Welcome, and thank you for standing by. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now I'd like to turn over the meeting to Tracy Krumme, Vice President of Investor Relations at NCR.

Thank you. Good afternoon, and thanks, everyone, for joining us on our First Quarter 2013 Earnings Call. Bill Nuti, NCR's Chairman and Chief Executive Officer, will lead our conference call. After Bill's opening remarks, Peter Leav, EVP and President, Industry and Field Operations, will update you on progress with respect to certain key initiatives. Bob Fishman, NCR's Chief Financial Officer, will then provide comments on our financial results. 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 risks and uncertainties that could cause actual results to vary materially. These risk factors are described in NCR's periodic filings with the SEC and in our annual report to stockholders. On today's call, Bill and Bob will be referring to a presentation posted on our website. We will also be discussing certain non-GAAP financial information, such as free cash flow and results excluding the impact of pension and other 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 press 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, ncr.com. For those listening to the replay of this call, please keep in mind that the information discussed is as of April 30, 2013, and NCR assumes no obligation to update or revise this information included in this call, whether as a result of new information or further results. And with that, I'd like to turn the call over to Bill.

Thank you, Tracy, and good afternoon to all of you. I'm on the key takeaways slide, Slide 3. Let's start with revenue. Revenue was up 13% as reported and 15% on an FX neutral basis. The 2-point difference was largely the Japanese yen impact on us in the quarter, and I would point to the fact that revenue was up significantly without Retalix. Revenue was up 9% and 11%, respectively, without the Retalix impact. So a solid quarter for NCR. Gross margin was a good story for us, up 120 basis points year-on-year. Again, that was also up without the impact of Retalix in the quarter, so a solid year-over-year expansion of gross margin, and we'll talk about why in a minute. But NPOI is a big story for us. This is the first time we've gone over 9% in the quarter, in the Q1, and it's a great start to the year not just the overall growth of NPOI year-on-year, but the margin we're now driving. Software was the key contributor to gross margin expansion. We're seeing solid software revenue growth across the company in all lines of business and in particular, SaaS revenue, which had a great quarter. And we are on track to achieve our guidance we gave you. And remember, software guidance is without professional services, so we don't include that in that number, that's software, SaaS and software maintenance. We did close Retalix in the quarter. It was a solid close on Feb. 6, and they had a good start to the year for NCR. We did have one significant win we'll talked about on today's call. We had several wins in the quarter but one certainly important win for our company, a great brand name in the organic grocery space. And today, ahead of…

Thank you, Bill. As Bill mentioned, strong revenue growth in Retail and Hospitality and continued solid performance in Financial Services drove our first quarter performance. Our continued focus on being the world's leader in consumer transaction technologies combined with strong innovation, the rapidly increasing contribution of software and SaaS in our revenue mix and consumers undeniable appetite for technologies that make it convenient to transact with business anytime and anywhere are key factors driving our success. Turning to our lines of business. Financial Services revenue is up 5% on an FX neutral basis in Q1, a good result against strong first quarter last year. As we have signaled previously with the larger U.S. ADA and PCA upgrade cycle of the past 2 years winding down, we faced some domestic headwinds in 2013. But we're seeing some strength in our international markets and has enabled us to start the year with solid revenue growth. Particularly strong areas for us where EMEA and China, where we had double-digit revenue growth year-over-year. We continue to see momentum and customer commitments for us multichannel deposit solutions, including intelligent deposit and Scalable Deposit Module, or SDM. In an effort to better serve customer segments and to create competitive differentiation in the market, Independent Bank Corporation in Michigan purchased our SDM-enabled SelfServ ATMs to begin its fleet migration from envelope deposit to intelligent deposit technology. As digital and self-service channels grow in importance, channel availability and a consistent consumer experience become more important. NCR's APTRA software portfolio is extending its leadership to help financial institutions deliver consistent, high-availability, software-enabled networks to consumers. Central 1, serving 3 million members, is Canada's leading payments processor and trade association for credit unions. They have selected NCR's APTRA Passport remote deposit capture software solution to allow customers to remotely deposit…

Okay. Thanks, Peter. NCR's total reported revenue in the fourth quarter was $1.41 billion, up 13% versus Q1 2012 and up 15% on a constant currency basis. We reported GAAP income from continuing operations of $62 million or $0.37 per diluted share. This compares to a GAAP loss from continuing operations of $10 million or a loss of $0.06 per diluted share in Q1 2012. NCR's results from continuing operations include special items in both periods. Excluding pension and special items, non-GAAP diluted income per share was $0.54 per share in Q1 2013 versus $0.47 in Q1 2012. To analyze NCR's operational performance without the effect of special items and pension expense, please see the supplemental financial schedule included in our earnings press release and the supplementary non-GAAP materials in the slides that Bill referred to earlier that reconcile our GAAP to non-GAAP results. Excluding the impact of special items and pension expense, our Q1 2013 gross margin was 27.4% compared to 26.2% in the prior year period. This 120-basis-point increase was primarily driven by a favorable mix of revenue, including higher software revenues and a continued focus on cost improvement initiatives. Operating expenses, excluding pension expense and special items, were approximately 18.3% of revenue in the first quarter of 2013 compared to 18.1% in the same period last year. The company continues to invest in sales and R&D while reducing our overall G&A expenses. Non-GAAP income from operations, or NPOI, was $129 million in the first quarter compared to $101 million in the prior year period, an increase of 28%. The first quarter of 2013 included a $13 million benefit from a change in the severance policy in the U.S. Our U.S. severance policy is no longer based on years of service. So going forward, expense will be recorded…

Operator, you can open up the call for questions now.

[Operator Instructions] Our first question comes from Katy Huberty with Morgan Stanley.

Could you talk a bit more about the investments you're making in R&D and services in the financial services industry just given that, that was a drag on margins for the last couple of quarters? Is that legacy investments or is that investments ahead of the branch automation opportunity?

It's the latter. We're making investments largely in branch transformation, Katy, as well as software. And the services investments we started back in Q3 of 2012, they'll continue on through the remainder of this year but become incrementally less as Q2, 3 and 4 unfold.

Okay. So if the branch automation revenue comes through, which it sounds like could be as early as the back half of the year, you would expect that the margins to expand again. And is that the right timing?

That is. I would say that 2014 will be an important year for branch transformation. Think about this year around $80 million to $100 million of branch transformation revenue, which, by the way, was a lot more than we originally anticipated coming into the year. So meaningful, but in the grand scheme of things, is small in comparison to the total. But that is a more margin-rich environment because it's more software involved in that selling process and ultimate solution, and it's more services. Kenneth S. James - Sterne Agee & Leach Inc., Research Division: Okay. And then just a quick follow-up for Bob. Just to be clear on the guidance, the higher NPOI and EPS guidance includes the $13 million benefit from severance changes but then you would expect that to be partially offset by higher severance of $7 million to $10 million as you go through the year. Is that the right way to think about the changes?

Yes, that's exactly the right way to think of it. The benefit of $13 million in Q1 is offset by the $7 million to $10 million that will flow through the remainder of the year.

Next question comes from Paul Coster with JP Morgan. Paul Coster - JP Morgan Chase & Co, Research Division: It feels like you are moving into different segments of your traditional markets with which your competitive landscape is changing. Can you just talk a little bit about both in the Retail segment and Financial Services segment, in particular, whom you now run up against and whether you sort of perceive yourself as the aggressor or the defender in that competition?

Well, I think, the -- Paul, the overall comment you make is something that is important for people to understand. This is a very different NCR than just a few years ago in so many ways. It's difficult to describe on a quarterly analyst call. But we are a very different company, and we do have a different go-to-market and set of products by industry now than we have had just in the recent past. If you think about Financial Services, we're still quite well positioned there. We're the #1 market share leader in hardware for ATMs and software for multi-vendor ATM software, for services in terms of services attached in our services business. So we're quite well positioned in the legacy space. And the positive aspect of branch transformation is net new space for NCR. Other competitors occupy it today but with older technology that will be replaced, so we feel very good about this segment of the market, this adjacency. And it should be noted, we've been working with several customers now for a long period of time on innovation in this space, large customers, as well as medium-sized customers. And so we feel good about the space overall. And we really feel excited about software and SaaS going down to market to the mid-tier and smaller banks on a global basis. So overall, that is an exciting industry with the exception of the difficult compares in the first half of '13 versus '12. Retail, we've gone from being hardware company to being in my estimation -- and I don't mean this to sound with hyperbole here, but one of the most, if not the most important technology company to retailers in the world. And these are our customers telling us this, not us wanting to believe that.…

Well, again, some of beat, just to clarify, in Q1 was based on the benefit of the severance change, and that's going to be offset with severance through the balance of the year. So we did increase the NPOI guidance by $10 million at the top end, so we viewed that as pretty significant. Again, from my perspective, the Q1 provided some more clarity into the balance of the year, which was good, and we were glad to be able to up the guidance.

Next question comes from Meghna Ladha with Susquehanna.

In Financial Services, it came in above our estimates despite half year-over-year comps. How should we think about growth in the segment the next few quarters?

Yes, I think you should think about growth in Q2 -- in Q2, it's going to be a challenging quarter for us in terms of growth, again, because it's the most difficult quarter we're facing in terms of compares year-on-year, particularly in the U.S. and then the back half of the year should incrementally improve as a result of compares that will get easier as the quarters go by, improvement in branch transformation revenues and improvement in services. So I think that, again, we've always anticipated in our outlook that the first half of the year will be more difficult than the back half of the year. Again, because of comparisons, the U.S. base mainly would begin to ease a bit. So I think the back half is going to be a better half for NCR and help us to achieve our guidance of 2% to 4% growth.

Okay. The next question is regarding FCPA. I don't see it in the press release. Bill, can you provide us with an update as to where we are with respect to the FCPA?

Yes, sure. I'd say there's nothing new to report in Q1, and we continue to work with the authorities to work through these issues to resolution.

Next question comes from Ian Zaffino with Oppenheimer. Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division: I know you indicated that in Financial Services, the U.S. was down. Can you give us an order of magnitude how much that was down and maybe how much non-U.S. was up?

North America revenues were down around the mid-teens. I think it was around 15% in North America, and the rest of the world made up the difference for us, Ian. I don't know the exact number because we break it down by region. But I can tell you that EMEA had solid growth for us. I know they were up, I think, 12% year-on-year. And included in there, we had some great performances in certain countries in Western Europe, in particular, year-on-year. China had a great quarter for us and Brazil. So they were really the key factors in what made up the difference between the U.S. being down a bit. Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division: Okay. And then on the self-checkout, you also alluded to just triple-digit growth. Ex-ing out your biggest contract, what was the rest of the business sort of up?

I don't know the answer to that. It was solid. When we take out that one big contract, it was still a solid quarter for us. And we anticipate that, that will continue, perhaps not at that 178% pace, although we'd like that year-on-year. But we don't expect that in the forthcoming quarters. We do expect to have a great Q2, 3 and 4 in that space. Ian A. Zaffino - Oppenheimer & Co. Inc., Research Division: Okay. And then the final question would be -- and I know you guys have always been very good as far as giving forward-looking -- not guidance, but really forward-looking plans. You discussed and laid out very well Phase I, Phase II, Phase III, the pension. You're pretty much done with Phase III of the pension. You've talked about the increase of free cash flow. You've talked about some spending or some investments you're going to do. But what's beyond that as you look to maybe -- are we looking for another acquisition? Are we looking to return cash to shareholders? How do we get our minds around that?

Well, right now, one thing we have done well, Ian, and we're disciplined in this way is that we've kind of had great balance of focus here on legacy issues and growth initiatives. Right now, we're digesting our Retalix and integrating that. We're finishing the integration of Radiant, and I want to make sure we'd do those both well. And by the way, in doing them well, we'll continue to grow our gross margins because of the growth we're seeing in software and SaaS. So I feel good about expansion of margin as a result of what we've done so far vis-à-vis growth initiatives. We're really focused on legacy initiatives for at least the remainder of this year, meaning we want to get pension Phase III right. There's a lot of work and effort Bob and I spend hours per week on this making sure it's done properly as do many tens of people at NCR. We're also dealing with other legacy issues that you may not see but do impact us, like the U.S. severance changes, so you're aware. As you well know, we traditionally have used FAS 112 as an accounting mechanism for severance accounting in the U.S. It's an old AT&T legacy vestige of the past. And now we're moving away from that in the U.S. And each of our businesses will now pay for severance in the quarter that they take it. That's very different than what was in the past using FAS 112 to amortize the cost of that severance over a 7-year period. So there are lots of those little -- they're not so little, but legacy issues were getting behind us. We are turning into rapidly a technology company and putting these legacy issues behind us culturally and otherwise helps us achieve that goal. And so we're going to spend our time doing that the remainder of this year and see where we are going into 2014. We have put ourselves in a position of achieving our aspirational targets. So we feel very good about the future of this company and the ability to continue to grow revenues and gross margin and operating margin even if we stopped with growth initiatives at the end of this year. We probably will going into '14, but I think we feel good about that. And then we'll make determinations. And we look at this every quarter, I do, with the board, as to how do we use our capital going forward. And it's everything. Everything is always on the table: buybacks, dividends, acquisitions, legacy issue like pension. We look at everything and examine what's in the best interest of the shareholder and we make a decision.

The next question comes from Matt Summerville with KeyBanc.

Just a couple of questions. First, in the Retail business, can you talk about what you expect your mix of self-checkout versus point-of-sale revenue to look like in '13 versus 12? I'm trying to understand more about how that -- we should be thinking about that mix shift?

Well, if you remember, Matt, going back many years, we used to think about 70-30. I don't know what that is today, but I can tell it it's not 70-30 anymore, it's higher. Let us come back to you through Tracy and Bob and answer that question for you specifically but...

I think it's an interesting question, Matt, because historically we would have had that at our fingertips. But now that we move more toward software services as a big piece, self-checkout point-of-sale, it's almost like -- we still like self-checkout because it drives those margins, but the whole business, the whole Retail business has become more services and software. We'll get you that answer, we just don't have it right now.

Sounds good. And then Bill, can you maybe talk more about just ATM demand more focused on emerging markets. You hit on the U.S. I'd like you maybe just to touch on Eastern Europe, Russia, you mentioned China being strong and sort of what you're game plan is, your next move in Brazil as the Bradesco shift has fully anniversary-ed a quarter or 2 ago.

Yes, the -- and I'll have Peter kind of weigh in here as well. But my high-level perspective for you, Matt, is quite simple. We continue to expect ATM demand in the emerging markets to be mid-single digit to high single-digit kind of growth over the medium term, while we expect in more mature markets, like Western Europe, the U.S. and Japan, demand to be flat to down over the medium term. The mix of that will continue to look like, from my point of view, a traditional ATM business, put branch aside for the moment and just look at that as a space in the low-single digits to maybe medium-single digits when you have acquisition -- I'm sorry, when you have upgrade cycles like Windows 7 or when you have upgrade cycles like EMV, you might get a nonsecular pop for a short period of time. But that market wants to grow secularly around 3% when you put it all together going forward. What will be the adjunct to that will be branch opportunities in software and services in terms of growth over that timeframe, which will help us grow faster than that market. So that gives you a little bit of color. For NCR, again, we had a superb quarter in countries in Europe, the Middle East, in particular, Brazil and China.

Matt, it's Peter. I'll just make a few additional comments related to those areas where we see significant opportunities for growth and certain countries that continue to do real well across Eastern Europe, Turkey being notable. As Bill mentioned, Middle East and Africa continues to do very, very well, and we continue to do very well there. You heard about China and Brazil, but India also is still very much a key component of the growth plan for ATMs and our growth plan within it albeit the models may be different. But that market is still moving forward and something that we've invested in and will continue to stay focused on and working to gain share in those areas. Additionally, not only is it a cash dispense discussion but many of these markets are moving towards deposit, and we know that, that leads to accretive margins. We know that, that leads to a change in behavior, and then that also ultimately leads to a broadened discussion regarding branch and services that grow with it. So we are very bullish, and we continue to be. And obviously, financial is a very broad business, both direct and through partnerships. We're in 180 countries, and that's something that served us very well and obviously helped our balance in Q1.

And then just lastly, real quick, Bob, can you give in absolute dollars what the old severance expense number for the full year was in the P&L and now what it is post moving away from FAS 112? I just want make sure I got this right.

And which year are you referring to, Matt?

I'm looking at 2013. Pre the move away from FAS 112, what would your severance expense have looked like, so if you were still amortizing it, versus the go-forward expenses incurred. I'm trying to understand the total change here.

I'd say it probably would have been between $150 million, $170 million. So if we hadn't made a change, that's what you'd be looking at.

And then what are we looking at now for the full year?

Well, on a run rate, you're looking at $20 million. And then we've included in the reconciliation that our forecast for pension expense this year, including the 2 activities that we started in Q1, which is the termination of the retirement executive plan and the ERO, the early retirement offer, that will take that $20 million run rate up to $35 million for this year. And that's outlined in the kind of the reconciliation between GAAP and non-GAAP, so think of it as a $20 million run rate and then impacted by a specific onetime transactions, like the termination of the executive plan and the ERO.

But that doesn't impact severance, right, Bob? I'm asking about what the severance expense would like.

I'm sorry, I thought you were asking about pension.

We're so focused on pension.

What with FAS 112 had been?

Yes. And now what is it without...

I think of it as it typically runs about $35 million, and it might now be about $5 million better, $3 million to $5 million better. I gave you all this extra pension information as a bonus there.

Next question comes from Julio Quinteros with Goldman Sachs.

It's Roman Leal in for Julio. I guess, first on the ATM backdrop, your competitor was out there today speaking about potentially changing their pricing structure, not clear whether that was domestically or across the board. And just curious, how much does pricing differ between you and your competitors domestically and across the board, I guess, globally in your ATM business?

Roman, this is Peter. So needless to say, we haven't announced anything of that nature related to pricing changes in the business, and it's just very variant. There are probably other elements to take into account where we've got different competitors and different markets that are more pronounced as it relates to your certain markets. So when we look at the business across the markets, there are different pricing structures and different competitive elements that we're seeing. So I think it is important that we leave it at that at this point. The discussion that we had this morning, we'll go back and take a look at the impact, but we're not looking at doing something comparable at this time.

Sure, that's helpful. In your Retail business, when you strip out Retalix and I just kind of look at the -- even stripping out the self-checkout, how did the traditional point-of-sale perform relative to your expectations? And how important is that in your guidance? Or is kind of your confidence in organic growth mostly driven by the self-checkout side of business?

Well, let me answer the question that Matt asked first, this way you'll have that because you're asking it indirectly. If you look at self-checkout, hardware and software in Q1, it accounted for around 18% of our total revenues. And again while important and somewhat higher margin than point-of-sale, even though our point-of-sale margins have gotten significantly better over the last few years in terms of hardware point-of-sale margins, the real big swing item for us now, given the size of it, is software and services. So the rest of the business, you can look at as a combination of hardware and then the software, SaaS and services piece. Is point-of-sale important? Yes. It continues to be reasonably good margins for us and is accounted for around 12% of our revenues in Q1. So as you can see, the diversity of this revenue stream has become quite substantial in terms of software and services and recurring in nature. So we're focused a great deal on that.

Our last question comes from Gil Luria with Wedbush Securities.

First of all, a very interesting announcement on Aloha Mobile. If you wouldn't mind giving us a little bit more details, when you launched it, is it a hosted or in-store? I think you said small business but initially about Silver, you said the same thing and then rolled it out to a 300-store chain. So if you wouldn't mind giving us a little bit more detail on that and then when it's coming out. And then the follow-up question to the last couple of questions in terms of when that big self-checkout project -- how long it's going to last, how many more quarters that's going to last?

Okay. First, on Aloha Mobile, obviously, we're all well aware of the movement towards tablets and mobile devices as a means to check people out or in depending upon the industry you're in. And in Aloha Mobile space, we've mobilized the application. That announcement came in Q1. We're beginning to roll it out. We're having great success, by the way, in initial rollouts of Aloha Mobile so far. You're right to point out that Silver is also a point-of-sale mobile application but not in Hospitality. It is mainly for retail, small and really small business retail, if you will, the mom-and-pop store kind of device, so slightly different markets. But again, we are utilizing a similar mobile embodiment of the technology. Relative to self-checkout, we'll continue to see self-checkout momentum for -- in the U.S. for a few larger customers roll into Q2 and then into Q3. But we do anticipate also having an opportunity to extend the size of that particular order in this year going into the remainder of this year and into 2014.

Just a clarification -- go ahead, is that Peter?

Just one other comment on Aloha Mobile. In contrast to Silver, it is an expansion of the existing base. So when you think in terms of our hospitality space, which you know fairly well, this is an opportunity that's driven by a significant uptick in the number of mobile users in the restaurant space where we play and, in many cases, where we are desirous of becoming a bigger player, the aforementioned discussion around global growth of the Hospitality business. Whereas Silver, we have a situation in which we are, in many cases, completely net new. So I want to make sure the distinction as far as growth is important as this is an add-on, a very important component of the mobile strategy, but it's in a base that exists in many cases.

But just to clarify, Silver is a mobile-hosted solution retail. Aloha Mobile is an extension of your existing point-of-sale for ordering. It's not a stand-alone restaurant POS hosted on mobile.

It is an extension of our current Aloha point-of-sale capability to mobile devices, but it is also hosted, as well as offered in server-based functionality.

Gil, it's John Bruno. I think I want to see you next week or in short, I'll take you through this in more detail. But I'd like to think about it as an application site similar to the way in which you think about our Hospitality business. And our teams sells it, as such to Peter's point, as an extension of the existing brand. It has full-feature function and capability. But if you think about the Aloha suite, there's a lot more to it than just mobile ordering. There's a whole bunch of things with promotion and loyalty and promotions, et cetera, coupon redemption and so forth. So we bifurcate the functionality necessary to make the mobile enablement, improve it. But unlike Silver, which is a complete mobile-enabled software solution, which is inclusive of the package, it's a little bit different only because it's skinny-ed down for the much lower tier market.

Okay. Thank you all for joining today. This is a longer call than the usual in light of the pension Phase III announcement. We appreciate you sticking in there with us today, and we look forward to reporting back to you next in July. Thank you.

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