NCR Atleos (NATL) - 2024 Q1 - Quarterly Report

PART I. Financial Information This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis of the company's financial performance and condition Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements, including operations, balance sheets, cash flows, and detailed notes for the specified periods Condensed Consolidated Statements of Operations (Unaudited) This statement outlines the company's revenues, expenses, and net income (loss) for the three months ended March 31, 2024 and 2023 Condensed Consolidated Statements of Operations (Unaudited) (in millions, except per share amounts) | In millions, except per share amounts | 2024 | 2023 | | :------------------------------------ | :--- | :--- | | Product revenue | $240 | $234 | | Service revenue | $810 | $752 | | Total revenue | $1,050 | $986 | | Income from operations | $72 | $66 | | Income (loss) before income taxes | $(4) | $62 | | Net income (loss) attributable to Atleos | $(8) | $36 | | Net income (loss) per share - basic and diluted | $(0.11) | $0.51 | - Total revenue increased by $64 million (6.5%) year-over-year, primarily driven by service revenue growth. However, the company reported a net loss of $8 million in Q1 2024, a significant decline from a net income of $36 million in Q1 2023, largely due to increased interest expense[10] Condensed Consolidated Statements of Comprehensive Income (Unaudited) This statement presents the company's net income (loss) and other comprehensive income (loss) components for the specified periods Condensed Consolidated Statements of Comprehensive Income (Unaudited) (in millions) | In millions | 2024 | 2023 | | :---------- | :--- | :--- | | Net income (loss) | $(8) | $37 | | Other comprehensive income (loss): | | Currency translation adjustments gain (loss) | $14 | $27 | | Unrealized gain (loss) on derivatives | $25 | $(11) | | (Gain) loss on derivatives arising during the period | $(21) | $(15) | | Less income tax benefit (expense) | $0 | $6 | | Other comprehensive income (loss) | $18 | $7 | | Total comprehensive income (loss) | $10 | $44 | | Comprehensive income (loss) attributable to Atleos common stockholders | $9 | $44 | - Total comprehensive income decreased significantly from $44 million in Q1 2023 to $10 million in Q1 2024, primarily due to the net loss and a reduction in currency translation adjustments, despite a positive shift in unrealized gains on derivatives[12] Condensed Consolidated Balance Sheets (Unaudited) This statement provides a snapshot of the company's assets, liabilities, and equity at March 31, 2024, and December 31, 2023 Condensed Consolidated Balance Sheets (Unaudited) (in millions) | In millions | March 31, 2024 | December 31, 2023 | | :------------------------------------ | :------------- | :---------------- | | Total current assets | $1,983 | $1,895 | | Total assets | $5,776 | $5,741 | | Total current liabilities | $1,883 | $1,747 | | Long-term borrowings | $2,857 | $2,938 | | Total liabilities | $5,489 | $5,454 | | Total Stockholders' equity | $287 | $287 | - Total assets increased slightly from $5,741 million at December 31, 2023, to $5,776 million at March 31, 2024, driven by an increase in current assets. Total liabilities also increased, while total stockholders' equity remained stable[15] Condensed Consolidated Statements of Cash Flows (Unaudited) This statement details the company's cash inflows and outflows from operating, investing, and financing activities for the specified periods Condensed Consolidated Statements of Cash Flows (Unaudited) (in millions) | In millions | 2024 | 2023 | | :------------------------------------ | :--- | :--- | | Net cash provided by operating activities | $148 | $120 | | Net cash used in investing activities | $(31) | $(25) | | Net cash used in financing activities | $(87) | $(91) | | Increase (decrease) in cash, cash equivalents, and restricted cash | $21 | $16 | | Cash, cash equivalents and restricted cash at end of period | $607 | $515 | - Net cash provided by operating activities increased to $148 million in Q1 2024 from $120 million in Q1 2023. Net cash used in investing activities increased to $31 million, while net cash used in financing activities slightly decreased to $87 million[17] Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) This statement presents the changes in the company's equity accounts, including common stock and retained earnings, for the specified periods Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited) (in millions) | In millions | December 31, 2023 | March 31, 2024 | | :------------------------------------ | :---------------- | :------------- | | Common Stock (Shares) | 71 | 72 | | Common Stock (Amount) | $1 | $1 | | Paid-in Capital | $16 | $14 | | Retained Earnings | $181 | $165 | | Accumulated Other Comprehensive Income (Loss) | $86 | $103 | | Noncontrolling Interests in Subsidiaries | $3 | $4 | | Total | $287 | $287 | - Total stockholders' equity remained stable at $287 million from December 31, 2023, to March 31, 2024. Key changes included a decrease in retained earnings due to the net loss and an increase in accumulated other comprehensive income[19] Notes to Condensed Consolidated Financial Statements (Unaudited) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements Note 1. Basis of Presentation and Summary of Significant Accounting Policies This note describes the company's financial statement presentation, spin-off details, and key accounting policies - NCR Atleos Corporation became a standalone publicly traded company on October 16, 2023, following a spin-off from NCR Corporation (now Voyix). The financial statements for periods prior to this date are presented on a standalone basis derived from NCR's historical records[24][25][26] - The company recorded adjustments in Q1 2024 related to the Separation, correcting an overstatement of total assets by $6 million, understatement of total liabilities by $5 million, overstatement of additional paid-in capital by $4 million, and overstatement of retained earnings by $8 million as of December 31, 2023. These adjustments did not impact Q1 2024 operating results, cash flows, or financial position[35] Cash, Cash Equivalents, and Restricted Cash Reconciliation (in millions) | Location in the Consolidated Balance Sheet | March 31, 2024 | March 31, 2023 | | :----------------------------------------- | :------------- | :------------- | | Cash and cash equivalents | $343 | $282 | | Short term restricted cash | $7 | $0 | | Long term restricted cash | $8 | $2 | | Cash included in settlement processing assets | $249 | $231 | | Total cash, cash equivalents, and restricted cash | $607 | $515 | Note 2. Goodwill and Purchased Intangible Assets This note details the company's goodwill and identifiable intangible assets, including their carrying amounts and amortization Goodwill by Segment (in millions) | In millions | December 31, 2023 Goodwill | Additions | Other | March 31, 2024 Goodwill | | :---------- | :------------------------- | :-------- | :---- | :---------------------- | | Network | $1,696 | $0 | $(1) | $1,695 | | Self Service Banking | $256 | $0 | $0 | $256 | | Total goodwill | $1,952 | $0 | $(1) | $1,951 | Identifiable Intangible Assets (in millions) | In millions | Amortization Period (in Years) | March 31, 2024 Gross Carrying Amount | March 31, 2024 Accumulated Amortization | December 31, 2023 Gross Carrying Amount | December 31, 2023 Accumulated Amortization | | :---------- | :----------------------------- | :----------------------------------- | :---------------------------------------- | :---------------------------------------- | :----------------------------------------- | | Direct customer relationships | 1 - 15 | $388 | $(89) | $392 | $(84) | | Technology-software | 3 - 8 | $492 | $(199) | $495 | $(185) | | Tradenames | 1 - 10 | $50 | $(36) | $50 | $(33) | | Total identifiable intangible assets | | $930 | $(324) | $937 | $(302) | - Amortization expense related to identifiable intangible assets was $25 million for both the three months ended March 31, 2024, and 2023. The estimated aggregate amortization expense for the remainder of 2024 is $72 million[51] Note 3. Segment Information and Concentrations This note provides financial information by operating segment and geographic area, along with recurring revenue details - The Company manages its operations in three segments: Self-Service Banking, Network, and Telecommunications & Technology (T&T). Performance is evaluated based on revenue and Adjusted EBITDA[53][54][55] Revenue and Adjusted EBITDA by Segment (in millions) | In millions | 2024 Revenue | 2023 Revenue | 2024 Adjusted EBITDA | 2023 Adjusted EBITDA | | :-------------------- | :----------- | :----------- | :------------------- | :------------------- | | Self-Service Banking | $628 | $606 | $134 | $139 | | Network | $310 | $300 | $86 | $75 | | T&T | $51 | $50 | $10 | $10 | | Total segment revenue | $989 | $956 | $230 | $224 | Recurring Revenue (in millions) | In millions | 2024 | 2023 | | :---------- | :--- | :--- | | Recurring revenue | $763 | $710 | | All other products and services | $287 | $276 | | Total revenue | $1,050 | $986 | Revenue by Geographic Area (in millions) | In millions | 2024 | 2023 | | :-------------------------- | :--- | :--- | | United States ("U.S.") | $479 | $466 | | Americas (excluding U.S.) | $138 | $119 | | Europe, Middle East and Africa | $303 | $282 | | Asia Pacific | $130 | $119 | | Total revenue | $1,050 | $986 | Note 4. Debt Obligations This note outlines the company's short-term and long-term debt, including borrowings under credit facilities and senior secured notes Short-Term and Long-Term Debt (in millions) | In millions, except percentages | March 31, 2024 Amount | March 31, 2024 Weighted Average Interest Rate | December 31, 2023 Amount | December 31, 2023 Weighted Average Interest Rate | | :------------------------------ | :-------------------- | :------------------------------------------ | :----------------------- | :------------------------------------------ | | Short-Term Borrowings | $80 | | $76 | | | Long-Term Borrowings | $2,857 | | $2,938 | | | Total Debt | $2,937 | | $3,014 | | - As of March 31, 2024, the Company had $1,567 million outstanding under its Term Loan Facilities and $93 million outstanding under its Revolving Credit Facility. The Revolving Credit Facility had a borrowing capacity of $382 million[60] - The Company's 9.500% senior secured notes due 2029 have an aggregate principal amount of $1,350 million, with interest payable semi-annually[66] Note 5. Trade Receivables Facility This note describes the company's trade receivables facility, under which certain receivables are sold and derecognized - The Company maintains a Trade Receivables Facility allowing its subsidiaries to sell certain trade receivables on a revolving basis. As of March 31, 2024, approximately $166 million of trade receivables had been sold and derecognized[70][72] - The SPEs (U.S. SPE and Canadian SPE) collectively owned $91 million of trade receivables as of March 31, 2024, which are included in Accounts receivable, net[72] Note 6. Income Taxes This note provides details on the company's income tax expense and unrecognized tax benefits - Income tax expense decreased from $25 million in Q1 2023 to $4 million in Q1 2024, primarily due to lower income before taxes[78] - The Company estimates a potential decrease of $2 million to $3 million in gross unrecognized tax benefits over the next 12 months[79] Note 7. Stock Compensation Plans This note details the company's stock-based compensation expense, restricted stock unit grants, and unrecognized compensation costs Stock-based Compensation Expense (in millions) | In millions | 2024 | 2023 | | :---------- | :--- | :--- | | Restricted stock units | $10 | $5 | | Tax expense (benefit) | $(1) | $(1) | | Stock-based compensation expense (net of tax) | $9 | $4 | - On February 16, 2024, the Company granted time-based and market-based restricted stock units under the 2023 Stock Incentive Plan. Time-based RSUs have a weighted-average grant date fair value of $21.90, and market-based RSUs have a fair value of $27.46 per share[82][83] - As of March 31, 2024, the total unrecognized compensation cost related to unvested restricted stock grants is $60 million, expected to be recognized over approximately 2.4 years[87] Note 8. Employee Benefit Plans This note provides information on the company's pension and postretirement benefit plans, including net periodic benefit costs Net Periodic Benefit Cost (Income) of Pension Plans (in millions) | In millions | 2024 U.S. Pension Benefits | 2023 U.S. Pension Benefits | 2024 International Pension Benefits | 2023 International Pension Benefits | 2024 Total Pension Benefits | 2023 Total Pension Benefits | | :---------- | :------------------------- | :------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------- | :-------------------------- | | Interest cost | $17 | $0 | $5 | $5 | $22 | $5 | | Expected return on plan assets | $(19) | $0 | $(9) | $(8) | $(28) | $(8) | | Net periodic benefit cost (income) | $(2) | $0 | $(4) | $(3) | $(6) | $(3) | - Atleos anticipates contributing a total of $3 million to its international pension plans, $2 million to its postretirement plan, and $18 million to its postemployment plan in 2024[91][92] Note 9. Commitments and Contingencies This note discusses the company's legal proceedings, environmental liabilities, and other contingent obligations - The Company is subject to various legal proceedings and claims in the normal course of business, including environmental, labor, intellectual property, and regulatory compliance matters[93] - Under the Separation and Distribution Agreement, Atleos shares liability with Voyix for certain shared environmental matters, including the Kalamazoo River Superfund Site. Atleos' estimated contribution for Shared Environmental Matters in 2024 may be approximately $2 million, payable in Q4 2024[95][97] - Voyix's total reserve for the Kalamazoo River was $142 million as of March 31, 2024, net of expected contributions from co-obligors and indemnitors, which are expected to range from $70 million to $155 million[101][102] Note 10. Related Parties This note describes transactions and balances with related parties, particularly prior to the company's spin-off from NCR - Following the Separation on October 16, 2023, Voyix ceased to be a related party to Atleos, and no related party transactions or balances are reported subsequent to this date[107] NCR Allocations to the Company (in millions) for Q1 2023 | In millions | 2023 | | :------------------------------------ | :--- | | Cost of products | $7 | | Cost of services | $22 | | Selling, general and administrative expense | $44 | | Research and development expense | $6 | | Total allocated costs | $79 | - Prior to the Separation, the Company recognized $3 million of interest income and $7 million of interest expense related to related-party notes and borrowings, respectively, for the three months ended March 31, 2023[112][114] Note 11. Earnings Per Share This note presents the calculation of basic and diluted earnings (loss) per share for the company's common stockholders Basic and Diluted Earnings (Loss) Per Share (in millions, except per share amounts) | In millions, except per share amounts | 2024 | 2023 | | :------------------------------------ | :--- | :--- | | Net income (loss) attributable to Atleos common stockholders | $(8) | $36 | | Basic and dilutive weighted average number of shares outstanding | 71.6 | 70.6 | | Basic and diluted earnings (loss) per share | $(0.11) | $0.51 | - For Q1 2024, potential common shares (restricted stock units and stock options) totaling 5.9 million were excluded from the diluted share count because their effect would have been anti-dilutive due to the net loss attributable to Atleos common stockholders[119] Note 12. Derivatives and Hedging Instruments This note describes the company's use of derivative financial instruments to manage foreign currency and interest rate risks - Atleos uses derivative financial instruments, including foreign currency contracts and interest rate swap contracts, to manage exposures to foreign currency exchange risk and interest rate risk associated with vault cash rental obligations[120][121][122][125] - In March 2024, the Company terminated all open U.S. Dollar interest rate swap contracts for cash proceeds of $13 million. New interest rate swap contracts totaling $2.0 billion notional amount were executed, terminating on March 31, 2027, to hedge U.S. Dollar vault cash agreements[127][128] Fair Values of Derivative Instruments (in millions) | In millions | March 31, 2024 Fair Value | December 31, 2023 Fair Value | | :------------------------------------ | :------------------------ | :------------------------- | | Derivatives designated as hedging instruments (Assets) | $11 | $7 | | Derivatives designated as hedging instruments (Liabilities) | $(25) | $(29) | | Derivatives not designated as hedging instruments (Assets) | $0 | $1 | | Derivatives not designated as hedging instruments (Liabilities) | $(1) | $0 | Note 13. Fair Value of Assets and Liabilities This note presents the fair value measurements of the company's assets and liabilities, categorized by valuation input levels Assets and Liabilities Recorded at Fair Value (in millions) | In millions | March 31, 2024 Total | March 31, 2024 Level 1 | March 31, 2024 Level 2 | March 31, 2024 Level 3 | | :---------- | :------------------- | :------------------- | :------------------- | :------------------- | | Assets: | | | | | | Deposits held in money market mutual funds | $3 | $3 | $0 | $0 | | Interest rate swap contracts | $11 | $0 | $11 | $0 | | Total assets | $14 | $3 | $11 | $0 | | Liabilities: | | | | | | Foreign exchange contracts | $1 | $0 | $1 | $0 | | Interest rate swap contracts | $25 | $0 | $25 | $0 | | Total liabilities | $26 | $0 | $26 | $0 | - Money market mutual funds are valued using Level 1 inputs (quoted market prices), while foreign exchange contracts and interest rate swap contracts are valued using Level 2 inputs (observable market transactions and income models)[135][136][137] Note 14. Accumulated Other Comprehensive Income This note details the changes in the components of accumulated other comprehensive income (loss) for the reporting period Changes in Accumulated Other Comprehensive Income (Loss) by Component (in millions) | In millions | Currency Translation Adjustments | Changes in Employee Benefit Plans | Changes in Fair Value of Effective Cash Flow Hedges | Total | | :---------- | :------------------------------- | :-------------------------------- | :------------------------------------------------ | :---- | | Balance as of December 31, 2023 | $57 | $(5) | $34 | $86 | | Other comprehensive income (loss) before reclassifications | $13 | $0 | $19 | $32 | | Amounts reclassified from AOCI | $0 | $0 | $(15) | $(15) | | Net current period other comprehensive income (loss) | $13 | $0 | $4 | $17 | | Other | $5 | $(5) | $0 | $0 | | Balance as of March 31, 2024 | $75 | $(10) | $38 | $103 | - Total AOCI increased from $86 million at December 31, 2023, to $103 million at March 31, 2024, primarily driven by currency translation adjustments and changes in the fair value of effective cash flow hedges[140] Note 15. Supplemental Financial Information This note provides additional financial details, including components of other income (expense), accounts receivable, and inventories Components of Other Income (Expense), Net (in millions) | In millions | 2024 | 2023 | | :------------------------------------ | :--- | :--- | | Interest income | $2 | $0 | | Foreign currency fluctuations and foreign exchange contracts | $(3) | $(3) | | Employee benefit plans | $5 | $3 | | Bank-related fees | $(2) | $0 | | Other, net | $1 | $0 | | Total other income (expense), net | $3 | $0 | Components of Accounts Receivable, Net (in millions) | In millions | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :---------------- | | Trade | $668 | $638 | | Other | $93 | $90 | | Accounts receivable, gross | $761 | $728 | | Less: allowance for credit losses | $(19) | $(14) | | Total accounts receivable, net | $742 | $714 | Components of Inventories (in millions) | In millions | March 31, 2024 | December 31, 2023 | | :-------------------------- | :------------- | :---------------- | | Work in process and raw materials | $52 | $55 | | Finished goods | $80 | $72 | | Service parts | $198 | $206 | | Total inventories | $330 | $333 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for the reporting period OVERVIEW This section provides an overview of the company's business, strategic initiatives, and operational context - Atleos is a financial technology company providing self-directed banking solutions, including ATM and ITM technology, software, services, hardware, and the Allpoint network. It operates in Self-Service Banking, Network, and Telecommunications & Technology (T&T) segments[145][146][148][149] - The Company completed its spin-off from NCR Corporation (now Voyix) on October 16, 2023, becoming a standalone publicly traded company. It expects to incur separation-related costs through at least fiscal year 2024[150][151] - Strategic initiatives include focusing on 'ATM as a Service,' shifting to a software-led, highly recurring revenue model, and leveraging new ATM transaction types like digital currency solutions. The company continues to be exposed to macroeconomic pressures and geopolitical challenges[153][154][155][160] RESULTS OF OPERATIONS This section analyzes the company's financial performance, including revenue, gross margin, and segment results for the reporting period Key Strategic Financial Metrics (in millions, except percentages) | In millions | 2024 | 2023 | 2024 % of Total Revenue | 2023 % of Total Revenue | Increase (Decrease) 2024 vs 2023 | | :------------------------------------ | :--- | :--- | :---------------------- | :---------------------- | :------------------------------- | | Recurring revenue | $763 | $710 | 72.7 % | 72.0 % | 7 % | | All other products and services | $287 | $276 | 27.3 % | 28.0 % | 4 % | | Total Revenue | $1,050 | $986 | 100.0 % | 100.0 % | 6 % | | Net income (loss) attributable to Atleos | $(8) | $36 | (0.8)% | 3.7 % | (122)% | | Adjusted EBITDA | $162 | $146 | 15.4 % | 14.8 % | 11 % | - Total revenue increased 6% year-over-year to $1,050 million, primarily driven by growth in recurring service revenue streams and commercial agreements with Voyix. However, net income attributable to Atleos decreased by 122% to a loss of $8 million[177][168] - Product revenue increased 3% to $240 million, mainly due to $25 million from commercial agreements with Voyix, partially offset by declines in non-core commerce, ATM hardware, Bitcoin-related, and ATM software license revenues. Service revenue increased 8% to $810 million, driven by hardware maintenance, ATM as a Service, and transaction processing services[178][179] - Gross margin as a percentage of revenue decreased from 22.3% in Q1 2023 to 21.0% in Q1 2024, primarily due to lower margins on services provided under commercial agreements with Voyix and increased interest rates on vault cash agreements[181] - Interest expense significantly increased to $79 million in Q1 2024 due to senior secured notes and credit facility borrowings, compared to no external interest expense in Q1 2023[187] Segment Revenue and Adjusted EBITDA (in millions) | In millions | 2024 Revenue | 2023 Revenue | 2024 Adjusted EBITDA | 2023 Adjusted EBITDA | | :-------------------- | :----------- | :----------- | :------------------- | :------------------- | | Self-Service Banking | $628 | $606 | $134 | $139 | | Network | $310 | $300 | $86 | $75 | | T&T | $51 | $50 | $10 | $10 | - Network Adjusted EBITDA increased 15% due to higher withdrawal transaction volumes and a favorable mix of higher-margin transaction revenue, partially offset by increased interest rates on vault cash agreements and cash-in-transit costs[200] Financial Condition, Liquidity and Capital Resources This section assesses the company's financial position, cash flows, and capital management strategies Summarized Cash Flow Information (in millions) | In millions | 2024 | 2023 | | :------------------------------------ | :--- | :--- | | Net cash provided by operating activities | $148 | $120 | | Net cash used in investing activities | $(31) | $(25) | | Net cash used in financing activities | $(87) | $(91) | - Net cash provided by operating activities increased by $28 million to $148 million in Q1 2024, driven by favorable movement in net working capital and increased non-cash charges, partially offset by a decline in net income[204] Adjusted Free Cash Flow-Unrestricted Reconciliation (in millions) | In millions | 2024 | 2023 | | :------------------------------------ | :--- | :--- | | Net cash provided by operating activities (GAAP) | $148 | $120 | | Capital expenditures for property, plant and equipment | $(24) | $(15) | | Additions to capitalized software | $(6) | $(8) | | Change in restricted cash settlement activity | $(18) | $(27) | | Pension contributions | $1 | $1 | | Temporary transfer of funds from Voyix | $(32) | $0 | | Adjusted free cash flow-unrestricted (non-GAAP) | $69 | $71 | - As of March 31, 2024, cash and cash equivalents totaled $343 million, and total debt was $3,018 million. The Company had a borrowing capacity of $382 million under its senior secured credit facility[211] Critical Accounting Policies and Estimates This section highlights the key accounting policies and estimates that significantly impact the company's financial reporting - Critical accounting estimates include revenue recognition, inventory valuation, goodwill and intangible assets, pension, postretirement and postemployment benefits, income taxes, and, for periods prior to the Separation, cost allocations[215] Recently Issued Accounting Pronouncements This section refers to disclosures regarding new accounting standards and their potential impact on the company - Refer to Note 1, 'Basis of Presentation and Summary of Significant Accounting Policies,' for discussion on recently issued accounting pronouncements[216] Forward-Looking Statements This section outlines forward-looking statements and associated risks that could affect the company's future performance - This section contains forward-looking statements regarding Atleos' plans, goals, intentions, strategies, and financial outlook, which are subject to known and unknown risks and uncertainties that could cause actual outcomes to differ materially[218] - Key risk factors include strategy and technology changes, business operations (e.g., economic conditions, supply chain, geopolitical challenges), data privacy and security, financial and accounting risks (e.g., indebtedness, interest rates), legal and compliance issues, governance, and risks related to the spin-off from NCR[219][220] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section details the company's exposure to market risks, such as foreign exchange and interest rate fluctuations, and its mitigation strategies - Atleos is exposed to foreign currency exchange risk across approximately 40 functional currencies, which can significantly impact results. The Company uses foreign exchange contracts to hedge transactional exposures, deferring gains/losses into AOCI for highly effective cash flow hedges[222] - A hypothetical 10% appreciation in the U.S. Dollar would decrease the fair value of the hedge portfolio by $4 million, while a 10% depreciation would increase it by $3 million, with expected offsets from underlying exposures[224] - The Company is subject to interest rate risk from variable-rate debt (approximately 45% of borrowings are fixed rate) and ATM vault cash rental expenses. A hypothetical 100 basis point increase in variable interest rates would increase pre-tax interest expense by approximately $4 million and vault cash rental expense by $10 million (excluding swaps)[225][226] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and internal control over financial reporting - Management, including the principal executive and financial officers, concluded that the Company's disclosure controls and procedures were effective as of March 31, 2024[229] - There have been no changes in internal control over financial reporting during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[230] PART II. Other Information This section provides additional disclosures on legal proceedings, risk factors, equity sales, and other miscellaneous information Item 1. Legal Proceedings This section refers to detailed information on the company's legal proceedings and contingent liabilities - Information regarding legal proceedings is incorporated by reference from Note 9, 'Commitments and Contingencies,' in the Notes to Condensed Consolidated Financial Statements[233] Item 1A. Risk Factors This section addresses potential risks and uncertainties that could materially impact the company's business and financial results - No material changes to the risk factors previously disclosed in Part I, Item 1A ('Risk Factors') of the Company's 2023 Annual Report on Form 10-K[234] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on unregistered equity sales and the company's policies regarding common stock repurchases - For the three months ended March 31, 2024, approximately 0.3 million shares of vested restricted stock units were purchased at an average price of $19.20 per share to cover withholding taxes[235] - The Company's repurchase of common stock is subject to restrictions under its senior secured credit facility and senior secured notes indentures, and the discretion of its Board of Directors[236] Item 5. Other Information This section provides additional disclosures, including information on director and officer trading arrangements - No director or officer adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement' during the three months ended March 31, 2024[237] Item 6. Exhibits This section lists all supplementary documents and certifications filed with the report - Exhibits include the Amended and Restated Executive Severance Plan, Forms of 2024 Restricted Stock Unit Award Agreements (Performance and Time-based), Certifications pursuant to Rules 13a-14(a) and 15d-14(a) and 18 U.S.C. Section 1350, and iXBRL formatted financial statements[239] Signatures This section contains the official certifications and signatures for the filed report - The report is signed by Paul J. Campbell, Executive Vice President and Chief Financial Officer of NCR Atleos Corporation, on May 14, 2024[243]