Document and Entity Information (USD $)	12 Months Ended
Document and Entity Information (USD $)	Dec. 31, 2010	Feb. 15, 2011	Jun. 30, 2010
Document and Entity Information
Document Type	10-K
Amendment Flag	false
Document Fiscal Year Focus	2010
Document Period End Date	Dec. 31, 2010
Document Fiscal Period Focus	FY
Trading Symbol	NCR
Entity Registrant Name	NCR CORP
Entity Central Index Key	0000070866
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Well-known Seasoned Issuer	Yes
Entity Common Stock, Shares Outstanding		160,100,000
Entity Public Float			$ 1,900,000,000

Consolidated Statements of Operations (USD $) In Millions, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Consolidated Statements of Operations
Product revenue	$ 2,403	$ 2,234	$ 2,861
Service revenue	2,416	2,378	2,454
Total revenue	4,819	4,612	5,315
Cost of products	1,925	1,811	2,113
Cost of services	1,930	1,918	2,019
Selling, general and administrative expenses	703	645	713
Research and development expenses	162	141	148
Total operating expenses	4,720	4,515	4,993
Income from operations	99	97	322
Interest expense	2	10	22
Other expense (income), net	11	31	(16)
Income from continuing operations before income taxes	86	56	316
Income tax (benefit) expense	(28)	(5)	68
Income from continuing operations	114	61	248
Income (loss) from discontinued operations, net of tax	23	(91)	(21)
Net income (loss)	137	(30)	227
Net income (loss) attributable to noncontrolling interests	3	3	(1)
Net income (loss) attributable to NCR	134	(33)	228
Amounts attributable to NCR common stockholders:
Income from continuing operations	111	58	249
Income (loss) from discontinued operations, net of tax	23	(91)	(21)
Net income (loss)	$ 134	$ (33)	$ 228
Net income per share attributable to NCR common stockholders:
Basic	$ 0.69	$ 0.37	$ 1.51
Diluted	$ 0.69	$ 0.36	$ 1.48
Net income (loss) per common share
Basic	$ 0.84	$ (0.21)	$ 1.38
Diluted	$ 0.83	$ (0.21)	$ 1.36
Weighted average common shares outstanding
Basic	159.8	158.9	165.3
Diluted	161.2	160.1	167.9

Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009
Assets
Cash and cash equivalents	$ 496	$ 451
Accounts receivable, net	928	896
Inventories, net	741	686
Other current assets	313	266
Total current assets	2,478	2,299
Property, plant and equipment, net	429	356
Goodwill	115	100
Prepaid pension cost	286	244
Deferred income taxes	630	617
Other assets	423	478
Total assets	4,361	4,094
Liabilities and stockholders' equity
Short-term borrowings	1	4
Accounts payable	499	557
Payroll and benefits liabilities	175	125
Deferred service revenue and customer deposits	362	329
Other current liabilities	379	367
Total current liabilities	1,416	1,382
Long-term debt	10	11
Pension and indemnity plan liabilities	1,259	1,268
Postretirement and postemployment benefits liabilities	309	355
Income tax accruals	165	165
Environmental liabilities	244	279
Other liabilities	42	42
Total liabilities	3,445	3,502
Commitments and contingencies (Note 11)
Stockholders' equity
Preferred stock: par value $0.01 per share, 100.0 shares authorized, no shares issued and outstanding as of December 31, 2010 and December 31, 2009
Common stock: par value $0.01 per share, 500.0 shares authorized, 159.7 and 159.6 shares issued and outstanding as of December 31, 2010 and December 31, 2009, respectively	2	2
Paid-in capital	281	270
Retained earnings	1,935	1,801
Accumulated other comprehensive loss	(1,335)	(1,509)
Total NCR stockholders' equity	883	564
Noncontrolling interests in subsidiaries	33	28
Total stockholders' equity	916	592
Total liabilities and stockholders' equity	$ 4,361	$ 4,094

Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Per Share data, unless otherwise specified	Dec. 31, 2010	Dec. 31, 2009
Consolidated Balance Sheets (Parenthetical)
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	100.0	100.0
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	500.0	500.0
Common stock, shares issued	159.7	159.6
Common stock, shares outstanding	159.7	159.6

Consolidated Statements of Cash Flows (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Operating activities
Net income (loss)	$ 137	$ (30)	$ 227
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
(Income) loss from discontinued operations	(23)	91	21
Depreciation and amortization	138	128	114
Stock-based compensation expense	21	12	41
Excess tax benefit from stock-based compensation			(2)
Deferred income taxes	(65)	(80)	10
Gain on sale of property, plant and equipment	(10)	(12)	(30)
Impairment of equity investments	14	39
Changes in operating assets and liabilities:
Receivables	(26)	27	249
Inventories	(54)	5	25
Current payables and accrued expenses	(12)	(28)	(56)
Deferred service revenue and customer deposits	34	18	(42)
Employee severance and pension	80	49	(43)
Other assets and liabilities	8	37	(74)
Net cash provided by operating activities	242	256	440
Investing activities
Grant reimbursements from capital expenditures	5	9
Expenditures for property, plant and equipment	(174)	(121)	(75)
Proceeds from sales of property, plant and equipment	39	11	59
Additions to capitalized software	(57)	(61)	(63)
Other investing activities and business acquisitions, net	(24)	(41)	(65)
Net cash used in investing activities	(211)	(203)	(144)
Financing activities
Repurchases of Company common stock	(20)	(1)	(494)
Excess tax benefit from stock-based compensation			2
Short-term borrowings, net	(4)	4
Repayment of senior unsecured notes		(300)
Repayment of long term debt	(1)
Payments on revolving credit facility	(75)	(30)
Borrowings on revolving credit facility	75	30
Proceeds from employee stock plans	11	9	17
Net cash used in financing activities	(14)	(288)	(475)
Cash flows from discontinued operations
Net cash provided by (used in) operating activities	21	(33)	(44)
Effect of exchange rate changes on cash and cash equivalents	7	8	(18)
Increase (decrease) in cash and cash equivalents	45	(260)	(241)
Cash and cash equivalents at beginning of year	451	711	952
Cash and cash equivalents at end of year	496	451	711
Supplemental data
Income taxes	34	49	108
Interest	$ 2	$ 10	$ 22

Consolidated Statements of Changes in Stockholders' Equity (USD $) In Millions, unless otherwise specified	Total	Common Stock [Member]	Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive (Loss) Income [Member]	Noncontrolling Interests in Subsidiaries [Member]
Balance at Dec. 31, 2007	$ 1,776	$ 2	$ 683	$ 1,608	$ (536)	$ 19
Balance (in shares) at Dec. 31, 2007		178.0
Comprehensive income (loss):
Net income (loss)	227			228		(1)
Other comprehensive income (loss):
Foreign currency translation	(201)				(201)
Unrealized gains (losses) from securities, net of tax benefit (expense)	(7)				(7)
Cash flow hedging gains (losses), net of tax benefit (expense)	(7)				(7)
Changes to unrecognized losses and prior service cost related to pension, postretirement and postemployment benefits, net of tax benefit (expense)	(893)				(893)
Total other comprehensive income (loss)	(1,108)				(1,108)
Total comprehensive income (loss)	(881)			228	(1,108)	(1)
Spin-off of Teradata (Note 1)	(2)			(2)
Employee stock purchase and stock compensation plans	59		59
Employee stock purchase and stock compensation plans (in shares)		2
Repurchase of Company common stock	(494)		(494)
Repurchase of Company common stock (in shares)		(22)
Increase in noncontrolling interests	7					7
Balance at Dec. 31, 2008	465	2	248	1,834	(1,644)	25
Balance (in shares) at Dec. 31, 2008		158.0
Comprehensive income (loss):
Net income (loss)	(30)			(33)		3
Other comprehensive income (loss):
Foreign currency translation	28				28
Unrealized gains (losses) from securities, net of tax benefit (expense)	1				1
Cash flow hedging gains (losses), net of tax benefit (expense)	8				8
Changes to unrecognized losses and prior service cost related to pension, postretirement and postemployment benefits, net of tax benefit (expense)	98				98
Total other comprehensive income (loss)	135				135
Total comprehensive income (loss)	105			(33)	135	3
Employee stock purchase and stock compensation plans	23		23
Employee stock purchase and stock compensation plans (in shares)		2
Repurchase of Company common stock	(1)		(1)
Balance at Dec. 31, 2009	592	2	270	1,801	(1,509)	28
Balance (in shares) at Dec. 31, 2009	159.6	160.0
Comprehensive income (loss):
Net income (loss)	137			134		3
Other comprehensive income (loss):
Foreign currency translation	32				30	2
Unrealized gains (losses) from securities, net of tax benefit (expense)	(1)				(1)
Cash flow hedging gains (losses), net of tax benefit (expense)	5				5
Changes to unrecognized losses and prior service cost related to pension, postretirement and postemployment benefits, net of tax benefit (expense)	140				140
Total other comprehensive income (loss)	176				174	2
Total comprehensive income (loss)	313			134	174	5
Employee stock purchase and stock compensation plans	31		31
Employee stock purchase and stock compensation plans (in shares)		2
Repurchase of Company common stock	(20)		(20)
Repurchase of Company common stock (in shares)		(2)
Balance at Dec. 31, 2010	$ 916	$ 2	$ 281	$ 1,935	$ (1,335)	$ 33
Balance (in shares) at Dec. 31, 2010	159.7	160.0

Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Consolidated Statements of Changes in Stockholders' Equity
Unrealized losses from securities, tax benefit	$ 0	$ 0	$ 1
Cash flow hedging gains (losses), tax (expense) benefit	(1)	0	0
Changes to unrecognized losses and prior service cost related to pension, postretirement and postemployment benefits, tax (expense) benefit	$ (27)	$ (110)	$ 477

Description of Business and Significant Accounting Policies

12 Months Ended

Dec. 31, 2010

Description of Business and Significant Accounting Policies

Description of Business and Significant Accounting Policies

Note 1 Description of Business and Significant Accounting Policies

Description of Business NCR Corporation (NCR or the Company, also referred to as "we," "us" or "our") and its subsidiaries provide innovative products and services that are designed specifically to enable NCR's customers to connect, interact and transact with their customers and enhance their customer relationships by addressing consumer demand for convenience, value and individual service. NCR's portfolio of self-service and assisted-service solutions serve customers in the financial services, retail and hospitality, healthcare, travel and gaming and entertainment industries and include automated teller machines (ATMs), self-service kiosks and point of sale devices as well as software application that can be used by consumers to enable them to interact with businesses from their computer or mobile device. NCR complements these product solutions by offering a complete portfolio of services to help customers design, deploy and support its technology tools, as well as offering services for third-party products.

NCR's solutions are built on a foundation of long-established industry knowledge and consulting expertise, value-added software and hardware technology, global customer support services, and a complete line of business consumables and specialty media products.

Discontinued Operations Income (loss) from discontinued operations, net of tax includes activity related to the Fox River environmental matter as well as the spin-off of the Teradata Data Warehousing (Teradata) business.

Fox River environmental matter In 2010, the Company revised its presentation of costs and insurance recoveries related to certain environmental obligations, including the Fox River matter, to classify those items as discontinued operations in the Consolidated Statement of Operations and Consolidated Statement of Cash Flows. Such costs and insurance recoveries were previously classified in other expense (income), net in the Consolidated Statement of Operations, and within cash flow from operating activities in the Consolidated Statement of Cash Flows. Presentation of these items as discontinued operations is appropriate because the environmental obligations arose at properties which the Company has divested, and is consistent with the guidance of the SEC, including SEC Staff Accounting Bulletin Topic 5Z(5), "Classification and Disclosure of Contingencies Relating to Discontinued Operations." The revised presentation has been applied for similar items in all periods presented. See Note 11, "Commitments and Contingencies" for additional information.

For the years ended December 31, 2009 and 2008, loss from discontinued operations, net of tax, related to the Fox River environmental matter of $91 million and $18 million, respectively, was previously reported as $143 million and $28 million included in other income (expense), net, respectively, and $52 million and $10 million was included in income tax expense (benefit), respectively. The revision in presentation did not change net income or net income per common share in either period. For the years ended December 31, 2009 and 2008, the cash flows from discontinued operations related to the Fox River environmental matter included $33 million and $25 million of cash used, respectively, which was previously included in net cash provided by operating activities.

For the year ended December, 31, 2010, income from discontinued operations of $31 million or $20 million, net of tax, was primarily due to the settlement of insurance claims with insurance carriers and net cash provided by discontinued operations was $21 million.

Spin-off of Teradata On September 30, 2007, NCR completed the spin-off of Teradata through the distribution of a tax-free stock dividend to its stockholders. The results of operations and cash flows of Teradata have been presented as a discontinued operation. There was no operating activity related to the spin-off of Teradata in 2010 and 2009. For the year ended December 31, 2010, $3 million was included in income from discontinued operations, net of tax, related to a favorable change in uncertain tax benefits attributable to Teradata. For the year ended December 31, 2008, $3 million was included in income (loss) from discontinued operations, which was comprised of $4 million of expenses related to professional and consulting fees directly associated with the spin-off of Teradata, net of $1 million income tax benefit recognized.

Evaluation of Subsequent Events The Company evaluated subsequent events through the date our Consolidated Financial Statements were issued. Except as described below, no matters were identified that required adjustment of the Consolidated Financial Statements or additional disclosure.

On January 1, 2011, NCR began management of its business on a line of business basis, changing from the previous model of geographic business segments. In accordance with accounting principles generally accepted in the United States (otherwise referred to as GAAP), the Company expects to report its results for line of business segments beginning in the first quarter of 2011. The new model is intended to align with our operational organization along lines of business, and is expected to improve profitability.

Out of Period Adjustments During 2009, the Company recorded adjustments to decrease product revenue by $10 million and cost of products by $7 million, which resulted in a net decrease in gross margin and net income of $3 million. The adjustments related to revenue incorrectly recorded during 2008 by the Company's Japanese subsidiary. Also during 2009, the Company recorded an adjustment to operating expenses to recognize additional employee benefits at its Italian subsidiary. These costs, which were incurred in 2007 and 2008, reduced 2009 net income by $3 million. The Company determined the impact of these errors was not material to the annual or interim financial statements of previous periods and the effect of correcting these errors in 2009 was not material to the 2009 annual or interim financial statements.

Basis of Consolidation The consolidated financial statements include the accounts of NCR and its majority-owned subsidiaries. Long-term investments in affiliated companies in which NCR owns between 20% and 50%, and therefore, exercises significant influence, but which it does not control, are accounted for using the equity method. Investments in which NCR does not exercise significant influence (generally, when NCR has an investment of less than 20% and no significant influence, such as representation on the investee's board of directors) are accounted for using the cost method. All significant inter-company transactions and accounts have been eliminated. In addition, the Company is required to determine whether it is the primary beneficiary of economic income or losses that may be generated by variable interest entities in which the Company has such an interest. In circumstances where the Company determined it is the primary beneficiary, consolidation of that entity would be required. For the periods presented, no variable interest entities have been consolidated.

Reclassifications Certain prior-period amounts have been reclassified in the accompanying Consolidated Financial Statements and Notes thereto in order to conform to the current period presentation. None of the reclassifications affected previously reported net income or net income per common share.

Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and revenues and expenses during the period reported. Actual results could differ from those estimates.

Revenue Recognition The Company records revenue, net of taxes, when it is realized, or realizable, and earned. The Company considers these criteria met when persuasive evidence of an arrangement exists, the products or services have been provided to the customer, the sales price is fixed or determinable, and collectability is reasonably assured. For product sales, delivery is deemed to have occurred when the customer has assumed risk of loss of the goods sold and all performance obligations are complete. For services sales, revenue is recognized as the services are provided or ratably over the service period, or, if applicable, after customer acceptance of the services.

NCR frequently enters into multiple-element arrangements with its customers including hardware, software, professional consulting services and maintenance support services. For arrangements involving multiple deliverables, where the delivered items have stand-alone value, verifiable objective evidence of selling price exists for the undelivered items, and the customer has no general right of return, NCR separates the deliverables and allocates the total arrangement consideration among the units of accounting. Each unit of accounting is then accounted for under the applicable revenue recognition guidance.

In situations where NCR's solutions contain software that is more than incidental to the hardware and services, revenue related to the software and software-related elements is supported by vendor-specific objective evidence (VSOE). VSOE of selling price is established by the price charged when each element is sold separately. In situations where there is appropriate evidence for all undelivered elements, but not for delivered elements, the residual method is used to allocate the arrangement's consideration. Under the residual method, the selling price of undelivered elements is deferred and the remaining portion of the arrangement fee is allocated to the delivered elements and recognized as revenue.

NCR's customers may request that delivery and passage of title and risk of loss occur on a bill and hold basis. For the years ended December 31, 2010, 2009 and 2008, the revenue recognized from bill and hold transactions approximated 1% or less of total revenue.

In addition to the standard product warranty, the Company periodically offers extended warranties to its customers in the form of product maintenance services. For contracts that are not separately priced but include product maintenance, the Company defers revenue at an amount equal to the selling price, based on objective and reliable evidence and recognizes the deferred revenue over the service term. For separately priced product maintenance contracts, NCR defers the stated amount of the separately priced contract and recognizes the deferred revenue ratably over the service term.

Net revenue from DVD movie rentals is recognized on a ratable basis during the term of a consumer's rental transaction. Revenue from a direct sale out of the kiosk of previously rented movies is recognized at the time of sale. On rental transactions for which the related DVDs have not yet been returned to the kiosk at month-end, revenue is recognized with a corresponding receivable recorded in the Consolidated Balance Sheet, net of a reserve for potentially uncollectible amounts. We record revenue net of refunds and applicable sales taxes collected from consumers.

Shipping and Handling Costs related to shipping and handling are included in cost of products in the Consolidated Statements of Operations.

Cash and Cash Equivalents All short-term, highly liquid investments having original maturities of three months or less, including time deposits, are considered to be cash equivalents.

Allowance for Doubtful Accounts NCR establishes provisions for doubtful accounts using percentages of accounts receivable balances to reflect historical average credit losses and specific provisions for known issues.

Inventories Inventories are stated at the lower of cost or market, using the average cost method. Cost includes materials, labor and manufacturing overhead related to the purchase and production of inventories. Service parts are included in inventories and include reworkable and non-reworkable service parts. The Company regularly reviews inventory quantities on hand, future purchase commitments with suppliers and the estimated utility of inventory. If the review indicates a reduction in utility below carrying value, inventory is reduced to a new cost basis. Excess and obsolete reserves are established based on forecasted usage, orders, technological obsolescence and inventory aging.

Long-Lived Assets

Capitalized Software Certain direct development costs associated with internal-use software are capitalized within other assets and amortized over the estimated useful lives of the resulting software. NCR typically amortizes capitalized internal-use software on a straight-line basis over four years beginning when the asset is substantially ready for use, as this is considered to approximate the usage pattern of the software.

Costs incurred for the development of software that will be sold, leased or otherwise marketed are capitalized when technological feasibility has been established. These costs are included within other assets and are amortized over the estimated useful lives of the resulting software. The Company amortizes capitalized software on a sum-of- the-years' digits basis over three years beginning when the product is available for general release, as this approximates the sales pattern of the software. Costs capitalized include direct labor and related overhead costs. Costs incurred prior to technological feasibility or after general release are expensed as incurred. The following table identifies the activity relating to total capitalized software:


In millions	2010			2009			2008
Beginning balance as of January 1	$	102		$	92		$	75
Capitalization		57			61			63
Amortization		(52	)		(51	)		(46	)

Ending balance as of December 31	$	107		$	102		$	92

Goodwill and Other Intangible Assets Goodwill represents the excess of purchase price over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. Goodwill is tested annually for impairment or more frequently if certain events occur indicating that the carrying value of goodwill may be impaired. A significant amount of judgment is involved in determining if an indicator of impairment has occurred. Such indicators may include a decline in expected cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition, or slower growth rates, among others.

Goodwill is evaluated for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment. NCR has three reporting units which are: Americas; Europe, Middle East and Africa (EMEA); and Asia Pacific and Japan (APJ). Total goodwill for each reporting unit is as follows: $55 million related to Americas, $33 million related to EMEA and $27 million related to APJ.

NCR's annual impairment test is performed during the fourth quarter. The evaluation of impairment involves comparing the current fair value of each reporting unit to its carrying value, including goodwill. NCR uses a discounted cash flow model (DCF model) to estimate the current fair value of its reporting units when testing for impairment. A number of significant assumptions and estimates are involved in the application of the DCF model to forecast operating cash flows, including markets and market shares, sales volumes and prices, costs to produce, tax rates, capital spending, discount rates and working capital changes. Most of these assumptions vary among reporting units. The cash flow forecasts are generally based on approved strategic operating plans.

In the event the estimated fair value of a reporting unit based on the DCF model is less than the carrying value, an additional analysis would be required. The additional analysis would compare the carrying value of the reporting unit's goodwill with the implied fair value of that goodwill. The implied fair value of goodwill is the excess of the fair value of the reporting unit over the fair value amounts assigned to all of the assets and liabilities of that unit as if the reporting unit was acquired in a business combination and the fair value of the reporting unit represented the purchase price. If the carrying value of goodwill exceeds its implied fair value, an impairment loss equal to such excess would be recognized.

Acquired intangible assets other than goodwill are amortized over their estimated useful lives unless the lives are determined to be indefinite. Acquired intangible assets are carried at cost, less accumulated amortization. For intangible assets purchased in a business combination, the estimated fair values of the assets received are used to establish the carrying value. The fair value of acquired intangible assets is determined using common techniques, and the Company employs assumptions developed using the perspective of a market participant.

Property, Plant and Equipment Property, plant and equipment, and leasehold improvements are stated at cost less accumulated depreciation. Depreciation is computed over the estimated useful lives of the related assets primarily on a straight-line basis. Machinery and other equipment are depreciated over 3 to 20 years and buildings over 25 to 45 years. Leasehold improvements are depreciated over the life of the lease or the asset, whichever is shorter. Assets classified as held for sale are not depreciated. Upon retirement or disposition of property, plant and equipment, the related cost and accumulated depreciation or amortization are removed from the Company's accounts, and a gain or loss is recorded. Depreciation expense related to property, plant and equipment was $77 million, $68 million, and $58 million for the years ended December 31, 2010, 2009, and 2008, respectively.

Valuation of Long-Lived Assets Long-lived assets such as property, plant and equipment, and software are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable in the period in which the held for sale criteria is met. This analysis consists of comparing the asset's carrying value to the expected future cash flows to be generated from the asset on an undiscounted basis. If the carrying amount of the asset is determined not to be recoverable, a write-down to fair value is recorded. Fair values are determined based on quoted market values, discounted cash flows, or external appraisals, as applicable. Long-lived assets are reviewed for impairment at the individual asset or the asset group level for which the lowest level of independent cash flows can be identified.

Warranty and Sales Returns Provisions for product warranties and sales returns and allowances are recorded in the period in which NCR becomes obligated to honor the related right, which generally is the period in which the related product revenue is recognized. The Company accrues warranty reserves based upon historical factors such as labor rates, average repair time, travel time, number of service calls per machine and cost of replacement parts. When a sale is consummated, a warranty reserve is recorded based upon the estimated cost to provide the service over the warranty period. The Company accrues sales returns and allowances using percentages of revenue to reflect the Company's historical average of sales return claims.

Research and Development Costs Research and development costs primarily include payroll and benefit-related costs, contractor fees, facilities costs, infrastructure costs, and administrative expenses directly related to research and development support and are expensed as incurred, except certain software development costs capitalized after technological feasibility of the software is established.

Leases The Company accounts for material escalation clauses, free or reduced rents and landlord incentives contained in operating type leases on a straight-line basis over the lease term, including any reasonably assured lease renewals. For leasehold improvements that are funded by the landlord, the Company records the incentive as deferred rent. The deferred rent is then amortized as reductions to lease expense over the lease term.

For capital leases where NCR is the lessee, it records an amortizable debt and a related fixed asset in the Consolidated Balance Sheet.

Pension, Postretirement and Postemployment Benefits NCR has significant pension, postretirement and postemployment benefit costs, which are developed from actuarial valuations. Actuarial assumptions are established to anticipate future events and are used in calculating the expense and liabilities relating to these plans. These factors include assumptions the Company makes about interest rates, expected investment return on plan assets, rate of increase in healthcare costs, total and involuntary turnover rates, and rates of future compensation increases. In addition, NCR also uses subjective factors, such as withdrawal rates and mortality rates to develop the Company's valuations. NCR generally reviews and updates these assumptions on an annual basis. NCR is required to consider current market conditions, including changes in interest rates, in making these assumptions. The actuarial assumptions that NCR uses may differ materially from actual results due to changing market and economic conditions, higher or lower withdrawal rates, or longer or shorter life spans of participants. These differences may result in a significant impact to the amount of pension, postretirement or postemployment benefits expense, and the related assets and liabilities, the Company has recorded or may record.

Foreign Currency For many NCR international operations, the local currency is designated as the functional currency. Accordingly, assets and liabilities are translated into U.S. Dollars at year-end exchange rates, and revenues and expenses are translated at average exchange rates prevailing during the year. Currency translation adjustments from local functional currency countries resulting from fluctuations in exchange rates are recorded in other comprehensive income. Where the U.S. Dollar is the functional currency, translation adjustments are recorded in other income and expense.

Derivative Instruments In the normal course of business, NCR enters into various financial instruments, including derivative financial instruments. The Company accounts for derivatives as either assets or liabilities in the Consolidated Balance Sheets at fair value and recognizes the resulting gains or losses as adjustments to earnings or other comprehensive income. The Company formally documents all relationships between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking various hedge transactions. Hedging activities are transacted only with highly rated institutions, reducing exposure to credit risk in the event of nonperformance. Additionally, the Company completes assessments related to the risk of counterparty nonperformance on a regular basis.

The accounting for changes in fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship, and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, the Company has designated the hedging instrument, based on the exposure being hedged, as a fair value hedge, a cash flow hedge or a hedge of a net investment in a foreign operation. For derivative instruments designated as fair value hedges, the effective portion of the hedge is recorded as an offset to the change in the fair value of the hedged item, and the ineffective portion of the hedge, if any, is recorded in the Consolidated Statement of Operations. For derivative instruments designated as cash flow hedges and determined to be highly effective, the gains or losses are deferred in other comprehensive income and recognized in the determination of income as adjustments of carrying amounts when the underlying hedged transaction is realized, canceled or otherwise terminated. When hedging certain foreign currency transactions of a long-term investment nature (net investments in foreign operations) gains and losses are recorded in the currency translation adjustment component of accumulated other comprehensive income (loss). Gains and losses on foreign exchange contracts that are not used to hedge currency transactions of a long-term investment nature, or that are not designated as cash flow or fair value hedges, are recognized in other income or expense as exchange rates change.

Fair Value of Assets and Liabilities Fair value is defined as an exit price, representing an amount that would be received to sell an asset or the amount paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the guidance prioritizes the inputs used to measure fair value into the following three-tier fair value hierarchy:

•

Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities

•

Level 2: Unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or inputs, other than quoted prices in active markets, that are observable either directly or indirectly

•

Level 3: Unobservable inputs for which there is little or no market data

Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes to the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy.

NCR measures its financial assets and financial liabilities at fair value based on one or more of the following three valuation techniques:

•

Market approach: Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

•

Cost approach: Amount that would be required to replace the service capacity of an asset (replacement cost).

•

Income approach: Techniques to convert future amounts to a single present amount based upon market expectations (including present value techniques, option pricing and excess earnings models).

We regularly review our investments to determine whether a decline in fair value, if any, below the cost basis is other than temporary. If the decline in the fair value is determined to be other than temporary, the cost basis of the security is written down to fair value and the amount of the write-down is included in the Consolidated Statement of Operations. For qualifying investments in debt or equity securities, a temporary impairment charge would be recognized in other comprehensive income (loss).

Environmental and Legal Contingencies In the normal course of business, NCR is subject to various proceedings, lawsuits, claims and other matters, including, for example, those that relate to the environment and health and safety, employee benefits, import/export compliance, intellectual property, data privacy, product liability, commercial disputes and regulatory compliance, among others. Additionally, NCR is subject to diverse and complex laws and regulations, including those relating to corporate governance, public disclosure and reporting, environmental safety and the discharge of materials into the environment, product safety import and export compliance, data privacy and security, antitrust and competition, government contracting, anti-corruption, and labor and human resources, which are rapidly changing and subject to many possible changes in the future. Compliance with these laws and regulations, including changes in accounting standards, taxation requirements, and federal securities laws among others, may create a substantial burden on, and substantially increase the costs to NCR or could have an impact on NCR's future operating results. NCR believes that the amounts provided in its consolidated financial statements are adequate in light of the probable and estimable liabilities. However, there can be no assurances that the actual amounts required to satisfy alleged liabilities from various lawsuits, claims, legal proceedings and other matters, including the Fox River environmental matter discussed in Note 11, "Commitments and Contingencies," and to comply with applicable laws and regulations, will not exceed the amounts reflected in NCR's consolidated financial statements or will not have a material adverse effect on the Company's consolidated results of operations, financial condition or cash flows. Any costs that may be incurred in excess of those amounts provided as of December 31, 2010 cannot currently be reasonably determined or are not currently considered probable.

Legal costs related to loss contingencies are typically expensed as incurred, except for certain costs associated with NCR's environmental remediation obligations. Costs and fees associated with litigating the extent and type of required remedial actions and the allocation of remediation costs among potentially responsible parties are typically included in the measurement of the environmental remediation liabilities.

Advertising Advertising costs are recognized in selling, general and administrative expenses when incurred.

Income Taxes Income tax expense is provided based on income before income taxes. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. These deferred taxes are determined based on the enacted tax rates expected to apply in the periods in which the deferred assets or liabilities are expected to be settled or realized. NCR records valuation allowances related to its deferred income tax assets when it is more likely than not that some portion or all of the deferred income tax assets will not be realized.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being sustained upon examination by authorities. Interest and penalties related to uncertain tax positions are recognized as part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law and until such time that the related tax benefits are recognized.

Earnings Per Share Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the reported period. The calculation of diluted earnings per share is similar to basic earnings per share, except that the weighted average number of shares outstanding includes the dilution from potential shares resulting from stock options and restricted stock awards. When calculating diluted earnings per share, the Company includes the potential windfall or shortfall tax benefits as well as average unrecognized compensation expense as part of the assumed proceeds from exercises of stock options. The Company uses the tax law ordering approach to determine the potential utilization of windfall benefits. The holders of unvested restricted stock awards do not have nonforfeitable rights to dividends or dividend equivalents and therefore, such unvested awards do not qualify as participating securities. See Note 8, "Employee Stock Compensation Plans," for share information on NCR's stock compensation plans.

The components of basic and diluted earnings per share attributable to NCR common stockholders are as follows (in millions, except earnings per share) for the years ended December 31:


	2010		2009			2008
Income from continuing operations	$	111	$	58		$	249
Income (loss) from discontinued operations, net of tax		23		(91	)		(21	)

Net income (loss) attributable to NCR common stockholders	$	134	$	(33	)	$	228

Weighted average outstanding shares of common stock		159.8		158.9			165.3
Dilutive effect of employee stock options and restricted stock		1.4		1.2			2.6

Common stock and common stock equivalents		161.2		160.1			167.9
Basic earnings (loss) per share:
From continuing operations	$	0.69	$	0.37		$	1.51
From discontinued operations		0.15		(0.58	)		(0.13	)

Total basic earnings (loss) per share	$	0.84	$	(0.21	)	$	1.38

Diluted earnings (loss) per share:
From continuing operations	$	0.69	$	0.36		$	1.48
From discontinued operations		0.14		(0.57	)		(0.12	)

Total diluted earnings (loss) per share	$	0.83	$	(0.21	)	$	1.36

Options to purchase 5.6 million, 7.0 million and 7.2 million shares of common stock for 2010, 2009 and 2008, respectively, were outstanding but were not included in the computation of diluted earnings per share because the options' exercise prices were greater than the average market price of the common shares and, therefore, the effect would have been anti-dilutive.

Stock Compensation Stock-based compensation represents the costs related to share-based awards granted to employees and non-employee directors. For all periods presented, the Company's outstanding stock-based compensation awards are classified as equity except for certain awards granted to non-employee directors. The Company measures stock-based compensation cost at the grant date, based on the estimated fair value of the award and recognizes the cost on a straight-line basis (net of estimated forfeitures) over the requisite service period. See Note 8, "Employee Stock Compensation Plans," for more information on NCR's stock-based compensation plans.

Recently Issued Accounting Pronouncements

In September 2009, the FASB ratified the final consensus reached by the Emerging Issues Task Force (EITF) that revised the authoritative guidance for revenue arrangements with multiple deliverables. The guidance addresses how to determine whether an arrangement involving multiple deliverables contains more than one unit of accounting and how the arrangement consideration should be allocated among the separate units of accounting. NCR is adopting this guidance effective January 1, 2011 and will apply it prospectively for new or materially modified arrangements. Under the consensus adopted by the EITF, use of the residual method, which the Company applies to many of its customer arrangements, will no longer be permitted. The new guidance will require the Company to use its best estimate of a deliverable's selling price whenever it lacks objective evidence. The result of this change is that any discount in a customer arrangement which previously would have been allocated to delivered items, will instead be allocated on a relative fair value basis among all the deliverables. Management does not anticipate that the adoption of the guidance will have a material impact on its consolidated financial statements.

In September 2009, the FASB also ratified the final consensus reached by the EITF that modifies the scope of the software revenue recognition guidance to exclude (a) non-software components of tangible products and (b) software components of tangible products that are sold, licensed or leased with tangible products when the software components and non-software components of the tangible product function together to deliver the tangible product's essential functionality. NCR is adopting this guidance effective January 1, 2011 and will apply it prospectively for new or materially modified arrangements. Management does not anticipate that the adoption of the guidance will have a material impact on its consolidated financial statements.

Supplemental Financial Information (in millions)

12 Months Ended

Dec. 31, 2010

Supplemental Financial Information (in millions)

Supplemental Financial Information (in millions)

Note 2 Supplemental Financial Information (in millions)


For the years ended December 31	2010			2009			2008
Other (income) expense, net
Interest income	$	(5	)	$	(6	)	$	(23	)
Impairment of an investment (Note 14)		14			24			—
Other, net		2			13			7

Total other (income) expense, net	$	11		$	31		$	(16	)


At December 31				2010			2009
Accounts Receivable
Trade				$	878		$	867
Other					63			53

Accounts Receivable, gross					941			920
Less: allowance for doubtful accounts					(13	)		(24	)

Total accounts receivable, net				$	928		$	896

Inventories
Work in process and raw materials, net				$	143		$	118
Finished goods, net					180			167
Service parts, net					418			401

Total inventories, net				$	741		$	686

Other current assets
Current deferred tax assets				$	125		$	104
Other					188			162

Total other current assets				$	313		$	266

Property, plant and equipment
Land and improvements				$	43		$	40
Buildings and improvements					234			275
Machinery and other equipment					818			695

Property, plant and equipment, gross					1,095			1,010
Less: accumulated depreciation					(666	)		(654	)

Total property, plant and equipment, net				$	429		$	356

Accumulated other comprehensive loss, net of tax
Currency translation adjustments				$	(54	)	$	(84	)
Unrealized gain on securities					2			3
Unrealized gain on derivatives					5			—
Actuarial losses and prior service costs on employee benefit plans					(1,288	)		(1,428	)

Total accumulated other comprehensive loss				$	(1,335	)	$	(1,509	)

Restructuring and Real Estate Transactions	12 Months Ended
Restructuring and Real Estate Transactions	Dec. 31, 2010
Restructuring and Real Estate Transactions
Restructuring and Real Estate Transactions	Note 3 Restructuring and Real Estate Transactions *Organizational Realignment* In the second quarter of 2008, NCR commenced a global realignment initiative to reduce redundancies and process inefficiencies to become more customer-focused and market-driven. This initiative addressed legacy process inefficiencies and unbalanced resource allocation by focusing on organizational design, process re-engineering and business process outsourcing. The initiative resulted in reductions in employment and productivity improvements, while freeing up funds to invest in growth programs. As a result of this initiative, the Company recorded a total of $57 million in employee severance and other termination costs in 2008. Of these costs, $5 million was recorded as cost of products, $31 million was recorded as cost of services, $16 million was recorded as selling, general and administrative expense and the remaining $5 million was recorded as research and development expense. Of the $57 million total expense recognized in 2008, $40 million was recorded as a discrete postemployment benefit cost. The realignment activities and the associated costs recognized during 2008 for approximately 900 employee terminations related to each of our reportable segments of Americas, EMEA and APJ. As of December 31, 2009, there was a related remaining accrued liability of $1 million. The organizational realignment was complete as of June 30, 2010 and the remaining accrued liability was reversed. The actions taken generated annualized savings of approximately $40 million. The Company continues to identify additional opportunities focusing on organizational design, process re-engineering and business process outsourcing as part of our continuous improvement process. *Real Estate Transactions* During the year ended December 31, 2010, the Company recognized $10 million in gains from the sale of real estate in the Consolidated Statement of Operations which were recorded as a reduction to selling, general and administrative expenses, which includes $3 million of gains previously deferred. The net proceeds of $39 million from these sales were recorded in investing activities and the net gains are recorded in operating activities in the Consolidated Statement of Cash Flows. During the year ended December 31, 2009, the Company recognized $12 million in gains from the sale of real estate in the Consolidated Statement of Operations which were recorded as a reduction to selling, general and administrative expenses, which includes $3 million of gains previously deferred. The net proceeds of $11 million from these sales were recorded in investing activities and the net gains are recorded in operating activities in the Consolidated Statement of Cash Flows. During the year ended December 31, 2008, the Company recognized $30 million in gains from the sale of real estate in the Consolidated Statement of Operations, which includes $3 million of gains previously deferred. The net proceeds of $52 million from these sales were recorded in investing activities and the net gains are recorded in operating activities in the Consolidated Statement of Cash Flows. Of the total gains recognized, $23 million related to the sale of properties in Canada which were recorded as a reduction to selling, general, and administrative expenses in the Consolidated Statement of Operations. During the fourth quarter of 2002, in connection with announced restructuring efforts, NCR's management approved a real estate consolidation and restructuring plan designed to accelerate the Company's re-engineering strategies. A pre-tax restructuring cost of $16 million was recorded in the fourth quarter of 2002 to provide for contractual lease termination costs. The remaining lease obligations will expire over various dates through 2015. The Company reviews this reserve on a quarterly basis to determine whether the reserve is adequate based on current market conditions. The balance of this liability at December 31, 2010 and 2009 was $3 million. During 2010, the reserve decreased due to ongoing lease payments, which was offset by an increase due to a change in estimated sublease income based on current market conditions.

Business Combinations and Investments

12 Months Ended

Dec. 31, 2010

Business Combinations and Investments

Business Combinations and Investments

Note 4 Business Combinations and Investments

During 2010, the Company completed one acquisition and several strategic investments, for total cash consideration of approximately $24 million. In 2009, NCR completed two acquisitions and acquired the remaining 80.4% interest in an equity investment, for total cash consideration of $41 million. In 2008, the Company completed several strategic investments and acquisitions and acquired the remaining 3% minority interest in one of our subsidiaries, for a total cost of approximately $65 million. A description of each acquisition and investment, all of which were paid primarily in cash, is as follows:

2010 Acquisitions and Investments

•

1% minority investment in ViVOtech Inc. on March 18, 2010, bringing the Company's total investment in ViVOtech Inc. to 6%. This additional investment was recorded as a cost method investment.

•

17% minority investment in Document Capture Technologies Inc. (DCT), a provider of imaging technology solutions on August 5, 2010. DCT's product is designed to facilitate the way information is stored, shared and managed for business and personal use. The Company recorded this transaction as an equity method investment.

•

8% minority investment in MOD Systems Inc. on August 20, 2010, bringing the Company's total investment in MOD Systems Inc. to 16%. Of this additional investment, 5% was recorded as an equity method investment and 3% was recorded as a cost method investment.

•

Acquisition of Mobiqa Limited on October 15, 2010, to enhance NCR's self-service portfolio by incorporating mobile content optimization into the Company's products.

2009 Acquisitions and Investments

•

Acquisition of the remaining 80.4% interest in TNR Holdings Corporation (TNR) on April 21, 2009 which provided the Company with access to additional markets for its DVD kiosks and enhanced kiosk technologies.

•

Acquisition of Netkey, Inc. on October 31, 2009, to extend NCR's self-service portfolio into the digital media merchandising market.

•

Acquisition of DVDPlay on December 8, 2009, to extend NCR's self-service portfolio in the entertainment line of business by increasing our DVD kiosk installations and enabling expansion into new markets.

2008 Acquisitions and Investments

•

Acquisition of Ambient Partners, LLC on April 18, 2008, to extend NCR's self-service portfolio into the digital media merchandising market.

•

10% minority investment and exclusive licensing agreement with e-Play, LLC on June 17, 2008 to add bare-disc technology to NCR's existing global self-service technology portfolio. The Company recorded this transaction as a cost method investment.

•

19.6% minority investment and exclusive supply and services agreements with TNR, an operator of movie rental kiosks, on July 28, 2008. The Company recorded this transaction as an equity method investment.

•

Acquisition of NCI Ltd. (NCI), a United Kingdom-based company on August 19, 2008. NCI is a leading provider of teller connectivity software used by financial institutions.

•

8% minority investment in MOD Systems, Inc., a leading provider of digital media delivery systems on October 17, 2008. MOD Systems' technology is designed to offer consumers one of the fastest, most convenient ways to access high-quality digital entertainment. The Company recorded this transaction as a cost method investment.

In 2010, goodwill recognized in the acquisition was $14 million, none of which is expected to be deductible for tax purposes. In 2009, goodwill recognized in these transactions amounted to $15 million, of which, $11 million is expected to be fully deductible for tax purposes. In 2008, goodwill recognized was $19 million, of which, $2 million is expected to be fully deductible for tax purposes.

As a result of the acquisition in 2010, NCR recorded $2 million related to identifiable intangible assets consisting primarily of proprietary technology and customer relationships, which have a weighted-average amortization period of 3.9 years. In connection with business combinations in 2009, the Company recorded $16 million for identifiable intangible assets for intellectual property associated with software, customer contracts and trade names, which have a weighted-average amortization period of 3.8 years. As a result of the acquisitions in 2008, NCR recorded $3 million related to identifiable intangible assets consisting primarily of intellectual property associated with software and hardware as well as non-compete arrangements which have a weighted-average amortization period of approximately 3 years.

The operating results of these businesses have been included within NCR's results as of the respective closing dates of the acquisitions. The pro forma disclosures are not being provided because the impact of the acquisitions, both individually and in the aggregate, are not considered material to the periods in which they occurred. The purchase prices of these businesses, reported in other investing activities and business acquisitions, net in the Consolidated Statements of Cash Flows, have been allocated based on the estimated fair value of net tangible and intangible assets acquired, with any excess recorded as goodwill.

Goodwill and Other Identifiable Intangible Assets

12 Months Ended

Dec. 31, 2010

Goodwill and Other Identifiable Intangible Assets

Goodwill and Other Identifiable Intangible Assets

Note 5 Goodwill and Other Identifiable Intangible Assets

The carrying amounts of goodwill by segment as of December 31, 2010 and 2009 are as follows:


	January 1, 2010									Foreign Currency Translation Adjustment		December 31, 2010
In millions	Goodwill		Accumulated Impairment Losses			Total		Additions		Foreign Currency Translation Adjustment		Goodwill		Accumulated Impairment Losses			Total
Americas	$	50	$	(3	)	$	47	$	8	$	—	$	58	$	(3	)	$	55
EMEA		28		—			28		5		—		33		—			33
APJ		25		—			25		1		1		27		—			27

Total	$	103	$	(3	)	$	100	$	14	$	1	$	118	$	(3	)	$	115


	January 1, 2009									Foreign Currency Translation Adjustment		December 31, 2009
In millions	Goodwill		Accumulated Impairment Losses			Total		Additions		Foreign Currency Translation Adjustment		Goodwill		Accumulated Impairment Losses			Total
Americas	$	35	$	(3	)	$	32	$	15	$	—	$	50	$	(3	)	$	47
EMEA		27		—			27		—		1		28		—			28
APJ		25		—			25		—		—		25		—			25

Total	$	87	$	(3	)	$	84	$	15	$	1	$	103	$	(3	)	$	100

NCR's identifiable intangible assets, reported in other assets in the Consolidated Balance Sheets, were specifically identified when acquired, and are deemed to have finite lives. The gross carrying amount and accumulated amortization for NCR's identifiable intangible assets were as follows:


	Original Amortization Life (in Years)		December 31, 2010					December 31, 2009
In millions	Original Amortization Life (in Years)		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
Identifiable intangible assets
Non-compete arrangements		3 - 5	$	6	$	(6	)	$	5	$	(5	)
Intellectual property		1 - 5		66		(51	)		65		(43	)

Total identifiable intangible assets			$	72	$	(57	)	$	70	$	(48	)

The increase in the gross carrying amount is primarily due to the acquisitions detailed in Note 4, "Business Combinations and Investments."

The aggregate amortization expense (actual and estimated) for identifiable intangible assets for the following periods is:


	December 31, 2010		For the years ended December 31 (estimated)
In millions	December 31, 2010		2011		2012		2013		2014		2015
Amortization Expense	$	9	$	5	$	4	$	3	$	3	$	—

- Definition

Discloses the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain or loss on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. This element may be used as a single block of text to include the entire intangible asset disclosure including data and tables.

+ References+ Details

Debt Obligations	12 Months Ended
Debt Obligations	Dec. 31, 2010
Debt Obligations
Debt Obligations	Note 6 Debt Obligations As of December 31, 2010, the Company's long term debt was $10 million. The Company's long-term debt mainly consists of $5 million in notes payable and $4 million related to the capital lease obligation described below as the Industrial Revenue Bond. The $5 million notes payable matures in 2020 and bears interest at a rate of 9.49% per annum. During the second quarter of 2009, at their maturity date, the Company repaid the $300 million of senior unsecured notes, which had previously been classified as short-term debt on the Consolidated Balance Sheet. Industrial Revenue Bond—During the third quarter of 2009, NCR entered into a transaction with the Development Authority of Columbus, Georgia (the Development Authority). The transaction resulted in the issuance of approximately $5 million in taxable revenue bonds by the Development Authority. The Development Authority used the proceeds to purchase a manufacturing facility consisting of a building and fixtures. NCR and the Development Authority entered into a lease agreement, whose terms provide NCR with a ten year lease of the facility for manufacturing purposes. Under the terms of the lease agreement, the rental payments made by NCR will be utilized by the Development Authority to repay the principal and interest (at a rate of 5%) of the bonds and NCR will have the option of acquiring the facility for a nominal amount at the end of the lease term. Based on the terms of the lease agreement, the transaction was accounted for as a capital lease, which resulted in the capitalization of the purchase price of the facility as an asset and recording of the capital lease obligation as long-term debt on NCR's Consolidated Balance Sheet. Revolving Credit Facility—On August 6, 2007, the Company amended and renewed its $500 million, five-year unsecured revolving credit facility to update certain terms and conditions. This replacement facility contains certain representations and warranties; conditions; affirmative, negative and financial covenants; and events of default customary for such facilities. NCR was in compliance with these covenants as of December 31, 2010. The key financial covenants include a total debt to consolidated EBITDA requirement for the period of four consecutive fiscal quarters not to exceed 3.00 to 1.00 and a minimum cash interest coverage ratio for the period of four consecutive fiscal quarters of not less than 4.00 to 1.00. The credit facility provides a grid-based interest rate that determines the margin charged in addition to the London Interbank Offered Rate (LIBOR) on borrowings. The rate is based on several factors including the credit rating of the Company and the amount of the Company's aggregate borrowings under the facility. As of December 31, 2010, LIBOR margin would have been 42.5 basis points. Additionally, the facility allows a portion of the availability to be used for outstanding letters of credit. As of December 31, 2010 and 2009, no amount was outstanding under the facility; however, the maximum borrowing available was reduced by $21 million for NCR's usage of letters of credit. Fair Value of Debt—The fair value of debt is based on a discounted cash flow model that incorporates a market yield curve based on the Company's credit rating with adjustments for duration. As of December 31, 2010 and 2009, the fair value of debt was $13 million and $16 million, respectively. The decrease in the fair value of debt was primarily due to the repayment of short-term debt during 2010.

Income Taxes

12 Months Ended

Dec. 31, 2010

Income Taxes

Income Taxes

Note 7 Income Taxes

For the years ended December 31, income from continuing operations before income taxes consisted of the following:


In millions	2010			2009			2008
(Loss) income before income taxes
United States	$	(109	)	$	(172	)	$	108
Foreign		195			228			208

Total income from continuing operations before income taxes	$	86		$	56		$	316

For the years ended December 31, income tax (benefit) expense consisted of the following:


In millions	2010			2009			2008
Income tax (benefit) expense
Current
Federal	$	(8	)	$	1		$	(15	)
State		1			7			(1	)
Foreign		44			67			74
Deferred
Federal		(25	)		(52	)		35
State		(1	)		(6	)		1
Foreign		(39	)		(22	)		(26	)

Total income tax (benefit) expense	$	(28	)	$	(5	)	$	68

The following table presents the principal components of the difference between the effective tax rate and the U.S. federal statutory income tax rate for the years ended December 31:


In millions	2010			2009			2008
Income tax (benefit) expense at the U.S. federal tax rate of 35%	$	30		$	20		$	111
Foreign income tax differential		(23	)		(33	)		(42	)
U.S. permanent book/tax differences		2			(1	)		1
Tax audit settlements		—			—			(19	)
Change in liability for unrecognized tax benefits		4			11			18
Japan valuation allowance release		(40	)		—			—
Other, net		(1	)		(2	)		(1	)

Total income tax (benefit) expense	$	(28	)	$	(5	)	$	68

NCR's tax provisions include a provision for income taxes in certain tax jurisdictions where its subsidiaries are profitable, but reflect only a portion of the tax benefits related to certain foreign subsidiaries' tax losses due to the uncertainty of the ultimate realization of future benefits from these losses. The 2010 tax benefit was favorably impacted by the release of a $40 million valuation allowance in the third quarter of 2010 that is no longer required on specific deferred tax assets in NCR's subsidiary in Japan and by the mix of taxable profits and losses by country. The 2009 tax benefit was favorably impacted by the non-proportional benefit of the impairment charges incurred in the United States and by the mix of taxable profits and losses by country. During 2008, we favorably settled examinations with the Internal Revenue Service (IRS) for the tax years of 2000 through 2006 that resulted in a $19 million tax benefit. In addition, income tax expense was benefited in 2008 by $26 million from the repatriation of earnings from international subsidiaries at an effective tax rate lower than previously estimated.

Deferred income tax assets and liabilities included in the Consolidated Balance Sheets as of December 31 were as follows:


In millions	2010			2009
Deferred income tax assets
Employee pensions and other benefits	$	540		$	550
Other balance sheet reserves and allowances		170			160
Tax loss and credit carryforwards		341			429
Capitalized research and development		57			59
Property, plant and equipment		23			27
Other		47			43

Total deferred income tax assets		1,178			1,268
Valuation allowance		(410	)		(528	)

Net deferred income tax assets		768			740

Deferred income tax liabilities
Capitalized software		11			12
Other		7			7

Total deferred income tax liabilities		18			19

Total net deferred income tax assets	$	750		$	721

NCR recorded valuation allowances related to certain deferred income tax assets due to the uncertainty of the ultimate realization of the future benefits from those assets. The valuation allowances cover deferred tax assets, primarily tax loss carryforwards, in tax jurisdictions where there is uncertainty as to the ultimate realization of a benefit from those tax losses. At December 31, 2010, our net deferred tax assets in the United States totaled approximately $597 million and realization of the related benefits was determined to be more likely than not. As of December 31, 2010, NCR had U.S. federal and foreign tax attribute carryforwards of approximately $925 million. The tax attribute carryforwards, subject to expiration, expire in the years 2011 through 2030.

The aggregate changes in the balance of our gross unrecognized tax benefits were as follows for the years ended December 31:


In millions	2010			2009
Gross unrecognized tax benefits—January 1	$	288		$	287
Increases related to tax positions from prior years		16			17
Decreases related to tax positions from prior years		(23	)		(49	)
Increases related to tax positions taken during the current year		30			55
Settlements with tax authorities		(11	)		(2	)
Lapses of statutes of limitation		(15	)		(20	)

Total gross unrecognized tax benefits—December 31	$	285		$	288

Of the total amount of gross unrecognized tax benefits as of December 31, 2010 up to $137 million would affect NCR's effective tax rate if realized. The Company's liability arising from uncertain tax positions is recorded in income tax accruals in the Consolidated Balance Sheet.

We recognized interest and penalties associated with uncertain tax positions as part of the provision for income taxes in our Consolidated Statements of Operations of $9 million of benefit, $6 million of expense, and $4 million of expense for the years ended December 31, 2010, 2009, and 2008, respectively. The gross amount of interest and penalties accrued as of December 31, 2010 and 2009 was $60 million and $68 million, respectively.

In the U.S., NCR files consolidated federal and state income tax returns where statutes of limitations generally range from three to five years. Although the Company resolved examinations for the tax years of 2000 through 2006 with the IRS in 2008, U.S. federal tax years are open from 2006 forward. In 2009, the IRS commenced an examination of our 2007 and 2008 income tax returns which is still ongoing. NCR and its subsidiaries also file income tax returns in international jurisdictions where statutes of limitations generally range from three to five years. Years beginning after 1996 are still open to examination by certain foreign taxing authorities, including several major taxing jurisdictions. In Japan, we are open to examination from 2001 onward. In Canada, we are open to examination from 1997 onward. During 2011, the Company expects to resolve certain Canadian tax matters related to 1997 through 2001. The settlement for these tax years could have a material impact on the effective tax rate and unrecognized tax benefits in 2011. Other than the Canada examination settlement, the Company does not expect any significant changes in unrecognized tax benefits in 2011.

NCR did not provide for U.S. federal income taxes or foreign withholding taxes in 2010 on approximately $1 billion of undistributed earnings of its foreign subsidiaries as such earnings are intended to be reinvested indefinitely. Quantification of the deferred tax liability, if any, associated with these undistributed earnings is not practicable.

See the Consolidated Statements of Changes in Stockholders' Equity for details of the tax effects on the components of other comprehensive income and Note 9, "Employee Benefit Plans."

Employee Stock Compensation Plans

12 Months Ended

Dec. 31, 2010

Employee Stock Compensation Plans

Employee Stock Compensation Plans

Note 8 Employee Stock Compensation Plans

The Company recognizes all share-based payments, including grants of stock options, as compensation expense in the financial statements based on their fair value.

As of December 31, 2010, the Company's primary types of share-based compensation were stock options and restricted stock. The Company recorded stock-based compensation expense, the components of which are further described below, for the years ended December 31 as follows:


In millions	2010			2009			2008
Stock options	$	6		$	14		$	17
Restricted stock		15			(2	)		24

Total stock-based compensation (pre-tax)		21			12			41
Tax benefit		(7	)		(3	)		(12	)

Total stock-based compensation (net of tax)	$	14		$	9		$	29

Stock-based compensation expense for the years ended December 31, 2010, 2009, and 2008 was computed using the fair value of options as calculated using the Black-Scholes option-pricing model. The weighted average fair value of options granted was $5.49 per share in 2010, $4.78 per share in 2009, and $7.11 per share in 2008 and was estimated based on the following weighted average assumptions:


	2010			2009			2008
Dividend yield		—			—			—
Risk-free interest rate		2.27	%		1.98	%		2.49	%
Expected volatility		46.8	%		44.1	%		33.1	%
Expected holding period (years)		4.8			5.0			5.1

Expected volatility incorporates a blend of both historical volatility of the Company's stock over a period equal to the expected term of the options and implied volatility from traded options on the Company's stock, as management believes this is more representative of prospective trends. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected holding period represents the period of time that options are expected to be outstanding. The risk-free interest rate for periods within the contractual life of the option is based on the five-year U.S. Treasury yield curve in effect at the time of grant.

Approximately 17 million shares are authorized to be issued under the 2006 Stock Incentive Plan (SIP). Details of the Company's stock-based compensation plans are discussed below.

Stock Options

The SIP provides for the grant of several different forms of stock-based compensation, including stock options to purchase shares of NCR common stock. The Compensation and Human Resource Committee of the Board of Directors has discretion to determine the material terms and conditions of option awards under the SIP, provided that (i) the exercise price must be no less than the fair market value of NCR common stock (defined as the closing price) on the date of grant, (ii) the term must be no longer than ten years, and (iii) in no event shall the normal vesting schedule provide for vesting in less than one year. Other terms and conditions of an award of stock options will be determined by the Compensation and Human Resource Committee of the Board of Directors as set forth in the agreement relating to that award. The Compensation and Human Resource Committee has authority to administer the SIP, except that the Committee on Directors and Governance will administer the SIP with respect to non-employee members of the Board of Directors. New shares of the Company's common stock are issued as a result of stock option exercises.

The following table summarizes the Company's stock option activity for the year ended December 31, 2010:


Shares in thousands	Shares Under Option			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in millions)
Outstanding as of January 1		9,643		$	15.94
Granted		1,368		$	12.96
Exercised		(654	)	$	9.89
Forfeited or expired		(798	)	$	18.34

Outstanding as of December 31		9,559		$	15.72		5.81	$	18

Fully vested and expected to vest as of December 31		9,394		$	15.74		5.76	$	18

Exercisable as of December 31		6,858		$	15.69		4.84	$	13

The total intrinsic value of all options exercised was $3 million in 2010, $1 million in 2009, and $12 million in 2008. Cash received from option exercises under all share-based payment arrangements was $6 million in 2010, $4 million in 2009, and $11 million in 2008. The tax benefit realized from these exercises was $1 million in 2010, minimal in 2009, and $3 million in 2008. As of December 31, 2010, there was $12 million of total unrecognized compensation cost related to unvested stock option grants. The cost is expected to be recognized over a weighted-average period of 2.2 years.

Restricted Stock and Restricted Stock Units

The SIP also provides for the issuance of restricted stock, as well as restricted stock units. These types of awards can have either service-based or performance-based vesting with performance goals being established by the Compensation and Human Resource Committee. Any grant of restricted stock or restricted stock units is subject to a vesting period of at least three years, except that a one-year term of service may be required if vesting is conditioned upon achievement of performance goals. Performance-based grants are subject to future performance measurements, which include NCR's achievement of specific return on capital and cumulative net operating profit levels (as defined in the SIP) during the performance period. Performance-based grants must be earned, based on performance, before the actual number of shares to be awarded is known. The Company considers the likelihood of meeting the performance criteria based upon management's estimates and analysis of achievement against the performance criteria. At the date of grant, a recipient of restricted stock has all the rights of a stockholder subject to certain restrictions on transferability and a risk of forfeiture. A recipient of restricted stock units does not have the rights of a stockholder and is subject to restrictions on transferability and risk of forfeiture. Other terms and conditions applicable to any award of restricted stock or restricted stock units will be determined by the Compensation and Human Resource Committee and set forth in the agreement relating to that award.

The following table reports restricted stock activity during the year ended December 31, 2010:


Shares in thousands	Number of Shares			Weighted Average Grant- Date Fair Value per Share
Unvested shares as of January 1		4,192		$	13.45
Shares granted		3,049		$	12.93
Shares vested		(726	)	$	21.53
Shares forfeited		(2,688	)	$	10.47

Unvested shares as of December 31		3,827		$	13.79

The total intrinsic value of shares vested and distributed was $9 million in 2010, $5 million in 2009, and $5 million in 2008. As of December 31, 2010, there was $31 million of unrecognized compensation cost related to unvested restricted stock grants. The unrecognized compensation cost is expected to be recognized over a remaining weighted-average period of 2.1 years.

The following table represents the composition of restricted stock grants in 2010:


Shares in thousands	Number of Shares		Weighted Average Grant- Date Fair Value
Service-based shares		1,682	$	12.99
Performance-based shares		1,367	$	12.86

Total restricted stock grants		3,049	$	12.93

Other Share-based Plans

The Employee Stock Purchase Plan (ESPP) enables eligible employees to purchase NCR's common stock at a discount to the average of the highest and lowest sale prices on the last trading day of each month. The ESPP discount is 5% of the average market price. Accordingly, this plan is considered non-compensatory. Employees may authorize payroll deductions of up to 10% of eligible compensation for common stock purchases. Employees purchased approximately 0.4 million shares in 2010, 0.5 million shares in 2009, and 0.3 million shares in 2008 for approximately $5 million in 2010, $5 million in 2009, and $6 million in 2008. A total of 4 million shares were originally authorized to be issued under the new ESPP and approximately 2.5 million authorized shares remain unissued as of December 31, 2010.

Employee Benefit Plans

12 Months Ended

Dec. 31, 2010

Employee Benefit Plans

Employee Benefit Plans

Note 9 Employee Benefit Plans

Pension, Postretirement and Postemployment Plans NCR sponsors defined benefit plans for many of its U.S. and international employees. For salaried employees, the defined benefit plans are based primarily upon compensation and years of service. For certain hourly employees in the U.S., the benefits are based on a fixed dollar amount per years of service. NCR's U.S. pension plans ceased the accrual of additional benefits after December 31, 2006 and are closed to new participants. Certain international plans are also closed to new participants. NCR's funding policy is to contribute annually not less than the minimum required by applicable laws and regulations. Assets of NCR's defined benefit plans are primarily invested in publicly traded common stocks, corporate and government debt securities, real estate investments, and cash or cash equivalents.

NCR recognizes the funded status of each applicable plan on the Consolidated Balance Sheets. Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability. Changes to the funded status are recognized as a component of accumulated other comprehensive loss in stockholders' equity.

Prior to September 1998, substantially all U.S. employees who reached retirement age while working for NCR were eligible to participate in a postretirement benefit plan. The plan provides medical care and life insurance benefits to retirees and their eligible dependents. In September 1998, the plan was amended whereby U.S. participants who had not reached a certain age and years of service with NCR were no longer eligible for such benefits. Non-U.S. employees are typically covered under government-sponsored programs, and NCR generally does not provide postretirement benefits other than pensions to non-U.S. retirees. NCR generally funds these benefits on a pay-as-you-go basis.

NCR offers various postemployment benefits to involuntarily terminated and certain inactive employees after employment but before retirement. These benefits are paid in accordance with NCR's established postemployment benefit practices and policies. Postemployment benefits may include disability benefits, supplemental unemployment benefits, severance, workers' compensation benefits, and continuation of healthcare benefits and life insurance coverage. NCR provides appropriate accruals for these postemployment benefits. These postemployment benefits are funded on a pay-as-you-go basis.

Amounts to be Recognized

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost (income) during 2011 are as follows:


In millions	U.S. Pension Benefits		International Pension Benefits		Total Pension Benefits		Postretirement Benefits			Postemployment Benefits
Prior service cost (income)	$	—	$	6	$	6	$	(18	)	$	(2	)
Actuarial loss	$	116	$	61	$	177	$	4		$	13

Pension Plans

Reconciliation of the beginning and ending balances of the benefit obligations for NCR's pension plans are as follows:


	U.S. Pension Benefits						International Pension Benefits						Total Pension Benefits
In millions	2010			2009			2010			2009			2010			2009
Change in benefit obligation
Benefit obligation as of January 1	$	3,404		$	3,227		$	1,963		$	1,645		$	5,367		$	4,872
Gross Service Cost		—			—			17			18			17			18
Interest Cost		190			195			89			92			279			287
Amendment		—			—			9			(1	)		9			(1	)
Actuarial loss (gain)		203			178			—			211			203			389
Benefits paid		(202	)		(196	)		(114	)		(111	)		(316	)		(307	)
Currency translation adjustments		—			—			(37	)		109			(37	)		109

Benefit obligation as of December 31	$	3,595		$	3,404		$	1,927		$	1,963		$	5,522		$	5,367

Accumulated benefit obligation as of December 31	$	3,595		$	3,404		$	1,850		$	1,886		$	5,445		$	5,290

A reconciliation of the beginning and ending balances of the fair value of the plan assets of NCR's pension plans are as follows:


	U.S. Pension Benefits						International Pension Benefits						Total Pension Benefits
In millions	2010			2009			2010			2009			2010			2009
Change in plan assets
Fair value of plan assets as of January 1	$	2,582		$	2,208		$	1,737		$	1,467		$	4,319		$	3,675
Actual return on plan assets		303			561			136			190			439			751
Company contributions		9			9			96			74			105			83
Benefits paid		(202	)		(196	)		(114	)		(111	)		(316	)		(307	)
Currency translation adjustments		—			—			(25	)		115			(25	)		115
Plan participant contributions		—			—			3			2			3			2

Fair value of plan assets as of December 31	$	2,692		$	2,582		$	1,833		$	1,737		$	4,525		$	4,319

The following table presents the funded status and the reconciliation of the funded status to amounts recognized in the Consolidated Balance Sheets and in accumulated other comprehensive loss as of December 31:


	U.S. Pension Benefits						International Pension Benefits						Total Pension Benefits
In millions	2010			2009			2010			2009			2010			2009
Funded Status	$	(903	)	$	(822	)	$	(94	)	$	(226	)	$	(997	)	$	(1,048	)

Amounts recognized in the Consolidated Balance Sheets
Noncurrent assets	$	—		$	—		$	286		$	244		$	286		$	244
Current liabilities		(8	)		(8	)		(16	)		(16	)		(24	)		(24	)
Noncurrent liabilities		(895	)		(814	)		(364	)		(454	)		(1,259	)		(1,268	)

Net amounts recognized	$	(903	)	$	(822	)	$	(94	)	$	(226	)	$	(997	)	$	(1,048	)

Amounts recognized in the accumulated other comprehensive loss
Net actuarial loss	$	1,021		$	1,074		$	765		$	883		$	1,786		$	1,957
Prior service cost		—			1			9			(1	)		9			—

Total	$	1,021		$	1,075		$	774		$	882		$	1,795		$	1,957

For pension plans with accumulated benefit obligations in excess of plan assets, the projected benefit obligation, accumulated benefit obligation and fair value of assets were $4,376 million, $4,431 million, and $3,162 million, respectively, as of December 31, 2010, and $4,310 million, $4,254 million and $3,030 million, respectively, as of December 31, 2009.

The net periodic benefit (income) cost of the pension plans for years ended December 31 was as follows:


In millions	U.S. Pension Benefits									International Pension Benefits									Total Pension Benefits
In millions	2010			2009			2008			2010			2009			2008			2010			2009			2008
Net service cost	$	—		$	—		$	—		$	15		$	17		$	27		$	15		$	17		$	27
Interest cost		190			195			195			89			92			103			279			287			298
Expected return on plan assets		(166	)		(180	)		(248	)		(109	)		(110	)		(124	)		(275	)		(290	)		(372	)
Settlement charge		—			—			—			8			3			4			8			3			4
Amortization of:
Prior service cost		—			—			—			—			1			7			—			1			7
Actuarial loss		119			94			1			62			47			60			181			141			61

Net periodic benefit (income) cost	$	143		$	109		$	(52	)	$	65		$	50		$	77		$	208		$	159		$	25

During 2009, NCR closed its United Kingdom-based manufacturing operation, resulting in a significant reduction in the number of employees enrolled in one of our defined benefit plans. The workforce reduction was accounted for as a curtailment and as such, the actuarial liability associated with the plan was re-measured as of July 1, 2009. As a result, the pension liability and accumulated other comprehensive loss were increased by $35 million. This curtailment did not have a material impact on net income from continuing operations in 2009.

In May of 2009, NCR completed a consultation process with employee representatives, which was required to freeze the benefits in one of our United Kingdom defined benefit plans, effective July 1, 2009. This action was accounted for as a curtailment and as such, the actuarial liability associated with the plan was re-measured as of May 31, 2009. As a result, the prepaid pension asset and accumulated other comprehensive income were reduced by $85 million. This curtailment did not have a material impact on net income from continuing operations in 2009.

The weighted average rates and assumptions used to determine benefit obligations as of December 31 were as follows:


	U.S. Pension Benefits						International Pension Benefits						Total Pension Benefits
	2010			2009			2010			2009			2010			2009
Discount rate		5.3	%		5.8	%		4.6	%		4.9	%		5.0	%		5.4	%
Rate of compensation increase		N/A			N/A			3.5	%		3.7	%		3.5	%		3.7	%

The weighted average rates and assumptions used to determine net periodic benefit cost for years ended December 31 were as follows:


	U.S. Pension Benefits									International Pension Benefits									Total Pension Benefits
	2010			2009			2008			2010			2009			2008			2010			2009			2008
Discount rate		5.8	%		6.3	%		6.3	%		4.9	%		5.3	%		5.4	%		5.4	%		5.9	%		5.9	%
Expected return on plan assets		7.5	%		7.8	%		7.8	%		6.0	%		6.1	%		6.3	%		6.9	%		7.1	%		7.2	%
Rate of compensation increase		N/A			N/A			N/A			3.7	%		3.9	%		4.1	%		3.7	%		3.9	%		4.1	%

The discount rate used to determine December 31, 2010 U.S. benefit obligations was derived by matching the plans' expected future cash flows to the corresponding yields from the Citigroup Pension Discount Curve. This yield curve has been constructed to represent the available yields on high-quality, fixed-income investments across a broad range of future maturities. International discount rates were determined by examining interest rate levels and trends within each country, particularly yields on high-quality, long-term corporate bonds, relative to our future expected cash flows.

NCR employs a building block approach as its primary approach in determining the long-term expected rate of return assumptions for plan assets. Historical market returns are studied and long-term relationships between equities and fixed income are preserved consistent with the widely accepted capital market principle that assets with higher volatilities generate higher returns over the long run. Current market factors, such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The expected long-term portfolio return is established for each plan via a building block approach with proper rebalancing consideration. The result is then adjusted to reflect additional expected return from active management net of plan expenses. Historical plan returns, the expectations of other capital market participants, and peer data are all used to review and assess the results for reasonableness and appropriateness.

The expected return on plan assets component of pension expense for our U.S. pension plan was determined using the expected rate of return and a calculated value of assets, referred to as the "market-related value." The market-related value for this plan was $2,421 million and $2,322 million as of December 31, 2010 and 2009, respectively, which is less than the fair value of plan assets by $269 million and less than the fair value of plan assets by $258 million, respectively. Differences between the assumed and actual returns are amortized to the market-related value on a straight-line basis over a five-year period. Differences in excess of 10% of the market value are recognized immediately. Similar approaches are employed in determining expense for NCR's international plans.

Gains and losses have resulted from changes in actuarial assumptions and from differences between assumed and actual experience, including, among other items, changes in discount rates and differences between actual and assumed asset returns. These gains and losses (except those differences being amortized to the market-related value) are only amortized to the extent that they exceed 10% of the higher of the market-related value or the projected benefit obligation of each respective plan. As a result, for the U.S. pension plan, unrecognized net losses of $349 million are not expected to be amortized during fiscal 2011. The remaining unrecognized net losses in excess of the corridor are $915 million and are being amortized over the expected remaining service periods of active plan participants (approximately 8.0 years during fiscal 2011). Similar approaches are employed in amortizing gains and losses for NCR's other U.S. and international plans.

Plan Assets The weighted average asset allocations as of December 31, 2010 and 2009 by asset category are as follows:


	U.S. Pension Fund									International Pension Funds
	Actual Allocation of Plan Assets as of December 31						Target Asset Allocation			Actual Allocation of Plan Assets as of December 31						Target Asset Allocation
	2010			2009			Target Asset Allocation			2010			2009			Target Asset Allocation
Equity securities		38	%		56	%		32-41	%		45	%		50	%		43-56	%
Debt securities		59	%		39	%		54-66	%		44	%		39	%		34-46	%
Real estate		3	%		5	%		2-4	%		5	%		6	%		4-7	%
Other		0	%		0	%		0-1	%		6	%		5	%		4-7	%

Total		100	%		100	%					100	%		100	%

The fair value of plan assets as of December 31, 2010 and 2009 by asset category is as follows:


	Notes		U.S.								International
			Fair Value as of December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observ- able Inputs (Level 2)		Significant Unobserv- able Inputs (Level 3)		Fair Value as of December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observ- able Inputs (Level 2)		Significant Unobserv- able Inputs (Level 3)
In millions			Fair Value as of December 31, 2010				Significant Other Observ- able Inputs (Level 2)		Significant Unobserv- able Inputs (Level 3)		Fair Value as of December 31, 2010				Significant Other Observ- able Inputs (Level 2)		Significant Unobserv- able Inputs (Level 3)
Assets
Equity securities:
Preferred stock		1	$	3	$	3	$	—	$	—	$	—	$	—	$	—	$	—
Common stock		1		554		553		—		1		483		483		—		—
Fixed income securities:
Government securities		2		138		—		138		—		—		—		—		—
Corporate debt		3		351		—		351		—		178		—		178		—
Other types of investments:
Money market funds				35		—		35		—		38		—		38		—
Common and commingled trusts—Equities		4		365		—		365		—		317		—		317		—
Common and commingled trusts—Bonds		4		872		—		872		—		521		—		521		—
Common and commingled trusts—Short Term Investments		4		53		—		53		—		—		—		—		—
Common and commingled trusts—Balanced		4		1		—		1		—		36		—		36		—
Partnership/joint venture interests—Real estate		5		30		—		—		30		—		—		—		—
Partnership/joint venture interests—Other		5		75		—		—		75		55		—		—		55
Mutual funds		4		178		178		—		—		35		35
Insurance products		4		—		—		—		—		51		—		51		—
Real estate and other		5		37		34		—		3		119		—		—		119

Total			$	2,692	$	768	$	1,815	$	109	$	1,833	$	518	$	1,141	$	174


In millions	Notes		U.S.								International
			Fair Value as of December 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observ- able Inputs (Level 2)		Significant Unobserv- able Inputs (Level 3)		Fair Value as of December 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observ- able Inputs (Level 2)		Significant Unobserv- able Inputs (Level 3)
			Fair Value as of December 31, 2009				Significant Other Observ- able Inputs (Level 2)		Significant Unobserv- able Inputs (Level 3)		Fair Value as of December 31, 2009				Significant Other Observ- able Inputs (Level 2)		Significant Unobserv- able Inputs (Level 3)
Assets
Equity securities:
Preferred stock		1	$	6	$	6	$	—	$	—	$	—	$	—	$	—	$	—
Common stock		1		879		870		—		9		439		439		—		—
Fixed income securities:
Government securities		2		31		—		31		—		—		—		—		—
Corporate debt		3		230		—		220		10		78		—		78		—
Other types of investments:
Money market funds				48		—		48		—		22		—		22		—
Common and commingled trusts—Equities		4		467		—		467		—		408		33		375		—
Common and commingled trusts—Bonds		4		632		—		632		—		538		—		538		—
Common and commingled trusts—Short Term Investments		4		19		—		19		—		—		—		—		—
Common and commingled trusts—Balanced		4		—		—		—		—		33		—		33		—
Partnership/joint venture interests—Real estate		5		28		—		—		28		54		—		—		54
Partnership/joint venture interests—Other		5		73		—		—		73		—		—		—		—
Mutual funds		4		96		96		—		—		9		9
Insurance products		4		—		—		—		—		50		—		50		—
Real estate and other		5		73		68		1		4		106		—		17		89

Total			$	2,582	$	1,040	$	1,418	$	124	$	1,737	$	481	$	1,113	$	143

Notes:

1 -	Common and preferred stocks are valued based on quoted market prices at the closing price as reported on the active market on which the individual securities are traded.

2 -

Government securities are valued based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar securities, the security is valued under a discounted cash flows approach that maximizes observable inputs, such as current yields on similar instruments but includes adjustments for certain risks that may not be observable, such as credit and liquidity risks.

3 -

Corporate debt is valued primarily based on observable market quotations for similar bonds at the closing price reported on the active market on which the individual securities are traded. When such quoted prices are not available, the bonds are valued using a discounted cash flows approach using current yields on similar instruments of issuers with similar credit ratings.

4 -

Common/collective trusts and registered investment companies (RICs) such as mutual funds are valued using a Net Asset Value (NAV) provided by the manager of each fund. The NAV is based on the underlying net assets owned by the fund, divided by the number of shares or units outstanding. The fair value of the underlying securities within the fund, which are generally traded on an active market, are valued at the closing price reported on the active market on which those individual securities are traded. For investments not traded on an active market, or for which a quoted price is not publicly available, a variety of unobservable valuation methodologies, including discounted cash flow, market multiple and cost valuation approaches, are employed by the fund manager to value investments. This valuation approach is often used in valuing insurance products with underlying investments in mutual funds, commingled funds and pooled separate accounts.

5 -

Partnership/joint ventures and hedge funds are valued based on the fair value of the underlying securities within the fund, which include investments both traded on an active market and not traded on an active market. For those investments that are traded on an active market, the values are based on the closing price reported on the active market on which those individual securities are traded and in the case of hedge funds they are valued using a Net Asset Value (NAV) provided by the manager of each fund. For investments not traded on an active market, or for which a quoted price is not publicly available, a variety of unobservable valuation methodologies, including discounted cash flow, market multiples and cost valuation approaches, are employed by the fund manager to value investments.

The following table presents the reconciliation of the beginning and ending balances of those plan assets classified within Level 3 of the valuation hierarchy. When the determination is made to classify the plan assets within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement.


In millions	U.S. Pension Plans			International Pension Plans
Balance, December 31, 2008	$	91		$	134
Realized and unrealized gains and losses, net		11			12
Purchases, sales and settlements, net		20			(3	)
Transfers in, net		2			—

Balance, December 31, 2009	$	124		$	143
Realized and unrealized gains and losses, net		10			16
Purchases, sales and settlements, net		(7	)		(2	)
Transfers in, net		(18	)		17

Balance, December 31, 2010	$	109		$	174

Investment Strategy NCR has historically employed a total return investment approach, whereby a mix of equities, fixed-income and real estate investments are used to maximize the long-term return of plan assets subject to a prudent level of risk. The risk tolerance is established for each plan through a careful consideration of plan liabilities, plan funded status and corporate financial condition. During the first quarter of 2010, the Company completed a comprehensive analysis of its capital allocation strategy, with specific focus on its approach to pension management. As a result of this analysis, the Company plans to substantially reduce future volatility in the value of assets held by the U.S. pension plan by rebalancing the asset allocation to a portfolio of entirely fixed income assets by the end of 2012. Similar investment strategy changes are under consideration or being implemented in a number of NCR's international plans.

The investment portfolios contain a diversified blend of equity and fixed-income investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, small and large capitalization stocks, and growth and value stocks. Fixed-income assets are also diversified across U.S. and non-U.S. issuers, type of fixed-income security (i.e., government bonds, corporate bonds, mortgage-backed securities) and credit quality. Where applicable, real estate investments are made through real estate securities, partnership interests or direct investment and are diversified by property type and location. Other assets, such as cash or private equity are used judiciously to improve portfolio diversification and enhance risk-adjusted portfolio returns. Derivatives may be used to adjust market exposures in an efficient and timely manner. Due to the timing of security purchases and sales, cash held by fund managers is classified in the same asset category as the related investment. Rebalancing algorithms are applied to keep the asset mix of the plans from deviating excessively from their targets. Investment risk is measured and monitored on an ongoing basis through regular performance reporting, investment manager reviews, actuarial liability measurements and periodic investment strategy reviews.

Postretirement Plans

Reconciliation of the beginning and ending balances of the benefit obligation for NCR's U.S. postretirement plan is as follows:


	Postretirement Benefits
In millions	2010			2009
Change in benefit obligation
Benefit obligation as of January 1	$	111		$	116
Gross service cost		—			—
Interest cost		5			6
Amendment		(44	)		—
Actuarial (gain) loss		(6	)		6
Plan participant contributions		5			6
Benefits paid		(16	)		(23	)

Benefit obligation as of December 31	$	55		$	111

In December 2010, the Company approved and announced changes in the benefits provided under its previously closed U.S. Post-65 Retiree Medical Plan effective February 1, 2011. With these changes, the majority of the Plan's participants will receive a fixed subsidy instead of the indemnity benefit previously provided. This change reduced the Company's postretirement plan liability and accumulated other comprehensive loss by $44 million.


	Postretirement Benefits
In millions	2010			2009
Benefit obligation	$	(55	)	$	(111	)

Amounts recognized in the Consolidated Balance Sheets
Current liabilities	$	(10	)	$	(15	)
Noncurrent liabilities		(45	)		(96	)

Net amounts recognized	$	(55	)	$	(111	)

Amounts recognized in accumulated other comprehensive loss
Net actuarial loss	$	42		$	51
Prior service credit		(120	)		(88	)

Total	$	(78	)	$	(37	)

The net periodic benefit (income) cost of the postretirement plan for the years ended December 31 was:


In millions	Postretirement Benefits
	2010			2009			2008
Interest cost	$	5		$	7		$	7
Net service cost		—			—			—
Amortization of:
Prior service benefit		(13	)		(13	)		(13	)
Actuarial loss		4			3			4

Net periodic benefit (income) cost	$	(4	)	$	(3	)	$	(2	)

The assumptions utilized in accounting for postretirement benefit obligations as of December 31 and for postretirement benefit income for the years ended December 31 were:


	Postretirement Benefit Obligations						Postretirement Benefit Costs
	2010			2009			2010			2009			2008
Discount rate		4.3	%		5.0	%		5.0	%		6.3	%		6.0	%

Assumed healthcare cost trend rates as of December 31 were:

2010

2009

Pre-65
Coverage

Post-65
Coverage

Pre-65
Coverage

Post-65
Coverage

Healthcare cost trend rate assumed for next year

9.0%

7.0%

9.0%

7.0%

Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)

5.0%

5.0%

Year that the rate reaches the ultimate rate

2018

2018

In addition, a one percentage point change in assumed healthcare cost trend rates would have the following effects on the postretirement benefit income and obligation:


In millions	1% Increase		1% Decrease
Service cost and interest cost for the year ended December 31, 2010	$	—	$	—
Postretirement benefit obligation as of December 31, 2010	$	2	$	(2	)

Postemployment Benefits

Reconciliation of the beginning and ending balances of the benefit obligation for NCR's postemployment plan was:


	Postemployment Benefits
In millions	2010			2009
Change in benefit obligation
Benefit obligation as of January 1	$	307		$	327
Restructuring program cost		(1	)		—
Service cost		22			25
Interest cost		11			13
Amendments		(5	)		—
Benefits paid		(51	)		(56	)
Foreign currency exchange		—			6
Actuarial (gain) loss		30			(8	)

Benefit obligation as of December 31	$	313		$	307

The following tables present the funded status and the reconciliation of the funded status to amounts recognized in the Consolidated Balance Sheets and in accumulated other comprehensive loss at December 31:


	Postemployment Benefits
In millions	2010			2009
Benefit obligation	$	(313	)	$	(307	)

Amounts recognized in the Consolidated Balance Sheets
Current liabilities	$	(49	)	$	(48	)
Noncurrent liabilities		(264	)		(259	)

Net amounts recognized	$	(313	)	$	(307	)

Amounts recognized in accumulated other comprehensive loss
Net actuarial loss	$	129		$	112
Prior service credit		(6	)		(2	)

Total	$	123		$	110

The net periodic benefit cost of the postemployment plan for years ended December 31 was:


In millions	Postemployment Benefits
	2010			2009			2008
Service cost	$	22		$	25		$	23
Interest cost		11			13			15
Amortization of:
Prior service cost		(1	)		(1	)		—
Actuarial loss		12			12			13

Net benefit cost	$	44		$	49		$	51
Restructuring severance cost		(1	)		—			40

Net periodic benefit cost	$	43		$	49		$	91

The weighted average assumptions utilized in accounting for postemployment benefit obligations as of December 31 and for postemployment benefit costs for the years ended December 31 were:


	Postemployment Benefit Obligations						Postemployment Benefit Costs
	2010			2009			2010			2009			2008
Discount rate		3.9	%		4.3	%		4.3	%		4.6	%		5.3	%
Salary increase rate		3.4	%		3.6	%		3.6	%		3.6	%		4.1	%
Involuntary turnover rate		5.5	%		5.0	%		5.0	%		5.0	%		5.0	%

The below table presents each relevant component of other comprehensive income related to NCR's benefit plans as of December 31, 2010, including the tax effects of each component:


In millions	Before-Tax Amount			Tax Benefit (Expense)			Net-of-Tax amount
Prior service cost during year	$	40		$	(16	)	$	24
Amortization of prior service cost		(14	)		5			(9	)
Net loss arising during year		(62	)		36			(26	)
Actuarial gain (loss) included in benefits expense		203			(52	)		151

Total benefit plans	$	167		$	(27	)	$	140

Cash Flows Related to Employee Benefit Plans

Cash Contributions NCR does not expect to be required to contribute to the U.S. qualified pension plan in 2011; however, the Company plans to contribute approximately $115 million to the international pension plans and $10 million to the executive pension plan in 2011. Due to the decline in the fair value of our pension plan assets in 2008, we continue to have a significant, underfunded pension obligation that may require material increases in cash contributions in future years. The Company also expects to make contributions of $10 million to the U.S. postretirement plan and $50 million to the postemployment plan in 2011.

Estimated Future Benefit Payments NCR expects to make the following benefit payments reflecting past and future service from its pension, postretirement and postemployment plans:


In millions	U.S. Pension Benefits		International Pension Benefits		Total Pension Benefits		Postretirement Benefits		Postemployment Benefits
Year
2011	$	225	$	99	$	324	$	10	$	50
2012	$	228	$	100	$	328	$	8	$	47
2013	$	231	$	100	$	331	$	7	$	45
2014	$	233	$	101	$	334	$	6	$	43
2015	$	234	$	99	$	333	$	6	$	41
2016-2020	$	1,214	$	510	$	1,724	$	18	$	173

Savings Plans U.S. employees and many international employees participate in defined contribution savings plans. These plans generally provide either a specified percent of pay or a matching contribution on participating employees' voluntary elections. NCR's matching contributions typically are subject to a maximum percentage or level of compensation. Employee contributions can be made pre-tax, after-tax or a combination thereof. The expense under the U.S. plan was approximately $8 million in 2010, $8 million in 2009, and $19 million in 2008. The expense under international and subsidiary savings plans was $14 million in 2010, $15 million in 2009, and $15 million in 2008.

Derivatives and Hedging Instruments

12 Months Ended

Dec. 31, 2010

Derivatives and Hedging Instruments

Derivatives and Hedging Instruments

Note 10 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. Due to our global operations, weakness in some of these currencies is sometimes offset by strengths in others. Since a substantial portion of our operations and revenues occur outside the United States (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 Our risk management strategy includes hedging, on behalf of each subsidiary, 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 contracts. This is primarily done through the hedging of foreign currency denominated inter-company inventory purchases by NCR's marketing units and of foreign currency denominated sales by our manufacturing units. As these transactions are firmly committed and forecasted, 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 (loss) (AOCI) and reclassified to income when the underlying hedged transaction has been completed and is recorded in earnings. As of December 31, 2010, the balance in accumulated other comprehensive income related to foreign exchange forward derivative transactions was $5 million, all of which related to instruments expiring in 2011. 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 generally 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.

Interest Rate Risk Interest rate risk associated with our borrowing is not considered material to our consolidated financial position, results of operations or cash flows as of December 31, 2010 based on the level of current borrowings and maturity dates. As such, we held no derivative financial instruments related to interest rate risk as of December 31, 2010.

The following tables provide information on the location and amounts of derivative fair values in the Consolidated Balance Sheets:


In millions	Fair Values of Derivative Instruments
	Asset Derivatives						Liability Derivatives
	December 31, 2010						December 31, 2010
	Balance Sheet Location		Notional Amount		Fair Value		Balance Sheet Location		Notional Amount		Fair Value
Derivatives designated as hedging instruments
Foreign exchange forward contracts		Other assets	$	96	$	7		Other liabilities	$	105	$	2

Total derivatives designated as hedging instruments					$	7					$	2

Derivatives not designated as hedging instruments
Foreign exchange forward contracts		Other assets	$	79	$	2		Other liabilities	$	70	$	1

Total derivatives not designated as hedging instruments					$	2					$	1

Total derivatives					$	9					$	3


In millions	Fair Values of Derivative Instruments
	Asset Derivatives						Liability Derivatives
	December 31, 2009						December 31, 2009
	Balance Sheet Location		Notional Amount		Fair Value		Balance Sheet Location		Notional Amount		Fair Value
Derivatives designated as hedging instruments
Foreign exchange forward contracts		Other assets	$	—	$	—		Other liabilities	$	—	$	—

Total derivatives designated as hedging instruments					$	—					$	—

Derivatives not designated as hedging instruments
Foreign exchange forward contracts		Other assets	$	56	$	1		Other liabilities	$	53	$	1

Total derivatives not designated as hedging instruments					$	1					$	1

Total derivatives					$	1					$	1

The effect of derivative instruments on the Consolidated Statements of Operations for the years ended December 31, 2010 and December 31, 2009 are as follows:


In millions	Amount of Gain (Loss) Recognized in Other Comprehensive Income (OCI) on Derivative (Effective Portion)					Amount of Gain (Loss) Reclassified from AOCI into the Consolidated Statement of Operations (Effective Portion)						Amount of Gain (Loss) Recognized in the Consolidated Statement of Operations (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Derivatives in Cash Flow Hedging Relationships	For the Year Ended December 31, 2010		For the Year Ended December 31, 2009		Location of Gain (Loss) Reclassified from AOCI into the Consolidated Statement of Operations (Effective Portion)	For the Year Ended December 31, 2010		For the Year Ended December 31, 2009			Location of Gain (Loss) Recognized in the Consolidated Statement of Operations (Ineffective Portion and Amount Excluded from Effectiveness Testing)	For the Year Ended December 31, 2010		For the Year Ended December 31, 2009

Foreign exchange forward contracts	$	5	$	8	Cost of Products	$	3	$	(9	)	Other income (expense)	$	—	$	1


In millions		Amount of Gain (Loss) Recognized in the Consolidated Statement of Operations
Derivatives not Designated as Hedging Instruments	Location of Gain (Loss) Recognized in the Consolidated Statement of Operations	For the Year Ended December 31, 2010			For the Year Ended December 31, 2009
Foreign exchange forward contracts	Other income (expense)	$	—		$	(6	)
Foreign exchange forward contracts	Cost of products	$	(1	)	$	6

Refer to Note 14, "Fair Value of Assets and Liabilities," 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 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 potential losses are adequate. As of December 31, 2010 and 2009, NCR did not have any major concentration of credit risk related to financial instruments.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2010

Commitments and Contingencies

Commitments and Contingencies

Note 11 Commitments and Contingencies

In the normal course of business, NCR is subject to various proceedings, lawsuits, claims and other matters, including, for example, those that relate to the environment and health and safety, employee benefits, import/export compliance, intellectual property, data privacy, product liability, commercial disputes and regulatory compliance, among others. Additionally, NCR is subject to diverse and complex laws and regulations, including those relating to corporate governance, public disclosure and reporting, environmental safety and the discharge of materials into the environment, product safety import and export compliance, data privacy and security, antitrust and competition, government contracting, anti-corruption, and labor and human resources, which are rapidly changing and subject to many possible changes in the future. Compliance with these laws and regulations, including changes in accounting standards, taxation requirements, and federal securities laws among others, may create a substantial burden on, and substantially increase the costs to NCR or could have an impact on NCR's future operating results. NCR believes the amounts provided in its consolidated financial statements, as prescribed by GAAP, are currently adequate in light of the probable and estimable liabilities with respect to such matters, but there can be no assurances that the amounts required to satisfy alleged liabilities from such matters will not impact future operating results. Other than as stated below, the Company does not currently expect to incur material capital expenditures related to such matters. However, there can be no assurances that the actual amounts required to satisfy alleged liabilities from various lawsuits, claims, legal proceedings and other matters, including, but not limited to the Fox River environmental matter and other matters discussed below, and to comply with applicable laws and regulations, will not exceed the amounts reflected in NCR's consolidated financial statements or will not have a material adverse effect on its consolidated results of operations, capital expenditures, competitive position, financial condition or cash flows. Any costs that may be incurred in excess of those amounts provided as of December 31, 2010 cannot currently be reasonably determined.

The United States Department of Justice is conducting an investigation regarding the propriety of the Company's former Teradata Data Warehousing business's arrangements and understandings with others in connection with certain federal contracts. In connection with the spin-off of Teradata on September 30, 2007, the responsibility for this matter, together with the related reserve, was distributed to Teradata Corporation. While the Company may be subject to ostensible exposure inasmuch as it was the contracting party in the matter at issue, Teradata Corporation is generally obligated to indemnify the Company for any losses arising out of this matter.

A separate portion of the government's investigation relates to the adequacy of pricing disclosures made to the government in connection with negotiation of the Company's General Services Administration Federal Supply Schedule and to whether certain subsequent price reductions were properly passed on to the government. Both Teradata Corporation and the Company are participating in this aspect of the investigation, with respect to certain products and services of each of them, and each will assume financial responsibility for its own exposures, if any, without indemnification from the other. At this time, the Company is unable to determine whether it has probable liability with respect to this aspect of the investigation.

In August 2009, a federal court in Ohio granted motions for summary judgment against NCR in two companion class actions brought on behalf of certain unionized retirees who claimed that the Company's 2003 decision to terminate certain benefits payable on death violated collective bargaining agreements and other rights. The Company has appealed the decision to the Sixth Circuit Court of Appeals. If affirmed on appeal, the decision will require the Company to restore the death benefit, at an approximate cost of $6 million, which NCR recognized as other expense during 2009. A settlement of approximately $3 million has been preliminarily approved by the federal district court, and a final hearing to approve the settlement and to consider any objections from class members, is set for March 2011.

In December 2010, a jury in a New York federal court awarded approximately $8 million, which NCR recognized as selling, general and administrative expense during 2010, to a plaintiff in a suit over a commission arrangement purportedly entered into by the Company's consumables business in 2003. The Company has moved to set aside the jury verdict, and if that motion is not granted the Company plans to appeal.

In a patent infringement cased filed by a company known as Automated Transactions, Limited (ATL) and scheduled to be tried in federal court in Delaware in March 2011, the Company has agreed to defend and indemnify it customers, 7-Eleven and Cardtronics. ATL contends that Vcom terminals sold by the Company to 7-Eleven (Cardtronics ultimately purchased the business from 7-Eleven) infringe certain ATL patents that purport to relate to the combination of an ATM with an Internet kiosk, in which a retail transaction can be realized over an Internet connection provided by the kiosk. The U.S. Patent and Trademark Office (USPTO) has rejected the parent patent as invalid in view of certain prior art, although related continuation patents were not reexamined by the USPTO. ATL has filed a second suit against the same companies with respect to a broader range of ATMs, based on the same patents plus a more recently issued patent; that suit is currently subject to a stay pending resolution of the case scheduled to be tried in March 2011. While the Company does not believe that the patent claims in the case to be tried are meritorious, if ATL's claims are successful potential royalties or damages could cause the Company to incur liability that could be material to it, and could adversely impact its ATM business.

Environmental Matters NCR's facilities and operations are subject to a wide range of environmental protection laws, and NCR has investigatory and remedial activities underway at a number of facilities that it currently owns or operates, or formerly owned or operated, to comply, or to determine compliance, with such laws. Also, NCR has been identified, either by a government agency or by a private party seeking contribution to site clean-up costs, as a potentially responsible party (PRP) at a number of sites pursuant to various state and federal laws, including the Federal Water Pollution Control Act, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and comparable state statutes. Other than the matter detailed below, we currently do not anticipate material expenses and liabilities from these other environmental matters.

NCR is one of eight entities that were formally notified by governmental and other entities (such as local Native American tribes) that they are PRPs for environmental claims under CERCLA and other statutes arising out of the presence of polychlorinated biphenyls (PCBs) in sediments in the lower Fox River and in the Bay of Green Bay in Wisconsin. NCR was identified as a PRP because of alleged PCB discharges from two carbonless copy paper manufacturing facilities it previously owned, which were located along the Fox River. Some parties contend that NCR is also responsible for PCB discharges from paper mills owned by other companies because carbonless paper manufactured by NCR was allegedly purchased by those mills as a raw material for their paper making processes. NCR sold the facilities in 1978 to Appleton Papers Inc. (API), which has also been identified as a PRP. The other Fox River PRPs that received notices are P.H. Glatfelter Company, Georgia-Pacific Consumer Products LP (GP, successor to Fort James Operating Company), WTM I Co. (formerly Wisconsin Tissue Mills, now owned by Chesapeake Corporation), CBC Corporation (formerly Riverside Paper Corporation), U.S. Paper Mills Corp. (owned by Sonoco Products Company), and Menasha Corporation.

In the October 2010 lawsuit discussed below, the federal and state governments assert certain claims against the eight parties referenced above as well as four other entities. The claims, filed under CERCLA and other statutes, relate to the presence of PCBs at the Fox River site, and as a result the four newly named parties are properly viewed as additional PRPs with respect to the site. Those entities are NewPage Wisconsin Systems, Inc., Neenah-Menasha Sewerage Commission, Kimberly-Clark Corporation and the City of Appleton, Wisconsin.

During the past several years, the United States Environmental Protection Agency (USEPA) and Wisconsin Department of Natural Resources (WDNR) (together, the Governments) assessed and developed clean-up plans for the upper and lower parts of the Fox River and for portions of the Bay of Green Bay, contained in various Records of Decisions (RODs) issued in January 2003, July 2003 and June 2007 (the last is referred to as the Amended ROD). In general, the clean-up plan or remedy calls for a combination of dredging and capping to remediate the sediments in the river, and for monitored natural attenuation in the Bay of Green Bay. Since 2004, the Company has been involved in certain aspects of the clean-up project, including performance, with GP, of engineering design work for the clean-up under an Administrative Order on Consent (AOC) that the Company and GP entered into with the Governments. In addition, the Company, with U.S. Paper Mills, performed specific remedial action involving an area of elevated PCB incidence downriver of the De Pere Dam (Phase 1 work), pursuant to a consent decree with the Governments that was approved in November 2006.

On November 13, 2007, the Governments issued a unilateral administrative order (Order) under Section 106 of CERCLA to all eight of the original PRPs identified above. The Order requires the PRPs to implement the remedial work in the lower river in accordance with the requirements of the Amended ROD. NCR and API are working with the Governments to implement certain provisions of the Order. In-water work began on schedule in April 2009, following construction of a facility to house the remediation operations in Green Bay, Wisconsin.

In April 2009, the NCR Board of Directors approved the terms of a contract with Tetra Tech, an environmental remediation contractor, to perform the remediation work at the Fox River consistent with the requirements of the Amended ROD. Prior to this, Tetra Tech had performed certain preparatory work pursuant to an interim contract with API. Also in April 2009, the Board of Directors approved the formation of a limited liability company (LLC), which NCR and API formed on April 27, 2009, for purposes of, among other things, entering into the Tetra Tech remediation contract. Other PRPs may join the LLC in the future, if and as they enter into settlements or otherwise agree to join in funding the remediation efforts. The LLC entered into the remediation contract with Tetra Tech on April 27, 2009, and in-water dredging and remediation by Tetra Tech commenced thereafter. The Company and API fund the LLC's operations on a regular basis in accordance with the remediation schedule, consistent with the Company's Fox River reserve, discussed below. The Tetra Tech contract also requires that the LLC members provide promissory notes to provide Tetra Tech financial assurance against the prospect that the LLC will terminate the contract before completion of the remediation for reasons other than "cause." The maximum obligation under the Company's note, formerly $20 million, is now approximately $16 million; the amount will vary based on a formula tied to conditions set forth in the contract, and generally is expected to decrease over time.

NCR and API share their portion of the cost of the Fox River clean-up and natural resource damages based upon an agreement and an arbitration award, which result in a 45% share for NCR of the first $75 million of such costs—a threshold that was reached in the second quarter of 2008—and a 40% share for amounts in excess of $75 million.

In 2008, NCR and API filed a lawsuit in federal court in Green Bay, Wisconsin, seeking a judicial ruling determining the allocable responsibility of several PRPs for the cost of performing the remedial work at the Fox River (the "allocation litigation"). As of December 31, 2010, there were a total of 28 defendants in that case and a companion consolidated case. A number of counterclaims seeking contribution under CERCLA and under various state law theories have been filed and are pending against NCR and API. On September 23, 2008, the court issued a Case Management Decision and Scheduling Order setting a "Phase I trial" limited to the questions of (i) when each party knew or should have known that recycling NCR-brand carbonless copy paper would result in the discharge of PCBs to a waterbody, thereby risking environmental damage; and (ii) what, if any, actions each party took upon acquiring such knowledge to avoid the risk of further PCB contamination. The court's order also limited initial discovery proceedings to the same questions.

On December 16, 2009, the court issued a ruling cancelling the Phase I trial and granting motions for summary judgment filed by certain of the defendants against NCR and API. The court held that NCR and API could not recover from these defendants any costs that NCR and API have incurred in the Fox River clean-up (the ruling does not affect the Governments' potential claims against such parties). The court based this ruling on a finding that NCR should have known, in the late 1960s, that the use of PCBs in carbonless copy paper presented an "appreciable risk of serious and long-lasting damage," whereas, it concluded, defendants did not know of PCB risks until after the majority of PCBs were released to the river. The court's ruling was also based on a finding that because NCR chose to use and introduce PCBs into the stream of commerce, it should bear the financial consequences of that decision. The Company intends to appeal the ruling to the United States Court of Appeals for the Seventh Circuit. In light of a subsequent February 2010 order by the district court denying a request to initiate an immediate appeal, the Company currently does not expect to be able to prosecute its appeal until the remaining claims in the litigation, including counterclaims brought by the defendants against NCR and API for reimbursement of previously incurred expenses and other matters, are resolved. Potentially dispositive motions regarding those counterclaims were argued on September 1, 2010. No decision on these motions has been issued as yet.

In 2009, the Governments filed a separate action in Wisconsin federal court to lodge and seek approval of two consent decrees involving twelve of the defendants in the allocation litigation (none of whom are recipients of the Order). The consent decrees, if approved, would require a total payment from the settling parties of approximately $2 million and in exchange would provide protection against claims for contribution under Section 113 of CERCLA decrees (including claims by NCR/API). NCR/API intervened in this action and formally opposed entry of the consent decrees, principally on the ground that insufficient investigation had been performed by the Governments to determine whether the proposed settlements were fair, reasonable and adequate under CERCLA. On December 16, 2009 and April 20, 2010, the judge presiding over the allocation litigation approved the consent decrees. NCR/API appealed both of these rulings to the United States Court of Appeals for the Seventh Circuit and the matter was argued on January 12, 2011. A decision is pending.

On October 14, 2010, the Governments filed a lawsuit in federal court in Wisconsin against twelve parties, including the companies named in the Order mandating the clean-up (i.e., the eight original PRPs), and NewPage Wisconsin Systems, Inc,. Neenah-Menasha Sewerage Commission, Kimberly-Clark Corporation, and the City of Appleton, Wisconsin (the four additional PRPs), with respect to the presence of PCBs at the Fox River. The suit seeks payment of the Governments' unreimbursed response costs in connection with the Fox River matter as well as compensation for natural resource damages. The Governments also request a judicial declaration that the eight Order recipients are required to comply with its provisions, which constitutes the Governments' initial steps to enforce the Order against the Order recipients other than NCR and API. With respect to NCR, there are no claims asserted against the Company in the Government's lawsuit that were not previously contemplated in the Company's Fox River reserve, as discussed herein.

In the quarter ended December 31, 2010, the Governments publicly announced proposed monetary settlements of Fox-River-related claims with four entities: GP, Brown County (Wisconsin), the City of Green Bay, and the United States itself (with respect to potential liabilities asserted against the Army Corps of Engineers for certain dredging and disposal activities, and against other federal agencies for certain carbonless copy paper recycling activities). All of those entities are defendants in the allocation litigation case described above. The GP settlement, if approved, would release GP from liability and provide contribution protection for claims relating to government oversight costs and for claims relating to clean-up actions upriver of GP's facilities (it does not affect claims for clean-up actions in that portion of the river near those facilities). The settlement with Brown County, the City of Green Bay and the United States would release these entities and provide contribution protection for all claims relating to the Fox River site. The Company filed administrative objections to the proposed settlement with GP, and expects to file similar administrative comments with respect to the other settlements. The United States and the State of Wisconsin moved the Court to enter the GP consent decree and the Company has opposed the motion.

The extent of NCR's potential liability remains subject to many uncertainties. NCR's eventual remediation liability—which is expected to be paid out over a period extending through at least approximately 2019, followed by long-term monitoring for several decades—will depend on a number of factors. In general, the most significant factors include: (1) the total clean-up costs for each of the segments of the river; (2) the total natural resource damages for the site; (3) the shares NCR and API will jointly bear of future clean-up costs and natural resource damages; (4) the share NCR will bear of the joint NCR/API payments for such clean-up costs and natural resource damages; and (5) NCR's transaction and litigation costs to defend itself in this matter, including participation in the allocation litigation and the October 2010 litigation filed by the Governments. In establishing the reserve, NCR attempts to estimate a range of reasonably possible outcomes for each of these factors, although each range is itself highly uncertain. NCR uses its best estimate within the range, if that is possible. Where there is a range of equally possible outcomes, and there is no amount within that range that is considered to be a better estimate than any other amount, NCR uses the low end of the range. These factors are discussed below.

For the first factor described above, NCR utilizes a best estimate of $930 million as the total of the clean-up costs for the segments of the river. The estimated total cost amount of $930 million includes estimates for the Operable Unit (OU) 1 through OU 5 work, including the remaining amount of work to be performed under the April 2009 Tetra Tech remediation contract, the Phase 1 work and the remedial design work. It adds to these estimates a 15% contingency for probable cost overruns based on historical experience; an estimate for the Governments' future oversight costs; an amount for the Governments' past oversight costs; an estimate for long-term monitoring extending over several decades; and an estimate for value engineering savings (potential projects intended to reduce the cost of the remediation), and the NCR-API share of estimated natural resource damages. There can be no assurances that this estimated total cost amount will not be significantly higher as remediation work progresses. A range of reasonably possible outcomes with respect to total cost is difficult to state, but if the portion of the cost estimate relating to the contingency for cost overruns and unexpected expenses were twice our estimate, the total cost would increase to approximately $986 million.

Second, for total natural resource damages (NRD), NCR uses a best estimate of $76 million. NCR believes the range of reasonably possible outcomes for NRD, if it were to be litigated, is between zero and $246 million. The federal government indicated, in a 2009 filing in a PRP's bankruptcy proceeding, that claims for NRD could be as high as $382 million. The litigation filed in October 2010 does not set forth a particular amount for the NRD claim.

Third, for the NCR/API shares of NRD, which is discussed above, NCR uses a best estimate. The joint NCR/API share of future clean-up costs is expected to be determined in the allocation litigation or possibly in or as a result of the government litigation filed in October 2010. NCR has modified the basis previously used for this component of the reserve (in the past, the Company used the low end of a range of outcomes, based primarily on the proximity of areas to be remediated to the locations at which PCBs were released into the river). In light of the Wisconsin federal court's December 16, 2009 ruling described above, NCR's reserve at December 31, 2010 assumes that NCR and API will be responsible for the full extent of the clean-up activities they are undertaking, which the Company considers a best estimate, and for a substantial portion of the counterclaims filed against NCR and API, as to which the Company uses the low end of a range of equally possible outcomes, the high end of which could increase the Company's reserve up to $25 million. The Company will seek to overturn the December 16, 2009 ruling on appeal, and believes that the NCR/API allocable share of total site costs is less than 100%, based on, among other things, equitable factors, principles of divisibility as developed under applicable law, and/or an apportionment of the claimed harm. Until such time, if any, that such a result is achieved, however, the Company assumes in its reserve that NCR and API will pay for the full extent of the clean-up. At this point the Company is unable to determine whether the defendants in the allocation litigation will pay portions of the Fox River liability and, if so, in what amount. NCR's reserve does not at present assume any payments or reduction of exposure based either on the appeal or on Government enforcement against the other Order recipients or defendants.

Fourth, for the NCR share of the joint NCR/API payments, as discussed above, NCR's percentage share is set by an agreement between NCR and API and a subsequent arbitration award, both of which arise out of certain agreements entered into in connection with the Company's 1978 sale of the facilities on the Fox River to API. NCR's analysis of this factor assumes that API is able and willing to pay its percentage share of the NCR/API joint share. Additionally, the API obligation to NCR is shared on a joint and several basis by a third party, B.A.T. Industries p.l.c., which, by virtue of various prior indemnification and other agreements not specifically directed to the Fox River matter, is a co-party to the same agreement and arbitration award. This analysis likewise assumes that B.A.T. Industries p.l.c. would be financially viable and willing to pay the joint and several obligation if API is unable or unwilling to do so. As a result of unrelated prior corporate transactions, API itself is indemnified by another company, Arjo Wiggins Appleton Ltd., which has funded and managed API's liability to date.

Finally, NCR estimated the transaction costs it is likely to incur to defend this matter through 2019, the time period NCR's engineering consultants believe it will take to implement the remedy for the river. This estimate is based on an analysis of NCR's costs since this matter first arose in 1995 and on estimates of what NCR's defense and transaction costs will be in the future. NCR expects that the bulk of these transaction costs have been and will be incurred in the 2008-2012 time period. The costs incurred and expected to be incurred during that period include, in particular, transaction costs and fees related to completion of the design work, equipment purchases, commencement and continuation of clean-up activities in the river, and the allocation litigation and October 2010 litigation filed by the Governments discussed above.

In light of several factors—among them, the remedial design work conducted by NCR and GP; settlement possibilities (including both group and individual settlements for some entities and the consent decrees the Governments are seeking with respect to certain parties); the efforts to implement the Order for clean-up of the lower river; the pending allocation litigation and the prospective appeal referenced above; whether there will be judicial recognition of allocable harm at the Fox River site and thus of divisible shares of liability among the various parties; the extent to which the Governments press claims against the parties in the Governments' October 2010 litigation or otherwise for NRD, government oversight costs and remediation liability; change orders or cost overruns that may result from the ongoing remediation efforts; the continued viability and willingness to pay of NCR's various indemnitors and co-obligors; and the subsequent value engineering efforts designed to make the clean-up more efficient and less costly—calculation of the Company's Fox River reserve has become subject to added layers of complexities, and it is possible there could be additional changes to some elements of the reserve over upcoming periods, although we are unable to predict or estimate such changes at this time. There can be no assurance that the clean-up and related expenditures will not have a material effect on NCR's capital expenditures, earnings, financial condition, cash flows, or competitive position.

As of December 31, 2010, the net reserve for the Fox River matter was approximately $199 million, compared to $202 million as of December 31, 2009. This decrease in the reserve is due primarily to payments for clean-up activities and legal fees during 2010. NCR regularly re-evaluates the assumptions used in determining the appropriate reserve for the Fox River matter as additional information becomes available and, when warranted, makes appropriate adjustments. NCR contributes to the LLC in order to fund remediation activities and generally, by contract, funds three months' worth of remediation activities in advance. As of December 31, 2010 and 2009, approximately $5 million and $3 million, respectively, remained from this funding and was recorded in other current assets in the Consolidated Balance Sheet. NCR's reserve for the Fox River matter is reduced as the LLC makes payments to Tetra Tech and other vendors with respect to remediation activities.

Under a 1996 agreement, AT&T and Alcatel-Lucent are responsible severally (not jointly) for indemnifying NCR for certain portions of the amounts paid by NCR for the Fox River matter over a defined threshold. (The agreement governs certain aspects of AT&T Corp.'s divestiture of NCR, then known as AT&T Global Information Solutions Company, and what was formerly known as Lucent Technologies, and specifically relates to shared contingent gains and liabilities of the former constituent companies within AT&T.) NCR's estimate of what AT&T and Alcatel-Lucent will pay under the indemnity is recorded as a long-term asset of approximately $86 million as of December 31, 2010 and $120 million as of December 31, 2009, and is deducted in determining the net reserve discussed above. The asset balance can fluctuate not only with respect to total clean-up and other costs, but also with respect to insurance recoveries and certain tax impacts as measured by a contractual formula using prior-year effective tax rates. Such insurance recoveries and tax impacts are netted against the asset in proportions specified under the indemnity agreement (i.e., they typically decrease its amount). Insurance recoveries, whether by judgment or settlement, are the subjects of ongoing litigation, which is now nearly concluded, and have the effect of reducing the Company's expected receipts under the indemnity, and therefore insurance recoveries are not expected to materially reduce the Company's aggregate expenditures for the Fox River matter. The tax impact within the indemnity calculation is subject to substantial volatility regarding the Company's effective tax rate from year to year, rendering the future tax impacts highly uncertain. When actual payments, net of insurance recoveries and tax impacts, reach the indemnity threshold, the Company expects to commence collection of the related portions of the asset. The Company does not expect to achieve the threshold before late 2011 or 2012.

In connection with the Fox River and other matters, through December 31, 2010, NCR has received a combined total of approximately $148 million in connection with settlements reached with its principal insurance carriers; and an additional $10 million is expected to be received in the future under the contractual terms of some of the settlements. Portions of most of these settlements are payable to a law firm that litigated the claims on the Company's behalf. Some of the settlements cover not only the Fox River, but also other environmental sites. Of the total amount collected to date, $9 million is subject to competing claims by another party, and NCR and the other party have agreed that these funds will be used for Fox River costs and will be shared on an agreed-upon basis (subject to reallocation at a later date). NCR's agreed-upon share of the $9 million is estimated to be $4 million.

In the year ended December 31, 2010, NCR reached settlements with several insurers which resulted in income of $31 million, or $20 million after tax, which is included in income (loss) from discontinued operations in the accompanying Consolidated Statement of Operations. In the year ended December 31, 2009, NCR reached settlements with several insurers totaling $13 million, offset by a $156 million increase in NCR's estimated liability due to an update for estimated total costs driven primarily by the December 16, 2009 court decision which resulted in a net charge of $143 million, or $91 million after tax, included in income (loss) from discontinued operations in the accompanying Consolidated Statement of Operations.

As of December 31, 2010, NCR had reached settlement with all but one of the insurance companies against which it had advanced claims with respect to the Fox River. That remaining company entered into certain stipulations which obviated the need for a trial and caused judgment to be entered against it in the amount of $5 million; an appeal is pending.

In November 2010, the United States Environmental Protection Agency (EPA) issued a "general notice letter" to NCR with respect to the Allied Paper, Inc./Portage Creek/Kalamazoo River Superfund Site (Kalamazoo River Site) in Michigan. (Three other parties—International Paper, Mead Corporation, and Consumers Energy—also received general notice letters at or about the same time.) EPA asserts that the site is contaminated by various substances, primarily PCBs as a result of discharges by various paper mills located along the river. EPA does not claim that the Company made direct discharges into the Kalamazoo River, but indicated that "NCR may be liable under Section 107 of CERCLA … as an arranger, who by contract or agreement, arranged for the disposal, treatment and/or transportation of hazardous substances at the Site." EPA stated that it "may issue special notice letters to [NCR] and other PRPs for future RI/FS [remedial investigation / feasibility studies] and RD/RA [remedial design / remedial action] negotiations." The Company disagrees that it may have liability at the Kalamazoo River Site, and will dispute such claims if formally asserted by the EPA.

Also in connection with the Kalamazoo River Site, in December 2010 the Company, along with International Paper Company, was sued in Wisconsin federal court by three GP entities in a contribution and cost recovery action for alleged pollution at that site. The suit asks that the Company pay a "fair portion" of the GP entities' costs, which are represented as $79 million to date; various removal and remedial actions remain to be performed at the Kalamazoo site. The suit alleges that the Company is liable as an "arranger" under CERCLA and under other theories. The suit does not allege that the Company has made direct discharges into the Kalamazoo River. Substantial litigation over the Kalamazoo River Site took place several years ago in federal courts in Michigan; the Company was not a party to that litigation, and has filed a motion to transfer the case to the Michigan federal court. The Company expects to contest the allegations in the GP suit vigorously.

It is difficult to estimate the future financial impact of environmental laws, including potential liabilities. NCR records environmental provisions when it is probable that a liability has been incurred and the amount or range of the liability is reasonably estimable. Provisions for estimated losses from environmental restoration and remediation are, depending on the site, based primarily on internal and third-party environmental studies (except for the Fox River site, where the estimated costs and natural resource damages are estimated as described above), estimates as to the number and participation level of any other PRPs, the extent of the contamination, and the nature of required clean-up and restoration actions. Reserves are adjusted as further information develops or circumstances change. Management expects that the amounts reserved from time to time will be paid out over the period of investigation, negotiation, remediation and restoration for the applicable sites. The amounts provided for environmental matters in NCR's consolidated financial statements are the estimated gross undiscounted amounts of such liabilities, without deductions for insurance, third-party indemnity claims or recoveries from the other PRPs, except as qualified in the following sentences. Except for the sharing agreement with API described above with respect to the Fox River site, in those cases where insurance carriers or third-party indemnitors have agreed to pay any amounts and management believes that collectability of such amounts is probable, the amounts are recorded in the Consolidated Financial Statements. For the Fox River site, as described above, an asset relating to the AT&T and Alcatel-Lucent indemnity is recorded because payment is considered probable and is supported by contractual agreements.

Guarantees and Product Warranties Guarantees associated with NCR's business activities are reviewed for appropriateness and impact to the Company's consolidated financial statements. NCR had no obligations related to such guarantees and therefore, its consolidated financial statements do not have any associated liability balance as of December 31, 2010 or 2009.

NCR provides its customers a standard manufacturer's warranty and records, at the time of the sale, a corresponding estimated liability for potential warranty costs. Estimated future obligations due to warranty claims are based upon historical factors, such as labor rates, average repair time, travel time, number of service calls per machine and cost of replacement parts. Upon consummating a sale, we recognize the total customer revenue and record the associated warranty liability using pre-established warranty percentages for that product class. From time to time, product design or quality corrections are accomplished through modification programs. When identified, associated costs of labor and parts for such programs are estimated and accrued as part of the warranty reserve.

The following table identifies the activity relating to the warranty reserve for the following years:


In millions	2010			2009			2008
Warranty reserve liability
Beginning balance as of January 1	$	25		$	24		$	13
Accruals for warranties issued		48			47			51
Settlements (in cash or in kind)		(49	)		(46	)		(40	)

Ending balance as of December 31	$	24		$	25		$	24

In addition, NCR provides its customers with certain indemnification rights. In general, NCR agrees to indemnify the customer if a third party asserts patent or other infringement on the part of the customer for its use of the Company's products. From time to time, NCR also enters into agreements in connection with its acquisition and divesture activities that include indemnification obligations by the Company. The fair value of these indemnification obligations is not readily determinable due to the conditional nature of the Company's potential obligations and the specific facts and circumstances involved with each particular agreement. The Company has not recorded a liability in connection with these indemnifications. Historically, payments made by the Company under these types of agreements have not had a material effect on the Company's consolidated financial position, results of operations or cash flows.

Purchase Commitments The Company has purchase commitments for materials, supplies, services, and property, plant and equipment as part of the normal course of business. This includes a long-term service agreement with Accenture under which many of NCR's key transaction processing activities and functions are performed.

Leases NCR conducts certain of its sales and manufacturing operations using leased facilities, the initial lease terms of which vary in length. Many of the leases contain renewal options and escalation clauses that are not material to the overall lease portfolio. Future minimum lease payments under non-cancelable operating leases as of December 31, 2010, for the following fiscal years were:


In millions	2011		2012		2013		2014		2015		Thereafter
Minimum lease obligations	$	53	$	45	$	37	$	31	$	22	$	26

Total rental expense for operating leases was $53 million in 2010, $54 million in 2009, and $58 million in 2008.

Segment Information and Concentrations

12 Months Ended

Dec. 31, 2010

Segment Information and Concentrations

Segment Information and Concentrations

Note 12 Segment Information and Concentrations

Operating Segment Information For the year ended December 31, 2010, 2009 and 2008, NCR managed and reported its business in the following three segments:

•

Americas;

•

Europe, Middle East and Africa (EMEA); and

•

Asia Pacific and Japan (APJ).

Each of these segments derives revenue by selling products and services to the financial services, retail and hospitality, travel and gaming and healthcare industries. The Americas region also includes revenues from sales in the entertainment industry. The Company's products, services and solutions enable NCR's customers to connect, interact and transact with their customers, and include: ATM hardware and software; traditional point-of-sale and self-checkout solutions; self-service kiosk solutions; business consumables; solutions that digitally capture, process and retain item-based transactions; maintenance of NCR solutions; consulting, installation and customer support services; as well as the maintenance and sale of third-party products and services. The Company's chief operating decision maker regularly assesses information relating to these segments to make decisions, including the allocation of resources. Management evaluates the performance of the segments based on revenue and segment gross margin. Segment assets are not included in this assessment of segment performance. The accounting policies used to determine the results of the operating segments are the same as those utilized for the consolidated financial statements as a whole. Intersegment sales and transfers are not material.

In recognition of the volatility of the effects of pension expense on our segment results, and to maintain operating focus on business performance, pension expense, as well as other significant nonrecurring items are excluded from the segment operating results utilized by our chief operating decision maker in evaluating segment performance and are separately delineated to reconcile back to total reported income from operations.

The following table presents revenue and gross margin by segment:


In millions	2010		2009		2008
Revenue by segment
Americas	$	2,123	$	2,022	$	2,269
EMEA		1,714		1,649		2,066
APJ		982		941		980

Total revenue		4,819		4,612		5,315
Gross margin by segment
Americas		457		386		437
EMEA		404		401		556
APJ		219		207		237

Total segment gross margin		1,080		994		1,230

Selling, general and administrative expenses		609		586		696
Research and development expenses		138		124		134
Pension expense		208		159		25
Other adjustments ⁽¹⁾		26		28		53

Income from operations	$	99	$	97	$	322

(1)

Other adjustments in 2010 include $8 million litigation charge and $18 million for incremental costs directly related to the relocation of the worldwide headquarters. Other adjustments in 2009 include $22 million charge for the impairment of assets related to an equity investment and $6 million of incremental costs directly related to the relocation of the worldwide headquarters. Other adjustments in 2008 include $57 million of organizational realignment costs, $12 million of legal costs, and a $16 million gain on the sale of a manufacturing facility in Canada.

The following table presents revenue from products and services for NCR for the years ended December 31:


In millions	2010		2009		2008
Product revenue	$	2,403	$	2,234	$	2,861
Professional and installation services revenue		586		578		638

Total solution revenue		2,989		2,812		3,499
Support services revenue		1,830		1,800		1,816

Total revenue	$	4,819	$	4,612	$	5,315

NCR allocates assets to its operating segments based on the primary segment benefitting from the assets. The assets attributable to NCR's operating segments consist primarily of accounts receivable, inventories, property, plant, and equipment, capitalized software and goodwill dedicated to a specific operating segment. Assets not attributable to operating segments because they are not dedicated to a specific segment consist primarily of deferred tax assets, prepaid pension costs, and cash and cash equivalents.

Segment assets as of December 31 were:


In millions	2010		2009
Segment assets
Americas	$	1,147	$	936
EMEA		630		677
APJ		481		486

Total segment assets		2,258		2,099
Assets not allocated to the segments:
Cash and cash equivalents		496		451
Prepaid pension cost		286		244
Deferred income taxes		630		617
Other assets not attributable to segments		691		683

Consolidated total assets	$	4,361	$	4,094

Revenues are attributed to the geographic area/country to which the product is delivered or in which the service is provided. The following table presents revenue by geographic area for NCR for the years ended December 31:


In millions	2010		%			2009		%			2008		%
Revenue by Geographic Area
United States	$	1,551		32	%	$	1,609		35	%	$	1,787		33	%
Americas (excluding United States)		572		12	%		413		9	%		482		9	%
Europe, Middle East, and Africa		1,714		36	%		1,649		36	%		2,066		39	%
Japan		336		7	%		328		7	%		352		7	%
Asia Pacific (excluding Japan)		646		13	%		613		13	%		628		12	%

Consolidated revenue	$	4,819		100	%	$	4,612		100	%	$	5,315		100	%

The following table presents property, plant and equipment by geographic area as of December 31:


In millions	2010		2009
Property, plant and equipment, net
United States	$	128	$	181
Americas (excluding United States)		165		21
Europe, Middle East, and Africa		43		71
Japan		59		55
Asia Pacific (excluding Japan)		34		28

Consolidated property, plant and equipment, net	$	429	$	356

Concentrations No single customer accounts for more than 10% of NCR's consolidated revenue. As of December 31, 2010, NCR is not aware of any significant concentration of business transacted with a particular customer that could, if suddenly eliminated, have a material adverse effect on NCR's operations. NCR also lacks a concentration of available sources of labor, services, licenses or other rights that could, if suddenly eliminated, have a material adverse effect on its operations.

A number of NCR's products, systems and solutions rely primarily on specific suppliers for microprocessors and other component products, manufactured assemblies, operating systems, commercial software and other central components. NCR also utilizes contract manufacturers in order to complete manufacturing activities. There can be no assurances that any sudden impact to the availability or cost of these technologies or services would not have a material adverse effect on NCR's operations.

Quarterly Information (unaudited)

12 Months Ended

Dec. 31, 2010

Quarterly Information (unaudited)

Quarterly Information (unaudited)

Note 13 Quarterly Information (unaudited)


In millions, except per share amounts	First			Second		Third		Fourth
2010
Total revenues	$	1,029		$	1,177	$	1,207	$	1,406
Gross margin	$	191		$	241	$	246	$	286
Operating (loss) income	$	(18	)	$	31	$	34	$	52
(Loss) income from continuing operations, net of tax	$	(17	)	$	20	$	80	$	31
Income from discontinued operations, net of tax	$	—		$	11	$	5	$	7
Net income (loss) attributable to noncontrolling interests	$	2		$	—	$	2	$	(1	)

Net (loss) income attributable to NCR	$	(19	)	$	31	$	83	$	39

Income (loss) per share attributable to NCR common stockholders:
Income (loss) per common share from continuing operations
Basic	$	(0.11	)	$	0.12	$	0.49	$	0.20

Diluted	$	(0.11	)	$	0.12	$	0.48	$	0.20

Net (loss) income per common share:
Basic	$	(0.12	)	$	0.19	$	0.52	$	0.24

Diluted	$	(0.12	)	$	0.19	$	0.51	$	0.24

2009
Total revenues	$	1,008		$	1,124	$	1,135	$	1,345
Gross margin	$	184		$	229	$	224	$	246
Operating (loss) income	$	(10	)	$	39	$	29	$	39
(Loss) income from continuing operations, net of tax	$	(17	)	$	21	$	17	$	40
Income (loss) from discontinued operations, net of tax	$	3		$	3	$	—	$	(97	)
Net income (loss) attributable to noncontrolling interests	$	1		$	1	$	2	$	(1	)

Net (loss) income attributable to NCR	$	(15	)	$	23	$	15	$	(56	)

Income (loss) per share attributable to NCR common stockholders:
Income (loss) per common share from continuing operations
Basic	$	(0.11	)	$	0.13	$	0.09	$	0.26

Diluted	$	(0.11	)	$	0.13	$	0.09	$	0.25

Net (loss) income per common share:
Basic	$	(0.09	)	$	0.14	$	0.09	$	(0.35	)

Diluted	$	(0.09	)	$	0.14	$	0.09	$	(0.35	)

Net income per share in each quarter is computed using the weighted-average number of shares outstanding during that quarter while net income per share for the full year is computed using the weighted-average number of shares outstanding during the year. Thus, the sum of the four quarters' net income per share will not necessarily equal the full-year net income per share.

- Definition

This element can be used to disclose the entire quarterly financial data disclosure in the annual financial statements as a single block of text. The disclosure includes a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income (loss) before extraordinary items and cumulative effect of a change in accounting principle and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished. Alternatively, the details of this disclosure can be reported using the elements in this group, or by using other taxonomy elements and applying the appropriate quarterly date and period contexts when creating an instance document. For example, the element for "Interest and Dividend Income, Operating" may be used by financial institutions from the Statement of Income, applying the appropriate quarterly date and period context when creating an instance document.

+ References+ Details

Fair Value of Assets and Liabilities

12 Months Ended

Dec. 31, 2010

Fair Value of Assets and Liabilities

Fair Value of Assets and Liabilities

Note 14 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, 2010 and 2009 are set forth as follows:


			Fair Value Measurements at Reporting Date Using
In millions			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	Fair Value as of December 31, 2010				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	$	—


			Fair Value Measurements at Reporting Date Using
In millions			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	Fair Value as of December 31, 2009				Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Deposits held in money market funds *	$	134	$	134	$	—	$	—
Available for sale securities **		13		13		—		—
Foreign exchange forward contracts ***		1		—		1		—

Total	$	148	$	147	$	1	$	—

Liabilities:
Foreign exchange forward contracts ***	$	1	$	—	$	1	$	—

Total	$	1	$	—	$	1	$	—

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.

***

Foreign Exchange Forward 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 contracts. The foreign exchange forward 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

The following table presents the Company's assets that were measured at fair value on a non-recurring basis:


			Fair Value Measurements at Reporting Date Using
In millions									Total Losses
Description	Fair Value Measurements During the Year Ended December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		For the Year Ended December 31, 2010
Intellectual property	$	1	$	—	$	—	$	1	$	—
Customer contract and trade names	$	1	$	—	$	—	$	1	$	—
Investment in MOD Systems	$	—	$	—	$	—	$	—	$	(14	)

Total	$	2	$	—	$	—	$	2	$	(14	)


			Fair Value Measurements at Reporting Date Using
In millions									Total Losses
Description	Fair Value Measurements During the Year Ended December 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		For the Year Ended December 31, 2009
Intellectual property	$	8	$	—	$	—	$	8	$	—
Customer contract and trade names	$	8	$	—	$	—	$	8	$	—
Investment in TNR	$	—	$	—	$	—	$	—	$	(5	)
Investment in ePlay	$	—	$	—	$	—	$	—	$	(19	)

Total	$	16	$	—	$	—	$	16	$	(24	)

NCR measures certain assets including intangible assets and cost and equity method investments at fair value on a nonrecurring basis. These assets are recognized at fair value when initially valued and when they are deemed to be other-than-temporarily impaired.

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 and TNR and ePlay in 2009 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 years ended December 31, 2010 and 2009, we recorded $14 million and $24 million, respectively, in other-than-temporary impairment charges in other (income) expense, net in the Consolidated Statements of Operations.

In conjunction with an acquisition in 2010 as described in Note 4, "Business Combinations and Investments", NCR recognized intangible assets for proprietary technology and customer relationships of $2 million. In conjunction with 2009 acquisitions, NCR recognized intangible assets for customer contracts, trade names and intellectual property of $16 million. We measured the fair value of the customer contracts and intellectual property through the use of discounted cash flows expected to be earned by the contracts, which required the use of unobservable inputs, including assumptions on projected revenue, expenses, and earnings, as well as a discount rate determined by management's estimates of the risk profile associated with the contract. We measured the fair value of trade names acquired in the transaction based on a relief from royalty approach, which required the use of unobservable inputs, including comparable royalty rates in the media and entertainment industry as well as expected revenues over the estimated life of the trade names.

- Definition

This item represents the complete disclosure regarding the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the Company is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risk is are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References+ Details

Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2010

Schedule II - Valuation and Qualifying Accounts

Schedule II - Valuation and Qualifying Accounts

NCR Corporation

SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

(In millions)


Column A	Column B		Column C					Column D		Column E
	Balance at Beginning of Period		Additions					Deductions		Balance at End of Period
Description	Balance at Beginning of Period		Charged to Costs & Expenses		Charged to Other Accounts			Deductions		Balance at End of Period
Year Ended December 31, 2010
Allowance for doubtful accounts	$	24	$	—	$	—		$	11	$	13
Deferred tax asset valuation allowance	$	528	$	—	$	—		$	118	$	410
Inventory excess and obsolete reserves	$	100	$	80	$	—		$	109	$	71
Reserves related to business restructuring	$	4	$	—	$	—		$	1	$	3

Year Ended December 31, 2009
Allowance for doubtful accounts	$	15	$	10	$	—		$	1	$	24
Deferred tax asset valuation allowance	$	478	$	50	$	—		$	—	$	528
Inventory excess and obsolete reserves	$	111	$	97	$	—		$	108	$	100
Reserves related to business restructuring	$	31	$	—	$	—		$	27	$	4

Year Ended December 31, 2008
Allowance for doubtful accounts	$	19	$	3	$	—		$	7	$	15
Deferred tax asset valuation allowance	$	441	$	37	$	—		$	—	$	478
Inventory excess and obsolete reserves	$	147	$	115	$	—		$	151	$	111
Reserves related to business restructuring	$	25	$	57	$	(2	)	$	49	$	31