Fair Value of Assets and Liabilities

12 Months Ended

Dec. 31, 2011

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities

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, 2011 and 2010 are set forth as follows:

			Fair Value Measurements at Reporting Date Using
In millions	Fair Value as of December 31, 2011		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Deposits held in money market funds*	$	33	$	33	$	—	$	—
Available for sale securities**	10		10		—		—
Foreign exchange forward and option contracts ***	6		—		6		—
Total	$	49	$	43	$	6	$	—
Liabilities:
Interest rate swap ****	$	9	$	—	$	9	$	—
Foreign exchange forward contracts****	3		—		3		—
Total	$	12	$	—	$	12	$	—
			Fair Value Measurements at Reporting Date Using
In millions	Fair Value as of December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Deposits held in money market funds*	$	155	$	155	$	—	$	—
Available for sale securities**	11		11		—		—
Foreign exchange forward contracts ***	9		—		9		—
Total	$	175	$	166	$	9	$	—
Liabilities:
Foreign exchange forward contracts****	$	3	$	—	$	3	$	—
Total	$	3	$	—	$	3	$	—

_____________

*    Included in Cash and cash equivalents in the Consolidated Balance Sheets.

**    Included in Other assets in the Consolidated Balance Sheets.

***    Included in Accounts receivable, net in the Consolidated Balance Sheets.

****    Included in Other current liabilities in the Consolidated Balance Sheets.

Deposits Held in Money Market Funds - A portion of the Company’s excess cash is held in money market funds which generate interest income based on prevailing market rates. Money market 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.

Interest rate swap - As a result of our 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 Forward and Option 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 forward and option 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). The following table presents the nonrecurring losses recognized for the years ended December 31, and the carrying value and asset classification of the related assets as of December 31:

In millions	2011					2010
	Carrying Value		Total Losses			Carrying Value		Total Losses
Property, plant and equipment	$	365	$	(81	)	$	—	$	—
Goodwill	913		(5		)	—		—
Definite-lived intangible assets	312		(2		)	—
Investment in MOD Systems	—		—			—		(14		)
Total	$	1,590	$	(88	)	$	—	$	(14	)

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.

The property, plant and equipment, goodwill, and definite-lived intangible assets were valued using a market approach based on an independent third-party market price. For the twelve months ended December 31, 2011, we recorded $88 million in impairment charges in the Consolidated Statements of Operations. Refer to Note 4, "Goodwill and Other Long-Lived Assets," for additional discussion.

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. We measured the fair value of our investment in MOD Systems Inc. in 2010 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 each investment. For the twelve months ended December 31, 2010, we recorded $14 million in other-than-temporary impairment charges in other (expense) income, net in the Consolidated Statements of Operations.