UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________

FORM 10-Q

________________________

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


			For the quarterly period ended June 30, 2021


or


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________

~~For the quarterly period ended June 30, 2020~~

~~Commission File Number~~


			Commission File Number: 001-00395

________________________

NCR CORPORATION

(Exact name of registrant as specified in its charter)

________________________


Maryland						31-0387920
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

864 Spring Street NW

Atlanta, GA 30308

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (937) ~~445-5000~~445-1936

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	NCR	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging ~~Growth Company~~growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended ~~transaction~~transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange ~~act.~~Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

~~Securities registered pursuant to Section 12(b) of the Act:~~


~~Title of each class~~	~~Trading Symbol(s)~~	~~Name of each exchange on which registered~~
~~Common Stock, par value $0.01 per share~~	~~NCR~~	~~New York Stock Exchange~~

As of July ~~17, 2020,~~23, 2021, there were approximately ~~128.4~~131.4 million shares of the registrant's common stock issued and outstanding.

Table of Contents

TABLE OF CONTENTS

PART I. Financial Information

Description

Page

Item 1.

Financial Statements

Condensed Consolidated Statements of Operations (Unaudited)Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020

Condensed Consolidated Statements of Comprehensive Income (Unaudited)Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020

Condensed Consolidated Balance Sheets (Unaudited)June 30, ~~2020~~2021 and December 31, ~~2019~~2020

Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020

Condensed Consolidated Statements of Changes in Stockholder's Equity (Unaudited)Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020

Notes to Condensed Consolidated Financial Statements (Unaudited)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

4243

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

5658

Item 4.

Controls and Procedures

5759

PART II. Other Information

Description

Page

Item 1.

Item 1A.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Part I. Financial Information

Item 1. FINANCIAL STATEMENTS

NCR Corporation

Condensed Consolidated Statements of Operations (Unaudited)


In millions, except per share amounts	In millions, except per share amounts	Three months ended June 30									Six months ended June 30									In millions, except per share amounts	Three months ended June 30						Six months ended June 30
				2020			2019			2020			2019		In millions, except per share amounts	2021			2020				2021			2020
Product revenue	Product revenue	$	481		$	664		$	955		$	1,203	Product revenue	$			$	481			$	1,033		$	955
Service revenue	Service revenue	1,003			1,046			2,032			2,043		Service revenue	1,126			1,003				2,188			2,032
Total revenue	Total revenue	1,484			1,710			2,987			3,246		Total revenue	1,677			1,484				3,221			2,987
Cost of products	Cost of products	411			539			802			992		Cost of products	453			411				861			802
Cost of services	Cost of services	701			700			1,416			1,372		Cost of services	768			701				1,490			1,416
Selling, general and administrative expenses	Selling, general and administrative expenses	234			252			489			504		Selling, general and administrative expenses	303			234				541			489
Research and development expenses	Research and development expenses	49			62			114			121		Research and development expenses	69			49				135			114

Total operating expenses	Total operating expenses	1,395			1,553			2,821			2,989		Total operating expenses	1,593			1,395				3,027			2,821
Income (loss) from operations	Income (loss) from operations	89			157			166			257		Income (loss) from operations	84			89				194			166

Interest expense	Interest expense	(57)			(45)			(107)			(90)		Interest expense	(61)			(57)				(106)			(107)
Other expense, net	Other expense, net	(2)			(9)			(4)			(17)		Other expense, net	(1)			(2)				(18)			(4)
Income (loss) from continuing operations before income taxes	Income (loss) from continuing operations before income taxes	30			103			55			150		Income (loss) from continuing operations before income taxes	22			30				70			55
Income tax expense (benefit)	Income tax expense (benefit)	(34)			15			(33)			24		Income tax expense (benefit)	31			(34)				48			(33)
Income (loss) from continuing operations	Income (loss) from continuing operations	64			88			88			126		Income (loss) from continuing operations	(9)			64				22			88
Loss from discontinued operations, net of tax	Loss from discontinued operations, net of tax	—			—			—			—		Loss from discontinued operations, net of tax	0			0				0			0
Net income (loss)	Net income (loss)	64			88			88			126		Net income (loss)	(9)			64				22			88
Net income (loss) attributable to noncontrolling interests	Net income (loss) attributable to noncontrolling interests	—			—			1			1		Net income (loss) attributable to noncontrolling interests	0			0				1			1
Net income (loss) attributable to NCR	Net income (loss) attributable to NCR	$	64		$	88		$	87		$	125	Net income (loss) attributable to NCR	$	(9)		$	64			$	21		$	87
Amounts attributable to NCR common stockholders:	Amounts attributable to NCR common stockholders:												Amounts attributable to NCR common stockholders:
Income (loss) from continuing operations	Income (loss) from continuing operations	$	64		$	88		$	87		$	125	Income (loss) from continuing operations	$	(9)		$	64			$	21		$	87
Dividends on convertible preferred stock	Dividends on convertible preferred stock	(7)			(12)			(13)			(25)		Dividends on convertible preferred stock	(4)			(7)				(8)			(13)
Income (loss) from continuing operations attributable to NCR common stockholders	Income (loss) from continuing operations attributable to NCR common stockholders	57			76			74			100		Income (loss) from continuing operations attributable to NCR common stockholders	(13)			57				13			74
Loss from discontinued operations, net of tax	Loss from discontinued operations, net of tax	—			—			—			—		Loss from discontinued operations, net of tax	0			0				0			0
Net income (loss) attributable to NCR common stockholders	Net income (loss) attributable to NCR common stockholders	$	57		$	76		$	74		$	100	Net income (loss) attributable to NCR common stockholders	$	(13)		$	57			$	13		$	74
Income (loss) per share attributable to NCR common stockholders:	Income (loss) per share attributable to NCR common stockholders:												Income (loss) per share attributable to NCR common stockholders:
Income (loss) per common share from continuing operations	Income (loss) per common share from continuing operations												Income (loss) per common share from continuing operations
Basic	Basic	$	0.45		$	0.63		$	0.58		$	0.83	Basic	$	(0.10)		$	0.45			$	0.10		$	0.58
Diluted	Diluted	$	0.44		$	0.58		$	0.57		$	0.81	Diluted	$	(0.10)		$	0.44			$	0.10		$	0.57
Net income (loss) per common share	Net income (loss) per common share												Net income (loss) per common share
Basic	Basic	$	0.45		$	0.63		$	0.58		$	0.83	Basic	$	(0.10)		$	0.45			$	0.10		$	0.58
Diluted	Diluted	$	0.44		$	0.58		$	0.57		$	0.81	Diluted	$	(0.10)		$	0.44			$	0.10		$	0.57
Weighted average common shares outstanding	Weighted average common shares outstanding												Weighted average common shares outstanding
Basic	Basic	128.0			120.2			128.0			119.8		Basic	131.0			128.0				130.5			128.0
Diluted	Diluted	128.9			152.7			129.7			123.0		Diluted	131.0			128.9				136.1			129.7

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

NCR Corporation

Condensed Consolidated Statements of Comprehensive Income (Unaudited)


In millions	In millions	Three months ended June 30									Six months ended June 30									In millions	Three months ended June 30				Six months ended June 30
				2020			2019			2020			2019		In millions	2021			2020		2021			2020
Net income (loss)	Net income (loss)	$	64		$	88		$	88		$	126	Net income (loss)	$			$	64	$	22		$	88
Other comprehensive (loss) income:
Other comprehensive income (loss):													Other comprehensive income (loss):
Currency translation adjustments	Currency translation adjustments												Currency translation adjustments
Currency translation gains (losses)	Currency translation gains (losses)	17			(8)			(44)			11		Currency translation gains (losses)	8			17		1			(44)
Derivatives	Derivatives												Derivatives
Unrealized gains (losses) on derivatives	Unrealized gains (losses) on derivatives	(3)			—			—			1		Unrealized gains (losses) on derivatives	0			(3)		0			0
Gains on derivatives recognized during the period		—			(2)			(1)			(3)
Losses (gains) on derivatives recognized during the period													Losses (gains) on derivatives recognized during the period	0			0		0			(1)
Less income tax	Less income tax	1			1			—			1		Less income tax	0			1		0			0
Employee benefit plans	Employee benefit plans												Employee benefit plans
Amortization of prior service benefit	Amortization of prior service benefit	(1)			(2)			(2)			(4)		Amortization of prior service benefit	0			(1)		(1)			(2)

Amortization of actuarial losses (gains)	Amortization of actuarial losses (gains)	(1)			—			(2)			(1)		Amortization of actuarial losses (gains)	0			(1)		0			(2)
Less income tax	Less income tax	1			—			2			—		Less income tax	0			1		0			2
Other comprehensive income (loss)	Other comprehensive income (loss)	14			(11)			(47)			5		Other comprehensive income (loss)	8			14		0			(47)
Total comprehensive income (loss)	Total comprehensive income (loss)	78			77			41			131		Total comprehensive income (loss)	(1)			78		22			41
Less comprehensive income attributable to noncontrolling interests:	Less comprehensive income attributable to noncontrolling interests:												Less comprehensive income attributable to noncontrolling interests:
Net income (loss)	Net income (loss)	—			—			1			1		Net income (loss)	0			0		1			1
Currency translation losses	Currency translation losses	—			—			(1)			—		Currency translation losses	0			0		0			(1)
Amounts attributable to noncontrolling interests	Amounts attributable to noncontrolling interests	—			—			—			1		Amounts attributable to noncontrolling interests	0			0		1			0
Comprehensive income (loss) attributable to NCR	Comprehensive income (loss) attributable to NCR	$	78		$	77		$	41		$	130	Comprehensive income (loss) attributable to NCR	$	(1)		$	78	$	21		$	41

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

NCR Corporation

Condensed Consolidated Balance Sheets (Unaudited)


In millions, except per share amounts	In millions, except per share amounts	June 30, 2020		December 31, 2019		In millions, except per share amounts	June 30, 2021		December 31, 2020
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	1,681	$	509	Cash and cash equivalents	$	449	$	338
Accounts receivable, net of allowances of $54 and $44 as of June 30, 2020 and December 31, 2019, respectively		1,249		1,490
Accounts receivable, net of allowances of $40 and $51 as of June 30, 2021 and December 31, 2020, respectively						Accounts receivable, net of allowances of $40 and $51 as of June 30, 2021 and December 31, 2020, respectively	1,271		1,117
Inventories	Inventories	782		784		Inventories	695		601
Restricted cash						Restricted cash	241		59
Other current assets	Other current assets	424		361		Other current assets	450		363
Total current assets	Total current assets	4,136		3,144		Total current assets	3,106		2,478
Property, plant and equipment, net	Property, plant and equipment, net	394		413		Property, plant and equipment, net	676		373
Goodwill	Goodwill	2,823		2,832		Goodwill	4,520		2,837
Intangibles, net	Intangibles, net	562		607		Intangibles, net	1,420		532
Operating lease assets	Operating lease assets	347		391		Operating lease assets	439		344
Prepaid pension cost	Prepaid pension cost	182		178		Prepaid pension cost	209		199
Deferred income taxes	Deferred income taxes	849		821		Deferred income taxes	930		965
Other assets	Other assets	656		601		Other assets	763		686
Total assets	Total assets	$	9,949	$	8,987	Total assets	$	12,063	$	8,414
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities	Current liabilities					Current liabilities
Short-term borrowings	Short-term borrowings	$	217	$	282	Short-term borrowings	$	303	$	8
Accounts payable	Accounts payable	680		840		Accounts payable	746		632
Payroll and benefits liabilities	Payroll and benefits liabilities	249		308		Payroll and benefits liabilities	347		268
Contract liabilities	Contract liabilities	563		502		Contract liabilities	572		507
Settlement liabilities						Settlement liabilities	243		31
Other current liabilities	Other current liabilities	585		606		Other current liabilities	756		642
Total current liabilities	Total current liabilities	2,294		2,538		Total current liabilities	2,967		2,088
Long-term debt	Long-term debt	4,473		3,277		Long-term debt	5,668		3,270
Pension and indemnity plan liabilities	Pension and indemnity plan liabilities	864		858		Pension and indemnity plan liabilities	842		851
Postretirement and postemployment benefits liabilities	Postretirement and postemployment benefits liabilities	114		111		Postretirement and postemployment benefits liabilities	116		120
Income tax accruals	Income tax accruals	91		92		Income tax accruals	98		102
Operating lease liabilities	Operating lease liabilities	334		369		Operating lease liabilities	420		325
Other liabilities	Other liabilities	254		240		Other liabilities	521		334
Total liabilities	Total liabilities	8,424		7,485		Total liabilities	10,632		7,090
Commitments and Contingencies (Note 9)	Commitments and Contingencies (Note 9)					Commitments and Contingencies (Note 9)	0		0

Series A convertible preferred stock: par value $0.01 per share, 3.0 shares authorized, 0.4 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively; redemption amount and liquidation preference of $405 and $399 as of June 30, 2020 and December 31, 2019, respectively		402		395
Series A convertible preferred stock: par value $0.01 per share, 3.0 shares authorized, 0.3 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively; redemption amount and liquidation preference of $276 as of June 30, 2021 and December 31, 2020, respectively						Series A convertible preferred stock: par value $0.01 per share, 3.0 shares authorized, 0.3 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively; redemption amount and liquidation preference of $276 as of June 30, 2021 and December 31, 2020, respectively	273		273
Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
NCR stockholders’ equity	NCR 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, 2020 and December 31, 2019, respectively		—		—
Common stock: par value $0.01 per share, 500.0 shares authorized, 128.2 and 127.7 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		1		1
Preferred stock: par value $0.01 per share, 100.0 shares authorized, 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively						Preferred stock: par value $0.01 per share, 100.0 shares authorized, 0 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	0		0
Common stock: par value $0.01 per share, 500.0 shares authorized, 131.1 and 129.1 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively						Common stock: par value $0.01 per share, 500.0 shares authorized, 131.1 and 129.1 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively	1		1
Paid-in capital	Paid-in capital	300		312		Paid-in capital	461		368
Retained earnings	Retained earnings	1,134		1,060		Retained earnings	963		950
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(315)		(269)		Accumulated other comprehensive loss	(271)		(271)
Total NCR stockholders’ equity	Total NCR stockholders’ equity	1,120		1,104		Total NCR stockholders’ equity	1,154		1,048
Noncontrolling interests in subsidiaries	Noncontrolling interests in subsidiaries	3		3		Noncontrolling interests in subsidiaries	4		3
Total stockholders’ equity	Total stockholders’ equity	1,123		1,107		Total stockholders’ equity	1,158		1,051
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	9,949	$	8,987	Total liabilities and stockholders’ equity	$	12,063	$	8,414

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

NCR Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)


In millions	In millions	Six months ended June 30									In millions	Six months ended June 30
				2020			2019		In millions	2021				2020
Operating activities	Operating activities						Operating activities
Net income (loss)		$	88		$	126
Net income							Net income	$	22			$	88
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Loss from discontinued operations		—			—

Depreciation and amortization	Depreciation and amortization	176			160		Depreciation and amortization	212				176
Stock-based compensation expense	Stock-based compensation expense	45			48		Stock-based compensation expense	81				45
Deferred income taxes	Deferred income taxes	(30)			(17)		Deferred income taxes	26				(30)
Impairment of other assets	Impairment of other assets	4			—		Impairment of other assets	0				4
Gain on sale of property, plant and equipment	Gain on sale of property, plant and equipment	(2)			(6)		Gain on sale of property, plant and equipment	0				(2)
Changes in assets and liabilities:
Changes in assets and liabilities, net of effects of business acquired:							Changes in assets and liabilities, net of effects of business acquired:
Receivables	Receivables	253			(71)		Receivables	(78)				253
Inventories	Inventories	(14)			(64)		Inventories	(81)				(14)
Current payables and accrued expenses	Current payables and accrued expenses	(230)			(144)		Current payables and accrued expenses	134				(230)
Contract liabilities	Contract liabilities	56			76		Contract liabilities	43				56
Employee benefit plans	Employee benefit plans	(3)			(9)		Employee benefit plans	(21)				(3)
Other assets and liabilities	Other assets and liabilities	(60)			(28)		Other assets and liabilities	(28)				(60)
Net cash provided by operating activities	Net cash provided by operating activities	283			71		Net cash provided by operating activities	310				283
Investing activities	Investing activities						Investing activities
Expenditures for property, plant and equipment	Expenditures for property, plant and equipment	(18)			(35)		Expenditures for property, plant and equipment	(30)				(18)
Proceeds from sale of property, plant and equipment	Proceeds from sale of property, plant and equipment	7			11		Proceeds from sale of property, plant and equipment	0				7
Additions to capitalized software	Additions to capitalized software	(122)			(103)		Additions to capitalized software	(110)				(122)
Business acquisitions, net		(25)			(12)
Purchases of investments		(6)			—
Proceeds from sales of investments		11			—
Business acquisitions, net of cash acquired							Business acquisitions, net of cash acquired	(2,464)				(25)
Purchases of short-term investments							Purchases of short-term investments	(13)				(6)
Proceeds from sales of short-term investments							Proceeds from sales of short-term investments	14				11
Other investing activities, net	Other investing activities, net	(1)			5		Other investing activities, net	(6)				(1)
Net cash used in investing activities	Net cash used in investing activities	(154)			(134)		Net cash used in investing activities	(2,609)				(154)
Financing activities	Financing activities						Financing activities
Short term borrowings, net	Short term borrowings, net	—			4		Short term borrowings, net	0				0
Payments on term credit facilities	Payments on term credit facilities	(4)			(39)		Payments on term credit facilities	(105)				(4)
Payments on revolving credit facilities	Payments on revolving credit facilities	(666)			(914)		Payments on revolving credit facilities	(685)				(666)
Borrowings on term credit facilities	Borrowings on term credit facilities	3			—		Borrowings on term credit facilities	1,505				3
Borrowings on revolving credit facilities	Borrowings on revolving credit facilities	1,404			897		Borrowings on revolving credit facilities	809				1,404
Proceeds from issuance of senior unsecured notes	Proceeds from issuance of senior unsecured notes	400			—		Proceeds from issuance of senior unsecured notes	1,200				400
Debt issuance costs		(8)			—
Series A Preferred Stock Dividends		(6)			—
Debt issuance costs and bridge commitment fees							Debt issuance costs and bridge commitment fees	(51)				(8)
Cash dividend paid for Series A preferred shares dividends							Cash dividend paid for Series A preferred shares dividends	(8)				(6)
Repurchases of Common Stock	Repurchases of Common Stock	(41)			—		Repurchases of Common Stock	0				(41)
Proceeds from employee stock plans	Proceeds from employee stock plans	9			10		Proceeds from employee stock plans	18				9
Tax withholding payments on behalf of employees	Tax withholding payments on behalf of employees	(25)			(16)		Tax withholding payments on behalf of employees	(25)				(25)
Net change in client funds obligations	Net change in client funds obligations	(3)			—		Net change in client funds obligations	(8)				(3)
Principal payments for finance lease obligations							Principal payments for finance lease obligations	(8)				(3)
Other financing activities	Other financing activities	(6)			—		Other financing activities	(1)				(3)
Net cash provided by (used in) financing activities		1,057			(58)
Net cash provided by financing activities							Net cash provided by financing activities	$	2,641			$	1,057
Cash flows from discontinued operations	Cash flows from discontinued operations						Cash flows from discontinued operations
Net cash provided by (used in) operating activities		6			(11)
Net cash provided by (used in) discontinued operations							Net cash provided by (used in) discontinued operations	(47)				6
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(16)			1		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(4)				(16)
Increase (decrease) in cash, cash equivalents, and restricted cash		1,176			(131)
Increase in cash, cash equivalents, and restricted cash							Increase in cash, cash equivalents, and restricted cash	291				1,176
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	563			532		Cash, cash equivalents and restricted cash at beginning of period	406				563
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	1,739		$	401	Cash, cash equivalents and restricted cash at end of period	$	697			$	1,739

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

NCR Corporation

Condensed Consolidated Statements of Changes in Stockholder's Equity (Unaudited)


		NCR Stockholders																							NCR Stockholders
		Common Stock									Accumulated Other Comprehensive (Loss) Income		Non-Redeemable Noncontrolling Interests in Subsidiaries						Common Stock								Accumulated Other Comprehensive (Loss) Income				Non-Redeemable Noncontrolling Interests in Subsidiaries
In millions	In millions	Shares	Amount		Paid-in Capital		Retained Earnings									Total		In millions	Shares		Amount		Paid-in Capital		Retained Earnings								Total
December 31, 2019		127	$	1	$	312	$	1,060	$	(269)	$	3	$	1,107
December 31, 2020															December 31, 2020		129		$	1	$	368	$	950	$	(271)			$	3			$	1,051
Comprehensive income:	Comprehensive income:														Comprehensive income:
Net income	Net income	—	—		—		23		—		1		24		Net income		—		—		—		30		—		1				31
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—		—		(60)		(1)		(61)		Other comprehensive income (loss)		—		—		—		—		(8)		0				(8)
Total comprehensive income (loss)	Total comprehensive income (loss)	—	—		—		23		(60)		—		(37)		Total comprehensive income (loss)		—		—		—		30		(8)		1				23
Employee stock purchase and stock compensation plans	Employee stock purchase and stock compensation plans	2	—		4		—		—		—		4		Employee stock purchase and stock compensation plans		2		—		30		—		—		—				30
Series A convertible preferred stock dividends	Series A convertible preferred stock dividends	—	—		—		(6)		—		—		(6)		Series A convertible preferred stock dividends		—		—		—		(4)		—		—				(4)
Repurchase of Company common stock		(2)	—		(41)		—		—		—		(41)
March 31, 2020		127	1		275		1,077		(329)		3		1,027
March 31, 2021															March 31, 2021		131		$	1	$	398	$	976	$	(279)	$	4			$	1,100
Comprehensive income:	Comprehensive income:														Comprehensive income:
Net income	Net income	—	—		—		64		—		—		64		Net income		—		—		—		(9)		—		0				(9)
Other comprehensive income		—	—		—		—		14		—		14
Total comprehensive income		—	—		—		64		14		—		78
Other comprehensive income (loss)															Other comprehensive income (loss)		—		—		—		—		8		0				8
Total comprehensive income (loss)															Total comprehensive income (loss)		—		—		—		(9)		8		0				(1)
Employee stock purchase and stock compensation plans	Employee stock purchase and stock compensation plans	1	—		25		—		—		—		25		Employee stock purchase and stock compensation plans		—		—		44		—		—		—				44
Fair value of converted Cardtronics awards attributable to pre-combination services															Fair value of converted Cardtronics awards attributable to pre-combination services		—		—		19		—		—		—				19
Series A convertible preferred stock dividends	Series A convertible preferred stock dividends	—	—		—		(7)		—		—		(7)		Series A convertible preferred stock dividends		—		—		—		(4)		—		—				(4)
June 30, 2020		128	$	1	$	300	$	1,134	$	(315)	$	3	$	1,123

June 30, 2021															June 30, 2021		131		$	1	$	461	$	963	$	(271)	$	4			$	1,158

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

NCR Corporation

Condensed Consolidated Statements of Changes in Stockholder's Equity (Unaudited) - (Continued)


		NCR Stockholders																							NCR Stockholders
		Common Stock									Accumulated Other Comprehensive (Loss) Income		Non-Redeemable Noncontrolling Interests in Subsidiaries						Common Stock								Accumulated Other Comprehensive (Loss) Income				Non-Redeemable Noncontrolling Interests in Subsidiaries
In millions	In millions	Shares	Amount		Paid-in Capital		Retained Earnings									Total		In millions	Shares		Amount		Paid-in Capital		Retained Earnings								Total
December 31, 2018		119	$	1	$	34	$	606	$	(246)	$	4	$	399
December 31, 2019															December 31, 2019		127		$	1	$	312	$	1,060	$	(269)			$	3			$	1,107
Comprehensive income:	Comprehensive income:														Comprehensive income:
Net income	Net income	—	—		—		37		—		1		38		Net income		—		—		—		23		—		1				24
Other comprehensive income	Other comprehensive income	—	—		—		—		16		—		16		Other comprehensive income		—		—		—		—		(60)		(1)				(61)
Total comprehensive income	Total comprehensive income	—	—		—		37		16		1		54		Total comprehensive income		—		—		—		23		(60)		0				(37)

Employee stock purchase and stock compensation plans	Employee stock purchase and stock compensation plans	1	—		14		—		—		—		14		Employee stock purchase and stock compensation plans		2		—		4		—		—		—				4

Series A convertible preferred stock dividends	Series A convertible preferred stock dividends	—	—		—		(13)		—		—		(13)		Series A convertible preferred stock dividends		—		—		—		(6)		—		—				(6)
March 31, 2019		120	1		48		630		(230)		5		454
Repurchase of Common Stock															Repurchase of Common Stock		(2)		—		(41)		—		—		—				(41)
March 31, 2020															March 31, 2020		127		$	1	$	275	$	1,077	$	(329)	$	3			$	1,027
Comprehensive income:	Comprehensive income:														Comprehensive income:
Net income	Net income	—	—		—		88		—		—		88		Net income		—		—		—		64		—		—				64
Other comprehensive income	Other comprehensive income	—	—		—		—		(11)		—		(11)		Other comprehensive income		—		—		—		—		14		—				14
Total comprehensive income	Total comprehensive income	—	—		—		88		(11)		—		77		Total comprehensive income		—		—		—		64		14		—				78
Employee stock purchase and stock compensation plans	Employee stock purchase and stock compensation plans	—	—		28		—		—		—		28		Employee stock purchase and stock compensation plans		1		—		25		—		—		—				25
Repurchase of Common Stock		—	—		—		—		—		—		—
Series A convertible preferred stock dividends	Series A convertible preferred stock dividends	—	—		—		(12)		—		—		(12)		Series A convertible preferred stock dividends		—		—		—		(7)		—		—				(7)
June 30, 2019		120	$	1	$	76	$	706	$	(241)	$	5	$	547

June 30, 2020															June 30, 2020		128		$	1	$	300	$	1,134	$	(315)	$	3			$	1,123

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

Index to Financial Statements and Supplemental Data



Note 1. Basis of Presentation and Summary of Significant Accounting Policies
Note 2. ~~Revisions to Previously Issued Financial Statements~~
~~Note 3.~~ Business Combinations
Note 4.3. Goodwill and Long-Lived Assets
Note 4. Segment Information and Concentrations
Note 5. Debt Obligations
Note 6. Income Taxes
Note 7. Stock Compensation Plans
Note 8. Employee Benefit Plans
Note 9. Commitments and Contingencies
Note 10. Leasing
Note 11. Series A Convertible Preferred Stock
Note 12. Earnings Per Share
Note 13. Derivatives and Hedging Instruments
Note 14. Fair Value of Assets and Liabilities
Note 15. Accumulated Other Comprehensive Income (Loss) (AOCI)
Note 16. ~~Segment Information and Concentrations~~
~~Note 17.~~ Supplemental Financial Information

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accompanying Condensed Consolidated Financial Statements have been prepared by NCR Corporation (NCR, the Company, we or us) without audit pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and, in the opinion of management, include all adjustments (consisting of normal, recurring adjustments, unless otherwise disclosed) necessary for a fair statement of the condensed consolidated results of operations, financial position, and cash flows for each period presented. The consolidated results for the interim periods are not necessarily indicative of results to be expected for the full year. The ~~2019~~2020 year-end Condensed Consolidated Balance Sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States (GAAP). These financial statements should be read in conjunction with NCR’s Form 10-K for the year ended December 31, ~~2019.~~2020.

Use of Estimates The preparation of financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenue and expenses during the period reported.

Although our estimates contemplate current and expected future conditions, as applicable, it is reasonably possible that actual conditions could differ from our expectations, which could materially affect our results of operations and financial position. In particular, a number of estimates have been and will continue to be affected by the ongoing novel coronavirus (COVID-19) pandemic. The severity, magnitude and duration of the COVID-19 pandemic, and the resulting economic consequences, are uncertain, rapidly changing and difficult to ~~predict.~~predict with certainty. As a result, our accounting estimates and assumptions may change over time as a consequence of the effects of COVID-19.

Such changes could result in future impairments of goodwill, intangible assets, long-lived assets, incremental credit losses on accounts receivable and decreases in the carrying amount of our tax assets.

Evaluation of Subsequent Events The Company evaluated subsequent events through the date that our Condensed Consolidated Financial Statements were issued. No matters were identified that required adjustment of the Condensed Consolidated Financial Statements or additional ~~disclosure.~~disclosure other than subsequent events disclosed within the notes to the Condensed Consolidated Financial Statements.

Reclassifications Certain prior-period amounts have been reclassified in the accompanying Condensed Consolidated Financial Statements and Notes thereto in order to conform to the current period presentation. Reclassifications had no effect on prior year net income or shareholders’ equity.

Cash, Cash Equivalents, and Restricted Cash All short-term, highly liquid investments having original maturities of three months or less, including time deposits, are considered to be cash equivalents. The Company has restricted cash on deposit with a bank as collateral for letters of credit, funds held for clients as well as cash included in settlement assets. Refer to Note 2, Revisions of Previously Issued Financial Statements, for disclosure related to the revision to include funds held for clients and cash included in settlement processing assets within cash, cash equivalents and restricted cash in the Condensed Consolidated Statement of Cash Flows.

The reconciliation of cash, cash equivalents and restricted cash in the Condensed Consolidated Statements of Cash Flows is as follows:


In millions	In millions	June 30									In millions	June 30
				2020			2019 As Revised		In millions	2021					2020
Reconciliation of cash, cash equivalents and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows
Cash and cash equivalents	Cash and cash equivalents	$	1,681		$	335	Cash and cash equivalents	$		449				$	1,681
Restricted cash included in other assets	Restricted cash included in other assets	9			10		Restricted cash included in other assets	7				9
Funds held for clients included in other current assets		28			46
Cash included in settlement processing assets included in other current assets		21			10
Funds held for clients included in restricted cash							Funds held for clients included in restricted cash	36				28
Cash included in settlement processing assets included in restricted cash							Cash included in settlement processing assets included in restricted cash	205				21
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	1,739		$	401	Total cash, cash equivalents and restricted cash	$	697			$	1,739

Contract Assets and Liabilities The following table presents the net contract asset and contract liability balances as of June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)


In millions	In millions	Location in the Condensed Consolidated Balance Sheet	June 30, 2020		December 31, 2019		In millions	Location in the Condensed Consolidated Balance Sheet	June 30, 2021		December 31, 2020
Current portion of contract assets		Other current assets	$	4	$	9
Current portion of contract liabilities	Current portion of contract liabilities	Contract liabilities	$	563	$	502	Current portion of contract liabilities	Contract liabilities	$	572	$	507
Non-current portion of contract liabilities	Non-current portion of contract liabilities	Other liabilities	$	80	$	81	Non-current portion of contract liabilities	Other liabilities	$	67	$	80

During the ~~three~~six months ended June 30, ~~2020,~~2021, the Company recognized ~~$303~~$323 million in revenue that was included in contract liabilities as of December 31, ~~2019.~~2020.

Remaining Performance Obligations Remaining performance obligations represent the transaction price of orders for which products have not been delivered or services have not been performed. As of June 30, ~~2020,~~2021, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $4$3.5 billion. The Company expects to recognize revenue on approximately three-quarters of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter. The majority of our professional services are expected to be recognized over the next 12 months but this is contingent upon a number of factors, including customers’ needs and schedules.

The Company has made two elections that affect the value of remaining performance obligations described above. We do not disclose remaining performance obligations for Software as a Service (SaaS) contracts where variable consideration is directly allocated based on usage or when the original expected length is one year or less.

Recent Accounting Pronouncements

~~Adopted~~Issued

In ~~June 2016,~~August 2020, the Financial Accounting Standards Board ("FASB") issued an accounting standards update with new guidance ~~on accounting~~ for ~~credit losses on financial instruments.~~convertible preferred stock, which eliminates considerations related to the beneficial conversion feature model. The ~~new guidance includes~~standard also requires an ~~impairment model~~average stock price when calculating the denominator for ~~estimating credit losses that~~diluted earnings per share to be used for stock units where the settlement of the number of shares is based on expected losses, rather than incurred losses. This accounting standards update is effective prospectively for fiscal years and interim periods beginning after December 15, 2019, with early adoption permitted. The adoption of this accounting standards update did not have a material effect on the ~~Company's net income, cash flows or financial condition.~~

In August 2018, the FASB issued an accounting standards update with new guidance on fair value measurement disclosure requirements that requires the disclosure of additions to and transfers into and out of Level 3 of the fair value hierarchy. This accounting standards update also requires disclosure about the uncertainty in measurement as of the reporting date. The new standard became effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019 with early adoption permitted. The adoption of this accounting standards update did not have a material impact on our financial statement disclosures.

In August 2018, the FASB issued an accounting standards update related to accounting for implementation costs incurred in a cloud computing arrangement that is also a service contract. If a cloud computing arrangement also includes an internal-use software, an intangible asset is recognized, and a liability is recognized for any payments related to the software license. However, if a cloud computing arrangement does not include a software license, the entity should account for the arrangement as a service contract and any fees associated with the service are expensed as incurred.stock price. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2019,~~2021. Early adoption is permitted no earlier than fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. The adoption of this accounting standards update is not expected to have a material effect on the Company's net income, cash flows, earnings per share or financial condition.

In May 2021, the FASB issued an accounting standards update with new guidance for freestanding equity-classified written call options. The new guidance requires modifications or exchanges of freestanding equity-classified written call options that remain equity classified after the modification or exchange based on the economic substance of the modification or exchange. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021, with early adoption permitted. The adoption of this accounting standards update ~~did~~is not expected to have a material effect on the Company's net income, cash flows, earnings per share or financial condition.

In ~~December 2019,~~July 2021, the FASB issued an accounting standards update with new guidance for lessors with lease contracts that ~~removes certain exceptions for recognizing deferred taxes for investments, performing intraperiod allocation~~have variable lease payments. Under the new guidance, a lease which includes variable lease payments which do not depend on a reference index or rate and ~~calculating income taxes~~would have resulted in ~~interim periods. This accounting standards update also adds guidance~~the recognition of a selling loss at lease commencement if classified as sales-type or direct financing are now to ~~reduce complexity in certain areas, including recognizing measures for the accounting for income taxes. This accounting standards update~~be classified as operating. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, ~~2020,~~2021, with early adoption permitted. The adoption of this accounting standards update ~~did~~is not expected to have a material ~~impact~~effect on the Company's net income, cash flows, earnings per share or financial condition.

2. BUSINESS COMBINATIONS

Pending acquisition of LibertyX

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

~~In March 2020, the SEC adopted final rules, effective January 4,~~On July 31, 2021, that, among other things, amend the financial disclosure requirements of Regulation S-X under the Securities Act for guaranteed securities registered with the SEC. As permitted by such rules, the CompanyNCR entered into a definitive agreement to acquire Moon Inc. dba LibertyX, a leading cryptocurrency software provider. The transaction is ~~voluntarily complying with the rules~~expected to close later in ~~advance of the effective date. Accordingly, we are no longer required~~2021, subject to ~~provide,~~customary closing conditions, including obtaining certain regulatory licensing consents and are not providing, supplemental guarantor information for NCR International, Inc.'s SEC registered guarantee of the 5.00% and 6.375% senior unsecured notes given that NCR International, Inc.'s reporting obligations with respect to guarantees under Section 15(d) of the Exchange Act have been automatically suspended.approvals.

Acquisition of Cardtronics plc

On January 25, 2021, NCR entered into a definitive agreement to acquire all outstanding shares of Cardtronics plc ("Cardtronics") for $39.00 per share (the "Cardtronics Transaction"). The legal closing of the Cardtronics Transaction occurred on June 21, 2021. Prior to the closing, the United Kingdom Competition and Markets Authority ("CMA") initiated a review of the transaction and issued an Initial Enforcement Order, effective on June 21, 2021, on NCR Corporation, NCR UK Group Limited and Cardtronics plc in relation to the acquisition (the “Initial Order”). The Initial Order requires the companies and each of their subsidiaries to operate separately and independently while the CMA reviews the transaction. However, the Initial Order allows for limited access to certain information strictly necessary for compliance with external financial reporting obligations. The CMA has also granted limited derogations to the Initial Order to permit certain critical functions.

Cardtronics is the world's largest non-bank ATM operator and service provider enabling cash transactions by converting digital currency into physical cash at over 285,000 ATMs across 10 countries in North America, Europe, Asia-Pacific, and Africa. The Cardtronics Transaction is expected to accelerate our NCR-as-a-service strategy and enhance our ability to provide technology solutions and capabilities that run our customers’ businesses.

Purchase Price Consideration

~~2. REVISIONS OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS~~The purchase consideration transferred consisted of the following:

~~During 2020,~~


In millions	Purchase Consideration
Cash paid to common stockholders and holders of certain restricted stock and stock option awards	$	1,775
Debt repaid by NCR on behalf of Cardtronics	809
Transaction costs paid by NCR on behalf of Cardtronics	57
Fair value of converted Cardtronics awards attributable to pre-combination services	19
Settlement of pre-existing relationships	14
Total purchase consideration	$	2,674

Other than certain outstanding restricted stock and stock option awards issued to directors which were paid out in cash at closing, the Company ~~determined there~~converted outstanding unvested Cardtronics awards into NCR awards pursuant to an exchange ratio as defined in the acquisition agreement. Each restricted stock award that was outstanding, whether performance-based or time-based, was converted into time-based awards, and will continue to be governed by the same vesting terms as the original Cardtronics awards. Cardtronics stock option awards were ~~errors in its previously issued Consolidated Statements of Cash Flows related~~converted into NCR stock option awards with an exercise price per share for option awards equal to the ~~business activities~~exercise price per share of such stock option award immediately prior to the completion of the acquisition divided by the exchange ratio, and will continue to be governed generally by the same terms and conditions as were applicable prior to the acquisition. The amounts attributable to services already rendered were included as an adjustment to the purchase price and the amounts attributable to future services will be expensed over the remaining vesting period, net of estimated forfeitures. The fair value of options that ~~commenced upon~~the Company assumed in connection with the acquisition of ~~JetPay Corporation (JetPay) in December 2018. As a result of these errors,~~Cardtronics were estimated using the Company's cash, cash equivalents and restricted cash within the Consolidated Statement of Cash Flows for the years ended December 31, 2019 and 2018 and within the Condensed Consolidated Statement of Cash Flows for the interim periods in fiscal 2019 and for the three months ended March 31, 2020, were understated. This also resulted in misclassifications of activities between net cash from operations, investing, and financing activities in each of the periods noted above.

More specifically, the Company determined: (i) the funds held for clients represent cash balances that, based upon the Company's intent, are restricted solely for the purposes of satisfying the obligations to remit funds relating to the Company's payroll and payroll tax filing services, which are classified as client fund obligations; and (ii) there are restricted cash balances included within settlement processing assets that are not yet due to the merchants. Such funds are held in a fiduciary duty, and are not available for the Company to use to fund its cash requirements. As a result, (i) the business acquisition purchase price upon the acquisition of JetPay should have been reflected net of these cash balances and (ii) the restricted cash in all periods should have been presented within cash, cash equivalents and restricted cash within the Consolidated Statement of Cash Flows.

Additionally, the Company determined the presentation of the cash inflow or outflow from client fund obligations should be reflected within financing activities rather than within operating activities beginning in the third quarter of 2019 and through December 31, 2019. However, in analyzing the impact of the change to include funds held for clients within cash, cash equivalents and restricted cash, it was determined the cash inflow or outflow from client funds obligations was incorrect.Black-Scholes model.

Recording of Assets Acquired and LiabilitiesAssumedThe ~~Company assessed~~fair value of consideration transferred to acquire Cardtronics was allocated to the ~~materiality~~identifiable assets acquired and liabilities assumed based upon their estimated fair values as of ~~these errors on~~ the ~~prior period financial statements in accordance with SEC Staff Bulletin No. 99,~~ ~~Materiality, codified in ASC Topic 250,~~ ~~Accounting Changes and Error Corrections. Based on this assessment,~~date of the Company determined the impact from these errors was not material to its previously filed annual or interim financial statements. The corrections had no impact on the Company's Consolidated Statements of Income, Consolidated Statements of Comprehensive Income or Consolidated Balance Sheets in previously issued annual or interim financial statements.acquisition as set forth below.

However, the Company has determined that it will revise its previously issued annual and interim financial statements to correct these errors within the Consolidated Statements of Cash Flows. The revision for the Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2019 is reflected within the accompanying Condensed Consolidated Financial Statements and the details for the revision for all periods are presented below. The Company will effect such revisions to its Consolidated Statements of Cash Flows for the years ended December 31, 2019 and 2018 in connection with the future filing of its 2020 Annual Report on Form 10-K, which contain these comparative periods and will effect the revisions for the three months ended March 31, 2020 and the nine months ended September 30, 2019 in connection with the future filings of its Form 10-Q which contain these comparative periods. In addition, in the previously issued unaudited interim financial statements for the three months ended March 31, 2020, the Company revised its beginning and ending cash, cash equivalents and restricted cash balances for the three months ended March 31, 2020 and 2019, which corrected for certain errors that were known at the time of such filing.

The ~~appropriate changes are reflected in our Condensed Consolidated Statement~~preliminary allocation of ~~Cash Flows and~~ the ~~corrections are reflected in the tables below:~~purchase price for Cardtronics is as follows:

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

For the year ended December 31, 2018
In millions As Reported Adjustment As Revised
Business acquisitions, net $ (206) $ 46 $ (160)
Net cash provided by (used in) investing activities $ (520) $ 46 $ (474)
Net increase (decrease) in client obligations $ — $ 10 $ 10
Net cash provided by (used in) financing activities $ (58) $ 10 $ (48)
Increase (decrease) in cash, cash equivalents and restricted cash $ (67) $ 56 $ (11)
Cash, cash equivalents and restricted cash at the end of the period $ 476 $ 56 $ 532


In millions	Fair Value
Assets acquired
Cash and restricted cash acquired	$	296
Trade accounts receivable	84
Prepaid expenses, other current assets and other assets	154
Property, plant and equipment	359
Estimated acquisition-related intangible assets	877
Total assets acquired	$	1,770

Liabilities assumed	690
Net assets acquired, excluding goodwill	1,080
Total purchase consideration	2,674
Estimated goodwill	$	1,594

We recorded a preliminary allocation of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of June 21, 2021. The provisional amounts for intangible assets are based on third-party valuations performed. Additionally, as noted above, access to information was limited based on the Initial Order issued by the CMA so further adjustments to the purchase price allocation will be required, within the measurement period, once the regulatory restrictions are lifted and the Company is able to complete more detailed procedures, additional refinement to finalize valuations, among other items.

Goodwill represents the future economic benefits arising from other assets acquired that could not be separately recognized. The goodwill arising from the acquisition consists of revenue and cost synergies expected from combining the operations of NCR and Cardtronics. It is expected that approximately $153 million of the goodwill recognized in connection with the acquisition will be deductible for tax purposes. The goodwill arising from the acquisition has been allocated to our Banking segment. Refer to Note 3, Goodwill and Long-Lived Assets, for the carrying amounts of goodwill by segment as of June 30, 2021.

The following table sets forth the components of the intangible assets acquired as of the acquisition date:


	Fair Value		Weighted Average Amortization Period (1)
	(In millions)		(In years)
Direct customer relationships	$	340	15
Technology - Software	485		8
Non-compete	1		1
Tradenames	51		5
Total acquired intangible assets	$	877

(1) Determination of the weighted average period of the individual categories of intangible assets was based on the nature of applicable intangible asset and the expected future cash flows to be derived from the intangible asset. Amortization of intangible assets with definite lives is recognized over the period of time the assets are expected to contribute to future cash flows.

In connection with the closing of the acquisition, the Company incurred transaction costs of $44 million and $46 million in the three and six months ended June 30, 2021, respectively, which has been included within selling, general and administrative expenses in the Condensed Consolidated Statement of Operation. Refer to Note 5, Debt Obligations for additional discussion on fees incurred related to the financing for the Cardtronics Transaction.

Unaudited Pro forma Information

For the three months ended March 31, 2019
In millions As Reported in March 31, 2019 Form 10-Q Adjustment As Revised in March 31, 2020 Form 10-Q Further Adjustment As Revised
Increase (decrease) in other assets and liabilities $ (10) $ — $ (10) $ — $ (10)
Net cash provided by (used in) operating activities $ (16) $ — $ (16) $ — $ (16)
Net increase (decrease) in client obligations $ — $ 17 $ 17 $ — $ 17
Net cash provided by (used in) financing activities $ 36 $ 17 $ 53 $ — $ 53
Increase (decrease) in cash, cash equivalents and restricted cash $ (53) $ 17 $ (36) $ — $ (36)
Cash, cash equivalents and restricted cash at the beginning of the period $ 476 $ 46 $ 522 $ 10 $ 532
Cash, cash equivalents and restricted cash at the end of the period $ 423 $ 63 $ 486 $ 10 $ 496

For the six months ended June 30, 2019
In millions As Reported Adjustment As Revised
Cash, cash equivalents and restricted cash at the beginning of the period $ 476 $ 56 $ 532
Cash, cash equivalents and restricted cash at the end of the period $ 345 $ 56 $ 401

For the nine months ended September 30, 2019
In millions As Reported Adjustment As Revised
Net increase (decrease) in client funds $ (2) $ 2 $ —
Net cash provided by (used in) investing activities $ (292) $ 2 $ (290)
Net increase (decrease) in client obligations $ 2 $ (4) $ (2)
Net cash provided by (used in) financing activities $ 33 $ (4) $ 29
Increase (decrease) in Cash, cash equivalents and restricted cash $ (67) $ (2) $ (69)
Cash, cash equivalents and restricted cash at the beginning of the period $ 476 $ 56 $ 532
Cash, cash equivalents and restricted cash at the end of the period $ 409 $ 54 $ 463

The following unaudited pro forma information presents the consolidated results of NCR and Cardtronics for the three and six months ended June 30, 2021 and 2020. The unaudited pro forma information is presented for illustrative purposes only. It is not necessarily indicative of the results of operations of future periods, or the results of

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

For the year ended December 31, 2019
In millions As Reported Adjustment As Revised
Increase (decrease) in other assets and liabilities $ 2 $ 6 $ 8
Net cash provided by (used in) operating activities $ 628 $ 6 $ 634
Net increase (decrease) in client obligations $ (15) $ 15 $ —
Net cash provided by (used in) investing activities $ (527) $ 15 $ (512)
Net increase (decrease) in client obligations $ 15 $ (30) $ (15)
Net cash provided by (used in) financing activities $ (31) $ (30) $ (61)
Increase (decrease) in Cash, cash equivalents and restricted cash $ 40 $ (9) $ 31
Cash, cash equivalents and restricted cash at the beginning of the period $ 476 $ 56 $ 532
Cash, cash equivalents and restricted cash at the end of the period $ 516 $ 47 $ 563
operations that actually would have been realized had the entities been a single company during the periods presented or the results that the combined company will experience after the acquisition. The unaudited pro forma information does not give effect to the potential impact of current financial conditions, regulatory matters or any anticipated synergies, operating efficiencies or cost savings that may be associated with the acquisition. The unaudited pro forma information also does not include any integration costs or remaining future transaction costs that the companies may incur related to the acquisition as part of combining the operations of the companies.

The unaudited pro forma consolidated results of operations, assuming the acquisition had occurred on January 1, 2020, are as follows:


In millions	Three months ended June 30				Six months ended June 30
	2021		2020		2021		2020
Revenue	$	1,919	$	1,698	$	3,703	$	3,489
Net Income attributable to NCR	$	42	$	36	$	72	$	(29)

The unaudited pro forma results for the three months ended June 30, 2021 include:

•$24 million in eliminated intercompany revenue and cost between NCR and Cardtronics;

•$15 million, net of tax, in additional amortization expense for acquired intangible assets;

•$71 million, net of tax, in eliminated transaction costs as if those costs were incurred in the prior year period; and

•$18 million, net of tax, in additional interest expense from the incremental borrowings under the senior secured credit facility as well as the 5.125% senior notes.

For the three months ended March 31, 2020
In millions As Reported Adjustment As Revised
Increase (decrease) in other assets and liabilities $ (90) $ (7) $ (97)
Net cash provided by (used in) operating activities $ 61 $ (7) $ 54
Increase (decrease) in Cash, cash equivalents and restricted cash $ 717 $ (7) $ 710
Cash, cash equivalents and restricted cash at the beginning of the period $ 548 $ 15 $ 563
Cash, cash equivalents and restricted cash at the end of the period $ 1,265 $ 8 $ 1,273

Consistent with the revision to the Consolidated Statement of Cash Flows described above, the Company has revised the reconciliation of cash, cash equivalents and restricted cash included in the Consolidated Statement of Cash Flows for all periods that include a revision. The ~~appropriate changes are reflected in our Condensed Consolidated Statement of Cash Flows~~unaudited pro forma results for the six months ended June 30, ~~2019,~~2021 include:

•$53 million in eliminated intercompany revenue and ~~the corrections,~~cost between NCR and Cardtronics;

•$25 million, net of tax, in additional amortization expense for acquired intangible assets;

•$87 million, net of tax, in eliminated transaction costs as ~~reflected~~if those costs were incurred in the ~~table below to include funds held for clients~~prior year period; and ~~cash included~~

•$35 million, net of tax, in ~~settlement assets within cash, cash equivalents and restricted cash, will be revised in connection with~~additional interest expense from the ~~future Form 10-K and 10-Q filings discussed above.~~incremental borrowings under the senior secured credit facility as well as the 5.125% senior notes.

In millions March 31, 2020 December 31, 2019 September 30, 2019 June 30, 2019 March 31, 2019 December 31, 2018
Reconciliation of cash, cash equivalents and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows
Cash and cash equivalents $ 1,214 $ 509 $ 388 $ 335 $ 414 $ 464
Restricted cash included in other assets 7 7 21 10 9 12
Funds held for clients included in other current assets 44 32 45 46 64 46
Cash included in settlement processing assets included in other current assets 8 15 9 10 9 10
Total cash, cash equivalents and restricted cash $ 1,273 $ 563 $ 463 $ 401 $ 496 $ 532
The unaudited pro forma results for the three months ended June 30, 2020 include:

•$19 million in eliminated intercompany revenue and cost between NCR and Cardtronics;

•$13 million, net of tax, in additional amortization expense for acquired intangible assets; and

•$14 million, net of tax, in additional interest expense from the incremental borrowings under the senior secured credit facility as well as the 5.125% senior notes.

The unaudited pro forma results for the six months ended June 30, 2020 include:

•$38 million in eliminated intercompany revenue and cost between NCR and Cardtronics;

•$27 million, net of tax, in additional amortization expense for acquired intangible assets;

•$67 million, net of tax, of transaction costs as if those costs were incurred in the period; and

•$33 million, net of tax, in additional interest expense from the incremental borrowings under the senior secured credit facility as well as the 5.125% senior notes.

~~3. BUSINESS COMBINATIONS~~Acquisition of Freshop, Terafina, & Dumac

~~Acquisition~~In the first quarter of ~~Origami~~2021, NCR completed acquisitions for total cash considerations of $126 million, as outlined below:

•On ~~June~~January 6, ~~2019,~~2021, NCR completed its acquisition of Freshop E-Commerce Solution, Inc. ("Freshop"), a leading provider of grocery e-commerce. The Freshop acquisition further expands NCR’s software and services-led offerings to our retail platform and creates more value for our customers and new capabilities for NCR to run the store. As a result of the acquisition, Freshop became a wholly owned subsidiary of NCR.

•On February 5, 2021, NCR ~~Brasil Ltda. (NCR Brasil) entered into~~completed its acquisition of Terafina, Inc. ("Terafina"), a ~~definitive agreement with OKI Electric Industry Co., Ltd.~~leading solution provider for customer account opening and onboarding across digital, branch and call center channels. The Terafina acquisition further expands NCR sales and marketing capabilities in its ~~Brazilian subsidiary, OKI Brasil Industria e Comércio de Produtos e Tecnologia em Automação S.A. (OKI~~industry-leading Digital First Banking platform to drive

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

~~Brasil), to purchase OKI Brasil's IT services~~revenue growth across consumer and ~~select software assets for use in the financial, retail and other industries. Neither OKI Brasil's manufacturing operations nor its printing~~ business ~~in Brazil are included in the acquisition. On April 9, 2020, NCR Brasil completed this acquisition through the purchase of 100%~~market segments. As a result of the ~~quotas of Origami Brasil Tecnologia e Serviços em Automação Ltda. (Origami), which~~acquisition, Terafina became a wholly owned subsidiary of NCR Brasil. The purchase price was approximately $5 million, of which $2 million is payable in cash within two years of the acquisition date, subject to certain conditions, and the remaining $3 million is payable in cash within six years of the acquisition date, subject to purchase price adjustments.NCR.

•On March 22, 2021 NCR completed its acquisition of certain assets and liabilities of Dumac Business Systems Inc. ("Dumac"), a leading POS solution provider for the quick service, table service, and convenient store markets. The Dumac asset acquisition further expands NCR's software and services-led offerings, creating more value for our customers and driving revenue growth across the Hospitality segment.

Recording of Assets Acquired and Liabilities AssumedThe fair value of consideration transferred ~~to acquire Origami~~ was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values as of the date of ~~acquisition~~the respective acquisitions as set forth below. The ~~acquisition is expected to result in a bargain purchase gain based on~~allocation of the purchase ~~price being limited mostly~~prices are provisional as of June 30, 2021 and may be subject to future adjustments as the ~~net assets~~Company obtains additional information to finalize the accounting for the business combinations. The allocation of the ~~business excluding cash and investments.~~purchase prices is as follows:


In millions	Fair Value
Cash acquired	$	12
~~Investments acquired~~	9
Tangible assets acquired	187
Acquired intangible assets other than goodwill	52
Acquired goodwill	86
Deferred ~~gain on business acquisition~~tax liabilities	~~(10)~~(8)
Liabilities assumed	(13)
Total purchase consideration	$	5126

~~This allocation~~Goodwill represents the future economic benefits arising from other assets acquired that could not be individually separately recognized. The goodwill arising from the acquisitions consists of revenue and cost synergies expected from combining the operations of NCR and the respective acquisitions. It is expected that $9 million of the ~~purchase price is provisional~~goodwill recognized in connection with the acquisitions will be deductible for tax purposes. The goodwill arising from the Freshop acquisition has been allocated to our Retail segment. The goodwill arising from the Terafina acquisition has been allocated to our Banking segment. The goodwill arising from the Dumac acquisition has been allocated to our Hospitality segment. Refer to Note 3, Goodwill and Long-Lived Assets, for the carrying amounts of goodwill by segment.

The following table sets forth the components of the intangible assets acquired as of ~~June 30, 2020~~the acquisition dates:


	Fair Value		Weighted Average Amortization Period (1)
	(In millions)		(In years)
Direct customer relationships	$	11	10
Technology - Software	36		8
Non-compete	1		1
Tradenames	4		9
Total acquired intangible assets	$	52

(1)Determination of the weighted average period of the individual categories of intangible assets was based on the nature of applicable intangible asset and the ~~deferred gain~~expected future cash flows to be derived from the intangible asset. Amortization of intangible assets with definite lives is recognized ~~may be subject~~over the period of time the assets are expected to contribute to future adjustments as the Company obtains additional information to finalize and reassess the accounting for the business combination. The estimated deferred gain on business acquisition of $10 million has been included within other current liabilities in the Condensed Consolidated Balance Sheet.cash flows.

The operating results of ~~Origami~~Freshop, Terafina, and Dumac have been included within NCR's results as of the closing ~~date~~dates of the ~~acquisition.~~acquisitions. Supplemental pro forma information and actual revenue and earnings since the acquisition ~~date~~dates have not been provided as ~~this acquisition~~the acquisitions did not have a material impact on the Company's Condensed Consolidated Statements of Operations.

4.3. GOODWILL AND LONG-LIVED ASSETS

~~Hospitality Goodwill Assessment~~ In addition to our annual goodwill impairment test performed in the fourth quarter, we perform interim impairment tests for long-lived and intangible assets, including goodwill, whenever events or changes in circumstances indicate that the carrying amount of the asset (group) may not be recoverable.

Late in the quarter ended March 31, 2020, there was significant market volatility driven by the COVID-19 pandemic that drove uncertainty around our full year revenue and operating income expectations. As a result, we withdrew our full year outlook for 2020 on March 31, 2020, which was previously provided during our fourth quarter 2019 earnings conference call on February 11, 2020. Given the rapidly changing environment, we considered if there was an indication that the carrying value of net assets were in excess of the fair value for each of our reporting units. This consideration included the expected impacts to the current year cash flows, and the potential impacts to future cash flows, as well as the excess of the fair value over the carrying value from the prior year annual assessment. As a result, we determined there was an indication that the carrying value of the net assets assigned to the Hospitality reporting unit may not be recoverable.

The fair value of the Hospitality reporting unit was estimated using a weighted methodology considering the output from both the income and market approaches. The income approach incorporates the use of discounted cash flow (DCF) analysis. A number of significant assumptions and estimates are involved in the application of the discounted cash flow model to forecast operating cash flows, including revenue growth, operating income margin and discount rate. The market approach is performed using the Guideline Public Companies (GPC) method, which is based on earnings multiple data of peer companies.

For the Hospitality reporting unit, the Company expects the COVID-19 pandemic to have a significant impact to our customers in the table service market, travel and entertainment market and small and medium business market in the near term. The Company expects the long term growth strategy to remain intact with previous growth expectations returning in 2021. Based on

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

these assumptions, the Company determined the fair value of the Hospitality segment continues to be greater than the carrying value and therefore, no impairment existed as of March 31, 2020. Additionally, as of June 30, 2020, the Company determined there was no indication the carrying value of the net assets assigned to the Hospitality segment may not be recoverable. However, if the actual results or the anticipated timing of the recovery from the COVID-19 pandemic differ from our expectations for the Hospitality, or any, reporting unit, there is a possibility we would have to perform another interim impairment test in 2020, which could lead to an impairment of goodwill or other assets.

Goodwill by Segment The carrying amounts of goodwill by segment as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 are included in the table below. Foreign currency fluctuations are included within other adjustments.


		December 31, 2019																June 30, 2020											December 31, 2020										June 30, 2021
In millions	In millions	Goodwill		Accumulated Impairment Losses		Total		Additions		Impairment		Other		Goodwill		Accumulated Impairment Losses		Total		In millions	Goodwill		Accumulated Impairment Losses		Total		Additions		Impairment		Other		Goodwill		Accumulated Impairment Losses		Total
Banking	Banking	$	1,774	$	(101)	$	1,673	$	—	$	—	$	(6)	$	1,768	$	(101)	$	1,667	Banking	$	1,772	$	(101)	$	1,671	$	1,633	$	0	$	1	$	3,406	$	(101)	$	3,305
Retail	Retail	638		(34)		604		—		—		(4)		634		(34)		600		Retail	643		(34)		609		38		0		2		683		(34)		649
Hospitality	Hospitality	402		(23)		379		3		—		(2)		403		(23)		380		Hospitality	404		(23)		381		9		0		0		413		(23)		390
Other		187		(11)		176		—		—		—		187		(11)		176
Telecommunications & Technology																				Telecommunications & Technology	187		(11)		176		0		0		0		187		(11)		176
Total goodwill	Total goodwill	$	3,001	$	(169)	$	2,832	$	3	$	—	$	(12)	$	2,992	$	(169)	$	2,823	Total goodwill	$	3,006	$	(169)	$	2,837	$	1,680	$	0	$	3	$	4,689	$	(169)	$	4,520

Identifiable Intangible Assets NCR's purchased intangible assets, reported in intangibles, net in the Condensed Consolidated Balance Sheets, were specifically identified when acquired, and are deemed to have finite lives. The gross carrying amount and accumulated amortization for NCR’s identifiable intangible assets were as set forth in the table below.


		Amortization Period (in Years)	June 30, 2020									December 31, 2019									Amortization Period (in Years)			June 30, 2021						December 31, 2020
In millions	In millions				Gross Carrying Amount			Accumulated Amortization			Gross Carrying Amount			Accumulated Amortization		In millions	Amortization Period (in Years)			Gross Carrying Amount			Accumulated Amortization			Gross Carrying Amount			Accumulated Amortization
Identifiable intangible assets	Identifiable intangible assets													Identifiable intangible assets
Reseller & customer relationships	Reseller & customer relationships	1 - 20	$	737		$	(297)		$	735		$	(270)	Reseller & customer relationships	1 - 20			$	1,092		$	(351)		$	740		$	(324)
Intellectual property	Intellectual property	2 - 8	524			(407)			529			(397)		Intellectual property	2 - 8			1,056			(433)			531			(418)
Customer contracts	Customer contracts	8	89			(89)			89			(89)		Customer contracts	8			89			(89)			89			(89)
Tradenames	Tradenames	1 - 10	77			(72)			78			(68)		Tradenames	1 - 10			131			(75)			77			(74)
Total identifiable intangible assets	Total identifiable intangible assets		$	1,427		$	(865)		$	1,431		$	(824)	Total identifiable intangible assets				$	2,368		$	(948)		$	1,437		$	(905)

The aggregate amortization expense ~~(actual and estimated)~~ for identifiable intangible assets for the following periods is:


In millions	In millions	Three months ended June 30, 2020		Six months ended June 30, 2020		Remainder of 2020 (estimated)		In millions	Three months ended June 30, 2021		Six months ended June 30, 2021		Remainder of 2021 (estimated)
Amortization expense	Amortization expense	$	19	$	41	$	40	Amortization expense	$	23	$	43	$	90


		For the years ended December 31 (estimated)																			For the years ended December 31 (estimated)
In millions	In millions	2021		2022		2023		2024		2025		In millions	2022		2023		2024		2025		2026
Amortization expense	Amortization expense	$	73	$	68	$	66	$	59	$	51	Amortization expense	$	175	$	171	$	162	$	150	$	140

4. SEGMENT INFORMATION AND CONCENTRATIONS

The Company manages and reports the following segments:

•Banking - We offer solutions to customers in the financial services industry that power their digital transformation through software, services and hardware to deliver differentiated experiences for their customers and improve efficiency for the financial institution. Our managed services and ATM-as-a-Service help banks run their end-to-end ATM channel, positioning NCR as a strategic partner. We augment these solutions by offering a full line of software, services and hardware including interactive teller machines (ITM), and recycling, multi-function and cash dispense ATMs. NCR's digital banking solutions enable anytime-anywhere convenience for a financial institution’s consumer and business customers. We also help institutions implement their Digital First platform strategy by providing solutions for banking channel services, transaction processing, imaging, and branch services. Cardtronics provides financial-related services to cardholders through Cardtronics' networks and, separately, Cardtronics owns and operates the Allpoint network, a retail-based surcharge-free ATM network. Cardtronics also provides ATM management and ATM equipment-related services to large retail merchants and smaller retailers.

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

•Retail - We offer software-defined solutions to customers in the retail industry, leading with digital to connect retail operations end to end to integrate all aspects of a customer’s operations in indoor and outdoor settings from POS, to payments, inventory management, fraud and loss prevention applications, loyalty and consumer engagement. These solutions are designed to improve operational efficiency, selling productivity, customer satisfaction and purchasing decisions; provide secure checkout processes and payment systems; and increase service levels. These solutions include retail-oriented technologies such as comprehensive API-point of sale retail software platforms and applications, hardware terminals, self-service kiosks including self-checkout (SCO), payment processing solutions, and bar-code scanners.

•Hospitality - We offer technology solutions to customers in the hospitality industry, including table-service, quick-service and fast casual restaurants of all sizes, that are designed to improve operational efficiency, increase customer satisfaction, streamline order and transaction processing and reduce operating costs. Our portfolio includes cloud-based software applications for point-of-sale, back office, payment processing, kitchen production, restaurant management and consumer engagement. We also provide hospitality-oriented hardware products such as point-of-sale (POS) terminals, order and payment kiosks, bar code scanners, printers and peripherals. And finally, we help reduce the complexities of running the restaurant through our services capabilities including strategic advisory, technology deployment and implementation, hardware and software maintenance and managed services.

•Telecommunications & Technology (T&T) - We offer maintenance, managed and professional services using solutions such as remote management and monitoring services, which are designed to improve operational efficiency, network availability and end-user experience, to customers in the telecommunications and technology industry. We also provide such services to end users on behalf of select manufacturers leveraging our global service capability, and resell third party networking products to customers in a variety of industries.

These segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker in assessing segment performance and in allocating the Company's resources. Management evaluates the performance of the segments based on revenue and adjusted EBITDA. The Company previously evaluated the performance of the segments based on segment operating income. Adjusted EBITDA is defined as GAAP net income (loss) from continuing operations attributable to NCR plus interest expense, net; plus income tax expense (benefit); plus depreciation and amortization; plus stock-based compensation expense; plus other income (expense); plus pension mark-to-market adjustments, pension settlements, pension curtailments and pension special termination benefits and other special items, including amortization of acquisition-related intangibles, restructuring charges, among others. The special items are considered non-operational so are excluded from the adjusted EBITDA metric utilized by our chief operating decision maker in evaluating segment performance and are separately delineated to reconcile back to total reported GAAP net income (loss) from operations attributable to NCR.

Assets are not allocated to segments, and thus are not included in the assessment of segment performance. Consequently, we do not disclose total assets by reportable segment. The accounting policies used to determine the results of the operating segments are the same as those utilized for the condensed consolidated financial statements as a whole. Intersegment sales and transfers are not material.

Corporate and Other reconciles our segment results to adjusted EBITDA, which primarily includes other income (expense) that are managed only on a total company basis and are, accordingly, reflected only in consolidated results.

The following table presents revenue and adjusted EBITDA by segment:

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)


In millions	Three months ended June 30				Six months ended June 30
	2021		2020		2021		2020
Revenue by segment
Banking	$	809	$	763	$	1,565	$	1,526
Retail	576		483		1,108		955
Hospitality	215		160		394		329
T&T	77		78		154		177
Consolidated revenue	$	1,677	$	1,484	$	3,221	$	2,987
Adjusted EBITDA by Segment
Banking	$	151	$	130	$	305	$	270
Retail	92		49		165		86
Hospitality	30		15		55		22
T&T	9		10		19		18
Corporate and Other	(1)		(3)		(5)		(7)
Total Adjusted EBITDA	$	281	$	201	$	539	$	389

For the three and six months endedJune 30, 2021, the operations of Cardtronics from the close date, June 21, 2021, to June 30, 2021 have been included in the Banking segment results which includes $32 million of revenue and $8 million of Adjusted EBITDA.

The following table reconciles net income (loss) from continuing operations to Adjusted EBITDA:


In millions	Three months ended June 30				Six months ended June 30
	2021		2020		2021		2020
Net income (loss) from continuing operations attributable to NCR	$	(9)	64		$	21	87
Transformation costs	7		8		15		13
Acquisition-related amortization of intangibles	23		19		43		41
Acquisition-related costs	56		0		83		0
Interest expense	61		57		106		107
Interest income	(1)		(1)		(4)		(2)
Depreciation and amortization (excluding acquisition-related amortization of intangibles)	76		68		146		131
Income tax expense (benefit)	31		(34)		48		(33)
Stock-based compensation expense	37		20		81		45
Total Adjusted EBITDA	$	281	$	201	$	539	$	389

The following table presents revenue by geography for NCR:


In millions	Three months ended June 30				Six months ended June 30
	2021		2020		2021		2020
Americas	$	1,007	$	886	$	1,936	$	1,778
Europe, Middle East and Africa (EMEA)	447		407		864		810
Asia Pacific (APJ)	223		191		421		399
Total revenue	$	1,677	$	1,484	$	3,221	$	2,987

The following table presents revenue from products and services for NCR:

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)


In millions	Three months ended June 30				Six months ended June 30
	2021		2020		2021		2020
Recurring revenue (1)	$	900	$	814	$	1,774	$	1,616
All other products and services	749		670		1,419		1,371
Cardtronics revenue	32		0		32		0
Intercompany eliminations	(4)		0		(4)		0
Total revenue	$	1,677	$	1,484	$	3,221	$	2,987

(1) Recurring revenue includes all revenue streams from contracts where there is a predictable revenue pattern that will occur at regular intervals with a relatively high degree of certainty. This includes hardware and software maintenance revenue, cloud revenue, payment processing revenue, certain professional services arrangements as well as term-based software license arrangements that include customer termination rights and excludes the results of Cardtronics.

5. DEBT OBLIGATIONS

The following table summarizes the Company's short-term borrowings and long-term debt:


					June 30, 2020									December 31, 2019											June 30, 2021				December 31, 2020
In millions, except percentages	In millions, except percentages				Amount			Weighted-Average Interest Rate			Amount			Weighted-Average Interest Rate		In millions, except percentages			Amount			Weighted-Average Interest Rate			Amount			Weighted-Average Interest Rate
Short-Term Borrowings	Short-Term Borrowings															Short-Term Borrowings
Current portion of Senior Secured Credit Facility ⁽¹⁾	Current portion of Senior Secured Credit Facility ⁽¹⁾				$	8		2.68%			$	8		4.30%		Current portion of Senior Secured Credit Facility (1)			$	4		2.69%			$	8		2.65%
Trade Receivables Securitization Facility	Trade Receivables Securitization Facility				200			1.14%			270			2.65%		Trade Receivables Securitization Facility			299			0.93%			0			0%
Other ⁽¹⁾					9			4.70%			4			2.82%

		Total short-term borrowings	$	217					$	282					Total short-term borrowings		$	303					$	8
Long-Term Debt	Long-Term Debt															Long-Term Debt
Senior Secured Credit Facility:	Senior Secured Credit Facility:															Senior Secured Credit Facility:
		Term loan facility ⁽¹⁾	$	736			2.68%		$	740			4.30%		Term loan facility (1)		$	1,936			2.63%		$	733			2.65%
		Revolving credit facility ⁽¹⁾	1,070				2.19%		265				3.76%		Revolving credit facility (1)		100				2.60%		75				2.40%
Senior notes:	Senior notes:															Senior notes:
		5.00% Senior Notes due 2022	600						600						8.125% Senior Notes due 2025		400						400
															5.750% Senior Notes due 2027		500						500
															5.000% Senior Notes due 2028		650						650
		6.375% Senior Notes due 2023	700						700						5.125% Senior Notes due 2029		1,200						0
		8.125% Senior Notes due 2025	400						—						6.125% Senior Notes due 2029		500						500
		5.750% Senior Notes due 2027	500						500						5.250% Senior Notes due 2030		450						450
		6.125% Senior Notes due 2029	500						500
Deferred financing fees	Deferred financing fees				(36)						(32)					Deferred financing fees			(70)						(40)
Other ⁽¹⁾	Other ⁽¹⁾				3			—%			4			0.05%		Other (1)			2			7.59%			2			7.68%
		Total long-term debt	$	4,473					$	3,277					Total long-term debt		$	5,668					$	3,270

⁽¹⁾ Interest rates are weighted-average interest rates as of June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

Senior Secured Credit Facility ~~On August 28, 2019,~~As previously disclosed, on February 4, 2021 the Company entered into an amended and restated senior secured credit facility with and among certain subsidiaries of NCR (the Foreign Borrowers), the lenders party thereto and JPMorgan Chase Bank, NA (JPMCB) as the administrative agent, refinancing its term loan facility and revolving credit facility thereunder (the Senior Secured Credit Facility). The Senior Secured Credit Facility consists of a ~~term loan facility with an aggregate principal commitment of $750 million, of which $744 million was outstanding as of June 30, 2020. Additionally,~~fourth amendment to the Senior Secured Credit Facility, ~~provides~~and, on February 16, 2021 the Company entered into (a) an amended and restated commitment letter (the "Commitment Letter"), with certain financial institutions party thereto (collectively, the "Commitment Parties"), (b) an incremental term loan A facility agreement (the Incremental Term Agreement) with the financial institutions party thereto as lenders, NCR International, Inc. (the "Guarantor Subsidiary"), and JPMorgan Chase Bank N.A., as the administrative agent (in such capacity, the "Administrative Agent") and (c) an incremental revolving facility agreement (the "Incremental Revolving Agreement") with certain financial institutions party thereto as lenders, the Guarantor Subsidiary, certain of the subsidiaries of NCR as borrowers (collectively, the "Foreign Borrowers") and the Administrative Agent.

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

Pursuant to the Commitment Letter, the Company obtained commitments for a ~~five-year revolving credit~~senior bridge facility ~~with~~(which was intended to be secured, but a portion of which may have been unsecured) in an aggregate principal amount of $1.0 billion (the “Bridge Facility”). The Bridge Facility would have been available to the Company for the purpose of financing the Cardtronics Transaction, if, and to the extent, certain securities offerings were not issued on or prior to the closing of the Cardtronics Transaction. As noted below, on April 6, 2021, the Company issued $1.2 billion aggregate principal amount of 5.125% senior notes due 2029 (the “5.125% Notes”) which financed a portion of the purchase price consideration in connection with the Cardtronics Transaction. As a result, the commitments with respect to the Bridge Facility were terminated.

Pursuant to the Incremental Term Agreement, the Company obtained a senior secured incremental term loan A facility under the Senior Secured Credit Facility, in an aggregate principal amount of $1.505 billion (the "TLA Facility"). The senior secured credit facility also includes a senior secured term loan B facility (the "TLB Facility") in an aggregate principal amount of $750 million.

Pursuant to the Incremental Revolving Agreement, the lenders party thereto provided the Company and the Foreign Borrowers with a $1.1 billion ~~of which $1.07 billion was outstanding as of June 30, 2020.~~revolving credit facility under the Senior Secured Credit Facility to replace the Company’s existing senior secured revolving credit facility. The revolving credit facility also allows a ~~portion of the availability to~~sub-facility that may be used for letters of credit, and, as of June 30, ~~2020, there were $28 million of~~2021, outstanding letters of credit ~~outstanding.~~were $26 million.

On June 24, 2021 (the “Conversion Effective Date”), the Company entered into an Incremental Revolving Facility Agreement (TLA-2 Conversion) (the “Incremental Revolving Conversion Agreement”), with the Guarantor Subsidiary and the Foreign Borrowers, the lenders party thereto and the Administrative Agent. Pursuant to the Incremental Revolving Conversion Agreement, $200 million of the TLA Facility was converted into an equal principal amount of senior secured incremental revolving credit commitments (the “Incremental Revolving Commitments”). The Incremental Revolving Conversion Agreement also amends and restates the credit agreement (the “Amended and Restated Credit Agreement”) to reflect, among other things, the Incremental Revolving Commitments, the TLA Facility and the Replacement Revolving Facility.

As a result, the aggregate principal amount under the TLA Facility is $1.305 billion and under the revolving credit facility is $1.3 billion. As of June 30, 2021, the term loan facilities (the TLA Facility and the TLB Facility) under the Senior Secured Credit Facility have an aggregate principal amount of $2.055 billion, of which $1.940 billion was outstanding. Additionally, as of June 30, 2021, there was $100 million outstanding under the revolving credit facility.

The terms of the Incremental Revolving Commitments are identical to the terms of the commitments under the Replacement Revolving Facility (together with the Incremental Revolving Commitments, the "Revolving Credit Facility"). Up to $400 million of the revolving credit facility is available to the Foreign Borrowers, as long as there is availability under the revolving credit facility. Term loans were made to the Company in U.S. Dollars, and loans under the revolving credit facility are available in U.S. Dollars, Euros and Pound Sterling.

The outstanding principal balance of the ~~term loan~~TLB facility is required to be repaid in equal quarterly installments of ~~approximately~~ 0.25% of the original aggregate principal amount that began with the fiscal quarter ending December 31, 2019, with the balance being due at maturity on August 28, ~~2026. Borrowings~~2026 (the "TLB Maturity Date").

The outstanding principal balance of the TLA Facility is required to be repaid in equal quarterly installments of 1.875% of the original aggregate principal amount thereof, beginning with the fiscal quarter ending September 30, 2021, with the balance being due at maturity on the earlier of (a) June 21, 2026 and (b) unless the loans under TLB Facility have been repaid prior to such date, the date that is 91 days prior to the TLB Maturity Date.

Commitments under the ~~revolving portion~~Revolving Credit Facility are scheduled to terminate on the earlier of (a) June 21, 2026 and (b) unless the ~~credit facility are due August 28, 2024. Revolving~~ loans ~~outstanding~~under TLB Facility have been repaid prior to such date, the date that is 91 days prior to the TLB Maturity Date. Loans under the ~~Senior Secured~~Revolving Credit Facility ~~denominated in U.S. Dollars~~may be repaid and reborrowed prior to such date, subject to the satisfaction of customary conditions.

Amounts covered under the Revolving Credit Facility and the TLA Facility bear interest at LIBOR (or, in the ~~Company's~~case of amounts denominated in Euros, EURIBOR), or, at our option, in the case of amounts denominated in Dollars, at ~~(a) London Inter-bank Offered Rate ("LIBOR"), plus a margin ranging from 1.25% to 2.25% or (b)~~ a base rate equal to the highest of (i) the federal funds rate plus 0.50%, (ii) the rate of interest last quoted by the Wall Street Journal as the “prime rate” ~~and~~, (iii) the one-month LIBOR rate plus 1.00%, and (iv) 0.00% per annum (the ~~Base Rate)~~"Base Rate"), plus, ~~a margin ranging from 0.25% to 1.25%,~~ in each case, ~~depending on the Company’s consolidated leverage ratio. Revolving loans denominated in Euro bear interest at the EURIBOR, plus~~ a margin ranging from 1.25% to 2.25% depending on the Company’s consolidated leverage ratio. The terms of the Senior Secured Credit Facility also require certain other fees and payments to be made by the Company, including a commitment fee on the undrawn portion of the revolving credit facility. Term loans outstanding under the Senior Secured Credit Facility bear interest, at NCR's option, at LIBOR plus 2.50%2.75% per annum ~~or the Base Rate plus a 1.50% margin~~for LIBOR-based and EURIBOR-based loans under such facilities and ranging from 0.25% to

1720

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

1.75% per ~~annum. In~~annum for Base Rate-based loans under such facilities, in each case, depending on our consolidated leverage ratio. Until we deliver financial statements for the ~~event that~~fiscal quarter ended September 30, 2021, the applicable margin will be 2.50% for LIBOR-based and EURIBOR-based loans under such facilities and 1.50% for loans under such facilities. Amounts borrowed under the TLB Facility bear interest at LIBOR ~~is no longer available~~ or, at our option, at the Base Rate, plus, in ~~certain other circumstances as described in~~each case, a margin of 2.50% per annum for LIBOR-based loans and 1.50% per annum for Base Rate-based loans. The Amended and Restated Credit Agreement contains customary LIBOR and EURIBOR replacement provisions. The daily unused portion of the ~~Senior Secured~~Revolving Credit Facility ~~the Senior Secured Credit Facility provides~~is subject to a ~~mechanism for determining an alternative rate of interest. There is no assurance that any such alternative, successor or replacement reference rate will be similar~~commitment fee ranging from 0.15% to ~~or produce the same value or economic equivalence of, LIBOR.~~0.45% per annum, depending on our consolidated leverage ratio.

~~The obligations of the Company and Foreign Borrowers under the Senior Secured Credit Facility are guaranteed by certain of the Company's wholly-owned domestic subsidiaries.~~ The Senior Secured Credit Facility and ~~these guarantees~~the above described guarantee are secured by a first priority lien and security interest in certain equity interests owned by the Company and the ~~guarantor subsidiaries~~Guarantor Subsidiary in certain of their respective domestic and foreign subsidiaries, and a ~~perfected~~ first priority lien and security interest in substantially all of the Company's U.S. assets and the assets of the ~~guarantor subsidiaries,~~Guarantor Subsidiary, subject to certain exclusions. These security interests would be released if the Company achieves an “investment grade” rating and will remain released so long as the Company maintains that rating.

The Senior Secured Credit Facility includes affirmative and negative covenants that restrict or limit the ability of the Company and its subsidiaries to, among other things, incur indebtedness; create liens on assets; engage in certain fundamental corporate changes or changes to the Company's business activities; make investments; sell or otherwise dispose of assets; engage in sale-leaseback or hedging transactions; repurchase stock, pay dividends or make similar distributions; repay other indebtedness; engage in certain affiliate transactions; or enter into agreements that restrict the Company's ability to create liens, pay dividends or make loan repayments. The Senior Secured Credit Facility also includes a financial covenant ~~that~~with respect to the Revolving Credit Facility and the TLA Facility. The financial covenant requires the Company to maintain:

•a consolidated leverage ratio on the last day of any fiscal quarter, not to exceed (i) in the case of any fiscal quarter ending on or prior to ~~March~~December 31, 2021, ~~(a) the sum of 4.50 and an amount (not~~5.50 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 March 31, 2021 and~~ on or prior to ~~March 31, 2023, (a) the sum of 4.25 and an amount (not~~September 30, 2022, 5.25 to ~~exceed 0.50) to reflect debt used to reduce NCR’s unfunded pension liabilities to (b) 1.00;~~1.00, and (iii) in the case of any fiscal quarter ending on or after ~~March~~December 31, ~~2023, (a) the sum of 4.00 and an amount (not~~2022, 4.75 to ~~exceed 0.50) to reflect debt used to reduce our unfunded pension liabilities to (b)~~ 1.00.

The Company has the option to elect to increase the maximum permitted leverage ratio for the periods described in the foregoing clause (iii) by 0.25 in connection with the consummation of any material acquisition (as defined in the Senior Secured Credit Facility) for ~~four~~three fiscal quarters, but in no event will the maximum permitted leverage ratio, inclusive of all increases, exceed 4.75 to 1.00. At June 30, 2020, the maximum consolidated leverage ratio under the Senior Secured Credit Facility was 4.75 to 1.00.quarters.

The Senior Secured Credit Facility also includes provisions for events of default, which are customary for similar financings. Upon the occurrence of an event of default, the lenders may, among other things, terminate the loan commitments, accelerate all loans and require cash collateral deposits in respect of outstanding letters of credit. If the Company is unable to pay or repay the amounts due, the lenders could, among other things, proceed against the collateral granted to them to secure such indebtedness.

For the three and six months ended June 30, 2021, the Company incurred financing fees of $2 million and $19 million, respectively, related to certain structuring and commitment fees as a result of the above referenced financing transactions entered into during the first quarter of 2021.

The Company may request, at any time and from time to time ~~but the lenders are not obligated to fund, the establishment of~~ one or more incremental term loans and/or revolving credit facilities (subject to the agreement of existing lenders or additional financial institutions to provide such term loans and/or revolving credit facilities) and with no requirement that existing lenders providing such facilities with commitments in an aggregate amount not to exceed the greater of (i) $150 million, and (ii) such amount as would not cause the leverage ratio under the Senior Secured Credit Facility, calculated on a pro forma basis including the incremental facility and assuming that it and the revolver are fully drawn, to exceed 3.00 to 1.00, and the proceeds of which can be used for working capital requirements and other general corporate purposes.

Senior Unsecured Notes On September 17, 2012, the Company issued $600 million aggregate principal amount of 5.00% senior unsecured notes due in 2022 (the 5.00% Notes). The 5.00% Notes were sold at 100% of the principal amount and will mature on July 15, 2022. On December 19, 2013, the Company issued $700 million aggregate principal amount of 6.375% senior unsecured notes due in 2023 (the 6.375% Notes). The 6.375% Notes were sold at 100% of the principal amount and will mature on December 15, 2023. On August 21, 2019, the Company issued $500 million aggregate principal amount of 5.750% senior unsecured notes due in 2027 (the ~~5.750% Notes)~~"5.750% Notes") and $500 million aggregate principal amount of 6.125% senior unsecured notes due in 2029 (the ~~6.125% Notes)~~"6.125% Notes"). The 5.750% Notes were sold at 100% of the principal amount ~~and will mature on~~with a maturity date of September 1, 2027. The 6.125% Notes were sold at 100% of the principal amount ~~and will mature on~~with a maturity date of September 1, 2029.

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

On April 13, 2020, the Company issued $400 million aggregate principal amount of 8.125% senior unsecured notes due in 2025 (the ~~8.125% Notes)~~"8.125% Notes"). The 8.125% Notes were sold at 100% of the principal amount ~~which resulted in total gross proceeds~~with a maturity date of ~~$400 million. Interest is payable on the 8.125% Notes semi-annually in arrears at an annual rate of 8.125%, on~~ April 15, 2025. On August 20, 2020, the Company issued $650 million aggregate principal amount of 5.000% senior unsecured notes due in 2028 (the "5.000% Notes") and $450 million aggregate principal amount of 5.250% senior unsecured notes due in 2030 (the 5.250%

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

Notes). The 5.000% Notes and 5.250% Notes were sold at 100% of the principal amount and with maturity dates of October 1, 2028 and October ~~15, beginning on October 15, 2020. The 8.125% Notes will mature on April 15, 2025.~~1, 2030, respectively.

The ~~8.125% Notes are~~senior unsecured ~~senior obligations of the Company and~~notes are guaranteed by the ~~Company's wholly-owned subsidiary, NCR International, Inc. (Guarantor Subsidiary),~~Guarantor Subsidiary, which ~~is 100% owned by the Company and~~ has guaranteed fully and unconditionally the obligations to pay principal and interest for these senior unsecured notes.

The

The Company has the option to redeem the 8.125% Notes, in whole or in part, at any time on or after April 15, 2022, at a redemption price of 104.063%, 102.031%, and 100% during the 12-month periods commencing on April 15, 2022, 2023 and 2024 and thereafter, respectively, plus accrued and unpaid interest to the redemption date. Prior to April 15, 2022, the Company may redeem some or all of the 8.125% Notes by paying a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus the Applicable Premium, as defined in the Indenture, as of, and accrued and unpaid interest to, but excluding, the redemption date (subject to the right of holders of record of the Notes on the relevant record date to receive interest due on the relevant interest payment date).

~~The~~ terms of the indentures for these notes limit the ability of the Company and certain of its subsidiaries to, among other things, incur additional debt or issue redeemable preferred stock; pay dividends or make certain other restricted payments or investments; incur liens; sell assets; incur restrictions on the ability of the Company's subsidiaries to pay dividends to the Company; enter into affiliate transactions; engage in ~~sale~~sale and leaseback transactions; and consolidate, merge, sell or otherwise dispose of all or substantially all of the Company's or such subsidiaries' assets. These covenants are subject to significant exceptions and qualifications. For example, if these notes are assigned an "investment grade" rating by Moody's or S&P and no default has occurred or is continuing, certain covenants will be terminated.

On April 6, 2021, the Company issued the 5.125% Notes due 2029. The Company used the net proceeds from the issuance of the 5.125% Notes, together with the borrowing under its senior secured credit facilities to finance the consideration paid in connection with the Cardtronics Transaction.

The 5.125% Notes are senior unsecured obligations of the Company and guaranteed by the Guarantor Subsidiary.

Interest is payable on the 5.125% Notes semi-annually in arrears at annual rates of 5.125% on April 15 and October 15 of each year, beginning on October 15, 2021. The 5.125% Notes will mature on April 15, 2029.

At any time and from time to time, prior to April 15, 2024, the Company may redeem up to a maximum of 40% of the original aggregate principal amount of the 5.125% Notes with the proceeds of one or more equity offerings, at a redemption price equal to 105.125% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, to, but not including, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided that: (i) at least 55% of the original aggregate principal amount of the applicable 5.125% Notes remains outstanding; and (ii) such redemption occurs within 180 days of the completion of such equity offering.

Prior to April 15, 2024, the Company may redeem some or all of the 5.125% Notes by paying a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus the applicable premium, as defined in the applicable Indenture, as of, and accrued and unpaid interest to, but excluding, the applicable redemption date (subject to the right of holders of record of the applicable 5.125% Notes on the relevant record date to receive interest due on the relevant interest payment date).

On or after April 15 of the relevant year listed below, the Company may redeem some or all of the 5.125% Notes at the prices listed below, plus accrued and unpaid interest, if any, to, but not including, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date): 2024 at a redemption price of 102.563%, 2025 at a redemption price of 101.281%, and 2026 and thereafter at a redemption price of 100%.

The 5.125% Notes contains customary events of default, including, among other things, payment default, exchange default, failure to provide certain notices thereunder and certain provisions related to bankruptcy events. The Indenture also contains customary high yield affirmative and negative covenants, including negative covenants that, among other things, limit the Company and its restricted subsidiaries’ ability to incur additional indebtedness, create liens on, sell or otherwise dispose of assets, engage in certain fundamental corporate changes or changes to lines of business activities, make certain investments or material acquisitions, engage in sale-leaseback or hedging transactions, repurchase common stock, pay dividends or make similar distributions on capital stock, repay certain indebtedness, engage in certain affiliate transactions and enter into agreements that restrict their ability to create liens, pay dividends or make loan repayments.

On August 2, 2021, the Company issued a Notice of Full Redemption of the 8.125% Notes pursuant to which the Company elected to redeem and will redeem on August 12, 2021 (the “Redemption Date”) $400 million aggregate principal amount of the outstanding 8.125% Notes at a redemption price equal to 100% of the principal amount of the 8.125% Notes plus the excess of (if any) (a) the present value at the Redemption Date of (i) the redemption price of 8.125% Notes on April 15, 2022, plus (ii) all required remaining scheduled interest payments due on the 8.125% Notes through April 15, 2022 (but excluding accrued and unpaid interest to, but excluding, the Redemption Date), computed using a discount rate equal to the Adjusted Treasury Rate (as described in the terms of the indenture relating to the 8.125% Notes), over (b) the principal amount of the 8.125% Notes on the Redemption Date, and accrued and unpaid interest to, but excluding, the Redemption Date (the “Redemption Price”). Holders of the 8.125% Notes will be paid the Redemption Price upon presentation and surrender of their notes for redemption.

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

Trade Receivables Securitization Facility In November 2014, the Company established a revolving trade receivables securitization facility (the A/"A/R ~~Facility)~~Facility") with PNC Bank, National Association (PNC) as the administrative agent, and various lenders. In November 2019, the Company amended the A/R Facility to increase the maximum commitment made available under the Facility and extended the maturity date to November 2021. The amendment also included other modifications including the scope of receivables subject to the facility and related eligibility requirements, the adoption of a new benchmark for determining overnight funding rates and the fees and interest payable to the agent and lenders party thereto. The A/R Facility ~~now~~ provides for up to $300 million in funding based on the availability of eligible receivables and other customary factors and conditions, of which ~~$200~~$299 million was outstanding as of June 30, ~~2020.~~2021.

Under the A/R Facility, NCR sells and/or contributes certain of its U.S. trade receivables to a wholly-owned, bankruptcy-remote subsidiary as they are originated, and advances by the lenders to that subsidiary are secured by those trade receivables. The assets of this financing subsidiary are restricted as collateral for the payment of its obligations under the A/R Facility, and its assets and credit are not available to satisfy the debts and obligations owed to the creditors of the Company. The Company includes the assets, liabilities and results of operations of this financing subsidiary in its condensed consolidated financial statements. The financing subsidiary owned ~~$524~~$490 million and ~~$603~~$428 million of outstanding accounts receivable as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, and these amounts are included in accounts receivable, net in the Company’s Condensed Consolidated Balance Sheets.

The financing subsidiary will pay annual commitments and other customary fees to the lenders, and advances by a lender under the A/R Facility will accrue interest (i) at a reserve-adjusted LIBOR rate or a base rate equal to the highest of (a) the applicable lender’s prime rate or (b) the federal funds rate plus 0.50%, if the lender is funding as a committed lender under the terms of the A/R Facility, or (ii) based on commercial paper interest rates if the lender is funding as a commercial paper conduit lender. Advances may be prepaid at any time without premium or penalty.

The A/R Facility contains various customary affirmative and negative covenants and default and termination provisions, which provide for the acceleration of the advances under the A/R Facility in circumstances including, but not limited to, failure to pay interest or principal when due, breach of representation, warranty or covenant, certain insolvency events or failure to maintain the security interest in the trade receivables, and defaults under other material indebtedness.

Fair Value of Debt The Company utilized Level 2 inputs, as defined in the fair value hierarchy, to measure the fair value of the long-term debt, which, as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 was ~~$4.79~~$6.22 billion and ~~$3.70~~$3.49 billion, respectively.

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

Management's fair value estimates were based on quoted prices for recent trades of NCR’s long-term debt, quoted prices for similar instruments, and inquiries with certain investment communities.

6. INCOME TAXES

Income tax provisions for interim (quarterly) periods are based on an estimated annual effective income tax rate calculated separately from the effect of significant, infrequent or unusual items. Income tax expense was $31 million for the three months ended June 30, 2021 compared to income tax benefit ~~was~~of $34 million for the three months ended June 30, ~~2020 compared to income~~2020. The change was primarily driven by discrete tax ~~expense of $15 million for~~expenses and benefits. In the three months ended June 30, ~~2019. The~~2021, the Company recognized a $34 million expense from recording a valuation allowance against interest limitation carryforwards in the U.S. and a $14 million benefit from the deferred tax impact of a tax law change ~~was primarily driven by an increase~~enacted in ~~discrete tax benefits as well as lower income before taxes in~~the U.K. In the three months ended June 30, ~~2020. The increase in discrete tax benefits primarily resulted from~~2020, the Company recognized a $48 million tax benefit ~~recorded~~ for the release of a valuation allowance against U.S. foreign tax credits and the re-establishment of expected foreign tax credit offsets to unrecognized tax benefits.

Income tax expense was $48 million for the six months ended June 30, 2021 compared to income tax benefit ~~was~~of $33 million for the six months ended June 30, ~~2020 compared to~~2020. The change was primarily driven by higher income before taxes and discrete tax ~~expense of $24 million for~~expenses and benefits. In the six months ended June 30, ~~2019. The~~2021, the Company recognized a $34 million expense from recording a valuation allowance against interest limitation carryforwards in the U.S. and a $14 million benefit from the deferred tax impact of a tax law change ~~was primarily driven by an increase~~ in ~~discrete tax benefits as well as lower income before taxes in~~the U.K. In the six months ended June 30, ~~2020. The increase in discrete tax benefits primarily resulted from~~2020, the Company recognized a $48 million tax benefit ~~recorded~~ for the release of a valuation allowance against U.S. foreign tax credits and the re-establishment of expected foreign tax credit offsets to unrecognized tax ~~benefits.~~

~~Additionally, in connection with preparing the financial statements for the six months ended June 30, 2020, the Company identified~~benefits and ~~recorded income~~ tax benefits of $2 million related to an error in the calculation of the permanent differences on ~~executive~~ stock compensation and $3 million for the write-off of ~~income~~ tax payables incorrectly recorded in prior periods. The Company determined the impact of these errors was not material to the annual or interim financial statements of previous periods and the effect of correcting these errors was not material to the Condensed Consolidated Financial Statements for the six months ended June 30, 2020 and is not expected to be material to the 2020 annual financial statements.

The Company engages in continuous discussions and negotiations with taxing authorities regarding tax matters, and the Company has determined that over the next 12 months it expects to resolve certain tax matters related to U.S. and foreign

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

jurisdictions. As a result, as of June 30, ~~2020,~~2021, we estimate that it is reasonably possible that gross unrecognized tax benefits may decrease by ~~$30~~$6 million to ~~$37~~$24 million in the next 12 months.

7. STOCK COMPENSATION PLANS

As of June 30, ~~2020,~~2021, the Company’s primary type of stock-based compensation was restricted stock units and stock options. Stock-based compensation expense for the following periods were:


In millions	In millions	Three months ended June 30									Six months ended June 30									In millions	Three months ended June 30				Six months ended June 30
				2020			2019			2020			2019		In millions	2021			2020		2021			2020
Restricted stock units	Restricted stock units	$	13		$	22		$	32		$	42	Restricted stock units	$			$	13	$	66		$	32
Stock options	Stock options	6			2			10			4		Stock options	5			6		11			10
Employee stock purchase plan	Employee stock purchase plan	1			1			3			2		Employee stock purchase plan	2			1		4			3
Stock-based compensation expense	Stock-based compensation expense	20			25			45			48		Stock-based compensation expense	37			20		81			45
Tax benefit	Tax benefit	(2)			(4)			(5)			(7)		Tax benefit	(4)			(2)		(9)			(5)
Stock-based compensation expense (net of tax)	Stock-based compensation expense (net of tax)	$	18		$	21		$	40		$	41	Stock-based compensation expense (net of tax)	$	33		$	18	$	72		$	40

Stock-based compensation expense is recognized in the financial statements based upon grant date fair value.

InOn February 23, 2021, the ~~six months ended June 30, 2020, the~~Company granted market-based restricted stock ~~options granted were premium-priced stock options, in which the exercise price is equal to 115%~~units with 50% of the ~~closing~~award vesting on December 31, 2022 and 50% of the award vesting on December 31, 2023. The number of awards that vest are subject to the performance of the Company's stock price onfrom the date of ~~the grant.~~grant to December 31, 2022. The ~~exercise price of the stock options granted in the six months ended June 30, 2020 was $37.97. The weighted average~~ fair value ~~of the option grants~~ was ~~$7.80 for the six months ended June 30, 2020~~determined to be $47.20 based on using a Monte-Carlo simulation model and will be recognized over the requisite service period. ~~These option grants have a seven year contractual term that vest at the end of 36 months. For the six months ended June 30,~~

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

~~2019, the weighted average fair value of option grants was $8.07 with a seven year contractual term that vest ratably over four years.~~ The table below details the assumptions used in determining the fair value of the ~~option grants.~~market-based restricted stock units.

Six months ended June 30
2020 2019
Dividend yield $ — $ —
Risk-free interest rate 1.44 % 2.50 %
Expected volatility 33.51 % 34.79 %
Expected holding period (years) 3.7 3.9


	Six months ended June 30
Dividend yield	0	%
Risk-free interest rate	0.10	%
Expected volatility	57.20	%

Expected volatility for the market-based restricted stock units is calculated as the historical volatility of the Company’s stock over a period ~~equal to the expected term~~ of ~~the options,~~three years, as management believes this is the best representation of prospective trends. The Company uses historical data to estimate option exercise and employee terminations within the valuation model. The expected holding period represents the period of time that options are expected to be outstanding. For options granted during the six months ended June 30, 2020, the seven-year U.S. Treasury yield curve was used to determine the risk-free interest rate. For options granted during the six months ended June 30, 2019, the risk-free interest rate was determined based on a blend of the ~~three~~one year and ~~five-year~~two years U.S. Treasury yield curves in effect at the time of the grant.

As of June 30, ~~2020,~~2021, the total unrecognized compensation cost of ~~$84~~$173 million related to unvested restricted stock grants is expected to be recognized over a weighted average period of approximately 1.0 year. As of June 30, ~~2020,~~2021, the total unrecognized compensation cost of ~~$57~~$33 million related to unvested stock option grants is expected to be recognized over a weighted average period of approximately ~~1.3~~0.8 years.

Employee Stock Purchase Plan The Company's Employee Stock Purchase Plan ("ESPP") provides employees a 15% discount on stock purchases using a three-month look-back feature where the discount is applied to the stock price that represents the lower of NCR’s closing stock price on either the first day or the last day of each calendar quarter. Participants can contribute between 1% and 10% of their compensation.

For the three months ended June 30, 2021, employees purchased 0.2 million shares, at a discounted price of $32.25. For the three months ended June 30, 2020, employees purchased 0.3 million shares, at a discounted price of $14.72. ~~For the three months ended June 30, 2019, employees purchased 0.2 million shares, at a discounted price of $24.02.~~

8. EMPLOYEE BENEFIT PLANS

Components of net periodic benefit cost (income) of the pension plans for the three months ended June 30 were as follows:

In millions U.S. Pension Benefits International Pension Benefits Total Pension Benefits
2020 2019 2020 2019 2020 2019
Net service cost $ — $ — $ 2 $ 1 $ 2 $ 1
Interest cost 13 17 2 5 15 22
Expected return on plan assets (9) (12) (6) (7) (15) (19)
Net periodic benefit cost (income) $ 4 $ 5 $ (2) $ (1) $ 2 $ 4

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)


In millions	U.S. Pension Benefits				International Pension Benefits				Total Pension Benefits
	2021		2020		2021		2020		2021		2020
Net service cost	$	0	$	0	$	2	$	2	$	2	$	2
Interest cost	8		13		2		2		10		15
Expected return on plan assets	(7)		(9)		(6)		(6)		(13)		(15)
Amortization of prior service cost	0		0		0		0		0		0
Net periodic benefit cost (income)	$	1	$	4	$	(2)	$	(2)	$	(1)	$	2

Components of net periodic benefit cost (income) of the pension plans for the six months ended June 30 were as follows:


In millions	In millions	U.S. Pension Benefits									International Pension Benefits										Total Pension Benefits								In millions	U.S. Pension Benefits						International Pension Benefits			Total Pension Benefits
				2020			2019			2020			2019			2020			2019		In millions	2021			2020			2021				2020			2021			2020
Net service cost	Net service cost	$	—		$	—		$	3		$	3		$	3		$	3	Net service cost	$			$	0		$	3			$	3		$	3		$	3
Interest cost	Interest cost	26			$	33		6			$	10		32			$	43	Interest cost	17			26			4				6			21			32
Expected return on plan assets	Expected return on plan assets	(18)			$	(22)		(13)			$	(15)		(31)			$	(37)	Expected return on plan assets	(15)			(18)			(12)				(13)			(27)			(31)

Amortization of prior service cost																			Amortization of prior service cost	0			0			0				0			0			0
Net periodic benefit cost (income)	Net periodic benefit cost (income)	$	8		$	11		$	(4)		$	(2)		$	4		$	9	Net periodic benefit cost (income)	$	2		$	8		$	(5)			$	(4)		$	(3)		$	4

~~The~~

Components of the benefit from the postretirement plan for the following periods were:


In millions	Three months ended June 30				Six months ended June 30
	2021		2020		2021		2020
Interest cost	$	0	$	0	$	0	$	0
Amortization of:
Prior service benefit	0		0		0		(1)
Actuarial loss	0		0		0		0
Net postretirement benefit	$	0	$	0	$	0	$	(1)

Components of the net cost of the postemployment plan for the following periods were:


	Three months ended June 30				Six months ended June 30
In millions	2021		2020		2021		2020
Net service cost	$	3	$	7	$	9	$	13
Interest cost	0		1		1		1
Amortization of:
Prior service benefit	0		(1)		(1)		(1)
Actuarial gain	0		(1)		0		(2)
Net benefit cost	$	3	$	6	$	9	$	11

Employer Contributions

Pension For the three and six months ended June 30, 2021, NCR contributed $5 million and $9 million to its international pension plans. NCR anticipates contributing an additional $11 million to its international pension plans for a total of $20 million in 2021.

Postretirement For the three and six months ended June 30, 2021, NCR made 0 contributions to its U.S. postretirement plan. NCR anticipates contributing an additional $2 million to its U.S. postretirement plan for a total of $2 million in 2021.

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

In millions Three months ended June 30 Six months ended June 30
2020 2019 2020 2019
Interest cost $ — $ — $ — $ —
Amortization of:
Prior service benefit — (1) (1) $ (2)
Net postretirement benefit $ — $ (1) $ (1) $ (2)

~~The net cost of the postemployment plan for the following periods were:~~

Three months ended June 30 Six months ended June 30
In millions 2020 2019 2020 2019
Net service cost $ 7 $ 5 $ 13 $ 19
Interest cost 1 1 1 2
Amortization of:
Prior service benefit (1) (1) (1) (2)
Actuarial gain (1) — (2) (1)
Net benefit cost $ 6 $ 5 $ 11 $ 18

~~Employer Contributions~~

~~Pension~~ For the three and six months ended June 30, 2020, NCR contributed $4 million and $9 million, respectively, to its international pension plans. NCR anticipates contributing an additional $12 million to its international pension plans for a total of $21 million in 2020.

~~Postretirement~~ For the three and six months ended June 30, 2020, NCR made $1 million of contributions to its U.S. postretirement plan. NCR anticipates contributing an additional $1 million to its U.S. postretirement plan for a total of $2 million in 2020.

Postemployment For the three and six months ended June 30, ~~2020,~~2021, NCR contributed $3$8 million and $7$18 million ~~respectively,~~ to its postemployment plan. NCR anticipates contributing an additional ~~$23~~$21 million to its postemployment plan for a total of ~~$30~~$39 million in ~~2020.~~2021.

9. COMMITMENTS AND CONTINGENCIES

In the normal course of business, NCR is subject to various proceedings, lawsuits, claims and other matters, including, for example, those that relate to the environment and health and safety, labor and employment, employee benefits, import/export compliance, intellectual property, data privacy and security, product liability, commercial disputes and regulatory compliance, among others. Additionally, NCR is subject to diverse and complex laws and regulations, including those relating to corporate governance, public disclosure and reporting, environmental safety and the discharge of materials into the environment, product safety, import and export compliance, data privacy and security, antitrust and competition, government contracting, anti-corruption, and labor and human resources, which are rapidly changing and subject to many possible changes in the future. Compliance with these laws and regulations, including changes in accounting standards, taxation requirements, and federal securities laws among others, may create a substantial burden on, and substantially increase costs to NCR or could have an impact on NCR's future operating results. The Company has reflected all liabilities when a loss is considered probable and reasonably estimable in the ~~Condensed~~ Consolidated Financial Statements. We do not believe there is a reasonable possibility that losses exceeding amounts already recognized have been incurred, but there can be no assurances that the amounts required to satisfy alleged liabilities from such matters will not impact future operating results.Other than as stated below, the Company does not currently expect to incur material capital expenditures related to such matters.However, there can be no assurances that the actual amounts required to satisfy alleged liabilities from various lawsuits, claims, legal proceedings and other matters, including, but not limited to the Fox River and Kalamazoo River environmental matters and other matters discussed below, and to comply with applicable laws and regulations, will not exceed the amounts reflected in NCR’s ~~Condensed~~ Consolidated Financial Statements or will not have a material adverse effect on its consolidated results of operations, capital expenditures, competitive position, financial condition or cash flows.

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

~~Nashville Tornado~~ On March 3, 2020, one of our Global Fulfillment Centers, operated with a third-party logistics partner in Mount Juliet, Tennessee, was severely impacted by tornadoes in the greater Nashville area. We maintain substantial property damage insurance coverage for this Global Fulfillment Center and have worked, and continue to work, closely with our insurance carrier and claims adjusters to ascertain the property damage, which mainly consisted of raw materials and finished goods inventory. The Company determined approximately $105 million of the inventory to be a total loss as of June 30, 2020 and as such, was written-off with an offsetting insurance receivable recorded, which was included within other current assets in the Condensed Consolidated Balance Sheet with no net impact on cost of sales. The insurance receivable was based on the amount probable of recovery based on the terms of the insurance policy. The remaining $45 million of inventory requires further assessment to determine recoverability, which remains ongoing as of June 30, 2020. As of June 30, 2020, we received a total of $91 million as an advance from the insurance carrier with $14 million remaining as an insurance receivable. Additionally, our insurance policy also provides for business interruption coverage, including lost profits, and reimbursement for other expenses and costs that have been incurred relating to the damages and losses suffered. As of June 30, 2020, the Company has incurred $9 million of other expenses, mainly related to expedite freight, professional services and contractor charges. The Company has received a $4 million insurance payment related to these expenses. The Company has recorded an insurance receivable for the remainder based on the amount probable of recovery based on the terms of the insurance policy.

~~Boston Consulting Group~~ On November 6, 2019, Boston Consulting Group, Inc., a former consultant for the Company, commenced a lawsuit against the Company in the United States District Court for the District of New York. The Complaint in the matter alleges the Company breached two consulting agreements and seeks in excess of $80 million and other compensatory damages and equitable relief. While the Company at this time is unable to make any predictions about the outcome of this case or estimate any possible liability, the Company believes the allegations of money owed are grossly overstated, and the Company intends to vigorously defend this lawsuit.

Environmental Matters NCR's facilities and operations are subject to a wide range of environmental protection laws, and NCR has investigatory and remedial activities underway at a number of facilities that it currently owns or operates, or formerly owned or operated, to comply, or to determine compliance, with such laws. Also, NCR has been identified, either by a government agency or by a private party seeking contribution to site clean-up costs, as a potentially responsible party (PRP) at a number of sites pursuant to various state and federal laws, including the Federal Water Pollution Control Act, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and comparable state statutes. Other than the Fox River matter, the Kalamazoo River matter and the Ebina matter discussed below, we currently do not anticipate material expenses and liabilities from these environmental matters.

Fox River NCR is one of 8 entities that were formally notified by governmental and other entities, such as local Native American tribes, that they are PRPs for environmental claims (under CERCLA and other statutes) arising out of the presence of polychlorinated biphenyls (PCBs) in sediments in the lower Fox River and in the Bay of Green Bay in Wisconsin. The other Fox River PRPs that received notices include Appleton Papers Inc. (API; now known as Appvion, Inc.), P.H. Glatfelter Company ("Glatfelter"), Georgia-Pacific Consumer Products LP (GP, successor to Fort James Operating Company), and others. NCR was identified as a PRP because of alleged PCB discharges from 2 carbonless copy paper manufacturing facilities it previously owned, which were located along the Fox River. NCR sold its facilities in 1978 to API. The parties have also contended that NCR is responsible for PCB discharges from paper mills owned by other companies because NCR carbonless copy paper "broke" was allegedly purchased by those other mills as a raw material.

The United States Environmental Protection Agency (USEPA) and Wisconsin Department of Natural Resources (together, the Governments) developed clean-up plans for the upper and lower parts of the Fox River and for portions of the Bay of Green Bay. On November 13, 2007, the Governments issued a unilateral administrative order (the 2007 Order) under CERCLA to the 8 original PRPs, requiring them to perform remedial work under the Governments’ clean-up plan for the lower parts of the river (operable units 2 through 5). In April 2009, NCR and API formed a limited liability company (the LLC), which entered into an agreement with an environmental remediation contractor to perform the work at the Fox River site. In-water dredging and remediation under the clean-up plan commenced shortly thereafter.

NCR and API, along with B.A.T Industries p.l.c. (BAT), share among themselves a portion of the cost of the Fox River clean-up and natural resource damages (NRD) based upon a 1998 agreement (the Cost Sharing Agreement), a 2005 arbitration award (subsequently confirmed as a judgment), and a September 30, 2014 Funding Agreement (the Funding Agreement). The Cost

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

Sharing Agreement and the arbitration resolved disputes that arose out of the Company's 1978 sale of its Fox River facilities to API. The Cost Sharing Agreement and arbitration award resulted in a 45% share for NCR of the first $75 million of such costs (a threshold that was reached in 2008), and a 40% share for amounts in excess of $75 million. The Funding Agreement arose out of a 2012 to 2014 arbitration dispute between NCR and API, and provides for regular, ongoing funding of NCR-incurred Fox River remediation costs via contributions, made to a new limited liability corporation created by the Funding Agreement, by BAT, API and, for 2014, API's indemnitor, Windward Prospects. The Funding Agreement creates an obligation on BAT and

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

API to fund 50% of ~~NCR’s~~NCR��s Fox River remediation costs from October 1, 2014 forward; (API’s Fox River-related obligations under the Funding Agreement were fully satisfied in 2016); the Funding Agreement also provides NCR contractual avenues for payment of, via direct and third-party sources, (1) the difference between BAT’s and API’s 60% obligation under the Cost Sharing Agreement and arbitration award on the one hand and their ongoing (since September 2014) 50% payments under the Funding Agreement on the other, as well as (2) the difference between the amount NCR received under the Funding Agreement and the amount owed to it under the Cost Sharing Agreement and arbitration award for the period from April 2012 through September 2014. As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the receivable under the Funding Agreement was approximately ~~$53~~$54 million, respectively, and was included in other assets in the Condensed Consolidated Balance Sheet. The Company anticipates that it will collect sums related to the receivable ~~in 2020 or later, likely~~ after ~~the remediation efforts related~~2021, subject and pursuant to the ~~Fox River matter, described below, are complete.~~terms of the Funding Agreement and related agreements. This receivable is not taken into account in calculating the Company’s Fox River net reserve.

The Company's litigations relating to contribution and enforcement claims concerning the Fox River have been concluded. A proposed consent decree settlement (the CD settlement) with respect to the contribution action (a case originally filed by NCR and API) and the government enforcement action (a case originally filed by the federal and state governments against several PRPs, including the Company) was successfully negotiated by NCR and the federal and state governments and was approved on August 22, 2017 by the federal district court in Wisconsin that had been presiding over those cases. A final order of dismissal as to the Company in the contribution and government enforcement actions was subsequently entered; 1 party, Glatfelter, had appealed the approval of the CD settlement. On January 3, 2019, the United States lodged a proposed consent decree with the Wisconsin court, reflecting a settlement reached by the United States, Wisconsin and Glatfelter with respect to Glatfelter’s Fox River liability under the government enforcement action; a component of that settlement was withdrawal of Glatfelter’s appeal opposing the Company’s CD settlement. On March 14, 2019, the Wisconsin court approved the Glatfelter consent decree, and on April 3, 2019, Glatfelter's appeal was dismissed.

The CD settlement has now resolved the remaining Fox River-related contribution and enforcement claims against the Company. The key components of the approved CD settlement include (1) the Company’s commitment to complete the remediation of the Fox River, which ishas now ~~expected to be completed in July 2020;~~been completed; (2) the Company’s conditional agreement to waive its contribution claims against the 2 remaining defendants in the case, GP and Glatfelter; (3) the Company’s agreement not to appeal the trial court’s decision on divisibility of harm; (4) the Governments’ agreement to include in the settlement so-called “contribution protection” in the Company’s favor as to GP’s and Glatfelter’s contribution claims against the Company, the effect of which will be to extinguish those claims; (5) the Governments’ agreement not to pursue the Company for the Governments’ past oversight costs; and (6) the Governments’ agreement to exercise prosecutorial discretion in pursuing other parties for future oversight costs and long-term monitoring and maintenance, with the Company retaining so-called “backstop” liability in the event that the other parties fail to pay future oversight costs or to perform long-term monitoring and maintenance. Additionally, although certain state law claims by GP and Glatfelter against the Company may not be affected directly by the CD settlement, the CD settlement provides that the Company’s contribution claims against those 2 parties will revive if those parties attempt to assert any claims against the Company relating to the Fox River, including any state law claims.

In the quarter ending September 30, 2017, the remediation general contractor commenced an arbitration against the LLC, in a dispute over contract interpretation. The hearing on this matter was completed in June 2019, and the parties submitted post-trial briefs in August 2019. The amounts claimed by the contractor range from approximately $46 million to approximately $53 million; the Company disputed the claims and contested them vigorously during the hearing. In November 2019, having rejected substantial portions of the claims, the arbitration panel awarded the contractor approximately $10 million. The Company’s indemnitors and co-obligors, described below, were responsible for the majority of the award, with the Company’s share being approximately ~~one-fourth~~25% of the award.

With respect to the Company’s prior dispute with API, which was generally superseded by the Funding Agreement, the Company received timely payments as they came due under the Funding Agreement. Although API filed for bankruptcy protection in October 2017, it had made all of the payments to the Company in connection with the Fox River that are required of it by the Funding Agreement.

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

NCR's eventual remediation liability, followed by long-term monitoring expected to be performed by others, will depend on a number of factors. In establishing the reserve, NCR attempts to estimate a range of reasonably possible outcomes for each of these factors, although each range is itself uncertain. NCR uses its best estimate within the range, if that is possible. Where there is a range of equally possible outcomes, and there is no amount within that range that is considered to be a better estimate than any other amount, NCR uses the low end of the range. The significant factors include: (1) the total remaining ~~clean-up~~site costs, including the costs associated with decommissioning the site, the expected cost impact of which is expected to be neutral or non-material to the Company, including long-term monitoring following completion of the clean-up, and what parties are

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

assigned to discharge the post-clean-up tasks (as noted, the Company no longer expects to bear long-term monitoring costs); (2) total NRD for the site and the share that NCR will bear (which is now resolved as to the Company); (3) the share of clean-up costs that NCR will bear (which is resolved under the CD settlement); (4) NCR's transaction and litigation costs to defend itself to the extent additional litigation is required with respect to claims brought by the general contractor; and (5) the share of NCR's payments that BAT will bear (which is governed by the Cost Sharing Agreement and the Funding Agreement, BAT has made all of the payments requested of it, and as discussed above; API is in bankruptcy and is not presumed likely to bear further shares of NCR’s payments). With respect to NRD, in connection with a certain settlement entered into by other PRPs in 2015, the Government withdrew the NRD claims it had prosecuted on behalf of NRD trustees, including those NRD claims asserted against the Company.

Calculation of the Company's Fox River reserve is subject to several complexities, and it is possible there could be additional changes to some elements of the reserve over upcoming periods, although the Company is unable to predict or estimate such changes at this time. There can be no assurance that the clean-up and related expenditures and liabilities will not have a material effect on NCR's capital expenditures, earnings, financial condition, cash flows, or competitive position. As of June 30, 2021 and December 31, 2020, the gross reserve for the Fox River matter was approximately ~~$4 million, compared to $5~~$6 million as of ~~December 31, 2019.~~both periods. As of June 30, 2021 and December 31, 2020, the net reserve for the Fox River matter was approximately ~~$26 million, compared to $16~~$28 million as of ~~December 31, 2019.~~both periods. NCR contributes to the LLC to fund remediation activities and generally, by contract, has funded certain amounts of remediation expenses in advance. As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, approximately 0 remained from this ~~funding.~~funding in both periods. NCR's reserve for the Fox River matter is reduced as the LLC makes payments to the remediation contractor and other vendors with respect to remediation activities.

Under a 1996 agreement, AT&T Corp. (AT&T) and Nokia (as the successor to Lucent Technologies and Alcatel-Lucent USA) are responsible severally (not jointly) for indemnifying NCR for certain portions of the amounts paid by NCR for the Fox River matter over a defined threshold and subject to certain offsets. (The agreement governs certain aspects of AT&T's divestiture of NCR and of what was then known as Lucent Technologies.) Those companies have made the payments requested of them by the Company on an ongoing basis.

Kalamazoo River In November 2010, USEPA issued a "general notice letter" to NCR with respect to the Allied Paper, Inc./Portage Creek/Kalamazoo River Superfund Site (Kalamazoo River site) in Michigan. NaN other companies - International Paper, Mead Corporation, and Consumers Energy - also received general notice letters at or about the same time. USEPA asserts that the site is contaminated by various substances, primarily PCBs, as a result of discharges by various paper mills located along the river. USEPA does not claim that the Company made direct discharges into the Kalamazoo River, and NCR never had facilities at or near the Kalamazoo River site, but USEPA indicated that "NCR may be liable under Section 107 of CERCLA ... as an arranger, who by contract or agreement, arranged for the disposal, treatment and/or transportation of hazardous substances at the Site." USEPA stated that it "may issue special notice letters to [NCR] and other PRPs for future RI/FS [remedial investigation / feasibility studies] and RD/RA [remedial design / remedial action] negotiations."

In connection with the Kalamazoo River site, in December 2010 the Company, along with 2 other defendants, was sued in federal court by 3 Georgia-Pacific (GP) affiliate corporations in a private-party contribution and cost recovery action for alleged pollution. The suit, pending in Michigan, asks that the Company and other defendants pay a "fair portion" of these companies’ costs. Various removal and remedial actions remain to be decided upon and performed at the Kalamazoo River site, the total costs for which generally remain undetermined; in 2017 Records of Decisions were issued for two parts of the river, and in 2018 such a decision was issued for another part of the river, but such decisions for the majority of the work are expected to be made only over the next several years. The suit alleges that the Company is liable to the GP entities as an "arranger" under CERCLA. The initial phase of the case was tried in a Michigan federal court in February 2013; on September 26, 2013 the court issued a decision that held NCR was liable as an “arranger” as of at least March 1969. (PCB-containing carbonless copy paper was produced from approximately 1954 to April 1971, and the majority of contamination at the Kalamazoo River site had occurred prior to 1969). NCR preserved its right to appeal the September 2013 decision.

In the 2013 decision, the Court did not determine NCR’s share of the overall liability. Relative shares of liability for the 4 companies were tried to the court in a subsequent phase of the case in December 2015. In a ruling issued on March 29, 2018,

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

the court addressed responsibility for the costs that GP had incurred in the past, totaling to approximately $50 million (GP had sought approximately $105 million, but $55 million of those claims were removed by the court upon motions filed by the Company and other parties); NCR and GP were each assigned a 40% share of those costs, and the other 2 companies were assigned 15% and 5% as their allocations. The court entered a judgment in the case on June 19, 2018, in which it indicated that it would not allocate future costs, but would enter a declaratory judgment that the four companies together had responsibility for future costs, in amounts and shares to be determined. Cross-proceedings have been commenced to obtain recoveries from the other parties pursuant to the judgment; those proceedings ~~are~~were stayed pending the appeal referenced below.

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

In July 2018, the Company appealed to the United States Court of Appeals for the Sixth Circuit both the 2013 court decision, which it believes is in conflict with a decision from the Fox River trial court as to Operable Unit 1 of that site and an affirmance of that decision from the Court of Appeals for the Seventh Circuit, and the 2018 court decision, on various legal grounds. The Company filed a bond to stay any execution of the judgment pending the appeal, and its application for a stay was approved by the court and remains stayed asuntil the Company filed its dismissal of ~~June 2020.~~the appeal on December 31, 2020 pursuant to a Consent Decree, noted below.

During the pendency of the Sixth Circuit stay, the Company negotiated a settlement of the Kalamazoo River matter with the USEPA and other government agencies having oversight over the river. On December 5, 2019, the Company entered into a Consent Decree, filed with the District Court on December 11, 2019, and on December 2, 2020, the District Court approved the Consent Decree, which ~~will resolve~~has now resolved all litigation associated with the river clean-up, including the Sixth Circuit ~~appeal when approved. Upon approval, the~~appeal. The Consent Decree ~~will require~~requires the Company to pay GP its 40% share of past costs, to pay the USEPA and state agencies their past and future administrative costs, and to dismiss its Sixth Circuit ~~appeal, and~~appeal. The Consent Decree further requires the Company to take responsibility for the remediation of a portion, but not all, of the Kalamazoo River. The Consent Decree further provides the Company protection from other PRPs, including GP, seeking contribution for their costs associated with the clean-up anywhere on the river, thereby resolving the allocation of future costs left unresolved by the June 19, 2019 judgment.

The Consent Decree was subject to a public comment period, which ended February 18, 2020, and the Company is still awaiting approval of the Consent Decree. In May 2020, the US and state agencies filed motions supporting entry of the Consent Decree, and in June 2020, the court permitted GP and the other two Kalamazoo defendants to intervene to file motions in opposition to the Consent Decree. A decision on approval of the Consent Decree is not expected until completion of all briefing in August 2020.

NCR expects to have claims against BAT and API under the Funding Agreement, discussed above for the Kalamazoo River remediation expenses. API filed for bankruptcy protection in October 2017, and thus payment of its potential share under the Funding Agreement for so-called “future sites,” which would include the Kalamazoo River site, may be at risk, but as liability under the Cost Sharing Agreement and the Funding Agreement is joint and several, the bankruptcy is not anticipated to affect the Company’s ability to seek that amount from BAT. The Company will also have indemnity or reimbursement claims against AT&T and Nokia under the arrangement discussed above in connection with the Fox River matter after expenses have met a contractual threshold set out in the 1996 agreement referenced above in the Fox River discussion.

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the total reserve for Kalamazoo was ~~$80~~$121 million and ~~$81~~$164 million, respectively. That figure is reported on a basis that is net of expected contributions from the Company's co-obligors and indemnitors, subject to when the applicable threshold is reached. While the Company believes its co-obligors' and indemnitors' obligations are as previously reported, the reserve reflects changes in positions taken by some of those co-obligors and indemnitors with respect to the Kalamazoo River. The contributions from its co-obligors and indemnitors are expected to range from $70 million to $140 million and the Company will continue to pursue such contribution.

As many aspects of the costs of remediation will not be determined for several years (and thus the high end of a range of possible costs for many areas of the site cannot be quantified at this time), the Company has made what it considers to be reasonable estimates of the low end of a range for such costs where remedies are identified, and/or of the costs of investigations and studies for areas of the river where remedies have not yet been determined, and the reserve is informed by those estimates. The extent of NCR’s potential liability remains subject to many uncertainties, notwithstanding the settlement of this matter and related Consent Decree noted above, particularly inasmuch as remedy decisions and cost estimates will not be generated until times in the future and as most of the work to be performed will take place through the 2030s. Under other assumptions or estimates for possible costs of remediation, which the Company does not at this point consider to be reasonably estimable or verifiable, it is possible that the reserve the Company has taken to discontinued operations reflected in this paragraph could more than approximately double the reflected reserve.

Ebina The Company is engaged in cooperative regulatory compliance activities with the government of Japan in connection with certain environmental contaminants generated in its past operations in that country. The Company has quantities of PCB and other wastes primarily from its former plant at Oiso, Japan, including capsulated undiluted solutions manufactured in the past, capacitors, light ballasts and PCB-affected soil from the Oiso plant that was excavated and placed in steel drums. These wastes are stored in a facility at Ebina, Japan in accordance with Japanese regulations governing such materials. Over the past several years Japan has enacted and amended legislation governing such wastes, and has set a current deadline for treating and disposing of (at government-constructed disposal facilities) the highest-concentration wastes by 2027. Lower-concentration

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

wastes can be and have been disposed of via private contractors, and as of the period ended June 30, ~~2020,~~2021, NCR had disposed of ~~more than a third~~approximately one-half of its lower-concentration wastes.

The Company and its consultants have met and communicated regularly with the Japanese agency charged with administration of the law, and are working with that agency on a program to manage disposal of the high-concentration wastes, including tests of technologies to make the disposal more efficient. ~~Based on communications with~~The government has given its final approvals and the ~~agency,~~Company has started to dispose of the ~~earliest that~~ high-concentration wastes ~~can be disposed of will be~~ in ~~early~~ 2021, with final deadlines for various of the government-constructed disposal sites currently set for 2022, 2023 and later. Low-concentration wastes are required to be contracted for disposal by

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

2027, a timetable that the Company expects to meet. In September 2019, the Company’s environmental consultants, following a series of communications and meetings with the Japanese agency, at the Company’s request prepared an estimate of remaining disposal costs over the coming several years. While the estimate is subject to a range of assumptions and uncertainties, including prospects of cost reduction in coordination with the agency as certain field testing to separate high-concentration and low-concentration waste progresses over the coming years, the Company has adjusted its existing reserve for the matter to take into account this cost estimate, and that reserve as of June 30, ~~2020~~2021 is ~~$20~~$19 million compared to ~~$19~~$20 million at December 31, ~~2019.~~2020. The Japan environmental waste issue is treated as a compliance matter and not as litigation or enforcement, and the Company has received no threats of litigation or enforcement.

Environmental-Related Insurance Recoveries In connection with the Fox River and other environmental sites, through June 30, ~~2020,~~2021, NCR has received a combined gross total of approximately $202 million in settlements reached with various of its insurance carriers. Portions of many of these settlements agreed in the 2010 through 2013 timeframe are payable to a law firm that litigated the claims on the Company's behalf. Some of the settlements cover not only the Fox River but also other environmental sites; some are limited to either the Fox River or the Kalamazoo River site. Some of the settlements are directed to defense costs and some are directed to indemnity; some settlements cover both defense costs and indemnity. The Company does not anticipate that further material insurance recoveries specific to Kalamazoo River remediation costs will be available to it, ~~owing~~but is currently in settlement discussions with certain carriers over amounts potentially owed to ~~considerations under applicable Michigan law.~~the Company. Claims with respect to Kalamazoo River defense costs have now been settled, with the amounts of those settlements included in the sum reported above.

Environmental Remediation Estimates It is difficult to estimate the future financial impact of environmental laws, including potential liabilities. NCR records environmental provisions when it is probable that a liability has been incurred and the amount or range of the liability is reasonably estimable in accordance with accounting guidance, where liabilities are not expected to be quantifiable or estimable for a period of years, the estimated costs of investigating those liabilities are recorded as a component of the reserve for that particular site. Provisions for estimated losses from environmental restoration and remediation are, depending on the site, based generally on internal and third-party environmental studies, estimates as to the number and participation level of other PRPs, the extent of contamination, estimated amounts for attorney and other fees, and the nature of required clean-up and restoration actions. Reserves are adjusted as further information develops or circumstances change. Management expects that the amounts reserved from time to time will be paid out over the period of investigation, negotiation, remediation and restoration for the applicable sites. The amounts provided for environmental matters in NCR's Condensed Consolidated Financial Statements are the estimated gross undiscounted amounts of such liabilities, without deductions for indemnity insurance, third-party indemnity claims or recoveries from other PRPs, except as qualified in the following sentences. In those cases where insurance carriers or third-party indemnitors have agreed to pay any amounts and management believes that collectability of such amounts is probable, the amounts are recorded in the Condensed Consolidated Financial Statements. For the Fox River and Kalamazoo River sites, as described above, assets relating to the AT&T and Nokia indemnities and to the BAT obligations are recorded as payment is supported by contractual agreements, public filings and/or payment history.

Cardtronics Matters Cardtronics is subject to various legal proceedings and claims arising in the ordinary course of its business. Cardtronics has reported to NCR that it has provided accruals where necessary for contingent liabilities, based on ASC 450, Contingencies, when it has determined that a liability is probable and reasonably estimable. Cardtronics’ management does not expect the outcome in any legal proceedings or claims, individually or collectively, to have a material adverse financial or operational impact on Cardtronics.

Kristen Schertzer, et al On March 1, 2019, Cardtronics was named as a defendant in a purported class action lawsuit stylized as Kristen Schertzer, et al. v. Bank of America, N.A., et al., Case No. 3:19-cv-00264, in the United States District Court for the Southern District of California, which alleges harm related to balance inquiry transactions. On September 28, 2020, the District Court issued a denial of Cardtronics’ motion to dismiss and the matter is proceeding to the discovery phase. Due to the early stages of this matter, including uncertainty related to class certification and potential amount claimed by the class, Cardtronics

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

is unable to determine if liability will arise from this matter or estimate the range of any potential liability. Cardtronics will vigorously defend this matter.

Guarantees and Product Warranties In the ordinary course of business, NCR may issue performance guarantees on behalf of its subsidiaries to certain of its customers and other parties. Some of those guarantees may be backed by standby letters of credit, surety bonds, or similar instruments. In general, under the guarantees, NCR would be obligated to perform, or cause performance, over the term of the underlying contract in the event of an unexcused, uncured breach by its subsidiary, or some other specified triggering event, in each case as defined by the applicable guarantee. NCR believes the likelihood of having to perform under any such guarantee is remote. As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, NCR had no material obligations related to such guarantees, and therefore its Condensed Consolidated Financial Statements do not have any associated liability balance.

NCR provides its customers a standard manufacturer’s warranty and records, at the time of the sale, a corresponding estimated liability for potential warranty costs. Estimated future obligations due to warranty claims are based upon historical factors, such as labor rates, average repair time, travel time, number of service calls per machine and cost of replacement parts. When a sale is consummated, the total customer revenue is recognized, provided that all revenue recognition criteria are otherwise satisfied, and the associated warranty liability is recorded using pre-established warranty percentages for the respective product classes.

From time to time, product design or quality corrections are accomplished through modification programs. When identified, associated costs of labor and parts for such programs are estimated and accrued as part of the warranty reserve.

The Company recorded the activity related to the warranty reserve for the six months ended June 30 as follows:

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~


In millions	In millions	2020		2019		In millions	2021		2020
Warranty reserve liability	Warranty reserve liability					Warranty reserve liability
Beginning balance as of January 1	Beginning balance as of January 1	$	21	$	26	Beginning balance as of January 1	$	18	$	21
Accruals for warranties issued	Accruals for warranties issued	15		16		Accruals for warranties issued	14		15
Settlements (in cash or in kind)	Settlements (in cash or in kind)	(18)		(20)		Settlements (in cash or in kind)	(13)		(18)
Ending balance as of June 30	Ending balance as of June 30	$	18	$	22	Ending balance as of June 30	$	19	$	18

In addition, NCR provides its customers with certain indemnification rights. In general, NCR agrees to indemnify the customer if a third party asserts patent or other infringement on the part of its customers for its use of the Company’s products subject to certain conditions that are generally standard within the Company’s industries. On limited occasions the Company will undertake additional indemnification obligations for business reasons. From time to time, NCR also enters into agreements in connection with its acquisition and divestiture activities that include indemnification obligations by the Company. The fair value of these indemnification obligations is not readily determinable due to the conditional nature of the Company’s potential obligations and the specific facts and circumstances involved with each particular agreement. The Company has not recorded a liability in connection with these indemnifications, and no current indemnification instance is material to the Company’s financial position. Historically, payments made by the Company under these types of agreements have not had a material effect on the Company’s condensed consolidated financial condition, results of operations or cash flows.

Purchase Commitments The Company has purchase commitments for materials, supplies, services, and property, plant and equipment as part of the normal course of business. This includes a long-term service agreement with Accenture, under which many of NCR's key transaction processing activities and functions are performed.

10. LEASING

Lessee We lease property, vehicles and equipment under operating and financing leases. For leases with terms greater than 12 months, we record the related asset and obligation at the present value of lease payments over the term. We determine the lease term by assuming the exercise of renewal options that are reasonably certain. Leases with a lease term 12 months or less at ~~inception~~lease commencement are not recorded on our Condensed Consolidated Balance Sheet and are expensed on a straight-line basis over the lease term in our Condensed Consolidated Statement of Operations. Our leases may include rental escalation clauses, renewal options and/or termination options that are factored into our determination of lease payments when appropriate. When available, we use the rate implicit in the lease to discount lease payments to present value; however, most of our leases do not provide a readily determinable implicit rate. Therefore, we must estimate our incremental borrowing rate to discount the lease payments based on information available at lease commencement. Our incremental borrowing rate is based on a credit-adjusted

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

risk-free rate at commencement date, which best approximates a secured rate over a similar term of lease. Additionally, we do not separate lease and non-lease components for any asset classes, except for those leases embedded in certain service arrangements. Fixed and in-substance fixed payments are included in the recognition of the operating and financing assets and lease liabilities, however, variable lease payments, other than those based on a rate or index, are recognized in the Condensed Consolidated Statements of Operations in the period in which the obligation for those payments is incurred. The Company’s variable lease payments generally relate to payments tied to various indices, non-lease components and payments above a contractual minimum fixed payment.

The following table presents our lease balances as of June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:


In millions	Location in the Condensed Consolidated Balance Sheet	June 30, 2021		December 31, 2020
Assets
Operating lease assets	Operating lease assets	$	439	$	344
Finance lease assets	Property, plant and equipment, net	63		55
Accumulated amortization of finance lease assets	Property, plant and equipment, net	(26)		(18)
Total leased assets		$	476	$	381
Liabilities
Current
Operating lease liabilities	Other current liabilities	$	105	$	85
Finance lease liabilities	Other current liabilities	17		15
Noncurrent
Operating lease liabilities	Operating lease liabilities	420		325
Finance lease liabilities	Other liabilities	21		23
Total lease liabilities		$	563	$	448

The following tables present our lease costs for operating and finance leases:


	Three months ended June 30				Six months ended June 30
In millions	2021		2020		2021		2020
Operating lease cost	$	34	$	30	$	65	$	62
Finance lease cost
Amortization of leased assets	4		3		8		6
Interest on lease liabilities	1		1		1		1
Short-Term lease cost	1		1		2		2
Variable lease cost	5		9		11		16
Total lease cost	$	45	$	44	$	87	$	87

The following tables present the supplemental cash flow information:


	Three months ended June 30				Six months ended June 30
In millions	2021		2020		2021		2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	43	$	31	$	74	$	61
Operating cash flows from finance leases	$	1	$	1	$	1	$	1
Financing cash flows from finance leases	$	4	$	3	$	8	$	6
Lease Assets Obtained in Exchange for Lease Obligations
Operating Leases	$	61	$	4	$	130	$	2
Finance Leases	$	1	$	7	$	2	$	15

2832

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

In millions Location in the Condensed Consolidated Balance Sheet June 30, 2020 December 31, 2019
Assets
       Operating lease assets Operating lease assets $ 347 $ 391
       Finance lease assets Property, plant and equipment, net 54 38
       Accumulated Amortization of Finance lease assets Property, plant and equipment, net (12) (5)
Total leased assets $ 389 $ 424
Liabilities
Current
       Operating lease liabilities Other current liabilities $ 83 $ 91
       Finance lease liabilities Other current liabilities 14 10
Noncurrent
       Operating lease liabilities Operating lease liabilities 334 369
       Finance lease liabilities Other liabilities 31 25
Total lease liabilities $ 462 $ 495

~~The following tables present our lease costs for operating and finance leases:~~

In millions Three months ended June 30, 2020 Six months ended June 30, 2020
Operating lease cost $ 30 $ 62
Finance lease cost
       Amortization of leased assets 3 6
  Interest on lease liabilities 1 1
Short-Term lease cost 1 2
Variable lease cost 9 16
      Total lease cost $ 44 $ 87

In millions For the three months ended June 30, 2019 For the 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

~~The following tables present the supplemental cash flow information:~~

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

In millions Three months ended June 30, 2020 Six months ended June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
         Operating cash flows from operating leases $ 31 $ 61
         Operating cash flows from finance leases $ 1 $ 1
         Financing cash flows from finance leases $ 3 $ 6
Lease Assets Obtained in Exchange for Lease Obligations
Operating Leases $ 4 $ 2
Finance Leases $ 7 $ 15

In millions For the three months ended June 30, 2019 For the 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

The following table reconciles the undiscounted cash flows for each of the first five years and total of the remaining years to the finance lease liabilities and operating lease liabilities recorded on the Condensed Consolidated Balance Sheet as of June 30, ~~2020:~~2021:

In millions Operating Leases Finance Leases
Remainder of 2020 $ 59 $ 8
2021 89 16
2022 67 15
2023 45 8
2024 38 1
Thereafter 271 —
Total lease payments 569 48
Less: Amount representing interest (152) (3)
Present value of lease liabilities $ 417 $ 45

As of June 30, 2020, we have additional operating leases of $69 million, primarily for a real estate lease in Europe, that have not yet commenced. This operating lease is expected to commence in 2021 with a lease term of 10 years.


In millions	Operating Leases		Finance Leases
Remainder of 2021	$	70	$	9
2022	106		17
2023	77		11
2024	62		3
2025	51		0
Thereafter	306		0
Total lease payments	672		40
Less: Amount representing interest	147		2
Present value of lease liabilities	$	525	$	38

The following table presents the weighted average remaining lease term and interest rates:

June 30, 2020 December 31, 2019
Weighted average lease term:
       Operating leases 9.1 years 8.9 years
       Finance leases 3.1 years 3.4 years
Weighted average interest rates:
       Operating leases 6.45 % 6.42 %
       Finance leases 4.44 % 3.72 %


	June 30, 2021		December 31, 2020
Weighted average lease term:
Operating leases	8.5 years		8.7 years
Finance leases	2.4 years		2.7 years
Weighted average interest rates:
Operating leases	5.67	%	6.45	%
Finance leases	3.99	%	4.59	%

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

Lessor We have various arrangements for certain point-of-sale equipment under which we are the lessor. These leases meet the criteria for operating lease classification. Lease income associated with these leases is not material.

11. SERIES A CONVERTIBLE PREFERRED STOCK

On December 4, 2015, NCR issued 820,000 shares of Series A Convertible Preferred Stock to certain entities affiliated with the Blackstone Group L.P. (collectively, Blackstone) for an aggregate purchase price of $820 million, or $1,000 per share, pursuant to an Investment Agreement between the Company and Blackstone, dated November 11, 2015. In connection with the issuance of the Series A Convertible Preferred Stock, the Company incurred direct and incremental expenses of $26 million, including financial advisory fees, closing costs, legal expenses and other offering-related expenses. These direct and incremental expenses originally reduced the Series A Convertible Preferred Stock, and will be accreted through retained earnings as a deemed dividend from the date of issuance through the first possible known redemption date, March 16, 2024. Holders of Series A Convertible Preferred Stock are entitled to a cumulative dividend at the rate of 5.5% per annum, payable quarterly in arrears. Beginning in the first quarter of 2020, dividends are payable in cash or in-kind at the option of the Company. If the Company does not declare and pay a dividend, the dividend rate will increase to 8.0% per annum until all accrued but unpaid dividends have been paid in full. During the the three months ended June 30, 2021, the Company paid cash dividends of $4 million. During the three months ended June 30, 2020, the Company paid dividends-in-kind of $7 million. During the six months ended June 30, 2021, the Company paid cash dividends of $8 million. During the the six months ended June 30, 2020, the Company paid total dividends of $13 million of which $7 million were dividends-in-kind and $6 million were paid in cash.

The Series A Convertible Preferred Stock is convertible at the option of the holders at any time into shares of common stock at a conversion price of $30.00 per share, or a conversion rate of 33.333 shares of common stock per share of Series A Convertible Preferred Stock.

Under the Investment Agreement, Blackstone agreed not to sell or otherwise transfer its shares of Series A Convertible Preferred Stock (or any shares of common stock issued upon conversion thereof) without the Company’s consent until June 4, 2017. In March 2017, we provided Blackstone with an early release from this lock-up, allowing Blackstone to sell approximately 49% of its shares of Series A Convertible Preferred Stock, and in return, Blackstone agreed to amend the Investment Agreement to extend the lock-up on the remaining 51% of its shares of Series A Convertible Preferred Stock for six months until December 1, 2017.

In connection with the early release of the lock-up, Blackstone offered for sale 342,000 shares of Series A Convertible Preferred Stock in an underwritten public offering. In addition, Blackstone converted 90,000 shares of Series A Convertible Preferred Stock into shares of our common stock and we repurchased those shares of common stock for $48.47 per share. The underwritten offering and the stock repurchase were consummated on March 17, 2017.

On September 18, 2019, NCR entered into an agreement to repurchase and convert the outstanding 512,221 shares of Series A Convertible Preferred Stock owned by Blackstone. NCR repurchased 237,673 shares of Series A Convertible Preferred Stock for total cash consideration of $302 million. The remaining shares of Blackstone's Series A Convertible Preferred Stock, including accrued dividends, were converted to approximately 9.16 million shares of common stock at a conversion price of $30.00 per share.

Beginning in the first quarter of 2020, dividends are payable in cash or in-kind at the option of the Company. During the three months ended June 30, 2020 and 2019, the Company paid dividends-in-kind of $7 million and $12 million, respectively. During the six months ended June 30, 2020, the Company paid total dividends of $13 million of which $7 million were dividends-in-kind and $6 million were paid in cash. During the six months ended June 30, 2019, the Company paid dividends-in-kind of $24 million. As of June 30, ~~2020 and December 31, 2019, the Company had accrued dividends of $1 million, respectively, associated with the Series A Convertible Preferred Stock.~~

~~As of June 30, 2020 and December 31, 2019,~~2021, the maximum number of common shares that could be required to be issued upon conversion of the outstanding shares of Series A Convertible Preferred Stock was ~~13.5~~9.2 million ~~and 13.3 million shares, respectively.~~shares.

12. EARNINGS PER SHARE

Basic earnings per share (EPS) is calculated by dividing net income or loss attributable to NCR, less any dividends (declared or cumulative undeclared), deemed dividends, accretion or decretion, redemption or induced conversion on our Series A Convertible Preferred Stock, by the weighted average number of shares outstanding during the period.

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

In computing diluted EPS, we adjust the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back the dividends (declared or cumulative undeclared), deemed dividends, accretion or decretion, redemption or induced conversion on our Series A Convertible Preferred Stock. We adjust the denominator used in the basic EPS computation, subject

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

to anti-dilution requirements, to include the dilution from potential shares related to the Series A Convertible Preferred Stock and stock-based compensation plans.

The holders of Series A Convertible Preferred Stock, unvested restricted stock units and stock options do not have nonforfeitable rights to common stock dividends or common stock dividend equivalents. Accordingly, the Series A Convertible Preferred Stock, unvested restricted stock units and stock options do not qualify as participating securities. See Note 7, Stock Compensation Plans for share information on NCR’s stock compensation plans.

The components of basic earnings per share are as follows:


In millions, except per share amounts	In millions, except per share amounts	Three months ended June 30									Six months ended June 30								In millions, except per share amounts		Three months ended June 30						Six months ended June 30
				2020			2019			2020			2019	In millions, except per share amounts			2021			2020			2021			2020
Numerator:	Numerator:												Numerator:
Income from continuing operations		$	64		$	88		$	87		$	125
Income (loss) from continuing operations													Income (loss) from continuing operations		$	(9)		$	64		$	21		$	87
Dividends on Series A Convertible Preferred Stock	Dividends on Series A Convertible Preferred Stock	(7)			(12)			(13)			(25)		Dividends on Series A Convertible Preferred Stock		(4)			(7)			(8)			(13)

Income from continuing operations attributable to NCR common stockholders		57			76			74			100
Income (loss) from continuing operations attributable to NCR common stockholders													Income (loss) from continuing operations attributable to NCR common stockholders		(13)			57			13			74
Loss from discontinued operations, net of tax	Loss from discontinued operations, net of tax	—			—			—			—		Loss from discontinued operations, net of tax		0			0			0			0
Net income attributable to NCR common stockholders		$	57		$	76		$	74		$	100
Net income (loss) attributable to NCR common stockholders													Net income (loss) attributable to NCR common stockholders		$	(13)		$	57		$	13		$	74

Denominator:	Denominator:												Denominator:
Basic weighted average number of shares outstanding	Basic weighted average number of shares outstanding	128.0			120.2			128.0			119.8		Basic weighted average number of shares outstanding		131.0			128.0			130.5			128.0

Basic earnings per share:	Basic earnings per share:												Basic earnings per share:
From continuing operations	From continuing operations	$	0.45		$	0.63		$	0.58		$	0.83	From continuing operations		$	(0.10)		$	0.45		$	0.10		$	0.58
From discontinued operations	From discontinued operations	—			—			—			—		From discontinued operations		0			0			0			0
Total basic earnings per share	Total basic earnings per share	$	0.45		$	0.63		$	0.58		$	0.83	Total basic earnings per share		$	(0.10)		$	0.45		$	0.10		$	0.58

3234

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

The components of diluted earnings per share are as follows:


In millions, except per share amounts	In millions, except per share amounts	Three months ended June 30									Six months ended June 30								In millions, except per share amounts		Three months ended June 30						Six months ended June 30
				2020			2019			2020			2019	In millions, except per share amounts			2021			2020			2021			2020
Numerator:	Numerator:												Numerator:
Income from continuing operations		$	64		$	88		$	87		$	125
Income (loss) from continuing operations													Income (loss) from continuing operations		$	(9)		$	64		$	21		$	87
Dividends on Series A Convertible Preferred Stock	Dividends on Series A Convertible Preferred Stock	(7)			—			(13)			(25)		Dividends on Series A Convertible Preferred Stock		(4)			(7)			(8)			(13)

Income from continuing operations attributable to NCR common stockholders		57			88			74			100
Income (loss) from continuing operations attributable to NCR common stockholders													Income (loss) from continuing operations attributable to NCR common stockholders		(13)			57			13			74
Loss from discontinued operations, net of tax	Loss from discontinued operations, net of tax	—			—			—			—		Loss from discontinued operations, net of tax		0			0			0			0
Net income attributable to NCR common stockholders		$	57		$	88		$	74		$	100
Net income (loss) attributable to NCR common stockholders													Net income (loss) attributable to NCR common stockholders		$	(13)		$	57		$	13		$	74

Denominator:	Denominator:												Denominator:
Basic weighted average number of shares outstanding	Basic weighted average number of shares outstanding	128.0			120.2			128.0			119.8		Basic weighted average number of shares outstanding		131.0			128.0			130.5			128.0

Dilutive effect of as-if converted Series A Convertible Preferred Stock		—			29.6			—			—

Dilutive effect of restricted stock units and stock options	Dilutive effect of restricted stock units and stock options	0.9			2.9			1.7			3.2		Dilutive effect of restricted stock units and stock options		0			0.9			5.6			1.7
Weighted average diluted shares	Weighted average diluted shares	128.9			152.7			129.7			123.0		Weighted average diluted shares		131.0			128.9			136.1			129.7

Diluted earnings per share:	Diluted earnings per share:												Diluted earnings per share:
From continuing operations	From continuing operations	$	0.44		$	0.58		$	0.57		$	0.81	From continuing operations		$	(0.10)		$	0.44		$	0.10		$	0.57
From discontinued operations	From discontinued operations	—			—			—			—		From discontinued operations		0			0			0			0
Total diluted earnings per share	Total diluted earnings per share	$	0.44		$	0.58		$	0.57		$	0.81	Total diluted earnings per share		$	(0.10)		$	0.44		$	0.10		$	0.57

For the three months ended June 30, 2021 shares related to the as-if converted Series A Convertible Preferred Stock of 9.2 million were excluded from the diluted share count because their effect would have been anti-dilutive. For the three months ended June 30, 2021 weighted average restricted stock units and options of 6.0 million were excluded from the diluted share count because their effect would have been anti-dilutive.

For the three months ended June 30, 2020, shares related to the as-if converted Series A Convertible Preferred Stock of 13.4 million were excluded from the diluted share count because their effect would have been anti-dilutive. For the three months ended June 30, 2020, weighted average restricted stock units and stock options of 11.4 million were excluded from the diluted share count because their effect would have been anti-dilutive.

For the ~~three~~six months ended June 30, ~~2019, it was more dilutive~~2021, shares related to ~~assume the Series A Convertible Preferred Stock was converted to common stock and therefore the weighted average outstanding shares of common stock were adjusted by~~ the as-if converted Series A Convertible Preferred ~~Stock.~~Stock of 9.2 million were excluded from the diluted share count because their effect would have been anti-dilutive. For the ~~three~~six months ended June 30, ~~2019,~~2021, weighted average restricted stock units and stock options of 4.7 million were excluded from the diluted share count because their effect would have been anti-dilutive.

For the six months ended June 30, 2020, shares related to the as-if converted Series A Convertible Preferred Stock of 13.3 million were excluded from the diluted share count because their effect would have been anti-dilutive. For the six months ended June 30, 2020, weighted average restricted stock units and stock options of 9.9 million were excluded from the diluted share count because their effect would have been anti-dilutive.

For the six months ended June 30, 2019, shares related to the as-if converted Series A Convertible Preferred Stock of 29.4 million were excluded from the diluted share count because their effect would have been anti-dilutive. For the six months ended June 30, 2019, weighted average restricted stock units and stock options of 5.1 million were excluded from the diluted share count because their effect would have been anti-dilutive.

13. DERIVATIVES AND HEDGING INSTRUMENTS

NCR is exposed to risks associated with changes in foreign currency exchange rates and interest rates. NCR utilizes a variety of measures to monitor and manage these risks, including the use of derivative financial instruments. NCR has exposure to approximately 50 functional currencies. Since a substantial portion of our operations and revenue occur outside the U.S., and in

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

currencies other than the U.S. Dollar, our results can be significantly impacted, both positively and negatively, by changes in foreign currency exchange rates.

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

Foreign Currency Exchange Risk

The accounting guidance for derivatives and hedging requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the Condensed Consolidated Balance Sheets. The Company designates foreign exchange contracts as cash flow hedges of forecasted transactions when they are determined to be highly effective at inception.

Our risk management strategy includes hedging, on behalf of certain subsidiaries, a portion of our forecasted, non-functional currency denominated cash flows for a period of up to 15 months. As a result, some of the impact of currency fluctuations on non-functional currency denominated transactions (and hence on subsidiary operating income, as stated in the functional currency), is mitigated in the near term. The amount we hedge and the duration of hedge contracts may vary significantly. In the longer term (greater than 15 months), the subsidiaries are still subject to the effect of translating the functional currency results to U.S. Dollars. To manage our exposures and mitigate the impact of currency fluctuations on the operations of our foreign subsidiaries, we hedge our main transactional exposures through the use of foreign exchange forward and option contracts. This is primarily done through the hedging of foreign currency denominated inter-company inventory purchases by NCR’s marketing units and the foreign currency denominated inputs to our manufacturing units. The related foreign exchange contracts are designated as highly effective cash flow hedges. The gains or losses on these hedges are deferred in accumulated other comprehensive income (AOCI) and reclassified to income when the underlying hedged transaction is recorded in earnings. As of June 30, ~~2020,~~2021, the balance in AOCI related to foreign exchange derivative transactions was ~~0, net of tax.~~0. The gains or losses from derivative contracts related to inventory purchases are recorded in cost of products when the inventory is sold to an unrelated third party.

We also utilize foreign exchange contracts to hedge our exposure of assets and liabilities denominated in non-functional currencies. We recognize the gains and losses on these types of hedges in earnings as exchange rates change. We do not enter into hedges for speculative purposes.

The following tables provide information on the location and amounts of derivative fair values in the Condensed Consolidated Balance Sheets:

3436

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)


		Fair Values of Derivative Instruments																			Fair Values of Derivative Instruments
		June 30, 2020																			June 30, 2021
In millions	In millions	Balance Sheet Location	Notional Amount		Fair Value		Balance Sheet Location	Notional Amount		Fair Value		In millions	Balance Sheet Location	Notional Amount		Fair Value		Balance Sheet Location	Notional Amount		Fair Value
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments											Derivatives designated as hedging instruments
Foreign exchange contracts	Foreign exchange contracts	Other current assets	$	155	$	1	Other current liabilities	$	79	$	2	Foreign exchange contracts	Other current assets	$	0	$	0	Other current liabilities	$	0	$	0
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments				$	1				$	2	Total derivatives designated as hedging instruments				$	0				$	0
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments											Derivatives not designated as hedging instruments
Foreign exchange contracts	Foreign exchange contracts	Other current assets	$	174	$	1	Other current liabilities	$	319	$	1	Foreign exchange contracts	Other current assets	$	594	$	1	Other current liabilities	$	136	$	1
Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments				$	1				$	1	Total derivatives not designated as hedging instruments				$	1				$	1
Total derivatives	Total derivatives				$	2				$	3	Total derivatives				$	1				$	1

		Fair Values of Derivative Instruments																			Fair Values of Derivative Instruments
		December 31, 2019																			December 31, 2020
In millions	In millions	Balance Sheet Location	Notional Amount		Fair Value		Balance Sheet Location	Notional Amount		Fair Value		In millions	Balance Sheet Location	Notional Amount		Fair Value		Balance Sheet Location	Notional Amount		Fair Value
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments											Derivatives designated as hedging instruments
Foreign exchange contracts	Foreign exchange contracts	Other current assets	$	55	$	1	Other current liabilities	$	—	$	—	Foreign exchange contracts	Other current assets	$	0	$	0	Other current liabilities	$	0	$	0
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments				$	1				$	—	Total derivatives designated as hedging instruments				$	0				$	0
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments											Derivatives not designated as hedging instruments
Foreign exchange contracts	Foreign exchange contracts	Other current assets	$	71	$	1	Other current liabilities	$	264	$	1	Foreign exchange contracts	Other current assets	$	150	$	0	Other current liabilities	$	425	$	1
Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments				$	1				$	1	Total derivatives not designated as hedging instruments				$	0				$	1
Total derivatives	Total derivatives				$	2				$	1	Total derivatives				$	0				$	1

3537

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

The effects of derivative instruments on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

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

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, 2020

For the three months ended June 30, 2019

Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations

For the three months ended June 30, 2020

For the three months ended June 30, 2019

Derivatives in Cash Flow Hedging Relationships

For the three months ended June 30, 2021

For the three months ended June 30, 2020

Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations

For the three months ended June 30, 2021

For the three months ended June 30, 2020

Foreign exchange contracts

(3)

—

Cost of products

—

(2)

Foreign exchange contracts

(3)

Cost of products

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, 2021

For the six months ended June 30, 2020

Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations (Effective Portion)

For the six months ended June 30, 2021

For the six months ended June 30, 2020

Foreign exchange contracts

Cost of products

(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, 2020 For the six months ended June 30, 2019 Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations For the six months ended June 30, 2020 For the six months ended June 30, 2019
Foreign exchange contracts $ — $ 1 Cost of products $ (1) $ (3)


In millions	In millions		Amount of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations													In millions			Amount of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations
			Three months ended June 30						Six months ended June 30								Three months ended June 30					Six months ended June 30
Derivatives not Designated as Hedging Instruments	Derivatives not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations	2020		2019		2020		2019		Derivatives not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations	2021		2020		2021			2020
Foreign exchange contracts	Foreign exchange contracts	Other (expense), net	$	5	$	(3)	$	11	$	(8)	Foreign exchange contracts	Other (expense), net	$	1	$	5	$	(14)		$	11

Refer to Note ~~13. Derivatives~~14, Fair Value of Assets and ~~Hedging Instruments,~~Liabilities, for further information on derivative assets and liabilities recorded at fair value on a recurring basis.

Concentration of Credit Risk

NCR is potentially subject to concentrations of credit risk on accounts receivable and financial instruments such as hedging instruments and cash and cash equivalents. Credit risk includes the risk of nonperformance by counterparties. The maximum potential loss may exceed the amount recognized on the Condensed Consolidated Balance Sheets. Exposure to credit risk is managed through credit approvals, credit limits, selecting major international financial institutions (as counterparties to hedging transactions) and monitoring procedures. NCR’s business often involves large transactions with customers, and if one or more of those customers were to default on its obligations under applicable contractual arrangements, the Company could be exposed to potentially significant losses. However, management believes that the reserves for expected losses are adequate. As of June 30, ~~2020,~~2021, we did not have any significant concentration of credit risk related to financial instruments.

14. FAIR VALUE OF ASSETS AND LIABILITIES

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities recorded at fair value on a recurring basis as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 are set forth as follows:

3638

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

June 30, 2020
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⁾
$ 1,365 $ 1,365 $ — $ —
Foreign investments⁽²⁾
4 — 4 —
Foreign exchange contracts ⁽²⁾
2 — 2 —
Total $ 1,371 $ 1,365 $ 6 $ —
Liabilities:
Foreign exchange contracts ⁽³⁾
$ 3 $ — $ 3 $ —
Total $ 3 $ — $ 3 $ —


		December 31, 2019															June 30, 2021
In millions	In millions	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		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:	Assets:									Assets:
Deposits held in money market mutual funds ⁽¹⁾	Deposits held in money market mutual funds ⁽¹⁾	$	15	$	15	$	—	$	—	Deposits held in money market mutual funds (1)	$	8	$	8	$	0	$	0
Foreign exchange contracts ⁽²⁾	Foreign exchange contracts ⁽²⁾	2		—		2		—		Foreign exchange contracts (2)	1		0		1		0
Total	Total	$	17	$	15	$	2	$	—	Total	$	9	$	8	$	1	$	0
Liabilities:	Liabilities:									Liabilities:

Foreign exchange contracts ⁽³⁾	Foreign exchange contracts ⁽³⁾	$	1	$	—	$	1	$	—	Foreign exchange contracts (3)	$	1	$	0	$	1	$	0
Total	Total	$	1	$	—	$	1	$	—	Total	$	1	$	0	$	1	$	0

^{December 31, 2020
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) $ 22 $ 22 $ 0 $ 0
Foreign investments(2) 2 0 2 0
Foreign exchange contracts (2) 0 0 0 0
Total $ 24 $ 22 $ 2 $ 0
Liabilities:
Foreign exchange contracts (3) $ 1 $ 0 $ 1 $ 0
Total $ 1 $ 0 $ 1 $ 0}

(1) Included in Cash and cash equivalents in the Condensed Consolidated Balance Sheets.

⁽²⁾ Included in Other current assets in the Condensed Consolidated Balance Sheets.

⁽³⁾ Included in Other current liabilities in the Condensed Consolidated Balance Sheets.

Deposits Held in Money Market Mutual Funds A portion of the Company’s excess cash is held in money market mutual funds that generate interest income based on prevailing market rates. Money market mutual fund holdings are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy.

Foreign Investments ~~As a result of our acquisition of Origami, as noted within Note 3, Business Combinations, we acquired~~The investments ~~held in Brazil. The investments~~primarily include an investment fund similar to a mutual ~~fund as well as certificates of deposit.~~fund. The investments are valued using observable, either directly or indirectly, inputs for substantially the full term of the assets and are classified within Level 2 of the valuation hierarchy.

Foreign Exchange Contracts As a result of our global operating activities, we are exposed to risks from changes in foreign currency exchange rates, which may adversely affect our financial condition. To manage our exposures and mitigate the impact of currency fluctuations on our financial results, we hedge our primary transactional exposures through the use of foreign exchange forward and option contracts. The foreign exchange contracts are valued using the market approach based on observable market transactions of forward rates and are classified ~~with in~~within Level 2 of the valuation hierarchy.

Assets Measured at Fair Value on a Non-recurring Basis

From time to time, certain assets are measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3). NCR reviews the carrying values of investments when events and circumstances warrant and considers all available evidence in evaluating when declines in fair value are other-than-temporary declines. There were 0 material impairment charges or non-recurring fair value adjustments recorded during the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.

3739

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (AOCI)

Changes in AOCI by Component


In millions	In millions	Currency Translation Adjustments		Changes in Employee Benefit Plans		Changes in Fair Value of Effective Cash Flow Hedges		Total		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, 2019		$	(260)	$	(10)	$	1	$	(269)

Balance as of December 31, 2020										Balance as of December 31, 2020	$	(245)	$	(26)	$	0	$	(271)
Other comprehensive income (loss) before reclassifications	Other comprehensive income (loss) before reclassifications	(43)		—		—		(43)		Other comprehensive income (loss) before reclassifications	1		0		0		1
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		(2)		(1)		(3)		Amounts reclassified from AOCI	0		(1)		0		(1)
Net current period other comprehensive (loss) income	Net current period other comprehensive (loss) income	(43)		(2)		(1)		(46)		Net current period other comprehensive (loss) income	1		(1)		0		0
Balance as of June 30, 2020		$	(303)	$	(12)	$	—	$	(315)
Balance as of June 30, 2021										Balance as of June 30, 2021	$	(244)	$	(27)	$	0	$	(271)

Reclassifications Out of AOCI


			For the three months ended June 30, 2020																			For the three months ended June 30, 2021
					Employee Benefit Plans														Employee Benefit Plans
In millions	In millions				Amortization of Actuarial Loss (Gain)		Amortization of Prior Service Benefit		Effective Cash Flow Hedge Loss (Gain)			Total		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:	Affected line in Condensed Consolidated Statement of Operations:													Affected line in Condensed Consolidated Statement of Operations:
		Cost of products	$	—	$	—	$	—		$	—		Cost of products		$	0	$	0	$	0		$	0
		Cost of services	—		(1)		—			(1)			Cost of services		0		0		0			0
		Selling, general and administrative expenses	(1)		—		—			(1)
		Total before tax	$	(1)	$	(1)	$	—		$	(2)
		Tax expense								1			Total before tax		$	0	$	0	$	0		$	0
		Total reclassifications, net of tax								$	(1)		Tax expense									0
													Total reclassifications, net of tax									$	0

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)
Cost of services — — — —
Selling, general and administrative expenses — (2) — (2)
Total before tax $ — $ (2) $ (2) $ (4)
Tax expense 1
Total reclassifications, net of tax $ (3)

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

For the six months ended June 30, 2020
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) (2) — (3)
Selling, general and administrative expenses (1) — — (1)
Total before tax $ (2) $ (2) $ (1) $ (5)
Tax expense 2
Total reclassifications, net of tax $ (3)


			For the six months ended June 30, 2019																			For the three months ended June 30, 2020
					Employee Benefit Plans														Employee Benefit Plans
In millions	In millions				Amortization of Actuarial Loss (Gain)		Amortization of Prior Service Benefit		Effective Cash Flow Hedge Loss (Gain)			Total		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:	Affected line in Condensed Consolidated Statement of Operations:													Affected line in Condensed Consolidated Statement of Operations:
		Cost of products	$	—	$	—	$	(3)		$	(3)		Cost of products		$	0	$	0	$	0		$	0
		Cost of services	(1)		(2)		—			$	(3)		Cost of services		0		(1)		0			(1)
		Selling, general and administrative expenses	—		(2)		—			$	(2)		Selling, general and administrative expenses		(1)		0		0			(1)

													Total before tax		$	(1)	$	(1)	$	0		$	(2)
		Total before tax	$	(1)	$	(4)	$	(3)		$	(8)		Tax expense									1
		Tax expense								1			Total reclassifications, net of tax									$	(1)
		Total reclassifications, net of tax								$	(7)

~~16. SEGMENT INFORMATION AND CONCENTRATIONS~~

~~The Company manages and reports the following segments:~~

•~~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. The solutions offered serve the following customer markets in the retail industry: food, drug and mass merchandisers; department and specialty retailers; convenience and fuel retailers, and small and medium retailers. 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 solutions to customers in the hospitality industry, serving businesses in the following markets: quick service restaurants, table service restaurants, small and medium restaurants and travel 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.

~~Table of Contents~~

~~NCR Corporation~~

~~Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)~~

The accounting policies used to determine the results of the operating segments are the same as those utilized for the consolidated financial statements as a whole. Intersegment sales and transfers are not material.

To maintain operating focus on business performance, non-operational items are excluded from the segment operating results utilized by our chief operating decision maker in evaluating segment performance and are separately delineated to reconcile back to total reported income from operations.

~~The following table presents revenue and operating income by segment:~~

In millions Three months ended June 30 Six months ended June 30
2020 2019 2020 2019
Revenue by segment
Banking $ 763 $ 868 $ 1,526 $ 1,626
Retail 483 558 955 1,069
Hospitality 160 202 329 395
Other 78 82 177 156
Consolidated revenue $ 1,484 $ 1,710 $ 2,987 $ 3,246
Operating income by segment
Banking $ 92 $ 129 $ 195 $ 224
Retail 17 40 22 66
Hospitality — 13 (9) 29
Other 7 10 12 20
Subtotal - segment operating income 116 192 220 339
Other adjustments ⁽¹⁾
27 35 54 82
Income from operations $ 89 $ 157 $ 166 $ 257

⁽¹⁾~~The following table presents the other adjustments for NCR:~~

In millions Three months ended June 30 Six months ended June 30
2020 2019 2020 2019
Transformation and restructuring costs $ 8 $ 14 $ 13 $ 40
Acquisition-related amortization of intangible assets 19 21 41 42
Total other adjustments $ 27 $ 35 $ 54 $ 82

~~The following table presents revenue by geography for NCR:~~

In millions Three months ended June 30 Six months ended June 30
2020 2019 2020 2019
Americas $ 886 $ 1,029 $ 1,778 $ 1,949
Europe, Middle East and Africa (EMEA) 407 452 810 871
Asia Pacific (APJ) 191 229 399 426
Total revenue $ 1,484 $ 1,710 $ 2,987 $ 3,246

~~The following tables present revenue from products and services for NCR:~~

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

In millions Three months ended June 30 Six months ended June 30
2020 2019 2020 2019
Product revenue $ 481 $ 664 $ 955 $ 1,203
Professional services and installation services revenue 189 270 416 508
Recurring revenue, including maintenance, cloud revenue and payments 814 776 1,616 1,535
Total revenue $ 1,484 $ 1,710 $ 2,987 $ 3,246
Reclassifications Out of AOCI

In millions Three months ended June 30 Six months ended June 30
2020 2019 2020 2019
Software $ 460 $ 496 $ 934 $ 963
Services 605 622 1,241 1,207
Hardware 419 592 812 1,076
Total revenue $ 1,484 $ 1,710 $ 2,987 $ 3,246


		For the six months ended June 30, 2021
		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	$	0	$	0	$	0	$	0
	Cost of services	0		(1)		0		(1)


	Total before tax	$	0	$	(1)	$	0	$	(1)
	Tax expense							0
	Total reclassifications, net of tax							$	(1)


		For the six months ended June 30, 2020
		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	$	0	$	0	$	(1)	$	(1)
	Cost of services	(1)		(2)		0		(3)
	Selling, general and administrative expenses	(1)		0		0		(1)

	Total before tax	$	(2)	$	(2)	$	(1)	$	(5)
	Tax expense							2
	Total reclassifications, net of tax							$	(3)

~~17.~~16. SUPPLEMENTAL FINANCIAL INFORMATION

The components of accounts receivable are summarized as follows:

In millions June 30, 2020 December 31, 2019
Accounts receivable
Trade $ 1,266 $ 1,482
Other 37 52
Accounts receivable, gross 1,303 1,534
Less: allowance for credit losses (54) (44)
Total accounts receivable, net $ 1,249 $ 1,490

Accounts receivable, net includes amounts billed and currently due from customers, as well as amounts unbilled that typically result from sales under contracts where revenue recognized exceeds the amount billed to the customer and where the Company has an unconditional right to consideration. The amounts due are stated at their net estimated realizable value.

Allowances for credit losses on accounts receivable are recognized when reasonable and supportable forecasts affect the expected collectability. This requires us to make our best estimate of the current expected losses inherent in our accounts receivable at each balance sheet date. These estimates require consideration of historical loss experience, adjusted for current conditions, forward looking indicators, trends in customer payment frequency and judgments about the probable effects of relevant observable data, including present and future economic conditions and the financial health of specific customers and market sectors. This policy is applied consistently among all of our operating segments.


In millions	June 30, 2021		December 31, 2020
Accounts receivable
Trade	$	1,286	$	1,120
Other	25		48
Accounts receivable, gross	1,311		1,168
Less: allowance for credit losses	(40)		(51)
Total accounts receivable, net	$	1,271	$	1,117

Our allowance for credit losses as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 was ~~$54~~$40 million and ~~$44~~$51 million, respectively. Our allowance for credit losses charged to expense for the three and six months ended June 30, 2021 was $3 million. Our allowance for credit losses charged to expense for the three and six months ended June 30 2020 was $9 million and $19 million, respectively. We increased our allowance for credit losses for the three and six months ended June 30, 2020 by $3 million and $6 million ~~respectively,~~ based upon ~~current~~ forecasts that reflect increased economic uncertainty resulting from the COVID-19 pandemic. The Company recorded write-offs against the reserve for the three months ended June 30, 2021 and 2020 of $2 million and $4 million, respectively. The Company recorded write-offs against the reserve for the six months ended June 30, 2021 and 2020 of $4$14 million and $6 million, respectively.

Table of Contents

NCR Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)

The components of inventory are summarized as follows:.


In millions	In millions	June 30, 2020		December 31, 2019		In millions	June 30, 2021		December 31, 2020
Inventories	Inventories					Inventories
Work in process and raw materials	Work in process and raw materials	$	198	$	204	Work in process and raw materials	$	148	$	133
Finished goods	Finished goods	201		184		Finished goods	184		135
Service parts	Service parts	383		396		Service parts	363		333
Total inventories	Total inventories	$	782	$	784	Total inventories	$	695	$	601

4142

Table of Contents

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

Second Quarter Overview

~~The following were the significant events for the second quarter of 2020, each of which~~

Our discussion within MD&A is ~~discussed more fully in later sections of this MD&A:~~organized as follows:

•~~Revenue decreased approximately 13% from the prior year period and 12% excluding unfavorable foreign currency impacts;~~

•~~Segment results continue to be negatively impacted by the COVID-19 pandemic;~~

•Overview. ~~Cash and cash equivalents as of June 30, 2020 of $1.68 billion, improved liquidity to help manage through the COVID-19 pandemic; and~~

•~~Task force continues to pro-actively manage the global impact of the COVID-19 pandemic~~This section contains background information on our ~~employees, customers~~company, summary of significant themes and ~~business.~~events during the quarter as well as strategic initiatives and trends in order to provide context for management’s discussion and analysis of our financial condition and results of operations.

~~Strategic Overview~~•Results of operations. This section contains an analysis of our results of operations presented in the accompanying condensed consolidated statements of income by comparing the results for the three and six months ended June 30, 2021 to the results for the three and six months ended June 30, 2020.

~~Today's consumers expect,~~ •~~including as the world navigates in a COVID-19 pandemic environment,~~Liquidity and capital resources. ~~businesses to provide~~This section provides an analysis of our cash flows and a ~~rich, integrated and personalized experience across all commerce channels, including online, mobile and,~~ discussion of our contractual obligations at June 30, 2021.

~~as consumers are able to return to a more normal operating environment,~~

~~in-store.~~

OVERVIEW

BUSINESS OVERVIEW

NCR is ~~at the forefront of this shift, assisting businesses of every size in their digital transformation journeys including~~ a ~~shift to contactless commerce. Our mission is to be the~~ leading software- and services-led enterprise provider in the financial, retail, hospitality, and ~~hospitality industries.~~ W~~e have developed~~telecommunications and technology industries (T&T). NCR is a ~~long-term growth strategy built on taking care~~global company that is headquartered in Atlanta, Georgia. NCR offers a range of solutions that help businesses of all sizes run the store, run the restaurant and run self-service banking channels. Our solutions are also designed to support our transition to an as-a-Service company and enable us to be the technology-based service provider of choice to our customers. We categorize our operations into the following segments: Banking, Retail, Hospitality, and T&T. Each of our ~~customers, improving execution~~segments derives its revenue in each of ~~new product introductions, accelerating software and services revenue growth and executing spend optimization programs. This long-term mission and our strategy to execute it are designed to position~~the sales theaters in which NCR to continue to drive -- in the long-term -- growth, sustainable revenue, profit and cash flow, and to improve value for all of our stakeholders. As we manage our business through the COVID-19 pandemic with a focus on prioritizing the health and safety of our employees and customers, and being positioned to capitalize on market opportunities when we return to a more normal operating environment, we have also remained focused on our long-term mission and executed at a high level to advance our strategy.

~~To deliver on our short-term and long-term mission and strategy, we are focused on the following main initiatives in 2020:~~operates.

•~~Customer Care~~Banking - ~~Support our~~We offer solutions to customers ~~to continue operations in a safe manner and enable them to transform their operations rapidly to meet consumer needs and emerging industry or government programs~~ in the ~~COVID-19 environment;~~financial services industry that power their digital transformation through software, services and hardware to deliver differentiated experiences for their customers and improve efficiency for the ~~customer experience~~financial institution. Our managed services and ~~execution~~ATM-as-a-Service help banks run their end-to-end ATM channel, positioning NCR as a strategic partner. We augment these solutions by offering a full line of ~~new product introductions;~~software, services and hardware including interactive teller machines (ITM), and recycling, multi-function and cash dispense ATMs. NCR's digital banking solutions enable anytime-anywhere convenience for a financial institution’s consumer and business customers. We also help institutions implement their digital first platform strategy by providing solutions for banking channel services, transaction processing, imaging, and branch services. Cardtronics provides financial-related services to cardholders through Cardtronics' networks and, separately, Cardtronics owns and operates the Allpoint network, a retail-based surcharge-free ATM network. Cardtronics also provides ATM management and ATM equipment-related services to large retail merchants and smaller retailers.

•~~Business Continuity Plans~~Retail - ~~Manage our business through the COVID-19~~ ~~pandemic by focusing on business continuity plans,~~ ~~reducing our planned capital expenditures,~~ ~~improving our liquidity and increasing our financial flexibility~~We offer software-defined solutions to ~~position our business,~~customers in the ~~long-term,~~retail industry, leading with digital, to ~~accelerate profitable top-line revenue growth by investing~~connect retail operations end to end to integrate all aspects of a customer’s operations in indoor and ~~shifting our revenue mix~~outdoor settings from POS, to ~~recurring~~payments, inventory management, fraud and loss prevention applications, loyalty and consumer engagement. These solutions are designed to improve operational efficiency, selling productivity, customer satisfaction and purchasing decisions; provide secure checkout processes and payment systems; and increase service levels. These solutions include retail-oriented technologies such as comprehensive API-point of sale (POS) retail software platforms and ~~services revenue streams we identify as strategic growth platforms, while improving the Company’s cost structure;~~

applications, hardware terminals, self-service kiosks including self-checkout (SCO), payment processing solutions, and bar-code scanners.

•~~Strategic Growth Platforms and Targeted Acquisitions~~Hospitality - ~~Increase capital expenditures in strategic growth platforms and targeted acquisitions~~We offer technology solutions to ~~gain solutions that drive the highest growth and return on investment and accelerate our NCR-as-a-Service vision;~~

•~~Talentand Employee Care~~ ~~- Implement actions to protect the health and safety of our employees and protect as many jobs as possible to enable us to retain talent, and,~~customers in the ~~long term, to continue to develop, reward~~hospitality industry, including table-service, quick-service and ~~retain talent with competitive recruiting, training and effective incentive-based compensation programs; and~~

•~~Sales Enablement~~ - Provide our sales force with flexibility in services and operations to meet customer needs through the COVID-19 pandemic; and provide top-performing and secure products packaged to target our desired revenue mix and drive customer delight, as well as invest in appropriate training programs to enable success.

~~Potentially significant risks to the execution~~fast casual restaurants of ~~our initiatives and achievement of our strategy include~~ the impact of the COVID-19 pandemic on our workforce, operations and financial results, including the impact on our customer’s businesses and their ability to pay; manufacturing disruptions, including those caused by or related to outsourced manufacturing or disruptions in our supply chain due to the COVID-19 pandemic; ~~strength of demand for the products we offer or will offer in the future consistent with our strategy and its effect on our businesses;~~ ~~domestic and global economic and credit conditions including, in~~

~~Table of Contents~~

particular, those resulting from the imposition or threat of protectionist trade policies or import or export tariffs, global and regional market conditions and spending trends in the financial services and retail industries, new tax legislation across multiple jurisdictions, modified or new global or regional trade agreements, execution of the United Kingdom's exit from the European Union, uncertainty over further potential changes in Eurozone participation and fluctuations in oil and commodity prices; the transformation of our business and shift to increased software and services revenue, as well as recurring revenue; our abilityall sizes, that are designed to improve ~~execution in our sales~~operational efficiency, increase customer satisfaction, streamline order and ~~services organizations; our ability to successfully introduce new solutions~~transaction processing and ~~compete in~~reduce operating costs. Our portfolio includes cloud-based software applications for point-of-sale, back office, payment processing, kitchen production, restaurant management and consumer engagement. We also provide hospitality-oriented hardware products such as POS terminals, order and payment kiosks, bar code scanners, printers and peripherals. And finally, we help reduce the ~~technology industry; cybersecurity risks and compliance with data privacy and protection requirements; the possibility of disruptions in or problems with our data center hosting facilities;~~ the impact of the March 2020 tornadoes in the greater Nashville area on an NCR Global Fulfillment Center in Mt. Juliet, Tennessee operated by a third party, including the sufficiency and effectiveness of our or our third-party logistics partner’s business continuity plans, the adequacy of our property damage and business interruption insurance coverage and our ability to recover under the applicable policies; defects or errors in our products; the impact of our indebtedness and its terms on our financial and operating activities; the historical seasonality of our sales; tax rates and tax legislation; foreign currency fluctuations; the success of our restructuring plans and cost reduction savings initiatives; the availability and success of acquisitions, divestitures and alliances; our pension strategy and underfunded pension obligations; reliance on third party suppliers; the impact of the terms of our Series A Convertible Preferred Stock; our multinational operations, including in new and emerging markets; collectability difficulties in subcontracting relationships in certain geographical markets; development and protection of intellectual property; workforce turnover and the ability to attract and retain skilled employees; uncertainties or delays associated with the transition of key business leaders; environmental exposures from our historical and ongoing manufacturing activities; and uncertainties with regard to regulations, lawsuits, claims, and other matters across various jurisdictions.

~~Impacts from the COVID-19 pandemic~~

The impact of COVID-19 has grown throughout the world, including in the United States. Governmental authorities have implemented numerous measures attempting to contain and mitigate the effects of COVID-19, including travel bans and restrictions, quarantines, shelter in place orders and shutdowns.

We continue to actively monitor the global outbreak and spread of COVID-19 and take steps to mitigate the potential risks to us posed by its spread and related circumstances and impacts. We continue to assess and update our business continuity plan in the context of this pandemic. We have taken precautions to help keep our workforce healthy and safe, including establishing a coronavirus task force in January 2020, thermal screening procedures at our manufacturing plants and call centers and remote working arrangements for the vast majority of our back-office employees. We expect the pandemic to create headwinds to our customers and our business until COVID-19 is contained, consumer confidence improves and the economic conditions rebound. Although it is difficult to project how deep and how long the COVID-19 pandemic will last, we do expect it will negatively impact our business for the remainder of 2020 and into 2021.

With respect to our Banking segment, we are working with local governments to make sure that these businesses are designated as essential critical infrastructure businesses. Although we experienced installation delays, we have not experienced any significant impact to our recurring services revenue stream. We believe our ATM break-fix services, which represented the largest percentage of Banking segment revenue, has remained strong, although there can be no assurance that such operations will not be impacted in the future with higher costs or labor availability.

With respect to our Retail segment, the food, drug and mass merchandising market, which includes grocery stores, drug stores and big box retailers, and which represented the majority of our Retail segment revenue, is currently designated as an essential critical infrastructure business in many jurisdictions. We have realigned our resources to support our customers as they respond to changing consumer demand, particularly with regard to self-checkout and contactless checkout. However, customers in our department and specialty retail market and in our small and medium business market, which is approximately 20% of our Retail segment revenue, have encountered significant adverse impacts in connection with COVID-19 as a result of temporary closures of physical stores and reduced consumer spending.

With respect to our Hospitality segment, the quick service restaurants, which are large chains and represent the majority of the Hospitality segment revenue, have remained busy with respect to drive-through and pick up services being in demand as many in-restaurant dining options are limited by social distancing and governmental orders. However, we do expect this market to be negatively impacted from lower new stores and less remodeling activity. For table service restaurants, which are sit-down restaurants with more than 50 locations, we expect negative impacts as a result of shelter-in-place orders. Although many of these businesses have experienced an increase in online and takeout ordering, we expect this market to be negatively impacted until consumer confidence improves once COVID-19 is contained. Customers in our small and medium business market have experienced significant working capital and adverse cash flow impacts as a result of the COVID-19 pandemic, which, similar to table service restaurants, is expected to continue until COVID-19 is contained and the economy begins to rebound.

Table of Contents

complexities of running the restaurant through our services capabilities including strategic advisory, technology deployment and implementation, hardware and software maintenance and managed services.

~~In order to build a stronger liquidity position, we have taken steps~~•Telecommunications and Technology (T&T) - We offer maintenance, managed and professional services using solutions such as remote management and monitoring services, which are designed to improve ~~working capital~~operational efficiency, network availability and ~~are addressing certain business impacts with spending cuts.~~end-user experience, to customers in the telecommunications and technology industry. We ~~have taken several steps~~also provide such services to ~~build~~end users on behalf of select manufacturers leveraging our ~~cash reserve~~global service capability, and resell third party networking products to ~~improve our financial liquidity and flexibility and provide~~customers in a ~~cushion to help weather the impacts~~variety of the pandemic. These steps include suspending our share repurchase programs, limiting our mergers and acquisition activity, reducing salary for members of our leadership team and certain salaried employees, reducing our planned capital expenditures, eliminating most contractors, curtailing travel, freezing merit increases and hiring. Additionally, on March 24, 2020, we drew the remaining available funds of $630 million on our five-year, $1.1 billion revolving credit facility and on April 13, 2020, we issued $400 million senior unsecured notes.industries.

~~The degree~~NCR’s reputation is founded upon over 137 years of providing quality products, services and solutions to our customers. At the heart of our customer and other business relationships is a commitment to acting responsibly, ethically and with the highest level of integrity. This commitment is reflected in NCR’s Code of Conduct, which ~~COVID-19 affects~~is available on the Corporate Governance page of our ~~financial results~~website.

SIGNIFICANT THEMES AND EVENTS

As more fully discussed in later sections of this MD&A, the following were significant themes and ~~operations will depend~~events for the second quarter of 2021.

•Revenue of $1,677 million, up 13%

•Significant profit margin expansion driven by cost reductions and favorable mix of revenue

•Closed the acquisition of Cardtronics plc on future developments, which are highly uncertain and cannot be predicted with certainty, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.June 21, 2021

STRATEGIC INITIATIVES AND TRENDS

In order to provide long-term value to all of our stakeholders, we set complementary business goals and financial strategies.Our business goal is to be a software and services-led company, and to be the leading technology provider of choice that runs stores, banks and restaurants around the world through our NCR-as-a-Service solutions that help banks, stores and restaurants run better, so they have more time to create customer experiences that drive lasting success. Our financial strategy is to transition our revenue mix so that 80 percent of our total revenue is comprised of software and services revenue, 60 percent of our total revenue is comprised of recurring revenue,and our adjusted EBITDA margin rate increases to 20 percent. Execution of our goals and strategy is driven by the following key pillars: (i) focus on our customers; (ii) take care of our employees; (iii) bring high-quality, innovative products to market; and (iv) leverage our brand.

Cybersecurity Risk Management

Similar to most companies, NCR and its customers are subject to more frequent and increasingly sophisticated cybersecurity attacks. The Company maintains cybersecurity risk management policies and procedures including disclosure controls, which it regularly evaluates for updates, for handling and responding to cybersecurity events. These policies and procedures include internal notifications and engagements and, as necessary, cooperation with law enforcement. Personnel involved in handling and responding to cybersecurity events periodically undertake tabletop exercises to simulate an event. Our internal notification procedures include notifying the applicable Company attorneys, which, depending on the level of severity assigned to the event, may include direct notice to, among others, the Company’s General Counsel, Ethics & Compliance Officer, and Chief Privacy Officer. Company attorneys support efforts to evaluate the materiality of any incidents, determine whether notice to third parties such as customers or vendors is required, determine whether any prohibition on insider trading is appropriate, and assess whether disclosure to stockholders or governmental filings, including with the SEC, are required. Our internal notification procedures also include notifying various NCR Information Technology Services managers, subject matter experts in the Company’s software department and Company leadership, depending on the level of severity assigned to the event.

IMPACTS FROM THE COVID-19 PANDEMIC

We continue to navigate through the challenging times presented by COVID-19, with a sharp focus on safeguarding our employees and helping our customers. Despite the unprecedented environment, our teams are executing at a high level and we are advancing our strategy. While it is difficult to project how disruptive and protracted the pandemic will be, we do expect it will negatively impact our business.

Table of Contents

The COVID-19 pandemic is complex and continues to evolve. The ultimate impact on our overall financial condition and operating results will depend on the currently unknowable duration and severity of the pandemic, as well as any additional governmental and public actions taken in response. We continue to evaluate the long-term impact that COVID-19 may have on our business model. There can be no assurance that the measures we have taken, or will take, will completely offset the negative impact of COVID-19.

Results from Operations

For the three and six months ended June 30, ~~2020~~2021 compared to the three and six months ended June 30, ~~2019~~2020

Key Strategic Financial Metrics

The following tables show our key strategic financial metrics for the three and six months ended June 30, the relative percentage that those amounts represent to total revenue, and the change in those amounts year-over-year. For the software and services revenue and recurring revenue metrics below we have excluded the results of operations of Cardtronics for the period from the date of acquisition, June 21, 2021 to June 30, 2021 which was $32 million of revenue. For the Adjusted EBITDA metric below, we have included the results of Cardtronics for the period from the date of acquisition, June 21, 2021 to June 30, 2021 which was $8 million of Adjusted EBITDA.

Software and services revenue as a percentage of total revenue - NCR standalone


	Three months ended June 30				Percentage of Total Revenue - NCR Standalone				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Software & Services	$	1,144	$	1,065	69.4	%	71.8	%	7	%
Hardware	505		419		30.6	%	28.2	%	21	%
Total Revenue - NCR Standalone	$	1,649	$	1,484	100.0	%	100.0	%	11	%


	Six months ended June 30				Percentage of Total Revenue - NCR Standalone				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Software & Services	$	2,254	$	2,175	70.6	%	72.8	%	4	%
Hardware	939		812		29.4	%	27.2	%	16	%
Total Revenue - NCR Standalone	$	3,193	$	2,987	100.0	%	100.0	%	7	%

Recurring revenue as a percentage of total revenue - NCR standalone


	Three months ended June 30				Percentage of Total Revenue - NCR Standalone				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Recurring revenue (1)	$	900	$	814	54.6	%	54.9	%	11	%
All other products and services	749		670		45.4	%	45.1	%	12	%
Total Revenue - NCR Standalone	$	1,649	$	1,484	100.0	%	100.0	%	11	%


	Six months ended June 30				Percentage of Total Revenue - NCR Standalone				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Recurring revenue (1)	$	1,774	$	1,616	55.6	%	54.1	%	10	%
All other products and services	1,419		1,371		44.4	%	45.9	%	4	%
Total Revenue - NCR Standalone	$	3,193	$	2,987	100.0	%	100.0	%	7	%

(1) Recurring revenue includes all revenue streams from contracts where there is a predictable revenue pattern that will occur at regular intervals with a relatively high degree of certainty. This includes hardware and software maintenance revenue, cloud revenue, payment processing revenue, and certain professional services arrangements as well as term-based software license arrangements that include customer termination rights and excludes the results from Cardtronics.

Table of Contents

Net income (loss) from continuing operations and Adjusted EBITDAas a percentage of total revenue


	Three months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Net income (loss) from continuing operations	$	(9)	$	64	(0.5)	%	4.3	%	(114)	%
Adjusted EBITDA	$	281	$	201	16.8	%	13.5	%	40	%


	Six months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Net income (loss) from continuing operations	$	21	$	87	2.0%		2.9	%	(76)	%
Adjusted EBITDA	$	539	$	389	16.7	%	13.0	%	39	%

Non-GAAP Financial Measures:

Total Revenue - NCR Standalone NCR presents certain financial measures, such as total revenue, on a standalone basis, which excludes the impacts from the operations of Cardtronics for the period from the date of close, June 21, 2021 to June 30, 2021. NCR’s management believes that presentation of this financial measure, which excludes Cardtronics, is more representative of the company's period-over-period operating performance and provides additional insight which may be helpful for investors.


	Three months ended June 30				Six months ended June 30
In millions	2021		2020		2021		2020
Total Revenue (GAAP)	$	1,677	$	1,484	$	3,221	$	2,987
Less Cardtronics revenue	(32)		—		(32)		—
Plus intercompany eliminations	4		—		4		—
Total Revenue - NCR Standalone (non-GAAP)	$	1,649	$	1,484	$	3,193	$	2,987

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA) NCR's management uses the non-GAAP measure Adjusted EBITDA because it provides useful information to investors as an indicator of strength and performance of the Company's ongoing business operations, including funding discretionary spending such as capital expenditures, strategic acquisitions, and other investments. NCR determines Adjusted EBITDA based on GAAP net income (loss) from continuing operations attributable to NCR plus interest expense, net; plus income tax expense (benefit); plus depreciation and amortization; plus stock-based compensation expense; plus other income (expense); plus pension mark-to-market adjustments, pension settlements, pension curtailments and pension special termination benefits and other special items, including amortization of acquisition-related intangibles, restructuring charges, among others. Refer to the table below for the reconciliations of net income (loss) from continuing operations (GAAP) to Adjusted EBITDA (non-GAAP).


	Three months ended June 30				Six months ended June 30
In millions	2021		2020		2021		2020
Net income (loss) from continuing operations (GAAP)	$	(9)	$	64	$	21	$	87

Transformation and restructuring costs	7		8		15		13
Acquisition-related amortization of intangibles	23		19		43		41
Acquisition-related costs	56		—		83		—



Interest expense	61		57		106		107
Interest income	(1)		(1)		(4)		(2)
Depreciation and amortization (excluding acquisition-related amortization of intangibles)	76		68		146		131
Income taxes	31		(34)		48		(33)
Stock-based compensation expense	37		20		81		45
Adjusted EBITDA (non-GAAP)	$	281	$	201	$	539	$	389

Table of Contents

Consolidated Results

The following table shows our results for the three and six months ended June ~~30:~~

Three months ended June 30 Six months ended June 30
In millions 2020 2019 2020 2019
Revenue $ 1,484 $ 1,710 $ 2,987 $ 3,246
Gross margin 372 471 769 882
Gross margin as a percentage of revenue 25.1 % 27.5 % 25.7 % 27.2 %
Operating expenses
Selling, general and administrative expenses $ 234 $ 252 $ 489 $ 504
Research and development expenses 49 62 114 121
Income from operations $ 89 $ 157 $ 166 $ 257
30, the relative percentage that those amounts represent to revenue, and the change in those amounts year-over-year.

~~The following table shows our revenue by geography for the three months ended June 30:~~

In millions 2020 % of Total 2019 % of Total % Increase (Decrease)
% Increase (Decrease) Constant Currency ⁽¹⁾
Americas $ 886 60% $ 1,029 60% (14)% (13)%
Europe, Middle East and Africa (EMEA) 407 27% 452 27% (10)% (8)%
Asia Pacific (APJ) 191 13% 229 13% (17)% (15)%
Consolidated revenue $ 1,484 100% $ 1,710 100% (13)% (12)%


	Three months ended June 30				Percentage of Revenue (1)				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Product revenue	$	551	$	481	32.9	%	32.4	%	15	%
Service revenue	1,126		1,003		67.1	%	67.6	%	12	%
Total revenue	1,677		1,484		100.0	%	100.0	%	13	%
Product gross margin	98		70		17.8	%	14.6	%	40	%
Service gross margin	358		302		31.8	%	30.1	%	19	%
Total gross margin	456		372		27.2	%	25.1	%	23	%
Selling, general and administrative expenses	303		234		18.1	%	15.8	%	29	%
Research and development expenses	69		49		4.1	%	3.3	%	41	%
Total operating expenses	372		283		22.2	%	19.1	%	31	%
Income from operations	$	84	$	89	5.0	%	6.0	%	(6)	%


	Six months ended June 30				Percentage of Revenue (1)				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Product revenue	$	1,033	$	955	32.1	%	32.0	%	8	%
Service revenue	2,188		2,032		67.9	%	68.0	%	8	%
Total revenue	3,221		2,987		100.0	%	100.0	%	8	%
Product gross margin	172		153		16.7	%	16.0	%	12	%
Service gross margin	698		616		31.9	%	30.3	%	13	%
Total gross margin	870		769		27.0	%	25.7	%	13	%
Selling, general and administrative expenses	541		489		16.8	%	16.4	%	11	%
Research and development expenses	135		114		4.2	%	3.8	%	18	%
Total operating expenses	676		603		21.0	%	20.2	%	12	%
Income from operations	$	194	$	166	6.0	%	5.6	%	17	%

(1)The ~~following table shows our~~percentage of revenue is calculated for each line item divided by ~~geography~~total revenue, except for product gross margin and service gross margin, which are divided by the ~~six months ended June 30:~~

In millions 2020 % of Total 2019 % of Total % Increase (Decrease)
% Increase (Decrease) Constant Currency ⁽¹⁾
Americas $ 1,778 60% $ 1,949 60% (9)% (8)%
Europe, Middle East and Africa (EMEA) 810 27% 871 27% (7)% (5)%
Asia Pacific (APJ) 399 13% 426 13% (6)% (4)%
Consolidated revenue $ 2,987 100% $ 3,246 100% (8)% (7)%
related component of revenue.

~~The following table shows our revenue by segment for the three months ended June 30:~~

Revenue


	Three months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 vs 2020
Product revenue	$	551	$	481	32.9	%	32.4	%	15	%
Service revenue	1,126		1,003		67.1	%	67.6	%	12	%
Total revenue	$	1,677	$	1,484	100.0	%	100.0	%	13	%

4447

Table of Contents

In millions 2020 % of Total 2019 % of Total % Increase (Decrease)
% Increase (Decrease) Constant Currency ⁽¹⁾
Banking $ 763 51% $ 868 51% (12)% (11)%
Retail 483 33% 558 32% (13)% (13)%
Hospitality 160 11% 202 12% (21)% (20)%
Other 78 5% 82 5% (5)% (2)%
Consolidated revenue $ 1,484 100% $ 1,710 100% (13)% (12)%


	Six months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 vs 2020
Product revenue	$	1,033	$	955	32.1	%	32.0	%	8	%
Service revenue	2,188		2,032		67.9	%	68.0	%	8	%
Total revenue	$	3,221	$	2,987	100.0	%	100.0	%	8	%

Product revenue includes our hardware and software license revenue streams. Service revenue includes hardware and software maintenance revenue, implementation services revenue, cloud revenue, payments processing revenue as well as professional services revenue.

Forthe three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020

On June 21, 2021, we completed the transaction with Cardtronics plc ("Cardtronics"). The ~~following table shows our~~second quarter 2021 results include the operations of Cardtronics from June 21, 2021 to June 30, 2021. As a result, revenue ~~by segment~~includes $32 million and Adjusted EBITDA includes $8 million from Cardtronics.

Total revenue increased 13% for the three months ended June 30, 2021 compared to the three months ended June 30, 2020. Total revenue increased 8% for the six months ended June ~~30:~~

In millions 2020 % of Total 2019 % of Total % Increase (Decrease)
% Increase (Decrease) Constant Currency ⁽¹⁾
Banking $ 1,526 51% $ 1,626 50% (6)% (5)%
Retail 955 32% 1,069 33% (11)% (10)%
Hospitality 329 11% 395 12% (17)% (16)%
Other 177 6% 156 5% 13% 15%
Consolidated revenue $ 2,987 100% $ 3,246 100% (8)% (7)%

⁽¹⁾~~The tables above~~30, 2021 compared to the six months ended June 30, 2020. Product revenue for the three and six months ended June 30, ~~are presented with period-over-period~~2021 increased due to growth in SCO and POS revenue ~~growth or declines on~~partially offset by a ~~constant currency basis. Constant currency is a non-GAAP measure that excludes the effects of foreign currency fluctuations. We calculate this information by translating prior period~~decline in ATM revenue. Service revenue growth at current period monthly average exchange rates. We believe that examining period-over-period revenue growth or decline excluding foreign currency fluctuations is useful for assessing the underlying performance of our business, and our management uses revenue growth adjusted for constant currency to evaluate period-over-period operating performance. This non-GAAP measure should not be considered a substitute for, or superior to, period-over-period revenue growth under GAAP.

~~The following table provides a reconciliation of geographic revenue percentage growth (GAAP) to revenue percentage growth constant currency (non-GAAP)~~ for the three ~~months ended June 30, 2020:~~

Revenue % Growth (GAAP) Favorable (unfavorable) FX impact Revenue % Growth Constant Currency (non-GAAP)
Americas (14)% (1)% (13)%
EMEA (10)% (2)% (8)%
APJ (17)% (2)% (15)%
Consolidated revenue (13)% (1)% (12)%

~~The following table provides a reconciliation of geographic revenue percentage growth (GAAP) to revenue percentage growth constant currency (non-GAAP) for the~~and six months ended June 30, ~~2020:~~

Revenue % Growth (GAAP) Favorable (unfavorable) FX impact Revenue % Growth Constant Currency (non-GAAP)
Americas (9)% (1)% (8)%
EMEA (7)% (2)% (5)%
APJ (6)% (2)% (4)%
Consolidated revenue (8)% (1)% (7)%

~~The following table provides a reconciliation of segment~~2021 increased mainly due to growth in hardware and software maintenance revenue ~~percentage growth (GAAP) to revenue percentage growth constant currency (non-GAAP) for the three months ended June 30, 2020:~~

~~Table of Contents~~

Revenue % Growth (GAAP) Favorable (unfavorable) FX impact Revenue % Growth Constant Currency (non-GAAP)
Banking (12)% (1)% (11)%
Retail (13)% —% (13)%
Hospitality (21)% (1)% (20)%
Other (5)% (3)% (2)%
Consolidated revenue (13)% (1)% (12)%
as well as an increase in software-as-a-service revenue.

~~The following table provides a reconciliation of segment revenue percentage growth (GAAP) to revenue percentage growth constant currency (non-GAAP) for the six months ended June 30, 2020:~~

Revenue % Growth (GAAP) Favorable (unfavorable) FX impact Revenue % Growth Constant Currency (non-GAAP)
Banking (6)% (1)% (5)%
Retail (11)% (1)% (10)%
Hospitality (17)% (1)% (16)%
Other 13% (2)% 15%
Consolidated revenue (8)% (1)% (7)%

~~Revenue~~

For the three months ended June 30, 2020 compared to the three months ended June 30, 2019, revenue decreased 13% year-over-year. The COVID-19 pandemic had a material impact to revenue while the shift from selling perpetual software licenses to recurring revenue lowered revenue by $22 million. Foreign currency fluctuations had an unfavorable impact of 1% on the revenue comparison.

Banking revenue decreased 12% due to the continued impact of the COVID-19 pandemic driven by a 25% decline in ATM hardware revenue. An accelerated shift from selling perpetual software licenses to recurring revenue also impacted the year-over-year revenue comparison. Foreign currency fluctuations had an unfavorable impact of 1% on the revenue comparison. Retail revenue decreased 13% driven by a large customer hardware roll-out in the prior year as well as the continued impact from the COVID-19 pandemic. Foreign currency fluctuations had no impact on the revenue comparison. Hospitality revenue decreased 21% due to the continued impact from the COVID-19 pandemic. Foreign currency fluctuations had an unfavorable impact of 1% on the revenue comparison.

For the six months ended June 30, 2020 compared to the six months ended June 30, 2019, revenue decreased 8% due to a combination of the impact of the COVID-19 pandemic and the accelerated shift from perpetual software licenses to recurring revenue. Foreign currency fluctuations had an unfavorable impact of 1% on the revenue comparison.

Banking revenue decreased 6% due to the impact of the COVID-19 pandemic, driven by an 18% decline in ATM hardware revenue. The decline in revenue was also driven by the shift from selling perpetual software licenses to recurring revenue. Foreign currency fluctuations had an unfavorable impact of 1% on the revenue comparison. Retail revenue decreased 11% driven by a large customer hardware roll-out in the prior year as well as the impact from the COVID-19 pandemic. Foreign currency fluctuations had an unfavorable impact of 1% on the revenue comparison. Hospitality revenue decreased 17% mainly driven by the impact from the COVID-19 pandemic. Foreign currency fluctuations had an unfavorable impact of 1% on the revenue comparison.

~~The changes to segment revenue and the drivers thereof are discussed in further detail under "Revenue and Operating Income by Segment" below.~~

Gross Margin


	Three months ended June 30				Percentage of Revenue (1)				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Product gross margin	$	98	$	70	17.8	%	14.6	%	40	%
Service gross margin	358		302		31.8	%	30.1	%	19	%
Total gross margin	$	456	$	372	27.2	%	25.1	%	23	%

(1) The percentage of revenue is calculated for each line item divided by the related component of revenue.

~~Gross~~For the three months ended June 30, 2021 compared to the three months ended June 30, 2020

Gross margin as a percentage of revenue in the three months endedJune 30, 2021 was 27.2% compared to 25.1% in the three months ended June 30, 2020. Gross margin in the three months ended June 30, ~~2020 was 25.1% compared to 27.5% in the three months ended June 30, 2019.~~2021 included $7 million of transformation and restructuring costs and $9 million of amortization of acquisition-related intangible assets. Gross margin infor the three months ended June 30, 2020 included $5 million of ~~costs related to~~

~~Table of Contents~~

transformation ~~initiatives~~and restructuring costs and $4 million of ~~acquisition-related~~ amortization of ~~intangibles. Gross margin in the three months ended June 30, 2019 included $10 million of costs related to restructuring and transformation initiatives and $6 million related to~~ acquisition-related ~~amortization of intangibles.~~intangible assets. Excluding these items, gross margin as a percentage of revenue ~~decreased~~increased from ~~28.5%~~25.7% to ~~25.7%~~28.1% due to an increase in the ~~overall decline in~~favorable mix of revenue ~~as well as from~~and recurring cost-saving actions partially offset by increased supply chain costs.


	Six months ended June 30				Percentage of Revenue (1)				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Product gross margin	$	172	$	153	16.7	%	16.0	%	12	%
Service gross margin	698		616		31.9	%	30.3	%	13	%
Total gross margin	$	870	$	769	27.0	%	25.7	%	13	%

(1) The percentage of revenue is calculated for each line item divided by the ~~shift~~related component of revenue.

For the six months ended June 30, 2021 compared to ~~recurring revenue with lower software license revenue.~~the six months ended June 30, 2020

Gross margin as a percentage of revenue in the six months ended June 30, ~~2020~~2021 was ~~25.7%~~27.0% compared to ~~27.2%~~25.7% in the six months ended June 30, ~~2019.~~2020. Gross margin in the six months ended June 30, 2021 included $11 million of transformation and

Table of Contents

restructuring costs and $16 million of amortization of acquisition-related intangible assets. Gross margin for the six months ended June 30, 2020 included $5 million of ~~costs related to~~ transformation ~~initiatives~~and restructuring costs and $11 million of ~~acquisition-related~~ amortization of ~~intangibles. Gross margin in the six months ended June 30, 2019 included $18 million of costs related to restructuring and transformation initiatives and $12 million related to~~ acquisition-related ~~amortization of intangibles.~~intangible assets. Excluding these items, gross margin as a percentage of revenue ~~decreased~~increased from ~~28.1%~~26.3% to ~~26.3%~~27.8% due to an increase in the ~~overall decline in~~favorable mix of revenue ~~as well as from the shift to~~and recurring ~~revenue with lower software license revenue.~~cost-saving actions.

~~Operating~~Selling, General and Administrative Expenses


	Three months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 vs 2020
Selling, general and administrative expenses	$	303	$	234	18.1	%	15.8	%	29	%

For the three months ended June 30, 2021 compared to the three months ended June 30, 2020

Selling, general, and administrative expenses were ~~$234~~$303 million ~~or 15.8% as a percentage of revenue, as~~ compared to ~~$252~~$234 million ~~or 14.7% as a percentage of revenue,~~ in the three months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively. ~~Selling,~~As a percentage of revenue, selling, general and administrative expenses were 18.1% compared to 15.8% in the three months ended June 30, 2021 and 2020, ~~included $15 million of acquisition-related amortization of intangibles and $3 million of costs related to transformation initiatives. Selling, general, and administrative expenses in~~respectively. In the three months ended June 30, ~~2019~~2021, selling, general and administrative expenses primarily included $14 million of amortization of acquisition-related intangible assets and $59 million of acquisition-related costs. In the three months ended June 30, 2020, selling, general and administrative expenses included $3 million of transformation and restructuring costs and $15 million of ~~acquisition-related~~ amortization of ~~intangibles and $4 million of costs related to restructuring and transformation initiatives.~~acquisition-related intangible assets. Excluding these items, selling, general and administrative expenses ~~increased from 13.6%~~decreased as a percentage of revenue from 14.6% to 13.7% primarily due an increase in revenue and recurring cost-saving actions implemented.


	Six months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 vs 2020
Selling, general and administrative expenses	$	541	$	489	16.8	%	16.4	%	11	%

For the ~~three~~six months ended June 30, ~~2019~~2021 compared to ~~14.6% as a percentage of revenue in~~ the ~~three~~six months ended June 30, 2020. The decrease in selling, general and administrative expenses was primarily due to the initiatives implemented in the first quarter to address the business impacts from the COVID-19 pandemic, including among others, salary reductions, elimination of certain contractors and curtailing travel, partially offset by an increase in account receivable reserves.2020

Selling, general, and administrative expenses were ~~$489~~$541 million ~~or 16.4% as a percentage of revenue, as~~ compared to ~~$504~~$489 million ~~or 15.5% as a percentage of revenue,~~ in the six months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively. ~~Selling,~~As a percentage of revenue, selling, general and administrative expenses were 16.8% compared to 16.4% in the six months ended June 30, 2021 and 2020, ~~included $30 million of acquisition-related amortization of intangibles and $8 million of costs related to transformation initiatives. Selling, general, and administrative expenses in~~respectively. In the six months ended June 30, ~~2019~~2021, selling, general and administrative expenses included $3 million of transformation and restructuring costs, $27 million of amortization of acquisition-related intangible assets and $69 million of acquisition-related costs. In the six months ended June 30, 2020, selling, general and administrative expenses included $8 million of transformation and restructuring costs and $30 million of ~~acquisition-related~~ amortization of ~~intangibles and $19 million of costs related to restructuring and transformation initiatives.~~acquisition-related intangible assets. Excluding these items, selling, general and administrative expenses ~~increased from 14.0%~~decreased as a percentage of revenue from 15.1% to 13.7% primarily due an increase in revenue and cost-saving actions implemented.

Research and Development Expenses


	Three months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Research and development expenses	$	69	$	49	4.1	%	3.3	%	41	%

For the ~~six~~three months ended June 30, ~~2019~~2021 compared to ~~15.1% as a percentage of revenue in~~ the ~~six~~three months ended June 30, 2020. The decrease in selling, general and administrative expenses was primarily due to a the initiatives implemented in the first quarter to address the business impacts from the COVID-19 pandemic, including among others, salary reductions, elimination of certain contractors and curtailing travel, partially offset by an increase in account receivable reserves.2020

Research and development expenses were $69 million compared to $49 million ~~or 3.3% as a percentage of revenue,~~ in the three months ended June 30, 2021 and 2020, ~~as compared to $62 million, or 3.6% as~~respectively. As a percentage of revenue, these costs were 4.1% and 3.3% in the three months ended June 30, ~~2019. The decrease~~2021 and 2020, respectively. In the three months ended June 30, 2021, research and development expenses included $1 million of reduction in costs related to our transformation and restructuring costs. After considering this item, research and development expenses increased slightly as a percentage of revenue from 3.3% to 4.2% due to an increase in research and development ~~expenses was due~~costs related to higher strategic investment.

Table of Contents


	Six months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Research and development expenses	$	135	$	114	4.2	%	3.8	%	18	%

For the six months ended June 30, 2021 compared to the initiatives implemented in the first quarter to address the business impacts from the COVID-19 pandemic, including among others, salary reductions, elimination of certain contractors and curtailing travel as well as increased investment in our strategic growth platforms.six months ended June 30, 2020

Research and development expenses were $135 million compared to $114 million ~~or 3.8% as a percentage of revenue,~~ in the six months ended June 30, 2021 and 2020, ~~as compared to $121 million, or 3.7% as~~respectively. As a percentage of revenue, in the six months ended June 30, 2019. Research and development expenses in the six months ended June 30, 2019 included $3 million of costs related to our restructuring and transformation initiatives. Excluding these costs ~~research~~were 4.2% and ~~development expenses as a percentage of revenue increased from 3.6% in the six months ended June 30, 2019 to~~ 3.8% in the six months ended June 30, 2021 and 2020, respectively. In the six months ended June 30, 2021, research and development expenses included $1 million of costs related to our transformation and restructuring costs. After considering this item, research and development expenses increased slightly as a percentage of revenue from 3.8% to 4.2% due to ~~the initiatives implemented~~an increase in ~~the first quarter~~research and development costs related to ~~address the business impacts from the COVID-19 pandemic, including among others, salary reductions, elimination of certain contractors and curtailing travel as well as increased investment in our~~higher strategic ~~growth platforms.~~

investment.

Interest Expense


	Three months ended June 30				Increase (Decrease)
In millions	2021		2020		2021 v 2020
Interest expense	$	61	$	57	7	%

For the three months ended June 30, 2021 compared to the three months ended June 30, 2020

Interest expense was $61 million compared to $57 million in the three months ended June 30, 2021 and 2020, respectively. Interest expense is primarily related to the Company's senior unsecured notes and borrowings under the Company's senior secured credit facility. The main driver was related to the increase in total outstanding debt during the three months ended June 30, 2021 as a result of the closing of the acquisition of Cardtronics.


	Six months ended June 30				Increase (Decrease)
In millions	2021		2020		2021 v 2020
Interest expense	$	106	$	107	(1)	%

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020

Interest expense was $106 million compared to $107 million in the six months ended June 30, 2021 and 2020, respectively. Interest expense is primarily related to the Company's senior unsecured notes and borrowings under the Company's senior secured credit facility. The lower average interest rates on the Company's senior unsecured notes partially offset by the higher average outstanding principal balances slightly decreased interest expense during the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

Other Income (Expense), net

Other income (expense), net was an expense of $1 million and $2 million in the three months ended June 30, 2021 and 2020, respectively, and was $18 million and $4 million in the six months ended June 30, 2021 and 2020, respectively, with the components reflected in the following table:


	Three months ended June 30				Six months ended June 30
In millions	2021		2020		2021		2020
Interest income	$	1	$	1	$	4	$	2
Foreign currency fluctuations and foreign exchange contracts	(3)		(3)		(7)		(5)
Bank-related fees	(2)		(1)		(21)		(3)
Employee benefit plans	3		1		6		2
Other income (expense), net	$	(1)	$	(2)	$	(18)	$	(4)

Table of Contents

~~Interest expense was $57~~

In the six months ended June 30, 2021, the Company incurred financing fees of $19 million inrelated to certain structuring and commitment fees as a result of the financing transactions entered into during the first quarter of 2021 related to the transaction with Cardtronics. Refer to Note 5, Debt Obligations of the Notes to Condensed Consolidated Financial Statements for additional discussion on the financing transactions.

Income Taxes


	Three months ended June 30				Increase (Decrease)
In millions	2021		2020		2021 v 2020
Income tax expense (benefit)	$	31	$	(34)	(191)	%

For the three months ended June 30, ~~2020~~2021 compared to ~~$45 million in~~ the three months ended June 30, ~~2019. The increase was due to higher average outstanding principal debt balances as well as higher interest rates on the Company's senior unsecured notes.~~

~~Interest expense was $107 million in the six months ended June 30,~~ 2020 compared to $90 million in the six months ended June 30, 2019. The increase was due to higher average outstanding principal debt balances as well as higher interest rates on the Company's senior unsecured notes.

~~Other Expense, net~~

Other expense, net of $2 million in the three months ended June 30, 2020 compared to $9 million in the three months ended June 30, 2019. Other expense, net of $4 million in the six months ended June 30, 2020 compared to $17 million in the six months ended June 30, 2019. The components of which are reflected in the table below:

Three months ended June 30 Six months ended June 30
In millions 2020 2019 2020 2019
Interest income $ 1 $ 1 $ 2 $ 2
Foreign currency fluctuations and foreign exchange contracts (3) (6) (5) (12)
Bank-related fees (1) (2) (3) (4)
Employee benefit plans 1 (2) 2 (4)
Other, net — — — 1
Other expense, net $ (2) $ (9) $ (4) $ (17)

~~Provision for Income Taxes~~

Income tax provisions for interim (quarterly) periods are based on an estimated annual effective income tax rate calculated separately from the effect of significant, infrequent or unusual items. Income tax expense was $31 million for the three months ended June 30, 2021 compared to income tax benefit ~~was~~of $34 million for the three months ended June 30, ~~2020 compared to income~~2020. The change was primarily driven by discrete tax ~~expense of $15 million for~~expenses and benefits. In the three months ended June 30, ~~2019. The~~2021, the Company recognized a $34 million expense from recording a valuation allowance against interest limitation carryforwards in the U.S. and a $14 million benefit from the deferred tax impact of a tax law change ~~was primarily driven by an increase~~ in ~~discrete tax benefits as well as lower income before taxes in~~the U.K. In the three months ended June 30, ~~2020. The increase in discrete tax benefits primarily resulted from~~2020, the Company recognized a $48 million tax benefit ~~recorded~~ for the release of a valuation allowance against U.S. foreign tax credits and the re-establishment of expected foreign tax credit offsets to unrecognized tax benefits.


	Six months ended June 30				Increase (Decrease)
In millions	2021		2020		2021 v 2020
Income tax expense (benefit)	$	48	$	(33)	(245)	%

For the six months ended June 30, 2021 compared to the six months ended June 30, 2020

Income tax expense was $48 million for the six months ended June 30, 2021 compared to income tax benefit ~~was~~of $33 million for the six months ended June 30, 2020 ~~compared to~~The change was primarily driven by higher income before taxes and changes in discrete tax ~~expense of $24 million for~~expenses and benefits. In the six months ended June 30, ~~2019. The~~2021, the Company recognized a $34 million expense from recording a valuation allowance against interest limitation carryforwards in the U.S. and a $14 million benefit from the deferred tax impact of a tax law change ~~was primarily driven by an increase~~ in ~~discrete tax benefits as well as lower income before taxes in~~the U.K. In the six months ended June 30, ~~2020. The increase in discrete tax benefits primarily resulted from~~2020, the Company recognized a $48 million tax benefit ~~recorded~~ for the release of a valuation allowance against U.S. foreign tax credits and the re-establishment of expected foreign tax credit offsets to unrecognized tax benefits.

~~NCR~~The Company is subject to numerous federal, state and foreign tax audits. While ~~NCR believes~~we believe that appropriate reserves exist for issues that might arise from these audits, should these audits be settled, the resulting tax effect could impact the tax provision and cash flows in ~~2020~~2021 or future periods.

Revenue and ~~Operating Income~~Adjusted EBITDA by Segment

The Company manages and reports ~~the following segments:~~

~~Table of Contents~~

and Small and Medium Retailers. 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 solutions to customers in the hospitality industry, serving~~its businesses in the following ~~markets: Quick Service Restaurants, Table Service Restaurants, Small~~segments: Banking, Retail, Hospitality and Medium Restaurants and Travel 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.

T&T. Each of these segments derives its revenue by selling in the ~~geographies~~sales theaters in which NCR operates. Segments are measured for profitability by the Company’s chief operating decision maker based on revenue and segment adjusted EBITDA. Adjusted EBITDA is defined as GAAP net income (loss) from continuing operations attributable to NCR plus interest expense, net; plus income tax expense (benefit); plus depreciation and amortization; plus stock-based compensation expense; plus other income (expense); plus pension mark-to-market adjustments, pension settlements, pension curtailments and pension special termination benefits and other special items, including amortization of acquisition-related intangibles, restructuring charges, among others. The special items are considered non-operational so are excluded from the adjusted EBITDA metric utilized by our chief operating ~~income. For purposes of discussing our operating results by~~decision maker in evaluating segment ~~we exclude the impact of certain non-operational items from segment operating income, consistent with the manner by which management reviews each segment, evaluates~~ performance and ~~reports our segment results under GAAP.~~are separately delineated to reconcile back to total reported income from operations. This format is useful to investors because it allows analysis and comparability of operating trends. It also includes the same information that is used by NCR management to make decisions regarding the segments and to assess our financial performance. ~~Our segment results are reconciled to total Company results reported under GAAP in Note 16, Segment Information and Concentrations of the Notes to the Condensed Consolidated Financial Statements.~~

~~In the segment discussions below, we have disclosed the impact~~

Table of ~~foreign currency fluctuations as it relates to~~Contents

Corporate and Other reconciles our segment ~~revenue.~~results to adjusted EBITDA, which primarily includes other income (expense) that are managed only on a total company basis and are, accordingly, reflected only in consolidated results.

On June 21, 2021, we completed the transaction with Cardtronics. The second quarter 2021 results include the operations of Cardtronics from June 21, 2021 to June 30, 2021 which have been included in the Banking segment. As a result, Banking revenue includes $32 million and Banking Adjusted EBITDA includes $8 million.

The following ~~table shows the Banking~~tables show our segment revenue and ~~operating income~~adjusted EBITDA for the three and six months ended June ~~30:~~

Three months ended June 30 Six months ended June 30
In millions 2020 2019 2020 2019
Revenue $ 763 $ 868 $ 1,526 $ 1,626
Operating income $ 92 $ 129 $ 195 $ 224
Operating income as a percentage of revenue 12.1 % 14.9 % 12.8 % 13.8 %
30, the relative percentage that those amounts represent to revenue, and the change in those amounts year-over-year.

In the three months ended June 30, 2020 compared to the three months ended June 30, 2019, revenue decreased 12% due to the continued impact of the COVID-19 pandemic driven by a 25% decline in ATM hardware revenue. An accelerated shift from selling perpetual software licenses to recurring revenue also impacted the revenue comparison. Additionally, the revenue decrease was mainly driven by declines in the Americas and Europe. Foreign currency fluctuations had an unfavorable impact of 1% on the revenue comparison.


	Three months ended June 30				Percentage of Revenue (1)				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Revenue
Banking	$	809	$	763	48.3	%	51.4	%	6	%
Retail	576		483		34.3	%	32.5	%	19	%
Hospitality	215		160		12.8	%	10.8	%	34	%
T&T	77		78		4.6	%	5.3	%	(1)	%
Total Revenue	$	1,677	$	1,484	100.0	%	100.0	%	13	%

Adjusted EBITDA by Segment
Banking	$	151	$	130	18.7	%	17.0	%	16	%
Retail	92		49		16.0	%	10.1	%	88	%
Hospitality	30		15		14.0	%	9.4	%	100	%
T&T	9		10		11.7	%	12.8	%	(10)	%
Corporate & Other	(1)		(3)
Total Adjusted EBITDA	$	281	$	201	16.8	%	13.5	%	40	%


	Six months ended June 30				Percentage of Revenue (1)				Increase (Decrease)
In millions	2021		2020		2021		2020		2021 v 2020
Revenue
Banking	$	1,565	$	1,526	48.6	%	51.1	%	3	%
Retail	1,108		955		34.4	%	32.0	%	16	%
Hospitality	394		329		12.2	%	11.0	%	20	%
T&T	154		177		4.8	%	5.9	%	(13)	%
Total Revenue	$	3,221	$	2,987	100.0	%	100.0	%	8	%

Adjusted EBITDA by Segment
Banking	$	305	$	270	19.5	%	17.7	%	13	%
Retail	165		86		14.9	%	9.0	%	92	%
Hospitality	55		22		14.0	%	6.7	%	150	%
T&T	19		18		12.3	%	10.2	%	6	%
Corporate & Other	(5)		(7)
Total Adjusted EBITDA	$	539	$	389	16.7	%	13.0	%	39	%

(1) The percentage of revenue is calculated for each line item divided by total revenue, except for Adjusted EBITDA, which are divided by the ~~six months ended June 30, 2020 compared to the six months ended June 30, 2019, revenue decreased 6% due to the impact~~related component of ~~the COVID-19 pandemic driven by a 18% decline in ATM hardware~~ revenue. An accelerated shift from selling perpetual software licenses to recurring revenue also impacted the revenue comparison. Additionally, the revenue decrease was mainly driven by declines in the Americas and Europe. Foreign currency fluctuations had an unfavorable impact of 1% on the revenue comparison.

~~Operating income decreased in~~

Segment Revenue

Table of Contents

For the three and six months ended June 30, ~~2020~~2021 compared to the three and six months ended June 30, 2019. The decrease in operating income was primarily due to a decline in revenue partially offset by a reduction in operating expenses from the initiatives put in place to address business impacts expected from the COVID-19 pandemic.2020

~~Table of Contents~~

~~Retail~~

~~The following table shows the Retail~~Banking revenue increased 6% and ~~operating income~~3% for the three and six months ended June ~~30:~~

Three months ended June 30 Six months ended June 30
In millions 2020 2019 2020 2019
Revenue $ 483 $ 558 $ 955 $ 1,069
Operating income $ 17 $ 40 $ 22 $ 66
Operating income as a percentage of revenue 3.5 % 7.2 % 2.3 % 6.2 %

~~In the three months ended June~~ 30, ~~2020 compared to the three months ended June 30, 2019, revenue decreased 13%~~2021, respectively, due to higher software and services revenue partially offset by a decline in ATM hardware revenue. Cardtronics increased Banking revenue ~~driven~~ by a large customer roll-out in the prior year as well as the continued impact from the COVID-19 pandemic. Additionally, the revenue decrease was mainly driven by declines in the Americas. Foreign currency fluctuations had no impact on the revenue comparison.

In the six months ended June 30, 2020 compared to the six months ended June 30, 2019, revenue decreased 11% due to a decline in hardware revenue driven by a large customer roll-out in the prior year as well as the impact from the COVID-19 pandemic. Additionally, the revenue decrease was mainly driven by declines in the Americas. Foreign currency fluctuations had an unfavorable impact of 1% on the revenue comparison.

Operating income decreased in the three months ended June 30, 2020 compared to the three months ended June 30, 2019 primarily due to the decline in hardware volume partially offset by lower operating expenses from the initiatives put in place to address business impacts expected from the COVID-19 pandemic.

~~Operating income decreased in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 primarily due to the decline in revenue.~~

~~Hospitality~~

~~The following table shows the Hospitality revenue~~4% and ~~operating loss~~2% for the three and six months ended June ~~30:~~

Three months ended June 30 Six months ended June 30
In millions 2020 2019 2020 2019
Revenue $ 160 $ 202 $ 329 $ 395
Operating income (loss) $ — $ 13 $ (9) $ 29
Operating income as a percentage of revenue — % 6.4 % (2.7) % 7.3 %

~~In the three months ended June~~ 30, 2020 compared to the three months ended June 30, 2019, revenue decreased 21% mainly due to the continued impact from the COVID-19 pandemic. The revenue decrease was mainly driven by North America. Foreign currency fluctuations had an unfavorable impact of 1%2021, respectively, on the revenue comparison.

~~In the six months ended June 30, 2020 compared to the six months ended June 30, 2019,~~Retail revenue decreased 17% mainly due to the impact from the COVID-19 pandemic. The revenue decrease was mainly driven by North America. Foreign currency fluctuations had an unfavorable impact of 1% on the revenue comparison.

~~Operating income decreased in the three months ended June 30, 2020 compared to the three months ended June 30, 2019 driven by the reduction in revenue~~increased 19% and higher accounts receivable reserves due to increased risk from COVID-19 uncertainties partially offset by lower operating expenses from the initiatives put in place to address business impacts expected from the COVID-19 pandemic.

Operating income decreased in the six months ended June 30, 2020 compared to the six months ended June 30, 2019 driven by the reduction in revenue, higher planned expenses from strategic acquisitions completed in 2019 as well as higher accounts receivable reserves due to increased risk from COVID-19 uncertainties.

~~Table of Contents~~

~~Other~~

~~The following table shows the Other revenue and operating income~~16% for the three and six months ended June ~~30:~~

Three months ended June 30 Six months ended June 30
In millions 2020 2019 2020 2019
Revenue $ 78 $ 82 $ 177 $ 156
Operating income $ 7 $ 10 $ 12 $ 20
Operating income as a percentage of revenue 9.0 % 12.2 % 6.8 % 12.8 %

~~In the three months ended June~~ 30, 2020 compared to June 30, 2019, revenue decreased 5% due to declines in Europe partially offset by growth in the Americas. Foreign currency fluctuations had an unfavorable impact of 3% on the revenue comparison.

~~In the six months ended June 30, 2020 compared to June 30, 2019, revenue increased 13%~~2021, respectively, due to growth in ~~the Americas partially offset by declines in Europe. Foreign currency fluctuations had an unfavorable impact~~self-checkout and point-of-sale solutions revenue across both of ~~2% on the revenue comparison.~~our food-drug-merchandise and convenience-fuel-retail customers.

~~Operating income decreased in~~Hospitality revenue increased 34% and 20% for the three and six months ended June 30, ~~2020 compared~~2021, respectively, due to ~~June 30, 2019 driven by the mix of~~an increase in point-of-sale revenue as well as higher services revenue.

~~Continuing Impacts of COVID-19~~T&T revenue decreased 1% and 13% for the three and six months ended June 30, 2021, respectively, driven by a decrease in services revenue.

~~While it is difficult~~

Segment Adjusted EBITDA

For the three and six months ended June 30, 2021 compared to ~~project how deep~~ the ~~pandemic will be~~three and ~~how long it will last, we do expect it will negatively impact our business~~six months ended June 30, 2020

Banking adjusted EBITDA increased for the ~~remainder of 2020. We expect our Hospitality~~three and ~~Retail segments to be the most impacted~~six months ended June 30, 2021 primarily driven by the ~~COVID-19 pandemic, but do expect our Banking segment will also experience negative impacts. We expect our hardware revenues to be most impacted while our~~increase in recurring revenue ~~stream is expected to be more resilient.~~as well as costs saving initiatives which lowered operating expenses.

Retail adjusted EBITDA increased for the three and six months ended June 30, 2021 primarily driven by the increase in self-checkout and point-of-sale solutions and recurring revenue as well as costs saving initiatives which lowered operating expenses.

Hospitality adjusted EBITDA increased for the three and six months ended June 30, 2021 primarily driven by an increase in revenue as well as costs saving initiatives which lowered operating expenses.

T&T adjusted EBITDA decreased slightly for the three and six months ended June 30, 2021 primarily driven by lower revenue. T&T adjusted EBITDA increased slightly for the six months ended June 30, 2021 primarily driven by costs saving initiatives which lowered operating expenses.

Financial Condition, Liquidity, and Capital Resources

Cash provided by operating activities was $310 million in the six months ended June 30, 2021 compared to cash provided by operating activities of $283 million in the six months ended June 30, ~~2020 compared to cash provided by operating activities of $71 million in the six months ended June 30, 2019.~~2020. The increase in cash provided by operating activities was due to ~~working capital improvements.~~higher operating earnings.

NCR’s management uses a non-GAAP measure called “free cash flow” to assess the financial performance of the Company. We define free cash flow as net cash provided by (used in) operating activities ~~and cash provided by (used in) discontinued operations,~~ less capital expenditures for property, plant and equipment, less additions to capitalized software, plus/minus restricted cash settlement activity, plus ~~discretionary~~acquisition-related items, and plus pension contributions and settlements. We believe free cash flow information is useful for investors because it relates the operating cash flows from the Company’s continuing and discontinued operations to the capital that is spent to continue and improve business operations. In particular, free cash flow indicates the amount of cash available after capital expenditures for, among other things, investments in the Company’s existing businesses, strategic acquisitions, repurchases of NCR stock and repayment of debt obligations. Free cash flow does not represent the residual cash flow available for discretionary expenditures, since there may be other non-discretionary expenditures that are not deducted from the measure. Free cash flow does not have a uniform definition under GAAP, and therefore NCR’s definition may differ from other companies’ definitions of this measure. This non-GAAP measure should not be considered a substitute for, or superior to, cash flows from operating activities under GAAP.

The table below reconciles net cash provided by operating activities to NCR’s non-GAAP measure of free cash flow for the six months ended June 30:

Six months ended June 30
In millions 2020 2019
Net cash provided by operating activities $ 283 $ 71
Expenditures for property, plant and equipment (18) (35)
Additions to capitalized software (122) (103)
Net cash used in discontinued operations 6 (11)
Free cash flow (use) (non-GAAP) $ 149 $ (78)

5153

Table of Contents

The decrease in expenditures for property, plant and equipment is primarily due to the strategic focus to reduce spending in order to increase investment in our capitalized software for the investment in our strategic growth platforms. Additionally, cash provided by operating activities included $95 million of insurance proceeds as an advance for the Nashville Global Fulfillment Center outage. There was no impact to the six months ended June 30, 2019 cash provided by operating activities and free cash flow from the revision discussed in Note 2, Revisions of Previously Issued Financial Statements of the Notes to the Condensed Consolidated Financial Statements.


	Six months ended June 30
In millions	2021		2020
Net cash provided by operating activities	$	310	$	283
Expenditures for property, plant and equipment	(30)		(18)
Additions to capitalized software	(110)		(122)
Restricted cash settlement activity	1		(6)
Acquisition related items	55		—
Pension contributions	9		9
Free cash flow (non-GAAP)	$	235	$	146

Financing activities and certain other investing activities are not included in our calculation of free cash flow. Other investing activities primarily include business acquisitions, divestitures and investments as well as proceeds from the sale of property, plant and equipment. During the six months ended June 30, 2021, the payments for business combinations totaled $2,464 million, net of cash acquired, mainly for the cash consideration paid related to the acquisition of Cardtronics completed in the second quarter of 2021. During the six months ended June 30, 2020, the payments for business combinations was $25 million, mainly for the remaining consideration paid related to the acquisition of Zynstra Ltd. completed in 2019.

Our financing activities include borrowings and repayments of credit facilities and notes. During the six months ended June 30, ~~2020,~~2021, in connection with the acquisition of Cardtronics, we issued new senior unsecured notes for an aggregate principal amount of ~~$400~~$1.2 billion and amended and restated the senior secured credit facility to add an incremental term loan for $1.505 billion, of which $200 million ~~and~~ converted into the revolving credit facility. Additionally, we paid $7$32 million of deferred financing fees related to ~~this issuance.~~these transactions.

Financing activities during the six months ended June 30, ~~2020~~2021 also included ~~the repurchase of our common stock for $41 million,~~ dividends paid on the Series A preferred stock of $6$8 million, proceeds from stock employee plans of $9$18 million as well as tax withholding payments on behalf of employees for stock based awards that vested of $25 million. Financing activities during the six months ended June 30, ~~2019~~2020 included the repurchase of our common stock for a total of $41 million, dividends paid on the Series A preferred stock of $6 million, proceeds from stock employee plans of ~~$10~~$9 million and tax withholding payments on behalf of employees for stock based awards that vested of ~~$16~~$25 million. ~~Additionally, there were no repurchases of our common stock completed during the six months ended June 30, 2019.~~

Long Term Borrowings ~~On August 28, 2019, we amended and restated our senior secured credit facility and refinanced the term loan facility and revolving credit facility thereunder.~~ The senior secured credit facility consists of a term loan ~~facility~~facilities in an aggregate principal amount of ~~$750 million,~~$2.055 billion, of which ~~$744 million~~$1.94 billion was outstanding as of June 30, ~~2020.~~2021. Additionally, the senior secured credit facility provides for a five-year revolving credit facility with an aggregate principal amount of ~~$1.1~~$1.3 billion, of which ~~$1.07 billion~~$100 million was outstanding as of June 30, 2020, subject to certain covenant limitations. Additionally, the revolving credit facility has up to $400 million available to certain foreign subsidiaries, as long as there is availability under the revolving credit facility. Loans under the revolving credit facility are available in U.S. Dollars, Euros and Pound Sterling.2021. The revolving credit facility also allows a portion of the availability to be used for letters of credit, and as of June 30, ~~2020,~~2021, there were ~~$28~~$26 million letters of credit outstanding. ~~As of December 31, 2019, the outstanding principal balance of the term loan facility was $748 million and the outstanding balance on the revolving facility was $265 million.~~

On April 13, 2020, the Company issued $400 million aggregate principal amount of 8.125% senior unsecured notes due in 2025 (the 8.125% Notes). The 8.125% Notes were sold at 100% of the principal amount, which resulted in total gross proceeds of $400 million.

As of June 30, ~~2020,~~2021, we had outstanding $1.2 billion in aggregate principal balance of 5.125% senior unsecured notes due in 2029, $400 million in aggregate principal balance of 8.125% senior unsecured ~~noted~~notes due in 2025, $500 million in aggregate principal balance of 5.750% senior unsecured notes due in 2027, $650 million aggregate principal balance of 5.000% senior unsecured notes due in 2028, $500 million in aggregate principal balance of 6.125% senior unsecured notes due in 2029, ~~$700~~and $450 million in aggregate principal balance of ~~6.375%~~5.250% senior unsecured notes due in ~~2023, $600~~2030.

On August 2, 2021, the Company issued a Notice of Full Redemption of the 8.125% Notes pursuant to which the Company elected to redeem and will redeem on August 12, 2021 (the “Redemption Date”) $400 million in aggregate principal ~~balance~~amount of ~~5.00% senior unsecured~~the outstanding 8.125% Notes at a redemption price equal to 100% of the principal amount of the 8.125% Notes plus the excess of (if any) (a) the present value at the Redemption Date of (i) the redemption price of 8.125% Notes on April 15, 2022, plus (ii) all required remaining scheduled interest payments due on the 8.125% Notes through April 15, 2022 (but excluding accrued and unpaid interest to, but excluding, the Redemption Date), computed using a discount rate equal to the Adjusted Treasury Rate (as described in the terms of the indenture relating to the 8.125% Notes), over (b) the principal amount of the 8.125% Notes on the Redemption Date, and accrued and unpaid interest to, but excluding, the Redemption Date (the “Redemption Price”). Holders of the 8.125% Notes will be paid the Redemption Price upon presentation and surrender of their notes ~~due in 2022.~~for redemption.

Our revolving trade receivables securitization facility provides the Company with up to $300 million in funding based on the availability of eligible receivables and other customary factors and conditions. As of June 30, ~~2020 and December 31, 2019,~~2021, the Company had ~~$200~~$299 million ~~and $270 million, respectively,~~ outstanding under the facility.

Table of Contents

See Note 5, Debt Obligations, of the Notes to Condensed Consolidated Financial Statements for further information on the senior secured credit facility (including certain amendments to such facility) and the senior unsecured notes in connection with the acquisition of Cardtronics.

Employee Benefit Plans In 2021, we expect to make contributions of $20 million to our international pension plans, $39 million to our postemployment plan and $2 million to our postretirement plan. For additional information, refer to Note 8, Employee Benefit Plans of the Notes to the Condensed Consolidated Financial Statements.

Series A Convertible Preferred Stock ~~On December 4, 2015, NCR issued 820,000 shares~~As of ~~Series A Convertible Preferred Stock to certain entities affiliated with~~June 30, 2021, the Blackstone Group L.P. for an aggregate purchase price of $820 million, or $1,000 per share, pursuant to an Investment Agreement between the Company and Blackstone, dated November 11, 2015. In connection with the issuanceredemption value of the Series A ~~Convertible~~ Preferred Stock ~~the Company incurred direct and incremental expenses of $26~~was approximately $276 million. These direct and incremental expenses reduced the Series A Convertible Preferred Stock, and will be accreted through retained earnings as a deemed dividend from the date of issuance through the first possible known redemption date, March 16, 2024. Holders of Series A Convertible Preferred Stock are entitled to a cumulative dividend at the rate of 5.5% per annum, payable quarterly in arrears.

~~Table of Contents~~

On September 18, 2019, NCR entered into an agreement to repurchase and convert the outstanding Series A Convertible Preferred Stock owned by Blackstone, which was 512,221 shares as of the date of the transaction. NCR repurchased 237,673 shares of Series A Convertible Preferred Stock for total cash consideration of $302 million. The remaining shares of Blackstone's Series A Convertible Preferred Stock, including accrued dividends, were converted to approximately 9.16 million shares of common stock at a conversion price of $30.00 per share. This transaction retired all of the Series A Convertible Preferred Stock owned by Blackstone.

Beginning in the first quarter of 2020, dividends are payable in cash or in-kind at the option of the Company. During the ~~three~~the six months ended June 30, ~~2020 and 2019,~~2021, the Company paid ~~dividends-in-kind~~cash dividends of ~~$7 million and $12 million, respectively.~~$8 million. During the six months ended June 30, 2020, the Company paid total dividends of $13 million of which $7 million were dividends-in-kind and $6 million were paid in cash. During the six months ended June 30, 2019, the Company paid dividends-in-kind of $24 million. As of June 30, 2020 and December 31, 2019, the Company had accrued dividends of $1 million, respectively, associated with the Series A Convertible Preferred Stock.

The ~~remaining~~ Series A Convertible Preferred Stock is convertible at the option of the holders at any time into shares of common stock at a conversion price of $30.00 per share, or a conversion rate of 33.333 shares of common stock per share of Series A Convertible Preferred Stock.

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the maximum number of common shares that could be required to be issued upon conversion of the outstanding shares of the Series A Convertible Preferred Stock was ~~13.5~~9.2 million ~~and 13.3 million,~~shares, respectively.

~~Employee Benefit Plans~~ In 2020, we expect to make contributions of $21 million to our international pension plans, $30 million to our postemployment plan and $2 million to our postretirement plan. For additional information, refer to Note 8, Employee Benefit Plans of the Notes to the Condensed Consolidated Financial Statements.

Cash and Cash Equivalents Held by Foreign Subsidiaries Cash and cash equivalents held by the Company's foreign subsidiaries at June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were ~~$317~~$386 million and ~~$475~~$329 million, respectively. This balance also includes the cash and cash equivalents for Cardtronics plc and its subsidiaries. Under current tax laws and regulations, if cash and cash equivalents and short-term investments held outside the U.S. are distributed to the U.S. in the form of dividends or otherwise, we may be subject to additional U.S. income taxes and foreign withholding taxes, which could be significant.

Summary As of June 30, ~~2020,~~2021, our cash and cash equivalents totaled ~~$1.68 billion~~$449 million and our total debt was ~~$4.73~~$6.04 billion.

~~In order to build a stronger liquidity position, we have taken steps to improve working capital and are addressing certain business impacts with spending cuts. We have taken several steps to build~~As of June 30, 2021, our ~~cash reserve to improve our financial liquidity and flexibility and provide a cushion to help weather~~borrowing capacity under the impacts of the pandemic. These steps include suspending our share repurchase programs, limiting our mergers and acquisition activity, reducing salary for members of our leadership team and certain salaried employees, reducing our planned capital expenditures, eliminating most contractors, curtailing travel, freezing merit increases and hiring. Additionally, on March 24, 2020, we drew the remaining available funds of $630 million on our five-year, $1.1 billion revolving credit facility was approximately $1,174 million. Our ability to generate positive cash flows from operations is dependent on general economic conditions, competitive pressures, and other business and risk factors described in Item 1A of Part I of the Company’s 2020 Annual Report on ~~April 13, 2020,~~Form 10-K and Item 1A of Part II of this Quarterly Report on Form 10-Q (as applicable). If we ~~issued $400 million~~are unable to generate sufficient cash flows from operations, or otherwise comply with the terms of our credit facilities or senior unsecured ~~notes.~~ notes, we may be required to seek additional financing alternatives.

The COVID-19 pandemic isremains complex and rapidly evolving, and the ultimate impact on our overall financial condition and operating results will depend on the currently unknowable duration and severity of the pandemic as well as any additional governmental and public actions taken in response. There can be no assurance that the measures we have taken will completely offset the negative impact of COVID-19.

~~Table of Contents~~

We believe that we have sufficient liquidity based on our current cash position, cash flows from operations and existing financing to meet our required pension, postemployment, and postretirement plan contributions, remediation and other payments related to the environmental matters, debt servicing obligations, and our operating requirements for the next twelve months.

Contractual and Other Commercial Commitments

There have been no significant changes in our contractual and other commercial obligations as described in our Form 10-K for the year ended December 31, ~~2019.~~2020 except as noted below.

During the second quarter of 2021, we amended and restated our senior secured credit facility and refinanced the term loan facility and revolving credit facility thereunder. In connection with the Cardtronics transaction, we issued a senior secured incremental term loan A facilities under the Senior Secured Credit Facility, in an aggregate principal amount of $1.505 billion of which $200 million of the term loan A facility was converted into revolving credit commitments under the Senior Secured Credit Facility. Additionally, on April 6, 2021, the Company issued $1.2 billion aggregate principal amount of 5.125% senior notes due 2029.

Table of Contents

These transactions significantly altered the contractual and other commercial commitments related to debt obligations and interest on debt obligations previously described in our Annual Report on Form 10-K for the year ended December 31, 2020. The following table outlines our future debt obligations and future interest on debt obligations as of June 30, 2021 with projected cash payments in the years shown:


In millions	Total Amounts			2021-2022		2023-2024		2025 & Thereafter
Debt Obligations	$	6,041		$	382	$	311	$	5,348
Interest on debt obligations	1,771		1,771	396		515		860
Total debt obligations	$	7,812		$	778	$	826	$	6,208

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements as defined by SEC Regulation S-K Item 303 (a) (4) (ii).

Critical Accounting Policies and Estimates

Management reassessed the critical accounting policies as disclosed in our ~~2019~~2020 Annual Report on Form 10-K and determined that there were no changes to our critical accounting policies or our estimates associated with those policies in the six months ended June 30, ~~2020.~~2021.

New Accounting Pronouncements

See discussion in Note 1, Basis of Presentation and Summary of Significant Accounting Policies of the Notes to the Condensed Consolidated Financial Statements for new accounting pronouncements.

Forward-Looking Statements

This quarterly report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”)~~, including~~. Forward-looking statements ~~containing the~~use words such as “expect,” “anticipate,” “outlook,” “intend,” “plan,” “believe,” “will,” “should,” “would,” “potential,” “proposed,” “objective,” “could,” ~~“designed,~~“may,” and words of similar meaning, as well as other words or expressions referencing future events, conditions or circumstances. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Act. Statements that describe or relate to NCR’s plans, goals, intentions, strategies, or financial outlook, and statements that do not relate to historical or current fact, are examples of forward-looking statements. Forward-looking statements are based on our current beliefs, expectations and assumptions, which may not prove to be accurate, and involve a number of known and unknown risks and uncertainties, many of which are out of NCR’s control. Forward-looking statements are not guarantees of future performance, and there are a number of important factors that could cause actual outcomes and results to differ materially from the results contemplated by such forward-looking statements, including those factors relating to: the impact of the ~~novel strain of the~~ coronavirus ~~identified in late 2019 (“COVID-19”)~~(COVID-19) pandemic on our workforce, operations and financial results, including the impact on our customer’s businesses and their ability to pay; manufacturing disruptions, including those caused by or related to outsourced manufacturing or disruptions in our supply chain ~~due~~costs, including but not limited to, ~~the COVID-19 pandemic; strength~~materials, labor and freight, business, financial condition and results of ~~demand for the products we offer or will offer in the future consistent with our strategy and its effect on our businesses;~~operations; domestic and global economic and credit conditions including, in particular, ~~those resulting from~~political, consumer, and unemployment conditions, the imposition or threat of protectionist trade policies or import or export tariffs, global and regional market conditions and spending trends, ~~in the financial services and retail industries,~~ new tax legislation across multiple jurisdictions, modified or new global or regional trade agreements, execution of the United ~~Kingdom's~~Kingdom’s exit from the European Union, uncertainty over further potential changes in Eurozone participation, ~~and~~ fluctuations in oil and commodity ~~prices;~~prices, and our customer responses to the same; the transformation of our business ~~and shift~~model to an as-a-service company with focus on, among other items, increased software and services revenue, ~~as well as~~and recurring revenue; our ability ~~to improve execution in our sales~~grow software and services ~~organizations;~~and expanding our customer base; our ability to successfully develop and introduce new solutions ~~and compete~~ in the ~~technology industry; cybersecurity risks and compliance with data privacy and protection requirements; the possibility of~~competitive, rapidly changing environment in which we do business; defects, errors, installation difficulties or development delays in our products; disruptions in ~~or problems with~~ our data center hosting facilities; the impact of the March 2020 tornadoes in the greater Nashville area on an NCR Global Fulfillment Center in Mt. Juliet, Tennessee operated by a third party, including the sufficiency and effectiveness of our or our third-party logistics partner’s business continuity plans, the adequacy of our property damage and business interruption insurance coverage and our ability to ~~recover under~~compete effectively within the applicable policies; defects or errors in our products; the impact of our indebtedness and its terms on our financial and operating activities; the historical seasonality of our sales; tax rates and tax legislation; foreign currency fluctuations; the success of our restructuring plans and cost reduction savings initiatives; the availability and success of acquisitions, divestitures and alliances; our pension strategy and underfunded pension obligations;technology industry; reliance on third party suppliers; ~~the impact of the terms of our Series A Convertible Preferred Stock;~~ our multinational operations, including in new and emerging markets; ~~collectability difficulties~~our ability to successfully integrate acquisitions or effectively manage alliance activities, including but not limited to, the Cardtronics acquisition; continuous improvement, customer experience, restructuring and cost reduction initiatives; our ability to retain key employees, or attract quality new and replacement employees; financing and liquidity risks including: our level of indebtedness; the terms of the documents governing our indebtedness including financial and other covenants; the incurrence of substantially more debt, including secured debt, and similar liabilities, which would increase the risks described in ~~subcontracting relationships in certain geographical markets;~~our risk factors relating to indebtedness and repurchase obligations; sufficiency of our cash flows including to service our indebtedness; interest rate risk, which could cause our debt service obligations to increase significantly; our ability to raise the funds necessary to finance a required repurchase of our senior unsecured notes or our Series A Convertible Preferred Stock; a lowering or withdrawal of the ratings assigned to our debt securities by rating agencies; our pension liabilities; data protection, cybersecurity and privacy risks; intellectual property risks including protection, development and our ability to manage third party claims regarding

5456

Table of Contents

patents and ~~protection of~~other intellectual ~~property; workforce turnover~~property rights; legal and ~~the ability~~regulatory risks including unanticipated changes to ~~attract~~our tax rates and ~~retain skilled employees; uncertainties or delays associated with the transition of key business leaders;~~additional income tax liabilities; environmental exposures from our historical and ongoing manufacturing activities; ~~and~~ uncertainties with regard to regulations, lawsuits, claims, and other matters across various ~~jurisdictions.~~jurisdictions; other risks including the impact of the terms of our Series A Convertible Preferred Stock relating to voting power, share dilution and market price of our common stock, as well as rights, preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders; actions or proposals from stockholders that do not align with our business strategies or the interests of our other stockholders; potential write-down of the value of certain significant assets; the integration of the business of Cardtronics and realization of anticipated benefits; the United Kingdom Competition and Markets Authority (the “CMA”) review of the Cardtronics transaction and remedies that may be required if the CMA does not approve the transaction as contemplated, including but not limited to, the divestiture of certain NCR and/or Cardtronics businesses; loss of management personnel and other key employees of NCR and Cardtronics related to the Cardtronics transaction; unknown or developing litigation or claims involving Cardtronics; certain additional significant risks and uncertainties from the Cardtronics business and industry such as reduced need for cash in the marketplace or a decline in the usage of Cardtronics ATMs related to the proliferation of payment options; changes in financial services transaction fees, loss of or change in key merchant contracts or bank sponsorships, change in interchange fees or rates, EFT network rules and regulations compliance, vault cash risks, election by Cardtronics merchant customers not to participate in the surcharge-free network offerings, cash-in-transit risks, and settlement of merchant funds or in the vault cash reconciliations; and increased total indebtedness following completion of the Cardtronics acquisition and the implications related to such indebtedness. Additional information concerning these and other factors can be found in the Company’s filings with the U.S. Securities and Exchange Commission, including the Company’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made. The Company does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Information About NCR

NCR encourages investors to visit its web site (http://www.ncr.com), which is updated regularly with financial and other important information about NCR. The contents of the Company’s web site are not incorporated into this quarterly report or the Company’s other filings with the U.S. Securities and Exchange Commission.

5557

Table of Contents

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

We are exposed to market risks primarily from changes in foreign currency exchange rates and interest rates. It is our policy to manage our foreign exchange exposure and debt structure in order to manage capital costs, control financial risks and maintain financial flexibility over the long term. In managing market risks, we employ derivatives according to documented policies and procedures, including foreign currency contracts and interest rate swaps. We do not use derivatives for trading or speculative purposes.

Foreign Exchange Risk

Since a substantial portion of our operations and revenue occur outside the United States, and in currencies other than the U.S. Dollar, our results can be significantly impacted by changes in foreign currency exchange rates. We have exposure to approximately 50 functional currencies and are exposed to foreign currency exchange risk with respect to our sales, profits and assets and liabilities denominated in currencies other than the U.S. Dollar. Although we use financial instruments to hedge certain foreign currency risks, we are not fully protected against foreign currency fluctuations and our reported results of operations could be affected by changes in foreign currency exchange rates. To manage our exposures and mitigate the impact of currency fluctuations on the operations of our foreign subsidiaries, we hedge our main transactional exposures through the use of foreign exchange forward and option contracts. These foreign exchange contracts are designated as highly effective cash flow hedges. This is primarily done through the hedging of foreign currency denominated inter-company inventory purchases by the marketing units. All of these transactions are forecasted. We also use derivatives not designated as hedging instruments consisting primarily of forward contracts to hedge foreign currency denominated balance sheet exposures. For these derivatives we recognize gains and losses in the same period as the remeasurement losses and gains of the related foreign currency-denominated exposures.

We utilize non-exchange traded financial instruments, such as foreign exchange forward and option contracts, that we purchase exclusively from highly rated financial institutions. We record these contracts on our balance sheet at fair market value based upon market price quotations from the financial institutions. We do not enter into non-exchange traded contracts that require the use of fair value estimation techniques, but if we did, they could have a material impact on our financial results.

For purposes of analyzing potential risk, we use sensitivity analysis to quantify potential impacts that market rate changes may have on the fair values of our hedge portfolio related to firmly committed or forecasted transactions. The sensitivity analysis represents the hypothetical changes in value of the hedge position and does not reflect the related gain or loss on the forecasted underlying transaction. A 10% appreciation or depreciation in the value of the U.S. Dollar against foreign currencies from the prevailing market rates would have resulted in a corresponding increase or decrease of $6$26 million as of June 30, ~~2020~~2021 in the fair value of the hedge portfolio. The Company expects that any increase or decrease in the fair value of the portfolio would be substantially offset by increases or decreases in the underlying exposures being hedged.

The U.S. Dollar was ~~slightly stronger~~weaker in the second quarter of ~~2020~~2021 compared to the second quarter of ~~2019~~2020 based on comparable weighted averages for our functional currencies. ~~This had an unfavorable impact of 1% on second quarter 2020 revenue versus second quarter 2019 revenue.~~ This excludes the effects of our hedging activities and, therefore, does not reflect the actual impact of fluctuations in exchange rates on our operating income.

Interest Rate Risk

We are subject to interest rate risk principally in relation to variable-rate debt. Approximately ~~57%~~61% of our borrowings were on a fixed rate basis as of June 30, ~~2020.~~2021. The increase in pre-tax interest expense for the six months ended June 30, ~~2020~~2021 from a hypothetical 100 basis point increase in variable interest rates would be approximately $5 million.

5658

Table of Contents

Concentrations of Credit Risk

We are potentially subject to concentrations of credit risk on accounts receivable and financial instruments, such as hedging instruments and cash and cash equivalents. Credit risk includes the risk of nonperformance by counterparties. The maximum potential loss may exceed the amount recognized on the balance sheet. Exposure to credit risk is managed through credit approvals, credit limits, selecting major international financial institutions (as counterparties to hedging transactions) and monitoring procedures. Our business often involves large transactions with customers for which we do not require collateral. If one or more of those customers were to default in its obligations under applicable contractual arrangements, we could be exposed to potentially significant losses. Moreover, a prolonged downturn in the global economy could have an adverse impact on the ability of our customers to pay their obligations on a timely basis. We believe that the reserves for potential losses are adequate. As of June 30, ~~2020,~~2021, we did not have any significant concentration of credit risk related to financial instruments.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

NCR has established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the Exchange Act)) to provide reasonable assurance that information required to be disclosed by NCR in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by NCR in the reports that it files or submits under the Exchange Act is accumulated and communicated to NCR’s management, including its Chief Executive and Chief Financial Officers, as appropriate to allow timely decisions regarding required disclosure. Based on their evaluation as of the end of the second quarter of ~~2020,~~2021, conducted under their supervision and with the participation of management, the Company’s Chief Executive and Chief Financial Officers have concluded that NCR’s disclosure controls and procedures are effective to meet such objectives and that NCR’s disclosure controls and procedures adequately alert them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in NCR’s Exchange Act filings.

We completed the Cardtronics acquisition on June 21, 2021 (see Note 2, Business Combinations of the Notes to Condensed Consolidated Financial Statements). The scope of management’s assessment of the effectiveness of the Company’s disclosure controls and procedures did not include the internal controls over financial reporting of Cardtronics. This exclusion is in accordance with the SEC Staff’s general guidance that an assessment of a recently acquired business may be omitted from the scope of management’s assessment for one year following the acquisition. Cardtronics represented approximately 2% of our gross revenue for the three months ended June 30, 2021. Total assets of the acquired business as of June 30, 2021 represented approximately 28% of total consolidated assets, consisting principally of goodwill and other intangible assets.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the three months ended June 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

5759

Table of Contents

Part II. Other Information

Item 1. LEGAL PROCEEDINGS

The information required by this item is included in Note 9, Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements in this quarterly report and is incorporated herein by reference.

Item 1A. RISK FACTORS

The following information with respect to the acquisition of Cardtronics plc ("Cardtronics") supplements the disclosure set forth under Part I, Item 1AIA ("Risk Factors") of the ~~Company’s 2019~~Company's 2020 Annual Report on Form 10-K ~~(the 2019 Annual Report) includes a discussion~~("Form 10-K"). In addition to the items noted below, the risk associated with the Cardtronics business are similar to those NCR faces in many respects, and therefore the acquisition will in many cases increase our exposure to the risks noted in our Form 10-K. Additional risks and uncertainties not presently known to us or that are currently not believed to be significant to our business may also affect our actual results and could harm our business, financial conditions and results of operations. If any of the risks and uncertainties ~~related to~~described below or any additional risks and uncertainties actually occur, our ~~business. The information presented below updates,~~business, results of operations and ~~should~~financial condition could be ~~read in conjunction with, the risk factors~~materially and ~~information disclosed in the 2019 Annual Report. Except as presented below, there have been no material changes from the risk factors described in the 2019 Annual Report.~~adversely affected.

NCR may be unable to integrate the business of Cardtronics successfully or realize certain anticipated benefits, or may be required to divest certain businesses. The ~~recent novel coronavirus (COVID-19) outbreak~~legal acquisition of Cardtronics closed on June 21, 2021. Prior to the closing, the United Kingdom Competition and Markets Authority ("CMA") initiated a review of the transaction and issued an Initial Enforcement Order, effective on June 21, 2021, on NCR Corporation, NCR UK Group Limited and Cardtronics plc in relation to the acquisition (the "Initial Order"). The Initial Order requires the companies and each of their subsidiaries to operate separately and independently while the CMA reviews the transaction. Additionally, pursuant to the Initial Order, the companies and each of their subsidiaries are precluded from commencing any integration activities and as a result, certain anticipated benefits will be delayed until approval is received by the CMA, or potentially not be realized if the CMA does not approve the transaction. If the CMA does not approve the transaction as contemplated, certain remedies may be required, including but not limited to, the divestiture of certain NCR and/or Cardtronics businesses.

Notwithstanding the result of the pending review by the CMA, NCR may fail to realize the anticipated benefits and synergies, which could ~~materially~~ adversely affect ~~our~~the business, financial condition and operating results of ~~operations.~~the Company. The success of the acquisition will depend, in significant part, on the ability to successfully integrate the acquired business, grow the revenue of the combined company and realize the anticipated strategic benefits and synergies from the combination. This growth and anticipated benefits may not be realized fully or at all, or may take longer than expected to realize. Actual operating technological, strategic and revenue opportunities, if achieved at all, may be less significant than expected or may take longer to achieve than anticipated. If we are not able to achieve these objectives, NCR's business, financial condition and operating results may be adversely affected.

~~The impact~~Uncertainties associated with the acquisition may cause loss of ~~COVID-19 has grown throughout~~management personnel and other key employees of NCR and Cardtronics, which could adversely affect the ~~world,~~future business and operations following the acquisition. NCR and Cardtronics are dependent on the experience and industry knowledge of their officers and other key employees to execute their business plans. Success after the acquisition will depend in part upon NCR's and Cardtronics' ability to retain key management personnel and other key employees. Current and prospective employees may experience uncertainty about their roles following the acquisition which may have an adverse effect on the ability to retain personnel after the acquisition, including key management, who are critical to the future operations of the combined company. We could face disruptions in operations, loss of existing customers, loss of key information, expertise or know-how and unanticipated additional requirements and training costs. In addition, the loss of key personnel could diminish the anticipated benefits of the acquisition. No assurance can be given that we will be able to retain or attract key management personnel and other key employees of NCR and Cardtronics to the same extent that NCR and Cardtronics have previously been able to retain or attract their own employees.

Unknown or developing litigation or claims involving Cardtronics could result in the ~~United States. Governmental authorities~~payment of damages or other remedies, or cause reputational harm to NCR. Cardtronics may be exposed to unknown or developing claims, which could result in one or more litigation matters being asserted against the Company or its subsidiaries. Additionally, stockholder lawsuits are often brought against companies that have implemented numerous measures attempting to contain and mitigate the effects of the virus, including travel bans and restrictions, quarantines, shelter in place orders and shutdowns. While we have implemented programs to mitigate the impactentered into merger agreements. Defending against any of these ~~measures on~~claims, even where the claims are without merit, can result in substantial costs and divert management time and resources. If we are unsuccessful in our ~~results~~defense of ~~operations, there can~~any of these claims, we may be ~~no assurance that these programs will~~forced to pay damages or be ~~successful. There is significant uncertainty regarding such measures and potential future measures.~~

~~Our manufacturing and distribution facilities are located in areas that~~subject to other remedies, any of which could have been affected by the pandemic and have taken measures to try to contain it. Restrictions on our access to our manufacturing facilities or on our support operations or workforce, or similar limitations for our distributors and suppliers, could limit customer demand and/or our capacity to meet customer demand and have a materialan adverse effect on our business, financial condition and results of ~~operations.~~

~~The continued spread of COVID-19 could cause delay, or limit the ability of, customers to continue to operate and perform, including in making timely payments to us,~~operations, or cause a decrease in customer demand or a slowdown in customer expansion. Local governmental restrictions and public perceptions of the risks associated with the COVID-19 pandemic have caused, and may continuereputational harm to cause, consumers to avoid or limit gatherings in public places or social interactions, which could adversely impact the businesses of our customers. For example, customers in our small and medium business market have experienced significant near-term working capital and adverse cash flow impacts as a result of the COVID-19 pandemic. Similarly, customers in our department and specialty retail market have encountered significant adverse impacts as a result of temporary closures of physical stores in connection with COVID-19. Furthermore, negative economic conditions related to the COVID-19 pandemic may impact the willingness of our customers to make capital expenditures or pay accounts receivable, the ability of our customers to obtain financing for the purchase of our products, or the amount of disposable income available to consumers, which may adversely impact the businesses of our customers. Any of these effects could have a material adverse effect on our business, financial condition and results of operations.

In addition, the spread of COVID-19 has caused us to modify our business practices, such as employee work locations, and we may take further actions as may be required by government authorities or that we determine is in the best interests of our employees, customers, distributors, suppliers and contractors. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and our ability to perform critical functions could be harmed. These measures, and similar measures at our customers, have resulted in and may result in further installation delays.NCR.

COVID-19 or any other adverse public health development could inhibit our ability to execute our strategic initiatives including, without limitation, expanding our customer base by increasing our use of indirect sales channels and by developing, marketing and selling solutions aimed at the small and medium business market, improving the experience of our customers, investing in growing identified strategic growth platforms and shifting the mix of revenue in our business to software and services revenue as well as recurring revenue.

The degree to which COVID-19 affects our financial results and operations will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

5860

Table of Contents

ToWe are subject to certain additional significant risks and uncertainties from the ~~extent~~Cardtronics business and industry. As a result of the ~~COVID-19 pandemic materially~~acquisition, the following additional risks where identified related to the Cardtronics business and industry.

•The proliferation of payment options and increasingly frictionless methods of payment other than cash, including credit cards, debit cards, stored-value debit cards, contactless, and mobile payments options, could result in a reduced need for cash in the marketplace and a resulting decline in the usage of Cardtronics ATMs. The continued growth in electronic payment methods, such as mobile phone payments, contactless payments and card only self-service order and payment terminals could result in a reduced need for cash in the marketplace and ultimately, a decline in the usage of ATMs. New payment technology, such as Venmo, Zelle, Square Cash, Facebook Messenger Payments and virtual currencies such as Bitcoin, or other new payment method preferences by consumers could reduce the general population’s need or demand for cash and negatively impact Cardtronics ATM transaction volumes in the future.

•Cardtronics derives a significant portion of its revenues from ATM and financial services transaction fees which could be reduced by a decline in the usage of ATMs, the ability to charge cardholders fees to use ATMs and the level of transaction fees received, or a decline in the number of ATMs that are operated by Cardtronics, whether as a result of changes in consumer spending preferences, global economic conditions, or otherwise. Additionally, should banks or other ATM operators decrease or eliminate the fees they charge to users of their ATMs or otherwise offer free access to their networks, such action would make transactions at Cardtronics' ATMs comparatively more expensive to consumers and could adversely ~~affects~~impact transaction volumes and revenue.

•A substantial portion of the revenue from Cardtronics is placed with a small number of merchants. The expiration, termination or renegotiation of any of these contracts, or if one or more of these merchants were to cease doing business with Cardtronics or substantially reduce its dealings with Cardtronics, could cause Cardtronics' revenues to decline significantly and could adversely impact our business, financial condition and results of operations.

•The majority of the electronic debit networks over which transactions are conducted require sponsorship by a bank, and the loss of any of sponsors and the inability to find a replacement may cause disruptions to Cardtronics' operations. In each of the geographic markets, bank sponsorship is required in order to process transactions over certain networks. In all of the markets served by Cardtronics, ATMs are connected to financial transaction switching networks operated by organizations such as Visa and MasterCard. The rules governing these switching networks require any company sending transactions through these networks to be a bank or a technical service processor that is approved and monitored by a bank. As a result, the operation of the ATM network in all of the markets served by Cardtronics depends on the ability to secure these “sponsor” arrangements with financial institutions following CMA approval of the transaction.

•Interchange fees may be lowered in some cases at the discretion of the various EFT networks through which transactions are routed, or through potential regulatory changes, thus reducing Cardtronics' future revenues and operating profits. Future changes in interchange rates, some of which we have minimal or no control over, could have an adverse impact on our operations and cash flows.

•Non-compliance with established EFT network rules and regulations could expose Cardtronics to fines, penalties or other liabilities and could negatively impact results ~~it may~~of operations. Additionally, new EFT network rules and regulations could require significant amounts of capital to remain in compliance with such rules and regulations. Transactions are routed over various EFT networks to obtain authorization for cash disbursements and to provide account balances. These networks primarily include Star, Pulse, NYCE, Cirrus (MasterCard), and Plus (Visa) in the U.S., and LINK in the U.K., among other networks. EFT networks set the interchange fees that they charge to the financial institutions, as well as the amounts paid to Cardtronics. Additionally, EFT networks, including MasterCard and Visa, establish rules and regulations that ATM providers, including Cardtronics, must comply with in order for member cardholders to use those ATMs. Failure to comply with such rules and regulations could result in penalties and/or fines, which could negatively impact our financial results.

•There is a significant amount of vault cash within Cardtronics' ATMs, which is subject to potential loss due to theft, civil unrest or other events, including natural disasters. Third parties are also relied upon in the various regions to provide Cardtronics with the cash required to operate many of the ATMs. If these third parties were unable or unwilling to provide the necessary cash to operate the ATMs, there would be a need to identify alternative sources of cash to operate the ATMs or Cardtronics would not be able to operate this business.

•The election by Cardtronics merchant customers not to participate in the surcharge-free network offerings could impact the effectiveness of those offerings, which would negatively impact Cardtronics financial results. Financial

Table of Contents

institutions that are members of the Allpoint network pay a fee in exchange for allowing their cardholders to use selected Cardtronics-owned, managed and/or participating ATMs on a surcharge-free basis. The success of the Allpoint network is dependent upon the participation by Cardtronics merchant customers in that network. In the event a significant number of Cardtronics merchants elect not to participate in the Allpoint network, the benefits and effectiveness of the network would be diminished, thus potentially causing some of the participating financial institutions to not renew their agreements, terminate early, and/or trigger financial penalties, thereby having a negative impact on Cardtronics financial results.

•The cash-in-transit business exposes Cardtronics to additional risks beyond those experienced from the ownership and operation of ATMs. The cash-in-transit operation in the U.K. delivers cash to and collects residual cash from ATMs in that market. The cash-in-transit business exposes Cardtronics to significant risks, including the potential for cash-in-transit losses, employee theft, as well as claims for personal injury, wrongful death, worker’s compensation, punitive damages, and general liability

•Errors or omissions in the settlement of merchant funds or in the vault cash reconciliations could damage relationships with customers and vault cash providers, respectively, and expose Cardtronics to liability. Cardtronics are responsible for maintaining accurate bank account information for certain merchant customers, financial institution customers and vault cash providers and accurate settlements of funds into these accounts based on the underlying transaction activity.

Total indebtedness following completion of the acquisition will be substantially greater than NCR’s indebtedness prior to completion of the acquisition. This increased level of indebtedness could adversely affect NCR, including by decreasing NCR’s business flexibility and increasing its interest expense. NCR has incurred acquisition-related financing of approximately $2.6 billion, all of which was used to pay the acquisition’s consideration as well as pay fees and expenses related to the acquisition. Accordingly, total indebtedness following completion of the acquisition is substantially greater than NCR’s indebtedness prior to completion of the acquisition. NCR’s substantially increased indebtedness following completion of the acquisition could have the effect, among other things, of ~~significantly heightening many~~reducing NCR’s flexibility to respond to changing business and economic conditions. In addition, the amount of cash required to pay interest has increased due to NCR’s increased indebtedness levels, thus the demands on NCR’s cash resources will be greater than the amount of cash flows required to service the indebtedness of NCR prior to the acquisition. If NCR does not achieve the expected benefits and cost savings from the acquisition, or if the financial performance of the ~~other risks associated with our business~~combined company does not meet current expectations, then NCR’s ability to service its indebtedness, or to reduce leverage levels based on debt repayments or cash flow generation, may be adversely impacted.

In addition, NCR’s credit ratings impact the cost and ~~substantial indebtedness, including those~~availability of future borrowings and, accordingly, NCR’s cost of capital. NCR’s ratings reflect each rating organization’s opinion of NCR’s financial strength, operating performance and ability to meet its debt obligations. There can be no assurance that NCR will maintain a particular rating in the future or that NCR’s ratings will not be adversely affected by the factors described ~~in our most recent Annual Report on Form 10-K for the year ended December 31, 2019.~~above.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On October 19, 2016, the Board approved a share repurchase program, with no expiration from the date of authorization, for the systematic repurchase of the Company’s common stock to offset the dilutive effects of the Company’s employee stock purchase plan, equity awards and in-kind dividends on the Company’s Series A Convertible Preferred Stock. Availability under this program accrues quarterly based on the average value of dilutive issuances during the quarter.

On March 12, 2017, the Board approved a second share repurchase program, with no expiration from the date of authorization, that provides for the repurchase of up to $300 million of the Company’s common stock. On July 25, 2018, the Board authorized an incremental $200 million of share repurchases under this program.

As of June 30, ~~2020, $508~~2021, $153 million was available for repurchases under the March 2017 program, and approximately ~~$153~~$615 million was available for repurchases under the October 2016 dilution offset program. The timing and amount of repurchases under these programs depend upon market conditions and may be made from time to time in open market purchases, privately negotiated transactions, accelerated stock repurchase programs, issuer self-tender offers or otherwise. The repurchases will be made in compliance with applicable securities laws and may be discontinued at any time.

The Company occasionally purchases vested restricted stock or exercised stock options at the current market price to cover withholding taxes. For the three months ended June 30, ~~2020,~~2021, 0.1 million shares were purchased at an average price of ~~$17.78~~$45.40 per share.

Table of Contents

The Company’s ability to repurchase its common stock is restricted under the Company’s senior secured credit facility and terms of the indentures for the Company’s senior unsecured notes, which prohibit certain share repurchases, including during the occurrence of an event of default, and establish limits on the amount that the Company is permitted to allocate to share repurchases and other restricted payments. The limitations are calculated using formulas based generally on 50% of the Company’s consolidated net income for the period beginning in the third quarter of 2012 through the end of the most recently ended fiscal quarter, subject to certain other adjustments and deductions, with certain prescribed minimums. These formulas are described in greater detail in the Company’s senior secured credit facility and the indentures for the Company’s senior unsecured notes, each of which is filed with the SEC.

5963

Table of Contents

Item 6. EXHIBITS


~~4.1~~			Indenture relating to the Notes, dated April 13, 2020, among NCR Corporation, NCR International, Inc. and Wells Fargo Bank, National Association (Exhibit 4.1 to Current Report on Form 8-K of NCR Corporation dated April 13, 2020).

10.1			Form of 2020 Director Restricted Stock Unit Grant Statement under the NCR Corporation 2017 Stock Incentive Plan. *

~~10.2~~			First Amendment to the NCR Corporation 2017 Stock Incentive Plan (Appendix A to the NCR Corporation Proxy Statement on Schedule 14A for the NCR Corporation 2020 Annual Meetings of Stockholders). *

~~10.3~~			~~Second Amendment,~~Incremental Revolving Facility Agreement (TLA-2 Conversion), dated as of ~~April 7, 2020, by and~~June 24, 2021, among NCR Corporation, the Foreign Borrowers thereto, the Subsidiary Loan Parties thereto, the Incremental Revolving Lenders ~~party~~ thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, relating to the Credit Agreement, dated as of August 22, 2011, as amended and restated as of July 25, 2013, as further amended and restated as of March 31, 2016, and as further amended and restated as of August 28, 2019, ~~and~~ as further amended October 7, ~~2019.~~2019, as further amended April 7, 2020, as further amended January 22, 2021, as further amended February 4, 2021, and as further amended February 16, 2021 (Exhibit 10.1 to Current Report on Form 8-K of NCR Corporation dated June 21, 2021 (the “June 21, 2021 Form 8-K”)).

~~10.4~~10.2			Reaffirmation Agreement, dated as of June 21, 2021, among NCR Corporation, certain foreign and domestic subsidiaries of NCR Corporation party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (Exhibit 10.2 to the June 21, 2021 Form 8-K).

21			~~Employment Agreement, dated June 15, 2020, between Timothy Oliver and~~Subsidiaries of NCR Corporation. *


31.1			Certification pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934.

31.2			Certification pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934.

32			Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101			The following materials from NCR Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2020,~~2021, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) our condensed consolidated statements of operations for the three months ended June 30, ~~2020~~2021 and ~~2019;~~2020; (ii) our condensed consolidated statements of comprehensive income for the three months ended June 30, ~~2020~~2021 and ~~2019;~~2020; (iii) our condensed consolidated balance sheets as of June 30, ~~2020~~2021 and December 31, ~~2019;~~2020; (iv) our condensed consolidated statements of cash flows for the three months ended June 30, ~~2020~~2021 and ~~2019;~~2020; (v) our condensed consolidated statements of changes in stockholder's equity for the three months ended June 30, ~~2020~~2021 and ~~2019;~~2020; and (vi) the notes to our condensed consolidated financial statements.

104			Cover Page Interactive Data File, formatted in Inline XBRL and contained in Exhibit 101.

* Management contracts or compensatory plans/arrangements.

6064

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NCR CORPORATION

Date:

~~July 31, 2020~~August 6, 2021

By:

/s/ Timothy C. Oliver

Timothy C. Oliver
Executive Vice President and Chief Financial Officer

6165


	For the year ended December 31, 2018
In millions	As Reported		Adjustment		As Revised
Business acquisitions, net	$	(206)	$	46	$	(160)
Net cash provided by (used in) investing activities	$	(520)	$	46	$	(474)
Net increase (decrease) in client obligations	$	—	$	10	$	10
Net cash provided by (used in) financing activities	$	(58)	$	10	$	(48)
Increase (decrease) in cash, cash equivalents and restricted cash	$	(67)	$	56	$	(11)
Cash, cash equivalents and restricted cash at the end of the period	$	476	$	56	$	532


	For the three months ended March 31, 2019
In millions	As Reported in March 31, 2019 Form 10-Q		Adjustment		As Revised in March 31, 2020 Form 10-Q		Further Adjustment		As Revised
Increase (decrease) in other assets and liabilities	$	(10)	$	—	$	(10)	$	—	$	(10)
Net cash provided by (used in) operating activities	$	(16)	$	—	$	(16)	$	—	$	(16)


Net increase (decrease) in client obligations	$	—	$	17	$	17	$	—	$	17
Net cash provided by (used in) financing activities	$	36	$	17	$	53	$	—	$	53
Increase (decrease) in cash, cash equivalents and restricted cash	$	(53)	$	17	$	(36)	$	—	$	(36)
Cash, cash equivalents and restricted cash at the beginning of the period	$	476	$	46	$	522	$	10	$	532
Cash, cash equivalents and restricted cash at the end of the period	$	423	$	63	$	486	$	10	$	496


	For the year ended December 31, 2019
In millions	As Reported		Adjustment		As Revised
Increase (decrease) in other assets and liabilities	$	2	$	6	$	8
Net cash provided by (used in) operating activities	$	628	$	6	$	634
Net increase (decrease) in client obligations	$	(15)	$	15	$	—
Net cash provided by (used in) investing activities	$	(527)	$	15	$	(512)
Net increase (decrease) in client obligations	$	15	$	(30)	$	(15)
Net cash provided by (used in) financing activities	$	(31)	$	(30)	$	(61)
Increase (decrease) in Cash, cash equivalents and restricted cash	$	40	$	(9)	$	31
Cash, cash equivalents and restricted cash at the beginning of the period	$	476	$	56	$	532
Cash, cash equivalents and restricted cash at the end of the period	$	516	$	47	$	563


In millions	2020		% of Total	2019		% of Total	% Increase (Decrease)	% Increase (Decrease) Constant Currency ⁽¹⁾
Americas	$	886	60%	$	1,029	60%	(14)%	(13)%
Europe, Middle East and Africa (EMEA)	407		27%	452		27%	(10)%	(8)%
Asia Pacific (APJ)	191		13%	229		13%	(17)%	(15)%
Consolidated revenue	$	1,484	100%	$	1,710	100%	(13)%	(12)%



	Revenue % Growth (GAAP)	Favorable (unfavorable) FX impact	Revenue % Growth Constant Currency (non-GAAP)
Americas	(14)%	(1)%	(13)%
EMEA	(10)%	(2)%	(8)%
APJ	(17)%	(2)%	(15)%
Consolidated revenue	(13)%	(1)%	(12)%