XML 35 R20.htm IDEA: XBRL DOCUMENT
v3.20.2

Derivatives and Hedging Instruments | 6 Months Ended
--- | ---
Jun. 30, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
DERIVATIVES AND HEDGING INSTRUMENTS | 13. DERIVATIVES AND HEDGING INSTRUMENTS NCR is exposed to risks associated with changes in foreign currency exchange rates and interest rates. NCR utilizes a variety of measures to monitor and manage these risks, including the use of derivative financial instruments. NCR has exposure to approximately 50 functional currencies. Since a substantial portion of our operations and revenue occur outside the U.S., and in 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 Condensed Consolidated Balance Sheets. The Company designates foreign exchange contracts as cash flow hedges of forecasted transactions when they are determined to be highly effective at inception. Our risk management strategy includes hedging, on behalf of certain subsidiaries, a portion of our forecasted, non-functional currency denominated cash flows for a period of up to 15 months. As a result, some of the impact of currency fluctuations on non-functional currency denominated transactions (and hence on subsidiary operating income, as stated in the functional currency), is mitigated in the near term. The amount we hedge and the duration of hedge contracts may vary significantly. In the longer term (greater than 15 months), the subsidiaries are still subject to the effect of translating the functional currency results to U.S. Dollars. To manage our exposures and mitigate the impact of currency fluctuations on the operations of our foreign subsidiaries, we hedge our main transactional exposures through the use of foreign exchange forward and option contracts. This is primarily done through the hedging of foreign currency denominated inter-company inventory purchases by NCR’s marketing units and the foreign currency denominated inputs to our manufacturing units. The related foreign exchange contracts are designated as highly effective cash flow hedges. The gains or losses on these hedges are deferred in accumulated other comprehensive income (AOCI) and reclassified to income when the underlying hedged transaction is recorded in earnings. As of June 30, 2020, the balance in AOCI related to foreign exchange derivative transactions was zero, net of tax. The gains or losses from derivative contracts related to inventory purchases are recorded in cost of products when the inventory is sold to an unrelated third party. We also utilize foreign exchange contracts to hedge our exposure of assets and liabilities denominated in non-functional currencies. We recognize the gains and losses on these types of hedges in earnings as exchange rates change. We do not enter into hedges for speculative purposes. The following tables provide information on the location and amounts of derivative fair values in the Condensed Consolidated Balance Sheets:
| Fair Values of Derivative Instruments |  |  |  |  |  |  |  |  |  |
| June 30, 2020 |  |  |  |  |  |  |  |  |  |
In millions | Balance Sheet Location |  | Notional Amount |  | Fair Value |  | Balance Sheet Location |  | Notional Amount |  | Fair Value
Derivatives designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts | Other current assets |  | $ | 155 |  |  | $ | 1 |  |  | Other current liabilities |  | $ | 79 |  |  | $ | 2 |
Total derivatives designated as hedging instruments |  |  |  |  | $ | 1 |  |  |  |  |  |  | $ | 2 |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts | Other current assets |  | $ | 174 |  |  | $ | 1 |  |  | Other current liabilities |  | $ | 319 |  |  | $ | 1 |
Total derivatives not designated as hedging instruments |  |  |  |  | $ | 1 |  |  |  |  |  |  | $ | 1 |
Total derivatives |  |  |  |  | $ | 2 |  |  |  |  |  |  | $ | 3 |
| Fair Values of Derivative Instruments |  |  |  |  |  |  |  |  |  |
| December 31, 2019 |  |  |  |  |  |  |  |  |  |
In millions | Balance Sheet Location |  | Notional Amount |  | Fair Value |  | Balance Sheet Location |  | Notional Amount |  | Fair Value
Derivatives designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts | Other current assets |  | $ | 55 |  |  | $ | 1 |  |  | Other current liabilities |  | $ | — |  |  | $ | — |
Total derivatives designated as hedging instruments |  |  |  |  | $ | 1 |  |  |  |  |  |  | $ | — |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |  |  |  |  |
Foreign exchange contracts | Other current assets |  | $ | 71 |  |  | $ | 1 |  |  | Other current liabilities |  | $ | 264 |  |  | $ | 1 |
Total derivatives not designated as hedging instruments |  |  |  |  | $ | 1 |  |  |  |  |  |  | $ | 1 |
Total derivatives |  |  |  |  | $ | 2 |  |  |  |  |  |  | $ | 1 |
The effects of derivative instruments on the Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2020 and 2019 were as follows:
In millions | Amount of Gain (Loss) Recognized in Other Comprehensive Income (OCI) on Derivative |  |  |  |  |  | Amount of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations |  |  |  |  |  |
Derivatives in Cash Flow Hedging Relationships | For the three months ended June 30, 2020 |  | For the three months ended June 30, 2019 |  | Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations |  | For the three months ended June 30, 2020 |  | For the three months ended June 30, 2019 |  |  |  |
Foreign exchange contracts | $ | (3) |  |  | $ | — |  |  | Cost of products |  | $ | — |  |  | $ | (2) |  |  |  |  |
In millions | Amount of Gain (Loss) Recognized in Other Comprehensive Income (OCI) on Derivative |  |  |  |  |  | Amount of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations |  |  |  |  |  |
Derivatives in Cash Flow Hedging Relationships | For the six months ended June 30, 2020 |  | For the six months ended June 30, 2019 |  | Location of (Gain) Loss Reclassified from AOCI into the Condensed Consolidated Statement of Operations |  | For the six months ended June 30, 2020 |  | For the six months ended June 30, 2019 |  |  |  |
Foreign exchange contracts | $ | — |  |  | $ | 1 |  |  | Cost of products |  | $ | (1) |  |  | $ | (3) |  |  |  |  |
In millions |  |  | Amount of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations |  |  |  |  |
|  |  | Three months ended June 30 |  |  | Six months ended June 30 |  |
Derivatives not Designated as Hedging Instruments | Location of Gain (Loss) Recognized in the Condensed Consolidated Statement of Operations |  | 2020 |  | 2019 | 2020 |  | 2019
Foreign exchange contracts | Other (expense), net |  | $ | 5 |  |  | $ | (3) |  | $ | 11 |  |  | $ | (8) |
Refer to Note 13. Derivatives and Hedging Instruments, for further information on derivative assets and liabilities recorded at fair value on a recurring basis. Concentration of Credit Risk NCR is potentially subject to concentrations of credit risk on accounts receivable and financial instruments such as hedging instruments and cash and cash equivalents. Credit risk includes the risk of nonperformance by counterparties. The maximum potential loss may exceed the amount recognized on the Condensed Consolidated Balance Sheets. Exposure to credit risk is managed through credit approvals, credit limits, selecting major international financial institutions (as counterparties to hedging transactions) and monitoring procedures. NCR’s business often involves large transactions with customers, and if one or more of those customers were to default on its obligations under applicable contractual arrangements, the Company could be exposed to potentially significant losses. However, management believes that the reserves for expected losses are adequate. As of June 30, 2020, we did not have any significant concentration of credit risk related to financial instruments.

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration