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 ~~September~~June 30, ~~2022~~2023


or


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


			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) 445-1936

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

☐

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

As of ~~October 14, 2022,~~July 21, 2023, there were approximately ~~137.4~~140.9 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	3

	Condensed Consolidated Statements of Operations (Unaudited) Three and Six ~~Nine~~Months Ended ~~September~~ June ~~30,~~ 3 0 , 2023 and 2022 ~~and 2021~~	3

	Condensed Consolidated Statements of Comprehensive Income (Unaudited) Three and S ~~Nine~~ix Months Ended ~~September~~June ~~30,~~3 0 , 2023 and 2022 ~~and 2021~~	4

	Condensed Consolidated Balance Sheets (Unaudited) ~~September~~June 30 ~~30, 2022~~, 2023 and December 31, ~~2021~~2022	5

	Condensed Consolidated Statements of Cash Flows (Unaudited) ~~Nine~~Six Months Ended ~~September~~June 30 ~~30,~~, 2023 and 2022 ~~and 2021~~	6

	Condensed Consolidated Statements of Changes in Stockholder's Equity (Unaudited) Three and S ~~Nine~~ix Months Ended ~~September~~ June 30 ~~30,~~, 2023 and 2022 ~~and 2021~~	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3938

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	5756

Item 4.	Controls and Procedures	5857

PART II. Other Information

	Description	Page

Item 1.	Legal Proceedings	5958

Item 1A.	Risk Factors	5958

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6059

Item 6.	Exhibits	6261

	Signatures	6362

Table of Contents

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 September 30				Nine months ended September 30				In millions, except per share amounts	Three months ended June 30				Six months ended June 30
		2022		2021		2022		2021			2023		2022		2023		2022
Product revenue	Product revenue	$	590	$	520	$	1,720	$	1,553	Product revenue	$	576	$	614	$	1,097	$	1,130
Service revenue	Service revenue	1,382		1,381		4,115		3,569		Service revenue	1,410		1,383		2,780		2,733
Total revenue	Total revenue	1,972		1,901		5,835		5,122��		Total revenue	1,986		1,997		3,877		3,863
Cost of products	Cost of products	524		429		1,560		1,290		Cost of products	478		544		934		1,036
Cost of services	Cost of services	957		952		2,902		2,442		Cost of services	970		982		1,939		1,945
Selling, general and administrative expenses	Selling, general and administrative expenses	264		294		886		835		Selling, general and administrative expenses	333		309		625		622
Research and development expenses	Research and development expenses	40		69		164		204		Research and development expenses	57		59		121		124

Total operating expenses	Total operating expenses	1,785		1,744		5,512		4,771		Total operating expenses	1,838		1,894		3,619		3,727
Income (loss) from operations	Income (loss) from operations	187		157		323		351		Income (loss) from operations	148		103		258		136
Loss on extinguishment of debt		—		(42)		—		(42)

Interest expense	Interest expense	(74)		(68)		(204)		(174)		Interest expense	(91)		(67)		(174)		(130)
Other income (expense), net	Other income (expense), net	(1)		(5)		9		(23)		Other income (expense), net	(8)		1		(11)		10
Income (loss) from continuing operations before income taxes	Income (loss) from continuing operations before income taxes	112		42		128		112		Income (loss) from continuing operations before income taxes	49		37		73		16
Income tax expense (benefit)	Income tax expense (benefit)	43		29		56		77		Income tax expense (benefit)	30		—		44		13
Income (loss) from continuing operations	Income (loss) from continuing operations	69		13		72		35		Income (loss) from continuing operations	19		37		29		3
Income (loss) from discontinued operations, net of tax	Income (loss) from discontinued operations, net of tax	—		—		5		—		Income (loss) from discontinued operations, net of tax	(1)		6		(1)		5
Net income (loss)	Net income (loss)	69		13		77		35		Net income (loss)	18		43		28		8
Net income (loss) attributable to noncontrolling interests	Net income (loss) attributable to noncontrolling interests	—		1		1		2		Net income (loss) attributable to noncontrolling interests	(1)		2		—		1
Net income (loss) attributable to NCR	Net income (loss) attributable to NCR	$	69	$	12	$	76	$	33	Net income (loss) attributable to NCR	$	19	$	41	$	28	$	7
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	$	69	$	12	$	71	$	33	Income (loss) from continuing operations	$	20	$	35	$	29	$	2
Series A convertible preferred stock dividends	Series A convertible preferred stock dividends	(4)		(4)		(12)		(12)		Series A convertible preferred stock dividends	(4)		(4)		(8)		(8)
Income (loss) from continuing operations attributable to NCR common stockholders	Income (loss) from continuing operations attributable to NCR common stockholders	65		8		59		21		Income (loss) from continuing operations attributable to NCR common stockholders	16		31		21		(6)
Income (loss) from discontinued operations, net of tax	Income (loss) from discontinued operations, net of tax	—		—		5		—		Income (loss) from discontinued operations, net of tax	(1)		6		(1)		5
Net income (loss) attributable to NCR common stockholders	Net income (loss) attributable to NCR common stockholders	$	65	$	8	$	64	$	21	Net income (loss) attributable to NCR common stockholders	$	15	$	37	$	20	$	(1)
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	$	0.47	$	0.06	$	0.43	$	0.16	Basic	$	0.11	$	0.23	$	0.15	$	(0.04)
Diluted	Diluted	$	0.46	$	0.06	$	0.42	$	0.15	Diluted	$	0.11	$	0.22	$	0.15	$	(0.04)
Net income (loss) per common share	Net income (loss) per common share									Net income (loss) per common share
Basic	Basic	$	0.47	$	0.06	$	0.47	$	0.16	Basic	$	0.11	$	0.27	$	0.14	$	(0.01)
Diluted	Diluted	$	0.46	$	0.06	$	0.45	$	0.15	Diluted	$	0.11	$	0.26	$	0.14	$	(0.01)
Weighted average common shares outstanding	Weighted average common shares outstanding									Weighted average common shares outstanding
Basic	Basic	137.0		131.5		136.4		130.8		Basic	140.4		136.6		140.0		136.2
Diluted	Diluted	140.3		137.8		140.9		137.1		Diluted	141.9		140.8		142.0		136.2

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 September 30				Nine months ended September 30				In millions	Three months ended June 30				Six months ended June 30
		2022		2021		2022		2021			2023		2022		2023		2022
Net income (loss)	Net income (loss)	$	69	$	13	$	77	$	35	Net income (loss)	$	18	$	43	$	28	$	8
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Currency translation adjustments	Currency translation adjustments									Currency translation adjustments
Currency translation gains (loss)	Currency translation gains (loss)	(75)		(29)		(154)		(28)		Currency translation gains (loss)	4		(53)		8		(79)
Derivatives	Derivatives									Derivatives
Unrealized gains (loss) on derivatives	Unrealized gains (loss) on derivatives	77		—		155		—		Unrealized gains (loss) on derivatives	35		21		24		78
Loss (gains) on derivatives recognized during the period	Loss (gains) on derivatives recognized during the period	(9)		—		(3)		—		Loss (gains) on derivatives recognized during the period	(24)		5		(43)		6
Less income tax	Less income tax	(16)		—		(35)		—		Less income tax	(5)		(6)		2		(19)
Employee benefit plans	Employee benefit plans									Employee benefit plans
Amortization of prior service cost (benefit)	Amortization of prior service cost (benefit)	—		—		(1)		(1)		Amortization of prior service cost (benefit)	(1)		—		(1)		(1)

Amortization of actuarial loss (gains)										Amortization of actuarial loss (gains)	(1)		—		(2)		—
Less income tax	Less income tax	—		—		—		—		Less income tax	1		—		1		—
Other comprehensive income (loss)	Other comprehensive income (loss)	(23)		(29)		(38)		(29)		Other comprehensive income (loss)	9		(33)		(11)		(15)
Total comprehensive income (loss)	Total comprehensive income (loss)	46		(16)		39		6		Total comprehensive income (loss)	27		10		17		(7)
Less comprehensive income (loss) attributable to noncontrolling interests:	Less comprehensive income (loss) attributable to noncontrolling interests:									Less comprehensive income (loss) attributable to noncontrolling interests:
Net income (loss)	Net income (loss)	—		1		1		2		Net income (loss)	(1)		2		—		1
Currency translation losses		(2)		—		(3)		—
Currency translation gains (losses)										Currency translation gains (losses)	1		(1)		—		(1)
Amounts attributable to noncontrolling interests	Amounts attributable to noncontrolling interests	(2)		1		(2)		2		Amounts attributable to noncontrolling interests	—		1		—		—
Comprehensive income (loss) attributable to NCR	Comprehensive income (loss) attributable to NCR	$	48	$	(17)	$	41	$	4	Comprehensive income (loss) attributable to NCR	$	27	$	9	$	17	$	(7)

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	September 30, 2022		December 31, 2021		In millions, except per share amounts	June 30, 2023		December 31, 2022
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	434	$	447	Cash and cash equivalents	$	547	$	505
Accounts receivable, net of allowances of $29 and $24 as of September 30, 2022 and December 31, 2021, respectively		1,116		959
Accounts receivable, net of allowances of $42 and $34 as of June 30, 2023 and December 31, 2022, respectively						Accounts receivable, net of allowances of $42 and $34 as of June 30, 2023 and December 31, 2022, respectively	986		1,083
Inventories	Inventories	827		754		Inventories	709		772
Restricted cash	Restricted cash	302		295		Restricted cash	254		228
Other current assets		512		421
Prepaid and other current assets						Prepaid and other current assets	458		494
Total current assets	Total current assets	3,191		2,876		Total current assets	2,954		3,082
Property, plant and equipment, net	Property, plant and equipment, net	620		703		Property, plant and equipment, net	677		663
Goodwill	Goodwill	4,572		4,519		Goodwill	4,544		4,540
Intangibles, net	Intangibles, net	1,184		1,316		Intangibles, net	1,064		1,145
Operating lease assets	Operating lease assets	377		419		Operating lease assets	353		371
Prepaid pension cost	Prepaid pension cost	263		300		Prepaid pension cost	222		212
Deferred income taxes	Deferred income taxes	678		732		Deferred income taxes	589		598
Other assets	Other assets	898		776		Other assets	876		896
Total assets	Total assets	$	11,783	$	11,641	Total assets	$	11,279	$	11,507
Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities	Current liabilities					Current liabilities
Short-term borrowings	Short-term borrowings	$	106	$	57	Short-term borrowings	$	105	$	104
Accounts payable	Accounts payable	876		826		Accounts payable	832		942
Payroll and benefits liabilities	Payroll and benefits liabilities	319		389		Payroll and benefits liabilities	208		207
Contract liabilities	Contract liabilities	507		516		Contract liabilities	560		537
Settlement liabilities	Settlement liabilities	271		263		Settlement liabilities	263		250
Other current liabilities	Other current liabilities	691		757		Other current liabilities	689		673
Total current liabilities	Total current liabilities	2,770		2,808		Total current liabilities	2,657		2,713
Long-term debt	Long-term debt	5,611		5,505		Long-term debt	5,316		5,561
Pension and indemnity plan liabilities	Pension and indemnity plan liabilities	723		789		Pension and indemnity plan liabilities	617		614
Postretirement and postemployment benefits liabilities	Postretirement and postemployment benefits liabilities	121		119		Postretirement and postemployment benefits liabilities	92		91
Income tax accruals	Income tax accruals	108		116		Income tax accruals	98		97
Operating lease liabilities	Operating lease liabilities	358		388		Operating lease liabilities	336		353
Other liabilities	Other liabilities	371		383		Other liabilities	334		324
Total liabilities	Total liabilities	10,062		10,108		Total liabilities	9,450		9,753
Commitments and Contingencies (Note 10)	Commitments and Contingencies (Note 10)					Commitments and Contingencies (Note 10)

Series A convertible preferred stock: par value $0.01 per share, 3.0 shares authorized, 0.3 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively; redemption amount and liquidation preference of $276 as of September 30, 2022 and December 31, 2021, respectively		275		274
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, 2023 and December 31, 2022, respectively; redemption amount and liquidation preference of $276 as of June 30, 2023 and December 31, 2022, 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, 2023 and December 31, 2022, respectively; redemption amount and liquidation preference of $276 as of June 30, 2023 and December 31, 2022, respectively	275		275
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 September 30, 2022 and December 31, 2021, respectively		—		—
Common stock: par value $0.01 per share, 500.0 shares authorized, 137.0 and 132.2 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		1		1
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively						Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	—		—
Common stock: par value $0.01 per share, 500.0 shares authorized, 140.4 and 138.0 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively						Common stock: par value $0.01 per share, 500.0 shares authorized, 140.4 and 138.0 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	1		1
Paid-in capital	Paid-in capital	675		515		Paid-in capital	770		704
Retained earnings	Retained earnings	1,095		1,031		Retained earnings	1,095		1,075
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(326)		(291)		Accumulated other comprehensive loss	(311)		(300)
Total NCR stockholders’ equity	Total NCR stockholders’ equity	1,445		1,256		Total NCR stockholders’ equity	1,555		1,480
Noncontrolling interests in subsidiaries	Noncontrolling interests in subsidiaries	1		3		Noncontrolling interests in subsidiaries	(1)		(1)
Total stockholders’ equity	Total stockholders’ equity	1,446		1,259		Total stockholders’ equity	1,554		1,479
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	11,783	$	11,641	Total liabilities and stockholders’ equity	$	11,279	$	11,507

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

NCR Corporation

Condensed Consolidated Statements of Cash Flows (Unaudited)


In millions	In millions	Nine months ended September 30				In millions	Six months ended June 30
		2022		2021			2023		2022
Operating activities	Operating activities					Operating activities
Net income (loss)	Net income (loss)	$	77	$	35	Net income (loss)	$	28	$	8
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	Adjustments to reconcile net income (loss) to net cash provided by operating activities:					Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Loss (income) from discontinued operations	Loss (income) from discontinued operations	(5)		—		Loss (income) from discontinued operations	1		(5)
Loss on debt extinguishment		—		42

Depreciation and amortization	Depreciation and amortization	451		364		Depreciation and amortization	306		299
Stock-based compensation expense	Stock-based compensation expense	97		119		Stock-based compensation expense	68		69
Deferred income taxes	Deferred income taxes	24		30		Deferred income taxes	16		6

Impairment of other assets						Impairment of other assets	1		—
Loss (gain) on disposal of property, plant and equipment and other assets	Loss (gain) on disposal of property, plant and equipment and other assets	4		—		Loss (gain) on disposal of property, plant and equipment and other assets	1		2
(Gain) loss on divestiture						(Gain) loss on divestiture	(8)		—
Changes in assets and liabilities, net of effects of business acquired:	Changes in assets and liabilities, net of effects of business acquired:					Changes in assets and liabilities, net of effects of business acquired:
Receivables	Receivables	(274)		240		Receivables	91		(209)
Inventories	Inventories	(220)		(165)		Inventories	21		(202)
Current payables and accrued expenses	Current payables and accrued expenses	113		210		Current payables and accrued expenses	(104)		58
Contract liabilities	Contract liabilities	(24)		5		Contract liabilities	25		34
Employee benefit plans	Employee benefit plans	(3)		(30)		Employee benefit plans	(24)		6
Other assets and liabilities	Other assets and liabilities	5		(43)		Other assets and liabilities	122		52
Net cash provided by operating activities	Net cash provided by operating activities	$	245	$	807	Net cash provided by operating activities	$	544	$	118
Investing activities	Investing activities					Investing activities
Expenditures for property, plant and equipment	Expenditures for property, plant and equipment	$	(72)	$	(68)	Expenditures for property, plant and equipment	$	(70)	$	(32)
Proceeds from sale of property, plant and equipment and other assets	Proceeds from sale of property, plant and equipment and other assets	8		1		Proceeds from sale of property, plant and equipment and other assets	8		3
Additions to capitalized software	Additions to capitalized software	(217)		(174)		Additions to capitalized software	(134)		(142)
Business acquisitions, net of cash acquired	Business acquisitions, net of cash acquired	(12)		(2,466)		Business acquisitions, net of cash acquired	(6)		(1)
Purchases of short-term investments		—		(13)
Proceeds from sales of short-term investments		—		14
Proceeds from divestiture, net						Proceeds from divestiture, net	8		—

Other investing activities, net	Other investing activities, net	(5)		(6)		Other investing activities, net	—		(5)
Net cash used in investing activities	Net cash used in investing activities	$	(298)	$	(2,712)	Net cash used in investing activities	$	(194)	$	(177)
Financing activities	Financing activities					Financing activities

Short term borrowings, net						Short term borrowings, net	$	—	$	2
Payments on term credit facilities	Payments on term credit facilities	$	(31)	$	(106)	Payments on term credit facilities	(50)		(4)
Payments on revolving credit facilities	Payments on revolving credit facilities	(846)		(1,431)		Payments on revolving credit facilities	(927)		(599)
Payments of senior unsecured notes		—		(400)
Borrowings on term credit facilities		—		1,505

Borrowings on revolving credit facilities	Borrowings on revolving credit facilities	1,021		1,541		Borrowings on revolving credit facilities	732		637
Proceeds from issuance of senior unsecured notes		—		1,200
Debt issuance costs and bridge commitment fees		—		(52)
Call premium paid on debt extinguishment		—		(37)

Payments on other financing arrangements						Payments on other financing arrangements	(2)		—
Cash dividend paid for Series A preferred shares dividends	Cash dividend paid for Series A preferred shares dividends	(11)		(11)		Cash dividend paid for Series A preferred shares dividends	(8)		(8)

Proceeds from employee stock plans	Proceeds from employee stock plans	19		33		Proceeds from employee stock plans	14		14
Tax withholding payments on behalf of employees	Tax withholding payments on behalf of employees	(38)		(28)		Tax withholding payments on behalf of employees	(16)		(36)
Net change in client funds obligations	Net change in client funds obligations	(6)		(3)		Net change in client funds obligations	—		(3)
Principal payments for finance lease obligations	Principal payments for finance lease obligations	(12)		(13)		Principal payments for finance lease obligations	(9)		(8)
Other financing activities	Other financing activities	(3)		(2)		Other financing activities	—		(2)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	$	93	$	2,196	Net cash provided by (used in) financing activities	$	(266)	$	(7)
Cash flows from discontinued operations	Cash flows from discontinued operations					Cash flows from discontinued operations
Net cash provided by (used in) operating activities of discontinued operations	Net cash provided by (used in) operating activities of discontinued operations	$	(1)	$	(50)	Net cash provided by (used in) operating activities of discontinued operations	$	(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	(43)		(12)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	(8)		(19)
Increase (decrease) in cash, cash equivalents, and restricted cash	Increase (decrease) in cash, cash equivalents, and restricted cash	(4)		229		Increase (decrease) in cash, cash equivalents, and restricted cash	70		(85)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	749		406		Cash, cash equivalents and restricted cash at beginning of period	740		749
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	745	$	635	Cash, cash equivalents and restricted cash at end of period	$	810	$	664

Supplemental disclosures of noncash investing and financing activities During the ~~nine~~six months ended ~~September~~June 30, 2022, we issued shares of the Company's common stock and assumed unvested outstanding option awards in the acquisition of Moon Inc., dba LibertyX, for total non-cash consideration of $68 million. In connection with the acquisition, we also assumed debt of $2 million. Refer to Note 2, “Business Combinations”, for additional information on the LibertyX acquisition.

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, 2021		132	$	1	$	515	$	1,031			$	(291)			$	3			$	1,259
Comprehensive income:
Net income (loss)		—	—		—		(34)		—				(1)				(35)
Other comprehensive income (loss)		—	—		—		—		18				—				18
Total comprehensive income (loss)		—	—		—		(34)		18				(1)				(17)
Employee stock purchase and stock compensation plans		3	—		19		—		—				—				19
Stock issued in acquisition of LibertyX		1	—		68		—		—				—				68
Series A convertible preferred stock dividends		—	—		—		(4)		—				—				(4)
March 31, 2022		136	$	1	$	602	$	993	$	(273)			$	2			$	1,325
December 31, 2022																			December 31, 2022			138		$	1		$	704		$	1,075	$	(300)		$	(1)	$	1,479
Comprehensive income:	Comprehensive income:																		Comprehensive income:
Net income (loss)	Net income (loss)	—	—		—		41		—				2				43		Net income (loss)			—		—			—			9		—			1		10
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—		—		(32)				(1)				(33)		Other comprehensive income (loss)			—		—			—			—		(19)			(1)		(20)
Total comprehensive income (loss)	Total comprehensive income (loss)	—	—		—		41		(32)				1				10		Total comprehensive income (loss)			—		—			—			9		(19)			—		(10)
Employee stock purchase and stock compensation plans	Employee stock purchase and stock compensation plans	1	—		42		—		—				—				42		Employee stock purchase and stock compensation plans			2		—			23			—		—			—		23

Series A convertible preferred stock dividends	Series A convertible preferred stock dividends	—	—		—		(4)		—				—				(4)		Series A convertible preferred stock dividends			—		—			—			(4)		—			—		(4)
June 30, 2022		137	$	1	$	644	$	1,030	$	(305)			$	3			$	1,373
March 31, 2023																			March 31, 2023			140		$	1		$	727		$	1,080	$	(319)		$	(1)	$	1,488
Comprehensive income:	Comprehensive income:																		Comprehensive income:
Net income (loss)	Net income (loss)	—	—		—		69		—				—				69		Net income (loss)			—		—			—			19		—			(1)		18
Other comprehensive income (loss)	Other comprehensive income (loss)	—	—		—		—		(21)				(2)				(23)		Other comprehensive income (loss)			—		—			—			—		8			1		9
Total comprehensive income (loss)	Total comprehensive income (loss)	—	—		—		69		(21)				(2)				46		Total comprehensive income (loss)			—		—			—			19		8			—		27
Employee stock purchase and stock compensation plans	Employee stock purchase and stock compensation plans	—	—		31		—		—				—				31		Employee stock purchase and stock compensation plans			—		—			43			—		—			—		43

Series A convertible preferred stock dividends	Series A convertible preferred stock dividends	—	—		—		(4)		—				—				(4)		Series A convertible preferred stock dividends			—		—			—			(4)		—			—		(4)
September 30, 2022		137	$	1	$	675	$	1,095	$	(326)			$	1			$	1,446
June 30, 2023																			June 30, 2023			140		$	1		$	770		$	1,095	$	(311)		$	(1)	$	1,554

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
Common Stock Accumulated Other Comprehensive (Loss) Income Non-Redeemable Noncontrolling Interests in Subsidiaries
In millions Shares Amount Paid-in Capital Retained Earnings Total
December 31, 2020 129 $ 1 $ 368 $ 950 $ (271) $ 3 $ 1,051
Comprehensive income:
Net income (loss) — — — 30 — 1 31
Other comprehensive income (loss) — — — — (8) — (8)
Total comprehensive income (loss) — — — 30 (8) 1 23
Employee stock purchase and stock compensation plans 2 — 30 — — — 30
Series A convertible preferred stock dividends — — — (4) — — (4)
March 31, 2021 131 $ 1 $ 398 $ 976 $ (279) $ 4 $ 1,100
Comprehensive income:
Net income (loss) — — — (9) — — (9)
Other comprehensive income (loss) — — — — 8 — 8
Total comprehensive income (loss) — — — (9) 8 — (1)
Employee stock purchase and stock compensation plans — — 44 — — — 44
Fair value of converted Cardtronics awards attributable to pre-combination services — — 19 — — — 19
Series A convertible preferred stock dividends — — — (4) — — (4)
June 30, 2021 131 $ 1 $ 461 $ 963 $ (271) $ 4 $ 1,158
Comprehensive income:
Net income — — — 12 — 1 13
Other comprehensive income (loss) — — — — (29) — (29)
Total comprehensive income (loss) — — — 12 (29) 1 (16)
Employee stock purchase and stock compensation plans 1 — 50 — — — 50
Series A convertible preferred stock dividends — — — (4) — — (4)
September 30, 2021 132 $ 1 $ 511 $ 971 $ (300) $ 5 $ 1,188


	NCR Stockholders
	Common Stock							Accumulated Other Comprehensive (Loss) Income		Non-Redeemable Noncontrolling Interests in Subsidiaries
In millions	Shares	Amount		Paid-in Capital		Retained Earnings						Total
December 31, 2021	132	$	1	$	515	$	1,031	$	(291)	$	3	$	1,259
Comprehensive income:
Net income (loss)	—	—		—		(34)		—		(1)		(35)
Other comprehensive income (loss)	—	—		—		—		18		—		18
Total comprehensive income (loss)	—	—		—		(34)		18		(1)		(17)
Employee stock purchase and stock compensation plans	3	—		19		—		—		—		19
Stock issued in acquisition of LibertyX	1	—		68		—		—		—		68
Series A convertible preferred stock dividends	—	—		—		(4)		—		—		(4)
March 31, 2022	136	$	1	$	602	$	993	$	(273)	$	2	$	1,325
Comprehensive income:
Net income (loss)	—	—		—		41		—		2		43
Other comprehensive income (loss)	—	—		—		—		(32)		(1)		(33)
Total comprehensive income (loss)	—	—		—		41		(32)		1		10
Employee stock purchase and stock compensation plans	1	—		42		—		—		—		42
Series A convertible preferred stock dividends	—	—		—		(4)		—		—		(4)
June 30, 2022	137	$	1	$	644	$	1,030	$	(305)	$	3	$	1,373

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. Business Combinations
Note 3. Goodwill and Purchased Intangible Assets
Note 4. Segment Information and Concentrations
Note 5. Debt Obligations
Note 6. Trade Receivables Facility
Note 7. Income Taxes
Note 8. Stock Compensation Plans
Note 9. Employee Benefit Plans
Note 10. Commitments and Contingencies

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. Supplemental Financial Information

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 ~~2021~~2022 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, ~~2021.~~2022.

~~Change in reportable segments~~ Effective January 1, 2022, the Company realigned its reportable segments to correspond with changes to its operating model, management structure and organizational responsibilities. The reportable segments effective January 1, 2022 include: Retail, Hospitality, Digital Banking, Payments & Network, and Self-Service Banking. Additionally, effective January 1, 2022, the Company manages Corporate & Other, which includes income and expenses that are not specifically attributable to an individual reportable segment and thus will be reflected only in consolidated results, as well as our Telecommunications & Technology business, an immaterial operating segment. We have reclassified prior period segment disclosures to conform to current period presentation. Refer to Note 4, “Segment Information and Concentrations”, for additional information on our reportable segments.

~~Conflict in Eastern Europe~~ The war in Eastern Europe and related sanctions imposed on Russia and related actors by the United States and other jurisdictions required us to commence the orderly wind down of our operations in Russia beginning in the first quarter of 2022. As of September 30, 2022, we have ceased operations in Russia and are in the process of dissolving our only subsidiary in Russia. As a result of these actions, our results for the nine months ended September 30, 2022 reflect the impact of the impairment and write down of the assets and liabilities of the entity, severance charges, the assessment of collectability on revenue recognition, and the residual operations of the entity. We recognized a pre-tax net loss of $22 million for the nine months ended September 30, 2022 related to these actions, recognized primarily in Cost of products, Cost of

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~~NCR Corporation~~

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

services and Selling, general and administrative expenses on the Condensed Consolidated Statement of Operations. No loss was recognized in the three months ended September 30, 2022 related to these actions.

~~Announcement of~~ Planned Separation On September 15, 2022, NCR announced a plan to separate into two independent, publicly traded companies – one focused on digital commerce, the other on ATMs. The separation is intended to be structured in a tax-free manner. The separation transaction will follow the satisfaction of customary conditions, including effectiveness of appropriate filings with the U.S. Securities and Exchange ~~Commission, and the completion of audited financial statements.~~Commission. The current target is to complete the separation byin the ~~end~~fourth quarter of 2023.

In connection with the planned separation into two independent, publicly traded companies, the restricted stock units and stock options of certain members of executive management, including our named executive officers, will be converted into restricted stock units and stock options of NCR (RemainCo) and NCR ATMCo (SpinCo) on the same basis as is applicable to our stockholders.

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.

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NCR Corporation

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

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 variants of the coronavirus (COVID-19) pandemic, macroeconomic pressures and geopolitical challenges. The ultimate impact on our overall financial condition and operating results will depend on the ~~currently unknowable~~ duration and severity of the pandemic, supply chain challenges and cost escalations including materials, interest, labor and freight, and any additional governmental and public actions taken in response. As a result, our accounting estimates and assumptions may change over time as a consequence of the effects of ~~COVID-19 and other~~these external factors. 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. Other than the items discussed within the Notes to Condensed Consolidated Financial Statements, no matters were identified that required adjustment to the Condensed Consolidated Financial Statements or additional disclosure.

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’~~stockholders’ equity.

Cyber ransomware incidentOn April 13, 2023, NCR determined that a single data center outage impacting certain of its commerce customers was caused by a cyber ransomware incident. Upon such determination, NCR immediately started contacting customers, enacted its cybersecurity protocol and engaged outside experts to contain the incident and begin the recovery process. We concluded that this incident is limited to specific functionality in Aloha cloud-based services and Counterpoint. Our investigation also indicated no financial reporting systems were impacted.

We have incurred, and may continue to incur, certain expenses related to this attack, including expenses to respond to, remediate and investigate this matter. During the three months ended June 30, 2023, we recognized $11 million related to this matter in Cost of services and Selling, general and administrative expenses. While the Company’s response to this incident is ongoing, at this time we do not believe such impact of the incident will ultimately have a material adverse effect on our business, results of operations or financial condition; however, we remain subject to risks and uncertainties as a result of the incident. We continue to assess the security event and cannot definitively determine, at this time, the full extent of the impact from such event on our business, results of operations or financial condition or whether such impact will ultimately have a material adverse effect.

Other In the first quarter of 2023, the Company recorded a $10 million out-of-period adjustment to increase operating expenses and an employee-related liability in order to correct for an understatement of such same balances during the fourth quarter of 2022. The Company evaluated the impact of the error and out-of-period adjustment and concluded it was not material to any previously issued interim or annual consolidated financial statements and the adjustment is not expected to be material to the year ending December 31, 2023.

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


In millions	In millions		September 30				In millions		June 30
		Balance Sheet Location	2022		2021			Balance Sheet Location	2023		2022
Cash and cash equivalents	Cash and cash equivalents	Cash and cash equivalents	$	434	$	383	Cash and cash equivalents	Cash and cash equivalents	$	547	$	398
Short term restricted cash	Short term restricted cash	Restricted cash	7		—		Short term restricted cash	Restricted cash	6		—
Long term restricted cash	Long term restricted cash	Other assets	9		6		Long term restricted cash	Other assets	9		11
Funds held for client	Funds held for client	Restricted cash	42		41		Funds held for client	Restricted cash	—		45
Cash included in settlement processing assets	Cash included in settlement processing assets	Restricted cash	253		205		Cash included in settlement processing assets	Restricted cash	248		210
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash		$	745	$	635	Total cash, cash equivalents and restricted cash		$	810	$	664

~~Contract Assets and Liabilities~~
~~The following table presents the net contract liability balances as of September 30, 2022 and December 31, 2021.~~

In millions Location in the Condensed Consolidated Balance Sheet September 30, 2022 December 31, 2021
Current portion of contract liabilities Contract liabilities $ 507 $ 516
Non-current portion of contract liabilities Other liabilities $ 56 $ 69

During the nine months ended September 30, 2022, the Company recognized $365 million in revenue that was included in contract liabilities as of December 31, 2021. During the nine months ended September 30, 2021 the Company recognized ~~$406 million~~ ~~in revenue that was included in contract liabilities as of December 31, 2020.~~

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NCR Corporation

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

Contract Assets and Liabilities The following table presents the net contract liability balances as of June 30, 2023 and December 31, 2022.


In millions	Location in the Condensed Consolidated Balance Sheet	June 30, 2023		December 31, 2022
Current portion of contract liabilities	Contract liabilities	$	560	$	537
Non-current portion of contract liabilities	Other liabilities	$	51	$	49

During the six months ended June 30, 2023, the Company recognized $265 million in revenue that was included in contract liabilities as of December 31, 2022. During the six months ended June 30, 2022, the Company recognized$309 millionin revenue that was included in contract liabilities as of December 31, 2021.

Remaining Performance ObligationsRemaining performance obligations represent the transaction price of orders for which products have not been delivered or services have not been performed. As of ~~September~~June 30, ~~2022,~~2023, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately ~~$3.7~~$3.9 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 three elections that affect the value of remaining performance obligations described above. We do not disclose remaining performance obligations for contracts where variable consideration is directly allocated based on usage or when the original expected duration is one year or less. Additionally, we do not disclose remaining performance obligations for contracts where we recognize revenue from the satisfaction of the performance obligation in accordance with the 'right to invoice' practical expedient.

Capitalized Software Capitalized development costs for internal-use software and software that will be sold, leased or otherwise marketed were $573 million and $554 million as of June 30, 2023 and December 31, 2022, respectively, presented within Other assets on the Condensed Consolidated Balance Sheets.

Recent Accounting Pronouncements

Adoption of New Accounting Pronouncements

~~In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06,~~ Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, with new guidance for convertible preferred stock, which eliminates considerations related to the beneficial conversion feature model. The standard also requires entities to use an average stock price when calculating the denominator for diluted earnings per share for stock units where the settlement of the number of shares is based on the stock price. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early adoption was 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 did not have a material effect on the Company's net income, cash flows, earnings per share or financial condition.

~~In May 2021, the FASB issued ASU 2021-04,~~ Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options, with new guidance for freestanding equity-classified written call options. The new guidance requires issuers to account for 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 not have a material effect on the Company's net income, cash flows, earnings per share or financial condition.

In March 2022, the SEC staff released Staff Accounting Bulletin No. 121 (“SAB 121”), which expressed the views of the SEC staff regarding the accounting for obligations to safeguard crypto-assets an entity holds for users of its crypto platform. This guidance requires entities that hold crypto-assets on behalf of platform users to recognize a liability to reflect the entity’s obligation to safeguard the crypto-assets held for its platform users. The liability should be measured at initial recognition and each reporting date at the fair value of the crypto-assets that the entity is responsible for holding for its platform users. The entity should also recognize an asset at the same time that it recognizes the safeguarding liability, measured at initial recognition and each reporting date at the fair value of the crypto-assets held for its platform users. SAB 121 also includes guidance on disclosures related to the Company’s safeguarding of crypto-assets. This guidance is effective from the first interim or annual period after June 15, 2022 and should be applied retrospectively to the beginning of the fiscal year to which the interim or annual period relates. The Company adopted this guidance in the interim period ending June 30, 2022; however, as the Company is not currently offering digital asset safeguarding services to its customers, the adoption of this guidance did not have an impact on the Company’s net income, cash flows, earnings per share or financial condition.

Although there are several other new accounting pronouncements issued by the FASB and adopted by or effective for the Company, the Company does not believe any of these accounting pronouncements had a material impact on its consolidated financial statements.

~~Accounting Pronouncements Issued But Not Yet Adopted~~

In October 2021, the FASB issued accounting standards update ~~(“ASU”~~("ASU") 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, with new guidance for contract assets and contract liabilities acquired in a business combination. The new guidance requires contract assets and contract liabilities, such as deferred revenue, acquired in a business combination to be recognized and measured by the acquirer on the acquisition

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~~NCR Corporation~~

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

date in accordance with ~~Accounting Standard Codification (“ASC”)~~ASC 606, Revenue from Contracts with Customers. Prior to the issuance of this guidance, contract assets and contract liabilities were recognized by the acquirer at fair value on the acquisition date. The accounting standards update is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted and should be applied prospectively to acquisitions occurring on or after the effective date. The ~~Company does not expect to early adopt the new accounting standards update. The~~ adoption of this accounting standards update isdid not ~~expected to~~ have a material effect on the Company's net income, cash flows, earnings per share or financial condition.

Although there are ~~several~~ other new accounting pronouncements issued by the FASB and adopted by or effective for the Company, the Company does not believe any of these accounting pronouncements had a material impact on its condensed consolidated financial statements.

Accounting Pronouncements Issued But Not Yet Adopted

Although there are new accounting pronouncements issued by the FASB and not yet adopted by or effective for the Company, the Company does not believe any of these accounting pronouncements will have a material impact on its condensed consolidated financial statements.

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NCR Corporation

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

2. BUSINESS COMBINATIONS

Acquisition of LibertyX (2022)

On January 5, 2022, NCR completed its acquisition of Moon Inc., dba LibertyX, a leading cryptocurrency software provider, with the goal of enabling NCR to provide ~~a complete~~ digital currency ~~solution,~~solutions, including the ability to buy and sell ~~cryptocurrency,~~Bitcoin, and conduct cross-border ~~remittance, and accept digital currency payments across digital and physical channels.~~remittance. The Company purchased all outstanding shares of LibertyX for $1 million cash consideration and approximately 1.4 million shares of the Company's common stock at a price of $42.13 per share. The Company also converted approximately 0.2 million outstanding unvested LibertyX option awards into NCR awards pursuant to an exchange ratio as defined in the acquisition agreement. LibertyX stock option awards were converted into NCR stock option awards with an exercise price per share for option awards equal to the exercise price per share of such stock option award immediately prior to the completion of the acquisition divided by the exchange ratio, and vested immediately. The value of the option awards was deemed attributable to services already rendered and was included as a portion of the purchase price. Total purchase consideration for the LibertyX acquisition was approximately $69 million. As a result of the acquisition, LibertyX became a wholly-owned subsidiary of NCR.

~~Recording of Assets Acquired and Liabilities Assumed~~The fair value of consideration transferred to acquire LibertyX was allocated to the identifiable assets and acquired ~~and~~ liabilities assumed based upon their estimated fair values as of the date of the acquisition as set forth below. The provisional amounts for intangible assets are based on third-party valuations performed. The allocation of the purchase price is provisional as of September 30, 2022 and may be subject to future adjustments, within the measurement period, as the Company obtains additional information to finalize the accounting for the business combination, including additional refinement to finalize valuations, among other items. The preliminary allocation of the purchase price is as follows:


~~In millions~~	~~Fair Value~~
~~Cash acquired~~	$	2
~~Tangible assets acquired~~	3
~~Acquired intangible assets other than goodwill~~	38
~~Acquired goodwill~~	41
~~Deferred tax liabilities~~	~~(11)~~
~~Liabilities assumed~~	~~(4)~~
~~Total purchase consideration~~	$	69

Goodwill represents the future economic benefits arising from other assets acquired that could not be individually separately recognized. The goodwill arising from the acquisition consists of revenue and cost synergies expected from combining the operations of NCR and LibertyX and is not deductible for tax purposes. The goodwill arising from the LibertyX acquisition has been allocated to our Payments & Network segment. Refer to Note 3, “Goodwill and Purchased Intangible Assets”, for the carrying amounts of goodwill by segment.

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~~NCR Corporation~~

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

~~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 $ 5 10
Technology - Software 30 13
Non-compete 1 1
Tradenames 2 2
Total acquired intangible assets $ 38

~~(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.

The operating results of LibertyX have been included within NCR's results since the closing date of the acquisition. Supplemental pro forma information and actual revenue and earnings since the acquisition date have not been provided as the acquisition did not have a material impact on the Company's Condensed Consolidated Statements of Operations.

~~Other Acquisitions (2022)~~

On July 1, 2022, NCR completed its acquisition of the India ATM business of FIS Payment Solutions & Services Private Limited for consideration of $19 million, of which $12 million has been paid in cash as of September 30, 2022.

~~Acquisition of Cardtronics plc (2021)~~

On June 21, 2021, NCR acquired all outstanding shares of Cardtronics plc (“Cardtronics”) for $39.00 per share (the “Cardtronics Transaction”). The fair value of consideration transferred to acquire Cardtronics was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition. The allocation of ~~the~~ purchase price was finalized ~~in June 2022. There have been no material adjustments to the allocation~~as of ~~purchase price since~~ December 31, ~~2021.~~2022.

~~Unaudited Pro forma Information~~ The following unaudited pro forma information presents the consolidated results of NCR and Cardtronics for the three and nine months ended September 30, 2021. 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 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 September 30 Nine months ended September 30
2021 2021
Revenue $ 1,901 $ 5,632
Net Income attributable to NCR $ 12 $ 81

~~The unaudited pro forma results for the nine months ended September 30, 2021 include:~~

•~~$53 million in eliminated intercompany revenue and 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 if those costs were incurred in the prior year period; and~~

•~~$35 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~~.

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~~NCR Corporation~~

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

3. GOODWILL AND PURCHASED INTANGIBLE ASSETS

Goodwill by Segment As described in Note 1, “Basis of Presentation and Summary of Significant Accounting Policies”, effective January 1, 2022, the Company realigned its reportable segments to correspond with changes to its operating model, management structure and organizational responsibilities. In connection with the change in reportable segments, during the first quarter of 2022, the Company determined its reporting units and then assigned goodwill to the new reporting units based on the relative fair value allocation approach. We have reclassified prior period goodwill disclosures to conform to the current period presentation.

The carrying amounts of goodwill by segment as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 are included in the table below. Foreign currency fluctuations are included within other adjustments.


		December 31, 2021												September 30, 2022							December 31, 2022												June 30, 2023
In millions	In millions	Goodwill		Accumulated Impairment		Total		Additions		Impairment		Other		Goodwill		Accumulated Impairment		Total		In millions	Goodwill		Accumulated Impairment		Total		Additions		Impairment		Other		Goodwill		Accumulated Impairment		Total

Retail	Retail	$	1,015	$	(34)	$	981	$	—	$	—	$	(20)	$	995	$	(34)	$	961	Retail	$	995	$	(34)	$	961	$	—	$	—	$	2	$	997	$	(34)	$	963
Hospitality	Hospitality	292		(23)		269		—		—		(5)		287		(23)		264		Hospitality	288		(23)		265		—		—		1		289		(23)		266
Digital Banking	Digital Banking	595		—		595		—		—		6		601		—		601		Digital Banking	594		—		594		—		—		—		594		—		594
Payments & Network	Payments & Network	988		—		988		51		—		8		1,047		—		1,047		Payments & Network	1,036		—		1,036		—		—		—		1,036		—		1,036
Self-Service Banking	Self-Service Banking	1,635		(101)		1,534		—		—		13		1,648		(101)		1,547		Self-Service Banking	1,633		(101)		1,532		—		—		1		1,634		(101)		1,533
Other(1)	Other(1)	163		(11)		152		—		—		—		163		(11)		152		Other(1)	163		(11)		152		—		—		—		163		(11)		152
Total goodwill	Total goodwill	$	4,688	$	(169)	$	4,519	$	51	$	—	$	2	$	4,741	$	(169)	$	4,572	Total goodwill	$	4,709	$	(169)	$	4,540	$	—	$	—	$	4	$	4,713	$	(169)	$	4,544

(1) Other segment includes the goodwill associated with our ~~Technology & Telecommunications reporting unit.~~

Additions during the nine months ended September 30, 2022 include immaterial purchase accounting adjustments related to the Cardtronics acquisition as well as the goodwill acquired through the LibertyX transaction on January 5, 2022. For additional information on these business combinations, refer to Note 2, “Business Combinations”.

Due to the change in reportable segments, management performed an interim goodwill impairment analysis immediately before and as of the effective date of January 1, 2022. The assessment as of December 31, 2021 was performed based on a qualitative assessment of the historical Banking, Retail, Hospitality and Telecommunications & Technology reporting units. No impairment was identified. The assessment as of January 1, 2022 was performed using a weighted combination of both guideline public company and discounted cash flow valuation methods. This assessment included, but was not limited to, our consideration of the potential impacts of the COVID-19 pandemic to the current and future cash flows, as well as macroeconomic conditions, industry and market considerations, and financial performance, including forecasted revenue, earnings and capital expenditures of each reporting unit. Based on this analysis, it was determined that the fair value of all reporting units were substantially in excess of the carrying value. However, if the actual results differ from our expectations for any of our reporting units, there is a possibility we would have to perform additional interim impairment tests, which could lead to an impairment of goodwill or other assets.

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, 2023				December 31, 2022
In millions		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Identifiable intangible assets
Reseller & customer relationships	1 - 20	$	1,104	$	(500)	$	1,103	$	(463)
Intellectual property	2 - 8	1,030		(598)		1,030		(558)
Customer contracts	8	89		(89)		89		(89)
Tradenames	1 - 10	131		(103)		128		(95)
Total identifiable intangible assets		$	2,354	$	(1,290)	$	2,350	$	(1,205)

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

Amortization
Period
(in Years) September 30, 2022 December 31, 2021
In millions Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization
Identifiable intangible assets
Reseller & customer relationships 1 - 20 $ 1,113 $ (449) $ 1,126 $ (391)
Intellectual property 2 - 8 1,022 (537) 1,008 (474)
Customer contracts 8 89 (89) 89 (89)
Tradenames 1 - 10 127 (92) 130 (83)
Total identifiable intangible assets $ 2,351 $ (1,167) $ 2,353 $ (1,037)

Amortization expense related to identifiable intangible assets for the following periods is:.


		Three months ended September 30				Nine months ended September 30					Three months ended June 30				Six months ended June 30
In millions	In millions	2022		2021		2022		2021		In millions	2023		2022		2023		2022
Amortization expense	Amortization expense	$	44	$	45	$	130	$	88	Amortization expense	$	43	$	45	$	85	$	86

The estimated aggregate amortization expense for identifiable intangible assets for the following periods is:


				For the years ended December 31													For the years ended December 31
In millions	In millions	Remainder of 2022		2023		2024		2025		2026		2027		In millions	Remainder of 2023		2024		2025		2026		2027		2028
Amortization expense	Amortization expense	$	44	$	174	$	163	$	151	$	141	$	125	Amortization expense	$	87	$	161	$	150	$	139	$	124	$	106

4. SEGMENT INFORMATION AND CONCENTRATIONS

As described in Note 1, “Basis of Presentation and Summary of Significant Accounting Policies”, effective January 1, 2022, the Company realigned its reportable segments to correspond with changes to its operating model, management structure and organizational responsibilities. We have reclassified prior period segment disclosures to conform to the current period presentation. As a result of the change, theThe Company manages and reports its operations in the following segments:

•Retail - We offer software-led 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,~~point-of-sale ("POS"), to payments, inventory management, fraud and loss prevention applications, loyalty and consumer engagement. 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 and merchant acquiring 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 solutions include POS hardware and software solutions, payment processing and merchant acquiring services, installation, maintenance, as well as managed and professional ~~services as well as payment processing solutions.~~services.

•Digital Banking - NCR Digital Banking helps financial institutions implement their digital-first platform strategy by providing solutions for account opening, account management, transaction processing, imaging, and branch services to enable financial institutions to offer a compelling customer experience.

•Payments & Network - We provide a cost-effective way for financial institutions, fintechs, and neobanks to reach and serve their customers through our network of automated teller machines ("ATMs") and multi-functioning financial services kiosks. We offer credit unions, banks, digital banks, fintechs, stored-value debit card issuers, and other consumer financial services providers access to our Allpoint retail-based ATM network, providing convenient and fee-free cash withdrawal and deposit access to their customers and cardholders as well as the ability to convert a digital value to cash, or vice versa, via NCRPay360. We also provide ATM branding solutions to financial institutions, ATM management and services to ~~financial institutions~~retailers and ~~businesses.~~other businesses, as well as payment processing and merchant acquiring services in the retail, hospitality and other industries.

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

•Self-Service 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 hardware and software, and related installation, maintenance, and managed and professional services. We also offer solutions to manage and run the ATM channel end-to-end for financial institutions that includes back office, cash management, software management and ATM deployment, among others.

Corporate and Other includes income and expenses related to corporate functions that are not specifically attributable to an individual reportable segment along with any immaterial operating segment(s).

Eliminations include revenues from contracts with customers and the related costs that are reported in the Payments & Network segment as well as in the Retail or Hospitality segments, including merchant acquiring services that are monetized via payments.

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. Adjusted EBITDA is defined as GAAP net income (loss) from continuing operations attributable to NCR plus interest expense, net; plus

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

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, separation-related costs, cyber ransomware incident recovery costs, and transformation and restructuring charges (which includes integration, severance and other exit and disposal costs), among others. The special items are considered non-operational or non-recurring in nature, 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 continuing operations attributable to NCR.

Special Item Related to Russia The war in Eastern Europe and related sanctions imposed on Russia and related actors by the United States and other jurisdictions required us to commence the orderly wind down of our operations in Russia ~~beginning~~ in the first quarter of 2022. As of ~~September~~June 30, ~~2022,~~2023, we have ceased operations in Russia and are in the process of dissolving our only subsidiary in Russia. As a result, for the three and ~~nine~~six months ~~ending September~~ended June 30, 2022, our presentation of segment revenue and Adjusted EBITDA exclude the immaterial impact of our operating results in Russia, as well as the impact of impairments taken to write down the carrying value of assets and liabilities, severance charges, and the assessment of collectability on revenue recognition. We recognized a pre-tax net loss of $22 million for the six months ended June 30, 2022 related to these actions, recognized primarily in Cost of products, Cost of services and Selling, general and administrative expenses on the Condensed Consolidated Statement of Operations. No charges have been recognized for the six months ended June 30, 2023. We consider this to be a non-recurring special item and management has reviewed the results of its business segments excluding these impacts. We have not adjusted the presentation of the prior year period due to the immaterial impact of Russia to revenue and income from continuing operations for the three and nine months ended September 30, 2021.

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.

The following table presents revenue and Adjusted EBITDA by segment:


In millions	Three months ended June 30				Six months ended June 30
	2023		2022		2023		2022
Revenue by segment
Retail	$	576	$	562	$	1,128	$	1,108
Hospitality	235		238		458		449
Digital Banking	140		131		276		267
Payments & Network	333		332		656		631
Self-Service Banking	661		679		1,274		1,290
Total segment revenue	$	1,945	$	1,942	$	3,792	$	3,745
Other (1)	54		61		108		129
Eliminations	(13)		(12)		(23)		(20)
Other adjustment (2)	—		6		—		9
Consolidated revenue	$	1,986	$	1,997	$	3,877	$	3,863

Adjusted EBITDA by segment
Retail	$	123	$	104	$	220	$	171
Hospitality	60		46		113		87
Digital Banking	53		56		102		112
Payments & Network	99		97		182		195
Self-Service Banking	169		142		307		254
Segment Adjusted EBITDA	$	504	$	445	$	924	$	819

(1) Other immaterial business operations that do not represent a reportable segment.

(2) Other adjustment reflects the revenue attributable to the Company's operations in Russia for the three and six months ended June 30, 2022 that were excluded from management's measure of revenue due to our previous announcement to suspend sales to Russia and orderly wind down of our operations in Russia beginning in the first quarter of 2022.

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

The following table reconciles Segment Adjusted EBITDA to Net income (loss) from continuing operations attributable to NCR:


In millions	Three months ended June 30				Six months ended June 30
	2023		2022		2023		2022
Segment Adjusted EBITDA	$	504	$	445	$	924	$	819
Less unallocated amounts:
Corporate and other income and expenses not allocated to reportable segments	106		98		216		195
Eliminations	9		8		17		14
Transformation and restructuring costs (1)	(1)		49		(1)		76
Acquisition-related amortization of intangibles	43		45		85		86
Acquisition-related costs (2)	1		3		1		8

Interest expense	91		67		174		130
Interest income	(3)		(2)		(6)		(3)
Depreciation and amortization (excluding acquisition-related amortization of intangibles)	109		104		215		207
Income tax expense (benefit)	30		—		44		13
Stock-based compensation expense	36		35		68		69
Separation costs (3)	52		—		71		—
Cyber ransomware incident recovery costs (4)	11		—		11		—
Russia	—		3		—		22
Net income (loss) from continuing operations attributable to NCR	$	20	$	35	$	29	$	2

(1) Represents integration, severance, and other exit and disposal costs, which are considered non-operational in nature.

(2) Represents professional fees, retention bonuses, and other costs incurred related to acquisitions, which are considered non-operational in nature.

(3) Represents professional fees specific to separation preparation including separation management, organizational design, and legal fees.

(4) Represents expenses to respond to, remediate and investigate the April 13, 2023 cyber ransomware incident, which is considered a non-recurring special item. Additional details regarding this cyber ransomware incident are discussed in Note 1, “Basis of Presentation and Summary of Significant Accounting Policies”.

The following table presents revenue by geography for NCR:


In millions	Three months ended June 30				Six months ended June 30
	2023		2022		2023		2022
United States	$	1,121	$	1,075	$	2,214	$	2,073
Americas (excluding United States)	199		201		381		384
Europe, Middle East and Africa	446		498		858		964
Asia Pacific	220		223		424		442
Total revenue	$	1,986	$	1,997	$	3,877	$	3,863

1615

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

The following table presents ~~revenue and Adjusted EBITDA by segment:~~

In millions Three months ended September 30 Nine months ended September 30
2022 2021 2022 2021
Revenue by segment
Retail $ 575 $ 541 $ 1,683 $ 1,623
Hospitality 238 224 687 618
Digital Banking 137 128 404 380
Payments & Network 336 304 967 380
Self-Service Banking 640 637 1,930 1,910
Other 58 75 187 229
Eliminations (12) (8) (32) (18)
Total segment revenue $ 1,972 $ 1,901 $ 5,826 $ 5,122
Other adjustment (1)
— — 9 —
Consolidated revenue $ 1,972 $ 1,901 $ 5,835 $ 5,122
Adjusted EBITDA by segment
Retail $ 128 $ 104 $ 299 $ 323
Hospitality 51 44 138 119
Digital Banking 60 52 172 161
Payments & Network 114 111 309 133
Self-Service Banking 150 155 404 432
Corporate and Other (112) (109) (307) (265)
Eliminations (11) (5) (25) (12)
Total Adjusted EBITDA $ 380 $ 352 $ 990 $ 891

~~(1)~~ Other adjustment reflects the revenue attributable to the Company's operations in Russia for the three and nine months ending September 30, 2022 that were excluded from management's measure of revenue due to our previous announcement to suspend sales to Russia and anticipated orderly wind down of our operations in Russia. The revenue attributable to the Russian operations for the three and nine months ended September 30, 2021 of $14 million and $33 million, respectively, is included in the respective segments.

~~For the three and nine months ended~~September 30, 2022, the operations of Cardtronics are included in the Payments & Network and Self-Service Banking segments. For the three and nine months ended September 30, 2021, the operations of Cardtronics have been included in the Payments & Network and Self-Service Banking segments from the close date, June 21, 2021.

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

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

In millions Three months ended September 30 Nine months ended September 30
2022 2021 2022 2021
Net income (loss) from continuing operations attributable to NCR $ 69 $ 12 $ 71 $ 33
Transformation and restructuring costs 17 5 93 20
Acquisition-related amortization of intangibles 44 45 130 88
Acquisition-related costs 1 9 9 92
Loss on debt extinguishment — 42 — 42
Interest expense 74 68 204 174
Interest income (3) — (6) (4)
Depreciation and amortization (excluding acquisition-related amortization of intangibles) 107 104 314 250
Income tax expense (benefit) 43 29 56 77
Stock-based compensation expense 28 38 97 119
Russia — — 22 —
Total Adjusted EBITDA $ 380 $ 352 $ 990 $ 891

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

In millions Three months ended September 30 Nine months ended September 30
2022 2021 2022 2021
Americas $ 1,320 $ 1,185 $ 3,777 $ 3,121
Europe, Middle East and Africa (EMEA) 403 494 1,367 1,358
Asia Pacific (APJ) 249 222 691 643
Total revenue $ 1,972 $ 1,901 $ 5,835 $ 5,122

~~The following table presents~~ the recurring revenue for NCR:


In millions	In millions	Three months ended September 30				Nine months ended September 30				In millions	Three months ended June 30				Six months ended June 30
		2022		2021		2022		2021			2023		2022		2023		2022
Recurring revenue (1)	Recurring revenue (1)	$	1,222	$	1,181	$	3,618	$	2,984	Recurring revenue (1)	$	1,262	$	1,217	$	2,491	$	2,396
All other products and services	All other products and services	750		720		2,217		2,138		All other products and services	724		780		1,386		1,467
Total revenue	Total revenue	$	1,972	$	1,901	$	5,835	$	5,122	Total revenue	$	1,986	$	1,997	$	3,877	$	3,863

(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, interchange and network revenue, ~~cryptocurrency-related~~Bitcoin-related revenue, and certain professional services arrangements, as well as term-based software license arrangements that include customer termination rights.

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

5. DEBT OBLIGATIONS

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


			September 30, 2022			December 31, 2021					June 30, 2023			December 31, 2022
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)		$	105	5.01%	$	56	2.63%	Current portion of Senior Secured Credit Facility (1)		$	101	7.54%	$	100	6.54%
Other (1)	Other (1)		1		4.60%	1		2.13%	Other (1)		4		7.24%	4		7.05%
		Total short-term borrowings	$	106		$	57			Total short-term borrowings	$	105		$	104
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)	$	1,805	5.12%	$	1,884	2.63%		Term loan facility (1)	$	1,726	7.63%	$	1,778	6.69%
		Revolving credit facility (1)	558		5.20%	380		2.36%		Revolving credit facility (1)	328		7.38%	523		6.79%
Senior notes:	Senior notes:								Senior notes:

		5.750% Senior Notes due 2027	500			500				5.750% Senior Notes due 2027	500			500
		5.000% Senior Notes due 2028	650			650				5.000% Senior Notes due 2028	650			650
		5.125% Senior Notes due 2029	1,200			1,200				5.125% Senior Notes due 2029	1,200			1,200
		6.125% Senior Notes due 2029	500			500				6.125% Senior Notes due 2029	500			500
		5.250% Senior Notes due 2030	450			450				5.250% Senior Notes due 2030	450			450
Deferred financing fees	Deferred financing fees		(52)			(60)			Deferred financing fees		(45)			(49)
Other (1)	Other (1)		—			1		6.62%	Other (1)		7		7.19%	9		7.1%
		Total long-term debt	$	5,611		$	5,505			Total long-term debt	$	5,316		$	5,561

(1) Interest rates are weighted-average interest rates as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

Senior Secured Credit Facility The Company is party to a Senior Secured Credit Facility, as amended, which provides for a senior secured term loan A facility in an aggregate principal amount of $1.305 billion (the “TLA Facility”), a senior secured term loan B facility in an aggregate principal amount of $750 million (the “TLB Facility” and together with the TLA Facility, the “Term Loan Facilities”), and a revolving credit facility with commitments in an initial aggregate principal amount of $1.3 billion (the “Revolving Credit Facility”).

As of ~~September~~June 30, ~~2022, $1.910~~2023, 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 $1.827 billion remained ~~outstanding under the Term Loan Facilities.~~outstanding. Additionally, as of ~~September~~June 30, ~~2022,~~2023, there was ~~$558~~$328 million outstanding under the Revolving Credit Facility. The Revolving Credit Facility also contains a sub-facility to be used for letters of credit, and, as of ~~September~~June 30, ~~2022,~~2023, outstanding letters of credit were ~~$24~~$29 million. Our borrowing capacity under our Revolving Credit Facility was ~~$718~~$943 million at ~~September~~June 30, ~~2022.~~2023.

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

The outstanding principal balance of the TLB Facility is required to be repaid in equal quarterly installments of 0.25% of the original aggregate principal amount thereof that began with the fiscal quarter ended December 31, 2019, with the balance being due at maturity on August 28, 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, that began with the fiscal quarter ended 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 Credit Facility are scheduled to terminate 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. Loans under the Revolving Credit Facility may be repaid and reborrowed prior to such date, subject to the satisfaction of customary conditions.

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

The obligations under the Senior Secured Credit Facility are guaranteed by certain of the Company’s domestic material subsidiaries including NCR International, Inc. (the “Guarantor Subsidiary”) and certain domestic subsidiaries acquired through the Cardtronics Transaction (collectively, the “Cardtronics Guarantors” and together with the Guarantor Subsidiary, the “Guarantors”). The obligations under the Senior Secured Credit Facility and the above described guarantee are secured by a first priority lien and security interest in certain equity interests owned by the Company and the Guarantors in certain of their respective domestic and foreign subsidiaries, and a first priority lien and security interest in substantially all of the assets of the Company and the Guarantors, 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 an “investment grade” 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 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 December 31, 2021, 5.50 to 1.00, (ii) in the case of any fiscal quarter ending on or prior to September 30, 2022, 5.25 to 1.00, and (iii) in the case of any fiscal quarter ending on or after December 31, 2022, 4.75 to 1.00.

Senior Unsecured Notes The ~~Company’s~~Company's senior unsecured notes are guaranteed by certain of the Company's domestic material subsidiaries (including the Guarantor Subsidiary and the Cardtronics Guarantors that joined as guarantors on October 14, 2021), which have guaranteed fully and unconditionally the obligations to pay principal and interest for the ~~Company’s~~Company's senior unsecured notes. The terms of the indentures for the ~~Company’s~~Company's senior unsecured 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 salesale 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.

Other Debt In December 2022, the Company entered into a borrowing agreement with Banc of America Leasing & Capital, LLC to direct funds to NCR in exchange for installment repayments and for security interest in ATM equipment in corresponding ATM-as-a-Service ("ATMaaS") contracts. The total amount available under the financing program is $20 million with repayment terms up to four years. As of June 30, 2023 total debt outstanding under the financing program was $11 million with a weighted average interest rate of 7.20% and a weighted average term of 3.3 years. As of December 31, 2022, total debt outstanding was $12 million with a weighted average interest rate of 7.21% and a weighted average term of 3.7 years.

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

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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~$5.06~~$5.18 billion and ~~$5.74~~$5.25 billion, respectively. 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. TRADE RECEIVABLES FACILITY

The Company ~~continues to maintain its~~maintains a trade receivables facility (the “T/R Facility”) with PNC Bank, National Association (“PNC”), which allows the Company's wholly-owned, bankruptcy remote subsidiary, NCR Receivables LLC (the “U.S. SPE”), to sell certain trade receivables on a revolving basis to PNC and the other unaffiliated purchasers participating in the T/R Facility. The T/R Facility, as amended, became effective September 30, 2021 and has a term of two years, which the Company and the U.S. SPE intend to renew.

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

As cash is collected on the trade receivables, the U.S. SPE has the ability to continuously transfer ownership and control of new qualifying receivables to PNC and the other unaffiliated purchasers such that the total outstanding balance of trade receivables sold can be up to $300 million at any point in time, which is the maximum purchase commitment of PNC and the other unaffiliated purchasers. The future outstanding balance of trade receivables that are sold is expected to vary based on the level of activity and other factors and could be less than the maximum purchase commitment of $300 million. The total outstanding balance of trade receivables that have been sold and derecognized by the U.S. SPE to PNC and the other unaffiliated purchasers is approximately $268 million and $300 million as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021.~~2022, respectively. Excluding the trade receivables sold to PNC and other unaffiliated purchasers, the SPEs collectively owned ~~$370~~$301 million and ~~$228~~$321 million of trade receivable as of

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

~~September~~ June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, and these amounts are included in Accounts receivable, net in the Company’s Condensed Consolidated Balance Sheets.

Continuous cash activity related to the T/R Facility is reflected in Net cash provided by operating activities in the Condensed Consolidated Statements of Cash Flows. During the six months ended June 30, 2023, the Company paid $76 million to PNC and the other unaffiliated purchasers and received $33 million as the outstanding balance of receivables sold fluctuated during the quarter. The U.S. SPE incurs fees due and payable to PNC and the other unaffiliated purchasers participating in the T/R Facility. Those fees, which are immaterial, are recorded within Other income (expense), net in the Condensed Consolidated Statements of Operations. In addition, each of the SPEs has provided a full recourse guarantee in favor of PNC and the other unaffiliated purchasers of the full and timely payment of all trade receivables sold to them by the U.S. SPE. The guarantee is collateralized by all the trade receivables owned by each of the SPEs that have not been sold to PNC or the other unaffiliated purchasers. The reserve recognized for this recourse obligation as of ~~September~~June 30, ~~2022~~2023 is not material.

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

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

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

7. 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 ~~$43~~$30 million for the three months ended ~~September~~June 30, ~~2022~~2023 compared to income tax expense of ~~$29 million~~approximately zero for the three months ended ~~September~~June 30, 2021. The change was primarily driven by higher income before taxes in the three months ended September 30, 2022, compared to the prior year. The Company did not recognize any material discrete tax expenses or benefits in either period.

~~Income tax expense was $56 million for the nine months ended September 30, 2022 compared to income tax expense of $77 million for the nine months ended September 30, 2021.~~2022. The change was primarily driven by discrete tax expenses and benefits and higher income before taxes in the three months ended June 30, 2023, compared to the prior year.In the three months ended June 30, 2023, the Company recognized a $2 million expense from recording a valuation allowance against deferred tax assets in Turkey and a $2 million expense related to interest on uncertain tax benefits. In the ~~nine~~three months ended ~~September~~June 30, 2022, the Company recognized a $7$6 million benefit from provision to return adjustments and a $7 million benefit related to uncertain tax position settlements and statute of limitation lapses.

Income tax expense was $44 million for the six months ended June 30, 2023 compared to income tax expense of $13 million for the six months ended June 30, 2022. The change was primarily driven by discrete tax expenses and benefits and higher income before taxes in the six months ended June 30, 2023, compared to the prior year. In the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2023, the Company recognized a ~~$34~~$2 million expense from recording a valuation allowance against ~~interest limitation carryforwards~~deferred tax assets in ~~the U.S.~~Turkey, a $2 million expense related to tax audit settlements, and a ~~$14~~$4 million expense related to interest on uncertain tax benefits. In the six months ended June 30, 2022, the Company recognized a $4 million benefit from ~~the deferred~~provision to return adjustments and a $7 million benefit related to uncertain tax ~~impact~~position settlements and statute of ~~a tax law change in the U.K.~~limitation lapses.

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 jurisdictions. As a result, as of ~~September~~June 30, ~~2022,~~2023, we estimate that it is reasonably possible that gross unrecognized tax benefits may decrease by $8$3 million to ~~$10~~$5 million in the next 12 months.

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

8. STOCK COMPENSATION PLANS

As of ~~September~~June 30, ~~2022,~~2023, the Company’s ~~primary type of~~ stock-based compensation ~~was~~consisted of restricted stock units, employee stock purchase plan and stock options. Stock-based compensation expense for the following periods were:


In millions	In millions	Three months ended September 30				Nine months ended September 30				In millions	Three months ended June 30				Six months ended June 30
		2022		2021		2022		2021			2023		2022		2023		2022
Restricted stock units	Restricted stock units	$	22	$	30	$	76	$	96	Restricted stock units	$	34	$	28	$	62	$	54
Stock options	Stock options	4		6		14		17		Stock options	—		5		2		10
Employee stock purchase plan	Employee stock purchase plan	2		2		7		6		Employee stock purchase plan	2		2		4		5
Stock-based compensation expense	Stock-based compensation expense	28		38		97		119		Stock-based compensation expense	36		35		68		69
Tax benefit	Tax benefit	(5)		(5)		(13)		(14)		Tax benefit	(4)		(4)		(4)		(8)
Stock-based compensation expense (net of tax)	Stock-based compensation expense (net of tax)	$	23	$	33	$	84	$	105	Stock-based compensation expense (net of tax)	$	32	$	31	$	64	$	61

Stock-based compensation expense is recognized in the ~~financial statements~~Condensed Consolidated Financial Statements based upon fair value.

On February ~~25, 2022,~~13, 2023, the Company granted market-based restricted stock units ~~with 100% of the award~~ vesting on December 31, ~~2024.~~2025. The number of awards that vest are subject to the ~~performance~~compound annual growth rate ("CAGR") of the Company's stock price from ~~the date of grant~~January 1, 2023 to December 31, ~~2024.~~2025 (the "performance period"), subject to an alternative level of achievement based on the Company's relative total shareholder return ranking among a comparison group. The fair value of the awards was determined to be ~~$57.67~~$35.04 per share based on using a Monte-Carlo simulation model and will be recognized over the requisite service period.

Approximately 50% of these market-based restricted stock units granted include an accelerated vesting provision if a Qualified Transaction, as defined in the award agreement, takes place during the performance period (with a minimum vesting period of one year from the grant date). Upon the occurrence of a Qualified Transaction, the number of shares that vest are then based on the Company's 20-day volume-weighted average closing stock price immediately preceding the transaction date. If a qualifying transaction is deemed probable, the award will be recognized over the adjusted requisite service period at a fair value determined using a Monte-Carlo simulation model ranging from $35.09 to $41.77 per unit, dependent upon the estimated timing of the transaction. Transactions of this nature are subject to many variables that are highly uncertain, including the receipt of regulatory approvals and market conditions.

The table below details the significant assumptions used in determining the fair value of the market-based restricted stock ~~units.~~units granted on February 13, 2023:



Dividend yield	—	%
Risk-free interest rate	~~1.73~~4.15	%
Expected volatility	~~59.26~~55.90	%

Expected volatility for ~~the market-based~~these restricted stock units is calculated as the historical volatility of the Company’s stock over a period of approximately three years, as management believes this is the best representation of prospective trends. The risk-free interest rate was determined based on a three year U.S. Treasury yield curve in effect at the time of the grant.

As of ~~September~~June 30, ~~2022,~~2023, the total unrecognized compensation cost of ~~$151~~$198 million related to unvested restricted stock grants is expected to be recognized over a weighted average period of approximately ~~1.0~~1.1 years. As of ~~September~~June 30, ~~2022,~~2023, the total unrecognized compensation cost ~~of $5 million~~ related to unvested stock option grants ~~is expected to be recognized over a weighted average period of~~was approximately ~~0.3 years.~~zero.

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 ~~September~~June 30, ~~2022,~~2023, employees purchased ~~0.4~~0.3 million shares, at a discounted price of ~~$16.16.~~$19.93. For the three months ended ~~September~~June 30, ~~2021,~~2022, employees purchased 0.2 million shares, at a discounted price of ~~32.95.~~$26.44.

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

9. EMPLOYEE BENEFIT PLANS

Components of net periodic benefit cost (income) of the pension plans for the three months ended ~~September~~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
		2022		2021		2022		2021		2022		2021			2023		2022		2023		2022		2023		2022
Net service cost	Net service cost	$	—	$	—	$	1	$	1	$	1	$	1	Net service cost	$	—	$	—	$	1	$	1	$	1	$	1
Interest cost	Interest cost	10		9		3		2		13		11		Interest cost	18		10		7		3		25		13
Expected return on plan assets	Expected return on plan assets	(17)		(8)		(6)		(6)		(23)		(14)		Expected return on plan assets	(16)		(16)		(9)		(7)		(25)		(23)
Amortization of prior service cost	Amortization of prior service cost	—		—		—		1		—		1		Amortization of prior service cost	—		—		—		—		—		—
Net periodic benefit cost (income)	Net periodic benefit cost (income)	$	(7)	$	1	$	(2)	$	(2)	$	(9)	$	(1)	Net periodic benefit cost (income)	$	2	$	(6)	$	(1)	$	(3)	$	1	$	(9)

Components of net periodic benefit cost (income) of the pension plans for the ~~nine~~six months ended ~~September~~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
		2022		2021		2022		2021		2022		2021			2023		2022		2023		2022		2023		2022
Net service cost	Net service cost	$	—	$	—	$	3	$	4	$	3	$	4	Net service cost	$	—	$	—	$	2	$	2	$	2	$	2
Interest cost	Interest cost	30		26		9		6		39		32		Interest cost	36		20		14		6		50		26
Expected return on plan assets	Expected return on plan assets	(50)		(23)		(20)		(18)		(70)		(41)		Expected return on plan assets	(33)		(33)		(17)		(14)		(50)		(47)
Amortization of prior service cost	Amortization of prior service cost	—		—		—		1		—		1		Amortization of prior service cost	—		—		—		—		—		—
Net periodic benefit cost (income)	Net periodic benefit cost (income)	$	(20)	$	3	$	(8)	$	(7)	$	(28)	$	(4)	Net periodic benefit cost (income)	$	3	$	(13)	$	(1)	$	(6)	$	2	$	(19)

~~Components of the~~Net postretirement benefit ~~from the postretirement plan~~was zero for the ~~following periods were:~~

In millions Three months ended September 30 Nine months ended September 30
2022 2021 2022 2021
Interest cost $ — $ — $ — $ —
Amortization of:
Prior service benefit — — — —
Actuarial loss 1 1 1 1
Net postretirement benefit $ 1 $ 1 $ 1 $ 1
three and six months ending June 30, 2023 and 2022.

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


		Three months ended September 30				Nine months ended September 30					Three months ended June 30				Six months ended June 30
In millions	In millions	2022		2021		2022		2021		In millions	2023		2022		2023		2022
Net service cost	Net service cost	$	8	$	4	$	57	$	13	Net service cost	$	3	$	36	$	6	$	49
Interest cost	Interest cost	1		—		2		1		Interest cost	2		—		3		1
Amortization of:	Amortization of:									Amortization of:
Prior service benefit	Prior service benefit	—		(1)		(1)		(2)		Prior service benefit	(1)		—		(1)		(1)
Actuarial gain	Actuarial gain	(1)		(1)		(1)		(1)		Actuarial gain	(1)		—		(2)		—
Net benefit cost	Net benefit cost	$	8	$	2	$	57	$	11	Net benefit cost	$	3	$	36	$	6	$	49

Employer Contributions

Pension For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, NCR contributed $3$4 million and ~~$12~~$8 million respectively, to its international pension plans. NCR anticipates contributing an additional $5$12 million to its international pension plans for a total of ~~$17~~$20 million in ~~2022.~~2023.

Postretirement For the three and six months ended June 30, 2023, NCR made no 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 2023.

Postemployment For the three and six months ended June 30, 2023, NCR contributed $10 million and $24 million respectively, to its postemployment plan. NCR anticipates contributing an additional $51 million to its postemployment plan for a total of $75 million in 2023.

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

~~Postretirement~~ For the three and nine months ended September 30, 2022, NCR made no contributions to its U.S. postretirement plan. NCR anticipates contributing an additional $1 million to its U.S. postretirement plan for a total of $1 million in 2022.

~~Postemployment~~ For the three and nine months ended September 30, 2022, NCR contributed $5 million and $20 million, respectively, to its postemployment plan. NCR anticipates contributing an additional $60 million to its postemployment plan for a total of $80 million in 2022.

10. 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, patents or other 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 Kalamazoo River environmental matter and other matters discussed above and 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.

Legal Matters During August 2019, a suit was filed against the Company by Pennsylvania-based CloudofChange LLC alleging willful infringement by NCR for its use of its NCR Silver point-of-sale offering. On October 27, 2022, the court in the Western District of Texas denied the Company's post-trial motion in this matter for judgment as a matter of law or alternatively for a new trial, resulting in a ruling against the Company in an amount of $13 million. The Company remains committed to its position that NCR Silver does not infringe the CloudofChange LLC patents and will vigorously defend its position on appeal. The Company has already engaged experienced appellate counsel and immediately filed its notice of appeal. The Company evaluated the matter in accordance with ASC 450, Contingencies, and concluded that, as of ~~September~~June 30, ~~2022 and the date of filing of the related Form 10-Q, that~~2023, a loss of up to $13 million is reasonably possible, but not probable and, therefore, no accrual has been recorded.

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 Kalamazoo River matter and the Ebina matter discussed below, we currently do not anticipate material expenses and liabilities from these environmental matters.

Fox River ~~On September 30, 2003,~~ NCR was one of eight entities that ~~were~~was formally notified by governmental and other entities ~~such as local Native American tribes,~~ that ~~they were PRPs~~it was a PRP 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 two 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~~ ~~also contended that NCR was responsible for PCB discharges from paper mills owned by other~~

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

~~companies because NCR~~River, and carbonless copy paper “broke” ~~was~~the Company allegedly ~~purchased by those~~sold to other mills as a raw material. In 2017, the Company entered into a Consent Decree with the federal and state governments for the clean-up of the Fox River, which was approved on August 22, 2017 by the federal district court in Wisconsin presiding over this matter. The Consent Decree resolved the Company’s disputes with the enforcement agencies as well as the other PRPs.

All litigation relating to the contribution and enforcement of remediation obligations on the Fox River has been ~~concluded. No other litigation is pending. All Company obligations under the Consent Decree have been completed.~~concluded. On October 3, 2022, the Environmental Protection Agency issued the Company a Certificate of Completion certifying that all of the Company’s remedial obligations under the Consent Decree have been completed.

The cost of the Fox River remediation ~~is currently~~has been shared ~~by the company~~ with three ~~indemnitors. NCR~~parties (the previously reported API having fully satisfied its obligations in 2016, and ~~API, along with B.A.T~~is now bankrupt): B.A.T. Industries p.l.c. (“BAT”) as co-obligor, and AT&T Corp. (“AT&T”) and Nokia (as the successor to Lucent Technologies and Alcatel-Lucent USA) as indemnitors. Under a 1998 Cost Sharing Agreement and subsequent 2005 arbitration award (collectively, the “Cost Sharing Agreement”), ~~share among themselves a portion~~from 2008 through 2014, BAT paid 60% 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~~. Pursuant to a September 30, 2014

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

Funding Agreement (the “Funding Agreement”). The Cost 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 API to fund~~funded 50% of 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);~~forward; the Funding Agreement also provides NCR contractual avenues for a future 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.~~ 2014 (collectively, the “Funding Agreement Receivable”). Pursuant to a June 12, 2015 Letter Agreement, NCR's contractual avenue for direct payment by BAT was effectively stayed pending completion of other unrelated lawsuits by BAT against third-parties. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021, the receivable under~~2022, the Funding Agreement Receivable was approximately $54 million and was included in Other assets in the Condensed Consolidated Balance Sheets. The timing of collection of sums related to the receivable is uncertain, subject and pursuant to the terms of the Funding Agreement and related agreements. This receivable is not taken into account in calculating the Company’s Fox River ~~net~~remaining reserve.

Additionally, under a 1996 ~~agreement,~~Divestiture Agreement, AT&T ~~Corp. (“AT&T”)~~ and Nokia ~~(as the successor to Lucent Technologies and Alcatel-Lucent USA) are~~have been 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 for insurance recoveries and net tax benefits (the “Divestiture Agreement Offsets”), if any. (The ~~agreement~~Divestiture 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.

There could be additional changes to some elements of the ~~reserve~~Company's remaining obligation over upcoming periods, in view of a final reconciliation of ~~indemnitor payments.~~the Funding Agreement Receivable and the Divestiture Agreement Offsets. Thus, there can be no assurance that unexpected expenditures and liabilities will not have a material effect on NCR's capital expenditures, earnings, financial condition, cash flows, or competitive position. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021, the gross reserve~~2022, we have no remaining liability for remedial obligations for the Fox River ~~matter was approximately $3 million and $4 million, respectively.~~matter. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the ~~net reserve for~~liability subject to final reconciliation with indemnitors under the ~~Fox River matter~~Divestiture Agreement was approximately $25 million and $26 million, respectively. In April 2009, NCR and API formed a limited liability company (the “LLC”). NCR contributes to the LLC to fund remediation activities and generally, by contract, has funded certain amounts of remediation expenses in advance. As of September 30, 2022 and December 31, 2021, approximately zero remained from this funding. 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.$22 million.

Kalamazoo River In November 2010, The United States Environmental Protection Agency (“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. Three 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.”

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In connection with the Kalamazoo River site, in December 2010 the Company, along with two other defendants, was sued in federal court by three 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 four companies were tried to the court in a subsequent phase of the case in December 2015. In a ruling issued on March 29, 2018, 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 two 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 were stayed pending the appeal referenced below.

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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 until the Company filed its dismissal of 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 has now resolved all litigation associated with the river clean-up, including the Sixth Circuit appeal. The Consent Decree 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. 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.

~~NCR expects to have~~The Company believes it has meritorious claims against BAT ~~and API~~ under the ~~Funding~~Cost Sharing 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~~expenses as a so-called “future ~~sites,~~site.” ~~which would include~~To date, BAT has denied that the Kalamazoo River is a “future site.” On February 10, 2023, the Company filed an action against BAT in the Southern District of New York seeking a declaration that the Kalamazoo River is indeed a future 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.~~Agreement. 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~~Divestiture Agreement referenced above in the Fox River discussion. The Company believes that contractual threshold was met in December 2022.

As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the total reserve for Kalamazoo was ~~$93~~$88 million and ~~$99~~$90 million, respectively. The reserve 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 ~~$150~~$155 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

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

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 in as much 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 wastes can be and have been disposed of via private contractors, and as of ~~September~~June 30, ~~2022,~~2023, NCR had disposed of approximately 96% of its lower-concentration wastes and approximately ~~59%~~75% of its higher-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. The government has given its final approvals, and the Company started to dispose of the high-concentration wastes in 2021, with final deadlines for various of the government-constructed disposal sites

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

currently set for ~~2022,~~ 2023 and later. Low-concentration wastes are required to be contracted for disposal by 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 adjusted its existing reserve for the matter to take into account this cost estimate. The reserve as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 is ~~$11~~$3 million and ~~$16~~$7 million, respectively. 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 ~~September~~June 30, ~~2022,~~2023, NCR has received a combined gross total of approximately $212 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, but it has recovered some amounts as a result of settlement discussions with certain carriers. ~~In December 2021, the Company recovered approximately~~ ~~$3 million~~ ~~as a result of those discussions and, in the nine months ending September 30, 2022, recovered an additional $7 million.~~ 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

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

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.

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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, 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. Warranty reserve liabilities are presented in Other current liabilities and Other liabilities in the Condensed Consolidated Balance Sheets.

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.

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

The Company recorded the activity related to the warranty reserve for the ~~nine~~six months ended ~~September~~June 30 ~~2022~~ as follows:


In millions	In millions	2022		2021		In millions	2023		2022
Warranty reserve liability	Warranty reserve liability					Warranty reserve liability
Beginning balance as of January 1	Beginning balance as of January 1	$	19	$	18	Beginning balance as of January 1	$	13	$	19
Accruals for warranties issued	Accruals for warranties issued	14		20		Accruals for warranties issued	7		9
Settlements (in cash or in kind)	Settlements (in cash or in kind)	(19)		(20)		Settlements (in cash or in kind)	(10)		(13)
Ending balance as of September 30		$	14	$	18
Ending balance as of June 30						Ending balance as of June 30	$	10	$	15

In addition, NCR provides its customers with certain indemnification ~~rights. In general,~~rights, subject to certain limitations and exceptions. NCR agrees to defend and indemnify ~~the customer if a~~its customers from third-party ~~asserts~~lawsuits alleging patent or other infringement of Company solutions based on ~~the part of~~ its ~~customers for its~~customers' use of ~~the Company’s products subject to certain conditions that are generally standard within the Company’s industries.~~them. On limited occasions the Company will undertake ~~additional indemnification obligations~~to indemnify a customer for business, rather than contractual, 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~~Historically, the Company has not recorded a liability in connection with these ~~indemnifications, and no current indemnification instance is material~~indemnifications. From time to ~~the Company’s financial position. Historically, payments made by~~time, the Company has provided indemnification under these ~~types~~circumstances, none of ~~agreements have not had a~~which has resulted in material ~~effect on~~liabilities, and the ~~Company’s condensed consolidated financial condition, results of operations or cash flows.~~Company expects these indemnities will continue to arise in the future.

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.

11. SERIES A CONVERTIBLE PREFERRED STOCK

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 three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company paid cash dividends of $34 million. During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company paid cash dividends of ~~$11~~$8 million.

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

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. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, 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 9.2 million 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.

In computing diluted EPS, we evaluate and reflect the maximum potential dilution, for each issue or series of issues of potential common shares in sequence from the most dilutive to the least dilutive. We adjust the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back the dividends (declared or cumulative undeclared) applicable to the Series A Convertible Preferred Stock. Such add-back would also include any adjustments to equity in the period to accrete the Series A Convertible Preferred Stock to its redemption price, or recorded upon a redemption or induced conversion. We adjust the denominator used in the basic EPS computation, subject to anti-dilution requirements, to include the dilution from potential shares resulting from the issuance of the Series A Convertible Preferred Stock, restricted stock units, and stock options.

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

The holders of Series A Convertible Preferred Stock, unvested restricted stock units and stock options do not have non-forfeitable 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 8, “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 September 30				Nine months ended September 30				In millions, except per share amounts	Three months ended June 30				Six months ended June 30
		2022		2021		2022		2021			2023		2022		2023		2022
Numerator:	Numerator:									Numerator:
Income (loss) from continuing operations	Income (loss) from continuing operations	$	69	$	12	$	71	$	33	Income (loss) from continuing operations	$	20	$	35	$	29	$	2
Dividends on Series A Convertible Preferred Stock	Dividends on Series A Convertible Preferred Stock	(4)		(4)		(12)		(12)		Dividends on Series A Convertible Preferred Stock	(4)		(4)		(8)		(8)

Income (loss) from continuing operations attributable to NCR common stockholders	Income (loss) from continuing operations attributable to NCR common stockholders	65		8		59		21		Income (loss) from continuing operations attributable to NCR common stockholders	16		31		21		(6)
Income from discontinued operations, net of tax		—		—		5		—
Income (loss) from discontinued operations, net of tax										Income (loss) from discontinued operations, net of tax	(1)		6		(1)		5
Net income (loss) attributable to NCR common stockholders	Net income (loss) attributable to NCR common stockholders	$	65	$	8	$	64	$	21	Net income (loss) attributable to NCR common stockholders	$	15	$	37	$	20	$	(1)

Denominator:	Denominator:									Denominator:
Basic weighted average number of shares outstanding	Basic weighted average number of shares outstanding	137.0		131.5		136.4		130.8		Basic weighted average number of shares outstanding	140.4		136.6		140.0		136.2

Basic earnings per share:	Basic earnings per share:									Basic earnings per share:
From continuing operations	From continuing operations	$	0.47	$	0.06	$	0.43	$	0.16	From continuing operations	$	0.11	$	0.23	$	0.15	$	(0.04)
From discontinued operations	From discontinued operations	—		—		0.04		—		From discontinued operations	—		0.04		(0.01)		0.03
Total basic earnings per share	Total basic earnings per share	$	0.47	$	0.06	$	0.47	$	0.16	Total basic earnings per share	$	0.11	$	0.27	$	0.14	$	(0.01)

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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 September 30				Nine months ended September 30				In millions, except per share amounts	Three months ended June 30				Six months ended June 30
		2022		2021		2022		2021			2023		2022		2023		2022
Numerator:	Numerator:									Numerator:
Income (loss) from continuing operations	Income (loss) from continuing operations	$	69	$	12	$	71	$	33	Income (loss) from continuing operations	$	20	$	35	$	29	$	2
Dividends on Series A Convertible Preferred Stock	Dividends on Series A Convertible Preferred Stock	(4)		(4)		(12)		(12)		Dividends on Series A Convertible Preferred Stock	(4)		(4)		(8)		(8)

Income (loss) from continuing operations attributable to NCR common stockholders	Income (loss) from continuing operations attributable to NCR common stockholders	65		8		59		21		Income (loss) from continuing operations attributable to NCR common stockholders	16		31		21		(6)
Income from discontinued operations, net of tax	Income from discontinued operations, net of tax	—		—		5		—		Income from discontinued operations, net of tax	(1)		6		(1)		5
Net income (loss) attributable to NCR common stockholders	Net income (loss) attributable to NCR common stockholders	$	65	$	8	$	64	$	21	Net income (loss) attributable to NCR common stockholders	$	15	$	37	$	20	$	(1)

Denominator:	Denominator:									Denominator:
Basic weighted average number of shares outstanding	Basic weighted average number of shares outstanding	137.0		131.5		136.4		130.8		Basic weighted average number of shares outstanding	140.4		136.6		140.0		136.2

Dilutive effect of restricted stock units and stock options	Dilutive effect of restricted stock units and stock options	3.3		6.3		4.5		6.3		Dilutive effect of restricted stock units and stock options	1.5		4.2		2.0		—
Weighted average diluted shares	Weighted average diluted shares	140.3		137.8		140.9		137.1		Weighted average diluted shares	141.9		140.8		142.0		136.2

Diluted earnings per share:	Diluted earnings per share:									Diluted earnings per share:
From continuing operations	From continuing operations	$	0.46	$	0.06	$	0.42	$	0.15	From continuing operations	$	0.11	$	0.22	$	0.15	$	(0.04)
From discontinued operations	From discontinued operations	—		—		0.03		—		From discontinued operations	—		0.04		(0.01)		0.03
Total diluted earnings per share	Total diluted earnings per share	$	0.46	$	0.06	$	0.45	$	0.15	Total diluted earnings per share	$	0.11	$	0.26	$	0.14	$	(0.01)

For the three months ended ~~September~~June 30, 2023, 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. Additionally, weighted average restricted stock units and stock options of 12.7 million were excluded from the diluted share count because their effect would have been anti-dilutive.

For the three months ended June 30, 2022, 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. Additionally, weighted average restricted stock units and stock options of ~~9.0~~7.4 million were excluded from the diluted share count because their effect would have been anti-dilutive.

For the three months ended September 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 September 30, 2021, weighted average restricted stock units and stock options of 0.1 million were excluded from the diluted share count because their effect would have been anti-dilutive.

For the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, 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. Additionally, for the ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, weighted average restricted stock units and stock options of ~~6.2~~12.7 million were excluded from the diluted share count because their effect would have been anti-dilutive.

For the ~~nine~~six months ended ~~September~~June 30, ~~2021, shares related~~2022, due to the ~~as-if converted~~net loss from continuing operations attributable to NCR common stockholders, potential common shares that would cause dilution, such as the Series A Convertible Preferred Stock, ~~of 9.2 million were~~restricted stock units and stock options, have been excluded from the diluted share count because their effect would have been anti-dilutive. The weighted average outstanding shares of common stock were not adjusted by 9.2 million for the as-if converted Series A Preferred Stock because their effect would have been anti-dilutive. For the ~~nine~~six months ended ~~September~~June 30, ~~2021,~~2022, weighted average restricted stock units and stock options of ~~4.7~~11.4 million were excluded from the diluted share count because their effect would have been anti-dilutive.

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

13. DERIVATIVES AND HEDGING INSTRUMENTS

NCR is exposed to certain risks arising from both our business operations and economic conditions. We principally manage exposures to a wide variety of business and operational risk through management of core business activities. We manage interest rate risk associated with our vault cash rental obligations and floating rate-debt by managing the amount, sources, and duration of debt funding and the use of derivative financial instruments. The Company uses interest rate cap agreements or interest rate swap contracts (“Interest Rate Derivatives”) to manage differences in the amount, timing and duration of known or expected cash payments related to our existing TLA Facility and vault cash agreements.

Further, a substantial portion of our operations and revenue occur outside the United States and, as such, NCR has exposure to approximately 45 functional currencies. Our results can be significantly impacted, both positively and negatively, by changes in foreign currency exchange rates. The Company seeks to mitigate such impact by hedging its foreign currency transaction exposure using foreign currency forward and option contracts. We do not enter into hedges for speculative purposes.

The Company assesses, both at inception of the hedge and on an ongoing basis, whether derivatives used as hedging instruments are highly effective in offsetting the changes in the fair value or cash flow of the hedged items. If it is determined that a derivative is not highly effective as a hedge or ceases to be highly effective, the Company discontinues hedge accounting prospectively.

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 ~~nonfunctional~~non-functional currency denominated transactions (and hence on subsidiary operating income, as stated in the functional currency), is mitigated in the near term. In the longer term (greater than 15 months), the subsidiaries are still subject to the effect of translating the functional currency results to United States 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. If the hedge is designated as a highly effective cash flow hedge, the gains or losses are deferred into accumulated other comprehensive income (“AOCI”). The gains or losses from derivative contracts that are designated as highly effective cash flow hedges related to inventory purchases are recorded in cost of products when the inventory is sold to an unrelated third party. Otherwise, they are recorded in earnings when the exchange rates change. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the balance in AOCI related to foreign exchange derivative transactions was zero.

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.

Interest Rate Risk The Company designates Interest Rate Derivative contracts as cash flow hedges of forecasted transactions when they are determined to be highly effective at inception.

We utilize interest rate swap contracts or interest rate cap agreements to add stability to interest cost and to manage exposure to interest rate movements as part of our interest rate risk management strategy. Payments and receipts related to Interest Rate Derivatives are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows.

In January 2022, the Company executed a $250 million notional amount interest rate swap contract originally terminating on January 1, 2025. The interest rate swap contract had a fixed rate of 1.43% and was designated as a cash flow hedge of floating interest rate cost associated with the Company's U.S. Dollar vault cash agreements.

In March 2022, the Company terminated the outstanding $2 billion notional amount interest rate cap agreements maturing in 2024 for proceeds of $64 million. The gains will be recognized ratably through July 1, 2024, corresponding to the term of the original interest rate cap agreements.

In March 2022, the Company executed $2.2 billion aggregate notional amount interest rate swap contracts that began April 1, 2022 and had an original termination date of April 1, 2025. These interest rate swap contracts had fixed rates ranging from 2.078% to 2.443%, and were designated as cash flow hedges of the floating rate interest associated with the Company’s U.S. Dollar and U.K. Pound Sterling vault cash agreements and TLA Facility.

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~~NCR Corporation~~

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

In June 2022, the Company terminated the outstanding $2.4 billion aggregate notional interest rate swap contracts maturing in 2025 for proceeds of $55 million. The gains will be recognized ratably primarily through April 1, 2025, corresponding to the term of the original interest rate swap agreements.

In June 2022, the Company executed $2.4 billion aggregate notional amount interest rate swap contracts effective June 1, 2022 and terminating on April 1, 2025. These interest rate swap contracts ~~have~~had fixed rates ranging from 2.790% to 3.251%, and ~~have been~~were designated as cash flow hedges of the floating rate interest associated with the Company's U.S. Dollar and U.K. Pound Sterling vault cash agreements.

~~At September 30, 2022, each~~ On June 14, 2023, the Company terminated all open interest rate swap contracts for cash proceeds of ~~our outstanding Interest Rate Derivative agreements~~$71 million. Based on the assessed “reasonably possible” probability of the future separation of the ATM business from NCR, further discussed in Note 1, “Basis of Presentation and Summary of Significant Accounting Policies”, the net derivative-related gains associated with these swaps were ~~determined to be highly effective. Amounts reported in~~deferred into Accumulated other comprehensive income ~~related to these derivatives~~and will be reclassified into earnings from Accumulated other comprehensive income through April 1, 2025, corresponding to the term of the original interest rate swap agreements.

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NCR Corporation

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

On June 14, 2023, the Company executed new $2.4 billion aggregate notional amount interest rate swap contracts effective June 14, 2023 and terminating on December 31, 2025. These interest rate swap contracts have fixed rates ranging from 4.2395% to 5.2740% and were designed to hedge the floating rate interest associated with the Company's U.S. Dollar and U.K. Pound Sterling vault cash agreements. However, due to the assessed “reasonably possible” probability of the future separation of the ATM business from NCR, the interest rate swap contracts did not qualify for cash flow hedge accounting treatment and are considered ineffective. As a result, changes in the fair value of the interest rate swaps will be recorded to Cost of services ~~as payments are made on~~in the ~~Company’s vault cash rental obligations.~~ accompanying Condensed Consolidated Statements of Operations. In the three and six months ended June 30, 2023, the Company recognized a gain of $14 million in Cost of services related to the active interest rate swaps.

Unrealized gains on terminated interest rate swap and cap agreements reported in Accumulated other comprehensive income will be reclassified to Interest expense and Cost of services ratably over terms corresponding to the original ~~agreements, as described above.~~agreements. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, the balance in AOCI related to Interest Rate Derivatives was ~~$125~~$92 million and $8$109 million, respectively.

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


													Fair Values of Derivative Instruments
													June 30, 2023
In millions												In millions	Balance Sheet Location	Notional Amount		Fair Value		Balance Sheet Location	Notional Amount		Fair Value
Derivatives not designated as hedging instruments												Derivatives not designated as hedging instruments
Interest rate swap contracts												Interest rate swap contracts	Prepaid and other current assets			$	20	Other current liabilities			$	—
Interest rate swap contracts												Interest rate swap contracts	Other Assets			2		Other liabilities			(8)
Total interest rate swap contracts												Total interest rate swap contracts		$	2,431	$	22		$	—	$	(8)

Foreign exchange contracts												Foreign exchange contracts	Prepaid and other current assets			$	1	Other current liabilities			$	(3)
Total foreign exchange contracts												Total foreign exchange contracts		$	276	$	1		$	534	$	(3)
Total derivatives not designated as hedging instruments												Total derivatives not designated as hedging instruments				$	23				$	(11)

		Fair Values of Derivative Instruments											Fair Values of Derivative Instruments
		September 30, 2022											December 31, 2022
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
Interest rate swap contracts	Interest rate swap contracts	Other current assets			$	13	Other current liabilities			$	—	Interest rate swap contracts	Prepaid and other current assets			$	36	Other current liabilities			$	—
Interest rate swap contracts	Interest rate swap contracts	Other assets			11		Other liabilities			—		Interest rate swap contracts	Other Assets			27		Other liabilities			—
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments		$	2,375	$	24		$	—	$	—	Total derivatives designated as hedging instruments		$	2,423	$	63		$	—	$	—
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			$	2	Other current liabilities			$	3	Foreign exchange contracts	Prepaid and other current assets			$	1	Other current liabilities			$	(2)
Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments		$	280	$	2		$	391	$	3	Total derivatives not designated as hedging instruments		$	376	$	1		$	373	$	(2)
Total derivatives	Total derivatives				$	26				$	3	Total derivatives				$	64				$	(2)

		Fair Values of Derivative Instruments
		December 31, 2021
In millions		Balance Sheet Location	Notional Amount		Fair Value		Balance Sheet Location	Notional Amount		Fair Value
Derivatives designated as hedging instruments
Interest rate cap contracts		Other Assets	$	2,000	$	18	Other liabilities	$	—	$	—
Total derivatives designated as hedging instruments					$	18				$	—
Derivatives not designated as hedging instruments
Foreign exchange contracts		Other current assets	$	278	$	1	Other current liabilities	$	396	$	1
Total derivatives not designated as hedging instruments					$	1				$	1
Total derivatives					$	19				$	1

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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 ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021~~2022 were as follows:


In millions	In millions	Amount of Gain (Loss) Recognized in Other Comprehensive Income (OCI) on Derivative Contracts					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 Contracts					Amount of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations
Derivatives in Cash Flow Hedging Relationships	Derivatives in Cash Flow Hedging Relationships	For the three months ended September 30, 2022		For the three months ended September 30, 2021		Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations	For the three months ended September 30, 2022		For the three months ended September 30, 2021		Derivatives in Cash Flow Hedging Relationships	For the three months ended June 30, 2023		For the three months ended June 30, 2022		Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations	For the three months ended June 30, 2023		For the three months ended June 30, 2022
Interest rate contracts	Interest rate contracts	$	77	$	—	Cost of services	$	(4)	$	—	Interest rate contracts	$	35	$	10	Cost of services	$	(19)	$	5
Interest rate contracts	Interest rate contracts	$	—	$	—	Interest expense	$	(5)	$	—	Interest rate contracts	$	—	$	11	Interest expense	$	(5)	$	—

In millions	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	Derivatives in Cash Flow Hedging Relationships	For the nine months ended September 30, 2022		For the nine months ended September 30, 2021		Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations	For the nine months ended September 30, 2022		For the nine months ended September 30, 2021		Derivatives in Cash Flow Hedging Relationships	For the six months ended June 30, 2023		For the six months ended June 30, 2022		Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations	For the six months ended June 30, 2023		For the six months ended June 30, 2022
Interest rate contracts	Interest rate contracts	$	119	$	—	Cost of services	$	2	$	—	Interest rate contracts	$	24	$	42	Cost of services	$	(34)	$	6
Interest rate contracts	Interest rate contracts	$	36	$	—	Interest expense	$	(5)	$	—	Interest rate contracts	$	—	$	36	Interest expense	$	(9)	$	—


In millions		Amount of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations
		Three months ended June 30				Six months ended June 30
Derivatives not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations	2023		2022		2023		2022
Foreign exchange contracts	Other income (expense), net	$	(3)	$	(12)	$	(8)	$	(18)
Interest rate contracts	Cost of services	$	14	$	—	$	14	$	—

The following tables show the impact of the Company's cash flow hedge accounting relationships on the Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2023 and 2022.


	Location and Amount of (Gain) Loss Recognized in Income on Cash Flow Hedging Relationships for the three months ended June 30:
In millions	Cost of Services				Interest Expense
	2023		2022			2023		2022
Total amount of expense presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded	$	970	$	982		$	91	$	67

Amount of (gain) loss reclassified from Accumulated other comprehensive loss, net of expense	$	(19)	$	5		$	(5)	$	—

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NCR Corporation

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


	Location and Amount of (Gain) Loss Recognized in Income on Cash Flow Hedging Relationships for the six months ended June 30:
In millions	Cost of Services				Interest Expense
	2023		2022			2023		2022
Total amount of expense presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded	$	1,939	$	1,945		$	174	$	130

Amount of (gain) loss reclassified from Accumulated other comprehensive loss, net of expense	$	(34)	$	6		$	(9)	$	—

As of ~~September~~June 30, ~~2022,~~2023, the Company expects to reclassify ~~$45~~$80 million of net derivative-related gains contained in Accumulated other comprehensive loss into earnings during the next twelve months.

In millions Amount of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations
Three months ended September 30 Nine months ended September 30
Derivatives not Designated as Hedging Instruments Location of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations 2022 2021 2022 2021
Foreign exchange contracts Other income (expense), net $ (2) $ (6) $ (20) $ (20)

Refer to Note 14, “Fair Value of Assets and 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 potential losses are adequate. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, we did not have any major concentration of credit risk related to financial instruments.

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NCR Corporation

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

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 ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 are set forth as follows:


		September 30, 2022									June 30, 2023
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)	$	17	$	17	$	—	$	—	Deposits held in money market mutual funds (1)	$	9	$	9	$	—	$	—
Foreign exchange contracts (2)	Foreign exchange contracts (2)	2		—		2		—		Foreign exchange contracts (2)	1		—		1		—
Interest rate swap agreements (3)	Interest rate swap agreements (3)	24		—		24		—		Interest rate swap agreements (3)	22		—		22		—
Total	Total	$	43	$	17	$	26	$	—	Total	$	32	$	9	$	23	$	—
Liabilities:	Liabilities:									Liabilities:

Interest rate swap agreements (4)										Interest rate swap agreements (4)	$	8	$	—	$	8	$	—
Foreign exchange contracts ~~(4)~~(5)	Foreign exchange contracts ~~(4)~~(5)	3		—		3		—		Foreign exchange contracts ~~(4)~~(5)	3		—		3		—
Total	Total	$	3	$	—	$	3	$	—	Total	$	11	$	—	$	11	$	—


		December 31, 2021									December 31, 2022
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)	$	17	$	17	$	—	$	—	Deposits held in money market mutual funds (1)	$	16	$	16	$	—	$	—

Foreign exchange contracts (2)	Foreign exchange contracts (2)	1		—		1		—		Foreign exchange contracts (2)	1		—		1		—
Interest rate cap agreements (3)		18		—		18		—
Interest rate swap and cap agreements (3)										Interest rate swap and cap agreements (3)	63		—		63		—
Total	Total	$	36	$	17	$	19	$	—	Total	$	80	$	16	$	64	$	—
Liabilities:	Liabilities:									Liabilities:

Foreign exchange contracts ~~(4)~~(5)	Foreign exchange contracts ~~(4)~~(5)	$	1	$	—	$	1	$	—	Foreign exchange contracts ~~(4)~~(5)	2		—		2		—
Total	Total	$	1	$	—	$	1	$	—	Total	$	2	$	—	$	2	$	—

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

(2) Included in ~~Other~~Prepaid and other current assets in the Condensed Consolidated Balance Sheets.

(3) Included in ~~Other~~Prepaid and other current assets and Other assets in the Condensed Consolidated Balance Sheets.

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

(5) 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 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 within Level 2 of the valuation hierarchy.

Interest Rate Swap and Cap Agreements In order to add stability to interest expense and operating costs and to manage exposure to interest rate movements the Company utilizes interest rate swap contracts and interest rate cap agreements as part of its interest rate risk management strategy. The interest rate cap agreements are valued using the market standard methodology of discounting the future expected cash receipts that would occur if variable interest rates rise above the strike rate of the caps. The variable interest rates used in the calculation of projected receipts on the cap are based on an expectation of future interest

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NCR Corporation

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

rates derived from observable market interest rate curves and volatilities. The interest rate swap contracts are valued using an income model based on disparity between variable and fixed interest rates, the scheduled balance of underlying principal

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~~NCR Corporation~~

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

outstanding, yield curves, and other information readily available in the market. As such, the interest rate swap contracts and interest rate cap agreements are classified in Level 2 of the fair value hierarchy.

We incorporate credit valuation adjustments to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of our derivative contracts for the effect of nonperformance risk, we consider the impact of netting and any applicable credit enhancements. We measure the credit risk of our derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Although we have determined that the majority of the inputs used to value our derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments utilize Level 3 inputs to evaluate the likelihood of both our own default and counterparty default. As of ~~September~~June 30, ~~2022,~~2023, we determined that the credit valuation adjustments are not significant to the overall valuation of our derivatives and therefore, the valuations are classified in Level 2 of the fair value 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 no material impairment charges or non-recurring fair value adjustments recorded during the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021.~~2022.

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NCR Corporation

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

15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in Accumulated Other Comprehensive Income (“AOCI”) by Component


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, 2022	$	(404)	$	(5)	$	109	$	(300)
Other comprehensive income (loss) before reclassifications	8		—		17		25
Amounts reclassified from AOCI	—		(2)		(34)		(36)
Net current period other comprehensive (loss) income	8		(2)		(17)		(11)
Balance as of June 30, 2023	$	(396)	$	(7)	$	92	$	(311)

Reclassifications Out of AOCI


		For the three months ended June 30, 2023
		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	$	—	$	—	$	—	$	—
	Cost of services	(1)		(1)		(19)		(21)
	Selling, general and administrative expenses	—		—		—		—
	Research and development expenses	—		—		—		—
	Interest expense	—		—		(5)		(5)
	Total before tax	$	(1)	$	(1)	$	(24)	$	(26)
	Tax expense							5
	Total reclassifications, net of tax							$	(21)


		For the three months ended June 30, 2022
		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	$	—	$	—	$	—	$	—
	Cost of services	—		—		5		5
	Selling, general and administrative expenses	—		—		—		—
	Research and development expenses	—		—		—		—
	Interest expense	—		—		—		—
	Total before tax	$	—	$	—	$	5	$	5
	Tax expense							(1)
	Total reclassifications, net of tax							$	4

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NCR Corporation

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

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


		For the six months ended June 30, 2023
		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	$	—	$	—	$	—	$	—
	Cost of services	(2)		(1)		(34)		(37)
	Selling, general and administrative expenses	—		—		—		—
	Research and development expenses	—		—		—		—
	Interest expense	—		—		(9)		(9)
	Total before tax	$	(2)	$	(1)	$	(43)	$	(46)
	Tax expense							10
	Total reclassifications, net of tax							$	(36)

~~Changes in Accumulated Other Comprehensive Income (“AOCI”) by Component~~

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, 2021 $ (275) $ (24) $ 8 $ (291)
Other comprehensive income (loss) before reclassifications (151) — 120 (31)
Amounts reclassified from AOCI — (1) (3) (4)
Net current period other comprehensive (loss) income (151) (1) 117 (35)
Balance as of September 30, 2022 $ (426) $ (25) $ 125 $ (326)

~~Reclassifications Out of AOCI~~

For the three months ended September 30, 2022
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 $ — $ — $ — $ —
Cost of services — — (4) (4)
Selling, general and administrative expenses — — — —
Research and development expenses — — — —
Interest expense — — (5) (5)
Total before tax $ — $ — $ (9) $ (9)
Tax expense 1
Total reclassifications, net of tax $ (8)

For the three months ended September 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 $ — $ — $ — $ —
Cost of services — — — —
Selling, general and administrative expenses — (1) — (1)
Research and development expenses — 1 — 1
Total before tax $ — $ — $ — $ —
Tax expense —
Total reclassifications, net of tax $ —


		For the six months ended June 30, 2022
		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	$	—	$	—	$	—	$	—
	Cost of services	—		(1)		6		5
	Selling, general and administrative expenses	—		—		—		—
	Research and development expenses	—		—		—		—

	Total before tax	$	—	$	(1)	$	6	$	5
	Tax expense							(1)
	Total reclassifications, net of tax							$	4

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~~NCR Corporation~~

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

For the nine months ended September 30, 2022
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 $ — $ — $ — $ —
Cost of services — (1) 2 1
Selling, general and administrative expenses — — — —
Research and development expenses — — — —
Interest expense — — (5) (5)
Total before tax $ — $ (1) $ (3) $ (4)
Tax expense —
Total reclassifications, net of tax $ (4)

For the nine months ended September 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 $ — $ — $ — $ —
Cost of services — (1) — (1)
Selling, general and administrative expenses — (1) — (1)
Research and development expenses — 1 — 1
Total before tax $ — $ (1) $ — $ (1)
Tax expense —
Total reclassifications, net of tax $ (1)

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NCR Corporation

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

16. SUPPLEMENTAL FINANCIAL INFORMATION

The components of accounts receivable are summarized as follows:


In millions	In millions	September 30, 2022		December 31, 2021		In millions	June 30, 2023		December 31, 2022
Accounts receivable	Accounts receivable					Accounts receivable
Trade	Trade	$	1,087	$	939	Trade	$	984	$	1,056
Other	Other	58		44		Other	44		61
Accounts receivable, gross	Accounts receivable, gross	1,145		983		Accounts receivable, gross	1,028		1,117
Less: allowance for credit losses	Less: allowance for credit losses	(29)		(24)		Less: allowance for credit losses	(42)		(34)
Total accounts receivable, net	Total accounts receivable, net	$	1,116	$	959	Total accounts receivable, net	$	986	$	1,083

Our allowance for credit losses as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 was ~~$29~~$42 million and ~~$24 million, respectively.~~ ~~The impact to our allowance for credit losses for the three and nine months ended September 30, 2022 was an expense of $7 million and $15~~$34 million, respectively. We continue to evaluate our reserves in light of the age and quality of our outstanding accounts receivable as well as risks to specific industries or countries ~~as well as the COVID-19 pandemic,~~ and adjust the reserves accordingly. The impact to our allowance for credit losses for the three and six months ended June 30, 2023 was an expense of $4 million and $8 million, respectively. The impact to our allowance for credit losses for the three and six months ended June 30, 2022 was an expense of $4 million and $8 million, respectively. The Company recorded recoveries against the reserve for the three months ended ~~September~~June 30, ~~2021 was a benefit of $2 million and for the nine months ended September 30, 2021 was an expense~~2023 of $1 million. The Company recorded write-offs against the reserve for the three months ended ~~September~~June 30, 2022 ~~and 2021~~ of $4 ~~million and $7 million, respectively.~~million. The Company recorded write-offs against the reserve for the ~~nine~~six months ended ~~September~~June 30, 2023 and 2022 of approximately zero and ~~2021 of $10 million and $21~~$6 million, respectively.

The components of inventory are summarized as follows:


In millions	In millions	September 30, 2022		December 31, 2021		In millions	June 30, 2023		December 31, 2022
Inventories	Inventories					Inventories
Work in process and raw materials	Work in process and raw materials	$	113	$	184	Work in process and raw materials	$	72	$	107
Finished goods	Finished goods	299		185		Finished goods	223		252
Service parts	Service parts	415		385		Service parts	414		413
Total inventories	Total inventories	$	827	$	754	Total inventories	$	709	$	772

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

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and notes thereto included under Item 1. Financial Statements of this Form 10-Q and our Consolidated Financial Statements and notes thereto and related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (the ~~“2021~~“2022 Form 10-K”).

Our discussion within MD&A is organized as follows:

•Overview. This section contains background information on our company, summary of significant themes and 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.

•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 ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 to the results for the three and ~~nine~~six months ended ~~September~~June 30, ~~2021.~~2022.

•Liquidity and capital resources. This section provides an analysis of our cash flows and a discussion of our contractual obligations at ~~September~~June 30, ~~2022.~~2023.

OVERVIEW

BUSINESS OVERVIEW

NCR Corporation (“NCR”, the “Company”, “we” or “us”) was originally incorporated in 1884 and is a software- and services-led enterprise technology provider that runs stores, restaurants and self-directed banking for our customers, which includes businesses of all sizes. NCR is a global company that is headquartered in Atlanta, Georgia. Our software platform, which runs in the cloud and includes microservices and APIs that integrate with our customers' systems, and our NCR-as-a-Service solutions bring together all of the capabilities and competencies of NCR to power the technology to run our customers’ operations. Our portfolio includes digital first software and services offerings for banking, retailers and restaurants, as well as payments processing and networks, multi-vendor connected device services, automated teller machines (“ATMs”), self-checkout (“SCO”), kiosks and related technologies, point of sale (“POS”) terminals and other self-service technologies. We also resell third-party networking products and provide related service offerings in the telecommunications and technology sector. Our solutions are designed to support our transition to becoming a software platform and payments company.

~~Effective January 1, 2022,~~We manage our operations in the Company realigned its reportable segments to correspond with changes to its operating model, management structure and organizational responsibilities. The reportable segments effective January 1, 2022 include:following segments: Retail, Hospitality, Digital Banking, Payments & Network, and Self-Service Banking.

•Retail - We offer software-led 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 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"),~~SCO, payment processing and merchant acquiring solutions, and bar-code scanners.

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•Payments & Network - We provide a cost-effective way for financial institutions, fintechs, and neobanks to reach and serve their customers through our network of ~~automated teller machines ("ATMs")~~ATMs and multi-functioning financial services kiosks. We offer credit unions, banks, digital banks, fintechs, stored-value debit card issuers, and other consumer financial services providers access to our Allpoint retail-based ATM network, providing convenient and fee-free cash withdrawal and deposit access to their customers and cardholders as well as the ability to convert a digital value to cash, or vice versa, via NCRPay360. We also provide ATM branding solutions to financial institutions, ATM management and services to ~~financial institutions~~retailers and ~~businesses.~~other businesses, as well as payment processing and merchant acquiring services in the retail, hospitality and other industries.

NCR’s reputation is founded upon over ~~137~~139 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 is available on the Corporate Governance page of our website.

SIGNIFICANT THEMES AND EVENTS

As more fully discussed in later sections of this MD&A, the following were significant themes and events for the ~~third~~second quarter of ~~2022.~~2023.

•Revenue of ~~$1,972~~$1,986 million, ~~up 4%~~down 1% compared to the prior year period, and ~~up 8%~~flat excluding foreign currency impacts

•◦~~Strong performance despite numerous external macro factors, such as rising interest rates,~~Recurring revenue increased 4% from the ~~effects~~prior year and comprised 64% of ~~the strong U.S. dollar, supply-chain challenges, and high component costs that continue to impact quarterly results~~total consolidated revenue

•Continued strength in strategic initiatives

•Planned separation of NCR into two independent, publicly traded companies ~~was~~ announced on September 15, 2022 continues

STRATEGIC INITIATIVES AND TRENDS

In order to provide long-term value to all our stakeholders, we set complementary business goals and financial strategies. NCR is continuing its transition to become a software platform and payments company with a shift to a higher level of recurring revenue. Our business goal is to be a leading enterprise technology provider that runs stores, restaurants and self-directed banking through our software platform and our NCR-as-a-Service solutions. 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.

As we strive to achieve these aspirational goals, we plan to capitalize on opportunities presented by the acquisitions of Cardtronics and LibertyX to accelerate our Payments & Network business as we go to market with a more robust offering in this segment. We also plan to continue to improve our execution to drive solid returns and to transform our business to enhance value for all ~~shareholders.~~stockholders.

On September 15, 2022, NCR announced a plan to separate into two independent, publicly traded companies – one focused on digital commerce, the other on ATMs. The ~~digital~~ commerce company is expected to be a growth business positioned to leverage NCR’s software-led model to continue transforming, connecting and running global retail, hospitality and digital banking. We believe it will enhance common solutions to drive innovation and boost operational efficiency. The ~~digital~~ commerce company is expected to also reinvest in the business to accelerate growth and recurring revenue.

The ATM company is expected to be a cash-generative business positioned to focus on delivering ~~ATM as a Service~~ATM-as-a-Service to a large, installed customer base across banks and retailers. We believe it will build on NCR’s leadership in self-service banking and ATM networks to meet global demand for ATM access and leverage new ATM transaction types, including digital currency

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solutions, to drive market growth. The ATM company is expected to also continue shifting to a highly recurring revenue model to drive stable cash flow and capital returns to ~~shareholders.~~stockholders.

The separation is intended to be structured in a tax-free manner. The separation transaction will follow the satisfaction of customary conditions, including effectiveness of appropriate filings with the U.S. Securities and Exchange ~~Commission, and the completion of audited financial statements.~~Commission. The current target is to complete the separation byin the ~~end~~fourth quarter of 2023.

Should alternative options become available in the future that could deliver superior value to our stockholders than the planned separation, such as a whole or partial company sale of NCR, the Board remains open to considering alternative scenarios.

Cybersecurity Risk Management

Similar to most companies, NCR and its customers are subject to more frequent and increasingly sophisticated cybersecurity ~~attacks.~~attacks (including the ransomware incident announced April 17, 2023). 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.

For further information on potential risks and uncertainties, see Part 1, Item 1A "Risk Factors," of the 2022 Form 10-K and Part II, Item 1A "Risk Factors," of this Form 10-Q, as applicable.

Impacts from Geopolitical ~~Macroeconomic,~~ and ~~COVID-19~~Macroeconomic Challenges

We continue to be exposed to macroeconomic pressures as a result of ~~the lingering impacts of the COVID-19 pandemic,~~ supply chain challenges, foreign currency fluctuations, and spikes in interest rates, commodity and energy prices as a result of geopolitical ~~challenges, including the war in Eastern Europe.~~challenges. We continue to navigate through these challenges with a sharp focus on and goal of safeguarding our employees, helping our customers and managing impacts on our supply chain. Despite the ~~unprecedented~~rapidly changing environment, our teams are executing at a high level and we are advancing our strategy.

The COVID-19 pandemic is complex and continues to evolve. While it is difficult to project the long-term impact of the pandemic, we expect it will negatively impact our business at least in the short-term. The ultimate impact on our overall financial condition and operating results will depend on the currently unknowable duration and severity of the pandemic, supply chain challenges and cost escalations including materials, labor and freight, and any additional governmental and public actions taken in response.

The war in Eastern Europe and related sanctions imposed on Russia and related actors have resulted in interest rate acceleration and inflation, including, but not limited to, a significant increase in the price of energy around the world, particularly in regions such as Europe that are significantly dependent on Russia for their energy needs, and continued commodity price increases due to disruption in the mining industry in Ukraine and other factors. The war in Eastern Europe has also contributed to further disruption in logistics due to the shipping difficulties in and around the Black Sea and its ports, which have resulted in the rerouting of traffic to other ports and further logistics challenges.

We expect that these factors will continue to negatively impact our business at least in the short-term. The ultimate impact on our overall financial condition and operating results will depend on the ~~currently unknowable~~ duration and severity of these ~~activities.~~geopolitical and other macroeconomic pressures and any governmental and public actions taken in response. We continue to evaluate the long-term impact that these may have on our business model, however, there can be no assurance that the measures we have taken or will take will completely offset the negative impact.

For further information on the risks posed to our business from the COVID-19 pandemic and other geopolitical and macroeconomic factors, refer to Part I, Item 1A, “Risk Factors”, of the Company's ~~2021~~2022 Form 10-K. For further information on exposures to foreign exchange risk, refer to Item 3, "Quantitative and Qualitative Disclosures about Market Risk", in this Form 10-Q.

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Results from Operations

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022

Consolidated Results

The following tables show our results for the three and ~~nine~~six months ended ~~September~~June 30, the relative percentage that those amounts represent to revenue, and the change in those amounts year-over-year.


		Three months ended September 30				Percentage of Revenue (1)				Increase (Decrease)			Three months ended June 30				Percentage of Revenue (1)				Increase (Decrease)
In millions	In millions	2022		2021		2022		2021		2022 v 2021		In millions	2023		2022		2023		2022		2023 vs 2022
Product revenue	Product revenue	$	590	$	520	29.9	%	27.4	%	13	%	Product revenue	$	576	$	614	29.0	%	30.7	%	(6)	%
Service revenue	Service revenue	1,382		1,381		70.1	%	72.6	%	—	%	Service revenue	1,410		1,383		71.0	%	69.3	%	2	%
Total revenue	Total revenue	1,972		1,901		100.0	%	100.0	%	4	%	Total revenue	1,986		1,997		100.0	%	100.0	%	(1)	%
Product gross margin	Product gross margin	66		91		11.2	%	17.5	%	(27)	%	Product gross margin	98		70		17.0	%	11.4	%	40	%
Service gross margin	Service gross margin	425		429		30.8	%	31.1	%	(1)	%	Service gross margin	440		401		31.2	%	29.0	%	10	%
Total gross margin	Total gross margin	491		520		24.9	%	27.4	%	(6)	%	Total gross margin	538		471		27.1	%	23.6	%	14	%
Selling, general and administrative expenses	Selling, general and administrative expenses	264		294		13.4	%	15.5	%	(10)	%	Selling, general and administrative expenses	333		309		16.8	%	15.5	%	8	%
Research and development expenses	Research and development expenses	40		69		2.0	%	3.6	%	(42)	%	Research and development expenses	57		59		2.9	%	3.0	%	(3)	%

Income from operations	Income from operations	$	187	$	157	9.5	%	8.3	%	19	%	Income from operations	$	148	$	103	7.5	%	5.2	%	44	%

Nine months ended September 30
Percentage of Revenue (1)
Increase (Decrease)
In millions 2022 2021 2022 2021 2022 v 2021
Product revenue $ 1,720 $ 1,553 29.5 % 30.3 % 11 %
Service revenue 4,115 3,569 70.5 % 69.7 % 15 %
Total revenue 5,835 5,122 100.0 % 100.0 % 14 %
Product gross margin 160 263 9.3 % 16.9 % (39) %
Service gross margin 1,213 1,127 29.5 % 31.6 % 8 %
Total gross margin 1,373 1,390 23.5 % 27.1 % (1) %
Selling, general and administrative expenses 886 835 15.2 % 16.3 % 6 %
Research and development expenses 164 204 2.8 % 4.0 % (20) %
Income from operations $ 323 $ 351 5.5 % 6.9 % (8) %


	Six months ended June 30				Percentage of Revenue (1)				Increase (Decrease)
In millions	2023		2022		2023		2022		2023 vs 2022
Product revenue	$	1,097	$	1,130	28.3	%	29.3	%	(3)	%
Service revenue	2,780		2,733		71.7	%	70.7	%	2	%
Total revenue	3,877		3,863		100.0	%	100.0	%	—	%
Product gross margin	163		94		14.9	%	8.3	%	73	%
Service gross margin	841		788		30.3	%	28.8	%	7	%
Total gross margin	1,004		882		25.9	%	22.8	%	14	%
Selling, general and administrative expenses	625		622		16.1	%	16.1	%	—	%
Research and development expenses	121		124		3.1	%	3.2	%	(2)	%

Income from operations	$	258	$	136	6.7	%	3.5	%	90	%

(1) The percentage of revenue is calculated for each line item divided by total revenue, except for product gross margin and service gross margin, which are divided by the related component of revenue.

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Key Strategic Financial Metrics

The following tables show our key strategic financial metrics for the three and ~~nine~~six months ended ~~September~~June 30, the relative percentage that those amounts represent to total revenue, and the change in those amounts year-over-year.

Recurring revenue as a percentage of total revenue


		Three months ended September 30				Percentage of Total Revenue				Increase (Decrease)			Three months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	In millions	2022		2021		2022		2021		2022 v 2021		In millions	2023		2022		2023		2022		2023 vs 2022
Recurring revenue (1)	Recurring revenue (1)	$	1,222	$	1,181	62.0	%	62.1	%	3	%	Recurring revenue (1)	$	1,262	$	1,217	63.5	%	60.9	%	4	%
All other products and services	All other products and services	750		720		38.0	%	37.9	%	4	%	All other products and services	724		780		36.5	%	39.1	%	(7)	%
Total Revenue	Total Revenue	$	1,972	$	1,901	100	%	100	%	4	%	Total Revenue	$	1,986	$	1,997	100	%	100	%	(1)	%

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Nine months ended September 30 Percentage of Total Revenue Increase (Decrease)
In millions 2022 2021 2022 2021 2022 v 2021
Recurring revenue (1)
$ 3,618 $ 2,984 62.0 % 58.3 % 21 %
All other products and services 2,217 2,138 38.0 % 41.7 % 4 %
Total Revenue $ 5,835 $ 5,122 100.0 % 100.0 % 14 %


	Six months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	2023		2022		2023		2022		2023 vs 2022
Recurring revenue (1)	$	2,491	$	2,396	64.3	%	62.0	%	4	%
All other products and services	1,386		1,467		35.7	%	38.0	%	(6)	%
Total Revenue	$	3,877	$	3,863	100.0	%	100.0	%	—	%

(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, interchange and network revenue, ~~cryptocurrency-related~~Bitcoin-related revenue, and certain professional services arrangements as well as term-based software license arrangements that include customer termination rights.

Net income (loss) from continuing operations attributable to NCR and Adjusted EBITDA(2) as a percentage of total revenue


		Three months ended September 30				Percentage of Total Revenue				Increase (Decrease)			Three months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	In millions	2022		2021		2022		2021		2022 v 2021		In millions	2023		2022		2023		2022		2023 vs 2022
Net income (loss) from continuing operations attributable to NCR	Net income (loss) from continuing operations attributable to NCR	$	69	$	12	3.5	%	0.6	%	475	%	Net income (loss) from continuing operations attributable to NCR	$	20	$	35	1.0	%	1.8	%	(43)	%
Adjusted EBITDA	Adjusted EBITDA	$	380	$	352	19.3	%	18.5	%	8	%	Adjusted EBITDA	$	389	$	339	19.6	%	17.0	%	15	%

(2) Refer to our definition of Adjusted EBITDA in the section entitled "Non-GAAP Financial Measures and Use of Certain Terms."


		Nine months ended September 30				Percentage of Total Revenue				Increase (Decrease)			Six months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	In millions	2022		2021		2022		2021		2022 v 2021		In millions	2023		2022		2023		2022		2023 vs 2022
Net income (loss) from continuing operations attributable to NCR	Net income (loss) from continuing operations attributable to NCR	$	71	$	33	1.2	%	0.6	%	115	%	Net income (loss) from continuing operations attributable to NCR	$	29	$	2	0.7	%	0.1	%	1,350	%
Adjusted EBITDA	Adjusted EBITDA	$	990	$	891	17.0	%	17.4	%	11	%	Adjusted EBITDA	$	691	$	610	17.8	%	15.8	%	13	%

Non-GAAP Financial Measures and Use of Certain Terms:

The term “annual recurring revenue” is recurring revenue, excluding software license sold as a subscription, for the last three months times four, plus the rolling four quarters for term-based software license arrangements that include customer termination rights.

Constant Currency NCR presents certain financial measures, such as period-over-period revenue growth, on a constant currency basis, which excludes the effects of foreign currency translation by translating prior period results at current period monthly average exchange rates. Due to the overall variability of foreign exchange rates from period to period, NCR’s management uses constant currency measures to evaluate period-over-period operating performance on a more consistent and comparable basis. NCR’s management believes that presentation of financial measures without this result may contribute to an understanding of the Company's period-over-period operating performance and provides additional insight into historical and/or future performance, which may be helpful for investors.

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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, separation-related costs, cyber ransomware incident recovery costs, and transformation and restructuring charges (which includes integration, severance and other exit and disposal costs), among others. The special items are considered non-operational or non-recurring in nature, 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 income (loss) from continuing operations attributable to NCR. 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. Refer to the table below

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for the reconciliations of net income (loss) from continuing operations attributable to NCR (GAAP) to Adjusted EBITDA (non-GAAP).

Special Item Related to Russia The war in Eastern Europe and related sanctions imposed on Russia and related actors by the United States and other jurisdictions required us to commence the orderly wind down of our operations in Russia ~~beginning~~ in the first quarter of 2022. As of ~~September~~June 30, ~~2022,~~2023, we have ceased operations in Russia and are in the process of dissolving our only subsidiary in Russia. As a result, for the three and ~~nine~~six months ended ~~September~~June 30, 2022, our ~~non-GAAP~~ presentation of ~~the measures described above~~segment revenue and Adjusted EBITDA exclude the immaterial impact of our operating results in Russia, as well as the impact of impairments taken to write down the carrying value of assets and liabilities, severance charges, and the assessment of collectability on revenue recognition. No charges have been recognized for the six months ended June 30, 2023. We consider this to be a non-recurring special item and management has reviewed the results of its business segments excluding these impacts. We have not adjusted the presentation of the prior year periods due to the immaterial impact of Russia to revenue and income from continuing operations for the three and nine months ended September 30, 2021.

NCR's definitions and calculations of these non-GAAP measures may differ from similarly-titled measures reported by other companies and cannot, therefore, be compared with similarly-titled measures of other companies. These non-GAAP measures should not be considered as substitutes for, or superior to, results determined in accordance with GAAP.


		Three months ended September 30				Nine months ended September 30					Three months ended June 30				Six months ended June 30
In millions	In millions	2022		2021		2022		2021		In millions	2023		2022		2023		2022
Net income (loss) from continuing operations attributable to NCR (GAAP)	Net income (loss) from continuing operations attributable to NCR (GAAP)	$	69	$	12	$	71	$	33	Net income (loss) from continuing operations attributable to NCR (GAAP)	$	20	$	35	$	29	$	2

Transformation and restructuring costs(1)	Transformation and restructuring costs(1)	17		5		93		20		Transformation and restructuring costs(1)	(1)		49		(1)		76
Acquisition-related amortization of intangibles	Acquisition-related amortization of intangibles	44		45		130		88		Acquisition-related amortization of intangibles	43		45		85		86
Acquisition-related costs(2)	Acquisition-related costs(2)	1		9		9		92		Acquisition-related costs(2)	1		3		1		8

Interest expense	Interest expense	74		68		204		174		Interest expense	91		67		174		130
Interest income	Interest income	(3)		—		(6)		(4)		Interest income	(3)		(2)		(6)		(3)
Depreciation and amortization (excluding acquisition-related amortization of intangibles)	Depreciation and amortization (excluding acquisition-related amortization of intangibles)	107		104		314		250		Depreciation and amortization (excluding acquisition-related amortization of intangibles)	109		104		215		207
Income taxes	Income taxes	43		29		56		77		Income taxes	30		—		44		13
Stock-based compensation expense	Stock-based compensation expense	28		38		97		119		Stock-based compensation expense	36		35		68		69
Loss on debt extinguishment		—		42		—		42

Separation costs (3)										Separation costs (3)	52		—		71		—
Cyber ransomware incident recovery costs (4)										Cyber ransomware incident recovery costs (4)	11		—		11		—
Russia	Russia	—		—		22		—		Russia	—		3		—		22
Adjusted EBITDA (non-GAAP)	Adjusted EBITDA (non-GAAP)	$	380	$	352	$	990	$	891	Adjusted EBITDA (non-GAAP)	$	389	$	339	$	691	$	610

(1) Represents integration, severance, and other exit and disposal costs, which are considered non-operational in nature.

(2) Represents professional fees, retention bonuses, and other costs incurred related to acquisitions, which are considered non-operational in nature.

(3) Represents professional fees specific to separation preparation including separation management, organizational design, and legal fees.

Revenue


	Three months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	2023		2022		2023		2022		2023 vs 2022
Product revenue	$	576	$	614	29.0	%	30.7	%	(6)	%
Service revenue	1,410		1,383		71.0	%	69.3	%	2	%
Total revenue	$	1,986	$	1,997	100.0	%	100.0	%	(1)	%

~~Revenue~~

Three months ended September 30 Percentage of Total Revenue Increase (Decrease)
In millions 2022 2021 2022 2021 2022 vs 2021
Product revenue $ 590 $ 520 29.9 % 27.4 % 13 %
Service revenue 1,382 1,381 70.1 % 72.6 % — %
Total revenue $ 1,972 $ 1,901 100.0 % 100.0 % 4 %

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		Nine months ended September 30				Percentage of Total Revenue				Increase (Decrease)			Six months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	In millions	2022		2021		2022		2021		2022 vs 2021		In millions	2023		2022		2023		2022		2023 vs 2022
Product revenue	Product revenue	$	1,720	$	1,553	29.5	%	30.3	%	11	%	Product revenue	$	1,097	$	1,130	28.3	%	29.3	%	(3)	%
Service revenue	Service revenue	4,115		3,569		70.5	%	69.7	%	15	%	Service revenue	2,780		2,733		71.7	%	70.7	%	2	%
Total revenue	Total revenue	$	5,835	$	5,122	100.0	%	100.0	%	14	%	Total revenue	$	3,877	$	3,863	100.0	%	100.0	%	—	%

Product revenue includes our hardware and software license revenue streams as well as ~~cryptocurrency-related~~Bitcoin-related revenues. Service revenue includes hardware and software maintenance revenue, implementation services revenue, cloud revenue, payments processing revenue, interchange and network revenue, as well as professional services revenue.

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022

Total revenue ~~increased 4%~~decreased 1% for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the three months ended ~~September~~June 30, ~~2021.~~2022. Product revenue for the three months ended June 30, 2023 decreased 6% compared to the three months ended June 30, 2022 due to a decline in ATM, SCO and POS revenues, partially offset by an increase in software license and Bitcoin-related revenues. Service revenue for the three months ended June 30, 2023 increased 2% due to growth in recurring banking services revenue, software maintenance, and other software related services, partially offset by a decline in hardware maintenance revenue. The declines in hardware and hardware maintenance are driven by our strategic shift to recurring service arrangements primarily in our Retail and Self-Service Banking segments. Foreign currency fluctuations had an unfavorable impact of 4%1% on the revenue comparison, primarily in hardware maintenance, hardware product sales and payments processing.

Total revenue was flat for the six months ended June 30, 2023 compared to the six months ended June 30, 2022. Foreign currency fluctuations had an unfavorable impact of 2% on the revenue comparison. Product revenue for the ~~three~~six months ended ~~September~~June 30, ~~2022 increased 13%~~2023 decreased 3% compared to the ~~three~~six months ended ~~September~~June 30, ~~2021~~2022 due to ~~growth~~a decline in ATM, SCO, POS, and ~~ATM revenue as well as the addition of cryptocurrency revenue following the acquisition of LibertyX in January 2022,~~software license revenues partially offset by ~~a decline~~an increase in software license revenue. Service revenue was flat for the three months ended September 30, 2022 when compared to the prior year period due to increases in software maintenance and other software related services fully offset by a decline in hardware maintenance and professional services revenue.

Total revenue increased 14% for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. Foreign currency fluctuations had an unfavorable impact of 4% on the revenue comparison. Product revenue for the nine months ended September 30, 2022 increased 11% compared to the nine months ended September 30, 2021 due to growth in POS and SCO revenue as well as the addition of cryptocurrency revenue following the acquisition of LibertyX in January 2022, partially offset by a slight decline in ATMBitcoin-related revenue. Service revenue for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 increased ~~15%~~2% compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 due to growth in recurring banking services revenue, payments processing, software maintenance and software related services, ~~which includes the results of Cardtronics,~~ partially offset by a decline in hardware maintenance revenue.

The declines in hardware and hardware maintenance are driven by our strategic shift to recurring service arrangements primarily in our Retail and Self-Service Banking segments.

Gross Margin


		Three months ended September 30				Percentage of Revenue (1)				Increase (Decrease)			Three months ended June 30				Percentage of Revenue (1)				Increase (Decrease)
In millions	In millions	2022		2021		2022		2021		2022 v 2021		In millions	2023		2022		2023		2022		2023 v 2022
Product gross margin	Product gross margin	$	66	$	91	11.2	%	17.5	%	(27)	%	Product gross margin	$	98	$	70	17.0	%	11.4	%	40	%
Service gross margin	Service gross margin	425		429		30.8	%	31.1	%	(1)	%	Service gross margin	440		401		31.2	%	29.0	%	10	%
Total gross margin	Total gross margin	$	491	$	520	24.9	%	27.4	%	(6)	%	Total gross margin	$	538	$	471	27.1	%	23.6	%	14	%

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

For the three months ended ~~September~~June 30, ~~2022~~2023 compared to the three months ended ~~September~~June 30, ~~2021~~2022

Gross margin as a percentage of revenue in the three months ended ~~September~~June 30, ~~2022~~2023 was ~~24.9%~~27.1% compared to ~~27.4%~~23.6% in the three months ended ~~September~~June 30, ~~2021~~2022. Gross margin forin the three months ended ~~September~~June 30, ~~2022~~2023 included $8$1 million of transformation and restructuring costs, ~~and~~$4 million of stock-based compensation expense, $27 million of amortization of acquisition-related intangible ~~assets.~~assets and $6 million related to the cyber ransomware incident recovery costs. Gross margin for the three months ended ~~September~~June 30, ~~2021~~2022 included $3$16 million of transformation and restructuring costs, ~~and $23~~$4 million of stock-based compensation expense, $27 million of amortization of acquisition-related intangible ~~assets.~~assets, and $1 million of acquisition-related costs, partially offset by profit of $4 million related to collections and inventory liquidation in Russia. Excluding these items, gross margin as a percentage of revenue ~~decreased~~increased from ~~28.7%~~25.8% to ~~26.7%~~29.0% due to ~~increases~~reductions in fuel, shipping costs and component parts compared to prior year, the impact of cost mitigation actions implemented, and an increase in the favorable higher margin software and services revenue. These improvements were partially offset by increased interest rates driving higher cost on vault cash agreements as well as other supply chain challenges that continued to negatively impact our costs as compared to the prior year. The impact of these cost increases were partially offset by cost mitigation actions implemented.rental agreements.

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Nine months ended September 30
Percentage of Revenue (1)
Increase (Decrease)
In millions 2022 2021 2022 2021 2022 v 2021
Product gross margin $ 160 $ 263 9.3 % 16.9 % (39) %
Service gross margin 1,213 1,127 29.5 % 31.6 % 8 %
Total gross margin $ 1,373 $ 1,390 23.5 % 27.1 % (1) %


	Six months ended June 30				Percentage of Revenue (1)				Increase (Decrease)
In millions	2023		2022		2023		2022		2023 v 2022
Product gross margin	$	163	$	94	14.9	%	8.3	%	73	%
Service gross margin	841		788		30.3	%	28.8	%	7	%
Total gross margin	$	1,004	$	882	25.9	%	22.8	%	14	%

For the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022

Gross margin as a percentage of revenue in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 was ~~23.5%~~25.9% compared to ~~27.1%~~22.8% in the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022. Gross margin in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 included ~~$29~~$1 million of transformation and restructuring costs, ~~$73~~$8 million of stock-based compensation expense, $53 million of amortization of acquisition-related intangible assets and $6 million related to the cyber ransomware incident recovery costs. Gross margin for the six months ended June 30, 2022 included $21 million of transformation and restructuring costs, $8 million of stock-based compensation expense, $46 million of amortization of acquisition-related intangible assets, $1 million of acquisition-related costs and $10 million related to operating losses, impairments and other actions taken with respect to our operations in Russia. ~~Gross margin for the nine months ended September 30, 2021 included $14 million of transformation and restructuring costs and $39 million of amortization of acquisition-related intangible assets.~~ Excluding these items, gross margin as a percentage of revenue ~~decreased~~increased from ~~28.2%~~25.1% to ~~25.5%~~27.7% due to ~~increases~~reductions in fuel, shipping costs and component parts ~~and increased interest rates driving higher cost on vault cash agreements as well as other supply chain challenges that negatively impacted our costs. The~~compared to prior year, the impact of ~~these cost increases were partially offset by~~ cost mitigation actions implemented, and an increase in the favorable higher margin software and services revenue. These improvements were partially offset by increased interest rates driving higher cost on vault cash rental agreements.

Selling, General and Administrative Expenses


		Three months ended September 30				Percentage of Total Revenue				Increase (Decrease)			Three months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	In millions	2022		2021		2022		2021		2022 vs 2021		In millions	2023		2022		2023		2022		2023 v 2022
Selling, general and administrative expenses	Selling, general and administrative expenses	$	264	$	294	13.4	%	15.5	%	(10)	%	Selling, general and administrative expenses	$	333	$	309	16.8	%	15.5	%	8	%

For the three months ended ~~September~~June 30, ~~2022~~2023 compared to the three months ended ~~September~~June 30, ~~2021~~2022

Selling, general, and administrative expenses were ~~$264 million compared to $294~~$333 million in the three months ended ~~September~~June 30, ~~2022 and 2021, respectively.~~2023, compared to $309 million in the same period of 2022. As a percentage of revenue, selling, general and administrative expenses were ~~13.4%~~16.8% in the three months ended June 30, 2023 compared to 15.5% in the ~~three months ended September 30, 2022 and 2021, respectively.~~same period of 2022. In the three months ended ~~September~~June 30, 2023, selling, general and administrative expenses included $5 million of transformation and restructuring costs, $29 million of stock-based compensation expense, $16 million of amortization of acquisition-related intangible assets, $1 million of acquisition related costs, $52 million of separation-related costs and $5 million related to the cyber ransomware incident recovery costs. In the three months ended June 30, 2022, selling, general and administrative expenses included $8$25 million of transformation and restructuring costs, ~~$17~~$28 million of stock-based compensation expense, $18 million of amortization of acquisition-related intangible assets, ~~and $1~~$2 million of acquisition-related ~~costs. In the three months ended September 30, 2021, selling, general~~costs and ~~administrative expenses included~~ $2 million of ~~transformation and restructuring~~ costs ~~$22 million of amortization of acquisition-related intangible assets and $8 million of acquisition-related costs.~~related to actions taken with respect to our operations in Russia. Excluding these items, selling, general and administrative expenses decreased slightly as a percentage of revenue from ~~13.8%~~11.7% to ~~12.1%~~11.3% primarily due to cost mitigation actions ~~implemented.~~implemented, partially offset by an increase in employee benefit-related costs.

Nine months ended September 30 Percentage of Total Revenue Increase (Decrease)
In millions 2022 2021 2022 2021 2022 vs 2021
Selling, general and administrative expenses $ 886 $ 835 15.2 % 16.3 % 6 %


	Six months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	2023		2022		2023		2022		2023 vs 2022
Selling, general and administrative expenses	$	625	$	622	16.1	%	16.1	%	—	%

For the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022

Selling, general, and administrative expenses were ~~$886~~$625 million compared to ~~$835~~$622 million in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. As a percentage of revenue, selling, general and administrative expenses were ~~15.2% compared to 16.3%~~16.1% in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021, respectively.~~2022. In the ~~nine~~six months ended ~~September~~June 30, 2023, selling, general and administrative expenses included $8 million of transformation and restructuring costs, $54 million of stock-based compensation expense, $32 million of

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amortization of acquisition-related intangible assets, $1 million of acquisition related costs, $71 million of separation-related costs and $5 million related to the cyber ransomware incident recovery costs. In the six months ended June 30, 2022, selling, general and administrative expenses included ~~$54~~$46 million of transformation and restructuring costs, ~~$57~~$55 million of stock-based compensation expenses, $40 million of amortization of acquisition-related intangible assets, $8$7 million of acquisition-related costs and $6 million of costs related to actions taken with respect to our operations in Russia. In the nine months ended September 30, 2021, selling, general and administrative expenses included $5 million of transformation and restructuring costs, $49 million of amortization of acquisition-related intangible assets, and $77 million of acquisition-related costs. Excluding these items, selling, general and administrative expenses decreased slightly as a percentage of revenue from ~~13.7%~~12.1% to ~~13.1%.~~11.7% primarily due to cost mitigation actions implemented, partially offset by an increase in employee benefit-related costs.

~~Table of Contents~~

Research and Development Expenses


		Three months ended September 30				Percentage of Total Revenue				Increase (Decrease)			Three months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	In millions	2022		2021		2022		2021		2022 v 2021		In millions	2023		2022		2023		2022		2023 v 2022
Research and development expenses	Research and development expenses	$	40	$	69	2.0	%	3.6	%	(42)	%	Research and development expenses	$	57	$	59	2.9	%	3.0	%	(3)	%

For the three months ended ~~September~~June 30, ~~2022~~2023 compared to the three months ended ~~September~~June 30, ~~2021~~2022

Research and development expenses were ~~$40 million compared to $69~~$57 million in the three months ended ~~September~~June 30, 2023, compared to $59 million in the same period of 2022. As a percentage of revenue, research and development costs were 2.9% and 3.0% in the three months ended June 30, 2023 and 2022, respectively. In the three months ended June 30, 2023, research and development costs included $3 million of stock-based compensation expense. In the three months ended June 30, 2022, research and ~~2021,~~development costs included $8 million of transformation costs and $3 million of stock-based compensation expense. Excluding these items, research and development expenses increased slightly as a percentage of revenue from 2.4% to 2.7% due to an increase in employee benefit-related costs.


	Six months ended June 30				Percentage of Total Revenue				Increase (Decrease)
In millions	2023		2022		2023		2022		2023 v 2022
Research and development expenses	$	121	$	124	3.1	%	3.2	%	(2)	%

For the six months ended June 30, 2023 compared to the six months ended June 30, 2022

Research and development expenses were $121 million compared to $124 million in the six months ended June 30, 2023 and 2022, respectively. As a percentage of revenue, these costs were ~~2.0%~~3.1% and ~~3.6%~~3.2% in the ~~three~~six months ended ~~September~~June 30, 2023 and 2022, ~~and 2021, respectively, and were lower due to an increase in capitalization as well as cost-mitigation actions that were implemented.~~

Nine months ended September 30 Percentage of Total Revenue Increase (Decrease)
In millions 2022 2021 2022 2021 2022 v 2021
Research and development expenses $ 164 $ 204 2.8 % 4.0 % (20) %

~~For~~respectively. In the ~~nine~~six months ended ~~September~~June 30, ~~2022 compared to the nine months ended September 30, 2021~~

~~Research~~2023, research and development expenses ~~were $164~~included $6 million ~~compared to $204 million in~~of stock-based compensation expense. In the ~~nine~~six months ended September 30, 2022 and 2021, respectively. As a percentage of revenue, these costs were 2.8% and 4.0% in the nine months ended September 30, 2022 and 2021, respectively. In the nine months ended SeptemberJune 30, 2022, research and development expenses included ~~$10~~$9 million of transformation and restructuring ~~costs. In the nine months ended September 30, 2021, research~~costs and ~~development expenses included $1~~$6 million of ~~transformation and restructuring costs.~~stock-based compensation expense. After considering this item, research and development expenses ~~decreased~~slightly increased as a percentage of revenue from ~~4.0%~~2.8% to ~~2.6%, respectively, and were lower~~3.0% due to an increase in ~~capitalization in 2022 as well as cost-mitigation actions that were implemented.~~employee benefit-related costs.

~~Loss on Debt Extinguishment~~

Three months ended September 30 Nine months ended September 30
In millions 2022 2021 2022 2021
Loss on extinguishment of debt $ — $ 42 $ — $ 42

~~Loss on extinguishment of debt of $42 million for the the three and nine months ended~~September 30, 2021 is related to the premium paid for early redemption of $400 million 8.125% senior secured notes due 2025, which includes the write-off of deferred financing fees of $5 million and a cash redemption premium of $37 million.

Interest Expense


		Three months ended September 30				Increase (Decrease)			Three months ended June 30				Increase (Decrease)
In millions	In millions	2022		2021		2022 v 2021		In millions	2023		2022		2023 v 2022
Interest expense	Interest expense	$	74	$	68	9	%	Interest expense	$	91	$	67	36	%

For the three months ended ~~September~~June 30, ~~2022~~2023 compared to the three months ended ~~September~~June 30, ~~2021~~2022

Interest expense was ~~$74~~$91 million compared to ~~$68~~$67 million in the three months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, 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~~increase in interest expense was ~~related~~primarily due to the significant increase in variable interest rates on the Senior Secured Credit ~~Facility and slightly higher average outstanding principal balances.~~Facility.

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		Nine months ended September 30				Increase (Decrease)			Six months ended June 30				Increase (Decrease)
In millions	In millions	2022		2021		2022 v 2021		In millions	2023		2022		2023 v 2022
Interest expense	Interest expense	$	204	$	174	17	%	Interest expense	$	174	$	130	34	%

For the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022

Interest expense was ~~$204~~$174 million compared to ~~$174~~$130 million in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, 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~~increase in interest expense was ~~related~~primarily due to the significant increase in ~~total outstanding debt as a result of the closing of the acquisition of Cardtronics in the second quarter of 2021, combined with an increase in~~variable interest rates on the Senior Secured Credit Facility.

Other Income (Expense), net

Other income (expense), net was expense of $1$8 million and $5income of $1 million in the three months ended ~~September~~June 30, 2023 and 2022, respectively, and ~~2021, respectively,~~expense of $11 million and income of ~~$9 million and expense of $23~~$10 million in the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, with the components reflected in the following table:


		Three months ended September 30				Nine months ended September 30					Three months ended June 30				Six months ended June 30
In millions	In millions	2022		2021		2022		2021		In millions	2023		2022		2023		2022
Interest income	Interest income	$	3	$	—	$	6	$	4	Interest income	$	3	$	2	$	6	$	3
Foreign currency fluctuations and foreign exchange contracts	Foreign currency fluctuations and foreign exchange contracts	(13)		(5)		(20)		(12)		Foreign currency fluctuations and foreign exchange contracts	(10)		(7)		(10)		(7)
Bank-related fees	Bank-related fees	(3)		(4)		(8)		(25)		Bank-related fees	(8)		(3)		(13)		(5)
Employee benefit plans	Employee benefit plans	10		3		31		9		Employee benefit plans	—		10		—		21
Other, net	Other, net	2		1		—		1		Other, net	7		(1)		6		(2)
Other income (expense), net	Other income (expense), net	$	(1)	$	(5)	$	9	$	(23)	Other income (expense), net	$	(8)	$	1	$	(11)	$	10

Employee benefit plans within Other income (expense), net includes the components of pension, postemployment and postretirement expense, other than service cost. The increase in Employee benefit plans in 2022 compared to the prior year period is primarily related to actuarial gains related to the pension plans that are being amortized throughout the year. In the nine months ended September 30, 2021, the Company incurred bank-related fees of $19 million related 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.

Income Taxes


		Three months ended September 30				Nine months ended September 30					Three months ended June 30				Six months ended June 30
In millions	In millions	2022		2021		2022		2021		In millions	2023		2022		2023		2022
Income tax expense (benefit)	Income tax expense (benefit)	$	43	$	29	$	56	$	77	Income tax expense (benefit)	$	30	$	—	$	44	$	13

For the three months ended ~~September~~June 30, ~~2022~~2023 compared to the three months ended ~~September~~June 30, ~~2021~~2022

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 ~~$43~~$30 million for the three months ended ~~September~~June 30, ~~2022~~2023 compared to ~~$29 million income tax expense~~approximately zero for the three months ended ~~September~~June 30, ~~2021. The change was primarily driven by higher income before taxes in the three months ended September 30, 2022, compared to the prior year.The company did not recognize any material discrete tax expenses or benefits in either period.~~

~~For the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021~~

~~Income tax expense was $56 million for the nine months ended September 30, 2022 compared to expense of $77 million for the nine months ended September 30, 2021.~~2022. The change was primarily driven by discrete tax expenses and benefits and higher income before taxes in the three months ended June 30, 2023, compared to the prior year.In the three months ended June 30, 2023, the Company recognized a $2 million expense from recording a valuation allowance against deferred tax assets in Turkey and a $2 million expense related to interest on uncertain tax benefits. In the ~~nine~~three months ended ~~September~~June 30, 2022, the Company recognized a $7$6 million benefit from provision to return adjustments and a $7 million benefit related to uncertain tax position settlements and statute of limitation lapses.

For the six months ended June 30, 2023 compared to the six months ended June 30, 2022

Income tax expense was $44 million for the six months ended June 30, 2023 compared to expense of $13 million for the six months ended June 30, 2022. The change was primarily driven by discrete tax expenses and benefits and higher income before taxes in the six months ended June 30, 2023, compared to the prior year. In the six months ended June 30, 2023, the Company recognized a $2 million expense from recording a valuation allowance against deferred tax assets in Turkey, a $2 million expense related to tax audit settlements, and a $4 million expense related to interest on uncertain tax benefits. In the ~~nine~~six months ended ~~September~~June 30, 2022, the Company recognized a $4 million benefit from provision to return adjustments and a $7 million benefit related to uncertain tax position settlements and statute of limitation lapses.

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30, 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 in the U.K.

The Company is subject to numerous federal, state and foreign tax audits. While 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 ~~2022~~2023 or future periods.

Income (Loss) from Discontinued Operations

~~There was no activity related to~~The Company recognized loss from discontinued operations, ~~for~~net of tax, of $1 million in the three and six months ended ~~September~~June 30, ~~2022, whereas the~~2023. The loss from discontinued operations, net of tax, was primarily driven by immaterial updates to various environmental remediation matters. The Company recognized income from discontinued operations, net of tax, of $6 million and $5 million in the ~~nine~~three and six months ended ~~September~~June 30, ~~2022.~~2022 respectively. The income from discontinued operations, net of tax, was primarily driven by insurance recoveries partially offset by immaterial updates to various environmental remediation matters. ~~In the three and nine months ended September 30, 2021, there was no activity related to discontinued operations.~~

Revenue and Adjusted EBITDA by Segment

The Company manages and reports its businesses in the following segments: Retail, Hospitality, Digital Banking, Payments & Network, and Self-Service Banking.

Segments are measured for profitability by the Company’s chief operating decision maker based on revenue and segment Adjusted EBITDA. Refer to our definition of 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~~in the section entitled "Non-GAAP Financial Measures 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 amortizationUse 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 income (loss) from continuing operations attributable to NCR. 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.Certain Terms."

~~Special Item Related to Russia~~ The war in Eastern Europe and related sanctions imposed on Russia and related actors by the United States and other jurisdictions required us to commence the orderly wind down of our operations in Russia beginning in the first quarter of 2022. As of September 30, 2022, we have ceased operations in Russia and are in the process of dissolving our only subsidiary in Russia. As a result, for the three and nine months ended September 30, 2022, our non-GAAP presentation of the measures described above exclude the immaterial impact of our operating results in Russia, as well as the impact of impairments taken to write down the carrying value of assets and liabilities, severance charges, and the assessment of collectability on revenue recognition. We consider this to be a non-recurring special item and management has reviewed the results of its business segments excluding these impacts. We have not adjusted the presentation of the prior year periods due to the immaterial impact of Russia to revenue and income from continuing operations for the three and nine months ended September 30, 2021.

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The following tables show our segment revenue and Adjusted EBITDA for the three and ~~nine~~six months ended ~~September~~June 30, the relative percentage that those amounts represent to segment revenue, and the change in those amounts year-over-year.

Three months ended September 30
Percentage of Revenue (1)
Increase (Decrease) Increase (Decrease) Constant Currency
In millions 2022 2021 2022 2021 2022 v 2021 2022 v 2021
Revenue
Retail $ 575 $ 541 29.2 % 28.5 % 6 % 12 %
Hospitality 238 224 12.1 % 11.8 % 6 % 8 %
Digital Banking 137 128 6.9 % 6.7 % 7 % 7 %
Payments & Network 336 304 17.0 % 16.0 % 11 % 14 %
Self-Service Banking 640 637 32.5 % 33.5 % — % 6 %
Other 58 75 2.9 % 3.9 % (23) % (18) %
Eliminations (2)
(12) (8) (0.6) % (0.4) % 50 % 50 %
Total segment revenue $ 1,972 $ 1,901 100.0 % 100 % 4 % 8 %
Total revenue $ 1,972 $ 1,901 4 % 8 %
Adjusted EBITDA by Segment
Retail $ 128 $ 104 22.3 % 19.2 % 23 %
Hospitality 51 44 21.4 % 19.6 % 16 %
Digital Banking 60 52 43.8 % 40.6 % 15 %
Payments & Network 114 111 33.9 % 36.5 % 3 %
Self-Service Banking 150 155 23.4 % 24.3 % (3) %
Corporate and Other (112) (109) (193.1) % (145.3) % 3 %
Eliminations (2)
(11) (5) 91.7 % 62.5 % 120 %
Total Adjusted EBITDA $ 380 $ 352 19.3 % 18.5 % 8 %


	Three months ended June 30				Percentage of Revenue (1)				Increase (Decrease)		Increase (Decrease) Constant Currency
In millions	2023		2022		2023		2022		2023 v 2022		2023 v 2022
Revenue
Retail	$	576	$	562	29.0	%	28.1	%	2	%	3	%
Hospitality	235		238		11.8	%	11.9	%	(1)	%	(1	%)
Digital Banking	140		131		7.0	%	6.6	%	7	%	7	%
Payments & Network	333		332		16.8	%	16.6	%	—	%	1	%
Self-Service Banking	661		679		33.3	%	34.0	%	(3)	%	(1)	%
Total segment revenue	$	1,945	$	1,942	97.9	%	97.2	%	—	%	1	%
Other (2)	54		61		2.8	%	3.1	%	(11)	%	(11)	%
Eliminations (3)	(13)		(12)		(0.7)	%	(0.6)	%	8	%	8	%
Other Adjustment (4)	$	—	6		—	%	0.3	%	n/m		n/m
Total revenue	$	1,986	$	1,997	100.0	%	100.0	%	(1)	%	—	%

Adjusted EBITDA by Segment
Retail	$	123	$	104	21.4	%	18.5	%	18	%
Hospitality	$	60	$	46	25.5	%	19.3	%	30	%
Digital Banking	$	53	$	56	37.9	%	42.7	%	(5)	%
Payments & Network	$	99	$	97	29.7	%	29.2	%	2	%
Self-Service Banking	$	169	$	142	25.6	%	20.9	%	19	%

(1) The percentage of revenue is calculated for each line item divided by total revenue, except for Adjusted EBITDA, which are divided by the related component of revenue.

(2) Other immaterial business operations that do not represent a reportable segment.

(3) Eliminations include revenues from contracts with customers and the related costs that are reported in the Payments & Network segment as well as in the Retail or Hospitality segments, including merchant acquiring services that are monetized via payments.

(4) Other adjustment reflects the revenue attributable to the Company's operations in Russia for the three months ended June 30, 2022 that were excluded from management's measure of revenue due to our previous announcement to suspend sales to Russia and orderly wind down of our operations in Russia beginning in the first quarter of 2022.

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Nine months ended September 30
Percentage of Revenue (1)
Increase (Decrease) Increase (Decrease) Constant Currency
In millions 2022 2021 2022 2021 2022 v 2021 2022 v 2021
Revenue
Retail $ 1,683 $ 1,623 28.9 % 31.7 % 4 % 8 %
Hospitality 687 618 11.8 % 12.1 % 11 % 12 %
Digital Banking 404 380 6.9 % 7.4 % 6 % 6 %
Payments & Network 967 380 16.6 % 7.4 % 154 % 162 %
Self-Service Banking 1,930 1,910 33.1 % 37.3 % 1 % 5 %
Other 187 229 3.2 % 4.5 % (18) % (15) %
Eliminations (2)
(32) (18) (0.5) % (0.4) % 78 % 78 %
Total segment revenue $ 5,826 $ 5,122 100 % 100.0 % 14 % 17 %
Other adjustment (3)
9 —
Total revenue $ 5,835 $ 5,122 14 % 18 %
Adjusted EBITDA by Segment
Retail $ 299 $ 323 17.8 % 19.9 % (7) %
Hospitality 138 119 20.1 % 19.3 % 16 %
Digital Banking 172 161 42.6 % 42.4 % 7 %
Payments & Network 309 133 32.0 % 35.0 % 132 %
Self-Service Banking 404 432 20.9 % 22.6 % (6) %
Corporate and Other (307) (265) (164.2) % (115.7) % 16 %
Eliminations (2)
(25) (12) 78.1 % 66.7 % 108 %
Total Adjusted EBITDA $ 990 $ 891 17.0 % 17.4 % 11 %


	Six months ended June 30				Percentage of Revenue (1)				Increase (Decrease)		Increase (Decrease) Constant Currency
In millions	2023		2022		2023		2022		2023 v 2022		2023 v 2022
Revenue
Retail	$	1,128	$	1,108	29.1	%	28.7	%	2	%	4	%
Hospitality	458		449		11.8	%	11.6	%	2	%	2	%
Digital Banking	276		267		7.1	%	6.9	%	3	%	3	%
Payments & Network	656		631		16.9	%	16.3	%	4	%	5	%
Self-Service Banking	1,274		1,290		32.9	%	33.4	%	(1)	%	1	%
Total segment revenue	$	3,792	$	3,745	97.8	%	96.9	%	1	%	3	%
Other (2)	108		129		2.8	%	3.4	%	(16)	%	(15)	%
Eliminations (3)	(23)		(20)		(0.6)	%	(0.5)	%	15	%	15	%
Other adjustment (4)	—		9		—	%	0.2	%	n/m		n/m
Total revenue	$	3,877	$	3,863	100.0	%	100.0	%	—	%	2	%

Adjusted EBITDA by Segment
Retail	$	220	$	171	19.5	%	15.4	%	29	%
Hospitality	$	113	$	87	24.7	%	19.4	%	30	%
Digital Banking	$	102	$	112	37.0	%	41.9	%	(9)	%
Payments & Network	$	182	$	195	27.7	%	30.9	%	(7)	%
Self-Service Banking	$	307	$	254	24.1	%	19.7	%	21	%

(1) The percentage of revenue is calculated for each line item divided by total revenue, except for Adjusted EBITDA, which are divided by the related component of revenue.

(2) Other immaterial business operations that do not represent a reportable segment.

~~(3)~~(4) Other adjustment reflects the revenue attributable to the Company's operations in Russia for the six months ended June 30, 2022 that were excluded from management's measure of revenue due to our previous announcement to suspend sales to Russia and ~~anticipated~~ orderly wind down of our operations in ~~Russia. The revenue attributable to the Russian operations for the prior period of $33 million is included~~Russia beginning in the ~~respective segments.~~first quarter of 2022.

The following table provides a reconciliation of segment and total revenue percentage growth (GAAP) to revenue percentage growth constant currency (non-GAAP) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022.~~2023.


		Three months ended September 30, 2022						Nine months ended September 30, 2022							Three months ended June 30, 2023						Six months ended June 30, 2023
$ in millions	$ in millions	Revenue Growth % (GAAP)		Favorable (Unfavorable) FX Impact		Revenue Growth % Constant Currency (non-GAAP)		Revenue Growth % (GAAP)		Favorable (Unfavorable) FX Impact		Revenue Growth % Constant Currency (non-GAAP)		$ in millions	Revenue Growth % (GAAP)		Favorable (Unfavorable) FX Impact		Revenue Growth % Constant Currency (non-GAAP)		Revenue Growth % (GAAP)		Favorable (Unfavorable) FX Impact		Revenue Growth % Constant Currency (non-GAAP)
Retail	Retail	6	%	(6)	%	12	%	4	%	(4)	%	8	%	Retail	2	%	(1)	%	3	%	2	%	(2)	%	4	%
Hospitality	Hospitality	6	%	(2)	%	8	%	11	%	(1)	%	12	%	Hospitality	(1)	%	—	%	(1)	%	2	%	—	%	2	%
Digital Banking	Digital Banking	7	%	—	%	7	%	6	%	—	%	6	%	Digital Banking	7	%	—	%	7	%	3	%	—	%	3	%
Payments & Network	Payments & Network	11	%	(3)	%	14	%	154	%	(8)	%	162	%	Payments & Network	—	%	(1)	%	1	%	4	%	(1)	%	5	%
Self-Service Banking	Self-Service Banking	—	%	(6)	%	6	%	1	%	(4)	%	5	%	Self-Service Banking	(3)	%	(2)	%	(1)	%	(1)	%	(2)	%	1	%
Total segment revenue														Total segment revenue	—	%	(1)	%	1	%	1	%	(2)	%	3	%
Other	Other	(23)	%	(5)	%	(18)	%	(18)	%	(3)	%	(15)	%	Other	(11)	%	—	%	(11)	%	(16)	%	(1)	%	(15)	%
Eliminations	Eliminations	50	%	—	%	50	%	78	%	—	%	78	%	Eliminations	8	%	—	%	8	%	15	%	—	%	15	%
Total segment revenue		4	%	(4)	%	8	%	14	%	(3)	%	17	%

Total revenue	Total revenue	4	%	(4)	%	8	%	14	%	(4)	%	18	%	Total revenue	(1)	%	(1)	%	—	%	—	%	(2)	%	2	%

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Segment Revenue

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022

Retail revenue increased 6%2% for the three and six months ended ~~September~~June 30, ~~2022 compared to the prior year period and increased 4% for the nine months ended September 30, 2022~~2023 compared to the prior year period. Foreign currency fluctuations had an unfavorable impact of 6%1% and 4%2% on the three and ~~nine~~six month revenue comparisons, respectively. Revenue results ~~for the quarter-to-date period~~ were primarily due to higher ~~self checkout hardware~~revenue from services and point-of-sale solutions ~~revenue~~ partially offset by a decrease in ~~software license, point-of-sale hardware,~~self-checkout related revenue.

Hospitality revenue decreased 1% for the three months ended June 30, 2023 compared to the prior year period and ~~hardware maintenance revenue.~~increased 2% for the six months ended June 30, 2023 compared to the prior year period. For the ~~nine~~three months ended ~~September~~June 30, ~~2022,~~2023, the decrease in revenue is due to a decrease in POS hardware partially offset by an increase in point-of-sale solutions revenue as well as increases in services and payments processing revenues. For the six months ended June 30, 2023, the increase in revenue of 2% compared to ~~the~~ prior period is due to an increase in ~~self checkout~~services and ~~point-of-sale hardware revenue~~software revenues, including growth in cloud services and ~~an increase in point-of-sale solutions revenue~~payment processing, partially offset by a decrease in ~~software license and hardware maintenance revenue.~~

Hospitality revenue increased 6% and 11% for the three and nine months ended September 30, 2022, respectively, compared to the prior year period, driven primarily by an increase in point-of-sale hardware, as well as increases in hardware maintenance and software revenues.POS hardware.

Digital Banking revenue increased 7% and 6%3% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, compared to the prior year ~~periods,~~period, due to an increase in ~~software license and~~recurring cloud services and software maintenance revenues.

Payments & Network revenue increased 11% for the three months ended September 30, 2022 and increased significantly for the nine months ended September 30, 2022 compared to the prior year periods. For the three months ended September 30, 2022, the increase in revenue compared to the prior year period is due to cryptocurrency transaction processing revenue following the acquisition of LibertyX in January 2022 as well as additional payments processing revenue. For the nine months ended September 30, 2022, the revenue increase is primarily due to additional payments processing revenue from the acquisition of Cardtronics, which occurred on June 21, 2021. Additionally, the nine months ended~~September 30, 2022 includes cryptocurrency transaction processing revenue following the acquisition of LibertyX in January 2022.~~

~~Self-Service Banking revenue growth~~ was flat for the three months ended ~~September~~June 30, ~~2022 and increased 1% for nine months ended September 30, 2022,~~2023 compared to the prior year ~~periods.~~period and increased 4% for the six months ended June 30, 2023 compared to the prior year period. For the six months ended June 30, 2023, the increase in revenue is due to an increase in payment processing and Bitcoin-related revenue driven by an increase in higher margin ATM transactions and merchant acquiring services.

Self-Service Banking revenue decreased 3% and 1% for the three and six months ended June 30, 2023, respectively, compared to the prior year period. Foreign currency fluctuations had an unfavorable impact of ~~6% and 4%~~2% on the three and ~~nine~~six month revenue ~~comparisons, respectively. For~~comparisons. Revenue results for the ~~three months ended September 30, 2022, increases~~periods were primarily due to the shift from one-time ATM hardware and hardware maintenance revenues to recurring ATM as-a-Service arrangements in addition to a decline in one-time software license revenues. The declines in ATM hardware, ~~revenue compared to the prior year period~~hardware maintenance and software license revenues were ~~fully~~partially offset by ~~declines in software related revenues. For the nine months ended September 30, 2022, the increase in revenue compared to prior year period is due to~~ an increase in recurring software and services revenues, including hardware maintenance and professional services partially offset by a decline in ATM hardware sales. The decline in ATM hardware sales for the year-to-date period was due in part to supply chain challenges that resulted in temporary order fulfillment delays during the first quarter of 2022.revenue. Software and services revenue as a percent of total Self-Service Banking segment revenue ~~was~~were 69% and 67% in the ~~third~~second quarter of 2023 and 2022, ~~and 2021.~~

For the operations grouped as Other, revenue decreased 23% and 18% for the three and nine months ended September 30, 2022, respectively, compared to the prior year period, primarily due to a decrease in hardware maintenance revenue in the telecommunications and technology business.respectively.

Segment Adjusted EBITDA

For the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022

Retail Adjusted EBITDA increased ~~23%~~18% and ~~declined~~29% for the three and six months ended June 30, 2023, respectively, compared to the prior year period, primarily due to favorable software and services revenue mix and improvements in component, labor and freight costs as well as other cost mitigation and pricing actions taken in the latter part of 2022 and 2023. These improvements were partially offset by an increase in employee benefit-related costs.

Hospitality Adjusted EBITDA increased 30% for the three and six months ended June 30, 2023 compared to the prior year period, primarily driven by pricing and cost mitigation actions taken in the latter part of 2022 and 2023 as well as improvements in component and fuel costs. These improvements were partially offset by an increase in employee benefit-related costs.

Digital Banking Adjusted EBITDA decreased 5% and 9% for the three and six months ended June 30, 2023, respectively, compared to the prior year period, driven by investment in selling expenses and research and development expenses, and an increase in employee benefit-related costs.

Payments & Network Adjusted EBITDA increased 2% and decreased 7% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, compared to the prior year period. The increase in Adjusted EBITDA for the three months ended ~~September~~June 30, ~~2022~~2023 compared to the prior year period iswas primarily due to increases in higher margin transaction revenue and cost mitigation and pricing actions as well as product mix during the quarter. For the nine months ended September 30, 2022, the decline in Adjusted EBITDA compared to the prior year period is primarily driven by product cost and mix, increased labor costs, and other supply chain challenges.

Hospitality Adjusted EBITDA increased 16% for the three and nine months ended September 30, 2022, respectively, compared to the prior year period, primarily driven by an increase in revenue driven by subscription and payments processing.optimization initiatives. These improvements were partially offset by ~~supply chain challenges and increased fuel costs which drove up component and other costs, particularly in transaction services and hardware.~~

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~~Digital Banking Adjusted EBITDA increased 15% and 7% for the three and nine months ended September 30, 2022, respectively, compared to the prior year period, driven by~~ an increase in ~~recurring revenue.~~

Payments & Network Adjusted EBITDA increased by 3% for the three months ended September 30, 2022 whereas it increased significantly for the nine months ended September 30, 2022 compared to the prior year period. This was primarily due to additional payments processing revenue from the acquisition of Cardtronics, which occurred in the second quarter of 2021. Payments & Network Adjusted EBITDA for the three and nine months ended September 30, 2022 has been negatively impacted by higher interest rates, which increases the cost of our vault cash rental ~~obligations.~~

~~Self-Service Banking Adjusted EBITDA declined 3%~~obligations, and ~~6% for the three and nine months ended September 30, 2022, respectively, compared to the prior year period.~~employee benefit-related costs. The ~~decrease~~decline in Adjusted EBITDA for the ~~three and nine~~six months ended ~~September~~June 30, ~~2022~~2023 compared to ~~the~~ prior year period was primarily due ~~to supply chain challenges~~significantly higher interest rates on our vault cash agreements, as well as higher cash-in-transit costs driven by the higher volume of cash dispensed in the period, and ~~increased fuel costs which drove up component and other costs, particularly~~an increase in ~~ATM hardware, hardware maintenance and transaction services. These headwinds were~~employee benefit-related costs. This was partially offset by anthe increase in ~~recurring revenue.~~higher margin transaction revenue described above.

~~Corporate and Other~~

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Self-Service Banking Adjusted EBITDA ~~loss~~ increased 3%19% and ~~16%~~21% for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022,~~2023, respectively, compared to the prior year period primarily due to ~~infrastructure~~improvement in component and fuel costs, ~~of the Cardtronics business that was acquired on June 21, 2021.~~

particularly in ATM hardware, as well as increases in higher margin recurring revenue streams. These improvements were partially offset by an increase in employee benefit-related costs.

Financial Condition, Liquidity, and Capital Resources

~~Cash provided by~~Historically, our principal sources of cash are cash generated from operations, borrowings under our revolving credit facility and issuances of debt. We continually evaluate our liquidity requirements in light of our operating activities was $245 million in the nine months ended September 30, 2022 compared to cash provided by operating activities of $807 million in the nine months ended September 30, 2021. The decrease in cash provided by operating activities in the nine months ended September 30, 2022 was driven by the unfavorable movement in net workingneeds, growth initiatives and capital accounts, partially offset by cash received upon termination of interest rate swap contracts in the first and second quarters of 2022. Additionally, cash provided by operating activities in the nine months ended September 30, 2021 reflects the agreement entered into during the third quarter of 2021 to sell short-term receivables from certain trade accounts to an unaffiliated financial institution, which provided a $274 million benefit to operating cash flows. Refer to Note 6, “Trade Receivables Facility”, of the Notes to Condensed Consolidated Financial Statements included in Item 1 of this Report for more information.resources.

NCR’s management uses a non-GAAP measure called ~~“free~~“Adjusted free cash ~~flow”~~flow-unrestricted” to assess the financial performance of the Company. We define Adjusted free cash ~~flow~~flow-unrestricted as net cash provided by (used in) operating activities less capital expenditures for property, plant and equipment, less additions to capitalized software, plus/minus the change in restricted cash settlement activity, plus acquisition-related items, ~~less~~plus/minus net reductions or reinvestments in the ~~impact from~~trade receivables facility established in the ~~initial sale of trade accounts receivables under the agreement entered into during the 3rd~~third quarter of 2021 due to fluctuations in the outstanding balance of receivables sold, and plus pension contributions and settlements. Restricted cash settlement activity represents the net change in amounts collected on behalf of, but not yet remitted to, certain of the Company’s merchant customers or third-party service providers that are pledged for a particular use or restricted to support these obligations. These amounts can fluctuate significantly period to period based on the number of days for which settlement to the merchant has not yet occurred or day of the week on which a reporting period ends. We believe Adjusted free cash ~~flow~~flow-unrestricted 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, Adjusted free cash ~~flow~~flow-unrestricted indicates the amount of cash available after ~~capital expenditures~~these adjustments for, among other things, investments in the Company’s existing businesses, strategic acquisitions, repurchases of NCR stock and repayment of debt obligations. ~~Free~~Adjusted free cash ~~flow~~flow-unrestricted 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~~Adjusted free cash ~~flow~~flow-unrestricted 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.

Summarized cash flow information for the six months ended June 30 is as follows:


	Six months ended June 30
In millions	2023		2022
Net cash provided by operating activities	$	544	$	118
Net cash used in investing activities	$	(194)	$	(177)
Net cash provided by (used in) financing activities	$	(266)	$	(7)

Cash provided by operating activities was $544 million in the six months ended June 30, 2023 compared to cash provided by operating activities of $118 million in the six months ended June 30, 2022. The increase in cash provided by operating activities in the six months ended June 30, 2023 was driven by higher operating income of $20 million and the favorable movement in net working capital accounts of $392 million.

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The table below reconciles net cash provided by operating activities, the most directly comparable GAAP measure, to NCR’s non-GAAP measure of Adjusted free cash ~~flow~~flow-unrestricted for the ~~nine~~six months ended ~~September~~June 30:


	Six months ended June 30
In millions	2023		2022
Net cash provided by operating activities (GAAP)	$	544	$	118
Expenditures for property, plant and equipment	(70)		(32)
Additions to capitalized software	(134)		(142)
Restricted cash settlement activity	(28)		37

Change in trade receivables facility	43		—
Pension contributions	8		9
Adjusted free cash flow-unrestricted (non-GAAP)	$	363	$	(10)

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For the six months ended June 30, ~~2022 :~~

Nine months ended September 30
In millions 2022 2021
Net cash provided by operating activities $ 245 $ 807
Expenditures for property, plant and equipment (72) (68)
Additions to capitalized software (217) (174)
Restricted cash settlement activity (6) 1
Transaction costs — 55
Initial sale of trade accounts receivable — (274)
Pension contributions 12 13
Free cash flow (non-GAAP) $ (38) $ 360
2023, net cash provided by operating activities increased $426 million, which contributed to a net increase in Adjusted free cash flow-unrestricted of $373 million in comparison to the six months ended June 30, 2022. The increase in net cash provided by operating activities was offset by an increase in restricted cash settlement activity of $65 million and an increase in capital expenditures for property, plant and equipment of $38 million. Adjusted free cash flow-unrestricted was also adjusted for the impact of a net $43 million reduction in the Company's trade receivables facility due to timing of fluctuations in the outstanding balance of receivables sold.

Financing activities and certain other investing activities are not included in our calculation of Adjusted free cash ~~flow.~~flow-unrestricted. Other investing activities primarily include business acquisitions, divestitures and ~~investments. During~~investments, which were not significant in the ~~nine~~six months ended ~~September~~June 30, 2022, the payments for business combinations totaled $12 million, net of cash acquired, for the cash consideration paid primarily related to the acquisition of the India ATM Business of FIS Payment Solutions & Services Private Limited completed in July of 20222023 and ~~the LibertyX acquisition completed in January of~~June 30, 2022. The LibertyX acquisition was completed via issuance of NCR common stock in exchange for the outstanding shares of LibertyX. During the nine months ended September 30, 2021, the payments for business acquisitions was $2,466 million, mainly related to the acquisition of Cardtronics completed in the second quarter of 2021.

Our financing activities include borrowings and repayments of credit facilities and notes. Financing activities during the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 also included dividends paid on the Series A preferred stock of ~~$11~~$8 million, proceeds from employee stock plans of ~~$19~~$14 million as well as tax withholding payments on behalf of employees for stock based awards that vested of ~~$38~~$16 million. Financing activities during the ~~nine~~six months ended ~~September~~June 30, ~~2021~~2022 included dividends paid on the Series A preferred stock of ~~$11~~$8 million, proceeds from stock employee plans of ~~$33~~$14 million, and tax withholding payments on behalf of employees for stock based awards that vested of ~~$28~~$36 million.

During the nine months ended September 30, 2021, in connection with the acquisition of Cardtronics, we issued new senior unsecured notes for an aggregate principal amount of $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 converted into the Revolving Credit Facility. Additionally, we paid $52 million of deferred financing fees related to these transactions.

Long Term Borrowings The Senior Secured Credit Facility consists of term loan facilities in an aggregate principal amount of $2.055 billion, of which ~~$1.91~~$1.83 billion was outstanding as of ~~September~~June 30, ~~2022.~~2023. Additionally, the Senior Secured Credit Facility provides for a five-year Revolving Credit Facility with an aggregate principal amount of $1.3 billion, of which ~~$558~~$328 million was outstanding as of ~~September~~June 30, ~~2022.~~2023. The Revolving Credit Facility also contains a sub-facility to be used for letters of credit, and as of ~~September~~June 30, ~~2022,~~2023, there were ~~$24~~$29 million letters of credit outstanding.

As of ~~September~~June 30, ~~2022,~~2023, we had outstanding $1.2 billion in aggregate principal balance of 5.125% senior unsecured notes due in 2029, $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, and $450 million in aggregate principal balance of 5.250% senior unsecured notes due in 2030.

See Note 5, “Debt Obligations”, of the Notes to Condensed Consolidated Financial Statements included in Item 1 of this Report for further information on the Senior Secured Credit Facility.

Employee Benefit Plans In ~~2022,~~2023, we expect to make contributions of ~~$17~~$20 million to our international pension plans, ~~$80~~$75 million to our postemployment plan and $1$2 million to our postretirement plan. For additional information, refer to Note 9, “Employee Benefit Plans”, of the Notes to Condensed Consolidated Financial Statements.

Series A Convertible Preferred Stock As of ~~September~~June 30, ~~2022,~~2023, the redemption value of the Series A Preferred Stock was approximately $276 million. 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

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the option of the Company. During the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021,~~2022, the Company paid cash dividends of ~~$11~~$8 million, respectively.

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. As of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, 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 9.2 million shares.

Cash and Cash Equivalents Held by Foreign Subsidiaries Cash and cash equivalents held by the Company's foreign subsidiaries at ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021~~2022 were ~~$328~~$455 million and ~~$412~~$419 million, respectively. 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 ~~September~~June 30, ~~2022,~~2023, our cash and cash equivalents totaled ~~$434~~$547 million and our total debt was ~~$5.77~~$5.47 billion, excluding deferred fees. As of ~~September~~June 30, ~~2022,~~2023, our borrowing capacity under the Revolving Credit Facility was approximately ~~$718~~$943 million. Our ability to generate positive cash flows from operations is dependent on general economic conditions, the competitive environment in our industry, and is subject to the business and other risk factors described in Item 1A of Part I of

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the Company’s ~~2021~~2022 Annual Report on Form 10-K and Item 1A of Part II of this Quarterly Report on Form 10-Q (as applicable). If we are unable to generate sufficient cash flows from operations, or otherwise comply with the terms of our credit facilities, we may be required to seek additional financing alternatives.

We believe that we have sufficient liquidity based on our current cash position, cash flows from operations and existing financing to meet our expected pension, postemployment, and postretirement plan contributions, remediation payments related to environmental matters, debt servicing obligations, payments related to separation, transformation and restructuring initiatives, and in the long-term (i.e., beyond ~~September~~June 30, ~~2023)~~2024) to meet our material cash requirements.

Material Cash Requirements from Contractual and Other Obligations

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, ~~2021.~~2022.

Critical Accounting Policies and Estimates

Critical accounting policies are those that are most important to the portrayal of our financial position and results of operations. These policies require highly subjective or complex judgments, often employing the use of estimates about the effect of matters that are inherently uncertain. Our most critical accounting estimates pertain to revenue recognition, inventory valuation, goodwill and intangible assets, pension, postretirement and postemployment benefits, environmental and legal contingencies, and income taxes, which are described in Item 7. of our ~~2021~~2022 Form 10-K.

New Accounting Pronouncements

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

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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”). Forward-looking statements use words such as “expect,” “anticipate,” “outlook,” “intend,” “plan,” “confident,” “believe,” “will,” “should,” “would,” “potential,” “positioning,” “proposed,” “planned,” ~~“likely,~~“objective,” ~~“objective,~~“likely,” “could,” “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. Examples of forward-looking statements in this Form 10-Q include, without limitation, statements regarding: our expectations of demand for our solutions and execution and the impact thereof on our financial results in 2023; NCR's focus on advancing our strategic growth initiatives and transforming NCR into a software-led as-a-service company with a higher mix of recurring revenue streams; our expectations of NCR's ability to deliver increased value to customers and stockholders; and statements regarding the planned separation of NCR into two separate companies, including, but not limited to, statements regarding the anticipated timing and structure of such planned transaction, the future commercial or financial performance of the digital commerce company or the ATM company following such planned transaction, value creation and ability to innovate and drive growth generally as a result of such transaction, and the expected capital structure, net debt and pension obligations of the companies at the time of and following the transaction. 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~~NCR's control. Forward-looking statements are not guarantees of future performance, and there are a

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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:

•Strategy and Technology: transforming our business model; development and introduction of new solutions; competition in the technology industry; integration of acquisitions and management of alliance activities; and our multinational operations;

•Business Operations: domestic and global economic and credit conditions; risks and uncertainties from the payments-related business and industry; disruptions in our data center hosting and public cloud facilities; retention and attraction of key employees; defects, errors, installation difficulties or development delays; failure of third-party suppliers; a major natural disaster or catastrophic event, including the impact of the coronavirus (COVID-19) pandemic and geopolitical and macroeconomic challenges; environmental exposures from historical and ongoing manufacturing activities; and climate ~~change~~change;

•Data Privacy & Security: impact of data protection, cybersecurity and data privacy including any related issues, including the April 2023 ransomware incident;

•Finance and Accounting: our level of indebtedness; the terms governing our indebtedness; incurrence of additional debt or similar liabilities or obligations; access or renewal of financing sources; our cash flow sufficiency to service our indebtedness; interest rate risks; the terms governing our trade receivables facility; the impact of certain changes in control relating to acceleration of our indebtedness, our obligations under other financing arrangements, or required repurchase of our senior unsecured notes; ~~and~~ any lowering or withdrawal of the ratings assigned to our debt securities by rating agencies; our pension liabilities; and write down of the value of certain significant ~~assets~~assets;

•Law and Compliance: allegations or claims by third parties that our products or services infringe on intellectual property rights of others, including claims against our customers and claims by our customers to defend and indemnify them with respect to such claims; protection of our intellectual property; changes to our tax rates and additional income tax liabilities; uncertainties regarding regulations, lawsuits and other related matters; and changes to cryptocurrency ~~regulations~~regulations;

•Governance: impact of the terms of our Series A Convertible Preferred (“Series A”) Stock relating to voting power, share dilution and market price of our common stock; rights, preferences and privileges of Series A stockholders compared to the rights of our common stockholders; and actions or proposals from stockholders that do not align with our business strategies or the interests of our other ~~stockholders~~stockholders;

•Planned Separation: an unexpected failure to complete, or unexpected delays in completing, the necessary actions for the planned separation, or to obtain the necessary approvals or third party consents to complete these actions; that the potential strategic benefits, synergies or opportunities expected from the separation may not be realized or may take longer to realize than expected; costs of implementation of the separation and any changes to the configuration of businesses included in the separation if implemented; the potential inability to access or reduced access to the capital markets or increased cost of borrowings, including as a result of a credit rating downgrade; the potential adverse reactions to the planned separation by customers, suppliers, strategic partners or key personnel and potential difficulties in maintaining relationships with such persons and risks associated with third party contracts containing consent and/or other provisions that may be triggered by the planned ~~separation;~~ separation and the ability to obtain such consents;

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the risk that any newly formed entity to house the digital commerce or ATM business would have no credit rating and may not have access to the capital markets on acceptable terms; unforeseen tax liabilities or changes in tax law; requests or requirements of governmental authorities related to certain existing liabilities; and the ability to obtain or consummate financing or refinancing related to the transaction upon acceptable terms or at all.

Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward-looking statements. There can be no guarantee that the planned separation will be completed in the expected form or within the expected time frame or at all. Nor can there be any guarantee that the digital commerce business and ATM business after a separation will be able to realize any of the potential strategic benefits, synergies or opportunities as a result of these actions. Neither can there be any guarantee that ~~shareholders~~stockholders will achieve any particular level of ~~shareholder~~stockholder returns. Nor can there be any guarantee that the planned separation will enhance value for ~~shareholders,~~stockholders, or that NCR or any of its divisions, or separate digital commerce and ATM business, will be commercially successful in the future, or achieve any particular credit rating or financial results. 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~~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.

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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~~approximately 45 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. This is primarily done through the hedging of foreign currency denominated inter-company inventory purchases by the marketing units and the foreign currency denominated inputs to our manufacturing units. All of these transactions are forecasted. If these contracts are designated as highly effective cash flow hedges, the gains or losses are deferred into accumulated other comprehensive income (“AOCI”). The gains or losses from derivative contracts that are designated as highly effective cash flow hedges related to inventory purchases are recorded in cost of products when the inventory is sold to an unrelated third party. Otherwise, the gains or losses from these contracts are recognized in earnings as exchange rates change. 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 in the value of the U.S. Dollar against foreign currencies from the prevailing market rates would have resulted in a corresponding decrease in the fair value of the hedge portfolio ~~of $2~~of $6 million as of ~~September~~June 30, ~~2022.~~2023. A 10% depreciation in the value of the U.S. Dollar against foreign currencies from the prevailing market rates would have resulted in a corresponding increase in the fair value of the hedge portfolio of $2$6 million as of ~~September~~June 30, ~~2022.~~2023. 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 stronger in the ~~third~~second quarter of ~~2022~~2023 compared to the ~~third~~second quarter of ~~2021~~2022 based on comparable weighted averages for our functional currencies. 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%~~60% of our borrowings were on a fixed rate basis as of ~~September~~June 30, ~~2022.~~2023. The increase in pre-tax interest expense for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 from a hypothetical 100 basis point increase in variable interest rates would be ~~approximately~~ approximatel~~$17~~y $13 million. As of ~~September~~June 30, ~~2022,~~2023, we do not have any outstanding interest rate derivative contracts related to our variable rate debt.

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Additionally, as our ATM vault cash rental expense is based on market rates of interest, it is sensitive to changes in applicable interest rates in the respective countries in which we operate. We pay a monthly fee on the average outstanding vault cash balances in our ATMs under floating rate formulas based on a spread above various interbank offered rates. The increase in vault cash rental expense for the three months ended ~~September~~June 30, ~~2022~~2023 from a hypothetical 100 basis point increase in variable interest rates would be approximately ~~$10~~$9 million, excluding the impact from outstanding interest rate swap agreements.

We utilize interest rate swap contracts and interest rate cap agreements to add stability to interest expense and to manage exposure to interest rate movements as part of our interest rate risk management strategy. Payments and receipts related to interest rate cap agreements and interest rate swap contracts are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. Refer to Note 13, “Derivatives and Hedging Instruments”, for further information on our interest rate derivative contracts in effect as of ~~September~~June 30, ~~2022~~2023.

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 ~~September~~June 30, ~~2022,~~2023, 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 ~~third~~second quarter of ~~2022,~~2023, 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.

Changes in Internal Control over Financial Reporting

~~In the third quarter of 2022, we began implementing a new enterprise resource planning (“ERP~~”) system, which will replace many of our existing core financial systems. The ERP system is designed to accurately maintain our financial records used to report operating results. The implementation will occur in phases and began this quarter. On a quarterly basis, we will continue to evaluate whether there are material changes that impact our internal control over financial reporting.

~~Other than the ERP system implementation, there~~There have been no changes in our internal control over financial reporting that occurred during the three months ended ~~September~~June 30, ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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Part II. Other Information

Item 1. LEGAL PROCEEDINGS

The information required by this item is included in Note 10, “Commitments and Contingencies”, of the Notes to 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 planned separation of NCR into two independent, publicly traded companies~~ supplements the disclosure set forth under Part I, Item IA (“Risk Factors”) of the Company's ~~2021~~2022 Annual Report on Form 10-K (“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 additional risks and uncertainties actually occur, our business, results of operations and financial condition could be materially and adversely affected.

~~The planned separation~~Data protection, cybersecurity and data privacy issues could negatively impact our business. Our products and services, including our cloud and hosted solutions as well as our payments and networking solutions, facilitate financial and other transactions for the customers in the industries we serve. As a result, we collect, use, transmit and store certain of the transaction, cryptocurrency, private keys, and personal data of our customers and end-users. We also have access to transaction and personal data of our customers and their customers through or in the course of servicing our products or third-party products. Additionally, we collect, use and store personal data of our employees and the personnel of our business partners, such as resellers, suppliers and contractors, in the ordinary course of business. While we have programs and measures in place designed to protect and safeguard this data, and while we have implemented access controls designed to limit the risk of unauthorized use or disclosure by employees and contractors, the techniques used to obtain unauthorized access to this data are complex and changing, as are the underlying objectives of the attacker, like targeted business disruption, financial impact, intellectual property theft, political motives, or sophisticated nation-state sponsored and organized cyber-criminal activity, and may be difficult to detect for long periods of time. An attack, disruption, intrusion, denial of service, theft or other breach, or an inadvertent act by an employee or contractor, could result in unauthorized access to, or disclosure of, this data, resulting in claims, costs and reputational harm that could negatively affect our operating results. We may also detect, or may receive notice from third parties (including governmental agencies) regarding, potential vulnerabilities in our information technology systems, our products, or third-party products used in conjunction with our products or our business. In the course of our business activities, NCR ~~into two independent, publicly traded companies – one focused on digital commerce,~~contracts with numerous suppliers, vendors and resellers who may experience a cybersecurity, data protection or privacy issue that could negatively affect our operating results. Even if these potential vulnerabilities do not result in a data breach, their existence can adversely affect marketplace confidence and reputation. To the ~~other on ATMs, is subject to various risks and uncertainties~~extent such vulnerabilities require remediation, such remedial measures could require significant resources and may not be ~~completed in accordance with~~implemented before such vulnerabilities are exploited. As the ~~expected plans or anticipated timeline, or at all,~~landscape evolves, we may also find it necessary to make significant further investments to protect information and infrastructure.

Like most companies, NCR is regularly the subject of attempted cyberattacks, which may involve personal data. Most attempted cyberattacks are detected and prevented by the Company’s various information technology and data protections, including but not limited to firewalls, intrusion prevention systems, denial of service detection, anomaly based detection, anti-virus/anti-malware, endpoint encryption and detection and response software, Security Information and Event Management (“SIEM”) system, identity management technology, security analytics, multi-factor authentication and encryption. There can be no assurance that our protections will ~~involve significant time, expense, and resources, which could disrupt or adversely affect our business.~~be successful.

On ~~September 15, 2022,~~April 13, 2023, NCR ~~announced~~determined that a ~~plan~~single data center outage impacting certain of its commerce customers was caused by a cyber ransomware incident. Upon such determination, NCR immediately started contacting customers, enacted its cybersecurity protocol and engaged outside experts to ~~separate into two independent,~~contain the incident and begin the recovery process. NCR disclosed this incident publicly ~~traded companies – one focused~~ on ~~digital commerce, the other on ATMs. The current target is to complete the separation by the end of~~April 17, 2023. We ~~cannot assure that the transactions will be completed~~believe this incident is limited to specific functionality in Aloha cloud-based services and Counterpoint. None of NCR's ATM, digital banking, payments, or other retail products are processed at this data center. Affected customers had reduced capabilities on the anticipated timeline or at all or that the terms of the separations will not change. The transactions will follow the satisfaction of customary conditions, including effectiveness of appropriate filings with the U.S. Securitiesspecific Aloha cloud-based and ~~Exchange Commission,~~Counterpoint functionality. NCR is conducting concurrent efforts to establish alternative functionality for customers, fully restore impacted data and ~~the completion of audited financial statements. The failure~~applications, and to ~~satisfy any of the required conditions could delay the completion of the separation for a significant period of time or prevent it from occurring at all.~~enhance its cyber security protections.

The ~~ability to obtain or consummate financing or refinancing related to the transaction upon acceptable terms, or at all (including not having a credit rating~~investigation into this incident includes NCR experts, external forensic cybersecurity experts and ~~not having access to the capital markets for any newly formed entity~~federal law enforcement. It is possible that ~~houses the digital commerce or ATM business); risks associated with third party contracts containing consent and/~~this cyber ransomware incident could result in claims from customers or other ~~provisions that may be triggered by the planned separation and; unanticipated developments, including changes~~legal liability or negative publicity, require costly remediation efforts, or result in ~~the competitive conditions~~payment of our markets, delays in obtaining various tax opinions or rulings, negotiating challenges, the uncertainty of the financial markets, changes in the law, requests or requirements of governmental authorities related to existing liabilities and challenges in executing the separation of the two businesses, could delay or prevent the completion of the planned separation, or cause the planned separation to occur on terms or conditions that are different or less favorable than initially expected. Any changes to the planned separation or delay in completing the planned separation could cause us not to realize some or all of the expected benefits, or realize them on a different timeline than initially expected. Further, our Board of Directors could decide, either because of a failure of conditions or because of marketdamages or other ~~factors,~~costs to ~~abandon the planned separation.~~

~~Whether~~customers or ~~not we complete the planned separation, our ongoing business may be~~others, any of which could materially and adversely ~~affected and we may be subject to certain risks and consequences as a result of pursuing the planned separation, including the following:~~

•We have incurred expenses in connection with the planned separation, and expect that the process of completing the planned separation will be time-consuming and involve significant additional costs and expenses, which may not yield a discernible benefit if the planned separation is not completed.

•Executing the planned separation will require significant time and attention from our senior management and employees, which may divert management’s attention from operating and growing our business and could adversely affectimpact our business, financial ~~results, and~~condition or results of operations. ~~Our employees may also be distracted due~~We continue to ~~uncertainty about their future roles with~~assess the ~~separate companies.~~

•~~We may also experience increased difficulties in attracting, retaining, and motivating employees during~~cybersecurity incident to determine the ~~pendency, and following completion,~~full extent of the ~~transactions, which~~impact from such event on our business, results of operations or financial condition and whether or not those impacts are material. With regard to this incident, factors that could ~~harm our businesses.~~

•Ifcause actual results to differ materially from those expressed or implied include (i) the ~~planned separation is not completed, we will still be required to pay certain costs~~ongoing assessment of the incident, (ii) legal, reputational and ~~expenses incurred in connection therewith, such as legal, accounting, and other professional fees.~~

•~~Some of our customers or suppliers may delay or defer decisions or may end their relationships with us.~~

•~~We may experience negative reactions~~financial risks resulting from the ~~financial markets if we fail to complete~~incident, (iii) the ~~planned separation or fail to complete it on a timely basis.~~

•~~The announcement~~effectiveness of ~~the planned separation may cause some investors to sell our shares, creating greater volatility in the trading price of our shares~~business continuity plans and ~~potentially causing market prices to decline.~~cybersecurity

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•~~We may experience~~risk management policies during the ~~inability~~incident, (iv) the possibility that our investigation will produce materially adverse findings not known to ~~access~~us on the date hereof, (v) that any future, or ~~reduced~~still undetected, cybersecurity related incident, whether an attack, disruption, intrusion, denial of service, theft or other breach could result in unauthorized access to, ~~the capital markets~~ or ~~increased cost~~disclosure of, ~~borrowing.~~data, resulting in claims, costs and reputational harm that could negatively affect our operating or financial results.

~~Any~~The Company has established relationships with cybersecurity firms and internal cybersecurity experts, which it engages in connection with certain suspected incidents. The costs arising from those engagements, which depending on the incident may include both investigatory and remedial efforts, have not to date been material to the Company. The Company also regularly undergoes evaluation of its protections against incidents, including both self-assessments and expert third-party assessments, and it regularly enhances those protections, both in response to specific threats and as part of the ~~above factors~~Company’s efforts to stay current with advances in cybersecurity defense. When the Company experiences a confirmed cybersecurity incident, it generally performs root cause analyses and in appropriate instances will implement additional controls based on those analyses. In 2022, Company spending on cybersecurity efforts represented approximately 10% of its overall IT spend. There can be no assurance that the Company or its cybersecurity consultants will be able to prevent or remediate all future incidents or that the cost associated with responding to any such incident will not be significant.

The personal information and other data that we process and store also are subject to data security and data privacy obligations and laws of many jurisdictions, which are growing in complexity and sophistication as data becomes more enriched and technology and the global data protection landscape evolves. These laws may provide a private right of action for individuals alleging a breach of privacy rights, including for example the Illinois Biometric Information Privacy Act (“BIPA”). These laws may also conflict with one another, and many of them are subject to frequent modification and differing interpretations. The laws impose a significant compliance burden and include, for example, the European Union's (“EU”) General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act and the Brazilian General Data Protection Law. Complying with these evolving and varying standards could ~~cause~~require significant expense and effort, and could require us to change our business practices or the ~~separation (or~~functionality of our products and services in a manner adverse to our customers and our business. In addition, violations of these laws can result in significant fines, penalties, claims by regulators or other third-party lawsuits alleging significant damages, and damage to our brand and business. The GDPR, for example, includes fines of up to €20 million or up to 4% of the annual global revenues of the infringer for failure to comply, and grants corrective powers to supervisory authorities including the ability to impose a limit on processing of personal data. The laws also cover the transfer of personal, financial and business information, including transfers of employee information between us and our subsidiaries, across international borders. As another example, the Illinois BIPA provides aggrieved plaintiffs the ability to recover $1,000 for each unauthorized scan of biometric data, and $5,000 for each scan found to be in willful disregard of the statute.

Disruptions in our data center hosting and public cloud facilities could adversely affect our business. Our software products are increasingly being offered and provided on a cloud or other hosted basis through data centers operated by the Company or third parties in the United States and other countries. In addition, certain applications and data that we use in our services offerings and our operations may be hosted or stored at such facilities. These facilities may be vulnerable to natural disasters, including those exacerbated by the effects of climate change, telecommunications failures and similar events, or to intentional acts of misconduct, such as security incidents (including the ransomware incident announced April 17, 2023) or interference (including by disgruntled employees, former employees or contractors). The occurrence of these events or acts, or any other unanticipated problems, at these facilities could result in damage to or the unavailability of these cloud hosting facilities. Such damage or unavailability could, despite existing disaster recovery and business continuity arrangements, interrupt the availability of our cloud offerings for our customers. We have experienced such interruptions and damage or unavailability which interrupt the availability of applications or data necessary to provide services or conduct critical operations. Interruptions in the availability of our data center or cloud offerings or our ability to service our customers could result in the failure to ~~execute~~meet contracted up-time or service levels, which could cause us to issue credits or pay damages or penalties or cause customers to terminate or not renew subscriptions. Interruptions could also expose us to liability claims from customers and others, payment of damages or other amounts, negative publicity and the ~~separation)~~need to engage in costly remediation efforts, any of which could have a material adverse effect on our business, financial condition ~~results of operations, and the trading price of our common stock.~~

The planned separation may not achieve the anticipated benefits and will expose us to new risks as the digital commerce company and the ATM company will have different financial profiles and each will be a smaller, less diversified company than NCR as it exists today.

~~We may not realize the anticipated strategic, financial, operational,~~ or other benefits from the planned separation. We cannot predict with certainty when the benefits expected from the planned separation will occur or the extent to which they will be achieved, or that the costs or dis-synergies of the transaction will not exceed the anticipated amounts. The planned separation will result in the digital commerce company and the ATM company being smaller, less diversified companies with more limited businesses concentrated in their respective industries than NCR as a whole. As a result, each company may be more vulnerable to changing market conditions, which could have a material adverse effect on its business, financial condition and results of operations. In addition, the diversification of revenues, costs, and cash flows will diminish, such that each company’s results of operations, cash flows, working capital, effective tax rate, and financing requirements may be subject to increased volatility and its ability to fund capital expenditures and investments, pay dividends and service debt may be diminished. The announcement and/or completion of the planned separation may cause uncertainty for or disruptions with our customers, partners, suppliers, and employees, which may negatively impact these relationships or our operations. In addition, we will incur one-time costs and ongoing costs in connection with, or as a result of, the planned separation, including costs of operating as independent, publicly-traded companies that the two companies will no longer be able to share. Those costs may exceed our estimates or could negate some of the benefits we expect to realize. If we do not realize the intended benefits or if our costs exceed our estimates, we or the business that is spun off could suffer a material adverse effect on the business, financial condition, results of operations, and trading price of us or the separated business.

~~If the planned separation is completed, the trading price of our common stock may decline and may experience greater volatility.~~

Upon completion of the planned separation, because the trading price for our shares will no longer reflect the value of the separated business, such trading price may be lower than immediately prior to the separation. In addition, until the market has fully analyzed our value without the separated business, the price of our shares may experience greater volatility. If the planned separation is completed, our shares may not match some holders’ investment strategies or meet minimum criteria for inclusion in stock market indices or portfolios, which could cause certain investors to sell their shares, which could lead to declines in the trading price of our common stock. Further, there can be no assurance that the combined value of the shares of the digital commerce company and the ATM company following the separation will be equal to or greater than what the value of our common stock would have been had the planned separation not occurred.

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.

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As of ~~September~~June 30, ~~2022,~~2023, $153 million was available for repurchases under the March 2017 program, and approximately ~~$790~~$870 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 ~~September~~June 30, ~~2022, less than~~2023, approximately ~~0.1 million~~23 thousand shares were purchased at an average price of $~~31.65~~23.46 per share.

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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.

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Item 6. EXHIBITS


10.1			~~First~~Sixth Amendment to the ~~Receivables Purchase~~Credit Agreement, dated as of ~~August 22, 2022,~~June 30, 2023, by and among NCR ~~Receivables LLC, NCR Canada Receivables, LP, NCR~~ Corporation, ~~NCR Canada Corp.~~the lenders party thereto and JPMorgan Chase Bank, N.A., ~~MUFG Bank, Ltd., Victory Receivables Corporation, PNC Bank, National Association, and PNC Capital Markets LLC.~~

~~10.2~~			~~Second Amendment to the Receivables Purchase Agreement, dated~~ as of September 20, 2022, by and among NCR Receivables LLC, NCR Canada Receivables, LP, NCR Corporation, NCR Canada Corp., MUFG Bank, Ltd., Victory Receivables Corporation, PNC Bank, National Association, and PNC Capital Markets LLC.administrative agent.

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 ~~September~~June 30, ~~2022,~~2023, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) our condensed consolidated statements of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021;~~2022; (ii) our condensed consolidated statements of comprehensive income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021;~~2022; (iii) our condensed consolidated balance sheets as of ~~September~~June 30, ~~2022~~2023 and December 31, ~~2021;~~2022; (iv) our condensed consolidated statements of cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021;~~2022; (v) our condensed consolidated statements of changes in stockholder's equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2022~~2023 and ~~2021;~~2022; 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.

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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:

~~October 31, 2022~~August 2, 2023

By:

/s/ Timothy C. Oliver

Timothy C. Oliver
Senior Executive Vice President and Chief Financial Officer

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	Fair Value		Weighted Average Amortization Period (1)
	(In millions)		(In years)
Direct customer relationships	$	5	10
Technology - Software	30		13
Non-compete	1		1
Tradenames	2		2
Total acquired intangible assets	$	38