Fair Value of Assets and Liabilities

6 Months Ended

Jun. 30, 2012

Fair Value Disclosures [Abstract]

Fair Value of Assets and Liabilities

11. 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 June 30, 2012 and December 31, 2011 are set forth as follows:

			Fair Value Measurements at Reporting Date Using
In millions	June 30, 2012		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*	$	71	$	71	$	—	$	—
Available for sale securities**	10		10		—		—
Foreign exchange forward and option contracts ***	5		—		5		—
Total	$	86	$	81	$	5	$	—
Liabilities:
Interest rate swap****	$	13	$	—	$	13	$	—
Foreign exchange forward and option contracts****	5		—		5		—
Total	$	18	$	—	$	18	$	—

			Fair Value Measurements at Reporting Date Using
In millions	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 and option contracts****	3		—		3		—
Total	$	12	$	—	$	12	$	—

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*    Included in Cash and cash equivalents in the Condensed Consolidated Balance Sheet.

**    Included in Other assets in the Condensed Consolidated Balance Sheet.

***    Included in Other current assets in the Condensed Consolidated Balance Sheet.

****    Included in Other current liabilities in the Condensed Consolidated Balance Sheet.

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). 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. 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, for the three and six months ended June 30, 2012, we recorded an other-than-temporary impairment charge of $4 million and $7 million, respectively, in other (expense) income, net in the Condensed Consolidated Statements of Operations based on Level 3 valuations. As of June 30, 2012, there was no remaining carrying value of the investment.

No impairment charges or material non-recurring fair value adjustments were recorded during the three and six months ended June 30, 2011.