Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

Overview

As more fully discussed in later sections of this MD&A, the following were the significant events for the third quarter of 2009:

• Cash flow from operations of $51 million; increase in cash as of September 30, 2009 to $419 million compared to $407 million as of June 30, 2009.

• Impairment charge of $17 million related to an equity investment and a $6 million litigation charge.

• Double digit sales declines across all three geographic segments in the third quarter of 2009 compared to the third quarter of 2008.

During the first nine months of 2009, we continued to focus on our strategic initiatives to provide maximum value to our stakeholders. The strategic initiatives and actions we are taking in 2009 are as follows:

1) Gain profitable share We continue to optimize our investments in demand creation to increase NCR's market share in areas with the greatest potential for profitable revenue growth, which include opportunities in self-service technologies with our core financial services and retail customers. We intend to expand and strengthen our geographic presence and sales coverage in addition to penetrating adjacent single and multi-channel self-service solution segments.

2) Expand into emerging growth industry segments The Company continues to focus 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: travel and gaming, healthcare and public sector, entertainment, and software and technology. We expect to grow our business in these industries through integrated service offerings in addition to targeted acquisitions and strategic partnerships. Our continued investment in our Entertainment business and progress on meeting our targeted roll-out of 2,500 DVD-rental kiosks by the end of 2009 is one example of these efforts.

3) Build the lowest cost structure in our industry The Company is continuing to focus on increasing the efficiency and effectiveness of our core functions and the productivity of our employees. While we continued to make progress in this regard in the first nine months of 2009, we intend to ensure that our execution through the end of the year will allow us to capture efficiencies and intended cost savings. In addition, as announced during the second quarter, NCR will open two new ATM manufacturing facilities - located in Columbus, Georgia and Manaus, Brazil - which will begin shipping product by the first quarter of 2010. NCR expects both plants to provide incremental margins over our existing contract-based manufacturing structure in the Americas.

4) Enhance our global service capability The Company continues to execute various initiatives to enhance its global service capability. We continue to focus on improving our service positioning, increasing our service attach rates for our products and continue to improve profitability in our services business. Our service capability provides us a growing competitive advantage in winning customers and it provides NCR with an attractive and stable revenue source.

5) Focus on working capital and balance sheet In 2008, NCR made significant improvements managing working capital, especially in the areas of accounts receivable and inventory. We will continue to focus on these areas to further improve our operating cash flow and working capital position. The Company will continue to make investments in areas that generate maximum growth, such as self-service research and development and demand creation.

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We expect to continue with these initiatives for the remainder of 2009 and beyond, as we refine our business model and position the Company for growth and profitability.