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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 September 30, 2022
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/c01683881d7df3d01e58f2e3e35c84b2-ncr-20220930_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 October 14, 2022, there were approximately 137.4 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.


2

Table of Contents
Part I. Financial Information
 
Item 1.    FINANCIAL STATEMENTS
NCR Corporation
Condensed Consolidated Statements of Operations (Unaudited) 
In millions, except per share amountsThree months ended September 30Nine months ended September 30
2022202120222021
Product revenue$590 $520 $1,720 $1,553 
Service revenue1,382 1,381 4,115 3,569 
Total revenue1,972 1,901 5,835 5,122 
Cost of products524 429 1,560 1,290 
Cost of services957 952 2,902 2,442 
Selling, general and administrative expenses264 294 886 835 
Research and development expenses40 69 164 204 
Total operating expenses1,785 1,744 5,512 4,771 
Income (loss) from operations187 157 323 351 
Loss on extinguishment of debt  (42) (42)
Interest expense(74)(68)(204)(174)
Other income (expense), net(1)(5)9 (23)
Income (loss) from continuing operations before income taxes112 42 128 112 
Income tax expense (benefit)43 29 56 77 
Income (loss) from continuing operations69 13 72 35 
Income (loss) from discontinued operations, net of tax  5  
Net income (loss)69 13 77 35 
Net income (loss) attributable to noncontrolling interests 1 1 2 
Net income (loss) attributable to NCR$69 $12 $76 $33 
Amounts attributable to NCR common stockholders:
Income (loss) from continuing operations$69 $12 $71 $33 
Series A convertible preferred stock dividends(4)(4)(12)(12)
Income (loss) from continuing operations attributable to NCR common stockholders65 8 59 21 
Income (loss) from discontinued operations, net of tax  5  
Net income (loss) attributable to NCR common stockholders$65 $8 $64 $21 
Income (loss) per share attributable to NCR common stockholders:
Income (loss) per common share from continuing operations
Basic$0.47 $0.06 $0.43 $0.16 
Diluted$0.46 $0.06 $0.42 $0.15 
Net income (loss) per common share
Basic$0.47 $0.06 $0.47 $0.16 
Diluted$0.46 $0.06 $0.45 $0.15 
Weighted average common shares outstanding
Basic137.0 131.5 136.4 130.8 
Diluted140.3 137.8 140.9 137.1 
See Notes to Condensed Consolidated Financial Statements.
3

Table of Contents
NCR Corporation
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
 
In millionsThree months ended September 30Nine months ended September 30
2022202120222021
Net income (loss)$69 $13 $77 $35 
Other comprehensive income (loss):
Currency translation adjustments
Currency translation gains (loss)(75)(29)(154)(28)
Derivatives
Unrealized gains (loss) on derivatives77  155  
   Loss (gains) on derivatives recognized during the period(9) (3) 
        Less income tax(16) (35) 
Employee benefit plans
   Amortization of prior service cost (benefit)  (1)(1)
        Less income tax    
Other comprehensive income (loss)(23)(29)(38)(29)
Total comprehensive income (loss)46 (16)39 6 
Less comprehensive income (loss) attributable to noncontrolling interests:
   Net income (loss) 1 1 2 
   Currency translation losses(2) (3) 
Amounts attributable to noncontrolling interests(2)1 (2)2 
Comprehensive income (loss) attributable to NCR$48 $(17)$41 $4 
See Notes to Condensed Consolidated Financial Statements.
4

Table of Contents
NCR Corporation
Condensed Consolidated Balance Sheets (Unaudited)
In millions, except per share amountsSeptember 30, 2022December 31, 2021
Assets
Current assets
Cash and cash equivalents$434 $447 
Accounts receivable, net of allowances of $29 and $24 as of September 30, 2022 and December 31, 2021, respectively
1,116 959 
Inventories827 754 
Restricted cash302 295 
Other current assets512 421 
Total current assets3,191 2,876 
Property, plant and equipment, net620 703 
Goodwill4,572 4,519 
Intangibles, net1,184 1,316 
Operating lease assets377 419 
Prepaid pension cost263 300 
Deferred income taxes678 732 
Other assets898 776 
Total assets$11,783 $11,641 
Liabilities and stockholders’ equity
Current liabilities
Short-term borrowings$106 $57 
Accounts payable876 826 
Payroll and benefits liabilities319 389 
Contract liabilities507 516 
Settlement liabilities271 263 
Other current liabilities691 757 
Total current liabilities2,770 2,808 
Long-term debt5,611 5,505 
Pension and indemnity plan liabilities723 789 
Postretirement and postemployment benefits liabilities121 119 
Income tax accruals108 116 
Operating lease liabilities358 388 
Other liabilities371 383 
Total liabilities10,062 10,108 
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 
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 
Paid-in capital675 515 
Retained earnings1,095 1,031 
Accumulated other comprehensive loss(326)(291)
Total NCR stockholders’ equity1,445 1,256 
Noncontrolling interests in subsidiaries1 3 
Total stockholders’ equity1,446 1,259 
Total liabilities and stockholders’ equity$11,783 $11,641 
See Notes to Condensed Consolidated Financial Statements.
5

Table of Contents
NCR Corporation
Condensed Consolidated Statements of Cash Flows (Unaudited)
In millionsNine months ended September 30
20222021
Operating activities
Net income (loss)$77 $35 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
     Loss (income) from discontinued operations(5) 
     Loss on debt extinguishment 42 
Depreciation and amortization451 364 
Stock-based compensation expense97 119 
Deferred income taxes24 30 
Loss (gain) on disposal of property, plant and equipment and other assets4  
Changes in assets and liabilities, net of effects of business acquired:
Receivables(274)240 
Inventories(220)(165)
Current payables and accrued expenses113 210 
Contract liabilities(24)5 
Employee benefit plans(3)(30)
Other assets and liabilities5 (43)
Net cash provided by operating activities$245 $807 
Investing activities
Expenditures for property, plant and equipment$(72)$(68)
Proceeds from sale of property, plant and equipment and other assets8 1 
Additions to capitalized software(217)(174)
Business acquisitions, net of cash acquired (12)(2,466)
Purchases of short-term investments (13)
Proceeds from sales of short-term investments 14 
Other investing activities, net(5)(6)
Net cash used in investing activities$(298)$(2,712)
Financing activities
Payments on term credit facilities$(31)$(106)
Payments on revolving credit facilities(846)(1,431)
Payments of senior unsecured notes (400)
Borrowings on term credit facilities 1,505 
Borrowings on revolving credit facilities1,021 1,541 
Proceeds from issuance of senior unsecured notes 1,200 
Debt issuance costs and bridge commitment fees (52)
Call premium paid on debt extinguishment  (37)
Cash dividend paid for Series A preferred shares dividends (11)(11)
Proceeds from employee stock plans19 33 
Tax withholding payments on behalf of employees(38)(28)
Net change in client funds obligations(6)(3)
Principal payments for finance lease obligations(12)(13)
Other financing activities(3)(2)
Net cash provided by (used in) financing activities$93 $2,196 
Cash flows from discontinued operations
Net cash provided by (used in) operating activities of discontinued operations$(1)$(50)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(43)(12)
Increase (decrease) in cash, cash equivalents, and restricted cash(4)229 
Cash, cash equivalents and restricted cash at beginning of period749 406 
Cash, cash equivalents and restricted cash at end of period$745 $635 
Supplemental disclosures of noncash investing and financing activities During the nine months ended September 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.
6

Table of Contents
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, 2021132 $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 plans3 — 19 — — — 19 
Stock issued in acquisition of LibertyX1 — 68 — — — 68 
Series A convertible preferred stock dividends— — — (4)— — (4)
March 31, 2022136 $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 plans1 — 42 — — — 42 
Series A convertible preferred stock dividends— — — (4)— — (4)
June 30, 2022137 $1 $644 $1,030 $(305)$3 $1,373 
Comprehensive income:
Net income (loss) — — 69 — — 69 
Other comprehensive income (loss) — — — (21)(2)(23)
Total comprehensive income (loss) — — 69 (21)(2)46 
Employee stock purchase and stock compensation plans— — 31 — — — 31 
Series A convertible preferred stock dividends — — (4)— — (4)
September 30, 2022137 $1 $675 $1,095 $(326)$1 $1,446 

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, 2020129 $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 plans2 — 30 — — — 30 
Series A convertible preferred stock dividends— — — (4)— — (4)
March 31, 2021131 $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, 2021131 $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 plans1 — 50 — — — 50 
Series A convertible preferred stock dividends — — (4)— — (4)
September 30, 2021132 $1 $511 $971 $(300)$5 $1,188 

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


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 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.

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. The current target is to complete the separation by the end of 2023.

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 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 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’ equity.

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 millionsSeptember 30
Balance Sheet Location20222021
Cash and cash equivalentsCash and cash equivalents$434 $383 
Short term restricted cashRestricted cash7