NCR

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013
Commission File Number 001-00395

NCR CORPORATION

(Exact name of registrant as specified in its charter)

Maryland
(State or other jurisdiction of
incorporation or organization)

31-0387920
(I.R.S. Employer
Identification No.)

3097 Satellite Boulevard
Duluth, GA 30096
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (937) 445-5000
Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registered

Common Stock, par value $0.01 per share

New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes Í No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ‘ No Í
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 Í No ‘
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted 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 and post such
files). Yes Í No ‘
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained
herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ‘
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a
smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Í
Non-accelerated filer ‘ (Do not check if a smaller reporting company)
Indicate by check mark whether
Act). Yes ‘ No Í
The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2013, was approximately
$5.5 billion. As of February 11, 2014, there were approximately 166.7 million shares of common stock issued and
outstanding.

‘
Accelerated filer
Smaller reporting company ‘
the Exchange

is a shell company (as defined in Rule 12b-2 of

the registrant

DOCUMENTS INCORPORATED BY REFERENCE

Part III: Portions of the Registrant’s Definitive Proxy Statement for its Annual Meeting of Stockholders to be
filed pursuant to Regulation 14A within 120 days after the Registrant’s fiscal year end of December 31,
2013 are incorporated by reference into Part III of this Report.

TABLE OF CONTENTS

Item

Description

Page

Forward-Looking Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

i

PART I

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.
Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.

PART II

5.

Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of

Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.
7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . .
7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.
9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . . . . . . . .
9A. Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

PART III

10. Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
12.

Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Certain Relationships and Related Transactions and Director Independence . . . . . . . . . . . . . . . . . . . .
Principal Accountant Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14.

1
9
19
19
19
19

20
22
23
43
45
113
113
114

115
115

115
115
115

PART IV

15.

Exhibits and Financial Statement Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

116

This Report contains trademarks, service marks, and registered marks of NCR Corporation and its subsidiaries,
and other companies, as indicated.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements use words such as “seek,” “potential,”
“expect,” “strive,” “continue,” “continuously,” “accelerate,” “anticipate,” “intend,” “plan,” “target,” “believe,”
“estimate,” “forecast,” “pursue,” and other similar expressions or future or conditional verbs such as “will,”
“should,” “would” and “could”. They include statements as to our anticipated or expected results; future financial
performance; projections of revenue, profit growth and other financial items; discussion of strategic initiatives
and related actions; comments about our future economic performance; comments about future market or
industry performance; comments about environmental
litigation and other contingencies; and beliefs,
things. Forward-looking statements are based on
expectations,
management’s current beliefs, expectations and assumptions and involve a number of known and unknown risks
and uncertainties, many of which are outside our control. These forward-looking statements are not guarantees of
future performance, and there are a number of factors, risks and uncertainties including those listed in Item 1A
“Risk Factors,” and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations,” of this Annual Report on Form 10-K, that could cause actual outcomes and results to differ
materially from the results contemplated by such forward-looking statements. We undertake no obligation to
publicly update or revise any forward-looking statements after the filing date of this Annual Report on
Form 10-K, whether as a result of new information, future events or otherwise.

intentions, and strategies, among other

i

Item 1.

BUSINESS

General

PART I

NCR Corporation and its subsidiaries (NCR or the Company, also referred to as “we”, “us” or “our”) provide
technology and services that help businesses connect, interact and transact with their customers.

Businesses

solutions

NCR Corporation is a leading global technology company that provides innovative products and services that
enable businesses to connect, interact and transact with their customers and enhance their customer relationships
by addressing consumer demand for convenience, value and individual service. Our portfolio of self-service and
assisted-service
travel, and
telecommunications and technology industries and include automated teller machines (ATMs) and ATM and
financial services software, point of sale devices (POS) and POS software, and self-service kiosks and software
applications that can be used by consumers to enable them to interact with businesses from their computer or
mobile device. We complement these product solutions by offering a complete portfolio of services to support
both NCR and third party solutions. We also resell third-party networking products and provide related service
offerings in the telecommunications and technology sectors.

retail, hospitality,

customers

financial

services,

in the

serve

Industries Served

NCR provides specific solutions for customers in a range of industries such as financial services, retail,
hospitality, travel, and telecommunications and technology. NCR’s solutions are built on a foundation of long-
established industry knowledge and consulting expertise, value-added software and hardware technology, global
customer support services, and a complete line of business consumables and specialty media products.

Company History

NCR was originally incorporated in 1884 and was a publicly traded company on the New York Stock Exchange
prior to its merger with a wholly-owned subsidiary of AT&T Corp. (AT&T) on September 19, 1991.
Subsequently, on December 31, 1996, AT&T distributed all of its interest in NCR to its stockholders. NCR
common stock is listed on the New York Stock Exchange and trades under the symbol “NCR”.

On September 30, 2007, NCR completed the spin-off of its Teradata Data Warehousing business through the
distribution of a tax-free stock dividend to NCR stockholders. NCR distributed one share of common stock of
Teradata Corporation (Teradata) for each share of NCR common stock to NCR stockholders of record as of the
close of business on September 14, 2007.

Significant Transactions

Effective in the first quarter of 2013, we elected to change our accounting methodology for recognizing costs for
all of our company-sponsored U.S. and international pension benefit plans. Under our new accounting methods,
we will recognize changes in the fair value of plan assets and net actuarial gains or losses upon remeasurement,
which is at least annually in the fourth quarter of each year. These new accounting methods will result in changes
in the fair value of plan assets and net actuarial gains and losses being recognized in expense faster than under
our previous amortization method. The remaining components of pension expense, primarily net service cost,
interest cost, and the expected return on plan assets, will be recorded on a quarterly basis as ongoing pension
expense. While our previous policy of recognizing pension expense was acceptable, we believe that these new
policies are preferable as they accelerate the recognition in our operating results of changes in the fair value of
plan assets and actuarial gains and losses.

On February 6, 2013, we completed the acquisition of Retalix Ltd. (Retalix), for which we paid an aggregate
cash purchase price of $791 million which includes $3 million to be recognized as compensation expense within
selling, general and administrative expenses over a period of approximately three years from the acquisition date.

1

The purchase price was paid from the net proceeds of the December 2012 offer and sale of our 4.625% senior
unsecured notes and borrowing under our senior secured credit facility. As a result of the acquisition, Retalix
became an indirect wholly owned subsidiary of NCR.

On December 2, 2013, we entered into an Agreement and Plan of Merger to acquire Digital Insight Corporation
(Digital Insight), a leader in online and mobile banking solutions, for a cash purchase price of $1.65 billion. On
December 19, 2013, through a newly formed wholly owned subsidiary, NCR Escrow Corp., we completed the
offering of $400 million aggregate principal amount of 5.875% senior unsecured notes due in 2021 and $700
million aggregate principal amount of 6.375% senior unsecured notes due in 2023,
to help finance the
acquisition. The aggregate principal amount from the offerings was initially deposited into a segregated escrow
account of NCR Escrow Corp. On January 10, 2014, we completed the acquisition of Digital Insight, NCR
Escrow Corp. merged with and into NCR, with NCR assuming all of NCR Escrow Corp.’s obligations under the
5.875% and 6.375% notes and the indentures governing those notes, and the net proceeds from the offering were
released from the escrow account to pay a portion of the purchase price for Digital Insight.

Operating Segments

We categorize our operations into four reportable segments: Financial Services, Retail Solutions, Hospitality, and
Emerging Industries.

The information required by Item 1 with respect to our reportable segments and financial information regarding
our geographic areas and those reportable segments can be found in Item 7 of Part II of this Report under
“Revenue and Operating Income by Segment” as well as in Item 8 of Part II of this Report as part of Note 13,
“Segment Information and Concentrations,” of the Notes to Consolidated Financial Statements, and is
incorporated herein by reference.

Products and Services

We sell products and services that help businesses connect, interact and transact with their customers. Our
product and service offerings fall into the following categories:

ATMs and Other Financial Products

We provide financial
institutions, retailers and independent deployers with financial-oriented self-service
technologies, such as ATMs, cash dispensers, and software solutions, including the APTRA™ self-service ATM
software application suite (providing ATM management systems) and cash management and video banking
software, as well as professional services related to ATM security, software and bank branch optimization. ATM
and other financial product solutions are designed to quickly and reliably process consumer transactions and
incorporate advanced features such as automated check cashing/deposit, automated cash deposit, web-
enablement and bill payment (including mobile bill payment). These solutions help enable businesses to reduce
costs and generate new revenue streams while enhancing customer loyalty.

Point of Sale

We provide retail and hospitality oriented technologies such as point of sale terminals and point of sale software,
bar-code scanners and other retail-oriented software and services to companies and entertainment and sports
venues worldwide. Combining our retail and hospitality industry expertise, software and hardware technologies,
and professional services, our solutions are designed to enable cost reductions and improve operational efficiency
while increasing customer satisfaction.

Self-Service Kiosks

We provide self-service kiosks and related operating software to the retail, hospitality and travel and gaming
industries. Our versatile kiosk solutions can support numerous retail self-service functions, including self-
checkout, wayfinding (our self-service software application that helps customers easily locate products or

2

navigate through large, complex buildings and campuses), digital signage, bill payment and gift registries. We
provide self-check in/out kiosk solutions to airlines, hotels and casinos that allow guests to check-in/out without
assistance. These solutions create pleasant and convenient experiences for consumers and enable our customers
to reduce costs. Our kiosks for the hospitality industry provide consumers the ability to order and pay at
restaurants while enabling our customers to streamline order processing and reduce operating costs.

Check and Document Imaging

Our check and document imaging offerings provide end-to-end solutions for both traditional paper-based and
image-based check and item processing. These solutions utilize advanced image recognition and workflow
technologies to automate item processing, helping financial institutions increase efficiency and reduce operating
costs. Consisting of hardware, software, professional and support services, our comprehensive check and
document imaging solutions enable check and item-based transactions to be digitally captured, processed and
retained within a flexible, scalable environment.

Consumables

We develop, produce and market a complete line of printer consumables for various print technologies. These
products include two-sided thermal paper (2ST®), paper rolls for receipts in ATMs and POS solutions, inkjet and
laser printer supplies, thermal transfer and ink ribbons, labels, laser documents, business forms, and specialty
media items such as photo and presentation papers. Consumables are designed to optimize operations and
improve transaction accuracy, while reducing overall costs.

Services

Services are an essential and integrated component of NCR’s complete solution offerings. We provide
maintenance and support services for our product offerings and also provide other services including site
installation and implementation, systems management and complete
assessment and preparation, staging,
managed services. We provide Predictive Services, a managed services offering, which is designed to predict and
address information technology issues quickly before they happen.

We also offer a range of software and services such as Software as a Service (SaaS), hosted services, and online,
mobile and transactional services and applications such as bill pay. In addition, we are also focused on expanding
the resale of third party networking products and related service offerings to a broader base of customers in the
telecommunications and technology sectors and servicing third-party computer hardware from select
manufacturers who value and leverage our global service capability.

Target Markets and Distribution Channels

Our ATMs and other financial product solutions primarily serve the financial services industry with particular
focus on retail banking, which includes traditional providers of consumer banking and financial services. These
solutions also serve the retail markets through convenience banking products for retailers designed to
complement their core businesses. Customers are located throughout the world in both developed and emerging
markets. We have historically sold most of our ATMs and financial products and services through a direct sales
channel, although a portion of revenues is derived through distributors and value-added resellers.

We provide self-service kiosk and POS solutions to the retail, hospitality and travel and gaming industries. Retail
customers include department stores, specialty retailers, mass merchandisers, catalog stores, supermarkets,
hypermarkets, grocery stores, drug stores, wholesalers, convenience stores and petroleum outlets. Hospitality
customers include restaurants and food service providers, and sports and entertainment venues (including
stadiums, arenas and cinemas). Travel and gaming customers include airlines, airports, car rental companies,
hotel/lodging operators and casinos. Self-service kiosk and POS solutions are sold through a direct sales force
and through relationships with value-added resellers, distributors, dealers and other indirect sales channels. We
have focused our investments and resources on self-service technologies with expanded offerings to include self-
ticketing and mobile check-in for the travel industry.

3

Our imaging solutions primarily serve the financial services industry worldwide, with the primary focus on
banks. We have historically distributed most of our imaging products and services through a direct sales channel,
although certain revenues are derived through sales by value-added resellers and distributors.

Our consumables products are sold to the financial services, retail and hospitality industries as well as to
customers involved in transportation and manufacturing. These products are also sold through a direct sales force
as well as through various channel partners including office product retailers, contract stationers, value-added
resellers, original equipment manufacturers as well as through telemarketing and the Internet.

We provide service and support for our products and solutions through service contracts with our customers. We
have also established managed service contracts with key customers and continue to pursue additional managed
service relationships. Longer term managed service arrangements can help improve the efficiency and
performance of the customer’s business, and also increase the strategic and financial
importance of its
relationship with NCR. We also service competing technologies—for example, ToshibaTec retail technologies
and Diebold ATMs. The primary sales channel for our services is our direct sales teams, which exist across all
geographies. Our services professionals provide these services directly to end customers.

Competition

In the financial services industry, we face a variety of competitors, including Diebold, Wincor Nixdorf GmbH &
Co. (Wincor) and Hyosung, as well as many other regional firms, across all geographies. The primary factors of
competition can vary, but typically include: value and quality of the solutions or products; total cost of
ownership; industry knowledge of the vendor; the vendor’s ability to provide and support a total end-to-end
solution; the vendor’s ability to integrate new and existing systems; fit of the vendor’s strategic vision with the
customer’s strategic direction; and quality of the vendor’s support and consulting services.

We face a variety of competitors in the retail and hospitality industries across all geographies. We believe that
key competitive factors can vary by geographic area but typically include: value and quality of the solutions or
products; total cost of ownership; industry knowledge of the vendor; and knowledge, experience and quality of
the vendor’s consulting, deployment and support services. Our competitors vary by market segment, product,
service offering and geographic area, and include ToshibaTec, Wincor, Fujitsu, Hewlett-Packard, Dell,
Honeywell, Micros Systems, Verifone and Datalogic, among others.

We face a diverse group of competitors in the travel and gaming industries. Competitors in the travel industry
include IBM, SITA and IER, among others. In the gaming industry, our key competitors are IBM, Wincor and
Cummins.

We face competition for services from other technology and service providers, as well as from independent
service operators, in all geographies where we operate around the world. The primary services competitors are
the companies identified in the descriptions of our other solutions as global technology providers are becoming
more focused on services as a core business strategy. We also compete with a range of regional and local service
companies across our various geographies.

Competition for printer consumables is significant and varies by geographic area and product group. The primary
areas of competitive differentiation typically include: quality; logistics and supply chain management; and total
cost of ownership. While price is always a factor, we focus on the customer’s total cost of ownership for our
consumables products. Total cost of ownership takes into account not only the per-unit cost, but also service,
usage, reporting and support costs. Our competitors include, among others, RiteMade Paper and Schades.

We face competition in the financial services industry for imaging solutions across all geographies. The primary
areas of competition can vary, but typically include: quality of the solutions or products; total cost of ownership;
industry knowledge; the vendor’s ability to provide and support a total end-to-end solution; the vendor’s ability
to integrate new and existing systems; fit of the vendor’s strategic vision with the customer’s strategic direction;
and quality of the vendor’s support and consulting services. Our competitors vary by product, service offering
and geographic area, and include Fidelity National Information Services and Unisys Corporation, among others.

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Research and Development

We remain focused on designing and developing products, services and solutions that anticipate our customers’
changing technological needs and consumer preferences. Our expenses for research and development were $203
million in 2013, $155 million in 2012, and $209 million in 2011. We anticipate that we will continue to have
significant research and development expenditures in the future in order to provide a continuing flow of
innovative, high-quality products and services and to help maintain and enhance our competitive position.
Information regarding the accounting and costs included in research and development activities is included in
Note 1, “Description of Business and Significant Accounting Policies,” of the Notes to Consolidated Financial
Statements in Item 8 of Part II of this Report and is incorporated herein by reference.

Patents and Trademarks

NCR seeks patent protection for its innovations and improvements associated with its products, services, and
developments, where such protection is likely to provide value to NCR. NCR owns approximately 1,425 patents
in the U.S. and numerous other patents in foreign countries. The foreign patents are generally counterparts of
NCR’s U.S. patents. Many of the patents owned by NCR are licensed to others, and NCR is licensed under
certain patents owned by others. NCR has active patent licensing programs. NCR also has numerous patent
applications pending in the U.S. and in foreign countries. NCR’s portfolio of patents and patent applications, in
the aggregate, is of significant value to NCR.

NCR has registered certain trademarks and service marks in the U.S. and in a number of foreign countries. NCR
considers the “NCR” and NCR logo marks and many of its other trademarks and service marks to be valuable
assets.

Seasonality

Our sales are historically seasonal, with lower revenue in the first quarter and higher revenue in the fourth quarter
of each year. Such seasonality also causes our working capital cash flow requirements to vary from quarter to
quarter depending on variability in the volume, timing and mix of product sales. In addition, revenue in the third
month of each quarter is typically higher than in the first and second months. Information regarding seasonality
and its potential impact on our business is included in Item 1A of this Report under the caption, “Operating
Results Fluctuations,” and is incorporated herein by reference.

Manufacturing and Raw Materials

In most cases, there are a number of vendors providing the services and producing the parts and components that
we utilize. However, there are some services and components that are purchased from single sources due to price,
quality, technology or other reasons. For example, we depend on computer chips and microprocessors from Intel
and operating systems from Microsoft. Certain parts and components used in the manufacturing of our ATMs
and the delivery of many of our retail solutions are also supplied by single sources. In addition, there are a
number of key suppliers for our businesses who provide us with critical products for our solutions.

We manufacture our ATMs in facilities located in Columbus, Georgia, USA; Manaus, Brazil; Budapest,
Hungary; Beijing, China; and Puducherry, India. Our self-checkout solutions are manufactured in facilities
located in Columbus, Georgia, USA and Budapest, Hungary. Our financial kiosk solutions are manufactured in
facilities located in Beijing, China. Our POS/Display terminals are manufactured in facilities located in
Columbus, Georgia, USA; Beijing, China; and Adelaide, Australia, and certain hand-held solutions are
manufactured in Salzburg, Austria. NCR outsources the manufacturing in all geographic regions of its payment
solutions, some POS/Display terminals, printers, bar code scanners and various other kiosks.

Further information regarding the potential impact of these relationships on our business operations, and
regarding sources and availability of raw materials, is also included in Item 1A of this Report under the caption
“Reliance on Third Parties,” and is incorporated herein by reference.

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Product Backlog

Our backlog was approximately $1,172 million and $1,137 million at December 31, 2013 and 2012, respectively.
The backlog includes orders confirmed for products scheduled to be shipped as well as certain professional and
transaction services to be provided. Although we believe that the orders included in the backlog are firm, some
orders may be cancelled by the customer without penalty, and we may elect to permit cancellation of orders
without penalty where management believes it is in our best interests to do so. Further, we have a significant
portion of revenues derived from our growing service-based business as well as the Hospitality line of business,
the recently acquired Retalix business and the consumables business, for which backlog information is not
measured. Therefore, we do not believe that our backlog, as of any particular date, is necessarily indicative of
revenues for any future period.

Employees

On December 31, 2013, NCR had approximately 29,300 employees and contractors.

Environmental Matters

Compliance with federal, state, and local environmental regulations relating to the protection of the environment
could have a material adverse impact on our capital expenditures, earnings or competitive position. While NCR
does not currently expect to incur material capital expenditures related to compliance with such laws and
regulations, and while we believe the amounts provided in our Consolidated Financial Statements are adequate in
light of the probable and estimable liabilities in this area, there can be no assurances that environmental matters
will not lead to a material adverse impact on our capital expenditures, earnings or competitive position. A
detailed discussion of the current estimated impacts of compliance issues relating to environmental regulations,
particularly the Fox River and Kalamazoo River matters, is reported in Item 8 of Part II of this Report as part of
Note 10, “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements and is
incorporated herein by reference. Further information regarding the potential impact of compliance with federal,
state, and local environmental regulations is also included in Item 1A of this Report under the caption
“Environmental,” and is incorporated herein by reference.

Executive Officers of the Registrant

The Executive Officers of NCR (as of February 26, 2014) are as follows:

Name

Age

Position and Offices Held

William R. Nuti . . . . . . .
John G. Bruno . . . . . . . .

50 Chairman of the Board, Chief Executive Officer and President
49 Executive Vice President, Industry and Field Operations and Corporate

Development
Senior Vice President, General Counsel and Secretary

Jennifer M. Daniels . . . .
Peter A. Dorsman . . . . .
Robert P. Fishman . . . . .
Andrea L. Ledford . . . .

50
58 Executive Vice President, Services
50
48

Senior Vice President and Chief Financial Officer
Senior Vice President, Corporate Services and Chief Human Resources Officer

Set forth below is a description of the background of each of the Executive Officers.

William R. Nuti, is NCR’s Chairman of the Board, Chief Executive Officer and President. Mr. Nuti became
Chairman of the Board on October 1, 2007. Before joining NCR in August 2005, Mr. Nuti served as President
and Chief Executive Officer of Symbol Technologies, Inc., an information technology company. Prior to that, he
was Chief Operating Officer of Symbol Technologies. Mr. Nuti joined Symbol Technologies in 2002 following a
10 plus year career at Cisco Systems, Inc. where he advanced to the dual role of Senior Vice President of the
company’s Worldwide Service Provider Operations and U.S. Theater Operations. Prior to his Cisco experience,
Mr. Nuti held sales and management positions at International Business Machines Corporation, Netrix
Corporation and Network Equipment Technologies. Mr. Nuti is also a director of United Continental Holdings,
Inc. where he is a member of the Audit Committee and previously served as a director of Sprint Nextel
Corporation. He is also a member of the Georgia Institute of Technology advisory board and a trustee of Long
Island University. Mr. Nuti became a director of NCR on August 7, 2005.

6

John G. Bruno became Executive Vice President, Industry and Field Operations and Corporate Development on
November 18, 2013. Prior to that position, Mr. Bruno was Executive Vice President and Chief Technology
Officer from November 1, 2011 through November 17, 2013 and also previously served as Executive Vice
President, Industry Solutions Group, from November 29, 2008 to October 31, 2011. Prior to joining NCR,
Mr. Bruno was a Managing Director at The Goldman Sachs Group, Inc., a global investment banking, securities
and investment management firm, from August 2007 to November 2008. Prior to this position, he was Senior
Vice President—General Manager, RFID Division, at Symbol Technologies, Inc., an information technology
company, from June 2005 through February 22, 2006. Mr. Bruno was Symbol Technologies’ Senior Vice
President, Corporate Development from May 2004 to June 2005, and was Symbol Technologies’ Senior Vice
President, Business Development, and Chief Information Officer, from November 2002 to May 2004.

Jennifer M. Daniels became Senior Vice President, General Counsel and Secretary in April 2010. Prior to joining
NCR, Ms. Daniels was Vice President, General Counsel and Corporate Secretary of Barnes & Noble, Inc., from
August 2007 to April 2010. Prior to that, she served as an attorney for more than 16 years at IBM, a worldwide
provider of computer hardware, software and services, where she held, among other positions, the positions of
Vice President, Assistant General Counsel and Chief Trust and Compliance Officer; Vice President and Assistant
General Counsel for Litigation; and Vice President and General Counsel of IBM Americas.

Peter A. Dorsman became Executive Vice President, Services on September 13, 2013. Before assuming that role,
he served as Executive Vice President and Chief Quality Officer from June 2012 through September 12, 2013
and also previously served as Executive Vice President, Industry Solutions Group and Global Operations.
Mr. Dorsman is also responsible for NCR’s Customer Experience/Continuous Improvement. Previously, he was
Senior Vice President, Global Operations from January 1, 2008 to October 31, 2011 and was Vice President and
General Manager of NCR’s Systemedia Division, now named NCR Interactive Printer Solutions, from April 17,
2006 to December 31, 2007. Prior to joining NCR, Mr. Dorsman served in several roles with The Standard
Register Company, a provider of information solutions, including as its Executive Vice President and Chief
Operating Officer responsible for the day-to-day operations of the company. Before his role at Standard Register,
Mr. Dorsman served for nearly 20 years at NCR in various marketing and sales leadership roles, including vice
president of worldwide industry marketing. Mr. Dorsman is a director of Applied Industrial Technologies Inc.

Robert P. Fishman became Senior Vice President and Chief Financial Officer in March 2010. Prior to assuming
this position, he was Interim Chief Financial Officer from October 2009 to March 2010. Prior to that position, he
was Vice President and Corporate Controller from January 2007 to October 2009. From September 2005 to
January 2007, Mr. Fishman was Assistant Controller and from January 2005 to September 2005, he was Director,
Corporate Planning. Mr. Fishman joined NCR in 1993.

Andrea L. Ledford became Senior Vice President, Corporate Services and Chief Human Resources Officer on
November 13, 2013. Previously, Ms. Ledford was Senior Vice President, Human Resources. She also served as
Interim Senior Vice President, Human Resources from February 2007 to June 2007. Prior to assuming this
position, she was Vice President, Human Resources, Asia/Pacific, and Europe, Middle East and Africa, from
February 2006 to February 2007. Before joining NCR in February 2006, Ms. Ledford was EMEA Leader,
Human Resources, at Symbol Technologies, Inc., an information technology company, from 2002 to February
2006 and held a variety of leadership roles at Cisco Systems, Inc., a manufacturer of communications and
information technology networking products, in EMEA, Asia/Pacific and Latin America.

Available Information

NCR makes available through its website at http://investor.ncr.com, free of charge, its Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, definitive proxy statements on Schedule 14A and Current Reports on
Form 8-K, and all amendments to such reports and schedules, as soon as reasonably practicable after these
reports are electronically filed or furnished to the U.S. Securities and Exchange Commission (SEC) pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934. The SEC website (www.sec.gov) contains the
reports, proxy statements and information statements, and other information regarding issuers that file
electronically with the SEC. Also, the public may read and copy any materials that NCR files with the SEC at the

7

SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Information on the operation of the
Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. NCR will furnish, without
charge to a security holder upon written request, the Notice of Meeting and Proxy Statement for the 2014 Annual
Meeting of Stockholders (the 2014 Proxy Statement), portions of which are incorporated herein by reference.
NCR also will furnish its Code of Conduct at no cost and any other exhibit at cost. Document requests are
available by calling or writing to:

NCR—Investor Relations
3097 Satellite Boulevard
Duluth, GA 30096
Phone: 800-255-5627
E-Mail: investor.relations@ncr.com
Website: http://investor.ncr.com

NCR’s website, www.ncr.com, contains a significant amount of information about NCR, including financial and
other information for investors. NCR encourages investors to visit its website regularly, as information may be
updated and new information may be posted at any time. The contents of NCR’s website are not incorporated by
reference into this Form 10-K and shall not be deemed “filed” under the Securities Exchange Act of 1934.

8

Item 1A. RISK FACTORS

The risks and uncertainties described below could materially and adversely affect our business, financial
condition, results of operations, could cause actual results to differ materially from our expectations and
projections, and could cause the market value of our stock to decline. You should consider these risk factors
when reading the rest of this Annual Report on Form 10-K, including “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and our financial statements and related notes included
elsewhere in this document. These risk factors may not include all of the important factors that could affect our
business or our industry or that could cause our future financial results to differ materially from historic or
expected results or cause the market price of our common stock to fluctuate or decline.

Economic Pressures. Our business may be negatively affected by global economic and credit conditions. Our
business is sensitive to the strength of domestic and global economic and credit conditions. The strength of
global economic and credit conditions depends on a number of factors,
including consumer confidence,
unemployment levels, interest rates and the effects of government actions to address sovereign debt issues,
improve global credit markets and generally stimulate economic growth. Recent sovereign debt crises in Europe
and elsewhere, slower growth in the emerging markets, and the uneven global economic recovery, among other
things, have created a challenging and unpredictable environment in which to market the products and services of
our various businesses across different geographies.

A negative economic climate could create financial pressures that impact the ability or willingness of our
customers to make capital expenditures, thereby affecting their ability to purchase our products or services, or
especially with respect to smaller customers, to pay accounts receivable owed to NCR. Additionally, if customers
respond to a negative economic climate by consolidation, such as has occurred in the financial services sector in
the recent past, it could reduce our base of potential customers. Negative global economic conditions also may
have a material effect on our customers’ ability to obtain financing for the purchase of our products and services
from third party financing companies, which could adversely affect our operating results.

Indebtedness. Our substantial level of indebtedness could limit our financial and operating activities, and
adversely affect our ability to incur additional debt to fund future needs. At December 31, 2013, we had
approximately $3,354 million of total indebtedness outstanding. Additionally, at December 31, 2013, we had
approximately $828 million of secured debt available for borrowing under our senior secured credit facility. This
level of indebtedness could:

•

require us to dedicate a substantial portion of our cash flow to the payment of principal and interest,
thereby reducing the funds available for operations and future business opportunities;

• make it more difficult for us to satisfy our obligations with respect to our outstanding senior unsecured

notes, including our change in control repurchase obligations;

•

•

•

limit our ability to borrow additional money if needed for other purposes, including working capital,
capital expenditures, debt service requirements, acquisitions and general corporate or other purposes,
on satisfactory terms or at all;

limit our ability to adjust to changing economic, business and competitive conditions;

place us at a competitive disadvantage with competitors who may have less indebtedness or greater
access to financing;

• make us more vulnerable to an increase in interest rates, a downturn in our operating performance or a

decline in general economic conditions; and

• make us more susceptible to changes in credit ratings, which could impact our ability to obtain

financing in the future and increase the cost of such financing.

If compliance with our debt obligations, including those under our senior secured credit facility and the
indentures for our senior unsecured notes, materially limits our financial or operating activities, or hinders our
ability to adapt to changing industry conditions, we may lose market share, our revenue may decline and our
operating results may be negatively affected.

9

The terms of our senior secured credit facility and the indentures for our senior unsecured notes include
financial and other covenants that could restrict or limit our financial and business operations. Our senior
secured credit facility and the indentures for our senior unsecured notes include restrictive covenants that, subject
to certain exceptions and qualifications, restrict or limit our ability and the ability of our subsidiaries to, among
other things:

•

•

•

incur additional indebtedness;

create liens on, sell or otherwise dispose of, our assets;

engage in certain fundamental corporate changes or changes to our business activities;

• make certain material acquisitions;

•

•

•

•

•

engage in sale-leaseback or hedging transactions;

repurchase our common stock, pay dividends or make similar distributions on our capital stock;

repay certain indebtedness;

engage in certain affiliate transactions; and

enter into agreements that restrict our ability to create liens, pay dividends or make loan repayments.

The senior secured credit facility and the indentures also contain certain affirmative covenants, and the senior
secured credit facility requires us to comply with financial coverage ratios regarding both our interest expense
and our debt relative to our Consolidated EBITDA (as defined in the senior secured credit facility).

These covenants and restrictions could affect our ability to operate our business, and may limit our ability to
react to market conditions or take advantage of potential business opportunities as they arise. Additionally, our
ability to comply with these covenants may be affected by events beyond our control, including general
economic and credit conditions and industry downturns.

If we fail to comply with these covenants and are unable to obtain a waiver or amendment, an event of default
would result under these agreements and under other agreements containing related cross-default provisions.
Upon an event of default under the senior secured credit facility, the lenders could, among other things, declare
outstanding amounts due and payable, refuse to lend additional amounts to us, and require deposit of cash
collateral in respect of outstanding letters of credit. If we were unable to repay or pay the amounts due, the
lenders could, among other things, proceed against the collateral granted to them to secure such indebtedness,
which includes certain of our domestic assets and the equity interests of certain of our domestic and foreign
subsidiaries. Upon an event of default under the indentures, the trustee or holders of our senior unsecured notes
could declare all outstanding amounts immediately due and payable.

In connection with the December 2013 issuances of our 5.875% and 6.375% senior unsecured notes, we also
entered into registration rights agreements that require us to file a registration statement with respect to an offer
to exchange each series of notes for a new issue of our debt securities registered under the Securities Act of 1933,
as amended, with terms substantially identical to such series of notes (except for the provisions relating to the
transfer restrictions and payment of additional interest). If we fail to satisfy our exchange obligations under the
registration rights agreements by October 15, 2014, we will be required to pay additional interest to the holders
of the notes of the applicable series under certain circumstances.

Our cash flows may not be sufficient to service our indebtedness, and if we are unable to satisfy our obligations
under our indebtedness, we may be required to seek other financing alternatives, which may not be successful.
Our ability to make timely payments of principal and interest on our debt obligations under our senior secured
credit facility and senior unsecured notes depends on our ability to generate positive cash flows from operations,
which is subject to general economic conditions, competitive pressures and certain financial, business and other
factors beyond our control. If our cash flows and capital resources are insufficient to make these payments, we
may be required to seek additional financing sources, reduce or delay capital expenditures, sell assets or
indebtedness. These actions could have a material adverse effect on our
operations or

refinance our

10

business, financial condition and results of operations. In addition, we may not be able to take any of these
actions, and, even if successful, these actions may not permit us to meet our scheduled debt service obligations.
Our ability to restructure or refinance our outstanding indebtedness will depend on, among other things, the
condition of the capital markets and our financial condition at such time. There can be no assurance that we will
be able to restructure or refinance any of our indebtedness on commercially reasonable terms or at all. If we
cannot make scheduled payments on our debt, we will be in default and the outstanding principal and interest on
our debt could be declared to be due and payable, in which case we could be forced into bankruptcy or
liquidation or required to substantially restructure or alter our business operations or debt obligations.

Despite our current levels of debt, we may still incur substantially more debt, including secured debt, and similar
liabilities, which would increase the risks described herein. The agreements relating to our debt, including our
senior secured credit facility and the indentures governing our senior unsecured notes, limit but do not prohibit
our ability to incur additional debt, and the amount of debt that we could incur could be substantial. In addition,
certain types of liabilities are not considered “Indebtedness” under our senior secured credit facility or the
indentures governing our senior unsecured notes, and the senior secured credit facility and indentures do not
impose any limitation on the amount of liabilities incurred by the subsidiaries, if any, that might be designated as
“unrestricted subsidiaries” (as defined in the indentures). Accordingly, we could incur significant additional debt
or similar liabilities in the future, including additional debt under our senior secured credit facility, some of
which could constitute secured debt. In addition, if we form or acquire any subsidiaries in the future, those
subsidiaries also could incur debt or similar liabilities. If new debt or similar liabilities are added to our current
debt levels, the related risks that we now face could increase.

Borrowings under our senior secured credit facility bear interest at a variable rate, which subjects us to interest
rate risk, which could cause our debt service obligations to increase significantly. All of our borrowings under
our senior secured credit facility are at variable rates of interest and expose us to interest rate risk. If interest rates
increase, our debt service obligations on this variable rate indebtedness would increase even though the amount
borrowed remained the same. We are party to an interest rate swap agreement that fixes the interest rate, based
on LIBOR, on a portion of our LIBOR-indexed floating rate borrowings through August 22, 2016, with a
notional amount of $518 million as of December 31, 2013 that amortizes to $341 million over the term of the
agreement. Although we may enter into additional interest rate swaps to reduce interest rate volatility, we cannot
provide assurances that we will be able to do so or that such swaps will be effective.

We may also enter into interest rate swaps in the future in connection with our senior unsecured notes. This
would expose us to interest rate risk, which could increase our debt service obligations.

We may not be able to raise the funds necessary to finance a required change in control purchase of our senior
unsecured notes. Upon the occurrence of a change in control under the applicable indenture governing the
applicable senior unsecured notes, holders of those notes may require us to purchase their notes. However, it is
possible that we would not have sufficient funds at that time to make the required purchase of notes. We cannot
assure the holders of the senior unsecured notes that we will have sufficient financial resources, or will be able to
arrange financing, to pay the repurchase price in cash with respect to any such notes tendered by holders for
repurchase upon a change in control. Our failure to repurchase the senior unsecured notes of a series when
required would result in an event of default with respect to such notes which could, in turn, constitute a default
under the terms of our other indebtedness, if any. In addition, a change in control may constitute an event of
default under our senior secured credit facility that would permit the lenders to accelerate the maturity of the
borrowings thereunder and would require us to make a similar change in control offer to holders of our existing
senior unsecured notes.

Important corporate events may not constitute a change in control under the indentures governing our senior
unsecured notes. Certain important corporate events, such as leveraged recapitalizations that would increase the
level of our indebtedness, would not constitute a change in control under the indentures.

A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our
future borrowing costs and reduce our access to capital. Any rating assigned to our debt could be lowered or

11

withdrawn entirely by a rating agency if, in that rating agency’s judgment, future circumstances relating to the
basis of the rating, such as adverse changes, so warrant. Any future lowering of our ratings likely would make it
more difficult or more expensive for us to obtain additional debt financing.

Competition. If we do not compete effectively within the technology industry, we will not be successful. We
operate in the intensely competitive information technology industry. This industry is characterized by rapidly
changing technology, evolving industry standards, frequent new product introductions, price and cost reductions,
and increasingly greater commoditization of products, making differentiation difficult. Our competitors include
other large companies in the information technology industry, such as: IBM, Hewlett-Packard, Diebold, Wincor,
Hyosung, ToshibaTec, Micros, Fujitsu and Unisys, some of which have more financial and technical resources,
or more widespread distribution and market penetration for their platforms and service offerings, than we do. In
addition, we compete with companies in specific industry segments, such as entry-level ATMs, imaging
solutions, and business consumables and media products. Our future competitive performance and market
position depend on a number of factors, including our ability to:

•

•

•

•

•

•

•

•

react to competitive product and pricing pressures (particularly in the ATM marketplace);

penetrate and meet
emerging markets, such as India, China, Brazil and Russia;

the changing competitive requirements and deliverables in developing and

exploit opportunities in emerging vertical markets, such as travel and telecommunications and
technology;

cross-sell additional products and services to our existing customer base, including customers gained
from our recent acquisitions;

rapidly and continually design, develop and market, or otherwise maintain and introduce innovative
solutions and related products and services for our customers that are competitive in the marketplace;

react on a timely basis to shifts in market demands;

compete in reverse auctions for new and continuing business;

reduce costs without creating operating inefficiencies or impairing product or service quality;

• maintain competitive operating margins;

•

•

improve product and service delivery quality; and

effectively market and sell all of our diverse solutions.

Our business and operating performance also could be impacted by external competitive pressures, such as
increasing price erosion and the entry of new competitors into our existing product and geographic markets. In
addition, our customers sometimes finance our product sales through third-party financing companies, and in the
case of customer default, these financing companies may be forced to resell this equipment at discounted prices,
competing with NCR and impacting our ability to sell incremental units. The impact of these product and pricing
pressures could include lower customer satisfaction, decreased demand for our solutions, loss of market share
and reduction of operating profits.

Business Model. If we are unsuccessful in transforming our business model, our operating results could be
negatively impacted. In recent years, we have begun to shift our business model to focus increasingly on sales of
higher margin software and SaaS, and professional, managed and other services. Our ability to successfully grow
our software and services businesses depends on a number of different factors, including market acceptance of
our software solutions; integrating, developing and supporting software gained through recent acquisitions;
enabling our sales force to use a consultative selling model that better incorporates our comprehensive and new
solutions; and the expansion of our services capabilities and geographic coverage, among others. In addition,
development of these businesses may require increased capital and research and development expenses and
resource allocation, and while we will seek to have the right level of investment and the right level of resources
focused on these opportunities, these costs may reduce our gross margins and the return on these investments

12

may be lower, or may develop more slowly, than we expect. In addition, we are pursuing initiatives to expand
our customer base by increasing our use of an indirect sales channel, and by developing, marketing and selling
solutions aimed at the small- to medium-business market. It is not yet certain whether these initiatives will yield
the anticipated benefits, or whether our solutions will be compelling and attractive to small and medium-sized
businesses. If we are not successful in growing our software and services businesses and expanding our customer
base at the rate that we anticipate, we may not meet our growth and gross margin projections or expectations, and
operating results could be negatively impacted.

Product Defects and Errors. Defects, errors, installation difficulties or development delays could expose us to
liability, harm our reputation and negatively impact our business. Many of our products are
potential
sophisticated and complex, and despite testing and quality control, we cannot be certain that defects or errors will
not be found in current versions or new versions of our products. If our products contain undetected defects or
errors, or otherwise fail to meet our customers’ expectations, we could face the loss of customers and additional
development costs. If defects or errors delay product installation or make it more difficult, we could experience
delays in customer acceptance, or if our products require significant amounts of customer support, it could result
in incremental costs to NCR. In addition, our customers may license and deploy our software in both standard
and non-standard configurations in different environments with different computer platforms, system
management software and equipment and networking configurations, which may increase the likelihood of
technical difficulties. Our products may be integrated with other components or software, and, in the event that
there are defects or errors, it may be difficult to determine the origin of such defects or errors. Additionally,
damage to or failure of any significant aspect of our SaaS hosting facilities could interrupt the availability of our
SaaS offerings, which could cause disruption for our customers and expose us to liability. If any of these risks
materialize, they could result in additional costs and expenses, exposure to liability claims, diversion of technical
and other resources to engage in remediation efforts, loss of customers or negative publicity, each of which could
impact our business and operating results.

Operating Results Fluctuations. Our revenue, operating results, and margins could fluctuate for a number of
reasons, including those described below:

Manufacturing. We manufacture advanced ATMs in facilities located in Columbus, Georgia, USA; Manaus,
Brazil; Budapest, Hungary; Beijing, China; and Puducherry, India. Our self-checkout solutions are manufactured
in facilities located in Columbus, Georgia, USA and Budapest, Hungary. Our financial kiosk solutions are
manufactured in facilities located in Beijing, China. Our POS/Display terminals are manufactured in facilities
located in Columbus, Georgia, USA; Beijing, China; and Adelaide, Australia, and certain hand-held solutions are
manufactured in Salzburg, Austria. If we develop or experience problems relating to product quality or on-time
delivery to customers that we are unable to quickly manage and resolve, whether due to the geographical
diversity of our manufacturing base or otherwise, we could experience business interruption that could negatively
impact our business and operating results.

Seasonality. Our sales are historically seasonal, with lower revenue in the first quarter and higher revenue in the
fourth quarter of each year. Such seasonality also causes our working capital cash flow requirements to vary from
quarter to quarter depending on the variability in the volume, timing and mix of product sales. In addition,
revenue in the third month of each quarter is typically higher than in the first and second months. These factors,
among other things, may adversely affect our ability to manage working capital, make our forecasting process
more difficult and impact our ability to predict financial results accurately.

Foreign Currency. Our revenue and operating income are subject to variability due to the effects of foreign
currency fluctuations against the U.S. Dollar. We have exposure to approximately 50 functional currencies. We
endeavor to mitigate the effects of currency fluctuations by our hedging strategy; however, certain significant
currency fluctuations could adversely affect our results of operations, including sales and gross margins.

Cost/Expense Reductions. Our success in achieving targeted cost and expense reductions through our continuous
improvement and other similar programs depends on a number of factors, including our ability to achieve
improve supply
infrastructure rationalizations, drive lower component and product development costs,

13

chain efficiencies and optimize the efficiency of our customer services and professional services consulting
resources. If we do not successfully execute on our cost and expense reduction initiatives or if we experience
delays in completing the implementation of these initiatives, our results of operations or financial condition could
be adversely affected.

Contractual Obligations for Professional Services. Our contracts for professional services consulting work, may
contemplate that services will be performed over multiple periods. Our profitability under those contracts is
largely a function of performing our contractual obligations within the estimated costs and time periods specified.
If we exceed these estimated costs or cannot otherwise complete the contracted services within the specified
periods, our profitability related to these contracts could be negatively impacted. In addition, if we are unable to
maintain appropriate utilization rates for our consultants, we may not be able to sustain profitability on these
contracts.

Acquisitions, Divestitures and Alliances. As part of our strategy, we expect to selectively acquire and divest
technologies, products and businesses, either through acquisitions, investments, joint ventures, strategic alliances,
or divestitures. As these acquisitions, divestitures and alliances occur and we begin to include or exclude, as the
case may be, the financial results related to these transactions our operating results could fluctuate materially,
depending on the size and nature of the transactions. In addition, our operating results may be adversely affected
if we are unable to properly integrate acquisitions or if investments or alliances do not perform up to, or meet,
our original expectations.

Underfunded Pension Obligation. At December 31, 2013, our obligation for benefits under our pension plans
was $5,145 million and our pension plan assets totaled $5,056 million, which resulted in an underfunded pension
obligation of $89 million. While we recently rebalanced our US and international plan assets in order to reduce
volatility and made several discretionary contributions to our pension plans, our remaining underfunded pension
obligation continues to require significant cash contributions. In addition, certain of the plan assets remain
subject to financial market risk, and our actuarial and other assumptions underlying our expected future benefit
payments, long-term expected rate of return and future funding expectations for our plans depend on, among
other things, interest rate levels and trends and capital market expectations. Further volatility in the performance
of financial markets, changes in any of these actuarial assumptions (including those described in our “Critical
Accounting Policies and Estimates” section of the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” included in Item 7 of Part II of this Report) or changes in regulations
regarding funding requirements could require material increases to our expected cash contributions to our
pension plans in future years. Our financial position and liquidity could be materially impacted by these
contributions.

See the “Effects of Pension, Postemployment and Postretirement Benefit Plans” and “Financial Condition,
Liquidity And Capital Resources” sections of the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” included in Item 7 of Part II of this Report and Note 9, “Employee Benefit
Plans” in the Notes to the Consolidated Financial Statements included in Item 8 of Part II of this Report for
further information regarding the funded status of our pension plans and potential future cash contributions.

Stock-based Compensation. Similar to other companies, we use stock awards as a form of compensation for
certain employees and non-employee directors. All stock-based awards are required to be recognized in our
financial statements based on their fair values. The amount recognized for stock compensation expense could
vary depending on a number of assumptions or changes that may occur. For example, assumptions such as the
risk-free rate, expected holding period and expected volatility that drive our valuation model could change. Other
examples that could have an impact include changes in the mix and type of awards, changes in our compensation
plans or tax rate, changes in our forfeiture rate, differences in actual results compared to management’s estimates
for performance-based awards or an unusually high amount of expirations of stock awards.

Income Taxes. We are subject to income taxes in the United States and a number of foreign jurisdictions. We
recognize deferred tax assets and liabilities based on the differences between the financial statement carrying
amounts and the tax basis of assets and liabilities. Significant judgment is required in determining our provision

14

for income taxes. We regularly review our deferred tax assets for recoverability and establish a valuation
allowance if it is more likely than not that some portion or all of a deferred tax asset will not be realized. Our
deferred tax assets totaled approximately $804 million and $839 million at December 31, 2013 and 2012,
respectively. If we are unable to generate sufficient future taxable income, if there is a material change in the
actual effective tax rates, if there is a change to the time period within which the underlying temporary
differences become taxable or deductible, or if the tax laws change unfavorably, then we could be required to
increase our valuation allowance against our deferred tax assets, which could result in a material increase in our
effective tax rate. Additionally, we are subject to ongoing tax audits in various jurisdictions both in the U.S. and
internationally, the outcomes of which could result in the assessment of additional taxes. Our effective tax rate in
the future could be adversely affected by changes in the mix of earnings in countries with differing statutory tax
rates, the changes in the valuation of deferred tax assets and liabilities, changes in tax laws and regulations, and
management’s assessment in regards to repatriation of earnings.

Multinational Operations. Our multinational operations, including our expansion into new and emerging
markets, expose us to business and legal risks. For the years ended December 31, 2013 and 2012, the percentage
of our revenues from outside of the United States was 61% and 62%, respectively, and we expect our percentage
of revenues generated outside the United States to continue to be significant. In addition, we continue to seek to
further penetrate existing international markets, and to identify opportunities to enter into or expand our presence
in developing and emerging markets, including Brazil, Russia, China, India, Africa, and the Middle East, among
others. While we believe that our geographic diversity may help to mitigate some risks associated with
geographic concentrations of operations (e.g., adverse changes in foreign currency exchange rates, deteriorating
economic environments or business disruptions due to economic or political uncertainties), our ability to
manufacture and sell our solutions internationally, including in new and emerging markets, is subject to risks,
which include, among others:

•

•

•

•

•

•

•

•

•

the impact of ongoing and future sovereign debt, economic and credit conditions on the stability of
national and regional economies;

political conditions and local regulations that could adversely affect demand for our solutions, or our
ability to access funds and resources, in these markets;

the impact of a downturn in the global economy, or in regional economies, on demand for our products;

currency exchange rate fluctuations that could result in lower demand for our products as well as
generate currency translation losses;

changes to and compliance with a variety of laws and regulations that may increase our cost of doing
business or otherwise prevent us from effectively competing internationally;

government uncertainty, including as a result of new, or changes to, laws and regulations;

the institution of, or changes to, trade protection measures, currency restrictions, and import or export
licensing requirements;

the successful implementation and use of systems, procedures and controls to monitor our operations in
foreign markets;

changing competitive requirements and deliverables in developing and emerging markets;

• work stoppages and other labor conditions or issues;

•

•

disruptions in transportation and shipping infrastructure; and

the impact of civil unrest relating to war and terrorist activity on the economy or markets in general, or
on our ability, or that of our suppliers, to meet commitments.

In addition, as a result of our revenues generated outside of the United States, the amount of cash and cash
equivalents that is held by our foreign subsidiaries continues to be significant. If these cash and cash equivalents
are distributed to the United States, whether in the form of dividends or otherwise, we may be subject to
additional U.S. income taxes and foreign withholding taxes. Any such taxes would reduce the amount of such
cash and cash equivalents that are available for our use.

15

Acquisitions and Alliances. If we do not successfully integrate acquisitions or effectively manage alliance
activities, we may not drive future growth. As part of our overall solutions strategy, we have made, and intend to
continue to make, investments in companies, products, services and technologies, either through acquisitions
(such as our acquisitions of Digital Insight Corporation and Retalix, Ltd.), investments, joint ventures or strategic
alliances. Acquisitions and alliance activities inherently involve risks. The risks we may encounter include those
associated with:

•

•

•

assimilating and integrating different business operations, corporate cultures, personnel, infrastructures
and technologies or products acquired or licensed;

the potential for unknown liabilities within the acquired or combined business; and

the possibility of conflict with joint venture or alliance partners regarding strategic direction,
prioritization of objectives and goals, governance matters or operations.

Further, we may make acquisitions and investments in order to acquire or obtain access to new technology or
products that expand our offerings. There is risk that the new technology or products may not perform as
anticipated and may not meet estimated growth projections or expectations, or investment recipients may not
successfully execute their business plans. There is also risk that key employees of an acquired business may not
remain with the acquired business as long as expected. In the event that these risks materialize, we may not be
able to fully realize the benefit of our investments. An acquisition or alliance, and the integration of an acquired
business, may also disrupt our ongoing business or we may not be able to successfully incorporate acquired
products, services or technologies into our solutions and maintain quality. Further, we may not achieve the
projected synergies once we have integrated the business into our operations, which may lead to additional costs
not anticipated at the time of acquisition.

Data Privacy and Security. Breaches to our systems or products that compromise the security and integrity of
personally identifiable information could have a negative impact on our results of operations. Certain of our
products and services are used by our customers to store and transmit personally identifiable information of their
customers. We also offer SaaS solutions that include the hosting of customer data on our networks. In addition to
customer data, we also maintain personal information about our employees. This information is subject to a
variety of laws, regulations and industry standards governing its collection, use, disclosure and disposal, which
are continually evolving and which may not be consistent across all of the jurisdictions in which we do business.
Vulnerabilities in the security of our products and services, whether relating to hardware, software or otherwise,
could compromise the confidentiality of, or result
information
transmitted or stored using our products or solutions, or impact
the availability of our SaaS offerings.
Additionally, vulnerabilities in the security of our own internal systems could compromise the confidentiality of,
or result in unauthorized access to, personal information of our employees. If we do not maintain the security and
integrity of personally identifiable information in accordance with applicable regulatory requirements, we could
lose customers and be exposed to claims, costs and reputational harm that could materially and adversely affect
our operating results. In addition, if we are required to implement additional or different data protection
measures, the associated costs could be significant.

in unauthorized access to or the loss of,

Introduction of New Solutions.
If we do not swiftly and successfully develop and introduce new solutions in
the competitive, rapidly changing environment in which we do business, our business results will be impacted.
The development process for our solutions requires high levels of innovation from our product development
teams and suppliers of the components embedded or incorporated in our solutions. In addition, certain of our
solutions, including our SaaS solutions, may require us to build or expand, and maintain, infrastructure to support
them. The development process also can be lengthy and costly, and requires us to commit a significant amount of
resources to bring our business solutions to market. If we are unable to anticipate our customers’ needs and
technological and industry trends accurately, or are otherwise unable to complete development efficiently, we
would be unable to introduce new solutions into the market on a timely basis, if at all, and our business and
operating results could be impacted. Likewise, we sometimes make assurances to customers regarding the
operability and specifications of new technologies, and our results could be impacted if we are unable to deliver
such technologies, or if such technologies do not perform as planned. Once we have developed new solutions, if
we cannot successfully market and sell those solutions, our business and operating results could be impacted.

16

Reliance on Third Parties. If third-party suppliers upon which we rely are not able to fulfill our needs, our
ability to bring our products to market in a timely fashion could be affected. In most cases, there are a number of
vendors providing the services and producing the parts and components that we utilize in or in connection with
our products. However, there are some services and components that are licensed or purchased from single
sources due to price, quality, technology, functionality or other reasons. For example, we depend on transaction
processing services from Accenture, computer chips and microprocessors from Intel and operating systems from
Microsoft. Certain parts and components used in the manufacturing of our ATMs and the delivery of many of our
retail solutions are also supplied by single sources. In addition, there are a number of key suppliers for our
businesses that provide us with critical products for our solutions. If we were unable to secure the necessary
services, including contract manufacturing, parts, software, components or products from a particular vendor, and
we had to find an alternative supplier, our new and existing product shipments and solution deliveries, or the
provision of contracted services, could be delayed, impacting our business and operating results.

We have, from time to time, formed alliances with third parties that have complementary products, software,
services and skills. These alliances represent many different
types of relationships, such as outsourcing
arrangements to manufacture hardware and subcontract agreements with third parties to perform services and
provide products and software to our customers in connection with our solutions. For example, we rely on third
parties for cash replenishment services for our ATM products. These alliances introduce risks that we cannot
control, such as nonperformance by third parties and difficulties with or delays in integrating elements provided
by third parties into our solutions. Lack of information technology infrastructure, shortages in business
capitalization, and manual processes and data integrity issues of smaller suppliers can also create product time
delays, inventory and invoicing problems, staging delays, as well as other operating issues. The failure of third
parties to provide high-quality products or services that conform to required specifications or contractual
arrangements could impair the delivery of our solutions on a timely basis, create exposure for non-compliance
with our contractual commitments to our customers and impact our business and operating results. Also, some of
these third parties have access to confidential NCR and customer data, the integrity and security of which are of
significant importance to the Company.

Intellectual Property. Our continuing ability to be a leading technology and services solutions provider could
be negatively affected if we do not develop and protect intellectual property that drives innovation. It is critical to
our continued development of leading technologies that we are able to protect and enhance our proprietary rights
in our intellectual property through patent, copyright, trademark and trade secret laws. These efforts include
protection of the products and the application, diagnostic and other software we develop. To the extent we are not
successful in protecting our proprietary rights, our business could be adversely impacted. Also, many of our
offerings rely on technologies developed by others, and if we are unable to continue to obtain licenses for such
technologies, our business could be adversely impacted. From time to time, we receive notices from third parties
regarding patent and other intellectual property claims. Whether such claims have merit, they may require
significant resources to defend. If an infringement claim is successful and we are required to pay damages, or we
are unable to license the infringed technology or to substitute similar non-infringing technology, our business
could be adversely affected.

Work Environment. Our continuous improvement, customer experience and cost reduction initiatives could
negatively impact productivity and business results. As part of our ongoing efforts to optimize our cost structure,
from time to time, we shift and realign our internal organizational structure and resources, which could
temporarily result in reduced productivity levels. In addition to our initiatives to reduce costs and expenses, we
have initiatives to grow revenue, drive innovation and improve the experience of our customers. We typically
have many such initiatives underway. If we are not successful in implementing and managing these various
initiatives and minimizing any resulting loss in productivity, we may not be able to achieve targeted cost savings
or productivity gains, and our business and operating results could be negatively impacted.

If we do not attract and retain quality employees, we may not be able to meet our business objectives. Our
employees are vital to our success, including the successful reinvention to a hardware-enabled, software driven
business. Our ability to attract and retain highly skilled technical, sales, consulting and other key personnel,
including key personnel of acquired businesses, is critical, as these key employees are difficult to replace. If we

17

are unable to attract or retain highly qualified employees by offering competitive compensation, secure work
environments and leadership opportunities now and in the future, our business and operating results could be
negatively impacted.

Our ability to effectively manage our business could be negatively impacted if we do not invest in and maintain
reliable technology infrastructure and information systems. It is periodically necessary to add to, replace,
upgrade or modify our technology infrastructure and internal information systems. If we are unable to expand,
replace, upgrade or modify such systems in a timely and cost-effective manner, especially in light of demands on
our information technology resources, our ability to capture and process financial transactions and therefore, our
financial condition, results of operations, or ability to comply with legal and regulatory reporting obligations,
may be impacted.

Internal Controls. If we do not maintain effective internal controls, accounting policies, practices, and
information systems necessary to ensure reliable reporting of our results, our ability to comply with our legal
obligations could be negatively affected. Our internal controls, accounting policies and practices, and internal
information systems enable us to capture and process transactions in a timely and accurate manner in compliance
with applicable accounting standards, laws and regulations, taxation requirements and federal securities laws and
regulations. Our internal controls and policies are being closely monitored by management as we continue to
implement a worldwide Enterprise Resource Planning (ERP) system. While we believe these controls, policies,
practices and systems are adequate to ensure data integrity, unanticipated and unauthorized actions of employees
or contractors (both domestic and international), temporary lapses in internal controls due to shortfalls in
transition planning and oversight, or resource constraints, could lead to improprieties and undetected errors that
could impact our financial condition, results of operations, or compliance with legal obligations. Moreover, while
management has concluded that the Company’s internal control over financial reporting was effective as of
December 31, 2013 (as set forth in “Management’s Report on Internal Control over Financial Reporting”
included in Item 9A of Part II of this Report), due to their inherent limitations, such controls may not prevent or
detect misstatements in our reported financial statements. Such limitations include, among other things, the
potential for human error or circumvention of controls. Further, the Company’s internal control over financial
reporting is subject to the risk that controls may become inadequate because of a failure to remediate control
deficiencies, changes in conditions or a deterioration of the degree of compliance with established policies and
procedures.

Environmental. Our historical and ongoing manufacturing activities subject us to environmental exposures.
Our facilities and operations are subject to a wide range of environmental protection laws, and we have
investigatory and remedial activities underway at a number of facilities that we currently own or operate, or
formerly owned or operated, to comply, or to determine compliance, with such laws. In addition, our products are
subject to environmental laws in a number of jurisdictions. Given the uncertainties inherent in such activities,
there can be no assurances that the costs required to comply with applicable environmental laws will not impact
future operating results. We have also been identified as a potentially responsible party in connection with certain
environmental matters, including the Fox River and Kalamazoo River matters, as further described in Note 10,
“Commitments and Contingencies,” of the Notes to Consolidated Financial Statements included in Item 8 of Part
II of this Report; in “Environmental Matters” within Item 1 of Part I of this Report; and in “Environmental and
Legal Contingencies” within the “Critical Accounting Policies and Estimates” section of the “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 of Part II of this
Report, and we incorporate such disclosures by reference and make them a part of this discussion of risk factors.

Sale of Entertainment. The sale of assets of our entertainment business may expose us to certain post-closing
liabilities. On February 3, 2012, we entered into an agreement to sell certain assets of our entertainment line of
business to Redbox Automated Retail, LLC (Redbox). Pursuant to the terms of the agreement, as amended on
June 22, 2012, and upon the terms and conditions thereof, on June 22, 2012, we completed the disposition of our
entertainment line of business to Redbox for cash consideration of $100 million. We remain responsible for pre-
closing liabilities of the entertainment business, and are subject to certain indemnification obligations in favor of
Redbox for, among other things, breaches of representations, warranties and covenants under the purchase
agreement. In addition, we may be subject to liabilities and obligations under and with respect to contracts and
assets of the entertainment business that were not transferred to or assumed by Redbox.

18

Contingencies. We face uncertainties with regard to regulations, lawsuits and other related matters. In the
normal course of business, we are subject to proceedings, lawsuits, claims and other matters, including, for
example, those that relate to the environment, health and safety, labor and employment, employee benefits,
import/export compliance, intellectual property, data privacy and security, product liability, commercial disputes
and regulatory compliance, among others. Because such matters are subject
their
outcomes are not predictable and we must make certain estimates and assumptions in our financial statements.
While we believe that amounts provided in our Consolidated Financial Statements with respect to such matters
are currently adequate in light of the probable and estimable liabilities, there can be no assurances that the
amounts required to satisfy alleged liabilities from such matters will not impact future operating results.
Additionally, we are 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 us, and substantially increase costs to our organization or could have an impact on our future operating
results.

to many uncertainties,

Additionally, doing business on a worldwide basis requires us and our subsidiaries to comply with the laws and
regulations of the U.S. government and various international jurisdictions. For example, our international
operations are subject to U.S. and foreign anti-corruption laws and regulations, such as the Foreign Corrupt
Practices Act, which generally prohibits U.S. companies or agents acting on behalf of such companies from
making improper payments to foreign officials for the purpose of obtaining or keeping business. Our
international operations are also subject to economic sanction programs administered by the U.S. Treasury
Department’s Office of Foreign Assets Control. If we are not in compliance with such laws and regulations, we
may be subject to criminal and civil penalties, which may cause harm to our reputation and to our brand and
could have an adverse effect on our business, financial condition and results of operations. See Note 10,
“Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Item 8 of Part
II of this Report for information regarding our FCPA and OFAC investigations, which disclosures are
incorporated by reference and made a part of this discussion of risk factors.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2.

PROPERTIES

As of December 31, 2013, NCR operated 276 facilities consisting of approximately 5.9 million square feet in 63
countries throughout the world. On a square footage basis, 24% of these facilities are owned and 76% are leased.
Within the total facility portfolio, NCR operates 35 research and development and manufacturing facilities
totaling 2.2 million square feet, 72% of which is leased. The remaining 3.7 million square feet of space includes
office, repair, and warehousing space and other miscellaneous sites, and is 78% leased. NCR also owns 10 land
parcels totaling 4 million square feet in 5 countries.

NCR is headquartered in Duluth, Georgia, USA. Our address at our corporate headquarters is 3097 Satellite
Boulevard, Duluth, Georgia, 30096, USA.

Item 3.

LEGAL PROCEEDINGS

Information regarding legal proceedings is included in Item 8 of Part II of this Report as part of Note 10,
“Commitments and Contingencies,” of the Notes to Consolidated Financial Statements and is incorporated herein
by reference.

Item 4. MINE SAFETY DISCLOSURES

Not applicable.

19

PART II

Item 5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

NCR common stock is listed on the New York Stock Exchange and trades under the symbol “NCR.” There were
approximately 108,474 holders of NCR common stock as of February 11, 2014. The following table presents the
high and low per share prices for NCR common stock for each quarter of 2013 and 2012 as reported on the
NYSE.

2013

High

Low

2012

High

Low

1st quarter . . . . . . . . . . . . . . . . . .
2nd quarter . . . . . . . . . . . . . . . . .
3rd quarter . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .
4th quarter

$29.76
$34.31
$39.94
$41.63

$25.74
$25.64
$32.79
$31.38

1st quarter . . . . . . . . . . . . . . . .
2nd quarter . . . . . . . . . . . . . . .
3rd quarter . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .
4th quarter

$22.19
$23.91
$25.99
$25.75

$16.39
$20.05
$21.55
$20.92

Dividends

Historically NCR has not paid cash dividends and does not anticipate the payment of cash dividends on NCR
common stock in the immediate future. The declaration of dividends is restricted under our senior secured credit
facility and the terms of the indentures for our senior unsecured notes, and would be further subject to the
discretion of NCR’s Board of Directors.

Stock Performance Graph

The following graph compares the relative investment performance of NCR stock, the Standard & Poor’s
MidCap 400 Stock Index, Standard & Poor’s 500 Information Technology Sector and the Standard & Poor’s 500
Stock Index. This graph covers the five-year period from December 31, 2008 through December 31, 2013.

Comparison of Cumulative Five-Year Total Return

NCR Corporation

S&P 500 Stock Index

S&P 500 Information Technology Sector

S&P MidCap 400 Stock Index

$300

$250

$200

$150

$100

$50

$0

2008

2009

2010

2011

2012

2013

20

Company / Index

2009

2010

2011

2012

2013

NCR Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Stock Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P 500 Information Technology Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P MidCap 400 Stock Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 79
$126
$162
$137

$109
$146
$178
$174

$116
$149
$183
$171

$180
$172
$210
$202

$241
$228
$269
$269

(1)

In each case, assumes a $100 investment on December 31, 2008, and reinvestment of all dividends, if any.

Purchase of Company Common Stock In October 1999, the Company’s Board of Directors authorized a share
repurchase program that provided for the repurchase of up to $250 million of its common stock, with no
expiration from the date of authorization. On October 31, 2007 and July 28, 2010, the Board authorized the
repurchase of an additional $250 million and $210 million, respectively, under this share repurchase program. In
December 2000, the Board approved a systematic share repurchase program, with no expiration from the date of
authorization, to be funded by the proceeds from the purchase of shares under the Company’s Employee Stock
Purchase Plan and the exercise of stock options, for the purpose of offsetting the dilutive effects of the employee
stock purchase plan and outstanding options. As of December 31, 2013, approximately $179 million and $119
million remained available for further repurchases of the Company’s common stock under the 1999 and 2000
Board of Directors share repurchase programs, respectively. 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.

During the three months ended December 31, 2013, the Company did not repurchase any shares of its common
stock. The Company occasionally purchases vested restricted stock shares at the current market price to cover
withholding taxes. During the three months ended December 31, 2013, 29,052 shares of vested restricted stock
were purchased at an average price of $36.42 per share.

21

Item 6.

SELECTED FINANCIAL DATA

In millions, except per share and employee and contractor amounts
For the years ended December 31

Continuing Operations (a)

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from operations . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . .

Income (loss) from continuing operations attributable to

NCR common stockholders . . . . . . . . . . . . . . . . . . . . . . . .
(Loss) income from discontinued operations, net of tax . . . .
Basic earnings (loss) per common share attributable to NCR

common stockholders:

2013

2012

2011

2010

2009

$ 6,123
$ 5,730
$
666
748
$
$ (103) $
(42) $
98
$
$
223
$

$ 5,291
$ (148) $
(13) $
(66) $

$ 4,711
298

$ 4,579
348
$
(10)
(2) $
121
$
5

$
$

452

$
(9) $

475
6

$
$

(97) $
(93) $

183
$
277
(10) $ (115)

. . . . . . . . . . . . . . . . . . .
From continuing operations (a,b)
From discontinued operations . . . . . . . . . . . . . . . . . . . .

2.73
$
$
$ (0.05) $

2.98
0.04

1.15
$ (0.61) $
$ (0.59) $ (0.06) $ (0.72)

1.73

$

Total basic earnings (loss) per common share . . . . . . . .

$

2.68

$

3.02

$ (1.20) $

1.67

$

0.43

Diluted earnings (loss) per common share attributable to

NCR common stockholders:

From continuing operations (a,b)
. . . . . . . . . . . . . . . . . . .
From discontinued operations . . . . . . . . . . . . . . . . . . . .

$
2.67
$
$ (0.05) $

2.90
0.04

$ (0.61) $
1.14
$ (0.59) $ (0.06) $ (0.72)

1.72

$

Total diluted earnings (loss) per common share . . . . . .
Cash dividends per share . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total NCR stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . .
Number of employees and contractors . . . . . . . . . . . . . . . . . .

2.62

$
0.42
$ — $ — $ — $ — $ —

$ (1.20) $

1.66

2.94

$

$

$ 8,108
$ 3,354
$ 1,769
29,300

$ 6,369
$ 1,963
$ 1,252
25,700

$ 5,604
853
$
718
$
23,500

$ 4,361
11
$
883
$
21,000

$ 4,094
15
$
564
$
21,500

(a) Continuing operations excludes the costs and insurance recoveries relating to certain environmental
obligations associated with discontinued operations, including the Fox River, Japan and Kalamazoo River
matters, the closure of NCR’s EFT payment processing business in Canada, and the results from our
previously disposed healthcare solutions and Entertainment businesses.
The following income (expense) amounts, net of tax are included in income from continuing operations for
the years ended December 31:

(b)

In millions

2013

2012

2011

2010

2009

Pension benefit (expense)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition related amortization of intangibles . . . . . . . . . . . . . . . . . . . . . . .
Acquisition related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition related purchase price adjustments . . . . . . . . . . . . . . . . . . . . . . .
OFAC and FCPA investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan valuation reserve release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
Legal settlements and charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
Incremental costs directly related to the relocation of the worldwide

$117
(25)
(16)

$ 58
(48)
(36)
(10) —
(2)
15 —

$(398) $ (16) $ (10)

(8) —
(28) —
—
—
(2) —
—
—
(7) —

—
—
—
—
39 —
(9)
(5)

(30)
(4)

2

headquarters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

—

(11)

(4)

—

—

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (23) $ 67

$(432) $ (2) $ (48)

22

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (MD&A)

BUSINESS OVERVIEW

solutions

NCR Corporation is a leading global technology company that provides innovative products and services that
enable businesses to connect, interact and transact with their customers and enhance their customer relationships
by addressing consumer demand for convenience, value and individual service. Our portfolio of self-service and
assisted-service
travel, and
telecommunications and technology industries and include automated teller machines (ATMs) and ATM and
financial services software, point of sale (POS) devices and POS software, self-service kiosks and software
applications that can be used by consumers to enable them to interact with businesses from their computer or
mobile device. We also complement these product solutions by offering a complete portfolio of services that
support both NCR and third party solutions. We also resell third-party networking products and provide related
service offerings in the telecommunications and technology sectors.

retail, hospitality,

customers

financial

services,

in the

serve

We have four operating segments: Financial Services, Retail Solutions, Hospitality and Emerging Industries.
Each of our lines of business derives its revenues by selling products and services in each of the sales theaters in
which NCR operates.

Our solutions are based on a foundation of long-established industry knowledge and consulting expertise, value-
added software, hardware technology, global customer support services, and a complete line of business
consumables and specialty media products.

NCR’s reputation is founded upon over 129 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.

2013 OVERVIEW

As more fully discussed in later sections of this MD&A, the following were significant themes and events for
2013:

• Revenue growth of approximately 7% compared to full year 2012

• Continued growth of higher margin software and services offerings and improvements in revenue mix

•

Pension underfunded status improved by $372 million compared to 2012

• Completed the acquisition of Retalix Ltd.

• Entered into a definitive Agreement and Plan of Merger to acquire Digital Insight Corporation for a

cash purchase price of approximately $1.65 billion

•

Issued $400 million aggregate principal amount of 5.875% senior unsecured notes due in 2021, and
$700 million aggregate principal amount of 6.375% senior notes due in 2023, to help finance the
Digital Insight acquisition

OVERVIEW OF STRATEGIC INITIATIVES

We have established a focused and consistent business strategy targeted at revenue growth, gross margin
expansion, improved customer loyalty and employee engagement. This strategy guided our efforts in 2013, and
will continue to guide us in 2014.

To execute this strategy, we incorporate three key imperatives that align with our financial objectives: deliver
disruptive innovation; focus on migrating our revenue to higher margin software and recurring services revenue;
and more fully enable our sales force with a consultative selling model that better leverages the innovation we are
bringing to the market.

23

Our strategy is summarized in more detail below:

• Gain profitable share—We have been working to shift our business model to focus on growth of
higher margin software and services revenue, including by focusing our research and development
efforts, changing and educating our sales force and executing transformative acquisitions in each of our
core lines of business. At the same time, we are continuing our effort to optimize our investments in
demand creation to increase NCR’s market share in areas with the greatest potential for profitable
growth, which include opportunities in self-service technologies with our core financial services, retail,
and hospitality customers. We focus on expanding our presence in our core industries, while seeking
additional growth by:

•

•

•

penetrating market adjacencies in single and multi-channel self-service segments;

expanding and strengthening our geographic presence and sales coverage across customer tiers
through use of the indirect channel; and

leveraging NCR Services and consumables solutions to grow our share of customer revenue,
improve customer retention, and deliver increased value to our customers.

• Expand into emerging growth industry segments—We are focused on broadening the scope of our self-
service solutions from our existing customers to expand these solution offerings to customers in newer
industry-vertical markets including telecommunications and technology as well as travel and gaming.
We expect to grow our business in these industries through integrated service offerings in addition to
targeted acquisitions and strategic partnerships.

• Build the lowest cost structure in our industry—We strive to increase the efficiency and effectiveness
of our core functions and the productivity of our employees through our continuous improvement
initiatives.

• Enhance our global service capability—We continue to identify and execute various initiatives to
enhance our global service capability. We also focus on improving our service positioning, increasing
customer service attach rates for our products and improving profitability in our services business. Our
service capability can provide us with a competitive advantage in winning customers and it provides
NCR with an attractive and stable revenue source.

•

Innovation of our people—We are committed to solution innovation across all customer industries. Our
focus on innovation has been enabled by closer collaboration between NCR Services and our lines of
business, and the movement of our software development resources directly into our various lines of
business. We also have placed responsibility for hardware engineering in our Integrated Supply Chain
organization, which is responsible for procuring the parts for, and manufacturing, our hardware
products. Innovation is also driven through investments in training and developing our employees by
taking advantage of our new world-class training centers. We expect that these steps and investments
will accelerate the delivery of innovative solutions focused on the needs of our customers and changes
in consumer behavior.

• Enhancing the customer experience—We are committed to providing a customer experience to drive
loyalty, focusing on product and software solutions based on the needs of our customers, a sales force
enabled with the consultative selling model to better leverage the innovative solutions we are bringing
to market, and sales and support service teams focused on delivery and customer interactions. We
continue to rely on the Customer Loyalty Survey, among other metrics, to measure our current state
and set a course for our future state where we aim to continuously improve with solution innovations as
well as through the execution of our service delivery programs.

• Pursue strategic acquisitions that promote growth and improve gross margin—We are continually
exploring potential acquisition opportunities in the ordinary course of business to identify acquisitions
that can accelerate the growth of our business and improve our gross margin mix, with a particular
focus on software-oriented transactions. We may fund acquisitions through either equity or debt,
including borrowings under our senior secured credit facility.

24

We are encouraged by our market position for 2014 and are forecasting revenue to be higher than 2013. We plan
to continue to manage our costs effectively and balance our investments in areas that generate high returns.
Potentially significant risks to the execution of our initiatives include the global economic and credit
environment and its effect on capital spending by our customers, competition that can drive further price erosion
and potential loss of market share, difficulties associated with introduction of products in new self-service
markets, market adoption of our products by customers, management and servicing of our existing indebtedness,
and integration of previously completed acquisitions. For further information on potential risks and uncertainties
see Item 1A “Risk Factors.”

RESULTS FROM OPERATIONS

The following table shows our results for the years ended December 31:

In millions

2013

2012

2011

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross margin as a percentage of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses

$6,123
1,740
28.4% 28.7% 18.0%

$5,291
951

$5,730
1,645

Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

871
203

742
155

890
209

Income (loss) from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 666

$ 748

$ (148)

The following table shows our revenues and gross margins from products and services, respectively, for the years
ended December 31:

In millions

2013

2012

2011

Product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,912
2,152

$2,854
2,144

$2,592
2,022

Product gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 760

$ 710

$ 570

Product gross margin as a percentage of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Services revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

26.1% 24.9% 22.0%

$3,211
2,231

$2,876
1,941

$2,699
2,318

Services gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 980

$ 935

$ 381

Services gross margin as a percentage of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

30.5% 32.5% 14.1%

The following table shows our revenues by theater for the years ended December 31:

In millions

Americas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Middle East Africa (AMEA) . . . . . . . . . . . . . . . . . .

2013

$3,030
1,492
1,601

50% $2,823
24% 1,459
26% 1,448

49%
7%
2%
26%
25% 11%

Consolidated revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$6,123

100% $5,730

100%

7%

8%
1%
18%

9%

% of
Total

2012

% of
Total

%
Increase
(Decrease)

% Increase
(Decrease)
Constant
Currency

2013 compared to 2012 results discussion

Revenue

Revenue increased 7% in 2013 from 2012 due to improvement in our retail solutions, hospitality, and emerging
industries lines of business offset by declines in our financial services line of business. The effects of foreign
the year ended
currency fluctuations had a 2% unfavorable impact on revenue for

the year. For

25

December 31, 2013, our product revenue increased 2% and services revenue increased 12% compared to the year
ended December 31, 2012. The increase in our product revenue was due to growth in the retail solutions line of
business in the Americas, growth in the hospitality line of business in all theaters, and growth in the financial
services and emerging industries lines of business in the AMEA theater partially offset by declines in the
financial services line of business in the Americas. The increase in our services revenue was primarily
attributable to increases in professional and installation services, maintenance services and software as a service
(SaaS) in the retail solutions line of business in the Americas and AMEA theaters, in the hospitality line of
business in all theaters and in the financial services line of business in the AMEA theater, partially offset by
declines in professional and installation services and maintenance services in the emerging industries line of
business in the Americas theater.

Gross Margin

Gross margin as a percentage of revenue was 28.4% in 2013 compared to 28.7% in 2012. Product gross margin
in 2013 increased to 26.1% compared to 24.9% in 2012. During 2013 and 2012, product gross margin was
adversely affected by approximately $36 million and $19 million,
respectively, of acquisition related
amortization of intangibles. Product gross margin in 2013 was also negatively impacted by $14 million in lower
pension benefit, or 0.5% as a percentage of product revenue, year over year. After considering these items, the
product gross margin increased due to favorable sales mix with an increase in software revenue.

Services gross margin decreased to 30.5% in 2013 compared to 32.5% in 2012. Services gross margin in 2013
was negatively impacted by $68 million in lower pension benefit, or 2.1% as a percentage of services revenue,
year over year. After considering this item, the increase in services gross margin was due to a favorable mix of
revenues, including an increase in SaaS revenues.

2012 compared to 2011 results discussion

Revenue

Revenue increased 8% in 2012 from 2011 due to improvement in our financial services and hospitality lines of
business offset by declines in our retail solutions and emerging industries lines of business. The effects of foreign
currency fluctuations had a 3% unfavorable impact on revenue. For the year ended December 31, 2012, our
product revenue increased 10% and services revenue increased 7% compared to the year ended December 31,
2011. The increase in our product revenue was due to growth in the financial services line of business in the
Americas, Europe and AMEA theaters, and growth in the hospitality line of business in the Americas theater
offset by declines in the retail solutions line of business in the Americas and Europe theaters. The increase in our
services revenue was primarily attributable to increases in professional and installation services and maintenance
services in the financial services and hospitality lines of business in the Americas theater offset by declines in
such services in the retail solutions line of business in the Americas and Europe theaters.

Gross Margin

Gross margin as a percentage of revenue was 28.7% in 2012 compared to 18.0% in 2011. Product gross margin
in 2012 increased slightly to 24.9% compared to 22.0% in 2011. During 2012 and 2011, product gross margin
was adversely affected by approximately $19 million and $6 million, respectively, of acquisition related
amortization of intangibles. Product gross margin was positively impacted by $37 million in lower pension
expense, or 1.3% as a percentage of product revenue, year over year. After considering these items, the product
gross margin increased due to favorable sales mix with an increase in software revenue.

Services gross margin increased to 32.5% in 2012 compared to 14.1% in 2011. Services gross margin was
positively impacted by $454 million in lower pension expense, or 15.8% as a percentage of services revenue,
year over year. After considering this item, the increase in services gross margin was due to lower labor and
service delivery costs.

26

Effects of Pension, Postemployment, and Postretirement Benefit Plans

NCR’s income from continuing operations for the years ended December 31 was impacted by certain employee
benefit plans as shown below:

In millions

2013

2012

2011

Pension (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Postemployment expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Postretirement benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(78)
18
(15)

$(224)
37
(14)

$582
46
(13)

Total (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(75)

$(201)

$615

In 2013, pension benefit decreased to $78 million compared to $224 million in 2012 and expense of $582 million
in 2011. In 2013, the pension benefit included actuarial gains of $104 million driven by increases in discount
rates used to value the U.S. and certain international plans and $15 million associated with the termination of
NCR’s U.S. non-qualified pension plans. Additionally, the 2013 pension benefit included special termination
benefit costs of $26 million related to U.S. employees who irrevocably accepted a voluntary early retirement
offer during 2013. In 2013, approximately 41% of the pension benefit was included in selling, general and
administrative and research and development expenses, with the remaining 59% included in cost of products and
services. In 2012, the pension benefit included actuarial gains of $293 million related to remeasurement of the
U.S. pension obligations in the fourth quarter of 2012, which primarily included the impact of the voluntary lump
sum offer to certain participants of the U.S. qualified pension plan that was completed in the fourth quarter
of 2012. In 2011, pension expense included actuarial losses of $570 million driven by significant decreases in
discount rates used to value the U.S. and international pension plan obligations.

Postemployment expense (severance and disability medical) was $18 million in 2013 compared to $37 million in
2012 and $46 million in 2011. During the first quarter of 2013, NCR amended its U.S. separation plan to
eliminate the accumulation of postemployment benefits. This amendment resulted in a curtailment benefit of
approximately $13 million. The decrease in postemployment expense in 2012 was primarily related to $6 million
of Radiant acquisition related severance costs incurred in 2011.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $129 million to $871 million in 2013 from $742 million
in 2012. As a percentage of revenue, these expenses were 14.2% in 2013 and 12.9% in 2012. In 2013, selling,
general and administrative expenses include $22 million of pension benefit, $46 million of acquisition related
costs, $29 million of amortization of acquisition related intangible assets and $3 million of legal costs related to
the previously disclosed OFAC and FCPA internal investigations. In 2012, selling, general and administrative
expenses included a pension benefit of $66 million, $23 million of acquisition related costs, $19 million of
amortization of acquisition related intangible assets and $4 million of legal costs related to the previously
disclosed OFAC and FCPA internal
investigations. After considering these items, selling, general and
administrative expenses remained consistent as a percentage of revenue at 13.3%, primarily due to a $7 million
gain on the sale of an office property in 2013 offset by investment in sales resources during 2013.

Selling, general, and administrative expenses decreased $148 million to $742 million in 2012 from $890 million
in 2011. As a percentage of revenue, these expenses were 12.9% in 2012 and 16.8% in 2011. In 2012, selling,
general, and administrative expenses included a pension benefit of $66 million, $23 million of acquisition related
costs, $19 million of amortization of acquisition related intangible assets and $4 million of legal costs related to
the previously disclosed OFAC and FCPA internal investigations. In 2011, selling, general, and administrative
expenses included $162 million of pension costs, $37 million of acquisition related costs, and $6 million of
amortization of acquisition related intangible assets. After considering these items, selling, general and
administrative expenses increased as a percentage of revenue to 13.3% in 2012 from 12.9% in 2011 primarily
due to additional investments in sales resources.

27

Research and Development Expenses

Research and development expenses increased $48 million to $203 million in 2013 from $155 million in 2012.
As a percentage of revenue, these costs were 3.3% in 2013 and 2.7% in 2012 . Research and development
expenses included pension benefit of $10 million in 2013 as compared to pension benefit of $30 million in 2012.
After considering this item, research and development expenses slightly increased to 3.5% in 2013 from 3.2% in
2012 as a percentage of revenue and are in line with management expectations as we continue to invest in
broadening our self-service solutions.

Research and development expenses decreased $54 million to $155 million in 2012 from $209 million in 2011.
As a percentage of revenue, these costs were 2.7% in 2012 and 4.0% in 2011. Research and development
expenses included a $30 million pension benefit in 2012 as compared to pension expense of $57 million in 2011.
After considering this item, research and development expenses slightly increased to 3.2% in 2012 from 2.9% in
2011 as a percentage of revenue and are in line with management expectations as we continue to invest in
broadening our self-service solutions.

Interest and Other Expense Items

Interest expense was $103 million in 2013 compared to $42 million in 2012 and $13 million in 2011. Interest
expense in 2013 was primarily related to the Company’s senior unsecured notes and borrowings under the
Company’s senior secured credit facility. The increase in 2013 compared to 2012 is primarily related to a full
year of interest expense related to the Company’s senior unsecured notes in 2013 compared to a partial year of
interest expense in 2012. The increase in 2012 compared to 2011 is primarily related to a full year of interest
expense related to the Company’s senior secured credit facility that was entered into in August 2011.

Other (expense) income, net was $9 million in 2013 compared to $8 million in 2012 and $3 million in 2011.
Interest income was $6 million in 2013, $6 million in 2012, and $5 million in 2011. In 2013, other (expense)
income, net included $13 million related to losses from foreign currency contracts not designated as hedging
instruments as well as from foreign currency fluctuations and $7 million in bank related fees partially offset by
income from the sale of certain patents and a $3 million gain on the sale of an investment. In 2012, other
(expense) income, net included $7 million related to the impairment of an investment, $5 million in bank related
fees and $2 million related to losses from foreign currency fluctuations. In 2011, other (expense) income, net
included $7 million related to losses from foreign currency fluctuations partially offset by income from the sale
of certain patents and a benefit of $3 million from final settlement of a litigation matter.

Income Taxes

The effective tax rate was 18% in 2013, 32% in 2012, and 40% in 2011. During 2013, we recorded a one-time
benefit of approximately $16 million in connection with the American Taxpayer Relief Act of 2012 that was
signed into law in January 2013 and the related retroactive tax relief for certain law provisions that expired in
2012. The 2013 tax rate was also favorably impacted by the release of a $10 million valuation allowance due to
the implementation of a tax planning strategy to access certain deferred tax assets, a $15 million reduction in a
valuation allowance related to a subsidiary in Japan, and a favorable mix of earnings by country, primarily
related to lower pension benefit. During 2012, we favorably settled examinations with Canada for the 2003 tax
year and Japan for tax years 2001 through 2006 that resulted in tax benefits of $14 million and $13 million,
respectively. In addition, the 2012 tax rate was favorably impacted by the mix of earnings by country. These
benefits were partially offset by an increase of $17 million to the U.S. valuation allowance for deferred tax
assets, primarily related to tax attributes expiring by 2015. During 2011, we favorably settled examinations with
Canada for 1997 through 2001 that resulted in a $12 million tax benefit.

During 2011, the Internal Revenue Service commenced an examination of our 2009 and 2010 income tax returns,
which is ongoing. While we are subject to numerous federal, state and foreign tax audits, 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 future periods. During 2014, the Company
expects to resolve certain tax matters related to U.S. and foreign jurisdictions. These resolutions could have a
material impact on the effective tax rate in 2014.

28

Income (Loss) from Discontinued Operations

For the year ended December 31, 2013, loss from discontinued operations was $9 million, net of tax, solely
related to environmental matters, which was due to changes in estimates related to the Fox River reserve in
addition to accruals for litigation fees related to the Kalamazoo River environmental matter, partially offset by
recoveries from insurance carriers.

For the year ended December 31, 2012, income from discontinued operations was $6 million, net of tax, which
includes a $4 million operating loss from the Entertainment business, an $8 million benefit from favorable
changes in uncertain tax benefits related to Teradata and a $2 million benefit from an insurance recovery from a
previously agreed settlement related to the Fox River environmental matter.

For the year ended December 31, 2011, loss from discontinued operations was $93 million, net of tax, which
includes a $96 million operating loss from the Entertainment business, a $1 million operating loss from the
closure of NCR’s EFT payment processing business in Canada, and a $4 million operating loss from the
divestiture of our healthcare solutions business, offset by $2 million of income from environmental matters
which included the favorable impact of changes in estimates related to the Fox River reserve offset by an accrual
for litigation fees related to the Kalamazoo River environmental matter and an accrual for anticipated future
disposal costs related to an environmental matter in Japan, and a $6 million benefit from favorable changes in
uncertain tax benefits attributable to Teradata.

Revenue and Operating Income by Segment

As described in Note 13, “Segment Information and Concentrations” of the Notes to Consolidated Financial
Statements, the Company manages and reports its businesses in the following segments:

• Financial Services—We offer solutions to enable customers in the financial services industry to
reduce costs, generate new revenue streams and enhance customer loyalty. These solutions include a
comprehensive line of ATM and payment processing hardware and software and cash management and
video banking software, and related installation, maintenance, and managed and professional services.
We also offer a complete line of printer consumables.

• Retail Solutions—We offer solutions to customers in the retail industry designed to improve selling
productivity and checkout processes as well as increase service levels. These solutions primarily
include retail-oriented technologies, such as point of sale terminals and point-of-sale software, bar-code
scanners, as well as innovative self-service kiosks, such as self-checkout. We also offer installation,
maintenance, and managed and professional services and a complete line of printer consumables.

• Hospitality—We offer

technology solutions to customers in the hospitality industry, serving
businesses that range from a single store or restaurant to global chains and sports and entertainment
venues. Our solutions include point of sale hardware and software solutions, installation, maintenance,
and managed and professional services and a complete line of printer consumables.

• Emerging Industries—We offer maintenance as well as managed and professional services for third-
party computer hardware provided to select manufacturers, primarily in the telecommunications
industry, who value and leverage our global service capability. Also included in the Emerging
Industries segment are solutions designed to enhance the customer experience for the travel and
gaming industries, including self-service kiosks, as well as related installation, maintenance, and
managed and professional services.

Each of these segments derives its revenues by selling products and services in the sales theaters in which NCR
operates. Segments are measured for profitability by the Company’s chief operating decision maker based on
revenue and segment operating income. For purposes of discussing our operating results by segment, we exclude
the impact of certain items from segment operating income, consistent with the manner by which management
reviews each segment, evaluates performance, and reports our segment results under accounting principles
is useful
generally accepted in the United States of America (otherwise known as GAAP). This format

29

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 amounts have been excluded from segment operating income for each reporting segment presented
below, including pension expense and certain other significant, non-recurring items. Our segment results are
reconciled to total Company results reported under GAAP in Note 13, “Segment
Information and
Concentrations” of the Notes to Consolidated Financial Statements included in Item 8 of Part II of this Report.

In the segment discussions below, we have disclosed the impact of foreign currency fluctuations as it relates to
our segment revenue due to its significance.

Financial Services Segment

The following table presents the Financial Services revenue and segment operating income for the years ended
December 31:

In millions

2013

2012

2011

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income as a percentage of revenue . . . . . . . . . . . . . . . . . . . . .

$3,115
$ 356

$3,201
$ 327

$2,999
$ 313

11.4% 10.2%

10.4%

Financial Services revenue decreased 3% in 2013 compared to 2012 and increased 7% in 2012 compared to
2011. Revenue decreased in 2013 compared to 2012 primarily driven by declines in product sales in the
Americas theater partially offset by growth in product sales and services revenues in the AMEA theater. Foreign
currency fluctuations negatively impacted the year-over-year revenue comparison by 2%. Revenue growth in
2012 compared to 2011 was primarily generated from higher product volumes in the Americas, Europe and
AMEA theaters, and higher services revenue in the Americas and Europe theaters. Foreign currency fluctuations
negatively impacted the year-over-year revenue comparison by 3%.

Operating income was $356 million in 2013, $327 million in 2012 and $313 million in 2011. The increase in
operating income in 2013 compared to 2012 was driven by a higher mix of software and professional services
revenue, reduced expenses, and a reimbursement from a supplier of certain previously incurred costs in the
second quarter of 2013. The improvement in Financial Services operating income in 2012 compared to 2011 was
driven by higher product sales and an improved mix of services revenue, slightly offset by a continued
investment in services and research and development.

Retail Solutions Segment

The following table presents the Retail Solutions revenue and segment operating income for the years ended
December 31:

In millions

2013

2012

2011

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income as a percentage of revenue . . . . . . . . . . . . . . . . . . . . .

$2,034
$ 205

$1,667
$ 102

10.1%

6.1%

$1,778
71
$
4.0%

The Company completed the acquisition of Retalix on February 6, 2013. As a result, the revenue and operating
include the impact of Retalix from February 6, 2013
income results for the Retail Solutions segment
through December 31, 2013. Retalix generated revenue of $298 million and $53 million of operating income
in the year ended December 31, 2013.

Retail Solutions revenue increased 22% in 2013 compared to 2012 and decreased 6% in 2012 compared to 2011.
The increase in revenue in 2013 compared to 2012 was primarily driven by growth in product sales and services
revenue in the Americas theater and services revenue in the AMEA theater, due, in part, to the impact of

30

the Retalix business. Foreign currency fluctuations negatively impacted the year-over-year revenue comparison
by 3%. The decrease in revenue in 2012 compared to 2011 was primarily driven by declines in product sales and
services revenue in the Americas and Europe theaters. Foreign currency fluctuations negatively impacted the
year-over-year revenue comparison by 1%.

Operating income was $205 million in 2013, $102 million in 2012 and $71 million in 2011. The increase in the
Retail Solutions operating income in 2013 compared to 2012 was primarily due to increased revenues, a higher
mix of software as well as the contribution from the Retalix business, as noted above. The improvement in the
Retail Solutions operating income in 2012 compared to 2011 was driven by a favorable mix of revenue and the
movement of specialty retail customer accounts that were formerly part of the Hospitality segment to the Retail
Solutions segment and the movement of hospitality customer accounts that were formerly part of the Retail
Solutions segment to the Hospitality segment, both of which occurred as of January 1, 2012.

Hospitality Segment

The following table presents the Hospitality revenue and segment operating income for the years ended
December 31:

In millions

2013

2012

2011

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income as a percentage of revenue . . . . . . . . . . . . . . . . . . . . . . . .

$ 626
$ 100
16.0% 16.3% 15.6%

$ 522
$ 85

$ 141
$ 22

The Hospitality segment generated revenue of $626 million in 2013, $522 million in 2012, and $141 million in
2011. The increase in revenue in 2013 compared to 2012 was primarily driven by growth in product sales and
services revenues in all theaters. Foreign currency fluctuations negatively impacted the year-over-year revenue
comparison by 1%.

Operating income for Hospitality was $100 million in 2013, $85 million in 2012, and $22 million in 2011.
The increase in 2013 compared to 2012 was driven by higher revenues slightly offset by investment in sales and
development resources.

The company completed its acquisition of Radiant Systems on August 24, 2011. Because the acquisition was
completed during the third quarter of 2011, the revenue and operating income results for the Hospitality segment
for the year ended December 31, 2011 are partial, and reflect only the period from August 24, 2011 through the
end of the year.

Emerging Industries Segment

The following table presents the Emerging Industries revenue and segment operating income for the years ended
December 31:

In millions

2013

2012

2011

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income as a percentage of revenue . . . . . . . . . . . . . . . . . . . . . . . .

$ 348
$ 56
16.1% 22.1% 20.6%

$ 340
$ 75

$ 373
$ 77

Emerging Industries revenue increased 2% in 2013 compared to 2012 and decreased 9% in 2012 compared to
2011. The increase in revenue in 2013 compared to 2012 was primarily driven by growth in product sales in the
AMEA theater, partially offset by declines in services revenues in the Americas theater. Foreign currency
fluctuations negatively impacted the year-over-year revenue comparison by 1%. The decrease in revenue in 2012
compared to 2011 was primarily driven by a decline in services revenue in the Americas theater. Foreign
currency fluctuations negatively impacted the year-over-year revenue comparison by 2%.

31

Operating income was $56 million in 2013, $75 million in 2012, and $77 million in 2011. The decrease in the
Emerging Industries operating income in 2013 compared to 2012 was primarily due to an unfavorable mix of
revenues. The decline in the Emerging Industries operating income in 2012 compared to 2011 was primarily due
to the decline in revenue.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

In the year ended December 31, 2013, cash provided by operating activities was $281 million and for the year
ended December 31, 2012, cash used in operating activities was $180 million.

NCR’s management uses a non-GAAP measure called “free cash flow” to assess the financial performance of the
Company. We define free cash flow as net cash provided by (used in) operating activities and cash provided by
(used in) discontinued operations, less capital expenditures for property, plant and equipment, less additions to
capitalized software plus discretionary pension contributions and settlements. Free cash flow does not have a
uniform definition under GAAP, and therefore NCR’s definition may differ from other companies’ definitions of
this measure. We believe free cash flow information is useful for investors because it relates the operating cash
flows from the Company’s continuing and discontinued operations to the capital that is spent to continue and
improve business operations. In particular, free cash flow indicates the amount of cash available after capital
expenditures for, among other things, investments in the Company’s existing businesses, strategic acquisitions
and investments, repurchase of NCR stock and repayment of debt obligations. Free cash flow does not represent
the residual cash flow available for discretionary expenditures, since there may be other non-discretionary
expenditures that are not deducted from the measure. This non-GAAP measure should not be considered a
substitute for, or superior to, cash flows from operating activities under GAAP. The table below reconciles net
cash provided by (used in) operating activities, the most directly comparable GAAP measure, to NCR’s non-
GAAP measure of free cash flow for the year ended December 31:

In millions

Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . .
Expenditures for property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . .
Additions to capitalized software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension discretionary contributions and settlements . . . . . . . . . . . . . . . . . . .

2013

2012

2011

$ 281
(116)
(110)
(52)
204

$(180)
(80)
(80)
(114)
600

$388
(61)
(62)
(77)
—

Free cash flow (non-GAAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 207

$ 146

$188

In 2013, net cash provided by operating activities increased $461 million, net capital expenditures increased $36
million, capitalized software additions increased $30 million, net cash used in discontinued operations decreased
$62 million, and pension discretionary contributions and settlements were $204 million in 2013, down from $600
million in 2012, all of which contributed to a net increase in free cash flow of $61 million in comparison to 2012.
The increase in net capital expenditures and capitalized software was due to continued investment in the business
as well as research and development. The cash used in discontinued operations in 2013 was primarily attributable
to remediation payments associated with the Fox River environmental matter. For the year ended December 31,
2012, net cash used in discontinued operations excludes cash provided by investing activities from discontinued
operations of $99 million.

In 2012, net cash provided by operating activities decreased $568 million, net capital expenditures increased $19
million, capitalized software additions increased $18 million, net cash used in discontinued operations increased
$37 million, and pension discretionary contributions and settlements were $600 million in 2012 and zero in 2011,
all of which contributed to a net decrease in free cash flow of $42 million in comparison to 2011. The increase in
net capital expenditures and capitalized software was due to additional investment since the acquisition of
Radiant. The cash used in discontinued operations was attributable to the operating loss from the Entertainment
business as well as remediation payments associated with the Fox River environmental matter. For the year
ended December 31, 2012, net cash used in discontinued operations excludes cash provided by investing
activities from discontinued operations of $99 million.

32

Financing activities and certain other investing activities are not included in our calculation of free cash flow.
Our other investing activities primarily include business acquisitions, divestitures and investments as well as
proceeds from the sales of property, plant and equipment. During the year ended December 31, 2013, we
completed the acquisition of Retalix for $664 million, net of cash received, and multiple other acquisitions that
totaled $116 million, net of cash received. During the year ended December 31, 2012, we completed multiple
acquisitions that totaled $108 million, net of cash received. During the year ended December 31, 2011, we
completed the acquisition of Radiant for approximately $1.087 billion, net of cash received (which is discussed
further below), and the divestiture of our healthcare business for approximately $2 million.

Our financing activities primarily include proceeds from employee stock plans, repurchases of NCR common
stock, issuance of unsecured notes and borrowings and repayments of credit facilities. During the years ended
December 31, 2013, 2012 and 2011, proceeds from employee stock plans were $57 million, $53 million and $18
million, respectively. During the years ended December 31, 2013, 2012 and 2011, payments made for tax
withholding on behalf of employees totaled $30 million, $12 million and zero, respectively. During the year
ended December 31, 2013, we repurchased shares of our consolidated subsidiaries from minority shareholders
for $24 million. During the year ended December 31, 2011, we repurchased approximately 3.6 million shares of
NCR common stock for $70 million. Additionally, during the year ended December 31, 2011, we received
proceeds of $43 million from the sale of a 49% voting equity interest in our manufacturing subsidiary in Brazil to
Scopus Tecnologia, Ltda.

On December 4, 2013, we amended our senior secured credit facility with and among the lenders party thereto
and JPMorgan Chase Bank, N.A. (JPMCB), as the administrative agent. As of December 31, 2013, the senior
secured credit facility consisted of a term loan facility in an aggregate principal amount of $1.12 billion, and a
revolving credit facility in an aggregate principal amount of $850 million. The revolving credit facility also
allows a portion of the availability to be used for outstanding letters of credit, and as of December 31, 2013,
outstanding letters of credit totaled approximately $22 million. As of December 31, 2013, the outstanding
principal balance of the term loan facility was $1.12 billion and the outstanding balance on the revolving facility
was zero. On December 4, 2013, under and in connection with the senior secured credit facility, we also entered
into an incremental facility agreement with and among the lenders party thereto and JPMCB, as administrative
agent. This incremental facility agreement created an additional $250 million of term loan commitments, which
were drawn on January 10, 2014 in connection with the completion of the acquisition of Digital Insight.

On December 19, 2013, in connection with the anticipated acquisition of Digital Insight, through a newly formed
wholly owned subsidiary, NCR Escrow Corp., we issued $400 million aggregate principal amount of 5.875%
senior unsecured notes due in 2021 and $700 million aggregate principal amount of 6.375% senior unsecured
notes due in 2023. Both the 5.875% and the 6.375% notes were sold at 100% of the principal amount, and are
unsecured senior obligations of NCR Escrow Corp. and are guaranteed, on an unsecured senior basis, by our
subsidiary, NCR International, Inc., which also guarantees our obligations under the senior secured credit
facility. The aggregate principal amount from the offerings was initially deposited into a segregated escrow
account of NCR Escrow Corp., and was held in that escrow account at December 31, 2013 to be used solely for
the acquisition of Digital Insight, which was completed on January 10, 2014. The aggregate principal amount
plus accrued interest funded to the escrow account totaling $1.11 billion has therefore been classified as
restricted cash in the Consolidated Balance Sheet as of December 31, 2013.

On September 17, 2012, we issued $600 million aggregate principal amount of 5.00% senior unsecured notes due
in 2022 and on December 18, 2012, we issued $500 million aggregate principal amount of 4.625% senior
unsecured notes due in 2021. The 5.00% notes were sold at 100% of the principal amount and will mature on
July 15, 2022. The 4.625% notes were sold at 100% of the principal amount and will mature on February 15,
2021. Both the 5.00% and the 4.625% notes are unsecured senior obligations of NCR Corporation and are
guaranteed, on an unsecured senior basis, by our subsidiary, NCR International, Inc.

The net proceeds of the 5.00% notes of $592 million were used for a $500 million discretionary contribution to
our U.S. qualified pension plan in the third quarter of 2012 and a $100 million discretionary contribution to our
U.S. qualified pension plan in the fourth quarter of 2012. The net proceeds of the 4.625% notes of $494 million
were used to help fund the acquisition of Retalix, which was completed during the first quarter of 2013.

33

See Note 6, “Debt Obligations,” of the Notes to Consolidated Financial Statements included in Item 8 of Part II
of this Report for further information on the senior secured credit facility and the senior unsecured notes, and
Note 18, “Subsequent Events” for additional information on the completion of the Digital Insight acquisition.

We expect to make pension, postemployment and postretirement plan contributions of approximately $122
million in 2014. Refer to Note 9, “Employee Benefit Plans,” of the Notes to the Consolidated Financial
Statements for additional discussion on our pension, postemployment and postretirement plans.

Cash and cash equivalents held by the Company’s foreign subsidiaries were $461 million and $509 million at
December 31, 2013 and 2012, respectively. Under current tax laws and regulations, if cash and cash equivalents
and short-term investments held outside the United States are distributed to the United States 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.

As of December 31, 2013, our cash and cash equivalents and restricted cash totaled $528 million and $1.11
billion, respectively, and our total debt was $3.35 billion. Excluding amounts available under the December 4,
2013 incremental facility agreement, our borrowing capacity under the term loan and revolver facility of our
senior secured credit facility was $828 million at December 31, 2013. Our ability to generate positive cash flows
from operations is dependent on general economic conditions, competitive pressures, and other business and risk
factors described in Item 1A of Part I of this 2013 Annual Report on Form 10-K. 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 the Fox River environmental matter, debt servicing obligations, and our
operating requirements for the next twelve months.

Contractual Obligations In the normal course of business, we enter into various contractual obligations that
impact, or could impact, the liquidity of our operations. The following table and discussion outlines our material
obligations as of December 31, 2013 on an undiscounted basis, with projected cash payments in the years shown:

In millions

Total
Amounts

2014

2015-
2016

2017-
2018

2019 &
Thereafter

All
Other

Debt obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on debt obligations . . . . . . . . . . . . . . . . . . . . . . . .
Estimated environmental liability payments . . . . . . . . . . .
Lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uncertain tax positions . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,354
1,207
163
236
970
193

$

34
159
46
94
872

$180
299
54
111
51
4 —

$ 932
267
8
30
47
—

$2,208

$—
482 —
55 —
1 —
—
189

—
—

Total obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$6,123

$1,209

$695

$1,284

$2,746

$189

As of December 31, 2013, we had short and long-term debt totaling $3.35 billion. On January 10, 2014, in
connection with the completion of the acquisition of Digital Insight, $250 million in incremental term loans were
drawn under the Company’s December 2013 incremental facility agreement along with approximately $300
million in additional borrowings under the revolving portion of the Company’s senior secured credit facility,
which are not included above. For additional information, refer to Note 18, “Subsequent Events,” included in
Item 8 of Part II of this Report.

For purposes of this table, we used interest rates as of December 31, 2013 to estimate the future interest on debt
obligations outstanding as of December 31, 2013 and have assumed no voluntary prepayments of existing debt.
See Note 6, “Debt Obligations,” of the Notes to Consolidated Financial Statements included in Item 8 of Part II
of this Report for additional disclosure related to our debt obligations and the related interest rate terms.

34

We have also incorporated the expected fixed payments based on our interest rate swap related to our term loan.
See Note 11, “Derivatives and Hedging Instruments,” of the Notes to Consolidated Financial Statements included
in Item 8 of Part II of this Report for additional disclosure related to our interest rate swap.

The estimated environmental liability payments included in the table of contractual obligations shown above are
related to the Fox River environmental matter. The amounts shown are NCR’s expected payments, net of the
payment obligations of its co-obligors; the amounts do not include an estimate for payments to be received from
insurers or
to Note 10, “Commitments and
Contingencies,” included in Item 8 of Part II of this Report.

indemnification parties. For additional

information,

refer

Our lease obligations are primarily for certain sales and manufacturing facilities in various domestic and
international locations as well as leases related to equipment and vehicles. Purchase obligations represent
committed purchase orders and other contractual commitments for goods or services. The purchase obligation
amounts were determined through information in our procurement systems and payment schedules for significant
contracts. Included in the amounts are committed payments in relation to the long-term service agreement with
Accenture under which NCR’s transaction processing activities and functions are performed.

We have a $193 million liability related to our uncertain tax positions. Due to the nature of the underlying
liabilities and the extended time often needed to resolve income tax uncertainties, we cannot make reliable
estimates of the amount or timing of cash payments that may be required to settle these liabilities. For additional
information, refer to Note 7, “Income Taxes,” of the Notes to Consolidated Financial Statements included in
Item 8 of Part II of this Report.

We also have product warranties that may affect future cash flows. These items are not included in the table of
obligations shown above, but are described in detail in Note 10, “Commitments and Contingencies,” of the Notes
to Consolidated Financial Statements included in Item 8 of Part II of this Report.

Our U.S. and international employee benefit plans, which are described in Note 9, “Employee Benefit Plans,” of
the Notes to Consolidated Financial Statements included in Item 8 of Part II of this Report, could require
significant future cash payments. The funded status of NCR’s U.S. pension plans is an underfunded position of
$248 million as of December 31, 2013 compared to an underfunded position of $440 million as of December 31,
2012. The improvement in our funded status is primarily attributable to the $180 million in discretionary
contributions and settlements in 2013. The funded status of our international retirement plans improved to an
overfunded position of $159 million as of December 31, 2013 from an underfunded position of $21 million as of
December 31, 2012. Strong asset returns and cash contributions coupled with increases in discount rates, which
reduce the plan liabilities, contributed to the improvement in funded status for these plans. We may, in
connection with the third phase of our pension strategy, make one or more discretionary contributions over the
next two years but no such contributions are scheduled as of this date. Contributions to international and
executive pension plans are expected to be approximately $88 million in 2014.

Our senior secured credit facility and the indentures for our senior unsecured notes includes affirmative and
negative covenants that restrict or limit our ability to, among other things, incur indebtedness; create liens on
assets; engage in certain fundamental corporate changes or changes to our business activities; make investments;
sell or otherwise dispose of assets; engage in sale-leaseback or hedging transactions; pay dividends or make
similar distributions; repay other indebtedness; engage in certain affiliate transactions; or enter into agreements
that restrict our ability to create liens, pay dividends or make loan repayments. Our senior secured credit facility
also includes financial covenants that require us 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 June 30, 2014, 4.85 to 1.00, (ii) in the case of any fiscal quarter
ending after June 30, 2014 and on or prior to December 31, 2014, (a) the sum of (x) 4.50 and (y) an
amount (not to exceed 0.25) to reflect new debt used to reduce NCR’s underfunded pension liabilities,
to (b) 1.00, (iii) in the case of any fiscal quarter ending after December 31, 2014 and on or prior to
December 31, 2016, (a) the sum of (x) 4.25 and (y) an amount (not to exceed 0.50) to reflect new debt

35

used to reduce NCR’s underfunded pension liabilities, to (b) 1.00, (iv) in the case of any fiscal quarter
ending after December 31, 2016 and on or prior to December 31, 2017, 4.00 to 1.00, and (v) in the case
of any fiscal quarter ending after December 31, 2017, 3.75 to 1.00; and

•

an interest coverage ratio on the last day of any fiscal quarter to be less than (i) in the case of any fiscal
quarter ending on or prior to December 31, 2014, 3.00 to 1.00, and (ii) in the case of any fiscal quarter
ending after December 31, 2014, 3.50 to 1.00.

Off-Balance Sheet Arrangements We have no significant contractual obligations not fully recorded on our
consolidated balance sheets or fully disclosed in the notes to our consolidated financial statements. We have no
material off-balance sheet arrangements as defined by SEC Regulation S-K Item 303 (a) (4) (ii).

See Note 10, “Commitments and Contingencies,” in the Notes to Consolidated Financial Statements in Item 8 of
Part II of this Report for additional information on guarantees associated with NCR’s business activities.

of

to Section 13(r)(1)(D)(iii)

the Securities Exchange Act. Pursuant

Disclosure Pursuant
to
Section 13(r)(1)(D)(iii) of the Securities Exchange Act of 1934, as amended, we note that, during the period
January 1, 2012 through December 31, 2012, the Company’s branch in Syria maintained a bank account and
guarantees at the Commercial Bank of Syria (CBS), which was designated as a Specially Designated National
pursuant to Executive Order 13382 (EO 13382) on August 10, 2011. This bank account and the guarantees at
CBS were maintained in the normal course of business prior to the listing of CBS pursuant to EO 13382. The
bank account generated interest at a rate greater than or equal to 1 percent compounded semi-annually during the
period covered by this Report and the account balance as of January 31, 2014 was approximately $5,307. The
guarantees did not generate any revenue or profits for the Company. Pursuant to a license granted to the
Company by the Office of Foreign Asset Controls (OFAC) on January 3, 2013 and subsequent licenses granted
on April 29, 2013 and July 12, 2013, the Company has been winding down its operations in Syria. In connection
with these efforts, the Company has also received authorization from OFAC to close the CBS account and
terminate any guarantees. Following the closure of the account and termination of the guarantees upon receipt of
a license from OFAC for this purpose, the Company does not intend to engage in any further business activities
with CBS.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation
of these financial statements, we are required to make assumptions, estimates and judgments that affect the
reported amounts of assets, liabilities, revenues, expenses and the related disclosure of contingent liabilities.
These assumptions, estimates and judgments are based on historical experience and are believed to be reasonable
at
the
the time. However, because future events and their effects cannot be determined with certainty,
determination of estimates requires the exercise of judgment. Our critical accounting policies are those that
require assumptions to be made about matters that are highly uncertain. Different estimates could have a material
impact on our financial results. Judgments and uncertainties affecting the application of these policies and
estimates may result in materially different amounts being reported under different conditions or circumstances.
Our management continually reviews these assumptions, estimates and judgments to ensure that our financial
statements are presented fairly and are materially correct.

In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not
require significant management judgment in its application. There are also areas in which management’s
judgment
in selecting among available alternatives would not produce a materially different result. The
significant accounting policies and estimates that we believe are the most critical to aid in fully understanding
and evaluating our reported financial results are discussed in the paragraphs below. Our senior management has
reviewed these critical accounting policies and related disclosures with our independent registered public
accounting firm and the Audit Committee of our Board of Directors (see Note 1, “Description of Business and
Significant Accounting Policies,” of the Notes to Consolidated Financial Statements in Item 8 of Part II of this
Report, which contains additional information regarding our accounting policies and other disclosures required
by GAAP).

36

Revenue Recognition NCR frequently enters into multiple-element arrangements with its customers including
hardware, software, professional consulting services and maintenance support services. For arrangements
involving multiple deliverables, when deliverables include software and non-software products and services,
NCR evaluates and separates each deliverable to determine whether it represents a separate unit of accounting
based on the following criteria: (a) the delivered item has value to the customer on a stand-alone basis; and (b) if
the contract includes a general right of return relative to the delivered item, delivery or performance of the
undelivered items is considered probable and substantially in the control of NCR.

For arrangements entered into or materially modified after January 1, 2011, consideration is allocated to each
unit of accounting based on the unit’s relative selling prices. In such circumstances, the Company uses a
hierarchy to determine the selling price to be used for allocating revenue to each deliverable: (i) vendor-specific
objective evidence of selling price (VSOE), (ii) third-party evidence of selling price (TPE), and (iii) best estimate
of selling price (BESP). VSOE generally exists only when the Company sells the deliverable separately and is
the price actually charged by the Company for that deliverable. VSOE is established for our software
maintenance services and we use TPE to establish selling prices for our non-software related services, which
include hardware maintenance, non-software related professional services, and transaction services. The
Company uses BESP to allocate revenue when we are unable to establish VSOE or TPE of selling price. BESP is
primarily used for elements such as products that are not consistently priced within a narrow range. The
Company determines BESP for a deliverable by considering multiple factors including product class, geography,
average discount, and management’s historical pricing practices. Amounts allocated to the delivered hardware
and software elements are recognized at the time of sale provided the other conditions for revenue recognition
have been met. Amounts allocated to the undelivered maintenance and other services elements are recognized as
the services are provided or on a straight-line basis over the service period. In certain instances, customer
acceptance is required prior to the passage of title and risk of loss of the delivered products. In such cases,
revenue is not recognized until the customer acceptance is obtained. Delivery and acceptance generally occur in
the same reporting period.

For arrangements entered into prior to January 1, 2011,
the Company has not applied BESP. In such
arrangements, if the Company has the requisite evidence of selling price for the undelivered elements but not for
the delivered elements, the Company applies the residual method to allocate arrangement consideration.

In situations where NCR’s solutions contain software that is more than incidental, revenue related to the software
and software-related elements is recognized in accordance with authoritative guidance on software revenue
recognition. For the software and software-related elements of such transactions, revenue is allocated based on
the relative fair value of each element, and fair value is determined by VSOE. If the Company cannot objectively
determine the fair value of any undelivered element included in such multiple-element arrangements, the
Company defers revenue until all elements are delivered and services have been performed, or until fair value
can objectively be determined for any remaining undelivered elements. When the fair value of a delivered
element has not been established, but fair value exists for the undelivered elements, the Company uses the
residual method to recognize revenue. Under the residual method, the fair value of the undelivered elements is
deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and is
recognized as revenue.

For certain of NCR’s long-term contracts, primarily related to the acquisition of Retalix, the Company utilizes a
percentage-of-completion accounting method, which requires estimates of future revenues and costs over the full
term of product and/or service delivery. Estimated losses, if any, on long-term projects are recognized as soon as
such losses become known.

Revenue recognition for complex contractual arrangements, especially those with multiple elements, requires a
significant level of judgment and is based upon a review of specific contracts, past experience, the selling price
of undelivered elements when sold separately, creditworthiness of customers, international laws and other
factors. Changes in judgments about these factors could impact the timing and amount of revenue recognized
between periods.

37

Allowance for Doubtful Accounts We evaluate the collectability of our accounts receivable based on a number
of factors. We establish provisions for doubtful accounts using percentages of our accounts receivable balance as
an overall proxy to reflect historical average credit losses and also use management judgment that may include
elements that are uncertain, including specific provisions for known issues. The percentages are applied to aged
accounts receivable balances. Aged accounts are determined based on the number of days the receivable is
outstanding, measured from the date of the invoice, or from the date of revenue recognition. As the age of the
receivable increases, the provision percentage also increases. This policy is applied consistently among all of our
operating segments.

Based on the factors below, we periodically review customer account activity in order to assess the adequacy of
the allowances provided for potential losses. Factors include economic conditions and judgments regarding
collectability of account balances, each customer’s payment history and creditworthiness.

The allowance for doubtful accounts was $18 million as of December 31, 2013, $16 million as of December 31,
2012, and $16 million as of December 31, 2011. These allowances represent, as a percentage of gross
receivables, 1.3% in 2013, 1.5% in 2012, and 1.5% in 2011.

Given our experience, the reserves for potential losses are considered adequate, but if one or more of our larger
customers were to default on its obligations, we could be exposed to potentially significant losses in excess of the
provisions established. We continually evaluate our reserves for doubtful accounts and economic deterioration
could lead to the need to increase our allowances.

Inventory Valuation Inventories are stated at the lower of cost or market, using the average cost method. Each
quarter, we reassess raw materials, work-in-process, parts and finished equipment inventory costs to identify
purchase or usage variances from standards, and valuation adjustments are made. Additionally, to properly
provide for potential exposure due to slow-moving, excess, obsolete or unusable inventory, a reserve against
technological
inventory is established. This reserve is established based on forecasted usage, orders,
obsolescence and inventory aging. These factors are impacted by market conditions, technology changes and
changes in strategic direction, and require estimates and management judgment that may include elements that
are uncertain. On a quarterly basis, we review the current market value of inventory and adjust for any inventory
exposure due to age or excess of cost over market value.

We have inventory in more than 40 countries around the world. We purchase inventory from third party suppliers
and manufacture inventory at our plants. This inventory is transferred to our distribution and sales organizations
at cost plus a mark-up. This mark-up is referred to as inter-company profit. Each quarter, we review our
inventory levels and analyze our inter-company profit to determine the correct amount of inter-company profit to
eliminate. Key assumptions are made to estimate product gross margins, the product mix of existing inventory
balances and current period shipments. Over time, we refine these estimates as facts and circumstances change. If
our estimates require refinement, our results could be impacted. The policies described are consistently applied
across all of our operating segments.

Warranty Reserves One of our key objectives is to provide superior quality products and services. To that end,
we provide a standard manufacturer’s warranty typically extending up to 12 months, allowing our customers to
seek repair of products under warranty at no additional cost. A corresponding estimated liability for potential
warranty costs is also recorded at the time of the sale. We sometimes offer extended warranties in the form of
product maintenance services to our customers for purchase. We defer the fair value of these revenues and
recognize revenue over the life of the extended warranty period. Refer to Note 1, “Description of Business and
Significant Accounting Policies,” in the Notes to Consolidated Financial Statements in Item 8 of Part II of this
Report for further information regarding our accounting for extended warranties.

Future warranty obligation costs 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 and the associated warranty liability is recorded based upon the estimated cost to
provide the service over the warranty period.

38

Total warranty costs were $39 million in 2013, $46 million in 2012, and $42 million in 2011. Warranty costs as a
percentage of total product revenues were 1.3% in 2013, 1.6% in 2012, and 1.6% in 2011. Historically, the
principal factor used to estimate our warranty costs has been service calls per machine. Significant changes in
this factor could result in actual warranty costs differing from accrued estimates. Although no near-term changes
in our estimated warranty reserves are currently anticipated, in the unlikely event of a significant increase in
warranty claims by one or more of our larger customers, costs to fulfill warranty obligations would be higher
than provisioned, thereby impacting results.

Goodwill Goodwill is tested at the reporting unit level for impairment on an annual basis during the fourth
quarter or more frequently if certain events occur indicating that the carrying value of goodwill may be impaired.
A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such
indicators may include a decline in expected cash flows, a significant adverse change in legal factors or in the
business climate, a decision to sell a business, unanticipated competition, or slower growth rates, among others.

In the evaluation of goodwill for impairment, we first perform a qualitative assessment to determine whether it is
more likely than not that the fair value of the reporting unit is less than the carrying amount. If so, we perform a
quantitative assessment and compare the fair value of the reporting unit to the carrying value. If the carrying
value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is potentially impaired and we
proceed to step two of the impairment analysis. In step two of the analysis, we will record an impairment loss
equal to the excess of the carrying value of the reporting unit’s goodwill over its implied fair value. Fair value of
the reporting units is estimated primarily using the income approach, which incorporates the use of discounted
cash flow (DCF) analyses. A number of significant assumptions and estimates are involved in the application of
the DCF model to forecast operating cash flows, including markets and market shares, sales volumes and prices,
costs to produce,
tax rates, capital spending, discount rate and working capital changes. Most of these
assumptions vary among reporting units. The cash flow forecasts are generally based on approved strategic
operating plans.

Valuation of Long-lived Assets and Amortizable Other Intangible Assets We perform impairment tests for
our long-lived assets if an event or circumstance indicates that the carrying amount of our long-lived assets may
not be recoverable. In response to changes in industry and market conditions, we may also strategically realign
our resources and consider restructuring, disposing of, or otherwise exiting businesses. Such activities could
result in impairment of our long-lived assets or other intangible assets. We also are subject to the possibility of
impairment of long-lived assets arising in the ordinary course of business. We consider the likelihood of
impairment if certain events occur indicating that the carrying value of the long-lived assets may be impaired and
we may recognize impairment if the carrying amount of a long-lived asset or intangible asset is not recoverable
from its undiscounted cash flows. Impairment is measured as the difference between the carrying amount and the
fair value of the asset. We use both the income approach and market approach to estimate fair value. Our
estimates of fair value are subject to a high degree of judgment since they include a long-term forecast of future
operations. Accordingly, any value ultimately derived from our long-lived assets may differ from our estimate of
fair value.

Pension, Postretirement and Postemployment Benefits We sponsor domestic and foreign defined benefit
pension and postemployment plans as well as domestic postretirement plans. As a result, we have significant
pension, postretirement and postemployment benefit costs, which are developed from actuarial valuations.
Actuarial assumptions attempt to anticipate future events and are used in calculating the expense and liability
relating to these plans. These factors include assumptions we make about interest rates, expected investment
return on plan assets, rate of increase in healthcare costs, total and involuntary turnover rates, and rates of future
compensation increases. In addition, our actuarial consultants advise us about subjective factors such as
withdrawal rates and mortality rates to use in our valuations. We generally review and update these assumptions
on an annual basis at the beginning of each fiscal year. We are required to consider current market conditions,
including changes in interest rates, in making these assumptions. The actuarial assumptions that we use may
differ materially from actual results due to changing market and economic conditions, higher or lower
withdrawal rates, or longer or shorter life spans of participants. These differences may result in a significant
impact to the amount of pension, postretirement or postemployment benefits expense we have recorded or may

39

record. Postemployment and postretirement expense impacts all of our segments. Pension expense is reported at
the corporate level and is excluded from our segment results as it is not included in the evaluation of segment
performance. See Note 13, “Segment Information and Concentrations,” in the Notes to Consolidated Financial
Statements in Item 8 of Part II of this Report for a reconciliation of our segment results to income from
operations.

The key assumptions used in developing our 2013 expense were discount rates of 3.8% for our U.S. pension
plans and 2.6% for our postretirement plan. We used an expected return on assets assumption of 3.8% for our
U.S. plans in 2013. The U.S. plans represented 57% and 100% of total pension and postretirement plan
obligations, respectively, as of December 31, 2013. We recognized changes in the fair value of plan assets and
net actuarial gains or losses of our pension plans upon remeasurement, which is at least annually in the fourth
quarter of each year. The remaining components of pension expense, primarily net service cost, interest cost, and
the expected return on plan assets, were recorded on a quarterly basis as ongoing pension expense. Holding all
other assumptions constant, a 0.25% change in the discount rate used for the U.S. plans would have increased or
decreased 2013 ongoing pension expense by approximately $5 million and would have had an immaterial impact
on 2013 postretirement expense. A 0.25% change in the expected rate of return on plan assets assumption for the
U.S. pension plan would have increased or decreased 2013 ongoing pension expense by approximately $7
million. Our expected return on plan assets has historically been and will likely continue to be material to net
income. While it is required that we review our actuarial assumptions each year at the measurement date, we
generally do not change them between measurement dates. We use a measurement date of December 31 for all of
our plans. Changes in assumptions or asset values may have a significant effect on the annual measurement of
expense or income in the fourth quarter.

We intend to use discount rates of 4.6% and 3.4% in determining the 2014 U.S. qualified plan pension and
postretirement expense, respectively, and an expected rate of return on assets assumption of 4.6% for the U.S.
qualified plan. The most significant assumption used in developing our 2014 postemployment plan expense is the
assumed rate of involuntary turnover of 4.8%. The involuntary turnover rate is based on historical trends and
projections of involuntary turnover in the future. A 0.25% change in the rate of involuntary turnover would have
increased or decreased 2013 expense by approximately $2 million. The sensitivity of the assumptions described
above is specific to each individual plan and not to our pension, postretirement and postemployment plans in the
aggregate.

Environmental and Legal Contingencies Each quarter, we review the status of each claim and legal
proceeding and assess our potential financial exposure. If the potential loss from any claim or legal proceeding
would be material and is considered probable and the amount can be reasonably estimated, we accrue a liability
for the estimated loss. To the extent that the amount of such a probable loss is estimable only by reference to a
range of equally likely outcomes, and no amount within the range appears to be a better estimate than any other
amount, we accrue the amount at the low end of the range. Because of uncertainties related to these matters, the
use of estimates, assumptions and judgments, and external factors beyond our control, accruals are based on the
best information available at the time. As additional information becomes available, we reassess the potential
liability related to our pending claims and litigation and may revise our estimates. Such revisions in the estimates
of the potential liabilities could have a material impact on our results of operations and financial position. Except
for the sharing agreement with Appleton Papers Inc. (API) with respect to a particular insurance settlement
described in Note 10, “Commitments and Contingencies,” in the Notes to Consolidated Financial Statements in
Item 8 of Part II of this Report with respect to the Fox River matter, when insurance carriers or third parties have
agreed to pay any amounts related to costs, and we believe that it is probable that we can collect such amounts,
those amounts are reflected as receivables in our Consolidated Balance Sheet.

The most significant legal contingency impacting our Company relates to the Fox River matter, which is further
described in detail in Note 10, “Commitments and Contingencies,” in the Notes to Consolidated Financial
Statements in Item 8 of Part II of this Report. NCR has been identified as a potentially responsible party (PRP) at
the Fox River site in Wisconsin.

40

As described below and in Note 10, “Commitments and Contingencies,” while substantial progress has been
made in the Fox River clean-up, the extent of our potential liability continues to be subject to significant
uncertainties. These uncertainties include the total clean-up costs for each of the segments of the river; the total
natural resource damages for the site; the extent to which clean-up and other costs will be allocated to and paid
by other PRPs; the solvency and willingness to pay of other PRPs, co-obligors or indemnitors; and the extent of
NCR’s eventual liability in the allocation litigation, including the outcome of the various appeals of the court
orders and judgments in the allocation litigation and in the government enforcement action described in Note 10,
“Commitments and Contingencies.”

Our net reserve for the Fox River matter as of December 31, 2013 was approximately $112 million as further
discussed in Note 10, “Commitments and Contingencies.” The Company regularly re-evaluates the assumptions
used in determining the appropriate reserve for the Fox River matter as additional information becomes available
and, when warranted, makes appropriate adjustments.

In determining our reserve, we attempt to estimate a range of reasonably possible outcomes for relevant factors,
although each range is itself highly uncertain. We use our best estimate within the range if that is possible. Where
there is a range of equally likely outcomes, and there is no amount within that range that appears to be a better
estimate than any other amount, we use the low end of the range. Our eventual liability for remediation, which
we expect will be paid out over a period continuing into 2017 or later (and a longer period thereafter for long-
term monitoring), will depend on a number of factors, the most significant of which are described in Note 10,
“Commitments and Contingencies.”

AT&T Corp. (AT&T) and Alcatel-Lucent are each responsible for indemnifying NCR for a portion of amounts
NCR incurs for the Fox River matter over a certain threshold, which was reached in the fourth quarter of 2012.
NCR’s estimate of what AT&T and Alcatel-Lucent will pay under the indemnity totaled approximately $51
million as of December 31, 2013, and is deducted in determining the net reserve discussed above.

While it remains difficult to predict, there could be significant changes in the future to some of the assumptions
underlying the reserve that could have a material effect on the amount of our reserve. Also, there are other
estimates for some of these factors that are significantly higher than the estimates described herein. It is the
opinion of the Company that the Fox River matter will have a moderate, but manageable, impact on our liquidity
and capital resources, assuming that the Company’s expenditures with respect to the Fox River matter are
required to be paid over the time frame currently contemplated. However, if such an amount were required to be
paid in a shorter time period or if any of NCR’s co-obligors or indemnitors defaulted on or otherwise did not
perform their contractual obligations, it could have a material impact on our liquidity and capital resources.

Income Taxes We recognize deferred tax assets and liabilities based on the differences between the financial
statement carrying amounts and the tax basis of assets and liabilities. The deferred tax assets and liabilities are
determined based on the enacted tax rates expected to apply in the periods in which the deferred tax assets or
liabilities are anticipated to be settled or realized.

We regularly review our deferred tax assets for recoverability and establish a valuation allowance if it is more
likely than not that some portion or all of a deferred tax asset will not be realized. The determination as to
whether a deferred tax asset will be realized is made on a jurisdictional basis and is based on the evaluation of
positive and negative evidence. This evidence includes historical taxable income, projected future taxable
income, the expected timing of the reversal of existing temporary differences and the implementation of tax
planning strategies. Projected future taxable income is based on our expected results and assumptions as to the
jurisdiction in which the income will be earned. The expected timing of the reversals of existing temporary
differences is based on current tax law and our tax methods of accounting.

If we are unable to generate sufficient future taxable income, or if there is a material change in the actual
effective tax rates or the time period within which the underlying temporary differences become taxable or
deductible, or if the tax laws change unfavorably, then we could be required to increase our valuation allowance
against our deferred tax assets, resulting in an increase in our effective tax rate.

41

We had valuation allowances of $364 million as of December 31, 2013 and $399 million as of December 31,
2012, related to certain deferred income tax assets, primarily tax loss carryforwards, in jurisdictions where there
is uncertainty as to the ultimate realization of a benefit from those tax assets. At December 31, 2013, our net
deferred tax assets in the United States totaled approximately $555 million. For the three year period ended
December 31, 2013, we had a cumulative net loss from continuing operations before income taxes, which is
generally considered a negative indicator of our ability to realize the benefits of those assets. We further
evaluated the realizability by weighing both positive and negative evidence, including our history of taxable
income in the U.S., and the substantial length of time over which our deferred tax assets relating to net operating
losses and employee pensions may be realized. Through this assessment, realization of the related benefits was
determined to be more likely than not.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the
tax position will be sustained on examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the consolidated financial statements from such a position are measured
based on the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement.
Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes
and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax
law until such time that the related tax benefits are recognized.

The provision for income taxes may change period-to-period based on non-recurring events, such as the
settlement of income tax audits and changes in tax laws, as well as recurring factors including the geographic
mix of income before taxes, state and local taxes and the effects of various global income tax strategies. We
maintain certain strategic management and operational activities in overseas subsidiaries and our foreign
earnings are taxed at rates that are generally lower than in the United States. As of December 31, 2013, we did
not provide for U.S. federal income taxes or foreign withholding taxes on approximately $1.9 billion of
undistributed earnings of our foreign subsidiaries as such earnings are expected to be reinvested indefinitely.

Refer to Note 7, “Income Taxes,” in the Notes to Consolidated Financial Statements in Item 8 of Part II of this
Report for disclosures related to foreign and domestic pretax income, foreign and domestic income tax (benefit)
expense and the effect foreign taxes have on our overall effective tax rate.

Stock-based Compensation We measure compensation cost for stock awards at fair value and recognize
compensation expense over the service period for which awards are expected to vest. We utilize the Black-
Scholes option pricing model to estimate the fair value of options at the date of grant, which requires the input of
highly subjective assumptions, including expected volatility and expected holding period. We estimate forfeitures
for awards granted which are not expected to vest. The estimation of stock awards that will ultimately vest
requires judgment, and to the extent that actual results or updated estimates differ from our current estimates,
such amounts will be recorded as a cumulative adjustment in the period in which estimates are revised. We
consider many factors when estimating expected forfeitures, including types of awards and historical experience.
Actual results and future changes in estimates may differ from our current estimates.

In addition, we have performance-based awards that vest only if specific performance conditions are satisfied,
typically at the end of a multi-year performance period. The number of shares that will be earned can vary based
on actual performance. No shares will vest if the objectives are not met, and in the event the objectives are
exceeded, additional shares will vest up to a maximum amount. The cost of these awards is expensed over the
performance period based upon management’s estimates of achievement against the performance criteria.
Because the actual number of shares to be awarded is not known until the end of the performance period, the
actual compensation expense related to these awards could differ from our current expectations.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

A discussion of recently issued accounting pronouncements is described in Note 1, “Description of Business and
Significant Accounting Policies,“of the Notes to Consolidated Financial Statements in Item 8 of Part II of this
Report, and we incorporate by reference such discussion in this MD&A.

42

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risk

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

Foreign Exchange Risk

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

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

For purposes of analyzing potential risk, we use sensitivity analysis to quantify potential impacts that market rate
changes may have on the fair values of our hedge portfolio related to firmly committed or forecasted
transactions. The sensitivity analysis represents the hypothetical changes in value of the hedge position and does
not reflect the related gain or loss on the forecasted underlying transaction. A 10% appreciation or depreciation in
the value of the U.S. Dollar against foreign currencies from the prevailing market rates would result in a
corresponding increase or decrease of $2 million as of December 31, 2013 in the fair value of the hedge portfolio.
The Company expects that any increase or decrease in the fair value of the portfolio would be substantially offset
by increases or decreases in the underlying exposures being hedged.

The U.S. Dollar was slightly stronger in 2013 compared to 2012 based on comparable weighted averages for our
functional currencies. This had an unfavorable impact of 2% on 2013 revenue versus 2012 revenue. This
excludes the effects of our hedging activities and, therefore, does not reflect the actual impact of fluctuations in
exchange rates on our operating income.

Interest Rate Risk

We are subject to interest rate risk principally in relation to variable-rate debt under our senior secured credit
facility. We use derivative financial instruments to manage exposure to fluctuations in interest rates in connection
with our risk management policies. We have entered into an interest rate swap for a portion of our senior secured
credit facility. The interest rate swap effectively converts a designated portion of the credit facility from a
variable interest rate to a fixed interest rate instrument. Approximately 46% of our borrowings under the credit
facility were effectively on a fixed rate basis as of December 31, 2013. As of December 31, 2013, the net fair
value of the interest rate swap was a liability of $10 million.

43

The potential gain in fair value of the swap from a hypothetical 100 basis point increase in interest rates would be
approximately $11 million as of December 31, 2013. The annual increase in pre-tax interest expense from a
hypothetical 100 basis point increase in variable interest rates (including the impact of the interest rate swap)
would be approximately $6 million as of December 31, 2013.

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 December 31, 2013, we did not have any significant concentration of credit risk related
to financial instruments.

44

Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of NCR Corporation:

In our opinion, the consolidated financial statements listed in the index appearing under Item 15(a)(1) present
fairly, in all material respects, the financial position of NCR Corporation and its subsidiaries at December 31,
2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period
ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement schedule listed in the index appearing under
Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction
with the related consolidated financial statements. Also in our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established
in Internal Control—Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). The Company’s management is responsible for these financial statements and
financial statement schedule, for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on
Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on
these financial statements, on the financial statement schedule, and on the Company’s internal control over
financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was maintained in all material
respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal
control over financial reporting included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it
accounts for defined benefit pension plans effective January 1, 2013.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

limitations,

/s/ PricewaterhouseCoopers LLP
Atlanta, Georgia
February 26, 2014

45

NCR Corporation

Consolidated Statements of Operations

For the years ended December 31 (in millions except per share amounts)

2013

2012

2011

Product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,912
3,211

$2,854
2,876

$2,592
2,699

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cost of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (expense) income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) from continuing operations before income taxes . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss) income from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . .

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . .

6,123

2,152
2,231
871
203

5,457

666
(103)
(9)

554
98

456
(9)

447
4

5,730

2,144
1,941
742
155

4,982

748
(42)
(8)

698
223

475
6

481
—

5,291

2,022
2,318
890
209

5,439

(148)
(13)
(3)

(164)
(66)

(98)
(93)

(191)
(1)

Net income (loss) attributable to NCR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 443

$ 481

$ (190)

Amounts attributable to NCR common stockholders:
Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss) income from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . .

$ 452
(9)

$ 475
6

$ (97)
(93)

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 443

$ 481

$ (190)

Net income (loss) per share attributable to NCR common stockholders:
Net income (loss) per common share from continuing operations

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2.73

$ 2.98

$ (0.61)

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2.67

$ 2.90

$ (0.61)

Net income (loss) per common share

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2.68

$ 3.02

$ (1.20)

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2.62

$ 2.94

$ (1.20)

Weighted average common shares outstanding

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

165.4
169.3

159.3
163.8

158.0
158.0

The accompanying notes are an integral part of the Consolidated Financial Statements.

46

2013

2012

2011

$447

$481

$(191)

(53)

(8)

(17)

2
6
(3)

(14)
1
3

3 —
(1) —

(2)
(17)

(5)
(30)
82 —
8
14
(17)
1

(12)
4
3

(1)

—

37
(14)
24
17
(20)

21

(1)
2

1

NCR Corporation

Consolidated Statements of Comprehensive Income

For the years ended December 31 (in millions)

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss):
Currency translation adjustments
Currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivatives
Unrealized gain (loss) on derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Losses on derivatives arising during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less income tax (expense) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Securities
Unrealized gain (loss) on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less income tax (expense) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefit plans
Prior service (cost) benefit during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net gain arising during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less income tax (expense) benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other comprehensive (loss) income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8)

(22)

Total comprehensive income (loss)
Less comprehensive income attributable to noncontrolling interests:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency translation adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 —
(7)

(4)

439

459

(170)

Amounts attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3)

(4)

Comprehensive income (loss) attributable to NCR common stockholders . . . . . . . . . .

$442

$463

$(171)

The accompanying notes are an integral part of the Consolidated Financial Statements.

47

NCR Corporation

Consolidated Balance Sheets

As of December 31 (in millions except per share amounts)

2013

2012

Assets
Current assets

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangibles, net
Prepaid pension cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 528
1,114
1,339
790
568

4,339

352
1,534
494
478
441
470

$1,069
—
1,086
797
454

3,406

308
1,003
304
368
532
448

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$8,108

$6,369

Liabilities and stockholders’ equity
Current liabilities

Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payroll and benefits liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred service revenue and customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension and indemnity plan liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Postretirement and post employment benefits liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Environmental liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

34
670
191
525
461

1,881

3,320
532
169
189
121
99

6,311

$

72
611
186
455
418

1,742

1,891
805
246
138
171
79

5,072

Commitments and Contingencies (Note 10)

Redeemable noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

14

15

Stockholders’ equity
NCR stockholders’ equity

Preferred stock: par value $0.01 per share,100.0 shares authorized, no shares issued and

outstanding as of December 31, 2013 and 2012, respectively . . . . . . . . . . . . . . . . . . . . .

—

—

Common stock: par value $0.01 per share, 500.0 shares authorized, 166.6 and 162.8

shares issued and outstanding as of December 31, 2013 and 2012, respectively . . . . . . .
Paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total NCR stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2
433
1,372
(38)

1,769
14

1,783

2
358
929
(37)

1,252
30

1,282

Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$8,108

$6,369

The accompanying notes are an integral part of the Consolidated Financial Statements.

48

NCR Corporation

Consolidated Statements of Cash Flows

For the years ended December 31 (in millions)

Operating activities
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Loss (income) from discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefit from stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of property, plant and equipment and other assets . . . . . . . . . . . . . . . . . . . . . .
Impairment of long-lived and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:

Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current payables and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred service revenue and customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension and indemnity plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investing activities

Expenditures for property, plant and equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sales of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to capitalized software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investing activities, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financing activities

Repurchases of Company common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax withholding payments on behalf of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefit from stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from employee stock plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments on term credit facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings on term credit facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments on revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings on revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from bond offerings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of noncontrolling interest
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of noncontrolling interest
Dividend distribution to minority shareholder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from discontinued operations

Net cash used in operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . .

2013

2012

2011

$

447

$ 481

$ (191)

9
208
41

—

3
(14)
—

(136)
10
21
36
(397)
53

281

(116)
10
(110)
(780)
(1,114)
5

(2,105)

—
(30)
(1)

—

57
(35)
329
(1,009)
1,009
1,100
(36)
—
(24)
(3)

1,357

(52)
—

(52)

(22)

(6)
166
49
—
144
(10)
7

(53)
(42)
86
31
(994)
(39)

(180)

(80)
8
(80)
(108)
—

4

93
128
33
(1)
(130)
(5)

—

(57)
4
50
34
452
(22)

388

(61)
2
(62)
(1,085)
—
—

(256)

(1,206)

—
(12)
—
—
53
—
150
(860)
720
1,100
(19)
—
—

(1)

1,131

(114)
99

(15)

(9)

(70)
—
—

1
18
—
700
(260)
400
—
(29)
43
—

(1)

802

(37)
(40)

(77)

(5)

(98)
496

398

55
5

$

$

$
$

(Decrease) increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(541)
$ 1,069

671
$ 398

$

528

$1,069

Supplemental data
Cash paid during the year for:

Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest

$
$

70
71

$
$

32
15

The accompanying notes are an integral part of the Consolidated Financial Statements.

49

NCR Corporation

Consolidated Statements of Changes in Stockholders’ Equity

in millions

NCR Stockholders

Common Stock

Shares Amount

Paid-in
Capital

Retained
Earnings

Accumulated
Other
Comprehensive
(Loss) Income

Non-Redeemable
Noncontrolling
Interests in
Subsidiaries

December 31, 2010 . . . . . . . . . . . . . . . . . . . 160

$ 2

$281

$ 638

$(38)

$ 33

Comprehensive income (loss):

. . . . . . . . . . . . . . . . —
Net income (loss)
Other comprehensive income (loss) . . —

Total comprehensive income (loss) . . . . . . . —
Employee stock purchase and stock

—
—

—

compensation plans . . . . . . . . . . . . . . . . .
Repurchase of Company common stock . . .
Dividend distribution to minority

—
1
(3) —

shareholder

. . . . . . . . . . . . . . . . . . . . . . . —

Sale of redeemable noncontrolling

interests . . . . . . . . . . . . . . . . . . . . . . . . . . —

—

—

—
—

—

53
(70)

—

23

(190)
—

(190)

—
—

—

—

—
19

19

—
—

—

—

December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . .

158

$

2

$ 287

$ 448

$ (19)

Comprehensive income (loss):

. . . . . . . . . . . . . . . . —
Net income (loss)
Other comprehensive income (loss) . . —

Total comprehensive income (loss) . . . . . . . —
Employee stock purchase and stock

compensation plans . . . . . . . . . . . . . . . . .

5

Dividend distribution to minority

shareholder

. . . . . . . . . . . . . . . . . . . . . . . —

—
—

—

—

—

—
—

—

71

—

481
—

481

—

—

—
(18)

(18)

—

—

1
2

3

—
—

(1)

—

$ 35

—

(4)

(4)

—

(1)

Total

$ 916

(189)
21

(168)

53
(70)

(1)

23

$ 753

481
(22)

459

71

(1)

December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . .

163

$

2

$ 358

$ 929

$ (37)

$ 30

$1,282

Comprehensive income (loss):

Net income (loss)
. . . . . . . . . . . . . . . . —
Other comprehensive income (loss) . . —

Total comprehensive income (loss) . . . . . . . —
Employee stock purchase and stock

compensation plans . . . . . . . . . . . . . . . . .

4

Purchase of subsidiary shares from

minority shareholder . . . . . . . . . . . . . . . . —
Acquisition of noncontrolling interest . . . . . —
Dividend distribution to minority

shareholder

. . . . . . . . . . . . . . . . . . . . . . . —

—
—

—

—

—
—

—

—
—

—

83

(8)

—

—

443
—

443

—

—
—

—

—

(1)

(1)

—

—
—

—

3
(5)

(2)

—

(20)
9

(3)

446
(6)

440

83

(28)
9

(3)

December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . .

167

$

2

$ 433

$1,372

$ (38)

$ 14

$1,783

The accompanying notes are an integral part of the Consolidated Financial Statements.

50

NCR Corporation
Notes to Consolidated Financial Statements

1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Description of Business NCR Corporation (NCR or the Company, also referred to as “we,” “us” or “our”) and
its subsidiaries provide innovative products and services that are designed to enable NCR’s customers to connect,
interact and transact with their customers and enhance their customer relationships by addressing consumer
demand for convenience, value and individual service. NCR’s portfolio of self-service and assisted-service
solutions serve customers in the financial services, retail, hospitality, travel, and telecommunications and
technology industries and include automated teller machines (ATMs) and ATM and financial services software,
point of sale (POS) devices and POS software, self-service kiosks and software applications that can be used by
consumers to enable them to interact with businesses from their computer or mobile device. NCR complements
these product solutions by offering a complete portfolio of services to support both NCR and third party
solutions. NCR also resells third-party networking products and provides related service offerings in the
telecommunications and technology sector.

NCR’s solutions are built on a foundation of long-established industry knowledge and consulting expertise,
value-added software and hardware technology, global customer support services, and a complete line of
business consumables and specialty media products.

On February 6, 2013, the Company completed the acquisition of Retalix Ltd. (Retalix). As a result of the
acquisition, the results of Retalix are included for the period from February 6, 2013 to December 31, 2013.
See Note 4, “Business Combinations and Divestitures,” for additional information.

Use of Estimates The preparation of financial statements in accordance with accounting principles generally
accepted in the United States of America (otherwise known as 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 revenues and expenses during the period reported. Actual
results could differ from those estimates.

Evaluation of Subsequent Events The Company evaluated subsequent events through the date that our
Consolidated Financial Statements were issued. Except as described in Note 18, “Subsequent Events,” no matters
were identified that required adjustment of the Consolidated Financial Statements or additional disclosure.

Out of Period Adjustments During the fourth quarter of 2013, the Company recorded a $15 million income tax
benefit related to the release of a valuation allowance on specific deferred tax assets in NCR’s subsidiary in
Japan that should have been released in a prior period. The Company determined the impact of this error was not
material to the annual or interim financial statements of previous periods and the effect of correcting this error
was not material to the 2013 annual financial statements.

During the third quarter of 2012, the Company recorded a $5 million income tax benefit related to an error in the
calculation of the interest portion included in income tax expense for 2011 and 2010. The Company determined
the impact of this error was not material to the annual or interim financial statements of previous periods and the
effect of correcting this error was not material to the 2012 annual or interim financial statements.

During the fourth quarter of 2011, the Company recorded charges of approximately $2 million in other (expense)
income, net related to foreign currency fluctuations from several inter-company transactions that were incorrectly
included in the cumulative translation adjustment balance. Additionally, the Company recorded an increase in
selling, general and administrative expenses of approximately $4 million to correct certain tax accounts in Brazil
determined to be unrecoverable. The Company determined the impact of these errors was not material to the
annual or interim financial statements of previous periods and the effect of correcting these errors in 2011 was
not material to the 2011 annual financial statements.

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Basis of Consolidation The consolidated financial statements include the accounts of NCR and its majority-
owned subsidiaries. Long-term investments in affiliated companies in which NCR owns between 20% and 50%,
and therefore, exercises significant influence, but which it does not control, are accounted for using the equity
method. Investments in which NCR does not exercise significant influence (generally, when NCR has an
investment of less than 20% and no significant influence, such as representation on the investee’s board of
directors) are accounted for using the cost method. All significant inter-company transactions and accounts have
been eliminated. In addition, the Company is required to determine whether it is the primary beneficiary of
economic income or losses that may be generated by variable interest entities in which the Company has such an
interest. In circumstances where the Company determined it is the primary beneficiary, consolidation of that
entity would be required. For the periods presented, no variable interest entities have been consolidated.

Reclassifications Certain prior-period amounts have been reclassified in the accompanying Consolidated
Financial Statements and Notes thereto in order to conform to the current period presentation.

Revenue Recognition The Company records revenue, net of taxes, when it is realized, or realizable, and earned.
The Company considers these criteria met when persuasive evidence of an arrangement exists, the products or
services have been provided to the customer, the sales price is fixed or determinable, and collectability is
reasonably assured. For product sales, delivery is deemed to have occurred when the customer has assumed risk
of loss of the goods sold and all performance obligations are complete. For services sales, revenue is recognized
as the services are provided or ratably over the service period, or, if applicable, after customer acceptance of the
services.

NCR frequently enters into multiple-element arrangements with its customers including hardware, software,
transaction services and maintenance support services. For arrangements
professional consulting services,
involving multiple deliverables, when deliverables include software and non-software products and services,
NCR evaluates and separates each deliverable to determine whether it represents a separate unit of accounting
based on the following criteria: (a) whether the delivered item has value to the customer on a stand-alone basis;
and (b) if the contract includes a general right of return relative to the delivered item, whether delivery or
performance of the undelivered items is considered probable and substantially in the control of NCR.

For arrangements entered into or materially modified after January 1, 2011, consideration is allocated to each
unit of accounting based on the units’ relative selling prices. In such circumstances, the Company uses a
hierarchy to determine the selling price to be used for allocating revenue to each deliverable: (i) vendor-specific
objective evidence of selling price (VSOE); (ii) third-party evidence of selling price (TPE); and (iii) best estimate
of selling price (BESP). VSOE generally exists only when the Company sells the deliverable separately and is
the price actually charged by the Company for that deliverable. VSOE is established for our software
maintenance services and we use TPE to establish selling prices for our non-software related services, which
include hardware maintenance, non-software related professional services, and transaction services. The
Company uses BESP to allocate revenue when we are unable to establish VSOE or TPE of selling price. BESP is
primarily used for elements such as products that are not consistently priced within a narrow range. The
Company determines BESP for a deliverable by considering multiple factors including product class, geography,
average discount, and management’s historical pricing practices. Amounts allocated to the delivered hardware
and software elements are recognized at the time of sale, provided the other conditions for revenue recognition
have been met. Amounts allocated to the undelivered maintenance and other services elements are recognized as
the services are provided or on a straight-line basis over the service period. In certain instances, customer
acceptance is required prior to the passage of title and risk of loss of the delivered products. In such cases,
revenue is not recognized until the customer acceptance is obtained. Delivery and acceptance generally occur in
the same reporting period.

the Company has not applied BESP. In such
For arrangements entered into prior to January 1, 2011,
arrangements, if the Company has the requisite evidence of selling price for the undelivered elements but not for
the delivered elements, the Company applies the residual method to allocate arrangement consideration.

In situations where NCR’s solutions contain software that is more than incidental, revenue related to the software
and software-related elements is recognized in accordance with authoritative guidance on software revenue
revenue is allocated
recognition. For

the software and software-related elements of such transactions,

52

based on the relative fair value of each element, and fair value is determined by VSOE. If the Company cannot
objectively determine the fair value of any undelivered element included in such multiple-element arrangements,
the Company defers revenue until all elements are delivered and services have been performed, or until fair value
can objectively be determined for any remaining undelivered elements. When the fair value of a delivered
element has not been established, but fair value evidence exists for the undelivered elements, the Company uses
the residual method to recognize revenue. Under the residual method, the fair value of the undelivered elements
is deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and is
recognized as revenue.

For certain of NCR’s long-term contracts, primarily related to the acquisition of Retalix, the Company utilizes a
percentage-of-completion accounting method, which requires estimates of future revenues and costs over the full
term of product and/or service delivery. Estimated losses, if any, on long-term projects are recognized as soon as
such losses become known.

NCR’s customers may request that delivery and passage of title and risk of loss occur on a bill and hold basis.
For the years ended December 31, 2013, 2012, and 2011, the revenue recognized from bill and hold transactions
approximated 1% or less of total revenue.

In addition to the standard product warranty, the Company periodically offers extended warranties to its
customers in the form of product maintenance services. For contracts that are not separately priced but include
product maintenance, the Company defers revenue at an amount based on the selling price, using objective and
reliable evidence, and recognizes the deferred revenue over the service term. For separately priced product
maintenance contracts, NCR defers the stated amount of the separately priced contract and recognizes the
deferred revenue ratably over the service term.

Shipping and Handling Costs related to shipping and handling are included in cost of products in the
Consolidated Statements of Operations.

Cash and Cash Equivalents All short-term, highly liquid investments having original maturities of three
months or less, including time deposits, are considered to be cash equivalents.

Restricted Cash Restricted cash consists of deposits that are contractually restricted as to their withdrawal or
use. Refer to Note 6, “Debt Obligations” for further discussion.

Allowance for Doubtful Accounts NCR establishes provisions for doubtful accounts using percentages of
accounts receivable balances to reflect historical average credit losses and specific provisions for known issues.

Inventories Inventories are stated at the lower of cost or market, using the average cost method. Cost includes
materials, labor and manufacturing overhead related to the purchase and production of inventories. Service parts
are included in inventories and include reworkable and non-reworkable service parts. The Company regularly
reviews inventory quantities on hand, future purchase commitments with suppliers and the estimated utility of
inventory. If the review indicates a reduction in utility below carrying value, inventory is reduced to a new cost
basis. Excess and obsolete reserves are established based on forecasted usage, orders, technological obsolescence
and inventory aging.

Goodwill and Other Long-Lived Assets

Capitalized Software Certain direct development costs associated with internal-use software are capitalized
within other assets and amortized over the estimated useful lives of the resulting software. NCR typically
amortizes capitalized internal-use software on a straight-line basis over four to seven years beginning when the
asset is substantially ready for use, as this is considered to approximate the usage pattern of the software.

Costs incurred for the development of software that will be sold, leased or otherwise marketed are capitalized
when technological feasibility has been established. These costs are included within other assets and are
amortized on a sum-of-the-years’ digits or straight-line basis over the estimated useful lives ranging from three to
the software.
five years, using the method that most closely approximates

the sales pattern of

53

Amortization begins when the product is available for general release. Costs capitalized include direct labor and
related overhead costs. Costs incurred prior to technological feasibility or after general release are expensed as
incurred. The following table identifies the activity relating to total capitalized software:

In millions

2013

2012

2011

Beginning balance as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$142
110
(59)

$118
80
(56)

$107
62
(51)

Ending balance as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$193

$142

$118

Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price over the value assigned
to the net tangible and identifiable intangible assets of businesses acquired. Goodwill is tested at the reporting
unit level for impairment on an annual basis during the fourth quarter or more frequently if certain events occur
indicating that the carrying value of goodwill may be impaired. A significant amount of judgment is involved in
determining if an indicator of impairment has occurred. Such indicators may include a decline in expected cash
flows, a significant adverse change in legal factors or in the business climate, a decision to sell a business,
unanticipated competition, or slower growth rates, among others.

In the evaluation of goodwill for impairment, we first perform a qualitative assessment to determine whether it is
more likely than not that the fair value of the reporting unit is less than the carrying amount. If so, we perform a
quantitative assessment and compare the fair value of the reporting unit to the carrying value. If the carrying
value of a reporting unit exceeds its fair value, the goodwill of that reporting unit is potentially impaired and we
proceed to step two of the impairment analysis. In step two of the analysis, we will record an impairment loss
equal to the excess of the carrying value of the reporting unit’s goodwill over its implied fair value should such a
circumstance arise. Fair values of the reporting units are estimated primarily using the income approach, which
incorporates the use of discounted cash flow (DCF) analyses. A number of significant assumptions and estimates
are involved in the application of the DCF model to forecast operating cash flows, including markets and market
shares, sales volumes and prices, costs to produce, tax rates, capital spending, discount rate and working capital
changes. Most of these assumptions vary among reporting units. The cash flow forecasts are generally based on
approved strategic operating plans.

For the fourth quarter of 2013 and 2012, we performed our annual impairment assessment of goodwill which did
not indicate that an impairment existed.

Acquired intangible assets other than goodwill are amortized over their weighted average amortization period
unless they are determined to be indefinite. Acquired intangible assets are carried at cost, less accumulated
amortization. For intangible assets purchased in a business combination, the estimated fair values of the assets
received are used to establish the carrying value. The fair value of acquired intangible assets is determined using
common techniques, and the Company employs assumptions developed using the perspective of a market
participant.

Property, Plant and Equipment Property, plant and equipment, and leasehold improvements are stated at cost
less accumulated depreciation. Depreciation is computed over the estimated useful lives of the related assets
primarily on a straight-line basis. Machinery and other equipment are depreciated over 3 to 20 years and
buildings over 25 to 45 years. Leasehold improvements are depreciated over the life of the lease or the asset,
whichever is shorter. Assets classified as held for sale are not depreciated. Upon retirement or disposition of
property, plant and equipment, the related cost and accumulated depreciation or amortization are removed from
the Company’s accounts, and a gain or loss is recorded. Depreciation expense related to property, plant and
equipment was $68 million, $64 million, and $58 million for the years ended December 31, 2013, 2012, and
2011, respectively.

Valuation of Long-Lived Assets Long-lived assets such as property, plant and equipment, finite-lived intangible
assets, and software are reviewed for impairment when events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable or in the period in which the held for sale criteria are met.
For assets held and used, this analysis consists of comparing the asset’s carrying value to the expected

54

future cash flows to be generated from the asset on an undiscounted basis. If the carrying amount of the asset is
determined not to be recoverable, a write-down to fair value is recorded. Fair values are determined based on
quoted market values, discounted cash flows, or external appraisals, as applicable. Long-lived assets are
reviewed for impairment at the individual asset or the asset group level for which the lowest level of independent
cash flows can be identified.

Warranty and Sales Returns Provisions for product warranties and sales returns and allowances are recorded
in the period in which NCR becomes obligated to honor the related right, which generally is the period in which
the related product revenue is recognized. The Company accrues warranty reserves 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, a warranty reserve is recorded based upon the estimated cost to provide the
service over the warranty period. The Company accrues sales returns and allowances using percentages of
revenue to reflect the Company’s historical average of sales return claims.

Research and Development Costs Research and development costs primarily include payroll and benefit-
related costs, contractor fees, facilities costs, infrastructure costs, and administrative expenses directly related to
research and development support and are expensed as incurred, except certain software development costs are
capitalized after technological feasibility of the software is established.

Leases The Company accounts for material escalation clauses, free or reduced rents and landlord incentives
contained in operating type leases on a straight-line basis over the lease term, including any reasonably assured
lease renewals. For leasehold improvements that are funded by the landlord, the Company records the incentive
as deferred rent. The deferred rent is then amortized as reductions to lease expense over the lease term.

For capital leases where NCR is the lessee, we record an amortizable debt and a related fixed asset in the
Consolidated Balance Sheet.

Pension, Postretirement and Postemployment Benefits NCR has significant pension, postretirement and
postemployment benefit costs, which are developed from actuarial valuations. Actuarial assumptions are
established to anticipate future events and are used in calculating the expense and liabilities relating to these
plans. These factors include assumptions the Company makes about interest rates, expected investment return on
plan assets, rate of increase in healthcare costs, total and involuntary turnover rates, and rates of future
compensation increases. In addition, NCR also uses subjective factors, such as withdrawal rates and mortality
rates to develop the Company’s valuations. NCR generally reviews and updates these assumptions on an annual
basis. NCR is required to consider current market conditions, including changes in interest rates, in making these
assumptions. The actuarial assumptions that NCR uses may differ materially from actual results due to changing
market and economic conditions, higher or lower withdrawal rates, or longer or shorter life spans of participants.
These differences may result in a significant impact to the amount of pension, postretirement or postemployment
benefits expense, and the related assets and liabilities, the Company has recorded or may record.

Foreign Currency For many NCR international operations, the local currency is designated as the functional
currency. Accordingly, assets and liabilities are translated into U.S. Dollars at year-end exchange rates, and
revenues and expenses are translated at average exchange rates prevailing during the year. Currency translation
adjustments from local functional currency countries resulting from fluctuations in exchange rates are recorded in
other comprehensive income. Where the U.S. Dollar is the functional currency, remeasurement adjustments are
recorded in other (expense) income, net.

Derivative Instruments In the normal course of business, NCR enters into various financial instruments,
including derivative financial instruments. The Company accounts for derivatives as either assets or liabilities in
the Consolidated Balance Sheets at fair value and recognizes the resulting gains or losses as adjustments to
earnings or other comprehensive income. The Company formally documents all relationships between hedging
instruments and hedged items, as well as the risk management objective and strategy for undertaking various
hedge transactions. Hedging activities are transacted only with highly rated institutions, reducing exposure to
credit risk in the event of nonperformance. Additionally, the Company completes assessments related to the risk
of counterparty nonperformance on a regular basis.

55

The accounting for changes in fair value of a derivative instrument depends on whether it has been designated
and qualifies as part of a hedging relationship, and further, on the type of hedging relationship. For those
derivative instruments that are designated and qualify as hedging instruments, the Company has designated the
hedging instrument, based on the exposure being hedged, as a fair value hedge, a cash flow hedge or a hedge of a
net investment in a foreign operation. For derivative instruments designated as fair value hedges, the effective
portion of the hedge is recorded as an offset to the change in the fair value of the hedged item, and the ineffective
portion of the hedge, if any, is recorded in the Consolidated Statement of Operations. For derivative instruments
designated as cash flow hedges and determined to be highly effective, the gains or losses are deferred in other
comprehensive income and recognized in the determination of income as adjustments of carrying amounts when
the underlying hedged transaction is realized, canceled or otherwise terminated. When hedging certain foreign
currency transactions of a long-term investment nature (net investments in foreign operations) gains and losses
are recorded in the currency translation adjustment component of accumulated other comprehensive income
(loss). Gains and losses on foreign exchange contracts that are not used to hedge currency transactions of a long-
term investment nature, or that are not designated as cash flow or fair value hedges, are recognized in other
(expense) income, net as exchange rates change.

Fair Value of Assets and Liabilities Fair value is defined as an exit price, representing an amount that would be
received to sell an asset or the amount paid to transfer a liability in an orderly transaction between market
participants at the measurement date. As such, fair value is a market-based measurement determined based on
assumptions that market participants would use in pricing an asset or liability. As a basis for considering such
assumptions, the guidance prioritizes the inputs used to measure fair value into the following three-tier fair value
hierarchy:

• Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities

• Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted
prices for identical or similar assets or liabilities in markets that are not active or inputs, other than
quoted prices in active markets, that are observable either directly or indirectly

• Level 3: Unobservable inputs for which there is little or no market data

Assets and liabilities are classified based on the lowest level of input that is significant to the fair value
measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes to the
observability of valuation inputs may result in a reclassification of levels for certain securities within the fair
value hierarchy.

NCR measures its financial assets and financial liabilities at fair value based on one or more of the following
three valuation techniques:

• Market approach: Prices and other relevant information generated by market transactions involving

identical or comparable assets or liabilities.

• Cost approach: Amount that would be required to replace the service capacity of an asset (replacement

cost).

•

Income approach: Techniques to convert future amounts to a single present amount based upon market
expectations (including present value techniques, option pricing and excess earnings models).

We regularly review our investments to determine whether a decline in fair value, if any, below the cost basis is
other than temporary. If the decline in the fair value is determined to be other than temporary, the cost basis of
the security is written down to fair value and the amount of the write-down is included in the Consolidated
Statement of Operations. For qualifying investments in debt or equity securities, a temporary impairment charge
would be recognized in other comprehensive income (loss).

Environmental and Legal Contingencies In the normal course of business, NCR is subject
to various
proceedings, lawsuits, claims and other matters, including, for example, those that relate to the environment and
health and safety, labor and employment, employee benefits, import/export compliance, intellectual property,
data privacy and security, product liability, commercial disputes and regulatory compliance, among others.
Additionally, NCR is subject to diverse and complex laws, regulations, and standards including those relating to

56

corporate governance, public disclosure and reporting, environmental safety and the discharge of materials into
import and export compliance, data privacy and security, antitrust and
the environment, product safety,
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 the costs to NCR or could have an impact on NCR’s
future operating results. NCR believes that the amounts provided in its Consolidated Financial Statements are
adequate in light of the probable and estimable liabilities. 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 the Fox River and Kalamazoo River environmental matters discussed in Note 10, “Commitments and
Contingencies,” and to comply with applicable laws and regulations, will not exceed the amounts reflected in
NCR’s Consolidated Financial Statements or will not have a material adverse effect on the Company’s
consolidated results of operations, financial condition or cash flows. Any costs that may be incurred in excess of
those amounts provided as of December 31, 2013 cannot currently be reasonably determined or are not currently
considered probable.

Legal fees and expenses related to loss contingencies are typically expensed as incurred, except for certain costs
associated with NCR’s environmental remediation obligations. Costs and fees associated with litigating the
extent and type of required remedial actions and the allocation of remediation costs among potentially
responsible parties are typically included in the measurement of the environmental remediation liabilities.

Advertising Advertising costs are recognized in selling, general and administrative expenses when incurred.

Income Taxes Income tax expense is provided based on income before income taxes. Deferred income taxes
reflect the impact of temporary differences between assets and liabilities recognized for financial reporting
purposes and such amounts recognized for tax purposes. These deferred taxes are determined based on the
enacted tax rates expected to apply in the periods in which the deferred assets or liabilities are expected to be
settled or realized. NCR records valuation allowances related to its deferred income tax assets when it is more
likely than not that some portion or all of the deferred income tax assets will not be realized.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the
tax position will be sustained on examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the consolidated financial statements from such a position are measured
based on the largest benefit that has a greater than fifty percent likelihood of being sustained upon examination
by authorities. Interest and penalties related to uncertain tax positions are recognized as part of the provision for
income taxes and are accrued beginning in the period that such interest and penalties would be applicable under
relevant tax law and until such time that the related tax benefits are recognized.

Redeemable Noncontrolling Interests In 2011, we sold a 49% voting equity interest in NCR Brasil—Indústria
de Equipamentos para Automaça˘o S.A., a subsidiary of the Company (NCR Manaus) to Scopus Tecnologia Ltda.
(Scopus) for a subscription price of approximately $43 million. In the event NCR Manaus does not meet a
defined financial performance goal during the five year period ending in 2016, Scopus may elect to put its
noncontrolling interest to us for its then-current fair value.

Earnings Per Share Basic earnings per share is calculated by dividing net income by the weighted average
number of shares outstanding during the reported period. The calculation of diluted earnings per share is similar
to basic earnings per share, except that the weighted average number of shares outstanding includes the dilution
from potential shares resulting from stock options and restricted stock awards. When calculating diluted earnings
per share, the Company includes the potential windfall or shortfall tax benefits as well as average unrecognized
compensation expense as part of the assumed proceeds from exercises of stock options. The Company uses the
tax law ordering approach to determine the potential utilization of windfall benefits. The holders of unvested
restricted stock awards do not have nonforfeitable rights to dividends or dividend equivalents and therefore, such
unvested awards do not qualify as participating securities. See Note 8, “Employee Stock Compensation Plans”
for share information on NCR’s stock compensation plans.

57

The components of basic and diluted earnings per share attributable to NCR common stockholders are as follows
for the years ended December 31:

In millions, except per share amounts

2013

2012

2011

Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss) income from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . . .

$ 452
(9)

$ 475
6

$ (97)
(93)

Net income (loss) attributable to NCR common stockholders . . . . . . . . . . . . . . . . . . . .

$ 443

$ 481

$ (190)

Weighted average outstanding shares of common stock . . . . . . . . . . . . . . . . . . . . . . . .
Dilutive effect of employee stock options and restricted stock . . . . . . . . . . . . . . . . . . .

Diluted weighted average number of shares outstanding . . . . . . . . . . . . . . . . . . . . . . .

165.4
3.9

169.3

159.3
4.5

163.8

158.0
—

158.0

Basic earnings (loss) per share:

From continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
From discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2.73
(0.05)

$ 2.98
0.04

$ (0.61)
(0.59)

Total basic earnings (loss) per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2.68

$ 3.02

$ (1.20)

Diluted earnings (loss) per share:

From continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
From discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2.67
(0.05)

$ 2.90
0.04

$ (0.61)
(0.59)

Total diluted earnings (loss) per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 2.62

$ 2.94

$ (1.20)

For 2011, due to the net loss attributable to NCR common stockholders, potential common shares that would
cause dilution, such as restricted stock and stock options, have been excluded from the diluted share count
because their effect would have been anti-dilutive. For the year ended December 31, 2011, the fully diluted
shares would have been 161.0 million shares.

For 2013, there were no anti-dilutive options. For 2012 and 2011, outstanding options to purchase approximately
1.2 million, and 3.7 million shares of common stock, respectively, were not included in the diluted share count
because the options’ exercise prices were greater than the average market price of the underlying common shares
and, therefore, the effect would have been anti-dilutive.

Stock Compensation Stock-based compensation represents the costs related to share-based awards granted to
employees and non-employee directors. For all periods presented, the Company’s outstanding stock-based
compensation awards are classified as equity except for certain awards granted to non-employee directors. The
Company measures stock-based compensation cost at the grant date, based on the estimated fair value of the
award and recognizes the cost on a straight-line basis (net of estimated forfeitures) over the requisite service
period. See Note 8, “Employee Stock Compensation Plans” for further information on NCR’s stock-based
compensation plans.

Related Party Transactions In 2011, concurrent with the sale of a noncontrolling interest in NCR Manaus to
Scopus, we entered into a Master Purchase Agreement (MPA) with Banco Bradesco SA (Bradesco), the parent of
Scopus. Through the MPA, Bradesco agreed to purchase up to 30,000 ATMs from us over the 5 year term of the
agreement. Pricing of the ATMs will adjust over the term of the MPA using certain formulas which are based on
prevailing market pricing. We recognized $124 million, $145 million and $35 million in revenue related to
Bradesco for the years ended December 31, 2013, 2012 and 2011, respectively, and we had $9 million in
receivables outstanding from Bradesco as of December 31, 2013 and 2012.

Recent Accounting Pronouncements

Adopted

In February 2013, the Financial Accounting Standards Board (FASB) issued an accounting standards update
requiring new disclosures about reclassifications from accumulated other comprehensive loss to net income.
These disclosures may be presented on the face of the statements or in the notes to the consolidated financial

58

statements. The standards update is effective for fiscal years beginning after December 15, 2012. We adopted
this standards update and included the additional disclosure, as required, beginning with the first quarter of 2013.
See Note 15, “Accumulated Other Comprehensive Income (Loss)” for further information.

Issued

In February 2013, the FASB issued changes to the accounting for obligations resulting from joint and several
liability arrangements. These changes require an entity to measure those joint and several liability arrangements
for which the total amount of the obligation is fixed at the reporting date. The total amount of the obligation is
determined as the sum of (i) the amount the reporting entity agreed to pay on the basis of its arrangement with its
co-obligors, and (ii) any additional amount the reporting entity expects to pay on behalf of its co-obligors. The
guidance also requires an entity to disclose the nature and amount of the obligation as well as other information
about the obligation. Examples of obligations subject to these requirements include debt arrangements, settled
litigation and judicial rulings. The amendments are effective for fiscal years, and interim periods within those
years, beginning after December 15, 2013, with early adoption permitted. The implementation of the amended
accounting guidance on January 1, 2014 is not expected to have a material impact on our consolidated financial
statements.

the FASB issued amendments to address the accounting for the cumulative translation
In March 2013,
adjustment when a parent either sells a part or all of its investment in a foreign entity or no longer holds a
controlling financial interest in a subsidiary or group of assets that is a nonprofit activity or a business within a
foreign entity. The amendments are effective prospectively for fiscal years, and interim reporting periods within
those years, beginning after December 15, 2013, with early adoption permitted. The initial adoption on January 1,
2014 is not expected to have a material impact on our consolidated financial statements.

2. PENSION BENEFIT PLAN ACCOUNTING METHODOLOGY CHANGES

Effective in the first quarter of 2013, we elected to change our accounting methodology for recognizing costs for
all of our company-sponsored U.S. and international pension benefit plans. Previously, net actuarial gains or
losses (except those differences not yet reflected in the market-related value) were only amortized to the extent
that they exceeded 10% of the higher of the market-related value or the projected benefit obligation of each
respective plan. Beginning in 2012, the losses associated with the U.S. qualified pension plan and our largest UK
pension plan were amortized over the expected remaining lifetime of plan participants instead of the expected
service period of active plan participants, because almost all of the participants were inactive. For our other U.S.
and international plans, the gains or losses were amortized over the expected service period of the active plan
participants. Further, the expected return on plan assets component of pension expense for our U.S. pension plan
was previously determined using the expected rate of return and a calculated value of assets, referred to as the
“market-related value.” Differences between the assumed and actual returns were reflected in market-related
value on a straight-line basis over a 5-year period. Differences in excess of 10% of the market value were
recognized immediately. Similar approaches were employed in determining expense for NCR’s international
plans.

Under our new pension accounting methods, we will recognize changes in the fair value of plan assets and net
actuarial gains or losses upon remeasurement, which is at least annually in the fourth quarter of each year. These
new accounting methods will result in changes in the fair value of plan assets and net actuarial gains and losses
being recognized in expense faster than under our previous amortization method. The remaining components of
pension expense, primarily net service cost, interest cost, and the expected return on plan assets, will be recorded
on a quarterly basis as ongoing pension expense. While our previous policy of recognizing pension expense was
acceptable, we believe that these new policies are preferable as they accelerate the recognition in our operating
results of changes in the fair value of plan assets and actuarial gains and losses.

59

These changes have been reported through retrospective application of the new policies to all periods presented.
We recorded a cumulative reduction of retained earnings as of December 31, 2010 (the most recent measurement
date prior to the change) of $1,297 million related to these changes in accounting methodology. The impact of all
adjustments made to the financial statements presented is summarized below (amounts in millions, except per
share data):

2013

2012

2011

Previous
Accounting
Method

As
Reported

Previously
Reported

Adjusted

Previously
Reported

Adjusted

$2,164
2,403

$2,152
2,231

$2,177
2,208

$2,144
1,941

$2,011
2,098

$2,022
2,318

957
236
5,760
363

251
6
245
236
$ 232

871
203
5,457
666

554
98
456
447
$ 443

894
219
5,498
232

182
42
140
146
$ 146

742
155
4,982
748

698
223
475
481
$ 481

794
176
5,079
212

196
51
145
52
53

$

890
209
5,439
(148)

(164)
(66)
(98)
(191)
$ (190)

241

452

140

475

146

(97)

In millions, except per share amounts
Consolidated Statements of Operations:
Cost of products . . . . . . . . . . . . . . . . . . . . . . . .
Cost of services . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative

expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development expenses . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . .
Income (loss) from operations . . . . . . . . . . . . .
Income (loss) from continuing operations

before income taxes . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit)
. . . . . . . . . . . . . .
Income (loss) from continuing operations . . . .
. . . . . . . . . . . . . . . . . . . . . . .
Net income (loss)
Net income (loss) attributable to NCR . . . . . . .
Amounts attributable to NCR common

stockholders:

Income (loss) from continuing operations . . . .
Income (loss) per share attributable to NCR

common stockholders:

Income (loss) per common share from

continuing operations

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 1.46
$ 1.42

$ 2.73
$ 2.67

$ 0.88
$ 0.85

$ 2.98
$ 2.90

$ 0.92
$ 0.91

$ (0.61)
$ (0.61)

Net income (loss) per common share

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive

Income:

. . . . . . . . . . . . . . . . . . . . . . .

Net income (loss)
Employee benefit plans
Net gain (loss) arising during the year . . . . . . .
Amortization of actuarial loss . . . . . . . . . . . . . .
Less income tax (expense) benefit
. . . . . . . . . .
Other comprehensive (loss) income . . . . . . . . .
Total comprehensive income (loss)
. . . . . . . . .
Comprehensive income (loss) attributable to

$ 1.40
$ 1.37

$ 2.68
$ 2.62

$ 0.92
$ 0.89

$ 3.02
$ 2.94

$ 0.34
$ 0.33

$ (1.20)
$ (1.20)

$ 236

$ 447

$ 146

$ 481

$

52

$ (191)

219
174
(109)
203
439

82
8
(17)
(8)
439

91
255
(148)
241
387

—
14
1
(22)
459

(425)
212
67
(155)
(103)

24
17
(20)
21
(170)

NCR common stockholders . . . . . . . . . . . . .

$ 442

$ 442

$ 391

$ 463

$ (104)

$ (171)

Consolidated Balance Sheets:

Previous

Accounting Method As Reported

Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . .

2,312
(978)

1,372
(38)

Previously
Reported

2,134
(1,247)

Adjusted

929
(37)

December 31, 2013

December 31, 2012

60

Consolidated Statements of Cash Flows:
Net income (loss) . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . .
Pension and indemnity plans . . . . . . . . . . . .

2013

2012

2011

Previous
Accounting
Method

236
(89)
(94)

As Reported

Previously
Reported

Adjusted

Previously
Reported

Adjusted

447
3
(397)

146
(37)
(478)

481
144
(994)

52
(13)
92

(191)
(130)
452

3. SUPPLEMENTAL FINANCIAL INFORMATION (in millions)

For the years ended December 31

2013

2012

2011

Other (expense) income, net
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of an investment (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

(15)

6

$

5

6
$
(7) —
(7)

(8)

Total other (expense) income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (9) $

(8) $

(3)

At December 31

Accounts Receivable
Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accounts Receivable, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2013

2012

$1,318
39

$1,056
46

1,357
(18)

1,102
(16)

Total accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$1,339

$1,086

Inventories
Work in process and raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service parts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Other current assets
Current deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property, plant and equipment
Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and other equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property, plant and equipment, gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 135
202
453

$ 187
167
443

$ 790

$ 797

$ 262
306

$ 223
231

$ 568

$ 454

$

40
237
722

$

42
231
636

999
(647)

909
(601)

Total property, plant and equipment, net

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 352

$ 308

4. BUSINESS COMBINATIONS AND DIVESTITURES

2013 Acquisitions

Following is a brief description of the Company’s noteworthy acquisitions completed during the 2013 fiscal year:

Acquisition of Retalix Ltd. On February 6, 2013, NCR completed the acquisition of Retalix Ltd. (“Retalix”), for
which it paid an aggregate cash purchase price of $791 million which includes $3 million to be recognized as
compensation expense within selling, general and administrative expenses over a period of approximately three

61

years from the acquisition date. The purchase price was paid from the net proceeds of the December 2012 offer
and sale of NCR’s 4.625% senior unsecured notes and borrowings under NCR’s senior secured credit facility. As
a result of the acquisition, Retalix became an indirect wholly owned subsidiary of NCR. Retalix is a leading
global provider of innovative retail software. The acquisition is consistent with NCR’s continued transformation
to a hardware-enabled, software-driven business. Retalix’s strength with blue-chip retailers is highly
complementary and provides additional sales opportunities across the combined installed base.

Recording of Assets Acquired and Liabilities Assumed

The fair value of consideration transferred to acquire Retalix was allocated to the identifiable assets acquired and
liabilities assumed based upon their estimated fair market values as of the date of the acquisition as set forth
below. This allocation is final as of December 31, 2013.

The allocation of the purchase price for Retalix is as follows:

In millions

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other tangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired goodwill
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquired intangible assets other than goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total purchase consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fair Value

$ 127
107
56
461
205
(52)
(116)

$ 788

Goodwill represents the future economic benefits arising from other assets acquired that could not be
individually identified and separately recognized. The goodwill arising from the acquisition consists of the
margin and cost synergies expected from combining the operations of NCR and Retalix. It is expected that
approximately $35 million of the goodwill recognized in connection with the acquisition will be deductible for
tax purposes. The goodwill arising from the acquisition has been allocated to the Retail Solutions segment. Refer
to Note 5, “Goodwill and Other Long-Lived Assets” for the carrying amounts of goodwill by segment as
of December 31, 2013.

The intangible assets acquired in the acquisition include the following:

Direct customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technology—Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Estimated
Fair Value
(In millions)
$121
74
10

Weighted Average
Amortization
Period(1)
(years)
20
5
6

Total acquired intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$205

14

(1) Determination of the weighted average amortization period of the individual categories of intangible assets
was based on the nature of the 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 Company incurred a total of $9 million of transaction expenses to date relating to the acquisition, of which
$6 million and $3 million are included in selling, general and administrative expenses in the Company’s
Consolidated Statement of Operations for the years ended December 31, 2013 and 2012, respectively. See Note
13, “Segment Information and Concentrations” for additional information regarding revenues and operating
income related to Retalix for the year ended December 31, 2013.

62

Unaudited Pro forma Information

The following unaudited pro forma information presents the consolidated results of NCR and Retalix for the
years ended December 31, 2013 and 2012. 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,
2012, are as follows:

In millions

For the year ended
December 31

2013

2012

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to NCR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$6,156
$ 447

$5,992
$ 443

The unaudited pro forma results for the year ended December 31, 2013 include:

•

•

•

$13 million in additional revenue associated with deferred revenue acquired, assuming the deferred
revenue was acquired on January 1, 2012,

$2 million, net of tax, in additional amortization expense for acquired intangible assets and

$5 million, net of tax, in eliminated transaction costs as if those costs had been recognized in the prior-
year period.

The unaudited pro forma results for the year ended December 31, 2012 include:

•

•

•

•

$16 million in reduced revenue associated with deferred revenue acquired,

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

$20 million, net of tax, in interest expense from the 4.625% senior unsecured notes and senior secured
credit facility, and

$5 million, net of tax, in transaction costs.

Acquisition of Alaric Systems Limited On December 2, 2013, the Company acquired all of the outstanding share
capital of Alaric Systems Limited (“Alaric Systems”) in exchange for approximately $84 million, plus related
acquisition costs. Alaric Systems is a provider of secure transaction switching and fraud prevention software.
Goodwill recognized related to this acquisition was $55 million, of which it is expected that zero will be
deductible for tax purposes. The goodwill and their results from the date of acquisition has been reported within
our Financial Services segment. As a result of the Alaric Systems acquisition, NCR recorded $37 million related
to identifiable intangible assets consisting primarily of proprietary technology and customer relationships, which
have a weighted-average amortization period of 8 years. Supplemental pro forma information and actual revenue
and earnings since the acquisition date have not been provided as this acquisition did not have a material impact
on the Company’s Consolidated Statements of Operations.

Other Acquisitions During the year ended December 31, 2013,
the Company completed five additional
acquisitions for aggregate purchase consideration of approximately $38 million, plus related acquisition costs.
Approximately $6 million was withheld by the Company as a source of recovery for possible claims under the
related acquisition agreements and will be paid to the respective sellers pursuant to the terms of such agreements.
Goodwill recognized related to these acquisitions was $23 million, of which it is expected that $19 million will

63

be deductible for tax purposes. The goodwill arising from these acquisitions has been allocated to the Hospitality
segment. As a result of these five additional acquisitions, NCR recorded $14 million related to identifiable
intangible assets consisting primarily of customer relationships, which have a weighted-average amortization
period of 3 years. Supplemental pro forma information and actual revenue and earnings since the acquisition
dates have not been provided as these acquisitions did not have a material impact, individually or in the
aggregate, on the Company’s Consolidated Statements of Operations.

2012 Acquisitions

Following is a brief description of the Company’s noteworthy acquisitions completed during the 2012 fiscal year:

Acquisition of POS and RDS On February 7, 2012, the Company acquired all of the outstanding capital stock
of POS Integrated Solutions Do Brasil Comercio E Servicos De Informatica S.A. (“POS”) and RDS South
America Comercio E Servicos De Informatica S.A.
for aggregate purchase consideration of
approximately $1 million, plus related acquisition costs. POS and RDS were resellers of certain of the
Company’s hardware and software, and their results have been reported within our Hospitality segment since the
date of the acquisitions.

(“RDS”)

Acquisition of Wyse Sistemas de Informatica Ltda. On May 31, 2012, the Company acquired all of the
outstanding units of membership interest of Wyse Sistemas de Informatica Ltda. (“Wyse”) for aggregate
purchase consideration of approximately $13 million, plus related acquisition costs. Wyse was a developer and
provider of point of sale software specifically designed for the hospitality market in Brazil, and their results have
been reported within our Hospitality segment since the date of the acquisition.

Hospitality Reseller Acquisitions During 2012,
the Company acquired the assets of six of its domestic
Hospitality resellers in separate transactions for aggregate purchase consideration of approximately $28 million,
plus related acquisition costs.

Acquisition of Transoft, Inc. On September 7, 2012, the Company acquired substantially all of the assets of
Transoft, Inc. for aggregate purchase consideration of approximately $40 million, plus related acquisition costs,
of which the Company will recognize $7 million as compensation expense included within selling, general and
administrative expenses over a period of two years from the acquisition date. Transoft, Inc. was a global leader in
cash management software for financial institutions, and their results have been reported within our Financial
Services segment since the date of the acquisition.

Acquisition of uGenius Technology, Inc. On, December 31, 2012, the Company acquired substantially all of the
assets of uGenius Technology, Inc. (uGenius) for aggregate purchase consideration of approximately $37
million, including the settlement of NCR’s pre-existing 8.7% equity investment in uGenius Technology, LLC,
plus related acquisition costs. uGenius was a provider of video banking solutions, and their results have been
reported within our Financial Services segment since the date of the acquisition.

Approximately $11 million of the aggregate purchase consideration was withheld by the Company as a source of
recovery for possible claims under the acquisition agreements for the 2012 acquisitions noted above, and will be
paid to the respective sellers pursuant to the terms of such agreements. As a result of the above noted 2012
acquisitions, NCR recorded $34 million related to identifiable intangible assets consisting primarily of
proprietary technology and customer relationships, which have a weighted-average amortization period of 7
years.

The operating results of the businesses acquired in 2012 have been included within NCR’s results as of the
closing date of each acquisition. Supplemental pro forma information and actual revenue and earnings since the
acquisition dates have not been provided as these acquisitions did not have a material impact, individually or in
the aggregate, on the Company’s Consolidated Statements of Operations. The purchase price of these businesses,
reported in business acquisitions, net of cash acquired within investing activities in the Consolidated Statements
of Cash Flows, has been allocated based on the estimated fair value of net tangible and intangible assets acquired,
with any excess recorded as goodwill. Goodwill recognized in the Company’s 2012 acquisitions was $85 million,
of which it is expected that $55 million of the goodwill will be deductible for tax purposes.

64

2011 Acquisitions

Following is a brief description of the Company’s noteworthy acquisitions completed during the 2011 fiscal year:

Acquisition of Radiant Systems, Inc. On August 24, 2011, NCR completed the acquisition of Radiant Systems,
Inc. (Radiant). The acquisition was completed through a tender offer and subsequent merger, with Radiant
becoming a wholly-owned subsidiary of NCR. The total equity purchase price was approximately $1.2 billion.

Radiant was a leading provider of technology solutions for managing site operations in the hospitality and
specialty retail industries, and is operated within NCR as a part of NCR’s Hospitality line of business.

Recording of Assets Acquired and Liabilities Assumed

The fair value of consideration transferred to acquire Radiant was allocated to the identifiable assets acquired and
liabilities assumed based upon their fair values as of the date of the acquisition as set forth below. This allocation
is final as of December 31, 2011.

In millions

Purchase
Consideration

$1,206

Net Tangible Assets
Acquired/(Liabilities
Assumed)

Purchased Intangible
Assets

$78

$319

Goodwill

$809

The goodwill arising from the acquisition consists of the revenue and cost synergies expected from combining
the operations of NCR and Radiant. It is expected that approximately $73 million of the goodwill recognized in
connection with the acquisition will be deductible for tax purposes. The goodwill arising from the acquisition has
been allocated as follows: approximately $624 million to the Hospitality segment; $86 million to the Financial
Services segment; and $99 million to the Retail Solutions segment.

See Note 5, “Goodwill and Other Long-Lived Assets” for additional information related to the carrying amounts
of goodwill by segment.

The intangible assets acquired include the following:

Reseller Network . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Technology—Software and Hardware . . . . . . . . . . . . . . . . . . . . . .
Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Direct customer relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncompete agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Internally developed software . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Estimated
Fair Value

(In millions)
88
106
48
74
2
1

Weighted Average
Amortization Period (1)

(years)
13
6
9
15
2
2

Total acquired intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . .

$319

(1) Determination of the weighted average amortization period of the individual categories of intangible assets
was based on the nature of the 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 Company incurred a total of $30 million of transaction expenses relating to the acquisition, which are
included in selling, general and administrative expenses in the results of operations for the year ended
December 31, 2011. See Note 13, “Segment Information and Concentrations” for additional
information
regarding revenues and operating income related to Radiant for the year ended December 31, 2011.

65

Unaudited Pro forma Information

The following unaudited pro forma information presents the consolidated results of NCR and Radiant for the
year ended December 31, 2011. 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,
2010, are as follows:

In millions

Year ended
December 31, 2011

Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to NCR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,538
$ (179)

The unaudited pro forma results for the year ended December 31, 2011 include:

•

•

•

•

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

$37 million, net of tax, in eliminated transaction costs as if those costs had been recognized in the
prior-year period,

$10 million, net of tax, in additional interest expense from the senior secured credit facility, and

$7 million, net of tax, in eliminated accelerated vesting of stock options and restricted stock unit
compensation expense directly attributable to the acquisition.

Divestitures

On February 3, 2012, NCR entered into an Asset Purchase Agreement (the “Agreement”) with Redbox
Automated Retail, LLC (“Purchaser”) pursuant to which NCR agreed to sell certain assets of its Entertainment
business (the “Entertainment Business”), including, but not limited to, substantially all of NCR’s DVD kiosks,
certain retailer contracts, select DVD inventory and certain intellectual property to Purchaser (the “Transaction”).
Pursuant to the terms of the Agreement, as amended on June 22, 2012, and upon the terms and conditions
thereof, on June 22, 2012, NCR completed the disposition of the assets of its Entertainment Business to
Purchaser for cash consideration of $100 million. As of the date of the sale, total assets sold of $67 million
included $51 million of property, plant and equipment, $15 million of inventory, and $1 million of intangible
assets.

NCR agreed to provide Purchaser with certain short-term support services following the closing under a
transition services agreement. The Agreement also contemplates that, for a period of five years following the
closing, Purchaser and its affiliates may procure certain hardware, software and services from NCR under a
manufacturing and services agreement. If, at the end of such five-year period, Purchaser and its affiliates have
not procured hardware, software and services that have yielded $25 million in margin to NCR, Purchaser will pay
the difference to NCR.

We determined that the cash inflows under the transition services agreement and the manufacturing and services
agreement will not constitute significant continuing involvement with the operations of the Entertainment
Business after the sale. In addition, the ongoing cash inflows related to the Entertainment Business under the
manufacturing and services agreement are substantially unrelated to the business sold. Therefore, we have
reclassified the operating results of the Entertainment Business, for all historical periods, to income (loss) from
discontinued operations, net of tax in the accompanying Consolidated Statements of Operations. During the year

66

ended December 31, 2011, we determined that disposal of the Entertainment business was probable, and we
assessed the assets of the business for impairment, which resulted in charges which reduced the carrying values
of goodwill, long-lived assets and certain inventories by an aggregate amount of $88 million.

The following table includes the results of the Entertainment Business, which we historically included in our
Entertainment segment:

For the year ended December 31

In millions
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

Loss from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain from divestiture of the business . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loss before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Loss from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . .

$

2012

2011

62
101

(39)
33

(6)
(2)

(4)

$

$

152
299

(147)
—

(147)
(51)

(96)

5. GOODWILL AND OTHER LONG-LIVED ASSETS

Goodwill

The carrying amounts of goodwill by segment as of December 31, 2013 and 2012 are included in the table below.
Foreign currency fluctuations are included within other adjustments.

January 1, 2013

December 31, 2013

Accumulated
Impairment
Losses

Total Additions Impairment Other Goodwill

In millions

Goodwill

Financial Services . . . . . . $ 202
120
Retail Solutions . . . . . . . .
659
Hospitality . . . . . . . . . . . .
5
Entertainment . . . . . . . . . .
25
Emerging Industries . . . . .

$—

(3)

—

(5)

—

$ 55
$ 202
461
117
23
659
—
—
25 —

Total . . . . . . . . . . . . . . . . . $1,011

$ (8)

$1,003

$539

$ (8) $1,542

$ (8)

$1,534

January 1, 2012

December 31, 2012

Accumulated
Impairment
Losses

Total Additions Impairment Other Goodwill

Accumulated
Impairment
Losses

$—

(3)

—

(5)

—

Total

$ 255
578
676
—
25

$ (2) $ 255
581
—
676
5
25

—
—

(6)

Accumulated
Impairment
Losses

$—

(3)

—

(5)

—

Total

$ 202
117
659
—
25

$— $ 202
120
—
659
5
25

—
—

5

$

5 $1,011

$ (8)

$1,003

$—
—
—
—
—

$—

$—
—
—
—
—

$—

In millions

Goodwill

Financial Services . . . . . . $ 152
120
Retail Solutions . . . . . . . .
619
Hospitality . . . . . . . . . . . .
5
Entertainment . . . . . . . . . .
25
Emerging Industries . . . . .

$—

(3)

—

(5)

—

$ 152

$ 50
117 —
35
619
—
—
25 —

Total . . . . . . . . . . . . . . . . . $ 921

$ (8)

$ 913

$ 85

67

Long-Lived Assets

NCR’s identifiable intangible assets, reported in other assets in the 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 follows. The increase in the gross
carrying amount
is primarily due to the acquisitions detailed in Note 4, “Business Combinations and
Divestitures.”

In millions

Identifiable intangible assets
Reseller & customer relationships . . . . . . . . . . . . .
Intellectual property . . . . . . . . . . . . . . . . . . . . . . . .
Tradenames . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-compete arrangements . . . . . . . . . . . . . . . . . .

Total identifiable intangible assets . . . . . . . . . . . . .

December 31, 2013

December 31, 2012

Amortization
Period
(in Years)

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
Amortization

1 - 20
2 - 7
2 - 10
2 - 5

$328
275
61
8

$672

$ (37)
(118)
(15)
(8)

$(178)

$179
180
49
8

$416

$ (17)
(80)
(8)
(7)

$(112)

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

In millions

December 31,
2013

For the years ended December 31 (estimated)

2014

2015

2016

2017

2018

Amortization expense . . . . . . . . . . . . .

$

66

$

73

$

73

$

67

$

58

$

41

6. DEBT OBLIGATIONS

Short-Term Borrowings

The following table summarizes the Company’s short-term borrowings:

In millions, except percentages

December 31, 2013

December 31, 2012

Amount

Weighted-Average
Interest Rate

Amount

Weighted-Average
Interest Rate

Current portion of Senior Secured Credit

Facility (1) . . . . . . . . . . . . . . . . . . . . . . . .
Other (2) . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total short-term borrowings . . . . . . .

$

$

28
6

34

2.55%
7.11%

$70
2

$72

3.06%
3.22%

68

Long-Term Debt

The following table summarizes the Company’s long-term debt:

In millions, except percentages

Senior Secured Credit Facility:

December 31, 2013

December 31, 2012

Amount

Weighted-Average
Interest Rate

Amount

Weighted-Average
Interest Rate

Term loan facility due 2018 (1) . . . . . .
Revolving credit facility due 2018 . .

$1,087
—

2.55%

Senior notes:

5.00% Senior Notes due 2022 . . . . . .
4.625% Senior Notes due 2021 . . . . .
5.875% Senior Notes due 2021 . . . . .
6.375% Senior Notes due 2023 . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .

Other (2)

600
500
400
700
33

Total long-term debt

. . . . . . . . . . . . .

$3,320

7.21%

$ 780
—

600
500
—
—
11

$1,891

3.06%

6.13%

(1)

(2)

Interest rates are weighted average interest rates as of December 31, 2013 and 2012 related to the Senior
Secured Credit Facility, which incorporates the impact of the interest rate swap. Refer to Note 11,
“Derivatives and Hedging Instruments,” for additional details.
Interest rates are weighted average interest rates as of December 31, 2013 and 2012 primarily related to
various international credit facilities and a note payable in the U.S.

Senior Secured Credit Facility In August 2011, the Company entered into a senior secured credit facility with
JPMorgan Chase Bank, NA (JPMCB), as administrative agent, and a syndicate of lenders. On July 25, 2013, the
Company amended and restated the senior secured credit facility, and refinanced its term loan facility and
revolving credit facility thereunder. On December 4, 2013, in connection with the then pending acquisition of
Digital Insight, the senior secured credit facility was further amended (as amended, the Senior Secured Credit
Facility). As of December 31, 2013, the Senior Secured Credit Facility consisted of a term loan facility in an
aggregate principal amount of $1.12 billion, and a revolving credit facility in an aggregate principal amount of
$850 million. The revolving credit facility also allows a portion of the availability to be used for outstanding
letters of credit, and as of December 31, 2013, outstanding letters of credit totaled approximately $22 million.

On December 4, 2013, in connection with the amendment of the Senior Secured Credit Facility, the Company
entered into an Incremental Facility Agreement with and among the lenders party thereto and JPMCB, as
administrative agent. The Incremental Facility Agreement created an additional $250 million of term loan
commitments, which were drawn, along with $300 million from the revolving credit facility, on January 10, 2014
in connection with the completion of the acquisition of Digital Insight. Refer to Note 18, “Subsequent Events”
for further details.

The outstanding principal balance of the term loan facility is required to be repaid in equal quarterly installments
in annual amounts. As of December 31, 2013, the repayment schedule required quarterly installments of
approximately $14 million beginning September 30, 2014, approximately $21 million beginning September 30,
2015, and approximately $28 million beginning September 30, 2016, with the balance being due at maturity on
July 25, 2018. Borrowings under the revolving portion of the credit facility are due July 25, 2018. Amounts
outstanding under the Senior Secured Credit Facility bear interest, at the Company’s option, at a base rate equal
to the highest of (i) the federal funds rate plus 0.50%, (ii) the administrative agent’s “prime rate” and (iii) the
one-month LIBOR rate plus 1.00% (the Base Rate) or LIBOR, plus a margin ranging from 0.25% to 1.25% for
Base Rate-based loans that are either term loans or revolving loans and ranging from 1.25% to 2.25% for
LIBOR-based loans that are either term loans or revolving loans, 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.

69

The Company’s obligations under the Senior Secured Credit Facility are guaranteed by certain of its wholly-
owned domestic subsidiaries. The Senior Secured Credit Facility and these guarantees are secured by a first
priority lien and security interest in certain equity interests owned by the Company and the guarantor subsidiaries
in certain of their respective domestic and foreign subsidiaries, and a perfected first priority lien and security
interest in substantially all of the Company’s U.S. assets and the assets of the guarantor subsidiaries, 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 financial covenants that require us 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 June 30, 2014, 4.85 to 1.00, (ii) in the case of any fiscal quarter
ending after June 30, 2014 and on or prior to December 31, 2014, (a) the sum of (x) 4.50 and (y) an
amount (not to exceed 0.25) to reflect new debt used to reduce NCR’s underfunded pension liabilities,
to (b) 1.00, (iii) in the case of any fiscal quarter ending after December 31, 2014 and on or prior to
December 31, 2016, (a) the sum of (x) 4.25 and (y) an amount (not to exceed 0.50) to reflect new debt
used to reduce NCR’s underfunded pension liabilities, to (b) 1.00, (iv) in the case of any fiscal quarter
ending after December 31, 2016 and on or prior to December 31, 2017, 4.00 to 1.00, and (v) in the case
of any fiscal quarter ending after December 31, 2017, 3.75 to 1.00; and

an interest coverage ratio on the last day of any fiscal quarter to be less than (i) in the case of any fiscal
quarter ending on or prior to December 31, 2014, 3.00 to 1.00, and (ii) in the case of any fiscal quarter
ending after December 31, 2014, 3.50 to 1.00.

The Senior Secured Credit Facility also contains events of default, which are customary for similar financings.
terminate the loan
Upon the occurrence of an event of default,
commitments, accelerate all loans and require cash collateral deposits in respect of outstanding letters of credit.

the lenders may, among other things,

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 loan 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 (a) prior to the date that the Company obtains an investment grade rating 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 2.50 to 1.00, and (b) on and after the date that the
Company obtains an investment grade rating 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 a ratio that is 0.50 less than the leverage ratio then applicable under the financial covenants of
the Senior Secured Credit Facility, the proceeds of which can be used for working capital requirements and other
general corporate purposes.

Senior Unsecured Notes On September 17, 2012, the Company issued $600 million aggregate principal amount
of 5.00% senior unsecured notes due in 2022 (the 5.00% Notes) and on December 18, 2012, the Company
issued $500 million aggregate principal amount of 4.625% senior unsecured notes due in 2021 (the 4.625%
Notes). On December 19, 2013, the Company, through its newly formed wholly owned subsidiary, NCR Escrow
Corp., issued $400 million aggregate principal amount of 5.875% senior unsecured notes due in 2021 (the 5.875%
Notes) and $700 million aggregate principal amount of 6.375% senior unsecured notes due in 2023 (the 6.375%
Notes). The aggregate principal amount from the 5.875% and 6.375% Notes was initially deposited into a
segregated escrow account of NCR Escrow Corp., and was held in that escrow account at December 31, 2013

70

to be used solely for the pending acquisition of Digital Insight Corporation. The aggregate principal amount plus
accrued interest funded to the escrow account have therefore been classified as restricted cash in the Consolidated
Balance Sheet as of December 31, 2013. Refer to Note 18, “Subsequent Events” for additional details.

The senior unsecured notes are guaranteed, fully and unconditionally, on an unsecured senior basis, by our
subsidiary, NCR International, Inc. Effective, December 31, 2013, Radiant Systems, Inc., formerly a guarantor
subsidiary of certain of the senior unsecured notes and, in such capacity, a party to the registration rights
agreements described below, was merged with and into the Company with the Company continuing as the
surviving corporation.

The Company has the option to redeem the 5.00% Notes, in whole or in part, at any time on or after July 15,
2017, at a redemption price of 102.5%, 101.667%, 100.833% and 100% during the 12-month periods
commencing on July 15, 2017, 2018, 2019 and 2020 and thereafter, respectively, plus accrued and unpaid interest
to the redemption date. Prior to July 15, 2017, the Company may redeem the 5.00% Notes, in whole or in part, at
a redemption price equal to 100% of the principal amount plus a make-whole premium and accrued and unpaid
interest to the redemption date. Prior to July 15, 2015, the Company may redeem the 5.00% Notes in an
aggregate principal amount not to exceed 35% of the aggregate principal amount of the notes originally issued at
a redemption price of 105% plus accrued and unpaid interest to the redemption date, with the net cash proceeds
from one or more qualified equity offerings under certain further requirements.

The Company has the option to redeem the 4.625% Notes, in whole or in part, at any time on or after
February 15, 2017, at a redemption price of 102.313%, 101.156% and 100% during the 12-month periods
commencing on February15, 2017, 2018 and 2019 and thereafter, respectively, plus accrued and unpaid interest
to the redemption date. Prior to February 15, 2017, the Company may redeem the 4.625% Notes, in whole or in
part, at a redemption price equal to 100% of the principal amount plus a make-whole premium and accrued and
unpaid interest to the redemption date. Prior to February 15, 2016, the Company may redeem the 4.625% Notes
in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the notes originally
issued at a redemption price of 104.625% plus accrued and unpaid interest to the redemption date, with the net
cash proceeds from one or more qualified equity offerings under certain further requirements.

The Company has the option to redeem the 5.875% Notes, in whole or in part, at any time on or after
December 15, 2017, at a redemption price of 102.938%, 101.469% and 100% during the 12-month periods
commencing on December15, 2017, 2018 and 2019 and thereafter, respectively, plus accrued and unpaid interest
to the redemption date. Prior to December 15, 2017, the Company may redeem the 5.875% Notes, in whole or in
part, at a redemption price equal to 100% of the principal amount plus a make-whole premium and accrued and
unpaid interest to the redemption date. Prior to December 15, 2016, the Company may redeem the 5.875% Notes
in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the notes originally
issued at a redemption price of 105.875% plus accrued and unpaid interest to the redemption date, with the net
cash proceeds from one or more qualified equity offerings under certain further requirements.

The Company has the option to redeem the 6.375% Notes, in whole or in part, at any time on or after
December 15, 2018, at a redemption price of 103.188%, 102.125%, 101.063% and 100% during the 12-month
periods commencing on December15, 2018, 2019, 2020 and 2021 and thereafter, respectively, plus accrued and
unpaid interest to the redemption date. Prior to December 15, 2018, the Company may redeem the 6.375% Notes,
in whole or in part, at a redemption price equal to 100% of the principal amount plus a make-whole premium and
accrued and unpaid interest to the redemption date. Prior to December 15, 2016, the Company may redeem the
6.375% Notes in an aggregate principal amount not to exceed 35% of the aggregate principal amount of the notes
originally issued at a redemption price of 106.375% plus accrued and unpaid interest to the redemption date, with
the net cash proceeds from one or more qualified equity offerings under certain further requirements.

The terms of the indentures for these 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 sale and
leaseback transactions; and consolidate, merge, sell or otherwise dispose of all or substantially all of the
Company’s assets. These covenants are subject to significant exceptions and qualifications.

71

For example, if the senior unsecured 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.

In connection with the issuances of the 5.875% and 6.375% Notes, the Company entered into registration rights
agreements with J.P. Morgan Securities LLC as representative of the initial purchasers of the applicable notes,
and NCR International, Inc. and Radiant Systems, Inc. in their capacities as future subsidiary guarantors. Each
registration rights agreement requires the Company and the subsidiary guarantors, at their cost, to among other
things:

•

•

•

use their commercially reasonable efforts to file a registration statement on an appropriate registration
form with respect to a registered offer to exchange the notes for new notes that are guaranteed by the
guarantors with terms substantially identical in all material respects to the notes (except that the
exchange notes will not contain terms with respect to transfer restrictions or any increase in annual
interest rate);

use their commercially reasonable efforts to cause the registration statement to become effective under
the Securities Act of 1933, as amended; and

promptly after the applicable registration statement is effective, commence an exchange offer.

In addition, under certain circumstances, the Company and the subsidiary guarantors may be required to file shelf
registration statements to cover sales of the notes by their holders.

If the Company and the subsidiary guarantors do not comply with their registration statement and exchange offer
obligations under a registration rights agreement, then additional interest shall accrue on the principal amount of
the notes that are registrable securities (as defined in each registration rights agreement) at a rate of 0.25% per
annum for the first 90-day period beginning on the day immediately following such registration default (which
rate will be increased by an additional 0.25% per annum for each subsequent 90-day period that such additional
interest continues to accrue, provided that the rate at which such additional interest accrues may in no event
exceed 1.00% per annum).

Debt Maturities Maturities of long-term debt outstanding, in principal amounts, at December 31, 2013 are
summarized below:

In millions

For the years ended December 31

Total

2014

2015

2016

2017

2018

Thereafter

Debt maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,354

$34

$76

$104

$118

$814

$2,208

Fair Value of Debt

The fair value of debt is based on a discounted cash flow model that incorporates a market yield curve based on
the Company’s credit rating with adjustments for duration. As of December 31, 2013 and 2012, the fair value of
debt was $3.33 billion and $1.97 billion, respectively, and has been measured using significant other observable
inputs (Level 2).

7. INCOME TAXES

For the years ended December 31, income (loss) from continuing operations before income taxes consisted of the
following:

In millions

Income (loss) before income taxes
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total income (loss) from continuing operations before income taxes . . . . . .

2013

2012

2011

$ 29
525

$554

$280
418

$698

$(418)
254

$(164)

72

For the years ended December 31, income tax expense (benefit) consisted of the following:

In millions

Income tax expense (benefit)

Current

2013

2012

2011

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (13)
3
105

Deferred

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

19
(4)
(12)

$

6

$

—
73

155
1
(12)

2
1
61

(128)
(3)
1

Total income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 98

$223

$ (66)

The following table presents the principal components of the difference between the effective tax rate and the
U.S. federal statutory income tax rate for the years ended December 31:

In millions

2013

2012

2011

Income tax expense (benefit) at the U.S. federal tax rate of 35% . . . . . . . . . . . . . .
Foreign income tax differential . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. permanent book/tax differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax audit settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
29
Change in liability for unrecognized tax benefits . . . . . . . . . . . . . . . . . . . . . . . . . .
1
Nondeductible transaction costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
Valuation allowance releases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax extenders legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$245
(50)
(3)
(12)
12
1
17
(25) —
(16)
(2)

$194
(86)
3

$ (58)
(8)
3
(12)
2
4
5

—
14 —
(1)

(2)

Total income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 98

$223

$ (66)

NCR’s tax provisions include a provision for income taxes in certain tax jurisdictions where its subsidiaries are
profitable, but reflect only a portion of the tax benefits related to certain foreign subsidiaries’ tax losses due to the
uncertainty of the ultimate realization of future benefits from these losses. During 2013, we recorded a one-time
benefit of approximately $16 million in connection with the American Taxpayer Relief Act of 2012 that was
signed into law in January 2013 and the related retroactive tax relief for certain law provisions that expired in
2012. The 2013 tax provision was also favorably impacted by the release of a $10 million valuation allowance
due to the implementation of a tax planning strategy to access certain deferred tax assets, a $15 million reduction
in a valuation allowance related to a subsidiary in Japan, and a favorable mix of earnings by country, primarily
related to lower pension benefit. During 2012, we favorably settled examinations with Canada for the 2003 tax
year and Japan for tax years 2001 through 2006 that resulted in tax benefits of $14 million and $13 million,
respectively. In addition, the 2012 tax provision was favorably impacted by the mix of earnings by country.
These benefits were partially offset by an increase of $17 million to the U.S. valuation allowance. During 2011,
we favorably settled examinations with Canada for 1997 through 2001 that resulted in a $12 million tax benefit.

73

Deferred income tax assets and liabilities included in the Consolidated Balance Sheets as of December 31 were
as follows:

In millions

Deferred income tax assets
Employee pensions and other benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other balance sheet reserves and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax loss and credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized research and development
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2013

2012

$ 119
170
719
101
7
52

$ 322
140
628
86
8
54

Total deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,168
(364)

1,238
(399)

Net deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

804

839

Deferred income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred income tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

125
20
7

152

83
16
11

110

Total net deferred income tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 652

$ 729

NCR recorded valuation allowances related to certain deferred income tax assets due to the uncertainty of the
ultimate realization of the future benefits from those assets. The valuation allowances cover deferred tax assets,
primarily tax loss carryforwards, in tax jurisdictions where there is uncertainty as to the ultimate realization of a
benefit from those tax losses. At December 31, 2013, our net deferred tax assets in the United States totaled
approximately $555 million. For the three year period ended December 31, 2013, we had a cumulative net loss
from continuing operations before income taxes, which is generally considered a negative indicator about our
ability to realize the benefits of those assets. We further evaluated the realizability of the U.S. deferred tax assets
by weighing other positive and negative evidence, including our history of taxable income in the U.S., and the
substantial length of time over which our deferred tax assets relating to net operating losses and employee
pensions may be realized. Through this assessment, realization of the related benefits was determined to be more
likely than not. If we are unable to generate sufficient future taxable income in the time period within which the
temporary differences underlying our deferred tax assets become deductible, or before the expiration of our loss
and credit carryforwards, additional valuation allowance could be required.

As of December 31, 2013, NCR had U.S. federal and foreign tax attribute carryforwards of approximately $1.8
billion. The net operating loss carryforwards, subject to expiration, expire in the years 2014 through 2033. The
amount of tax deductions in excess of previously recorded windfall tax benefits associated with stock-based
compensation included in U.S. federal net operating loss carryforwards but not reflected in deferred tax assets for
the year ended December 31, 2013 was $69 million. Upon realization of the U.S. federal net operating losses, the
Company will recognize a windfall tax benefit as an increase to additional paid-in capital. In addition, the
Company had U.S.
tax credit carryforwards of $117 million. Approximately $22 million of the credit
carryforwards do not expire, and $95 million expires in the years 2014 through 2033.

74

The aggregate changes in the balance of our gross unrecognized tax benefits were as follows for the years ended
December 31:

In millions

Gross unrecognized tax benefits—January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increases related to tax positions from prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decreases related to tax positions from prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increases related to tax provisions taken during the current year . . . . . . . . . . . . . . . . . . . . . .
Settlements with tax authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lapses of statutes of limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2013

2012

2011

$256
33
(33)
40
(2)
(17)

$273
24
(16)
30
(35)
(20)

$303
24
(31)
23
(33)
(13)

Total gross unrecognized tax benefits—December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$277

$256

$273

Of the total amount of gross unrecognized tax benefits as of December 31, 2013, $155 million would affect
NCR’s effective tax rate if realized. The Company’s liability arising from uncertain tax positions is recorded in
income tax accruals and other current liabilities in the Consolidated Balance Sheets.

We recognized interest and penalties associated with uncertain tax positions as part of the provision for income
taxes in our Consolidated Statements of Operations of $8 million of expense, $4 million of expense, and $11
million of benefit for the years ended December 31, 2013, 2012, and 2011, respectively. The gross amount of
interest and penalties accrued as of December 31, 2013 and 2012 was $56 million and $51 million, respectively.

In the U.S., NCR files consolidated federal and state income tax returns where statutes of limitations generally
range from three to five years. U.S. federal tax years remain open to examination from 2009 forward. In 2011,
the IRS commenced an examination of our 2009 and 2010 income tax returns, which is ongoing. Years beginning
after 2000 are still open to examination by certain foreign taxing authorities, including several major taxing
jurisdictions. We are open to examination from 2001 onward in Korea and India and from 2002 onward in
Canada.

During 2014, the Company expects to resolve certain tax matters related to U.S. and foreign jurisdictions. As of
December 31, 2013, we estimate that it is reasonably possible that unrecognized tax benefits may decrease by
$20 million to $25 million in the next 12 months due to the resolution of these issues.

NCR did not provide for U.S. federal income taxes or foreign withholding taxes in 2013 on approximately $1.9
billion of undistributed earnings of its foreign subsidiaries as such earnings are intended to be reinvested
indefinitely. Due to the complexities in the tax laws, the assumptions that we would have to make and the
availability and calculation of associated foreign tax credits, it is not practicable to determine the amount of the
related unrecognized deferred income tax liability associated with these undistributed earnings.

See the Consolidated Statements of Comprehensive Income for details of the tax effects on the components of
other comprehensive income.

8. EMPLOYEE STOCK COMPENSATION PLANS

The Company recognizes all share-based payments, including grants of stock options, as compensation expense
in its financial statements based on their fair value.

75

As of December 31, 2013, the Company’s primary types of stock-based compensation were restricted stock and
stock options. The Company recorded stock-based compensation expense, the components of which are further
described below, for the years ended December 31 as follows:

In millions

Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total stock-based compensation (pre-tax)
. . . . . . . . . . . . . . . . . . . . .
Tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2013

$ 39
2

41
(13)

2012

$ 46
3

49
(14)

2011

$ 27
6

33
(10)

Total stock-based compensation (net of tax)

. . . . . . . . . . . . . . . . . . .

$ 28

$ 35

$ 23

Stock-based compensation expense for the years ended December 31, 2013, 2012 and 2011 was computed using
the fair value of options as calculated using the Black-Scholes option-pricing model. During the year ended
December 31, 2013, the Company did not grant any stock options. The weighted average fair value of options
granted was estimated based on the below weighted average assumptions and was $8.24 per share in 2012 and
$7.38 per share in 2011.

2012

2011

Dividend yield . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected volatility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected holding period (years) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0.78% 2.04%
40.1% 40.4%
5.0

5.1

—

Expected volatility incorporates a blend of both historical volatility of the Company’s stock over a period equal
to the expected term of the options and implied volatility from traded options on the Company’s stock, as
management believes this is more representative of prospective trends. The Company uses historical data to
estimate option exercise and employee terminations within the valuation model. The expected holding period
represents the period of time that options are expected to be outstanding. The risk-free interest rate for periods
within the contractual life of the option is based on the 5-year U.S. Treasury yield curve in effect at the time of
grant.

Approximately 19 million shares are authorized to be issued under the 2013 Stock Incentive Plan (formerly the
2011 Amended and Restated Stock Incentive Plan) (SIP). Details of the Company’s stock-based compensation
plans are discussed below.

Restricted Stock and Restricted Stock Units

The SIP provides for the issuance of restricted stock, as well as restricted stock units. These types of awards can
have either service-based or performance-based vesting with performance goals being established by the
Compensation and Human Resource Committee. Any grant of restricted stock or restricted stock units is subject
to a vesting period of at least three years, except that a one-year term of service may be required if vesting is
conditioned upon achievement of performance goals. Performance-based grants are subject to future performance
measurements, which include NCR’s achievement of specific return on capital and other financial metrics (as
defined in the SIP) during the performance period. Performance-based grants must be earned, based on
performance, before the actual number of shares to be awarded is known. The Company considers the likelihood
of meeting the performance criteria based upon management’s estimates and analysis of achievement against the
performance criteria. At the date of grant, a recipient of restricted stock has all the rights of a stockholder subject
to certain restrictions on transferability and a risk of forfeiture. A recipient of restricted stock units does not have
the rights of a stockholder and is subject to restrictions on transferability and risk of forfeiture. Other terms and
conditions applicable to any award of restricted stock or restricted stock units will be determined by the
Compensation and Human Resource Committee and set forth in the agreement relating to that award.

76

The following table reports restricted stock activity during the year ended December 31, 2013:

Shares in thousands

Number
of
Shares

Weighted Average
Grant-Date Fair Value
per Share

Unvested shares as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,720
2,286
(1,156)
(541)

Unvested shares as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,309

$19.02
$25.64
$15.56
$21.75

$22.30

The total fair value of shares vested and distributed was $33 million in 2013, $68 million in 2012, and $1 million
in 2011. As of December 31, 2013, there was $54 million of unrecognized compensation cost related to unvested
restricted stock grants. The unrecognized compensation cost is expected to be recognized over a remaining
weighted-average period of 1.4 years. The weighted average grant date fair value for restricted stock awards
granted in 2012 and 2011 was $19.59 and $18.84, respectively.

The following table represents the composition of restricted stock grants in 2013:

Shares in thousands

Number
of
Shares

Weighted
Average Grant-
Date
Fair Value

Service-based shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance-based shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

944
1,342

Total restricted stock grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,286

$27.72
$24.18

$25.64

The 2013 performance-based share grant activity above includes 0.9 million shares related to the 2013 to 2014
performance period. The remaining performance-based share grant activity in 2013 relates to the achievement of
performance goals in 2013 associated with performance-based shares granted in a prior period.

Stock Options

The SIP also provides for the grant of several different forms of stock-based compensation, including stock
options to purchase shares of NCR common stock. The Compensation and Human Resource Committee of the
Board of Directors has discretion to determine the material terms and conditions of option awards under the SIP,
provided that (i) the exercise price must be no less than the fair market value of NCR common stock (defined as
the closing price) on the date of grant, (ii) the term must be no longer than ten years, and (iii) in no event shall the
normal vesting schedule provide for vesting in less than one year. Other terms and conditions of an award of
stock options will be determined by the Compensation and Human Resource Committee of the Board of
Directors as set forth in the agreement relating to that award. The Compensation and Human Resource
Committee has authority to administer the SIP, except that the Committee on Directors and Governance will
administer the SIP with respect to non-employee members of the Board of Directors. New shares of the
Company’s common stock are issued as a result of stock option exercises.

77

The following table summarizes the Company’s stock option activity for the year ended December 31, 2013:

Shares in thousands

Shares Under
Option

Weighted
Average
Exercise Price
per Share

Weighted
Average
Remaining
Contractual
Term (in
years)

Aggregate
Intrinsic
Value
(in millions)

Outstanding as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Outstanding as of December 31 . . . . . . . . . . . . . . . . . . . . . .

Fully vested and expected to vest as of December 31 . . . . .

Exercisable as of December 31 . . . . . . . . . . . . . . . . . . . . . .

4,858
—
(2,870)
(50)

1,938

1,918

1,708

$17.49
$ —
$17.66
$13.86

$17.32

$17.36

$17.84

4.02

4.14

3.71

$32

$32

$27

The total intrinsic value of all options exercised was $37 million in 2013, $31 million in 2012, and $8 million in
2011. Cash received from option exercises under all share-based payment arrangements was $51 million in 2013,
$47 million in 2012, and $13 million in 2011. The tax benefit realized from these exercises was $12 million in
2013, $10 million in 2012, and $3 million in 2011.

Other Share-based Plans

The Employee Stock Purchase Plan (ESPP) enables eligible employees to purchase NCR’s common stock at a
discount to the average of the highest and lowest sale prices on the last trading day of each month. The ESPP
discount is 5% of the average market price. Accordingly, this plan is considered non-compensatory. Employees
may authorize payroll deductions of up to 10% of eligible compensation for common stock purchases.
Employees purchased approximately 0.2 million shares in 2013, 0.3 million shares in 2012, and 0.3 million
shares in 2011 for approximately $6 million in 2013, $6 million in 2012, and $5 million in 2011. A total of
4 million shares were originally authorized to be issued under the new ESPP and approximately 1.7 million
authorized shares remain unissued as of December 31, 2013.

9. EMPLOYEE BENEFIT PLANS

Pension, Postretirement and Postemployment Plans NCR sponsors defined benefit plans for many of its U.S.
and international employees. For salaried employees,
the defined benefit plans are based primarily upon
compensation and years of service. For certain hourly employees in the U.S., the benefits are based on a fixed
dollar amount per years of service. NCR’s U.S. pension plans ceased the accrual of additional benefits after
December 31, 2006 and are closed to new participants. Certain international plans are also closed to new
participants. NCR’s funding policy is to contribute annually not less than the minimum required by applicable
laws and regulations. Assets of NCR’s defined benefit plans are primarily invested in corporate and government
debt securities, insurance products, common and commingled trusts, publicly traded common stocks, real estate
investments, and cash or cash equivalents.

NCR recognizes the funded status of each applicable plan on the Consolidated Balance Sheets. Each overfunded
plan is recognized as an asset and each underfunded plan is recognized as a liability. For pension plans, changes
in the fair value of plan assets and net actuarial gains or losses are recognized upon remeasurement, which is at
least annually in the fourth quarter of each year. For postretirement and postemployment plans, changes to the
funded status are recognized as a component of other comprehensive loss in stockholders’ equity.

Prior to September 1998, substantially all U.S. employees who reached retirement age while working for NCR
were eligible to participate in a postretirement benefit plan. The plan provides medical care and life insurance
the plan was amended whereby
benefits to retirees and their eligible dependents. In September 1998,

78

U.S. participants who had not reached a certain age and years of service with NCR were no longer eligible for
such benefits. Non-U.S. employees are typically covered under government-sponsored programs, and NCR
generally does not provide postretirement benefits other than pensions to non-U.S. retirees. NCR generally funds
these benefits on a pay-as-you-go basis.

NCR offers various postemployment benefits to involuntarily terminated and certain inactive employees after
employment but before retirement. These benefits are paid in accordance with NCR’s established
postemployment benefit practices and policies. Postemployment benefits include mainly severance as well as
disability benefits, supplemental unemployment benefits, workers’ compensation benefits, and continuation of
healthcare benefits and life insurance coverage. NCR provides appropriate accruals for these postemployment
benefits. These postemployment benefits are funded on a pay-as-you-go basis.

Amounts to be Recognized

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net
periodic benefit cost (income) during 2014 are as follows:

In millions

U.S.
Pension
Benefits

International
Pension
Benefits

Total
Pension
Benefits

Postretirement
Benefits

Postemployment
Benefits

Prior service cost (income)
. . . . . . . . . . . . . . . . .
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$—
$—

2

$
$—

2

$
$—

$(18)
$ 2

$ (4)
$—

Pension Plans

Reconciliation of the beginning and ending balances of the benefit obligations for NCR’s pension plans are as
follows:

In millions

U.S. Pension
Benefits

International
Pension Benefits

Total Pension
Benefits

2013

2012

2013

2012

2013

2012

Change in benefit obligation
Benefit obligation as of January 1 . . . . . . . . . . . . . . . . . . .
Net service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan participant contributions . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement
Special termination benefit cost
. . . . . . . . . . . . . . . . . . . .
Acquired pension obligation . . . . . . . . . . . . . . . . . . . . . . .
Currency translation adjustments . . . . . . . . . . . . . . . . . . .

$3,462
—
124
—
(271)
(410)
—
—
26
—
—

$4,084
—
159
—
(94)
(687)
—
—
—
—
—

$2,249
14
79
4
(45)
(113)
3

—
—

4
19

$5,711
14
203
4
(316)
(523)
3

$2,073
14
83
9
112
(111)
3
(2) —
26
4
19

—
—
68

$6,157
14
242
9
18
(798)
3
(2)

—
—
68

Benefit obligation as of December 31 . . . . . . . . . . . . . . . .

$2,931

$3,462

$2,214

$2,249

$5,145

$5,711

Accumulated benefit obligation as of December 31 . . . . .

$2,931

$3,462

$2,180

$2,166

$5,111

$5,628

79

A reconciliation of the beginning and ending balances of the fair value of the plan assets of NCR’s pension plans
are as follows:

In millions

Change in plan assets
Fair value of plan assets as of January 1 . . . . . . . . . . . . . .
Actual return on plan assets . . . . . . . . . . . . . . . . . . . . . . .
Company contributions . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency translation adjustments . . . . . . . . . . . . . . . . . . .
Plan participant contributions . . . . . . . . . . . . . . . . . . . . . .

U.S. Pension
Benefits

2013

2012

International
Pension Benefits
2012
2013

Total Pension
Benefits

2013

2012

$3,022
(116)
187
(410)
—
—
—

$2,733
325
651
(687)
—
—
—

$2,228
129
96
(113)
—
30
3

$1,981
181
101
(111)

$5,250
13
283
(523)

(2) —
30
75
3
3

$4,714
506
752
(798)
(2)
75
3

Fair value of plan assets as of December 31 . . . . . . . . . . .

$2,683

$3,022

$2,373

$2,228

$5,056

$5,250

The following table presents the funded status and the reconciliation of the funded status to amounts recognized
in the Consolidated Balance Sheets and in accumulated other comprehensive loss as of December 31:

In millions

U.S. Pension
Benefits

International
Pension Benefits

Total Pension
Benefits

2013

2012

2013

2012

2013

2012

Funded Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(248) $(440) $ 159

$ (21) $ (89) $(461)

Amounts recognized in the Consolidated Balance Sheets
Noncurrent assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ — $ — $ 478
(18)
(301)

(17)
(231)

(9)
(431)

$ 368
(15)
(374)

$ 478
(35)
(532)

$ 368
(24)
(805)

Net amounts recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(248) $(440) $ 159

$ (21) $ (89) $(461)

Amounts recognized in accumulated other comprehensive

loss

Prior service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

—

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ — $ — $

2

2

$

5

5

$

2

2

$

5

5

For pension plans with accumulated benefit obligations in excess of plan assets, the projected benefit obligation,
accumulated benefit obligation and fair value of assets were $3,319 million, $3,311 million, and $2,582 million,
respectively, as of December 31, 2013, and $4,271 million, $4,243 million and $3,457 million, respectively, as of
December 31, 2012.

The net periodic benefit (income) cost of the pension plans for the years ended December 31 was as follows:

In millions

2013

2012

2011

2013

2012

2011

2013

2012

2011

U.S. Pension Benefits

International Pension Benefits Total Pension Benefits

. . . . . . . . . . . . . . . . . .
Net service cost
Interest cost
. . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . .
Amortization of prior service cost
Special termination benefit cost . . . . . .
Actuarial (gain) loss . . . . . . . . . . . . . . .

$ — $ — $ — $ 14
79
(99)
6
—
(76)

124
159
(109)
(127)
—
—
26 —
(43)

182
(175)
—
—
450

(293)

$ 14
83
(98)
7
—

31

$ 15
90
(106)
6
—
120

$ 14
$ 14
203
242
(208)
(225)
6
7
26 —

(119)

(262)

$ 15
272
(281)
6
—
570

Net periodic benefit (income) cost

. . . $

(2) $(261) $ 457

$ (76) $ 37

$ 125

$ (78) $(224) $ 582

80

During 2013, a select group of U.S. employees were offered the option to participate in a voluntary early
retirement opportunity, which included incremental benefits for each employee who elected to participate,
resulting in recognition of special termination benefit costs totaling $26 million. Additionally, during the year
ended December 31, 2013, an actuarial gain of $15 million was recognized associated with the termination of
NCR’s U.S. non-qualified pension plans.

In the third quarter of 2012, the Company offered a voluntary lump sum payment option to certain former
employees who were deferred vested participants of the Company’s U.S. pension plan who had not yet started
monthly payments of their pension benefit. The voluntary lump sum payment offer was completed during the
fourth quarter of 2012, which resulted in an actuarial gain from the remeasurement of the plan.

The weighted average rates and assumptions used to determine benefit obligations as of December 31 were as
follows:

U.S. Pension
Benefits

International
Pension Benefits

Total
Pension Benefits

2013

2012

2013

2012

2013

2012

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A N/A

4.6% 3.8% 3.8% 3.7% 4.3% 3.7%
2.7% 2.5% 2.7% 2.5%

The weighted average rates and assumptions used to determine net periodic benefit cost for the years ended
December 31 were as follows:

U.S. Pension Benefits

International Pension Benefits Total Pension Benefits

2013

2012

2011

2013

2012

2011

2013

2012

2011

Discount rate . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . .
Rate of compensation increase . . . . . . . . . . N/A N/A N/A

3.8% 4.0% 5.3% 3.7% 4.1%
3.8% 4.8% 6.8% 4.6% 4.8%
2.5% 3.0%

4.6% 3.7% 4.0% 5.0%
5.5% 4.1% 4.8% 6.3%
3.5% 2.5% 3.0% 3.5%

The discount rate used to determine December 31, 2013 U.S. benefit obligations was derived by matching the
plans’ expected future cash flows to the corresponding yields from the Aon Hewitt AA Bond Universe Curve.
This yield curve has been constructed to represent the available yields on high-quality, fixed-income investments
across a broad range of future maturities. International discount rates were determined by examining interest rate
levels and trends within each country, particularly yields on high-quality, long-term corporate bonds, relative to
our future expected cash flows.

NCR employs a building block approach as its primary approach in determining the long-term expected rate of
return assumptions for plan assets. Historical market returns are studied and long-term relationships between
equities and fixed income are preserved consistent with the widely accepted capital market principle that assets
with higher volatilities generate higher returns over the long run. Current market factors, such as inflation and
interest rates are evaluated before long-term capital market assumptions are determined. The expected long-term
portfolio return is established for each plan via a building block approach with proper rebalancing consideration.
The result is then adjusted to reflect additional expected return from active management net of plan expenses.
Historical plan returns, the expectations of other capital market participants, and peer data are all used to review
and assess the results for reasonableness and appropriateness.

81

Plan Assets The weighted average asset allocations as of December 31, 2013 and 2012 by asset category are as
follows:

U.S. Pension Fund

International Pension Fund

Actual Allocation of
Plan Assets as of
December 31

2013

2012

Target
Asset
Allocation

Actual Allocation of
Plan Assets as of
December 31

2013

2012

Target
Asset
Allocation

Equity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . — % — %
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

0-2%
97% 97% 96-100%
1%
0-2%
1%
2%
0-2%
2%

11% 24%
6-14%
76% 65% 71-82%
6%
3-7%
6%
7%
4-11%
5%

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100% 100%

100% 100%

The fair value of plan assets as of December 31, 2013 and 2012 by asset category is as follows:

U.S.

International

Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)

Fair
Value as of
December 31,
2013

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Fair Value
as of
December 31,
2013

Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

$ —

$—

$ —

$—

$

65

$ 65

$ —

$—

260
1,091

24

—

1,035

44

—

35

48
146
—
—

—
—

—

—

—

—

—

—

—
146
—
—

260
1,091

24

—

1,035

44

—

—

—
—
—
—

—
—

—

—

—

—

—

35

48
—
—
—

209
110

57

155

153

—

158

—

49
—
1,283
134

—
—

—

—

—

—

—

—

—
—
—
—

205
110

57

155

153

—

158

—

—
—
1,283
—

4

—

—

—

—

—

—

—

49
—
—
134

In millions

Notes

Assets
Equity securities:
Common stock . . . . . . . .
Fixed income securities:
Government securities . .
Corporate debt
. . . . . . . .
Other types of
investments:

Money market funds . . . .
Common and

commingled trusts—
Equities . . . . . . . . . . . .

Common and

commingled trusts—
Bonds . . . . . . . . . . . . .

Common and

commingled trusts—
Short Term
Investments . . . . . . . . .

Common and

commingled trusts—
Balanced . . . . . . . . . . .
Partnership/joint venture

interests—Real
estate . . . . . . . . . . . . . .
Partnership/joint venture
interests—Other . . . . .
Mutual funds . . . . . . . . .
Insurance products . . . . .
. . .
Real estate and other

1

2
3

4

4

4

4

4

5

5
4
4
5

Total . . . . . . . . . . . .

$2,683

$146

$2,454

$ 83

$2,373

$ 65

$2,121

$187

82

U.S.

International

Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)

Fair
Value as of
December 31,
2012

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Fair Value
as of
December 31,
2012

Quoted
Prices in
Active
Markets
for
Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

$

2

$ 1

$ —

$

1

$ 170

$170

$ —

$—

228
1,221

33

—

1,191

49

1

40

22
206
28
1

—
—

—

—

—

—

—

—

—
206
—
—

228
1,221

33

—

1,191

49

1

—

—
—

28
1

—
—

—

—

—

—

—

40

22

—
—
—

114
199

46

246

907

—

36

—

62
261
56
131

—
—

—

105

—

—

—

—

—
261
—
—

114
199

46

141

907

—

36

—

—
—

56

—

—
—

—

—

—

—

—

—

62

—
—
131

In millions

Notes

Assets
Equity securities:
Common stock . . . . . . . . .
Fixed income securities:
Government securities . . .
Corporate debt
. . . . . . . . .
Other types of investments:
Money market funds . . . . .
Common and commingled
trusts—Equities . . . . . . .
Common and commingled
trusts—Bonds . . . . . . . .
Common and commingled
trusts—Short Term
Investments . . . . . . . . . .
Common and commingled
trusts—Balanced . . . . . .

Partnership/joint venture

interests—Real estate . .

Partnership/joint venture

interests—Other . . . . . .
Mutual funds . . . . . . . . . . .
Insurance products . . . . . .
Real estate and other . . . . .

1

2
3

4

4

4

4

4

5

5
4
4
5

Total . . . . . . . . . . . . .

$3,022

$207

$2,752

$ 63

$2,228

$536

$1,499

$193

Notes:

1. Common stocks are valued based on quoted market prices at the closing price as reported on the active

market on which the individual securities are traded.

2. Government securities are valued based on yields currently available on comparable securities of issuers
with similar credit ratings. When quoted prices are not available for identical or similar securities, the
security is valued under a discounted cash flows approach that maximizes observable inputs, such as current
yields on similar instruments but includes adjustments for certain risks that may not be observable, such as
credit and liquidity risks.

4

3. Corporate debt is valued primarily based on observable market quotations for similar bonds at the closing
price reported on the active market on which the individual securities are traded. When such quoted prices
are not available, the bonds are valued using a discounted cash flows approach using current yields on
similar instruments of issuers with similar credit ratings.
Common/collective trusts and registered investment companies (RICs) such as mutual funds are valued
using a Net Asset Value (NAV) provided by the manager of each fund. The NAV is based on the underlying
net assets owned by the fund, divided by the number of shares or units outstanding. The fair value of the
underlying securities within the fund, which are generally traded on an active market, are valued at the
closing price reported on the active market on which those individual securities are traded. For investments
not traded on an active market, or for which a quoted price is not publicly available, a variety of
unobservable valuation methodologies, including discounted cash flow, market multiple and cost valuation
approaches, are employed by the fund manager or independent third party to value investments.
Partnership/joint ventures and hedge funds are valued based on the fair value of the underlying securities
within the fund, which include investments both traded on an active market and not traded on an active
market. For those investments that are traded on an active market, the values are based on the closing price
reported on the active market on which those individual securities are traded and in the case of hedge funds
they are valued using a Net Asset Value (NAV) provided by the manager of each fund. For investments not

5.

83

traded on an active market, or for which a quoted price is not publicly available, a variety of unobservable
valuation methodologies, including discounted cash flow, market multiples and cost valuation approaches,
are employed by the fund manager to value investments.

The following table presents the reconciliation of the beginning and ending balances of those plan assets
classified within Level 3 of the valuation hierarchy. When the determination is made to classify the plan assets
within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair
value measurement.

In millions

U.S. Pension Plans

International
Pension Plans

Balance, December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized and unrealized gains and losses, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases, sales and settlements, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance, December 31, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Realized and unrealized gains and losses, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases, sales and settlements, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance, December 31, 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 96
4
(37)
—

$ 63
8
(16)
28

$ 83

$187
17
(11)
—

$193
19
(29)
4

$187

Investment Strategy NCR has historically employed a total return investment approach, whereby a mix of
fixed-income, equities and real estate investments are used to maximize the long-term return of plan assets
subject to a prudent level of risk. The risk tolerance is established for each plan through a careful consideration of
plan liabilities, plan funded status and corporate financial condition. During the first quarter of 2010, the
Company completed a comprehensive analysis of its capital allocation strategy, with specific focus on its
approach to pension management. As a result of this analysis, the Company implemented a plan to reduce future
volatility in the value of assets held by the U.S. pension plan by rebalancing the asset allocation to a portfolio of
entirely fixed income assets by the end of 2012. At the end of 2012, the Company had reallocated approximately
100% of pension assets to fixed income assets compared to 80% at the end of 2011. Similar investment strategy
changes are under consideration or being implemented in a number of NCR’s international plans.

The investment portfolios contain primarily fixed-income investments,which are diversified across U.S. and non-
U.S. issuers, type of fixed-income security (i.e., government bonds, corporate bonds, mortgage-backed securities)
and credit quality. The investment portfolios also contain a blend of equity investments, which are diversified
across U.S. and non-U.S. stocks, small and large capitalization stocks, and growth and value stocks, primarily of
non-U.S. issuers. Where applicable, real estate investments are made through real estate securities, partnership
interests or direct investment and are diversified by property type and location. Other assets, such as cash or
private equity are used judiciously to improve portfolio diversification and enhance risk-adjusted portfolio
returns. Derivatives may be used to adjust market exposures in an efficient and timely manner. Due to the timing
of security purchases and sales, cash held by fund managers is classified in the same asset category as the related
investment. Rebalancing algorithms are applied to keep the asset mix of the plans from deviating excessively
from their targets. Investment risk is measured and monitored on an ongoing basis through regular performance
reporting,
liability measurements and periodic investment strategy
reviews.

investment manager reviews, actuarial

From time to time, the Company may invest in insurance contracts, known as buy-in contracts, as a step towards
transferring the plan’s liabilities to a third party. In November 2013, the trustees of the NCR Pension Plan (UK)
entered into an agreement with Pension Insurance Corporation (PIC) to purchase, as a plan asset, an insurance
policy with PIC to facilitate the wind-up and buy-out of the pension plan. NCR Limited, a UK subsidiary of the
Company, is the principal employer of the pension plan which has approximately 5,400 participants and
approximately $750 million in pension plan obligations.

84

Postretirement Plans

Reconciliation of the beginning and ending balances of the benefit obligation for NCR’s U.S. postretirement plan
is as follows:

In millions

Postretirement
Benefits

2013

2012

$ 35
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

Change in benefit obligation
Benefit obligation as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross service cost
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
Actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan participant contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(5)
2
(6)

1

$ 44
—

1
(4)
(1)
3
(8)

Benefit obligation as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 27

$ 35

The following table presents the funded status and the reconciliation of the funded status to amounts recognized
in the Consolidated Balance Sheets and in accumulated other comprehensive loss as of December 31:

In millions

Postretirement
Benefits

2013

2012

Benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(27) $(35)

Amounts recognized in the Consolidated Balance Sheets
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (4) $ (5)
(23)
(30)

Net amounts recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(27) $(35)

Amounts recognized in accumulated other comprehensive loss
Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service benefit

$ 20 $ 29
(69)
(88)

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(49) $(59)

The net periodic benefit (income) cost of the postretirement plan for the years ended December 31 was:

In millions

Postretirement
Benefits

2013

2012

2011

Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
Amortization of:

$

1

$

1

$

2

—

—

Prior service benefit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(18)
2

(18)
3

(18)
3

Net periodic benefit (income) cost

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (15) $ (14) $ (13)

The assumptions utilized in accounting for postretirement benefit obligations as of December 31 and for
postretirement benefit income for the years ended December 31 were:

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.4% 2.6% 2.6% 3.3% 4.3%

85

Postretirement
Benefit
Obligations

Postretirement Benefit
Costs

2013

2012

2013

2012

2011

Assumed healthcare cost trend rates as of December 31 were:

Healthcare cost trend rate assumed for next year . . . . . .
Rate to which the cost trend rate is assumed to decline

(the ultimate trend rate) . . . . . . . . . . . . . . . . . . . . . . . .
Year that the rate reaches the ultimate rate . . . . . . . . . . .

2013

2012

Pre-65
Coverage

Post-65
Coverage

Pre-65
Coverage

Post-65
Coverage

7.0%

6.0%

8.0%

6.5%

5.0%

2024

5.0%

2024

5.0%

2018

5.0%

2018

In addition, a one percentage point change in assumed healthcare cost trend rates would have had an immaterial
impact on the postretirement benefit income and obligation.

Postemployment Benefits

Reconciliation of the beginning and ending balances of the benefit obligation for NCR’s postemployment plan
was:

In millions

Change in benefit obligation
Benefit obligation as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring program cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service cost
Interest cost
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Curtailment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial (gain) loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Benefit obligation as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Postemployment
Benefits

2013

2012

$ 258
—
24
6
1
(35)
(51)
(6)
(21)

$ 176

$264
(1)
24
9
(3)
(37)
—

1
1

$258

The following tables present the funded status and the reconciliation of the unfunded status to amounts
recognized in the Consolidated Balance Sheets and in accumulated other comprehensive loss at December 31:

In millions

Postemployment Benefits

2013

2012

Benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$(176)

$(258)

Amounts recognized in the Consolidated Balance Sheets
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net amounts recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Amounts recognized in accumulated other comprehensive loss
Net actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service benefit

Total

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (30)
(146)

$(176)

$

5
(18)

$ (13)

$ (42)
(216)

$(258)

$ 87
(36)

$ 51

86

The net periodic benefit cost of the postemployment plan for the years ended December 31 was:

In millions

Postemployment Benefits

2013

2012

2011

Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost

$ 24
6

$ 24
9

$ 25
10

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of:
Prior service benefit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Curtailment gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring severance cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)
5

(6)
11
(13) —

$ 18
—

$ 18

$ 38
(1)

$ 37

(9)
14
—

$ 40
6

$ 46

During the first quarter of 2013, NCR amended its U.S. separation plan to eliminate the accumulation of
postemployment benefits, resulting in a curtailment benefit of $13 million.

During 2011, NCR recorded approximately $6 million of severance costs related to the acquisition of Radiant.
Additionally, during 2011, NCR announced a change in the long term disability benefits provided to former
employees, effective July 1, 2011. This action reduced the actuarial liability associated with this benefit by
approximately $6 million in 2011.

The weighted average assumptions utilized in accounting for postemployment benefit obligations as of
December 31 and for postemployment benefit costs for the years ended December 31 were:

Postemployment Benefit
Obligations

Postemployment Benefit Costs

2013

2012

2013

2012

2011

Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salary increase rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Involuntary turnover rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.2%
2.8%
4.8%

2.9%
2.6%
5.5%

2.9% 3.5%
2.6% 3.2%
5.5% 5.5%

3.9%
3.4%
5.5%

Cash Flows Related to Employee Benefit Plans

Cash Contributions NCR does not plan to contribute to the U.S. qualified pension plan in 2014, and plans to
contribute approximately $70 million to the international pension plans and a one-time contribution of $18
million to the executive pension plan to settle the remaining obligation related to the plan termination in 2014.
The Company also plans to make contributions of $4 million to the U.S. postretirement plan and $30 million to
the postemployment plan in 2014.

Estimated Future Benefit Payments NCR expects to make the following benefit payments reflecting past and
future service from its pension, postretirement and postemployment plans:

In millions

Year
2014 . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . .
2017 . . . . . . . . . . . . . . . . . . . . . . . . . .
2018 . . . . . . . . . . . . . . . . . . . . . . . . . .
2019—2023 . . . . . . . . . . . . . . . . . . . .

U.S. Pension
Benefits

International
Pension Benefits

Total Pension
Benefits

Postretirement
Benefits

Postemployment
Benefits

$ 339
$ 314
$ 315
$ 311
$ 310
$1,531

$4
$4
$3
$3
$2
$7

$30
$27
$25
$24
$22
$91

$233
$212
$209
$207
$206
$997

$106
$102
$106
$104
$104
$534

87

Savings Plans U.S. employees and many international employees participate in defined contribution savings
plans. These plans generally provide either a specified percent of pay or a matching contribution on participating
employees’ voluntary elections. NCR’s matching contributions typically are subject to a maximum percentage or
level of compensation. Employee contributions can be made pre-tax, after-tax or a combination thereof. The
expense under the U.S. plan was approximately $12 million in 2013, $10 million in 2012, and $8 million in 2011.
The expense under international and subsidiary savings plans was $22 million in 2013, $17 million in 2012, and
$16 million in 2011.

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, 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. NCR believes the amounts provided in its
Consolidated Financial Statements, as prescribed by GAAP, are currently adequate in light of the probable and
estimable liabilities with respect to such matters, but there can be no assurances that the amounts required to
satisfy alleged liabilities from such matters will not impact future operating results. Other than as stated below,
the Company does not currently expect to incur material capital expenditures related to such matters. However,
there can be no assurances that the actual amounts required to satisfy alleged liabilities from various lawsuits,
claims, legal proceedings and other matters, including, but not limited to the Fox River and Kalamazoo River
environmental matters and other matters discussed below, and to comply with applicable laws and regulations,
will not exceed the amounts reflected in NCR’s 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. Any costs that may be incurred in excess of those amounts provided as of December 31,
2013 cannot currently be reasonably determined, or are not currently considered probable.

In 2012, NCR received anonymous allegations from a purported whistleblower regarding certain aspects of the
Company’s business practices in China, the Middle East and Africa. The principal allegations received in 2012
relate to the Company’s compliance with the Foreign Corrupt Practices Act (FCPA) and federal regulations that
prohibit U.S. persons from engaging in certain activities in Syria. NCR promptly retained experienced outside
counsel and began an internal investigation of those allegations that was completed in January 2013. On August 31,
2012, the Board of Directors received a demand letter from an individual shareholder demanding that the Board
investigate and take action in connection with certain of the whistleblower allegations. The Board formed a Special
Committee to investigate those matters, and that Special Committee also separately retained experienced outside
counsel, and completed an investigation in January 2013. On January 23, 2013, upon the recommendation of the
Special Committee following its review, the Board of Directors adopted a resolution rejecting the shareholder
demand. As part of its resolution, the Board determined, among other things, that the officers and directors named in
the demand had not breached their fiduciary duties and that the Company will not commence litigation against the
named officers and directors. The Board further resolved to review measures proposed and implemented by
management to strengthen the Company’s compliance with trade embargos, export control laws and anti-bribery
laws. In March 2013, the shareholder who sent the demand filed a derivative action in a Georgia state court, naming
as defendants three Company officers, five members of the Board of Directors, and the Company as a nominal
defendant. The Company and the officers and directors removed the case to federal court in Georgia. In July 2013,
the Board of Directors received a demand letter from another shareholder with respect to allegations similar to those
contained in the prior demand letter. In September 2013, the Board of Directors rejected the demand contained in
that letter. In the quarter ended December 31, 2013, the individual defendants in the Georgia suit, and the Company
as nominal defendant, entered into a memorandum of understanding with respect to a potential settlement of
plaintiff’s claims. See Note 18, “Subsequent Events” for additional information.

88

With respect to Syria, in 2012 NCR voluntarily notified the U.S. Treasury Department, Office of Foreign Assets
Control (OFAC) of potential violations and ceased operations in Syria, which were commercially insignificant.
The notification related to confusion stemming from the Company’s failure to register in Syria the transfer of the
Company’s Syrian branch to a foreign subsidiary and to deregister the Company’s legacy Syrian branch, which
was a branch of NCR Corporation. The Company has applied for and received from OFAC various licenses that
have permitted the Company to take measures required to wind down its past operations in Syria. The Company
also submitted a detailed report to OFAC regarding this matter, including a description of the Company’s
comprehensive export control program and related remedial measures.

With respect to the FCPA, the Company made a presentation to the staff of the Securities and Exchange
Commission (SEC) and the U.S. Department of Justice (DOJ) providing the facts known to the Company related
to the whistleblower’s FCPA allegations, and advising the government that many of these allegations were
unsubstantiated. The Company is responding to subpoenas of the SEC and requests of the DOJ for documents
and information related to the FCPA, including matters related to the whistleblower’s FCPA allegations. The
Company’s investigations of the whistleblower’s FCPA allegations identified a few opportunities to strengthen
the Company’s comprehensive FCPA compliance program, and remediation measures are being implemented.

The Company is fully cooperating with the authorities with respect to all of these matters. There can be no
assurance that the Company will not be subject to fines or other remedial measures as a result of OFAC’s, the
SEC’s or the DOJ’s investigations.

In relation to a patent infringement case filed by a company known as Automated Transactions LLC (ATL), the
Company agreed to defend and indemnify its customers, 7-Eleven and Cardtronics. On behalf of those
customers, the Company won summary judgment in the case in March 2011. ATL’s appeal of that ruling was
decided in favor of 7-Eleven and Cardtronics in 2012, and its petition for review by the United States Supreme
Court was denied in January 2013. (There are further proceedings to occur in the trial court on the indemnified
companies’ counterclaims against ATL, such that the case is not fully resolved, although ATL’s claims of
infringement in that case have now been fully adjudicated.) ATL contends that Vcom terminals sold by the
Company to 7-Eleven (Cardtronics ultimately purchased the business from 7-Eleven) infringed certain ATL
patents that purport to relate to the combination of an ATM with an Internet kiosk, in which a retail transaction
can be realized over an Internet connection provided by the kiosk. Independent of the litigation, the U.S. Patent
and Trademark Office (USPTO) rejected the parent patent as invalid in view of certain prior art, although related
continuation patents were not reexamined by the USPTO. ATL filed a second suit against the same companies
with respect to a broader range of ATMs, based on the same patents plus additional more recently issued patents;
that suit has been consolidated with the first case. These cases are being defended vigorously by NCR, together
with 7-Eleven and Cardtronics.

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

Fox River NCR is one of eight entities that were formally notified by governmental and other entities, such as
local Native American tribes, that they are PRPs for environmental claims (under CERCLA and other statutes)
arising out of the presence of polychlorinated biphenyls (PCBs) in sediments in the lower Fox River and in the
Bay of Green Bay in Wisconsin. The other Fox River PRPs that received notices are Appleton Papers Inc. (API;
now known as Appvion, Inc.), P.H. Glatfelter Company, Georgia-Pacific Consumer Products LP (GP, successor
to Fort James Operating Company), WTM I Co. (formerly Wisconsin Tissue Mills, now owned by Canal
Corporation, formerly known as Chesapeake Corporation), CBC Corporation (formerly Riverside Paper

89

Corporation), U.S. Paper Mills Corp. (owned by Sonoco Products Company), and Menasha Corporation. 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.
Some parties contend that NCR is also responsible for PCB discharges from paper mills owned by other
companies because NCR carbonless copy paper “broke” was allegedly purchased by those other mills as a raw
material.

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

NCR and API, along with B.A.T Industries p.l.c. (BAT), share a portion of the cost of the Fox River clean-up and
natural resource damages (NRD) based upon a 1998 agreement (the Cost Sharing Agreement) and a 2005
arbitration award (subsequently confirmed as a judgment). The Cost Sharing Agreement and the arbitration
resolved disputes that arose out of agreements relating to the Company’s 1978 sale of its Fox River facilities to
API. The agreement and award result 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 non-NCR balance is
shared on a joint and several basis by API and BAT.

Various litigation proceedings concerning the Fox River are pending. In a contribution action filed in 2008
seeking to determine allocable responsibility of several companies and governmental entities, a federal court in
Wisconsin ruled that NCR and API did not have a right to obtain contribution from the other parties, but that
those parties could obtain contribution from NCR and API with respect to certain moneys they had spent.
Decisions in that action were issued in 2009, 2011, 2012 and 2013, with a final judgment entered in 2013. The
final judgment held the Company liable in the approximate amount of $76 million; the Company prevailed on
claims seeking to hold it liable under an “arranger” theory for the most upriver portion of the site, where claimed
damages were approximately $95 million. The Company has secured a bond to stay execution on the judgment
and has commenced an appeal from the aspects of the judgment that were not favorable to the Company. Other
companies are also appealing from the judgment, including from those aspects that are favorable to the
Company.

In August 2013, GP filed a breach of contract action against the Company in a Wisconsin state court, seeking
reimbursement of expenses incurred under Fox River-related agreements entered into by certain PRPs in the
1990s; the Wisconsin federal court had ruled the expenses could not be recovered in the context of the
contribution action. Any liability arising under those agreements would be subject to the cost-sharing obligations
described herein pertaining to API, BAT, AT&T and Alcatel-Lucent. The Company expects the outcome of the
appeal in the contribution litigation to control the result of this breach of contract action; the amount sought in
the action is encompassed in the Company’s Fox River reserve, described below.

In 2010, the Governments filed a lawsuit (the Government enforcement action) in Wisconsin federal court
against the companies named in the 2007 Order. After a 2012 trial, in May 2013 the court held, among other
things, that harm at the site is not divisible, and it entered a declaratory judgment against seven defendants
(including NCR), finding them jointly and severally liable to comply with the applicable provisions of the 2007
Order. The court also issued an injunction against four companies (including NCR), ordering them to comply
with the applicable provisions of the 2007 Order. Several parties, including NCR, have appealed from the
judgment.

In April 2012, the court ruled in the Government enforcement action that API did not have direct CERCLA
liability to the Governments, without disturbing API’s continuing obligation to pay under the Cost Sharing
Agreement, arbitration award and judgment. Following the court’s decision and API’s subsequent and disputed

90

withdrawal from the LLC, API has refused to pay for remediation costs and the Company has funded the cost of
remediation activity ordered by the court. NCR has sought payment from API under the Cost Sharing
Agreement, and NCR’s payment demands made upon API as of December 31, 2013 total to approximately $80
million. The Company believes that the court’s decision dismissing the Governments’ claims against API has no
effect on API’s independent contractual and judgment-based obligations to NCR. The Company and API are
engaged in arbitration proceedings over API’s failure to pay; API has counterclaimed against NCR. In
connection with the dispute, in public filings in November 2013 API states that the Wisconsin federal court’s
rulings “do not affect [API’s] rights or obligations to share defense and liability costs with NCR in accordance
with the terms of a 1998 agreement [the Cost Sharing Agreement] and a 2005 arbitration determination . . .”
Appleton also reports in the same filing that “[t]he current carrying amount of [API’s] liability under the
[a]rbitration is $60.8 million, which represents [API’s] best estimate of potential amounts to be paid.”

The extent of NCR’s potential Fox River liability remains subject to many uncertainties. NCR’s eventual
remediation liability, which is expected to be paid out over a period extending through approximately 2017,
followed by long-term monitoring, will depend on a number of factors. In general, the most significant factors
include: (1) the total clean-up costs, which are estimated at $825 million (there can be no assurances that this
estimate will not be significantly higher as work progresses); (2) total NRD for the site, which may range from
zero to $246 million (the government in one court filing in 2009 indicated claims could be as high as $382 million;
in a September 2011 ruling the Wisconsin federal court ruled that the defendants in the contribution litigation
could seek recovery against NCR for overpayments of NRD, although NRD recovery, if any, is a disputed issue
that is not expected to be determined before later in 2014 or 2015); (3) the share of future clean-up costs and NRD
that NCR will bear, which under the current rulings by the federal court is assumed to be the full extent of clean-
up activities other than for the most upriver portion of the site; (4) NCR’s transaction and litigation costs to defend
itself in this matter; and (5) the share of NCR’s payments that API or BAT will bear, which is established by the
Cost Sharing Agreement, arbitration award and judgment. With respect to the last point, as a result of certain
corporate transactions unrelated to NCR, API is itself indemnified by Windward Prospects Limited, which has
funded and managed much of API’s liability to date. NCR’s analysis of this factor assumes that API and
Windward Prospects are financially viable and pay their percentage share. This analysis also assumes that BAT
would be financially viable and willing to pay the joint and several obligation if API does not.

this time. There can be no assurance that

Calculation of the Company’s Fox River reserve is subject to several complexities, and it is possible there could
be additional changes to some elements of the reserve over upcoming periods, although the Company is unable to
predict or estimate such changes at
the clean-up and related
expenditures will not have a material effect on NCR’s capital expenditures, earnings, financial condition, cash
flows, or competitive position. As of December 31, 2013, the net reserve for the Fox River matter was
approximately $112 million, compared to $115 million as of December 31, 2012. The decrease in the net reserve
is due to payments for clean-up activities and litigation costs, offset by cash receipts from AT&T and Alcatel-
Lucent and changes in estimates and assumptions of the total costs. NCR contributes to the LLC in order to fund
remediation activities and generally, by contract, funds three months’ worth of remediation activities in advance.
As of December 31, 2013 and 2012, approximately zero and $3 million, respectively, remained from this funding
and was recorded in other current assets in the Consolidated Balance Sheets. NCR’s reserve for the Fox River
matter is reduced as the LLC makes payments to the remediation contractor and other vendors with respect to
remediation activities.

Under a 1996 agreement, AT&T and Alcatel-Lucent are responsible severally (not jointly) for indemnifying
NCR for certain portions of the amounts paid by NCR for the Fox River matter over a defined threshold and
subject to certain offsets. (The agreement governs certain aspects of AT&T Corp.‘s divestiture of NCR and of
what was then known as Lucent Technologies.) NCR’s estimate of what AT&T and Alcatel-Lucent will be
obligated to pay under the indemnity totaled approximately $51 million as of December 31, 2013 and $84 million
as of December 31, 2012, and is deducted in determining the net reserve discussed above.

In connection with the Fox River and other matters, through December 31, 2013, NCR has received a combined
total of approximately $173 million in settlements reached with its principal insurance carriers. Included in this
sum is approximately $9 million received in settlements, distributions and other transactions in the quarter ended

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December 31, 2013. Portions of most of these settlements 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.
Of the total amount collected to date, $9 million is subject to competing claims by API. As of December 31,
2013, NCR had reached settlement with all of the solvent insurance companies against which it had advanced
claims with respect to the Fox River, and no litigation against insurance carriers remains pending.

Kalamazoo River In November 2010, USEPA issued a “general notice letter” to NCR with respect to the Allied
Paper, Inc./Portage Creek/Kalamazoo River Superfund Site (Kalamazoo River site) in Michigan. 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, but indicated that “NCR may be liable under Section 107 of
CERCLA . as an arranger, who by contract or agreement, arranged for the disposal,
treatment and/or
transportation of hazardous substances at the Site.” USEPA stated that it “may issue special notice letters to
[NCR] and other PRPs for future RI/FS [remedial investigation / feasibility studies] and RD/RA [remedial design
/ remedial action] negotiations.”

In connection with the Kalamazoo River site, in December 2010 the Company, along with two other defendants,
was sued in federal court by three companies in a contribution and cost recovery action for alleged pollution. The
suit, pending in Michigan, asks that the Company pay a “fair portion” of these companies’ costs, which are
represented in the complaint as $79 million to date; various removal and remedial actions remain to be performed
at the Kalamazoo River site, the costs for which have not been determined. The suit alleges that the Company is
liable 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,” at
least as of March 1969. PCB-containing carbonless copy paper was produced from approximately 1954 to April
1971. The Court did not determine NCR’s share of the overall liability or how NCR’s liability relates to the
liability of other liable or potentially liable parties at the site. The amount of damages, if any, will be litigated in
a subsequent phase of the case, with trial scheduled to commence on July 28, 2015. If the Company is found
liable for money damages with respect to the Kalamazoo River site, it would have claims against API and BAT
under the Cost Sharing Agreement, arbitration award and judgment discussed above in connection with the Fox
River matter and against AT&T and Alcatel-Lucent.

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. 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
Consolidated Financial Statements are the estimated gross undiscounted amounts of such liabilities, without
deductions for insurance, third-party indemnity claims or recoveries from other PRPs, except as qualified in the
following sentences. Except for the sharing agreement with API described above with respect to a particular
insurance settlement, in those cases where insurance carriers or third-party indemnitors have agreed to pay any
amounts and management believes that collectibility of such amounts is probable, the amounts are recorded in
the Consolidated Financial Statements. For the Fox River site, as described above, assets relating to the AT&T
and Alcatel-Lucent indemnity and to the API/BAT joint and several obligation are recorded as payment is
supported by contractual agreements, public filings and/or payment history.

Guarantees and Product Warranties Guarantees associated with NCR’s business activities are reviewed for
appropriateness and impact to the Company’s financial statements. As of December 31, 2013 and 2012, NCR had
no material obligations related to such guarantees, and therefore its financial statements do not have any
associated liability balance.

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

The Company recorded the activity related to the warranty reserve for the years ended December 31 as follows:

In millions

Warranty reserve liability
Beginning balance as of January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accruals for warranties issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements (in cash or in kind) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2013

2012

2011

$ 26
39
(43)

$ 23
46
(43)

$ 24
42
(43)

Ending balance as of December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 22

$ 26

$ 23

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

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

Leases NCR conducts certain of its sales and manufacturing operations using leased facilities, and also operates
certain equipment and vehicles under leases, the initial lease terms of which vary in length. Many of the leases
contain renewal options and escalation clauses that are not material to the overall lease portfolio. Future
minimum lease payments under non-cancelable operating leases as of December 31, 2013, for the following
fiscal years were:

In millions

Minimum lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2014

$94

2015

$67

2016

$44

2017

$21

2018

$9

Total rental expense for operating leases was $118 million in 2013, $102 million in 2012, and $100 million in
2011.

11. DERIVATIVES AND HEDGING INSTRUMENTS

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

93

operations and revenues occur outside the United States (U.S.), and in currencies other than the U.S. Dollar, our
results can be significantly impacted, both positively and negatively, by changes in foreign currency exchange
rates.

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 Consolidated Balance Sheets.
The Company designates foreign exchange contracts as cash flow hedges of forecasted inter-company inventory
purchases when they are determined to be highly effective at inception.

Our risk management strategy includes hedging, on behalf of certain subsidiaries, a portion of our forecasted,
non-functional currency denominated cash flows for a period of up to 15 months. As a result, some of the impact
of currency fluctuations on non-functional currency denominated transactions (and hence on subsidiary operating
income, as stated in the functional currency), is mitigated in the near term. The amount we hedge and the
duration of hedge contracts may vary significantly. In the longer term (greater than 15 months), the subsidiaries
are still subject to the effect of translating the functional currency results to U.S. Dollars. To manage our
exposures and mitigate the impact of currency fluctuations on the operations of our foreign subsidiaries, we
hedge our main transactional exposures through the use of foreign exchange forward and option contracts. This is
primarily done through the hedging of foreign currency denominated inter-company inventory purchases by
NCR’s marketing units and the foreign currency denominated inputs to our manufacturing units. As these
transactions are firmly committed and forecasted, the related foreign exchange contracts are designated as highly
effective cash flow hedges. The gains or losses on these hedges are deferred in AOCI and reclassified to income
when the underlying hedged transaction has been completed and is recorded in earnings. As of December 31,
2013, the balance in AOCI related to foreign exchange derivative transactions was zero. The gains or losses from
derivative contracts related to inventory purchases are recorded in cost of products when the inventory is sold to
an unrelated third party.

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

Interest Rate Risk The Company is party to an interest rate swap agreement that fixes the interest rate on a
portion of the Company’s LIBOR indexed floating rate borrowings under its Senior Secured Credit Facility
through August 22, 2016. The notional amount of the interest rate swap as of December 31, 2013 was $518
million and amortizes to $341 million over the term. The Company designates the interest rate swap as a cash
flow hedge of forecasted quarterly interest payments made on three-month LIBOR indexed borrowings under the
Senior Secured Credit Facility. The interest rate swap was determined to be highly effective at inception.

Our risk management strategy includes hedging a portion of our forecasted interest payments. These transactions
are firmly committed and forecasted and the related interest rate swap agreement is designated as a highly
effective cash flow hedge. The gains or losses on this hedge are deferred in AOCI and reclassified to income
when the underlying hedged transaction has been completed and is recorded in earnings. As of December 31,
2013, the balance in AOCI related to the interest rate swap agreement was a loss of $5 million, net of tax. The
gains or losses from this derivative contract related to interest payments are recorded in interest expense when
the interest is accrued and affects earnings.

94

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

In millions

Derivatives designated as hedging instruments

Fair Values of Derivative Instruments

December 31, 2013

December 31, 2013

Balance Sheet
Location

Notional
Amount

Fair
Value

Balance Sheet
Location

Notional
Amount

Fair
Value

Interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . Other current

Other current
assets

$— $—

assets

103

Total derivatives designated as hedging

instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Derivatives not designated as hedging

instruments

Foreign exchange contracts . . . . . . . . . . . . . . . . . . Other current

assets

$162

Total derivatives not designated as hedging

instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total derivatives . . . . . . . . . . . . . . . . . . . . . . . . . .

1

1

1

1

2

$

$

$

$

Other current
liabilities and
other liabilities * $518
Other current
liabilities

—

Other current
liabilities

$158

$ 10

—

$ 10

$

$

1

1

$ 11

In millions

Derivatives designated as hedging instruments

Fair Values of Derivative Instruments

December 31, 2012

December 31, 2012

Balance Sheet
Location

Notional
Amount

Fair
Value

Balance Sheet
Location

Notional
Amount

Fair
Value

Interest rate swap . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . . . . Other current

Other current
assets

$— $—

assets

28 —

Other current
liabilities and
other liabilities* $560
Other current
liabilities

72

Total derivatives designated as hedging

instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Derivatives not designated as hedging instruments
Foreign exchange contracts . . . . . . . . . . . . . . . . . . Other current

assets

$169

Total derivatives not designated as hedging

instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . .

$—

$

$

$

1

1

1

Other current
liabilities

$245

$ 16

1

$ 17

$

$

3

3

$ 20

*

As of December 31, 2013, approximately $3 million was recorded in other current liabilities and $7 million
was recorded in other liabilities related to the interest rate swap. As of December 31, 2012, approximately
$5 million was recorded in other current liabilities and $11 million was recorded in other liabilities related
to the interest rate swap.

95

The effect of derivative instruments on the Consolidated Statement of Operations for the years ended
December 31 were as follows:

Amount of Gain (Loss)
Recognized in Other Comprehensive
Income (OCI) on
Derivative
(Effective Portion)

In millions

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

Amount of Gain (Loss)
Recognized in the
Consolidated
Statement of
Operations
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing)

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

Interest
expense

Cost of
Products

For the year
ended
December 31,
2013

For the year
ended
December 31,
2012

For the year
ended
December 31,
2011

$(7)

$ 1

$(5)

$ 4

$(1)

$(3)

Location of
Gain (Loss)
Recognized
in the
Consolidated
Statement of
Operations
(Ineffective
Portion and
Amount
Excluded
from
Effectiveness
Testing)

Interest
expense
Other
(expense)
income, net

For the year
ended
December 31,
2013

For the year
ended
December 31,
2012

For the year
ended
December 31,
2011

$—

$—

$—

$—

$—

$ 1

Derivatives in
Cash Flow
Hedging
Relationships

For the year
ended
December 31,
2013

For the year
ended
December 31,
2012

For the year
ended
December 31,
2011

Interest rate

swap . . . . . .

$—

$(12)

Foreign

exchange
contracts . . .

$ 2

$ (2)

$(9)

$(3)

In millions

Derivatives not
Designated as
Hedging Instruments

Foreign exchange

Amount of Gain (Loss) Recognized in the Consolidated
Statement of Operations

Location of Gain (Loss)
Recognized in the Consolidated
Statement of Operations

For the year ended
December 31, 2013

For the year ended
December 31, 2012

For the year ended
December 31, 2011

contracts . . . . . . . . . . . . Other (expense) income, net

$(19)

$(8)

$6

Refer to Note 12, “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
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
the Company could be exposed to
default on its obligations under applicable contractual arrangements,
potentially significant losses. However, management believes that the reserves for potential losses are adequate.
As of December 31, 2013 and 2012, NCR did not have any major concentration of credit risk related to financial
instruments.

96

12. 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 December 31, 2013 and 2012 are set forth as
follows:

Fair Value Measurements at Reporting Date Using
Significant
Quoted Prices
Other
in Active
Observable
Markets for
Inputs
Identical Assets
(Level 2)
(Level 1)

Significant
Unobservable
Inputs
(Level 3)

Fair Value as of
December 31, 2013

In millions

Assets:
Deposits held in money market mutual

funds* . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available for sale securities** . . . . . . . . . . . .
Foreign exchange contracts *** . . . . . . . . . . .

$

9
8
2

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 19

Liabilities:
Interest rate swap **** . . . . . . . . . . . . . . . . . .
Foreign exchange contracts**** . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 10
1

$ 11

In millions

Fair Value as of
December 31, 2012

Assets:
Deposits held in money market mutual

funds* . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Available for sale securities** . . . . . . . . . . . .
Foreign exchange contracts *** . . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Liabilities:
Interest rate swap **** . . . . . . . . . . . . . . . . . .
Foreign exchange contracts**** . . . . . . . . . .

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$527
11
1

$539

$ 16
4

$ 20

$

9
8

—

$ 17

$—
—

$—

$—
—

2

2

$

$ 10
1

$ 11

$—
—
—

$—

$—
—

$—

Fair Value Measurements at Reporting Date Using

Quoted Prices in
Active Markets
for Identical
Assets (Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

$527
11
—

$538

$—
—

$—

$—
—

1

1

$

$ 16
4

$ 20

$—
—
—

$—

$—
—

$—

Included in Cash and cash equivalents in the Consolidated Balance Sheets.
Included in Other assets in the Consolidated Balance Sheets.

*
**
*** Included in Other current assets in the Consolidated Balance Sheets.
****Included in Other current liabilities and Other liabilities in the 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 which 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.

Available-For-Sale Securities—The Company has investments in mutual funds and equity securities that are
valued using the market approach with quotations from the NASDAQ stock exchange and two stock exchanges
in Japan. As a result, available-for-sale securities are classified within Level 1 of the valuation hierarchy.

97

Interest rate swap—As a result of our Senior Secured Credit Facility, we are exposed to risk from changes in
LIBOR, which may adversely affect our financial condition. To manage our exposure and mitigate the impact of
changes in LIBOR on our financial results, we hedge a portion of our forecasted interest payments through the
use of an interest rate swap agreement. The interest rate swap is valued using the income approach inclusive of
nonperformance and counterparty risk considerations and is classified within Level 2 of the valuation hierarchy.

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

Assets Measured at Fair Value on a Non-recurring Basis

Certain assets have been measured at fair value on a nonrecurring basis using significant unobservable inputs
(Level 3). NCR measures certain assets, including intangible assets and cost and equity method investments, at
fair value on a non-recurring basis. These assets are recognized at fair value when initially valued and when
deemed to be impaired.

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. NCR carries
equity investments in privately-held companies at cost or at fair value when NCR recognizes an other-than-
temporary impairment charge. During 2012, we measured the fair value of an investment utilizing the income
approach based on the use of discounted cash flows. The discounted cash flows are based on unobservable
inputs, including assumptions of projected revenues, expenses, earnings, capital spending, as well as a discount
rate determined by management’s estimates of risk associated with the investment. As a result, the year ended
December 31, 2012, we recorded an other-than-temporary impairment charge of $7 million in Other (expense)
income, net in the Consolidated Statements of Operations based on Level 3 valuations.

13. SEGMENT INFORMATION AND CONCENTRATIONS

Operating Segment Information The Company manages and reports its businesses in the following four
segments:

• Financial Services—We offer solutions to enable customers in the financial services industry to
reduce costs, generate new revenue streams and enhance customer loyalty. These solutions include a
comprehensive line of ATM and payment processing hardware and software and cash management and
video banking software, and related installation, maintenance and managed and professional services.
We also offer a complete line of printer consumables.

• Retail Solutions—We offer solutions to customers in the retail industry designed to improve selling
productivity and checkout processes as well as increase service levels. These solutions primarily
include retail-oriented technologies, such as point of sale terminals and point of sale software, bar-code
scanners, as well as innovative self-service kiosks, such as self-checkout. We also offer installation,
maintenance, and managed and professional services and a complete line of printer consumables.

• Hospitality—We offer

technology solutions to customers in the hospitality industry, serving
businesses that range from a single store or restaurant to global chains and sports and entertainment
venues. Our solutions include point of sale hardware and software solutions, installation, maintenance,
and managed and professional services and a complete line of printer consumables.

• Emerging Industries—We offer maintenance as well as managed and professional services for third-
party computer hardware provided to select manufacturers, primarily in the telecommunications
industry, who value and leverage our global service capability. Also included in our Emerging
Industries segment are solutions designed to enhance the customer experience for the travel and
gaming industries, including self-service kiosks, as well as related installation, maintenance, and
managed and professional services.

98

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 segment operating income. Assets are not allocated to segments, and thus are not included in the assessment
of segment performance, and 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 consolidated financial statements as a whole. Intersegment sales and transfers are not material.

In recognition of the volatility of the effects of pension expense on our segment results, and to maintain operating
focus on business performance, pension expense, as well as other significant, non-recurring items, are excluded
from the segment operating results utilized by our chief operating decision maker in evaluating segment
performance and are separately delineated to reconcile to income from operations.

The following table presents revenue and operating income by segment for the years ended December 31:

In millions

Revenue by segment

2013

2012

2011

Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retail Solutions(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hospitality(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Emerging Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$3,115
2,034
626
348

$3,201
1,667
522
340

$2,999
1,778
141
373

Consolidated revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6,123

5,730

5,291

Operating income by segment

Financial Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retail Solutions(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hospitality(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Emerging Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Subtotal—segment operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pension (benefit) expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other adjustments(3)

356
205
100
56

717

(78)
129

327
102
85
75

589

(224)
65

313
71
22
77

483

582
49

Income (loss) from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 666

$ 748

$ (148)

(1) From the acquisition date of February 6, 2013 through December 31, 2013, Retalix contributed $298 million

in revenue and $53 million in segment operating income to the Retail Solutions segment.

(2) The acquisition of Radiant was completed on August 24, 2011. Because the transaction was completed
during 2011, the revenue and operating income results reflected for the Hospitality segment are partial, and
reflect only the period from August 25, 2011 through December 31, 2011.

(3) Other adjustments for the twelve months ended December 31, 2013 include $46 million of acquisition-
related costs, $65 million of acquisition-related amortization of intangible assets, $15 million of acquisition-
related purchase price adjustments, and $3 million of legal costs incurred related to the OFAC and FCPA
investigations. For the twelve months ended December 31, 2012, other adjustments include $23 million of
acquisition-related costs, $38 million of acquisition-related amortization of intangible assets and $4 million
of legal costs incurred related to the OFAC and FCPA investigations. For the twelve months ended
December 31, 2011, other adjustments include $37 million of acquisition-related costs and $12 million of
acquisition-related amortization of intangible assets.

99

The following table presents revenue from products and services for NCR for the years ended December 31:

In millions

Product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Professional and installation services revenue . . . . . . . . . . . . . . . . . . . . .

Total solution revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Support services revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2013

2012

2011

$2,912
1,259

4,171
1,952

$2,854
927

3,781
1,949

$2,592
764

3,356
1,935

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$6,123

$5,730

$5,291

Revenues are attributed to the geographic area/country to which the product is delivered or in which the service
is provided. The following table presents revenue by geographic area for NCR for the years ended December 31:

In millions

2013

%

2012

%

2011

%

Revenue by Geographic Area
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Americas (excluding United States) . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Middle East Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$2,383
647
1,492
1,601

39%$2,198
11% 625
24% 1,459
26% 1,448

38% $1,914
11% 534
26% 1,421
25% 1,422

36%
10%
27%
27%

Consolidated revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$6,123

100%$5,730

100% $5,291

100%

The following table presents property, plant and equipment by geographic area as of December 31:

In millions

Property, plant and equipment, net
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Americas (excluding United States) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Middle East Africa (excluding Japan)

Consolidated property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2013

2012

$153
22
56
41
80

$352

$147
23
42
51
45

$308

Concentrations No single customer accounts for more than 10% of NCR’s consolidated revenue. As of
December 31, 2013, NCR is not aware of any significant concentration of business transacted with a particular
customer that could, if suddenly eliminated, have a material adverse effect on NCR’s operations. NCR also lacks
a concentration of available sources of labor, services, licenses or other rights that could, if suddenly eliminated,
have a material adverse effect on its operations.

A number of NCR’s products, systems and solutions rely primarily on specific suppliers for microprocessors and
other component products, manufactured assemblies, operating systems, commercial software and other central
components. NCR also utilizes contract manufacturers in order to complete manufacturing activities. There can
be no assurances that any sudden impact to the availability or cost of these technologies or services would not
have a material adverse effect on NCR’s operations.

14. DISCONTINUED OPERATIONS

Income (loss) from discontinued operations, net of tax includes activity related to environmental matters, the
divestiture of our Entertainment business, the spin-off of Teradata Data Warehousing (Teradata), the closure of
NCR’s EFT payment processing business in Canada, and the divestiture of our healthcare solutions business.

100

The income (loss) from discontinued operations for the years ended December 31 was:

2013

2012

2011

Pre -Tax Net of Tax

Pre - Tax Net of Tax

Pre - Tax Net of Tax

Environmental matters . . . . . . . . . . . . . . . . . . . .
Divestiture of the Entertainment business . . . . .
Spin-off of Teradata . . . . . . . . . . . . . . . . . . . . . .
Closure of the EFT Canadian business . . . . . . . .
Divestiture of the Healthcare business . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (15)
—
—
—
—
$ (15)

$ (9)
—
—
—
—
$ (9)

$

3
(6)

—
—
—
$ (3)

$

2
(4)
8

—
—

$

6

$
3
(147)
—

(2)
(5)
$(151)

$ 2
(96)
6
(1)
(4)
$(93)

Environmental Matters For the year ended December 31, 2013, loss from discontinued operations primarily
includes changes in estimates related to the Fox River reserve in addition to accruals for litigation fees related to
the Kalamazoo River environmental matter, partially offset by recoveries from insurance carriers. For the year
ended December 31, 2012,
income from discontinued operations primarily includes previously agreed
settlements with insurance carriers related to the Fox River matter. For the year ended December 31, 2011, loss
from discontinued operations included an accrual for an environmental matter in Japan, which relates to
anticipated future disposal requirements of certain materials generated by a former NCR manufacturing facility
in that country, and accruals for litigation fees related to the Kalamazoo River environmental matter. These
accruals were offset by Fox River related activities which include scheduled payments from an insurer in
connection with a settlement that had been agreed to in prior years coupled with the favorable impact of changes
in estimates and assumptions of the total costs. Refer to Note 10, “Commitments and Contingencies” for
additional information regarding the Fox River environmental matter.

Divestiture of the Entertainment Business As described in Note 4, “Business Combinations and Divestitures” on
June 22, 2012, we sold certain assets of our Entertainment business. Beginning in the first quarter of 2012, we
accounted for the Entertainment business as a discontinued operation and as a result, for each period presented,
the results of operations and cash flows of the Entertainment business have been presented as a discontinued
operation. For the year ended December 31, 2012, income (loss) from discontinued operations included the
results of operations of the Entertainment business, as well as a $33 million, or $21 million net of tax, gain from
the divestiture of the business.

Spin-off of Teradata On September 30, 2007, NCR completed the spin-off of Teradata through the distribution
of a tax-free stock dividend to NCR stockholders. The results of operations and cash flows of Teradata have been
presented as a discontinued operation. There was no operating activity related to the spin-off of Teradata in 2013,
2012 and 2011. For the years ended December 31, 2012 and 2011, income from discontinued operations, net of
tax, related to favorable changes in uncertain tax benefits attributable to Teradata.

Closure of the Canadian EFTBusiness In the second quarter of 2011, we closed our EFT payment processing
business in Canada. For each of the years presented, we have included the results of operations of the EFT
business under loss from discontinued operations.

Divestiture of our Healthcare Solutions Business In December 2011, we sold our healthcare solutions business.
For each of the years presented, we have included the results of operations of the healthcare solutions business
under loss from discontinued operations.

101

15. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in Accumulated Other Comprehensive Income (Loss) (AOCI) by Component

In millions

Foreign
Currency
Translation
Adjustments

Employee
Benefit Plan
Adjustments

Changes in
Fair Value
of Effective
Cash Flow
Hedges

Changes in
Fair Value
of Available
for Sale
Securities

Balance at December 31, 2012 . . . . . . . . . . . . . . . . .
Other comprehensive (loss) income before

$ (6)

$(22)

$(10)

$

reclassifications . . . . . . . . . . . . . . . . . . . . . . . . . .

(46)

Amounts reclassified from accumulated other

comprehensive (loss) income . . . . . . . . . . . . . . . .

—

Net current period other comprehensive (loss)

income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 2013 . . . . . . . . . . . . . . . . .

(46)

$ (52)

50

(12)

38

$ 16

1

4

5

$ (5)

$

1

2

2

3

—

Total

$(37)

7

(8)

(1)

$(38)

Reclassifications Out of Accumulated Other Comprehensive Income (Loss)

The reclassifications from AOCI are summarized as follows:

In millions

For the year ended December 31, 2013

Employee benefit plans

Actuarial
losses
recognized

Amortization of
prior service
benefit

Effective Cash
Flow Hedges

Total

Affected line in Consolidated Statement of Operations:

Cost of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . .
Research and development expenses . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$—

5
2
1
—

Total before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

8

Tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total reclassifications, net of tax . . . . . . . . . . . . . . . . . .

$ (2)
(15)
(9)
(4)

—

$ (30)

$ (1)
—
—
—

7

6

$

$ (3)
(10)
(7)
(3)
7

$(16)

8

$ (8)

16. CONDENSED CONSOLIDATING SUPPLEMENTAL GUARANTOR INFORMATION

During 2012, the Company issued 5.00% senior unsecured notes due in 2022 (“5.00% Notes”) and 4.625% senior
unsecured notes due in 2021 (the “4.625% Notes”). During 2013, the Company, through its newly formed wholly
owned subsidiary, NCR Escrow Corp., issued 5.875% senior unsecured notes due in 2021 (“5.875% Notes”) and
6.375% senior unsecured notes due in 2023 (“6.375% Notes”). Each series of these senior unsecured notes is
guaranteed by the Company’s subsidiary, NCR International, Inc. (“Guarantor Subsidiary”), which is 100%
owned by the Company and has guaranteed fully and unconditionally, the obligations to pay principal and
interest for the senior unsecured notes. Effective December 31, 2013, Radiant Systems, Inc., formerly a
subsidiary guarantor of these senior unsecured notes, was merged with and into NCR Corporation. Therefore,
Radiant Systems, Inc. is included within Issuers in the accompanying Condensed Consolidating Financial
Statements. The Company has reclassified prior period amounts to conform to current period presentation. Refer
to Note 6, “Debt Obligations,” and Note 18, “Subsequent Events,” for additional disclosures.

Pursuant to the registration rights agreements entered into in connection with the offerings of the 5.00% and
4.625% Notes, the Company completed registered offers to exchange the 5.00% and 4.625% Notes on May 30,
2013.

102

In connection with the offerings of the 5.875% and 6.375% Notes, the Company and the Guarantor Subsidiary
and Radiant Systems Inc. entered into registration rights agreements with the initial purchasers of such Notes.
Each registration rights agreement requires the Company and the Guarantor Subsidiary, at their cost, to among
other things, use their commercially reasonable efforts to file a registration statement with respect to a registered
offer to exchange the senior unsecured notes subject to such registration rights agreement for new notes that are
guaranteed by the Guarantor Subsidiary with terms substantially identical in all material respects to the senior
unsecured notes subject to such registration statement.

In connection with the registration statements for the exchange offers of the 5.00% and 4.625% Notes and the
filing of the registration statements for the 5.875% and 6.375% Notes, the Company is required to comply with
Rule 3-10 of SEC Regulation S-X (Rule 3-10), and has therefore included the accompanying Condensed
Consolidating Financial Statements in accordance with Rule 3-10(f) of SEC Regulation S-X.

The following supplemental information sets forth, on a consolidating basis, the statements of operations and
comprehensive income (loss), the balance sheets and the statements of cash flows for the issuers of these senior
unsecured notes, for the Guarantor Subsidiary and for the Company and all of its consolidated subsidiaries
(amounts in millions):

Consolidating Statements of Operations and Comprehensive Income
For the year ended December 31, 2013

In millions

Issuers

Guarantor
Subsidiary

Non-Guarantor
Subsidiaries

Eliminations Consolidated

Product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,107
1,232
Service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,339

$ 85
24

109

Cost of products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . .
Research and development expenses . . . . . . . . . . . . . .

844
880
467
94 —

17
9
5

Total operating expenses . . . . . . . . . . . . . . . . . . . . . .

2,285

Income (loss) from operations . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (expense) income, net . . . . . . . . . . . . . . . . . . . . .

54
(104)
(12)

Income (loss) from continuing operations before

income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . .

Income (loss) from continuing operations before

earnings in subsidiaries . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of consolidated subsidiaries . . . . . .

Income (loss) from continuing operations . . . . . . . . . .
Income (loss) from discontinued operations, net of

(62)
(23)

(39)
491

452

31

78
2
(8)

72
25

47
409

456

tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(9) —

$1,977
1,955

3,932

1,548
1,342
399
109

3,398

534
(6)
16

544
96

448
—

448

—

$(257)
—

$2,912
3,211

(257)

(257)
—
—
—

(257)

—

5
(5)

—
—

—
(900)

(900)

—

6,123

2,152
2,231
871
203

5,457

666
(103)
(9)

554
98

456
—

456

(9)

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 443
Net (loss) income attributable to noncontrolling

$456

$ 448

$(900)

$ 447

interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —

—

4

—

4

Net income (loss) attributable to NCR . . . . . . . . . . . $ 443

$456

$ 444

$(900)

$ 443

Total comprehensive income (loss) . . . . . . . . . . . . . . .
Less comprehensive income (loss) attributable to

442

331

noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . —

—

437

(3)

(771)

—

439

(3)

Comprehensive income (loss) attributable to NCR

common stockholders . . . . . . . . . . . . . . . . . . . . . . . $ 442

$331

$ 440

$(771)

$ 442

103

Consolidating Statements of Operations and Comprehensive Income
For the year ended December 31, 2012

Guarantor
Subsidiary

Non-Guarantor
Subsidiaries

Eliminations Consolidated

(in millions)

Product revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
Service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .

Issuers

$1,155
1,180

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2,335

Cost of products . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . .
Research and development expenses . . . . . . . . . .

865
682
399
66

Total operating expenses . . . . . . . . . . . . . . . . . .

2,012

Income (loss) from operations . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (expense) income, net . . . . . . . . . . . . . . . . .

323
(46)
(102)

Income (loss) from continuing operations before

income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . . . . . . . .

Income (loss) from continuing operations before

earnings in subsidiaries . . . . . . . . . . . . . . . . . . .

Equity in earnings of consolidated

subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) from continuing operations . . . . . .
Income (loss) from discontinued operations, net

175
93

82

396

478

$112
25

137

31
11
5

—

47

90
(1)
(3)

86
61

25

177

202

$1,869
1,671

3,540

1,530
1,248
338
89

3,205

335
(4)
106

437
69

368

—

368

3

$(282)
—

(282)

(282)
—
—
—

(282)

—

9
(9)

—
—

—

(573)

(573)

—

$2,854
2,876

5,730

2,144
1,941
742
155

4,982

748
(42)
(8)

698
223

475

—

475

6

of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3

—

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . .
Net (loss) income attributable to noncontrolling

$ 481

$202

$ 371

$(573)

$ 481

interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

—

—

—

Net income (loss) attributable to NCR . . . . . . .

$ 481

$202

$ 371

$(573)

$ 481

Total comprehensive income (loss) . . . . . . . . . . .
Less comprehensive income (loss) attributable to
noncontrolling interests . . . . . . . . . . . . . . . . . .

463

297

—

—

362

(4)

(663)

—

459

(4)

Comprehensive income (loss) attributable to

NCR common stockholders . . . . . . . . . . . . . .

$ 463

$297

$ 366

$(663)

$ 463

104

Consolidating Statements of Operations and Comprehensive Income
For the year ended December 31, 2011

Guarantor
Subsidiary

Non-Guarantor
Subsidiaries

Eliminations Consolidated

(in millions)

Product revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
Service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cost of products . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of services . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . .
Research and development expenses . . . . . . . . . .

Total operating expenses . . . . . . . . . . . . . . . . . .

Income (loss) from operations . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (expense) income, net . . . . . . . . . . . . . . . . .

Income (loss) from continuing operations before

income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . . . . . . . .

Issuers

$1,043
1,027

2,070

820
1,044
530
130

2,524

(454)
(18)
(15)

(487)
(158)

Income (loss) from continuing operations before

earnings in subsidiaries . . . . . . . . . . . . . . . . . . .

(329)

$103
23

126

22
11
6

—

39

87
(1)
(9)

77
46

31

Equity in earnings of consolidated

subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) from continuing operations . . . . . .
Income (loss) from discontinued operations, net

234

(95)

184

215

of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(95)

—

$1,705
1,649

3,354

1,439
1,263
354
79

3,135

219
(6)
33

246
46

200

—

200

2

$(259)
—

(259)

(259)
—
—
—

(259)

—
12
(12)

—
—

—

(418)

(418)

—

$2,592
2,699

5,291

2,022
2,318
890
209

5,439

(148)
(13)
(3)

(164)
(66)

(98)

—

(98)

(93)

Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . .
Net (loss) income attributable to noncontrolling

$ (190)

$215

$ 202

$(418)

$ (191)

interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

—

(1)

—

(1)

Net income (loss) attributable to NCR . . . . . . .

$ (190)

$215

$ 203

$(418)

$ (190)

Total comprehensive income (loss) . . . . . . . . . . .
Less comprehensive income (loss) attributable to
noncontrolling interests . . . . . . . . . . . . . . . . . .

(171)

183

—

—

229

1

(411)

(170)

—

1

Comprehensive income (loss) attributable to

NCR common stockholders . . . . . . . . . . . . . .

$ (171)

$183

$ 228

$(411)

$ (171)

105

Consolidating Balance Sheet
December 31, 2013

Issuers

Guarantor
Subsidiary

Non-Guarantor
Subsidiaries

Eliminations Consolidated

(in millions)

Assets
Current assets

Cash and cash equivalents . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from affiliates . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . .

Total current assets . . . . . . . . . . . . . . . . . . . . . . . .

Property, plant and equipment, net . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid pension cost . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . .
Investments in subsidiaries . . . . . . . . . . . . . . . . . .
Due from affiliates . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

75
1,114
424
319
333
360

2,625

146
872
234
—
321
2,665
28
334

$

11

—

14
11
854
25

915

1

—
—
—
68
1,927
20
40

$ 442
—
901
460
298
209

2,310

205
662
260
478
52
—
45
96

$ —
—
—
—
(1,485)
(26)

(1,511)

—
—
—
—
—
(4,592)
(93)
—

$ 528
1,114
1,339
790
—
568

4,339

352
1,534
494
478
441
—
—
470

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$7,225

$2,971

$4,108

$(6,196)

$8,108

$

28
254
78

$ —
1
1

Liabilities and stockholders’ equity
Current liabilities

Short-term borrowings . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . .
Payroll and benefits liabilities . . . . . . . . . . .
Deferred service revenue and customer

deposits . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . .

Total current liabilities . . . . . . . . . . . . . . . . . . . . .

Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension and indemnity plan liabilities . . . . . . . . .
Postretirement and postemployment benefits

liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax accruals . . . . . . . . . . . . . . . . . . . . . . .
Environmental liabilities . . . . . . . . . . . . . . . . . . . .
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .

155
1,007
219

1,741

3,296
234

25
4
121
17
18

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .

5,456

Redeemable noncontrolling interest . . . . . . . . . . .
Stockholders’ equity
Total NCR stockholders’ equity . . . . . . . . . . . .
Noncontrolling interests in subsidiaries . . . . . . . .

Total stockholders’ equity . . . . . . . . . . . . . . . . .

—

1,769
—

1,769

12
123
7

144

—
—

—

10
—
44
—

198

—

2,773
—

2,773

$

6
415
112

358
355
261

1,507

24
298

144
175
—
32
81

2,261

14

1,819
14

1,833

$ —
—
—

—
(1,485)
(26)

(1,511)

—
—

—
—
—
(93)
—

(1,604)

—

(4,592)
—

(4,592)

$

34
670
191

525
—
461

1,881

3,320
532

169
189
121
—
99

6,311

14

1,769
14

1,783

Total liabilities and stockholders’ equity . . . . .

$7,225

$2,971

$4,108

$(6,196)

$8,108

106

Consolidating Balance Sheet
December 31, 2012

Issuers

Guarantor
Subsidiary

Non-Guarantor
Subsidiaries

Eliminations Consolidated

(in millions)

Assets
Current assets

Cash and cash equivalents . . . . . . . . . . . . . .
Accounts receivable, net . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . .
Due from affiliates . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . .

$ 571
311
310
191
261

$

Total current assets . . . . . . . . . . . . . . . . . . . . . . . .

Property, plant and equipment, net . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid pension cost . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . .
Investments in subsidiaries . . . . . . . . . . . . . . . . . .
Due from affiliates . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,644

148
841
262
—
403
1,857
26
334

6
16
3
647
24

696

1

—
—
—
59
569
20
27

$ 492
759
484
479
204

2,418

159
162
42
368
70
—
238
87

$ —
—
—
(1,317)
(35)

(1,352)

—
—
—
—
—
(2,426)
(284)
—

$1,069
1,086
797
—
454

3,406

308
1,003
304
368
532
—
—
448

Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$5,515

$1,372

$3,544

$(4,062)

$6,369

Liabilities and stockholders’ equity
Current liabilities

Short-term borrowings . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . .
Payroll and benefits liabilities . . . . . . . . . . .
Deferred service revenue and customer

deposits . . . . . . . . . . . . . . . . . . . . . . . . . . .
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . .

Total current liabilities . . . . . . . . . . . . . . . . . . . . .

Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . .

Pension and indemnity plan liabilities . . . . . . . . .
Postretirement and postemployment benefits

liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax accruals . . . . . . . . . . . . . . . . . . . . . . .
Environmental liabilities . . . . . . . . . . . . . . . . . . . .
Due to affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

71
225
93

121
775
184

1,469

1,889

434

79
3
171
195
23

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .

4,263

Redeemable noncontrolling interest . . . . . . . . . . .
Stockholders’ equity
Total NCR stockholders’ equity . . . . . . . . . . . .
Noncontrolling interests in subsidiaries . . . . . . . .

Total stockholders’ equity . . . . . . . . . . . . . . . . .

—

1,252
—

1,252

$ —
1

—

13
12
13

39

—

—

1

8

—
60
—

108

—

1,264
—

1,264

$

1
385
93

321
530
256

1,586

2

370

167
127
—
29
56

2,337

15

1,162
30

1,192

$

$ —
—
—

—
(1,317)
(35)

(1,352)

—

—

—
—
—
(284)
—

(1,636)

—

(2,426)
—

(2,426)

72
611
186

455
—
418

1,742

1,891

805

246
138
171
—
79

5,072

15

1,252
30

1,282

Total liabilities and stockholders’ equity . . . . .

$5,515

$1,372

$3,544

$(4,062)

$6,369

107

Consolidating Statement of Cash Flows
December 31, 2013

(in millions)

Net cash (used in) provided by operating

Issuers

Guarantor
Subsidiary

Non-Guarantor
Subsidiaries

Eliminations Consolidated

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

(7)

$ 15

$ 312

$ (39)

$

281

Investing activities

Expenditures for property, plant and

equipment

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(35)

(6)

Proceeds from sales of property, plant and

equipment

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to capitalized software . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in restricted cash . . . . . . . . . . . . . . . . . . .
Proceeds from (payments of) intercompany

notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in subsidiaries . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Other investing activities, net

2
(81)
(207)
—
(1,114)

(54)
(308)
5

Net cash used in investing activities . . . . . . . . . . . . . .

(1,792)

Financing activities

Tax withholding payments on behalf of

employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from employee stock plans . . . . . . . . . .
Equity contribution . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of short term borrowings . . . . . . . . . .
Payments on term credit facilities . . . . . . . . . . . . .
Borrowings on term credit facilities . . . . . . . . . . .
Payments on revolving credit facility . . . . . . . . . .
Borrowings on revolving credit facility . . . . . . . .
Proceeds from bond offerings . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings (repayments) of intercompany

notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of noncontrolling interest . . . . . . . . . . . .
Dividend distribution to minority shareholder
. . .
Dividend distribution to consolidated

subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(30)
57
—
—
(35)
300
(1,009)
1,009
1,100
(36)

—
—
—

—

—
—
—
—
—

—
(33)
—

(39)

—
—

30
—
—
—
—
—
—
—

—
—
—

—

Net cash provided by (used in) financing

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,356

30

Cash flows from discontinued operations

Net cash used in operating activities . . . . . . . . . . .
Net cash provided by (used in) investing

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash used in discontinued operations . . . . . . . . .

Effect of exchange rate changes on cash and cash

equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Increase (decrease) in cash and cash equivalents . . . . .
Cash and cash equivalents at beginning of period . . . . .

(52)

—

(52)

(1)

(496)
571

—

—

—

(1)

5
6

(75)

8
(29)
(756)
183
—

—
—
—

(669)

—
—
311
(1)

—
29
—
—
—
—

54
(24)
(3)

(39)

327

—

—

—

(20)

(50)
492

—

—
—
183
(183)
—

54
341
—

395

—
—
(341)
—
—
—
—
—
—
—

(54)
—
—

39

(116)

10
(110)
(780)
—
(1,114)

—
—

5

(2,105)

(30)
57
—

(1)
(35)
329
(1,009)
1,009
1,100
(36)

—
(24)
(3)

—

(356)

1,357

—

—

—

—

—
—

(52)

—

(52)

(22)

(541)
1,069

Cash and cash equivalents at end of period . . . . . . .

$

75

$ 11

$ 442

$ —

$

528

108

Consolidating Statement of Cash Flows
December 31, 2012

(in millions)

Net cash (used in) provided by operating

Issuers

Guarantor
Subsidiary

Non-Guarantor
Subsidiaries

Eliminations Consolidated

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ (372)

$ (9)

$211

$ (10)

$ (180)

Investing activities

Expenditures for property, plant and equipment
Proceeds from sales of property, plant and

. .

(44)

equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to capitalized software . . . . . . . . . . . . . .
Business acquisitions, net of cash acquired . . . . . .
Proceeds from (payments of) intercompany

notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in subsidiaries . . . . . . . . . . . . . . . . . . .
Other investing activities, net . . . . . . . . . . . . . . . . .

—
(63)
(70)

—
(21)
4

Net cash used in investing activities . . . . . . . . . . . . . .

(194)

Financing activities

Tax withholding payments on behalf of

employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from employee stock plans . . . . . . . . . . .
Equity contribution . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings on term credit facility . . . . . . . . . . . . .
Payments on revolving credit facility . . . . . . . . . . .
Borrowings on revolving credit facility . . . . . . . . .
Proceeds from bond offerings . . . . . . . . . . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings (repayments) of intercompany

notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividend distribution to minority shareholder . . . .
Dividend distribution to consolidated

(12)
53
—
150
(860)
720
1,100
(19)

(11)
—

subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—

Net cash provided by (used in) financing

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,121

Cash flows from discontinued operations

Net cash used in operating activities . . . . . . . . . . . .
Net cash provided by (used in) investing

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash used in discontinued operations . . . . . . . . . .

Effect of exchange rate changes on cash and cash

equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Increase (decrease) in cash and cash equivalents . . . . . .
Cash and cash equivalents at beginning of period . . . . .

(114)

99

(15)

(1)

539
32

—

—
—
—

96
(90)
—

6

—
—
—
—
—
—
—
—

—
—

(2)

(2)

—

—

—

—

(5)
11

Cash and cash equivalents at end of period . . . . . . . .

$ 571

$

6

(36)

8
(17)
(38)

11
—
—

(72)

—
—
111
—
—
—
—
—

(96)
(1)

(8)

6

—

—

—

(8)

137
355

$492

—

—
—
—

(107)
111
—

4

—
—
(111)
—
—
—
—
—

107
—

10

6

—

—

—

—

—
—

(80)

8
(80)
(108)

—
—
4

(256)

(12)
53
—
150
(860)
720
1,100
(19)

—

(1)

—

1,131

(114)

99

(15)

(9)

671
398

$ —

$1,069

109

Consolidating Statement of Cash Flows
December 31, 2011

(in millions)

Net cash (used in) provided by operating

Issuers

Guarantor
Subsidiary

Non-Guarantor
Subsidiaries

Eliminations Consolidated

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

390

$ (85)

$ 145

$ (62)

$

388

Investing activities

Expenditures for property, plant and

equipment

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(31)

Proceeds from sales of property, plant and

equipment

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to capitalized software . . . . . . . . . . . . .
Business acquisitions, net of cash acquired . . . . . .
Proceeds from (payments of) intercompany

notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in subsidiaries . . . . . . . . . . . . . . . . . .

—
(46)
(1,085)

57
(11)

Net cash used in investing activities . . . . . . . . . . . . . .

(1,116)

Financing activities

Repurchase of Company common stock . . . . . . . .
Excess tax benefit from stock based

compensation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from employee stock plans . . . . . . . . . .
Equity contribution . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings on term credit facilities . . . . . . . . . . .
Payments on revolving credit facility . . . . . . . . . .
Borrowings on revolving credit facility . . . . . . . .
Debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings (repayments) of intercompany

notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of noncontrolling interest . . . .
Dividend distribution to minority shareholder
. . .
Dividend distribution to consolidated

subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(70)

1
18
—
700
(260)
400
(29)

11
—
—

—

—

—
—
—

138
—

138

—

—
—
—
—
—
—
—

—
—
—

(51)

Net cash provided by (used in) financing

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

771

(51)

Cash flows from discontinued operations

Net cash used in operating activities . . . . . . . . . . .
Net cash provided by (used in) investing

activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net cash used in discontinued operations . . . . . . . . .

Effect of exchange rate changes on cash and cash

equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Increase (decrease) in cash and cash equivalents . . . . .
Cash and cash equivalents at beginning of period . . . . .

(37)

(40)

(77)

(1)

(33)
65

—

—

—

—

2
9

(30)

2
(16)
—

(12)
—

(56)

—

—
—

11
—
—
—
—

(194)
43
(1)

(11)

(152)

—

—

—

(4)

(67)
422

—

—
—
—

(183)
11

(172)

—

—
—
(11)
—
—
—
—

183
—
—

62

234

—

—

—

—

—
—

(61)

2
(62)
(1,085)

—
—

(1,206)

(70)

1
18
—
700
(260)
400
(29)

—

43
(1)

—

802

(37)

(40)

(77)

(5)

(98)
496

Cash and cash equivalents at end of period . . . . . . .

$

32

$ 11

$ 355

$ —

$

398

110

17. QUARTERLY INFORMATION (unaudited)

In millions, except per share amounts

First

Second

Third

Fourth

2013
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations (attributable to NCR) . . . . . . . . . . . . . . .
(Loss) from discontinued operations, net of tax . . . . . . . . . . . . . . . . . . . . . . .

$1,535
$1,410
426
369
139
85
62
86
(1) —

$1,508
415
145
98
—

$1,670
530
297
206
(8)

Net income attributable to NCR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

61

$

86

$

98

$ 198

Income per share attributable to NCR common stockholders:
Income per common share from continuing operations

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 0.38

$ 0.52

$ 0.59

$ 1.24

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 0.37

$ 0.51

$ 0.58

$ 1.21

Net income per common share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 0.37

$ 0.52

$ 0.59

$ 1.19

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 0.36

$ 0.51

$ 0.58

$ 1.16

2012
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from continuing operations (attributable to NCR) . . . . . . . . . . . . . . .
(Loss) income from discontinued operations, net of tax . . . . . . . . . . . . . . . . .

$1,244
315
78
59
(9)

$1,409
374
130
89
13

$1,435
382
129
88
(1)

$1,642
574
411
239
3

Net income attributable to NCR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$

50

$ 102

$

87

$ 242

Income per share attributable to NCR common stockholders:
Income per common share from continuing operations

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 0.37

$ 0.56

$ 0.55

$ 1.49

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 0.36

$ 0.54

$ 0.53

$ 1.45

Net income per common share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 0.32

$ 0.64

$ 0.55

$ 1.51

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 0.31

$ 0.62

$ 0.53

$ 1.47

As described in Note 2, “Pension Benefit Plan Accounting Methodology Changes,” our results have been revised
for the retrospective application of our accounting methodology for recognizing costs for all of our company-
sponsored U.S. and international pension benefit plans. For the quarter ended December 31, 2012, operating
loss was previously reported as $7 million, net loss attributable to NCR was previously reported as $20 million,
and basic and diluted loss per share was previously reported as $0.12. For the quarter ended December 31, 2013,
if we had not elected to change our accounting methodology, operating income would have been $124 million,
net income attributable to NCR would have been $82 million, basic earnings per share would have been $0.49,
and diluted earnings per share would have been $0.48.

Operating income for the quarter ended December 31, 2013 was impacted by actuarial gains related to the
remeasurement of our pension plan assets and liabilities. The actuarial gains included in pension benefit
recognized in the quarter ended December 31, 2013 increased operating income by $104 million, net income
attributable to NCR by $73 million, basic earnings per share by $0.44, and diluted earnings per share by $0.43.

Operating income for the quarter ended December 31, 2012 was impacted by actuarial gains related to the
remeasurement of our pension plan assets and liabilities. The actuarial gains included in pension benefit

111

recognized in the quarter ended December 31, 2012 increased operating income by $262 million, net income
attributable to NCR by $155 million, basic earnings per share by $0.97, and diluted earnings per share by $0.94.

Net income per share in each quarter is computed using the weighted-average number of shares outstanding
during that quarter while net income per share for the full year is computed using the weighted-average number
of shares outstanding during the year. Thus, the sum of the four quarters’ net income per share will not
necessarily equal the full-year net income per share.

18. SUBSEQUENT EVENTS

Acquisition of Digital Insight Corporation On January 10, 2014, the Company completed its acquisition of
Digital Insight Corporation, a leader in online and mobile banking solutions for a cash purchase price of
approximately $1.65 billion. As a result of the acquisition, Digital Insight became an indirect wholly owned
subsidiary of NCR. The transaction will be accounted for as a business combination.

The purchase price for Digital Insight was financed using the aggregate principal amount from the December
2013 offering by NCR Escrow Corp. of $400 million aggregate principal amount of 5.875% senior unsecured
notes due in 2021 and $700 million aggregate principal amount of 6.375% senior unsecured notes due in 2023,
$250 million in incremental term loans drawn at closing under the Company’s December 2013 Incremental
Facility Agreement and approximately $300 million in additional borrowings made at closing under the
revolving portion of the Company’s Senior Secured Credit Facility. At the closing of the acquisition of Digital
Insight, NCR Escrow Corp. merged with and into the Company, with the Company continuing as the surviving
corporation. The Company assumed all of NCR Escrow Corp.‘s obligations under the 5.875% and 6.375% Notes
and the indentures governing those Notes, and the net proceeds from the offering were released from the escrow
account to pay for the Digital Insight acquisition. Following the Digital Insight acquisition, NCR’s total debt
balance was $3.92 billion

NCR incurred acquisition-related transaction costs of approximately $15 million which consist primarily of
investment banking, legal and accounting fees. Approximately $7 million were incurred during the year ended
December 31, 2013 and are included in selling, general and administrative expenses and interest expense in the
accompanying Consolidated Statements of Operations.

These disclosures are based on our preliminary estimates and management is still determining the purchase price
allocation. However, the substantial majority of the purchase price is expected to be allocated to goodwill and
intangible assets. Additionally, management is still determining the pro forma impact of the Digital Insight
acquisition on the 2013 results.

Shareholder Derivative Action With respect
to the derivative action settlement referenced in Note 10,
“Commitments and Contingencies,” on February 3, 2014, the court issued an order that preliminarily approved
the proposed settlement, approved the form and content of shareholder notices, and scheduled a fairness hearing.

112

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Item 9.

None.

Item 9A. 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 ensure 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 ensure 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 period covered by this Report,
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 objective 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

There have been no changes in our internal control over financial reporting that occurred during the last fiscal
quarter that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining effective internal control over financial reporting as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial
reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could
have a material effect on the financial statements.

Because of its inherent limitations due to, for example, the potential for human error or circumvention of
controls, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

The Company’s management assessed the effectiveness of the Company’s internal control over financial
reporting as of December 31, 2013. In making this assessment, we used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework
(1992) . Based on our assessment, we determined that, as of December 31, 2013, the Company’s internal control
over financial reporting was effective based on those criteria.

113

PricewaterhouseCoopers LLP, our independent registered public accounting firm, has audited the effectiveness
of the Company’s internal control over financial reporting as of December 31, 2013 as stated in their report
which appears in Item 8 of this Report.

Item 9B. OTHER INFORMATION

None

114

PART III

Item 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERANCE

forth under

Except as set forth in the following paragraphs of this Item 10, the information required by this Item 10 will be
set
the headings “Election of Directors,” “Section 16(a) Beneficial Ownership Reporting
Compliance,” and “Committees of the Board” in the Definitive Proxy Statement for our 2014 Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal
2013 year, and is incorporated herein by reference. The information required by this Item 10 regarding our
executive officers is set forth under the heading “Executive Officers of the Registrant” in Part I of this
Form 10-K and is incorporated herein by reference.

We have not materially changed the procedures by which stockholders may recommend nominees to the
Company’s Board of Directors.

We have a Code of Conduct that sets the standard for ethics and compliance for all of our directors and
employees, including our chief executive officer, our chief financial officer and our chief accounting officer. Our
Code of Conduct is available on the Corporate Governance page at our website at http://www.ncr.com/about-ncr/
corporate-governance under the heading “Code of Conduct.” We intend to disclose any amendments to or
waivers of the Code of Conduct with respect to any director as well as our principal executive officer, principal
financial officer, and principal accounting officer, on the Corporate Governance page of our website promptly
following the date of such amendment or waiver.

Item 11.

EXECUTIVE COMPENSATION

The information required by this Item 11 will be set forth under the headings “Executive Compensation,”
“Compensation and Human Resource Committee,” and “Board Compensation and Human Resource Committee
Report on Executive Compensation” in the Definitive Proxy Statement for our 2014 Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal
2013 year, and is incorporated herein by reference.

Item 12.

SECURITY OWNERSHIPS OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS

The information required by this Item 12 will be set forth under the headings “Stock Ownership” and “Equity
for our 2014 Annual Meeting of
Compensation Plan Information” in the Definitive Proxy Statement
Stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal
2013 year, and is incorporated herein by reference.

Item 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE

The information required by this Item 13 will be set forth under the headings “Related Person Transactions” and
“Corporate Governance” in the Definitive Proxy Statement for our 2014 Annual Meeting of Stockholders to be
filed with the Securities and Exchange Commission within 120 days after the end of our fiscal 2013 year, is
incorporated herein by reference.

Item 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information required by this Item 14 will be set forth under the heading “Fees Paid to Independent
Registered Public Accounting Firm” in the Definitive Proxy Statement for our 2014 Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission within 120 days after the end of our fiscal
2013 year, and is incorporated herein by reference.

115

PART IV

Item 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

(a)(1) Financial Statements: The following is an index of the consolidated financial statements of the Company
and the Report of Independent Registered Public Accounting Firm filed as part of this Form 10-K:

Page of
Form 10-K

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations for the years ended December 31, 2013, 2012, and 2011 . . . .
Consolidated Statements of Comprehensive Income Operations for the years ended December 31,

2013, 2012, and 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets at December 31, 2013 and 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended December 31, 2013, 2012, and 2011 . . . .
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2013,
2012, and 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

45
46

47
48
49

50
51

(2) Financial Statement Schedule: Financial Statement Schedule II—Valuation and Qualifying Accounts is
included in this Form 10-K. All other schedules are not required under the related instructions or are not
applicable.

(3) Exhibits: See Index of Exhibits below for a listing of all exhibits to this Form 10-K. The management
contracts and compensatory plans or arrangements required to be filed as an exhibit to this Form 10-K are
identified in the Index of Exhibits by an asterisk (*).

(b) The following is an index of all exhibits to this Form 10-K. Exhibits identified in parentheses in the index
below, on file with the SEC, are incorporated herein by reference as exhibits hereto.

2.1

2.2

2.3

2.4

2.5

2.6

2.7

Separation and Distribution Agreement, dated as of August 27, 2007 between NCR Corporation
and Teradata Corporation (Exhibit 2.1 to the Form 10 of Teradata Corporation (the “Teradata
Form 10”)).

Agreement and Plan of Merger by and among NCR Corporation, Ranger Acquisition Corporation
and Radiant Systems, Inc., dated as of July 11, 2011 (Exhibit 2.1 to the Current Report on
Form 8-K of NCR Corporation dated July 12, 2011).

Asset Purchase Agreement, dated as of February 3, 2012, by and between Redbox Automated
Retail, LLC and NCR Corporation.

First Amendment to Asset Purchase Agreement, dated as of June 22, 2012, by and between
Redbox Automated Retail, LLC and NCR Corporation (Exhibit 2.3 to the NCR Corporation
Quarterly Report on Form 10-Q for the quarter ended June 30, 2012).

Agreement and Plan of Merger, dated November 28, 2012, by and among NCR Corporation,
Moon S.P.V. (Subsidiary) Ltd., and Retalix, Ltd. (Exhibit 2.1 to the Current Report on Form 8-K
of NCR Corporation dated February 6, 2013).

Agreement and Plan of Merger, dated as of December 2, 2013, by and among NCR Corporation,
Delivery Acquisition Corporation, Fandango Holdings Corporation and Thoma Bravo, LLC as the
Stockholder Representative (Exhibit 10.1 to the Current Report on Form 8-K of NCR Corporation
dated December 2, 2013 (the “December 2, 2013 Form 8-K”)).

Commitment Letter, dated as of December 2, 2013, by and among NCR Corporation, JPMorgan
Chase Bank, N.A., J.P. Morgan Securities LLC, Bank of America, N.A., Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Royal Bank of Canada, RBC Capital Markets, SunTrust Bank,
SunTrust Robinson Humphrey, Inc., WF Investment Holdings, LLC and Wells Fargo Securities,
LLC (Exhibit 10.2 to the December 2, 2013 Form 8-K).

116

2.8

3.1

3.2

4.1

4.2

4.3

4.4

4.5

10.1

10.2

10.3

10.4

10.5

10.6

10.7

Share Purchase Agreement, dated as of December 2, 2013, by and among NCR Limited and the
holders of the outstanding share capital of Alaric Systems Limited (Exhibit 10.3 to the
December 2, 2013 Form 8-K).

Articles of Amendment and Restatement of NCR Corporation as amended May 14, 1999
(Exhibit 3.1 to the NCR Corporation Form 10-Q for the quarter ended June 30, 1999).

Bylaws of NCR Corporation, as amended and restated on January 26, 2011 (Exhibit 3(ii) to the
Current Report on Form 8-K of NCR Corporation dated January 31, 2011).

Common Stock Certificate of NCR Corporation (Exhibit 4.1 to the NCR Corporation Annual
Report on Form 10-K for the year ended December 31, 1999).

Indenture, dated September 17, 2012, among NCR Corporation, as issuer, NCR International Inc.
and Radiant Systems Inc. as subsidiary guarantors and U.S. Bank National Association, as trustee
(Exhibit 4.01 to the Current Report on Form 8-K of NCR Corporation dated September 18, 2012
(the “September 18, 2012 Form 8-K”)).

Indenture, dated December 18, 2012, among NCR Corporation, as issuer, NCR International Inc.
and Radiant Systems Inc. as subsidiary guarantors and U.S. Bank National Association, as trustee
(Exhibit 4.01 to the Current Report on Form 8-K of NCR Corporation dated December 18, 2012
(the “December 18, 2012 Form 8-K”)).

Indenture, dated December 19, 2013, between NCR Escrow Corp. and U.S. Bank National
Association relating to the $400 million aggregate principal amount of 5.875% senior notes due
2021 (Exhibit 4.1 to the Current Report on Form 8-K of NCR Corporation dated December 19,
2013 (the “December 19, 2013 Form 8-K”)).

Indenture, dated December 19, 2013, between NCR Escrow Corp. and U.S. Bank National
Association relating to the $700 million aggregate principal amount of 6.375% senior notes due
2023 (Exhibit 4.2 to the December 19, 2013 Form 8-K).

Separation and Distribution Agreement, dated as of February 1, 1996 and amended and restated as
of March 29, 1996 (Exhibit 10.1 to the Lucent Technologies Inc. Registration Statement on Form
S-1 (No. 333-00703) (the “Lucent Registration Statement”)).

Employee Benefits Agreement, dated as of November 20, 1996, by and between AT&T Corp. and
NCR Corporation (Exhibit 10.2 to the NCR Corporation Annual Report on Form 10-K for the year
ended December 31, 1996 (the “1996 Annual Report”).

Patent License Agreement, effective as of March 29, 1996, by and among AT&T Corp., NCR
Corporation, and Lucent Technologies Inc. (Exhibit 10.7 to the Lucent Registration Statement).

Amended and Restated Technology License Agreement, effective as of March 29, 1996, by and
among AT&T Corp., NCR Corporation, and Lucent Technologies Inc. (Exhibit 10.8 to the Lucent
Registration Statement).

Tax Sharing Agreement, dated as of February 1, 1996, and amended and restated as of March 29,
1996, by and among AT&T Corp., NCR Corporation, and Lucent Technologies Inc. (Exhibit 10.6
to the Lucent Registration Statement).

Purchase and Manufacturing Services Agreement effective as of January 19, 2007, between NCR
Corporation and Solectron Corporation (now Flextronics International Ltd.) (incorporated by
reference to Exhibit 10.6 to the Form 10-K/A for the fiscal year ended December 31, 2006, filed
June 4, 2008). Certain portions of this exhibit were granted confidential
treatment by the
Securities and Exchange Commission on October 2, 2008.

Tax Sharing Agreement, dated as of September 21, 2007, between NCR Corporation and Teradata
Corporation (Exhibit 10.1 to the Current Report on Form 8-K of NCR Corporation dated
September 21, 2007 (the “September 21, 2007 Form 8-K”)).

117

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

10.16.1

10.16.2

10.16.3

10.16.4

10.17

10.17.1

10.17.2

10.17.3

10.17.4

10.17.5

Employee Benefits Agreement, dated as of September 21, 2007, between NCR Corporation and
Teradata Corporation (Exhibit 10.2 to the September 21, 2007 Form 8-K).

Form of Exclusive Patent License Agreement between NCR Corporation and Teradata US, Inc.
(Exhibit 10.4 to the Teradata Form 10).

Form of Patent License Agreement between NCR Corporation and Teradata US, Inc. (Exhibit 10.5
to the Teradata Form 10).

Form of Technology Agreement between NCR Corporation and Teradata US, Inc. (Exhibit 10.6 to
the Teradata Form 10).

Form of Master Agreement between NCR Corporation and Teradata Corporation for Enterprise
Data Warehousing Sales and Support (Exhibit 10.16 to the Teradata Form 10).

Form of Network Support Agreement between NCR Corporation and Teradata Corporation
(Exhibit 10.17 to the Teradata Form 10).

Form of Service Provider Agreement between NCR Corporation and Teradata Corporation
(Exhibit 10.18 to the Teradata Form 10).

Form of Master Reseller Agreement for Middle East and Africa between NCR Corporation and
Teradata Corporation (Exhibit 10.19 to the Teradata Form 10).

NCR Management Stock Plan (Exhibit 10.8 to the 1996 Annual Report). *

First Amendment to the NCR Management Stock Plan dated April 30, 2003 (Exhibit 10.4 to the
NCR Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 2003). *

Amendment to NCR Management Stock Plan effective as of December 31, 2008 (Exhibit 10.17.2
to the NCR Corporation Annual Report on Form 10-K for the year ended December 31, 2008 (the
“2008 Annual Report”)). *

Form of Stock Option Agreement under the NCR Management Stock Plan (Exhibit 10.6.3 to the
NCR Corporation Annual Report on Form 10-K for the year ended December 31, 2005 (the “2005
Annual Report”)). *

Form of Restricted Stock Agreement under the NCR Management Stock Plan (Exhibit 10.6.4 to
the 2005 Annual Report). *

NCR Corporation 2011 Amended and Restated Stock Incentive Plan (formerly the NCR 2006
Stock Incentive Plan, as amended and restated effective as of December 31, 2008) (the “2011
Stock Incentive Plan”) (Exhibit 10.1 to the Current Report on Form 8-K of NCR Corporation
dated April 27, 2011). *

Form of 2009 Stock Option Agreement under the NCR Corporation 2011 Stock Incentive Plan
(Exhibit
dated
December 12, 2008). *

on Form 8-K of NCR Corporation

the Current Report

10.5

to

Form of 2009 Restricted Stock Unit Agreement under the 2011 Stock Incentive Plan (Exhibit 10.2
to the Current Report on Form 8-K of NCR Corporation dated December 12, 2008).

Form of 2010 Stock Option Agreement under the 2011 Stock Incentive Plan (Exhibit 10.2 to the
NCR Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 (the
“First Quarter 2010 Quarterly Report”)). *

Form of 2010 Restricted Stock Agreement under the 2011 Stock Incentive Plan (Exhibit 10.3 to
the First Quarter 2010 Quarterly Report). *

Form of 2010 Restricted Stock Unit Agreement under the 2011 Stock Incentive Plan (Exhibit 10.4
to the First Quarter 2010 Quarterly Report). *

118

10.17.6

10.17.7

10.17.8

10.17.9

10.17.10

10.17.11

10.17.12

10.17.13

10.17.14

10.17.15

10.17.16

Form of 2010 Performance Based Restricted Stock Agreement under the 2011 Stock Incentive
Plan (Exhibit 10.5 to the First Quarter 2010 Quarterly Report). *

Form of 2010 Performance Based Restricted Stock Unit Agreement under the 2011 Stock
Incentive Plan (Exhibit 10.6 to the First Quarter 2010 Quarterly Report). *

Form of 2011 Stock Option Agreement under the 2011 Stock Incentive Plan (Exhibit 10.1 to the
NCR Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 2011 (the
“First Quarter 2011 Quarterly Report”)). *

Form of 2011 Restricted Stock Agreement under the 2011 Stock Incentive Plan (Exhibit 10.2 to
the First Quarter 2011 Quarterly Report). *

Form of 2011 Restricted Stock Unit Agreement under the 2011 Stock Incentive Plan (Exhibit 10.3
to the First Quarter 2011 Quarterly Report). *

Form of 2011 Performance Based Restricted Stock Agreement under the 2011 Stock Incentive
Plan (Exhibit 10.4 to the First Quarter 2011 Quarterly Report). *

Form of 2011 Performance Based Restricted Stock Unit Agreement under the 2011 Stock
Incentive Plan (Exhibit 10.5 to the First Quarter 2011 Quarterly Report). *

Amendment to the 2011 Restricted Stock Unit Agreement for William Nuti dated April 19, 2012
(Exhibit 10.1 to the Current Report on Form 8-K of NCR Corporation filed April 19, 2012). *

Form of 2012 Restricted Stock Unit Award Agreement for Non-Executive Employees under the
2011 Stock Incentive Plan (Exhibit 10.2 to the NCR Corporation Quarterly Report on Form 10-Q
for the quarter ended March 31, 2012 (the “First Quarter 2012 Quarterly Report”).)*

Form of 2012 Restricted Stock Unit Award Agreement for Executives under the 2011 Stock
Incentive Plan (Exhibit 10.3 to the First Quarter 2012 Quarterly Report). *

Form of 2012 Performance Based Restricted Stock Unit Award Agreement for Non-Executive
Employees under the 2011 Stock Incentive Plan (Exhibit 10.4 to the First Quarter 2012 Quarterly
Report). *

10.17.17

Form of 2012 Performance Based Restricted Stock Unit Award Agreement for Executives under
the 2011 Stock Incentive Plan (Exhibit 10.5 to the First Quarter 2012 Quarterly Report). *

10.18

10.19

10.20

10.20.1

10.20.2

10.21

10.21.1

NCR Management Incentive Program for Executive Officers (Exhibit 10.19 to the 1996 Annual
Report). *

Amended and Restated NCR Management Incentive Plan (Exhibit 10.1 to the Current Report on
Form 8-K of NCR Corporation dated April 27, 2011). *

NCR Director Compensation Program effective April 21, 2009 (Exhibit 10.7 to the NCR
Corporation Quarterly Report on Form 10-Q for the quarter ended March 31, 2009 (the “First
Quarter 2009 Form 10-Q”)). *

2009 Director Option Grant Statement under the NCR Director Compensation Program (Exhibit
10.8 to the First Quarter 2009 Form 10-Q). *

2009 Director Restricted Stock Unit Grant Statement under the NCR Director Compensation
Program (Exhibit 10.9 to the First Quarter 2009 Form 10-Q). *

Amended and Restated NCR Change in Control Severance Plan effective December 31, 2008
(Exhibit 10.24.2 to the 2008 Annual Report). *

First Amendment to the Amended and Restated NCR Change in Control Severance Plan (Exhibit
10.6 to the NCR Corporation Quarterly Report on Form 10-Q for the quarter ended September 30,
2011). *

119

10.22

Amended and Restated NCR Nonqualified Excess Plan, effective December 31, 2008 (Exhibit
10.26.6 to the 2008 Annual Report). *

10.22.1

First Amendment to the NCR Nonqualified Excess Plan dated October 24, 2012. *

10.23

10.23.1

10.23.2

10.24

10.24.1

10.24.2

10.25

10.26

10.27

10.28

10.29

10.29.1

10.29.2

10.30

10.31

10.32

10.33

Employment Agreement with William Nuti, dated July 29, 2005 (Exhibit 10.1 to the Current
Report on Form 8-K of NCR Corporation filed August 2, 2005). *

Letter agreement dated July 26, 2006 with William Nuti (Exhibit 10.4 to the Current Report on
Form 8-K of NCR Corporation filed July 27, 2006). *

Second Amendment effective as of December 12, 2008 to Letter Agreement with William Nuti
dated July 29, 2005, as amended July 26, 2006 (Exhibit 10.30.2 to the 2008 Annual Report). *

NCR Director Compensation Program Effective April 27, 2010 (Exhibit 10.1 to the NCR
Corporation Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 (the “Second
Quarter 2010 Quarterly Report”)). *

Form of 2010 Director Option Grant Statement (Exhibit 10.2 to the Second Quarter 2010
Quarterly Report). *

Form of 2010 Director Restricted Stock Unit Grant Statement (Exhibit 10.3 to the Second Quarter
2010 Quarterly Report). *

Letter Agreement with Robert Fishman dated March 17, 2010 (Exhibit 10.7 to the First Quarter
2010 Quarterly Report). *

Letter Agreement with John Bruno dated October 27, 2008 (Exhibit 10.8 to the First Quarter 2010
Quarterly Report). *

Letter Agreement with Peter Leav dated December 28, 2008 (Exhibit 10.9 to the First Quarter
2010 Quarterly Report). *

Letter Agreement with Peter Dorsman dated April 4, 2006 (Exhibit 10.1 to the NCR Corporation
Quarterly Report on Form 10-Q for the quarter ended September 30, 2010). *

NCR Corporation 2011 Economic Profit Plan (Exhibit 10.3 to the Current Report on Form 8-K of
NCR Corporation dated April 27, 2011). *

First Amendment to NCR Corporation 2011 Economic Profit Plan (Exhibit 10.29.1 to the NCR
Corporation Annual Report on Form 10-K for the year ended December 31, 2011). *

Second Amendment to NCR Corporation 2011 Economic Profit Plan, dated January 25, 2012
(Exhibit 10.1 to the First Quarter 2012 Quarterly Report).

Tender and Voting Agreement, dated as of July 11, 2011, by and among NCR Corporation,
Ranger Acquisition Corporation and certain shareholders of Radiant Systems, Inc. (Exhibit 10.1 to
the Current Report on Form 8-K of NCR Corporation dated July 12, 2011).

First Amendment to Tender and Voting Agreement, dated as of July 21, 2011, by and among NCR
Corporation, Ranger Acquisition Corporation and certain shareholders of Radiant Systems, Inc.
(Exhibit 10.2 to the Current Report on Form 8-K/A of NCR Corporation dated July 21, 2011).

Equity Subscription Agreement, dated July 26, 2011, among NCR Corporation, Scopus Industrial
S.A., Scopus Tecnologia Ltda. and NCR Brasil—Indústria de Equipamentos Para Automaça˘o
Ltda., including Schedule I—The form of Shareholders’ Agreement (Exhibit 10.1 to the Current
Report on Form 8-K of NCR Corporation dated August 1, 2011).

Credit Agreement, dated as of August 22, 2011, by and among NCR Corporation, the Lenders
party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (Exhibit 10.1 to the
Current Report on Form 8-K of NCR Corporation dated August 26, 2011).

120

10.34

Guarantee and Pledge Agreement, dated as of August 22, 2011, by and among NCR Corporation,
the subsidiaries of NCR Corporation identified therein and JPMorgan Chase Bank, N.A., as
Administrative Agent (Exhibit 10.1 to the Current Report on Form 8-K of NCR Corporation dated
August 26, 2011).

10.35

The Retirement Plan for Officers of NCR (Amended and Restated effective December 31, 2008)
(Exhibit 10.22.5 to the 2008 Annual Report). *

10.35.1

First Amendment to the Retirement Plan for Officers of NCR dated October 23, 2012. *

10.36

10.37

10.38

10.39

Registration Rights Agreement, dated September 17, 2012, among NCR Corporation, as issuer,
NCR International Inc. and Radiant Systems Inc. as subsidiary guarantors and J.P. Morgan
Securities LLC) as representative of the initial purchasers (Exhibit 10.01 to the September 18,
2012 Form 8-K).

Incremental Facility Agreement, dated as of August 22, 2012, by and among NCR Corporation,
the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent (Exhibit
10.1 to the NCR Corporation Quarterly Report on Form 10-Q for the quarter ended September 30,
2012 (the “Third Quarter 2012 Quarterly Report”)).

Reaffirmation Agreement, dated as of August 22, 2012, by and among NCR Corporation, the
subsidiaries of NCR Corporation identified therein, and JPMorgan Chase Bank, N.A., as
Administrative Agent (Exhibit 10.2 to the Third Quarter 2012 Quarterly Report).

Second Amendment, dated as of August 22, 2012, by and among NCR Corporation, the Lenders
party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, relating to the Credit
Agreement, dated as of August 22, 2011 and amended as of December 21, 2011, by and among
NCR Corporation, the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative
Agent (Exhibit 10.3 to the Third Quarter 2012 Quarterly Report).

10.40

Voting and Support Agreement, dated as of November 28, 2012, by and among NCR Corporation,
Moon S.P.V. (Subsidiary) Ltd. and each of Boaz Dotan, Eli Gelman, Nehemia Lemelbaum,
Avinoam Naor and Mario Segal (Exhibit 10.1 to the Current Report on Form 8-K of NCR
Corporation dated November 28, 2012).

10.41

10.42

10.42.1

10.42.2

10.43

Registration Rights Agreement, dated December 18, 2012, among NCR Corporation, as issuer,
NCR International Inc. and Radiant Systems Inc. as subsidiary guarantors and J.P. Morgan
Securities LLC) as representative of the initial purchasers (Exhibit 10.01 to the December 18,
2012 Form 8-K).

NCR Corporation 2013 Stock Incentive Plan (the “2013 Stock Incentive Plan”) (Appendix A to
the NCR Corporation Proxy Statement on Schedule 14A for the NCR Corporation 2013 Annual
Meeting of Stockholders). *

Form of 2013 Time-Based Restricted Stock Unit Agreement under the 2011 Stock Incentive and
the 2013 Stock Incentive Plan (Exhibit 10.2 to the NCR Corporation Quarterly Report on Form
10-Q for the quarter ended March 31, 2013 (the “First Quarter 2013 Quarterly Report”)). *

Form of 2013 Performance-Based Restricted Stock Unit Agreement under the 2011 Stock
Incentive Plan and the 2013 Stock Incentive Plan (Exhibit 10.3 to the First Quarter 2013 Quarterly
Report). *

Third Amendment, dated as of February 5, 2013, by and among NCR Corporation, the Lenders
party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent, relating to the Credit
Agreement, dated as of August 22, 2011, as amended and restated as of August 22, 2012, by and
among NCR Corporation,
the Lenders party thereto and JPMorgan Chase Bank, N.A., as
Administrative Agent (Exhibit 10.1 to the First Quarter 2013 Quarterly Report).

121

10.44

10.45

10.46

10.47

10.48

10.49

10.50

10.51

Third Amendment to the NCR Corporation 2011 Economic Profit Plan (Exhibit 10.1 to the
Current Report on Form 8-K of NCR Corporation dated October 1, 2013). *

Credit Agreement, dated as of August 22, 2011, as amended and restated as of July 25, 2013, by
and among NCR Corporation, the Lenders party thereto and JPMorgan Chase Bank, N.A., as
Administrative Agent (Exhibit 10.1 to the NCR Corporation Quarterly Report on Form 10-Q for
the quarter ended September 30, 2013 (the “Third Quarter 2013 Quarterly Report”)).

Reaffirmation Agreement, dated as of July 25, 2013, by and among NCR Corporation, the
subsidiaries of NCR Corporation identified therein, and JPMorgan Chase Bank, N.A., as
Administrative Agent (Exhibit 10.2 to the Third Quarter 2013 Quarterly Report).

Agreement between NCR and the Trustees of the NCR Pension Plan (UK), dated November 14,
2013 (Exhibit 10.1 to the Current Report on Form 8-K of NCR Corporation dated
November 14, 2013).

First Amendment, dated as of December 4, 2013, to the Credit Agreement, dated as of August 22,
2011, as amended and restated as of July 25, 2013, among NCR Corporation, the lenders party
thereto and JPMorgan Chase Bank, N.A., as the administrative agent (Exhibit 10.1 to the Current
Report on Form 8-K of NCR Corporation dated December 5, 2013 (the “December 5, 2013 Form
8-K”)).

Incremental Facility Agreement, dated as of December 4, 2013, among NCR Corporation, the
lenders party thereto and JPMorgan Chase Bank, N.A., as the administrative agent (Exhibit 10.2 to
the December 5, 2013 Form 8-K).

Registration Rights Agreement relating to the 2021 Notes, dated December 19, 2013, among NCR
Corporation; NCR International, Inc., and Radiant Systems, Inc., as subsidiary guarantors; and
J.P. Morgan Securities LLC, as representative of the initial purchasers (Exhibit 10.1 to the
December 19, 2013 Form 8-K).

Registration Rights Agreement relating to the 2023 Notes, dated December 19, 2013, among NCR
Corporation; NCR International, Inc., and Radiant Systems, Inc., as subsidiary guarantors; and
J.P. Morgan Securities LLC, as representative of the initial purchasers (Exhibit 10.2 to the
December 19, 2013 Form 8-K).

10.52

Letter agreement with Jennifer Daniels dated March 23, 2010. *

12.1

21

23.1

31.1

31.2

32

99.1

Statement Regarding Computation of Ratio of Earnings to Fixed Charges.

Subsidiaries of NCR Corporation.

Consent of Independent Registered Public Accounting Firm.

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

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

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

Tax Opinion of Wachtell, Lipton, Rosen & Katz in connection with the Spin off of Teradata, dated
August 27, 2007 (Exhibit 99.2 to the Current Report on Form 8-K of NCR Corporation dated
September 30, 2007).

101

Financials in XBRL Format.

* Management contracts or compensatory plans/arrangements

122

NCR Corporation

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
(In millions)

Column A

Description

Column B

Column C

Additions

Column D

Column E

Balance at
Beginning
of Period

Charged to
Costs &
Expenses

Charged
to Other
Accounts

Deductions

Balance at
End of
Period

Year Ended December 31, 2013

Allowance for doubtful accounts . . . . . . . . . . . . . .
Deferred tax asset valuation allowance . . . . . . . . . .

Year Ended December 31, 2012

Allowance for doubtful accounts . . . . . . . . . . . . . .
Deferred tax asset valuation allowance . . . . . . . . . .
Reserves related to business restructuring . . . . . . .

Year Ended December 31, 2011

Allowance for doubtful accounts . . . . . . . . . . . . . .
Deferred tax asset valuation allowance . . . . . . . . . .
Reserves related to business restructuring . . . . . . .

$ 16
$399

$ 16
$425
2
$

$ 13
$410
3
$

2

$
$—

$—
$ 17
$—

$
3
$ 15
$—

$—
$—

$—
$—
$—

$—
$—
$—

$—
$ 35

$—
$ 43
2
$

$—
$—
1
$

$ 18
$364

$ 16
$399
$—

$ 16
$425
2
$

123

Pursuant to the requirements of Section 13 or 15 (d) 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.

SIGNATURES

Date: February 26, 2014

NCR CORPORATION

By:

/s/ Robert P. Fishman
Robert P. Fishman
Senior Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the date indicated.

Signature

Title

/S/ WILLIAM R. NUTI

William R. Nuti

Chairman of the Board of Directors,
Chief Executive Officer and President

/S/ ROBERT P. FISHMAN

Robert P. Fishman

Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

/S/ EDWARD P. BOYKIN

Director

Edward P. Boykin

/S/ RICHARD L. CLEMMER

Director

Richard L. Clemmer

/S/ GARY DAICHENDT

Gary Daichendt

Director

/S/ ROBERT P. DERODES

Director

Robert P. DeRodes

/S/ KURT P. KUEHN

Kurt P. Kuehn

Director

/S/ LINDA FAYNE LEVINSON

Director

Linda Fayne Levinson

/S/ DEANNA W. OPPENHEIMER

Director

Deanna W. Oppenheimer

Date: February 26, 2014

124