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Table of Contents

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 March 31, 2021
or
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number: 001-00395
 ________________________
https://cdn.kscope.io/c8c43cf58d3e888da00bd748e21e99a8-ncr-20210331_g1.jpg
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: (937445-1936
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
þ
Accelerated filer
o
Non-accelerated filer
o
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 April 16, 2021, there were approximately 130.9 million shares of the registrant's common stock issued and outstanding.


Table of Contents

TABLE OF CONTENTS    
 
PART I. Financial Information
 DescriptionPage
Item 1.

Item 2.
Item 3.
Item 4.
PART II. Other Information
 DescriptionPage
Item 1.
Item 1A.
Item 2.
Item 6.


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Part I. Financial Information
 
Item 1.    FINANCIAL STATEMENTS
NCR Corporation
Condensed Consolidated Statements of Operations (Unaudited) 
In millions, except per share amountsThree months ended March 31
20212020
Product revenue$482 $474 
Service revenue1,062 1,029 
Total revenue1,544 1,503 
Cost of products408 391 
Cost of services722 715 
Selling, general and administrative expenses238 255 
Research and development expenses66 65 
Total operating expenses1,434 1,426 
Income (loss) from operations110 77 
Interest expense(45)(50)
Other expense, net(17)(2)
Income (loss) from continuing operations before income taxes48 25 
Income tax expense (benefit)17 1 
Income (loss) from continuing operations31 24 
Loss from discontinued operations, net of tax  
Net income (loss)31 24 
Net income (loss) attributable to noncontrolling interests1 1 
Net income (loss) attributable to NCR$30 $23 
Amounts attributable to NCR common stockholders:
Income (loss) from continuing operations$30 $23 
Dividends on convertible preferred stock(4)(6)
Income (loss) from continuing operations attributable to NCR common stockholders26 17 
Loss from discontinued operations, net of tax  
Net income (loss) attributable to NCR common stockholders$26 $17 
Income (loss) per share attributable to NCR common stockholders:
Income (loss) per common share from continuing operations
Basic$0.20 $0.13 
Diluted$0.19 $0.13 
Net income (loss) per common share
Basic$0.20 $0.13 
Diluted$0.19 $0.13 
Weighted average common shares outstanding
Basic130.0 128.0 
Diluted134.7 130.5 
See Notes to Condensed Consolidated Financial Statements.
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NCR Corporation
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 
In millionsThree months ended March 31
20212020
Net income (loss)$31 $24 
Other comprehensive income (loss):
Currency translation adjustments
Currency translation gains (losses)(7)(61)
Derivatives
Unrealized gains (losses) on derivatives 3 
   Losses (gains) on derivatives recognized during the period (1)
        Less income tax (1)
Employee benefit plans
   Amortization of prior service benefit(1)(1)
   Amortization of actuarial losses (gains) (1)
        Less income tax 1 
Other comprehensive income (loss)(8)(61)
Total comprehensive income (loss)23 (37)
Less comprehensive income attributable to noncontrolling interests:
   Net income (loss)1 1 
   Currency translation losses (1)
Amounts attributable to noncontrolling interests1  
Comprehensive income (loss) attributable to NCR$22 $(37)
See Notes to Condensed Consolidated Financial Statements.
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NCR Corporation
Condensed Consolidated Balance Sheets (Unaudited)
In millions, except per share amountsMarch 31, 2021December 31, 2020
Assets
Current assets
Cash and cash equivalents$319 $338 
Accounts receivable, net of allowances of $39 and $51 as of March 31, 2021 and December 31, 2020, respectively
1,212 1,117 
Inventories634 601 
Other current assets447 422 
Total current assets2,612 2,478 
Property, plant and equipment, net364 373 
Goodwill2,924 2,837 
Intangibles, net565 532 
Operating lease assets396 344 
Prepaid pension cost202 199 
Deferred income taxes946 965 
Other assets693 686 
Total assets$8,702 $8,414 
Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings$52 $8 
Accounts payable707 632 
Payroll and benefits liabilities227 268 
Contract liabilities594 507 
Other current liabilities638 673 
Total current liabilities2,218 2,088 
Long-term debt3,349 3,270 
Pension and indemnity plan liabilities839 851 
Postretirement and postemployment benefits liabilities117 120 
Income tax accruals101 102 
Operating lease liabilities377 325 
Other liabilities328 334 
Total liabilities7,329 7,090 
Commitments and Contingencies (Note 9)
Series A convertible preferred stock: par value $0.01 per share, 3.0 shares authorized, 0.3 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively; redemption amount and liquidation preference of $276 as of March 31, 2021 and December 31, 2020, respectively
273 273 
Stockholders’ equity
NCR stockholders’ equity
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively
  
Common stock: par value $0.01 per share, 500.0 shares authorized, 130.6 and 129.1 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively
1 1 
Paid-in capital398 368 
Retained earnings976 950 
Accumulated other comprehensive loss(279)(271)
Total NCR stockholders’ equity1,096 1,048 
Noncontrolling interests in subsidiaries4 3 
Total stockholders’ equity1,100 1,051 
Total liabilities and stockholders’ equity$8,702 $8,414 
See Notes to Condensed Consolidated Financial Statements.
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NCR Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
 
In millionsThree months ended March 31
20212020
Operating activities
Net income (loss)$31 $24 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization92 87 
Stock-based compensation expense44 25 
Deferred income taxes7 5 
Impairment of other assets 1 
Gain on sale of property, plant and equipment (2)
Changes in assets and liabilities:
Receivables(91)137 
Inventories(17)(48)
Current payables and accrued expenses34 (183)
Contract liabilities74 108 
Employee benefit plans(10)(3)
Other assets and liabilities(9)(97)
Net cash provided by operating activities155 54 
Investing activities
Expenditures for property, plant and equipment(10)(10)
Proceeds from sale of property, plant and equipment 7 
Additions to capitalized software(51)(69)
Business acquisitions, net(157)(26)
Purchases of investments(5) 
Proceeds from sales of investments5  
Net cash used in investing activities(218)(98)
Financing activities
Short term borrowings, net 3 
Payments on term credit facilities(8)(2)
Payments on revolving credit facilities(318)(573)
Borrowings on revolving credit facilities448 1,397 
Debt issuance costs(1)(1)
Cash dividend payments related to Series A Convertible Preferred Stock(4)(6)
Repurchases of Common Stock (41)
Proceeds from employee stock plans8 3 
Tax withholding payments on behalf of employees(22)(24)
Net change in client funds obligations 12 
Principal payments for finance lease obligations(4)(3)
Other financing activities(1) 
Net cash provided by (used in) financing activities$98 $765 
Cash flows from discontinued operations
Net cash provided by (used in) operating activities(44)3 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(6)(14)
Increase (decrease) in cash, cash equivalents, and restricted cash(15)710 
Cash, cash equivalents and restricted cash at beginning of period406 563 
Cash, cash equivalents and restricted cash at end of period$391 $1,273 
See Notes to Condensed Consolidated Financial Statements.
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NCR Corporation
Condensed Consolidated Statements of Changes in Stockholder's Equity (Unaudited)
NCR Stockholders
Common StockAccumulated Other Comprehensive (Loss) IncomeNon-Redeemable Noncontrolling Interests in Subsidiaries
In millionsSharesAmountPaid-in CapitalRetained EarningsTotal
December 31, 2020129 $1 $368 $950 $(271)$3 $1,051 
Comprehensive income:
     Net income— — — 30 — 1 31 
     Other comprehensive income (loss)— — — — (8) (8)
Total comprehensive income (loss)— — — 30 (8)1 23 
Employee stock purchase and stock compensation plans2 — 30 — — — 30 
Series A convertible preferred stock dividends— — — (4)— — (4)
March 31, 2021131 $1 $398 $976 $(279)$4 $1,100 
See Notes to Condensed Consolidated Financial Statements.


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NCR Corporation
Condensed Consolidated Statements of Changes in Stockholder's Equity (Unaudited) - (Continued)
NCR Stockholders
Common StockAccumulated Other Comprehensive (Loss) IncomeNon-Redeemable Noncontrolling Interests in Subsidiaries
In millionsSharesAmountPaid-in CapitalRetained EarningsTotal
December 31, 2019127 $1 $312 $1,060 $(269)$3 $1,107 
Comprehensive income:
     Net income— — — 23 — 1 24 
     Other comprehensive income— — — — (60)(1)(61)
Total comprehensive income— — — 23 (60) (37)
Employee stock purchase and stock compensation plans2 — 4 — — — 4 
Series A convertible preferred stock dividends— — — (6)— — (6)
Repurchase of Common Stock(2)— (41)— — — (41)
March 31, 2020127 $1 $275 $1,077 $(329)$3 $1,027 
See Notes to Condensed Consolidated Financial Statements.


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NCR Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited)

Index to Financial Statements and Supplemental Data

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

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

Cash, Cash Equivalents, and Restricted Cash All short-term, highly liquid investments having original maturities of three months or less, including time deposits, are considered to be cash equivalents. The Company has restricted cash on deposit with a bank as collateral for letters of credit, funds held for clients as well as cash included in settlement processing assets. Refer to Note 16, Revisions of Previously Issued Financial Statements, for disclosure related to the revision to include funds held for clients and cash included in settlement processing assets within cash, cash equivalents and restricted cash in the Condensed Consolidated Statement of Cash Flows.

The reconciliation of cash, cash equivalents and restricted cash in the Condensed Consolidated Statements of Cash Flows is as follows:
In millionsMarch 31
2021
2020
As Revised
Reconciliation of cash, cash equivalents and restricted cash as shown in the Condensed Consolidated Statements of Cash Flows
Cash and cash equivalents$319 $1,214 
Restricted cash included in other assets8 7 
Funds held for clients included in other current assets44 44 
Cash included in settlement processing assets included in other current assets20 8 
Total cash, cash equivalents and restricted cash$391 $1,273 

Contract Assets and Liabilities The following table presents the net contract asset and contract liability balances as of March 31, 2021 and December 31, 2020.
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NCR Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)
In millionsLocation in the Condensed Consolidated Balance SheetMarch 31, 2021December 31, 2020
Current portion of contract liabilitiesContract liabilities$594 $507 
Non-current portion of contract liabilitiesOther liabilities$76 $80 

During the three months ended March 31, 2021, the Company recognized $255 million in revenue that was included in contract liabilities as of December 31, 2020.

Remaining Performance Obligations Remaining performance obligations represent the transaction price of orders for which products have not been delivered or services have not been performed. As of March 31, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was approximately $3.8 billion. The Company expects to recognize revenue on approximately three-quarters of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter. The majority of our professional services are expected to be recognized over the next 12 months but this is contingent upon a number of factors, including customers’ needs and schedules.

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


Recent Accounting Pronouncements

Issued

In August 2020, the Financial Accounting Standards Board ("FASB") issued an accounting standards update with new guidance for convertible preferred stock, which eliminates considerations related to the beneficial conversion feature model. The standard also requires an average stock price when calculating the denominator for diluted earnings per share to be used 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 is permitted no earlier than fiscal years beginning after December 15, 2020 and interim periods within those fiscal years. The adoption of this accounting standards update is not expected to have a material effect on the Company's net income, cash flows, earnings per share or financial condition.


2. BUSINESS COMBINATIONS

Acquisition of Freshop, Terafina, & Dumac

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

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

On February 5, 2021, NCR completed its acquisition of Terafina, Inc. ("Terafina"), a leading solution provider for customer account opening and onboarding across digital, branch and call center channels. The Terafina acquisition further expands NCR sales and marketing capabilities in its industry-leading Digital First Banking platform to drive revenue growth across consumer and business market segments. As a result of the acquisition, Terafina became a wholly owned subsidiary of NCR.

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

Recording of Assets Acquired and Liabilities Assumed The fair value of consideration transferred was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values as of the date of the respective acquisitions as set forth below. The allocation of the purchase prices are provisional as of March 31, 2021 and may be subject to future adjustments as the Company obtains additional information to finalize the accounting for the business combinations. The allocation of the purchase prices is as follows:

In millionsFair Value
Cash acquired$2 
Tangible assets acquired7 
Acquired intangible assets other than goodwill52 
Acquired goodwill86 
Deferred tax liabilities(8)
Liabilities assumed(13)
Total purchase consideration$126 


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

The following table sets forth the components of the intangible assets acquired as of the acquisition dates:
Fair Value
Weighted Average Amortization Period (1)
(In millions) (In years)
Direct customer relationships$11 10
Technology - Software36 8
Non-compete 1 1
Tradenames4 9
Total acquired intangible assets$52 
(1) Determination of the weighted average period of the individual categories of intangible assets was based on the nature of applicable intangible asset and the 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 Freshop, Terafina, and Dumac have been included within NCR's results as of the closing dates of the acquisitions. Supplemental pro forma information and actual revenue and earnings since the acquisition dates have not been provided as the acquisitions did not have a material impact on the Company's Condensed Consolidated Statements of Operations.

Proposed Transaction

On January 25, 2021, NCR entered into a definitive agreement (Cardtronics Transaction) to acquire all outstanding shares of Cardtronics plc (Cardtronics) for $39.00 per share. The transaction is subject to regulatory approval and customary closing conditions, including approval by Cardtronics' shareholders, and is expected to close in mid-2021. Cardtronics is the world's largest non-bank ATM operator and service provider enabling cash transactions by converting digital currency into physical cash at over 285,000 ATMs across 10 countries in North America, Europe, Asia-Pacific, and Africa. During the first quarter of 2021, the Company, on behalf of Cardtronics, paid a fee of $33 million to terminate the acquisition agreement between Cardtronics and Catalyst Holdings Limited, a private limited company affiliated with investment funds managed by affiliates of
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NCR Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)
Apollo Global Management, Inc. and has been recorded within other current assets in the Condensed Consolidated Balance Sheet as prepaid purchase price.


3. GOODWILL AND LONG-LIVED ASSETS

Goodwill by Segment The carrying amounts of goodwill by segment as of March 31, 2021 and December 31, 2020 are included in the table below. Foreign currency fluctuations are included within other adjustments.
December 31, 2020March 31, 2021
In millionsGoodwillAccumulated Impairment LossesTotalAdditionsImpairmentOtherGoodwillAccumulated Impairment LossesTotal
Banking$1,772 $(101)$1,671 $39 $ $1 $1,812 $(101)$1,711 
Retail 643 (34)609 38  2 683 (34)649 
Hospitality404 (23)381 9  (2)411 (23)388 
Telecommunications & Technology187 (11)176    187 (11)176 
Total goodwill$3,006 $(169)$2,837 $86 $ $1 $3,093 $(169)$2,924 

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)
March 31, 2021December 31, 2020
In millionsGross Carrying AmountAccumulated AmortizationGross Carrying AmountAccumulated Amortization
Identifiable intangible assets
Reseller & customer relationships
1 - 20
$752 $(337)$740 $(324)
Intellectual property
2 - 8
569 (424)531 (418)
Customer contracts
8
89 (89)89 (89)
Tradenames
1 - 10
80 (75)77 (74)
Total identifiable intangible assets$1,490 $(925)$1,437 $(905)

The aggregate amortization expense for identifiable intangible assets for the following periods is:
In millionsThree months ended March 31, 2021Remainder of 2021 (estimated)
Amortization expense$20 $58 
For the years ended December 31 (estimated)
In millions20222023202420252026
Amortization expense$73 $71 $64 $56 $53 
    

4. SEGMENT INFORMATION AND CONCENTRATIONS

The Company manages and reports the following segments:

Banking - We offer solutions to customers in the financial services industry that power their digital transformation through software, services and hardware to deliver differentiated experiences for their customers and improve efficiency for the financial institution. Our managed services and ATM-as-a-Service help banks run their end-to-end ATM channel, positioning NCR as a strategic partner. We augment these solutions by offering a full line of software, services and hardware including interactive teller machines (ITM), and recycling, multi-function and cash dispense ATMs. NCR's digital banking solutions enable anytime-anywhere convenience for a financial institution’s consumer
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NCR Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)
and business customers. We also help institutions implement their Digital First platform strategy by providing solutions for banking channel services, transaction processing, imaging, and branch services. 
Retail - We offer software-defined solutions to customers in the retail industry, leading with digital to connect retail operations end to end to integrate all aspects of a customer’s operations in indoor and outdoor settings from POS, to payments, inventory management, fraud and loss prevention applications, loyalty and consumer engagement. These solutions are designed to improve operational efficiency, selling productivity, customer satisfaction and purchasing decisions; provide secure checkout processes and payment systems; and increase service levels. These solutions include retail-oriented technologies such as comprehensive API-point of sale retail software platforms and applications, hardware terminals, self-service kiosks including self-checkout (SCO), payment processing solutions, and bar-code scanners.
Hospitality - We offer technology solutions to customers in the hospitality industry, including table-service, quick-service and fast casual restaurants of all sizes, that are designed to improve operational efficiency, increase customer satisfaction, streamline order and transaction processing and reduce operating costs. Our portfolio includes cloud-based software applications for point-of-sale, back office, payment processing, kitchen production, restaurant management and consumer engagement. We also provide hospitality-oriented hardware products such as point-of-sale (POS) terminals, order and payment kiosks, bar code scanners, printers and peripherals. And finally, we help reduce the complexities of running the restaurant through our services capabilities including strategic advisory, technology deployment and implementation, hardware and software maintenance and managed services.
Telecommunications & Technology (T&T)- We offer maintenance, managed and professional services using solutions such as remote management and monitoring services, which are designed to improve operational efficiency, network availability and end-user experience, to customers in the telecommunications and technology industry. We also provide such services to end users on behalf of select manufacturers leveraging our global service capability, and resell third party networking products to customers in a variety of industries.

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

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

Corporate and Other reconciles our segment results to adjusted EBITDA, which primarily includes other income (expense) that are managed only on a total company basis and are, accordingly, reflected only in consolidated results.
The following table presents revenue and adjusted EBITDA by segment:
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NCR Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)
In millionsThree months ended March 31
20212020
Revenue by segment
Banking$756 $763 
Retail532 472 
Hospitality179 169 
   T&T77 99 
Consolidated revenue$1,544 $1,503 
Adjusted EBITDA by Segment
Banking$154 $140 
Retail73 37 
Hospitality25 7 
  T&T10 8 
       Corporate and Other(4)(4)
Total Adjusted EBITDA$258 $188 

The following table reconciles net income (loss) from continuing operations to Adjusted EBITDA:
In millionsThree months ended March 31
20212020
Net income (loss) from continuing operations attributable to NCR$30 23 
Transformation costs8 5 
Acquisition-related amortization of intangibles20 22 
Acquisition-related costs27  
Interest expense45 50 
Interest income(3)(1)
Depreciation and amortization (excluding acquisition-related amortization of intangibles)70 63 
Income tax expense17 1 
Stock-based compensation expense44 25 
Total Adjusted EBITDA$258 $188 

The following table presents revenue by geography for NCR:
In millionsThree months ended March 31
20212020
Americas$929 $892 
Europe, Middle East and Africa (EMEA)417 403 
Asia Pacific (APJ)198 208 
Total revenue$1,544 $1,503 

The following table presents revenue from products and services for NCR:
In millionsThree months ended March 31
20212020
Recurring revenue (1)
$874 $802 
All other products and services670 701 
Total revenue$1,544 $1,503 

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NCR Corporation
Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)
(1) Recurring revenue includes all revenue streams from contracts where there is a predictable revenue pattern that will occur at regular intervals with a relatively high degree of certainty. This includes hardware and software maintenance revenue, cloud revenue, payment processing revenue, certain professional services arrangements as well as term-based software license arrangements that include customer termination rights.


5. DEBT OBLIGATIONS

The following table summarizes the Company's short-term borrowings and long-term debt:
March 31, 2021December 31, 2020
In millions, except percentagesAmountWeighted-Average Interest RateAmountWeighted-Average Interest Rate
Short-Term Borrowings
Current portion of Senior Secured Credit Facility (1)
$2 2.72%$8 2.65%
Trade Receivables Securitization Facility50 0.95% %
Total short-term borrowings$52 $8 
Long-Term Debt
Senior Secured Credit Facility:
Term loan facility (1)
$731 2.72%$733 2.65%
Revolving credit facility (1)
155 2.39%75 2.40%
Senior notes:
8.125% Senior Notes due 2025
400 400 
5.750% Senior Notes due 2027
500 500 
5.000% Senior Notes due 2028
650 650 
6.125% Senior Notes due 2029
500 500 
5.250% Senior Notes due 2030
450 450 
Deferred financing fees(39)(40)
Other (1)
2 7.48%2 7.68%
Total long-term debt$3,349 $3,270 
(1)    Interest rates are weighted-average interest rates as of March 31, 2021 and December 31, 2020.

Senior Secured Credit Facility On August 28, 2019, the Company entered into an amended and restated senior secured credit agreement with and among certain subsidiaries of NCR (the Foreign Borrowers), the lenders party thereto and JPMorgan Chase Bank, NA (JPMCB) as the administrative agent, refinancing its term loan facility and revolving credit facility thereunder (the Senior Secured Credit Facility). The Senior Secured Credit Facility consists of a term loan facility in an original aggregate principal amount of $750 million, of which $733 million was outstanding as of March 31, 2021. Additionally, the Senior Secured Credit Facility provides for a five-year revolving credit facility with an aggregate principal amount of $1.1 billion, of which $155 million was outstanding as of March 31, 2021. The revolving credit facility also allows a portion of the availability to be used for letters of credit, and, as of March 31, 2021, outstanding letters of credit were $26 million.

Up to $400 million of the revolving credit facility is available to the Foreign Borrowers, as long as there is availability under the revolving credit facility. Term loans were made to the Company in U.S. Dollars, and loans under the revolving credit facility are available in U.S. Dollars, Euros and Pound Sterling.

The outstanding principal balance of the term loan facility is required to be repaid in equal quarterly installments of  0.25% of the original aggregate principal amount that began with the fiscal quarter ending December 31, 2019, with the balance being due at maturity on August 28, 2026 and may be repaid and reborrowed prior to maturity, subject to the satisfaction of customary conditions. Borrowings under the revolving portion of the credit facility are due August 28, 2024. Revolving loans outstanding under the Senior Secured Credit Facility denominated in U.S. Dollars bear interest at the Company's option at (a) London Inter-bank Offered Rate (LIBOR), plus a margin ranging from 1.25% to 2.25% or (b) a base rate equal to the highest of (i) the federal funds rate plus 0.50%, (ii) the rate of interest last quoted by the Wall Street Journal as the “prime rate” and (iii)
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Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)
the one-month LIBOR rate plus 1.00% (the Base Rate), plus, a margin ranging from 0.25% to 1.25%, in each case, depending on the Company’s consolidated leverage ratio. Revolving loans denominated in Euro bear interest at the EURIBOR, plus a margin ranging from 1.25% to 2.25% depending on the Company’s consolidated leverage ratio. The terms of the Senior Secured Credit Facility also require certain other fees and payments to be made by the Company, including a commitment fee on the undrawn portion of the revolving credit facility. Term loans outstanding under the Senior Secured Credit Facility bear interest, at NCR's option, at LIBOR plus 2.50% per annum or the Base Rate plus a 1.50% margin per annum. In the event that LIBOR is no longer available or in certain other circumstances as described in the Senior Secured Credit Facility, the Senior Secured Credit Facility provides a mechanism for determining an alternative rate of interest. There is no assurance that any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, LIBOR.

The obligations of the Company and Foreign Borrowers under the Senior Secured Credit Facility are guaranteed by the Company's wholly-owned subsidiary, NCR International, Inc. (the Guarantor Subsidiary). The Senior Secured Credit Facility and such guarantee are secured by a first priority lien and security interest in certain equity interests owned by the Company and the Guarantor Subsidiary in certain of their respective domestic and foreign subsidiaries, and a perfected first priority lien and security interest in substantially all of the Company's U.S. assets and the assets of the Guarantor Subsidiary, subject to certain exclusions. These security interests would be released if the Company achieves an “investment grade” rating and will remain released so long as the Company maintains that rating.
The Senior Secured Credit Facility includes affirmative and negative covenants that restrict or limit the ability of the Company and its subsidiaries to, among other things, incur indebtedness; create liens on assets; engage in certain fundamental corporate changes or changes to the Company's business activities; make investments; sell or otherwise dispose of assets; engage in sale-leaseback or hedging transactions; repurchase stock, pay dividends or make similar distributions; repay other indebtedness; engage in certain affiliate transactions; or enter into agreements that restrict the Company's ability to create liens, pay dividends or make loan repayments. The Senior Secured Credit Facility also includes a financial covenant that requires the Company to maintain:
a consolidated leverage ratio on the last day of any fiscal quarter, not to exceed (i) in the case of any fiscal quarter ending on or prior to March 31, 2021, (a) the sum of 4.50 and an amount (not to exceed 0.50) to reflect debt used to reduce NCR’s unfunded pension liabilities to (b) 1.00, and (ii) in the case of any fiscal quarter ending after March 31, 2021 and on or prior to March 31, 2023, (a) the sum of 4.25 and an amount (not to exceed 0.50) to reflect debt used to reduce NCR’s unfunded pension liabilities to (b) 1.00; and (iii) in the case of any fiscal quarter ending after March 31, 2023, (a) the sum of 4.00 and an amount (not to exceed 0.50) to reflect debt used to reduce our unfunded pension liabilities to (b) 1.00.
The Company has the option to elect to increase the maximum permitted leverage ratio by 0.25 in connection with the consummation of any material acquisition (as defined in the Senior Secured Credit Facility) for four fiscal quarters, but in no event will the maximum permitted leverage ratio, inclusive of all increases, exceed 4.75 to 1.00. At March 31, 2021, the maximum consolidated leverage ratio under the Senior Secured Credit Facility was 4.60 to 1.00.

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

On February 4, 2021, the Company entered into a fourth amendment to the Senior Secured Credit Facility. Pursuant to such amendment, contingent upon the closing of the proposed Cardtronics Transaction, the maximum permitted total leverage ratio of the Company will be increased initially to 5.50 to 1.00, subject to further modification as set forth in the amendment. In addition, certain technical and other changes to the Senior Secured Credit Facility, including amendments to the definition of "Permitted Acquisition" set forth therein, are now operative.

On February 16, 2021, the Company entered into (a) an amended and restated commitment letter (the Commitment Letter), with certain financial institutions party thereto (the Commitment Parties), (b) an incremental term loan A facility agreement (the Incremental Term Agreement) with the Commitment Parties and the Guarantor Subsidiary and (c) an incremental revolving facility agreement (the Incremental Revolving Agreement) with certain financial institutions, the Guarantor Subsidiary and certain of the Foreign Borrowers.

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Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)
Pursuant to and subject to the final Commitment Letter and the Incremental Term Agreement, contingent upon and in connection with the proposed Cardtronics Transaction, the Commitment Parties have committed to provide the following: (i) a senior secured incremental term loan A facility under the Senior Secured Credit Facility, in an aggregate principal amount of $1.505 billion, (ii) a senior secured incremental term loan B facility under the Senior Secured Credit Facility, in an aggregate principal amount of $195 million and (iii) a senior secured bridge facility (a portion of which may be unsecured) in an aggregate principal amount of $1.00 billion. The credit facilities will be available to the Company subject to certain conditions precedent, including, among other things, the closing of the proposed Cardtronics Transaction. Pursuant to the terms of the Incremental Term Agreement, subject to the satisfaction of certain customary conditions, $200 million of the $1.505 billion term loan A facility will convert into revolving credit commitments under the Senior Secured Credit Facility (the Additional Revolving Commitments) on or about the date that is 3 business days after the closing of the initial funding of the term loan A facilities.

The bridge facility was available to the Company if, and to the extent, certain securities offerings were not issued on or prior to the closing of the proposed Cardtronics Transaction. As noted below, on April 6, 2021, the Company issued $1.2 billion aggregate principal amount of 5.125% senior notes due 2029 (the 5.125% Notes) which is expected to be used to finance a portion of the purchase price consideration in connection with the pending Cardtronics Transaction. As a result, the commitments with respect to the senior secured incremental term loan B and the senior secured bridge facility were terminated.    

Pursuant to the Incremental Revolving Agreement, the lenders party thereto have agreed to provide the Company and the Foreign Borrowers with a $1.1 billion revolving credit facility under the Senior Secured Credit Facility to replace the Company’s existing senior credit revolving credit facility, which will be available to the Company upon the satisfaction of certain customary conditions precedent and conditions subsequent, including the closing of the proposed Cardtronics Transaction and subject to increase in connection with the conversion of a portion of the term loan A facility into Additional Revolving Commitments.

For the three months ended March 31, 2021, the Company incurred financing fees of $17 million related to certain structuring and commitment fees as a result of the above referenced financing transactions entered into during the first quarter of 2021.

The Company may request, at any time and from time to time, but the lenders are not obligated to fund the establishment of one or more incremental term loans and/or revolving credit facilities (subject to the agreement of existing lenders or additional financial institutions to provide such term loans and/or revolving credit facilities) with commitments in an aggregate amount not to exceed the greater of (i) $150 million, and (ii) such amount as would not cause the leverage ratio under the Senior Secured Credit Facility, calculated on a pro forma basis including the incremental facility and assuming that it and the revolver are fully drawn, to exceed 3.00 to 1.00, and the proceeds of which can be used for working capital requirements and other general corporate purposes.

Senior Unsecured Notes On August 21, 2019, the Company issued $500 million aggregate principal amount of 5.750% senior unsecured notes due in 2027 (the 5.750% Notes) and $500 million aggregate principal amount of 6.125% senior unsecured notes due in 2029 (the 6.125% Notes). The 5.750% Notes were sold at 100% of the principal amount with a maturity date of September 1, 2027. The 6.125% Notes were sold at 100% of the principal amount with a maturity date of September 1, 2029. On April 13, 2020, the Company issued $400 million aggregate principal amount of 8.125% senior unsecured notes due in 2025 (the 8.125% Notes). The 8.125% Notes were sold at 100% of the principal amount with a maturity date of April 15, 2025. On August 20, 2020, the Company issued $650 million aggregate principal amount of 5.000% senior unsecured notes due in 2028 (the 5.000% Notes) and $450 million aggregate principal amount of 5.250% senior unsecured notes due in 2030 (the 5.250% Notes).

The senior unsecured notes are guaranteed by NCR International Inc. (Guarantor Subsidiary), which has guaranteed fully and unconditionally the obligations to pay principal and interest for these senior unsecured notes. The terms of the indentures for these notes limit the ability of the Company and certain of its subsidiaries to, among other things, incur additional debt or issue redeemable preferred stock; pay dividends or make certain other restricted payments or investments; incur liens; sell assets; incur restrictions on the ability of the Company's subsidiaries to pay dividends to the Company; enter into affiliate transactions; engage in sale 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.

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Notes to Condensed Consolidated Financial Statements (Unaudited)—(Continued)
On April 6, 2021, the Company issued $1.2 billion aggregate principal amount of 5.125% senior notes due 2029 (the 5.125% Notes). The Company intends to use the net proceeds from the issuance of the 5.125% Notes, together with borrowing under its senior secured credit facilities and/or cash on hand, to finance the consideration payable in connection with the pending Cardtronics Transaction. The proceeds of the 5.125% Notes will be held in escrow until satisfaction of the escrow release conditions.

If such escrow release conditions are not satisfied on or prior to the earlier of November 1, 2021 and the date on which the Company notifies the escrow agent and the trustee in writing that the Company has determined that the escrow release conditions will not be satisfied, then $600 million o