the period
|
3
|
|
|
Utilization
|
(5
|
)
|
|
Ending balance as of June 30
|
$
|
—
|
|
In millions
|
June 30, 2019
|
|
December 31, 2018
|
||||
Accounts receivable
|
|
|
|
||||
Trade
|
$
|
1,435
|
|
|
$
|
1,364
|
|
Other
|
30
|
|
|
23
|
|
||
Accounts receivable, gross
|
1,465
|
|
|
1,387
|
|
||
Less: allowance for doubtful accounts
|
(35
|
)
|
|
(31
|
)
|
||
Total accounts receivable, net
|
$
|
1,430
|
|
|
$
|
1,356
|
|
In millions
|
June 30, 2019
|
|
December 31, 2018
|
||||
Inventories
|
|
|
|
||||
Work in process and raw materials
|
$
|
235
|
|
|
$
|
237
|
|
Finished goods
|
261
|
|
|
214
|
|
||
Service parts
|
372
|
|
|
355
|
|
||
Total inventories
|
$
|
868
|
|
|
$
|
806
|
|
•
|
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 June 30, 2019
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Product revenue
|
$
|
344
|
|
|
$
|
3
|
|
|
$
|
399
|
|
|
$
|
(82
|
)
|
|
$
|
664
|
|
Service revenue
|
552
|
|
|
1
|
|
|
493
|
|
|
—
|
|
|
1,046
|
|
|||||
Total revenue
|
896
|
|
|
4
|
|
|
892
|
|
|
(82
|
)
|
|
1,710
|
|
|||||
Cost of products
|
288
|
|
|
1
|
|
|
332
|
|
|
(82
|
)
|
|
539
|
|
|||||
Cost of services
|
339
|
|
|
1
|
|
|
360
|
|
|
—
|
|
|
700
|
|
|||||
Selling, general and administrative expenses
|
141
|
|
|
—
|
|
|
111
|
|
|
—
|
|
|
252
|
|
|||||
Research and development expenses
|
34
|
|
|
—
|
|
|
28
|
|
|
—
|
|
|
62
|
|
|||||
Total operating expenses
|
802
|
|
|
2
|
|
|
831
|
|
|
(82
|
)
|
|
1,553
|
|
|||||
Income (loss) from operations
|
94
|
|
|
2
|
|
|
61
|
|
|
—
|
|
|
157
|
|
|||||
Interest expense
|
(43
|
)
|
|
—
|
|
|
(4
|
)
|
|
2
|
|
|
(45
|
)
|
|||||
Other (expense) income, net
|
(7
|
)
|
|
2
|
|
|
(2
|
)
|
|
(2
|
)
|
|
(9
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
44
|
|
|
4
|
|
|
55
|
|
|
—
|
|
|
103
|
|
|||||
Income tax expense (benefit)
|
(48
|
)
|
|
(17
|
)
|
|
80
|
|
|
—
|
|
|
15
|
|
|||||
Income (loss) from continuing operations before earnings in subsidiaries
|
92
|
|
|
21
|
|
|
(25
|
)
|
|
—
|
|
|
88
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
(4
|
)
|
|
62
|
|
|
—
|
|
|
(58
|
)
|
|
—
|
|
|||||
Income (loss) from continuing operations
|
88
|
|
|
83
|
|
|
(25
|
)
|
|
(58
|
)
|
|
88
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income (loss)
|
$
|
88
|
|
|
$
|
83
|
|
|
$
|
(25
|
)
|
|
$
|
(58
|
)
|
|
$
|
88
|
|
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income (loss) attributable to NCR
|
$
|
88
|
|
|
$
|
83
|
|
|
$
|
(25
|
)
|
|
$
|
(58
|
)
|
|
$
|
88
|
|
Total comprehensive income (loss)
|
163
|
|
|
68
|
|
|
(34
|
)
|
|
(120
|
)
|
|
77
|
|
|||||
Less comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Comprehensive income (loss) attributable to NCR common stockholders
|
$
|
163
|
|
|
$
|
68
|
|
|
$
|
(34
|
)
|
|
$
|
(120
|
)
|
|
$
|
77
|
|
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||
For the three months ended June 30, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Product revenue
|
$
|
258
|
|
|
$
|
24
|
|
|
$
|
306
|
|
|
$
|
(63
|
)
|
|
$
|
525
|
|
Service revenue
|
519
|
|
|
8
|
|
|
485
|
|
|
—
|
|
|
1,012
|
|
|||||
Total revenue
|
777
|
|
|
32
|
|
|
791
|
|
|
(63
|
)
|
|
1,537
|
|
|||||
Cost of products
|
236
|
|
|
7
|
|
|
271
|
|
|
(63
|
)
|
|
451
|
|
|||||
Cost of services
|
354
|
|
|
3
|
|
|
326
|
|
|
—
|
|
|
683
|
|
|||||
Selling, general and administrative expenses
|
130
|
|
|
—
|
|
|
131
|
|
|
—
|
|
|
261
|
|
|||||
Research and development expenses
|
29
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
65
|
|
|||||
Asset impairment charges
|
165
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
183
|
|
|||||
Total operating expenses
|
914
|
|
|
10
|
|
|
782
|
|
|
(63
|
)
|
|
1,643
|
|
|||||
Income (loss) from operations
|
(137
|
)
|
|
22
|
|
|
9
|
|
|
—
|
|
|
(106
|
)
|
|||||
Interest expense
|
(40
|
)
|
|
—
|
|
|
(3
|
)
|
|
2
|
|
|
(41
|
)
|
|||||
Other (expense) income, net
|
(12
|
)
|
|
1
|
|
|
4
|
|
|
(2
|
)
|
|
(9
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
(189
|
)
|
|
23
|
|
|
10
|
|
|
—
|
|
|
(156
|
)
|
|||||
Income tax expense (benefit)
|
32
|
|
|
2
|
|
|
(46
|
)
|
|
—
|
|
|
(12
|
)
|
|||||
Income (loss) from continuing operations before earnings in subsidiaries
|
(221
|
)
|
|
21
|
|
|
56
|
|
|
—
|
|
|
(144
|
)
|
|||||
Equity in earnings of consolidated subsidiaries
|
77
|
|
|
62
|
|
|
—
|
|
|
(139
|
)
|
|
—
|
|
|||||
Income (loss) from continuing operations
|
(144
|
)
|
|
83
|
|
|
56
|
|
|
(139
|
)
|
|
(144
|
)
|
|||||
Income (loss) from discontinued operations, net of tax
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(2
|
)
|
|||||
Net income (loss)
|
$
|
(145
|
)
|
|
$
|
83
|
|
|
$
|
55
|
|
|
$
|
(139
|
)
|
|
$
|
(146
|
)
|
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Net income (loss) attributable to NCR
|
$
|
(145
|
)
|
|
$
|
83
|
|
|
$
|
56
|
|
|
$
|
(139
|
)
|
|
$
|
(145
|
)
|
Total comprehensive income (loss)
|
(185
|
)
|
|
46
|
|
|
10
|
|
|
(60
|
)
|
|
(189
|
)
|
|||||
Less comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||||
Comprehensive income (loss) attributable to NCR common stockholders
|
$
|
(185
|
)
|
|
$
|
46
|
|
|
$
|
14
|
|
|
$
|
(60
|
)
|
|
$
|
(185
|
)
|
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||
For the six months ended June 30, 2019
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Product revenue
|
$
|
617
|
|
|
$
|
5
|
|
|
$
|
709
|
|
|
$
|
(128
|
)
|
|
$
|
1,203
|
|
Service revenue
|
1,075
|
|
|
3
|
|
|
965
|
|
|
—
|
|
|
2,043
|
|
|||||
Total revenue
|
1,692
|
|
|
8
|
|
|
1,674
|
|
|
(128
|
)
|
|
3,246
|
|
|||||
Cost of products
|
534
|
|
|
1
|
|
|
585
|
|
|
(128
|
)
|
|
992
|
|
|||||
Cost of services
|
702
|
|
|
2
|
|
|
668
|
|
|
—
|
|
|
1,372
|
|
|||||
Selling, general and administrative expenses
|
281
|
|
|
—
|
|
|
223
|
|
|
—
|
|
|
504
|
|
|||||
Research and development expenses
|
67
|
|
|
—
|
|
|
54
|
|
|
—
|
|
|
121
|
|
|||||
Total operating expenses
|
1,584
|
|
|
3
|
|
|
1,530
|
|
|
(128
|
)
|
|
2,989
|
|
|||||
Income (loss) from operations
|
108
|
|
|
5
|
|
|
144
|
|
|
—
|
|
|
257
|
|
|||||
Interest expense
|
(86
|
)
|
|
—
|
|
|
(9
|
)
|
|
5
|
|
|
(90
|
)
|
|||||
Other (expense) income, net
|
(20
|
)
|
|
4
|
|
|
4
|
|
|
(5
|
)
|
|
(17
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
2
|
|
|
9
|
|
|
139
|
|
|
—
|
|
|
150
|
|
|||||
Income tax expense (benefit)
|
1
|
|
|
(18
|
)
|
|
41
|
|
|
—
|
|
|
24
|
|
|||||
Income (loss) from continuing operations before earnings in subsidiaries
|
1
|
|
|
27
|
|
|
98
|
|
|
—
|
|
|
126
|
|
|||||
Equity in earnings of consolidated subsidiaries
|
124
|
|
|
156
|
|
|
—
|
|
|
(280
|
)
|
|
—
|
|
|||||
Income (loss) from continuing operations
|
125
|
|
|
183
|
|
|
98
|
|
|
(280
|
)
|
|
126
|
|
|||||
Income (loss) from discontinued operations, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income (loss)
|
$
|
125
|
|
|
$
|
183
|
|
|
$
|
98
|
|
|
$
|
(280
|
)
|
|
$
|
126
|
|
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Net income (loss) attributable to NCR
|
$
|
125
|
|
|
$
|
183
|
|
|
$
|
97
|
|
|
$
|
(280
|
)
|
|
$
|
125
|
|
Total comprehensive income (loss)
|
253
|
|
|
185
|
|
|
104
|
|
|
(411
|
)
|
|
131
|
|
|||||
Less comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Comprehensive income (loss) attributable to NCR common stockholders
|
$
|
253
|
|
|
$
|
185
|
|
|
$
|
103
|
|
|
$
|
(411
|
)
|
|
$
|
130
|
|
Condensed Consolidating Statements of Operations and Comprehensive Income (Loss)
|
|||||||||||||||||||
For the six months ended June 30, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Product revenue
|
$
|
535
|
|
|
$
|
29
|
|
|
$
|
588
|
|
|
$
|
(101
|
)
|
|
$
|
1,051
|
|
Service revenue
|
1,036
|
|
|
16
|
|
|
951
|
|
|
—
|
|
|
2,003
|
|
|||||
Total revenue
|
1,571
|
|
|
45
|
|
|
1,539
|
|
|
(101
|
)
|
|
3,054
|
|
|||||
Cost of products
|
465
|
|
|
11
|
|
|
496
|
|
|
(101
|
)
|
|
871
|
|
|||||
Cost of services
|
696
|
|
|
6
|
|
|
658
|
|
|
—
|
|
|
1,360
|
|
|||||
Selling, general and administrative expenses
|
294
|
|
|
1
|
|
|
211
|
|
|
—
|
|
|
506
|
|
|||||
Research and development expenses
|
75
|
|
|
—
|
|
|
56
|
|
|
—
|
|
|
131
|
|
|||||
Asset impairment charges
|
165
|
|
|
—
|
|
|
18
|
|
|
—
|
|
|
183
|
|
|||||
Total operating expenses
|
1,695
|
|
|
18
|
|
|
1,439
|
|
|
(101
|
)
|
|
3,051
|
|
|||||
Income (loss) from operations
|
(124
|
)
|
|
27
|
|
|
100
|
|
|
—
|
|
|
3
|
|
|||||
Interest expense
|
(79
|
)
|
|
—
|
|
|
(6
|
)
|
|
3
|
|
|
(82
|
)
|
|||||
Other (expense) income, net
|
(15
|
)
|
|
2
|
|
|
2
|
|
|
(3
|
)
|
|
(14
|
)
|
|||||
Income (loss) from continuing operations before income taxes
|
(218
|
)
|
|
29
|
|
|
96
|
|
|
—
|
|
|
(93
|
)
|
|||||
Income tax expense (benefit)
|
24
|
|
|
4
|
|
|
(33
|
)
|
|
—
|
|
|
(5
|
)
|
|||||
Income (loss) from continuing operations before earnings in subsidiaries
|
(242
|
)
|
|
25
|
|
|
129
|
|
|
—
|
|
|
(88
|
)
|
|||||
Equity in earnings of consolidated subsidiaries
|
153
|
|
|
121
|
|
|
—
|
|
|
(274
|
)
|
|
—
|
|
|||||
Income (loss) from continuing operations
|
(89
|
)
|
|
146
|
|
|
129
|
|
|
(274
|
)
|
|
(88
|
)
|
|||||
Income (loss) from discontinued operations, net of tax
|
(36
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(37
|
)
|
|||||
Net income (loss)
|
$
|
(125
|
)
|
|
$
|
146
|
|
|
$
|
128
|
|
|
$
|
(274
|
)
|
|
$
|
(125
|
)
|
Net income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income (loss) attributable to NCR
|
$
|
(125
|
)
|
|
$
|
146
|
|
|
$
|
128
|
|
|
$
|
(274
|
)
|
|
$
|
(125
|
)
|
Total comprehensive income (loss)
|
(151
|
)
|
|
108
|
|
|
97
|
|
|
(208
|
)
|
|
(154
|
)
|
|||||
Less comprehensive income (loss) attributable to noncontrolling interests
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Comprehensive income (loss) attributable to NCR common stockholders
|
$
|
(151
|
)
|
|
$
|
108
|
|
|
$
|
100
|
|
|
$
|
(208
|
)
|
|
$
|
(151
|
)
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||
June 30, 2019
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
18
|
|
|
$
|
2
|
|
|
$
|
315
|
|
|
$
|
—
|
|
|
$
|
335
|
|
Accounts receivable, net
|
57
|
|
|
1
|
|
|
1,372
|
|
|
—
|
|
|
1,430
|
|
|||||
Inventories
|
309
|
|
|
1
|
|
|
558
|
|
|
—
|
|
|
868
|
|
|||||
Due from affiliates
|
830
|
|
|
2,081
|
|
|
404
|
|
|
(3,315
|
)
|
|
—
|
|
|||||
Other current assets
|
143
|
|
|
2
|
|
|
257
|
|
|
—
|
|
|
402
|
|
|||||
Total current assets
|
1,357
|
|
|
2,087
|
|
|
2,906
|
|
|
(3,315
|
)
|
|
3,035
|
|
|||||
Property, plant and equipment, net
|
260
|
|
|
—
|
|
|
112
|
|
|
—
|
|
|
372
|
|
|||||
Goodwill
|
2,199
|
|
|
—
|
|
|
508
|
|
|
—
|
|
|
2,707
|
|
|||||
Intangibles, net
|
498
|
|
|
—
|
|
|
55
|
|
|
—
|
|
|
553
|
|
|||||
Operating lease assets
|
270
|
|
|
—
|
|
|
144
|
|
|
—
|
|
|
414
|
|
|||||
Prepaid pension cost
|
—
|
|
|
—
|
|
|
151
|
|
|
—
|
|
|
151
|
|
|||||
Deferred income taxes
|
315
|
|
|
3
|
|
|
150
|
|
|
—
|
|
|
468
|
|
|||||
Investments in subsidiaries
|
3,477
|
|
|
3,050
|
|
|
—
|
|
|
(6,527
|
)
|
|
—
|
|
|||||
Due from affilates
|
16
|
|
|
1
|
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|||||
Other assets
|
465
|
|
|
1
|
|
|
56
|
|
|
—
|
|
|
522
|
|
|||||
Total assets
|
$
|
8,857
|
|
|
$
|
5,142
|
|
|
$
|
4,082
|
|
|
$
|
(9,859
|
)
|
|
$
|
8,222
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
94
|
|
|
$
|
—
|
|
|
$
|
104
|
|
|
$
|
—
|
|
|
$
|
198
|
|
Accounts payable
|
365
|
|
|
—
|
|
|
404
|
|
|
—
|
|
|
769
|
|
|||||
Payroll and benefits liabilities
|
125
|
|
|
—
|
|
|
110
|
|
|
—
|
|
|
235
|
|
|||||
Contract liabilities
|
294
|
|
|
1
|
|
|
251
|
|
|
—
|
|
|
546
|
|
|||||
Due to affiliates
|
2,478
|
|
|
109
|
|
|
728
|
|
|
(3,315
|
)
|
|
—
|
|
|||||
Other current liabilities
|
208
|
|
|
1
|
|
|
346
|
|
|
—
|
|
|
555
|
|
|||||
Total current liabilities
|
3,564
|
|
|
111
|
|
|
1,943
|
|
|
(3,315
|
)
|
|
2,303
|
|
|||||
Long-term debt
|
2,915
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
2,918
|
|
|||||
Pension and indemnity plan liabilities
|
514
|
|
|
—
|
|
|
253
|
|
|
—
|
|
|
767
|
|
|||||
Postretirement and postemployment benefits liabilities
|
17
|
|
|
4
|
|
|
99
|
|
|
—
|
|
|
120
|
|
|||||
Income tax accruals
|
25
|
|
|
—
|
|
|
69
|
|
|
—
|
|
|
94
|
|
|||||
Due to affiliates
|
—
|
|
|
—
|
|
|
17
|
|
|
(17
|
)
|
|
—
|
|
|||||
Operating lease liabilities
|
297
|
|
|
—
|
|
|
92
|
|
|
—
|
|
|
389
|
|
|||||
Other liabilities
|
99
|
|
|
—
|
|
|
87
|
|
|
—
|
|
|
186
|
|
|||||
Total liabilities
|
7,431
|
|
|
115
|
|
|
2,563
|
|
|
(3,332
|
)
|
|
6,777
|
|
|||||
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
|||||
Series A convertible preferred stock
|
884
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
884
|
|
|||||
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Total NCR stockholders’ equity
|
542
|
|
|
5,027
|
|
|
1,500
|
|
|
(6,527
|
)
|
|
542
|
|
|||||
Noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||
Total stockholders’ equity
|
542
|
|
|
5,027
|
|
|
1,505
|
|
|
(6,527
|
)
|
|
547
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
8,857
|
|
|
$
|
5,142
|
|
|
$
|
4,082
|
|
|
$
|
(9,859
|
)
|
|
$
|
8,222
|
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||
December 31, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
6
|
|
|
$
|
8
|
|
|
450
|
|
|
$
|
—
|
|
|
$
|
464
|
|
|
Accounts receivable, net
|
37
|
|
|
10
|
|
|
1,309
|
|
|
—
|
|
|
1,356
|
|
|||||
Inventories
|
288
|
|
|
4
|
|
|
514
|
|
|
—
|
|
|
806
|
|
|||||
Due from affiliates
|
708
|
|
|
2,092
|
|
|
457
|
|
|
(3,257
|
)
|
|
—
|
|
|||||
Other current assets
|
137
|
|
|
47
|
|
|
255
|
|
|
(42
|
)
|
|
397
|
|
|||||
Total current assets
|
1,176
|
|
|
2,161
|
|
|
2,985
|
|
|
(3,299
|
)
|
|
3,023
|
|
|||||
Property, plant and equipment, net
|
245
|
|
|
1
|
|
|
113
|
|
|
—
|
|
|
359
|
|
|||||
Goodwill
|
2,168
|
|
|
—
|
|
|
524
|
|
|
—
|
|
|
2,692
|
|
|||||
Intangibles, net
|
536
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
595
|
|
|||||
Prepaid pension cost
|
—
|
|
|
—
|
|
|
140
|
|
|
—
|
|
|
140
|
|
|||||
Deferred income taxes
|
317
|
|
|
—
|
|
|
149
|
|
|
(18
|
)
|
|
448
|
|
|||||
Investments in subsidiaries
|
3,244
|
|
|
2,854
|
|
|
—
|
|
|
(6,098
|
)
|
|
—
|
|
|||||
Due from affiliates
|
16
|
|
|
1
|
|
|
35
|
|
|
(52
|
)
|
|
—
|
|
|||||
Other assets
|
453
|
|
|
4
|
|
|
47
|
|
|
—
|
|
|
504
|
|
|||||
Total assets
|
$
|
8,155
|
|
|
$
|
5,021
|
|
|
$
|
4,052
|
|
|
$
|
(9,467
|
)
|
|
$
|
7,761
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
100
|
|
|
$
|
—
|
|
|
$
|
185
|
|
Accounts payable
|
397
|
|
|
2
|
|
|
498
|
|
|
—
|
|
|
897
|
|
|||||
Payroll and benefits liabilities
|
141
|
|
|
—
|
|
|
97
|
|
|
—
|
|
|
238
|
|
|||||
Contract liabilities
|
221
|
|
|
5
|
|
|
235
|
|
|
—
|
|
|
461
|
|
|||||
Due to affiliates
|
2,177
|
|
|
143
|
|
|
937
|
|
|
(3,257
|
)
|
|
—
|
|
|||||
Other current liabilities
|
201
|
|
|
6
|
|
|
336
|
|
|
(42
|
)
|
|
501
|
|
|||||
Total current liabilities
|
3,222
|
|
|
156
|
|
|
2,203
|
|
|
(3,299
|
)
|
|
2,282
|
|
|||||
Long-term debt
|
2,978
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2,980
|
|
|||||
Pension and indemnity plan liabilities
|
502
|
|
|
—
|
|
|
257
|
|
|
—
|
|
|
759
|
|
|||||
Postretirement and postemployment benefits liabilities
|
18
|
|
|
3
|
|
|
97
|
|
|
—
|
|
|
118
|
|
|||||
Income tax accruals
|
19
|
|
|
5
|
|
|
67
|
|
|
—
|
|
|
91
|
|
|||||
Due to affiliates
|
—
|
|
|
36
|
|
|
16
|
|
|
(52
|
)
|
|
—
|
|
|||||
Other liabilities
|
162
|
|
|
24
|
|
|
91
|
|
|
(18
|
)
|
|
259
|
|
|||||
Total liabilities
|
6,901
|
|
|
224
|
|
|
2,733
|
|
|
(3,369
|
)
|
|
6,489
|
|
|||||
Redeemable noncontrolling interest
|
—
|
|
|
—
|
|
|
14
|
|
|
—
|
|
|
14
|
|
|||||
Series A convertible preferred stock
|
859
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
859
|
|
|||||
Stockholders’ equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Total NCR stockholders’ equity
|
395
|
|
|
4,797
|
|
|
1,301
|
|
|
(6,098
|
)
|
|
395
|
|
|||||
Noncontrolling interests in subsidiaries
|
—
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
|||||
Total stockholders’ equity
|
395
|
|
|
4,797
|
|
|
1,305
|
|
|
(6,098
|
)
|
|
399
|
|
|||||
Total liabilities and stockholders’ equity
|
$
|
8,155
|
|
|
$
|
5,021
|
|
|
$
|
4,052
|
|
|
$
|
(9,467
|
)
|
|
$
|
7,761
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the six months ended June 30, 2019
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
230
|
|
|
$
|
(208
|
)
|
|
$
|
50
|
|
|
$
|
(1
|
)
|
|
$
|
71
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenditures for property, plant and equipment
|
(17
|
)
|
|
—
|
|
|
(18
|
)
|
|
—
|
|
|
(35
|
)
|
|||||
Proceeds from sales of property, plant and equipment
|
3
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
11
|
|
|||||
Additions to capitalized software
|
(93
|
)
|
|
—
|
|
|
(10
|
)
|
|
—
|
|
|
(103
|
)
|
|||||
Proceeds from (payments of) intercompany notes
|
47
|
|
|
255
|
|
|
34
|
|
|
(336
|
)
|
|
—
|
|
|||||
Investments in equity affiliates
|
—
|
|
|
—
|
|
|
98
|
|
|
(98
|
)
|
|
—
|
|
|||||
Business acquisitions, net
|
(12
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|||||
Other investing activities, net
|
5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
Net cash provided by (used in) investing activities
|
(67
|
)
|
|
255
|
|
|
112
|
|
|
(434
|
)
|
|
(134
|
)
|
|||||
Financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short term borrowings, net
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|||||
Payments on term credit facilities
|
(39
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
|||||
Payments on revolving credit facilities
|
(800
|
)
|
|
—
|
|
|
(114
|
)
|
|
—
|
|
|
(914
|
)
|
|||||
Borrowings on revolving credit facilities
|
780
|
|
|
—
|
|
|
117
|
|
|
—
|
|
|
897
|
|
|||||
Proceeds from employee stock plans
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|||||
Equity contribution
|
(84
|
)
|
|
(14
|
)
|
|
—
|
|
|
98
|
|
|
—
|
|
|||||
Dividend distribution to consolidated subsidiaries
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
|||||
Borrowings (repayments) of intercompany notes
|
—
|
|
|
(34
|
)
|
|
(302
|
)
|
|
336
|
|
|
—
|
|
|||||
Tax withholding payments on behalf of employees
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(145
|
)
|
|
(48
|
)
|
|
(300
|
)
|
|
435
|
|
|
(58
|
)
|
|||||
Cash flows from discontinued operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash used in operating activities
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Increase (decrease) in cash, cash equivalents and restricted cash
|
7
|
|
|
(1
|
)
|
|
(137
|
)
|
|
—
|
|
|
(131
|
)
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
12
|
|
|
3
|
|
|
461
|
|
|
—
|
|
|
476
|
|
|||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
19
|
|
|
$
|
2
|
|
|
$
|
324
|
|
|
$
|
—
|
|
|
$
|
345
|
|
In millions
|
June 30, 2019
|
||||||||||||||||||
Reconciliation of cash, cash equivalents and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash and cash equivalents
|
$
|
18
|
|
|
$
|
2
|
|
|
$
|
315
|
|
|
$
|
—
|
|
|
$
|
335
|
|
Restricted cash included in Other assets
|
1
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
10
|
|
|||||
Total cash, cash equivalents and restricted cash
|
$
|
19
|
|
|
$
|
2
|
|
|
$
|
324
|
|
|
$
|
—
|
|
|
$
|
345
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||
For the six months ended June 30, 2018
|
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
In millions
|
Parent Issuer
|
|
Guarantor Subsidiary
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
105
|
|
|
$
|
(150
|
)
|
|
$
|
140
|
|
|
$
|
—
|
|
|
$
|
95
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenditures for property, plant and equipment
|
(57
|
)
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|
(70
|
)
|
|||||
Additions to capitalized software
|
(71
|
)
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
(86
|
)
|
|||||
Proceeds from (payments of) intercompany notes
|
160
|
|
|
145
|
|
|
—
|
|
|
(305
|
)
|
|
—
|
|
|||||
Other investing activities, net
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Net cash provided by (used in) investing activities
|
29
|
|
|
145
|
|
|
(28
|
)
|
|
(305
|
)
|
|
(159
|
)
|
|||||
Financing activities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short term borrowings, net
|
3
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
2
|
|
|||||
Payments on term credit facilities
|
(34
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(34
|
)
|
|||||
Payments on revolving credit facilities
|
(660
|
)
|
|
—
|
|
|
(353
|
)
|
|
—
|
|
|
(1,013
|
)
|
|||||
Borrowings on revolving credit facilities
|
710
|
|
|
—
|
|
|
453
|
|
|
—
|
|
|
1,163
|
|
|||||
Repurchase of Company common stock
|
(210
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(210
|
)
|
|||||
Proceeds from employee stock plans
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||
Borrowings (repayments) of intercompany notes
|
—
|
|
|
—
|
|
|
(305
|
)
|
|
305
|
|
|
—
|
|
|||||
Tax withholding payments on behalf of employees
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|||||
Net cash provided by (used in) financing activities
|
(209
|
)
|
|
—
|
|
|
(206
|
)
|
|
305
|
|
|
(110
|
)
|
|||||
Cash flows from discontinued operations
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash used in operating activities
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||||
Increase (decrease) in cash, cash equivalents, and restricted cash
|
(86
|
)
|
|
(5
|
)
|
|
(102
|
)
|
|
—
|
|
|
(193
|
)
|
|||||
Cash, cash equivalents and restricted cash at beginning of period
|
97
|
|
|
11
|
|
|
435
|
|
|
—
|
|
|
543
|
|
|||||
Cash, cash equivalents and restricted cash at end of period
|
$
|
11
|
|
|
$
|
6
|
|
|
$
|
333
|
|
|
$
|
—
|
|
|
$
|
350
|
|
In millions
|
June 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
|
$
|
11
|
|
|
$
|
6
|
|
|
$
|
326
|
|
|
$
|
—
|
|
|
$
|
343
|
|
Restricted cash included in Other assets
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
|||||
Total cash, cash equivalents and restricted cash
|
$
|
11
|
|
|
$
|
6
|
|
|
$
|
333
|
|
|
$
|
—
|
|
|
$
|
350
|
|
Item 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
|
•
|
Revenue increased approximately 11% from the prior year period and 14% excluding unfavorable foreign currency impacts;
|
•
|
Banking revenue increased 20% and operating margin rate increased 190 basis points from the prior year period;
|
•
|
Retail revenue increased 4% and operating margin rate declined 40 basis points from the prior year period; and
|
•
|
Hospitality revenue increased 2% and operating margin rate declined 320 basis points from the prior year period.
|
•
|
Customer Care - Improve the customer experience and execution of new product introductions;
|
•
|
Stockholder Value - Accelerate profitable top-line revenue growth by investing in and shifting our revenue mix to recurring software and services revenue streams we identify as strategic growth platforms, while improving the Company’s cost structure;
|
•
|
Strategic Growth Platforms and Targeted Acquisitions - Increase capital expenditures in strategic growth platforms and target acquisitions to gain solutions that drive the highest growth and return on investment;
|
•
|
Talent and Employee Care - Develop, reward and retain talent with competitive recruiting, training and effective incentive-based compensation programs; and
|
•
|
Sales Enablement - Provide our sales force with top-performing and secure products packaged to target our desired revenue mix and drive customer delight and stockholder value, as well as invest in appropriate training programs to enable success.
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
In millions
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
$
|
1,710
|
|
|
$
|
1,537
|
|
|
$
|
3,246
|
|
|
$
|
3,054
|
|
Gross margin
|
471
|
|
|
403
|
|
|
882
|
|
|
823
|
|
||||
Gross margin as a percentage of revenue
|
27.5
|
%
|
|
26.2
|
%
|
|
27.2
|
%
|
|
26.9
|
%
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative expenses
|
$
|
252
|
|
|
$
|
261
|
|
|
$
|
504
|
|
|
$
|
506
|
|
Research and development expenses
|
62
|
|
|
65
|
|
|
121
|
|
|
131
|
|
||||
Asset impairment charges
|
—
|
|
|
183
|
|
|
—
|
|
|
183
|
|
||||
Income from operations
|
$
|
157
|
|
|
$
|
(106
|
)
|
|
$
|
257
|
|
|
$
|
3
|
|
In millions
|
2019
|
% of Total
|
|
2018
|
% of Total
|
|
% Increase (Decrease)
|
% Increase (Decrease) Constant Currency (1)
|
||||
Americas
|
$
|
1,029
|
|
60%
|
|
$
|
875
|
|
57%
|
|
18%
|
19%
|
Europe, Middle East and Africa (EMEA)
|
452
|
|
27%
|
|
418
|
|
27%
|
|
8%
|
13%
|
||
Asia Pacific (APJ)
|
229
|
|
13%
|
|
244
|
|
16%
|
|
(6)%
|
(3)%
|
||
Consolidated revenue
|
$
|
1,710
|
|
100%
|
|
$
|
1,537
|
|
100%
|
|
11%
|
14%
|
In millions
|
2019
|
% of Total
|
|
2018
|
% of Total
|
|
% Increase (Decrease)
|
% Increase (Decrease) Constant Currency (1)
|
||||
Americas
|
$
|
1,949
|
|
60%
|
|
$
|
1,764
|
|
58%
|
|
10%
|
12%
|
Europe, Middle East and Africa (EMEA)
|
871
|
|
27%
|
|
826
|
|
27%
|
|
5%
|
11%
|
||
Asia Pacific (APJ)
|
426
|
|
13%
|
|
464
|
|
15%
|
|
(8)%
|
(4)%
|
||
Consolidated revenue
|
$
|
3,246
|
|
100%
|
|
$
|
3,054
|
|
100%
|
|
6%
|
9%
|
In millions
|
2019
|
% of Total
|
|
2018
|
% of Total
|
|
% Increase (Decrease)
|
% Increase (Decrease) Constant Currency (1)
|
||||
Banking
|
$
|
868
|
|
51%
|
|
$
|
725
|
|
47%
|
|
20%
|
23%
|
Retail
|
558
|
|
32%
|
|
537
|
|
35%
|
|
4%
|
6%
|
||
Hospitality
|
202
|
|
12%
|
|
198
|
|
13%
|
|
2%
|
3%
|
||
Other
|
82
|
|
5%
|
|
77
|
|
5%
|
|
6%
|
8%
|
||
Consolidated revenue
|
$
|
1,710
|
|
100%
|
|
$
|
1,537
|
|
100%
|
|
11%
|
14%
|
In millions
|
2019
|
% of Total
|
|
2018
|
% of Total
|
|
% Increase (Decrease)
|
% Increase (Decrease) Constant Currency (1)
|
||||
Banking
|
$
|
1,626
|
|
50%
|
|
$
|
1,446
|
|
47%
|
|
12%
|
16%
|
Retail
|
1,069
|
|
33%
|
|
1,058
|
|
35%
|
|
1%
|
4%
|
||
Hospitality
|
395
|
|
12%
|
|
402
|
|
13%
|
|
(2)%
|
—%
|
||
Other
|
156
|
|
5%
|
|
148
|
|
5%
|
|
5%
|
8%
|
||
Consolidated revenue
|
$
|
3,246
|
|
100%
|
|
$
|
3,054
|
|
100%
|
|
6%
|
9%
|
|
Revenue % Growth (GAAP)
|
Favorable (unfavorable) FX impact
|
Revenue % Growth Constant Currency (non-GAAP)
|
Americas
|
18%
|
(1)%
|
19%
|
EMEA
|
8%
|
(5)%
|
13%
|
APJ
|
(6)%
|
(3)%
|
(3)%
|
Consolidated revenue
|
11%
|
(3)%
|
14%
|
|
Revenue % Growth (GAAP)
|
Favorable (unfavorable) FX impact
|
Revenue % Growth Constant Currency (non-GAAP)
|
|||
Americas
|
10
|
%
|
(2
|
)%
|
12
|
%
|
EMEA
|
5
|
%
|
(6
|
)%
|
11
|
%
|
APJ
|
(8
|
)%
|
(4
|
)%
|
(4
|
)%
|
Consolidated revenue
|
6
|
%
|
(3
|
)%
|
9
|
%
|
|
Revenue % Growth (GAAP)
|
Favorable (unfavorable) FX impact
|
Revenue % Growth Constant Currency (non-GAAP)
|
Banking
|
20%
|
(3)%
|
23%
|
Retail
|
4%
|
(2)%
|
6%
|
Hospitality
|
2%
|
(1)%
|
3%
|
Other
|
6%
|
(2)%
|
8%
|
Consolidated revenue
|
11%
|
(3)%
|
14%
|
|
Revenue % Growth (GAAP)
|
Favorable (unfavorable) FX impact
|
Revenue % Growth Constant Currency (non-GAAP)
|
Banking
|
12%
|
(4)%
|
16%
|
Retail
|
1%
|
(3)%
|
4%
|
Hospitality
|
(2)%
|
(2)%
|
—%
|
Other
|
5%
|
(3)%
|
8%
|
Consolidated revenue
|
6%
|
(3)%
|
9%
|
•
|
Banking - We offer solutions to enable customers in the financial services industry to reduce costs, generate new revenue streams and enhance customer loyalty. These solutions include a comprehensive line of ATM and payment processing hardware and software; cash management and video banking software and customer-facing digital banking services; and related installation, maintenance, and managed and professional services.
|
•
|
Retail - We offer solutions to customers in the retail industry designed to improve selling productivity and checkout processes as well as increase service levels. These solutions primarily include retail-oriented technologies, such as point of sale terminals and point of sale software; a retail software platform with a comprehensive suite of retail software applications; innovative self-service kiosks, such as self-checkout; as well as bar-code scanners. We also offer installation, maintenance, managed and professional services as well as payment processing solutions.
|
•
|
Hospitality - We offer technology solutions to customers in the hospitality industry, serving businesses that range from a single store or restaurant to global chains and sports and entertainment venues. Our solutions include point of sale hardware and software solutions, installation, maintenance, managed and professional services as well as payment processing solutions.
|
•
|
Other - This category includes telecommunications and technology solutions where we offer maintenance as well as managed and professional services for third-party hardware provided to select manufacturers who value and leverage our global service capability.
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
In millions
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
$
|
868
|
|
|
$
|
725
|
|
|
$
|
1,626
|
|
|
$
|
1,446
|
|
Operating income
|
$
|
129
|
|
|
$
|
94
|
|
|
$
|
224
|
|
|
$
|
178
|
|
Operating income as a percentage of revenue
|
14.9
|
%
|
|
13.0
|
%
|
|
13.8
|
%
|
|
12.3
|
%
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
In millions
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
$
|
558
|
|
|
$
|
537
|
|
|
$
|
1,069
|
|
|
$
|
1,058
|
|
Operating income
|
$
|
40
|
|
|
$
|
41
|
|
|
$
|
66
|
|
|
$
|
76
|
|
Operating income as a percentage of revenue
|
7.2
|
%
|
|
7.6
|
%
|
|
6.2
|
%
|
|
7.2
|
%
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
In millions
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
$
|
202
|
|
|
$
|
198
|
|
|
$
|
395
|
|
|
$
|
402
|
|
Operating income
|
$
|
13
|
|
|
$
|
19
|
|
|
$
|
29
|
|
|
$
|
38
|
|
Operating income as a percentage of revenue
|
6.4
|
%
|
|
9.6
|
%
|
|
7.3
|
%
|
|
9.5
|
%
|
|
Three months ended June 30
|
|
Six months ended June 30
|
||||||||||||
In millions
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenue
|
$
|
82
|
|
|
$
|
77
|
|
|
$
|
156
|
|
|
$
|
148
|
|
Operating income
|
$
|
10
|
|
|
$
|
11
|
|
|
$
|
20
|
|
|
$
|
21
|
|
Operating income as a percentage of revenue
|
12.2
|
%
|
|
14.3
|
%
|
|
12.8
|
%
|
|
14.2
|
%
|
|
Six months ended June 30
|
||||||
In millions
|
2019
|
|
2018
|
||||
Net cash provided by operating activities
|
$
|
71
|
|
|
$
|
95
|
|
Expenditures for property, plant and equipment
|
(35
|
)
|
|
(70
|
)
|
||
Additions to capitalized software
|
(103
|
)
|
|
(86
|
)
|
||
Net cash used in discontinued operations
|
(11
|
)
|
|
(11
|
)
|
||
Free cash outflow (non-GAAP)
|
$
|
(78
|
)
|
|
$
|
(72
|
)
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
Item 4.
|
CONTROLS AND PROCEDURES
|
Item 1.
|
LEGAL PROCEEDINGS
|
Item 1A.
|
RISK FACTORS
|
Item 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Articles of Amendment and Restatement of NCR Corporation.
|
|
|
|
Form of 2019 Director Restricted Stock Unit Grant Statement under the NCR Corporation 2017 Stock Incentive Plan.
|
|
|
|
Fourth Amendment to Receivables Financing Agreement, dated as of November 15, 2018, by and among NCR Receivables LLC, as borrower, NCR Corporation, as servicer, PNC Bank, National Association, as administrative agent, and PNC Bank, National Association, MUFG Bank, Ltd. (f/k/a The Bank of Tokyo Mitsubishi UFJ, Ltd., New York Branch) and Victory Receivables Corporation, as lenders.
|
|
|
|
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.
|
|
|
|
|
|
NCR CORPORATION
|
||
|
|
|
|
|
Date:
|
August 2, 2019
|
By:
|
|
/s/ Andre J. Fernandez
|
|
|
|
|
Andre J. Fernandez
Executive Vice President and Chief Financial Officer
|
Title: Assistant Secretary
|
Title: Executive Vice President, General Counsel and Secretary
|
Name of Grantee
|
Grant Date
|
No. of Restricted Stock Units
|
1.
|
The Stock Units will vest during the one (1) year period beginning on the date upon which you were granted the Stock Units (the “Grant Date”), in four (4) equal quarterly installments commencing three (3) months after the Grant Date, provided that you continuously serve as a Director of NCR until each quarterly vesting date. Notwithstanding the foregoing, if the Grant Date of your Stock Units is the date of an Annual Meeting of Stockholders, then, the fourth quarterly vesting will occur only if you continue to serve as a Director until the earlier of (a) the next Annual Meeting of Stockholders following the Grant Date, or (b) the first (1st) anniversary of the Grant Date.
|
2.
|
The Stock Units will become fully vested if, prior to the one (1) year anniversary of the Grant Date, you die at a time while serving as a Director of NCR.
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3.
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The vesting schedule will accelerate and the Stock Units will become fully vested if (1) a Change in Control (as defined in Section 10(b) of the Plan) occurs, and (2) you cease to serve as a Director of NCR within twenty-four (24) months of the effective date of the Change in Control for any reason other than your engaging willfully in illegal conduct or gross misconduct, as determined by the affirmative vote of a majority of the entire membership of the Board of Directors of NCR. In the event that Stock Units become vested due to your cessation of service as a Director of NCR pursuant to this Section 3, to the extent required to comply with Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"), such Stock Units shall be paid upon your "separation from service" within the meaning of Section 409A of the Code; provided, however, that if you are a "specified employee" as determined under NCR's policy for determining specified employees on the date of separation from service, such Stock Units shall be paid, to the extent required to comply with Section 409A of the Code, on the first business day after the date that is six months following your "separation from service" within the meaning of Section 409A of the Code.
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4.
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Except as otherwise provided pursuant to (1) a deferral election in effect under Article IV of the Program or (2) Section 3 of this Statement, when vested, the Stock Units will be paid to you in shares of NCR common stock, such that one Stock Unit equals one share of NCR common stock.
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5.
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Any cash dividends declared before the vesting dates on the shares underlying the Stock Units shall not be paid currently, but shall be converted to additional Stock Units, based on the fair market value of NCR common stock on the date the dividend is declared. Any Stock Units resulting from such conversion will be considered Stock Units for purposes of this Statement and will be subject to all of the terms, conditions and restrictions set forth herein.
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6.
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You may designate one or more beneficiaries to receive all or part of any shares underlying the Stock Units to be distributed in case of your death, and you may change or revoke such designation at any time. In the event of your death, any shares underlying the Stock Units distributable hereunder that are subject to such a designation will be distributed to such beneficiary or beneficiaries in accordance with this Statement. Any
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7.
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The terms of this award of Stock Units as evidenced by this Statement may be amended by the NCR Board of Directors or the Compensation and Human Resource Committee of the NCR Board of Directors, provided that no such amendment shall impair your rights hereunder without your consent.
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8.
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In the event of a conflict between the terms and conditions of this Statement and the terms and conditions of the Plan, the terms and conditions of the Plan shall prevail.
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(i)
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NCR RECEIVABLES, LLC, a Delaware limited liability company, as Borrower (together with its successors and assigns, the “Borrower”);
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(ii)
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NCR CORPORATION, a Maryland corporation (the “Servicer”), as initial Servicer;
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(iii)
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MUFG BANK, LTD. (f/k/a The Bank of Tokyo Mitsubishi UFJ, Ltd., New York Branch), as a Committed Lender and as a Group Agent;
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(iv)
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VICTORY RECEIVABLES CORPORATION, as a Conduit Lender; and
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(v)
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PNC BANK, NATIONAL ASSOCIATION, as a Committed Lender, as a Group Agent and as the Administrative Agent (in such capacity, the “Administrative Agent”).
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2
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3
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4
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NCR RECEIVABLES LLC,
as the Borrower
By: /s/ Farzad Jalil
Name: Farzad Jalil Title: Assistant Treasurer |
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NCR CORPORATION,
as the Servicer
By: /s/ Vladimir Samoylenko Name: Vladimir Samoylenko Title: Assistant Secretary |
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PNC BANK, NATIONAL ASSOCIATION,
as Administrative Agent By: /s/ Eric Bruno Name: Eric Bruno Title: Senior Vice President |
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PNC BANK, NATIONAL ASSOCIATION,
as a Group Agent By: /s/ Eric Bruno Name: Eric Bruno Title: Senior Vice President |
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PNC BANK, NATIONAL ASSOCIATION,
as a Committed Lender By: /s/ Eric Bruno Name: Eric Bruno Title: Senior Vice President |
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MUFG BANK, LTD.,
as a Committed Lender By: /s/ Eric Williams Name: Eric Williams Title: Managing Director |
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MUFG BANK, LTD.,
as a Group Agent By: /s/ Eric Williams Name: Eric Williams Title: Managing Director
VICTORY RECEIVABLES CORPORATION,
as a Conduit Lender
By: /s/ Kevin J. Corrigan Name: Kevin J. Corrigan Title: Vice President |
Date:
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August 2, 2019
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/s/ Michael D. Hayford
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Michael D. Hayford
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President and Chief Executive 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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August 2, 2019
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/s/ Michael D. Hayford
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Michael D. Hayford
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President and Chief Executive Officer
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Dated:
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August 2, 2019
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/s/ Andre J. Fernandez
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Andre J. Fernandez
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Executive Vice President and Chief Financial Officer
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Date:
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August 2, 2019
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/s/ Andre J. Fernandez
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Andre J. Fernandez
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Executive Vice President and Chief Financial Officer
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