Please stand by; we're about to begin. Good day, and welcome to the NCR Corporation Third Quarter Fiscal Year 2015 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Gavin Bell, Vice President of Investor Relations. Please go ahead.

Good afternoon and thank you for joining our third quarter 2015 earnings call. Joining me on the call today and offering opening remarks are Bill Nuti, Chairman and Chief Executive Officer, and Bob Fishman, Chief Financial Officer. Additionally, available on the call today for Q&A are Andy Heyman, Senior Vice President and President-Financial Services; Michael Bayer, Senior Vice President and President-Retail Solutions; and Paul Langenbahn, Senior Vice President and President of Hospitality. Our presentations and discussions today include forecasts and statements that are considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. While these statements reflect our current outlook, expectations, and beliefs, they are subject to a number of risks and uncertainties that could cause actual results to vary materially. These risks and uncertainties are described in our earnings release and our periodic filings with the SEC, including our Annual Report to stockholders. On today's call, we will be referring to presentation materials 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. Reconciliation of these non-GAAP financial measures to their most directly comparable GAAP measures, and other information concerning such measures are included in the presentation materials and in our earnings release. These are also available on the Investor Relations section of NCR's website. A replay of the call will be available later today on our website, ncr.com. With that, I'd like to turn the call over to Bill Nuti. William R. Nuti - Chairman, President & Chief Executive Officer: Thanks, Gavin. Good afternoon, everyone, and thank you for joining us today. We had a solid third quarter, as consistent execution by the NCR team generated results in line with the outlook we provided in July.…

Thank you very much. We'll take our first question from Paul Coster from JPMorgan.

Well, first of all, it's nice to see another decent quarter, but of course the question which everyone will be asking is what about the strategic review; what can you say about that please, Bill? William R. Nuti - Chairman, President & Chief Executive Officer: Thank you, Paul. First of all, I appreciate the kind opening. On the strategic review, Paul, that is ongoing. We continue to comprehensively look at all of the alternatives we have as a board. We are balancing both running the business responsibly and, to your point, making our commitments, while also, again, with a lot of rigor looking at every single alternative we have and really giving it enough time for analysis and review. So, it is ongoing; I anticipate it will be ongoing now for the next few months, and we'll see where it lands. But right now, there's been no change in that particular analysis.

Bill, does it have to come to a point of completion or are there items that may fall out of the strategic review that can be executed upon along the way, and I'm particularly interested in Bob's comments about restructuring and how there may be some additional restructuring opportunities ahead, which didn't sound like they were part of the strategic review, but I suspect there's some relationship there? William R. Nuti - Chairman, President & Chief Executive Officer: Yes, Paul. You will likely see some aspects of the strategic review fall out into our near-term actions, and we can't get into that on the phone today, but certainly if there is a smart thing for us to do, we're going to do it. Is there an official ending to the process? I think the answer is yes. But, again, I would tell you my learnings out of this is the following: one, when you take on that kind of a project, it's a 15-hour workday and a lot of weekends so that you can responsibly run the business. And secondarily, the depth to which one needs to go for each alternative to give your board a thorough view is a lot of analysis. It will not stop our board, however, from taking immediate action on areas that make sense, and one of them, Paul, may be some amount of additional restructuring. One of the benefits for Bob and I of going through the process has been we've had access to a number of exceptional resources that have looked inside of our company, at a level of depth that would normally cost us millions of dollars of consulting fees that, I think fortunately for us, we didn't have to bear; and we're going to take their advice in some circumstances but make sure it makes sense for the business. And we may decide to extend the restructuring initiative in Q4 and Q1, but we're not quite there yet. Robert P. Fishman - SVP, Chief Financial & Accounting Officer: Ian, I would say to that point is we are definitely focused on fast-payback opportunities that are attractive to investors. As we continue to focus on higher margin, higher growth opportunities, end-of-lifing products, as an example, those continue to be areas – how do we become more efficient. That's all work that continues to be done, and we wanted to leave open the opportunity that if we did see some attractive fast payback opportunities, that would be available to us.

Okay, great. Thanks. I'll hop back on the queue.

We'll go next to Ian Zaffino from Oppenheimer. Ian A. Zaffino - Oppenheimer & Co., Inc. (Broker): Hi, great. Thank you very much. Question will be on the pushout of the backlogs. Is that just an emerging markets phenomenon or are you seeing that in the developed markets and maybe what areas of the business are you seeing that in? Thanks. William R. Nuti - Chairman, President & Chief Executive Officer: Thanks, Ian. It really is primarily in the Financial Services area, so I'll ask Andy Heyman to comment. Andy?

Yeah. Hi, Ian. In terms of where the backlog right now is a little slower than normal. And just to give you some statistics on this, we had earlier in the year anticipated some reduction in the typical backlog conversions based on our contracts were increasingly in the areas of higher branch transformation commitments, higher enterprise software commitments, and higher areas in terms of our refreshed ATM fleet, called the 80 series. And we had planned in the back half of the year for about a 50-basis-point reduction – I'm sorry, a 500-basis-point reduction in a typical backlog conversion. So think of that as, entering a quarter, if you've got $800 million of backlog where there is 50% conversion, we had planned it for about 500 basis points less. What we're seeing is about a 1,000-basis-point less conversion because of those three areas. There is a higher percentage of more innovative products in the queue right now. The customers continue to try to get ready for, if you will, as they come out of R&D into the implementation cycles, and those go through typical certifications that can have delays; there could be some R&D areas where we're tightening up, et cetera. So that's what's led to slower conversions. And as we look into next year, we think we'll start to revert to the mean, but that is what's causing the backlog delays that you're seeing right now. Ian A. Zaffino - Oppenheimer & Co., Inc. (Broker): Okay. Thank you. And then, next question maybe be more... Robert P. Fishman - SVP, Chief Financial & Accounting Officer: I would add just to that point. Sorry, Ian, I would add to that point, Andy, that the backlog growth – constant currency is up double digits going into Q4, and I expect it…

We'll go next to Meghna Ladha from Susquehanna International Group.

Hi. This is Hamza Fodderwala in for Meghna Ladha. I wanted to get a sense of – you had cited headwinds from Russia and China of, roughly, I think, 200 bps earlier this year in your guidance. What exactly accelerated the weakness here? William R. Nuti - Chairman, President & Chief Executive Officer: Andy, can you take that please?

Yeah. The – in terms of Russia and China, they each have unique situations in terms – if you're referring to what's causing those headwinds. In China, what we've seen is a significant tightening under the government's secure-and-control mandate to reduce spending the banks are allowed to invest in with companies that build systems outside of China, that have R&D that are not indigenous to Chinese companies. So that has caused banks to significantly reduce spending with companies that are not Chinese companies and instead point it towards local companies. So that's really accelerated the headwind in China. In Russia, a very different story. First of all, the macroeconomic conditions in Russia have been very challenged for local financial institutions there, and then second of all, we have a lot of contracts in U.S. dollar in Russia. And when you have a contract in U.S. dollar, as the dollar has strengthened significantly over the last 18 months, it's made it much more difficult for a financial institution in Russia to be able to afford our solution. So it's a bit of a double whammy that's going on in Russia right now.

Okay. And then just to follow up, I know you mentioned obviously a potential merger between a couple of your competitors. Just wanted to get your sense on the landscape should this transaction go through, and do you think it could help stabilize the pricing environment in Europe? William R. Nuti - Chairman, President & Chief Executive Officer: I'll make a couple of comments and then ask Andy to give his point of view. First of all, I think on the surface, the strategic rationale of two legacy ATM providers coming together actually makes very good sense, especially given that there really isn't a lot of geographic overlap for their market presence, so on the surface I think it makes sense. Now, both of their CEOs have talked about the importance they place on investing in software, in cloud, in digital banking, and using the combination perhaps to build a balance sheet to be able to invest in where customers in the market that they serve and we serve are going. Now, of course, we've been through that process for the last five years, so we have a unique point of view on that. I think the challenge for them, if there are challenges, are obvious to all of us in that a merger of that size is extremely difficult to pull off, and I don't envy the geographic proximity issues, the cultural differences between the two companies, the product overlap issues that they'll inevitably have to face, in choosing which product lives and which product does not. The services infrastructure issues that they'll have to face. Clearly, the issue around where they decide to make cost cuts in terms of employees and R&D, and there's a lot of fundamental issues that could, if they do not execute well, slow them down in a market that's moving very, very fast. So, again, on the surface I think it's a good thing. Relative to the challenges for us, of course, we are now with many of our acquisitions and the assets we have behind us, where they want to go, laser-focused on innovation, moving forward in a rapid fashion, and I think putting ourselves into a great position in the market. Andy, any other comments?

Yeah. Let me say a couple of things in – at an enterprise level, obviously one of the companies has a retail business. So I want Michael Bayer to also get a chance to say a couple of words, but it's largely about Financial Services with this merger possibility. First of all, we were not surprised by this news at all. It had been something that we felt might make sense for a number of years for all the reasons Bill outlined. What our customers are telling us right now – and, by the way, there's been no shortage of communication between customers and us based on the recent news – but what they're saying to us right now is a couple of things. First of all is they've congratulated us. Just looking at our value proposition, how we've been so focused on a transformation for a number of years, becoming much more software-driven. So much of our revenue streams today in Financial Services do not come from ATMs anymore. We have a very large and growing enterprise software business that in the recent quarter made up about 40% of our software revenues. So we've been doing a lot of things to change the value proposition, and for us it's changed our operating margins quite substantially based on that innovation. The second thing that they're telling us is keep doing exactly what you're doing, which makes a lot of sense to us. We feel like the strategy that we've put in place has really changed the game in the industry. It's not just about physical channels. It's not just about digital channels. We're the ones that they look to to integrate channels seamlessly to help financial institutions control costs and improve revenues. So it's really been working for us. In terms of your question about pricing, you can never predict what's going to happen out there on pricing, but there's a lot of competition. There always has been in the Financial Services space. There's a lot of spending and a lot of competition. We don't expect that to change over the course of time, but I would say, just as we're looking at recent activity, that we do think that pricing is probably more stable right now than it was six months ago. That's not to say that that's a new trend, either. It's a highly competitive market.

Okay. Thank you very much. That's it for me.

We'll go next to Kartik Mehta with Northcoast Research.

Good afternoon, Bill. Bill, I don't know if this is a question for you or maybe Andy. I was just wondering if either one of you could comment on Digital Insight, and the growth you're witnessing now as it's part of NCR and maybe some of the leverage you were able to get because of the ATM business. William R. Nuti - Chairman, President & Chief Executive Officer: Yeah, sure. First of all, I'll let Andy do most of the talking, Kartik. But we are very pleased so far with the progress we're making in DI. Andy, any other further comments from you?

Well, yeah, a couple of things. First of all, it's been the backbone for us of our whole community financial institution segment play that we've been making for a couple of years now. That business will perform extremely well this year for us. The Digital Insight component, which is a subset of how we go to market in the community financial institution space, continues to be growing this year in kind of the mid-single digits. The key thing to know that we've been talking about is that we believe this is a business that can grow high-single digits, low-double digits long-term, like our Hospitality SaaS business, and what we've been working on so hard is getting the customer satisfaction model extremely high; and our team has done an exceptional job of that. We've grown the net promoter score from negative numbers to very positive numbers in about 12 months. We're still – if you look at the business, there's a lot of growth in end users, which is great. We have a new module coming to market right now. We went live with it last week: business banking. We see a lot of growth ahead for the business and we just have to work through the erosion of some of the complaints in contracts from prior owners that should be behind us by the first half of next year, so that's been the only headwind in the business. That will be behind us soon enough, so it's been a fantastic acquisition thus far.

So, Andy, would that imply – if DI is growing mid-single digits and if I look at financials of service numbers on a constant-currency basis, would that imply that overall ATM business was down, and if so, what would you attribute that to?

Well, yeah, the ATM business is – when we look at it right now, it goes a little bit back to the backlog story there. I would say the ATM business, generally speaking, if you think about our business, as the ATM business versus the branch business versus DI? The ATM business is – right now, there is a softness to the point you mentioned, but you've got to look at the Russia, China syndrome that's going on because that is causing a – depending on the quarter – a 300 basis point or 400 basis point impact. So when you normalize it for that, it's a growth business still; and the backlog position, because of the points I made about slower backlog conversion, is the cause of why it's not even a faster growing business than that. But it's still a low single-digit growth business without Russia, China. Once the backlog starts to revert to the mean in the outer quarters here as we look into 2016, then we're back to what I would call a normal level of growth for the business.

So you're just having two geographies negatively impact you.

Two geographies negatively impacting us along with slower conversion of other markets due to the percentage of contracts that are in these more innovative areas.

And, Bill, just one last question – obviously a lot of questions on the strategic review. As you look at it today, has it taken longer than you thought, and if so, as you look back, why do you think so? William R. Nuti - Chairman, President & Chief Executive Officer: Oh, for sure, Kartik. It's taken a lot longer than we initially thought and the reason is twofold. I mentioned these earlier. One is when you're a public company and you need to focus on running the business and running it responsibly, there is only so many hours in the day; and if you devote all of your time to a strategic review, you could take your eye off the ball, and we will not let that happen; that's number one. Number two, the depth of the analysis, by alternative, has been very comprehensive, more comprehensive than I initially thought, meaning we're going deeper, wider; we're viewing every alternative at a very comprehensive level, and I think in the end that is the most responsible thing to do. So I would say yes and for those reasons.

Thank you very much. I appreciate it.

We'll go next to Gil Luria from Wedbush Securities.

Yes, thanks for taking my question. Excluding Russia and China, what other countries do you feel have gotten worse over the last few months, and what currencies have been the incremental weight since you reported last time? William R. Nuti - Chairman, President & Chief Executive Officer: Hey, Gil. It's Bill. First of all, I saw you in my office today on CNBC. You looked very handsome. How about it, Andy?

Thank you. I appreciate that. William R. Nuti - Chairman, President & Chief Executive Officer: And on this question, I'll ask Andy to answer that. Andy?

Yeah. I think, let me say a couple of things. First of all, the African nations in general have – we've started to see some softness there. And I don't know if you caught my comments related to Russia and the fact that there's a lot of contracts we have in Russia on U.S. dollar. It's the same thing with Africa, where you might see anywhere from a 5% to 12% FX impact there that – if a distributor is buying a product from us in U.S. dollars, all of a sudden that same product costs 5% to 12% more, makes it more difficult for them to do business. So African nations, we've seen softness there this year relative to prior year. And that's been the big one. And I'd say, as we look out, while it's not been a material impact yet, we do believe there could be a little bit of softness ahead with a couple of the other BRICs as well down the road. But right now, I would say it's limited to more in Africa, maybe to a smaller extent other parts of Asia. Robert P. Fishman - SVP, Chief Financial & Accounting Officer: And then, Gil, this is Bob. On the kind of currency question, we saw for the full year $65 million more revenue headwind. About two-thirds came from three currencies, in Brazil, Canada, and Australia. Brazil changed by roughly 24% from when we gave guidance in July. And then there were probably 40 currencies that all weakened versus the U.S. dollar. So those were the three big ones, but then it was across the board on the remaining piece. William R. Nuti - Chairman, President & Chief Executive Officer: The interesting thing, Gil, is when you take out Russia and China and you look at Andy's business, he actually grew orders in Q3 ex-China and Russia by 5% FX-neutral and grew revenue by 3% FX-neutral, so it gives you a sense of the impact of China and Russia this year so far.

So let me – first, I wanted to ask Bob another question, just again for modeling. Below the line, you changed three of the assumptions for the annual guidance: the share count, the interest expense, and the tax rate. Can you go through what are the changes that have happened in those lines to reduce them? Robert P. Fishman - SVP, Chief Financial & Accounting Officer: Yeah, so previously for other income and expense we had guided to $215 million to $220 million. We now think that number will be closer to $204 million. Interest expense is down. We also started the year, from an OIE perspective, building in a little bit more FX volatility on that particular line, and then we saw some favorability in just a couple of other areas, around bank fees as an example. So that's why we were able to bring the other income and expense down to that $204 million number. On taxes, we continued to do a good job. We had guided originally to 25%. We now think we'll be closer to 24% to 25% in terms of the tax rate. And then on the share count, you make assumptions at the beginning of the year: we said 175 million; it's looking like it's closer to 173 million, and, again, that includes a number of assumptions around forfeitures, et cetera. So those three all help.

Got it. I just want to circle back into the BRICs and ask, because you guys have so many feet on the street in all these different countries, a little bit of the really high level perspective about what your prospect is for those markets, for the emerging markets, especially the big ones? Is this – are we looking at a multi-year slowdown after a few decades of growth or is this just some hesitation or contagion from the Chinese stock market? How do you guys view the macro backdrop for the emerging market businesses that you have, given the specific insight that you have there? William R. Nuti - Chairman, President & Chief Executive Officer: Well, I think it is a little different by market. In China, to be successful long-term, we're going to have to go in a direction that helps us to become more of a local player in the market. So if the regulatory environment does not change in China, and it could, we're going to have to figure out what our long-term strategic plan is around going local. And there are a variety of interesting alternatives there for us, but our goal, by the way, there would be certainly to become more software-focused than hardware. In Russia, it really is a macro and currency headwind that should over time abate. Now, of course, they're very sensitive to the oil markets in terms of the impact on their economic growth. And clearly, relative to their relationship with the U.S., that can also feature prominently in our success. However, my thinking there is that that market will see more stability over time for us than not. Brazil has certainly been more challenged, given their macroeconomic situation. I think for Brazil, we'll have to wait and see, environment, but they have experienced more of a slowdown there. And India is a different market altogether. I think all-in for us is very market-dependent. I do not expect, by the way, 2016 to see as much of a drag on our revenue from Russia and China, simply because we begin to lap difficult compares by the middle of next year. So, Andy, you may want to give some more commentary on that point.

Yeah. Let me also just add one thing, and we think it's really important. When you look at the BRICs right now for us, they're largely not the places that we have driven the transformation agenda, and where that really shows up is on the gross margin and operating income line of each of the four regions. This year in 2015, we will see a hit from an operating income perspective for those headwinds, but those should really abate next year and beyond to Bill's point, even though the revenues may still have some challenges. I'd say most of the margin dollars there of where the risks would be, the risk there is much lower on the margin dollar perspective than where the future revenue softness may land with each of the four markets. So that's the other thing I would add that I think is really important as we assess the impact on operating income in the outer years here.

Got it. Thank you very much.

We'll go next to Matt Summerville from Alembic Global Advisors.

Hey, can you guys hear me okay? William R. Nuti - Chairman, President & Chief Executive Officer: Yeah.

Perfect. I want to talk just one more minute on the ATM business. If you look at going from kind of up 4% to 6% constant currency to up 1% to 2% constant currency and you bear in mind that roughly half-ish of the business should be annuity-like services, that's a really big reduction in the final quarter of the year, if you will, or the final half of the year relative to your 2Q guidance, and then the whole China and Russia thing is not necessarily "new" in my view. And then you talk about an industry that's sort of pushing stuff out because it's (54:28) moving fast, so I'm just trying to square all those (54:33). I know there's a lot of moving pieces but if you can help me make sense of all of that, it would be extremely helpful.

Bill, can I get that? William R. Nuti - Chairman, President & Chief Executive Officer: Yeah, please, go ahead.

Okay, yeah, good, good. So, Matt, good question. Just so you know, Matt, you did garble up a little bit at the end of the question, but I think I got the gist of it, which is I think you're saying in the fourth quarter how did you have a 300-basis-point to 400-basis-point drop in revenue, especially given that you got a reasonable annuity stream. It's really the backlog conversion. I'd say, when we looked at it, we planned in Q3 and Q4 for backlog conversion rates that were 500 basis points less than last year in both of the quarters, roughly, and where we're landing now is 1,000-basis-point reduction over prior year. So just to use some real math, and I'll just use rough numbers here, in the third quarter we – in the fourth quarter where we're now landing has cost 50% to 55% of backlog conversions, a little lower in the third quarter, a little higher in fourth quarter. So that 50% to 55% compares to last year's 60% to 65%. We had planned on being a 500-basis-point drop from last year, not 1,000-basis-point drop, and 500 basis points called on roughly $800 million of backlog is in the $40 million-plus range per quarter. That's the drop. We, frankly, did not do a good job with the modeling there. This outlook here is much more conservative and much more responsible, and we've planned expenses accordingly.

Got it. I appreciate the color. And then just one follow-up, getting back to the whole strategic side of things. I guess at some point you have to be able to kind of put a check in the box and say, this is a viable, this isn't viable, this is viable, this isn't viable, and so on and so forth. And I feel like we're right back where NCR was six to nine months ago when some of this stuff started getting discussed, rumored, what have you. I guess – so what boxes have been checked or not checked or what opportunities actually appear viable from a strategic standpoint from here going forward? William R. Nuti - Chairman, President & Chief Executive Officer: Yeah. Matt, I think it's just too early to give you a check-the-box view. I think we've seen all of the options remain viable, and the Board of Directors is looking at them in concert with one another, and the optionality of one versus another in terms of what's best for our shareholders in NCR.

Is there a timeframe, Bill, I mean, you guys talked about having an Analyst Meeting in September. That sort of got canceled – I'm not going to call it last minute, but not all that far in advance of the actual meeting, at least officially. I mean, when can we expect, and I think there's a lot of folks sort of waiting for this – when can we expect to hear something more definitive about where this company goes from here – from an inflection standpoint, strategically, et cetera? William R. Nuti - Chairman, President & Chief Executive Officer: Well, I think, once the strategic process has completed and we have something of note to say other than continuing to execute to our plan and execute to our guidance, we will not have an Investor Meeting. But I would tell you that, right now, it will either be in Q4 or Q1 is my estimation right now, Matt.

Great. Thanks a lot, guys.

We'll take our next question from Prasad Borra with Goldman Sachs.

Hi. Thanks for taking my questions, couple, if I may. Probably just focus on the free cash flow generation now you're talking about incremental restructuring measures. Given what you have gone through in terms of the process and probably you have a better view on which are the elements of the business which can be improved. Would you say that there are some additional tailwinds or benefits you can see from a free cash flow perspective, which could offset some of the impacts on additional restructuring costs?

Yes, without a doubt. I mean we're very focused on the savings that those additional restructuring initiatives would drive, so my view is that I would not expect a negative impact in 2016. If anything, we'll see incremental free cash flow associated with the restructuring.

Okay. And, Bill, you had mentioned that there's a lot of new learnings which you had from probably reading the data a lot more, and probably getting the consulting experience which you would have probably not have explored before. What are the key takings from it? Operationally, what can you do better, and also, in terms of probably setting the guidance, are there any lessons to take? Would you be more willing to be conservative in terms of giving guidance, and, yeah, anything you can say from that perspective? William R. Nuti - Chairman, President & Chief Executive Officer: Well, I think what we've learned is that we can be a bit more focused on resource allocation, and a bit more aggressive on resource allocation where we see higher growth and higher margin expansion. That would be point one. Point two, that we have some amount of inefficiency and a level of under-productiveness in certain aspects of the company that we can go to work on, and overall that our cost structure can be a bit more competitive going forward, but while driving the kind of growth and bottom-line expansion and cash flow that we think we can drive. In terms of guidance, we're meeting our guidance. This year, I think we've done a good job in terms of setting guidance. On that point, I might add one of the things Bob and I are proud of is the fact that since we gave NPOI guidance in February, we've seen about $20 million to $25 million more of NPOI headwinds as a result of FX and we did not take guidance down to $805 million to $845 million, in that range, to reflect the additional headwinds of FX. We stuck with our guidance and we're proud of the fact that we can navigate through those headwinds and make our guidance.

Okay. That's pretty much from my end. Thank you.

And at this time I would like to turn the call back over to Bill Nuti for any additional or closing remarks. William R. Nuti - Chairman, President & Chief Executive Officer: Well, thank you, all, for joining us, and we appreciate the questions. As always, we look forward to being in contact you. If something were to change within the quarter, we'll certainly be in contact you, but otherwise we look forward to talking to you again in Q1. Good night.

This does conclude today's conference. We thank you for your participation.