Good morning and welcome to the NCR Investor Relations Teleconference Call. At this time all participants are in a listen-only mode. After the presentation we will conduct a question-and-answer. (Operator Instructions). At the request of the company this conference is being recorded for playback purposes. It is now my pleasure to turn the meeting over to your host Mr. Gregg Swearingen, Vice President of Investor Relations. Sir, you may begin your conference.

Thank you and good morning. And thanks for all of you for joining us for our 2006 fourth quarter earnings call. Bill Nuti, NCR CEO will lead off our conference call this morning, after which Pete Bocian, NCR CFO will discuss our Q4 and full year 2006 financial performance as well as our guidance for full year 2007. Our discussion today includes forecasts and other information that are considered forward-looking statements. While these statements reflect our current outlook, they are subject to a number of risk and uncertainties that could cause actual results to vary materially. These risk factors are described in NCR’s periodic filings with the SEC and our Annual Report to stockholders. On today's call, we will also be discussing certain non-GAAP financial information such as free cash flow and result excluding the impact of pension and other non-operational items. Reconciliations of non-GAAP financial results to our reported and forecasted GAAP results and other information concerning such measures are included in our earnings release and are also available on the investor page of NCR's website. A replay of this conference call will be available later today on NCR's website, which can be accessed at ncr.com. For those listening to the replay of the call, please keep in mind that the information discussed is as of January 25, 2007 and NCR assumes no obligation to update or revise the information included in this call, whether as a result of new information or future results. On January 8, NCR's Board of Directors announced its intentions to spin-off NCR's Teradata Data Warehousing business later this year, since we have just begun the operational process we are not in a position to provide details regarding the spin-off today. I will now turn the call over to Bill.

Thank you, Gregg and good morning, and thank you to all of you for joining us as we discuss what was one of if not the best quarter in NCR's recent history. I would like to thank all of our employees and partners for delivering a strong Q4 which provides momentum as we prepare for the planned strategic separation of Teradata and NCR that we announced earlier this month. Some of the Q4 highlights include Teradata who had the highest revenue and operating profit quarter ever. Financial Self Service who grew a very healthy 6% in the quarter and just as important generated 18% operating margins and the mix of self-service revenues in our retail business continues to improve. I will now discuss our business unit results and I'll start with Teradata. Revenue of $469 million in the quarter was up 15% from Q4 2005. Full year revenues were $1.57 billion a 6% increase from 2005. Teradata's operating income was a record $112 million in the quarter up 26% from the $89 million of operating income in the fourth quarter of 2005. Operating margin in the quarter was 24% an increase of 200 basis points from the fourth quarter of 2005. Teradata's operating margin continue to improve as higher revenue more than offset unfavorable revenue mix and increased investments and sales, demand creation and engineering resources. For the full year Teradata's operating margin improved to 22% versus 21% in 2005. In the quarter Teradata continued to add new customer's, some that we can publicly share are RadioShack Avon products, Paramount, Qatar Airways and VIBO Telecom and fund on commercial bank both in Taiwan. Additionally some of the customers who expanded their Enterprise Data Warehouses during the quarter include Cisco Systems, the Limited Brands, Harris, [UM Private Incorporation], Southwest Airlines, Lloyds…

Thanks, Bill and good morning everyone. Total revenue in the quarter was roughly $1.81 billion, up 5% year-over-year with two points of benefit from currency translation. Reported operating income was $205 million, versus a $171 million in the fourth quarter of 2005. We reported GAAP net income of a $174 million or $0.96 per share versus a $150 million of net income or $0.81 per share in Q4 of '05. The prior year reported net income included $17 million or $0.09 a share of non-typical tax items. Excluding the non-operational items in the fourth quarter of 2005, EPS increased 33% from the $0.72 in the fourth quarter of 2005. For the full year 2006, GAAP net income was $382 million or $2.09 a share. Our GAAP results included $0.04 of early retirement expense from the first quarter of 2006. Excluding the early retirement expense, EPS was 213 in 2006. Our 2005 GAAP EPS was $2.80, but this included a $1.12 of benefit from tax and other non-operational items. Excluding these items, 2005 EPS was a $1.68. So excluding non-operational items in both 2005 and 2006, year-over-year operating earnings improved 27%. In the quarter we had pension expense of 33 million, matching the 33 million of pension expense in Q4 of 2005. Excluding early retirement expense, we had a 136 million of pension expense in 2006 versus a 131 million in 2005. To analyze NCR's operational performance without the effect of pension and one-time items, please see the supplement of financial schedule on the investor page of our website that reconciles GAAP and non-GAP results. For the remainder of my comments regarding our 2006 results, I’ll exclude the impact of pension. NCR's gross margin was 31.4% in the quarter, a slight decline from 31.8% in last years fourth quarter. For the…

Thank you, Pete. Before we open up for questions, I really would like to thank the NCR employees and our partners again for all of their hard work in 2006. We are encouraged by the Q4 performance in each of our business units and excited about the future of each going forward as well as the additional benefits we expect to realize to the planned strategic separation of Teradata and NCR. We expect this transaction to create two strong independent companies with a greater focus on their respective markets, distinct customer basis, business strategies, growth initiatives and operational objectives. As spoken to many of our customers about the spin-off and they are enthused. They say that this is good thing from the standpoint of innovation for both NCR and Teradata and that this raises the level of their awareness for Teradata. Industry analysts are also saying positive things about it and employees across the company are looking forward to the spin-off. This is a win-win situation. It's beneficial for everyone except maybe the competitors. Teradata continues to be recognized as the leader in the Enterprise Data Warehouse market and growing data warehouse market and should continue to benefit as spending shifts toward more centralized data warehousing architectures. As new data elements and more real-time analytics continue to add to the scale and complexity requirements of data warehouses. Our sales force continues to add new accounts, and our existing customers continue to grow their data warehouses. As the year progresses, Teradata will be ready to compete as an independent company. But just as importantly, the new NCR will be positioned for growth in the self-service market. Financial institutions are starting to follow the airlines lead, and some have started installing, teller-assisted branches, where individuals use an ATM like kiosk for many…

Thank you. (Operator Instructions). Our first question comes from Matt Summerville.

Good morning.

Good morning

First things first, with respect to Teradata the increased growth rate in '07 relative to '06, is that coming from both a combination of heightened market spending if you will versus the additions you've made to the sales force. And then you had given out in the third quarter queue a number on your net increase in spend around demand creation at $20 million bucks. Could you give that for the full year and what you anticipate that being next year or in '07?

I will let Pete answer the second; I will start with the first, Matt good morning. With respect to 2007 growth and kind of the drivers of that growth for Teradata, first and foremost we have made substantial additions to the demand creation headcounts in Teradata in '06. In fact it was more than double the number of people we hired in demand creation in '05. And that’s evidenced by some of the numbers that Pete mentioned in the prior call, but he will give you some further clarity on. Certainly the demand for data warehousing, or I should say enterprise analytic is also increasing in terms of the customer base. The importance of getting after your data and using it for competitive advantage in the market is growing, and new industries as well are also interested in this technology in the way that other industries have shown interest and have grown over many years for us. So, we have had some success in new industries like manufacturing in 2006 where the investments we've made in prior years began to payoff there as the typical sales cycles about 18 months commenced with investments before them. And you'll see also geographically, growth come from markets outside the U.S., Europe continues to do well or it has done well in '06 and we expect good growth there, and also in Asia Pacific. So it’s a mix of those things that I would say are going to be the key growth drivers. Pete.

Yeah. I think couple of points, 7% and 9% is consistent with what we have talked about before. A one point of margin improvement year-on-year is consistent. We reported in Q3 about, I think $20 million relative to incremental investment in demand creation in Teradata. We finished the year about $27 million, and that will reported out in the K. So I think we did what we said we do in terms of investment and that should lead to our ability to both increase one point next year, get 7 to 9 and continue to invest for our future.

So, is that $27 million moving higher in '07, is that what you are seeing?

We will continue to invest and we will -- our goal is that we expect the margins to improve a point year-on-year.

How do you feel about the sustainability of the growth you are seeing in EMEA and Asia Pacific right now? And then I think one of you guys made the point that you expect a stronger second half for the year with respect to Check 21 adoption in the US and I was hoping may be you could point to a couple of more concrete examples that gives you that confidence?

I'll start in reverse with you Matt. First of all, in terms of deposit automation in the US we are leading in the market today. There were couple of thousand ATM machines out there that are already deposit capable in the US, intelligent deposit capable for Check 21. Europe is in a different position, and its been going faster in terms of deposit automation, and our largest customer in the world in fact is in Europe and so we are enthusiastic about the opportunities in the US with Check 21. And again, given where customers are in the deployment cycle; pilot to production, we are more so anticipating a back-end half year improvement in that. But it's highly depended upon factors that are outside of our control such as the data center application being deployed to support Check 21 which is a driver to how customers invest on the front-end. In terms of growth we’ll – the guidance we gave you is 1 to 2% I think growth in that particular space. And Europe is solid. Europe is solid for us in terms of growth; Asia-Pacific has been solid, we had a better year in China this past year; the Americas continues to be challenged to challenge market. And as I said the guidance by the way is 2 to 3%. But as I said, the markets are sustainable in Europe for us. I think they are sustainable in Asia. The work we have to do and what we have to get after is really the America's business.

Yeah. And Matt I would add that, for the year 2 to 3% revenue guidance, there will be more Check 21 U.S. later part versus first half. But we do have, as you know, we are 25%-ish kind of Americas and 75% elsewhere. So we do have a lot of other markets that will contribute to growth. I think our comment about latter part of the year certainly relates to the U.S. portion of Check 21, but it also related to the full impact of the manufacturing, restructuring initiatives in terms of their (inaudible). So we still got to execute that plan through the first half, we'll start seeing later half the improvement and then on into 2008. So it's both a revenue mix story, but it was as much a comment about the ATM continued improvement and profitability and marching towards the 14%.

Okay. And then Pete you gave color on the anticipated restructuring charges that will hit the P&L and ATMs. Any idea what the severance cost is going to be and then what are your plans for share repurchase between now and the Teradata spin-off?

Yeah I gave you the restructuring which as the way we account would be the non-severance portion. The severance portion of the ATM is in our guidance. So it's in the 245 to 255 and we expect that number somewhere in the 75 to 80 for the year. Okay, so not much different year-on-year but absorbing the ATM manufacturing structure. On the share repurchase you are aware we didn’t buy in Q4 because the decision process around the spin we did purchase 280 million in Q1 through Q3. We have $264 million left on the board authorization. We are not going to forecast share repurchases that said we continue to believe that NCR is a good investment.

Okay, thanks guys.

Thanks Matt.

Operator, we are ready for our next question?

Our next question comes from John Healy. John Healy - FTN Midwest Research. Good morning guys.

Good morning. John Healy - FTN Midwest Research. I had a question on the Solectron movement that you guys are going to be going through this year. I was wondering if you could provide a little bit more detail on the timeframe, I know you said nine months, is that nine month until that begins or is that nine months until to be fully up and running. And along with that could you give us some details maybe on what kind of feedback you’ve got from your banking customers regarding this decision?

You will see the Solectron rollout. It will execute that throughout the year much like the rest of the program we put in place for manufacturing, restructuring. So it will be as Pete pointed out earlier it will be more back-half loaded in terms of the improvement on margins. In terms of the customer response it's been fine I have talked to many customers about it. Customers, of course, are mainly focused on ensuring that, quality remains which is a hallmark of the company, quality remains at the forefront of our minds. We are confidence Solectron can deliver at or above the quality we deliver from our current manufacturing plants in North America. The other thing on their minds, of course, is time-to-market in terms of deliverability and actually we think we are going to see an improvement there moving to Solectron. And of course, they are proving EMS, Electronics Manufacturing Services Company that has a great track record and really good quality design for manufacturability and design for serviceability, both of which should have a solid impact on the company in the future as well. John Healy - FTN Midwest Research. Yes. Now that’s helpful. And then on the ATM side here in America and Check 21. Could you give us a little more color on why are you expecting that demand that come from in the second half of the year, if it's more of your large U.S. banks or credit union the community banks deployed that technology and then along with that, are there any updates on kind of your -- on your bulk Check accepting technology and when that might be available for banking customers?

Sure. On the first half of your question, larger banks are going to lead in terms of numbers of units, but its interesting, community banks and mid-sized banks are actually moving more aggressively. But partly the reason is, they have less of a job to do relative to the backend applications in their data centers to support Check 21 and larger banks have significantly more work to do, just given their scale. In terms of the rollout, however, of Check 21 towards the latter part of the year again it’s highly depended upon what we see in the market. The second question you had was? John Healy - FTN Midwest Research. I was just hoping to get an update on bulk check accepting technology that something that you guys are planning on rolling out in 2007 and now where the developments are from that technology?

Yes, in terms of the bulk check a couple of comments I can make first a little bit of texture on this. Today about 95% of deposits done at the ATM are largely single check. And NCR today has a wonderful solution from merchants who might come to a bank with multiple checks and we have a remote image capture solution out of our payments and imaging division that can solve that problem today, in fact to save them and also a lot of time and increased productivity, because you can capture and scan the check on the prim of your enterprise, they are supposed to having a packaging it up with some cash and take it to the bank. That being said we were not going to be religious about technology and we are in the development for bulk check solution, we will have one in 2007 not -- we missed to give you any timing right now but you can be assured we will have our product available this year. John Healy - FTN Midwest Research. Okay great, thanks guys.

Thank you, our next question comes from Richard Farmer of Merrill Lynch.

Thank you, Bill and Pete are you able to provide any more color on the ATM margin dynamics with respect to Dundee and Budapest. How much is the cost mix going to change there by quarter and how is that going to affect the ATM cost based through I guess the bulk of 2007 by quarter.

Yeah I think a couple of points of color is that the -- we calendarized within the 14%, the impact of the improvement but clearly that’s not a full year. As you look I guess the way I described it as you look at the non-severance related cost which I identified as $25 million to $30 million that’s about the size of the full-year impact of the action going forward which would start in 2008. So that gives you a sense of the going forward momentum look at some of that in '07, and then a full-year impact as well as other things we are working on whether its deposit and the mix of the revenue etcetera, will get us moving to our future goals.

Okay. Thanks. That’s helpful. On the Customer Services business, so can you give us a little bit of an update on some of the specific initiatives that the CS team is working on there and how a big an impact some of those will have on the CS margins in 2007. I heard you mentioned that parts and logistics delivery system and the related cost, but what are the big movers of cost progress that are left to take place in Customer Services?

There are three significant drivers to cost structure improvements in WCS all of which we will be focused on in 2007. Some will be completed in '07, some will be moving into '08. The first one of course is parts and logistics, and making sure that we improve the productivity of our parts and logistics system which will have a good impact on cost which -- we are not going to give the targets but it does feed into our 6% NPOI forecast for '07. The second would be call center consolidation continuing to look at ways in which we can improve, well the numbers of call centers we have and where we have them around the world but also most importantly the effectiveness of those call centers in terms of follow the same kind of model going forward to drive a 24/7 support model. And the third is in the productivity of our customer engineering organization improving their productivity in terms of the numbers of calls that they can achieve on a per day basis and there are other programs said were not specifically Richard, CS related that will have an impact going forward not in '07 but in the out years on cost. First of all things like design for service ability making our products more easily serviced, things like remote, diagnostics and remote internet management using software and the network is a way to reach out to devices and remotely repair them as oppose to having to send a human being out there. And a whole number of programs to be used focused in those areas. So, there are CS related programs that will have an impact this year that feed into the 6% forecast and there are other programs underway that we hope to be able to start this year and complete in the out years.

Okay, thank you. Just one more if I could on ATM pricing, I think you mentioned in your comments still that it is moderating. Given, I guess the lag effects of those price changes as a backlog found in the revenue, how important in fact is pricing going to have on the ATM margins in 2007 do you think?

It will have some impact although slight. You can think about the pricing environment and I will confirm that it is moderating out there, it still does -- it still is market dependent. The emerging markets are still more competitive because that’s where we are seeing and our competitors are seeing more growth, but if you think about our pricing environment that was near double-digits over the last several years that is moderated to kind of single mid digits price erosion, there is some impact there, some impact there for margins. But the vast majority of margin improvement will come from operational programs such as what we just announced.

Thank you.

Thanks.

(Operator Instructions). Our next question comes from Reik Reed of Robert Baird and Company.

Can you guys just give us an update on the retail environment as it relates to point-of-sale, and then also Bill as part of your comments you had mentioned Teradata was -- had seen some nice broad based strength. I think you had said in the past couple of quarter that retail was still a little bit of challenge there. Can you talk a little bit about how that is changed?

Sure in point-of-sales specifically, non-self-service related Reik it was a slower year for point-of-sale rollouts in terms of point-of-sale application software. But a fairly, I would say steady year with respect to hardware, point-of-sale terminal growth. On the Teradata verticals side, retail continues to be a strong vertical for that business, and while we did not have as good of a year in the retail space and Teradata, other verticals certainly picked up the pace for that business and verticals such as financial services, new verticals such as manufacturing and also communications had a very solid year for us.

But are you seeing a better trajectory in both of those segments with respect to retail at this point? It just seems from your comments that that’s the case, so I just want to make sure.

Going into '07 did you mean like?

Yeah, exactly.

No not really. I think we can expect another year in retail that will be gated by the economy and gated by what happens in the consumer demand environment. They are so good at ratcheting up and ratcheting down capital spending in that environment based upon their own performance, it's a difficult environment to forecast. On the retail side, however self-service is gaining traction and we are seeing good opportunities and stronger opportunities in self checkout and in new self-service applications such as kiosks for multi-channel selling. And so I would say the point-of-sale side remains very dependent upon the consumers spending environment and macro economy in the US and we are very focused on improving the mix with respect to self-service and retail, where it does have a material impact on a retailer's productivity and ability to retain and attract new customers.

Yeah, right. The only thing I will add is, the retail can -- in Teradata can tend to be lumpy. So you go through cycles. I think the good news there is we’d expanded into the other verticals which basically gives much more of a smoothing effect. So A, we don't have to count on retail as much, it will be lumpy. As Bill said, not one of the stronger vertical this year, but we fully expect the same people that have been buying from us will continue to expand our warehouses.

Okay, great. That's great. And then in the ATM space, Bill as part of your comments, you had mentioned stability in Europe and Asia, but you need to get after the Americas. Can you talk a little bit about -- the industry seems to be a little bit weaker in the Americas, is there something that you are planning to do internally other than the restructuring that helps you start to generate more demand?

When I -- just a little more color on, then get after the comment. When I say get after it, it really is around market share gains and wallet share gains in the Americas market. As you well know, while we are the number one market share leader globally in ATM’s, we are number two in the Americas and we have a goal to be number one here. And so getting after it – it really is in the dimension of market share gains and wallet share gains. And the second would be deposit, we want to lead in deposit, and in the Check 21 space as I said earlier. Our deposit technology has been rolled out for Check 21 to approximately couple of thousand machines, and that is an area where – we have a technology lead, we have a services leading and we are going to do everything we can to use that as an opportunity to achieve the first goal which was market share gains.

Okay. And than I just want to follow-up on the margin question that we have asked just a bunch of different ways in the Financial Self Service area. But with the restructuring action that you are taking and I am excluding the onetime items here. Will there be some inefficiencies, so therefore from a margin perspective you would expected to take a few steps backwards early and then bring it up later? And can you talk about when you really expect the restructuring to kick-in?

The answer to the question is simply is yes. We would expect the first half of the year where we are doing a lot of the work with respect to our manufacturing, restructuring, to been additive to our cost. For example, we are going to have two manufacturing plants in Europe up and running in Q1. And overtime, of course we are going to see one from the volume prospective decrease and the other pick it up and that would be Budapest, who is doing very well by the way in terms of volume product, and so the second half of the year will be more so benefited by that action. Pete?

No. I think that’s all you said. It’s a -- that it is a project with a lot of complexity, we need to ensure we continue with the quality of the products that we deliver. So we are -- we are I don’t want to call taking your time, but we will do this right. And the net of it is that we will see more in the second half than the first still. But the expectation is we’ll get from the 12% this year up margins is to 14% for full year '07.

Operator, we are going to take on more call.

Thank you. Our final question comes from Katie Huberty of Morgan Stanley

Thanks and good morning. Perhaps you can share a metric for total financial plus retail self service growth given this is the direction you heading in, in terms of managing the business. Then have a quick follow-up on cash flow.

So Katie what we will do then both of these companies are separated is we will be coming back to the market, and we will be talking to you about the strategic direction for both of these companies, and at that time we may decide to change the metrics you report where unfortunately we are not going to do that today. But what we can say is, certainly the guidance we gave you for Financial Self Service of 2 to 3 is what you should expect from us in terms of growth. And in the other self-service segment that today is within the retail space, you should continue to expect double-digit growth in that business and represent about 30% of the total revenue of retail or what is today retail automation in 2007?

Yeah I think Katie you can kind of -- if you take the ATM piece, you can see the services we do report that. We said 27% of this year is $870 million is the retail self-service component that will move to a third of the business that’s growing 5 to 6%. So you can do the math. I think the only piece that’s not in all that would be the customer services piece on the retail. And as Bill mentioned, as we get into the -- after Q1 reported results we'll get into more clarity or looking into those numbers. But that’s really the only piece that you don’t have to kind of add up the self-service components.

Sorry go ahead.

The underlying question certainly is that I didn’t want to -- it's an important one, because it's trying to help you and all of the analyst community and investor understand what the new NCR can do in terms of growth. And as we get out and talk to you more about this [genuine] companies, I will assure you we'll give you more transparency of what we intend to do there.

Okay, great. And then just quickly on cash flow, can you help me understand the kind of step up in CapEx this quarter, especially in light of the fact that you're exiting some facility?

Yeah, the way I look at the cash flow is, we said we’d do about 310 to $320 million for the year, we ended up at 270. In that 310 to 320 was always an assumption around increased CapEx in 2006 versus 2005. So we always had that planned. I think the three drivers though when you compare the 270 versus the 310 to 320, one is strong Q4 relative to revenue. We probably left the couple of days of DSO year-on-year in receivables which is about $30 million that we fully expect to recover in 2007 and early in 2007. The inventories were also a little bit higher, partly because of the self-service transition, but also in the parts space. And we have mentioned a couple of times about initiatives in the parts space, which will impact both the working capital as well as the margins. And then we did have higher expenditures and PP&E kind of in the 20% range or $20 million versus original expectation. And then I have you given you for next year for next year we expect to go from 212 down to 175. So, I would characterize CapEx as kind of a -- some '05 spilled in '06. We did have some higher number, but it was only a piece part of the whole cash flow picture and then we expect to be down to 175 in CapEx next year with a DNA number of about 165.

So does the $20 million incremental infrastructure investment help support to separate entities or is that investment cycle still in front of us?

Yeah, it was a one time and it's not related to the separation.

Okay, great. Thanks so much.

Hey Katie, thank you very much. And I also wanted to take an opportunity to thank everybody for joining us today, and we'll look forward talking to you and after Q1. Take care folks.

This concludes today's conference. Thank you and have a good day.